<PAGE>
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
SCHEDULE TO
Tender Offer Statement
Under Section 14(d)(1) or 13(e)(1) of the Securities Exchange Act of 1934
----------------
Echelon International Corporation
(Name of Subject Company)
EIN Acquisition Corp.
(Name of Filing Person--Offeror)
Common Stock, par value $.01 per share
(Title of Class of Securities)
278747100
(CUSIP Number of Class of Securities)
James Haber
President
EIN Acquisition Corp.
ETA Holding LLC
950 Third Avenue, 23rd Floor
New York, New York 10022
Telephone: (212) 688-2700
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Filing Persons)
Copy to:
Stuart Bressman, Esq.
Robert M. Unger, Esq.
Brown Raysman Millstein Felder & Steiner LLP
120 West 45th Street
New York, New York 10036
Telephone: (212) 944-1515
CALCULATION OF FILING FEE
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Transaction Valuation* Amount of Filing Fee
- - ------------------------------------------------------------------------------
<S> <C>
$245,965,452 $49,193.09
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
</TABLE>
* Based on the offer to purchase all of the outstanding shares of Common
Stock of the Subject Company at $34.00 cash per share, 6,719,938 shares
outstanding and 514,340 shares reserved for issuance upon the exercise of
outstanding stock options as of December 31, 1999.
[_]Check the box if any part of the fee is offset as provided by Rule 0-
11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid:
Form or Registration No:
Filing Party:
Date Filed:
[_]Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which
the statement relates:
[X]third-party tender offer subject to Rule 14d-1.
[_]issuer tender offer subject to Rule 13e-4.
[_]going-private transaction subject to Rule 13e-3.
[_]amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the
results of the tender offer: [_]
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
<PAGE>
This Tender Offer Statement on Schedule TO relates to the offer by EIN
Acquisition Corp., a Florida corporation ("Purchaser") and a wholly-owned
subsidiary of ETA Holding LLC, a Delaware limited liability company
("Parent"), to purchase all of the issued and outstanding shares of common
stock, par value $.01 per share (the "Common Stock"), of Echelon International
Corporation, a Florida corporation (the "Company") and the associated
preferred share purchase rights (the "Rights" and, together with the Common
Stock, the "Shares"), at a purchase price of $34.00 per Share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated January 28, 2000 (the
"Offer to Purchase"), a copy of which is attached hereto as Exhibit (a)(1)(i),
and in the related Letter of Transmittal (which, together with the Offer to
Purchase, as amended or supplemented from time to time, constitute the
"Offer"), a copy of which is attached hereto as Exhibit (a)(1)(ii).
Item 1. Summary Term Sheet.
The information set forth in the Summary Term Sheet in the Offer to Purchase
is incorporated herein by reference.
Item 2. Subject Company Information.
(a) Name and address. The name of the subject company is Echelon
International Corporation. The Company's executive offices are located at 450
Carillon Parkway, Suite 200, St. Petersburg, Florida, 33716, telephone (727)
803-8200.
(b) Securities. The exact title of the class of equity securities being
sought in the Offer is common stock, par value $.01 per share, of the Company,
of which 6,946,523 shares were issued, 6,719,938 shares were outstanding,
6,121 shares were canceled, 220,464 shares were held in treasury and 514,340
shares were reserved for issuance upon the exercise of outstanding stock
options as of December 31, 1999. The information set forth in the Introduction
(the "Introduction") of the Offer to Purchase is incorporated herein by
reference.
(c) Trading market and price. The information set forth in Section 6 ("Price
Range of Shares; Dividends") of the Offer to Purchase is incorporated herein
by reference.
(d) Dividends. The information set forth in Section 6 ("Price Range of
Shares; Dividends") of the Offer to Purchase is incorporated herein by
reference.
(e) Prior public offerings. Neither Purchaser nor Parent has made an
underwritten public offering of the subject securities for cash during the
past three years that was registered under the Securities Act of 1933 or
exempt from registration under Regulation A promulgated thereunder.
(f) Prior stock purchases. Neither Purchaser nor Parent has purchased any
subject securities during the past two years.
Item 3. Identity and Background of Filing Person.
(a) Name and address. This Tender Offer Statement is filed by Purchaser and
Parent. The information set forth in Section 8 ("Certain Information
Concerning Purchaser and Parent") of the Offer to Purchase and on Schedule I
thereto is incorporated herein by reference.
(b) Business and background of entities. The information set forth in
Section 8 ("Certain Information Concerning Purchaser and Parent") of the Offer
to Purchase and on Schedule I thereto is incorporated herein by reference.
(c) Business and background of natural persons.
(1) and (2). The information set forth in Section 8 ("Certain Information
Concerning Purchaser and Parent") of the Offer to Purchase and on Schedule
I thereto is incorporated herein by reference.
2
<PAGE>
(3) and (4). During the last five years, none of Purchaser or Parent or,
to the best knowledge of Purchaser or Parent, any of the persons listed on
Schedule I to the Offer to Purchase (i) has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii)
was a party to any judicial or administrative proceeding (except for
matters that were dismissed without sanction or settlement) that resulted
in a judgment, decree or final order enjoining the person from future
violations of, or prohibiting activities subject to, federal or state
securities laws, or a finding of any violation of such laws.
(5). Country of citizenship. All of the persons listed on Schedule I to
the Offer to Purchase are citizens of the United States.
(d) Tender Offer. Purchaser hereby offers to purchase all of the outstanding
shares of Common Stock of the Company and the associated Rights at a purchase
price of $34.00 per Share, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in this Offer
to Purchase and in the related Letter of Transmittal. The principal offices of
the manager of Parent and the principal offices of Purchaser are located at
950 Third Avenue, New York, New York 10022, (212) 688-2700.
Item 4. Terms of the Transaction.
The information set forth in the Offer to Purchase is incorporated herein by
reference.
Item 5. Past Contacts, Transactions, Negotiations and Agreements.
(a) Transactions. During the past two years, there have been no transactions
that would be required to be disclosed under this Item 5 (a) between any of
Purchaser or Parent or, to the best knowledge of Purchaser and Parent, any of
the persons listed on Schedule I to the Offer to Purchase, and the Company or
any of its executive officers, directors or affiliates.
(b) Significant Corporate Events. The information set forth in the
Introduction, Section 10 ("Background of the Offer; Contacts with the
Company") and Section 11 ("The Merger Agreement") of the Offer to Purchase and
in Exhibit (a)(1)(i) of this Schedule TO is incorporated herein by reference.
Except as set forth in the Introduction, Section 10 and Section 11 of the
Offer to Purchase and in Exhibit (a)(1)(i) of this Schedule TO, there have
been no contacts, negotiations or transactions during the past two years which
would be required to be disclosed under this Item 5 (b) between any of
Purchaser or Parent or any of their respective subsidiaries or, to the best
knowledge of Purchaser and Parent, any of those persons listed on Schedule I
to the Offer to Purchase and the Company or its affiliates concerning a
merger, consolidation or acquisition, a tender offer or other acquisition of
securities, an election of directors or a sale or other transfer of a material
amount of assets.
(c), (d) and (e). Not Applicable.
Item 6. Purpose of the Tender Offer and Plans or Proposals of the Bidder.
(a) Purpose. The information set forth in the Introduction, Section 10
("Background of the Offer; Contacts with the Company"), Section 11 ("The
Merger Agreement"), Section 12 ("Purpose of the Offer; the Merger; Plans for
the Company") and Section 13 ("Dividends and Distributions") of the Offer to
Purchase is incorporated herein by reference.
(b) Use of Securities Acquired. Not applicable.
(c) Plans.
(1) and (2). The information set forth in the Introduction, Section 10
("Background of the Offer; Contacts with the Company"), Section 11 ("The
Merger Agreement"), Section 12 ("Purpose of the Offer; the Merger; Plans
for the Company") and Section 13 ("Dividends and Distributions") of the
Offer to Purchase is incorporated herein by reference.
3
<PAGE>
(3). The information set forth in Section 13 ("Dividends and
Distributions") of the Offer to Purchase is incorporated herein by
reference.
(4) and (5). The information set forth in Section 12 ("Purpose of the
Offer; the Merger; Plans for the Company") of the Offer to Purchase is
incorporated herein by reference.
(6) and (7). The information set forth in Section 14 ("Effect of the
Offer on the Market for the Shares, New York Stock Exchange Listing and
Exchange Act Registration") of the Offer to Purchase is incorporated herein
by reference.
(8), (9) and (10). Not applicable.
(d) Subject Company Negotiations. Not applicable.
Item 7. Source and Amount of Funds or Other Consideration.
The information set forth in Section 9 ("Source and Amount of Funds") of the
Offer to Purchase is incorporated herein by reference.
Item 8. Interest in Securities of the Subject Company.
(a) and (b). The information set forth in the Introduction and Section 8
("Certain Information Concerning Purchaser and Parent") of the Offer to
Purchase is incorporated herein by reference.
Item 9. Persons/Assets Retained, Employed or to be Compensated.
The information set forth in the Introduction and Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
Item 10. Financial Statements.
Not applicable.
Item 11. Additional Information.
(a) Agreements, regulatory requirements and legal proceedings. The
information set forth in Section 16 ("Certain Legal Matters and Regulatory
Approvals") of the Offer to Purchase is incorporated herein by reference.
(b) Other Material Information. The information set forth in the Offer to
Purchase and the Letter of Transmittal is incorporated herein by reference.
Item 12. Exhibits.
<TABLE>
<C> <S>
(a) (1)(i) Offer to Purchase dated January 28, 2000.
(a) (1)(ii) Letter of Transmittal.
(a) (1)(iii) Notice of Guaranteed Delivery.
(a) (1)(iv) Letter from the Dealer Manager to Brokers, Dealers, Commercial
Banks, Trust Companies and Nominees.
(a) (1)(v) Letter to clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Nominees.
(a) (1)(vi) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a) (1)(vii) Summary Advertisement as published on January 28, 2000.
</TABLE>
4
<PAGE>
<TABLE>
<C> <S>
(a) (1)(viii) Press Release dated January 22, 2000.
(b)(1) Credit Agreement dated as of January 21, 2000 among EIN
Acquisition Corp., Utrecht-America Finance Co., as Initial
Lender, and Cooperatieve Centrale Raiffeisen-Boerenleenbank
B.A., "Rabobank Nederland," New York Branch, as Agent (the
"Credit Agreement").
(b)(2) Security Agreement dated as of January 21, 2000 made by EIN
Acquisition Corp. in favor of Cooperatieve Centrale Raiffeisen-
Boerenleenbank B.A., "Rabobank Nederland," New York Branch, as
Agent for the lenders party to the Credit Agreement.
(c) Not applicable.
(d)(1) Agreement and Plan of Merger, dated as of January 21, 2000, by
and among Echelon International Corporation, EIN Acquisition
Corp. and ETA Holding LLC.
(d)(2) Purchase and Sale Agreement, dated as of January 21, 2000, by
and among Echelon International Corporation and certain of its
subsidiaries, collectively, as seller, and Echelon Residential
LLC, as buyer.
(d)(3) Subscription Agreement, dated as of January 21, 2000, by and
among Echelon International Corporation and certain of its
subsidiaries, collectively, as transferor, and Heller Affordable
Housing of Florida, Inc., as issuer.
(d)(4) Lease Agreement, dated as of January 21, 2000, between Heller
Affordable Housing of Florida, Inc., as Lessor, and Echelon
Commercial LLC, as Lessee.
(d)(5) Omnibus Agreement, dated January 21, 2000, between EIN
Acquisition Corp. and Heller Financial, Inc.
(d)(6) Purchase Agreement, dated as of January 13, 2000, by and between
Echelon International Corporation and Echelon Affordable
Housing, Inc., collectively, as sellers, and Heller Affordable
Housing, Inc., as purchaser.
<CAPTION>
(e) Not applicable.
<C> <S>
(f) Not applicable.
(g) None.
(h) None.
</TABLE>
Item 13. Information Required by Schedule 13E-3.
Not applicable.
5
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
ETA Holding LLC
By: ETA Holding Corp., its Manager
/s/ James Haber
By: _________________________________
James Haber
President
EIN Acquisition Corp.
/s/ James Haber
By: _________________________________
James Haber
President
Date: January 28, 2000
6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
No. Description No.
------- ----------- ----
<C> <S> <C>
(a)(1)(i) Offer to Purchase dated January 28, 2000..................
(a)(1)(ii) Letter of Transmittal.....................................
(a)(1)(iii) Notice of Guaranteed Delivery.............................
(a)(1)(iv) Letter from the Dealer Manager to Brokers, Dealers,
Commercial Banks,
Trust Companies and Nominees..............................
(a)(1)(v) Letter to clients for use by Brokers, Dealers, Commercial
Banks, Trust
Companies and Nominees....................................
(a)(1)(vi) Guidelines for Certification of Taxpayer Identification
Number on
Substitute Form W-9.......................................
(a)(1)(vii) Summary Advertisement as published on January 28, 2000....
(a)(1)(viii) Press Release dated January 22, 2000......................
(b)(1) Credit Agreement dated as of January 21, 2000 among EIN
Acquisition
Corp., Utrecht-America Finance Co., as Initial Lender, and
Cooperatieve
Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank
Nederland," New York
Branch, as Agent (the "Credit Agreement").................
(b)(2) Security Agreement dated as of January 21, 2000 made by
EIN Acquisition Corp.
in favor of Cooperatieve Centrale Raiffeisen-
Boerenleenbank B.A.,
"Rabobank Nederland," New York Branch, as Agent for the
lenders party to
the Credit Agreement......................................
(d)(1) Agreement and Plan of Merger, dated as of January 21,
2000, by and among
ETA Holding LLC, EIN Acquisition Corp. and Echelon
International Corporation.................................
(d)(2) Purchase and Sale Agreement, dated January 21, 2000, by
and among Echelon International Corporation and certain of
its subsidiaries, collectively, as seller,
and Echelon Residential LLC, as buyer.....................
(d)(3) Subscription Agreement, dated as of January 21, 2000, by
and among Echelon International Corporation and certain of
its subsidiaries, collectively, as transferor
and Heller Affordable Housing of Florida, Inc., as
issuer....................................................
(d)(4) Lease Agreement, dated as of January 21, 2000, between
Heller Affordable
Housing of Florida, Inc., as Lessor, and Echelon
Commercial LLC, as Lessee.................................
(d)(5) Omnibus Agreement, dated January 21, 2000, between EIN
Acquisition Corp.
and Heller Financial, Inc.................................
(d)(6) Purchase Agreement, dated as of January 13, 2000, by and
between Echelon International Corporation and Echelon
Affordable Housing, Inc., collectively, as sellers and
Heller Affordable Housing, Inc., as purchaser.............
</TABLE>
7
<PAGE>
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Echelon International Corporation
at
$34.00 Net Per Share
by
EIN Acquisition Corp.
a wholly-owned subsidiary of
ETA Holding LLC
---------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, FEBRUARY 29, 2000, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT
NUMBER OF SHARES (THE "SHARES") OF COMMON STOCK OF ECHELON INTERNATIONAL
CORPORATION (THE "COMPANY") WHICH, TOGETHER WITH THE SHARES OWNED BY ETA
HOLDING LLC ("PARENT") AND EIN ACQUISITION CORP. ("PURCHASER"), IF ANY,
CONSTITUTES MORE THAN 80% OF ALL SHARES OF THE COMPANY OUTSTANDING (DETERMINED
ON A FULLY-DILUTED BASIS) (THE "MINIMUM CONDITION") AND (II) THE EXPIRATION OR
TERMINATION OF ANY AND ALL WAITING PERIODS UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED APPLICABLE TO THE TRANSACTIONS
CONTEMPLATED BY THE MERGER AGREEMENT (AS DEFINED BELOW). THE OFFER IS ALSO
SUBJECT TO OTHER TERMS AND CONDITIONS. SEE THE INTRODUCTION AND SECTIONS 1
AND 15.
THE OFFER IS BEING MADE IN CONNECTION WITH THE AGREEMENT AND PLAN OF MERGER,
DATED AS OF JANUARY 21, 2000, BY AND AMONG THE COMPANY, PARENT AND PURCHASER
(THE "MERGER AGREEMENT"). THE COMPANY HAS ADVISED PARENT THAT THE BOARD OF
DIRECTORS OF THE COMPANY (WITH TWO INTERESTED DIRECTORS ABSTAINING) HAS
APPROVED THE OFFER, HAS DETERMINED THAT THE OFFER IS FAIR TO, AND IN THE BEST
INTERESTS OF, THE COMPANY'S STOCKHOLDERS AND RECOMMENDS THAT THE COMPANY'S
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
---------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares (as defined herein) should either (1) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in
the Letter of Transmittal, mail or deliver the Letter of Transmittal (or such
facsimile) and any other required documents to the Paying Agent (as defined
herein), and either deliver the certificates evidencing the tendered Shares
and any other required documents to the Paying Agent or tender such Shares
pursuant to the procedure for book-entry transfer set forth in Section 3, or
(2) request such stockholder's broker, dealer, commercial bank, trust company
or other nominee to effect the transfer for such stockholder. Stockholders
having Shares registered in the name of a broker, dealer, commercial bank,
trust company or other nominee must contact such broker, dealer, commercial
bank, trust company or other nominee if they desire to tender Shares so
registered.
A stockholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available, or who cannot comply
with the procedure for book-entry transfer on a timely basis, may tender such
Shares by following the procedures for guaranteed delivery set forth in
Section 3.
Questions and requests for assistance may be directed to the Dealer Manager
or the Information Agent at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Additional copies of
this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may also be obtained from the Information Agent, or from brokers,
dealers, commercial banks or trust companies.
The Dealer Manager for the Offer is:
Georgeson Shareholder Securities Corporation
17 State Street, 10th Floor
New York, New York 10004
January 28, 2000
Page 1 of 81 Pages
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SUMMARY TERM SHEET........................................................ i
INTRODUCTION.............................................................. 1
THE TENDER OFFER.......................................................... 3
1.Terms of the Offer; Expiration Date.................................. 3
2.Acceptance for Payment and Payment for Shares........................ 4
3.Procedure for Accepting the Offer and for Tendering Shares........... 5
4.Withdrawal Rights.................................................... 8
5.Certain Federal Income Tax Consequences.............................. 8
6.Price Range of Shares; Dividends..................................... 10
7.Certain Information Concerning the Company........................... 10
8.Certain Information Concerning Purchaser and Parent.................. 14
9.Source and Amount of Funds........................................... 15
10.Background of the Offer; Contacts with the Company................... 18
11.The Merger Agreement................................................. 22
12.Purpose of the Offer; the Merger; Plans for the Company.............. 36
13.Dividends and Distributions.......................................... 62
14.Effect of the Offer on the Market for the Shares, New York Stock
Exchange Listing and Exchange Act Registration..................... 63
15.Certain Conditions of the Offer...................................... 64
16.Certain Legal Matters and Regulatory Approvals....................... 66
17.Fees and Expenses.................................................... 68
18.Miscellaneous........................................................ 68
</TABLE>
EXHIBIT A Section 607.1320, Florida Business Corporation Act--Dissenter's
Rights
SCHEDULE I Certain Information Regarding the Directors and Executive Officers
of Purchaser and Parent
<PAGE>
Summary Term Sheet
<TABLE>
<C> <S>
Offeror.......................... We are EIN Acquisition Corp., a Florida
corporation wholly-owned by ETA Holding
LLC, a Delaware limited liability company.
Class and Amount of Securities
Sought in the Tender Offer: .... We are offering to purchase all of the
outstanding shares of common stock, par
value $0.01 per share, of Echelon
International Corporation, a Florida
corporation, and the preferred share
purchase rights associated with such
shares, pursuant to an Agreement and Plan
of Merger among us, our parent, and
Echelon.
Offer Price and Form of Payment.. $34.00 net per share; cash
Offeror's Financial Resources.... We have obtained financing in the form of a
loan for the entire amount of the Offer
Price that we are paying to shareholders of
Echelon pursuant to the tender offer.
Expiration Date.................. Unless the tender offer is extended as set
forth below, you have until 12:00 Midnight,
New York City time, on Tuesday, February
29, 2000, to tender your shares in the
tender offer.
Extension of Tender Offer We may extend the period of time during
Period.......................... which you may tender your shares in the
tender offer if the conditions to the
tender offer specified below are not
satisfied by the expiration date set forth
above, unless the merger agreement relating
to the tender offer is terminated as a
consequence of such delays or otherwise.
Notice of Extension.............. If we extend the tender offer period, we
will notify the paying agent for the tender
offer and publish a public announcement of
the extension in the national edition of
the New York Times.
Conditions to the Tender Offer... Our obligation to purchase your shares in
the tender offer is subject to the
following conditions:
. at least 80% of the outstanding shares
of Echelon must be validly tendered in
the tender offer;
. no action shall have been taken by any
court or agency (and no law shall be in
effect) that would:
. make the tender offer or the related
merger illegal;
. impede, delay or prohibit the tender
offer or the related merger;
. materially limit our ownership or
operation of the business or assets of
Echelon;
. materially limit our ability to exercise
the rights, including the voting rights,
associated with ownership of shares of
Echelon;
. require us to divest ourselves of shares
of Echelon;
. materially and adversely affect the
condition of Echelon and its
subsidiaries, taken as a whole.
. no directive or bulletin shall have been
issued by any government agency or
manufacturer that would result in a
material increase in the cost of
maintaining Echelon's aircraft;
</TABLE>
i
<PAGE>
<TABLE>
<C> <S>
. no change shall have occurred that would
have a material adverse effect on
Echelon's portfolio of leveraged lease
assets, taken as a whole (other than any
change arising in the ordinary course of
business or arising out of general
economic conditions);
. none of the representations or
warranties made by Echelon in the merger
agreement shall be materially untrue or
incorrect, subject to certain
qualifications and limitations;
. Echelon's board of directors shall not
have withdrawn, modified or amended in
any respect adverse to us its
recommendation of the tender offer;
. Echelon shall have performed in all
material respects its obligations under
the merger agreement and the related
escrow agreements;
. no person, entity or group (other than
us) shall have acquired beneficial
ownership of more than 20% of the
outstanding voting securities of
Echelon;
. the agreements pursuant to which the
surviving corporation in the merger will
sell and/or transfer certain real estate
assets of Echelon shall not have been
terminated;
. all of the conditions precedent to the
transactions described in the agreements
relating to the sale and/or transfer of
Echelon's real estate assets shall have
been satisfied or waived and the
deliveries required to be made pursuant
to those agreements shall have been
made;
. the escrow agreements referred to in the
merger agreement shall not have been
terminated by Echelon;
. none of the lessees which are party to
the leases in Echelon's portfolio of
leveraged leases shall have committed
any defaults or events of default under
those leases that, individually or
collectively, would have a material
adverse effect on Echelon's portfolio of
leveraged leases, taken as a whole.
Procedure for Tendering.......... If you wish to tender all or any portion of
your shares in the tender offer, you must
either comply with the following steps 1
through 4 or ask your broker, dealer,
commercial bank, trust company or other
nominee to effect the transfer on your
behalf. (If your shares are registered in
the name of a broker, dealer, commercial
bank, trust company or other nominee, you
must contact that entity if you wish to
tender your shares.)
If you do not effect the tender of your
shares through a broker, dealer, commercial
bank, trust company or other nominee, you
must:
1. complete and sign the Letter of
Transmittal that accompanies this Offer
to Purchase in accordance with the
instructions in the Letter of
Transmittal;
</TABLE>
ii
<PAGE>
<TABLE>
<C> <S>
2. mail or deliver the Letter of
Transmittal and any other required
documents to the paying agent for the
tender offer at the address on the back
page of the Offer to Purchase;
3. either deliver the certificates
evidencing your tendered shares and any
other required documents to the paying
agent or tender your shares pursuant to
the procedure for book-entry transfer in
Section 3 of the Offer to Purchase;
4. if the certificates evidencing your
shares are not immediately available, or
you cannot comply with the procedure for
book-entry transfer on a timely basis,
you may tender your shares by following
the procedures for guaranteed delivery
in Section 3 of the Offer to Purchase.
Questions and requests for assistance may
be directed to the dealer manager or the
information agent for the tender offer at
their respective addresses and telephone
numbers on the back cover of the Offer to
Purchase.
</TABLE>
Withdrawal of Previously
Tendered Shares.............. If you decide that you do not want to
participate in the tender offer after you have
already tendered your shares, you may withdraw
from the tender offer at any time prior to
12:00 Midnight, New York City time, on Tuesday,
February 29, 2000, or, unless we have already
accepted your shares for payment, at any time
subsequent to March 28, 2000.
You may withdraw your previously tendered
shares from the tender offer by sending a
written notice of withdrawal to the paying
agent for the tender offer at one of its
addresses on the back cover of the Offer to
Purchase.
Your notice of withdrawal must specify your
name, the number of shares to be withdrawn and
the name of the registered holder, if different
from yours.
Withdrawals of shares may not be rescinded. If
you properly withdraw your shares, they will be
deemed not to have been validly tendered for
purposes of the tender offer. You may, however,
re-tender your shares at any time prior to the
expiration date of the tender offer set forth
above.
For more information about the procedures for
withdrawing from the tender offer, you should
review Section 4 of the Offer to Purchase.
Approval of the Tender Offer
by the The board of directors of Echelon (with two
Board of Directors of interested directors abstaining) has approved
Echelon...................... the tender offer. The board of directors has
determined that the tender offer is fair to
you, and in your best interests as a
shareholder of Echelon. The board of directors
recommends that you accept the offer and tender
your shares in the tender offer.
iii
<PAGE>
Merger Agreement.............
We will not be obligated to purchase shares in
the tender offer unless at least 80% of all of
the outstanding shares of Echelon are tendered
in the tender offer.
If, however, this condition and the other
conditions of the tender offer set forth above
are satisfied, we will immediately merge with
and into Echelon pursuant to the "short-form"
merger provisions of Section 607.1104 of the
Florida Business Corporation Act. We will not
need your vote, or the vote of any other
shareholder, to approve the merger.
Dissenter's Rights........... If you decide not to tender your shares in the
tender offer and the merger is effected, your
rights as a shareholder of Echelon will be
limited to the rights to receive a cash payment
equal to the price per share being paid in the
tender offer, or to dissent under the
provisions of the Florida Business Corporation
Act. If you comply with these provisions, your
shares, at the effective time of the merger,
will not entitle you to the offer price that we
are paying in the tender offer. You will
instead be entitled to receive whatever
consideration may be determined to be due to
you by a court pursuant to the applicable
provision of the Florida Business Corporation
Act. Your right to seek an appraisal under
Florida law may be forfeited if you or the
surviving corporation in the merger fails to
file a petition in accordance with Florida law
seeking a determination of the value of your
shares.
Recent Market Value
of shares of Echelon......... On January 20, 2000, the last full trading day
prior to announcement of the tender offer, the
last sale price per share reported on the New
York Stock Exchange was $23.94.
On January 21, 2000, the day before the
announcement of the tender offer, the last sale
price per share reported on the New York Stock
Exchange was $27.56 before trading in the
Company's securities on that exchange was
halted.
On January 27, 2000, the last full trading day
before commencement of the tender offer, the
closing sale price per share reported on the
New York Stock Exchange was $32.56.
Plans for the Company........ Immediately after the consummation of the
tender offer and the related merger, we intend
to:
. sell certain of Echelon's real estate assets
to affiliates of Equis Financial Group for
approximately $33 million (including
reimbursement of approved capital
expenditures);
. convey certain of Echelon's other real
estate assets (constituting substantially
the balance of Echelon's real estate
portfolio) to an affiliate of Heller
Financial, Inc. (which will, in turn, lease
these assets to another affiliate of Equis),
for approximately $51.3 million and $2
million of preferred stock;
iv
<PAGE>
. sell Echelon's interest in eighteen aircraft
included in its portfolio of leveraged
leases to another affiliate of Heller for
approximately $130.3 million; and
. reincorporate in the State of Delaware by
merging the surviving corporation with and
into a Delaware corporation that is wholly
owned by the parent of the Offeror.
Prior to the tender offer, Echelon sold its
investments in low income housing tax credit
partnerships to a third affiliate of Heller,
for approximately $21.1 million.
We expect to use the proceeds of these sales to
repay the indebtedness that we incurred to
finance the tender offer.
Subsequent to these transactions Echelon's
remaining assets will consist of cash and its
interests in two properties included in its
leveraged lease portfolio, an office building
leased to Union Bank in Monterey Park,
California, and a locomotive and related
rolling stock leased to Consolidated Rail
Corporation.
Further Information.......... Questions or requests for assistance may be
directed to the Information Agent or to the
Dealer Manager at their respective addresses
and telephone numbers set forth below:
The Information Agent for the tender offer is:
Georgeson Shareholder Communications Inc.
17 State Street, 10th Floor
New York, New York 10004
Banks & Brokers Call Collect : (212) 440-9884
All Others Call Toll-Free: (800) 223-2064
The Dealer Manager for the tender offer is:
Georgeson Shareholder Securities Corporation
17 State Street, 10th Floor
New York, New York 10004
Banks & Brokers Call Collect : (212) 440-9084
All Others Call Toll-Free: (800) 445-1790
You may also contact you broker, dealer,
commercial bank or trust company for assistance
concerning the tender offer.
v
<PAGE>
To the Holders of Common Stock of
Echelon International Corporation:
INTRODUCTION
EIN Acquisition Corp., a Florida corporation ("Purchaser") and a wholly-
owned subsidiary of ETA Holding LLC, a Delaware limited liability company
("Parent"), hereby offers to purchase all of the outstanding shares of Common
Stock, par value $0.01 per share (the "Common Stock"), of Echelon
International Corporation, a Florida corporation (the "Company"), and the
associated preferred share purchase rights (the "Rights" and, together with
the Common Stock, the "Shares") at a purchase price of $34.00 per Share (the
"Offer Price"), net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in this Offer to Purchase and in
the related Letter of Transmittal (which, as amended or supplemented from time
to time, together constitute the "Offer").
Tendering stockholders who have Shares registered in their own name and who
tender directly to the Paying Agent will not be obligated to pay brokerage
fees or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the transfer and sale of Shares pursuant
to the Offer. Purchaser will pay all fees and expenses of Georgeson
Shareholder Securities Corporation ("Georgeson") which is acting as Dealer
Manager for the Offer (in such capacity, the "Dealer Manager"), EquiServe,
L.P., which is acting as Paying Agent for the Offer (in such capacity, the
"Paying Agent"), and Georgeson Shareholder Communications Inc., which is
acting as the Information Agent for the Offer (the "Information Agent"),
incurred in connection with the Offer. See Section 17.
THE COMPANY HAS ADVISED PARENT THAT THE BOARD OF DIRECTORS OF THE COMPANY
(THE "BOARD OF DIRECTORS") HAS (WITH TWO INTERESTED DIRECTORS ABSTAINING)
APPROVED THE OFFER, HAS DETERMINED THAT THE OFFER IS FAIR TO, AND IN THE BEST
INTERESTS OF, THE COMPANY'S STOCKHOLDERS AND RECOMMENDS THAT THE COMPANY'S
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
The Offer is conditioned upon, among other things (i) there being validly
tendered and not properly withdrawn prior to the Expiration Date (as defined
in Section 1) that number of Shares which, together with the Shares owned by
Parent and Purchaser, if any, constitutes more than 80% of all Shares of the
Company outstanding (determined on a fully-diluted basis) (the "Minimum
Condition") and (ii) the expiration or termination of any and all waiting
periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act") applicable to the transactions contemplated by the
Merger Agreement. The Offer is also subject to other terms and conditions. See
Sections 1 and 15. If Purchaser purchases not less than that number of Shares
needed to satisfy the Minimum Condition, it will be able to effect the Merger
without the affirmative vote of any other stockholder of the Company. See
Section 12.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of January 21, 2000 (the "Merger Agreement"), among Parent, Purchaser and
the Company. The Merger Agreement provides, among other things, for the making
of the Offer by Purchaser, and further provides that, following the completion
of the Offer, upon the terms and subject to the conditions of the Merger
Agreement and the Florida Business Corporation Act (the "FBCA"), Purchaser
will be merged with and into the Company (the "Merger"). Following the Merger,
the Company will continue as the surviving corporation (the "Surviving
Corporation") and become a wholly-owned subsidiary of Parent, and the separate
corporate existence of Purchaser will cease. Thereafter, the Merger Agreement
requires that, immediately following the earlier to occur of (i) the twelfth
(12th) business day following consummation of the sale and/or transfer of
certain real estate assets of the Company as described in Section 12 below
under "Plans for the Company -- Sale of Assets to Buyer" and "-- Conveyance of
Lessor Assets to Lessor" and (ii) the consummation of the purchase and sale of
the Company's beneficial interests in
1
<PAGE>
the trust estates with respect to certain of the aircraft identified in the
Merger Agreement, the Company will merge with and into EIN Corp., a Delaware
corporation wholly-owned by Parent that has been incorporated for the sole
purpose of reincorporating the Surviving Corporation in Delaware. See Section
12 of this Offer to Purchase.
At the effective time of the Merger (the "Effective Time"), each Share
issued and outstanding immediately prior to the Effective Time (other than
Shares held in the treasury of the Company or each Share owned by Parent,
Purchaser or any other direct or indirect subsidiary of Parent or of the
Company, which shall be canceled), and other than Shares, if any
(collectively, "Dissenting Shares"), held by stockholders who have properly
exercised rights under Section 607.1320 of the FBCA), will be canceled,
extinguished and converted into the right to receive $34.00 in cash (the
"Merger Consideration"), payable to the holder thereof, without interest
thereon, upon surrender of the certificate formerly representing such Share,
less any required withholding taxes.
The Company has represented to Parent that (i) as of December 31, 1999,
6,946,523 shares of Common Stock were issued, of which 6,719,938 shares were
outstanding, 6,121 shares were canceled, 220,464 shares were held in treasury
and 514,340 shares were reserved for issuance upon the exercise of outstanding
stock options. Based upon the foregoing, if Purchaser acquires at least
5,787,423 Shares in the Offer, the Minimum Condition will be satisfied.
Accordingly, Purchaser would have sufficient voting power to approve the
Merger without the affirmative vote of any other stockholder.
The Merger Agreement is more fully described in Section 11. Certain federal
income tax consequences of the sale of the Shares pursuant to the Offer and
the exchange of Shares for the Merger Consideration pursuant to the Merger are
described in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE WITH RESPECT TO THE OFFER.
2
<PAGE>
THE TENDER OFFER
1. Terms of the Offer; Expiration Date. Upon the terms and subject to the
conditions of the Offer (including if the Offer is extended or amended, the
terms and conditions of such extension or amendment), Purchaser will accept
for payment and pay for all Shares validly tendered prior to the Expiration
Date (as defined below) and not properly withdrawn as permitted by Section 4.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Tuesday, February 29, 2000, unless and until Purchaser, in its sole discretion
(but subject to the terms and conditions of the Merger Agreement), shall have
extended the period during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as
so extended by Purchaser, shall expire.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Condition and certain other conditions. The Merger Agreement and the
Offer may be terminated by Purchaser and Parent if certain events occur. The
Offer is also subject to other terms and conditions. See Section 15. Subject
to the provisions of the Merger Agreement and the applicable rules and
regulations of the Securities and Exchange Commission (the "Commission"),
Purchaser reserves the right, in its sole discretion, to waive any or all
conditions to the Offer (other than the Minimum Condition) and to make any
other changes in the terms and conditions of the Offer. Subject to the
provisions of the Merger Agreement, including the provisions of the Merger
Agreement set forth in the next paragraph, and the applicable rules and
regulations of the Commission, if by the Expiration Date any or all of such
conditions to the Offer have not been satisfied, Purchaser reserves the right
(but shall not be obligated) to (i) terminate the Offer and return all
tendered Shares to tendering stockholders, (ii) waive such unsatisfied
conditions (other than the Minimum Condition) and purchase all Shares validly
tendered or (iii) extend the Offer and, subject to the terms of the Offer
(including the rights of stockholders to withdraw their Shares), retain the
Shares which have been tendered, until the termination of the Offer, as
extended.
Subject to the applicable rules and regulations of the Commission and the
terms of the Merger Agreement, Purchaser expressly reserves the right, in its
sole discretion, at any time and from time to time, and regardless of whether
any of the events set forth in Section 15 shall have occurred, to (i) extend
the period of time during which the Offer is open and thereby delay acceptance
for payment of, and the payment for, any Shares, by giving oral or written
notice of such extension to the Paying Agent and by making a public
announcement of such extension, and (ii) amend the Offer in any respect by
giving oral or written notice of such amendment to the Paying Agent. During
any such extension, all Shares previously tendered and not properly withdrawn
will remain subject to the Offer, subject to the right of a tendering
stockholder to withdraw such stockholder's Shares. Under the terms of the
Merger Agreement, however, unless previously approved by the Company in
writing, Purchaser may not change the Minimum Condition or decrease the price
per Share payable in the Offer, add to the conditions to the Offer, change the
form of consideration payable in the Offer, reduce the maximum number of
Shares to be purchased in the Offer, amend the terms or conditions to the
Offer to impose conditions or terms to the Offer in addition to those set
forth in Section 15 which, in either case, are adverse to the holders of
Shares, or, except as permitted by the Merger Agreement, extend the Offer
beyond any scheduled expiration date. Purchaser shall have no obligation to
pay interest on the Offer Price of tendered Shares. The rights reserved by
Purchaser in this paragraph are in addition to Purchaser's rights to terminate
the Offer as described in Section 15.
Any extension, delay, termination, waiver or amendment of the Offer will be
followed (as promptly as practicable) by public announcement thereof, and such
announcement in the case of an extension will be made in accordance with Rule
14e-1(d) no later than 9:00 A.M., New York City time, on the next business day
after the previously scheduled Expiration Date. Without limiting the manner in
which Purchaser may choose to make any public announcement, except as provided
by applicable law (including Rules 14d-4(c) and 14(d)-6(d) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), which
require that material changes be promptly disseminated to holders of Shares),
Purchaser shall have no obligation to publish, advertise or otherwise
communicate any such public announcement other than by issuing a release to
the Dow Jones News Service.
3
<PAGE>
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will disseminate additional tender offer material and extend
the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1(d)
under the Exchange Act. The minimum period during which an offer must remain
open following material changes in the terms of the offer, other than a change
in price or a change in the percentage of securities sought, will depend upon
the facts and circumstances, including the materiality, of the changes. With
respect to a change in price or, subject to certain limitations, a change in
the percentage of securities sought, a minimum ten business day period from
the date of such change is generally required to allow for adequate
dissemination to stockholders. For purposes of the Offer, a "business day"
means any day other than a Saturday, Sunday, or a federal holiday and consists
of the time period from 12:01 A.M. through 12:00 Midnight, New York City time.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of
Transmittal and other relevant materials will be mailed by Purchaser to record
holders of Shares whose names appear on the Company's stockholder list and
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
list or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
2. Acceptance for Payment and Payment for Shares. Upon the terms and subject
to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any such extension or amendment),
Purchaser will accept for payment, and will pay for, all Shares validly
tendered prior to the Expiration Date and not properly withdrawn as soon as
practicable after the later to occur of (i) the Expiration Date and (ii) the
satisfaction or waiver of the conditions of the Offer set forth in Section 15,
including without limitation the expiration or termination of any waiting
period under the HSR Act applicable to the consummation of the transactions
contemplated by the Merger Agreement following the Merger. In addition,
subject to applicable rules of the Commission, Purchaser expressly reserves
the right to delay acceptance for payment of or payment for Shares pending
receipt of any other regulatory approvals specified in Section 16. Any such
delays will be effected in compliance with Rule 14e-1(c) under the Exchange
Act. See Section 16.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Paying Agent of (i)
certificates evidencing such Shares ("Share Certificates") or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares into the Paying Agent's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in
Section 3, (ii) the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message (as defined below) in connection with a book-entry transfer,
and (iii) any other documents required by the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Paying Agent and forming a part of
a Book-Entry Confirmation, which states that the Book-Entry Transfer Facility
has received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that
Purchaser may enforce such agreement against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the Paying
Agent of Purchaser's acceptance for payment of such Shares pursuant to the
Offer. Upon the terms and subject to the conditions of the Offer, payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of
the Offer Price therefor with the Paying Agent, which will also act as Paying
Agent for tendering stockholders for the purpose of receiving payments from
Purchaser and transmitting such payments to tendering stockholders whose
Shares have been accepted for payment. Under no circumstances will interest on
the purchase price for Shares be paid by Purchaser, regardless of any
extension of the Offer or any delay in making such payment. Upon deposit of
funds with the Paying Agent for the purpose of making
4
<PAGE>
payments to tendering stockholders, Purchaser's obligation to make such
payment is satisfied, and tendering stockholders must thereafter look solely
to the Paying Agent for payment of amounts owed to them by reason of the
acceptance for payment of Shares pursuant to the Offer.
If for any reason whatsoever acceptance for payment of, or payment for, any
Shares tendered pursuant to the Offer is delayed or Purchaser is unable to
accept for payment, or pay for, Shares tendered pursuant to the Offer, then
without prejudice to Purchaser's rights set forth herein, the Paying Agent may
nevertheless, on behalf of Purchaser and subject to Rule 14e-1(c) under the
Exchange Act, retain tendered Shares and such Shares may not be withdrawn
except to the extent that the tendering stockholder is entitled to and duly
exercises withdrawal rights as described in Section 4.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer or if Share Certificates are
submitted for more Shares than are tendered, Share Certificates evidencing
unpurchased or untendered Shares will be returned without expense to the
tendering stockholder (or, in the case of Shares tendered by book-entry
transfer into the Paying Agent's account at the Book-Entry Transfer Facility
pursuant to the procedures set forth in Section 3, such Shares will be
credited to an account maintained at the Book-Entry Transfer Facility), as
promptly as practicable following the expiration, termination or withdrawal of
the Offer.
Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to one or more of its affiliates the right to purchase all or
any portion of the Shares tendered pursuant to the Offer, but any such
transfer or assignment will not relieve Purchaser of its obligations under the
Offer and will in no way prejudice the rights of tendering stockholders to
receive payment for Shares validly tendered and accepted for payment pursuant
to the Offer.
If, prior to the Expiration Date, Purchaser increases the Offer Price, such
increased consideration will be paid to all stockholders whose Shares are
purchased pursuant to the Offer, whether or not such Shares were tendered
prior to such increased consideration.
3. Procedures for Accepting the Offer and for Tendering Shares. Valid
Tenders. Except as set forth below, in order for Shares to be validly tendered
pursuant to the Offer, the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer of
Shares, and any other documents required by the Letter of Transmittal, must be
received by the Paying Agent at one of its addresses set forth on the back
cover of this Offer to Purchase prior to the Expiration Date, or the tendering
stockholder must comply with the guaranteed delivery procedure set forth
below, and either (i) Share Certificates evidencing tendered Shares must be
received by the Paying Agent at such address or such Shares must be tendered
pursuant to the procedures for book-entry transfer described below and a Book-
Entry Confirmation must be received by the Paying Agent, or (ii) the tendering
stockholder must comply with the guaranteed delivery procedures described
below.
Book-Entry Transfer. The Paying Agent will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the system of the Book-Entry
Transfer Facility may make book-entry delivery of Shares by causing the Book-
Entry Transfer Facility to transfer such Shares into the Paying Agent's
account at the Book-Entry Transfer Facility in accordance with the Book-Entry
Transfer Facility's procedures for such transfer. However, although delivery
of Shares may be effected through book-entry transfer at the Book-Entry
Transfer Facility, the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or an Agent' s Message in connection with a book-entry transfer,
and any other documents required by the Letter of Transmittal, must, in any
case, be received by the Paying Agent at one of its addresses set forth on the
back cover of this Offer to Purchase prior to the Expiration Date, or the
tendering stockholder must comply with the guaranteed delivery procedures
described below.
5
<PAGE>
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH
THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO
THE PAYING AGENT.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE PAYING AGENT (INCLUDING, IN THE
CASE OF BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Signature Guarantees. Signatures on Letters of Transmittal must be
guaranteed by a firm which is a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the
Securities Transfer Agents Medallion Program, or by any other "eligible
guarantor institution," as such term is defined in Rule 17Ad-15 under the
Exchange Act (each of the foregoing being referred to as an "Eligible
Institution"), except in cases where Shares are tendered (i) by a registered
holder of Shares who has not completed either the box labeled "Special Payment
Instructions" or the box labeled "Special Delivery Instructions" on the Letter
of Transmittal or (ii) for the account of an Eligible Institution. See
Instructions 1 and 5 of the Letter of Transmittal.
If the Share Certificates are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made, or Share
Certificates not accepted for payment or not tendered are to be returned, to a
person other than the registered holder, the Share Certificates must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name of the registered holder appears on such certificates,
with the signatures on such certificates or stock powers guaranteed as
aforesaid. See Instructions 1 and 5 of the Letter of Transmittal.
If Share Certificates are forwarded separately to the Paying Agent, a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) must accompany each such delivery.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates evidencing such Shares are
not immediately available, or such stockholder cannot deliver the Share
Certificates and all other required documents to reach the Paying Agent on or
prior to the Expiration Date, or such stockholder cannot complete the
procedure for delivery by book-entry transfer on a timely basis, such Shares
may nevertheless be tendered, provided that all of the following conditions
are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Purchaser, is
received by the Paying Agent as provided below prior to the Expiration
Date; and
(iii) the Share Certificates (or a Book-Entry Confirmation), representing
all tendered Shares, in proper form for transfer, together with the Letter
of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message) and any other documents required
by the Letter of Transmittal, are received by the Paying Agent within three
New York Stock Exchange trading days after the date of execution of such
Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, telex, facsimile transmission or mail to the Paying Agent and must
include a guarantee by an Eligible Institution and a representation that the
stockholder owns the Shares tendered within the meaning of, and that the
tender of the Shares effected thereby complies with, Rule 14e-4 under the
Exchange Act, each in the form set forth in such Notice of Guaranteed
Delivery.
6
<PAGE>
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Paying Agent of Share Certificates for, or of Book-Entry
Confirmation with respect to, such Shares, a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof), together with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message), and any other documents required by the Letter of
Transmittal. Accordingly, payment might not be made to all tendering
stockholders at the same time and will depend upon when Share Certificates or
Book-Entry Confirmations of such Shares are received into the Paying Agent's
account at the Book-Entry Transfer Facility.
Appointment as Proxy. By executing the Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints Purchaser or its designees
and each of them as such stockholder's attorneys-in-fact and proxies, each
with full power of substitution, in the manner set forth in the Letter of
Transmittal, to the full extent of such stockholder's rights with respect to
the Shares tendered by such stockholder and accepted for payment by Purchaser
(and with respect to any and all other Shares or other securities issued or
issuable in respect of such Shares on or after the date hereof). All such
powers of attorney and proxies shall be considered irrevocable and coupled
with an interest in the tendered Shares. Such appointment will be effective
when, and only to the extent that, Purchaser accepts such Shares for payment.
Upon such acceptance for payment, all prior powers of attorney and proxies
given by such stockholder with respect to such Shares (and such other Shares
and securities) will be revoked without further action, and no subsequent
powers of attorney and proxies may be given nor any subsequent written
consents executed by such stockholder (and, if given or executed, will not be
deemed effective with respect thereto). The designees of Purchaser will, with
respect to the Shares (and such other Shares and securities) for which such
appointment is effective, be empowered to exercise all voting and other rights
of such stockholder as they in their sole discretion may deem proper at any
annual or special meeting of the Company's stockholders or any adjournment or
postponement thereof, by written consent in lieu of any such meeting or
otherwise. Purchaser reserves the right to require that, in order for Shares
to be deemed validly tendered, immediately upon Purchaser's payment for such
Shares, Purchaser must be able to exercise full voting rights with respect to
such Shares and other securities, including voting at any meeting of
stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tender of Shares will be determined by Purchaser in its sole discretion, which
determination shall be final and binding on all parties. Purchaser reserves
the absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance for payment of which may in the opinion of its
counsel be unlawful. Purchaser also reserves the absolute right to waive any
of the conditions of the Offer or any defect or irregularity in any tender of
Shares of any particular stockholder whether or not similar defects or
irregularities are waived in the case of other stockholders. No tender of
Shares will be deemed to have been validly made until all defects and
irregularities have been cured or waived. None of Purchaser, Parent, any of
their affiliates or assigns, the Dealer Manager, the Paying Agent, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification. Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter
of Transmittal and the instructions thereto) will be final and binding.
Backup Federal Income Tax Withholding and Substitute Form W-9. Under the
"backup withholding" provisions of federal income tax law, the Paying Agent
may be required to withhold 31% of the amount of any payments of cash pursuant
to the Offer. In order to avoid backup withholding, each stockholder
surrendering, Shares in the Offer must, unless an exemption applies, provide
the Paying Agent with such stockholder's correct taxpayer identification
number ("TIN") on a substitute Form W-9 and certify, under penalties of
perjury, that such TIN is correct and that such stockholder is not subject to
backup withholding. If a stockholder does not provide its correct TIN or fails
to provide the certifications described above, the Internal Revenue Service
("IRS") may impose a penalty on such stockholder and payment of cash to such
stockholder pursuant to the Offer may be subject to backup withholding of 31%.
All stockholders surrendering Shares pursuant to the Offer should complete and
sign the substitute Form W-9 included in the Letter of Transmittal to provide
the information and certification necessary to avoid backup withholding
(unless an applicable exemption exists and
7
<PAGE>
is proved in a manner satisfactory to the Paying Agent). Certain stockholders
(including among others all corporations and certain foreign individuals and
entities) are not subject to backup withholding, Noncorporate foreign
stockholders should complete and sign a Form W-8, Certificate of Foreign
Status, a copy of which may be obtained from the Paying Agent, in order to
avoid backup withholding. See Instruction 9 of the Letter of Transmittal.
Other Requirements. Purchaser's acceptance for payment of Shares tendered
pursuant to any of the procedures described above will constitute a binding
agreement between the tendering stockholder and Purchaser upon the terms and
subject to the conditions of the Offer, including the tendering stockholder's
representation and warranty that (i) the stockholder is the holder of the
Shares within the meaning of, and that the tender of the Shares complies with,
Rule 14e-4 under the Exchange Act, (ii) the stockholder has the full power and
authority to tender, sell, assign and transfer the tendered Shares (and any
other Shares or other securities issued or issuable in respect of such Shares
on or after January 28, 2000) and (iii) when the same are accepted for payment
by Purchaser, Purchaser will acquire good and unencumbered title thereto, free
and clear of all liens, restrictions, charges and encumbrances and not subject
to any adverse claims.
4. Withdrawal Rights. Tenders of Shares made pursuant to the Offer are
irrevocable, except that Shares tendered pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by Purchaser pursuant to the Offer, may also be withdrawn
at any time after March 28, 2000. If Purchaser extends the Offer, is delayed
in its acceptance for payment of Shares or is unable to purchase Shares
validly tendered pursuant to the Offer for any reason, then, without prejudice
to Purchaser's rights under the Offer, the Paying Agent may nevertheless, on
behalf of Purchaser, retain tendered Shares and such Shares may not be
withdrawn except to the extent that tendering stockholders are entitled to
withdrawal rights as described in this Section 4, subject to Rule 14e-1(c)
under the Exchange Act, which provides that no person who makes a tender offer
shall fail to pay the consideration offered or return the securities deposited
by or on behalf of security holders promptly after the termination or
withdrawal of the Offer. Any such delay in acceptance for payment will be
accompanied by an extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Paying Agent
at one of its addresses set forth on the back cover of this Offer to Purchase.
Any notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of
the registered holder, if different from that of the person who tendered such
Shares. If Share Certificates to be withdrawn have been delivered or otherwise
identified to the Paying Agent, then prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted
to the Paying Agent and the signatures on the notice of withdrawal must be
guaranteed by an Eligible Institution unless such Shares have been tendered
for the account of an Eligible Institution. If Shares have been tendered
pursuant to the procedure for book-entry transfer as set forth in Section 3,
any notice of withdrawal must specify the name and number of the account at
the Book-Entry Transfer Facility to be credited with the withdrawn Shares, in
which case a notice of withdrawal will be effective if delivered to the Paying
Agent by any method of delivery described in the first sentence of this
paragraph.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding. None of Purchaser, Parent, any
of their affiliates or assigns, the Dealer Manager, the Paying Agent, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will thereafter be deemed not to have been validly tendered for purposes of
the Offer. However, withdrawn Shares may be re-tendered at any time prior to
the Expiration Date by following one of the procedures described in Section 3.
5. Certain Federal Income Tax Consequences; Liability of Shareholders to
Creditors of the Company. The summary of tax consequences set forth below is
for general information only and is based on
8
<PAGE>
the law as currently in effect. The tax treatment of each stockholder will
depend in part upon such stockholder's particular situation. Special tax
consequences not described herein may be applicable to particular classes of
taxpayers, such as financial institutions, broker-dealers, persons who are not
citizens or residents of the United States, stockholders who acquired their
Shares through the exercise of an employee stock option or otherwise as
compensation, and persons who received payments in respect of options to
acquire Shares. All stockholders should consult with their own tax advisors as
to the particular tax consequences of the Offer and the Merger to them,
including the applicability and effect of the alternative minimum tax and any
state, local or foreign income and other tax laws and changes in such tax
laws.
The receipt of cash pursuant to the Offer or the Merger will be a taxable
transaction for Federal income tax purposes under the Internal Revenue Code of
1986, as amended, and may also be a taxable transaction under applicable
state, local or foreign income or other tax laws. Generally, for Federal
income tax purposes, a tendering stockholder will recognize gain or loss in an
amount equal to the difference between the cash received by the stockholder
pursuant to the Offer or the Merger and the stockholder's adjusted tax basis
in the Shares tendered by the stockholder and purchased pursuant to the Offer
or the Merger. For Federal income tax purposes, such gain or loss will be a
capital gain or loss if the Shares are a capital asset in the hands of the
stockholder, and a long-term capital gain or loss if the stockholder's holding
period is more than one year as of the date Purchaser accepts such Shares for
payment pursuant to the Offer or the effective date of the Merger, as the case
may be. Under present U.S. federal law, long-term capital gains are generally
taxable at a maximum rate of 20% for individuals and 35% for corporations.
There are limitations on the deductibility of capital losses.
As discussed in detail in Section 9 below, the Offer Price to be paid to
tendering shareholders in the Offer and the consideration paid to shareholders
in the Merger will be funded entirely through a loan to Purchaser that will be
secured by a perfected security interest in all of Purchaser's right, title
and interest in and to the proceeds of certain transactions described under
"Plans for the Company" in Section 12 below, as well as in and to the
agreements governing such transactions. In these transactions, certain assets
of the Company will be sold to a third party purchaser, certain other assets
will be transferred to another third party in exchange for a combination of
cash consideration and stock, and the Company's interest in certain aircraft
assets will be sold to another third party. Parent and Purchaser anticipate
that the loan obtained to finance the Offer and the Merger will be repaid with
the proceeds of these sales and transfers of the Company's assets.
Pursuant to the FBCA, claims of the Company's creditors, including claims of
taxing authorities, are not extinguished by the Merger and, accordingly, the
Surviving Corporation will be liable for the claims of creditors of both
Purchaser and the Company existing immediately prior to the Merger in addition
to those of the Surviving Corporation resulting from consummation of the
transactions contemplated by the Merger Agreement. To the extent that the
Surviving Corporation is not able to discharge all claims of creditors
existing at the Effective Date or thereafter, it is possible that creditors
(including the taxing authorities) or a representative of such creditors,
including the Surviving Corporation as a debtor in possession or trustee in
bankruptcy of the Surviving Corporation, may seek to bring claims against
persons who are tendering shareholders in the Offer or are otherwise entitled
to receive the Merger Consideration asserting that such shareholders are
subject to transferee liability (i.e., that such shareholders are liable for
the obligations of the Company by virtue of the fact that they received the
Offer Price or Merger Consideration, although such potential liability of any
shareholder would presumably be limited to the value of the aggregate Offer
Price and/or Merger Consideration received by such shareholder, plus any
allowable interest charge). If any such claims were to be made and be
successful, the net proceeds received by such shareholders from the Offer
and/or Merger could be materially reduced.
The likelihood of any taxing authority or other creditor of the Company or
the Surviving Corporation or trustee succeeding with respect to any claim that
the shareholders, as a result of their receipt of the Offer Price or Merger
Consideration, as the case may be, should be held liable for the obligations
of the Company or Surviving Corporation as transferees of its assets, directly
or indirectly, is, in part, dependent on the critical facts relating to such
claims, including the value of the assets of the Company transferred and the
extent to which the transactions contemplated by the Merger Agreement may give
rise to the liabilities discussed above. All stockholders should consult with
their own tax and legal advisors as to the particular consequences of the
consummation of the Merger and the transactions contemplated by the Merger
Agreement.
9
<PAGE>
6. Price Range of Shares; Dividends. The Shares are listed and traded on the
New York Stock Exchange under the symbol "EIN" and have traded on the New York
Stock Exchange since December 9, 1996. The following table sets forth, for the
quarters indicated, the high and low sales prices per Share on the New York
Stock Exchange as reported in the Company's Annual Report on Form 10-K for the
year ended December 31, 1998 (the "1998 Annual Report") with respect to
periods occurring in 1996, 1997 and 1998 and as reported by the Dow Jones News
Service thereafter, and the amount of cash dividends paid or declared per
share for each quarter based on publicly available sources. No dividends were
paid to stockholders during 1998 or 1997. The Company paid a $100,000 dividend
to its former parent in 1996, as reported in the Consolidated Statements of
Stockholders' Equity included in the financial statements filed as an exhibit
to the 1998 Annual Report.
<TABLE>
<CAPTION>
High Low Dividends
------ ------ ---------
<S> <C> <C> <C>
Year Ended December 31, 1996
First Quarter...................................... -- -- --
Second Quarter..................................... -- -- --
Third Quarter...................................... -- -- --
Fourth Quarter..................................... $16.38 $13.00 $100,000
Year Ended December 31, 1997:
First Quarter...................................... $19.50 $14.75 --
Second Quarter..................................... 23.00 18.25 --
Third Quarter...................................... 24.75 20.56 --
Fourth Quarter..................................... 25.13 20.81 --
Year Ended December 31, 1998:
First Quarter...................................... $23.38 $20.63 --
Second Quarter..................................... 27.81 22.63 --
Third Quarter...................................... 26.63 20.19 --
Fourth Quarter..................................... 22.88 18.88 --
Year Ended December 31, 1999:
First Quarter...................................... $22.31 $19.63 --
Second Quarter..................................... 23.44 18.56 --
Third Quarter...................................... 25.63 20.63 --
Fourth Quarter..................................... 25.38 20.06 --
Year Ended December 31, 2000:
First Quarter (through January 27, 2000)........... $33.06 $23.00 --
</TABLE>
On August 17, 1999, the last full trading day prior to the date that Parent
submitted a written proposal to the Company with respect to the Offer, the
closing sale price per Share reported on the New York Stock Exchange was
$21.44. On January 20, 2000, the last full trading day prior to announcement
of the Offer, the last sale price per Share reported on the New York Stock
Exchange was $23.94. On January 21, 2000, the day before the announcement of
the tender offer, the last sale price per Share reported on the New York Stock
Exchange was $27.56 before trading in the Company's securities on that
exchange was halted. On January 27, 2000, the last full trading day before
commencement of the Offer, the closing sale price per Share reported on the
New York Stock Exchange was $32.56. Stockholders are urged to obtain a current
market quotation for the Shares.
Pursuant to the Merger Agreement, the Company has agreed not to declare, set
aside, make or pay any dividend or other distribution.
7. Certain Information Concerning the Company. Except as otherwise set forth
herein, the information concerning the Company contained in this Offer to
Purchase, including financial information, has been furnished by the Company
or has been taken from or based upon publicly available documents and records
on file with the Commission and other public sources. The summary information
concerning the Company in this Section 7 and elsewhere in this Offer to
Purchase is derived from the 1998 Annual Report and other publicly
10
<PAGE>
available information. The summary information set forth below is qualified in
its entirety by reference to such reports (which may be obtained and inspected
as described below) and should be considered in conjunction with the more
comprehensive financial and other information in such reports and other
publicly available reports and documents filed by the Company with the
Commission and other publicly available information. Although Purchaser and
Parent do not have any knowledge that would indicate that any statements
contained herein based upon such reports are untrue, neither Purchaser,
Parent, nor the Dealer Manager assumes any responsibility for the accuracy or
completeness of the information contained therein, or for any failure by the
Company to disclose events that may have occurred and may affect the
significance or accuracy of any such information but which are unknown to
Purchaser and Parent.
General. The Company is a real estate company which develops, owns and
manages commercial and multi-family residential real estate (the "Real Estate
Business"). The Real Estate Business includes two segments: 1) Commercial Real
Estate and 2) Multi-Family Residential Real Estate. The Company also owns and
manages a portfolio of financial assets consisting primarily of leased
aircraft and other assets and collateralized financings of commercial real
estate and aircraft (the "Leasing and Lending Business"). The Leasing and
Lending Business comprises the majority of the Company's third segment,
Investments in Financial Assets. The Company is continuing to withdraw from
the aircraft and real estate lending business to focus on its core real estate
operations. The Company's executive offices are located at 450 Carillon
Parkway, Suite 200, St. Petersburg, Florida, 33716, telephone (727) 803-8200.
Prior to December 18, 1996, the Company was a wholly-owned subsidiary of
Florida Progress Corporation ("Florida Progress"). On December 18, 1996,
Florida Progress effected a spin-off of the Company (the "Spin-Off") by
distributing all of the issued and outstanding Common Stock of the Company to
all holders of outstanding Florida Progress Common Stock by a tax-free stock
dividend.
The Spin-Off established the Company as a publicly held corporation, listed
on the New York Stock Exchange, independent from Florida Progress.
The Real Estate Business
Commercial and Multi-Family Residential Real Estate Ownership and
Management. The Company owns and manages a portfolio of commercial and multi-
family residential real estate and has additional commercial and multi-family
residential properties under construction or development. Currently, the
majority of the income-producing properties are located in the Tampa Bay area
of Florida. The Company also has offices in Dallas, Texas and Orlando,
Florida, both of which focus on the development and management of multi-family
residential communities in the southeast and southwest United States. At
December 31, 1999, the Company's owned assets included commercial and multi-
family residential real estate properties, consisting of nine operating office
buildings, two operating parking garages, one office building currently under
construction, two industrial and other properties, five income-producing
multi-family residential communities, and ten multi-family residential
communities currently under development or construction.
Real Estate Management and Brokerage Services. The real estate management
and brokerage services are complementary to the Company's commercial and
multi-family residential real estate operations. Growth is expected to occur
primarily as a result of the growth in the commercial and multi-family
residential real estate operations, and the growth of revenue associated with
these services for buildings owned by third parties. In addition, the Company
continues to evaluate the acquisition of real estate management and/or
brokerage companies as opportunities become available.
Undeveloped Owned Commercial & Multi-Family Residential Real Estate. A
portion of the Company's real estate holdings is represented by several large
parcels of undeveloped land in the St. Petersburg, Florida area. Certain of
these properties already have substantial infrastructure in place.
11
<PAGE>
The Leasing and Lending Business
Collateralized Commercial Real Estate Loan Portfolio. The Company is
continuing to withdraw from the real estate lending business. The Company does
not anticipate originating any new loans except to facilitate the sale of an
existing asset. The Company's remaining commercial real estate loan portfolio
is secured by properties located in the western and southern United States.
The aggregate loan balance of that portfolio, as of December 31, 1999, was
$27.7 million.
Affordable Housing Investments. On January 13, 2000, the Company and its
wholly-owned subsidiary, Echelon Affordable Housing, Inc., a Florida
corporation, entered into a Purchase Agreement with Heller Affordable Housing,
Inc., a Delaware corporation (the "Tax Credit Interest Purchase Agreement"),
pursuant to which the Company and Echelon Affordable Housing, Inc. sold, on
January 14, 2000, their interests in five affordable housing tax credit
limited partnerships (the "Tax Credit LP Interests") for an aggregate purchase
price of $21,065,000. The Tax Credit Interest Purchase Agreement requires the
purchaser of the Tax Credit LP Interests to cooperate with the Company to
obtain, on a timely basis, bonds required to be delivered to the Internal
Revenue Service in order for the Company to avoid recapture of Federal income
tax credits previously claimed by the Company, or, in the event that the
Merger is not consummated for any reason, to pay to the Company the sum of
$435,000.
Collateralized Leasing and Financing of Aircraft and Related Equipment. The
Company owns and manages a portfolio of leveraged, direct finance and
operating leases of aircraft and other equipment and one collateralized loan
secured by aircraft (the "Leveraged Lease Portfolio"). The Company's Leveraged
Lease Portfolio represents transactions in which the Company acts as the
equity investor and owner participant. In a typical aircraft leveraged lease
transaction, an airline (which may be unable either to allocate capital to the
purchase of a large commercial aircraft or to effectively utilize the tax
benefits related to ownership) and an aircraft manufacturer enter into a
transaction in which a third party (called an "owner participant" or "equity
participant") purchases the aircraft, typically through a special purpose
trust (an "owner trust"), from the manufacturer. The aircraft is then leased
to the airline or to an affiliate of the manufacturer which then subleases the
aircraft to the airline. The owner trust is the legal owner of the aircraft.
The purchase of the aircraft is generally financed by both the equity
investment by the owner participant and by non-recourse loans borrowed by the
owner trust from a bank or other lender(s). The rent payable to the owner
trust pursuant to the leveraged lease generally represents the amount
necessary to service the debt, plus a return on the owner participant's equity
investment. The owner participant also generally recognizes certain tax
benefits as the beneficial owner of the aircraft. These leases are typically
long-term (20 years or more) and at termination the owner participant takes
possession of the aircraft, which generally still has a useful life of several
years (usually 10 years in the case of aircraft). Upon expiration, the lessee
generally has the right to purchase the aircraft for the higher of the
aircraft's fair market value or for some stated percentage of the aircraft's
cost. The lessee may also generally terminate the lease early by payment of
the lease termination value (a predetermined pricing method which reflects,
among other things, the amount of non-recourse debt, the initial investment
and certain tax consequences).
The Company also owns assets under operating and direct finance leases.
Under operating leases, the Company leases an asset to a third party in
circumstances unrelated to the financing of such asset for a term which is
generally shorter than the typical term of a leveraged lease. Direct finance
leases are generally structurally similar to the leveraged lease transactions,
except for the absence of third party debt financing by the owner trust.
Financial Information. Set forth below are certain selected consolidated
financial data for the Company's last three fiscal years which were derived
from the 1998 Annual Report. More comprehensive financial information is
included in the reports (including management's discussion and analysis of
financial condition and results of operations) and other documents filed by
the Company with the Commission, and the following financial data is qualified
in its entirety by reference to such reports and other documents including the
financial information and related notes contained therein. Such reports and
other documents may be examined and copies thereof may be obtained from the
offices of the Commission and the New York Stock Exchange in the manner set
forth below.
12
<PAGE>
ECHELON INTERNATIONAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
For the Year
Ended December 31,
------------------------------------------
1998 1997 1996
------------- ------------- -------------
(In Millions, Except Per Share Amounts)
<S> <C> <C> <C>
SUMMARY OF OPERATIONS
Revenue........................ $ 40.6 $ 44.2 $ 63.3
============= ============= =============
Income (loss) before income
taxes and extraordinary
items......................... 7.2 11.6 (44.8)(1)
============= ============= =============
Income (loss) before
extraordinary items........... 8.7 9.5 (29.3)(1)
Extraordinary items:
Gain on settlement of debt,
net of income tax expense... .8 -- --
Gain (loss) on extinguishment
of debt, net of income tax
effect...................... -- (1.9) 1.8
------------- ------------- -------------
Net income (loss).............. $ 9.5 $ 7.6 $ (27.5)(1)
============= ============= =============
Basic and diluted earnings per
common share:
Income (loss) before
extraordinary items......... $ 1.28 $ 1.40 $ (4.51)
Extraordinary items.......... .12 (.28) .28
------------- ------------- -------------
Net income (loss) per common
share......................... $ 1.40 $ 1.12 $ (4.23)
============= ============= =============
Basic and diluted weighted
average shares of common stock
outstanding................... 6.8 6.8 6.5
Dividends paid to former
parent........................ $ -- $ -- $ .1
============= ============= =============
BALANCE SHEET DATA
Assets:
Real estate.................. $ 206.2 $ 134.7 $ 146.5
Investments in Financial
Assets...................... 266.4 276.0 334.0
Cash equivalents and
marketable securities....... 21.6 49.8 63.3
------------- ------------- -------------
Total assets............... $ 494.2 $ 460.5 $ 543.8
Deferred income taxes.......... $ 141.5 $ 154.2 $ 163.3
============= ============= =============
Capitalization:
Long-term debt............... $ 121.7 $ 77.1 $ 116.5
Notes and advances from
former parent............... -- -- 32.9
Common equity................ 215.8 209.1 201.4
------------- ------------- -------------
Total capitalization........... $ 337.5 $ 286.2 $ 350.8
============= ============= =============
</TABLE>
- - --------
(1)Reflects $31.4 million pre-tax provisions for lease, loan and real estate.
The Shares are registered under the Exchange Act. Accordingly, the Company
is subject to the informational filing requirements of the Exchange Act and in
accordance therewith is obligated to file periodic reports, proxy statements
and other information with the Commission relating to its business, financial
condition and other matters. Information as of particular dates concerning the
Company's directors and officers, their remuneration, options granted to them,
the principal holders of the Company's securities and any material interest of
such persons in transactions with the Company is required to be disclosed in
such proxy statements and distributed to the Company's stockholders and filed
with the Commission. Such reports, proxy statements and other information
should be available for inspection at the public reference facilities of the
Commission located in Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and should also be available for inspection and copying at
prescribed rates at the regional offices of the Commission located at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and
Seven World Trade Center, Suite 1300, New York, New York 10048. Such reports,
proxy statements and other information may also be obtained at the Web site
that the
13
<PAGE>
Commission maintains at http://www.sec.gov. Copies of this material may also
be obtained by mail upon payment of the Commission's customary fees, from the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C.
20549. In addition, such material should also be available for inspection at
the library of the New York Stock Exchange, 20 Broad Street, New York, New
York 10005. Except as otherwise noted in this Offer to Purchase, all of the
information with respect to the Company set forth in this Offer to Purchase
has been derived from publicly available information.
8. Certain Information Concerning Purchaser and Parent.
Parent is a Delaware limited liability company and Purchaser is a Florida
corporation, wholly-owned by Parent, both recently organized in connection
with the Merger. Neither Parent nor Purchaser has carried on any activities,
other than in connection with the Merger and the other transactions discussed
herein. Parent is wholly owed by its sole member, The 1999 Haber Family Trust,
an irrevocable trust organized under the laws of the State of New York
pursuant to a Trust Agreement dated as of June 24, 1999 by and between James
Haber, as grantor, and Eric B. Woldenberg, as trustee. Parent is managed by
ETA Holding Corp., a Delaware corporation. The principal offices of the
manager of Parent and the principal offices of Purchaser are located at 950
Third Avenue, New York, New York 10022, (212) 688-2700.
Until immediately prior to the time Parent and Purchaser will participate in
the Merger, it is not anticipated that such entities will have any significant
assets or liabilities other than those incident to their formation and
capitalization, including the capitalization of Parent specified in the Merger
Agreement, and the transactions contemplated by the Merger. As of the date
hereof, neither Parent nor Purchaser nor any of their affiliates owned any
Shares.
The Merger Agreement requires Parent and Purchaser to, and to cause their
respective officers, directors, employees, agents, affiliates, financial
advisors and other representatives to, use their reasonable best efforts to
satisfy all conditions precedent set forth in the Credit Agreement and,
subject only to the simultaneous consummation of the transactions contemplated
by the Merger Agreement, to incur the financing provided thereby on the terms
set forth therein in order to finance the consummation of the transactions
contemplated by the Merger Agreement. Purchaser has agreed that, except to the
extent the Company consents in writing, Purchaser will not amend, modify or
supplement in any material respect the terms or conditions of, or cancel or
waive any material right under, the Credit Agreement.
Pursuant to the terms and conditions of the Merger Agreement, Parent and
Purchaser have agreed that, immediately after the earlier to occur of (i) the
twelfth (12th) business day following consummation of the sale and/or transfer
of certain assets of the Company as described in Section 12 below under "Plans
for the Company--Sale of Assets to Buyer" and "--Conveyance of Lessor Assets
to Lessor" and (ii) the consummation of the purchase and sale of the Company's
beneficial interests in the trust estates with respect to certain aircraft
identified in the Merger Agreement, Parent will cause the Surviving
Corporation to merge with and into EIN Corp., a wholly-owned subsidiary of
Parent incorporated in the State of Delaware. Thereafter, the separate
corporate existence of the Surviving Corporation will cease, and EIN Corp.
will continue as the surviving corporation under the laws of the State of
Delaware, all in accordance with the applicable provisions of the General
Corporation Law of the State of Delaware (the "DGCL").
The Merger Agreement requires Parent to maintain at all times through the
Effective Date unrestricted and unutilized cash on hand in an amount not less
than $2,000,000 and to cause EIN Corp., as the surviving corporation
subsequent to the merger described in the preceding paragraph, to maintain its
existence until at least March 31, 2003.
The name, citizenship, business address, principal occupation or employment
and five-year employment history of each of the directors and executive
officers of Purchaser and Parent and certain other information are set forth
on Schedule I hereto.
14
<PAGE>
None of Purchaser or Parent, or, to the best knowledge of Purchaser and
Parent, any of the persons listed on Schedule I hereto or any associate or
majority-owned subsidiary of Purchaser or Parent or any of the persons so
listed, beneficially owns or has a right to acquire, directly or indirectly,
any Shares, and none of Purchaser or Parent or, to the best knowledge of
Purchaser and Parent, any of the persons or entities referred to above, or any
of the respective executive officers, directors or subsidiaries of any of the
foregoing, has effected any transactions in the Shares during the past 60
days.
9. Source and Amount of Funds. Purchaser estimates that the total amount of
funds required to acquire the outstanding Shares pursuant to the Offer and to
pay related fees and expenses will be approximately $262 million, assuming the
purchase of all outstanding Shares. Fees and expenses related to the Offer and
the Merger and the consummation of the transactions contemplated by the Merger
Agreement are to be paid from an escrow fund (the "Expense Escrow") to be
established by the Company immediately prior to the Effective Date in
accordance with the escrow agreement entered into pursuant to the Merger
Agreement among Purchaser, Parent, the Company and LandAmerica Financial
Group, as escrow agent (the "Escrow Agent"). See "Closing Procedures" in
Section 12 of this Offer to Purchase.
Purchaser has entered into a credit agreement dated as of January 21, 2000
among Purchaser, as borrower, Utrecht-America Finance Co., as initial lender
(the "Initial Lender"), and Cooperatieve Centrale Raiffeisen-Boerenleenbank
B.A., "Rabobank Nederland", New York Branch, as Agent, (the "Agent") (the
"Credit Agreement") pursuant to which, subject to specified conditions, the
Initial Lender has agreed to provide to Purchaser an advance in the aggregate
principal amount equal to the lesser of $300,000,000 or the aggregate dollar
amount of the Merger Consideration and the Offer Price required to be paid
pursuant to the Merger Agreement (the "Advance") to finance the Offer and the
proposed Merger. Pursuant to the terms and conditions of the Credit Agreement,
the Advance may be made from the Initial Lender to Purchaser on any business
day on or before the earlier of the effective date of the Merger and March 6,
2000, unless extended.
The Credit Agreement provides that the proceeds of the Advance may be used
solely to finance the Offer and the Merger by paying to the Paying Agent the
aggregate dollar amount of the Offer Price and the Merger Consideration
pursuant to the terms and conditions of the Merger Agreement. Purchaser is
required to repay to the Agent the aggregate outstanding principal amount of
the Advance on or before April 27, 2000 (the "Maturity Date") but is not
required to make any payments of principal or interest prior to the Maturity
Date other than in connection with acceleration upon default or mandatory or
optional prepayments as required or permitted by the Credit Agreement.
Mandatory prepayments are required in an amount equal to 100% of the proceeds
of the sale by Purchaser or Parent of any assets of the Company. Purchaser may
voluntarily prepay the Advance in whole or in part at any time prior to the
Maturity Date, without premium or penalty; provided that (a) each partial
prepayment is in an aggregate principal amount of $10,000,000 or an integral
multiple of $5,000,000 in excess thereof, and (b) the payment of certain
required amounts intended to compensate the Initial Lender in respect of the
redeployment of funds if such prepayment is made on a date other than the last
day of an interest accrual period, if applicable, under the Credit Agreement.
In addition to the conditions described below, the Credit Agreement requires
that the Agent, Parent, Purchaser and the Company enter into an escrow
agreement pursuant to which cash in a minimum amount to be certified by the
Company on or prior the Escrow Closing Date (the "Minimum Cash Escrow") shall
be deposited with the Agent, as escrow agent for the purpose of, among other
things, repayment, in part, of the Advance.
The Advance will bear interest at an annual rate equal to, at Purchaser's
option, (a) the Federal Funds Rate (as hereinafter defined) plus .50% or (b)
the Eurodollar Rate (as hereinafter defined) plus .50%. For purposes of the
Credit Agreement, "Eurodollar Rate" means, for any applicable interest period
selected by Purchaser as set forth below, an interest rate per annum equal to
the rate per annum obtained by dividing (x) the average rate per annum at
which deposits in U.S. dollars are offered by the Agent, or by certain
reference banks selected by the Agent, in London, England to prime banks in
the London interbank market at 11:00 a.m. London time two business days before
the first day of such interest period in an amount substantially equal to the
principal amount of the Advance outstanding and for a period equal to such
interest period, by (y) a percentage equal to 100% minus the Eurodollar Rate
Reserve Percentage (as defined in the Credit Agreement). "Federal Funds Rate"
15
<PAGE>
means, for any period, a fluctuating interest rate per annum equal for each
day during such period to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day that is a
business day, the average of the quotations for such day on such transactions
received by the Agent from three Federal funds brokers of recognized standing
selected by it. At any time when Purchaser is in default in the payment of any
amount due under the Credit Agreement, overdue principal, interest and fees on
the Advance will bear interest at a rate equal to 2% above the rate otherwise
applicable thereto. All interest rates will be calculated on the basis of a
year of 360 days for actual days elapsed. Interest periods for any time during
which the Advance accrues interest at the Eurodollar Rate may be, at
Purchaser's option, one week, one month, two months or three months.
The Advance is secured by a Security Agreement dated as of January 21, 2000
(the "Security Agreement") made by Purchaser in favor of the Agent and
granting to the Agent a perfected security interest in all of Purchaser's
right, title and interest in and to the proceeds of the transactions described
under "Plans for the Company" in Section 12 of this Offer to Purchase, as well
as in and to the agreements governing such transactions, including (a) the
Purchase and Sale Agreement pursuant to which certain assets will be sold to
Echelon Residential LLC, (b) the Omnibus Agreement pursuant to which certain
aircraft assets will be sold to Heller Financial, Inc., (c) the Subscription
Agreement pursuant to which certain other assets will be sold to Heller
Affordable Housing of Florida, Inc. (the Purchase and Sale Agreement, the
Omnibus Agreement and the Subscription Agreement, each as defined and as more
fully described in Section 12 of this Offer to Purchase under the heading
"Plans for the Company", being collectively referred to herein as the
"Collateral Agreements"), (d) all accounts, contract rights, chattel paper,
general intangibles and other obligations of any kind relating to the
Collateral Agreements, and (e) all proceeds of the foregoing. The Agent's
security interest in the Collateral Agreements includes, without limitation,
all distributions, cash or other property from time to time received,
receivable or otherwise distributed in connection therewith, all rights to
receive moneys due or to become due thereunder, and all rights of Purchaser
under the Collateral Agreements to compel performance and otherwise exercise
remedies thereunder.
The conditions precedent to the obligation of the Initial Lender to make the
Advance under the Credit Agreement include:
. there being no change in the corporate and legal structure and
capitalization of Purchaser, the Company or EIN Corp.;
. there being no action, suit, investigation, litigation or proceeding
affecting Purchaser, the Company, EIN Corp., or any of their respective
subsidiaries pending or threatened before any court, governmental agency
or arbitrator that:
. could, with respect to Purchaser or EIN Corp., have a material
adverse effect on (A) the business, condition (financial or
otherwise), operations, performance, properties or prospects of
Purchaser, (B) the rights and remedies of the Agent or any lender
under the Credit Agreement, any note issued thereunder, the Security
Agreement, any of the Collateral Agreements or any other document
executed in connection with the transactions contemplated thereby
(collectively, the "Transaction Documents"), or (C) the ability of
Purchaser to perform its obligations under any Transaction Document,
or, with respect to the Company and its subsidiaries taken as whole,
have a material adverse effect on the business or results of
operations of such person, or on the financial condition of the
assets that are to be conveyed pursuant to the Purchase and Sale
Agreement and the Subscription Agreement, taken as a whole or on the
Leveraged Lease Portfolio; or
. purports to affect the legality, validity or enforceability of the
Credit Agreement, any promissory note issued thereunder, the
Security Agreement or any other Transaction Document;
. the payment of all accrued fees and expenses of the Agent and the
Initial Lender;
. the receipt by the Agent of a certificate from the Aircraft Purchaser
that the Omnibus Agreement has not been amended, supplemented, modified
or terminated;
16
<PAGE>
. the receipt by the Agent of reasonable assurances that the Articles of
Merger have been pre-cleared for filing with the Department of State of
the State of Florida and oral confirmation from the Escrow Agent under
the Purchase and Sale Agreement and the Subscription Agreement (see
"Closing Procedures" in Section 12 of this Offer to Purchase) that the
Articles of Merger will be filed with the Department of State of the
State of Florida immediately after the Agent has made the Advance
available to Purchaser;
. the satisfaction of the Minimum Condition and the occurrence of the
Expiration Date;
. the receipt by the Agent, on or before the day of the borrowing of the
Advance, of executed copies of the Collateral Agreements, the other
Transactions documents and various closing certificates, wire
instructions, joint instruction letters and legal opinions required
thereunder;
. the receipt by the Escrow Agent of the items required to be placed in
escrow pursuant to the Purchase and Sale Agreement and the Subscription
Agreement;
. the sum of the net cash proceeds of the sales of all assets under the
Purchase and Sale Agreement, the Subscription Agreement and the Omnibus
Agreement, together with cash deposited by the Company in escrow
pursuant to the Minimum Cash Escrow (See "Closing Procedures" in Section
12 of this Offer to Purchase) being not less than the sum of the Advance
plus all interest and fees payable under the Credit Agreement plus
$1,000,000;
. the representations and warranties made by Purchaser in the Credit
Agreement being true and correct;
. no default or event of default having occurred under the Credit
Agreement; and
. no default shall exist by the Aircraft Purchaser under the Omnibus
Agreement, by the Buyer under the Purchase and Sale Agreement, by the
Lessor under the Subscription Agreement or by the Company under the
Merger Agreement, except for defaults that could not have an adverse
effect on the value of the collateral securing the Credit Agreement.
The Credit Agreement also contains representations, warranties of Purchaser
that are customary for similar transactions, including representations with
respect to:
. Purchaser's due organization, good standing and power and with respect
to the authorization and validity of the Credit Agreement and other
Transaction Documents;
. the absence, with respect to Purchaser's performance of the transactions
contemplated by the Credit Agreement and the other Transaction
Documents, of any contravention or violation of Purchaser's
organizational documents or any law or agreement to which Purchaser is a
party;
. the absence of any required authorization, approval or consent from any
third parties in connection with the transactions contemplated by the
Transaction Documents except those that have been made or will be made
prior to the making of the Advance;
. the due execution and delivery of the Transaction Documents; the absence
of any action, suit or proceeding affecting Purchaser; compliance with
applicable margin stock regulations; the validity of the first priority
perfected security interest created by the Security Agreement;
. compliance with the Investment Company Act of 1940; and
. the solvency of Purchaser at the time of the Advance.
The Credit Agreement also contains covenants of Purchaser with respect to
compliance with laws, payment of taxes, preservation of existence, keeping of
books, performance of its obligations under the Transaction Documents, the
exercise of rights in the collateral described in the Security Agreement, as
well as certain negative covenants with respect to the incurrence of liens
(except with respect to permitted debt and with respect to the capital stock
of the Company), the incurrence of debt (other than existing and permitted
debt), lease obligations (other than those assumed by the other parties to the
Transaction Documents in connection with the transactions contemplated
thereby), sales of assets (other than as contemplated by the Transactions
Documents),
17
<PAGE>
mergers (other than the Merger), investments in others (other than Purchaser's
investment in the Company or pursuant to the Transaction Documents),
distributions (other than pursuant to the Transaction Documents), change of
business (other than as contemplated by the Transaction Documents), amendments
to the organizational documents of Purchaser (other than as contemplated by
the Merger Agreement), and amendments to the Transaction Documents. Purchaser
will also have certain reporting obligations to the Agent and to the lenders
under the Credit Agreement.
Events of Default under the Credit Agreement include:
. the failure to pay principal when due, or interest or any other payment
under the Transaction Documents within three business days of their
becoming due;
. any representation or warranty of Purchaser being incorrect in any
material respect when made;
. the failure of Purchaser to perform or observe any covenant contained in
the Credit Agreement (unless such failure could not result in a material
adverse effect with respect to Purchaser);
. certain bankruptcy or insolvency events with respect to Purchaser, the
Company or EIN Corp.;
. the rendering of certain judgments or orders against Purchaser, subject
to certain limitations;
. any provision in any Transaction Document ceasing to be valid and
enforceable with respect to Purchaser;
. the security interest created by the Security Agreement ceasing to be
valid;
. the failure by Purchaser or the Company to pay principal or interest
with respect to any other debt of Purchaser of at least $500,000 when
due (after giving effect to applicable grace periods); and
. there occurring a material adverse effect with respect to Purchaser, the
Company or EIN Corp.
The foregoing summary of the terms and conditions of the Credit Agreement
and the related security agreement is qualified in its entirety by reference
to the text of such agreements, copies of which are filed as exhibits to the
Tender Offer Statement on Schedule TO of Purchaser and Parent filed with the
Commission in connection with the Offer (the "Schedule TO") and are
incorporated herein by reference and may be inspected in the same manner as
set forth in Section 7 of this Offer to Purchase.
Parent anticipates that the Credit Agreement will be repaid with the
proceeds from the sale of assets pursuant to the transactions described under
"Plans for the Company" in Section 12 of this Offer to Purchase, including the
sale of the certain assets of the Company pursuant to the Purchase and Sale
Agreement, the exchange of certain other assets of the Company to another
party pursuant to the Subscription Agreement, the sale of the Company's
interest in that portion of the Leveraged Lease Portfolio related to aircraft
pursuant to the Omnibus Agreement, as well as from the Minimum Cash Escrow,
which amounts may include a portion of the proceeds of the sale of the Tax
Credit LP Interests pursuant to the Tax Credit Interest Purchase Agreement.
See Section 7 of this Offer to Purchase for a discussion of the recent sale of
the Tax Credit LP Interests.
The Offer is not conditioned on Purchaser obtaining financing.
10. Background of the Offer; Contacts with the Company.
The Company has informed Purchaser and Parent that, (i) in August, 1998, the
Company's Board of Directors (hereinafter sometimes referred to as, the
"Board") discussed the underperformance of its Shares and determined to
explore means of creating greater value for its shareholders, (ii) the Board
considered various options and, in October, 1998, formally engaged Donaldson
Lufkin & Jenrette Securities Corporation ("DLJ") to assist the Company in such
process, and (iii) in May, 1999, DLJ distributed a Confidential Offering
Memorandum regarding the real estate and certain other assets of the Company
(excluding the Leveraged Lease Portfolio) as well as a Confidential
Information Memorandum regarding the Leveraged Lease Portfolio to potential
investors. A copy of that later Confidential Offering Memorandum was obtained
by an agent of the manager of Parent in late June, 1999.
18
<PAGE>
On July 6, 1999, Parent caused to be submitted to DLJ a written offer to
purchase the Company for $141,000,000 on the assumption that the Leveraged
Lease Portfolio would be the only remaining asset of the Company at such time.
On August 6, 1999, Parent lowered its offer to $130,000,000, which offer was
promptly rejected by DLJ.
Also, on August 6, 1999, DLJ delivered a letter to Parent describing the
final procedures for submission of a binding offer to purchase the Company.
Bids were to be premised on the separate sale of the Real Estate Business. In
addition, Parent received a draft merger agreement to which it was asked to
provide specific modifications, if any, that Parent would require as part of
any binding offer.
On August 10, 1999, Parent submitted to DLJ a formal offer letter pursuant
to which Parent offered an all-cash purchase price of $140 million to acquire
the Leveraged Lease Portfolio as described above.
On August 18, 1999, Parent delivered a written offer and a mark-up of the
draft merger agreement to DLJ. Parent offered an all-cash purchase price for
the Leveraged Lease Portfolio (as described above) of $140 million subject to
a financing contingency. Parent's bid was supported by a letter of confidence
from Agent, on behalf of Initial Lender, for up to $150 million. Parent
subsequently informed DLJ that it would increase its offer to $143 million if
the transaction included an exchange of certain of the Company's real estate
assets with an affiliate of Heller Financial, Inc. (hereinafter sometimes,
"Heller") ultimately identified as Lessor (as that term is defined under the
heading "Plans for the Company -- Generally" in Section 12 of this Offer to
Purchase), as an investment in Lessor.
From September, 1999, to October, 1999, DLJ met with Parent and with Agent
with respect to Parent's anticipated financing, and Parent performed
additional due diligence on the Company.
On September 13, 1999, the Company's legal advisors met with Parent's legal
advisors to discuss the structure, financing and timing of the proposed
transaction, the due diligence process and the terms of the draft merger
agreement previously circulated to Parent. On September 23, 1999, Parent
lowered its bid for the Leveraged Lease Portfolio to $137 million.
On October 15, 1999, DLJ advised Parent that it had received an unsolicited
letter from Equis Financial Group ("Equis") requesting that it be allowed to
submit a bid with respect to the Real Estate Business. At approximately the
same time the Company's legal advisor shared with Parent's legal advisor, for
the first time, drafts of the proposed Purchase and Sale Agreement (as
described under the heading "Plans for the Company--Sale of Assets to Buyer"
below) that had been negotiated with Buyer and other bidders for the Real
Estate Business.
On October 22, 1999, the Company and its legal advisors met with
representatives of Parent and Lessor and their respective legal advisors to
discuss the structure, financing and timing of the proposed transactions, with
particular emphasis on: (1) how any exchange transaction with Lessor would
impact the rest of the proposed transactions; and (2) the manner in which the
Company's liabilities would be divided among the various parties. The various
parties also discussed the terms of the legal documentation governing the
proposed transactions, with particular emphasis on the extent of the Company's
representations and warranties.
The Company has advised Parent that, also on October 22, 1999, Equis offered
an all-cash purchase price of $120 million (subsequently increased to $122
million) for the Company's combined Real Estate Business. Parent requested
that the Company work with Lessor and one or more affiliates of Lessor to
include the exchange transaction with Lessor in the structure of the overall
transactions. At approximately the same time Parent introduced the possibility
that another affiliate of Heller would purchase the Tax Credit LP Interests.
Parent expected that the proposed exchange transaction would replace the need
on the part of Equis to secure financing for its acquisition of the Company's
Real Estate Business. The Company has advised Parent that on October 29, 1999,
Equis submitted a mark-up of the draft Purchase and Sale Agreement to the
Company, which was subsequently provided to Parent. Negotiations among all
parties commenced promptly thereafter.
19
<PAGE>
On November 2, 1999, Parent was advised by DLJ that the Board had determined
to terminate negotiations of the proposed agreements with Parent, Lessor and
Equis and that it intended to issue a press release announcing that those
discussions had been terminated. During the following week Parent, together
with representatives of Heller and Equis, reiterated its interest in pursuing
the proposed transactions and on November 9, 1999, proposed that:
. Parent would, through Purchaser, launch a tender offer to acquire the
Company's capital stock;
. Initial Lender would provide financing to Parent to pay for the tendered
shares of the Company's capital stock;
. Heller would acquire, over a period of time after Parent's acquisition
of the Company, the Company's interests in the aircraft portion of the
Leveraged Lease Portfolio;
. a separate subsidiary of Heller, would acquire the Tax Credit LP
Interests;
. Equis would acquire the Real Estate Business (except for those
properties which the Company would convey as an investment in Lessor);
and
. Lessor would lease those real estate assets to Equis.
On November 11, 1999, representatives of the Company and its legal advisors
met with representatives of Equis, Lessor and Parent and their respective
legal advisors to discuss the structure, financing and timing of the proposed
transaction, with particular emphasis on: (1) the economics of the proposed
transaction; and (2) how the exchange transaction with Lessor would impact the
rest of the proposed transaction. The various parties, including Parent, also
updated the Company with respect to their due diligence process.
Throughout the months of November and December, 1999, through January, 2000,
the Company and its legal advisors continued negotiations with Parent and its
legal advisors concerning the Leveraged Lease Portfolio, the proposed
conveyance of the Real Estate Business by the Surviving Corporation to Lessor
and Equis, and the sale of the Tax Credit LP Interests in each case with
respect to the terms of the legal documentation governing the four separate
sales involved in the proposed transactions and Parent's financing commitment
with Initial Lender.
On December 20, 1999, Parent provided to the Company a letter from Brown &
Wood LLP, special tax counsel to Parent and the Purchaser, addressed to the
Company and requested by Parent in order to assist the Company with respect to
its due diligence of the Parent and the Purchaser, and, in particular their
ability to satisfy certain liabilities, including federal income tax
liabilities, that might result from the transactions contemplated by the
Merger Agreement. (The Brown & Wood LLP letter was updated on January 11,
2000.)
From January 5, 2000, through January 6, 2000, representatives of the
Company and its legal advisors met with representatives of Equis, Lessor and
Parent and their respective legal advisors to finalize the terms of the legal
documentation to govern the proposed transactions. The parties discussed:
. the need to obtain the required consents from various parties (including
certain lessees under the Leveraged Lease Portfolio, the holders of
Existing and Assumed Debt (as such terms are defined below under the
headings, "Plans for the Company--Sale of Assets to Buyer"; and "--
Conveyance of Lessor Assets to Lessor") and joint venture partners with
respect to the proposed transaction;
. the logistics of the proposed transaction, including the requirement
that the Surviving Corporation merge with and into a Delaware entity
after the disposition of the Real Estate Business;
. allocation among the parties of the risk of failure to complete one
aspect of the transaction affecting the entire transaction and cost
reimbursement in light of each party's risk;
. the extent of the Company's representations and warranties;
20
<PAGE>
. the circumstances under which the various parties would have the right
to terminate the transaction agreements and the consequences thereof,
including the payment of break-up fees and cost reimbursement;
. the conditions precedent to the closing of the transactions contemplated
by the transaction agreements, including with respect to the Offer to
Purchase;
. conduct of the Company's business during the period between the dates of
the Merger Agreement and the Effective Date, if any, and management of
the related cash flow of the Company during the same period;
. completion of due diligence with respect to both the Leveraged Lease
Portfolio and the Real Estate Business; and
. the assumption by Equis of certain liabilities under the Distribution
Agreement entered into between the Company and Florida Progress in
connection with the Spin-Off of the Company by Florida Progress (the
"Distribution Agreement").
From January 6, 2000, through January 13, 2000, negotiations with respect to
the foregoing continued. From January 12, 2000, through January 13, 2000,
Parent negotiated directly with representatives of the Company and the
purchaser of the Tax Credit LP Interests to complete the Tax Credit Interest
Purchase Agreement as described under the heading "Certain Information
Concerning the Company--Affordable Housing Investments" in Section 7 of this
Offer to Purchase. On January 13, 2000, Parent approved the final form of the
Tax Credit Interest Purchase Agreement negotiated by the Company.
Also, on January 13, 2000, the Company and its legal advisors held
discussions with representatives of Equis, Purchaser and Lessor and their
respective legal advisors regarding:
. the extent of the Company's representations and warranties with respect
to its liabilities;
. the Company's delivery of financial information to the various parties
for the fiscal year ended December 31, 1999;
. the remedies available to the Company's in the event of a default by the
various parties;
. the capitalization and financial condition of the Lessor;
. the circumstances under which the various parties would be obligated to
pay break-up fees to the other parties and to reimburse the other
parties for their out-of-pocket costs and expenses;
. the amount of break-up fees;
. the manner in which the Company's liabilities would be divided among and
assumed by the various parties; and
. the time period after the Surviving Corporation's disposition of the
Company's Real Estate Business before it would be obligated to merge
with and into a Delaware entity.
From January 17, 2000, through January 21, 2000, the Company and its legal
advisors held discussions with representatives of Equis, Purchaser and Lessor
and their respective legal advisors regarding:
. the terms and conditions of the Purchaser's financing;
. the terms and conditions of the consents to be solicited from some of
the Company's lessees in respect of the Leveraged Lease Portfolio,
lenders and joint venture partners in connection with the transactions;
. the press release to be issued by the Company announcing the
transactions;
. the management of the Company's cash flow for the period prior to the
consummation of the Merger; and
21
<PAGE>
. the mechanism for ensuring that there is sufficient cash in the Company
at the time of the Merger to: (1) cover transaction expenses; (2)
provide, in part, for repayment of the Purchaser's financing; and (3)
establish a certain reserve fund to cover liabilities that may arise in
the future.
On January 21, 2000, the Company and its legal advisors held discussions
with representatives of Equis, Parent, Purchaser and Lessor regarding the
finalization of each of the Transaction Documents and the Credit Agreement
consistent with all prior negotiations and agreements and, in particular
concerning the closing procedures described under the heading "Plans for the
Company--Closing Procedures" in Section 12 of this Offer to Purchase, and the
particulars of the Expense Escrow and Minimum Cash Escrow. Upon completion of
those negotiations, and receipt by Purchaser and Parent of satisfactory
evidence that each of the Transaction Documents to which Lessor, Buyer, and
Lessee are parties had been executed and delivered, Parent and Purchaser
executed and delivered each of the agreements described herein to which either
is a party.
Except as set forth in the Introduction, this Section 10 and Section 11 of
this Offer to Purchase, there have been no contacts, negotiations or
transactions during the past two years which would be required to be disclosed
under Item 5 (b) of the Schedule TO between any of Purchaser or Parent or any
of their respective subsidiaries or, to the best knowledge of Purchaser and
Parent, any of those persons listed on Schedule I to this Offer to Purchase
and the Company or its affiliates concerning a merger, consolidation or
acquisition, a tender offer or other acquisition of securities, an election of
directors or a sale or other transfer of a material amount of assets.
11. The Merger Agreement. The following is a summary of the Merger
Agreement, which summary is qualified in its entirety by reference to the
Merger Agreement which is filed as an exhibit to the Tender Offer Statement on
Schedule TO.
The Offer. The Merger Agreement provides that Purchaser will commence the
Offer as promptly as practicable, but in no event later than five (5) business
days after the date of the Merger Agreement, unless the Merger Agreement is
terminated pursuant to its terms or due to a failure to satisfy any of the
conditions set forth under the heading "Certain Conditions of the Offer" below
(the "Tender Offer Conditions").
The obligation of Purchaser to accept for payment and pay for Shares
tendered pursuant to the Offer is subject to the satisfaction of the Minimum
Condition, and further that there shall have been no failure to satisfy any of
the Tender Offer Conditions, any of which may be waived by Parent or Purchaser
(except that the Minimum Condition may be waived only with the prior written
consent of the Company). Purchaser has expressly reserved the right to modify
the terms of the Offer. However, neither Parent nor Purchaser, without the
consent of the Company, may:
. reduce the number of Shares to be purchased in the Offer,
. reduce the Offer Price,
. add to the Tender Offer Conditions,
. modify the Tender Offer Conditions or any other term or condition of the
Offer in a manner adverse to the holders of Common Stock,
. change the form of consideration payable in the Offer, or
. except as provided in the following paragraph, extend the Offer beyond
any scheduled expiration date.
Parent and Purchaser have agreed that, unless the Company otherwise consents
in writing, Purchaser will accept for payment and pay for the Shares as soon
as (but in any event within one business day after the Offer terminates)
Purchaser is permitted to do so under applicable law. If Purchaser is unable
to consummate the Offer on the initial scheduled expiration date because the
Tender Offer Conditions shall not then have been waived or satisfied,
Purchaser shall, unless the Merger Agreement has been terminated in accordance
with its terms, extend the Offer and set a subsequent scheduled expiration
date, and will continue to so extend the Offer
22
<PAGE>
and set subsequent scheduled expiration dates until the termination of the
Merger Agreement in accordance with its terms. However, any such extended
expiration date may not be later than the earlier of (x) 20 business days
following the previously scheduled expiration date and (y) the date on which
Purchaser reasonably believes that all Tender Offer Conditions will be
satisfied or waived.
Company Action. The Merger Agreement provides that the Company approves of
and consents to the Offer, and represents that the Board of Directors, at a
meeting duly called and held, has:
. determined that the Offer is fair to, and in the best interests of, the
holders of Common Stock,
. approved the Offer, and
. determined to recommend the acceptance of the Offer by the shareholders
of the Company.
Such recommendation or other action may, however, be withdrawn, modified or
amended at any time or from time to time in a manner adverse to Parent and
Purchaser so long as the Company has complied with the provisions regarding
the solicitation of other offers described under "No Solicitation of Other
Offers" below. The Company further represents and warrants in the Merger
Agreement that DLJ has delivered to the Board of Directors of the Company its
opinion that the consideration to be received by the holders of Common Stock
(other then Parent or Purchaser) pursuant to the Offer and the Merger is fair
to the holders of Common Stock from a financial point of view, subject to
certain assumptions and qualifications contained in such opinion.
The Merger. The Merger Agreement provides that, on the terms and subject to
the conditions of the Merger Agreement and subject to, and in accordance with,
the applicable provisions of the FBCA, at the Effective Time (as defined
below), Purchaser shall be merged with and into the Company and the separate
corporate existence of Purchaser shall cease and the Company shall continue as
the surviving corporation under the laws of the State of Florida under the
name of "Echelon International Corporation".
On the date of acceptance of payment and immediately following payment to
the Paying Agent for not less than 80% of all the Shares outstanding
(calculated on a fully diluted basis) in accordance with the Offer, Purchaser
will cause articles of merger (the "Articles of Merger") to be filed with the
office of the Department of State of the State of Florida in a manner required
by the FBCA and will take such other and further actions as may be required by
law to make the Merger effective. The Merger will become effective at the time
when the Articles of Merger are duly filed with the Department of State of the
State of Florida. The time and the date as of which the Merger becomes
effective in accordance with applicable law is referred to herein as the
"Effective Time" or the "Effective Date", as applicable. From and after the
Effective Time, the Merger will have the effects set forth in the FBCA.
The Amended and Restated Articles of Incorporation and the By-laws of the
Company in effect immediately prior to the Effective Time shall be the
Articles of Incorporation and By-laws of the Surviving Corporation until
thereafter duly amended as provided by law. For a period of 180 days after the
Effective Time, the Surviving Corporation will have the right to use the word
"Echelon" as its tradename, but only for the purposes of identifying itself as
the appropriate business entity in dealing with third parties to facilitate
the sale of the assets to be conveyed pursuant to the Purchase and Sale
Agreement and the Subscription Agreement (collectively, the "Real Estate
Disposition Agreements") and in connection with the management of and any sale
to any third party purchaser of any remaining asset of the Company including
the Leveraged Lease Portfolio and not for any other purpose, including,
without limitation, use of "Echelon" as a trademark for the purpose of
marketing or promoting any product or service.
The directors of Purchaser immediately prior to the Effective Time shall be
the initial directors of the Surviving Corporation, each of such directors to
hold office, subject to the applicable provisions of the Articles of
Incorporation and By-Laws of the Surviving Corporation, until the next annual
shareholders' meeting of the Surviving Corporation and until their respective
successors shall be duly elected or appointed and qualified. At the Effective
Time, the officers of the Company immediately prior to the Effective Time
shall, subject to the
23
<PAGE>
applicable provisions of the Articles of Incorporation and By-Laws of the
Surviving Corporation, be the initial officers of the Surviving Corporation
until their respective successors shall be duly elected or appointed and
qualified; provided that prior to the Effective Date the officers of the
Company shall have tendered their respective resignations to be effective upon
consummation of the Merger and of the transactions contemplated by the Real
Estate Disposition Agreements.
Conversion of Stock. The Merger Agreement provides that, at the Effective
Time, each share of Common Stock then issued and outstanding (other than (i)
any Shares which are held by any subsidiary of the Company or in the treasury
of the Company, or which are held, directly or indirectly, by Parent or any
direct or indirect subsidiary of Parent (including Purchaser), all of which
shall be canceled and none of which shall receive any payment with respect
thereto and (ii) Shares held by Dissenting Shareholders (as defined below))
shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into and represent the right to receive an amount
in cash, without interest, equal to the price paid for each Share pursuant to
the Offer (the "Merger Consideration"), upon surrender, in the manner provided
in the Merger Agreement, of the certificate that formerly evidenced such
Share. At the Effective Time, each share of common stock of Purchaser then
issued and outstanding shall, by virtue of the Merger and without any action
on the part of the holder thereof, become one fully paid and nonassessable
share of common stock of the Surviving Corporation.
Dissenting Stock. Notwithstanding anything in the Merger Agreement to the
contrary but only to the extent required by the FBCA, Shares that are issued
and outstanding immediately prior to the Effective Time and are held by
holders of Common Stock who comply with all the provisions of the FBCA
concerning the right of holders of Common Stock to dissent from the Merger and
require an appraisal of their Shares (the "Dissenting Shareholders") shall not
be converted into the right to receive the Merger Consideration but shall
become the right to receive such consideration as may be determined to be due
such Dissenting Shareholder pursuant to the FBCA; provided that (i) if any
Dissenting Shareholder shall subsequently deliver a written withdrawal of his
or her demand for appraisal (with the written approval of the Surviving
Corporation, to the extent permitted by the FBCA), or (ii) if any Dissenting
Shareholder fails to establish and perfect, or shall have effectively
withdrawn or lost, his or her entitlement to appraisal rights as provided by
applicable law, or (iii) to the extent permitted by the FBCA, if within the
time period prescribed by the FBCA neither any Dissenting Shareholder nor the
Surviving Corporation has filed a petition demanding a determination of the
value of the Shares outstanding at the Effective Time and held by Dissenting
Shareholders, in accordance with applicable law, then such Dissenting
Shareholder or Dissenting Shareholders, as the case may be, shall forfeit the
right to appraisal of such Shares and such Shares shall thereupon be deemed to
have been converted into the right to receive, as of the Effective Time, the
Merger Consideration, without interest. The Company shall give Parent and
Purchaser (a) notice of any written demands for appraisal, withdrawals of
demands for appraisal and any other related instruments received by the
Company and (b) the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal. The Company will not voluntarily make
any payment with respect to any demands for appraisal and will not, except
with the prior written consent of Parent, settle or offer to settle any
demand.
Surrender of Certificates. The Merger Agreement further provides that, as
soon as practicable after the Effective Time, Parent shall or shall cause the
Paying Agent to mail and/or make available to each holder of a certificate
theretofore evidencing Shares (other than those which are held by any
subsidiary of the Company or in the treasury of the Company or which are held
directly or indirectly by Parent or any direct or indirect subsidiary of
Parent (including Purchaser)) a notice and letter of transmittal advising such
holder of the effectiveness of the Merger and the procedure for surrendering
to the Paying Agent such certificate or certificates which immediately prior
to the Effective Time represented outstanding Common Stock (the
"Certificates") in exchange for the Merger Consideration deliverable in
respect thereof pursuant to the Merger Agreement. Upon the surrender for
cancellation to the Paying Agent of such Certificates, together with a letter
of transmittal, duly executed and completed in accordance with the
instructions thereon, and any other items specified by the letter of
transmittal, the Paying Agent shall promptly pay to the person entitled
thereto the Merger Consideration deliverable in respect thereof. Until so
surrendered, each Certificate shall be deemed, for all corporate purposes,
24
<PAGE>
to evidence only the right to receive upon such surrender the Merger
Consideration deliverable in respect thereof to which such person is entitled
pursuant to the Merger Agreement. No interest shall be paid or accrued in
respect of such cash payments.
The Merger Agreement further provides that, if the Merger Consideration (or
any portion thereof) is to be delivered to a person other than the person in
whose name the surrendered Certificates are registered, it shall be a
condition to the payment of the Merger Consideration that the Certificates so
surrendered shall be properly endorsed or accompanied by appropriate stock
powers and otherwise in proper form for transfer, that such transfer otherwise
be proper and that the person requesting such transfer pay to the Paying Agent
any transfer or other taxes payable by reason of the foregoing or establish to
the satisfaction of the Paying Agent that such taxes have been paid or are not
required to be paid.
The Merger Agreement also provides that, in the event any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or destroyed,
the Paying Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration deliverable in respect thereof as
determined in accordance with the Merger Agreement; provided that the person
to whom the Merger Consideration is paid shall, as a condition precedent to
the payment thereof, give the Surviving Corporation a bond in such sum as it
may direct or otherwise indemnify the Surviving Corporation in a manner
satisfactory to it against any claim that may be made against the Surviving
Corporation with respect to the Certificate claimed to have been lost, stolen
or destroyed.
Payment. The Merger Agreement further provides that, concurrently with or
immediately prior to the Effective Time, Parent or Purchaser shall deposit, or
cause to be deposited, in trust with the Paying Agent cash in United States
dollars in an aggregate amount equal to the product of (i) the number of
Shares outstanding immediately prior to the Effective Time (other than Shares
which are held by any subsidiary of the Company or in the treasury of the
Company or which are held directly or indirectly by Parent or any direct or
indirect subsidiary of Parent (including Purchaser) or a person known at the
time of such deposit to be a Dissenting Shareholder) and (ii) the Merger
Consideration (hereinafter referred to as the "Payment Fund"). The Payment
Fund shall be invested by the Paying Agent as directed by Parent in direct
obligations of the United States, obligations for which the full faith and
credit of the United States is pledged to provide for the payment of principal
and interest, commercial paper rated of the highest quality by Moody's
Investors Services, Inc. or Standard & Poor's Ratings Group or certificates of
deposit, bank repurchase agreements or bankers' acceptances of a commercial
bank having at least $1,000,000,000 in assets (collectively, "Permitted
Investments") or in money market funds which are invested in Permitted
Investments, and any net earnings with respect thereto shall be paid to Parent
as and when requested by Parent. The Paying Agent shall, pursuant to
irrevocable instructions, make the payments referred to above out of the
Payment Fund. The Payment Fund shall not be used for any other purpose except
as otherwise agreed to by Parent. Promptly following six months after the
Effective Time, the Paying Agent shall return to the Surviving Corporation all
cash, certificates and other instruments in its possession that constitute any
portion of the Payment Fund, and the Paying Agent's duties shall terminate.
Thereafter, each holder of a Certificate may surrender such Certificate to the
Surviving Corporation and (subject to applicable abandoned property, escheat
and similar laws) receive in exchange therefor the Merger Consideration,
without interest, but shall have no greater rights against the Surviving
Corporation or Parent than may be accorded to general creditors of the
Surviving Corporation or Parent under applicable law. Notwithstanding the
foregoing, neither the Paying Agent nor any party to the Merger Agreement
shall be liable to a holder of Shares for any Merger Consideration delivered
to a public official pursuant to applicable abandoned property, escheat and
similar laws.
No Further Rights of Transfer. At and after the Effective Time, each holder
of a Certificate shall cease to have any rights as a shareholder of the
Company, except for, in the case of a holder of a Certificate (other than
shares to be canceled pursuant to the above provisions and other than shares
held by Dissenting Shareholders), the right to surrender his or her
Certificate in exchange for payment of the Merger Consideration or, in the
case of a Dissenting Shareholder, to perfect his or her right to receive
payment for his or her Shares pursuant to the FBCA if such holder has validly
perfected and not withdrawn his or her right to receive payment for his or her
shares, and no transfer of Shares shall be made on the stock transfer books of
the Surviving Corporation.
25
<PAGE>
Certificates presented to the Surviving Corporation after the Effective Time
shall be canceled and exchanged for cash as provided in the Merger Agreement.
At the close of business on the day of the Effective Time the stock ledger of
the Company with respect to Common Stock shall be closed.
Stock Option and Other Plans. Prior to the Effective Time, the Board of
Directors of the Company (or, if appropriate, any committee thereof) shall
adopt appropriate resolutions and use its reasonable best efforts to take all
other actions necessary to provide for the cancellation, effective at the
Effective Time, of all the outstanding stock options to purchase Common Stock
(the "Options") granted under any stock option plan of the Company (the "Stock
Plans"). Immediately prior to the Effective Time, the Company shall use its
reasonable best efforts to ensure that (i) each Option, whether or not then
vested or exercisable, shall no longer be exercisable for the purchase of
Shares but shall entitle each holder thereof, in cancellation and settlement
therefor, to payments by the Company in cash (subject to any applicable
withholding taxes, the "Cash Payment"), at the Effective Time, equal to the
product of (x) the total number of Shares subject to such Option as to which
such Option could have been exercised as of the Effective Date and (y) the
excess of the Merger Consideration over the exercise price per share of Common
Stock subject to such Option, each such Cash Payment to be paid to each holder
of an outstanding Option at the Effective Time and (ii) each share of Common
Stock previously issued in the form of grants of restricted stock or grants of
contingent or bonus shares, and not vested prior to the Effective Time, shall
fully vest and be paid by the Company in cash at the Effective Time in an
amount equal to the Merger Consideration (subject to applicable withholding
taxes) and otherwise in accordance with their respective terms. Prior to the
Effective Time, the Board of Directors of the Company shall adopt appropriate
resolutions and use its reasonable best efforts to take all other actions
necessary to provide for the purchase prior to the Effective Time of Shares
covered by subscriptions outstanding under the Echelon International
Corporation 1996 Employee Stock Purchase Plan. As provided in the Merger
Agreement, the Company shall use its reasonable best efforts to ensure that
the Company's Stock Plans shall terminate as of the Effective Time and the
provisions of any employee benefit plan providing for the issuance or grant of
shares of the capital stock of the Company shall be deleted as of the
Effective Time. The Company will take all reasonable steps to ensure that
neither the Company nor any of its subsidiaries is or will be bound by any
Options, other options, warrants, rights or agreements which would entitle any
person, other than Parent or its affiliates, to own or purchase any capital
stock of the Surviving Corporation or any of its subsidiaries. The Company
will use its reasonable best efforts to obtain any necessary consents to
ensure that after the Effective Time, the only rights of the holders of
Options, in respect of such Options, will be to receive the Cash Payment in
cancellation and settlement thereof.
Representation and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto including,
without limitation, representations and warranties by the Company and Parent
and Purchaser as to the parties' due organization, good standing and power and
with respect to the authorization and validity of the Merger Agreement, and
with respect to broker's or finder's fees. The Merger Agreement also contains
representations and warranties of the Company as to the Company's
capitalization, the absence of any required filings and consents, the
Company's reports and financial statements, the absence of certain changes,
title to property and encumbrances related thereto, real property leases, the
Leveraged Lease Portfolio, compliance with laws, the absence of litigation,
employee benefit plans, taxes, liabilities, intellectual property matters,
material contracts, environmental matters, state takeover statutes, the
Company's Rights Agreement relating to the Rights, year 2000 compliance, the
fairness opinion of the Company's financial advisor, and certain matters
relating to the Distribution Agreement. In addition, the Merger Agreement
contains representations and warranties of Parent and Purchaser with respect
to: the capitalization of Purchaser, the financing for the Offer, the size of
Parent, Purchaser and their affiliates for purposes of the HSR Act, capital
contributions of Parent to Purchaser, Purchaser's cash on hand of at least
$2,000,000, and the solvency of Parent and Purchaser. See "Certain Information
Concerning Purchaser and Parent" above.
Access to Information Concerning Properties and Records; Delivery of
Financial Information. (a) During the period commencing on the date of the
Merger Agreement and ending on the Effective Date, the Company shall, and
shall cause each of its subsidiaries to, upon reasonable notice, afford Parent
and Purchaser, and their
26
<PAGE>
respective counsel, accountants, consultants and other authorized
representatives, reasonable access during normal business hours to the
employees, properties, books and records of the Company and its subsidiaries
in order that they may have the opportunity to make such investigations as
they shall desire of the affairs of the Company and its subsidiaries (other
than relating to those assets with respect to which no liability shall be
retained by the Surviving Corporation after giving effect to the transactions
contemplated by the Real Estate Disposition Agreements). The Company shall
furnish promptly to Parent and Purchaser (i) a copy of each report, schedule,
registration statement and other document filed by it or its subsidiaries
during such period pursuant to the requirements of Federal or state securities
laws and (ii) all other information concerning its or its subsidiaries'
business, properties and personnel as Parent and Purchaser may reasonably
request. The Company agrees to cause its officers and employees to furnish
such additional financial and operating data and other information and respond
to such inquiries as Parent and Purchaser shall from time to time reasonably
request.
(b) On or prior to February 15, 2000, the Company will deliver to Parent a
copy of all written information prepared by the Company with respect to its
fiscal year ended December 31, 1999 of the type which the Company customarily
prepares to initially deliver to its independent auditors (prior to responding
to any inquiries from its independent auditors) in connection with the
preparation of the Company's financial statements in accordance with generally
accepted accounting principles for the end of a fiscal year of the Company.
(c) During the period commencing on the date of the Merger Agreement and
ending on the Effective Date, to the extent (and only to the extent) that the
Company delivers to its independent auditors any written information prepared
by the Company relating to the fiscal year ended December 31, 1999 or any
prior period or otherwise bearing upon the condition of the Company and its
subsidiaries taken as a whole, the Company shall, concurrently with such
delivery of written information to its independent auditors, deliver to Parent
true and complete copies of all such written information.
The Merger Agreement provides that information obtained by Parent and
Purchaser and their respective counsel, accountants, consultants and other
authorized representatives pursuant to the Merger Agreement is subject to the
provisions of the Confidentiality Agreement between DLJ, as an agent for the
Company and an agent for ETA Holding Corp., the manager of Parent dated April
21, 1999.
Conduct of the Business of the Company Pending the Effective Date. Except as
permitted, required or contemplated by, or otherwise described in, the Merger
Agreement, the disclosure letter of the Company related thereto (the "Company
Disclosure Letter"), the Real Estate Disposition Agreements or otherwise
consented to or approved by Parent (which consent or approval shall not be
unreasonably withheld, conditioned or delayed), during the period commencing
on the date of the Merger Agreement and ending on the Effective Date:
. the Company and each of its subsidiaries will conduct their respective
operations only according to their ordinary course of business
consistent with past practice and will use their reasonable best efforts
to preserve intact their respective business organizations, keep
available the services of their officers and employees and maintain
satisfactory relationships with licensors, suppliers, distributors,
clients, landlords, joint venture partners, employees and others having
business relationships with them;
. neither the Company nor any of its subsidiaries shall:
. make any change in or amendment to its articles of incorporation or
by-laws (or comparable governing documents);
. authorize for issuance, issue, sell or deliver (or agree or commit
to issue, sell or deliver), whether pursuant to the issuance or
granting of options, warrants, commitments, subscriptions, rights to
purchase or otherwise, any shares of its capital stock (other than
in connection with: (A) the exercise of certain options outstanding
on the date of the Merger Agreement or (B) the exercise of
subscription rights set forth in the Echelon International
Corporation 1996 Employee Stock Purchase Plan (as in effect on the
date of the Merger Agreement and as may be amended as contemplated
by the above provisions of the Merger Agreement));
27
<PAGE>
. sell or pledge or agree to sell or pledge any stock owned by it in
any of its subsidiaries;
. enter into any contract or commitment with respect to capital
expenditures;
. acquire (by merger, consolidation, acquisition of stock or assets or
otherwise) any corporation, partnership or other business or
division thereof (provided that any subsidiary of the Company may be
merged with and into the Company or any subsidiary of the Company);
. cancel, amend or modify, in any material respect, any contract
disclosed in the Company Disclosure Letter or enter into any
contract that, if in effect on the date of the Merger Agreement,
would be required to be set forth in the Company Disclosure Letter;
. amend or modify either of the Real Estate Disposition Agreements, or
waive any term or condition thereunder, in each case in any manner
that (A) is adverse to Parent and Purchaser or (B) amends or
modifies Schedule I to either of the Real Estate Disposition
Agreements;
. except as permitted by the Real Estate Disposition Agreements,
acquire any assets or securities;
. except to the extent required under existing employee and director
benefit plans, agreements or arrangements as in effect on the date
of the Merger Agreement, (A) increase the compensation or fringe
benefits of any of its directors, officers or employees, (B) grant
any severance or termination pay not currently required to be paid
under existing severance plans, (C) enter into any employment,
consulting or severance agreement or arrangement with any present or
former director, officer or other employee of the Company or any of
its subsidiaries or (D) establish, adopt, enter into or amend or
terminate any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit
of any directors, officers or employees;
. except in the ordinary course of business with respect to the Total
Assets (as defined below and including assets acquired as permitted
by the Merger Agreement) only, subject to the terms and conditions
of the Real Estate Disposition Agreements, and otherwise without
exception, transfer, lease, license, guarantee, sell, mortgage,
pledge, dispose of, encumber or subject to any lien, any material
assets (including in any event any asset subject to a lease in the
Leveraged Lease Portfolio) or incur or modify any indebtedness for
borrowed money (other than for borrowings under existing lines of
credit and indebtedness for working capital in the ordinary course
of business);
. make any tax election or settle or compromise any tax liability;
. except as required by applicable law or generally accepted
accounting principles, make any change in its method of accounting;
. adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries not
constituting an inactive subsidiary (other than in connection with
(A) the Merger or (B) any merger of a subsidiary of the Company with
and into the Company or any other subsidiary of the Company);
. make any loans, advances or capital contributions to, or investment
in, any other person, other than to any direct or indirect
subsidiary of the Company;
. declare, set aside or pay any dividends on, or make or cause to be
made any other distributions in respect of, any of its capital stock
or other equity securities or any interest in any trust that holds
title to any asset included in the Leveraged Lease Portfolio other
than dividends and distributions by a direct or indirect subsidiary
of the Company to its parent;
. split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock;
28
<PAGE>
. enter into any agreement providing for the acceleration of payment
or performance or other consequence as a result of the transactions
contemplated thereby or any other change of control of the Company;
. purchase, redeem or otherwise acquire any shares of capital stock of
the Company or any subsidiary or any rights, warrants or options to
acquire any such shares or other securities; or
. agree, in writing or otherwise, to take any of the foregoing
actions; and
. the Company shall not, and shall not permit any of its subsidiaries to:
. take any action, engage in any transaction or enter into any
agreement which would cause any of the representations or warranties
set forth in the Merger Agreement to be untrue as of the Effective
Date, or
. purchase or acquire, or offer to purchase or acquire, any shares of
capital stock of the Company.
The Merger Agreement also provides that, notwithstanding anything to the
contrary set forth in the Merger Agreement, the Company and its subsidiaries
shall be permitted to conduct their respective real estate operations (so long
as they (x) relate only to the Total Assets (as defined below) and (y) would
not result in any reduction to the purchase price or transfer value payable
under any Real Estate Disposition Agreement), including, without limitation,
(i) acquire (by merger, consolidation, or acquisition of stock or assets) any
corporation, partnership, limited liability company or other business or
division thereof, (ii) enter into any contract or commitment with respect to
capital expenditures, (iii) cancel, amend or modify any contract, (iv) acquire
a material amount of assets or securities, (v) transfer, lease, license,
guarantee, sell, mortgage, pledge, dispose of, encumber or subject to any
lien, any material assets or incur or modify any indebtedness for borrowed
money, (vi) make any loans, advances or capital contributions to, or
investment in, any other person and (vii) agree, in writing or otherwise, to
take any of the foregoing actions) as the Company or its subsidiaries, as
applicable, shall deem necessary or desirable in its sole discretion.
Shareholder Approval. Pursuant to the Merger Agreement, in the event the
Minimum Condition is satisfied, Parent and Purchaser have agreed to take all
necessary and appropriate action to cause the Merger to become effective as
soon as reasonably practicable after the completion of the Offer, without a
meeting of the Company's shareholders, in accordance with the relevant
provisions of the FBCA.
Reasonable Best Efforts. Subject to the terms and conditions provided
herein, each of the Company, Parent and Purchaser shall, and the Company shall
cause each of its subsidiaries to, cooperate and use their respective
reasonable best efforts to take, or cause to be taken, all appropriate action,
and to make, or cause to be made, all filings necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by the Merger Agreement, including, without
limitation, their respective reasonable best efforts to obtain, prior to the
Effective Date, all licenses, permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities and parties to contracts
with the Company and its subsidiaries as are necessary to fulfill the
conditions to the Offer. Parent has also agreed, in its capacity as sole
shareholder of the Surviving Corporation, to take or cause to be taken,
subject to the terms and conditions of the Merger Agreement, all appropriate
action necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by the Real Estate
Disposition Agreements, including, without limitation, executing and
delivering any consents required under applicable laws and regulations.
No Solicitation of Other Offers. The Merger Agreement further provides that
the Company and its affiliates and each of their respective officers,
directors, employees, representatives, consultants, investment bankers,
attorneys, accountants and other agents shall immediately cease any existing
discussions or negotiations with any other parties that may be ongoing with
respect to any Acquisition Proposal (as defined below). Neither the Company
nor any of its affiliates shall take (and the Company shall not authorize or
permit any of its officers, directors, employees, representatives,
consultants, investment bankers, attorneys, accountants or other agents, to
29
<PAGE>
so take) any action (i) to solicit, initiate or knowingly encourage the making
of any Acquisition Proposal or (ii) to have any discussions or negotiations
with, or, furnish or disclose any information to, any person (other than
Parent or Purchaser) in furtherance of, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or is reasonably
expected to lead to, any Acquisition Proposal; provided that, to the extent
that the failure to take such action would reasonably be likely to breach the
fiduciary obligations of the Board of Directors of the Company, as determined
in good faith by a majority of the disinterested members thereof based on the
advice of outside counsel, the Company may, in response to an Acquisition
Proposal that was not solicited by the Company and that did not otherwise
result from a breach of the above provisions of the Merger Agreement, furnish
information with respect to the Company and its subsidiaries to any person
pursuant to a customary confidentiality agreement and participate in
discussions or negotiations with respect to any Acquisition Proposal.
The Merger Agreement further provides that neither the Board of Directors of
the Company nor any committee thereof shall:
. withdraw or modify in a manner adverse to Parent or Purchaser, the
approval of the Merger Agreement or the recommendation by the Board of
Directors or any such committee of the Offer,
. approve any letter of intent, agreement in principle, acquisition
agreement or similar agreement relating to any Acquisition Proposal,
. approve or recommend any Acquisition Proposal or
. enter into any agreement with respect to any Acquisition Proposal.
Notwithstanding the foregoing, if the Company receives a Superior Proposal (as
defined below) and a majority of the disinterested directors of the Company
determine in good faith, based on the advice of outside counsel, that failure
to take such action would reasonably be likely to breach their fiduciary
obligations, the Board of Directors of the Company may, no sooner than 3
business days following delivery to Parent of notice of such Superior Proposal
in compliance with the above provisions of the Merger Agreement, withdraw or
modify its approval of the Merger Agreement or recommendation of the Offer and
may take any other action otherwise prohibited by the above provisions of the
Merger Agreement.
The Merger Agreement further provides that the Company promptly shall advise
Parent orally and in writing of any Acquisition Proposal and the identity of
the person making any such Acquisition Proposal including any change to the
material terms of any such Acquisition Proposal or inquiry. The Company shall
(i) keep Parent fully informed of the status including any change to the terms
of any such Acquisition Proposal or inquiry and (ii) provide to Parent, as
soon as practicable after receipt or delivery thereof, copies of all
correspondence and other written material sent or provided to the Company from
any third party in connection with any Acquisition Proposal or sent or
provided by the Company to any third party in connection with any Acquisition
Proposal.
The Merger Agreement further provides that nothing in the provisions
described above shall prevent the Company or its Board of Directors from
taking and disclosing to the Company's shareholders a position contemplated by
Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act with respect to
any tender offer. Any actions permitted under, and taken in compliance with,
the above provision shall not be deemed a breach of any other covenant or
agreement of such party contained in the Merger Agreement.
For purposes of the Merger Agreement (i) "Acquisition Proposal" means any
inquiry, proposal or offer from any person or group relating to any direct or
indirect acquisition or purchase of a substantial amount of assets of the
Company or any of its subsidiaries or of all or any portion of any class of
equity securities of the Company or any of its subsidiaries, any tender offer
or exchange offer that if consummated would result in any person beneficially
owning all or any portion of any class of equity securities of the Company or
any of its subsidiaries, any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or any transaction having similar
economic effect involving the Company or any of its subsidiaries, other than
the transactions contemplated by the Merger Agreement and the Real Estate
Disposition Agreements, and
30
<PAGE>
(ii) "Superior Proposal" means a bona fide written proposal made by a third
party to acquire all or substantially all of the Company pursuant to a tender
offer, exchange offer, a merger or other business combination or a sale of all
or substantially all of the assets of the Company and its subsidiaries on
terms which a majority of the disinterested members of the Board of Directors
of the Company determines in their good faith reasonable judgment (after
consultation with its financial advisors and outside counsel) (i) would, if
consummated, be superior to the holders of Common Stock from a financial point
of view than the Merger, taking into account all the terms and conditions of
such Acquisition Proposal and the Merger Agreement, and (ii) is reasonably
capable of being completed.
Notification of Certain Matters. The Merger Agreement provides that the
Company shall give prompt notice to Parent, and Parent and Purchaser shall
give prompt notice to the Company, of the occurrence, or failure to occur, of
any event, which occurrence or failure to occur would likely cause any
representation or warranty contained in the Merger Agreement to be untrue in
any material respect at any time from the date of the Merger Agreement to the
Effective Time. Each of the Company and Parent shall give prompt notice to the
other party of any notice or other communication from any third party alleging
that the consent of such third party is or may be required in connection with
the transactions contemplated by the Merger Agreement.
HSR Act. The Merger Agreement further provides that the Company and Parent
shall, as soon as practicable and in any event within ten business days from
the date of the Merger Agreement, file, if required, Notification and Report
Forms under the HSR Act with the Federal Trade Commission (the "FTC") and the
Antitrust Division of the Department of Justice (the "Antitrust Division") and
shall use their reasonable best efforts to respond as promptly as practicable
to all inquiries received from the FTC or the Antitrust Division, including,
without limitation, a request for additional information or documentation.
Employment Agreements. Immediately following the consummation of the Merger,
the Company shall pay any and all amounts, to the extent then due and payable
(including as a result of the consummation of the Merger), under the
employment agreements between the Company and its employees (including,
without limitation, the senior officers) subject to no conditions other than
the prior or concurrent delivery by each such employee of a written statement
to the Company terminating his or her employment agreement with the Company
effective upon consummation of the Merger. Pursuant to their employment
agreements and rights under the Stock Plans, certain senior officers of the
Company are entitled to receive, and shall be paid, severance payments in
respect of the termination of their employment with the Company, as well as
the net cash payments and other bonus payments due to them as a result of the
Merger.
Directors' and Officers' Insurance; Indemnification. The Merger Agreement
further provides that the Articles of Incorporation and the By-Laws of the
Surviving Corporation shall contain the provisions with respect to
indemnification and exculpation from liability set forth in the Company's
Amended and Restated Articles of Incorporation and By-Laws on the date of the
Merger Agreement, which provisions shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who on or prior to
the Effective Time were directors, officers, employees or agents of the
Company, unless such modification is required by law.
The Merger Agreement further provides that for six years from the Effective
Time, the Surviving Corporation shall either maintain in effect the Company's
current directors' and officers' liability insurance covering those persons
who are currently covered on the date of the Merger Agreement by the Company's
directors' and officers' liability insurance policy or substitute for such
Company policies, policies with at least the same coverage containing terms
and conditions which are no less advantageous and provided that said
substitution does not result in any gaps or lapses in coverage with respect to
matters occurring prior to the Effective Time. The cost to the Surviving
Corporation of maintaining such directors' and officers' liability insurance
policies shall be paid by the Company upon consummation of the Merger.
31
<PAGE>
Guaranty of Performance. The Merger Agreement provides that Parent
guarantees the performance of Purchaser of its obligations under the Merger
Agreement and the obligations of the Surviving Corporation under the above
provisions relating to employment agreements, directors' and officers'
insurance and indemnification.
Financing; Capital; Capitalization; Solvency; Going Concern. The Merger
Agreement requires Parent and Purchaser to, and to cause their respective
officers, directors, employees, agents, affiliates, financial advisors and
other representatives to, use their reasonable best efforts to satisfy all
conditions precedent set forth in the Credit Agreement and, subject only to
the simultaneous consummation of the transactions contemplated by the Merger
Agreement, to incur the financing provided thereby on the terms set forth
therein in order to finance the consummation of the transactions contemplated
by the Merger Agreement. The Purchaser has agreed that, except to the extent
the Company consents in writing, Purchaser will not amend, modify or
supplement in any material respect the terms or conditions of, or cancel or
waive any material right under, the Credit Agreement.
The Merger Agreement requires Parent to maintain at all times through the
Effective Date unrestricted and unutilized cash on hand in an amount not less
than $2,000,000 and to cause the Surviving Corporation to file all income tax
returns for the current fiscal year and pay all taxes shown to be due thereon.
Parent has also agreed to cause EIN Corp. to be a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware to establish and maintain an office in the State of Delaware, and
to refrain from establishing or maintaining an office in the States of
Georgia, Florida and Alabama. Parent will also cause the Surviving Corporation
to maintain its existence until at least March 31, 2003.
Rights Agreement. The Merger Agreement provides that, except to the extent
permitted in accordance with the above provisions of the Merger Agreement, the
Company shall not (i) redeem the Rights, (ii) amend (other than to delay the
Distribution Date (as defined in the Rights Agreement) or to render the Rights
inapplicable to the Offer and the Merger) or terminate the Rights Agreement
prior to the Effective Time without the consent of Parent, unless required to
do so by a court of competent jurisdiction or (iii) take any action which
would allow any person (as such term is defined in the Rights Agreement) other
than Parent or Purchaser to be the Beneficial Owner (as such term is defined
in the Rights Agreement) of 15% or more of the outstanding Shares without
causing a Distribution Date (as such term is defined in the Rights Agreement)
or any event described in the Rights Agreement to occur.
State Takeover Statutes. The Merger Agreement further provides that if any
"fair price", "control share acquisition", "moratorium", "interested
shareholder" or other anti-takeover statute, or similar statute or regulation,
shall become applicable to the Merger Agreement, the Rights Agreement or any
of the transactions contemplated thereby (including, without limitation, the
Offer), the Company and its Board of Directors shall (subject always to
applicable law and the fiduciary duties of the Board of Directors) take all
action necessary to ensure that the Offer and the other transactions
contemplated by the Merger Agreement may be consummated as promptly as
practicable on the terms contemplated thereby and otherwise to minimize the
effect of such statute or regulation on the Offer and the other transactions
contemplated by the Merger Agreement.
No Other Representations or Warranties. The Merger Agreement further
provides that except for the representations and warranties contained in the
above provisions of the Merger Agreement, neither the Company nor any other
person makes any other express or implied representation or warranty on behalf
of the Company or any of its affiliates. In particular, the Company makes no
representation or warranty to Parent or Purchaser with respect to (a) the
information set forth in the Confidential Information Memoranda and related
materials distributed by DLJ in connection with the offering of the Company
(except to the extent specifically incorporated by reference in the Company
Disclosure Letter) or (b) any financial projection or forecast relating to the
Company.
32
<PAGE>
Insurance. Simultaneously with the execution and delivery of the Merger
Agreement, the Company is obligated to procure, or cause to be procured, and
to maintain in full force and effect for a period expiring no earlier than
thirty (30) days after the expiration of the Offer, insurance covering all
risks of loss with respect to the assets subject to any lease included in the
Leveraged Lease Portfolio in the amounts set forth on Schedule I to the Merger
Agreement at a net premium cost to the Company, after payment or reimbursement
by Purchaser or the Aircraft Purchaser (as defined below), of not more than
$10,000.
Closing Certificate. On the Escrow Closing Date (as defined in the Real
Estate Disposition Agreements), the Company will deliver to Parent a
certificate of the Chief Financial Officer of the Company in the form
specified in the Merger Agreement (the "Closing Certificate"). The Company
shall pay to, and deposit with, the Escrow Agent under an escrow agreement for
disbursement in accordance with the terms and conditions thereof, the Expense
Escrow in a sum equal to the aggregate transaction expenses listed on Schedule
A to the Closing Certificate, including the aggregate amount of all expenses
itemized on such Schedule A that are incurred (or to be incurred) by persons
other than the Company (subject to certain limitations). Not later than 48
hours prior to the Escrow Closing Date, the Company shall provide Parent with
an itemized list of the transaction expenses to be listed on Schedule A to the
Closing Certificate along with any and all substantiation of such transaction
expenses. See "Closing Procedures" in Section 12 of this Offer to Purchase.
Preclearance of Articles of Merger. Parent has agreed that, as soon as
reasonably practicable and in any event not later than five Business Days
prior to the initial expiration date of the Offer, Parent will submit to the
office of the Department of State of the State of Florida draft Articles of
Merger for the purpose of preclearing such Articles of Merger for filing with
the Florida Department of State. Parent will use its reasonable best efforts
to respond as promptly as practicable to all inquiries or comments of the
Florida Department of State with respect thereto and to make all such changes
to the Articles of Merger as shall be necessary to effect the filing of the
Articles of Merger with the Department of State pursuant to the terms and
conditions of the Merger Agreement. Parent will also submit to the office of
the Secretary of State of the State of Delaware a draft certificate of merger
relating to the merger of the Surviving Corporation with and into EIN Corp. as
contemplated by the Merger Agreement, for the purpose of preclearing such
certificate of merger for filing with the Delaware Secretary of State. Parent
will use its reasonable best efforts to respond as promptly as practicable to
all inquiries or comments of the Delaware Secretary of State with respect
thereto and shall make all such changes to the certificate of merger as shall
be necessary to effect the filing thereof with the Delaware Secretary of State
pursuant to the Merger Agreement.
Merger of Surviving Corporation with and into EIN Corp. The Merger Agreement
provides that, immediately following the earlier to occur of (i) the twelfth
(12th) business day following the completion of all transactions contemplated
by the Real Estate Disposition Agreements and (ii) the consummation of the
purchase and sale pursuant to the Omnibus Agreement of the beneficial
interests in the trust estates with respect to certain aircraft identified on
the Merger Agreement, Parent will cause the Surviving Corporation to merge
with and into EIN Corp. such that the separate corporate existence of the
Surviving Corporation will cease, and EIN Corp. shall continue, under that
name, as the surviving corporation under the laws of the State of Delaware,
all in accordance with the applicable provisions of the DGCL. Parent has
agreed that it will, and it will cause the Surviving Corporation to, take all
actions necessary, proper or advisable under applicable laws and regulations
to make such merger effective. The articles of incorporation and by-laws of
the Surviving Corporation, as in effect immediately prior to the consummation
of such merger, will be the Certificate of Incorporation and by-laws of EIN
Corp. until thereafter amended. Such Certificate of Incorporation shall at all
times, however, comply with the requirements for director and officer
insurance and indemnification provided for in the Merger Agreement and may
not, at any time, be amended to include any reference to the word "Echelon"
(or any similar words based thereon or derived therefrom) in the name of EIN
Corp. The By-Laws of the Surviving Corporation, as in effect immediately prior
to the consummation of such merger, will be the By-Laws of EIN Corp. until
thereafter duly amended as provided by law and such By-Laws. Thereafter, all
references in the Merger Agreement to the Surviving Corporation will be deemed
to be references to EIN Corp.
33
<PAGE>
Termination and Abandonment. The Merger Agreement provides that the Merger
Agreement may be terminated and the Offer and the other transactions
contemplated thereby may be abandoned, at any time prior to the Effective
Time:
(a) by mutual consent of the Company, on the one hand, and of Parent and
Purchaser, on the other hand;
(b) by either Parent, on the one hand, or the Company, on the other hand,
if any governmental or regulatory agency shall have issued an order, decree
or ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the acceptance for payment of, or payment for, Shares
pursuant to the Offer or the Merger and such order, decree or ruling or
other action shall have become final and nonappealable;
(c) by either Parent, on the one hand, or the Company, on the other hand,
if due to an occurrence or circumstance which would result in a failure to
satisfy any of the Tender Offer Conditions, Purchaser shall have failed to
pay for Shares pursuant to the Offer within 90 days after commencement of
the Offer (the "Outside Date"), unless such failure to pay for Shares shall
have occurred because of a material breach of any representation, warranty,
obligation, covenant, agreement or condition set forth in the Merger
Agreement on the part of the party seeking to terminate the Merger
Agreement;
(d) by either Parent, on the one hand, or the Company, on the other hand,
if the Offer is terminated or (subject to the above provision of the Merger
Agreement) expires in accordance with its terms without Purchaser having
purchased any Common Stock thereunder due to an occurrence which would
result in a failure to satisfy any of the conditions set forth in the
Merger Agreement; provided that (i) Parent may not terminate the Merger
Agreement pursuant to such provision if such failure shall have been caused
by or resulted from the failure of Parent or Purchaser to perform any
covenant or agreement of either of them contained in the Merger Agreement
or the breach by Parent or Purchaser of any representation or warranty of
either of them contained in the Merger Agreement and (ii) the Company may
not terminate the Merger Agreement pursuant to such provision if such
failure shall have been caused by or resulted from the failure of the
Company to perform any covenant or agreement contained in the Merger
Agreement or the breach by the Company of any representation or warranty
contained in the Merger Agreement;
(e) by Parent, in the event of a breach by the Company of any
representation, warranty, covenant or agreement contained in the Merger
Agreement which (A) would cause any of the representations and warranties
of the Company to be untrue in any material respect, or fail to comply in
any material respect with a covenant under the Merger Agreement or under
either of the escrow agreements referred to therein (other than a
representation, warranty or covenant under the Real Estate Disposition
Agreements relating to the assets subject thereto, so long as the Real
Estate Disposition Agreements shall at all times be in full force and
effect and the purchase price or transfer value, as the case may be, under
each such agreement shall have not been reduced in connection with any such
breach of representation, warranty, covenant or agreement contained in the
Merger Agreement), (B) cannot or has not been cured prior to the earlier of
(i) 15 days after the giving of written notice of such breach to the
Company and (ii) two business days prior to the date on which the Offer
expires and (C) has not been waived by Parent pursuant to the provisions
thereof;
(f) by the Company, if the Company receives a Superior Proposal and a
majority of the disinterested directors of the Company determine in good
faith, based on the advice of outside counsel, that a failure to terminate
the Merger Agreement would be reasonably likely to breach their respective
fiduciary obligations; provided, that the Company shall have complied with
its obligations under the Merger Agreement;
(g) by Parent, if the Company shall have received a Superior Proposal and
(i) the Board of Directors of the Company shall have withdrawn or modified
(including by amendment of the Schedule 14D-9) in a manner adverse to
Parent or Purchaser its approval or recommendation of the Offer, (ii) the
Company or its Board of Directors shall have approved, recommended or
entered into an agreement with respect to, or consummated the transactions
contemplated by, any Acquisition Proposal, or (iii) the Board of Directors
of the Company shall have resolved to do any of the foregoing;
34
<PAGE>
(h) by the Company, in the event of a breach by Parent or Purchaser of
any representation, warranty, covenant or agreement contained in the Merger
Agreement which cannot or has not been cured within the earlier of (i) 15
days after the giving of written notice of such breach to Parent and
Purchaser and (ii) to the extent applicable, two business days prior to the
date on which the Offer expires, except, in any case where such failures
are not reasonably likely to affect adversely Parent's or Purchaser's
ability to complete the Offer;
(i) by the Company, if Parent or Purchaser shall have (i) failed to
commence the Offer within 5 days following the date of the Merger
Agreement, (ii) terminated the Offer or (iii) failed to pay for Shares
pursuant to the Offer on or prior to the earlier of (x) the fifth day after
any Shares tendered in the Offer have been accepted for payment and (y) the
Outside Date, unless in the case of (i) or (ii) such failure shall have
been caused by the failure of the Company to satisfy the conditions set
forth in certain provisions of the Merger Agreement;
(j) by Parent, at any time prior to Purchaser having accepted for payment
Shares pursuant to the Offer, if either of the Real Estate Disposition
Agreements shall have been terminated and be of no further force and
effect; or
(k) by Parent, at any time prior to Purchaser having accepted Shares for
payment pursuant to the Offer, if any person (other than Parent or
Purchaser) shall have acquired beneficial ownership (as defined in Rule
13d-3 promulgated under the Exchange Act) of more than 20% of the
outstanding voting securities of the Company or is granted an option or
right to acquire more than 20% of such voting securities of the Company.
In the event of the termination of the Merger Agreement pursuant to the
provisions thereof by Parent or Purchaser, on the one hand, or the Company, on
the other hand, written notice thereof shall forthwith be given to the other
party or parties specifying the provision thereof pursuant to which such
termination is made, and the Merger Agreement shall become void and have no
effect, and there shall be no liability thereunder on the part of Parent,
Purchaser or the Company, except that the provisions relating to
confidentiality, effect of termination, fees and expenses, applicable law and
waiver of jury trial shall survive any termination of the Merger Agreement.
Nothing in the above provision shall relieve any party to the Merger Agreement
of liability for breach of the Merger Agreement.
In the event of a termination of the Merger Agreement pursuant to clauses
(f), (g) or (k) of the second preceding paragraph, the Company shall pay to
Parent the sum of $2,750,000. In the event of a termination of the Merger
Agreement pursuant to clauses (e), (f), (g), (j) or (k) of the second
preceding paragraph, the Company shall, in addition to paying Parent
$2,750,000, reimburse Parent and Purchaser all of their reasonable out-of-
pocket costs and expenses incurred in connection with the Offer to Purchase,
the Merger Agreement and each of the transactions contemplated by the Merger
Agreement in the sum of up to $1,000,000 (subject to providing reasonable
documentation of such costs and expenses) and the Company shall have no
further liability to Parent or Purchaser thereunder and neither Parent nor
Purchaser shall have any other remedy against the Company. Notwithstanding the
foregoing, in the event of a termination of the Merger Agreement pursuant to
clause (j) of the second preceding paragraph as a result of the termination of
the Subscription Agreement by the Company pursuant to Section 9.1(g) thereof,
the Company will not be obligated to reimburse Parent or Purchaser any of
their out-of-pocket costs and expenses incurred in connection with the Offer
to Purchase, the Merger Agreement or any of the transactions contemplated in
the Merger Agreement.
In the event of a termination of the Merger Agreement by the Company
pursuant to clause (h) of the third preceding paragraph, the Company's sole
remedy will be to receive from Parent and/or Purchaser a sum equal to
$2,750,000 as agreed and liquidated damages, it being agreed that in such
event the Company's actual damages would be incapable of precise ascertainment
and that the foregoing is a reasonable estimate of such damages, and neither
Parent nor Purchaser shall have any further liability to any other party to
the Merger Agreement.
35
<PAGE>
Any payment required to be made by Parent or Purchaser, on the one hand, or
the Company, on the other hand, pursuant to the Merger Agreement will be made
by such party within three business days after receipt by it of notice from
the other party or parties, setting forth, in reasonable detail, (i) a
description of the event(s) giving rise to the payment obligation and (ii)
calculation of the payment obligation.
Fees and Expenses. Except as described above or otherwise required to be
paid by or on behalf of the Company under the Expense Escrow, all costs and
expenses incurred in connection with the Merger Agreement and the consummation
of the transactions contemplated thereby shall be paid by the party incurring
such costs and expenses.
Representations and Warranties. The Merger Agreement further provides that
the respective representations and warranties of the Company, on the one hand,
and Parent and Purchaser, on the other hand, contained therein or in any
certificates or other documents delivered pursuant thereto shall not be deemed
waived or otherwise affected by any investigation made by any party. Each and
every such representation and warranty shall expire with, and be terminated
and extinguished by, the Effective Time and thereafter none of the Company,
Parent or Purchaser shall be under any liability whatsoever with respect to
any such representation or warranty. Such provision shall have no effect upon
any other obligation of the parties thereto, whether to be performed before or
after the Effective Time.
Extension; Waiver. At any time prior to the Effective Time, the parties to
the Merger Agreement, by action taken by or on behalf of the respective Boards
of Directors of the Company, Parent or Purchaser, may (i) extend the time for
the performance of any of the obligations or other acts of the other parties
thereto, (ii) waive any inaccuracies in the representations and warranties
contained therein by any other applicable party or in any document,
certificate or writing delivered pursuant thereto by any other applicable
party or (iii) waive compliance with any of the agreements or conditions
contained therein. Any agreement on the part of any party to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. No waiver by a party of any breach of
the Merger Agreement or of any warranty or representation thereunder by the
other party will be deemed to be a waiver of any other breach by such other
party (whether preceding or succeeding and whether or not of the same or
similar nature), and no acceptance of payment or performance by a party after
any breach by the other party will be deemed to be a waiver of any breach of
the Merger Agreement or of any representation or warranty hereunder by such
other party, whether or not the first party knows of such breach at the time
it accepts such payment or performance. No failure or delay by a party to
exercise any right it may have by reason of the default of the other party
will operate as a waiver of default or modification of the Merger Agreement or
will prevent the exercise of any right by the first party while the other
party continues so to be in default.
12. Purpose Of The Offer; The Merger; Plans For The Company. Purpose. The
purpose of the Offer is to acquire control of, and the entire equity interest
in, the Company. The Offer is being made pursuant to the Merger Agreement. As
promptly as practicable following consummation of the Offer and after
satisfaction or waiver of all conditions to the Merger set forth in the Merger
Agreement, Purchaser intends to acquire the remaining equity interest in the
Company not acquired in the Offer by consummating the Merger.
Vote Required to Approve the Merger. If the Minimum Condition is satisfied,
Purchaser will have the power to approve the Merger and the transactions
contemplated by the Merger Agreement without the affirmative vote of any other
stockholder. Parent and Purchaser have agreed to cause all Shares then owned
by them and their subsidiaries to be voted in favor of the approval of the
Merger Agreement and the Merger. If the Minimum Condition is satisfied,
Purchaser intends to take all necessary and appropriate action to cause the
Merger to become effective as soon as reasonably practicable after such
acquisition, without a meeting of the Company's stockholders, in accordance
with the FBCA. In such event, the Merger would be accomplished without such a
meeting.
Dissenter's Rights. Stockholders do not have appraisal rights as a result of
the Offer. However, if the Merger is consummated, stockholders of the Company
at the time of the Merger who dissent from and do not
36
<PAGE>
vote in favor of the Merger and comply with all statutory requirements
relative to dissention will have the right under the FBCA to demand payment in
cash of the fair value of their Shares outstanding immediately prior to the
Effective Date in accordance with Section 607.1320 of the FBCA.
Under the FBCA, stockholders who comply with the statutory procedures
relative to dissention will, in the event they reject the Company's
determination of fair value, be entitled to receive a judicial determination
of the fair value of their Shares (exclusive of any element of value arising
from the accomplishment or expectation of the Merger) and to receive payment
of such fair value in cash. Any such judicial determination of the fair value
of such Shares could be based upon considerations other than or in addition to
the price paid in the Offer and the Merger and the market value of the Shares.
Stockholders should recognize that the value so determined could be equal to
or higher or lower than the price per Share paid pursuant to the Offer or the
consideration per Share to be paid in the Merger.
THE FOREGOING SUMMARY OF THE RIGHTS OF STOCKHOLDERS DOES NOT PURPORT TO BE A
COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY STOCKHOLDERS DESIRING
TO EXERCISE ANY AVAILABLE APPRAISAL RIGHTS. THE PRESERVATION AND EXERCISE OF
APPRAISAL RIGHTS REQUIRE STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE
FBCA.
The foregoing description of the FBCA is not necessarily complete and is
qualified in its entirety by reference to Section 607.1320 of the FBCA, a copy
of which is attached to this Offer to Purchase as Exhibit A.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may
under certain circumstances be applicable to the Merger following the purchase
of Shares pursuant to the Offer in which Purchaser seeks to acquire any
remaining Shares. Rule 13e-3 should not be applicable to the Merger if the
Merger is consummated within one year after the expiration or termination of
the Offer and the price paid in the Merger is not less than the per Share
price paid pursuant to the Offer. However, in the event that Purchaser is
deemed to have acquired control of the Company pursuant to the Offer and if
the Merger is consummated more than one year after completion of the Offer or
an alternative acquisition transaction is effected whereby stockholders of the
Company receive consideration less than that paid pursuant to the Offer, in
either case at a time when the Shares are still registered under the Exchange
Act, Purchaser may be required to comply with Rule 13e-3 under the Exchange
Act. If applicable, Rule 13e-3 would require, among other things, that certain
financial information concerning the Company and certain information relating
to the fairness of the Merger or such alternative transaction and the
consideration offered to minority stockholders in the Merger or such
alternative transaction, be filed with the Commission and disclosed to
stockholders prior to consummation of the Merger or such alternative
transaction. The purchase of a substantial number of Shares pursuant to the
Offer may result in the Company being able to terminate its Exchange Act
registration. See Section 14. If such registration were terminated, Rule 13e-3
would be inapplicable to any such future Merger or such alternative
transaction.
Plans for the Company.
Generally. If Purchaser obtains control of the Company pursuant to the
Offer, immediately after the Effective Time, Parent expects to cause the
Surviving Corporation and certain of its subsidiaries (the "Seller") to:
. sell certain real estate assets comprising generally the Company's
Multi-Family Development Properties (the "Buyer Assets") to Echelon
Residential LLC ("Buyer") as described under the heading "Plans for the
Company--Sale of Assets to Buyer" below, for approximately $33,000,000;
. convey certain other real estate assets comprising generally the
Company's Income-Producing Assets (the "Lessor Assets" and, together
with the Buyer Assets, the "Total Assets") to Heller Affordable Housing
of Florida, Inc., a Florida corporation ("Lessor"), as described under
the heading "Plans for the Company--Conveyance of Lessor Assets to
Lessor" below for approximately $51,300,000 plus preferred stock of the
Lessor having a liquidation or redemption value of $2,000,000;
37
<PAGE>
. commence the sale to Heller (the "Aircraft Purchaser") of the Company's
interest in eighteen aircraft included in the Leveraged Lease Portfolio
(the "Aircraft") as described under the heading "Plans for the Company--
Sale of Aircraft in Leveraged Lease Portfolio to Aircraft Purchaser"
below for approximately $130,300,000.
The Lessor Assets conveyed to Lessor will be leased by Lessor to Echelon
Commercial LLC, a Delaware limited liability company ("Echelon Commercial"),
pursuant to a net lease substantially in the form of the Lease attached as an
exhibit to the Schedule TO relating to the Offer (the "Lease") as described
under the heading "Plans for the Company--Conveyance of Lessor Assets to
Lessor" below. Under the terms of the Lease, Echelon Commercial shall have the
right to terminate its rental and other obligations in respect of any Lessor
Assets that may be sold to third parties during its term, upon payment of
amounts to Lessor equal to the outstanding balance of the Assumed Debt (as
defined below) with respect to such Lessor Assets and other sums set forth in
Schedule 2 to the Lease adjusted as specified in the Lease for certain sums
paid or payable into the cash collateral account established thereunder to
enhance the creditworthiness of Echelon Commercial, as well as all accrued and
unpaid rent.
Buyer and Echelon Commercial are both newly formed affiliates of Equis,
formed specifically to acquire, by purchase or net lease, the Company's assets
comprising the Real Estate Business. Pursuant to the Purchase and Sale
Agreement, Buyer will offer employment to all employees of the Company,
including senior management (see "Employees and Employee Benefits Matters"
below).
Following the consummation of each of the foregoing transactions, (i) the
Surviving Corporation's sole remaining assets will consist of cash, certain
shares of preferred stock of Lessor received in exchange for the conveyance of
the Lessor Assets to Lessor, its leasehold interest in the real property and
its interest in the building thereon leased to Union Bank of California, N.A.
located in Monterey Park, California, and the beneficial ownership of a
locomotive and related rolling stock leased to Consolidated Rail Corporation,
each as included in the Leveraged Lease Portfolio and not sold to Aircraft
Purchaser. The Surviving Corporation intends to sell such retained assets, but
has no present agreements or commitments to do so, and may hold such retained
assets indefinitely. The Surviving Corporation's liabilities will consist of
non-recourse debt associated with the retained assets, as well as the other
liabilities not assumed by Buyer or Lessor as a result of the foregoing
transactions and any tax liabilities arising from the sale or transfer of the
Total Assets and the Surviving Corporation's interests in the Aircraft. The
Surviving Corporation may make other investments, from time to time, in real
and personal property, intangibles and financial assets, and may raise capital
in the form of assets or cash, by the issuance of equity securities.
Immediately after the earlier to occur of (i) the twelfth (12th) business
day following completion of the sale and/or transfer of the Total Assets of
the Company as described above and (ii) the consummation of the purchase and
sale of the Company's beneficial interests in the trust estates with respect
to certain of the aircraft identified in the Merger Agreement, Parent will
cause the Surviving Corporation to merge with and into EIN Corp., a Delaware
Corporation. Thereafter, the separate corporate existence of the Surviving
Corporation will cease, and EIN Corp. will continue as the surviving
corporation under the laws of the State of Delaware.
Potential Management Investment. The Company has informed Parent that the
Board of Directors of the Company has been advised by Equis that (i) Equis
intends to offer the Company's current management an opportunity to invest
along with Equis in a newly-formed entity formed to acquire a portion of the
Company's real estate operations, and (ii) Equis does not expect this
investment opportunity to exceed 10% of the overall investment in such entity.
The Company has further advised Parent that (i) Equis has informed the Board
of Directors of the Company that it has had only one preliminary conversation
with management as to their potential investment but has no agreement
regarding the same, (ii) Equis intends to discuss this investment proposal
with management and hopes to finalize this investment proposal before the
consummation of the transactions contemplated by the Purchase and Sale
Agreement, (iii) in connection with the investment proposal, Equis has
informed the Board of Directors of the Company that it intends to cause the
new entity to extend employment
38
<PAGE>
offers to management and (iv) Equis has informed the Board of Directors of the
Company that neither management's acceptance of the investment proposal nor
management's acceptance of the employment offers to be extended by the new
entity is a condition to the Buyer's obligations under the Purchase and Sale
Agreement or the Buyer's consummation of the transactions contemplated
thereby.
A. Sale of Assets to Buyer.
The Surviving Corporation and certain of its subsidiaries (collectively
referred to in this Section A as the "Company") will sell the Buyer Assets to
Buyer for the Purchase Price described below pursuant to the terms and
conditions of the Purchase and Sale Agreement, substantially in the form of
the Purchase and Sale Agreement attached as an exhibit to the Schedule TO
relating to the Offer (the "Purchase and Sale Agreement").
Purchase Price. The Purchase Price to be paid by Buyer to acquire the Buyer
Assets (the "Purchase Price") will be equal to (u) $47,921,172, minus (v) a
minimum cash amount of $21,275,000, minus (w) the aggregate amount of cash and
cash equivalents, if any, which is expected to remain in the Company or its
subsidiaries after consummation of all transactions contemplated by the
Purchase and Sale Agreement, the Merger Agreement and the Subscription
Agreement, minus (x) the aggregate amount of cash and cash equivalents
associated with certain customer deposits pursuant to the leases for certain
of the Company's commercial real estate properties, minus (y) the aggregate
outstanding principal amount of the Executive Loans extended by the Company to
certain officers of the Company plus (z) certain expenditures that have been
pre-approved by Buyer.
Terms of Payment. On the date of execution of the Purchase and Sale
Agreement, Buyer delivered to the escrow agent appointed under the Purchase
and Sale Agreement (the "Escrow Agent") $4,275,750, which will be held in an
interest-bearing account with interest accruing thereon constituting a part
thereof (the "Deposit"). The Deposit will be credited to Buyer against the
Purchase Price and will be non-refundable in all instances except as
specifically provided in the Purchase and Sale Agreement and the balance of
the Purchase Price will be paid by Buyer to the Seller in U.S. dollars in
immediately available funds at the time of the closing of the sale of the
Buyer Assets (the "Closing") in accordance with the terms and conditions of
the Purchase and Sale Agreement.
Joint Instructions to the Escrow Agent. Not later than one business day
prior to the Expiration Date as certified by the Company to Buyer (referred to
herein as the "Escrow Closing Date"), Buyer and the Company will deliver to
the Escrow Agent, together with a joint direction letter listing with
specificity all such items, documents, agreements and instruments (the
"Escrowed Items") required to be delivered by Buyer and/or the Company
pursuant to the terms and conditions of the Purchase and Sale Agreement and
necessary to effect the Closing, including, without limitation, the Purchase
Price and the aggregate amount of Asset Sales Proceeds (as defined in the
Purchase and Sale Agreement) from certain enumerated pending transactions. The
joint direction letter will also set forth irrevocable instructions to the
Escrow Agent from Buyer and the Company to the effect that (a) immediately
following the filing by the Escrow Agent of the Articles of Merger with
respect to the Merger with the Department of State of the State of Florida or
the receipt of notice by the Escrow Agent that such filing has occurred, the
Escrowed Items shall be promptly delivered by the Escrow Agent to the party
entitled to same (including, without limitation, that (i) the Purchase Price
be delivered to the Company and (ii) the aggregate amount of Asset Sales
Proceeds be delivered to Buyer), (b) immediately following receipt of written
notice from Buyer or the Company that the Purchase and Sale Agreement has been
terminated pursuant to its terms (see "Termination" below), the Escrowed Items
shall be promptly delivered by the Escrow Agent to the party which had
previously deposited same with the Escrow Agent, and (c) immediately following
receipt of written notice from Buyer that the Expiration Date did not occur on
or prior to the third business day after the Escrow Closing Date, the Escrowed
Items shall be promptly delivered by the Escrow Agent to the party which had
previously deposited same with the Escrow Agent.
Closing Expenses. All costs and expenses associated with the purchase and
sale of the Buyer Assets contemplated in the Purchase and Sale Agreement,
including without limitation, environmental and property condition reports
(but only to the extent procured prior to execution of the Purchase and Sale
Agreement with
39
<PAGE>
the approval of the Company), title insurance premiums, survey preparation
costs, transfer taxes (including all stamp, transfer, documentary, sales, use,
registration and other taxes), document recordation and filing charges, escrow
expenses and other customary costs of the Closing, will be paid by the
Company. Each of Buyer and the Company will be responsible for its due
diligence costs and expenses (including, without limitation, the payment of
the fees and disbursements of its attorneys) and the Company will make any
required payments to DLJ.
Assumed and Excluded Liabilities. The Purchase and Sale Agreement provides,
among other things, that, on the closing date specified therein (the "Closing
Date"), Buyer will (or will cause one or more of its affiliates to) assume and
pay, perform and discharge when due the following ("Assumed Liabilities"):
. all enumerated indebtedness the repayment of which is specifically
secured by the related Buyer Assets (the "Existing Debt"), including any
prepayment obligations related thereto,
. any and all liabilities and obligations of the Company arising out of or
related to any litigation,
. any Real Estate Taxes (as defined in the Purchase and Sale Agreement),
. any and all liabilities and obligations relating to employees and
employee benefits for which Buyer is responsible pursuant to the terms
of the Purchase and Sale Agreement (see "Employees and Employee Benefits
Matters" below),
. any and all liabilities and obligations of the Company arising out of or
related to the Permits, Contracts, Leases (in each case, as defined in
the Purchase and Sale Agreement and whether arising before, on or after
the Closing Date),
. any and all liabilities and obligations (including unpaid transaction
costs) relating to any of the Total Assets sold, transferred or
otherwise disposed of pursuant to a Pending Transaction (as defined
below),
. any and all liabilities and obligations of the Company (as of the
Closing Date) referred to under the column heading "Real Estate Assets &
Liabilities" in the Combining Trial Balance annexed to the Purchase and
Sale Agreement,
. certain liabilities and obligations relating to employees and employee
benefits for which the Company is responsible pursuant to the terms of
the Subscription Agreement (see "Conveyance of the Lessor Assets to
Lessor" below),
. any and all liabilities and obligations of the Company arising out of or
related to the Distribution Agreement (excluding all of the Ancillary
Agreements, as defined in the Distribution Agreement), but only to the
extent same arises out of or relates to the real property assets
included in the Buyer Assets or the real property assets included in the
Lessor Assets that were previously conveyed to the Company pursuant to
the Distribution Agreement but in any event excluding (A) any and all
liabilities and obligations of the Company arising out of or related to
the Florida Progress Business or the Echelon Business (each as defined
in the Distribution Agreement), except for the assumption of liabilities
and obligations by Buyer pursuant to the foregoing provisions of this
bullet point, (B) any and all liabilities and obligations of the Company
arising out of or related to permits, contracts or leases which do not
constitute Permits, Contracts or Leases as defined in the Purchase and
Sale Agreement, and (C) any and all liabilities and obligations with
respect to employee agreements and employee matters, except to the
extent Buyer has expressly assumed responsibility therefor under the
Purchase and Sale Agreement, and
. any and all other liabilities and obligations of the Company arising out
of or relating primarily to the Total Assets (including any and all
liabilities and obligations of the Company arising out of the ownership,
possession, construction, use, access, leasing, maintenance, management,
replacement, renewal, repair, operation, enjoyment, alterations,
modifications, additions, accessions, improvements, appurtenances,
replacements and substitutions thereof and thereto but excluding any and
all liabilities
40
<PAGE>
and obligations of the Company which are expressly not assumed by Buyer
pursuant to preceding bullet point.
The liabilities assumed by Buyer will not include certain liabilities
assumed by Lessor pursuant to the Subscription Agreement and will not include
any liabilities or obligations of the Company or its affiliates or
predecessors that are not expressly assumed by Buyer or Lessor.
Buyer will not assume any liabilities and obligations relating to the
following (which will remain obligations of the Company):
. employees and employee benefits to the extent that the Company is
expressly responsible for such liabilities pursuant to the terms of the
Purchase and Sale Agreement (see "Employees and Employee Benefits
Matters" below),
. the Leveraged Lease Portfolio (including those liabilities and
obligations (as of the Closing Date) referred to under the column
heading "Aircraft Assets & Liabilities" in the Combining Trial Balance
annexed to the Purchase and Sale Agreement),
. the Tax Credit LP Interests (see Section 7 "Certain Information
Concerning the Company" for a discussion of the recent sale of the Tax
Credit LP Interests),
. all taxes (other than Real Estate Taxes),
. performance by the Company of the Purchase and Sale Agreement or the
Merger Agreement (including with respect to any shareholder litigation
relating thereto),
. except to the extent that Buyer is responsible therefor under the
Purchase and Sale Agreement, all obligations (including payments due as
a result of a change of control of Echelon or otherwise) under any
employment agreement entered into by the Company or any of its
subsidiaries, and
. assets or businesses previously owned by the Company (or its affiliates
or predecessors) which were divested or otherwise disposed of prior to
the date of execution of the Purchase and Sale Agreement (including,
without limitation, any liabilities or obligations of the Company (or
its affiliates or predecessors) arising out of or related to (A) the
Spin-Off and the other transactions contemplated by the Distribution
Agreement and (B) the first mortgage bonds secured by certain life care
communities previously owned directly or indirectly by the Company).
Subject to certain employee benefits matters (see "Employees and Employee
Benefit Matters" below), each of Buyer and the Company has agreed to indemnify
and hold the other party harmless from and against any loss, cost, liability,
damage or expense including, without limitation, reasonable attorneys' fees
and costs in all trial and appellate proceedings incurred in connection with
any legal claim by a third party made, or arising out of, in the case of Buyer
as indemnitor, the liabilities assumed by Buyer as aforesaid and, in the case
of the Company as indemnitor, the foregoing excluded liabilities not assumed
by Buyer in connection with the purchase of the Buyer Assets under the
Purchase and Sale Agreement and not assumed by Lessor pursuant to the
Subscription Agreement.
Representations and Warranties. The Purchase and Sale Agreement contains
various customary representations and warranties of the parties thereto
including, without limitation, representations and warranties by the Company
and Buyer as to the parties' due organization, good standing and power, with
respect to the authorization and validity of the Purchase and Sale Agreement,
and with respect to the absence of any required filings or consents. The
Purchase and Sale Agreement also contains representations and warranties of
the Company as to the Company's title to property and encumbrances related
thereto, ownership of certain joint venture interests, ownership of employee
loans, environmental matters, leases affecting the conveyed assets, the
absence of material litigation, the use of land in compliance with applicable
laws and regulations, material contracts, Existing Debt, employee benefit
plans and other labor matters, intellectual property matters, reports and
financial statements, the absence of certain changes, the absence of
undisclosed liabilities, compliance with
41
<PAGE>
laws, insurance and year 2000 compliance. The representations and warranties
of the Company will not survive the Escrow Closing Date. The Company and Buyer
have expressly agreed that, in the case of any breach by the Company of any of
such representations and warranties, Buyer's sole right will be the exercise
(if it is entitled to do so) of its right of termination pursuant to the terms
of the Purchase and Sale Agreement (and Buyer's sole remedies in connection
therewith will be those expressly set forth in the Purchase and Sale
Agreement) and the Company will not at any time (whether before, on or after
the Escrow Closing Date) have any further liability whatsoever with respect to
any such breach.
The Purchase and Sale Agreement contains representations and warranties from
Buyer as to Buyer's having conducted all due diligence that Buyer deems
necessary or desirable and as to Buyer's acquiring the Buyer Assets "as is",
"where is" and "with all faults". The Company does not make any
representations or warranties to Buyer, express or implied, with respect to
the quality, physical condition, expenses, legal status, zoning, value,
utility or development or operating potential of the Buyer Assets, or the
absence of any Hazardous Substances (as defined in the Purchase and Sale
Agreement) on, in, under or near the Buyer Assets, or any other matter or
thing affecting or relating to the Buyer Assets (including, without
limitation, warranties of merchantability and/or of fitness for a particular
purpose) which might be pertinent in considering whether to purchase the Buyer
Assets.
Buyer further acknowledges that it is purchasing the Buyer Assets subject to
the certain enumerated encumbrances. Buyer represents and warrants that it
will acquire certain joint venture interests for its own account for
investment and not with a view toward any resale or distribution thereof, that
it has sufficient funds available to it to purchase the Buyer Assets, that it
has reviewed ALTA owner's title insurance commitments or other reports and
surveys with respect to the real estate included in the Buyer Assets and
acknowledges its approval as of the date of execution of the Purchase and Sale
Agreement of the condition of title to such real estate, and that it has
inspected the Buyer Assets and any operating files maintained by the Company
or its property managers in connection with the ownership, leasing,
maintenance and/or management of the Buyer Assets and indemnifies the Company
against any claim for liabilities, costs, expenses (including reasonable
attorney's fees), damages or injuries arising out of or resulting from
physical injury or damages to persons or property resulting from the
inspections of the Buyer Assets. The representations and warranties of the
Buyer will not survive the Escrow Closing Date, except for (x) representations
and warranties relating to the condition of the Total Assets, certain existing
liens with respect to the Buyer Assets, and the purchase by Buyer of certain
joint venture interests included in the Buyer Assets for its own account for
investment purposes, which such representations will survive for a period of
one year after the Closing Date and (y) representations, warranties and
agreements with respect to the inspection by Buyer of the Total Assets, which
such representations, warranties and agreement will survive as specifically
set forth in the Purchase and Sale Agreement.
