Exhibit 2.1
EXECUTION COPY
by and among
PARKWAY PROPERTIES, INC.;
PARKWAY PROPERTIES LP;
EOLA OFFICE PARTNERS LLC (“EOP”);
EOLA CAPITAL LLC (“EOC”);
THE MEMBERS OF EOP AND EOC
THAT ARE PARTIES HERETO;
and
THE MEMBERS OF BANYAN STREET OFFICE
HOLDINGS LLC THAT ARE PARTIES HERETO.
April 10, 2011
TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS |
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2 |
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1.1 Definitions |
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2 |
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ARTICLE 2 THE CONTRIBUTIONS |
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2 |
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2.1 The EOP Contribution |
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2.2 The EOC Contribution |
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3 |
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2.3 Closing |
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3 |
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ARTICLE 3 EFFECT OF THE CONTRIBUTIONS |
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3 |
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3.1 Required Tax Withholding |
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3.2 No Further Ownership Rights |
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3.3 Further Assurances |
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4 |
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3.4 Earn-Out; Earn-Up |
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4 |
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3.5 Working Capital Adjustment |
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14 |
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3.6 Cash Payments |
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16 |
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ARTICLE 4 CONSENTS, REPRESENTATIONS, WARRANTIES AND
COVENANTS OF MEMBERS AND EOC BENEFICIAL
OWNERS |
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16 |
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4.1 Consents and Approvals |
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16 |
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4.2 Representations and Warranties |
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17 |
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4.3 Confidentiality |
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19 |
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4.4 Waiver and Release |
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20 |
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4.5 Restricted Securities |
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21 |
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4.6 No Public Market |
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22 |
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4.7 Legends |
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22 |
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ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF MEMBERS
CONCERNING THE ACQUIRED COMPANIES |
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22 |
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5.1 Organization; Qualification; Power; Governance |
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5.2 Capitalization of the Acquired Companies |
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5.3 No Investment in Other Persons |
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24 |
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5.4 Contravention; Consents; Authorizations |
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5.5 Books and Records |
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25 |
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5.6 Financial Statements |
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5.7 No Change in Certain Financial Policies |
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5.8 Undisclosed Liabilities |
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5.9 Absence of Certain Changes or Events |
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5.10 Accounts Receivable |
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5.11 Taxes |
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5.12 Authorizations |
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5.13 Compliance with Law and Orders |
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5.14 Sufficiency of Assets; Title to Personal Property |
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33 |
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5.15 Condition of Certain Tangible Assets |
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5.16 Real Property |
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5.17 Legal Proceedings; Claims; Orders |
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34 |
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5.18 Environmental Matters |
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35 |
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5.19 Intellectual Property |
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36 |
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5.20 Employees |
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37 |
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5.21 Labor Relations; Compliance |
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39 |
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5.22 Employee Notification; WARN Act, etc. |
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5.23 Employee Benefit Plans |
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5.24 Material Contracts |
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43 |
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5.25 Bank Accounts |
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5.26 Insurance |
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5.27 Certain Affiliate Business Relationships; Employment Agreements |
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5.28 Brokerage Fees |
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5.29 Real Estate Broker Licensing |
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ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PURCHASER
PARTIES |
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6.1 Organization; Qualification; Power; Governance |
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6.2 Authorization of Agreements; Execution and Delivery; Enforceability |
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48 |
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6.3 Governmental Filings and Authorizations |
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6.4 No Contravention |
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6.5 Brokerage Fees |
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6.6 Litigation |
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6.7 Valid Issuance of OP Units |
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6.8 Capitalization |
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6.9 Compliance with Laws |
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6.10 Securities Filings |
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6.11 Absence of Certain Changes or Events |
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6.12 Taxes |
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6.13 Purchaser Parties Release |
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51 |
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ARTICLE 7 CONDITIONS TO EACH PARTY’S OBLIGATION TO CLOSE |
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7.1 Competition Matters |
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7.2 No Injunction or Illegality |
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ARTICLE 8 CONDITIONS TO PURCHASER PARTIES’ OBLIGATION TO
CLOSE |
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8.1 Accuracy of Acquired Companies’ Representations and Warranties |
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8.2 Members’ and Acquired Companies’ Performance |
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8.3 Other Deliveries |
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8.4 Consents |
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8.5 No Proceedings; Orders; Restrictive Authorizations |
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8.6 No Material Adverse Change |
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8.7 Estoppel Certificates |
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8.8 Legal Opinion |
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8.9 Resignations |
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8.10 Voting Agreement |
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8.11 Registration Rights Agreement |
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8.12 Affiliate Agreements |
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8.13 Payoff Letters |
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8.14 Employee/Independent Contractor Release |
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8.15 Banyan Street Management Fees |
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55 |
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ARTICLE 9 CONDITIONS TO THE ACQUIRED COMPANIES’ AND
MEMBERS’ OBLIGATION TO CLOSE |
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9.1 Purchaser Parties’ Representations and Warranties |
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9.2 Purchaser Parties’ Performance |
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9.3 Legal Opinion |
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9.4 REIT Opinion |
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9.5 Consents |
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9.6 Other Transactions |
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9.7 Registration Rights Agreement |
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9.8 No Material Adverse Change |
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9.9 Other Deliveries |
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9.10 Global Agreement |
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9.11 Parent Credit Agreement |
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9.12 No Proceedings; Orders; Restrictive Authorizations |
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ARTICLE 10 CERTAIN PRE-CLOSING COVENANTS |
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10.1 Access |
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10.2 Competitive Information |
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10.3 Regulatory Authorizations |
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10.4 Public Announcements |
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10.5 Conduct and Preservation of Business Generally |
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10.6 Certain Prohibitions |
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10.7 WARN Act |
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10.8 Intercompany Indebtedness; Termination of Certain
Commitments
Release of Liens; |
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10.9 Third-Party Consents |
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10.10 Notice of Certain Developments |
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10.11 Disclosure Schedule Supplements |
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10.12 Exclusivity of Transactions |
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10.13 Control of Operations |
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10.14 Confidentiality |
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10.15 Employees and Employee Benefit Matters |
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ARTICLE 11 ADDITIONAL COVENANTS AND AGREEMENTS |
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11.1 Expenses |
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11.2 No Assignments |
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11.3 Tax Matters |
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11.4 Further Assurances |
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11.5 No Use of Corporate Name |
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11.6 Cash Distributions |
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76 |
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11.7 Entity Distributions |
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11.8 Non-Competition |
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11.9 Execution of Partnership Agreements |
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80 |
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ARTICLE 12 INDEMNIFICATION |
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12.1 Survival |
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12.2 Indemnification of Purchaser Parties |
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80 |
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12.3 Limitations |
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12.4 Limitations on Indemnification of Parent Indemnitees |
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83 |
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12.5 Indemnification of Member Indemnitees |
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12.6 Limitations on Indemnification of Members |
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12.7 Procedures Relating to Indemnification |
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12.8 No Double Recovery |
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88 |
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ARTICLE 13 SELLERS’ REPRESENTATIVES |
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13.1 Designation |
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13.2 Authority |
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89 |
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ARTICLE 14 TERMINATION |
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14.1 Termination of Agreement |
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14.2 Effect of Termination; Remedies |
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14.3 Termination Remedies |
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91 |
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ARTICLE 15 CERTAIN DEFINITIONS |
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92 |
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ARTICLE 16 MISCELLANEOUS PROVISIONS |
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16.1 Notices |
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111 |
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16.2 Entire Agreement |
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113 |
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16.3 Amendments and Waivers |
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113 |
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16.4 Governing Law |
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113 |
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16.5 Jurisdiction and Venue |
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113 |
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16.6 WAIVER OF TRIAL BY JURY |
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16.7 Binding Effect |
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114 |
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16.8 Interpretation |
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16.9 Severability |
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115 |
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16.10 Counterparts |
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115 |
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16.11 Third Parties |
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16.12 Schedules and Exhibits |
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115 |
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16.13 Time Periods |
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116 |
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16.14 Specific Performance |
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116 |
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Exhibits
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Revenue Target Amounts |
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A-1; A-2 |
Focus Plan Targets |
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B |
Earn-Out Assets |
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C |
Form of Acquired Company Legal Opinion |
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D |
Form of Parent Legal Opinion |
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E-1 |
Form of Parent REIT Tax Opinion |
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E-2 |
Form of Registration Rights Agreement |
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F |
FIRPTA Certificates |
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G-1; G-2 |
Related Agreements |
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H |
Managed Properties |
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I |
Lock-up and Voting Agreement |
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J |
EOP Revenue Amount |
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K-1 |
EOC Revenue Amount |
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K-2 |
Purchase and Sale Agreement Transactions |
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L |
Methods of Calculating WC |
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M |
EOC Reduction Amount |
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N-1 |
EOP Reduction Amount |
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N-2 |
Form of Assignment and Transfer of Interest |
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O-1; O-2 |
-v-
This
Contribution Agreement (this “
Agreement”), dated as of April 10, 2011, is by and
among Eola Office Partners LLC, a
Florida limited liability company (“
EOP”), EOLA Capital
LLC, a
Florida limited liability company (“
EOC”), Parkway Properties, Inc., a Maryland
corporation (“
Parent”), Parkway Properties LP, a Delaware limited partnership
(“
Partnership”), Banyan Street Office Holdings LLC, a
Florida limited liability company
(“
Banyan”), the members of EOP (each such member of EOP and Banyan, a “
Member” and
collectively, with Banyan, the “
Members”) and each of Xxxxxxx Prio Touzet, a resident of
the State of
Florida and Xxxxx Xxxxx, a resident of the State of
Florida (each, an “
EOC
Beneficial Owner” and collectively, the “
EOC Beneficial Owners”), which EOC Beneficial
Owners own all of the membership interests of Banyan, which holds membership interests in EOC. EOP,
EOC, Parent, Partnership, Banyan, the Members and the EOC Beneficial Owners are sometimes referred
to herein as the “
Parties” and each, a “
Party.”
WHEREAS, upon the terms and subject to the conditions set forth in this Agreement, (i) the
Members of EOP desire to contribute all of the outstanding units of membership interests in EOP
(each, an “EOP Unit”) to Partnership (the “EOP Contribution”) in exchange for the
right to receive the EOP Per Unit Consideration, plus the EOP Earn-Out Payments, if applicable; and
(ii) Banyan desires to contribute all of its units of membership interest in EOC (each, an “EOC
Unit”) to Partnership (the “EOC Contribution” and, together with the EOP Contribution,
the “Contributions”), in exchange for the right to receive the EOC Per Unit Consideration,
plus the EOC Earn-Out Payments, if applicable, which consideration Banyan desires to be paid
directly to the EOC Beneficial Owners;
WHEREAS, simultaneously with the execution and delivery of this Agreement, the Parties and
certain of their respective Affiliates are entering into the following other transaction agreements
(the “
Other Transaction Agreements”): (i) one or more purchase and sale agreements,
pursuant to which, among other things, Affiliates of Parent shall directly or indirectly purchase
interests in certain real property and improvements as listed on
Exhibit L hereto; (ii) a
master transaction agreement (the “
Global Agreement”) relating to certain governance and
other matters regarding the Transactions and providing for the execution and delivery of other
agreements by the Parties and the transactions contemplated by the Other Transaction Agreements;
and (iii) a
contribution agreement by and between Partnership and ACP Peachtree Center Manager LLC
relating to an equity investment by Partnership in ACP Peachtree Center Manager LLC (collectively,
the “
Other Transactions”);
WHEREAS, the general partner of Partnership and the respective board of managers or members of
each of EOP, EOC, and Banyan, as applicable, have each adopted resolutions approving this Agreement
and the Other Transactions;
WHEREAS, neither the approval of the shareholders of Parent nor the approval of the limited
partners of Partnership is required in connection with the Transactions and the Contributions.
WHEREAS, the Parties intend that the Contributions shall be treated for federal income tax
purposes, as (i) (A) a taxable sale of each Member’s EOP Units and Banyan’s EOC Units, as
applicable, to the extent required by the Treasury Regulations under Code Section 707 relating to
“disguised sales” that a Member or an EOC Beneficial Owner (as successor to Banyan) receives cash
in connection with the Contributions, including without limitation, cash provided as part of the
Earn-Out Payments, and (B) otherwise as a tax-free contribution by each Member of its EOP Units and
to Banyan of its EOC Units to Partnership under Section 721 of the Code, and (ii) a distribution by
Banyan to the EOC Beneficial Owners of the EOC Consideration under Section 731 of the Code.
NOW THEREFORE, the Parties acknowledge the adequacy and receipt of the consideration provided
to each through their respective representations, warranties, conditions, rights and promises
contained in this Agreement, and other good and valuable consideration, and intending to be legally
bound hereby, agrees as provided below.
ARTICLE 1
DEFINITIONS
1.1 Definitions. Capitalized terms not otherwise defined in this Agreement shall have
the meanings set forth in Article 15. Accounting terms not otherwise defined in this Agreement
shall be interpreted in accordance with GAAP.
ARTICLE 2
THE CONTRIBUTIONS
2.1 The EOP Contribution.
2.1.1 Upon the terms and subject to the conditions set forth in this Agreement, at Closing,
each Member of EOP shall sell, transfer, convey, contribute and deliver to Partnership all of such
Members’ EOP Units, with such Members’ EOP Units collectively representing 100% of the EOP Units
outstanding, and shall execute and deliver to Partnership an Assignment and Transfer of Interest in
the form of Exhibit O-1 hereto.
2.1.2 In exchange for the contribution of the EOP Units to Partnership, Partnership shall pay
or issue to each EOP Member (i) at the Closing, an amount equal to the number of EOP Units held by
such EOP Member immediately prior to Closing, multiplied by the EOP Per Unit Cash Consideration
(and together with the EOP Earn-Out Payments, the “EOP Per Unit Consideration”), and (ii)
thereafter, the EOP Earn-Out Payments, if any, in accordance with the terms and conditions of
Section 3.4.
2.1.3 If, between the date of this Agreement and the Closing, the outstanding EOP Units shall
have been changed into a different number of units or a different class by reason of any
reclassification, recapitalization, dividend, split-up, combination, exchange of units or similar
adjustment, without limiting any other rights hereunder, the EOP Per Unit Consideration shall be
ratably adjusted; provided that nothing in this Section 2.1.3 shall be construed to permit
EOP to take any action with respect to its Equity Interests that is prohibited or not expressly
permitted by the terms of this Agreement.
2
2.2 The EOC Contribution.
2.2.1 Upon the terms and subject to the conditions set forth in this Agreement, at Closing,
Banyan shall sell, transfer, convey, contribute and deliver to Partnership all of Banyan’s EOC
Units, which represent all of the EOC Units outstanding that are not owned by EOP, and shall
execute and deliver to Partnership an Assignment and Transfer of Interest in the form of
Exhibit O-2 hereto.
2.2.2 In exchange for the contribution of the EOC Units to Partnership, at the direction of
Banyan, Partnership shall pay or issue to Banyan (i) at the Closing, an amount equal to the number
of EOC Units held by Banyan immediately prior to Closing, multiplied by the EOC Per Unit Cash
Consideration (and together with the EOC Earn-Out Payments, the “EOC Per Unit
Consideration”), and (ii) thereafter, the EOC Earn-Out Payments, if any, in accordance with the
terms and conditions of Section 3.4, and Banyan shall have no rights with respect thereto.
2.2.3 If, between the date of this Agreement and the Closing, the outstanding EOC Units shall
have been changed into a different number of units or a different class by reason of any
reclassification, recapitalization, dividend, split-up, combination, exchange of units or similar
adjustment, without limiting any other rights hereunder, the EOC Per Unit Consideration shall be
ratably adjusted; provided that nothing in this Section 2.2.3 shall be construed to permit
EOC to take any action with respect to its Equity Interests that is prohibited or not expressly
permitted by the terms of this Agreement.
2.3 Closing. Unless this Agreement shall have been terminated pursuant to Article
14, subject to the satisfaction or waiver of the conditions to the obligations of the Parties
set forth in Article 7, Article 8 and Article 9 of this Agreement, a
closing to effectuate the Contributions (the “Closing”) shall take place at 10:00 a.m.
(Eastern time) on the third (3rd) Business Day following the satisfaction or waiver of
all the conditions set forth in Article 7, Article 8 and Article 9 of this
Agreement (other than conditions which, by their nature, are to be satisfied at the Closing, but
subject to the satisfaction or waiver of those conditions), at the offices of Hunton & Xxxxxxxx
LLP, Bank of America Plaza, 000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000, Xxxxxxx, Xxxxxxx, 00000 or at
such other time or place as the Parties may mutually agree in writing. The date on which the
Closing is to occur is sometimes referred to in this Agreement as the “Closing Date.”
ARTICLE 3
EFFECT OF THE CONTRIBUTIONS
3.1 Required Tax Withholding.
3.1.1 Partnership shall be entitled to deduct and withhold from the consideration otherwise
payable to any Member or EOC Beneficial Owner pursuant to this Agreement such amounts as
Partnership is required to deduct and withhold with respect to the making of such payment under the
Code or any other provision of federal, state, local or foreign Tax Law; provided, however, that no
amount shall be withheld from the consideration otherwise payable to a Member or EOC Beneficial
Owner pursuant to this Agreement, except (a) to the
3
extent that Partnership has previously been notified by a Member or EOC Beneficial Owner (as
provided in Section 3.1.3 below) that any such withholding is required, or (b) Partnership
has reasonably determined that such withholding is required by applicable Law; and provided further
that if Partnership (or any of its Affiliates) intends to withhold any amount based on a reasonable
determination pursuant to clause (b) of the immediately preceding proviso, Partnership shall
provide reasonable advance written notice to the relevant Member or EOC Beneficial Owner of
Partnership’s intent to so withhold and a summary of the rationale for such withholding. To the
extent that amounts are withheld by Partnership, such withheld amounts (1) shall be remitted
promptly and in accordance with applicable Law by Partnership to the applicable Governmental
Authority, and (2) shall be treated for all purposes of this Agreement as having been paid to the
relevant Member or EOC Beneficial Owner in respect of which such deduction and withholding was made
by Partnership and shall be deemed part of the EOP Per Unit Consideration or EOC Per Unit
Consideration, as applicable. Partnership shall promptly provide to the relevant Member or EOC
Beneficial Owner written evidence reasonably satisfactory to the Member or EOC Beneficial Owner of
any such remittance.
3.1.2 A Member or EOC Beneficial Owner, as applicable, shall notify Partnership in writing of
any action or event that would otherwise require Partnership to withhold under applicable Law any
amount from the consideration otherwise payable to a Member or EOC Beneficial Owner pursuant to
this Agreement. The notice required by this Section 3.1.2 shall include information
sufficient to enable Partnership to determine to withhold the proper amount from any such payment,
and to report such amounts to the appropriate Governmental Authority.
3.1.3 Each of Partnership, the Members, and the EOC Beneficial Owners acknowledge that, as of
the date hereof, neither it nor any of its Affiliates has any knowledge that any amount is required
to be withheld by Partnership from any portion of any consideration payable pursuant to this
Agreement.
3.2 No Further Ownership Rights. At and after the Closing, the EOP Per Unit
Consideration and the EOC Per Unit Consideration, each as applicable, payable pursuant to this
Article 3 in accordance with the terms hereof shall be deemed to have been issued and paid in full
satisfaction of all rights pertaining to the Equity Interests of EOP and Banyan’s Equity Interests
of EOC, as the case may be, and the EOP Former Members and Banyan and the EOC Beneficial Owners
shall have no further ownership or other rights with respect thereto.
3.3 Further Assurances. If, at any time after the Closing, the officers of EOP or EOC,
as applicable, determine that any further action is necessary to carry out the purposes of this
Agreement or to vest EOP or EOC (as applicable) with full right, title and possession of and to all
rights and property of EOP, or EOC, as the case may be, the officers of EOC and EOP and Parent
shall be fully authorized (in the name of EOP, EOC, and otherwise) to take such action.
3.4 Earn-Out; Earn-Up.
3.4.1 EOP Earn-Out Payments. In addition to the payment of the EOP Per Unit Cash
Consideration in accordance with Section 2.1.2, the EOP Former Members shall be
4
entitled to EOP Earn-Out Payments, if any, in accordance with the terms set forth in this
Section 3.4.
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(a) |
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If the Management Earn-Out Revenues during the 2011 Earn-Out Period are less than the
Management Earn-Out Revenue Threshold, neither Parent nor Partnership shall have any obligation to
issue any additional OP Units pursuant to this Section 3.4 with respect to the 2011
Earn-Out Period. |
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(b) |
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If the Management Earn-Out Revenues during the 2011 Earn-Out Period are equal to or greater
than the Management Earn-Out Revenue Threshold, then Partnership shall issue and pay to each EOP
Former Member (i) a number of OP Units determined as set forth in Exhibit A-1, multiplied
by (y) 0.75, multiplied by (z) the EOP Former Member’s applicable EOP Membership Interest
Percentage (the resulting amount, the “2011 EOP Unit Payment”), plus (ii) a cash
payment in an amount equal to (A) the aggregate amount of distributions declared on such number of
OP Units during the 2011 Earn-Out Period, plus (B) all distributions declared on such
number of OP Units from the end of the 2011 Earn-Out Period through the date of delivery of the
2011 EOP Unit Payment (including, in the case of clauses (A) and (B), any distributions declared
during such period with a record date prior to delivery of the 2011 EOP Unit Payment and a payment
date after delivery of the 2011 EOP Unit Payment) (together with the 2011 EOP Unit Payment, the
“2011 EOP Revenue Payment”). |
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(c) |
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If the Management Earn-Out Revenues during the 2012 Earn-Out Period are less than the
Management Earn-Out Revenue Threshold, then neither Parent nor Partnership shall have any
obligation to issue any additional OP Units pursuant to this Section 3.4 with respect to
the 2012 Earn-Out Period. |
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(d) |
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If the Management Earn-Out Revenues during the 2012 Earn-Out Period are equal to or greater
than the Management Earn-Out Revenue Threshold, then Partnership shall issue and pay to each EOP
Former Member (i)(x) a number of OP Units determined as set forth in Exhibit A-2,
multiplied by (y) 0.75, multiplied by (z) the EOP Former Member’s applicable EOP Membership
Interest Percentage (the resulting amount, the “2012 EOP Unit Payment”), plus (ii)
a cash payment in an amount equal to (A) the aggregate amount of distributions declared on such
number of OP Units during the 2011 Earn-Out Period and the 2012 Earn-Out Period, plus (B)
all distributions declared on such number of OP Units from the end of the 2012 Earn-Out Period
through the date of delivery of the 2012 EOP Unit Payment (including, in the case of clauses (A)
and (B), any distributions declared during such period with a record date prior to delivery of the
2012 EOP Unit Payment and a payment date after delivery of the 2012 EOP Unit Payment) (together
with the 2012 EOP Unit Payment, the “2012 EOP Revenue Payment”). |
5
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(e) |
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In addition to the 2011 EOP Revenue Payment and the 2012 EOP Revenue Payment, if any,
Partnership shall issue and pay to each EOP Former Member (i) a number of OP Units equal to (x) the
Focus Plan Amount, multiplied by (y) 0.75, multiplied by (z) the EOP Former
Member’s applicable EOP Membership Interest Percentage (the resulting amount, the “EOP Focus
Plan Payment”), plus (ii) a cash payment in an amount equal to (A) the aggregate amount
of distributions declared during the 0000 Xxxx-Xxx Period and the 2012 Earn-Out Period on such
number of OP Units, plus (B) all distributions declared on such number of OP Units from the
end of the 2012 Earn-Out Period through the date of delivery of the EOP Focus Plan Payment
(including, in the case of clauses (A) and (B), any distributions declared during such period with
a record date prior to delivery of the EOP Focus Plan Payment and a payment date after delivery of
the EOP Focus Plan Payment). |
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(f) |
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In addition to the 2011 EOP Revenue Payment, the 2012 EOP Revenue Payment and the EOP Focus
Plan Payment, if any, Partnership shall issue and pay to each EOP Former Member (i) a number of OP
Units equal to (x) the Earn-Up Amount, multiplied by (y) 0.75, multiplied by (z)
the EOP Former Member’s applicable EOP Membership Interest Percentage (the resulting amount, the
“EOP Earn-Up Payment”), plus (ii) a cash payment in an amount equal to (A) the
aggregate amount of distributions declared during the 0000 Xxxx-Xxx Period and the 2012 Earn-Out
Period on such number of OP Units, plus (B) all distributions declared on such number of OP
Units from the end of the 2012 Earn-Out Period through the date of delivery of the EOP Earn-Up
Payment (including, in the case of clauses (A) and (B), any distributions declared during such
period with a record date prior to delivery of the EOP Earn-Up Payment and a payment date after
delivery of the EOP Earn-Up Payment) (together with the EOP Earn-Up Payment, the EOP Focus Plan
Payment, the 2011 EOP Revenue Payment and the 2012 EOP Revenue Payment, the “EOP Earn-Out
Payments”). |
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(g) |
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In addition to the EOP Earn-Out Payments, upon the occurrence of a Principal Termination Event,
if applicable, Partnership shall issue and pay to each EOP Former Member: |
(i) (x) a number of OP Units equal to (1) 1,574,000, multiplied by (2) 0.75,
multiplied by (3) the EOP Former Member’s applicable EOP Membership Interest Percentage,
minus (y) all 2011 EOP Unit Payments, 2012 EOP Unit Payments and EOP Focus Plan Payments,
if any, previously issued to such EOP Former Member (the resulting amount, the “EOP Termination
Event Payment”); plus
(ii) a cash payment in an amount equal to the aggregate amount of distributions declared on
such number of OP Units during the time period commencing on the first day of the 2011 Earn-Out
Period and ending on the date
6
of delivery of the EOP Termination Event Payment (including any distribution declared during such
period with a record date prior to delivery of the EOP Termination Event Payment and a payment date
after delivery of the EOP Termination Event Payment).
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(h) |
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In no event shall the EOP Earn-Out Payments and the EOP Termination Event Payment, in the
aggregate, exceed the EOP Cap Amount. |
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(i) |
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Following the determination of any 2011 EOP Unit Payment, 2012 EOP Unit Payment, EOP Focus Plan
Payment, EOP Earn-Up Payment or EOP Termination Event Payment, as applicable, Parent or Partnership
shall deliver to each EOP Former Member evidence of delivery of the issuance of OP Units equal to
any 2011 EOP Unit Payment, 2012 EOP Unit Payment, EOP Focus Plan Payment, EOP Earn-Up Payment or
EOP Termination Event Payment. |
3.4.2 EOC Earn-Out Payments. In addition to the payment of the EOC Per Unit Cash
Consideration in accordance with Section 2.2.2, the EOC Beneficial Owners, as the sole
members of the EOC Former Member, shall be entitled to EOC Earn-Out Payments, if any, in accordance
with the terms set forth in this Section 3.4.
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(a) |
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If the Management Earn-Out Revenues during the 2011 Earn-Out Period are less than the
Management Earn-Out Revenue Threshold, then neither Parent nor Partnership shall have any
obligation to issue any additional OP Units pursuant to this Section 3.4 with respect to
the 2011 Earn-Out Period. |
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(b) |
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If the Management Earn-Out Revenues during the 2011 Earn-Out Period are equal to or greater
than the Management Earn-Out Revenue Threshold, then Partnership shall issue and pay to each EOC
Beneficial Owner (i)(x) a number of OP Units determined as set forth in Exhibit A-1,
multiplied by (y) 0.25, multiplied by (z) the EOC Beneficial Owner’s applicable Banyan Membership
Interest Percentage (the resulting amount, the “2011 EOC Unit Payment”), plus (ii) a cash
payment in an amount equal to (A) the aggregate amount of distributions declared on such number of
OP Units during the 2011 Earn-Out Period, plus (B) all distributions declared on such
number of OP Units from the end of the 2011 Earn-Out Period through the date of delivery of the
2011 EOC Unit Payment (including, in the case of clauses (A) and (B), any distributions declared
during such period with a record date prior to delivery of the 2011 EOC Unit Payment and a payment
date after delivery of the 2011 EOC Unit Payment) (together with the 2011 EOC Unit Payment, the
“2011 EOC Revenue Payment”). |
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(c) |
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If the Management Earn-Out Revenues during the 2012 Earn-Out Period are less than the
Management Earn-Out Revenue Threshold, then neither Parent nor Partnership shall have any
obligation to issue any additional OP |
7
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Units pursuant to this Section 3.4 with respect to the 2012 Earn-Out Period. |
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(d) |
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If the Management Earn-Out Revenues during the 2012 Earn-Out Period are equal to or greater
than the Management Earn-Out Revenue Threshold, then Partnership shall issue and pay to each EOC
Beneficial Owner (i)(x) a number of OP Units determined as set forth in Exhibit A-2,
multiplied by (y) 0.25, multiplied by (z) the EOC Beneficial Owner’s applicable Banyan Membership
Interest Percentage (the resulting amount, the “2012 EOC Unit Payment”), plus (ii)
a cash payment in an amount equal to (A) the aggregate amount of distributions declared on such
number of OP Units during the 2011 Earn-Out Period and the 2012 Earn-Out Period, plus (B)
all distributions declared on such number of OP Units from the end of the 2012 Earn-Out Period
through the date of delivery of the 2012 EOC Unit Payment (including, in the case of clauses (A)
and (B), any distributions declared during such period with a record date prior to delivery of the
2012 EOC Unit Payment and a payment date after delivery of the 2012 EOC Unit Payment) (together
with the 2012 EOC Unit Payment, the “2012 EOC Revenue Payment”). |
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(e) |
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In addition to the 2011 EOC Revenue Payment and the 2012 EOC Revenue Payment, if any,
Partnership shall issue and pay to each EOC Beneficial Owner (i) a number of OP Units equal to (x)
the Focus Plan Amount, multiplied by (y) 0.25, multiplied by (z) the EOC Beneficial
Owner’s applicable Banyan Membership Interest Percentage (the resulting amount, the “EOC Focus
Plan Payment”), plus (ii) a cash payment in an amount equal to (A) the aggregate amount
of distributions declared on such number of OP Units during the 2011 Earn-Out Period and the 2012
Earn-Out Period, plus (B) all distributions declared on such number of OP Units from the
end of the 2012 Earn-Out Period through the date of delivery of the EOC Focus Plan Payment
(including, in the case of clauses (A) and (B), any distributions declared during such period with
a record date prior to delivery of the EOC Focus Plan Payment and a payment date after delivery of
the EOC Focus Plan Payment). |
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(f) |
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In addition to the 2011 EOC Revenue Payment, the 2012 EOC Revenue Payment and the EOC Focus
Plan Payment, if any, Partnership shall issue and pay to each EOC Beneficial Owner (i) a number of
OP Units equal to (x) the Earn-Up Amount, multiplied by (y) 0.25, multiplied by (z)
the EOC Beneficial Owner’s applicable Banyan Membership Interest Percentage (the resulting amount,
the “EOC Earn-Up Payment”), plus (ii) a cash payment in an amount equal to (A) the
aggregate amount of distributions declared during the 0000 Xxxx-Xxx Period and the 2012 Earn-Out
Period on such number of OP Units, plus (B) all distributions declared on such number of OP
Units from the end of the 2012 Earn-Out Period through the date of delivery of the EOC Earn-Up
Payment (including, in the case of clauses (A) and (B), any distributions declared during such |
8
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period with a record date prior to delivery of the EOC Earn-Up Payment and a payment date after
delivery of the EOC Earn-Up Payment) (together with the EOC Earn-Up Payment, the EOC Focus Plan
Payment, the 2011 EOC Revenue Payment and the 2012 EOC Revenue Payment, the “EOC Earn-Out
Payments”). |
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(g) |
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In addition to the EOC Earn-Out Payments, upon the occurrence of a Principal Termination Event,
if applicable, Partnership shall issue and pay to each EOC Beneficial Owner: |
(i) (x) a number of OP Units equal to (1) 1,574,000, multiplied by (2) 0.25,
multiplied by (3) the EOC Beneficial Owner’s applicable Banyan Membership Interest
Percentage, minus (y) all 2011 EOC Unit Payments, 2012 EOC Unit Payments and EOC Focus Plan
Payments, if any, previously issued to such EOC Beneficial Owner (the resulting amount, the
“EOC Termination Event Payment”); plus
(ii) a cash payment in an amount equal to the aggregate amount of distributions declared on
such number of OP Units during the time period commencing on the first day of the 2011 Earn-Out
Period and ending on the date of delivery of the EOC Termination Event Payment (including any
dividend and other distributions declared during such time period with a record date prior to
delivery of the EOC Termination Event Payment and a payment date after delivery of the EOC
Termination Event Payment).
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(h) |
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In no event shall the EOC Earn-Out Payments and the EOC Termination Event Payment, in the
aggregate, exceed the EOC Cap Amount. |
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(i) |
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Following the determination of any 2011 EOC Unit Payment, 2012 EOC Unit Payment, EOC Focus Plan
Payment, the EOC Earn-Up Payment or EOC Termination Event Payment, as applicable, Parent or
Partnership shall deliver to each EOC Beneficial Owner evidence of the issuance of OP Units equal
to any 2011 EOP Unit Payment, 2012 EOP Unit Payment, EOP Focus Plan Payment, EOC Earn-Up Payment or
EOC Termination Event Payment. |
3.4.3 Earn-Out Statement.
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(a) |
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At least thirty (30) days prior to the last day of each of the 2011 Earn-Out Period and 2012
Earn-Out Period, Parent shall, at its expense, prepare, submit and deliver to Sellers’
Representatives a draft statement setting forth in writing and in reasonable detail, including
information by property and category of revenue, Parent’s good faith calculation of the Management
Earn-Out Revenues for the period between the Closing Date and September 30, 2011 with respect to
the 2011 Earn-Out Period and the nine-month period ended September 30, 2012 with respect to the
2012 Earn-Out Period. |
9
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(b) |
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As promptly as practicable, but in no event later than forty-five (45) days following the end
of the 2011 Earn-Out Period or the 2012 Earn-Out Period, as applicable (each, a “Statement
Delivery Date”), Parent shall, at its expense, prepare, submit and deliver to Sellers’
Representatives a statement (the “Earn-Out Statement”), setting forth in writing and in
reasonable detail, including information by property and category of revenue, Parent’s good-faith
calculation of the applicable EOP Earn-Out Payments and EOC Earn-Out Payments, if any, payable to
the EOP Former Members and/or the EOC Beneficial Owners, as applicable, in accordance with this
Section 3.4. In addition, on or prior to the delivery of each Earn-Out Statement, Sellers’
Representatives shall be entitled, and Parent shall, at its expense, provide or provide reasonable
access (in a manner not unreasonably disruptive to the Business) to EOP and EOC to review the
books, records, documents and work papers (including, without limitation, the general ledger and
bank statements) related to the preparation of the Earn-Out Statement. Sellers’ Representatives
shall be entitled to make reasonable inquiries and information requests of Parent, Partnership, EOP
and EOC regarding the Earn-Out Statement and the calculations set forth therein. In the event that
Parent shall fail to deliver the Earn-Out Statement by any Statement Delivery Date, then Sellers’
Representatives shall be entitled to provide notice of such failure to Parent (each such
notification, a “Statement Delivery Notification”). If, within, fifteen (15) days following
the delivery of a Statement Delivery Notification by Sellers’ Representatives to Parent, Parent
does not deliver the applicable Earn-Out Statement to Sellers’ Representatives, then the Earn-Out
Statement shall be deemed to have been delivered by Parent setting forth Management Earn-Out
Revenues equal to the Maximum Earn-Out Revenue Amount with respect to the 0000 Xxxx-Xxx Period or
the 0000 Xxxx-Xxx Period, as applicable. |
3.4.4 Earn-Out Objection.
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(a) |
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If Sellers’ Representatives have any objections to the calculations set forth in the Earn-Out
Statement, then, within fifteen (15) days after receipt of the Earn-Out Statement, Sellers’
Representatives jointly shall deliver to Parent a single written statement (an “Earn-Out
Objections Statement”) setting forth their objections thereto in reasonable detail and the
basis therefor; provided, however, that such fifteen (15)-day period shall be tolled for any period
during which Parent, Partnership, EOP or EOC shall fail to make available to Sellers’
Representatives all books, records, documents and work papers requested by Sellers’ Representatives
pursuant to Section 3.4.3(b), which are required to be made available to Sellers’
Representatives under Section 3.4.3(b) (except where providing reasonable access to books,
records documents and work papers pursuant to Section 3.4.3(b) cannot be done in a manner
that is not unreasonably disruptive to the Business). Each Earn-Out Objections Statement shall (i)
include a copy of Parent’s calculations marked to indicate those specific |
10
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line items that are in dispute, and (ii) be accompanied by Sellers’ Representatives’ calculations
of each of the disputed line items and Sellers’ Representatives’ revised calculations setting forth
its determination of the EOP Earn-Out Payment or the EOC Earn-Out Payment, as applicable, together
with a detailed description of the basis for any such disagreement. All such line items that are
not disputed shall be final, binding and non-appealable for all purposes hereunder. If an Earn-Out
Objections Statement is not delivered to Parent within fifteen (15) days after delivery of the
Earn-Out Statement, the Earn-Out Statement shall be final and binding on and non-appealable by, the
Parties; provided, however, that such fifteen (15) day period shall be tolled for any period during
which Parent, Partnership, EOP or EOC shall fail to make available to Sellers’ Representatives all
books, records, documents and work papers requested by Sellers’ Representatives pursuant to
Section 3.4.3(b), which are required to be made available to Sellers’ Representative under
Section 3.4.3(b) (except where providing reasonable access to books, records documents and
work papers pursuant to Section 3.4.3(b) cannot be done in a manner that is not
unreasonably disruptive to the Business). If an Earn-Out Objections Statement is delivered to
Parent within fifteen (15) days after delivery of the Earn-Out Statement (or such later date as a
result of any tolling of such fifteen (15)-day period), then Sellers’ Representatives and Parent
shall negotiate in good faith to resolve any such objections, but if they do not reach a final
resolution within fifteen (15) days after the delivery of the Earn-Out Objections Statement (such
period, the “Earn-Out Review Period”), then Sellers’ Representatives and Parent shall
submit any outstanding disputes to the Independent Accounting Firm for final, binding and
non-appealable resolution. |
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(b) |
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Sellers’ Representatives and Parent shall use commercially reasonable efforts to cause the
Independent Accounting Firm to resolve all disagreements as soon as practicable, but in any event
within thirty (30) days after the dispute is first submitted to the Independent Accounting Firm.
