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STOCK PURCHASE AGREEMENT
between
NRT INCORPORATED
as the Purchaser,
ST. XXX REAL ESTATE SERVICES, INC.
as the Company,
and
THE ST. XXX COMPANY,
as the Seller
Dated as of April 17, 2002
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS AND TERMS................................................................... 2
Section 1.1 Definitions.................................................................. 2
Section 1.2 Other Interpretive Provisions................................................ 13
ARTICLE II PURCHASE AND SALE...................................................................... 13
Section 2.1 Prior Purchase and Sale of Mortgage Shares................................... 13
Section 2.2 Purchase and Sale of Shares.................................................. 14
Section 2.3 Shares Purchase Price........................................................ 14
Section 2.4 Deliveries and Payment....................................................... 14
Section 2.5 Purchase Price Adjustments................................................... 16
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER.......................................... 19
Section 3.1 Authority and Validity....................................................... 19
Section 3.2 Subsidiaries................................................................. 19
Section 3.3 Title to Shares; Etc......................................................... 20
Section 3.4 No Conflict; Governmental Consents........................................... 21
Section 3.5 Financial Statements......................................................... 21
Section 3.6 Absence of Certain Changes or Events......................................... 22
Section 3.7 Assets....................................................................... 25
Section 3.8 Litigation and Claims; Compliance with Laws.................................. 26
Section 3.9 Insurance.................................................................... 28
Section 3.10 Environmental Matters........................................................ 28
Section 3.11 Material Contracts........................................................... 29
Section 3.12 Intellectual Property........................................................ 32
Section 3.13 Taxes........................................................................ 34
Section 3.14 Employee Benefits; ERISA..................................................... 36
Section 3.15 Labor Matters................................................................ 39
Section 3.16 Terminated Arrangements...................................................... 40
Section 3.17 Records...................................................................... 41
Section 3.18 Affiliate Transactions....................................................... 41
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Section 3.19 Pendings, Listings........................................................... 42
Section 3.20 Sales Associates............................................................. 42
Section 3.21 Client Trust Funds........................................................... 43
Section 3.22 Brokers, Finders, etc........................................................ 43
Section 3.23 Rates and Fees Charged by Title Services..................................... 43
Section 3.24 Leased Employees............................................................. 43
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER........................................ 44
Section 4.1 Authority; Validity.......................................................... 44
Section 4.2 No Conflict; Governmental Consents........................................... 44
Section 4.3 Brokers, Finders, etc........................................................ 45
ARTICLE V COVENANTS............................................................................... 45
Section 5.1 Public Disclosure; Confidentiality........................................... 45
Section 5.2 Further Assurances........................................................... 45
Section 5.3 Dissolution.................................................................. 46
Section 5.4 Employee Plans............................................................... 46
Section 5.5 Change of Control Payments................................................... 48
Section 5.6 Internet Link................................................................ 48
Section 5.7 Certain Obligations of Seller................................................ 48
Section 5.8 Prosecution of Certain Claims................................................ 49
ARTICLE VI CERTAIN TAX MATTERS.................................................................... 50
Section 6.1 Preparation and Filing of Tax Returns; Payment of Taxes...................... 50
Section 6.2 Section 338(h)(10) Election.................................................. 50
Section 6.3 Tax Indemnification.......................................................... 52
Section 6.4 Tax Refunds.................................................................. 53
Section 6.5 Tax Indemnification Procedures............................................... 54
Section 6.6 Transfer and Similar Taxes................................................... 55
Section 6.7 Information to be Provided by the Purchaser.................................. 55
Section 6.8 Termination of Tax Sharing Agreements........................................ 55
Section 6.9 Conflicts; Survival.......................................................... 56
Section 6.10 Tax Treatment................................................................ 56
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Section 6.11 Assistance and Cooperation................................................... 56
ARTICLE VII SURVIVAL AND INDEMNIFICATION.......................................................... 56
Section 7.1 Survival of Representations and Warranties................................... 56
Section 7.2 Indemnification by the Seller................................................ 57
Section 7.3 Indemnification by the Purchaser............................................. 60
Section 7.4 Notice and Resolution of Claim............................................... 61
Section 7.5 Indemnity Payments........................................................... 63
Section 7.6 Exclusive Remedy............................................................. 63
ARTICLE VIII MISCELLANEOUS........................................................................ 63
Section 8.1 Notices...................................................................... 63
Section 8.2 Amendment; Waiver............................................................ 65
Section 8.3 Assignment................................................................... 65
Section 8.4 Entire Agreement............................................................. 65
Section 8.5 Parties in Interest.......................................................... 65
Section 8.6 Expenses..................................................................... 65
Section 8.7 Governing Law; Jurisdiction; Service of Process.............................. 65
Section 8.8 Specific Performance......................................................... 66
Section 8.9 Counterparts................................................................. 66
Section 8.10 Headings..................................................................... 66
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Exhibits
Exhibit A - Form of Tax Certificate
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STOCK PURCHASE AGREEMENT, dated April 17, 2002 (this
"AGREEMENT"), between NRT Incorporated, a Delaware corporation (the
"PURCHASER") and The St. Xxx Company, a Florida corporation (the "SELLER").
W I T N E S S E T H :
WHEREAS, the Company has immediately prior to the execution
and delivery of this Agreement sold and transferred to Cendant Mortgage
Corporation, a New Jersey corporation (the "MORTGAGE PURCHASER"), all of the
issued and outstanding shares of capital stock ("MORTGAGE SHARES") of Arvida
Mortgage Services, Inc., a Florida corporation ("ARVIDA MORTGAGE");
WHEREAS, the Seller is the record and beneficial owner of all
issued and outstanding shares of capital stock (the "SHARES") of St. Xxx Real
Estate Services, Inc., a Florida corporation (the "COMPANY"), and the Company
is the record and beneficial owner of all of the issued and outstanding shares
of each of the Subsidiary companies and the holder of the majority membership
interests in the limited liability companies, set forth on Schedule 3.2 to this
Agreement (the Company together with such Subsidiary companies and limited
liability companies and Arvida Mortgage, the "COMPANIES");
WHEREAS, the Seller desires to sell and transfer to the
Purchaser, and the Purchaser desires to purchase from the Seller, all of the
Shares, upon the terms and subject to the conditions set forth herein;
WHEREAS, the Seller is willing to make certain
representations and warranties and to indemnify the Purchaser and its
Affiliates upon the terms and conditions herein;
WHEREAS, the Purchaser is willing to make certain
representations and warranties to the Seller and to indemnify the Seller and
its Affiliates upon the terms and conditions herein; and
WHEREAS, as a condition to, and in connection with, the
execution and delivery of this Agreement, the parties are entering into the
Related Agreements.
NOW, THEREFORE, in consideration of the foregoing premises
and for other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, and intending to be legally bound hereby, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
SECTION 1.1 DEFINITIONS. Capitalized terms used in this Agreement
shall have the meanings set forth in this Agreement. In addition, as used in
this Agreement, the following terms shall have the following meanings:
"ACCOUNTING REFEREE" shall have the meaning given in Section
2.5.
"AFFILIATE" shall mean, as to any Person, (i) any other
Person which, directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person or (ii) any corporation or organization
(other than a Subsidiary of such Person) of which such Person is an officer,
general partner or managing member, or is, directly or indirectly, the
beneficial owner of twenty-five percent (25%) or more of any class of equity
securities. The term "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as applied to any Person,
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or other ownership interest, by contract or
otherwise.
"AGREEMENT" shall have the meaning given in the introduction
to this Agreement.
"ARVIDA MORTGAGE" shall have the meaning given in the
recitals.
"AUDITED FINANCIAL STATEMENTS" shall have the meaning given
in Section 3.5.
"BALANCE SHEET" shall mean the consolidated balance sheet of
the Company and its Subsidiaries as of February 28, 2002 included in the
Financial Statements.
"BUSINESS" shall mean the businesses conducted by the
Companies, including real estate brokerage, relocation, referral, title and
escrow services, mortgage origination, brokerage and banking, real estate
education, and products and services ancillary or related thereto.
"BUSINESS DAY" shall mean any day other than a Saturday, a
Sunday or a day on which banks in New York City are authorized or obligated by
law or executive order to close.
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"CLEANUP" shall mean all actions (i) required under
Environmental Laws to: clean up, remove, treat or remediate Hazardous
Materials; (ii) prevent the Release of Hazardous Materials that could
reasonably be expected to result in a liability of any of the Companies or a
violation of Environmental Laws by any of the Companies; or (iii) respond to
any government requests for information or any legal process relating to
clean-up, removal, treatment or remediation of Hazardous Materials.
"CLIENT TRUST FUNDS" shall mean all (i) binder deposit
accounts and other client trust funds relating to Pendings, and (ii) all other
funds held for the benefit of third parties in connection with title/escrow
services provided by the Companies or in connection with mortgage loans to be
disbursed.
"CLOSING" shall mean the consummation of the transactions
contemplated by this Agreement.
"CLOSING DATE" shall mean the date of the Closing.
"CLOSING DATE BALANCE SHEET" shall have the meaning given in
Section 2.5.
"CLOSING DATE INDEBTEDNESS" shall have the meaning given in
Section 2.5.
"CLOSING DATE PURCHASE PRICE" shall have the meaning given in
Section 2.3.
"CLOSING DATE WORKING CAPITAL" shall have the meaning given
in Section 2.5.
"COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended.
"COMPANIES" shall have the meaning given in the recitals.
"COMPANY" shall have the meaning given in the recitals.
"COMPUTER PROGRAMS" shall mean (i) any and all computer
software programs, including all source and object code, (ii) databases and
compilations, including any and all data and collections of data, whether
machine readable or otherwise, (iii) all descriptions, flow-charts and other
work product used to design,
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plan, organize and develop any of the foregoing, and (iv) all documentation,
including user manuals and training materials, relating to any of the
foregoing.
"CONSENT AGREEMENT" shall mean the Consent Agreement, dated
April 15, 2002, between the Seller, the Company, St. Xxx Arvida/Company, Inc.,
a Florida corporation and JMB Southeast Development, L.L.C., a Delaware limited
liability company.
"CREDIT AGREEMENT" shall mean the Credit Agreement, dated
April 26, 2001, among Bank of America, N.A., SPI Development X LLC, SPI
Investment X LLC and the lenders party thereto.
"CURRENT ASSETS" shall mean, without duplication, the sum of
the Company's (i) unrestricted cash and cash equivalents, (ii) trade and other
accounts receivable, and (iii) other current assets; all accounted for in
accordance with GAAP and on a closed (settled) basis.
"CURRENT LIABILITIES" shall mean, without duplication, the
sum of the Company's (i) trade accounts payable, (ii) accrued and unpaid
salaries, bonuses and vacation pay, (iii) commissions payable on closed
(settled) transactions, (iv) obligations under the current portion of all
capitalized leases, and (v) other current liabilities; all accounted for in
accordance with GAAP and on a closed (settled) basis. Any liability that would
be classified as a Current Liability for purposes of this definition or is
included in the definition of Working Capital but which is also classified as
"Indebtedness" under the definition thereof in this Section 1.1 shall instead
be treated as a Current Liability or otherwise accounted for in the definition
of Working Capital and shall not be treated as Indebtedness for purposes of the
calculations in Section 2.3(b) and Section 2.5.
"DAMAGES" shall have the meaning given in Section 7.2.
"DOLLARS" shall have the meaning given in Section 1.2.
"EIGHTY MILLION DOLLAR NOTE" shall have the meaning given in
Section 2.4 (xii).
"ELECTION" shall have the meaning given in Section 6.2.
"ELECTION PERIOD" shall have the meaning given in Section
7.4.
"ENVIRONMENTAL CLAIM" shall mean any claim, action or written
notice by any Person alleging potential liability (including potential
liability for investigatory costs, Cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries, or penalties)
arising out of, based on
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or resulting from either (a) the presence, or Release, of any Hazardous
Materials at any location, whether or not owned, leased or operated by any of
the Companies, or (b) any other circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
"ENVIRONMENTAL LAWS" shall mean all Laws relating to
pollution or protection of human health as it relates to Hazardous Materials or
the environment, including Laws relating to Releases or threatened Releases of
Hazardous Materials, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, and all Laws with regard to record keeping, notification,
disclosure and reporting requirements respecting Hazardous Materials.
"ENVIRONMENTAL LIABILITY" shall mean any liability resulting:
(i) from an Environmental Claim; (ii) from failure to comply with any
Environmental Law; (iii) from failure to obtain or comply with any
Environmental Permit; (iv) from a Cleanup; or (v) from harm or injury to any
Person, to public health, or to the environment as a result of actual,
threatened or potential exposure to Hazardous Materials.
"ENVIRONMENTAL PERMITS" shall mean all permits, approvals,
identification numbers, licenses, certificates, executions, approvals and any
other authorizations required under any Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"ERISA AFFILIATE" shall have the meaning given in Section
3.14.
"ERISA PLANS" shall have the meaning given in Section 3.14.
"ESTIMATED INDEBTEDNESS" shall have the meaning given in
Section 2.3.
"ESTIMATED WORKING CAPITAL" shall have the meaning given in
Section 2.3.
"FEBRUARY 2002 CREDIT AGREEMENT" shall mean the Second
Amended and Restated Credit Agreement, dated as of February 7, 2002, among the
lender, the agent, Bank of America, N.A., Xxxxx Fargo Bank, SunTrust Bank,
Regions Bank and First Union Securities, Inc.
"FINANCIAL STATEMENTS" shall have the meaning given in
Section 3.5.
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"FOUNDATION" shall have the meaning given in Section 5.3.
"GAAP" shall mean United States generally accepted accounting
principles and practices, consistently applied.
"GOVERNMENTAL AUTHORITY" shall mean any national, federal,
state, local or foreign judicial, legislative, executive, regulatory or
administrative authority, self-regulatory organization or arbitrator.
"HAZARDOUS MATERIALS" means all substances defined as
Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil and
Hazardous Substances Pollution Contingency Plan, 40 C.F.R. ss. 300.5, or
defined as such by, or regulated as such under, any Environmental Law.
"INDEBTEDNESS" of any Person at any date shall include,
without duplication, (i) all indebtedness (including interest payments or
prepayments required prior to satisfaction) of such Person for borrowed money
or for the deferred purchase price of property or services (other than current
liabilities for trade payables incurred and payable in the ordinary course of
business consistent with past practice), including earn-out or similar
contingent purchase amounts, (ii) any other indebtedness of such Person which
is evidenced by a note, mortgage, bond, debenture or similar instrument, (iii)
all obligations of such Person under capitalized leases (other than the current
portion thereof to the extent reflected in Current Liabilities), (iv) all
obligations pertaining to offices closed prior to the Closing, (v) all amounts
payable under severance, bonus and similar arrangements upon or as a result of
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby (but not as a result of any termination
thereafter to the extent that the amount payable upon such termination
thereafter is not, as a result of the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby, greater than the
amount payable if termination were to occur in the absence of the execution or
delivery of this Agreement or the consummation of the transactions contemplated
hereby) and (vi) any current or contingent payment or indemnity obligations of
any of the Companies resulting from or arising in connection with acquisitions
of any entities or assets by any of the Companies prior to the Closing;
provided, that Indebtedness shall not include any liabilities for or relating
to Taxes or any Tax Sharing or Tax Indemnification Agreement.
"INDEMNIFIED BENEFITS LIABILITIES" shall have the meaning
given in Section 5.4.
"INDEMNIFIED PARTY" shall have the meaning given in Section
7.4.
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"INDEMNIFYING PARTY" shall have the meaning given in Section
7.4.
"INDEMNITY PAYMENTS" shall have the meaning given in Section
7.5.
"INTELLECTUAL PROPERTY" shall mean all intellectual property
used by the Companies in the Business as currently conducted or currently held
by the Companies or their Affiliates for use in the Business, including, but
not limited to, all United States and foreign patents and patent applications;
trademarks, service marks, logos, designs, trade dress, slogans, trade names,
domain names and any and all registrations and applications therefor, and
general intangibles of like nature, copyrights, copyright registrations and
applications; Computer Programs; technology, trade secrets, proprietary
processes and customer lists.
"IRS" shall mean the Internal Revenue Service of the United
States.
"LAWS" shall mean any federal, state, foreign or local law,
common law, statute, ordinance, rule, regulation, order, judgment,
administrative order, decree, administrative or judicial decision and any other
executive, legislative, regulatory or administrative proclamation.
"LEASE GUARANTIES" shall mean the guaranties of obligations
of any of the Companies by the Seller and its Affiliates (other than the
Companies) under the Leases set forth on Schedule 1.1.
"LEASES" shall have the meaning given in Section 3.7.
"LICENSES" shall have the meaning given in Section 3.12.
"LIENS" shall mean any lien, pledge, mortgage, security
interest, lease, charge, option, right of first refusal, easement, servitude or
restriction on use or transfer under any instrument or agreement, or any other
similar encumbrance of any nature whatsoever.
"LITIGATION" shall mean any litigation, legal action,
arbitration, proceeding, demand or claim brought against any of the Companies
(or any of their respective employees or sales associates or independent
contractors if and to the extent that such Persons are entitled to indemnity,
reimbursement or contribution therefor from any of the Companies or covered
therefor under the insurance policies applicable to the Companies) before or by
any Governmental Authority, in each case with respect to any claim if and to
the extent arising out of or resulting from events, circumstances, actions or
failures to act in breach of contractual or other legal requirements occurring
or existing prior to the Closing.
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"MATERIAL ADVERSE EFFECT" shall mean a material adverse
effect on (i) the sales, assets, properties, operations, results of operations
or financial condition of the Companies taken as a whole or (ii) the ability of
the Seller to consummate the transactions contemplated by this Agreement or
perform its obligations under this Agreement.
"MATERIAL CONTRACTS" shall have the meaning given in Section
3.11.
"MORTGAGE NOTE" shall have the meaning given in Section 2.1.
"MORTGAGE PURCHASER" shall have the meaning given in the
recitals.
"MORTGAGE SERVICES FINANCIAL STATEMENTS" shall have the
meaning given in Section 3.5.
"MORTGAGE SHARES" shall have the meaning given in the
recitals.
"NON-COMPETITION AGREEMENT" shall mean the Non-Competition
Agreement, dated the Closing Date, among the Seller Parties and the Purchaser.
"NOTE PURCHASE AGREEMENT" shall mean the Note Purchase
Agreement, dated as of February 7, 2002, among the Seller and the note
purchasers.
"ORGANIZATIONAL DOCUMENTS" shall mean, as to any Person, the
certificate of incorporation and bylaws or other organizational documents of
such Person.