Covenants. The Company covenants in the Purchase and Sale Agreement that the
Company will, in all material respects, comply with and abide by all
applicable laws related or applicable to any portion of the Buyer Assets, that
it will use commercially reasonable efforts to maintain all contracts, permits
and other agreements affecting the Buyer Assets in good standing and free from
delinquency or material default, other than those which are modified,
rescinded or terminated in the ordinary course of business or in connection
with certain enumerated pending transactions, and that it will deliver to
Buyer a copy of any notice of violation of any statute, law, ordinance, rule,
permit, regulation or agreement governing the planning, development,
construction, occupancy, use or maintenance of any portion of any of the real
estate included in the Buyer Assets, or of any permit, approval or
authorization issued in connection therewith or of any contemplated or pending
investigation with respect thereto.
The Company further covenants that, from and after the execution of the
Purchase and Sale Agreement until the Closing Date, the Company will not
without the prior consent of Buyer (which consent shall not be unreasonably
withheld, conditioned or delayed) directly or indirectly sell, transfer,
encumber or otherwise dispose of any of the Buyer Assets or any portion
thereof to any person, other than sales, transfers or other dispositions of
Buyer Assets (i) constituting non-material equipment or personalty made in the
ordinary course of business, (ii) pursuant to the casualty and condemnation
provisions of the Purchase and Sale Agreement, (iii) constituting overdue
accounts receivable arising in the ordinary course of business, but only in
connection with
42
<PAGE>
the compromise or collection thereof consistent with sound business practices
(and not as a part of any bulk sale or financing of receivables) or (iv)
pursuant to any or all of certain enumerated pending transaction
(collectively, the "Pending Transactions"). The Net Sale Proceeds (as defined
in the Purchase and Sale Agreement) from any sale, transfer, encumbrance or
disposition of Buyer Assets, in whole or in part, pursuant to any Pending
Transaction consummated after the date of execution of the Purchase and Sale
Agreement and prior to the Closing Date (the "Asset Sales Proceeds") shall be
promptly delivered by the Company to the Escrow Agent for distribution in
accordance with the terms thereof. See "Closing Procedures" in Section 12 of
this Offer to Purchase.
With respect to the operation of the Buyer Assets during the period
commencing on the date of execution of the Purchase and Sale Agreement and
ending on the Closing Date, the Company has agreed that it will, and will
cause its Subsidiaries to, operate, manage and maintain its Buyer Assets and
otherwise conduct its real estate business only according to its ordinary
course of business consistent with past practice and will use reasonable best
efforts to preserve intact its business organization, keep available the
services of its officers and employees and maintain satisfactory relationships
with licensors, suppliers, distributors, clients, landlords, tenants, joint
venture partners, employees and others having business relationships with it.
The Purchase and Sale Agreement also contains other significant restrictions
on the actions that can be taken by the Company without Buyer's consent.
The Company further covenants that, from and after the date of execution of
the Purchase and Sale Agreement, except in connection with Pending
Transactions, the Company will not cancel or amend or modify in any material
respect, (i) any contract or lease affecting any of the real estate included
in the Buyer Assets or (ii) any agreements, documents or instruments relating
to the Existing Debt, subject to certain enumerated exceptions, and will not,
subject to certain enumerated exceptions, enter into any new contract or lease
affecting any of the real estate Buyer Assets or any other agreements,
documents or instruments relating to the Existing Debt and will not
intentionally do any act or omit to do any act that will cause a material
breach of any such contracts or leases or agreements, documents or instruments
relating to the Existing Debt, without Buyer's express prior written consent,
which consent is not to be unreasonably withheld, conditioned or delayed. The
Company has also agreed that it will not, without the prior consent of Buyer
(not to be unreasonably withheld, conditioned or delayed), amend, modify or
supplement the Merger Agreement (including the Schedules and Exhibits thereto)
or grant any consent or waiver under the Merger Agreement, in each case that
would in any manner materially and adversely affect the rights, obligations
and interests of Buyer under the Purchase and Sale Agreement.
The Company has agreed that it will use its commercially reasonable efforts
(without obligating the Company or its affiliates to spend money or assume
obligations in connection therewith) to obtain the written consent of the
other necessary parties to the assignment of any contracts, leases,
commitments, sales orders, purchase orders, accounts, licenses, permits and
undertakings, and if such consent is not obtained, the Company will use
commercially reasonable efforts (without obligating the Company or its
affiliates to spend money or assume obligations in connection therewith) to
cooperate with Buyer in any lawful arrangement designed to provide Buyer the
benefits under any such documents.
From and after the Closing Date, Buyer will have the absolute and exclusive
proprietary right to the name "Echelon" as used in relation to the Buyer
Assets or any name confusingly similar to the foregoing and to all trademarks,
trade names, logos and signage incorporating "Echelon" or any name confusingly
similar to the foregoing. All rights of the Company and its affiliates in and
to any trademarks, trade names, logos, tag lines and signage incorporating
"Echelon" and the goodwill represented thereby and pertaining thereto have
been assigned to Buyer pursuant to the Purchase and Sale Agreement.
Accordingly, the Company has agreed that it will not, and will cause its
affiliates not to, use (i) the name "Echelon" or any name confusingly similar
to the foregoing or any trademark, logo, tag lines or signage incorporating
the name "Echelon" or any name confusingly similar to the foregoing or (ii)
the Company's intellectual property in any manner, including in connection
with the sale of any products or services or otherwise in the conduct of its
business. Notwithstanding the foregoing, for a period of 180 days after the
Closing Date, the Company will have the right to use the word "Echelon" as its
tradename, but only for the purposes of identifying itself as the appropriate
business entity in dealing with third
43
<PAGE>
parties to facilitate the sale of the Buyer Assets to Buyer, the transfer of
the Lessor Assets to Lessor, and in connection with the management of and any
sale to any third party purchaser of any asset subject to a lease in the
Leveraged Lease Portfolio and not for any other purpose, including, without
limitation, use of "Echelon" as a trademark for the purpose of marketing or
promoting any product or service.
After the Closing Date, Buyer and the Company are obligated to cooperate
with each other and with each other's agents, including accounting firms and
legal counsel, in connection with matters relating to taxes of Buyer, the
Company and their affiliates.
During the period commencing on the signing of the Purchase and Sale
Agreement and ending on the Closing Date, the Company is obligated to maintain
insurance on the real estate Buyer Assets in the amounts set forth on the
relevant schedule to the Purchase and Sale Agreement. The Company may,
however, discontinue or reduce any insurance to the extent that it is no
longer available at commercially reasonable rates or similarly situated
companies are, in general, reducing or eliminating such insurance in a manner
consistent with the changes being effected by the Company, unless, in each
case, Buyer shall have requested in writing that the Company not discontinue
or reduce, as the case may be, such insurance and shall have paid to the
Company in immediately available funds all costs (including, without
limitation, all premiums) and expenses of the Company in connection with not
discontinuing or reducing, as the case may be, such insurance.
Buyer also covenants in the Purchase and Sale Agreement to keep certain
information and records available to the Company in connection with the
satisfaction by the Company of its obligations under the Distribution
Agreement.
Employees and Employee Benefits Matters. Within a reasonable period of time
prior to the Closing Date, Buyer will offer employment, commencing as of the
Closing Date, to all of the employees of the Company and its subsidiaries as
of the date of the Purchase and Sale Agreement (and still employed by the
Company or its subsidiaries on the date of such offer of employment) on such
terms and conditions as Buyer may determine. With respect to any such employee
currently on long-term disability or other approved leave of absence, such
offer will be effective upon such employee's resumption of active employment.
Each such employee who accepts such offer of employment is referred to
hereinafter as a "Transferred Employee", and all such employees collectively
as the "Transferred Employees". Notwithstanding the foregoing, following the
Closing Date, Buyer may terminate the employment of any Transferred Employee
(subject to the payment by Buyer of any severance benefits payable to such
Transferred Employee in connection with such termination under a plan
substantially in accordance with the plan for such severance attached as an
exhibit to the Purchase and Sale Agreement and full payment and satisfaction
of the Transferred Employee's rights under any employment agreement).
From and after the Closing Date, Buyer will assume, and will honor, pay,
perform and satisfy when due any and all liabilities, obligations and
responsibilities to, or in respect of, each Transferred Employee, and each
former employee and officer of the Company, arising under the terms of, or in
connection with, any Employee Benefit Plan (as defined in the Purchase and
Sale Agreement), in each case, in accordance with the terms thereof in effect
immediately prior to the date hereof, with respect to events or claims arising
at any time. Buyer will not, however, be committed or obligated to continue
any such Employee Benefit Plan after the Closing Date except that Buyer will
provide, or shall cause to be provided, effective commencing on the Closing
Date, coverage to all current and former employees of the Company, (including
any employees that do not accept the offer of employment offered to them by
Buyer as required by the Purchase and Sale Agreement), and their spouses and
dependents, under a group health plan which does not contain any waiting
period or exclusion or limitation with respect to any pre-existing conditions,
and Buyer will be solely responsible for compliance with the requirements of
Section 4980B of the Internal Revenue Code of 1986, as amended, and part 6 of
subtitle B of Title I of the Employee Retirement Income Security Act of 1974,
as amended ("COBRA"), including, without limitation, the provision of
continuation coverage, with respect to all such employees, spouses and
dependents, for whom a qualifying event occurs before, on or after the Closing
Date. (The terms "group health plan", "continuation coverage", "qualifying
event" and "qualified beneficiary" are used herein with the respective
meanings ascribed thereto in COBRA.)
44
<PAGE>
On the Closing Date, Buyer will assume sponsorship of the Echelon Savings
Plan (the "Savings Plan") and the related trust, and the liabilities
thereunder, with respect to all persons entitled to benefits under the
provisions of the Savings Plan. Effective upon the Closing, Buyer will be
substituted for the Company as the plan sponsor under the Savings Plan. Buyer
has agreed, for a period of at least twelve (12) months following the Closing
Date, to maintain the Savings Plan in accordance with the terms of the Savings
Plan as in effect on the date of the Purchase and Sale Agreement, except to
the extent that Buyer is required to amend the Savings Plan to comply with
applicable law. Buyer will be solely responsible for and will indemnify and
hold the Company and its subsidiaries harmless from any obligations or losses
relating to claims made by any of the Transferred Employees for their
compensation, severance or termination pay, benefits or notice under any
applicable Federal, state or local law or under any plan, policy, practice or
agreement, in each case, that accrues after the Closing Date and arises as a
result of their employment or separation from employment with Buyer or its
subsidiaries after the Closing Date.
Subject to the foregoing, the Company will be solely responsible for and
will indemnify and hold Buyer harmless from any obligations or losses relating
to claims made by any current or former employee of the Company or any of its
subsidiaries, including, without limitation, the Transferred Employees, for
their compensation, severance or termination pay, benefits or notice under any
applicable Federal, state or local law or under any plan, policy, practice or
agreement, in each case, that accrue through the Closing Date as a result of
their employment or separation from employment with the Company or its
subsidiaries, including all obligations (including payments due as a result of
a change of control of the Company or otherwise) with respect to certain
enumerated existing employment agreements. Accrued but unpaid vacation, sick
or other paid time off with respect to all employees of the Company or any of
its subsidiaries as of the Closing Date, including, without limitation, the
Transferred Employees, will, to the extent permitted by applicable law, be
assumed by Buyer and paid by Buyer in accordance with the terms of the
Company's applicable policies and procedures in effect on the date of the
Purchase and Sale Agreement. In the event of any "plant closing" or "mass
layoff" by Buyer, as defined by the Federal Worker Adjustment Retraining
Notification Act, 29 U.S.C. (S) 2101 et seq. ("WARN"), or any state law
equivalent, which will occur after the Closing Date, Buyer will comply with
all of the requirements of WARN and any applicable state law equivalent.
Following the Closing, (a) Buyer will waive any waiting periods, exclusions,
or pre-existing condition limitations of Transferred Employees under any
benefit plans of Buyer, and (b) Buyer will honor or cause to be honored all
premiums, co-payments and deductibles paid by the Transferred Employees during
the plan year in which the Closing occurs under the Company's employee welfare
benefit plans and arrangements up to (and including) the Closing Date.
Following the Closing, each employee benefit plan or arrangement and employee
compensation policy or practice sponsored by Buyer or its affiliates will
credit, for all purposes (except for benefit accruals under any defined
benefit pension plans), all service of the Transferred Employees, and other
employees and officers of the Company and its subsidiaries, with the Company
and its subsidiaries and predecessors to the same extent such service was
taken into consideration under comparable employee benefit plans of the
Company or the relevant subsidiary.
Conditions to Closing. The obligations of Buyer and the Company to close the
transaction which is the subject of the Purchase and Sale Agreement is subject
to the fulfillment as of the Closing Date or as of the Escrow Closing Date, as
applicable, of a number of conditions. The obligations of both parties are
subject to the following conditions:
. the Merger shall have been consummated on or prior to the Closing Date,
. the transfer of the Lessor Assets as contemplated by the Subscription
Agreement shall have been consummated on or prior to the Closing Date,
. the purchase and sale of the Tax Credit LP Interests as contemplated by
the Tax Credit LP Interest Purchase Agreement shall have been
consummated on or prior to the Closing Date (see Section 7 "Certain
Information Concerning the Company" for a discussion of the recent sale
of the Tax Credit LP Interests),
45
<PAGE>
. the leasing of the Lessor Assets as contemplated by the Lease shall have
been consummated on or prior to the Closing Date,
. all Required Consents (as defined in the Purchase and Sale Agreement),
including the consents of the holders of certain Existing Debt, shall
have been executed and delivered by the respective parties thereto,
. any applicable waiting period (and any extension thereof) under the HSR
Act applicable to the sale of Buyer Assets to Buyer shall have expired
or been terminated,
. no preliminary or permanent injunction or other order shall have been
issued by any court or by any governmental or regulatory agency, body or
authority which prohibits the consummation of the transactions
contemplated by the Purchase and Sale Agreement and which is in effect
on the Closing Date; provided that, in the case of a decree, injunction
or other order, each of the parties shall have used reasonable best
efforts to prevent the entry of any such injunction or other order and
to appeal as promptly as possible any decree, injunction or other order
that may be entered,
. no law, statute, rule, regulation, executive order, decree or order of
any kind shall have been enacted, entered, promulgated or enforced by
any court or governmental authority which prohibits the consummation of
the transactions contemplated by the Purchase and Sale Agreement as of
the Closing Date; and
. on or prior to the Escrow Closing Date, each of the parties shall have
delivered to the Escrow Agent all documents and other items specified to
be delivered by such party under the Purchase and Sale Agreement.
The obligation of Buyer to close the transaction is also subject to the
additional condition that the Company shall have delivered to Buyer
certification that, as of the Escrow Closing Date, the Company has performed
in all material respects each of its obligations and complied in all material
respects with each agreement and covenant of the Company to be performed or
complied with by it under the Purchase and Sale Agreement on or prior to such
date.
The obligation of the Company to close the transaction is further subject to
the delivery by Buyer to the Company of certification that, as of the Escrow
Closing Date, Buyer has performed in all material respects each of its
obligations and complied in all material respects with each agreement and
covenant of Buyer to be performed or complied with by it under the Purchase
and Sale Agreement on or prior to such date.
Termination. The Purchase and Sale Agreement may be terminated and the
transactions contemplated by the Purchase and Sale Agreement may be abandoned:
(a) by mutual consent of Buyer and the Company at any time prior to the
Expiration Date;
(b) by either Buyer or the Company at any time prior to the Closing Date,
if any court or governmental or regulatory agency shall have issued an
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the consummation of the transactions
contemplated by the Purchase and Sale Agreement and such order, decree or
ruling or other action shall have become final and nonappealable;
(c) by either Buyer or the Company, if the Closing Date fails to occur
within 90 days following the execution of the Purchase and Sale Agreement,
unless such failure of the Closing Date to occur shall be as a result of a
material breach of any representation, warranty, obligation, covenant,
agreement or condition set forth in the Purchase and Sale Agreement on the
part of the party seeking to terminate the Purchase and Sale Agreement;
(d) by either Buyer or the Company at any time prior to the Closing Date,
if the Merger Agreement shall have been terminated and be of no further
force and effect;
46
<PAGE>
(e) by either Buyer or the Company at any time prior to the Expiration
Date, if any of the Subscription Agreement, the Lease or the Tax Credit LP
Interest Purchase Agreement shall have been terminated and be of no further
force and effect (see Section 7 "Certain Information Concerning the
Company" for a discussion of the recent sale of the Tax Credit LP
Interests);
(f) by Buyer (x) at any time prior to the Escrow Closing Date, in the
event that Buyer exercises its right of termination due to changes in the
Company's representations and warranties that, taken in the aggregate would
have a material adverse effect on the business, results of operations or
financial condition of the Total Assets taken as a whole, or (y) at any
time prior to the Expiration Date in the event of a breach by the Company
of any representation, warranty, covenant or agreement contained in the
Purchase and Sale Agreement which cannot or has not been cured prior to the
earlier of (i) fifteen (15) days after the giving of written notice of such
breach to the Company and (ii) two business days prior to the date on which
the Offer expires and which has not been waived by Buyer; or
(g) by the Company, in the event of a breach by Buyer of any
representation, warranty, covenant or agreement contained in the Purchase
and Sale Agreement which cannot or has not been cured prior to the earlier
of (i) fifteen (15) days after the giving of written notice of such breach
to Buyer and (ii) two business days prior to the date on which the Offer
expires and which has not been waived by the Company, except, in any case
where such failures are not reasonably likely to affect adversely Buyer's
ability to consummate the transactions contemplated by the Purchase and
Sale Agreement.
Termination--Return of Deposit to Buyer. In the event of a termination of
the Purchase and Sale Agreement pursuant to the foregoing subparagraphs (a),
(b), (c), (d), (e) or (f), the Deposit will be returned to Buyer.
Termination--Liquidated Damages. The Company shall pay to Buyer a sum of
$3,500,000 in the event of a termination of the Purchase and Sale Agreement as
described in subparagraph (d) of the subheading above entitled "Termination"
following the termination of the Merger Agreement by (i) mutual consent of the
Company, on the one hand, and of Parent and Purchaser, on the other hand (but
only if Parent and the Company shall have entered into an alternative
transaction within 180 days after such termination of the Merger Agreement
pursuant to which Parent (or an affiliate thereof) would directly or
indirectly acquire the Company, the Leveraged Lease Portfolio or all or
substantially all of the assets or equity of the Company and its
subsidiaries), (ii) the Company or Parent, if the Company has received a
Superior Proposal and has taken certain actions in connection with such
Superior Proposal or the Company's Board of Directors shall have withdrawn,
modified or amended in any respect adverse to Parent or Purchaser its
recommendation of the Offer or (iii) by Parent, if a person, entity or group
(other than Parent or Purchaser) shall have acquired beneficial ownership of
more than 20% of the outstanding voting securities of the Company.
Termination--Expenses. Buyer shall be entitled to receive from the Company
reimbursement for its reasonable out-of-pocket costs and expenses incurred in
connection with the transactions contemplated by the Purchase and Sale
Agreement in the sum of up to $1,000,000 (subject to providing reasonable
documentation of such costs and expenses) in the event of a termination of the
Purchase and Sale Agreement as described in either (A) subparagraph (f) of the
subheading above entitled "Termination" or (B) as described in subparagraph
(d) thereof following the termination of the Merger Agreement by (i) mutual
consent of the Company, on the one hand, and of Parent and Purchaser, on the
other hand (but only if Parent and the Company shall have entered into an
alternative transaction within 180 days after such termination of the Merger
Agreement pursuant to which Parent (or an affiliate thereof) would directly or
indirectly acquire the Company, the Leveraged Lease Portfolio or all or
substantially all of the assets or equity of the Company and its
subsidiaries), (ii) by Parent, in the event of a breach under certain
circumstances by the Company of any representation, warranty, covenant or
agreement in the Merger Agreement, (iii) the Company or Parent, if the Company
has received a Superior Proposal and has taken certain actions in connection
with such Superior Proposal or the Company's Board of Directors shall have
withdrawn, modified or amended in any respect adverse to Parent or Purchaser
its recommendation of the Offer, (iv) by Parent, if any of the Real Estate
Disposition Agreements shall have been terminated and be of no further force
and effect or (v) by Parent, if a person, entity or group (other than Parent
or Purchaser) shall have acquired
47
<PAGE>
beneficial ownership of more than 20% of the outstanding voting securities of
the Company. Notwithstanding the foregoing, in the event of the termination of
the Merger Agreement as a result of the termination of the Subscription
Agreement by the Company as the result of any breach by Lessor of any
representation, warranty, covenant or agreement thereunder not cured or waived
as provided therein, Buyer shall not be entitled to receive from the Company
reimbursement for its out-of-pocket costs and expenses incurred in connection
with the transactions contemplated by the Purchase and Sale Agreement.
Termination Based on Termination of Merger Agreement. Buyer shall be
entitled to receive 50% of any recovery of damages (as determined by a court
of competent jurisdiction in a final and non-appealable decision) or proceeds
of any settlement of a claim or any other amounts, in each case that the
Company may actually receive in connection with any proceeding by the Company
against Parent for damages in the event of a breach under certain
circumstances by Parent or Purchaser of any representation, warranty, covenant
or agreement in the Merger Agreement but only in the event of a termination of
the Purchase and Sale Agreement as described in subparagraph (d) of the
subheading above entitled "Termination" as a result of such breach by Parent
or Purchaser. In no event, however, will Buyer be entitled to receive from the
Company an amount in excess of $3,500,000 or will the Company be obligated to
commence or pursue any proceeding against Parent or any other person for
recovery of damages or other amounts arising out of the Merger Agreement. In
the event that the Company elects in its sole discretion to commence and
pursue any such proceeding against Parent or any other person, Buyer will not
be entitled to participate in any manner whatsoever in any such proceeding nor
shall the Company be obligated to cooperate, coordinate or consult with Buyer
in any manner whatsoever (including, without limitation, with respect to any
settlement or other compromise of any claims).
Buyer will be entitled to proceed against the Company for recovery of its
actual damages (as determined by a court of competent jurisdiction in a final
and non-appealable decision) in the event of termination of the Purchase and
Sale Agreement as provided in paragraph (f) of the subheading above entitled
"Termination". In no event, however, will such actual damages exceed
$3,500,000 nor will the Company be liable for loss of profits, or indirect,
consequential or special damages arising out of, or in connection with the
transactions contemplated by, the Purchase and Sale Agreement. In the event of
a termination of the Purchase and Sale Agreement as provided in subparagraph
(g) of the subheading above entitled "Termination", the Company's sole remedy
will be to receive a sum equal to the Deposit as agreed and liquidated
damages, it being agreed that in such event the Company's actual damages would
be incapable of precise ascertainment.
In the event of the termination of the Purchase and Sale Agreement pursuant
to the provisions thereof by Buyer or the Company, written notice thereof
shall forthwith be given to the other party specifying the provision thereof
pursuant to which such termination is made, and the Purchase and Sale
Agreement shall become void and have no effect, and there shall be no
liability thereunder on the part of Buyer or the Company, except that the
provisions relating to closing expenses, effect of termination, applicable
law, confidentiality and waiver of jury trial shall survive any termination of
the Purchase and Sale Agreement. Any payment required to be made by Buyer or
the Company pursuant to the Purchase and Sale Agreement shall be made by such
party within three business days after receipt by it of notice from the other
party setting forth, in reasonable detail, (i) a description of the event(s)
giving rise to the payment obligation and (ii) calculation of the payment
obligation. Except as expressly set forth in the provisions relating to effect
of termination of the Purchase and Sale Agreement, neither Buyer nor the
Company shall be entitled to any remedy in connection with the termination of
the Purchase and Sale Agreement (including, without limitation, specific
performance).
Risk of Loss from Casualty or Condemnation. In the event that any portion of
the real estate included in the Buyer Assets is damaged or destroyed or access
thereto is taken by eminent domain or condemnation proceeding, in each case,
prior to the Expiration Date, and if such damage, destruction or condemnation
would have, individually or in the aggregate, a Material Adverse Effect (as
defined therein and after giving effect to receipt of insurance proceeds or
award proceeds, as applicable), Buyer may by written notice to the Company
actually received by the Company not later than the earlier to occur of (i)
12:01 a.m. on the date of expiration of the Offer as described in the Merger
Agreement and (ii) the thirtieth (30th) day following Buyer's receipt of
written notice of such damage or destruction, terminate the Purchase and Sale
Agreement. Upon such
48
<PAGE>
termination, the Deposit will be returned to Buyer and the Purchase and Sale
Agreement will become null and void and the parties will have no further
rights or obligations thereunder. Subject to the foregoing, Buyer has agreed
to proceed to the Closing with no reduction in the Purchase Price
notwithstanding any damage, destruction or condemnation occurring with respect
to any real estate included in the Buyer Assets. The Company will deliver
and/or assign to Buyer on the Closing Date any insurance proceeds or award
proceeds with respect to such damage, destruction or condemnation to the
extent the Company is entitled to same; provided that Buyer has been afforded
a reasonable opportunity by the Company to participate in any discussions with
third parties relating to such proceeds and payment of such proceeds has not
been settled or otherwise compromised by the Company without the approval of
Buyer (not to be unreasonably withheld, conditioned or delayed).
B. Conveyance of Lessor Assets to Lessor.
The Company and certain of its subsidiaries have entered into a Subscription
Agreement substantially in the form of the Subscription Agreement attached as
an exhibit to the Schedule TO relating to the Offer (the "Subscription
Agreement"), pursuant to which the Company will transfer the Lessor Assets to
the Lessor in exchange for the Transfer Value described below, and the Lessor
will assume certain debt obligations and other liabilities relating to the
Lessor Assets simultaneously with the consummation of the sale of the Buyer
Assets to Buyer.
Transfer Value. The aggregate consideration to be paid by the Lessor in
exchange for the Lessor Assets (the "Transfer Value") will be equal to (x)
$51,300,000 minus (y) the aggregate amount of cash and cash equivalents
associated with certain customer deposits pursuant to the leases for certain
of the Company's real estate properties minus (z) amounts specified in the
Subscription Agreement (the "Reduction in Transfer Value") in the event that
certain enumerated pending transactions occur on or prior to the Escrow
Closing Date, plus (y) 2,000 shares of Series A Cumulative Redeemable
Preferred Stock of Lessor, par value $1,000 per share (the "Preferred Shares")
(as further described under "Terms of Preferred Shares" below).
Terms of Payment. The Transfer Value will be paid by the Lessor to the
Company at the time of closing of the transfer of the Lessor Assets on the
Closing Date (i) in U.S. dollars in immediately available funds and (ii) by
delivery of stock certificates representing the Preferred Shares to the
Company and certain of its affiliates, in each case in accordance with the
terms and conditions of the Subscription Agreement.
Terms of Preferred Shares. The Preferred Shares will accrue cash dividends
on a cumulative basis. The Lessor will be obligated to declare and to pay, to
the fullest extent permitted under the Florida Business Corporation Act or
otherwise by law, cash dividends, out of funds legally available for such
purpose, in an annual amount of $85.00 per share from the Closing Date,
payable in equal quarterly payments on the first day of February, May, August
and November in each year (each, a "Dividend Period"). If full cumulative
dividends on all Preferred Shares have not been declared and paid at the
appropriate time by the Lessor, or if less than the full dividend for a prior
Dividend Period has been declared and paid, the unpaid amounts will be
declared and paid, with a further dividend on such amounts at a deficiency
rate of 10.5% per annum (accrued from the date of such nonpayment). The terms
of the Preferred Shares will also provide for the payment to holders thereof
of an amount equal to $1,000 per share, or $2,000,000 in the aggregate, plus
all accumulated and unpaid dividends on such shares, in the event of a
bankruptcy, voluntary or involuntary liquidation, dissolution or winding up of
the Lessor, the merger or consolidation of the Lessor or a sale of all or
substantially all of the assets of the Lessor. The Preferred Shares will be
redeemable, in whole or in part, at the option of the holder thereof or the
Lessor, at any time on and after the date that is twenty-one (21) years after
the original issuance date of such shares, at a redemption price of $1,000 per
share or $2,000,000 in the aggregate, plus all accrued and unpaid dividends
thereon to the date of redemption, without interest.
The holders of the Preferred Shares will not generally be permitted to vote
as a class or together with the holders of common stock of the Lessor.
However, the Lessor may not authorize, create or increase the issued
49
<PAGE>
amount of any class or series of capital stock ranking senior to or on parity
with the Preferred Shares as to dividends or upon liquidation without the vote
of at least two-thirds of the Preferred Shares then outstanding. Moreover, if
the Lessor fails to pay dividends on the Preferred Shares when due for four or
more consecutive periods or in total for six or more dividend periods, the
holders of the Preferred Shares, voting as a class, will be entitled to elect
two additional directors of the Lessor.
The Subscription Agreement obligates the Surviving Corporation to distribute
or cause to be distributed to Parent, all Preferred Shares prior to the merger
of the Surviving Corporation with and into EIN Corp. as described under the
heading, "Plans for the Company--Generally" above.
Joint Instructions to the Escrow Agent. Not later than the Escrow Closing
Date, the Lessor and the Company will deliver to Escrow Agent a joint
direction letter listing with specificity all items, documents, instruments
and agreements (the "Subscription Agreement Escrowed Items") required to be
delivered by the Lessor and/or the Company pursuant to the terms and
conditions of the Subscription Agreement and necessary to effect the transfer
of the Lessor Assets to Lessor in consideration of the delivery of the
Transfer Value to the Company, including, without limitation, the Transfer
Value and the aggregate amount of Lessor Asset Sales Proceeds (as defined
below) from certain enumerated Lessor pending transactions. The joint
direction letter will also set forth irrevocable instructions to the Escrow
Agent from the Lessor and the Company to the effect that, (a) immediately
following the filing by the Escrow Agent of the Articles of Merger with
respect to the Merger with the Department of State of the State of Florida or
the receipt of notice by the Escrow Agent that such filing has occurred, the
Subscription Agreement Escrowed Items shall be promptly delivered by the
Escrow Agent to the party entitled to same, (b) immediately following receipt
of written notice from Lessor or the Company that the Subscription Agreement
has been terminated pursuant to its terms (see "Subscription Agreement
Termination" below), the Subscription Agreement Escrowed Items shall be
promptly delivered by the Escrow Agent to the party which had previously
deposited same with the Escrow Agent, and (c) immediately following receipt of
written notice from the Lessor that the Expiration Date did not occur on or
prior to the third business day after the Escrow Closing Date, the
Subscription Agreement Escrowed Items shall be promptly delivered by the
Escrow Agent to the party which had previously deposited same with the Escrow
Agent.
Closing Expenses. All costs and expenses associated with the purchase and
sale of the Lessor Assets contemplated in the Subscription Agreement,
including without limitation, environmental and property condition reports,
title insurance premiums, survey preparation costs, transfer taxes (including
all stamp, transfer, documentary, sales, use, registration and other taxes),
document recordation and filing charges, escrow expenses and other customary
costs of the Closing, will be paid by the Company. Each of the Lessor and the
Company will be responsible for its due diligence costs and expenses
(including, without limitation, the payment of the fees and disbursements of
its attorneys) and the Company will make any required payments to DLJ.
Assumed Liabilities. The Subscription Agreement provides that, on the
Closing Date, the Lessor will assume and pay, perform and discharge when due
(x) debt obligations relating to the Lessor Assets, consisting of loans to
finance construction of the Lessor Assets or other enumerated indebtedness the
repayment of which is specifically secured by the Lessor Assets (the "Assumed
Debt") and (y) the executory obligations of the Company arising on or after
the Closing Date in connection with permits, contracts and leases relating to
the Lessor Assets. The liabilities assumed by the Lessor will not include any
of the Assumed Liabilities to be assumed by Buyer pursuant to the Purchase and
Sale Agreement and will not include any liabilities or obligations of the
Company or its affiliates or predecessors that are not expressly assumed by
Lessor or Buyer.
Representations and Warranties. The Subscription Agreement contains various
customary representations and warranties of the parties thereto including,
without limitation, representations and warranties by the Company and the
Lessor as to the parties' due organization, good standing and power, with
respect to the authorization and validity of the Subscription Agreement, and
with respect to the absence of any required filings or consents. The
Subscription Agreement also contains representations and warranties of the
Company as to the Company's title to property and encumbrances related
thereto, ownership of mortgage loans, environmental matters, leases affecting
the conveyed assets, the absence of material litigation, the use of land in
compliance
50
<PAGE>
with applicable laws and regulations, material contracts, permits relating to
the Lessor Assets, assumed debt, intellectual property matters, compliance
with laws, insurance, year 2000 compliance and investment intention with
respect to the Preferred Shares. The representations and warranties of the
Company will not survive the Escrow Closing Date, except for the
representation regarding investment intention with respect to the Preferred
Shares, which will survive for a period of one year following the Closing
Date. The Company and the Lessor have expressly agreed that, in the case of
any breach by the Company of any of such representations and warranties, the
Lessor's sole right will be the exercise (if it is entitled to do so) of its
right of termination pursuant to the terms of the Subscription Agreement (and
the Lessor's sole remedies in connection therewith will be those expressly set
forth in the Subscription Agreement) and the Company will not at any time
(whether before, on or after the Escrow Closing Date) have any further
liability whatsoever with respect to any such breach.
The Subscription Agreement contains representations and warranties from the
Lessor as to the Lessor's having conducted all due diligence that the Lessor
deems necessary or desirable and as to the Lessor's acquiring the Assets "as
is", "where is" and "with all faults". The Company does not make any
representations or warranties to the Lessor, express or implied, with respect
to the quality, physical condition, expenses, legal status, zoning, value,
utility or development or operating potential of the Lessor Assets, or the
absence of any Hazardous Substances (as defined in the Subscription Agreement)
on, in, under or near the Assets, or any other matter or thing affecting or
relating to the Lessor Assets (including, without limitation, warranties of
merchantability and/or of fitness for a particular purpose) which might be
pertinent in considering whether to acquire the Lessor Assets.
Lessor further acknowledges under the Subscription Agreement that it is
acquiring the Lessor Assets subject to the certain enumerated encumbrances,
and represents and warrants that it has sufficient funds available to it to
acquire the Lessor Assets in accordance with the Subscription Agreement, that
it has reviewed ALTA owner's title insurance commitments or other reports and
surveys with respect to the real estate included in the Lessor Assets and
acknowledges its approval as of the date of execution of the Subscription
Agreement of the condition of title to such real estate, and that it has
inspected the Lessor Assets and any operating files maintained by the Company
or its property managers in connection with the ownership, leasing,
maintenance and/or management of the Lessor Assets and agrees to indemnify the
Company against any claim for liabilities, costs, expenses (including
reasonable attorney's fees), damages or injuries arising out of or resulting
from physical injury or damages to persons or property resulting from the
inspections of the Lessor Assets. The representations and warranties of the
Lessor under the Subscription Agreement will not survive the Escrow Closing
Date, except for (x) representations and warranties relating to the condition
of the Lessor Assets and certain existing liens with respect to the Lessor
Assets, which such representations will survive for a period of one year after
the Closing Date and (y) representations, warranties and agreements with
respect to the inspection by Lessor of the Lessor Assets, which such
representations, warranties and agreement will survive as specifically set
forth in the Subscription Agreement.
Covenants. The Company covenants in the Subscription Agreement that the
Company will, in all material respects, comply with and abide by all
applicable laws related or applicable to any portion of the Lessor Assets,
that it will use commercially reasonable efforts to maintain all contracts,
permits and other agreements affecting the Lessor Assets in good standing and
free from delinquency or material default, other than those which are
modified, rescinded or terminated in the ordinary course of business or in
connection with certain enumerated pending transactions, and that it will
deliver to the Lessor a copy of any notice of violation of any statute, law,
ordinance, rule, permit, regulation or agreement governing the planning,
development, construction, occupancy, use or maintenance of any portion of any
of the real estate included in the Lessor Assets, or of any permit, approval
or authorization issued in connection therewith or of any contemplated or
pending investigation with respect thereto.
The Company further covenants that, from and after the execution of the
Subscription Agreement until the Closing Date, the Company will not without
the prior consent of the Lessor (which consent shall not be unreasonably
withheld, conditioned or delayed) directly or indirectly sell, transfer,
encumber or otherwise dispose of any of the Lessor Assets or any portion
thereof to any person, other than sales, transfers or other
51
<PAGE>
dispositions of Lessor Assets (i) constituting non-material equipment or
personalty made in the ordinary course of business, (ii) pursuant to the
casualty and condemnation provisions of the Subscription Agreement, (iii)
constituting overdue accounts receivable arising in the ordinary course of
business, but only in connection with the compromise or collection thereof
consistent with sound business practices (and not as a part of any bulk sale
or financing of receivables) or (iv) pursuant to any or all of the pending
transactions described in the Subscription Agreement (each a "Lessor Pending
Transaction"). The Net Sale Proceeds (as defined in the Subscription
Agreement) from any sale, transfer, encumbrance or disposition of Lessor
Assets, in whole or in part, pursuant to any Lessor Pending Transaction
consummated after the date of execution of the Subscription Agreement and
prior to the Closing Date (the "Lessor Asset Sales Proceeds") are required to
be promptly delivered by the Company to the Escrow Agent for distribution in
accordance with the terms of the Subscription Agreement. See "Closing
Procedures" below.
With respect to the operation of the Lessor Assets during the period
commencing on the date of execution of the Subscription Agreement and ending
on the Closing Date, the Company has agreed that it will, and will cause its
subsidiaries to, operate, manage and maintain the Lessor Assets and otherwise
conduct its real estate business only according to its ordinary course of
business consistent with past practice and will use reasonable best efforts to
preserve intact its business organization, keep available the services of its
officers and employees and maintain satisfactory relationships with licensors,
suppliers, distributors, clients, landlords, tenants, joint venture partners,
employees and others having business relationships with it. The Subscription
Agreement also contains other significant restrictions on the actions that can
be taken by the Company without the Lessor's consent.
The Company further covenants that, from and after the date of execution of
the Subscription Agreement, except in connection with the Lessor Pending
Transactions, the Company will not cancel or amend or modify in any material
respect, (i) any contract or lease affecting any of the real estate included
in the Lessor Assets or (ii) any agreements, documents or instruments relating
to the Assumed Debt, subject to certain enumerated exceptions, and will not,
subject to certain enumerated exceptions, enter into any new contract or lease
affecting any of the real estate Lessor Assets or any other agreements,
documents or instruments relating to the Assumed Debt and will not
intentionally do any act or omit to do any act that will cause a material
breach of any such contracts or leases or agreements, documents or instruments
relating to the Assumed Debt, without the Lessor's express prior written
consent, which consent is not to be unreasonably withheld, conditioned or
delayed. The Company has also agreed that it will not, without the prior
consent of the Lessor (not to be unreasonably withheld, conditioned or
delayed), amend, modify or supplement the Merger Agreement (including the
Schedules and Exhibits thereto) or grant any consent or waiver under the
Merger Agreement, in each case that would in any manner materially and
adversely affect the rights, obligations and interests of the Lessor under the
Subscription Agreement.
The Company has agreed that it will use its commercially reasonable efforts
(without obligating the Company or its affiliates to spend money or assume
obligations in connection therewith) to obtain the written consent of the
other necessary parties to the assignment of any contracts, leases,
commitments, sales orders, purchase orders, accounts, licenses, permits and
undertakings, and if such consent is not obtained, the Company will use
commercially reasonable efforts (without obligating the Company or its
affiliates to spend money or assume obligations in connection therewith) to
cooperate with the Lessor in any lawful arrangement designed to provide the
Lessor the benefits under any such documents.
After the Closing Date, Lessor and the Company are obligated to cooperate
with each other and with each other's agents, including accounting firms and
legal counsel, in connection with matters relating to taxes of Lessor, the
Company and their affiliates.
During the period commencing on the signing of the Subscription Agreement
and ending on the Closing Date, the Company is obligated to maintain insurance
on the real estate included in the Lessor Assets in the amounts set forth on
the relevant schedule to the Subscription Agreement. The Company may, however,
discontinue or reduce any insurance to the extent that it is no longer
available at commercially reasonable rates
52
<PAGE>
or similarly situated companies are, in general, reducing or eliminating such
insurance in a manner consistent with the changes being effected by the
Company unless, in each case, Lessor shall have requested in writing that the
Company not discontinue or reduce, as the case may be, such insurance and
shall have paid to the Company in immediately available funds all costs
(including, without limitation, all premiums) and expenses of the Company in
connection with not discontinuing or reducing, as the case may be, such
insurance.
Lessor has agreed that, at all times through and including the thirtieth
(30th) day after the Closing Date, Lessor will have assets which would be
classified as cash and cash equivalents on a balance sheet prepared in
accordance with generally accepted accounting principles of not less than
$15,000,000.
Environmental Indemnity. The Subscription Agreement provides that, upon
completion of the Merger, the Surviving Corporation will indemnify, hold
harmless and defend the Lessor from and against any and all claims (including
without limitation third party claims for personal injury or real or personal
property damage), losses, damages, liabilities, fines, penalties, charges,
administrative and judicial proceedings (including informal proceedings) and
orders, judgments, remedial action, requirements, enforcement actions of any
kind, and all reasonable and documented costs and expenses incurred in
connection therewith (including but not limited to reasonable and documented
attorneys' and/or paralegals' fees and expenses), including, but not limited
to, all costs incurred in connection with any investigation or monitoring of
site conditions or any clean-up, remedial, removal or restoration work by any
federal, state or local government agency, arising in whole or in part, out
of:
. the presence on or under any of the real estate included in the Lessor
Assets of any Hazardous Materials (as defined in the Subscription
Agreement), or any releases or discharges of any Hazardous Materials on,
under, from or onto any of such real estate;
. any activity, including, without limitation, construction, carried on or
undertaken on or of any of such real estate, and whether by the
Surviving Corporation or any predecessor in title or any employees,
agents, contractors or subcontractors of the Surviving Corporation or
any predecessor in title, or any other persons, in connection with the
handling, treatment, removal, storage, decontamination, clean-up,
transport or disposal of any Hazardous Materials that at any time are
located or present on or under or that at any time migrate, flow,
percolate, diffuse or in any way move onto or under any of such real
estate;
. loss of or damage to any property or the environment (including, without
limitation, clean-up costs, response costs, remediation and removal
costs, cost of corrective action, costs of financial assurance, fines
and penalties and natural resource damages), or death or injury to any
person, and all expenses associated with the protection of wildlife,
aquatic species, vegetation, flora and fauna, and any mitigative action
required by or under any Environmental Law (as defined in the
Subscription Agreement);
. any claim concerning lack of compliance with any Environmental Law, or
any act or omission causing an environmental condition that requires
remediation or would allow any governmental authority to record a lien
on the land records, or
. any residual contamination on or under any of the real estate included
in the Lessor Assets, or affecting any natural resources, and to any
contamination of any property or natural resources arising in connection
with the generation, use, handling, storage, transport or disposal of
any such Hazardous Materials, and irrespective of whether any of such
activities were or will be undertaken in accordance with applicable
laws, regulations, codes and ordinances.
The foregoing indemnity will survive the expiration or termination of the
Subscription Agreement and will be separate and independent from any remedy
under the Subscription Agreement.
The obligations of the Surviving Corporation pursuant to the foregoing
environmental indemnity will however, be assigned to and assumed by the Buyer
pursuant to the Purchase and Sale Agreement. Upon such assignment by the
Surviving Corporation and the express assumption of such environmental
indemnity by the
53
<PAGE>
Buyer (each on terms satisfactory to Lessor), Lessor will release the
Surviving Corporation from any obligations under such indemnity by execution
of a release in form and substance reasonably satisfactory to the Surviving
Corporation.
Conditions to Closing. The obligations of the Lessor and the Company to
close the transaction which is the subject of the Subscription Agreement is
subject to the fulfillment as of the Closing Date or as of the Escrow Closing
Date, as applicable, of a number of conditions. The obligations of both
parties are subject to the following conditions:
. the Merger shall have been consummated on or prior to the Closing Date,
. the purchase and sale of the Assets as contemplated by the Purchase and
Sale Agreement shall have been consummated on or prior to the Closing
Date,
. the purchase and sale of the Partnership Interests as contemplated by
the Tax Credit LP Interest Purchase Agreement shall have been
consummated on or prior to the Closing Date (see Section 7 "Certain
Information Concerning the Company" for a discussion of the recent sale
of the Tax Credit LP Interests),
. the leasing of the Lessor Assets as contemplated by the Lease shall have
been consummated on or prior to the Closing Date,
. all required consents shall have been executed and delivered by the
respective parties thereto,
. any applicable waiting period (and any extension thereof) under the HSR
Act applicable to the sale of the Lessor Assets to the Lessor shall have
expired or been terminated,
. no preliminary or permanent injunction or other order shall have been
issued by any court or by any governmental or regulatory agency, body or
authority which prohibits the consummation of the transactions
contemplated by the Subscription Agreement and which is in effect on the
Closing Date; provided that, in the case of a decree, injunction or
other order, each of the parties shall have used reasonable best efforts
to prevent the entry of any such injunction or other order and to appeal
as promptly as possible any decree, injunction or other order that may
be entered,
. no statute, rule, regulation, executive order, decree or order of any
kind shall have been enacted, entered, promulgated or enforced by any
court or governmental authority which prohibits the consummation of the
transactions contemplated by the Subscription Agreement, and
. on or prior to the Escrow Closing Date, each of the parties shall have
delivered to the Escrow Agent all documents and other items specified to
be delivered by such party under the Subscription Agreement.
The obligation of the Lessor to close the transaction is also subject to
the following additional conditions: (a) the Company shall have delivered to
the Lessor certification that, as of the Escrow Closing Date, the Company has
performed in all material respects each of its obligations and complied in all
material respects with each agreement and covenant of the Company to be
performed or complied with by it under the Subscription Agreement on or prior
to such date.
The obligation of the Company to close the transaction is further subject
to the delivery by the Lessor to the Company of certification that, as of the
Escrow Closing Date, the Lessor has performed in all material respects each of
its obligations and complied in all material respects with each agreement and
covenant of the Lessor to be performed or complied with by it under the
Subscription Agreement on or prior to such date.
Subscription Agreement Termination. The Subscription Agreement may be
terminated under certain circumstances, which include, but are not limited to,
the following:
(a) by mutual consent of Lessor and the Company at any time prior to the
Expiration Date;
54
<PAGE>
(b) by either Lessor or the Company at any time prior to the Closing
Date, if any court or governmental or regulatory agency shall have issued
an order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the consummation of the transactions
contemplated by the Subscription Agreement and such order, decree or ruling
or other action shall have become final and nonappealable;
(c) by either Lessor or the Company, if the Closing Date fails to occur
within 90 days following the execution of the Subscription Agreement,
unless such failure of the Closing Date to occur shall be as a result of a
material breach of any representation, warranty, obligation, covenant,
agreement or condition set forth in the Subscription Agreement on the part
of the party seeking to terminate the Subscription Agreement;
(d) by either Lessor or the Company at any time prior to the Closing
Date, if the Merger Agreement shall have been terminated and be of no
further force and effect;
(e) by either Lessor or the Company at any time prior to the Expiration
Date, if any of the Purchase and Sale Agreement, the Lease or the Tax
Credit LP Interest Purchase Agreement shall have been terminated and be of
no further force and effect (see Section 7 "Certain Information Concerning
the Company" for a discussion of the recent sale of the Tax Credit LP
Interests);
(f) by Lessor (x) at any time prior to the Escrow Closing Date, in the
event that Lessor exercises its right of termination due to changes in the
Company's representations and warranties that, taken in the aggregate would
have a material adverse effect on the business, results of operations or
financial condition of the Lessor Assets taken as a whole, or (y) at any
time prior to the Expiration Date in the event of a breach by the Company
of any representation, warranty, covenant or agreement contained in the
Subscription Agreement which cannot or has not been cured prior to the
earlier of (i) fifteen (15) days after the giving of written notice of such
breach to the Company and (ii) two business days prior to the date on which
the Offer expires and which has not been waived by Lessor; or
(g) by the Company, in the event of a breach by Lessor of any
representation, warranty, covenant or agreement contained in the
Subscription Agreement which cannot or has not been cured prior to the
earlier of (i) fifteen (15) days after the giving of written notice of such
breach to Lessor and (ii) two business days prior to the date on which the
Offer expires and which has not been waived by the Company, except, in any
case where such failures are not reasonably likely to affect adversely
Lessor's ability to consummate the transactions contemplated by the
Subscription Agreement.
Termination--Expenses; Liquidated Damages. The Company has agreed to
reimburse the Lessor for its reasonable out-of-pocket costs and expenses
incurred in connection with the transactions contemplated by the Subscription
Agreement, the Omnibus Agreement and the Tax Credit Interest Purchase
Agreement in the sum of up to $1,000,000 (subject to providing reasonable
documentation of such costs and expenses) in the event of a termination of the
Subscription Agreement as described in subparagraph (d) of the subheading
above entitled "Subscription Agreement Termination", following the termination
of the Merger Agreement by (i) mutual consent of the Company, on the one hand,
and of Parent and Purchaser, on the other hand (but only if Parent and the
Company shall have entered into an alternative transaction within 180 days
after such termination of the Merger Agreement pursuant to which Parent (or an
affiliate thereof) would directly or indirectly acquire the Company, the
Leveraged Lease Portfolio or all or substantially all of the assets or equity
of the Company and its subsidiaries), (ii) the Company or Parent, if the
Company has received a Superior Proposal and has taken certain actions in
connection with such Superior Proposal or the Company's Board of Directors
shall have withdrawn, modified or amended in any respect adverse to Parent or
Purchaser its recommendation of the Offer, (iii) by Parent, if a person,
entity or group (other than Parent or Purchaser) shall have acquired
beneficial ownership of more than 20% of the outstanding voting securities of
the Company, or (iv) by Parent as a result of any termination of the Real
Estate Disposition Agreements, Omnibus Agreement or Tax Credit Interest
Purchase Agreement (except as a result of any nonperformance by Lessor, or any
affiliate of Lessor, of their respective obligations thereunder). In the event
of a termination of the Subscription Agreement as described in subparagraph
(g) of the subheading above entitled "Subscription Agreement Termination", the
Company's sole remedy will be to receive a sum equal to $2,750,000 from Lessor
as agreed and liquidated damages.
55
<PAGE>
Risk of Loss from Casualty or Condemnation. In the event that any portion of
the real estate included in the Lessor Assets is damaged or destroyed or
access thereto is taken by eminent domain or condemnation proceedings prior to
the Expiration Date, and if such damage, destruction or condemnation would
have, individually or in the aggregate, a Material Adverse Effect (as defined
therein and after giving effect to receipt of insurance proceeds or award
proceeds, as applicable), the Lessor may, by written notice to the Company
actually received by the Company not later than the earlier to occur of (i)
12:01 a.m. (New York Time) on the Tender Offer Expiration Date and (ii) the
thirtieth (30th) day following Company's receipt of written notice of such
damage or destruction, terminate the Subscription Agreement. Upon such
termination, the Subscription Agreement will become null and void and the
parties will have no further rights or obligations thereunder. Subject to the
foregoing, the Lessor has agreed to proceed to the Closing with no reduction
in the Transfer Value notwithstanding any damage, destruction or condemnation
occurring with respect to any real estate included in the Lessor Assets. The
Company will deliver and/or assign to the Lessor on the Closing Date any
insurance proceeds or award proceeds with respect to such damage, destruction
or condemnation to the extent the Company is entitled to same; provided that
the Lessor has been afforded reasonable opportunity by the Company to
participate in any discussions with third parties relating to such proceeds
and payment of such proceeds has not been settled or otherwise compromised by
the Company without the approval of the Lessor (not to be unreasonably
withheld, conditioned or delayed).
All of the Lessor Assets conveyed to Lessor pursuant to the Subscription
Agreement will be leased by Lessor to Echelon Commercial pursuant to the terms
and conditions of the Lease.
Lease. The term of the Lease shall commence on the Closing Date (for the
purpose of the following description of the Lease, the "Commencement Date")
and end on (but exclude) January 31, 2010 (the "Expiration Date") unless
earlier terminated.
Representations and Warranties. The Lease contains various customary
representations and warranties of the parties thereto including, without
limitation, representations and warranties by Lessor and Echelon Commercial as
to the parties' due organization, good standing and power; with respect to the
authorization and validity of the Lease, and with respect to no violation of
other obligations or contravention of other agreements, the absence of
material litigation, and as to the lack of governmental approvals. The Lease
also contains representations and warranties of Echelon Commercial as to
Echelon Commercial's insurance coverage; compliance with all Federal, state,
local and foreign tax returns; the absence of defaults or material
misstatements under the Lease and all other documents executed and delivered
in connection therewith (the "Lease Transaction Documents").
Conditions to Commencement Date. The occurrence of the Commencement Date of
the Lease is subject to the satisfaction or waiver of various customary
conditions to transactions of the type contemplated by the Lease, including
that:
. all Lease Transaction Documents shall have been executed and delivered
by the parties thereto;
. all governmental approvals and required consents shall have been duly
obtained, given or accomplished;
. no action or other proceeding shall have been instituted or threatened,
which restrains or prevents the full performance of the Lease or the
transactions contemplated thereby or by the Lease Transaction Documents,
or which is reasonably likely to materially and adversely affect Echelon
Commercial; and
. the Merger has been completed on the terms provided for in the Merger
Agreement.
Payment of Rent. Echelon Commercial shall pay basic rent (the "Basic Rent")
for each calendar month, in the amounts and or the dates provided in the
Lease. Basic Rent shall be paid absolutely net to Lessor, so that the Lease
shall yield to Lessor the full amount thereof on an after tax basis, without
setoff or reduction. Basic Rent shall be due on the first day of each calendar
quarter, commencing on April 1, 2000, and ending on the Expiration Date or the
date of any earlier termination of the Lease. Basic Rent is determined as a
monthly amount
56
<PAGE>
which is the product of the "Lease Rate" and the "Lease Balance". The Lease
Rate is (i) during the period from the Commencement Date through January 31,
2003, .0058333 with respect to that amount of the Average Lease Balance
(reduced by the Average Cash Collateral Account Balance (as defined in the
Lease)) up to and including $34,000,000.00, and .008333 with respect to the
Average Lease Balance (reduced by the Average Cash Collateral Account Balance)
which is in excess of $34,000,000.00 and (ii) during the period from February
1, 2003 through the Expiration Date, the product of the rate set forth in (i)
multiplied by 1.25. For purposes of the Lease, "Lease Balance" means the
amount of Lessor's allocated cost of the Lessor Assets as set forth in
Schedule 2 of the Lease plus the amount of any loans set forth on Schedule 3
of the Lease, including all Assumed Debt, for all Lessor Assets then covered
by the terms of the Lease, and "Average Lease Balance" means the average Lease
Balance for any month determined as one-half of the sum of (i) the Lease
Balance as of the first calendar day of such month, and (ii) the Lease Balance
as of the last calendar day of such month after giving effect to any early
termination of the Lease as to any Lessor Assets following the occurrence of
any Early Buy-Out Option described below Echelon Commercial shall also pay all
amounts, liabilities and obligations which Echelon Commercial assumes or
agrees to pay to Lessor, or directly to third parties pursuant to the terms of
the Lease (the "Supplemental Rent"). Supplemental Rent includes, but is not
limited to all amounts payable to the holders of underlying mortgages assumed
by Lessor.
Net Lease. The Lease constitutes a net lease. The Lease will not terminate,
Echelon Commercial will not be entitled to any reduction or defense with
respect to the rent, and the obligations of Echelon Commercial will not be
affected by reason of and including that: (i) any defect in the condition of
any Lessor Assets, any damage to or destruction or taking of any Lessor
Assets, or any failure of any Lessor Assets to comply with applicable laws;
(ii) any restriction or interference of any use of any Lessor Assets; (iii)
any defects in title to or rights to any Property; and (iv) any failure on the
part of Lessor to comply with the terms of the Lease or any other agreement.
Subleases. Pursuant to the Lease Lessor assigns to Echelon Commercial all
right, title and interest in and to all subleases of the Lessor Assets, set
forth in Schedule 4 of the Lease, for the term of the Lease. Echelon
Commercial can further sublet any available space in any real estate included
in the Lessor Assets, to any person that Echelon Commercial determines to be
creditworthy and reputable tenant. No sublease can in any way discharge or
diminish any of Echelon Commercial's obligations to Lessor, and Echelon
Commercial shall remain directly and primarily liable under the Lease as to
the Properties.
Early Buy-Out Option. Echelon Commercial has the option to market and
complete the sale of any Lessor Assets for Lessor (the "Early Buy-Out
Option"), subject to the conditions in the Lease. At any time, but not later
than 15 days prior to February 2, 2003, Echelon Commercial shall give Lessor
notice of its exercise of an Early Buy-Out Option with respect to any Lessor
Asset. Exercise of the Early Buy-Out Option requires payment by Echelon
Commercial to Lessor of an amount equal to the sum of all accrued unpaid Basic
Rent under the Lease with respect to the Lessor Asset being sold, plus all
outstanding Assumed Debt with respect thereto, plus the Lessor's Cost of that
Lessor Asset as set forth in Schedule 2 of the Lease, plus an amount,
calculated as set forth in the Lease, equal to the allocated portion of sums
deposited in the Cash Collateral Account (defined below) with respect to such
Lessor Assets, compounded as provided in the Lease from the Commencement Date
to the date of such payment (the "Early Buy-Out Option Price" with respect to
any Lessor Asset).
Purchase Option. Echelon Commercial has the option to purchase all, and not
less than all, Lessor Assets then subject to the Lease on or after February 2,
2003, at a purchase price equal to the greater of the fair market value of all
such Lessor Assets and the aggregate Early Buy-Out Option Price therefor.
Indemnification. Pursuant to the Lease, Echelon Commercial will indemnify
and hold Lessor harmless on an after-tax basis against, and will be liable for
and will pay any loss, cost or expense arising out of:
. the Lease, the Lease Transaction Documents, or failure to comply with
any of the transactions contemplated thereby;
57
<PAGE>
. any claim arising from any violation of law in tort, easement or
condition affecting title to any Property, any claims for patent,
trademark or copyright infringement;
. any liabilities or obligations of Echelon Commercial required to be
satisfied under the Lease; and
. claims by the holders of all Assumed Debt relating to the Property under
the terms of the agreements with respect thereto, including, without
limitation, any environmental indemnity claims.
Echelon Commercial is also liable to indemnify and hold Lessor harmless ,
and will be liable for and will pay any loss, cost or expense arising out of:
. the presence on or under any real estate included in the Lessor Assets,
or the release or discharge, of any Hazardous Substance on, under, from
or onto any such real estate;
. any activity or any residual contamination in connection with the
handling or disposal of any Hazardous Substances that are located or
might move onto any real estate included in the Lessor Assets and
. any claim relating to the lack of compliance with Environmental Laws.
Excess Proceeds and Cash Collateral Accounts. To the extent that the sale
proceeds from the exercise of the Early Buy-Out Option are in excess of the
Early Buy-Out Price, as defined in the Lease, (the "Excess Proceeds"), then
such Excess Proceeds received by Lessor shall be applied by Lessor as follows:
(i) at any time that the Lease Balance is $34,000,000.00 or greater, 15% of
any payment of Excess Proceeds shall be distributed to Echelon Commercial and
85% of any payment of Excess Proceeds shall be paid to the Lessor and
deposited in a cash collateral account (the "Cash Collateral Account")
maintained pursuant to the Cash Collateral Agreement attached as an exhibit to
the Lease, and (ii) at any time that the Average Lease Balance (reduced by the
Average Cash Collateral Account Balance) is less than $34,000,000.00, then 25%
of any payment of Excess Proceeds shall be distributed to Echelon Commercial
and 75% of any payment of Excess Proceeds shall be paid to the Lessor and
deposited in the Cash Collateral Account.
C. Sale of Aircraft in Leveraged Lease Portfolio to Aircraft Purchaser.
In addition to the sale of the Total Assets pursuant to the Real Estate
Disposition Agreements, the Surviving Corporation shall sell the Aircraft to
the Aircraft Purchaser pursuant to the terms and conditions of an Omnibus
Agreement substantially in the form of the Omnibus Agreement attached as an
exhibit to the Schedule TO relating to the Offer (the "Omnibus Agreement") for
a fixed price of not less than $130,258,531 (the "Aircraft Cost"), plus any
and all interest accrued under and paid or payable under the Credit Agreement
on that portion of the principal amount of the Advance equal to the Aircraft
Cost, to the extent not then prepaid as the result of any sale of the
Surviving Corporation's interest therein pursuant to the Omnibus Agreement,
plus any and all other sums then due and payable under the Credit Agreement.
Pursuant to the Omnibus Agreement, Purchaser has agreed to, and, upon
consummation of the Merger, the Surviving Corporation shall, subject to the
terms and conditions thereof, commence the sale to the Aircraft Purchaser, and
the Aircraft Purchaser has agreed to purchase and accept from the Surviving
Corporation, the Surviving Corporation's legal and beneficial interest in the
trust estates described in the trust agreements relating to the Aircraft
(each, an "Equity Interest"), with each such purchase to be entered into
pursuant to the terms and conditions of a Purchase Agreement in the form
attached to the Omnibus Agreement (each, a "Purchase Agreement") at such time
or times as the Surviving Corporation and the Aircraft Purchaser shall
mutually agree, but in all events prior to April 27, 2000 (the "Final Closing
Date").
Notwithstanding anything in the Omnibus Agreement, any Purchase Agreement or
any other relevant document to the contrary including the satisfaction of any
of the conditions or the breach of any of the representations and warranties
specified below, the Aircraft Purchaser is absolutely and unconditionally
obligated to purchase all Equity Interests from the Surviving Corporation on
the Final Closing Date such that the aggregate
58
<PAGE>
amount of proceeds received by the Surviving Corporation with respect to all
Equity Interests sold pursuant to the Omnibus Agreement shall be at least
equal to the Aircraft Cost, except that the Aircraft Purchaser is not so
obligated if the documents deposited in the Aircraft Escrow Agreement are not
released to the Aircraft Purchaser as contemplated by the Aircraft Escrow
Agreement as discussed below.
Escrow Agreement. The Purchaser, the Aircraft Purchaser and the Agent have
entered into a separate escrow agreement (the "Aircraft Escrow Agreement")
pursuant to which the Purchaser and the Aircraft Purchaser will deposit with
the Agent, not later than one business day prior to the consummation of the
Effective Date, two executed originals of each Purchase Agreement and a
related assignment agreement with respect to each Equity Interest covered by
the Omnibus Agreement. Such documents will be released to the Aircraft
Purchaser in accordance with the terms of the Aircraft Escrow Agreement at
such times as the Aircraft Purchaser and Surviving Corporation notify Agent,
and in all events on or prior to the Final Closing Date (each an "Aircraft
Closing Date"). Each of Aircraft Purchaser and the Surviving Corporation has
agreed to use its respective best efforts to consummate the transfer of the
Equity Interests relating to certain Aircraft identified in the Merger
Agreement as soon as reasonably practical following the Effective Date, but
not sooner than one business day following the Effective Date.
Reserved Rights. Pursuant to the Omnibus Agreement and the related Purchase
Agreement, the Surviving Corporation will retain, with respect to the sale of
each Equity Interest, any and all rights of the Company in respect of (a) any
tax or other indemnification under any leases, security documents,
participation agreements, trust agreements or other documents relating to the
applicable Equity Interest (collectively, "Aircraft Transaction Documents") as
a result of or arising out of events occurring or circumstances existing prior
to the Aircraft Closing Date with respect to such Equity Interest, (b) each
and every obligation of the lessee of the applicable Aircraft (each, a
"Lessee") to provide liability insurance on behalf of or in favor of the
Company as an additional insured under any Aircraft Transaction Document with
respect to events occurring or circumstances existing prior to the Aircraft
Closing Date with respect to such Equity Interest, (c) any interest payable by
the applicable Lessee on any amount referred to in the foregoing clauses (a)
and (b), and (d) the right to enforce payment of the amounts referred to in
the foregoing clauses (a) through (c) (the "Reserved Rights").
Conditions To Closing. The Aircraft Purchaser's obligation to acquire an
Equity Interest and to pay the purchase price for such Equity Interest on the
relevant Aircraft Closing Date is subject to the satisfaction or waiver of
various conditions customary to transactions of the type contemplated by the
Omnibus Agreement, including that:
. all approvals and required consents shall have been duly obtained,
given, accomplished or waived;
. no action or other proceeding shall have been instituted or threatened,
which questions the validity or legality of any Purchase Agreement or
the transactions contemplated thereby or by the Aircraft Transaction
Documents, or the ability of either party to consummate any of such
transactions;
. the relevant assignment agreement shall have been filed with the Federal
Aviation Administration ("FAA");
. receipt by the Aircraft Purchaser of a satisfactory opinion from the
Company's counsel and a certificate by an authorized officer of the
Company certifying the Company's performance and satisfaction of all
conditions set forth in the Omnibus Agreement and related Purchase
Agreement;
. as of December 1, 1999, no change shall have occurred in any applicable
law that would make it illegal for the Aircraft Purchaser to fully
perform its obligation under the Omnibus Agreement, the related Purchase
Agreement and the Transaction Documents;
. receipt by the Aircraft Purchaser of satisfactory evidence as to the
absence of any liens or any adverse claims against the Equity Interest;
and
. receipt by the Aircraft Purchaser of a certificate from the relevant
Lessee's independent insurance broker evidencing the requisite insurance
and listing the Aircraft Purchaser and its affiliates, officers,
59
<PAGE>
directors, employees, servants and agents as additional insureds to the
extent the same is required by the relevant lease, and a broker's letter
of undertaking in form and substance reasonably satisfactory to the
Aircraft Purchaser.
Each Purchase Agreement provides further, however, that each of such
conditions shall be deemed waived by the Aircraft Purchaser, such that the
purchase of each Equity Interest shall in all events close, not later than the
Final Closing Date.
Representations and Warranties. The Omnibus Agreement contains, and each
Purchase Agreement will contain, various customary representations and
warranties of the parties thereto including, without limitation,
representations and warranties by the Surviving Corporation and the Aircraft
Purchaser as to the parties' due organization, good standing and power, with
respect to the authorization and validity of the Omnibus Agreement, with
respect to no violation or contravention of other agreements, and as to the
lack of required consents or approvals. The Omnibus Agreement also contains
representations and warranties as to the Company's title to each Equity
Interest and encumbrances related thereto, the absence of material litigation,
compliance with applicable laws, compliance with the Securities Act of 1933,
as amended (the "Securities Act"), the absence of any assignments or subleases
with respect to any of the Aircraft, the delivery of true and complete copies
of the Aircraft Transaction Documents for each Equity Interest to the Aircraft
Purchaser, the performance by the Surviving Corporation of its obligations
under such Aircraft Transaction Documents and in respect of the indebtedness
relating to each Equity Interest, and the absence of defaults under the
Aircraft Transaction Documents. The Aircraft Purchaser also represents and
warrants that there is no pending litigation against or affecting the Aircraft
Purchaser that would adversely affect the consummation of the transactions
contemplated by the Omnibus Agreement and related documents. Each Purchase
Agreement will contain additional representations and warranties of the
Surviving Corporation as to the payment of basic rent under the relevant
lease, the absence of any obligation to repair, modify or improve the relevant
Aircraft, indebtedness with respect to the relevant Equity Interest, and the
absence of any event of loss with respect to the relevant Aircraft.
Failure to Consummate Transaction. The Omnibus Agreement provides that all
transfers of the Equity Interests, unless otherwise agreed in writing by the
Company and the Aircraft Purchaser, must be consummated not earlier than one
business day following the Effective Date and on or before April 27, 2000. No
loss or destruction of any Aircraft will affect the parties obligation to
consummate the transfers of the related or any remaining Equity Interests.
Indemnification. The Aircraft Purchaser will have no liability or obligation
as a result of, and the Surviving Corporation will indemnify and hold the
Aircraft Purchaser harmless on an after-tax basis against, and will be liable
for and will pay any loss, cost or other expense arising out of (i) any
failure by the Company or the Surviving Corporation to comply with the terms
of the Transaction Documents to which it is a party prior to the relevant
Aircraft Closing Date, or (ii) any liabilities or obligations of the Company
or the Surviving Corporation required to be satisfied or performed prior to
the relevant Aircraft Closing Date.
The Company will have no liability or obligation as a result of, and the
Aircraft Purchaser will indemnify and hold the Company and the Surviving
Corporation harmless on an after-tax basis against, and will be liable for and
will pay any loss, cost or other expense arising out of (i) any failure by the
Aircraft Purchaser to comply with the terms of the Aircraft Transaction
Documents on or after the relevant Aircraft Closing Date, (ii) any liabilities
or obligations of the Aircraft Purchaser required to be satisfied or performed
on or after the relevant Aircraft Closing Date, or (iii) the breach or
inaccuracy of any of the Aircraft Purchaser's representations or agreements
contained in the Omnibus Agreement, Purchase Agreements or other documents or
instruments delivered in connection therewith.
Omnibus Agreement Termination. The Omnibus Agreement may be terminated and
the transactions contemplated thereunder abandoned by either Purchaser or
Aircraft Purchaser at any time on notice by either to the other that the
Merger Agreement has been terminated and is of no further force and effect, or
upon
60
<PAGE>
the entry of any nonappealable judgment or order enjoining or otherwise
prohibiting the consummation of the transactions contemplated by the Merger
Agreement.
Aircraft Purchaser and Parent have also entered into a separate agreement
pursuant to which, in the event of termination of the Merger Agreement and
payment to Parent by the Company of any liquidated sum as provided in Section
5.02(b)(i) of the Merger Agreement under the circumstances described in the
third to last paragraph under the heading "Termination and Abandonment" of
Section 11 of this Offer to Purchase, Parent shall pay fifty percent (50%) of
any such amount actually received from the Company to Aircraft Purchaser.
Parent has further agreed to pay or cause to be paid to Aircraft Purchaser, as
and when collected by the Surviving Corporation following the Effective Date,
if any, the aggregate amount of rent payments, whether in advance or arrears,
in excess of debt service actually received by the Surviving Corporation
subsequent to the date of the Merger Agreement with respect to any Aircraft.
Conversely, Aircraft Purchaser has agreed to pay to the Surviving Corporation
debt service in excess of rent payments with respect to any Aircraft for any
period from the date of the Merger Agreement to and including the related
Aircraft Closing Date.
D. Closing Procedures.
The closing of the transactions contemplated by the Merger Agreement, the
Purchase and Sale Agreement, the Subscription Agreement and the Omnibus
Agreement will take place through a series of escrow arrangements and the
delivery of joint instructions to the escrow agents under such escrow
arrangements as follows:
. On the Escrow Closing Date, the Company and the Buyer will deliver the
Escrowed Items to the Escrow Agent to be held and disbursed on the
Closing Date in accordance with the provisions of the Purchase and Sale
Agreement.
. On the Escrow Closing Date, the Company and the Lessor will deliver the
Subscription Agreement Escrowed Items to the Escrow Agent to be held and
disbursed on the Closing Date in accordance with the provisions of the
Subscription Agreement.
. Pursuant to the Purchase and Sale Agreement and the Subscription
Agreement, on the Escrow Closing Date the Company, Lessor and Buyer will
each jointly execute and deliver a joint direction letter to Escrow
Agent pursuant to which each shall acknowledge, agree, represent and
warrant that, except for (i) the filing of the Articles of Merger, and
(ii) the issuance by any court or governmental authority or agency of
any order, or the enactment, promulgation, entry or enforcement by any
court or governmental authority or agency of any law, statute, rule,
regulation, executive order or decree, in any of such cases, that
prohibits the consummation of the transactions contemplated by such
agreements, each of the conditions to the closing of the transactions
described in the Purchase and Sale Agreement and the Subscription
Agreement have been satisfied or waived as of the Escrow Closing Date,
and irrevocably instructing the Escrow Agent to release and deliver the
Escrowed Items and the Subscription Agreement Escrowed Items as required
by such agreements on the Closing Date (see "Joint Instructions to the
Escrow Agent" above). Such joint instructions shall provide that they
may not be amended, modified, superseded or revoked without the prior
written consent of each of the Company, the Lessor, the Buyer and
Purchaser.
. Pursuant to the Purchase and Sale Agreement and the Subscription
Agreement, on the Escrow Closing Date Lessor and Buyer will each jointly
execute and deliver a joint instruction letter to Escrow Agent pursuant
to which each shall acknowledge, agree, represent and warrant that,
except for (i) the filing of the Articles of Merger, and (ii) the
issuance by any court or governmental authority or agency of any order,
or the enactment, promulgation, entry or enforcement by any court or
governmental authority or agency of any law, statute, rule, regulation,
executive order or decree, in any of such cases, that prohibits the
consummation of the transactions contemplated by such agreements, each
of the conditions to the closing of the transactions described in the
Purchase and Sale Agreement and the Subscription Agreement have been
satisfied or waived as of the Escrow Closing Date, and irrevocably
instructing the Escrow Agent to release and deliver the Escrowed Items
and the Subscription
61
<PAGE>
Agreement Escrowed Items as required by such agreements (see "Joint
Instructions to the Escrow Agent" above). Such joint instructions shall
provide that they may not be amended, modified, superseded or revoked
without the prior written consent of each of the Lessor, the Buyer,
Purchaser and the Initial Lender.
. Parent, Purchaser, the Company and the Escrow Agent have entered into a
separate escrow agreement pursuant to which the Company will, prior to
the Effective Time, deposit with the Escrow Agent, the Expense Escrow
for the purpose of reimbursing certain fees and expenses related to the
Offer, the Merger and the consummation of the transactions contemplated
by the Merger Agreement. The Expense Escrow will be an amount equal to
the aggregate transaction expenses listed on Schedule A to the Closing
Certificate delivered pursuant to the Merger Agreement (including the
aggregate amount of all expenses itemized on such Schedule A that are
incurred (or to be incurred) by persons other than the Company (subject
to certain limitations)). These reimbursed expenses will include,
without limitation:
. all severance payments in respect of the termination of employment of
certain key officers of the Company, together with the net Cash
Payments and certain bonus payments due to them as a result of the
Merger;
. the cost to the Surviving Corporation of maintaining the directors'
and officers' liability insurance policies described under the
heading "Directors' and Officers' Insurance; Indemnification" in
Section 11 of this Offer to Purchase and all premiums therefor;
. all costs and expenses associated with the purchase and sale of the
Buyer Assets contemplated in the Purchase and Sale Agreement and the
transfer of the Lessor Assets contemplated in the Subscription
Agreement, including without limitation, environmental and property
condition reports (but only to the extent procured prior to execution
of the Purchase and Sale Agreement or the Subscription Agreement, as
the case may be, with the approval of the Company), title insurance
premiums, survey preparation costs, transfer taxes (including all
stamp, transfer, documentary, sales, use, registration and other
taxes), document recordation and filing charges, escrow expenses and
other customary costs of the Closing;
. fees and expense reimbursements payable to DLJ and the Company's
legal advisors; and
. fees and expenses payable to the holders of Existing Debt and/or
Assumed Debt in connection with obtaining any Required Consents.
. The Agent, Parent, Purchaser and the Company have entered into an escrow
agreement pursuant to which the Minimum Cash Escrow will be deposited
with the Agent, as escrow agent, to provide for, among other things,
repayment, in part, of the Advance.
. Purchaser, the Aircraft Purchaser and the Agent have entered into the
Aircraft Escrow Agreement pursuant to which Purchaser and the Aircraft
Purchaser will deposit with the Agent, not later than one business day
prior to the Effective Date, two executed originals of a Purchase
Agreement and a related assignment agreement with respect to each Equity
Interest covered by the Omnibus Agreement, such documents to be released
to the Aircraft Purchaser in accordance with the terms of the Aircraft
Escrow Agreement on each Aircraft Closing Date and in all event on or
prior to the Final Closing Date.
13. Dividends And Distributions. According to the Company's 1998 Annual
Report, the Company paid no dividends to stockholders during fiscal years 1998
or 1997. The Company paid a $100,000 dividend to its former parent in 1996, as
reported in the Consolidated Statements of Stockholders' Equity included in
the financial statements filed as an exhibit to the 1998 Annual Report. The
1998 Annual Report further states that the Company currently intends to retain
all future earnings for the development of its business and does not
anticipate paying any cash dividends for the foreseeable future. Pursuant to
the terms of the Merger Agreement, the Company is not permitted, without the
prior written consent of Purchaser, to declare, set aside or pay any
62
<PAGE>
dividends on, or make any other distributions in respect of, any of its
capital stock other than dividends and distributions by a direct or indirect
subsidiary of the Company to its parent.
14. Effect of the Offer on the Market for the Shares, New York Stock
Exchange Listing and Exchange Act Registration. The purchase of Shares
pursuant to the Offer will reduce the number of Shares that might otherwise
trade publicly and will reduce the number of holders of Shares, which will
likely adversely affect the liquidity and market value of the remaining Shares
held by stockholders other than Purchaser. The extent of the public market, if
any, for Shares and the availability of price quotations in respect thereof
following the purchase of Shares pursuant to the Offer will depend upon the
number of holders of Shares remaining at that time, the interest in
maintaining a market in the Shares on the part of securities firms, the
possible termination of registration of the Shares under the Exchange Act, as
described below, and other factors.
Stock Quotations. Depending on the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the NYSE's listing requirements.
According to the NYSE's published guidelines, the NYSE would consider
delisting the Shares if the number of record holders falls below 1,200, and
the average monthly trading volume is less than 100,000 shares for the most
recent 12-month period, the number of publicly held Shares (exclusive of
holdings of officers, directors and their families and other concentrated
holdings of 10% or more (the "NYSE Excluded Holdings")) falls below 600,000 or
the Company fails to maintain the required global market capitalization. If,
as a result of the purchase of Shares pursuant to the Offer or otherwise, the
Shares no longer meet the requirements of the NYSE for continued listing and
the listing of the Shares is discontinued, the market for the Shares could be
adversely affected.
If the NYSE were to delist the Shares, it is possible that the Shares would
continue to trade on another securities exchange or in the over-the-counter
market and that price or other quotations would be reported by the exchange or
through the NASDAQ Stock Market or other sources. The extent of the public
market for the Shares and the availability of the quotations would depend,
however, upon factors such as the number of stockholders and the aggregate
market value of the Shares remaining at that time, the interest in maintaining
a market in the Shares on the part of securities firms, the possible
termination of registration under the Exchange Act, as described below, and
other factors. Purchaser cannot predict whether the reduction in the number of
Shares that might otherwise trade publicly would have an adverse or beneficial
effect on the market price for or marketability of the Shares or whether it
would cause future market prices to be higher or lower than the Offer Price.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. This registration may be terminated upon application by the
Company to the Commission if the Shares are not listed on a national
securities exchange and there are fewer than 300 record holders of the Shares.
The termination of registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by the Company
to holders of Shares and to the Commission and would make certain provisions
of the Exchange Act, such as the short-swing profit recovery provisions of
Section 16(b), the requirement to furnish a proxy statement in connection with
stockholders' meetings pursuant to Section 14(a) and the requirements of Rule
13e-3 under the Exchange Act with respect to "going private" transactions, no
longer applicable to the Shares. In addition, "affiliates" of the Company and
persons holding "restricted securities" of the Company may be deprived of the
ability to dispose of these securities pursuant to Rule 144 under the
Securities Act.
If the registration of the Shares is not terminated prior to the Merger,
then the Shares will be delisted from all stock exchanges and the registration
of the Shares under the Exchange Act will be terminated following consummation
of the Merger.
If registration of the Shares under the Exchange Act were terminated, the
Shares would no longer be eligible for listing on the NYSE.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect of allowing brokers to extend
credit on the collateral of the Shares. Depending upon factors similar to
those described above
63
<PAGE>
regarding listing and market quotations, following the Offer, it is possible
that the Shares would no longer constitute "margin securities" for the
purposes of the margin regulations of the Federal Reserve Board and therefore
could no longer be used as collateral for loans made by brokers.
15. Certain Conditions of the Offer.
Notwithstanding any other provision of the Offer, Purchaser will not be
required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return Shares promptly after
termination or withdrawal of the Offer), pay for any Shares tendered pursuant
to the Offer, and may postpone the acceptance of and, subject to the
restrictions referred to above, payment for, any Shares tendered pursuant to
the Offer, if (i) any applicable waiting period under the HSR Act with respect
to any of the transactions contemplated by the Merger Agreement has not
expired or been terminated or (ii) the Minimum Condition has not been
satisfied.
Additionally and without limiting the foregoing, notwithstanding any other
provision of the Offer, Purchaser will not be required to accept for payment
or, subject to the restrictions referred to above, pay for any Shares, and may
terminate or amend the Offer and may postpone the acceptance of, subject to
the restrictions referred to above, payment for Shares, if at any time on or
after the date of the Merger Agreement and at or before the time of payment
for any such Shares (whether or not any Shares have previously been accepted
for payment or paid for pursuant to the Offer) any of the following (other
than the matters set forth in the last three bullet points below, which will
only be determined immediately prior to the expiration of the Offer) occurs:
. there shall be any action taken, or any law, statute, rule, regulation,
legislation, interpretation, judgment, order or injunction enacted,
enforced, promulgated, amended or issued by, any legislative body,
court, government or governmental, administrative or regulatory
authority or agency, domestic or foreign, other than the routine
application of the waiting period provisions of the HSR Act to the Offer
or to the Merger, which is in effect and would:
. make illegal, impede, delay or otherwise directly or indirectly
restrain or prohibit the Offer or the Merger or seeking to obtain
material damages,
. prohibit or materially limit the ownership or operation by Parent or
Purchaser of all or any material portion of the business or assets
of the Company and its subsidiaries taken as a whole or compel
Parent or Purchaser to dispose of or hold separately all or any
material portion of the business or assets of Parent and its
subsidiaries (including Purchaser), taken as a whole, or the Company
and its subsidiaries, taken as a whole, or seeking to impose any
material limitation on the ability of Parent or Purchaser to conduct
its business or own such assets or to prohibit or materially limit
the ability of Purchaser to consummate the transactions contemplated
by the Real Estate Disposition Agreements or the Omnibus Agreement,
. impose material limitations on the ability of Parent or Purchaser
effectively to exercise rights of ownership of the Shares,
including, without limitation, the right to vote any Shares acquired
or owned by Purchaser or Parent on all matters properly presented to
the Company's shareholders,
. require divestiture by Parent or Purchaser of any Shares, or
. materially and adversely affect the business, results of operations
or financial condition of the Company and its subsidiaries taken as
a whole. (For purposes of the Merger Agreement, events, facts or
circumstances (including any material adverse effect) with respect
to the Total Assets (including any of the Total Assets acquired as
permitted by the Merger Agreement), will not, individually or in the
aggregate, be deemed to have a material adverse effect on the
business, results of operations or financial condition of the
Company and its subsidiaries taken as a whole, so long as each of
the Real Estate Disposition Agreements are in full force and effect
and the purchase price or transfer value, as the case may be,
payable thereunder has not been reduced. For purposes of the Merger
Agreement, the term "material" means material with respect to the
64
<PAGE>
Leveraged Lease Portfolio taken as a whole and not with respect to
the Company and its subsidiaries taken as a whole.)
. there shall have been issued any airworthiness directive by the Federal
Aviation Administration or any other governmental or regulatory body,
agency or authority having jurisdiction over the Company or the relevant
asset, or any manufacturer's service bulletin or similar document, in
each case that would result in an increase in the cost to the Company of
maintaining, or complying with any applicable rules, regulations or
approved maintenance programs with respect to, the assets subject to the
leases in the Leveraged Lease Portfolio, which increase in the cost to
the Company would have a material adverse effect on the Leveraged Lease
Portfolio, taken as a whole;
. any change (other than any change (x) arising in the ordinary course of
business, (y) arising out of changes in general economic, regulatory or
political conditions or (z) arising out of changes which affect the
markets in which the Company operates in general) shall have occurred
that would have a material adverse effect on the Leveraged Lease
Portfolio taken as a whole;
. any of the representations or warranties made by the Company in the
Merger Agreement that are qualified by materiality shall be untrue or
incorrect, or any such representation and warranty that is not so
qualified shall be untrue or incorrect in any material respect, in each
case as of the date of the Merger Agreement and the scheduled expiration
date of the Offer, except (i) for changes specifically permitted by the
Merger Agreement and (ii) that those representations and warranties
which address matters only as of a particular date shall remain true and
correct in all material respects, as of such date (it being expressly
understood and agreed that no representation or warranty made by the
Company in the Merger Agreement shall be deemed to be untrue or
incorrect to the extent such representation or warranty relates to the
Total Assets (as defined in the Purchase and Sale Agreement and which
shall include Total Assets acquired as permitted by the Merger
Agreement), so long as the Real Estate Disposition Agreements and the
Tax Credit LP Interest Purchase Agreement shall at all times be in full
force and effect and the purchase price or transfer value, as the case
may be, under each such agreement shall have not been reduced in
connection with any such breach of representation, warranty, covenant or
agreement contained in the Merger Agreement);
. the Company's Board of Directors shall have withdrawn, modified or
amended in any respect adverse to Parent or Purchaser its recommendation
of the Offer and the Company shall have entered into an agreement
providing for or implementing an Acquisition Proposal, or shall have
resolved to do any of the foregoing;
. the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement or under either of the escrow agreements relating to
the Expense Escrow or the Minimum Cash Escrow (the "Cash Escrow
Agreements"), including the deposit of all amounts to be deposited
thereunder when and as required thereby;
. any corporation, person, partnership, trust, other entity or group (as
defined in the Exchange Act) other than Parent or Purchaser shall have
acquired beneficial ownership (as defined in Rule 13d-3 promulgated
under the Exchange Act) of more than 20% of the outstanding voting
securities of the Company or is granted an option or right to acquire
more than 20% of such voting securities of the Company;
. any of the Merger Agreement, any Real Estate Disposition Agreement or
the Tax Credit LP Interest Purchase Agreement shall have been terminated
in accordance with their respective terms or otherwise (see Section 7
"Certain Information Concerning the Company" for a discussion of the
recent sale of the Tax Credit LP Interests);
. there shall have occurred and be continuing one or more defaults or
events of default by the lessees party to the leases in the Leveraged
Lease Portfolio with respect to their respective obligations
65
<PAGE>
thereunder, which defaults and events of default, individually or in the
aggregate, would have a material adverse effect on the Leveraged Lease
Portfolio taken as a whole;
. either of the Cash Escrow Agreements shall have been terminated by the
Company in accordance with their respective terms or otherwise;
. any condition precedent to the closing of the transactions contemplated
by the Purchase and Sale Agreement shall not have been satisfied or
waived and all closing documents to be delivered on or prior to the
closing of the transactions contemplated thereby shall not have been
irrevocably delivered, together with the full amount of the purchase
price in accordance with the terms of the Purchase and Sale Agreement,
to be held in escrow pending the consummation of the Offer and the
Merger; or
. any condition precedent to the closing of the transactions contemplated
by the Subscription Agreement shall not have been satisfied or waived or
any closing document to be delivered on or prior to the closing of the
transactions contemplated thereby shall not have been irrevocably
delivered, together with the full amount of the transfer value in
accordance with the terms of the Subscription Agreement, to be held in
escrow pending the consummation of the Offer and the Merger.
16. Certain Legal Matters And Regulatory Approvals. General. Except as set
forth below, based upon its examination of publicly available filings by the
Company with the Commission and other publicly available information
concerning the Company, neither Purchaser nor Parent is aware of any licenses
or other regulatory permits that appear to be material to the business of the
Company and its subsidiaries, taken as a whole, that might be adversely
affected by Purchaser's acquisition of Shares (and the indirect acquisition of
the stock of the Company's subsidiaries) as contemplated herein, or of any
filings, approvals or other actions by or with any domestic (federal or
state), foreign or supranational governmental authority or administrative or
regulatory agency that would be required prior to the acquisition of Shares
(or the indirect acquisition of the stock of the Company's subsidiaries) by
Purchaser pursuant to the Offer as contemplated herein. Should any such
approval or other action be required, it is Purchaser's present intention to
seek such approval or action. There can be no assurance that any such approval
or other action, if needed, would be obtained without substantial conditions
or that adverse consequences might not result to the business of the Company,
Parent or Purchaser or that certain parts of the businesses of the Company,
Parent or Purchaser might not have to be disposed of or held separate or other
substantial conditions complied with in order to obtain such approval or other
action or in the event that such approval was not obtained or such other
action was not taken, any of which could cause Purchaser to elect (subject to
the terms of the Merger Agreement) to terminate the Offer without the purchase
of the Shares thereunder. Purchaser's obligation under the Offer to accept for
payment and pay for Shares is subject to certain conditions, including
conditions relating to the legal matters discussed in this Section 15.
State Takeover Laws. The Company is incorporated under the laws of the State
of Florida. Florida Law contains provisions that are intended to defer hostile
takeovers of Florida-based corporations and are informally known as the
"Affiliated Transactions Statute" and the "Control-Share Acquisition Statute."
In general, the Affiliated Transactions Statute requires that any "affiliated
transaction" between a corporation with more than 300 shareholders and any
person who is the beneficial owner of more than 10% of the corporation's
outstanding voting shares (an "interested shareholder"), or any affiliate or
associate of an interested shareholder, must be approved by the holders of
two-thirds of the voting shares of the corporation other than the shares
beneficially owned by the interested shareholder. Absent approval by
disinterested shareholders or an exception, the statute requires that a "fair
price" be paid to shareholders in the transaction. An "affiliated transaction"
includes a merger, a sale, exchange or other transfer of assets or shares of
the corporation, and the benefit of loans, advances, pledges, guarantees, or
other financial assistance or tax credits or advances provided by or through
the corporation. The Affiliated Transactions Statute does not apply to an
affiliated transaction if the transaction is approved in advance by a majority
of the corporation's directors who were (i) directors before the date that the
affiliate became an interested shareholder or (ii) elected to fill a vacancy
by a majority of the disinterested directors then on the corporation's board
("disinterested directors").
66
<PAGE>
Under the Control-Share Acquisition Statute, "control shares" of certain
corporations that are acquired in a "control-share acquisition" will retain
their voting rights only to the extent granted by a resolution that is
approved by a majority of each class of voting securities of the corporation.
A "control-share acquisition" is a direct or indirect acquisition by a person
of the ownership or power to direct the exercise of the voting rights of
"control shares," which is defined as shares that entitle a person to exercise
more than specified proportions of the voting power of a corporation that is
subject to the Control-Share Acquisition Statute (commencing with the
acquisition of 20% or more of the voting shares of such corporation). An
acquisition of shares does not constitute a "control-share acquisition" if the
acquisition has been approved beforehand by the board of directors of the
issuing corporation or certain other statutory conditions have been met.
At a meeting duly called and held on January 21, 2000, the Company's Board
of Directors, none of whom are currently affiliated or associated with the
Purchaser or Parent and all of whom are "disinterested directors," approved
the Offer and the Merger Agreement and has determined that the Offer is fair
to and in the best interests of the shareholders of the Company and
recommended that the shareholders of the Company accept the Offer and tender
all their Shares pursuant thereto. Accordingly, the Affiliated Transactions
Statute and Control-Share Acquisition Statute will not apply to Purchaser and
Parent in connection with the Merger Agreement and the Offer.
A number of states have adopted takeover laws and regulations which purport
to varying degrees to be applicable to attempts to acquire securities of
corporations which are incorporated in such states or which have or whose
business operations have substantial economic effects in such states, or which
have substantial assets, security holders, principal executive offices or
principal places of business therein. To the extent that certain provisions of
certain of these state takeover statutes purport to apply to the Offer,
Purchaser believes that such laws conflict with federal law and constitute an
unconstitutional burden on interstate commerce. In 1982, the Supreme Court of
the United States, in Edgar v. Mite Corp., invalidated on constitutional
grounds the Illinois Business Takeovers Act, which as a matter of state
securities law made takeovers of corporations meeting certain requirements
more difficult, and the reasoning in such decision is likely to apply to
certain other state takeover statutes. However, in 1987, in CTS Corp. v.
Dynamics Corp. of America, the Supreme Court of the United States held that
the State of Indiana could, as a matter of corporate law and in particular
those aspects of corporate law concerning corporate governance,
constitutionally disqualify a potential acquiror from voting on the affairs of
a target corporation without the prior approval of the remaining stockholders,
provided that such laws were applicable only under certain conditions.
Subsequently, in TLX Acquisition Corp. v. Telex Corp., a federal district
court in Oklahoma ruled that the Oklahoma statutes were unconstitutional
insofar as they applied to corporations incorporated outside Oklahoma in that
they would subject such corporations to inconsistent regulations. Similarly,
in Tyson Foods, Inc. v. McReynolds, a federal district court in Tennessee
ruled that four Tennessee takeover statutes were unconstitutional as applied
to corporations incorporated outside Tennessee. This decision was affirmed by
the United States Court of Appeals for the Sixth Circuit. In December 1988, a
federal district court in Florida held in Grand Metropolitan PLC v.
Butterworth that the provisions of the Florida Affiliated Transactions Act and
the Florida Control Share Acquisition Act were unconstitutional as applied to
corporations incorporated outside of Florida.
Except as described herein, Purchaser has not attempted to comply with any
state takeover statutes in connection with the Offer. Purchaser reserves the
right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in this Offer to Purchase nor any action
taken in connection herewith is intended as a waiver of that right. In the
event that any state takeover statute is found applicable to the Offer,
Purchaser might be unable to accept for payment or purchase Shares tendered
pursuant to the Offer or be delayed in continuing or consummating the Offer.
In such case, Purchaser may not be obligated to accept for purchase or pay
for, any Shares tendered. See Section 15.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission ("FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the
"Antitrust Division") and the FTC and certain waiting period requirements have
been satisfied.
67
<PAGE>
Although Purchaser and Parent do not believe that a filing with the FTC
under the HSR Act is necessary and no filing will be made in connection with
transactions described in this Offer to Purchase, the FTC and the Antitrust
Division frequently scrutinize the legality under the antitrust laws of
transactions such as those described herein and the acquisition of shares by a
purchaser pursuant to a tender offer. At any time before or after the purchase
by Purchaser of Shares pursuant to the Offer, either of the FTC and the
Antitrust Division could take such action under the antitrust laws as it deems
necessary or desirable in the public interest, including seeking to enjoin the
purchase of Shares pursuant to the Offer or seeking the divestiture of Shares
purchased by Purchaser or the divestiture of substantial assets of Parent, its
subsidiaries or the Company. Private parties and state attorneys general may
also bring legal action under federal or state antitrust laws under certain
circumstances.
Margin Credit Regulations. Federal Reserve Board Regulations T, U and X (the
"Margin Credit Regulations") restrict the extension or maintenance of credit
for the purpose of buying or carrying margin stock, including the Shares, if
the credit is secured directly or indirectly thereby. Such secured credit may
not be extended or maintained in an amount that exceeds the maximum loan value
of the margin stock. Under the Margin Credit Regulations, the Shares are
presently margin stock and the maximum loan value thereof is generally 50% of
their current market value. The definition of "indirectly secured" contained
in the Margin Credit Regulations provides that the term does not include an
arrangement with a customer if the lender in good faith has not relied upon
margin stock as collateral in extending or maintaining the particular credit.
17. Fees And Expenses. Georgeson Shareholder Securities Corporation
("Georgeson") is acting as Dealer Manager in connection with the Offer and
serving as financial advisor to Parent and Purchaser in connection with the
acquisition of the Company for which services Georgeson will receive customary
compensation. Parent and Purchaser will also reimburse Georgeson for all its
reasonable expenses incurred in connection with its engagement, including
reasonable attorneys' fees, and have also agreed to indemnify Georgeson
against certain liabilities and expenses in connection with the Offer,
including certain liabilities under the federal securities laws.
Purchaser has retained Georgeson Shareholder Communications Inc. to act as
the Information Agent and EquiServe L.P. to act as the Paying Agent in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, telex, telegraph and personal interview and may request
brokers, dealers and other nominee stockholders to forward the Offer materials
to beneficial owners. The Information Agent and the Paying Agent will receive
reasonable and customary compensation for services relating to the Offer and
will be reimbursed for certain out-of-pocket expenses from, in each case, the
Expense Escrow. Purchaser and Parent have also agreed to indemnify the
Information Agent and the Paying Agent against certain liabilities and
expenses in connection with the Offer, including certain liabilities under the
federal securities laws.
Neither Parent nor Purchaser will pay any fees or commissions to any broker
or dealer or any other person for soliciting tenders of Shares pursuant to the
Offer (other than to the Dealer Manager, the Information Agent and the Paying
Agent). Brokers, dealers, commercial banks and trust companies will, upon
request, be reimbursed by Purchaser for customary mailing and handling
expenses incurred by them in forwarding offering materials to their customers.
18. Miscellaneous. The Offer is being made solely by this Offer to Purchase
and the related Letter of Transmittal and is being made to all holders of
Shares. Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of Shares pursuant thereto, Purchaser
will make a good faith effort to comply with any such state statute. If after
such good faith effort, Purchaser cannot comply with such state statute, the
Offer will not be made to nor will tenders be accepted from or on behalf of
the holders of Shares in such state. In any jurisdiction where the securities,
blue sky or other laws require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of Purchaser by the
Dealer Manager or one or more registered brokers or dealers that are licensed
under the laws of such jurisdiction.
68
<PAGE>
Purchaser and Parent have filed with the Commission a Schedule TO (including
exhibits) pursuant to Rule 14d-3 under the Exchange Act, furnishing certain
additional information with respect to the Offer. Such statement and any
amendments thereto, including exhibits, may be inspected and copies may be
obtained from the offices of the Commission (except that they will not be
available at the regional offices of the Commission) in the manner set forth
in Section 7 of this Offer to Purchase.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN THE
LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
69
<PAGE>
Exhibit A
FLORIDA STATUTES 1999
***THIS DOCUMENT IS CURRENT THROUGH THE 1999 LEGISLATIVE SESSION***
TITLE XXXVI BUSINESS ORGANIZATIONS
CHAPTER 607 CORPORATIONS
Fla. Stat. (S) 607.1320 (1999)
607.1320 Procedure for exercise of dissenters' rights.
(1) (a) If a proposed corporate action creating dissenters' rights under s.
607.1302 is submitted to a vote at a shareholders' meeting, the meeting notice
shall state that shareholders are or may be entitled to assert dissenters'
rights and be accompanied by a copy of ss. 607.1301, 607.1302, and 607.1320. A
shareholder who wishes to assert dissenters' rights shall:
1. Deliver to the corporation before the vote is taken written notice of
the shareholder's intent to demand payment for his or her shares if the
proposed action is effectuated, and
2. Not vote his or her shares in favor of the proposed action. A proxy or
vote against the proposed action does not constitute such a notice of
intent to demand payment.
(b) If proposed corporate action creating dissenters' rights under s.
607.1302 is effectuated by written consent without a meeting, the
corporation shall deliver a copy of ss. 607.1301, 607.1302, and 607.1320 to
each shareholder simultaneously with any request for the shareholder's
written consent or, if such a request is not made, within 10 days after the
date the corporation received written consents without a meeting from the
requisite number of shareholders necessary to authorize the action.
(2) Within 10 days after the shareholders' authorization date, the
corporation shall give written notice of such authorization or consent or
adoption of the plan of merger, as the case may be, to each shareholder who
filed a notice of intent to demand payment for his or her shares pursuant to
paragraph (1)(a) or, in the case of action authorized by written consent, to
each shareholder, excepting any who voted for, or consented in writing to, the
proposed action.
(3) Within 20 days after the giving of notice to him or her, any shareholder
who elects to dissent shall file with the corporation a notice of such
election, stating the shareholder's name and address, the number, classes, and
series of shares as to which he or she dissents, and a demand for payment of
the fair value of his or her shares. Any shareholder failing to file such
election to dissent within the period set forth shall be bound by the terms of
the proposed corporate action. Any shareholder filing an election to dissent
shall deposit his or her certificates for certificated shares with the
corporation simultaneously with the filing of the election to dissent. The
corporation may restrict the transfer of uncertificated shares from the date
the shareholder's election to dissent is filed with the corporation.
(4) Upon filing a notice of election to dissent, the shareholder shall
thereafter be entitled only to payment as provided in this section and shall
not be entitled to vote or to exercise any other rights of a shareholder. A
notice of election may be withdrawn in writing by the shareholder at any time
before an offer is made by the corporation, as provided in subsection (5), to
pay for his or her shares. After such offer, no such notice of election may be
withdrawn unless the corporation consents thereto. However, the right of such
shareholder to be paid the fair value of his or her shares shall cease, and
the shareholder shall be reinstated to have all his or her rights as a
shareholder as of the filing of his or her notice of election, including any
intervening preemptive rights and the right to payment of any intervening
dividend or other distribution or, if any such rights have expired or any such
dividend or distribution other than in cash has been completed, in lieu
thereof, at the election of the corporation, the fair value thereof in cash as
determined by the board as of the time of such expiration or completion, but
without prejudice otherwise to any corporate proceedings that may have been
taken in the interim, if:
(a) Such demand is withdrawn as provided in this section;
<PAGE>
(b) The proposed corporate action is abandoned or rescinded or the
shareholders revoke the authority to effect such action;
(c) No demand or petition for the determination of fair value by a court
has been made or filed within the time provided in this section; or
(d) A court of competent jurisdiction determines that such shareholder is
not entitled to the relief provided by this section.
(5) Within 10 days after the expiration of the period in which shareholders
may file their notices of election to dissent, or within 10 days after such
corporate action is effected, whichever is later (but in no case later than 90
days from the shareholders' authorization date), the corporation shall make a
written offer to each dissenting shareholder who has made demand as provided
in this section to pay an amount the corporation estimates to be the fair
value for such shares. If the corporate action has not been consummated before
the expiration of the 90-day period after the shareholders' authorization
date, the offer may be made conditional upon the consummation of such action.
Such notice and offer shall be accompanied by:
(a) A balance sheet of the corporation, the shares of which the dissenting
shareholder holds, as of the latest available date and not more than 12
months prior to the making of such offer; and
(b) A profit and loss statement of such corporation for the 12-month period
ended on the date of such balance sheet or, if the corporation was not in
existence throughout such 12-month period, for the portion thereof during
which it was in existence.
(6) If within 30 days after the making of such offer any shareholder accepts
the same, payment for his or her shares shall be made within 90 days after the
making of such offer or the consummation of the proposed action, whichever is
later. Upon payment of the agreed value, the dissenting shareholder shall
cease to have any interest in such shares.
(7) If the corporation fails to make such offer within the period specified
therefor in subsection (5) or if it makes the offer and any dissenting
shareholder or shareholders fail to accept the same within the period of 30
days thereafter, then the corporation, within 30 days after receipt of written
demand from any dissenting shareholder given within 60 days after the date on
which such corporate action was effected, shall, or at its election at any
time within such period of 60 days may, file an action in any court of
competent jurisdiction in the county in this state where the registered office
of the corporation is located requesting that the fair value of such shares be
determined. The court shall also determine whether such dissenting
shareholder, as to whom the corporation requests the court to make such
determination, is entitled to receive payment for his or her shares. If the
corporation fails to institute the proceeding as herein provided, any
dissenting shareholder may do so in the name of the corporation. All
dissenting shareholders (whether or not residents of this state), other than
shareholders who have agreed with the corporation as to the value of their
shares, shall be made parties to the proceeding as an action against their
shares. The corporation shall serve a copy of the initial pleading in such
proceeding upon each dissenting shareholder who is a resident of this state in
the manner provided by law for the service of a summons and complaint and upon
each nonresident dissenting shareholder either by registered or certified mail
and publication or in such other manner as is permitted by law. The
jurisdiction of the court is plenary and exclusive. All shareholders who are
proper parties to the proceeding are entitled to judgment against the
corporation for the amount of the fair value of their shares. The court may,
if it so elects, appoint one or more persons as appraisers to receive evidence
and recommend a decision on the question of fair value. The appraisers shall
have such power and authority as is specified in the order of their
appointment or an amendment thereof. The corporation shall pay each dissenting
shareholder the amount found to be due him or her within 10 days after final
determination of the proceedings. Upon payment of the judgment, the dissenting
shareholder shall cease to have any interest in such shares.
(8) The judgment may, at the discretion of the court, include a fair rate of
interest, to be determined by the court.
2
<PAGE>
(9) The costs and expenses of any such proceeding shall be determined by the
court and shall be assessed against the corporation, but all or any part of
such costs and expenses may be apportioned and assessed as the court deems
equitable against any or all of the dissenting shareholders who are parties to
the proceeding, to whom the corporation has made an offer to pay for the
shares, if the court finds that the action of such shareholders in failing to
accept such offer was arbitrary, vexatious, or not in good faith. Such
expenses shall include reasonable compensation for, and reasonable expenses
of, the appraisers, but shall exclude the fees and expenses of counsel for,
and experts employed by, any party. If the fair value of the shares, as
determined, materially exceeds the amount which the corporation offered to pay
therefor or if no offer was made, the court in its discretion may award to any
shareholder who is a party to the proceeding such sum as the court determines
to be reasonable compensation to any attorney or expert employed by the
shareholder in the proceeding.
(10) Shares acquired by a corporation pursuant to payment of the agreed
value thereof or pursuant to payment of the judgment entered therefor, as
provided in this section, may be held and disposed of by such corporation as
authorized but unissued shares of the corporation, except that, in the case of
a merger, they may be held and disposed of as the plan of merger otherwise
provides. The shares of the surviving corporation into which the shares of
such dissenting shareholders would have been converted had they assented to
the merger shall have the status of authorized but unissued shares of the
surviving corporation.
HISTORY: s. 120, ch. 89-154; s. 35, ch. 93-281; s. 32, ch. 97-102.
3
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
PURCHASER AND PARENT
1. Directors and Executive Officers of Purchaser. The name, business
address, present principal occupation or employment and material occupations,
positions, offices or employments during the last five years of each director
and executive officer of Purchaser and certain other information are set forth
below. All directors and executive officers listed below are citizens of the
United States.
<TABLE>
<S> <C>
NAME AND ADDRESS PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL
OCCUPATIONS, POSITIONS, OFFICES OR EMPLOYMENT HELD DURING THE
LAST FIVE YEARS
James Haber Mr. Haber has served as the sole director, President, Secretary
950 Third Avenue and Treasurer of the Purchaser since its incorporation in
23rd Floor October of 1999. Mr. Haber has also served as sole director,
New York, New President, Secretary and Treasurer of The Diversified Group
York 10022 Incorporated, since founding that company in 1992. He also
serves as a director and/or officer of a number of entities
affiliated with The Diversified Group Incorporated.
</TABLE>
2. Directors and Executive Officers of Parent. The name, business address,
present principal occupation or employment and material occupations,
positions, offices or employment during the last five years of each director
and executive officer of Parent and certain other information are set forth
below. All directors and executive officers listed below are citizens of the
United States.
<TABLE>
<S> <C>
NAME AND ADDRESS PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL
OCCUPATIONS, POSITIONS, OFFICES OR EMPLOYMENT HELD DURING THE
LAST FIVE YEARS
James Haber Mr. Haber is a director of ETA Holding Corp., the manager of
950 Third Avenue Parent, and has served as the President and Secretary of ETA
23rd Floor Holding Corp. since its incorporation in June of 1999. Mr.
New York, New Haber has also served as sole director, President, Secretary
York 10022 and Treasurer of The Diversified Group Incorporated, since
founding that company in 1992. He also serves as a director
and/or officer of a number of entities affiliated with The
Diversified Group Incorporated.
Irwin Rosen Mr. Rosen has served as a director and vice president of ETA
950 Third Avenue Holding Corp., the manager of Parent, since its incorporation
23rd Floor in June of 1999. Mr. Rosen has also served as an officer of The
New York, New Diversified Group Incorporated since 1992 and has served as a
York 10022 director and/or officer of a number of entities affiliated with
The Diversified Group Incorporated.
</TABLE>
During the last five years, none of Purchaser or Parent or, to the best
knowledge of Purchaser or Parent, any of the persons listed on this Schedule I
to the Offer to Purchase (i) has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) was a party to
any judicial or administrative proceeding (except for matters that were
dismissed without sanction or settlement) that resulted in a judgment, decree
or final order enjoining the person from future violations of, or prohibiting
activities subject to, federal or state securities laws, or a finding of any
violation of such laws.
<PAGE>
The Letter of Transmittal, Share Certificates and any other required
documents should be sent or delivered by each holder of Shares or such
holder's broker, dealer, commercial bank, trust company or other nominee to
the Paying Agent as follows:
The Paying Agent for the Offer is:
EQUISERVE, L.P.
By First Class Mail: By Overnight Courier:
EquiServe EquiServe
Attn: Corporate Actions Attention: Corporate Actions
P.O. Box 8029 150 Royall Street
Canton, MA 02266-8029 Canton, MA 02021
By Hand:
Securities Transfer Reporting Services, Inc.
c/o EquiServe
100 William Street
New York, NY 10038
Questions or requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective addresses and telephone
numbers set forth below. Additional copies of this Offer to Purchase, the
Letter of Transmittal and the Notice of Guaranteed Delivery may be obtained
from the Information Agent or the Dealer Manager and will be furnished
promptly at Purchaser's expense. A holder of Shares may also contact his, hers
or its broker, dealer, commercial bank or trust company for assistance
concerning the Offer.
The Information Agent for the Offer is:
[LOGO]
GEORGESON SHAREHOLDER COMMUNICATIONS INC.
17 State Street, 10th Floor
New York, New York 10004
Banks & Brokers Call Collect : (212) 440-9884
All Others Call Toll-Free: (800) 223-2064
The Dealer Manager for the Offer is:
[LOGO]
GEORGESON SHAREHOLDER SECURITIES CORPORATION
member NASD, SIPC
17 State Street, 10th Floor
New York, New York 10004
Banks & Brokers Call Collect : (212) 440-9884
All Others Call Toll-Free: (800) 445-1790
<PAGE>
EXHIBIT (A)(1)(II)
LETTER OF TRANSMITTAL
To Tender Shares of Common Stock
of
Echelon International Corporation
Pursuant to the Offer to Purchase
dated January 28, 2000
by
EIN Acquisition Corp.
a wholly-owned subsidiary of
ETA Holding LLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON TUESDAY, FEBRUARY 29, 2000, UNLESS THE OFFER IS EXTENDED.
The Paying Agent for the Offer is:
EQUISERVE, L.P.
<TABLE>
<S> <C>
By First Class Mail: By Overnight Courier:
EquiServe EquiServe
Attn: Corporate Actions Attention: Corporate Actions
P.O. Box 8029 150 Royall Street
Canton, MA 02266-8029 Canton, MA 02021
</TABLE>
By Hand:
Securities Transfer Reporting Services, Inc.
c/o EquiServe
100 William Street
New York, NY 10038
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS
SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
The names and addresses of the registered holders should be printed, if not
already below, exactly as they appear on the certificates evidencing Shares
("Share Certificates") tendered hereby. The Share Certificates and the Shares
(as defined below) that the undersigned wishes to tender should be indicated
in the appropriate boxes.
DESCRIPTION OF SHARES TENDERED
- - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Name(s) and Address(es) of
Registered Holder(s)
(Please fill in,
if blank, exactly as
name(s) appear(s) on Share Share Certificate(s) and Share(s) Tendered
Certificate(s)) (Attach additional signed list, if necessary)
- - ---------------------------------------------------------------------------
Share Total Number of Number
Certificate Shares Evidenced of Shares
Number(s)* By Certificate(s)* Tendered**
---------------------------------
<S> <C> <C> <C>
---------------------------------
---------------------------------
---------------------------------
Total Shares
- - ---------------------------------------------------------------------------
</TABLE>
* Need not be completed by Book-Entry Stockholders.
** Unless otherwise indicated, all Shares evidenced by Certificates
delivered to the Paying Agent will be deemed to have been tendered
hereby. See Instruction 4.
<PAGE>
This Letter of Transmittal is to be completed by stockholders, either if
Share Certificates are to be forwarded herewith or, unless an Agent's Message
(as defined in the Offer to Purchase) is utilized, if tenders of Shares are to
be made by book-entry transfer into the account of EquiServe, L.P., as Paying
Agent (the "Paying Agent"), at The Depository Trust Company (the "Book-Entry
Transfer Facility") pursuant to the procedures set forth in Section 3 of the
Offer to Purchase. Stockholders who tender Shares by book-entry transfer are
referred to herein as "Book-Entry Stockholders".
Holders of Shares whose Share Certificates are not immediately available or
who cannot deliver their Share Certificates and all other required documents to
the Paying Agent prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase), or who cannot complete the procedure for book-entry
transfer on a timely basis, must tender their Shares according to the
guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.
See Instruction 2. Delivery of documents to the Book-Entry Transfer Facility
does not constitute delivery to the Paying Agent.
[_]CHECK HERE IF SHARES ARE BEING TENDERED BY BOOK-ENTRY TRANSFER MADE TO AN
ACCOUNT MAINTAINED BY THE PAYING AGENT WITH THE BOOK-ENTRY TRANSFER FACILITY
AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER
FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution: _________________________________________________
Account Number: ________________________________________________________________
Transaction Code Number: _______________________________________________________
[_]CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE PAYING AGENT AND COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s): ________________________________________________
Window Ticket Number (if any): _________________________________________________
Date of Execution of Notice of Guaranteed Delivery: ____________________________
Name of Institution that Guaranteed Delivery: __________________________________
Account Number: ________________________________________________________________
Transaction Code Number: _______________________________________________________
[_]CHECK HERE IF ANY OF YOUR SHARE CERTIFICATES HAS BEEN LOST, DESTROYED OR
STOLEN. SEE INSTRUCTION 11.
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to EIN Acquisition Corp., a Florida
corporation ("Purchaser") and a wholly-owned subsidiary of ETA Holding LLC, a
Delaware limited liability company ("Parent"), the above-described shares of
Common Stock, par value $.01 per share (the "Common Stock"), of Echelon
International Corporation, a Florida corporation (the "Company") and the
associated preferred share purchase rights (the "Rights" and, together with
the Common Stock, the "Shares"), at a purchase price of $34.00 per Share, net
to the seller in cash, without interest thereon, upon the terms and subject to
the conditions set forth in the Offer to Purchase dated January 28, 2000 (the
"Offer to Purchase") and in this Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer"). The
undersigned understands that Purchaser reserves the right to transfer or
assign, in whole or from time to time in part, to one or more of its
affiliates, the right to purchase all or any portion of the Shares tendered
pursuant to the Offer, receipt of which is hereby acknowledged.
Subject to, and effective upon, acceptance for payment for the Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Purchaser all
right, title and interest in and to all of the Shares that are being tendered
hereby and any and all dividends, distributions (including additional Shares)
or rights declared, paid or issued with respect to the tendered Shares on or
after the date hereof and payable or distributable to the undersigned on a
date prior to the transfer to the name of Purchaser or nominee or transferee
of Purchaser on the Company's stock transfer records of the Shares tendered
herewith (collectively, a "Distribution"), and appoints the Paying Agent the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares (and any Distribution) with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest)
to (a) deliver such Share Certificates (as defined herein) (and any
Distribution) or transfer ownership of such Shares (and any Distribution) on
the account books maintained by the Book-Entry Transfer Facility, together in
either case with appropriate evidences of transfer, to the Paying Agent for
the account of Purchaser, (b) present such Shares (and any Distribution) for
transfer on the books of the Company and (c) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares (and any
Distribution), all in accordance with the terms and subject to the conditions
of the Offer.
The undersigned irrevocably appoints designees of Purchaser as such
stockholder's proxy, with full power of substitution, to the full extent of
such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by Purchaser and with respect to any and
all other Shares or other securities issued or issuable in respect of such
Shares on or after the date hereof. Such appointment will be effective when,
and only to the extent that, Purchaser accepts such Shares for payment. Upon
such acceptance for payment, all prior proxies given by such stockholder with
respect to such Shares (and such other shares and securities) will be revoked
without further action, and no subsequent proxies may be given nor any
subsequent written consents executed (and, if given or executed, will not be
deemed effective). The designees of Purchaser will be empowered to exercise
all voting and other rights of such stockholder as they in their sole
discretion may deem proper at any annual or special meeting of the Company's
stockholders or any adjournment or postponement thereof, by written consent in
lieu of any such meeting or otherwise. Purchaser reserves the right to require
that, in order for Shares to be deemed validly tendered, immediately upon
Purchaser's payment for such Shares, Purchaser must be able to exercise full
voting rights with respect to such Shares.
The undersigned hereby represents and warrants that (a) the undersigned has
full power and authority to tender, sell, assign and transfer the Shares (and
any Distribution) tendered hereby and (b) when the Shares are accepted for
payment by Purchaser, Purchaser will acquire good, marketable and unencumbered
title to the Shares (and any Distribution), free and clear of all liens,
restrictions, charges and encumbrances, and the same will not be subject to
any adverse claim. The undersigned, upon request, will execute and deliver any
additional documents deemed by the Paying Agent or Purchaser to be necessary
or desirable to complete the sale, assignment and transfer of the Shares
tendered hereby (and any Distribution). In addition, the undersigned shall
promptly remit and transfer to the Paying Agent for the account of Purchaser
any and all Distributions in respect of the Shares tendered hereby,
accompanied by appropriate documentation of transfer, and pending such
remittance or appropriate assurance thereof, Purchaser will be, subject to
applicable law, entitled to all rights and
3
<PAGE>
privileges as owner of any such Distribution and may withhold the entire
purchase price or deduct from the purchase price the amount or value thereof,
as determined by Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall not be
affected by and shall survive the death or incapacity of the undersigned and
any obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned.
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to
the Expiration Date (as defined in the Offer to Purchase) and, unless
theretofore accepted for payment by Purchaser pursuant to the Offer, may also
be withdrawn at any time after March 28, 2000. See Section 4 of the Offer to
Purchase.
The undersigned understands that tenders of Shares pursuant to any of the
procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the
undersigned and Purchaser upon the terms and subject to the conditions set
forth in the Offer to Purchase, including the undersigned's representation
that the undersigned owns the Shares being tendered.
Unless otherwise indicated herein under "Special Payment Instructions",
please issue the check for the purchase price and/or issue or return any
certificate(s) for Shares not tendered or not accepted for payment in the
name(s) of the registered holder(s) appearing under "Description of Shares
Tendered". Similarly, unless otherwise indicated herein under "Special
Delivery Instructions", please mail the check for the purchase price and/or
any certificate(s) for Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing under "Description of Shares Tendered". In the event that
both the Special Delivery Instructions and the Special Payment Instructions
are completed, please issue the check for the purchase price and/or any
certificate(s) for Shares not tendered or accepted for payment in the name of,
and deliver such check and/or such certificates to, the person or persons so
indicated. Unless otherwise indicated herein under "Special Payment
Instructions", please credit any Shares tendered herewith by book-entry
transfer that are not accepted for payment by crediting the account at the
Book-Entry Transfer Facility (as defined herein) designated above. The
undersigned recognizes that Purchaser has no obligation, pursuant to the
Special Payment Instructions, to transfer any Shares from the name(s) of the
registered holder(s) thereof if Purchaser does not accept for payment any of
the Shares so tendered.
4
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7) (See Instructions 1, 5, 6 and 7)
To be completed ONLY if Share To be completed ONLY if certifi-
Certificate(s) not tendered or cates for Shares not tendered or
not accepted for payment and/or not purchased and/or any check
the check for the purchase price for the Purchase Price of Shares
of Shares accepted for payment purchased, issued in the name of
are to be issued in the name of the undersigned, are to be sent
someone other than the under- to someone other than the under-
signed or if Shares tendered by signed, or to the undersigned at
book-entry transfer which are not an address other than that shown
accepted for payment are to be above.
returned by credit to an account
maintained at the Book-Entry Mail [_] check [_] certificates
Transfer Facility. to:
Issue [_] check [_] certificates Name______________________________
to: (Please Print)
Name _____________________________ Address __________________________
(Please Print)
__________________________________
Address __________________________ (Include Zip Code)
__________________________________ __________________________________
(Include Zip Code) (Tax Id. or Social Security
Number)
__________________________________ (See Substitute Form W-9)
(Tax Id. or Social Security
Number)
(See Substitute Form W-9)
Credit Shares tendered by book-
entry transfer that are not ac-
cepted for payment to The Deposi-
tory Trust Company ("DTC") to:
__________________________________
(DTC Account No.)
5
<PAGE>
SIGN HERE
AND COMPLETE SUBSTITUTE FORM W-9
X _____________________________________________________
X _____________________________________________________
(Signature(s) of Holder(s))
Dated: ______________________, 2000
(Must be signed by registered holder(s) exactly as
name(s) appear(s) on Share Certificate(s) or on a
security position listing or by person(s) authorized
to become registered holder(s) by certificates and
documents transmitted herewith. If signature is by
trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity,
please provide the following information and see
Instruction 5.)
Name(s)________________________________________________
_______________________________________________________
(Please Print)
Capacity (full title)__________________________________
Address________________________________________________
_______________________________________________________
(Include Zip Code)
Area Code and Telephone Number ________________________
Tax Identification or Social Security No. _____________
COMPLETE SUBSTITUTE FORM W-9
GUARANTEE OF SIGNATURE(S) (See Instructions 1 and 5)
Authorized Signature __________________________________
Name __________________________________________________
Name of Firm __________________________________________
(Please Print)
Address _______________________________________________
_______________________________________________________
(Include Zip Code)
Area Code and Telephone Number ________________________
Dated: _____________________, 2000
(right arrow) (left
(right arrow) arrow)
(left
arrow)
(left
arrow)
6
<PAGE>
INSTRUCTIONS
Forming Part Of The Terms And Conditions Of The Offer
1. Guarantee of Signatures. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) of Shares tendered herewith, unless such holder(s) has
completed either the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" above, or (b) if such Shares are
tendered for the account of a firm which is a bank, broker, dealer, credit
union, savings association or other entity which is a member in good standing
of the Securities Transfer Agents Medallion Program or by any "eligible
guarantor institution," as such term is defined in Rule 17Ad-15 and/or the
Securities Exchange Act of 1934 as amended (each of the foregoing being
referred to as an "Eligible Institution"). In all other cases, all signatures
on this Letter of Transmittal must be guaranteed by an Eligible Institution.
See Instruction 5.
2. Delivery of Letter of Transmittal and Share Certificates. This Letter of
Transmittal is to be completed by stockholders either if Share Certificates
are to be forwarded herewith or, unless an Agent's Message (as defined in the
Offer to Purchase) is utilized, if tenders are to be made pursuant to the
procedures for tender by book-entry transfer set forth in Section 3 of the
Offer to Purchase. Share Certificates evidencing all physically tendered
Shares, or timely confirmation (a "Book-Entry Confirmation") of a book-entry
transfer of Shares into the Paying Agent's account at the Book-Entry Transfer
Facility, as well as this Letter of Transmittal (or a facsimile hereof),
properly completed and duly executed, with any required signature guarantees,
or an Agent's Message in connection with a book-entry transfer, and any other
documents required by this Letter of Transmittal, must be received by the
Paying Agent at one of its addresses set forth herein prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase). If Share Certificates
are forwarded to the Paying Agent in multiple deliveries, a properly completed
and duly executed Letter of Transmittal must accompany each such delivery.
Stockholders whose Share Certificates are not immediately available or who
cannot deliver their Share Certificates and all other required documents to
the Paying Agent prior to the Expiration Date or who cannot complete the
procedure for delivery by book-entry transfer on a timely basis may tender
their Shares by properly completing and duly executing a Notice of Guaranteed
Delivery pursuant to the guaranteed delivery procedure set forth in Section 3
of the Offer to Purchase. Pursuant to such procedure: (i) such tender must be
made by or through an Eligible Institution; (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form made
available by Purchaser, must be received by the Paying Agent prior to the
Expiration Date; and (iii) the Share Certificates (or a Book-Entry
Confirmation) representing all tendered Shares, in proper form for transfer,
in each case together with the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry delivery, an Agent's Message) and any other
documents required by this Letter of Transmittal, must be received by the
Paying Agent within three New York Stock Exchange trading days after the date
of execution of such Notice of Guaranteed Delivery.
The method of delivery of this Letter of Transmittal, Share Certificates and
all other required documents, including delivery through the Book-Entry
Transfer Facility, is at the option and risk of the tendering stockholder, and
the delivery will be deemed made only when actually received by the Paying
Agent (including, in the case of book-entry transfer, by Book-Entry
Confirmation). If delivery is by mail, registered mail with return receipt
requested, properly insured, is recommended. In all cases, sufficient time
should be allowed to ensure timely delivery.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution
of this Letter of Transmittal (or a facsimile hereof), waive any right to
receive any notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate signed schedule attached hereto.
4. Partial Tenders (Not Applicable to Book-Entry Stockholders). If fewer
than all the Shares evidenced by any Share Certificate submitted are to be
tendered, fill in the number of Shares which are to be tendered in the box
entitled "Number of Shares Tendered". In such cases, new Share Certificates
for the Shares that were evidenced by your old Share Certificates, but were
not tendered by you, will be sent to you, unless otherwise provided in the
appropriate box on this Letter of Transmittal, as soon as practicable after
the Expiration Date. All Shares represented by Share Certificates delivered to
the Paying Agent will be deemed to have been tendered unless otherwise
indicated.
7
<PAGE>
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any certificates or stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and proper evidence satisfactory
to Purchaser of their authority so to act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to or
certificates for Shares not tendered or not purchased are to be issued in the
name of a person other than the registered holder(s). Signatures on such
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificate(s) listed, the certificate(s) must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the
certificate(s). Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction 6,
Purchaser will pay any stock transfer taxes with respect to the transfer and
sale of Shares to it or its order pursuant to the Offer. If, however, payment
of the purchase price is to be made to, or if certificate(s) for Shares not
tendered or accepted for payment are to be registered in the name of, any
person other than the registered holder(s), or if tendered certificate(s) are
registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holder(s) or such person) payable on account of the transfer
to such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes or an exemption therefrom, is submitted.
Except as otherwise provided in this Instruction 6, it will not be necessary
for transfer tax stamps to be affixed to the certificate(s) listed in this
Letter of Transmittal.
7. Special Payment and Delivery Instructions. If a check is to be issued in
the name of, and/or certificates for Shares not tendered or not accepted for
payment are to be issued or returned to, a person other than the signer of
this Letter of Transmittal or if a check and/or such certificates are to be
returned to a person other than the person(s) signing this Letter of
Transmittal or to an address other than that shown in this Letter of
Transmittal, the appropriate boxes on this Letter of Transmittal must be
completed. A Book-Entry Stockholder may request that Shares not accepted for
payment be credited to such account maintained at the Book-Entry Transfer
Facility as such Book-Entry Stockholder may designate under "Special Payment
Instructions". If no such instructions are given, such Shares not accepted for
payment will be returned by crediting the account at the Book-Entry Transfer
Facility.
8. Waiver of Conditions. Subject to the terms and conditions of the Merger
Agreement (as defined in the Offer to Purchase), the conditions of the Offer
(other than the Minimum Condition (as defined in the Offer to Purchase)) may
be waived by Purchaser in whole or in part at any time and from time to time
in its sole discretion.
9. 31% Backup Withholding; Substitute Form W-9. Under U.S. federal income
tax law, a stockholder whose tendered Shares are accepted for payment is
required to provide the Paying Agent with such stockholder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the Paying
Agent is not provided with the correct TIN, the Internal Revenue Service may
subject the stockholder or other payee to a $50 penalty. In addition, payments
that are made to such stockholder or other payee with respect to Shares
purchased pursuant to the Offer may be subject to 31% backup withholding.
8
<PAGE>
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, the stockholder must submit a Form W-9, signed under penalties of
perjury, attesting to that individual's exempt status. A Form W-9 can be
obtained from the Paying Agent. See the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for more
instructions.
If backup withholding applies, the Paying Agent is required to withhold 31%
of any such payments made to the stockholder or other payee. Backup
withholding is not an additional tax. Rather, the tax liability of persons
subject to backup withholding will be reduced by the amount of tax withheld.
If withholding results in an overpayment of taxes, a refund may be obtained
from the Internal Revenue Service.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
stockholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Paying Agent will
withhold 31% of all payments made prior to the time a properly certified TIN
is provided to the Paying Agent.
The stockholder is required to give the Paying Agent the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares or of the last transferee appearing on the transfers attached to, or
endorsed on, the Shares. If the Shares are in more than one name or are not in
the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
10. Requests for Assistance or Additional Copies. Questions or requests for
assistance may be directed to the Dealer Manager or the Information Agent at
their respective addresses and telephone numbers set forth below. Additional
copies of the Offer to Purchase, this Letter of Transmittal and the Notice of
Guaranteed Delivery may also be obtained from the Information Agent or the
Dealer Manager or from brokers, dealers, commercial banks or trust companies.
You may also contact your broker, dealer, commercial bank, trust company or
other nominee for assistance concerning the Offer.
11. Lost, Destroyed or Stolen Certificates. If any certificate representing
Shares has been lost, destroyed or stolen, the stockholder should promptly
notify the Paying Agent. The stockholder will then be instructed as to the
steps that must be taken in order to replace the certificate. This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost or destroyed certificates have been followed.
Important: This Letter of Transmittal (or a facsimile hereof), properly
completed and duly executed together with certificates or confirmation of
Book-Entry Transfer or the Notice of Guaranteed Delivery, and all other
required documents, must be received by the Paying Agent prior to the
Expiration Date.
9
<PAGE>
PAYER'S NAME:
Part 1--PLEASE PROVIDE ----------------------
SUBSTITUTE YOUR TIN IN THE BOX AT THE Social Security
Form W-9 RIGHT AND CERTIFY BY Number
SIGNING AND DATING BELOW.
OR
----------------------
Employer
Identification Number
--------------------------------------------------------
Department of the Part 2--Certification--Under penalties of perjury, I
Treasury certify that:
Internal Revenue
Service (1) The number shown on this form is my correct TIN
(or I am waiting for a number to be issued to
me) and
(2) I am not subject to backup withholding because:
(a) I am exempt from backup withholding, or (b)
I have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report
all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to
backup withholding.
--------------------------------------------------------
Payer's Request for Certification Instructions--You must
Taxpayer cross out item (2) above if you have
Identification been notified by the IRS that you are
Number ("TIN") currently subject to backup
withholding because of under-
reporting interest or dividends on
your tax return. However, if after Part 3
being notified by the IRS that you Awaiting
were subject to backup withholding TIN [_]
you received another notification
from the IRS that you are no longer
subject to backup withholding, do not
cross out such Item (2).
SIGN HERE (right Signature: __________ Date: ,2000
arrow)
- - --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE
IF YOU CHECKED THE BOX IN PART 3 OF THE SUBSTITUTE W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of payment, 31% of all reportable payments made to me will be withheld.
Signature: Date: , 2000
10
<PAGE>
The Information Agent for the Offer is
[LOGO OF GEORGESON SHAREHOLDER COMMUNICATIONS INC.]
17 State Street, 10th Floor
New York, New York 10004
Banks and Brokers Call Collect: (212) 440-9884
All Others Call Toll Free: (800) 223-2064
The Dealer Manager for the Offer is:
[LOGO OF GEORGESON SHAREHOLDER SECURITIES CORPORATION]
17 State Street, 10th Floor
New York, New York 10004
Banks and Brokers Call Collect: (212) 440-9884
All Others Call Toll Free: (800) 445-1790
11
<PAGE>
EXHIBIT (A)(1)(III)
NOTICE OF GUARANTEED DELIVERY
for
Tender of Shares of Common Stock
of
Echelon International Corporation
As set forth in Section 3 of the Offer to Purchase described below, this
instrument, or one substantially equivalent hereto, must be used to accept the
Offer (as defined below) if certificates evidencing Shares (as defined below)
are not immediately available, or the certificates for Shares and all other
required documents cannot be delivered to EquiServe, L.P. (the "Paying Agent")
prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase), or if the procedure for delivery by book-entry transfer cannot be
completed on a timely basis. This instrument may be delivered by hand or
transmitted by facsimile transmission or mailed to the Paying Agent. See
Section 3 of the Offer to Purchase.
The Paying Agent for the Offer is:
EQUISERVE, L.P.
<TABLE>
<S> <C>
By First Class Mail: By Overnight Courier:
EquiServe EquiServe
Attn: Corporate Actions Attention: Corporate Actions
P.O. Box 8029 150 Royall Street
Canton, MA 02266-8029 Canton, MA 02021
By Hand: By Facsimile Transmission:
Securities Transfer Reporting Services, Inc. (781) 575-2233
c/o EquiServe Confirm Receipt of Facsimile By Telephone:
100 William Street (781) 575-3120
New York, NY 10038
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER
THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. DELIVERIES TO
THE COMPANY WILL NOT BE FORWARDED TO THE PAYING AGENT AND THEREFORE WILL NOT
CONSTITUTE VALID DELIVERY. DELIVERIES TO THE BOOK-ENTRY TRANSFER FACILITY WILL
NOT CONSTITUTE VALID DELIVERY TO THE PAYING AGENT.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
(as defined in the Offer to Purchase) under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box in the Letter of Transmittal.
The Eligible Institution which completes this form must communicate the
guarantee to the Paying Agent and must deliver the Letter of Transmittal or an
Agent's Message and certificates evidencing Shares to the Paying Agent within
the time shown herein. Failure to do so could result in a financial loss to
such Eligible Institution.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tender(s) to EIN Acquisition Corp., a Florida
corporation ("Purchaser") and a wholly-owned subsidiary of ETA Holding LLC, a
Delaware limited liability company ("Parent"), upon the terms and subject to
the conditions set forth in the Offer to Purchase dated January 28, 2000 (the
"Offer to Purchase"), and in the related Letter of Transmittal (which, as
amended or supplemented from time to time, together constitute the "Offer"),
receipt of which is hereby acknowledged, the number of shares of Common Stock,
par value $.01 per share (the "Common Stock"), of Echelon International
Corporation, a Florida corporation (the "Company") and the associated
preferred share purchase rights (the "Rights" and, together with the Common
Stock, the "Shares"), pursuant to the guaranteed delivery procedure set forth
in Section 3 of the Offer to Purchase.
<TABLE>
<S> <C>
Signature(s) ____________________________________ Check one box if Shares will be tendered by
book-entry transfer to The Depository Trust
Company
Name(s) of Record Holders Account Number ________________________________
_________________________________________________ _______________________________________________
Please Type or Print
Address(es) _____________________________________
_________________________________________________
Zip Code
Area Code and Tel. No(s) ________________________
Number of Shares ________________________________
Certificate Nos. (If Available)
_________________________________________________
_________________________________________________
Dated _________________________________, 2000
</TABLE>
2
<PAGE>
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a firm which is a bank, broker, dealer, credit union,
savings association or other entity which is a member in good standing of the
Securities Transfer Agents Medallion Program or other entity which is an
"eligible guarantor institution," as such term is defined in Rule 17Ad-15
under the Securities Exchange Act of 1934, as amended (each of the foregoing
constituting an "Eligible Institution"), (a) represents that the above named
person(s) "own(s)" the Shares tendered hereby within the meaning of Rule 14e-
4 under the Securities Exchange Act of 1934, as amended ("Rule 14e-4"), (b)
represents that such tender of Shares complies with Rule 14e-4, and (c)
guarantees to deliver to the Paying Agent either the certificates evidencing
all tendered Shares, in proper form for transfer, or to deliver Shares
pursuant to the procedure for book-entry transfer into the Paying Agent's
account at The Depository Trust Company (the "Book-Entry Transfer Facility"),
together with the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees or an
Agent's Message (as defined in the Offer to Purchase) in the case of a book-
entry delivery, and any other required documents, all within three New York
Stock Exchange trading days after the date hereof.
------------------------------------- -------------------------------------
Name of Firm Authorized Signature
------------------------------------- Name _______________________________
Address Please Type or Print
------------------------------------- Title ______________________________
Zip Code
Dated _________________________, 2000
-------------------------------------
Area Code and Tel No.
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR
SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE>
EXHIBIT (A)(1)(IV)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Echelon International Corporation
at
$34.00 Net Per Share
by
EIN Acquisition Corp.
a wholly-owned subsidiary of
ETA Holding LLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, FEBRUARY 29, 2000, UNLESS THE OFFER IS EXTENDED.
January 28, 2000
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by EIN Acquisition Corp., a Florida corporation
("Purchaser") and a wholly-owned subsidiary of ETA Holding LLC., a Delaware
limited liability company ("Parent"), to act as Dealer Manager in connection
with Purchaser's offer to purchase for cash all the outstanding shares of
Common Stock, par value $.01 per share (the "Common Stock"), of Echelon
International Corporation, a Florida corporation (the "Company") and the
associated preferred share purchase rights (the "Rights" and, together with
the Common Stock, the "Shares"), at a purchase price of $34.00 per Share, net
to the seller in cash, without interest thereon, upon the terms and subject to
the conditions set forth in the Offer to Purchase, dated January 28, 2000 (the
"Offer to Purchase"), and in the related Letter of Transmittal (which, as
amended or supplemented from time to time, together constitute the "Offer")
enclosed herewith. Holders of Shares whose certificates for such Shares (the
"Share Certificates") are not immediately available or who cannot deliver
their Share Certificates and all other required documents to the Paying Agent
(as defined below) prior to the Expiration Date (as defined in the Offer to
Purchase), or who cannot complete the procedures for book-entry transfer on a
timely basis, must tender their Shares according to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase.
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares registered in your name or in the name of your
nominee. Please bring the Offer to their attention as promptly as possible.
Enclosed herewith for your information and forwarding to your client are
copies of the following documents:
1. The Offer to Purchase, dated January 28, 2000.
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of Transmittal
may be used to tender Shares.
1
<PAGE>
3. The Notice of Guaranteed Delivery for Shares to be used to accept the
Offer if Share Certificates are not immediately available or if such
certificates and all other required documents cannot be delivered to
EquiServe, L.P. (the "Paying Agent") by the Expiration Date or if the
procedure for book-entry transfer cannot be completed by the Expiration
Date.
4. The Letter to stockholders of the Company from the Chairman, President
and Chief Executive Officer of the Company, accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9.
5. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer.
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
7. A return envelope addressed to EquiServe, L.P., the Paying Agent.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, FEBRUARY 29, 2000, UNLESS
THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not properly withdrawn prior to the expiration of the Offer that
number of Shares which, together with any Shares owned by Parent and
Purchaser, constitutes more than 80% of the voting power (determined on a
fully-diluted basis), and (ii) the expiration or termination of all applicable
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended. The Offer is also subject to other terms and conditions. See
the Introduction and Section 1 and 15 of the Offer to Purchase.
The Board of Directors of the Company (the "Board of Directors") (with two
interested directors abstaining) has approved the Offer, has determined that
the Offer is fair to, and in the best interests of, the Company's stockholders
and recommends that the Company's stockholders accept the Offer and tender
their Shares pursuant to the Offer.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of January 21, 2000 (the "Merger Agreement"), among Parent, Purchaser and
the Company. The Merger Agreement provides, among other things, for the making
of the Offer by Purchaser, and further provides that, following the completion
of the Offer, upon the terms and subject to the conditions of the Merger
Agreement and the Florida Business Corporation Act, Purchaser will be merged
with and into the Company (the "Merger"). Following the Merger, the Company
will continue as the surviving corporation and become a wholly-owned
subsidiary of Parent, and the separate corporate existence of Purchaser will
cease.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal and any required signature guarantees, or an
Agent' s Message (as defined in the Offer to Purchase) in connection with a
book-entry delivery of Shares, and other required documents should be sent to
the Paying Agent, and (ii) either Share Certificates, representing the
tendered Shares should be delivered to the Paying Agent, or such Shares should
be tendered by book-entry transfer into the Paying Agent's account maintained
at the Book-Entry Transfer Facility (as described in the Offer to Purchase),
all in accordance with the instructions set forth in the Offer.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Share Certificates or other required documents prior to the
Expiration Date or to comply with the book-entry transfer procedures on a
timely basis, a tender may be effected by following the guaranteed delivery
procedures specified in Section 3 of the Offer to Purchase.
2
<PAGE>
Purchaser will not pay any commissions or fees to any broker, dealer or
other person (other than the Dealer Manager, the Paying Agent and Georgeson
Shareholder Communications Inc. (the "Information Agent") (as described in the
Offer to Purchase)) for soliciting tenders of Shares pursuant to the Offer.
Purchaser will, however, upon request, reimburse you for customary clerical
and mailing expenses incurred by you in forwarding any of the enclosed
materials to your clients. Purchaser will pay or cause to be paid any stock
transfer taxes payable on the transfer of Shares to it, except as otherwise
provided in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
the Information Agent or the undersigned, at their respective addresses and
telephone numbers set forth on the back cover of the Offer to Purchase.
Additional copies of the enclosed materials may be obtained from the
Information Agent.
Very truly yours,
GEORGESON SHAREHOLDER SECURITIES
CORPORATION
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON THE AGENT OF PURCHASER AND PARENT, THE DEALER MANAGER, THE
COMPANY, THE PAYING AGENT OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF
THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY
DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE>
EXHIBIT (A)(1)(V)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Echelon International Corporation
at
$34.00 Net Per Share
by
EIN Acquisition Corp.
a wholly-owned subsidiary of
ETA Holding LLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, FEBRUARY 29, 2000, UNLESS THE OFFER IS EXTENDED.
January 28, 2000
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated January 28,
2000 (the "Offer to Purchase"), and the related Letter of Transmittal relating
to the offer by EIN Acquisition Corp., a Florida corporation ("Purchaser") and
a wholly-owned subsidiary of ETA Holding LLC, a Delaware limited liability
company ("Parent"), to purchase all of the outstanding shares of Common Stock,
par value $.01 per share (the "Common Stock"), of Echelon International
Corporation, a Florida corporation (the "Company") and the associated
preferred share purchase rights (the "Rights" and, together with the Common
Stock, the "Shares"), at a purchase price of $34.00 per Share, net to the
seller in cash without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase and in the related Letter of
Transmittal (which, as amended or supplemented from time to time, together
constitute the "Offer"). Holders of Shares whose certificates for such Shares
(the "Share Certificates") are not immediately available or who cannot deliver
their Share Certificates and all other required documents to EquiServe, L.P.,
the Paying Agent, prior to the Expiration Date (as defined in the Offer to
Purchase), or who cannot complete the procedures for book-entry transfer on a
timely basis, must tender their Shares according to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase.
We are the holder of record of Shares held by us for your account. A tender
of such Shares can be made only by us as the holder of record and pursuant to
your instructions. The Letter of Transmittal is furnished to you for your
information only and cannot be used by you to tender Shares held by us for
your account.
We request instructions as to whether you wish to have us tender on your
behalf any or all of such Shares held by us for your account, pursuant to the
terms and subject to the conditions set forth in the Offer to Purchase.
Your attention is directed to the following:
1. The tender price is $34.00 per Share, net to the seller in cash
without interest thereon.
2. The Offer is made for all of the outstanding Shares.
3. The Board of Directors of the Company has (with two interested
directors abstaining) approved the Offer, has determined that the Offer is
fair to, and in the best interests of, the holders of Shares and recommends
that holders of the Shares accept the Offer and tender their Shares
pursuant to the Offer.
<PAGE>
4. The Offer is being made pursuant to the Agreement and Plan of Merger,
dated as of January 21, 2000 (the "Merger Agreement"), which provides that
subsequent to the consummation of the Offer, Purchaser will merge with and
into the Company (the "Merger"). At the effective time of the Merger (the
"Effective Time"), each Share issued and outstanding immediately prior to
the Effective Time (other than Shares held in the treasury of the Company
and each Share owned by Parent, Purchaser or any other direct or indirect
subsidiary of Parent or of the Company and other than Shares, if any, held
by stockholders who have not voted in favor of or consented to the Merger
and who have delivered a written demand for appraisal of such Shares in
accordance with the FBCA) will be canceled, extinguished and converted into
the right to receive $34.00 in cash, without interest thereon.
5. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on February 29, 2000, unless the Offer is extended.
6. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares pursuant to the
Offer.
7. The Offer is conditioned upon, among other things, (i) there being
validly tendered and not properly withdrawn prior to the expiration of the
Offer, that number of Shares which, together with the Shares owned by
Parent and Purchaser, constitute more than 80% of the voting power
(determined on a fully-diluted basis) and (ii) the expiration or
termination of all applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
The Offer is being made solely by the Offer to Purchase and the related
Letter of Transmittal and is being made to all holders of Shares. Purchaser is
not aware of any state where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of
the Offer or the acceptance of Shares pursuant thereto, Purchaser will make a
good faith effort to comply with any such state statute. If, after such good
faith effort, Purchaser cannot comply with such state statute, the Offer will
not be made to, nor will tenders be accepted from or on behalf of, the holders
of Shares in such state. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of Purchaser by Georgeson
Shareholder Securities Corporation, the Dealer Manager for the Offer, or one
or more registered brokers or dealers that are licensed under the laws of such
jurisdiction.
If you wish to have us tender any or all of the Shares held by us for your
account, please instruct us by completing, executing and returning to us the
instruction form contained in this letter. If you authorize a tender of your
Shares, all such Shares will be tendered unless otherwise specified in such
instruction form. Your instructions should be forwarded to us in ample time to
permit us to submit a tender on your behalf prior to the expiration of the
Offer.
2
<PAGE>
Instructions With Respect To The Offer To Purchase For Cash
All Outstanding Shares of Common Stock
of
Echelon International Corporation
by
EIN Acquisition Corp.
The undersigned acknowledge(s) receipt of your letter enclosing the Offer to
Purchase dated January 28, 2000 (the "Offer to Purchase") and the related
Letter of Transmittal pursuant to an offer by EIN Acquisition Corp., a Florida
corporation and a wholly-owned subsidiary of ETA Holding LLC, a Delaware
limited liability company, to purchase all outstanding shares of Common Stock,
par value $.01 per share (the "Common Stock"), of Echelon International
Corporation, a Florida corporation (the "Company") and the associated
preferred share purchase rights (the "Rights" and, together with the Common
Stock, the "Shares"), at a purchase price of $34.00 per Share, net to the
seller in cash without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase and the related Letter of
Transmittal.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) which are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer to Purchase and in the related Letter of Transmittal
furnished to the undersigned.
Number of Shares to be Tendered*
_____________________________ Shares
Dated ________________________, 2000
SIGN HERE
------------------------------------
------------------------------------
Signature
------------------------------------
Please print name(s)
------------------------------------
Address
------------------------------------
Area Code and Telephone Number
------------------------------------
Tax Identification or Social
Security Number
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE OPTION AND RISK OF THE
TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
THIS FORM MUST BE RETURNED TO THE BROKERAGE FIRM MAINTAINING YOUR ACCOUNT.
- - -------
* Unless otherwise indicated, it will be assumed that all of your Shares held
by us for your account are to be tendered
<PAGE>
EXHIBIT (A)(1)(vi)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer.--Social Security numbers have nine digits separated by two hyphens i.e.
000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen i.e., 00-0000000. The table below will help determine the
number to give the payer.
- - -------------------------------------- --------------------------------------
<TABLE>
<CAPTION>
Give the
SOCIAL SECURITY
For this type of account: number of --
<CAPTION>
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, the first
individual on
the account (1)
3. Husband and wife (joint The actual owner
account) of the account
or, if joint
funds, either
person (1)
4. Custodian account of a The minor (2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult, or if
account) the minor is the
only
contributor, the
minor (1)
6. Account in the name of The ward, minor,
guardian or committee or incompetent
for a designated ward, person (3)
minor, or incompetent
person
7.a. The usual revocable The grantor-
savings trust account trustee (1)
(grantor is also
trustee)
b. So-called trust account The actual owner
that is not a legal or (4)
valid trust under State
law
8. Sole proprietorship The owner (4)
account
</TABLE>
<TABLE>
<CAPTION>
Give the EMPLOYER
IDENTIFICATION
For this type of account: number of --
- - -------------------------------------- --------------------------------------
<S> <C>
9. A valid trust, estate, The legal entity
or pension trust (Do not furnish
the identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title) (5)
10. Corporate account The corporation
11. Religious, charitable or The organization
educational organization
account
12. Partnership account held The partnership
in the name of the
partnership
13. Association, club or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public
Department of entity
Agriculture in the name
of a public entity (such
as a State or local
government, school
district or prison)
that receives
agricultural program
payments
</TABLE>
- - --------------------------------------
(1) List first and circle the name of the person whose number you furnish.
--------------------------------------
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show your individual name. You may also enter your business name. You may
use either your Social Security Number or your Employer Identification
Number.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
Note: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
Page 1 of Pages
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
Obtaining a Number
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Appli- cation for Employer Identification Number
(for businesses and all other entities), at the local office of the Social
Security Administration or the Internal Revenue Service (the "IRS") and apply
for a number.
Payees Exempt from Backup Withholding
Payees specifically exempted from backup withholding ALL payments include the
following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), of the Internal
Revenue Code of 1986, as amended (the "Code"), or an individual retirement
plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S.,
or a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a) of the Code.
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1) of the Code.
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under Section 1441
of the Code.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup witholding include the
following:
. Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have
not provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt interest dividends under
section 852 of the Code.)
. Payments described in section 6049(b)(5) of the Code to nonresident
aliens.
. Payments on tax-free covenant bonds under section 1451 of the Code.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE
THE FORM AND RETURN IT TO THE PAYER. IF YOU ARE A NON-RESIDENT ALIEN OR A
FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED
INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see Sections 6041, 6041A(a), 6045, and 6050A and
6050N of the Code and the regulations promulgated therein.
Privacy Act Notice.--Section 6109 requires most recipients of dividends,
interest or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold
31% of taxable interest, dividends and certain other payments to a payee who
does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) Civil Penalty for False Information With Respect To Withholding.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
2
<PAGE>
Exhibit (A)(1)(VII)
This announcement is neither an offer to purchase nor a solicitation of
an offer to sell Shares. The Offer (as defined below) is made solely by the
Offer to Purchase, dated January 28, 2000 and the related Letter of Transmittal,
and any amendments or supplements thereto, and is being made to all holders of
Shares. The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. However, Purchaser (as defined below) may in its discretion
take such actions as it may deem necessary to make the Offer in any jurisdiction
and extend the Offer to holders of Shares in such jurisdiction. In any
jurisdiction where securities, blue sky or other laws require the Offer to be
made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Purchaser by Georgeson Shareholder Securities Corporation ("Georgeson"
or the "Dealer Manager") or one or more registered brokers or dealers licensed
under the laws of such jurisdictions.
Notice of Offer to Purchase for Cash
All of the Outstanding Common Shares
of
Echelon International Corporation
at
$34.00 Net Per Share
by
EIN Acquisition Corp.
a wholly owned subsidiary
of
ETA Holding LLC
EIN Acquisition Corp., a Florida corporation ("Purchaser"), and a wholly
owned subsidiary of ETA Holding LLC, a Delaware limited liability company
("Parent"), is offering to purchase all of the issued and outstanding shares of
common stock and the associated preferred share purchase rights (the "Shares")
of Echelon International Corporation (the "Company") at $34.00 per Share, net to
the seller in cash, without interest thereon, on the terms and subject to the
conditions set forth in the Offer to Purchase dated January 28, 2000 (the "Offer
to Purchase") and in the related Letter of Transmittal (which together, as
either may be amended or supplemented from time to time, constitute the
"Offer"). Tendering stockholders who have Shares registered in their name and
who tender directly will not be charged brokerage fees or commissions or,
subject to Instruction 6 of the Letter of Transmittal, transfer taxes on the
purchase of Shares pursuant to the Offer. Stockholders holding Shares through
their broker or bank are urged to consult them as to whether they charge any
service fees. Following the Offer, Purchaser intends to effect the Merger
described below.
<PAGE>
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, FEBRUARY 29, 2000, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, there being validly
tendered and not properly withdrawn prior to the Expiration Date that number of
Shares which, together with any Shares then owned by Parent and its
subsidiaries, constitutes 80% of the Shares outstanding on a fully diluted basis
on the date of purchase (the "Minimum Condition"). The Offer is also subject to
certain other conditions set forth in the Offer to Purchase. See the
Introduction and Sections 1, 11 and 15 of the Offer to Purchase.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of January 21, 2000 (the "Merger Agreement"), among Parent, Purchaser and the
Company. The Merger Agreement provides that, among other things, Purchaser will
make the Offer and that, as promptly as practicable following the consummation
of the Offer and the satisfaction or waiver of certain conditions set forth in
the Merger Agreement and in accordance with relevant provisions of the Florida
Business Corporation Act ("FBCA"), Purchaser will merge with and into the
Company (the "Merger"). On consummation of the Merger, the Company will
continue as the surviving corporation and will be a wholly owned subsidiary of
Parent. At the effective time of the Merger (the "Effective Time"), each Share
issued and outstanding immediately prior to the Effective Time (other than
Shares held by the Company as treasury stock or by any subsidiary of the Company
or Parent or Purchaser or any subsidiary of Parent or Purchaser and other than
Shares held by stockholders who have properly exercised their dissenters' rights
under the FBCA) will be converted into the right to receive cash in an amount
equal to the price per Share paid pursuant to the Offer, without interest (and
less any required withholding taxes). The Merger Agreement is more fully
described in Section 11 of the Offer to Purchase.
The Board of Directors of the Company (with two interested directors
abstaining) has approved the Offer, has determined that the Offer is fair to,
and in the best interests of, the Company's stockholders, and recommends that
the Company's stockholders accept the Offer and tender their Shares pursuant to
the Offer.
The Offer is subject to certain conditions set forth in the Offer to
Purchase. If any such condition is not satisfied, Purchaser may, subject to
certain terms of the Merger Agreement, (a) terminate the Offer and not accept
for payment or pay for any such Shares and return all tendered Shares to
tendering stockholders or (b) waive all unsatisfied conditions (other than
Minimum Condition) and accept for payment and pay for all Shares validly
tendered and not properly withdrawn prior to the Expiration Date or (c) extend
the Offer and, subject to the right of the stockholders to withdraw Shares until
the Expiration Date as set forth below, retain the Shares that have been
tendered during the period for which the Offer is extended.
For purposes of the Offer, Purchaser shall be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to Paying Agent
(as defined in the Offer to Purchase) of its acceptance of such Shares for
payment pursuant to the Offer. In all cases, on the terms and subject to the
conditions of the Offer, payment for Shares purchased pursuant to the Offer will
be made by deposit of the purchase price therefor with the Paying Agent, which
will act as agent for tendering stockholders for the purpose of receiving
payment from Purchaser and transmitting payment to validly tendering
stockholders. Payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Paying Agent of (i) certificates
for such Shares (or timely confirmation of a book-entry transfer of such Shares
into the Paying Agent's account at the Book-Entry Transfer Facility (as defined
in the Offer to Purchase)), (ii) a Letter of Transmittal (or facsimile thereof)
properly completed and duly executed with all the required signature guarantees
or, in the case of book-entry transfer, an Agent's Message (as defined in the
Offer to Purchase), and (iii) any other documents required by the Letter of
Transmittal.
<PAGE>
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Tuesday, February 29, 2000, unless and until Purchaser shall have extended the
period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by Purchaser, shall expire.
If the Minimum Condition is satisfied and Purchaser purchases Shares
pursuant to the Offer, Purchaser will be able to effect the Merger without the
affirmative vote of any other stockholder pursuant to the "short-form" merger
provisions of Section 607.1104 of the FBCA. In that event, Purchaser intends to
effect the Merger immediately following the purchase of Shares in the Offer.
Under no circumstances will interest be paid on the purchase price to be
paid for the Shares pursuant to the Offer, regardless of any extension of the
Offer or any delay in making such payment. No interest will be paid on the
consideration to be paid in the Merger to stockholders who fail to tender their
Shares pursuant to the Offer, regardless of any delay in effecting the Merger or
making such payment.
Subject to the terms of the Merger Agreement and the applicable rules and
regulations of the Securities and Exchange Commission, Purchaser may, under
certain circumstances, (i) extend the period of time during which the Offer is
open and thereby delay acceptance for payment of and the payment for any Shares
by giving oral or written notice of such extension to the Paying Agent and (ii)
amend the Offer in any other respect by giving oral or written notice of such
amendment to the Paying Agent. Any extension, delay, waiver, amendment or
termination of the Offer will be followed as promptly as practicable by a public
announcement thereof, the announcement in the case of an extension to be issued
no later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date. During any such extension, all Shares
previously tendered and not properly withdrawn will remain subject to the Offer,
subject to the right of a tendering stockholder to withdraw such stockholder's
Shares.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable, except
that they also may be withdrawn at any time after March 28, 2000, unless
theretofore accepted for payment as provided in the Offer to Purchase.. For a
withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Paying Agent at
one of its addresses set forth in the Offer to Purchase and must specify the
name of the person who tendered the Shares to be withdrawn, the number of Shares
to be withdrawn and the name of the registered holders of the Shares, if
different from the person who tendered the Shares. If certificates evidencing
the Shares to be withdrawn have been delivered or otherwise identified to the
Paying Agent, a signed notice of withdrawal with signatures guaranteed by an
Eligible Institution (as defined in the Offer to Purchase) must be submitted
prior to the release of such Shares (except in the case of Shares tendered by an
Eligible Institution). In addition, such notice must specify, in the case of
Shares tendered by delivery of certificates, the name of the registered holder
(if different from that of the tendering stockholder) and the serial numbers
shown on the particular certificates evidencing the Shares to be withdrawn or,
in the case of Shares tendered by book-entry transfer, the name and number of
the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Shares.
The information required to be disclosed by paragraph (d)(l) of Rule 14d-6
of the General Rules and Regulations under the Securities Exchange Act of 1934,
as amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares whose names appear on the Company's
stockholder lists and will be furnished to brokers, banks and similar persons
whose names, or the names of whose nominees, appear on the stockholder list or,
if applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial Share owners.
<PAGE>
The Offer to Purchase and the related Letter of Transmittal contain
important information which should be read carefully before any decision is made
with respect to the Offer.
Any questions or requests for assistance or for additional copies of the
Offer to Purchase, the related Letter of Transmittal and other tender offer
materials may be directed to the Information Agent or the Dealer Manager as set
forth below, and copies will be furnished promptly at Purchaser's expense.
Neither Parent nor Purchaser will pay any fees or commissions to any broker or
dealer or any other person (other than the Dealer Manager, the Paying Agent and
the Information Agent) in connection with the solicitation of tenders of Shares
pursuant to the Offer.
The Information Agent for the Offer is:
GEORGESON
SHAREHOLDER
COMMUNICATIONS INC.
------------------
17 State Street, 10th Floor
New York, New York 10004
Banks and Brokers
Call Collect: (212) 440-9884
All Others Call Toll Free: (800) 223-2064
The Dealer Manager for the Offer is:
GEORGESON SHAREHOLDER SECURITIES CORPORATION
17 State Street, 10th Floor
New York, New York 10004
Banks and Brokers Call Collect: (212) 440-9884
All Others Call Toll Free: (800) 445-1790
January 28, 2000
<PAGE>
Exhibit (A)(1)(VIII)
FOR IMMEDIATE RELEASE
TENDER OFFER ANNOUNCED FOR
ECHELON INTERNATIONAL CORPORATION
ST. PETERSBURG, FL, January 22, 2000 - Echelon International Corporation
("Echelon") (NYSE: EIN), a real estate company which develops, owns and manages
multi-family residential and commercial real estate, announced today that it has
entered into a definitive agreement pursuant to which EIN Acquisition Corp. will
initiate a tender offer for all the outstanding shares of Echelon for a cash
price of $34.00 per share. The offer is fully financed and is subject to, among
other things, the escrow closing of the real estate transactions described
below.
Under the terms of the agreement, which was approved by the Board of Directors
of Echelon and the Board of Directors of EIN Acquisition Corp., EIN Acquisition
Corp. will commence an all-cash tender offer for all outstanding shares of
Echelon within five (5) business days of signing. The offer will be made only
pursuant to definitive offering documents being filed with the Securities and
Exchange Commission. The offer is conditioned upon, among other things, there
having been validly tendered, and not withdrawn prior to the expiration of the
tender offer, eighty percent (80%) of Echelon's shares. The transaction is
expected to be completed in late February or early March 2000. Donaldson, Lufkin
& Jenrette Securities Corporation acted as the financial advisor to Echelon.
Affiliates of Equis Financial Group ("Equis") and Heller Financial, Inc.
("Heller") have also entered into definitive agreements with Echelon in
connection with the acquisition and financing of Echelon's real estate assets.
These transactions will close as soon as practicable after the completion of the
tender offer and subsequent merger of EIN Acquisition Corp. into Echelon. Equis
will acquire the name "Echelon" and will operate its real estate business
throughout the southeast and southwest United States. Separately, another Heller
affiliate acquired all of Echelon's low income housing tax credit partnership
interests.
Darryl A. LeClair, Echelon's chairman, president and chief executive officer,
commented,
"Since Echelon's spin-off from Florida Progress Corporation (NYSE: FPC),
the Board and management have worked diligently to unlock the value of the
Company for the shareholders. We believe this transaction unlocks value,
providing a premium to shareholders of 42% over the market price of the
stock as of January 20, 2000."
# # #
Note: Certain statements contained in this press release regarding other than
<PAGE>
historical facts are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 and are intended to be covered
by the safe harbor created thereby. Such statements, including those concerning
Echelon's expected sources and uses of funds and capital expenditures and its
business strategy including its plans to gradually withdraw from the aircraft
and real estate lending business and focus on its core real estate operations,
involve risks and uncertainties.
Where the Company expresses an expectation or belief as to future events, such
expectation or belief is expressed in good faith and is believed to have a
reasonable basis. However, such forward-looking statements are subject to risks,
uncertainties and other factors, which could cause actual results to differ
materially from future results expressed or implied by such forward-looking
statements. Important factors that could cause actual strategies and the timing
and expected results thereof to differ materially from such forward-looking
statements ("cautionary statements") include, but are not limited to those
factors identified under "CAUTIONARY STATEMENT REGARDING FORWARD LOOKING
STATEMENTS" in the Company's 1998 Annual Report. Given these uncertainties,
readers are cautioned not to place undue reliance on such forward-looking
statements.
All subsequent written and oral forward-looking statements attributable to the
Company or to persons acting on its behalf are expressly qualified in their
entirety by the cautionary statements. The Company disclaims any intent or
obligation to update publicly any forward-looking statements set forth in this
press release, whether as a result of new information, future events or
otherwise.
<PAGE>
EXHIBIT (B)(1)
$300,000,000
CREDIT AGREEMENT
Dated as of January 21, 2000
Among
EIN ACQUISITION CORP.
as Borrower
-- --------
and
UTRECHT-AMERICA FINANCE CO.
as Initial Lender
-- ------- ------
and
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND",
NEW YORK BRANCH
as Agent
-- -----
<PAGE>
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of January 21, 2000 among EIN ACQUISITION
CORP., a Florida corporation (together with any successor by merger, the
"Borrower"), UTRECHT-AMERICA FINANCE CO., a Delaware corporation ("Utrecht"),
-------- -------
listed on the signature pages hereof as the Initial Lender (the "Initial
-------
Lender"), and COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH, ("Rabobank"), as agent (together with any successor
--------
appointed pursuant to Article VII hereof, the "Agent") for the Lenders (as
-----
hereinafter defined).
PRELIMINARY STATEMENTS:
(1) The Borrower intends to acquire (the "Acquisition") all of the
issued and outstanding Capital Stock of Echelon International Corporation
("Echelon").
(2) The Borrower has requested that the Initial Lender extend credit
to the Borrower, on the terms and conditions set forth herein, for the purpose
of financing the Acquisition.
(3) To induce the Initial Lender to enter into this Agreement and
extend credit to the Borrower, the Borrower is executing and delivering to the
Agent the Security Agreement (as hereinafter defined) pursuant to which the
Borrower is assigning and pledging to the Agent for its benefit and the ratable
benefit of the Lenders the Borrower's right title and interest in and to certain
assets as security for its obligations hereunder.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
---------------------
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Acquisition" has the meaning specified in the recital of parties to
-----------
this Agreement.
"Advance" has the meaning specified in Section 2.01.
-------
<PAGE>
2
"Affiliate" means, as to any Person, any other Person that, directly
---------
or indirectly, controls, is controlled by or is under common control with
such Person or is a director or officer of such Person. For purposes of
this definition, the term "control" (including the terms "controlling,"
"controlled by" and "under common control with") of a Person means the
possession, direct or indirect, of the power to vote 5% or more of the
Voting Stock of such Person or to direct or cause the direction of the
management and policies of such Person, whether through the ownership of
Voting Stock, by contract or otherwise.
"Agent" has the meaning specified in the recital of parties to this
-----
Agreement.
"Agent's Account" means the account of the Agent maintained by the
---------------
Agent with The Bank of New York, ABA #021-000-018, at its office at 245
Park Avenue, New York, New York 10167, Account No. 802-6002-533, credit to
Rabobank Nederland, New York Branch, Attention: Corporate Services/EIN
Acquisition, or such other account as shall be notified to the Borrower by
the Agent from time to time.
"Aggregate Collateral Value" means the sum of (i) the Purchase Price
--------------------------
(as defined in the Real Estate Purchase Agreement) plus (ii) the cash
----
portion of the Transfer Value (as defined in the Subscription Agreement)
plus (iii) the dollar amount set forth in Section 4(b) of the Heller
----
Purchase Agreement plus (iv) the amount of the Escrow Fund deposited
pursuant to the Cash Escrow Agreement.
"Applicable Lending Office" means, with respect to each Lender, such
-------------------------
Lender's Lending Office, in the case of a Eurodollar Rate Advance,
specified by the Initial Lender on the signature pages hereto and specified
by each other Lender in the Assignment and Acceptance pursuant to which it
became a Lender, and, in the case of a Base Rate Advance, such other office
of such Lender as such Lender may specify to the Borrower and the Agent as
its Lending Office for a Base Rate Advance.
"Applicable Margin" means 0.50% per annum.
-----------------
"Assignment and Acceptance" means an assignment and acceptance
-------------------------
agreement entered into by a Lender and an Eligible Assignee, and accepted
by the Agent, in accordance with Section 8.07 and in form and substance
satisfactory to the Agent.
"Base Rate" means a fluctuating interest rate per annum in effect from
---------
time to time, which rate per annum shall at all times be equal to the
higher of:
(a) the rate of interest quoted by the Agent in New York, New
York, from time to time, as its base rate; and
(b) 1/2 of one percent per annum above the Federal Funds Rate.
"Base Rate Advance" means the Advance at any time that the Advance
-----------------
bears interest as provided in Section 2.06(a)(ii).
<PAGE>
3
"Borrower" has the meaning specified in the recital of parties to this
--------
Agreement; it being expressly understood that (i) at any time after the
effectiveness of the Merger but prior to the effectiveness of the Delaware
Merger, "Borrower" shall mean and include the surviving company in the
Merger and (ii) at any time after the Delaware Merger, "Borrower" shall
mean and include the surviving company in the Delaware Merger.
"Borrowing" means the borrowing of an Advance.
---------
"Business Day" means a day of the year on which banks are not required
------------
or authorized by law to close in New York City and, if the applicable
Business Day relates to a Eurodollar Rate Advance, on which dealings are
carried on in the London interbank market.
"Capital Stock": any and all shares, interests, participations or
-------------
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any of the
foregoing.
"Cash Equivalents" means any of the following, to the extent owned by
----------------
the Borrower free and clear of all Liens and having a maturity of not
greater than 90 days from the date of acquisition thereof: (a) readily
marketable direct obligations of the Government of the United States or any
agency or instrumentality thereof or obligations unconditionally guaranteed
by the full faith and credit of the Government of the United States or (b)
insured certificates of deposit of or time deposits with any commercial
bank that is a Lender or a member of the Federal Reserve System, is
organized under the laws of the United States or any State thereof and has
combined capital and surplus of at least U.S.$1,000,000,000 (or the
equivalent thereof).
"Cash Escrow Agreement" means that certain Cash Escrow Agreement,
---------------------
dated as of a date on or prior to the sate of the funding of the Advance,
among Echelon, the Borrower and Rabobank, as Escrow Agent, attached hereto
as Exhibit F.
"Collateral" means all "Collateral" referred to in the Security
----------
Agreement and all other property that is or is intended to be subject to
any Lien in favor of the Agent for the benefit of the Secured Parties.
"Confidential Information" means information that the Borrower
------------------------
furnishes to the Agent or any Lender on a confidential basis, but does not
include any such information that is or becomes generally available to the
public or that is or becomes available to the Agent or such Lender from a
source other than the Borrower which source was not, to the best knowledge
of the Agent or the Borrower, as applicable, subject to any confidentiality
agreement or arrangement.
"Consolidated" refers to the consolidation of accounts in accordance
------------
with GAAP.
<PAGE>
4
"Convert", "Conversion" and "Converted" each refers to a conversion of
------- ---------- ---------
Advances of one Type into Advances of the other Type pursuant to Section
2.07 or 2.08.
"Debt" of any Person means, without duplication, (a) all indebtedness
----
of such Person for borrowed money, (b) all obligations of such Person for
the deferred purchase price of property or services, (c) all obligations of
such Person evidenced by notes, bonds, debentures or other similar
instruments, (d) all obligations of such Person created or arising under
any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of
the seller or lender under such agreement in the event of default are
limited to repossession or sale of such property), (e) all obligations of
such Person as lessee under leases that have been or should be, in
accordance with GAAP, recorded as capital leases, (f) all obligations,
contingent or otherwise, of such Person in respect of acceptances, letters
of credit or similar extensions of credit, (g) all obligations of such
Person in respect of Hedge Agreements, (h) all Debt of others referred to
in clauses (a) through (g) above or clause (i) below guaranteed directly or
indirectly in any manner by such Person, or in effect guaranteed directly
or indirectly by such Person through an agreement (1) to pay or purchase
such Debt or to advance or supply funds for the payment or purchase of such
Debt, (2) to purchase, sell or lease (as lessee or lessor) property, or to
purchase or sell services, primarily for the purpose of enabling the debtor
to make payment of such Debt or to assure the holder of such Debt against
loss, (3) to supply funds to or in any other manner invest in the debtor
(including any agreement to pay for property or services irrespective of
whether such property is received or such services are rendered) or (4)
otherwise to assure a creditor against loss, and (i) all Debt referred to
in clauses (a) through (h) above secured by (or for which the holder of
such Debt has an existing right, contingent or otherwise, to be secured by)
any Lien on property (including, without limitation, accounts and contract
rights) owned by such Person, even though such Person has not assumed or
become liable for the payment of such Debt.