Within ten (10) Business Days following the engagement of the Independent Accounting Firm, Sellers’
Representatives and Parent shall each submit in writing to the Independent Accounting Firm and to
the other Party simultaneously its calculations of the unresolved disputed items in the Earn-Out
Objections Statement together with such work papers, calculations and other materials that such
Party has determined supports such Party’s calculation (the “Initial Materials”). Each of
Sellers’ Representatives and Parent shall thereafter be entitled to submit a rebuttal to the other
Party’s submission (together with the Initial Materials, the “Determination Materials”),
which rebuttals shall be delivered to the Independent Accounting Firm and to the other Party
simultaneously within five (5) days following the delivery of the Parties’ initial submissions to
the Independent Accounting Firm and to each other. The Independent Accounting Firm may request
additional information from |
11
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Sellers’ Representatives and Parent. The Independent Accounting Firm shall base its determination
of the disputed amounts solely on the Determination Materials and any other information requested
by the Independent Accounting Firm. The Independent Accounting Firm shall only consider those line
items and amounts in the Earn-Out Statement to which Sellers’ Representatives have timely objected
pursuant to this Section 3.4.4 and which Parent and Sellers’ Representatives have been
unable to resolve. In resolving each disputed item, the Independent Accounting Firm shall not
assign a value to any disputed item greater than the greatest value or less than the smallest value
for such item assigned to it by Parent or Sellers’ Representative, as the case may be. The
resolution of the dispute by the Independent Accounting Firm shall be final, binding and
non-appealable on and by the Parties. If the Independent Accounting Firm resolves all disputes
presented to it entirely in the manner proposed by Parent or Sellers’ Representative, as the case
may be, the fees and expenses of the Independent Accounting Firm relating to the resolution of such
dispute shall be paid by the other Party. In all other events, the fees and expenses of the
Independent Accounting Firm shall be shared based on the difference between Sellers’
Representatives’ position, on the one hand, and Parent’s position, on the other hand, initially
presented to the Independent Accounting Firm (based on the aggregate of all differences taken as a
whole) and the final resolution as determined by the Independent Accounting Firm in proportion to
the total difference between Sellers’ Representative’s and Parent’s initial positions. |
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(c) |
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The statement setting forth the final, binding and non-appealable EOP Earn-Out Payments and EOC
Earn-Out Payments, as determined in accordance with this Section 3.4.4, shall be known as
the “Final Earn-Out Statement.” |
3.4.5 Undisputed Amount. Within fifteen (15) days after the delivery of the Earn-Out
Statement by Parent, Parent shall issue to the EOP Former Members and the EOC Beneficial Owners, in
accordance with the payment provisions set forth in Section 3.4.1 and Section
3.4.2, the EOP Earn-Out Payment and the EOC Earn-Out Payment, if any, set forth on the Earn-Out
Statement with respect to all amounts that are not disputed (each, an “Undisputed Amount”).
In addition, in the event an Earn-Out Objections Statement is timely delivered as described in
Section 3.4.4, then, within five (5) days after the date that the calculation of the EOP
Earn-Out Payment and EOC Earn-Out Payment, as applicable, becomes final, binding and non-appealable
in accordance with Section 3.4.4, Parent shall issue:
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(a) |
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to each EOP Former Member, (i) the amount of the EOP Earn-Out Payment set forth in the Final
Earn-Out Statement payable to such EOP Former Member pursuant to the payment provisions set forth
in Section 3.4.1, less (ii) the Undisputed Amount previously paid to such EOP
Former Member by Parent; and |
12
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(b) |
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to each EOC Beneficial Owner, (i) the amount of the EOC Earn-Out Payment set
forth in the Final Earn-Out Statement payable to such EOC Beneficial Owner pursuant
to the payment provisions set forth in Section 3.4.2, less (ii) the
Undisputed Amount previously paid to such EOC Beneficial Owner by Parent. |
3.4.6 Set-Off. The Purchaser Parties may set-off any amounts owed by the Members to
any Parent Indemnitees pursuant to Article 12 against any amount (whether in the form of
cash or OP Units) payable pursuant to Sections 3.4 or 3.5 to the extent that such
amount is actually then due and payable pursuant to a final determination by a court of competent
jurisdiction in accordance with the terms and conditions of this Agreement, including Section 12.7.
The value ascribed to any OP Units set-off pursuant to this Section 3.4.6 shall be the
average closing price of PKY Shares on the New York Stock Exchange during the five (5) day period
prior to the Purchaser Parties’ exercise of their rights under this Section 3.4.6;
provided, however, that, for purposes of this Section 3.4.6, in no event shall the value
ascribed to any OP Units be less than $19.00 per OP Unit.
3.4.7 Earn-Out Covenants and Agreements. Following the Closing Date, none of the
Purchaser Parties, EOP, EOC, or any of their respective Affiliates shall willfully and
intentionally (a) take any action that causes the termination of the Management Agreements in
existence as of the Closing Date prior to expiration of the 2012 Earn-Out Period, excluding any
termination by the Purchaser Parties, EOP, EOC or any of their respective Affiliates following a
default by the counterparty, or (b) take any action or omit to take any action that results in a
material deficiency in the resources or personnel assigned to the Managed Properties as compared to
the industry standard of management services provided for the same class of buildings in the
markets where the Managed Properties are located, which deficiency results in a demonstrable and
material reduction in the revenues received from the management of the Managed Properties prior to
the expiration of the 2012 Earn-Out Period or (c) at any time prior to the end of the 2012 Earn-Out
Period, take any action that results in a Voluntary reduction in invoice amounts below the approved
2011 budgeted amounts for any particular Managed Property of any salary or administrative cost
reimbursements, which have been approved by Owners of the Managed Properties and have been
delivered by the Acquired Companies to the Purchaser Parties or any of their respective Affiliates
with respect to the provision of any management services pursuant to the Management Agreements
(items (b) and (c), collectively, a “Policy Change”). In the event following the Closing
there has been a termination of a Management Agreement in violation of clause (a) above or a Policy
Change, then, as of the date of such termination or Policy Change, as applicable, all revenues that
would have been payable pursuant to the terms of such Management Agreement with respect to the 0000
Xxxx-Xxx Period and/or the 2012 Earn-Out Period, as applicable, shall be included in the
calculation of Management Earn-Out Revenues and in the determination of whether any 2011 EOP
Revenue Payment, 2012 EOP Revenue Payment, 2011 EOC Revenue Payment and/or 2012 EOC Revenue Payment
are payable in accordance with this Section 3.4. Notwithstanding the foregoing, it is
acknowledged and agreed that Parent and Partnership, in their discretion, shall be entitled to
determine whether to permit any Acquired Company to (A) enter into any new management agreements or
leasing agent agreements (other than the Management Agreements) (B) renew any Management Agreements
upon expiration upon economic terms or length of term less favorable to the Acquired Company than
those contained in the current agreement as of the date hereof or
13
(C) amend any Management Agreements to provide for economic terms or length of term less favorable
to the Acquired Company than those contained in the agreement as of the date hereof.
3.5 Working Capital Adjustment.
3.5.1 The EOP Per Unit Cash Consideration and EOC Per Unit Cash Consideration shall be
adjusted after the Closing Date as follows:
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(a) |
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Promptly following the Closing Date, but in no event later than forty five
(45)-days following the Closing Date (the “CD Calculations Delivery Date”),
Parent shall, at its expense, prepare and deliver to Sellers’ Representatives a
statement setting forth, in reasonable detail, Parent’s calculation of the Closing
Date Net Working Capital (the “Proposed Closing Date Net Working Capital”),
which calculations shall (i) be prepared in accordance with the Methods of
Calculating WC and (ii) to the extent not addressed by the Methods of Calculating
WC, GAAP. |
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(b) |
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On or prior to the delivery (or deemed delivery in accordance with Section
3.5.1(c)) of the statement setting forth the Proposed Closing Date Net Working
Capital, Sellers’ Representatives shall be entitled to, and Parent shall, at its
expense, provide or provide reasonable access (in a manner not unreasonably
disruptive to the Business) to EOP and EOC to review the books and records,
documents and work papers related to the preparation of such statement (including,
without limitation, the general ledger and bank statements of EOP and EOC).
Sellers’ Representatives shall be entitled to make reasonable inquiries and
information requests of Parent, Partnership, EOP and EOC regarding the statement
setting forth the Proposed Closing Date Net Working Capital and the calculations
set forth therein. |
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(c) |
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In the event that Parent shall fail to deliver the statement setting forth the
Proposed Closing Date Net Working Capital by the CD Calculations Delivery Date,
then Sellers’ Representatives shall be entitled to provide notice of such failure
to Parent (a “NWC Statement Delivery Notification”). If, within, fifteen
(15) days following the delivery of a NWC Statement Delivery Notification by
Sellers’ Representatives to Parent, Parent does not deliver the statement setting
forth the Proposed Closing Date Net Working Capital to Sellers’ Representatives,
then such statement shall be deemed to have been delivered by Parent setting forth
a Proposed Closing Date Net Working Capital equal to positive $250,000. |
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(d) |
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If Sellers’ Representatives dispute the correctness of the Proposed Closing
Date Net Working Capital, then, within fifteen (15) days after receipt of the
statement setting forth the Proposed Closing Date Net Working Capital, Sellers’
Representatives jointly shall deliver to Parent a single written statement (a
“WC Objection Notice”) setting forth their objections thereto in reasonable
detail and the basis therefor; provided, however, that |
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such fifteen (15)-day period shall be tolled for any period during which Parent,
Partnership, EOP or EOC shall fail to make available to Sellers’ Representatives all books,
records, documents and work papers requested by Sellers’ Representative pursuant to
Section 3.5.1(b), which are required to be made available to Sellers’
Representatives under Section 3.5.1(b) (except where providing reasonable access to
books, records documents and work papers pursuant to Section 3.5.1(b) cannot be
done in a manner that is not unreasonably disruptive to the Business). The WC Objection
Notice shall (i) set forth Sellers’ Representatives calculations of the Net Working Capital
of the Acquired Companies as of the Closing, (ii) specify those individual line items in
the Proposed Closing Date Net Working Capital with which Sellers’ Representatives disagree,
and (iii) be accompanied by a detailed description of the basis for any such disagreement.
All such line items that are not disputed shall be final, binding and non-appealable for
all purposes hereunder. If a WC Objection Notice is not delivered to Parent within the
fifteen (15)-day period after the delivery of the statement setting forth the Proposed
Closing Date Net Working Capital, then the statement setting forth the Proposed Closing
Date Net Working Capital shall be final, binding and non-appealable on and by the Parties
and the Proposed Closing Date Net Working Capital shall become the Final Closing Date Net
Working Capital; provided, however, that such fifteen (15)-day period shall be tolled for
any period during which Parent, Partnership, EOP or EOC shall fail to make available to
Sellers’ Representatives all books, records, documents and work papers requested by
Sellers’ Representative pursuant to Section 3.5.1(b), which are required to be made
available to Sellers’ Representatives under Section 3.5.1(b) (except where
providing reasonable access to books, records documents and work papers pursuant to
Section 3.5.1(b) cannot be done in a manner that is not unreasonably disruptive to
the Business). If a WC Objection Notice is delivered to Parent within fifteen (15) days
after delivery of the statement setting forth the Proposed Closing Date Net Working Capital
(or such later date as a result of any tolling of such fifteen (15)-day period), then
Sellers’ Representatives and Parent shall negotiate in good faith to resolve any such
objections, but if they do not reach a final resolution within fifteen (15) days after the
delivery of the WC Objection Notice (the “WC Objections Period”), then Sellers’
Representatives and Parent shall submit any outstanding disputes to the Independent
Accounting Firm for final, binding and non-appealable resolution in accordance with the
same procedures outlined in Section 3.4.4(b) with respect to the resolution of
disputes relating to a Earn-Out Objections Statement. |
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(e) |
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The final, binding and non-appealable Closing Date Net Working Capital as determined in
accordance with this Section 3.5.1, shall be known as the “Final Closing Date Net Working
Capital” and the relevant date on which the Final Closing Date Net Working Capital is determined
shall be known as the “WC Final Resolution Date.” |
15
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(f) |
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Each of the Proposed Closing Date Net Working Capital and the Final Closing
Date Net Working Capital shall be (i) prepared in accordance with the Methods of
Calculating WC and (ii) to the extent not addressed by the Methods of Calculating
WC, GAAP. |
3.5.2 No later than five (5) days after the WC Final Resolution Date:
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(a) |
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If the Final Closing Date Net Working Capital is less than the Target Net
Working Capital, then (1) each EOP Former Member shall pay to Parent an amount
equal to (A) the difference between the Final Closing Date Net Working Capital and
the Target Net Working Capital (the “NWC Deficit”), multiplied by
(B) 0.75, multiplied by (C) such EOP Former Member’s applicable EOP
Membership Interest Percentage, and (2) each EOC Beneficial Owner shall pay to
Parent an amount equal to (x) the NWC Deficit, multiplied by (y) 0.25,
multiplied by (z) such EOC Beneficial Owner’s applicable Banyan Membership
Interest Percentage. |
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(b) |
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If the Final Closing Date Net Working Capital is greater than the Target Net
Working Capital, (1) Parent shall pay to each EOP Former Member an amount equal to
(A) the difference between the Final Closing Date Net Working Capital and the
Target Net Working Capital (the “NWC Surplus”), multiplied by (B)
0.75, multiplied by (C) such EOP Former Member’s applicable EOP Membership
Interest Percentage, and (2) Parent shall pay to each EOC Beneficial Owner an
amount equal to (x) the NWC Surplus, multiplied by (y) 0.25,
multiplied by (z) such EOC Beneficial Owner’s applicable Banyan Membership
Interest Percentage. |
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(c) |
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Any payments pursuant to this Section 3.5.2, if applicable, shall be
deemed adjustments to the EOP Per Unit Consideration and the EOC Per Unit
Consideration. |
3.6 Cash Payments. All cash amounts payable pursuant to the terms and conditions of
this Agreement shall be paid by wire transfer of immediately available funds to an account or
accounts designated by the applicable Party to receive such cash amount, which account or accounts
shall be designated no later than three (3) days prior to the Closing Date.
ARTICLE 4
CONSENTS, REPRESENTATIONS, WARRANTIES
AND COVENANTS OF MEMBERS AND EOC BENEFICIAL OWNERS
4.1 Consents and Approvals. By execution and delivery of this Agreement, each of the
Members adopts and approves the execution and delivery of this Agreement as a member of EOP or EOC,
as applicable, and in accordance with the requirements of the articles of organization of EOP and
EOC, and each EOP Member consents to the EOP Contribution and each EOC Member and EOC Beneficial
Owner consents to the EOC Contribution in accordance with the terms of, and subject to the
conditions set forth in, this Agreement. Each EOC Beneficial Owner consents to Banyan’s execution
and delivery of this Agreement.
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4.2 Representations and Warranties. Each Member and EOC Beneficial Owner severally represents
and warrants to the Purchaser Parties as set forth in this Section 4.2, except as set forth
in the Disclosure Schedules. No Member or EOC Beneficial Owner makes any representation or
warranty in this Section 4.2 with respect to any other Member or EOC Beneficial Owner.
4.2.1 Authority and Capacity. Member or EOC Beneficial Owner has all requisite right,
legal capacity, power and authority to execute this Agreement and deliver and perform its
obligations hereunder and each Related Agreement to be executed and delivered by such Member or EOC
Beneficial Owner, and to consummate the Transactions. If Member is not a natural person, Member is
duly organized, validly existing and in good standing under the Laws of its jurisdiction of
organization, and has provided the Purchaser Parties in the Data Room correct and complete copies
of its Organizational Documents as currently in effect.
4.2.2 Ownership of EOP Units and EOC Units.
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(a) |
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Member is the sole beneficial and record owner and has good and marketable
title to all of such Member’s EOP Units or EOC Units, as applicable, as set forth
on Section 4.2.2(a) of the Disclosure Schedules. |
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(b) |
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Member will be the sole beneficial and record owner and have good and
marketable title to such Member’s EOP Units or EOC Units, as of the Closing, free
and clear of all Liens, options or similar rights of any nature, and other than
those imposed by federal and state securities Laws, and Member does not own any
other units of any class of membership interests or other ownership interests or
other Equity Interests of EOP or EOC, except as set forth on Section
4.2.2(b) of the Disclosure Schedules. Except as set forth on Section
4.2.2(b) of the Disclosure Schedules, other than pursuant to the terms and
conditions of this Agreement or the Organizational Documents of the applicable
Acquired Company, Member or EOC Beneficial Owner is not a party to any option,
warrant, purchase right or other contract that could require (x) EOP, EOC or
Banyan to issue any ownership interest or other securities of EOP or EOC, or (y)
such Member or EOC Beneficial Owner to sell, transfer or otherwise dispose of such
Member’s EOP Units, EOC Units or interests in Banyan and no Member or EOC
Beneficial Owner is not a party to any voting trust, agreement, proxy or other
contract with respect to the voting thereof. At the Closing, the Purchaser Parties
will acquire from Member full legal and beneficial ownership of and good and valid
title to such Member’s EOP Units or EOC Units (either directly or indirectly
through EOP), as applicable, free and clear of all Liens, options, voting
agreements, or similar rights of any nature, other than restrictions on transfer
under applicable federal and state securities Laws. |
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(c) |
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EOC Beneficial Owner is the sole beneficial and record owner of all of such EOC
Beneficial Owner’s membership interests in Banyan as set forth in Section
4.2.2(c) of the Disclosure Schedules and will be the sole |
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beneficial and record owner of such membership interests in Banyan as of
the Closing. The EOC Beneficial Owners collectively own all of the
outstanding equity interests of Banyan. |
4.2.3 Authorization; Execution and Delivery. This Agreement has been, and each Related
Agreement to be executed and delivered by Member or EOC Beneficial Owner will upon such delivery
be, duly executed and delivered by Member or EOC Beneficial Owner. The execution, delivery and
performance of this Agreement and each Related Agreement to be executed and delivered by Member or
EOC Beneficial Owner and the consummation of the Transactions have been duly and validly authorized
by all requisite corporate or other action on the part of Member or EOC Beneficial Owner, and no
other proceedings on its part are necessary to authorize the execution, delivery or performance of
this Agreement and each such Related Agreement by Member or EOC Beneficial Owner, as the case may
be.
4.2.4 Enforceability. This Agreement, assuming the due execution and delivery of it
by the other Parties, is the valid and binding obligation of Member or EOC Beneficial Owner, as
applicable, enforceable against such Member or EOC Beneficial Owner in accordance with its terms,
except as enforceability might be limited by bankruptcy, insolvency, reorganization, moratorium and
similar Laws affecting creditors’ rights generally or limitations on the availability of equitable
remedies. Each Related Agreement to which Member or EOC Beneficial Owner is or will be a party,
when executed and delivered by Member or EOC Beneficial Owner, and assuming the due authorization,
execution and delivery of that Related Agreement by the other parties to that agreement, will
constitute the valid and binding obligation of such Member or EOC Beneficial Owner, enforceable
against such Member or EOC Beneficial Owner in accordance with its terms, except as enforceability
might be limited by bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting
creditors’ rights generally or limitations on the availability of equitable remedies.
4.2.5 Noncontravention. None of the execution and delivery by Member or EOC Beneficial
Owner of this Agreement or any Related Agreement to which Member or EOC Beneficial Owner is or will
become a party, the performance by Member or EOC Beneficial Owner of its obligations under this
Agreement and such Related Agreements or the consummation of the Transactions, including the EOP
Contribution or EOC Contribution, will:
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(a) |
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violate any Law applicable to such Member or EOC Beneficial Owner; |
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(b) |
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in the case of any Member that is not a natural Person, violate any provision
of such Member’s Organizational Documents; |
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(c) |
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result in a breach of, constitute a default under (with or without notice or
lapse of time, or both), result in the acceleration of, create in any Party the
right to modify, accelerate, terminate or cancel, or require any consent or
approval of any Person under any lease, sublease, license, sublicense, franchise,
Permit, agreement for borrowed money, or other agreement or instrument to which
such Member or EOC Beneficial Owner is a party or by which such Member or EOC
Beneficial Owner is bound, except where such Member or EOC Beneficial Owner has
obtained (or, prior to Closing |
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will have obtained) the consent of or waiver from the other party to such
agreement or instrument; |
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(d) |
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result in the creation of any Lien on such Member’s EOP Units or EOC Units, as
applicable; or |
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(e) |
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require a Filing with or the obtainment of a Permit from any Governmental
Authority, |
except, in the case set forth in clauses (a), (c), and (e), such violation, breach, default,
acceleration, creation of a right, or requirement that (i) would not reasonably be expected to have
a Material Adverse Change, or (ii) would not prevent, impede or delay such Member or EOC Beneficial
Owner from consummating the Transactions.
4.2.6 Litigation. There are no Actions pending against nor, to the Knowledge of the
Member or EOC Beneficial Owner, any Actions threatened in writing against, such Member or EOC
Beneficial Owner (i) under any bankruptcy or insolvency Law, (ii) in which it is sought to restrain
or prohibit or to obtain damages or other relief in connection with the Transactions, or (iii) that
would reasonably be expected to prevent, impede or delay Member’s or EOC Beneficial Owner’s
performance under this Agreement or any Related Agreement or the consummation of the Transactions.
4.2.7 Brokerage. Except as set forth on Section 4.2.7 of the Disclosure
Schedules, no Person is or will become entitled, by reason of any dealings, communications or
agreements of any kind with or on behalf of Member or EOC Beneficial Owner, to receive any
commission, finder’s fee or other similar compensation in connection with this Agreement or the
Transactions.
4.2.8 Solvency. Member or EOC Beneficial Owner is solvent for all purposes under
federal bankruptcy and applicable state fraudulent transfer and fraudulent conveyance Laws. The
Transactions will not render Member or EOC Beneficial Owner insolvent and do not constitute a
fraudulent transfer or conveyance under such Laws. The distribution by Banyan of the EOC Per Unit
Consideration to the EOC Beneficial Owners will be a lawful distribution under applicable Laws.
4.2.9 Accredited Investor; Investment Decision. Member or EOC Beneficial Owner is an
“accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities
Act. Member or EOC Beneficial Owner acknowledges that it has received such information as the
Member or EOC Beneficial Owner deems necessary in order to make an investment decision with respect
to the OP Units.
4.2.10 U.S. Investor. Member or EOC Beneficial Owner is a United States person (as
defined by Section 7701(a)(30) of the Code).
4.3 Confidentiality. For a period of two (2) years following the Closing Date, each
Member and each EOC Beneficial Owner shall (and shall cause each of its Affiliates and
Representatives to) treat and hold as confidential all of the Confidential Information, refrain
from disclosing or using any of the Confidential Information (except, as applicable, in the
furtherance
19
of such Member’s or EOC Beneficial Owner’s duties on behalf of the Acquired Companies or as
directed by EOP, EOC, Partnership or Parent) and deliver promptly to Parent or destroy, at the
request and option of Parent, all tangible embodiments (and all copies) of such Confidential
Information that are in its possession; provided, however, that, subject to the confidentiality
provisions set forth in this Section 4.3, each such Member or EOC Beneficial Owner may
retain copies of the Confidential Information for the purposes set forth below, to the extent that
such retention is required to demonstrate compliance with applicable Law, rule or regulation or to
comply with any pre-existing, ordinary course document retention policy or procedure. In the event
that any Member or EOC Beneficial Owner (or any Affiliate or Representative thereof) is requested
or required (by oral question or written request for information or documents by any Governmental
Authority or in any legal proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, such Member or EOC Beneficial Owner will
notify Parent promptly of the request or requirement so that Parent, at its expense, may seek an
appropriate protective order or waive compliance with the provisions of this Section 4.3.
If, in the absence of a protective order or the receipt of a waiver hereunder, any Member or EOC
Beneficial Owner (in consultation with counsel) is required to disclose any Confidential
Information to any Governmental Authority or pursuant to any such proceeding, such Member or EOC
Beneficial Owner may disclose the Confidential Information; provided, however, that the disclosing
Member or EOC Beneficial Owner shall, upon the request of and at the expense of Parent, reasonably
cooperate with Parent to obtain an order or other assurance that confidential treatment will be
accorded to such portion of the Confidential Information required to be disclosed as Parent may
reasonably request. Notwithstanding the foregoing, the provisions of this Section 4.3 shall
not prohibit the disclosure of Confidential Information by any Member or EOC Beneficial Owner to
the extent reasonably required (i) to prepare or complete any required Tax Returns or financial
statements, (ii) in connection with audits or other proceedings by or on behalf of a Governmental
Authority, (iii) to comply with applicable Law, (iv) to provide services to any Purchaser Parties
or any of their respective Affiliates, pursuant to any employment relationship or otherwise, or (v)
in connection with asserting any rights or remedies or performing any obligations under this
Agreement or any Related Agreement. Notwithstanding the foregoing, the provisions of this
Section 4.3 shall not apply to information that is or becomes publicly available other than
as a result of a disclosure by a Member in violation of this Section 4.3.
4.4 Waiver and Release.
4.4.1 Effective as of the Closing, each Member (other than EOP in its capacity as a member of
EOC) and EOC Beneficial Owner, on behalf of itself and its officers, employees, managers,
equityholders, parents, affiliates, heirs, executors, administrators, agents, successors and
assigns (collectively, the “Releasing Parties”), irrevocably and unconditionally waives and
releases any and all rights with respect to, and releases, forever acquits and discharges each of
the Acquired Companies, and their respective present and future equityholders, directors, officers,
employees, agents and other Representatives, in their capacities as such, and their respective
heirs, executors, administrators, successors and assigns (the “Released Parties”) with
respect to, each and all claims, demands, charges, complaints, obligations, causes of action,
suits, liabilities, indebtedness, sums of money, covenants, agreements, instruments, contracts
(written or oral, express or implied), controversies, promises, fees, expenses (including
attorneys’ fees, costs and expenses), damages and judgments, at law or
20
in equity, in contract or tort, in the United States, state, foreign or other judicial,
administrative, arbitration or other proceedings, of any nature whatsoever, known or unknown,
suspected or unsuspected, previously, now or hereafter arising, in each case which arise out of,
are based upon or are connected with facts or events occurring or in existence on or prior to the
Closing Date (the “Released Claims”). Each such Member or EOC Beneficial Owner hereby
agrees that following the Closing, (x) if any payment is required to be made by such Member or EOC
Beneficial Owner or (y) Member or EOC Beneficial Owner has any liability pursuant to Article
12, or otherwise in respect of Losses suffered or incurred by any Person, to the extent such
Member or EOC Beneficial Owner has an indemnity obligation according to Article 12, whether
such obligation is related to judgments, damages, penalties, fines, costs, amounts paid in
settlement, losses, expenses or otherwise, such Member or EOC Beneficial Owner (directly or through
any Affiliate) shall have no rights against the Acquired Companies or any other Released Party,
whether by reason of subrogation, contribution, indemnification, reimbursement or otherwise, in
respect of any such payments or liabilities, and shall not take any action against the Acquired
Companies, Parent, Partnership or any of their respective Subsidiaries or any other Released Party
with respect thereto other than the rights under Article 12; provided, however, that in no
event shall the foregoing release apply with respect to any obligations of any Released Party set
forth in this Agreement (including the indemnification obligations set forth in Article 12
and the obligations with respect to any EOP Earn-Out Payment, any EOC Earn-Out Payment, any EOP
Termination Event Payment and/or any EOC Termination Event Payment, as applicable, in accordance
with Section 3.4), any of the Related Agreements or any of the Other Transaction Agreements
and the transactions contemplated thereby, subject to the limitations and conditions provided in
this Agreement; and provided further that in no event shall the foregoing release apply with
respect to any obligations, agreements or other arrangement between any Member or EOC Beneficial
Owner and any other Member or EOC Beneficial with respect to matters that do not involve Parent,
Partnership or the Acquired Companies. Each Member and EOC Beneficial Owner represents and warrants
that such Member or EOC Beneficial Owner has not assigned or otherwise transferred any right or
interest in or to any of the Released Claims. EACH MEMBER AND EOC BENEFICIAL OWNER FURTHER
ACKNOWLEDGES THAT SUCH MEMBER OR EOC BENEFICIAL OWNER IS AWARE THAT STATUTES EXIST THAT RENDER NULL
AND VOID RELEASES AND DISCHARGES OF ANY CLAIMS, RIGHTS, DEMANDS, LIABILITIES, ACTIONS OR CAUSES OF
ACTIONS THAT ARE UNKNOWN TO THE RELEASING OR DISCHARGING PARTY AT THE TIME OF EXECUTION OF THE
RELEASE AND DISCHARGE. EACH MEMBER AND EOC BENEFICIAL OWNER HEREBY EXPRESSLY AND VOLUNTARILY
WAIVES, SURRENDERS AND AGREES TO FOREGO ANY PROTECTION TO WHICH SUCH MEMBER OR EOC BENEFICIAL OWNER
WOULD OTHERWISE BE ENTITLED BY VIRTUE OF THE EXISTENCE OF ANY SUCH STATUTE IN ANY JURISDICTION.
4.5 Restricted Securities. Each Member and EOC Beneficial Owner understands that the
OP Units to be issued in connection with the Contributions have not been, and will not be,
registered under the Securities Act, by reason of a specific exemption from the registration
provisions of the Securities Act, which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of each Member’s and EOC Beneficial Owner’s representations
as expressed in this Agreement. Each Member and EOC Beneficial Owner understands that the OP Units
are “restricted securities” under applicable U.S. federal and state securities Laws and that,
pursuant to these Laws, such Member or EOC Beneficial Owner must
21
hold the OP Units, as applicable, indefinitely unless they are registered with the SEC and
qualified by state authorities, or an exemption from such registration and qualification
requirements is available. Each Member and EOC Beneficial Owner acknowledges that Parent has no
obligation to register or qualify the OP Units for resale, except as set forth in the Registration
Rights Agreement. Each Member and EOC Beneficial Owner further acknowledges that if an exemption
from registration or qualification is available, it may be conditioned on various requirements,
including, but not limited to, the time and manner of sale, the holding period for the OP Units,
and on requirements relating to Parent, which are outside of such Member’s or EOC Beneficial
Owner’s control, and which Parent is under no obligation, and may not be able, to satisfy. Each
Member and EOC Beneficial Owner acknowledges that the OP Units are subject to the terms of the
Amended and Restated Agreement of Limited Partnership of the Partnership, which is filed as an
exhibit to the SEC Documents.
4.6 No Public Market. Each Member and EOC Beneficial Owner understands that no public
market now exists for the OP Units, and that neither Parent nor Partnership has made any
representation that a public market will ever exist for the OP Units.
4.7 Legends. Each Member and EOC Beneficial Owner understands that any certificate
representing the OP Units may bear a legend substantially as follows:
4.7.1 “THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS, AND HAVE BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH TRANSFER
MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS.”
4.7.2 Any legend set forth in or expressly required by the other Related Agreement or required
by the Amended and Restated Agreement of Limited Partnership of the Partnership.
4.7.3 Any legend required by the securities Laws of any state to the extent such Laws are
applicable.
4.7.4 Each Member and EOC Beneficial Owner understands and agrees that Parent, Partnership and
any transfer agent with respect to Parent’s or Partnership’s securities will cause the transfer
records of Parent and Partnership to reflect the foregoing.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF MEMBERS
CONCERNING THE ACQUIRED COMPANIES
The Members and the EOC Beneficial Owners jointly and severally represent and warrant to the
Purchaser Parties with respect to the Acquired Companies as set forth in this Article 5, except as
set forth in the Disclosure Schedules.
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5.1 Organization; Qualification; Power; Governance.
5.1.1 Organization and Qualification. Each Acquired Company is duly organized,
validly existing and in good standing under the Laws of the jurisdiction of its organization. Each
Acquired Company is duly authorized to conduct business as a foreign entity of its type in, and is
in good standing under the Laws of, each jurisdiction where such qualification is required, except
to the extent that the failure to maintain any such authorization would not reasonably be expected
to have a Material Adverse Change. Section 5.1.1 of the Disclosure Schedules identifies the state
of each Acquired Company’s organization and each other jurisdiction in which such Acquired Company
is doing business and is qualified to do business.
5.1.2 Power and Authority. Each Acquired Company has all requisite entity power and
authority necessary to own, lease and operate its properties and assets and to conduct its business
as currently conducted.
5.1.3 Organizational Documents. Each Acquired Company has made available to the
Purchaser Parties in the Data Room true, correct and complete copies of its Organizational
Documents as currently in effect. No Acquired Company is in violation of its Organizational
Documents.
5.1.4 Management. Section 5.1.4 of the Disclosure Schedules identifies all of
the members and, if any, managers and officers of each Acquired Company.
5.2 Capitalization of the Acquired Companies.
5.2.1 Authorized and Issued Equity Interests of EOP. The authorized Equity Interests
of EOP consist of 110 EOP Units, of which 110 EOP Units are issued and outstanding, and are owned
by the Persons and in the amounts set forth on Section 5.2.1 of the Disclosure Schedules,
all of which have been duly authorized and validly issued, and are fully paid. None of the EOP
Units were issued in violation of any preemptive or similar right of any Person.
5.2.2 Authorized and Issued Equity Interests of EOC and Banyan. The authorized Equity
Interests of EOC consist of 100 EOC Units, of which 100 EOC Units are issued and outstanding, and
are owned by the Persons and in the amounts set forth on Section 5.2.2 of the Disclosure
Schedules, all of which have been duly authorized and validly issued, and are fully paid. None of
the EOC Units were issued in violation of any preemptive or similar right of any Person. All of the
authorized and outstanding Equity Interests of Banyan have been duly authorized and validly issued
and are fully paid and are owned by the Persons and in the amounts set forth on Section
5.2.2 of the Disclosure Schedules. None of the Equity Interests of Banyan were issued in
violation of any preemptive or similar right of any Person.
5.2.3 Options, etc. Except as set forth on Section 5.2.3 of the Disclosure
Schedules, there is no outstanding or authorized option, warrant, purchase right, subscription
right, conversion right, exchange right or other Contract that requires an Acquired Company (i) to
offer, issue or transfer, or to redeem or otherwise acquire, any Equity Interest of such Acquired
Company or (ii) to issue any security that is convertible into or exchangeable for any Equity
Interest of such Acquired Company. There is no voting trust, proxy or other Contract or
23
understanding with respect to the voting of the Equity Interests of an Acquired Company, or Banyan,
except as set forth on Section 5.2.3 of the Disclosure Schedules.
5.2.4 No Equity Equivalents. No Acquired Company has any existing or contingent
obligation to any Person with respect to, or any Contract relating to, any equity appreciation,
phantom equity, profit participation or similar right with respect to Equity Interests of such
Acquired Company.
5.2.5 Previous Redemptions. No securities of any Acquired Company have been acquired
by such Acquired Company, by redemption or otherwise, since December 31, 2007.
5.2.6 No Debtholder, Etc., Votes. No Acquired Company has outstanding any bond, note
or other instrument or Contract that provides to the holder thereof the right to vote on any matter
on which the holders of its Equity Interests are entitled to vote or are required to consent.
5.3 No Investment in Other Persons. No Acquired Company controls, or has any direct
or indirect Equity Interest in, or any right or obligation to acquire any equity interest in, any
Person, other than as set forth in Section 5.3 of the Disclosure Schedules. There is no
existing Contract or commitment by which any Acquired Company is required to purchase Equity
Interests in, to make any investment in (in the form of a loan, capital contribution or otherwise),
or to provide financial support to, any other Person, including investments in or support to
another Acquired Company. Each subsidiary of EOP and EOC is listed on Section 5.3 of the
Disclosure Schedules (each, a “Subsidiary” and collectively, the “Subsidiaries”).
Each of EOP and EOC is the sole beneficial and record owner and has good and marketable title to
all of Equity Interests of their respective Subsidiaries, and, except with respect to CP Aviation
Management, LLC, CP Aviation, LLC or Eola Capital Investment Fund III LLC, as contemplated in
Section 11.7 will be the sole beneficial and record owner and have good and marketable
title to such Equity Interests as of the Closing Date, free and clear of all Liens, options or
similar rights of any nature, other than restrictions on transfers under applicable federal and
state securities Laws.
5.4 Contravention; Consents; Authorizations.
5.4.1 Certain Consequences. Except as set forth on Section 5.4.1 of the
Disclosure Schedules, none of the execution and delivery by any Acquired Company of this Agreement
or any Related Agreement to which such Acquired Company is or will be a party, the performance by
such Acquired Company of its obligations under this Agreement and such Related Agreements or the
consummation of the Transactions, including the EOP Contribution and the EOC Contribution, will:
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(a) |
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violate any provision of the Organizational Documents of such Acquired Company; |
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(b) |
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violate any Law applicable to such Acquired Company; |
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(c) |
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violate or result in the termination or modification of any Company
Authorization (including, without limitation, Environmental Permits) or Order to
which an Acquired Company or any of its properties or assets is subject; |
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(d) |
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result in a breach of, constitute a default under (with or without notice or
lapse of time, or both), result in the acceleration of, create in any Person the
right to modify, accelerate, terminate or cancel any Contract or Realty Lease to
which such Acquired Company is a party or by which such Acquired Company is bound,
except where Member has obtained (or, prior to Closing will have obtained) the
consent of or waiver from the other party to such agreement or instrument; or |
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(e) |
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result in the creation of any Lien upon any of the properties or assets of such
Acquired Company; |
except, as set forth in clauses (b), (c), (d) and (e), for any such violation, default,
termination, acceleration, cancellation, modification or creation or imposition of any Lien that
would not reasonably be expected to result in a Material Adverse Change.
5.4.2 Consents. Section 5.4.2 of the Disclosure Schedules identifies each
Consent that is required, in connection with the execution of this Agreement or any other Related
Agreement or the consummation of the Transactions, under any Material Contract, in order (i) to
preserve immediately following the Closing all rights and benefits of such Material Contract as
existing under the Material Contract immediately before the execution of this Agreement other than
rights that expire or lapse in the Ordinary Course of Business in accordance with the terms of such
Material Contract between the date hereof and the Closing Date (without taking into account any
impacts attributable to Parent or any action or inaction of Parent after Closing), or (ii) to avoid
giving any Person any right of termination, cancellation, acceleration or material modification
thereunder as a result of this Agreement, any other Related Agreement or the Transactions.
5.4.3 Required Authorizations. Except with respect to the Filings described in
Section 10.3, no Acquired Company is required to make any Filing with any Governmental
Authority or obtain any Authorization in connection with the execution, delivery or performance of
this Agreement or any other Related Agreement, or the consummation of the Transactions.
5.5 Books and Records.
5.5.1 The respective minute books and other books and records of company member and manager
actions and approvals of each Acquired Company are true and correct in all material respects and
represent actual, bona fide transactions and meetings of the respective Members.
5.5.2 Adequacy; Controls. The Books and Records of the Acquired Companies have been
maintained in accordance with sound business practices, including the maintenance of a system of
internal controls adequate for the size, operations and business of the Acquired Companies to
ensure that (i) all transactions related to the Acquired Companies are
25
executed in accordance with management’s general or specific authorizations, (ii) since January 1,
2010, transactions are recorded as necessary to permit the preparation of financial statements in
conformity with GAAP applied on a consistent basis, except as described in Section 5.6.2 of
the Disclosure Schedules, for ordinary year-end adjustments, the absence of footnotes and to
maintain proper accountability for assets, (iii) the recorded accountability for assets is compared
with existing assets at reasonable intervals and appropriate action is taken with respect to any
differences, and (iv) access to the properties and assets of the Acquired Companies is permitted
only in accordance with management’s general or specific authorizations.