"PARTICIPATION AGREEMENT" shall mean the Participation
Agreement, dated as of April 26, 2001, among the Seller, St. Xxx Commercial,
Inc., the lessees party thereto, the guarantors, SPI Development X LLC, Bank of
America Securities LLC, SPI Investment X LLC and the owners party thereto and
the lenders party thereto.
"PENDINGS" shall have the meaning given in Section 3.19.
"PERMITS" shall mean as to any Person, all licenses, permits,
franchises, orders, approvals, concessions, registrations, authorizations and
qualifications under any federal, state, local or foreign laws with any and all
Governmental Authorities or with any and all industry or other nongovernmental
self-regulatory organizations that are issued to such Person, including
Environmental Permits.
"PERMITTED LIENS" means any (i) Lien which arises by
operation of law with respect to current Taxes not yet due and payable, (ii)
statutory
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materialmen's, mechanics', workmen's or repairmen's Lien in each case created
in the ordinary course of business the existence of which does not, and would
not reasonably be expected to, materially impair the value or use and enjoyment
of the asset subject to such Lien, and (iii) Lien encumbering the fee interest
title in any leased Real Property the existence of which does not, and would
not reasonably be expected to, materially impair the value or use and enjoyment
of such Real Property by the lessee.
"PERSON" shall mean an individual, a corporation, a
partnership, limited liability company, an association, a trust or other entity
or organization.
"PLANS" shall have the meaning given in Section 3.14.
"POST-CLOSING PERIODS" shall have the meaning given in
Section 6.3.
"POST-CLOSING STRADDLE PERIOD" shall have the meaning given
in Section 6.3.
"PRE-CLOSING LITIGATION" shall have the meaning given in
Section 7.5.
"PRE-CLOSING PERIODS" shall have the meaning given in Section
6.3.
"PRIOR TRADEMARK LICENSE" shall have the meaning given in
Section 3.12.
"PURCHASE PRICE" shall have the meaning given in Section 2.3.
"PURCHASER" shall have the meaning given in the introduction
to this Agreement.
"PURCHASER INDEMNIFIED MATTERS" shall have the meaning given
in Section 7.3.
"PURCHASER INDEMNIFIED PARTIES" shall have the meaning given
in Section 7.2.
"PURCHASER PLANS" shall have the meaning given in Section
5.4.
"PURCHASER'S DEDUCTIBLE AMOUNT" shall have the meaning given
in Section 7.3.
"REAL PROPERTY" shall have the meaning given in Section 3.7.
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"RELATED AGREEMENTS" shall mean the Transitional Trademark
License Agreement, the Non-Competition Agreement and the Use of Name Agreement.
"RELEASE" shall mean any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment (including ambient air,
surface water, groundwater and surface or subsurface strata), or onto, into or
out of any property, including the movement of Hazardous Materials through or
in the air, soil, surface water, groundwater or property.
"RETAINED USE AGREEMENTS" shall mean the agreements set forth
in Exhibit B to the Use of Name Agreement.
"SALES ASSOCIATES" shall have the meaning given in Section
3.20.
"SELLER" shall have the meaning given in the introduction to
this Agreement.
"SELLER INDEMNIFIABLE MATTERS" shall have the meaning given
in Section 7.2.
"SELLER INDEMNIFIED PARTIES" shall have the meaning given in
Section 7.3.
"SELLER PARTIES" shall mean the Seller and St. Xxx/Arvida
Company, L.P., a Delaware limited partnership.
"SELLER PLANS" shall have the meaning given in Section 3.14.
"SELLER'S DEDUCTIBLE AMOUNT" shall have the meaning given in
Section 7.2.
"SHARES" shall have the meaning given in the recitals.
"SPECIFIED OBLIGATIONS" shall mean (i) obligations of any of
the Companies in respect of acceptances issued or created for the account of
any of the Companies, (ii) obligations of any of the Companies to make payments
pursuant to sale-leaseback transactions, (iii) obligations of any of the
Companies to make payments pursuant to non-compete payment obligations or
change of control payment obligations, (iv) loans between any of the Companies
on the one hand and, on the other hand, any of the officers or stockholders of
any of the Companies, (v) amounts related to intercompany balances or other
monetary obligations between one or more of the Companies on the one hand, and,
on the other hand, the Seller and
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its Affiliates (other than the Companies), and (vi) guarantees by any of the
Companies of obligations of others and Liens on the assets of any of the
Companies securing obligations of others, in each case whether or not such
Person has assumed or otherwise become directly liable for the payment thereof.
"ST. XXX XXXX" shall have the meaning given in the
Transitional Trademark License Agreement.
"STRADDLE PERIODS" shall have the meaning given in Section
6.3.
"SUBSIDIARY" shall mean, with respect to any Person, any
corporation, limited liability company or other organization, whether
incorporated or unincorporated, of which such Person or any other subsidiary of
such Person beneficially owns a majority of the voting or equity interests.
"TAX CLAIM" shall have the meaning given in Section 6.5.
"TAX INDEMNIFICATION AGREEMENT" shall have the meaning given
in Section 3.13.
"TAX INDEMNITY PAYMENTS" shall have the meaning given in
Section 6.3.
"TAX LAW" shall mean any Law relating to Taxes.
"TAX PACKAGE" shall have the meaning given in Section 6.7.
"TAX RETURN" shall mean any return, report, declaration,
information return or other document (including any related or supporting
information) required to be filed with any Governmental Authority with respect
to Taxes, including any amendments thereof.
"TAX SHARING AGREEMENT" shall have the meaning given in
Section 6.8.
"TAXES" shall mean all taxes, charges, fees, duties, levies,
penalties or other assessments imposed by any Governmental Authority, including
income, gross receipts, excise, property, sales, gain, use, license, capital
stock, transfer, franchise, payroll, withholding, social security or other
taxes, including any interest, penalties or additions attributable thereto.
"TERMINATED ARRANGEMENTS" shall have the meaning given in
Section 3.16.
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"TITLE SERVICES" shall mean St. Xxx Title Services, Inc., a
Florida corporation.
"TRANSFER TAXES" shall have the meaning given in Section 6.6.
"TRANSITIONAL TRADEMARK LICENSE AGREEMENT" shall mean the
Transitional Trademark License Agreement, dated the Closing Date, among the
Seller Parties and the Purchaser.
"TREASURY REGULATIONS" shall mean the United States Tax
Regulations, including Temporary Regulations, promulgated under the Code, as
the same may be amended hereafter from time to time (including corresponding
provisions of succeeding United States Tax Regulations).
"UNAUDITED FINANCIAL STATEMENTS" shall have the meaning given
in Section 3.5.
"USE OF NAME AGREEMENT" shall mean the Use of Name Agreement,
dated the Closing Date, among the Seller Parties and the Purchaser.
"WAREHOUSE CREDIT AGREEMENT" shall mean the Warehousing
Credit and Security Agreement, as amended, dated March 1, 2001, between Arvida
Mortgage and Residential Funding Corporation.
"WARN ACT" shall have the meaning given in Section 3.15.
"WORKING CAPITAL" shall mean (A) Current Assets excluding any
(i) prepaid, deferred or other items related to Taxes or any Tax Sharing or Tax
Indemnification Agreements and (ii) intercompany balances between any of the
Companies on one hand, and on the other hand, the Seller and its Affiliates
(other than the Companies), minus (B) Current Liabilities excluding any (i)
accrued, deferred or other items related to Taxes or any Tax Sharing or Tax
Indemnification Agreements, (ii) any reserve for Litigation expense and (iii)
intercompany balances (including accrued interest) between the Companies on one
hand, and on the other hand, the Seller and its Affiliates (other than the
Companies) plus (C) any security deposits for office Leases or other assets in
each case set forth on Schedule 1.1 that are classified under GAAP as long-term
and not included in Current Assets, plus (D) any mortgage receivables that are
classified under GAAP as long-term and not included in Current Assets minus (E)
any Indebtedness assumed by the Purchaser that is directly related to the
mortgage receivables in (D) above.
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SECTION 1.2 OTHER INTERPRETIVE PROVISIONS.
(a) The words "HEREOF," "HEREIN," "HERETO," "HEREUNDER" and
words of similar import, when used in this Agreement, shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
(b) Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa except for any reference to the
Company or the Companies which shall only be interpreted in accordance with
their respective definitions in Section 1.1.
(c) The terms "DOLLARS" and "$" shall mean United States
dollars.
(d) The word "INCLUDING" shall mean including without
limitation and the words "INCLUDE" and "INCLUDES" shall have corresponding
meanings.
(e) The word "KNOWLEDGE" shall mean (i) in the case of the
Seller, what Xxxx Xxxxxx, Xxxxx Xxxxxx, Xxxxx Xxxx, Xxxxxxx Xxxx, Xxxx Xxxxx,
Xxxxx Xxxxx or any Regional President of the Companies knew, or should
reasonably have known in each of their respective capacities with the Companies
and (ii) in the case of the Purchaser, what any executive officer of the
Purchaser knew or should have known, in each of their respective capacities
with the Purchaser.
(f) In the event that the final day of any time period
provided herein based on calendar days does not fall on a Business Day, such
time period shall be extended such that the final day of such period shall fall
on the next Business Day thereafter.
ARTICLE II
PURCHASE AND SALE
SECTION 2.1 PRIOR PURCHASE AND SALE OF MORTGAGE SHARES.
Immediately prior to the execution of this Agreement, (i) the Company sold,
conveyed, transferred, assigned and delivered to the Mortgage Purchaser, and
the Mortgage Purchaser purchased from the Company, free and clear of all Liens,
all of the Mortgage Shares and (ii) in consideration of the sale and transfer
of the Mortgage Shares, the Mortgage Purchaser issued to the Company a note in
the amount of eighteen million dollars ($18,000,000) (the "MORTGAGE NOTE").
However, for purposes of the adjustment set forth in Section 2.5, the
representations and warranties set forth in Article III (except where otherwise
specifically indicated in Sections 3.1, 3.3, 3.4, 4.1 and 4.2) and the
obligations set forth in Article VII (except
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as such Article relates to the portions of the representations and warranties
referred to in the immediately preceding parenthetical clause), the purchase
and sale of the Mortgage Shares shall be treated as if it had not occurred
prior to the Closing.
SECTION 2.2 PURCHASE AND SALE OF SHARES. Upon the terms of this
Agreement, the Seller hereby sells, conveys, transfers, assigns and delivers to
the Purchaser, and the Purchaser hereby purchases from the Seller, free and
clear of all Liens, all of the Shares.
SECTION 2.3 SHARES PURCHASE PRICE.
(a) In consideration of the sale and transfer of the Shares
and the execution and delivery of the Related Agreements upon the terms and
subject to the conditions of this agreement, the Purchaser hereby agrees to pay
concurrently herewith to the Seller by wire transfer of immediately available
funds to the account previously designated by the Seller, an aggregate of one
hundred and seventy million two hundred and nine thousand two hundred and
thirty-one dollars and sixty-five cents ($170,209,231.65), which includes the
thirty million seven hundred and nine thousand two hundred and thirty-one
dollars and sixty-five cents ($30,709,231.65) adjustment in respect of
Estimated Working Capital referred to in Section 2.3(b) (the "CLOSING DATE
PURCHASE PRICE"), subject to further adjustment pursuant to Section 2.5 (as so
adjusted, the "PURCHASE PRICE").
(b) The Seller has delivered to the Purchaser a good faith
estimated calculation of the consolidated Working Capital of the Companies as
of the Closing Date (the "ESTIMATED WORKING CAPITAL"), which has been certified
by the Chief Financial Officer of the Company and the Chief Financial Officer
of the Seller. The Closing Date Purchase Price has been increased by the amount
of thirty million seven hundred and nine thousand two hundred and thirty-one
dollars and sixty-five cents ($30,709,231.65) by which the Estimated Working
Capital exceeds zero.
(c) The Seller has delivered to the Purchaser a good faith
estimated calculation of any Indebtedness of any of the Companies as of the
Closing Date other than the Indebtedness set forth on Schedule 2.3(c) (the
"ESTIMATED INDEBTEDNESS"), which has been certified by the Chief Financial
Officer of the Company and the Chief Financial Officer of the Seller. The
Closing Date Purchase Price has not been decreased as the amount of Estimated
Indebtedness is zero.
SECTION 2.4 DELIVERIES AND PAYMENT.
(a) The Seller is delivering, or causing to be delivered,
contemporaneously herewith to the Purchaser at the Closing:
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(i) certificates representing all of the Shares
accompanied by stock powers duly executed in blank and otherwise in form
satisfactory to the Purchaser for transfer on the books of the Company (with
any requisite transfer tax stamps attached by the Seller);
(ii) certificates representing all of the issued
and outstanding shares of capital stock of the Subsidiaries of the Company;
(iii) a good standing certificate for each of the
Companies issued by the applicable Secretaries of State dated within ten (10)
Business Days prior to the Closing Date;
(iv) the stock transfer records and corporate
minute books of each of the Companies;
(v) duly executed resignations of each director
of each of the Companies and of those officers of the Companies listed on
Schedule 2.4(v);
(vi) an opinion of the Seller's counsel;
(vii) a certificate of the Seller's non-foreign
status in the form of Exhibit A;
(viii) the Transitional Trademark License
Agreement, duly executed by the Seller Parties;
(ix) the Non-Competition Agreement, duly
executed by the Seller Parties;
(x) the Use of Name Agreement, duly executed by
the Seller Parties;
(xi) the Consent Agreement, duly executed by the
Seller and the other parties thereto.
(xii) evidence of the repayment, discharge and
release (without any continuing liability, obligation or other adverse effect
upon the Companies) of all Indebtedness of the Companies set forth on Schedule
2.4(xii) including the eighty million dollar ($80,000,000) note issued by the
Company to the Seller ("$80 MILLION DOLLAR NOTE");
(xiii) written evidence of the termination of the
mortgage, title insurance, referral or other similar agreements listed on
Schedule 2.4(xiii) attached hereto;
15
(xiv) evidence of a prepaid two (2) year errors
and omissions insurance policy for the Companies;
(xv) a non-competition agreement duly executed
by Xxxxxxx Xxxx; and
(xvi) written evidence of the release of the
guaranties provided in relation to the financing agreements listed on Schedule
2.4(xii).
(b) The Purchaser is delivering, or causing to be
delivered, contemporaneously herewith to the Seller at the Closing:
(i) the Closing Date Purchase Price in
immediately available funds by wire transfer to the account previously
designated by the Seller;
(ii) an opinion of the Purchaser's counsel;
(iii) the Transitional Trademark License
Agreement, duly executed by the Purchaser;
(iv) the Non-Competition Agreement, duly
executed by the Purchaser; and
(v) the Use of Name Agreement, duly executed by
the Purchaser.
(vi) a non-competition agreement for Xxxxxxx
Xxxx, duly executed by the Purchaser.
SECTION 2.5 PURCHASE PRICE ADJUSTMENTS.
(a) Working Capital and Indebtedness Adjustments.
(i) Within ninety (90) days following the
Closing Date, the Purchaser shall provide to the Seller a consolidated balance
sheet of the Company and its Subsidiaries (the "CLOSING DATE BALANCE SHEET"),
which shall set forth a calculation of the Working Capital of the Companies
(including the components thereof in reasonable detail) (the "CLOSING DATE
WORKING CAPITAL") and any Indebtedness of the Companies (including the
components thereof in reasonable detail) (the "CLOSING DATE INDEBTEDNESS"), as
of the Closing Date. If the Purchaser does not deliver the Closing Date Balance
Sheet prior to the expiration of ninety (90) days after the Closing Date and
the Seller does not, within ninety (90) days following the Closing Date,
provide the Purchaser with written notice that it believes in good faith the
Estimated Working Capital or the Estimated Indebtedness did not reflect the
16
consolidated Working Capital of the Companies or the Indebtedness,
respectively, of the Companies as of the Closing Date, then the Estimated
Working Capital and the Estimated Indebtedness shall constitute the Closing
Date Working Capital and/or the Closing Date Indebtedness, as applicable, and
shall be final and binding on the parties. The Closing Date Balance Sheet, the
Closing Date Working Capital and the Closing Date Indebtedness shall be
prepared in accordance with GAAP and on a closed (settled) basis.
(ii) Until the Closing Date Working Capital and
Closing Date Indebtedness have become final in accordance with this Section
2.5(a), the Purchaser shall provide the Seller and its authorized
representatives with reasonable access to the books and records and senior
financial staff of the Company (and otherwise generally will cooperate with the
Seller and its authorized representatives), to the extent relevant to the
determination of the Closing Date Working Capital and the Closing Date
Indebtedness, during normal business hours and upon reasonable notice.
(iii) If the Seller in good faith disagrees with
the Purchaser's calculation of the Closing Date Working Capital or the Closing
Date Indebtedness as set forth on the Closing Date Balance Sheet, the Seller
may within fifteen (15) Business Days after receipt thereof deliver a written
notice to the Purchaser disagreeing with such calculation. Any such notice of
disagreement shall specify in reasonable detail those items or amounts
comprising the Closing Date Working Capital or the Closing Date Indebtedness as
to which the Seller disagrees and the basis of such disagreement, and the
Seller shall be deemed to have agreed with all other items and amounts
contained in the Closing Date Balance Sheet or the Closing Date Indebtedness.
If no such notice of disagreement is timely delivered, the Closing Date Working
Capital and the Closing Date Indebtedness shall be final and binding on the
parties.
(iv) If a notice of disagreement shall be timely
delivered pursuant to Section 2.5(a)(ii) of this Agreement or if the Purchaser
does not timely deliver the Closing Date Balance Sheet and pursuant to Section
2.5(a)(i) the Seller timely delivers written notice that it believes the
Estimated Working Capital or the Estimated Indebtedness should be changed, the
Seller and the Purchaser shall, during the fifteen (15) Business Days following
such delivery, use their reasonable efforts to reach agreement on the disputed
items or amounts. If such an agreement is reached, the Closing Date Working
Capital or Closing Date Indebtedness as so agreed shall be final and binding on
the parties. If the parties are unable to reach such agreement, the New York
City office of a nationally recognized independent accounting firm not then
acting as the principal outside accountant for the Companies, the Seller or the
Purchaser and as mutually agreed by the Purchaser and the Seller (the
"ACCOUNTING REFEREE"), shall be retained to review promptly this Agreement and
the disputed
17
items or amounts. If the parties are unable to agree mutually upon an
Accounting Referee then each party shall select a nationally recognized
accounting firm. Such two (2) nationally recognized accounting firms shall then
in turn mutually select a separate nationally recognized accounting firm not
then acting as the principal outside accountant for the Companies, the Seller
or the Purchaser who shall then be designated as the "Accounting Referee." In
connection therewith, the Accounting Referee shall consider only those items or
amounts in the Closing Date Working Capital or the Closing Date Indebtedness as
to which the Seller has disagreed. The Accounting Referee shall deliver to the
Seller and the Purchaser, as promptly as practicable, and within forty-five
(45) days of being referred the matter, a report setting forth its adjustments,
if any, to the Closing Date Balance Sheet or the Closing Date Indebtedness
(including any adjustments to non-disputed items necessary as a result of
changes to disputed items) and the calculations supporting such adjustments.