"Default" means any Event of Default or any event that would
-------
constitute an Event of Default but for the requirement that notice be given
or time elapse or both.
"Delaware Merger" means the merger of the surviving company in the
---------------
Merger into EIN.
"Distributions" means any distribution or dividend or return of
-------------
capital or any other distribution, payment or delivery of property or cash,
or the redemption, retirement, purchase or acquisition, directly or
indirectly, of any membership or partnership interest now or hereafter
outstanding (or any warrants for or options in respect of any such
interest) or the setting aside of any funds for any of the foregoing
purposes.
"Echelon" means Echelon International Corporation, a Florida
-------
corporation.
"EIN" means EIN Corp., a Delaware corporation.
---
"Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender;
-----------------
(c) a commercial bank organized under the laws of the United States, or any
State thereof, and having total assets in excess of U.S.$500,000,000 (or
the equivalent thereof); (d) a savings and loan association or
<PAGE>
5
savings bank organized under the laws of the United States, or any State
thereof, and having total assets in excess of U.S.$500,000,000 (or the
equivalent thereof); (e) a commercial bank organized under the laws of any
other country that is a member of the OECD and having total assets in
excess of U.S.$500,000,000 (or the equivalent thereof); (f) the central
bank of any country that is a member of the OECD; (g) a finance company or
other financial institution (whether a corporation, partnership, trust or
other entity) that is engaged in making, purchasing or otherwise investing
in commercial loans in the ordinary course of its business and having total
assets in excess of U.S.$500,000,000 (or the equivalent thereof); or (h)
any other Person approved by the Agent and the Borrower, such approval not
to be unreasonably withheld.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"Escrow Agreement" means that certain Escrow Agreement, dated as of
----------------
attached hereto as Exhibit E.
"Eurocurrency Liabilities" has the meaning specified in Regulation D
------------------------
of the Board of Governors of the Federal Reserve System, as in effect from
time to time.
"Eurodollar Rate" means, for any Interest Period, an interest rate per
---------------
annum equal to the rate per annum obtained by dividing (a) the average rate
pr annum (rounded upward to the nearest whole multiple of 1/16 of 1% per
annum, if such average is not such a multiple) at which deposits in U.S.
Dollars are offered by the Reference Banks in London, England to prime
banks in the London interbank market at 11:00 A.M. (London time) two
Business Days before the first day of such Interest Period in an amount
substantially equal to the principal amount of the Advance outstanding and
for a period equal to such Interest Period by (b) a percentage equal to
100% minus the Eurodollar Rate Reserve Percentage for such Interest Period;
provided that, unless and until the Agent designates at least three
--------
Reference Banks, the "Eurodollar Rate" means an interest rate per annum
obtained by dividing (a) the rate per annum at which deposits in U.S.
Dollars are offered by the principal office of the Agent in London, England
to prime banks in the London interbank market at 11:00 A.M. (London time)
two days before the date of the first day of such Interest Period in an
amount substantially equal to the principal amount of Advance and for a
period equal to such Interest Period by (b) a percentage equal to 100%
minus the Eurodollar Rate Reserve Percentage for such Interest Period.
"Eurodollar Rate Advance" means the Advance at any time that the
-----------------------
Advance bears interest as provided in Section 2.06(a)(i).
"Eurodollar Rate Reserve Percentage" means, for any Interest Period,
----------------------------------
the reserve percentage applicable two Business Days before the first day of
such Interest Period under regulations issued from time to time by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, without limitation,
any emergency, supplemental or other marginal reserve requirement) for a
member bank of the Federal Reserve System in New York City with respect to
liabilities or assets
<PAGE>
6
consisting of or including Eurocurrency Liabilities (or with respect to any
other category of liabilities that includes deposits by reference to which
the interest rate on the Eurodollar Rate Advance is determined) having a
term equal to such Interest Period.
"Events of Default" has the meaning specified in Section 6.01.
-----------------
"Federal Funds Rate" means, for any period, a fluctuating interest
------------------
rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the
average of the quotations for such day on such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by
it.
"Fiscal Year" means a fiscal year of the Borrower ending on December
-----------
31 in any calendar year.
"GAAP" has the meaning specified in Section 1.03.
----
"Hedge Agreements" means interest rate swap, cap or collar agreements,
----------------
interest rate future or option contracts, currency swap agreements,
currency future or option contracts and other similar agreements.
"Heller Purchase Agreement" means the Omnibus Agreement, dated the
-------------------------
date hereof between Heller and the Borrower (together with the form of
purchase agreement attached thereto) in the form attached hereto as Exhibit
B, or such other form acceptable to the Agent and the Initial Lender in
their sole discretion.
"Heller" means Heller Financial, Inc., a Delaware corporation.
------
"Indemnified Party" has the meaning specified in Section 8.04(b).
-----------------
"Initial Lender" has the meaning specified in the recital of parties
--------------
to this Agreement.
"Interest Period" means, at any time when the Advance is a Eurodollar
---------------
Rate Advance, initially, the period commencing on the date of the Advance
becomes a Eurodollar Rate Advance and ending on the day which is one week,
one month, two months or three months thereafter, as selected by the
Borrower in the relevant Notice of Borrowing and, thereafter, each
subsequent period commencing on the last day of the immediately preceding
Interest Period and ending on the day which is one week, one month, two
months or three months thereafter, as selected by the Borrower in the
relevant Notice of Borrowing; provided, however, that:
-------- -------
(i) the duration of any Interest Period which commences before
the Maturity Date and otherwise ends after the Maturity Date shall end
on the Maturity Date;
<PAGE>
7
(ii) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day; provided that if such extension would cause the last
--------
day of such Interest Period to occur in the next following calendar
month, the last day of such Interest Period shall occur on the next
preceding Business Day; and
(iii) whenever the first day of any Interest Period occurs on a
day of an initial calendar month for which there is no numerically
corresponding day in the last calendar month of such Interest Period,
such Interest Period shall end on the last Business Day of such last
calendar month;
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
---------------------
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"Investment" in any Person means any loan or advance to such Person,
----------
any purchase or other acquisition of any capital stock or other ownership
or profit interest, warrants, rights, options, obligations or other
securities of such Person, any capital contribution to such Person or any
other investment in such Person, including, without limitation, any
arrangement pursuant to which the investor incurs Debt of the types
referred to in clause (h) or (i) of the definition of "Debt" in respect of
----
such Person.
"Joint Instruction Letter" means that certain Joint Instruction
------------------------
Letter, dated as of the date which is one Business Day prior to the date of
the Advance, among the Real Estate Purchaser, the Real Estate Escrow Agent,
the Subscription Counterparty and the Subscription Escrow Agent, attached
hereto as Exhibit H.
"Lenders" means the Initial Lender and each Person that shall become a
-------
Lender hereunder pursuant to Section 8.07.
"Lending Office" means, with respect to any Lender, the office of such
--------------
Lender specified as its "Lending Office" in the case of the Initial Lender
on the signature pages hereto, and in the case of each other Lender in the
Assignment and Acceptance pursuant to which it became a Lender, or such
other office of such Lender as such Lender may from time to time specify to
the Borrower and the Agent.
"Lien" means any lien, security interest or other charge or
----
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on
title to real property.
"Loan Documents" means (i) this Agreement, (ii) the Notes, (iii) the
--------------
Security Agreement and (iv) the other documents executed in connection with
the transactions contemplated thereby, in each case as amended or otherwise
modified from time to time in accordance with the terms thereof and hereof.
<PAGE>
8
"Margin Stock" has the meaning specified in Regulation U.
------------
"Material Adverse Effect" means a material adverse effect on (a) the
-----------------------
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower, (b) the rights and remedies of (i)
the Agent or any Lender under any Loan Document or (ii) the Borrower under
any Transaction Document or (c) the ability of the Borrower to perform its
Obligations under any Loan Document or any Transaction Document to which it
is or will be a party.
"Maturity Date" means April 27, 2000.
-------------
"Merger" means the merger contemplated by the Merger Agreement.
------
"Merger Consideration" has the meaning set forth in the Merger
--------------------
Agreement.
"Merger Agreement" means the Agreement and Plan of Merger, dated as of
----------------
a date on or prior to the date of the Advance, by and among ETA Holding
LLC, the Borrower and Echelon in the form attached hereto as Exhibit G, or
such other form acceptable to the Agent and the Initial Lender in their
sole discretion.
"Minimum Required Collateral Value" means the sum of (i) the principal
---------------------------------
amount of the Advance, plus (ii) all interest and fees payable under this
----
Agreement during the period beginning on the date hereof and ending on the
Maturity Date, plus (iii) $1,000,000.
----
"Note" means a promissory note of the Borrower payable to the order of
----
any Lender, in substantially the form of Exhibit A attached hereto,
evidencing the aggregate indebtedness of the Borrower to such Lender
resulting from the Advance.
"Notice of Borrowing" has the meaning specified in Section 2.02(a).
-------------------
"Obligation" means, with respect to any Person, any payment,
----------
performance or other obligation of such Person of any kind, including,
without limitation, any liability of such Person on any claim, whether or
not the right of any creditor to payment in respect of such claim is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
disputed, undisputed, legal, equitable, secured or unsecured, and whether
or not such claim is discharged, stayed or otherwise affected by any
proceeding referred to in Section 6.01(e). Without limiting the generality
of the foregoing, the Obligations of the Borrower under the Transaction
Documents include (a) the obligation to pay principal, interest, charges,
expenses, fees, attorneys' fees and disbursements, indemnities and other
amounts payable by the Borrower under any Transaction Document and (b) the
obligation of the Borrower to reimburse any amount in respect of any of the
foregoing that any Lender, in its sole discretion, may elect to pay or
advance on behalf of the Borrower.
"OECD" means the Organization for Economic Cooperation and
----
Development.
<PAGE>
9
"Offer Price" has the meaning set forth in the Merger Agreement.
-----------
"Other Taxes" has the meaning specified in Section 2.10(b).
-----------
"Paying Agent" has the meaning set forth in the Merger Agreement.
------------
"Paying Agent's Account" means the account of the Paying Agent which
----------------------
is designated pursuant to the Offer Documents (as defined in the Merger
Agreement) as the account to which the Offer Price or Merger Consideration,
as applicable, shall be delivered.
"Permitted Merger" means a merger permitted pursuant to Section
----------------
5.02(d).
"Person" means an individual, partnership, corporation (including a
------
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government
or any political subdivision or agency thereof.
"Rabobank" means Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
--------
"Rabobank Nederland", New York Branch.
"Real Estate Escrow Agent" means the Escrow Agent as defined in the
------------------------
Real Estate Purchase Agreement.
"Real Estate Purchase Agreement" means the Purchase And Sale Agreement
------------------------------
by and among Echelon and Certain of its Subsidiaries and the Real Estate
Purchaser, dated as of a date on or prior to the date of the Advance, in
the form attached hereto as Exhibit C, or such other form acceptable to the
Agent and the Initial Lender in their sole discretion.
"Real Estate Purchaser" means Echelon Residential LLC, a Delaware
---------------------
limited liability company.
"Reference Banks" means the Agent and the other banks, if any,
---------------
designated by the Agent as "Reference Banks" in consultation with the
Borrower.
"Register" has the meaning specified in Section 8.07(d).
--------
"Regulation U" means Regulation U of the Board of Governors of the
------------
Federal Reserve System, as in effect from time to time.
"Required Lenders" means, at any time, Lenders owed at least 51% of
----------------
the then aggregate unpaid principal amount of the Advance owing to Lenders.
"Responsible Officer" means any officer of the Borrower.
-------------------
"Secured Obligations" has the meaning specified in the Security
-------------------
Agreement.
<PAGE>
10
"Secured Parties" means the Agent and the Lenders.
---------------
"Security Agreement" means the Security Agreement dated as of the date
------------------
hereof, made by the Borrower as grantor to the Agent for the benefit of the
Agent and the other Secured Parties, as the same may be amended from time
to time in accordance with the terms hereof and thereof.
"Solvent" and "Solvency" mean, with respect to any Person on a
------- --------
particular date, that on such date (a) the fair value of the property of
such Person is greater than the total amount of liabilities, including,
without limitation, contingent liabilities, of such Person, (b) the present
fair salable value of the assets of such Person is not less than the amount
that will be required to pay the probable liability of such Person on its
debts as they become absolute and matured, (c) such Person does not intend
to, and does not reasonably believe that it will, incur debts or
liabilities beyond such Person's ability to pay such debts and liabilities
as they mature and (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for
which such Person's property would constitute an unreasonably small
capital. The amount of contingent liabilities at any time shall be
computed as the amount that, in the light of all the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Subscription Agreement" means the Subscription Agreement by and among
----------------------
Echelon and Certain of its Subsidiaries and the Subscription Counterparty,
dated as of a date on or prior to the date of the Advance, attached thereto
in the form attached hereto as Exhibit D, or such other form acceptable to
the Agent and the Initial Lender in their sole discretion.
"Subscription Counterparty" means Heller Affordable Housing of
-------------------------
Florida, Inc., a Florida corporation.
"Subscription Escrow Agent" means the Escrow Agent as defined in the
-------------------------
Subscription Agreement.
"Subsidiary" of any Person means any corporation, partnership, joint
----------
venture, limited liability company, trust or estate of which (or in which)
more than 50% of (a) the issued and outstanding capital stock having
ordinary voting power to elect a majority of the Board of Directors of such
corporation (irrespective of whether at the time capital stock of any other
class or classes of such corporation shall or might have voting power upon
the occurrence of any contingency), (b) the interest in the capital or
profits of such partnership, joint venture or limited liability company or
(c) the beneficial interest in such trust or estate is at the time directly
or indirectly owned or controlled by such Person, by such Person and one or
more of its other Subsidiaries or by one or more of such Person's other
Subsidiaries.
"Taxes" has the meaning specified in Section 2.10(a).
-----
<PAGE>
11
"Transaction Documents" means (i) the Heller Purchase Agreement, (ii)
---------------------
the Real Estate Purchase Agreement, (iii) the Subscription Agreement, (iv)
the Merger Agreement, (v) any documents executed in connection with the
Delaware Merger, (v) the Escrow Agreement, (vi) the Cash Escrow Agreement
and (vii) the other documents executed in connection with the transactions
contemplated thereby, in each case as amended or otherwise modified from
time to time in accordance with the terms thereof and hereof.
"Type" refers to the distinction between an Advance bearing interest
----
at the Base Rate and an Advance bearing interest at the Eurodollar Rate.
"Voting Stock" means capital stock issued by a corporation, or
------------
equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the happening of
such a contingency.
"Wire Transfer Instructions" means the wire transfer instructions
--------------------------
attached hereto as Exhibit I.
SECTION 1.02. Computation of Time Periods. In this Agreement in the
---------------------------
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
SECTION 1.03. Accounting Terms. Accounting terms not specifically
----------------
defined herein shall be construed in accordance with generally accepted
accounting principles consistently applied ("GAAP").
----
ARTICLE II
AMOUNT AND TERMS OF THE ADVANCE
SECTION 2.01. The Advance. The Initial Lender agrees, on the terms
-----------
and conditions hereinafter set forth, to make an advance (the "Advance") to the
-------
Borrower (i) in an amount equal to the lesser of (a) $300,000,000 and (b) the
aggregate dollar amount of the Merger Consideration and the Offer Price required
to be paid pursuant to the Merger Agreement and (ii) to be made on any Business
Day (the "Borrowing Date") on or before the earlier to occur of (y) the
--------------
Effective Date (as defined in the Merger Agreement) and (z) March 6, 2000.
Amounts borrowed and repaid or prepaid may not be reborrowed.
SECTION 2.02. Making the Advance. (a) The Advance shall be made on
------------------
notice (a "Notice of Borrowing"), given by the Borrower to the Agent not later
-------------------
than 10:00 A.M. (New York City time) (a) two Business Days prior to the
requested Borrowing Date, if the Advance is to be initially a Eurodollar Rate
Advance and (b) on the Borrowing Date, otherwise), specifying (i) the amount to
be borrowed, (ii) the Borrowing Date, (iii) whether the Advance is to be a
Eurodollar Rate Advance or a Base Rate Advance and (iv) if the Advance is to be
initially a Eurodollar Rate Advance, the length of the initial Interest Period
therefor. Upon receipt of any such notice from the Borrower, the Agent shall
<PAGE>
12
promptly notify each Lender thereof. Upon the satisfaction of the conditions
precedent set forth herein, each Lender shall on the Borrowing Date, make
available to the Agent at the Agent's Account, in same day funds, the amount of
the Advance. After the Agent's receipt of such funds and upon fulfillment of
the applicable conditions set forth in Article III, the Agent will make such
funds available to the Borrower by transferring the proceeds of the Advance to
the Paying Agent at the Paying Agent's Account.
(b) The Notice of Borrowing shall be irrevocable and binding on the
Borrower. The Borrower shall indemnify each Lender against any loss, cost or
expense incurred by such Lender as a result of any failure to fulfill on or
before the proposed date specified for the Advance the applicable conditions set
forth in Article III, including, without limitation, any loss actually incurred
by such Lender (including loss of anticipated profits), cost or expense incurred
by reason of the liquidation or reemployment of deposits or other funds acquired
by such Lender to fund the Advance when the Advance, as a result of such
failure, is not made on such date.
SECTION 2.03. Fees. The Borrower shall pay to the Initial Lender an
----
upfront fee in the amount of $1,000,000. Once paid, the fees or any part
thereof payable hereunder shall not be refundable under any circumstances.
SECTION 2.04. Repayment of Advance. The Borrower shall repay to the
--------------------
Agent for the ratable account of the Lenders on the Maturity Date the aggregate
outstanding principal amount of the Advance then outstanding.
SECTION 2.05. Prepayments. (a) Optional. The Borrower may, upon at
----------- --------
least three Business Days' notice to the Agent, stating the proposed date and
aggregate principal amount of the prepayment, and if such notice is given the
Borrower shall, prepay the outstanding aggregate principal amount of the Advance
in whole or in part, together with accrued interest to the date of such
prepayment on the aggregate principal amount prepaid; provided, however, that
-------- -------
(i) each partial prepayment shall be in an aggregate principal amount of
$10,000,000 or an integral multiple of $5,000,000 in excess thereof and (ii) if
any prepayment of the Advance made when the Advance is a Eurodollar Rate Advance
is made on a date other than the last day of an Interest Period, the Borrower
shall also pay any amounts owing pursuant to Section 8.04(c).
(b) Mandatory. (i) The Borrower shall, upon receipt of any
---------
distribution or payment in respect of the Collateral or any part thereof,
immediately apply 100% of the amount of such distribution or payment to prepay
the Advance. If any such distribution or payment is received by the Agent from
any third party, the Agent is hereby authorized and instructed to apply such
amounts to prepay the Advance as set forth in clause (iii) below.
(ii) All prepayments made under this subsection (b) shall be made
together with accrued interest to the date of such prepayment on the
principal amount prepaid. If the Advance is a Eurodollar Rate Advance at
the time of prepayment and a prepayment is required to be made under this
subsection (b) on a date other than the last day of an Interest Period, the
Borrower shall be obligated to pay the Lenders any amounts owing pursuant
to Section 8.04(c).
<PAGE>
13
(iii) All amounts received by the Agent pursuant to Section 2.05(b)
shall be applied (A) first, to the payment of all amounts due, if any,
pursuant to Section 8.04(c), (B) second, to pay accrued interest on the
principal amount of the Advance being prepaid and (C) third, to prepay the
Advance.
(c) Notice. Each prepayment shall be accompanied by written notice
------
to the Agent of the provision of Section 2.05(a) or 2.05(b) under which such
prepayment is to be made, and identifying the source of the proceeds of such
prepayment.
SECTION 2.06. Interest. (a) Scheduled Interest. (i) For each
-------- ------------------
period during which the Advance is a Eurodollar Rate Advance, the Borrower
shall pay interest on the unpaid principal amount of the Advance from the
date the Advance became a Eurodollar Rate Advance until the Advance is
Converted into a Base Rate Advance or paid in full, at the rate per annum
equal at all times during each Interest Period to the sum of (x) the
Eurodollar Rate for such Interest Period plus (y) the Applicable Margin,
----
payable in arrears on the last day of such Interest Period and on the date
the Advance is Converted into a Base Rate Advance or paid in full.
(ii) For each period during which the Advance is a Base Rate Advance,
the Borrower shall pay interest on the unpaid principal amount of the
Advance from the date the Advance became a Base Rate Advance until the
Advance is paid in full or Converted into a Eurodollar Rate Advance, at a
rate per annum equal at all times to the Base Rate in effect from time to
time, payable in arrears quarterly on the last day of each calendar month
and on the date such Base Rate Advance is paid in full or Converted into a
Eurodollar Rate Advance.
(b) Default Interest. Upon the occurrence and during the continuance
----------------
of an Event of Default and at the election of the Required Lenders upon the
occurrence and during the continuance of any other Default, the Borrower shall
pay interest on (i) the unpaid principal amount of the Advance owing to each
Lender, payable in arrears on the dates referred to in clause (a)(i) or (ii)
above, at a rate per annum equal at all times to 2% per annum above the rate per
annum required to be paid on the Advance pursuant to clause (a)(i) or (ii)
above, and (ii) to the fullest extent permitted by law, the amount of any
interest, fee or other amount payable hereunder that is not paid when due, from
the date such amount shall be due until such amount shall be paid in full,
payable in arrears on the date such amount shall be paid in full and on demand,
at a rate per annum equal at all times to 2% per annum above the rate per annum
required to be paid on the Advance.
SECTION 2.07. Interest Rate Determination. (a) Each Reference Bank
---------------------------
agrees to furnish to the Agent timely information for the purpose of determining
each Eurodollar Rate. If any one or more of the Reference Banks shall not
furnish such timely information to the Agent for the purpose of determining any
such interest rate, the Agent shall determine such interest rate on the basis of
timely information furnished by the remaining Reference Banks. The Agent shall
give prompt notice to the Borrower and the Lenders of the applicable interest
rate determined by the Agent for purposes of Section 2.06(a)(i) or (ii), and the
rate, if any, furnished by each Reference Bank for the purpose of determining
the interest rate under Section 2.06(a).
<PAGE>
14
(b) If, at any time when the Advance is a Eurodollar Rate Advance,
the Required Lenders notify the Agent that the Eurodollar Rate for any Interest
Period for such Advance will not adequately reflect the cost to such Required
Lenders of funding or maintaining their respective share of the Advance for such
Interest Period, the Agent shall forthwith so notify the Borrower and the
Lenders, whereupon the Advance will automatically, on the last day of the then
existing Interest Period therefor, Convert into a Base Rate Advance.
(c) On the date on which the aggregate unpaid principal amount of the
Advance shall be reduced, by payment or prepayment or otherwise, to less than
$10,000,000, if the Advance is a Eurodollar Rate Advance, it will automatically
Convert into a Base Rate Advance.
(d) Upon the occurrence and during the continuance of any Event of
Default, if the Advance is a Eurodollar Rate Advance, it will automatically, on
the last day of the then existing Interest Period therefor, Convert into a Base
Rate Advance.
(e) If, at any time after the Agent has appointed more than two
Reference Banks, fewer than two Reference Banks furnish timely information to
the Agent for determining the Eurodollar Rate for an Interest Period,
(i) the Agent shall forthwith notify the Borrower and the Lenders
that the interest rate cannot be determined for such Interest Period,
and
(ii) the Advance will automatically, on the last day of the then
existing Interest Period therefor, Convert into a Base Rate Advance.
SECTION 2.08. Increased Costs, Etc. (a) If, due to either (i) the
--------------------
introduction of or any change in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request from any central
bank or other governmental authority (whether or not having the force of law),
there shall be any increase in the cost to any Lender of funding or maintaining
the Advance as a Eurodollar Rate Advance (excluding for purposes of this Section
2.08 any such increased costs resulting from (i) Taxes or Other Taxes (as to
which Section 2.10 shall govern) and (ii) changes in the basis of taxation of
overall net income or overall gross income by the United States or by the
foreign jurisdiction or state under the laws of which such Lender is organized
or has its Applicable Lending Office or any political subdivision thereof), then
the Borrower shall from time to time, upon demand by such Lender (with a copy of
such demand to the Agent), pay to the Agent for the account of such Lender
additional amounts sufficient to compensate such Lender for such increased cost;
provided, however, that a Lender claiming additional amounts under this Section
- - -------- -------
2.08(a) agrees to use reasonable efforts (consistent with its internal policy
and legal and regulatory restrictions) to designate a different Applicable
Lending Office if the making of such a designation would avoid the need for, or
reduce the amount of, such increased cost that may thereafter accrue and would
not, in the reasonable judgment of such Lender, be otherwise disadvantageous to
such Lender. A certificate as to the amount of such increased cost, submitted
to the Borrower by such Lender, shall be conclusive and binding for all
purposes, absent manifest error.
<PAGE>
15
(b) If the Advance is a Eurodollar Rate Advance and the Required
Lenders notify the Agent that the Eurodollar Rate for the relevant Interest
Period will not adequately reflect the cost to such Lenders of funding or
maintaining their respective share of the Advance for such Interest Period, the
Agent shall forthwith so notify the Borrower and the Lenders, whereupon the
Advance will automatically, on the last day of the then existing Interest Period
therefor, Convert into a Base Rate Advance.
(c) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for any Lender or its Applicable
Lending Office to continue to fund or maintain its respective share of the
Advance as a Eurodollar Rate Advance hereunder, then, on notice thereof and
demand therefor by such Lender to the Borrower through the Agent, if the Advance
is a Eurodollar Rate Advance, it will automatically, upon demand, Convert into a
Base Rate Advance; provided, however, that, before making any such demand, such
-------- -------
Lender agrees to use reasonable efforts (consistent with its internal policy and
legal and regulatory restrictions) to designate a different Applicable Lending
Office if the making of such a designation would allow such Lender or its
Applicable Lending Office to continue to fund or maintain its respective share
of the Advance as a Eurodollar Rate Advance and would not, in the judgment of
such Lender, be otherwise disadvantageous to such Lender.
SECTION 2.09. Payments and Computations. (a) The Borrower shall
-------------------------
make each payment hereunder and under the Notes, irrespective of any right of
counterclaim or set-off, not later than 11:00 A.M. (New York City time) on the
day when due in U.S. dollars to the Agent at the Agent's Account in same day
funds. The Agent will promptly thereafter cause like funds to be distributed
(i) if such payment by the Borrower is in respect of principal, interest or any
other Obligation then payable hereunder and under the Notes to more than one
Lender, to such Lenders for the account of their respective Applicable Lending
Offices ratably in accordance with the amounts of such respective Obligations
then payable to such Lenders and (ii) if such payment by the Borrower is in
respect of any Obligation then payable hereunder to one Lender, to such Lender
for the account of its Applicable Lending Office, in each case to be applied in
accordance with the terms of this Agreement. Upon its acceptance of an
Assignment and Acceptance and recording of the information contained therein in
the Register pursuant to Section 8.07(d), from and after the effective date of
such Assignment and Acceptance, the Agent shall make all payments hereunder and
under the Notes in respect of the interest assigned thereby to the Lender
assignee thereunder, and the parties to such Assignment and Acceptance shall
make all appropriate adjustments in such payments for periods prior to such
effective date directly between themselves.
(b) The Borrower hereby authorizes each Lender, if and to the extent
payment owed to such Lender is not made when due hereunder or, in the case of a
Lender, under the Note held by such Lender, to charge from time to time against
any or all of the Borrower's accounts with such Lender any amount so due.
(c) All computations of interest and fees shall be made by the Agent
on the basis of a year of 360 days, in each case for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest, fees or commissions are payable. Each
<PAGE>
16
determination by the Agent of an interest rate, fee or commission hereunder
shall be conclusive and binding for all purposes, absent manifest error.
(d) Whenever any payment hereunder or under the Notes shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest; provided, however, that, if such
-------- -------
extension would cause payment of interest on or principal of a Eurodollar Rate
Advance to be made in the next following calendar month, such payment shall be
made on the next preceding Business Day.
(e) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to any Lender hereunder that the
Borrower will not make such payment in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to each such
Lender on such due date an amount equal to the amount then due such Lender. If
and to the extent the Borrower shall not have so made such payment in full to
the Agent, each such Lender shall repay to the Agent forthwith on demand such
amount distributed to such Lender together with interest thereon, for each day
from the date such amount is distributed to such Lender until the date such
Lender repays such amount to the Agent, at the Federal Funds Rate.
SECTION 2.10. Taxes. (a) Any and all payments by the Borrower
-----
hereunder or under the Notes shall be made, in accordance with Section 2.09,
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Lender and the Agent, taxes that
---------
are imposed on its overall net income by the United States and taxes that are
imposed on its overall net income (and franchise taxes imposed in lieu thereof)
by the state or foreign jurisdiction under the laws of which such Lender or the
Agent (as the case may be) is organized or any political subdivision thereof
and, in the case of each Lender, taxes that are imposed on its overall net
income (and franchise taxes imposed in lieu thereof) by the state or foreign
jurisdiction of such Lender's Applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities in respect of payments hereunder or under
the Notes being hereinafter referred to as "Taxes"). If the Borrower shall be
-----
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Note to any Lender or the Agent, (i) the sum payable
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.10) such Lender or the Agent (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the relevant taxation authority or other authority
in accordance with applicable law.
(b) In addition, the Borrower shall pay any present or future stamp,
documentary, excise, property or similar taxes, charges or levies that arise
from any payment made hereunder or under the Notes or from the execution,
delivery or registration of, performing under, or otherwise with respect to,
this Agreement or the Notes (hereinafter referred to as "Other Taxes").
-----------
<PAGE>
17
(c) The Borrower shall indemnify each Lender and the Agent for and
hold it harmless against the full amount of Taxes and Other Taxes, and for the
full amount of taxes of any kind imposed by any jurisdiction on amounts payable
under this Section 2.10, imposed on or paid by such Lender or the Agent (as the
case may be) and any liability (including penalties, additions to tax, interest
and expenses) arising therefrom or with respect thereto. This indemnification
shall be made within 30 days from the date such Lender or the Agent (as the case
may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the
Borrower shall furnish to the Agent, at its address referred to in Section 8.02,
the original or a certified copy of a receipt evidencing such payment. In the
case of any payment hereunder or under the Notes by or on behalf of the Borrower
through an account or branch outside the United States or by or on behalf of the
Borrower by a payor that is not a United States person, if the Borrower
determines that no Taxes are payable in respect thereof, the Borrower shall
furnish, or shall cause such payor to furnish, to the Agent, at such address, an
opinion of counsel acceptable to the Agent stating that such payment is exempt
from Taxes. For purposes of this subsection (d) and subsection (e), the terms
"United States" and "United States person" shall have the meanings specified in
------------- --------------------
Section 7701 of the Internal Revenue Code.
(e) Each Lender organized under the laws of a jurisdiction outside the
United States shall, on or prior to the date of its execution and delivery of
this Agreement in the case of the Initial Lender and on the date of the
Assignment and Acceptance pursuant to which it becomes a Lender in the case of
each other Lender, and from time to time thereafter as requested in writing by
the Borrower (but only so long thereafter as such Lender remains lawfully able
to do so), provide each of the Agent and the Borrower with two original Internal
Revenue Service forms 1001 or 4224 or (in the case of a Lender that has
certified in writing to the Agent that it is not a "bank" as defined in Section
881(c)(3)(A) of the Internal Revenue Code) form W-8 (and, if such Lender
delivers a form W-8, a certificate representing that such Lender is not a "bank"
for purposes of Section 881(c) of the Internal Revenue Code, is not a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Internal Revenue
Code) of the Borrower and is not a controlled foreign corporation related to the
Borrower (within the meaning of Section 864(d)(4) of the Internal Revenue
Code)), as appropriate, or any successor or other form prescribed by the
Internal Revenue Service, certifying that such Lender is exempt from or entitled
to a reduced rate of United States withholding tax on payments pursuant to this
Agreement or the Notes or, in the case of a Lender providing a form W-8,
certifying that such Lender is a foreign corporation, partnership, estate or
trust. If the forms provided by a Lender at the time such Lender first becomes
a party to this Agreement indicates a United States interest withholding tax
rate in excess of zero, withholding tax at such rate shall be considered
excluded from Taxes unless and until such Lender provides the appropriate form
certifying that a lesser rate applies, whereupon withholding tax at such lesser
rate only shall be considered excluded from Taxes for periods governed by such
form; provided, however, that, if at the date of the Assignment and Acceptance
-------- -------
pursuant to which a Lender becomes a party to this Agreement, the Lender
assignor was entitled to payments under subsection (a) in respect of United
States withholding tax with respect to interest paid at such date, then, to such
extent, the term Taxes shall include (in addition to withholding taxes that may
be imposed in the future or other amounts otherwise includable in Taxes) United
States withholding tax, if any, applicable with respect to the Lender assignee
on such date. If any form or document referred to in this subsection (e)
requires the disclosure of information, other than information necessary to
compute the tax payable and information required on the date hereof by Internal
Revenue Service form 1001, 4224 or W-8 (or the related
<PAGE>
18
certificate described above), that the Lender reasonably considers to be
confidential, the Lender shall give notice thereof to the Borrower and shall not
be obligated to include in such form or document such confidential information.
(f) For any period with respect to which a Lender has failed to
provide the Borrower with the appropriate form described in subsection (e) above
(other than if such failure is due to a change in law occurring after the date
----- ----
on which a form originally was required to be provided or if such form otherwise
is not required under subsection (e) above), such Lender shall not be entitled
to indemnification under subsection (a) or (c) with respect to Taxes imposed by
the United States by reason of such failure; provided, however, that should a
-------- -------
Lender become subject to Taxes because of its failure to deliver a form required
hereunder, the Borrower shall take such steps as such Lender shall reasonably
request to assist such Lender to recover such Taxes.
SECTION 2.11. Sharing of Payments, Etc. If any Lender shall obtain
-------------------------
at any time any payment (whether voluntary, involuntary, through the exercise of
any right of set-off, or otherwise) (a) on account of Obligations due and
payable to such Lender hereunder and under the Notes at such time (other than
pursuant to Section 2.10 or 8.04(c)) in excess of its ratable share (according
to the proportion of (i) the amount of such Obligations due and payable to such
Lender at such time to (ii) the aggregate amount of the Obligations due and
payable to all Lenders hereunder and under the Notes at such time) of payments
on account of the Obligations due and payable to all Lenders hereunder and under
the Notes at such time obtained by all the Lenders at such time or (b) on
account of Obligations owing (but not due and payable) to such Lender hereunder
and under the Notes at such time (other than pursuant to Section 2.10 or
8.04(c)) in excess of its ratable share (according to the proportion of (i) the
amount of such Obligations owing to such Lender at such time to (ii) the
aggregate amount of the Obligations owing (but not due and payable) to all
Lenders hereunder and under the Notes at such time) of payments on account of
the Obligations owing (but not due and payable) to all Lenders hereunder and
under the Notes at such time obtained by all of the Lenders at such time, such
Lender shall forthwith purchase from the other Lenders such participations in
the Obligations due and payable or owing to them, as the case may be, as shall
be necessary to cause such purchasing Lender to share the excess payment ratably
with each of them; provided, however, that if all or any portion of such excess
-------- -------
payment is thereafter recovered from such purchasing Lender, such purchase from
each other Lender shall be rescinded and such other Lender shall repay to the
purchasing Lender the purchase price to the extent of such Lender's ratable
share (according to the proportion of (i) the purchase price paid to such Lender
to (ii) the aggregate purchase price paid to all Lenders) of such recovery
together with an amount equal to such Lender's ratable share (according to the
proportion of (i) the amount of such other Lender's required repayment to (ii)
the total amount so recovered from the purchasing Lender) of any interest or
other amount paid or payable by the purchasing Lender in respect of the total
amount so recovered. The Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section 2.11 may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such participation as fully as if such
Lender were the direct creditor of the Borrower in the amount of such
participation.
SECTION 2.12. Use of Proceeds. The proceeds of the Advance shall be
---------------
available (and the Borrower agrees that it shall use such proceeds) solely to
pay to the Paying Agent the aggregate
<PAGE>
19
dollar amount of the Offer Price and the Merger Consideration pursuant to the
terms of the Merger Agreement.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to the Making of the Advance. The
-------------------------------------------------
obligation of the Initial Lender to make the Advance hereunder is subject to the
satisfaction of the following conditions precedent before or concurrently with
the making of such Advance:
(a) Between the date of this Agreement and the date of the Borrowing,
there has been no change in the corporate and legal structure and capitalization
of the Borrower, Echelon or EIN, including the terms and conditions of the
charter, bylaws and each class of capital stock of the Borrower, Echelon and EIN
and of each agreement or instrument relating to such structure or
capitalization.
(b) There shall exist no action, suit, investigation, litigation or
proceeding affecting the Borrower, Echelon, EIN or any of the Subsidiaries
thereof pending or threatened before any court, governmental agency or
arbitrator that (i) with respect to the Borrower or EIN, could reasonably be
expected to have a Material Adverse Effect, (ii) with respect to Echelon and its
Subsidiaries taken as a whole, could reasonably be expected to have a material
adverse effect on (A) the business, results of operations of such Person (B) the
financial condition of the Total Assets (as defined in the Real Estate Purchase
Agreement) or (C) the Leveraged Lease Portfolio (as defined in the Merger
Agreement) or (iii) purports to affect the legality, validity or enforceability
of any Loan Document, any Transaction Document or the consummation of the
transactions contemplated thereby.
(c) The Borrower shall have paid all accrued fees and expenses of the
Agent and the Initial Lender (including the accrued fees and expenses of counsel
to the Agent).
(d) The Agent shall have received a certificate from Heller
certifying that the Heller Agreement has not been amended, supplemented,
otherwise modified or terminated.
(e) The Agent shall have received (i) evidence that the Articles of
Merger (as defined in the Merger Agreement and in form and substance
satisfactory to the Agent in its sole discretion) have been pre-cleared for
filing with the Department of State of the State of Florida and (ii) oral
confirmation from the Real Estate Escrow Agent that such Articles of Merger will
be filed by the Real Estate Escrow Agent with the Department of State of the
State of Florida immediately after the Agent has made the Advance available to
the Borrower.
(f) The Minimum Condition (as defined in the Merger Agreement) shall
have been satisfied.
(g) The Tender Offer Expiration Date (as defined in the Real Estate
Purchase Agreement) has occurred.
<PAGE>
20
(h) The Agent shall have received on or before the day of the
Borrowing the following, in form and substance satisfactory to the Agent (unless
otherwise specified):
(i) The Note payable to the order of the Initial Lender,
dated the date of the Borrowing, duly executed by the
Borrower.
(ii) An original counterpart of this Agreement, duly
executed by the Borrower.
(iii) An original counterpart of the Security Agreement, duly
executed by the Borrower and an executed Notification And
Confirmation, the forms of which is attached thereto as
Exhibit A.
(iv) An original counterpart of the Merger Agreement, duly
executed by the parties thereto
(v) An original counterpart of the Heller Purchase
Agreement, duly executed by the parties thereto.
(vi) An original counterpart of the Real Estate Purchase
Agreement, duly executed by the parties thereto.
(vii) An original counterpart of the Subscription Agreement,
duly executed by the parties thereto.
(viii) An original counterpart of the Escrow Agreement, duly
executed by the parties thereto.
(ix) An original counterpart of the Joint Instruction
Letter, duly executed by the parties thereto.
(x) The Wire Transfer Instructions, duly executed by the
Borrower with receipt acknowledged by LandAmerica
Financial Group.
(xi) Evidence satisfactory to the Agent of all recordings,
filings and other actions (including, without limitation,
each consent required thereby) of or with respect to the
Security Agreement that the Agent may deem necessary or
desirable in order to perfect and protect the Liens
created thereby.
(xii) A favorable opinion of the counsel for the Borrower, in
form and substance reasonably satisfactory to the Agent
addressing, among other things, the fact that this
Agreement and the Security Agreement will, upon the
effectiveness of the Merger, be the legal, valid
<PAGE>
21
and binding obligations of the surviving corporation in
the merger, enforceable against such entity in accordance
with their terms.
(xiii) A favorable opinion of counsel for Heller, in form and
substance reasonably satisfactory to the Agent with
respect to the matters set forth in clauses (a), (b) and
(c) of Section 7 of the Heller Purchase Agreement.
(xiv) A favorable opinion of the counsel of Real Estate
Purchaser, in form and substance reasonably satisfactory
to the Agent with respect to the matters set forth in
Sections 4.1, 4.2 and 4.3(a), (b) and (c) of the Real
Estate Purchase Agreement.
(xv) A favorable opinion of the counsel of Subscription
Agreement Counterparty, in form and substance reasonably
satisfactory to the Agent with respect to the matters set
forth in Sections 4.1, 4.2 and 4.4(a), (b) and (c) of the
Subscription Agreement.
(xvi) Such other approvals, opinions or documents as the
Agent or Initial Lender may reasonably request.
(i) The Escrow Agent (as defined in the Escrow Agreement) shall have
received the Escrowed Items (as defined in the Escrow Agreement) required to be
delivered to it pursuant to the Escrow Agreement.
(j) The Aggregate Collateral Value shall not be less than the Minimum
Required Collateral Value.
(k) Each of the representations and warranties made by the Borrower
in or pursuant to the Loan Documents and any Transaction Documents shall be true
and correct on and as of such date as if made on and as of such date.
(l) No Default or Event of Default shall have occurred and be
continuing on such date or immediately after giving effect to the Advance.
(m) No default shall exist (i) by Heller under the Heller Purchase
Agreement, (ii) by the Real Estate Purchaser under the Real Estate Purchase
Agreement, (iii) by the Subscription Counterparty under the Subscription
Agreement or (iv) by Echelon under the Merger Agreement, other than any defaults
described in clauses (i) through (iv) of this clause (m) which, in the
aggregate, could not have an adverse effect on the value of the Collateral.
<PAGE>
22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower . The
----------------------------------------------
Borrower represents and warrants as follows:
(a) The Borrower (i) is a corporation duly organized, validly existing
and in good standing under the laws of the state of its incorporation and (ii)
has all requisite corporate power and authority (including, without limitation,
all governmental licenses, permits and other approvals) to own or lease and
operate its properties and to carry on its business as now conducted and as
proposed to be conducted.
(b) The execution, delivery and performance by the Borrower of this
Agreement, the Notes, the Security Agreement and each other Transaction Document
to which it is or is to be a party, and the consummation of the other
transactions contemplated hereby, are within the Borrower's corporate powers,
have been duly authorized by all necessary corporate action, and do not (i)
contravene the Borrower's by-laws, (ii) violate any law (including, without
limitation, the Securities Exchange Act of 1934 and the Racketeer Influenced and
Corrupt Organizations Chapter of the Organized Crime Control Act of 1970), rule,
regulation (including, without limitation, Regulation X of the Board of
Governors of the Federal Reserve System), order, writ, judgment, injunction,
decree, determination or award, (iii) conflict with or result in the breach of,
or constitute a default under, any contract, loan agreement, indenture,
mortgage, deed of trust, lease or other instrument binding on or affecting the
Borrower or (iv) except for the Liens created thereby, result in or require the
creation or imposition of any Lien upon or with respect to any of the properties
of the Borrower. The Borrower is not in violation of any such law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award or
in breach of any such contract, loan agreement, indenture, mortgage, deed of
trust, lease or other instrument, the violation or breach of which could
reasonably be expected to have a Material Adverse Effect.
(c) Other than those filings which have been made or will be made
prior to the making of the Advance, no authorization or approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body or any other third party is required for (i) the due execution, delivery,
recordation, filing or performance by the Borrower of the Loan Documents and the
Transaction Document to which it is or will be a party, or for the consummation
of the other transactions contemplated hereby, (ii) the grant by the Borrower of
the Liens granted by them pursuant to the Security Agreement, (iii) the
perfection or maintenance of the Liens created by the Security Agreement
(including the first priority nature thereof) or (iv) the exercise by the Agent
or any Lender of its rights under the Loan Documents or any of their rights
under or remedies in respect of the Transaction Documents or the other
Collateral pursuant to the Security Agreement.
(d) This Agreement has been, and each of the Notes and each other
Transaction Document to which the Borrower is or is to be party when delivered
hereunder will
<PAGE>
23
have been, duly executed and delivered by the Borrower. This Agreement is, and
each of the Notes, each other Transaction Document to which the Borrower is
party or is to be party when delivered hereunder will be, the legal, valid and
binding obligation of the Borrower, enforceable against the Borrower in
accordance with its terms.
(e) There is no action, suit, investigation, litigation or proceeding
affecting the Borrower, pending or threatened before any court, governmental
agency or arbitrator.
(f) The Borrower is not engaged in the business of extending credit
for the purpose of purchasing or carrying Margin Stock, and no proceeds of the
Advance will be used in violation of Regulation U or any other regulation
governing Margin Stock.
(g) The Security Agreement creates a valid and perfected first
priority security interest in the Collateral, securing the payment of the
Secured Obligations, and all filings and other actions necessary or desirable to
perfect and protect such security interest have been duly taken. Upon the
consummation of the transactions contemplated by this Agreement and the other
Transaction Documents, the Borrower will be the legal and beneficial owner of
the Collateral subject to the Security Agreement free and clear of any Lien,
except for the liens and security interests created or permitted under the
Transaction Documents.
(h) The Borrower is not an "investment company," or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended (the "1940 Act"). Neither the making of the Advance, nor the
application of the proceeds or repayment thereof by the Borrower, nor the
consummation of the other transactions contemplated hereby, will violate any
provision of the 1940 Act or any rule, regulation or order of the Securities and
Exchange Commission thereunder.
(i) The Borrower is Solvent.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as the Advance shall
----------------------
remain unpaid, the Borrower, each of its Subsidiaries and any successors to the
Borrower or its Subsidiaries by merger or otherwise will:
(a) Compliance with Laws, Etc. Comply in all material respects, with
-------------------------
all applicable laws, rules, regulations and orders, such compliance to include,
without limitation, compliance with ERISA and the Racketeer Influenced and
Corrupt Organizations Chapter of the Organized Crime Control Act of 1970.
(b) Payment of Taxes, Etc. Pay and discharge, before the same shall
---------------------
become delinquent, (i) all taxes, assessments and governmental charges or levies
imposed upon it or upon
<PAGE>
24
its property and (ii) all lawful claims that, if unpaid, might by law become a
Lien upon its property; provided, however, that the Borrower shall not be
-------- -------
required to pay or discharge any such tax, assessment, charge or claim that is
being contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained, unless and until any Lien resulting
therefrom attaches to its property and becomes enforceable against its other
creditors.
(c) Preservation of Existence, Etc. Preserve and maintain its
------------------------------
existence, legal structure, legal name, rights (charter and statutory), permits,
licenses, approvals, privileges and franchises.
(d) Keeping of Books. Keep proper books of record and account, in
----------------
which full and correct entries shall be made of all financial transactions and
the assets and business of the Borrower in accordance with generally accepted
accounting principles in effect from time to time.
(e) Performance of Transaction Documents. Perform and observe all of
------------------------------------
the terms and provisions of each Transaction Document to be performed or
observed by it, maintain each such Transaction Document in full force and
effect, enforce such Transaction Document in accordance with its terms, take all
such action to such end as may be from time to time requested by the Agent and,
upon request of the Agent, make to each other party to each such Transaction
Document such demands and requests for information and reports or for action as
the Borrower is entitled to make under such Transaction Document.
(f) Exercise of Rights under the Collateral. Fully enforce its rights
---------------------------------------
under the Collateral, including, without limitation, taking any action requested
by the Agent in connection therewith.
SECTION 5.02. Negative Covenants. So long as any portion of the
-------------------
Advance shall remain unpaid, the Borrower will not, at any time:
(a) Liens, Etc. Create, incur, assume or suffer to exist any Lien
----------
(other than (i) the Liens created under the Security Agreement, (ii) Liens
securing Debt permitted pursuant to clauses (b)(ii), (b)(iii) or (c) below and
(iii) after the Merger, Liens permitted by Section 3.01(g) of the Merger
Agreement to the extent that the existence of such Liens could not reasonably be
expected to have a Material Adverse Effect) on or with respect to any of its
properties (other than the Capital Stock of Echelon) of any character
(including, without limitation, accounts) whether now owned or hereafter
acquired, or sign or file or suffer to exist under the Uniform Commercial Code
of any jurisdiction, a financing statement that names the Borrower as debtor, or
sign or suffer to exist any security agreement authorizing any secured party
thereunder to file such financing statement, or assign any accounts or other
right to receive income.
(b) Debt. Create, incur, assume or suffer to exist any Debt other
----
than (i) Debt hereunder, (ii) Debt which is being repaid with the proceeds of
the Advance pursuant to the Merger Agreement or is being or will be assumed by
Heller, the Real Estate Purchaser or the
<PAGE>
25
Subscription Counterparty pursuant to the Transaction Documents and (iii) after
the effectiveness of the Merger, the Debt described on Schedule 5.02(b) attached
hereto.
(c) Lease Obligations. Create, incur, assume or suffer to exist any
-----------------
obligations as lessee for the rental or hire of real or personal property of any
kind other than (i) such obligations that are or will be assumed by Heller, the
Real Estate Purchaser or the Subscription Counterparty pursuant to the
Transaction Documents and (ii) after the effectiveness of the Merger, such
obligations described on Schedule 5.02(c) attached hereto.
(d) Mergers, Etc. Merge into or consolidate with any Person or permit
------------
any Person to merge into it; provided, however, that (i) the Borrower may merge
-------- -------
into Echelon pursuant to the Transaction Documents and (ii) the Borrower may
merge into EIN pursuant to the Delaware Merger if (A) EIN agrees in writing, in
form and substance reasonably satisfactory to the Agent, to become bound by the
terms and conditions of this Agreement and the Security Agreement; (B) all
Collateral shall remain, subject to the valid security interest of the Agent
under the Security Agreement; (C) EIN shall execute and deliver such other
documents and agreements, as may be reasonably requested by the Agent, to ensure
that such merger does not adversely affect the rights of the Agent under this
Agreement or the Security Agreement and (D) the Agent shall have received a
favorable opinion of the counsel of EIN, in form and substance reasonably
satisfactory to the Agent addressing, among other things, the fact that this
Agreement and the Security Agreement will, upon the effectiveness of the
Delaware Merger, be the legal, valid and binding obligations of EIN, enforceable
against EIN in accordance with their terms.
(e) Sales, Etc. of Assets. Sell, lease, transfer or otherwise dispose
---------------------
of any assets or grant any option or other right to purchase, lease or otherwise
acquire any assets other than pursuant to the Transaction Documents.
(f) Investments in Other Persons. Make or hold any Investment in any
----------------------------
Person other than:
(i) Investments by the Borrower in Echelon;
(ii) after the effectiveness of the Merger, Investments in
(A) any subsidiary or joint venture of Echelon in existence
as of the date hereof and (B) any wholly-owned subsidiary
of the Borrower as of the date of the Advance;
(iii) Investments by the Borrower in the Preferred Stock (as
defined in the Subscription Agreement); and
(ii) Investments by the Borrower in Cash Equivalents.
(g) Distributions, Etc. Declare or pay any dividends, purchase,
------------------
redeem, retire, defease or otherwise acquire for value any of its capital stock
or any warrants, rights or options to
<PAGE>
26
acquire such capital stock, now or hereafter outstanding, return any capital to
its stockholders as such, make any distribution of assets, capital stock,
warrants, rights, options, obligations or securities to its stockholders as such
or issue or sell any capital stock or any warrants, rights or options to acquire
such capital stock, in each case, other than pursuant to the Transaction
Documents.
(h) Change in Nature of Business. Without the prior written consent
----------------------------
of the Lenders (which consent shall not be unreasonably withheld or delayed),
engage in any business activities other than the transactions contemplated or
permitted by the Transaction Documents.
(i) Charter Amendments. Amend its certificate of incorporation or
------------------
bylaws, except as permitted by the Merger Agreement.
(j) Amendment, Etc. of Transaction Documents. Cancel or terminate any
----------------------------------------
Transaction Document or consent to or accept any cancellation or termination
thereof, amend, modify or change in any manner any term or condition of any
Transaction Document or give any consent, waiver or approval thereunder, waive
any default under or any breach of any term or condition of any Transaction
Document, agree in any manner to any other amendment, modification or change of
any term or condition of any Transaction Document or take any other action in
connection with any Transaction Document that would impair the value of the
interest or rights of the Borrower thereunder or that would impair the rights or
interests of the Agent or any Lender.
SECTION 5.03. Reporting Requirements. So long as the Advance shall
----------------------
remain unpaid, the Borrower will furnish to the Lenders:
(a) Default Notice. As soon as possible and in any event within two
--------------
days after the occurrence of each Default or any event, development or
occurrence reasonably likely to have a Material Adverse Effect continuing on the
date of such statement, a statement of the chief financial officer of the
Borrower setting forth details of such Default and the action that the Borrower
has taken and proposes to take with respect thereto.
(b) Financials. As soon as available and in any event within 45 days
----------
after each fiscal quarter of the Borrower and 90 days after the end of each
fiscal year of the Borrower, consolidated and consolidating statements of
income, retained earnings and cash flow of the Borrower and its consolidated
Subsidiaries for such period and the related consolidated and consolidating
balance sheets as at the end of such period.
(c) Litigation. Promptly after the commencement thereof, notice of
----------
all actions, suits, investigations, litigation and proceedings before any court
or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the Borrower, Echelon or EIN of
the type described in Section 4.01(e).
<PAGE>
27
(d) Transaction Document Notices. Promptly upon receipt thereof,
----------------------------
copies of all notices, requests and other documents received by the Borrower
under or pursuant to any Transaction Document regarding or related to any breach
or default by any party thereto or any other event that could impair the value
of the interests or the rights of the Borrower or otherwise have a Material
Adverse Effect and copies of any amendment, modification or waiver of any
provision of any Transaction Document and, from time to time upon request by the
Agent, such information and reports regarding the Transaction Documents as the
Agent may reasonably request.
(e) Other Information. Such other information respecting the
-----------------
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower, Echelon or EIN as any Lender (through
the Agent) may from time to time reasonably request.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events
-----------------
("Events of Default") shall occur and be continuing:
- - -------------------
(a) (i) the Borrower shall fail to pay any principal of the Advance
when the same shall become due and payable or (ii) the Borrower shall fail to
pay any interest on the Advance or shall fail to make any other payment under
any Transaction Document in accordance with the terms of such Transaction
Document, in each case under this clause (ii) within three Business Days after
the same becomes due and payable; or
(b) any representation or warranty made by the Borrower (or any of its
officers) under or in connection with any Transaction Document shall prove to
have been incorrect in any material respect when made; or
(c) the Borrower shall fail to perform or observe any other term,
covenant or agreement contained herein or in any other Transaction Document on
its part to be performed or observed, unless such failure could not result in a
Material Adverse Effect; or
(d) the Borrower shall generally not pay its debts as such debts
become due, or shall admit in writing its inability to pay its debts generally,
or shall make a general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against the Borrower seeking to adjudicate
it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted against it
(but not instituted by it) that is being diligently contested by it in good
faith, either such
<PAGE>
28
proceeding shall remain undismissed or unstayed for a period of 30 days or any
of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or any substantial part of its
property) shall occur; or the Borrower shall take any corporate action to
authorize any of the actions set forth above in this subsection (d); or
(e) the occurrence of any of the events set forth in subparagraph (d)
with respect to Echelon or EIN; or
(f) any judgment or order for the payment of money in excess of
$500,000 shall be rendered against the Borrower and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order or (ii) there shall be any period of 10 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(g) any non-monetary judgment or order shall be rendered against the
Borrower that could have a Material Adverse Effect, and there shall be any
period of 10 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(h) any provision of any Transaction Document to which the Borrower is
party after delivery thereof pursuant to Section 3.01 shall for any reason cease
to be valid and binding on or enforceable against the Borrower, or the Borrower
shall so state in writing; or
(i) the Security Agreement after delivery thereof pursuant to Section
3.01 shall for any reason (other than pursuant to the terms thereof) cease to
create a valid and perfected first priority lien on and security interest in the
Collateral purported to be covered thereby or the Borrower or any successor, by
merger or otherwise, to the Borrower shall so assert in writing; or
(j) the Borrower shall fail to pay any principal of, premium or
interest on or any other amount payable in respect of any Debt or notional
amount of at least $500,000 (but excluding Debt outstanding hereunder) of the
Borrower, when the same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in the agreement
or instrument relating to such Debt; or any other event shall occur or condition
shall exist under any agreement or instrument relating to any Debt and shall
continue after the applicable grace period, if any, specified in such agreement
or instrument, if the effect of such event or condition is to accelerate, or to
permit the acceleration of, the maturity of such Debt or otherwise to cause, or
to permit the holder thereof to cause, such Debt to mature; or any such Debt
shall be declared to be due and payable or required to be prepaid or redeemed
(other than by a regularly scheduled prepayment or redemption), purchased or
defeased, or an offer to prepay, redeem, purchase or defease such Debt shall be
required to be made, in each case prior to the stated maturity thereof; or
<PAGE>
29
(k) the occurrence of any of the events set forth in subparagraph (j)
with respect to Echelon or EIN; or
(l) there shall occur in the reasonable judgment of the Required
Lenders any Material Adverse Effect;
then, and in any such event, the Agent shall at the request, or may with the
consent, of the Required Lenders, (A) by notice to the Borrower, terminate its
obligation to make any part of the Advance, declare the Notes, all interest
thereon and all other amounts payable under this Agreement and the other
Transaction Documents to be forthwith due and payable, whereupon the Notes, all
such interest and all such amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrower; provided, however, that in
-------- -------
the event of an actual or deemed entry of an order for relief with respect to
the Borrower or any successor, by merger or otherwise, to the Borrower under the
Federal Bankruptcy Code, such obligations shall automatically terminate and the
Notes, all such interest and all such amounts shall automatically become and be
due and payable, without presentment, demand, protest or any notice of any kind,
all of which are hereby expressly waived by the Borrower.
ARTICLE VII
THE AGENT
SECTION 7.01. Authorization and Action. Each Lender (in its capacity
------------------------
as a Lender) hereby appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers and discretion under this
Agreement and the other Transaction Documents as are delegated to the Agent by
the terms hereof and thereof, together with such powers and discretion as are
reasonably incidental thereto. As to any matters not expressly provided for by
the Transaction Documents (including, without limitation, enforcement or
collection of the Notes), the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Lenders, and such instructions shall be
binding upon all Lenders and all holders of Notes; provided, however, that the
-------- -------
Agent shall not be required to take any action that exposes the Agent to
personal liability or that is contrary to this Agreement or applicable law. The
Agent agrees to give to each Lender prompt notice of each notice given to it by
the Borrower pursuant to the terms of this Agreement.
SECTION 7.02. Agent's Reliance, Etc. Neither the Agent nor any of
---------------------
its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with the
Transaction Documents, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, the Agent:
(a) may treat the payee of any Note as the holder thereof until the Agent
receives and accepts an Assignment and Acceptance entered into by the Lender
that is the payee of such Note, as assignor, and an Eligible Assignee, as
assignee, as provided in Section 8.07; (b) may consult
<PAGE>
30
with legal counsel (including counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations (whether written or oral) made in or
in connection with the Transaction Documents; (d) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions of any Transaction Document on the part of the Borrower
or to inspect the property (including the books and records) of the Borrower;
(e) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of, or the
perfection or priority of any lien or security interest created or purported to
be created under or in connection with, any Transaction Document or any other
instrument or document furnished pursuant thereto; and (f) shall incur no
liability under or in respect of any Transaction Document by acting upon any
notice, consent, certificate or other instrument or writing (which may be by
telegram, telecopy or telex) believed by it to be genuine and signed or sent by
the proper party or parties.
SECTION 7.03. Rabobank and Affiliates. With respect to the Advance
-----------------------
and the Notes issued to it, Rabobank shall have the same rights and powers under
the Transaction Documents as any other Lender and may exercise the same as
though it were not the Agent; and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include Rabobank in its individual capacity.
Rabobank and its affiliates may accept deposits from, lend money to, act as
trustee under indentures of, accept investment banking engagements from and
generally engage in any kind of business with, the Borrower and any Person who
may do business with or own securities of the Borrower, all as if Rabobank were
not the Agent and without any duty to account therefor to the Lenders.
SECTION 7.04. Lender Credit Decision. Each Lender acknowledges that
----------------------
it has, independently and without reliance upon the Agent or any other Lender
and based on such documents and other and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and
without reliance upon the Agent or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement.
SECTION 7.05. Indemnification. Each Lender severally agrees to
---------------
indemnify the Agent (to the extent not promptly reimbursed by the Borrower) from
and against such Lender's ratable share (determined as provided below) of any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by, or asserted against the Agent in
any way relating to or arising out of the Transaction Documents or any action
taken or omitted by the Agent under the Transaction Documents; provided,
--------
however, that no Lender shall be liable for any portion of such liabilities,
- - -------
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent's gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse the Agent promptly upon demand for its ratable share of any costs and
expenses (including, without
<PAGE>
31
limitation, fees and expenses of counsel) payable by the Borrower under Section
8.04, to the extent that the Agent is not promptly reimbursed for such costs and
expenses by the Borrower. For purposes of this Section 7.05, the Lenders'
respective ratable shares of any amount shall be determined, at any time,
according to the sum of the aggregate principal amount of the Advance
outstanding at such time and owing to the respective Lenders. The failure of any
Lender to reimburse the Agent promptly upon demand for its ratable share of any
amount required to be paid by the Lender to the Agent as provided herein shall
not relieve any other Lender of its obligation hereunder to reimburse the Agent
for its ratable share of such amount, but no Lender shall be responsible for the
failure of any other Lender to reimburse the Agent for such other Lender's
ratable share of such amount. Without prejudice to the survival of any other
agreement of any Lender hereunder, the agreement and obligations of each Lender
contained in this Section 7.05 shall survive the payment in full of principal,
interest and all other amounts payable hereunder and under the other Transaction
Documents.
SECTION 7.06. Successor Agents. The Agent may resign at any time by
----------------
giving written notice thereof to the Lenders and the Borrower and may be removed
at any time with or without cause by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment, within 30 days after
the retiring Agent's giving of notice of resignation or the Required Lenders'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be a commercial bank organized
under the laws of the United States or of any State thereof and having a
combined capital and surplus of at least $250,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent and upon the execution
and filing or recording of such financing statements, or amendments thereto, and
such other instruments or notices, as may be necessary or desirable, or as the
Required Lenders may request, in order to continue the perfection of the Liens
granted or purported to be granted by the Security Agreement, such successor
Agent shall succeed to and become vested with all the rights, powers,
discretion, privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations under the Transaction
Documents. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Article VII shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.
<PAGE>
32
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any
---------------
provision of this Agreement or the Notes or any other Transaction Document, nor
consent to any departure by the Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed (or, in the case of the
Security Agreement, consented to) by the Required Lenders, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment, waiver or consent
-------- -------
shall, unless in writing and signed by all of the Lenders, do any of the
following at any time: (i) change the number of Lenders or the percentage of
the aggregate unpaid principal amount of the Advance that, in each case, shall
be required for the Lenders or any of them to take any action hereunder, (ii)
release all or substantially all of the Collateral in any transaction or series
of related transactions, (iii) subject the Lenders to any additional
obligations, (iv) reduce the principal of, or interest on, the Notes or any fees
or other amounts payable hereunder, (v) postpone any date fixed for any payment
of principal of, or interest on, the Notes or any fees or other amounts payable
hereunder or (vi) limit the liability of the Borrower under any of the
Transaction Documents; and provided further that no amendment, waiver or consent
-------- -------
shall, unless in writing and signed by the Agent in addition to the Lenders
required above to take such action, affect the rights or duties of the Agent
under this Agreement.
SECTION 8.02. Notices. All notices and other communications provided
-------
for hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered, if to
the Borrower, c/o The Diversified Group, 950 Third Avenue, New York, New York
10167, Attention: James Haber; if to the Initial Lender, at its Applicable
Lending Office specified on the signature pages hereto; if to any other Lender,
at its Applicable Lending Office specified in the Assignment and Acceptance
pursuant to which it became a Lender; and if to the Agent, at its address at 245
Park Avenue, New York, New York 10167, Attention: Chris Kortlandt; or, as to
each party, at such other address as shall be designated by such party in a
written notice to the other parties. All such notices and communications shall,
when mailed, telegraphed, telecopied or telexed, be effective when deposited in
the mails, delivered to the telegraph company, transmitted by telecopier or
confirmed by telex answerback, respectively, except that notices and
communications to the Agent pursuant to Article II, III or VII shall not be
effective until received by the Agent. Delivery by telecopier of an executed
counterpart of any amendment or waiver of any provision of this Agreement or the
Notes or of any Exhibit hereto to be executed and delivered hereunder shall be
effective as delivery of a manually executed counterpart thereof.
SECTION 8.03. No Waiver; Remedies No failure on the part of any
-------------------
Lender or the Agent to exercise, and no delay in exercising, any right hereunder
or under any Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
<PAGE>
33
SECTION 8.04. Costs, Expenses. (a) The Borrower agrees to pay on
---------------
demand (i) all costs and expenses of the Agent in connection with the
preparation, execution, delivery, administration, modification and amendment of
the Transaction Documents (including, without limitation, (A) all due diligence,
collateral review, syndication, transportation, computer, duplication,
appraisal, audit, insurance, consultant, search, filing and recording fees and
expenses and (B) the reasonable fees and expenses of counsel for the Agent with
respect thereto, with respect to advising the Agent as to its rights and
responsibilities, or the perfection, protection or preservation of rights or
interests, under the Transaction Documents, with respect to negotiations with
the Borrower arising out of any Default or any events or circumstances that may
give rise to a Default and with respect to presenting claims in or otherwise
participating in or monitoring any bankruptcy, insolvency or other similar
proceeding involving creditors' rights generally and any proceeding ancillary
thereto) and (ii) all costs and expenses of the Agent and the Lenders in
connection with the enforcement of the Transaction Documents, whether in any
action, suit or litigation, any bankruptcy, insolvency or other similar
proceeding affecting creditors' rights generally (including, without limitation,
the reasonable fees and expenses of counsel for the Agent and each Lender with
respect thereto).
(b) The Borrower agrees to indemnify and hold harmless the Agent, each
Lender and each of their Affiliates and their officers, directors, employees,
agents and advisors (each, an "Indemnified Party") from and against any and all
-----------------
claims, damages, losses, liabilities and expenses (including, without
limitation, reasonable fees and expenses of counsel) that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising out of
or in connection with or by reason of (including, without limitation, in
connection with any investigation, litigation or proceeding or preparation of a
defense in connection therewith) the actual or proposed use of the proceeds of
the Advance, the Transaction Documents or any of the transactions contemplated
thereby. In the case of an investigation, litigation or other proceeding to
which the indemnity in this Section 8.04(b) applies, such indemnity shall be
effective whether or not such investigation, litigation or proceeding is brought
by the Borrower, its directors, shareholders or creditors or an Indemnified
Party or any Indemnified Party is otherwise a party thereto and whether or not
the transactions contemplated hereby are consummated. The Borrower also agrees
not to assert any claim against the Agent, any Lender or any of their
Affiliates, or any of their respective officers, directors, employees, attorneys
and agents, on any theory of liability, for special, indirect, consequential or
punitive damages arising out of or otherwise relating to the actual or proposed
use of the proceeds of the Advance, the Transaction Documents or any of the
transactions contemplated thereby.
(c) If any payment of principal of, or Conversion of, a Eurodollar
Rate Advance is made by the Borrower to or for the account of a Lender other
than on the last day of the Interest Period for such Advance, as a result of a
payment or Conversion pursuant to Section 2.05(a)(ii), 2.05(b), 2.07(c) or
2.08(c), acceleration of the maturity of the Notes pursuant to Section 6.01 or
for any other reason, the Borrower shall, upon demand by such Lender (with a
copy of such demand to the Agent), pay to the Agent for the account of such
Lender any amounts required to compensate such Lender for any additional losses,
costs or expenses that it may reasonably incur as a result of such payment,
including, without limitation, any loss (including
<PAGE>
34
loss of anticipated profits), cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by any Lender to
fund or maintain such Advance.
(d) If the Borrower fails to pay when due any costs, expenses or other
amounts payable by it under any Transaction Document, including, without
limitation, fees and expenses of counsel and indemnities, such amount may be
paid on behalf of the Borrower by the Agent or any Lender, in its sole
discretion.
(e) Without prejudice to the survival of any other agreement of the
Borrower hereunder or under any other Transaction Document, the agreements and
obligations of the Borrower contained in Sections 2.08 and 2.10 and this Section
8.04 shall survive the payment in full of principal, interest and all other
amounts payable hereunder and under any of the other Transaction Documents.
SECTION 8.05. Right of Set-off . Upon (a) the occurrence and during
-----------------
the continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the Agent to
declare the Notes due and payable pursuant to the provisions of Section 6.01,
each Lender and each of its respective Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and otherwise apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Lender or such Affiliate to or for the credit or the account of the
Borrower against any and all of the Obligations of the Borrower now or hereafter
existing under this Agreement and the Note or Notes (if any) held by such
Lender, irrespective of whether such Lender shall have made any demand under
this Agreement or such Note or Notes and although such obligations may be
unmatured. Each Lender agrees promptly to notify the Borrower after any such
set-off and application; provided, however, that the failure to give such notice
-------- -------
shall not affect the validity of such set-off and application. The rights of
each Lender and its respective Affiliates under this Section are in addition to
other rights and remedies (including, without limitation, other rights of set-
off) that such Lender and its respective Affiliates may have.
SECTION 8.06. Binding Effect. This Agreement shall become effective
---------------
when it shall have been executed by the Borrower, the Agent and the Initial
Lender and thereafter shall be binding upon and inure to the benefit of the
Borrower, the Agent and each Lender and their respective successors and assigns,
except that the Borrower shall not have the right to assign its rights hereunder
or any interest herein without the prior written consent of the Lenders, other
than with respect to a Permitted Merger.
SECTION 8.07. Assignments and Participations. (a) Each Lender may
-------------------------------
assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement, the portion of the Advance owing to it and the
Note or Notes held by it; provided, however, that (i) each such assignment shall
-------- -------
be to an Eligible Assignee, and (ii) the parties to each such assignment shall
execute and deliver to the Agent, for its acceptance and recording in
<PAGE>
35
the Register, an Assignment and Acceptance, together with any Note or Notes
subject to such assignment and a processing and recordation fee of $3,000.
(b) Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in such Assignment and Acceptance, (x) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and (y) the
Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any other Transaction Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, this Agreement or any other Transaction Document or
any other instrument or document furnished pursuant hereto or thereto; (ii) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under any
Transaction Document or any other instrument or document furnished pursuant
thereto; (iii) such assignee confirms that it has received a copy of this
Agreement and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such Assignment and
Acceptance; (iv) such assignee will, independently and without reliance upon the
Agent, such assigning Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers and discretion under the Transaction Documents as are
delegated to the Agent by the terms hereof, together with such powers and
discretion as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all of the obligations which
by the terms of this Agreement are required to be performed by it as a Lender.
(d) The Agent shall maintain at its address referred to in Section
8.02 a copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and addresses of the Lenders and
the principal amount of the Advance owing to each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for
--------
all purposes, absent manifest error, and the Borrower, the Agent and the Lenders
shall treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the
<PAGE>
36
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee, together with any Note or Notes subject to
such assignment, the Agent shall, if such Assignment and Acceptance has been
completed and is in form and substance satisfactory to the Agent, (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in
the Register and (iii) give prompt notice thereof to the Borrower. In the case
of any assignment by a Lender, within five Business Days after its receipt of
such notice, the Borrower, at its own expense, shall execute and deliver to the
Agent in exchange for the surrendered Note or Notes a new Note to the order of
such Eligible Assignee in an amount equal to the amount of the Advance assumed
by it pursuant to such Assignment and Acceptance and, if the assigning Lender
has retained a portion of the Advance, a new Note to the order of the assigning
Lender in an amount equal to the portion of the Advance retained by it
hereunder. Such new Note or Notes shall be in an aggregate principal amount
equal to the aggregate principal amount of such surrendered Note or Notes, shall
be dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of Exhibit A hereto.
(f) Each Lender may sell participations to one or more Persons (other
than the Borrower or any of its Affiliates) in or to all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of the Advance owing to it and the Note or Notes (if any) held by
it); provided, however, that (i) such Lender's obligations under this Agreement
-------- -------
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) such Lender
shall remain the holder of any such Note for all purposes of this Agreement, and
(iv) the Borrower, the Agent and the other Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement.
(g) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 8.07, disclose
to the assignee or participant or proposed assignee or participant, any
information relating to the Borrower furnished to such Lender by or on behalf of
the Borrower; provided, however, that, prior to any such disclosure, the
-------- -------
assignee or participant or proposed assignee or participant shall agree to
preserve the confidentiality of any Confidential Information received by it from
such Lender.
(h) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time create a security interest in all or any portion of
its rights under this Agreement (including, without limitation, the Advances
owing to it and the Note or Notes held by it) in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board of Governors of the Federal
Reserve System.
SECTION 8.08. Execution in Counterparts. This Agreement may be
--------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall
<PAGE>
37
constitute one and the same agreement. Delivery of an executed counterpart of a
signature page to this Agreement by telecopier shall be effective as delivery of
a manually executed counterpart of this Agreement.
SECTION 8.09 Jurisdiction, Etc. (a) Each of the parties hereto
-----------------
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or any of the other Transaction Documents to which it is a party, or
for recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such New York State
court or, to the extent permitted by law, in such federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement
shall affect any right that any party may otherwise have to bring any action or
proceeding relating to this Agreement or any of the other Transaction Documents
in the courts of any jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any of the other
Transaction Documents to which it is a party in any New York State or federal
court. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
SECTION 8.10 GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL BE
-------------
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 8.11 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE AGENT
--------------------
AND THE LENDERS IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, THE ADVANCE OR THE
ACTIONS OF THE AGENT OR ANY LENDER IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT THEREOF.
<PAGE>
38
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
EIN ACQUISITION CORP.
By:_______________________
Name:
Title:
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK NEDERLAND",
NEW YORK BRANCH, as Agent
By:_______________________
Name:
Title:
By:_______________________
Name:
Title:
UTRECHT-AMERICA FINANCE CO., as Initial
Lender
By:_______________________
Name:
Title:
By:_______________________
Name:
Title:
Address:
245 Park Avenue
New York, New York 10167
<PAGE>
EXHIBIT A
PROMISSORY NOTE
$_______________ Dated: _________ __, 199_
FOR VALUE RECEIVED, the undersigned, EIN ACQUISITION CORP., a Florida
corporation, together with any successor by merger (the "Borrower"), HEREBY
--------
PROMISES TO PAY [to the order]* of _________________________ (the "Lender")
------
[or its registered assigns]** for the account of its Applicable Lending
Office (as defined in the Credit Agreement referred to below) the principal
amount of the Advance (as defined below) owing to the Lender by the Borrower
pursuant to the Credit Agreement dated as of January __, 2000 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement";
----------------
terms defined therein being used herein as therein defined) among the Borrower,
the Lender, certain other lenders party thereto and COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH, as Agent
for the Lender and such other lenders thereto on the Maturity Date.
The Borrower promises to pay to [the Lender or its registered
assigns]** interest on the unpaid principal amount of the Advance from the
date of such Advance until such principal amount is paid in full, at such
interest rates, and payable at such times, as are specified in the Credit
Agreement.
Both principal and interest are payable in lawful money of the United
States of America to Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
"Rabobank Nederland", New York Branch, as Agent, at 245 Park Avenue, New York,
New York 10167, United States, in same day funds. The Advance owing to the
Lender by the Borrower and the maturity thereof, and all payments made on
account of principal thereof, shall be recorded by the Lender and, prior to any
transfer hereof, endorsed on the grid attached hereto, which is part of this
Promissory Note.
This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit Agreement, among
other things, (i) provides for the making of a single advance (the "Advance") by
-------
the Lender to the Borrower in an amount not
___________________
* Delete these brackets if the Lender will not be relying on the portfolio
interest exception.
** Include this language if the Lender will be relying on the portfolio
interest exception.
<PAGE>
2
to exceed the U.S. dollar amount first above mentioned, the indebtedness of the
Borrower resulting from such Advance being evidenced by this Promissory Note,
and (ii) contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified. The obligations of the Borrower under this Promissory Note
are secured by the Collateral as provided in the Transaction Documents.
EIN ACQUISITION CORP.
By_____________________________
Name:
Title:
<PAGE>
ADVANCES AND PAYMENTS OF PRINCIPAL
================================================================================
Amount of Unpaid
Amount of Principal Paid Principal Notation
Date Advance or Prepaid Balance Made By
================================================================================
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
================================================================================
<PAGE>
EXHIBIT B
HELLER PURCHASE AGREEMENT
(See Exhibit (d)(5) to the Schedule TO)
<PAGE>
EXHIBIT C
REAL ESTATE PURCHASE AGREEMENT
(See Exhibit (d)(2) to the Schedule TO)
<PAGE>
EXHIBIT D
SUBSCRIPTION AGREEMENT
(See Exhibit (d)(3) to the Schedule TO)
<PAGE>
EXHIBIT E
ESCROW AGREEMENT
----------------
This ESCROW AGREEMENT, dated as of January 21, 2000 (this "Agreement"),
among EIN ACQUISITION CORP., a Florida corporation (together with any successor
by merger, the "Seller"), HELLER FINANCIAL, INC., a Delaware corporation (the
"Purchaser"), and COOPERATIEVE CENTRALE RAFFEISEN-BOERENLEENBANK B.A., NEW YORK
BRANCH, in its capacity as escrow agent, (the "Escrow Agent").
RECITALS
A. The Purchaser and Seller have entered into Omnibus Agreement,
dated January __, 2000 (the "Omnibus Agreement") pursuant to which the Purchaser
has agreed to purchase from Seller, and Seller has agreed to sell to the
Purchaser, the Equity Interests. Unless otherwise defined herein, capitalized
terms used shall have the meanings specified in the Omnibus Agreement.
B. In order to ensure the delivery of the documents necessary to convey the
Equity Interests upon the relevant Closing Date, the Seller and the Purchaser
wish to deposit into escrow all Escrowed Items to be delivered under the Omnibus
Agreement with the Escrow Agent, to be held and distributed by the Escrow Agent
in accordance with this Agreement.
C. The Escrow Agent will hold the Escrowed Items in escrow for the benefit
of the Seller, the Purchaser and Seller's Lender.
AGREEMENT
Now, therefore, in consideration of the foregoing and the mutual agreements
contained herein and in the Omnibus Agreement, and intending to be legally bound
hereby, the parties hereby agree as follows:
1. Appointment and Agreement of Escrow Agent. The Purchaser and the Seller
-----------------------------------------
hereby appoint the Escrow Agent to serve as, and the Escrow Agent hereby agrees
to act as, escrow agent upon the terms and conditions of this Agreement. Seller
shall pay all fees and expenses of the Escrow Agent for services to be rendered
by Escrow Agent hereunder.
2. Establishment of the Escrow.
---------------------------
(a) In accordance with Section 4(c) of the Omnibus Agreement,
simultaneously with the consummation of the Merger, the Purchaser and Seller
shall deliver or cause to be delivered to the Escrow Agent, the Escrowed Items.
The Escrow Agent shall hold the Escrowed Items in escrow pursuant to this
Agreement.
(b) Each of the Purchaser and the Seller confirms to the Escrow Agent,
to each other and to the Seller's Lender that the Escrowed Items delivered in
accordance with paragraph 2(a) above are all of the deliveries necessary to
satisfy the conditions set forth in Section 4(c) of the Omnibus Agreement.
3. Release from Escrow. Upon the receipt of written notice from the
-------------------
Purchaser and the Seller to deliver an Escrowed Item which notice shall in all
events be subject to the terms and conditions of and certify that it complies
with Sections 8(a) and 8(d) of the Omnibus Agreement, the Escrow Agent shall, on
the date specified in such notice (which date shall be selected by the Purchaser
and reasonably acceptable to the Seller) , deliver such Escrowed Item to the
Purchaser. Notwithstanding anything else to the contrary contained herein, in
the Omnibus Agreement or in any other Relevant Document (including, without
limitation, the failure of the Escrow Agent to receive the notice described in
the preceding sentence), on the Final Closing Date (or such other date as may be
specified by the Purchaser, which date, for the avoidance of doubt, may be after
the Final Closing Date if the applicable Acquisition Price and any and all
amounts specified in the last sentence of Section 4(b) of the Omnibus Agreement
and in each Purchase Agreement shall have been paid in full on or prior to the
Final Closing Date), the Escrow Agent shall deliver to the Purchaser each of the
Escrowed Items which has not previously been delivered to the Purchaser pursuant
to this Paragraph 3.
4. Assignment of Rights to the Escrow Fund: Assignment of Obligations;
------------------------------------------------------------------
Successors. This Agreement may not be assigned by operation of law or otherwise
- - ----------
without the express written consent of the other parties hereto (which consent
may be granted or withheld in the sole discretion of such other parties);
provided, however, that it is expressly understood and agreed that EIN
- - -------- -------
Acquisition Corp. shall, upon the terms and subject to the conditions of the
Merger Agreement, be merged with and into Echelon International Corporation, a
Florida corporation, which, in turn, shall be merged with and into EIN Corp., a
Delaware corporation, each of which shall be bound by and become a party hereto
as and from the date of such respective mergers in accordance with applicable
law. Purchaser and Seller shall have the right, but shall not be obligated to,
execute and deliver to Escrow Agent jointly, at the effective time of each such
merger, replacement Escrowed Items in the name of each surviving corporation
described in the preceding sentence, to be held in escrow hereunder, in place
and instead of any Escrowed Items. This Agreement shall be binding upon and
inure solely to the benefit of the parties hereto, the Seller's Lender and their
permitted assigns.
5. Escrow Agent.
------------
(a) Except as expressly contemplated by this Agreement or by written
instructions from the Purchaser, the Seller and the Seller's Lender, the Escrow
Agent shall not deliver any Escrowed Item, except pursuant to an order of a
court of competent jurisdiction.
(b) The duties and obligations of the Escrow Agent shall be determined
solely by this Agreement, and the Escrow Agent shall not be liable except for
the performance of such duties and obligations as are specifically set forth in
this Agreement.
(c) In the performance of its duties hereunder, the Escrow Agent shall
be entitled to rely upon any document, instrument or signature believed by it in
good faith to be genuine and signed by any party hereto or an authorized officer
or agent thereof, and shall not be required to investigate the truth or accuracy
of any statement contained in any such document or instrument. The Escrow Agent
may assume that any Person purporting to give any notice in accordance with the
provisions of this Agreement has been duly authorized to do so.
(d) The Escrow Agent shall not be liable for any error of judgment, or
any action taken, suffered or omitted to be taken, hereunder except in the case
of its negligence, bad faith or willful misconduct. The Escrow Agent may consult
with counsel of its own choice (including in-house counsel) and shall have full
and complete authorization and protection for any action taken or suffered by it
hereunder in good faith and in accordance with the opinion of such counsel.
(e) The Seller and the Purchaser shall reimburse and indemnify the
Escrow Agent for, and hold it harmless against, any loss, liability or expense,
including, without limitation, reasonable attorneys' fees, incurred without
negligence, bad faith or willful misconduct on the part of the Escrow Agent
arising out of, or in connection with the acceptance of, or the performance of,
its duties and obligations under this Agreement.
(f) The Escrow Agent may at any time resign by giving twenty business
days' prior written notice of resignation to the Seller and the Purchaser. The
Seller and the Purchaser may, with the consent of the Seller's Lender, at any
time jointly remove the Escrow Agent by giving ten business days' written notice
signed by each of them to the Escrow Agent. If the Escrow Agent shall resign or
be removed, a successor Escrow Agent, which shall be a bank or trust company
having its principal executive offices in New York and assets in excess of $1.5
billion, and which shall be reasonably acceptable to the Seller and the Seller's
Lender, shall be appointed by the Purchaser by written instrument executed by
the Purchaser and delivered to the Escrow Agent and to such successor Escrow
Agent and, thereupon, the resignation or removal of the predecessor Escrow Agent
shall become effective and such successor Escrow Agent, without any further act,
deed or conveyance, shall become vested with all right, title and interest to
all cash and property held hereunder of such predecessor Escrow Agent. If no
successor Escrow Agent shall have been appointed within twenty business days of
a notice of resignation by the Escrow Agent, the Escrow Agent's sole
responsibility shall thereafter be to hold the Escrowed Items until the earliest
of (i) its receipt of designation of a successor Escrow Agent, (ii) its receipt
of a written instruction by the Seller, the Purchaser and the Seller's Lender or
(iii) termination of this Agreement in accordance with its terms.
6. Termination. This Agreement shall terminate on the earlier date (i)
-----------
on which all Escrowed Items have been delivered pursuant to the terms hereof or
(ii) the Seller, the Purchaser, the Seller's Lender and the Escrow Agent agree
in writing to terminate this Agreement.
7. Notices. All notices, requests, claims, demands and other
-------
communications delivered hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by cable, by telecopy, by telegram or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
7):
(a) if to the Seller, at its address set forth in the Omnibus Agreement.
(b) if to the Purchaser, at its address set forth in the Omnibus Agreement.
(c) if to the Seller's Lender:
245 Park Avenue
New York, New York 10167
Fax: 212-922-0969
Attention: Hans den Baas
(d) if to the Escrow Agent:
245 Park Avenue
New York, NY 10167-0062
Fax: (212) 808-2585
Attention: Chris Kortlandt
8. Governing Law. This Agreement shall be governed by, and construed
-------------
in accordance with, the laws of the State of New York applicable to contracts
executed and to be performed entirely within that State without giving effect to
principles thereof relating to conflicts of law rules that would direct the
application of the laws of another jurisdiction.
9. Amendments. This Agreement may not be amended or modified except
----------
(a) by an instrument in writing signed by, or on behalf of, the Seller, the
Purchaser, the Seller's Lender and the Escrow Agent or (b) by a waiver in
accordance with Section 10 of this Agreement.
10. Waiver. Any party hereto may (i) extend the time for the
------
performance of any obligation or other act of any other party hereto or (ii)
waive compliance with any agreement or condition contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party or parties to be bound thereby. Any waiver of any term or
condition shall not be construed as a waiver of any subsequent breach or a
subsequent waiver of the same term or condition, or a waiver of any other term
or condition, of this Agreement. The failure of any party to assert any of its
rights hereunder shall not constitute a waiver of any of such rights.
11. Severability. If any term or other provision of this Agreement is
------------
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic and legal substance of
the transactions contemplated by this Agreement is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated by this Agreement be consummated as
originally contemplated to the fullest extent possible.
12. Entire Agreement. This Agreement constitutes the entire agreement
----------------
of the parties hereto with respect to the subject matter hereof and supersedes
all prior agreements and undertakings, both written and oral, among the Seller,
the Purchaser, the Seller's Lender and the Escrow Agent with respect to the
subject matter hereof.
13. No Third Party Beneficiaries. Except with respect to the Seller's
----------------------------
Lender, this Agreement is for the sole benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other person or entity any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.
14. Headings. The descriptive headings contained in this Agreement are
--------
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
15. Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by different parties hereto in separate counterparts, each of
which when duly executed shall be deemed to be an original but all of which when
taken together shall constitute one and the same agreement.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
In witness whereof, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
EIN ACQUISITION CORP.
By:
--------------------------------------
Name:
Title:
HELLER FINANCIAL, INC.
By:
--------------------------------------
Name:
Title:
COOPERATIEVE CENTRALE RAFFEISEN-BOERENLEENBANK
B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
<PAGE>
EXHIBIT F
CASH ESCROW AGREEMENT
---------------------
This CASH ESCROW AGREEMENT, dated as of January 21, 2000 (this
"Agreement"), among ETA HOLDING LLC, a Delaware limited liability company (the
"Parent"), EIN ACQUISITION CORP., a Florida corporation (together with any
successor by merger, the "Sub"), ECHELON INTERNATIONAL CORPORATION, a Florida
corporation (the "Company"), and COOPERATIEVE CENTRALE RAFFEISEN-BOERENLEENBANK
B.A., NEW YORK BRANCH, in its capacity as escrow agent, (the "Escrow Agent").
RECITALS
A. The Company, the Parent and Sub have entered into an Agreement and Plan of
Merger, dated January 21, 2000 (the "Merger Agreement"). Unless otherwise
defined herein, capitalized terms used shall have the meanings specified in the
Merger Agreement.
B. In order to facilitate the transaction contemplated by the Merger
Agreement, the Company has agreed to deposit into escrow cash, to be held and
distributed by the Escrow Agent in accordance with this Agreement, in an
aggregate amount (the "Escrow Fund") equal to the sum of:
(i) the difference between (A) the sum of the aggregate Offer Price plus
the aggregate Merger Consideration less (B) the sum of (1) the cash portion
----
of the Transfer Value and any Reduction in Transfer Value (each as defined
in the Subscription Agreement) plus (2) the Purchase Price (as defined in
----
the Purchase and Sale Agreement) plus (3) the aggregate Acquisition Price
----
set forth on Schedule 3 to, and as defined in, the Omnibus Agreement;
plus
----
(ii) the sum of (A) $7,000,000 plus (B) the aggregate amount of rent
payments received by the Company with respect to the Leveraged Lease
Portfolio during the period from February 1, 2000 through the Effective
Date.
C. The Escrow Agent will hold the Escrow Fund in escrow for the benefit of
the Sub and the Company.
AGREEMENT
Now, therefore, in consideration of the foregoing and the mutual agreements
contained herein and in the Merger Agreement, and intending to be legally bound
hereby, the parties hereby agree as follows:
1. Appointment and Agreement of Escrow Agent. The Company and the Sub
-----------------------------------------
hereby appoint the Escrow Agent to serve as, and the Escrow Agent hereby agrees
to act as, escrow agent upon the terms and conditions of this Agreement. Sub
shall pay all fees and expenses of the Escrow Agent for services to be rendered
by Escrow Agent hereunder.
2. Establishment of the Escrow Fund.
--------------------------------
(a) In accordance with terms of the Merger Agreement, simultaneously
with the consummation of the Merger, the Company shall deliver or cause to
be delivered to the Escrow Agent, the Escrow Fund. The Escrow Agent shall
hold the Escrow Fund in escrow pursuant to this Agreement.
(b) Each of Sub and the Company confirms to the Escrow Agent and to
each other that all amounts in the Escrow Fund are free and clear of all
Encumbrances (as defined below), except as may be created by this
Agreement.
"Encumbrances" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement or restriction of any kind
including, without limitation, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership.
3. Release from Escrow. Notwithstanding anything else to the contrary
-------------------
contained herein, in the Merger Agreement or in any other related document,
immediately following the filing of the Articles of Merger with respect to the
Merger with the Department of State of the State of Florida, the Escrow Agent
shall transfer, release and pay entire balance of the Escrow Fund to the Sub's
account with the Escrow Agent. If (i) the Purchase and Sale Agreement is
terminated pursuant to Section 9.1 thereof, or (ii) the Tender Offer Expiration
Date does not occur on or prior to the third Business Day after the date hereof,
the Escrow Fund shall be promptly transferred by Escrow Agent to the Company.
4. Assignment of Rights to the Escrow Fund: Assignment of Obligations;
-------------------------------------------------------------------
Successors. This Agreement may not be assigned by operation of law or otherwise
- - ----------
without the express written consent of the other parties hereto (which consent
may be granted or withheld in the sole discretion of such other parties);
provided, however, that it is expressly understood and agreed that (i) EIN
- - -------- -------
Acquisition Corp. shall, upon the terms and subject to the conditions of the
Merger Agreement, be merged with and into Echelon International Corporation, a
Florida corporation, which, in turn, shall be merged with and into EIN Corp., a
Delaware corporation, each of which shall be bound by and become a party hereto
as and from the date of such respective mergers in accordance with applicable
law and (ii) the Sub may assign its rights under this Agreement to Utrecht-
America Finance Co. ("UAFC") and the other Lenders (as defined in the Credit
Agreement dated as of January 21, 2000 among Sub, UAFC and Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New York Branch, as
agent)(UAFC and the other Lenders, collectively referred to as the "Lender").
This Agreement shall be binding upon and inure solely to the benefit of the
parties hereto and their permitted assigns.
5. Liquidation of the Escrow Fund. Whenever the Escrow Agent shall be
------------------------------
required to make payment of the Escrow Fund, the Escrow Agent shall pay such
amounts by liquidating the investments of the Escrow Fund, as the case may be,
to the extent necessary to pay such amounts in full and in cash.
6. Maintenance of the Escrow Fund; Termination of the Escrow Fund. The
--------------------------------------------------------------
Escrow Agent shall continue to maintain the Escrow Fund, as the case may be,
until the earlier of (i) the time at which there shall be no funds in such
Escrow Fund or (ii) the termination of this Agreement.
7. Investment of Escrow Fund. The Escrow Agent shall invest and reinvest
-------------------------
moneys on deposit in the Escrow Fund, in any combination of the following: (a)
readily marketable direct obligations of the Government of the United States or
any agency or instrumentality thereof or readily marketable obligations
unconditionally guaranteed by the full faith and credit of the Government of the
United States, (b) insured certificates of deposit of, or time deposits with,
any commercial bank that is a member of the Federal Reserve System and which
issues (or the parent of which issues) commercial paper rated as described in
clause (c), is organized under the laws of the United States or any State
thereof and has combined capital and surplus of at least $1 billion or (c)
commercial paper in an aggregate amount of no more than $1,000,000 per issuer
outstanding at any time, issued by any corporation organized under the laws of
any State of the United States, rated at least "Prime 1 " (or the then
equivalent grade) by Moody's Investors Services, Inc. or "A 1 " (or the then
equivalent grade) by Standard & Poors, Inc. It is agreed for federal income tax
purposes that the parties herein shall treat the Escrow Fund as a grantor trust
established by Sub. The Interest shall be included on Sub's tax return as it is
earned by the Escrow Fund in accordance with Sub's method of tax accounting.
8. Escrow Agent.
------------
(a) Except as expressly contemplated by this Agreement or by written
instructions from the Company, the Sub and their permitted assigns, the
Escrow Agent shall not deliver any funds constituting the Escrow Fund,
except pursuant to an order of a court of competent jurisdiction.
(b) The duties and obligations of the Escrow Agent shall be determined
solely by this Agreement, and the Escrow Agent shall not be liable except
for the performance of such duties and obligations as are specifically set
forth in this Agreement.
(c) In the performance of its duties hereunder, the Escrow Agent shall
be entitled to rely upon any document, instrument or signature believed by
it in good faith to be genuine and signed by any party hereto or an
authorized officer or agent thereof, and shall not be required to
investigate the truth or accuracy of any statement contained in any such
document or instrument. The Escrow Agent may assume that any Person
purporting to give any notice in accordance with the provisions of this
Agreement has been duly authorized to do so.
(d) The Escrow Agent shall not be liable for any error of judgment, or
any action taken, suffered or omitted to be taken, hereunder except in the
case of its negligence, bad faith or willful misconduct. The Escrow Agent
may consult with counsel of its own choice (including in-house counsel) and
shall have full and complete authorization and protection for any action
taken or suffered by it hereunder in good faith and in accordance with the
opinion of such counsel.
(e) The Sub and the Company shall reimburse and indemnify the Escrow
Agent for, and hold it harmless against, any loss, liability or expense,
including, without limitation, reasonable attorneys' fees, incurred without
negligence, bad faith or willful misconduct on the part of the Escrow Agent
arising out of, or in connection with the acceptance of, or the performance
of, its duties and obligations under this Agreement.
(f) The Escrow Agent may at any time resign by giving twenty business
days' prior written notice of resignation to the Sub and the Company. The
Sub and the Company may, with the consent of their permitted assigns, at
any time jointly remove the Escrow Agent by giving ten business days'
written notice signed by each of them to the Escrow Agent. If the Escrow
Agent shall resign or be removed, a successor Escrow Agent, which shall be
a bank or trust company having its principal executive offices in New York
and assets in excess of $1.5 billion, and which shall be reasonably
acceptable to the Sub and their permitted assigns, shall be appointed by
the Company by written instrument executed by the Company and delivered to
the Escrow Agent and to such successor Escrow Agent and, thereupon, the
resignation or removal of the predecessor Escrow Agent shall become
effective and such successor Escrow Agent, without any further act, deed or
conveyance, shall become vested with all right, title and interest to all
cash and property held hereunder of such predecessor Escrow Agent. If no
successor Escrow Agent shall have been appointed within twenty business
days of a notice of resignation by the Escrow Agent, the Escrow Agent's
sole responsibility shall thereafter be to hold the Escrow Fund until the
earliest of (i) its receipt of designation of a successor Escrow Agent,
(ii) its receipt of a written instruction by the Sub, the Company and their
permitted assigns or (iii) termination of this Agreement in accordance with
its terms.
9. Termination. This Agreement shall terminate on the earlier date (i) on
-----------
which all funds in the Escrow Fund have been delivered pursuant to the terms
hereof or (ii) the Sub, the Company, their permitted assigns and the Escrow
Agent agree in writing to terminate this Agreement.
10. Notices. All notices, requests, claims, demands and other
-------
communications delivered hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by cable, by telecopy, by telegram or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
7):
(a) if to the Sub, at its address set forth in the Merger Agreement.
(b) if to the Company, at its address set forth in the Merger Agreement.
(c) if to the Escrow Agent:
245 Park Avenue
New York, NY 10167-0062
Fax: (212) 808-2585
Attention: Chris Kortlandt
11. Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance with, the laws of the State of New York applicable to contracts
executed and to be performed entirely within that State without giving effect to
principles thereof relating to conflicts of law rules that would direct the
application of the laws of another jurisdiction.
12. Amendments. This Agreement may not be amended or modified except (a)
----------
by an instrument in writing signed by, or on behalf of, the Sub, the Company,
their permitted assign and the Escrow Agent or (b) by a waiver in accordance
with Section 10 of this Agreement.
13. Waiver. Any party hereto may (i) extend the time for the performance
------
of any obligation or other act of any other party hereto or (ii) waive
compliance with any agreement or condition contained herein. Any such extension
or waiver shall be valid only if set forth in an instrument in writing signed by
the party or parties to be bound thereby. Any waiver of any term or condition
shall not be construed as a waiver of any subsequent breach or a subsequent
waiver of the same term or condition, or a waiver of any other term or
condition, of this Agreement. The failure of any party to assert any of its
rights hereunder shall not constitute a waiver of any of such rights.
14. Severability. If any term or other provision of this Agreement is
------------
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic and legal substance of
the transactions contemplated by this Agreement is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated by this Agreement be consummated as
originally contemplated to the fullest extent possible.
15. Entire Agreement. This Agreement constitutes the entire agreement of
----------------
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and undertakings, both written and oral, among the Sub, the
Company and the Escrow Agent with respect to the subject matter hereof.
16. No Third Party Beneficiaries. Except with respect to permitted
----------------------------
assigns, this Agreement is for the sole benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other person or entity any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.
17. Headings. The descriptive headings contained in this Agreement are
--------
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
18. Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by different parties hereto in separate counterparts, each of
which when duly executed shall be deemed to be an original but all of which when
taken together shall constitute one and the same agreement.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
In witness whereof, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
EIN ACQUISITION CORP.
By:
-----------------------------------------
Name:
Title:
ETA HOLDING LLC
By:
-----------------------------------------
Name:
Title:
ECHELON INTERNATIONAL CORPORATION
By:
-----------------------------------------
Name:
Title:
COOPERATIEVE CENTRALE RAFFEISEN-BOERENLEENBANK
B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH
By:
-----------------------------------------
Name:
Title:
By:
-----------------------------------------
Name:
Title:
<PAGE>
EXHIBIT G
MERGER AGREEMENT
(see Exhibit (b)(1) to the Schedule TO)
<PAGE>
EXHIBIT H
EXHIBIT 7.8
-----------
JOINT INSTRUCTION LETTER
[February] , 2000
LandAmerica Financial Group
3922 Coconut Palm Drive, Suite 102
Tampa, Florida 33619
Attention: Juanita M. Shuster
Dear Ms. Shuster:
Reference is made to (a) the Purchase and Sale Agreement dated January __,
2000 (the "Purchase and Sale Agreement") by and among Echelon International
Corporation and certain of its subsidiaries, collectively, as Sellers
(collectively, in such capacity, referred to herein as the "Seller"), and
Echelon Residential LLC, as Buyer (the "Buyer"), (b) the Subscription Agreement
dated January 2000 (the "Subscription Agreement") by and among Echelon
International Corporation and certain of its subsidiaries, collectively, as
Transferor (collectively, in such capacity, referred to herein as the
"Transferor"), and Heller Affordable Housing of Florida, Inc., as Transferee
(the "Transferee"), and (c) that certain Joint Direction Letter of even date
herewith made by the Seller, the Buyer, the Transferor and the Transferee and
delivered to you pursuant to Sections 7.7 of the Purchase and Sale Agreement and
Section 7.7 of the Subscription Agreement (the "Joint Direction Letter"). Unless
otherwise defined or provided, capitalized terms herein shall have the meanings
ascribed to such terms in the Purchase and Sale Agreement or Subscription
Agreement, respectively, as the case may be.
This Joint Instruction Letter is delivered to LandAmerica Financial Group
as Escrow Agent under the Purchase and Sale Agreement and under the Subscription
Agreement (in such capacity, referred to in herein as "Escrow Agent") pursuant
to Section 7.8 of the Purchase and Sale Agreement and Section 7.8 of the
Subscription Agreement and, once delivered by the parties hereto, shall be
irrevocable in all respects. A copy of this Joint Instruction Letter shall be
delivered by Escrow Agent to EIN Acquisition Corp., a Florida corporation,
("EIN") and to Cooperative Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank
Nederland", New York Branch, for the benefit of itself and Utrecht VIN America
Finance Co. (collectively "Lender") and may be relied upon by EIN and Lender as
if it had been addressed to them directly.
1. Each of the Buyer and the Transferee hereby expressly acknowledges,
agrees, represents and warrants and, to the extent the following waivers and
confirmation may only be validly made by the other party hereto or by any other
signatory to the Joint Direction Letter but not by it, based upon and in
reliance upon, but not in any event subject to, the waivers and acknowledgements
of such other parties hereby and thereby made, that, except for the conditions
described in Sections 6.1(c), (i) and (j) and 6.2(c), (i) and (j) of the
Purchase and Sale Agreement and Sections 6.1(c), (i) and (j) and 6.2(c), (i) and
(j) of the Subscription Agreement, each of the conditions to the closing of the
transactions described in the Purchase and Sale Agreement and the Subscription
Agreement (including, without limitation, conditions based upon (x) the accuracy
as of any date of the representations and warranties of any party thereto, (y)
compliance by any party thereto with its covenants or other obligations
thereunder, and (z) the deliveries to Escrow Agent of the Escrowed Items
required hereby or thereby) have been satisfied or waived as of the date hereof.
2. The Buyer hereby represents and warrants that (a) to its knowledge, none
of the conditions described in Sections 6.1(1) and (j), and 6.2 (i) and (j) of
the Purchase and Sale Agreement has occurred, and (b) the Purchase and Sale
Agreement has not been amended, supplemented, terminated (pursuant to Section 9
thereof or otherwise or otherwise modified, except such amendments, supplements
or modifications as (i) are permitted by the Merger Agreement, (ii) would not
reduce the aggregate Purchase Price and would not affect Sections 7.7, 7.8, or
12.2 of the Purchase and Sale Agreement and (iii) are attached as exhibits
hereto. On the Closing Date under the Purchase and Sale Agreement, Buyer agrees
to deliver to Escrow Agent a certificate reconfirming for the benefit of Escrow
Agent, EIN and Lender the representations and warranties of the preceding
sentence together with the other items required to be delivered to EIN as
provided in Section 7.8 of the Purchase and Sale Agreement.
3. The Transferee hereby represents and warrants that (a) to its knowledge,
none of the conditions described in Sections 6.1(1) and (j), and 6.2(1) and (j)
of the Subscription Agreement has occurred, and (b) the Subscription Agreement
has not been amended, supplemented, or terminated (pursuant to Section 9 thereof
or otherwise) or otherwise modified, except such amendments, supplements or
modifications as (i) are permitted by the Merger Agreement, (ii) would not
reduce the aggregate cash portion of the Transfer Value and would not affect
Sections 7.7, 7.8, or 12.2 of the Subscription Agreement and (iii) are attached
as exhibits hereto. On the Closing Date under the Subscription Agreement, the
Transferee agrees to deliver to Escrow Agent a certificate reconfirming for the
benefit of Escrow Agent, EIN and Lender the representations and warranties of
the preceding sentence together with the other items required to be delivered to
EIN as provided in Section 7.8 of the Subscription Agreement.
4. The Buyer hereby further confirms that (a) listed on Schedule I hereto
is a list of all items required to be delivered by the Buyer and/or the Seller
to Escrow Agent Linder Sections 7.4 and 7.5 of the Purchase and Sale Agreement
<PAGE>
(the "Purchase Escrowed Items"), (b) all such items, including the Purchase
Price, have been delivered to Escrow Agent Linder the Purchase and Sale
Agreement, (c) the amount of the Purchase Price is $ , (d) the aggregate amount
of Asset Sales Proceeds (as such term is defined in the Purchase and Sale
Agreement) is $ , and (e) the Joint Direction Letter required by Section 7.7 of
the Purchase and Sale Agreement has been delivered by the Buyer and the Seller
to Escrow Agent.
5. The Transferee hereby further confirms that (a) listed on Schedule II
hereto is a list of all items required to be delivered by the Transferor and/or
the Transferee under Sections 7.4 and 7.5 of the Subscription Agreement (the
"Subscription Escrowed Items"), (b) all such items, including the Transfer
Value, have been delivered to Escrow Agent under the Subscription Agreement, (c)
the amount of the cash portion of the Transfer Value, after giving effect to any
Reduction in Transfer Value as the result of the consummation on or prior to the
date hereof of any Pending Transactions (as such term is defined in the
Subscription Agreement) is $ [, the Reduction in Transfer Value is and the
Excess Amount (as such term is defined in the Subscription Agreement is ]), and
(d) the Joint Direction Letter required by Section 7.7 of the Subscription
Agreementhas been delivered by the Transferor and the Transferee to Escrow
Agent.
6. The Buyer hereby irrevocably, and without condition except as provided
in this paragraph, instructs Escrow Agent as follows:
(a) immediately following the filing by Escrow Agent of the Articles of
Merger with respect to the Merger with the Department of State of the State of
Florida or the receipt by Escrow Agent of notice that such filing has occurred,
the Purchase Escrowed Items shall be promptly delivered by Escrow Agent to the
party entitled to same and, in particular,
(i) the Purchase Price shall be delivered, by wire transfer of immediately
available funds, to the Surviving Corporation or as it shall direct;
and
(ii) the aggregate amount of Asset Sales Proceeds shall be delivered, by
wire transfer of immediately available funds, to the Buyer as follows:
[Echelon Residential LLC wire instructions].
(b) if (i) the Purchase and Sale Agreement has been terminated pursuant to
Section 911 thereof, or (ii) the Tender Offer Expiration Date does not occur on
or prior to the third Business Day after the date hereof, the Purchase Escrowed
Items shall be promptly delivered by Escrow Agent to the party which had
previously deposited same with Escrow Agent, and these instructions shall cease
to have any effect.
7. The Transferee hereby irrevocably, and without condition
except as provided in this paragraph, instructs Escrow Agent as follows: (a)
immediately following the filing by Escrow Agent of the Articles of Merger with
respect to the Merger with the Department of State of the State of Florida or
the receipt by Escrow Agent of notice that such filing has occurred, the
Subscription Escrowed Items shall be promptly delivered by Escrow Agent to the
party entitled to same and, in particular,
(i) the Preferred Stock shall be delivered to the Surviving Corporation;
(ii) the cash portion of the Transfer Value plus the amount of any
Reduction in Transfer Value shall be delivered, by wire transfer of
immediately available funds, to the Surviving Corporation or as it
shall direct;
(iii) an amount equal to fifteen (15%) percent of any Excess Amount shall
be delivered, by wire transfer of immediately available funds, to
Echelon Commercial LLC as follows: [Echelon Commercial LLC wire
instructions]; and
(iv) an amount equal to eighty-five (85%) percent of such Excess Amount
shall be delivered, by wire transfer of immediately available funds,
to the Transferee for credit to the Cash Collateral Account (as such
term is defined in the Heller Lease) as follows: [Heller Affordable
Housing of Florida Inc., Cash Collateral Account wire instructions].
(b) If (i) the Subscription Agreement has been terminated pursuant to
Section 9.1 thereof, or (ii) the Tender Offer Expiration Date does not occur on
or prior to the third Business Day after the date hereof, the Subscription
Escrowed Items shall be promptly delivered by Escrow Agent to the party which
had previously deposited same with Escrow Agent, and these instructions shall
cease to have any effect.
8. These instructions may not be revoked, modified, superseded or amended,
without the prior written consent of each of the Buyer, the Transferee, EIN and
Lender.
Please acknowledge your receipt hereof and of each of the Joint Direction
Letter, Purchase Escrowed Items, and Subscription Escrowed Items, including the
Purchase Price and the Transfer Value, and your agreement, irrevocably, to
comply herewith, by signing the enclosed copies of this letter and delivering
copies hereof to each of the Buyer, the Transferee, EIN and Lender. EIN and
Lender and joining in the execution hereof for the purpose of acknowledging
their receipt hereof and agreement to be bound hereby, subject to all of the
terms and conditions hereof.
<PAGE>
IN WITNESS WHEREOF, this irrevocable Joint Instruction Letter has been
signed this -day of [February], 2000.
ECHELON RESIDENTIAL LLC, as Buyer
By:
----------------------------
Name:
------------------------
Title:
-----------------------
HELLER AFFORDABLE HOUSING OF
FLORIDA, INC., as Transferee
By:
----------------------------
Name:
------------------------
Title:
-----------------------
ACKNOWLEDGED AND AGREED:
LANDAMERICA FINANCIAL GROUP
By:
-----------------------------------------
Name:
---------------------------------
Title:
--------------------------------
RECEIPT ACKNOWLEDGED:
EIN ACCUSATION CORPORATION
By:
-----------------------------------------
Name:
---------------------------------
Title:
--------------------------------
COOPERATIVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A
"RABOBANK NEDERLAND", NEW YORK BRANCH
By:
-----------------------------------------
Name:
---------------------------------
Title:
--------------------------------
<PAGE>
EXHIBIT 99(b)(2)
SECURITY AGREEMENT dated as of January 21 , 1999 made by EIN ACQUISITION
CORP., a Florida corporation, as grantor (together with any successor by merger,
the "Borrower") to COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
--------
"RABOBANK NEDERLAND", NEW YORK BRANCH ("Rabobank"), as agent (the "Agent") for
-------- -----
the Initial Lender (as hereinafter defined) and other lenders party to the
Credit Agreement (as hereinafter defined) (the "Lenders").
-------
PRELIMINARY STATEMENTS PRELIMINARY
1. The Borrower, Utrecht-America Finance Co., as Initial Lender (the
"Initial Lender") and the Agent have entered into a Credit Agreement (the
--------------
"Credit Agreement") dated as of January 21, 2000. The terms defined in the
----------------
Credit Agreement and not otherwise defined herein are used herein as therein
defined.
2. It is a condition precedent to the effectiveness of the Credit
Agreement and to the Borrowing thereunder that the Borrower shall have executed
and delivered this Security Agreement.
3. The Borrower will derive substantial benefit from the transactions
contemplated by the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Initial Lender to enter into the Credit Agreement and make the Advance
thereunder, the Borrower hereby agrees as follows:
SECTION 1. Grant of Security. The Borrower hereby assigns and
-----------------
pledges to the Agent for its benefit and the ratable benefit of the other
Secured Parties and hereby grants to the Agent for its benefit and the ratable
benefit of the other Secured Parties, a first priority security interest in all
of the Borrower's right, title and interest in and to the following, whether now
owned or hereafter acquired (the "Collateral"):
(a) the Heller Purchase Agreement, including but not limited to (i) all
distributions, cash and other property from time to time received,
receivable or otherwise distributed in connection with the Heller Purchase
Agreement, (ii) all rights to receive moneys due and to become due under or
pursuant to the Heller Purchase Agreement (v) all of the rights of the
Borrower to perform under the Heller Purchase Agreement and to compel
performance and otherwise exercise all remedies thereunder;
(b) the Real Estate Purchase Agreement, including but not limited to (i)
all distributions, cash and other property from time to time received,
receivable or otherwise distributed in connection with the Real Estate
Purchase Agreement, (ii) all rights to receive moneys due and to become due
under or pursuant to the Real Estate Purchase
<PAGE>
Agreement (v) all of the rights of the Borrower to perform under the Real
Estate Purchase Agreement and to compel performance and otherwise exercise
all remedies thereunder;
(c) the Cash Escrow Agreement including but not limited to (i) all
distributions, cash and other property from time to time received,
receivable or otherwise distributed in connection with the Cash Escrow
Agreement, (ii) all rights to receive moneys due and to become due under or
pursuant to the Cash Escrow Agreement (v) all of the rights of the Borrower
to perform under the Cash Escrow Agreement and to compel performance and
otherwise exercise all remedies thereunder;
(d) the Subscription Agreement (together with the Heller Agreement, the
Real Estate Purchase Agreement and the Cash Escrow Agreement, the
"Collateral Agreements"), including but not limited to (i) all
distributions, cash and other property from time to time received,
receivable or otherwise distributed in connection with the Subscription
Agreement, (ii) all rights to receive moneys due and to become due under or
pursuant to the Subscription Agreement (v) all of the rights of the
Borrower to perform under the Subscription Agreement and to compel
performance and otherwise exercise all remedies thereunder;
(e) All accounts, contract rights, chattel paper, general intangibles and
other obligations of any kind, now or hereafter existing and all rights now
or hereafter existing in and to all security agreements, leases, and other
contracts securing or otherwise relating to any such accounts, contract
rights, chattel paper, general intangibles or obligations, in each case,
relating to the Collateral Agreements; and
(f) All proceeds (as defined in the Uniform Commercial Code in effect in
the State of New York on the date hereof) of any and all of the foregoing
Collateral
SECTION 2. Security for Obligations. This Agreement secures the payment
------------------------
of all Obligations of the Borrower now or hereafter existing under the Credit
Agreement and the other Transaction Documents, whether for principal, interest,
fees, expenses or otherwise (all such Obligations being the "Secured
-------
Obligations"). Without limiting the generality of the foregoing, this Agreement
- - -----------
secures the payment of all amounts that constitute part of the Secured
Obligations and would be owed by the Borrower to the Agent or any other Secured
Party but for the fact that they are unenforceable or not allowable due to the
existence of a bankruptcy, reorganization or similar proceeding involving the
Borrower.
SECTION 3. Borrower Remains Liable. Anything herein to the contrary
-----------------------
notwithstanding, (a) the Borrower shall remain liable under the Collateral
Agreements to the extent set forth therein to perform all of the Borrower's
duties and obligations thereunder to the same extent as if this Agreement had
not been executed, (b) the exercise by the Agent of any of the rights hereunder
shall not release the Borrower from any of the Borrower's duties or obligations
under the Collateral Agreements and (c) neither the Agent nor any Secured Party
shall have any obligation or liability under the Collateral Agreements by reason
of this Agreement, nor shall the Agent or any Secured Party be obligated to
perform any of the
2
<PAGE>
obligations or duties of the Borrower thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
SECTION 4. Representations and Warranties. The Borrower represents and
------------------------------
warrants as follows:
(a) No consent of any other person or entity and no authorization or
approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required for (i) the grant by
the Borrower of the Lien granted by it pursuant to this Agreement, (ii) the
perfection or maintenance of such liens (including the first priority
nature thereof) except for the filing of financing statements required
pursuant to Section 3.01 of the Credit Agreement, which financing
statements have been duly filed, or (iii) the exercise by the Agent or any
other Secured Party of its rights under this Agreement or the remedies in
respect of the Collateral (except as specifically provided herein).
(b) The chief place of business and chief executive office and the
office where it keeps its records concerning the Collateral, and an
original copy of the Collateral Agreements, are located at its address set
forth in the Credit Agreement.
(c) The Borrower is the legal and beneficial owner of the Collateral,
free and clear of any lien, security interest, charge or encumbrance,
except for security interests created by this Agreement. No effective
financing statement or other instrument similar in effect covering all or
any part of the Borrower's Collateral is on file in any recording office,
except such as may have been filed in favor of the Agent relating to this
Agreement.
(d) This Agreement creates a valid and perfected first priority security
interest in the Collateral enforceable against all third parties, securing
the payment of the Secured Obligations, and all filings and other actions
necessary or desirable to perfect and protect such security interest have
been duly made or taken.
(e) The Collateral Agreements, a true and complete copy of which has
been furnished to the Agent, have been duly authorized, executed and
delivered by the Borrower and, to the best of the Borrower's knowledge,
each other party thereto, have not been amended or otherwise modified, are
in full force and effect and are binding upon and enforceable against all
parties thereto in accordance with their terms. There exists no default
under the Collateral Agreements by the Borrower or, to the best of the
Borrower's knowledge, any other party thereto.
SECTION 5. Further Assurances. (a) The Borrower agrees that at any time
------------------
and from time to time, at the expense of the Borrower, the Borrower will
promptly execute and deliver all further instruments and documents and take all
further action that may be necessary or desirable, or that the Agent may
reasonably request, in order to continue, perfect and protect any assignment or
security interest granted or purported to be granted hereby or to enable the
Agent
3
<PAGE>
to exercise and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, the Borrower
shall: (i) mark conspicuously the Collateral Agreements and, at the request of
the Agent, each of its records pertaining to the Collateral with a legend, in
form and substance satisfactory to the Agent, indicating that the Collateral
Agreements or Collateral is subject to the security interest granted hereby;
(ii) execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as the Agent may request, in order to perfect and preserve the
assignment and security interest granted or purported to be granted hereby; and
(iii) prepare and execute such reports, applications and other documents as the
Agent may from time to time reasonably request in connection with the exercise
by the Agent of its rights under the Transaction Documents.
(b) The Borrower hereby authorizes the Agent to file one or more
financing or continuation statements, and amendments thereto, relating to all or
any part of the Borrower's Collateral without the signature of the Borrower
where permitted by law. A carbon, photographic or other reproduction of this
Agreement or any financing statement covering the Borrower's Collateral or any
part thereof shall be sufficient as a financing statement where permitted by
law.
(c) In the event any certificates or instruments are issued that
represent or evidence any Collateral, the Borrower shall promptly deliver all
such certificates and instruments to the Agent to be held by or on behalf of the
Agent pursuant hereto, and such certificates and instruments shall be in
suitable form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Agent. The Agent shall have the right, at any time in its
discretion and without notice to the Borrower, to transfer to or to register in
the name of the Agent or any of its nominees any or all certificates or
instruments representing or evidencing any of the Borrower's Collateral, subject
only to the revocable rights specified in Section 7(a). In addition, the Agent
shall have the right at any time to exchange certificates or instruments or
evidencing Collateral for certificates or instruments of smaller or larger
denominations.
(d) The Borrower has delivered to the Agent the Notification and
Confirmations in substantially the form attached as Exhibit A hereto, dated the
date hereof and otherwise in form and substance satisfactory to the Agent; and
(f) The Agent is hereby authorized to demand specific performance by the
Borrower of the provisions of this Section 5. The Borrower hereby irrevocably
waives any defense based on the adequacy of a remedy at law that might be
asserted as a bar to such remedy of specific performance. The Borrower hereby
acknowledges that the provisions of this Section 5 are intended to be
enforceable at all times, whether before or after the commencement of a
proceeding for the dissolution, winding up, liquidation, arrangement,
reorganization, adjustment, protection, relief or composition of any Borrower or
its debts, whether in any bankruptcy, insolvency, arrangement, reorganization,
receivership, relief or similar proceeding or upon an assignment for the benefit
of creditors or any other marshalling of the assets and liabilities of any
Borrower or otherwise.
4
<PAGE>
SECTION 6. Place of Perfection; Records. The Borrower shall keep its
----------------------------
chief place of business and chief executive office and the office where it keeps
its records concerning the Collateral and original copies of the Collateral
Agreements at the location therefor specified in Section 4(b) or, upon 30 days'
prior written notice to the Agent, at such other locations in a jurisdiction
where all actions required by Section 5 shall have been taken with respect to
the Collateral.
SECTION 7. Voting Rights; Distributions; Etc. (a) The Agent shall have
---------------------------------
the sole right to exercise or refrain from exercising any and all voting and
other consensual rights, if any, pertaining to the Collateral.
(b) Any and all distributions of any kind or description in respect of
the Borrower's Collateral shall be paid directly to the Agent (and the contract
parties to each of the Collateral Agreements shall be so instructed) to pay or
prepay obligations of the Borrower under the Credit Agreement in accordance with
the terms thereof and shall, if received by the Borrower, be received in trust
for the benefit of the Agent, be segregated from the other property or funds of
the Borrower, and be forthwith delivered to the Agent as Collateral in the same
form as so received (with any necessary endorsement).
SECTION 8. As to the Collateral Agreements.
-------------------------------
(a) At the direction of the Agent, the Borrower shall continue to
collect, at its own expense, all amounts due or to become due to the Borrower
under the Collateral Agreements, if any. In connection with such collections,
the Borrower shall take, at the Agent's direction, such actions as the Agent may
deem necessary or advisable to enforce any or all of the Borrower's rights to
receive payments or other distributions with respect to the Collateral
Agreements. The Agent shall have the right at any time (i) to direct the
parties to the Collateral Agreements to make payment of all amounts due or to
become due to the Borrower under the Collateral Agreements directly to the Agent
and, upon such notification, (ii) at the expense of the Borrower, to enforce
collection of such amounts under the Collateral and (iii) to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the same
extent as the Borrower might have done.
(b) The Borrower shall at its expense:
(i) perform and observe all the terms and provisions of the Collateral
Agreements to be performed or observed by it, except as otherwise provided
by law, maintain the Collateral Agreements in full force and effect, enforce
the Collateral Agreements in accordance with their respective terms and take
all such action to such end as may be from time to time requested by the
Agent; and
(ii) furnish to the Agent promptly upon receipt thereof, copies of all
(A) notices of cancellation, termination, lapse, extension or renewal of,
notices of default under, waivers of any provisions of, amendments or
modifications to, the Collateral Agreements,
5
<PAGE>
and (B) upon the request of the Agent, other notices, requests, proposals,
appraisals, correspondence and documents received by the Borrower with
respect to the Collateral Agreements or the Company, and from time to time
upon the reasonable request of the Agent, make such demands and requests for
information or action upon such Persons as the Borrower is entitled to make
under the Collateral Agreements.
SECTION 9. Transfers and Other Liens. The Borrower shall not, without
-------------------------
the Agent's consent:
(i) sell, assign (by operation of law or otherwise) or otherwise
dispose of, or grant any option with respect to, any of the Collateral; or
(ii) create or suffer to exist any Lien upon or with respect to any of
the Collateral except for the assignment and security interest created by
this Agreement.
SECTION 10. Agent Appointed Attorney-in-Fact. The Borrower hereby
--------------------------------
irrevocably appoints the Agent the Borrower's attorney-in-fact, with full
authority in the place and stead of the Borrower and in the name of the Borrower
or otherwise, from time to time in the Agent's discretion, to take any action
and to execute any instrument that the Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:
(a) to ask for, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any of the Collateral;
(b) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) above;
(c) to file any claims or take any action or institute any proceedings
that the Agent may deem necessary or desirable for the collection of any of
the Collateral or otherwise to enforce compliance with the terms and
conditions of the Collateral Agreements or the rights of the Agent with
respect to any of the Collateral; and
SECTION 11. Agent May Perform. If the Borrower fails to perform any
-----------------
agreement contained herein, the Agent may itself perform, or cause performance
of, such agreement, and the expenses of the Agent incurred in connection
therewith shall be payable by the Borrower under Section 14.
SECTION 12. The Agent's Duties. The powers conferred on the Agent
------------------
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral. The Agent shall
be deemed to have exercised
6
<PAGE>
reasonable care in the custody and preservation of the Collateral in its
possession if the Collateral is accorded treatment substantially equal to that
which Rabobank accords its own property, it being understood that neither the
Agent nor any other Secured Party shall have responsibility for (i) ascertaining
or taking action with respect to exchanges, maturities, tenders, offers to
purchase, notices to purchase or sell, notices of termination or dissolution or
other matters relative to any Collateral, whether or not the Agent or any other
Secured Party has or is deemed to have knowledge of such matters, or (ii) taking
any necessary steps to preserve rights against any parties or any other rights
pertaining to any Collateral.
SECTION 13. Remedies Upon Default. If any Event of Default shall have
---------------------
occurred and be continuing:
(a) The Agent may exercise in respect of the Collateral, in addition to
other rights and remedies provided for herein or otherwise available to it,
all the rights and remedies of a secured party upon default under the
Uniform Commercial Code in effect in the State of New York at such time (the
"New York Uniform Commercial Code") (whether or not the New York Uniform
--------------------------------
Commercial Code applies to the affected Collateral), and also may (i)
exercise any and all rights and remedies of the Borrower, (ii) require the
Borrower to, and the Borrower hereby agrees that it will at its expense and
upon request of the Agent forthwith, assemble all or part of the Collateral
as directed by the Agent and make it available to the Agent at a place to be
designated by the Agent that is reasonably convenient to both parties, and
(iii) without notice except as specified below, sell the Collateral or any
part thereof in one or more parcels at one or more public or private sales,
at any of the Agent's offices or elsewhere, for cash, on credit or for
future delivery, to one or more Persons (which may include the Agent, any
Secured Party or any partner of the Company), and upon such other terms as
the Agent may deem commercially reasonable. The Borrower agrees that, to
the extent notice of sale shall be required by law, at least 10 days' notice
to the Borrower of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification. The Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Agent may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
(b) All payments received by the Borrower under or in connection with
the Collateral Agreements or otherwise and other distributions received by
the Borrower in respect of the Collateral shall be received in trust for the
benefit of the Agent, shall be segregated from other funds of the Borrower
and shall be forthwith paid over to the Agent in the same form as so
received (with any necessary endorsement).
(c) All payments and other distributions made under or in connection
with the Collateral Agreements or otherwise in respect of the Collateral,
and all cash proceeds received by the Agent in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
may, in the discretion of the Agent, be held by the Agent for the ratable
benefit of the Secured Parties as collateral for the Secured Obligations,
and/or
7
<PAGE>
then or at any time thereafter applied (after payment of any amounts payable
to the Agent pursuant to Section 14) in whole or in part by the Agent for
the ratable benefit of the Secured Parties against, all or any part of the
Secured Obligations in such order as the Agent shall elect. Any surplus of
such cash or cash proceeds held by the Agent and remaining after payment in
full of all the Secured Obligations shall be paid over to the Borrower or to
whomsoever may be lawfully entitled to receive such surplus.
SECTION 14. Indemnity and Expenses. The Borrower will upon demand pay
----------------------
to the Agent the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, that
the Agent may incur in connection with (i) the administration of this Agreement,
(ii) the custody, preservation, use or operation of, or the sale of, collection
from or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Agent or the other Secured Parties
hereunder or (iv) the failure by the Borrower to perform or observe any of the
provisions hereof.
SECTION 15. Amendments; Waivers; Etc. (a) No amendment or waiver of
---------------------------
any provision of this Agreement, and no consent to any departure by the Borrower
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Agent and the Required Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
(b) No failure on the part of the Agent to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right.
SECTION 16. Addresses for Notices. All notices and other
---------------------
communications provided for hereunder shall be made and be effective as set
forth in the Credit Agreement.
SECTION 17. Continuing Security Interest; Assignments Under Credit
------------------------------------------------------
Agreement. This Agreement shall create a continuing security interest in the
- - ---------
Collateral and shall (a) remain in full force and effect until the indefeasible
payment in full in cash of the Secured Obligations, (b) be binding upon the
Borrower, its successors and assigns; it being expressly understood that (i) at
any time after the effectiveness of the Merger but prior to the effectiveness of
the Delaware Merger, "Borrower" shall mean and include Echelon as successor by
merger to the Borrower and (ii) at any time after the Delaware Merger,
"Borrower" shall mean and include EIN, as successor by merger to Echelon and (c)
inure, together with the rights and remedies of the Agent hereunder, to the
benefit of the Agent and the other Secured Parties and their respective
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c), any Lender may assign or otherwise transfer all or any
portion of its rights and obligations under the Credit Agreement (including,
without limitation, all or any portion of the Advance owing to it and the Note
or Notes held by it) to any other Person or entity, and such other Person or
entity shall thereupon become vested with all the benefits in respect thereof
granted to such Lender herein or otherwise, in each case as provided in Section
8.07 of the Credit Agreement.
8
<PAGE>
SECTION 18. Termination. Upon the indefeasible payment in full in cash
-----------
of the Secured Obligations, the assignment and security interest granted hereby
shall terminate and all rights to the Collateral shall revert to the Borrower.
Upon any such termination, the Agent will execute and deliver to the Borrower,
at the Borrower's expense, such documents as the Borrower shall reasonably
request to evidence such termination.
SECTION 19. Borrower Not Released. The exercise by the Agent of any of
---------------------
the rights hereunder shall not release the Borrower from any of its or his
duties or obligations under any agreement with the Agent, the Secured Parties or
each other and neither the Agent nor any other Secured Party shall have any
obligation or liability under any such agreement by reason of this Agreement,
nor shall the Agent or any other Secured Party be obligated to perform any of
the obligations or duties of the Borrower thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
SECTION 20. Severability. If any term or provision of this Agreement
---------------
is or shall become illegal, invalid or unenforceable in any jurisdiction, all
other terms and provisions of this Agreement shall remain legal, valid and
enforceable in such jurisdiction and such illegal, invalid or unenforceable
provision shall be legal, valid and enforceable in any other jurisdiction.
SECTION 21. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED BY
--------------------
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. UNLESS
OTHERWISE DEFINED HEREIN OR IN THE CREDIT AGREEMENT, TERMS USED IN THE NEW YORK
UNIFORM COMMERCIAL CODE ARE USED HEREIN AS THEREIN DEFINED.
SECTION 22. Effectiveness; Execution in Counterparts. This Agreement
----------------------------------------
shall become effective as to the Borrower when it shall have been executed by
the Borrower, and may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement. Delivery of an executed counterpart of a signature page
to this Agreement by telecopier shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 23. WAIVER OF JURY TRIAL. THE BORROWER AND THE AGENT HEREBY
--------------------
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREBY.
9
<PAGE>
IN WITNESS WHEREOF, the Borrower has, or has caused this Agreement to
be duly executed and delivered by its officers thereunto duly authorized, as of
the date first above written.
EIN ACQUISITION CORP.
By:___________________
Name:
Title:
10
<PAGE>
EXHIBIT A
NOTIFICATION AND CONFIRMATION
January __, 2000
Dear Sir or Madam:
Pursuant to the Security Agreement dated as of January __, 2000 (the
"Security Agreement") made by EIN Acquisition Corp., a Florida corporation
- - -------------------
(together with any successor by merger, the "Borrower"), to Cooperatieve
--------
Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New York Branch
("Rabobank"), as agent (the "Agent"), the Borrower has assigned and pledged to
-------- -----
the Agent for the ratable benefit of the Lenders (as defined in the Security
Agreement) all of the Borrower's right, title and interest in and to the Heller
Purchase Agreement (as defined in the Security Agreement);
1. The Borrower hereby notifies Heller Financial, Inc. (the
"Counterparty") of, and the Counterparty hereby acknowledges and agrees to, the
assignment and pledge of the Heller Purchase Agreement pursuant to the Security
Agreement.
2. The Borrower hereby instructs the Counterparty and the
Counterparty hereby agrees to make any and all payments and other distributions
with respect to the Heller Purchase Agreement directly to the Agent in payment
of the Obligations (as defined in the Security Agreement).
3. The Counterparty hereby agrees, simultaneously with each notice
delivered to the Borrower pursuant to the Heller Purchase Agreement to send a
copy of such notice to the Agent at the Agent's address set forth in the
Security Agreement.
EIN ACQUISITION CORP.
By:_____________________
Name:
Title:
ACKNOWLEDGED AND AGREED TO:
HELLER FINANCIAL, INC.
By:_____________________
Name:
Title:
<PAGE>
EXHIBIT (D)(1)
- - --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ETA HOLDING LLC,
EIN ACQUISITION CORP.
AND
ECHELON INTERNATIONAL CORPORATION
Dated as of January 21, 2000
- - --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
ARTICLE I
<S> <C>
THE OFFER..................................................................................................... 2
1.01 The Offer....................................................................................... 2
1.02 Company Actions................................................................................. 4
ARTICLE II
THE MERGER AND RELATED MATTERS................................................................................ 5
2.01 The Merger...................................................................................... 5
2.02 Effective Time.................................................................................. 5
2.03 Effect of Merger................................................................................ 6
2.04 Conversion of Stock............................................................................. 6
2.05 Dissenting Stock................................................................................ 6
2.06 Surrender of Certificates....................................................................... 7
2.07 Payment......................................................................................... 8
2.08 No Further Rights of Transfers.................................................................. 8
2.09 Stock Option and Other Plans.................................................................... 8
2.10 Articles of Incorporation of the Surviving Corporation; Use of "Echelon"Name.................... 9
2.11 By-Laws of the Surviving Corporation............................................................ 10
2.12 Directors and Officers of the Surviving Corporation............................................. 10
ARTICLE III
REPRESENTATIONS AND WARRANTIES................................................................................ 10
3.01 Representations and Warranties of the Company................................................... 10
(a) Due Organization, Good Standing and Power.............................................. 10
(b) Authorization and Validity of Agreement................................................ 11
(c) Capitalization......................................................................... 11
(d) Consents and Approvals; No Violations.................................................. 12
(e) Company Reports and Financial Statements............................................... 13
(f) Absence of Certain Changes............................................................. 14
(g) Title to Properties; Encumbrances...................................................... 14
(h) Compliance with Laws................................................................... 16
(i) Litigation............................................................................. 16
</TABLE>
(i)
<PAGE>
<TABLE>
<S> <C>
(j) Employee Benefit Plans................................................................ 16
(k) Taxes................................................................................. 17
(l) Liabilities........................................................................... 17
(m) Intellectual Properties............................................................... 18
(n) Material Contracts.................................................................... 18
(o) Broker's or Finder's Fee.............................................................. 18
(p) Environmental Laws and Regulations.................................................... 18
(q) State Takeover Statutes............................................................... 20
(r) Rights Agreement...................................................................... 21
(s) Year 2000............................................................................. 21
(t) Opinion of Financial Advisor.......................................................... 21
(u) Disclosure............................................................................ 21
(v) Distribution Agreement................................................................ 21
3.02 Representations and Warranties of Parent and Sub............................................... 22
(a) Due Organization; Good Standing and Corporate Power................................... 22
(b) Authorization and Validity of Agreement............................................... 22
(c) Consents and Approvals; No Violations................................................. 22
(d) Capitalization........................................................................ 23
(e) Broker's or Finder's Fee.............................................................. 23
(f) Financing............................................................................. 23
(g) Parent Not an Affiliated Shareholder.................................................. 23
(h) Size of Person........................................................................ 24
(i) Capital Contributions; Cash On Hand; Special Purpose Entities......................... 24
(j) Going Concern; Solvency............................................................... 24
ARTICLE IV
COVENANTS.................................................................................................... 24
4.01 Access to Information Concerning Properties and Records; Delivery of Financial Information..... 24
4.02 Confidentiality................................................................................ 25
4.03 Conduct of the Business of the Company Pending the Effective Date.............................. 25
4.04 Shareholder Approval........................................................................... 27
4.05 Reasonable Best Efforts........................................................................ 27
4.06 No Solicitation of Other Offers................................................................ 28
4.07 Notification of Certain Matters................................................................ 29
4.08 HSR Act........................................................................................ 30
4.09 Employment Agreements.......................................................................... 30
4.10 Directors' and Officers'Insurance; Indemnification............................................. 30
4.11 Guaranty of Performance........................................................................ 31
4.12 Financing; Capital; Capitalization; Solvency; Going Concern.................................... 31
4.13 Rights Agreement............................................................................... 31
4.14 State Takeover Statutes........................................................................ 32
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
4.15 No Other Representations or Warranties......................................................... 32
4.16 Insurance...................................................................................... 32
4.17 Closing Certificate............................................................................ 32
4.18 Preclearance of Articles of Merger............................................................. 33
4.19 Merger of Surviving Corporation with and into Delaware Sub..................................... 33
ARTICLE V
TERMINATION AND ABANDONMENT.................................................................................. 34
5.01 Termination.................................................................................... 34
5.02 Effect of Termination.......................................................................... 36
ARTICLE VI
MISCELLANEOUS................................................................................................ 37
6.01 Fees and Expenses.............................................................................. 37
6.02 Representations and Warranties................................................................. 37
6.03 Extension; Waiver.............................................................................. 37
6.04 Public Announcements........................................................................... 38
6.05 Notices........................................................................................ 38
6.06 Entire Agreement............................................................................... 39
6.07 Binding Effect; Benefit; Assignment............................................................ 39
6.08 Amendment and Modification..................................................................... 39
6.09 Further Actions................................................................................ 40
6.10 Headings....................................................................................... 40
6.11 Counterparts................................................................................... 40
6.12 Applicable Law................................................................................. 40
6.13 Severability................................................................................... 40
6.14 Certain Definitions............................................................................ 40
6.15 Transfer Taxes................................................................................. 41
6.16 Waiver of Jury Trial........................................................................... 41
</TABLE>
ANNEX A - Tender Offer Conditions
EXHIBIT A - Form of Tax Credit LP Interest Purchase Agreement
EXHIBIT B - Form of Purchase and Sale Agreement
EXHIBIT C - Form of Subscription Agreement
EXHIBIT D - Form of LandAmerica Escrow Agreement
EXHIBIT E - Form of Rabobank Escrow Agreement
EXHIBIT F - Form of Closing Certificate (including Schedule A
----------
thereto)
SCHEDULE I - Insurance Coverage
(iii)
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER, dated as of January 21, 2000 (this
"Agreement"), by and among ETA HOLDING LLC, a Delaware limited liability company
("Parent"), EIN ACQUISITION CORP., a Florida corporation and a direct wholly-
owned subsidiary of Parent ("Sub"), and ECHELON INTERNATIONAL CORPORATION, a
Florida corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the acquisition of the Company's capital stock by Parent
on the terms and conditions set forth herein;
WHEREAS, in contemplation thereof, it is proposed that Sub will make a
tender offer (the "Offer") to purchase all the issued and outstanding shares of
the Company's common stock, par value $0.01 per share, (the "Common Stock") and
the associated preferred share purchase rights (the "Rights") issued pursuant to
the Stockholder Rights Agreement, dated as of November 15, 1996, by and between
the Company and The First National Bank of Boston (the "Rights Agreement"), at a
purchase price of $34.00 per share (and associated Right) net to the seller in
cash, without interest thereon, (the "Offer Price") on the terms and subject to
the conditions set forth in the Offer to Purchase referred to herein and in the
related letter of transmittal;
WHEREAS, to complete such acquisition, the respective Boards of
Directors of Parent and Sub have approved and adopted this Agreement and the
plan of merger set forth herein whereby Sub will merge with and into the
Company, with the Company being the surviving corporation (the "Merger"), on the
terms and subject to the conditions of this Agreement;
WHEREAS, the Board of Directors of the Company has determined (i) that
the Offer is fair to, and in the best interests of, the holders of Common Stock,
(ii) to approve the Offer and (iii) to recommend the acceptance of the Offer by
the shareholders of the Company;
WHEREAS, on or prior to the date hereof, a Purchase Agreement, in the
form attached hereto as Exhibit A (the "Tax Credit LP Interest Purchase
---------
Agreement"), has been executed and delivered by each of the parties thereto
pursuant to which the Company has agreed to sell, transfer and assign all of its
right, title and interest in and to the Partnership Interests (as defined
therein) pursuant to and in accordance with the terms and conditions thereof;
WHEREAS, concurrently herewith, a Purchase and Sale Agreement, in the
form attached hereto as Exhibit B (the "Purchase and Sale Agreement"), has been
---------
executed and delivered by each of the parties thereto pursuant to which the
Company has agreed to sell, transfer and assign all of its right, title and
interest in and to the Assets (as defined therein) pursuant to and in accordance
with the terms and conditions thereof;
<PAGE>
WHEREAS, concurrently herewith, a Subscription Agreement, in the form
attached hereto as Exhibit C (the "Subscription Agreement"), has been executed
---------
and delivered by each of the parties thereto pursuant to which the Company has
agreed to convey, transfer and assign all of its right, title and interest in
and to the Assets (as defined therein) pursuant to and in accordance with the
terms and conditions thereof (it being understood and agreed that for purposes
of this Agreement (other than the immediately preceding paragraph and the
preceding provisions of this paragraph), (i) "Real Estate Assets" shall be
deemed to be a collective reference to the Assets (as defined in the Purchase
and Sale Agreement) and the Assets (as defined in the Subscription Agreement),
(ii) "Assets" shall be deemed to be a collective reference to the Real Estate
Assets and the Partnership Interests (as defined in the Tax Credit LP Interest
Purchase Agreement), so long as the transactions contemplated thereby have not
been consummated, (iii) "Real Estate Disposition Agreements" shall be deemed to
be a collective reference to the Purchase and Sale Agreement and the
Subscription Agreement and (iv) "Asset Disposition Agreements" shall be deemed
to be a collective reference to the Real Estate Disposition Agreements and the
Tax Credit LP Interest Purchase Agreement, so long as the transactions
contemplated thereby have not been consummated);
WHEREAS, concurrently herewith, an Escrow Agreement, in the form
attached hereto as Exhibit D (the "LandAmerica Escrow Agreement"), has been
---------
executed and delivered by each of the parties thereto pursuant to which the
Company has agreed to deposit certain funds with the escrow agent thereunder
relating to the transaction expenses to be incurred in connection with the
transactions contemplated hereby; and
WHEREAS, concurrently herewith, an Escrow Agreement, in the form
attached hereto as Exhibit E (the "Rabobank Escrow Agreement" and, together with
---------
the LandAmerica Escrow Agreement, the "Escrow Agreements"), has been executed
and delivered by each of the parties thereto pursuant to which the Company has
agreed to deposit certain funds with the escrow agent thereunder until such time
as when the transactions contemplated hereby shall have been consummated;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto agree as follows:
ARTICLE I
THE OFFER
1.01 The Offer. (a) Provided that this Agreement shall not have been
---------
terminated in accordance with Article VI hereof and so long as none of the
events set forth in Annex A hereto (the "Tender Offer Conditions") shall have
-------
occurred and be continuing, as promptly as practicable, but in no event later
than the fifth Business Day (as defined in Section 6.14 hereof) after the date
of this Agreement, Sub shall, and Parent shall cause Sub to, commence (within
the meaning of Rule 14d-2 promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) the Offer. The obligations of Sub to, and of
Parent to cause Sub to, accept for payment and to pay for any shares of Common
Stock (and associated Rights)
-2-
<PAGE>
tendered shall be subject only to the Tender Offer Conditions, any of which may
be waived by Parent or Sub; provided, that the Minimum Condition (as defined in
Annex A hereto) may not be waived by Parent or Sub without the prior written
- - -------
consent of the Company. Sub expressly reserves the right to modify the terms of
the Offer; provided, that, without the consent of the Company, neither Parent
nor Sub shall (i) reduce the number of shares of Common Stock to be purchased in
the Offer, (ii) reduce the Offer Price, (iii) add to the Tender Offer
Conditions, (iv) modify the Tender Offer Conditions or any other term or
condition of the Offer in a manner that is adverse to the holders of Common
Stock, (v) change the form of consideration payable in the Offer or (vi) except
as provided in the last two sentences of this subsection (a), extend the Offer
beyond any scheduled expiration date. Parent and Sub covenant and agree that, on
the terms and subject to the conditions of this Agreement, including, but not
limited to, the Tender Offer Conditions and the last sentence of this Section
1.01(a), unless the Company otherwise consents in writing, Sub will accept for
payment and pay for the Common Stock (and associated Rights) as soon as (but in
any event within one Business Day after the Offer terminates) it is permitted to
do so under applicable law. Parent and Sub agree that if Sub is unable to
consummate the Offer on the initial scheduled expiration date due to the failure
of the Tender Offer Conditions set forth in the first sentence of Annex A to be
-------
satisfied or waived, Sub shall, unless this Agreement has been terminated in
accordance with its terms, extend the Offer and set a subsequent scheduled
expiration date, and shall continue to so extend the Offer and set subsequent
scheduled expiration dates, until the termination of this Agreement in
accordance with its terms; provided, that any such extended expiration date
shall not be later than the earlier of (x) 20 Business Days following the
previously scheduled expiration date and (y) the date on which Sub reasonably
believes that all Tender Offer Conditions will be satisfied or waived.
(b) As soon as reasonably practicable on the date that the Offer is
commenced, Parent and Sub shall file, and Parent shall cause Sub to file, with
the Securities and Exchange Commission (the "Commission") a Tender Offer
Statement on Schedule TO (together with all amendments and supplements thereto,
the "Schedule TO") with respect to the Offer. The Schedule TO shall contain
(included as an exhibit) or shall incorporate by reference an offer to purchase
(the "Offer to Purchase") and a form of the related letter of transmittal (the
"Letter of Transmittal"), as well as all other information and exhibits required
by law (which Schedule TO, Offer to Purchase, Letter of Transmittal and such
other information and exhibits, together with any supplements or amendments
thereto, are referred to herein collectively as the "Offer Documents"). The
Company and its counsel shall be given the opportunity to review and comment
upon the Schedule TO prior to its filing with the Commission. Parent and Sub
represent and warrant that the Offer Documents will comply in all material
respects with the provisions of applicable federal securities laws and, on the
date filed with the Commission and the date first published, sent or given to
the Company's shareholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading, except that no representation is made
by Parent or Sub with respect to any information supplied by the Company or its
officers, directors or affiliates in writing for inclusion in the Offer
Documents. If, at any time prior to the completion, expiration or termination
of the Offer, any event occurs which should be described in an amendment or
supplement to the Schedule TO or any amendment or supplement thereto, Parent and
Sub will,
-3-
<PAGE>
and Parent will cause Sub to, file and disseminate, as required, an amendment or
supplement which complies in all material respects with the Exchange Act and the
rules and regulations thereunder and any other applicable laws. Prior to its
filing with the Commission, the amendment or supplement shall be delivered to
the Company and its counsel and the Company and its counsel shall be given the
opportunity to comment thereon. The written information supplied or to be
supplied by Parent and Sub for inclusion in the Schedule 14D-9 (as defined in
Section 1.02 hereof) of the Company will not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made, in light of the circumstances under which they are made, not
misleading. Each of Parent and Sub agrees to provide the Company and its counsel
with copies of any written comments Parent and Sub or their counsel may receive
from the Commission or its staff with respect to the Offer Documents promptly
after the receipt of such comments and shall provide the Company and its counsel
an opportunity to participate, including by way of discussions with the
Commission or its staff, in the response of Parent and Sub to such comments.
1.02 Company Actions. The Company hereby approves of and consents to
---------------
the Offer and represents that: (a) its Board of Directors (at a meeting duly
called and held) has (i) determined that the Offer is fair to, and in the best
interests of, the holders of Common Stock, (ii) approved the Offer and (iii)
determined to recommend the acceptance of the Offer by the shareholders of the
Company; provided, however, that such recommendation or other action may be
withdrawn, modified or amended at any time or from time to time in a manner
adverse to Parent and Sub so long as the Company has complied with Section 4.06
hereof; and (b) Donaldson, Lufkin & Jenrette Securities Corporation has
delivered to the Board of Directors of the Company its opinion that the
consideration to be received by the holders of Common Stock (other than Parent
and Sub) pursuant to the Offer and the Merger is fair to the holders of Common
Stock from a financial point of view, subject to the assumptions and
qualifications contained in such opinion. The Company shall file with the
Commission, as soon as practicable after the date of the commencement of the
Offer, a Solicitation/Recommendation Statement on Schedule 14D-9 (together with
all amendments and supplements thereto, the "Schedule 14D-9") containing the
recommendations referred to in clause (a) of the preceding sentence and shall
disseminate the Schedule 14D-9 as required by Rule 14d-9 under the Exchange Act;
provided, however, that such recommendation or other action may be withdrawn,
modified or amended at any time or from time to time in a manner adverse to
Parent and Sub so long as the Company has complied with Section 4.06 hereof.
Parent and Sub and their counsel shall be given the opportunity to review and
comment on the Schedule 14D-9 prior to its filing with the Commission. The
Company represents and warrants that the Schedule 14D-9 will comply in all
material respects with the provisions of applicable federal securities laws and,
on the date filed with the Commission and on the date first published, sent or
given to the Company's shareholders, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information supplied by
Parent or Sub or their officers, directors or affiliates in writing for
inclusion in the Schedule 14D-9. If at any time prior to the completion,
expiration or termination of the Offer, any event occurs which should be
described in an amendment or supplement to the Schedule 14D-9 or any amendment
or
-4-
<PAGE>
supplement thereto, the Company will file and disseminate, as required, an
amendment or supplement which complies in all material respects with the
Exchange Act and the rules and regulations thereunder and any other applicable
laws. Prior to its filing with the Commission, the amendment or supplement
shall be delivered to Parent and its counsel and Parent and its counsel shall be
given the opportunity to comment thereon. The written information supplied or
to be supplied by the Company for inclusion in the Offer Documents will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made, in light of the
circumstances under which they are made, not misleading. The Company agrees to
provide Parent and its counsel with any comments the Company or its counsel may
receive from the Commission or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments and shall provide Parent and its
counsel an opportunity to participate, including by way of discussions with the
Commission or its staff, in the response of the Company to such comments.
In connection with the Offer, the Company will promptly furnish Sub
with mailing labels, security position listings and any available listing or
computer list containing the names and addresses of the record holders of the
Common Stock as of the most recent practicable date and shall furnish Sub with
such additional information (including, but not limited to, updated lists of
holders of Common Stock and their addresses, mailing labels and lists of
security positions) and such other assistance as Sub or its agents may
reasonably request in communicating the Offer to the Company's shareholders.
Subject to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Merger, Parent, Sub and their respective affiliates,
associates, agents, and advisors, shall keep confidential and use the
information contained in any such labels, listings and files only in connection
with the Offer and the Merger and, if this Agreement shall be terminated, will
deliver to the Company all copies of such information then in their possession.
ARTICLE II
THE MERGER AND RELATED MATTERS
2.01 The Merger. (a) On the terms and subject to the conditions of
----------
this Agreement and subject to, and in accordance with, the applicable provisions
of the Florida Business Corporation Act (the "FBCA"), at the Effective Time (as
defined in Section 2.02 hereof), Sub shall be merged with and into the Company
and the separate corporate existence of Sub shall cease, and the Company shall
continue as the surviving corporation under the laws of the State of Florida
under the name of "Echelon International Corporation" (together with its
successors, the "Surviving Corporation").
2.02 Effective Time. On the date of acceptance for payment and
--------------
immediately following payment to the paying agent designated in the Offer
Documents for not less than 80% of all the shares of Common Stock outstanding
(calculated on a fully diluted basis) in accordance with the Offer, Sub will
cause articles of merger (the "Articles of Merger") to be filed pursuant to the
LandAmerica Escrow Agreement with the office of the Department of State of the
State of Florida in the manner required by Section 607.1105 of the FBCA and
shall take such other and
-5-
<PAGE>
further actions as may be required by law to make the Merger effective. The
Merger shall become effective at the time when the Articles of Merger have been
duly filed with the Department of State of the State of Florida. The time and
the date as of which the Merger becomes effective in accordance with applicable
law is referred to as the "Effective Time" or the "Effective Date", as
applicable.
2.03 Effect of Merger. From and after the Effective Time, the Merger
----------------
shall have the effects set forth in Section 607.1106 of the FBCA.
2.04 Conversion of Stock. At the Effective Time:
-------------------
(a) Each share of Common Stock then issued and outstanding (other
than (i) any shares of Common Stock which are held by any Subsidiary of the
Company or in the treasury of the Company, or which are held, directly or
indirectly, by Parent or any direct or indirect subsidiary of Parent (including
Sub), all of which shall be canceled and none of which shall receive any payment
with respect thereto and (ii) shares of Common Stock held by Dissenting
Shareholders (as defined in Section 2.05 hereof)) shall, by virtue of the Merger
and without any action on the part of the holder thereof, be converted into and
represent the right to receive an amount in cash, without interest, equal to the
price paid for each share of Common Stock (and associated Right) pursuant to the
Offer (the "Merger Consideration"), upon surrender, in the manner provided in
Section 2.06 hereof, of the certificate that formerly evidenced such share of
Common Stock; and
(b) Each share of common stock, par value $0.01 per share, of Sub
then issued and outstanding shall, by virtue of the Merger and without any
action on the part of the holder thereof, become one fully paid and
nonassessable share of common stock, par value $0.01 per share, of the Surviving
Corporation.
2.05 Dissenting Stock. Notwithstanding anything in this Agreement to
----------------
the contrary (including, without limitation, Section 2.04 hereof) but only to
the extent required by the FBCA, shares of Common Stock that are issued and
outstanding immediately prior to the Effective Time and are held by holders of
Common Stock who comply with all the provisions of the FBCA concerning the right
of holders of Common Stock to dissent from the Merger and require an appraisal
of their shares of Common Stock (the "Dissenting Shareholders") shall not be
converted into the right to receive the Merger Consideration but shall become
the right to receive such consideration as may be determined to be due such
Dissenting Shareholder pursuant to Section 607.1320 of the FBCA; provided, that
(i) if any Dissenting Shareholder shall subsequently deliver a written
withdrawal of his or her demand for appraisal (with the written approval of the
Surviving Corporation, to the extent permitted by the FBCA), or (ii) if any
Dissenting Shareholder fails to establish and perfect, or shall have effectively
withdrawn or lost, his or her entitlement to appraisal rights as provided by
applicable law or (iii) to the extent permitted by the FBCA, if within the time
period prescribed by the FBCA neither any Dissenting Shareholder nor the
Surviving Corporation has filed a petition demanding a determination of the
value of the shares of Common Stock outstanding at the Effective Time and held
by Dissenting Shareholders, in accordance with applicable law, then such
Dissenting Shareholder or
-6-
<PAGE>
Shareholders, as the case may be, shall forfeit the right to appraisal of such
shares and such shares shall thereupon be deemed to have been converted into the
right to receive, as of the Effective Time, the Merger Consideration, without
interest. The Company shall give Parent and Sub (A) notice of any written
demands for appraisal, withdrawals of demands for appraisal and any other
related instruments received by the Company and (B) the opportunity to direct
all negotiations and proceedings with respect to demands for appraisal. The
Company will not voluntarily make any payment with respect to any demands for
appraisal and will not, except with the prior written consent of Parent, settle
or offer to settle any demand.
2.06 Surrender of Certificates. (a) Concurrently with or prior to
-------------------------
the Effective Time, Parent shall designate a bank or trust company located in
the United States and reasonably acceptable to the Company to act as paying
agent (the "Paying Agent") for purposes of making the cash payments contemplated
hereby. As soon as practicable after the Effective Time, Parent shall or shall
cause the Paying Agent to mail and/or make available to each holder of a
certificate theretofore evidencing shares of Common Stock (other than those
which are held by any Subsidiary of the Company or in the treasury of the
Company or which are held directly or indirectly by Parent or any direct or
indirect subsidiary of Parent (including Sub)) a notice and letter of
transmittal advising such holder of the effectiveness of the Merger and the
procedure for surrendering to the Paying Agent such certificate or certificates
which immediately prior to the Effective Time represented outstanding Common
Stock (the "Certificates") in exchange for the Merger Consideration deliverable
in respect thereof pursuant to this Article II. Upon the surrender for
cancellation to the Paying Agent of such Certificates, together with a letter of
transmittal, duly executed and completed in accordance with the instructions
thereon, and any other items specified by the letter of transmittal, the Paying
Agent shall promptly pay to the Person (as defined in Section 6.14 hereof)
entitled thereto the Merger Consideration deliverable in respect thereof. Until
so surrendered, each Certificate shall be deemed, for all corporate purposes, to
evidence only the right to receive upon such surrender the Merger Consideration
deliverable in respect thereof to which such Person is entitled pursuant to this
Article II. No interest shall be paid or accrued in respect of such cash
payments.
(b) If the Merger Consideration (or any portion thereof) is to be
delivered to a Person other than the Person in whose name the Certificates
surrendered in exchange therefor are registered, it shall be a condition to the
payment of the Merger Consideration that the Certificates so surrendered shall
be properly endorsed or accompanied by appropriate stock powers and otherwise in
proper form for transfer, that such transfer otherwise be proper and that the
Person requesting such transfer pay to the Paying Agent any transfer or other
taxes payable by reason of the foregoing or establish to the satisfaction of the
Paying Agent that such taxes have been paid or are not required to be paid.
(c) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed, the Paying Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Merger Consideration
deliverable in respect thereof as determined in accordance with this Article II;
provided that, the Person to whom the Merger Consideration is paid shall, as a
condition precedent to the payment thereof, give the Surviving Corporation a
bond in such sum
-7-
<PAGE>
as it may direct or otherwise indemnify the Surviving Corporation in a manner
satisfactory to it against any claim that may be made against the Surviving
Corporation with respect to the Certificate claimed to have been lost, stolen or
destroyed.
2.07 Payment. Concurrently with or immediately prior to the Effective
-------
Time, Parent or Sub shall deposit, or cause to be deposited, in trust with the
Paying Agent cash in United States dollars in an aggregate amount equal to the
product of (i) the number of shares of Common Stock outstanding immediately
prior to the Effective Time (other than shares of Common Stock which are held by
any Subsidiary of the Company or in the treasury of the Company or which are
held directly or indirectly by Parent or any direct or indirect subsidiary of
Parent (including Sub) or a Person known at the time of such deposit to be a
Dissenting Shareholder) and (ii) the Merger Consideration (such amount being
hereinafter referred to as the "Payment Fund"). The Payment Fund shall be
invested by the Paying Agent as directed by Parent in direct obligations of the
United States, obligations for which the full faith and credit of the United
States is pledged to provide for the payment of principal and interest,
commercial paper rated of the highest quality by Moody's Investors Services,
Inc. or Standard & Poor's Ratings Group or certificates of deposit, bank
repurchase agreements or bankers' acceptances of a commercial bank having at
least $1,000,000,000 in assets (collectively, "Permitted Investments") or in
money market funds which are invested in Permitted Investments, and any net
earnings with respect thereto shall be paid to Parent as and when requested by
Parent. The Paying Agent shall, pursuant to irrevocable instructions, make the
payments referred to in Section 2.04(a) hereof out of the Payment Fund. The
Payment Fund shall not be used for any other purpose except as otherwise agreed
to by Parent. Promptly following the date which is six months after the
Effective Time, the Paying Agent shall return to the Surviving Corporation all
cash, certificates and other instruments in its possession that constitute any
portion of the Payment Fund, and the Paying Agent's duties shall terminate.
Thereafter, each holder of a Certificate may surrender such Certificate to the
Surviving Corporation and (subject to applicable abandoned property, escheat and
similar laws) receive in exchange therefor the Merger Consideration, without
interest, but shall have no greater rights against the Surviving Corporation or
Parent than may be accorded to general creditors of the Surviving Corporation or
Parent under applicable law. Notwithstanding the foregoing, neither the Paying
Agent nor any party hereto shall be liable to a holder of shares of Common Stock
for any Merger Consideration delivered to a public official pursuant to
applicable abandoned property, escheat and similar laws.
2.08 No Further Rights of Transfers. At and after the Effective Time,
------------------------------
each holder of a Certificate shall cease to have any rights as a shareholder of
the Company, except for, in the case of a holder of a Certificate (other than
shares to be canceled pursuant to Section 2.04(a) hereof and other than shares
held by Dissenting Shareholders), the right to surrender his or her Certificate
in exchange for payment of the Merger Consideration or, in the case of a
Dissenting Shareholder, to perfect his or her right to receive payment for his
or her shares pursuant to the FBCA if such holder has validly perfected and not
withdrawn his or her right to receive payment for his or her shares, and no
transfer of shares of Common Stock shall be made on the stock transfer books of
the Surviving Corporation. Certificates presented to the Surviving Corporation
after the Effective Time shall be canceled and exchanged for cash as provided in
this
-8-
<PAGE>
Article II. At the close of business on the day of the Effective Time the stock
ledger of the Company with respect to Common Stock shall be closed.
2.09 Stock Option and Other Plans. Prior to the Effective Time, the
----------------------------
Board of Directors of the Company (or, if appropriate, any committee thereof)
shall adopt appropriate resolutions and use its reasonable best efforts to take
all other actions necessary to provide for the cancellation, effective at the
Effective Time, of all the outstanding stock options to purchase Common Stock
(the "Options") heretofore granted under any stock option plan of the Company
(the "Stock Plans"). Immediately prior to the Effective Time, the Company shall
use its reasonable best efforts to ensure that (i) each Option, whether or not
then vested or exercisable, shall no longer be exercisable for the purchase of
shares of Common Stock but shall entitle each holder thereof, in cancellation
and settlement therefor, to payments by the Company in cash (subject to any
applicable withholding taxes, the "Cash Payment"), at the Effective Time, equal
to the product of (x) the total number of shares of Common Stock subject to such
Option as to which such Option could have been exercised as of the Effective
Date and (y) the excess of the Merger Consideration over the exercise price per
share of Common Stock subject to such Option, each such Cash Payment to be paid
to each holder of an outstanding Option at the Effective Time and (ii) each
share of Common Stock previously issued in the form of grants of restricted
stock or grants of contingent or bonus shares, and not vested prior to the
Effective Time, shall fully vest and be paid by the Company in cash at the
Effective Time in an amount equal to the Merger Consideration (subject to
applicable withholding taxes) and otherwise in accordance with their respective
terms. Prior to the Effective Time, the Board of Directors of the Company shall
adopt appropriate resolutions and use its reasonable best efforts to take all
other actions necessary to provide for the purchase prior to the Effective Time
of shares of Common Stock covered by subscriptions outstanding under the Echelon
International Corporation 1996 Employee Stock Purchase Plan. As provided
herein, the Company shall use its reasonable best efforts to ensure that the
Stock Plans shall terminate as of the Effective Time and the provisions of any
Employee Benefit Plan (as defined in Section 3.01(j) hereof) providing for the
issuance or grant of shares of the capital stock of the Company shall be deleted
as of the Effective Time. The Company will take all reasonable steps to ensure
that neither the Company nor any of its Subsidiaries is or will be bound by any
Options, other options, warrants, rights or agreements which would entitle any
Person, other than Parent or its affiliates, to own or purchase any capital
stock of the Surviving Corporation or any of its subsidiaries. The Company will
use its reasonable best efforts to obtain any necessary consents to ensure that
after the Effective Time, the only rights of the holders of Options, in respect
of such Options, will be to receive the Cash Payment in cancellation and
settlement thereof.
2.10 Articles of Incorporation of the Surviving Corporation; Use of
--------------------------------------------------------------
"Echelon" Name. The Amended and Restated Articles of Incorporation of the
- - --------------
Company, as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation until thereafter duly
amended as provided by law and such Articles of Incorporation, provided, that
such Articles of Incorporation shall at all times be in accordance with the
provisions of Section 4.10 hereof. For a period of 180 days after the Effective
Time, the Surviving Corporation shall have the right to use the word "Echelon"
as its tradename, but only for the purposes of identifying itself as the
appropriate business entity in dealing with third
-9-
<PAGE>
parties to facilitate the sale of the Real Estate Assets pursuant to the Real
Estate Disposition Agreements and in connection with the management of, and any
sale to any third party purchaser of, any asset subject to any lease in the
Leveraged Lease Portfolio (as defined in Section 3.01(g)(iii) hereof) and not
for any other purpose, including, without limitation, use of "Echelon" as a
trademark for the purpose of marketing or promoting any product or service.
2.11 By-Laws of the Surviving Corporation. The By-Laws of the
------------------------------------
Company, as in effect immediately prior to the Effective Time, shall be the By-
Laws of the Surviving Corporation until thereafter duly amended as provided by
law and such By-Laws.
2.12 Directors and Officers of the Surviving Corporation. At the
---------------------------------------------------
Effective Time, the directors of Sub immediately prior to the Effective Time
shall be the directors of the Surviving Corporation, each of such directors to
hold office, subject to the applicable provisions of the Articles of
Incorporation and By-Laws of the Surviving Corporation, until the next annual
shareholders' meeting of the Surviving Corporation and until their respective
successors shall be duly elected or appointed and qualified. At the Effective
Time, the officers of the Company immediately prior to the Effective Time shall,
subject to the applicable provisions of the Articles of Incorporation and By-
Laws of the Surviving Corporation, be the officers of the Surviving Corporation
until their respective successors shall be duly elected or appointed and
qualified; provided, that prior to the Effective Date the officers of the
Company shall have tendered their respective resignations (which resignations
shall be expressly conditional upon the consummation of the Merger and the
consummation of the transactions contemplated by the Real Estate Disposition
Agreements and thereafter automatically shall take effect without any further
act of the Surviving Corporation; provided, further that such officers shall
nevertheless remain authorized as provided in, and subject to the terms and
conditions of, the LandAmerica Escrow Agreement to authorize disbursements from
the escrow established thereby and for no other purpose).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of the Company. In connection
---------------------------------------------
with the transactions contemplated by this Agreement, the Company hereby
represents and warrants to Parent and Sub as follows:
(a) Due Organization, Good Standing and Power. Each of the Company
-----------------------------------------
and its Subsidiaries is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and each such
entity has all requisite corporate, partnership or limited liability company
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Except as set forth in Section 3.01(a) of the
Company Disclosure Letter (as defined in Section 6.14 hereof), each of the
Company and its Subsidiaries is duly qualified or licensed to do business and is
in good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary, except where such failure to be so qualified or
licensed and in good standing would not have a material adverse effect on the
business, results
-10-
<PAGE>
of operations or financial condition (collectively, but after giving effect to
the immediately succeeding provisos, the "Condition") of the Company and its
Subsidiaries taken as a whole; provided that, for purposes of this Agreement, in
no event shall any events, facts or circumstances (including any material
adverse effect) with respect to the Assets (including Assets acquired pursuant
to the provisions of Section 4.03), individually or in the aggregate, be deemed
to have a material adverse effect on the business, results of operations or
financial condition of the Company and its Subsidiaries taken as a whole, so
long as each of the Asset Disposition Agreements shall at all times be in full
force and effect and the purchase price or transfer value, as the case may be,
thereunder shall not have been reduced; provided, further, that, for purposes of
this Agreement, "material" shall mean material with respect to the Leveraged
Lease Portfolio taken as a whole and not with respect to the Company and its
Subsidiaries taken as a whole.
(b) Authorization and Validity of Agreement. The Company has the
---------------------------------------
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and, subject only to compliance with Section 607.1104
of the FBCA, to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement by the Company, and the consummation
by it of the transactions contemplated hereby, have been duly authorized by its
Board of Directors and no other corporate action on the part of the Company is
necessary to authorize the execution, delivery and performance of this Agreement
by the Company and the consummation of the transactions contemplated hereby
(other than (i) compliance with Section 607.1104 of the FBCA and (ii) the filing
and recordation of appropriate merger documents as required by the FBCA). This
Agreement has been duly executed and delivered by the Company and, assuming that
this Agreement constitutes a valid and binding obligation of Parent and Sub, is
a valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except to the extent that its enforceability may be
subject to applicable bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium and similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles.
(c) Capitalization. (i) The authorized capital stock of the Company
--------------
consists of 25,000,000 shares of Common Stock and 10,000,000 shares of preferred
stock of the Company ("Company Preferred Stock"), par value $0.01 per share (of
which 250,000 shares have been designated as Series A Junior Participating
Preferred Stock (the "Series A Junior Participating Preferred Stock")). As of
December 31, 1999, (1) 6,946,523 shares of Common Stock were issued, of which
6,719,938 were outstanding and 6,121 shares were canceled, (2) 514,340 shares of
Common Stock and no shares of Company Preferred Stock were reserved for issuance
pursuant to outstanding Options granted under the Stock Plans, (3) 220,464
shares of Common Stock and no shares of Company Preferred Stock were held in the
Company's treasury, (4) no shares of Company Preferred Stock were issued and
outstanding and (5) no shares of Common Stock and no shares of Company Preferred
Stock are held by any of the Company's Subsidiaries. All issued and outstanding
shares of Common Stock have been duly authorized, validly issued and are fully
paid and nonassessable and are not subject to, nor were they issued in violation
of, any preemptive rights. Except as set forth in this Section 3.01(c) or in
Section 3.01(c)(i) of the Company Disclosure Letter, (x) there are no shares of
capital stock of the
-11-
<PAGE>
Company authorized or, as of the date hereof, issued or outstanding and (y)
there are not as of the date hereof, and at the Effective Time there will not
be, any outstanding or authorized options, warrants, rights, subscriptions,
claims of any character, agreements, rights of redemption, convertible or
exchangeable securities, or other commitments, contingent or otherwise, relating
to Common Stock or any other shares of capital stock of the Company, pursuant to
which the Company is or may become obligated to issue shares of Common Stock,
any other shares of its capital stock or any securities convertible into,
exchangeable for, or evidencing the right to subscribe for, any shares of the
capital stock of the Company.
(ii) Section 3.01(c)(ii) of the Company Disclosure Letter lists all of
the Company's Subsidiaries. All of the outstanding shares of capital stock or
other equity interests of each of the Company's Subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable, are not subject
to, nor were they issued in violation of, any preemptive rights, and are owned,
of record and beneficially, by the Company or one of its direct or indirect
Subsidiaries, free and clear of all liens, encumbrances, options or claims
whatsoever except as set forth in Section 3.01(c)(ii) of the Company Disclosure
Letter. No shares of capital stock of any of the Company's Subsidiaries are
reserved for issuance and there are no outstanding or authorized options,
warrants, rights, subscriptions, claims of any character, agreements,
obligations, rights of redemption, convertible or exchangeable securities, or
other commitments, contingent or otherwise, relating to the capital stock of any
Subsidiary of the Company, pursuant to which such Subsidiary is or may become
obligated to issue any shares of capital stock of such Subsidiary or any
securities convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of such Subsidiary. Except for restrictions under
applicable law or as set forth in Section 3.01(c)(ii) of the Company Disclosure
Letter, there are no restrictions of any kind which prevent the payment of
dividends by any of the Company's Subsidiaries. Except for the Subsidiaries
listed in Section 3.01(c)(ii) of the Company Disclosure Letter, the Company does
not own, directly or indirectly, any capital stock or other equity interest in
any Person or have any direct or indirect equity or ownership interest in any
Person and neither the Company nor any of its Subsidiaries is subject to any
obligation or requirement to provide funds for or to make any investment (in the
form of a loan or capital contribution) to or in any Person.