5.6 Financial Statements.
5.6.1 Financial Statements. Section 5.6.1 of the Disclosure Schedules
contains accurate copies of the following: (A) unaudited consolidated financial statements of EOP
(or its predecessor entity) for each of the fiscal years ended December 31, 2008, 2009 and 2010,
and the two months ended February 28, 2011, and (B) unaudited consolidated financial statements of
EOC for each of the fiscal years (or portions thereof) ended December 31, 2009 and 2010, and two
months ended February 28, 2011, in each case, consisting of consolidated balance sheets and the
related statements of income for the fiscal years or periods then ended (the “Financial
Statements”).
5.6.2 Presentation. The Financial Statements were prepared from the Books and Records
of the Acquired Companies. Transactions reflected in the Financial Statements were actual and bona
fide. The unaudited consolidated balance sheets of each of EOP and EOC for the two months ended
February 28, 2011 (each, a “Balance Sheet” and collectively, the “Balance Sheets”)
and the unaudited consolidated statements of income of each of EOP and EOC for the two months ended
February 28, 2011 were prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered by them, except as described on Section 5.6.2 of the Disclosure
Schedules and except for ordinary year-end adjustments and the absence of footnotes. The Financial
Statements fairly present, in all material respects, the financial condition and results of
operations of the Acquired Companies as of their respective dates.
5.7 No Change in Certain Financial Policies. Since February 28, 2011, and except as
set forth on Section 5.7 of the Disclosure Schedules or otherwise permitted in accordance
with Section 10.5 or 10.6, no Acquired Company has changed or revised in any
material respect any of its policies or practices with respect to: (a) cash management; (b)
invoicing and collection of Accounts Receivable; (c) establishment of reserves for uncollectible
Accounts Receivable; (d) accrual of Accounts Receivable; (e) prepayment of expenses; (f) accrual
and payment of accounts payable; (g) accrual of other expenses; (h) recognition and deferral of
revenue; and (i) acceptance of security deposits.
5.8 Undisclosed Liabilities. None of the Acquired Companies nor any of their
Subsidiaries has any Liability, except for (a) Liabilities reflected or reserved against in the
applicable Balance Sheet; (b) Current Liabilities incurred since February 28, 2011 in the Ordinary
Course of Business which are not, individually or in the aggregate, material in amount to such
Acquired Company; (c) Liabilities that were incurred in connection with the Transactions pursuant
to the terms of this Agreement, the Related Agreements or the Other Transaction
26
Agreements or the other agreements contemplated hereby or thereby; (d) other Liabilities which
would not be required by GAAP to be included in a consolidated balance sheet (or the notes thereto)
prepared in accordance with GAAP which are not, individually or in the aggregate, material in
amount to such Acquired Company; and (e) Liabilities described in Section 5.8 of the Disclosure
Schedules.
5.9 Absence of Certain Changes or Events. No Material Adverse Change has occurred at
any time since February 28, 2011. To the Knowledge of the Members, no event has occurred or
circumstance has arisen at any time since February 28, 2011 that, alone or in combination with
other events or circumstances, would reasonably be expected to result in a Material Adverse Change.
Without limiting the generality of the preceding sentence, except as set forth in Section
5.9 of the Disclosure Schedules, between February 28, 2011 and the date of this Agreement, each
Acquired Company has conducted its business only in the Ordinary Course of Business and as a going
concern and none of the events or actions identified in Sections 5.9.1 through
5.9.21 of this Section 5.9 has occurred.
5.9.1 (Organizational Documents) — No Acquired Company has amended its Organizational
Documents.
5.9.2 (Dividends and Distributions; Redemption) — (i) Except in connection with
quarterly tax distributions, no Acquired Company has declared, set aside or paid any dividend or
made any distribution with respect to its Equity Interests (whether in cash or in property); and
(ii) No Acquired Company has redeemed, purchased, or otherwise acquired any of its Equity
Interests.
5.9.3 (Equity) — No Acquired Company has issued or authorized for issuance any Equity
Interest or other security, issued any option, warrant or other right to acquire any Equity
Interest, made any change in any issued and outstanding Equity Interest or other security, or
redeemed, purchased or otherwise acquired any Equity Interest or other security or permitted any
transfer of any Equity Interest of any Acquired Company.
5.9.4 (Liens) — No Acquired Company has created or allowed to be imposed any Lien on
any of its properties or assets, tangible or intangible, other than Permitted Liens or Liens that
have been removed or are removed prior to Closing.
5.9.5 (Asset Dispositions) — No Acquired Company has disposed of, leased or licensed
any of its material properties or assets, tangible or intangible, other than in the Ordinary Course
of Business.
5.9.6 (Settlements) — No Acquired Company has entered into any settlement, consent
decree or Order, or other arrangement with any Governmental Authority or other Person that would
materially adversely affect the operation of the Business after the Closing or would require the
payment of money after the Closing.
5.9.7 (Debt) — No Acquired Company has incurred any Indebtedness that will remain an
obligation of any Acquired Company after the Closing Date, other than Current Liabilities in the
Ordinary Course of Business or Liabilities that are reflected in the Final Closing Date Net Working
Capital or Permitted Liens, if applicable.
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5.9.8 (Guarantees) — No Acquired Company has guaranteed, assumed or provided
collateral to secure any indebtedness of another Person or act as surety for another Person if such
guarantee or surety would remain an obligation of any Acquired Company after the Closing Date.
5.9.9 (Capex) — No Acquired Company has made any capital expenditure (or series of
related capital expenditures) (i) totaling more than $30,000, (ii) involving insurance proceeds
from a casualty loss, or (iii) outside the Ordinary Course of Business.
5.9.10 (Investments in Others) — No Acquired Company has made any capital investment
in or any loan to any Person, or acquired any Equity Interest or other security of any other Person
or formed a new Subsidiary.
5.9.11 (Payment of Liabilities) — No Acquired Company has delayed or postponed the
payment of its accounts payable or other Liabilities in a manner outside the Ordinary Course of
Business.
5.9.12 (Waivers) — No Acquired Company has canceled, compromised, waived or released
any Indebtedness or other right or Claim (or series or related rights or Claims) either (i) outside
the Ordinary Course of Business, or (ii) that involved (or, if a contingent Claim, that would
reasonably be expected to have involved) in the aggregate more than $25,000.
5.9.13 (Material Contracts) — No Acquired Company has entered into any Contract
involving receipts or expenditures in excess of $100,000, or amended or modified any existing
Contract involving receipts or expenditures in excess of $100,000 in a manner that would materially
effect the economic terms of such Contract, or voluntarily terminated (or failed to renew) any such
Contract.
5.9.14 (Benefit Plans; Compensation Changes) — No Acquired Company has (i) entered
into or adopted any Employee Benefit Plan, amended (except as required by Law) or terminated any
Company Benefit Plan (except as permitted in clause (ii) below), or entered into, adopted, amended
or terminated any other agreement, arrangement, plan or policy between any Acquired Company and one
or more of its managers, officers, employees or independent contractors; (ii) increased the
compensation or fringe benefits (including severance or change in control benefits) payable or to
become payable to any director, officer, employee or independent contractor (except for increases
in salary or wages payable or to become payable in the Ordinary Course of Business; or (iii) paid
any benefit not required by any Company Benefit Plan or other arrangement in effect as of February
28, 2011.
5.9.15 (Directors and Employees) — No Acquired Company has made any loan to or entered
into any other transaction outside the Ordinary Course of Business with any of its directors,
officers or employees or their respective Affiliates that will not be repaid at or prior to
Closing, including any adoption or amendment to any resolution or agreement concerning
indemnification of directors, officers or employees.
5.9.16 (Fundamental Transactions) — No Acquired Company has adopted or commenced any
plan of liquidation, dissolution, conversion or merger.
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5.9.17 (Discharges) — No Acquired Company has discharged a material Liability outside
the Ordinary Course of Business.
5.9.18 (Security Deposits) — No Acquired Company has released any funds constituting
some or all of the security deposits related to the Managed Properties, except to the extent
released to a tenant or former tenant at the Managed Properties and only to the extent required
under the terms of the applicable lease.
5.9.19 (Restrictive Agreements) — No Acquired Company has renewed or entered into any
non-compete, exclusivity, non-solicitation or similar agreement that would restrict or limit, in
any respect, the operations of any Acquired Company (or the EOP Surviving Company or EOC Surviving
Company) after the Closing (other than provisions in any existing Material Contracts listed on
Section 5.24.1 of the Disclosure Schedules that are renewed in accordance with their
terms).
5.9.20 (Change in Accounting) — No Acquired Company has changed in any material
respect any of the accounting, reserving, underwriting, claims or actuarial methods, principles or
practices, or working capital policies applicable to any Acquired Company.
5.9.21 No Commitments. No Acquired Company has authorized, committed or otherwise
become obligated to take any of the actions described in subsections 5.9.1 through
5.9.20 of this Section 5.9.
5.10 Accounts Receivable. All Accounts Receivable of the Acquired Companies reflected
in the Balance Sheet or arising subsequent to the date thereof arose from bona fide transactions
occurring in the Ordinary Course of Business. To the extent still outstanding, the Accounts
Receivable are not subject to valid defenses, set-offs or counterclaims, other than Accounts
Receivable in an amount equal to the reserve for collection losses shown in the Financial
Statements and as adjusted for the passage of time from February 28, 2011 through the Closing Date
in accordance with the Ordinary Course of Business.
5.11 Taxes. Except as described in Section 5.11 of the Disclosure
Schedules:
5.11.1 Each Acquired Company and its predecessors have filed, or have had filed on their
respective behalf, all Tax Returns required to have been filed by or for it, and all information
set forth in such Tax Returns is correct and complete in all material respects. No Acquired Company
has since, March 31, 2011, either filed any amended Tax Return or settled or compromised any Tax
Dispute.
5.11.2 Each Acquired Company is in compliance in all material respects with the requirements
of FIN 48 (to the extent that any such Acquired Company is subject to such requirements). Each
Acquired Company and its predecessors has paid all Taxes due and payable by it.
5.11.3 Since December 31, 2006, neither any Acquired Company nor any predecessor has succeeded
distributed to its Members or security holders stock or securities of a controlled corporation in a
transaction to which Section 355(a) or Section 361 of the Code
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applies, nor has any stock or securities of any Acquired Company or any such Person been
distributed in such a transaction.
5.11.4 Except for Liens that are Permitted Liens, no Lien has arisen or has been imposed or
could be imposed on any of the assets of, or any interest in, an Acquired Company arising out of
the non-payment of Taxes.
5.11.5 Each Acquired Company (and its respective predecessors) have timely withheld and/or
paid over all Taxes required to have been withheld and/or paid over, as the case may be, in
connection with any amount accrued, paid, or otherwise required to be withheld with respect to any
employee, independent contractor, creditor, or other Person.
5.11.6 Each Acquired Company is, in all material respects, in compliance with requirements of
applicable Law related to the preservation and/or maintenance of Tax Returns and Tax-related
records or documents.
5.11.7 There are no ongoing, pending, or, to the Knowledge of the Members, threatened, Tax
Disputes, either of an Acquired Company or its respective predecessors.
5.11.8 No Acquired Company is a party to, or has any obligation under, any Tax sharing, Tax
allocation, or Tax indemnity agreement, other than an arrangement under or resulting from customary
provisions in lending, credit, leasing, or service or vendor contracts or agreements entered into
in the Ordinary Course of Business (each a “Tax Sharing Agreement”).
5.11.9 No Acquired Company has been a member of a Consolidated Tax Group.
5.11.10 Since the date of its formation, EOP has been a “Subchapter S Corporation” within the
meaning of Section 1361(a) of the Code.
5.11.11 Since the date of its formation, EOC has been only (a) a “Subchapter S Corporation”
within the meaning of Section 1361(a) of the Code; (b) a “Qualified Subchapter S Subsidiary” within
the meaning of Section 1361(b)(3) of the Code; or (c) a “partnership” or “disregarded entity” for
federal income tax purposes.
5.11.12 No Acquired Company has ever been taxable as a “C Corporation” for federal income tax
purposes.
5.11.13 No Acquired Company (or any of their respective predecessors) has engaged in any
“listed transaction” within the meaning of Treasury Regulations Section 1.6011-4(b)(2) or any
predecessor regulation, and each Acquired Company has properly disclosed in its federal income Tax
Returns all “reportable transactions” within the meaning of Treasury Regulations Sections
1.6011-4(b)(1), any predecessor regulation, or any similar provision of state or foreign Law.
5.11.14 No Acquired Company is required to include any item of income in, or exclude any item
of deduction from, taxable income, for any taxable period (or portion thereof) ending after the
Closing as a result of any:
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(a) |
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change in method of accounting for a taxable period ending on or prior to the
date of this Agreement; |
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(b) |
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“closing agreement” under Federal Law (or any corresponding or similar
provision of state, local or foreign Law) executed prior to the date of this
Agreement; |
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(c) |
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installment sale or open transaction made on or prior to the date of this
Agreement; |
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(d) |
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prepaid amount received prior to the date of this Agreement; or |
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(e) |
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election under Section 108(i) of the Code. |
5.11.15 No Acquired Company currently is the beneficiary of any extension of time within which
to file any Tax Return.
5.11.16 No Acquired Company has granted (nor is it subject to) any waiver that is currently in
effect of the period of limitations for the assessment or collection of Tax (except to the extent
resulting from an extension of time to file a Tax Return).
5.11.17 Neither the Acquired Companies nor the Members have relied upon any statements,
representations or advice from the Purchaser Parties or their advisors regarding the federal, state
or local Tax consequences of the Contributions, and each Member and each EOC Beneficial Owner has
consulted with, and relied upon, the advice from, its own advisors regarding such consequences.
This Section 5.11 and Section 5.23 (Employee Benefit Plans) set forth the sole and
exclusive representations and warranties of the Members with respect to Taxes and Tax matters. For
purposes of this Section 5.11, a reference to a “predecessor” of an Acquired Company shall
refer only to any Person whose liabilities an Acquired Company has succeeded.
5.12 Authorizations.
5.12.1 Set forth on Section 5.12 of the Disclosure Schedules is a list of each
Authorization (including, without limitation, Environmental Permits) held by or issued to the
applicable Acquired Company that is necessary to permit such Acquired Company to conduct the
Business in substantially the manner as historically conducted and that is material to the conduct
of the Business (each, a “Company Authorization” and collectively, the “Company
Authorizations”).
5.12.2 Each Company Authorization (including, to the Knowledge of the Members, Environmental
Permits) is valid and in full force and effect.
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5.12.3 Compliance With Authorizations; Maintenance. With respect to each Company
Authorization:
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(a) |
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each Acquired Company has complied in all material respects with the terms and
requirements of the Company Authorization (including, without limitation,
Environmental Permits); |
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(b) |
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Since December 31, 2007, no Acquired Company has received any written notice or
other written communication from any Governmental Authority regarding (A) any
actual or alleged violation of or failure to comply with the Company Authorization
(including, without limitation, Environmental Permits), or (B) any actual or
alleged revocation, withdrawal, suspension or termination of, or modification to,
the Company Authorization; and |
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(c) |
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all applications required to have been filed with a Governmental Authority for
the renewal of the Company Authorization have been duly filed. |
5.13 Compliance with Law and Orders.
5.13.1 General Compliance. Except as set forth on Section 5.13.1 of the
Disclosure Schedules, each Acquired Company is and has been at all times during the past five (5)
years, in compliance in all material respects with all Laws and Orders applicable to it or to its
properties, assets or business or the use of its Assets.
5.13.2 Notices of Violation. No Acquired Company has received, at any time since
January 1, 2006, any written notice or other written communication from any Governmental Authority
or any other Person regarding any actual or alleged violation of or failure to comply with any Law
or Order material to the Acquired Company or its Business.
5.13.3 Improper Payments and Actions. No Member has, and, to the actual knowledge of
any Member, no current or former managing member, officer, manager, agent or employee of any
Acquired Company, or any other Person acting on its behalf, has: (i) used company funds for
unlawful contributions, gifts or entertainment or other unlawful payments relating to political
activity; (ii) made a payment to a foreign or domestic government official or employee, or to a
foreign or domestic political party or campaign in violation of any Law; (iii) violated the Foreign
Corrupt Practices Act; (iv) made to or received from any Person, private or public, regardless of
form, whether in money, property or services, a contribution, gift, bribe, rebate, payoff,
influence payment, kickback or other payment (A) to unlawfully obtain favorable treatment in
securing business, (B) to unlawfully pay for favorable treatment for business secured, (C) to
unlawfully obtain or provide special concessions or for special concessions already obtained or
provided, for or concerning any Acquired Company or any Affiliate of the Acquired Companies, or (D)
that otherwise was in violation of any Law; or (v) established or maintained a fund or asset that
has not been recorded in the books and records of the Acquired Companies. To the actual knowledge
of any Member, none of the predecessors of the Acquired Companies made any of the payments or took
any of the actions specified in this Section 5.13.3. For purposes of this Section
5.13, “predecessors” means any Person to whose liabilities any of the Acquired Companies has
succeeded.
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5.14 Sufficiency of Assets; Title to Personal Property.
5.14.1 Sufficiency. The properties and assets owned, licensed or leased by each
Acquired Company (i) are sufficient in all material respects for the conduct of the business of
such Acquired Company in substantially the same manner as it was conducted during the periods
covered by the Financial Statements and as currently conducted, and (ii) include all assets
reflected in the Balance Sheet and all properties and assets acquired by an Acquired Company since
February 28, 2011, other than properties or assets sold in the Ordinary Course of Business since
that date.
5.14.2 Title. Each Acquired Company has good and valid title to all personal property
that it purports to own, free of Liens other than Permitted Liens.
5.14.3 Leased Personal Property. With respect to personal property that is leased by
an Acquired Company, that has a payment obligation exceeding $5,000 annually or $15,000 over the
term of the lease and that is not terminable on 30 day’s notice without penalty (“Leased
Personal Property”), the Acquired Company has a valid leasehold interest in the Leased Personal
Property, free of Liens, other than Permitted Liens, the ownership interest of the lessor and the
lessor’s rights under the lease. All such leases are in full force and effect and constitute valid
and binding obligations of each party to such lease. Neither the Acquired Company nor, to the
Knowledge of the Members, any other party to such a lease is in breach of any such lease.
5.15 Condition of Certain Tangible Assets. All tangible personal property owned or
leased by each Acquired Company and material to the operation of the Business as currently
conducted, including Equipment, is in good operating condition and repair (subject to normal wear
and tear) and is suitable in all material respects for the purposes for which it currently is used.
5.16 Real Property.
5.16.1 Identification. No Acquired Company owns any interest in real property or any
option to acquire any interest in real property. Section 5.16.1 of the Disclosure Schedules
contains a list as of the date of this Agreement of all real property and interests in real
property leased by any Acquired Company, listed by lessee (the “Leased Real Property”).
5.16.2 Other Interests. No Person other than an Acquired Company is in possession of
any of the Leased Real Property and, to the Knowledge of the Members, there is no lease, sublease,
license, concession or other Contract or permission, written or oral, granting to any Person, other
than the Acquired Company or its Affiliates, the right of use or occupancy of any of the Leased
Real Property, other than rights under Permitted Liens. No Acquired Company is a party to any
agreement or option to purchase any interest in any real property.
5.16.3 Leases. With respect to Leased Real Property, each Acquired Company has
delivered to the Purchaser Parties in the Data Room a true, correct and complete copy of every
lease and sublease (including all amendments, extensions, renewals, guaranties and other agreements
with respect to them) pursuant to which any Acquired Company is a party (each, a “Realty
Lease”). As to each Realty Lease:
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(a) |
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the Acquired Company designated as lessee has peaceful and undisturbed
possession of the related Leased Real Property; |
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(b) |
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the Realty Lease is legal, valid, binding, enforceable and in full force and
effect as to the applicable Acquired Company and, to the Knowledge of Members, the
other parties thereto, and contains the entire agreement of the parties with
respect to its subject matter; |
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(c) |
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no Acquired Company is in material breach of the Realty Lease, and to the
Knowledge of the Members, no other party is in breach of the Realty Lease; and |
|
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(d) |
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there are no Liens on the estate or interest of the Acquired Company created by
such Realty Lease, other than the ownership interest of the lessor in the Leased
Real Property and any other rights granted by the lessor or to which the underlying
fee estate is subject, the lessor’s rights under the lease, and Permitted Liens. |
5.16.4 Condition. The Leased Real Property is in suitable condition in all material
respects for the conduct of the Business in substantially the same manner as it was conducted
during the periods covered by the Financial Statements and as currently conducted.
5.16.5 Nonconforming Use. To the Knowledge of the Members, the use or occupancy of
the Leased Real Property in the conduct of the Business by the Acquired Companies as currently
conducted complies in all material respects with all zoning Laws and is not dependent on a
permitted nonconforming use or permitted nonconforming structure or similar variance, exemption or
Authorization.
5.16.6 Security Deposits for Managed Properties. The security deposit accounts
pertaining to the Managed Properties have been at all times and currently are maintained in
accordance with all applicable Laws, the terms of the Management Agreements and other
authorizations of the applicable property owners. At no time have the security deposit accounts
pertaining to the Managed Properties or any other cash of the Managed Properties been commingled
with any assets or accounts of the Acquired Companies.
5.17 Legal Proceedings; Claims; Orders.
5.17.1 Affecting the Transactions. As of the date of this Agreement, (i) no
Proceeding is pending and, to the Knowledge of the Members, (ii) none has been threatened, (iii)
nor has any Claim been made in writing against any Acquired Company or any Member, that seeks to
restrain, prohibit or otherwise challenge legality or validity of this Agreement or any of the
Transactions.
5.17.2 Managers, etc. As of the date of this Agreement, (i) no Proceeding is pending
to which any Acquired Company is a party, and (ii) no Claim has been made in writing, against any
Acquired Company or any current managing member, or, to the Knowledge of the Members, any employee
or agent of any Acquired Company or, to the Knowledge of the Members, against any former managing
member, employee or agent of any Acquired Company,
34
with respect to which any Acquired Company has or would reasonably be expected to have Liability
therefor or an indemnification or expense advancement obligation.
5.17.3 Other Proceedings. Except as set forth on Section 5.17.3 of the
Disclosure Schedules, as of the date of this Agreement, no Proceeding is pending against any
Acquired Company and, as of the date of this Agreement, to the Knowledge of the Members, no
Proceeding has been threatened against any Acquired Company or any of its properties or assets.
5.17.4 Orders. No Order exists to which any Acquired Company or any of its properties
or assets is subject, other than Orders included in the Company Authorizations.
5.18 Environmental Matters.
5.18.1 Each Acquired Company is, and, for the past five (5) years, has been, in material
compliance with all applicable Environmental Laws.
5.18.2 No Acquired Company has received written notice of any alleged, actual or potential
responsibility for, or any inquiry or investigation regarding and there has not been (i) any
Release or threatened Release of any Hazardous Substance at, from or to any real property leased,
operated, occupied or managed by any Acquired Company, including the Managed Properties, during the
time that such properties were leased, operated, occupied or managed by any Acquiring Company, or
to the Knowledge of the Members, at any other time, or (ii) any alleged violation of or
non-compliance with any Environmental Law or Environmental Permit by any Acquired Company with
respect to any property occupied or managed by any Acquired Company, including the Managed
Properties, in each case, that has resulted in or would reasonably be expected to result in any
material liability to the Acquired Company or Parent. No Acquired Company is subject to any order
of a Governmental Authority related to any real property leased, operated, occupied or managed by
any Acquired Company nor has any Acquired Company received written notice of any Proceeding by any
Person against an Acquired Company alleging (i) a violation of any Environmental Laws or (ii)
injury or damage to any Person, property, natural resource or the environment arising from or
relating to any Release or threatened Release of any Hazardous Substances in the case of (i) and
(ii) with respect to any real property leased, operated, occupied or managed by any Acquired
Company, including, without limitation, the Managed Properties.
5.18.3 Except as set forth on Section 5.18.3 of the Disclosure Schedules or have been
made available by Members to Parent, there are no (i) reports submitted by any Acquired Company or,
to the Knowledge of the Members, any of their respective Affiliates, to any Governmental Authority
with respect to any Hazardous Substance contamination (or clean-up thereof) at any real property
leased, operated, occupied or managed by any Acquired Company, or (ii) reports resulting from any
environmental or safety inspection or assessment at any real property occupied or managed by any
Acquired Company, that have been performed by (A) any Acquired Company or, to the Knowledge of the
Members, any of its Affiliates or (B) any other Person and provided to any Acquired Company or, to
the Knowledge of the Members, any of its Affiliates.
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5.18.4 Notwithstanding any other provision of this Agreement, other than Section
5.4.1, Section 5.12 and Section 5.17.3, this Section 5.18 sets forth
Members’ sole and exclusive environmental representations and warranties.
5.19 Intellectual Property. Section 5.19(a) of the Disclosure Schedules sets
forth a complete and correct list of all Acquired Company-owned patented or other registered
Company Intellectual Property and all Acquired Company-owned pending patent applications and
applications for registration of other Company Intellectual Property. Section 5.19(b) of
the Disclosure Schedules sets forth all written material licenses for which any Acquired Company is
a party either as a licensee or licensor of Company Intellectual Property (“IP Licenses”).
With respect to Intellectual Property matters:
5.19.1 to the Knowledge of the Members, each Acquired Company owns and possesses all, right,
title and interest in and to, or has a valid and enforceable right or license to use the Company
Intellectual Property as currently being used;
5.19.2 except as set forth on Section 5.19.2 of the Disclosure Schedules, to the
Knowledge of the Members, the Company Intellectual Property owned by an Acquired Company is not (i)
subject to any Liens (other than Permitted Liens); (ii) the subject of any claim of ownership or
other right thereto brought or threatened by any Person; (iii) subject to any requirement of any
past, present or future royalty payments, license fees, charges or other payments other than
pursuant to written license agreements applicable thereto; or (iv) subject to any restrictions or
limitations regarding use, disposition or disclosure other than pursuant to written license
agreements applicable thereto;
5.19.3 to the Knowledge of the Members, the registered Company Intellectual Property owned by
an Acquired Company is valid, subsisting, in full force and effect and has not been cancelled,
expired or abandoned;
5.19.4 except as set forth on Section 5.19.4 of the Disclosure Schedules, to the
Knowledge of the Members, no Acquired Company has infringed, misappropriated or otherwise
conflicted with, any Intellectual Property of any Person;
5.19.5 except as set forth on Section 5.19.5 of the Disclosure Schedules, within the
past six (6) years, no Acquired Company has received any written notice that it has infringed,
misappropriated or otherwise conflicted with any Intellectual Property of any Person;
5.19.6 to the Knowledge of the Members, no Person has infringed, misappropriated or otherwise
conflicted with any of the Company Intellectual Property owned by an Acquired Company;
5.19.7 within the past six (6) years, no Acquired Company has issued any written notice to any
Person that such Person has infringed, misappropriated or otherwise conflicted with any Company
Intellectual Property owned by any Acquired Company;
5.19.8 except for the Company Intellectual Property subject to the IP Licenses or that an
Acquired Company has authorized third Persons to use in the normal course of providing business
services of the Acquired Company, no Acquired Company has licensed,
36
granted or otherwise conveyed, whether express or implied, any rights in material Company
Intellectual Property to any third Person;
5.19.9 to the Knowledge of the Members, there is no existing or threatened default under or
violation of any of the IP Licenses by any party thereto that would give rise to a right to
terminate such IP License;
5.19.10 except as set forth on Section 5.19.10 of the Disclosure Schedules, each
Acquired Company uses commercially reasonable measures to maintain the secrecy of all trade secrets
in the Company Intellectual Property that are material to the operations of an Acquired Company
and, to the Knowledge of the Members, no Person has breached any agreement protecting the trade
secrets of an Acquired Company in a manner that would result in the loss of such trade secret
status under applicable Law;
5.19.11 during the prior five (5)-year period, (i) each Acquired Company has complied in all
material respects with all relevant requirements of any applicable data protection Laws, Orders or
industry standard setting organizations, including requests from data subjects for access to data
held by any Acquired Company and any Law, Order or industry standard requirements relating to the
registration of data users insofar as the same pertain to any aspect of the business of any
Acquired Company; (ii) no Acquired Company has received any Order or other notification from a
Governmental Authority regarding non-compliance or violation of any data protection principles or
Law; and (iii) no Acquired Company has received from any Person a claim for any compensation from
any Acquired Company for the loss of or unauthorized disclosure or transfer of personal data, and
no facts or circumstances exist that might give rise to such a claim insofar as the same relate to
any Acquired Company;
5.19.12 to the Knowledge of the Members, there are no material problems or defects in any
software within the Company Intellectual Property or in any Systems that has caused any substantial
disruption to the Business in the prior twelve (12) months; and
5.19.13 no funding from any Governmental Authority or facilities of a university, college,
other educational institution or non-profit organization was used in the development of the Company
Intellectual Property owned by an Acquired Company, and no Governmental Authority, university,
college, other educational institution or non-profit organization has a claim or right to claim any
right in the Company Intellectual Property owned by an Acquired Company. No employee or contractor
of an Acquired Company who was involved and contributed to the creation or development of the
Company Intellectual Property owned by an Acquired Company has performed services for a
Governmental Authority, university, college, other educational institution or non-profit
organization during a time period when such employee or contractor also was involved in or
contributed to the creation or development of the Company Intellectual Property owned by an
Acquired Company.
5.20 Employees.
5.20.1 Employee List. Section 5.20.1 of the Disclosure Schedules contains a
correct and complete list as of the date of this Agreement containing the following information for
each employee of each Acquired Company (the “Employees”), including each employee on
37
leave of absence or layoff status (with benefit accruals or credits, as of the most recent
month-end): (i) employer; (ii) name; (iii) job title; (iv) vacation accrued; (v) service credited
for purposes of vesting and eligibility to participate under any Company Pension Benefit Plan or
under any other Company Benefit Plan; (vi) the base compensation of each employee; and (vii) for
each employee who has a target or other bonus for the current fiscal year in excess of $1,000,
the target or other bonus amount and a description of the criteria on which a bonus is determined.
No Acquired Company is delinquent in any material respects in any payment of wages, salaries,
commissions, bonuses, or other compensation to the Employees, and all applicable withholdings have
been timely made. All employment agreements, including commission payment agreements, if any,
between any Acquired Company and an employee of an Acquired Company will be terminated or cancelled
at or prior to Closing (the “Employment Agreements”) without cost or liability to the
Acquired Company. Except for the obligations under the Global Agreement, there are no Employment
Agreements that will survive the Closing or result in any liability to the Purchaser Parties or any
Acquired Company after Closing.
5.20.2 Contracts. Section 5.20.2 of the Disclosure Schedules identifies as of
the date of this Agreement any employment Contract, severance Contract, Contract providing for
payment of brokerage commissions or other real estate commissions with an Employee or change in
control Contract (including, in any case, any related incentive contract) to which any Acquired
Company is a party or is bound. The Acquired Companies have provided to the Purchaser Parties
true, correct and complete copies of each such Contract.
5.20.3 Contractors. Section 5.20.3 of the Disclosure Schedules (i) sets forth
as of the date of this Agreement a list of Persons who are (A) “leased employees” within the
meaning of Section 414(n) of the Code, or (B) “independent contractors” within the meaning of the
Code and the rules and regulations promulgated thereunder, and (ii) provides for each Person listed
(A) the hourly pay rate or other compensatory arrangements with such Person, and (B) the amount
paid by any Acquired Company to such Person in 2010 and through February 28, 2011 in the current
fiscal year. Except for agreements or arrangements that will not survive Closing, all “independent
contractors” of the Acquired Companies within the meaning of the Code may be terminated by the
Acquired Companies with no more than thirty (30) days prior notice, for any reason or for no reason
at all, at no cost or liability to the Acquired Companies.
5.20.4 Employee, Director or Manager Restrictions. To the Knowledge of the Members, no
employee listed on Section 5.20.1 of the Disclosure Schedules, is a party to, or is
otherwise bound by, any Contract or arrangement, including any confidentiality, noncompetition, or
proprietary rights agreement with any Person, or is subject to any Order, that in any way
materially adversely affects or would reasonably be expected to materially adversely affect (i) the
performance of such Person’s duties for the Acquired Companies, or (ii) the ability of any Acquired
Company to conduct its business in substantially the same manner as it was conducted during the
periods covered by the Financial Statements and as currently conducted.
5.20.5 Continuation. To the Knowledge of the Members, no officer or other employee of
any Acquired Company listed on Section 5.20.1 of the Disclosure Schedules has notified any
Acquired Company in writing of his or her intent to terminate employment with any Acquired Company.
38
5.20.6 Workers’ Compensation. Section 5.20.6 of the Disclosure Schedules
contains a description of the workers’ compensation claims with respect to each Acquired Company
since December 31, 2007.
5.20.7 Immigration Matters. The Acquired Companies have complied in all material
respects with the requirements of the Immigration Reform and Control Act of 1986, as amended, and
all related regulations and executive orders in effect regarding the employment in the United
States of persons who are not citizens of the United States.
5.21 Labor Relations; Compliance.
5.21.1 Compliance. Each Acquired Company has complied with applicable Laws relating
to the employment of personnel or the provision of labor, including those pertaining to equal
employment opportunity, federal and state prohibitions of discrimination, harassment, privacy and
retaliation, termination of employment, the Americans With Disabilities Act of 1990, as amended,
the Family Medical Leave Act of 1993, as amended, the Fair Labor Standards Act of 1938, as amended,
state wage and hour and payment Laws, withholding and reporting requirements with respect to wages,
salaries and other payments to any Person, occupational safety and health, promotion, and the
termination of benefits of any employee or other Person. Each Acquired Company has paid or
properly accrued all wages and compensation due to employees, including all vacations or vacation
pay, holidays or holiday pay, sick days or sick pay, and bonuses.
5.21.2 Notices and Records. Each Acquired Company has filed, posted or provided all
reports, information and notices, and has maintained all records, as required under applicable Laws
with regard to the hiring, hours, wages, occupational safety and health, employment, equal
employment opportunity and anti-discrimination policies, employment conditions, harassment,
promotion, termination of benefits and other terms or conditions of employment.
5.21.3 Unions. No Acquired Company has been a party to a collective bargaining
agreement or a relationship with a labor union, or agreed to recognize any labor union. To the
Knowledge of the Members, no labor union or group of employees (current or former) has filed any
representation petition with, or made any written or oral demand for recognition upon, any Acquired
Company. To the Knowledge of the Members, (i) no union organizing or decertification effort has
occurred or has been threatened and (ii) no question concerning representation exists.
5.21.4 Strikes; Lockouts. No labor strike, work stoppage, slowdown or other labor
dispute affecting the employees of any Acquired Company has occurred, and to the Knowledge of the
Members, none has been threatened. There is no lockout of employees by any Acquired Company in
effect and no lockout is contemplated.
5.21.5 Claims. Except as set forth on Section 5.21.5 of the Disclosure
Schedules, there is no Order, or any pending employment-related charge, complaint, grievance, Claim
or Proceeding of any kind, relating to hiring, wages, discrimination, family medical leave,
retaliation, harassment, working conditions or labor policies, or relating to an alleged violation
of
39
Law or breach of Contract pertaining to employees of or employment by any Acquired Company. Except
as set forth on Section 5.21.5 of the Disclosure Schedules, to the Knowledge of the Members, none
has been threatened. No employee or agent of any Acquired Company has committed any act or omission
giving rise to a Liability for any violation of such Law or breach of such Contract.
5.22 Employee Notification; WARN Act, etc.
5.22.1 WARN Act, etc. Since December 31, 2007, no Acquired Company has implemented any
plant closing or mass layoff of employees that could implicate (i) the Worker Adjustment and
Retraining Notification Act of 1988, as amended (the “WARN Act”), or (ii) any labor notice,
bargaining obligation or consultation requirement of any Law or labor agreement (collectively with
the WARN Act, the “Labor Rights Requirements”).
5.22.2 Plant Closure; Relocation. No Acquired Company is a party to any Contract or
subject to any Labor Rights Requirement (other than the WARN Act) that restricts any Acquired
Company from relocating or closing any of its facilities or operations or any portion thereof, that
requires advance notice of that event, or that could impose any Liability on any Acquired Company
as a consequence of (i) the relocation or closure, (ii) the failure to give required notice or
(iii) the failure to consult with employees or their representative in connection with a relocation
or closure.
5.22.3 Effect of Transactions. The execution and delivery of this Agreement and the
Related Agreements and the consummation of the Transactions will not create Liability for any act
by any Acquired Company on or prior to the Closing under the (i) WARN Act, or (ii) any other Law or
Labor Rights Requirement regarding reductions in force, changes affecting workers or plant
closings, in connection with sales of businesses or changes in control.
5.23 Employee Benefit Plans.
5.23.1 Definitions. For the purposes of this Agreement, the following definitions
apply:
|
(a) |
|
“Company Benefit Plan” means any currently existing or previously
terminated Employee Benefit Plan (A) which any Acquired Company sponsors, maintains
or contributes to, and (B) with respect to which any Acquired Company has any
obligation to make payments or contributions or might otherwise have a Liability. |
|
|
(b) |
|
“Company Pension Benefit Plan” means a Company Benefit Plan that is a
Pension Benefit Plan. |
|
|
(c) |
|
“Employee Benefit Plan” means each pension, retirement, savings,
disability, medical, dental, health, life (including any life insurance policy as
to which an Acquired Company is the owner or a beneficiary), death benefit, group
insurance, profit sharing, deferred compensation, executive compensation, fringe
benefit, perquisite, stock option, stock purchase, performance share, stock
appreciation or other equity-based |
40
|
|
|
compensation, bonus, incentive, performance pay, loan or loan guarantee,
plant closing, change in control, vacation pay, paid time off, leave of
absence, severance pay, Code Section 125 “cafeteria” or “flexible benefit”
plan, workers’ compensation or other employee benefit plan or program,
trust, arrangement, contract, agreement, policy or commitment, and each
Pension Benefit Plan or Welfare Plan. |
|
|
(d) |
|
“Pension Benefit Plan” means an employee pension benefit plan as
defined in Section 3(2) of ERISA. |
|
|
(e) |
|
“Welfare Plan” means an employee welfare benefit plan as defined in
Section 3(1) of ERISA. |
5.23.2 Disclosure. Section 5.23.2 of the Disclosure Schedules identifies each
material Company Benefit Plan, regardless of whether the Company Benefit Plan is funded, insured or
self-funded, and whether written or oral. As to each Company Benefit Plan that is not written,
Section 5.23.2 of the Disclosure Schedules also contains a correct and complete description
of the plan. No Acquired Company has made any commitment to create, or communicated to any
employee of any Acquired Company any intention to create, any additional Company Benefit Plan or to
amend any Company Benefit Plan.