Such report shall be final and binding upon the parties and the Closing Date
Working Capital or the Closing Date Indebtedness, as adjusted pursuant to such
report, shall be final and binding on the parties. The cost of the Accounting
Referee's review and report shall be borne equally by the parties.
(v) If the Estimated Working Capital exceeds
the Closing Date Working Capital reflected on the Closing Date Balance Sheet,
then the Seller shall pay or cause to be paid to the Purchaser, as an
adjustment to the Purchase Price, with interest as provided in Section 2.5(b),
an amount equal to the amount of such excess. If the Closing Date Working
Capital reflected on the Closing Date Balance Sheet exceeds the Estimated
Working Capital, then the Purchaser shall pay to the Seller, as an adjustment
to the Purchase Price, with interest as provided in Section 2.6(b), an amount
equal to the amount of such excess.
(vi) If the Estimated Indebtedness exceeds the
Closing Date Indebtedness reflected on the Closing Date Balance Sheet, then the
Purchaser shall pay to the Seller, as an adjustment to the Purchase Price, with
interest as provided in Section 2.5(b), an amount equal to the amount of such
excess. If the Closing Date Indebtedness reflected on the Closing Date Balance
Sheet exceeds the Estimated Indebtedness, then the Seller shall pay to the
Purchaser, as an adjustment to the Purchaser Price, with interest as provided
in Section 2.5(b), an amount equal to the amount of such excess.
(vii) For the avoidance of doubt, no amount shall
be included in both "CURRENT LIABILITIES" for purposes of calculating Estimated
Working Capital or Closing Date Working Capital and in "INDEBTEDNESS" for
purposes of calculating Estimated Indebtedness or Closing Date Indebtedness.
(b) Payments and Interest. Any payments pursuant to this
Section 2.5 shall be made by wire transfer of immediately available funds to
accounts at United
18
States banks designated in writing by the Purchaser or the Seller, as the case
may be. Any amount due pursuant to this Section 2.5 shall bear interest for the
period from and including the Closing Date to but excluding the payment date at
the rate of three percent (3%) per annum.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Purchaser as
follows:
SECTION 3.1 AUTHORITY AND VALIDITY. The Seller is a corporation
validly existing and in good standing under the laws of the state of Florida.
The Seller has full corporate power and authority to execute and deliver this
Agreement, and the Related Agreements and to consummate the transactions
contemplated hereunder and thereunder (and the Company has the full corporate
power and authority to consummate the purchase and sale referred to in Section
2.1). The execution, delivery and performance of this Agreement, and the
Related Agreements and the consummation of the transactions contemplated
hereunder and thereunder, have been duly and validly authorized by the board of
directors of the Seller (and the consummation of the purchase and sale referred
to in Section 2.1 has been duly and validly authorized by the board of
directors of the Company) and no other corporate proceedings on the part of the
Seller or the Company are necessary to authorize this Agreement or the Related
Agreements or the consummation of the transactions contemplated hereunder or
thereunder (or the consummation by the Company of the purchase and sale
referred to in Section 2.1). This Agreement and the Related Agreements have
been duly executed and delivered by the Seller and, assuming due execution and
delivery by the Purchaser, constitute valid and binding obligations of the
Seller enforceable against the Seller in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws relating to creditors' rights and to general principles of
equity.
SECTION 3.2 SUBSIDIARIES.
(a) Schedule 3.2(a) sets forth the name, form of
organization, jurisdiction of organization and capitalization (authorized and
outstanding capital stock, including record and beneficial holders thereof, and
certificates therefor) or membership as applicable, of each of the Companies
and the officers and directors of each of the Companies.
(b) Each of the Companies is a validly existing
corporation or limited liability company and is in good standing under the laws
of the jurisdiction of its
19
organization, has all requisite corporate authority to own, lease and operate
its properties and assets and to carry on the Business as it is now being
conducted and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary.
(c) The Seller has delivered to the Purchaser a complete
and correct copy of the Organizational Documents of each of the Companies, and
such Organizational Documents are in full force and effect and the Companies
are not in violation of any provision of such Organizational Documents.
(d) The Company has no direct or indirect Subsidiaries
except as set forth on Schedule 3.2(a), and other than the Subsidiaries of the
Company set forth on such schedule, neither the Company nor its Subsidiaries
owns directly or indirectly, any equity or other ownership interest in any
corporation, partnership, joint venture or other Person. There are no options,
warrants, calls, rights, commitments or agreements of any kind to which the
Companies or any of their Affiliates are parties or by which any of them are
bound or to which they are subject, relating to the sale, issuance or voting
of, or the granting of rights to acquire, any shares of the capital stock of
any class or series of, or other equity interest in, any of the Companies or
any securities convertible or exchangeable into or evidencing the right to
purchase any shares of capital stock of any class or series of, or other equity
interest in, any of the Companies or obligating any of the Companies or any of
their Affiliates to grant, extend or enter into any such option, warrant, call,
right, commitment or agreement.
SECTION 3.3 TITLE TO SHARES; ETC. (a) The Seller owns
beneficially and of record the Shares free and clear of all Liens, and the
transfer and delivery of the Shares to the Purchaser by the Seller as
contemplated by this Agreement shall transfer good title thereto to the
Purchaser, free and clear of all Liens. No Person has any claim arising out of
or related to any shares of capital stock of the Companies or their respective
predecessors. Immediately prior to the purchase and sale referred to in Section
2.1, the Company owned beneficially and of record the Mortgage Shares free and
clear of all Liens, and the Company's transfer and delivery of the Mortgage
Shares to the Mortgage Purchaser immediately prior to the execution of this
Agreement transferred good title thereto to the Mortgage Purchaser, free and
clear of all Liens.
(b) Except as set forth on Schedule 3.3(b), the Seller
does not own an interest in or operate any real estate brokerage, relocation,
referral, title, escrow, mortgage origination, brokerage or banking, or real
estate education business, or other business providing products or services
ancillary or related thereto, other than its interests in the Companies, and
does not own any assets used by the Companies in the conduct of the Business.
20
SECTION 3.4 NO CONFLICT; GOVERNMENTAL CONSENTS.
(a) Neither the execution, delivery or performance by
the Seller of this Agreement or the Related Agreements nor the consummation of
the transactions contemplated hereby or thereby (including the purchase and
sale referred to in Section 2.1) or compliance by the Seller (or the Company,
in the case of the purchase and sale referred to in Section 2.1) with any of
the provisions hereof or thereof will (i) violate any provision of any
Organizational Document of the Seller or any of the Companies, or (ii) except
as set forth in Schedule 3.4(a), require any consent, approval or notice under,
violate, or result in the violation of, conflict with or result in a breach of
any provisions of, constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, result in the
termination of, accelerate the performance required by or result in a right of
termination or acceleration, result in the loss of a material benefit under or
result in the creation of any Lien upon any of the properties or assets of any
of the Companies or any of the Mortgage Shares or Shares under the terms,
conditions or provisions of any contract, agreement, lease, instrument, Permit
or other obligation to which any of the Companies or the Seller is a party or
to which they or their respective assets are subject, or (ii) violate any Law
applicable to the Seller or any of the Companies.
(b) The Seller and the Companies have received each
consent or approval that may be required under any contract, agreement, lease
(where the landlord under a property lease is a related party) or instrument in
connection with the execution, delivery or performance (including the purchase
and sale referred to in Section 2.1) of this Agreement or any Related
Agreement, or the consummation of the transactions contemplated hereby or
thereby, without any loss of benefits or rights to the Companies. All payments,
liabilities and obligations arising in connection with such consents have been
fully satisfied and paid for solely by the Seller.
(c) Except as provided in Schedule 3.4(c), no consent,
order or authorization of, or registration, declaration or filing with, any
Governmental Authority is required to be obtained, made by the Seller or any of
the Companies in connection with the execution, delivery and performance of
this Agreement or any Related Agreement, or the consummation of the
transactions contemplated hereby or thereby that has not been obtained or made,
as applicable.
SECTION 3.5 FINANCIAL STATEMENTS.
(a) Attached hereto as Schedule 3.5(a) are (i) the
audited, consolidated financial statements of the Company and its Subsidiaries
for the fiscal years ended December 31, 2001, 2000 and 1999 (the "AUDITED
FINANCIAL STATEMENTS"), (ii) the audited, consolidated financial statements
with respect to
21
Mortgage Services for the fiscal years ended December 31, 2001, 2000 and 1999
(the "MORTGAGE SERVICES FINANCIAL STATEMENTS"), and (iii) the unaudited
consolidated income statement and balance sheet of the Company and its
Subsidiaries for the two (2) month periods ended February 28, 2002 and 2001
(the "UNAUDITED FINANCIAL STATEMENTS" and, together with the Audited Financial
Statements and the Mortgage Services Financial Statements, the "FINANCIAL
STATEMENTS"). The Financial Statements have been prepared on a closed (settled)
basis in accordance with GAAP applied on a consistent basis during the periods
involved and fairly present in all material respects the financial position of
such entities as of the dates thereof and the results of operations and (in the
case of Financial Statements other than the Unaudited Financial Statements)
cash flows for the periods then ended, in the case of the Unaudited Financial
Statements subject to normal year-end adjustments that are not material in the
aggregate.
(b) (i) The Companies have no Specified Obligations, and
except as set forth on Schedule 3.5(b)(i), the Companies have no (A)
Indebtedness or (B) liabilities under profit sharing plans or post-retirement
benefit arrangements. Each of the Companies has cash or cash equivalents on
hand at least equal to the amount of customer escrow funds delivered to such
Companies by its customers, together with all interest thereon accrued to the
Closing Date.
(ii) Schedule 3.5(b)(ii) sets forth the names of
all financial and other similar institutions at which each of the Companies
maintains accounts, deposits or safe deposit boxes of any nature, and the
account numbers and the names of all persons authorized to draw thereon or make
withdrawals therefrom. The Companies' bank balances of cash as of April 11,
2002 are set forth on Schedule 3.5(b)(ii).
(c) Except as and to the extent reflected on the Balance
Sheet or on Schedule 3.5(c), the Companies have no liabilities or obligations
of any nature (absolute, accrued, contingent or otherwise) due or to become
due, except for such liabilities and obligations as were incurred since the
date of the Balance Sheet in the ordinary course of business consistent with
past practice which individually and in the aggregate would not reasonably be
expected to have a Material Adverse Effect.
(d) The calculation of Estimated Working Capital and the
calculation of Indebtedness, in each case as of the Closing Date, delivered by
the Seller to the Purchaser were prepared in good faith in accordance with GAAP
by the Seller based on the books and records of the Companies.
SECTION 3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since January
1, 2002, except as set forth on Schedule 3.6, each of the Companies has
conducted its business only in the ordinary course of business and consistent
with past practice and
22
there has not been any Material Adverse Effect or any development or event
which could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. Without limiting the foregoing, except as set forth in
Schedule 3.6 and except for the sale of Arvida Mortgage to the Mortgage
Purchaser, since January 1, 2002, none of the Companies has:
(a) declared, set aside or paid any dividend or other
distribution (whether in cash, securities or property or any combination
thereof) in respect of any class or series of its capital stock or other
interests;
(b) (i) sold, leased, transferred or disposed of any
assets or rights, other than assets or rights disposed of in the ordinary
course of business consistent with past practice and not individually or in the
aggregate material, (ii) incurred any Lien upon its assets, other than
Permitted Liens, (iii) acquired or leased any assets or rights other than in
the ordinary course of business consistent with past practice that individually
or in the aggregate would not be material;
(c) paid, discharged or satisfied any liability,
obligation or Lien, other than payment, discharge or satisfaction of (i)
Indebtedness as it matured and became due and payable or (ii) liabilities,
obligations or Liens in the ordinary course of business consistent with past
practice;
(d) changed any of the accounting or tax principles,
practices or methods or changed reserve policies or materially changed
reserves;
(e) (i) made any change in the compensation payable or
to become payable to any of its officers, directors, employees, agents,
consultants or sales associates (other than general increases in wages or
salaries to employees who are not officers or directors in the ordinary course
consistent with past practice), or to Persons providing management services,
(ii) entered into or amended any employment, severance, consulting, termination
or other agreement or employee benefit plan or made any loans to any of its
officers, directors, employees, Affiliates, agents, consultants or sales
associates or (iii) made any change in its existing borrowing or lending
arrangements for or on behalf of any of such Persons pursuant to an employee
benefit plan or otherwise;
(f) (i) made any accrual or commitment for future
payment of any pension, retirement allowance, unused vacation days or other
employee benefit to any officer, director, employee, sales associate or
Affiliate, except payments and accruals made in the ordinary course consistent
with past practice; (ii) adopted any pension, profit-sharing, bonus, extra
compensation, incentive, deferred compensation, stock purchase, stock option,
stock appreciation right, group insurance, severance pay, retirement or other
employee benefit plan, agreement or
23
arrangement, or any employment or consulting agreement, or made any payments or
grants in relation to the foregoing other than in the ordinary course
consistent with past practice; or (iii) amended in any material respect any
such existing plan, agreement or arrangement in a manner inconsistent with the
foregoing;
(g) other than compensation or advances of expenses in
the ordinary course consistent with past practice, made any payments, loans,
advances or other distributions to, or entered into any transaction, agreement
or arrangement with, any of its Affiliates, officers, directors, employees,
agents, consultants or sales associates, stockholders or their Affiliates;
(h) made or committed the Company to make any capital
expenditures, except as set forth in the 2002 business plan (set forth on
Schedule 3.6(h)) and otherwise in the ordinary course consistent with past
practice not in excess of $25,000 individually, or $100,000 in the aggregate;
(i) settled or compromised any Tax liability or agreed
to any adjustment of any Tax attribute or made any election with respect to
Taxes;
(j) made any change in its working capital practices
generally, including accelerating any collections of cash or accounts
receivable or deferring payments or accruals;
(k) incurred any material liability other than in the
ordinary course of business consistent with past practice;
(l) had a judgment entered or settled any Litigation
resulting in a loss, payment or other cost, after receipt of insurance
payments, in excess of $25,000 individually, or $100,000 in the aggregate;
(m) altered through merger, liquidation, reorganization,
restructuring or in any other material fashion its corporate structure or
ownership or amended its Organizational Documents in any material respect;
(n) entered into or amended in an adverse manner any
material agreement which had non-competition, geographical restriction or
similar covenants relating to the Business or that otherwise would be material;
or
(o) agreed to take any of the foregoing actions or any
action which would reasonably be expected to prevent or delay the consummation
of the transactions contemplated by this Agreement.
24
SECTION 3.7 ASSETS.
(a) Each of the Companies owns, or otherwise has a valid
leasehold interest providing sufficient and legally enforceable (subject to
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar Laws relating to creditor's rights and to general principles of
equity) rights to use, all of the property and assets necessary or material to
its conduct of the Business as currently conducted or otherwise used or held for
use by it in the Business. Except as indicated on Schedule 3.7(a), none of the
material assets used by any of the Companies in the conduct of the Business are
owned or leased by the Seller or any Affiliate thereof other than one of the
Companies. The Companies have good title to all assets reflected on the Balance
Sheet or acquired since the date of the Balance Sheet, free and clear of all
Liens except Permitted Liens, other than assets disposed of since the date of
the Balance Sheet in the ordinary course of business consistent with past
practice which are not in the aggregate material. Such assets are, considered in
the aggregate, in reasonable operating condition and repair (ordinary wear and
tear excepted) in all material respects, have been reasonably maintained in all
material respects and are suitable for their present use in all material
respects.
(b) The Companies do not own any real property and none
of the Companies has acquired or disposed of any ownership interest in any real
property since June 30, 1998. Schedule 3.7(b) contains a list of all real
property (including the address thereof) leased by the Companies, or by the
Seller on behalf of the Companies (including any real property owned by the
Seller or its Affiliates and leased to the Companies), indicating the use
thereof, the lessee of such real property, and the name and address of the
lessor together with any amendments, modifications, extensions or other
agreements (the "LEASES"). With respect to all real property leased by any of
the Companies (the "REAL PROPERTY"), the Companies have possession thereof, and
have valid leasehold interests providing exclusive and legally enforceable
rights to use such Real Property, free and clear of all Liens except Permitted
Liens. The current use of the Real Property by the Companies does not violate in
any material respect the certificate of occupancy thereof, any local zoning or
similar land use or other Laws or the applicable Lease. None of the Companies
nor any of their Affiliates have received written notice of any pending or
threatened condemnation proceeding, or of any sale or other disposition in lieu
of condemnation, affecting any of the Real Property. None of the Companies has
subleased any of the Real Property or given any third party any license or other
right to occupy any portion of the Real Property leased by it (other than the
access provided to sales associates to work in the offices). Except as set forth
in Schedule 3.7(b), no Real Property is used for any purpose other than the
conduct of the Business.
25
(c) The Seller has delivered or made available to the
Purchaser a true, correct and complete copy of each of the Leases, and (i) each
Lease is legal, valid, binding and enforceable against the Companies party
thereto in accordance with the terms thereof, subject to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws relating
to creditor's rights and to general principles of equity; (ii) neither the
Companies, nor, to the knowledge of the Seller, any other party to any Lease,
has waived any material term or condition thereof, and all material covenants to
be performed by the Companies prior to the Closing, or to the Seller's
knowledge, any other party to any Lease, have been performed in all material
respects; (iii) neither the Companies nor, to the knowledge of the Seller, any
other party to any Lease, is in breach or default under any Lease, and no event
or circumstance exists or has occurred which, with the delivery of notice, the
passage of time or both, would constitute a breach or default by any Company or
to the Seller's knowledge, any other party thereto, or to the Seller's knowledge
permit the termination, modification or acceleration of rent under any Lease;
(iv) no security deposit or portion thereof deposited with respect to any Lease
has been applied in respect of a breach or default under any Lease which has not
been redeposited in full; (v) the Companies do not owe, nor will they at
Closing, pursuant to existing agreements, owe, any brokerage commissions or
finder's fees with respect to any Lease; and (vi) the Companies have not
collaterally assigned or granted any security interest in any Lease or any
interest therein.