(d) Consents and Approvals; No Violations. Assuming (i) any filings
-------------------------------------
required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), are made and any applicable waiting period thereunder
has been terminated or has expired, (ii) the requirements of the Exchange Act
relating to the Offer are met, (iii) the filing of the Articles of Merger and
other appropriate merger documents, if any, as required by the FBCA are made and
(iv) any required approval by the Company's shareholders in connection with the
consummation of the Merger is received, the execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby will not: (1) violate any provision of the Amended and
Restated Articles of Incorporation or By-Laws of the Company or the comparable
governing documents of any of its Subsidiaries, in each case, as amended; (2)
violate any law, statute, ordinance, rule, regulation, order or decree of any
court or of any governmental or regulatory body, agency or authority applicable
to the Company or any of its Subsidiaries or by which any of their respective
properties or assets may be bound; (3) except as set forth in Section 3.01(d) of
the Company Disclosure Letter, require any filing with,
-12-
<PAGE>
or permit, consent or approval of, or the giving of any notice to, any
governmental or regulatory body, agency or authority; or (4) except as set forth
in Section 3.01(d) of the Company Disclosure Letter, result in a violation or
breach of, conflict with, constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation,
payment, purchase, sale or acceleration) under, or result in the creation of any
lien, security interest, mortgage, charge or encumbrance (each, an
"Encumbrance") upon any of the properties or assets of the Company or any of its
Subsidiaries under, any of the terms, conditions or provisions of, any note,
bond, mortgage, indenture, license, franchise, permit, agreement, lease,
franchise agreement or other instrument or obligation to which the Company or
any of its Subsidiaries is a party, or by which it or any of their respective
properties or assets are bound except, in the case of clauses (2), (3) and (4)
above, for any such filing, permit, consent, approval, notice, the failure to
obtain or make which, and except for any breach, violation or Encumbrance which,
would not have a material adverse effect on the Condition of the Company and its
Subsidiaries taken as a whole or would not prevent consummation of the
transactions contemplated by this Agreement.
(e) Company Reports and Financial Statements. (i) Since December 18,
----------------------------------------
1996 the Company has filed all forms, reports and documents with the Commission
required to be filed by it pursuant to the federal securities laws and the
Commission rules and regulations thereunder, and all forms, reports and
documents filed with the Commission by the Company have complied in all material
respects with all applicable requirements of the federal securities laws and the
Commission rules and regulations promulgated thereunder. The Company has, prior
to the date of this Agreement, made available to Parent true and complete copies
of all forms, reports, registration statements and other filings filed by the
Company with the Commission since December 18, 1996 (such forms, reports,
registration statements and other filings, together with any exhibits, any
amendments thereto and information incorporated by reference therein, are
sometimes collectively referred to as the "Commission Filings"). Except to the
extent amended or superseded by a subsequent filing with the Commission made
prior to the date hereof, as of their respective dates, the Commission Filings
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated balance sheets (and related audited
consolidated statements of operations, audited consolidated statement of
shareholders' equity and audited consolidated statement of cash flows) for each
of the years in the two-year period ended December 31, 1998 and the unaudited
consolidated balance sheet (and related consolidated statement of operations,
consolidated statement of shareholders' equity and consolidated statement of
cash flows) as of September 30, 1999 (such statements, collectively, the
"Financial Statements"), included in the Commission Filings, were prepared in
accordance with generally accepted accounting principles ("GAAP") (as in effect
from time to time) applied on a consistent basis in all material respects,
(except as may be indicated therein or in the notes or schedules thereto) and
fairly present, in all material respects, the consolidated financial position of
the Company and its consolidated Subsidiaries as of the dates thereof and the
results of their operations and changes in cash flows for the periods then ended
(subject, in the case of unaudited statements, to the absence of notes and
normal year-end adjustments).
-13-
<PAGE>
(ii) Section 3.01(e)(ii) of the Company Disclosure Letter sets forth
the trial balance of the assets, liabilities and shareholders' equity accounts
of the Company and its consolidated Subsidiaries as of September 30, 1999. Each
such account reflected on the trial balance has been included in or allocated
between (a) the Company's leveraged lease portfolio and (b) the Company's real
estate portfolio, as agreed to by the parties hereto. Since September 30, 1999,
the Company has consistently allocated all of its known liabilities consistent
with the trial balance set forth on Section 3.01(e)(ii) of the Company
Disclosure Letter and in accordance with GAAP.
(iii) Section 3.01(e)(iii) of the Company Disclosure Letter sets
forth the condensed consolidated financial statements of the Company and its
consolidated Subsidiaries as of and for the three and nine month periods ended
September 30, 1999 together with the report of KPMG LLP dated October 15, 1999.
The balance sheet included in such condensed consolidated financial statements
was prepared from and is consistent with the trial balance referred to in
Section 3.01(e)(ii) above.
(f) Absence of Certain Changes. Except as previously disclosed in the
--------------------------
Commission Filings, as set forth in Section 3.01(f) of the Company Disclosure
Letter or as otherwise contemplated by this Agreement, since September 30, 1999
(i) there has not been any material adverse change in the Condition of the
Company and its Subsidiaries taken as a whole, in each case other than any
change (x) arising in the ordinary course of business, (y) arising out of
changes in general economic, regulatory or political conditions or (z) arising
out of changes which affect the markets in which the Company operates, in
general and (ii) the businesses of the Company and each of its Subsidiaries
(including, without limitation, with respect to the Leveraged Lease Portfolio
have been conducted only in the ordinary course.
(g) Title to Properties; Encumbrances. (i) Except as set forth in
---------------------------------
Section 3.01(g)(i) of the Company Disclosure Letter, the Company and each of its
Subsidiaries and each Relevant Entity (as defined in Section 3.01(g)(iii)
hereof) has good title to (A) all of its material tangible properties and assets
(real and personal), including, without limitation, all the properties and
assets reflected in the consolidated balance sheet as of September 30, 1999
except as indicated in the notes thereto and except for properties and assets
reflected in the consolidated balance sheet as of September 30, 1999 which have
been sold or otherwise disposed of in the ordinary course of business after such
date, and (B) all the material tangible properties and assets purchased by the
Company and any of its Subsidiaries and each Relevant Entity since September 30,
1999 except for such properties and assets which have been sold or otherwise
disposed of in the ordinary course of business; in each case subject to no
Encumbrance, except for (1) Encumbrances reflected in the consolidated balance
sheet as of September 30, 1999 (including the notes thereto), (2) Encumbrances
consisting of zoning or planning restrictions, easements, permits and other
restrictions or limitations on the use of real property or irregularities in
title thereto which do not materially detract from the value of, or materially
impair the use of, such property by the Company or any of its Subsidiaries in
the operation of its respective business, (3) statutory liens or liens of
landlords, carriers, warehousemen, mechanics, suppliers, materialmen or
repairmen arising in the ordinary course of business, (4) Encumbrances for
current taxes, assessments or governmental charges or levies on property not yet
due and delinquent and (5)
-14-
<PAGE>
such Encumbrances as would not have a material adverse effect on the Condition
of the Company and its Subsidiaries taken as a whole.
(ii) Leases. Section 3.01(g)(ii) of the Company Disclosure Letter
------
contains a list of all leases of real property (with an annual base rental
amount (not including variable payments) in excess of $50,000) to which the
Company or any of its Subsidiaries is a party (collectively, "Real Property
Leases"). To the Company's knowledge, except as set forth in Section
3.01(g)(ii) of the Company Disclosure Letter or as disclosed in the Commission
Filings, (1) each lease set forth in Section 3.01(g)(ii) of the Company
Disclosure Letter is in full force and effect, (2) all rents and additional
rents due to date on each such lease have been paid (other than for amounts not
exceeding $25,000 in the aggregate with respect to each such lease) and (3)
neither the Company nor any of its Subsidiaries has received written notice that
it is in default thereunder, except to the extent that the failure to be in full
force and effect or pay such rents or such default would not have a material
adverse effect on the Condition of the Company and its Subsidiaries taken as a
whole.
(iii) Leveraged Lease Portfolio. Section 3.01(g)(iii) of the Company
-------------------------
Disclosure Letter including the detailed sections referred to therein contains a
list of all leveraged and operating leases of personal property other than
personal property included in or underlying the Real Property Leases and certain
real property (collectively, the "Leveraged Lease Portfolio"), including all
material amendments, extensions and waivers thereto to which the Company or any
of its Subsidiaries, or the trust of which the Company or the relevant
Subsidiary of the Company is the beneficiary (such entity, the "Relevant
Entity"), is a party. Except as set forth in Section 3.01(g)(iii) of the
Company Disclosure Letter or as disclosed in the Commission Filings, (1) each
lease set forth in Section 3.01(g)(iii) of the Company Disclosure Letter is in
full force and effect and constitutes the valid and enforceable right and
obligation of the Relevant Entity and, to the Company's knowledge, the other
parties thereto and there are no amendments, extensions, or waivers of any of
the terms thereof, or agreements among the parties thereto to which the Relevant
Entity is also a party relating to any of such matters (including, without
limitation, residual sharing, tax sharing, remarketing or similar agreements)
that are not disclosed in Section 3.01(g)(iii) of the Company Disclosure Letter,
(2) there has not occurred any event which constitutes a default or event of
default by the Relevant Entity or, to the Company's knowledge, by the lessee
under any lease in the Leveraged Lease Portfolio or other default with respect
to the repair of, or modifications or improvements to, the assets subject to any
such lease (including with respect to any airworthiness directives or
manufacturer service bulletin) that is presently continuing, or, to the
Company's knowledge, any event of loss, casualty or similar occurrence
thereunder, (3) to the Company's knowledge, all rents and additional rents, or
amounts payable in lieu of or supplemental to rent, due to date under each such
lease have been paid, and there are no prepayments or overpayments of such rents
or amounts (other than with respect to the unexpired portion of any rent payment
period thereto paid in advance), (4) the Relevant Entity has not received
payment in respect of any indemnity obligation of any lessee thereunder,
including any tax indemnity, other than reimbursement of out-of-pocket expenses
related to the performance or enforcement of any term or condition of any such
lease, and no tax indemnity claim has been made by the Relevant Entity party
thereto under any such lease or related agreement and, to the Company's
knowledge, there is no basis for any such claim against
-15-
<PAGE>
any lessee, and (5) none of the Company, any of its Subsidiaries or, to the
Company's knowledge, any Relevant Entity has received written notice of (x) any
default or event which, with or without the giving of notice or the passage of
time or both, or otherwise, would constitute a default under any lease in the
Leveraged Lease Portfolio or any loan agreement, indenture or other financing
instrument related thereto, except such as has been cured within any applicable
grace period thereunder, (y) the exercise by any lessee of any purchase or
renewal option provided by any such lease or (z) the exercise by any lessee of
any early termination option provided therein or the assertion of any right or
claim by any lessee to cancel, terminate or modify any such lease. To the
Company's knowledge, there are no duplicate or executed original counterparts of
any lease in the Leveraged Lease Portfolio other than those marked "duplicate"
or a counterpart number other than the counterpart delivered to the holder of
any non-recourse debt with respect thereto and there exists no offset,
counterclaim, right of recoupment or abatement or other defenses to performance
or the payment of rent or other sums due thereunder by any lessee. All insurance
required to be maintained by the Company or any of its Subsidiaries or a
Relevant Entity under any agreement, instrument or indenture relating to the
Leveraged Lease Portfolio (including the insurance specified in Section 4.16
hereof) or, to the Company's knowledge, by any lessee with respect to any of the
property included in or underlying the Leveraged Lease Portfolio, is in full
force and effect and names the Company or the relevant Subsidiary of the Company
or the Relevant Entity as additional insureds and loss payees as their
respective interests appear.
(h) Compliance with Laws. Except as set forth in the Commission
--------------------
Filings or as set forth in Section 3.01(h) of the Company Disclosure Letter, the
Company and its Subsidiaries are in compliance with all applicable laws,
regulations, orders, judgments and decrees (including, without limitation, the
Federal Aviation Act and all rules and regulations promulgated thereunder)
(other than with respect to taxes, Environmental Laws (as defined in Section
3.01(p) hereof), employee benefits and federal securities laws, which are the
subject of specific representations contained in this Agreement), except in each
case where the failure to so comply would not have a material adverse effect on
the Condition of the Company and its Subsidiaries taken as a whole or would not
prevent or materially delay consummation of the transactions contemplated by
this Agreement.
(i) Litigation. Except as disclosed in the Commission Filings or as
----------
set forth in Section 3.01(i) of the Company Disclosure Letter, there is no
action, suit, proceeding at law or in equity, or any arbitration or any
administrative or other proceeding by or before (or to the knowledge of the
Company any investigation by) any governmental or other instrumentality or
agency, pending against the Company or any of its Subsidiaries, or by which any
of their properties or rights are subject, which, either individually or in the
aggregate, would have a material adverse effect on the Condition of the Company
and its Subsidiaries taken as a whole or would prevent or materially delay
consummation of the transactions contemplated by this Agreement. Except as
disclosed in the Commission Filings or as set forth in Section 3.01(i) of the
Company Disclosure Letter, neither the Company nor any of its Subsidiaries (nor
any of their respective assets) is subject to any judgment, order or decree
entered in any lawsuit or proceeding which would have a material adverse effect
on the Condition of the Company and its
-16-
<PAGE>
Subsidiaries taken as a whole or would prevent or materially delay consummation
of the transactions contemplated by this Agreement.
(j) Employee Benefit Plans. Each material employee benefit plan
----------------------
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), maintained by the Company and/or any of its
Subsidiaries or to which the Company or any such Subsidiary contributes
(collectively, the "Employee Benefit Plans") is listed in Section 3.01(j) of the
Company Disclosure Letter. Except as set forth in Section 3.01(j) of the
Company Disclosure Letter or disclosed in the Commission Filings, or to the
extent that any breach of the representations set forth in this sentence would
not have a material adverse effect on the Condition of the Company and its
Subsidiaries taken as a whole: (i) each Employee Benefit Plan is in compliance
with applicable law and has been administered and operated in all respects in
accordance with its terms; (ii) each Employee Benefit Plan which is intended to
be "qualified" within the meaning of Section 401(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), has received a favorable determination letter
from the Internal Revenue Service and, to the knowledge of the Company, no event
has occurred and no condition exists which would result in the revocation of any
such determination; (iii) no Employee Benefit Plan is covered by Title IV of
ERISA or subject to Section 412 of the Code or Section 302 of ERISA; (iv)
neither the Company nor any of its Subsidiaries, nor, to the Company's
knowledge, any other "disqualified person" or "party in interest" (as defined in
Section 4975(e)(2) of the Code and Section 3(14) of ERISA, respectively) has
engaged in any transactions in connection with any Employee Benefit Plan that
would result in the imposition of a penalty pursuant to Section 502(i) of ERISA
or a tax pursuant to Section 4975 of the Code; and (v) no claim, action or
litigation, has been made, commenced or, to the Company's knowledge, threatened
with respect to any Employee Benefit Plan (other than routine claims for
benefits payable in the ordinary course, and appeals of denials of such claims).
(k) Taxes. Except to the extent that the failure to do so would not
-----
have a material adverse effect on the Condition of the Company and its
Subsidiaries taken as a whole, the Company has filed or caused to be filed, or
will file or cause to be filed on or prior to the Effective Date, all federal,
state, local and foreign tax returns and tax reports (including, without
limitation, with respect to the acquisition, ownership or lease of any of the
assets included in or underlying the Leveraged Lease Portfolio) which are
required to be filed by, or with respect to, the Company on or prior to the
Effective Date (taking into account any extension of time to file granted to or
on behalf of the Company) (collectively, the "Returns"). Except as set forth in
Section 3.01(k) of the Company Disclosure Letter or disclosed in the Commission
Filings, and except to the extent that the failure to do so would not have a
material adverse effect on the Condition of the Company and its Subsidiaries
taken as a whole, all federal, state, local and foreign taxes ("Taxes") due and
payable by the Company on or prior to the Effective Date, including all amounts
shown to be due on any Return, have been, or prior to the Effective Date will
be, paid or fully provided for on the books and records of the Company in
accordance with GAAP. Except as set forth in Section 3.01(k) of the Company
Disclosure Letter, (a) there are no written waivers in effect of the applicable
statutory period of limitation for Taxes of the Company for any taxable period
and (b) no deficiency assessment or proposed adjustment with respect to any tax
liability of the Company for any taxable period is pending or, to the knowledge
-17-
<PAGE>
of the Company, threatened, except for such deficiency assessments or proposed
adjustments that would not have a material adverse effect on the Condition of
the Company and its Subsidiaries taken as a whole. Furthermore, there are no
outstanding requests by the Company or any of its Subsidiaries for any ruling of
the Internal Revenue Service including, without limitation, with respect to any
of the assets included in or underlying the Leveraged Lease Portfolio, and no
written notice has been received by the Company or any of its Subsidiaries of a
proposed reassessment of any Taxes.
(l) Liabilities. Neither the Company nor any of its Subsidiaries has
-----------
any material claims, liabilities or indebtedness outstanding which would be
required to be reflected on a balance sheet prepared in accordance with GAAP
except (i) as set forth in the Financial Statements, or referred to in the
footnotes thereto, (ii) as set forth in Sections 3.01(e)(ii) and 3.01(e)(iii) of
the Company Disclosure Letter, (iii) for liabilities incurred subsequent to
September 30, 1999, in the ordinary course of business, (iv) as otherwise
disclosed in the Commission Filings or (v) such claims, liabilities or
indebtedness which would not have a material adverse effect on the Condition of
the Company and its Subsidiaries taken as a whole.
(m) Intellectual Properties. Except as would not have a material
-----------------------
adverse effect on the Condition of the Company and its Subsidiaries taken as a
whole, as set forth in Section 3.01(m) of the Company Disclosure Letter or as
disclosed in the Commission Filings, to the knowledge of the Company, the
Company and its Subsidiaries own or have valid, binding and enforceable rights
to use all patents, trademarks, trade names, service marks, service names,
copyrights, applications therefor and licenses or other rights in respect
thereof ("Intellectual Property") used or held for use in connection with the
business of the Company or its Subsidiaries, without any known conflict with the
rights of others. Neither the Company nor any of its Subsidiaries has received
any notice in writing from any other Person pertaining to or challenging the
right of the Company or any of its Subsidiaries to use any Intellectual Property
or any trade secrets, proprietary information, inventions, know-how, processes
and procedures owned or used or licensed to the Company or its Subsidiaries,
except (i) as set forth in Section 3.01(m) of the Company Disclosure Letter or
(ii) with respect to rights the loss of which, individually or in the aggregate,
would not have a material adverse effect on the Condition of the Company and its
Subsidiaries taken as a whole.
(n) Material Contracts. Except as set forth in Section 3.01(n) of the
------------------
Company Disclosure Letter and except for (i) the Asset Disposition Agreements,
(ii) the Contracts (as defined in each of the Real Estate Disposition
Agreements) and (iii) any agreements, contracts and commitments that are to be
fully performed by the Company or any Subsidiary of the Company prior to the
Effective Time, neither the Company nor any Subsidiary of the Company has or is
bound by any agreement, contract or commitment that involves base payments or
the performance of services by it of an amount or value (as measured by the
revenue derived therefrom during fiscal year 1998-1999) in excess of $12,000
annually. Except as otherwise set forth in Sections 3.01(d) and 3.01(n) of the
Company Disclosure Letter, each contract or agreement set forth in Section
3.01(n) of the Company Disclosure Letter is in force and effect and (A) there
exists no default or event of default or event, occurrence, condition or act
(including the consummation of the Offer or the Merger) on the part of the
Company or any of its
-18-
<PAGE>
Subsidiaries which, with the giving of notice, the lapse of time or the
happening of any other event or condition, would become a default or event of
default thereunder, except for such default or event of default which would not
have a material adverse effect on the Condition of the Company and its
Subsidiaries taken as a whole and (B) no approval or consent of, or notice to,
any Person is needed in order that each such contract or agreement shall
continue in full force and effect in accordance with its terms without penalty,
acceleration or rights of early termination by reason of the consummation of the
transactions contemplated by this Agreement.
(o) Broker's or Finder's Fee. Except for Donaldson, Lufkin & Jenrette
------------------------
Securities Corporation (whose fees and expenses will be paid by the Company at
or prior to the Effective Time in accordance with the Company's agreement with
such firm), no agent, broker, Person or firm acting on behalf of the Company is,
or will be, entitled to any fee, commission or broker's or finder's fees from
any of the parties hereto, or from any Person controlling, controlled by, or
under common control with any of the parties hereto, in connection with this
Agreement or any of the transactions contemplated hereby.
(p) Environmental Laws and Regulations. Except as set forth in this
----------------------------------
Section 3.01(p), Section 3.01(p) of the Company Disclosure Letter or as
disclosed in the Commission Filings, or as would not have a material adverse
effect on the Condition of the Company and its Subsidiaries taken as a whole,
and to the knowledge of the Company:
(i) Hazardous Materials have not been generated, used,
treated or stored by the Company or its Subsidiaries on any Company
Property, except for quantities generated, used, treated or stored at
such Company Property in compliance with Environmental Laws and as
required in connection with the normal operations and maintenance of
such Company Property;
(ii) Hazardous Materials have not been Released or disposed
of by the Company or its Subsidiaries on any Company Property, except
for quantities Released or disposed of on such Company Property in
compliance with Environmental Laws and required in connection with the
normal operation and maintenance of such Company Property;
(iii) The Company and its Subsidiaries are in compliance
with Environmental Laws and the requirements of permits issued under
such Environmental Laws with respect to any Company Property;
(iv) There are no pending or threatened Environmental
Claims against the Company, any of its Subsidiaries or any Company
Property;
(v) There are no past or present actions, activities,
circumstances, conditions, events or incidents (including, without
limitation, the release, emission, discharge, presence or disposal of
any Hazardous Materials) which would form the basis for any
Environmental Claim against the Company or any of its Subsidiaries,
or, to the knowledge of the Company, against any Person
-19-
<PAGE>
whose liability for any Environmental Claim the Company or any its
Subsidiaries has retained or assumed whether contractually or by
operation of law;
(vi) The Company and its Subsidiaries have delivered or
otherwise made available for inspection to Parent true, complete and
correct copies and results of any reports, studies, analyses, tests or
monitoring in the possession of the Company or its Subsidiaries
pertaining to Hazardous Materials in, on, beneath or adjacent to any
Company Property; and
(vii) There are no underground storage tanks located on any
Company Property.
Radon is a naturally occurring radioactive gas that, when it has
accumulated in a building in sufficient quantities, may present health risks to
persons who are exposed to it over time ("Radon"). Levels of Radon that exceed
federal and state guidelines have been found in buildings in Florida.
Additional information regarding Radon and Radon testing may be obtained from
the local county public health unit.
As used in this Section 3.01(p), the following terms shall have the
meanings set forth below:
(1) "Company Property" means any real property and
improvements owned, leased (as lessee or lessor), operated or occupied
by the Company or any of its Subsidiaries at any time;
(2) "Hazardous Materials" means (a) any petroleum or
petroleum products, radioactive materials, asbestos in any form that
is friable, urea formaldehyde foam insulation and polychlorinated
biphenyls; (b) any chemicals, materials or substances defined as or
included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "extremely hazardous substances",
"restricted hazardous wastes", "toxic substances", "toxic pollutants",
or words of similar import, under any applicable Environmental Law and
(c) any other substance (other than Radon) prohibited or regulated
pursuant to the provisions of any Environmental Law;
(3) "Environmental Law" means any federal, state or local
statute, law, rule, regulation, ordinance, code, policy or rule of
common law in effect and in each case as amended as of the Effective
Date, and any judicial or administrative interpretation thereof as of
the Effective Date, including any judicial or administrative order,
consent decree or judgment, relating to the environment, health,
safety or Hazardous Materials, including the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended, 42 U.S.C. (S) 9601 et seq.; the Resource Conservation and
-- ----
Recovery Act, as amended, 42 U.S.C. (S) 6901 et seq.; the Federal
-- ----
Water Pollution Control Act, as amended, 33 U.S.C. (S) 1251 et seq.;
-- ----
the Toxic Substances Control Act, 15 U.S.C. (S) 2601 et seq.; the
-- ----
Clean Air Act, 42 U.S.C. (S) 7401 et seq.; the Safe Drinking
-- ----
-20-
<PAGE>
Water Act, 42 U.S.C. (S) 300f et seq.; the Oil Pollution Act of 1990,
-- ----
33 U.S.C. (S) 2701 et seq.; and their state and local counterparts and
-- ----
equivalents;
(4) "Environmental Claims" means administrative, regulatory
or judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, investigations or proceedings
relating in any way to any Environmental Law or any permit issued
under any such Environmental Law (hereafter "Claims"), including (a)
Claims by governmental or regulatory authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law and (b) Claims by any
third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from Hazardous
Materials or arising from alleged injury or threat of injury to
health, safety or the environment; and
(5) "Release" means disposing, discharging, injecting,
spilling, leaking, leaching, dumping, emitting, escaping, emptying,
seeping, placing and the like, into or upon any land or water or air,
or otherwise entering into the environment.
(q) State Takeover Statutes. The Board of Directors of the Company
-----------------------
has approved the Offer and this Agreement and Sections 607.0901 and 607.0902 of
the FBCA are inapplicable to the Offer and this Agreement and the other
transactions contemplated by this Agreement.
(r) Rights Agreement. Prior to the date of acceptance for payment and
----------------
immediately following payment to the paying agent designated in the Offer
Documents for not less than 80% of all the shares of Common Stock outstanding
(calculated on a fully diluted basis) in accordance with the Offer, the Company
and the Board of Directors of the Company shall have taken and will maintain in
effect all necessary action to (i) render the Rights Agreement inapplicable with
respect to the Offer and (ii) ensure that (y) neither Parent nor Sub nor any of
their Affiliates (as defined in the Rights Agreement) or Associates (as defined
in the Rights Agreement) is considered to be an Acquiring Person (as defined in
the Rights Agreement) and (z) the provisions of the Rights Agreement, including
the occurrence of a Distribution Date (as defined in the Rights Agreement), are
not and shall not be triggered by reason of the announcement or consummation of
the Offer. The Company has made available to Parent a complete and correct copy
of the Rights Agreement as amended and supplemented to the date of this
Agreement.
(s) Year 2000. There is not reasonably expected to be a material
---------
adverse effect on the Condition of the Company and its Subsidiaries taken as a
whole caused by the failure to be Year 2000 Compliant with respect to computer
systems, computer software or technology that are internal to the Company and
its Subsidiaries. There is not reasonably expected to be a material adverse
effect on the Condition of the Company and its Subsidiaries taken as a whole
caused by the failure to be Year 2000 Compliant of any products or services of
the Company or its Subsidiaries sold or licensed to customers of the Company and
its
-21-
<PAGE>
Subsidiaries. For purposes of this Agreement, "Year 2000 Compliant" means that a
product or system is (i) able to receive, record, store, process, calculate,
manipulate and output dates from and after January 1, 2000, time periods that
include January 1, 2000 and information that is dependent on or relates to such
dates or time periods, in the same manner and with the same accuracy,
functionality, data integrity and performance as when dates or time periods
prior to January 1, 2000 are involved and (ii) able to store and output date
information in a manner that is unambiguous as to century.
(t) Opinion of Financial Advisor. The Company has received the
----------------------------
opinion of Donaldson, Lufkin & Jenrette Securities Corporation to the effect
that, as of the date of this Agreement, the consideration to be received in the
Offer and the Merger by the Company's shareholders is fair to the Company's
shareholders from a financial point of view, and a complete and correct signed
copy of such opinion has been, or will be, delivered to Parent.
(u) Disclosure. The information contained in the Company Disclosure
----------
Letter as it relates to the representations and warranties made by the Company
in this Section 3.01 does not contain any untrue statement of a material fact.
(v) Distribution Agreement. To the Company's knowledge, (i) there are
----------------------
no outstanding claims against the Company or accrued obligations or accrued
liabilities of the Company of any nature whatsoever arising under the
Distribution Agreement, dated as of December 16, 1996 (the "Distribution
Agreement"), by and between Florida Progress Corporation, a Florida corporation,
and the Company, or under any Ancillary Agreement, in each case that have not
been satisfied in full and (ii) since December 16, 1996, there has been no claim
asserted by Florida Progress Corporation (or any Affiliate thereof) against the
Company (A) in respect of any Indemnifiable Losses of Florida Progress
Corporation (or any Affiliate thereof) or (B) in respect of any Third Party
Claim asserted against Florida Progress Corporation (or any Affiliate thereof).
Capitalized terms used in this Section 3.01(v) and not defined in this Agreement
shall have the respective meanings ascribed thereto in the Distribution
Agreement.
3.02 Representations and Warranties of Parent and Sub. Each of Parent
------------------------------------------------
and Sub represents and warrants to the Company as follows:
(a) Due Organization; Good Standing and Corporate Power. Parent is a
---------------------------------------------------
limited liability company duly organized and validly existing and in good
standing under the laws of its jurisdiction of organization. Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida. EIN Corp., a Delaware corporation and a direct wholly-
owned subsidiary of Parent ("Delaware Sub"), is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Each of Parent, Sub and Delaware Sub has all requisite power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted except where the failure to have such power and authority,
individually or in the aggregate, would not prevent or materially delay the
consummation of the transactions contemplated by this Agreement.
(b) Authorization and Validity of Agreement. Each of Parent and Sub
---------------------------------------
has the power and authority to execute and deliver this Agreement, to perform
its obligations hereunder
-22-
<PAGE>
and to consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement by Parent and Sub, and the consummation by
each of them of the transactions contemplated hereby, have been duly authorized
by the member and manager of Parent and the Board of Directors of Sub. No other
limited liability company or corporate action on the part of either of Parent or
Sub is necessary to authorize the execution, delivery and performance of this
Agreement by each of Parent and Sub and the consummation of the transactions
contemplated hereby (other than, in the case of Sub, the filing and recordation
of appropriate merger documents as required by the FBCA). This Agreement has
been duly executed and delivered by each of Parent and Sub and is a valid and
binding obligation of each of Parent and Sub, enforceable against each of Parent
and Sub in accordance with its terms, except that such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or other similar laws affecting creditors' rights
generally, and general equitable principles.
(c) Consents and Approvals; No Violations. Assuming (i) any filings
-------------------------------------
required under the HSR Act are made and any applicable waiting period thereunder
has been terminated or has expired, (ii) the requirements of the Exchange Act
relating to the Offer are met, and (iii) the filing of the Articles of Merger
and other appropriate merger documents, if any, as required by the FBCA, the
execution and delivery of this Agreement by Parent and Sub and the consummation
by Parent and Sub of the transactions contemplated hereby will not: (1) violate
any provision of the Certificate of Formation or Operating Agreement of Parent
or the Articles of Incorporation or By-Laws of Sub; (2) violate any law,
statute, ordinance, rule, regulation (including, without limitation, Regulations
T, U and X of the Board of Governors of the Federal Reserve System) or any
applicable order, writ, injunction or decree of any court or of any governmental
or regulatory body, agency or authority applicable to Parent or Sub or by which
either of their respective properties or assets may be bound; (3) require any
filing with, or permit, consent or approval of, or the giving of any notice to
any governmental or regulatory body, agency or authority; or (4) result in a
violation or breach of, conflict with, constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, or result in the creation of any
Encumbrance upon any of the properties or assets of Parent, Sub or any of their
subsidiaries under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, franchise, permit, agreement, lease or other
instrument or obligation to which Parent or Sub or any of their subsidiaries is
a party, or by which they or their respective properties or assets may be bound
except, in the cases of clauses (2), (3) and (4) above, for any such filing,
permit, consent, approval, the failure to obtain or make which, and except for
any breach, violation or Encumbrance which, would not prevent or materially
delay consummation of the transactions contemplated by this Agreement.
(d) Capitalization. (i) The authorized capital stock of Sub consists
--------------
of 1,000 shares of common stock, par value $.01 per share, of which 1,000 shares
are outstanding. All of the outstanding shares of common stock of Sub are
entitled to vote as a class and are owned of record by Parent.
(ii) The authorized capital stock of Delaware Sub consists of 1,000
shares of common stock, par value $.01 per share, of which 1,000 shares are
outstanding. All of the
-23-
<PAGE>
outstanding shares of common stock of Delaware Sub are entitled to vote as a
class and are owned of record by Parent.
(iii) Except as set forth above in this Section 3.02(d), Parent does
not own any shares of capital stock or other equity interests in any Person.
(e) Broker's or Finder's Fee. No agent, broker, Person or firm acting
------------------------
on behalf of Parent or Sub is, or will be, entitled to any fee, commission or
broker's or finder's fees from any of the parties hereto, or from any Person
controlling, controlled by, or under common control with any of the parties
hereto, in connection with this Agreement or any of the transactions
contemplated hereby.
(f) Financing. The Credit Agreement, dated as of January 21, 2000
---------
(the "Credit Agreement"), by and among Sub (as borrower), Utrecht-America
Finance Co., a Delaware corporation (as initial lender), and Cooperatieve
Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New York branch
(as agent), which upon the terms and subject to the conditions thereof provides
for up to $300,000,000 senior secured single draw term loan facility, has been
duly authorized, executed and delivered by each of the parties thereto. A true,
complete and correct copy of the Credit Agreement has been furnished to the
Company prior to the date hereof. The Credit Agreement has not been amended,
modified or supplemented in any way and is in full force and effect.
(g) Parent Not an Affiliated Shareholder. As of the date hereof, (i)
------------------------------------
neither Parent nor any of its Affiliates (as defined in Section 6.14 hereof) is,
with respect to the Company, an "interested shareholder" as such term is defined
in Section 607.0901 of the FBCA and (ii) Parent and its Affiliates collectively
do not hold directly or indirectly any outstanding voting shares of the Company.
(h) Size of Person. At all times prior to the Effective Time, none of
--------------
Parent, Sub, Delaware Sub or any "ultimate parent entity" (as such term is
defined in the regulations promulgated under the HSR Act), individually or
collectively, holds or owns assets, or has annual net sales, of $10,000,000 or
more (as calculated in accordance with the HSR Act (and the regulations
promulgated thereunder)).
(i) Capital Contributions; Cash On Hand; Special Purpose Entities.
-------------------------------------------------------------
(i) Parent has received at least $2,000,000 from new cash common equity
contributions by its sole member.
(ii) Parent has unrestricted and unutilized cash on hand in an amount
not less than $2,000,000.
(iii) Each of Parent, Sub and Delaware Sub was formed for the sole
purpose of effecting the transactions contemplated hereby and by the Omnibus
Agreement (as defined in Section 6.14 hereof) and, prior to the consummation
thereof, had no assets or liabilities except in connection with the transactions
contemplated hereby and thereby. Parent engages in no direct business
activities, other than (x) its ownership of the capital stock of Sub and
Delaware Sub and
-24-
<PAGE>
liabilities incident thereto and (y) its obligations with respect to this
Agreement and the Omnibus Agreement. Sub engages in no direct business
activities, other than its obligations with respect to this Agreement, the
Credit Agreement and the Omnibus Agreement. Delaware Sub engages in no direct
business activities, other than its obligations with respect to the Credit
Agreement and the Omnibus Agreement (upon giving effect to the provisions of
Section 4.19 hereof).
(j) Going Concern; Solvency. As of the Effective Time, both before
-----------------------
and after giving effect to the transactions contemplated hereby, as to each of
Parent, Sub, Delaware Sub and, to the best of Parent's knowledge with respect to
any liabilities or obligations (contingent or otherwise) of the Company and
otherwise without qualification, the Surviving Corporation, individually and
collectively, (i) all of such entity's known debts and obligations have been, or
will be, paid in full, (ii) the sum of such entity's debts is not greater than
such entity's assets at a fair valuation, (iii) such entity is generally paying
its debts as they become due and (iv) such entity has reasonably sufficient
capital to conduct its business, to engage in all contemplated transactions, and
to satisfy its debts, contingencies and obligations (including federal, state
and local income taxes) as they become due. None of Parent, Sub or Delaware Sub
actually intends, by consummating the transactions contemplated hereby, to
engage in a transaction void or voidable under Section 548(a)(1)(A) of Title 11
of the United States Code or the comparable provisions of any applicable state
statute (including, without limitation, Chapter 726 of the Florida Statutes).
ARTICLE IV
COVENANTS
4.01 Access to Information Concerning Properties and Records; Delivery
-----------------------------------------------------------------
of Financial Information. (a) During the period commencing on the date hereof
- - ------------------------
and ending on the Effective Date, the Company shall, and shall cause each of its
Subsidiaries to, upon reasonable notice, afford Parent and Sub, and their
respective counsel, accountants, consultants and other authorized
representatives, reasonable access during normal business hours to the
employees, properties, books and records of the Company and its Subsidiaries in
order that they may have the opportunity to make such investigations as they
shall desire of the affairs of the Company and its Subsidiaries (other than
relating to those Assets with respect to which no liability shall be retained by
the Surviving Corporation after giving effect to the transactions contemplated
by the Asset Disposition Agreements). The Company shall furnish promptly to
Parent and Sub (i) a copy of each report, schedule, registration statement and
other document filed by it or its Subsidiaries during such period pursuant to
the requirements of Federal or state securities laws and (ii) all other
information concerning its or its Subsidiaries' business, properties and
personnel as Parent and Sub may reasonably request. The Company agrees to cause
its officers and employees to furnish such additional financial and operating
data and other information and respond to such inquiries as Parent and Sub shall
from time to time reasonably request.
(b) On or prior to February 15, 2000, the Company shall deliver to
Parent a copy of all written information prepared by the Company with respect to
its fiscal year ended December 31, 1999 of the type which the Company
customarily prepares to initially deliver to its independent auditors (prior to
responding to any inquiries from its independent auditors) in
-25-
<PAGE>
connection with the preparation of the Company's financial statements in
accordance with GAAP for the end of a fiscal year of the Company.
(c) During the period commencing on the date hereof and ending on the
Effective Date, to the extent (and only to the extent) that the Company delivers
to its independent auditors any written information prepared by the Company
relating to the fiscal year ended December 31, 1999 or any prior period or
otherwise bearing upon the Condition of the Company and its Subsidiaries taken
as a whole, the Company shall, concurrently with such delivery of written
information to its independent auditors, deliver to Parent true and complete
copies of all such written information.
4.02 Confidentiality. Information obtained by Parent and Sub and
---------------
their respective counsel, accountants, consultants and other authorized
representatives pursuant to Section 4.01 hereof shall be subject to the
provisions of the Confidentiality Agreement, dated April 21, 1999, entered into
by and between Donaldson, Lufkin & Jenrette Securities Corporation, as agent for
the Company, and an agent for ETA Holding Corp., the manager of Parent.
4.03 Conduct of the Business of the Company Pending the Effective
------------------------------------------------------------
Date. The Company agrees that, except as permitted, required or contemplated
- - ----
by, or otherwise described in, this Agreement, the Company Disclosure Letter,
the Asset Disposition Agreements or otherwise consented to or approved by Parent
(which consent or approval shall not be unreasonably withheld, conditioned or
delayed), during the period commencing on the date hereof and ending on the
Effective Date:
(a) the Company and each of its Subsidiaries will conduct their
respective operations only according to their ordinary course of business
consistent with past practice and will use their reasonable best efforts to
preserve intact their respective business organization, keep available the
services of their officers and employees and maintain satisfactory relationships
with licensors, suppliers, distributors, clients, landlords, joint venture
partners, employees and others having business relationships with them;
(b) neither the Company nor any of its Subsidiaries shall: (i) make
any change in or amendment to its articles of incorporation or by-laws or
comparable governing documents; (ii) authorize for issuance, issue, sell or
deliver (or agree or commit to issue, sell or deliver), whether pursuant to the
issuance or granting of options, warrants, commitments, subscriptions, rights to
purchase or otherwise, any shares of its capital stock (other than in connection
with (A) the exercise of certain options outstanding on the date hereof or (B)
the exercise of subscription rights set forth in the Echelon International
Corporation 1996 Employee Stock Purchase Plan (as in effect on the date hereof
and as may be amended as contemplated by Section 2.09 of this Agreement)); (iii)
sell or pledge or agree to sell or pledge any stock owned by it in any of its
Subsidiaries or any other entity in which it has an equity interest; (iv) enter
into any contract or commitment with respect to capital expenditures; (v)
acquire (by merger, consolidation, or acquisition of stock or assets or
otherwise) any corporation, partnership or other business or division thereof
(or any interest therein); provided, that any subsidiary of the Company may be
-26-
<PAGE>
merged with and into the Company or any other Subsidiary of the Company; (vi)
cancel, amend or modify, in any material respect, any contract disclosed on
Section 3.01(n) of the Company Disclosure Letter or enter into any contract
that, if in effect on the date hereof, would be required to be set forth in the
Company Disclosure Letter; (vii) amend or modify any Real Estate Disposition
Agreement, or waive any term or condition thereunder, in each case in any manner
that (A) is adverse to Parent and Sub or (B) amends or modifies Schedule I to
either of the Real Estate Disposition Agreements; (viii) except as permitted by
the Asset Disposition Agreements, acquire any assets or securities; (ix) except
to the extent required under existing employee and director benefit plans,
agreements or arrangements as in effect on the date of this Agreement, (A)
increase the compensation or fringe benefits of any of its directors, officers
or employees, (B) grant any severance or termination pay not currently required
to be paid under existing severance plans, (C) enter into any employment,
consulting or severance agreement or arrangement with any present or former
director, officer or other employee of the Company or any of its Subsidiaries or
(D) establish, adopt, enter into or amend or terminate any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any directors, officers or employees; (x) except
in the ordinary course of business with respect to the Assets (including Assets
acquired pursuant to the provisions of this Section 4.03) only, subject to the
terms and conditions of the Asset Disposition Agreements and otherwise without
exception, transfer, lease, license, guarantee, sell, mortgage, pledge, dispose
of, encumber or subject to any lien, any material assets (including in any event
any asset subject to a lease in the Leveraged Lease Portfolio) or incur or
modify any indebtedness for borrowed money (other than for borrowings under
existing lines of credit and indebtedness for working capital in the ordinary
course of business); (xi) make any tax election or settle or compromise any tax
liability; (xii) except as required by applicable law or generally accepted
accounting principles, make any change in its method of accounting; (xiii) adopt
a plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any of
its Subsidiaries not constituting an inactive Subsidiary (other than in
connection with (A) the Merger or (B) any merger of a Subsidiary of the Company
with and into the Company or any other Subsidiary of the Company); (xiv) make
any loans, advances or capital contributions to, or investment in, any other
Person, other than to any direct or indirect Subsidiary of the Company; (xv)
declare, set aside or pay any dividends on, or make or cause to be made any
other distributions in respect of, any of its capital stock or other equity
securities or any interest in any Relevant Entity other than dividends and
distributions by a direct or indirect Subsidiary of the Company to its parent;
(xvi) split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; (xvii) enter into any agreement
providing for the acceleration of payment or performance or other consequence as
a result of the transactions contemplated hereby or any other change of control
of the Company; (xviii) purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any Subsidiary or any rights, warrants or
options to acquire any such shares or other securities; or (xix) agree, in
writing or otherwise, to take any of the foregoing actions; and
(c) the Company shall not, and shall not permit any of its
Subsidiaries to, (i) take any action, engage in any transaction or enter into
any agreement which would cause any of
-27-
<PAGE>
the representations or warranties set forth in Section 3.01 hereof to be untrue
as of the Effective Date or (ii) purchase or acquire, or offer to purchase or
acquire, any shares of capital stock of the Company.
Notwithstanding anything to the contrary set forth in this Agreement,
the Company and its Subsidiaries shall be permitted to conduct their respective
real estate operations (so long as same (x) relates only to the Assets
(including Assets acquired pursuant to the provisions of this Section 4.03) and
(y) would not result in any reduction to the purchase price or transfer value,
as the case may be, under any of the Asset Disposition Agreements), including,
without limitation, (i) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership, limited liability company or
other business or division thereof, (ii) enter into any contract or commitment
with respect to capital expenditures, (iii) cancel, amend or modify any
contract, (iv) acquire a material amount of assets or securities, (v) transfer,
lease, license, guarantee, sell, mortgage, pledge, dispose of, encumber or
subject to any lien, any material assets or incur or modify any indebtedness for
borrowed money, (vi) make any loans, advances or capital contributions to, or
investment in, any other Person and (vii) agree, in writing or otherwise, to
take any of the foregoing actions) as the Company or its Subsidiaries, as
applicable, shall deem necessary or desirable in its sole discretion.
4.04 Shareholder Approval. In the event that the Minimum Condition is
--------------------
satisfied, Parent and Sub agree to take all necessary and appropriate action to
cause the Merger to become effective as soon as reasonably practicable after the
completion of the Offer, without a meeting of the Company's shareholders, in
accordance with Section 607.1104 of the FBCA.
4.05 Reasonable Best Efforts. (a) Subject to the terms and
-----------------------
conditions provided herein, each of the Company, Parent and Sub shall, and
Parent shall cause Sub and the Company shall cause each of its Subsidiaries to,
cooperate and use their respective reasonable best efforts to take, or cause to
be taken, all appropriate action, and to make, or cause to be made, all filings
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including, without limitation, their respective reasonable best efforts to
obtain, prior to the Effective Date, all licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and
parties to contracts with the Company and its Subsidiaries as are necessary to
fulfill the conditions to the Offer.
(b) Subject to the terms and conditions provided herein, Parent (in
its capacity as holder of the capital stock of the Surviving Corporation) shall
take, or cause to be taken, all appropriate action necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by the Real Estate Disposition Agreements,
including, without limitation, executing and delivering any consents required
under applicable laws and regulations.
4.06 No Solicitation of Other Offers. (a) The Company and its
-------------------------------
affiliates and each of their respective officers, directors, employees,
representatives, consultants, investment bankers, attorneys, accountants and
other agents shall immediately cease any existing discussions
-28-
<PAGE>
or negotiations with any other parties that may be ongoing with respect to any
Acquisition Proposal (as defined below). Neither the Company nor any of its
affiliates shall take (and the Company and its affiliates shall not authorize or
permit any of its officers, directors, employees, representatives, consultants,
investment bankers, attorneys, accountants or other agents, to so take) any
action (i) to solicit, initiate or knowingly encourage the making of any
Acquisition Proposal or (ii) to have any discussions or negotiations with, or,
furnish or disclose any information to, any Person (other than Parent or Sub) in
furtherance of, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or is reasonably expected to lead to,
any Acquisition Proposal; provided, that, to the extent that the failure to take
such action would reasonably be likely to breach the fiduciary obligations of
the Board of Directors of the Company, as determined in good faith by a majority
of the disinterested members thereof based on the advice of outside counsel, the
Company may, in response to an Acquisition Proposal that was not solicited by
the Company and that did not otherwise result from a breach of this Section
4.06(a), furnish information with respect to the Company and its Subsidiaries to
any Person pursuant to a customary confidentiality agreement and participate in
discussions or negotiations with respect to any Acquisition Proposal.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw or modify in a manner adverse to Parent or Sub, the
approval of this Agreement or the recommendation by the Board of Directors or
any such committee of the Offer, (ii) approve any letter of intent, agreement in
principle, acquisition agreement or similar agreement relating to any
Acquisition Proposal, (iii) approve or recommend any Acquisition Proposal or
(iv) enter into any agreement with respect to any Acquisition Proposal.
Notwithstanding the foregoing, if the Company receives a Superior Proposal (as
defined below) and a majority of the disinterested directors of the Company
determine in good faith, based on the advice of outside counsel, that failure to
take such action would reasonably be likely to breach their fiduciary
obligations, the Board of Directors of the Company may, no sooner than three
Business Days following delivery to Parent of notice of such Superior Proposal
in compliance with Section 4.06(c), withdraw or modify its approval of this
Agreement or recommendation of the Offer and may take any other action otherwise
prohibited by this Section 4.06(b).
"Acquisition Proposal" shall mean any inquiry, proposal or offer from
any Person or group relating to any direct or indirect acquisition or purchase
of a substantial amount of assets of the Company or any of its Subsidiaries or
of all or any portion of any class of equity securities of the Company or any of
its Subsidiaries, any tender offer or exchange offer that if consummated would
result in any Person beneficially owning all or any portion of any class of
equity securities of the Company or any of its Subsidiaries, any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or any transaction having similar economic effect involving the Company or any
of its Subsidiaries, other than the transactions contemplated by this Agreement
and the Asset Disposition Agreements. "Superior Proposal" shall mean a bona
fide written proposal made by a third party to acquire all or substantially all
of the Company pursuant to a tender offer, exchange offer, a merger or other
business combination or a sale of all or substantially all of the assets of the
Company and its Subsidiaries on terms which a majority of the disinterested
members of the Board of Directors of the Company determines in
-29-
<PAGE>
their good faith reasonable judgment (after consultation with its financial
advisors and outside counsel) (i) would, if consummated, be superior to the
holders of Common Stock from a financial point of view than the Merger taking
into account all the terms and conditions of such Acquisition Proposal and this
Agreement and (ii) is reasonably capable of being completed.
(c) The Company promptly shall advise Parent orally and in writing of
any Acquisition Proposal and the identity of the Person making any such
Acquisition Proposal including any change to the material terms of any such
Acquisition Proposal or inquiry. The Company shall (i) keep Parent fully
informed of the status including any change to the terms of any such Acquisition
Proposal or inquiry and (ii) provide to Parent, as soon as practicable after
receipt or delivery thereof, copies of all correspondence and other written
material sent or provided to the Company from any third party in connection with
any Acquisition Proposal or sent or provided by the Company to any third party
in connection with any Acquisition Proposal.
(d) Nothing in this Section 4.06 shall prevent the Company or its
Board of Directors from taking and disclosing to the Company's shareholders a
position contemplated by Rule 14d-9 and Rule 14e-2 promulgated under the
Exchange Act with respect to any tender offer. Any actions permitted under, and
taken in compliance with, this Section 4.06 shall not be deemed a breach of any
other covenant or agreement of such party contained in this Agreement.
4.07 Notification of Certain Matters. The Company shall give prompt
-------------------------------
notice to Parent, and Parent and Sub shall give prompt notice to the Company, of
the occurrence, or failure to occur, of any event, which occurrence or failure
to occur would likely cause any representation or warranty contained in the
Agreement to be untrue in any material respect at any time from the date of this
Agreement to the Effective Time. Each of the Company and Parent shall give
prompt notice to the other party of any notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement.
4.08 HSR Act. The Company and Parent shall, as soon as practicable
-------
and in any event within ten Business Days from the date of this Agreement, file,
if required, Notification and Report Forms under the HSR Act with the Federal
Trade Commission (the "FTC") and the Antitrust Division of the Department of
Justice (the "Antitrust Division") and shall use their reasonable best efforts
to respond as promptly as practicable to all inquiries received from the FTC or
the Antitrust Division, including, without limitation, a request for additional
information or documentary material.
4.09 Employment Agreements. Immediately following the consummation of
---------------------
the Merger, the Company shall pay any and all amounts, to the extent then due
and payable (including as a result of the consummation of the Merger), under the
employment agreements between the Company and its employees (including, without
limitation, the senior officers) subject to no conditions other than the prior
or concurrent delivery by each such employee of a written statement to the
Company terminating his or her employment agreement with the Company effective
upon consummation of the Merger. It is understood and agreed that the
-30-
<PAGE>
employees (including, without limitation, the senior officers) party to the
employment agreements with the Company shall be third party beneficiaries of
this Section 4.09.
4.10 Directors' and Officers' Insurance; Indemnification. (a) The
---------------------------------------------------
Articles of Incorporation and the By-Laws of the Surviving Corporation shall
contain the provisions with respect to indemnification and exculpation from
liability set forth in the Company's Amended and Restated Articles of
Incorporation and By-Laws on the date of this Agreement, which provisions shall
not be amended, repealed or otherwise modified for a period of six years from
the Effective Time in any manner that would adversely affect the rights
thereunder of individuals who on or prior to the Effective Time were directors,
officers, employees or agents of the Company, unless such modification is
required by law.
(b) For six years from the Effective Time, the Surviving Corporation
shall either (x) maintain in effect the Company's current directors' and
officers' liability insurance covering those persons who are currently covered
on the date of this Agreement by the Company's directors' and officers'
liability insurance policy (a copy of which has been heretofore delivered to
Parent) (the "Indemnified Parties"); provided that the Surviving Corporation may
substitute for such Company policies, policies with at least the same coverage
containing terms and conditions which are no less advantageous and provided that
said substitution does not result in any gaps or lapses in coverage with respect
to matters occurring prior to the Effective Time or (y) cause Parent's
directors' and officers' liability insurance then in effect to cover those
persons who are covered on the date of this Agreement by the Company's
directors' and officers' liability insurance policy with respect to those
matters covered by the Company's directors' and officers' liability policy;
provided that the coverage provided by Parent's insurance shall be no less
favorable to the Indemnified Parties and shall provide no fewer rights than the
Company's directors' and officers' liability insurance policy currently in
place; provided, further, that in no event shall the Surviving Corporation be
required to expend pursuant to this Section 4.10(b) more than an amount per year
equal to 200% of the current annual premiums paid by the Company for such
insurance; provided, further, that if the annual premiums exceed such amount,
the Surviving Corporation shall be required to obtain a policy with the greatest
coverage available for a cost not exceeding such amount.
(c) It is understood and agreed that the directors, officers,
employees and agents of the Company immediately prior to the consummation of the
Offer shall be third party beneficiaries of this Section 4.10.
4.11 Guaranty of Performance. Parent hereby guarantees the
-----------------------
performance of Sub of its obligations under this Agreement and the obligations
of the Surviving Corporation under Sections 4.09 and 4.10 hereof. It is
understood and agreed that the third party beneficiaries of Sections 4.09 and
4.10 hereof shall also be third party beneficiaries of this Section 4.11.
4.12 Financing; Capital; Capitalization; Solvency; Going Concern. (a)
-----------------------------------------------------------
Parent and Sub shall, and shall cause their respective officers, directors,
employees, agents, affiliates, financial advisors and other representatives to,
use their reasonable best efforts to satisfy all conditions precedent set forth
in the Credit Agreement and, subject only to the simultaneous
-31-
<PAGE>
consummation of the transactions contemplated hereby, to incur the financing
provided thereby on the terms set forth therein in order to finance the
consummation of the transactions contemplated hereby. Except to the extent the
Company shall otherwise consent in writing, Sub will not amend, modify or
supplement in any material respect the terms or conditions of, or cancel or
waive any material right under, the Credit Agreement.
(b) Parent shall maintain at all times through the Effective Date
unrestricted and unutilized cash on hand in an amount not less than $2,000,000.
Parent shall cause the representations and warranties set forth in Section
3.02(i) hereof to be true in all respects at all times through the Effective
Date.
(c) The Surviving Corporation will, and Parent will cause the
Surviving Corporation to, file all income Tax returns for the current fiscal
year and pay all Taxes shown to be due thereon.
(d) Parent shall cause Delaware Sub (i) to be a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware (including after giving effect to the provisions of Section 4.19
hereof), (ii) to establish and maintain an office in the State of Delaware and
(iii) to refrain from establishing or maintaining an office in any of the States
of Alabama, Florida and Georgia. The Surviving Corporation will, and Parent
will cause the Surviving Corporation to, maintain its existence until at least
March 31, 2003.
4.13 Rights Agreement. Except to the extent permitted in accordance
----------------
with Section 4.06 hereof, the Company shall not (i) redeem the Rights, (ii)
amend (other than to delay the Distribution Date (as defined therein) or to
render the Rights inapplicable to the Offer and the Merger) or terminate the
Rights Agreement prior to the Effective Time without the consent of Parent,
unless required to do so by a court of competent jurisdiction or (iii) take any
action which would allow any Person (as such term is defined in the Rights
Agreement) other than Parent or Sub to be the Beneficial Owner (as such term is
defined in the Rights Agreement) of 15% or more of the Common Stock without
causing a Distribution Date (as such term is defined in the Rights Agreement) or
any event described in Section 11(a)(ii) or 13(a)(i)-(iv) of the Rights
Agreement to occur.
4.14 State Takeover Statutes. If any "fair price", "control share
-----------------------
acquisition", "moratorium", "interested shareholder" or other anti-takeover
statute, or similar statute or regulation, shall become applicable to this
Agreement, the Rights Agreement or any of the transactions contemplated hereby
or thereby (including, without limitation, the Offer), the Company and its Board
of Directors shall (subject always to applicable law and the fiduciary duties of
the Board of Directors) take all action necessary to ensure that the Offer and
the other transactions contemplated hereby and thereby may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise to
minimize the effect of such statute or regulation on the Offer and the other
transactions contemplated hereby and thereby.
4.15 No Other Representations or Warranties. Except for the
--------------------------------------
representations and warranties contained in Section 3.01 hereof, neither the
Company nor any other Person makes any other express or implied representation
or warranty on behalf of the Company or any
-32-
<PAGE>
of its affiliates. In particular, the Company makes no representation or
warranty to Parent or Sub with respect to (a) the information set forth in the
Confidential Information Memoranda and related materials previously distributed
by Donaldson, Lufkin and Jenrette Securities Corporation in connection with the
offering of the Company (except to the extent specifically incorporated by
reference in the Company Disclosure Letter) or (b) any financial projection or
forecast relating to the Company.
4.16 Insurance. Simultaneously with the execution and delivery
---------
hereof, the Company shall procure or cause to be procured, and shall maintain in
full force and effect for a period expiring no earlier than thirty (30) days
after the expiration of the Offer, insurance covering all risks of loss with
respect to the assets subject to any lease included in the Leveraged Lease
Portfolio, such insurance coverage to be as described in, and in the amounts set
forth in, Schedule I hereto; provided that Parent shall have paid to the Company
----------
in immediately available funds all costs (including, without limitation, all
premiums) and expenses of the Company (but only to the extent that such costs
and expenses exceed, in the aggregate, $10,000) in connection with procuring and
maintaining such insurance (it being expressly understood and agreed that in the
event of termination of this Agreement pursuant to Section 5.01 hereof, Parent
shall not be entitled to any refund or reimbursement of any amounts previously
paid by it to the Company as contemplated above).
4.17 Closing Certificate. On the Escrow Closing Date (as defined in
-------------------
the Real Estate Disposition Agreements), the Company shall deliver to Parent a
certificate of the Chief Financial Officer of the Company in the form attached
hereto as Exhibit F (the "Closing Certificate"). The Company shall pay to, and
---------
deposit with, the escrow agent under the LandAmerica Escrow Agreement for
disbursement in accordance with the terms and conditions thereof, a sum equal to
the aggregate transaction expenses listed on Schedule A to the Closing
Certificate, including the aggregate amount of all expenses itemized on such
Schedule A that are incurred (or to be incurred) by Persons other than the
Company (subject to the limitations set forth in Exhibit F hereto). Not later
---------
than 48 hours prior to the Escrow Closing Date, the Company shall provide Parent
with an itemized list of the transaction expenses to be listed on Schedule A to
the Closing Certificate along with any and all substantiation of such
transaction expenses.
4.18 Preclearance of Articles of Merger. Parent shall, as soon as
----------------------------------
reasonably practicable and in any event not later than five Business Days prior
to the initial expiration date of the Offer, (a) submit to the office of the
Department of State of the State of Florida draft Articles of Merger for the
purpose of preclearing such Articles of Merger for filing with the Florida
Department of State and shall use its reasonable best efforts to respond as
promptly as practicable to all inquiries or comments of the Florida Department
of State with respect thereto and shall make all such changes to the Articles of
Merger as shall be necessary to effect the filing thereof with the Florida
Department of State pursuant to Section 2.02 hereof and (b) submit to the office
of the Secretary of State of the State of Delaware a draft certificate of merger
relating to the merger of the Surviving Corporation with and into Delaware Sub
as contemplated by Section 4.19 hereof, for the purpose of preclearing such
certificate of merger for filing with the Delaware Secretary of State and shall
use its reasonable best efforts to respond as promptly as
-33-
<PAGE>
practicable to all inquiries or comments of the Delaware Secretary of State with
respect thereto and shall make all such changes to the certificate of merger as
shall be necessary to effect the filing thereof with the Delaware Secretary of
State pursuant to Section 4.19 hereof.
4.19 Merger of Surviving Corporation with and into Delaware Sub.
----------------------------------------------------------
Immediately following the earlier to occur of (i) the twelfth Business Day
following the completion of all transactions contemplated by the Asset
Disposition Agreements and (ii) the consummation of the purchase and sale
pursuant to the Omnibus Agreement of the beneficial interests in the trust
estates which own the aircraft bearing Federal Aviation Administration
Registration Numbers N14062, N79745 and N90070 (it being understood and agreed
that each of Parent and Sub has represented and warranted to the Company that
the Omnibus Agreement shall at all times contain provisions obligating each of
the parties thereto to use their respective best efforts to consummate such
purchase and sale of the beneficial interests in the trust estates as soon as
possible after the Effective Date, but in no event prior to the first Business
Day following the Effective Date; and each of Parent and Sub hereby covenants
(and shall cause each other party to the Omnibus Agreement to covenant in
writing for the benefit of the Company) that such provisions in the Omnibus
Agreement shall not be amended, modified or supplemented at any time prior to
the consummation of such purchase and sale of the beneficial interests in the
trust estates, in each case without the prior written consent of the Company),
Parent shall cause the Surviving Corporation to merge with and into Delaware Sub
and the separate corporate existence of the Surviving Corporation shall cease,
and Delaware Sub shall continue as the surviving corporation under the laws of
the State of Delaware under the name of "EIN Corp.", all in accordance with the
applicable provisions of the General Corporation Law of the State of Delaware
(the "DGCL"). Parent and the Surviving Corporation shall take, or cause to be
taken, all actions necessary, proper or advisable under applicable laws and
regulations (including, without limitation, the filing of this Agreement or a
certificate of merger or certificate of ownership and merger with the Secretary
of State of the State of Delaware, in such form as is required by, and executed
in accordance with, the relevant provisions of the DGCL) to make the merger
contemplated above in this Section 4.19 effective and the effect of such merger
shall be as provided in the applicable provisions of the DGCL. Upon
consummation of the merger contemplated above in this Section 4.19, (i) the
Articles of Incorporation of the Surviving Corporation, as in effect immediately
prior to the consummation of such merger, shall be the Certificate of
Incorporation of Delaware Sub until thereafter duly amended as provided by law
and such Certificate of Incorporation; provided, that such Certificate of
Incorporation shall at all times comply with the requirements set forth in
Section 4.10 hereof; provided, further, that such Certificate of Incorporation
may not at any time be amended to include any reference to the word "Echelon"
(or any similar words based thereon or derived therefrom) in the name of
Delaware Sub (it being hereby expressly acknowledged and agreed by the parties
hereto that neither Delaware Sub nor any Affiliate thereof shall have any
interest in, or right to use, the word "Echelon" (or any similar words based
thereon or derived therefrom) except as expressly set forth in Section 2.10
hereof), (ii) the By-Laws of the Surviving Corporation, as in effect immediately
prior to the consummation of such merger, shall be the By-Laws of Delaware Sub
until thereafter duly amended as provided by law and such By-Laws and (iii) all
references in this Agreement (other than this Section 4.19) to the Surviving
Corporation shall be deemed to be references to Delaware Sub. It is understood
and agreed that the directors, officers and
-34-
<PAGE>
shareholders of the Company immediately prior to the consummation of the Offer
shall be third party beneficiaries of this Section 4.19.
ARTICLE V
TERMINATION AND ABANDONMENT
5.01 Termination. This Agreement may be terminated and the Offer and
-----------
the other transactions contemplated hereby may be abandoned, at any time prior
to the Effective Time:
(a) by mutual consent of the Company, on the one hand, and of Parent
and Sub, on the other hand;
(b) by either Parent, on the one hand, or the Company, on the other
hand, if any governmental or regulatory agency shall have issued an order,
decree or ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the acceptance for payment of, or payment for, shares of
Common Stock pursuant to the Offer or the Merger and such order, decree or
ruling or other action shall have become final and nonappealable;
(c) by either Parent, on the one hand, or the Company, on the other
hand, if due to an occurrence or circumstance which would result in a failure to
satisfy any of the Tender Offer Conditions, Sub shall have failed to pay for
shares of Common Stock (and associated Rights) pursuant to the Offer within 90
days after commencement of the Offer (the "Outside Date"), unless such failure
to pay for shares of Common Stock (and associated Rights) shall have occurred
because of a material breach of any representation, warranty, obligation,
covenant, agreement or condition set forth in this Agreement on the part of the
party seeking to terminate this Agreement;
(d) by either Parent, on the one hand, or the Company, on the other
hand, if the Offer is terminated or (subject to Section 1.01(a) hereof) expires
in accordance with its terms without Sub having purchased any Common Stock
thereunder due to an occurrence which would result in a failure to satisfy any
of the conditions set forth on Annex A hereto; provided, that (i) Parent may not
-------
terminate this Agreement pursuant to this Section 5.01(d) if such failure shall
have been caused by or resulted from the failure of Parent or Sub to perform any
covenant or agreement of either of them contained in this Agreement or the
breach by Parent or Sub of any representation or warranty of either of them
contained in this Agreement and (ii) the Company may not terminate this
Agreement pursuant to this Section 5.01(d) if such failure shall have been
caused by or resulted from the failure of the Company to perform any covenant or
agreement contained in this Agreement or the breach by the Company of any
representation or warranty contained in this Agreement;
(e) by Parent, in the event of a breach by the Company of any
representation, warranty, covenant or agreement contained in this Agreement
which (A) would give rise to the occurrence of an event or condition set forth
in paragraph (d) or (f) of Annex A, (B) cannot or has not been cured prior to
-------
the earlier of (i) 15 days after the giving of written notice of such
-35-
<PAGE>
breach to the Company and (ii) two Business Days prior to the date on which the
Offer expires and (C) has not been waived by Parent pursuant to the provisions
hereof (it being expressly understood and agreed that no representation,
warranty, covenant (other than the covenant set forth in Section 4.17 hereof) or
agreement contained in this Agreement shall be deemed to be breached by the
Company or any of its Subsidiaries to the extent such representation, warranty,
covenant or agreement relates to the Assets (including Assets acquired pursuant
to the provisions of Section 4.03 hereof), so long as the Asset Disposition
Agreements shall at all times be in full force and effect and the purchase price
or transfer value, as the case may be, under each such agreement shall have not
been reduced in connection with any such breach of representation, warranty,
covenant or agreement contained in this Agreement);
(f) by the Company, if the Company receives a Superior Proposal and a
majority of the disinterested directors of the Company determine in good faith,
based on the advice of outside counsel, that a failure to terminate this
Agreement would be reasonably likely to breach their respective fiduciary
obligations; provided, that the Company shall have complied with its obligations
under Sections 4.06 and 5.02(b) hereof;
(g) by Parent, if the Company shall have received a Superior Proposal
and (i) the Board of Directors of the Company shall have withdrawn or modified
(including by amendment of the Schedule 14D-9) in a manner adverse to Parent or
Sub its approval or recommendation of the Offer, (ii) the Company or its Board
of Directors shall have approved, recommended or entered into an agreement with
respect to, or consummated the transactions contemplated by, any Acquisition
Proposal or (iii) the Board of Directors of the Company shall have resolved to
do any of the foregoing;
(h) by the Company, in the event of a breach by Parent or Sub of any
representation, warranty, covenant or agreement contained in this Agreement
which cannot or has not been cured within the earlier of (i) 15 days after the
giving of written notice of such breach to Parent and Sub and (ii) to the extent
applicable, two Business Days prior to the date on which the Offer expires,
except, in any case where such failures are not reasonably likely to affect
adversely Parent's or Sub's ability to complete the Offer;
(i) by the Company, if Parent or Sub shall have (i) failed to
commence the Offer within 5 days following the date of this Agreement, (ii)
terminated the Offer or (iii) failed to pay for shares of Common Stock pursuant
to the Offer on or prior to the earlier of (x) the fifth day after any shares of
Common Stock tendered in the Offer have been accepted for payment and (y) the
Outside Date, unless in the case of (i) or (ii) such failure shall have been
caused by the failure of the Company to satisfy the conditions set forth in
paragraph (d) or (f) of Annex A hereto;
-------
(j) by the Parent, at any time prior to Sub having accepted for
payment shares of Common Stock (and associated Rights) pursuant to the Offer, if
any of the Asset Disposition Agreements shall have been terminated and be of no
further force and effect; or
(k) by the Parent, at any time prior to Sub having accepted for
payment shares of Common Stock (and associated Rights) pursuant to the Offer, if
any Person (other than Parent
-36-
<PAGE>
or Sub) shall have acquired beneficial ownership (as defined in Rule 13d-3
promulgated under the Exchange Act) of more than 20% of the outstanding voting
securities of the Company or is granted an option or right to acquire more than
20% of such voting securities of the Company (as used in this clause (k),
"Person" shall include any corporation, person, partnership, trust, other entity
or group as defined in the Exchange Act).
5.02 Effect of Termination. (a) In the event of the termination of
---------------------
this Agreement pursuant to Section 5.01 hereof by Parent or Sub, on the one
hand, or the Company, on the other hand, written notice thereof shall forthwith
be given to the other party or parties specifying the provision hereof pursuant
to which such termination is made, and this Agreement shall become void and have
no effect, and there shall be no liability hereunder on the part of Parent, Sub
or the Company, except that Sections 4.02, 5.02, 6.01, 6.11 and 6.15 hereof
shall survive any termination of this Agreement. Nothing in this Section 5.02
shall relieve any party to this Agreement of liability for breach of this
Agreement. Any payment required to be made by Parent or Sub, on the one hand,
or the Company, on the other hand, pursuant to this Section 5.02 shall be made
by such party within three Business Days after receipt by it of notice from the
other party or parties, setting forth, in reasonable detail, (i) a description
of the event(s) giving rise to the payment obligation and (ii) calculation of
the payment obligation.
(b) (i) In the event of a termination of this Agreement pursuant to
Section 5.01(f), (g) or (k) hereof, the Company shall pay to Parent the sum of
$2,750,000 and the Company shall have no further liability to any other party
hereto and neither Parent nor Sub shall have any other remedy against the
Company hereunder except as provided in Section 5.02(b)(ii) below.
(ii) In the event of a termination of this Agreement pursuant to
Section 5.01(e), (f), (g), (j) or (k) hereof, in addition to the amounts payable
under Section 5.02(b)(i) above with respect to any termination of this Agreement
pursuant to Section 5.01(f), (g) or (k) hereof, the Company shall reimburse
Parent and Sub all of their reasonable out-of-pocket costs and expenses incurred
in connection with the Offer to Purchase, this Agreement and each of the
transactions contemplated hereby in the sum of up to $1,000,000 (subject to
providing reasonable documentation of such costs and expenses) and the Company
shall have no further liability to any other party hereto and neither Parent nor
Sub shall have any other remedy against the Company hereunder; provided, that,
notwithstanding the foregoing, in the event of a termination of this Agreement
pursuant to Section 5.01(j) hereof as a result of the termination of the
Subscription Agreement by the Company pursuant to Section 9.1(g) thereof, the
Company shall not be obligated to reimburse Parent or Sub any of their out-of-
pocket costs and expenses incurred in connection with the Offer to Purchase,
this Agreement or any of the transactions contemplated hereby.
(c) In the event of a termination of this Agreement by the Company
pursuant to Section 5.01(h) hereof, the Company's sole remedy shall be to
receive from Parent and/or Sub a sum equal to $2,750,000 as agreed and
liquidated damages, it being agreed that in such event the Company's actual
damages would be incapable of precise ascertainment and that the foregoing is a
reasonable estimate of such damages and neither Parent nor Sub shall have any
-37-
<PAGE>
further liability to any other party hereto. The obligations of Parent and Sub
pursuant to this Section 5.02(c) shall be joint and several.
ARTICLE VI
MISCELLANEOUS
6.01 Fees and Expenses. All costs and expenses incurred in connection
-----------------
with this Agreement and the consummation of the transactions contemplated hereby
shall be paid by the party incurring such costs and expenses.
6.02 Representations and Warranties. The respective representations
------------------------------
and warranties of the Company, on the one hand, and Parent and Sub, on the other
hand, contained herein or in any certificates or other documents delivered
pursuant hereto shall not be deemed waived or otherwise affected by any
investigation made by any party. Each and every such representation and
warranty shall expire with, and be terminated and extinguished by, the Effective
Time and thereafter none of the Company, Parent or Sub shall be under any
liability whatsoever with respect to any such representation or warranty. This
Section 6.02 shall have no effect upon any other obligation of the parties
hereto, whether to be performed before or after the Effective Time.
6.03 Extension; Waiver. At any time prior to the Effective Time, the
-----------------
parties hereto, by action taken by or on behalf of the respective Boards of
Directors of the Company, Parent or Sub, may (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein by any other applicable party or in any document, certificate or writing
delivered pursuant hereto by any other applicable party or (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. No waiver by a party of any breach of this Agreement or of any warranty
or representation hereunder by the other party will be deemed to be a waiver of
any other breach by such other party (whether preceding or succeeding and
whether or not of the same or similar nature), and no acceptance of payment or
performance by a party after any breach by the other party will be deemed to be
a waiver of any breach of this Agreement or of any representation or warranty
hereunder by such other party, whether or not the first party knows of such
breach at the time it accepts such payment or performance. No failure or delay
by a party to exercise any right it may have by reason of the default of the
other party will operate as a waiver of default or modification of this
Agreement or will prevent the exercise of any right by the first party while the
other party continues so to be in default.
6.04 Public Announcements. The Company, on the one hand, and Parent
--------------------
and Sub, on the other hand, agree to consult promptly with each other prior to
issuing any press release or otherwise making any public statement with respect
to the transactions contemplated hereby, and shall not issue any such press
release or make any such public statement prior to such consultation and review
by the other party of a copy of such release or statement; provided, that a
party may, without the prior consent of any other party, issue a press release
or make such
-38-
<PAGE>
public statement as may be required by law or any rule of or agreement with any
national securities exchange or automated quotation system to which Parent or
the Company is subject.
6.05 Notices. All notices, requests, demands, claims, waivers and
-------
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if delivered in
person or mailed, certified or registered mail with postage prepaid, or sent by
telex, telegram or telecopier, as follows:
(a) if to the Company, to it at:
Echelon International Corporation
450 Carillon Parkway, Suite 200
St. Petersburg, Florida 33716
Telecopier: (727) 803-8203
Attention: Darryl A. LeClair
with a copy to:
Echelon International Corporation
450 Carillon Parkway, Suite 200
St. Petersburg, Florida 33716
Telecopier: (727) 803-8203
Attention: Susan Glatthorn Johnson, Esq.
with a copy to:
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Telecopier: (212) 354-8113
Attention: William F. Wynne, Jr., Esq.
(b) if to Parent, Sub or the Surviving Corporation, to it at:
950 Third Avenue
New York, New York 10022
Telecopier: (212) 688-7908
Attention: James Haber
-39-
<PAGE>
with a copy to:
Brown Raysman Millstein Felder and Steiner LLP
120 West 45th Street
New York, New York 10036
Telecopier: (212) 840-2429
Attention: Robert M. Unger, Esq.
or to such other Person or address as any party shall specify by notice in
writing to each of the other parties. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the date of
delivery unless if mailed, in which case on the third Business Day after the
mailing thereof except for a notice of a change of address, which shall be
effective only upon receipt thereof.
6.06 Entire Agreement. This Agreement and the annex, schedules and
----------------
other documents referred to herein or delivered pursuant hereto, collectively
contain the entire understanding of the parties hereto with respect to the
subject matter contained herein and supersede all prior agreements and
understandings, oral and written, with respect thereto.
6.07 Binding Effect; Benefit; Assignment. This Agreement shall inure
-----------------------------------
to the benefit of and be binding upon the parties hereto and, with respect to
the provisions of Sections 4.09, 4.10, 4.11 and 4.19 hereof, shall inure to the
benefit of the Persons benefiting from the provisions thereof who are intended
to be third party beneficiaries thereof, and, in each such case, their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties.
Except as specified in the previous sentence, nothing in this Agreement,
expressed or implied, is intended to confer on any Person other than the parties
hereto or their respective successors and permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
6.08 Amendment and Modification. Subject to applicable law, this
--------------------------
Agreement may be amended, modified and supplemented in writing by the parties
hereto in any and all respects before the Effective Time (notwithstanding any
shareholder approval), by action taken by the respective Boards of Directors of
Parent, Sub and the Company or by the respective officers authorized by such
Boards of Directors; provided, however, that after any such shareholder
approval, no amendment shall be made which by law requires further approval by
such shareholders without such further approval.
6.09 Further Actions. Each of the parties hereto agrees that, subject
---------------
to its legal obligations, it will use its reasonable best efforts to fulfill all
conditions precedent specified herein, to the extent that such conditions are
within its control, and to do all things reasonably necessary to consummate the
transactions contemplated hereby.
-40-
<PAGE>
6.10 Headings. The descriptive headings of the several Articles and
--------
Sections of this Agreement are inserted for convenience only, do not constitute
a part of this Agreement and shall not affect in any way the meaning or
interpretation of this Agreement.
6.11 Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
6.12 Applicable Law. This Agreement and the legal relations between
--------------
the parties hereto shall be governed by and construed in accordance with the
laws of the State of New York, without regard to the conflict of laws rules
thereof.
6.13 Severability. If any term, provision, covenant or restriction
------------
contained in this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions
contained in this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
6.14 Certain Definitions. (a) The term "Affiliate" or "affiliate" of
-------------------
a specified Person means a Person who directly or indirectly through one or more
intermediaries controls, is controlled by, or is under common control with, such
specified Person. For purposes of this definition, "control" (including the
terms "controlled by" and "under common control with") means the possession,
directly or indirectly or as trustee or executor, of the power to direct or
cause the direction of the management and policies of a person, whether through
the ownership of voting securities, as trustee or executor, by contract or
credit arrangement or otherwise.
(b) The term "Business Day" or "business day" shall mean any day,
other than a Saturday, Sunday or a day on which banks located in New York, New
York shall be authorized or required by law to close.
(c) "Knowledge" or "known" Defined. When any representation or
warranty contained in this Agreement or in the Company Disclosure Letter is
expressly qualified by the knowledge of the Company, such knowledge shall mean
the actual knowledge of Darryl A. LeClair, W. Michael Doramus, Julio A. Maggi,
Larry J. Newsome, Susan G. Johnson, J. Mark Stroud, Thomas D. Wilson, Antonia P.
Williams, Timothy S. Tinsley or K. Brent Little; provided that, for avoidance of
doubt, the Company shall, for purposes of this Agreement, be deemed to have
knowledge of any factual matter of which Parent or Sub shall have notified the
Company in writing in accordance with the provisions of Section 6.05 hereof.
(d) The term "Person" or "person" shall mean and include an
individual, a partnership, a joint venture, a corporation, a person, a trust, a
limited liability company, an unincorporated organization, a group and a
government or other department or agency thereof.
(e) The term "Subsidiary", with respect to the Company, shall mean
and include (x) any partnership of which the Company or any Subsidiary is a
general partner or (y) any other entity in which the Company or any of its
Subsidiaries owns or has the power to vote
-41-
<PAGE>
50% or more of the equity interests in such entity having general voting power
to participate in the election of the governing body of such entity.
(f) The term "Company Disclosure Letter" shall mean the Company's
disclosure letter delivered by the Company to Parent and Sub concurrently with
the delivery of this Agreement.
(g) The term "Omnibus Agreement" shall mean the Omnibus Agreement,
dated as of January 21, 2000, between Sub and Heller Financial, Inc., a Delaware
corporation (as same is in effect on the date of this Agreement and thereafter,
as amended, modified or supplemented from time to time with the prior written
consent of the Company).
6.15 Transfer Taxes. All stamp, transfer, documentary, sales, use,
---------------
registration and other such taxes and fees (including any penalties and
interest) incurred in connection with this Agreement and the Offer
(collectively, the "Transfer Taxes") shall be paid by Sub, and Sub shall, at its
own expense, procure any stock transfer stamps required by, and properly file on
a timely basis all necessary tax returns and other documentation with respect
to, any Transfer Tax and provide to the Company evidence of payment of all
Transfer Taxes.
6.16 Waiver of Jury Trial. IN ANY CIVIL ACTION, COUNTERCLAIM OR
---------------------
PROCEEDING, WHETHER AT LAW OR IN EQUITY, WHICH ARISES OUT OF, CONCERNS, OR
RELATES TO THIS AGREEMENT, AND ANY AND ALL TRANSACTIONS CONTEMPLATED HEREUNDER,
THE PERFORMANCE HEREOF, OR THE RELATIONSHIP CREATED HEREBY, WHETHER SOUNDING IN
CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE, TRIAL WILL BE TO A COURT OF
COMPETENT JURISDICTION AND NOT TO A JURY. EACH PARTY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY. ANY PARTY MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE PARTIES HERETO OF THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
NEITHER PARTY HAS MADE OR RELIED UPON ANY ORAL REPRESENTATIONS TO OR BY ANY
OTHER PARTY REGARDING THE ENFORCEABILITY OF THIS PROVISION. EACH PARTY HAS READ
AND UNDERSTANDS THE EFFECT OF THIS JURY WAIVER PROVISION.
[SIGNATURE PAGE FOLLOWS]
-42-
<PAGE>
IN WITNESS WHEREOF, each of Parent, Sub and the Company have caused
this Agreement to be executed by their respective officers thereunto duly
authorized, all as of the date first above written.
ETA HOLDING LLC
By: ETA Holding Corp., its Manager
By:___________________________
Name:
Title:
EIN ACQUISITION CORP.
By:___________________________
Name:
Title:
ECHELON INTERNATIONAL CORPORATION
By:___________________________
Name:
Title:
<PAGE>
ANNEX A
-------
The capitalized terms used in this Annex A shall have the meanings set
-------
forth in the Agreement to which it is annexed, except that the term "Merger
Agreement" shall be deemed to refer to the Agreement to which this Annex A is
-------
appended and "Purchaser" shall be deemed to refer to Sub. ______________________
________________________________________________________________________________
Notwithstanding any other provision of the Offer, Purchaser shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act,
pay for any shares of Common Stock tendered pursuant to the Offer, and may
postpone the acceptance of and, subject to the restrictions referred to above,
payment for, any shares of Common Stock tendered pursuant to the Offer, if (i)
any applicable waiting period under the HSR Act shall not have expired or been
terminated or (ii) there shall not have been validly tendered and not properly
withdrawn prior to the expiration of the Offer (which shall not be earlier than
thirty (30) days after the mailing of the Offer Documents to the shareholders of
the Company) shares of Common Stock representing at least 80% of all the shares
of Common Stock outstanding (calculated on a fully diluted basis) (the "Minimum
Condition"). Additionally and without limiting the foregoing, notwithstanding
any other provision of the Offer, Purchaser shall not be required to accept for
payment or, subject to the restrictions referred to above, pay for any shares of
Common Stock, and may terminate or amend the Offer and may postpone the
acceptance of, subject to the restrictions referred to above, payment for shares
of Common Stock, if at any time on or after the date of the Merger Agreement and
at or before the time of payment for any such shares of Common Stock (whether or
not any shares of Common Stock have theretofore been accepted for payment or
paid for pursuant to the Offer) any of the following (other than the matters set
forth in clauses (i), (j) and (k) below, which shall only be determined
immediately prior to the expiration of the Offer) shall occur:
(a) there shall be any action taken by, or any law, statute, rule,
regulation, legislation, interpretation, judgment, order or injunction enacted,
enforced, promulgated, amended or issued by, any legislative body, court,
government or governmental, administrative
<PAGE>
Annex A
Page 2
or regulatory authority or agency, domestic or foreign, other than the routine
application of the waiting period provisions of the HSR Act to the Offer or to
the Merger, which is in effect and would (i) make illegal, impede, delay or
otherwise directly or indirectly restrain or prohibit the Offer or the Merger or
seeking to obtain material damages, (ii) prohibit or materially limit the
ownership or operation by Parent or Purchaser of all or any material portion of
the business or assets of the Company and its Subsidiaries taken as a whole or
to compel Parent or Purchaser to dispose of or hold separately all or any
material portion of the business or assets of Parent and its subsidiaries
(including Purchaser), taken as a whole, or the Company and its Subsidiaries,
taken as a whole, or seeking to impose any material limitation on the ability of
Parent or Purchaser to conduct its business or own such assets or to prohibit or
materially limit the ability of Purchaser to consummate the transactions
contemplated by the Asset Disposition Agreements or the Omnibus Agreement, (iii)
impose material limitations on the ability of Parent or Purchaser effectively to
exercise rights of ownership of the shares of Common Stock, including, without
limitation, the right to vote any shares of Common Stock acquired or owned by
Purchaser or Parent on all matters properly presented to the Company's
shareholders, (iv) require divestiture by Parent or Purchaser of any shares of
Common Stock or (v) materially and adversely affect the Condition of the Company
and its Subsidiaries taken as a whole;
(b) there shall have been issued any airworthiness directive by the
Federal Aviation Administration or any other governmental or regulatory body,
agency or authority having jurisdiction over the Company or the relevant asset,
or any manufacturer's service bulletin or similar document, in each case that
would result in an increase in the cost to the Company of maintaining, or
complying with any applicable rules, regulations or approved maintenance
programs with respect to, the assets subject to the leases in the Leveraged
Lease Portfolio, which increase in the cost to the Company would have a material
adverse effect on the Leveraged Lease Portfolio taken as a whole;
(c) any change (other than any change (x) arising in the ordinary
course of business, (y) arising out of changes in general economic, regulatory
or political conditions or (z) arising out of changes which affect the markets
in which the Company operates in general) shall have occurred that would have a
material adverse effect on the Leveraged Lease Portfolio taken as a whole;
(d) any of the representations or warranties made by the Company in
the Merger Agreement that are qualified by materiality shall be untrue or
incorrect, or any such representation and warranty that is not so qualified
shall be untrue or incorrect in any material respect, in each case as of the
date of the Merger Agreement and the expiration date of the Offer, except (i)
for changes specifically permitted by the Merger Agreement and (ii) that those
representations and warranties which address matters only as of a particular
date shall remain true and correct in all material respects, as of such date (it
being expressly understood and agreed that no representation or warranty made by
the Company in the Merger Agreement shall be deemed to be untrue or incorrect to
the extent such representation or warranty relates to the Assets (including
Assets acquired pursuant to the provisions of Section 4.03 of the Merger
Agreement), so long as each of the Asset Disposition Agreements shall at all
times be in full force and effect and the purchase price or transfer value, as
the case may be, under each such
<PAGE>
Annex A
Page 3
Asset Disposition Agreement shall have not been reduced in connection with any
such breach of representation, warranty, covenant or agreement contained in the
Merger Agreement);
(e) the Company's Board of Directors shall have withdrawn, modified
or amended in any respect adverse to Parent or Purchaser its recommendation of
the Offer and the Company shall have entered into an agreement providing for or
implementing an Acquisition Proposal, or shall have resolved to do any of the
foregoing;
(f) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the Merger
Agreement or under either of the Escrow Agreements (including the deposit of all
amounts to be deposited thereunder when and as required thereby);
(g) any Person (other than Parent or Sub) shall have acquired
beneficial ownership (as defined in Rule 13d-3 promulgated under the Exchange
Act) of more than 20% of the outstanding voting securities of the Company or is
granted an option or right to acquire more than 20% of such voting securities of
the Company (as used in this clause (g), "Person" shall include any corporation,
person, partnership, trust, other entity or group as defined in the Exchange
Act);
(h) any of the Merger Agreement or any Asset Disposition Agreement
shall have been terminated in accordance with their respective terms or
otherwise;
(i) either of the Escrow Agreements shall have been terminated by the
Company in accordance with their respective terms or otherwise;
(j) any condition precedent to the closing of the transactions
contemplated by the Purchase and Sale Agreement shall not have been satisfied or
waived or any closing document to be delivered on or prior to the closing of the
transactions contemplated thereby shall not have been irrevocably delivered,
together with the full amount of the purchase price in accordance with the terms
of the Purchase and Sale Agreement, to be held in escrow pending the
consummation of the Offer and the Merger;
(k) any condition precedent to the closing of the transactions
contemplated by the Subscription Agreement shall not have been satisfied or
waived or any closing document to be delivered on or prior to the closing of the
transactions contemplated thereby shall not have been irrevocably delivered,
together with the full amount of the transfer value in accordance with the terms
of the Subscription Agreement, to be held in escrow pending the consummation of
the Offer and the Merger; or
(l) there shall have occurred and be continuing one or more defaults
or events of default by the lessees party to the leases in the Leveraged Lease
Portfolio with respect to their respective obligations thereunder, which
defaults and events of default, individually or in the
<PAGE>
Annex A
Page 4
aggregate, would have a material adverse effect on the Leveraged Lease Portfolio
taken as a whole.
<PAGE>
EXHIBIT A
---------
FORM OF TAX CREDIT LP INTEREST PURCHASE AGREEMENT
-------------------------------------------------
(See Exhibit (d)(6) to the Schedule TO)
<PAGE>
EXHIBIT B
---------
FORM OF PURCHASE AND SALE AGREEMENT
-----------------------------------
(See Exhibit (d)(2) to the Schedule TO)
<PAGE>
EXHIBIT C
---------
FORM OF SUBSCRIPTION AGREEMENT
------------------------------
(See Exhibit (d)(3) to the Schedule TO)
<PAGE>
EXHIBIT D
---------
FORM OF LANDAMERICA ESCROW AGREEMENT
------------------------------------
<PAGE>
ESCROW AGREEMENT
----------------
ESCROW AGREEMENT, dated as of January 21, 2000 (this "Agreement"), by
and among ETA HOLDING LLC, a Delaware limited liability company ("Parent"), EIN
ACQUISITION CORP., a Florida corporation and a direct wholly-owned subsidiary of
Parent ("Sub"), ECHELON INTERNATIONAL CORPORATION, a Florida corporation (the
"Company"), and LANDAMERICA FINANCIAL GROUP, a Virginia corporation ("Escrow
Agent").
W I T N E S S E T H:
-------------------
WHEREAS, Parent, Sub and the Company have entered into an Agreement
and Plan of Merger, dated as of January 21, 2000 (the "Merger Agreement"), and
in connection with the transactions contemplated thereby, certain costs and
expenses, as described in the certificate of the Chief Financial Officer of the
Company to be delivered pursuant to Section 4.17 thereof (the "Closing
Certificate"), are expected to be incurred;
WHEREAS, it is a condition to the transactions contemplated by the
Merger Agreement that each of Parent, Sub and the Company shall have executed
and delivered this Agreement; and
WHEREAS, Parent, Sub and the Company desire to execute this Agreement
in order to satisfy the condition described in the preceding paragraph and, in
connection therewith, desire to appoint LandAmerica Financial Group as the
escrow agent hereunder, and
<PAGE>
LandAmerica Financial Group is willing to act as the escrow agent hereunder in
accordance with the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
Section 1. Definitions. Unless otherwise defined herein, terms which
-----------
are defined in the Merger Agreement, as in effect on the date hereof, and used
herein are so used as so defined.
Section 2. Filing of Articles of Merger. (a) Promptly upon
----------------------------
completion of the preclearing process contemplated in Section 4.18 of the Merger
Agreement with respect to the Articles of Merger, and in any event prior to the
date of acceptance for payment of the tendered shares of Common Stock (and
associated Rights) in accordance with the Offer, Parent shall cause Sub to
deliver the precleared Articles of Merger to Escrow Agent.
(b) On the date of acceptance for payment and immediately following
payment to the paying agent designated in the Offer Documents for not less than
80% of all the shares of Common Stock outstanding (calculated on a fully diluted
basis) in accordance with the Offer, Sub shall instruct Escrow Agent to file the
precleared Articles of Merger previously delivered to Escrow Agent with the
office of the Department of State of the State of Florida in the manner required
by Section 607.1105 of the Florida Business Corporation Act and Escrow Agent
agrees to effectuate such filing of the precleared Articles of Merger
immediately upon receipt by it of such instructions from Sub.
Section 3. Establishment of Escrow Account. On the Escrow Closing
-------------------------------
Date (as defined in the Real Estate Disposition Agreements), the Company shall
deliver to Escrow Agent
<PAGE>
cash in an amount not less than the aggregate amount of all transaction expenses
(both paid and accrued) set forth in the Closing Certificate (whether invoiced
or estimated), including the aggregate amount of all expenses itemized on
Schedule A to the Closing Certificate that are incurred (or to be incurred) by
any Person other than the Company (subject to the limitations set forth in
Exhibit F to the Merger Agreement) (the "Escrow Amount") and such cash shall be
- - ---------
accepted by Escrow Agent and placed into a separate interest-bearing escrow
account (the "Escrow Account") with an institution the deposits in which are
insured by an agency of the United States; provided that, interest accruing
thereon shall constitute part of the Escrow Amount. The Escrow Amount shall be
held and administered in accordance with the terms and conditions of this
Agreement. A form W-9 will be provided by the Company.
Section 4. Disbursements of the Escrow Amount. (a) Simultaneously
----------------------------------
with the consummation of the Merger, the Company shall cause written
instructions in the form attached as Exhibit A hereto to be delivered to Escrow
Agent with respect to all transaction expenses (other than those for which no
invoices have been provided). Within one Business Day after receipt of written
instructions in the form attached as Exhibit A hereto signed by any person
---------
identified on Exhibit B hereto (collectively, the "Authorized Persons"), Escrow
---------
Agent shall make a disbursement from the Escrow Account to the Persons, and in
such amounts, as specified in Schedule A to the Closing Certificate; provided
that in no event shall Escrow Agent make any disbursement from the Escrow
Account in an amount greater than the aggregate Escrow Amount. It is expressly
understood and agreed that (i) in no event shall the direction, instruction,
consent or approval of Parent, Sub or the Company be required in order to
authorize or make any disbursement from the Escrow Account in accordance with
the terms of this Section 4(a) and (ii) in no event shall the provisions of this
Agreement (including Exhibit B hereto) be amended,
---------
<PAGE>
modified or supplemented in any manner (A) to limit the authority of any of the
Authorized Persons to give disbursement instructions to Escrow Agent in
accordance with the terms of this Section 4(a) or (B) to grant any person (other
than the Authorized Persons as in effect on the date of this Agreement) any
authority to give disbursement instructions to Escrow Agent, in each case
without the prior written consent of (i) any of the Authorized Persons and (ii)
any of the officers of Parent whose signature appears on Exhibit B. Each of the
Authorized Persons shall be a third party beneficiary of this Section 4(a)
solely for the purpose of enforcing the terms of this Section 4(a) subsequent to
the Merger.
(b) In the event of a dispute between the parties hereto or between
the parties hereto and the Authorized Officers, Escrow Agent shall, in its
discretion, be entitled to transfer to a court of competent jurisdiction all
amounts then held in the Escrow Account and, upon such transfer and upon the
commencement of appropriate proceedings therein in the nature of interpleader,
the Escrow Account shall be deemed dissolved and this Agreement shall terminate.
Section 5. Termination of Escrow Account and Escrow Agreement.
--------------------------------------------------
Within one Business Day after the Closing Date (as defined in the Real Estate
Disposition Agreements), unless this Agreement shall have been previously
terminated pursuant to Section 4(b) hereof, Escrow Agent shall deliver to Sub
(or its successor) any and all amounts remaining in the Escrow Account and, upon
such delivery, the Escrow Account shall be deemed dissolved and this Agreement
shall terminate.
Section 6. Rights, Duties and Immunities of Escrow Agent. Acceptance
---------------------------------------------
by Escrow Agent of its duties under this Agreement is subject to the following
terms and conditions, which all parties to this Agreement hereby agree shall
govern and control the rights, duties and immunities of Escrow Agent:
<PAGE>
(a) The duties and obligations of Escrow Agent shall be determined
solely by the express provisions of this Agreement and Escrow Agent shall not be
liable except for the performance of such duties and obligations as are
specifically set forth in this Agreement.
(b) Escrow Agent shall not be responsible in any manner for the
validity or sufficiency of any property delivered hereunder, or for the value or
collectability of any note, check or other instrument so delivered, or for any
representations made or obligations assumed by any party other than Escrow
Agent. Nothing herein contained shall be deemed to obligate Escrow Agent to
deliver any cash, instruments, documents or any other property referred to
herein, unless the same shall have first been received by Escrow Agent pursuant
to this Agreement.
(c) Each of Parent, Sub and the Company, jointly and severally, will
indemnify Escrow Agent for, and hold it harmless against any loss, liability or
expense, including but not limited to counsel fees, incurred without bad faith,
gross negligence, fraud or intentional misconduct on the part of Escrow Agent
arising out of or in conjunction with its acceptance of, or the performance of
its duties and obligations under this Agreement as well as the costs and
expenses of defending against any claim or liability arising out of or relating
to this Agreement.
(d) Escrow Agent shall be fully protected in acting on and relying
upon any written notice, direction, request, waiver, consent, receipt or other
paper or documents which Escrow Agent in good faith believes to have been signed
and presented by the proper party or parties.
(e) Escrow Agent shall not be liable for any error of judgment, or for
any act done or step taken or omitted by it in good faith or for any mistake in
act or law, or for anything
<PAGE>
which it may do or refrain from doing in connection herewith, except its own bad
faith, gross negligence, fraud or intentional misconduct.
(f) Escrow Agent may seek the advice of legal counsel in the event of
any dispute or question as to the construction of any of the provisions of this
Agreement or its duties hereunder, and it shall incur no liability and shall be
fully protected in respect of any action taken, omitted or suffered by it in
good faith in accordance with the opinion of such counsel.
The parties hereto agree that should any dispute arise with respect to
the payment, ownership or right of possession of the Escrow Account, Escrow
Agent is authorized and directed to proceed in accordance with Section 4(b) or
retain in its possession, without liability to anyone, except for its bad faith,
willful misconduct or gross negligence, all or any part of the Escrow Account
until such dispute shall have been settled either by mutual agreement by the
parties concerned or by the final order, decree or judgment of a court or other
tribunal of competent jurisdiction in the United States, and a notice executed
by the parties to the dispute or their authorized representatives shall have
been delivered to Escrow Agent setting forth the resolution of the dispute.
Escrow Agent shall be under no duty whatsoever to institute, defend or partake
in such proceedings.
(g) The agreements set forth in Section 4(b) and this Section 6 shall
survive the termination of this Agreement and the payment of all amounts
hereunder.
Section 7. Resignation of Escrow Agent. Escrow Agent shall have the
---------------------------
right to resign upon 30 days written notice to Parent, the Company and the
Authorized Persons. In the event of such resignation, with the consent of the
Parent and the Authorized Persons, which consent shall not unreasonably be
withheld, the Parent and the Authorized Persons shall appoint a successor escrow
agent hereunder by delivering to Escrow Agent a written notice of such
<PAGE>
appointment. Upon receipt of such notice, Escrow Agent shall deliver to the
designated successor escrow agent all money and other property held hereunder
and shall thereupon be released and discharged from any and all further
responsibilities whatsoever under this Agreement. It is understood and agreed
that the Authorized Persons shall be third party beneficiaries of this Section 7
solely for the purpose of enforcing the terms of this Section 7 subsequent to
the Merger.
Section 8. Notices. All claims, notices and other communications
-------
hereunder to be effective shall be in writing and shall be deemed to have been
duly given when delivered by hand, or 5 days after being deposited in the mail
or sent by registered or certified first class mail postage prepaid, or, in the
case of facsimile transmission, when received and telephonically confirmed, in
each case addressed to the parties at the addresses set forth below (or to such
other person or address as the parties shall have notified each other and Escrow
Agent in writing; provided that notices of a change of address shall be
effective only upon receipt thereof):
(a) if to the Company or any of the Authorized Persons, to it or such
person at:
Echelon International Corporation
450 Carillon Parkway, Suite 200
St. Petersburg, Florida 33716
Telecopier: (727) 803-8203
Attention: Darryl A. LeClair
with a copy to:
Echelon International Corporation
450 Carillon Parkway, Suite 200
St. Petersburg, Florida 33716
Telecopier: (727) 803-8203
Attention: Susan Glatthorn Johnson, Esq.
<PAGE>
with a copy to:
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Telecopier: (212) 354-8113
Attention: William F. Wynne, Jr., Esq.
(b) if to Parent or Sub (or its successor), to it at:
950 Third Avenue
New York, New York 10022
Telecopier: (212) 688-7908
Attention: James Haber
with a copy to:
Brown Raysman Millstein Felder and Steiner LLP
120 West 45th Street
New York, New York 10036
Telecopier: (212) 840-2429
Attention: Robert M. Unger, Esq.
(c) if to Escrow Agent, to it at:
LandAmerica Financial Group
3922 Coconut Palm Drive, Suite 102
Tampa, Florida 33619
Telecopier: (813) 740-0595
Attention: Juanita M. Shuster
Section 9. Binding Effect. This Agreement shall inure to the benefit
--------------
of and be binding upon the parties hereto and, with respect to the provisions of
Sections 4(a) and 7 hereof, shall inure to the benefit of the Authorized Persons
who are intended to be third party beneficiaries thereof, and, in each such
case, their respective successors and permitted assigns,
<PAGE>
but neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto without the prior
written consent of the other parties.
Section 10. Amendments. This Agreement may be amended, modified or
----------
supplemented at any time or from time to time in writing executed by the parties
to this Agreement.
Section 11. Governing Law. This Agreement shall be governed by and
-------------
construed and enforced in accordance with the laws of the State of New York
applicable to contracts to be performed entirely within the State of New York,
without reference to or application of rules or principles of conflicts of law.
Section 12. Interpretation. The headings of the sections contained
--------------
in this Agreement are solely for convenience or reference and shall not affect
the meaning or interpretation of this Agreement.
Section 13. Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 14. Consent to Jurisdiction. Each of the parties hereto
-----------------------
hereby irrevocably agrees that any action, suit or proceedings against any of
them by any of the other aforementioned parties with respect to this Agreement
shall be brought before the exclusive jurisdiction of the federal or state
courts located in the Borough of Manhattan in the State of New York, unless all
the parties hereto agree in writing to any other jurisdiction. Each of the
parties hereto hereby submits to such exclusive jurisdiction.
<PAGE>
Section 15. Severability. If any provisions of this Agreement shall
------------
be declared by any court of competent jurisdiction illegal, void or
unenforceable, the other provisions shall not be affected, but shall remain in
full force and effect.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and the year first above written.
ETA HOLDING LLC
By: ETA Holding Corp., its Manager
By:___________________________
Name:
Title:
EIN ACQUISITION CORP.
By:___________________________
Name:
Title:
ECHELON INTERNATIONAL CORPORATION
By:___________________________
Name:
Title:
LANDAMERICA FINANCIAL GROUP
By:___________________________
Name:
Title:
<PAGE>
EXHIBIT A
---------
FORM OF WRITTEN INSTRUCTIONS
[Date]
LandAmerica Financial Group
3922 Coconut Palm Drive, Suite 102
Tampa, Florida 33619
Attention: Juanita M. Shuster
Re: Escrow Agreement, dated as of January 21, 2000 (the "Escrow Agreement"), by
and among ETA Holding LLC, EIN Acquisition Corp., Echelon International
Corporation and LandAmerica Financial Group, as Escrow Agent
---------------------------------------------------------------------------
The undersigned is an Authorized Person under the Escrow Agreement and is
authorized to give the disbursement instructions set forth below. Please make
the following disbursement via wire transfer from the Escrow Account to the
account listed below within one Business Day after your receipt of these
instructions:
Amount: $______________
Wiring Instructions: _______________
To: _______________
Account No.: _______________
Credit to: _______________
The foregoing disbursement is in [complete] [partial] satisfaction of the
Transaction Expense identified as Item ____ on Schedule I to the Escrow
----------
Agreement. The balance in the Escrow Account after giving effect to all
disbursements previously made from the Escrow Account and after giving effect to
the foregoing disbursement is $______________./1/
We appreciate your cooperation.
Very truly yours,
_____________________
Authorized Person
cc: James Haber (agent for ETA Holding LLC)
Robert M. Unger (Brown
__________________________
/1/ Must be greater than $0.
<PAGE>
EXHIBIT B
---------
PERSONS AUTHORIZED TO GIVE DISBURSEMENT INSTRUCTIONS
<TABLE>
<S> <C>
Name and Title Signature
-------------- ---------
Darryl A. LeClair,
Chairman, President and CEO ______________________
W. Michael Doramus,
Executive Vice President ______________________
Susan Glatthorn Johnson,
Senior Vice President ______________________
</TABLE>
PERSONS AUTHORIZED TO CONSENT TO MODIFICATIONS ON BEHALF OF PARENT
<TABLE>
<S> <C>
Name and Title Signature
-------------- ---------
James Haber,
President ______________________
ETA Holding Corp.,
Manager of ETA Holding LLC
Irwin Rosen,
Vice President ______________________
ETA Holding Corp.,
Manager of ETA Holding LLC
</TABLE>
<PAGE>
EXHIBIT E
---------
FORM OF RABOBANK ESCROW AGREEMENT
---------------------------------
<PAGE>
EXHIBIT E
CASH ESCROW AGREEMENT
---------------------
This CASH ESCROW AGREEMENT, dated as of January 21, 2000 (this
"Agreement"), among ETA HOLDING LLC, a Delaware limited liability company (the
"Parent"), EIN ACQUISITION CORP., a Florida corporation (together with any
successor by merger, the "Sub"), ECHELON INTERNATIONAL CORPORATION, a Florida
corporation (the "Company"), and COOPERATIEVE CENTRALE RAFFEISEN-BOERENLEENBANK
B.A., NEW YORK BRANCH, in its capacity as escrow agent, (the "Escrow Agent").
RECITALS
A. The Company, the Parent and Sub have entered into an Agreement and Plan of
Merger, dated January 21, 2000 (the "Merger Agreement"). Unless otherwise
defined herein, capitalized terms used shall have the meanings specified in the
Merger Agreement.
B. In order to facilitate the transaction contemplated by the Merger
Agreement, the Company has agreed to deposit into escrow cash, to be held and
distributed by the Escrow Agent in accordance with this Agreement, in an
aggregate amount (the "Escrow Fund") equal to the sum of:
(i) the difference between (A) the sum of the aggregate Offer Price plus
the aggregate Merger Consideration less (B) the sum of (1) the cash portion
----
of the Transfer Value and any Reduction in Transfer Value (each as defined
in the Subscription Agreement) plus (2) the Purchase Price (as defined in
----
the Purchase and Sale Agreement) plus (3) the aggregate Acquisition Price
----
set forth on Schedule 3 to, and as defined in, the Omnibus Agreement;
plus
----
(ii) the sum of (A) $7,000,000 plus (B) the aggregate amount of rent
payments received by the Company with respect to the Leveraged Lease
Portfolio during the period from February 1, 2000 through the Effective
Date.
C. The Escrow Agent will hold the Escrow Fund in escrow for the benefit of
the Sub and the Company.
AGREEMENT
Now, therefore, in consideration of the foregoing and the mutual agreements
contained herein and in the Merger Agreement, and intending to be legally bound
hereby, the parties hereby agree as follows:
1. Appointment and Agreement of Escrow Agent. The Company and the Sub
-----------------------------------------
hereby appoint the Escrow Agent to serve as, and the Escrow Agent hereby agrees
to act as, escrow agent upon the terms and conditions of this Agreement. Sub
shall pay all fees and expenses of the Escrow Agent for services to be rendered
by Escrow Agent hereunder.
2. Establishment of the Escrow Fund.
--------------------------------
(a) In accordance with terms of the Merger Agreement, simultaneously
with the consummation of the Merger, the Company shall deliver or cause to
be delivered to the Escrow Agent, the Escrow Fund. The Escrow Agent shall
hold the Escrow Fund in escrow pursuant to this Agreement.
(b) Each of Sub and the Company confirms to the Escrow Agent and to
each other that all amounts in the Escrow Fund are free and clear of all
Encumbrances (as defined below), except as may be created by this
Agreement.
"Encumbrances" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement or restriction of any kind
including, without limitation, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership.
3. Release from Escrow. Notwithstanding anything else to the contrary
-------------------
contained herein, in the Merger Agreement or in any other related document,
immediately following the filing of the Articles of Merger with respect to the
Merger with the Department of State of the State of Florida, the Escrow Agent
shall transfer, release and pay entire balance of the Escrow Fund to the Sub's
account with the Escrow Agent. If (i) the Purchase and Sale Agreement is
terminated pursuant to Section 9.1 thereof, or (ii) the Tender Offer Expiration
Date does not occur on or prior to the third Business Day after the date hereof,
the Escrow Fund shall be promptly transferred by Escrow Agent to the Company.
4. Assignment of Rights to the Escrow Fund: Assignment of Obligations;
-------------------------------------------------------------------
Successors. This Agreement may not be assigned by operation of law or otherwise
- - ----------
without the express written consent of the other parties hereto (which consent
may be granted or withheld in the sole discretion of such other parties);
provided, however, that it is expressly understood and agreed that (i) EIN
- - -------- -------
<PAGE>
Acquisition Corp. shall, upon the terms and subject to the conditions of the
Merger Agreement, be merged with and into Echelon International Corporation, a
Florida corporation, which, in turn, shall be merged with and into EIN Corp., a
Delaware corporation, each of which shall be bound by and become a party hereto
as and from the date of such respective mergers in accordance with applicable
law and (ii) the Sub may assign its rights under this Agreement to Utrecht-
America Finance Co. ("UAFC") and the other Lenders (as defined in the Credit
Agreement dated as of January 21, 2000 among Sub, UAFC and Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New York Branch, as
agent)(UAFC and the other Lenders, collectively referred to as the "Lender").
This Agreement shall be binding upon and inure solely to the benefit of the
parties hereto and their permitted assigns.
5. Liquidation of the Escrow Fund. Whenever the Escrow Agent shall be
------------------------------
required to make payment of the Escrow Fund, the Escrow Agent shall pay such
amounts by liquidating the investments of the Escrow Fund, as the case may be,
to the extent necessary to pay such amounts in full and in cash.
6. Maintenance of the Escrow Fund; Termination of the Escrow Fund. The
--------------------------------------------------------------
Escrow Agent shall continue to maintain the Escrow Fund, as the case may be,
until the earlier of (i) the time at which there shall be no funds in such
Escrow Fund or (ii) the termination of this Agreement.
7. Investment of Escrow Fund. The Escrow Agent shall invest and reinvest
-------------------------
moneys on deposit in the Escrow Fund, in any combination of the following: (a)
readily marketable direct obligations of the Government of the United States or
any agency or instrumentality thereof or readily marketable obligations
unconditionally guaranteed by the full faith and credit of the Government of the
United States, (b) insured certificates of deposit of, or time deposits with,
any commercial bank that is a member of the Federal Reserve System and which
issues (or the parent of which issues) commercial paper rated as described in
clause (c), is organized under the laws of the United States or any State
thereof and has combined capital and surplus of at least $1 billion or (c)
commercial paper in an aggregate amount of no more than $1,000,000 per issuer
outstanding at any time, issued by any corporation organized under the laws of
any State of the United States, rated at least "Prime 1 " (or the then
equivalent grade) by Moody's Investors Services, Inc. or "A 1 " (or the then
equivalent grade) by Standard & Poors, Inc. It is agreed for federal income tax
purposes that the parties herein shall treat the Escrow Fund as a grantor trust
established by Sub. The Interest shall be included on Sub's tax return as it is
earned by the Escrow Fund in accordance with Sub's method of tax accounting.
8. Escrow Agent.
------------
(a) Except as expressly contemplated by this Agreement or by written
instructions from the Company, the Sub and their permitted assigns, the
Escrow Agent shall not deliver any funds constituting the Escrow Fund,
except pursuant to an order of a court of competent jurisdiction.
(b) The duties and obligations of the Escrow Agent shall be determined
solely by this Agreement, and the Escrow Agent shall not be liable except
for the performance of such duties and obligations as are specifically set
forth in this Agreement.
(c) In the performance of its duties hereunder, the Escrow Agent shall
be entitled to rely upon any document, instrument or signature believed by
it in good faith to be genuine and signed by any party hereto or an
authorized officer or agent thereof, and shall not be required to
investigate the truth or accuracy of any statement contained in any such
document or instrument. The Escrow Agent may assume that any Person
purporting to give any notice in accordance with the provisions of this
Agreement has been duly authorized to do so.
(d) The Escrow Agent shall not be liable for any error of judgment, or
any action taken, suffered or omitted to be taken, hereunder except in the
case of its negligence, bad faith or willful misconduct. The Escrow Agent
may consult with counsel of its own choice (including in-house counsel) and
shall have full and complete authorization and protection for any action
taken or suffered by it hereunder in good faith and in accordance with the
opinion of such counsel.
(e) The Sub and the Company shall reimburse and indemnify the Escrow
Agent for, and hold it harmless against, any loss, liability or expense,
including, without limitation, reasonable attorneys' fees, incurred without
negligence, bad faith or willful misconduct on the part of the Escrow Agent
arising out of, or in connection with the acceptance of, or the performance
of, its duties and obligations under this Agreement.
(f) The Escrow Agent may at any time resign by giving twenty business
days' prior written notice of resignation to the Sub and the Company. The
Sub and the Company may, with the consent of their permitted assigns, at
any time jointly remove the Escrow Agent by giving ten business days'
written notice signed by each of them to the Escrow Agent. If the Escrow
Agent shall resign or be removed, a successor Escrow Agent, which shall be
a bank or trust company having its principal executive offices in New York
and assets in excess of $1.5 billion, and which shall be reasonably
acceptable to the Sub and their permitted assigns, shall be appointed by
the Company by written instrument executed by the Company and delivered to
the Escrow Agent and to such successor Escrow Agent and, thereupon, the
resignation or removal of the predecessor Escrow Agent shall become
effective and such successor Escrow Agent, without any further act, deed or
conveyance, shall become vested with all right, title and interest to all
cash and property held hereunder of such predecessor Escrow Agent. If no
<PAGE>
successor Escrow Agent shall have been appointed within twenty business
days of a notice of resignation by the Escrow Agent, the Escrow Agent's
sole responsibility shall thereafter be to hold the Escrow Fund until the
earliest of (i) its receipt of designation of a successor Escrow Agent,
(ii) its receipt of a written instruction by the Sub, the Company and their
permitted assigns or (iii) termination of this Agreement in accordance with
its terms.
9. Termination. This Agreement shall terminate on the earlier date (i) on
-----------
which all funds in the Escrow Fund have been delivered pursuant to the terms
hereof or (ii) the Sub, the Company, their permitted assigns and the Escrow
Agent agree in writing to terminate this Agreement.
10. Notices. All notices, requests, claims, demands and other
-------
communications delivered hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by cable, by telecopy, by telegram or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
7):
(a) if to the Sub, at its address set forth in the Merger Agreement.
(b) if to the Company, at its address set forth in the Merger Agreement.
(c) if to the Escrow Agent:
245 Park Avenue
New York, NY 10167-0062
Fax: (212) 808-2585
Attention: Chris Kortlandt
11. Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance with, the laws of the State of New York applicable to contracts
executed and to be performed entirely within that State without giving effect to
principles thereof relating to conflicts of law rules that would direct the
application of the laws of another jurisdiction.
12. Amendments. This Agreement may not be amended or modified except (a)
----------
by an instrument in writing signed by, or on behalf of, the Sub, the Company,
their permitted assign and the Escrow Agent or (b) by a waiver in accordance
with Section 10 of this Agreement.
13. Waiver. Any party hereto may (i) extend the time for the performance
------
of any obligation or other act of any other party hereto or (ii) waive
compliance with any agreement or condition contained herein. Any such extension
or waiver shall be valid only if set forth in an instrument in writing signed by
the party or parties to be bound thereby. Any waiver of any term or condition
shall not be construed as a waiver of any subsequent breach or a subsequent
waiver of the same term or condition, or a waiver of any other term or
condition, of this Agreement. The failure of any party to assert any of its
rights hereunder shall not constitute a waiver of any of such rights.
14. Severability. If any term or other provision of this Agreement is
------------
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic and legal substance of
the transactions contemplated by this Agreement is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated by this Agreement be consummated as
originally contemplated to the fullest extent possible.
15. Entire Agreement. This Agreement constitutes the entire agreement of
----------------
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and undertakings, both written and oral, among the Sub, the
Company and the Escrow Agent with respect to the subject matter hereof.
16. No Third Party Beneficiaries. Except with respect to permitted
----------------------------
assigns, this Agreement is for the sole benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other person or entity any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.
17. Headings. The descriptive headings contained in this Agreement are
--------
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
18. Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by different parties hereto in separate counterparts, each of
which when duly executed shall be deemed to be an original but all of which when
taken together shall constitute one and the same agreement.
<PAGE>
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
In witness whereof, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
EIN ACQUISITION CORP.
By:
-----------------------------------------
Name:
Title:
ETA HOLDING LLC
By:
-----------------------------------------
Name:
Title:
ECHELON INTERNATIONAL CORPORATION
By:
-----------------------------------------
Name:
Title:
COOPERATIEVE CENTRALE RAFFEISEN-BOERENLEENBANK
B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH
By:
-----------------------------------------
Name:
Title:
By:
-----------------------------------------
Name:
Title:
<PAGE>
EXHIBIT F
---------
FORM OF CLOSING CERTIFICATE
---------------------------
ECHELON INTERNATIONAL CORPORATION
CLOSING CERTIFICATE
I, the undersigned, Chief Financial Officer of Echelon International
Corporation, do hereby certify, solely in my capacity as an officer of the
Company and not in my individual capacity, on behalf of the Company, to the best
of my knowledge, that the following is true and complete, as of the Effective
Date:
1. Unrestricted Cash in Company: $ ____________/1/
2. Proceeds from Purchase and Sale Agreement: $ ____________/2/
3. Proceeds from Subscription Agreement: $ ____________/3/
4. Assumed Proceeds: $ ____________/4/
- - ----------------------------------------------------------------
5. Total Cash Available: $ ____________
Less:
- - ----
1. Transaction Expenses Paid: $ (____________) (See attached schedule)
2. Transaction Expenses Accrued: $ (____________) (See attached schedule)
- - --------------------------------------------------------
3. Total Transaction Expenses: $ (____________)/5/
Equal:
- - -----
1. Net Cash (including Tender
Consideration): $ ____________/6/
<PAGE>
Exhibit F
Page 2
Endnotes:
- - --------
/1/ This amount shall, in any event, include (i) the aggregate amount of funds
to be deposited in escrow under the LandAmerica Escrow Agreement and (ii)
the aggregate amount of funds to be deposited in escrow under the Rabobank
Escrow Agreement.
/2/ Assume consummation of the transactions set forth in the Purchase and Sale
Agreement as of the date of this certificate, including the application of
a credit against the purchase price under the Purchase and Sale Agreement
in an amount equal to the Excess Cash Amount (as defined in the Purchase
and Sale Agreement).
/3/ Assume consummation of the transactions set forth in the Subscription
Agreement as of the date of this certificate.
/4/ Parent has represented to the Company that, for purposes of this
certificate, the amount of the Assumed Proceeds shall be $130,258,531
(which amount is a fixed amount and not subject to any downward adjustment
for any reason whatsoever) and the Company (including the officer of the
Company executing this certificate) shall be entitled to rely, and shall be
fully protected (and shall have no liability to any Person) in relying,
upon such representation of Parent.
/5/ It is agreed among the parties to the Merger Agreement that, for purposes
of calculating Transaction Expenses (both paid and accrued), (i) the
aggregate amount of any and all Transaction Expenses incurred (or to be
incurred) by any party other than the Company as set forth on Schedule A to
----------
this certificate shall be capped at $1,200,000, (ii) if certain Transaction
Expenses have not yet been incurred as of the date of this certificate,
good-faith estimates of such Transaction Expenses shall be used and (iii)
Transaction Expenses shall include, but not be limited to, all expenses of
the type itemized on Schedule A to this certificate (including, without
----------
limitation, payment of the Cash Payment required by Section 2.09 of the
Merger Agreement, payment of the fees and expenses of Donaldson, Lufkin &
Jenrette Securities Corporation pursuant to Section 3.01(o) of the Merger
Agreement and payment of any amounts required to be paid pursuant to
Section 4.09 of the Merger Agreement).
/6/ This amount shall be equal to the sum of (i) $233,528,672 plus (ii) the
----
aggregate amount of rent payments, whether in arrears or in advance,
actually received by the Company with respect to the Leveraged Lease
Portfolio during the period from February 1, 2000 through the Effective
Date.
<PAGE>
Exhibit F
Page 3
SCHEDULE A TO CLOSING CERTIFICATE
---------------------------------
LIST OF TRANSACTION EXPENSES
----------------------------
List of Costs incurred (or to be incurred) by the Company
---------------------------------------------------------
Fee to Donaldson, Lufkin & Jenrette
Reimbursement of Out-of-Pocket Expenses to Donaldson, Lufkin &
Jenrette
Assumption and Assignment fees to Company's Lenders
Reimburse Company's Lenders for Out of Pocket Legal Costs
Company Legal Costs
Directors and Officers Insurance Policy
SEC & Hart-Scott-Rodino Filing Fees
Documentary Stamps and Recording Fees
Title Insurance
Company Accounting & Tax Fees
Company Administrative Costs
Company Payroll through Date of Closing
Change in Control Payments to Company Contract Employees (netted
for Executive Loan Repayments)
Exercise and Other Tax Gross-Up Payments
Cash Payment in Lieu of Stock for Executive LTIP Shares
Cash Payment for All Outstanding Options in Lieu of Shares
List of Costs incurred (or to be incurred) by Parties
-----------------------------------------------------
Other than the Company
----------------------
Transfer Agent Fees
Tender Offer Printing Costs
Tender Offer Solicitation and Distribution Costs
<PAGE>
EXHIBIT (D)(2)
EXECUTION COPY
================================================================================
PURCHASE AND SALE AGREEMENT
by and among
ECHELON INTERNATIONAL CORPORATION
and
CERTAIN OF ITS SUBSIDIARIES,
collectively, as Seller,
and
ECHELON RESIDENTIAL LLC,
as Buyer
January 21, 2000
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Definitions and References.................................................................. 1
Section 2. Purchase and Sale........................................................................... 10
2.1 Purchase Price............................................................................ 10
2.2 Terms of Payment.......................................................................... 10
2.3 Assumption of Liabilities................................................................. 11
Section 3. Seller's Representations and Warranties..................................................... 11
3.1 Due Organization and Good Standing of Seller.............................................. 12
3.2 Authorization and Validity of Agreement................................................... 12
3.3 Consents and Approvals; No Violations..................................................... 13
3.4 Title to Assets; Encumbrances............................................................. 13
3.5 Ownership of Joint Venture Interests...................................................... 14
3.6 Ownership of Employee Loans............................................................... 14
3.7 Environmental Laws and Regulations........................................................ 14
3.8 Leases.................................................................................... 15
3.9 Litigation................................................................................ 15
3.10 Land Use.................................................................................. 15
3.11 Contracts................................................................................. 16
3.12 Existing Debt............................................................................. 16
3.13 Employee Benefit Plans; Labor Matters..................................................... 16
3.14 Intellectual Property..................................................................... 17
3.15 Insurance................................................................................. 18
3.16 Assets.................................................................................... 18
3.17 Reports and Financial Statements.......................................................... 18
3.18 Absence of Certain Changes................................................................ 19
3.19 Liabilities............................................................................... 19
3.20 Compliance with Laws...................................................................... 19
3.21 Year 2000................................................................................. 20
3.22 No Other Representations or Warranties.................................................... 20
Section 4. Buyer's Representations and Warranties...................................................... 20
4.1 Due Organization and Good Standing of Buyer............................................... 20
4.2 Authorization and Validity of Agreement................................................... 20
4.3 Consents and Approvals; No Violations..................................................... 20
4.4 Condition of the Assets................................................................... 21
4.5 Liens..................................................................................... 22
4.6 Purchase for Investment................................................................... 22
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
4.7 Sufficient Funds.......................................................................... 22
4.8 Title and Survey.......................................................................... 22
4.9 Inspection................................................................................ 22
4.10 No Other Representations or Warranties.................................................... 22
Section 5. Covenants................................................................................... 23
5.1 Compliance................................................................................ 23
5.2 Notices of Violations..................................................................... 23
5.3 Ownership of Assets; Proceeds of Asset Sales.............................................. 23
5.4 Operation of Assets Subsequent to the Agreement Date...................................... 23
5.5 Status of Agreements...................................................................... 25
5.6 Further Assurances........................................................................ 26
5.7 Consents.................................................................................. 27
5.8 Use of Business Names by Buyer............................................................ 27
5.9 Bringdown of Seller's Representations..................................................... 27
5.10 Cooperation Regarding Taxes............................................................... 28
5.11 Insurance................................................................................. 28
5.12 Reasonable Best Efforts................................................................... 29
5.13 Access to Information Concerning Assets................................................... 29
5.14 Notification of Certain Matters........................................................... 30
5.15 HSR Act................................................................................... 30
5.16 Access to Information Pursuant to Distribution Agreement.................................. 30
5.17 Witness Services Under Distribution Agreement............................................. 30
5.18 Retention of Records...................................................................... 30
Section 6. Conditions Precedent to Closing............................................................. 31
6.1 Buyer Conditions.......................................................................... 31
6.2 Seller Conditions......................................................................... 32
Section 7. Closing..................................................................................... 33
7.1 Time and Place............................................................................ 33
7.2 Closing Expenses.......................................................................... 33
7.3 Notification of Escrow Closing Date....................................................... 33
7.4 Documents and/or Deliveries............................................................... 34
7.5 Buyer Documents and/or Deliveries......................................................... 36
7.6 Execution and Delivery of Closing Statements.............................................. 37
7.7 Joint Instructions to Escrow Agent........................................................ 37
7.8 Further Deliveries........................................................................ 37
Section 8. Brokers..................................................................................... 38
Section 9. Termination and Abandonment................................................................. 38
9.1 Termination............................................................................... 38
9.2 Effect of Termination..................................................................... 39
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 10. Risk of Loss; Indemnity...................................................................... 41
10.1 Casualty................................................................................... 41
10.2 Condemnation............................................................................... 41
10.3 Indemnity.................................................................................. 41
Section 11. Employees and Employee Benefits Matters...................................................... 43
11.1 Transfer of Employees...................................................................... 43
11.2 Assumption of Liabilities.................................................................. 43
11.3 Participation and Crediting of Service Under Employee Plans and Practices.................. 45
Section 12. Miscellaneous................................................................................ 45
12.1 Litigation................................................................................. 45
12.2 Escrow Obligations of Escrow Agent......................................................... 45
12.3 Notices.................................................................................... 47
12.4 Entire Agreement........................................................................... 48
12.5 Successors and Assigns..................................................................... 48
12.6 Headings................................................................................... 49
12.7 Applicable Law............................................................................. 49
12.8 Severability............................................................................... 49
12.9 Counterparts............................................................................... 49
12.10 No Waiver of Default....................................................................... 49
12.11 Confidentiality............................................................................ 50
12.12 Recourse Limited........................................................................... 50
12.13 Business Day............................................................................... 50
12.14 Recordation................................................................................ 51
12.15 Jury Waiver................................................................................ 51
12.16 Public Announcements....................................................................... 51
12.17 Radon Gas.................................................................................. 51
12.18 Bulk Sales Law Waiver...................................................................... 52
12.19 Knowledge.................................................................................. 52
12.20 Amendments, Modifications and Supplements.................................................. 52
12.21 Representations and Warranties............................................................. 52
12.22 Performance and Discharge.................................................................. 52
</TABLE>
(iii)
<PAGE>
SCHEDULES
---------
Schedule I - List of Assets and Owners
Schedule II - List of Existing Debt
Schedule III - Leases
Schedule IV - Purchase Price Allocation
Schedule V - Consents
Schedule VI - Liens on Real Estate Assets
Schedule VII - Liens on Joint Venture Interests
Schedule VIII - Required Consents
Schedule IX - Hazardous Materials
Schedule X - Permits
Schedule XI - Real Estate Contracts
Schedule XII - Employee Benefit Plans
Schedule XIII - Employees Subject to Existing Employment Agreement
Schedule XIV - Intellectual Property
Schedule XV - Pending Transactions
Schedule XVI - Land Use
Schedule XVII - Litigation
Schedule XVIII - List of Subsidiary Non-Qualification Information
Schedule XIX - Changes in Operations
Schedule XX - Violations
Schedule XXI - Trial Balance & Consolidated Financial Statements
Schedule XXII - Insurance
Schedule XXIII - Real Estate Related Accounts
Schedule XXIV - Title Insurance Commitments or Other Reports
Schedule XXV - Surveys
(iv)
<PAGE>
EXHIBITS
--------
Exhibit A - Form of Special Warranty Deed
Exhibit B - Form of Bill of Sale
Exhibit C - Form of Assignment and Assumption of Permits, Contracts and Leases
Exhibit D - Form of Tenant Estoppel Statement
Exhibit E - Form of Assignment and Assumption Agreement of Mortgage Loans
Exhibit F - Form of Assignment of Trademarks
Exhibit G - Severance Benefits Plan
Exhibit H - Intentionally Omitted
Exhibit I - Form of Title Affidavit
Exhibit J - Form of Gap Indemnity
Exhibit K - Form of FIRPTA Affidavit
Exhibit L - Joint Direction Letter
Exhibit M - Joint Instruction Letter
(v)
<PAGE>
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made as of the
---------
21st day of January, 2000, by and among ECHELON INTERNATIONAL CORPORATION, a
Florida corporation ("Echelon"), and various of its subsidiaries signatory
-------
hereto (each, a "Subsidiary", and collectively, the "Subsidiaries") (Echelon and
---------- ------------
the Subsidiaries are collectively referred to herein as "Seller"), and ECHELON
------
RESIDENTIAL LLC, a Delaware limited liability company ("Buyer"). All
-----
capitalized terms used herein shall have the meanings set forth in Section 1
-
hereof.
WHEREAS, Echelon, either itself or through a Subsidiary, is the owner
of the real estate and other interests and assets more specifically described in
Schedule I (other than Part V thereof) annexed hereto and made a part hereof
- -
(collectively, the "Assets"); and
------
WHEREAS, Seller desires to sell, and Buyer desires to purchase, all of
Seller's right, title and interest in and to the Assets pursuant to and in
accordance with the terms and provisions of this Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Seller agrees to sell,
assign and transfer to Buyer, and Buyer agrees to purchase and assume from
Seller, for the price and on the terms and subject to the conditions herein set
forth, all of Seller's right, title and interest in and to the Assets and the
Assumed Liabilities.
Section 1. Definitions and References.
--------------------------
The following terms, as used in this Agreement, have the following
meanings unless the context is inconsistent therewith:
"Agreement" has the meaning set forth in the introductory paragraph
---------
hereof.
"Agreement Date" means the date upon which this Agreement has been
--------------
executed and delivered by Seller, Buyer and Escrow Agent.
"Asset Sales Proceeds" has the meaning set forth in Section 5.3
-------------------- ---
hereof.
"Assets" has the meaning set forth in the first recital hereof, as
------
more particularly described on Schedule I (other than Part V thereof), and
- -
includes, without limitation, any Asset Sales Proceeds; it being understood and
agreed, for avoidance of doubt, that none of the following shall constitute a
portion of the Assets: (i) the Excepted Leases, (ii) the Tax Credit LP
Interests, (iii) the Other Assets, (iv) any and all cash on hand (including,
without limitation, (A) cash with respect to the Excepted Leases and (B) cash
with respect to the Tax Credit LP Interests, but, in any event, excluding the
restricted cash (and cash equivalents) described in item 17 under Part VII of
---
Schedule I) and (v) any and all refunds or any reduction of, or credit against,
-
<PAGE>
Seller's Tax liabilities (other than with respect to Real Estate Taxes) in or
with respect to any taxable year (including all periods prior to the Closing
Date).
"Assumed Liabilities" has the meaning set forth in Section 2.3 hereof.
------------------- ---
"Bringdown Certificate" has the meaning set forth in Section 5.9
--------------------- ---
hereof.
"Broker" has the meaning set forth in Section 8 hereof.
------ -
"Business Day" means any day, other than a Saturday, Sunday or a day
------------
on which banks located in the State of New York shall be authorized or required
by law to close.
"Buyer" has the meaning set forth in the introductory paragraph
-----
hereof.
"Claim" has the meaning set forth in Section 10.3 hereof.
----- ----
"Claim Notice" has the meaning set forth in Section 10.3 hereof.
------------ ----
"Closing" means the consummation of the transfer, assignment and sale
-------
and conveyance of the Assets by or on behalf of Seller to Buyer and payment of
the Purchase Price and assumption of the Assumed Liabilities by Buyer to Seller,
pursuant to Section 7 hereof.
-
"Closing Date" has the meaning specified in Section 7.1 hereof.
------------ ---
"COBRA" has the meaning set forth in Section 11.2(a)(1) hereof.
----- ----------
"Code" has the meaning set forth in Section 3.13 hereof.
---- ----
"Combining Trial Balance" means the trial balance set forth in Part I
----------------------- -
of Schedule XXI annexed hereto and made a part hereof.
---
"Commercial Property" means the real property, including the
-------------------
improvements thereon, described in Part I of Schedule I; provided, that in no
- - --------
event shall "Commercial Property" include any or all of the Other Assets.
"Commercial Property Security Deposit Amount" means the aggregate
-------------------------------------------
amount (as in effect on the Escrow Closing Date) of cash (and cash equivalents)
associated with the customer deposits (but only to the extent same relates to
the Leases) included in general ledger balance sheet account number 25020-000
set forth on the Combining Trial Balance.
"Commission" has the meaning set forth in Section 3.17(a) hereof.
---------- -------
"Commission Filings" has the meaning set forth in Section 3.17(a)
------------------ -------
hereof.
"Contracts" means, collectively, (i) the contracts, agreements and
---------
commitments described on Schedule XI annexed hereto and made a part hereof, (ii)
--
any contract, agreement or commitment by which Seller is bound primarily
affecting or relating to any of the Total Assets
-2-
<PAGE>
(excluding Leases and leases relating to the Residential Properties,
Encumbrances on title and any documents and instruments related to the Existing
Debt) which involves base payments or the performance of services by Seller of
an amount or value (as measured by the revenue derived therefrom during fiscal
year 1998-1999) not in excess of $12,000 annually or is terminable by Seller on
not more than 90 days notice without penalty and (iii) any and all contracts,
agreements and commitments by which Seller is bound primarily affecting or
relating to any of the Total Assets (excluding Leases and leases relating to the
Residential Properties, Encumbrances on title and any documents and instruments
related to the Existing Debt) and which are entered into after the Agreement
Date in compliance with the provisions of this Agreement; provided, that in no
--------
event shall "Contracts" include any or all of the Other Contracts.
"County" means a political subdivision of the State within which a
------
Real Estate Asset is situated.
"Deposit" has the meaning set forth in Section 2.2(a) hereof.
------- ------
"Distribution Agreement" means the Distribution Agreement, dated as of
----------------------
December 16, 1996, by and between Florida Progress and Echelon.
"Echelon" has the meaning set forth in the introductory paragraph
-------
hereof.
"Employee Benefit Plans" has the meaning set forth in Section 3.13
---------------------- ----
hereof.
"Employee Loans" means the loans described in Part IX of Schedule I.
-------------- -- -
"Encumbrance" has the meaning set forth in Section 3.3 hereof.
----------- ---
"Environmental Claims" means administrative, regulatory or judicial
--------------------
actions, suits, demands, demand letters, claims, liens, notices of non-
compliance or violation, investigations or proceedings relating in any way to
any Environmental Law or any permit issued under any such Environmental Law,
including (a) Environmental Claims by governmental or regulatory authorities for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law and (b) Environmental Claims by any
third party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
"Environmental Law" means any federal, state or local statute, law,
-----------------
rule, regulation, ordinance, code, policy or rule of common law in effect and in
each case as amended as of the Closing Date, and any judicial or administrative
interpretation thereof as of the Closing Date, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or Hazardous Materials, including the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. (S)
9601 et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C.
-- ----
(S) 6901 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
-- ----
(S) 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. (S) 2601 et seq.;
-- ---- -- ----
the Clean Air Act, 42 U.S.C. (S) 7401 et seq.; the Safe
-- ----
-3-
<PAGE>
Drinking Water Act, 42 U.S.C. (S) 300f et seq.; the Oil Pollution Act of 1990,
-- ----
33 U.S.C. (S) 2701 et seq.; and their state and local counterparts and
-- ----
equivalents.
"ERISA" has the meaning set forth in Section 3.13 hereof.
----- ----
"Escrow Agent" means LandAmerica Financial Group, a Virginia
------------
corporation.
"Escrow Closing" means the delivery on the Escrow Closing Date to
--------------
Escrow Agent by each of Buyer and Seller of the agreements, documents and
instruments specified in Sections 7.4 and 7.5 hereof, respectively.
--- ---
"Escrow Closing Date" means the date specified as such in the initial
-------------------
Escrow Date Notification Certificate delivered by Seller to Buyer; provided,
--------
that if Seller shall deliver one or more subsequent Escrow Date Notification
Certificates in accordance with Section 7.3 hereof, the Escrow Closing Date
---
shall mean the date specified as such in the last Escrow Date Notification
Certificate theretofore delivered by Seller to Buyer.
"Escrow Date Notification Certificate" has the meaning set forth in
------------------------------------
Section 7.3 hereof.
---
"Escrowed Items" has the meaning set forth in Section 7.7 hereof.
-------------- ---
"Excepted Leases" has the meaning provided in Schedule I.
--------------- -
"Excess Cash Amount" means the aggregate amount of cash and cash
------------------
equivalents, if any, which is expected (in the sole determination of the Chief
Financial Officer of Echelon made on the Escrow Closing Date) to remain in
Echelon or its subsidiaries after consummation of all transactions contemplated
by this Agreement, the Merger Agreement and the Subscription Agreement;
provided, that in no event shall the Excess Cash Amount include an amount equal
- - --------
to $7,000,000 plus the aggregate amount of rent payments, whether in arrears or
in advance, actually received by Seller with respect to the Leveraged Lease
Portfolio (as defined in the Merger Agreement) during the period from February
1, 2000 through the Effective Date (as defined in the Merger Agreement); and
provided, further, in no event shall the Excess Cash Amount be less than $0.
- - -------- -------
"Excluded Liabilities" means any liabilities or obligations of Seller
--------------------
or its affiliates or predecessors other than the Assumed Liabilities, and in any
event "Excluded Liabilities" shall be inclusive of all liabilities or
obligations for which Seller (or its affiliates or predecessors) is responsible
pursuant to Section 11 hereof and those arising out of or relating to (i) the
--
Excepted Leases (including those liabilities and obligations (as of the Closing
Date) referred to in the Combining Trial Balance under the column heading
"Aircraft Assets & Liabilities"), (ii) the Tax Credit LP Interests, (iii) Taxes
(other than Real Estate Taxes), (iv) the Other Assumed Liabilities, (v) this
Agreement or the Merger Agreement (including with respect to any shareholder
litigation relating hereto or thereto), (vi) except to the extent Buyer is
responsible therefor pursuant to Section 11 hereof, all obligations (including
--
payments due as a result of a change of control of Echelon or otherwise) under
any employment agreement entered into by Echelon or any of its
-4-
<PAGE>
Subsidiaries (including the employment agreements described on Schedule XIII
----
annexed hereto and made a part hereof) and (vii) assets or businesses previously
owned by Seller (or its affiliates or predecessors) which were divested or
otherwise disposed of prior to the Agreement Date (including, without
limitation, any liabilities or obligations of Seller (or its affiliates or
predecessors) arising out of or related to (A) the spin-off of Echelon and the
other transactions contemplated by the Distribution Agreement and (B) the first
mortgage bonds secured by certain life care communities previously owned
directly or indirectly by Seller).
"Executive Loans Repayment Amount" means (as of the Escrow Closing
--------------------------------
Date) the aggregate outstanding principal amount, together with any accrued
interest, charges, fees or other amounts related thereto, of any loans extended
by Seller to W. Michael Doramus, Larry J. Newsome, Susan G. Johnson and Julio A.
Maggi.
"Existing Debt" means the indebtedness described in Schedule II
------------- --
annexed hereto and made a part hereof; provided, that, in no event shall
--------
"Existing Debt" include any or all of the Other Existing Debt.
"Financial Statements" has the meaning set forth in Section 3.17(a)
-------------------- -------
hereof.
"Florida Progress" means Florida Progress Corporation, a Florida
----------------
corporation.
"GAAP" has the meaning set forth in Section 3.17(a) hereof.
---- -------
"Hazardous Materials" means (a) any petroleum or petroleum products,
-------------------
radioactive materials, asbestos in any form that is friable, urea formaldehyde
foam insulation and polychlorinated biphenyls; (b) any chemicals, materials or
substances defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous substances",
"restricted hazardous wastes", "toxic substances", "toxic pollutants", or words
of similar import, under any applicable Environmental Law; and (c) any other
substance (other than Radon) prohibited or regulated pursuant to the provisions
of any Environmental Law.
"Heller Lease" means the Lease Agreement, dated as of January 21,
------------
2000, between Heller Affordable Housing of Florida, Inc., a Florida corporation,
and Echelon Commercial LLC, a Delaware limited liability company (in the form
executed on the Agreement Date and thereafter, as amended, modified or
supplemented from time to time with the prior written consent of Echelon).
"herein" or "hereof" means this entire Agreement rather than just the
------ ------
sentence, paragraph or section in which used.
"HSR Act" has the meaning set forth in Section 3.3 hereof.
------- ---
"Improvements" means all buildings, structures and other improvements
------------
existing upon the Land.
-5-
<PAGE>
"including", "include" or "includes" mean including as an example,
--------- ------- --------
without limiting the generality of the description.
"Indemnitee" has the meaning set forth in Section 10.3 hereof.
---------- ----
"Indemnitor" has the meaning set forth in Section 10.3 hereof.
---------- ----
"Intangible Personal Property" means the Intellectual Property and
----------------------------
other intangible personal property used primarily in connection with the Total
Assets, and includes, without limitation, (i) the intangible personal property
described on Part VII of Schedule I and (ii) all interest of Echelon and its
--- -
subsidiaries in all assignable credit records, security codes, assignable
telephone numbers, warranties and guarantees; provided, that in no event shall
--------
"Intangible Personal Property" include any or all of the Other Intangible
Personal Property.
"Intellectual Property" means all trademarks, trade names, service
---------------------
marks, copyrights and any applications therefor, inventions, discoveries,
technology, trade secrets, know-how, data, computer software programs or
applications, (including all source and object codes thereto) and all
proprietary information or material that in any material respect is used by
Echelon and/or its subsidiaries in connection with the Total Assets, as more
particularly described in Schedule XIV annexed hereto and made a part hereof;
---
provided, that in no event shall "Intellectual Property" include any or all of
- - --------
the Other Intellectual Property.
"Joint Venture Interests" means Seller's equity interests in the joint
-----------------------
ventures described in Part VI of Schedule I.
-- -
"Land" means, singularly or collectively, the various real properties
----
underlying the Real Estate Assets, together with all tenements, hereditaments,
easements, privileges, reversions, remainders and other rights and appurtenances
belonging or in any manner appertaining thereto, including all reversionary
interests in and to any adjoining or abutting rights-of-way and all riparian,
littoral and other water rights.
"Leases" means the leases relating to the use or occupancy of portions
------
of the Commercial Property which are more particularly described on Schedule III
---
annexed hereto and made a part hereof; provided, that in no event shall "Leases"
--------
include any or all of the Other Leases.
"Litigation" has the meaning set forth in Section 3.9 hereof.
---------- ---
"Losses" has the meaning set forth in Section 10.3 hereof.
------ ----
"Material Adverse Effect" means a material adverse effect on the
-----------------------
business, results of operations or financial condition of the Total Assets taken
as a whole.
"Merger" means the merger of EIN Acquisition Corp., a Florida
------
corporation, with and into Echelon, with Echelon being the surviving
corporation, on the terms and subject to the conditions set forth in the Merger
Agreement.
-6-
<PAGE>
"Merger Agreement" means the Agreement and Plan of Merger, dated as of
----------------
January 21, 2000, by and among ETA Holding LLC, a Delaware limited liability
company, EIN Acquisition Corp., a Florida corporation and a direct wholly-owned
subsidiary of ETA Holding LLC, and Echelon (as same is in effect on the
Agreement Date and thereafter, as amended, modified or supplemented from time to
time in accordance with the terms thereof and consistent with the terms of
Section 5.5(b) hereof).
------
"Minimum Cash Amount" means $21,275,000.
-------------------
"NationsBank Tower" means the 26-story Class A office tower located at
-----------------
One Progress Plaza, St. Petersburg, Florida.
"Net Sale Proceeds" means, for any Pending Transaction, the gross cash
-----------------
proceeds received from such Pending Transaction, net of (i) reasonable and
customary transaction costs (including, without limitation, any underwriting,
brokerage or other customary selling commissions payable to employees or third
parties and all legal, advisory and other fees and expenses, including title,
survey, transfer taxes, property taxes and recording expenses associated
therewith), (ii) the amount of such gross cash proceeds required to be used to
repay any Existing Debt which is secured by or directly related to the
respective assets which were sold, transferred or otherwise disposed of
concurrently with the consummation of such Pending Transaction and (iii) any
pre-closing or post-closing adjustments to the purchase price for the Asset that
is the subject of such Pending Transaction in accordance with the terms and
conditions of the documentation relating to such Pending Transaction.
"Offer" has the meaning specified in the Merger Agreement.
-----
"Other Assets" means the "Assets" as defined in the Subscription
------------
Agreement.
"Other Assumed Liabilities" means the "Assumed Liabilities" as defined
-------------------------
in the Subscription Agreement.
"Other Buyer" means "Company" as defined in the Subscription
-----------
Agreement.
"Other Contracts" means the "Contracts" as defined in the Subscription
---------------
Agreement.
"Other Existing Debt" means the "Assumed Debt" as defined in the
-------------------
Subscription Agreement.
"Other Intangible Personal Property" means the "Intangible Personal
----------------------------------
Property" as defined in the Subscription Agreement.
"Other Intellectual Property" means the "Intellectual Property" as
---------------------------
defined in the Subscription Agreement.
"Other Leases" means the "Leases" as defined in the Subscription
------------
Agreement.
-7-
<PAGE>
"Other Permits" means the "Permits" as defined in the Subscription
-------------
Agreement.
"Other Personalty" means the "Personalty" as defined in the
----------------
Subscription Agreement.
"Other Real Estate Assets" means the "Real Estate Assets" as defined
------------------------
in the Subscription Agreement.
"Other Tangible Personal Property" means the "Tangible Personal
--------------------------------
Property" as defined in the Subscription Agreement.
"Pending Transactions" has the meaning set forth in Section 5.3
-------------------- ---
hereof.
"Permits" means the licenses or permits required to be maintained by
-------
Seller for the development, use or occupancy of any portion of any of the Real
Estate Assets, including those certificates of occupancy and other material
licenses and permits described in Schedule X annexed hereto and made a part
-
hereof; provided, that in no event shall "Permits" include any or all of the
--------
Other Permits.
"Person" means and includes an individual, a partnership, a joint
------
venture, a corporation, a trust, a limited liability company, an unincorporated
organization, a group and a government or other department or agency thereof.
"Personalty" means the Tangible Personal Property and Intangible
----------
Personal Property; provided, that in no event shall "Personalty" include any or
--------
all of the Other Personalty.
"Pre-Approved Expenditures" means the aggregate amount of (i) all
-------------------------
expenditures of Seller described in Part III of Schedule XV annexed hereto and
--- --
made a part hereof but only to the extent actually paid by Seller in respect of
the respective Assets or Other Assets indicated on such Part III of Schedule XV
--- --
at any time after November 30, 1999 and on or prior to the Escrow Closing Date
and (ii) any and all other expenditures incurred by Seller from time to time but
in each case only to the extent approved by Buyer in its sole discretion;
provided, that in no event shall the aggregate amount of all Pre-Approved
- - --------
Expenditures (as of the Escrow Closing Date specified in the initial Escrow Date
Notification Certificate delivered by Seller pursuant to Section 7.3 hereof)
---
exceed $7,750,000.
"Purchase Price" has the meaning set forth in Section 2.1 hereof.
-------------- ---
"Radon" has the meaning set forth in Section 12.17 hereof.
----- -----
"Real Estate Assets" means, collectively, the Residential Property
------------------
(including the Residential Property with respect to which Seller owns any Joint
Venture Interest), the Commercial Property and the Undeveloped Land, together
with the Personalty, Contracts, Leases and Permits relating thereto, as more
particularly described in Parts I, II and III of Schedule I; it being understood
- -- --- -
and agreed that in any event neither the Union Bank Building nor any of the
Other Real Estate Assets shall constitute a portion of the Real Estate Assets.
-8-
<PAGE>
"Real Estate Taxes" means any ad valorem taxes levied upon the Total
-----------------
Assets based upon the ownership, leasing, renting or operation of the Total
Assets; provided, however, that Real Estate Taxes shall not include any net
-------- -------
income, capital, stock, succession, transfer, franchise, gift, estate or
inheritance taxes. For avoidance of doubt, Real Estate Taxes shall include,
without limitation, real estate taxes, sales and use taxes, personal property
taxes, sewer rents, water rents, assessments (special or otherwise), transit
taxes, any tax or excise on rent or any other tax (however described) imposed
directly on account of the ownership, leasing, management or operation of, or
rental received for use and occupancy of, any or all of the Total Assets,
whether any such taxes are imposed by the United States, the State or County in
which the Asset or Other Asset, as the case may be, is located or any local
governmental municipality, authority or agency, or any other political
subdivision of any thereof.
"Release" means disposing, discharging, injecting, spilling, leaking,
-------
leaching, dumping, emitting, escaping, emptying, seeping, placing and the like,
into or upon any land or water or air, or otherwise entering into the
environment.
"Required Consents" means the consents, loan document modification
-----------------
agreements, documents and instruments to be delivered by the parties identified
in Schedule VIII annexed hereto and made a part hereof consenting to the
transactions contemplated by this Agreement and containing terms and provisions
no more onerous to Buyer than those set forth in Schedule VIII and otherwise in
form and substance reasonably satisfactory to Buyer.
"Residential Property" means the real property described in Part II of
-------------------- --
Schedule I.
-
"Savings Plan" has the meaning set forth in Section 11.2(a)(2) hereof.
------------ ----------
"Seller" has the meaning set forth in the introductory paragraph.
------
"7th Avenue Property" means that certain industrial warehouse located
-------------------
at 4701 Broadway Avenue, Tampa, Florida.
"Subscription Agreement" means the Subscription Agreement, dated as of
----------------------
January 21, 2000, by and among Heller Affordable Housing of Florida, Inc., a
Florida corporation, and Echelon and its subsidiaries signatory thereto.
"Subsidiary" means each of the entities signatory hereto other than
----------
Echelon, Buyer and Escrow Agent.
"Surveys" means the surveys with respect to the Real Estate Assets
-------
described on Schedule XXV annexed hereto and made a part hereof.
---
"Tangible Personal Property" means the personal property used
--------------------------
primarily in connection with the Total Assets (including, without limitation,
the tangible personal property described in Part VIII of Schedule I) other than
---- -
the Intangible Personal Property; provided, that in no event shall "Tangible
--------
Personal Property" include any or all of the Other Tangible Personal Property.
-9-
<PAGE>
"Tax Credit LP Interest Purchase Agreement" means the Purchase
-----------------------------------------
Agreement, dated as of January 13, 2000, by and between Heller Affordable
Housing, Inc., a Delaware corporation, Echelon Affordable Housing, Inc., a
Florida corporation, and Echelon.
"Tax Credit LP Interests" means Seller's equity interests in the
-----------------------
limited partnerships described in Part V of Schedule I.
- -
"Tax Return" means any return, report, information return or other
----------
document (including any related or supporting information) filed or required to
be filed with any taxing authority with respect to Taxes.
"Taxes" means all taxes, charges, fees, levies, penalties or other
-----
assessments imposed by any United States federal, state, local or foreign taxing
authority, including, without limitation, income, excise, property, sales and
use, transfer, franchise, payroll, withholding, social security or other taxes,
including any interest, penalties or additions attributable thereto.
"Tender Offer Expiration Date" means the date (as extended from time
----------------------------
to time in accordance with the terms of the Merger Agreement) on which the Offer
expires.
"Title Commitments" means the ALTA owner's title insurance commitments
-----------------
with respect to the Real Estate Assets described on Schedule XXIV annexed hereto
----
and made a part hereof.
"Total Assets" means the Assets and the Other Assets, collectively.
------------
"Transferred Employee" has the meaning set forth in Section 11.1
-------------------- ----
hereof.
"Undeveloped Land" means the real property described in Part III of
---------------- ---
Schedule I.
-
"Union Bank Building" means the 3 1/2-story office building located at
-------------------
1980 Saturn Street, Monterey Park, California.
"WARN" has the meaning set forth in Section 11.2(d) hereof.
---- -------
Section 2. Purchase and Sale.
-----------------
2.1 Purchase Price. The aggregate purchase price to be paid by Buyer
--------------
to acquire the Assets (the "Purchase Price") shall be equal to (u) $47,921,172,
--------------
minus (v) the Minimum Cash Amount, minus (w) the Excess Cash Amount, minus (x)
- - ----- ----- -----
the Commercial Property Security Deposit Amount, minus (y) the Executive Loans
-----
Repayment Amount, plus (z) the Pre-Approved Expenditures. The Purchase Price
----
shall be allocated among the Assets, and between the real estate and personal
property comprising the Assets, as set forth on Schedule IV annexed hereto and
--
made a part hereof.
-10-
<PAGE>
2.2 Terms of Payment. The Purchase Price will be paid as follows:
----------------
(a) On the Agreement Date, Buyer will deliver to Escrow Agent
$4,275,750 (the "Deposit") which will be held in an interest-bearing account
-------
with an institution the deposits in which are insured by an agency of the United
States or, upon joint instructions of Seller and Buyer, invested in securities
of the United States; provided that, in each case, interest accruing thereon
--------
will constitute part of the Deposit.
(b) The Deposit shall be credited to Buyer against the Purchase Price
and will be non-refundable in all instances except as provided in Sections 5.9,
---
9.2, 10.1, and 10.2 hereof and the balance of the Purchase Price will be paid by
- - --- ---- ----
Buyer to Seller in U.S. dollars in immediately available funds at the time of
Closing in accordance with the terms and conditions of this Agreement. The
actual amount of the balance of the Purchase Price payable hereunder shall be
calculated by making reference to the notice to be delivered pursuant to Section
7.4(h) hereof.
- - ------
2.3 Assumption of Liabilities. On the terms and subject to the
-------------------------
conditions of this Agreement, on the Closing Date, Buyer shall, or shall cause
one or more of its affiliates to, assume and pay, perform and discharge when
due, without duplication, (i) the Existing Debt (as in effect on the Closing
Date), including any prepayment obligations, (ii) any and all liabilities and
obligations of Seller arising out of or related to the Litigation (whether
before, on or after the Closing Date), (iii) any Real Estate Taxes (whether due
or to become due), (iv) any and all liabilities and obligations for which Buyer
is responsible pursuant to Section 11, (v) any and all liabilities and
--
obligations of Seller arising out of or related to the Permits, Contracts and
Leases (in each case, whether before, on or after the Closing Date), (vi) any
and all liabilities and obligations (including unpaid transaction costs)
relating to any of the Total Assets sold, transferred or otherwise disposed of
pursuant to a Pending Transaction, (vii) any and all liabilities and obligations
of Seller (as of the Closing Date) referred to in the Combining Trial Balance
under the column heading "Real Estate Assets & Liabilities", (viii) any and all
liabilities and obligations of Seller pursuant to Section 11 of the Subscription
Agreement, (ix) any and all liabilities and obligations of Seller arising out of
or related to the Distribution Agreement (excluding all of the Ancillary
Agreements, as defined in the Distribution Agreement), but only to the extent
same arises out of or relates to the Real Estate Assets and/or the Other Real
Estate Assets which were previously conveyed to Seller pursuant to the
Distribution Agreement but in any event excluding (A) any and all liabilities
and obligations of Seller arising out of or related to the Florida Progress
Business and the Echelon Business (as said terms defined in the Distribution
Agreement), except for the assumption of liabilities and obligations by Buyer
pursuant to the preceding provisions of this subclause (ix), (B) any and all
liabilities and obligations of Seller arising out of or related to permits,
contracts or leases which do not constitute Permits, Contracts or Leases
hereunder and (C) any and all liabilities and obligations with respect to
employee agreements and employee matters, except to the extent Buyer is
responsible therefor pursuant to Section 11 and (x) any and all other
--
liabilities and obligations of Seller arising out of or relating primarily to
any of the Total Assets (including any and all liabilities and obligations of
Seller arising out of the ownership, possession, construction, use, access,
leasing, maintenance, management, replacement, renewal, repair, operation,
enjoyment, alterations, modifications,
-11-
<PAGE>
additions, accessions, improvements, appurtenances, replacements and
substitutions thereof and thereto but excluding any and all liabilities and
obligations of Seller which are expressly not assumed by Buyer pursuant to
preceding subclause (ix)) (collectively, the "Assumed Liabilities"); provided,
------------------- --------
that the Assumed Liabilities shall not include any of (i) the Excluded
Liabilities, all of which shall be retained by Seller, and (ii) the Other
Assumed Liabilities, all of which shall be assumed by the Other Buyer.
Section 3. Seller's Representations and Warranties. Seller makes the
---------------------------------------
following representations and warranties to Buyer, which representations and
warranties shall not survive the Escrow Closing Date (it being expressly
understood and agreed that, notwithstanding anything to the contrary (express or
implied) set forth herein, in the case of any breach by Seller of any of the
following representations and warranties, Buyer's sole right shall be the
exercise (if it is entitled to do so) of its right of termination pursuant to
Section 9.1(f) hereof (and Buyer's sole remedies in connection therewith shall
------
be those expressly set forth in Section 9.2 hereof) and Seller shall not at any
---
time (whether before, on or after the Escrow Closing Date) have any further
liability whatsoever with respect to any such breach of the following
representations and warranties):
3.1 Due Organization and Good Standing of Seller. (a) Echelon is a
--------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority to own, lease and operate its properties, including the Assets,
and to carry on its business as now being conducted. True and complete copies
of Echelon's Amended and Restated Articles of Incorporation and By-laws, each as
in effect on the Agreement Date, have been previously made available for review
to Buyer. Except as set forth on Schedule XVIII annexed hereto and made a part
-----
hereof, Echelon is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification
necessary.
(b) Each Subsidiary is an entity duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization and each
such entity has all requisite corporate, partnership or limited liability
company power and authority to own, lease and operate its properties, including
the Assets, and to carry on its business as now being conducted. True and
complete copies of each Subsidiary's certificate of incorporation, by-laws or
equivalent organizational documents, in each case as in effect on the Agreement
Date, have been previously made available for review to Buyer. Except as set
forth on Schedule XVIII, each Subsidiary is duly qualified or licensed to do
-----
business and is in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary.
(c) Each of the entities in which Echelon or its relevant Subsidiary
owns a Joint Venture Interest is an entity duly organized, validly existing and
good standing under the laws of the jurisdiction of its organization and each
such entity has all requisite corporate, partnership or limited liability
company power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. True and complete copies of
-12-
<PAGE>
each such entity's certificate of incorporation, by-laws or equivalent
organizational documents, in each case as in effect on the Agreement Date, have
been previously made available for review to Buyer. Except as set forth on
Schedule XVIII, each such entity is duly qualified or licensed to do business
-----
and is in good standing in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it make such
qualification necessary.
3.2 Authorization and Validity of Agreement. Seller has the power
---------------------------------------
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and, subject only to those prohibitions and consents described in
Schedule V, to consummate the transactions contemplated hereby. The execution,
-
delivery and performance of this Agreement by Seller, and the consummation by it
of the transactions contemplated hereby, have been duly authorized and no other
action on its part is necessary to authorize the execution, delivery and
performance of this Agreement by it and the consummation of the transactions
contemplated hereby (other than complying with those prohibitions and consents
described in Schedule V). This Agreement has been duly executed and delivered
-
by Seller and, assuming that this Agreement constitutes a valid and binding
obligation of Buyer, is a valid and binding obligation of Seller enforceable
against Seller in accordance with its terms, except to the extent that its
enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium and similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles.
3.3 Consents and Approvals; No Violations. Assuming any filings
-------------------------------------
required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), applicable to the sale of Assets to Buyer are made and
-------
any applicable waiting period thereunder has been terminated or has expired, the
execution and delivery of this Agreement by Echelon and its Subsidiaries and the
consummation by Echelon and its Subsidiaries of the transactions contemplated
hereby will not: (a) violate any provision of the Amended and Restated Articles
of Incorporation or By-Laws of Echelon or the comparable governing documents of
any Subsidiary, in each case, as amended; (b) violate any statute, ordinance,
rule, regulation, order or decree of any court or of any governmental or
regulatory body, agency or authority applicable to Echelon or any Subsidiary or
by which any of the Assets may be bound; (c) except as set forth on Schedule V,
-
require any filing with, or permit, consent or approval of, or the giving of any
notice to, any governmental or regulatory body, agency or authority; or (d)
except as set forth on Schedule V, result in a violation or breach of, conflict
-
with, constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation, payment, purchase, sale
or acceleration) under, or result in the creation of any lien, security
interest, mortgage, charge, claim or encumbrance (each, an "Encumbrance") upon
-----------
any of the Assets under, any of the terms, conditions or provisions of, any
note, bond, mortgage, indenture, license, franchise, permit, agreement, lease,
franchise agreement or other instrument or obligation to which Echelon or any
Subsidiary is a party, or by which it or any of their respective Assets are
bound.
3.4 Title to Assets; Encumbrances. Echelon or its relevant
-----------------------------
Subsidiary, as applicable, has good and marketable title to the Land and the
Improvements thereon and has good title to the other Assets (other than with
respect to the Employee Loans, with respect to which no representation or
warranty is being made pursuant to this Section 3.4), subject to no
---
-13-
<PAGE>
Encumbrance or other restriction of any kind or character, except for (a) liens
reflected on Schedule VI annexed hereto and made a part hereof, (b) zoning,
--
planning or other governmental restrictions, easements or permits or other
restrictions or limitations on the use of the Real Estate Assets, in each case
which would not have, individually or in the aggregate, a Material Adverse
Effect, (c) statutory liens or liens of landlords, carriers, warehousemen,
mechanics, suppliers, materialmen or repairmen arising in the ordinary course of
business and which would not have, individually or in the aggregate, a Material
Adverse Effect and (d) liens for current Taxes, assessments or governmental
charges or levies on property not yet delinquent. The Commercial Property, the
Residential Property and the Undeveloped Land are owned in fee by Seller and the
Real Estate Assets are the only real property interests that are owned by Seller
or in which Seller has a leasehold or other interest, except for the Tax Credit
LP Interests, certain real property leases under which Seller is the tenant (as
more particularly described in Schedule V) and the Union Bank Building.
-
3.5 Ownership of Joint Venture Interests. Echelon or the Subsidiary
------------------------------------
of Echelon set forth on Schedule VII, as applicable, is the owner and holder of
---
the Joint Venture Interests described on Schedule VII, free and clear of all
---
Encumbrances of every kind other than those described in Schedule VII annexed
---
hereto and made a part hereof. Except as set forth on Schedule VII, Seller has
---
received no written notice that the organizational documents of the joint
ventures to which the Joint Venture Interests relate are not in full force and
effect, and Seller is not in default of its obligations under such
organizational documents. True and complete copies of the organizational
documents of the joint ventures to which the Joint Venture Interests relate have
been made available for review to Buyer. Schedule VII includes a true and
---
complete list of all Joint Venture Interests owned by Echelon and its
Subsidiaries, the percentage interest in the entity owned by Echelon or such
Subsidiary, as the case may be, and the percentage interests owned by the other
shareholders, partners or members, as the case may be, in such entity.
3.6 Ownership of Employee Loans. Echelon is the owner and holder of
---------------------------
the Employee Loans, free and clear of all Encumbrances and claims of every kind.
True and complete copies of the documents evidencing the Employee Loans have
been made available for review to Buyer. Except as set forth in Part IX of
--
Schedule I, the documents evidencing the Employee Loans are in full force and
-
effect and no defaults on the part of the borrowers or Echelon thereunder have
occurred and are continuing. Except as set forth in Part IX of Schedule I, all
-- -
payments of principal and interest in respect of the Employee Loans are current.
Part IX of Schedule I sets forth the outstanding principal balance of each of
-- -
the Employee Loans as of the date indicated therein. Seller has not satisfied,
canceled or subordinated any of the promissory notes evidencing the Employee
Loans, in whole or in part.
3.7 Environmental Laws and Regulations. Except as set forth on
----------------------------------
Schedule IX annexed hereto and made a part hereof, and subject to Section 12.17
-- -----
hereof, to the knowledge of Seller:
(i) Hazardous Materials have not been generated, used,
treated or stored by Seller on the Real Estate Assets or the Other
Real Estate Assets, except for quantities generated, used, treated or
stored in compliance with
-14-
<PAGE>
Environmental Laws and as required in connection with the normal
operations and maintenance of such Real Estate Assets or Other Real
Estate Assets, as the case may be;
(ii) Hazardous Materials have not been Released or disposed
of by Seller on the Real Estate Assets or the Other Real Estate
Assets, except for quantities Released or disposed of in compliance
with Environmental Laws and as required in connection with the normal
operation and maintenance of such Real Estate Assets or Other Real
Estate Assets, as the case may be;
(iii) Seller is in compliance with Environmental Laws and
the requirements of permits issued under such Environmental Laws with
respect to the Real Estate Assets and the Other Real Estate Assets;
(iv) There are no pending or threatened Environmental
Claims against Seller with respect to the Real Estate Assets or the
Other Real Estate Assets;
(v) There are no past or present actions, activities,
circumstances, conditions, events or incidents (including, without
limitation, the release, emission, discharge, presence or disposal of
any Hazardous Materials) which would form the basis for any
Environmental Claim against Seller or against any Person whose
liability for any Environmental Claim Seller has retained or assumed
whether contractually or by operation of law, in each case to the
extent same relates to the Real Estate Assets or the Other Real Estate
Assets;
(vi) Seller has delivered to or otherwise made available
for inspection by Buyer true, complete and correct copies and results
of any reports, studies, analyses, tests or monitoring in the
possession of Seller pertaining to Hazardous Materials in, on, beneath
or adjacent to any Real Estate Assets or any Other Real Estate Assets;
and
(vii) There are no underground storage tanks located on the
Real Estate Assets or the Other Real Estate Assets.
3.8 Leases. Schedule III sets forth all Leases affecting any
------ ---
portions of any of the Commercial Property and with respect to each Lease, as of
the Agreement Date, the name of the tenant, the location and the gross leasable
area of any space leased, the monthly rent due thereunder, the Lease termination
date and the amount of any security deposits. True and complete copies of such
Leases and the leases relating to the Residential Properties have been made
available for review to Buyer. Except as set forth on Schedule III, each Lease
---
is in full force and effect, all rents and additional rents due thereunder have
been paid to date, and Seller has neither sent nor received any notice of a
material default under any Lease at a Commercial Property which remains
outstanding. The Commercial Property, the Residential Property and the
Undeveloped Land are not subject to any ground leases.
-15-
<PAGE>
3.9 Litigation. Schedule XVII annexed hereto and made a part hereof
---------- ----
contains a current list of all actions, suits, arbitrations and proceedings
pending, or to Seller's knowledge threatened, against or concerning the Total
Assets (collectively, "Litigation"). To Seller's knowledge, there are no
----------
judgments, orders or decrees entered in any lawsuit or proceeding against or
concerning the Total Assets, other than as set forth on Schedule XVII. Seller
----
has received no written notice of any pending or threatened condemnation, taking
or similar proceeding affecting the Total Assets, or any pending public
improvements which would result in, nor has Seller received written notice of,
special assessments affecting the Total Assets.
3.10 Land Use. With respect to the Real Estate Assets, Seller has not
--------
received any written notice from any governmental authority, and Seller
otherwise has no knowledge, that a Real Estate Asset is not in substantial
compliance with the County regulations and restrictions applicable to the zoning
district within which it is situated, and, except as described in Schedule XVI
---
annexed hereto and made a part hereof, Seller has no actual knowledge of any
covenants, restrictions or other agreements with or in favor of any governmental
authority or other Person limiting in any material respect the use of any of the
Real Estate Assets for the purposes permitted by the regulations governing the
applicable zoning district.
3.11 Contracts. Except for the Leases, Encumbrances on title and the
---------
documents and instruments relating to the Existing Debt, Schedule XI sets forth
--
all agreements, contracts and commitments by which Seller is bound primarily
affecting or relating to the Total Assets other than such contracts, agreements
or commitments that involve base payments or the performance of services by
Seller of an amount or value (as measured by the revenue derived therefrom
during fiscal year 1998-1999) not in excess of $12,000 annually or are
terminable by Seller on not more than 90 days notice without penalty. True and
complete copies of all of the agreements, contracts and commitments referred to
in Schedule XI have been made available for review to Buyer. Except as
--
otherwise set forth on Schedules V and XI, each agreement, contract and
- --
commitment referred to in Schedule XI is in force and effect and (a) there
--
exists no default or event of default thereunder (or any event, occurrence,
condition or act on the part of Seller which, with the giving of notice, the
lapse of time or the happening of any other event or condition, would become a
default or event of default thereunder) and (b) no approval or consent of, or
notice to, any Person is needed in order that each such contract or agreement
shall continue in force and effect in accordance with its terms without penalty,
acceleration or rights of early termination by reason of the consummation of the
transactions contemplated by this Agreement.
3.12 Existing Debt. Echelon or its relevant Subsidiary, as
-------------
applicable, is the borrower under the Existing Debt encumbering the Assets owned
by it, as more particularly set forth on Schedule II. Except as set forth on
--
Schedule II, the documents evidencing and securing the Existing Debt are in full
--
force and effect and no defaults on the part of the borrower or the lender
thereunder have occurred and are continuing. Except for the Existing Debt and
except for debt incurred in connection with Pending Transactions, no other
indebtedness for borrowed money encumbers any of the Assets. Except as set
forth on Schedule II, all payments of principal and interest in respect of the
--
Existing Debt are current. True and complete copies of all agreements
evidencing and securing the Existing Debt have been made available for review to
Buyer.
-16-
<PAGE>
3.13 Employee Benefit Plans; Labor Matters. Each employee benefit
-------------------------------------
plan within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and all stock purchase, stock
-----
option, severance, employment, change-in-control, fringe benefit, collective
bargaining, bonus, incentive, deferred compensation and all other employee
benefit plans, programs, policies or agreements, whether or not subject to ERISA
(including any funding mechanism therefor now in effect or required in the
future as a result of the transactions contemplated by this Agreement or
otherwise) maintained by Seller (including for purposes of this Section 3.13,
----
all employers that would be treated, together with Seller, as a single employer
within the meaning of Section 414(b) and (c) of the Internal Revenue Code of
1986, as amended (the "Code")) or to which Seller contributes or has current or
----
contingent liability (collectively, the "Employee Benefit Plans") is listed on
----------------------
Schedule XII annexed hereto and made a part hereof. Seller does not contribute
---
and has not contributed during the past six years to any "multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA, and Seller is not subject to
any withdrawal liability under Title IV of ERISA with respect to any such plan.