5.23.3 Plan Documents. Each Acquired Company has provided true, correct and complete
copies of the following, to the extent applicable:
|
(a) |
|
each material Company Benefit Plan, including all amendments, all summary plan
descriptions and other summaries of such Company Benefit Plan, including employee
communication materials describing such Company Benefit Plan and/or participant
rights or benefits thereunder; |
|
|
(b) |
|
each trust agreement, annuity or insurance contract, or other funding
instrument pertaining to a material Company Benefit Plan; |
|
|
(c) |
|
the most recent determination letter issued by the IRS with respect to each
Company Benefit Plan that is intended to be tax-qualified and a copy of any pending
applications for such IRS letters; |
|
|
(d) |
|
the two most recent actuarial valuation reports for each Company Benefit Plan
for which an actuarial valuation report has been prepared; |
|
|
(e) |
|
the three most recent annual reports (IRS Form 5500 Series), including all
schedules to the reports, if applicable, filed with respect to each Company Benefit
Plan; |
|
|
(f) |
|
the most recent plan audits, financial statements and accountant’s opinion
(with footnotes) for each Company Benefit Plan; |
|
|
(g) |
|
the most recent discrimination testing reports for each Company Benefit Plan;
and |
41
|
(h) |
|
all material correspondence with Governmental Authorities concerning any
Company Benefit Plan (other than as previously referenced above). |
5.23.4 Operation. Each Company Benefit Plan has been operated, administered and
documented in compliance with its terms, the terms of any applicable collective bargaining
agreement, and in all material respects with the applicable requirements of ERISA, the Code and any
other Law (including related regulations and rulings). No Proceeding by any Governmental Authority
is pending and, to the Knowledge of the Members, none has been threatened, regarding any Company
Benefit Plan. No party dealing with any Company Benefit Plan has engaged in any prohibited
transaction (within the meaning of Section 406 of ERISA or Section 4975 of the Code) or has
committed any breach of fiduciary duty.
5.23.5 Tax Qualifications. Each Company Benefit Plan that is intended to be tax
qualified under Section 401(a) of the Code has received a favorable determination letter from the
IRS as to its qualification status. No event, or failure to act, has occurred that could
jeopardize the qualified status of any such Company Benefit Plan.
5.23.6 No Claims. There are no pending or, to the Knowledge of the Members,
directors, officers (or employees responsible for employee benefit matters) of the Acquired
Companies, threatened claims against any Company Benefit Plans or any fiduciary of a Company
Benefit Plan or the Company with respect to a Company Benefit Plan other than routine claims for
benefits. No fact or condition exists that could subject any Acquired Company, any ERISA Affiliate
or any fiduciary responsible for a Company Benefit Plan to any material Liability (other than
routine claims for benefits) under the terms of any Company Benefit Plan or applicable Law.
5.23.7 Provision for Payments. The assets of all Company Benefit Plans that are
required under applicable Law to be held in trust are in fact held in trust.
5.23.8 Health Plans. All Company Benefit Plans that are group health plans, including
health care flexible spending accounts, have been operated in compliance in all material respects
with the requirements of Section 4980B of the Code and Parts 6 and 7 of Title I of ERISA, to the
extent those requirements are applicable.
5.23.9 No Retiree Benefits. None of the Acquired Companies or any ERISA Affiliate
maintains or contributes to any plan or arrangement that provides, has any Liability to provide, or
has ever made a promise to provide, post-employment coverage or benefits other than: (i) group
health plan continuation coverage mandated by Law; or (ii) retirement or death benefits.
5.23.10 Plan Amendment. Except as required by Law or as set forth on Section
5.23.10 of the Disclosure Schedules, each Company Benefit Plan can be amended or terminated, by
the applicable Acquired Company at any time without approval from any Person, without advance
notice and without any Liability other than for benefits accrued and vested prior to such amendment
or termination (or which had accrued prior to such amendment or termination and become vested as a
result thereof).
42
5.23.11 Effect of Transactions. Neither the execution of this Agreement nor the
consummation of the Transactions, disregarding any termination of employment which may occur on or
after the Closing Date, will: (i) result in any material payment becoming due to any director,
officer or employee under any Company Benefit Plan; (ii) materially increase benefits otherwise
payable under any Company Benefit Plan; or (iii) result in any acceleration of the time of payment
or vesting of any such benefits to any material extent.
5.23.12 Pension Plans. None of the Acquired Companies maintains, participates in,
contributes to, or has any obligation to contribute to or any Liability (including any Liability
arising out of being an ERISA Affiliate with any other entity) with respect to, any defined benefit
plan, multiple employer plan, multiemployer plan (as defined in Section 3(37) of ERISA), or any
plan subject to the minimum funding provisions of the Code, the minimum funding or termination
insurance provisions of ERISA, or the withdrawal liability provisions of ERISA, nor has any
Acquired Company had any obligation with respect to such a plan at any time during the six years
immediately preceding the date of this Agreement.
5.23.13 Parachute Payments. There are no agreements that will provide payments to any
officer, employee or highly compensated individual that will be “parachute payments” under Sections
280G or 4999 of the Code that would result in loss of tax deductions under Section 280G of the
Code.
5.23.14 No Tax Gross-Up Obligations. None of the Acquired Companies has any obligation
to reimburse, pay or make whole any Person for adverse tax consequences or any related costs
(including interest, penalties or additional excise taxes), including consequences or costs arising
under Section 409A, 280G or 4999 of the Code, relating to any payment made, provision of, omission
from, or operation of, any Company Benefit Plan.
5.24 Material Contracts.
5.24.1 Identification. Section 5.24.1(a) through (o) of the
Disclosure Schedules contains a list of each Contract or series of related Contracts described in
this subsection to which any Acquired Company is a party or is legally bound, excluding the Realty
Leases, Benefit Plans, intercompany agreements that will be terminated prior to Closing and the IP
Licenses (the “Material Contracts”); provided that for purposes of this Section
5.24 only, “Material Contracts” shall not include Contracts entered into in accordance
with the terms of Section 10.5 or Section 10.6:
|
(a) |
|
any derivative that is an exchange-traded or over-the-counter swap, forward,
future, option, cap, floor or collar financial Contract, or any other Contract that
is a derivatives Contract (including various combinations thereof) or any
commitment to enter into any of the foregoing; |
|
|
(b) |
|
any partnership or joint venture agreement that is a partnership, joint
venture, cost-sharing or similar Contract; |
|
|
(c) |
|
any distribution agreement that is a distribution, dealer, sales representative
or sales agency Contract that provides for payments in |
43
|
|
|
excess of $10,000 that is not terminable on thirty (30) days’ notice without penalty; |
|
|
(d) |
|
any indemnity that provides for the indemnification by any Acquired Company of any Person, or
for the undertaking by any Acquired Company to be responsible for consequential damages or lost
profits, except for Contracts entered into in the Ordinary Course of Business; |
|
|
(e) |
|
any governmental agreement, except as disclosed in Section 5.17 of the Disclosure
Schedules, that is with any Governmental Authority, including any agreement with respect to any
pending Proceeding that purports to waive the attorney-client privilege or other legal privilege on
behalf of the Acquired Company in connection with any pending Proceeding; |
|
|
(f) |
|
any credit agreement, surety contract or a guaranty of the payment or performance of an
obligation of another Person, or any other Contract relating to Indebtedness of any Acquired
Company in excess of $15,000 (other than Accounts Payable to trade creditors in the Ordinary Course
of Business and Permitted Liens); |
|
|
(g) |
|
any agreement relating to any capital expenditure or leasehold improvement that has commenced
but is not yet completed or that obligates any Acquired Company to incur expenditures with respect
to a project that has not yet commenced; |
|
|
(h) |
|
any leases for Leased Personal Property (whether accounted for as a capital lease or an
operating lease), in any one case providing for payments by any Acquired Company exceeding $10,000
annually or exceeding $15,000 over the term of the lease remaining as of the date of this Agreement
that is not terminable on thirty (30) days’ notice without penalty; |
|
|
(i) |
|
any noncompete agreement that restricts or purports to restrict the right of any Acquired
Company to engage in any line of business, acquire any property, develop or distribute any product
or provide any service (including geographic restrictions) or to compete with any Person; |
|
|
(j) |
|
any nonsolicitation or standstill Contract; |
|
|
(k) |
|
any information technology agreement that pertains to data processing, data security, network
communication or other information technology services provided either by or for any Acquired
Company and that is material to the conduct of the Business as currently conducted; |
|
|
(l) |
|
any confidentiality agreement that pertains to the receipt by any Acquired Company of the
confidential information of another Person other than confidentiality agreements relating to the
potential investment in or management of real property; |
44
|
(m) |
|
any management agreement and leasing agreement pursuant to which any Acquired
Company provides services to any of the Managed Properties (each, a “Management
Agreement” and collectively, the “Management Agreements”), and with
respect to the Management Agreements, Section 5.24.1(n) of the Disclosure
Schedules sets forth the expiration date of the current term of each such
Management Agreement; |
|
|
(n) |
|
any insurance brokerage Contract; |
|
|
(o) |
|
each agreement involving annual receipts or expenditures in excess of $30,000
that is not terminable on 30 days’ (or less than 30 days) notice without penalty;
or |
|
|
(p) |
|
any agreement relating to compensation of tenant leasing agents or landlord
leasing agents, whether with employees of the Acquired Companies or with any third
parties. |
5.24.2 Benefit. Except as set forth on Section 5.24.2 of the Disclosure
Schedules, each Material Contract is a legal, valid, binding obligation of the applicable Acquired
Company and enforceable against such Acquired Company, except as enforceability might be limited by
bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’ rights
generally or limitations on the availability of equitable remedies, and, to the Knowledge of
Members, is in full force and effect as to each other party thereto.
5.24.3 No Breach. No Acquired Company is in material breach, and, to the Knowledge of
the Members, no other party thereto is in material breach, of any Material Contract. No Acquired
Company has given notice to or received written notice from any Person relating to any alleged or
potential material breach of a Material Contract that has not been cured. Except as set forth on
Section 5.24.3 of the Disclosure Schedules, to the Knowledge of the Members, no event has
occurred that, with or without the giving of notice or lapse of time (or both) would reasonably be
expected to result in a material breach of a Material Contract by any Acquired Company, or give any
Person the right (i) to declare a breach and obtain any material remedy thereunder; (ii) to
accelerate the maturity, performance or payment of any obligation of any Acquired Company
thereunder, (iii) to make operative any provision that varies any of the material rights or
obligations of any Acquired Company from those that would apply if the event had not occurred, or
(iv) to cancel, terminate or modify (in a manner adverse to any Acquired Company) the Material
Contract in any material respect. As of the date of this Agreement, no counterparty to a Material
Contract has notified an Acquired Company in writing that it intends to prematurely terminate or
fail to renew a Material Contract.
5.25 Bank Accounts. Section 5.25 of the Disclosure Schedules identifies as of
the date of this Agreement, all checking accounts, saving accounts, custodial accounts and escrow
accounts maintained by any Acquired Company with any depositary as well as the current balance held
in each account as of a date no earlier than five (5) Business Days prior to the date of this
Agreement.
45
5.26 Insurance.
5.26.1 Listing. Section 5.26.1 of the Disclosure Schedules contains, as of the
date of this Agreement, (i) a correct and complete list and a summary of all insurance policies
covering any Acquired Company or its properties or assets currently in force (the “Company
Insurance Policies”), (ii) a statement of the aggregate amount of claims paid out, and claims
pending, under each Company Insurance Policy since January 1, 2008, and (iii) a description of
risks that any Acquired Company has designated as being self-insured.
5.26.2 Validity. To the Knowledge of the Members, the Company Insurance Policies are
in full force and effect. All premiums due have been paid by each Acquired Company, as applicable,
and each Acquired Company is otherwise in compliance in all material respects with the terms and
provisions of such policies.
5.26.3 No Denials. Except as set forth on Section 5.26.3 of the Disclosure
Schedules, to the Knowledge of the Members:
|
(a) |
|
no Acquired Company has been denied a policy of insurance or an endorsement to
a policy of insurance for which it has applied within the previous three (3) years; |
|
|
(b) |
|
no Acquired Company has received any notice of cancellation or nonrenewal of
any Company Insurance Policy, and the termination of any such policy has not been
threatened in writing; |
|
|
(c) |
|
no Claim is pending under any Company Insurance Policy as to which coverage has
been questioned, denied or disputed; and |
|
|
(d) |
|
no Acquired Company has received written notice from any insurance carrier that
insurance premiums under any Company Insurance Policy will be increased in the
future or that insurance coverage presently provided will not be available to each
Acquired Company upon expiration of such policy term on substantially the same
terms as now in effect. |
5.26.4 No Retroactivity. None of the Company Insurance Policies provides for any
retrospective premium adjustment, experienced-based liability or loss sharing arrangement affecting
any Acquired Company.
5.27 Certain Affiliate Business Relationships; Employment Agreements. Except for the
Management Agreements, all intercompany obligations between any Acquired Company, on the one hand,
and any Member or any of such Member’s other Affiliates, on the other hand, will be satisfied,
repaid, eliminated or cancelled at or prior to Closing (the “Affiliate Agreements”). Except
for the Organizational Documents of each Acquired Company and except for the Management Agreements,
there are no written Contracts between any Acquired Company, on the one hand, and any Member or any
of Member’s other Affiliates, on the other hand that will survive the Closing or result in any
liability to an Acquired Company after Closing.
46
5.28 Brokerage Fees. Except as described on Section 5.28 of the Disclosure
Schedules, no Acquired Company has any Liability to pay any fee or commission, or to provide any
other thing of value, to any broker, finder or agent as a result of this Agreement or the
consummation of any of the Transactions.
5.29 Real Estate Broker Licensing.
5.29.1 Section 5.29.1 of the Disclosure Schedules contains a true, correct and
complete list as of the date of this Agreement containing the following information for each
Acquired Company: (i) each jurisdiction in which any Acquired Company is licensed as a real estate
broker; (ii) the name of the responsible broker (or similar designation) for such jurisdiction;
(iii) the address of each office or location covered by such license; and (iv) the information
required in clauses (i) — (iii) with respect to any Subsidiary.
5.29.2 Section 5.29.2 of the Disclosure Schedules contains a true, correct and
complete list as of the date of this Agreement of the following information for each employee,
officer, director or manager of each Acquired Company and Subsidiary, if any, who holds a real
estate license and who is engaged on behalf of an Acquired Company in activities for which a real
estate license is required: (i) the name of such person; (ii) each jurisdiction in which such
person is licensed as a real estate broker, salesperson or other similar category of license; (ii)
the name of such person’s responsible broker (or similar designation) for each listed jurisdiction,
if any; (iii) the date of and parties to any employment or similar agreement between an Acquired
Company and any person who is a responsible broker (or similar designation) in any jurisdiction or
any other agreement to which an Acquired Company is a party or bound related to such Person’s
status as responsible broker; and (iv) the address of the office or location designated on such
license as the office location of such person, if so designated.
5.29.3 Except as disclosed in Section 5.29.3 of the Disclosure Schedules, there have
been no formal complaints or proceedings related to the status of the licenses listed in
Section 5.29.1 or, to the Knowledge of the Members, the licenses listed on Section
5.29.2 of the Disclosure Schedule, and, to the Knowledge of the Members, no complaints or
proceedings are threatened, which if adversely determined might have an adverse effect on such
license.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER PARTIES
The Purchaser Parties jointly and severally represent and warrant to the Members as set forth
in this Article 6.
6.1 Organization; Qualification; Power; Governance. Parent is a corporation duly
incorporated, validly existing and in good standing under the Laws of the State of Maryland.
Partnership is a limited partnership formed and existing and in good standing under the Laws of the
State of Delaware. Each of Parent and Partnership has full corporate or partnership power and
authority necessary to own, lease and operate its properties and assets, to conduct its business as
currently conducted, to execute, deliver and perform its obligations under this Agreement and each
other Related Agreement to be executed and delivered by Parent or Partnership and to consummate the
Transactions. Each of Parent and Partnership is duly
47
authorized to conduct business as a foreign entity of its type in, and is in good standing under
the Laws of, each jurisdiction where such qualification is required, except to the extent that the
failure to maintain any such authorization would not reasonably be expected to materially adversely
affect the business, financial condition or results of operations of Parent and Partnership and
their subsidiaries, taken as a whole (a “Parent Material Adverse Change”).
6.2 Authorization of Agreements; Execution and Delivery; Enforceability.
6.2.1 Authorization; Execution and Delivery. This Agreement has been, and each Related
Agreement to be executed and delivered by a Purchaser Party will upon such delivery be, duly
executed and delivered by each such Purchaser Party. Each Purchaser Party has duly authorized the
execution, delivery and performance of this Agreement and each other Related Agreement to which
such Purchaser Party is a party. Neither the approval of the shareholders of Parent nor the
approval of the limited partners of Partnership is required in connection with the execution,
delivery or performance of this Agreement or any of the Related Agreements, or the consummation of
the Transactions (including, without limitation the Contributions). The execution, delivery and
performance of this Agreement and each Related Agreement to be executed and delivered by a
Purchaser Party and the consummation of the Transactions have been duly and validly authorized by
all requisite corporate or other action on the part of such Purchaser Party, and no other
proceedings on its part are necessary to authorize the execution, delivery or performance of this
Agreement and each such Related Agreement on the part of such Purchaser Party.
6.2.2 Enforceability. This Agreement, assuming the due execution and delivery of it
by the other Parties, is the valid and binding obligation of the Purchaser Parties, enforceable
against such Purchaser Party in accordance with its terms, except as enforceability might be
limited by bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’
rights generally or limitations on the availability of equitable remedies. Each Related Agreement
to which any Purchaser Party is or will become a party, when executed and delivered by such
Purchaser Party, and assuming the due authorization, execution and delivery of that Related
Agreement by the other parties to that agreement, will constitute the valid and binding obligation
of such Purchaser Party, enforceable against such Purchaser Party in accordance with its terms,
except as enforceability might be limited by bankruptcy, insolvency, reorganization, moratorium and
similar Laws affecting creditors’ rights generally or limitations on the availability of equitable
remedies.
6.3 Governmental Filings and Authorizations. Except for filings required by Parent
under the Exchange Act, no Purchaser Party is required, in connection with the execution and
delivery of this Agreement, or the compliance or performance by such Purchaser Party with any of
its obligations in this Agreement or any other Related Agreement to which such Purchaser Party is
or is to become a party, (i) to make any Filing with any Governmental Authority, or (ii) to obtain
any Authorization.
6.4 No Contravention. Each Purchaser Party’s execution and delivery of this
Agreement, and of each other Related Agreement to which it is or will be a party, its performance
of its obligations under this Agreement and such Related Agreements and the
48
consummation of the Transactions, including the EOP Contribution and EOC Contribution, do not and
will not:
6.4.1 violate any provision of the Organizational Documents of such Purchaser Party;
6.4.2 violate any Law, Authorization or Order to which such Purchaser Party or any of its
properties or assets is subject, or give any Governmental Authority or other Person the right to
challenge the Transactions or to exercise any remedy or obtain any relief under any such Law,
Authorization or Order;
6.4.3 result in a breach of, constitute a default under (with or without notice or lapse of
time, or both), result in the acceleration of, create in any party the right to modify, accelerate,
terminate or cancel, or require any consent or approval of any Person under any lease, sublease,
license, sublicense, franchise, Permit, agreement for borrowed money, or other material agreement
or instrument to which such Purchaser Party is a party or by which such Purchaser Party is bound,
except where such Purchaser Party has obtained the consent of or waiver from the other party to
such agreement or instrument; or
6.4.4 result in the creation of any Lien upon any of the properties or assets of any Purchaser
Party.
except, with respect to Sections 6.4.2, 6.4.3 and 6.4.4, such violation,
default, termination, acceleration, cancellation, modification or creation or imposition of any
Lien that would not reasonably be expected to have a Parent Material Adverse Change.
6.5 Brokerage Fees. Other than as disclosed on Section 6.5 of the Purchaser
Disclosure Schedules no Person is or will become entitled, by reason of any dealings,
communications or agreements of any kind with or on behalf of Purchaser Party, to receive any
commission, finder’s fee or other similar compensation in connection with this Agreement or the
Transactions.
6.6 Litigation. Except as disclosed in the SEC Documents, no Proceeding or Order is
pending, no Claim has been made against or affecting the Purchaser Parties, and, to the knowledge
of the Purchaser Parties, no Proceeding, Order or Claim has been threatened, that (a) seeks to
restrain, prohibit or otherwise challenge the consummation, legality or validity of this Agreement
or any of the Transactions, (b) would reasonably be expected to prevent, impede or delay the
Purchaser Parties’ performance under this Agreement or any other Related Agreement to which any
Purchaser Party or any of their respective Affiliates is a party or the consummation of the
Transactions, or (c) would be reasonably expected to have a Parent Material Adverse Change.
6.7 Valid Issuance of OP Units. The issuance of the OP Units to be issued in
accordance with the terms of this Agreement has been duly authorized and, when issued and delivered
in accordance with the terms and for the consideration set forth in this Agreement, will be validly
issued, fully paid and nonassessable and the applicable Member or EOC Beneficial Owner shall
acquire good and valid title to such OP Units, free and clear of any Liens, other than (a) those
imposed under the Organizational Documents of Partnership or Parent, as applicable, or
49
(b) restrictions on transfer under federal and state securities Laws. Assuming the accuracy of the
representations of Members set forth in Article 4 of this Agreement, the OP Units will be
issued in compliance with all applicable federal securities Laws.
6.8 Capitalization. As of the date of this Agreement, (A) 65,625,104 PKY Shares were
authorized for issuance by Parent, of which 21,962,564 shares are issued and outstanding, (B)
5,374,896 shares of Series D Preferred Stock were authorized for issuance, of which 4,374,896
shares are issued and outstanding, and (C) 30,000,000 shares of Excess Stock (as defined in
Parent’s articles of incorporation), par value $0.001 per share, were authorized for issuance, none
of which were issued or outstanding. All of the issued and outstanding shares of capital stock of
Parent have been duly authorized and are validly issued, fully paid and nonassessable. The
stockholders of Parent have no preemptive rights. Except as set forth on Section 6.8 of the
Purchaser Disclosure Schedules or as described in the SEC Documents, other than pursuant to this
Agreement and the Other Transaction Agreements, there are no outstanding options, warrants or other
rights requiring the issuance of, and no commitments, plans or arrangements to issue, any shares of
capital stock of Parent or equity interests in the Partnership or any subsidiary of Parent or
Partnership or any security convertible into or exchangeable for such shares or interests.
6.9 Compliance with Laws. To the actual knowledge of the Purchaser Parties, each of
the Purchaser Parties is in compliance with and has at all times during the prior five (5) year
period been in compliance with all Laws applicable to them, except for violations, if any, which
would not reasonably be expected to result in a Parent Material Adverse Change.
6.10 Securities Filings.
6.10.1 Parent has furnished or filed all reports, schedules, forms, statements and other
documents (including exhibits and other information incorporated therein) required to be furnished
or filed by Parent with the SEC since January 1, 2008 (such documents, together with any documents
filed with or furnished to the SEC during such period by Parent on a voluntary basis on a Current
Report on Form 8-K, collectively the “SEC Documents”).
6.10.2 Each SEC Document (i) at the time filed, complied in all material respects with the
requirements of SOX and the Exchange Act or the Securities Act, as the case may be, and the rules
and regulations of the SEC promulgated thereunder applicable to such SEC Document, and (ii) did not
at the time it was filed (or if amended or superseded by a filing or amendment prior to the date of
this Agreement, then at the time of such filing or amendment) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they were made, not
misleading. Each of the consolidated financial statements of Parent included in the SEC Documents
complied at the time it was filed as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect thereto, was prepared
in accordance with GAAP (except, in the case of unaudited statements, as permitted by Form 10-Q
under the Securities Exchange Act of 1934, as amended) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly presented in all
material respects the consolidated financial position of Parent and its consolidated subsidiaries
as of the dates thereof and the consolidated
50
results of their operations and cash flows for the periods shown (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
6.11 Absence of Certain Changes or Events. No event or circumstance has occurred at
any time since the filing with the SEC by Parent of its most recent Annual Report on Form 10-K
that, alone or in combination with other events or circumstances, would reasonably be expected to
have a Parent Material Adverse Change.
6.12 Taxes.
6.12.1 Parent, its subsidiaries, and their respective predecessors, have filed, or have had
filed on their respective behalf, all Tax Returns required to have been filed by or for it, and all
information set forth in such Tax Returns is correct and complete in all material respects.
6.12.2 Parent, (i) for all taxable years commencing with its taxable year ended December 31,
2006 through December 31, 2010, qualified and was subject to taxation as a “real estate investment
trust” within the meaning of Section 856 of the Code (a “REIT”) and has satisfied all
requirements to qualify as a REIT for such years; (ii) has operated since December 31, 2010 through
the date hereof in a manner that will permit it to qualify and be subject to taxation as a REIT for
its taxable year that includes the date hereof; and (iii) intends to continue to operate in such a
manner as to permit it to continue to qualify as a REIT for its taxable year that includes the date
hereof and for all taxable years thereafter.
6.12.3 Neither Parent nor any of its subsidiaries has relied upon any statements,
representations or advice from a Member, EOC Beneficial Owner, or any of their advisors, regarding
the federal, state or local Tax consequences of the Contributions, and each of Parent and its
subsidiaries has consulted with, and relied upon the advice from, its own advisors regarding such
consequences.
6.12.4 This Section 6.12 sets forth the sole and exclusive representations and
warranties of Parent and its subsidiaries with respect to Taxes and tax matters. For purposes of
this Section 6.12, a reference to a “predecessor” of Parent (or any of its subsidiaries)
shall refer only to any Person to whose liabilities either Parent and/or such subsidiary, as the
case may be, has succeeded.
6.13 Purchaser Parties Release. Effective as of the Closing, except for fraud, each of
Parent and Partnership, for themselves and any of their respective successors and assigns and their
Affiliates (including, after the EOP Contribution and the EOC Contribution, the Acquired
Companies), hereby irrevocably and absolutely waives its right to recover from, and forever
releases and discharges, and covenants not to file or otherwise pursue any legal action against,
Members with respect to any and all Released Claims that may arise on account of or in any way be
connected with Acquired Company, any EOP Units, the EOC Units or any portion thereof, or any Law
applicable thereto, whether before or after the date of this Agreement; provided, however, that in
no event shall the foregoing release apply with respect to any obligations of Members set forth in
this Agreement (including the indemnification obligations set forth in Article 12), any of
the Related Agreements or any of the Other Transaction Agreements or the transactions contemplated
thereby, subject to the limitations and conditions provided in this
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Agreement. EACH OF PARENT AND PARTNERSHIP FURTHER ACKNOWLEDGES THAT IT IS AWARE THAT STATUTES
EXIST THAT RENDER NULL AND VOID RELEASES AND DISCHARGES OF ANY CLAIMS, RIGHTS, DEMANDS,
LIABILITIES, ACTIONS OR CAUSES OF ACTIONS THAT ARE UNKNOWN TO THE RELEASING OR DISCHARGING PARTY AT
THE TIME OF EXECUTION OF THE RELEASE AND DISCHARGE. EACH OF PARENT AND PARTNERSHIP HEREBY
EXPRESSLY AND VOLUNTARILY WAIVES, SURRENDERS AND AGREES TO FOREGO ANY PROTECTION TO WHICH IT WOULD
OTHERWISE BE ENTITLED BY VIRTUE OF THE EXISTENCE OF ANY SUCH STATUTE IN ANY JURISDICTION.
ARTICLE 7
CONDITIONS TO EACH PARTY’S OBLIGATION TO CLOSE
The respective obligations of the Parties to consummate the Closing are subject to the
satisfaction (or waiver by each of the Parties), at or prior to the Closing, of the following
conditions set forth in this Article 7.
7.1 Competition Matters. Any waiting period (and any extension thereof) and any
approvals or clearances applicable to the Transactions under the Competition Laws, shall have
expired or been terminated or obtained, as applicable.
7.2 No Injunction or Illegality. There must not be in effect any Order, whether
temporary, preliminary or permanent, issued by any Governmental Authority enjoining, preventing or
prohibiting the consummation of the Closing or any of the Transactions. There must not be any Law
in effect that makes the consummation of any of the Transactions in accordance with this Agreement
or any Related Agreement illegal.
ARTICLE 8
CONDITIONS TO PURCHASER PARTIES’ OBLIGATION TO CLOSE
The Purchaser Parties’ obligation to consummate the Closing and to take the other actions
contemplated by this Agreement at Closing is subject to the satisfaction (or the waiver by Parent,
on behalf of itself and each other Purchaser Party, in writing), at or prior to the Closing, of
each of the conditions set forth in this Article 8.
8.1 Accuracy of Acquired Companies’ Representations and Warranties.
8.1.1 Each of the representations and warranties of Members, EOC Beneficial Owners and the
Acquired Companies made in this Agreement must have been true and correct in all respects as of the
date of this Agreement, except that any such representation and warranty that refers specifically
to another date must have been true and correct only as of such other date.
8.1.2 Each of the representations and warranties of Members, EOC Beneficial Owners and the
Acquired Companies made in this Agreement must be true and correct in all material respects as of
the Closing Date as if made on the Closing Date, except that (i) any representation and warranty
that refers specifically to another date must only have been true and correct as of the such other
date, and (ii) any representation or warranty already qualified by concepts of materiality must be
true and correct in all respects; provided, however, that the
52
representations and warranties contained in Sections 4.2.1, 4.2.2, 4.2.3,
4.2.4, 4.2.8, 4.2.9, 5.1.1, 5.1.2 and 5.2 must be
true and correct in all respects.
8.1.3 Disclosures made in any supplement to the Disclosure Schedules pursuant to Section
10.11 will be disregarded and of no effect for the purposes of this Section 8.1.
8.2 Members’ and Acquired Companies’ Performance. Each Member, each EOC Beneficial
Owner and the Acquired Companies must have complied, in all material respects, with all of their
respective obligations in this Agreement with which such Members or the Acquired Companies are
required to comply at or prior to the Closing (except that Members and the Acquired Companies must
have complied fully with any obligation that is qualified by concepts of materiality). Disclosures
made in any supplement to the Disclosure Schedules will be disregarded for purposes of this
Section 8.2.
8.3 Other Deliveries. The Acquired Companies (and, in the case of Section
8.3.1, each of the Members, and in the case of Section 8.3.3, each of the Members and
EOC Beneficial Owners) must have delivered the following to Parent at the Closing, each in a form
and substance reasonably satisfactory to Parent:
8.3.1 an Assignment and Transfer of Interest in the form of Exhibit O attached hereto;
8.3.2 a certificate duly executed by an officer or member of each Acquired Company certifying
that the conditions set forth in Section 8.1 and Section 8.2 have been fulfilled;
8.3.3 certificates from each of the Members and EOC Beneficial Owners in substantially the
same form as Exhibit G-1 or Exhibit G-2, as applicable;
8.3.4 an election under Section 1362(e)(3) of the Code, if not otherwise required by Law, to
apply the “closing-of-the books” method with respect to the allocation of income of EOP for the
2011 taxable year, which election is signed by each person who owned Units in EOP during the
Pre-Closing Straddle Period; and
8.3.5 evidence of termination or cancellation of each of the Affiliate Agreements.
8.4 Consents. The Acquired Companies shall have obtained and delivered to Parent, each
of the Consents set forth in Schedule 8.4, in form and substance reasonably satisfactory to
Parent, and the Acquired Companies shall not have received any revocation of any such Consents.
8.5 No Proceedings; Orders; Restrictive Authorizations.
8.5.1 Proceedings. There must not be an existing or threatened in writing Proceeding
against any Member, any EOC Beneficial Owner, any Acquired Company, the Purchaser Parties or any of
their respective directors that was not in existence on or prior to the
53
date of this Agreement and that was disclosed to Parent in Section 5.17.3 of the Disclosure
Schedules:
|
(a) |
|
that involves any challenge to, or seeks damages or other relief in connection
with, this Agreement or the Transactions; |
|
|
(b) |
|
that seeks to interfere with the Transactions or to impose any limitation on
the ownership or use (directly or indirectly) of any material portion of the
properties or assets of any Acquired Company; |
|
|
(c) |
|
that seeks to require Parent, Partnership or any of their respective Affiliates
to dispose of or hold separate (A) any property or asset of an Acquired Company, or
(B) any property or asset of Parent, Partnership or their respective Affiliates as
a condition to consummation of the Transactions; or |
|
|
(d) |
|
that seeks to require any other structural or conduct remedy that would require
Parent, Partnership or any of their respective Affiliates, or any Acquired Company
to conduct its business in a specified manner as a consequence of this Agreement or
the Transactions, or to prohibit the later acquisition of ownership of property or
enterprises or conduct of business in any industry or geographic area. |
8.5.2 Orders. There must not be any Order in effect that would have any of the results
described in Section 8.5.1.
8.5.3 Authorizations. The issuance or effectiveness of any Authorization required
under Section 10.3 of this Agreement must not be conditioned on actions described in
Section 8.5.1(b) or Section 8.5.1(c).
8.6 No Material Adverse Change. No Material Adverse Change, or any event or
circumstance that, individually or when combined with other events or circumstances, would
reasonably be expected to result in a Material Adverse Change, shall have occurred since the date
of this Agreement.
8.7 Estoppel Certificates. The Acquired Companies must have delivered to Parent
estoppel certificates, duly executed on behalf of the owners of the Managed Properties identified
on Schedule 8.7 dated as of a date not more than sixty (60) days prior to the Closing Date,
each in a form and substance reasonably satisfactory to Parent.
8.8 Legal Opinion. Counsel to the Acquired Companies must have delivered to Parent an
opinion substantially in form and substance as set forth in Exhibit D and acceptable to
Parent, dated as of the Closing Date.
8.9 Resignations. Parent must have received the resignations, effective as of the
Closing, of each member of the board of managers and officer of each Acquired Company, as
applicable, other than those members of the board of managers and/or officers of any Acquired
Company with respect to whom Parent specifies in writing that resignations are not required.
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8.10 Voting Agreement. Each Member and each EOC Beneficial Owner (other than Xxxxx
Xxxxx) shall have executed and delivered to Parent a duly executed lockup and voting agreement in
the form of Exhibit J and such agreement shall continue to be in effect.
8.11 Registration Rights Agreement. Each Member and each EOC Beneficial Owner shall
have executed and delivered to Parent a duly executed registration rights agreement substantially
in the form attached hereto as Exhibit F (“Registration Rights Agreement”).
8.12 Affiliate Agreements. Each of the Affiliate Agreements shall have been satisfied,
repaid, eliminated or cancelled and evidence thereof reasonably satisfactory to Parent shall have
been provided to Parent.
8.13 Payoff Letters. The Acquired Companies must have delivered to Parent payoff
letters duly executed by each creditor identified on Schedule 8.13, dated as of a date not
more than ten (10) days prior to the Closing Date in a form reasonably satisfactory to Parent.
8.14 Employee/Independent Contractor Release. The Acquired Companies must have
delivered to Parent termination agreements executed by (x) each employee with an Employment
Agreement and (y) the independent contractor of the Acquired Companies identified on Schedule
8.14, in each case, in a form reasonably satisfactory to Parent.
8.15 Banyan Street Management Fees. The Acquired Companies must have delivered to
Parent a termination from Banyan and each of the owners of the Managed Properties who have agreed
that a portion of management fees due the Acquired Companies would be paid to Banyan, or any other
third Person, which termination shall be in a form reasonably satisfactory to Parent.
ARTICLE 9
CONDITIONS TO THE ACQUIRED COMPANIES’ AND MEMBERS’
OBLIGATION TO CLOSE
The Acquired Companies’ and Members’ obligation to consummate the Closing and to take the
other actions contemplated by this Agreement at Closing is subject to the satisfaction (or the
waiver by the Sellers’ Representatives, on behalf of each of the Acquired Companies and the
Members), at or prior to the Closing, of the conditions set forth in this Article 9.
9.1 Purchaser Parties’ Representations and Warranties.
9.1.1 Each of the representations and warranties of the Purchaser Parties made in this
Agreement must have been true and correct in all respects as of the date of this Agreement, except
that any such representation and warranty that refers specifically to another date must have been
accurate only as of such other date.
9.1.2 Each of the representations and warranties of Purchaser Parties made in this Agreement
must be true and correct in all material respects as of the Closing Date as if made on the Closing
Date, except that (i) any representation and warranty that refers specifically to another date must
only have been true and correct in all material respects as of such other date, and (ii) any
representation or warranty already qualified by concepts of materiality must be true
55
and correct in all respects, in each case; provided, however, that the representations and
warranties contained in Sections 6.1, 6.2.1 and 6.2.2 must be true and correct in
all respects.
9.2 Purchaser Parties’ Performance. Each of the Purchaser Parties must have complied,
in all material respects, with all of their respective obligations in this Agreement with which the
Purchaser Parties are required to comply at or prior to the Closing, except that Purchaser Parties
must have complied fully with any obligation that is qualified by concepts of materiality.
9.3 Legal Opinion. Counsel to Purchaser Parties must have delivered to Sellers’
Representative an opinion substantially in form and substance as set forth in Exhibit E-1
and acceptable to Sellers’ Representatives, dated as of the Closing Date.
9.4 REIT Opinion. Counsel to Parent must have delivered to Sellers’ Representatives an
opinion of Xxxxxxx Xxxxxxxxxxx & Mugel, LLP, or other counsel to Parent reasonably acceptable to
Sellers’ Representatives, dated as of the Closing Date, substantially in the Form attached hereto
as Exhibit E-2.
9.5 Consents. The Acquired Companies shall have obtained the Consents set forth on
Schedule 8.4, in form and substance reasonably satisfactory to Members and the Acquired
Companies shall not have received any written revocation of any such Consents.
9.6 Other Transactions. The Other Transactions shall have closed or be closing
simultaneously with the Closing.
9.7 Registration Rights Agreement. Parent shall have executed and delivered to
Members and EOC Beneficial Owners the Registration Rights Agreement.
9.8 No Material Adverse Change. No Parent Material Adverse Change, or any event that
individually or when combined with other events or circumstances, would reasonably be expected to
result in a Parent Material Adverse Change, shall have occurred since the date of this Agreement.
9.9 Other Deliveries. The Purchaser Parties must have delivered to Sellers’
Representatives a certificate duly executed by an officer of each Purchaser Party representing to
Sellers’ Representatives that each of the conditions set forth in Section 9.1 and
Section 9.2 has been fulfilled, each of which shall be in a form and substance reasonably
satisfactory to Sellers’ Representative.
9.10 Global Agreement. The Global Agreement shall continue to be in effect and Parent
shall have taken all corporate actions necessary to cause to be implemented at or after Closing of
each of the corporate governance arrangements set forth in the Global Agreement and delivered
evidence thereof reasonably satisfactory to Members.
9.11 Parent Credit Agreement. Parent and Partnership shall have delivered evidence to
Sellers’ Representatives that Parent and Partnership have provided notice to the Administrative
Agent (as defined in the Parent Credit Agreement) pursuant to Section 9.4 of the Parent Credit
Agreement.
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9.12 No Proceedings; Orders; Restrictive Authorizations.