(d) Schedule 3.7(d) sets forth for each of the Companies
that has such property, the aggregate net book value of the furniture, fixtures
and equipment owned and used by the Companies at such offices. Except as set
forth on Schedule 3.7(d), no material personal property owned by the Companies
is held under any lease, security agreement, conditional sales contract, or
other title retention or security arrangement or subject to any Liens.
(e) All receivables of the Companies reflected on the
Balance Sheet, and all receivables created after the date of the Balance Sheet,
arose from valid transactions with unrelated parties in the ordinary course of
business and to the knowledge of the Seller, subject to reserves for doubtful
accounts reflected on the Balance Sheet, are collectible in their full amount,
net of applicable reserves reflected on the Balance Sheet. Except as set forth
on Schedule 3.7(e), no account receivable is owned by any Person other than the
Companies.
SECTION 3.8 LITIGATION AND CLAIMS; COMPLIANCE WITH LAWS.
(a) Schedule 3.8(a) lists all Litigation pending or, to
the knowledge of the Seller, threatened, including the name of the claimant, the
status of the Litigation, the date of the alleged act or omission, a summary of
the nature of the alleged act or omission, the date the claim was made, the date
the matter was referred to the
26
Companies' errors and omissions insurance carrier (if referred) and a statement
as to whether the claim is insured and if so the insurance policy applicable to
such claim. Except as indicated on Schedule 3.8(a)(i), (i) all Litigation is
reasonably expected to be covered by the insurance policies referenced in
Section 3.9, and (ii) except as specifically indicated on Schedule 3.8(a)(ii),
to the Seller's knowledge there is no Litigation which if adversely determined
would reasonably be expected to individually or in the aggregate have a Material
Adverse Effect, or individually result in an award in excess of $100,000. Except
as indicated on Schedule 3.8(a), there is no Litigation pending or, to the
Seller's knowledge, threatened in writing by any customers, potential customers,
employees, prospective employees or others against the Companies relating to
alleged unlawful discrimination or sexual harassment and neither the Companies
nor, to the knowledge of the Seller, any other Person is investigating any such
allegation that, individually or in the aggregate, would reasonably be expected
to be material. There is no unsatisfied judgment or any injunction, decree,
order or other determination of an arbitrator or Governmental Authority
applicable to the Companies or any of their properties or assets. There is no
Litigation pending or, to the knowledge of the Seller, threatened in writing
against the Seller or the Companies which seeks to prevent consummation of the
transactions contemplated hereby or which seeks damages in connection with the
transactions contemplated hereby, and no temporary restraining order,
preliminary or permanent injunction or other order or decree which prevents the
consummation of the transactions contemplated hereby has been issued and remains
in effect.
(b)(i) The Companies, their respective employees and
agents, are in compliance in all material respects with all Organizational
Documents and requirements of Law, including (A) holding all Permits necessary
for the conduct of the Business, and complying in all material respects with
each such Permit and (B) being in compliance with all Laws having the purpose of
prohibiting unlawful discrimination against customers or potential customers.
(ii) Since June 30, 1998, the Companies have not
received any written communication from any Governmental Authority asserting
that any of the Companies is not in compliance in all material respects with any
Organizational Document or requirement of Law applicable to the Companies.
(iii) The Companies have complied in all material
respects with all requirements of Law applicable to the Companies with respect
to the treatment of Client Trust Funds or assets subject to escheat, and to the
knowledge of the Seller, there is no investigation by any Governmental Authority
ongoing or threatened with respect to any such matter and, to the knowledge of
the Seller, no basis exists for any such investigation. Funds of the Companies
have not been: (A) used for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity; (B) used for any direct
or indirect unlawful payments to
27
government officials or employees; (C) established or maintained in any unlawful
or unrecorded fund of corporate monies or other assets; or (D) paid as any
bribe, payoff, kickback or other unlawful payment; and to the knowledge of the
Seller, no employee or agent has made any such payment on behalf of the
Companies.
SECTION 3.9 INSURANCE.
(a) Schedule 3.9 sets forth a complete and accurate list
of all primary, excess and umbrella policies, bonds and other forms of insurance
owned or held by or on behalf of and/or providing insurance coverage to the
Business, the Companies and their properties and assets (or their directors,
officers, salespersons, agents or employees), including the following
information for each such policy: type(s) of insurance coverage provided; name
of insurer; effective date; policy number; per occurrence and annual aggregate
deductibles or self-insured retention; per occurrence and annual aggregate
limits of liability and the extent, if any, to which the limits of liability
have been exhausted that is complete and accurate in all material respects.
(b) All such policies are in full force and effect, and
following the Closing, will remain in full force and effect enforceable by the
Companies with respect to circumstances, acts and omissions existing, arising or
occurring prior to the Closing Date.
(c) Since June 30, 1998, the Companies have maintained
uninterrupted claims-made errors and omissions insurance and employment
practices liability insurance. The Companies have not received written notice of
default under any such policy, nor received written notice of any pending or
threatened termination or cancellation, coverage limitation or reduction, or
material premium increase with respect to any such policy.
(d) No letters of credit have been posted and no cash has
been restricted to support any reserves for insurance on the Balance Sheet.
SECTION 3.10 ENVIRONMENTAL MATTERS.
(a) Except as disclosed on Schedule 3.10, the Companies
are in compliance in all material respects with all Environmental Laws (which
compliance includes the possession by the Companies of all Environmental Permits
and other governmental authorizations required for the operations of the
Business as presently conducted under applicable Environmental Laws, and
compliance with the terms and conditions thereof). The Companies have not
received any written communication from any Person or Governmental Authority
alleging that any of the Companies is not in such compliance and, to the
Seller's knowledge, there are no circumstances or
28
conditions that would be reasonably expected to prevent or materially interfere
with such compliance in the future assuming no change in Law and that the
Companies continue to use the Real Property only in the Business and in a manner
consistent with past practice. All Environmental Permits used in the conduct of
the Business are identified on Schedule 3.10. To the Seller's knowledge, no
transfers of Environmental Permits, no additional Environmental Permits, and no
notification, filing or approval of any Governmental Authority under any
Environmental Law, will be required to permit the conduct of the Business to be
in material compliance with all applicable Environmental Laws immediately
following the Closing Date, as conducted by the Companies immediately prior to
the Closing Date.
(b) There are no Environmental Claims pending or, to the
knowledge of the Seller, threatened against the Companies or to the Seller's
knowledge against any Person who is entitled to indemnity, contribution or
reimbursement from any of the Companies therefor.
(c) The Companies have not placed, stored, deposited,
discharged, buried, dumped or disposed or caused the Release of any Hazardous
Materials or any other wastes produced by, or resulting from, any business,
commercial or industrial activities, operations or processes, on, beneath or
from any Real Property or other property currently or formerly owned, operated
or leased by the Companies or any predecessor of the Companies other than fuel,
oil, cleaning supplies and similar materials used in office buildings in the
ordinary course and in compliance with applicable Environmental Laws and which
could not reasonably be expected to result in any material liability to any of
the Companies.
(d) Notwithstanding any other representation and warranty
in this Article III, the representations and warranties contained in this
Section 3.10 constitute the sole representations and warranties of the Seller
concerning the Companies with respect to any Environmental Laws or Hazardous
Materials; provided, that the foregoing shall not be deemed to limit the
representations and warranties made pursuant to Section 3.5.
SECTION 3.11 MATERIAL CONTRACTS.
(a) Schedule 3.11 lists (without duplication), with
respect to each of the Companies, all contracts and other agreements (or, in the
case of oral contracts or agreements, summaries thereof) to which any of the
Companies is a party or by, or to which, any of the Companies or any of their
assets or properties is bound or subject (such contracts and agreements being
"MATERIAL CONTRACTS") of the following types:
(i) any advertising, market research and other
marketing agreements which contain firm commitments by any of the Companies to
make
29
annual payments in excess of $25,000 in any calendar year and which is not
terminable on notice of ninety (90) days or less without the payment of any
termination fee or similar payment;
(ii) any employment, severance, non-competition,
stock option agreement, restricted stock agreement, consulting or other
agreements with any current or former stockholder, director, officer, sales
associate, consultant or employee of any of the Companies, under which any of
the Companies has any material obligation as of the date hereof, including any
non-competition agreements executed in favor of any of the Companies; in each
case (other than independent contractor agreements with sales associates
substantially in the form attached hereto as Schedule 3.11(a)(ii)). (iii) any
agreements (A) relating to Indebtedness, interest rate swap or hedging
arrangements, sale and leaseback transactions or other similar financing
transactions or (B) restricting the ability of any of the Companies to incur
Indebtedness or make any loan or advance or own, operate, sell, transfer, pledge
or otherwise dispose of any assets owned by any of the Companies;
(iii) any agreements (A) relating to
Indebtedness, interest rate swap or hedging arrangements, sale and leaseback
transactions or other similar financing transactions or (B) restricting the
ability of any of the Companies to incur Indebtedness or make any loan or
advance or own, operate, sell, transfer, pledge or otherwise dispose of any
assets owned by any of the Companies;
(iv) any agreements with any Governmental
Authority except those entered into in the ordinary course of business which are
not material to any of the Companies;
(v) any agreements relating to the purchasing of
goods by, or the furnishing of services to, any of the Companies (A) requiring
payments by the Companies in excess of $25,000 in any calendar year and (B)
which are not terminable on notice of ninety (90) days or less without the
payment of any termination fee or similar payment;
(vi) any contracts, agreements and other
arrangements for the furnishing of services by any of the Companies in exchange
for payments in excess of $25,000 in any calendar year and which are not
terminable on notice of ninety (90) days or less without the payment of any
termination fee or similar payment;
(vii) any agreements (including settlement
agreements and consent agreements) pursuant to which any of the Companies
licenses the right to use any Intellectual Property to any Person or from any
Person (other than off-the-shelf applications) or pursuant to which any Person
has the right to acquire rights in Intellectual Property from any of the
Companies;
(viii) any confidentiality agreements entered into
by any of the Companies during the period commencing two (2) years prior to the
date of this
30
Agreement pursuant to which any of the Companies was restricted from providing
information to third parties and any agreements pursuant to which any of the
Companies has agreed to provide any information regarding any of its listings to
any third party;
(ix) any shareholder, voting trust or similar
agreements relating to the Business or any of the Companies to which any of the
Companies or the Seller (or any Affiliate thereof) is a party and any joint
venture, partnership or similar organizational documents or agreements to which
any of the Companies is a party;
(x) any agreements relating to the origination
or brokering of mortgage loans or relating to the provision of mortgage, escrow
or title services by any of the Companies or relating to the purchase by any of
the Companies of property pursuant to any guaranteed sales or other similar
programs or any other settlement services;
(xi) any Leases and any lease agreement with
respect to personal property which requires any of the Companies to make annual
payments in excess of $25,000 and which is not terminable upon notice of ninety
(90) days or less without the payment of any termination fee or similar payment;
(xii) any agreements that limit or purport to
limit the ability of any of the Companies or any transferee of the Shares to
compete in any business or to acquire, own, operate, sell, transfer, pledge or
otherwise dispose of any assets or hire or solicit for employment any person;
(xiii) all agreements between any of the Companies,
on the one hand, and any current or former shareholder, director, officer or
other Affiliate of any of the Companies, on the other hand; and
(xiv) all other agreements, contracts or
commitments which cannot be terminated upon notice of ninety (90) days or less
and will require payments by any of the Companies of an amount in excess of
$25,000 in any calendar year.
(b) Each Material Contract is a legal, valid and binding
obligation of, and enforceable against, one or more of the Companies, and, to
the knowledge of the Seller, the other parties thereto, and is in full force and
effect subject to bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws relating to creditors' rights and to general
principles of equity. The sales of the Shares and the Mortgage Shares pursuant
to this Agreement will not, by themselves together with the transactions
contemplated hereby and by the Related Agreements,
31
give any Person the right to terminate or adversely modify any Material
Contract. The Companies are not (and with the giving of notice or lapse of time
would not be) in material breach of, or default under, any Material Contract
and, to the knowledge of the Seller, no other party thereto is in breach of, or
default under, any Material Contract. None of the Companies has received written
notice that any party to a Material Contract intends to terminate such Material
Contract prior to the termination date specified therein, or that any other
party is in material breach of, or default under, any Material Contract. True
and complete copies of all Material Contracts have been previously delivered or
made available to the Purchaser.
SECTION 3.12 INTELLECTUAL PROPERTY.
(a) Each of the Companies is the sole and exclusive owner
of, or has the valid right to use, the Intellectual Property free and clear of
all Liens (except Permitted Liens). Schedule 3.12(a) sets forth a complete and
accurate list of all U.S. and foreign (i) patents and patent applications, (ii)
registered and common law trademarks, service marks, logos, slogans, trade
names, and any registrations or pending applications for any of the foregoing,
(iii) copyright registrations and applications, and material unregistered
copyrights, and (iv) Internet domain names, all of the foregoing owned, licensed
or used by any of the Companies, and identifies the owner thereof and which of
the Companies is a licensee thereof. Except as specifically identified in
Schedule 3.12(a), one of the Companies currently is listed in the records of the
appropriate U.S., state or foreign agency as the sole owner of record for each
application and registration listed on Schedule 3.12(a). Other than the
trademarks, service marks, trade names and domain names set forth on Schedule
3.12(a), none of the Companies has used any trademark, service xxxx, trade name
or domain name since June 30, 1998. No present or former shareholder, employee,
officer or director of any of the Companies has any right, title or interest,
directly or indirectly, in whole or in part, in any of the Intellectual Property
owned by any of the Companies.
(b) The registrations listed on Schedule 3.12(a) are
valid and subsisting, in full force and effect in all material respects, and
have not been cancelled, expired or abandoned. There is no pending or, to the
Seller's knowledge, threatened opposition, interference, cancellation proceeding
or other legal or governmental proceeding before any court or registration
authority in any jurisdiction against any of the Intellectual Property.
(c) Schedule 3.12(c) lists all material Computer Programs
(other than off-the-shelf applications) which are owned, licensed, leased or
otherwise used by one or more of the Companies in connection with the operation
of the Business as currently conducted, and identifies which is owned, licensed,
leased, or otherwise used, as the case may be. Each Computer Program listed on
Schedule 3.12(c) is
32
either (i) owned by one or more of the Companies, (ii) currently in the public
domain or otherwise available to the Companies without the license, lease or
consent of any third party, or (iii) used under rights granted to the Companies
pursuant to an agreement, license or lease from a third party, which agreement,
license or lease is identified on Schedule 3.12(c).
(d) Schedule 3.12(d)(i) sets forth a complete and
accurate list of all agreements to which the Seller or any Affiliate thereof
(including any of the Companies) is a party granting to any Person other than
any of the Companies any right to use or practice any rights under any of the
Intellectual Property owned by the Companies or used by one or more of the
Companies and owned by an Affiliate of the Companies. Schedule 3.12(d)(ii) sets
forth a complete and accurate list of all agreements permitting the Companies to
use any Intellectual Property (such agreements, together with the agreements
referenced in Schedule 3.12(d)(ii) are collectively referred to herein as the
"LICENSES"). The Licenses are valid and binding obligations of the Companies,
enforceable against the Companies, and to the Seller's knowledge, against the
Companies' counterparties, in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws relating to creditors' rights and to general principles of
equity, and the Companies are not in breach or default of any agreement
thereunder.
(e) The conduct of the Business does not infringe upon
any intellectual property right of any third party; to the knowledge of the
Seller no third party is infringing upon or otherwise violating rights to any
Intellectual Property owned or material Intellectual Property used by any of the
Companies; and no such claims have been made against a third party by any of the
Companies. There are no claims or suits pending or to the knowledge of Seller
threatened, and neither the Seller nor any of the Companies has received any
written notice of a third-party claim or suit (a) alleging that the Companies'
activities or the conduct of the Business infringes upon or constitutes the
unauthorized use of the proprietary rights of any third party, or (b)
challenging the ownership, use, validity or enforceability of any Intellectual
Property. Except as set forth on Schedule 3.12(e), there are no settlements,
consents, judgments, orders, consent agreements or other agreements (other than
the Licenses) which restrict the Companies' rights to use any Intellectual
Property.
(f) The consummation of the transactions contemplated
hereby will not result in the loss or impairment of any of the Companies' or the
Purchaser's rights to own or use any of the Intellectual Property nor will it
require the consent of any Governmental Authority or third party in respect of
any such Intellectual Property, except as set forth on Schedule 3.12(f).
33
(g) The inclusion of the phrase "[s]ubject to the uses
permitted under the Retained Use Agreements" in Section 2 of the Transitional
Trademark License Agreement does not restrict the rights of the Purchaser or its
Affiliates to use the ARVIDA Xxxx or the St. Xxx Xxxx in any way but only
modifies the exclusivity of such grant with respect to Persons other than the
Seller or its Affiliates.
(h) The Seller represents and warrants that (A) Schedule
3.12(h) hereto identifies all current third-party licensees of the rights of the
Seller or its Affiliates (including St. Xxx/Arvida Company, L.P.) to the ARVIDA
Xxxx, (B) the Service Xxxx License Agreement dated July 31, 1998, as amended
between St. Xxx/Arvida Company, L.P. and the Company (the "PRIOR TRADEMARK
LICENSE"), has been terminated concurrently with the effectiveness of the
Transitional Trademark License Agreement and (C) Arvida/JMB Partners, L.P. is
not permitted to engage in any activity pursuant to the exception contained in
Section 1(b)(D) of the NonCompetition Agreement that is not permitted pursuant
to Sections 1(b)(A)-(C) of the NonCompetition Agreement. Other than the Limited
Partnership Agreement of St. Xxx/Arvida Company, L.P., the Consent Agreement,
the Retained Use Agreements and the Prior Trademark License which is being
terminated concurrently herewith, there are no agreements or arrangements
between the Seller or its Affiliates on the one hand, and on the other hand, JMB
Southeast Development L.P. or its Affiliates with respect to (A) this Agreement,
the Related Agreements or the transactions contemplated hereby or thereby, (B)
the ARVIDA Xxxx or (C) except as set forth on Schedule 3.12(h), the Business.