No Employee Benefit Plan is subject to Title IV of ERISA or Section 412 of the
Code. Seller has not incurred and does not reasonably expect to incur any
liability under Title IV of ERISA. No Employee Benefit Plan provides for post-
employment or post-retirement health or medical or life insurance benefits for
retired or former employees of Seller or its affiliates, except as required to
avoid excise tax under Section 4980B of the Code. Except as set forth on
Schedule XII: (i) each Employee Benefit Plan is in substantial compliance with
---
applicable law and has been administered and operated in all material respects
in accordance with its terms; (ii) each Employee Benefit Plan which 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, to the
knowledge of Seller, no event has occurred and no condition exists which would
result in the revocation of any such determination; (iii) neither Seller, nor
any other "disqualified person" or "party in interest" (as defined in Section
4975(e)(2) of the Code and Section 3(14) of ERISA, respectively) has engaged in
any transaction in connection with any Employee Benefit Plan that would result
in the imposition of a material penalty pursuant to Section 502(i) of ERISA or a
material tax pursuant to Section 4975 of the Code and no event has occurred and
no condition exists that would otherwise subject Seller to any material excise
tax, penalty, fine or lien imposed by ERISA or the Code with respect to an
Employee Benefit Plan; and (iv) no claim, action or litigation, has been made,
commenced or, to the knowledge of Seller, threatened with respect to any
Employee Benefit Plan (other than routine claims for benefits payable in the
ordinary course, and appeals of denied such claims). Except as provided by or
under the agreements and arrangements described on Schedules XII and XIII, the
--- ----
execution of this Agreement and the consummation of the transactions
contemplated hereby will not result in any material payment to or accelerate the
vesting of benefits of any employee of Seller under any Employee Benefit Plan or
other plan, policy or agreement of Seller. With respect to each Employee Benefit
Plan, Seller has delivered or made available for review to Buyer or its counsel
a true and complete copy of, to the extent applicable: (a) the plan document
(including any amendments thereto) and any related trust agreement or other
funding instrument, (b) the most recent Internal Revenue Service determination
letter, (c) the summary plan description and (d) the annual report most recently
filed on Internal Revenue Service Form 5500-series.
-17-
<PAGE>
3.14 Intellectual Property. (a) Schedule XIV sets forth a true and
--------------------- ---
complete list of all Intellectual Property, specifying, if applicable, the
registration or application numbers for each such Intellectual Property, owned
by or licensed to Echelon and/or its subsidiaries. Other than as set forth on
Schedule XIV, neither Echelon nor any of its subsidiaries owns or uses any other
---
item of intellectual property which is material to the Total Assets.
(b) Except as set forth on Schedule XIV, Echelon and/or its
---
subsidiaries own or have the valid and enforceable right to use all Intellectual
Property in the manner such Intellectual Property is being used or held for use
by Echelon and/or its subsidiaries.
(c) Except as set forth on Schedule XVII, neither Echelon nor any of
----
its subsidiaries (or any of their respective affiliates) is a defendant in any
investigation or proceeding relating to, or otherwise has been notified of, any
alleged claim of infringement with respect to the Intellectual Property and, to
Seller's knowledge, use of the Intellectual Property in connection with the
Total Assets as currently conducted does not infringe upon any third party
proprietary rights.
(d) There is no outstanding claim or suit brought by Echelon or its
subsidiaries (or any of their respective affiliates) for infringement by any
other Person of any of the Intellectual Property.
(e) Except as set forth on Schedule XIV, there are no licenses,
---
sublicenses or other agreements relating to the Intellectual Property pursuant
to which Echelon or its subsidiaries (or any of their respective affiliates) is
authorized to use any Intellectual Property owned or controlled by a third
party, and no third party is authorized to use any Intellectual Property owned
or controlled by Echelon or its subsidiaries (or any of their respective
affiliates). Echelon and its subsidiaries are not, nor as a result of the
execution, delivery or performance of their obligations hereunder will Echelon
or its subsidiaries be, in violation of, or lose any rights pursuant to, any
license or agreement described in Schedule XIV.
---
(f) To the knowledge of Seller, there has not been and there is not
currently any unauthorized use, infringement or misappropriation of any of the
Intellectual Property by any other Person, including any employee or former
employee of Echelon and/or its subsidiaries.
3.15 Insurance. Schedule XXII annexed hereto and made a part hereof
--------- -------------
sets forth a true and complete listing of all insurance policies maintained by
Seller on and as of the Agreement Date relating to the Real Estate Assets or the
Other Real Estate Assets, with the amounts insured (and any deductibles) set
forth therein.
3.16 Assets. The Total Assets are all of the assets used in Seller's
------
real estate business or which are reasonably necessary for Seller's real estate
business to function and operate as an on-going concern in substantially the
same manner as Seller's real estate business has recently functioned and
operated as an on-going concern; it being understood and agreed, for avoidance
of doubt, that, for purposes of this Section 3.16, none of the Excepted Leases
----
or the Tax Credit LP Interests relate to Seller's real estate business.
-18-
<PAGE>
3.17 Reports and Financial Statements. (a) Since December 18, 1996,
--------------------------------
Seller has filed all forms, reports and documents with the Securities and
Exchange Commission (the "Commission") required to be filed by it pursuant to
----------
the federal securities laws and the Commission rules and regulations thereunder,
and all forms, reports and documents filed with the Commission by Seller have
complied in all material respects with all applicable requirements of the
federal securities laws and the Commission rules and regulations promulgated
thereunder. Seller has, prior to the date of this Agreement, made available for
review to Buyer true and complete copies of all forms, reports, registration
statements and other filings filed by Seller with the Commission since December
18, 1996 (such forms, reports, registration statements and other filings,
together with any exhibits, any amendments thereto and information incorporated
by reference therein, are sometimes collectively referred to as the "Commission
----------
Filings"). Except to the extent amended or superseded by a subsequent filing
- - -------
with the Commission made prior to the date hereof, as of their respective dates,
the Commission Filings did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The audited consolidated balance sheets (and related
audited consolidated statements of operations, audited consolidated statement of
shareholders' equity and audited consolidated statement of cash flows) for each
of the years in the two-year period ended December 31, 1998 and the unaudited
consolidated balance sheet (and related consolidated statement of operations,
consolidated statement of shareholders' equity and consolidated statement of
cash flows) as of September 30, 1999 (such statements, collectively, the
"Financial Statements"), included in the Commission Filings, were prepared in
--------------------
accordance with generally accepted accounting principles ("GAAP") (as in effect
----
from time to time) applied on a consistent basis in all material respects,
(except as may be indicated therein or in the notes or schedules thereto) and
fairly present, in all material respects, the consolidated financial position of
Echelon and its consolidated subsidiaries as of the dates thereof and the
results of their operations and changes in cash flows for the periods then ended
(subject, in the case of unaudited statements, to the absence of notes and
normal year-end adjustments).
(b) Part I of Schedule XXI sets forth the trial balance of the
- ---
assets, liabilities and shareholders' equity accounts of Echelon and its
consolidated Subsidiaries as of September 30, 1999. Each such account reflected
on the trial balance has been included in or allocated between (x) Seller's
leveraged lease portfolio and (y) Seller's real estate portfolio, as agreed to
by the parties hereto.
(c) Part II of Schedule XXI sets forth the condensed consolidated
-- ---
financial statements of Echelon and its consolidated Subsidiaries as of and for
the three and nine month periods ended September 30, 1999 together with the
report of KPMG LLP dated October 15, 1999. The balance sheet included in such
condensed consolidated financial statements was prepared from and is consistent
with the trial balance referred to in Section 3.17(b) hereof.
-------
3.18 Absence of Certain Changes. Except as previously disclosed in
--------------------------
the Commission Filings, as set forth on Schedule XIX annexed hereto and made a
---
part hereof or as otherwise contemplated by this Agreement, since September 30,
1999 (i) there has not been any Material Adverse Effect, other than any change
(x) arising out of changes in general economic
-19-
<PAGE>
conditions or (y) arising out of economic changes which affect, in general, the
markets in which Echelon operates and (ii) the businesses of Echelon and each of
its subsidiaries have been conducted only in the ordinary course.
3.19 Liabilities. Seller has no material claims, liabilities or
-----------
indebtedness outstanding which would be required to be reflected on a balance
sheet prepared in accordance with GAAP except (i) as set forth in the Financial
Statements, or referred to in the footnotes thereto, (ii) as set forth on
Schedule XXI, (iii) for liabilities incurred subsequent to September 30, 1999 in
---
the ordinary course of business or (iv) as otherwise disclosed in the Commission
Filings.
3.20 Compliance with Laws. Except as set forth in the Commission
--------------------
Filings or as set forth on Schedule XX annexed hereto and made a part hereof,
--
Seller is in compliance with all applicable laws, regulations, orders, judgments
and decrees (other than with respect to Taxes, environmental matters, employee
benefits and federal securities laws, which are the subject of specific
representations contained in this Agreement).
3.21 Year 2000. There is not reasonably expected to be a Material
---------
Adverse Effect caused by the failure to be Year 2000 Compliant with respect to
computer systems, computer software or technology that are internal to Seller.
There is not reasonably expected to be a Material Adverse Effect caused by the
failure to be Year 2000 Compliant of any products or services of Seller sold or
licensed to customers of Seller. For purposes of this Agreement, "Year 2000
---------
Compliant" means that a product or system is (i) able to receive, record, store,
- - ---------
process, calculate, manipulate and output dates from and after January 1, 2000,
time periods that include January 1, 2000 and information that is dependent on
or relates to such dates or time periods, in the same manner and with the same
accuracy, functionality, data integrity and performance as when dates or time
periods prior to January 1, 2000 are involved and (ii) able to store and output
date information in a manner that is unambiguous as to century.
3.22 No Other Representations or Warranties. Except for the
--------------------------------------
representations and warranties contained in this Section 3 and in Section 8
- -
hereof, neither Seller nor any other Person makes any other express or implied
representation or warranty on behalf of Seller or any of its affiliates.
Section 4. Buyer's Representations and Warranties. Buyer makes the
--------------------------------------
following representations and warranties to Seller, which representations and
warranties shall not survive the Escrow Closing Date, except for (x) those
representations and warranties set forth in Sections 4.4, 4.5 and 4.6 hereof
--- --- ---
which shall survive for a period of one year after the Closing Date and (y)
those representations, warranties and agreements set forth in Section 4.9 hereof
---
which shall survive as set forth therein:
4.1 Due Organization and Good Standing of Buyer. Buyer is a limited
-------------------------------------------
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware. Buyer has all requisite limited liability
company power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. Buyer is duly qualified or
licensed to do business in Delaware and will, on or prior to the Closing Date,
qualify to do business in each jurisdiction where the Assets are located.
-20-
<PAGE>
4.2 Authorization and Validity of Agreement. Buyer has the power and
---------------------------------------
authority to execute and deliver this Agreement, to perform its obligations
hereunder and consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement by Buyer, and the consummation by it
of the transactions contemplated hereby, have been duly authorized by the member
or manager of Buyer and no other limited liability company action on the part of
Buyer is necessary to authorize the execution, delivery and performance of this
Agreement by Buyer and the consummation of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Buyer and is a valid and
binding obligation of Buyer enforceable against Buyer in accordance with its
terms, except to the extent that its enforceability may be subject to applicable
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium and
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles.
4.3 Consents and Approvals; No Violations. Assuming any filings
-------------------------------------
required under the HSR Act applicable to the sale of Assets to Buyer are made
and any applicable waiting period thereunder has been terminated or has expired,
the execution and delivery of this Agreement by Buyer and the consummation by
Buyer of the transactions contemplated hereby will not: (a) violate any
provision of the certificate of formation or operating agreement of Buyer; (b)
violate any statute, ordinance, rule, regulation, order or decree of any court
or of any governmental or regulatory body, agency or authority applicable to
Buyer or by which any of its properties or assets may be bound; (c) require any
filing with, or permit, consent or approval of, or the giving of any notice to,
any governmental or regulatory body, agency or authority; or (d) result in a
violation or breach of, conflict with, constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation, payment or acceleration) under, or result in the creation of any
Encumbrance upon any of the property or assets of Buyer under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
franchise, permit, agreement, lease, franchise agreement or other instrument or
obligation to which Buyer is a party, or by which it or its assets are bound
except, in the case of clauses (b), (c) and (d), above, for any such filing,
permit, consent, approval or notice, the failure to obtain or make which, and
except for any breach, violation or Encumbrance which, would not prevent or
materially delay the consummation of the transactions contemplated by this
Agreement.
4.4 Condition of the Assets. Buyer has conducted all due diligence
------------------------
that Buyer deems necessary or desirable with respect to the Total Assets, the
Assumed Liabilities, the Other Assumed Liabilities, this Agreement and the
transactions contemplated hereby in order for it to enter into this Agreement
and consummate the transactions contemplated hereby. Except for the limited
representations of Seller specifically set forth in Section 3 hereof, Buyer will
-
rely solely upon such due diligence in acquiring the Assets and in assuming the
Assumed Liabilities. Without limiting the generality of the foregoing, Buyer
acknowledges that Seller makes and will make no representation or warranty
concerning environmental conditions heretofore, now or hereafter existing on
properties adjoining or proximate to the Total Assets. Notwithstanding anything
in this Agreement, it is expressly understood and agreed that Buyer is acquiring
the Assets "AS IS", "WHERE IS" and "WITH ALL FAULTS", and that Seller has not
made and does not and will not make any representations or warranties, express
or implied, including any
-21-
<PAGE>
with respect to the quality, physical condition, expenses, legal status, zoning,
value, utility or development or operating potential of the Total Assets, or the
absence of any Hazardous Substances on, in, under or near the Total Assets, or
any other matter or thing affecting or relating to the Total Assets, the Assumed
Liabilities, the Other Assumed Liabilities or this Agreement (including, without
limitation, warranties of merchantability and/or of fitness for a particular
purpose) which might be pertinent in considering whether to purchase the Assets,
assume the Assumed Liabilities or to make and enter into this Agreement, except,
in each case, to the extent of the limited representations set forth in Section
3 hereof. Seller is not liable or bound in any manner by any warranties, either
- - -
expressed or implied, guaranties, or any promises, statements, representations
or information pertaining to the Total Assets or to the value thereof made or
furnished by any broker or any real estate agent, employee, servant or other
Person representing or purporting to represent Seller. As of the Agreement Date,
Buyer is not aware of any events, facts or circumstances which, individually or
in the aggregate, have or would have a Material Adverse Effect.
4.5 Liens. Buyer acknowledges that it is acquiring the Assets
-----
subject to the matters described in Schedules VI, VII and VIII and the Existing
-- --- ----
Debt described in Schedule II, and such other matters as are permitted pursuant
--
to the terms of this Agreement.
4.6 Purchase for Investment. Buyer will acquire the Joint Venture
-----------------------
Interests for its own account for investment and not with a view toward any
resale or distribution thereof, without prejudice, however, to the rights of
Buyer at all times to sell or otherwise dispose of all or any part of such
securities under an effective registration statement under the Securities Act of
1933, as amended, or under an exemption from such registration available under
the Securities Act of 1933, as amended.
4.7 Sufficient Funds. Buyer has sufficient funds available to it to
----------------
purchase the Assets pursuant to this Agreement and will not, prior to Closing,
incur third party debt to finance any portion of the Purchase Price (it being
understood and acknowledged that concurrently with the execution and delivery of
this Agreement by the parties hereto, each of the Subscription Agreement and the
Heller Lease (in each case, executed copies of which have heretofore been made
available to Seller) shall have been executed and delivered by the respective
parties thereto.)
4.8 Title and Survey. Prior to the Agreement Date, Buyer has
----------------
reviewed (i) the Title Commitments or other reports with respect to the Real
Estate Assets described on Schedule XXIV and (ii) the Surveys with respect to
----
the Real Estate Assets described on Schedule XXV. Buyer hereby acknowledges its
---
approval as of the Agreement Date of the condition of title to the Real Estate
Assets, subject to Seller's fulfilling its obligation to deliver the documents
described in Sections 7.4(b)(x) through (b)(xiii), inclusive, hereof.
--------- ---------
4.9 Inspection. Prior to the Agreement Date, Buyer has inspected the
----------
Total Assets and any operating files maintained by Seller or its property
managers in connection with the ownership, leasing, maintenance and/or
management of the Total Assets, including, without limitation, the Leases, lease
files, operating agreements, insurance policies, bills, invoices,
-22-
<PAGE>
receipts and other general records relating to the Total Assets, correspondence,
surveys, plans and specifications, warranties for services and materials
provided, environmental assessments and similar materials, in each case, as
Buyer has deemed necessary in connection with making its determination to
execute and deliver this Agreement. Buyer hereby indemnifies Seller and holds
Seller harmless from and against any claim for liabilities, costs, expenses
(including reasonable attorney's fees), damages or injuries arising out of or
resulting from physical injury or damages to persons or property resulting from
the inspections of the Total Assets by Buyer or its agents other than injury or
damages resulting from Seller's gross negligence or willful misconduct, and such
indemnity shall survive Closing or any termination of this Agreement.
4.10 No Other Representations or Warranties. Except for the
--------------------------------------
representations and warranties contained in this Section 4 and in Section 8
- -
hereof, neither Buyer nor any other Person makes any other express or implied
representation or warranty on behalf of Buyer or any of its affiliates.
Section 5. Covenants.
---------
5.1 Compliance. During the period commencing on the Agreement Date
----------
and ending on the Closing Date, Seller will, in all material respects, comply
with and abide by all of the covenants, conditions and requirements set forth or
imposed by, related to or arising out of all statutes, laws, ordinances, rules,
regulations, plans and specifications, permits, agreements, contracts,
authorizations or approvals related or applicable to any portion of the Assets,
and will use commercially reasonable efforts to maintain all contracts, permits
and other agreements affecting the Assets in good standing and free from
delinquency or material default, other than those which are modified, rescinded
or terminated in the ordinary course of business or in connection with Pending
Transactions and those the rescission, modification or termination of which
would not reasonably be expected to have a Material Adverse Effect.
5.2 Notices of Violations. During the period commencing on the
---------------------
Agreement Date and ending on the Closing Date, in the event that Seller receives
any notice from any County, or any other governmental or quasi-governmental
authority having jurisdiction over any of the Real Estate Assets, of a violation
or alleged violation of any statute, law, ordinance, rule, permit, regulation or
agreement governing the planning, development, construction, occupancy, use or
maintenance of any portion of any of the Real Estate Assets, or of any permit,
approval or authorization issued in connection therewith or of any contemplated
or pending investigation with respect thereto, Seller promptly will deliver a
copy of such notice to Buyer; and Buyer will have the option (but will not be
required) either to (a) participate with Seller in responding to such notice or
(b) seek independently to intervene in any proceeding of which notice has been
given for the purpose of protecting Buyer's interests in and with respect to any
of the Real Estate Assets.
5.3 Ownership of Assets; Proceeds of Asset Sales. During the period
--------------------------------------------
commencing on the Agreement Date and ending on the Closing Date, Seller shall
not without the prior consent of Buyer (which consent shall not be unreasonably
withheld, conditioned or delayed) directly or indirectly sell, transfer,
encumber or otherwise dispose of any of the Assets
-23-
<PAGE>
or any portion thereof to any Person, other than sales, transfers or other
dispositions of Assets (i) constituting non-material equipment or personalty
made in the ordinary course of business, (ii) as contemplated by Sections 10.1
----
and 10.2 hereof, (iii) constituting overdue accounts receivable arising in the
----
ordinary course of business, but only in connection with the compromise or
collection thereof consistent with sound business practices (and not as a part
of any bulk sale or financing of receivables) or (iv) pursuant to any or all of
the transactions described in Schedule XV (collectively, the "Pending
-- -------
Transactions"); provided, that the Net Sale Proceeds from any sale, transfer,
- - ------------
encumbrance or disposition of Assets, in whole or in part, pursuant to any
Pending Transaction consummated after the Agreement Date and prior to the
Closing Date (collectively, the "Asset Sales Proceeds") shall be promptly
--------------------
delivered by Seller to Escrow Agent, and such Asset Sales Proceeds shall be held
in an interest-bearing account with an institution the deposits in which are
insured by an agency of the United States or, upon joint instructions of Seller
and Buyer, invested in securities of the United States; provided that, in each
--------
case, interest accruing thereon will constitute part of such Asset Sales
Proceeds.
5.4 Operation of Assets Subsequent to the Agreement Date. Seller
----------------------------------------------------
agrees that, except for Pending Transactions (including all transactions
incident thereto as set forth on Schedule XV, such as (i) the incurrence of
--
indebtedness for borrowed money and (ii) the incurrence of capital expenditures)
and except as required or contemplated by this Agreement, the Subscription
Agreement, the Tax Credit LP Interest Purchase Agreement or the Merger Agreement
or otherwise consented to or approved by Buyer (which consent or approval shall
not be unreasonably withheld, conditioned or delayed), during the period
commencing on the Agreement Date and ending on the Closing Date:
(a) Echelon will, and will cause its Subsidiaries to, operate, manage
and maintain the Assets and otherwise conduct its business relating to the
Assets only according to its ordinary course of business consistent with past
practice and will use reasonable best efforts to preserve intact its business
organization, keep available the services of its officers and employees and
maintain satisfactory relationships with licensors, suppliers, distributors,
clients, landlords, tenants, joint venture partners, employees and others having
business relationships with it;
(b) Echelon shall not, and shall cause its Subsidiaries not to, (i)
make any change in or amendment to its articles of incorporation or by-laws or
comparable governing documents (including, without limitation, documents
governing Seller's Joint Venture Interests, but excluding documents governing
Seller's Tax Credit LP Interests); (ii) authorize for issuance, issue, sell or
deliver (or agree or commit to issue, sell or deliver), whether pursuant to the
issuance or granting of options, warrants, commitments, subscriptions, rights to
purchase or otherwise, any shares of its capital stock (other than in connection
with (A) the exercise of certain options outstanding on the date hereof or (B)
the exercise of subscription rights set forth in the Echelon International
Corporation 1996 Employee Stock Purchase Plan (as in effect on the date hereof
and as may be amended as contemplated by the Merger Agreement)); (iii) sell or
pledge any stock owned by it in any of its Subsidiaries or any other entity in
which it has an equity interest (including the issuers of the Joint Venture
Interests, but excluding the issuers of Tax Credit LP Interests); (iv) enter
into any contract or commitment with respect to capital expenditures; (v)
acquire (by merger, consolidation, or acquisition of stock or assets or
-24-
<PAGE>
otherwise) any corporation, partnership or other business or division thereof
(or any interest therein); provided, that any subsidiary of Echelon may be
--------
merged with and into Echelon or any other subsidiary of Echelon; (vi) acquire a
material amount of assets or securities; (vii) except to the extent required
under existing Employee Benefit Plans as in effect on the date of this
Agreement, (A) increase the compensation or fringe benefits of any of its
directors, officers or employees, (B) grant any severance or termination pay not
currently required to be paid under existing severance plans, (C) enter into any
employment, consulting or severance agreement or arrangement with any present or
former director, officer or other employee of Seller or (D) establish, adopt,
enter into or amend or terminate any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of any
directors, officers or employees; (viii) except as provided in Sections 5.3 and
---
5.5 hereof, transfer, lease, license, guarantee, sell, mortgage, pledge, dispose
- - ---
of, encumber or subject to any lien, any material assets or incur or modify any
new or existing indebtedness for borrowed money; (ix) make any material Tax
election or settle or compromise any material Tax liability, in each case only
to the extent same would adversely affect the Assets; (x) except as required by
applicable law or GAAP, make any material change in its method of accounting;
(xi) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of
Echelon or any of its Subsidiaries that owns any Assets (other than in
connection with (A) the Merger or (B) any merger of a subsidiary of Echelon with
and into Echelon or any other subsidiary of Echelon); (xii) except pursuant to
any contract relating to any Pending Transaction, make any loans, advances or
capital contributions to, or investment in, any other Person; (xiii) declare,
set aside or pay any dividends on, or make any other distributions in respect
of, any of its capital stock other than dividends and distributions by a direct
or indirect subsidiary of Echelon to its parent; (xiv) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock; (xv) enter into any agreement providing for the acceleration of
payment or performance or other consequence as a result of the transactions
contemplated hereby or any other change of control of Echelon or its
subsidiaries other than with respect to the satisfaction of Existing Debt; (xvi)
purchase, redeem or otherwise acquire any shares of capital stock of Seller or
any rights, warrants or options to acquire any such shares or other securities;
or (xvii) agree, in writing or otherwise, to take any of the foregoing actions;
and
(c) Echelon shall not, and shall not permit any of its Subsidiaries
to, transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of,
encumber or subject to any lien any of the Assets associated with the general
ledger accounts listed in Schedule XXIII annexed hereto and made a part hereof
-----
for any purpose (including, without limitation, for the purpose of satisfying
any Excluded Liabilities) except as related to, and for the benefit of, the
Assets.
5.5 Status of Agreements. (a) During the period commencing on the
--------------------
Agreement Date and ending on the Closing Date, except in connection with Pending
Transactions, the Required Consents or as set forth on Schedule V or otherwise
-
consented to or approved by Buyer (which consent or approval shall not be
unreasonably withheld, conditioned or delayed), Seller will not do any of the
following:
-25-
<PAGE>
(i) cancel or amend or modify in any material respect, (x)
any Contract or Lease affecting any of the Real Estate Assets or (y)
any agreements, documents or instruments relating to the Existing
Debt;
(ii) enter into any new contract, agreement or commitment
(other than (x) a contract, agreement or commitment that involves base
payments or the performance of services by Seller of an amount or
value (as measured by the revenue derived therefrom during fiscal year
1998-1999) not in excess of $12,000 annually or terminable by Seller
on not more than 90 days notice without penalty, or (y) a contract,
agreement or commitment that is entered into (A) in order to preserve
public safety as to one or more Assets or (B) as a result of an
emergency situation or force majeure event affecting one or more
Assets), any new Lease (other than a Lease demising space of less than
5000 square feet on terms and conditions consistent with the current
leasing practices of the subject property and otherwise consistent
with good business practice) affecting any of the Real Estate Assets
or any new agreements, documents or instruments relating to the
Existing Debt; or
(iii) intentionally do any act or omit to do any act that
will cause a material breach of any Contract or Lease or agreements,
documents or instruments relating to the Existing Debt.
(b) During the period commencing on the Agreement Date and ending on
the Closing Date, Echelon will not, without the prior consent of Buyer (not to
be unreasonably withheld, conditioned or delayed), amend, modify or supplement
the Merger Agreement (including the Schedules and Exhibits thereto) or grant any
consent or waiver under the Merger Agreement, in each case that would in any
manner materially and adversely affect the rights, obligations and interests of
Buyer under this Agreement (it being expressly understood and agreed that in no
event shall Section 4.07 or Section 5.01 of the Merger Agreement be amended,
modified or supplemented (and in no event shall Seller grant any consent or
waiver with respect to any such Section) without the prior consent of Buyer (not
to be unreasonably withheld, conditioned or delayed)). The parties hereto
acknowledge that Buyer is a third party beneficiary of the agreements made by
Echelon pursuant to Section 4.07 of the Merger Agreement and that Seller shall
be required to provide Buyer with any and all information required to be
provided to Parent (as defined in the Merger Agreement) pursuant to Section
4.07(c) of the Merger Agreement. Nothing in this Section 5.5(b), however, shall
------
in any manner whatsoever require that the Board of Directors of Echelon take any
action or refrain from taking any action, in each case which is permitted under
Section 4.07 of the Merger Agreement.
5.6 Further Assurances. On or after the Closing Date and without
------------------
further consideration, each of Seller and Buyer shall execute, acknowledge and
deliver such further agreements, assignments, deeds, certificates, assumptions,
transfers and assurances and shall take, or cause to be taken, such further
actions, in each case, as shall be reasonably requested by Buyer or Seller from
time to time for the more effective transfer, assignment and conveyance to Buyer
of any of the Assets or the Assumed Liabilities, including without limitation,
obtaining the
-26-
<PAGE>
consent of third parties (without obligating Buyer or Seller or their respective
affiliates to spend money or assume obligations in connection therewith), as, in
the reasonable opinion of Buyer or Seller, as the case may be, or their
respective counsel, are necessary to transfer, assign and convey the Assets to
Buyer, the assumption by Buyer of the Assumed Liabilities, the consummation of
the transactions contemplated by this Agreement or otherwise in the effectuation
of the intentions and purposes of this Agreement; provided, that all reasonable
--------
out-of-pocket costs and expenses incurred in connection with any of the
foregoing actions shall be for the account of the party requesting such actions
subject, in each case, to providing reasonable documentation of such out-of-
pocket costs and expenses, unless such actions relate to the Assumed
Liabilities, in which case all reasonable out-of-pocket costs and expenses in
connection therewith shall be for the account of Buyer (irrespective of whether
such actions were at the request of Seller or Buyer). In addition to and not in
limitation of the foregoing provisions of this Section 5.6, Buyer shall,
---
promptly following Closing, (i) establish all bank accounts necessary to hold
the security deposits delivered by tenants pursuant to the Leases, and shall
fund such accounts out of its own funds in amounts equal to the security
deposits held by Seller in respect thereof at Closing (including any interest
accrued thereon), (ii) deliver notices to the tenants who deposited such
security deposits under such Leases, confirming that Buyer is holding such
security deposits, the accounts where same are held and the amount of such
security deposits and (iii) take any and all other actions as required by
applicable law with respect to the security deposits, if any, delivered by
tenants pursuant to the Leases or the leases relating to the Residential
Properties. The provisions of this Section 5.6 shall survive Closing for a
---
period of one year from the Closing Date.
5.7 Consents. To the extent that a claim can be made successfully
--------
that the transactions contemplated hereby will constitute the assignment of any
contract, lease, commitment, sales order, purchase order, account, license,
permit or undertaking requiring the consent of another party thereto, this
Agreement shall not constitute an agreement to assign the same if an attempted
assignment would constitute a breach thereof. During the period commencing on
the Agreement Date and ending on the Closing Date, Seller agrees that it will
use its commercially reasonable efforts (without obligating Seller or its
affiliates to spend money or assume obligations in connection therewith) to
obtain the written consent of the other necessary parties to the assignment of
such contracts, leases, commitments, sales orders, purchase orders, accounts,
licenses, permits and undertakings, and if such consent is not obtained, Seller
will use commercially reasonable efforts (without obligating Seller or its
affiliates to spend money or assume obligations in connection therewith) to
cooperate with Buyer in any lawful arrangement designed to provide Buyer the
benefits under any such documents.
5.8 Use of Business Names by Buyer. From and after the Closing Date,
------------------------------
Seller acknowledges that Buyer has the absolute and exclusive proprietary right
to the name "Echelon" as used in relation to the Assets or any name confusingly
similar to the foregoing and to all trademarks, trade names, logos and signage
incorporating "Echelon" or any name confusingly similar to the foregoing. All
rights of Seller and its respective affiliates in and to any trademarks, trade
names, logos, tag lines and signage incorporating "Echelon" and the goodwill
represented thereby and pertaining thereto have been assigned to Buyer pursuant
to this Agreement. Accordingly, Seller agrees that it will not, and will cause
its affiliates not to, use (i) the name
-27-
<PAGE>
"Echelon" or any name confusingly similar to the foregoing or any trademark,
logo, tag lines or signage incorporating the name "Echelon" or any name
confusingly similar to the foregoing and (ii) the Intellectual Property in any
manner, including in connection with the sale of any products or services or
otherwise in the conduct of its business. Notwithstanding the foregoing, for a
period of 180 days after the Closing Date, Seller shall have the right to use
the word "Echelon" as its tradename, but only for the purposes of identifying
itself as the appropriate business entity in dealing with third Persons (i) to
facilitate the sale of the Assets to Buyer and the transfer of the Other Assets
to the Other Buyer and (ii) in connection with the management of, and any sale
to any third party purchaser of, Seller's interest in the assets subject to the
Excepted Leases, and not for any other purpose, including, without limitation,
use of "Echelon" as a trademark for the purpose of marketing or promoting any
product or service.
5.9 Bringdown of Seller's Representations. On the Escrow Closing
-------------------------------------
Date, Seller shall deliver to Buyer a certificate (a "Bringdown Certificate")
---------------------
executed by the President, any Vice President or a managing member of each of
Echelon and its subsidiaries signatory hereto certifying that, as of the Escrow
Closing Date, the representations and warranties made by Seller in this
Agreement are true and correct in all material respects, except for a change in
facts and circumstances which requires a change in any such representation and
warranty, and in such event the certificate shall specify any such change in
reasonable detail. Seller's representations and warranties set forth in such
certificate shall not survive the Escrow Closing Date (it being expressly
understood and agreed that, notwithstanding anything to the contrary (express or
implied) set forth herein, in the case of any breach by Seller of any of
Seller's representations and warranties, Buyer's sole right shall be the
exercise (if it is entitled to do so) of its right of termination pursuant to
Section 9.1(f) hereof (and Buyer's sole remedies in connection therewith shall
------
be those expressly set forth in Section 9.2 hereof) and Seller shall not at any
---
time (whether before, on or after the Escrow Closing Date) have any further
liability whatsoever with respect to any such breach of Seller's representations
and warranties). If, and only if, all of the changes in Seller's representations
and warranties set forth in such Bringdown Certificate (other than any changes
related to Pending Transactions), taken in the aggregate, would have a Material
Adverse Effect, then Buyer shall have the right by written notice to Seller
actually received by Seller not later than the expiration of the Offer as
described in the Merger Agreement to terminate this Agreement pursuant to
Section 9.1(f) hereof. In the event that Seller shall deliver one or more new
------
Escrow Date Notification Certificates pursuant to the terms of Section 7.3
---
hereof setting forth a new Escrow Closing Date, Seller shall, on each such new
each such new Escrow Closing Date, deliver to Buyer a new Bringdown Certificate
certifying as to the matters set forth above in this Section 5.9 as of such new
---
Escrow Closing Date.
5.10 Cooperation Regarding Taxes. After the Closing Date, Buyer and
---------------------------
Seller shall cooperate with each other and with each other's agents, including
accounting firms and legal counsel, in connection with matters relating to Taxes
of Buyer, Seller and their affiliates including (i) the preparation and filing
of any Tax Returns, (ii) determining the liability for and amount of any Taxes
due (including estimated Taxes) or the right to and amount of any refund of
Taxes, (iii) examinations of Tax Returns, and (iv) any administrative or
judicial proceeding in respect of Taxes assessed or proposed to be assessed.
Such information and documents shall be delivered without representation or
warranty and shall include, without limitation, records,
-28-
<PAGE>
returns, schedules, documents, work papers or other relevant materials. Buyer
and Seller shall also make available to each other, as reasonably requested and
on a mutually convenient basis, personnel (including officers, directors,
employees and agents of Buyer or Seller or their respective affiliates) to
provide such assistance as might be reasonably required in connection of the
matters set forth in (i), (ii), (iii) and (iv) above. Any information provided
under this Section 5.10 shall be kept confidential by the party receiving the
----
information or documents, except as may otherwise be necessary in connection
with the filing of Tax Returns or in connection with any communications with a
tax authority or any administrative or judicial proceedings relating to Taxes or
any Tax Return. Buyer and Seller and their respective affiliates shall make
available to each other for inspection and copying during normal business hours
upon reasonable notice all Tax records in their possession to the extent
reasonably required by the other party in connection with the preparation,
review or audit of Tax Returns, Tax litigation and claims, and the resolution of
items under this Agreement. All reasonable out-of-pocket costs and expenses
incurred in connection with any of the foregoing actions shall be for the
account of the party requesting such actions (subject to providing reasonable
documentation of such out-of-pocket costs and expenses). The provisions of this
Section 5.10 shall survive Closing for a period of one year after the Closing
----
Date.
5.11 Insurance. (a) For six years from the Closing Date, Echelon
---------
shall maintain in effect Echelon's current directors' and officers' liability
insurance covering those Persons who are covered on the Agreement Date by
Echelon's directors' and officers' liability insurance policy (a copy of which
has been heretofore delivered to Buyer); provided that Seller may substitute for
--------
such policies, policies with at least the same coverage containing terms and
conditions which are no less advantageous and provided that said substitution
does not result in any gaps or lapses in coverage with respect to matters
occurring prior to the Closing Date; provided, further, that in no event shall
-------- -------
Seller be required to expend pursuant to this Section 5.11(a) more than an
-------
amount per year equal to 200% of the current annual premiums paid by Seller for
such insurance (it being understood and agreed that if the annual premiums
exceed such amount, Seller shall be required to obtain a policy with the
greatest coverage available for a cost not exceeding such amount). The
provisions of this Section 5.11(a) shall survive Closing for a period of six
-------
years after the Closing Date.
(b) During the period commencing on the Agreement Date and ending on
the Closing Date, Seller will maintain the insurance policies relating to the
Real Estate Assets set forth on Schedule XXII; provided, that Seller may
---- --------
discontinue or reduce any such insurance to the extent that (x) it is no longer
available at commercially reasonable rates or (y) similarly situated companies
are, in general, reducing or eliminating such insurance in a manner consistent
with the changes being effected by Seller, unless, in each case, Buyer shall
have requested in writing that Seller not discontinue or reduce, as the case may
be, such insurance and shall have paid to Seller in immediately available funds
all costs (including, without limitation, all premiums) and expenses of Seller
in connection with not discontinuing or reducing, as the case may be, such
insurance (it being expressly understood and agreed that in the event of
termination of this Agreement pursuant to Section 9.1 hereof, Buyer shall not be
---
entitled to any refund or reimbursement of any amounts previously paid by it to
Seller as contemplated above).
-29-
<PAGE>
5.12 Reasonable Best Efforts. During the period commencing on the
-----------------------
Agreement Date and ending on the Closing Date, subject to the terms and
conditions provided herein, each of Buyer and Seller shall cooperate and use
their respective reasonable best efforts to take, or cause to be taken, all
appropriate action, and to make, or cause to be made, all filings necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including, without
limitation, their respective reasonable best efforts to obtain, prior to the
Closing Date, all licenses, permits, approvals, authorizations, qualifications
and orders of governmental authorities and parties to Contracts with Seller as
are necessary for consummation of the transactions contemplated by this
Agreement.
5.13 Access to Information Concerning Assets. During the period
---------------------------------------
commencing on the Agreement Date and ending on the Closing Date, Seller shall,
upon reasonable notice, afford Buyer and its counsel, accountants, consultants
and other authorized representatives, reasonable access (subject to the rights
of tenants under the Leases and the leases relating to the Residential
Properties) during normal business hours to the employees, properties, books and
records of Seller in order that Buyer may have the opportunity to make such
investigations as it shall desire of the Assets. Seller shall furnish promptly
to Buyer (a) a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of Federal
or state securities laws and (b) all other information in Seller's possession
concerning the Assets as Buyer may reasonably request. Seller agrees to cause
its officers and employees to furnish such additional financial and operating
data and other information and respond to such inquiries, in each case as Buyer
shall from time to time reasonably request in relation to the Assets.
5.14 Notification of Certain Matters. During the period commencing on
-------------------------------
the Agreement Date and ending on the Closing Date, Seller shall give prompt
notice to Buyer, and Buyer shall give prompt notice to Seller, of the
occurrence, or failure to occur, of (x) any event, which occurrence or failure
to occur would likely cause any representation or warranty contained in this
Agreement to be untrue in any material respect and (y) the existence of any
Material Adverse Effect. During the period commencing on the Agreement Date and
ending on the Closing Date, each of Seller and Buyer shall give prompt notice to
the other party of any notice or other communication from any third party
alleging that the consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement.
5.15 HSR Act. Buyer and Seller shall, as soon as practicable and in
-------
any event within five Business Days following the Agreement Date, make any
required filings under the HSR Act and shall use their reasonable best efforts
to respond as promptly as practicable to all inquiries received with respect
thereto, including, without limitation, a request for additional information or
documentary material.
5.16 Access to Information Pursuant to Distribution Agreement. From
--------------------------------------------------------
and after the Closing Date, Buyer shall afford to Seller and its authorized
accountants, counsel and other designated representatives reasonable access
during normal business hours to the personnel, properties, books and records
received by Buyer or its subsidiaries from Seller at time
-30-
<PAGE>
of Closing insofar as same relates to the Total Assets and is reasonably
required by Seller or Florida Progress in connection with the satisfaction by
either of them of their respective obligations under the Distribution Agreement.
5.17 Witness Services Under Distribution Agreement. At all times from
---------------------------------------------
and after the Closing Date, Buyer shall use its commercially reasonable efforts
to make available to Seller, upon reasonable written request, its and its
subsidiaries' officers, directors, employees and agents as witnesses to the
extent that such Persons may be required in connection with the prosecution or
defense of any actual or threatened action, suit, arbitration, inquiry,
proceeding or investigation by or before any court, any governmental or other
regulatory or administrative agency, body or commission or any arbitration
tribunal insofar as such action, suit, arbitration, inquiry, proceeding or
investigation relates to the Total Assets and is reasonably required by Seller
or Florida Progress in connection with the satisfaction by either of them of
their respective obligations under the Distribution Agreement. Buyer shall be
entitled to receive from Seller, upon the presentation of invoices therefor,
payments for such amounts, relating to disbursements and other out-of-pocket
expenses (which shall be deemed to exclude the costs of salaries and benefits of
employees who are witnesses), as may be reasonably incurred in providing such
witness services.
5.18 Retention of Records. Except as otherwise agreed between Buyer
--------------------
and Seller in writing, Buyer shall, and shall cause its subsidiaries to, retain
all information relating directly and primarily to the Total Assets that is
delivered to or obtained by Buyer pursuant to the terms of this Agreement that
is less than ten years old until such information is at least ten years old
except that if, prior to the expiration of such period, information in the
possession or control of Buyer is to be destroyed or disposed of, and such
information is at least three years old, prior to destroying or disposing of any
such information, (1) Buyer shall provide no less than 30 days' prior written
notice to Seller specifying the information proposed to be destroyed or disposed
of and (2) if, prior to the scheduled date for such destruction or disposal,
Seller requests in writing that any of the information proposed to be destroyed
or disposed of be delivered to Seller, Buyer promptly shall deliver the
requested information to a location specified by Seller, at Seller's sole cost
and expense.
Section 6. Conditions Precedent to Closing.
-------------------------------
6.1 Buyer Conditions. The obligation of Buyer to close the
----------------
transaction which is the subject of this Agreement is subject to the fulfillment
as of the Closing Date or as of the Escrow Closing Date, as applicable, of each
of the following conditions, unless any unfulfilled condition is waived in
writing by Buyer:
(a) Officer's Certificate. Echelon shall have delivered to
---------------------
Buyer a certificate executed by the President, any Vice President or a managing
member of each of Echelon and its subsidiaries signatory hereto certifying that,
as of the Escrow Closing Date, Seller has performed in all material respects
each of its obligations and complied in all material respects with each
agreement and covenant of Seller to be performed or complied with by it
-31-
<PAGE>
under this Agreement on or prior to such date, including the delivery of the
certificate required under Section 5.9 hereof.
---
(b) Delivery of Documents and Other Items. On or prior to the
-------------------------------------
Escrow Closing Date, all documents and other items specified in Section 7.4
---
hereof shall have been delivered to Escrow Agent.
(c) Merger. The Merger shall have been consummated on or prior
------
to the Closing Date.
(d) Transfer of Other Assets. The transfer of the Other Assets
------------------------
to the Other Buyer as contemplated by the Subscription Agreement in exchange for
the consideration provided therein shall have been consummated on or prior to
the Closing Date.
(e) Purchase and Sale of Tax Credit LP Interests. The purchase
--------------------------------------------
and sale of the Tax Credit LP Interests as contemplated by the Tax Credit LP
Interest Purchase Agreement shall have been consummated on or prior to the
Closing Date.
(f) Leasing of the Other Assets. The leasing of the Other
---------------------------
Assets as contemplated by the Heller Lease shall have been consummated on or
prior to the Closing Date.
(g) Required Consents. All Required Consents shall have been
-----------------
executed and delivered by the parties providing such Required Consents on or
prior to the Escrow Closing Date.
(h) HSR Act. Any applicable waiting period (and any extension
-------
thereof) under the HSR Act applicable to the sale of Assets to Buyer shall have
expired or been terminated as of the Escrow Closing Date.
(i) No Injunction. No preliminary or permanent injunction or
-------------
other order shall have been issued by any court or by any governmental or
regulatory agency, body or authority which prohibits the consummation of the
transactions contemplated by this Agreement and which is in effect on the
Closing Date; provided, that, in the case of a decree, injunction or other
--------
order, each of the parties shall have used reasonable best efforts to prevent
the entry of any such injunction or other order and to appeal as promptly as
possible any decree, injunction or other order that may be entered.
(j) Statutes. No law, statute, rule, regulation, executive
--------
order, decree or order of any kind shall have been enacted, entered, promulgated
or enforced by any court or governmental authority which prohibits the
consummation of the transactions contemplated by this Agreement as of the
Closing Date.
6.2 Seller Conditions. The obligation of Seller to close the
-----------------
transaction which is the subject of this Agreement is subject to the fulfillment
as of the Closing Date or as of the Escrow Closing Date, as applicable, of each
of the following conditions, unless any unfulfilled condition is waived in
writing by Seller:
-32-
<PAGE>
(a) Officer's Certificate. Buyer shall have delivered to Seller
---------------------
a certificate of the President or any Vice President of Buyer certifying that,
as of the Escrow Closing Date, Buyer has performed in all material respects each
of its obligations and complied in all material respects with each agreement and
covenant of Buyer to be performed or complied with by it under this Agreement on
or prior to such date.
(b) Delivery of Documents and Other Items. On or prior to the
-------------------------------------
Escrow Closing Date, all documents and other items (including payment of the
Purchase Price) specified in Section 7.5 hereof shall have been delivered to
---
Escrow Agent.
(c) Merger. The Merger shall have been consummated on or prior
------
to the Closing Date.
(d) Transfer of Other Assets. The transfer of the Other Assets
------------------------
to the Other Buyer as contemplated by the Subscription Agreement in exchange for
the consideration provided therein shall have been consummated on or prior to
the Closing Date.
(e) Purchase and Sale of Tax Credit LP Interests. The purchase
--------------------------------------------
and sale of the Tax Credit LP Interests as contemplated by the Tax Credit LP
Interest Purchase Agreement shall have been consummated on or prior to the
Closing Date.
(f) Leasing of the Other Assets. The leasing of the Other
---------------------------
Assets as contemplated by the Heller Lease shall have been consummated on or
prior to the Closing Date.
(g) Required Consents. All Required Consents shall have been
-----------------
executed and delivered by the parties providing such Required Consents on or
prior to the Escrow Closing Date.
(h) HSR Act. Any applicable waiting period (and any extension
-------
thereof) under the HSR Act applicable to the sale of Assets to Buyer shall have
expired or been terminated as of the Escrow Closing Date.
(i) No Injunction. No preliminary or permanent injunction or
-------------
other order shall have been issued by any court or by any governmental or
regulatory agency, body or authority which prohibits the consummation of the
transactions contemplated by this Agreement and which is in effect on the
Closing Date; provided, that, in the case of a decree, injunction or other
--------
order, each of the parties shall have used reasonable best efforts to prevent
the entry of any such injunction or other order and to appeal as promptly as
possible any decree, injunction or other order that may be entered.
(j) Statutes. No law, statute, rule, regulation, executive
--------
order, decree or order of any kind shall have been enacted, entered, promulgated
or enforced by any court or governmental authority which prohibits the
consummation of the transactions contemplated by this Agreement as of the
Closing Date.
-33-
<PAGE>
Section 7. Closing.
-------
7.1 Time and Place. The Closing will take place at the offices of
--------------
White & Case LLP, 1155 Avenue of the Americas, New York, New York 10036 on the
date of consummation of the Merger, or at such other place and time as shall be
agreed upon by the parties hereto (the actual date of the Closing being
hereinafter referred to as the "Closing Date").
------------
7.2 Closing Expenses. All costs and expenses associated with the
----------------
purchase and sale of the Assets contemplated herein, including without
limitation, environmental and property condition reports (but only to the extent
procured prior to the Agreement Date with the approval of Seller), title
insurance premiums, survey preparation costs, transfer taxes (including all
stamp, transfer, documentary, sales, use, registration and other Taxes),
document recordation and filing charges, escrow expenses and other customary
costs of Closing, shall be paid by Seller. Each of Buyer and Seller shall be
responsible for its due diligence costs and expenses (including, without
limitation, the payment of the fees and disbursements of its attorneys) and
Seller shall make any required payments to the Broker in accordance with Section
8 hereof.
- - -
7.3 Notification of Escrow Closing Date. Seller shall deliver to
-----------------------------------
Buyer a certificate (an "Escrow Date Notification Certificate") specifying the
------------------------------------
Escrow Closing Date (which in no event shall be earlier than the 30th day after
the Agreement Date) on which the Escrowed Items are to be delivered to Escrow
Agent, such Escrow Date Notification Certificate to be delivered by Seller to
Buyer no later than one day prior to such Escrow Closing Date; provided that if
--------
the Tender Offer Expiration Date shall not have occurred on or prior to the
third Business Day after such Escrow Closing Date, Escrow Agent shall, upon
written request from Buyer, return the Escrowed Items to the party which had
previously deposited same with Escrow Agent, whereupon Seller shall have the
right to deliver a new Escrow Date Notification Certificate to Buyer upon the
terms set forth above specifying a new Escrow Closing Date. Seller shall have
the right to deliver one or more Escrow Date Notification Certificates upon the
terms set forth above until such time as the Tender Offer Expiration Date shall
have occurred or, if earlier, such time as this Agreement shall have been
terminated pursuant to Section 9.1 hereof.
---
7.4 Documents and/or Deliveries. On or prior to the Escrow Closing
---------------------------
Date, as a condition to Closing, the following shall be delivered to Escrow
Agent, which shall have been executed by Seller to the extent applicable (other
than those agreements, documents and instruments described in Sections
7.4(b)(vi), (b)(viii), (b)(ix), (c)(i), and (d)(i) hereof, all of which shall
- - ---------- --------- ------- ------ ------
have been made available to Buyer during normal business hours at one or more
locations previously identified to Buyer (which location shall, in the case of
the agreements, documents and instruments described in Sections 7.4(b)(vi),
----------
(c)(i) and (d)(i) hereof, be 450 Carillon Parkway, Suite 200, St. Petersburg,
- - ------ ------
Florida) and which shall remain in such locations until the Closing Date):
(a) with respect to Echelon and each Subsidiary: (i) good
standing certificates and authority to do business certificates issued by the
relevant authorities in all relevant jurisdictions, in each case, dated not more
than thirty (30) days prior to the Closing Date; (ii) certified corporate
resolutions of Echelon and corporate or limited liability company
-34-
<PAGE>
resolutions of each Subsidiary, or of the general partner in each Subsidiary
that is a limited partnership, as applicable, authorizing the execution and
delivery of this Agreement by Echelon or such Subsidiary and the consummation of
the transactions contemplated hereby; and (iii) incumbency certificates for the
officers of Echelon and each Subsidiary executing the documents to be executed
and delivered pursuant to this Agreement;
(b) with respect to the Real Estate Assets: (i) a special
warranty deed conveying title to the Real Estate Assets substantially in the
form annexed hereto as Exhibit A; (ii) a bill of sale with respect to the Real
-
Estate Assets substantially in the form annexed hereto as Exhibit B; (iii) an
-
assignment and assumption agreement with respect to Permits, Contracts and
Leases being assumed by Buyer in relation to the Real Estate Assets,
substantially in the form annexed hereto as Exhibit C; (iv) third-party consents
-
sought in connection with the consummation of the purchase and sale of the Real
Estate Assets but only to the extent actually obtained by Seller (it being
expressly understood and agreed, for avoidance of doubt, that so long as Seller
shall have complied with Section 5.7 hereof, no such third-party consents (other
---
than the Required Consents) shall be required to be obtained and in no event
shall any such third-party consents (other than the Required Consents) be a
condition precedent to the consummation of the transactions contemplated
hereby); (v) tenant estoppel statements, dated within one hundred and twenty
(120) days of the Closing Date, with respect to tenants occupying 50% of the
rentable square footage at the Commercial Property in the form specified in the
tenant's Lease or, if none, substantially in the form annexed hereto as Exhibit
D (it being understood that Seller does not warrant or guarantee any of the
- - -
information contained in tenant estoppel certificates); (vi) the originals (or
copies, if originals are unavailable) of existing Leases and all tenant files,
Contracts and files and records pertaining to any of the Real Estate Assets as
are in Seller's possession or in the possession of the current property manager
for any of the Real Estate Assets; provided, however, that Buyer will make all
-------- -------
originals available to Seller after Closing to the extent required by Seller in
connection with accounting, taxation, litigation or other proceedings involving
Seller's prior ownership of the any of the Real Estate Assets; (vii) notices to
the tenants renting space at the Real Estate Assets confirming that such Real
Estate Assets have been acquired by Buyer, in such form as Seller and Buyer
shall agree; (viii) originals (or copies, if originals are unavailable) of all
governmental licenses, permits and approvals relating to the occupancy or use of
any of the Real Estate Assets in the possession of Seller or Seller's current
property manager; (ix) those site plans, soil and substrata studies,
architectural renderings, plans and specifications, engineering plans and
studies, floor plans, landscape plans, utility schemes, tax bills and receipts
for current real estate taxes, keys and all other books, financial statements,
documentation, files or records covering, affecting or relating to the Real
Estate Assets in Seller's possession; (x) a Title Affidavit in the form annexed
hereto as Exhibit I; (xi) a Gap Indemnity in the form annexed hereto as Exhibit
-
J if required by the title insurance company; (xii) a FIRPTA Affidavit in the
- - -
form annexed hereto as Exhibit K; (xiii) such documents or other evidence as may
-
be required to satisfy all requirements raised in the Title Commitments;
provided, however, Seller shall not be required to satisfy requirements raised
- - -------- -------
in the Title Commitments relating to Real Estate Taxes, Existing Debt (other
than the delivery of the Required Consents relating to any Existing Debt in
accordance with the terms of this Agreement), Other Existing Debt, mechanics'
liens (other than the delivery of an affidavit certifying as to the status of
construction relating to any Real Estate Asset) or other matters which Buyer is
taking subject to pursuant to the terms of this Agreement;
-35-
<PAGE>
and (xiv) transfer tax forms and affidavits as may be required by governmental
authorities in connection with the recordation of the special warranty deeds;
(c) with respect to the Joint Venture Interests: (i) originals
(or copies, if originals are unavailable) of all articles of incorporation, by-
laws, limited liability company agreements, limited liability company operating
agreements, partnership agreements, venture agreements and other organizational
documents relating to the joint ventures to which the Joint Venture Interests
relate and (ii) all documents and instruments required effectively to transfer
such Joint Venture Interests to Buyer, including, without limitation, consents
from co-venturers sought pursuant to the terms of the relevant joint venture
documentation, as more particularly identified on Schedule V (it being expressly
-
understood and agreed, for avoidance of doubt, that so long as Seller shall have
complied with Section 5.7 hereof, no such consents (other than the Required
---
Consents) shall be required to be obtained and in no event shall any such
consents (other than the Required Consents) be a condition precedent to the
consummation of the transactions contemplated hereby);
(d) with respect to the Existing Debt: (i) originals (or copies,
if originals are unavailable) of all documents and instruments evidencing and
securing the Existing Debt and (ii) all documents and instruments required to
effect the assignment and assumption of the borrower's interest in the Existing
Debt from Seller to Buyer, including without limitation, if applicable, consents
sought from the holders of the Existing Debt, as more particularly identified on
Schedule V (it being expressly understood and agreed, for avoidance of doubt,
-
that so long as Seller shall have complied with Section 5.7 hereof, no such
---
consents (other than the Required Consents) shall be required to be obtained and
in no event shall any such consents (other than the Required Consents) be a
condition precedent to the consummation of the transactions contemplated
hereby);
(e) with respect to the Employee Loans: (i) the promissory note
relating to each such Employee Loan, duly endorsed, or attaching an allonge
executed by Seller in favor of Buyer, in either case without recourse to Seller;
(ii) original, executed counterparts of all other documents and instruments
relating to such Employee Loan; and (iii) any consents sought from the obligors
of such Employee Loans, if applicable, as more particularly identified on
Schedule V (it being expressly understood and agreed, for avoidance of doubt,
-
that so long as Seller shall have complied with Section 5.7 hereof, no such
---
consents (other than the Required Consents) shall be required to be obtained and
in no event shall any such consents (other than the Required Consents) be a
condition precedent to the consummation of the transactions contemplated
hereby);
(f) with respect to the transfer of any Intellectual Property,
including trademarks, an assignment and assumption agreement substantially in
the form annexed hereto as Exhibit F;
-
(g) originals of all Required Consents (but only to the extent
theretofore obtained by Seller);
-36-
<PAGE>
(h) a notice from the Chief Financial Officer of Echelon (which
notice shall be conclusive absent manifest error) setting forth the aggregate
amount of each of (i) the Excess Cash Amount, (ii) the Commercial Property
Security Deposit Amount, (iii) the Executive Loans Repayment Amount and (iv) the
Pre-Approved Expenditures; and
(i) with respect to the transfer of any of the Assets, such other
documents and instruments as are customary in connection with the transfer of
assets of the same type and which the parties deem reasonably necessary or
desirable to effect the consummation of the transactions contemplated hereby;
provided, however, that (i) Seller shall not be required to provide any
- - -------- -------
representations, warranties or indemnitees with respect to the Assets or title
thereto beyond those set forth in this Agreement, (ii) Seller shall not be
required to provide any representations or warranties which survive the Escrow
Closing Date and (iii) so long as Seller shall have complied with Section 5.7
---
hereof, no consents (other than the Required Consents) shall be required to be
obtained and in no event shall any such consents (other than the Required
Consents) be a condition precedent to the consummation of the transactions
contemplated hereby.
7.5 Buyer Documents and/or Deliveries. On or prior to the Escrow
---------------------------------
Closing Date, Buyer will deliver (subject only to receipt by Buyer of the
relevant Bringdown Certificate and Escrow Date Notification Certificate) the
following to Escrow Agent, which shall have been executed by Buyer to the extent
applicable:
(a) the balance of the Purchase Price payable in accordance with
Section 2.2(b) hereof;
------
(b) certified copies of resolutions of Buyer authorizing the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby;
(c) with respect to the transfer of any of the Assets, the
documents and instruments required to effect the assumption thereof, as more
particularly described in Sections 7.4(b)(iii), (c)(ii), (d)(ii) and (f) hereof;
----------- ------- ------- ---
(d) with respect to the transfer of any of the Assets and the
assumption of the Assumed Liabilities, such other documents and instruments as
are customary in connection with the transfer of assets and assumption of
liabilities of the same type and which the parties deem reasonably necessary or
desirable to effect the consummation of the transactions contemplated hereby;
provided, however, that (i) Seller shall not be required to provide any
- - -------- -------
representations, warranties or indemnitees with respect to the Assets or title
thereto beyond those set forth in this Agreement, (ii) Seller shall not be
required to provide any representations or warranties which survive the Escrow
Closing Date and (iii) so long as Seller shall have complied with Section 5.7
---
hereof, no consents (other than the Required Consents) shall be required to be
obtained and in no event shall any such consents (other than the Required
Consents) be a condition precedent to the consummation of the transactions
contemplated hereby; and
(e) transfer tax forms and affidavits as may be required by
governmental authorities in connection with the recordation of the special
warranty deeds.
-37-
<PAGE>
7.6 Execution and Delivery of Closing Statements. At Closing, in
--------------------------------------------
addition to any other documents required to be executed and delivered in
counterparts by both parties, Seller and Buyer will execute and deliver to each
other closing statements accounting for sums disbursed at Closing.
7.7 Joint Instructions to Escrow Agent. Not later than the Escrow
----------------------------------
Closing Date, Buyer and Seller shall execute and deliver to Escrow Agent a joint
direction letter in the form annexed hereto as Exhibit L, which shall be
irrevocable, (a) listing with specificity all items delivered by Buyer and/or
Seller pursuant to Sections 7.4 and 7.5 hereof (including, without limitation,
--- ---
(x) the balance of the Purchase Price and (y) the aggregate amount of Asset
Sales Proceeds) (all such items, together with the Deposit, collectively
referred to herein as the "Escrowed Items") and (b) setting forth irrevocable
--------------
instructions from Buyer and Seller to the effect that (x) immediately following
the filing by Escrow Agent of the Articles of Merger with respect to the Merger
with the Department of State of the State of Florida or the receipt of notice by
Escrow Agent that such filing has occurred, the Escrowed Items shall be promptly
delivered by Escrow Agent to the party entitled to same (including, without
limitation, that (A) the Purchase Price shall be delivered to the Surviving
Corporation (as defined in the Merger Agreement) or to such account as the
Surviving Corporation may designate and (B) the aggregate amount of Asset Sales
Proceeds shall be delivered to Buyer) as set forth in such joint direction
letter, (y) if this Agreement has been terminated pursuant to Section 9.1
---
hereof, the Escrowed Items shall be promptly delivered by Escrow Agent to the
party which had previously deposited same with Escrow Agent and (z) if Tender
Offer Expiration Date does not occur on or prior to the third Business Day after
the Escrow Closing Date, the Escrowed Items shall be promptly delivered by
Escrow Agent to the party which had previously deposited same with Escrow Agent.
7.8 Further Deliveries. Simultaneously with the delivery of the
------------------
joint instructions set forth in Section 7.7 of this Agreement, Buyer shall
---
execute and deliver (a) to Escrow Agent, together with Other Buyer, a joint
instruction letter in the form annexed hereto as Exhibit M and (b) to EIN
Acquisition Corp. a legal opinion addressed to Agent for the benefit of the
Lenders (in each case as such terms are defined in the Credit Agreement (as
defined in the Merger Agreement)) with respect to those matters contained in
Sections 4.1, 4.2 and 4.3(a), (b) and (c) of this Agreement.
Section 8. Brokers. Each party represents and warrants to the other
-------
that it has not consulted, dealt with or negotiated with any Person except
Seller has engaged Donaldson, Lufkin & Jenrette Securities Corporation (the
"Broker") to whom a commission is or could be due in connection with the sale of
- - -------
the Assets by Seller to Buyer, or any other matter associated with this
Agreement. Seller has made a separate agreement with Broker and will pay all
sums, if any, due to Broker in connection with this Agreement. Each party
hereby agrees to indemnify and hold harmless the other from any losses, damages,
costs, liabilities or expenses, including reasonable costs and attorneys' fees
incurred in trial, appellate or post-judgment proceedings, related to or arising
out of any breach of the representations, warranties and agreements set forth in
this Section 8 made by it. Anything to the contrary notwithstanding, the
-
representations,
-38-
<PAGE>
warranties and agreements in this Section 8 will survive Closing of the
-
transactions which are the subject of this Agreement, or any earlier termination
of this Agreement.
Section 9. Termination and Abandonment.
---------------------------
9.1 Termination. This Agreement may be terminated and the
-----------
transactions contemplated by this Agreement may be abandoned:
(a) by mutual consent of Buyer and Seller at any time prior to the
Tender Offer Expiration Date;
(b) by either Buyer or Seller at any time prior to the Closing Date,
if any court or governmental or regulatory agency shall have issued an order,
decree or ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the consummation of any of the transactions contemplated
by this Agreement and such order, decree or ruling or other action shall have
become final and nonappealable;
(c) by either Buyer or Seller, if the Closing Date fails to occur
within 90 days following the Agreement Date, unless such failure of the Closing
Date to occur shall be as a result of a material breach of any representation,
warranty, obligation, covenant, agreement or condition set forth in this
Agreement on the part of the party seeking to terminate this Agreement;
(d) by either Buyer or Seller at any time prior to the Closing Date,
if the Merger Agreement shall have been terminated and be of no further force
and effect;
(e) by either Buyer or Seller at any time prior to the Tender Offer
Expiration Date, if any of the Subscription Agreement, the Heller Lease or the
Tax Credit LP Interest Purchase Agreement shall have been terminated and be of
no further force and effect;
(f) by Buyer on or at any time prior to the Escrow Closing, in the
event (i) that Buyer exercises its right of termination as provided in Section
5.9 or (ii) in the event of (A) a breach by Seller of its representations and
- - ---
warranties set forth herein (other than arising out of or related to Pending
Transactions) which, taken in the aggregate, would have a Material Adverse
Effect or (B) a breach by Seller of its material covenants or agreements set
forth herein, in each case which (1) cannot or has not been cured prior to the
earlier of (x) 15 days after the giving of written notice of such breach to
Seller and (y) two Business Days prior to the Tender Offer Expiration Date and
(2) has not been waived by Buyer; or
(g) by Seller on or at any time prior to the Escrow Closing, in the
event of a breach by Buyer of any representation, warranty, covenant or
agreement contained in this Agreement, which (A) cannot or has not been cured
prior to the earlier of (i) 15 days after the giving of written notice of such
breach to Buyer, and (ii) two Business Days prior to the Tender Offer Expiration
Date and (B) has not been waived by Seller, except, in any case where such
failures are not reasonably likely to affect adversely the ability of Buyer to
consummate the transactions contemplated by this Agreement.
-39-
<PAGE>
9.2 Effect of Termination. (a) In the event of the termination of
---------------------
this Agreement pursuant to Section 9.1 hereof by Buyer or Seller, as the case
---
may be, written notice thereof shall forthwith be given to the other party
specifying the provision hereof pursuant to which such termination is made, and
this Agreement shall become void and have no effect and the parties will have no
further rights or obligations hereunder, except that Sections 7.2, 9.2, 12.7,
--- --- ----
12.11 and 12.15 shall survive any termination of this Agreement.
- - ----- -----
(b) (i) In the event of a termination of this Agreement pursuant to
Section 9.1(a), (b), (c), (d), (e) or (f) above, the Deposit shall be returned
------ --- --- --- --- ---
to Buyer.
(ii) In the event of a termination of this Agreement pursuant to
Section 9.1(d) above following the termination of the Merger Agreement pursuant
------
to Section 5.01(a) of the Merger Agreement (but only if Parent and Echelon shall
have entered into an alternative transaction within 180 days after such
termination of the Merger Agreement pursuant to which Parent (or an affiliate
thereof) would directly or indirectly acquire Echelon, the Excepted Leases or
all or substantially all of the assets or equity of Echelon and its
Subsidiaries) or Section 5.01(f), (g) or (k) of the Merger Agreement, Seller
shall pay to Buyer a sum of $3,500,000.
(iii) In the event of a termination of this Agreement pursuant to (x)
Section 9.1(d) above following the termination of the Merger Agreement pursuant
------
to Section 5.01(a) of the Merger Agreement (but only if Parent and Echelon shall
have entered into an alternative transaction within 180 days after such
termination of the Merger Agreement pursuant to which Parent (or an affiliate
thereof) would directly or indirectly acquire Echelon, the Excepted Leases or
all or substantially all of the assets or equity of Echelon and its
Subsidiaries) or Section 5.01(e), (f), (g), (j) or (k) of the Merger Agreement
or (y) Section 9.1(f) above, Buyer shall be entitled to receive from Seller
------
reimbursement for its reasonable out-of-pocket costs and expenses incurred in
connection with the transactions contemplated by this Agreement in the sum of up
to $1,000,000 (subject to providing reasonable documentation of such costs and
expenses); provided, that, notwithstanding the foregoing, in the event of the
--------
termination of the Merger Agreement pursuant to Section 5.01(j) of the Merger
Agreement as a result of the termination of the Subscription Agreement by
Echelon pursuant to Section 9.1(g) thereof, Buyer shall not be entitled to
------
receive from Seller reimbursement for its out-of-pocket costs and expenses
incurred in connection with the transactions contemplated by this Agreement.
(iv) In the event of a termination of this Agreement pursuant to
Section 9.1(d) above following the termination of the Merger Agreement pursuant
------
to Section 5.01(h) or (i) of the Merger Agreement, Buyer shall be entitled to
receive 50% of any recovery of damages (as determined by a court of competent
jurisdiction in a final and non-appealable decision) or proceeds of any
settlement of a claim or any other amounts, in each case that Seller may
actually receive in connection with any proceeding by Seller against Parent for
damages arising out of the matters set forth in Section 5.01(h) or (i) of the
Merger Agreement; provided that, in no event (A) shall Buyer be entitled
--------
pursuant to this Section 9.2(b)(iv) to receive from Seller an amount in excess
----------
of $3,500,000 and (B) shall Seller be obligated to commence or pursue any
proceeding against Parent or any other Person for recovery of damages or other
amounts arising out of the matters set forth in Section 5.01(h) or (i) of the
Merger Agreement and in the event that Seller
-40-
<PAGE>
shall elect in its sole discretion to commence and pursue any such proceeding
against Parent or any other Person, Buyer shall not be entitled to participate
in any manner whatsoever in any such proceeding nor shall Seller be obligated to
cooperate, coordinate or consult with Buyer in any manner whatsoever (including,
without limitation, with respect to any settlement or other compromise of any
claims).
(v) In the event of a termination of this Agreement pursuant to
Section 9.1(f) above, Buyer may proceed against Seller for recovery of its
------
actual damages (as determined by a court of competent jurisdiction in a final
and non-appealable decision); provided that, in no event (A) shall any such
--------
actual damages (i) exceed an amount equal to $3,500,000 or (ii) include any out-
of-pocket costs and expenses incurred by Buyer in connection with the
transactions contemplated by this Agreement and (B) shall Seller be liable for
loss of profits, or indirect, consequential or special damages arising out of,
or in connection with the transactions contemplated by, this Agreement.
(vi) In the event of a termination of this Agreement pursuant to
Section 9.1(g), Seller's sole remedy will be to receive a sum equal to the
------
Deposit as agreed and liquidated damages, it being agreed that in such event
Seller's actual damages would be incapable of precise ascertainment.
(vii) Except as expressly set forth above in this Section 9.2, neither
---
Buyer nor Seller shall be entitled to any remedy in connection with the
termination of this Agreement (including, without limitation, specific
performance).
(c) Any payment required to be made by Seller or Buyer, as the case
may be, pursuant to Section 9.2(b) shall be made by such party within three
------
Business Days after receipt by it of notice from the other party setting forth,
in reasonable detail, (i) a description of the event(s) giving rise to the
payment obligation and (ii) calculation of the payment obligation.
Section 10. Risk of Loss; Indemnity.
-----------------------
10.1 Casualty. In the event that any portion of the Real Estate
--------
Assets is damaged or destroyed prior to the Tender Offer Expiration Date, and if
such damage or destruction would have, individually or in the aggregate, a
Material Adverse Effect (after giving effect to receipt of insurance proceeds),
Buyer may by written notice to Seller actually received by Seller not later than
the earlier to occur of (x) 12:01 a.m. (New York time) on the Tender Offer
Expiration Date and (y) the thirtieth day following Buyer's receipt of written
notice of such damage or destruction (such receipt of written notice by Seller
to be promptly thereafter acknowledged), terminate this Agreement, whereupon the
Deposit will be returned to Buyer and thereafter this Agreement will be null and
void and the parties will have no further rights or obligations hereunder.
Except as otherwise expressly provided in the immediately preceding sentence,
Buyer shall proceed to Closing with no reduction in the Purchase Price
notwithstanding any damage or destruction occurring with respect to the Real
Estate Assets, and Seller will deliver and/or assign to Buyer on the Closing
Date any insurance proceeds with respect to such damage or destruction to the
extent Seller is entitled to same; provided that Buyer shall be afforded
--------
reasonable opportunity by Seller to participate in any discussions with third
parties
-41-
<PAGE>
relating to such insurance proceeds and such insurance proceeds shall not be
settled or otherwise compromised by Seller without the approval of Buyer (not to
be unreasonably withheld, conditioned or delayed). Seller shall notify Buyer of
any damage to or destruction of the Real Estate Assets promptly after Seller
learns of the same.
10.2 Condemnation. In the event that any portion of the Real Estate
------------
Assets or access thereto is taken by eminent domain or condemnation proceeding
prior to the Tender Offer Expiration Date, and if such taking or condemnation
would have, individually or in the aggregate, a Material Adverse Effect (after
giving effect to receipt of award proceeds), Buyer may by written notice to
Seller actually received by Seller not later than the earlier to occur of (x)
12:01 a.m. (New York time) on the Tender Offer Expiration Date and (y) the
thirtieth day following Buyer's receipt of written notice of such damage or
destruction (such receipt of written notice by Seller to be promptly thereafter
acknowledged), terminate this Agreement, whereupon the Deposit will be returned
to Buyer and thereafter this Agreement will be null and void and the parties
will have no further rights or obligations hereunder. Except as otherwise
expressly provided in the immediately preceding sentence, Buyer shall proceed to
Closing with no reduction in the Purchase Price notwithstanding any taking or
condemnation occurring with respect to the Real Estate Assets, and Seller will
deliver and/or assign to Buyer on the Closing Date any award with respect to
such taking or condemnation to the extent Seller is entitled to same; provided
--------
that Buyer shall be afforded reasonable opportunity by Seller to participate in
any discussions with third parties relating to such condemnation proceeds and
such condemnation proceeds shall not be settled or otherwise compromised by
Seller without the approval of Buyer (not to be unreasonably withheld,
conditioned or delayed). Seller shall notify Buyer of any eminent domain or
condemnation proceeding in respect of the Real Estate Assets promptly after
Seller learns of the same.
10.3 Indemnity. Subject to Section 11, each of Buyer and Seller (in
--------- --
such capacity, "Indemnitor") agrees to indemnify and hold the other party (in
----------
such capacity, "Indemnitee") harmless from and against any loss, cost,
----------
liability, damage or expense including, without limitation, reasonable
attorneys' fees and costs in all trial and appellate proceedings ("Losses")
------
incurred in connection with any claim by a third party, including, without
limitation, any current or former shareholder, director, officer, employee or
agent of Seller (a "Claim"), made, or arising out of (x) in the case of Buyer
-----
(as Indemnitor), the Assumed Liabilities or the Other Assumed Liabilities or any
failure by Buyer or Other Buyer, as the case may be, for any reason to pay,
perform and discharge any Assumed Liabilities or Other Assumed Liabilities, as
the case may be, or (y) in the case of Seller (as Indemnitor), the Excluded
Liabilities or any failure by Seller for any reason to pay, perform or discharge
any Excluded Liabilities.
Within not more than ten (10) days after the date upon which the
Indemnitee receives a complaint filed against it or a formal written demand of
it, the Indemnitee will deliver written notice (a "Claim Notice") to the
------------
Indemnitor, describing in reasonable detail the facts giving rise to such Claim
and stating that the Indemnitee intends to seek indemnification for such Claim
from the Indemnitor pursuant to this Agreement. The Indemnitor will have the
right to settle all Claims upon terms and conditions acceptable to the
Indemnitor; provided that (i) such settlement includes an unconditional release
--------
of the Indemnitee from all liability with respect to
-42-
<PAGE>
such Claim and (ii) such settlement does not involve the imposition of equitable
remedies or the imposition of any material obligations on the Indemnitee other
than financial obligations for which the Indemnitee will be indemnified
hereunder.
Upon timely receipt of a Claim Notice from the Indemnitee with respect
to any Claim, the Indemnitor may assume the defense thereof with counsel of the
Indemnitor's choice reasonably satisfactory to the Indemnitee, and will not be
required to engage more than one law firm to defend the Claim in question;
provided that such counsel is reasonably approved in writing by the Indemnitee,
- - --------
and without regard to whether such counsel also represents Indemnitor in
defending such Claim. The Indemnitee will cooperate in all reasonable respects
in such defense. Subject to the foregoing duty of cooperation, the Indemnitee
will have the right to employ separate counsel in any action or Claim and to
participate in the defense thereof; provided that the fees and expenses of
--------
counsel employed by the Indemnitee will be at the Indemnitee's sole cost and
expense, except as otherwise herein provided.
If the Indemnitor does not notify the Indemnitee in writing within ten
(10) days after receipt of a Claim Notice that the Indemnitor elects to
undertake the defense thereof, the Indemnitee will have the right, at the
expense of the Indemnitor, to defend the Claim with counsel of the Indemnitee's
choice.
The parties hereto acknowledge that the law firm defending a Claim may
have an inherent conflict of interest where the Indemnitor and Indemnitee have
not agreed upon the Indemnitee's right to indemnification. Therefore,
notwithstanding any provision herein to the contrary, unless an Indemnitor has
acknowledged in writing its obligation to indemnify the Indemnitee, the
Indemnitor will, and will cause the law firm defending the Claim to, at all
times keep the Indemnitee fully advised of the status of settlement negotiations
and/or defense of the Claim, and promptly provide to the Indemnitee copies of
all documents and correspondence related to the Claim. If, at any time, the
Indemnitee believes in good faith that the law firm defending the Claim is not
fairly representing the Indemnitee's position with respect to such Claim and/or
is prejudicing the Indemnitee's rights with respect to the Claim for
indemnification, the Indemnitee may, at the Indemnitor's sole expense, retain
separate counsel of the Indemnitee's choice, and such separate counsel will be
entitled fully to participate in the defense of such Claim on behalf of the
Indemnitee.
The Indemnitee will cooperate fully with the Indemnitor as to all
Claims, will make available to the Indemnitor as reasonably requested all
information, records and documents relating to all Claims and will preserve all
such information, records and documents until final, nonappealable resolution of
any Claim. The Indemnitee will also make available to the Indemnitor, as
reasonably requested, its personnel (including technical), agents and other
representatives who are responsible for preparing or maintaining information,
records or other documents, or who may have particular knowledge with respect to
any Claim. The Indemnitee will also cooperate with the Indemnitor in attempting
to minimize the Losses subject to indemnification by considering in good faith
any request to pursue, and/or assign to Indemnitor, any rights of contribution
or to reimbursement, whether contractual or otherwise.
-43-
<PAGE>
Section 11. Employees and Employee Benefits Matters.
---------------------------------------
11.1 Transfer of Employees. Within a reasonable period of time prior
---------------------
to the Closing Date, Buyer shall offer employment, commencing as of the Closing
Date, to all of the employees of Echelon and its subsidiaries as of the date
hereof (and still employed by Echelon and/or its subsidiaries on the date of
such offer of employment) on such terms and conditions as Buyer may determine;
provided, however, that with respect to any such employee currently on long-term
- - -------- -------
disability or other approved leave of absence, such offer shall be effective
upon such employee's resumption of active employment. Each such employee who
accepts such offer of employment is referred to hereinafter as a "Transferred
-----------
Employee", and all such employees collectively as the "Transferred Employees".
- - -------- ---------------------
Notwithstanding the foregoing, following the Closing Date, Buyer may terminate
the employment of any Transferred Employee (subject to the payment by Buyer of
any severance benefits payable to such Transferred Employee in connection with
such termination under a plan substantially in accordance with the terms set
forth in Exhibit G annexed hereto).
-
11.2 Assumption of Liabilities. (a)(1) From and after the Closing
-------------------------
Date, Buyer shall assume, and shall honor, pay, perform and satisfy when due any
and all liabilities, obligations and responsibilities to, or in respect of, each
Transferred Employee, and each former employee and officer of Echelon and its
subsidiaries, arising under the terms of, or in connection with, any Employee
Benefit Plan, in each case, in accordance with the terms thereof in effect
immediately prior to the date hereof, with respect to events or claims arising
at any time; provided, that nothing contained herein shall constitute a
--------
commitment or obligation on the part of Buyer to continue any such Employee
Benefit Plan after the Closing Date except that Buyer shall provide, or shall
cause to be provided, effective commencing on the Closing Date, coverage to all
current and former employees of Echelon and its subsidiaries (including any
employees who do not accept the offer of employment described in Section 11.1
----
hereof), and their spouses and dependents, under a group health plan which does
not contain any waiting period or exclusion or limitation with respect to any
pre-existing conditions, and Buyer shall be solely responsible for compliance
with the requirements of Section 4980B of the Code and part 6 of subtitle B of
Title I of ERISA ("COBRA"), including, without limitation, the provision of
-----
continuation coverage, with respect to all such current and former employees,
spouses and dependents, for whom a qualifying event occurs before, on or after
the Closing Date. The terms "group health plan", "continuation coverage",
"qualifying event" and "qualified beneficiary" are used in this Section
11.2(a)(1) with the respective meanings ascribed thereto in COBRA.
- - ----------
(2) On the Closing Date, Buyer shall assume sponsorship of the
Echelon International Corporation Savings Plan (the "Savings Plan") and the
------------
related trust, and the liabilities thereunder, with respect to all persons
entitled to benefits under the provisions of the Savings Plan, and Echelon shall
cause all right, title, interest, authorities, obligations, duties, liabilities
and assets of Echelon and its subsidiaries in, to and under the Savings Plan and
the related trust to be transferred to and assumed by Buyer and any successor
trustee, respectively, in accordance with applicable law. At Closing, the
parties shall execute and deliver such documents and instruments as may be
required to effect such assumption and transfer and to ensure that all assets of
the Savings Plan, as the same exist immediately prior to the Closing
-44-
<PAGE>
Date, shall be transferred with the Savings Plan to the extent provided in this
Section 11(a)(2). Effective upon Closing, Buyer will be substituted for Echelon
--------
as the plan sponsor under the Savings Plan. For a period of at least twelve (12)
months following the Closing Date, Buyer covenants and agrees to maintain the
Savings Plan in accordance with the terms of the Savings Plan as in effect on
the date hereof, except to the extent that Buyer is required to amend the
Savings Plan to comply with applicable law.
(3) Buyer shall be solely responsible for and shall indemnify and
hold Echelon and its subsidiaries harmless from any obligations or Losses
relating to claims made by any of the Transferred Employees for their
compensation, severance or termination pay, benefits or notice under any
applicable Federal, state or local law or under any plan, policy, practice or
agreement, in each case, that accrues after the Closing Date and arises as a
result of their employment or separation from employment with Buyer or its
subsidiaries after the Closing Date.
(b) Subject to Section 11.2(a) hereof, Echelon shall be solely
-------
responsible for and shall indemnify and hold Buyer harmless from any obligations
or Losses relating to claims made by any current or former employee of Echelon
and its subsidiaries, including, without limitation, the Transferred Employees,
for their compensation, severance or termination pay, benefits or notice under
any applicable Federal, state or local law or under any plan, policy, practice
or agreement, in each case, that accrue through the Closing Date as a result of
their employment or separation from employment with Echelon or its subsidiaries.
On or prior to the Closing Date, Echelon shall satisfy all obligations
(including payments due as a result of a change of control of Echelon or
otherwise) then due and payable under any employment agreement entered into by
Echelon or any of its subsidiaries (including the employment agreements
described on Schedule XIII) and shall deliver to Buyer copies of any and all
----
employee estoppel letters delivered in connection therewith.
(c) Accrued but unpaid vacation, sick or other paid time off with
respect to all employees of Echelon and its subsidiaries as of the Closing Date,
including, without limitation, the Transferred Employees, shall, to the extent
permitted by applicable law, be assumed by Buyer and paid by Buyer in accordance
with the terms of the applicable policies and procedures of Echelon and its
subsidiaries in effect on the date hereof.
(d) In the event of any "plant closing" or "mass layoff" by Buyer, as
defined by the Federal Worker Adjustment Retraining Notification Act, 29 U.S.C.
(S) 2101 et seq. ("WARN"), or any state law equivalent, which shall occur after
-- ---- ----
the Closing Date, Buyer shall comply with all of the requirements of WARN and
any applicable state law equivalent and shall indemnify Echelon and its
subsidiaries from and against any Losses incurred by Echelon and its
subsidiaries as the result of any action against Buyer or Echelon (and/or its
subsidiaries) under WARN.
11.3 Participation and Crediting of Service Under Employee Plans and
---------------------------------------------------------------
Practices. Following Closing, (a) Buyer shall waive any waiting periods,
- - ---------
exclusions, or pre-existing condition limitations that may otherwise be
applicable to Transferred Employees, and
-45-
<PAGE>
their spouses and eligible dependents, under any benefit plans of Buyer, and
(ii) Buyer shall honor or cause to be honored all premiums, co-payments and
deductibles paid by the Transferred Employees, and their spouses and eligible
dependents, during the plan year in which Closing occurs under the employee
welfare benefit plans and arrangements of Echelon and its subsidiaries up to
(and including) the Closing Date. Following Closing, each employee benefit plan
or arrangement and employee compensation policy or practice sponsored by Buyer
or its affiliates shall credit, for all purposes (except for benefit accruals
under any defined benefit pension plans), all service of the Transferred
Employees, and other employees and officers of Echelon and its subsidiaries,
with Echelon and its subsidiaries (and their respective predecessors) to the
same extent such service was taken into consideration under comparable employee
benefit plans of Echelon and its subsidiaries.
Section 12. Miscellaneous.
-------------
12.1 Litigation. In the event of any litigation between Seller and
----------
Buyer concerning the terms of this Agreement, the prevailing party will be
entitled to reimbursement of its costs and expenses, including reasonable
attorneys' fees incurred in trial, appellate and post-judgment proceedings. The
provisions of this Section 12.1 will survive Closing, expiration or termination
----
of this Agreement.
12.2 Escrow Obligations of Escrow Agent. Seller and Buyer acknowledge
----------------------------------
that Escrow Agent undertakes hereunder to perform only such duties as are
expressly set forth herein and no implied duties or obligations will be inferred
against Escrow Agent. The Purchase Price (including the Deposit), the Asset
Sales Proceeds and the other Escrowed Items will be held and disbursed by Escrow
Agent as follows:
(a) Escrow Agent may (i) act in reliance upon any writing or
instrument or signature which it, in good faith, believes to be genuine,
(ii) assume the validity and accuracy of any statement or assertion
contained in such a writing or instrument and (iii) assume that any person
purporting to give any writing, notice, advice or instruction in connection
with the provisions hereof has been duly authorized to do so.
(b) Seller and Buyer agree, jointly and severally, to indemnify and
hold harmless Escrow Agent from and against any and all claims,
liabilities, losses, actions, suits or proceedings at law or in equity, or
any other expenses, fees or charges of any character or nature whatsoever,
which Escrow Agent may incur or with which it may be threatened solely by
reason of its acting as escrow agent hereunder, except to the extent
resulting from Escrow Agent's gross negligence, fraud or intentional
misconduct; and in connection therewith, to indemnify Escrow Agent against
any and all expenses, including reasonable attorneys' fees and the cost of
defending any action, suit or proceedings or resisting any claim; provided,
--------
however, that if such expenses are incurred by Escrow Agent in connection
-------
with litigation between Seller and Buyer, the responsibility for
indemnifying Escrow Agent for such expenses will belong solely to the non-
prevailing party.
-46-
<PAGE>
(c) Escrow Agent will not make any disbursement of the Purchase Price
(including the Deposit) or any Asset Sales Proceeds (except, in each case
as set forth in succeeding subsection (d)) without giving written notice to
the party which will not receive the disbursement at least ten (10)
Business Days in advance of the disbursement. The failure of the party not
receiving the disbursement to object (on or prior to the seventh day after
receipt of such notice) to the disbursement by written notice to the other
party and to Escrow Agent will constitute binding acquiescence of such
party to the disbursement. If there is any disagreement about the
interpretation of this Agreement, or about the rights and obligations, or
the propriety, of any action contemplated by Escrow Agent hereunder, or if
Escrow Agent shall have received inconsistent instructions as to the
disbursement of the Purchase Price (including the Deposit) or the Asset
Sales Proceeds, in each case except as set forth in succeeding subsection
(d), Escrow Agent will not disburse the Purchase Price (including the
Deposit) or Asset Sales Proceeds, as the case may be, and will file an
action in interpleader to resolve such disagreement or inconsistency, as
the case may be. Escrow Agent will be indemnified (by Seller or Buyer,
whichever is the non-prevailing party) as set forth in the foregoing
subsection (b) in connection with such interpleader action, and will be
fully protected in suspending all or a part of its activities under this
Agreement until a final judgment in the interpleader action is received.
(d) Notwithstanding anything to the contrary set forth in foregoing
subsection (c) or elsewhere in this Agreement (including, without
limitation, receipt of inconsistent instructions from Buyer or Seller as to
the disbursement of any Escrowed Item), Escrow Agent shall take the
following actions: (i) upon receipt of all Escrowed Items specified in the
joint direction letter described in Section 7.7 hereof, Escrow Agent will
---
promptly (and in any event, within one Business Day) notify Buyer and
Seller of such receipt of all Escrowed Items, (ii) immediately following
the filing by Escrow Agent of the Articles of Merger with respect to the
Merger with the Department of State of the State of Florida or the receipt
of notice by Escrow Agent that such filing has occurred, Escrow Agent shall
deliver the Escrowed Items to the party entitled to same (including,
without limitation, delivery of (x) the Purchase Price to Seller or to such
account as Seller may designate and (y) the Asset Sales Proceeds to Buyer)
as set forth in the joint direction letter described in Section 7.7 hereof,
---
(iii) immediately following receipt of written notice from Seller or Buyer
that this Agreement has been terminated pursuant to Section 9.1 hereof, the
---
Escrowed Items shall be promptly delivered by Escrow Agent to the party
which had previously deposited same with Escrow Agent and (iv) immediately
following receipt of written notice from Buyer that the Tender Offer
Expiration Date did not occur on or prior to the third Business Day after
the Escrow Closing Date, the Escrowed Items shall be promptly delivered by
Escrow Agent to the party which had previously deposited same with Escrow
Agent.
(e) Escrow Agent may consult with counsel of its own choice and will
have full and complete authorization and protection for any action taken or
suffered by it hereunder in good faith and in accordance with the opinion
of such counsel. Escrow Agent
-47-
<PAGE>
otherwise will not be liable for any mistakes of fact or error of judgment,
or for any acts or omissions of any kind unless caused by its willful
misconduct or gross negligence.
(f) Escrow Agent may resign upon 15 days' written notice to Seller
and Buyer, and if a successor escrow agent is not appointed by Buyer and
Seller within such 15-day period, Escrow Agent may petition a court of
competent jurisdiction to name a successor.
12.3 Notices. All notices, requests, demands, claims, waivers and
-------
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if delivered in
person or mailed, certified or registered mail with postage prepaid, or sent by
telecopier and courier service for next Business Day delivery, as follows:
(a) if to Seller, to it at:
Echelon International Corporation
450 Carillon Parkway, Suite 200
St. Petersburg, Florida 33716
Facsimile: (727) 803-8203
Attention: Darryl A. LeClair
with a copy to:
Echelon International Corporation
450 Carillon Parkway, Suite 200
St. Petersburg, Florida 33716
Facsimile: (727) 803-8203
Attention: Susan Glatthorn Johnson, Esq.
with a copy to:
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Facsimile: (212) 354-8113
Attention: William F. Wynne, Jr., Esq.
-48-
<PAGE>
and a copy to:
EIN Acquisition Corp.
950 Third Avenue
New York, New York 10022
Facsimile: (212) 688-7908
Attention: James Haber
with a copy to:
Brown Raysman Millstein Felder and Steiner LLP
120 West 45th Street
New York, New York 10036
Facsimile: (212) 840-2429
Attention: Robert M. Unger, Esq.
(b) if to Buyer, to it at:
c/o Equis Financial Group
One Canterbury Green, 8th Floor
Stamford, Connecticut 06901
Facsimile: (203) 363-0861
Attention: Gary D. Engle
with a copy to:
Steel Hector & Davis LLP
200 South Biscayne Boulevard
Miami, Florida 33131
Facsimile: (305) 577-7001
Attention: Thomas V. Eagan, P.A.
(c) if to Escrow Agent, to it at:
LandAmerica Financial Group
3922 Coconut Palm Drive, Suite 102
Tampa, Florida 33619
Facsimile: (813) 740-0595
Attention: Juanita M. Shuster
-49-
<PAGE>
or to such other Person or address as any party shall specify by notice in
writing to each of the other parties. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the date of
delivery unless if mailed, in which case on the third Business Day after the
mailing thereof except for a notice of a change of address, which shall be
effective only upon receipt thereof.
12.4 Entire Agreement. This Agreement and the exhibits, schedules and
----------------
other documents referred to herein or delivered pursuant hereto, collectively
contain the entire understanding of the parties hereto with respect to the
subject matter contained herein and supersede all prior agreements and
understandings, oral and written, with respect thereto.
12.5 Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the parties hereto, and their respective
successors and permitted assigns; and no third party shall have any rights,
privileges or other beneficial interests herein or hereunder. Buyer shall not
be entitled to assign this Agreement or any of its rights, duties or interests
herein or hereunder to any other Person; provided, however, that Buyer may, not
-------- -------
less than five Business Days prior to the Closing Date, designate one or more of
its wholly-owned subsidiaries or affiliates controlled by it to be the
transferee of one or more Assets and/or the Assumed Liabilities (without
limiting the foregoing, it is understood and agreed that Buyer may designate
Echelon Commercial LLC, a Delaware limited liability company and an affiliate of
Buyer, to acquire title to the 7th Avenue Property), in each case so long as (x)
such transfer, assignment or assumption does not impose any incremental burden
on Seller under this Agreement or delay (or otherwise impede) the consummation
of the transactions contemplated by this Agreement and (y) Buyer remains liable
to Seller for all of its obligations hereunder with respect to the Assumed
Liabilities and the Other Assumed Liabilities notwithstanding such transfer,
assignment or assumption.
12.6 Headings. The descriptive headings of the several Sections of
--------
this Agreement are inserted for convenience only, do not constitute a part of
this Agreement and shall not affect in any way the meaning or interpretation of
this Agreement.
12.7 Applicable Law. This Agreement and the legal relations between
--------------
the parties hereto shall be governed by and construed in accordance with the
laws of the State of New York, without regard to the conflict of laws rules
thereof.
12.8 Severability. If any term, provision, covenant or restriction
------------
contained in this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions
contained in this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
12.9 Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
-50-
<PAGE>
12.10 No Waiver of Default. No waiver by a party of any breach of
--------------------
this Agreement or of any warranty or representation hereunder by the other party
will be deemed to be a waiver of any other breach by such other party (whether
preceding or succeeding and whether or not of the same or similar nature), and
no acceptance of payment or performance by a party after any breach by the other
party will be deemed to be a waiver of any breach of this Agreement or of any
representation or warranty hereunder by such other party, whether or not the
first party knows of such breach at the time it accepts such payment or
performance. No failure or delay by a party to exercise any right it may have
by reason of the default of the other party will operate as a waiver of default
or modification of this Agreement or will prevent the exercise of any right by
the first party while the other party continues so to be in default.
12.11 Confidentiality. It is agreed that (x) Seller will, at all
---------------
times, keep in strict confidence all non-public information (other than
information made public as a result of a breach of its obligations pursuant to
this Section 12.11) obtained by it with respect to Buyer and/or the Assets and
-----
(y) Buyer will, at all times prior to the Closing Date, keep in strict
confidence all non-public information (other than information made public as a
result of a breach of its obligations pursuant to this Section 12.11) obtained
-----
by it with respect to Seller pursuant to or in connection with this Agreement or
any confidentiality agreement executed by Buyer related to the Assets (including
all information obtained by such Person with respect to the tenants and other
occupants of any of the Real Estate Assets and all information attached hereto
with respect to the Joint Venture Interests, the Employee Loans and the Existing
Debt). Each of Seller and Buyer agrees to instruct its agents, employees,
advisers and consultants to comply with the provisions of this Section 12.11 and
-----
any confidentiality agreement executed in connection with the Assets.
Notwithstanding the foregoing, each of Seller and Buyer may disclose any such
non-public information obtained by it to its directors, bankers, advisors,
attorneys, accountants and agents so long as such parties agree in writing for
the benefit of the other parties hereto to keep the information confidential in
accordance with the terms of this Section 12.11. In addition, each of Seller
-----
and Buyer may disclose any such non-public information as may be required by
law. If the purchase and sale of the Assets contemplated by this Agreement is
not completed for any reason, Buyer will, upon request of Seller, promptly
return to Seller all instruments and materials or copies of instruments and
materials delivered pursuant hereto and obtained by Buyer. The provisions of
this Section 12.11 will survive any termination of this Agreement.
-----
12.12 Recourse Limited. Notwithstanding anything to the contrary in
----------------
this Agreement, neither any present or future constituent shareholder, member,
partner, officer, director, employee or agent of the parties hereto or of any
corporation, limited liability company or partnership that is the owner of any
equity interest in the parties hereto will be personally liable, directly or
indirectly, under or in connection with this Agreement, or any document,
instrument or certificate securing or otherwise executed in connection with this
Agreement, or any amendments or modifications to any of the foregoing made at
any time or times, heretofore or hereafter, or in respect of any matter,
condition, injury or loss related to this Agreement or the Assets (provided that
--------
Echelon shall be so liable to the extent Echelon constitutes the holder of
equity interests in its Subsidiaries); and each party hereto (and their
respective successors and assigns) waives any such personal liability.
-51-
<PAGE>
12.13 Business Day. If any date herein set forth for the performance
------------
of any obligations by Seller or for the delivery of any instrument or notice as
herein provided should be on a day other than a Business Day, the compliance
with such obligations or delivery will be deemed acceptable on the next
occurring Business Day.
12.14 Recordation. Buyer and Seller agree that neither this
-----------
Agreement nor any memorandum hereof will be recorded in any public records, and
that any such recording would constitute a default subject to Section 9.1
---
hereof.
12.15 Jury Waiver. IN ANY CIVIL ACTION, COUNTERCLAIM OR PROCEEDING,
-----------
WHETHER AT LAW OR IN EQUITY, WHICH ARISES OUT OF, CONCERNS, OR RELATES TO THIS
AGREEMENT, AND ANY AND ALL TRANSACTIONS CONTEMPLATED HEREUNDER, THE PERFORMANCE
HEREOF, OR THE RELATIONSHIP CREATED HEREBY, WHETHER SOUNDING IN CONTRACT, TORT,
STRICT LIABILITY OR OTHERWISE, TRIAL WILL BE TO A COURT OF COMPETENT
JURISDICTION AND NOT TO A JURY. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY. ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO OF THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. NEITHER PARTY HAS
MADE OR RELIED UPON ANY ORAL REPRESENTATIONS TO OR BY ANY OTHER PARTY REGARDING
THE ENFORCEABILITY OF THIS PROVISION. EACH PARTY HAS READ AND UNDERSTANDS THE
EFFECT OF THIS JURY WAIVER PROVISION.
12.16 Public Announcements. At all times prior to the Closing Date,
--------------------
Seller, on the one hand, and Buyer, on the other hand, agree to consult promptly
with each other prior to issuing any press release or otherwise making any
public statement with respect to the transactions contemplated hereby (other
than for the Schedule TO, the Schedule 14D-9 and any other public filing made in
connection with the transactions contemplated by the Merger Agreement), and
shall not issue any such press release or make any such public statement prior
to such consultation and review by the other party of a copy of such release or
statement; provided, that (x) a party may, without the prior consent of any
--------
other party, issue a press release or make such public statement as may be
required by law or any rule of or agreement with any national securities
exchange or automated quotation system to which such party is subject and (y)
subject to Seller's obligations under the Merger Agreement, Seller will give
Buyer and its counsel the opportunity to review and comment upon the Schedule
TO, the Schedule 14D-9 and any other public filing made in connection with the
transactions contemplated by the Merger Agreement but only to the extent that
same directly relates to the identity and description of Buyer or to the
description of the principal terms and conditions of this Agreement.
12.17 Radon Gas. Radon is a naturally occurring radioactive gas
---------
that, when it has accumulated in a building in sufficient quantities, may
present health risks to persons who are exposed to it over time ("Radon").
-----
Levels of Radon that exceed federal and state guidelines have been found in
buildings in Florida. Additional information regarding Radon and Radon
-52-
<PAGE>
testing may be obtained from the local county public health unit. The matters
set forth in this Section 12.17 shall constitute an exception to the
-----
representation and warranty of Seller set forth in Section 3.7 hereof.
---
12.18 Bulk Sales Law Waiver. Each party hereto agrees to waive
---------------------
compliance by the other with the provisions of the bulk sales law or comparable
law of any jurisdiction to the extent that the same may be applicable to the
transactions contemplated hereby.
12.19 Knowledge. When any representation or warranty contained in
---------
this Agreement is expressly qualified by the knowledge of Seller or Echelon,
such knowledge means the actual knowledge of Darryl A. LeClair, W. Michael
Doramus, Julio A. Maggi, Larry J. Newsome, Susan G. Johnson, J. Mark Stroud,
Thomas D. Wilson, Antonia P. Williams, Timothy S. Tinsley or K. Brent Little.
12.20 Amendments, Modifications and Supplements. This Agreement
-----------------------------------------
(including all Schedules and Exhibits thereto) may be amended, modified and
supplemented only in writing executed by the parties hereto.
12.21 Representations and Warranties. The respective representations
------------------------------
and warranties of Seller, on the one hand, and Buyer, on the other hand,
contained herein or in any certificates or other documents delivered pursuant
hereto shall not be deemed waived or otherwise affected by any investigation
made by any party. Except as expressly provided in Section 8 hereof (and, in
-
the case of Buyer, Sections 4.4, 4.5, 4.6 and 4.9 hereof), each and every such
--- --- --- ---
representation and warranty shall expire with, and be terminated and
extinguished by, the Escrow Closing Date and thereafter neither Seller nor Buyer
shall be under any liability whatsoever with respect to any such representation
or warranty. Furthermore, notwithstanding anything to the contrary (express or
implied) set forth herein (other than Section 8 hereof), in the case of any
-
breach by Seller of any of its representations and warranties, Buyer's sole
right shall be the exercise (if it is entitled to do so) of its right of
termination pursuant to Section 9.1(f) hereof (and Buyer's sole remedies in
------
connection therewith shall be those expressly set forth in Section 9.2 hereof)
---
and Seller shall not at any time (whether before, on or after the Escrow Closing
Date) have any further liability whatsoever with respect to any such breach of
its representations and warranties. This Section 12.21 shall have no effect
-----
upon any other obligation of the parties hereto, whether to be performed before
or after the Closing Date.
12.22 Performance and Discharge. The acceptance by Buyer of the
-------------------------
agreements, instruments and other documents contemplated in this Agreement
conveying title to, or assigning Seller's rights and interests in, the Assets
shall be deemed to be a full performance and discharge of every agreement and
obligation on the part of Seller to be performed under this Agreement, except
those, if any, where are herein specifically stated to survive delivery of such
agreements, instruments and other documents.
[SIGNATURE PAGE FOLLOWS]
-53-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Purchase and Sale
Agreement to be executed on the date(s) hereinafter set forth.
SELLER:
-------
WITNESSED BY: ECHELON INTERNATIONAL CORPORATION,
a Florida corporation
_____________________
Name:________________ By:___________________________
Name:_________________________
Title:________________________
_____________________ Date: January ____, 2000
Name:________________
ECHELON DOWNTOWN I, INC., a Florida
corporation
By:___________________________
Name:_________________________
Title:________________________
Date: January ____, 2000
ECHELON RESIDENTIAL INVESTMENTS, INC.,
a Florida corporation
By:___________________________
Name:_________________________
Title:________________________
Date: January ____, 2000
ECHELON RESIDENTIAL SERVICES, INC.,
a Florida corporation
By:___________________________
Name:_________________________
Title:________________________
Date: January ____, 2000
<PAGE>
ECHELON GENERAL PARTNER, INC., a Florida
corporation
By:___________________________
Name:_________________________
Title:________________________
Date: January ____, 2000
WITNESSED BY: ECHELON AT BRIARGATE, INC., a Florida
corporation
___________________
Name:______________ By:____________________________
Name:__________________________
___________________ Title:_________________________
Date: January ____, 2000
Name:______________
<PAGE>
WITNESSED BY: ECHELON AT TWENTY MILE VILLAGE, INC.,
a Florida corporation
____________________
Name:_______________ By:______________________________
Name:____________________________
____________________ Title:___________________________
Date: January ____, 2000
Name:_______________
NEW FOURTH RESIDENTIAL LIMITED PARTNERSHIP,
a Texas Limited Partnership
WITNESSED BY:
By: Echelon General Partner, Inc., a Florida
Corporation, its general partner
____________________
Name:_______________ By:______________________________
Name:____________________________
____________________ Title:___________________________
Date: January ____, 2000
Name:_______________
WITNESSED BY: WATTERS CREEK LIMITED PARTNERSHIP, a
Texas Limited Partnership
By: Echelon General Partner II, Inc., a
Florida Corporation, its general partner
____________________
Name:_______________ By:______________________________
Name:____________________________
____________________ Title:___________________________
Date: January ____, 2000
Name:_______________
<PAGE>
WITNESSED BY: KELLER-COUNTRY BROOK LIMITED PARTNERSHIP,
a Texas Limited Partnership
By: Echelon General Partner II, Inc., a
Florida Corporation, its general partner
____________________
Name:_______________ By:______________________________
Name:____________________________
____________________ Title:___________________________
Date: January ____, 2000
Name:_______________
WITNESSED BY: GALLOWAY-TRIPP SF LIMITED PARTNERSHIP,
a Texas Limited Partnership
By: Echelon General Partner II, Inc., a
Florida Corporation, its general partner
____________________
Name:_______________ By:______________________________
Name:____________________________
____________________ Title:___________________________
Date: January ____, 2000
Name:_______________
WITNESSED BY: MID-TOWN RESIDENTIAL LIMITED PARTNERSHIP,
a Texas Limited Partnership
By: Echelon General Partner II, Inc., a
Florida Corporation, its general partner
____________________
Name:_______________ By:______________________________
Name:____________________________
____________________ Title:___________________________
Date: January ____, 2000
Name:_______________
<PAGE>
WITNESSED BY: RIVER PARK ESTATES, LLC, a Delaware
Limited Liability Company
By: Echelon Residential Incorporated, a Florida
Corporation, its managing member
__________________
Name:_____________ By:_______________________
Name:_____________________
__________________ Title:____________________
Name:_____________ Date: January ____, 2000
<PAGE>
BUYER:
-----
WITNESSED BY: ECHELON RESIDENTIAL LLC, a Delaware limited
liability company
__________________
Name:_____________ By: Equis Corporation, a Massachusetts
corporation, its managing member
__________________
Name:_____________
By:________________________
Name:______________________
Title:_____________________
Date: January ____, 2000
<PAGE>
Escrow Agent hereby agrees to hold and disburse the Purchase Price
(including the Deposit), the Asset Sales Proceeds and the other Escrowed Items
in accordance with and subject to the provisions of the foregoing Purchase and
Sale Agreement.
LANDAMERICA FINANCIAL GROUP
By:_______________________
Name:_____________________
Title:____________________
Date: January ____, 2000
<PAGE>
The following entities are executing this Agreement for the purpose of
acknowledging their agreement to convey any of the assets described herein which
they may have an ownership interest in:
ECHELON DEVELOPMENT CORPORATION
By:________________________
Name:______________________
Title:_____________________
Date: January ____, 2000
ECHELON REAL ESTATE SERVICES, INC.
By:________________________
Name:______________________
Title:_____________________
Date: January ____, 2000
PCC DEL, INC.
By:________________________
Name:______________________
Title:_____________________
Date: January ____, 2000
ECHELON RESIDENTIAL INCORPORATED
By:________________________
Name:______________________
Title:_____________________
Date: January ____, 2000
<PAGE>
ECHELON GENERAL PARTNER, INC.
By:________________________
Name:______________________
Title:_____________________
Date: January ____, 2000
SOUTH CORE COMMERCIAL, INC.
By:________________________
Name:______________________
Title:_____________________
Date: January ____, 2000
<PAGE>
SOUTH CORE PARKING, INC.
By:________________________
Name:______________________
Title:_____________________
Date: January ____, 2000
ECHELON AFFORDABLE DEVELOPMENT, INC.
By:________________________
Name:______________________
Title:_____________________
Date: January ____, 2000
ECHELON CARILLON ONE, INC.
By:________________________
Name:______________________
Title:_____________________
Date: January ____, 2000
ECHELON AT CARILLON TWO, INC.
By:________________________
Name:______________________
Title:_____________________
Date: January ____, 2000
<PAGE>
ECHELON CARILLON THREE, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
Date: January ____, 2000
ECHELON AT MCNULTY, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
Date: January ____, 2000
HIGHPOINT CENTER HEALTH CLUB, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
Date: January ____, 2000
ECHELON GENERAL PARTNER AFFORDABLE
HOUSING, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
Date: January ____, 2000
<PAGE>
ECHELON AT BAY ISLE KEY, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
Date: January ____, 2000
ECHELON AT NORTHLAKE, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
Date: January ____, 2000
ECHELON AT THE RESERVE I, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
Date: January ____, 2000
ECHELON AT THE RESERVE II, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
Date: January ____, 2000
<PAGE>
ECHELON AT WOODLAND PARK, INC.
n/k/a ECHELON GATEWAY, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
Date: January ____, 2000
ECHELON AT THE HARBORAGE, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
Date: January ____, 2000
ECHELON RESIDENTIAL INVESTMENTS II, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
Date: January ____, 2000
KNOX STREET CAPITAL, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
Date: January ____, 2000
<PAGE>
BAYBRIDGE APARTMENTS, LTD.
By:___________________________________
Name:_________________________________
Title:________________________________
Date: January ____, 2000
200 CARILLON, L.L.C.
By:___________________________________
Name:_________________________________
Title:________________________________
Date: January ____, 2000
SOUTH GARNETT RESIDENTIAL LIMITED
PARTNERSHIP
By:___________________________________
Name:_________________________________
Title:________________________________
Date: January ____, 2000
RESIDENTIAL 98/TH/ MEMORIAL CREEK
TURNPIKE LIMITED PARTNERSHIP
By:___________________________________
Name:_________________________________
Title:________________________________
Date: January ____, 2000
<PAGE>
MISSION RANCH LIMITED PARTNERSHIP
By:_________________________________
Name:_______________________________
Title:______________________________
Date: January ____, 2000
<PAGE>
EXHIBIT A
FOLIO NUMBER: ____________
FORM OF
SPECIAL WARRANTY DEED
---------------------
THIS SPECIAL WARRANTY DEED is made this ______ day of ____________,
2000, by ______________________, a _______________ ("Grantor"), whose address is
-------
_____________________________________, to _______________________, a
______________ ("Grantee"), whose address is _________________________________.
-------
W I T N E S S E T H:
THAT GRANTOR, for and in consideration of the sum of ten Dollars
($10.00) and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, does hereby grant, bargain, sell, transfer and
deliver to Grantee, its successors and assigns forever, the real property (the
"Property") described in Exhibit A attached hereto and made a part hereof.
- - --------- -
TOGETHER, with all the tenements, hereditaments and appurtenances
belonging or in anyway appertaining thereto.
TO HAVE AND TO HOLD the same in fee simple forever.
AND GRANTOR hereby specially warrants the title to the Property, and
will defend the same against the lawful claims of all persons whomsoever
claiming by, through or under Grantor, but none others.
IN WITNESS WHEREOF, GRANTOR has caused this Special Warranty Deed to
be executed as of the date first above written.
WITNESSED BY: GRANTOR:
______________________________ By:
Name:_________________________
______________________________ By:___________________________
Name:_________________________
Name:_________________________ Title:
This instrument prepared by and when recorded return to:
_____________________________
_____________________________
_____________________________
_____________________________
<PAGE>
STATE OF ___________ )
) ss:
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me this _____ day of
______, 2000, by ________________, as ______________ of _______________, a
__________ corporation, _____________ of _________________, a
___________________, on behalf of the _____________, who is personally known to
me or who has produced a driver's license as identification.
________________________________________
Name:
Notary Public, State of ________________
My commission expires:
<PAGE>
IN WITNESS WHEREOF, this Bill of Sale has been signed, sealed and
delivered by the parties as of the date first above written.
WITNESSED BY: SELLER:
______________________________ By: ________________________________
Name:_________________________
By:___________________________
______________________________ Name:_________________________
Title:________________________
Name:_________________________
WITNESSED BY: BUYER:
______________________________ By:_________________________________
Name:_________________________
By:___________________________
______________________________ Name:_________________________
Title:________________________
Name:________________________
<PAGE>
EXHIBIT B
FORM OF
BILL OF SALE
------------
Made and entered into this ____ day of __________, 2000, by and
between _____________, a _____________ ("Seller"), and __________________, a
------
____________ ("Buyer").
-----
W I T N E S S E T H:
WHEREAS, Seller and Buyer entered into that certain Purchase and Sale
Agreement (the "Agreement"), dated as of January ____, 2000, for, inter alia,
--------- ----- ----
the sale and purchase of the real property more specifically described in
Exhibit A attached hereto and made a part hereof (the "Property"); and
- --------
WHEREAS, in accordance with the terms of the Agreement, Seller desires
to assign, transfer, set over and deliver to Buyer all of Seller's right, title
and interest in, and Buyer desires to assume all duties and obligations of
Seller with respect to, all items of personalty situated at or on the Property,
excluding any personal property owned or leased by tenants of the Property
(collectively, the "Personalty");
----------
NOW, THEREFORE, in accordance with the Agreement and in consideration
of the sum of ten Dollars ($10.00) and other good and valuable consideration,
the sufficiency and receipt of which are hereby acknowledged, the parties do
hereby agree as follows:
1. Seller does hereby grant, bargain, transfer, set over and deliver
unto Buyer all of Seller's right, title and interest in and to the Personalty.
2. Buyer hereby acknowledges and agrees that it is purchasing the
Personalty in its "as is" condition. Seller makes no representation or warranty
of any kind with respect to the Property or the Personalty, except as otherwise
expressly set forth herein or in the Agreement.
3. This Bill of Sale shall be governed by the laws of the State of
_______ and shall be binding upon, and inure to the benefit of, the parties
hereto and their respective heirs, legal representatives, successors and
assigns.
Seller hereby warrants title to the Property against the lawful claims
of all persons claiming by, through or under Seller, but none others.
<PAGE>
EXHIBIT C
FORM OF
ASSIGNMENT AND ASSUMPTION OF PERMITS, CONTRACTS AND LEASES
----------------------------------------------------------
THIS ASSIGNMENT AND ASSUMPTION OF PERMITS, CONTRACTS AND LEASES (this
"Assignment") is made and entered into as of the ____ day of _______________,
----------
2000, by and between _____________, a _________________ ("Assignor"), and
--------
_______________________, a ___________________ ("Assignee").
--------
W I T N E S S E T H :
WHEREAS, Assignor and Assignee entered into that certain Purchase and
Sale Agreement (the "Agreement"), dated as of January ____, 2000, for, inter
--------- -----
alia, the sale and purchase of certain real property more particularly described
- - ----
in Exhibit A attached hereto and made a part hereof (the "Property"); and
- --------
WHEREAS, in accordance with the terms of the Agreement, Assignor
desires to assign, transfer, set over and deliver to Assignee all of Assignor's
right, title and interest in, and Assignee desires to assume all duties and
obligations of Assignor with respect to, the Permits, Contracts and Leases
listed on Exhibit B attached hereto and made a part hereof;
-
NOW, THEREFORE, in accordance with the Agreement and in consideration
of the sum of ten Dollars ($10.00) and other good and valuable consideration,
the sufficiency and receipt of which are hereby acknowledged, the parties do
hereby agree as follows:
1. Assignment. Assignor does hereby assign, transfer, set over and
----------
deliver unto Assignee all of Assignor's right, title and interest in and to the
Permits, Contracts and Leases. Assignee makes no representation or warranty of
any kind with respect to the Permits, Contracts and Leases, except as otherwise
expressly set forth herein or in the Agreement.
2. Assumption. Assignee hereby accepts the foregoing assignment and
----------
hereby assumes all duties and obligations under the same arising on or after the
date hereof.
3. Assignor Indemnification. Assignor hereby agrees to indemnify,
------------------------
defend and hold harmless Assignee from and against any loss, cost, damage, or
expense arising from or in connection with any liability or obligation related
to the Permits, Contracts and Leases arising by virtue of acts or omissions by
Assignor which have accrued or occurred prior to the date hereof.
4. Assignee Indemnification. Assignee hereby agrees to indemnify,
------------------------
defend and hold harmless Assignor from and against any loss, cost, damage, or
expense arising from or in connection with any liability or obligation related
to the Permits, Contracts and Leases arising by virtue of acts or omissions by
Assignee which accrue or occur on or after the date hereof.
<PAGE>
5. Governing Law; Parties Bound. This Agreement shall be governed by
----------------------------
the laws of the State of __________. This Assignment shall be binding upon, and
inure to the benefit of, the parties to this Assignment and their respective
heirs, legal representatives, successors and assigns.
IN WITNESS WHEREOF, this Assignment has been signed, sealed and
delivered by the parties as of the date first above written.
WITNESSED BY: ASSIGNOR:
______________________________ By: ________________________________
Name:_________________________
By:___________________________
______________________________ Name:_________________________
Title:________________________
Name:_________________________
WITNESSED BY: ASSIGNEE:
______________________________ By:_________________________________
Name:_________________________
By:___________________________
______________________________ Name:_________________________
Title:________________________
Name:________________________
<PAGE>
EXHIBIT D
FORM OF
TENANT ESTOPPEL STATEMENT
-------------------------
DATE: ______________, [1999] [2000]
TO: ________________________, a
________________________ ("Buyer")
-----
RE: Lease (the "Lease"), dated ___________, by and between
-----
___________ as landlord ("Landlord") and ___________ as tenant
--------
("Tenant"), with respect to _______________________________ (the
--------
"Leased Premises")
----------------
Gentlemen:
As Tenant under the Lease, the undersigned hereby acknowledges for the
benefit of Buyer, which is about to purchase the Leased Premises, and Buyer's
lender, if any, the truth and accuracy of the following statements pertaining to
said Lease:
1. Date of Lease:
2. Description of Any and All Amendments, Modification or
Assignments of the Lease:
3. Term of Lease / Date of Expiration:
4. Current Monthly Rent / Common Area Maintenance / Other Charges:
5. Security Deposit / Last Month's Rent / Other Prepaid Amounts:
6. Guarantor(s), if any:
7. The Lease is in full force and effect.
8. Tenant is in exclusive possession of the Leased Premises under the terms of
the Lease.
9. All rent, charges or other payments due Landlord under the Lease have been
paid through ________________, [1999] [2000]. Rent has not been paid more
than one (1) month in advance.
10. There are not any uncured defaults on the part of Landlord or Tenant under
the Lease and, to the best of Tenant's knowledge and belief, no event has
occurred which, with notice and/or lapse of time, would cause such a
default to occur by either Landlord or Tenant.
11. All tenant improvements and other improvements to be constructed by
Landlord under the Lease have been fully completed and accepted by Tenant.
<PAGE>
12. Tenant does not have any outstanding option to renew the Lease, option to
expand the Leased Premises or option to purchase any part of the Leased
Premises other than as follows:
13. The Lease, together with any modifications listed in item 2 hereof, sets
forth the entire agreement between Landlord and Tenant. There are no other
documents or agreements affecting the rights of the parties except as
follows: ___________________________
14. To the best of Tenant's knowledge and belief, the Lease is valid and
enforceable in accordance with its terms and none of the provisions thereof
that inure to the benefit of Landlord have been waived by Landlord and
there are no offsets or defenses to the payment of rent by Tenant under the
Lease.
15. Tenant is the sole owner of the entire leasehold estate under the Lease and
has not assigned the Lease or any interest therein, nor has Tenant sublet
all or any portion of the Leased Premises.
16. Tenant has obtained the required occupational licenses, certificates of
occupancy or other similar licenses required for Tenant to operate its
business on the Leased Premises.
17. This certification shall be binding upon Tenant, its successors and
assigns, and shall inure to the benefit of Buyer, its successors and
assigns, the Buyer's lender, if any, and all parties claiming through or
under such persons.
TENANT:
____________________________________
By: ___________________________
Name:___________________________
Title:__________________________
<PAGE>
EXHIBIT E
FORM OF
ASSIGNMENT AND ASSUMPTION AGREEMENT OF MORTGAGE LOAN
----------------------------------------------------
THIS ASSIGNMENT AND ASSUMPTION OF MORTGAGE LOAN (this "Assignment") is
----------
made and entered into as of the ____ day of _______________, 2000, by and
between _________________ ("Assignor"), having an address at _________________
--------
and _______________________, a ___________________ ("Assignee"), having an
--------
address at _______________________.
W I T N E S S E T H :
WHEREAS, pursuant to that certain [Mortgage], dated _______, ____,
between Assignor, as lender/mortgagee, to [Name of Borrower], as
borrower/mortgagor (the "Borrower"), and recorded in the Office of the Clerk of
--------
_______ County on _______ in Liber _______, Page ________, Assignor made a loan
to the Borrower in the sum of $______________ (the "Mortgage Loan");
-------------
WHEREAS, Assignor and Assignee entered into that certain Purchase and
Sale Agreement (the "Agreement"), dated as of January 21, 2000, for, inter alia,
--------- ----- ----
the transfer of the Mortgage Loan; and
WHEREAS, in accordance with the terms of the Agreement, Assignor
desires to assign, transfer, set over and deliver to Assignee all of Assignor's
right, title and interest in, and Assignee desires to assume all duties and
obligations of Assignor with respect to the Mortgage Loan and the mortgage loan
documents relating thereto and described on Exhibit A attached hereto and made a
part hereof (the "Mortgage Loan Documents");
-----------------------
NOW, THEREFORE, in accordance with the Agreement and in consideration
of the sum of ten Dollars ($10.00) and other good and valuable consideration,
the sufficiency and receipt of which are hereby acknowledged, the parties do
hereby agree as follows:
1. Assignment. Assignor does hereby assign, transfer, set over and
----------
deliver unto Assignee all of Assignor's right, title and interest in and to the
Mortgage Loan and the Mortgage Loan Documents, together with all other documents
and instruments relating thereto. The foregoing assignment is made without
representation or warranty of any kind, except as otherwise set forth herein or
in the Agreement.
2. Assumption. Assignee hereby accepts the foregoing assignment
----------
and hereby assumes all duties and obligations under the Mortgage Loan Documents
arising on or after the date hereof.
<PAGE>
3. Assignor Indemnification. Assignor hereby agrees to indemnify,
------------------------
defend and hold harmless Assignee from and against any loss, cost, damage, or
expense arising from or in connection with any liability or obligation related
to the Mortgage Loan and the Mortgage Loan Documents arising by virtue of acts
or omissions by Assignor which have accrued or occurred prior to the date
hereof.
4. Assignee Indemnification. Assignee hereby agrees to indemnify,
------------------------
defend and hold harmless Assignor from and against any loss, cost, damage, or
expense arising from or in connection with any liability or obligation related
to the Mortgage Loan and the Mortgage Loan Documents arising by virtue of acts
or omissions by Assignee which accrue or occur on or after the date hereof.
5. Governing Law; Parties Bound. This Assignment shall be governed
----------------------------
by the laws of the State of ________ and shall be binding upon, and inure to the
benefit of, the parties to this Assignment and their respective heirs, legal
representatives, successors and assigns.
IN WITNESS WHEREOF, this Assignment has been signed, sealed and
delivered by the parties as of the date first above written.
WITNESSED BY: ASSIGNOR:
______________________________ By:________________________
Name:_________________________
By:________________________
______________________________ Name:______________________
Title:_____________________
Name:_________________________
WITNESSED BY: ASSIGNEE:
______________________________ By:________________________
Name:_________________________
By:________________________
______________________________ Name:______________________
Title:_____________________
Name:________________________
<PAGE>
STATE OF ___________ )
) ss:
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me this _____ day of
______, 2000, by ________________, as ______________ of _______________, a
__________ corporation, _____________ of _________________, a
___________________, on behalf of the _____________, who is personally known to
me or who has produced a driver's license as identification.
__________________________________
Name:
Notary Public, State of ________________
My commission expires:
STATE OF ___________ )
) ss:
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me this _____ day of
______, 2000, by _________________, as ______________ of __________________, a
________ corporation, ______________ of ______________________, a ___________,
on behalf of the _________________, who is personally known to me or who has
produced a driver's license as identification.
__________________________________
Name:
Notary Public, State of ________________
My commission expires:
<PAGE>
EXHIBIT F
FORM OF
ASSIGNMENT OF TRADEMARKS
------------------------
This ASSIGNMENT OF TRADEMARKS is made and entered into as of the ____
day of _____, 2000, by and between _____________ ("Assignor"), and __________
--------
("Assignee").
- - ----------
WHEREAS, Assignor owns all right, title and interest in and to the
trademarks, service marks and trade names listed in Schedule A annexed hereto
(the "Marks"); and
-----
WHEREAS, Assignee is desirous of acquiring the Marks, and any
applications and registrations thereof;
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, Assignor does hereby assign, sell and transfer to
Assignee its entire right, title and interest in and to the Marks, together with
the goodwill of the business symbolized by the Marks, and any applications and
registrations thereof.
Dated: (Assignor)
_________________________________
By:______________________________
Name:
Title:
<PAGE>
STATE OF ___________ )
) ss:
COUNTY OF ___________ )
On this _____day of ______ 2000, before me personally appeared
__________________, to me known who, being by me duly sworn, did depose and say
that he is the _________________ (title) of ________________, Inc., Assignor,
described herein and which executed the foregoing instrument and that he signed
his name thereto.
________________________
Notary Public
<PAGE>
EXHIBIT G
SEVERANCE BENEFITS PLAN
-----------------------
Except for those employees who are covered by employment agreements with Echelon
International Corporation, each Transferred Employee that is terminated as part
of any work force reduction plan implemented by Buyer within twelve (12) months
of the Closing Date will receive:
* Two weeks base salary for each year of service with Echelon International
Corporation (pro rated, not truncated);
* One week base salary for each $10,000 of base salary (pro rated, not
truncated);
* Payment for any accrued but unpaid vacation time;
* However, in no event will the payment be less than 4 weeks base salary; and
* Any earned, but unpaid, bonus payment for 2000.
<PAGE>
EXHIBIT H
INTENTIONALLY OMITTED
---------------------
<PAGE>
EXHIBIT I
FORM OF
TITLE AFFIDAVIT
---------------
STATE OF ___________ )
) ss:
COUNTY OF ___________ )
The undersigned, [PROPERTY OWNER], hereinafter called Affiant, being duly sworn,
says that:
1. Affiant is the owner in fee simple of the premises described on Exhibit A
-
attached hereto.
2. Affiant has present possession of all the premises subject to lessees or
tenants in possession.
3. Affiant states further that no work has been done or materials furnished to
said premises, or any part thereof, or demolition of existing improvements
conducted thereon, for the past six (6) months and that there are no
outstanding claims for the furnishings of material or labor for the
erection, construction, alteration or demolition of any building on the
premises whereby the same are now or might become subject to mechanic's or
other liens, except as listed on Exhibit B attached hereto.
-
4. Affiant further represents that it has not received notice of an assessment
for any public improvements affecting the property prior to the date of
closing that would give rise to a special property tax assessment against
the property described on Exhibit A after the date of closing.
-
5. Affiant is not currently in bankruptcy under the U.S. Code, and further
represents to its knowledge that there are no pending proceedings or
unsatisfied judgments of record, nor any tax liens filed against Affiant,
except as shown on Exhibit C attached hereto; that if there are any
judgments, bankruptcies, probate proceedings, state or federal tax liens of
record against parties with same or similar names, they are not against
Affiant.
6. Affiant agrees not to place of record any lien or encumbrance upon the
above-mentioned property from the date hereof to the date of recordation of
documents executed and delivered in connection with the above commitment.
<PAGE>
This affidavit is made for the purpose of inducing one or more of LANDAMERICA
FINANCIAL GROUP's title insurers to issue an Owner's policy of title insurance
on the premises without exception to rights of parties in possession or
intervening matters which do or do not appear of record between the date of
closing and recordation.
By:__________________________________
Title:_________________________________
Subscribed and sworn to before me this _____ day of ____________, ____
________________________________
Notary Public
________________________________
Address
________________________________
Commission expires:
<PAGE>
EXHIBIT J
FORM OF
GAP INDEMNITY
-------------
TITLE NO. ______________
THIS INDEMNITY, given by [Property Owner] (hereinafter called Indemnitor)
to [LANDAMERICA FINANCIAL GROUP] (hereinafter called Company) on _____________,
2000.
WHEREAS, Indemnitor has requested Company to issue its policy(s) of title
insurance insuring an interest in or title to certain real estate in
______________ County (City) _____________, described in Policy/Commitment No.
_____________ issued by Company and/or described in Exhibit A attached hereto
and made a part hereof without exception to, or providing certain affirmative
insurance against, the following matters (hereinafter referred to as the
Exception):
Defects, liens, encumbrances, adverse claims or other matters, if any,
created, first appearing in the public records on attaching subsequent to
the effective date hereby but prior to the date the proposed insured
acquires for value of record the estate or interest or mortgage thereon
covered by this commitment, other than mechanics' and materialman's claims.
AND WHEREAS, Company is unwilling to so issue such policy(s) unless
indemnified by Indemnitor as hereinafter provided;
AND WHEREAS, Indemnitor has, as an inducement to Company, offered to
indemnify Company against loss or damage which Company may become liable for by
reason of the omission or deletion of the Exception in said Policy or Commitment
against loss, damage, cost or expense which may result from the matters referred
to in the Exception;
NOW, THEREFORE, the condition of this obligation is such that if
Indemnitor, its heirs, administrators, executors, successors, and assigns, or
any of them, shall and do at all times hereinafter well and sufficiently save,
defend, keep harmless, and indemnify Company, its successors and assigns of and
from all loss, damage, cost, change, liability or expense, including court costs
and reasonable attorneys' fees, which it may sustain, suffer or be put to under
its policy or policies of title insurance or otherwise on account of the
omission or deletion of, or affirmative insurance in connection with, the
Exception due to or arising from any act or omission of Indemnitor and in the
event any claims or liens in connection with the Exception are filed of record
which are so due to the action or omission of Indemnitor; shall cause same to be
paid and discharged of record without delay, or otherwise disposed of to
Company's reasonable satisfaction, then this obligation shall be null and void,
otherwise to remain in full force and effect until the date of policy issuance.
<PAGE>
The conditions, covenants, and terms of this Indemnity attached hereto as
Schedule A are incorporated herein by reference.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
this ______ day of __________, 2000.
INDEMNITOR
[PROPERTY OWNER]
By: __________________________
_____________________________(SEAL)
Address: __________________________
__________________________
Telephone: ________________________
<PAGE>
SCHEDULE A TO EXHIBIT J
-----------------------
THE CONDITIONS, COVENANTS, AND TERMS OF THE ATTACHED INDEMNITY ARE:
1. Indemnitor agrees that Company may, in its discretion, report to its
proposed insured the existence of the matters set forth as the Exception and
refuse to so issue such policy(s) of title insurance unless Company is furnished
with satisfactory acknowledgment by the proposed insured that said proposed
insured is aware of the existence of the matters set forth as of title
insurance. The obligations of Indemnitor under this instrument shall continue
until Company has ascertained through a lien search conducted as soon as
possible following the issuance of the policy, that no matters of record have
been filed between the date of the Commitment and the date of the policy.
Company also agrees to conduct a lien search and update the effective date of
the Commitment to a date immediately prior to the date of closing of the
transaction pursuant to which the policy will be issued.
2. Indemnitor agrees that if at any time Company deems it necessary in
order to satisfy its obligations under said policy(s), it may, with notice to
Indemnitor, pay, satisfy, compromise or do any other act reasonably necessary to
obtain a release or discharge of the Exception to the title (provided however,
that such Exception is due to the act or omission of Indemnitor, and Indemnitor
has had a reasonable opportunity to satisfy the obligation itself.) Indemnitor
hereby authorizes and empowers Company to advance and pay any sums reasonably
necessary to obtain a release, discharge or satisfaction of the matters set
forth as the Exception to the title. Indemnitor shall promptly furnish such
funds so expended by Company following demand therefor.
3. If Company shall sustain or incur loss or damage because Indemnitor
failed to provide sufficient funds upon demand by Company, Indemnitor shall
become indebted to Company in amount equal to the loss and expense sustained or
incurred by Company and agrees to repay Company that amount on demand, together
with interest thereon, from the date of demand, at the legal rate for judgments
in the state where the real estate is located.
4. If Indemnitor fails timely to take such steps as in the opinion of
Company are reasonably necessary to remove the matters set forth herein as the
Exception to the title, on or before agreed date as provided herein, Company is
authorized in its reasonable discretion to take whatever steps, including but
not limited to the commencement of legal action or payment of money, that it
determines necessary to remove said matters, and in connection therewith
Indemnitor shall, upon demand, advance to Company all funds necessary, including
all costs, attorneys' fees, and other expenses.
5. Company shall have the right with the reasonable approval of Indemnitor
to select and approve any and all counsel who may be retained by Company or by
Indemnitor to defend any action brought by any party as a result of Company
issuing its policy(s) without showing said Exception, or insuring against loss,
damage, cost or expense which may result from the matters referred to in said
Exception, or any counsel retained by Company or Indemnitor to bring any action
or to perform any work to correct the matters shown in the Exception, and
Indemnitor agrees promptly to pay the counsel to selection or approved by
Company.
<PAGE>
6. In this instrument, wherever the context so requires, the singular
number includes the plural, and where there is more than one person included as
Indemnitor the obligations of this agreement shall be binding on all such
persons jointly and severally. "Policy" shall be deemed to include a binder or
commitment; and "Commitment" shall be deemed to include binder.
7. If any provision hereof is held to be void or unenforceable under the
laws of any place covering its construction or enforcement, this instrument
shall not be void or vitiated thereby, but shall be construed to be in force
with the same effect as though such provision were omitted.
8. The liability of Indemnitor under this instrument is direct and primary
and is not conditioned or contingent upon prior pursuit of any remedies by
Company except demand for performance upon Indemnitor. Indemnitor shall be
liable for and shall pay promptly to Company all costs, expenses and reasonable
attorneys' fees incurred by Company in enforcing its rights hereunder.
9. This instrument shall be binding upon Indemnitor, and its successors
and assigns and shall inure to the benefit of Company, its successors or
assigns, including, without limitation, any other insurer involved in
reinsuring, in any matter, any liabilities of Company under any policy(s) of
title insurance or endorsement(s) thereto issued in reliance hereon.
10. Written notice shall be deemed to have been duly served if delivered
to the person or to a member of the firm or to an officer of the corporation for
whom it was intended, or if delivered at or sent by registered or certified mail
to the appropriate address shown herein.
<PAGE>
EXHIBIT K
FORM OF
FIRPTA AFFIDAVIT
----------------
CERTIFICATION OF NONFOREIGN STATUS
----------------------------------
Section 1445 of the Internal Revenue Code provides that a transferee
(buyer) of a U.S. real property interest must withhold tax if the transferor
(seller) is a foreign person. To inform the transferee (buyer) that withholding
of tax is not required upon the disposition of U.S. real property interest, the
undersigned hereby certify the following:
1. The undersigned are not nonresident aliens for purposes of U.S.
Income taxation;
2. The undersigned's U.S. taxpayer identifying numbers are
identified on Schedule A; and
3. The undersigned's address is:
c/o Susan Glatthorn Johnson, Esq.
General Counsel & Senior Vice President
Echelon International Corporation
450 Carillon Parkway, Suite 200
St. Petersburg, Florida 33716
The undersigned understand that this Certification may be disclosed to
the Internal Revenue Service by the transferee and that any false statement it
has made here could be punished by fine, imprisonment, or both.
Under penalties of perjury the undersigned declare that they have
examined this Certification and to the best of their knowledge and belief it is
true, correct, and complete.
Dated: __________ ___, 2000
[INSERT HERE THE LIST OF SUBS FOR
PURCHASE AND SALE AGREEMENT]
By:_____________________________
Name:___________________________
Title:____________________________
<PAGE>
EXHIBIT L
JOINT DIRECTION LETTER
[February] __, 2000
LandAmerica Financial Group
3922 Coconut Palm Drive, Suite 102
Tampa, Florida 33619
Attention: Juanita M. Shuster
Dear Ms. Shuster:
Reference is made to (a) the Purchase and Sale Agreement dated January
__, 2000 (the "Purchase and Sale Agreement") by and among Echelon International
Corporation and certain of its subsidiaries, collectively, as Sellers
(collectively, in such capacity, referred to herein as the "Seller"), and
Echelon Residential LLC, as Buyer (the "Buyer"), and (b) the Subscription
Agreement dated January __, 2000 (the "Subscription Agreement") by and among
Echelon International Corporation and certain of its subsidiaries, collectively,
as Transferor (collectively, in such capacity, referred to herein as the
"Transferor"), and Heller Affordable Housing of Florida, Inc., as Transferee
(the "Transferee"). Unless otherwise defined or provided, capitalized terms
herein shall have the meanings ascribed to such terms in the Purchase and Sale
Agreement or Subscription Agreement, respectively, as the case may be.
This Joint Direction Letter is delivered to LandAmerica Financial
Group as Escrow Agent under the Purchase and Sale Agreement and under the
Subscription Agreement (in such capacity, referred to herein as "Escrow Agent")
pursuant to Section 7.7 of the Purchase and Sale Agreement and Section 7.7 of
the Subscription Agreement and, once delivered by the parties hereto, shall be
irrevocable in all respects.
1. Each of the Seller, the Buyer, the Transferor and the Transferee
hereby expressly acknowledges, agrees, represents and warrants and, to the
extent the following waivers and confirmation may only be validly made by any
other signatory hereto but not by it, based upon and in reliance upon the
acknowledgement, agreement, representations and warranties of such other parties
hereby made, that, except for the conditions described in Sections 6.1(c), (i)
and (j) and 6.2(c), (i) and (j) of the Purchase and Sale Agreement and Sections
6.1(c), (i) and (j) and 6.2(c), (i) and (j) of the Subscription Agreement, each
of the conditions to the closing of the transactions described in the Purchase
and Sale Agreement and the Subscription Agreement (including, without
limitation, conditions based upon (x) the accuracy as of any date of the
representations and warranties of any party thereto, (y) compliance by any party
thereto with its covenants or other obligations thereunder, and (z) the
deliveries to Escrow Agent of the Escrowed Items required thereby) have been
satisfied or waived as of the date hereof.
2. Each of the Seller and the Buyer hereby represents and warrants
that (a) to the best of its knowledge, after due inquiry, none of the conditions
described in Sections 6.1(i)
<PAGE>
and (j), and 6.2 (i) and (j) of the Purchase and Sale Agreement has occurred,
and (b) the Purchase and Sale Agreement has not been amended, supplemented,
terminated (pursuant to Section 9 thereof or otherwise) or otherwise modified,
except such amendments, supplements or modifications as (i) are permitted by the
Merger Agreement, (ii) would not reduce the aggregate Purchase Price and would
not affect Sections 7.7, 7.8 or 12.2 of the Purchase and Sale Agreement and
(iii) are attached as exhibits hereto.
3. Each of the Transferor and Transferee hereby represents and
warrants that (a) to the best of its knowledge, after due inquiry, none of the
conditions described in Sections 6.1(i) and (j), and 6.2(i) and (j) of the
Subscription Agreement has occurred, and (b) the Subscription Agreement has not
been amended, supplemented, or terminated (pursuant to Section 9 thereof or
otherwise) or otherwise modified, except such amendments, supplements or
modifications as (i) are permitted by the Merger Agreement, (ii) would not
reduce the aggregate cash portion of the Transfer Value and would not affect
Sections 7.7, 7.8 or 12.2 of the Subscription Agreement and (iii) are attached
as exhibits hereto.
4. The Seller and the Buyer each hereby further confirm to Escrow
Agent that (a) listed on Schedule I hereto is a list of all items required to be
delivered by the Buyer and/or the Seller to Escrow Agent under Sections 7.4 and
7.5 of the Purchase and Sale Agreement (the "Purchase Escrowed Items"), (b) all
such items, including the Purchase Price, have been delivered to Escrow Agent
under the Purchase and Sale Agreement, (c) the amount of the Purchase Price is
$______, and (d) the aggregate amount of Asset Sales Proceeds (as such term is
defined in the Purchase and Sale Agreement) is $______.
5. The Transferor and the Transferee each hereby further confirm that
(a) listed on Schedule II hereto is a list of all items required to be delivered
by the Transferor and/or the Transferee under Sections 7.4 and 7.5 of the
Subscription Agreement (the "Subscription Escrowed Items"), (b) all such items,
including the Transfer Value, have been delivered to Escrow Agent under the
Subscription Agreement, and (c) the amount of the cash portion of the Transfer
Value, after giving effect to any Reduction in Transfer Value as the result of
the consummation on or prior to the date hereof of any Pending Transactions (as
such term is defined in the Subscription Agreement) is $_____[, the Reduction in
Transfer Value is $______ and the Excess Amount (as such term is defined in the
Subscription Agreement is $_______]).
6. The Buyer and the Seller hereby irrevocably instruct you as
follows:
(a) Immediately following the filing by Escrow Agent of the Articles
of Merger with respect to the Merger with the Department of State of the State
of Florida or the receipt by Escrow Agent of notice that such filing has
occurred, the Purchase Escrowed Items shall be promptly delivered by Escrow
Agent to the party entitled to same and, in particular,
(i) the Purchase Price shall be delivered, by wire transfer of
immediately available funds, to the Surviving Corporation or as it
shall direct; and
(ii) the aggregate amount of Asset Sales Proceeds shall be delivered,
by wire transfer of immediately available funds, to the Buyer or
as it shall direct.
<PAGE>
(b) If (i) the Purchase and Sale Agreement has been terminated
pursuant to Section 9.1 thereof, or (ii) the Tender Offer Expiration Date does
---
not occur on or prior to the third Business Day after the date hereof, the
Purchase Escrowed Items shall be promptly delivered by Escrow Agent to the party
which had previously deposited same with Escrow Agent, and these instructions
shall cease to have any effect.
7. The Transferor and the Transferee hereby irrevocably instruct
Escrow Agent as follows:
(a) Immediately following the filing by Escrow Agent of the Articles
of Merger with respect to the Merger with the Department of State of the State
of Florida or the receipt by Escrow Agent of notice that such filing has
occurred, the Subscription Escrowed Items shall be promptly delivered by Escrow
Agent to the party entitled to same and, in particular,
(i) the Preferred Stock shall be delivered to the Surviving
Corporation;
(ii) the cash portion of the Transfer Value plus the amount of any
Reduction in Transfer Value shall be delivered, by wire transfer
of immediately available funds, to the Surviving Corporation or
as it shall direct;
(iii) an amount equal to fifteen (15%) percent of the Excess Amount
shall be delivered, by wire transfer of immediately available
funds, to Echelon Commercial LLC or as it shall direct; and
(iv) an amount equal to eighty-five (85%) percent of such Excess
Amount shall be delivered, by wire transfer of immediately
available funds, to the Transferee for credit to the Cash
Collateral Account (as such term is defined in the Heller
Lease).
(b) If (i) the Subscription Agreement has been terminated pursuant to
Section 9.1 thereof, or (ii) the Tender Offer Expiration Date does not occur on
---
or prior to the third Business Day after the date hereof, the Subscription
Escrowed Items shall be promptly delivered by Escrow Agent to the party which
had previously deposited same with Escrow Agent, and these instructions shall
cease to have any effect.
8. These instructions may not be revoked, modified, superseded or
amended, without the prior written consent of each of the Seller, the Buyer, the
Transferee, the Transferor, and EIN Acquisition Corp.
Please acknowledge your receipt hereof and of each of the Purchase
Escrowed Items, and Subscription Escrowed Items, including the Purchase Price
and the Transfer Value, and your agreement, irrevocably, to comply herewith, by
signing the enclosed copies of this letter and delivering copies hereof to each
of the Buyer, the Seller, the Transferee, the Transferor, and EIN Acquisition
Corp. EIN Acquisition Corp. is joining in the execution hereof for the purpose
of acknowledging its receipt hereof and agreement to be bound hereby, subject to
all of the terms and conditions hereof.
<PAGE>
IN WITNESS WHEREOF, this irrevocable Joint Direction Letter has been
signed this __ day of [February], 2000.
ECHELON INTERNATIONAL CORP., [list all
subsidiaries parties to Purchase and Sale
Agreement], as Seller
By:__________________________________________
Name:
Title:
ECHELON INTERNATIONAL CORP.,
[list all subsidiaries party to Subscription
Agreement], as Transferor
By:__________________________________________
Name:
Title:
ECHELON RESIDENTIAL LLC, as Buyer
By:__________________________________________
Name:
Title:
HELLER AFFORDABLE HOUSING OF
FLORIDA, INC., as Transferee
By:__________________________________________
Name:
Title:
ACKNOWLEDGED AND AGREED:
LANDAMERICA FINANCIAL GROUP
By:______________________________
Name:________________________
Title:_______________________
<PAGE>
RECEIPT ACKNOWLEDGED:
EIN ACQUSITION CORP.
By:______________________________
Name:________________________
Title:_______________________
<PAGE>
EXHIBIT M
---------
JOINT INSTRUCTION LETTER
[February] __, 2000
LandAmerica Financial Group
3922 Coconut Palm Drive, Suite 102
Tampa, Florida 33619
Attention: Juanita M. Shuster
Dear Ms. Shuster:
Reference is made to (a) the Purchase and Sale Agreement dated January __,
2000 (the "Purchase and Sale Agreement") by and among Echelon International
Corporation and certain of its subsidiaries, collectively, as Sellers
(collectively, in such capacity, referred to herein as the "Seller"), and
Echelon Residential LLC, as Buyer (the "Buyer"), (b) the Subscription Agreement
dated January __, 2000 (the "Subscription Agreement") by and among Echelon
International Corporation and certain of its subsidiaries, collectively, as
Transferor (collectively, in such capacity, referred to herein as the
"Transferor"), and Heller Affordable Housing of Florida, Inc., as Transferee
(the "Transferee"), and (c) that certain Joint Direction Letter of even date
herewith made by the Seller, the Buyer, the Transferor and the Transferee and
delivered to you pursuant to Sections 7.7 of the Purchase and Sale Agreement and
Section 7.7 of the Subscription Agreement (the "Joint Direction Letter").
Unless otherwise defined or provided, capitalized terms herein shall have the
meanings ascribed to such terms in the Purchase and Sale Agreement or
Subscription Agreement, respectively, as the case may be.
This Joint Instruction Letter is delivered to LandAmerica Financial Group
as Escrow Agent under the Purchase and Sale Agreement and under the Subscription
Agreement (in such capacity, referred to in herein as "Escrow Agent") pursuant
to Section 7.8 of the Purchase and Sale Agreement and Section 7.8 of the
Subscription Agreement and, once delivered by the parties hereto, shall be
irrevocable in all respects. A copy of this Joint Instruction Letter shall be
delivered by Escrow Agent to EIN Acquisition Corp., a Florida corporation,
("EIN") and to Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank
Nederland", New York Branch, for the benefit of itself and Utrecht-America
Finance Co. (collectively "Lender") and may be relied upon by EIN and Lender as
if it had been addressed to them directly.
1. Each of the Buyer and the Transferee hereby expressly acknowledges,
agrees, represents and warrants and, to the extent the following waivers and
confirmation may only be validly made by the other party hereto or by any other
signatory to the Joint Direction Letter but not by it, based upon and in
reliance upon, but not in any event
<PAGE>
subject to, the waivers and acknowledgements of such other parties hereby and
thereby made, that, except for the conditions described in Sections 6.1(c), (i)
and (j) and 6.2(c), (i) and (j) of the Purchase and Sale Agreement and Sections
6.1(c), (i) and (j) and 6.2(c), (i) and (j) of the Subscription Agreement, each
of the conditions to the closing of the transactions described in the Purchase
and Sale Agreement and the Subscription Agreement (including, without
limitation, conditions based upon (x) the accuracy as of any date of the
representations and warranties of any party thereto, (y) compliance by any party
thereto with its covenants or other obligations thereunder, and (z) the
deliveries to Escrow Agent of the Escrowed Items required hereby or thereby)
have been satisfied or waived as of the date hereof.
2. The Buyer hereby represents and warrants that (a) to its knowledge,
none of the conditions described in Sections 6.1(i) and (j), and 6.2 (i) and (j)
of the Purchase and Sale Agreement has occurred, and (b) the Purchase and Sale
Agreement has not been amended, supplemented, terminated (pursuant to Section 9
thereof or otherwise) or otherwise modified, except such amendments, supplements
or modifications as (i) are permitted by the Merger Agreement, (ii) would not
reduce the aggregate Purchase Price and would not affect Sections 7.7, 7.8, or
12.2 of the Purchase and Sale Agreement and (iii) are attached as exhibits
hereto. On the Closing Date under the Purchase and Sale Agreement, Buyer agrees
to deliver to Escrow Agent a certificate reconfirming for the benefit of Escrow
Agent, EIN and Lender the representations and warranties of the preceding
sentence together with the other items required to be delivered to EIN as
provided in Section 7.8 of the Purchase and Sale Agreement.
3. The Transferee hereby represents and warrants that (a) to its
knowledge, none of the conditions described in Sections 6.1(i) and (j), and
6.2(i) and (j) of the Subscription Agreement has occurred, and (b) the
Subscription Agreement has not been amended, supplemented, or terminated
(pursuant to Section 9 thereof or otherwise) or otherwise modified, except such
amendments, supplements or modifications as (i) are permitted by the Merger
Agreement, (ii) would not reduce the aggregate cash portion of the Transfer
Value and would not affect Sections 7.7, 7.8, or 12.2 of the Subscription
Agreement and (iii) are attached as exhibits hereto. On the Closing Date under
the Subscription Agreement, the Transferee agrees to deliver to Escrow Agent a
certificate reconfirming for the benefit of Escrow Agent, EIN and Lender the
representations and warranties of the preceding sentence together with the other
items required to be delivered to EIN as provided in Section 7.8 of the
Subscription Agreement.
4. The Buyer hereby further confirms that (a) listed on Schedule I hereto
is a list of all items required to be delivered by the Buyer and/or the Seller
to Escrow Agent under Sections 7.4 and 7.5 of the Purchase and Sale Agreement
(the "Purchase Escrowed Items"), (b) all such items, including the Purchase
Price, have been delivered to Escrow Agent under the Purchase and Sale
Agreement, (c) the amount of the Purchase Price is $______, (d) the aggregate
amount of Asset Sales Proceeds (as such term is defined in the
<PAGE>
Purchase and Sale Agreement) is $_______, and (e) the Joint Direction Letter
required by Section 7.7 of the Purchase and Sale Agreement has been delivered by
the Buyer and the Seller to Escrow Agent.
5. The Transferee hereby further confirms that (a) listed on Schedule II
hereto is a list of all items required to be delivered by the Transferor and/or
the Transferee under Sections 7.4 and 7.5 of the Subscription Agreement (the
"Subscription Escrowed Items"), (b) all such items, including the Transfer
Value, have been delivered to Escrow Agent under the Subscription Agreement, (c)
the amount of the cash portion of the Transfer Value, after giving effect to any
Reduction in Transfer Value as the result of the consummation on or prior to the
date hereof of any Pending Transactions (as such term is defined in the
Subscription Agreement) is $_____[, the Reduction in Transfer Value is $______
and the Excess Amount (as such term is defined in the Subscription Agreement is
$_______]), and (d) the Joint Direction Letter required by Section 7.7 of the
Subscription Agreement has been delivered by the Transferor and the Transferee
to Escrow Agent.
6. The Buyer hereby irrevocably, and without condition except as provided
in this paragraph, instructs Escrow Agent as follows:
(a) immediately following the filing by Escrow Agent of the Articles of
Merger with respect to the Merger with the Department of State of the State of
Florida or the receipt by Escrow Agent of notice that such filing has occurred,
the Purchase Escrowed Items shall be promptly delivered by Escrow Agent to the
party entitled to same and, in particular,
(i) the Purchase Price shall be delivered, by wire transfer of
immediately available funds, to the Surviving Corporation or as it
shall direct; and
(ii) the aggregate amount of Asset Sales Proceeds shall be delivered, by
wire transfer of immediately available funds, to the Buyer as
follows: [Echelon Residential LLC wire instructions].
(b) If (i) the Purchase and Sale Agreement has been terminated pursuant
to Section 9.1 thereof, or (ii) the Tender Offer Expiration Date does not occur
---
on or prior to the third Business Day after the date hereof, the Purchase
Escrowed Items shall be promptly delivered by Escrow Agent to the party which
had previously deposited same with Escrow Agent, and these instructions shall
cease to have any effect.
7. The Transferee hereby irrevocably, and without condition except as
provided in this paragraph, instructs Escrow Agent as follows:
<PAGE>
(a) immediately following the filing by Escrow Agent of the Articles of
Merger with respect to the Merger with the Department of State of the State of
Florida or the receipt by Escrow Agent of notice that such filing has occurred,
the Subscription Escrowed Items shall be promptly delivered by Escrow Agent to
the party entitled to same and, in particular,
(i) the Preferred Stock shall be delivered to the Surviving
Corporation;
(ii) the cash portion of the Transfer Value plus the amount of any
Reduction in Transfer Value shall be delivered, by wire transfer
of immediately available funds, to the Surviving Corporation or as
it shall direct;
(iii) an amount equal to fifteen (15%) percent of any Excess Amount
shall be delivered, by wire transfer of immediately available
funds, to Echelon Commercial LLC as follows: [Echelon Commercial
LLC wire instructions]; and
(iv) an amount equal to eighty-five (85%) percent of such Excess Amount
shall be delivered, by wire transfer of immediately available
funds, to the Transferee for credit to the Cash Collateral Account
(as such term is defined in the Heller Lease) as follows: [Heller
Affordable Housing of Florida Inc., Cash Collateral Account wire
instructions].
(b) If (i) the Subscription Agreement has been terminated pursuant to
Section 9.1 thereof, or (ii) the Tender Offer Expiration Date does not occur on
---
or prior to the third Business Day after the date hereof, the Subscription
Escrowed Items shall be promptly delivered by Escrow Agent to the party which
had previously deposited same with Escrow Agent, and these instructions shall
cease to have any effect.
8. These instructions may not be revoked, modified, superseded or amended,
without the prior written consent of each of the Buyer, the Transferee, EIN and
Lender.
Please acknowledge your receipt hereof and of each of the Joint Direction
Letter, Purchase Escrowed Items, and Subscription Escrowed Items, including the
Purchase Price and the Transfer Value, and your agreement, irrevocably, to
comply herewith, by signing the enclosed copies of this letter and delivering
copies hereof to each of the Buyer, the Transferee, EIN and Lender. EIN and
Lender and joining in the execution hereof for the purpose of acknowledging
their receipt hereof and agreement to be bound hereby, subject to all of the
terms and conditions hereof.
<PAGE>
IN WITNESS WHEREOF, this irrevocable Joint Instruction Letter has been
signed this __ day of [February], 2000.
ECHELON RESIDENTIAL LLC, as Buyer
By:___________________________________
Name:
Title:
HELLER AFFORDABLE HOUSING OF
FLORIDA, INC., as Transferee
By:___________________________________
Name:
Title:
ACKNOWLEDGED AND AGREED:
LANDAMERICA FINANCIAL GROUP
By:____________________________
Name:_______________________
Title:______________________
RECEIPT ACKNOWLEDGED:
EIN ACQUSITION CORPORATION
By:____________________________
Name:_______________________
Title:______________________
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A
"RABOBANK NEDERLAND", NEW YORK BRANCH
By:____________________________
Name:_______________________
Title:______________________
<PAGE>
EXHIBIT (D)(3)
EXECUTION COPY
================================================================================
SUBSCRIPTION AGREEMENT
by and among
ECHELON INTERNATIONAL CORPORATION
and
CERTAIN OF ITS SUBSIDIARIES,
collectively, as Transferor,
and
HELLER AFFORDABLE HOUSING OF FLORIDA, INC.,
as Company
January 21, 2000
================================================================================
<PAGE>
Table of Contents
-----------------
<TABLE>
<S> <C>
Section 1. Definitions and References...................................................................... 1
Section 2. Transfer of Assets; Assumption of Liabilities................................................... 8
2.1 Transfer Value................................................................................ 8
2.2 Assumption of Liabilities..................................................................... 9
2.3 Pending Transactions.......................................................................... 9
Section 3. Transferor's Representations and Warranties..................................................... 10
3.1 Due Organization and Good Standing of Transferor.............................................. 10
3.2 Authorization and Validity of Agreement....................................................... 10
3.3 Consents and Approvals; No Violations......................................................... 11
3.4 Title to Assets; Encumbrances................................................................. 11
3.5 Ownership of Mortgage Loans................................................................... 12
3.6 Environmental Laws and Regulations............................................................ 12
3.7 Leases........................................................................................ 13
3.8 Litigation.................................................................................... 13
3.9 Land Use...................................................................................... 13
3.10 Contracts..................................................................................... 14
3.11 Permits....................................................................................... 14
3.12 Assumed Debt.................................................................................. 14
3.13 Intellectual Property......................................................................... 15
3.14 Insurance..................................................................................... 16
3.15 Assets........................................................................................ 16
3.16 Compliance with Laws.......................................................................... 16
3.17 Year 2000..................................................................................... 16
3.18 Investment Intention.......................................................................... 16
3.19 No Other Representations or Warranties........................................................ 16
Section 4. Company's Representations and Warranties........................................................ 17
4.1 Due Organization and Good Standing of Company................................................. 17
4.2 Authorization and Validity of Agreement....................................................... 17
4.3 Capitalization................................................................................ 17
4.4 Consents and Approvals; No Violations......................................................... 17
4.5 Condition of the Assets....................................................................... 18
4.6 Liens......................................................................................... 18
4.7 Sufficient Funds.............................................................................. 19
4.8 Title and Survey.............................................................................. 19
4.9 Inspection.................................................................................... 19
4.10 Company Liquidity............................................................................. 19
4.11 No Other Representations or Warranties........................................................ 19
</TABLE>
i
<PAGE>
Table of Contents
-----------------
(Continued)
<TABLE>
<CAPTION>
<S> <C>
Page
----
Section 5. Covenants....................................................................................... 19
5.1 Compliance.................................................................................... 19
5.2 Notices of Violations......................................................................... 20
5.3 Ownership of Assets........................................................................... 20
5.4 Operation of Assets Subsequent to the Agreement Date.......................................... 20
5.5 Status of Agreements.......................................................................... 21
5.6 Further Assurances............................................................................ 22
5.7 Consents...................................................................................... 23
5.8 Bringdown of Transferor's Representations..................................................... 23
5.9 Cooperation Regarding Taxes................................................................... 24
5.10 Insurance..................................................................................... 25
5.11 Reasonable Best Efforts....................................................................... 25
5.12 Access to Information Concerning Assets....................................................... 25
5.13 Notification of Certain Matters............................................................... 25
5.14 HSR Act....................................................................................... 26
5.15 Retention of Records.......................................................................... 26
5.16 Transfer of Preferred Stock................................................................... 26
5.17 Maintenance of Liquidity...................................................................... 26
Section 6. Conditions Precedent to Closing................................................................. 26
6.1 Company Conditions............................................................................ 26
6.2 Transferor Conditions......................................................................... 27
Section 7. Closing......................................................................................... 29
7.1 Time and Place................................................................................ 29
7.2 Closing Expenses.............................................................................. 29
7.3 Notification of Escrow Closing Date........................................................... 29
7.4 Documents and/or Deliveries................................................................... 29
7.5 Company Documents and/or Deliveries........................................................... 32
7.6 Execution and Delivery of Closing Statements.................................................. 33
7.7 Joint Instructions to Escrow Agent............................................................ 33
7.8 Further Deliveries............................................................................ 33
Section 8. Brokers......................................................................................... 34
Section 9. Termination and Abandonment..................................................................... 34
9.1 Termination................................................................................... 34
9.2 Effect of Termination......................................................................... 35
</TABLE>
ii
<PAGE>
Table of Contents
-----------------
(Continued)
<TABLE>
<CAPTION>
<S> <C>
Page
----
Section 10. Risk of Loss; Indemnity......................................................................... 36
10.1 Casualty...................................................................................... 36
10.2 Condemnation.................................................................................. 36
10.3 Indemnity..................................................................................... 37
Section 11. Special Environmental Indemnity................................................................. 38
11.1 Environmental Liabilities..................................................................... 38
11.2 Proceedings in Respect of Claims.............................................................. 39
11.3 Assignment of Indemnity....................................................................... 41
Section 12. Miscellaneous................................................................................... 41
12.1 Litigation.................................................................................... 41
12.2 Escrow Obligations of Escrow Agent............................................................ 41
12.3 Notices....................................................................................... 45
12.4 Entire Agreement.............................................................................. 46
12.5 Successors and Assigns........................................................................ 46
12.6 Headings...................................................................................... 46
12.7 Applicable Law................................................................................ 46
12.8 Severability.................................................................................. 46
12.9 Counterparts.................................................................................. 46
12.10 No Waiver of Default.......................................................................... 46
12.11 Confidentiality............................................................................... 47
12.12 Recourse Limited.............................................................................. 47
12.13 Business Day.................................................................................. 47
12.14 Recordation................................................................................... 47
12.15 Jury Waiver................................................................................... 48
12.16 Public Announcements.......................................................................... 48
12.17 Radon Gas..................................................................................... 48
12.18 Bulk Sales Law Waiver......................................................................... 48
12.19 Knowledge..................................................................................... 49
12.20 Amendments, Modifications and Supplements..................................................... 49
12.21 Representations and Warranties................................................................ 49
12.22 Performance and Discharge..................................................................... 49
12.23 Section 351 of the Code....................................................................... 49
</TABLE>
iii
<PAGE>
SCHEDULES
---------
Schedule I - List of Assets
Schedule II - List of Assumed Debt
Schedule III - Leases
Schedule IV - Consents
Schedule V - Liens on Real Estate Assets
Schedule VI - Liens on Mortgage Loans
Schedule VII - Hazardous Materials
Schedule VIII - Real Estate Contracts
Schedule IX - Intellectual Property
Schedule X - Pending Transactions
Schedule XI - Land Use
Schedule XII - Litigation
Schedule XIII - List of Subsidiary Non-Qualification Information
Schedule XIV - Violations
Schedule XV - Insurance
Schedule XVI - Title Insurance Commitments or Other Reports
Schedule XVII - Surveys
Schedule XVIII - List of Entities Acquiring Preferred Stock
Schedule XIX - Terms of Required Consents
iv
<PAGE>
EXHIBITS
--------
Exhibit A - Form of Special Warranty Deed
Exhibit B - Form of Bill of Sale
Exhibit C - Form of Assignment and Assumption of Permits,
Contracts and Leases
Exhibit D - Form of Tenant Estoppel Statement
Exhibit E - Form of Assignment and Assumption Agreement of
Mortgage Loans
Exhibit F - Form of Title Affidavit
Exhibit G - Form of Gap Indemnity
Exhibit H - Form of FIRPTA Affidavit
Exhibit 7.7 Form of Escrow Agent Joint Direction Letter
Exhibit 7.8 Form of Escrow Agent Joint Instruction Letter
v
<PAGE>
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this "Agreement") is made as of the 21st
---------
day of January, 2000, by and among ECHELON INTERNATIONAL CORPORATION, a Florida
corporation ("Echelon"), and various of its subsidiaries signatory hereto (each,
-------
a "Subsidiary", and collectively, the "Subsidiaries") (Echelon and the
---------- ------------
Subsidiaries are collectively referred to herein as "Transferor"), and HELLER
----------
AFFORDABLE HOUSING OF FLORIDA, INC., a Florida corporation ("Company"). All
-------
capitalized terms used herein shall have the meanings set forth in Section 1
-
hereof.
WHEREAS, Echelon, either itself or through a Subsidiary, is the owner
of the real estate and other interests and assets more specifically described in
Schedule I annexed hereto and made a part hereof (collectively, the "Assets");
- ------
WHEREAS, Transferor desires to transfer all of Transferor's right,
title and interest in and to the Assets as an investment in Company pursuant to
and in accordance with the terms and provisions of this Agreement in exchange
for 2,000 shares of Preferred Stock of the Company (the "Shares") and
------
$51,300,000 in cash (subject to the adjustments set forth in Section 2.1 hereof)
---
("Cash Consideration"); and
------------------
WHEREAS, the transfer pursuant to this Agreement is intended, in
connection with a common plan for the capitalization of Company, together with a
contribution of property to Company by Heller Financial, Inc. in exchange for
shares of common stock of Company, to be a contribution to the capital of
Company pursuant to Section 351 of the Code;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Transferor agrees to
contribute, assign and transfer to Company, and Company agrees to acquire and
assume from Transferor, in exchange for the Shares and the Cash Consideration
and on the terms and subject to the conditions herein set forth, all of
Transferor's right, title and interest in and to the Assets and the Assumed
Liabilities.
Section 1. Definitions and References.
--------------------------
The following terms, as used in this Agreement, have the following
meanings unless the context is inconsistent therewith:
"Agreement" has the meaning set forth in the introductory paragraph
---------
hereof.
"Agreement Date" means the date upon which this Agreement has been
--------------
executed and delivered by Transferor, Company and Escrow Agent.
<PAGE>
"Asset Sales Proceeds" has the meaning set forth in Section 5.3
-------------------- ---
hereof.
"Assets" has the meaning set forth in the first recital hereof.
------
"Assumed Debt" means the indebtedness (as of the Closing Date)
------------
described in Schedule II annexed hereto and made a part hereof.
--
"Assumed Liabilities" has the meaning set forth in Section 2.2 hereof.
------------------- ---
"Bringdown Certificate" has the meaning set forth in Section 5.8
--------------------- ---
hereof.
"Broker" has the meaning set forth in Section 8 hereof.
------ -
"Business Day" means any day, other than a Saturday, Sunday or a day
------------
on which banks located in the State of New York shall be authorized or required
by law to close.
"Claim" has the meaning set forth in Section 10.3 hereof.
----- ----
"Claim Notice" has the meaning set forth in Section 10.3 hereof.
------------ ----
"Closing" means the consummation of the transfer of the Assets by or
-------
on behalf of Transferor to Company and issuance of the Preferred Stock, the
payment of the Cash Consideration, and assumption of the Assumed Liabilities by
Company, pursuant to Section 7 hereof.
-
"Closing Date" has the meaning specified in Section 7.1 hereof.
------------ ---
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Commission Filings" means all forms, reports, registration statements
------------------
filed by Transferor with the Securities and Exchange Commission since December
18, 1996.
"Common Stock and Subordinated Debt Subscription Agreement" means the
---------------------------------------------------------
Common Stock and Subordinated Debt Subscription Agreement, dated as of January
21, 2000, by and between Company and Heller Financial Inc., a Delaware
corporation.
"Company" has the meaning set forth in the introductory paragraph
-------
hereof.
"Contracts" means, collectively, (i) the contracts, agreements and
---------
commitments described on Schedule VIII annexed hereto and made a part hereof,
----
(ii) any contract, agreement or commitment by which Transferor is bound
primarily affecting or relating to any of the Assets (excluding Leases,
Encumbrances on title and any documents and instruments related to the Assumed
Debt) which involves base payments or the performance of services by Transferor
of an amount or value (as measured by the revenue derived therefrom during
fiscal year 1998-1999) not in excess of $12,000 annually or is terminable by
Transferor on not more than 90 days notice without penalty and (iii) any and all
contracts, agreements and commitments by which Transferor
2
<PAGE>
is bound primarily affecting or relating to any of the Assets (excluding Leases,
Encumbrances on title and any documents and instruments related to the Assumed
Debt) and which are entered into after the Agreement Date in compliance with the
provisions of this Agreement.
"County" means a political subdivision of the State within which a
------
Real Estate Asset is situated.
"Echelon" has the meaning set forth in the introductory paragraph
-------
hereof.
"Encumbrance" has the meaning set forth in Section 3.3 hereof.
----------- ---
"Environmental Claims" has the meaning set forth in Section 11.1
-------------------- ----
hereof.
"Environmental Law" means any federal, state or local statute, law,
-----------------
rule, regulation, ordinance, code, policy or rule of common law in effect and in
each case as amended as of the Closing Date, and any judicial or administrative
interpretation thereof as of the Closing Date, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or Hazardous Materials, including the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. (S)
9601 et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C.
(S) 6901 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
(S) 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. (S) 2601 et seq.;
the Clean Air Act, 42 U.S.C. (S) 7401 et seq.; the Safe Drinking Water Act, 42
U.S.C. (S) 300f et seq.; the Oil Pollution Act of 1990, 33 U.S.C. (S) 2701 et
seq.; and their state and local counterparts and equivalents.
"Escrow Agent" means LandAmerica Financial Group, a Virginia
------------
Corporation.
"Escrow Closing" means the delivery on the Escrow Closing Date to
--------------
Escrow Agent by each of Company and Transferor of the agreements, documents and
instruments specified in Sections 7.4 and 7.5 hereof, respectively.
--- ---
"Escrow Closing Date" means the date specified as such in the initial
-------------------
Escrow Date Notification Certificate delivered by Transferor to Company;
provided, that if Transferor shall deliver one or more subsequent Escrow Date
Notification Certificates in accordance with Section 7.3 hereof, the Escrow
---
Closing Date shall mean the date specified as such in the last Escrow Date
Notification Certificate theretofore delivered by Transferor to Company.
"Escrow Date Notification Certificate" has the meaning set forth in
------------------------------------
Section 7.3 hereof.
---
"Escrowed Items" has the meaning set forth in Section 7.7 hereof.
-------------- ---
"Excepted Leases" has the meaning provided in Schedule I of the
--------------- -
Purchase and Sale Agreement.
3
<PAGE>
"Excess Amount" has the meaning set forth in Section 2.3(a) hereof.
------------- ------
"Excluded Liabilities" means any liabilities or obligations of
--------------------
Transferor or its affiliates or predecessors other than the Assumed Liabilities.
"GAAP" means generally accepted accounting principles (as in effect
----
from time to time).
"Governmental Authority" means any nation or government, any state or
----------------------
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Hazardous Materials" means (a) any petroleum or petroleum products,
-------------------
radioactive materials, asbestos in any form that is friable, urea formaldehyde
foam insulation and polychlorinated biphenyls; (b) any chemicals, materials or
substances defined as or included in the definition of "Hazardous Materials",
"hazardous wastes", "hazardous materials", "extremely Hazardous Materials",
"restricted hazardous wastes", "toxic substances", "toxic pollutants", or words
of similar import, under any applicable Environmental Law; and (c) any other
substance (other than Radon) prohibited or regulated pursuant to the provisions
of any Environmental Law.
"Heller Lease" means the Lease Agreement, dated as of January 21,
------------
2000, between Company and Echelon Commercial LLC, a Delaware limited liability
company (in the form executed on the Agreement Date and thereafter, as amended,
modified or supplemented from time to time with the prior written consent of
Echelon).
"herein" or "hereof" means this entire Agreement rather than just the
------ ------
sentence, paragraph or section in which used.
"HSR Act" has the meaning set forth in Section 3.3 hereof.
------- ---
"Improvements" means all buildings, structures and other improvements
------------
existing upon the Land.
"including", "include" or "includes" mean including as an example,
--------- ------- --------
without limiting the generality of the description.
"Indemnitee" has the meaning set forth in Section 10.3 hereof.