9.12.1 Proceedings. There must not be an existing or threatened in writing Proceeding
against any Member, any EOC Beneficial Owner or any Acquired Company or any of their respective
directors, that was not in existence on or prior to the date of this Agreement and that was
disclosed to Parent in Section 5.17.3 of the Disclosure Schedules:
|
(a) |
|
that involves any challenge to, or seeks damages or other relief in connection
with, this Agreement or the Transactions; |
|
|
(b) |
|
that seeks to interfere with the Transactions or to impose any limitation on
the ownership or use (directly or indirectly) of any material portion of the
properties or assets of any Acquired Company; |
|
|
(c) |
|
that seeks to require Parent, Partnership or any of their respective Affiliates
to dispose of or hold separate (A) any property or asset of an Acquired Company, or
(B) any property or asset of Parent, Partnership or their respective Affiliates as
a condition to consummation of the Transactions; or |
|
|
(d) |
|
that seeks to require any other structural or conduct remedy that would require
Parent, Partnership or any of their respective Affiliates, or any Acquired Company
to conduct its business in a specified manner as a consequence of this Agreement or
the Transactions, or to prohibit the later acquisition of ownership of property or
enterprises or conduct of business in any industry or geographic area. |
9.12.2 Orders. There must not be any Order in effect that would have any of the
results described in Section 9.12.1.
9.12.3 Authorizations. The issuance or effectiveness of any Authorization required
under Section 10.3 of this Agreement must not be conditioned on actions described in
Section 9.12.2 or 9.12.3.
ARTICLE 10
CERTAIN PRE-CLOSING COVENANTS
10.1 Access. Except as may be necessary to comply with any applicable Laws and subject to (i)
any applicable privileges (including the attorney-client privilege), (ii) the terms and conditions
of the Confidentiality Agreement and this Section 10.1, and (iii) the terms and conditions
of any confidentiality or similar agreements between any Member, any Acquired Company and a third
party, which is disclosed in writing to Purchaser Parties, from the date of this Agreement until
the Closing Date, the Acquired Companies shall (and the Members shall cause each Acquired Company
to):
10.1.1 during normal business hours and upon reasonable prior notice, give the Purchaser
Parties and their Representatives (the “Parent Group”) reasonable access to the records of
the Acquired Companies;
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10.1.2 during normal business hours and upon reasonable prior notice, give the Parent Group
reasonable access to the Managed Properties;
10.1.3 furnish to the Parent Group copies of such books, records (including Tax records and
Tax Returns), Contracts and other documents of or pertaining to the Acquired Companies as the
Parent Group reasonably may request; and
10.1.4 discuss the business of the Acquired Companies with tenants and property owners of the
Managed Properties, members of management, officers, directors and employees of, and advisors to
and counsel and accountants for, the Acquired Companies, and to obtain the financial, operating or
other information regarding the Acquired Companies or the Managed Properties as the Parent Group
reasonably may request.
Notwithstanding the foregoing, the Parent Group shall not have access to personnel records of the
Acquired Companies relating to medical histories of their respective employees.
10.2 Competitive Information. The Parties shall consult with outside antitrust counsel
before any competitively sensitive information (including price information, strategic and
marketing plans and customer-specific information) is provided to the Parent Group pursuant to
Section 10.1.
10.3 Regulatory Authorizations.
10.3.1 HSR and Other Filings. Within fifteen (15) days after the date of this
Agreement, the Parties (i) will file, or cause to be filed by their respective “ultimate parent
entities” (as defined in the HSR Act), the notifications required to be filed under the HSR Act
with respect to the Transactions, and (ii) shall request early termination of the HSR Act waiting
period for any notification filed as soon as practicable after the public announcement of the
Agreement, but not before.
10.3.2 Cooperation. The Parties shall use commercially reasonable efforts to obtain,
and shall cooperate fully with each other with respect to the acquisition of, all Authorizations
referred to in Section 10.3.1. Cooperation by a Party shall include, subject to applicable
Law and any applicable privileges (including the attorney-client privilege):
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(a) |
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permitting counsel for any other Party to review in advance of, and consider in
good faith the views of any other Party in connection with, a proposed Filing or
other written communication with any Governmental Authority in connection with the
Transactions; |
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(b) |
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providing counsel for the other Parties with copies of (A) all Filings made by
that Party and all correspondence between that Party (or its advisors) with any
Governmental Authority and any other information supplied by that Party its
Affiliates to a Governmental Authority in connection with the Transactions, and (B)
information received from a Governmental Authority in connection with the
Transactions; |
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(c) |
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furnishing to the other Parties information and assistance as a Party may
reasonably request in connection with its preparation of any Filing pursuant to
this Agreement; and |
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(d) |
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keeping the other Parties reasonably apprised of the status of communications
with, and inquiries or requests for additional information from, any Governmental
Authority in connection with the Transactions. |
10.3.3 Reservation of Rights. Notwithstanding the foregoing, nothing in this
Article 10 shall require the Purchaser Parties, the Acquired Companies, the Members or
their respective Affiliates to (i) sell, hold separate or otherwise dispose of any of their
respective properties or assets (including any properties or assets of any Acquired Company), (ii)
consent to any other structural or conduct remedy, (iii) agree to any Order regarding Competition
Laws with respect to the Transactions, or (iv) agree to conduct their businesses in a specified
manner as a condition to obtaining any Authorization. The rights afforded a Party under this
Section 10.3.3 do not impair or otherwise affect the conditions to Closing set forth in
Article 7, Article 8 or Article 9, or the termination rights set forth in
Article 14.
10.3.4 Post-Closing Cooperation. From and after the Closing Date, the Members shall
use commercially reasonable efforts to cooperate with the Purchaser Parties to obtain any
Authorization or Consent required in connection with the Transactions that is not obtained prior to
the Closing.
10.3.5 Expenses. The Purchaser Parties and the Acquired Companies, shall be
responsible for their own Filing and other fees and expenses payable or incurred in connection with
their efforts to obtain Authorizations under this Section 10.3, including expenses of local
counsel and other advisors engaged by them.
10.4 Public Announcements.
10.4.1 Announcements. Except for the disclosure permitted by this Section
10.4.1, prior to the Closing, none of the Members, the Acquired Companies, the Purchaser
Parties nor any of their respective Affiliates shall issue any press release or public statement
concerning this Agreement or the Transactions without obtaining the prior written approval of the
other Parties (which approval the other Parties shall not unreasonably withhold, condition or
delay). Notwithstanding the foregoing, a Party may make such disclosure as it determines in good
faith is required by applicable Law or Order, or by an obligation pursuant to any agreement with
any national securities exchange or national securities association of the United States or any
other jurisdiction; provided that, prior to issuing any such press release or public statement,
such Party shall advise the other Parties of such press release or public statement and shall
discuss the contents of the disclosure. Each Party also may make (and the Acquired Companies may
make) announcements to its employees that are consistent with the public disclosures made by a
Party.
10.4.2 Representatives. Each Party shall require its Representatives (and Parent
shall require the other members of the Parent Group) not to make any disclosure about
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this Agreement or the Transactions that such Party is not permitted to make pursuant to the terms
and conditions of this Agreement.
10.4.3 Communications to Employees, Customers and Suppliers. The Parties will consult
and cooperate reasonably with each other concerning the means by which the Acquired Companies’
employees, customers and suppliers will be informed of the Transactions, and the joint
participation by Representatives of the Parties in those communications; provided that joint
participation shall not be required for communications with employees following the initial joint
communication regarding the Transactions.
10.4.4 SEC Compliance. The Members each acknowledge that Parent is a publicly
registered company that is required to disclose the existence of this Agreement upon full execution
and to make certain disclosures in its SEC Documents that may include audited and unaudited
financial statements with respect to the Acquired Companies. To assist Parent in preparing the SEC
Documents and any required audited financial statements, Members agree to within thirty (30) days
after the date of this Agreement, and at Parent’s request, any time thereafter until the second
anniversary of the Closing Date, deliver an audit inquiry letter regarding pending litigation and
other matters in a form reasonably requested by Parkway (the “Audit Inquiry Letter”) to
Acquired Companies’ counsel prior to Closing and use commercially reasonable efforts to deliver to
Parent an executed letter from such counsel in response to the Audit Inquiry Letter as soon as
reasonably practicable thereafter. Members shall further reasonably cooperate, at Parent’s cost and
expense, in connection with such audit, including, if required by Parent’s registered independent
accounting firm in order to complete the audit and not on a going forward basis, answering a
standard SAS 99 questionnaire from such registered independent accounting firm and delivery of a
representation letter in form and scope reasonably acceptable to Sellers’ Representatives, Parent
and Parent’s registered independent accounting firm. The provisions of this Section 10.4.4
shall survive the Closing for a period of two (2) years. Parent shall reimburse Members for their
actual and documented reasonable out-of-pocket expenses in connection with compliance with this
Section 10.4.4. All costs incurred as a result of Parent undertaking such audit shall be
borne exclusively by Parent; provided, however, Sellers’ Representatives shall make available such
books, records and materials as may be reasonably requested by Parent and Parent’s registered
independent accounting firm in order to conduct such audit. The Parties shall mutually agree to the
allocation of any out-of-pocket costs incurred as a result of the Members’ compliance with the
preceding sentence. All such audit activities shall be conducted in a commercially reasonable
fashion during normal business hours and upon five (5) days prior notice from Parent to Sellers’
Representatives.
10.5 Conduct and Preservation of Business Generally.
10.5.1 Ordinary Course Operation. Except as expressly provided otherwise in this
Agreement, as required by applicable Law, as required pursuant to the terms and conditions of
Contracts in existence on the date of this Agreement or to the extent that Parent consents in
writing in advance (which consent shall not be unreasonably withheld, conditioned or delayed),
during the period from the date of this Agreement until the Closing or earlier termination of this
Agreement, the Acquired Companies shall conduct their business in all material respects in the
Ordinary Course of Business and in compliance with applicable Laws, Authorizations and Orders.
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10.5.2 Specific Matters. Without limiting the generality of Section 10.5.1 or
the prohibitions of Section 10.6, from the date of this Agreement until the Closing or
earlier termination of this Agreement, except as expressly provided otherwise in this Agreement, as
required by applicable Law, as required pursuant to the terms and conditions of Contracts in
existence on the date of this Agreement or to the extent that Parent consents in writing in advance
(which consent shall not be unreasonably withheld, conditioned or delayed), each Acquired Company
shall (and each Member shall cause the Acquired Companies to) comply with the following
obligations, to the extent applicable, in all material respects:
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(a) |
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(Existence) — maintain its legal existence and all of its current
Company Authorizations and material Consents; |
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(b) |
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(Books and Records) — keep and maintain accurate books, records and
accounts in accordance with GAAP (except as described in Section 5.6 of the
Company Disclosure Schedules) and including as necessary to maintain the system of
internal controls described in Section 5.5; |
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(c) |
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(Financial Policies) — maintain its cash management practices and its
policies, practices and procedures with respect to collection of Accounts
Receivable, establishment of reserves for uncollectible Accounts Receivable,
accrual of Accounts Receivable, prepayment of expenses, payment of accounts
payable, accrual of other expenses, deferral of revenue, and acceptance and custody
of security deposits, in accordance with GAAP (except as described in Section
5.6 of the Company Disclosure Schedules); |
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(d) |
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(Preservation of Relationships) — use commercially reasonable efforts
to preserve the current business organization and the goodwill of the Acquired
Company, keep available the services of its current directors, officers, employees
and agents, maintain an adequate workforce and maintain good relations with
suppliers, licensors and licensees, franchisors and franchisees, distributors,
customers, landlords, creditors, accountants and others having a business
relationship with the Acquired Company; |
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(e) |
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(Taxes) — pay or, where appropriate, accrue all Taxes, assessments and
other charges imposed by Law or any Governmental Authority upon the Acquired
Company, or any of its properties or assets, when due and before the accrual of any
penalty or interest, unless the validity of the imposition is being contested in
good faith by appropriate Proceedings and adequate reserves for such contingency
have been set aside; |
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(f) |
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(Accounts Payable, etc.) — except as set forth on Schedule
10.5.2 pay all accounts payable, royalties, rents, fees and other claims and
expenses consistent with past practices (including claims and expenses for labor,
services, materials and supplies) when they become due and payable in accordance
with their terms, unless contested in good faith; |
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(g) |
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(Wages) — pay all wages and other compensation earned by employees of
the Acquired Company through the Closing Date consistent with past practices when
due and payable under Law or in accordance with the Acquired Company’s obligations
under any labor or employment practice or policy, any collective bargaining
agreement, or other labor contract or individual employment agreement to which the
Acquired Company may be a party or to which it may be subject; |
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(h) |
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(Insurance) — replace or renew (without any gap in coverage) any
insurance coverage in effect on the date of this Agreement that lapses or expires
with insurance that is comparable in amount and scope of coverage; |
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(i) |
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(Care of Property) — maintain the tangible properties of the Acquired
Company in good repair and condition (including the timely performance of all
scheduled maintenance consistent with past practices); |
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(j) |
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(Capex) — make all planned capital expenditures in accordance with the
Ordinary Course of Business; |
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(k) |
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(Casualty) — if there is any casualty loss or damage to any property of
the Acquired Companies prior to Closing, consult with Parent regarding replacement
or repair and any insurance claim that could be made with respect to the loss or
damage, and pay to the Acquired Company the proceeds of insurance recovered with
respect to the loss or damage; |
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(l) |
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(Intellectual Property) — make all Filings in any public record or with
any Governmental Authority necessary to maintain the registrations (or in the case
of pending applications, to prosecute such applications) for the Company
Intellectual Property listed on Section 5.19(a) of the Disclosure
Schedules; |
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(m) |
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(Trade Secrets) — use commercially reasonable efforts to maintain the
secrecy of all trade secrets in the Company Intellectual Property that are material
to the operations of an Acquired Company in the same manner as conducted prior to
the date of this Agreement; and |
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(n) |
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(IP Licenses) — use commercially reasonable efforts to protect and
preserve the effectiveness of licenses to any licensed Company Intellectual and any
other franchise, license or concession materially benefiting the Acquired Company. |
10.6 Certain Prohibitions. Without limiting the generality or applicability of
Section 10.5, from the date of this Agreement until the Closing or earlier termination of
this Agreement and except as expressly provided otherwise in this Agreement, as required by
applicable Law, as required pursuant to the terms and conditions of Contracts in existence on the
date of this Agreement, as provided on Schedule 10.6 or to the extent that Parent consents
in writing in advance (which consent shall not be unreasonably withheld, conditioned or delayed),
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prior to the Closing, no Acquired Company shall (and the Members shall cause the Acquired Companies
not to):
10.6.1 (Organizational Documents) — amend its Organizational Documents;
10.6.2 (Dividends and Distributions; Redemption) — (i) except to the extent expressly
permitted under this Agreement or in connection with quarterly tax distributions, declare, set
aside or pay any dividend or make any distribution with respect to its Equity Interests (whether in
cash or in property); or (ii) redeem, purchase, or otherwise acquire any of its Equity Interests;
10.6.3 (Equity) — issue or authorize for issuance any Equity Interest or other
security, issue any option, warrant or other right to acquire any Equity Interest, make any change
in any issued and outstanding Equity Interest or other security, or redeem, purchase or otherwise
acquire any Equity Interest or other security or permit any transfer of any Equity Interest of any
Acquired Company or distribute, transfer or convey any Equity Interest owned by any Acquired
Company other than as set forth in Section 11.7;
10.6.4 (Liens) — create or allow to be imposed any Lien on any of its material
properties or assets, tangible or intangible, other than Permitted Liens;
10.6.5 (Asset Dispositions) — dispose of, lease or license any of its properties or
assets, tangible or intangible, other than in the Ordinary Course of Business;
10.6.6 (Settlements) — enter into any settlement, consent decree or Order, or other
arrangement with any Governmental Authority or other Person that would materially adversely affect
the operation of the Business after the Closing or would require the payment of money after the
Closing;
10.6.7 (Debt) — incur any Indebtedness that will remain an obligation of any Acquired
Company after the Closing Date, other than Current Liabilities in the Ordinary Course of Business
and Permitted Liens;
10.6.8 (Guarantees) — guarantee, assume or provide collateral to secure any
indebtedness of another Person or act as surety for another Person if such guarantee or surety
would remain an obligation of any Acquired Company after the Closing Date;
10.6.9 (Capex) — make any capital expenditure (or series of related capital
expenditures) (i) totaling more than $30,000, (ii) involving insurance proceeds from a casualty
loss, or (iii) outside the Ordinary Course of Business;
10.6.10 (Investments in Others) — make any capital investment in or any loan to any
Person, or acquire any Equity Interest or other security of any other Person or form a new
Subsidiary;
10.6.11 (Payment of Liabilities) — delay or postpone the payment of its accounts
payable or other Liabilities in a manner outside the Ordinary Course of Business;
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10.6.12 (Waivers) — cancel, compromise, waive or release any Indebtedness or other
right or Claim (or series of related rights and Claims) either (i) outside the Ordinary Course of
Business, or (ii) that involves (or, if a contingent Claim, that would reasonably be expected to
involve) in the aggregate more than $25,000, other than Indebtedness described in Section
10.6.12;
10.6.13 (Material Contracts) — enter into any Material Contract, or amend or modify
any existing Material Contract in a manner that would materially effect the economic terms of such
Material Contract, or voluntarily terminate (or fail to renew) any Material Contract;
10.6.14 (Benefit Plans; Compensation Changes) — (i) enter into or adopt any Employee
Benefit Plan, amend (except as required by Law) or terminate any Company Benefit Plan, or enter
into, adopt, amend or terminate any other agreement, arrangement, plan or policy between any
Acquired Company and one or more of its managers, officers, employees or independent contractors;
(ii) increase the compensation or fringe benefits (including severance or change in control
benefits) payable or to become payable to any director, officer, employee or independent
contractor; or (iii) pay any benefit not required by any Company Benefit Plan or other arrangement
as in effect as of the date of this Agreement;
10.6.15 (Directors and Employees) — make any loan to or enter into any other
transaction outside the Ordinary Course of Business with any of its directors, officers or
employees or their respective Affiliates that is not repaid or terminated at or prior to Closing
and not otherwise inconsistent with the other terms and conditions of this Agreement, including any
adoption or amendment to any resolution or agreement concerning indemnification of directors,
officers or employees;
10.6.16 (Fundamental Transactions) — adopt or commence any plan of liquidation,
dissolution, conversion or merger;
10.6.17 (Discharges) — discharge a material Liability outside the Ordinary Course of
Business;
10.6.18 (Security Deposits) — release any funds constituting some or all of the
security deposits related to the Managed Properties, except to the extent released to a tenant or
former tenant at the Managed Properties and only to the extent required under the terms of the
applicable lease;
10.6.19 (Disclosure) — disclose any of its Confidential Information that is material
to the Business or as permitted under the terms of this Agreement;
10.6.20 (Restrictive Agreements) — renew or enter into any non-compete, exclusivity,
non-solicitation or similar agreement that would restrict or limit, in any respect, the operations
of any Acquired Company after the Closing (other than provisions in any existing Material Contracts
listed on Section 5.24.1 of the Disclosure Schedules that are renewed in accordance with
their terms);
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10.6.21 (Change in Accounting) — change in any material respect any of the
accounting, reserving, underwriting, claims or actuarial methods, principles or practices, or
working capital policies applicable to any Acquired Company, except as required by the GAAP;
10.6.22 (Taxes) — file any amended Tax Return, enter into any closing agreement, waive
or extend any statute of limitations with respect to Taxes (except to the extent resulting from an
extension of time to file a Tax Return), settle or compromise any Tax Dispute, or enter into any
Tax Sharing Agreement; or
10.6.23 (Commitments) — take or agree to take any of the actions prohibited by this
Section 10.6.
10.7 WARN Act. Without complying fully with the notice and other requirements of the
WARN Act, prior to the Closing, no Acquired Company shall effectuate (i) a “plant closing” as
defined in the WARN Act affecting any site of employment or one or more facilities or operating
units within any site of employment of any Acquired Company; or (ii) a “mass layoff” as defined in
the WARN Act affecting any site of employment of any Acquired Company.
10.8 Intercompany Indebtedness; Termination of Certain Commitments Release of Liens;.
10.8.1 Intercompany Accounts; Termination of Certain Commitments. (i) Prior to or at
the Closing, the Members will cause all Indebtedness owed to any Acquired Company by any Member
(other than amounts owed by one Acquired Company to another) to be paid in full, (ii) the Members
will cause all Indebtedness owed by any Acquired Company to any Member or any Affiliate of any
Member, or accounts between any Acquired Company and the Members or any Affiliate of any Member, to
be reduced to zero, (iii) the Members will cause all Long-Term Liabilities of the Acquired
Companies to be paid in full, (iv) the Members shall cause the Acquired Companies to terminate all
Employment Agreements and each agreement listed on Schedule 8.14 and Schedule 10.8
such that the Acquired Companies shall have no monetary or other liability thereunder following the
Closing, and (v) the Members and EOC Beneficial Owners shall cause the Acquired Companies or their
Affiliates to have terminated all agreements or arrangements with each of the owners of the Managed
Properties who have agreed that a portion of management fees due the Acquired Companies would be
paid to Banyan or any other third Person, such that the Acquired Companies will have no monetary or
other liability with respect to such arrangement following the Closing.
10.8.2 Lien Cancellations. Prior to or at the Closing, the Acquired Companies shall
use commercially reasonable efforts to cause all Liens on any asset or other property of any
Acquired Company to be released, except for Permitted Liens.
10.9 Third-Party Consents. The Acquired Companies shall use commercially reasonable
efforts to obtain each Consent set forth on Schedule 10.9.
10.10 Notice of Certain Developments. From the date of this Agreement until the
Closing Date or earlier termination of this Agreement, Sellers’ Representatives (on behalf of the
Members and the Acquired Companies) shall give prompt written notice to Parent, and Parent (on
behalf of the Purchaser Parties) shall give prompt written notice to Sellers’ Representatives
65
when a Member or the Acquired Company obtains Knowledge, or any Purchaser Party obtains knowledge,
as applicable, of any of the following:
10.10.1 the occurrence of any event or the existence of any circumstance that would be
reasonably likely to cause any representation of such Party contained in this Agreement to be
inaccurate or warranty to be breached if such representation were made, or the warranty were
effective, at the time of such event or circumstance, where the effect of such breach would be to
cause the conditions to the obligation to consummate the Closing of the terminating Party not to be
capable of being satisfied;
10.10.2 the breach of any obligation of any other Party, where the effect of such breach would
be to cause the conditions to the obligation to consummate the Closing of the terminating Party not
to be capable of being satisfied;
10.10.3 the receipt by any Party of a written notice or other material communication from any
Governmental Authority in connection with this Agreement or any of the Transactions;
10.10.4 the initiation or written threat of initiation of any Proceeding by any Person that,
if pending on the date of this Agreement, would have been required to have been disclosed pursuant
to Section 4.2.5 or Section 5.17 in order for each of those representations and
warranties to be accurate;
10.10.5 the receipt by any such Party of a written notice or other written communication from
any Person alleging that the consent of such Person is or may be required in connection with the
Transactions, if the subject matter of such communication or the failure of such party to obtain
such consent would not be expected to be material to the other Parties; and
10.10.6 the occurrence of any Material Adverse Change, Parent Material Adverse Change or any
event or circumstance that, alone or in combination with other events or circumstances, would
reasonably be expected to have a Material Adverse Change or Parent Material Adverse Change.
10.11 Disclosure Schedule Supplements. A notice given under Section 10.10
shall not of itself serve to qualify any representation or warranty in this Agreement of any Party
or in any certificate delivered pursuant to this Agreement. At any time prior to the Closing,
Sellers’ Representatives (on behalf of the Members) shall be entitled, but not required, to deliver
to Parent updates to, or substitutions of, the Disclosure Schedules. No supplement or update to the
Disclosure Schedules shall affect any of the conditions to the Purchaser Parties’ obligations under
this Agreement (including for purposes of determining satisfaction or waiver of the conditions set
forth in Article 8), affect the Purchaser Parties’ indemnification rights under Article
12 or affect any other remedy available to the Purchaser Parties arising from a representation
that was or would be inaccurate, or a warranty that would be breached, without qualification by the
supplement or update.
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10.12 Exclusivity of Transactions.
10.12.1 Acquisition Proposals. Except for negotiations and discussions with the
Purchaser Parties, prior to the Closing or the termination of this Agreement pursuant to
Section 14.1, the Members will not, and will cause each Acquired Company and will use
commercially reasonable efforts to cause their Representatives not to:
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directly or indirectly solicit, initiate or encourage an inquiry or proposal
from any Person relating to any transaction involving (A) the sale or other
transfer of the properties or assets of the Acquired Companies other than those
permitted under Section 10.5 and not prohibited by Section 10.6,
(B) the sale or other transfer of any of the Equity Interests of any Acquired
Company, or (C) a merger, consolidation, business combination or similar
transaction involving any Acquired Company (an “Acquisition Proposal”); or |
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(b) |
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discuss or negotiate with, cooperate with or provide information to, any Person
in connection with any Acquisition Proposal. |
10.12.2 Voting Prohibition. The Members will not vote or agree to vote any Equity
Interests in EOP or EOC in favor of any Acquisition Proposal.
10.12.3 Notification of Inquiries. The Members and the Acquired Companies will notify
Parent promptly if they become aware that any Person makes a bona fide Acquisition Proposal.
10.12.4 Existing Agreements. The Members will not, and will cause each Acquired
Company not to, without the prior written consent of Parent, release any Person from, or waive any
provision of, any confidentiality or standstill agreement to which any Acquired Company is a party
or to which any Member is a party that pertains to any Acquired Company.
10.13 Control of Operations. Nothing in this Agreement shall give Parent, Partnership
or any of their Affiliates, directly or indirectly, the right to control or direct the operations
of the Acquired Companies prior to the Closing Date.
10.14 Confidentiality. Each of the Purchaser Parties agrees that all information
provided or otherwise made available to Parent, Partnership or any of their respective Affiliates
or Representatives prior to, on or after the Closing Date under the Confidentiality Agreement or
otherwise under this Agreement (including pursuant to this Article 10) with respect to (i)
assets, businesses or other activities of Members or entities other than the Acquired Companies, or
(ii) CP Aviation Management LLC or CP Aviation, LLC shall be governed by the provisions of, and
treated as if provided or otherwise made available under, the Confidentiality Agreement, provided,
however, that, notwithstanding Section 15 of the Confidentiality Agreement, the obligations
applicable to the Purchaser Parties set forth in the Confidentiality Agreement with respect to such
information shall continue in full force and effect until the two (2)-year anniversary of the
Closing Date. Nothing in this Section 10.14, however, shall limit or otherwise restrict the
applicability of any other confidentiality or similar provisions included in this Agreement, any
Related Agreement or any other agreement between the Parties.
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10.15 Employees and Employee Benefit Matters.
10.15.1 Terminated Employees. At or immediately prior to Closing, Members shall cause
the Acquired Companies to terminate the employment of each of the Employees set forth on
Schedule 10.15.1 (each, a “Terminated Employee”), which Terminated Employees will
not continue their employment relationship with the Acquired Companies following the Closing. In
connection with such terminations, at Closing, Parent shall cause the applicable Acquired Company
to pay such individuals the severance amounts specified in the Global Agreement.
10.15.2 Employee Payment Matters. At or prior to Closing, the following Liabilities
shall be included in the calculation of the Closing Date Net Working Capital in accordance with
Section 3.5: (i) employee or independent contractor compensation and benefits accrued and
unpaid for services rendered by all employees and independent contractors of the Acquired Companies
prior to the Closing; and (ii) subject to Section 10.15.3, Liabilities with respect to
payroll, vacation and sick leave incurred or accrued, and that remain unpaid, at Closing, in each
case, with respect to present or former employees or independent contractors of the Acquired
Companies.
10.15.3 Service Credit. To the extent service is relevant for eligibility,
eligibility waiting periods, vesting, the amount of any vacation, sick days, flexible spending,
severance or layoff (but excluding for purposes of benefit accrual or determination of benefits),
under any retirement plan, benefit plan, program or arrangement established, continued, or
maintained by Parent or any of its Affiliates for the benefit of Employees, such plan, program, or
arrangement shall credit the Employees service for such purposes earned on and prior to the Closing
Date with any Acquired Company or its predecessors, in addition to service earned with Parent or
any of Parent’s Affiliates after the Closing Date.
10.15.4 Pre-Existing Conditions. With respect to any “employee welfare plan,” as
defined in Section 3(1) of ERISA, sponsored, maintained, or contributed to for the benefit of
Employees after the Closing Date, Parent shall or shall cause one of its Affiliates (including,
after the Closing, the Acquired Company) to waive all limitations to pre-existing conditions or
evidence of insurability and shall provide credit to Employees (or their spouses or dependents) for
any co-payments, deductibles, or out-of-pocket expenses paid by such Employees under any similar
plan of any Acquired Company during the portion of the relevant plan year the Closing Date occurs.
10.15.5 No Third-Party Beneficiary Rights; Plan Amendments. Nothing herein shall
create any third-party beneficiary rights in favor of any Employee or other Person with respect to
the matters set forth in this Section 10.15, nor shall this Agreement: (a) limit in any way
the ability of Parent to amend, in whole or in part, or terminate at any time and from time to time
any employee benefit plan, program or arrangement sponsored by Parent or any Affiliate of Parent
(including any Company Benefit Plan assumed by Parent or any Affiliate of Parent; or (b) create any
right of any Employee to continued employment with Parent or any Affiliate of Parent.
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ARTICLE 11
ADDITIONAL COVENANTS AND AGREEMENTS
11.1 Expenses. Except as otherwise set forth in this Agreement:
11.1.1 Parent shall pay all fees and expenses with respect to the Transactions that are
incurred by Parent or its Representatives and, other than as set forth in Section 11.1.2
each Member shall pay all fees and expenses with respect to the Transactions contemplated herein
that are incurred by such Member; and
11.1.2 Members shall pay all fees and expenses, not paid prior to the Closing Date, with
respect to the Transactions that are incurred by the Acquired Companies, Members, or their
respective Representatives on or prior to Closing; provided that Parent shall pay, or immediately
following Closing, shall cause the Acquired Companies to pay reasonable and documented external
legal and accounting expenses of the Acquired Companies in an amount up to $1,000,000 in the
aggregate, which expenses are incurred as a result of the Transactions and relate to professional
services rendered since December 21, 2010 and prior to the Closing; provided further that Parent
shall pay the advisory fees of the Acquired Companies due to BofA Xxxxxxx Xxxxx and to Barclays
Capital in the amounts set forth on Schedule 11.1.2, which fees were incurred by the
Acquired Companies in connection with the Transactions. All other financial advisory fees incurred
by the Acquired Companies in connection with Transactions, including all advisory fees due CBRE
Xxxxxxx Xxxxx, Inc. or its Affiliates, shall be paid by the Acquired Companies at or prior to
Closing. In no event will the Purchaser Parties or the Acquired Companies pay or become liable for
any costs or expenses incurred in connection with the proposed public offering of Eola Property
Trust.
11.2 No Assignments. No assignment of any part of this Agreement or any right or
obligation hereunder may be made by any Party without the prior written consent of all other
Parties, and any attempted assignment without such consent shall be void and of no force or effect;
provided, however, that (a) after the Closing, Parent may assign any of its rights or delegate any
of its duties under this Agreement to any Affiliate of Parent controlled by Parent; and provided,
further, that no such assignment shall relieve Parent of its obligations hereunder, and (b) Parent
may collaterally assign its rights, but not its obligations, under this Agreement to any of its
financing sources. Any attempted assignment, delegation or transfer in violation of this
Section 11.2 shall be void.
11.3 Tax Matters.
11.3.1 Tax Returns; Tax Liability.
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(a) |
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Except as set forth in Section 11.3.4, the Purchasing Parties shall
prepare or cause to be prepared, and file or cause to be filed, all Tax Returns
required to be filed by or on behalf of the Acquired Companies after the Closing
Date, whether for a Tax period that ends on or before the Closing Date (a
“Pre-Closing Periods”) or for a Tax period that begins before the Closing
Date and ends after the Closing Date (a “Straddle Period”). Such
Tax Returns shall be prepared and filed in a manner consistent with the |
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Acquired Companies’ past practice and applicable Law. Within thirty (30) days
following the Closing Date, Sellers’ Representatives shall provide Parent with a
proposed allocation of tax items for each Acquired Company to Pre-Closing Periods
and Post-Closing Straddle Periods (as defined below), and Purchasing Parties may
use such proposed allocation as the basis for the preparation of the Tax Returns
which they are required to prepare and file pursuant to this Section 11.3.1(a).
Parent shall inform Sellers’ Representatives of any disagreement with any portion
of such proposed allocation. Purchasing Parties shall permit Sellers’
Representatives to review and comment on each such Tax Return prior to its filing
and Parent shall, in good faith, consider such comments with respect to such Tax
Returns. |
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(b) |
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Except for Taxes reflected in the calculation of the Final Closing Date Net Working
Capital, each Member and each EOC Beneficial Owner shall indemnify the Parent Indemnities
against and hold the Parent Indemnitees harmless from and against the entirety of any
Losses arising out of, or caused by: |
(i) Pre-Closing Taxes; provided, however, that Pre-Closing Taxes do not include any
income, franchise or similar Taxes on EOP or any of its subsidiaries as a “C Corporation”
for the date that includes the Closing Date for the EOP Contribution as a result of EOP or
any of its subsidiaries, as the case may be, being treated as a “C Corporation” on such
date as a result of the occurrence of the EOP Contribution;
(ii) all Taxes of any member (other than Acquired Company) of Consolidated Tax Group
of which an Acquired Company (or any of their respective predecessors as defined in the
flush language of Section 5.11) is or was a member prior to the Closing Date,
whether pursuant to Treasury Regulations Section 1.1502-6 or any analogous or similar
provision of state, local, or foreign Law; and
(iii) Taxes of any Person imposed on the Acquired Companies as a transferee or
successor, by contract or pursuant to any Law, which Taxes relate to an event or
transaction that occurred prior to the Effective Time.
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(c) |
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For purposes of this Agreement, whenever it is necessary to allocate liability for
Taxes for a Straddle Period or to allocate items of income, receipts, gain, deduction,
loss, or credit of an Acquired Company, such allocation shall be made to, on the one hand,
the portion of the Straddle Period ending on and including the Closing Date (such portion,
a “Pre-Closing Straddle Period”), and the portion of the Straddle Period beginning
and ending after the Closing Date, the Straddle Period shall be deemed to consist of two
taxable periods, one which ended at the close of the Closing Date and the other which began
at the beginning of the day following the Closing Date. Items of income, receipts, gain,
deduction, |
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loss or credit of the Acquired Companies for the Straddle Period shall be allocated
between such periods on a “closing of the books basis” by assuming that the books
of the Acquired Companies were closed at the end of the Closing Date; provided,
however, that any extraordinary event, action, or transaction or other event
outside the Ordinary Course of Business, regardless of when effective, by
Purchasing Party or any of their respective Affiliates (including, after the
Closing Date, an Acquired Company) occurring after the Closing Date, shall, for
purposes of Section 11.3, be treated as being solely attributable to the
portion of the Straddle Period beginning and ending after the Closing Date. The
amount of other Taxes of the Acquired Companies for a Straddle Period shall be
allocated to the Pre-Closing Straddle Period and the remainder of the Straddle
Period pro rata, based on the number of days of the Pre-Closing Straddle
Period, on the one hand, and the number of days remaining in the Straddle Period,
on the other hand; provided, however, that any increase in any such Tax resulting
from any extraordinary event, action, or transaction or other event outside the
Ordinary Course of Business, regardless of when effective, by Purchasing Party or
any of their respective Affiliates (including, after the Closing Date, an Acquired
Company) after the Closing Date, shall, for purposes of Section 11.3, be
treated as being solely attributable to the portion of the Straddle Period
beginning and ending after the Closing Date. |
11.3.2 Amendment of Tax Returns; Subsequent Actions.
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Without limitation of Section 11.3.1(a), no Party shall, and no Party shall
cause the Acquired Companies to, amend, refile, revoke or otherwise modify any Tax Return
or Tax election of, in respect of, or on behalf of an Acquired Company with respect to any
Pre-Closing Period or Straddle Period without the prior written consent of Parent or
Sellers’ Representatives, as the case may be, which consent shall not be unreasonably
withheld, conditioned or delayed. |
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(b) |
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No Purchasing Party nor any of its Affiliates (including, as of and after the Closing
Date, any of the Acquired Companies) shall, without prior written consent of Sellers’
Representatives, (1) take any extraordinary action that any such Purchasing Party (or any
of their respective Affiliates) reasonably should know (without the necessity of any
extraordinary research or other similar investigation) would result in an increased
liability for Taxes (including a reduction or limitation on the use of a refund or other
Tax benefit) or reduction of any Tax asset of an Acquired Company or any of its
Subsidiaries (or Seller or any of its Affiliates) attributable to a Pre-Closing Period or
Pre-Closing Straddle Period, or would otherwise increase the liability for Taxes of any
Seller pursuant to this Agreement or otherwise; or (2) make or change any Tax election
affecting a Pre-Closing Period or Pre-Closing Straddle Period, or would |
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otherwise increase the liability for Taxes of any Seller pursuant to this Agreement
or otherwise. |
11.3.3 Tax Contests; Cooperation.
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Contest Rights. In the event that a notice of a Tax Dispute, or any intent to initiate
a Tax Dispute, is received that relates to any Pre-Effective Date Period or Straddle Period
or which, if successful, would either result in a Loss or Liability in respect of Taxes
which indemnity properly may be sought against any Member or any EOC Beneficial Owner
pursuant to this Agreement, Parent shall (i) notify Sellers’ Representatives of such claim
or demand within the earlier of twenty (20) days of receipt thereof or such time that would
allow the Members to timely respond to such Tax Dispute (but in any event no earlier than
such notice could be reasonably provided by Parent) and (ii) give Sellers’ Representatives
such information with respect thereto as Sellers’ Representatives may reasonably request;
provided, however, that for the sake of clarity, any failure by Parent to provide such
notice shall not relieve a Member or any EOC Beneficial Owner of any liability under this
Agreement unless and to the extent that a Member or an EOC Beneficial Owner has been
materially and adversely been prejudiced thereby. Members or an EOC Beneficial Owner may,
at their own expense, participate in and, upon reasonable prior notice to Parent by
Sellers’ Representatives, assume the defense of any such Tax Dispute so long as (a)
Sellers’ Representatives furnish Parent with an opinion of tax counsel selected by Sellers’
Representatives (and reasonably satisfactory to Parent (which approval shall not be
unreasonably withheld, delayed or conditioned)) (the “Approved Counsel”), at the
Members’ or an EOC Beneficial Owner expense, to the effect that no less than “substantial
authority” exists with respect to the defense for such Tax Dispute, (b) Members or an EOC
Beneficial Owner continue to be represented in the Tax Dispute by Approved Counsel (or
substitute Approved Counsel) and (c) Members and the EOC Beneficial Owners agree to
indemnify Parent and the applicable Acquired Company (or its successor) in a manner
reasonably satisfactory to Parent and the Acquired Company (or its successor) and to pay to
Parent or the Acquired Company (or its successor) on demand all liabilities and expenses
which may reasonably be entailed in such defense (excluding any liabilities and expenses of
the Parent and the applicable Acquired Company (or its successor) attributable to Parent
exercising its right provided for in the next sentence to participate in such defense). If
Sellers’ Representatives assumes such defense and continue to satisfy the conditions in the
preceding sentence, Sellers’ Representatives shall have the sole discretion as to the
conduct of such defense and Parent shall have the right to participate (but not the
obligation to participate or any obligation if it does not participate) in the defense
thereof and to employ separate counsel at its own expense; provided, however, that Sellers’
Representatives shall (1) keep Parent promptly and fully informed of the conduct of any
such Tax |
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Dispute, (2) provide promptly to Parent any documents, correspondence, or other
materials relating to any such Tax Dispute, and (3) take into account any
reasonable suggestions of Parent relating to the conduct (including prosecution,
compromise, or settlement) of such Tax Dispute. Whether or not the Members or the
EOC Beneficial Owners choose to defend any claim, all of the Parties shall
cooperate in the defense or prosecution thereof in accordance with Section
11.3.3(b); provided further that neither Sellers’ Representatives nor any
Member or EOC Beneficial Owner may settle any such Tax Dispute without the prior
written consent of Parent (which consent shall not be unreasonably withheld,
delayed or conditioned). |
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(b) |
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Cooperation. The Members, EOC Beneficial Owners’, Sellers’ Representatives, and the
Purchaser Parties shall provide all reasonable cooperation in connection with the filing of
Tax Returns of the Acquired Companies and any Tax Disputes involving the Acquired
Companies.