SECTION 3.13 TAXES. Except as set forth on Schedule 3.13 (a)
through (k):
(a) Each of the Companies has (i) duly and timely filed
(or there has been duly and timely filed on its behalf) with the appropriate
Governmental Authorities all Tax Returns required to be filed by it, and all
such Tax Returns are true, correct and complete and (ii) timely paid (or there
has been timely paid on its behalf) all Taxes due or claimed to be due from or
in respect of it by any Governmental Authority.
(b) Each of the Companies has complied in all respects
with all applicable Laws relating to the payment and withholding of Taxes
(including withholding of Taxes pursuant to Sections 1441 and 1442 of the Code
or similar provisions under any foreign Laws) and has, within the time and
manner prescribed by Law, withheld and paid over to the proper Governmental
Authorities all amounts required to be withheld and paid over under all
applicable Laws.
(c) There are no Liens for Taxes upon the assets or
properties of any of the Companies except for statutory liens for Taxes not yet
due. There are no
34
outstanding waivers or comparable consents regarding the application of the
statute of limitations with respect to any Taxes or Tax Returns of any of the
Companies. None of the Companies has requested an extension of time within which
to file any Tax Return in respect of any taxable period which Tax Return has not
since been filed.
(d) No jurisdiction in which any of the Companies does
not file a Tax Return has made a claim that any of the Companies is required to
file a Tax Return for such jurisdiction. No federal, state, local or foreign
audits or other administrative proceedings have formally commenced or are
presently pending with regard to any Taxes or Tax Returns of or including any of
the Companies, and no notification has been received that such an audit or other
proceeding is pending or threatened with respect to any Taxes due from or with
respect to any of the Companies or any Tax Return filed by or with respect to
any of the Companies. No deficiency for any Tax has been assessed with respect
to any of the Companies which has not been paid in full. No power of attorney
which is currently in force has been granted by or with respect to any of the
Companies with respect to any matter relating to Taxes. None of the Companies
has changed any method of accounting, received a ruling from any taxing
authority or signed an agreement with any taxing authority which could affect
the Purchaser, any of the Companies (or their respective Affiliates) after the
Closing. No closing agreement pursuant to Section 7121 of the Code (or any
predecessor provision) or any similar provision of any state, local or foreign
Law has been entered into by or with respect to any of the Companies.
(e) None of the Companies is a party to, bound by, or has
any obligation under any agreement, contract or arrangement similar in terms to
the provisions of Section 6.3 hereof, or, insofar as it relates to Section 3.13,
Article 7 hereof ("TAX INDEMNIFICATION AGREEMENT") or has any potential
liability or obligation to any Person as a result of, or pursuant to, any such
agreement, contract or arrangement. None of the Companies has filed a consent
pursuant to Section 341(f) of the Code (or any predecessor provision) or agreed
to have Section 341(f)(2) of the Code apply to any disposition of a subsection
(f) asset (as such term is defined in Section 341(f)(4) of the Code) owned by
any of the Companies. No claim has been asserted by any Governmental Authority
that any of the Companies is liable for Taxes under or as a result of Section
482 of the Code or any similar provision of Law.
(f) None of the Companies is a party to any agreement,
plan, contract or arrangement that would result, separately or in the aggregate,
in the payment of any "excess parachute payments" within the meaning of Section
280G of the Code. No Person is entitled to receive any "gross-up" payment from
any of the Companies in the event that the excise Tax of section 4999(a) is
imposed on such Person.
35
(g) Any Taxes of any of the Companies that accrued
through, but were not due and payable as of, the Balance Sheet date, were
properly accrued on the Balance Sheet. Since the date of the Balance Sheet, none
of the Companies has incurred any liability for Taxes other than in the ordinary
course of business.
(h) Each partnership and limited liability company in
which any of the Companies has owned an interest has not elected to be treated
as a corporation for United States federal income tax purposes for each taxable
period of such partnership or limited liability company's existence through the
date on which the Company no longer owned an interest in such partnership or
limited liability company.
(i) None of the Companies has been a member of a federal,
state or local consolidated, combined, unitary or similar group other than the
group in which the Seller is the common parent.
(j) The Seller is eligible to join with the Purchaser (or
its Affiliates) in making a valid Election with respect to each of the
Companies.
(k) The federal income Tax Returns of each of the
Companies for all tax years through December 31, 1999, (i) have been examined
and the tax years closed by the Internal Revenue Service, and no adjustments to
such Tax Returns were made, or (ii) the statute of limitations with respect to
all such Tax Returns has expired.
SECTION 3.14 EMPLOYEE BENEFITS; ERISA.
(a) Schedule 3.14(a) contains a true and complete list of
all "Plans" that are or have been sponsored, maintained or contributed to or
required to be contributed to by any of the Companies or to which any of the
Companies has any liability or potential liability. For purposes of this
Agreement, "Plans" means (i) each employment, termination, severance, bonus,
deferred compensation, incentive compensation, stock purchase, stock option
(except for the St. Xxx Company 1998 Stock Incentive Plan), stock appreciation
right or other stock-based incentive plan, program, agreement, or arrangement
applicable to employees, consultants, independent contractors or sales
associates of each of the Companies; (ii) each severance, change-in-control, or
termination pay, surgical, hospitalization or other medical, disability, life or
other insurance, supplemental unemployment benefits and other "welfare" plan,
fund or program (within the meaning of Section 3(1) of ERISA) applicable to
employees, consultants, independent contractors or sales associates of each of
the Companies; (iii) each profit-sharing, stock bonus or pension plan (except
for the St. Xxx Company Pension Plan), program, agreement or arrangement (within
the meaning of Section 3(2) of ERISA) applicable to
36
employees, consultants, independent contractors or sales associates of each of
the Companies; and (iv) each other employee benefit plan, fund, program,
agreement or arrangement, that are or have been sponsored, maintained or
contributed to or required to be contributed to by any of the Companies or to
which any of the Companies has any liability or potential liability for the
benefit of any current or former employee or director of the Companies
(collectively, the "PLANS"). Schedule 3.14(a) identifies each of the Plans that
is an "employee welfare benefit plan," or "employee pension benefit plan" as
such terms are defined in Sections 3(1) and 3(2) of ERISA (such plans being
hereinafter referred to collectively as the "ERISA PLANS"). The Seller also
sponsors the St. Xxx Company 1998 Stock Incentive Plan and a defined benefit
plan known as The St. Xxx Company Pension Plan ("SELLER PLANS") which covers
employees of the Companies. None of the Companies nor any trade or business,
whether or not incorporated (including Seller and its Affiliates)(an "ERISA
AFFILIATE"), that together with any of the Companies would be deemed a "single
employer" within the meaning of Section 4001(b)(1) of ERISA has any formal plan
or commitment, whether legally binding or not, to create any additional Plan or
modify or change any existing Plan or the Seller Plans in any material respect
(except as required by law) that would affect any current or former employee of
any of the Companies. No Plan is or has been subject to Title IV of ERISA or
Section 412 of the Code and none of the Companies has sponsored, maintained,
contributed to or been required to contribute to any such plan within the past
six (6) years of the date hereof. No Plan is a "multiemployer plan," as such
term is defined in Section 3(37) of ERISA.
(b) With respect to each of the Plans, each of the
Companies has previously made available to the Purchaser true and complete
copies of each of the following documents, as applicable: (i) a copy of the Plan
documents (including all amendments thereto) for each written Plan or a written
description of any Plan that is not otherwise in writing; (ii) a copy of the
three (3) most recent annual reports and actuarial reports, if required under
ERISA, and the most recent report prepared with respect thereto in accordance
with Statement of Financial Accounting Standards No. 87; (iii) a copy of the
most recent summary plan description and all other subsequent summaries of
material modifications; (iv) if the Plan is funded through a trust or any other
funding vehicle, a copy of the trust or other funding agreement (including all
amendments thereto) and the latest financial statements thereof, if any; and (v)
the most recent determination letter received from the IRS with respect to each
Plan that is intended to be qualified under Section 401(a) of the Code.
(c) No liability under Title IV or Section 302 of ERISA
has been incurred by any of the Companies or any ERISA Affiliate that has not
been satisfied in full, and no condition exists that presents a material risk to
any of the Companies of incurring any such liability. The Companies do not have
any liability (i) under Title
37
IV of ERISA, (ii) under Section 302 of ERISA, (iii) under Sections 412 and 4971
of the Code, or (iv) as a result of failure to comply with the continuation
coverage requirements of Section 601 et seq. of ERISA and Section 4980B of the
Code.
(d) All contributions required to be made with respect to
any Plan on or prior to the date of the Agreement have been timely made or are
reflected on the Balance Sheet.
(e) None of the Companies, nor any of the ERISA Plans,
nor any trust created thereunder, nor to the knowledge of Seller, any trustee or
plan administrator thereof, has engaged in a transaction with respect to any of
the ERISA Plans, that assuming the taxable period of such transaction expired as
of the date hereof, could subject the Companies or the Plans to any material
liability for either a civil penalty assessed pursuant to Section 502(i) of
ERISA or a tax imposed pursuant to Section 4975(a) or (b) of the Code. All
contributions and premiums which any of the Companies is required to pay under
the terms of each of the ERISA Plans and the Code, have, to the extent required,
been paid or properly recorded on the financial statements or records of any of
the Companies in all material respects.
(f) Each of the Plans has been operated and administered
in all material respects in accordance with its terms and any Organizational
Documents and Law, including ERISA and the Code; (ii) each of the ERISA Plans
that is intended to be "qualified" within the meaning of Section 401(a) of the
Code has received a favorable determination letter from the Internal Revenue
Service, and no circumstance exists that is or could result in a revocation of
any such favorable determination letter or loss of the qualification of such
ERISA Plan under Section 401(a) of the Code; (iii) no fund established under an
ERISA Plan is intended to satisfy the requirements of Section 501(c)(9) of the
Code; and (iv) there are no pending, or to the knowledge of the Seller,
threatened or anticipated claims by or on behalf of any Plan, by any employee or
beneficiary under any such Plan, or otherwise involving any such Plan (other
than routine claims for benefits or relating to qualified domestic relations
orders). No amounts payable under any of the Plans or any other contract,
agreement or arrangement with respect to which any of the Companies may have any
liability would fail to be deductible for federal income tax purposes by virtue
of Section 280G of the Code.
(g) No Plan provides benefits, including death,
hospitalization, surgical, medical or similar benefits (whether or not insured),
with respect to current or former employees of any of the Companies or any ERISA
Affiliate after retirement or other termination of service (other than coverage
mandated by applicable Laws or death benefits under any "employee pension
plan"). None of the Companies has any liability, contingent or otherwise, under
any excess benefit plan or supplemental executive retirement plan. No condition
exists that would prevent
38
any of the Companies from amending or terminating any Plan providing health or
medical benefits in respect of any active or former employee of any of the
Companies.
(h) Except as otherwise set forth on Schedule 3.14(h),
the consummation of the transactions contemplated by this Agreement will not,
either alone or in combination with another event, (i) entitle any current or
former employee, officer or director of any of the Companies to severance pay,
unemployment compensation or any other similar payment or (ii) accelerate the
time of payment or vesting, or increase the amount of or otherwise enhance any
benefit due any such employee, officer or director.
(i) Schedule 3.14(i) is a true, correct and complete
schedule of the aggregate amounts of all accrued liabilities of the Companies
that are owed on or following the date of this Agreement to any sales
associates, managers or employees of the Business or to any other Person
pursuant to any existing bonus plan, deferred compensation plan or vacation
plan.
(j) On or after the Closing, upon no more than sixty(60)
days notice, each and all of the Plans may be terminated in accordance with its
terms without material cost to the Purchaser.
SECTION 3.15 LABOR MATTERS. Except as set forth on Schedule 3.15:
(a) (i) No labor strike, dispute, slowdown, stoppage or
lockout is pending, or to the knowledge of the Seller, threatened against or
affecting the Companies and during the past five (5) years there has not been
any such action, (ii) none of the Companies is party to or bound by any
collective bargaining or similar agreement with any labor organization, or work
rules or practices agreed to with any labor organization or employee association
applicable to employees of the Companies, (iii) to the knowledge of the Seller,
no employees of any of the Companies are represented by any labor organization,
nor does any question concerning representation exist concerning such employees
and the Seller has no knowledge of any union organizing activities among such
employees within the past five (5) years, (iv) no material written personnel
policies, rules or procedures are applicable to employees and sales associates
of any of the Companies, (v) each of the Companies is in compliance, in all
material respects, with all requirements of Law respecting employment and
employment practices, terms and conditions of employment, wages, hours of work
and occupational safety and health, and the Companies are not engaged in any
unfair labor practices as defined in the National Labor Relations Act or other
applicable Laws, (vi) no unfair labor practice charge or complaint against any
of the Companies is pending or, to the knowledge of the Seller, threatened
before the National Labor Relations Board or any similar agency,
39
(vii) no charges or complaints with respect to or relating to the Companies are
pending before, and none of the Companies have received any notice of intent to
conduct an investigation from, the Equal Employment Opportunity Commission or
any other agency responsible for the prevention of unlawful employment
practices, (viii) none of the Companies have received notice of the intent of
any Governmental Authority responsible for the enforcement of labor or
employment laws to conduct an investigation with respect to or relating to the
Companies and no such investigation is in progress and the Seller has no
knowledge of any other Person investigating any such allegation, (ix) no
complaints, lawsuits or other proceedings are pending or, to the knowledge of
the Seller, threatened in any forum by or on behalf of any present or former
employee or sales associate of any of the Companies, any applicant for
employment or classes of the foregoing, alleging breach by any of the Companies
of any express or implied contract of employment, any Laws governing employment
or the termination thereof or other discriminatory, wrongful or tortious conduct
in connection with the employment relationship, and (x) no employment contracts
or severance agreements exist with any employee of the Companies.
(b) The Companies have at all times properly classified
each of their respective employees as employees and each of their independent
contractors as independent contractors, as applicable. There is no action, suit
or investigation pending, or to the knowledge of the Seller, threatened, against
the Companies by any Person challenging or questioning the classification by the
Companies of any Person as an independent contractor, including any claim for
unpaid benefits, for or on behalf of, any such Persons.
(c) Since the enactment of the Worker Adjustment and
Retraining Notification Act (the "WARN ACT"), (i) none of the Companies have
effectuated 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 or facility of the Companies, (ii) there has not occurred a "mass
layoff" (as defined in the WARN Act) affecting any site of employment or
facility of any of the Companies; nor have any of the Companies been affected by
any transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar Law, and (iii) none of the
Companies' employees have suffered an "employment loss" (as defined in the WARN
Act) during the six-month period prior to the date of this Agreement.
SECTION 3.16 TERMINATED ARRANGEMENTS. Except as set forth on
Schedule 3.16, none of the Companies has or is bound by any of the following
arrangements or agreements or any commitment or understanding to enter into any
of the following arrangements or agreements and, to the extent that prior to
the date of this Agreement, the Companies had or was bound by any of the
following
40
arrangements or agreements, such arrangements or agreements have been validly
terminated without any requirement to pay any termination fee or similar payment
or any action or forbearance from action, or other obligation or liability on
the part of the Companies or their Affiliates (all of the following arrangements
and agreements, the "TERMINATED ARRANGEMENTS"):
(i) arrangements or agreements relating to franchise or
licensing matters, including any of the Companies being a franchisee,
sub-franchisee or franchisor, sub-franchisor of any Person or under any
obligation to any Person with respect to a franchisee or franchisor (or
sub-franchisor or sub-franchisee) relationship, or any of the Companies having
granted any Person the right to operate a franchised or licensed business using
any trademark or tradename owned or used by any of the Companies or the right to
sell or grant others a franchise or license to use any trademarks or tradenames
owned by any of the Companies; and
(ii) arrangements or agreements providing any Person
(other than one of the Companies) with rights of refusal, buy/sell rights or
similar rights with respect to any asset or property of any of the Companies or
any aspect of the Business.
SECTION 3.17 RECORDS. The corporate record books of the Companies
contain accurate records of all material meetings and accurately reflect all
other material actions taken by the boards of directors and committees of the
boards of directors of the Companies. Complete and accurate copies of all such
record books have been made available by the Seller and the Companies to the
Purchaser.
SECTION 3.18 AFFILIATE TRANSACTIONS.
(a) Schedule 3.18(a) lists all existing agreements and
arrangements and contains a summary of all transactions since January 1, 2001,
and all currently proposed agreements, arrangements and transactions between any
of the Companies, on the one hand, and any current or former shareholder,
director, officer or other Affiliate of any of the Companies or, on the other
hand, the Seller or any such Person's Affiliates, or any entity in which any
such Person has a direct or indirect material interest. All outstanding debts
and other obligations of any of the Companies to the Seller, any director,
officer or other Affiliate of any of the Companies or the Seller were incurred
in return for fair and adequate consideration paid or delivered by them in cash
or other property, and all transactions with Affiliates have been appropriately
reflected in the Financial Statements in all material respects.
(b) The Seller and the Companies have caused the
Companies' Affiliates to cancel any Indebtedness or other amounts owing to such
Persons from
41
the Companies, without payment therefor. Except for those agreements set forth
on Schedule 3.18(b), the Seller and the Companies have caused (A) all agreements
between any of the Companies' Affiliates, on the one hand, and any of the
Companies, on the other hand and (B) all guarantees, Liens or similar
liabilities or obligations in respect of Indebtedness of the Seller or its
Affiliates, to be terminated in all respects such that there is no liability
thereunder on the part of the Companies.
SECTION 3.19 PENDINGS, LISTINGS.
(a) Schedule 3.19(a) sets forth, as of the close of
business on April 11, 2002 an itemization of (i) all of the Companies' rights
under open real estate listing contracts between any of the Companies and owners
of real property, and (ii) all of the Companies' rights under real estate
listing contracts (x) relating to real estate closings and sales contracts
pending as of the date of this Agreement ("PENDINGS") and (y) with respect to
Pendings when the Companies are on the "buy side" of the transaction and, to the
knowledge of the Seller, as of the date of this Agreement, the information set
forth in Schedule 3.19(a) continues to be true, accurate and complete in all
material respects except for such changes since that date resulting from the
conduct of the Business in the ordinary course consistent with past practices.
(b) Schedule 3.19(b) sets forth as of the close of
business on April 11, 2002 an itemization of all of the Companies' loan
commitments or other commitments to fund and any agreement to sell or purchase
such loans to a third party, as well as under mortgage brokerage arrangements,
between any of the Companies and any prospective purchasers of real property,
third party investors or banks, as applicable and, to the knowledge of the
Seller, as of the date of this Agreement, the information set forth in Schedule
3.19(b) continues to be true, accurate and complete in all material respects
except for such changes since that date resulting from the conduct of the
Business in the ordinary course consistent with past practices.