---------- ----
"Indemnitor" has the meaning set forth in Section 10.3 hereof.
---------- ----
"Intangible Personal Property" means the Intellectual Property and
----------------------------
other intangible personal property used primarily in connection with the Assets,
and includes, without limitation, (i) the intangible personal property described
on Part VII of Schedule I and (ii) all interest of Echelon and its Subsidiaries
--- -
in all assignable credit records, security codes, assignable telephone numbers,
warranties and guarantees; provided, that in no event shall "Intangible
--------
4
<PAGE>
Personal Property" include any intellectual property or other intangible
personal property used primarily in connection with the Other Assets.
"Intellectual Property" means all trademarks, trade names, service
---------------------
marks, copyrights and any applications therefor, inventions, discoveries,
technology, trade secrets, know-how, data, computer software programs or
applications, (including all source and object codes thereto) and all
proprietary information or material that in any material respect is used by
Echelon and/or its subsidiaries in connection with the Assets, as more
particularly described in Schedule IX annexed hereto and made a part hereof;
--
provided, that in no event shall "Intellectual Property" include any
- - --------
intellectual property used in connection with the Other Assets and in any event
Company shall not obtain any use of the name "Echelon" except to the extent the
use of such name is licensed pursuant to the Lease.
"Land" means, singularly or collectively, the various real properties
----
underlying the Real Estate Assets, together with all tenements, hereditaments,
easements, privileges, reversions, remainders and other rights and appurtenances
belonging or in any manner appertaining thereto, including all reversionary
interests in and to any adjoining or abutting rights-of-way and all riparian,
littoral and other water rights.
"Leases" means the leases relating to the use or occupancy of portions
------
of the Real Estate Assets which are more particularly described on Schedule III
---
annexed hereto and made a part hereof.
"Lien" means any mortgage, deed of trust, pledge, security interest,
----
encumbrance, lien, easement, servitude or charge of any kind, including, without
limitation, any irrevocable license, conditional sale or other title retention
agreement, any lease in the nature thereof, or any other right of or arrangement
with any creditor to have its claim satisfied out of any specified property or
asset with the proceeds therefrom prior to the satisfaction of the claims of the
general creditors of the owner thereof, whether or not filed or recorded, or the
filing of, or agreement to execute as "debtor", any financing or continuation
statement under the Uniform Commercial Code of any jurisdiction or any federal,
state or local lien imposed pursuant to any Environmental Laws.
"Losses" has the meaning set forth in Section 10.3 hereof.
------ ----
"Material Adverse Effect" means a material adverse effect on the
-----------------------
business, results of operations or financial condition of the Assets taken as a
whole.
"Merger" means the merger of EIN Acquisition Corp., a Florida
------
corporation, with and into Echelon, with Echelon being the surviving
corporation, on the terms and subject to the conditions set forth in the Merger
Agreement.
"Merger Agreement" means the Agreement and Plan of Merger, dated as of
----------------
January 21, 2000, by and among ETA Holding LLC, a Delaware limited liability
company, EIN Acquisition Corp., a Florida corporation and a direct wholly-owned
subsidiary of ETA Holding
5
<PAGE>
LLC, and Echelon (as same is in effect on the Agreement Date and thereafter, as
amended, modified or supplemented from time to time in accordance with the terms
thereof and consistent with the terms of Section 5.5(b) hereof).
------
"Mortgage Loans" means the real estate mortgage loans described in
--------------
Part IV of Schedule I.
-- -
"Net Proceeds" means, for a Pending Transaction, the gross cash
------------
proceeds received from such Pending Transaction, net of (i) reasonable and
customary transaction costs (including, without limitation, any underwriting,
brokerage or other customary selling commissions payable to employees or third
parties and all legal, advisory and other fees and expenses, including title,
survey, transfer taxes, property taxes and recording expenses associated
therewith), (ii) the amount of such gross cash proceeds required to be used to
repay any Assumed Debt which is secured by or directly related to the respective
assets which were sold, transferred or otherwise disposed or concurrently with
the consummation of such Pending Transaction and (iii) any pre-closing or post-
closing adjustments to the purchase price for the Asset that is the subject of
such Pending Transaction in accordance with the terms and conditions of the
documentation relating to such Pending Transaction.
"Offer" has the meaning specified in the Merger Agreement.
-----
"Omnibus Agreement" means the Omnibus Agreement, dated as of January
-----------------
21, 2000, between EIN Acquisition Corp., as seller and Heller Financial, Inc.,
as purchaser.
"Other Assets" means the "Assets" as defined in the Purchase and Sale
------------
Agreement.
"Other Assumed Liabilities" means the "Assumed Liabilities" as defined
-------------------------
in the Purchase and Sale Agreement.
"Other Buyer" means the "Buyer" as defined in the Purchase and Sale
-----------
Agreement.
"Other Real Estate Assets" means the "Real Estate Assets" as defined
------------------------
in the Purchase and Sale Agreement.
"Pending Transactions" has the meaning set forth in Section 5.3
-------------------- ---
hereof.
"Permits" means any certificates, licenses, authorizations,
-------
registrations or permits required to be maintained by Transferor for the
development, use or occupancy of any portion of any of the Real Estate Assets;
provided, that in no event shall "Permits" include any licenses or permits
- - --------
required to be maintained for the development, use or occupancy of any portion
of any of the Other Real Estate Assets.
6
<PAGE>
"Person" means and includes an individual, a partnership, a joint
------
venture, a corporation, a trust, a limited liability company, an unincorporated
organization, a group and a government or other department or agency thereof.
"Personalty" means the Tangible Personal Property and Intangible
----------
Personal Property.
"Preferred Stock" means the shares of Series A Cumulative Redeemable
---------------
Preferred Stock, par value $1,000 per share, of Company.
"Purchase and Sale Agreement" means the Purchase and Sale Agreement,
---------------------------
dated as of January 21, 2000, by and among Echelon and its subsidiaries
signatory thereto Echelon Residential LLC, a Delaware limited liability company,
and Escrow Agent.
"Radon" has the meaning set forth in Section 12.17 hereof.
----- -----
"Real Estate Assets" means, collectively, the real property, together
------------------
with the Personalty, Contracts, Leases, and Permits relating thereto, as more
particularly described in Schedule I.
-
"Release" means disposing, discharging, injecting, spilling, leaking,
-------
leaching, dumping, emitting, escaping, emptying, seeping, placing and the like,
into or upon any land or water or air, or otherwise entering into the
environment.
"Required Consents" means the consents, loan document modification
-----------------
agreements, documents and instruments to be delivered by the parties identified
in Schedule XIX annexed hereto and made a part hereof consenting to the
---
transactions contemplated by this Agreement and containing terms and provisions
no more onerous to Company than those set forth in Schedule XIX and otherwise in
---
form and substance reasonably satisfactory to Company.
"Residential Property Restricted Cash Bank Accounts" means the bank
--------------------------------------------------
accounts set forth in Part VI of Schedule I annexed hereto and made a part
-- -
hereof.
"Securities Act" has the meaning set forth in Section 3.18 hereof.
-------------- ----
"Security Deposit Amount" means the aggregate amount (as in effect on
-----------------------
the Escrow Closing Date) of cash (and cash equivalents) associated with the
customer deposits (but only to the extent same relates to the Leases) included
in general ledger balance sheet account number 25020-000 set forth on the
Combining Trial Balance (as defined in the Purchase and Sale Agreement).
"Subsidiary" means each of the entities signatory hereto other than
----------
Echelon, Company and Escrow Agent.
7
<PAGE>
"Surveys" means the surveys with respect to the Real Estate Assets
-------
described on Schedule XVII annexed hereto and made a part hereof.
----
"Surviving Corporation" has the meaning specified in the Merger
---------------------
Agreement.
"Tangible Personal Property" means the personal property used
--------------------------
primarily in connection with the Assets (including, without limitation, the
tangible personal property described in Schedule I) other than the Intangible
-
Personal Property; provided, that in no event shall "Tangible Personal Property"
--------
include any personal property used primarily in connection with the Other
Assets.
"Tax Credit LP Interest Purchase Agreement" means the Purchase
-----------------------------------------
Agreement, dated as of January 13, 2000, by and between Company, Echelon
Affordable Housing, Inc., a Florida corporation, and Echelon.
"Tax Credit LP Interests" means the equity interests of Echelon and
-----------------------
its subsidiaries in the limited partnerships described in Part V of Schedule I.
- -
"Tax Return" means any return, report, information return or other
----------
document (including any related or supporting information) filed or required to
be filed with any taxing authority with respect to Taxes.
"Taxes" means all taxes, charges, fees, levies, penalties or other
-----
assessments imposed by any United States federal, state, local or foreign taxing
authority, including, without limitation, income, excise, property, sales and
use, transfer, franchise, payroll, withholding, social security or other taxes,
including any interest, penalties or additions attributable thereto.
"Tender Offer Expiration Date" means the date (as extended from time
----------------------------
to time in accordance with the terms of the Merger Agreement) on which the Offer
expires.
"Title Commitments" means the ALTA owner's title insurance commitments
-----------------
with respect to the Real Estate Assets described on Schedule XVI annexed hereto
---
and made a part hereof.
"Transfer Value" has the meaning set forth in Section 2.1 hereof.
-------------- ---
"Transferor" has the meaning set forth in the introductory paragraph
----------
hereof.
Section 2. Transfer of Assets; Assumption of Liabilities.
---------------------------------------------
2.1 Transfer Value. The aggregate consideration to be paid by
--------------
Company in exchange for the Assets (the "Transfer Value") shall be (A) an
--------------
aggregate amount equal to (x) $51,300,000, minus (y) the Security Deposit
-----
Amount, minus (z) the aggregate amount set forth under the column "Reduction in
-----
Transfer Value" on Schedule X with respect to the Pending Transactions if
-
consummated on or prior to the Escrow Closing Date and (B) 2,000 shares of
Preferred Stock. The Transfer Value shall be calculated in accordance with the
immediately
8
<PAGE>
preceding sentence by making reference to the notice to be delivered pursuant to
Section 7.4(f) hereof. The Transfer Value before reduction by the aggregate
------
amount of "Reduction in Transfer Value" amounts shall be allocated among the
Assets in accordance with Schedule XVIII herein.
-----
2.2 Assumption of Liabilities. On the terms and subject to the
-------------------------
conditions of this Agreement, on the Closing Date, Company shall assume and pay,
perform and discharge when due, without duplication, (i) the Assumed Debt (as in
effect on the Closing Date), including any prepayment obligations and (ii) the
executory obligations of Transferor arising on or after the Closing Date out of
the Permits, Contracts and Leases (collectively, the "Assumed Liabilities").
-------------------
Except for the Assumed Liabilities and the executory obligations of Transferor
under the Contracts, Company and Transferor agree that Company shall have no
responsibility, obligation, or duty with respect to any other liability of
Transferor, including, without limitation, the Other Assumed Liabilities, all of
which shall be assumed by the Other Buyer.
2.3 Pending Transactions.
--------------------
(a) In the event that a Pending Transaction set forth on
Schedule X which is a sale of any of the Assets is consummated after the
-
Agreement Date and prior to the Closing Date, (i) Company will not acquire any
of the Assets that are the subject of such Pending Transaction, (ii) Transferor
shall promptly deliver to Escrow Agent (in accordance with Section 5.3 hereof)
---
the Net Proceeds from such Pending Transaction, (iii) Company and Transferor
shall instruct the Escrow Agent not later than the Escrow Closing Date (in
accordance with Section 7.7 hereof) to distribute such Net Proceeds as follows:
---
(A) an amount equal to the Reduction in Transfer Value (as set forth on Schedule
X hereto) shall be delivered to or at the direction of Transferor, (B) an amount
- - -
equal to fifteen (15) percent of the Excess Amount (as defined below) shall be
delivered to the Lessee (as defined in the Heller Lease) and (C) eighty-five
(85) percent of the Excess Amount shall be delivered to Company to be held in
the Cash Collateral Account pursuant to the Heller Lease and (iv) Company will
not assume or undertake to discharge any liability or perform any contract or
agreement with respect to such Pending Transaction. For purposes hereof, "Excess
------
Amount" means an amount equal to the difference between (A) the aggregate Net
- - ------
Proceeds received by Transferor in connection with such Pending Transaction and
(B) the Reduction in Transfer Value (as set forth on Schedule X hereto) with
-
respect to the Assets that are the subject of such Pending Transaction;
provided, that in no event shall the Excess Amount be less than $0. The Excess
- - --------
Amount shall be calculated in accordance with the immediately preceding sentence
by making reference to the notice to be delivered pursuant to Section 7.4(f)
------
hereof.
(b) In the event that a Pending Transaction set forth on
Schedule X which is a refinancing of any of the Assets is consummated after the
-
Agreement Date and prior to the Closing Date, (i) the New Debt (as described on
Schedule X) shall be included in Assumed Debt, (ii) Transferor shall promptly
-
deliver to Escrow Agent (in accordance with Section 5.3 hereof) the Net Proceeds
from such Pending Transaction, (iii) Company and Transferor shall instruct the
Escrow Agent not later than the Escrow Closing Date (in accordance with Section
7.7 hereof) to distribute (A) fifteen (15) percent of the Net Proceeds to the
Lessee and (B) eighty-five (85) percent of the Net Proceeds to Company to be
held in the Cash Collateral Account pursuant
9
<PAGE>
to the Heller Lease and (iv) Company will not assume or undertake to discharge
any liability with respect to the Refinanced Debt (as described on Schedule X
-
hereto).
Section 3. Transferor's Representations and Warranties.
-------------------------------------------
Transferor makes the following representations and warranties to
Company, which representations and warranties shall not survive the Escrow
Closing Date, except for the representation and warranty set forth in Section
3.18 hereof which shall survive for a period of one year after the Closing Date
- - ----
(it being expressly understood and agreed that notwithstanding anything to the
contrary (express or implied) set forth herein, in the case of any breach by
Transferor of any of the following representations and warranties, Company's
sole right shall be the exercise (if it is entitled to do so) of its right of
termination pursuant to Section 9.1(f) hereof (and Company's sole remedies in
------
connection therewith shall be those expressly set forth in Section 9.2 hereof)
---
and Transferor shall not at any time (whether before, on or after the Escrow
Closing Date) have any further liability whatsoever with respect to any such
breach of the following representations and warranties):
3.1 Due Organization and Good Standing of Transferor.
------------------------------------------------
(a) Echelon is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has all requisite corporate power and authority to own, lease and operate its
properties, including the Assets, and to carry on its business as now being
conducted. True and complete copies of Echelon's Amended and Restated Articles
of Incorporation and By-laws, each as in effect on the Agreement Date, have been
previously made available for review to Company. Except as set forth on Schedule
XIII annexed hereto and made a part hereof, Echelon is duly qualified or
- - ----
licensed to do business and is in good standing in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary.
(b) Each Subsidiary is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and each such entity has all requisite corporate, partnership or
limited liability company power and authority to own, lease and operate its
properties, including the Assets, and to carry on its business as now being
conducted. True and complete copies of each Subsidiary's certificate of
incorporation, by-laws or equivalent organizational documents, in each case as
in effect on the Agreement Date, have been previously made available for review
to Company. Except as set forth on Schedule XIII, each Subsidiary is duly
----
qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification necessary.
3.2 Authorization and Validity of Agreement. Transferor has the
---------------------------------------
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and, subject only to those prohibitions and consents
described in Schedule IV, to consummate the transactions contemplated hereby.
--
The execution, delivery and performance of this Agreement
10
<PAGE>
by Transferor, and the consummation by it of the transactions contemplated
hereby, have been duly authorized and no other action on its part is necessary
to authorize the execution, delivery and performance of this Agreement by it and
the consummation of the transactions contemplated hereby (other than complying
with those prohibitions and consents described in Schedule IV). This Agreement
--
has been duly executed and delivered by Transferor and, assuming that this
Agreement constitutes a valid and binding obligation of Company, is a valid and
binding obligation of Transferor enforceable against Transferor in accordance
with its terms, except to the extent that its enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium and similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles.
3.3 Consents and Approvals; No Violations. Assuming any filings
-------------------------------------
required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), applicable to the sale of Assets to Company are made
-------
and any applicable waiting period thereunder has been terminated or has expired,
the execution and delivery of this Agreement by Echelon and its Subsidiaries and
the consummation by Echelon and its Subsidiaries of the transactions
contemplated hereby will not: (a) violate any provision of the Amended and
Restated Articles of Incorporation or By-Laws of Echelon or the comparable
governing documents of any Subsidiary, in each case, as amended; (b) violate any
statute, ordinance, rule, regulation, order or decree of any court or of any
governmental or regulatory body, agency or authority applicable to Echelon or
any Subsidiary or by which any of the Assets may be bound; (c) except as set
forth on Schedule IV, require any filing with, or permit, consent or approval
--
of, or the giving of any notice to, any governmental or regulatory body, agency
or authority; or (d) except as set forth on Schedule IV, result in a violation
--
or breach of, conflict with, constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation,
payment, purchase, sale or acceleration) under, or result in the creation of any
lien, security interest, mortgage, charge, claim or encumbrance (each, an
"Encumbrance") upon any of the Assets under, any of the terms, conditions or
-----------
provisions of, any note, bond, mortgage, indenture, license, franchise, permit,
agreement, lease, franchise agreement or other instrument or obligation to which
Echelon or any Subsidiary is a party, or by which it or any of their respective
Assets are bound.
3.4 Title to Assets; Encumbrances. Echelon or its relevant
-----------------------------
Subsidiary, as applicable, has good and marketable title to the Land and the
Improvements thereon and has good title to the other Assets (other than with
respect to the Mortgage Loans, with respect to which no representation or
warranty is being made pursuant to this Section 3.4), subject to no Encumbrance
---
or other restriction of any kind or character, except for (a) liens reflected on
Schedule V annexed hereto and made a part hereof, (b) zoning, planning or other
-
governmental restrictions, easements or permits or other restrictions or
limitations on the use of the Real Estate Assets, in each case which would not
have, individually or in the aggregate, a Material Adverse Effect, (c) statutory
liens or liens of landlords, carriers, warehousemen, mechanics, suppliers,
materialmen or repairmen arising in the ordinary course of business and which
would not have,
11
<PAGE>
individually or in the aggregate, a Material Adverse Effect and (d) liens for
current Taxes, assessments or governmental charges or levies on property not yet
delinquent.
3.5 Ownership of Mortgage Loans. Transferor or its relevant
---------------------------
Subsidiary, as applicable, is the owner and holder of the Mortgage Loans, free
and clear of all Encumbrances and claims of every kind other than those
described in Schedule VI annexed hereto and made a part hereof. True and
--
complete copies of the documents evidencing and securing the Mortgage Loans, and
any participation agreements relating thereto, have been made available for
review to Company. Except as set forth on Schedule VI, the documents evidencing
--
and securing the Mortgage Loans are in full force and effect and no defaults on
the part of the borrower or, to Transferor's knowledge, the lender thereunder
have occurred and are continuing. Except as set forth on Schedule VI, all
--
payments of principal and interest in respect of the Mortgage Loans are current.
Schedule VI sets forth the outstanding principal balance of each of the Mortgage
--
Loans as of the date indicated therein. To Transferor's knowledge, the Mortgage
Loans and each of the borrower's obligations thereunder are not subject to any
valid right of rescission, set-off, abatement, diminution, counterclaim or
defense which would prevent Company (or any of its assigns) from enforcing the
payment provisions of the documents evidencing and securing the Mortgage Loans,
including, without limitation, any payment guaranty or from foreclosing on the
assets that are security for such Mortgage Loans and Transferor has received no
notice of any such claims having been asserted. Transferor has not satisfied,
canceled or subordinated any of the promissory notes evidencing the Mortgage
Loans in whole or in part.
3.6 Environmental Laws and Regulations. Except as set forth on
----------------------------------
Schedule VII annexed hereto and made a part hereof, and subject to Section 12.17
--- -----
hereof, to the knowledge of Transferor:
(i) Hazardous Materials have not been generated, used,
treated or stored by Transferor on the Real Estate Assets, except for
quantities generated, used, treated or stored in compliance with
Environmental Laws and as required in connection with the normal
operations and maintenance of such Real Estate Assets;
(ii) Hazardous Materials have not been Released or disposed
of by Transferor on the Real Estate Assets, except for quantities
Released or disposed of in compliance with Environmental Laws and as
required in connection with the normal operation and maintenance of
such Real Estate Assets;
(iii) Transferor is in compliance with Environmental Laws
and the requirements of permits issued under such Environmental Laws
with respect to the Real Estate Assets;
(iv) There are no pending or threatened Environmental
Claims against Transferor with respect to the Real Estate Assets;
12
<PAGE>
(v) There are no past or present actions, activities,
circumstances, conditions, events or incidents (including, without
limitation, the release, emission, discharge, presence or disposal of
any Hazardous Materials) which would form the basis for any
Environmental Claim against Transferor, or against any Person whose
liability for any Environmental Claim Transferor has retained or
assumed whether contractually or by operation of law, in each case to
the extent same relates to the Real Estate Assets;
(vi) Transferor has delivered to or otherwise made
available for inspection by Company true, complete and correct copies
and results of any reports, studies, analyses, tests or monitoring in
the possession of Transferor pertaining to Hazardous Materials in, on,
beneath or adjacent to any Real Estate Assets; and
(vii) There are no underground storage tanks located on the
Real Estate Assets.
3.7 Leases. Schedule III sets forth all Leases affecting any
------ ---
portions of any of the Real Estate Assets and the Other Real Estate Assets and
with respect to each Lease, as of the Agreement Date, the name of the tenant,
the location and the gross leasable area of any space leased, the monthly rent
due thereunder, the Lease termination date and the amount of any security
deposits. True and complete copies of such Leases have been made available for
review to Company. Except as set forth on Schedule III, each Lease is in full
---
force and effect, all rents and additional rents due thereunder have been paid
to date, and Transferor has neither sent nor received any notice of a material
default under any Lease which remains outstanding. The Real Estate Assets are
not subject to any ground leases.
3.8 Litigation. Schedule XII annexed hereto and made a part hereof
---------- ---
contains a current list of all actions, suits, arbitrations and proceedings
pending, or to Transferor's knowledge threatened, against or concerning the
Assets or the Other Assets. To Transferor's knowledge, there are no judgments,
orders or decrees entered in any lawsuit or proceeding against or concerning the
Assets or the Other Assets, other than as set forth on Schedule XII. Transferor
---
has received no written notice of any pending or threatened condemnation, taking
or similar proceeding affecting the Assets, or any pending public improvements
which would result in, nor has Transferor received written notice of, special
assessments affecting the Assets.
3.9 Land Use. With respect to the Real Estate Assets, Transferor has
--------
not received any written notice from any governmental authority, and Transferor
otherwise has no knowledge, that a Real Estate Asset is not in substantial
compliance with the County regulations and restrictions applicable to the zoning
district within which it is situated, and, except as described in Schedule XI
--
annexed hereto and made a part hereof, Transferor has no actual knowledge of any
covenants, restrictions or other agreements with or in favor of any governmental
authority or other Person limiting in any material respect the use of any of the
Real
13
<PAGE>
Estate Assets or the Other Real Estate Assets for the purposes permitted by the
regulations governing the applicable zoning district.
3.10 Contracts. Except for the Leases, Encumbrances on title and the
---------
documents and instruments relating to the Assumed Debt, Schedule VIII sets forth
----
all agreements, contracts and commitments by which Transferor is bound primarily
affecting or relating to the Assets or the Other Assets other than such
contracts, agreements or commitments that involve base payments or the
performance of services by Transferor of an amount or value (as measured by the
revenue derived therefrom during fiscal year 1998-1999) not in excess of $12,000
annually or are terminable by Transferor on not more than 90 days notice without
penalty relating to or affecting the Assets. True and complete copies of all of
the agreements, contracts and commitments referred to in Schedule VIII have been
----
made available for review to Company. Except as otherwise set forth on Schedule
IV and VIII, each agreement, contract and commitment referred to in Schedule
- - -- ----
VIII is in force and effect and (a) there exists no default or event of default
- - ----
thereunder (or any event, occurrence, condition or act on the part of Transferor
which, with the giving of notice, the lapse of time or the happening of any
other event or condition, would become a default or event of default thereunder)
and (b) no approval or consent of, or notice to, any Person is needed in order
that each such contract or agreement shall continue in force and effect in
accordance with its terms without penalty, acceleration or rights of early
termination by reason of the consummation of the transactions contemplated by
this Agreement.
3.11 Permits. Transferor has obtained all material Permits necessary
-------
for the development, use and occupancy of the Real Estate Assets (except for
those Permits relating to the development of the Real Estate Assets which are
not yet required to be issued), all of such Permits are in full force and
effect, and none of such Permits is the subject of any revocation proceeding,
suspension, forfeiture or the like.
3.12 Assumed Debt. Echelon or its relevant Subsidiary, as applicable,
------------
is the borrower under the Assumed Debt encumbering the Assets owned by it, as
more particularly set forth on Schedule II. Except as set forth on Schedule II,
-- --
the documents evidencing and securing the Assumed Debt are in full force and
effect and no defaults on the part of the borrower or the lender thereunder have
occurred and are continuing. Except for the Assumed Debt and except for debt
incurred in connection with a Pending Transaction, no other indebtedness for
borrowed money encumbers any of the Assets. Except as set forth on Schedule II,
--
all payments of principal and interest in respect of the Assumed Debt are
current. True and complete copies of all agreements evidencing and securing the
Assumed Debt have been made available for review to Company.
14
<PAGE>
3.13 Intellectual Property.
---------------------
(a) Schedule IX sets forth a true and complete list of all
--
Intellectual Property, specifying, if applicable, the registration or
application numbers for each such item of Intellectual Property, owned by or
licensed to Echelon and/or its subsidiaries. Other than as set forth on
Schedule IX, neither Echelon nor any of its subsidiaries owns or uses any other
--
item of intellectual property which is material to the Assets or the Other
Assets.
(b) Except as set forth on Schedule IX, Echelon and/or its
--
subsidiaries own or have the valid and enforceable right to use all Intellectual
Property in the manner such Intellectual Property is being used or held for use
by Echelon and/or its subsidiaries.
(c) Except as set forth on Schedule IX, neither Echelon nor any
--
of its subsidiaries (or any of their respective affiliates) is a defendant in
any investigation or proceeding relating to, or otherwise has been notified of,
any alleged claim of infringement with respect to the Intellectual Property and,
to Transferor's knowledge, use of the Intellectual Property in connection with
the Assets as currently conducted does not infringe upon any third party
proprietary rights.
(d) There is no outstanding claim or suit brought by Echelon or
its subsidiaries (or any of their respective affiliates) for infringement by any
other Person of any of the Intellectual Property.
(e) Except as set forth on Schedule IX, there are no licenses,
--
sublicenses or other agreements relating to the Intellectual Property pursuant
to which Echelon or its subsidiaries (or any of their respective affiliates) is
authorized to use any Intellectual Property owned or controlled by a third
party, and no third party is authorized to use any Intellectual Property owned
or controlled by Echelon or its subsidiaries (or any of their respective
affiliates). Echelon and its subsidiaries are not, nor as a result of the
execution, delivery or performance of their obligations hereunder will Echelon
or its subsidiaries be, in violation of, or lose any rights pursuant to, any
license or agreement described in Schedule IX.
--
(f) To the knowledge of Transferor, there has not been and there
is not currently any unauthorized use, infringement or misappropriation of any
of the Intellectual Property by any other Person, including any employee or
former employee of Echelon and/or its subsidiaries.
15
<PAGE>
3.14 Insurance. Schedule XV annexed hereto and made a part hereof
--------- --
sets forth a true and complete listing of all insurance policies maintained by
Transferor on and as of the Agreement Date relating to the Real Estate Assets or
the Other Real Estate Assets, with the amounts insured (and any deductibles) set
forth therein.
3.15 Assets. The Assets are all of the assets necessary for the
------
Assets to function and operate in substantially the same manner as the Assets
have recently functioned and been operated by Transferor.
3.16 Compliance with Laws. Except as set forth in the Commission
--------------------
Filings or as set forth on Schedule XIV, Transferor is in compliance with all
---
applicable laws, regulations, orders, judgments and decrees (other than with
respect to environmental matters and federal securities laws, which are the
subject of specific representations contained in this Agreement).
3.17 Year 2000. There has not been nor is there reasonably expected
---------
to be a Material Adverse Effect caused by the failure to be Year 2000 Compliant
with respect to computer systems, computer software or technology that are
internal to Transferor. There has not been nor is there reasonably expected to
be a Material Adverse Effect caused by the failure to be Year 2000 Compliant of
any products or services of Transferor sold or licensed to customers of
Transferor.
For purposes of this Agreement, "Year 2000 Compliant" means that a
-------------------
product or system is (i) able to receive, record, store, process, calculate,
manipulate and output dates from and after January 1, 2000, time periods that
include January 1, 2000 and information that is dependent on or relates to such
dates or time periods, in the same manner and with the same accuracy,
functionality, data integrity and performance as when dates or time periods
prior to January 1, 2000 are involved and (ii) able to store and output date
information in a manner that is unambiguous as to century.
3.18 Investment Intention. Transferor is acquiring the Preferred
--------------------
Stock for its own account, for investment purposes only and not with a view to,
or any present intention of, the distribution thereof, except as a result of the
consummation of the transactions contemplated by the Merger Agreement.
Transferor will not, directly or indirectly, offer, transfer, sell, assign,
pledge, hypothecate or otherwise dispose of any of the Preferred Stock (or
solicit any offers to buy, purchase, or otherwise acquire any of the Preferred
Stock), except in compliance with the Securities Act of 1933, as amended (the
"Securities Act"). Transferor acknowledges that the Preferred Stock has not been
--------------
registered under the Securities Act or the securities laws of any state or
other jurisdiction and cannot be disposed of unless it is subsequently
registered under the Securities Act and any applicable state laws or exemption
from such registration is available.
3.19 No Other Representations or Warranties. Except for the
--------------------------------------
representations and warranties contained in this Section 3 and in Section 8
- -
hereof, neither Transferor nor any other Person makes any other express or
implied representation or warranty on behalf of Transferor or any of its
affiliates.
16
<PAGE>
Section 4. Company's Representations and Warranties.
----------------------------------------
Company makes the following representations and warranties to
Transferor, which representations and warranties shall not survive the Escrow
Closing Date, except for (x) those representations and warranties set forth in
Sections 4.5 and 4.6 hereof which shall survive for a period of one year after
--- ---
the Closing Date and (y) those representations, warranties and agreements set
forth in Section 4.9 hereof which shall survive as set forth therein:
---
4.1 Due Organization and Good Standing of Company. Company is a
---------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida. Company has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. Company is duly qualified or licensed to do business in
Florida and will, on or prior to the Closing Date, qualify to do business in
each jurisdiction where the Assets are located.
4.2 Authorization and Validity of Agreement. Company has the power
---------------------------------------
and authority to execute and deliver this Agreement and the Common Stock and
Subordinated Debt Subscription Agreement, to perform its obligations hereunder
and thereunder and consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance of this Agreement and the Common Stock
and Subordinated Debt Subscription Agreement by Company, and the consummation by
it of the transactions contemplated hereby and thereby, have been duly
authorized and no other corporate, partnership or limited liability company
action on the part of Company is necessary to authorize the execution, delivery
and performance of this Agreement and the Common Stock and Subordinated Debt
Subscription Agreement by Company and the consummation of the transactions
contemplated hereby and thereby. This Agreement and the Common Stock and
Subordinated Debt Subscription Agreement have each been duly executed and
delivered by Company and each is a valid and binding obligation of Company
enforceable against Company in accordance with its terms, except to the extent
that its enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium and similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles.
4.3 Capitalization. Immediately after the Closing Date, the
--------------
authorized capital stock of Company will consist of (i) 4,000 shares of common
stock, par value $1.00 per share, of which 1,200 shares will be issued and
outstanding and (ii) 2,000 shares of Preferred Stock, of which 2,000 shares will
be issued and outstanding. Immediately after the Closing Date, all issued and
outstanding shares of capital stock of Company will have been duly authorized
and be validly issued and outstanding, fully paid and nonassessable.
4.4 Consents and Approvals; No Violations. Assuming any filings
-------------------------------------
required under the HSR Act applicable to the transfer of the Assets to Company
are made and any applicable waiting period thereunder has been terminated or has
expired, the execution and delivery of this Agreement by Company and the
consummation by Company of the transactions contemplated hereby will not: (a)
violate any provision of the Certificate of Incorporation or By-Laws of Company,
as amended; (b) violate any statute, ordinance, rule, regulation, order or
17
<PAGE>
decree of any court or of any governmental or regulatory body, agency or
authority applicable to Company or by which any of its properties or assets may
be bound; (c) require any filing with, or permit, consent or approval of, or the
giving of any notice to, any governmental or regulatory body, agency or
authority; or (d) result in a violation or breach of, conflict with, constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation, payment or acceleration) under, or
result in the creation of any Encumbrance upon any of the property or assets of
Company under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, franchise, permit, agreement, lease, franchise
agreement or other instrument or obligation to which Company is a party, or by
which it or its assets are bound except, in the case of clauses (b), (c) and
(d), above, for any such filing, permit, consent, approval or notice, the
failure to obtain or make which, and except for any breach, violation or
Encumbrance which, would not prevent or materially delay the consummation of the
transactions contemplated by this Agreement.
4.5 Condition of the Assets. Company has conducted all due diligence
------------------------
that Company deems necessary or desirable with respect to the Assets, the
Assumed Debt, this Agreement and the transactions contemplated hereby in order
for it to enter into this Agreement and consummate the transactions contemplated
hereby. Except for the limited representations of Transferor specifically set
forth in Section 3 hereof, Company will rely solely upon such due diligence in
-
acquiring the Assets and in assuming the Assumed Liabilities. Without limiting
the generality of the foregoing, Company acknowledges that Transferor makes and
will make no representation or warranty concerning environmental conditions
heretofore, now or hereafter existing on properties adjoining or proximate to
the Assets. Notwithstanding anything in this Agreement, it is expressly
understood and agreed that Company is acquiring the Assets "AS IS", "WHERE IS"
and "WITH ALL FAULTS", and that Transferor has not made and does not and will
not make any representations or warranties, express or implied, including any
with respect to the quality, physical condition, expenses, legal status, zoning,
value, utility or development or operating potential of the Assets, or the
absence of any Hazardous Materials on, in, under or near the Assets, or any
other matter or thing affecting or relating to the Assets, the Assumed
Liabilities or this Agreement (including, without limitation, warranties of
merchantability and/or of fitness for a particular purpose) which might be
pertinent in considering whether to purchase the Assets, assume the Assumed
Liabilities or to make and enter into this Agreement, except, in each case, to
the extent of the limited representations set forth in Section 3 hereof.
-
Transferor is not liable or bound in any manner by any warranties, either
expressed or implied, guaranties, or any promises, statements, representations
or information pertaining to the Assets or to the value thereof made or
furnished by any broker or any real estate agent, employee, servant or other
Person representing or purporting to represent Transferor. As of the Agreement
Date, Company is not aware of any events, facts or circumstances which,
individually or in the aggregate, have or would have a Material Adverse Effect.
4.6 Liens. Company acknowledges that it is acquiring the Assets
-----
subject to the matters described in Schedules V and VI and the Assumed Debt
- --
described in Schedule II, and such other matters as are permitted pursuant to
--
the terms of this Agreement.
18
<PAGE>
4.7 Sufficient Funds. Company has sufficient funds available to it
----------------
to acquire the Assets pursuant to this Agreement and will not, prior to Closing,
incur third party debt to finance any portion of the Transfer Value.
4.8 Title and Survey. Prior to the Agreement Date, Company has
----------------
reviewed (i) the Title Commitments or other reports with respect to the Real
Estate Assets described on Schedule XVI and (ii) the Surveys with respect to the
---
Real Estate Assets described on Schedule XVII. Company hereby acknowledges its
----
approval as of the Agreement Date of the condition of title to the Real Estate
Assets, subject to Transferor's fulfilling its obligation to deliver the
documents described in Sections 7.4(b)(x) through (b)(xiii), inclusive, hereof.
--------- ---------
4.9 Inspection. Prior to the Agreement Date, Company has inspected
----------
the Assets and any operating files maintained by Transferor or its property
managers in connection with the ownership, leasing, maintenance and/or
management of the Assets, including, without limitation, the Leases, lease
files, operating agreements, insurance policies, bills, invoices, receipts and
other general records relating to the Assets, correspondence, surveys, plans and
specifications, warranties for services and materials provided, environmental
assessments and similar materials, in each case, as Company has deemed necessary
in connection with making its determination to execute and deliver this
Agreement. Company hereby indemnifies Transferor and holds Transferor harmless
from and against any claim for liabilities, costs, expenses (including
reasonable attorney's fees), damages or injuries arising out of or resulting
from physical injury or damages to persons or property resulting from the
inspections of the Assets by Company or its agents other than injury or damages
resulting from Transferor's gross negligence or willful misconduct, and such
indemnity shall survive Closing or any termination of this Agreement.
4.10 Company Liquidity. Company has and through the Closing Date will
-----------------
have assets which would be classified as cash and cash equivalents on a balance
sheet prepared in accordance with GAAP of not less than $15,000,000.
4.11 No Other Representations or Warranties. Except for the
--------------------------------------
representations and warranties contained in this Section 4 and in Section 8
- -
hereof, neither Company nor any other Person makes any other express or implied
representation or warranty on behalf of Company or any of its affiliates.
Section 5. Covenants.
---------
5.1 Compliance. During the period commencing on the Agreement Date
----------
and ending on the Closing Date, Transferor will, in all material respects,
comply with and abide by all of the covenants, conditions and requirements set
forth or imposed by, related to or arising out of all statutes, laws,
ordinances, rules, regulations, plans and specifications, permits, agreements,
contracts, authorizations or approvals related or applicable to any portion of
the Assets, and will use commercially reasonable efforts to maintain all
contracts, permits and other agreements affecting the Assets in good standing
and free from delinquency or material default, other than those which are
modified, rescinded or terminated in the ordinary course of business or in
19
<PAGE>
connection with a Pending Transaction and those the rescission, modification or
termination of which would not reasonably be expected to have a Material Adverse
Effect.
5.2 Notices of Violations. During the period commencing on the
---------------------
Agreement Date and ending on the Closing Date, in the event that Transferor
receives any notice from any County, or any other Governmental Authority having
jurisdiction over any of the Real Estate Assets, of a violation or alleged
violation of any statute, law, ordinance, rule, permit, regulation or agreement
governing the planning, development, construction, occupancy, use or maintenance
of any portion of any of the Real Estate Assets, or of any permit, approval or
authorization issued in connection therewith or of any contemplated or pending
investigation with respect thereto, Transferor promptly will deliver a copy of
such notice to Company; and Company will have the option (but will not be
required) either to (a) participate with Transferor in responding to such notice
or (b) seek independently to intervene in any proceeding of which notice has
been given for the purpose of protecting Company's interests in and with respect
to any of the Real Estate Assets.
5.3 Ownership of Assets. During the period commencing on the
-------------------
Agreement Date and ending on the Closing Date, Transferor shall not without the
prior consent of Company (which consent shall not be unreasonably withheld,
conditioned or delayed) directly or indirectly sell, transfer, encumber or
otherwise dispose of any of the Assets or any portion thereof to any Person,
other than sales, transfers, encumbrances or other dispositions of Assets (i)
constituting non-material equipment or personalty made in the ordinary course of
business, (ii) as contemplated by Sections 10.1 and 10.2 hereof, (iii)
---- ----
constituting overdue accounts receivable arising in the ordinary course of
business, but only in connection with the compromise or collection thereof
consistent with sound business practices (and not as a part of any bulk sale or
financing of receivables) or (iv) pursuant to the transaction described in
Schedule X (the "Pending Transactions"); provided, that the Net Proceeds from
- -------------------- --------
any sale, transfer, encumbrance or disposition of Assets, in whole or in part,
pursuant to the Pending Transactions consummated after the Agreement Date and
prior to the Closing Date (collectively, the "Asset Sales Proceeds") shall be
--------------------
promptly delivered by Transferor to Escrow Agent, and such Asset Sales Proceeds
shall be held in an interest-bearing account with an institution the deposits in
which are insured by an agency of the United States or, upon joint instructions
of Transferor and Company, invested in securities of the United States; provided
--------
that, in each case, interest accruing thereon will constitute part of such Asset
Sales Proceeds.
5.4 Operation of Assets Subsequent to the Agreement Date. Transferor
----------------------------------------------------
agrees that except for the Pending Transactions (including all transactions
incident thereto as set forth on Schedule X, such as (i) the incurrence of
-
indebtedness for borrowed money and (ii) the incurrence of capital expenditures)
and except as required or contemplated by this Agreement, the Purchase and Sale
Agreement, the Tax Credit LP Interest Purchase Agreement or the Merger Agreement
or otherwise consented to or approved by Company (which consent or approval
shall not be unreasonably withheld, conditioned or delayed), during the period
commencing on the Agreement Date and ending on the Closing Date:
20
<PAGE>
(a) Echelon will, and will cause its Subsidiaries to, operate,
manage and maintain the Assets and otherwise conduct its business relating to
the Assets only according to its ordinary course of business consistent with
past practice and will use reasonable best efforts to preserve intact its
business organization, keep available the services of its officers and employees
and maintain satisfactory relationships with licensors, suppliers, distributors,
clients, landlords, tenants, joint venture partners, employees and others having
business relationships with it;
(b) Insofar as any such action relates to the Assets, Echelon
shall not, and shall cause its Subsidiaries not to, (i) make any change in or
amendment to its articles of incorporation or by-laws or comparable governing
documents; (ii) enter into any contract or commitment with respect to capital
expenditures; (iii) acquire (by merger, consolidation, or acquisition of stock
or assets or otherwise) any corporation, partnership or other business or
division thereof (or any interest therein); provided, that any subsidiary of
Echelon may be merged with and into Echelon or any other subsidiary of Echelon;
(iv) acquire a material amount of assets or securities; (v) except as provided
in Sections 5.3 and 5.5 hereof, transfer, lease, license, guarantee, sell,
--- ---
mortgage, pledge, dispose of, encumber or subject to any Lien, any material
assets or incur or modify any new or existing indebtedness for borrowed money;
(vi) make any material Tax election or settle or compromise any material Tax
liability, in each case only to the extent same would adversely affect the
Assets; (vii) except as required by applicable law or GAAP, make any material
change in its methods of accounting for financial accounting or income tax
return filing purposes; (viii) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of Echelon or any of its Subsidiaries that owns any Assets (other
than in connection with (A) the Merger or (B) any merger of a subsidiary of
Echelon with and into Echelon or any other subsidiary of Echelon); (ix) enter
into any agreement providing for the acceleration of payment or performance or
other consequence as a result of the transactions contemplated hereby or any
other change of control of Echelon or its subsidiaries other than with respect
to the satisfaction of Assumed Debt; or (x) agree, in writing or otherwise, to
take any of the foregoing actions;
(c) Echelon shall not, and shall not permit any of its
Subsidiaries to, transfer, lease, license, guarantee, sell, mortgage, pledge,
dispose of, encumber or subject to any lien any of the Assets for any purpose
(including, without limitation, for the purpose of satisfying any Excluded
Liabilities) except as related to, and for the benefit of, the Assets.
5.5 Status of Agreements. (a) During the period commencing on the
--------------------
Agreement Date and ending on the Closing Date, except in connection with the
Pending Transactions, the Required Consents or as set forth on Schedule IV or
--
otherwise consented to or approved by Company (which consent or approval shall
not be unreasonably withheld, conditioned or delayed), Transferor will not do
any of the following:
(i) cancel or amend or modify in any material respect, (x) any
Contract or Lease affecting any of the Real Estate Assets or (y) any agreements,
documents or instruments relating to the Assumed Debt;
21
<PAGE>
(ii) enter into any new contract, agreement or commitment (other
than (x) a contract, agreement or commitment that involves base payments or the
performance of services by Transferor of an amount or value (as measured by the
revenue derived therefrom during fiscal year 1998-1999) not in excess of $12,000
annually or terminable by Transferor on not more than 90 days notice without
penalty, or (y) a contract, agreement or commitment that is entered into (A) in
order to preserve public safety as to one or more Assets or (B) as a result of
an emergency situation or force majeure event affecting one or more Assets), any
new Lease (other than a Lease demising space of less than 5000 square feet on
terms and conditions consistent with the current leasing practices of the
subject property and otherwise consistent with good business practice) affecting
any of the Real Estate Assets or any new agreements, documents or instruments
relating to the Assumed Debt; or
(iii) intentionally do any act or omit to do any act that will
cause a material breach of any Contract or Lease or agreements, documents or
instruments relating to the Assumed Debt.
(b) During the period commencing on the Agreement Date and
ending on the Closing Date, Echelon will not, without the prior consent or
approval of Company (which consent or approval shall not be unreasonably
withheld, conditioned or delayed), amend, modify or supplement the Merger
Agreement (including the Schedules and Exhibits thereto) or grant any consent or
waiver under the Merger Agreement, in each case that would in any manner
materially and adversely affect the rights, obligations and interests of Company
under this Agreement (it being expressly understood and agreed that in no event
shall Section 4.07 or 5.01 of the Merger Agreement be amended, modified or
supplemented (and in no event shall Transferor grant any consent or waiver with
respect to any such Section) without the prior consent of Company (not to be
unreasonably withheld, conditioned or delayed)). The parties hereto acknowledge
that Company is a third party beneficiary of the agreements made by Echelon
pursuant to Section 4.07 of the Merger Agreement and that Transferor shall be
required to provide Company with any and all information required to be provided
to Parent (as defined in the Merger Agreement) pursuant to Section 4.07(c) of
the Merger Agreement. Nothing in this Section 5.5(b), however, shall in any
------
manner whatsoever require that the Board of Directors of Echelon take any action
or refrain from taking any action, in each case which is permitted under Section
4.07 of the Merger Agreement.
5.6 Further Assurances. On or after the Closing Date and without
------------------
further consideration, each of Transferor and Company shall execute, acknowledge
and deliver such further agreements, assignments, deeds, certificates,
assumptions, transfers and assurances and shall take, or cause to be taken, such
further actions, in each case, as shall be reasonably requested by Company or
Transferor from time to time for the more effective transfer, assignment and
conveyance to Company of any of the Assets or the Assumed Liabilities, including
without limitation, obtaining the consent of third parties (without obligating
Company or Transferor or their respective affiliates to spend money or assume
obligations in connection therewith), as, in the reasonable opinion of Company
or Transferor, as the case may be, or their respective counsel, are necessary to
transfer, assign and convey the Assets to Company, the
22
<PAGE>
assumption by Company of the Assumed Liabilities, the consummation of the
transactions contemplated by this Agreement or otherwise in the effectuation of
the intentions and purposes of this Agreement; provided, that all reasonable
--------
out-of-pocket costs and expenses incurred in connection with any of the
foregoing actions shall be for the account of the party requesting such actions
subject, in each case, to providing reasonable documentation of such out-of-
pocket costs and expenses, unless such actions relate to the Assumed
Liabilities, in which case all reasonable out-of-pocket costs and expenses in
connection therewith shall be for the account of Company (irrespective of
whether such actions were at the request of Transferor or Company). In addition
to and not in limitation of the foregoing provisions of this Section 5.6,
---
Company shall, promptly following Closing, (i) establish all bank accounts
necessary to hold the security deposits delivered by tenants pursuant to the
Leases, and shall fund such accounts out of its own funds in amounts equal to
the security deposits held by Transferor in respect thereof at Closing
(including any interest accrued thereon), (ii) deliver notices to the tenants
who deposited such security deposits under such Leases, confirming that Company
is holding such security deposits, the accounts where same are held and the
amount of such security deposits and (iii) take any and all other actions as
required by applicable law with respect to the security deposits delivered by
tenants pursuant to the Leases. The provisions of this Section 5.6 shall survive
---
Closing for a period of one year from the Closing Date, except for the
provisions of the preceding sentence, which shall survive the Closing
indefinitely.
5.7 Consents. To the extent that a claim can be made successfully
--------
that the transactions contemplated hereby will constitute the assignment of any
contract, lease, commitment, sales order, purchase order, account, license,
permit or undertaking requiring the consent of another party thereto, this
Agreement shall not constitute an agreement to assign the same if an attempted
assignment would constitute a breach thereof. During the period commencing on
the Agreement Date and ending on the Closing Date, Transferor agrees that it
will use its commercially reasonable efforts (without obligating Transferor or
its affiliates to spend money or assume obligations in connection therewith) to
obtain the written consent of the other necessary parties to the assignment of
such contracts, leases, commitments, sales orders, purchase orders, accounts,
licenses, permits and undertakings, and if such consent is not obtained,
Transferor will use commercially reasonable efforts (without obligating
Transferor or its affiliates to spend money or assume obligations in connection
therewith) to cooperate with Company in any lawful arrangement designed to
provide Company the benefits under any such documents.
5.8 Bringdown of Transferor's Representations. On the Escrow Closing
-----------------------------------------
Date, Transferor shall deliver to Company a certificate (a "Bringdown
---------
Certificate") executed by the President, any Vice President or a managing member
- - -----------
of each of Echelon and its subsidiaries signatory hereto certifying that, as of
the Escrow Closing Date, the representations and warranties made by Transferor
in this Agreement are true and correct in all material respects, except for a
change in facts and circumstances which requires a change in any such
representation and warranty, and in such event the certificate shall specify any
such change in reasonable detail. Transferor's representations and warranties
set forth in such certificate shall not survive the Escrow Closing Date (it
being expressly understood and agreed that, notwithstanding anything to the
contrary (express or implied) set forth herein, in the case of any
23
<PAGE>
breach by Transferor of any of Transferor's representations and warranties,
Company's sole right shall be the exercise (if it is entitled to do so) of its
right of termination pursuant to Section 9.1(f) hereof (and Company's sole
------
remedies in connection therewith shall be those expressly set forth in Section
9.2 hereof) and Transferor shall not at any time (whether before, on or after
- - ---
the Escrow Closing Date) have any further liability whatsoever with respect to
any such breach of Transferor's representations and warranties). If, and only
if, all of the changes in Transferor's representations and warranties set forth
in such Bringdown Certificate (other than any changes related to a Pending
Transaction), taken in the aggregate, would have a Material Adverse Effect, then
Company shall have the right by written notice to Transferor actually received
by Transferor not later than the expiration of the Offer as described in the
Merger Agreement to terminate this Agreement pursuant to Section 9.1(f) hereof.
------
In the event that Transferor shall deliver one or more new Escrow Date
Notification Certificates pursuant to the terms of Section 7.3 hereof setting
---
forth a new Escrow Closing Date, Transferor shall, on each such new Escrow
Closing Date, deliver to Company a new Bringdown Certificate certifying as to
the matters set forth above in this Section 5.8 as of such new Escrow Closing
---
Date.
5.9 Cooperation Regarding Taxes. After the Closing Date, Company and
---------------------------
Transferor shall cooperate with each other and with each other's agents,
including accounting firms and legal counsel, in connection with matters
relating to Taxes of Company, Transferor and their affiliates including (i) the
preparation and filing of any Tax Returns, (ii) determining the liability for
and amount of any Taxes due (including estimated Taxes) or the right to and
amount of any refund of Taxes, (iii) examinations of Tax Returns, and (iv) any
administrative or judicial proceeding in respect of Taxes assessed or proposed
to be assessed. Such information and documents shall be delivered without
representation or warranty and shall include, without limitation, records,
returns, schedules, documents, work papers or other relevant materials. Company
and Transferor shall also make available to each other, as reasonably requested
and on a mutually convenient basis, personnel (including officers, directors,
employees and agents of Company or Transferor or their respective affiliates) to
provide such assistance as might be reasonably required in connection of the
matters set forth in (i), (ii), (iii) and (iv) above. Any information provided
under this Section 5.9 shall be kept confidential by the party receiving the
---
information or documents, except as may otherwise be necessary in connection
with the filing of Tax Returns or in connection with any communications with a
tax authority or any administrative or judicial proceedings relating to Taxes or
any Tax Return. Company and Transferor and their respective affiliates shall
make available to each other for inspection and copying during normal business
hours upon reasonable notice all Tax records in their possession to the extent
reasonably required by the other party in connection with the preparation,
review or audit of Tax Returns, Tax litigation and claims, and the resolution of
items under this Agreement. All reasonable out-of-pocket costs and expenses
incurred in connection with any of the foregoing actions shall be for the
account of the party requesting such actions (subject to providing reasonable
documentation of such out-of-pocket costs and expenses). Company and Transferor
agree to retain all records relevant to the tax basis of the Assets and tax
treatment of this Agreement for a period of seven years after the Closing Date.
The provisions of this Section 5.9 shall survive Closing for a period of seven
---
years after the Closing Date.
24
<PAGE>
5.10 Insurance. During the period commencing on the Agreement Date
---------
and ending on the Closing Date, Transferor will maintain the insurance policies
relating to the Real Estate Assets set forth on Schedule XV; provided, that
-- --------
Transferor may discontinue or reduce any such insurance to the extent that (x)
it is no longer available at commercially reasonable rates or (y) similarly
situated companies are, in general, reducing or eliminating such insurance in a
manner consistent with the changes being effected by Transferor, unless, in each
case, Company shall have requested in writing that Transferor not discontinue or
reduce, as the case may be, such insurance and shall have paid to Transferor in
immediately available funds all costs (including, without limitation, all
premiums) and expenses of Transferor in connection with not discontinuing or
reducing, as the case may be, such insurance (it being expressly understood and
agreed that in the event of termination of this Agreement pursuant to Section
9.1 hereof, Company shall not be entitled to any refund or reimbursement of any
- - ---
amounts previously paid by it to Transferor as contemplated above).
5.11 Reasonable Best Efforts. During the period commencing on the
-----------------------
Agreement Date and ending on the Closing Date, subject to the terms and
conditions provided herein, each of Company and Transferor shall cooperate and
use their respective reasonable best efforts to take, or cause to be taken, all
appropriate action, and to make, or cause to be made, all filings necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including, without
limitation, their respective reasonable best efforts to obtain, prior to the
Closing Date, all licenses, permits, approvals, authorizations, qualifications
and orders of Governmental Authorities and parties to Contracts with Transferor
as are necessary for consummation of the transactions contemplated by this
Agreement.
5.12 Access to Information Concerning Assets. During the period
---------------------------------------
commencing on the Agreement Date and ending on the Closing Date, Transferor
shall, upon reasonable notice, afford Company and its counsel, accountants,
consultants and other authorized representatives, reasonable access (subject to
the rights of tenants under the Leases) during normal business hours to the
employees, properties, books and records of Transferor in order that Company may
have the opportunity to make such investigations as it shall desire of the
Assets. Transferor shall furnish promptly to Company (a) a copy of each report,
schedule, registration statement and other document filed by it during such
period pursuant to the requirements of Federal or state securities laws and (b)
all other information in Transferor's possession concerning the Assets as
Company may reasonably request. Transferor agrees to cause its officers and
employees to furnish such additional financial and operating data and other
information and respond to such inquiries, in each case as Company shall from
time to time reasonably request in relation to the Assets.
5.13 Notification of Certain Matters. During the period commencing on
-------------------------------
the Agreement Date and ending on the Closing Date, Transferor shall give prompt
notice to Company, and Company shall give prompt notice to Transferor, of the
occurrence, or failure to occur, of (x) any event, which occurrence or failure
to occur would likely cause any representation or warranty contained in this
Agreement to be untrue in any material respect and
25
<PAGE>
(y) the existence of any Material Adverse Effect. During the period commencing
on the Agreement Date and ending on the Closing Date, each of Transferor and
Company shall give prompt notice to the other party of any notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement.
5.14 HSR Act. Company and Transferor shall, as soon as practicable
-------
and in any event within five Business Days following the Agreement Date, make
any required filings under the HSR Act and shall use their reasonable best
efforts to respond as promptly as practicable to all inquiries received with
respect thereto, including, without limitation, a request for additional
information or documentary material.
5.15 Retention of Records. Except as otherwise agreed between Company
--------------------
and Transferor in writing, Company shall, and shall cause its subsidiaries to,
retain all information relating directly and primarily to the Assets that is
delivered to or obtained by Company pursuant to the terms of this Agreement that
is less than ten years old until such information is at least ten years old
except that if, prior to the expiration of such period, information in the
possession or control of Company is to be destroyed or disposed of, and such
information is at least three years old, prior to destroying or disposing of any
such information, (1) Company shall provide no less than 30 days' prior written
notice to Transferor specifying the information proposed to be destroyed or
disposed of and (2) if, prior to the scheduled date for such destruction or
disposal, Transferor requests in writing that any of the information proposed to
be destroyed or disposed of be delivered to Transferor, Company promptly shall
deliver the requested information to a location specified by Transferor, at
Transferor's sole cost and expense.
5.16 Transfer of Preferred Stock. Following the consummation of the
---------------------------
Merger and the Closing, Echelon shall distribute (as defined in Code Section
351(c)) the shares of Preferred Stock received by Echelon as set forth on
Schedule XVIII to Parent (as defined in the Merger Agreement).
-----
5.17 Maintenance of Liquidity. At all times through and including the
------------------------
thirtieth day after the Closing Date, Company shall have assets which would be
classified as cash and cash equivalents on a balance sheet prepared in
accordance with GAAP of not less than $15,000,000.
Section 6. Conditions Precedent to Closing.
-------------------------------
6.1 Company Conditions. The obligation of Company to close the
------------------
transaction which is the subject of this Agreement is subject to the fulfillment
as of the Closing Date or as of the Escrow Closing Date, as applicable, of each
of the following conditions, unless any unfulfilled condition is waived in
writing by Company:
(a) Officer's Certificate. Echelon shall have delivered to
---------------------
Company a certificate executed by the President, any Vice President or a
managing member of each of Echelon and its subsidiaries signatory hereto
certifying that, as of the Escrow Closing Date,
26
<PAGE>
Transferor has performed in all material respects each of its obligations and
complied in all material respects with each agreement and covenant of Transferor
to be performed or complied with by it under this Agreement on or prior to such
date, including the delivery of the certificate required under Section 5.8
---
hereof.
(b) Delivery of Documents and Other Items. On or prior to the
-------------------------------------
Escrow Closing Date, all documents and other items specified in Section 7.4
---
hereof shall have been delivered to Escrow Agent.
(c) Merger. The Merger shall have been consummated on or prior
------
to the Closing Date.
(d) Purchase and Sale of Other Assets. The purchase and sale of
---------------------------------
the Other Assets as contemplated by the Purchase and Sale Agreement shall have
been consummated on or prior to the Closing Date.
(e) Purchase and Sale of Tax Credit LP Interests. The purchase
--------------------------------------------
and sale of the Tax Credit LP Interests as contemplated by the Tax Credit LP
Interest Purchase Agreement shall have been consummated on or prior to the
Closing Date.
(f) Leasing of the Assets. The leasing of the Assets as
---------------------
contemplated by the Heller Lease shall have been consummated on or prior to the
Closing Date.
(g) Required Consents. All Required Consents shall have been
-----------------
executed and delivered by the parties providing such Required Consents on or
prior to the Escrow Closing Date.
(h) HSR Act. Any applicable waiting period (and any extension
-------
thereof) under the HSR Act applicable to the sale of Assets to Company shall
have expired or been terminated as of the Escrow Closing Date.
(i) No Injunction. No preliminary or permanent injunction or
-------------
other order shall have been issued by any court or by any governmental or
regulatory agency, body or authority which prohibits the consummation of the
transactions contemplated by this Agreement and which is in effect on the
Closing Date, provided, however, that, in the case of a decree, injunction or
-------- -------
other order, each of the parties shall have used reasonable best efforts to
prevent the entry of any such injunction or other order and to appeal as
promptly as possible any decree, injunction or other order that may be entered.
(j) Statutes. No law, statute, rule, regulation, executive
--------
order, decree or order of any kind shall have been enacted, entered, promulgated
or enforced by any court or governmental authority which prohibits the
consummation of the transactions contemplated by this Agreement as of the
Closing Date.
6.2 Transferor Conditions. The obligation of Transferor to close the
---------------------
transaction which is the subject of this Agreement is subject to the fulfillment
as of the Closing
27
<PAGE>
Date or as of the Escrow Closing Date, as applicable, of each of the following
conditions, unless any unfulfilled condition is waived in writing by Transferor:
(a) Officer's Certificate. Company shall have delivered to Transferor
---------------------
a certificate of the President or any Vice President of Company certifying that,
as of the Escrow Closing Date, Company has performed in all material respects
each of its obligations and complied in all material respects with each
agreement and covenant of Company to be performed or complied with by it under
this Agreement on or prior to such date.
(b) Delivery of Documents and Other Items. On or prior to the Escrow
-------------------------------------
Closing Date, all documents and other items (including payment or issuance of
the Transfer Value) specified in Section 7.5 hereof shall have been delivered to
---
Escrow Agent.
(c) Merger. The Merger shall have been consummated on or prior to the
------
Closing Date.
(d) Purchase and Sale of Other Assets. The purchase and sale of the
---------------------------------
Other Assets as contemplated by the Purchase and Sale Agreement shall have been
consummated on or prior to the Closing Date.
(e) Purchase and Sale of Tax Credit LP Interests. The purchase and
--------------------------------------------
sale of the Tax Credit LP Interests as contemplated by the Tax Credit LP
Interest Purchase Agreement shall have been consummated on or prior to the
Closing Date.
(f) Leasing of the Assets. The leasing of the Assets as contemplated
---------------------
by the Heller Lease shall have been consummated on or prior to the Closing Date.
(g) Required Consents. All Required Consents shall have been executed
-----------------
and delivered by the parties providing such Required Consents on or prior to the
Escrow Closing Date.
(h) HSR Act. Any applicable waiting period (and any extension
-------
thereof) under the HSR Act applicable to the sale of Assets to Company shall
have expired or been terminated as of the Escrow Closing Date.
(i) No Injunction. No preliminary or permanent injunction or other
-------------
order shall have been issued by any court or by any governmental or regulatory
agency, body or authority which prohibits the consummation of the transactions
contemplated by this Agreement and which is in effect on the Closing Date,
provided, however, that, in the case of a decree, injunction or other order,
- - -------- -------
each of the parties shall have used reasonable best efforts to prevent the entry
of any such injunction or other order and to appeal as promptly as possible any
decree, injunction or other order that may be entered.
(j) Statutes. No law, statute, rule, regulation, executive order,
--------
decree or order of any kind shall have been enacted, entered, promulgated or
enforced by any court or
28
<PAGE>
governmental authority which prohibits the consummation of the transactions
contemplated by this Agreement as of the Closing Date.
Section 7. Closing.
-------
7.1 Time and Place. The Closing will take place at the office of
--------------
White & Case LLP, 1155 Avenue of the Americas, New York, New York 10036 on the
date of consummation of the Merger, or at such other place and time as shall be
agreed upon by the parties hereto (the actual date of the Closing being
hereinafter referred to as the "Closing Date").
------------
7.2 Closing Expenses. All costs and expenses associated with the
----------------
transfer of the Assets contemplated herein, including without limitation,
environmental and property condition reports (but only to the extent procured
prior to the Agreement Date with the approval of Transferor), title insurance
premiums, survey preparation costs, transfer taxes (including all stamp,
transfer, documentary, sales, use, registration and other Taxes), document
recordation and filing charges, escrow expenses and other customary costs of
Closing, shall be paid by Transferor. Each of Company and Transferor shall be
responsible for its due diligence costs and expenses (including, without
limitation, the payment of the fees and disbursements of its attorneys) and
Transferor shall make any required payments to the Broker in accordance with
Section 8 hereof.
-
7.3 Notification of Escrow Closing Date. Transferor shall deliver to
-----------------------------------
Company a certificate (an "Escrow Date Notification Certificate") specifying the
------------------------------------
Escrow Closing Date (which in no event shall be earlier than the 30th day after
the Agreement Date) on which the Escrowed Items are to be delivered to Escrow
Agent, such Escrow Date Notification Certificate to be delivered by Transferor
to Company no later than one day prior to such Escrow Closing Date; provided
that if the Tender Offer Expiration Date shall not have occurred on or prior to
the third Business Day after such Escrow Closing Date, Escrow Agent shall, upon
written request from Company, return the Escrowed Items to the party which had
previously deposited same with Escrow Agent, whereupon Transferor shall have the
right to deliver a new Escrow Date Notification Certificate to Company upon the
terms set forth above specifying a new Escrow Closing Date. Transferor shall
have the right to deliver one or more Escrow Date Notification Certificates upon
the terms set forth above until such time as the Tender Offer Expiration Date
shall have occurred or, if earlier, such time as this Agreement shall have been
terminated pursuant to Section 9.1 hereof.
---
7.4 Documents and/or Deliveries. On or prior to the Escrow Closing
---------------------------
Date, as a condition to Closing, the following shall be delivered to Escrow
Agent, which shall have been executed by Transferor to the extent applicable
(other than those agreements, documents and instruments described in Sections
7.4(b)(vii), (b)(ix), (b)(x), (c)(i) (except that the allonge referred to
- - ---------- ------- ------- ------
therein shall be delivered to Escrow Agent), (c)(ii), (c)(iii), (c)(iv) and
------- -------- -------
(d)(i) hereof, all of which shall have been made available to Company during
- - ------
normal business hours at one or more locations previously identified to Company
(which location shall, in the case of the agreements, documents and instruments
described in Section 7.4(b)(vii) and (d)(i) hereof, be 450
----------- ------
29
<PAGE>
Carillon Parkway, Suite 200, St. Petersburg, Florida) and which shall remain in
such locations until the Closing Date):
(a) with respect to Echelon and each Subsidiary: (i) good standing
certificates and authority to do business certificates issued by the relevant
authorities in all relevant jurisdictions, in each case, dated not more than
thirty (30) days prior to the Closing Date; (ii) certified corporate resolutions
of Echelon and corporate or limited liability company resolutions of each
Subsidiary, or of the general partner in each Subsidiary that is a limited
partnership, as applicable, authorizing the execution and delivery of this
Agreement by Echelon or such Subsidiary and the consummation of the transactions
contemplated hereby; and (iii) incumbency certificates for the officers of
Echelon and each Subsidiary executing the documents to be executed and delivered
pursuant to this Agreement;
(b) with respect to the Real Estate Assets: (i) a special warranty
deed conveying title to the Real Estate Assets substantially in the form annexed
hereto as Exhibit A; (ii) a bill of sale with respect to the Real Estate Assets
-
substantially in the form annexed hereto as Exhibit B; (iii) an assignment and
-
assumption agreement with respect to Permits, Contracts and Leases being assumed
by Company in relation to the Real Estate Assets, substantially in the form
annexed hereto as Exhibit C; (iv) an assignment and assumption agreement with
-
respect to each of the Residential Property Restricted Cash Bank Accounts, in
the form specified by the Bank (or other financial institution) where the
respective Residential Property Restricted Cash Bank Account is established or,
if none, in a form satisfactory to Company; (v) third-party consents sought in
connection with the consummation of the transfer of the Real Estate Assets but
only to the extent actually obtained by Transferor (it being expressly
understood and agreed, for avoidance of doubt, that so long as Transferor shall
have complied with Section 5.7 hereof, no such third-party consents (other than
---
the Required Consents) shall be required to be obtained and in no event shall
any such third-party consents (other than the Required Consents) be a condition
precedent to the consummation of the transactions contemplated hereby); (vi)
tenant estoppel statements, dated within one hundred and twenty (120) days of
the Closing Date, with respect to tenants occupying 50% of the rentable square
footage at the Real Estate Assets (which tenant estoppel statements shall in any
event include tenant estoppel statements from each of Andersen Consulting,
Florida Power Corporation, Florida Progress, NationsBank, N.A. and Raymond James
& Associates) in the form specified in the tenant's Lease or, if none,
substantially in the form annexed hereto as Exhibit D (it being understood that
-
Transferor does not warrant or guarantee any of the information contained in
tenant estoppel certificates); (vii) the originals (or copies if originals are
unavailable) of existing Leases and all tenant files, Contracts and files and
records pertaining to any of the Real Estate Assets as are in Transferor's
possession or in the possession of the current property manager for any of the
Real Estate Assets; provided, however, that Company will make all originals
-------- -------
available to Transferor after Closing to the extent required by Transferor in
connection with accounting, taxation, litigation or other proceedings involving
Transferor's prior ownership of the any of the Real Estate Assets; (viii)
notices to the tenants renting space at the Real Estate Assets confirming that
such Real Estate Assets have been acquired by Company, in such form as
Transferor and Company shall agree; (ix) originals (or copies if originals are
unavailable) of all governmental licenses, permits and approvals relating to
30
<PAGE>
the occupancy or use of any of the Real Estate Assets in the possession of
Transferor or Transferor's current property manager; (x) those site plans, soil
and substrata studies, architectural renderings, plans and specifications,
engineering plans and studies, floor plans, landscape plans, utility schemes,
tax bills and receipts for current real estate taxes, keys and all other books,
financial statements, documentation, files or records covering, affecting or
relating to the Real Estate Assets in Transferor's possession; (xi) a Title
Affidavit in the form annexed hereto as Exhibit F; (xii) a Gap Indemnity in the
-
form annexed hereto as Exhibit G if required by the title insurance company;
-
(xiii) a FIRPTA Affidavit in the form annexed hereto as Exhibit H; (xiv) such
-
documents or other evidence as may be required to satisfy all requirements
raised in the Title Commitments; provided, however, Transferor shall not be
-------- -------
required to satisfy requirements raised in the Title Commitments relating to
Real Estate Taxes, Assumed Debt (other than the delivery of the Required
Consents relating to any Assumed Debt in accordance with the terms of this
Agreement), Other Assumed Debt, mechanics' liens (other than the delivery of an
affidavit certifying as to the status of construction relating to any Real
Estate Asset) or other matters which Transferor is taking pursuant to the terms
of this Agreement; and (xv) transfer tax forms and affidavits as may be required
by governmental authorities in connection with the recordation of the special
warranty deeds;
(c) with respect to the Mortgage Loans: (i) the mortgage note
relating to each such Mortgage Loan, duly endorsed, or attaching an allonge
executed by Transferor in favor of Company, in either case without recourse to
Transferor; (ii) the original executed mortgage or deed of trust securing such
mortgage note, stamped by the appropriate recorders' office as having being duly
filed of record (or a copy thereof certified by the relevant county or
municipality); (iii) the mortgagee title insurance policy relating to the
Mortgage Loan, endorsed to show the assignment of the lender's interest to
Company, (iv) original, executed counterparts of all other documents and
instruments relating to such Mortgage Loan; (v) an assignment and assumption
agreement substantially in the form annexed hereto as Exhibit E, effectively
-
assigning to Company all of Transferor's right, title and interest in and to,
and obligations with respect to, such Mortgage Loan, together with all relevant
UCC-3 assignment statements; and (vi) any consents sought from pledgees of such
Mortgage Loans, if applicable, as more particularly identified on Schedule IV
--
(it being expressly understood and agreed, for avoidance of doubt, that so long
as Transferor shall have complied with Section 5.7 hereof, no such consents
---
(other than the Required Consents) shall be required to be obtained and in no
event shall any such consents (other than the Required Consents) be a condition
precedent to the consummation of the transactions contemplated hereby);
(d) with respect to the Assumed Debt: (i) originals (or copies if
originals are unavailable) of all documents and instruments evidencing and
securing the Assumed Debt and (ii) all documents and instruments required to
effect the assignment and assumption of the borrower's interest in the Assumed
Debt from Transferor to Company, including without limitation, if applicable,
consents sought from the holders of the Assumed Debt, as more particularly
identified on Schedule IV (it being expressly understood and agreed, for
--
avoidance of doubt, that so long as Transferor shall have complied with Section
5.7 hereof, no such consents (other than the Required Consents) shall be
- - ---
required to be obtained and in no
31
<PAGE>
event shall any such consents (other than the Required Consents) be a condition
precedent to the consummation of the transactions contemplated hereby);
(e) originals of all Required Consents (but only to the extent
theretofore obtained by Transferor);
(f) a notice from the Chief Financial Officer of Echelon (which
notice shall be conclusive absent manifest error) setting forth the aggregate
amount of each of (i) the Security Deposit Amount and (ii) the Net Proceeds
received by Transferor in connection with a Pending Transaction, if consummated
prior to the Escrow Closing Date; and
(g) with respect to the transfer of any of the Assets, such
other documents and instruments as are customary in connection with the transfer
of assets of the same type and which the parties deem reasonably necessary or
desirable to effect the consummation of the transactions contemplated hereby;
provided, however, that (i) Transferor shall not be required to provide any
- - -------- -------
representations, warranties or indemnitees with respect to the Assets or title
thereto beyond those set forth in this Agreement, (ii) Transferor shall not be
required to provide any representations or warranties which survive the Escrow
Closing Date and (iii) so long as Transferor shall have complied with Section
5.7 hereof, no consents (other than the Required Consents) shall be required to
- - ---
be obtained and in no event shall any such consents (other than the Required
Consents) be a condition precedent to the consummation of the transactions
contemplated hereby.
7.5 Company Documents and/or Deliveries. On or prior to the Escrow
-----------------------------------
Closing Date, Company will deliver (subject only to receipt by Company of the
relevant Bringdown Certificate and Escrow Date Notification Certificate) the
following to Escrow Agent, which shall have been executed by Company to the
extent applicable:
(a) the Transfer Value, by (i) bank wire transfer of U.S.
dollars in immediately available funds and (ii) delivery of stock certificates,
representing a total of 2,000 shares of Preferred Stock, registered in the names
and in the amounts set forth on Schedule XVIII;
-----
(b) certified copies of resolutions of Company authorizing the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby;
(c) with respect to the transfer of any of the Assets, the
documents and instruments required to effect the assumption thereof, as more
particularly described in Sections 7.4(b)(iii), (c)(v), and (d)(ii) hereof;
----------- ------ -------
(d) with respect to the transfer of any of the Assets and the
assumption of the Assumed Liabilities, such other documents and instruments as
are customary in connection with the transfer of assets and assumption of
liabilities of the same type and which the parties deem reasonably necessary or
desirable to effect the consummation of the transactions
32
<PAGE>
contemplated hereby; provided, however, that (i) Transferor shall not be
-------- -------
required to provide any representations, warranties or indemnitees with respect
to the Assets or title thereto beyond those set forth in this Agreement (ii)
Transferor shall not be required to provide any representations or warranties
which survive the Escrow Closing Date, and (iii) so long as Transferor shall
have complied with Section 5.7 hereof, no consents (other than the Required
---
Consents) shall be required to be obtained and in no event shall any such
consents be a condition precedent to the consummation of the transactions
contemplated hereby; and
(e) transfer tax forms and affidavits as may be required by
governmental authorities in connection with the recordation of the special
warranty deeds.
(f) a release, executed by a duly authorized officer of Company,
releasing Transferor from any and all liabilities or obligations of Transferor
arising under Section 11 of this Agreement, which such liabilities and
obligations shall be assumed by Other Buyer under the Purchase and Sale
Agreement.
7.6 Execution and Delivery of Closing Statements. At Closing, in
--------------------------------------------
addition to any other documents required to be executed and delivered in
counterparts by both parties, Transferor and Company will execute and deliver to
each other closing statements accounting for sums disbursed at Closing.
7.7 Joint Instructions to Escrow Agent. Not later than the Escrow
----------------------------------
Closing Date, Company and Transferor shall execute and deliver to Escrow Agent a
joint direction letter in the form attached hereto as Exhibit 7.7, which shall
---
be irrevocable, (a) listing with specificity all items delivered by Company
and/or Transferor pursuant to Sections 7.4 and 7.5 hereof (including the
--- ---
Transfer Value, all such items collectively referred to herein as the "Escrowed
--------
Items") and (b) setting forth irrevocable instructions from Company and
- - -----
Transferor to the effect that (x) immediately following the filing by Escrow
Agent of the Articles of Merger with respect to the Merger with the Department
of State of the State of Florida or the receipt of notice by Escrow Agent that
such filing has occurred, the Escrowed Items shall be promptly delivered by
Escrow Agent to the party entitled to same (including, without limitation, that
the Transfer Value shall be delivered to Surviving Corporation or to such
account as Surviving Corporation may designate) as set forth in such joint
direction letter, (y) if this Agreement has been terminated pursuant to Section
9.1 hereof, the Escrowed Items shall be promptly delivered by Escrow Agent to
- - ---
the party which had previously deposited same with Escrow Agent and (z) if the
Tender Offer Expiration Date does not occur on or prior to the third Business
Day after the Escrow Closing Date, the Escrowed Items shall be promptly
delivered by Escrow Agent to the party which had previously deposited same with
Escrow Agent.
7.8 Further Deliveries. Simultaneously with the delivery of the
------------------
joint directions set forth in Section 7.7 of this Agreement, Company shall
---
execute and deliver Error! Bookmark not defined. to Escrow Agent, together with
Other Buyer, a joint instruction letter in the form attached hereto as Exhibit
7.8 and Error! Bookmark not defined. to EIN Acquisition Corp. a legal opinion
- - ---
addressed to Agent for the benefit of the Lenders (in each case, as such
33
<PAGE>
terms are defined in the Credit Agreement (as defined in the Merger Agreement))
with respect to those matters set forth in Sections 4.1, 4.2 and 4.4(a), (b) and
(c) of this Agreement.
Section 8. Brokers. Each party represents and warrants to the other
-------
that it has not consulted, dealt with or negotiated with any Person except
Transferor has engaged Donaldson, Lufkin & Jenrette Securities Corporation (the
"Broker") to whom a commission is or could be due in connection with the sale of
------
the Assets by Transferor to Company, or any other matter associated with this
Agreement. Transferor has made a separate agreement with Broker and will pay
all sums, if any, due to Broker in connection with this Agreement. Each party
hereby agrees to indemnify and hold harmless the other from any losses, damages,
costs, liabilities or expenses, including reasonable costs and attorneys' fees
incurred in trial, appellate or post-judgment proceedings, related to or arising
out of any breach of the representations, warranties and agreements set forth in
this Section 8 made by it. Anything to the contrary notwithstanding, the
-
representations, warranties and agreements in this Section 8 will survive
-
Closing of the transactions which are the subject of this Agreement, or any
earlier termination of this Agreement.
Section 9. Termination and Abandonment.
---------------------------
9.1 Termination. This Agreement may be terminated and the
-----------
transactions contemplated by this Agreement may be abandoned:
(a) by mutual consent of Company and Transferor at any time prior
to the Tender Offer Expiration Date;
(b) by either Company or Transferor at any time prior to the
Closing Date, if any court or governmental or regulatory agency shall have
issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the consummation of any of the
transactions contemplated by this Agreement and such order, decree or ruling or
other action shall have become final and nonappealable;
(c) by either Company or Transferor, if the Closing Date fails to
occur within 90 days following the Agreement Date, unless such failure of the
Closing Date to occur shall be as a result of a material breach of any
representation, warranty, obligation, covenant, agreement or condition set forth
in this Agreement on the part of the party seeking to terminate this Agreement;
(d) by either Company or Transferor at any time prior to the
Closing Date, if the Merger Agreement shall have been terminated and be of no
further force and effect;
(e) by either Company or Transferor at any time prior to the
Tender Offer Expiration Date, if any of the Purchase and Sale Agreement, the
Heller Lease or the Tax Credit LP Interest Purchase Agreement shall have been
terminated and be of no further force and effect;
34
<PAGE>
(f) by Company on or at any time prior to the Escrow Closing, in
the event (i) that Company exercises its right of termination as provided in
Section 5.8 or (ii) in the event of (A) a breach by Transferor of its
---
representations and warranties set forth herein (other than arising out of or
related to a Pending Transaction) which, taken in the aggregate, would have a
Material Adverse Effect or (B) a breach by Transferor of its material covenants
or agreements set forth herein, in each case which (1) cannot or has not been
cured prior to the earlier of (x) 15 days after the giving of written notice of
such breach to Transferor and (y) two Business Days prior to the Tender Offer
Expiration Date and (2) has not been waived by Company; or
(g) by Transferor on or at any time prior to Escrow Closing, in
the event of a breach by Company of any representation, warranty, covenant or
agreement contained in this Agreement which (A) cannot or has not been cured
prior to the earlier of (i) 15 days after the giving of written notice of such
breach to Company and (ii) two Business Days prior to the Tender Offer
Expiration Date and (B) has not been waived by Transferor, except, in any case
where such failures are not reasonably likely to affect adversely Company's
ability to consummate the transactions contemplated by this Agreement.
9.2 Effect of Termination. (a) In the event of the termination of
---------------------
this Agreement pursuant to Section 9.1 hereof by Company or Transferor, as the
---
case may be, written notice thereof shall forthwith be given to the other party
specifying the provision hereof pursuant to which such termination is made, and
this Agreement shall become void and have no effect and the parties will have no
further rights or obligations hereunder, except that Sections 7.2, 9.2, 12.7,
--- --- ----
12.11 and 12.15 shall survive any termination of this Agreement.
- - ----- -----
(b) (i) In the event of a termination of this Agreement pursuant
to (x) Section 9.1(d) above following the termination of the Merger Agreement
------
pursuant to Section 5.01(a) of the Merger Agreement (but only if Parent and
Echelon shall have entered into an alternative transaction within 180 days after
such termination of the Merger Agreement pursuant to which Parent (or an
affiliate thereof) would directly or indirectly acquire Echelon, the Excepted
Leases or all or substantially all of the assets or equity of Echelon and its
Subsidiaries) or Sections 5.01(e), (f), (g), (j) (except if the Merger Agreement
has been terminated as a result of the non-performance by Company or any
affiliate of Company under any of the Asset Disposition Agreements (as defined
in the Merger Agreement)) or (k) of the Merger Agreement or (y) Section 9.1(f)
------
above, Company and its affiliates shall be entitled to receive from Transferor
reimbursement for its reasonable out-of-pocket costs and expenses incurred in
connection with the transactions contemplated by this Agreement, the Omnibus
Agreement and the Tax Credit LP Interest Purchase Agreement in an amount of up
to $1,000,000 (subject to providing reasonable documentation of such costs and
expenses).
(ii) In the event of a termination of this Agreement pursuant
to Section 9.1(g) above, Transferor's sole remedy shall be to receive a sum
------
equal to $2,750,000 as agreed and liquidated damages, it being agreed that in
such event Transferor's actual damages would be incapable of precise
ascertainment and that the foregoing is a reasonable estimate of such damages.
35
<PAGE>
(iii) Except as expressly set forth above in this Section 9.2,
---
neither Company nor Transferor shall be entitled to any remedy in connection
with the termination of this Agreement (including, without limitation, specific
performance).
(c) Any payment required to be made by Transferor or Company, as
the case may be, pursuant to Section 9.2(b) shall be made by such party within
------
three Business Days after receipt by it of notice from the other party setting
forth, in reasonable detail, (i) a description of the event(s) giving rise to
the payment obligation and (ii) calculation of the payment obligation.
Section 10. Risk of Loss; Indemnity.
-----------------------
10.1 Casualty. In the event that any portion of the Real Estate
--------
Assets is damaged or destroyed prior to the Tender Offer Expiration Date, and if
such damage or destruction would have, individually or in the aggregate, a
Material Adverse Effect (after giving effect to receipt of insurance proceeds),
Company may by written notice to Transferor actually received by Transferor not
later than the earlier to occur of (x) 12:01 a.m. (New York time) on the Tender
Offer Expiration Date and (y) the thirtieth day following Company's receipt of
written notice of such damage or destruction (such receipt of written notice by
Transferor to be promptly thereafter acknowledged), terminate this Agreement,
whereupon this Agreement will be null and void and the parties will have no
further rights or obligations hereunder. Except as otherwise expressly provided
in the immediately preceding sentence, Company shall proceed to Closing with no
reduction in the Transfer Value notwithstanding any damage or destruction
occurring with respect to the Real Estate Assets, and Transferor will deliver
and/or assign to Company on the Closing Date any insurance proceeds with respect
to such damage or destruction to the extent Transferor is entitled to same;
provided that Company shall be afforded reasonable opportunity by Transferor to
- - --------
participate in any discussions with third parties relating to such insurance
proceeds and such insurance proceeds shall not be settled or otherwise
compromised by Transferor without the approval of Company (not to be
unreasonably withheld, conditioned or delayed). Transferor shall notify Company
of any damage to or destruction of the Real Estate Assets promptly after
Transferor learns of the same.
10.2 Condemnation. In the event that any portion of the Real Estate
------------
Assets or access thereto is taken by eminent domain or condemnation proceeding
prior to the Tender Offer Expiration Date, and if such taking or condemnation
would have, individually or in the aggregate, a Material Adverse Effect (after
giving effect to receipt of award proceeds), Company may by written notice to
Transferor actually received by Transferor not later than the earlier to occur
of (x) 12:01 a.m. (New York time) on the Tender Offer Expiration Date and (y)
the thirtieth day following Company's receipt of written notice of such damage
or destruction (such receipt of written notice by Transferor to be promptly
thereafter acknowledged), terminate this Agreement, whereupon this Agreement
will be null and void and the parties will have no further rights or obligations
hereunder. Except as otherwise expressly provided in the immediately preceding
sentence, Company shall proceed to Closing with no reduction in the Transfer
Value
36
<PAGE>
notwithstanding any taking or condemnation occurring with respect to the Real
Estate Assets, and Transferor will deliver and/or assign to Company on the
Closing Date any award with respect to such taking or condemnation to the extent
Transferor is entitled to same; provided that Company shall be afforded
--------
reasonable opportunity by Transferor to participate in any discussions with
third parties relating to such condemnation proceeds and such condemnation
proceeds shall not be settled or otherwise compromised by Transferor without the
approval of Company (not to be unreasonably withheld, conditioned or delayed).
Transferor shall notify Company of any eminent domain or condemnation proceeding
in respect of the Real Estate Assets promptly after Transferor learns of the
same.
10.3 Indemnity. Each of Company and Transferor (in such capacity,
---------
"Indemnitor") agrees to indemnify and hold the other party (in such capacity,
----------
"Indemnitee") harmless from and against any loss, cost, liability, damage or
- - -----------
expense including, without limitation, reasonable attorneys' fees and costs in
all trial and appellate proceedings ("Losses") incurred in connection with any
------
claim by a third party, including, without limitation, any current or former
shareholder, director, officer, employee or agent of Transferor (a "Claim"),
-----
made, or arising out of (x) in the case of Company (as Indemnitor), the Assumed
Liabilities or any failure by Company for any reason to pay, perform and
discharge any Assumed Liabilities, or (y) in the case of Transferor (as
Indemnitor) the Excluded Liabilities or any failure by Transferor for any reason
to pay, perform or discharge any Excluded Liabilities.
Within not more than ten (10) days after the date upon which the
Indemnitee receives a complaint filed against it or a formal written demand of
it, the Indemnitee will deliver written notice (a "Claim Notice") to the
------------
Indemnitor, describing in reasonable detail the facts giving rise to such Claim
and stating that the Indemnitee intends to seek indemnification for such Claim
from the Indemnitor pursuant to this Agreement. The Indemnitor will have the
right to settle all Claims upon terms and conditions acceptable to the
Indemnitor, provided that (i) such settlement includes an unconditional release
--------
of the Indemnitee from all liability with respect to such Claim and (ii) such
settlement does not involve the imposition of equitable remedies or the
imposition of any material obligations on the Indemnitee other than financial
obligations for which the Indemnitee will be indemnified hereunder.
Upon timely receipt of a Claim Notice from the Indemnitee with respect
to any Claim, the Indemnitor may assume the defense thereof with counsel of the
Indemnitor's choice reasonably satisfactory to the Indemnitee, and will not be
required to engage more than one law firm to defend the Claim in question,
provided that such counsel is reasonably approved in writing by the Indemnitee,
- - --------
and without regard to whether such counsel also represents Indemnitor in
defending such Claim. The Indemnitee will cooperate in all reasonable respects
in such defense. Subject to the foregoing duty of cooperation, the Indemnitee
will have the right to employ separate counsel in any action or Claim and to
participate in the defense thereof, provided that the fees and expenses of
--------
counsel employed by the Indemnitee will be at the Indemnitee's sole cost and
expense, except as otherwise herein provided.
If the Indemnitor does not notify the Indemnitee in writing within ten
(10) days after receipt of a Claim Notice that the Indemnitor elects to
undertake the defense thereof, the
37
<PAGE>
Indemnitee will have the right, at the expense of the Indemnitor, to defend the
Claim with counsel of the Indemnitee's choice.
The parties hereto acknowledge that the law firm defending a Claim may
have an inherent conflict of interest where the Indemnitor and Indemnitee have
not agreed upon the Indemnitee's right to indemnification. Therefore,
notwithstanding any provision herein to the contrary, unless an Indemnitor has
acknowledged in writing its obligation to indemnify the Indemnitee, the
Indemnitor will, and will cause the law firm defending the Claim to, at all
times keep the Indemnitee fully advised of the status of settlement negotiations
and/or defense of the Claim, and promptly provide to the Indemnitee copies of
all documents and correspondence related to the Claim. If, at any time, the
Indemnitee believes in good faith that the law firm defending the Claim is not
fairly representing the Indemnitee's position with respect to such Claim and/or
is prejudicing the Indemnitee's rights with respect to the Claim for
indemnification, the Indemnitee may, at the Indemnitor's sole expense, retain
separate counsel of the Indemnitee's choice, and such separate counsel will be
entitled fully to participate in the defense of such Claim on behalf of the
Indemnitee.
The Indemnitee will cooperate fully with the Indemnitor as to all
Claims, will make available to the Indemnitor as reasonably requested all
information, records and documents relating to all Claims and will preserve all
such information, records and documents until final, nonappealable resolution of
any Claim. The Indemnitee will also make available to the Indemnitor, as
reasonably requested, its personnel (including technical), agents and other
representatives who are responsible for preparing or maintaining information,
records or other documents, or who may have particular knowledge with respect to
any Claim. The Indemnitee will also cooperate with the Indemnitor in attempting
to minimize the Losses subject to indemnification by considering in good faith
any request to pursue, and/or assign to Indemnitor, any rights of contribution
or to reimbursement, whether contractual or otherwise.
Section 11. Special Environmental Indemnity.
-------------------------------
11.1 Environmental Liabilities. Upon completion of the Merger and
-------------------------
notwithstanding any other provision of this Agreement to the contrary, the
Surviving Corporation hereby agrees to indemnify, hold harmless and defend
Company from and against any and all claims (including without limitation third
party claims for personal injury or real or personal property damage), losses,
damages, liabilities, fines, penalties, charges, administrative and judicial
proceedings (including informal proceedings) and orders, judgments, remedial
action, requirements, enforcement actions of any kind, and all reasonable and
documented costs and expenses incurred in connection therewith (including but
not limited to reasonable and documented attorneys' and/or paralegals' fees and
expenses), including, but not limited to, all costs incurred in connection with
any investigation or monitoring of site conditions or any clean-up, remedial,
removal or restoration work by any federal, state or local government agency,
arising in whole or in part, out of:
38
<PAGE>
(a) the presence on or under any of the Real Estate Assets of any
Hazardous Materials, or any releases or discharges of any Hazardous Materials
on, under, from or onto any of the Real Estate Assets,
(b) any activity, including, without limitation, construction,
carried on or undertaken on or of any of the Real Estate Assets, and whether by
the Surviving Corporation or any predecessor in title or any employees, agents,
contractors or subcontractors of the Surviving Corporation or any predecessor in
title, or any other Persons, in connection with the handling, treatment,
removal, storage, decontamination, clean-up, transport or disposal of any
Hazardous Materials that at any time are located or present on or under or that
at any time migrate, flow, percolate, diffuse or in any way move onto or under
any of the Real Estate Assets,
(c) loss of or damage to any property or the environment
(including, without limitation, clean-up costs, response costs, remediation and
removal costs, cost of corrective action, costs of financial assurance, fines
and penalties and natural resource damages), or death or injury to any Person,
and all expenses associated with the protection of wildlife, aquatic species,
vegetation, flora and fauna, and any mitigative action required by or under any
Environmental Law,
(d) any claim concerning lack of compliance with any
Environmental Law, or any act or omission causing an environmental condition
that requires remediation or would allow any Governmental Authority to record a
Lien on the land records, or
(e) any residual contamination on or under any of the Real Estate
Assets, or affecting any natural resources, and to any contamination of any
property or natural resources arising in connection with the generation, use,
handling, storage, transport or disposal of any such Hazardous Materials, and
irrespective of whether any of such activities were or will be undertaken in
accordance with applicable laws, regulations, codes and ordinances (any claim
arising out of the events set forth in subsections (a) through (e) of this
Section 11.1 being an "Environmental Claim").
---- -------------------
It is expressly understood and agreed that the indemnity provided for herein
shall survive the expiration or termination of and shall be separate and
independent from any remedy under this Agreement.
11.2 Proceedings in Respect of Claims. (a) With respect to any amount
--------------------------------
that the Surviving Corporation is requested by Company to pay by reason of
Section 11.1, Company shall, if so requested by the Surviving Corporation and
----
prior to any payment, submit such additional information to the Surviving
Corporation as the Surviving Corporation may reasonably request and which is in
the possession of Company to substantiate the requested payment.
(b) In case any action, suit or proceeding shall be brought against
Company, Company shall promptly notify the Surviving Corporation of the
commencement thereof, and the Surviving Corporation shall be entitled, at its
expense, to participate in, and, to the extent that the Surviving
39
<PAGE>
Corporation desires to, assume and control the defense thereof, but only to that
the Surviving Corporation shall have acknowledged in writing its obligation to
fully indemnify Company in respect of such action, suit or proceeding. The
Surviving Corporation shall keep Company fully apprised of the status of such
action suit or proceeding and shall provide Company with all information with
respect to such action suit or proceeding as Company shall reasonably request.
The Surviving Corporation shall not be entitled to assume and control the
defense of any such action, suit or proceeding if and to the extent that, (A) in
the reasonable opinion of Company, (x) such action, suit or proceeding involves
any risk of imposition of criminal liability or any risk of imposition of
material civil liability on Company or will involve a material risk of the sale,
forfeiture or loss of, or the creation of any Lien on any Real Estate Assets or
any part thereof unless, in the case of civil liability, the Surviving
Corporation shall have posted a bond or other security satisfactory to Company
in respect to such risk or (y) the control of such action, suit or proceeding
would involve an actual or potential conflict of interest, or (B) such
proceeding involves claims not fully indemnified by the Surviving Corporation
which the Surviving Corporation and Company have been unable to sever from the
indemnified claim(s). Company may participate in a reasonable manner at its own
expense and with its own counsel in any proceeding conducted by the Surviving
Corporation in accordance with the foregoing. The Surviving Corporation shall
not enter into any settlement or other compromise with respect to any
Environmental Claim which is entitled to be indemnified under Sections 11.1 or
----
11.2 without the prior written consent of Company which consent shall not be
- - ----
unreasonably withheld in the case of a money settlement not involving an
admission of liability of Company; provided, however, that in the event that
-------- -------
Company withholds consent to any settlement or other compromise, the Surviving
Corporation shall not be required to indemnify Company under Sections 11.1 or
----
11.2 to the extent that the applicable Environmental Claim (x) is for legal fees
- - ----
and expenses incurred after the date of the proposed settlement or (y) results
in a judgment in excess of such offered money settlement.
Company shall at the expense of the Surviving Corporation supply the
Surviving Corporation with such information and documents reasonably requested
by the Surviving Corporation as are necessary or advisable for the Surviving
Corporation to participate in any action, suit or proceeding to the extent
permitted by Sections 11.1 or 11.2. Company shall not enter into any settlement
---- ----
or other compromise with respect to any Environmental Claim which is entitled to
be indemnified under Sections 11.1 or 11.2 without the prior written consent of
---- ----
the Surviving Corporation, which consent shall not be unreasonably withheld,
unless Company waives its right to be indemnified under Sections 11.1 or 11.2
---- ----
with respect to such Environmental Claim.
Upon payment in full of any Environmental Claim by the Surviving
Corporation pursuant to Sections 11.1 or 11.2 to or on behalf of Company, the
---- ----
Surviving Corporation, without any further action, shall be subrogated to any
and all claims that Company may have relating thereto (other than claims in
respect of insurance policies maintained by Company at its own expense), and
Company shall execute such instruments of assignment and conveyance, evidence of
claims and payment and such other documents, instruments and agreements as may
be necessary to preserve any such claims and otherwise cooperate with the
Surviving Corporation and give such
40
<PAGE>
further assurances as are necessary or advisable to enable the Surviving
Corporation vigorously to pursue such claims.
(c) Any amount payable to Company pursuant to Sections 11.1 or 11.2 shall
---- ----
be paid to Company promptly upon receipt of a written demand therefor from
Company, accompanied by a written statement describing in reasonable detail the
basis for such indemnity and the computation of the amount so payable and, if
requested by the Surviving Corporation, such determination shall be verified by
a nationally recognized independent accounting firm mutually acceptable to the
Surviving Corporation and Company at the expense of the Surviving Corporation;
provided, however, that if the Surviving Corporation has assumed the defense of
- - -------- -------
the related Environmental Claim or is paying the costs of Company's defense of
the related claim on an ongoing basis, the Surviving Corporation shall not be
required to pay such amount to Company until such time as a judgment is entered
with respect to such Environmental Claim, the enforcement of which is not stayed
or which judgment is not bonded over, or the Environmental Claim is otherwise
settled or lost. To the extent the Surviving Corporation suffers any losses or
damages as a result of Company's failure to provide the Surviving Corporation
with prompt notice of the commencement of any action, suit or proceeding against
Company in accordance with the first sentence of the second paragraph of this
Section 11.2, the amounts of such losses or damages may be offset against the
----
Surviving Corporation's indemnification obligation to Company.
11.3 Assignment of Indemnity. The obligations of the Surviving
-----------------------
Corporation under this Section 11 may be assigned to the Buyer (as such term is
--
defined in the Purchase and Sale Agreement). Upon such assignment by the
Surviving Corporation and the express assumption of this Special Environmental
Indemnity by Buyer (each on terms satisfactory to Company), Company will release
the Surviving Corporation from any obligations under this Section 11 by
--
execution of a release in form and substance reasonably satisfactory to the
Surviving Corporation.
Section 12. Miscellaneous.
-------------
12.1 Litigation. In the event of any litigation between Transferor
----------
and Company concerning the terms of this Agreement, the prevailing party will be
entitled to reimbursement of its costs and expenses, including reasonable
attorneys' fees incurred in trial, appellate and post-judgment proceedings. The
provisions of this Section 12.1 will survive Closing, expiration or termination
----
of this Agreement.
12.2 Escrow Obligations of Escrow Agent. Transferor and Company
----------------------------------
acknowledge that Escrow Agent undertakes hereunder to perform only such duties
as are expressly set forth herein and no implied duties or obligations will be
inferred against Escrow Agent. The Transfer Value and the other Escrowed Items
will be held and disbursed by Escrow Agent as follows:
(a) Escrow Agent may (i) act in reliance upon any writing or
instrument or signature which it, in good faith, believes to be genuine,
(ii) assume the validity and
41
<PAGE>
accuracy of any statement or assertion contained in such a writing or
instrument and (iii) assume that any person purporting to give any writing,
notice, advice or instruction in connection with the provisions hereof has
been duly authorized to do so.
(b) Transferor and Company agree, jointly and severally, to indemnify
and hold harmless Escrow Agent from and against any and all claims,
liabilities, losses, actions, suits or proceedings at law or in equity, or
any other expenses, fees or charges of any character or nature whatsoever,
which Escrow Agent may incur or with which it may be threatened solely by
reason of its acting as escrow agent hereunder, except to the extent
resulting from Escrow Agent's gross negligence, fraud or intentional
misconduct; and in connection therewith, to indemnify Escrow Agent against
any and all expenses, including reasonable attorneys' fees and the cost of
defending any action, suit or proceedings or resisting any claim; provided,
--------
however, that if such expenses are incurred by Escrow Agent in connection
-------
with litigation between Transferor and Company, the responsibility for
indemnifying Escrow Agent for such expenses will belong solely to the non-
prevailing party.
(c) Escrow Agent will not make any disbursement of the Transfer Value
(except, in each case as set forth in succeeding subsection (d)) without
giving written notice to the party which will not receive the disbursement
at least ten (10) Business Days in advance of the disbursement. The
failure of the party not receiving the disbursement to object (on or prior
to the seventh day after receipt of such notice) to the disbursement by
written notice to the other party and to Escrow Agent will constitute
binding acquiescence of such party to the disbursement. If there is any
disagreement about the interpretation of this Agreement, or about the
rights and obligations, or the propriety, of any action contemplated by
Escrow Agent hereunder, or if Escrow Agent shall have received inconsistent
instructions as to the disbursement of the Transfer Value except as set
forth in succeeding subsection (d), Escrow Agent will not disburse the
Transfer Value and will file an action in interpleader to resolve such
disagreement or inconsistency, as the case may be. Escrow Agent will be
indemnified (by Transferor or Company, whichever is the non-prevailing
party) as set forth in the foregoing subsection (b) in connection with such
interpleader action, and will be fully protected in suspending all or a
part of its activities under this Agreement until a final judgment in the
interpleader action is received.
(d) Notwithstanding anything to the contrary set forth in foregoing
subsection (c) or elsewhere in this Agreement (including, without
limitation, receipt of inconsistent instructions from Transferor or Company
as to the disbursement of any Escrowed Item), Escrow Agent shall take the
following actions: (i) upon receipt of all Escrowed Items specified in the
joint direction letter described in Section 7.7 hereof, Escrow Agent will
---
promptly (and in any event, within one Business Day) notify Transferor and
Company of such receipt of all Escrowed Items, (ii) immediately following
the filing by Escrow Agent of the Articles of Merger with respect to the
Merger with the Department of State of the State of Florida or the receipt
of notice by Escrow Agent that such filing has occurred, Escrow Agent shall
deliver the Escrowed Items to the party entitled to same (including,
42
<PAGE>
without limitation, delivery of the Transfer Value to Transferor or to such
account as Transferor may designate) as set forth in the joint direction
letter described in Section 7.7 hereof, (iii) immediately following receipt
---
of written notice from Transferor or Company that this Agreement has been
terminated pursuant to Section 9.1 hereof, the Escrowed Items shall be
---
promptly delivered by Escrow Agent to the party which had previously
deposited same with Escrow Agent and (iv) immediately following receipt of
written notice from Company that the Tender Offer Expiration Date did not
occur on or prior to the third Business Day after the Escrow Closing Date,
the Escrowed Items shall be promptly delivered by Escrow Agent to the party
which had previously delivered same with Escrow Agent.
(e) Escrow Agent may consult with counsel of its own choice and will
have full and complete authorization and protection for any action taken or
suffered by it hereunder in good faith and in accordance with the opinion
of such counsel. Escrow Agent otherwise will not be liable for any
mistakes of fact or error of judgment, or for any acts or omissions of any
kind unless caused by its willful misconduct or gross negligence.
(f) Escrow Agent may resign upon 15 days' written notice to
Transferor and Company, and if a successor title agent is not appointed
within such 15-day period, Escrow Agent may petition a court of competent
jurisdiction to name a successor.
12.3 Notices. All notices, requests, demands, claims, waivers and
-------
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if delivered in
person or mailed, certified or registered mail with postage prepaid, or sent by
telecopier and courier service for next Business Day delivery, as follows:
(a) if to Transferor, to it at:
Echelon International Corporation
450 Carillon Parkway, Suite 200
St. Petersburg, Florida 33716
Facsimile: (727) 803-8203
Attention: Darryl A. LeClair
with a copy to:
Echelon International Corporation
450 Carillon Parkway, Suite 200
St. Petersburg, Florida 33716
Facsimile: (727) 803-8203
Attention: Susan Glatthorn Johnson, Esq.
43
<PAGE>
with a copy to:
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Facsimile: (212) 354-8113
Attention: William F. Wynne, Jr., Esq.
and a copy to:
EIN Acquisition Corp.
950 Third Avenue
New York, New York 10022
Facsimile: (212) 688-7908
Attention: James Haber
with a copy to:
Brown Raysman Millstein Felder and Steiner LLP
120 West 45th Street
New York, New York 10036
Facsimile: (212) 840-2429
Attention: Robert M. Unger, Esq.
(b) if to Company, to it at:
Heller Affordable Housing of Florida, Inc.
500 West Monroe Street
Chicago, Illinois 60661
Facsimile: (312) 441-7119
Attention: John Petrovksi
and a copy to:
Heller Financial
111 West 50th Street
New York, New York 10020
Facsimile: (212) 586-3017
Attention: Mark Hirschhorn
44
<PAGE>
with a copy to:
Winston & Strawn
200 Park Avenue
New York, New York 10166
Facsimile: (212) 294-4700
Attention: Robert W. Ericson, Esq.
with a copy to:
Equis Financial Group
1 Canterbury Green, 8th Floor
Stamford, Connecticut 06901
Facsimile: (203) 363-0861
Attention: James A. Coyne
and a copy to:
Steel Hector & Davis LLP
200 South Biscayne Blvd.
Miami, Florida 33131
Facsimile: (305) 577-7001
Attention: Thomas V. Eagan, P.A.
(c) if to Escrow Agent, to it at:
LandAmerica Financial Group
3922 Coconut Palm Drive, Suite 102
Tampa, Florida 33619
Facsimile: (813) 740-0595
Attention: Juanita M. Shuster
or to such other Person or address as any party shall specify by notice in
writing to each of the other parties. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the date of
delivery unless if mailed, in which case on the third Business Day after the
mailing thereof except for a notice of a change of address, which shall be
effective only upon receipt thereof.
12.4 Entire Agreement. This Agreement and the exhibits, schedules and
----------------
other documents referred to herein or delivered pursuant hereto, collectively
contain the entire under-
45
<PAGE>
standing of the parties hereto with respect to the subject matter contained
herein and supersede all prior agreements and understandings, oral and written,
with respect thereto.
12.5 Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the parties hereto, and their respective
successors and permitted assigns; and no third party shall have any rights,
privileges or other beneficial interests herein or hereunder. Company shall not
be entitled to assign this Agreement or any of its rights, duties or interests
herein or hereunder to any other Person; provided, however, that Company may,
-------- -------
not less than five Business Days prior to the Closing Date, designate one or
more of its wholly-owned subsidiaries or affiliates controlled by it to be the
transferee of one or more Assets and/or the Assumed Liabilities, in each case so
long as (x) such transfer, assignment or assumption does not impose any
incremental burden on Transferor under this Agreement or delay (or otherwise
impede) the consummation of the transactions contemplated by this Agreement and
(y) Company remains liable to Transferor for all of its obligations hereunder
with respect to the Assumed Liabilities notwithstanding such transfer,
assignment or assumption.
12.6 Headings. The descriptive headings of the several Sections of
--------
this Agreement are inserted for convenience only, do not constitute a part of
this Agreement and shall not affect in any way the meaning or interpretation of
this Agreement.
12.7 Applicable Law. This Agreement and the legal relations between
--------------
the parties hereto shall be governed by and construed in accordance with the
laws of the State of New York, without regard to the conflict of laws rules
thereof.
12.8 Severability. If any term, provision, covenant or restriction
------------
contained in this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions
contained in this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
12.9 Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
12.10 No Waiver of Default. No waiver by a party of any breach of
--------------------
this Agreement or of any warranty or representation hereunder by the other party
will be deemed to be a waiver of any other breach by such other party (whether
preceding or succeeding and whether or not of the same or similar nature), and
no acceptance of payment or performance by a party after any breach by the other
party will be deemed to be a waiver of any breach of this Agreement or of any
representation or warranty hereunder by such other party, whether or not the
first party knows of such breach at the time it accepts such payment or
performance. No failure or delay by a party to exercise any right it may have
by reason of the default of the other party will operate as a waiver of default
or modification of this Agreement or will prevent the exercise of any right by
the first party while the other party continues so to be in default.
46
<PAGE>
12.11 Confidentiality. It is agreed that (x) Transferor will, at all
---------------
times, keep in strict confidence all non-public information (other than
information made public as a result of a breach of its obligations pursuant to
this Section 12.11) obtained by it with respect to Company and/or the Assets and
-----
(y) Company will, at all times prior to the Closing Date, keep in strict
confidence all non-public information (other than information made public as a
result of a breach of its obligations pursuant to this Section 12.11) obtained
-----
by it with respect to Transferor pursuant to or in connection with this
Agreement or any confidentiality agreement executed by Company related to the
Assets (including all information obtained by such Person with respect to the
tenants and other occupants of any of the Real Estate Assets and all information
attached hereto with respect to the Mortgage Loans and the Assumed Debt). Each
of Transferor and Company agrees to instruct its agents, employees, advisers and
consultants to comply with the provisions of this Section 12.11 and any
-----
confidentiality agreement executed in connection with the Assets.
Notwithstanding the foregoing, each of Transferor and Company may disclose any
such non-public information obtained by it to its directors, bankers, advisors,
attorneys, accountants and agents so long as such parties agree in writing for
the benefit of the other parties hereto to keep the information confidential in
accordance with the terms of this Section 12.11. In addition, each of
-----
Transferor and Company may disclose any such non-public information as may be
required by law. If the transfer of the Assets contemplated by this Agreement
is not completed for any reason, Company will, upon request of Transferor,
promptly return to Transferor all instruments and materials or copies of
instruments and materials delivered pursuant hereto and obtained by Company.
The provisions of this Section 12.11 will survive any termination of this
-----
Agreement.
12.12 Recourse Limited. Notwithstanding anything to the contrary in
----------------
this Agreement, neither any present or future constituent shareholder, member,
partner, officer, director, employee or agent of the parties hereto or of any
corporation, limited liability company or partnership that is the owner of any
equity interest in the parties hereto will be personally liable, directly or
indirectly, under or in connection with this Agreement, or any document,
instrument or certificate securing or otherwise executed in connection with this
Agreement, or any amendments or modifications to any of the foregoing made at
any time or times, heretofore or hereafter, or in respect of any matter,
condition, injury or loss related to this Agreement or the Assets (provided that
--------
Echelon shall be so liable to the extent Echelon constitutes the holder of
equity interests in its Subsidiaries); and each party hereto (and their
respective successors and assigns) waives any such personal liability.
12.13 Business Day. If any date herein set forth for the performance
------------
of any obligations by Transferor or for the delivery of any instrument or notice
as herein provided should be on a day other than a Business Day, the compliance
with such obligations or delivery will be deemed acceptable on the next
occurring Business Day.
12.14 Recordation. Company and Transferor agree that neither this
-----------
Agreement nor any memorandum hereof will be recorded in any public records, and
that any such recording would constitute a default subject to Section 9.1
---
hereof.
47
<PAGE>
12.15 Jury Waiver. IN ANY CIVIL ACTION, COUNTERCLAIM OR PROCEEDING,
-----------
WHETHER AT LAW OR IN EQUITY, WHICH ARISES OUT OF, CONCERNS, OR RELATES TO THIS
AGREEMENT, AND ANY AND ALL TRANSACTIONS CONTEMPLATED HEREUNDER, THE PERFORMANCE
HEREOF, OR THE RELATIONSHIP CREATED HEREBY, WHETHER SOUNDING IN CONTRACT, TORT,
STRICT LIABILITY OR OTHERWISE, TRIAL WILL BE TO A COURT OF COMPETENT
JURISDICTION AND NOT TO A JURY. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY. ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO OF THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. NEITHER PARTY HAS
MADE OR RELIED UPON ANY ORAL REPRESENTATIONS TO OR BY ANY OTHER PARTY REGARDING
THE ENFORCEABILITY OF THIS PROVISION. EACH PARTY HAS READ AND UNDERSTANDS THE
EFFECT OF THIS JURY WAIVER PROVISION.
12.16 Public Announcements. At all times prior to the Closing Date,
--------------------
Transferor, on the one hand, and Company, on the other hand, agree to consult
promptly with each other prior to issuing any press release or otherwise making
any public statement with respect to the transactions contemplated hereby (other
than for the Schedule 14D-1, the Schedule 14D-9 and any other public filing made
in connection with the transactions contemplated by the Merger Agreement), and
shall not issue any such press release or make any such public statement prior
to such consultation and review by the other party of a copy of such release or
statement; provided, that (x) a party may, without the prior consent of any
--------
other party, issue a press release or make such public statement as may be
required by law or any rule of or agreement with any national securities
exchange or automated quotation system to which such party is subject and (y)
subject to Transferor's obligations under the Merger Agreement, Transferor will
give Company and its counsel the opportunity to review and comment upon the
Schedule 14D-1, the Schedule 14D-9 and any other public filing made in
connection with the transactions contemplated by the Merger Agreement but only
to the extent that same directly relates to the identity and description of
Company or to the description of the principal terms and conditions of this
Agreement.
12.17 Radon Gas. Radon is a naturally occurring radioactive gas
---------
that, when it has accumulated in a building in sufficient quantities, may
present health risks to persons who are exposed to it over time ("Radon").
-----
Levels of Radon that exceed federal and state guidelines have been found in
buildings in Florida. Additional information regarding Radon and Radon testing
may be obtained from the local county public health unit. The matters set forth
in this Section 12.17 shall constitute an exception to the representation and
-----
warranty of Transferor set forth in Section 3.6 hereof.
---
12.18 Bulk Sales Law Waiver. Each party hereto agrees to waive
---------------------
compliance by the other with the provisions of the bulk sales law or comparable
law of any jurisdiction to the extent that the same may be applicable to the
transactions contemplated hereby.
48
<PAGE>
12.19 Knowledge. When any representation or warranty contained in
---------
this Agreement is expressly qualified by the knowledge of Transferor or Echelon,
such knowledge means the actual knowledge of Darryl A. LeClair, W. Michael
Doramus, Julio A. Maggi, Larry J. Newsome, Susan G. Johnson, J. Mark Stroud,
Thomas D. Wilson, Antonia P. Williams, Timothy S. Tinsley or K. Brent Little.
12.20 Amendments, Modifications and Supplements. This Agreement
-----------------------------------------
(including all Schedules and Exhibits thereto) may be amended, modified and
supplemented only in writing executed by the parties hereto.
12.21 Representations and Warranties. The respective representations
------------------------------
and warranties of Transferor, on the one hand, and Company, on the other hand,
contained herein or in any certificates or other documents delivered pursuant
hereto shall not be deemed waived or otherwise affected by any investigation
made by any party. Except as expressly provided in Section 8 hereof (and, in
-
the case of Company, Sections 4.5, 4.6 and 4.9 hereof), each and every such
--- --- ---
representation and warranty shall expire with, and be terminated and
extinguished by, the Escrow Closing Date and thereafter neither Transferor nor
Company shall be under any liability whatsoever with respect to any such
representation or warranty. Furthermore, notwithstanding anything to the
contrary (express or implied) set forth herein (other than Section 8 hereof), in
-
the case of any breach by Transferor of any of its representations and
warranties, Company's sole right shall be the exercise (if it is entitled to do
so) of its right of termination pursuant to Section 9.1(f) hereof (and Company's
------
sole remedies in connection therewith shall be those expressly set forth in
Section 9.2 hereof) and Transferor shall not at any time (whether before, on or
---
after the Escrow Closing Date) have any further liability whatsoever with
respect to any such breach of its representations and warranties. This Section
12.21 shall have no effect upon any other obligation of the parties hereto,
- - -----
whether to be performed before or after the Closing Date.
12.22 Performance and Discharge. The acceptance by Company of the
-------------------------
agreements, instruments and other documents contemplated in this Agreement
conveying title to, or assigning Transferor's rights and interests in, the
Assets shall be deemed to be a full performance and discharge of every agreement
and obligation on the part of Transferor to be performed under this Agreement,
except those, if any, where are herein specifically stated to survive delivery
of such agreements, instruments and other documents.
12.23 Section 351 of the Code. Each party hereto agrees that this
-----------------------
Agreement and the transactions contemplated thereby shall be taxed in accordance
with Section 351 of the Code and that such party will file applicable Tax
Returns to reflect such treatment.
[SIGNATURE PAGE FOLLOWS]
49
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Subscription
Agreement to be executed on the date(s) hereinafter set forth.
ECHELON INTERNATIONAL CORPORATION,
a Florida corporation
By:______________________________
Name:____________________________
Title:___________________________
Date: January ____, 2000
ECHELON DEVELOPMENT CORPORATION,
a Florida corporation
By:______________________________
Name:____________________________
Title:___________________________
Date: January ____, 2000
SOUTH CORE COMMERCIAL, INC.,
a Florida corporation
By:______________________________
Name:____________________________
Title:___________________________
Date: January ____, 2000
SOUTH CORE PARKING, INC.,
a Florida corporation
By:______________________________
Name:____________________________
Title:___________________________
Date: January ____, 2000
<PAGE>
ECHELON AT CARILLON ONE, INC.,
a Florida corporation
By:______________________________
Name:____________________________
Title:___________________________
Date: January ____, 2000
ECHELON AT NORTHLAKE, INC.,
a Florida corporation
By:______________________________
Name:____________________________
Title:___________________________
Date: January ____, 2000
ECHELON AT THE RESERVE, INC.,
a Florida corporation
By:______________________________
Name:____________________________
Title:___________________________
Date: January ____, 2000
WITNESSED BY: ECHELON AFFORDABLE HOUSING, INC.,
a Florida corporation
_________________________
Name:____________________ By:______________________________
Name:____________________________
_________________________ Title:___________________________
Name:____________________ Date: January ____, 2000
<PAGE>
WITNESSED BY: BAYBRIDGE APARTMENTS, LTD., a Florida Limited
Partnership
____________________
Name:_______________ By: Echelon General Partner Affordable
Housing, Inc., a Florida Corporation,
its general partner
____________________
Name:_______________
By:________________________________
Name:______________________________
Title:_____________________________
Date: January ____, 2000
WITNESSED BY: 200 CARILLON, L.L.C., a Delaware Limited
Liability Company
____________________
Name:_______________ By: Echelon at Carillon Two, Inc., a Florida
Corporation, its managing member
____________________ By:________________________________
Name:_______________ Name:______________________________
Title:_____________________________
Date: January ____, 2000
<PAGE>
SOUTH GARNETT RESIDENTIAL LIMITED
PARTNERSHIP, a Texas Limited Partnership
By: Echelon General Partner, Inc., a Florida
Corporation, its general partner
By:_____________________________
Name:___________________________
Title:__________________________
Date: January ____, 2000
RESIDENTIAL 98/TH/ MEMORIAL CREEK TURNPIKE
LIMITED PARTNERSHIP, a Texas Limited
Partnership
By: Echelon General Partner, Inc., a Florida
Corporation, its general partner
By:_____________________________
Name:___________________________
Title:__________________________
Date: January ____, 2000
WITNESSED BY: MISSION RANCH LIMITED PARTNERSHIP, a Texas
Limited Partnership
_________________________
Name:____________________ By: Echelon General Partner, Inc., a Florida
Corporation, its general partner
_________________________
Name:____________________
By:_____________________________
Name:___________________________
Title:__________________________
Date: January ____, 2000
<PAGE>
COMPANY:
WITNESSED BY: HELLER AFFORDABLE HOUSING OF FLORIDA, INC., a
Florida corporation
__________________________
Name:_____________________ By:_______________________________
Name: Michael H. Jahrmarkt
___________________________ Title: Executive Vice President
Name:______________________ Date: January 21, 2000
<PAGE>
Escrow Agent hereby agrees to hold and disburse the Transfer Value and
the other Escrowed Items in accordance with and subject to the provisions of the
foregoing Subscription Agreement.
LANDAMERICA FINANCIAL GROUP
By:_____________________
Name:___________________
Title:__________________
Date: January ____, 2000
<PAGE>
EXHIBIT A
FOLIO NUMBER: ____________
FORM OF
SPECIAL WARRANTY DEED
---------------------
THIS SPECIAL WARRANTY DEED is made this ______ day of ____________,
2000, by ______________________, a _______________ ("Grantor"), whose address is
-------
_____________________________________, to _______________________, a
______________ ("Grantee"), whose address is _________________________________.
-------
W I T N E S S E T H:
THAT GRANTOR, for and in consideration of the sum of ten Dollars
($10.00) and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, does hereby grant, bargain, sell, transfer and
deliver to Grantee, its successors and assigns forever, the real property (the
"Property") described in Exhibit A attached hereto and made a part hereof.
- - ---------
TOGETHER, with all the tenements, hereditaments and appurtenances
belonging or in anyway appertaining thereto.
TO HAVE AND TO HOLD the same in fee simple forever.
AND GRANTOR hereby specially warrants the title to the Property, and
will defend the same against the lawful claims of all persons whomsoever
claiming by, through or under Grantor, but none others.
IN WITNESS WHEREOF, GRANTOR has caused this Special Warranty Deed to
be executed as of the date first above written.
WITNESSED BY: GRANTOR:
______________________________ By: ______________________________
Name:_________________________
______________________________ By:___________________________
Name:_________________________
Name:_________________________ Title:________________________
This instrument prepared by and when recorded return to:
_____________________________
_____________________________
_____________________________
_____________________________
<PAGE>
STATE OF ___________ )
) ss:
COUNTY OF___________ )
The foregoing instrument was acknowledged before me this _____ day of
______, 2000, by ________________, as ______________ of _______________, a
__________ corporation, _____________ of _________________, a
___________________, on behalf of the _____________, who is personally known to
me or who has produced a driver's license as identification.
__________________________________
Name:
Notary Public, State of ________________
My commission expires:
<PAGE>
EXHIBIT B
FORM OF
BILL OF SALE
------------
Made and entered into this ____ day of __________, 2000, by and
between _____________, a _____________ ("Transferor"), and __________________, a
----------
____________ ("Company").
-------
W I T N E S S E T H:
WHEREAS, Transferor and Company entered into that certain Subscription
Agreement (the "Agreement"), dated as of January 21, 2000, for, inter alia, the
--------- ----- ----
transfer of the real property more specifically described in Exhibit A attached
hereto and made a part hereof (the "Property"); and
--------
WHEREAS, in accordance with the terms of the Agreement, Transferor
desires to assign, transfer, set over and deliver to Company all of Transferor's
right, title and interest in, and Company desires to assume all duties and
obligations of Transferor with respect to, all items of personalty situated at
or on the Property, excluding any personal property owned or leased by tenants
of the Property (collectively, the "Personalty");
----------
NOW, THEREFORE, in accordance with the Agreement and in consideration
of the sum of ten Dollars ($10.00) and other good and valuable consideration,
the sufficiency and receipt of which are hereby acknowledged, the parties do
hereby agree as follows:
1. Transferor does hereby grant, bargain, transfer, set over and
deliver unto Company all of Transferor's right, title and interest in and to the
Personalty.
2. Company hereby acknowledges and agrees that it is purchasing the
Personalty in its "as is" condition. Transferor makes no representation or
warranty of any kind with respect to the Property or the Personalty, except as
otherwise expressly set forth herein or in the Agreement.
3. This Bill of Sale shall be governed by the laws of the State of
_______ and shall be binding upon, and inure to the benefit of, the parties
hereto and their respective heirs, legal representatives, successors and
assigns.
Transferor hereby warrants title to the Property against the lawful
claims of all persons claiming by, through or under Transferor, but none others.
<PAGE>
IN WITNESS WHEREOF, this Bill of Sale has been signed, sealed and
delivered by the parties as of the date first above written.
WITNESSED BY: TRANSFEROR:
______________________________ By:
Name:_________________________
By:___________________________
______________________________ Name:_________________________
Title:________________________
Name:_________________________
WITNESSED BY: COMPANY:
______________________________ By:___________________________
Name:_________________________
By:___________________________
______________________________ Name:_________________________
Title:________________________
Name:________________________
<PAGE>
EXHIBIT C
FORM OF
ASSIGNMENT AND ASSUMPTION OF PERMITS, CONTRACTS AND LEASES
----------------------------------------------------------
THIS ASSIGNMENT AND ASSUMPTION OF PERMITS, CONTRACTS AND LEASES (this
"Assignment") is made and entered into as of the ____ day of _______________,
----------
2000, by and between _____________, a _________________ ("Assignor"), and
--------
_______________________, a ___________________ ("Assignee").
--------
W I T N E S S E T H :
WHEREAS, Assignor and Assignee entered into that certain Subscription
Agreement (the "Agreement"), dated as of January 21, 2000, for, inter alia, the
--------- ----- ----
transfer to Assignee of certain real property more particularly described in
Exhibit A attached hereto and made a part hereof (the "Property"); and
--------
WHEREAS, in accordance with the terms of the Agreement, Assignor
desires to assign, transfer, set over and deliver to Assignee all of Assignor's
right, title and interest in, and Assignee desires to assume all duties and
obligations of Assignor with respect to, the Permits, Contracts and Leases (as
such terms are defined in the Agreement) relating to the Property;
NOW, THEREFORE, in accordance with the Agreement and in consideration
of the sum of ten Dollars ($10.00) and other good and valuable consideration,
the sufficiency and receipt of which are hereby acknowledged, the parties do
hereby agree as follows:
1. Assignment. Assignor does hereby assign, transfer, set over and
----------
deliver unto Assignee all of Assignor's right, title and interest in and to the
Permits, Contracts and Leases. Assignee makes no representation or warranty of
any kind with respect to the Permits, Contracts and Leases, except as otherwise
expressly set forth herein or in the Agreement.
2. Assumption. Assignee hereby accepts the foregoing assignment and
----------
hereby assumes all duties and obligations under the same arising on or after the
date hereof.
3. Assignor Indemnification. Assignor hereby agrees to indemnify,
------------------------
defend and hold harmless Assignee from and against any loss, cost, damage, or
expense arising from or in connection with any liability or obligation related
to the Permits, Contracts and Leases arising by virtue of acts or omissions by
Assignor which have accrued or occurred prior to the date hereof.
4. Assignee Indemnification. Assignee hereby agrees to indemnify,
------------------------
defend and hold harmless Assignor from and against any loss, cost, damage, or
expense arising from or in connection with any liability or obligation related
to the Permits, Contracts and Leases arising by virtue of acts or omissions by
Assignee which accrue or occur on or after the date hereof.
<PAGE>
5. Governing Law; Parties Bound. This Agreement shall be governed by
----------------------------
the laws of the State of __________. This Assignment shall be binding upon, and
inure to the benefit of, the parties to this Assignment and their respective
heirs, legal representatives, successors and assigns.
IN WITNESS WHEREOF, this Assignment has been signed, sealed and
delivered by the parties as of the date first above written.
WITNESSED BY: ASSIGNOR:
______________________________ By:
Name:_________________________
By:___________________________
______________________________ Name:_________________________
Title:________________________
Name:_________________________
WITNESSED BY: ASSIGNEE:
______________________________ By:___________________________
Name:_________________________
By:___________________________
______________________________ Name:_________________________
Title:________________________
Name:________________________
<PAGE>
EXHIBIT D
FORM OF
TENANT ESTOPPEL STATEMENT
-------------------------
DATE: ______________, 2000
TO: ________________________, a
________________________ ("Company")
-------
RE: Lease (the "Lease"), dated ___________, by and between
-----
___________ as landlord ("Landlord") and ___________ as tenant
--------
("Tenant"), with respect to _______________________________ (the
--------
"Leased Premises")
----------------
Gentlemen:
As Tenant under the Lease, the undersigned hereby acknowledges for the
benefit of Company, which is about to purchase the Leased Premises, and
Company's lender, if any, the truth and accuracy of the following statements
pertaining to said Lease:
1. Date of Lease:
2. Description of Any and All Amendments, Modification or
Assignments of the Lease:
3. Term of Lease / Date of Expiration:
4. Current Monthly Rent / Common Area Maintenance / Other Charges:
5. Security Deposit / Last Month's Rent / Other Prepaid Amounts:
6. Guarantor(s), if any:
7. The Lease is in full force and effect.
8. Tenant is in exclusive possession of the Leased Premises under the terms of
the Lease.
9. All rent, charges or other payments due Landlord under the Lease have been
paid through ________________, [1999] [2000]. Rent has not been paid more
than one (1) month in advance.
10. There are not any uncured defaults on the part of Landlord or Tenant under
the Lease and, to the best of Tenant's knowledge and belief, no event has
occurred which, with notice and/or lapse of time, would cause such a
default to occur by either Landlord or Tenant.
<PAGE>
11. All tenant improvements and other improvements to be constructed by
Landlord under the Lease have been fully completed and accepted by Tenant.
12. Tenant does not have any outstanding option to renew the Lease, option to
expand the Leased Premises or option to purchase any part of the Leased
Premises other than as follows:
13. The Lease, together with any modifications listed in item 2 hereof, sets
forth the entire agreement between Landlord and Tenant. There are no other
documents or agreements affecting the rights of the parties except as
follows: ___________________________
14. To the best of Tenant's knowledge and belief, the Lease is valid and
enforceable in accordance with its terms and none of the provisions thereof
that inure to the benefit of Landlord have been waived by Landlord and
there are no offsets or defenses to the payment of rent by Tenant under the
Lease.
15. Tenant is the sole owner of the entire leasehold estate under the Lease and
has not assigned the Lease or any interest therein, nor has Tenant sublet
all or any portion of the Leased Premises.
16. Tenant has obtained the required occupational licenses, certificates of
occupancy or other similar licenses required for Tenant to operate its
business on the Leased Premises.
17. This certification shall be binding upon Tenant, its successors and
assigns, and shall inure to the benefit of Company, its successors and
assigns, the Company's lender, if any, and all parties claiming through or
under such persons.
TENANT:
_________________________________
By: __________________________
Name:__________________________
Title:_________________________
<PAGE>
EXHIBIT E
FORM OF
ASSIGNMENT AND ASSUMPTION AGREEMENT OF MORTGAGE LOAN
----------------------------------------------------
THIS ASSIGNMENT AND ASSUMPTION OF MORTGAGE LOAN (this "Assignment") is
----------
made and entered into as of the ____ day of _______________, 2000, by and
between _________________ ("Assignor"), having an address at _________________
--------
and _______________________, a ___________________ ("Assignee"), having an
--------
address at _______________________.
W I T N E S S E T H :
WHEREAS, pursuant to that certain [Mortgage], dated _______, ____,
between Assignor, as lender/mortgagee, to [Name of Borrower], as
borrower/mortgagor (the "Borrower"), and recorded in the Office of the Clerk of
--------
_______ County on _______ in Liber _______, Page ________, Assignor made a loan
to the Borrower in the sum of $______________ (the "Mortgage Loan");
-------------
WHEREAS, Assignor and Assignee entered into that certain Subscription
Agreement (the "Agreement"), dated as of January 21, 2000, for, inter alia, the
--------- ----- ----
transfer of the Mortgage Loan; and
WHEREAS, in accordance with the terms of the Agreement, Assignor
desires to assign, transfer, set over and deliver to Assignee all of Assignor's
right, title and interest in, and Assignee desires to assume all duties and
obligations of Assignor with respect to the Mortgage Loan and the mortgage loan
documents relating thereto and described on Exhibit A attached hereto and made a
part hereof (the "Mortgage Loan Documents");
-----------------------
NOW, THEREFORE, in accordance with the Agreement and in consideration
of the sum of ten Dollars ($10.00) and other good and valuable consideration,
the sufficiency and receipt of which are hereby acknowledged, the parties do
hereby agree as follows:
1. Assignment. Assignor does hereby assign, transfer, set over and
----------
deliver unto Assignee all of Assignor's right, title and interest in and to the
Mortgage Loan and the Mortgage Loan Documents, together with all other documents
and instruments relating thereto. The foregoing assignment is made without
representation or warranty of any kind, except as otherwise set forth herein or
in the Agreement.
2. Assumption. Assignee hereby accepts the foregoing assignment
----------
and hereby assumes all duties and obligations under the Mortgage Loan Documents
arising on or after the date hereof.
<PAGE>
3. Assignor Indemnification. Assignor hereby agrees to indemnify,
------------------------
defend and hold harmless Assignee from and against any loss, cost, damage, or
expense arising from or in connection with any liability or obligation related
to the Mortgage Loan and the Mortgage Loan Documents arising by virtue of acts
or omissions by Assignor which have accrued or occurred prior to the date
hereof.
4. Assignee Indemnification. Assignee hereby agrees to indemnify,
------------------------
defend and hold harmless Assignor from and against any loss, cost, damage, or
expense arising from or in connection with any liability or obligation related
to the Mortgage Loan and the Mortgage Loan Documents arising by virtue of acts
or omissions by Assignee which accrue or occur on or after the date hereof.
5. Governing Law; Parties Bound. This Assignment shall be governed
----------------------------
by the laws of the State of ________ and shall be binding upon, and inure to the
benefit of, the parties to this Assignment and their respective heirs, legal
representatives, successors and assigns.
IN WITNESS WHEREOF, this Assignment has been signed, sealed and
delivered by the parties as of the date first above written.
WITNESSED BY: ASSIGNOR:
______________________________ By:________________________
Name:_________________________
By:________________________
______________________________ Name:______________________
Title:_____________________
Name:_________________________
WITNESSED BY: ASSIGNEE:
______________________________ By:________________________
Name:_________________________
By:________________________
______________________________ Name:______________________
Title:_____________________
Name:________________________
<PAGE>
STATE OF ___________ )
) ss:
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me this _____ day of
______, 2000, by ________________, as ______________ of _______________, a
__________ corporation, _____________ of _________________, a
___________________, on behalf of the _____________, who is personally known to
me or who has produced a driver's license as identification.
__________________________________
Name:
Notary Public, State of ________________
My commission expires:
STATE OF ___________ )
) ss:
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me this _____ day of
______, 2000, by _________________, as ______________ of __________________, a
________ corporation, ______________ of ______________________, a ___________,
on behalf of the _________________, who is personally known to me or who has
produced a driver's license as identification.
__________________________________
Name:
Notary Public, State of ________________
My commission expires:
<PAGE>
EXHIBIT F
FORM OF
TITLE AFFIDAVIT
---------------
STATE OF ___________ )
) ss:
COUNTY OF ___________ )
The undersigned, [PROPERTY OWNER], hereinafter called Affiant, being duly sworn,
says that:
1. Affiant is the owner in fee simple of the premises described on Exhibit A
attached hereto.
2. Affiant has present possession of all the premises subject to lessees or
tenants in possession.
3. Affiant states further that no work has been done or materials furnished to
said premises, or any part thereof, or demolition of existing improvements
conducted thereon, for the past six (6) months and that there are no
outstanding claims for the furnishings of material or labor for the
erection, construction, alteration or demolition of any building on the
premises whereby the same are now or might become subject to mechanic's or
other liens, except as listed on Exhibit B attached hereto.
4. Affiant further represents that it has not received notice of an assessment
for any public improvements affecting the property prior to the date of
closing that would give rise to a special property tax assessment against
the property described on Exhibit A after the date of closing.
5. Affiant is not currently in bankruptcy under the U.S. Code, and further
represents to its knowledge that there are no pending proceedings or
unsatisfied judgments of record, nor any tax liens filed against Affiant,
except as shown on Exhibit C attached hereto; that if there are any
judgments, bankruptcies, probate proceedings, state or federal tax liens of
record against parties with same or similar names, they are not against
Affiant.
6. Affiant agrees not to place of record any lien or encumbrance upon the
above-mentioned property from the date hereof to the date of recordation of
documents executed and delivered in connection with the above commitment.
<PAGE>
This affidavit is made for the purpose of inducing one or more of LANDAMERICA
FINANCIAL GROUP's title insurers to issue an Owner's policy of title insurance
on the premises without exception to rights of parties in possession or
intervening matters which do or do not appear of record between the date of
closing and recordation.
By:__________________________________
Title:________________________________
Subscribed and sworn to before me this _____ day of ____________, ____
________________________________
Notary Public
________________________________
Address
________________________________
Commission expires:
<PAGE>
EXHIBIT G
FORM OF
GAP INDEMNITY
-------------
TITLE NO. ______________
THIS INDEMNITY, given by [Property Owner] (hereinafter called Indemnitor)
to [LANDAMERICA FINANCIAL GROUP] (hereinafter called Company) on _____________,
2000.
WHEREAS, Indemnitor has requested Company to issue its policy(s) of title
insurance insuring an interest in or title to certain real estate in
______________ County (City) _____________, described in Policy/Commitment No.
_____________ issued by Company and/or described in Exhibit A attached hereto
and made a part hereof without exception to, or providing certain affirmative
insurance against, the following matters (hereinafter referred to as the
Exception):
Defects, liens, encumbrances, adverse claims or other matters, if any,
created, first appearing in the public records on attaching subsequent to
the effective date hereby but prior to the date the proposed insured
acquires for value of record the estate or interest or mortgage thereon
covered by this commitment, other than mechanics' and materialman's claims.
AND WHEREAS, Company is unwilling to so issue such policy(s) unless
indemnified by Indemnitor as hereinafter provided;
AND WHEREAS, Indemnitor has, as an inducement to Company, offered to
indemnify Company against loss or damage which Company may become liable for by
reason of the omission or deletion of the Exception in said Policy or Commitment
against loss, damage, cost or expense which may result from the matters referred
to in the Exception;
NOW, THEREFORE, the condition of this obligation is such that if
Indemnitor, its heirs, administrators, executors, successors, and assigns, or
any of them, shall and do at all times hereinafter well and sufficiently save,
defend, keep harmless, and indemnify Company, its successors and assigns of and
from all loss, damage, cost, change, liability or expense, including court costs
and reasonable attorneys' fees, which it may sustain, suffer or be put to under
its policy or policies of title insurance or otherwise on account of the
omission or deletion of, or affirmative insurance in connection with, the
Exception due to or arising from any act or omission of Indemnitor and in the
event any claims or liens in connection with the Exception are filed of record
which are so due to the action or omission of Indemnitor; shall cause same to be
paid and discharged of record without delay, or otherwise disposed of to
Company's reasonable satisfaction, then this obligation shall be null and void,
otherwise to remain in full force and effect until the date of policy issuance.
<PAGE>
The conditions, covenants, and terms of this Indemnity attached hereto as
Schedule A are incorporated herein by reference.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
this ______ day of __________, 2000.
INDEMNITOR
[PROPERTY OWNER]
By: __________________________
_____________________________(SEAL)
Address: __________________________
__________________________
Telephone: ________________________
<PAGE>
SCHEDULE A TO EXHIBIT G
-----------------------
THE CONDITIONS, COVENANTS, AND TERMS OF THE ATTACHED INDEMNITY ARE:
1. Indemnitor agrees that Company may, in its discretion, report to its
proposed insured the existence of the matters set forth as the Exception and
refuse to so issue such policy(s) of title insurance unless Company is furnished
with satisfactory acknowledgment by the proposed insured that said proposed
insured is aware of the existence of the matters set forth as of title
insurance. The obligations of Indemnitor under this instrument shall continue
until Company has ascertained through a lien search conducted as soon as
possible following the issuance of the policy, that no matters of record have
been filed between the date of the Commitment and the date of the policy.
Company also agrees to conduct a lien search and update the effective date of
the Commitment to a date immediately prior to the date of closing of the
transaction pursuant to which the policy will be issued.
2. Indemnitor agrees that if at any time Company deems it necessary in
order to satisfy its obligations under said policy(s), it may, with notice to
Indemnitor, pay, satisfy, compromise or do any other act reasonably necessary to
obtain a release or discharge of the Exception to the title (provided however,
that such Exception is due to the act or omission of Indemnitor, and Indemnitor
has had a reasonable opportunity to satisfy the obligation itself.) Indemnitor
hereby authorizes and empowers Company to advance and pay any sums reasonably
necessary to obtain a release, discharge or satisfaction of the matters set
forth as the Exception to the title. Indemnitor shall promptly furnish such
funds so expended by Company following demand therefor.
3. If Company shall sustain or incur loss or damage because Indemnitor
failed to provide sufficient funds upon demand by Company, Indemnitor shall
become indebted to Company in amount equal to the loss and expense sustained or
incurred by Company and agrees to repay Company that amount on demand, together
with interest thereon, from the date of demand, at the legal rate for judgments
in the state where the real estate is located.
4. If Indemnitor fails timely to take such steps as in the opinion of
Company are reasonably necessary to remove the matters set forth herein as the
Exception to the title, on or before agreed date as provided herein, Company is
authorized in its reasonable discretion to take whatever steps, including but
not limited to the commencement of legal action or payment of money, that it
determines necessary to remove said matters, and in connection therewith
Indemnitor shall, upon demand, advance to Company all funds necessary, including
all costs, attorneys' fees, and other expenses.
5. Company shall have the right with the reasonable approval of Indemnitor
to select and approve any and all counsel who may be retained by Company or by
Indemnitor to defend any action brought by any party as a result of Company
issuing its policy(s) without showing said Exception, or insuring against loss,
damage, cost or expense which may result from the matters referred to in said
Exception, or any counsel
<PAGE>
retained by Company or Indemnitor to bring any action or to perform any work to
correct the matters shown in the Exception, and Indemnitor agrees promptly to
pay the counsel to selection or approved by Company.
6. In this instrument, wherever the context so requires, the singular
number includes the plural, and where there is more than one person included as
Indemnitor the obligations of this agreement shall be binding on all such
persons jointly and severally. "Policy" shall be deemed to include a binder or
commitment; and "Commitment" shall be deemed to include binder.
7. If any provision hereof is held to be void or unenforceable under the
laws of any place covering its construction or enforcement, this instrument
shall not be void or vitiated thereby, but shall be construed to be in force
with the same effect as though such provision were omitted.
8. The liability of Indemnitor under this instrument is direct and primary
and is not conditioned or contingent upon prior pursuit of any remedies by
Company except demand for performance upon Indemnitor. Indemnitor shall be
liable for and shall pay promptly to Company all costs, expenses and reasonable
attorneys' fees incurred by Company in enforcing its rights hereunder.
9. This instrument shall be binding upon Indemnitor, and its successors
and assigns and shall inure to the benefit of Company, its successors or
assigns, including, without limitation, any other insurer involved in
reinsuring, in any matter, any liabilities of Company under any policy(s) of
title insurance or endorsement(s) thereto issued in reliance hereon.
10. Written notice shall be deemed to have been duly served if delivered
to the person or to a member of the firm or to an officer of the corporation for
whom it was intended, or if delivered at or sent by registered or certified mail
to the appropriate address shown herein.
<PAGE>
EXHIBIT H
FORM OF
FIRPTA AFFIDAVIT
----------------
CERTIFICATION OF NONFOREIGN STATUS
----------------------------------
Section 1445 of the Internal Revenue Code provides that a transferee
(buyer) of a U.S. real property interest must withhold tax if the transferor
(seller) is a foreign person. To inform the transferee (buyer) that withholding
of tax is not required upon the disposition of U.S. real property interest, the
undersigned hereby certify the following:
1. The undersigned are not nonresident aliens for purposes of U.S.
Income taxation;
2. The undersigned's U.S. taxpayer identifying numbers are
identified on Schedule A; and
3. The undersigned's address is:
c/o Susan Glatthorn Johnson, Esq.
General Counsel & Senior Vice President
Echelon International Corporation
450 Carillon Parkway, Suite 200
St. Petersburg, Florida 33716
The undersigned understand that this Certification may be disclosed to
the Internal Revenue Service by the transferee and that any false statement it
has made here could be punished by fine, imprisonment, or both.
Under penalties of perjury the undersigned declare that they have
examined this Certification and to the best of their knowledge and belief it is
true, correct, and complete.
Dated: __________ ___, 2000
[INSERT HERE THE LIST OF SUBS FOR
SUBSCRIPTION AGREEMENT]
By:_____________________________
Name:___________________________
Title:____________________________
<PAGE>
EXHIBIT 7.7
JOINT DIRECTION LETTER
[February] __, 2000
LandAmerica Financial Group
3922 Coconut Palm Drive, Suite 102
Tampa, Florida 33619
Attention: Juanita M. Shuster
Dear Ms. Shuster:
Reference is made to (a) the Purchase and Sale Agreement dated January
__, 2000 (the "Purchase and Sale Agreement") by and among Echelon International
Corporation and certain of its subsidiaries, collectively, as Sellers
(collectively, in such capacity, referred to herein as the "Seller"), and
Echelon Residential LLC, as Buyer (the "Buyer"), and (b) the Subscription
Agreement dated January __, 2000 (the "Subscription Agreement") by and among
Echelon International Corporation and certain of its subsidiaries, collectively,
as Transferor (collectively, in such capacity, referred to herein as the
"Transferor"), and Heller Affordable Housing of Florida, Inc., as Transferee
(the "Transferee"). Unless otherwise defined or provided, capitalized terms
herein shall have the meanings ascribed to such terms in the Purchase and Sale
Agreement or Subscription Agreement, respectively, as the case may be.
This Joint Direction Letter is delivered to LandAmerica Financial
Group as Escrow Agent under the Purchase and Sale Agreement and under the
Subscription Agreement (in such capacity, referred to herein as "Escrow Agent")
pursuant to Section 7.7 of the Purchase and Sale Agreement and Section 7.7 of
the Subscription Agreement and, once delivered by the parties hereto, shall be
irrevocable in all respects.
1. Each of the Seller, the Buyer, the Transferor and the Transferee
hereby expressly acknowledges, agrees, represents and warrants and, to the
extent the following waivers and confirmation may only be validly made by any
other signatory hereto but not by it, based upon and in reliance upon the
acknowledgement, agreement, representations and warranties of such other parties
hereby made, that, except for the conditions described in Sections 6.1(c), (i)
and (j) and 6.2(c), (i) and (j) of the Purchase and Sale Agreement and Sections
6.1(c), (i) and (j) and 6.2(c), (i) and (j) of the Subscription Agreement, each
of the conditions to the closing of the transactions described in the Purchase
and Sale Agreement and the Subscription Agreement (including, without
limitation, conditions based upon (x) the accuracy as of any date of the
<PAGE>
representations and warranties of any party thereto, (y) compliance by any party
thereto with its covenants or other obligations thereunder, and (z) the
deliveries to Escrow Agent of the Escrowed Items required thereby) have been
satisfied or waived as of the date hereof.
2. Each of the Seller and the Buyer hereby represents and warrants
that (a) to the best of its knowledge, after due inquiry, none of the conditions
described in Sections 6.1(i) and (j), and 6.2 (i) and (j) of the Purchase and
Sale Agreement has occurred, and (b) the Purchase and Sale Agreement has not
been amended, supplemented, terminated (pursuant to Section 9 thereof or
otherwise) or otherwise modified, except such amendments, supplements or
modifications as (i) are permitted by the Merger Agreement, (ii) would not
reduce the aggregate Purchase Price and would not affect Sections 7.7, 7.8 or
12.2 of the Purchase and Sale Agreement and (iii) are attached as exhibits
hereto.
3. Each of the Transferor and Transferee hereby represents and
warrants that (a) to the best of its knowledge, after due inquiry, none of the
conditions described in Sections 6.1(i) and (j), and 6.2(i) and (j) of the
Subscription Agreement has occurred, and (b) the Subscription Agreement has not
been amended, supplemented, or terminated (pursuant to Section 9 thereof or
otherwise) or otherwise modified, except such amendments, supplements or
modifications as (i) are permitted by the Merger Agreement, (ii) would not
reduce the aggregate cash portion of the Transfer Value and would not affect
Sections 7.7, 7.8 or 12.2 of the Subscription Agreement and (iii) are attached
as exhibits hereto.
4. The Seller and the Buyer each hereby further confirm to Escrow
Agent that (a) listed on Schedule I hereto is a list of all items required to be
delivered by the Buyer and/or the Seller to Escrow Agent under Sections 7.4 and
7.5 of the Purchase and Sale Agreement (the "Purchase Escrowed Items"), (b) all
such items, including the Purchase Price, have been delivered to Escrow Agent
under the Purchase and Sale Agreement, (c) the amount of the Purchase Price is
$______, and (d) the aggregate amount of Asset Sales Proceeds (as such term is
defined in the Purchase and Sale Agreement) is $______.
5. The Transferor and the Transferee each hereby further confirm that
(a) listed on Schedule II hereto is a list of all items required to be delivered
by the Transferor and/or the Transferee under Sections 7.4 and 7.5 of the
Subscription Agreement (the "Subscription Escrowed Items"), (b) all such items,
including the Transfer Value, have been delivered to Escrow Agent under the
Subscription Agreement, and (c) the amount of the cash portion of the Transfer
Value, after giving effect to any Reduction in Transfer Value as the result of
the consummation on or prior to the date hereof of any Pending Transactions (as
such term is defined in the Subscription Agreement) is $_____[, the Reduction in
Transfer Value is $______ and the Excess Amount (as such term is defined in the
Subscription Agreement is $_______]).
6. The Buyer and the Seller hereby irrevocably instruct you as
follows:
(a) Immediately following the filing by Escrow Agent of the Articles
of Merger with respect to the Merger with the Department of State of the State
of Florida or the receipt by Escrow Agent of notice that such filing has
occurred, the Purchase Escrowed Items shall be promptly delivered by Escrow
Agent to the party entitled to same and, in particular,
2
<PAGE>
(i) the Purchase Price shall be delivered, by wire transfer of immediately
available funds, to the Surviving Corporation or as it shall direct; and
(ii) the aggregate amount of Asset Sales Proceeds shall be delivered, by wire
transfer of immediately available funds, to the Buyer or as it shall
direct.
(b) If (i) the Purchase and Sale Agreement has been terminated
pursuant to Section 9.1 thereof, or (ii) the Tender Offer Expiration Date does
---
not occur on or prior to the third Business Day after the date hereof, the
Purchase Escrowed Items shall be promptly delivered by Escrow Agent to the party
which had previously deposited same with Escrow Agent, and these instructions
shall cease to have any effect.
7. The Transferor and the Transferee hereby irrevocably instruct
Escrow Agent as follows:
(a) Immediately following the filing by Escrow Agent of the Articles
of Merger with respect to the Merger with the Department of State of the State
of Florida or the receipt by Escrow Agent of notice that such filing has
occurred, the Subscription Escrowed Items shall be promptly delivered by Escrow
Agent to the party entitled to same and, in particular,
(i) the Preferred Stock shall be delivered to the Surviving Corporation;
(ii) the cash portion of the Transfer Value plus the amount of any Reduction in
Transfer Value shall be delivered, by wire transfer of immediately
available funds, to the Surviving Corporation or as it shall direct;
(iii) an amount equal to fifteen (15%) percent of the Excess Amount shall be
delivered, by wire transfer of immediately available funds, to Echelon
Commercial LLC or as it shall direct; and
(iv) an amount equal to eighty-five (85%) percent of such Excess Amount shall
be delivered, by wire transfer of immediately available funds, to the
Transferee for credit to the Cash Collateral Account (as such term is
defined in the Heller Lease).
(b) If (i) the Subscription Agreement has been terminated pursuant to
Section 9.1 thereof, or (ii) the Tender Offer Expiration Date does not occur on
---
or prior to the third Business Day after the date hereof, the Subscription
Escrowed Items shall be promptly delivered by Escrow Agent to the party which
had previously deposited same with Escrow Agent, and these instructions shall
cease to have any effect.
8. These instructions may not be revoked, modified, superseded or
amended, without the prior written consent of each of the Seller, the Buyer, the
Transferee, the Transferor, and EIN Acquisition Corp.
3
<PAGE>
Please acknowledge your receipt hereof and of each of the Purchase
Escrowed Items, and Subscription Escrowed Items, including the Purchase Price
and the Transfer Value, and your agreement, irrevocably, to comply herewith, by
signing the enclosed copies of this letter and delivering copies hereof to each
of the Buyer, the Seller, the Transferee, the Transferor, and EIN Acquisition
Corp. EIN Acquisition Corp. is joining in the execution hereof for the purpose
of acknowledging its receipt hereof and agreement to be bound hereby, subject to
all of the terms and conditions hereof.
IN WITNESS WHEREOF, this irrevocable Joint Direction Letter has been
signed this __ day of [February], 2000.
ECHELON INTERNATIONAL CORP., [list all
subsidiaries parties to Purchase and Sale
Agreement], as Seller
By:
___________________________________
Name:
Title:
ECHELON INTERNATIONAL CORP.,
[list all subsidiaries party to Subscription
Agreement], as Transferor
By:
___________________________________
Name:
Title:
ECHELON RESIDENTIAL LLC, as Buyer
By:
___________________________________
Name:
Title:
HELLER AFFORDABLE HOUSING OF
FLORIDA, INC., as Transferee
By:_______________________________
Name:_____________________________
Title:___________________________
4
<PAGE>
ACKNOWLEDGED AND AGREED:
LANDAMERICA FINANCIAL GROUP
By:__________________________
Name:__________________________
Title:__________________________
RECEIPT ACKNOWLEDGED:
EIN ACQUSITION CORP.
By:_______________________________
Name:_____________________________
Title:____________________________
5
<PAGE>
EXHIBIT 7.8
JOINT INSTRUCTION LETTER
[February] __, 2000
LandAmerica Financial Group
3922 Coconut Palm Drive, Suite 102
Tampa, Florida 33619
Attention: Juanita M. Shuster
Dear Ms. Shuster:
Reference is made to (a) the Purchase and Sale Agreement dated January __,
2000 (the "Purchase and Sale Agreement") by and among Echelon International
Corporation and certain of its subsidiaries, collectively, as Sellers
(collectively, in such capacity, referred to herein as the "Seller"), and
Echelon Residential LLC, as Buyer (the "Buyer"), (b) the Subscription Agreement
dated January __, 2000 (the "Subscription Agreement") by and among Echelon
International Corporation and certain of its subsidiaries, collectively, as
Transferor (collectively, in such capacity, referred to herein as the
"Transferor"), and Heller Affordable Housing of Florida, Inc., as Transferee
(the "Transferee"), and (c) that certain Joint Direction Letter of even date
herewith made by the Seller, the Buyer, the Transferor and the Transferee and
delivered to you pursuant to Sections 7.7 of the Purchase and Sale Agreement and
Section 7.7 of the Subscription Agreement (the "Joint Direction Letter").
Unless otherwise defined or provided, capitalized terms herein shall have the
meanings ascribed to such terms in the Purchase and Sale Agreement or
Subscription Agreement, respectively, as the case may be.
This Joint Instruction Letter is delivered to LandAmerica Financial Group
as Escrow Agent under the Purchase and Sale Agreement and under the Subscription
Agreement (in such capacity, referred to in herein as "Escrow Agent") pursuant
to Section 7.8 of the Purchase and Sale Agreement and Section 7.8 of the
Subscription Agreement and, once delivered by the parties hereto, shall be
irrevocable in all respects. A copy of this Joint Instruction Letter shall be
delivered by Escrow Agent to EIN Acquisition Corp., a Florida corporation,
("EIN") and to Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank
Nederland", New York Branch, for the benefit of itself and Utrecht-America
Finance Co. (collectively "Lender") and may be relied upon by EIN and Lender as
if it had been addressed to them directly.
1. Each of the Buyer and the Transferee hereby expressly acknowledges,
agrees, represents and warrants and, to the extent the following waivers and
confirmation may
<PAGE>
only be validly made by the other party hereto or by any other signatory to the
Joint Direction Letter but not by it, based upon and in reliance upon, but not
in any event subject to, the waivers and acknowledgements of such other parties
hereby and thereby made, that, except for the conditions described in Sections
6.1(c), (i) and (j) and 6.2(c), (i) and (j) of the Purchase and Sale Agreement
and Sections 6.1(c), (i) and (j) and 6.2(c), (i) and (j) of the Subscription
Agreement, each of the conditions to the closing of the transactions described
in the Purchase and Sale Agreement and the Subscription Agreement (including,
without limitation, conditions based upon (x) the accuracy as of any date of the
representations and warranties of any party thereto, (y) compliance by any party
thereto with its covenants or other obligations thereunder, and (z) the
deliveries to Escrow Agent of the Escrowed Items required hereby or thereby)
have been satisfied or waived as of the date hereof.
2. The Buyer hereby represents and warrants that (a) to its knowledge,
none of the conditions described in Sections 6.1(i) and (j), and 6.2 (i) and (j)
of the Purchase and Sale Agreement has occurred, and (b) the Purchase and Sale
Agreement has not been amended, supplemented, terminated (pursuant to Section 9
thereof or otherwise) or otherwise modified, except such amendments, supplements
or modifications as (i) are permitted by the Merger Agreement, (ii) would not
reduce the aggregate Purchase Price and would not affect Sections 7.7, 7.8, or
12.2 of the Purchase and Sale Agreement and (iii) are attached as exhibits
hereto. On the Closing Date under the Purchase and Sale Agreement, Buyer agrees
to deliver to Escrow Agent a certificate reconfirming for the benefit of Escrow
Agent, EIN and Lender the representations and warranties of the preceding
sentence together with the other items required to be delivered to EIN as
provided in Section 7.8 of the Purchase and Sale Agreement.
3. The Transferee hereby represents and warrants that (a) to its
knowledge, none of the conditions described in Sections 6.1(i) and (j), and
6.2(i) and (j) of the Subscription Agreement has occurred, and (b) the
Subscription Agreement has not been amended, supplemented, or terminated
(pursuant to Section 9 thereof or otherwise) or otherwise modified, except such
amendments, supplements or modifications as (i) are permitted by the Merger
Agreement, (ii) would not reduce the aggregate cash portion of the Transfer
Value and would not affect Sections 7.7, 7.8, or 12.2 of the Subscription
Agreement and (iii) are attached as exhibits hereto. On the Closing Date under
the Subscription Agreement, the Transferee agrees to deliver to Escrow Agent a
certificate reconfirming for the benefit of Escrow Agent, EIN and Lender the
representations and warranties of the preceding sentence together with the other
items required to be delivered to EIN as provided in Section 7.8 of the
Subscription Agreement.
4. The Buyer hereby further confirms that (a) listed on Schedule I hereto
is a list of all items required to be delivered by the Buyer and/or the Seller
to Escrow Agent under Sections 7.4 and 7.5 of the Purchase and Sale Agreement
(the "Purchase Escrowed Items"),
<PAGE>
(b) all such items, including the Purchase Price, have been delivered to Escrow
Agent under the Purchase and Sale Agreement, (c) the amount of the Purchase
Price is $______, (d) the aggregate amount of Asset Sales Proceeds (as such term
is defined in the Purchase and Sale Agreement) is $_______, and (e) the Joint
Direction Letter required by Section 7.7 of the Purchase and Sale Agreement has
been delivered by the Buyer and the Seller to Escrow Agent.
5. The Transferee hereby further confirms that (a) listed on Schedule II
hereto is a list of all items required to be delivered by the Transferor and/or
the Transferee under Sections 7.4 and 7.5 of the Subscription Agreement (the
"Subscription Escrowed Items"), (b) all such items, including the Transfer
Value, have been delivered to Escrow Agent under the Subscription Agreement, (c)
the amount of the cash portion of the Transfer Value, after giving effect to any
Reduction in Transfer Value as the result of the consummation on or prior to the
date hereof of any Pending Transactions (as such term is defined in the
Subscription Agreement) is $_____[, the Reduction in Transfer Value is $______
and the Excess Amount (as such term is defined in the Subscription Agreement is
$_______]), and (d) the Joint Direction Letter required by Section 7.7 of the
Subscription Agreement has been delivered by the Transferor and the Transferee
to Escrow Agent.
6. The Buyer hereby irrevocably, and without condition except as provided
in this paragraph, instructs Escrow Agent as follows:
(a) immediately following the filing by Escrow Agent of the Articles of
Merger with respect to the Merger with the Department of State of the State of
Florida or the receipt by Escrow Agent of notice that such filing has occurred,
the Purchase Escrowed Items shall be promptly delivered by Escrow Agent to the
party entitled to same and, in particular,
(i) the Purchase Price shall be delivered, by wire transfer of immediately
available funds, to the Surviving Corporation or as it shall direct; and
(ii) the aggregate amount of Asset Sales Proceeds shall be delivered, by wire
transfer of immediately available funds, to the Buyer as follows:
[Echelon Residential LLC wire instructions].
(b) If (i) the Purchase and Sale Agreement has been terminated pursuant
to Section 9.1 thereof, or (ii) the Tender Offer Expiration Date does not occur
---
on or prior to the third Business Day after the date hereof, the Purchase
Escrowed Items shall be promptly delivered by Escrow Agent to the party which
had previously deposited same with Escrow Agent, and these instructions shall
cease to have any effect.
<PAGE>
7. The Transferee hereby irrevocably, and without condition except as
provided in this paragraph, instructs Escrow Agent as follows:
(a) immediately following the filing by Escrow Agent of the Articles of
Merger with respect to the Merger with the Department of State of the State of
Florida or the receipt by Escrow Agent of notice that such filing has occurred,
the Subscription Escrowed Items shall be promptly delivered by Escrow Agent to
the party entitled to same and, in particular,
(i) the Preferred Stock shall be delivered to the Surviving Corporation;
(ii) the cash portion of the Transfer Value plus the amount of any Reduction
in Transfer Value shall be delivered, by wire transfer of immediately
available funds, to the Surviving Corporation or as it shall direct;
(iii) an amount equal to fifteen (15%) percent of any Excess Amount shall be
delivered, by wire transfer of immediately available funds, to Echelon
Commercial LLC as follows: [Echelon Commercial LLC wire instructions];
and
(iv) an amount equal to eighty-five (85%) percent of such Excess Amount shall
be delivered, by wire transfer of immediately available funds, to the
Transferee for credit to the Cash Collateral Account (as such term is
defined in the Heller Lease) as follows: [Heller Affordable Housing of
Florida Inc., Cash Collateral Account wire instructions].
(b) If (i) the Subscription Agreement has been terminated pursuant to
Section 9.1 thereof, or (ii) the Tender Offer Expiration Date does not occur on
---
or prior to the third Business Day after the date hereof, the Subscription
Escrowed Items shall be promptly delivered by Escrow Agent to the party which
had previously deposited same with Escrow Agent, and these instructions shall
cease to have any effect.
8. These instructions may not be revoked, modified, superseded or amended,
without the prior written consent of each of the Buyer, the Transferee, EIN and
Lender.
Please acknowledge your receipt hereof and of each of the Joint Direction
Letter, Purchase Escrowed Items, and Subscription Escrowed Items, including the
Purchase Price and the Transfer Value, and your agreement, irrevocably, to
comply herewith, by signing the enclosed copies of this letter and delivering
copies hereof to each of the Buyer, the Transferee, EIN and Lender. EIN and
Lender and joining in the execution hereof for the purpose of acknowledging
their receipt hereof and agreement to be bound hereby, subject to all of the
terms and conditions hereof.
<PAGE>
IN WITNESS WHEREOF, this irrevocable Joint Instruction Letter has been
signed this __ day of [February], 2000.
ECHELON RESIDENTIAL LLC, as Buyer
By:
Name:______________________________
Title:_____________________________
HELLER AFFORDABLE HOUSING OF
FLORIDA, INC., as Transferee
By:
Name:______________________________
Title:_____________________________
ACKNOWLEDGED AND AGREED:
LANDAMERICA FINANCIAL GROUP
By:____________________________
Name:_______________________
Title:________________________
RECEIPT ACKNOWLEDGED:
EIN ACQUSITION CORPORATION
By:____________________________
Name:_______________________
Title:________________________
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A
"RABOBANK NEDERLAND", NEW YORK BRANCH
By:____________________________
Name:_______________________
Title:________________________
<PAGE>
EXHIBIT (D)(4)
================================================================================
LEASE AGREEMENT
Dated as of January 21, 2000
between
HELLER AFFORDABLE HOUSING OF FLORIDA, INC.,
as the Lessor
and
ECHELON COMMERCIAL LLC,
as the Lessee
================================================================================
<PAGE>
LEASE AGREEMENT
THIS LEASE AGREEMENT (this "Lease"), dated as of January 21, 2000, between
-----
HELLER AFFORDABLE HOUSING OF FLORIDA, INC., a Florida corporation having an
address at 500 West Monroe Street, Chicago IL 60661 (the "Lessor"), and ECHELON
------
COMMERCIAL LLC, a Delaware limited liability company having an address at 450
Carillon Parkway, Suite 200, St. Petersburg FL 33716 (the "Lessee"),
-------
W I T N E S S E T H:
WHEREAS, the Lessor desires to lease to the Lessee, and the Lessee desires
to lease from the Lessor, the Properties (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
I.1 Definitions. Unless a clear contrary intention appears, terms defined
-----------
herein have the respective indicated meanings when used herein.
"Accrued Rent" means (i) the amount of Basic Rent which would have been
------------
payable pursuant to the definition of "Basic Rent" without reduction, however,
for Average Cash Collateral Balance provided for in clause (y) of such
definition, less (ii) the Basic Rent actually payable pursuant to the definition
of Basic Rent.
"Affiliate" means, when used with respect to any Person, any other Person
---------
directly or indirectly Controlling or Controlled by or under direct or indirect
common control with such Person.
"After Tax Basis" means, with respect to any payment to be received, the
---------------
amount of such payment increased so that, after deduction of the amount of all
taxes required to be paid by the recipient (including any Taxes otherwise
excluded by this Lease and assuming for this purpose that such recipient was
subject to taxation at the maximum marginal federal, state and local tax rates
applicable to such recipient for the year in which such income is taxable) with
respect to the receipt by the recipient of such amounts, such increased payment
(as so reduced) is equal to the payment otherwise required to be made.
"Applicable Law" means all existing and future applicable laws, rules,
--------------
regulations (including Environmental Laws) statutes, treaties, codes,
ordinances, permits, certificates, orders and licenses of and interpretations
by, any Governmental Authority, and applicable judgments, decrees, injunctions,
writs, orders or like action of any court, arbitrator or other administrative,
judicial or quasi-judicial tribunal or agency of competent jurisdiction,
including those pertaining
1
<PAGE>
to health, safety or the environment (including, without limitation, wetlands)
and those pertaining to the construction, use or occupancy of the Property
(including all building, zoning and fire codes and the Americans with
Disabilities Act of 1990, 42 U.S.C. (S)(S) 1201 et seq. and any other similar
Federal, state or local laws or ordinances and the regulations promulgated
thereunder) and any restrictive covenant or deed restriction or easement of
record affecting any Property.
"Appraisal" means an appraisal of any Property, which appraises the fair
---------
market value of the Property as of the Commencement Date and complies with all
FIRREA requirements, in form and substance satisfactory to the Lessor, prepared
by a reputable appraiser selected by the Lessor.
"Architect" means, with respect to any Property, the architect acting in
---------
such capacity.
"Average Cash Collateral Account Balance" means the average amount on
---------------------------------------
deposit in the Cash Collateral Account for any month, determined as one-half of
the sum of (i) the amount on deposit in the Cash Collateral Account as of the
first calendar day of such month, and (ii) the amount on deposit in the Cash
Collateral Account as of the last calendar day of such month.
"Average Lease Balance" means the average Lease Balance for any month,
---------------------
determined as one-half of the sum of (i) the Lease Balance as of the first
calendar day of such month, and (ii) the Lease Balance as of the last calendar
day of such month.
"Basic Rent" means (A) from the Commencement date and until January 31,
----------
2003, the monthly amount determined as (i) the product of (x) the Lease Rate,
multiplied by (y) the Average Lease Balance for such month reduced by the
Average Cash Collateral Balance for such month, plus (ii) the interest and other
----
earnings with respect to amounts on deposit in the Cash Collateral Account, and
(B) from and after February 1, 2003 and until the Expiration Date, the amount
determined pursuant to clause (i) of this definition plus a monthly amount equal
----
to twenty-five percent of the Supplemental Rent for such month, as adjusted and
pro-rated for the months which include the Commencement Date and the Expiration
Date.
"Borrower" means the obligor under a Note.
--------
"Borrowers" means all of the obligors under the Notes.
---------
"Business Day" means each day which is not a day on which banks in New
------------
York, New York are generally authorized or obligated, by law or executive order,
to close.
"Carillon Parcels" means those ten parcels of land identified as the
----------------
Carillon Parcels on Schedule 1 attached hereto.
----------
"Cash Collateral Account" means the Cash Collateral Account maintained
-----------------------
pursuant to the Cash Collateral Agreement.
-2-
<PAGE>
"Cash Collateral Agreement" means the Cash Collateral Agreement, dated as
-------------------------
of the Commencement Date, between the Lessor and the Lessee, in the form
attached hereto as Exhibit A or as mutually agreed between the Lessor and the
---------
Lessee.
"Casualty" means any damage or destruction of all or any portion of any
--------
Property as a result of a fire or other casualty.
"CERCLA" means the Comprehensive Environmental Response, Compensation, and
------
Liability Act of 1980, 42 U.S.C. (S)(S) 9601 et seq., as amended by the
-- ---
Superfund Amendments and Reauthorization Act of 1986.
"Certifying Party" is defined in Section 25.1 of this Lease.
---------------- ------------
"Claims" means any and all obligations, liabilities, losses, actions,
------
suits, judgments, penalties, fines, claims, demands, settlements, costs and
expenses (including, without limitation, reasonable legal fees and expenses) of
any nature whatsoever.
"Code" means the Internal Revenue Code of 1986, as amended from time to
----
time, or any successor statute thereto.
"Collateral Documents" means, with respect to each Loan, each and every
--------------------
document or account or security evidencing, securing or otherwise relating to
such Loan, including, without limitation, any mortgage, security agreement, UCC
financing statements, regulatory agreement, assignment of rents, pledge
agreement, guaranty, indemnification agreement, assignment of management
agreement, assignment of stock or partnership units, title insurance policies,
tax and insurance escrows, letters of credit, certificates of deposit or
deposits or escrows of any kind, fire and casualty insurance policies (or
certificates evidencing such policies), flood hazard insurance policies, other
insurance and other documents, agreements or instruments under which legal
rights or obligations are created or exist, if any, provided to the Lessor to
evidence or secure the Loan and held by the Lessor.
"Commencement Date" means the date of the "Closing" as defined in the
-----------------
Subscription Agreement.
"Condemnation" means any condemnation, requisition, confiscation, seizure
------------
or other taking or sale of the use, access, occupancy, easement rights or title
to any Property or any part thereof, wholly or partially (temporarily or
permanently), by or on account of any actual or threatened eminent domain
proceeding or other taking of action by any Person having the power of eminent
domain, including an action by a Governmental Authority to change the grade of,
or widen the streets adjacent to, such Property or alter the pedestrian or
vehicular traffic flow to the Property so as to result in change in access to
the Property, or by or on account of an eviction by paramount title or any
transfer made in lieu of any such proceeding or action. A "Condemnation" shall
------------
be deemed to have occurred on the earliest of the dates that use, occupancy or
title vests in the condemning authority.
-3-
<PAGE>
"Control" means (including the correlative meanings of the terms
-------
"controlled by" and "under common control with"), as used with respect to any
Person, the possession directly or indirectly, of the power to direct or cause
the direction of the management policies of such Person, whether through the
ownership of voting securities or by contract or otherwise. A Person shall be
deemed to be controlling another Person if the first Person, or wholly owned
subsidiary of that Person, owns 51% or more of the other Person.
"Debt" means, for any Person, (i) all indebtedness of such Person for
----
borrowed money or for the deferred purchase price of property or services, (ii)
all obligations of such Person under any conditional sale or other title
retention agreement relating to property purchased by such Person, (iii) all
indebtedness for borrowed money or for the deferred purchase price of property
or services secured by (or for which the holder of such indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on any
property owned by such Person, whether or not such indebtedness has been
assumed, and (iv) all obligations of such Person as lessee under leases that
have been or should be, in accordance with generally accepted accounting
principles, recorded as capital leases.