Such cooperation shall include the reasonable furnishing or making available during
normal business hours of personnel, powers of attorney, and the retention and (upon
a Party’s request) the provision of records and information that are reasonably
relevant to the preparation of any such Tax Return or to any such Tax Dispute.
Each of Members, Sellers’ Representatives and the Purchaser Parties shall (i)
retain all books and records that are in his, her or its, as the case may be,
possession with respect to Tax matters pertinent to the Acquired Companies relating
to any Pre-Closing Periods or Straddle Period until the expiration of the
applicable statute of limitations (and, to the extent notified by Parent or
Sellers’ Representatives, any extension thereof) of the applicable taxable periods,
and abide by all record retention agreements entered into with any taxing
authority, and (ii) give the other Parties reasonable written notice before
transferring, destroying or discarding any such books and records and, if the other
Party so requests and to the extent consistent with Law, Sellers’ Representatives
or Parent, as the case may be, shall allow the other party to take possession of
such books and records. |
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(c) |
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Parent and Sellers’ Representatives shall, upon request, use commercially reasonable
efforts to obtain any certificate or other document from any Person as may be necessary to
mitigate, reduce or eliminate, in a manner consistent with applicable Law, any Tax that
could be imposed (including with respect to the Contributions) on any Purchasing Party (or
any of their respective Affiliates), on the one hand, or Sellers’ Representatives, any
Member or the EOC Beneficial Owners (or any of their respective Affiliates), on the other
hand; provided, however, that for the sake of clarity, no Purchasing Party (or any of their
respective Affiliates), on the one hand, and none of Sellers’ Representatives, any Member
or EOC Beneficial Owner (or any of their respective Affiliates), on the other hand, shall
be required, as a result of this subparagraph (c), to bear any expense |
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or otherwise take any action (or be required to fail to take any action)
that it reasonably determines would adversely affect its interests. |
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(d) |
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Subsequent Recovery. Without limitation of Section 11.3.6, if any
amounts shall have been paid to Parent, the applicable Acquired Company (or its
successor), or their respective Affiliates, pursuant to this Section 11.3
or Article 12 (in the latter case, with respect to Taxes or a Tax Dispute),
and any such amount shall be subsequently be recovered in whole or in part by
Parent, the Acquired Company (or its successor), or any of their respective
Affiliates by reason of agreement with the Internal Revenue Service, the United
States or other appropriate taxing authority, or any court decision (including a
decision of the United States Tax Court or other comparable court or forum) which
is not appealed, then Parent or the applicable Acquired Company (or its successor),
as the case may be, shall promptly (i) notify Sellers’ Representatives and (ii) pay
such recovered amounts to the Sellers’ Representatives. |
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(e) |
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Consultation. If the Parties disagree as to the amount of Taxes (or Tax-related
Losses) for which they are liable under this Agreement, Parent and Sellers’
Representatives shall consult with each other in good faith to resolve such dispute
following the receipt of written notice from the other to begin such consultation
(the “Tax Consultation Notice”). If any such point of disagreement cannot
be resolved within thirty (30) days following the date of receipt of the Tax
Consultation Notice, Parent and Sellers’ Representatives shall jointly select a
nationally recognized independent public accounting or law firm to act as an
arbitrator to resolve those points of disagreement. Any such resolution shall be
conclusive and binding on the Parties and their respective Affiliates. The fees of
such accounting or law firm shall be borne equally between the Purchasing Parties,
on the one hand, and Sellers, on the other hand. The Parties shall provide (and
shall cause their respective Affiliates to provide) to such firm all reasonable and
reasonably necessary cooperation. |
11.3.4 Transfer Taxes. All sales, transfer (including, without limitation, real
estate transfer Tax), recording, deed, stamp, registration, documentary, conveyancing, franchise,
property, notarial, grantor or grantee Taxes (but not including any income, franchise, or similar
Taxes) in connection with the effectuation of the Contributions, whether imposed on the Purchaser
Parties, the Acquired Companies, any Member or any EOC Beneficial Owner, shall be borne and paid
for fifty percent (50%) by Parent and fifty percent (50%) by the Members and EOC Beneficial Owners.
The Parties shall cooperate to comply with all Tax Return requirements for such Taxes contemplated
by this Section 11.3.4 (which shall be prepared and filed (or caused to be filed) by Parent
to the extent permissible under applicable Law). The Parties shall cooperate to take such
reasonable actions as may be necessary to minimize the amount of any such Taxes in a manner
consistent with Law.
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11.3.5 Tax Treatment of the Contributions and Related Transactions.
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(a) |
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The Parties intend that the Contributions be treated, for federal income tax
purposes, as (i) (A) a taxable sale of each Member’s EOP Units and Banyan’s EOP
Units to the extent required by the Treasury Regulations under Code Section 707
relating to “disguised sales” that a Member or an EOC Beneficial Owner (as
successor to Banyan) receives cash in connection with the Contributions, including,
without limitation, cash provided as part of the Earn-Out Payments, and (B)
otherwise as a tax-free contribution by each Member of its EOP Units and to Banyan
of its EOC Units to Partnership under Section 721 of the Code and (ii) a
distribution by Banyan to the EOC Beneficial Owners of the EOC Consideration under
Section 731 of the Code. |
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The Parties (i) will report the EOP Contribution and the EOC Contribution in a
manner consistent with this Section 11.3.5 for U.S. federal income and all
other relevant Tax purposes and (ii) will not take any action or position
inconsistent with such treatment. |
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(c) |
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Provided the requirement of Section 8.3.4 hereof has been satisfied or
to the extent otherwise required by Law, Partnership shall execute and cause EOP to
timely file an election under section 1362(e)(3) of the Code to apply the
“closing-of-the books” method with respect to the allocation of income of EOP for
the 2011 taxable year and shall take no action or position inconsistent with that
election. |
11.3.6 Tax Refunds. If, following the Closing, a refund of Taxes is recognized by or
credited to the account of an Acquired Company or any of its Subsidiaries in respect of any
Pre-Closing Period or Pre-Closing Straddle Period (determined pursuant to the principles set forth
in Section 11.3.1(c)), and except to the extent that (i) such refund is attributable to a
tax item relating either to a taxable period other than a Pre-Closing Period or Pre-Closing
Straddle Period, or (ii) a credit for such refund has been reflected in the Final Closing Date Net
Working Capital, the Purchasing Parties will pay (or cause to be paid) the amount of such refund to
Sellers’ Representatives, who shall then disburse such amount to the appropriate Members or EOC
Beneficial Owners.
11.3.7 Relationship of this Section 11.3 to Article 12. Any conditions or limitations
on indemnification set forth in Article 12 (except as provided for in Section
12.4.2 with respect to the Tax Threshold Amount or in Section 12.4.4 with respect to
pro rata indemnification limits) with respect to monetary amount of claims or liability shall not
apply to any claim or liability to which this Section 11.3 applies or to any breach of any
obligation under this Section 11.3. In the event of any inconsistency between provisions of
Article 12 and this Section 11.3, this Section 11.3 shall control. The
Members shall have no liability under this Agreement for any Taxes of the Acquired Companies except
as otherwise expressly provided in this Section 11.3.
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11.3.8 Survival. Notwithstanding any other provision of this Agreement, the covenants
and obligations set forth in this Section 11.3 shall survive until, and any claim for
indemnification with respect thereto must be made prior to, the expiration of the applicable
statute of limitations with respect to the underlying Tax claim (including any valid extensions).
11.4 Further Assurances. From and after the Closing, Members and Parent will execute
and deliver, and will cause their respective Affiliates to execute and deliver, such further
instruments of conveyance and transfer and take such other actions as might reasonably be requested
to carry out the purposes and intent of this Agreement and the Related Agreements.
11.5 No Use of Corporate Name. Subject to the following sentence, except as required
by applicable Law, otherwise required pursuant to the terms and conditions of this Agreement or
consented to in writing by Parent, Members agree that following the Closing Date, they shall not,
nor shall they permit any of their Affiliates to, make any use of the wordmarks “Eola” or any
variation thereof (the “Marks”), including, but not limited to, use in corporate names,
brand names, domain names, and marketing materials; provided that Members and their Affiliates
shall be permitted to use the Marks following the Closing Date (i) as a historical reference to the
Business, and (ii) in connection with the name and operations of entities affiliated with Members
that were in existence prior to the date of this Agreement and that used the wordmark “Eola” in
connection therewith. In furtherance of the foregoing (but subject to the limited license set forth
in the preceding sentence), as promptly as practicable but in no event later than ninety (90) days
following the Closing Date, Members shall cease any and all use of all Marks, on any and all items
and materials relating to the business of Members, including any websites, domain names, business
cards, stationery and marketing materials.
11.6 Cash Distributions. The Parties acknowledge and agree that, notwithstanding
anything to the contrary in this Agreement, within five (5) Business Days prior to the anticipated
Closing Date, Members shall, subject to compliance with all applicable Laws, be entitled to cause
the Acquired Companies to pay cash dividends or other distributions to Members to the extent of
Excess Cash at the Acquired Companies; provided, however, that, as of Closing, Members shall cause
the Acquired Companies to maintain an amount of Net Working Capital equal to no less than $250,000,
which amount shall be subject to delivery to the Members in accordance with Section 3.5.
11.7 Entity Distributions. The Parties acknowledge and agree that, notwithstanding
anything to the contrary in this Agreement, at or prior to the Closing, Members shall cause the
Acquired Companies to distribute all Equity Interests held by any Acquired Company in CP Aviation
Management LLC, CP Aviation LLC and Eola Capital Investment Fund III LLC to be transferred or
otherwise distributed by the Acquired Companies to Members or their designees.
11.8 Non-Competition.
11.8.1 Except as provided in Section 11.8.5 below, in furtherance of the consideration
being paid by Parent and Partnership to the Members and EOC Beneficial Owners hereunder, each of
the Members and EOC Beneficial Owners agree that, during the period beginning on the Closing Date
and ending on the fifth (5th) anniversary of the Closing Date (such period, the
“Restricted Period”), no Member, EOC Beneficial Owner, or any of their respective
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Affiliates shall directly or indirectly (i) engage or participate in, or seek to engage or
participate in (whether as an officer, director, employee, partner, stockholder, agent, consultant,
representative, or otherwise) any property management services for the Managed Properties, (ii)
provide, or seek to provide, consulting services with respect to the property management of the
Managed Properties, or (iii) own any equity interest in any entity that provides, or seeks to
provide, property management services for the Managed Properties.
11.8.2 Each of the Members and EOC Beneficial Owners acknowledge and agree that the scope and
the length of the non-compete period in Section 11.8.1 is reasonable and narrowly drawn to
impose no greater restraint than is necessary to protect the goodwill of the Business and to
protect the Purchaser Parties’ legitimate interest in the enjoyment of the Business. Each of the
Purchaser Parties, Members and EOC Beneficial Owners intends that the covenants of this Section
11.8.2 and Section 11.8.1 shall be deemed to be a series of separate covenants.
11.8.3 Except as permitted by Section 11.8.5 below, each of the Members and EOC
Beneficial Owners agree that no Member, EOC Beneficial Owner or any of their respective Affiliates
shall, whether directly or indirectly, during the Restricted Period do any of the following: (i)
solicit the employment of or hire any current employee of any of the Acquired Companies (other than
Xxxxx X. Xxxxxxxx) who remains employed by the Acquired Companies, Parent or Partnership or their
Affiliates at Closing (excluding such employees following any termination of employment with the
Purchaser Parties) without the prior written consent of Parent, provided, however, that nothing
herein shall prohibit Members, EOC Beneficial Owners or any of their respective Affiliates from
making general solicitation advertisements that are not targeted at such employees or hiring any
such employees who were previously terminated or had previously resigned such employment; or (ii)
call on or solicit any supplier or vendor that was providing products or services to the Business
on the Closing Date in order to influence or induce or attempt to influence or induce such Person
to decrease or cease doing business with any Acquired Company; or (iii) make any statement or do
any act willfully and intentionally to cause existing property owners who conduct business with any
of the Acquired Companies to make use of the property management services of any competing property
management company with respect to any of the properties being managed by the Acquired Companies.
(a) If Members, EOC Beneficial Owners or any of their respective Affiliates breach or threaten
to commit a breach of any of the restrictive covenants set forth in Section 11.8.3, then,
notwithstanding anything to the contrary in this Agreement, Purchaser Parties sole right and
remedy, in addition to recovery of reasonable attorney fees and expenses in connection therewith,
shall be to have the restrictive covenants in this Section 11.8.3 specifically enforced
against Members, EOC Beneficial Owners and/or their respective Affiliates, including temporary
restraining orders and injunctions by any court of competent jurisdiction and without the
requirement to post any bond or make any other undertaking with respect thereto, it being agreed by
Members and EOC Beneficial Owners that any breach or threatened breach by Members, EOC Beneficial
Owners or any of their respective Affiliates of this Section 11.8.3 would cause irreparable
injury to Purchaser Parties and that money damages would not provide an adequate remedy to
Purchaser Parties.
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(b) If Members, EOC Beneficial Owners or any of their respective Affiliates breach any of the
restrictive covenants set forth in Section 11.8.1, then Purchaser Parties shall have the
right to seek the remedies set forth in Section 11.8.8, which remedies, notwithstanding
anything to the contrary in this Agreement, shall be the sole and exclusive remedies of Purchaser
Parties with respect to any breach of Section 11.8.1 by Members or EOC Beneficial Owners.
11.8.4 If, during the enforcement of any or all of the covenants and provisions set forth in
this Section 11.8, any court of competent jurisdiction enters a final judgment that
declares that the duration, scope, or area restrictions stated herein are unreasonable under
circumstances then existing, are invalid, or are otherwise unenforceable, then the Parties agree
that the maximum enforceable duration, scope, or area reasonable under such circumstances shall be
substituted for the stated duration, scope, or area, and that the court making the determination of
invalidity or unenforceability shall have the power to revise the scope, duration, or area of the
term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and that comes the closest
to expressing the intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified to cover the maximum duration, scope, or area permitted by Law.
11.8.5 Notwithstanding the terms of this Section 11.8, each of the Members, EOC
Beneficial Owners and their respective Affiliates shall be directly or indirectly (i) entitled to
own equity interests in Partnership and Parent, subject to the applicable terms of the Other
Transaction Agreements, and (ii) permitted to engage in all activities necessary to carry out such
Person’s duties and obligations as a director, or as directed by senior management or the Board of
Parent, as an employee or other Representative of Parent, Partnership or any of their respective
subsidiaries. In addition, notwithstanding the terms of this Section 11.8, the Parties
acknowledge and agree that Members, EOC Beneficial Owners and their Affiliates hold equity and
other economic interests in the Managed Properties and such Persons shall be entitled to carry out
all fiduciary and other contractual obligations in connection therewith. None of the activities set
forth in this Section 11.8.5 shall violate or breach the other restrictions set forth in
this Section 11.8.
11.8.6 Members and EOC Beneficial Owners shall be responsible for any breach of this
Section 11.8 by any of their respective Affiliates.
11.8.7 Each of the Parties considers the provisions of this Section 11.8 to be fair
and reasonable in order to protect their respective legitimate business interests.
11.8.8 Management Agreement Terminations. The Parties agree that if at any time during
the sixty (60) month period following the Closing (the “Protected Period”), any Member or
EOC Beneficial Owner willfully and intentionally takes any action that results in the termination
of any of the Management Agreements with respect to the Managed Properties (other than a
termination due to (A) a bona fide sale of a Managed Property to a third party, (B) a foreclosure
or other transfer of a Managed Property to a lender in satisfaction of indebtedness, or (C) any
action willfully and intentionally taken, or the willful and intentional omission to take any
action, by Purchaser Parties, EOP, EOC, or any of their respective Affiliates that causes or
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results in the termination of such Management Agreement, excluding (i) any termination by the
Purchaser Parties, EOC, EOP or their respective Affiliates following a default by a counterparty,
(ii) any failure to renew any Management Agreement upon expiration on economic terms or length of
term less favorable to the Acquired Company than those contained in the agreement as of the date
hereof or (iii) any failure to amend any Management Agreements to provide for economic terms or
length of terms less favorable to the Acquired Company than those contained in the agreement as of
the date hereof) (a “Qualified Termination”), then Members and EOC Beneficial Owners shall
pay to the applicable Acquired Company an amount equal to the product of (x) the number of whole
months remaining in the Protected Period following the effective date of the Qualified Termination
and (y) the amount set forth under the heading “Monthly Net Fee Income” on Schedule 11.8.8
that corresponds to the applicable Management Agreement (“Make Whole Payment”).
Notwithstanding the foregoing, subject to the consummation of the Closing, any termination of the
Peachtree Management Agreements due to a sale to a third Person, which sale is consummated between
the date hereof and July 6, 2012 shall be deemed a Qualified Termination and obligate Members and
EOC Beneficial Owners to pay Parent the applicable Make Whole Payments with respect to the Managed
Properties included in such sale in accordance with the terms of this Section 11.8.8. Each
Member or EOC Beneficial Owner shall only be responsible for his or her pro rata share of any Make
Whole Payment due to Parent (based on each EOP Former Member’s applicable EOC Membership Interest
Percentage multiplied by 75% and each EOC Beneficial Owner’s applicable Banyan Membership Interest
Percentage, multiplied by 25%, as applicable) pursuant to this Section 11.8.8. All Make
Whole Payments shall be due within thirty (30) days following the delivery of written notice of the
occurrence of a Qualified Termination following such Qualified Termination by Parent to Sellers’
Representatives.
11.8.9 Management Agreement Reimbursements. The Parties agree that if, at any time
during the Protected Period for so long as the applicable Management Agreement remains in effect
(the “Reimbursements Period”), EOP or EOC, or their respective Affiliates, are required to
reduce any salary or administrative cost reimbursements below the budgeted amounts that have been
approved by the owners of the applicable Managed Property pursuant to such Management Agreement due
to a written demand by the managing member of the owner of such Managed Property (or an owner or
other Person with authority to terminate such Management Agreement on behalf of such owner) (a
“Qualified Loss”), then, with respect to such Qualified Loss, Members and EOC Beneficial
Owners shall pay to the applicable Acquired Company an amount equal to the product of (x) the
number of whole months during the Reimbursements Period where EOP or EOC, or their respective
Affiliates, experiences such Qualified Loss by (y) the difference between (A) the applicable
approved budgeted amounts of salary or administrative cost reimbursements approved by the owners of
such Managed Property pursuant to such Management Agreement and (B) the as adjusted amounts of
salary or administrative cost reimbursements invoiced by EOP or EOC, or their respective
Affiliates, as a result of such written demand (the “Reimbursements Payment”). Each Member
or EOC Beneficial Owner shall only be responsible for his or her pro rata share of any
Reimbursements Payment due to Parent (based on each EOP Former Member’s applicable EOC Membership
Interest Percentage multiplied by 75% and each EOC Beneficial Owner’s applicable Banyan Membership
Interest Percentage, multiplied by 25%, as applicable) pursuant to this Section 11.8.9.
All Reimbursements Payments with respect to any portion of a Reimbursements Period that has
occurred shall be due within thirty (30) days following the delivery of written notice of such
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Qualified Loss and the applicable Reimbursements Payment amount by Parent to Sellers’
Representatives.
11.9 Execution of Partnership Agreements. Effective upon receipt of OP Units
hereunder, each Member and EOC Beneficial Owner shall execute and deliver a signature page to the
Amended and Restated Agreement of Limited Partnership of the Partnership as a limited partner of
the Partnership.
ARTICLE 12
INDEMNIFICATION
12.1 Survival.
12.1.1 All of the representations and warranties of each of the Members, EOC Beneficial Owners
and the Purchaser Parties shall survive the Closing, and shall continue in full force and effect
for a period of eighteen (18) months thereafter (the “Standard Survival Period”), except
for the representations and warranties set forth in:
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(a) |
|
Sections 4.2.1 through 4.2.4, 5.1, 5.2,
6.1, 6.2, 6.4 and any claim for fraud (collectively, the
“Fundamental Representations”), which shall survive the Closing
indefinitely (the “Fundamental Survival Period”); and |
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(b) |
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Sections 4.2.7, 4.2.9, 4.2.10, 5.11,
5.18, 5.23, 5.27, 5.28 and 6.5 and
6.12, which shall survive the Closing until sixty (60) days following the
applicable statute of limitations period in all relevant jurisdictions (the
“Extended Survival Period”). |
12.1.2 All covenants and agreements that by their terms apply or are to be performed in whole
or in part after the Closing will survive for the period provided in such covenants and agreements,
if any, or until fully performed (the “Covenant Survival Period”). All covenants and
agreements that by their terms apply or are to be performed in their entirety on or prior to the
Closing shall terminate at the Closing.
12.1.3 The Parties intend to shorten applicable statutes of limitations, and agree that no
claims may be brought with respect to any matter after expiration of the applicable Survival Period
for such matter under this Section 12.1. It is understood and agreed that (a) after the
Closing, the sole and exclusive remedy with respect to any breach of this Agreement shall be a
claim for Losses made pursuant to (and subject to the limitations of) this Article 12;
provided that, notwithstanding the foregoing, nothing in this Article 12 shall limit the
right of any Party (i) to pursue an action for or to seek remedies with respect to claims for
fraud, or (ii) to seek specific performance or other equitable relief pursuant to Section
16.14; and (b) prior to the Closing, the Parties shall be entitled only to the termination of
this Agreement in accordance with Article 14, and indemnification under this Article
12 shall not apply. In addition, the Parties waive all other claims, whether by statute,
common law, or otherwise.
12.2 Indemnification of Purchaser Parties. Effective as of Closing and subject to
Sections 12.3, 12.4, 12.7, and 12.8, each Member (other than EOP in
its capacity as a Member of EOC) and each EOC Beneficial Owner shall severally and not jointly
indemnify Parent and its
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Affiliates, the Acquired Companies, officers, directors, employees and agents (collectively, the
“Parent Indemnitees”), defend, and hold the Parent Indemnitees harmless from and against,
and reimburse the Parent Indemnitees for, any and all of the following Losses the Parent
Indemnitees may suffer, sustain or become subject to, through and after the date of the claim for
indemnification (including any Losses suffered after the end of the applicable Survival Period with
respect to claims made within such period in accordance with Section 12.3):
12.2.1 any Losses based upon, arising out of or caused by any breach or inaccuracy of any
representation or warranty made by such Member or EOC Beneficial Owner in Section 4.2 or
referred to in the certificate delivered by or on behalf of Members and EOC Beneficial Owners
pursuant to Section 8.3.1;
12.2.2 any Losses based upon, arising out of or caused by any breach or inaccuracy of any
representation or warranty made by Members and EOC Beneficial Owners in Article 5 or
referred to in the certificate delivered by or on behalf of Members and EOC Beneficial Owners
pursuant to Section 8.3.1;
12.2.3 any Losses based upon, arising out of or caused by any failure of Members, EOC
Beneficial Owners or Sellers’ Representatives to carry out, perform, satisfy and discharge any of
their respective covenants, agreements, undertakings, liabilities or obligations under this
Agreement or the Related Agreements that are required to be performed after the Closing;
12.2.4 any Losses based upon, arising out of or caused by any failure of the Acquired
Companies to properly classify worker’s status for purposes of federal, state or local income or
employment Tax, timely and properly reporting income of any employee, independent contractor or
other service provider, or timely and properly submitting any required withholdings relating to any
such income, in each case, for periods prior to the Closing;
12.2.5 any Losses based upon, arising out of or caused by the failure of the Acquired
Companies to obtain and file, prior to the Closing, full and effective releases of all Liens or any
asset or other property of any Acquired Company other than Permitted Liens, including those Liens
described on Schedule 12.2.5.
12.2.6 any amounts due and payable or necessary to fully discharge any and all Long-Term
Liabilities of the Acquired Companies existing at Closing, which are not satisfied or paid at or
prior to the Closing;
12.2.7 any Losses arising out of Partnership’s payment of the EOC Per Unit Consideration or
EOC Earn-Out Payments directly to the EOC Beneficial Owners instead of being paid to Banyan;
12.2.8 any Losses arising out of EOP’s ownership of Aviation Management LLC, CP Aviation, LLC
or the business or operations of either Aviation Management LLC, CP Aviation, LLC or the investment
in Eola Capital Investment Fund III LLC; and
12.2.9 (x) any Losses arising out of any Proceedings pending against the Acquired Companies as
of the Closing Date (excluding Proceedings involving Parent or any of
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its Affiliates, as determined immediately prior to Closing), or (y) any Losses arising out of the
Proceeding styled as
Estate of Xxxxxxx Xxxxx et al versus MFM Owner LLC, Case No 2010-CA-007129-0,
in the Circuit Court of the Ninth Circuit, in and for Orange County,
Florida or any related
Proceeding.
For the purposes of determining a breach or inaccuracy of, or the amount of any Losses related
to such breach or inaccuracy, the representations and warranties made by Members and EOC Beneficial
Owners in either Article 4 or 5 shall be considered without regard to any concepts
of materiality, such as “material” or similar qualifications set forth herein (excluding (x) such
references in the defined terms “Material Contracts,” and “Company Authorization,” (y) with respect
to the representations and warranties contained in Sections 5.6 and 5.9, or (z) any
breach of any of the covenants or obligations made by Members or EOC Beneficial Owners in this
Agreement).
12.3 Limitations. Any claims for indemnification under and pursuant to this
Article 12 shall be required to be made by delivering notice to Sellers’ Representatives or
Parent (as applicable) no later than the expiration of the applicable Survival Period; provided
that with respect to indemnification claims made against the Members or EOC Beneficial Owners (i)
pursuant to Sections 12.2.5 and 12.2.6 the survival period shall be eighteen (18)
months following the Closing Date, (ii) pursuant to Section 12.2.4 the survival period
shall be the statute of limitations with respect to such matters, and (iii) pursuant to
Sections 12.2.7, 12.2.8 and Section 12.2.9 the Survival Period shall be
indefinite. Notwithstanding the foregoing, any representation or warranty (and the indemnification
obligations with respect thereto) that would otherwise terminate upon expiration of the applicable
Rep Survival Period, and the indemnification obligations with respect to covenants and agreements
that would otherwise terminate upon expiration of the Covenant Survival Period, will continue to
survive if notice for indemnification shall have been given in accordance with this Section
12.3 on or prior to such expiration date, but only to the extent of the claim or claims and
underlying facts (solely to the extent of such underlying facts as are stated with reasonable
specificity, including their connection to the relevant claim or claims and only for the purpose of
determining the Losses that may ultimately be attributed to, and determining the scope of, such
claim or claims and not for the purpose of bringing any additional claims) expressly described in
such notice for indemnification, until such claim for indemnification has been satisfied or
otherwise resolved as provided herein. Notwithstanding anything herein to the contrary, including
applicable Survival Periods, the Parent Indemnitees may make claims for indemnification under and
pursuant to this Article 12 during the forty eight (48) month period following the Closing
with respect to Losses incurred as a result of a Third Party Claim against Parent Indemnitee (and
not a direct claim by any Parent Indemnitee) based upon or arising out of pre-Closing breaches
under any property management contracts to which any of the Acquired Companies was a party prior to
Closing based on events or circumstances prior to Closing, but only to the extent that, after first
becoming aware of the existence of such Losses, Parent and its Affiliates do not willfully and
intentionally take any action post-Closing that materially increases any Losses relating to any
such pre-Closing event or circumstance; it being understood that the indemnification provisions of
this Article 12, including, without limitation, Section 12.4, shall apply to any
such claim made during such forty eight (48) month period.
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12.4 Limitations on Indemnification of Parent Indemnitees. Notwithstanding anything to
the contrary contained in this Agreement, the indemnification of Parent Indemnitees for Losses
pursuant to this Agreement shall be subject to the following additional limitations and conditions:
12.4.1 any claim by a Parent Indemnitee for indemnification pursuant to Section 12.2
and the last sentence of Section 12.3 shall be required to be made by delivering written
notice to Sellers’ Representatives no later than the expiration of the applicable Survival Period
described in Section 12.3;
12.4.2 Parent Indemnitees shall not be entitled to indemnification under Sections
12.2.1 or 12.2.2 or with respect to any Claims brought under the last sentence of
Section 12.3, until the aggregate amount of all of such Losses exceeds an amount equal to
$333,000 (the “Parent Indemnification Threshold Amount”), it being understood that the
Parent Indemnification Threshold Amount shall be a deductible amount and shall not be recoverable
by any Parent Indemnitee; provided that, with respect to claims for indemnification for breaches of
the representations and warranties contained in Section 5.11, Parent Indemnities shall not
be entitled to indemnification pursuant to Section 12.2.2 until the aggregate amount of all
of such Losses for which the Parent Indemnitees are entitled to Indemnification hereunder exceeds
an amount equal to $166,500 (the “Tax Threshold Amount”), it being understood that the Tax
Threshold Amount shall be a deductible amount and shall not be recoverable by any Parent
Indemnitee; and provided further that Members and EOC Beneficial Owners shall not be liable to
Parent Indemnitees under this Article 12 or otherwise with respect to any Loss (or series
of related Losses) incurred with respect to breaches of the representations and warranties (other
than the Fundamental Representations) if the Loss (or series of related Losses) is less than the
Mini-Basket;
12.4.3 the maximum amount for which Parent Indemnitees may be entitled to indemnification
under Sections 12.2.1 or 12.2.2 or with respect to any Claims brought under the
last sentence of Section 12.3 shall be an amount equal to $7,500,000; provided that the
foregoing limitation shall not apply to claims for indemnification for breaches of the
representations and warranties contained in Section 5.11 or 5.28;
12.4.4 notwithstanding anything to the contrary in this Section 12.4, each Member or
EOC Beneficial Owner shall be liable for such Member’s or EOC Beneficial Owner’s pro rata share of
Losses for which Parent Indemnitees may be entitled to indemnification under Section 12.4
(based on each EOP Former Member’s applicable EOP Membership Interest Percentage multiplied by 75%
and each EOC Beneficial Owner’s applicable Banyan Membership Interest Percentage multiplied by 25%,
as applicable);
12.4.5 the amount of any Losses recoverable by the Parent Indemnitee shall be reduced by (i)
the insurance proceeds actually received by such Parent Indemnitee with respect to such Loss, and
(ii) an amount equal to any Tax benefit actually realized with respect to such Loss;
12.4.6 notwithstanding anything to the contrary in this Article 12, in no event shall
any Parent Indemnitee be entitled to seek indemnification with respect to the obligations set
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forth in Section 12.2.7 from any EOP Former Member and the indemnification obligations of
the EOC Beneficial Owners shall with respect to Losses relating to the matters described in
Section 12.2.7 be pro rata based on their respective ownership interests in Banyan; and
12.4.7 notwithstanding anything to the contrary in this Article 12, in no event shall
any Parent Indemnitee be entitled to seek indemnification with respect to the obligations set forth
in Section 12.2.8 or 12.2.9 (with respect to any Proceeding relating to EOP and not
EOC) from any EOC Beneficial Owner and the indemnification obligations of the EOP Members shall
with respect to Losses relating to the matters described in Section 12.2.8 be pro rata
based on their respective ownership interests in EOP.
Notwithstanding the foregoing or anything to the contrary herein, (i) the limitations set forth in
Section 12.4 shall not apply to any claims of any Parent Indemnitee related to fraud and (ii) the
limitations set forth in Sections 12.4 (other than Section 12.4.4) shall not apply
to Losses based upon, arising out of or caused by any breach of any of the Fundamental
Representations, and (iii) nothing provided in this Section 12.4 shall limit any duty of a
Parent Indemnitee to mitigate Losses.
12.5 Indemnification of Member Indemnitees. Effective as of Closing and subject to
Sections 12.3, 12.6, 12.7 and 12.8, the Purchaser Parties shall
jointly and severally indemnify Members and their respective Affiliates, officers, directors,
employees and agents (collectively, the “Member Indemnitees”), defend and hold the Member
Indemnitees harmless from and against, and reimburse the Member Indemnitees for, any and all of the
following Losses the Member Indemnitees may suffer, sustain or become subject to, through and after
the date of the claim for indemnification (including any Losses suffered after the end of the
applicable Survival Period with respect to claims made within such period in accordance with
Section 12.3):
12.5.1 any Losses based upon, arising out of or caused by any breach or inaccuracy of any
representation or warranty made by the Purchaser Parties in Article 6 of this Agreement
(excluding the representation and warranty set forth in Section 6.10) or referred to in the
certificate delivered by or on behalf of Purchaser Parties pursuant to Section 9.10; and
12.5.2 any Losses based upon, arising out of or caused by any failure of the Purchaser Parties
to carry out, perform, satisfy and discharge any of their covenants, agreements, undertakings,
liabilities or obligations under this Agreement or the Related Agreements that are required to be
performed after the Closing.
Solely for purposes of determining a breach or inaccuracy of, or the amount of any Losses
related to such breach or inaccuracy, the representations and warranties made by the Purchaser
Parties in this Agreement shall be considered without regard to any “materiality” or “Parent
Material Adverse Change” qualification (other than any breach of any of the covenants or
obligations made by the Purchaser Parties in this Agreement or with respect to the representations
and warranties contained in Sections 6.9, 6.10.2 and 6.11).
12.6 Limitations on Indemnification of Members. Notwithstanding any other provisions
of this Agreement, the indemnification of Member Indemnitees for Losses pursuant to this Agreement
shall be subject to the following additional limitations and conditions:
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12.6.1 any claim by a Member Indemnitee for indemnification pursuant to Section 12.5
shall be required to be made by delivering written notice to Parent no later than the
expiration of the applicable Survival Period described in Section 12.3;
12.6.2 no Member Indemnitee shall be entitled to indemnification under Section 12.5.1
of this Agreement until the aggregate amount of all of such Losses for which the Member Indemnitees
are entitled to indemnification hereunder exceeds an amount equal to $333,000 (the “Member
Indemnification Threshold Amount”), it being understood that the Member Indemnification
Threshold Amount shall be a deductible amount and shall not be recoverable by any Member
Indemnitee; provided that Purchaser Parties shall not be liable to the Member Indemnitees under
this Article 12 or otherwise with respect to any Loss (or series of related Losses)
incurred with respect to breaches of the representations and warranties (other than the Fundamental
Representations, Section 6.5 if the Loss (or series of related Losses) is less than the
Mini-Basket;
12.6.3 the maximum amount for which Member Indemnitees may be entitled to indemnification
under Section 12.5.1 shall be an amount equal to $7,500,000; and
12.6.4 the amount of any Losses recoverable by the Member Indemnitee shall be reduced by an
amount equal to any Tax benefit actually realized with respect to such Loss.
Notwithstanding the foregoing or anything to the contrary herein, (i) the limitations set forth in
Section 12.6 shall not apply to any claims of any Member Indemnitee related to fraud, (ii)
the limitations set forth in Section 12.6 shall not apply to Losses arising out of or
caused by any breach of any of the Fundamental Representations, and (iii) nothing provided in this
Section 12.6 shall limit any duty of a Member Indemnitee to mitigate Losses.
12.7 Procedures Relating to Indemnification.
12.7.1 Third-Party Claims. In the event a third-party claim or demand (a
“Third-Party Claim”) is made against a Party (the “Indemnitee”) entitled to
indemnification under this Agreement, such Indemnitee must give prompt notice (a “Third-Party
Claim Notice”) of the Third-Party Claim (i) to Parent, if indemnity is sought from Parent, (ii)
to Sellers’ Representatives, if indemnity is sought from Members, or (iii) to the Member from whom
indemnity is sought for Losses resulting from breaches of the representations and warranties
contained in Article 4 (the Party to whom notice hereunder is given, in any case, the
“Indemnitor’s Representative,” and the Party against whom the indemnification claim is
asserted, the “Indemnitor”). Such Third-Party Claim Notice shall be given no later than
thirty (30) days following the receipt of any such Third-Party Claim or demand by the Indemnitee.
The failure to provide a Third-Party Claim Notice in accordance with this Section 12.7.1,
or any delay in providing such notice, shall not relieve the Indemnitor of any liability it may
have to the Indemnitee, except to the extent that (x) any such failure or delay in giving any
Third-Party Claim Notice causes the amounts paid or to be paid by the Indemnitor to be greater than
they otherwise would have been or otherwise results in prejudice to the Indemnitor, or (y) such
Third-Party Claim Notice is not delivered to the Indemnitor’s Representative prior to the
expiration of the applicable Survival Period in accordance with Section 12.3. Each
Third-Party Claim Notice shall state the amount or good faith estimated amount of Losses with
respect to such claim, the
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method of computation thereof, the specific basis for such claim (if such information is available
or discernable at the time such notice is prepared) and copies of all notices and documents
(including court papers received by the Indemnitee) relating to the Third-Party Claim.
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(a) |
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If a Third-Party Claim is made against an Indemnitee, the Indemnitor’s
Representative shall have fifteen (15) days after receipt of a Third-Party Claim
Notice to elect to undertake, contest, control and defend (through counsel
reasonably satisfactory to the Indemnitee), at the Indemnitor’s cost and expense,
the legal proceedings relating to such Third-Party Claim and the defense and
settlement thereof, so long as (i) the applicable Third-Party Claim involves only
money damages, does not involve a class action, allegations of criminal activities,
or violations of the Racketeering Influenced and Corrupt Organization Act, arises
from a qui tam or similar whistle blower claim, does not seek an injunction or
other equitable relief against the Indemnitee, and is not brought by a Governmental
Authority; (ii) the Indemnitor diligently defends such Third-Party Claim (but the
Indemnitee’s right to assume or control the defense in such instance shall only
continue for so long as the Indemnitor fails to diligently defend such Third-Party
Claim); and (iii) the Indemnitee has not been advised by counsel that a conflict
exists if the same counsel were to represent the Indemnitee and the Indemnitor in
connection with conducting the defense of the Third Party Claim. After written
notice by the Indemnitor’s Representative of its election to assume the defense and
control of the Third-Party Claim, the Indemnitor shall not be liable to the
Indemnitee for any legal fees or expenses subsequently incurred by such Indemnitee
in connection therewith, provided that (x) until such time as the Indemnitor’s
Representative assumes the defense and control of a Third-Party Claim, the
Indemnitee shall have the right to defend such Third-Party Claim, subject to the
limitations set forth in this Section 12.7, in such manner as it may deem
appropriate, and (y) if the Indemnitor’s Representative assumes the defense and
control of a Third-Party Claim, then the Indemnitee shall have the right to
participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the Indemnitor, it being understood that the
Indemnitor’s Representative shall control such defense. |
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(b) |
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The Party conducting the defense of any Third-Party Claim shall at all times
act as if all Losses relating to the Third-Party Claim were for its own account and
shall act in good faith and with reasonable prudence to minimize Losses therefrom.