(c) Schedule 3.19(c) sets forth as of the close of
business on April 11, 2002 an itemization of all of the Companies' open title or
escrow accounts and, to the knowledge of the Seller, as of the date of this
Agreement, the information set forth in Schedule 3.19(c) continues to be true,
accurate and complete in all material respects except for such changes since
that date resulting from the conduct of the Business in the ordinary course
consistent with past practices.
SECTION 3.20 SALES ASSOCIATES. Schedule 3.20 sets forth the
current commission schedule for the Companies, and a list that is true, accurate
and complete in all material respects of the sales associates affiliated with
the Companies as of April 11, 2002 (the "SALES ASSOCIATES"), with each such
Sales Associate's
42
commission split in effect immediately prior to the date of this Agreement and
such Sales Associate's total sales commissions earned for the last full calendar
year and for sales commissions earned for the current year through April 11,
2002 and, to the knowledge of the Seller, as of the date of this Agreement, such
list continues to be true, accurate and complete in all material respects except
for such changes since that date resulting from the conduct of the Business in
the ordinary course consistent with past practices. The Companies have not
changed their commission schedule, or increased any Sales Associates' commission
split (except based upon increased sales commissions earned of such Sales
Associate consistent with corporate policy and past practices), since January 1,
2002. The Sales Associates have each executed the Arvida Realty Services
Independent Contractor Agreement in the form annexed to Schedule 3.20.
SECTION 3.21 CLIENT TRUST FUNDS. Schedule 3.21(a) sets forth, as
of April 11, 2002, a list that is complete and accurate in all material respects
of any and all Client Trust Funds held by any of the Companies, indicating (by
relevant company) the buyer's name, the seller's name, the deal number and the
amount thereof and, to the knowledge of the Seller, as of the date of this
Agreement, such list continues to be true, accurate and complete in all material
respects except for such changes since that date resulting from the conduct of
the Business in the ordinary course consistent with past practices. The
Companies have held, disbursed and paid to depositors monies from their
respective Client Trust Funds in compliance with all applicable Laws. There has
been no improper co-mingling of its Client Trust Funds and no shortages exist,
nor have any shortages ever existed, in such funds.
SECTION 3.22 BROKERS, FINDERS, ETC. None of the Companies nor the
Seller or its Affiliates have employed, or are subject to the valid claim of,
nor has any of the Companies or the Seller or its Affiliates incurred any
liability that would be payable by any of the Companies, for any brokerage,
finder's or other fees or commissions of any broker, finder or other financial
intermediary in connection with the transactions contemplated by this Agreement.
SECTION 3.23 RATES AND FEES CHARGED BY TITLE SERVICES. Schedule
3.23 contains copies that are true and complete in all material respects of all
rate and fee schedules used by Title Services for title insurance during 2001
and for 2002 to date.
SECTION 3.24 LEASED EMPLOYEES. None of the Companies has any
leased employees.
43
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller as
follows:
SECTION 4.1 AUTHORITY; VALIDITY. The Purchaser is a corporation
validly existing and in good standing under the laws of the State of Delaware.
The Purchaser has full corporate power and authority to execute and deliver
this Agreement and the Related Agreements and to consummate the transactions
contemplated hereunder and thereunder (and the Mortgage Purchaser has full
corporate power and authority to consummate the purchase and sale referred to
in Section 2.1). The execution, delivery and performance of this Agreement and
the Related Agreements by the Purchaser and the consummation by the Purchaser
of the transactions contemplated hereunder and thereunder have been duly and
validly authorized by the board of directors of the Purchaser (and the
consummation of the purchase and sale referred to in Section 2.1 has been duly
and validly authorized by the board of directors of the Mortgage Purchaser),
and no other corporate proceedings on the part of the Purchaser or the Mortgage
Purchaser are necessary to authorize this Agreement or the Related Agreements
or the consummation of the transactions contemplated hereunder and thereunder
(or the consummation by the Mortgage Purchaser of the purchase and sale
referred to in Section 2.1). This Agreement and the Related Agreements have
been duly executed and delivered by the Purchaser, and, assuming due execution
and delivery by the Seller, constitute valid and binding obligations of the
Purchaser enforceable against the Purchaser in accordance with their terms
subject to bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws relating to creditors' rights and to general
principles of equity.
SECTION 4.2 NO CONFLICT; GOVERNMENTAL CONSENTS.
(a) Neither the execution, delivery or performance by the
Purchaser of this Agreement and the Related Agreements nor the consummation of
the transactions contemplated hereby or thereby (including the purchase and
sale referred to in Section 2.1) and compliance by the Purchaser (or the
Mortgage Purchaser, in the case of the purchase and sale referred to in Section
2.1) with any of the provisions hereof and thereof will (i) violate any
provision of any Organizational Document of the Mortgage Purchaser and the
Purchaser, (ii) require any consent, approval or notice under, violate or
result in the violation of, conflict with or result in a breach of any
provisions of, constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, result in the termination of,
accelerate the performance required by or result in a right of termination or
acceleration, result in the loss of a material benefit under or result in the
creation of
44
any Lien upon, any of the properties or assets of the Mortgage Purchaser and
the Purchaser under any of the terms, conditions or provisions of any material
contractual obligation of the Mortgage Purchaser and the Purchaser (other than
such consents as have already been obtained) or (iii) violate, or result in the
violation of, any Law applicable to the Purchaser.
(b) No consent, order or authorization of, or registration,
declaration or filing with, any Governmental Authority is required to be
obtained or made by the Purchaser or the Mortgage Purchaser in connection with
the execution, delivery and performance of this Agreement or any Related
Agreement or the consummation of the transactions contemplated hereby or
thereby that has not been obtained or made, as applicable.
SECTION 4.3 BROKERS, FINDERS, ETC. Neither the Purchaser nor its
Affiliates have employed, are subject to the valid claim of, nor have incurred
any liability that would be payable by the Mortgage Purchaser and the
Purchaser, for any brokerage, finder's or other fees or commissions of any
broker, finder or other financial intermediary in connection with the
transactions contemplated by this Agreement.
ARTICLE V
COVENANTS
SECTION 5.1 PUBLIC DISCLOSURE; CONFIDENTIALITY. The parties have
agreed on the forms of their respective press releases covering the
transactions contemplated hereby. Except as may be required to comply with any
applicable Law or stock exchange rule, neither the Purchaser nor the Seller
shall issue any press release or make any other public announcement concerning
the terms of this Agreement or the transactions contemplated hereby.
Notwithstanding the foregoing, the parties may disclose the terms of this
Agreement to their respective officers, employees, accountants, attorneys,
financial advisors and lenders as may be necessary or reasonably desirable in
connection with such party's business and the performance of such Person's
duties in connection therewith.
SECTION 5.2 FURTHER ASSURANCES. From and after the Closing Date,
each of the Purchaser and the Seller covenants to cooperate in good faith with
the other to carry out any provisions of this Agreement which have not been
fully satisfied in accordance with their terms and to use reasonable efforts to
consummate and make effective the transactions contemplated by this Agreement
(including the release or discharge of the Companies of any obligations and
liabilities of any kind which in any way arise out of or in any way relate to
the loans, financial
45
accommodations or otherwise made pursuant to the Note Purchase Agreements, the
February 2002 Credit Agreement, the Participation Agreement, the Credit
Agreement and the Eighty Million Dollar Note and any other documents,
instruments and agreements entered in connection therewith and the transactions
contemplated thereby), including the release of any guaranties provided by any
of the Companies to secure obligations of the Seller under the financing
agreements listed in Schedule 2.4(xii), as promptly as practicable; it being
understood that this sentence shall not be interpreted as imposing on either
party any expense or other obligation of a material nature not expressly
required by the other terms of this Agreement.
SECTION 5.3 DISSOLUTION. The Seller shall:
(i) distribute any and all funds held by Arvida
Realty Services Foundation, Inc., a Florida corporation (the "FOUNDATION"), in
accordance with the past practice of Foundation;
(ii) shall cause the Foundation to be dissolved
within three (3) months of the Closing Date without liability or obligation to
any of the Companies; and
(iii) shall not transfer, or permit the transfer of,
the control of, or any interest in, the Foundation to any other Person.
SECTION 5.4 EMPLOYEE PLANS.
(a) The Seller has taken all necessary and appropriate
actions so that from and after the Closing Date, all Plans shall be assumed by
the Purchaser in accordance with the transactions authorized by this Agreement.
The Purchaser shall not assume the Seller Plans, or any liabilities thereunder.
(b) Notwithstanding the foregoing, the Seller shall assume
and retain the Indemnified Benefits Liabilities. "INDEMNIFIED BENEFITS
LIABILITIES" shall mean any and all liabilities relating to, arising out of, or
resulting from (i) noncompliance with or violation of COBRA to the extent
incurred prior to the Closing, (ii) to the extent not covered under the
applicable Plans at the Closing, the continuation coverage requirements of
Section 4980B of the Code with respect to employees of the Companies who have
incurred a "qualifying event" (as defined in Section 4980B(f)(3) of the Code)
and their qualified beneficiaries, (iii) noncompliance with or violation of any
of the provisions of ERISA to the extent incurred or related to periods prior
to the Closing, and (iv) claims by employees, independent contractors or
directors of the Companies arising from or relating to their employment with or
46
services to the Companies prior to the Closing (including termination of such
employment or service).
(c) The Seller has taken all necessary and appropriate
actions to amend the Company 401(k) Plan substantially in accordance with the
amendment attached hereto as Schedule 5.4(c).
(d) The Seller has taken any and all actions necessary to
cause each employee and independent contractor of the Companies immediately
prior to the Closing who has a benefit or account in any employee pension
benefit plan (as defined in Section 3(2) of ERISA) which is sponsored by the
Seller or any of its ERISA Affiliates to become fully vested in such benefit or
account effective immediately prior to the Closing. The Seller shall take any
and all action necessary to cause each employee and independent contractor of
the Companies who has outstanding options to purchase stock of the Seller to
become fully vested in such options effective immediately prior to the Closing.
(e) On and after the Closing Date, the Purchaser shall
provide, or cause to be provided, to each employee of any of the Companies (the
"EMPLOYEES") under each Plan maintained or contributed to by any of the
Companies, and each other employee benefit plan (within the meaning of Section
3(3) of ERISA) maintained or contributed to by the Purchaser, its parent or its
respective Subsidiaries or Affiliates (collectively, the "PURCHASER PLANS"),
credit, for purposes of eligibility to participate and vesting, for full and
partial years of service with any of the Companies, the Seller or their
respective Subsidiaries or Affiliates performed at any time prior to the
Closing Date to the extent credited by any of the Companies, the Seller, or
their respective Subsidiaries or Affiliates under the applicable Plan or Seller
Plan, except where such crediting results in the duplication of benefits.
(f) The Purchaser shall honor, without modification, all
Plans sponsored or maintained by the Companies which are disclosed in Schedule
3.14; provided, however, that this undertaking is not intended to prevent any
of the Companies or the Purchaser from enforcing such Plans in accordance with
their terms, including any reserved right to amend, modify, suspend, revoke or
terminate any such Plan.
(g) The Purchaser shall, or shall cause any of the Companies
or any of their Affiliates to, (i) waive all limitations as to pre-existing
conditions, exclusions and waiting periods with respect to participation and
coverage requirements applicable to all Employees under any welfare benefit
plan established to replace any welfare benefit plan (as defined in Section
3(1) of ERISA) covering Employees at the Closing Date, other than limitations
or waiting periods that are already in effect with respect to any such Employee
and that have not been satisfied as of the Closing
47
Date under the welfare benefit plan maintained for such Employees immediately
prior to the Closing Date, and (ii) provide each such Employee with credit for
co-payments and deductibles paid prior to the Closing Date in satisfying any
co-payment, deductible, or out-of-pocket requirements under any welfare benefit
plans that such Employees are eligible to participate in after the Closing
Date.
(h) The Sellers, the Purchaser and the Companies shall
cooperate in (i) making all appropriate filings required under the Code or
ERISA and any applicable securities Laws with respect to the Plans, (ii)
implementing all appropriate communications with participants under the Plans,
(iii) maintaining and transferring appropriate records, and (iv) taking all
such other actions as may be necessary and appropriate to implement the
provisions of Section 3.14. The Seller, the Purchaser and the Companies shall
cooperate fully with one another in providing records regarding the employment
of, and benefits provided to, all individuals who are or were Employees.
SECTION 5.5 CHANGE OF CONTROL PAYMENTS.(a) The Seller shall be
responsible for and pay any and all change of control payments due to Xxxx
Xxxxxx Xxxxxx under her Severance Agreement, dated October 4, 2001 and Xxxxx
Xxxxxx under his Severance Agreement, dated February 14, 2002.
(b) The Seller shall be responsible for any and all severance
and change of control payments under existing arrangements with the Company due
to Xxxxxxx Xxxx and Xxxxxx Xxxx, if any, as a result of the change of control
of the Company resulting from the transactions contemplated hereby, to the
extent any such payments are not covered by the definition of "Indebtedness"
herein.
SECTION 5.6 INTERNET LINK. The Seller shall until December 31,
2003 maintain, in a substantially similar manner as currently maintained, the
link at xxx.xxx.xxx and the link at xxx.xxxxxx.xxx, and any other of the
Seller's or its Affiliates websites where such links are currently maintained,
directly to the Arvida Realty Services website which is currently located at
xxx.xxxxxxxxxxxx.xxx (but also accessible through xxxxxxxxxxxxxxxxxxxx.xxx and
xxxxxxxxxxxxxx.xxx). The Seller agrees that the Purchaser or its Affiliates may
cause such Arvida Realty Services website to automatically link to another
website of the Purchaser or its Affiliates.
SECTION 5.7 CERTAIN OBLIGATIONS OF SELLER. The Purchaser agrees
that no later than ninety (90) days following the date hereof it shall cause the
Warehouse Credit Agreement to be terminated, or if the Warehouse Credit
Agreement is not terminated, shall cause the guarantee by Seller of the
obligations of Arvida Mortgage to be released. The Purchaser shall indemnify,
defend and hold harmless the Seller Indemnified Parties (as defined in Section
7.3(a)) from and against any and all
48
Damages (as defined in Section 7.2(a)) suffered by any of the Seller
Indemnified Parties resulting from, arising out of, relating to or incurred
with respect to (i) the Lease Guaranties or (ii) the Seller's guarantee of the
obligations of Arvida Mortgage under the Warehouse Credit Agreement.
SECTION 5.8 PROSECUTION OF CERTAIN CLAIMS.
(a) Each of the Seller and the Purchaser agrees to promptly
notify the other in writing if it becomes aware that any Person other than (x)
the Seller and its Affiliates, (y) the Purchaser and its Affiliates or (z)
other Persons to the extent permitted pursuant to Section 2(a)(A) of the Use of
Name Agreement is using the ARVIDA Xxxx in the Business. The Seller agrees, and
to the extent within its reasonable control agrees to cause any of its
Affiliates relevant thereto, in each case at the Seller's sole cost and
expense, to use its best efforts to restrain and prevent any Person (other than
the Seller and its Affiliates or the Purchaser and its Affiliates or other
Persons to the extent permitted by Section 2(a)(A) of the Use of Name
Agreement) from using or purporting to have the right to license or sublicense
the use of the ARVIDA Xxxx in the Business and to seek to obtain all monetary
damages available in respect of such use, licensing or sublicensing, including
by promptly commencing and diligently prosecuting at the Seller's sole cost and
expense a claim for injunctive relief and, if available, monetary damages
against such Person. In connection with any such prosecution, the Seller and
its Affiliates shall keep the Purchaser apprised of all material developments
as they occur and will provide the Purchaser with the opportunity to consult
regularly with the Seller on the appropriate actions and strategies by which to
carry out such prosecution.
(b) In the event the Seller does not, within five (5)
Business Days after giving or receiving the notice described above, commence
judicial action in respect of any such use of the ARVIDA Xxxx in the Business
in one or more appropriate courts of competent jurisdiction seeking any and all
available equitable and other relief (such relief to include, as appropriate,
one or more of a temporary restraining order, a preliminary injunction or a
permanent injunction), Purchaser shall have the right, on behalf and at the
cost of the Seller (to the extent permitted under applicable law and
regulation), but only after providing the Seller at least two (2) Business
Days' prior written notice (which notice shall include a summary of the actions
proposed to be brought and the forum or forums in which such actions will be
brought), to commence such a judicial action in the name and on behalf of the
Seller; provided, however, that the Purchaser shall not have the right to
commence any judicial action on behalf of the Seller if and to the extent the
Seller, acting in good faith, and based on the advice of outside counsel, has
determined and advised the Purchaser that commencement or prosecution of such
action by or on behalf of the Seller or any of its Affiliates would violate or
constitute a breach of a fiduciary
49
duty that the Seller or any of its Affiliates owes to any of their respective
Affiliates or to any Partner, member, other equity holder or Affiliate of any
such Affiliate.
(c) In the event that the Purchaser commences any such action
as permitted in the preceding paragraph, the Seller shall have the right at any
time thereafter, by written notice to the Purchaser (which notice shall include
an affirmative undertaking to continue the prosecution of such action in
accordance with the requirements of Section 5.8(a), and which right shall be
subject to the Seller prosecuting such action in accordance with such
requirements), to assume and direct in all respects the prosecution of such
action in accordance with the requirements above, and the Purchaser agrees to
take such actions as the Seller may reasonably request to turn control of the
action over to the Seller.
(d) The obligations of the parties under this Section 5.8
shall terminate on December 21, 2008.
ARTICLE VI
CERTAIN TAX MATTERS
SECTION 6.1 PREPARATION AND FILING OF TAX RETURNS; PAYMENT OF
TAXES.
(a) The Seller shall prepare and file or cause to be prepared
and filed at its own cost and expense (in a manner consistent with past
practice, except as required by applicable Law), on a timely basis (including
extensions) all Tax Returns of the Companies for all Pre-Closing Periods (as
defined in Section 6.3(a) below); provided, that the Purchaser (or its
Affiliate) shall be permitted to review any such Tax Returns before they are
filed; and provided, further, in the case of any Tax Return of the Seller or
any of the Seller's Affiliates other than the Companies, the Purchaser's right
to review shall be limited to information relating solely to the Companies. The
Seller shall pay all Taxes shown to be due and payable on such Tax Returns.