"Default" means any event or condition which, with the lapse of time or the
-------
giving of notice, or both, would constitute an Event of Default.
"Development Properties" means those of the Properties identified as
----------------------
Catalina, The Reserve, Memorial Creek, Woodland Park, Mission Ranch and
Northlake on Schedule 1.
----------
"Dollars" and "$" mean dollars in lawful currency of the United States of
------- -
America.
"Early Buy-Out Option" is defined in Section 22.1 of this Lease.
-------------------- ------------
"Early Buy-Out Closing Date" is defined in Section 22.1 of this Lease.
-------------------------- ------------
"Early Buy-Out Notice" is defined in Section 22.1 of this Lease.
-------------------- ------------
"Early Buy-Out Price" for any Property as of the date of this Lease is the
-------------------
amount set forth for such Property on Schedule 6. The "Early Buy-Out Price" for
----------
any Property or Loan subsequent to the Commencement Date is the sum of (a) the
then outstanding balance of the Senior Loan with respect to such Property or
Loan, plus (b) an amount equal to the Lessor's Cost for such Property or Loan,
----
plus (c) the Lessor's Cost for such Property less (the amount in the Cash
- - ---- ----
Collateral Account multiplied by a fraction, the numerator being the Lessor's
Cost for such Property or Loan and the denominator being the aggregate of the
Lessor's Costs for the remaining Properties and Loans) multiplied by .0033333
for each calendar month (pro rated for any partial month on the basis of a 30-
day month and 360 day year) elapsed since the Commencement Date, compounded
monthly, plus (d) all accrued and unpaid Basic Rent and Supplemental Rent with
----
respect to such Property owing on the Early Buy-Out Closing Date or other date
of payment of the Early Buy-Out Price.
"Employee Benefit Plan" means an employee benefit plan (within the meaning
---------------------
of Section 3(3) of ERISA, including any multiemployer plan (within the meaning
of Section 3(37)(A) of
-4-
<PAGE>
ERISA)), or any "plan" as defined in Section 4975(e)(1) of the Code and as
interpreted by the Internal Revenue Service and the Department of Labor in
rules, regulations, releases or bulletins in effect on the Documentation Date.
"Environmental Audit" means a Phase One environmental site assessment (the
-------------------
scope and performance of which meets or exceeds ASTM Standard Practice E1527-93
Standard Practice for Environmental Site Assessments: Phase One Environmental
Site Assessment Process) of the Property, and, if called for by the Lessor, a
Phase Two environmental site assessment.
"Environmental Law" means, whenever enacted or promulgated, any applicable
-----------------
Federal, state, county or local law, statute, ordinance, rule, regulation,
license, permit, authorization, approval, covenant, criteria, administrative or
court order, judgment, decree, injunction, code or requirement or any agreement
with a Governmental Authority:
(x) relating to pollution (or the cleanup, removal, remediation or
encapsulation thereof, or any other response thereto), or the regulation or
protection of human health, safety or the environment, including air,
water, vapor, surface water, groundwater, drinking water, land (including
surface or subsurface), plant, aquatic and animal life, or
(y) concerning exposure to, or the use, containment, storage, recycling,
treatment, generation, discharge, emission, Release or threatened Release,
transportation, processing, handling, labeling, containment, production,
disposal or remediation of any Hazardous Substance, Hazardous Condition or
Hazardous Activity.
Applicable laws include, but are not limited to, CERCLA; the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. (S) 6901 et seq.; the Federal
-- ---
Water Pollution Control Act, 33 U.S.C. (S) 1251 et seq.; the Clean Air Act, 42
-- ---
U.S.C. (S)(S) 7401 et seq.; the National Environmental Policy Act, 42 U.S.C. (S)
-- ---
4321; the Refuse Act, 33 U.S.C. (S)(S) 401 et seq.; the Hazardous Materials
-- ---
Transportation Act of 1975, 49 U.S.C. (S)(S) 1801-1812; the Toxic Substances
Control Act, 15 U.S.C. (S)(S) 2601 et seq.; the Federal Insecticide, Fungicide,
-- ---
and Rodenticide Act, 7 U.S.C. (S)(S) 136 et seq.; the Safe Drinking Water Act,
-- ---
42 U.S.C. (S)(S) 300f et seq., and the Occupational Safety and Health Act of
-- ---
1970, each as amended and as now or hereafter in effect, and their state and
local counterparts or equivalents, including any regulations promulgated
thereunder.
"Environmental Violation" means any activity, occurrence or condition that
-----------------------
violates or results in non-compliance with any Environmental Law with respect to
or affecting the Property.
"Equipment" means equipment, apparatus, furnishings, fittings and personal
---------
property of every kind and nature whatsoever purchased, leased or otherwise
acquired by the Lessee, and now or subsequently attached to, contained in or
used or usable in any way in connection with any operation or letting of the
Property, including but without limiting the generality of the foregoing, all
screens, awnings, shades, blinds, curtains, draperies, artwork, carpets, rugs,
storm doors and windows, shelving, furniture and furnishings, heating,
electrical, and mechanical equipment, lighting, switchboards, plumbing,
ventilation, air conditioning and air-cooling apparatus, refrigerating, and
incinerating equipment, escalators, elevators, loading and unloading equipment
and systems, stoves, ranges, laundry equipment, cleaning systems (including
window
-5-
<PAGE>
cleaning apparatus), telephones, communication systems (including satellite
dishes and antennae), televisions, computers, sprinkler systems and other fire
prevention and extinguishing apparatus and materials, security systems, motors,
engines, machinery, pipes, pumps, tanks, conduits, appliances, fittings and
fixtures of every kind and description.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time or any successor Federal statute.
"Event of Default" is defined in Section 19.1 of this Lease.
---------------- ------------
"Event of Loss" is defined in Section 18.1 of this Lease.
------------- ------------
"Excess Proceeds" means, with respect to any Property or Loan, the Net
---------------
Proceeds received by the Lessor less the Early Buy-Out Price.
----
"Expiration Date" means, unless this Lease shall have been earlier
---------------
terminated in accordance with the provisions of this Lease, the earlier of (i)
the date that the last Property is sold pursuant to the terms of Articles XXI or
------------
XXII or otherwise pursuant to the terms of this Lease, or (ii) January 31,
- - ----
2010.
"Fair Market Sales Value" means (i) the Fair Market Sales Value as mutually
-----------------------
determined by the Lessor and the Lessee, or (ii) in the event that the Lessor
and the Lessee cannot mutually agree upon a Fair Market Sales Value, the Fair
Market Sales Value as determined as follows: the Lessor and the Lessee shall
each retain an MAI appraisal firm to appraise the Property or Properties (or
Loan or Loans) in question. If the two appraisals vary by less than five
percent, the market value shall be the average of the two. If the appraisals
vary by more than five percent, then the two appraisal firms shall choose
another appraisal firm, which firm shall render its opinion of value. If a third
firm is retained, the Fair Market Sales Value shall be the average of the two
appraisals closest in value. If the Lessee fails to retain an appraiser within
ten days of the Lessor's written request, the Fair Market Sales Value shall be
determined by the Lessor's appraiser and, in such case, the determination so
made shall be conclusive and binding on the Lessor and the Lessee. If the Lessor
fails to retain an appraiser within ten days of the Lessee's written request,
the Fair Market Sales Value shall be determined by the Lessee's appraiser and,
in such case, the determination so made shall be conclusive and binding on the
Lessor and the Lessee.
"Fixtures" means all fixtures relating to the Improvements, including all
--------
components thereof, located in or on the Improvements, together with all
replacements, modifications, alterations and additions thereto.
"Full Collateralization" means that the balance in the Cash Collateral
----------------------
Account is equal to or greater than the sum of (a) the Lease Balance, and (b)
---
Recourse Debt.
"GAAP" means United States generally accepted accounting principles in
----
effect from time to time.
-6-
<PAGE>
"Governmental Action" means all permits, authorizations, registrations,
-------------------
consents, approvals, waivers, exceptions, variances, orders, judgments, written
interpretations, decrees, licenses, exemptions, publications, filings, notices
to and declarations of or with, or required by, any Governmental Authority, or
required by any Applicable Law, and shall include, without limitation, all
environmental and operating permits and licenses that are required for the full
use, occupancy, zoning and operation of any Property.
"Governmental Authority" means any nation or government, any state or other
----------------------
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Gross Proceeds" is defined in Section 22.1(g) of this Lease.
-------------- ---------------
"Guarantor" means AFG Investment Trust A, AFG Investment Trust B, AFG
---------
Investment Trust C, and AFG Investment Trust D, each a Delaware business trust.
"Guarantee" means the Guarantee, dated as of the Commencement Date,
---------
between the Guarantor and the Lessor, in the form attached hereto as Exhibit B
---------
or as mutually agreed between the Lessor and the Lessee.
"Guarantee Event of Default" means any event of default under the
--------------------------
Guarantee.
"Hazardous Activity" means any activity, process, procedure or undertaking
------------------
that directly or indirectly (i) produces, generates or creates any Hazardous
Substance; (ii) causes or results in (or threatens to cause or result in) the
Release of any Hazardous Substance into the environment (including air, water
vapor, surface water, groundwater, drinking water, land (including surface or
subsurface), plant, aquatic and animal life; (iii) involves the containment or
storage of any Hazardous Substance; or (iv) would be regulated as hazardous
waste treatment, storage or disposal within the meaning of any Environmental
Law.
"Hazardous Condition" means any condition that violates or threatens to
-------------------
materially violate, or that results in or threatens to result in a requirement
to clean up or remediate any Property under, any Environmental Law.
"Hazardous Substance" means any of the following: (i) any petroleum or
-------------------
petroleum product, explosives, radioactive materials, asbestos,
ureaformaldehyde, polychlorinated biphenyls, lead and radon gas; (ii) any
substance, material, product, derivative, compound or mixture, mineral,
chemical, waste, gas, medical waste, or pollutant, that is toxic, harmful or
hazardous to the environment or human health or safety, as defined under any
Environmental Law; or (iii) any substance, material, product, derivative,
compound or mixture, mineral, chemical, waste, gas, medical waste or pollutant
that would support the assertion of any claim under any Environmental Law,
whether or not defined as hazardous as such under any Environmental Law.
-7-
<PAGE>
"Heller Guarantee" means the Guarantee, dated as of the Commencement Date,
----------------
between Heller Financial, Inc. and the Lessee, in the form attached hereto as
Exhibit C or as mutually agreed between the Lessor and the Lessee.
- - ---------
"Impositions" means any and all liabilities, losses, expenses and costs of
-----------
any kind whatsoever for fees, taxes, levies, imposts, duties, charges,
assessments or withholdings of any nature whatsoever ("Taxes") (including,
-----
without limitation, (i) real and personal property taxes, including personal
property taxes on the Properties covered by this Lease that are classified by
any Governmental Authorities as personal property, and real estate or ad valorem
taxes in the nature of property taxes; (ii) sales taxes, use taxes and other
similar taxes (including rent taxes and intangibles taxes); (iii) any excise
taxes; (iv) transfer taxes, conveyance taxes, mortgage taxes, intangible taxes,
stamp taxes and documentary recording taxes and fees; (v) assessments on the
Properties, including all assessments for public improvements or benefits,
whether or not such improvements are commenced or completed within the Term);
and (vi) any Tax, Lien and assessment or charge asserted, imposed or possessed
by the PBGC, and in each case all interest, additions to tax and penalties
thereon, which at any time may be levied, assessed or imposed by any
Governmental Authority upon or with respect to (a) any Indemnitee, any Property
or any part thereof or interest therein, or the Lessee or any sublessee or user
of the Property; (b) the financing, refinancing, demolition, construction,
substitution, subleasing, assignment, control, condition, occupancy, servicing,
maintenance, repair, ownership, possession, purchase, rental, lease, activity
conducted on, delivery, insuring, use, operation, improvement, transfer, return
or other disposition of any Property or any part thereof or interest therein;
(c) the rentals, receipts or earnings arising from the Properties or any part
thereof or interest therein; (d) the Loan Documents or any payment made or
accrued pursuant thereto; (e) the income or other proceeds received with respect
to the Property or any part thereof or interest therein upon the sale or
disposition thereof; (f) any contract relating to the construction, acquisition
or delivery of the Improvements or any part thereof or interest therein; or (g)
otherwise in connection with the transactions contemplated by the Transaction
Documents).
The term "Imposition" shall not mean or include the following:
(i) Taxes and impositions (other than Taxes that are, or are in the nature
of, sales, use, rental, transfer or property taxes) that are imposed by the
United States federal government and that are based upon or measured by the
gross or net income or gross or net receipts (including any minimum taxes) of a
Property; provided that this clause (i) shall not be interpreted to prevent a
-------- ----------
payment from being made on an After Tax Basis if such payment is otherwise
required to be so made;
(ii) any Tax or imposition for so long as, but only for so long as, it is
being contested in accordance with the provisions of Section 24.4(b) of this
---------------
Lease, provided that the foregoing shall not limit the Lessee's obligation under
--------
Section 24.4(b) of this Lease to advance to such Indemnitee amounts with respect
- - ---------------
to Taxes that are being contested in accordance with Section 24.4(b) of this
---------------
Lease or any expenses incurred by such Indemnitee in connection with such
contest;
-8-
<PAGE>
(iii) Taxes imposed on or with respect to or payable by any Indemnitee
based on, measured by or imposed with respect to any fees received by such
Indemnitee;
(iv) any Taxes imposed against or payable by an Indemnitee resulting from,
or that would not have been imposed but for, the gross negligence or willful
misconduct of such Indemnitee itself (as opposed to gross negligence or willful
misconduct imputed to such Indemnitee), but not Taxes imposed as a result of
ordinary negligence of such Indemnitee; and
(v) any Taxes that are or are in the nature of franchise, income, value
added, gross receipts, privilege and doing business taxes, license and
registration fees.
"Improvements" means all buildings, structures, Fixtures and other
------------
improvements of every kind existing at any time and from time to time on or
under the Land, together with any and all appurtenances to such buildings,
structures or improvements, including sidewalks, utility pipes, conduits and
lines, parking areas and roadways, and including all Modifications and other
additions to or changes in the Improvements at any time.
"Indemnitee" means the Lessor and their respective successors, permitted
----------
assigns, directors, shareholders, partners, officers, employees, agents and
Affiliates.
"Institutional Lender" means a savings bank, a savings and loan
--------------------
association, a commercial bank or trust company (whether acting individually or
in a fiduciary capacity), or an insurance company, in each case organized and
existing under the laws of its state or country of formation or any political
subdivision thereof or the United States or any state thereof, a real estate
investment trust, a religious, educational or eleemosynary institution, a
governmental agency, body or entity, an employee, benefit, pension or retirement
plan or fund, a commercial credit corporation, an investment bank, a commercial
bank or trust company acting as trustee or fiduciary of various pension funds or
tax-exempt funds, or as trustee in connection with the issuance of any bonds or
any other debt financing, a special purpose corporation or other entity
established for the purpose of securitized financing which is controlled by any
other Institutional Lender, or a corporation or other entity which is owned
wholly by any other Institutional Lender or a subtrustee of any such commercial
bank or trust company acting as such trustee, or any combination of the
foregoing; provided, however, that (i) each of the above entities, or any
-------- -------
combination of such entities, shall qualify as an Institutional Lender for
purposes of this Lease only if each such entity, or combination of such
entities, or the parent or parents of such entity or entities, shall have
individual or combined assets, as the case may be, of not less than Five Hundred
Million Dollars ($500,000,000), and (ii) unless an Event of Default has occurred
and is continuing, an Affiliate of the Lessor shall not qualify as an
Institutional Lender.
"Insurance Requirements" means all terms and conditions of any insurance
----------------------
policy required by this Lease to be maintained by the Lessee and the Lessor, and
all reasonable and appropriate requirements of the issuer of any such policy.
"Investment Company Act" means the Investment Company Act of 1940, as
----------------------
amended, together with the rules and regulations promulgated thereunder.
-9-
<PAGE>
"Land" means the real property interests more fully described on Schedule 1
---- ----------
attached hereto.
"Lease" means this Lease Agreement.
-----
"Lease Balance" means, at any time, the aggregate of the Lessor's Cost for
-------------
all Properties and all the Loans then covered by the terms of this Lease, as
adjusted as Properties and Loans are sold pursuant to the terms of Articles XXI
------------
or XXII or otherwise pursuant to the terms of this Lease.
----
"Lease Expenses" is defined in Section 28.2 of this Lease.
-------------- ------------
"Lease Rate" means (a) during the period from the Commencement Date
----------
through January 31, 2003, .0058333 with respect to that amount of the Average
Lease Balance (reduced by amounts on deposit in the Average Cash Collateral
Account Balance), up to and including $34,000,000 and .008333 with respect to
that amount of the Average Lease Balance (reduced by amounts on deposit in the
Average Cash Collateral Account Balance), which is in excess of $34,000,000, and
(b) during the period from February 1, 2003 through the Expiration Date, a rate
equal to the rate determined in clause (a) of this definition multiplied by
1.25.
"Lessee" means Echelon Commercial LLC.
------
"Lessor" means Heller Affordable Housing of Florida, Inc.
------
"Lessor's Cost" means, with respect to any Property, the amount set forth
-------------
on Schedule 2.
----------
"Lessor Lien" means any Lien, true lease or sublease or disposition of
-----------
title arising as a result of (a) any Claim against the Lessor not resulting from
the transactions contemplated by the Loan Documents, (b) any act or omission of
the Lessor which is not required by the Loan Documents or is in violation of any
of the terms of the Loan Documents, (c) any Claim against the Lessor with
respect to Taxes or Transaction Expenses against which Lessee is not required to
indemnify the Lessor pursuant to this Lease, or (d) any Claim against the Lessor
arising out of any transfer by the Lessor of all or any portion of the interest
of the Lessor in any Property or the Properties other than the transfer of title
to or possession of any Property by the Lessor pursuant to and in accordance
with this Lease.
"Lien" means any mortgage, deed of trust, pledge, security interest,
----
encumbrance, lien, easement, servitude or charge of any kind, including, without
limitation, any irrevocable license, conditional sale or other title retention
agreement, any lease in the nature thereof, or any other right of or arrangement
with any creditor to have its claim satisfied out of any specified property or
asset with the proceeds therefrom prior to the satisfaction of the claims of the
general creditors of the owner thereof, whether or not filed or recorded, or the
filing of, or agreement to execute as "debtor", any financing or continuation
statement under the Uniform Commercial Code of any jurisdiction or any federal,
state or local lien imposed pursuant to any Environmental Law.
"Loan" means any one of the Loans.
----
-10-
<PAGE>
"Loans" means the loans described on Schedule 1 hereto.
----- ----------
"Loan Documents" means those documents evidencing the Senior Loans, which
--------------
as of the Commencement Date are those documents more fully described on Schedule
--------
3 (which documents shall include the consents of the Senior Lenders to (i) the
- - -
transfers of the Properties to, and the assumption of the Senior Loans by, the
Lessor, and (ii) this Lease) and, subsequent to the Commencement Date, shall
include any amendments, modifications, additions thereto or replacements
thereof .
"Loss Notice" is defined in Section 18.1 of this Lease.
----------- ------------
"Major Sublease" means a lease, or an amendment or modification of any
--------------
Sublease, to be entered into after the date of this Lease which (i) requires the
consent of a Senior Lender, or (ii) covers an area of twenty-five thousand
rentable square feet or more (including, for purposes of determining whether a
lease or an amendment or modification of any Sublease is a Major Sublease, any
area covered by options) in one or more of the Properties.
"Memorandum of Lease" means the Memorandum of Lease, dated as of the
-------------------
Commencement Date, between the Lessor and the Lessee with respect to this
Lease, in the form attached hereto as Exhibit D or as mutually agreed between
---------
the Lessor and the Lessee.
"Material Adverse Effect" means a materially adverse effect on (i) the
-----------------------
business, assets, operations or condition, financial or otherwise, of the Lessee
or the Guarantor, (b) the ability of the Lessee or the Guarantor to perform any
of its obligations under the document to which it is or will be a party in the
transactions contemplated by this Lease, (c) the value or condition of the
Properties, the Loans or the Lessor's interests therein or title thereto, taken
as a whole, or (d) the rights of or benefits available to the Lessor under this
Lease.
"Material Assets" means with respect to any Person all material interests
---------------
in any kind of property or asset, whether real, personal or mixed, or tangible
or intangible.
"Merger Agreement" means the Agreement and Plan of Merger, dated as of
----------------
January 21, 2000, by and among ETA Holding LLC, EIN Acquisition Corp., and
Echelon International Corporation.
"Modifications" is defined in Section 13.1(a) of this Lease.
------------- ---------------
"Net Proceeds" means (i) in connection with any Casualty or Condemnation,
------------
the net amounts paid to the Lessor less the reasonable expense of claiming and
collecting such amounts, and (ii)in connection with the Lessee's exercise of
the Early Buy-Out Option under Article XXII of this Lease, as defined in Section
------------ -------
22.1(g).
- - -------
"Note" means any one of the Notes.
----
"Notes" means, with regard to the Loans, the originally executed promissory
------
notes or bonds or other evidence of indebtedness with respect to the Loans.
-11-
<PAGE>
"Overdue Rate" means a monthly rate equal to the Lease Rate plus .17%,
------------
compounded monthly.
"Parent" shall mean Echelon Development LLC, a Delaware limited liability
------
company and the sole member of the Lessee.
"Parent Guarantee" means the Guarantee, dated as of the Commencement Date,
----------------
between the Parent and the Lessor, in the form attached hereto as Exhibit E or
---------
as mutually agreed between the Lessor and the Lessee.
"Payment Date" means those dates which are determined as (i) the first day
------------
of the calendar month next following the ninetieth day following the
Commencement Date, and (ii) the first day of each third calendar month
thereafter, and (iii) the Expiration Date or the date of any earlier
termination of this Lease.
"PBGC" means the Pension Benefit Guaranty Corporation, or any federal
----
agency or authority of the United States from time to time succeeding to its
functions under ERISA.
"Permitted Liens" means with respect to the Property:
---------------
(i) the respective rights and interests of the Senior Lenders under the
Loan Documents as provided in the Loan Documents;
(ii) the rights of any Sublessee under a Sublease expressly permitted by
the terms of this Lease;
(iii) Liens for Taxes that either are not yet due or are being contested in
accordance with the provisions of Section 24.4(k) of this Lease;
---------------
(iv) Liens arising by operation of law, materialmen's, mechanics',
workers', repairmen's, employees', carriers', warehousemen's and other like
Liens relating to the construction of the Improvements or in connection
with any Modifications or arising in the ordinary course of business for
amounts that either are not more than 60 days past due or are being
diligently contested in good faith by appropriate proceedings, so long as
such proceedings satisfy the conditions for the continuation of proceedings
to contest Taxes set forth in Section 24.4(k) of this Lease and are
---------------
"insured over" by an acceptable title insurance company;
(v) Liens of any of the types referred to in clause (iv) above that have
-----------
been bonded for not less than the full amount in dispute (or as to which
other security arrangements satisfactory to the Lessor have been made),
which bonding (or arrangements) shall comply with Applicable Laws, and has
effectively stayed any execution or enforcement of such Liens;
(vi) Liens arising out of judgments or awards with respect to which
appeals or other proceedings for review are being prosecuted in good faith
and for the payment of which
-12-
<PAGE>
adequate reserves have been provided as required by GAAP by cash delivered
to the Lessor or other appropriate provisions have been made, so long as
such proceedings have the effect of staying the execution of such judgments
or awards and satisfy the conditions for the continuation of proceedings to
contest set forth in Section 15.1 of this Lease;
------------
(vii) easements, rights of way and other encumbrances on title to real
property existing as of the date of this Lease approved by the Lessor;
(viii) Lessor Liens; and
(ix) Liens created by the Lessee with the consent of the Lessor.
"Person" means any individual, corporation, partnership, joint venture,
------
association, joint-stock company, trust, unincorporated organization,
governmental authority or any other entity.
"Plan" means an Employee Benefit Plan.
----
"Prepaid EBO Amount" is defined in Section 22.3 of this Lease.
------------------
"Properties" means all of (a) the Land; (b) the Improvements at any time
----------
located on or under the Land; (c) all miscellaneous property related to the Land
and Improvements and acquired by the Lessor pursuant to the Subscription
Agreement, including but not limited to security deposits; books and records;
contract rights, claims and counterclaims against third parties; appraisals;
surveys; site plans; plans and specifications (including construction and as-
built plans and specifications); landscape designs and architectural drawings;
licenses and permits; warranties and guaranties; general intangibles and good
will; utility agreements; and development rights or orders, and all other assets
acquired by Lessor under the Subscription Agreement; and (d) all of the
Equipment. The term "Properties" (i) when the context of this Lease requires,
shall also include the Loans, and (ii) shall not include any Property or Loan
from and after the date on which such Property or Loan is sold pursuant to
Article XXI or XXII or otherwise pursuant to the terms of this Lease.
- - ----------- ----
"Property" means any one of the Properties at a discrete address or
--------
location.
"Purchase Notice" is defined in Section 21.1 of this Lease.
--------------- ------------
"Purchase Option" is defined in Section 21.1 of this Lease.
--------------- ------------
"Purchase Option Closing Date " is defined in Section 21.1 of this Lease.
----------------------------- ------------
"Purchase Option Price" shall be the greater of (i) the aggregate of the
---------------------
Fair Market Sales Value for each of the Properties and the Loans determined as
of a date not earlier than sixty days prior to the Purchase Option Closing Date,
and (ii) the aggregate of the Early Buy-Out Prices for the Properties and the
Loans as of the Purchase Option Closing Date.
-13-
<PAGE>
"Purchase and Sale Agreement" means the Purchase and Sale Agreement, dated
---------------------------
as of January 21, 2000, by and among Echelon International Corporation and
certain of its Subsidiaries and Echelon Residential LLC.
"Recourse Debt" means the amount of the Senior Loans secured by the
-------------
Development Properties and the amount of the Senior Loans held by Salomon
Brothers Realty Corp. (and any other obligations under the Loan Documents with
respect to the Development Properties and to Salomon Brothers Realty Corp.,
including but not limited to claims under environmental indemnities), which are
recourse to assets or interests of the Lessor (including but not limited to the
interest of the Lessor in the amount on deposit in the Cash Collateral Account)
other than the Properties; provided, however, that with respect to any Senior
-------- -------
Loan secured by a Development Property or held by Salomon Brothers Realty Corp.,
at such time that a permanent certificate of occupancy (or local equivalent) is
issued or at any time thereafter, Recourse Debt for such Property shall be
deemed to be the amount, if any, by which the amount of the Senior Loan exceeds
seventy percent of the Fair Market Sales Value for such Property. Recourse Debt
shall include all amounts reasonably determined by the Lessor which are, or are
likely to be, payable to Senior Lenders (i) pursuant to any indemnities provided
for in the Loan Documents, (ii) on the basis of claims made by Senior Lenders
based on exceptions or "carve outs" to the non-recourse terms of any Senior
Loan. Based on the Lessor's valuations as of the date of this Lease (which
valuations the Lessee acknowledges are subject to change over Term) of the
Properties which are subject to Senior Loans held by Salomon Brothers Realty
Corp., the Lessor acknowledges that the Senior Loans held by Salomon Brothers
Realty Corp. are not included within the definition of "Recourse Debt". In the
event that after the date of this Lease any Senior Loan held by Salomon Brothers
Realty Corp. is amended to provide that such Senior Loan is non-recourse (on
terms reasonably satisfactory to the Lessor), or if Salomon Brothers Realty
Corp. acquires any additional Senior Loan which is non-recourse by its terms,
then such Senior Loan shall not be included within the definition of "Recourse
Debt". Further, the Lessor acknowledges that the terms of the Senior Loans held
by Northwestern Mutual Life Insurance Company as of the date of this Lease are
not recourse to the assets of the "mortgagor" thereunder.
"Refinancing Proceeds" is defined in Section 20.2 of this Lease.
-------------------- ------------
"Release" means any release, pumping, pouring, emptying, injecting,
-------
escaping, leaching, dumping, seepage, spill, leak, flow, discharge, disposal or
emission of a Hazardous Substance.
"Rent" means, collectively, (i) Basic Rent, (ii) Supplemental Rent, and
----
(iii) beginning February 1, 2003, Accrued Rent.
"Requesting Party" is defined in Section 25.1 of this Lease.
---------------- ------------
"Required Modification" is defined in Section 13.1 of this Lease.
--------------------- ------------
"Responsible Employee" means the President, any Vice President, the
--------------------
Treasurer or the Controller of any Person.
-14-
<PAGE>
"Restricted Payments" means (i) any dividend or other distribution, direct
-------------------
or indirect, on account of any shares of any class of capital stock of, or
partnership or membership or other equity interest in, the Lessee now or
hereafter outstanding, (ii) any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect, of any
shares of any class of capital stock of, or partnership or membership or other
equity interest in, the Lessee now or hereafter outstanding, (iii) any payment
made to redeem, purchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any capital
stock of, or partnership or membership or other equity interest in, the Lessee
now or hereafter outstanding, and (iv) any payment made to acquire, directly or
indirectly, any real property (other than one of the Properties acquired
pursuant to the terms of this Agreement); provided, however, that the foregoing
-------- -------
shall not be deemed to limit or restrict any distributions or payments to the
Parent.
"Senior Loans" means the obligations to the Senior Lenders evidenced and
------------
secured by the Loan Documents, the principal balances of which as of the date of
this Lease are set forth on Schedule 3, and subsequent to the Commencement Date
----------
shall include any amendments, modifications, additions thereto or replacements
thereof or any new loan secured by the Properties.
"Senior Lenders" means the holders of the Senior Loans described on
--------------
Schedule 3.
- - ----------
"Significant Casualty" means: (a) a Casualty that renders a Property
--------------------
unsuitable for continued use as property of the type of such Property
immediately prior to such Casualty, (b) a Casualty that is so substantial in
nature that restoration of the Property to substantially its condition as
existed immediately prior to such Casualty would be impracticable or impossible,
or (c) a Casualty which results in an insurance settlement with respect to a
Property on the basis of a total loss of the Improvements.
"Significant Condemnation" means (a) a Condemnation that involves a taking
------------------------
of the Lessor's entire title to a Property, or (b) a Condemnation that in the
reasonable, good faith judgment of the Lessor, after consultation with Lessee
about potential remediation efforts, either (i) renders a Property unsuitable
for continued use as property of the type of such Property immediately prior to
such Condemnation or (ii) is such that restoration of the Property to
substantially its condition as existed immediately prior to such Condemnation
would be impracticable or impossible to effect, or (c) in the case of a
temporary Condemnation, a temporary Condemnation which, in the reasonable, good
faith judgment of the Lessor, (i) will provide for an award or awards
insufficient to pay the Rent applicable to such Property during the period of
such taking, or (ii) extends beyond the Term.
"Stipulated Loss Value" means (a) with respect to a determination of such
---------------------
value made prior to February 2, 2003, the Early Buy-Out Price for the relevant
Property, and (b) with respect to a determination of such value made on or after
February 2, 2003, the Purchase Option Price allocable to the relevant Property.
-15-
<PAGE>
"Subleases" means those leases described in Schedule 4 and any leases,
--------- ----------
subleases or other occupancy agreements entered into after the Commencement Date
with respect to any Property.
"Sublessees" means those parties holding the tenant's interest under the
----------
Subleases.
"Subordination of Management Contracts Agreement" means the Subordination
-----------------------------------------------
of Management Contracts Agreement, dated as of the Commencement Date, between
the Lessor, the Lessee and the Parent, in the form attached hereto as Exhibit F
---------
or as mutually agreed between the Lessor and the Lessee.
"Subscription Agreement" means the Subscription Agreement, dated as of
----------------------
January 21, 2000, by and among Echelon International Corporation and certain of
its Subsidiaries and the Lessor.
"Subsidiary" of any Person means a corporation or other entity of which
----------
securities or other ownership interests having ordinary voting power (other than
securities or other ownership interests having such power by reason of the
happening of a contingency) to elect the majority of the board of directors or
other persons performing similar functions are at the time directly or
indirectly owned by such Person, by such Person and one or more of its
Subsidiaries or by one or more of such Person's Subsidiaries.
"Substituted Equipment" is defined in Section 13.2 of this Lease.
--------------------- ------------
"Supplemental Rent" means all amounts, liabilities and obligations (other
-----------------
than Basic Rent) which the Lessee assumes or agrees to pay to the Lessor or
directly to third parties pursuant to the terms of this Lease, including but not
limited to (i) all amounts payable to the Senior Lenders under the terms of the
Loan Documents, as more fully described in Section 8.2 this Lease, (ii) Taxes,
-----------
(iii) the obligation to discharge all Liens except Lessor Liens, (iv) all
amounts paid by Lessor as a result of the failure by the Lessee to make a
payment or perform an obligation under this Lease, and (v) all other amounts
payable by the Lessee to the Lessor under this Lease.
"Taxes" is defined in the definition of Impositions.
-----
"Term" is defined in Section 2.2 of this Lease.
---- -----------
"Transaction Documents" shall mean this Lease, the Cash Collateral
---------------------
Agreement, the Guarantee, the Heller Guarantee, the Memorandum of Lease, the
Parent Guarantee and the Subordination of Management Contracts Agreement, and
all other documents executed and delivered in connection herewith or therewith.
"Transaction Expenses" is defined in Section 28.1 of this Lease.
-------------------- ------------
"Transfer Date" is defined in Section 18.2 of this Lease.
------------- ------------
-16-
<PAGE>
"Underlying Agreements" means those agreements defined as "Contracts" in
---------------------
the Subscription Agreement and assumed by the Lessor pursuant to the terms of
the Subscription Agreement.
"Uniform Commercial Code" and "UCC" mean the Uniform Commercial Code as in
----------------------- ---
effect in any applicable jurisdiction.
I.2 Interpretation. As used in this Lease, unless a clear contrary
--------------
intention appears:
(i) the singular number includes the plural number and vice versa;
---- -----
(ii) reference to any Person includes such Person's successors and
assigns but, if applicable, only if such successors and assigns are
permitted by this Lease, and reference to a Person in a particular capacity
excludes such Person in any other capacity or individually;
(iii) reference to any gender includes each other gender;
(iv) reference to any agreement, document or instrument means such
agreement, document or instrument as amended or modified and in effect from
time to time in accordance with the terms thereof and, if applicable, the
terms of the other Loan Documents and reference to any promissory note
includes any promissory note which is an extension or renewal thereof or a
substitute or replacement therefor;
(v) reference to any Applicable Law means such Applicable Law as
amended, modified, codified, replaced or reenacted, in whole or in part,
and in effect from time to time, including rules and regulations
promulgated thereunder and reference to any section or other provision of
any Applicable Law means that provision of such Applicable Law from time to
time in effect and constituting the substantive amendment, modification,
codification, replacement or reenactment of such section or other
provision;
(vi) reference in this Lease to any Article, Section, Appendix,
Schedule or Exhibit means such Article or Section thereof or Appendix,
Schedule or Exhibit thereto;
(vii) "hereunder", "hereof", "hereto" and words of similar import
shall be deemed references to this Lease as a whole and not to any
particular Article, Section or other provision thereof;
(viii) "including" (and with correlative meaning "include") means
including without limiting the generality of any description preceding such
term;
(ix) relative to the determination of any period of time, "from"
means "from and including" and "to" means "to but excluding".
I.3 Accounting Terms. Unless expressly otherwise provided, accounting
----------------
terms shall be construed and interpreted, and accounting determinations and
computations shall be made, in accordance with GAAP.
-17-
<PAGE>
I.4 Business Day. If any payment provided for hereunder (including but not
------------
limited to Rent) becomes due on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day.
I.5 Conflict with Loan Documents. If there is any conflict between any of
----------------------------
the terms of this Lease and the terms of any Loan Documents or any Subleases,
this Lease shall be interpreted and construed, if possible, so as to avoid or
minimize such conflict but, to the extent (and only to the extent) of such
conflict, terms of the Loan Documents or the Subleases, as the case may be,
shall prevail and control; provided, however, that in the case of any Sublease,
-------- -------
such Sublease shall control only to the extent that such Sublease existed as of
the Commencement Date or was entered into pursuant to the terms of this Lease..
I.6 Legal Representation of the Parties. This Lease was negotiated by the
-----------------------------------
parties with the benefit of legal representation and any rule of construction or
interpretation otherwise requiring this Lease to be construed or interpreted
against any party shall not apply to any construction or interpretation hereof
or thereof.
ARTICLE II
LEASE
II.1 Lease and Acceptance of Property. Subject to the terms and conditions
--------------------------------
of this Lease, on the Commencement Date the Lessor shall demise and lease to the
Lessee for the Term the Lessor's interest in the Properties, and the Lessee
hereby accepts the Properties and agrees, expressly for the direct benefit of
the Lessor, to lease from the Lessor for the Term, the Lessor's interest in the
Properties. To the extent that any of the Properties are subject to Pending
Transactions (as defined in the Subscription Agreement) as of the date of this
Lease and are sold or refinanced prior to the Commencement Date, such Properties
will be excluded from the definition of Properties hereunder and any proceeds
payable to the Lessor with respect thereto pursuant to Section 2.3 of the
Subscription Agreement shall be applied by the Lessor in accordance with Section
2.3 of the Subscription Agreement.
II.2 Lease Term. The term of this Lease (the "Term") shall commence on
---------- ----
(and include) the Commencement Date and end on (but exclude) the Expiration
Date.
II.3 Title. Each Property is leased to the Lessee without any
-----
representation or warranty, express or implied (except as set forth specifically
in this Lease), by the Lessor and subject to (i) the Subleases and the rights of
parties in possession, (ii) the Underlying Agreements, (iii) the existing state
of title (including, without limitation, Permitted Liens other than Lessor
Liens), (iv) the Loan Documents and the rights of the Senior Lenders thereunder,
and (v) all Applicable Laws. The Lessee shall in no event have any recourse
against the Lessor for any defect in or exception to title to the Property other
than to the extent resulting from Lessor Liens.
-18-
<PAGE>
ARTICLE III
CONDITIONS PRECEDENT
III.1 Conditions Precedent to the Commencement Date. The occurrence of the
---------------------------------------------
Commencement Date is subject to the satisfaction or waiver of the following
conditions precedent:
(a) Transaction Documents. All Transaction Documents shall have been
---------------------
executed and delivered by the parties thereto.
(b) Opinions of Local Counsel. Counsel to the Lessee in each
-------------------------
jurisdiction in which any Property is located shall have issued to the Lessor
its opinion, in form attached hereto as Exhibit G or otherwise in form and
substance reasonably satisfactory to the Lessor, as to the Lease satisfying
state-specific requirements for a lease and the Memorandum of Lease being in
proper form for recording.
(c) Governmental Approvals. All necessary (or, in the reasonable opinion
----------------------
of the Lessor, advisable) Governmental Actions, in each case required by any
Applicable Law, shall have been obtained or made and be in full force and
effect.
(d) Litigation. No action or proceeding shall have been instituted, nor
----------
shall any action or proceeding be threatened, before any Governmental Authority,
nor shall any order, judgment or decree have been issued or proposed to be
issued by any Governmental Authority (i) to set aside, restrain, enjoin or
prevent the full performance of this Lease or any transaction contemplated
hereby or by the Transaction Documents, or (ii) which is reasonably likely to
materially and adversely affect the Lessee.
(e) Violations of Applicable Law. The transactions contemplated by the
----------------------------
Transaction Documents do not and will not violate any Applicable Law the
violation of which could have a Material Adverse Effect and do not and will not
subject the Lessor to any material adverse regulatory prohibitions or
constraints.
(f) Recordation. The Lessor shall have received evidence reasonably
-----------
satisfactory to it that the Memorandum of Lease shall have been or is being
recorded with the appropriate Governmental Authorities.
(g) Evidence of Insurance. The Lessor shall have obtained evidence of
---------------------
insurance with respect to each Property and with respect to environmental
liability required to be maintained pursuant to this Lease setting forth the
respective coverages, limits of liability, carrier, policy number and period of
coverage, and otherwise satisfying the requirements set forth in Article XVI.
-----------
(h) Secretary's or Assistant Secretary's Certificates. The Lessee shall
-------------------------------------------------
have delivered to the Lessor a certificate of the Secretary or an Assistant
Secretary of the managing trustee of each Guarantor and the Lessee attaching and
certifying as to (i) the constituent documents of
-19-
<PAGE>
such Person, (ii) resolutions of the governing body of each such Person
authorizing the execution, delivery and performance of this Lease and the other
Transaction Documents to which such Person is a party and (iii) the incumbency
and signature of persons authorized to execute and deliver this Lease and the
other Transaction Documents to which such Person is a party.
(i) Opinion of Counsel to the Lessee, the Guarantor and the Parent. On or
--------------------------------------------------------------
prior to the Commencement Date, the Lessor shall have received an opinion of
external counsel for the Lessee, the Guarantor and the Parent, in form attached
hereto as Exhibit H or otherwise in form and substance reasonably satisfactory
to the Lessor, as to organization, qualification, authorization, execution and
delivery, enforceability, non-contravention, required consents and such other
matters as may be reasonably required by the Lessor.
(j) Consummation of Merger. The Merger (as such term is defined in the
----------------------
Merger Agreement) has been completed on the terms provided for in the Merger
Agreement.
(k) Consummation of Purchase and Sale Agreement. The "Closing" (as such
-------------------------------------------
term is defined in the Purchase and Sale Agreement) has been completed on the
terms provided for in the Purchase and Sale Agreement.
(l) Consummation of Subscription Agreement. The "Closing" (as such term
--------------------------------------
is defined in the Subscription Agreement) has been completed on the terms
provided for in the Subscription Agreement, without waiver of closing conditions
or requirements except to the extent specifically approved by the Lessee.
(m) Transfer of Security Deposits. The Lessor shall have transferred to
-----------------------------
the Lessee any security deposits with respect to the Subleases received by the
Lessor whether in cash or as a credit to the Transfer Value pursuant to Section
2.1 of the Subscription Agreement.
(n) Place of Delivery. All documents and instruments required to be
-----------------
delivered on the Commencement Date shall be delivered at the offices of White &
Case LLP, 1155 Avenue of the Americas, New York, New York 10036, or at such
other location as may be determined by the Lessor and the Lessee.
ARTICLE IV
REPRESENTATIONS OF THE LESSOR
The Lessor represents and warrants to the Lessee that, as of the
Commencement Date:
I.1 Status. The Lessor (i) is a is a duly organized and validly existing
------
corporation in good standing under the laws of the State of Delaware, and (ii)
has the power and authority to own and lease properties and to conduct the
business in which it is currently engaged.
IV.1 Power and Authority. The Lessor has the corporate power and authority
-------------------
to execute, deliver and carry out the terms and provisions of this Lease and has
taken all necessary corporate action to authorize the execution, delivery and
performance of this Lease and has duly
-20-
<PAGE>
executed this Lease and, assuming the due authorization, execution and delivery
hereof on the part of the Lessee, this Lease constitutes a legal, valid and
binding obligation enforceable against it in accordance with its terms, except
as the same may be limited by insolvency, bankruptcy, reorganization or other
laws relating to or affecting the enforcement of creditors' rights generally and
by equitable principles whether enforcement is sought by proceedings in equity
or at law and except as the same may be limited by certain circumstances under
law or court decisions in respect of provisions providing for indemnification of
a party with respect to liability where such indemnification is contrary to
public policy.
IV.2 No Legal Bar. Neither the execution, delivery and performance by the
------------
Lessor of this Lease nor compliance with the terms and provisions hereof, nor
the consummation by the Lessor of the transactions contemplated herein (i) will
result in a violation by the Lessor of any provision of any Applicable Law that
would have a Material Adverse Effect on (x) the validity or enforceability of
this Lease, or the title to, or value or condition of, the Properties, or (y)
the consolidated financial position, business or consolidated results of
operations of the Lessor or the ability of the Lessor to perform its obligations
under this Lease, (ii) will conflict with or result in any breach which would
constitute a default under, or (other than pursuant to the Loan Documents)
result in the creation or imposition of (or the obligation to create or impose)
any Lien upon any of the property or assets of the Lessor pursuant to the terms
of any indenture, loan agreement or other agreement for borrowed money to which
the Lessor is a party or by which it or any of its property or assets is bound
or to which it may be subject (other than Permitted Liens), or (iii) will
violate any provision of the certificate of incorporation or by-laws of the
Lessor.
IV.3 Litigation. There are no actions, suits or proceedings pending or, to
----------
the knowledge of the Lessor, threatened (i) that are reasonably likely to have a
Material Adverse Effect on the Properties or on the ability of the Lessor to
perform its obligations under this Lease or (ii) that question the validity of
this Lease or the rights or remedies of the Lessee with respect to the Lessor or
the Properties.
IV.4 Governmental Approvals. No Governmental Action by any Governmental
----------------------
Authority having jurisdiction over the Lessor or the Properties is required to
authorize or is required in connection with (i) the execution, delivery and
performance by the Lessor of this Lease, or (ii) the legality, validity,
binding effect or enforceability against the Lessor of this Lease.
ARTICLE V
REPRESENTATIONS OF THE LESSEE
The Lessee represents and warrants to the Lessor that, as of the
Commencement Date:
V.1 Status. The Lessee (i) is a duly organized and validly existing
------
limited liability company in good standing under the laws of the State of
Delaware, and (ii) has the power and authority to own and lease properties and
to conduct the business in which it is currently engaged.
-21-
<PAGE>
V.2 Power and Authority. The Lessee has the limited liability company
-------------------
power and authority to execute, deliver and carry out the terms and provisions
of this Lease and has taken all necessary action to authorize the execution,
delivery and performance of this Lease and has duly executed this Lease and,
assuming the due authorization, execution and delivery hereof on the part of the
Lessor, this Lease constitutes a legal, valid and binding obligation enforceable
against it in accordance with its terms, except as the same may be limited by
insolvency, bankruptcy, reorganization or other laws relating to or affecting
the enforcement of creditors' rights generally and by equitable principles
whether enforcement is sought by proceedings in equity or at law and except as
the same may be limited by certain circumstances under law or court decisions in
respect of provisions providing for indemnification of a party with respect to
liability where such indemnification is contrary to public policy.
V.3 Separate Existence. The Lessee has, since its formation, maintained
------------------
itself as an entity separate from any other entity and, in particular, has: (i)
maintained books and records, financial statements, and accounts separate from
those of any other Person; (ii) not commingled its assets or funds with those of
any other Person; (iii) held all of its assets in its own name; (iv) conducted
its business in its own name; (iv) paid its liabilities out of its own funds;
(v) observed all corporate formalities; (vi) maintained an arm's-length
relationship with its Affiliates, if any; (vii) prepared and maintained
financial statements separate from its Affiliates, if any, except as may have
been required by applicable law; (viii) paid the salaries of its own employees
and fees for its directors and officers from its own funds; (ix) not guaranteed
or become obligated for the debts of any other entity, or held out its credit as
being available to satisfy the obligations of others; (x) allocated and charged
fairly and reasonably any overhead for shared office space; (xi) used separate
stationery, invoices and checks, each bearing its own name; (xii) not pledged
its assets for the benefit of any other entity nor made any loans or advances to
any Person; (xiii) held itself out to creditors and the public as a legal entity
separate from any other Person and corrected any known misunderstanding
regarding such separate identity; (xiv) maintained adequate capital in light of
its contemplated business purpose, transactions and liabilities; (xv) unless
otherwise required by applicable law, filed its tax returns separately from
those of any other Person; (xvi) not purchased or held evidence of indebtedness
issued by any other Person; (xvii) not identified itself as a division of any
other Person, nor acquired or held any subsidiary; (xviii) not acquired any
securities of any Person; (xvix) not borrowed money or incurred indebtedness
other than normal trade accounts payable and lease obligations in the normal
course of its business nor granted consensual Liens on any of its property,
except the Senior Loans; (xix) not filed a voluntary petition or otherwise
initiated proceedings to become bankrupt or insolvent, or consented to the
institution of bankruptcy or insolvency proceedings, or file a petition seeking
or consenting to reorganization or relief as debtor under any applicable federal
or state law relating to bankruptcy, insolvency, or other relief for debtors, or
sought or consented to the appointment of any receiver, conservator, assignee,
sequestrator, custodian, liquidator (or other similar official) or made any
general assignment for the benefit of creditors of the Borrower, or admitted in
writing the inability to pay its debts generally as they become due or declared
or effected a moratorium on t debts or taken any action in furtherance of any
such action; (xx) not merged or consolidated with any other Person; and (xxi)
not pledged its assets for the benefit of any other Person.
-22-
<PAGE>
V.4 No Legal Bar. Neither the execution, delivery and performance by the
------------
Lessee of this Lease nor compliance with the terms and provisions hereof, nor
the consummation by the Lessee of the transactions contemplated herein (i) will
result in a violation by the Lessee of any provision of any Applicable Law that
would have a Material Adverse Effect on (x) the validity or enforceability of
this Lease, or the title to, or value or condition of, the Properties, or (y)
the consolidated financial position, business or consolidated results of
operations of the Lessee or the ability of the Lessee to perform its obligations
under this Lease, (ii) will conflict with or result in any breach which would
constitute a default under, or (other than pursuant to the Loan Documents)
result in the creation or imposition of (or the obligation to create or impose)
any Lien upon any of the property or assets of the Lessee pursuant to the terms
of any indenture, loan agreement or other agreement for borrowed money to which
the Lessee is a party or by which it or any of its property or assets is bound
or to which it may be subject (other than Permitted Liens), or (iii) will
violate any provision of the constituent documents of the Lessee.
V.5 Litigation. There are no actions, suits or proceedings pending or, to
----------
the knowledge of the Lessee, threatened (i) that are reasonably likely to have a
Material Adverse Effect on the Properties or on the ability of the Lessee to
perform its obligations under this Lease or (ii) that question the validity of
this Lease or the rights or remedies of the Lessor with respect to the Lessee or
the Properties.
V.6 Governmental Approvals. No Governmental Action by any Governmental
----------------------
Authority having jurisdiction over the Lessee or the Properties is required to
authorize or is required in connection with (i) the execution, delivery and
performance by the Lessee of this Lease, or (ii) the legality, validity,
binding effect or enforceability against the Lessee of this Lease.
V.7 Investment Company Act. The Lessee is not an "investment company" or
----------------------
a company "controlled" by an "investment company," within the meaning of the
Investment Company Act.
V.8 Public Utility Holding Company Act. The Lessee is not a "holding
----------------------------------
company" or a "subsidiary company", or an "affiliate" of a "holding company" or
of a "subsidiary company" of a "holding company", within the meaning of the
Public Utility Company Act of 1935, as amended.
V.9 Insurance. The Lessee has obtained insurance coverage covering each
---------
Property which satisfies the terms of this Lease, the premiums (to the extent
not fully paid) have been paid for the current quarterly payment required by the
terms of the policies and the Lessee shall have made the deposit with the Lessor
required by the terms of Section 16.5(c), any such coverage is in full force and
---------------
effect, and no notice of cancellation has been received by the Lessee or its
agents.
V.10 Defaults. No Default or Event of Default or similar event has
--------
occurred and is continuing hereunder or under any material bond, debenture, note
or other evidence of indebtedness or material mortgage, deed of trust, indenture
or loan agreement or other instrument to which the Lessee is a party or is
subject to or bound.
-23-
<PAGE>
V.11 Tax Returns. Each of the Guarantor and its Subsidiaries has filed or
-----------
caused to be filed all Federal, state, local and foreign tax returns required to
have been filed by it and has paid or caused to be paid all taxes shown to be
due and payable on such returns or on any assessments received by it, except
taxes that are being contested in good faith by appropriate proceedings and for
which the Guarantor or such Subsidiary shall have set aside on its books
adequate reserves, and there are no tax liens outstanding with respect to the
Guarantor and its Subsidiaries or any of their properties.
V.12 No Material Misstatements. No information, report, financial
-------------------------
statement, exhibit or schedule furnished by or on behalf of the Lessee to the
Lessor in connection with the negotiation of this Lease or included therein or
delivered pursuant thereto contained, contains or will contain any misstatement
of a material fact or omitted, omits or will omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were, are or will be made, not misleading. Notwithstanding the
foregoing, any financial projections provided by the Lessee are based upon
assumptions believed to be reasonable at the time by the management of the
Lessee and are not intended to be guarantees of future results.
V.13 Chief Place of Business. The chief place of business and chief
-----------------------
executive office (as such term is defined in Article 9 of the UCC) of the Lessee
is located at 450 Carillon Parkway, Suite 200, St. Petersburg FL 33716.
ARTICLE VI
PAYMENT OF RENT
VI.1 Basic Rent. The Lessee shall pay Basic Rent for each calendar month
----------
and for any portion of a calendar month since the date of the last such payment
of Basic Rent, such Basic Rent to be payable (i) on each Payment Date during the
Term; (ii) on the date required under Section 21.1 in connection with the
------------
Lessee's exercise of the Purchase Option; (iii) on the date required under
Section 22.1 in connection with the Lessee's exercise of the Early Buy-Out
- - ------------
Option; and (iv) on any date on which this Lease shall terminate.
VI.2 Supplemental Rent. The Lessee shall pay to the Lessor or to the
-----------------
appropriate third parties, as the case may be, Supplemental Rent in the amounts
and on the dates provided for herein.
VI.3 Payment of Rent. Rent shall be due and payable in lawful money of the
---------------
United States and shall be paid by check or wire transfer of immediately
available funds, on the due date therefor to such account or accounts at such
bank or banks or to the Lessor, or in such other manner, as the Lessor shall
from time to time direct in a written notice to the Lessee. Rent shall be paid
absolutely net to the Lessor, so that this Lease shall yield to the Lessor the
full amount thereof, without setoff, deduction or reduction. Neither the
Lessee's inability or failure to take possession of all or any portion of the
Property when delivered by the Lessor, whether or not attributable to any act or
omission of the Lessor or the Lessee or for any other reason whatsoever, shall
delay or otherwise affect the Lessee's obligation to pay Rent for the Property
in accordance
-24-
<PAGE>
with the terms of this Lease. In addition, the Lessee shall pay to the Lessor as
Supplemental Rent, on demand, to the extent permitted by Applicable Law,
interest at the Overdue Rate on any payment of Rent not paid when due for the
period for which the same shall be overdue until the same shall be paid.
VI.4 Method of Payment. Subject to Section 8.2, each payment of Rent or
----------------- -----------
any other amount due hereunder shall be made by the Lessee to the Lessor prior
to 2:00 p.m., New York time, at the place of payment designated in writing by
the Lessor in funds consisting of lawful currency of the United States of
America which shall be immediately available on the scheduled date when such
payment shall be due, unless such scheduled date shall not be a Business Day, in
which case such payment shall be made on the next succeeding Business Day.
Payments received after 2:00 p.m., New York time on the date due shall for all
purposes hereof be deemed received on the next succeeding Business Day and,
unless the Lessor is otherwise able to invest or employ such funds on the date
received, subject to interest at the Overdue Rate.
VI.5 Application of Supplemental Rent. All payments of Supplemental Rent
--------------------------------
received by the Lessor shall be distributed promptly by the Lessor upon receipt
thereof to the Persons entitled thereto.
VI.6 Application of Cash Collateral. If (x) the Lessee provides to the
------------------------------
Lessor projections of income and expenses for any period of ninety days forward
which, taking into account the cash and liquid assets available to the Lessee
and the Parent, support that the Lessee and the Parent will have inadequate
funds to pay all anticipated expenses (including Basic Rent and Supplemental
Rent) over the period of such projections, (y) the Guarantor is in compliance
with the financial covenants in the Guarantee, and (z) no Event of Default has
occurred which is continuing, then the Lessee shall be entitled to direct the
Lessor to apply funds in the Cash Collateral Account to (i) one installment of
Basic Rent due on a Payment Date determined by the Lessee at any time that the
Lease Balance reduced by amounts on deposit in the Cash Collateral Account is
-------
less than $34,000,000.00 and prior to Full Collateralization, and (ii) a second
installment of Basic Rent due on any Payment Date determined by the Lessee at
any time that the Lease Balance reduced by amounts on deposit in the Cash
-------
Collateral Account and increased by the amount of Recourse Debt is less than
---------
$20,000,000.00 and prior to Full Collateralization. Upon Full Collateralization,
payments of Basic Rent shall be paid directly and solely from interest earned on
the amounts on deposit in the Cash Collateral Account.
VI.7 Accrued Rent. Accrued Rent shall be determined on February 1, 2003,
------------
and shall be payable by the Lessee to the Lessor in equal installments on each
Payment Date thereafter in an amount sufficient to pay the full amount thereof
over the then balance of the Term. To the extent that all Properties are sold
pursuant to the terms of Articles XXI or XXII or otherwise pursuant to the
------------ ----
terms of this Lease prior to February 1, 2003, the Lessee shall be relieved of
the requirement to pay Accrued Rent hereunder in the form of a discount on the
last Early Buy-Out Price paid hereunder. No Accrued Rent shall be payable
hereunder at any time prior to February 1, 2003.
-25-
<PAGE>
ARTICLE VII
QUIET ENJOYMENT; RIGHT TO INSPECT
VII.1 Quiet Enjoyment. Subject to Sections 2.3 and 7.2, and subject to
--------------- ------------ ---
the rights of the Lessor contained herein and in the other Transaction
Documents, the Lessee shall peaceably and quietly have, hold and enjoy the
Properties for the Term, free of any claim or other action by the Lessor or
anyone claiming by, through or under the Lessor (other than the Lessee, the
Senior Lenders pursuant to the Senior Loan Documents, and Sublessees) with
respect to any matters arising from and after the Commencement Date. Such right
of quiet enjoyment is independent of, and shall not affect the Lessor's rights
otherwise to initiate legal action to enforce, the obligations of the Lessee
under this Lease.
VII.2 Right to Inspect. The Lessee shall, upon reasonable notice from the
----------------
Lessor (except that no notice shall be required if a Default under this Lease
has occurred and is continuing or the Lessor has a reasonable basis to believe
that a default has occurred and is continuing), permit the Lessor, the Senior
Lenders, and their authorized representatives to inspect any Property during
normal business hours, provided that such inspections shall not unreasonably
interfere with the Lessee's business operations at such Property and shall be
subject to the rights if any, of Sublessees; provided that as long as no Default
--------
has occurred and is continuing, the Lessor's right to inspect shall be limited
to no more than once per quarter.
ARTICLE VIII
NET LEASE, ETC.
VIII.1 Net Lease. This Lease shall constitute a net lease. Any present or
---------
future law to the contrary notwithstanding, this Lease shall not terminate, nor
shall the Lessee be entitled to any abatement, suspension, deferment, reduction,
setoff, counterclaim, or defense with respect to the Rent, nor shall the
obligations of the Lessee hereunder be affected (except as expressly herein
permitted and by performance of the obligations in connection therewith) by
reason of: (i) any defect in the condition, merchantability, design,
construction, quality or fitness for use of the Property or any part thereof, or
the failure of any Property to comply with all Applicable Laws, including any
inability to occupy or use any Property by reason of such non-compliance; (ii)
any damage to, removal, abandonment, salvage, loss, contamination of or Release
from, scrapping or destruction of or any requisition or taking of any Property
or any part thereof; (iii) any restriction, prevention or curtailment of or
interference with any use of any Property or any part thereof including
eviction; (iv) any defect in title to or rights to any Property or any Lien on
such title or rights or on any Property (other than Lessor Liens); (v) any
change, waiver, extension, indulgence or other action or omission or breach in
respect of any obligation or liability of or by the Lessor; (vi) any bankruptcy,
insolvency, reorganization, composition, adjustment, dissolution, liquidation or
other like proceedings relating to the Lessee or any other Person, or any action
taken with respect to this Lease by any trustee or receiver of the Lessee or any
other Person, or by any court, in any such proceeding; (vii) any claim that the
Lessee has or might have against any Person, including without limitation the
Lessor and any vendor, manufacturer,
-26-
<PAGE>
contractor of or for any portion of any Property; (viii) any failure on the part
of the Lessor to perform or comply with any of the terms of this Lease or of any
other agreement; (ix) any invalidity or unenforceability or illegality or
disaffirmance of this Lease against or by the Lessee or any provision hereof or
any of the other Loan Documents or any provision of any thereof; (x) the
impossibility or illegality of performance by the Lessee, the Lessor, or both of
them; (xi) any action by any court, administrative agency or other Governmental
Authority; (xii) any restriction, prevention or curtailment of or interference
with the construction on or any use of any Property or any part thereof; or
(xiii) any other cause or circumstances, whether or not the Lessee shall have
notice or knowledge of any of the foregoing. The parties intend that the
obligations of the Lessee hereunder shall be covenants and agreements that are
separate and independent from any obligations of the Lessor hereunder or under
any other Transaction Documents and the obligations of the Lessee shall continue
unaffected unless such obligations shall have been modified or terminated in
accordance with an express provision of this Lease. Nothing contained herein is
intended to obviate or otherwise diminish any right the Lessee may have to bring
an action, either at law or in equity, to remedy any breach by the Lessor of the
Lessor's obligations hereunder.
VIII.2 Senior Lenders. Until such time as (i) the Lessor has asserted a
--------------
Default under the terms of this Lease, or (ii) an Event of Default has occurred
and is continuing, the Lessor agrees that the Lessee shall pay on behalf of the
Lessor, as Supplemental Rent, directly to the Senior Lenders on or before the
date such payments are due hereunder all amounts, liabilities and obligations
due and payable by the Lessor to the Senior Lenders under the terms of the Loan
Documents, including but not limited to all interest, whether at the stated or
default rate; principal; extension fees; assumption fees; prepayment fees and
yield indemnity charges (including but not limited to those due in connection
with an Event of Loss or the exercise by the Lessee of a Purchase Option or an
Early Buy-Out Option); expenses of Senior Lenders for professional or other fees
and expenses, recording fees and title insurance premiums; and claims for
indemnity, all on the terms provided for in the Loan Documents. At the time such
payments of Supplemental Rent are made directly to Senior Lenders, the Lessee
shall simultaneously deliver to the Lessor evidence of such payment in form
reasonably satisfactory to the Lessor. If (i) the Lessor has asserted a Default
under the terms of this Lease, or (ii) if an Event of Default has occurred and
is continuing, then the Lessee shall pay directly to the Lessor the Supplemental
Rent due to Senior Lenders. In such case, the Lessee shall pay to the Lessor any
and all Supplemental Rent due to Senior Lenders (i) in the case of all payments
or obligations for which a payment date is specified in the Loan Documents, not
less than five days prior to the date on which the payment due under the Loan
Documents giving rise to such Supplemental Rent obligation shall be due and
payable to any Senior Lender, and (ii) in the case of payments or obligations
which are not scheduled in the Loan Documents, within the lesser of (x) ten days
following the Lessor's demand therefor, or (y) two Business Days immediately
preceding the date on which the payment due under the Loan Documents giving rise
to such Supplemental Rent obligation shall be due and payable to any Senior
Lender. In addition, the Lessee shall pay to the Lessor as Supplemental Rent,
among other things, on demand, to the extent permitted by Applicable Law, the
default rate interest specified in the relevant Loan Documents on any
installment of Supplemental Rent not paid when due for the period for which the
same shall be overdue until the same shall be paid. Unless expressly provided
otherwise in this Lease, in the
-27-
<PAGE>
event of any failure on the part of the Lessee to pay and discharge any
Supplemental Rent as and when due hereunder, the Lessee shall also promptly pay
and discharge any fine, penalty, interest or cost which may be assessed or added
under any Loan Document for nonpayment or late payment of such Supplemental
Rent, all of which shall also constitute Supplemental Rent.
VIII.3 No Termination or Abatement. The Lessee shall remain obligated
---------------------------
under this Lease in accordance with its terms and shall not take any action to
terminate, rescind or avoid this Lease, notwithstanding any action for
bankruptcy, insolvency, reorganization, liquidation, dissolution, or other
proceeding affecting the Lessor, or any action with respect to this Lease which
may be taken by any trustee, receiver or liquidator of the Lessor or by any
court with respect to the Lessor. The Lessee hereby waives all right (i) to
terminate or surrender this Lease (except as provided herein) or (ii) to avail
itself of any abatement, suspension, deferment, reduction, setoff, counterclaim
or defense with respect to any Rent. The Lessee shall remain obligated under
this Lease in accordance with its terms during the Term (and following the
expiration of the Term with respect to those obligations which this Lease
provides survive the expiration or termination of this Lease) and the Lessee
hereby waives any and all rights now or hereafter conferred by statute or
otherwise to modify or to avoid strict compliance with its obligations under
this Lease. Notwithstanding any such statute or otherwise, the Lessee shall be
bound by all of the terms and conditions contained in this Lease.
ARTICLE IX
SUBLEASES AND UNDERLYING AGREEMENTS
IX.1 The Subleases. As of the Commencement Date, the Lessor hereby
-------------
assigns to the Lessee all right, title and interest in the Subleases for the
Term, and the Lessee hereby assumes, and agrees to comply with, all covenants
and obligations on the part of the "landlord" or "lessor" under the terms of the
Subleases during the Term. The Lessee shall take such actions with respect to
the Subleases and Sublessees during the Term as the Lessee deems reasonable and
prudent in order to maintain the Subleases in full force and effect and to
maintain the rental income therefrom. The Lessee shall receive and collect all
rent due under the Subleases, which rent shall be received and held by the
Lessee subject to application to the Lessee's obligation to pay Rent hereunder.
IX.2 Further Subletting. The Lessee shall market any untenanted and
------------------
otherwise available space in the Properties for leasing on market terms and
conditions, as reasonably determined by the Lessee, to any Person (other than an
Affiliate) that the Lessee may reasonably determine to be a creditworthy and
reputable tenant. The intention of the Lessor and the Lessee being that a direct
leasing by the Lessor to any Person (as opposed to a sublease by the Lessee to
such Person) will enhance the marketability of the Properties, the Lessor
agrees, on the terms and conditions hereinafter provided in this Section 9.2, to
-----------
execute any such lease on the condition that, simultaneously with the execution
and delivery of any such lease, (i) the Lessor shall assign to the Lessee all
right, title and interest in the lease for the Term, (ii) the Lessee shall
assume, and agree to comply with, all covenants and obligations on the part of
the "landlord" or "lessor" under the terms of the leases during the Term, and
(iii) such lease shall thereafter be deemed a
-28-
<PAGE>
Sublease for all purposes of this Lease. In the case of any proposed lease other
than a Major Sublease, the Lessor agrees to execute and return such lease to the
Lessee within two Business Days following receipt thereof. The terms and
conditions of, and the tenant or lessee under, a Major Sublease shall be subject
to approval by the Lessor, which approval shall not be unreasonably withheld or
delayed. The Lessor agrees, within five Business days following receipt of a
proposed Major Sublease delivered in accordance with the instructions for notice
of Major Subleases set forth on Schedule 7, either (i) to execute and return
----------
such Major Sublease to the Lessee (on the terms proposed and with such
immaterial changes as may later be requested by the Lessee), or (ii) to advise
the Lessee in writing of the Lessor's specific grounds for objecting to such
Major Sublease. Upon Full Collateralization, the Lessor's grounds for objecting
to a Major Sublease shall not include the financial terms of, or the
creditworthiness of the tenant under, such Major Sublease.
IX.3 Effect of Sublease. No sublease or other relinquishment of possession
------------------
of any Property shall in any way discharge or diminish any of the Lessee's
obligations to the Lessor hereunder, and the Lessee shall remain directly and
primarily liable under this Lease as to the Property or portion thereof so
sublet. The Lessor hereby expressly agrees that any obligations or covenants
under this Lease may be performed by any Sublessee directly, and the Lessor
agrees that any such performance will be accepted in satisfaction of the
obligations or covenants in this Lease.
IX.4 The Underlying Agreements. As of the Commencement Date, the Lessor
-------------------------
hereby assigns to the Lessee all right, title and interest in the Underlying
Agreements for the Term, and the Lessee hereby assumes, and agrees to comply
with, all covenants and obligations on the part of the "owner" under the terms
of the Underlying Agreements. The Lessee shall take all such actions with
respect to the Underlying Agreements and the parties thereto during the Term as
the Lessee deems reasonable and prudent in order to maintain the Underlying
Agreements in full force and effect to the extent that the Underlying Agreements
are necessary or appropriate to the management or maintenance of the Properties.
The Lessee shall pay or collect, as the case may be, all amounts receivable or
payable pursuant to the terms of the Underlying Agreements and all amounts
received shall be held by the Lessee subject to application to the Lessee's
obligation to pay Rent hereunder.
IX.5 Further Agreements. The Lessee may also, with the prior written
------------------
consent of the Lessor, which consent shall not be unreasonably withheld, enter
into further or additional agreements with respect to the management or
maintenance of the Properties by third parties; provided, however, that the
-------- -------
Lessor consents to the terms of such agreements; provided, further, that the
-------- -------
consent of the Lessor not shall be required so long as the aggregate of
obligations under such further or additional agreements do not exceed
$500,000.00 in any twelve-month period. Any such agreements shall expressly (i)
be made subject to and subordinated to this Lease and to the rights of the
Lessor hereunder, (ii) be at market rates and with third parties which are not
Affiliates of the Lessee (except that the Lessee or an Affiliate of the Lessee
may enter into management contracts with respect to those Properties which are
residential in nature) and, and (iii) be terminable by the Lessor without
penalty upon the expiration or earlier termination of this
-29-
<PAGE>
Lease. Upon Full Collateralization, the Lessor's grounds for objecting to
further agreements shall not include the financial terms of such agreements or
the creditworthiness of the parties thereto.
IX.6 Effect of Agreements. No Underlying Agreement or further or
--------------------
additional agreements with respect to the management or maintenance of the
Properties by third parties shall in any way discharge or diminish any of the
Lessee's obligations to the Lessor hereunder, and the Lessee shall remain
directly and primarily liable under this Lease. The Lessor hereby expressly
agrees that any obligations or covenants under this Lease may be performed by
any third party directly, and the Lessor agrees that any such performance will
be accepted in satisfaction of the obligations or covenants in this Lease.
ARTICLE X
LESSEE ACKNOWLEDGMENTS
X.1 Condition of the Property. THE LESSEE ACKNOWLEDGES AND AGREES THAT IT
-------------------------
IS LEASING THE PROPERTIES "AS IS" WITHOUT REPRESENTATION, WARRANTY OR COVENANT
(EXPRESS OR IMPLIED) BY THE LESSOR (EXCEPT AS EXPRESSLY SET FORTH IN THIS LEASE)
AND SUBJECT TO (A) THE EXISTING STATE OF TITLE, (B) THE RIGHTS OF ANY PARTIES IN
POSSESSION THEREOF, (C) ANY STATE OF FACTS WHICH AN ACCURATE SURVEY OR PHYSICAL
INSPECTION MIGHT SHOW, AND (D) VIOLATIONS OF APPLICABLE LAW WHICH MAY EXIST ON
THE DATE HEREOF OR ON THE COMMENCEMENT DATE. EXCEPT AS EXPRESSLY SET FORTH IN
THIS LEASE, THE LESSOR HAS NOT MADE OR SHALL BE DEEMED TO HAVE MADE ANY
REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) AND SHALL NOT BE
DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO THE TITLE (OTHER THAN FOR LESSOR
LIENS), VALUE, HABITABILITY, USE, CONDITION, DESIGN, OPERATION, OR FITNESS FOR
USE OF THE PROPERTY (OR ANY PART THEREOF), OR ANY OTHER REPRESENTATION, WARRANTY
OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY PROPERTY (OR ANY
PART THEREOF) AND THE LESSOR SHALL NOT BE LIABLE FOR ANY LATENT, HIDDEN, OR
PATENT DEFECT THEREIN (OTHER THAN FOR LESSOR LIENS) OR THE FAILURE OF THE
PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY APPLICABLE LAW.
X.2 Risk of Loss. During the Term, the risk of loss of or decrease in the
------------
enjoyment and beneficial use of each Property as a result of the damage or
destruction thereof by Casualty, Condemnation, Environmental Violations or
otherwise is assumed by the Lessee, and the Lessor shall in no event be
answerable or accountable therefor.
ARTICLE XI
POSSESSION AND USE OF THE PROPERTY, ETC.
XI.1 Possession and Use of the Property. Each Property shall be used in a
----------------------------------
manner consistent with (i) the standards applicable to properties of a similar
nature in the geographic area
-30-
<PAGE>
in which such Property is located and in any event not less than the standards
applied by the Lessee for other comparable properties owned or leased by the
Lessee and (ii) the term and conditions of the Loan Documents. The Lessee shall
pay, or cause to be paid, all charges and costs required in connection with the
use of each Property as contemplated by this Lease. The Lessee shall not commit
or permit any waste of any Property or any part thereof.
XI.2 Development Properties. The Lessee shall continue the development and
----------------------
construction of the Development Properties in accordance with the existing plans
and specifications therefor and, in connection therewith, shall be entitled as
the Lessor's sole agent to request advances of the Senior Loans applicable to
the Development Properties on the terms provided in the Loan Documents. The
Lessee shall provide to the Lessor a plan and cost review acceptable to the
Lessor in the Lessor's sole discretion for construction of the Improvements on
each of the Development Properties within thirty days following the Commencement
Date. If the Lessee has not delivered an acceptable plan and cost review within
thirty days following the Commencement Date for any Development Property, then
the Lessor shall be entitled to revoke the grant of agency provided for in this
Section 11.2. In addition, the Lessee shall pay as Supplemental Rent hereunder
- - ------------
the costs and expenses of the Lessor's consultant to monitor the progress of
construction on the Development Properties. The Lessee shall be permitted to
make or approve immaterial changes to the plans and specifications provided that
such changes do not affect the intended use or have a material impact on the
construction budget. The Lessee shall provide to the Lessor copies of all draw
requests submitted pursuant to the Loan Documents and quarterly reports, which
reports shall be in form and substance reasonably satisfactory to the Lessor, as
to the progress of construction and advances of the Senior Loans, and in the
event that the Lessor in its sole discretion finds the progress of construction
or advances of the Senior Loans unsatisfactory, the Lessor shall be entitled to
revoke the grant of agency provided for in this Section 11.2. The Lessor agrees
------------
to promptly execute and deliver any documents reasonably required by the Lessee
in connection with the Lessee's exercise of rights under this Section 11.2.
------------
XI.3 Compliance with Applicable Laws and Insurance Requirements. Subject
----------------------------------------------------------
to the terms hereof relating to permitted contests, the Lessee, at its sole cost
and expense, shall (a) comply in all respects with all Applicable Laws
(including all Environmental Laws) and Insurance Requirements relating to the
Properties, the violation of which could have a Material Adverse Effect,
including the use, construction, operation, maintenance, repair and restoration
thereof, whether or not compliance therewith shall require structural or
extraordinary changes in the applicable Improvements or interfere with the use
and enjoyment of a Property, and (b) procure, maintain and comply with all
material licenses, permits, orders, approvals, consents and other authorizations
required for the construction, use, maintenance and operation of a Property and
for the use, operation, maintenance, repair and restoration of the applicable
Improvements.
XI.4 Utility Charges. The Lessee shall pay or cause to be paid all charges
---------------
for electricity, power, gas, oil, water, telephone, sanitary sewer service and
all other rents and utilities used in or on the Properties during the Term. The
Lessee shall be entitled to receive any credit or refund with respect to any
utility charge paid by the Lessee. To the extent that the Lessee has requested
that the Lessor join with the Lessee in pursuing any such credit or refund
-31-
<PAGE>
on account of any utility charges paid by the Lessee, the amount of any such
credit or refund received by the Lessor, net of the costs and expenses
reasonably incurred by the Lessor in obtaining such credit or refund, shall be
promptly paid over to the Lessee.
XI.5 McNulty Station. On the basis of the Phase I report, dated December,
---------------
1997, by ATC Associates on the Property identified as "McNulty Station" on
Schedule 1, the Lessee agrees to keep the drinking fountain at such Property
- - ----------
identified in such report capped off and to prohibit absolutely the use of such
drinking fountain during the term of this Lease.
ARTICLE XII
MAINTENANCE AND REPAIR; RETURN
XII.1 Maintenance and Repair; Return.
------------------------------
(a) The Lessee, at its sole cost and expense, shall maintain each
Property in good condition (ordinary wear and tear excepted) and make all
necessary repairs thereto, of every kind and nature whatsoever, whether interior
or exterior, ordinary or extraordinary, structural or nonstructural or foreseen
or unforeseen, in each case (i) as required by all Applicable Laws, the Loan
Documents and Insurance Requirements, and (ii) on a basis consistent with the
operation and maintenance of properties comparable in type and location to such
Property and in no event less than the standards applied by the Lessee in the
operation and maintenance of other comparable properties owned or leased by the
Lessee or its Affiliates.
(b) The Lessor shall under no circumstances be required to build any
improvements on the Property, make any repairs, replacements, alterations or
renewals of any nature or description to the Property, make any expenditure
whatsoever in connection with this Lease or maintain the Property in any way.
The Lessor shall not be required to maintain, repair or rebuild all or any part
of the Property, and the Lessee waives any right to (i) require the Lessor to
maintain, repair, or rebuild all or any part of the Property, or (ii) make
repairs at the expense of the Lessor pursuant to any Applicable Laws, the Loan
Documents, Insurance Requirement, contract, agreement, or covenant, condition or
restriction in effect at any time during the Term.
(c) The Lessee shall, upon the expiration or earlier termination of this
Lease, vacate and surrender the Properties to the Lessor in its then-current,
"AS IS" condition, subject to the Lessee's obligations under Sections 11.3,
-------------
12.1(a), 13.1, 14.1, 17.1(a) and 17.2, unless the Lessee has purchased the
- - ------- ---- ---- ------- ----
Property from the Lessor as provided herein. Upon the expiration or earlier
termination of this Lease, (i) the Lessee shall be deemed to assign to the
Lessor all right, title and interest in the Subleases, and the Lessor shall be
deemed to assume, and agree to comply with, all covenants and obligations on the
part of the "landlord" or "lessor" under the terms of the Subleases thereafter
arising, and (ii) the Lessee shall be deemed to assign to the Lessor all right,
title and interest in the Underlying Agreements, and the Lessor shall be deemed
to assume, and agree to comply with, all covenants and obligations on the part
of the "owner" under the terms of the Underlying Agreements thereafter arising.
-32-
<PAGE>
ARTICLE XIII
MODIFICATIONS, ETC.
XIII.1 Modifications. The Lessee, at its sole cost and expense, may at
-------------
any time and from time to time make alterations, renovations, improvements and
additions to any Property or any part thereof and substitutions and replacements
therefor (collectively, "Modifications"); provided, however, that: (i) except
-------------- -------- -------
for any Modification required to be made pursuant to any Applicable Law (a
"Required Modification"), no Modification shall impair the value, utility or
----------------------
useful life of the Property or any part thereof from that which existed
immediately prior to such Modification; (ii) the Modification shall be done
expeditiously and in a good and workmanlike manner; (iii) the Lessee shall
comply with all Applicable Laws (including all Environmental Laws), the Loan
Documents and Insurance Requirements applicable to the Modification, including
the obtaining of all permits and certificates of occupancy and consents, if
required, of Senior Lenders, and the structural integrity of the Property shall
not be adversely affected; (iv) subject to the terms of Article XV relating to
----------
permitted contests, the Lessee shall pay all costs and expenses and shall
discharge (or cause to be insured or bonded over) within forty-five days after
the same shall be filed (or otherwise become effective) any Liens arising with
respect to the Modification; (v) such Modifications shall comply with Sections
--------
11.3 and 12.1(a); and (vi) the Lessee shall be required to obtain the prior
- - ---- -------
written approval of the Lessor, which approval shall not be unreasonably
withheld, with respect to any alterations (other than Required Modifications and
other than with respect to the development of the Development Properties in
accordance with plans and specifications as of the Commencement Date, as the
same may be changed pursuant to Section 11.2) that shall (A) require the consent
------------
of the Senior Lenders under the terms of the Senior Loan Documents, (B)
materially affect any structural element of the applicable Improvements or major
building system therein, or (C) cost in excess of $1,000,000 for the relevant
Property during the term of the Lease, or (D) materially change the nature of
the applicable Improvements for the purposes contemplated by the Lessor and the
Lessee as of the Commencement Date. All Modifications shall remain part of the
realty and shall be subject to this Lease and title thereto shall immediately
vest in the Lessor; provided, however, that Modifications that meet each of the
-------- -------
following conditions shall not be subject to this Lease: (x) such Modifications
are not Required Modifications, and (y) such Modifications are readily removable
without impairing the value, utility or remaining useful life of the Property.
The Lessee may place upon a Property any trade fixtures, machinery, equipment or
other property belonging to the Lessee or third parties and may remove the same
at any time during the Term, subject, however, to the terms of Section 12.1(a),
---------------
and the Lessor hereby waives any Liens, to which it may be entitled pursuant to
any statutory or common law, in such trade fixtures, machinery, equipment or
other property; provided that such trade fixtures, machinery, equipment or other
--------
property do not materially impair the value, utility or remaining useful life of
the Property; and provided, further, that the Lessee shall keep and maintain at
-------- -------
the Property and shall not remove from the Property any Equipment financed or
otherwise paid for (directly or indirectly) by the Lessor pursuant to this Lease
except as provided in Section 13.2.
------------
XIII.2 Substitutions and Replacements. The Lessee shall have the option,
------------------------------
as hereinafter provided, to substitute equipment of "like kind" and of at least
equal utility ("Substituted Equipment"), for Equipment subject to this Lease.
With respect to any item of Substituted
-33-
<PAGE>
Equipment having a value of $250,000.00 or more, on the date of any such
substitution Lessee shall deliver to Lessor a Bill of Sale identifying such
Substituted Equipment and transferring to Lessor all right, title and interest
in and to the Substituted Equipment. With respect to any item of Substituted
Equipment having a value of in excess of $5,000.00 but less than $250,000.00,
Lessee shall deliver to Lessor on the first Business Day of each calendar
quarter a Bill of Sale or Bills of Sale identifying all such items of
Substituted Equipment substituted by the Lessee during such calendar quarter and
transferring to Lessor all right, title and interest in and to the Substituted
Equipment. Such Substituted Equipment shall become subject to this Lease. Upon
the substitution of Equipment as provided herein, Lessor shall transfer to
Lessee at Lessee's expense all of the Lessor's right, title and interest in and
to original Equipment subject to the substitution without any representation or
warranty other than the absence of Lessor Liens.
ARTICLE XIV
WARRANT OF TITLE; EASEMENTS
XIV.1 Warrant of Title. The Lessee agrees that except as otherwise
----------------
provided herein and subject to the terms of Article XV relating to permitted
----------
contests, the Lessee shall not directly or indirectly create or allow to remain,
and shall promptly discharge at its sole cost and expense, any Lien (other than
Lessor Liens), defect, attachment, levy, title retention agreement or claim upon
the Property or any Modifications or any Lien, attachment, levy or claim with
respect to the Rent, other than Permitted Liens
XIV.2 No Consent to Work. Nothing contained in this Lease shall be
------------------
construed as constituting the consent or request of the Lessor, expressed or
implied, to or for the performance by any contractor, mechanic, laborer,
materialman, supplier or vendor of any labor or services or for the furnishing
of any materials for any construction, alteration, addition, repair or
demolition of or to the Properties or any part thereof. NOTICE IS HEREBY GIVEN
THAT THE LESSOR IS NOT AND SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR
MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE HOLDING THE
PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE, AND THAT NO MECHANIC'S
OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR
AFFECT THE INTEREST OF THE LESSOR IN AND TO THE PROPERTIES.
ARTICLE XV
PERMITTED CONTESTS
XV.1 Permitted Contests in Respect of Applicable Law. If, to the extent
-----------------------------------------------
and for so long as (a) a test, challenge, appeal or proceeding for review of any
Applicable Law relating to any Property shall be prosecuted diligently and in
good faith in appropriate proceedings by the Lessee or (b) compliance with such
Applicable Law shall have been excused or exempted by a valid nonconforming use,
variance permit, waiver, extension or forbearance, the Lessee shall not be
required to comply with such Applicable Law but only if and so long as any such
test,
-34-
<PAGE>
challenge, appeal, proceeding, waiver, extension, forbearance or noncompliance
shall not, in the reasonable opinion of the Lessor, involve (A) any risk of
criminal liability being imposed on the Lessor or the Property, or (B) any risk
of (1) foreclosure, forfeiture or loss of the Property, or any material part
thereof, or (2) the nonpayment of Rent or (C) any substantial danger of (1) the
sale of, or the creation of any Lien (other than a Permitted Lien) on, any part
of the Property, (2) civil liability being imposed on the Lessor or the
Property, or (3) enjoinment of, or interference with, the use, possession or
disposition of the Property in any material respect. The Lessor will not be
required to join in any proceedings pursuant to this Section 15.1 unless a
------------
provision of any Applicable Law requires that such proceedings be brought by or
in the name of the Lessor; and in that event the Lessor will join in the
proceedings or permit them or any part thereof to be brought in its name if and
so long as (i) no Default has occurred and is continuing and (ii) the Lessee
pays all related expenses and indemnifies the Lessor to its satisfaction.
ARTICLE XVI
INSURANCE
XVI.1 Public Liability and Workers' Compensation Insurance.
----------------------------------------------------
(a) The Lessee shall procure and carry from a financially sound and
responsible insurance company, at the Lessee's sole cost and expense, commercial
general liability insurance for claims for bodily injury or death sustained by
persons or damage to property while on the Property and such other public
liability coverages on terms and in amounts that are no less favorable than set
forth on Schedule 5 hereto. Any such policy shall be endorsed to name the
----------
Lessor as an additional insured. Any such policy shall also specifically
provide that the policy shall be considered primary insurance which shall apply
to any loss or claim before any contribution by any insurance which the Lessor
may have in force.
(b) The Lessee shall, in the operation of the Properties including in
connection with any Modifications thereof), comply with, or cause the applicable
contractor to comply with, all applicable workers' compensation laws.
XVI.2 Property and Other Insurance. The Lessee shall procure and carry
----------------------------
from a sound and responsible insurance company, at the Lessee's sole cost and
expense, property and other insurance for each Property insured against loss or
damage by fire, flood and other risks on terms and in amounts that are no less
favorable than as set forth on Schedule 5 hereto.
----------
XVI.3 Business Interruption and Rental Insurance. The Lessee shall
-------------------------------------------
procure and carry from a sound and responsible insurance company, at the
Lessee's sole cost and expense, business interruption and /or loss of rental
income insurance on terms and in amounts that are no less favorable than as set
forth on Schedule 5 hereto.
----------
XVI.4 Environmental Insurance. The Lessee shall procure and carry from a
-----------------------
sound and responsible insurance company, at the Lessee's sole cost and expense,
environmental insurance on terms and in amounts that are no less favorable than
as set forth on Schedule 5 hereto throughout the Term of this Lease.
----------
-35-
<PAGE>
XVI.5 Insurance Coverage.
------------------
(a) The Lessee shall furnish the Lessor with certificates showing the
insurance procured under Sections 16.1 , 16.2, 16.3 and 16.4 to be in effect and
------------- ---- ---- ----
naming the Lessor as additional insured with respect to liability coverage
(excluding worker's compensation insurance) and naming the Lessor as loss payee
with respect to property coverage. All such insurance shall be at the cost and
expense of the Lessee. Such certificates shall include a provision for no less
than thirty days' advance written notice by the insurer to the Lessor in the
event of cancellation or reduction of such insurance.
(b) The Lessee agrees that the insurance policy or policies obtained
under Section 16.2, shall include an appropriate clause pursuant to which such
policy shall provide that it will not be invalidated should the Lessee waive, in
writing, prior to a loss, any or all rights of recovery against any party for
losses covered by such policy, and that the insurance in favor of the Lessor and
its rights under and interests in said policies shall not be invalidated or
reduced by any act or omission or negligence of the Lessee or any other Person
having any interest in the Property. The Lessee hereby waives any and all such
rights against the Lessor to the extent of payments made under such policies.
(c) If the policies of insurance required by this Article XVI provide
for the payment of premiums on other than an annual basis, then (x) such
premiums shall be paid no less frequently than quarterly, and (ii) the Lessee
shall maintain with the Lessor as of the Commencement Date and at all times
thereafter an amount sufficient to pay the next quarterly installment of
premiums, which amount shall be maintained in an escrow account by the Lessor.
(d) Subject to the terms of the Loan Documents and the Subleases, all
proceeds of insurance maintained pursuant to Section 16.2 on account of any
------------
damage to or destruction of any Property or any part thereof shall be paid over
to the Lessor or as it may direct; provided that if no Event of Default, or
--------
Event of Loss shall have occurred and be continuing and, so long as the Lessee
is diligently repairing the damage to the Property caused by the applicable
Casualty, all such proceeds will be disbursed to the Lessee on a progress-
payment basis and otherwise on standard commercial terms to effect the repair of
the Improvements or the Equipment.
ARTICLE XVII
CASUALTY AND CONDEMNATION;
ENVIRONMENTAL MATTERS
XVII.1 Casualty and Condemnation.
-------------------------
(a) Subject to the provisions of this Article XVII, if all or a portion
------------
of any Property (having a value in excess of the lesser of (x) ten percent of
the Stipulated Loss Value of such Property or (y) $1,000,000.00) is damaged or
destroyed in whole or in part by a Casualty or if the use, access, occupancy,
easement rights or title to such Property or any part thereof, is the subject
-36-
<PAGE>
of a Condemnation, then the Lessee shall (i) reconstruct, refurbish and repair
the Property upon submission to the Lessor of an Architect's certificate to the
effect that the Property can be fully restored to the condition required under
this Lease prior to the end of the Term and as to the cost of such restoration,
or (ii) pay to Lessor the Stipulated Loss Value for such Property.
(b) The Lessee may appear in any proceeding or action to negotiate,
prosecute, adjust or appeal, and shall be entitled to control adjustment of, any
claim for any award, compensation or insurance payment on account of any such
Casualty or Condemnation, if the Lessee has agreed to repair the damage to the
Improvements, unless an Event of Default shall have occurred and be continuing,
in which case losses shall be adjusted by the Lessor. Losses shall also be
adjusted by the Lessor in circumstances where the Lessee is not required to, and
has not agreed to, repair the damage to the Improvements, unless the Lessee has
purchased the Property pursuant to the terms of this Lease. The Lessee shall
pay all reasonable expenses of the Lessor in any proceeding or action to
negotiate, prosecute, adjust or appeal any claim for any award, compensation or
insurance payment on account of any Casualty or Condemnation. At the Lessee's
reasonable request, and at the Lessee's sole cost and expense, the Lessor shall
participate in any such proceeding, action, negotiation, prosecution or
adjustment which the Lessee is entitled to control. The Lessor and the Lessee
agree that this Lease shall control the rights of the Lessor and the Lessee in
and to any such award, compensation or insurance payment.
(c) If the Lessor or the Lessee shall receive notice of a Casualty or of
an actual, pending or threatened Condemnation of the Property or any interest
therein, the Lessor or the Lessee, as the case may be, shall give notice thereof
to the other promptly after the receipt of such notice.
(d) If, pursuant to this Section 17.1 and Section 18.1, this Lease shall
------------ ------------
continue in full force and effect following a Casualty or Condemnation with
respect to such Property, the Lessee shall, at its sole cost and expense (and,
without limitation, if any award, compensation or insurance payment is not
sufficient to restore the Property in accordance with this paragraph, the Lessee
shall pay the shortfall), promptly and diligently repair any damage to the
Property caused by such Casualty or Condemnation in conformity with the
requirements of Sections 12.1 and 13.1 using the as-built plans and
------------- ----
specifications for the Property (as modified to give effect to any subsequent
Modifications, any Condemnation affecting the Property and all Applicable Laws)
so as to restore the Property to at least the same condition, operation,
function and value as existed immediately prior to such Casualty or Condemnation
with such Modification as the Lessee may elect in accordance with Section 13.1.
------------
In such event, title to the Property shall remain with the Lessor. Upon
completion of such restoration, the Lessee shall furnish the Lessor an
Architect's certificate of substantial completion and a Responsible Employee's
Certificate confirming that such restoration has been completed pursuant to this
Lease.
(e) In no event shall a Casualty or Condemnation affect the Lessee's
obligations to pay Rent pursuant to Articles VI or to perform its obligations
-----------
and pay any amounts due pursuant to Article XXII .
------------
-37-
<PAGE>
(f) Subject to the terms of the Loan Documents, any Net Proceeds
received by the Lessee in respect of a Casualty or Condemnation shall be turned
over to the Lessor. Unless a Casualty or Condemnation results in an Event of
Loss, and subject to the terms of the Loan Documents, the Lessor will make any
Net Proceeds available to the Lessee for the repair or restoration of the
Property on a progress-payment basis and otherwise on standard commercial terms.
In the event that the Lessee elects to pay to Lessor the Stipulated Loss Value
for such Property pursuant to Section 17.1(a)(ii), Net Proceeds received by the
-------------------
Lessor shall be credited against the Lessee's payment of the Stipulated Loss
Value. To the extent that Net Proceeds exceed the cost of repair or restoration
or the Stipulated Loss Value, as the case may be, such excess shall be treated
as Excess Proceeds.
XVII.2 Environmental Matters. Promptly upon the Lessee's discovery of the
---------------------
existence of an Environmental Violation not disclosed in the environmental
audits identified in Schedule IX to the Purchase and Sale Agreement, the Lessee
shall notify the Lessor in writing of such Environmental Violation. If the
Lessor elects not to terminate this Lease pursuant to Section 18.1, at the
------------
Lessee's sole cost and expense, the Lessee shall promptly and diligently
commence, or diligently pursue all reasonable commercial efforts to cause
responsible third parties to commence, any response, clean up, remedial or other
action necessary to remove, clean up or remediate the Environmental Violation in
accordance with the terms of Section 11.3. If the Lessor does not deliver a
------------
Termination Notice pursuant to Section 18.1, the Lessee shall, upon completion
------------
of remedial action by the Lessee, cause to be prepared by an environmental
consultant reasonably acceptable to the Lessor a report describing the
Environmental Violation and the actions taken by the Lessee (or its agents) in
response to such Environmental Violation, and a statement by the consultant that
the Environmental Violation has been remedied in compliance in all material
respects with applicable Environmental Law. Each such Environmental Violation
shall be remedied prior to the Expiration Date. Nothing in this Article XVII
------------
shall reduce or limit the Lessee's obligations under the indemnity provisions
hereof.
XVII.3 Notice of Environmental Matters. Promptly, but in any event within
-------------------------------
sixty Business Days from the date the Lessee has actual knowledge thereof, the
Lessee shall provide to the Lessor written notice of any pending or threatened
claim, action or proceeding (except to the extent that such claim, action or
proceeding is disclosed in the environmental audits identified in Schedule IX to
the Purchase and Sale Agreement) involving any Environmental Law or any Release
on or in connection with the Properties. All such notices shall describe in
reasonable detail the nature of the claim, action or proceeding and the Lessee's
proposed response thereto. In addition, the Lessee shall provide to the Lessor,
within ninety days of receipt, copies of all written communications with any
Governmental Authority relating to any Environmental Violation in connection
with the Properties. The Lessee shall also promptly provide such detailed
reports of any such environmental claims as may reasonably be requested by the
Lessor. In the event that the Lessor receives written notice of any pending or
threatened claim, action or proceeding involving any Environmental Law or any
Release on or in connection with the Property, the Lessor shall promptly give
notice thereof to the Lessee.
-38-
<PAGE>
ARTICLE XVIII
EVENTS OF LOSS
XVIII.1 Transfer upon Certain Events. With respect to any Property, if
----------------------------
any of the following events shall occur ("Event of Loss"):
-------------
(a) a Significant Casualty;
(b) a Significant Condemnation;
(c) an Environmental Violation, the estimated cost of remediation of which
would exceed an amount equal to $500,000.00;
and the Lessor or the Lessee shall have given written notice to the other party
within ninety days following actual knowledge of such Event of Loss, that this
Lease is to be terminated as to such Property as a consequence of the occurrence
of such an event (a "Loss Notice"), then the Lessee shall be obligated to pay to
------------
the Lessor, on or prior to the date occurring sixty days after the date of the
Loss Notice, the Stipulated Loss Value for such Property, and the Lessor shall,
as set forth in Section 18.2, upon receipt of such payment, transfer to the
------------
Lessee on such date of payment all of the Lessor's interest in the Property.
XVIII.2 Transfer Procedures. On the date of the payment by the Lessee of
-------------------
the Stipulated Loss Value pursuant to Section 18.1 (such date, the "Transfer
------------ --------
Date"), this Lease shall terminate as to such Property and, concurrent with the
- - -----
Lessor's receipt of such payment,
(a) the Lessor shall execute and deliver to the Lessee at the Lessee's
cost and expense a quitclaim deed with respect to the Property and an assignment
of the Lessor's entire interest in the Property (which shall include an
assignment of all of the Lessor's right, title and interest in and to any Net
Proceeds not previously received by the Lessor and existing subleases and
security deposits thereunder), in each case in recordable form and otherwise in
conformity with local custom and free and clear any Lessor Liens attributable to
the Lessor;
(b) the Property shall be conveyed to such Person "AS IS" and in its then
present physical condition;
(c) Net Proceeds received by the Lessor shall be credited against the
Lessee's payment of the Stipulated Loss Value (and to the extent that Net
Proceeds exceed the Stipulated Loss Value, such excess shall be treated as
Excess Proceeds); and
(d) the Lessor shall discharge any Lessor's Liens and execute and deliver
to the Lessee and the Lessee's title insurance company an affidavit as to the
absence of any Lessor Liens.
-39-
<PAGE>
ARTICLE XIX
EVENTS OF DEFAULT
XIX.1 Events of Default. The occurrence of any one or more of the
-----------------
following events (whether such event shall be voluntary or involuntary or come
about or be effected by operation of law or pursuant to or in compliance with
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body) shall constitute an "Event of Default":
-----------------
(a) the Lessee shall fail to make any payment of Basic Rent, including
amounts due upon an Event of Loss, when due; provided, however, that with
-------- -------
respect to any two payments due in any twelve-month period prior to February 2,
2003, such failure shall constitute an Event of Default only if such failure
shall continue for a period of five days after the due date;
(b) the Lessee shall fail to make payment of any Supplemental Rent as
and when due (subject to any notice requirements and grace periods provided for
in the Loan Documents) and, in the case where no due date is specified, within
fifteen days following the Lessor's written demand therefor;
(c) the Lessee shall fail to maintain insurance as required by Article
-------
XVI of this Lease;
- - ---
(d) the Lessee shall breach Section 11.5 of this Lease;
(e) the Lessee shall fail to observe or perform any term, covenant or
condition of the Lessee under this Lease or the Loan Documents other than those
described in Section 19.1(a), (b), (c) or (d) hereof, and such failure shall
--------------- --- --- ---
have continued for the lesser of (i) thirty days after the earlier of (x)
delivery to the Lessee of written notice thereof from the Lessor or (y) a
Responsible Employee of the Lessee shall have knowledge of such failure, or (ii)
such lesser period as may be provided for the cure of such default under the
Loan Documents; provided, however, that if such failure is capable of cure but
-------- -------
cannot be cured by payment of money or cannot be cured by diligent efforts
within such thirty-day period but such diligent efforts shall be properly
commenced within the cure period and the Lessee is diligently pursuing, and
shall continue to pursue diligently, remedy of such failure, the cure period
shall be extended for an additional period of time as may be necessary to cure,
not to exceed (i) an additional forty-five days, or (ii) in the case only of a
failure to observe or perform any term, covenant or condition of the Loan
Documents other than those described in Section 19.1(a), (b), (c) or (d), such
--------------- --- --- ----
period (if any) as may be provided for the cure of such default under the Loan
Documents, but in no event beyond the Expiration Date;
(f) any representation or warranty made by the Lessee in this Lease
shall prove to have been inaccurate as of the date of execution of this Lease,
and such inaccuracy shall have a Material Adverse Effect, and if such inaccuracy
can be cured, it shall not have been cured within forty-five days after the
earlier of (i) delivery to the Lessee of written notice thereof from the Lessor
or (ii) a Responsible Employee of the Lessee shall have knowledge of such
inaccuracy;
-40-
<PAGE>
(g) the Lessee shall assign, transfer or other pledge or hypothecate its
interest under this Lease;
(h) a Guarantee Event of Default shall have occurred and be continuing;
(i) the Lessee shall (i) admit in writing its inability to pay its debts
generally as they become due, (ii) file a petition under the United States
bankruptcy laws or any other applicable insolvency law or statute of the United
States of America or any State or Commonwealth thereof, (iii) make a general
assignment for the benefit of its creditors, (iv) consent to the appointment of
a receiver of itself or the whole or any substantial part of its property, (v)
fail to cause the discharge of any custodian, trustee or receiver appointed for
the Lessee or the whole or a substantial part of its property within sixty days
after such appointment, or (vi) file a petition or answer seeking or consenting
to reorganization under the United States bankruptcy laws or any other
applicable insolvency law or statute of the United States of America or any
State or Commonwealth thereof;
(j) insolvency proceedings or a petition under the United States
bankruptcy laws or any other applicable insolvency law or statute of the United
States of America or any State or Commonwealth thereof shall be filed against
the Lessee and not dismissed within sixty days from the date of its filing, or a
court of competent jurisdiction shall enter an order or decree appointing,
without the consent of the Lessee, a receiver of the Lessee or the whole or a
substantial part of any of its property and such order or decree shall not be
vacated or set aside within ninety days from the date of the entry thereof;
(k) an event of default, as defined in any agreement, mortgage,
indenture or instrument under which there may be issued, or by which there may
be secured or evidenced, any indebtedness for borrowed money of the Lessee in a
principal amount in excess of $5,000,000 which by its terms is recourse to the
assets or interests of the Lessee, whether such indebtedness now exists or shall
hereafter be created, shall happen and be continuing, if the effect of such
default is to accelerate the maturity of such indebtedness, unless the Lessee is
diligently and in good faith contesting such default in appropriate proceedings;
(l) the Lessee shall fail to comply with the obligations with respect to
the Properties assumed by the Lessee under the terms of the Purchase and Sale
Agreement and such failure shall have continued for thirty days after the
earlier of delivery to the Lessee of written notice thereof from the Lessor;
provided, however, that if such failure is capable of cure but cannot be cured
- - -------- -------
by payment of money or cannot be cured by diligent efforts within such thirty-
day period but such diligent efforts shall be properly commenced within the cure
period and the Lessee is diligently pursuing, and shall continue to pursue
diligently, remedy of such failure, the cure period shall be extended for an
additional period of time as may be necessary to cure, not to exceed an
additional forty-five days; or
(m) the Lessee shall directly or indirectly contest the validity of this
Lease or the Guaranty in any manner in any court of competent jurisdiction.
-41-
<PAGE>
XIX.2 Remedies. Upon the occurrence of any Event of Default and at any
--------
time thereafter, the Lessor may, so long as such Event of Default is continuing,
do one or more of the following as the Lessor in its sole discretion shall
determine, without limiting any other right or remedy the Lessor may have on
account of such Event of Default; provided, however, that the Lessor will not
-------- -------
exercise any of such remedies with respect to an Event of Default arising under
Section 19.1(a) until the Lessor has given the Lessee written notice of such
- - ---------------
Event of Default and the Lessee has failed to cure such Event of Default for a
period of five days thereafter:
(a) The Lessor may, by notice to the Lessee rescind or terminate this
Lease as of the date specified in such notice; however, (i) no reletting,
reentry or taking of possession of any Property (or any portion thereof) or all
the Properties by the Lessor will be construed as an election on the Lessor's
part to terminate this Lease unless a written notice of such intention is given
to the Lessee, (ii) notwithstanding any reletting, reentry or taking of
possession, the Lessor may at any time thereafter elect to terminate this Lease
for a continuing Event of Default and (iii) no act or thing done by the Lessor
or any of its agents, representatives or employees and no agreement accepting a
surrender of the Property shall be valid unless the same be made in writing and
executed by the Lessor.
(b) The Lessor may (i) demand that the Lessee, and the Lessee shall upon
the written demand of the Lessor, return any Property or all the Properties
promptly to the Lessor in the manner and condition required by, and otherwise in
accordance with all of the provisions of, Articles XII and Sections 11.3 hereof
------------ -------------
as if the Properties were being returned at the end of the Term, and the Lessor
shall not be liable for the reimbursement of the Lessee for any costs and
expenses incurred by the Lessee in connection therewith, and (ii) without
prejudice to any other remedy which the Lessor may have for possession of the
Properties, and to the extent and in the manner permitted by Applicable Law,
enter upon the Properties or any Property and take immediate possession (to the
exclusion of the Lessee) thereof or any part thereof and expel or remove the
Lessee and any other Person who may be occupying such Properties or Property, by
summary proceedings or otherwise, all without liability to the Lessee for or by
reason of such entry or taking of possession, whether for the restoration of
damage to property caused by such taking or otherwise and, in addition to the
Lessor's other damages, the Lessee shall be responsible for all costs and
expenses incurred by the Lessor in connection with any reletting, including,
without limitation, reasonable brokers' fees and all costs of any alterations or
repairs made by the Lessor.
(c) The Lessor may, at its option, elect not to terminate this Lease and
to preserve the Lessee's obligation to pay all Rent (together with all costs of
collection) and to enforce the Lessee's obligations under this Lease as and when
the same become due, or are to be performed, and at the option of the Lessor,
upon any abandonment of any Property by the Lessee or re-entry of same by the
Lessor, the Lessor may, in its sole and absolute discretion, elect not to
terminate this Lease and may collect rent due under Subleases and other income
of the Properties, make and collect payments under Underlying Agreements, make
the necessary repairs, and relet any Property or any part thereof for such term
or terms (which may be for a long term extending beyond the Term of this Lease)
and at such rental or rentals and upon such other terms and conditions as the
Lessor in its reasonable discretion may deem advisable; and the net amount of
-42-
<PAGE>
such collections and payments by the Lessor, if any, shall be applied to the
Lessee's obligations hereunder in such order, proportion and priority as the
Lessor may elect in the Lessor's sole and absolute discretion and if the net
amount of such collections and payments by the Lessor is insufficient to pay all
Rent to be paid with respect to any period, the Lessee shall pay any deficiency,
as calculated by the Lessor, to the Lessor on demand.
(d) The Lessor may exercise any other right or remedy that may be
available to it under Applicable Law, or proceed by appropriate court action
(legal or equitable) to enforce the terms hereof or to recover damages for the
breach hereof. Separate suits may be brought to collect any such damages for any
period(s), and such suits shall not in any manner prejudice the Lessor's right
to collect any such damages for any subsequent period(s), or the Lessor may
defer any such suit until after the expiration of the Term, in which event such
suit shall be deemed not to have accrued until the expiration of the Term.
(e) Notwithstanding the Lessor's choice of remedies provided for above,
the Lessor may retain and apply against any Rent and the Lessor's damages (i)
all amounts on deposit from time to time in the Cash Collateral Account or
otherwise assigned or pledged as security for the performance of the Lessee's
obligations under this Lease, and (ii) all sums which the Lessor would, absent
such Event of Default, be required to pay to, or turn over to, the Lessee
pursuant to the terms of this Lease.
(f) Waiver of Certain Rights. If this Lease shall be terminated pursuant
------------------------
to Section 19.2, the Lessee waives, to the fullest extent permitted by law, (a)
------------
any notice of re-entry or the institution of legal proceedings to obtain re-
entry or possession; (b) any right of redemption, re-entry or repossession; (c)
the benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt or limiting the Lessor with respect to the
election of remedies; and (d) any other rights which might otherwise limit or
modify any of the Lessor's rights or remedies under this Article XIX.
-----------
XIX.3 The Lessor's Right to Cure the Lessee's Lease Defaults. The Lessor,
------------------------------------------------------
without waiving or releasing any obligation or Event of Default, may (but shall
be under no obligation to), remedy any Event of Default for the account and, at
the sole cost and expense of the Lessee, including the failure by the Lessee to
maintain the insurance required by Article XVI, and may, to the fullest extent
-----------
permitted by law, and notwithstanding any right of quiet enjoyment in favor of
the Lessee, enter upon the Property for such purpose and take all such action
thereon as the Lessor may reasonably determine to be necessary or appropriate
therefor, and the Lessor shall give prompt notice thereof to the Lessee. No
such entry shall be deemed an eviction of the Lessee. All reasonable out-of-
pocket costs and expenses so incurred (including fees and expenses of counsel or
other agents or representatives retained by the Lessor for this purpose),
together with interest thereon at the Overdue Rate from the date on which such
sums or expenses are paid by the Lessor, shall be paid by the Lessee to the
Lessor or to such other Person as may be entitled thereto as Supplemental Rent.
XIX.4 Cure by the Lessee. Notwithstanding anything in Section 19.2 to the
------------------ ------------
contrary, but subject to the restriction set forth in Section 22.2, in the case
------------
of an Event of Default arising
-43-
<PAGE>
under Section 19.1(e) or (f), the Lessee may suspend the Lessor's exercise of
--------------- ---
rights and remedies hereunder by giving notice to the Lessor that the Lessee
intends to purchase the Lessor's interest in the Property or Properties giving
rise to the Event of Default on or prior to the date occurring sixty days after
the date of the Lessee's notice by paying the Lessor the Stipulated Loss Value
for such Property or Properties; provided, however, that if the Lessee is
-------- -------
prohibited from exercising its rights provided for in this Section 19.4 by
------------
reason of the restriction set forth in Section 22.2, and unless the Lessor
------------
agrees to waive such restriction, then the Lessor shall not exercise any right
or remedy pursuant to Section 19.2, 19.3, the Guarantee, the Parent Guarantee,
------------ ----
or otherwise until the Lessee shall have had a period of ten days following the
termination of such restriction to exercise its rights under this Section 19.4;
------------
provided, further, that if the Lessor has determined that the Lessee has the
- - -------- -------
funds and is otherwise capable of curing the Event of Default giving rise to the
exercise of rights under this Section 19.4 and that the obstacles to the
Lessee's ability to cure the Event of Default are not bona fide, then the Lessor
---- ----
shall not be prohibited from exercising any right or remedy pursuant to Section
--- -------
19.2, 19.3, the Guarantee, the Parent Guarantee, or otherwise. The Lessor shall
- - ---- ----
transfer to the Lessee on such date of payment all of the Lessor's interest in
the Property or Properties on terms consistent with those set forth in Section
-------
18.2 (it being understood that the restrictions set forth in Section 22.1(b) and
- - ---- ---------------
(d), 22.4, and 22.5 shall not be applicable to as transfer made pursuant to this
---- ----
Section 19.4).
- - ------------
XIX.5 Default by the Lessor. If any representation or warranty of Lessor
---------------------
in this Lease is or becomes untrue in any material respect, or if the Lessor is
in breach of any covenant or obligation of the Lessor under this Lease, then the
Lessor will be in default under this Lease. If the Lessor fails to cure such
default within thirty days following the Lessee's written notice of such
default, the Lessee will be entitled, at its option, to (a) seek specific
performance of the Lessor's obligations under this Lease, (b) seek recovery of
the Lessee's actual and consequential damages resulting from the Lessor's
default, (c) purchase any or all of the Properties for the Stipulated Loss Value
notwithstanding the restriction set forth in Section 22.2, (d) terminate this
------------
Lease upon the Lessee's notice to the Lessor of the Lessee's intention to
terminate this Lease on a date specified in such notice, and thereupon be
relieved of any further obligations thereafter accruing to the Lessor under this
Lease, including, but not limited to, the obligation to pay Rent, (e) any other
right or remedy now or hereafter existing by law or in equity, or (f) any
combination of the foregoing. Lessor will pay to Lessee all reasonable expenses
incurred by Lessee in connection with any default by Lessor under this Lease,
including Lessee's reasonable attorneys' fees and expenses. To the extent that
the Lessee is prevented from exercising any rights under this Lease as a result
of a default by the Lessor, any time periods provided for in this Lease with
respect to the exercise of such rights shall be tolled during the period of the
Lessor's default.
ARTICLE XX
REFINANCING
XX.1 Refinancing Proposed by Lessee. The Lessor agrees to cooperate with
------------------------------
the Lessee (which cooperation shall include the execution and delivery of
application and loan closing
-44-
<PAGE>
documentation) in connection with the application for and closing of a
refinancing loan secured by any Property on terms and from an Institutional
Lender selected by the Lessee; provided, however, that (i) the loan
-------- -------
documentation shall be reasonably satisfactory to the Lessor, and (ii) the loan
documentation shall provide that the loan is non-recourse (subject only to
standard recourse exceptions). In the event of the refinancing of any Property,
the new loan shall be deemed a Senior Loan for all purposes of this Lease.
XX.2 Refinancing Proceeds. Any proceeds of a refinancing of a Property in
--------------------
excess of the Senior Loan being refinanced but less than the Early Buy-Out Price
for the Property shall be applied by the Lessor to reduce the Lessor's Cost for
such Property. Any proceeds of a refinancing of a Property in excess of the
Early Buy-Out Price for such Property shall be "Refinancing Proceeds".
--------------------
Refinancing Proceeds received by the Lessor shall be applied by the Lessor as
follows: (i) at any time that the Lease Balance reduced by amounts on deposit in
-------
the Cash Collateral Account and increased by the amount of Recourse Debt is
---------
$34,000,000.00 or greater, the Guarantor is in compliance with the financial
covenants in the Guarantee, and no Event of Default has occurred which is
continuing, (x) any payment of Refinancing Proceeds shall be retained by the
Lessor and applied by the Lessor to reduce the Lessor's Costs for the Properties
and Loans on a pro rata basis or otherwise as mutually agreed by the Lessor and
the Lessee, and (y) an amount equal to fifteen percent of such payment of
Refinancing Proceeds shall be released to the Lessee from the Cash Collateral
Account (or, to the extent of any insufficiency in the Cash Collateral Account,
the Lessee will be entitled to a release of the next monies deposited in the
Cash Collateral Account) , and (ii) at any time that the Lease Balance reduced
-------
by amounts on deposit in the Cash Collateral Account and increased by the amount
---------
of Recourse Debt is less than $34,000,000.00, the Guarantor is in compliance
with the financial covenants in the Guarantee, and no Event of Default has
occurred which is continuing, (x) any payment of Refinancing Proceeds shall be
retained by the Lessor and applied by the Lessor to reduce the Lessor's Costs
for the Properties and Loans on a pro rata basis or otherwise as mutually agreed
by the Lessor and the Lessee, and (y) an amount equal to twenty-five percent of
such payment of Refinancing Proceeds shall be released to the Lessee from the
Cash Collateral Account (or, to the extent of any insufficiency in the Cash
Collateral Account, the Lessee will be entitled to a release of the next monies
deposited in the Cash Collateral Account); provided, however, that upon Full
-------- -------
Collateralization, one hundred percent of any payments of Refinancing Proceeds
shall be retained by the Lessor and applied by the Lessor to reduce the Lessor's
Costs for the Properties and Loans on a pro rata basis or otherwise as mutually
agreed by the Lessor and the Lessee, and a corresponding amount shall be
released from the Cash Collateral Account to the Lessee; and provided, further,
-------- -------
at any time that an Event of Default has occurred and is continuing, the Lessor
may apply one hundred percent of Refinancing Proceeds to the cure of the Event
of Default or to the Lease Balance, as the Lessor shall determine in its sole
discretion.
XX.3 Refinancing Proposed by Lessor. The Lessee agrees to cooperate with
------------------------------
the Lessor in connection with the application for and closing of a refinancing
loan secured by any Property on terms and from an Institutional Lender selected
by the Lessor; provided, however, that, so long as an Event of Default has not
-------- -------
occurred and is continuing, (i) the loan terms shall be on the same or better
terms as the loan being refinanced, (ii) the loan documentation shall be
reasonably satisfactory to the Lessee, (iii) the loan documentation shall
provide that the loan is
-45-
<PAGE>
non-recourse; and (iv) the Refinancing Proceeds of any refinancing shall be
applied in accordance with Section 20.1.
------------
ARTICLE XXI
PURCHASE OPTION
XXI.1 Purchase Option. The Lessee shall have the option (exercisable by
---------------
giving the Lessor irrevocable written notice (the "Purchase Notice") of the
---------------
Lessee's election to exercise such option) to purchase all, and not less than
all, of the Properties and the Loans on or after February 2, 2003, and prior to
the Expiration Date at a purchase price equal to the Purchase Option Price. The
Lessee shall deliver the Purchase Notice to the Lessor not less than 90 days
prior to the proposed closing date for the transfer of the Properties and the
Loans (the "Purchase Option Closing Date"), which date shall in no event be
----------------------------
later than the Expiration Date. If the Lessee exercises its option to purchase
the Properties and the Loans pursuant to this Section 21.1 (the "Purchase
------------ --------
Option"), the Lessor shall transfer to the Lessee or its designee all of the
- - ------
Lessor's right, title and interest in and to the Properties and the Loans upon
receipt of the Purchase Price on the Purchase Option Closing Date. The Lessee
may designate, in a notice given to the Lessor not less than ten Business Days
prior to the closing of such purchase (time being of the essence), the
transferee or transferees to whom the conveyances shall be made (if other than
to the Lessee), in which case such conveyances shall (subject to the terms and
conditions set forth herein) be made to such designee or designees; provided,
--------
however, that such designation of a transferee or transferees shall not cause
- - -------
the Lessee to be released, fully or partially, from any of its obligations under
this Lease.
ARTICLE XXII
EARLY BUY-OUT OPTION
XXII.1 Early Buy-Out Option. Subject to the fulfillment of each of the
--------------------
conditions set forth in this Section 22.1, the Lessee shall have the option (the
------------
"Early Buy-Out Option") to market and complete the sale of any Property for the
--------------------
Lessor. The Lessee's effective exercise and consummation of the Early Buy-Out
Option shall be subject to the due and timely fulfillment of each of the
following provisions as to the Property as of the dates set forth below.
(a) Subject to Section 22.2, at any time, but not later than 15 days
------------
prior to February 2, 2003, the Lessee shall give to the Lessor written notice of
the Lessee's exercise of an Early Buy-Out Option with respect to any Property
(the "Early Buy-Out Notice"), which notice shall specify a date for closing of
--------------------
title to such Property prior to February 2, 2003 (the "Early Buy-Out Closing
---------------------
Date").
- - ----
(b) The Lessor's obligation to convey any Property upon the exercise of
an Early Buy-Out Option is subject to the condition that, on the date of the
Lessee's notice to the Lessor of the Lessee's exercise of the Early Buy-Out
Option and thereafter until the Early Buy-Out
-46-
<PAGE>
Closing Date, no Event of Default or Default shall exist; provided, however,
-------- ------
that such condition shall not apply with respect to an exercise of the Lessee's
rights under Section 19.4.
------------
(c) The Lessee, as the Lessor's exclusive agent for the period prior to
February 2, 2003, may hire brokers and make any Property available for
inspection by prospective purchasers. The Lessee shall promptly upon request
permit inspection of a Property and any maintenance records relating to a
Property by the Lessor and any potential purchasers, and shall otherwise do all
things necessary to sell and deliver possession of the Property to any
purchaser. All such marketing of the Property shall be at the Lessee's sole
expense. The Lessee shall allow the Lessor and any potential qualified
purchaser reasonable access to the Property for the purpose of inspecting the
same.
(d) The Lessee shall deliver to the Lessor, together with the Early Buy-
Out Notice, a written offer or offers by a purchaser or purchasers offering to
purchase the Property. Subject to Article XVIII and Sections 19.4 , 22.4 and
------------- ------------- ----
22.5, prior to February 3, 2002, no such purchaser shall be the Lessee or an
- - ----
Affiliate of the Lessee and any exercise of an Early Buy-Out Option on or
subsequent to February 3, 2002, by the Lessee or an Affiliate of the Lessee
must provide for a exercise with respect to all of the Properties and the Loans.
The written offer must specify (i) subject to Section 22.3, a purchase price
------------
which will yield Net Proceeds (as hereinafter defined) not less than an amount
equal to the Early Buy-Out Price (or shall be supplemented by the Lessee's
commitment to pay cash at the closing sufficient, when added to the amount in
the offer, to yield Net Proceeds equal to the Early Buy-Out Price), and (ii) a
closing date prior to February 2, 2003, unless the Lessor shall otherwise agree
in its sole discretion. All offers shall be on an all-cash basis; provided,
--------
however, that the Lessor (i) agrees to be reasonable in its evaluation of
- - -------
offers which provide for sufficient cash to pay the Early Buy-Out Price, but
provide for all or part of Excess Proceeds to be on a non-cash basis, and (ii)
agrees that, to the extent that an offer for a Property provides for cash terms
which are sufficient to pay the Early Buy-Out Price and generate Excess
---
Proceeds, then the offer may include an amount not in excess of ten percent of
Gross Proceeds to be paid by a purchase money note or other consideration, on
terms reasonably satisfactory to the Lessor, in which case such purchase money
note or other consideration shall be pledged to the Lessor as additional
security for the obligations of the Lessee hereunder.
(e) In connection with any such sale of the Property, the Lessee will
provide to each Purchaser all customary "seller's" indemnities, representations
and warranties regarding absence of Liens (except Lessor Liens) and the
condition of the Property, including, without limitation, an environmental
indemnity to the extent the same are customarily required by Purchasers;
provided, however, that if necessary to consummate a transaction, the Lessor
- - -------- -------
will also give customary representations limited to actual knowledge and
warranties regarding absence of Liens (except Lessor Liens) and the condition of
the Property on the condition that the Lessee provides the Lessor a specific
indemnity with respect thereto. The Lessee shall have obtained, at its cost and
expense, all required governmental and regulatory consents and approvals and
shall have made all filings as required by Applicable Law in order to carry out
and complete the transfer of the Property. As to the Lessor, any such sale
shall be made on an "as is, with all faults" basis without representation or
warranty by the Lessor other than the absence of Lessor Liens. Any agreement as
to such sale shall be made subject to the Lessor's rights hereunder.
-47-
<PAGE>
(f) Payment of all prorations, credits, reasonable costs and expenses
of the sale of the Property, whether incurred by the Lessor or the Lessee,
including without limitation, the cost of all title insurance, surveys,
environmental reports, appraisals, transfer taxes, the Lessor's reasonable
attorneys' fees, the Lessee's attorneys' fees, commissions (in the case of
commissions payable to an Affiliate of the Lessee, not to exceed customary or
market rates), escrow fees, recording fees, and all applicable documentary and
other transfer taxes shall be payable out of "Gross Proceeds", as hereinafter
defined; provided, however, that to the extent that any costs and expenses of a
-------- -------
sale permitted by this Section 22.1(f) are payable in advance of the closing of
---------------
the sale of the Property, such costs shall be advanced by the Lessee and
reimbursed to the Lessee out of Gross Proceeds.
(g) The sale of the Property shall be consummated on or before the
Early Buy-out Closing Date and the gross proceeds (the "Gross Proceeds") of the
--------------
sale of the Property, less the documented reasonable expenses incurred by the
Lessee under clause (f) and amounts paid to (or as directed by) the Senior
----------
Lender to repay the Senior Loan secured by such Property (the "Net Proceeds")
------------
shall be paid directly to the Lessor; provided, however, that if the Net
-------- -------
Proceeds from such sale or sales are less than the Early Buy-Out Price, then the
shortfall shall be paid by the Lessee on the Early Buy-out Closing Date.
XXII.2 Suspension of Early Buy-Out Option. Notwithstanding anything in
----------------------------------
this Lease to the contrary (other than the rights provided for in Article
-------
XVIII), if at any time prior to February 2, 2002, the aggregate of all payments
- - -----
of Early Buy-Out Prices received by the Lessor pursuant to this Lease reduce the
Lease Balance to an amount of $10,300,000.00 or less (or would result in such a
reduction if a proposed transaction were given effect), then the right of the
Lessee to exercise an Early Buy-Out Option and the obligation of the Lessor to
convey title thereto shall be suspended until February 2, 2002. In furtherance
of the foregoing, any Early Buy-Out Notice given prior to February 2, 2002,
which would result in the sum of (a) the Lease Balance and (b) the Loan
Balance being reduced to an amount of $10,300,000.00 or less shall be null and
void.
XXII.3 Grossed-Up Early Buy-Out Amounts. To the extent that any Senior
--------------------------------
Lender in connection with the repayment of any Senior Loan shall require the
payment of an amount in excess of principal balance due on the Senior Loan being
repaid, the Lessee shall (i) pay such excess amount (such excess or excesses
with respect to any Senior Lender, a "Prepaid EBO Amount") as Supplemental Rent
due hereunder, in which case such Prepaid EBO Amount shall be credited against
the repayment of the Senior Loan designated by such Senior Lender (or, if the
Lessee does not exercise an Early Buy-Out Option with respect to the Property to
which the Senior Lender has credited the Prepaid EBO Amount, to the last Early
Buy-Out Price paid by the Lessee hereunder), or (ii) to the extent that the
Lessee does not have adequate funds to pay both the Early Buy-Out Price and such
excess, direct the Lessor to apply funds from the Cash Collateral Account to pay
to the Lessor the shortfall in the funds necessary to pay the Early-Buy-Out
Price; provided, however, that funds so applied from the Cash Collateral Account
-------- -------
shall not exceed twenty-five percent of the amount required for the repayment of
such Senior Loan.
-48-
<PAGE>
XXII.4 Carillon Parcels. Notwithstanding the requirement set forth in
----------------
Section 22.1(d) that the purchaser or purchasers of a Property which is the
- - ---------------
subject of an Early Buy-Out Option not be the Lessee or an Affiliate, the Lessee
or any Affiliate of the Lessee shall be entitled to acquire one or more of the
Carillon Parcels on the following terms: (i) the first two such parcels
(excluding Block 10, Lot 2 and Block 1, Lot 1) may be purchased by the Lessee or
any Affiliate of the Lessee provided that an amount equal to an additional
thirty-two percent of the Early Buy-Out Price shall be deposited by the Lessee
in the Cash Collateral Account, and (ii) all other parcels (including Block 10,
Lot 2 and Block 1, Lot 1) may be purchased by the Lessee or any Affiliate of the
Lessee provided that an amount equal to an additional ten percent of the Early
Buy-Out Price shall be deposited by the Lessee in the Cash Collateral Account.
This Section 22.4 shall not be deemed to restrict the exercise of the Early Buy-
------------
Out Option with respect to any or all the Carillon Parcels in those cases where
the purchaser or purchasers of a Property which is the subject of an Early Buy-
Out Option is not the Lessee or an Affiliate.
XXII.5 Permitted Purchases by the Lessee. Notwithstanding the requirement
---------------------------------
set forth in Section 22.1(d) that the purchaser or purchasers of a Property
---------------
which is the subject of an Early Buy-Out Option not be the Lessee or an
Affiliate, the Lessee or any Affiliate of the Lessee shall be entitled to
acquire one or more parcels of "4th Street Land" and "9th Street Land" on
Schedule 1 attached hereto provided that an amount equal to an additional
- - ----------
fifteen percent of the Early Buy-Out Price shall be deposited by the Lessee in
the Cash Collateral Account.
XXII.6 Deposits to Cash Collateral Account upon Resale. In the event that
-----------------------------------------------
the Lessee or an Affiliate of the Lessee purchases any Property on the basis of
the exceptions set forth in Sections 19.4, 22.4 or 22.5, then any further sale
------------- ---- ----
or disposition of such Property by the Lessee or its Affiliate occurring during
the Term shall be treated as an exercise of an Early Buy-Out Option, with the
requirement that that percentage of "Excess Proceeds" (determined with reference
to the Early Buy-Out Price as of the date of the original transfer of the
Property to the Lessee or an Affiliate) resulting from such further sale or
disposition which would be deposited to the Cash Collateral Account pursuant to
the terms of Section 30.1, shall be deposited in the Cash Collateral Account.
------------
XXII.7 Full Release by Senior Lender. Notwithstanding the terms of the
-----------------------------
definition of Early Buy-Out Price and this Article XXII which require that the
------------
Senior Loan secured by a Property which is the subject of an exercise of the
Early Buy-Out Option be repaid and satisfied, the transferee of such Property
may instead assume such Senior Loan provided that the Lessor is fully and
completely released from all obligations with respect to such Senior Loan
(including indemnity obligations which the Loan Document provided are to survive
repayment of the Senior Loan), pursuant to assumption and release documentation
reasonably satisfactory to the Lessor.
XXII.8 No Time of the Essence. Except with respect to the last date for
----------------------
giving of notice in Section 22.1(a) and the restriction on exercise of the Early
---------------
Buy-Out Option in Section 22.2, time shall not be deemed to be of the essence
------------
with respect to the dates and obligations provided for in this Article XXII,
and the parties shall be entitled to such reasonable extension or adjournments
as are provided for by law or statute.
-49-
<PAGE>
ARTICLE XXIII
PROCEDURES RELATING TO PURCHASE OR EARLY BUY-OUT
XXIII.1 Provisions Relating to the Exercise of Purchase Option and
----------------------------------------------------------
Conveyance Upon Early Buy-Out. (a) In connection with the Lessee's exercise of
- - -----------------------------
its Purchase Option with respect to the Properties or an Early Buy-Out Option
with respect to any Property, upon the Purchase Option Closing Date or the Early
Buy-Out Closing Date, as the case may be:
(i) the Lessor shall execute and deliver (x) in the case of any
Property to be conveyed directly to the Lessee or its designee, at the
Lessee's cost and expense, a quitclaim deed with respect to the Property,
and (y) in the case of any Property to be conveyed to a Person other than
the Lessee or its designee, at the Lessor's election either (A) at the
Lessor's cost and expense, a quitclaim deed conveying the Property to the
Lessee or an Affiliate or designee of the Lessee (with the transfer costs
attributable to the Lessee's transfer to any third party to be paid by the
Lessee), or (B) at the Lessee's cost and expense, a special warranty deed
(or the equivalent in the case of any state other than Florida) conveying
the Property directly to such Person.
(ii) a quitclaim bill of sale with respect to any Equipment and an
assignment of the Lessor's entire interest in the Property (which shall
include an assignment of all of the Lessor's right, title and interest in
and to any Net Proceeds not previously received by the Lessor for that
Property, an assignment of leases of the Property and any security deposits
collected by the Lessor), in each case in recordable form and otherwise in
conformity with local custom and free and clear of any Lessor Liens
attributable to the Lessor;
(iii)the Property shall be conveyed to the Lessee or its designee
"AS IS" and in its then present physical condition;
(iv) the Lessor shall execute and deliver to the Lessee or its
designee and the Lessee's title insurance company an affidavit as to the
absence of Lessor Liens; and
(v) the Lessor shall execute such other documents reasonably
requested by the Lessee or its designee, or otherwise required under local
law, to effect a transfer of the Property and title thereto.
ARTICLE XXIV
INDEMNIFICATION
XXIV.1 General Indemnification.
-----------------------
(a) The Lessee agrees, whether or not any of the transactions contemplated
hereby shall be consummated, to assume liability for, and to indemnify, protect,
defend, save and keep harmless each Indemnitee, on an After Tax Basis, from and
against, any and all Claims that may
-50-
<PAGE>
be imposed on, incurred by or asserted against such Indemnitee (whether because
of action or omission by such Indemnitee or otherwise), whether or not such
Indemnitee shall also be indemnified as to any such Claim by any other Person
and whether or not such Claim arises or accrues after the Expiration Date, in
any way relating to or arising out of:
(i) this Lease or any of the transactions contemplated hereby, and
any amendment, modification or waiver in respect hereof;
(ii) any of the Loan Documents or any of the transactions contemplated
thereby, and any amendment, modification or waiver in respect thereof;
(iii)any Property or any part thereof or interest therein;
(iv) the purchase, design, construction, preparation, installation,
inspection, delivery, non-delivery, acceptance, rejection, ownership,
management, possession, operation, rental, lease, sublease, repossession,
maintenance, repair, alteration, modification, addition or substitution,
storage, transfer of title, redelivery, use, financing, refinancing,
disposition, operation, condition, sale (including, without limitation, any
sale pursuant to any provision hereof), return or other disposition of all
or any part or any interest in any Property or the imposition of any Lien
(or incurring of any liability to refund or pay over any amount as a result
of any Lien) thereon, including, without limitation: (A) Claims or
penalties arising from any violation of law or in tort (strict liability or
otherwise), (B) latent or other defects, whether or not discoverable, (C)
any Claim based upon a violation or alleged violation of the terms of any
restriction, easement, condition or covenant or other matter affecting
title to any Property, (D) the making of any Modifications in violation of
any standards imposed by any insurance policies required to be maintained
by the Lessee pursuant to this Lease which are in effect at any time with
respect to the Property or any part thereof, (E) any Claim for patent,
trademark or copyright infringement and (F) Claims arising from any public
improvements with respect to any Property resulting in any change or
special assessments being levied against any Property or any plans to
widen, modify or realign any street or highway adjacent to any Property, or
any Claim for utility "tap-in" fees;
(v) the breach by the Lessee of any covenant, representation or
warranty made by it or deemed made by it in this Lease or any certificate
required hereunder;
(vi) the retaining or employment of any broker, finder or financial
advisor by the Lessee to act on its behalf in connection with the
transactions contemplated hereby;
(vii)the existence of any Lien on or with respect to any Property,
any Improvements, any Basic Rent or Supplemental Rent, title thereto, or
any interest therein including any Liens which arise out of the possession,
use, occupancy, construction, repair or rebuilding of any Property or by
reason of labor or materials furnished or claimed to have been furnished to
the Lessee or the Lessor or any predecessor in title, or any of its
contractors or agents or by reason of the financing of any personalty or
equipment purchased or leased by the Lessee or the Lessor or any
predecessor in title
-51-
<PAGE>
Modifications constructed by the Lessee, except Lessor Liens and Liens in
favor of the Lessor;
(viii) subject to the accuracy of Lessor's representation set forth
in Section 5.1, the transactions contemplated by this Lease in respect of
-----------
the application of Parts 4 and 5 of Subtitle B of Title I of ERISA and any
prohibited transaction described in Section 4975(c) of the Code; or
(ix) claims by the Senior Lenders relating to the Property under
the terms of the Senior Loan Documents, including, without limitation, any
environmental indemnity claims.
(b) Notwithstanding the terms of clause (a) of this Section 24.1, the
----
Lessee shall not be required to indemnify any Indemnitee under this Section 24.1
------------
for any of the following: (1) any Claim to the extent resulting from the
willful misconduct or gross negligence of such Indemnitee (it being understood
-------------------
that the Lessee shall be required to indemnify an Indemnitee even if the
ordinary (but not gross) negligence of such Indemnitee caused or contributed to
such Claim), (2) any Claim resulting from Lessor Liens which such Indemnitee is
responsible for discharging under the Loan Documents, any (3) any Claim to the
extent attributable to acts or events occurring after the expiration of the Term
or the purchase of the Property pursuant to this Lease so long as the Lessor is
not exercising remedies against the Lessee in respect of the Loan Documents and
no Event of Default has occurred or is continuing. It is expressly understood
and agreed that the indemnity provided for herein shall survive the expiration
or termination of and shall be separate and independent from any remedy under
this Lease. Without limiting the express rights of any Indemnitee under this
Section 24.1, this Section 24.1 shall be construed as an indemnity only and not
- - ------------ ------------
a guaranty of residual value of the Property.
XXIV.2 Environmental Indemnity.
-----------------------
(a) Without limitation of the other provisions of this Article XXIV, the
------------
Lessee hereby agrees to indemnify, hold harmless and defend each Indemnitee from
and against any and all claims (including without limitation third party claims
for personal injury or real or personal property damage), losses (including but
not limited to, to the extent the Lease Balance has not been fully paid, any
loss of value of the Property), damages, liabilities, fines, penalties, charges,
administrative and judicial proceedings (including informal proceedings) and
orders, judgments, remedial action, requirements, enforcement actions of any
kind, and all reasonable and documented costs and expenses incurred in
connection therewith (including but not limited to reasonable and documented
attorneys' and/or paralegals' fees and expenses), including, but not limited to,
all costs incurred in connection with any investigation or monitoring of site
conditions or any clean-up, remedial, removal or restoration work by any
federal, state or local government agency, arising in whole or in part, out of
(a) the presence on or under any Property of any Hazardous Substance, or
any releases or discharges of any Hazardous Substance on, under, from or onto
any Property that was not disclosed in the environmental audits identified in
Schedule IX to the Purchase and Sale Agreement,
-52-
<PAGE>
(b) any activity, including, without limitation, construction, carried on
or undertaken on or off any Property by the Lessee or any employees, agents,
contractors or subcontractors of the Lessee in connection with the handling,
treatment, removal, storage, decontamination, clean-up, transport or disposal of
any Hazardous Substances that at any time are located or present on or under or
that at any time migrate, flow, percolate, diffuse or in any way move onto or
under any Property,
(c) loss of or damage to any property or the environment (including,
without limitation, clean-up costs, response costs, remediation and removal
costs, cost of corrective action, costs of financial assurance, fines and
penalties and natural resource damages), or death or injury to any Person, and
all expenses associated with the protection of wildlife, aquatic species,
vegetation, flora and fauna, and any mitigative action required by or under
Environmental Laws as a result of any Environmental Violation on a Property that
was not disclosed in the environmental audits identified in Schedule IX to the
Purchase and Sale Agreement,
(d) any claim first arising after the Commencement Date concerning lack of
compliance with Environmental Laws, or any act or omission causing an
environmental condition that requires remediation or would allow any
Governmental Authority to record a Lien on the land records, or
(e) any residual contamination on or under the Land, or affecting any
natural resources, and to any contamination of any property or natural resources
arising in connection with the generation, use, handling, storage, transport or
disposal of any such Hazardous Substances, and irrespective of whether any of
such activities were or will be undertaken in accordance with applicable laws,
regulations, codes and ordinances.
It is expressly understood and agreed that the indemnity provided for herein
shall survive the expiration or termination of and shall be separate and
independent from any remedy under this Lease.
XXIV.3 Proceedings in Respect of Claims. With respect to any amount
--------------------------------
that the Lessee is requested by an Indemnitee to pay by reason of Section 24.1
------------
or 24.2, such Indemnitee shall, if so requested by the Lessee and prior to any
----
payment, submit such additional information to the Lessee as the Lessee may
reasonably request and which is in the possession of such Indemnitee to
substantiate the requested payment.
In case any action, suit or proceeding shall be brought against any
Indemnitee, such Indemnitee shall promptly notify the Lessee of the commencement
thereof, and the Lessee shall be entitled, at its expense, to participate in,
and, to the extent that the Lessee desires to, assume and control the defense
thereof; provided, however, that the Lessee shall not have any increased
-------- -------
liability as a direct result of an Indemnitee's failure to provide such notice
promptly; provided, further, that the Lessee shall have acknowledged in writing
-------- -------
its obligation to fully indemnify such Indemnitee in respect of such action,
suit or proceeding, and, the Lessee shall keep such Indemnitee fully apprised of
the status of such action suit or proceeding and shall provide such Indemnitee
with all information with respect to such action suit or proceeding as such
Indemnitee
-53-
<PAGE>
shall reasonably request, and provided, further, that the Lessee shall not be
-------- -------
entitled to assume and control the defense of any such action, suit or
proceeding if and to the extent that, (A) in the reasonable opinion of such
Indemnitee, (x) such action, suit or proceeding involves any risk of imposition
of criminal liability or any risk of imposition of material civil liability on
such Indemnitee or will involve a material risk of the sale, forfeiture or loss
of, or the creation of any Lien (other than a Permitted Lien) on any Property or
any part thereof unless, in the case of civil liability, the Lessee shall have
posted a bond or other security satisfactory to the relevant Indemnitees in
respect to such risk or (y) the control of such action, suit or proceeding would
involve an actual or potential conflict of interest, (B) such proceeding
involves Claims not fully indemnified by the Lessee which the Lessee and the
Indemnitee have been unable to sever from the indemnified claim(s), or (C) an
Event of Default has occurred and is continuing. The Indemnitee may participate
in a reasonable manner at its own expense and with its own counsel in any
proceeding conducted by the Lessee in accordance with the foregoing. The Lessee
shall not enter into any settlement or other compromise with respect to any
Claim which is entitled to be indemnified under Section 24.1, 24.2 or 24.3
------------ ---- ----
without the prior written consent of the Indemnitee which consent shall not be
unreasonably withheld in the case of a money settlement not involving an
admission of liability of such Indemnitee; provided, however, that in the event
-------- -------
that such Indemnitee withholds consent to any settlement or other compromise,
the Lessee shall not be required to indemnify such Indemnitee under Section
-------
24.1, 24.2 or 24.3 to the extent that the applicable Claim (x) is for legal fees
---- ----
and expenses incurred after the date of the proposed settlement or (y) results
in a judgment in excess of such offered money settlement.
Each Indemnitee shall at the expense of the Lessee supply the Lessee with
such information and documents reasonably requested by the Lessee as are
necessary or advisable for the Lessee to participate in any action, suit or
proceeding to the extent permitted by Section 24.1, 24.2 or 24.3. Unless an
------------ ---- ----
Event of Default shall have occurred and be continuing, no Indemnitee shall
enter into any settlement or other compromise with respect to any Claim which is
entitled to be indemnified under Section 24.1 or 24.3 without the prior written
------------ ----
consent of the Lessee, which consent shall not be unreasonably withheld, unless
such Indemnitee waives its right to be indemnified under Section 24.1 or 24.3
------------ ----
with respect to such Claim.
Upon payment in full of any Claim by the Lessee pursuant to Section 24.1,
------------
24.2 or 24.3 to or on behalf of an Indemnitee, the Lessee, without any further
- - ---- ----
action, shall be subrogated to any and all claims that such Indemnitee may have
relating thereto (other than claims in respect of insurance policies maintained
by such Indemnitee at its own expense), and such Indemnitee shall execute such
instruments of assignment and conveyance, evidence of claims and payment and
such other documents, instruments and agreements as may be necessary to preserve
any such claims and otherwise cooperate with the Lessee and give such further
assurances as are necessary or advisable to enable the Lessee vigorously to
pursue such claims.
Any amount payable to an Indemnitee pursuant to Section 24.1, 24.2 or 24.3
------------------ ----
shall be paid to such Indemnitee promptly upon receipt of a written demand
therefor from such Indemnitee, accompanied by a written statement describing in
reasonable detail the basis for such indemnity and the computation of the amount
so payable and, if requested by the Lessee, such determination shall be verified
by a nationally recognized independent accounting firm mutually
-54-
<PAGE>
acceptable to the Lessee and the Indemnitee at the expense of the Lessee;
provided, however, that if the Lessee has assumed the defense of the related
- - -------- -------
Claim or is paying the costs of the Indemnitee's defense of the related claim on
an ongoing basis, the Lessee shall not be required to pay such amount to the
applicable Indemnitee until such time as a judgment is entered with respect to
such Claim, the enforcement of which is not stayed or which judgment is not
bonded over, or the Claim is otherwise settled or lost. To the extent the Lessee
suffers any losses or damages as a result of an Indemnitee's failure to provide
the Lessee with prompt notice of the commencement of any action, suit or
proceeding against any Indemnitee in accordance with the first sentence of the
second paragraph of this Section 24.4, the amounts of such losses or damages may
------------
be offset against the Lessee's indemnification obligation to such Indemnitee.
XXIV.4 General Impositions Indemnity.
-----------------------------
(a) Indemnification. The Lessee shall pay and assume liability for, and
---------------
does hereby agree to indemnify, protect and defend the Property and all
Indemnitees, and hold them harmless against, all Impositions on an After Tax
Basis.
(a) Contests. If any claim shall be made against any Indemnitee or if any
--------
proceeding shall be commenced against any Indemnitee (including a written notice
of such proceeding) for any Imposition as to which the Lessee may have an
indemnity obligation pursuant to this Section 24.4, or if any Indemnitee shall
------------
determine that any Imposition to which the Lessee may have an indemnity
obligation pursuant to this Section 24.4 may be payable, such Indemnitee shall
------------
promptly (and in any event, within 30 days) notify the Lessee in writing
(provided that failure to so notify the Lessee within 30 days shall not alter
- - ---------
such Indemnitee's rights under this Section 24.4 except to the extent such
------------
failure precludes or materially adversely affects the ability to conduct a
contest of any indemnified Taxes) and shall not take any action with respect to
such claim, proceeding or Imposition without the written consent of the Lessee
(such consent not to be unreasonably withheld or unreasonably delayed) for 30
days after the receipt of such notice by the Lessee; provided, however, that in
-------- -------
the case of any such claim or proceeding, if such Indemnitee shall be required
by law or regulation to take action prior to the end of such 30-day period, such
Indemnitee shall in such notice to the Lessee, so inform the Lessee, and such
Indemnitee shall not take any action with respect to such claim, proceeding or
Imposition without the consent of the Lessee (such consent not to be
unreasonably withheld or unreasonably delayed) for 10 days after the receipt of
such notice by the Lessee unless the Indemnitee shall be required by law or
regulation to take action prior to the end of such 10-day period.
The Lessee shall be entitled for a period of 30 days from receipt of such
notice from the Indemnitee (or such shorter period as the Indemnitee has
notified the Lessee is required by law or regulation for the Indemnitee to
commence such contest), to request in writing that such Indemnitee contest the
imposition of such Tax, at the Lessee's expense. If (x) such contest can be
pursued in the name of the Lessee and independently from any other proceeding
involving a Tax liability of such Indemnitee for which the Lessee has not agreed
to indemnify such Indemnitee, (y) such contest must be pursued in the name of
the Indemnitee, but can be pursued independently from any other proceeding
involving a Tax liability of such Indemnitee for which the Lessee has not agreed
to indemnify such Indemnitee or (z) the Indemnitee so requests, then
-55-
<PAGE>
the Lessee shall be permitted to control the contest of such claim, provided
--------
that in the case of a contest described in clause (y), if the Indemnitee
----------
determines in good faith that such contest by the Lessee could have a material
adverse impact on the business or operations of the Indemnitee and provides a
written explanation to the Lessee of such determination, the Indemnitee may
elect to control or reassert control of the contest, and provided, that by
--------
taking control of the contest, Lessee acknowledges that it is responsible for
the Imposition ultimately determined to be due by reason of such claim, and
provided, further, that in determining the application of clauses (x) and (y) of
- - -------- ------- ----------- ---
the preceding sentence, each Indemnitee shall take any and all reasonable steps
to segregate claims for any Taxes for which the Lessee indemnifies hereunder
from Taxes for which the Lessee is not obligated to indemnify hereunder, so that
the Lessee can control the contest of the former. In all other claims requested
to be contested by the Lessee, the Indemnitee shall control the contest of such
claim, acting through counsel reasonably acceptable to the Lessee. In no event
shall the Lessee be permitted to contest (or the Indemnitee required to contest)
any claim, (A) if such Indemnitee provides the Lessee with a legal opinion of
counsel reasonably acceptable to the Lessee that such action, suit or proceeding
involves a risk of imposition of criminal liability or will involve a material
risk of the sale, forfeiture or loss of, or the creation of any Lien (other than
a Permitted Lien) on the Property or any part of any thereof unless the Lessee
shall have posted and maintained a bond or other security satisfactory to the
relevant Indemnitee in respect to such risk, (B) if an Event of Default has
occurred and is continuing unless the Lessee shall have posted and maintained a
bond or other security satisfactory to the relevant Indemnitee in respect of the
Taxes subject to such claim and any and all expenses for which the Lessee is
responsible hereunder reasonably foreseeable in connection with the contest of
such claim, (C) unless the Lessee shall have agreed to pay and shall pay, to
such Indemnitee on demand all reasonable out-of-pocket costs, losses and
expenses that such Indemnitee may incur in connection with contesting such
Imposition including all reasonable legal, accounting and investigatory fees and
disbursements, or (D) if such contest shall involve the payment of the Tax prior
to the contest, unless the Lessee shall provide to the Indemnitee an interest-
free advance in an amount equal to the Imposition that the Indemnitee is
required to pay (with no additional net after-tax costs to such Indemnitee). In
addition for Indemnitee controlled contests and claims contested in the name of
the Indemnitee in a public forum, no contest shall be required: (A) unless the
amount of the potential indemnity (taking into account all similar or logically
related claims that have been or could be raised in any audit involving such
Indemnitee for which the Lessee may be liable to pay an indemnity under this
Section 24.4(b)) exceeds $500,000 and (B) unless, if requested by the
- - ---------------
Indemnitee, the Lessee shall have provided to the Indemnitee an opinion of
counsel selected by the Lessee (which may be in-house counsel) (except, in the
case of income taxes indemnified hereunder which shall be an opinion of
independent tax counsel selected by the Indemnitee and reasonably acceptable to
the Lessee) that a reasonable basis exists to contest such claim. In no event
shall a Indemnitee be required to appeal an adverse judicial determination to
the United States Supreme Court.
The party conducting the contest shall consult in good faith with the other
party and its counsel with respect to the contest of such claim for Taxes (or
claim for refund) but the decisions regarding what actions to be taken shall be
made by the controlling party in its sole judgement, provided, however, that if
-------- -------
the Indemnitee is the controlling party and the Lessee recommends the acceptance
of a settlement offer made by the relevant Governmental Authority and such
-56-
<PAGE>
Indemnitee rejects such settlement offer then the amount for which the Lessee
will be required to indemnify such Indemnitee with respect to the Taxes subject
to such offer shall not exceed the amount which it would have owed if such
settlement offer had been accepted. In addition, the controlling party shall
keep the noncontrolling party reasonably informed as to the progress of the
contest, and shall provide the noncontrolling party with a copy of (or
appropriate excerpts from) any reports or claims issued by the relevant auditing
agents or taxing authority to the controlling party thereof, in connection with
such claim or the contest thereof.
Each Indemnitee shall at the Lessee's expense supply the Lessee with such
information and documents reasonably requested by the Lessee as are necessary or
advisable for the Lessee to participate in any action, suit or proceeding to the
extent permitted by this Section 24.4(b). No Indemnitee shall enter into any
---------------
settlement or other compromise or fail to appeal an adverse ruling with respect
to any claim which is entitled to be indemnified under this Section 24.4 (and
------------
with respect to which contest is required under this Section 24.4(b)) without
---------------
the prior written consent of the Lessee, unless such Indemnitee waives its right
to be indemnified under this Section 26.5 with respect to such claim.
------------
Notwithstanding anything contained herein to the contrary, a Indemnitee
will not be required to contest (and the Lessee shall not be permitted to
contest) a claim with respect to the imposition of any Tax if such Indemnitee
shall waive its right to indemnification under this Section 24.4 with respect to
------------
such claim (and any claim with respect to such year or any other taxable year
the contest of which is materially adversely affected as a result of such
waiver).
(b) Payments. Any Imposition indemnifiable under this Section 24.4 shall
-------- ------------
be paid directly when due to the applicable taxing authority if direct payment
is practicable and permitted. If direct payment to the applicable taxing
authority is not permitted or is otherwise not made, any amount payable to a
Indemnitee pursuant to Section 24.4 shall be paid within thirty days after
------------
receipt of a written demand therefor from such Indemnitee accompanied by a
written statement describing in reasonable detail the amount so payable, but not
before two Business Days prior to the date that the relevant Taxes are due. Any
payments made pursuant to this Section 24.4 shall be made directly to the
------------
Indemnitee entitled thereto or the Lessee, as the case may be, in immediately
available funds at such bank or to such account as specified by the payee in
written directions to the payor, or, if no such direction shall have been given,
by check of the payor payable to the order of the payee by certified mail,
postage prepaid at its address as set forth in Schedule 7 hereto. Upon the
-----------
request of any Indemnitee with respect to a Tax that the Lessee is required to
pay, the Lessee shall furnish to such Indemnitee the original or a certified
copy of a receipt for the Lessee's payment of such Tax or such other evidence of
payment as is reasonably acceptable to such Indemnitee.
(c) Reports. In the case of any report, return or statement required to be
-------
filed with respect to any Taxes that are subject to indemnification under this
Section 24.4 and of which the Lessee has knowledge, the Lessee shall promptly
- - ------------
notify the Indemnitee of such requirement and, at the Lessee's expense (i) if
the Lessee is permitted (unless otherwise requested by the Indemnitee) by
Applicable Law, timely file such report, return or statement in its own name or
(ii) if such report, return or statement is required to be in the name of or
filed by such Indemnitee
-57-
<PAGE>
or the Indemnitee otherwise requests that such report, return or statement for
filing by such Indemnitee in such manner as shall be satisfactory to such
Indemnitee and send the same to the Indemnitee for filing no later than 15 days
prior to the due date therefor. In any case in which the Indemnitee will file
any such report, return or statement, the Lessee shall, upon written request of
such Indemnitee, provide such Indemnitee with such information as is reasonably
necessary to allow the Indemnitee to file such report, return or statement.
(d) Verification. At the Lessee's request, the amount of any indemnity
------------
payment by the Lessee pursuant to this Section 24.5 shall be verified and
------------
certified by an independent public accounting firm mutually acceptable to the
Lessee and the Indemnitee. The costs of such verification shall be borne by the
Lessee unless such verification shall result in an adjustment in the Lessee's
favor of the lesser of (i) $10,000, or (ii) five percent of the payment as
computed by the Indemnitee, in which case such fee shall be paid by the
Indemnitee. In no event shall the Lessee have the right to review the
Indemnitee's tax returns or receive any other confidential information from the
Indemnitee in connection with such verification. Any information provided to
such accountants by any Person shall be and remain the exclusive property of
such Person and shall be deemed by the parties to be (and the accountants will
confirm in writing that they will treat such information as) the private,
proprietary and confidential property of such Person, and no Person other than
such Person and the accountants shall be entitled thereto and all such materials
shall be returned to such Person. Such accounting firm shall be requested to
make its determination within 30 days of the Lessee's request for verifications
and the computations of the accounting firm shall be final, binding and
conclusive upon the Lessee and the Indemnitee. The parties agree that the sole
responsibility of the independent public accounting firm shall be to verify the
amount of a payment pursuant to this Lease and that matters of interpretation of
this Lease are not within the scope of the independent accounting firm's
responsibilities.
ARTICLE XXV
ESTOPPEL CERTIFICATES
XXV.1 Estoppel Certificates. At any time and from time to time upon
---------------------
not less than twenty days' prior request by the Lessor or the Lessee (the
"Requesting Party"), the other party (whichever party shall have received such
- - ------------------
request, the "Certifying Party") shall furnish to the Requesting Party (but in
-----------------
the case of the Lessor, as Certifying Party, not more than four times per year
unless required to satisfy the requirements of any subleases and only to the
extent that the required information has been provided to the Lessor by the
Lessee) a certificate signed by an individual having the office of vice
president or higher in the Certifying Party certifying that this Lease is in
full force and effect (or that this Lease is in full force and effect as
modified and setting forth the modifications); the dates to which the Basic Rent
and Supplemental Rent have been paid; to the best knowledge of the signer of
such certificate, whether or not the Requesting Party is in default under any of
its obligations hereunder (and, if so, the nature of such alleged default); and
such other matters under this Lease as the Requesting Party may reasonably
request. Any such certificate furnished pursuant to this Article XXV may be
-----------
relied upon by the Requesting Party, and any existing or prospective mortgagee,
purchaser or lender, and any accountant or auditor, of, from or to the
Requesting Party (or any Affiliate thereof).
-58-
<PAGE>
ARTICLE XXVI
ACCEPTANCE OF SURRENDER
XXVI.1 Acceptance of Surrender. Except as specifically provided for in
-----------------------
this Lease, no surrender to the Lessor of this Lease or of all of the Properties
or any Property or any portion of any Property or of any interest therein shall
be valid or effective unless agreed to and accepted in writing by the Lessor,
and no act by the Lessor or any representative or agent of the Lessor, other
than a written acceptance, shall constitute an acceptance of any such surrender.
ARTICLE XXVII
NO MERGER OF TITLE
XXVII.1 No Merger of Title. There shall be no merger of this Lease or of
------------------
the leasehold estate created hereby by reason of the fact that the same Person
may acquire, own or hold, directly or indirectly, in whole or in part, (a) this
Lease or the leasehold estate created hereby or any interest in this Lease or
such leasehold estate, (b) the fee estate in any Property, except as may
expressly be stated in a written instrument duly executed and delivered by the
appropriate Person or (c) a beneficial interest in the Lessor.
ARTICLE XXVIII
PAYMENT OF CERTAIN EXPENSES
XXVIII.1 Transaction Expenses. The Lessee shall pay, or cause to be paid
--------------------
(on behalf of the Lessor in the case of amounts incurred by the Lessor), the
following expenses with respect to this Lease, the other Transaction Documents
and the transactions contemplated hereby and thereby ("Transaction Expenses"):
--------------------
(a) any and all Taxes and fees incurred in recording, registering or
filing the Memorandum of Lease, any Transaction Document, any Loan Document or
recording or filing required by the terms of any Loan Document, or any
Transaction Document, any deed, declaration, mortgage, security agreement,
notice or financing statement with any public office, registry or governmental
agency in connection with the transactions contemplated by the Loan Documents;
(b) any title fees, premiums and escrow costs and other expenses relating
to the Senior Lenders' title insurance, Senior Lender's assumption fees, and
otherwise required by the Loan Documents;
(c) any title fees, premiums and escrow costs and other expenses relating
to the Lessee's acquisition of title to the Properties and the Loans pursuant to
the Subscription Agreement (to the extent not paid by the "Transferor" under the
Subscription Agreement);
-59-
<PAGE>
(d) all expenses relating to all surveys, Environmental Audits,
inspections and engineering reports, and Appraisals to be delivered on or prior
to the Commencement Date; provided, however, that such expenses incurred in
-------- -------
response to the Lessor's requirements only shall not exceed $200,000.00; and
(e) all fees and expenses of obtaining the consent of the Senior Lenders
to the transactions contemplated by the Subscription Agreement and to this Lease
(to the extent not paid by the "Transferor" under the Subscription Agreement).
XXVIII.2 Lease Expenses. The Lessee shall also pay, or cause to be paid
--------------
(on behalf of the Lessor in the case of amounts incurred by the Lessor), from
time to time, the following expenses arising with respect to the transactions
contemplated by this Lease and the other Transaction Documents ("Lease
-----
Expenses"):
(a) all expenses incurred in entering into any future amendments or
supplements with respect to any of the Loan Documents, whether or not such
amendments or supplements are ultimately entered into, or giving or withholding
of waivers of consents hereto or thereto;
(b) all expenses in obtaining or refinancing any Senior Loan, whether or
not such loan is ultimately entered into or consummated (but excluding such
expenses when the refinancing was initiated by the Lessor and such refinancing
is not entered into or consummated);
(c) all expenses (except as specifically provided in Section 23.1) in
------------
connection with any transfer of any Property by the Lessor to the Lessee or
other Person pursuant to this Lease, including but not limited to the costs of
all appraisals obtained by the Lessor or the Lessee in the process of
determining Fair Market Sales Value, any brokers' fees and any and all stamp,
transfer and other similar taxes, fees and excises, if any, including any
interest and penalties;
(d) any expenses incurred in connection with the Lessor's review of, or
consent to, any matter provided for in this Lease, including but not limited to
any Modification and any Major Lease;
(e) expenses incurred in respect of enforcement of any of its rights or
remedies against the Lessee; and
(f) the reasonable fees and expenses of the Lessor's counsel (including
local counsel, if any, who may be retained by such legal counsel) incurred in
connection with the foregoing; excluding, however, fees and expenses the
Lessor's counsel incurred in connection with the preparation, execution and
delivery of the Transaction Documents.
XXVIII.3 Time of Payment. The Lessee shall pay or cause to be paid
---------------
Transaction Expenses on the Commencement Date (or if the Lessee has not received
written invoices with appropriate back-up therefor prior to the Commencement
Date, such Transaction Expenses shall be paid within thirty days after the
Lessee has received written invoices with appropriate back-up therefor). The
Lessee shall pay or cause to be paid Lease Expenses at the closing of the
relevant transaction or, if there is no closing or if the Lessee has not
received written invoices therefor
-60-
<PAGE>
prior to such date, such Lease Expenses shall be paid within thirty days after
the Lessee has received written invoices with appropriate back-up therefor.
ARTICLE XXIX
OTHER COVENANTS AND AGREEMENTS
XXIX.1 Covenants. The Lessee hereby agrees that so long as this Lease
---------
is in effect:
(a) Information. The Lessee will deliver to the Lessor:
-----------
(i) as soon as possible and in any event within ten Business Days
after a Responsible Employee of the Lessee obtains knowledge of the
occurrence of each Event of Default or each event that, with the giving of
notice or time elapse, or both, would constitute an Event of Default
continuing on the date of such statement, a statement of the authorized
officer setting forth details of such Event of Default or event and the
action that the Lessee proposes to take with respect thereto; provided that
the Lessee shall not be obligated to give notice of any Event of Default
which is remedied within ten Business Days after such Responsible Employee
first obtains knowledge;
(ii) promptly upon becoming aware thereof, written notice of the
commencement or existence of any proceeding against the Lessee or any
Affiliate of the Lessee by or before any court or governmental agency that
might, in the reasonable judgment of the Lessee, result in a Material
Adverse Effect on the business, operations or financial conditions of the
Lessee or the ability of the Lessee to perform its obligations under the
Loan Documents;
(iii) as soon as possible and in any event within ten Business Days
after the occurrence of any violation or alleged violation of an
Environmental Law by Lessee, a statement of an authorized officer setting
forth the details of such violation and the action which the Lessee
proposes to take with respect thereto; and
(iv) from time to time such additional information regarding the
business, properties, condition or operations, financial or otherwise, of
the Lessee, or regarding the Property or the status of any construction
thereon, if any, as the Lessor may reasonably request in connection with
the Property.
(b) Compliance with Laws. The Lessee will comply in all material respects
--------------------
with all applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including, without limitation, Environmental Laws and
ERISA and the rules and regulations thereunder) with respect to its Material
Assets, including the Property, except where the necessity of compliance
therewith is contested in good faith by appropriate proceedings.
-61-
<PAGE>
(c) Further Assurances. The Lessee shall take or cause to be taken from
------------------
time to time all action necessary to assure that the intent of the parties
pursuant to this Lease is given effect . The Lessee shall execute and deliver,
or cause to be executed and delivered, to the Lessor from time to time, promptly
upon request therefor, any and all other and further instruments (including
correction instruments and supplemental mortgages, deeds of trust and security
agreements) that may be reasonably requested by the Lessor to cure any
deficiency in the execution and delivery of this Lease.
(d) Preservation of Existence, Etc. The Lessee will preserve and maintain
------------------------------
(i) its existence as a duly organized and validly existing limited liability
company in good standing under the laws of the State of Delaware, and (ii) the
power and authority to own and lease properties and to conduct the business in
which it is currently engaged, and (iii) all rights, privileges and franchises
necessary and desirable in the normal conduct of its business and the
performance of its obligations hereunder and under the Loan Documents; provided
that the Lessee may consolidate with or merge with or into any other corporation
or convey or transfer its properties and assets substantially as an entirety to
any Person, if either the Lessee shall be the continuing corporation, or the
corporation (if other than the Lessee) formed by such consolidation or into
which the Lessee is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Lessee substantially as an entirety
shall expressly assume, by an assumption agreement executed and delivered to the
Lessor, the performance of the Lessee's obligations under each of the Loan
Documents.
(e) Separate Existence. The Lessee will: (i) maintain its books and
------------------
records, financial statements, and accounts separate from those of any other
Person; (ii)not commingle its assets or funds with those of any other Person;
hold all of its assets in its own name; (iii) conduct its business in its own
name; (iv) pay its liabilities out of its own funds; (v) observe all corporate
formalities; (vi) maintain an arm's-length relationship with its Affiliates;
(vii) maintain separate financial statements from any Affiliates; (viii) pay the
salaries of its own employees and fees for its directors and officers out of its
own funds; (ix) not guarantee or become obligated for the debts of any other
Person, or hold out its credit as being available to satisfy the obligations of
others; (x) not acquire obligations or securities of its owners, directors,
officers or Affiliates; (xi) allocate and charge fairly and reasonably any
overhead for shared office space; (xii) maintain stationery, invoices and checks
separate from its Affiliates, each bearing its own name; (xiii) not pledge its
assets for the benefit of any other Person or make any loans or advances to any
other Person; (xiv) hold itself out to creditors and the public as a legal
entity separate from any other Person and correct any known misunderstanding
regarding such separate identity; (xv) maintain adequate capital in light of its
contemplated business purpose, transactions and liabilities; (xvi) unless
otherwise required by applicable law, file its tax returns separately from those
of any other Person; (xvii) not buy or hold evidence of indebtedness issued by
any other Person; (xviii) not identify itself as a division of any other
Person, nor acquire or hold any Subsidiary; (xix) not acquire any securities;
(xx) not borrow money or incurred indebtedness other than normal trade accounts
payable and lease obligations in the normal course of its business nor grant
consensual Liens on its property; (xxi) without the unanimous consent of its
board of directors, not file a voluntary petition or otherwise initiated
proceedings to be adjudicated, bankrupt or insolvent, or consented to the
institution of bankruptcy or insolvency proceedings, or file a petition seeking
or
-62-
<PAGE>
consenting to reorganization or relief as debtor under any applicable federal or
state law relating to bankruptcy, insolvency, or other relief for debtors, seek
or consent to the appointment of any receiver, conservator, assignee,
sequestrator, custodian, liquidator (or other similar official) of all or
substantial part of its properties or make any general assignment for the
benefit of creditors, or admit in writing its inability to pay its debts
generally as they become due or declare or effect a moratorium on its debts or
take any action in furtherance of any such action; (xxii) not merge or
consolidate with any other Person; (xxiii) not hold itself out as having agreed
to pay or become liable, by guarantee or otherwise, for the debts of another
Person; (xxiv) not pledge its assets for the benefit of any other Person; (xxv)
not effect a change of management or ownership without the written consent of
the Lessee, including fail to maintain at all times at least one "independent"
director; (xxvi) not do or fail to do any act, the effect of which is (a) to
interfere with the normal operation of the Senior Loan Documents or (b) to cause
a breach or default thereunder; (xxvii) provide the Lessee promptly with copies
of any default notices which the Lessee receives from any of its creditors;
(xxviii) pay all of its obligations as they become due in the ordinary course of
its business; and (xxix) cause its directors, officers, managers, agents and
other representatives to act at all times consistently and in furtherance of the
foregoing.
(f) Payment of Taxes. The Lessee and each of its Subsidiaries shall
----------------
promptly pay when due all Taxes owing by the Lessee or such Subsidiary where
such failure could reasonably be expected to have a Material Adverse Effect,
except for such Taxes that are being contested in good faith by appropriate
proceedings and adequate reserves shall have been set aside therefor. The
forgoing shall not be deemed to limit or restrict the Lessee's obligations under
Section 24.4.
- - ------------
(g) Books and Records. The Lessee shall, and shall cause each Subsidiary
-----------------
to, maintain its books and financial statements in accordance with GAAP, and
permit the Lessor to make or cause to be made inspections and audits of any
books, records and papers of the Lessee and its Subsidiaries and to make
extracts therefrom at all such reasonable times and as often as any such Person
may reasonably require; provided that so long as no Event of Default has
--------
occurred and is continuing, the Lessor's right to inspect and audit books and
records shall be limited to no more than once per year.
(h) Fundamental Changes. Subject to the terms of any Sublease, the Lessee
-------------------
shall not, nor shall it permit any Sublessee to, enter into any merger,
consolidation or amalgamation, where it is not the surviving entity, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution); or convey, sell, assign, transfer or otherwise dispose of any of
the capital stock of the Sublessees or all or substantially all of the property,
business or assets of the Sublessees; provided, however, that if no Default or
-------- -------
Event of Default shall have occurred before or after giving effect thereto:
(i) any Sublessee of the Lessee may be merged or consolidated with or
into the Lessee (provided, however, that the Lessee is the surviving
-------- -------
corporation); and
(ii) any Sublessee may sell, lease, transfer or otherwise dispose of
any or all of its assets (upon voluntary liquidation or otherwise) to the
Lessee.
-63-
<PAGE>
(i) Employee Benefit Plans. The Lessee shall maintain, and cause each of
----------------------
its Subsidiaries to maintain, each Plan as to which it may have liability, in
compliance with all Applicable Laws.
(j) Subleases. During the Term, the Lessee shall use reasonable efforts to
---------
cause each Sublessee to observe and perform all of their respective obligations
under the Subleases, including the taking of reasonable enforcement actions
against the Sublessees. The Lessor shall assist in those efforts as reasonably
necessary, at the Lessee's expense.
(k) Restricted Payments. Until Full Collateralization, the Lessee shall
-------------------
not make any Restricted Payments.
(l) Transferee Indemnity. In the event Florida Progress Corporation (or
--------------------
its subsidiary, Florida Power Corporation) fails to provide a limited
indemnification agreement to a third party transferee of Bayboro Station
consistent with the recent practice of Echelon International, Inc. and Florida
Progress which practice is to provide terms and conditions substantially as set
forth in the Indemnity Agreement made as of November 1, 1999 between Florida
Progress Corporation and Tampa Anderson Warehouse, L.P., the amount of Recourse
Debt shall be increased by $2,000,000 for such period as Lessor continues to own
Bayboro Station.
XXIX.2 Covenants. The Lessor hereby agrees that so long as this Lease
---------
is in effect and no Event of Default has occurred which is continuing:
(a) Further Encumbrances. Lessor will not further encumber any of the
--------------------
Properties or grant any easement or other rights in the nature of easements or
leases on the Properties without the prior written consent of the Lessee. As
long as no Event of Default has occurred and is continuing hereunder, Lessor, at
the request of Lessee, will grant or declare, amend or release easements,
covenants, restrictions for utilities, parking or other matters as necessary or
desirable for the development or operation of the Properties, and execute and
deliver to any Person any instrument appropriate to confirm or effect such
grant, declaration, release or amendment.
(b) Lessor Liens. The Lessor will not directly or indirectly sell,
------------
transfer, or otherwise dispose of, or create, or permit there to be created or
to remain, and will promptly discharge, any Lessor Lien of any nature whatsoever
on, in or with respect to, its interests in the Properties arising by or through
it or its actions.
(c) Quiet Enjoyment. The Lessor shall not conduct any business activities
---------------
or act or fail to act in any manner which would give any third party any claims
which would, in either case, (i) materially interfere with the Lessee's quiet
enjoyment of its rights under this Lease, or (ii) materially restrict the
Lessee's rights under this Lease, including without limitation the right to
exercise any Purchase Option or any Early Buy-Out Option.
(d) Further Assurances. The Lessor shall take or cause to be taken from
------------------
time to time all action necessary to assure that the intent of the parties
pursuant to this Lease is given effect. The Lessor shall execute and deliver, or
cause to be executed and delivered, to the Lessee from
-64-
<PAGE>
time to time, promptly upon request therefor, any and all other and further
instruments (including correction instruments and supplemental mortgages, deeds
of trust and security agreements) that may be reasonably requested by the Lessee
to cure any deficiency in the execution and delivery of this Lease.