The Indemnitee shall, and shall cause each of its Affiliates and Representatives
to, cooperate fully with the Indemnitor’s Representative in connection with any
Third-Party Claim. |
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(c) |
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The Indemnitor’s Representative shall be authorized to consent to a settlement
of, or the entry of a judgment arising from, any Third-Party Claim, and the
Indemnitee shall consent to a settlement of, or the entry of any judgment arising
from, such Third-Party Claim, if (i) such settlement |
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|
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obligates the Indemnitor to pay the full amount of the liability in
connection with such Third-Party Claim, (ii) such settlement does not
require any payment or other action by, or limitation on the Business
(including injunctive or any other equitable relief or restrictions or
obligations) on, the Indemnitee, (iii) such settlement does not require
any admission or acknowledgement of liability or fault of the Indemnitee,
and (iv) such settlement contains as a condition thereto, a complete
release of the Indemnitee. In no event shall the Indemnitee admit any
liability with respect to such Third-Party Claim or settle, compromise,
pay or discharge such Third-Party Claim without the prior written consent
of the Indemnitor’s Representative. |
12.7.2 Other Claims. In the event any Indemnitee should have a claim against any
Indemnitor under this Article 12 that does not involve a Third-Party Claim, the Indemnitee
shall deliver notice of such claim to the Indemnitor’s Representative promptly following the
discovery of any indemnifiable Loss or of facts or circumstances reasonably likely to result in any
such indemnifiable Loss, but in any event not later than the last day of the applicable Survival
Period in accordance with Section 12.3. Each notice with respect to a claim (other than a
Third-Party Claim) shall state the amount or good faith estimated amount of Losses with respect to
such claim, the method of computation thereof, the specific basis for such claim, the
representations, warranties or covenants alleged to have been breached (if such information is
available or discernable at the time such notice is prepared) and copies of all notices and
documents supporting the basis or bases for such claim. Within thirty (30) days following receipt
of any such notice, the Indemnitor’s Representative shall notify the Indemnitee as to whether the
Indemnitor accepts liability for any such Loss. If the Indemnitor’s Representative disputes the
Indemnitor’s liability with respect to such claim, as provided above, the Indemnitor’s
Representative and the Indemnitee shall attempt to resolve such dispute in good faith. And, if not
resolved through the good faith negotiations within thirty (30) days after the delivery of the
objection notice referenced in the immediately preceding sentence (or such longer period as the
Parties may mutually agree), either Party may commence Proceedings to resolve such dispute.
12.7.3 Additional Procedures.
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(a) |
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If an Indemnitor makes any payment on a claim, including any Third-Party Claim,
the Indemnitor shall be subrogated, to the extent of such payment, to all rights
and remedies of the Indemnitee to any insurance benefits or other claims or
benefits of the Indemnitee with respect to such claim. |
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(b) |
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To the extent permitted by applicable Law, any payment under this Section
12.7 shall be treated as an adjustment to the purchase price hereunder for Tax
purposes. |
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(c) |
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As a condition to any claim, including any Third-Party Claim, made by any
Indemnitee, the Indemnitor agrees to take commercially reasonable steps under the
circumstances to mitigate any Losses of the Indemnitee |
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upon and after becoming aware of any event or condition which would
reasonably be expected to give rise to any Losses that are indemnifiable
hereunder. |
12.8 No Double Recovery. Notwithstanding anything herein to the contrary, no Party
shall be entitled to indemnification or reimbursement under any provision of this Agreement for any
amount to the extent that such Party or any of its Affiliates has been indemnified or reimbursed
for such amount under any other provision of this Agreement or any Related Agreement.
ARTICLE 13
SELLERS’ REPRESENTATIVES
13.1 Designation. For purposes of this Agreement and Related Agreements, each Member
and each EOC Beneficial Owner hereby designates each of the Sellers’ Representatives, acting
jointly, as such Member’s or EOC Beneficial Owner’s attorney-in-fact, with full powers of
substitution to act in the name, place and stead of such Member or EOC Beneficial Owner, to execute
any and all documents on behalf of the Member or EOC Beneficial Owner, and to take any other
actions on behalf of the Member or EOC Beneficial Owner that may be required pursuant to this
Agreement and the Related Agreements, in each case, as may be necessary or desirable in order to
consummate the Transactions contemplated herein and perform its obligations hereunder before, at or
following the Closing. Without limiting the generality of the foregoing, Sellers’ Representatives,
acting jointly, shall have the full and exclusive authority to: (i) agree with Parent with respect
to any matter deemed necessary by Sellers’ Representatives in connection with this Agreement and
the Related Agreements calling for the agreement of the Members, give and receive notices on behalf
of each Member, grant consents and waivers for each Member, and act on behalf of each Member or
each EOC Beneficial Owner in connection with any matter as to which Members are or may be obligated
under this Agreement and the Related Agreements, all in the absolute discretion of Sellers’
Representatives; (ii) execute and deliver all documents, in the name of and for and on behalf of
each Member, contemplated by this Agreement and the Related Agreements; (iii) take all actions
necessary or desirable in connection with the defense, resolutions, or settlement of any
indemnification claims pursuant to Section 12.2 and performance of obligations hereunder,
including to withhold funds for satisfaction of expenses or other liabilities or obligations or to
withhold funds for potential indemnification claims made hereunder; (iv) to terminate, amend, or
waive any provision of this Agreement or the other Related Agreements, provided that any such
action, if material to the rights and obligations of the Members, in the reasonable judgment of
Sellers’ Representatives, shall be taken in substantially the same manner with respect to all
Members, unless otherwise agreed by each such Member or EOC Beneficial Owner who is subject to any
disparate treatment of a potentially adverse nature; and (v) to do or refrain from doing any
further act or deed on behalf of Members which Sellers’ Representatives deem necessary or
appropriate, in their sole discretion, relating to the subject matter of this Agreement as fully
and completely as any of such Members could do if personally present and acting. The appointment of
Sellers’ Representatives shall be deemed irrevocable and coupled with an interest, and Parent, and
any other Person may conclusively and absolutely rely, without inquiry, upon any action of the
Sellers’ Representatives, acting jointly, or any successor representatives of Members in all
matters referred to herein and/or in the Related Agreements.
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13.2 Authority.
13.2.1 Decisions by Sellers’ Representatives within the scope of the authority granted
pursuant to this Section 13.2.1, including decisions made as the Indemnitor’s
Representative pursuant to Section 12.7, shall be binding upon all Members and EOC
Beneficial Owners, and no Member or EOC Beneficial Owner shall have the right to contest the same.
Members shall cooperate with Sellers’ Representatives and any accountants, attorneys or other
agents whom he/she or it may retain to assist in carrying out its duties hereunder. Sellers’
Representatives may communicate with any Member or EOC Beneficial Owner or any other Person
concerning his/her or its responsibilities hereunder, but are not required to do so. Sellers’
Representatives have a duty to serve in good faith the interests of Members and EOC Beneficial
Owners and to perform their designated role under this Agreement, but Sellers’ Representatives
shall have no financial liability whatsoever to any Person relating to its service hereunder
(including any action taken or omitted to be taken), except that it shall be liable for harm which
he/she or it causes by an act of gross negligence, fraud, bad faith or willful misconduct.
13.2.2 Notwithstanding anything to the contrary in this Agreement, Sellers’ Representatives
shall have no duties and responsibilities, except those expressly set forth herein or in the
Related Agreements, and no implied covenants, functions, responsibilities, duties, obligations or
liabilities on behalf of any Acquired Company, any Member or any EOC Beneficial Owner shall
otherwise exist against Sellers’ Representatives. Except as expressly provided in this Agreement
or any Related Agreement, Sellers’ Representatives, in such capacity, shall have no duties or
responsibilities to Parent or any Purchaser Party.
13.2.3 The service by Sellers’ Representatives shall be without compensation, provided that
Members shall reimburse Sellers’ Representatives for all costs and expenses, including reasonable
professional fees, incurred and shall indemnify and hold harmless Sellers’ Representatives against
any loss, expense (including attorney’s fees incurred pursuant to Section 12.7) or other
liability arising out of their service as Sellers’ Representatives under this Agreement, other than
for harm caused by an act of gross negligence, fraud, bad faith or willful misconduct. Neither
Parent nor any Acquired Company will be liable for (i) any payment to the Sellers’ Representatives
with respect to services provided by the Sellers’ Representatives in connection with this
Agreement, the Related Agreements or the Transactions, or (ii) the Members in connection with the
appointment of the Sellers’ Representatives or the performance by the Sellers’ Representatives on
behalf to the Members, whether or not such action is specifically authorized by this Section
13.2.
13.2.4 Either Sellers’ Representatives may resign at any time by notifying in writing Parent
and Members. If Xxxxx X. Xxxxxxxx resigns as a Sellers’ Representative, Members holding a majority
of the membership interest equal to all EOP Membership Interest Percentages may elect a successor.
If Xxxxxxx Prio Touzet resigns as a Sellers’ Representative, Members holding a majority of the
membership interest equal to all Banyan Membership Interest Percentages may elect a successor.
Prompt written notice of election of a new Sellers’ Representative shall be given to Parent. Such
successor Sellers’ Representative(s) shall exercise the rights and powers of and be entitled to the
indemnity, reimbursement and other benefits of the original Sellers’ Representatives. If no such
successor is selected by the Members in accordance with this Section 13.2.4, then all
actions taken in accordance with the terms of this
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Agreement shall be taken by the other remaining Sellers’ Representative or, if none, by all
Members.
ARTICLE 14
TERMINATION
14.1 Termination of Agreement. This Agreement may be terminated prior to the Closing
as provided in this Article 14.
14.1.1 Consent. Parent (on behalf of the Purchaser Parties) and Sellers’
Representatives (on behalf of the Acquired Companies and Members) may terminate this Agreement by
mutual written consent.
14.1.2 Expiration; Illegality; Prohibition. Either Parent (on behalf of the Purchaser
Parties) or Sellers’ Representatives (on behalf of the Acquired Companies and Members and EOC
Beneficial Owners) may terminate this Agreement by written notice to the other Party:
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(a) |
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if the Closing has not occurred on or before May 31, 2011 (the “Expiration
Date”) (other than due to the failure of any Party seeking to terminate this
Agreement to perform in all material respects its obligations under this Agreement
or any of the Related Agreements); |
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(b) |
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if there is any Law that makes consummation of any of the Transactions illegal
or otherwise prohibited; or |
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(c) |
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if a Governmental Authority of competent jurisdiction having valid enforcement
authority issues a final Order, not subject to appeal, permanently restraining,
prohibiting or enjoining the Acquired Companies or the Purchaser Parties from
consummating any of the Transactions, provided that the right to terminate this
Agreement pursuant to this Section 14.1.2(c) shall not be available to any
Party that has initiated any Proceeding that results in such Order, or that has not
taken any and all reasonable actions necessary to oppose, contest and resist, and
to have lifted, rescinded or vacated, such order, decree or judgment before it
became final and nonappealable. |
14.1.3 Breach. Parent (on behalf of the Purchaser Parties) or Sellers’
Representatives (on behalf of the Acquired Companies, Members and EOC Beneficial Owners) may
terminate this Agreement by written notice to the other Party in the event of a breach by the other
Party of any covenant or agreement under this Agreement (including the breach of representations
and warranties set forth herein), where the effect of such breach would be to cause the conditions
to the obligation to consummate the Closing of the terminating Party not to be capable of being
satisfied, and such breach is not cured by the breaching Party within fifteen (15) Business Days
following receipt of written notice from the terminating Party of the breach or alleged breach,
which written notice shall state that, unless such breach is cured in accordance with this
Section 14.1.3, the terminating Party intends to terminate this Agreement (it being
understood that such 15-day cure period shall not extend the Expiration Date).
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14.1.4 Other Transactions. Sellers’ Representatives (on behalf of the Acquired
Companies, EOC Beneficial Owners and Members) or Parent (on behalf of the Purchaser Parties) may
terminate this Agreement by written notice to the other Party if any of the agreements with respect
to the Other Transactions has been terminated in accordance with its terms.
14.1.5 Insolvency Proceeding. Sellers’ Representatives (on behalf of the Acquired
Companies, EOC Beneficial Owners and Members) or Parent (on behalf of the Purchaser Parties) may
terminate this Agreement by written notice to the other Party if a Bankruptcy Event has occurred
with respect to any such other Party.
14.1.6 Required Authorizations. Parent may terminate this Agreement if a Government
Authority notifies the Acquired Companies or Parent that an Authorization required for the
Transactions under Section 7.1 may be obtained only upon a condition referred to in Section 10.3.3
to which a Party is not required to agree.
14.2 Effect of Termination; Remedies. If this Agreement is terminated pursuant to
Section 14.1:
14.2.1 this Agreement shall forthwith become null and void and of no further force and effect,
except that Section 10.4, Section 11.1, this Section 14.2, Article 15 and
16 and all applicable definitions in this Agreement shall survive such termination;
14.2.2 the Purchaser Parties shall return all documents, work papers and other materials (and
all copies thereof) obtained from any Acquired Company, any Member or any of their respective
Representatives relating to the Transactions, whether so obtained before or after the execution
hereof, to Sellers’ Representatives, and all confidential or proprietary information received by
any Purchaser Party with respect to any Acquired Company or any Member shall be treated in
accordance with Section 10.14 and the Confidentiality Agreement;
14.2.3 the Members, the EOC Beneficial Owners and the Acquired Companies shall return all
documents, work papers and other materials (and all copies thereof) obtained from any Purchaser
Party or any of their respective Representatives relating to the Transactions, whether so obtained
before or after the execution hereof, to Parent, and all confidential or proprietary information
received by any Acquired Company, Member and the EOC Beneficial Owners with respect to any
Purchaser Party shall be treated in accordance with Section 10.14 and the Confidentiality
Agreement; and
14.2.4 the sole and exclusive rights and remedies of a Party, if any, following a termination
under Section 14.1 shall be termination of this Agreement without other recourse and the
rights and remedies, if any, available under Section 14.3, if applicable, shall be in lieu
of any other rights or remedies available by applicable Law or otherwise.
14.3 Termination Remedies.
14.3.1 In the event that this Agreement shall be terminated by Sellers’ Representatives in
accordance with Section 14.1.3 or Section 14.1.4 (or Parent’s or its Affiliates’ refusal to
consummate the transactions contemplated by such Other Transaction Agreement or
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by this Agreement), then the sole remedy of Members, EOC Beneficial Owners and the Acquired
Companies shall be to terminate this Agreement, the Related Agreements (if any) and the Other
Transaction Agreements and receive any amounts payable under the Other Transaction Agreements in
accordance with the express terms of the Other Transaction Agreements.
14.3.2 In the event that this Agreement shall be terminated by Parent in accordance with
Section 14.1.3, then the sole remedy of Parent and its Affiliates shall be to terminate the
Related Agreements (if any) and the Other Transaction Agreements and receive any amounts payable
thereunder in accordance with the express terms thereof.
ARTICLE 15
CERTAIN DEFINITIONS
When used in this Agreement, the following terms in all of their tenses, cases and correlative
forms shall have the meanings assigned to them in this Article 15, or elsewhere in this
Agreement as indicated in this Article 15:
“2011 Earn-Out Period” means (i) if the Closing occurs prior to June 30, 2011, the
period beginning on the Closing Date and ending on December 31, 2011, or (ii) if the Closing occurs
after June 30, 2011, the period beginning on the Closing Date and ending at the end of the
six-month period that commences on the first day of the month following the month in which the
Closing Date occurs.
“2011 EOC Revenue Payment” shall have the meaning set forth in Section
3.4.2(b) hereof.
“2011 EOP Revenue Payment” shall have the meaning set forth in Section
3.4.1(b) hereof.
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“2011 EOC Unit Payment” shall have the meaning set forth in Section
3.4.2(b) hereof. |
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“2011 EOP Unit Payment” shall have the meant set forth in Section 3.4.1(b)
hereof. |
“2012 Earn-Out Period” means (i) if the Closing occurs prior to June 30, 2011, the
period beginning on January 1, 2012 and ending on December 31, 2012, or (ii) if the Closing occurs
after June 30, 2011, the 12-month period beginning on the first day of the month immediately
following the expiration of the 2011 Earn-Out Period.
“2012 EOC Revenue Payment” shall have the meaning set forth in Section
3.4.2(d) hereof.
“2012 EOP Revenue Payment” shall have the meaning set forth in Section
3.4.1(d) hereof.
“Accounts Receivable” means all accounts receivable, notes receivable and associated
rights owned by any Acquired Company.
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“2012 EOC Unit Payment” shall have the meant set forth in Section 3.4.2(d). |
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“2012 EOP Unit Payment” shall have the meant set forth in Section 3.4.1(d).
“Acquired Companies” means collectively, EOP, EOC and their respective Subsidiaries,
excluding CP Aviation Management, LLC and CP Aviation, LLC.
“Acquisition Proposal” shall have the meaning set forth in Section
10.12.1(a) hereof.
“Action” means any suit, legal proceeding, charge, complaint, claim, action, hearing,
investigation, tax audit, administrative enforcement proceeding, or arbitration proceeding, in any
court or quasi-judicial or administrative agency of any Governmental Authority or before any
arbitrators.
An “Affiliate” of a specified Person means any other Person which, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or is under common
control with such specified Person. For purposes of this definition, “control” of any
Person means possession, directly or indirectly, of the power to direct or cause the direction of
the management and policies of such Person, whether through the ownership of equity interests, by
contract, or otherwise.
“Affiliate Agreement” shall have the meaning set forth in Section 5.27
hereof.
“Aggregate
Closing Cash” means $32,400,000 less the sum of the
EOP Reduction Amount and EOC Reduction Amount.
“Agreement” means this Agreement and Plan of Merger, as may be amended from time to
time.
“Approved Counsel” shall have the meaning set forth in Section 11.3.3(a)
hereof.
“Assets” means, collectively, all of the tangible and intangible assets, rights and
properties used, held for use or purportedly owned by the Acquired Companies, including all Real
Property and Intellectual Property.
“Audit Inquiry Letter” shall have the meaning set forth in Section 10.4.4
hereof.
“Authorization” means any approval, authorization, certificate, concession, consent,
exemption, franchise, grant of authority, license, real estate broker license, Order, permission,
permit, qualification, ratification, registration, waiver or variance, of or from any Governmental
Authority or required by or available under any Law.
“Average Share Price” means the average closing share price of the PKY Shares for any
consecutive thirty (30) day period during the ninety (90) day period immediately prior to the end
of the 2012 Earn-Out Period.
“Balance Sheets” shall have the meaning set forth in Section 5.6.2 hereof.
“Bankruptcy Event” means, with respect to any Person, the occurrence of any of the
following:
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(a) |
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a court of competent jurisdiction enters a decree or order for relief in an
involuntary case under applicable bankruptcy, insolvency, or other similar |
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Law now or hereinafter in effect, or appoints a receiver, liquidator,
assignee, custodian, trustee, sequestrator, or similar official for such
Person or for any substantial part of such Person’s property, or ordering
the winding up or liquidation of its affairs; |
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(b) |
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such Person commences a voluntary case under any applicable bankruptcy,
insolvency, or other similar Law now or hereinafter in effect, or consents to the
entry of an order for relief in an involuntary case under any such Law, or consents
to the appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator, or other similar official for such Person or for
any substantial part of such Person’s property, or makes any general assignment for
the benefit of creditors, or fails generally to, or admits in writing its
inability, to pay debts as they become due; or |
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(c) |
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an insolvency case under any applicable bankruptcy, insolvency, or other
similar Law now or hereinafter in effect, is commenced against such Person or for
the appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator, or other similar official for such Person or for
any substantial part of such Person’s property. |
“Banyan” shall have the meaning set forth in the preamble.
“Banyan Membership Interest Percentage” means the percentage of Equity Interests held
by the Persons listed on Section 4.2.2(c) of the Disclosure Schedules in Banyan as of the
date of this Agreement and immediately prior to the Closing.
“Books and Records” means original or true and complete copies of all of the books,
records, files, data and information of the Acquired Companies (including customer and supplier
lists, financial and accounting records, purchase orders and invoices, sales orders, credit and
collection records, engineering order files, warranty and repair files, studies, surveys, analyses,
strategies, plans, forms, designs, diagrams, drawings, specifications, technical data, production
and quality control records and formulations, lists of and correspondence and miscellaneous records
with respect to customers, suppliers, representatives and distributors and all other general
correspondence).
“Business” means the commercial office property management business conducted by the
Acquired Companies.
“Business Day” shall mean each day other than a Saturday, Sunday or other day on which
banks in New York, New York are not required by Law to be open.
“CD Calculations Delivery Date” shall have the meaning set forth in Section
3.5.1(a) hereof.
“Claim” means any claim, demand or written assertion by any Person (except for those
included in the definition of Proceeding).
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“Closing” shall have the meaning set forth in Section 2.3 hereof.
“Closing Date” shall have the meaning set forth in Section 2.3 hereof.
“Closing Date Net Working Capital” means Net Working Capital of the Acquired Companies
as of the Closing.
“Closing
Percentage” means the amount expressed as a percentage
derived from dividing the Aggregate Closing Cash by the sum of
(i) the Aggregate Closing Cash and (ii) 29,906,000.
“Code” shall have the meaning set forth in the Recitals.
“Company Authorization” or “Company Authorizations” shall have the meaning set
forth in Section 5.12.1 hereof.
“Company Benefit Plan” shall have the meaning set forth in Section
5.23.1(a) hereof.
“Company Insurance Policies” shall have the meaning set forth in Section
5.26.1 hereof.
“Company Intellectual Property” means the Intellectual Property owned, licensed or
held for use by the Acquired Companies.
“Company Pension Benefit Plan” shall have the meaning set forth in Section
5.23.1(b).
“Competition Laws” means the HSR Act and any other Law designed to prohibit, restrict
or regulate actions undertaken for the purpose or effect of monopolization or restraint of trade.
“Confidentiality Agreement” means that certain Confidentiality Agreement dated October
8, 2010, by and between Parent and EOC.
“Confidential Information” means any confidential or proprietary information or data,
whether in paper, electronic or other form, relating to the businesses and affairs of the Acquired
Companies that has historically been treated as confidential by the Acquired Companies, including,
without limitation, Tax Returns, Tax work papers, and all other Tax information, other than any
such information that is generally available to or known by the public prior to the time of
disclosure, except as a result of the breach of a confidentiality obligation by the disclosing or
receiving party with respect to such information.
“Consent” means any notice, approval, consent, license, permission or waiver of any
Person other than a Governmental Authority.
“Consolidated Tax Group” means an affiliated, consolidated, combined or unitary group
for Tax purposes (whether federal, state, local, or foreign).
“Contracts” means all contracts, agreements, leases of personal property (such as
computers and copiers), leases of real property, notes, bonds, indentures, arrangements,,
undertakings (whether written or oral and whether express or implied) or license agreements
(including, but not limited to, software licenses and licenses for Intellectual Property), to which
any Acquired Company is a party or by which any Acquired Company is legally bound; provided that
the term “Contracts” shall not include purchase orders, sales orders or similar arrangements.
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“Contributions” shall have the meaning set forth in the recitals hereto.
“Covenant Survival Period” shall have the meaning set forth in Section
12.1.2 hereof.
“Cumulative Management Earn-Out Revenue Percentage” means the percentage derived from
(i) the sum of the Management Earn-Out Revenues during the 0000 Xxxx-Xxx Period and the 2012
Earn-Out Period divided by (ii) $42,000,000.
“Current Assets” shall have the meaning set forth in the Methods of Calculating WC.
“Current Liabilities” shall have the meaning set forth in the Methods of
Calculating WC.
“Data Room” means the electronic data room established by EOP and EOC for the purpose
of making information, agreements, documents and other due diligence materials regarding the
Acquired Companies available to the Purchaser Parties, as it existed on the date that is two (2)
Business Days prior to the date hereof.
“Determination Materials” shall have the meaning set forth in Section 3.4.4
hereof.
“Disclosure Schedules” means the schedules accompanying this Agreement prepared by
Members and EOC Beneficial Owners pursuant to Articles 4 and 5, which schedules
include the information specified in Articles 4 and 5 and exceptions to the
representations and warranties of Members and EOC Beneficial Owners set forth in Articles 4
and 5 hereof. Any matter set forth in the Disclosure Schedules with respect to any
particular section of the Agreement shall refer only to the section of the Disclosure Schedules
corresponding to the applicable Agreement section number, except that any item disclosed in the
Disclosure Schedules shall be deemed disclosed under any other applicable section of the Disclosure
Schedules if it is readily apparent on its face that such disclosure is likewise applicable to such
other section of the Disclosure Schedules.
“Disposal,” “Storage,” and “Treatment” shall have the meanings
assigned them at 42 U.S.C. § 6901(3)(33) and (34), respectively, but the terms shall be applied to
all “Hazardous Materials” as defined by this Agreement, not merely “Hazardous Waste” as defined in
that statute.
“Earn-Out Objections Statement” shall have the meaning set forth in Section
3.4.4 hereof.
“Earn-Out Review Period” shall have the meaning set forth in Section 3.4.4
hereof.
“Earn-Out Statement” shall have the meaning set forth in Section 3.4.3
hereof.
“Earn-Up Amount” means the positive amount, if any, derived from (i)(A) the Management
Earn-Out Revenues during the 2012 Earn-Out Period minus 21,000,000 (B) divided by (ii) 1,626,515,
multiplied by 226,000; provided that the Earn-Up Amount shall in no event exceed 226,000.
“Employee Benefit Plan” shall have the meaning set forth in Section
5.23.1(c) hereof.
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“Employees” shall have the meaning set forth in Section 5.20.1 hereof.
“Employment Agreements” shall have the meaning set forth in Section 5.20.1
hereof.
“Environment” means any ambient, work place or indoor air, surface water, drinking
water, groundwater, land surface (whether below or above water), subsurface strata, sediment, plant
or animal life and natural resources.
“Environmental Laws” means any applicable Law or other legal requirement pertaining to
the Environment or the health or safety of the public or employees, the Release or threatened
Release of Hazardous Substances or otherwise relating to the Treatment, Storage, transport, use,
handling, Disposal or presence of Hazardous Substances, including: the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq. (“CERCLA”); the Solid
Waste Disposal Act, 42 U.S.C. §§ 6901 et seq.; the Emergency Planning and Community Xxxxx-xx-Xxxx
Xxx, 00 X.X.X. § 00000 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. §§ 5101 et
seq.; the Clean Air Act, 42 U.S.C. §§ 7401 et seq. (“CAA”); the Clean Water Act, 33 U.S.C.
§§ 1251 et seq.; the Occupational Safety and Health Act, 29 U.S.C. §§ 651 et seq.; the Toxic
Substances Control Act, 15 U.S.C. §§ 2601 et seq.; the Rivers and Harbors Act of 1899, 33 U.S.C. §
401, et seq.; the Oil Pollution Act of 1990, 33 U.S.C. § 2701, et seq., the Federal Insecticide,
Fungicide and Rodenticide Act, 7 U.S.C. §§ 136 et seq.; each as amended; any state or local Law
similar to the foregoing; all regulations issued pursuant to the foregoing; and all permits issued
to the Company pursuant to the foregoing, all as in effect on or prior to Closing Date.
“Environmental Permits” means Authorizations required to comply with Environmental
Laws.
“EOC” shall have the meaning set forth in the preamble hereto.
“EOC Beneficial Owner” or “EOC Beneficial Owners” shall have the meaning set
forth in the preamble of this Agreement.
“EOC Cap Amount” shall mean 450,000 OP Units, together with the cash amount payable by
Parent in accordance with Section 3.4.2 hereof.
“EOC Earn-Out Payments” shall have the meaning set forth in Section
3.4.2(e) hereof.
“EOC Earn-Up Payment” shall have the meaning set forth in Section 3.4.2(f)
hereof.
“EOC Focus Plan Payment” shall have the meaning set forth in Section
3.4.2(e) hereof.
“EOC Former Member” means Banyan.
“EOC Contribution” shall have the meaning set forth in the recitals hereto.
“EOC Per Unit Cash Consideration” shall mean $8,100,000 in cash, minus the EOC
Reduction Amount, if any, divided by the total number of EOC Units outstanding immediately
prior to the Closing.
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“EOC Per Unit Consideration” shall have the meaning set forth in Section
2.2.2 hereof.
“EOC Reduction Amount” means, with respect to the sale of any of the properties listed
on Exhibit N-1 consummated between the date of this Agreement and the Closing Date to any
purchaser other than Parent or one of its Affiliates, the sum of the amounts listed under the
column “Applicable Termination Fee” on Exhibit N-1, which relates to such property.
“EOC Revenue Amount” means, with respect to the sale of any of the properties listed
on Exhibit K-1 consummated between the date of this Agreement and the Closing Date to any
purchaser other than Parent or one of its Affiliates, the sum of the amounts listed under the
column “Applicable Revenue Reduction Amount” on Exhibit K-1, which relates to such
property.
“EOC Termination Event Payment” shall have the meaning set forth in Section
3.4.2(f) hereof.
“EOC Unit” shall have the meaning set forth in the recitals hereto.
“EOP” shall have the meaning set forth in the preamble hereto.
“EOP Cap Amount” shall mean 1,350,000 OP Units, together with the cash payable by
Parent in accordance with Section 3.4.1 hereof.
“EOP Earn-Out Payments” shall have the meaning set forth in Section
3.4.1(e) hereof.
“EOP Earn-Up Payment” shall have the meaning set forth in Section 3.4.1(f)
hereof.
“EOP Focus Plan Payment” shall have the meaning set forth in Section
3.4.1(e) hereof.
“EOP Former Member” means an EOP member listed on Section 4.2.2 of the
Disclosure Schedules.
“EOP Membership Interest Percentage” means, with respect to any EOP Former Member, the
fraction expressed as a percentage equal to the number of EOP Units of a EOP Member held by such
EOP Former Member immediately prior to the Closing divided by the total outstanding EOP Units
immediately prior to the Closing, as set forth on Section 4.2.2 of the Disclosure
Schedules.
“EOP Contribution” shall have the meaning set forth in the recitals hereto.
“EOP Per Unit Cash Consideration” shall mean $24,300,000 in cash, minus the
EOP Reduction Amount, if any, divided by the total number of EOP Units outstanding
immediately prior to the Closing.
“EOP Per Unit Consideration” shall have the meaning set forth in Section
2.1.2 hereof.
“EOP Reduction Amount” means, with respect to the sale of any of the properties listed
on Exhibit N-2 consummated between the date of this Agreement and the Closing Date to any
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purchaser other than Parent or one of its Affiliates, the sum of the amounts listed under the
column “Applicable Termination Fee” on Exhibit N-2, which relates to such property.
“EOP Revenue Amount” means, with respect to the sale of any of the properties listed
on Exhibit K-2 consummated between the date of this Agreement and the Closing Date to any
purchaser other than Parent or one of its Affiliates, the sum of the amounts listed under the
column “Applicable Revenue Reduction Amount” on Exhibit K-2, which relates to such
property.
“EOP Termination Event Payment” shall have the meaning set forth in Section
3.4.1(g)(i) hereof.
“EOP Unit” shall have the meaning set forth in the recitals hereto.
“Equity Interest” means (a) the equity ownership rights in a business entity, whether
a corporation, company, joint stock company, limited liability company, general or limited
partnership, joint venture, bank, association, trust, trust company, land trust, business trust,
sole proprietorship or other business entity or organization, and whether in the form of capital
stock, ownership unit, limited liability company interest, membership interest, limited or general
partnership interest or any other form of ownership, and (b) all rights, warrants, options,
convertible securities or indebtedness, exchangeable securities or other instruments or rights that
are outstanding and exercisable for, convertible into or exchangeable for any Equity Interest
described in the foregoing clause (a) whether at the time of issuance or upon the passage of time
or occurrence of some future event.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the
regulations thereunder.
“ERISA Affiliate” means a trade or business, whether or not incorporated, which is
deemed to be in common control or affiliated with the Acquired Companies within the meaning of
Section 4001 of ERISA or Section 414(b), (c), (m), or (o) of the Code.
“Excess Cash” means cash held by the Acquired Companies in excess of the amounts
required to meet the Target Net Working Capital.
“Exchange
Act” means the Securities Exchange Act of 1934, as
amended.
“Expiration Date” shall have the meaning as set forth in Section 14.1.2(a)
hereof.
“Extended Survival Period” shall have the meaning set forth in Section
12.1.1(b) hereof.
“Filing” means any filing or registration with, or a written notice to, a Governmental
Authority.
“Final Earn-Out Statement” shall have the meaning set forth in Section
3.4.4 hereof.
“Final Closing Date Net Working Capital” shall have the meaning set forth in
Section 3.5.1(e) hereof.
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“Financial Statements” shall have the meaning set forth in Section 5.6
hereof.
“Focus Plan Amount” means (1) (a)1,574,000 multiplied by (b) the applicable
percentage set forth on Exhibit B hereto that corresponds to the Average Share Price and
Cumulative Management Earn-Out Revenue Percentage, minus (2) the aggregate number of OP
Units issued as a 2011 EOP Revenue Payment, a 2012 EOP Revenue Payment, a 2011 EOC Revenue Payment
and/or 2012 EOC Revenue Payment, if any.
“Fundamental Representations” shall have the meaning set forth in Section
12.1.1(a) hereof.
“Fundamental Survival Period” shall have the meaning set forth in Section
12.1.1(a) hereof.
“GAAP” means generally accepted accounting principles, as in effect in the United
States from time to time.
“Global Agreement” shall have the meaning set forth in the Recitals.
“Governmental Authority” means any government or political subdivision, whether
federal, state, local or foreign, or any agency or instrumentality of any such government or
political subdivision, or any federal, state, local or foreign court, authority, tribunal,
department, bureau or commission, in each case having jurisdiction over the applicable matter.
“Hazardous Substances” means any (a) chemical, material or substance defined as or
included in the definition of “hazardous substances”, “hazardous wastes”, “hazardous materials”,
“extremely hazardous waste”, “acutely hazardous waste”, “radioactive waste”, “biohazardous waste”,
“pollutant”, “toxic pollutant”, “contaminant”, “restricted hazardous waste”, “infectious waste”,
“toxic substances” or any other term or expression intended to define, list, regulate or classify
substances by reason of properties harmful to health, safety or the indoor or outdoor environment
(including harmful properties such as ignitability, corrosivity, reactivity, carcinogenicity,
toxicity, reproductive toxicity, “TCLP toxicity” or words of similar import) as defined in, the
subject of, or that could give rise to liability under, any Environmental Law, (b) oil, petroleum,
petroleum fraction, petroleum additive (including methyl tertiary butyl ether) or petroleum derived
substance, (c) flammable substances or explosives, (d) radioactive materials, (e) asbestos or
asbestos-containing materials, (f) urea formaldehyde foam insulation, (g) polychlorinated
biphenyls, and (h) lead-based paint, including, in each case, any mixture or solution thereof.
“HSR Act” means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act.
“Indebtedness” means, as of the Closing Date, all obligations of the Acquired
Companies which in accordance with GAAP should be classified upon a balance sheet of such Person as
a liability, and in any event, regardless of how classified in accordance
with GAAP, shall include (without duplication), with respect to any Acquired Company, (a) all
capital lease obligations of the Acquired Companies (including the amount necessary to pay in full
all principal, interest, break fees, penalties, lease payments, buyout options or similar payments
such that as of the date of such payment, the payor would own all equipment or other property that
is subject of such
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capital lease agreement); (b) any indebtedness (other than indebtedness of the Acquired Companies)
guaranteed by the Acquired Companies; (c) all outstanding obligations relating to payments for the
acquisition of property or assets (including obligations in respect of principal and accrued
interest); (d) all obligations secured by any Lien upon property or assets owned by any Acquired
Company, even though such Person has not assumed or become liable for the payment of such
obligations; (e) all obligations created or arising under any deferred purchase price, conditional
sale or other title retention agreement with respect to property acquired by any Acquired Company,
notwithstanding the fact that the rights and remedies of any Person under such agreement in the
event of default are limited to repossession or sale of the property; (f) all obligations with
respect to interest rate or currency swaps, collars, caps and similar hedging obligations; (g) all
guaranties, surety or indemnity obligations by such Acquired Company; (h) all obligations of such
Acquired Company in regard to guaranties or sureties by others of such Person’s obligations,
regardless of whether of payment or performance, or whether such guaranties are in the form of,
without limitation, letters of credit, deposits, bonds, insurance or other forms of security,
indemnity, surety or guaranty; (i) all obligations upon which interest charges are customarily paid
off balance sheet and similar liabilities or obligations; and (j) any prepayment premiums, charges,
penalties or other costs or expenses related to any of the foregoing.
“Indemnitee” shall have the meaning set forth in Section 12.7.1 hereof.
“Indemnitor” shall have the meaning set forth in Section 12.7.1 hereof.
“Indemnitor’s Representative” shall have the meaning set forth in Section
12.7.1 hereof.
“Independent Accounting Firm” means the Atlanta, Georgia, office of Deloitte LLP.
“Initial Materials” shall have the meaning set forth in Section 3.4.4
hereof.
“Intellectual Property” means any of the following in any jurisdiction throughout the
world (a) patents, patent applications, patent disclosures and inventions, including any
continuations, divisionals, continuations-in-part, renewals, reexaminations, reissues, foreign
counterparts and extensions for any of the foregoing; (b) Internet domain names, trademarks
(registered or unregistered), service marks (registered or unregistered), trade dress, trade names,
logos and corporate names and registrations and applications for registration thereof together with
all of the goodwill associated therewith; (c) copyrights (registered or unregistered) and
copyrightable works and registrations and applications for registration thereof; (d) mask works and
registrations and applications for registration thereof; (e) material computer software (whether in
source or object code and specifically excluding all packaged, commercially available
“off-the-shelf” licensed software programs sold to the public), data, data bases and documentation
thereof; and (f) trade secrets and confidential financial and marketing plans and customer and
supplier lists.
“IP Licenses” shall have the meaning set forth in Section 5.19 hereof.
“JV Partner Consents” means each of the Consent and acknowledgment documents with
respect to the management fees payable under the Management Agreements, and certain other
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matters, that have been executed prior to the date hereof by Persons who hold an ownership interest
in the Managed Properties.
“Knowledge” means, with respect to any Member, the actual knowledge of such Member,
after inquiry of each of the regional vice presidents of the Acquired Companies with respect the
matters in such Person’s actual knowledge (without any duty or obligation of inquiry); provided
however, that in the case of Banyan Street Office Holdings LLC, “Knowledge” means the actual
knowledge of Xxxxxxx Prio Touzet, after inquiry of each of the regional vice presidents of the
Acquired Companies with respect the matters in such Person’s actual knowledge (without any duty or
obligation of inquiry).