(b) The Purchaser (or its Affiliate) shall prepare and file
or cause to be prepared and filed on a timely basis (including extensions) all
Tax Returns of the Companies other than those provided for in Section 6.1(a) of
this Agreement. Subject to Section 6.3, the Purchaser shall pay or cause the
Companies to pay all Taxes shown to be due and payable thereon.
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SECTION 6.2 SECTION 338(H)(10) ELECTION.
(a) The Purchaser (and its Affiliates) and the Seller (and
its Affiliates) shall jointly make a timely and effective election provided for
by Section 338(h)(10) of the Code and Section 1.338(h)(10)-1 of the Treasury
Regulations and any comparable election under state, local or foreign Tax Law
with respect to the purchase of the capital stock of each of the Companies
(each, an "ELECTION" and collectively, the "ELECTIONS"). The Purchaser, the
Seller and their respective Affiliates shall cooperate with each other to take
all actions necessary and appropriate (including filing such additional forms,
returns, elections, schedules and other documents as may be required to effect
and preserve timely Elections in accordance with the provisions of Section
338(h)(10) of the Code and Section 1.338(h)(10)-1 of the Treasury Regulations
(and any comparable provisions of state, local or foreign Tax Law) or any
successor provisions. Specifically, the Seller and the Purchaser shall, within
sixty (60) days of the later of the date on which the Closing Date Working
Capital has been finalized pursuant to Section 2.5 or the date that the
allocation of the "aggregate deemed sales price" is finalized under Section
6.2(b), exchange completed and executed copies of the Internal Revenue Service
Form 8023, required schedules thereto, and any similar state, local or foreign
forms. If changes are required in any of these forms as a result of information
which is first available after the date on which any such form is completed and
executed pursuant to the preceding sentence, the parties will promptly agree on
such changes. The Seller, the Purchaser and their respective Affiliates shall
(i) report the purchase by the Mortgage Purchaser of the Mortgage Shares and
the acquisition of the capital stock of Arvida Mortgage consistent with such
Election and (ii) report the purchase by the Purchaser of the Shares and the
acquisition of the capital stock of each of the Companies (other than Arvida
Mortgage) consistent with each such Election and in each case, shall take no
position inconsistent therewith in any Tax Return, any proceeding before any
taxing authority or otherwise.
(b) In connection with the Elections, as soon as practicable
after the Closing, the Seller and the Purchaser (or its Affiliate) shall agree
as to the manner in which the "aggregate deemed sales price," as defined in
Treasury Regulation Section 1.338-4, with respect to each of the Companies
shall be allocated among the assets of each of the Companies, which allocations
shall (i) be made in accordance with Section 338(b) of the Code and any
applicable Treasury Regulations, (ii) reflect, and be made in accordance with,
the purchase price for the Mortgage Shares as stated in Section 2.1 of this
Agreement and (iii) reflect and be made in accordance with, the Purchase Price
for the Shares pursuant to Section 2.2 of this Agreement. If, within sixty (60)
days prior to the last date for filing an Election, the parties have not
reached an agreement pursuant to the preceding sentence, the dispute shall be
presented to an independent accounting firm mutually agreed upon by the Seller
and
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the Purchaser, whose determination shall be binding on both parties. The fees
and expenses of such accounting firm shall be paid equally by the Seller and
the Purchaser (or its Affiliate). The Seller, the Purchaser and their
respective affiliates shall (i) be bound by any such allocation for purposes of
determining any Taxes, (ii) prepare and file their Tax Returns on a basis
consistent with such determination of the aggregate deemed sales price and such
allocations and (iii) take no position inconsistent with such determination and
allocations on any applicable Tax Return, in any proceeding before any taxing
authority or otherwise. In the event that any of the allocations are disputed
by any taxing authority, the party receiving notice of the dispute shall
promptly notify the other party concerning resolution of the dispute.
SECTION 6.3 TAX INDEMNIFICATION.
(a) The Seller shall indemnify, defend, and hold harmless the
Purchaser Indemnified Parties (as defined in Section 7.2(a) below) from and
against any and all Damages asserted against, resulting to, imposed on,
sustained, incurred or suffered by, or asserted against any of the Purchaser
Indemnified Parties, directly or indirectly, by reason of or resulting from
(without duplication of any amounts paid pursuant to Section 7.2): (i) all
Taxes, including Taxes with respect to all Elections, imposed upon any of the
Companies with respect to any taxable period or portion thereof ending on or
before the Closing Date ("PRE-CLOSING PERIODS"), and for any taxable period
beginning on or before the Closing Date and ending after the Closing Date
("STRADDLE PERIODS"), but only with respect to the portion of such Straddle
Period ending on the close of the Closing Date and in the manner provided in
Section 6.3(c) of this Agreement, (ii) all Taxes imposed on any of the
Companies under section 1.1502-6 of the Treasury Regulations (and corresponding
provisions of state, local, or foreign Law) as a result of being a member of
any federal, state, local or foreign consolidated, unitary, combined or similar
group for any taxable period ending on or before, or that includes, the Closing
Date, and (iii) any Taxes of or relating to the Foundation.
(b) The Purchaser shall indemnify, defend and hold harmless
the Seller Indemnified Parties (as defined under Section 7.3(a) below) from and
against any and all Damages, asserted against, resulting to, imposed on,
sustained, incurred or suffered by, or asserted against any of the Seller
Indemnified Parties, directly or indirectly, by reason of or resulting from any
and all Taxes imposed upon any of the Companies with respect to (a) any taxable
period beginning after the Closing Date ("POST-CLOSING PERIODS") or (b) the
portion of any Straddle Period beginning the day after the Closing Date and in
the manner provided for in Section 6.3(c) hereof (the "POST-CLOSING STRADDLE
PERIOD").
(c) For purposes of this Section 6.3, in order to apportion
appropriately any Taxes relating to a Straddle Period, the parties hereto
shall, to the
52
extent permitted under applicable Law, elect with the relevant Tax authority to
treat for all Tax purposes the Closing Date as the last day of the taxable year
or period of the Companies. In any case where applicable Law does not permit
the Companies to treat the Closing Date as the last day of the taxable year or
period, the portion of any Taxes that are allocable to the portion of the
Straddle Period ending on the Closing Date shall be:
(i) in the case of Taxes that are imposed on a
periodic basis (such as real property taxes), deemed to be the amount of such
Taxes for the entire period (or, in the case of such Taxes determined on an
arrears basis, the amount of such Taxes for the immediately preceding period)
multiplied by a fraction the numerator of which is the number of calendar days
in the Straddle Period ending on (and including) the Closing Date and the
denominator of which is the number of calendar days in the entire relevant
Straddle Period; and
(ii) in the case of Taxes not described in (i) (such
as taxes that are either (x) based upon or related to income or receipts, or
(y) imposed in connection with any sale or other transfer or assignment of
property (real or personal, tangible or intangible) and (z) payroll and similar
Taxes), deemed equal to the amount that would be payable if the taxable year or
period ended on the Closing Date; provided, that, in determining such amount,
exemptions, allowances, or deductions that are calculated on a periodic basis,
such as the deduction for depreciation, shall be taken into account on a
pro-rated basis in the manner described in Section 6.3(c)(i).
(d) All amounts payable or to be paid under this Section 6.3
(the "TAX INDEMNITY PAYMENTS") shall be paid in immediately available funds
within five (5) Business Days after the later of (i) receipt of a written
request from the party entitled to such Tax Indemnity Payment and (ii) the day
of payment of the amount that is the subject of the Tax Indemnity Payment by
the party entitled to receive the Tax Indemnity Payment.
(e) For purposes of Article 6, any transaction that takes
place after the Closing, including transactions taking place after the Closing
but on the Closing Date, shall be considered to be made after the Closing Date.
SECTION 6.4 TAX REFUNDS. The Purchaser shall pay to the Seller(a)
all refunds or credits of Taxes received by the Purchaser or any of the
Companies after the Closing Date and attributable to Taxes paid by any of the
Companies with respect to a Pre-Closing Period and (b) a portion of all refunds
or credits of Taxes received by the Purchaser or any of the Companies after the
Closing Date and attributable to Taxes paid by any of the Companies with
respect to any Straddle Period (such portion to be allocated consistent with
the principles set forth in Section
53
6.3(c)), in each case, net of any Taxes imposed on such refund amount. The
Purchaser hereby agrees to the extent permitted by Law, to waive the carry back
of any tax attribute with respect to any of the Companies.
SECTION 6.5 TAX INDEMNIFICATION PROCEDURES.
(a) If a notice of deficiency, proposed adjustment,
adjustment, assessment, audit, examination or other administrative or court
proceeding, suit, dispute or other claim (a "TAX CLAIM") shall be delivered or
sent to or commenced or initiated against any of the Companies by any taxing
authority with respect to Taxes for which one party to this Agreement is
entitled to indemnification from another party, the receiving party shall
promptly notify the other party in writing of the Tax Claim along with a copy
of the relevant Tax Claim notice; provided, that the failure by either party to
promptly notify the other of any such notice shall not release the other party
from its obligations under this Article VI in whole or in part except to the
extent that the Seller is materially and adversely prejudiced as a consequence
of such failure.
(b) With respect to Tax Claims for which the Seller would be
liable to indemnify the Purchaser Indemnified Parties, the Seller may, upon
written notice to the Purchaser (such written notice to be provided within the
lesser of (i) thirty (30) days after notice thereof has been given to the
Indemnifying Party, and (ii) three (3) Business Days prior to the date required
to answer or respond to any such claim), assume and control the defense of such
Tax Claim at its own cost and expense and with its own counsel and the
Purchaser and its Affiliates agree to cooperate with the Seller in pursuing
such contest. If the Seller elects to assume the defense of any such Tax Claim,
notwithstanding anything to the contrary contained herein, (i) the Seller shall
consult with the Purchaser or its Affiliate and shall not enter into any
settlement with respect to any such Tax Claim without the Purchaser's (or its
Affiliate's) prior written consent, which consent shall not be unreasonably
withheld or delayed, or if such settlement would increase the Tax liability of
the Purchaser (or any of its Affiliates) or any of the Companies for any
taxable period for which the Seller has not indemnified the Purchaser pursuant
to Section 6.3, without the consent of the Purchaser (or its Affiliate); (ii)
the Seller shall keep the Purchaser informed of all material developments and
events relating to such Tax Claim (including promptly forwarding copies to the
Purchaser of any related correspondence and providing the Purchaser with a
reasonable opportunity to review and comment on any related correspondence
prior to being sent by the Seller to any Tax Authority); and (iii) at its own
cost and expense, the Purchaser (or its Affiliate) shall have the right to
participate in (but not to control) the defense of such Tax Claim.
(c) In connection with the contest of any Tax Claim that
relates to (i) any Post-Closing Period, (ii) any Straddle Period and (iii) any
Tax Claim that the
54
Seller has the ability to control but does not timely elect to control pursuant
to Section 6.5(b), such contest shall be controlled by the Purchaser, and the
Seller agrees to cooperate fully with the Purchaser and its Affiliates in
pursuing such contest. In connection with any such contest that relates to (ii)
or (iii) above, the Purchaser or its Affiliate shall keep the Seller informed
of all material developments and events relating to such Tax Claim and the
Seller, at its own cost and expense, shall have the right to participate
(including participation in any relevant meetings) in (but not control) the
defense of such Tax Claim. If the Purchaser or its Affiliate controls the
contest of a claim, the Seller shall have the right to comment on any decision
to be made by the Purchaser or its Affiliate with respect to such claim prior
to such decision being made, and the Purchaser or its Affiliate shall, in good
faith, consider such comments in making any such decision. Nothing contained
herein shall be construed as limiting the Purchaser's (or any Purchaser
Indemnified Party's) right to indemnification under this Article VI.
(d) Notwithstanding anything to the contrary contained in
this Agreement, the procedure for indemnification claims with regard to Taxes
or otherwise brought pursuant to this Article VI shall be governed exclusively
by this Section 6.5.
SECTION 6.6 TRANSFER AND SIMILAR TAXES. Notwithstanding any other
provision of this Agreement to the contrary, the Seller shall assume and
promptly pay all sales, use, privilege, transfer, documentary, gains, stamp,
duties, recording and similar Taxes and fees (including any penalties, interest
or additions) imposed upon any party incurred in connection with the
transactions (including any Lease Assignment) contemplated by this Agreement
(collectively, the "TRANSFER TAXES"), and the Seller shall, at its own expense,
procure any stock transfer stamps required by, and accurately file all
necessary Tax Returns and other documentation with respect to, any Transfer
Tax.
SECTION 6.7 INFORMATION TO BE PROVIDED BY THE PURCHASER. With
respect to the taxable year of the Seller ending December 31, 2001 and the
period in 2002 prior to the Closing Date, the Purchaser (or its Affiliate)
shall, to the extent that such information is available to the Purchaser (or
its Affiliates), as promptly as reasonably practicable cause the Companies to
prepare and provide to the Seller a package of Tax information materials ("TAX
PACKAGE"), which shall be completed in accordance with past practice including
past practice as to providing the information, schedules and work papers and as
to the method of computation of separate taxable income or other relevant
measure of income of the Companies.
SECTION 6.8 TERMINATION OF TAX SHARING AGREEMENTS. The Seller
hereby agrees and covenants that any and all existing tax allocation or sharing
agreements or arrangements, whether or not written, that may have been entered
into
55
by the Seller or its Affiliates and any of the Companies ("TAX SHARING
AGREEMENTS") shall be terminated on or before the Closing Date, and no payments
to or from any of the Companies pursuant to any such Tax Sharing Agreement
shall be made after such termination.
SECTION 6.9 CONFLICTS; SURVIVAL. Notwithstanding any other
provision of this Agreement to the contrary, the obligations of the parties
hereto set forth in this Article VI shall: (a) be unconditional and absolute
and (b) remain in full force and effect indefinitely. In the event of a
conflict between this Article VI and any other provision of this Agreement,
this Article VI shall govern and control.
SECTION 6.10 TAX TREATMENT. The parties hereto agree to treat any
payment made pursuant to Article VI and Article VII as an adjustment to the
Purchase Price for all Tax purposes.
SECTION 6.11 ASSISTANCE AND COOPERATION. After the Closing, the
Seller and the Purchaser shall:
(a) assist (and cause their respective Affiliates to assist)
the other party in preparing any Tax Returns which such other party is
responsible for preparing and filing in accordance with this Article VI;
(b) cooperate fully in preparing for any audits of, or
disputes with taxing authorities regarding, any Tax Returns with respect to the
Companies;
(c) make available to the other and to any taxing authority
as reasonably requested all information, records, and documents relating to
Taxes of the Companies;
(d) provide timely notice to the other in writing of any
pending or threatened tax audits or assessments with respect to the Companies
for taxable periods for which the other may have a liability under this Article
VI; and
(e) furnish the other with copies of all correspondence
received from any taxing authority in connection with any tax audit or
information request with respect to any taxable period for which the other may
have a liability under this Article VI.
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ARTICLE VII
SURVIVAL AND INDEMNIFICATION
SECTION 7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES Each of
the representations and warranties made by the parties in this Agreement shall
terminate on June 30, 2004; provided, however, that (i) the representations and
warranties contained in Sections 3.10, 3.13, 3.14, and 3.15 shall survive the
Closing until ninety (90) days following the expiration of the applicable
statute of limitations, (ii) the representations and warranties contained in
Sections 3.1, 3.2, 3.3(a), 3.5(b)(i), 3.7(a), 3.16, 3.12(g), 3.22, 4.1 and 4.3
shall survive the Closing and remain in full force and effect without
termination and (iii) the representations and warranties set forth in Section
3.12 (h) shall survive the Closing until March 31, 2009. In the event notice of
any claim for indemnification under Sections 7.2(a)(i) or 7.3(a)(i) of this
Agreement shall have been given (within the meaning of Section 8.1) within the
applicable survival period, the representations and warranties that are the
subject of such indemnification claim shall survive until such time as such
claim is finally resolved.
SECTION 7.2 INDEMNIFICATION BY THE SELLER.
(a) Subject to the other provisions of this Article VII, the
Seller shall, indemnify, defend and hold harmless the Purchaser, the Mortgage
Purchaser, the Companies, and their respective Affiliates, the representatives
and agents thereof, and each of the successors and permitted assigns of any of
the foregoing (collectively, the "PURCHASER INDEMNIFIED PARTIES") from and
against any and all costs, expenses, losses, damages and liabilities (including
attorneys' fees and expenses) ("DAMAGES") suffered by any of the Purchaser
Indemnified Parties resulting from, arising out of, relating to or incurred
with respect to (without duplication):
(i) any breach of or inaccuracy in any
representation or warranty or Schedule of the Seller contained in this
Agreement (other than a breach or inaccuracy of a nature that would give rise
to a claim indemnifiable under Section 6.3(a));
(ii) any breach of any covenant or agreement of the
Seller contained in this Agreement (including any covenant contained in Article
VI);
(iii) any Indemnified Benefits Liabilities and the
Seller Plans;
57
(iv) any liabilities to third parties if and to the
extent arising out of or resulting from events or circumstances occurring or
existing prior to the Closing, including all Litigation, other than the
liabilities set forth on Schedule 7.2(a)(iv); and
(v) any (A) claims or rights reserved in Section 3
of the Consent Agreement, (B) claims for additional compensation for the
benefits to the Purchaser and/or the Companies under the Transitional Trademark
License Agreement or the restrictions imposed on the Seller and its Affiliates
(including St. Xxx/Arvida Company, L.P.) pursuant to any of the Related
Agreements or the termination of the Prior Trademark License and (C) claims
seeking to question the validity of the Related Agreements or the right of the
Purchaser and its Affiliates to use the ARVIDA Xxxx in compliance with the
Transitional Trademark License Agreement or the termination of the Prior
Trademark License; provided, however, that the Seller shall not have any
indemnification obligation hereunder in respect of any such claims seeking to
enforce against the Purchaser or any of the Companies any term of any of the
Related Agreements by the Seller or St. Xxx/Arvida Company, L.P., and the
foregoing shall not be interpreted as limiting in any way any of the Seller's
or St. Xxx/Arvida Company, L.P.'s rights to enforce against the Purchaser or
the Companies any of the Related Agreements in accordance with their terms; and
(vi) any use by any Person (other than the Purchaser
and its Affiliates) of: (A) the ARVIDA Xxxx in the Business or in the
Commercial Businesses other than to the extent permitted under clause (A) of
Section 2(a) of the Use of Name Agreement; (B) ARVIDA REALTY, ARVIDA SERVICES,
ARVIDA REALTY SERVICES, ARVIDA REAL ESTATE OR ARVIDA REALTORS and any other
ARVIDA Xxxx currently used in the Business or formatives or confusingly similar
variations of the foregoing for any use, regardless of whether such use is in
or related to the Business, other than to the extent permitted under clause (A)
of Section 2(b) of the Use of Name Agreement; (C) any or all of the Internet
domain names and/or email addresses currently used by any of the Companies,
including xxxxxxxxxxxx.xxx, xxxxxxxxxxxxxx.xxx and xxxxxxxxxxxxxxxxxxxx.xxx,
for any use, regardless of whether such use is in or related to the Business;
and (D) the trade dress currently used by the Companies, for any use,
regardless of whether such use is in or related to the Business. Notice of any
claim for indemnification under this Section 7.2(a)(vi) must be given by the
Purchaser on or prior to March 31, 2009.