ARTICLE XXX
APPLICATION OF EXCESS PROCEEDS; CASH COLLATERAL ACCOUNT
XXX.1 Application of Excess Proceeds. Any payments of Excess Proceeds
------------------------------
received by the Lessor shall be applied by the Lessor as follows: (i) at any
time that the Lease Balance reduced by amounts on deposit in the Cash Collateral
-------
Account and increased by the amount of Recourse Debt is $34,000,000.00 or
---------
greater and no Event of Default has occurred which is continuing, (x) fifteen
percent of any payment of Excess Proceeds shall be distributed to the Lessee,
and (y) eighty five percent of any payment of Excess Proceeds shall be deposited
in the Cash Collateral Account to be held in accordance with the terms of the
Cash Collateral Agreement and this Lease, and (ii) at any time that the Lease
Balance reduced by amounts on deposit in the Cash Collateral Account and
-------
increased by the amount of Recourse Debt is less than $34,000,000.00 and no
- - ---------
Event of Default has occurred which is continuing, (x) twenty-five percent of
any payment of Excess Proceeds shall be distributed to the Lessee, and (y)
seventy-five percent of any payment of Excess Proceeds shall be deposited in the
Cash Collateral Account to be held in accordance with the terms of the Cash
Collateral Agreement and this Lease; provided, however, that upon Full
-------- -------
Collateralization, one hundred percent of any payments of Excess Proceeds shall
be distributed to the Lessee; and provided, further, at any time that an Event
-------- -------
of Default has occurred and is continuing, the Lessor may apply one hundred
percent of Excess Proceeds to the cure of the Event of Default or to the Lease
Balance, as the Lessor shall determine in its sole discretion.
XXX.2 Additional Deposit to Cash Collateral Account. The Lessee also
---------------------------------------------
agrees that upon the sale by the Lessee of the Property described on Schedule 1
----------
as the " 7th Avenue Property", the net proceeds of such sale (determined in a
manner consistent with the the determination of Net Proceeds pursuant to Section
-------
22.1) shall be applied by the Lessee as following: (i) the net proceeds up to
- - ----
$3,000,000.00 shall be paid to the Lessor and deposited in the Cash Collateral
Account to be held in accordance with the terms of the Cash Collateral Agreement
and this Lease; (ii) the net proceeds in excess of $3,000,000.00 up to an amount
not to exceed $4,000,000.00 shall be retained by the Lessee; and (iii) the net
proceeds in excess of $4,000,000.00 shall be paid to the Lessor and deposited in
the Cash Collateral Account to be held in accordance with the terms of the Cash
Collateral Agreement and this Lease.
XXX.3 Release from Cash Collateral. At any time that (i) the Lease
----------------------------
Balance reduced by amounts on deposit in the Cash Collateral Account and
-------
increased by the amount of Recourse Debt is less than $34,000,000.00 but prior
- - ---------
to Full Collateralization, (ii) no Material Adverse Effect to the
creditworthiness of the Guarantor as reasonably determined by the Lessor has
-65-
<PAGE>
occurred, and (iii) no Event of Default has occurred and is continuing, in
addition to the rights provided for in Section 6.6 the Lessee shall be entitled
-----------
to direct the Lessor to release from the Cash Collateral Account to the partners
or members of the Lessee, or to the partners or members of the Parent, an amount
sufficient to pay the income tax liability of such partners or members arising
out of activities or transactions as required, permitted or contemplated or by
the terms of this Lease; provided, however, that the amount of such release
-------- -------
shall not exceed 5% of the Excess Proceeds payable in connection with the first
$17,000,00.00 of reductions to the Lease Balance.
XXX.4 Deposits to Cash Collateral Account. The Lessee shall have the
-----------------------------------
right, but not the obligation, to make deposits of funds other than Excess
Proceeds into the Cash Collateral Account at any time.
XXX.5 Effect of Full Collateralization. That portion of any Early Buy-
--------------------------------
Out Price determined pursuant to clause (b) of the definition of "Early Buy-Out
Price" accruing and compounding from and after the date of Full
Collateralization and paid by the Lessee in connection with the exercise of any
Early Buy-Out Option shall be applied as a discount to the last Early Buy-Out
Price paid by the Lessee hereunder. Further, upon Full Collateralization, and
provided that no Event of Default has occurred and is continuing, (i) in the
event of any deposit of Excess Proceeds into the Cash Collateral Account, a
corresponding amount shall be released from the Cash Collateral Account to the
Lessee, and (ii) any amounts on deposit in the Cash Collateral Account in excess
of the Lease Balance increased by the amount of Recourse Debt shall be released
---------
to the Lessee.
ARTICLE XXXI
HOLDING OVER
XXXI.1 Holding Over. If the Lessee shall for any reason remain in
------------
possession of the Property after the expiration or earlier termination of this
Lease (unless the Property is conveyed to Lessee or its designee), such
possession shall be as a tenancy at sufferance during which time the Lessee
shall continue to pay Supplemental Rent that would be payable by the Lessee
hereunder were this Lease then in full force and effect with respect to the
Property and the Lessee shall continue to pay Basic Rent at an annual rate equal
to the rate payable hereunder immediately preceding such expiration or earlier
termination; provided, however, that from and after the sixtieth day the Lessee
-------- -------
shall remain in possession of the Property after such expiration or earlier
termination, the Lessee shall pay Basic Rent at an annual rate equal to two
hundred percent of the Basic Rent payable hereunder immediately preceding such
expiration or earlier termination. Such Basic Rent shall be payable from time to
time upon demand by the Lessor. During any period of tenancy at sufferance, the
Lessee shall, subject to the second preceding sentence, be obligated to perform
and observe all of the terms, covenants and conditions of this Lease, but shall
have no rights hereunder other than the right, to the extent given by law to
tenants at sufferance, to continue its occupancy and use of the Property.
Nothing contained in this Article XXXI shall constitute the consent, express or
------------
implied, of the Lessor to the holding over of the Lessee after the expiration or
earlier termination of this Lease as to the Property and nothing contained
herein shall be read or construed as preventing the Lessor from maintaining a
-66-
<PAGE>
suit for possession of the Property or exercising any other remedy available to
the Lessor at law or in equity.
ARTICLE XXXII
LOANS
XXXII.1 Agreement to Service. The Lessee agrees to administer and service
--------------------
the Loans, and otherwise act in accordance with this Article XXXII, until the
-------------
Expiration Date.
XXXII.2 Servicing the Loans. The Lessee shall service and administer the
-------------------
Loans and shall collect payments due under the Loans in accordance with its
customary and usual servicing procedures (the "Servicing Standard"); provided,
------------------ --------
however, that the Lessee, in connection with its servicing and administration of
- - -------
the Loans shall act without regard to any credit or other relationships apart
from the contracts that the Lessee or any of its Affiliates may have with any
Borrower, or any Affiliate of any Borrower.
XXXII.3 Power and Authority. In connection with its servicing and
-------------------
administration of the Loans hereunder, the Lessee shall have full power and
authority, acting alone or through any party properly designated by it
hereunder, to do any and all things in connection with such servicing and
administration that it may deem (x) necessary or desirable and consistent with
the Servicing Standard and (y) consistent with maximizing the amount ultimately
to be received by the Lessor with respect to the Loans; provided, however, that
-------- -------
the Lessee shall not without the Lessor's consent, which shall not be
unreasonably withheld or delayed, consent or agree to (1) the extension or
deferral of any date on which a Loan or any payment due with respect thereto is
to be paid, (2) any waiver of any covenant in any Collateral Document, (3) any
amendment or modification to any Collateral Document, (4) any change in the
interest rate or interest rate basis or spread applicable to any Loan, or (5)
any release of a guaranty or collateral securing repayment of any Loan, or (6)
the forgiveness of any payment due with respect to any Loan. The Lessee shall
not be obligated to use servicing procedures, offices, employees or accounts for
servicing the Loans thereunder that are separate and apart from the procedures,
offices, employees and accounts used by the Lessee in connection with servicing
and administering its own portfolio of loans and investments. The Lessor
acknowledges that the Loan identified on Schedule 1 as "Marquardt" is currently
----------
in default and subject to work-out negotiations.
XXXII.4 Servicing Covenants. The Lessee covenants and agrees, with
-------------------
respect to each Loan, that: (i) it will duly fulfill all obligations on its part
to be fulfilled under or in connection with the Loans and will maintain in
effect all qualifications required in order to service the Loans the failure to
comply with which could reasonably be expected to have a Material Adverse
Effect; (ii) it will not permit any rescission or cancellation of any
obligations under the Loans except as ordered by a court of competent
jurisdiction or other Governmental Authority; (iii) it will do nothing to impair
the rights of the Lessor in the Loans; and (iv) it will not reschedule, revise
or defer payments due on the Loans; without the Lessor's consent (which shall
not be unreasonably withheld or delayed). In the event the Lessee breaches any
covenant or agreement set forth in this Article XXXII, and such breach has a
-------------
Material Adverse Effect on the
-67-
<PAGE>
Loans and is not cured within 30 days of the earlier to occur of the discovery
of such event by the Lessee, or receipt by the Lessee of written notice of such
event given by the Lessor, then the Lessor may, at its election, terminate this
the rights and obligations of the Lessee under this Article XXXII.
-------------
XXXII.5 Payments to Lessor. The Lessee shall remain obligated for, and
------------------
shall receive the benefit of, any "swap" resulting from the difference between
(i) interest amounts collected from the Borrowers, and (ii) the component of
"Basic Rent" payable by the Lessee hereunder by virtue of the Lease Balance
includes the Lessor's Cost with respect to each Loan. Any payments on account of
principal received by the Lessee from any Borrower shall be remitted to the
Lessor within two Business Days and applied by the Lessor to reduce the Lessor's
Cost for such Loan. To the extent that such payments of principal received and
applied by the Lessor reduce the Lessor's Cost for any Loan to zero, any further
payments of principal shall be applied by the Lessor to reduce the Lessor's
Costs for the all other Properties and Loans on a pro rata basis or otherwise as
mutually agreed by the Lessor and the Lessee
XXXII.6 Servicing Compensation. The Lessee shall not be entitle to, and
----------------------
shall not receive, any compensation for its servicing activities hereunder.
XXXII.7 Reports and Records for the Lessor.
----------------------------------
(a) Quarterly Servicing Certificate. The Lessee shall forward to the
-------------------------------
Lessor on or before the 45th day following the end of each calendar quarter an
accounting with respect to all payments collected by the Lessee with respect to
the Loans and such other information with respect to the Loans as the Lessee has
determined may have a Material Adverse Effect.
(b) Annual Servicing Certificate. On or before January 31 of each
----------------------------
calendar year, beginning with January 31, 2001, the Lessee will deliver a review
of the activities of the Lessee during the twelve-month period ending on
December 31 of such year, or for the initial period, from the Commencement Date
until December 31, 2000, and a certificate to the effect that its performance
under this Article XXXII was made under the supervision of the officer signing
-------------
such certificate and (b) to the best of such officer's knowledge, based on such
review, the Lessee has fully performed all its obligations under this Article
-------
XXXII throughout such period, or, if there has been a default in the performance
- - -----
of any such obligation, specifying each such default known to such officer and
the nature and status thereof.
XXXII.8 Purchase Option. It is the intention of the Lessor and the
---------------
Lessee that the Lessee shall have the same rights and obligations, and shall be
subject to the same restrictions, with respect to Loans as are provided with
respect to the Properties pursuant to Article XXI of this Lease.
-----------
XXXII.9 Early Buy-Out Option. It is the intention of the Lessor and the
--------------------
Lessee that the Lessee shall have the same rights and obligations with respect
to Loans as are provided with respect to the Properties pursuant to Article XXII
------------
of this Lease.
-68-
<PAGE>
XXXII.10 Provisions Relating to the Exercise of Options. In connection
----------------------------------------------
with the Lessee's exercise of its Purchase Option with respect to the Loans or
an Early Buy-Out Option with respect to any Loan, upon the Purchase Option
Closing Date or the Early Buy-Out Closing Date, as the case may be, at the
Closing the Lessor shall sell, assign and convey to the transferee all right,
title and interest in and to the Loans, together with all the Collateral
Documents as follows:
(i) deliver to the transferee the Note or Notes for the Loan or
Loans being purchased, in each case endorsed by allonge without
representation, warranty or recourse, except a representation that the Note
or Notes have not been pledged other than to the Senior Lender; provided,
--------
however, that if the originals of the Notes are not in the possession of
-------
the Lessor and the Lessor has exhausted all reasonable means to locate such
original Notes, the Lessor may deliver copies of the Notes together with
lost notes certificates;
(ii) deliver originals of the other Collateral Documents (or if
originals are not available and the Lessor has exhausted all reasonable
means to locate the originals of such other Loan Documents, copies
thereof), and an assignment and assumption of loan documents for each Loan
or Loans, in each case without representation, warranty or recourse and in
recordable form when appropriate;
(iii) execute and deliver copies of the UCC financing statements
and assignments of UCC financing statements related to the personal
property;
(iv) deliver and assign to the transferee any escrows held by
the Lessor;
(v) execute and deliver a notice to the Borrower advising the
Borrower of the sale of the Loan; and
(vi) the Lessor shall execute such other documents reasonably
requested by the Lessee or its designee, or otherwise required under local
law, to effect a transfer of the Property and title thereto.
ARTICLE XXXIII
MISCELLANEOUS
XXXIII.1 Survival; Severability; Etc. Anything contained in this Lease to
---------------------------
the contrary notwithstanding, all claims against and liabilities of the Lessee
or the Lessor arising from events commencing prior to the expiration or earlier
termination of this Lease shall survive such expiration or earlier termination
for a period of one year except as to indemnification which shall continue to
survive. If any term or provision of this Lease or any application thereof shall
be declared invalid or unenforceable, the remainder of this Lease and any other
application of such term or provision shall not be affected thereby. If any
right or option of the Lessee
-69-
<PAGE>
provided in this Lease would, in the absence of the limitation imposed by this
sentence, be invalid or unenforceable as being in violation of the rule against
perpetuities or any other rule of law relating to the vesting of an interest in
or the suspension of the power of alienation of property, then such right or
option shall be exercisable only during the period which shall end twenty-one
years after the date of death of the last survivor of the descendants of
Franklin D. Roosevelt, the former President of the United States, Henry Ford,
the deceased automobile manufacturer, and John D. Rockefeller, the founder of
the Standard Oil Company, known to be alive on the date of the execution,
acknowledgment and delivery of this Lease.
XXXIII.2 Force Majeure. If the Lessee is prevented from exercising on a
-------------
timely basis any Early Buy-Out Option, or consummating on a timely basis any
sale or purchase on the basis of the exercise of any Early Buy-Out Option, by
natural disaster, fire, declared or undeclared war, riots, mob violence,
insurrections, sabotage, strikes, lockouts, condemnation, temporary restraining
orders or injunctions, the failure or refusal of governmental authorities to
issue permits or take other actions on a timely basis (and, upon Full
Collateralization only, the failure of other third parties to take actions on a
timely basis), or changes after the date hereof in the requirements or
interpretations of relevant laws, in any such case, so long as (i) such cause is
not within the reasonable control of the Lessee, (ii) the Lessee gives notice of
such event to the Lessor within ten days of the Lessee's actual knowledge of the
occurrence thereof, (iii) no Event of Default shall have occurred which is
continuing, then, at the election of the Lessor, either (A) any time periods
provided for in this Lease with respect to the exercise of any Early Buy-Out
Option, or for consummating any sale or purchase on the basis of the exercise of
any Early Buy-Out Option, shall be tolled during the period of such condition or
event, or (B) the Lessor and the Lessee shall enter into a trust, nominee, or
other transaction or arrangement, on terms reasonably satisfactory to the Lessor
and the Lessee, to provide to the Lessee the financial benefits of such Early
Buy-Out Option or Early Buy-Out Options. In addition, in the event that (x) Full
Collateralization is achieved prior to February 1, 2003, and (y) the Lessee is
prevented from exercising on a timely basis all Early Buy-Out Options, or
consummating on a timely basis any sale or purchase on the basis of the exercise
of all Early Buy-Out Options, by an event or condition described above, and (z)
satisfaction of clauses (i), (ii), and (iii) above, then the increases in Basic
Rent as of February 1, 2003, provided for in the definition of "Basic Rent" and
the payment of Accrued Rent shall also be tolled (and, at such time that the
tolling of the payment of Accrued Rent ceases, installments of Accrued Rent
shall be recalculated to provide for equal installments on each Payment Date
thereafter in an amount sufficient to pay the full amount thereof over the then
balance of the Term).
XXXIII.3 Amendments and Modifications. Neither this Lease nor any
----------------------------
provision hereof may be amended, waived, discharged or terminated except by an
instrument in writing in recordable form signed by the Lessor and the Lessee.
XXXIII.4 No Waiver. No failure by the Lessor or the Lessee to insist upon
---------
the strict performance of any term hereof or to exercise any right, power or
remedy upon a default hereunder, and no acceptance of full or partial payment of
Rent during the continuance of any such default, shall constitute a waiver of
any such default or of any such term. To the fullest extent permitted by law,
no waiver of any default shall affect or alter this Lease, and this Lease
-70-
<PAGE>
shall continue in full force and effect with respect to any other then existing
or subsequent default.
XXXIII.5 Notices. All notices, demands, requests, consents, approvals and
-------
other communications hereunder shall be in writing (including by facsimile), and
directed to the address of the appropriate party as set forth in Schedule 7
----------
hereto.
XXXIII.6 Successors and Assigns. All the terms and provisions of this
----------------------
Lease shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
XXXIII.7 Headings and Table of Contents. The headings and table of
------------------------------
contents in this Lease are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof.
XXXIII.8 Counterparts. This Lease may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same instrument.
XXXIII.9 Brokerage Commissions. Neither Lessor nor Lessee has discussed
---------------------
this Lease or the leasing or sale of the Properties with any brokers, agents or
finders so as to create any legal right of such broker to any commission or
similar fee. Each of Lessee and Lessor hereby indemnifies and agree to hold
harmless the other from and against any claims for any such commission or fee by
any person acting by, through, under or on behalf of the indemnifying party.
XXXIII.10 Florida - Radon Gas Disclosure. Radon is a naturally occurring
------------------------------
radioactive gas that, when it has accumulate din a building in sufficient
quantities, may present health risks to person who are exposed to it over time.
Levels of radon that exceed federal and state guidelines have been found in
buildings in Florida. Additional information regarding radon and radon testing
may be obtained from your county public health unit.
XXXIII.11 Treatment as a Lease. The Lessor and the Lessee each agree that
--------------------
this Lease shall be treated for all tax purposes as a lease and that each of the
Lessor and the Lessee will file applicable tax returns to reflect such
treatment. The Lessee represents and warrants that it will not claim ownership
of (or any tax benefits, including depreciation, with respect to) any Property
for any income tax purposes, it being understood that the Lessor is and will
remain the owner of the Properties for such income tax purposes until the
termination of this Lease or, with respect to any Property, the sale of such
Property pursuant to the terms of Articles XXI or XXII or otherwise pursuant to
------------ ----
the terms of this Lease.
XXXIII.12 GOVERNING LAW. THIS LEASE SHALL BE GOVERNED BY, AND CONSTRUED AND
-------------
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (EXCLUDING ANY
CONFLICT-OF-LAW OR CHOICE-OF-LAW RULES WHICH MIGHT LEAD TO THE APPLICATION OF
THE INTERNAL LAWS OF ANOTHER JURISDICTION), EXCEPT AS TO MATTERS RELATING TO THE
CREATION, PERFECTION AND ENFORCEMENT OF LIENS
-71-
<PAGE>
AND SECURITY INTERESTS AND THE EXERCISE OF REMEDIES WITH RESPECT THERETO, WHICH
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE IN
WHICH THE PROPERTY IS LOCATED.
XXXIII.13 SUBMISSION TO JURISDICTION; WAIVERS. THE LESSEE HEREBY
-----------------------------------
IRREVOCABLY AND UNCONDITIONALLY:
(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS LEASE AND THE OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY, OR
FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGEMENT IN RESPECT THEREOF, TO THE NON-
EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE
COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK,
AND APPELLATE COURTS FROM ANY THEREOF;
(b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH
COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE
OF ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE
AFFECTED BY PERSONAL SERVICE OR AS OTHERWISE PERMITTED BY APPLICABLE LAWS;
(d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN
ANY OTHER JURISDICTION; AND
(e) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY
HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS
SECTION 33.13 ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.
- - -------------
THE LESSEE FURTHER AGREES THAT IN ANY LITIGATION, TRIAL, ARBITRATION OR OTHER
DISPUTE RESOLUTION PROCEEDING RELATING TO THIS LEASE, ALL DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS OF THE LESSEE SHALL BE DEEMED TO BE EMPLOYEES OR MANAGING
AGENTS OF THE LESSEE FOR PURPOSES OF ALL APPLICABLE LAW OR COURT RULES REGARDING
PRODUCTION OF WITNESSES BY NOTICE FOR TESTIMONY (WHETHER IN A DEPOSITION, AT
TRIAL OR OTHERWISE). THE LESSEE AGREES THAT THE LESSOR'S COUNSEL IN ANY SUCH
DISPUTE RESOLUTION PROCEEDING MAY EXAMINE ANY OF THESE INDIVIDUALS AS IF UNDER
CROSS-EXAMINATION AND THAT ANY DISCOVERY DEPOSITION OF ANY OF
-72-
<PAGE>
THEM MAY BE USED IN THAT PROCEEDING AS IF IT WERE AN EVIDENCE DEPOSITION. THE
LESSEE IN ANY EVENT WILL USE ALL COMMERCIALLY REASONABLE EFFORTS TO PRODUCE IN
ANY SUCH DISPUTE RESOLUTION PROCEEDING, AT THE TIME AND IN THE MANNER REQUESTED
BY THE LESSOR, ALL PERSONS, DOCUMENTS (WHETHER TANGIBLE. ELECTRONIC OR OTHER
FORM) OR OTHER THINGS UNDER THE LESSEE'S CONTROL RELATING TO THE DISPUTE.
(f) Waiver of Jury Trial. THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY
--------------------
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS LEASE AND/OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF SUCH PARTIES. THE PARTIES HERETO
ACKNOWLEDGE AND AGREE THAT THEY HAVE RECEIVED FULL AND SUFFICIENT CONSIDERATION
FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
PARTIES ENTERING INTO THIS LEASE.
[signature page follows]
-73-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Lease to be duly executed
and delivered as of the date first above written.
- - --------------------------------------------------------------------------------
signed, sealed and delivered in the HELLER AFFORDABLE HOUSING OF FLORIDA,
presence of: INC.,
_______________________________
Print Name: as the Lessor
_______________________________ By:_________________________________
Print Name: Name: Michael H. Jahrmarkt
Title: Executive Vice-President
- - --------------------------------------------------------------------------------
_______________________________ ECHELON COMMERCIAL LLC,
Print Name:
By: Equis Corporation, its manager
_______________________________ By:_________________________________
Print Name: Name: James A. Coyne
Title: Vice President
- - --------------------------------------------------------------------------------
-74-
<PAGE>
STATE OF NEW YORK
COUNTY OF NEW YORK
The foregoing instrument was acknowledged before me this 21st day of
January, 2000, by Michael H. Jahrmarkt, as Executive Vice President of HELLER
AFFORDABLE HOUSING OF FLORIDA, INC., a Florida corporation (Lessor), on behalf
of the Lessor, who is personally known to me or who has produced a driver's
license as identification.
_____________________________
Notary Signature
(SEAL)
STATE OF NEW YORK
COUNTY OF NEW YORK
The foregoing instrument was acknowledged before me this 21st day of
January 21, 2000, by, as Vice President of Equis Corporation, a
_________________, as the Managing Member of ECHELON COMMERICAL LLC, a Delaware
limited liability company (Lessee), on behalf of Lessee, who is personally known
to me or who has produced __________________ as identification.
_____________________________
Notary Signature
(SEAL)
-75-
<PAGE>
Exhibit (d)(5)
- - -------------------------------------------------------------------------------
OMNIBUS AGREEMENT
Dated January 21, 2000
Between
EIN ACQUISITION CORP.,
as Seller,
and
HELLER FINANCIAL, INC.,
as Purchaser
- - -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. Definitions 1
SECTION 2. Sale of Equity Interests 4
SECTION 3. Purchase of Equity Interest 5
SECTION 4. Closing 5
SECTION 5. Conditions 6
SECTION 6. Representations and Warranties of Seller 7
SECTION 7. Representations and Warranties of Purchaser 10
SECTION 8. Consummation of Transactions; Termination 11
SECTION 9. Further Assurances 11
SECTION 10. Miscellaneous 11
SECTION 11. Effective Time of Transfer 17
SCHEDULE 1 - ADDRESSES AND ACCOUNTS
SCHEDULE 2 - TRUST AGREEMENTS AND OWNER TRUSTEES
SCHEDULE 3 - DESCRIPTION OF AIRCRAFT AND ACQUISITION PRICES
SCHEDULE 4 - INDEBTEDNESS
SCHEDULE 5 - LEASES, LESSEES AND LESSORS
SCHEDULE 6 - PARTICIPATION AGREEMENTS
SCHEDULE 7 - SECURITY DOCUMENTS AND SECURITY TRUSTEES
SCHEDULE 8 - LITIGATION
SCHEDULE 9 - TRANSACTION DOCUMENTS
SCHEDULE 10 - ADDITIONAL INSURANCE
i
<PAGE>
SCHEDULE 11 - LEVERAGED LEASE PORTFOLIO
EXHIBIT A - FORM OF PURCHASE AGREEMENT
EXHIBIT B - FORM OF ESCROW AGREEMENT
EXHIBIT C - FORM OF NOTIFICATION AND CONFIRMATION
ii
<PAGE>
OMNIBUS AGREEMENT
THIS OMNIBUS AGREEMENT dated January 21, 2000 (this "Agreement") is by and
between HELLER FINANCIAL, INC., a Delaware corporation, (together with its
assigns and designees, "Purchaser") and EIN ACQUISITION CORP., a Florida
corporation (together with its successors and assigns (including, without
limitation and for the avoidance of doubt, Echelon International Corporation and
EIN Corp. upon consummation successively, of the Merger and the Forward Merger
(as hereinafter defined) "Seller")). Defined terms used herein shall have the
meanings assigned to such terms (whether by reference to another document or
otherwise) in Section 1.
WITNESSETH:
----------
WHEREAS, Seller owns or, subsequent to the Merger, will own, the beneficial
interests of the trust estates created pursuant to the trust agreements listed
on Schedule 2 hereto;
WHEREAS, upon the terms and subject to the conditions set forth herein and
in the related Purchase Agreements, Seller desires to sell, assign, transfer,
convey and set over to Purchaser, and Purchaser desires to purchase, accept and
assume from Seller, Seller's right, title and interest in and to such beneficial
interests;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, subject to the terms and
conditions set forth herein, the parties hereto hereby agree as follows:
SECTION 1. Definitions. The following terms shall have the following
-----------
meanings for all purposes of this Agreement:
"Acquisition Price" shall mean the purchase price for an Equity Interest as
-----------------
specified in Schedule 3 hereto, subject to adjustment (if any) in accordance
with the terms of the relevant Purchase Agreement).
"Aircraft" shall mean the aircraft described on Schedule 3 hereto, or any
--------
of them, as indicated by the context.
"Amendments" shall mean, collectively, amendments to the Security
----------
Documents, the Leases, the Trust Agreements and the Participation Agreements, if
any, required pursuant to the Purchase Agreements in order to reflect the Equity
Interest Transfers.
"Applicable Law" shall mean all applicable laws of any Governmental
--------------
Authority, including, without limitation, federal, state and foreign securities
laws, tax laws, tariff and trade laws, ordinances, judgments, decrees,
injunctions, writs and orders or like actions of any
<PAGE>
[Omnibus Agreement]
Governmental Authority and rules, regulations, orders, interpretations,
licenses, and permits of any federal, regional, state, county, municipal or
other Governmental Authority.
"Assignment" shall mean an assignment and assumption agreement with respect
----------
to an Equity Interest Transfer, substantially in the form attached as Exhibit A
to the related Purchase Agreement.
"Closing Date" shall mean each date reasonably acceptable to Seller and
------------
Seller's Lender on which an Equity Interest Transfer is consummated in
accordance with this Agreement and the Escrow Agreement, which date shall be a
date (prior to the Final Closing Date except as otherwise provided in Section 3
of the Escrow Agreement) specified by Purchaser, but subject to the conditions
of Sections 8(a) and 8(d) of this Agreement, on which all conditions to an
Equity Interest Transfer, as specified in the related Purchase Agreement and
Section 5 hereof, shall have been satisfied or waived, or deemed to have been
satisfied or waived in accordance herewith and therewith.
"Consents" shall mean, collectively, the Consents (Indebtedness), the
--------
Consents (Lessee) and the Consents (Owner Trustee).
"Consents (Indebtedness)" shall mean the consents of holders of the
-----------------------
Indebtedness (or an agent or trustee acting for such holders) to the Equity
Interest Transfers, each substantially in the form attached as Exhibit D to the
related Purchase Agreement.
"Consents (Lessee)" shall mean the consents of the Lessees to the Equity
-----------------
Interest Transfers, each substantially in the form attached as Exhibit B to the
related Purchase Agreement.
"Consents (Owner Trustee)" shall mean the consents of the Owner Trustees to
------------------------
the Equity Interest Transfers, each substantially in the form attached as
Exhibit C to the related Purchase Agreement.
"Echelon" shall mean Echelon International Corporation, a Florida
-------
corporation.
"Equity Interest" shall mean 100% of the beneficial interest in a Trust
---------------
Estate, all of Seller's right, title and interest in, to and under the related
Transaction Documents (including, without limitation, the related Trust
Agreement) arising from and after the Closing Date and any other property
constituting the related Trust Estate.
"Equity Interest Transfer" shall mean a transfer, sale and assignment from
------------------------
Seller to Purchaser of an Equity Interest as contemplated by, and subject to the
terms and conditions of, this Agreement and the relevant Purchase Agreement and
Assignment.
2
<PAGE>
[Omnibus Agreement]
"Escrow Agreement" shall mean that certain Escrow Agreement, dated the date
----------------
hereof, among the Purchaser, the Seller and Cooperatieve Centrale Raiffeisen-
Boerenleenbank B.A., "Rabobank Nederland", New York Branch, as Escrow Agent,
substantially in the form attached hereto as Exhibit B.
"Escrowed Items" shall have the meaning set forth in Section 4(c) hereof.
--------------
"Event of Default" shall mean an "Event of Default", "Termination Event",
----------------
"Acceleration Event" or any similar occurrence (whether by a Lessee, an Owner
Trustee or any other party) under any Transaction Document.
"Final Closing Date" shall mean April 27, 2000.
------------------
"Forward Merger" shall have the meaning set forth in Section 5(b)(iii)
--------------
hereof.
"Governmental Authority" shall mean any nation or government (including any
----------------------
state or other political subdivision of either thereof) and any entity
exercising executive, legislative, judicial, regulatory or administrative
function of or pertaining to government.
"Indebtedness" shall mean the indebtedness secured by the Security
------------
Documents.
"Leases" shall mean the documents identified on Schedule 5 hereto.
------
"Lender" shall mean any Person for whose benefit a Security Trustee has
------
entered into a Security Document or any other holder of Indebtedness.
"Lessees" shall mean the lessees named on Schedule 5 hereto.
-------
"Lessors" shall mean the lessors named on Schedule 5 hereto.
-------
"Leveraged Lease Portfolio" shall mean the leveraged and operating leases
-------------------------
of personal property listed on Schedule 11 hereto.
"Lien" shall mean any mortgage, pledge, security interest, charge, lien or
----
other encumbrance.
"Material Adverse Effect" shall mean a material adverse effect upon the
-----------------------
ownership, lease, use, operation, maintenance, value or management of any Equity
Interest and the property or assets underlying any Equity Interest, or any other
property included in the Leveraged Lease Portfolio, or the consummation of the
transactions contemplated by, or performance by Seller of its obligations under,
this Agreement and the other Seller Documents.
3
<PAGE>
[Omnibus Agreement]
"Merger" shall have the meaning set forth in Section 5(a)(iii) hereof.
------
"Merger Agreement" shall have the meaning set forth in Section 5(a)(iii)
----------------
hereof.
"Owner Trustees" shall mean the owner trustees named on Schedule 2 hereto.
--------------
"Participation Agreements" shall mean the documents listed on Schedule 6
------------------------
hereto.
"Person" shall mean any individual, corporation, partnership, joint
------
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof or any Governmental
Authority or other entity.
"Purchase Agreement" shall mean a purchase agreement with respect to an
------------------
Equity Interest Transfer, substantially in the form of Exhibit A attached
hereto.
"Relevant Documents" shall mean this Agreement, each Purchase Agreement,
------------------
each other Seller Document and each other document or agreement executed in
connection with the transactions contemplated hereby or thereby.
"Reserved Rights" shall have the meaning set forth in Section 2 hereof.
---------------
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated thereunder.
"Security Documents" shall mean the documents listed on Schedule 2 hereto.
------------------
"Security Trustee" shall mean any Person identified as agent, indenture
----------------
trustee, mortgagee or security trustee on Schedule 7 hereto.
"Seller Documents" shall have the meaning set forth in Section 5(a)(iii)
----------------
hereof.
"Seller's Lender" shall mean Utrecht-America Finance Co., an affiliate of
---------------
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New
York Branch ("Rabobank") and any other lender from time to time a party to the
Credit Agreement of even date herewith among Seller, Seller's Lender and
Rabobank, as agent.
"Transaction Documents" shall mean, collectively, the documentation
---------------------
identified as such on Schedule 9 hereto.
"Transfer Documents" shall mean, collectively, this Agreement, the Purchase
------------------
Agreements, the Assignments, any Amendments and the Consents.
4
<PAGE>
[Omnibus Agreement]
"Trust Agreements" shall mean the documents listed on Schedule 2 hereto.
----------------
"Trust Estate" shall mean a trust estate created pursuant to a Trust
------------
Agreement.
SECTION 2. Sale of Equity Interests. Subject to the terms and
------------------------
conditions set forth herein and in the related Purchase Agreement (including,
without limitation, satisfaction of the conditions precedent set forth herein
and in the related Purchase Agreement in accordance herewith and therewith, and
payment of the applicable Acquisition Price), on each Closing Date, Seller
hereby agrees to sell, convey, assign, transfer and set over unto Purchaser, as
of the relevant Closing Date, each Equity Interest other than the related
Reserved Rights (as defined below). For purposes hereof, "Reserved Rights"
shall mean any and all rights and interests of Seller in respect of the
following: (i) Seller's right to tax and other indemnification under any
Transaction Document as a result of or arising out of events occurring or
circumstances existing prior to the relevant Closing Date (or claim asserted
against Seller with respect to a matter subsequent to the Closing Date if Seller
would otherwise be entitled to indemnification for such claim), (ii) each and
every obligation of the applicable Lessee to provide liability insurance on
behalf of or in favor of Seller as an additional insured under any Transaction
Document with respect to events occurring or circumstances existing prior to the
relevant Closing Date, (iii) any interest payable by the applicable Lessee on
any amount referred to in clauses (i) and (ii) above and (iv) the right to
enforce payment of the amounts referred to in clauses (i) through (iii) above.
Seller hereby agrees to execute and deliver to Purchaser, and to perform all of
its obligations under, all of the Purchase Agreements.
SECTION 3. Purchase of Equity Interest. Subject to the terms and
---------------------------
conditions set forth herein and in the related Purchase Agreement (including,
without limitation, satisfaction of the conditions precedent set forth herein
and in the related Purchase Agreement in accordance herewith and therewith), on
each Closing Date, Purchaser hereby agrees to purchase and accept from Seller,
as of the relevant Closing Date, each Equity Interest exclusive of the Reserved
Rights and to pay the applicable Acquisition Price therefor.
SECTION 4. Closing. (a) Subject to the following Sections 4(b), 4(c)
-------
and 4(d), the closing and effectiveness (a "Closing") of a sale and purchase and
the assignment and assumption of an Equity Interest contemplated hereby shall
take place (i) upon the execution by Seller and delivery of each of the related
Assignment and Amendments (if any) as so executed by Seller in accordance with
Section 8(a) of this Agreement and Section 3 of the Escrow Agreement, (ii)
subject to the limitations of the following Section 4(b), upon satisfaction (or
waiver) of the conditions precedent set forth herein and in the applicable
Purchase Agreement, (iii) on a Closing Date and (iv) at the offices of Vedder,
Price, Kaufman & Kammholz, 222 North LaSalle Street, Suite 2600, Chicago,
Illinois 60601 or at such other location as shall be mutually agreed upon by the
parties hereto.
5
<PAGE>
[Omnibus Agreement]
(b) Except as specifically provided in clause (c) below, notwithstanding
anything else to the contrary contained herein or in any other Relevant
Document, including, without limitation, (i) any breach, failure to perform or
other default by any party hereunder, under any Purchase Agreement or under any
other Relevant Document (including, without limitation, the Seller), (ii) the
failure of any condition (other than the filing of the Articles of Merger (as
defined in the Merger Agreement)) or condition subsequent (other than the
condition subsequent set forth in Section 5(c) of this agreement) specified
herein, in any Purchase Agreement or in any other Relevant Document to be
satisfied, (iii) the failure of any representation or warranty to be true and
accurate, (iv) the failure of any party to this Agreement, any Purchase
Agreement or any other Relevant Document to comply with any requirement set
forth herein, in such Purchase Agreement or in any other such Relevant Document
or (v) any other matter, occurrence or event of any nature whatsoever, whether
or not similar to the foregoing, the Purchaser shall be absolutely and
unconditionally obligated to purchase additional Equity Interests from the
Seller on the Final Closing Date such that the aggregate amount of proceeds
received by the Seller in its account specified on Schedule I hereto with
respect to Equity Interests sold pursuant hereto (inclusive of such Equity
Interests being purchased on the Final Closing Date pursuant to this clause (b))
shall equal at least $130,258,531.
(c) Simultaneously with the consummation of the Merger, Purchaser and
Seller shall deliver to the Escrow Agent under the Escrow Agreement, two duly
executed originals of a Purchase Agreement and related Assignment with respect
to each Equity Interest covered by this Agreement for release to Purchaser in
accordance with the Escrow Agreement (the "Escrowed Items"). Notwithstanding
such deliveries, it is expressly understood and agreed that the Escrowed Items
shall be ineffective until released to Purchaser in accordance with Section 3 of
the Escrow Agreement, and the same shall be dated and effective as and from the
date of release. The sole exception to the obligations of the Purchaser pursuant
to clause (b) above shall be the release of the Escrowed Items (or, in the case
any Escrowed Items have been replaced with replacement Escrowed Items pursuant
to paragraph 4 of the Escrow Agreement, such replacement Escrowed Items)
pursuant to the terms of the Escrow Agreement.
(d) Seller shall use its best commercial efforts to assist Purchaser, and
will exercise such rights and remedies as it may have under the Merger Agreement
to cause Echelon reasonably to assist Purchaser, both before and after the
Merger, to obtain the Consents and Amendments, if any, from each of the parties
thereto, and will execute and deliver to Purchaser and/or the other parties
thereto all such Consents, as well as any notices, certificates and other
documents that may be required under the terms of the Transaction Documents in
order to consummate the transactions contemplated hereby in accordance
therewith.
(e) The Purchaser hereby agrees (which agreement shall be binding on its
successors and assigns), for the express benefit of the Seller's Lender as third
party beneficiary of this clause (e), that it will not institute against or join
any other Person in instituting against, the Seller any bankruptcy,
reorganization, arrangement, insolvency or similar proceeding, or other
proceeding
6
<PAGE>
[Omnibus Agreement]
under any federal or state bankruptcy or similar law, from the date hereof until
the date which is one year and one day after the later of (i) the date on which
the Purchaser performs its obligation pursuant to clause (b) above, and (ii) the
Final Closing Date. The provisions of this clause (e) shall survive the
termination of this Agreement.
(f) For the avoidance of doubt, Seller hereby agrees that each Equity
Interest acquired by Purchaser shall include any insurance proceeds relating to
the corresponding Trust Estate (or any part thereof) which are paid or become
payable on or after the date of this Agreement, or arise out of or otherwise
relate to any event occurring or circumstance existing on or after the date of
this Agreement.
SECTION 5. Conditions. (a) Purchaser's Conditions to Closing. Subject
---------- ----------------------------------
to the limitations of Section 4(b) hereof, the obligation of Purchaser to
acquire an Equity Interest and to pay the related Acquisition Price on any
Closing Date prior to the Final Closing Date is subject to the reasonable
satisfaction of, or the waiver by, Purchaser (which waiver shall be in writing
and signed by Purchaser) of the following conditions precedent, it being
understood, however, that such conditions (other than consummation of the Merger
as described in and in accordance with the terms of Section 5(a)(iii) below)
shall be, and hereby are, waived as of the Final Closing Date:
(i) On or before each Closing Date, Purchaser shall have
received, in each case duly authorized, executed and delivered by Seller,
each Transfer Document relating to the Equity Interest being transferred on
such Closing Date.
(ii) Subject to the limitations of Section 3.4 thereof, all of
the conditions precedent to Purchaser's obligations set forth in the
Purchase Agreement relating to the Equity Interest to be transferred on
such Closing Date shall have been satisfied or waived by Purchaser on or
prior to such Closing Date.
(iii) On or before the initial Closing Date, Purchaser shall have
received evidence of (A) the merger of Seller with and into Echelon (the
"Merger") in accordance with that certain Agreement and Plan of Merger of
even date herewith between Seller and Echelon (the "Merger Agreement") (and
none of the terms and conditions of the Merger Agreement, insofar as they
relate to any Aircraft, Lease, Lessee, Transaction Document or Transfer
Document shall have been waived or modified by any party to the Merger
Agreement without the prior written consent of Purchaser) and (B) the
authorization by all necessary action on behalf of Seller of the execution,
delivery and performance of this Agreement and each other document required
to be executed by the Seller in accordance with the provisions hereof and
of the Purchase Agreements, including, without limitation, the Transfer
Documents to which Seller is a party (collectively, the "Seller
Documents").
7
<PAGE>
[Omnibus Agreement]
(iv) The representations and warranties of Seller contained
herein and in all of the Purchase Agreements shall be true and correct in
all material respects as of such Closing Date with the same force and
effect as though made on and as of such Closing Date, except to the extent
that any such representation or warranty relates solely to an earlier date
in which case such representation or warranty shall have been true and
correct in all material respects on and as of such earlier date.
(b) Seller's Conditions to Closing. The obligation of Seller to sell,
------------------------------
convey, assign, transfer and set over an Equity Interest to Purchaser on a
Closing Date prior to the Final Closing Date is subject to the reasonable
satisfaction of, or the waiver by, Seller of the following conditions precedent:
(i) All of the conditions precedent to Seller's obligations set
forth in the Purchase Agreement relating to the Equity Interest to be
transferred on such Closing Date shall have been satisfied or waived by
Seller on or prior to such Closing Date.
(ii) Purchaser shall not be in default of any of its obligations
hereunder or under any of the Purchase Agreements.
(ii) On or before the initial Closing Date, Seller shall have
effected the Merger, and on or before the Closing Date with respect to any
Equity Interest Transfer other than the Equity Interest Transfers described
in Section 8(d) of this Agreement, Seller shall have effected the Merger of
Echelon with and into EIN Corp., a Delaware corporation, in accordance with
Section 4.19 of the Merger Agreement (the "Forward Merger").
(c) Condition Subsequent. The execution, delivery and performance by
--------------------
Seller of all of the Purchase Agreements in accordance with the Escrow
Agreement, is a condition subsequent to Purchaser's obligations hereunder and
under the Purchase Agreements, it being understood, however, that Seller's
Lender shall have the right, at any time, to instruct the Escrow Agent under the
Escrow Agreement, on behalf of Seller, subject to the terms and conditions of
the Escrow Agreement, to complete and to deliver to Purchaser each and any of
the Escrowed Items in accordance with the Escrow Agreement pursuant to its
rights under that certain Security Agreement of even date herewith between
Seller and Seller's Lender granting to Seller's Lender a purchase money security
interest in and to all of Seller's rights and interests herein and hereunder and
Seller hereby covenants that such security interest insofar as relates to any
Equity Interest shall be released on and as of the Closing Date with respect
thereto.
(d) Conditions Precedent to Execution and Delivery of Agreement by
--------------------------------------------------------------
Purchaser. (i) Additional Insurance. It is a condition precedent to
- - --------- --------------------
Purchaser's execution and delivery of this Agreement that Purchaser shall have
received evidence reasonably satisfactory to it that Seller has obtained or
caused to be obtained, at Purchaser's expense except as otherwise
8
<PAGE>
[Omnibus Agreement]
provided in the Merger Agreement, additional insurance with respect to the
Aircraft in the amounts specified on Schedule 10 and that the proceeds of such
insurance are payable to Purchaser.
(ii) Legal Opinion. It is a condition precedent to Purchaser's
--------------
execution and delivery of this Agreement that Purchaser shall have received a
legal opinion from Thelen Reid & Priest, addressing such matters and otherwise
in form and scope reasonably requested by and satisfactory to Purchaser.
SECTION 6. Representations and Warranties of Seller. Seller hereby
----------------------------------------
represents and warrants to Purchaser, as of the date hereof and as of each
Closing Date as follows:
(a) Organization, Corporate Authority, Etc. Seller is a corporation
---------------------------------------
duly incorporated, validly existing and in good standing under the laws of the
state of Florida. Seller has all requisite power and authority to enter into
and perform its obligations under the Seller Documents.
(b) Authorization, Etc. This Agreement has been, and each of the
------------------
other Seller Documents will have been, on or prior to the applicable Closing
Date, duly authorized, executed and delivered by Seller. This Agreement does,
and each of the other Seller Documents when executed and delivered will
constitute the legal, valid and binding obligations of Seller, enforceable
against Seller in accordance with their respective terms, except as enforcement
of the terms hereof and thereof may be limited by applicable bankruptcy,
insolvency, reorganization, liquidation, moratorium or similar laws affecting
enforcement of creditors' rights generally, and by general principles of equity.
(c) No Violation. None of the execution, delivery or performance by
------------
Seller of this Agreement or any of the other Seller Documents, or the
consummation by Seller of the transactions contemplated hereby and thereby, will
contravene any Applicable Law binding on Seller or any of its property, or any
provision of the certificate of incorporation or by-laws of Seller, or, subject
to the terms and conditions of each Purchase Agreement, including, without
limitation, Purchaser's obtaining the Consents, will result in a breach of, or
constitute a default under, or contravene any provision of, any mortgage, deed
of trust, indenture or other agreement (including, without limitation, the
Transaction Documents) or instrument to which Seller is a party or by which
Seller or all or any of its property or assets is bound except, in each case, to
the extent the same would not have a Material Adverse Effect.
(d) No Consents and Approvals. None of the execution, delivery or
-------------------------
performance by Seller of this Agreement or any of the other Seller Documents, or
the consummation by Seller of the transactions contemplated hereby and thereby,
requires the consent or approval of, the giving of notice to, the registration,
recording or filing of any documents with, or the taking of any other action in
respect of, any United States federal or state
9
<PAGE>
[Omnibus Agreement]
Governmental Authority or the terms and provisions of any Transaction
Documents, except (i) as contemplated by the related Purchase Agreement,
Consents, Assignments or Amendments (if any), (ii) such as have been obtained,
effected, waived or paid on or prior to the relevant Closing Date, or (iii)
those with respect to which the failure to obtain would not have a Material
Adverse Effect.
(e) Seller's Liens. Seller is the sole legal and beneficial owner of
--------------
the Equity Interests. Other than the Lien of Seller's Lender on Seller's rights
under this Agreement and any of the Transfer Documents, which Lien shall be
discharged and released with respect to any Equity Interest as of the Closing
Date with respect thereto, there are no Liens on any Equity Interest, except
inchoate or similar Liens as may arise by operation of law upon or with respect
thereto, in the ordinary course of business, and/or which would not have a
Material Adverse Effect, and on the relevant Closing Date Seller will transfer
to Purchaser good and marketable title to each Equity Interest, free and clear
of all Liens, except as provided in this sentence. Seller has not assigned, and
before the relevant Closing Date shall not have assigned, any of its right,
title and interest in any Equity Interest to any Person, and on the relevant
Closing Date, Seller will transfer to Purchaser all of its right, title and
interest in and to each Equity Interest. Except as provided in the second
sentence, of this Section 6(e), there are no Liens on any of the Aircraft or the
Leases, other than Seller's interest in the Equity Interests and other than
Liens created pursuant to, or permitted by, the Transaction Documents. Seller
has not previously sold, assigned, encumbered, transferred or conveyed, and
except as expressly contemplated hereby or by any of the Transaction Documents,
has no obligation to sell, assign, encumber, transfer or convey any of its
right, title or interest in, to and under any Equity Interest.
(f) No Litigation. Except as described in Schedule 8 hereto, there
-------------
are no pending or, to the best of Seller's knowledge, threatened investigations,
suits or proceedings against Seller or affecting Seller or its properties or
involving any of the Aircraft, the Equity Interests or any Transaction Document,
that, if determined adversely, would have a Material Adverse Effect.
(g) No Violation of Law. Seller is not in breach of any Applicable
-------------------
Law that would have a Material Adverse Effect.
(h) Securities Act. Other than pursuant to this Agreement and the
--------------
other Transfer Documents, neither Seller nor anyone authorized to act on
Seller's behalf has directly or indirectly offered any security (as defined in
Section 2(1) of the Securities Act), relating to an interest in any Equity
Interest for sale to, or solicited any offer to acquire any such security from,
or has sold any such security to, any Person in violation of the Securities Act,
and neither Seller nor anyone authorized to act on Seller's behalf will directly
or indirectly make any such offer, solicitation or sale in violation of the
Securities Act. Without limiting the generality of Section 6(c), the transfer
of the Equity Interests to Purchaser as contemplated herein will not violate any
provision of the Securities Act.
10
<PAGE>
[Omnibus Agreement]
(i) No Assignment or Sublease. Seller has not consented (or directed
-------------------------
or otherwise caused any Lessor to consent) to any assignment by any Lessee of
its rights under the relevant Lease or to any sublease or transfer of possession
of any of the Aircraft, and, to the best of Seller's knowledge, no such
assignment, sublease or transfer of possession has occurred, other than as
permitted or contemplated by the Transaction Documents.
(j) Transaction Documents. Seller has provided Purchaser with true
---------------------
and complete copies of the Transaction Documents. On or prior to the Closing
Date of an Equity Interest Transfer, Seller shall deliver (or cause to be
delivered) to Purchaser the signed original counterparts of the Transaction
Documents relating to the Equity Interest to be transferred on such Closing
Date. Each of the Transaction Documents is and on the applicable Closing Date
will be in full force and effect and shall not have been amended, modified or
supplemented (except or as such document may be amended by or pursuant to any
Amendment). There are no documents, agreements or instruments, other than the
Transaction Documents, relating to the Equity Interests, the Trust Estates (or
any part thereof), the subject matter hereof or of any of the Transaction
Documents by which Purchaser will be bound after the applicable Closing Date or
which would affect the Equity Interests or the Trust Estates (or any part
thereof). To the best of Seller's knowledge, no Lessee has exercised any option
to terminate the related Lease.
(k) Performance of Transaction Documents. Seller has performed, and
------------------------------------
is not in default with respect to, any obligation to be performed by it, or in
violation of any covenant to be observed by it, pursuant to any of the
Transaction Documents. To the best of Seller's knowledge, there are no set-
offs, defenses or counterclaims against any amounts owed to Seller or any Lessor
under any of the Transaction Documents.
(l) Indebtedness. The Indebtedness is as described on Schedule 4 to
------------
this Agreement.
(m) No Default. To the best of Seller's knowledge, there is no Event
----------
of Default or any event, condition or circumstance that, with the passage of
time or the giving of notice or both, would constitute an Event of Default under
any Transaction Document.
SECTION 7. Representations and Warranties of Purchaser. Purchaser
-------------------------------------------
hereby represents and warrants to Seller, as of the date hereof and as of each
Closing Date, as follows:
(a) Organization, Authority, Etc. Purchaser is a corporation duly
----------------------------
incorporated, validly existing and in good standing under the laws of the state
of Delaware. Purchaser has all requisite power and authority to enter into and
perform its obligations under this Agreement and each of the Transfer Documents
to which Purchaser is or may become a party.
11
<PAGE>
[Omnibus Agreement]
(b) Authorization, Etc. This Agreement has been duly authorized,
------------------
executed and delivered by Purchaser. This Agreement does, and each of the other
Transfer Documents, when executed and delivered by Purchaser will, constitute
the legal, valid and binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms, except as enforcement of the terms
hereof may be limited by applicable bankruptcy, insolvency, reorganization,
liquidation, moratorium or similar laws affecting enforcement of creditors'
rights generally, and by general principles of equity.
(c) No Violation. None of the execution, delivery or performance by
------------
Purchaser of this Agreement or any of the Transfer Documents to which Purchaser
is or may become a party, or the consummation by Purchaser of the transactions
contemplated hereby and thereby, will contravene any Applicable Law binding on
Purchaser or any of its property, or any provision of the certificate of
incorporation or by-laws of Purchaser, or will result in a breach of, or
constitute a default under, or contravene any provision of, any mortgage, deed
of trust, indenture or other agreement or instrument to which Purchaser is a
party or by which Purchaser or all or any of its property or assets is bound.
(d) No Litigation. There are no pending or, to the best of
-------------
Purchaser's knowledge, threatened investigations, suits or proceedings against
Purchaser or affecting Purchaser or its properties, that, if determined
adversely, would adversely affect the consummation of the transactions
contemplated by, or the performance by Purchaser of its obligations under, this
Agreement and the other Transfer Documents to which Purchaser is or may become a
party.
(e) No Consents and Approvals. None of the execution, delivery or
-------------------------
performance by Purchaser of this Agreement and the other Transfer Documents to
which Purchaser is or may become a party, or the consummation by Purchaser of
the transactions contemplated hereby or thereby, requires the consent or
approval of, the giving of notice to, the registration, recording or filing of
any documents with, or the taking of any other action in respect of, any United
States federal or state Governmental Authority, except (i) as contemplated by
the related Purchase Agreement, Consents, Assignments or Amendments (if any),
(ii) such as have been obtained, effected, waived or paid on or prior to the
relevant Closing Date, or (iii) those with respect to which the failure to
obtain would not have a Material Adverse Effect.
SECTION 8. Consummation of Transactions; Termination. (a) All of the
-----------------------------------------
Equity Interest Transfers, unless otherwise agreed in writing by Seller and
Purchaser, shall be consummated not earlier than one Business Day following the
Effective Date (as defined in the Merger Agreement), and on or before April 27,
2000.
(b) This Agreement may be terminated, and the transactions contemplated by
this Agreement abandoned, by either Seller or Purchaser at any time upon notice
to the other, if the Merger Agreement shall have been terminated and be of no
further force and effect by mutual
12
<PAGE>
[Omnibus Agreement]
consent of the parties thereto, or upon the entry of any nonappealable judgment
or order enjoining or otherwise prohibiting the consummation of the transactions
contemplated by the Merger Agreement or following any unilateral termination
thereof by either party thereto in accordance with the terms and conditions
thereof.
(c) At least one business day prior to the Effective Date of the Merger
(as notified to Purchaser by Seller in writing), Purchaser shall deliver to
Seller originals, duly executed by Purchaser as applicable, of the following:
(i) a legal opinion addressed to Seller's Lender addressing the representations
of the Purchaser contained in Sections 7(a), (b) and (c) of this Agreement; and
(ii) a Notification and Confirmation, substantially in the form attached hereto
as Exhibit C, acknowledging, for the benefit of the Agent (as defined in such
Notification and Confirmation), the assignment and pledge of the rights, if any,
of Seller and its successors in and to this Agreement.
(d) Each of Seller and Purchaser agrees to use its respective best efforts
to consummate the Equity Interest Transfers of the Equity Interests in the Trust
Estates relating to the Aircraft bearing FAA registration numbers N14062, N79745
and N90070 as soon as possible following the effective time of the Merger, but
in no event prior to the first Business Day following the Effective Date. The
preceding sentence may not be amended, modified or supplemented, and the
obligations of Seller and Purchaser thereunder may not be waived by either
Seller or Purchaser at any time prior to the consummation of such Equity
Interest Transfers, in each case, without the prior written consent of Echelon,
it is expressly understood and agreed that Echelon shall be a third party
beneficiary of this paragraph 8(d).
SECTION 9. Further Assurances. Each of the parties hereto agrees to
------------------
execute, acknowledge, deliver, file, record and publish such further
certificates, amendments of certificates, instruments or documents, and to take
all such further acts and do all such further things, as may be required by law,
or as may reasonably be necessary or advisable or requested by the other party
to carry out the intent and purposes of, and the transactions contemplated by,
this Agreement and the Purchase Agreements.
13
<PAGE>
[Omnibus Agreement]
SECTION 10. Miscellaneous.
-------------
(a) Transaction Costs. Regardless of whether the transactions
-----------------
contemplated hereby are consummated, (A) Purchaser agrees to pay (i) all costs,
expenses and fees (collectively, "Costs") incurred by it (including, without
-----
limitation, fees and disbursements of counsel and/or special counsel to
Purchaser) in connection with the transactions contemplated hereby, (ii) any and
all Costs incurred by each Lessee, Security Trustee and Owner Trustee and Lender
in connection with the transactions contemplated hereby and (iii) the fees and
expenses of Special FAA counsel, if any, for services rendered in connection
with the transactions contemplated hereby, and (B) Seller agrees to pay all
Costs incurred by it in connection with the transactions contemplated hereby
(including, without limitation, fees and disbursements of counsel and/or special
counsel to Seller).
(b) Brokers, Finders, Etc. Each party to this Agreement represents to
---------------------
the other that it has dealt with no broker or finder, in connection with the
transactions contemplated hereby, and no broker or Person acting on such a
party's behalf is entitled to any brokerage fee, financial advisory fee,
commission or finder's fee in connection with such transaction. Each of Seller
and Purchaser agrees to indemnify and hold harmless the other for, from and
against any and all loss, liability, damage, cost, claim or expense (including,
without limitation, attorneys' fees) incurred by reason of any commission,
brokerage fee, financial advisory fee or finder's fee alleged to be payable
because of any act, omission or statement of the indemnifying party.
(c) Announcements. Purchaser and Seller shall consult with each other
-------------
regarding press releases or other public announcements related to this Agreement
and the transactions contemplated hereby, but nothing herein shall limit
compliance with, nor shall Seller be in breach of this Section 10(c) as the
result of Seller's compliance with, the disclosure or reporting requirements of
any Applicable Law or Transaction Documents in connection with this Agreement or
the Merger Agreement of any of the transactions contemplated hereby or thereby.
(d) Counterparts. This Agreement may be executed by the parties
------------
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts shall together constitute
but one and the same instrument.
(e) Amendments, Etc.; Entire Agreement. Except as otherwise
----------------------------------
specifically provided herein, this Agreement and the other Transfer Documents
contain the entire agreement of the parties with respect to the subject matter
hereof and thereof, and supersede all prior agreements and understandings
between the parties, whether written or oral. Neither this Agreement nor any of
the terms hereof may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument which purports to terminate, amend,
supplement, waive or modify this Agreement, or any of the terms hereof, signed
by the party against which the enforcement of the termination, amendment,
supplement, waiver or modification is sought. The schedules, exhibits and
appendices attached to this Agreement constitute a part of this
14
<PAGE>
[Omnibus Agreement]
Agreement and are incorporated herein by reference as if set forth in full in
the main body of this Agreement.
(f) Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their successors and permitted
assigns. Seller may not assign its rights hereunder except (i) to Seller's
Lender and (ii) in connection with the Merger, the Forward Merger or the other
transactions contemplated by the Merger Agreement, without the prior written
consent of Purchaser (and any such attempted assignment by Seller without such
consent shall be void). Purchaser may assign any or all of its rights hereunder
to any Person (and any such assignee or designee may be specified as the
"Purchaser" and "Assignee" under the related Purchase Agreement and Assignment,
respectively) without the prior consent of Seller, but no such assignment by
Purchaser shall relieve Purchaser of any of its obligations hereunder or under
any Purchase Agreement with respect to the payment of any Acquisition Price or
any of its other obligations hereunder or thereunder, unless otherwise expressly
agreed by Seller and Seller's Lender.
(g) Governing Law; Submission to Jurisdiction. (i) THIS AGREEMENT,
-----------------------------------------
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF ILLINOIS APPLICABLE TO CONTRACTS MADE IN SUCH STATE, WITHOUT GIVING EFFECT TO
PRINCIPLES RELATING TO CONFLICTS OF LAW.
(ii) EACH OF SELLER AND PURCHASER IRREVOCABLY AGREES THAT ANY
LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING SOLELY TO THIS
AGREEMENT, ANY PURCHASE AGREEMENT OR ANY ASSIGNMENT (OR ANY DOCUMENT
REFERRED TO HEREIN OR THEREIN) OR THE TRANSACTION CONTEMPLATED HEREBY OR
THEREBY OR THE SUBJECT MATTER HEREOF OR THEREOF, SHALL BE INSTITUTED IN THE
STATE OR FEDERAL COURTS IN THE COUNTY OF COOK, STATE OF ILLINOIS, AND IT
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE NOW OR HEREAFTER TO THE LAYING OF THE VENUE OR
THE JURISDICTION OR THE CONVENIENCE OF THE FORUM OF ANY SUCH LEGAL SUIT,
ACTION OR PROCEEDING AND IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY
TO THE JURISDICTION OF ANY SUCH COURT BUT ONLY IN ANY SUCH SUIT, ACTION OR
PROCEEDING. EACH OF SELLER AND PURCHASER FURTHER IRREVOCABLY AGREES TO THE
SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS BUT ONLY IN ANY
SUIT, ACTION OR PROCEEDING OF THE NATURE REFERRED TO ABOVE BY THE MAILING
OF THE COPIES THEREOF BY CERTIFIED MAIL, POSTAGE PREPAID, RETURN RECEIPT
REQUESTED, TO IT AT ITS ADDRESS SPECIFIED
15
<PAGE>
[Omnibus Agreement]
IN SECTION 10(I) HEREOF (AS THE SAME MAY BE CHANGED FROM TIME TO TIME
PURSUANT TO SECTION 10(I) HEREOF), SUCH SERVICE TO BE EFFECTIVE UPON THE
DATE OF RECEIPT INDICATED ON THE POSTAL RECEIPT RETURNED FROM IT.
(iii) Final judgment against Seller or Purchaser in any suit
shall be conclusive, and may be enforced in other jurisdictions by suit on
the judgment, a certified or true copy of which shall be conclusive
evidence of the fact and of the amount of any indebtedness or liability of
Seller or Purchaser, as the case may be, therein described.
(h) WAIVER OF JURY TRIAL. BY ITS SIGNATURE BELOW WRITTEN, EACH PARTY
--------------------
HERETO HEREBY IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY PURCHASE AGREEMENT OR
ANY ASSIGNMENT OR RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT, OR ANY
ASSIGNMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY
AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.
EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER
IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE
WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND
REPRESENTS THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
(i) Notices, Etc. All notices, offers, acceptances, approvals,
------------
waivers, requests, demands and other communications hereunder or under any
instrument, certificate or other instrument delivered in connection with the
transactions described herein shall be in writing, shall be addressed as
provided below and shall be considered as properly given (a) if delivered in
person, (b) if sent by reputable overnight delivery service, (c) in the event
overnight delivery services are not readily available, if mailed by first class
United States mail, postage prepaid, registered or certified with return receipt
requested, or (d) if sent by telecopier or other
16
<PAGE>
[Omnibus Agreement]
electronic data transmission facility and confirmed in writing by any other
manner described above. Notice so mailed shall be effective upon the earlier of
actual receipt or the expiration of five (5) days after its deposit. Notice
given in any other manner shall be effective upon receipt by the addressee;
provided, however, that if any notice is tendered to an addressee and the
- - -------- -------
delivery thereof is refused by such addressee, such notice shall be effective
upon such tender. For the purposes of notice, the address of the parties shall
be as set forth below; provided, that either party shall have the right to
change its address for notice hereunder to any other location by the giving of
prior notice to the other party in the manner set forth hereinabove. The initial
addresses of the parties hereto are as follows:
Purchaser:
Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinois 60661
Attention: Managing Director -- Aircraft Finance Division
Telephone: (312) 441-7542
Telecopier: (312) 441-7378
with a copy to:
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, Illinois 60601
Attention: Dean N. Gerber, Esq.
Telephone: (312) 609-7500
Telecopier: (312) 609-5005
Seller:
EIN Acquisition Corp.
950 Third Avenue
New York, New York 10022
Attention: James Haber
Telephone: (212) 688-2700
Telecopier: (212) 688-7908
17
<PAGE>
[Omnibus Agreement]
with a copy to:
Brown Raysman Millstein Felder & Steiner LLP
120 West 45th Street
New York, New York 10036
Attention: Robert M. Unger, Esq.
Telephone: (212) 944-1515
Telecopier: (212) 840-2429
and, in the case of any notice or other communication prior to the
Merger, with a copy to:
Echelon International Corporation
450 Carillon Parkway
Suite 200
St. Petersburg, Florida 33716
Telephone: (727) 803-8262
Telecopier: (727) 803-8201
Attention: Susan Glatthorn Johnson, Esq.
and, in the case of any notice or other communication prior to the
Merger, with a further copy to:
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Attention: William F. Wynne, Jr., Esq.
Telephone: (212) 819-8316
Telecopier: (212) 354-8113
(j) Severability of Provisions. Any provision of this Agreement which
--------------------------
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
(k) Headings, Etc. The headings and the table of contents used herein
-------------
are for convenience of reference only and shall not define or limit any of the
terms or provisions hereof.
(l) Further Assurances; Confidentiality. (i) Seller and Purchaser
-----------------------------------
shall do and perform such further acts and execute and deliver such further
instruments as may be required by applicable law or reasonably requested by
either party to carry out and effectuate the purposes of this Agreement, the
Purchase Agreements and the Assignments.
18
<PAGE>
[Omnibus Agreement]
(ii) Purchaser and Seller agree that the terms and conditions of this
Agreement, the Purchase Agreements, and any and all information of any kind
obtained pursuant to this Agreement that shall not then be or have become
generally available shall be kept and maintained in strictest confidence, and
shall not be disclosed or disseminated to any other Person, except (A) as
otherwise required by any Transaction Document, (B) to any Governmental
Authority (provided, however, that Seller request confidential treatment with
respect to the economic terms of the transaction contemplated by this Agreement,
including, without limitation, the Acquisition Price), (C) in response to any
subpoena or other legal process, (D) to any prospective successor or assign
which has agreed with such party that, upon disclosure of such information, such
prospective successor or assign shall be bound by the provisions of this Section
10(l)(ii), (E) as part of any filing to be made with any Governmental Authority
(provided, however, that Seller request confidential treatment with respect to
the economic terms of the transaction contemplated by this Agreement, including,
without limitation, the Acquisition Price), (F) Seller's Lender, and (G) to
attorneys, accountants and financial, insurance and other independent advisors
of any such party.
(m) Survival. The representations, warranties, covenants and
--------
indemnities of the parties contained in this Agreement, the Purchase Agreements
and/or the Assignments shall survive execution and delivery hereof, of the
Purchase Agreements and of the Assignments.
SECTION 11. Effective Time of Transfer. Notwithstanding anything to the
--------------------------
contrary contained herein, an Assignment shall be effective and is intended to
transfer Seller's interests (including, without limitation, any and all of
Seller's rights and obligations under the Transaction Documents) only with
respect to the Trust Estate described therein.
* * *
19
<PAGE>
[Omnibus Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Omnibus Agreement
to be duly executed and delivered as of the date first above written.
EIN ACQUISITION CORP.,
Seller
By:
-----------------------
Name:
-----------------------
Title:
-----------------------
HELLER FINANCIAL, INC.,
Purchaser
By:
-----------------------
Name:
-----------------------
Title:
-----------------------
20
<PAGE>
EXHIBIT A
[Omnibus Agreement]
FORM OF PURCHASE AGREEMENT
<PAGE>
================================================================================
PURCHASE AGREEMENT ([______])
Dated as of [____________], 2000
Between
ECHELON INTERNATIONAL CORPORATION,
as Seller,
and
HELLER FINANCIAL, INC.,
as Purchaser
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS ............................................................... 1
Section 1.1. Defined Terms .......................................... 1
ARTICLE II
SALE AND PURCHASE; OTHER AGREEMENTS ....................................... 2
Section 2.1. Sale and Purchase ...................................... 2
Section 2.2. Acquisition Price; Payment ............................. 2
Section 2.3. Sales Taxes ............................................ 2
ARTICLE III
CLOSING; CONDITIONS TO CLOSING ............................................ 3
Section 3.1. Closing ................................................ 3
Section 3.2. Seller's Conditions to Closing ......................... 3
Section 3.3. Purchaser's Conditions to Closing ...................... 4
Section 3.4. Cooperation ............................................ 7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES ............................................ 7
Section 4.1. Representations and Warranties of Seller ............... 7
Section 4.2. Representations and Warranties of Purchaser ............10
ARTICLE V
RESERVED RIGHTS ...........................................................11
Section 5.1. Reserved Rights ........................................11
Section 5.2. Indemnification ........................................12
Section 5.3. Reporting ..............................................13
Section 5.4. Mutual Cooperation .....................................13
ARTICLE VI
MISCELLANEOUS .............................................................13
Section 6.1. Transaction Costs ......................................13
Section 6.2. Brokers, Finders, Etc ..................................13
Section 6.3. Announcements ..........................................14
Section 6.4. Counterparts ...........................................14
Section 6.5. Amendments, Etc.; Entire Agreement .....................14
Section 6.6. Successors and Assigns .................................14
Section 6.7. Governing Law; Submission to Jurisdiction ..............14
Section 6.8. Waiver of Jury Trial ...................................15
Section 6.9. Notices, Etc ...........................................16
<PAGE>
Section 6.10. Severability of Provisions ............................17
Section 6.11. Headings, Etc .........................................17
Section 6.12. Further Assurances; Confidentiality ...................17
Section 6.13. Survival ..............................................18
EXHIBIT A Form of Assignment and Assumption Agreement
EXHIBIT B Form of Consent (Lessee)
EXHIBIT C Form of Consent (Owner Trustee)
EXHIBIT D Form of Consent (Indebtedness)
SCHEDULE 1 Rent
SCHEDULE 2 Description of Indebtedness
SCHEDULE 3 Litigation
APPENDIX A Definitions
ii
<PAGE>
PURCHASE AGREEMENT ([______])
THIS PURCHASE AGREEMENT ([______]) dated as of [________], 2000 (this
"Agreement"), is by and between [ECHELON INTERNATIONAL CORPORATION, a Florida
- - ----------
corporation] [EIN Corp., a Delaware corporation] (as successor-in-interest to
EIN Acquisition Corp.) ("Seller"), and HELLER FINANCIAL, INC., a Delaware
------
corporation ("Purchaser").
---------
W I T N E S S E T H :
-------------------
WHEREAS, on [________] [________] (["Original Owner"/"Seller"]) entered
--------------
into the Transaction (such term and other capitalized terms used herein shall
have the meanings assigned to such terms, whether by reference to another
document or otherwise, in Section 1.1 hereof);
WHEREAS, [describe any subsequent assignment to Seller]; and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, all of Seller's right, title and interest in and to the
Equity Interest, all on the terms and conditions, and subject to the limitations
and exclusions, set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1. Defined Terms.
-------------
(a) For purposes of this Agreement, capitalized terms used herein
shall, unless otherwise expressly provided for or defined herein, have the
respective meanings set forth in Appendix A hereto or, to the extent not defined
in Appendix A hereto, in the [Lease/Participation Agreement] (as such term is
defined in Appendix A hereto).
(b) Unless otherwise indicated, all references in this Agreement to
sections, paragraphs, clauses, schedules, appendices and exhibits are to
sections, paragraphs, clauses, schedules, appendices and exhibits in and to this
Agreement.
<PAGE>
[Purchase Agreement ([______])]
ARTICLE II
SALE AND PURCHASE; OTHER AGREEMENTS
Section 2.1. Sale and Purchase. Subject to the terms and conditions set
-----------------
forth herein and in the Omnibus Agreement (including, without limitation,
satisfaction of the conditions precedent set forth herein and in the Omnibus
Agreement), on the Closing Date, Seller hereby agrees to sell, convey, assign,
transfer and set over unto Purchaser, and Purchaser agrees to purchase and
accept from Seller, the Equity Interest exclusive, however, of the Reserved
Rights.
Section 2.2. Acquisition Price; Payment.
--------------------------
(a) Acquisition Price for Equity Interest. The purchase price payable
-------------------------------------
by Purchaser to Seller for the Equity Interest on the Closing Date (the
"Acquisition Price") shall be equal to the sum of (i) the amount set forth
- - ------------------
opposite the description of the related Aircraft on Schedule 3 to the Omnibus
Agreement, or [________] (the "Equity Amount"), plus (ii) any and all interest
accrued under and paid or payable by Seller or its predecessor-in-interest
pursuant to that certain Credit Agreement dated January __, 2000, between EIN
Acquisition Corp. and Seller's Lender on that portion of the principal amount of
the loans extended thereby equal to the Equity Amount, and any and all other
sums then due and payable to Seller's Lender thereunder as certified by Seller's
Lender, which certification shall be deemed correct absent manifest error. The
Acquisition Price shall be payable by Purchaser in lawful dollar currency of the
United States of America in the manner contemplated by, and to Seller's account
specified in, paragraph (b) of this Section 2.2.
(b) Payment Instructions. Payment of the Acquisition Price on the
--------------------
Closing Date shall be made to the account of Seller established with Seller's
Lender set forth on Schedule 1 to the Omnibus Agreement, by wire transfer of
immediately available funds, or in such other manner or to such other account as
Seller may direct.
Section 2.3. Sales Taxes. Purchaser shall be responsible for payment of
-----------
and shall pay any and all sales, use, excise, transfer, value added, gross
receipts or any other similar taxes, fees or charges ("Sales Taxes") imposed by
the United States federal or any state or local government or taxing authority
upon or in respect of the sale, assignment or transfer of the Equity Interest as
contemplated hereby. Subject to the scheduled locations of the equipment
constituting the Trust Estate on the Closing Date, Seller agrees to cooperate
with Purchaser concerning the time of closing of the transaction contemplated
hereby on the Closing Date so as to minimize the imposition of any Sales Taxes
that otherwise might be imposed upon or in respect of the sale, assignment or
transfer of the Equity Interest as contemplated hereby.
2
<PAGE>
[Purchase Agreement ([______])]
ARTICLE III
CLOSING; CONDITIONS TO CLOSING
Section 3.1. Closing. The closing in respect of the Equity Interest
-------
Transfer (the "Closing") shall take place at the offices of Vedder, Price,
Kaufman & Kammholz, 222 North LaSalle Street, Chicago, Illinois (or at such
other location as the parties hereto may agree) commencing at such time as
Seller and Buyer may mutually agree on the Closing Date.
Section 3.2. Seller's Conditions to Closing. The obligation of Seller to
------------------------------
sell, convey, assign, transfer and set over the Equity Interest to Purchaser on
the Closing Date as provided herein is subject to the satisfaction of (to the
reasonable satisfaction of Seller) or the waiver by Seller of, the following
conditions precedent:
(a) Consents and Approvals of Governmental Authority and Others. All
-----------------------------------------------------------
approvals and consents of, or notices to, any Governmental Authority or any
trustee or holder of any indebtedness or obligation of Seller, which are
required in connection with the transactions contemplated by the Omnibus
Agreement, this Agreement and the Assignment and Assumption Agreement, shall
have been duly obtained, given, accomplished or waived.
(b) Litigation. No action, proceeding or investigation shall have
----------
been instituted or threatened by any Person before any Governmental Authority,
nor shall any order, writ, judgment or decree have been issued or proposed to be
issued by any Governmental Authority as of the Closing Date, which in any case
questions the validity or legality of this Agreement, the Omnibus Agreement, the
transactions contemplated hereby or by the Transaction Documents or the ability
of either party hereto to consummate any of such transactions.
(c) Assignment and Assumption Agreement; Consents. (i) Each of this
---------------------------------------------
Agreement and the Assignment and Assumption Agreement shall have been duly
authorized, executed and delivered by Purchaser; and (ii) each of the Consents
shall have been duly authorized, executed and delivered by each of the parties
thereto.
(d) Acquisition Price. Seller shall have received the Acquisition
-----------------
Price in the manner contemplated by, and to the account specified in, Section
2.2.
(e) Change in Law. Since December 1, 1999, no change shall have
-------------
occurred in Applicable Law or interpretations thereof by any Governmental
Authority, any of which would make it illegal for Seller to fully perform its
obligations under this Agreement, the Omnibus Agreement, the Assignment and
Assumption Agreement, the Consents or any Transaction Document.
(f) Insurance. Seller shall have received evidence that it has been
---------
named as an additional insured under the liability insurance policies maintained
pursuant to the Lease.
3
<PAGE>
[Purchase Agreement ([______])]
(g) Representations and Warranties. The representations and
------------------------------
warranties (i) of Purchaser contained in this Agreement, [the Omnibus
Agreement,] the Assignment and Assumption Agreement and the Consents shall be
true and correct as of the Transfer Time with the same force and effect as
though made on and as of the Transfer Time except to the extent that any such
representation or warranty relates solely to an earlier date, in which case such
representation or warranty shall have been true and correct on and as of such
earlier date.
Section 3.3. Purchaser's Conditions to Closing. The obligation of
---------------------------------
Purchaser to acquire the Equity Interest and to pay the Acquisition Price on the
Closing Date as provided herein is subject to the satisfaction of (to the
reasonable satisfaction of Purchaser) or the waiver by Purchaser (which waiver,
except pursuant to Section 3.4, shall be in writing and signed by Purchaser) of,
the following conditions precedent, subject to the limitations of Section 3.4
below:
(a) Consents and Approvals of Governmental Authority and Others. All
-----------------------------------------------------------
approvals and consents of, or notices to, any Governmental Authority or any
trustee or holder of any indebtedness or obligation of Purchaser, which are
required in connection with the transaction contemplated by this Agreement, [the
Omnibus Agreement,] the Assignment and Assumption Agreement, the Consents and
the Amendments shall have been duly obtained, given or accomplished.
(b) Closing Certificates. Purchaser shall have received (i) a
--------------------
certificate of a duly authorized officer of Seller, dated the Closing Date, to
the effect that Seller has performed all agreements and satisfied all conditions
set forth in this Agreement, the Omnibus Agreement, the Assignment and
Assumption Agreement and the Consents and required to be performed by it on or
before the Closing Date except those with respect to which the failure to
perform or satisfy would not have a Material Adverse Effect and that all of the
representations and warranties of Seller contained in this Agreement, the
Omnibus Agreement, the Assignment and Assumption Agreement and the Consents are
true and correct in all material respects on and as of the Closing Date, except
to the extent that (x) any such representation or warranty relates solely to an
earlier date, in which case such representation or warranty shall have been true
and correct on and as of such earlier date, and (y) the breach of any such
representation or warranty would not have a Material Adverse Effect, and (ii) a
certificate of the secretary or an assistant secretary of Seller, dated the
Closing Date, certifying as to the incumbency of the officer of Seller executing
this Agreement, the Omnibus Agreement, the Assignment and Assumption Agreement,
the Consents and any other document contemplated hereby or thereby.
(c) Litigation. No action, proceeding or investigation shall have
----------
been instituted or threatened by any Person before any Governmental Authority,
nor shall any order, writ, judgment or decree have been issued or proposed to be
issued by any Governmental Authority as of the Closing Date, which in any case
questions the validity or legality of this Agreement, the transactions
contemplated hereby or by the Transaction Documents, or the ability
4
<PAGE>
[Purchase Agreement ([______])]
of either party hereto to consummate any of such transactions or which, if
determined adversely, would have a Material Adverse Effect on the Equity
Interest, the Aircraft or the Trust Estate.
(d) Omnibus Agreement; Assignment and Assumption Agreement; Consents
----------------------------------------------------------------
and Amendments. (i) Each of this Agreement, the Omnibus Agreement and the
- - --------------
Assignment and Assumption Agreement shall have been duly authorized, executed
and delivered by Seller; and (ii) subject to the limitations of Section 3.4
below, each of the Consents and any Amendments shall have been duly authorized,
executed and delivered by each of the parties thereto. The Assignment and
Assumption Agreement [and any applicable Amendments] shall have been duly filed
with the FAA pursuant to the Aviation Law (or shall be filed concurrently with
or immediately after the closing of the transaction contemplated hereby). All
of the conditions precedent to the obligations of Purchaser set forth in the
Omnibus Agreement shall have been satisfied.
(e) Opinions. Purchaser shall have received (i) an opinion of
--------
Seller's counsel in form and substance reasonably satisfactory to Purchaser and
covering such matters as Purchaser may reasonably request, and (ii) of Special
FAA Counsel, in form and substance reasonably satisfactory to Purchaser and
covering such matters as are customary in transactions similar to the Equity
Interest Transfer (including, without limitation, as to title and registration
of the Aircraft).
(f) Transaction Documents. Subject to the limitations of Section 3.4
---------------------
below, Seller shall have duly taken such action as is required to be taken by it
with respect to the transfer, sale and assignment of the Equity Interest in
accordance with the provisions of the Transaction Documents, including, without
limitation, providing notice to, or obtaining consent from, Lessee, Owner
Trustee [Security Trustee, Lenders] of the Equity Interest Transfer and shall
otherwise have satisfied or be in compliance with all conditions or requirements
under the Transaction Documents applicable to a transferor of the Equity
Interest. The Transaction Documents shall be in full force and effect, and
copies thereof shall have been delivered to Purchaser as contemplated by Section
4.1(j) of this Agreement.
(g) Change in Law. Since December 1, 1999 no change shall have
-------------
occurred in Applicable Law or interpretations thereof by any Governmental
Authority, any of which would make it illegal for Purchaser to fully perform its
obligations under this Agreement, the Assignment and Assumption Agreement, the
Consents, the Amendments or any Transaction Document.
(h) Insurance. Purchaser shall have received (i) a certificate from
---------
Lessee's independent insurance broker evidencing the insurance required to be
maintained pursuant to the Lease and reflecting the transactions contemplated by
this Agreement, including listing Purchaser (and, to the extent the same is
required pursuant to the Lease, its affiliates, officers, directors, employees,
servants and agents) as additional insured(s); and (ii) a broker's letter of
undertaking,
5
<PAGE>
[Purchase Agreement ([______])]
in form and substance reasonably satisfactory to Purchaser, as is customary in
transactions similar to the Equity Interest Transfer.
(i) Other Documents. All certificates, agreements, amendments,
---------------
documents and other evidence relating thereto required hereby or by any Transfer
Document or Transaction Document in connection with the transactions
contemplated hereby shall be reasonably satisfactory to Purchaser and its
counsel, and Purchaser and such counsel shall have received copies of such
certificates, agreements, documents and other evidence as Purchaser or such
counsel may reasonably request.
(j) Representations and Warranties. Subject to the limitations of
------------------------------
Section 3.4 below, the representations and warranties (i) of Seller contained in
this Agreement, the Omnibus Agreement, the Assignment and Assumption Agreement
and the Consents, and of (ii) each of the other parties to each of the Consents
and the Amendments (if any) contained in such Consent or Amendment, as the case
may be, shall be true and correct in all material respects as of the Transfer
Time with the same force and effect as though made on and as of the Transfer
Time, except to the extent that any such representation or warranty relates
solely to an earlier date in which case such representation or warranty shall
have been true and correct in all material respects on and as of such earlier
date.
(k) Due Authorization. Purchaser shall have received a certified copy
-----------------
of the resolutions of the Board of Directors of Seller with respect to the due
authorization of the transaction contemplated by this Agreement, the Omnibus
Agreement and the Assignment and Assumption Agreement.
(l) Organizational Documents. Purchaser shall have received true and
------------------------
complete copies, certified by an officer of Seller, of (i) the [certificate of
incorporation] of Seller, (ii) the by-laws of Seller and (iii) a good standing
certificate for Seller in the state of Florida.
(m) No Liens. Purchaser shall have received evidence satisfactory to
--------
Purchaser that the Equity Interest and the Trust Estate (including, without
limitation, the Aircraft) is the property of Seller or the Owner Trustee, as the
case may be, free and clear of any and all Liens and adverse claims or rights
except, in the case of the Aircraft, Permitted Liens (other than Lessor Liens
[other than the Lien of the Security Document]).
(n) Merger. Purchaser shall have received evidence of the
------
consummation of the merger of EIN Acquisition Corp. ("EIN") [and Echelon
International Corporation] with and into Seller pursuant to that certain Merger
Agreement of even date with the Omnibus Agreement between Seller and EIN (the
"Merger Agreement"), and subject to each of the terms and conditions thereof,
none of which insofar as it relates to the Aircraft, Lease, Lessee or any
Transfer Document or Transaction Document, shall have been modified or waived
by any party to the Merger Agreement without the prior written consent of
Purchaser.
6
<PAGE>
[Purchase Agreement ([______])]
Section 3.4. Cooperation. Notwithstanding the foregoing, so long as
-----------
Seller shall not be in default of any of its obligations hereunder or under the
Omnibus Agreement to execute and deliver the Consents, any Assignment and
Assumption Agreement and Amendments (if any) and to cooperate reasonably with
Purchaser to obtain each of the Consents and any Amendments from the other
parties thereto, as well as such approvals, certificates and other documents as
shall be required hereby, the failure of Seller or Purchaser to have obtained
from any party any Consent and any Amendment or any approval required by Section
3.3 above or any other certificate or document required hereby prior to April
27, 2000 (the "Final Closing Date"), shall not be a condition precedent to
Closing on and as of such date, nor shall the occurrence of any matter or event,
or the failure of any condition specified in Section 3.3 be raised by Purchaser
at as a bar to or condition precedent to Closing on and as of the Final Closing
Date, it being expressly understood and agreed that, subject to Seller's
continuing obligation to provide such assurances and cooperation as Purchaser
may reasonably request in connection with obtaining such Consents, Amendments,
approvals, certificates and documents or resolving any disputes or litigation
concerning such matters, the same are, as of the Final Closing Date, hereby
waived by Purchaser such that the transactions contemplated hereby and by the
Omnibus Agreement shall in all respects close on or prior to the Final Closing
Date. Nothing contained in this Section 3.4 shall relieve, or be deemed to
relieve, Seller of any of its notice or other obligations under any Transaction
Document.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties of Seller. Seller hereby
----------------------------------------
represents and warrants to Purchaser, as of the date hereof and as of the
Transfer Time[, but none of which representations and warranties shall survive
the Closing Date], as follows:
(a) Organization, Corporate Authority, Etc. Seller is a corporation
--------------------------------------
duly incorporated, validly existing and in good standing under the laws of the
state of Florida [Delaware]. Seller has all requisite power and authority to
enter into and perform its obligations under this Agreement, the Omnibus
Agreement, the Assignment and Assumption Agreement and the Consents.
(b) Authorization, Etc. Each of this Agreement and the Omnibus
------------------
Agreement has been, and on or prior to the Closing Date, the Assignment and
Assumption Agreement and the Consents will have been, duly authorized, executed
and delivered by Seller. Each of this Agreement and the Omnibus Agreement
constitutes and the Assignment and Assumption Agreement and the Consents when
executed and delivered by Seller will constitute, the legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms,
except as enforcement of the terms hereof and thereof may be limited by
applicable bankruptcy,
7
<PAGE>
[Purchase Agreement ([______])]
insolvency, reorganization, liquidation, moratorium or similar laws affecting
enforcement of creditors' rights generally, and by general principles of equity.
(c) No Violation. None of the execution, delivery or performance by
------------
Seller of this Agreement, the Omnibus Agreement, the Assignment and Assumption
Agreement or the Consents, or the consummation by Seller of the transactions
contemplated hereby and thereby, will contravene any Applicable Law binding on
Seller or any of its property, or any provision of the certificate of
incorporation or by-laws of Seller, or, subject to the terms and conditions of
this Agreement, including, without limitation, delivery of the Consents, will
result in a breach of, or constitute a default under, or contravene any
provision of, any mortgage, deed of trust, indenture or other agreement
(including, without limitation, the Transaction Documents) or instrument to
which Seller is a party or by which Seller or all or any of its property or
assets may be bound except, in each case, to the extent the same would not have
a Material Adverse Effect.
(d) No Consents and Approvals. None of the execution, delivery or
-------------------------
performance by Seller of this Agreement, the Omnibus Agreement, the Assignment
and Assumption Agreement or the Consents, or the consummation by Seller of the
transactions contemplated hereby and thereby, requires the consent or approval
of, the giving of notice to, the registration, recording or filing of any
documents with, or the taking of any other action in respect of, any United
States federal or state Governmental Authority or the terms and provisions of
any Transaction Documents, except (i) as contemplated hereby and by the
Consents, the Assignment and Assumption Agreement or any Amendment, (ii) such as
have been obtained, effected, waived or paid on or prior to the Closing Date, or
(iii) those with respect to which the failure to obtain would not have a
Material Adverse Effect, subject, however, in each case, to the limitations of
Section 3.4 above.
(e) Seller's Liens. Seller is the sole legal and beneficial owner of
--------------
the Equity Interest. Other than the Lien of Seller's Lender on Seller's rights
under this Agreement and any of the other Transfer Documents, which Lien shall
be discharged and released on the Closing Date, at or prior to the Transfer
Time, there are no Liens on the Equity Interest, except inchoate or similar
Liens as may arise by operation of law upon or with respect thereto, in the
ordinary course of business, and/or which would not have a Material Adverse
Effect, and at the Transfer Time Seller will transfer to Purchaser good and
marketable title to the Equity Interest, free and clear of all Liens except as
provided in this sentence. Seller has not assigned, and before the Transfer
Time shall not have assigned, any of its right, title and interest in the Equity
Interest to any Person, and at the Transfer Time Seller will transfer to
Purchaser all of its right, title and interest in and to the Equity Interest.
Except as set forth in the second sentence of this Section 4.1(e), there are no
Liens on the Aircraft or the Lease or any other part of the Trust Estate, other
than Permitted Liens, Seller's interest in the Equity Interest and other than
Liens created pursuant to, or permitted by, the Transaction Documents. Seller
has not previously sold, assigned, encumbered, transferred or conveyed, and
except as expressly contemplated hereby or by any of
8
<PAGE>
[Purchase Agreement ([______])]
the Transaction Documents, has no obligation to sell, assign, encumber, transfer
or convey any of its right, title or interest in, to and under the Equity
Interest.
(f) No Litigation. Except as described on Schedule 3 hereto, there
-------------
are no pending or, to the best of Seller's knowledge, threatened investigations,
suits or proceedings against Seller or affecting Seller or its properties, that,
if determined adversely, would have a Material Adverse Effect.
(g) No Violation of Law. Seller is not in breach of any Applicable
-------------------
Law that would have a Material Adverse Effect.
(h) Securities Act. Other than pursuant to this Agreement and the
--------------
other Transfer Documents, neither Seller nor anyone authorized to act on
Seller's behalf has directly or indirectly offered any security (as defined in
Section 2(1) of the Securities Act), relating to an interest in the Equity
Interest for sale to, or solicited any offer to acquire any such security from,
or has sold any such security to, any Person in violation of the Securities Act,
and neither Seller nor anyone authorized to act on Seller's behalf will directly
or indirectly make any such offer, solicitation or sale in violation of the
Securities Act. The transfer of the Equity Interest to Purchaser as
contemplated herein will not violate any provision of the Securities Act.
(i) No Assignment or Sublease. As of the date of this Agreement,
-------------------------
Seller has not consented to any assignment by the Lessee of its rights under the
Lease or to any sublease or transfer of possession of the Aircraft, and, to the
best of Seller's knowledge, no such assignment, sublease or transfer of
possession has occurred, other than as permitted or contemplated by the
Transaction Documents.
(j) Transaction Documents. Seller has provided Purchaser with true
---------------------
and complete copies of the Transaction Documents. Seller shall deliver (or
cause to be delivered) the signed original counterparts of the Transaction
Documents to Purchaser at or before the Transfer Time. Each of the Transaction
Documents is and at the Transfer Time will be in full force and effect and has
not been further amended, modified or supplemented (except or as such document
may be amended by or pursuant to any Amendments). There are no documents,
agreements or instruments, other than the Transaction Documents, relating to the
Equity Interest, the Trust Estate (or any part thereof), the subject matter
hereof or of any of the Transaction Documents by which Purchaser will be bound
after the Transfer Time or which would affect the Equity Interest or the Trust
Estate (or any part thereof). To the best of Seller's knowledge, Lessee has not
exercised any option to terminate the Lease.
(k) Performance of Transaction Documents. Subject to the limitations
------------------------------------
of Section 3.4 above, Seller has performed, and is not in default with respect
to, any obligations to be performed by it, or in violation of any covenant to be
observed by it, pursuant to any of the
9
<PAGE>
[Purchase Agreement ([______])]
Transaction Documents. To the best of Seller's knowledge, there are no set-offs,
defenses or counterclaims against any amounts owed to Seller under any of the
Transaction Documents.
(l) Rent. Basic Rent is payable in the amounts and at the times set
----
forth on Schedule 1 hereto. Such amount is in respect of Basic Rent only, and
does not include any other amounts payable by Lessee (including, without
limitation, amounts in repayment of financing of modifications to the Aircraft).
No Basic Rent due after the date hereof has been paid in advance of the date
such payment is due and payable under the Lease.
(m) Aircraft Modifications. Neither Lessor nor Seller has, and
----------------------
Purchaser will not have, any outstanding unsatisfied obligation arising or
accruing on or before the date hereof under the Lease or any other Transaction
Document with respect to the repair of, or modifications or improvements to, the
Aircraft, or the incorporation of any airworthiness directive or manufacturer's
service bulletin.
(n) Indebtedness. The Indebtedness is as described on Schedule 2 to
------------
this Agreement.
(o) No Default; No Event of Loss. To the best of Seller's knowledge,
----------------------------
there is no Default, Event of Default or Event of Loss or event that, with the
passage of time or the giving of notice or both, would constitute an Event of
Loss with respect to the Aircraft.
Section 4.2. Representations and Warranties of Purchaser. Purchaser
-------------------------------------------
hereby represents and warrants to Seller, as of the date hereof and as of the
Transfer Time, as follows:
(a) Organization, Authority, Etc. Purchaser is a corporation duly
----------------------------
incorporated, validly existing and in good standing under the laws of the state
of Delaware. Purchaser has all requisite power and authority to enter into and
perform its obligations under this Agreement, [the Omnibus Agreement,] the
Assignment and Assumption Agreement and the Consents.
(b) Authorization, Etc. This Agreement has been, and on or prior to
------------------
the Closing Date, the Assignment and Assumption Agreement and the Consents will
have been, duly authorized, executed and delivered by Purchaser. This Agreement
constitutes, and the Assignment and Assumption Agreement and the Consents when
executed and delivered will constitute the legal, valid and binding obligation
of Purchaser, enforceable against Purchaser in accordance with its terms, except
as enforcement of the terms hereof and thereof may be limited by applicable
bankruptcy, insolvency, reorganization, liquidation, moratorium or similar laws
affecting enforcement of creditors' rights generally, and by general principles
of equity.
(c) No Violation. None of the execution, delivery or performance by
------------
Purchaser of this Agreement, the Assignment and Assumption Agreement or the
Consents, or
10
<PAGE>
[Purchase Agreement ([______])]
the consummation by Purchaser of the transactions contemplated hereby and
thereby, will contravene any Applicable Law binding on Purchaser or any of its
property, or any provision of the certificate of incorporation or by- laws of
Purchaser, or will result in a breach of, or constitute a default under, or
contravene any provision of, any mortgage, deed of trust, indenture or other
agreement or instrument to which Purchaser is a party or by which Purchaser or
all or any of its property or assets is bound.
(d) No Consents or Approvals. None of the execution, delivery or
------------------------
performance by Purchaser of this Agreement, the Assignment and Assumption
Agreement, or the Consents, or the consummation by Purchaser of the transactions
contemplated hereby and thereby, requires the consent or approval of, the giving
of notice to, the registration, recording or filing of any documents with, or
the taking of any other action in respect of, any Governmental Authority or the
terms and provisions of any Transaction Documents, except such as have been
obtained or effected on or prior to the Closing Date.
(e) No Material Litigation. There are no pending or, to the best of
----------------------
Purchaser's knowledge, threatened investigations, suits or proceedings against
Purchaser or affecting Purchaser or its properties, that, if determined
adversely, would adversely affect the consummation of the transaction
contemplated by, or the performance by Purchaser of its obligations under, this
Agreement, the Assignment and Assumption Agreement or the Consents.
(f) No Violation of Law. Purchaser is not in breach of any Applicable
-------------------
Law that would have an adverse effect on Purchaser or on the transaction
contemplated by, or on Purchaser's ability to perform its obligations under,
this Agreement, the Assignment and Assumption Agreement or the Consents.
ARTICLE V
RESERVED RIGHTS
Section 5.1. Reserved Rights. (a) Purchaser will be entitled to all
---------------
benefits and rights of "Owner" and "Owner Participant" (subject to Seller's
retention of the Reserved Right (as defined below)), pursuant to any and all
Transaction Documents in respect of the period after the Closing Date. Seller
hereby reserves, and nothing contained herein shall be construed as a sale,
conveyance, assignment or transfer of Reserved Rights (as defined below). For
purposes hereof, "Reserved Rights" shall mean any and all rights and interests
of Seller in respect of the following: (i) Seller's right to tax and other
indemnification under any Transaction Document as a result of or arising out of
events occurring or circumstances existing prior to the Closing Date (or claim
asserted against Seller with respect to a matter subsequent to the Closing Date,
if Seller would otherwise be entitled to indemnification for such claim), (ii)
each and every obligation of Lessee to provide liability insurance on behalf of
or in favor of Seller as an additional insured under any Transaction Document
with respect to events occurring or circumstances existing prior
11
<PAGE>
[Purchase Agreement ([______])]
to the Closing Date, (iii) any interest payable by Lessee on any amount referred
to in clauses (i) and (ii) above and (iv) the right to enforce payment of the
amounts referred to in clauses (i) through (iii) above.
(b) If Purchaser or Owner Trustee shall receive any amount relating
to any Transaction Document or any of the transactions contemplated thereby to
which Seller is entitled under Section 5.1(a), Purchaser shall promptly remit or
shall cause the Owner Trustee to remit such amount to Seller (together with, to
the extent not paid over within five Business Days, interest at the then-
applicable average rate for federal funds from and including the date of receipt
by Purchaser or Owner Trustee, as the case may be, to but excluding, the date of
payment to Seller) and, until so delivered, any such amount received shall be
received and held in trust by Purchaser or Owner Trustee, as the case may be,
for the benefit of Seller. If Seller shall receive any amount relating to any
Transaction Document or any of the transactions contemplated thereby to which
Purchaser or Owner Trustee is entitled under Section 5.1(a), Seller shall
promptly remit such amount to Purchaser or Owner Trustee, as the case may be
(together with, to the extent not paid over within five Business Days, interest
at the then-applicable average rate for federal funds from and including the
date of receipt by Seller to, but excluding, the date of payment to Purchaser or
Owner Trustee, as the case may be), and until so delivered any such amount
received by Seller shall be received and held in trust by Seller for the benefit
of Purchaser or Owner Trustee, as the case may be.
Section 5.2. Indemnification. (a) Purchaser shall have no liability or
---------------
obligation as a result of, and Seller shall indemnify and hold Purchaser
harmless on an after-tax basis against, and shall be liable for and shall pay
any loss, cost or other expense of Purchaser (including reasonable attorneys'
fees and court costs) arising out of (i) any failure by Seller to comply with
the terms of the Transaction Documents prior to the Closing Date or (ii) any
liabilities or obligations of Seller with respect to the Aircraft, the Trust
Estate or otherwise arising under the Transaction Documents required to be
satisfied or performed prior to the Closing Date.
(b) Seller shall have no liability or obligation as a result of, and
Purchaser shall indemnify and hold Seller harmless on an after-tax basis
against, and shall be liable for and shall pay any loss, cost or other expense
of Seller (including reasonable attorneys' fees and court costs) arising out of
(i) any failure by Purchaser to comply with the terms of the Transaction
Documents on or after the Closing Date or (ii) any liabilities or obligations of
Purchaser with respect to the Aircraft, the Trust Estate or otherwise arising
under the Transaction Documents required to be satisfied or performed on or
after the Closing Date.
Section 5.3. Reporting. Seller shall cause to be prepared any and all
---------
tax returns (including schedules) for the Trust Estate that are due for periods
in which the Closing Date occurs. A copy of such tax returns (including
schedules) for the Trust Estate will be furnished to Purchaser upon Purchaser's
written request.
12
<PAGE>
[Purchase Agreement ([______])]
Section 5.4. Mutual Cooperation. Seller and Purchaser shall provide each
------------------
other with such assistance as may reasonably be requested by either of them in
writing in connection with the preparation of any tax return, any audit or other
examination by any taxing authority, or any judicial or administrative
proceedings relating to liability for Taxes, and each will retain and, upon the
request of the other, provide the other with any records or information which
may be relevant to such return, audit or examination or proceedings. Such
assistance shall include making employees available on a mutually convenient
basis to provide additional information and explanation of any material provided
hereunder. The party requesting assistance hereunder shall reimburse the other
for reasonable out-of-pocket expenses incurred by the other in providing such
assistance.
ARTICLE VI
MISCELLANEOUS
Section 6.1. Transaction Costs. Regardless of whether the transaction
-----------------
contemplated hereby is consummated, (A) Purchaser agrees to pay (i) all costs,
expenses and fees (collectively, "Costs") incurred by it (including, without
-----
limitation, fees and disbursements of counsel and/or special counsel to
Purchaser) in connection herewith, (ii) any and all Costs incurred by each of
Lessee, [Security Trustee,] Owner Trustee [and any Lender] in connection with
the transactions contemplated hereby and (iii) the fees and expenses of Special
FAA counsel, if any, for services rendered in connection with the transaction
contemplated hereby and (B) Seller agrees to pay all Costs incurred by it in
connection with the transaction contemplated hereby (including, without
limitation, fees and disbursements of counsel and/or special counsel to Seller).
Section 6.2. Brokers, Finders, Etc. Each party to this Agreement
---------------------
represents to the other that it has dealt with no broker or finder, in
connection with the transaction contemplated hereby, and no broker or Person
acting on such a party's behalf is entitled to any brokerage fee, financial
advisory fee, commission or finder's fee in connection with such transaction.
Each of Seller and Purchaser agrees to indemnify and hold harmless the other
for, from and against any and all loss, liability, damage, cost, claim or
expense (including, without limitation, attorneys' fees) incurred by reason of
any commission, brokerage fee, financial advisory fee or finder's fee alleged to
be payable because of any act, omission or statement of the indemnifying party.
Section 6.3. Announcements. Except as provided in Section 10(c) and
-------------
Section 10(l)(i) of the Omnibus Agreement, Purchaser and Seller shall consult
with each other regarding press releases or other public announcements related
to this Agreement and the transactions contemplated hereby or thereby.
13
<PAGE>
[Purchase Agreement ([______])]
Section 6.4. Counterparts. This Agreement may be executed by the parties
------------
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts shall together constitute
but one and the same instrument.
Section 6.5. Amendments, Etc.; Entire Agreement. Except as otherwise
----------------------------------
specifically provided herein, this Agreement and the other Transfer Documents
contain the entire agreement of the parties with respect to the subject matter
hereof and thereof, and supersede all prior agreements and understandings
between the parties, whether written or oral. Neither this Agreement nor any of
the terms hereof may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument which purports to terminate, amend,
supplement, waive or modify this Agreement, or any of the terms hereof, signed
by the party against which the enforcement of the termination, amendment,
supplement, waiver or modification is sought. The schedules, exhibits and
appendices attached to this Agreement constitute a part of this Agreement and
are incorporated herein by reference as if set forth in full in the main body of
this Agreement.
Section 6.6. Successors and Assigns. This Agreement shall be binding upon
----------------------
and inure to the benefit of the parties hereto and their successors and
permitted assigns, but no such assignment by Purchaser shall relieve Purchaser
of any of its obligations hereunder, including, without limitation, payment of
the Acquisition Price, unless otherwise expressly agreed by Seller and Seller's
Lender. Seller may not assign its rights hereunder, except to Seller's Lender,
without the prior written consent of Purchaser (and any such attempted
assignment by Seller without such consent shall be void).
Section 6.7. Governing Law; Submission to Jurisdiction. (a) THIS
-----------------------------------------
AGREEMENT, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE IN SUCH STATE, WITHOUT
GIVING EFFECT TO PRINCIPLES RELATING TO CONFLICTS OF LAW.
(b) EACH OF SELLER AND PURCHASER IRREVOCABLY AGREES THAT ANY LEGAL
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING SOLELY TO THIS AGREEMENT,
OR THE ASSIGNMENT AND ASSUMPTION AGREEMENT (OR ANY DOCUMENT REFERRED TO HEREIN
OR THEREIN) OR THE TRANSACTION CONTEMPLATED HEREBY OR THEREBY OR THE SUBJECT
MATTER HEREOF OR THEREOF, SHALL BE INSTITUTED IN THE STATE OR FEDERAL COURTS IN
THE COUNTY OF COOK, STATE OF ILLINOIS, AND IT HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE NOW OR
HEREAFTER TO THE LAYING OF THE VENUE OR THE JURISDICTION OR THE CONVENIENCE OF
THE FORUM OF ANY SUCH LEGAL SUIT, ACTION OR PROCEEDING AND IRREVOCABLY SUBMITS
GENERALLY AND
14
<PAGE>
[Purchase Agreement ([______])]
UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT BUT ONLY IN ANY SUCH SUIT,
ACTION OR PROCEEDING. EACH OF SELLER AND PURCHASER FURTHER IRREVOCABLY AGREES TO
THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS BUT ONLY IN ANY SUIT,
ACTION OR PROCEEDING OF THE NATURE REFERRED TO ABOVE BY THE MAILING OF THE
COPIES THEREOF BY CERTIFIED MAIL, POSTAGE PREPAID, RETURN RECEIPT REQUESTED, TO
IT AT ITS ADDRESS SPECIFIED IN SECTION 6.9 HEREOF (AS THE SAME MAY BE CHANGED
FROM TIME TO TIME PURSUANT TO SECTION 6.9 HEREOF), SUCH SERVICE TO BE EFFECTIVE
UPON THE DATE OF RECEIPT INDICATED ON THE POSTAL RECEIPT RETURNED FROM IT.
(c) Final judgment against Seller or Purchaser in any suit shall be
conclusive, and may be enforced in other jurisdictions by suit on the judgment,
a certified or true copy of which shall be conclusive evidence of the fact and
of the amount of any indebtedness or liability of Seller or Purchaser, as the
case may be, therein described.
Section 6.8. WAIVER OF JURY TRIAL. BY ITS SIGNATURE BELOW WRITTEN, EACH
--------------------
PARTY HERETO HEREBY IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, OR THE ASSIGNMENT
AND ASSUMPTION AGREEMENT OR RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT, OR
THE ASSIGNMENT AND ASSUMPTION AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED
TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT
AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING WITHOUT
LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH
HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH
WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH
PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT EACH HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION. IN
THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
15
<PAGE>
[Purchase Agreement ([______])]
Section 6.9. Notices, Etc. All notices, offers, acceptances, approvals,
------------
waivers, requests, demands and other communications hereunder or under any
instrument, certificate or other instrument delivered in connection with the
transactions described herein shall be in writing, shall be addressed as
provided below and shall be considered as properly given (a) if delivered in
person, (b) if sent by reputable overnight delivery service, (c) in the event
overnight delivery services are not readily available, if mailed by first class
United States mail, postage prepaid, registered or certified with return receipt
requested, or (d) if sent by telecopier or other electronic data transmission
facility and confirmed in writing by any other manner described above. Notice
so mailed shall be effective upon the earlier of actual receipt or the
expiration of five (5) days after its deposit. Notice given in any other manner
shall be effective upon receipt by the addressee; provided, however, that if any
-------- -------
notice is tendered to an addressee and the delivery thereof is refused by such
addressee, such notice shall be effective upon such tender. For the purposes of
notice, the address of the parties shall be as set forth below; provided, that
--------
either party shall have the right to change its address for notice hereunder to
any other location by the giving of prior notice to the other party in the
manner set forth hereinabove. The initial addresses of the parties hereto are
as follows:
Purchaser:
[Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinois 60661
Attention: Managing Director -- Aircraft Finance Division
Telephone: (312) 441-7542
Telecopier: (312) 441-7378]
with a copy to:
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, Illinois 60601
Attention: Dean N. Gerber, Esq.
Telephone: (312) 609-7500
Telecopier: (312) 609-5005
16
<PAGE>
[Purchase Agreement ([______])]
Seller:
[ECHELON INTERNATIONAL CORPORATION][EIN CORP.]
950 Third Avenue
New York, New York 10022
Attention: James Haber
Telephone: (212) 688-2700
Brown Raysman Millstein Felder & Steiner LLP
120 West 45th Street
New York, New York 10036
Attention: Robert M. Unger, Esq.
Telephone: (212) 944-1515
Telecopier: (212) 840-2429
Section 6.10. Severability of Provisions. Any provision of this Agreement
--------------------------
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 6.11. Headings, Etc. The headings and the table of contents used
-------------
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
Section 6.12. Further Assurances; Confidentiality. (a) Seller and
-----------------------------------
Purchaser shall do and perform such further acts and execute and deliver such
further instruments as may be required by Applicable Law or reasonably requested
by either party to carry out and effectuate the purposes of this Agreement and
the Assignment and Assumption Agreement.
(b) Purchaser and Seller agree that any and all information of any
kind obtained pursuant to this Agreement that shall not then be or have become
generally available shall be kept and maintained in strictest confidence, and
shall not be disclosed or disseminated to any other Person, except (A) as
otherwise required by any Transaction Document, (B) to any Governmental
Authority, (C) in response to any subpoena or other legal process, (D) to any
prospective successor or assign which has agreed with such party that, upon
disclosure of such information, such prospective successor or assign shall be
bound by the provisions of this Section 6.12(b), (E) as part of any filing to be
made with any Governmental Authority and (F) to attorneys, accountants and
financial, insurance and other independent advisors of any such party.
17
<PAGE>
[Purchase Agreement ([______])]
Section 6.13. Survival. The representations, warranties, covenants and
--------
indemnities of the parties contained in this Agreement or the Assignment and
Assumption Agreement shall survive execution and delivery hereof and of the
Assignment and Assumption Agreement.
* * *
18
<PAGE>
[Purchase Agreement ([______])]
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be duly executed and delivered by its authorized officer as of the day and year
set forth above.
[ECHELON INTERNATIONAL
CORPORATION][EIN CORP.], as Seller
By:_______________________________
Name:_____________________________
Title:____________________________
[HELLER FINANCIAL, INC.], as
Purchaser
By:_______________________________
Name:_____________________________
Title:____________________________
<PAGE>
[Purchase Agreement ([______])]
EXHIBIT A
ASSIGNMENT AND ASSUMPTION AGREEMENT (______)
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT ([_____]), dated [____________ __,
____] (this "Assignment"), is by and between ECHELON INTERNATIONAL CORPORATION,
----------
a Florida corporation][EIN CORP., a Delaware corporation] (as successor-in-
interest to EIN Acquisition Corp.) ("Seller"), and [HELLER FINANCIAL, INC.], a
------
Delaware corporation ("Purchaser").
---------
W I T N E S S E T H :
WHEREAS, the parties hereto wish to effect the sale by Seller to Purchaser
of the right, title and interest of Seller in and to the Equity Interest (other
than with respect to Reserved Rights) and the assumption of the obligations of
Seller under the Transaction Documents; and
WHEREAS, Seller and Purchaser desire to enter into this Assignment to
effect such sale and assumption;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. Definitions. For purposes of this Assignment, capitalized
-----------
terms used herein shall, unless otherwise expressly provided for or defined
herein, have the respective meanings set forth in Appendix A hereto or, to the
extent not defined in Appendix A hereto, in the [Lease / Participation
Agreement] (as such term is defined in Appendix A hereto).
SECTION 2. Assignment. Seller does hereby sell, convey, assign,
----------
transfer and set over unto Purchaser all of Seller's right, title and interest
in and to the Equity Interest, other than Reserved Rights (for the avoidance of
doubt, Seller hereby reserves, and nothing contained herein shall be construed
as an assignment, transfer, conveyance, sale or setting over of any of the
Reserved Rights).
SECTION 3. Assumption. Purchaser hereby assumes all of the
----------
liabilities, duties and obligations of Seller, under the Transaction Documents
arising or accruing on or after the Closing Date. For the avoidance of doubt,
nothing contained herein shall discharge or release (or be deemed to discharge
or release) Seller from any obligation under the Transaction Documents arising
or accruing prior to the Closing Date.
SECTION 4. Substitution. Effective from and after the Closing Date,
------------
Purchaser shall be substituted in lieu of Seller as a party to each of the
Transaction Documents to which Seller is a party.
<PAGE>
[Purchase Agreement ([______])]
SECTION 5. Successors and Assigns. This Assignment shall be binding
----------------------
upon and inure to the benefit of the parties hereto and their successors and
permitted assigns.
SECTION 6. Governing Law. THIS ASSIGNMENT, INCLUDING ALL MATTERS OF
-------------
CONSTRUCTION, VALIDITY AND PERFORMANCE, SHALL IN ALL RESPECTS BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS, APPLICABLE
TO CONTRACTS MADE IN SUCH STATE, WITHOUT GIVING EFFECT TO PRINCIPLES RELATING TO
CONFLICTS OF LAW.
SECTION 7. Counterparts. This Assignment may be executed by the
------------
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 8. Notices. All notices, offers, acceptances, approvals,
-------
waivers, requests, demands and other communications hereunder or under any
instrument, certificate or other instrument delivered in connection with the
transactions described herein shall be in writing, shall be addressed as
provided below and shall be considered as properly given (a) if delivered in
person, (b) if sent by reputable overnight delivery service, (c) in the event
overnight delivery services are not readily available, if mailed by first class
United States mail, postage prepaid, registered or certified with return receipt
requested or (d) if sent by telecopier or other electronic data transmission
facility and confirmed in writing by any other manner described above. Notice
so mailed shall be effective upon the earlier of actual receipt or the
expiration of five (5) days after its deposit. Notice given in any other manner
shall be effective upon receipt by the addressee; provided, however, that if any
-------- -------
notice is tendered to an addressee and the delivery thereof is refused by such
addressee, such notice shall be effective upon such tender. For the purposes of
notice, the address of the parties shall be as set forth below; provided, that
--------
either party shall have the right to change its address for notice hereunder to
any other location by the giving of prior notice to the other party in the
manner set forth hereinabove. The initial addresses of the parties hereto are
as follows:
Purchaser:
Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinois 60661
Attention: Managing Director -- Aircraft Finance Division
Telephone: (312) 441-7542
Telecopier: (312) 441-7378
A-2
<PAGE>
[Purchase Agreement ([______])]
with a copy to:
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, Illinois 60601
Attention: Dean N. Gerber, Esq.
Telephone: (312) 609-7500
Telecopier: (312) 609-5005
Seller:
[Echelon International Corporation][EIN Corp.]
950 Third Avenue
New York, New York 10022
Attention: James Haber
Telephone: (212) 688-2700
Brown Raysman Millstein Felder & Steiner LLP
120 West 45th Street
New York, New York 10036
Attention: Robert M. Unger, Esq.
Telephone: (212) 944-1515
Telecopier: (212) 840-2429
* * *
A-3
<PAGE>
[Purchase Agreement ([______])]
IN WITNESS WHEREOF, each of the parties hereto has caused this Assignment
to be duly executed and delivered by its authorized officer on the day and year
set forth above.
[ECHELON INTERNATIONAL
CORPORATION][EIN CORP.], as
Seller/Assignor
By:_______________________________
Name:_____________________________
Title:____________________________
HELLER FINANCIAL, INC., as
Purchaser/Assignee
By:_______________________________
Name:_____________________________
Title:____________________________
A-4
<PAGE>
[Purchase Agreement ([______])]
EXHIBIT I
Transaction Documents
---------------------
[To be Inserted]
A-5
<PAGE>
[Purchase Agreement ([______])]
Appendix A
to
Assignment
[To be Inserted]
<PAGE>
[Purchase Agreement ([_______])
EXHIBIT B
[FORM OF CONSENT (LESSEE)]
<PAGE>
[Purchase Agreement ([______])]
EXHIBIT C
[FORM OF CONSENT (OWNER TRUSTEE]
CONSENT AND AGREEMENT ([______])
THIS CONSENT AND AGREEMENT ([______]) dated ([______]) (this "Consent") is
-------
by [____________], not in its individual capacity except as expressly set forth
herein but solely as Owner Trustee ("Owner Trustee").
-------------
W I T N E S S E T H:
WHEREAS, [Owner Trustee and [______] entered into the Trust Agreement];
WHEREAS, [describe subsequent transfers];
WHEREAS, [Heller Financial, Inc.], a [Delaware] corporation ("Purchaser")
---------
has assumed the obligations of Seller pursuant to that certain Assignment and
Assumption Agreement ([______]) dated [____________], a copy of which is
attached hereto as Exhibit A (the "Assignment");
--------- ----------
NOW THEREFORE, in consideration of good and valuable consideration, the
receipt of which is hereby acknowledged, Owner Trustee hereby agrees as follows:
SECTION 1. Definitions. Capitalized terms used herein, including the
------------
recitals hereto, and not otherwise defined herein shall have the meanings
assigned to such terms (whether by reference to another document or otherwise)
in the Assignment.
SECTION 2. Consent. Owner Trustee hereby acknowledges and consents to the
-------
assignment of the Equity Interest by Seller to Purchaser in accordance with the
Assignment (which Assignment is in form and substance satisfactory to Owner
Trustee).
SECTION 3. Representations and Warranties. [____________], in its
------------------------------
individual capacity and as Owner Trustee, hereby represents and warrants to each
of Seller and Purchaser as follows:
(i) Due Authorization. Each of the Transaction Documents to which
-----------------
Owner Trustee is a party and this Consent has been duly authorized, executed and
delivered by Owner Trustee and constitutes the legal, valid and binding
obligation of Owner Trustee, enforceable against Owner Trustee in accordance
with its terms, except as enforcement may be limited by
<PAGE>
[Purchase Agreement ([______])]
applicable bankruptcy, insolvency, reorganization, liquidation, moratorium or
similar laws affecting enforcement of creditors' rights generally, and by
general principles of equity.
(ii) Organization and Power. The Owner Trustee (i) is the duly
----------------------
appointed owner trustee under the Trust Agreement and pursuant thereto has full
power to carry on its business as it is now being conducted, to perform its
obligations under the Transaction Documents and to execute, deliver and perform
its obligations under this Consent, and (ii) has complied with all material
statutory and other requirements relating to the business carried on by it.
(iii) Citizenship. Owner Trustee is a "citizen of the United States"
-----------
as defined in Section 40102(a)(15) of the Aviation Law for purposes of
maintaining FAA registration of the Aircraft pursuant to the Aviation Law.
(iv) Trust Authority. The performance by Owner Trustee of the
---------------
Transaction Documents and the execution, delivery and performance by Owner
Trustee of this Consent have been duly authorized by all necessary action on the
part of Owner Trustee, do not require any approval from Seller or, at the
Transfer Time, Purchaser under the Trust Agreement, do not and will not violate
any provision of the Trust Agreement and will not result in the breach of,
constitute a default under, contravene any provision of or result in the
creation of any Lien upon the Trust Estate or any of Owner Trustee's other
property or assets pursuant to, any agreement, indenture, mortgage, note, lease
or other agreement or instrument to which Owner Trustee is a party or by which
Owner Trustee or its property may be bound or affected.
(v) Consents. All necessary consents, resolutions and
--------
authorization (if any) for Owner Trustee to perform its obligations under the
Transaction Documents and to execute, deliver and perform this Consent have been
obtained.
(vi) Litigation. No judgments are outstanding against Owner
----------
Trustee, and no action, claim, suit or proceeding is pending or threatened
(including tax liens and tax actions) against or affecting Owner Trustee before
any court, board or arbitration or administrative agency.
(vii) Title to Collateral. Owner Trustee has, without limitation,
-------------------
and will at the Transfer Time have, full legal title in and to the assets in the
Trust Estate, including the Aircraft, and the right, title and interest of Owner
Trustee in the Transaction Documents. At the Transfer Time, the Trust Estate
and the assets in the Trust Estate will be free and clear of any Liens other
than Liens created pursuant to, or permitted by, the Transaction Documents.
(viii) No Default. The Owner Trustee is not in default under any
----------
agreement to which it is a party or by which it may be bound.
C-2
<PAGE>
[Purchase Agreement ([______])]
(ix) No Assignment or Sublease. As of the date of this Consent,
-------------------------
Owner Trustee has not consented to any assignment by the Lessee of its rights
under the Lease or to any sublease or transfer of possession of the Aircraft,
and no such assignment, sublease or transfer of possession has occurred.
SECTION 4. Third Party Beneficiaries. Owner Trustee hereby agrees that
-------------------------
each of Seller and Purchaser is intended to be a third party beneficiary of this
Consent.
* * *
C-3
<PAGE>
[Purchase Agreement ([______])]
IN WITNESS WHEREOF, Owner Trustee has caused this Consent to be duly
executed and delivered by its duly authorized officer on the day and year set
forth above.
[_________________________________],
not in its individual capacity except
as expressly set forth herein but
solely as Owner Trustee
By:_________________________________
Name:___________________________
Title:__________________________
C-4
<PAGE>
[Purchase Agreement ([______])]
EXHIBIT A
[Consent and Agreement ([______])]
Assignment and Assumption
Agreement ([______])
[To be Inserted]
C-5
<PAGE>
[Purchase Agreement ([______])]
[EXHIBIT D]
[FORM OF CONSENT (INDEBTEDNESS)]
<PAGE>
[Purchase Agreement ([______])]
SCHEDULE 1
[Rent]
<PAGE>
[Purchase Agreement ([______])]
SCHEDULE 2
[DESCRIPTION OF INDEBTEDNESS]
<PAGE>
[Purchase Agreement ([______])]
SCHEDULE 3
[LITIGATION]
<PAGE>
[Purchase Agreement ([______])]
APPENDIX A
----------
Unless otherwise required by the context, the following terms shall
have the following meanings, and such meanings shall include the plural as well
as the singular of each such term. For purposes of this Appendix A, references
to any Person shall include the successors and permitted assigns of such Person.
References to any agreement shall mean such agreement as amended from time to
time in accordance with its terms.
Acquisition Price shall have the meaning set forth in Section 2.2(a)
of the Purchase Agreement.
Affiliate shall [have the meaning set forth in the Lease].
Aircraft shall mean the Aircraft as such term is defined in the Lease.
Amendments shall mean the amendments, if any, to the Security
Documents, the Lease, the Trust Agreement and the Participation Agreement
required in order to reflect the Equity Interest Transfer.
Applicable Law shall mean all applicable laws of any Governmental
Authority, including, without limitation, federal, state and foreign securities
laws, tax laws, tariff and trade laws, ordinances, judgments, decrees,
injunctions, writs and orders or like actions of any Governmental Authority and
rules, regulations, orders, interpretations, licenses, and permits of any
federal, regional, state, county, municipal or other Governmental Authority.
Assignment and Assumption Agreement shall mean the Assignment and
Assumption Agreement ([______]) dated the Closing Date, between Seller and
Purchaser, substantially in the form of Exhibit A to the Purchase Agreement.
Aviation Law shall mean the Sections of Title 49 of the United States
Code relating to aviation, as amended.
Basic Rent shall have the meaning set forth in the Lease.
Business Day shall have the meaning set forth in the Lease.
Closing Date shall mean the date on which the Equity Interest Transfer
shall be consummated (which day shall be a Business Day).
Code shall mean the Internal Revenue Code of 1986, as amended from
time to time.
<PAGE>
[Purchase Agreement ([______])]
[Consent (Indebtedness) shall mean the Consent and Agreement
([_________]) among the [Security Trustee,] Seller and Purchaser, substantially
in the form of Exhibit D to the Purchase Agreement.]
Consent (Lessee) shall mean the Acknowledgment and Consent ([______])
dated the Closing Date among Lessee, Owner Trustee, Seller and Purchaser,
substantially in the form of Exhibit B to the Purchase Agreement.
Consent (Owner Trustee) shall mean the Consent and Agreement
([______]) dated the Closing Date by Owner Trustee, substantially in the form of
Exhibit C to the Purchase Agreement.
Consents shall mean, collectively, the Consent (Lessee) and the
Consent (Owner Trustee)[, and the Consent (Indebtedness)].
Costs shall have the meaning set forth in Section 6.1 of the Purchase
Agreement.
Default shall mean an event that, with the giving of notice, the
passage of time or both, would constitute an Event of Default [or similar event
under Security Document].
Equity Interest shall mean 100% of the beneficial interest in the
Trust Estate, all of Seller's right, title and interest in, to and under the
Transaction Documents (including, without limitation, the Trust Agreement)
arising from and after the Closing Date and any other property constituting the
Trust Estate.
Event of Default shall mean an "Event of Default" under the Lease [or
an "Event of Default" under the Security Document].
Equity Interest Transfer shall mean the transfer, sale and assignment
from Seller to Purchaser of the Equity Interest as contemplated by, and subject
to the terms and conditions of, the Purchase Agreement and the Assignment and
Assumption Agreement.
Event of Loss shall have the meaning set forth in the Lease.
FAA shall mean the Federal Aviation Administration of the United
States provided for in the Department of Transportation Act of 1966 or any
successor or substituted governmental authority at the time having jurisdiction
over the Aircraft.
Governmental Authority shall mean any nation or government (including
any state or other political subdivision of either thereof) and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
AA-2
<PAGE>
[Purchase Agreement ([______])]
Indebtedness shall mean the indebtedness secured by the Security
Document.
Lease shall mean the Lease of the Aircraft described in Schedule 5 to
the Omnibus Agreement.
Lender shall mean the Person or Persons for whose benefit Security
Trustee has entered into any Security Document or any other holder of the
Indebtedness.
Lessee shall mean the Lessee of the Aircraft as identified in Schedule
5 to the Omnibus Agreement.
Lessor shall mean the Lessor of the Aircraft and the registered Owner
of the Aircraft as identified in Schedule 5 to the Omnibus Agreement.
Lessor Lien shall [have the meaning set forth in the Lease.]
Leveraged Lease Portfolio shall mean the leveraged and operating
leases of personal property listed on Schedule 11 to the Omnibus Agreement.
Lien shall mean [any mortgage, pledge, security interest, charge, lien
or other encumbrance.]
Material Adverse Effect shall mean a material adverse effect upon the
ownership, lease, use, operation, maintenance, value or management of the Equity
Interest, the Aircraft, the Trust Estate, and any other property or assets
underlying the Equity Interest, or any other property included in the Leveraged
Lease Portfolio, or the consummation of the transactions contemplated by, or
performance by Seller of its obligations under, this Agreement and the Omnibus
Agreement.
Omnibus Agreement shall mean that certain Omnibus Agreement dated
January [__], 2000, between EIN Acquisition Corp. and Purchaser.
Owner Trustee shall mean the Owner Trustee with respect to the
Aircraft as described in Schedule 2 to the Omnibus Agreement, not in its
individual capacity, but solely as Owner Trustee under the Trust Agreement.
Participation Agreement shall mean the document(s) with respect to the
Aircraft listed on Schedule 6 to the Omnibus Agreement.
Permitted Liens shall [have the meaning set forth in the Lease.]
AA-3
<PAGE>
[Purchase Agreement ([______])]
Person shall mean any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
any government or political subdivision thereof or any Governmental Authority or
other entity.
Purchase Agreement shall mean that certain Purchase Agreement
([______]) dated as of [_______________], between Seller and Purchaser, to which
this Appendix A is attached.
Purchaser shall mean Heller Financial, Inc., a Delaware corporation.
Reserved Rights shall mean any and all of the rights and interests of
Seller in respect to the following; (i) Seller's right to tax and other
indemnification under any Transaction Document as a result of or arising out of
events occurring or circumstances existing prior to the Closing Date (or claim
asserted against Seller with respect to a matter subsequent to the Closing Date,
if Seller would otherwise be entitled to indemnification for such claim), (ii)
each and every obligation of Lessee to provide liability insurance on behalf of
or in favor of Seller as an additional insured under any Transaction Document
with respect to events occurring or circumstances existing prior to the Closing
Date, (iii) any interest payable by Lessee on any amount referred to in clauses
(i) and (ii) above and (iv) the right to enforce payment of the amounts referred
to in clauses (i) through (iii) above..
Securities Act shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
Security Document(s) shall mean the document(s) with respect to the
Aircraft listed on Schedule 7 to the Omnibus Agreement.
Security Trustee shall mean the Person identified as [agent/indenture
trustee/mortgagee/security trustee] on Schedule 7 to the Omnibus Agreement.
Seller shall mean [Echelon International Corporation, a Florida
corporation][EIN Corp., a Delaware corporation], as successor-in-interest to EIN
Acquisition Corp.
Seller's Lender shall mean Utrecht-America Finance Co., an affiliate
of Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland",
New York Branch ("Rabobank") and any other lender from time to time a party to
the Credit Agreement of even date with the Omnibus Agreement among Seller,
Seller's Lender and Rabobank, as agent.
Special FAA Counsel shall mean Daugherty, Fowler, Peregrin & Haught
P.C. of Oklahoma City, Oklahoma.
AA-4
<PAGE>
[Purchase Agreement ([______])]
Transaction shall mean the transaction entered into pursuant to the
Transaction Documents.
Transaction Documents shall mean the documentation identified as such
in Exhibit I to the Assignment and Assumption Agreement under the caption
"Transaction Documents".
Transfer Documents shall mean the Omnibus Agreement, the Purchase
Agreement, the Assignment and Assumption Agreement and the Consents.
Transfer Time shall mean the time on the Closing Date mutually agreed
by Seller and Purchaser at which the Equity Interest Transfer will occur.
Trust Agreement shall mean the document with respect to the Aircraft
listed on Schedule 2 to the Omnibus Agreement.
Trust Estate shall have the meaning specified in the Trust Agreement.
AA-5
<PAGE>
[Omnibus Agreement]
EXHIBIT B
FORM OF ESCROW AGREEMENT
<PAGE>
EXHIBIT B
ESCROW AGREEMENT
----------------
This ESCROW AGREEMENT, dated as of January 21, 2000 (this "Agreement"),
among EIN ACQUISITION CORP., a Florida corporation (together with any successor
by merger, the "Seller"), HELLER FINANCIAL, INC., a Delaware corporation (the
"Purchaser"), and COOPERATIEVE CENTRALE RAFFEISEN-BOERENLEENBANK B.A., NEW YORK
BRANCH, in its capacity as escrow agent, (the "Escrow Agent").
RECITALS
A. The Purchaser and Seller have entered into Omnibus Agreement,
dated January __, 2000 (the "Omnibus Agreement") pursuant to which the Purchaser
has agreed to purchase from Seller, and Seller has agreed to sell to the
Purchaser, the Equity Interests. Unless otherwise defined herein, capitalized
terms used shall have the meanings specified in the Omnibus Agreement.
B. In order to ensure the delivery of the documents necessary to convey the
Equity Interests upon the relevant Closing Date, the Seller and the Purchaser
wish to deposit into escrow all Escrowed Items to be delivered under the Omnibus
Agreement with the Escrow Agent, to be held and distributed by the Escrow Agent
in accordance with this Agreement.
C. The Escrow Agent will hold the Escrowed Items in escrow for the benefit
of the Seller, the Purchaser and Seller's Lender.
AGREEMENT
Now, therefore, in consideration of the foregoing and the mutual agreements
contained herein and in the Omnibus Agreement, and intending to be legally bound
hereby, the parties hereby agree as follows:
1. Appointment and Agreement of Escrow Agent. The Purchaser and the Seller
-----------------------------------------
hereby appoint the Escrow Agent to serve as, and the Escrow Agent hereby agrees
to act as, escrow agent upon the terms and conditions of this Agreement. Seller
shall pay all fees and expenses of the Escrow Agent for services to be rendered
by Escrow Agent hereunder.
2. Establishment of the Escrow.
---------------------------
(a) In accordance with Section 4(c) of the Omnibus Agreement,
simultaneously with the consummation of the Merger, the Purchaser and Seller
shall deliver or cause to be delivered to the Escrow Agent, the Escrowed Items.
The Escrow Agent shall hold the Escrowed Items in escrow pursuant to this
Agreement.
(b) Each of the Purchaser and the Seller confirms to the Escrow Agent,
to each other and to the Seller's Lender that the Escrowed Items delivered in
accordance with paragraph 2(a) above are all of the deliveries necessary to
satisfy the conditions set forth in Section 4(c) of the Omnibus Agreement.
3. Release from Escrow. Upon the receipt of written notice from the
-------------------
Purchaser and the Seller to deliver an Escrowed Item which notice shall in all
events be subject to the terms and conditions of and certify that it complies
with Sections 8(a) and 8(d) of the Omnibus Agreement, the Escrow Agent shall, on
the date specified in such notice (which date shall be selected by the Purchaser
and reasonably acceptable to the Seller) , deliver such Escrowed Item to the
Purchaser. Notwithstanding anything else to the contrary contained herein, in
the Omnibus Agreement or in any other Relevant Document (including, without
limitation, the failure of the Escrow Agent to receive the notice described in
the preceding sentence), on the Final Closing Date (or such other date as may be
specified by the Purchaser, which date, for the avoidance of doubt, may be after
the Final Closing Date if the applicable Acquisition Price and any and all
amounts specified in the last sentence of Section 4(b) of the Omnibus Agreement
and in each Purchase Agreement shall have been paid in full on or prior to the
Final Closing Date), the Escrow Agent shall deliver to the Purchaser each of the
Escrowed Items which has not previously been delivered to the Purchaser pursuant
to this Paragraph 3.
4. Assignment of Rights to the Escrow Fund: Assignment of Obligations;
------------------------------------------------------------------
Successors. This Agreement may not be assigned by operation of law or otherwise
- - ----------
without the express written consent of the other parties hereto (which consent
may be granted or withheld in the sole discretion of such other parties);
provided, however, that it is expressly understood and agreed that EIN
Acquisition Corp. shall, upon the terms and subject to the conditions of the
Merger Agreement, be merged with and into Echelon International Corporation, a
Florida corporation, which, in turn, shall be merged with and into EIN Corp., a
Delaware corporation, each of which shall be bound by and become a party hereto
as and from the date of such respective mergers in accordance with applicable
law. Purchaser and Seller shall have the right, but shall not be obligated to,
execute and deliver to Escrow Agent jointly, at the effective time of each such
merger, replacement Escrowed Items in the name of each surviving corporation
described in the preceding sentence, to be held in escrow hereunder, in place
and instead of any Escrowed Items. This Agreement shall be binding upon and
inure solely to the benefit of the parties hereto, the Seller's Lender and their
permitted assigns.
5. Escrow Agent.
------------
<PAGE>
(a) Except as expressly contemplated by this Agreement or by written
instructions from the Purchaser, the Seller and the Seller's Lender, the Escrow
Agent shall not deliver any Escrowed Item, except pursuant to an order of a
court of competent jurisdiction.
(b) The duties and obligations of the Escrow Agent shall be determined solely
by this Agreement, and the Escrow Agent shall not be liable except for the
performance of such duties and obligations as are specifically set forth in this
Agreement.
(c) In the performance of its duties hereunder, the Escrow Agent shall be
entitled to rely upon any document, instrument or signature believed by it in
good faith to be genuine and signed by any party hereto or an authorized officer
or agent thereof, and shall not be required to investigate the truth or accuracy
of any statement contained in any such document or instrument. The Escrow Agent
may assume that any Person purporting to give any notice in accordance with the
provisions of this Agreement has been duly authorized to do so.
(d) The Escrow Agent shall not be liable for any error of judgment, or any
action taken, suffered or omitted to be taken, hereunder except in the case of
its negligence, bad faith or willful misconduct. The Escrow Agent may consult
with counsel of its own choice (including in-house counsel) and shall have full
and complete authorization and protection for any action taken or suffered by it
hereunder in good faith and in accordance with the opinion of such counsel.
(e) The Seller and the Purchaser shall reimburse and indemnify the Escrow
Agent for, and hold it harmless against, any loss, liability or expense,
including, without limitation, reasonable attorneys' fees, incurred without
negligence, bad faith or willful misconduct on the part of the Escrow Agent
arising out of, or in connection with the acceptance of, or the performance of,
its duties and obligations under this Agreement.
(f) The Escrow Agent may at any time resign by giving twenty business days'
prior written notice of resignation to the Seller and the Purchaser. The Seller
and the Purchaser may, with the consent of the Seller's Lender, at any time
jointly remove the Escrow Agent by giving ten business days' written notice
signed by each of them to the Escrow Agent. If the Escrow Agent shall resign or
be removed, a successor Escrow Agent, which shall be a bank or trust company
having its principal executive offices in New York and assets in excess of $1.5
billion, and which shall be reasonably acceptable to the Seller and the Seller's
Lender, shall be appointed by the Purchaser by written instrument executed by
the Purchaser and delivered to the Escrow Agent and to such successor Escrow
Agent and, thereupon, the resignation or removal of the predecessor Escrow Agent
shall become effective and such successor Escrow Agent, without any further act,
deed or conveyance, shall become vested with all right, title and interest to
all cash and property held hereunder of such predecessor Escrow Agent. If no
successor Escrow Agent shall have been appointed within twenty business days of
a notice of resignation by the Escrow Agent, the Escrow Agent's sole
responsibility shall thereafter be to hold the Escrowed Items until the earliest
of (i) its receipt of designation of a successor Escrow Agent, (ii) its receipt
of a written instruction by the Seller, the Purchaser and the Seller's Lender or
(iii) termination of this Agreement in accordance with its terms.
6. Termination. This Agreement shall terminate on the earlier date (i) on
-----------
which all Escrowed Items have been delivered pursuant to the terms hereof or
(ii) the Seller, the Purchaser, the Seller's Lender and the Escrow Agent agree
in writing to terminate this Agreement.
7. Notices. All notices, requests, claims, demands and other communications
-------
delivered hereunder shall be in writing and shall be given or made (and shall be
deemed to have been duly given or made upon receipt) by delivery in person, by
courier service, by cable, by telecopy, by telegram or by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 7):
(a) if to the Seller, at its address set forth in the Omnibus Agreement.
(b) if to the Purchaser, at its address set forth in the Omnibus Agreement.
(c) if to the Seller's Lender:
245 Park Avenue
New York, New York 10167
Fax: 212-922-0969
Attention: Hans den Baas
(d) if to the Escrow Agent:
245 Park Avenue
New York, NY 10167-0062
Fax: (212) 808-2585
Attention: Chris Kortlandt
8. Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance with, the laws of the State of New York applicable to contracts
executed and to be performed entirely within that State without giving effect to
principles thereof relating to conflicts of law rules that would direct the
application of the laws of another jurisdiction.
9. Amendments. This Agreement may not be amended or modified except
----------
<PAGE>
----------
(a) by an instrument in writing signed by, or on behalf of, the Seller, the
Purchaser, the Seller's Lender and the Escrow Agent or (b) by a waiver in
accordance with Section 10 of this Agreement.
10. Waiver. Any party hereto may (i) extend the time for the
------
performance of any obligation or other act of any other party hereto or (ii)
waive compliance with any agreement or condition contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party or parties to be bound thereby. Any waiver of any term or
condition shall not be construed as a waiver of any subsequent breach or a
subsequent waiver of the same term or condition, or a waiver of any other term
or condition, of this Agreement. The failure of any party to assert any of its
rights hereunder shall not constitute a waiver of any of such rights.
11. Severability. If any term or other provision of this Agreement is
------------
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic and legal substance of
the transactions contemplated by this Agreement is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated by this Agreement be consummated as
originally contemplated to the fullest extent possible.
12. Entire Agreement. This Agreement constitutes the entire agreement
----------------
of the parties hereto with respect to the subject matter hereof and supersedes
all prior agreements and undertakings, both written and oral, among the Seller,
the Purchaser, the Seller's Lender and the Escrow Agent with respect to the
subject matter hereof.
13. No Third Party Beneficiaries. Except with respect to the Seller's
----------------------------
Lender, this Agreement is for the sole benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other person or entity any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.
14. Headings. The descriptive headings contained in this Agreement are
--------
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
15. Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by different parties hereto in separate counterparts, each of
which when duly executed shall be deemed to be an original but all of which when
taken together shall constitute one and the same agreement.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
In witness whereof, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
EIN ACQUISITION CORP.
By:
--------------------------------------
Name:
Title:
HELLER FINANCIAL, INC.
By:
--------------------------------------
Name:
Title:
COOPERATIEVE CENTRALE RAFFEISEN-BOERENLEENBANK
B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
<PAGE>
[Omnibus Agreement]
EXHIBIT C
FORM OF NOTIFICATION AND CONFIRMATION
<PAGE>
EXHIBIT C
NOTIFICATION AND CONFIRMATION
January __, 2000
Dear Sir or Madam:
Pursuant to the Security Agreement dated as of January __, 2000 (the
"Security Agreement") made by EIN Acquisition Corp., a Florida corporation
- - -------------------
(together with any successor by merger, the "Borrower"), to Cooperatieve
--------
Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New York Branch
("Rabobank"), as agent (the "Agent"), the Borrower has assigned and pledged to
-------- -----
the Agent for the ratable benefit of the Lenders (as defined in the Security
Agreement) all of the Borrower's right, title and interest in and to the Heller
Purchase Agreement (as defined in the Security Agreement);
1. The Borrower hereby notifies Heller Financial, Inc. (the
"Counterparty") of, and the Counterparty hereby acknowledges and agrees to, the
assignment and pledge of the Heller Purchase Agreement pursuant to the Security
Agreement.
2. The Borrower hereby instructs the Counterparty and the
Counterparty hereby agrees to make any and all payments and other distributions
with respect to the Heller Purchase Agreement directly to the Agent in payment
of the Obligations (as defined in the Security Agreement).
3. The Counterparty hereby agrees, simultaneously with each notice
delivered to the Borrower pursuant to the Heller Purchase Agreement to send a
copy of such notice to the Agent at the Agent's address set forth in the
Security Agreement.
EIN ACQUISITION CORP.
By:_____________________
Name:
Title:
ACKNOWLEDGED AND AGREED TO:
HELLER FINANCIAL, INC.
By:_____________________
Name:
Title:
<PAGE>
EXHIBIT (d)(6)
PURCHASE AGREEMENT
This Purchase Agreement (this "Agreement") is made and entered into as of
January 13, 2000, by and between Echelon International Corporation, a Florida
corporation, and Echelon Affordable Housing, Inc., a Florida corporation, as
sellers (collectively, "Sellers"), and Heller Affordable Housing, Inc., a
Delaware corporation, as purchaser ("Purchaser").
WITNESSETH
WHEREAS, Sellers are the legal and beneficial owners of limited partner
interests (the "Partnership Interests") in five multi-investor tax credit funds
(the "Funds"), which Partnership Interests and Funds are more particularly
identified in Exhibit A hereto; and
WHEREAS, Purchaser desires to purchase from Sellers, and Sellers desire to
sell to Purchaser, all the Partnership Interests on the terms and conditions set
forth herein;
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Purchase of Partnership Interests
---------------------------------
1.1 Basic Transaction. On and subject to the terms and conditions of
------------------
this Agreement, Purchaser shall purchase from Sellers, and Sellers shall
sell to Purchaser, the Partnership Interests.
1.2 Purchase Price. The aggregate purchase price (the "Purchase
--------------
Price") for the Partnership Interests shall equal the sum of $21,065,000
plus the Recapture Premium (as defined in Section 5.7), and shall be
payable as follows:
(a) $21,065,000 shall be paid by Purchaser to Sellers at the closing
of the transactions contemplated by this Agreement (the "Closing") by
wire transfer of immediately available U.S. funds to an account
designated by Sellers; and
(b) the Recapture Premium shall be paid in accordance with Section 5
hereof.
<PAGE>
1.3 The Closing. The Closing shall be held at the offices of White &
-----------
Case LLP, 1155 Avenue of the Americas, New York, New York 10036, commencing
at 10:00 a.m. (New York time) on January 14, 2000, or at such other place
and earlier time and date as shall be agreed upon by the parties hereto
(the actual date of the Closing is hereinafter referred to as the "Closing
Date").
1.4 Deliveries at Closing. At the Closing, Sellers will deliver to
---------------------
Purchaser the various certificates, instruments and documents referred to
in Section 6.1 hereof, and Purchaser will deliver to Sellers the cash
portion of the Purchase Price described in Section 1.2(a) and the various
certificates, instruments and documents referred to in Section 6.2 hereof.
2. Representations and Warranties of Sellers
-----------------------------------------
Sellers represent and warrant to Purchaser that the statements contained in
this Section 2 are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date. The representations and
warranties set forth in this Section 2 shall not survive the Closing Date
(except for those set forth in Sections 2.5 and 2.12, which shall survive the
Closing Date; provided, however, that the representations and warranties set
forth in Section 2.5 shall terminate upon the merger of EIN Acquisition Corp.
with and into Echelon International Corporation (the "Merger")).
2.1 Organization. Each Seller is a corporation duly organized,
------------
validly existing and in good standing under the laws of the State of
Florida.
2.2 Authorization. Each Seller has full power and authority to
-------------
execute and deliver this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby. This Agreement has
been duly executed and delivered by each Seller and, assuming that this
Agreement constitutes a valid and binding obligation of Purchaser, is a
valid and binding obligation of each Seller enforceable against each Seller
in accordance with its terms, except to the extent that its enforceability
may be subject to applicable bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium and similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles.
2.3 Noncontravention. Neither the execution and delivery of this
----------------
Agreement, nor the consummation of the transactions contemplated hereby,
will (a) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge or other restriction of any
government, governmental agency or court to which either Seller is subject
or any provision of its charter or bylaws, or (b) conflict with, result in
a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify or cancel,
or require any notice or consent under any agreement, contract, lease,
2
<PAGE>
license, instrument or other arrangement to which either Seller is a party
or by which it is bound or to which any of its assets are subject, except
for such notices and consents which must be given or obtained pursuant to
the partnership agreements for the various Funds (the "Fund Agreements").
2.4 Description of Partnership Interests. With respect to each
------------------------------------
Partnership Interest, the following information is set forth on Exhibit A
hereto:
(a) the name, state of organization, taxpayer identification
number and tax shelter registration number of the relevant Fund; and
(b) the number of units comprising such Partnership Interest and
whether such Partnership Interest is represented by a separate
certificate.
2.5 Ownership of Partnership Interests. Sellers are the sole legal
----------------------------------
and beneficial owners of the Partnership Interests. Sellers have not
granted any security interests, liens, claims or encumbrances with respect
to the Partnership Interests which will remain outstanding as of the
Closing Date. At the Closing, Sellers will transfer the Partnership
Interests to Purchaser free and clear of any liens, claims or encumbrances
of any kind whatsoever of which Sellers have knowledge.
2.6 Consents. Except for the consent of the general partner of each
--------
Fund (a "General Partner") and except as set forth in the Fund Agreements,
no consent, authorization or approval of any person, or of any court or
governmental authority, is required in connection with the consummation by
Sellers of the transactions contemplated by this Agreement.
2.7 Capital Contributions. Sellers have made all scheduled capital
---------------------
contributions required to be made by them to any Fund under the existing
Fund Agreements as a result of the ownership of the Partnership Interests.
2.8 Fund Agreements. Sellers have provided to Purchaser true and
---------------
correct copies of each Fund Agreement (and all amendments thereto) and all
other agreements, instruments or writings of any kind in the possession of
Sellers which set forth or govern the rights and obligations of either
Seller in its capacity as the owner of the Partnership Interests, in each
case to which either Seller is a party or of which either Seller has
knowledge.
2.9 Defaults. Sellers are not in default with respect to any of
--------
their material obligations under any Fund Agreement and, to Sellers'
knowledge, no General Partner is in default with respect to any of its
material obligations under the applicable Fund Agreement.
3
<PAGE>
2.10 Audits. To Sellers' knowledge, except as set forth in Schedule
------
2.10, no income tax audit has ever been commenced by the Internal Revenue
Service with respect to any Fund or any lower-tier limited partnership or
limited liability company (a "Project Partnership") in which any Fund has
invested.
2.11 Litigation. To Sellers' knowledge, except as set forth in
----------
Schedule 2.11, no litigation, arbitration or similar proceeding has been
commenced, or is threatened, against any Fund or Project Partnership which,
if determined adversely to any such party, would materially and adversely
affect such Fund or Project Partnership.
2.12 Brokers. Sellers have no liability or obligation to pay any
-------
fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement and no such person or entity
claims any of the foregoing with respect to the transactions contemplated
by this Agreement.
3. Representations and Warranties of Purchaser
-------------------------------------------
Purchaser represents and warrants to Sellers that the statements contained
in this Section 3 are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date. The representations and
warranties set forth in this Section 3 shall not survive the Closing Date
(except for (x) those set forth in Sections 3.4, 3.5 and 3.6, which shall
survive for a period of one year after the Closing Date, and (y) those set forth
in Section 3.7, which shall survive the Closing Date).
3.1 Organization. Purchaser is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Delaware.
3.2 Authorization. Purchaser has full power and authority to execute
-------------
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Purchaser and, assuming that this Agreement
constitutes a valid and binding obligation of Sellers, is a valid and
binding obligation of Purchaser enforceable against Purchaser in accordance
with its terms, except to the extent that its enforceability may be subject
to applicable bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium and similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles.
3.3 Noncontravention. Neither the execution and delivery of this
----------------
Agreement, nor the consummation of the transactions contemplated hereby,
will (a) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge or other restriction of any
government, governmental agency or court to which Purchaser is subject or
any provision of its charter or bylaws, or
4
<PAGE>
(b) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify or cancel, or require any notice or consent under any
agreement, contract, lease, license, instrument or other arrangement to
which Purchaser is a party or by which it is bound or to which any of its
assets are subject.
3.4 Due Diligence. Purchaser has conducted all due diligence that
--------------
Purchaser deems necessary or desirable with respect to the Partnership
Interests, this Agreement and the transactions contemplated hereby in order
for it to enter into this Agreement and consummate the transactions
contemplated hereby. Except for the limited representations of Sellers
specifically set forth in Section 2 hereof, Purchaser will rely solely upon
such due diligence in purchasing the Partnership Interests.
Notwithstanding anything in this Agreement, it is expressly understood and
agreed that Purchaser is acquiring the Partnership Interests "AS IS",
"WHERE IS", and that Sellers have not made and do not and will not make any
representations or warranties, express or implied, which might be pertinent
in considering whether to purchase the Partnership Interests or to make and
enter into this Agreement, except, in each case, to the extent of the
limited representations set forth in Section 2 hereof. Sellers are not
liable or bound in any manner by any warranties, either express or implied,
guarantees, or any promises, statements, representations or information
pertaining to the Partnership Interests or to the value thereof made or
furnished by any broker or any agent, employee, servant or other person
representing or purporting to represent Sellers.
3.5 Purchase for Investment. Purchaser will acquire the Partnership
-----------------------
Interests for its own account for investment and not with a view toward any
resale or distribution thereof, without prejudice, however, to the rights
of Purchaser at all times to sell or otherwise dispose of all or any part
of the Partnership Interests under the Securities Act of 1933, as amended
(the "Securities Act"), or under an exemption from such registration
available under the Securities Act. Purchaser is an "accredited investor"
as defined under Regulation D of the Securities Act and has substantial
experience in purchasing investments similar to the Partnership Interests.
Purchaser has evaluated the merits and risks inherent in purchasing the
Partnership Interests and is a able to bear the financial risks of such
investment.
3.6 Tax Status. Purchaser is neither a "foreign person" within the
----------
meaning of Sections 897 and 1445 of the Internal Revenue Code of 1986, as
amended (the "Code"), nor a "tax-exempt entity" within the meaning of
Section 168(h)(2) of the Code.
3.7 Brokers. Purchaser has no liability or obligation to pay any
-------
fees or commissions to any broker, finder or agent with respect to the
transactions
5
<PAGE>
contemplated by the Agreement and no such person or entity claims any of
the foregoing with respect to the transactions contemplated by this
Agreement.
4. Covenants
---------
4.1 Consents. Purchaser will use reasonable efforts to obtain, prior
--------
to January 14, 2000, all consents required for the admission of Purchaser
as a substitute limited partner in each Fund (the "Consents"); provided
that Sellers shall have cooperated with Purchaser in obtaining such
Consents and in complying with the applicable requirements of the Fund
Agreements prior to such time. Purchaser shall pay all costs incurred by
it in connection with obtaining the Consents and effecting the admission of
Purchaser as a substitute limited partner in each Fund, including any
amounts payable to any General Partner pursuant to a Fund Agreement.
4.2 Delivery of Documents. Prior to Closing, Sellers shall deliver
---------------------
to Purchaser all documents, or copies thereof, in its possession which
relate to any of the Funds and which do not contain any proprietary or
confidential information. Sellers may retain copies of any or all of such
documents.
4.3 Transfer Taxes. Purchaser shall pay when due all transfer taxes,
--------------
if any, imposed by any governmental authority with respect to the transfer
of the Partnership Interests to Purchaser, and shall indemnify and hold
Sellers harmless from and against any loss, liability or claim against or
incurred by Sellers as a result of Purchaser's failure to pay such transfer
taxes.
4.4 Allocation of Purchase Price. The Purchase Price shall be
----------------------------
allocated among the Partnership Interests in accordance with the schedule
attached hereto as Exhibit B. Each Seller and Purchaser shall utilize such
allocation in the preparation of all tax returns and financial statements
reflecting its sale or purchase, as the case may be, of the Partnership
Interests and shall not take any positions which are inconsistent
therewith.
5. Recapture Bonds
---------------
5.1 Procedures. Promptly after Closing, Purchaser and Sellers shall
----------
take the following actions in order to obtain any recapture bonds (the
"Bonds") required to be delivered to the Internal Revenue Service (the
"IRS") in order for Sellers to avoid any recapture of federal income tax
credits claimed by Sellers pursuant to Section 42 of the Code with respect
to their ownership of the Partnership Interests.
6
<PAGE>
(a) Sellers shall request from the IRS a 30-day extension of the
due date for providing the Bonds (such due date, as it may be extended
from time to time, is hereinafter referred to as the "Bonding Date");
(b) Purchaser shall use its best efforts to obtain a written
commitment from a surety selected by Purchaser and reasonably
acceptable to Sellers (the "Surety") which contains the following
provisions:
(i) if the Merger occurs prior to the Bonding Date and
Purchaser guarantees the obligations of Sellers to the Surety
with respect to the Bonds, the Surety will issue the Bonds on or
prior to the Bonding Date for a premium based on Purchaser's
credit rating;
(ii) if the Merger does not occur prior to the Bonding Date
and Purchaser does not guarantee the obligations of Sellers to
the Surety with respect to the Bonds, the Surety will issue the
Bonds on or prior to the Bonding Date for a premium based on
Sellers' credit rating; and
(iii) if the Merger occurs after the Bonding Date and the
Surety has already issued the Bonds for a premium based on
Sellers' credit rating and Purchaser then delivers to the Surety
a guarantee of the obligations of Sellers to the Surety with
respect to the Bonds, then the surety will pay to the Purchaser,
in exchange for such guarantee, an amount equal to the excess of
(x) the premium charged for the Bonds based on Sellers' credit
rating over (y) the premium that would have been charged for the
Bonds based on Purchaser's credit rating.
(c) Purchaser and Sellers shall cooperate with each other and
prepare, execute and deliver such documents and forms as may be
necessary to obtain the Bonds prior to the Bonding Date.
5.2 Merger Occurs Prior to Bonding Date. If the Merger occurs prior
-----------------------------------
to the Bonding Date, whether or not the commitment described in Section
5.1(b) is obtained, Purchaser will (a) provide such guarantee or other form
of credit enhancement as may be required in order to cause a surety to
issue the Bonds on behalf of Sellers on or prior to the Bonding Date and
(b) pay directly to such surety the full amount of all premiums payable as
consideration for the issuance of the Bonds.
5.3 Bonding Date Occurs Prior to Merger. If the Bonding Date occurs
-----------------------------------
prior to the Merger, whether or not the commitment described in Section
5.1(b) is
7
<PAGE>
obtained, Sellers will (a) cause a surety to issue the Bonds on behalf of
Sellers on or prior to the Bonding Date and (b) pay directly to such surety
any premium then due as consideration for the issuance of the Bonds. Within
two business days after the later of (x) the consummation of the Merger and
(y) the delivery by Sellers to Purchaser of a receipt and/or invoice for
any premium paid and/or payable as consideration for the issuance of the
Bonds, Purchaser will pay to Sellers an amount equal to such premium. If,
after the Merger, Purchaser guarantees the obligations of Sellers to a
surety with respect to the Bonds, then Purchaser shall be entitled to
retain any rebate or other payment made by such surety in exchange for
Purchaser's guarantee.
5.4 Merger Does Not Occur. If any agreement with respect to the
---------------------
merger is not executed prior to January 31, 2000, or following execution
such agreement is terminated for any reason, Purchaser shall pay $435,000
to Sellers within two business days after the applicable date and, upon
such payment, shall be relieved of any further obligations under this
Section 5.
5.5 Merger Occurs but Bonds Not Obtained. If, for any reason other
------------------------------------
than the willful failure by Sellers to comply with the provisions of this
Section 5, the Sellers are unable to obtain the Bonds and the Merger is
consummated despite the absence of the Bonds, Purchaser shall pay, and
hereby agrees to pay, to Sellers an amount equal to fifty percent (50%) of
any "credit recapture amount" (as defined in Section 42(j)(2) of the Code)
of Sellers resulting from the transfer of the Partnership Interests
pursuant hereto.
5.6 Payments. Any amounts payable to Sellers pursuant to Section
--------
5.3, Section 5.4 or Section 5.5 shall be paid by wire transfer of
immediately available U.S. funds to an account designated by Sellers. Any
amount payable by Purchaser pursuant to Section 5.3 shall be paid in such
manner as shall be agreed upon by Purchaser and the surety.
5.7 Recapture Premium. For purposes of this Agreement, the term
-----------------
"Recapture Premium" shall mean the amount payable by Purchaser pursuant to
Section 5.2, Section 5.3 (less any rebate or other payment received by
Purchaser from a surety), Section 5.4 or Section 5.5, as the case may be.
5.8 Purchaser to Include Affiliates. For purposes of the foregoing
-------------------------------
provisions of this Section 5, the term "Purchaser" also includes any
affiliate of Purchaser that performs any of the obligations of Purchaser
under this Section 5.
6. Closing Conditions
------------------
8
<PAGE>
6.1 Conditions to Obligations of Purchaser. The obligation of
--------------------------------------
Purchaser to consummate the transactions contemplated by this Agreement is
subject to the satisfaction or waiver of the following conditions:
(a) the representations and warranties set forth in Section 2
shall be true and correct in all material respects as of the Closing
Date;
(b) Sellers shall have performed and complied with all their
covenants hereunder in all material respects through the Closing Date;
(c) there shall not be any injunction, judgment, order, decree or
ruling in effect preventing consummation of any of the transactions
contemplated by this Agreement;
(d) Sellers shall have delivered to Purchaser a Closing
Certificate in the form attached hereto as Exhibit C;
(e) to the extent that Sellers have previously granted security
interests to the Funds with respect to the Partnership Interests,
Sellers shall have delivered to Purchaser, with respect to each such
Partnership Interest, a copy of a termination statement evidencing the
termination of the applicable Fund's security interest in such
Partnership Interest or such other documentation reasonably
satisfactory to Purchaser which evidences that the security interest
has been terminated;
(f) each of the required Consents shall have been obtained and
appropriate documentation, in each case in the form specified by the
respective Fund Agreement and otherwise in form and substance
reasonably satisfactory to Purchaser, shall have been executed by all
relevant parties to effect the transfer of the Partnership Interests
to Purchaser and the admission of Purchaser as a substitute limited
partner in each Fund; and
(g) Sellers shall have delivered to Purchaser a Certificate of
Non-Foreign Status in the form attached hereto as Exhibit D.
6.2 Conditions to Obligations of Seller. The obligation of Sellers
-----------------------------------
to consummate the transactions contemplated by this Agreement is subject to
the satisfaction or waiver of the following conditions:
(a) the representations and warranties set forth in Section 3
shall be true and correct in all material respects as of the Closing
Date;
9
<PAGE>
(b) Purchaser shall have performed and complied with all its
covenants hereunder in all material respects through the Closing Date;
(c) there shall not be any injunction, judgment, order, decree or
ruling in effect preventing consummation of any of the transactions
contemplated by this Agreement;
(d) Purchaser shall have delivered to Sellers a Closing
Certificate in the form attached hereto as Exhibit E; and
(e) each of the required Consents shall have been obtained and
appropriate documentation, in each case in the form specified by the
respective Fund Agreement and otherwise in form and substance
reasonably satisfactory to Sellers, shall have been executed by all
relevant parties to effect the transfer of the Partnership Interests
to Purchaser and the admission of Purchaser as a substitute limited
partner in each Fund, and Purchaser shall have cooperated with Sellers
in complying with the applicable requirements set forth in the Fund
Agreements relating to the transfer of the Partnership Interests to
Purchaser and the admission of Purchaser as a substitute limited
partner.
7. Miscellaneous
-------------
7.1 No Third Party Beneficiaries. This Agreement shall not confer
----------------------------
any rights or remedies upon any person other than the parties and their
respective successors and permitted assigns.
7.2 Succession and Assignment. This Agreement shall be binding upon
-------------------------
and inure to the benefit of the parties named herein and their respective
successors and permitted assigns. No party may assign either this
Agreement or any of its rights, interests, or obligations hereunder without
the prior written approval of the other party.
7.3 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
7.4 Headings. The section headings contained in the Agreement are
--------
inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Agreement.
7.5 Notices. All notices, requests, demands, claims, and other
-------
communications hereunder will be in writing. Any notice, request, demand,
claim,
10
<PAGE>
or other communication hereunder shall be deemed duly given two business
days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set
forth below:
If to Sellers prior to the Merger:
---------------------------------
Echelon International Corporation
and Echelon Affordable Housing, Inc.
450 Carillon Parkway, Suite 200
St. Petersburg, Florida 33716
Attn: Susan Glatthorn Johnson, Esq.
Telecopy No: (727) 803-8203
with a copy, which shall not constitute notice, prior to the
Merger, to:
White & Case LLP
1155 Avenue of the Americas
New York, New York, 10036-2787
Attn: William F. Wynne, Jr., Esq.
Telecopy No: (212) 354-8113
If to Sellers after the Merger:
------------------------------
950 Third Avenue
New York, New York 10022
Attn: James Haber
Telecopy No: (212) 688-7908
with a copy, which shall not constitute notice, after the Merger,
to:
Brown Raysman Millstein Felder and Steiner LLP
120 West 45th Street
New York, New York 10036
Attn: Robert M. Unger, Esq.
Telecopy No: (212) 840-2429
If to Purchaser: Heller Affordable Housing, Inc
---------------
500 West Monroe
30th Floor
Chicago, Illinois 60661
11
<PAGE>
Attn: Larry Mandel
Telecopy No: (312) 441-7560
with a copy, which shall not constitute notice, to:
Paul, Hastings, Janofsky & Walker LLP
600 Peachtree St., NE, Suite 2400
Atlanta, Georgia 30308
Attn: Philip J. Marzetti, Esq.
Telecopy No. (404) 815-2424
Any party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth
above using any other means (including personal delivery, expedited
courier, messenger service, telecopy, telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim or other communication
shall be deemed to have been duly given unless and until it actually is
received by the intended recipient. Any party may change the address to
which notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other party notice in the
manner herein set forth.
7.7 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the domestic laws of the State of New York without
giving effect to any choice or conflict of law provision or rule (whether
of the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New
York.
7.8 Amendments and Waivers. No amendment of any provision of this
----------------------
Agreement shall be valid unless the same shall be in writing and signed by
Purchaser and Sellers. No waiver by any party of any default,
misrepresentation, or beach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent
such occurrence.
7.9 Severability. If any term, provision, covenant or restriction
------------
contained in this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its
regulatory policy, the remainder of the terms, provisions, covenants and
restrictions contained in this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
12
<PAGE>
7.10 Expenses. Except as otherwise specifically provided herein,
--------
each party hereto will bear its own costs and expenses (including legal
fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby.
7.11 Construction. The parties have participated jointly in the
------------
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement. Any reference to
any federal, state, local, or foreign statute or law shall be deemed also
to refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise. The word "including" shall mean including
without limitation.
7.12 Knowledge. When any representation or warranty contained in
---------
this Agreement is expressly qualified by the knowledge of Sellers, such
knowledge shall mean the actual knowledge of Larry J. Newsome, James R.
Hobbs, Jr. and Dan R. Johnson.
7.13 Incorporation of Exhibits and Schedules. The Exhibits and
---------------------------------------
Schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.
7.14 Entire Agreement. This Agreement constitutes the entire
----------------
agreement among the parties and supersedes any prior understandings,
agreements, or representations by or among the parties, written or oral, to
the extent they have related in any way to the subject matter hereof.
7.15 Termination. This Agreement shall terminate automatically if
-----------
the Closing does not occur on or before January 14, 2000, unless the
Closing Date is extended by mutual agreement of all the parties hereto.
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
PURCHASER: HELLER AFFORDABLE HOUSING, INC.
By:_______________________________________
Name:________________________________
Title:_______________________________
SELLERS: ECHELON INTERNATIONAL CORPORATION
By:_______________________________________
Name:________________________________
Title:_______________________________
ECHELON AFFORDABLE HOUSING, INC.
By:_______________________________________
Name:________________________________
Title:_______________________________
14
<PAGE>
EXHIBIT A
DESCRIPTION OF PARTNERSHIP INTERESTS
<TABLE>
<CAPTION>
Taxpayer Tax Shelter Number of Holding in
State of Identification Registration Units Held Certificate
Name of Fund Organization Number Number of Fund Form?
========================================================================================================
<S> <C> <C> <C> <C> <C>
American Tax
Credit Corporate Delaware 31-1455367 96058000264 4 No
Fund III, L.P.
KeyCorp
Investment Ohio 34-1811098 6 No
Limited
Partnership II
Lehman Housing
Tax Credit Fund New York 13-3928458 95276000023 6.738544 Yes
L.P.
Lehman Housing
Tax Credit Fund Delaware 13-3932050 97241000369 8.673 Yes
VI L.P.
National
Corporate Tax California 95-4593894 97139000133 5 No
Credit Fund VII
</TABLE>
15
<PAGE>
EXHIBIT B
ALLOCATION OF PURCHASE PRICE
The cash portion of the Purchase Price payable pursuant to Section 1.2(a)
of the Agreement shall be allocated among the Partnership Interests as follows:
Partnership Interest Price
-------------------- -----
Lehman Housing Tax Credit Fund L.P. $ 4,452,826
Lehman Housing Tax Credit Fund VI L.P. 5,720,099
KeyCorp Investment Limited Partnership II 4,989,556
National Corporate Tax Credit Fund VII 3,092,815
American Tax Credit Corporate Fund III, L.P. 2,809,704
===========
TOTAL $21,065,000
The Recapture Premium payable pursuant to Sections 1.2(b) and 5 of the
Agreement shall be allocated among the Partnership Interests in the same ratios
as the foregoing cash portion of the Purchase Price is allocated among such
Partnership Interests.
16
<PAGE>
EXHIBIT C
CLOSING CERTIFICATE
Pursuant to Section 6.1(d) of the Purchase Agreement between Echelon
International Corporation and Echelon Affordable Housing, Inc. ("Sellers") and
Heller Affordable Housing, Inc. ("Purchaser") made and entered into as of
January 13, 2000 (the "Purchase Agreement"), the undersigned hereby certify on
behalf of Sellers as follows:
(1) The representations and warranties of Sellers set forth in
Section 2 of the Purchase Agreement are true and correct in all material
respects as of the date hereof;
(2) Sellers have performed and complied with all its covenants
under the Purchase Agreement in all material respects through the date
hereof; and
(3) No injunction, judgment, order, decree or ruling is in effect
with respect to Seller which would prevent the consummation of the
transactions contemplated by the Purchase Agreement.
This ____ day of January, 2000.
ECHELON INTERNATIONAL CORPORATION
By: ___________________________
Name:______________________
Title:_____________________
ECHELON AFFORDABLE HOUSING, INC.
By: ___________________________
Name:______________________
Title:_____________________
17
<PAGE>
EXHIBIT D
CERTIFICATE OF NON-FOREIGN STATUS
In order to comply with Sections 897 and 1445 of the Internal Revenue
Code (the "Code"), the undersigned hereby certify on behalf of Echelon
International Corporation and Echelon Affordable Housing, Inc. (the "Sellers")
as follows:
(1) Neither Seller is a "foreign person" within the meaning of
Section 7701 of the Code;
(2) The employer identification number of Echelon International
Corporation is 59-2554218, and the employer identification number of
Echelon Affordable Housing, Inc. is 59-3420655;
(3) The address of each Seller is 450 Carillon Parkway, Suite
200, St. Petersburg, Florida 33716; and
(4) Each Seller understands that this certification may be
disclosed to the Internal Revenue Service and that any false statement
contained herein could be punished by fine, imprisonment or both.
Under penalties of perjury, the undersigned declare that they have
examined this certification and, to the best of their knowledge and belief, it
is true, correct and complete, and they further declare that they have the
authority to sign this certification on behalf of the Sellers.
This _____ day of January, 2000.
ECHELON INTERNATIONAL CORPORATION
By: ___________________________
Name:______________________
Title:_____________________
ECHELON AFFORDABLE HOUSING, INC.
By: ___________________________
Name:______________________
Title:_____________________
18
<PAGE>
EXHIBIT E
CLOSING CERTIFICATE
Pursuant to Section 6.2(d) of the Purchase Agreement between Echelon
International Corporation and Echelon Affordable Housing, Inc. ("Sellers") and
Heller Affordable Housing, Inc. ("Purchaser") made and entered into as of
January 13, 2000 (the "Purchase Agreement"), the undersigned hereby certifies on
behalf of Purchaser as follows:
(1) The representations and warranties of Purchaser set forth in
Section 3 of the Purchase Agreement are true and correct in all material
respects as of the date hereof;
(2) Purchaser has performed and complied with all its covenants under
the Purchase Agreement in all material respects through the date hereof;
and
(3) No injunction, judgment, order, decree or ruling is in effect with
respect to Purchaser which would prevent the consummation of the
transactions contemplated by the Purchase Agreement.
This ____ day of January, 2000.
HELLER AFFORDABLE HOUSING, INC.
By: ___________________________
Name:______________________
Title:_____________________
19