“Labor Rights Requirements” shall have the meaning set forth in Section
5.22.1 hereof.
“Law” means any statute, law, ordinance, executive order, judgment, order, decree,
writ, stipulation, injunction, decision, award, ruling, administrative order, code, treaty, common
law doctrine or other regulation, requirement or rule of any Governmental Authority.
“Leased Personal Property” shall have the meaning set forth in Section
5.14.3 hereof.
“Leased Real Property” shall have the meaning set forth in Section 5.16.1
hereof.
“Liability” means any liability or obligation of whatever kind or nature, whether
known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated
or unliquidated, or due or to become due.
“Lien” means, (i) with respect to any asset, any lien, charge, mortgage, pledge,
security interest, any other encumbrance of any kind in respect of such asset or any other interest
in such asset (or the income or profits therefrom) designed to secure the repayment of
Indebtedness, and (ii) with respect to securities only, any transfer restriction or limitation, and
(iii) with respect to real property, any easement, encroachment, title defect, title retention
agreement, encumbrance, restriction, invalidity or irregularity, or sublease, in each case, whether
consensual or nonconsensual and whether arising by agreement or under any Law or otherwise.
“Long-Term Liabilities” shall mean, except as otherwise included in the calculation of
the Closing Date Net Working Capital, all monetary obligations of the Acquired Companies (including
any prepayment, make-whole, clawback or similar amounts) (i) for borrowed money or with respect to
deposits or advances of any kind to the Acquired Companies (except for deposits or advances made by
customers of the Acquired Companies in connection with the sale of goods or services in the
Ordinary Course of Business consistent with past practice), (ii) evidenced by bonds, debentures,
indentures, notes or similar instruments, (iii) upon which interest charges are customarily
paid (excluding trade accounts payable of the Acquired Companies and other similar amounts
payable by the Acquired Companies in the Ordinary Course of Business), (iv) under conditional sale
or other title retention agreements relating to property purchased by the Acquired Companies, (v)
issued or assumed as the deferred purchase price of property or services wherein interest or
similar charges accrue therein (excluding trade accounts payable of the Acquired Companies and
other similar amounts payable by the Acquired Companies in the Ordinary Course of Business), (vi)
under interest rate or currency swap or other similar transactions (valued at the termination cost
thereof), (vii) under guarantees and
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arrangements having the economic effect of a guarantee by the Acquired Companies of any
indebtedness of any other Person or (viii) with respect to any capitalized leases, the amount
necessary to pay the principal amount of such lease as of the date of such payment.
“Loss” or “Losses” means any and all charges, judgments, losses, liabilities,
damages, costs, Taxes, penalties, expenses, fees, fines, assessments, sanctions or awards
(including, without limitation, (i) amounts paid in settlement, (ii) costs of actions taken to
bring the Business into compliance with applicable Laws, and (iii) reasonable costs of
investigation and defense, reasonable legal expenses and court costs), but specifically excluding
(a) any costs incurred by or allocated to an Indemnitee with respect to time spent by employees of
the Indemnitee or its Affiliates, and (b) any special, indirect, punitive, exemplary, consequential
or any similar types of damages (except to the extent that such damages are payable in connection
with a Third Party Claim, in which case such damages shall be considered Losses hereunder for
indemnification purposes).
“Make Whole Payment” shall have the meaning set forth in Section 11.8.7
hereof.
“Managed Properties” means all multi-unit office or other properties with respect to
which an Acquired Company provides property management services pursuant to the Management
Agreements which as of the date of this Agreement is set forth on Exhibit I hereto.
“Management Agreements” shall have the meaning as set forth in Section
5.24.1(k) hereof.
“Management Earn-Out Revenue” means the amount equal to (1) the gross fees payable to
the Acquired Companies (or their successor-in-interest) or one or more of their respective
subsidiaries pursuant to the Management Agreements, any leasing agent agreements (net of any
leasing commissions paid or payable to either in-house or third-party leasing agents), and any
construction management agreements, in each case, with respect to any of the properties set forth
on Exhibit C attached hereto, during the 2011 Earn-Out Period and/or the 2012 Earn-Out
Period, as applicable; plus (2) any salary or out-of-pocket personnel or administrative
cost reimbursements with respect to the provision of any management services pursuant to the
Management Agreements, any leasing agent agreements, and any construction management agreement, in
each case, with respect to any of the properties set forth on Exhibit C attached hereto,
during the 2011 Xxxx-Xxx Xxxiod and the 2012 Earn-Out Period, as applicable; plus (3) any
additional fees (the “Additional Fees”) payable to Parent, the Partnership and/or one or
more of their direct or indirect subsidiaries (including EOC) during the 2011 Xxxx-Xxx Xxxiod and
the 2012 Earn-Out Period, as applicable, (a) relating to the provision of management, leasing agent
(net of any leasing commissions paid or payable to either in-house or third-party leasing agents),
construction management and/or similar services with respect to properties other than those
properties set forth on Exhibit C attached hereto, and (b) resulting from relationships
established by or arrangements negotiated by one or more of the Members or Other Eola Persons,
including as contemplated in the
Global Agreement (it being acknowledged and agreed that all relationships relating to the
properties commonly known as One Irvington Centre, Two Irvington, Three Irvington Centre and Four
Irvington Centre shall be considered to have resulted from relationships established by or
arrangements negotiated by one or more of the Members or Other Eola Persons), provided, however,
that, solely with respect to the Additional Fees
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described in this clause (3), the Management Earn-Out Revenue shall not include any intercompany
fee revenue or salary or out-of-pocket personnel or administrative cost reimbursements with respect
to the provision of such management services, but Management Earn-Out Revenue shall include any
profits associated with personnel or administrative cost reimbursements in excess of actual
out-of-pocket expense, provided further that, notwithstanding the foregoing proviso, it is
acknowledged and agreed that, to the extent that Parent, Partnership or any of their wholly-owned
subsidiaries acquires any equity ownership or other beneficial interest in any other Person
(including through any joint venture or fund arrangement) from relationships established by or
arrangements negotiated by one or more of the Members, the Management Earn-Out Revenue shall
include all amounts payable in connection with management, leasing agent (net of any leasing
commissions payable to either in-house or third-party leasing agents), construction management
and/or similar services with respect to the acquired properties and any profits associated with
personnel or administrative cost reimbursements in excess of actual out-of-pocket expense,
multiplied by the percentage of equity ownership held by Persons other than Parent,
Partnership or any of their wholly-owned subsidiaries; plus (4) any lost fees directly
attributable to the purchase by Parent or any of its Affiliates of the properties set forth on
Exhibit C attached hereto during the 2011 Earn-Out Period or the 2012 Earn-Out Period,
which amounts relating to (I) management fees and salary or out-of-pocket personnel or
administrative cost reimbursements with respect to the provision of such management services shall
be included as Management Earn-Out Revenue at the same rate and on the same basis as in place
immediately prior to the purchase by Parent or any such Affiliate of any such property, and (II)
leasing commissions, leasing agent fees and construction management fees shall be included as
Management Earn-Out Revenue in the amounts that exist immediately prior to the purchase by Parent
or any such Affiliate of any such property. For purposes of clarity, the Management Earn-Out
Revenue with respect to the 2011 Earn-Out Period shall be calculated on an annualized basis based
on the number of days from the Closing Date through the end of the 2011 Earn-Out Period, (i) by
dividing (A) the actual Management Earn-Out Revenue with respect to the 2011 Earn-Out Period, by
(B) the number of days from the Closing Date to December 31, 2011, then (ii) multiplying the amount
resulting from the calculation in subclause (i) by 365. For purposes of determining the amount of
Management Earn-Out Revenues payable at any particular time, such determination shall be made in
accordance with GAAP, subject to the following reserve procedures for allowance for doubtful
accounts: the Acquired Companies shall receive credit for amounts actually received as of the
determination date plus receivable amounts, net of allowance for doubtful accounts, which allowance
shall be based on the specific identification method, plus additional allowance equal to 50% of the
accounts receivable balances that are more than sixty (60) days but less than or equal to ninety
(90) days outstanding plus 100% of the accounts receivable balances that are more than ninety (90)
days outstanding. Notwithstanding the foregoing, the allowance for receivables related to all
leasing commissions and construction management fees will be subject to the allowance reserve for
doubtful accounts based on the specific identification method, plus additional allowance equal to
50% of the receivable balances that are 60 days but less than or equal to 90 days outstanding from
the payment due date, plus 100% of the receivable balances that are more than 90 days outstanding
from the payment due date.
“Management
Earn-Out Revenue Threshold” means $10,920,000, minus
the product of (A) the sum of
the EOP Revenue Amount and EOC Revenue Amount and (B) the
Closing Percentage.
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“Marks” shall have the meaning set forth in Section 11.5 hereof.
“Material Adverse Change” means, with respect to the Acquired Companies, a material
adverse change with respect to the properties, liabilities, business, condition (financial or
otherwise) or results of operations of the Acquired Companies taken as a whole; provided, however,
that none of the following shall constitute a “Material Adverse Change” or be taken into
account in determining whether a Material Adverse Change has occurred: (i) changes in business or
economic conditions affecting the economy or the industry of the Acquired Companies generally
(provided that such changes do not affect the Acquired Companies in a disproportionate manner);
(ii) changes or conditions in the economy, the stock markets, the credit markets, Tax rates or
implementation of new Taxes, interest rates, exchange rates or other matters affecting the economy
or the industry of the Acquired Companies generally (provided that such changes do not affect the
Acquired Companies in a disproportionate manner); (iii) any adverse change, effect, event,
occurrence, state of facts or development resulting from any change in regulatory conditions or the
enactment or implementation of any new Law (provided that such changes do not affect the Acquired
Companies in a disproportionate manner) or changes in the interpretation of any applicable Law by
any Governmental Authority; (iv) any adverse change, effect, event, occurrence, state of facts or
development to the extent attributable to any Purchaser Party’s announcement or other disclosure of
its plans or intentions with respect to the operations of the Acquired Companies (or any portion
thereof); (v) any failure by the Acquired Companies to meet projections or forecasts; (vi) any
adverse change, effect, event, occurrence, state of facts or development resulting from the taking
of any action required by, or the failure to take any action prohibited by, this Agreement or
attributable solely to expenses incurred in connection with the transactions contemplated by this
Agreement; (ix) any flood, earthquake or other natural disaster; or (x) for purposes of Article
8 only, the commencement, continuation or escalation of a war, armed hostilities or other
international or national calamity or act of terrorism.
“Material Contracts” shall have the meaning set forth in Section 5.24.1
hereof.
“Maximum Earn-Out Revenue Amount” means the Revenue Target.
“Member” or “Members” shall have the meaning set forth in the preamble of this
Agreement.
“Member Indemnification Threshold Amount” shall have the meaning set forth in
Section 12.6.2 hereof.
“Member Indemnitees” shall have the meaning set forth in Section 12.5
hereof.
“Methods of Calculating WC” shall mean the accounting principles, policies, practices,
methods and exceptions to GAAP that in each case as are described in Exhibit M attached
hereto.
“Mini-Basket” means $10,000.
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“Net Working Capital” as of a particular date means the Current Assets minus the
Current Liabilities, in each case as determined in accordance with the Methods of Calculating WC.
“NWC Deficit” shall the meaning set forth in Section 3.5.2(a) hereof.
“NWC Document Delivery Date” shall have the meaning as set forth in Section
3.5.1(a) hereof.
“NWC Statement Delivery Notification” shall have the meaning as set forth in
Section 3.5.1(c) hereof.
“NWC Surplus” shall the meaning set forth in Section 3.5.2(b) hereof.
“OP Unit” means a unit of limited partnership interest in Partnership.
“Order” means any decree, injunction, judgment, order, ruling, writ, assessment or
arbitration award of a Governmental Authority, whether arising from a Proceeding or applicable Law.
“Ordinary Course of Business” means an action taken by a Person only if that action is
consistent in nature and scope with the past practices of such Person and is taken in the ordinary
course of the normal operations of such Person.
“Organizational Documents” means the Articles or Certificate of Incorporation, Code of
Regulations and By-Laws for a corporate entity, the Articles of Organization or Certificate of
Formation and Operating Agreement or Limited Liability Company Agreement of a limited liability
company entity, the trust agreement for a trust entity and other similar organizational and
governing documents for entities other than corporations, limited liability companies or trusts.
“Other Eola Persons” shall mean each of Xxxxx X’Xxxxxx, Xxxxx Xxxxxxx and Xxxxx
Xxxxxx.
“Other Transaction Agreements” has the meaning set forth in the recitals.
“Other Transactions” has the meaning set forth in the recitals.
“Parent” shall have the meaning set forth in the preamble hereto.
“Parent Credit Agreement” means the Credit Agreement, by and among Parent,
Partnership, Xxxxx Fargo Securities, LLC, X.X. Xxxxxx Securities LLC, Xxxxx Fargo Bank, National
Association, JPMorgan Chase Bank, N.A., PNC Bank, National Association, Bank of America, N.A., U.S.
Bank National Association, and other financial institutions, dated as of January 31, 2011.
“Parent Group” shall have the meaning set forth in Section 10.1.1 hereof.
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“Parent Indemnification Threshold Amount” shall have the meaning set forth in
Section 12.4.2 hereof.
“Parent Indemnitees” shall have the meaning set forth in Section 12.2
hereof.
“Parent Material Adverse Change” shall have the meaning set forth in Section
6.1 hereof.
“Partnership” shall have the meaning set forth in the preamble hereto.
“Party” or “Parties” shall have the meaning set forth in the preamble
hereof.
“Peachtree Management Agreements” means each of (i) Management Contract, dated as of
December 5, 2006, between ACP Marquis I LLC and ACP Realty Services LLC, as assigned to Eola
Capital Asset Mgt LLC pursuant to the Assignment, (ii) Management Contract, dated as of December 5,
2006, between ACP Xxxxxxx XX LLC and ACP Realty Services LLC, as assigned to Eola Capital Asset Mgt
LLC pursuant to the Assignment, (iii) Management Contract, dated as of December 5, 2006, between
ACP Courtland Garage LLC and ACP Realty Services LLC, as assigned to Eola Capital Asset Mgt LLC
pursuant to the Assignment, (iv) Management Contract, dated as of December 5, 2006, between ACP
International Garage LLC and ACP Realty Services LLC, as assigned by to Eola Capital Asset Mgt LLC
pursuant to the Assignment, (v) Management Contract, dated as of December 5, 2006, between ACP
Peachtree Center LLC and ACP Realty Services LLC, as assigned by to Eola Capital Asset Mgt LLC
pursuant to the Assignment, and (vi) Management Contract, dated as of December 5, 2006, between ACP
161 Peachtree Center Garage LLC and ACP Realty Services LLC, as assigned by to Eola Capital Asset
Mgt LLC pursuant to the Assignment.
“Pension Benefit Plan” shall have the meaning set forth in Section
5.23.1(d) hereof.
“Permitted Liens” means (a) Liens for current Taxes, assessments, government charges,
levies or utilities that are not yet due and payable or which are being contested in good faith;
(b) Liens that shall be satisfied by Members at or before Closing; (c) easements, covenants,
rights-of-way, restrictions, conditions and matters of record which would be shown by a current
accurate survey of any applicable real property, none of which, individually or in the aggregate,
materially adversely affects the continued use and operation of the Leased Real Property as
presently used in the Business or the Managed Properties, as applicable; (d) zoning, building and
other similar restrictions imposed by applicable Laws; (e) statutory Liens or landlords’,
carriers’, workmen’s, warehousemen’s, repairmen’s, mechanic’s, suppliers’, materialmen’s or other
like Liens arising in the Ordinary Course of Business with respect to amounts not yet due or
overdue for a period of forty five (45) days or amounts being contested in good faith; and (f)
non-exclusive licenses with respect to Intellectual Property granted in the Ordinary Course of
Business;
“Person” means an individual, a corporation, a limited liability company, a general
partnership, a limited partnership, a trust, a venture, a business, a union, a society, an
association, a firm, a Governmental Authority or any other entity or organization.
“PKY Shares” means shares of Parent’s common stock, par value $0.001 per share.
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“Policy Change” shall have the meaning set forth in Section 3.4.7 hereof.
“Pre-Closing Periods” shall have the meaning set forth in Section 11.3.1(a)
hereof.
“Pre-Closing Straddle Period” shall have the meaning set forth in Section
11.3.1(a) hereof.
“Pre-Closing Taxes” means any and all Taxes of or incurred by the Acquired Companies
attributable to either a Pre-Closing Period or a Pre-Closing Straddle Period.
“Principal Termination Event” means the occurrence of any of the following events (A)
the failure of Xxxxxxx Prio Touzet to be appointed to the board of directors of Parent by Parent or
its board of directors by the later of June 1, 2011 or Closing; (B) at any time prior to the end of
the 2012 Earn-Out Period, (1) the failure of Xxxxx X. Xxxxxxxx to be appointed to the board of
directors of Parent by Parent or its board of directors by the later of June 1, 2011 or Closing,
(2) the failure of Xxxxx X. Xxxxxxxx to be appointed as executive chairman of Parent by the later
of June 1, 2011 or Closing, (3) the failure of Xxxxx X. Xxxxxxxx to be nominated for election to
the board of directors of Parent by Parent or its board of directors at the annual meeting of
stockholders of Parent in 2012 or a change in recommendation by the board of directors or Parent
with respect to any previous nomination of Xxxxx X. Xxxxxxxx to the board of directors of Parent,
in either case other than in connection with the termination of employment of Xxxxx X. Xxxxxxxx for
Cause (as defined in the Global Agreement), (4) the failure of Xxxxx X. Xxxxxxxx to be granted
observer rights to the investment committee of the board of directors of Parent by Parent’s board
of directors, by the later of June 1, 2011 or Closing, (5) the removal of Xxxxx X. Xxxxxxxx as an
observer on the investment committee of the board of directors of Parent (other than in connection
with any termination of employment of Xx. Xxxxxxxx for Cause (as defined in the Global Agreement)),
or (6) the termination of employment of Xxxxx X. Xxxxxxxx without Cause (as defined in the Global
Agreement) by Parent or any of its applicable subsidiaries; and (C) a breach by Parent of Sections
2.1.1, 2.2.1, 2.2.4 or 2.2.6 of the Global Agreement (as such obligations relate to Xx. Xxxxxxxx or
Xx. Xxxxxx), which breach Parent fails to cure within ninety (90) days following notice of such
breach to Parent.
“Proceeding” means any action, claim, audit or other inquiry, hearing, investigation,
suit or other charge or proceeding (whether civil, criminal, administrative, investigative, formal
or informal) by or before any Governmental Authority or before an arbitrator or arbitral body or
mediator.
“Proposed Closing Date Net Working Capital” shall have the meaning set forth in
Section 3.5.1(a) hereof.
“Protected Period” shall have the meaning set forth in Section 11.8.8
hereof.
“Purchaser Disclosure Schedules” means the schedules accompanying this Agreement
prepared by Purchaser Parties pursuant to Article 6, which schedules include the
information specified in Articles 6 and exceptions to the representations and warranties of
the Purchaser Parties set forth in Article 6 hereof. Any matter set forth in the Purchaser
Disclosure Schedules will respect to any particular section of the Agreement shall refer only to
the section of the Purchaser Disclosure Schedules corresponding to the applicable Agreement section
number,
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except that any item disclosed in the Purchaser Disclosure Schedules shall be deemed disclosed
under any other applicable section of the Purchaser Disclosure Schedules if it is readily apparent
on its fact that such disclosure is likewise applicable to such other section of the Purchaser
Disclosure Schedules.
“Purchaser Parties” shall have the meaning set forth in the preamble hereto.
“Qualified Loss” shall have the meaning set forth in Section 11.8.9.
“Qualified Termination” shall have the meaning set forth in Section
11.8.8.
“Realty Lease” shall have the meaning set forth in Section
5.16.3 hereof.
“Registration Rights Agreement” shall have the meaning set forth in Section
8.10 hereof.
“Reimbursements Payment” shall have the meaning set forth in Section
11.8.9.
“Reimbursements Period” shall have the meaning set forth in Section 11.8.9.
“REIT” shall have the meaning set forth in Section 6.12.2.
“Related Agreement” those specific agreements listed on Exhibit H hereto.
“Release” shall have the meaning assigned it at 42 U.S.C. § 9601(22) without giving
effect to exception (A) therein, including but not limited to the (i) movement of Hazardous
Substance through, in, on or under any Environmental medium located within, or under any building,
structure, real property or facility; (ii) the movement of Hazardous Substance off-site from any
real property; and (iii) the abandonment of barrels, tanks, containers, or other receptacles
containing or that contained Hazardous Substance.
“Released Claims” shall have the meaning set forth in Section 4.4
hereof.
“Released Parties” shall have the meaning set forth in Section
4.4 hereof.
“Releasing Parties” shall have the meaning set forth in
Section 4.4 hereof.
“Rep Survival Period” means the Standard Survival Period, the Fundamental Survival
Period or the Extended Survival Period, as the case may be.
“Representative” means, with respect to a particular Person, any director, officer,
employee, agent, consultant, advisor or other representative of the Person, including legal
counsel, accountants, and financial advisors.
“Restricted Period” shall have the meaning set forth in Section 11.8.1
hereof.
“Revenue Target” means the $21,000,000 less the EOP Revenue Amount and EOC Revenue
Amount.
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“Schedules” means the schedules accompanying this Agreement prepared pursuant Articles 8, 10 and 12.
“SEC” means the U.S. Securities and Exchange Commission.
“SEC Documents” shall have the meaning set forth in Section
6.10.1.
“Securities Act” means the Securities and Exchange Act of 1933, as
amended.
“Sellers’ Representatives” means Xxxxx X. Xxxxxxxx and Xxxxxxx Prio Touzet, or their
successors, as appointed in accordance with Section 13.2 hereof.
“Standard Survival Period” shall have the meaning as set forth in Section
12.1.1 hereof.
“Statement Delivery Date” shall have the meaning set forth in Section 3.4.3
hereof.
“Statement Delivery Notice” shall have the meaning as set forth in Section
3.4.3 hereof.
“Statement Delivery Notification” shall have the meaning as set forth in Section
3.4.3(b) hereof.
“Straddle Period” shall have the meaning set forth in Section 11.3.1(a).
“Subsidiary” or “Subsidiaries” shall have the meaning set forth in Section
5.3 hereof.
“Survival Period” means the Covenant Survival Period or the applicable Rep Survival
Period, as the case may be.
“Systems” means any computer hardware (whether general or special purpose), databases,
telecommunications capabilities (including all voice, data and video networks) and other
information technology infrastructure used by or relied on by any Acquired Company in the conduct
of the Business.
“Target Net Working Capital” shall mean an amount equal to $0.
“Tax” or “Taxes” means taxes, levies, imposts, duties, assessments, charges,
unemployment insurance payments and all withholdings imposed or required to be collected by or paid
over to any Governmental Authority, including any interest, penalties, or additions imposed in
respect of the foregoing.
“Tax Consultation Notice” shall have the meaning set forth in Section
11.3.3(e) hereof.
“Tax Dispute” means any audit, examination, claim, appeal, litigation, proceeding,
assessment, in each case relating to Taxes or any Tax Return.
“Tax Return” means any report, return, amended return, refund claim, information
statement, payee statement or other information provided or required to be provided to any
Governmental Authority, with respect to Taxes, including any return of a consolidated, affiliated,
combined or unitary group.
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“Tax Sharing Agreement” shall have the meaning set forth in Section 5.11.8
hereof.
“Tax Threshold Amount” shall have the meaning set forth in Section 12.4.2
hereof.
“Terminated Employee” shall have the meaning set forth in Section 10.15.1.
“Third-Party Claim” shall have the meaning set forth in Section 12.7.1
hereof.
“Third-Party Claim Notice” shall have the meaning set forth in Section
12.7.1 hereof.
“Transactions” means the transactions contemplated by this Agreement and the Related
Agreements.
“Undisputed Amount” shall have the meaning set forth in Section 3.4.5
hereof.
“Voluntary” means an action taken by the Purchaser Parties, EOP, EOC or their
respective Affiliates that is not the result of a written request or demand by the managing member
of the owner of the applicable Managed Property (or an owner or other Person with authority to
terminate a Management Agreement on behalf of an owner) to take such action.
“WARN Act” shall have the meaning set forth in Section 5.22.1 hereof.
“WC Final Resolution Date” shall have the meaning specified in Section
3.5.1(e) of the Agreement.
“WC Objection Notice” shall have the meaning specified in Section 3.5.1(d) of
the Agreement.
“WC Objections Period” shall have the meaning as set forth in Section
3.5.1(d) hereof.
“Welfare Plan” shall have the meaning set forth in Section 5.23.1(e).
ARTICLE 16
MISCELLANEOUS PROVISIONS
16.1 Notices. Any notice, request or other communication to be given pursuant to this
Agreement shall be given in writing (including electronic mail, facsimile or similar writing) and
delivered as follows:
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If to Parent or any other Purchaser Party, to: |
Parkway Properties, Inc.
000 Xxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx XX 00000
Attention: Chief Executive Officer
Facsimile Number: 601.949.4077
Email: xxxxxxx@xxx.xxx and xxxxxxxx@xxx.xxx
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With a copy to (which shall not constitute notice):
Xxxxxxx Xxxxxxxxxxx & Mugel, LLP
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
Facsimile Number: 716.856.0432
Email: XXxxxxxx@xxxxxxx.xxx
and
Hunton & Xxxxxxxx LLP
Riverfront Plaza, East Tower
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
Facsimile Number: 000-000-0000
Email: xxxxxxx@xxxxxx.xxx
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If to the Acquired Companies (prior to the Closing), Sellers’ Representatives
or to any Member, as follows: |
x/x Xxxx Xxxxxxx LLC
000 X. Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
Email: XXxxxxxxx@xxxxxxxxxxx.xxx and XXxxxxx@xxxxxxxxxxx.xxx
Attn: Xxxxx X. Xxxxxxxx and Xxxxxxx Prio Touzet
With a copy to (which shall not constitute notice):
Xxxxx Lovells US LLP
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Phone: (000) 000-0000
Facsimile: (000)000-0000
Email: xxxxx.xxxxxx@xxxxxxxxxxxx.xxx
Attn:Xxxxx X. Xxxxxx
or in any case, to such other address for a Party as to which notice shall have been specified by
such Party to Parent and Sellers’ Representatives in accordance with this Section. Each notice,
request or communication shall be deemed to have been duly given (i) on the third (3rd)
Business Day after the day of registration, if sent by registered or
certified mail, postage prepaid, (ii) on the next Business Day following the documented acceptance
thereof for next-day delivery by a national overnight air courier service, if so sent, or (iii) on
the date sent by facsimile transmission or by electronic mail if sent during normal business hours
(otherwise the next Business Day after
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such transmission), provided receipt in each case is electronically confirmed. Otherwise, notices
shall be deemed to have been given when actually received at such address.
16.2 Entire Agreement. This Agreement, the schedules and exhibits hereto, the
Confidentiality Agreement and the Related Agreements constitute the entire agreement among the
Parties concerning the subject matter hereof, and supersedes all other prior agreements,
understandings and negotiations, oral or written, between the Parties concerning such subject
matter. If there is any conflict between this Agreement, the Confidentiality Agreement and/or any
of the Related Agreements, the terms of this Agreement shall govern.
16.3 Amendments and Waivers.
16.3.1 Subject to the provisions of Section 10.11, no modification or waiver of this
Agreement shall be enforceable unless made in a written instrument signed by the Party against whom
the modification or waiver would apply.
16.3.2 Subject to the provisions of Section 10.11, no failure or delay by any Party in
exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. Except as otherwise provided herein, no action
taken pursuant to this Agreement, including any investigation by or on behalf of any Party, shall
be deemed to constitute a waiver by the party taking such action of compliance with any
representations, warranties, covenants or agreements contained in this Agreement. Any term,
covenant or condition of this Agreement may be waived at any time by the Party that is entitled to
the benefit thereof, but only by a written notice signed by such Party expressly waiving such term
or condition. No waiver by any Party hereto of any default, misrepresentation or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior
or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in
any way any rights arising by virtue of any prior or subsequent occurrence of such kind.
16.4
Governing Law. The EOP Contribution and the EOC Contribution shall be governed
by, and construed in accordance with, the Laws of the State of
Florida, as applicable, regardless
of the Laws that might otherwise govern under applicable principles of conflict of laws thereof.
Except as provided in the immediately preceding sentence, this Agreement shall be governed by, and
construed in accordance with, the Laws of the State of Delaware, regardless of the Laws that might
otherwise govern under applicable principles of conflict of laws thereof.
16.5 Jurisdiction and Venue. Except as otherwise provided in Section 3.4.4 or
Section 3.5, each of the Parties irrevocably and unconditionally submits to the sole and
exclusive personal jurisdiction of (a) the state courts of the State of Delaware, and (b) the
United States District Court for the District of Delaware (and appropriate appellate courts
therefrom), for the purposes of any dispute, claim, controversy, suit, action or other
proceeding arising out of this Agreement or the Related Agreements or any transaction
contemplated hereby or thereby. Each of the Parties further agrees and covenants (i) to commence
any such action, suit or proceeding either in the United States District Court for the District of
Delaware or if such suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in any state court
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located in the City of Wilmington, Delaware and (ii) to not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court. Each of the Parties further
agrees and covenants that if subject matter jurisdiction over any action, suit, or proceeding in
connection with any dispute, claim, or controversy arising out of or relating to this Agreement,
the Related Agreements, or the Transactions exists in the Court of Chancery of the State of
Delaware by reason of Section 111 of the DGCL or if there otherwise exists a good faith basis for
concluding that the Court of Chancery of the State of Delaware would have subject matter
jurisdiction in connection with any such action, suit, or proceeding, then any such action, suit,
or proceeding shall be brought exclusively in the Court of Chancery of the State of Delaware, and
each party agrees that it shall not attempt to deny or defeat subject matter jurisdiction over such
action, suit, or proceeding in the Court of Chancery of the State of Delaware. Each of the Parties
irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or
proceeding arising out of this Agreement or the Transactions in (a) the United States District
Court for the District of Delaware, or (b) any state court located in the City of Wilmington,
Delaware, and hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum. Each of the Parties hereby agrees that this Agreement involves at
least $100,000 and that this Agreement has been entered into in express reliance on 6 Del. C. §
2708.
16.6 WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY LAW, EACH MEMBER, SELLERS’
REPRESENTATIVES, PARENT AND PARTNERSHIP HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY IRREVOCABLY
AND UNCONDITIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON,
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE RELATED AGREEMENTS OR ANY COURSE
OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY
HERETO OR THERETO IN CONNECTION HEREWITH OR THEREWITH. EACH MEMBER, SELLERS’ REPRESENTATIVES
PARENT AND PARTNERSHIP HEREBY EXPRESSLY ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR
PARENT, PARTNERSHIP, MEMBERS AND SELLERS’ REPRESENTATIVES TO ENTER INTO THIS AGREEMENT.
16.7 Binding Effect. This Agreement shall be binding upon and shall inure to the
benefit of Parent, Partnership, each Member, each EOC Beneficial Owner, Sellers’ Representatives
and the respective heirs, executors, personal representatives, successors and permitted assigns of
Parent, Partnership, Sellers’ Representatives, each EOC Beneficial Owner and each Member.
16.8 Interpretation. As used in this Agreement and required by the context, the
singular and plural shall be deemed to include all genders; words importing persons shall include
partnerships, corporations and other entities; when reference is made in this Agreement to an
Article, Section, Schedule or Exhibit, such reference shall be to an Article, Section, Schedule or
Exhibit of this Agreement unless otherwise indicated; and
the terms “herein,” “hereof” and “hereunder” or other similar terms, refer to this Agreement
as a whole and not only to the particular sentence, subsection or section in which any such term
may be employed. Whenever in this Agreement the word “including” is used, it shall be deemed to be
for purposes of
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identifying only one or more of the possible alternatives, and the entire provision in which such
word appears shall be read as if the phrase “including without limitation” were actually used in
the text. The section headings herein are for convenience only and shall not affect the
construction hereof. All references to dollars (or the symbol “$”) contained herein shall be
deemed to refer to United States dollars. Where any provision in this Agreement refers to action to
be taken by any Person, or which such Person is prohibited from taking, such provision shall be
applicable whether the action in question is taken directly or indirectly by such Person. Except
when used together with the word “either” or otherwise for the purpose of identifying mutually
exclusive alternatives, the term “or” has the inclusive meaning represented by the phrase “and/or”.
With regard to each and every term and condition of this Agreement, the Parties understand and
agree that the same have or has been mutually negotiated, prepared and drafted, and that if at any
time the Parties desire or are required to interpret or construe any such term or condition or any
agreement or instrument subject thereto, no consideration shall be given to the issue of which
Party actually prepared, drafted or requested any term or condition of this Agreement.
16.9 Severability. Any term or provision of this Agreement that is invalid 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 invalid or
unenforceable term or provision in any other situation or in any other jurisdiction. If a final
judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid
or unenforceable, the Parties agree that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope, duration, or area of the term or
provision, to delete specific words or phrases, or to replace any invalid 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, and this Agreement
shall be enforceable as so modified.
16.10 Counterparts. This Agreement may be executed and delivered in multiple
counterparts, each of which shall be deemed an original, and all of which together shall constitute
one and the same instrument. It is the express intent of the Parties to be bound by the exchange of
signatures on this Agreement via facsimile or electronic mail via the portable document format
(PDF). A facsimile or other copy of a signature shall be deemed an original.
16.11 Third Parties. Except as otherwise expressly stated herein, no provision of this
Agreement is intended or shall confer on any Person, other than the Parties (and their successors
and permitted assignees), any rights under this Agreement.
16.12 Schedules and Exhibits. The schedules and exhibits, if any, referenced in this
Agreement constitute an integral part of this Agreement and are incorporated herein by reference
and made a part hereof. Any information disclosed in a schedule or a section of any such schedule
shall be deemed to be disclosed in such other schedules or sections of any such schedule to the
extent that the disclosure is reasonably apparent from
its face to be applicable to such other schedule or section of any such schedule. Disclosure
of any fact or item in any schedule shall not be deemed to constitute an admission that such item
or fact is material for the purposes of this Agreement.
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16.13 Time Periods. Any action required hereunder to be taken within a certain number
of days shall, unless otherwise provided herein, be taken within that number of calendar days;
provided, however, that if the last day for taking such action falls on a Saturday, a Sunday, or a
legal holiday, the period during which such action may be taken shall be extended to the next
Business Day.
16.14 Specific Performance. The Parties agree that irreparable damage would occur in
the event any of the provisions of this Agreement were not performed in accordance with the terms
hereof and that, subject to the terms of Section 11.8, Section 14.3 and this
Section 16.14, each of the Parties shall be entitled to specific performance of the terms
hereof pursuant to this Section 16.14, in addition to any other remedy at law or in equity.
It is accordingly agreed that, subject to the terms and conditions of Section 11.8,
Section 14.3 and this Section 16.14, Parent shall be entitled to an injunction,
specific performance and other equitable relief to prevent breaches of this Agreement by the
Acquired Companies, Members or EOC Beneficial Owners and to enforce specifically the terms and
provisions hereof, this being in addition to any other remedy to which they are entitled at law or
in equity, without the necessity of posting bonds or other undertaking in connection therewith; it
being understood and agreed that, notwithstanding the first sentence of this Section 16.14
or anything else in this Agreement to the contrary, Parent’s right to specific performance to
require the Acquired Companies, Members or EOC Beneficial Owners to consummate the Closing shall
remain subject to the satisfaction (or waiver by the applicable Party) of the conditions to Closing
hereunder, expressly including, without limitation, the simultaneous consummation of all of the
Other Transactions that have not otherwise previously been consummated in accordance with their
terms and, notwithstanding anything in this Agreement to the contrary, to the extent any of the
Other Transactions have not previously closed or are not closing simultaneously with a Closing
hereunder for any reason, Parent shall not be entitled to specific performance to require the
Acquired Companies, Members or EOC Beneficial Owners to consummate the Closing. The Parties further
acknowledge and agree that, prior to Closing, the Acquired Companies and Members shall be entitled
to an injunction, specific performance and other equitable relief only to enforce specifically the
terms and provisions of, and to prevent breaches of, Sections 10.3, 10.4,
10.10 and 10.14 by the Purchaser Parties. Following the Closing, Members and EOC
Beneficial Owners shall be entitled to an injunction or other equitable relief to prevent breaches
of Article 3 or Section 10.14 of this Agreement by the Purchaser Parties and to
enforce specifically the terms and provisions therein, in each case this being in addition to any
other remedy to which they are entitled at law or in equity. The Parties acknowledge that in the
absence of a waiver, a bond or undertaking may be required by a court and the Parties hereby waive
any such requirement of such a bond or undertaking.
[Signature Page Follows.]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date set forth above.
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EOP:
EOLA OFFICE PARTNERS LLC
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By: |
/s/
Xxxxx X. Xxxxxxxx |
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Name: |
Xxxxx X. Xxxxxxxx |
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Title: |
Manager |
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EOC:
EOLA CAPITAL LLC
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By: |
/s/
Xxxxxxx Prio Touzet |
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Name: |
Xxxxxxx Prio Touzet |
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Title: |
Chief Executive Officer |
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PARENT:
PARKWAY PROPERTIES, INC.
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By: |
/s/
Xxxxxx X. Xxxxxx |
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Name: |
Xxxxxx X. Xxxxxx |
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Title: |
President and CEO |
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By: |
/s/
Xxxxxxx Xxxxxxx
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Name: |
Xxxxxxx Xxxxxxx |
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Title: |
Executive Vice President & Chief Financial Officer |
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PARTNERSHIP: |
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PARKWAY PROPERTIES LP |
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By:
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Parkway Properties General Partners, Inc.,
general partner |
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By: |
/s/
Xxxxx
X. Xxxxxx
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Name: |
Xxxxx
X. Xxxxxx |
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Title: |
Executive Vice President & Chief Investment Officer |
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By: |
/s/ M. Xxxxxx Xxxxxx
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Name: |
M. Xxxxxx Xxxxxx |
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Title: |
Senior Vice President & Fund Manager |
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MEMBERS:
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/s/
Xxxxx X. Xxxxx, III
Name: Xxxxx X. Xxxxx, III
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/s/ Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
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/s/ Xxxx X. Xxx
Name: Xxxx X. Xxx
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/s/ Xxxx Xxxx
Name: Xxxx Xxxx
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/s/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
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BANYAN STREET OFFICE HOLDINGS |
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LLC, a Florida limited liability company |
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By: /s/ Xxxxxxx Prio Xxxxxx |
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Xxxxxxx Prio Touzet, Managing Member
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EOC BENEFICIAL OWNERS: |
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/s/ Xxxxx Xxxxx
Name: Xxxxx Xxxxx
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/s/ Xxxxxxx Prio Touzet
Name: Xxxxxxx Prio Touzet
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SELLERS’ REPRESENTATIVES, |
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SOLELY FOR PURPOSES OF |
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ARTICLE 13: |
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/s/ Xxxxxxx Prio Touzet
Name: Xxxxxxx Prio Touzet
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/s/ Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
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