For the purposes of this Section 7.2(a), the Seller shall not be obligated to
indemnify any Purchaser Indemnified Party for any incidental, consequential,
indirect, punitive, special or exemplary damages, or for lost profits,
unrealized expectations or other similar terms (except to the extent a
Purchaser Indemnified Party incurs Damages in respect of claims for such
damages by third parties; provided, that for purposes of
58
this Section 7.2, Damages shall include incidental or consequential damages,
including lost profits, with respect to any claim for indemnification pursuant
to Section 7.2(a)(vi) or pursuant to Section 7.2(a)(i) based on any breach of
or inaccuracy in the representations and warranties set forth in Sections
3.12(h) and (i)). In addition, for the purposes of this Section 7.2(a), in
computing such individual or aggregate amounts of claims, the amount of each
claim shall be deemed to be an amount net of any insurance proceeds and any
indemnity, contribution or other similar payment, in each case recovered by the
Indemnified Party from any third party with respect thereto.
Notwithstanding anything in this Agreement to the contrary, it is hereby
understood and agreed that in the event of a breach of or inaccuracy in
representation or warranty contained in this Agreement that is qualified by a
materiality or Material Adverse Effect exception or qualification, the amount
of Damages incurred by a Purchaser Indemnified Party as a result of such breach
(the existence of a breach being determined after giving effect to such
exception or qualification) shall be calculated as if such representation or
warranty were not subject to such exception or qualification.
The foregoing matters for which the Seller has an
indemnification obligation under this Section 7.2(a) are collectively referred
to herein as "SELLER INDEMNIFIABLE MATTERS".
(b) The Seller shall not be required to provide
indemnification pursuant to Section 7.2(a)(i) (and, therefore, shall not be
liable to any Purchaser Indemnified Party hereunder for any breach of
representation or warranty) unless and until the aggregate dollar amount of all
Damages that would otherwise be indemnifiable pursuant to Section 7.2(a)(i)
exceeds five hundred thousand dollars ($500,000) ("SELLER'S DEDUCTIBLE
AMOUNT"), at which point the Seller shall indemnify the Purchaser Indemnified
Parties only as to the amount of such Damages in excess of the Seller's
Deductible Amount. Notwithstanding the foregoing, the limitations in this
Section 7.2(b) shall not apply with respect to any breach or inaccuracy in any
of the representations and warranties set forth in Sections 3.1, 3.2, 3.3 (a),
3.5(b)(i), 3.7(a), 3.10, 3.12(g) and (h), 3.13, 3.14, 3.15, 3.16, 3.18(b) and
3.22, and Damages indemnified hereunder in respect of claims made by Purchaser
Indemnified Parties with respect to breaches of or inaccuracies in the
representations and warranties set forth in such sections shall be disregarded
for purposes of the first sentence of this Section 7.2(b) in determining
whether the aggregate Damages exceed Seller's Deductible Amount as described
above).
(c) In connection with this Section 7.2, the Seller hereby
(i) waives any right of contribution or indemnification or similar right they
may have against any of the Companies for any amounts paid by the Seller
hereunder, and (ii) waives
59
any defense based on fault of any of the Companies; provided, that the
foregoing shall not be deemed to limit any claims that the Seller may have
against insurers under its insurance policies.
(d) Notwithstanding anything contained herein to the
contrary, in no event shall the Seller be liable for, or required to make any
payment, under this Section 7.2 in connection with any amount to the extent a
reduction in the Purchase Price was made because such item or amount was
included in the definition of "Indebtedness" for purposes of calculating the
Estimated Indebtedness or the Closing Date Indebtedness or that was included in
the definition of "Current Liabilities" for purposes of calculating the
Estimated Working Capital or the Closing Date Working Capital; and any such
items or amounts shall be excluded in determining whether the aggregate Damages
exceed the Seller's Deductible Amount pursuant to paragraph (b) above.
SECTION 7.3 INDEMNIFICATION BY THE PURCHASER
(a) Subject to the other provisions of this Article VII, the
Purchaser shall indemnify, defend and hold harmless the Seller and its
Affiliates, the representatives and agents thereof, and each of the successors
and permitted assigns of any of the foregoing (collectively, the "SELLER
INDEMNIFIED PARTIES"), from and against any Damages suffered by the Seller
Indemnified Parties resulting from, arising out of, relating to or incurred
with respect to:
(i) any breach of or inaccuracy in any
representation or warranty of the Purchaser contained in this Agreement; and
(ii) any breach of any covenant or agreement of the
Purchaser contained in this Agreement.
Notwithstanding anything in this Agreement to the contrary, it is hereby
understood that for purposes of this Section 7.3, all materiality exceptions
and qualifications set forth in any representation or warranty of the Purchaser
contained in this Agreement shall be disregarded.
The foregoing matters for which the Purchaser has an
indemnification obligation under this Section 7.3(a) are collectively referred
to herein as "PURCHASER INDEMNIFIED MATTERS".
(b) The Purchaser shall not be required to pay any amount of
indemnification pursuant to Section 7.3(a)(i) until the aggregate dollar amount
of all Damages that would otherwise be indemnifiable pursuant to Section
7.3(a)(i) exceeds five hundred thousand dollars ($500,000) ("PURCHASER'S
DEDUCTIBLE
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AMOUNT"), at which point the Purchaser shall indemnify the Seller Indemnified
Parties only as to the amount of such Damages in excess of the Purchaser's
Deductible Amount. Notwithstanding the foregoing, the limitations in this
Section 7.3(b) shall not apply with respect to any breach or inaccuracy in any
of the representations and warranties set forth in Sections 4.1 and 4.3, and
Damages indemnified hereunder in respect of claims made by Seller Indemnified
Parties with respect to breaches or inaccuracies in the representations or
warranties set forth in such sections shall be disregarded for purposes of the
first sentence of this Section 7.3(b) in determining whether the aggregate
Damages exceed Purchaser's Deductible Amount as described above.
SECTION 7.4 NOTICE AND RESOLUTION OF CLAIM.
(a) The Seller Indemnified Parties or the Purchaser
Indemnified Parties (each, an "INDEMNIFIED PARTY"), as the case may be, shall
promptly give written notice to the indemnifying party (the "INDEMNIFYING
PARTY") after obtaining knowledge of any third party claim or Litigation
against the Indemnified Party or as to which recovery may be sought against the
Indemnifying Party because of the indemnities set forth in Sections 7.2 or 7.3,
specifying in reasonable detail the third party claim or Litigation and the
basis for indemnification; provided, that the failure of an Indemnified Party
promptly to notify the Indemnifying Party of any such matter shall not release
the indemnifying party, in whole or in part, from its obligations under this
Article VII except to the extent the Indemnified Party's failure to so notify
in breach of this Section 7.4 materially prejudices the Indemnifying Party's
ability to defend against such third party claim or Litigation. The
Indemnifying Party shall have the right to assume the defense of any such third
party claim (other than (i) claims with respect to Litigation, (A) pending or
threatened as of the Closing or (B) otherwise related to the ordinary course
conduct of the Business prior to the Closing of a nature typically tendered by
the Companies to their errors and omissions insurance carrier and actually
tendered to the carrier under the insurance policy referred to in Section
2.4(a)(xvii) (the "PRE-CLOSING LITIGATION") other than as set forth on Schedule
7.4 and (ii) with respect to Taxes which are covered by Article VI), at its own
cost and expense, with counsel reasonably acceptable to the Indemnified Party
by giving written notice to the Indemnified Party of its agreement to assume
such defense within the lesser of (i) thirty (30) days after notice thereof has
been given to the Indemnifying Party, and (ii) three (3) Business Days prior to
the date required to answer or respond to any such claim (the "ELECTION
PERIOD"). Failure by the Indemnifying Party to notify the Indemnified Party of
its election to assume the defense of any such claim by a third party within
the Election Period shall be deemed a waiver by the Indemnifying Party of its
right to assume the defense of such claim, in which case the Indemnified Party
may defend or settle such claim in such manner and on such terms as the
Indemnified Party may deem
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appropriate and any Damages of the Indemnified Party shall be the liability of
the Indemnifying Party hereunder.
(b) The Purchaser shall manage the Pre-Closing Litigation in
the ordinary course and shall reasonably defend or settle such claims. The
Purchaser shall not enter into any settlement of Pre-Closing Litigation without
the consent of the Seller (not to be unreasonably withheld) if the amount to be
paid in settlement of such claim is not covered by insurance (excluding any
deductible).
(c) If the Indemnifying Party assumes the defense of any such
third party claim, the obligations of the Indemnifying Party under this
Agreement shall include taking all steps necessary in the investigation,
defense or settlement of such claim (including the retention of legal counsel)
and holding the Indemnified Party harmless from and against any and all Damages
caused by or arising out of any settlement approved by the Indemnifying Party
or any judgment in connection with such claim. The Indemnifying Party shall
not, in the defense of such claim, consent to entry of any judgment (except
with the written consent of the Indemnified Party), or enter into any
settlement (except with the written consent of the Indemnified Party): (i) that
does not include as an unconditional term thereof the giving by the claimant or
the plaintiff to the Indemnified Party(ies) a complete release from all
liability of the Indemnified Party(ies) in respect of such claim; or (ii) the
effect of which is to permit any injunction, declaratory judgment, other order
or other equitable relief to be entered, directly or indirectly, against any
Indemnified Party, or admit to any wrongdoing, whether civil or criminal in
nature. The Indemnifying Party shall notify the Indemnified Party as to the
existence of any offers to settle such claim, and the Indemnifying Party shall
not settle a claim, or refuse to settle a claim, if to the knowledge of the
Indemnifying Party (after notifying and consulting with the Indemnified Party)
such action or inaction would reasonably be expected to have a materially
adverse impact on the Indemnified Party or the Business. The Indemnifying Party
shall permit the Indemnified Party to participate in such defense or settlement
through counsel chosen by the Indemnified Party, with the fees and expenses of
such counsel borne by the Indemnified Party. The Indemnified Party shall
cooperate with the Indemnifying Party in the defense or settlement thereof, and
the Indemnifying Party shall reimburse the Indemnified Party for all its
reasonable out-of-pocket expenses in connection therewith. If the Indemnifying
Party elects to direct the defense of any such claim or proceeding, the
Indemnified Party shall not pay any part of any claim or demand arising from
such asserted liability unless the Indemnifying Party consents in writing (such
consent not to be unreasonably withheld) to such payment or unless the
Indemnifying Party withdraws from the defense of such asserted liability or
unless a final judgment is entered against the Indemnified Party for such
liability.
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(d) The Purchaser agrees to cooperate, and to cause each of
the Companies to cooperate, with the Seller in connection with the
investigation, negotiation, preparation for and/or defense of any third party
claim subject to indemnity hereunder, which cooperation shall include providing
the Seller with access to their employees and agents and with access to and the
opportunity to copy and otherwise use any documents or other records held by
any of them or otherwise under their control, in each case as the Seller may
reasonably request. In addition, the Purchaser agrees to make available to the
Seller those documents within its possession or control relating to any Claim
(as defined in the Consent Agreement) that may be requested by the Seller,
acting reasonably, to the extent required to be made available to JMB Southeast
Development, L.L.C., St. Xxx/Arvida Company, L.P. and their respective
Affiliates under the Consent Agreement in connection with any Claim; provided,
that no such information that is proprietary, competitive or of another
sensitive nature shall be required to be provided by the Purchaser hereunder
unless the Seller and JMB Southeast Development, L.L.C., St. Xxx/Arvida
Company, L.P. and their respective Affiliates, as applicable, enter into
customary confidentiality arrangements for the benefit of the Purchaser
acceptable to the Purchaser acting reasonably. The Seller agrees to reimburse
the Purchaser and the Companies for all reasonable out-of-pocket expenses
incurred by them in connection with the foregoing.
(e) If the Indemnified Party has been fully indemnified by
the Indemnifying Party for its Damages in respect of a third party claim and
the Indemnified Party has a cause of action against the third party raising the
claim or another third party, then the Indemnified Party shall assign any such
claim to the Indemnifying Party, to the extent any such claim is capable of
assignment and without making any representation as to or bearing any
responsibility for the effectiveness of such assignment.
SECTION 7.5 INDEMNITY PAYMENTS. All indemnity payments payable
under this Agreement ("INDEMNITY PAYMENTS"), shall be paid in immediately
available funds within five (5) Business Days after the later of (i) final
determination and written request therefor by the Indemnified Party. All such
Indemnity Payments shall be made to the accounts and in the manner specified in
writing by the party entitled to such Indemnity Payments.
SECTION 7.6 EXCLUSIVE REMEDY. Subject to Article VI, in the
absence of fraud or an intentional misrepresentation, the indemnification
provided by this Article VII shall be the sole and exclusive remedy in respect
of the Purchaser Indemnifiable Matters and the Seller Indemnifiable Matters. In
the absence of fraud or an intentional misrepresentation, the Seller's sole and
exclusive recourse in respect of any Purchaser Indemnifiable Matter shall be
pursuant to Section 7.3 of this Agreement, and subject to Article VI, the
Mortgage Purchaser's and the Purchaser's
63
sole and exclusive recourse in respect of any Seller Indemnifiable Matter shall
be pursuant to Section 7.2 of this Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 NOTICES. All notices or other communications
hereunder shall be deemed to have been duly given and made if in writing and if
served by personal delivery upon the party for whom it is intended, if
delivered by registered or certified mail, return receipt requested, or by a
national courier service, or if sent by facsimile. Any such notice shall be
deemed delivered (a) on the date delivered if by personal delivery, (b) on the
date upon which receipt is signed or delivery is made, (c) on the date upon
which the return receipt is signed or delivery is refused or the notice is
designated by the postal authorities as not deliverable, as the case may be, if
mailed by registered or certified mail, (d) on the next succeeding Business Day
if sent by national courier service, or (e) on the date sent by facsimile if
the appropriate facsimile confirmation is received by the sender.
To the Seller:
The St. Xxx Company
0000 Xxxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX
Attention: Xxxxxxx Xxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
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To the Purchaser:
NRT Incorporated
000 Xxxxxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
SECTION 8.2 AMENDMENT; WAIVER. Any provision of this Agreement
may be amended or waived if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by the Purchaser, the Seller
and the Companies or in the case of a waiver, by the party against whom the
waiver is to be effective. No failure or delay by any party in exercising any
right, power or privilege hereunder 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.
SECTION 8.3 ASSIGNMENT. No party to this Agreement may assign any
of its rights or obligations under this Agreement without the prior written
consent of the other party.
SECTION 8.4 ENTIRE AGREEMENT. This Agreement (including all
Schedules), the Related Agreements and the other agreements, documents and
instruments delivered in connection herewith contain the entire agreement
between the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, oral or written, with respect to such
matters.
SECTION 8.5 PARTIES IN INTEREST. This Agreement shall inure to
the benefit of and be binding upon the parties and their respective successors
and permitted assigns. Nothing in this Agreement, express or implied, is
intended to confer upon any Person other than the Purchaser, the Purchaser
Indemnified Parties, the Seller, the Companies, the Seller Indemnified Parties,
or their successors or permitted assigns, any rights or remedies under or by
reason of this Agreement.
65
SECTION 8.6 EXPENSES. All costs and expenses incurred by the
Purchaser in connection with this Agreement and the transactions contemplated
hereby shall be borne by the Purchaser, and all costs and expenses incurred by
the Seller and the Companies shall be borne by the Seller.
SECTION 8.7 GOVERNING LAW; JURISDICTION; SERVICE OF PROCESS. This
Agreement shall be governed by the Laws of the State of New York, without
giving effect to its rules of conflict of Laws. The Purchaser, the Seller and
the Companies hereby agree and consent to be subject to the jurisdiction of any
federal court sitting in the State of New York, and the jurisdiction of the
courts of the State of New York in any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby. Each
party hereby irrevocably consents to the service of any and all process in any
such suit, action or proceeding by the delivery of such process to such party
at the address and in the manner provided in Section 8.1.
SECTION 8.8 SPECIFIC PERFORMANCE. The parties agree that if any
of the provisions of this Agreement are not performed in accordance with their
specific terms or are otherwise breached, irreparable damage would occur, no
adequate remedy at Law would exist and damages would be difficult to determine,
and that the parties shall be entitled to specific performance of the terms of
this Agreement, in addition to any other remedy at law or equity.
SECTION 8.9 COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, and all of
which, when taken together, shall constitute one and the same agreement.
SECTION 8.10 HEADINGS. The heading references herein and in the
table of contents hereto are for convenience purposes only, do not constitute a
part of this Agreement, and shall not be deemed to limit or affect any of the
provisions of this Agreement.
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IN WITNESS WHEREOF, the parties have executed or caused this
Agreement to be executed as of the date first written above.
NRT INCORPORATED
By:/s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President
THE ST. XXX COMPANY
By:/s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President
ST. XXX REAL ESTATE SERVICES, INC.
By:/s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Vice President
EXHIBIT A
TAX CERTIFICATE
Section 1445 of the Internal Revenue Code provides that a
transferee of a U.S. real property interest must withhold tax if the transferor
is a foreign person. To inform the transferee that withholding of tax is not
required upon the disposition of a U.S. real property interest by [Seller], the
undersigned hereby certifies the following on behalf of [Seller].
1. [Seller] is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate (as
those terms are defined in the Internal Revenue Code
and Income Tax Regulations);
2. [Seller's] U.S. employer identification number is
___________, and
3. [Seller's] office address is:
_____________________________________________________
_____________________________________________________
[Seller] understands that this certification may be disclosed
to the Internal Revenue Service by transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.
Under penalties of perjury, I declare that I have examined
this certification and to the best of my knowledge and belief it is true,
correct, and complete, and I further declare that I have authority to sign this
document on behalf of [Seller].
Signature: ________________________
Signed by: ________________________
Title: ____________________
Date:
A-1
