SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): November 25, 1997
FREEDOM TAX CREDIT PLUS L.P.
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(Exact Name of Registrant as Specified in Charter)
Delaware
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(State or other Jurisdiction of Incorporation)
0-24652 13-3533987
(Commission File Number) (IRS Employer Identification Number)
625 Madison Avenue, New York, NY 10022
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(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (212) 421-5333
Not Applicable
- - --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report
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Item 1. Changes in Control of Registrant
On November 25, 1997, affiliates of Related Freedom Associates L.P.
("RFA") and Freedom GP Inc. ("FGP"), general partners of Freedom Tax Credit Plus
L.P. (the "Partnership") executed a Purchase Agreement (the "Purchase
Agreement") pursuant to which FGP agreed to sell and an affiliate of RFA agreed
to purchase 100% of the stock of FGP (the "Transfer"). The Purchase Agreement
also reflected the transfer of 100% of the stock from affiliates of FGP to
affiliates of RFA in four additional partnerships that affiliates of FGP and RFA
are general partners as well as the transfer of general partner interest in
three partnerships that affiliates of FGP and RFA are general partners (the
"Additional Partnerships"). Pursuant to the Amended and Restated Partnership
Agreement (the "Partnership Agreement"), the consent of the Limited Partners of
the Partnership was not required to approve the Transfer. In addition to the
Transfer, RFA acquired FGP's general partner interest in Freedom SLP, L.P., the
Special Limited Partner of the Partnership.
The terms of the Transfer in the Purchase Agreement allowed for the
Partnership to pay FGP the accrued asset management fees from both the
Partnership and the Additional Partnerships in the aggregate amount of $922,789.
A payment from affiliates of RFA was made to affiliates of FGP in the aggregate
amount of $1,002,788 with respect to both the Partnership and the Additional
Partnership.
Additional terms of the Transfer are further described in the Purchase
Agreement which is attached as an exhibit to this Form 8-K.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a). Financial Statements
Not Applicable
(b). Pro Forma Financial Information
Not Applicable
(c). Exhibits
99.1 Purchase Agreement among Related Capital Company and LB I Group,
Inc., DA Holdings, Inc., Advantaged Housing Associates Inc., and
Liberty GP, Inc. dated as of October 22, 1997 and executed on November
25, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Freedom Tax Credit Plus L.P.
(Registrant)
By: Related Freedom Associates L.P.,
a General Partner
By: Related Freedom Associates Inc.,
a General Partner
BY: /s/ Stuart J. Boesky
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Stuart J. Boesky
Vice President
December 5, 1997
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EXHIBIT 99.1
PURCHASE AGREEMENT
PURCHASE AGREEMENT, made this 22nd day of October, 1997 (this
"Agreement"), by and among Related Capital Company, a New York general
partnership ("Related"), LB I Group Inc., a Delaware corporation ("LB I Group"),
DA Group Holdings Inc., a Delaware corporation ("DA"), Advantaged Housing
Associates Inc., a Delaware corporation ("AHA"), and Liberty GP Inc., a Delaware
corporation ("Liberty" and collectively with LB I Group, DA and AHA, the
"Seller"). The "Purchaser" of the Interests (as defined) will be one or more
entities to be designated by Related. The "Purchaser and its Affiliates" shall
include the Purchaser, Related and their respective directors, officers and
employees, but shall not include the Partnerships (as defined).
WHEREAS, LB I Group is the sole stockholder of AHA, Liberty,
Government Assisted Properties Inc., a Delaware corporation ("GAP"), Assisted
Housing Inc., a Delaware corporation ("Assisted"), Liberty GP II Inc., a
Delaware corporation ("Liberty II"), Assisted Housing Associates Inc., a
Delaware corporation ("Housing"), and Subsidized Housing Services II Inc., a
Delaware corporation ("SHSII");
WHEREAS, DA is the sole stockholder of Freedom GP Inc., a Delaware
corporation ("Freedom"), Sharpstown Center Inc., a Delaware corporation
("Sharpstown"), and Liberty GP III Inc., a Delaware corporation ("Liberty III");
WHEREAS, GAP is the general partner of Cambridge + Related Housing
Properties Limited Partnership ("C+R" and the stock of GAP is the "C+R
Interest");
WHEREAS, Assisted is the general partner of Cambridge Advantaged
Properties Limited Partnership ("CAP" and the stock of Assisted is the "CAP
Interest");
WHEREAS, AHA is a general partner of Cambridge Advantaged Properties
II Limited Partnership ("CAP II"), a general partner of Related and Cambridge
Associates, L.P. ("R and
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C"), and a general partner of H/R Florida Associates ("H/R" and such general
partner interests in CAP II, R and C and H/R are collectively referred to as the
"CAP II Interest");
WHEREAS, Liberty is the general partner and special limited partner
of Liberty Tax Credit Plus L.P. ("Liberty Partnership" and such general and
special limited partner interests are the "Liberty Interest");
WHEREAS, Liberty II is the general partner of Liberty Tax Credit
Plus II L.P. ("Liberty II Partnership" and the stock of Liberty II is the
"Liberty II Interest");
WHEREAS, Liberty III is the general partner of Liberty Tax Credit
Plus III L.P. ("Liberty III Partnership" and the stock of Liberty III is the
"Liberty III Interest");
WHEREAS, Housing is a general partner of C/R Special Limited
Partnership ("C/R Special Partnership" and the stock of Housing is the "Housing
Interest");
WHEREAS, Freedom is the general partner of Freedom Tax Credit Plus
L.P. ("Freedom Partnership" and the stock of Freedom is the "Freedom Interest");
WHEREAS, Sharpstown is the sole stockholder of Sharpstown Center
Subsidiary Inc. which in turn is the general partner of Sharpstown Center
Associates ("Sharpstown Partnership" and the stock of Sharpstown is the
"Sharpstown Interest");
WHEREAS, SHSII (the stock of which is the "SHSII Interest") is the
general partner of (i) Subsidized Housing Partners I, a Delaware limited
partnership ("SHPI"), (ii) Fresno Subsidized Housing Partners II, a Delaware
limited partnership ("SHPII"), (iii) Subsidized Housing Partners IV, a Delaware
limited partnership ("SHPIV"), and (iv) Subsidized Housing Partners V, a
Delaware limited partnership("SHPV");
WHEREAS, Lehman Capital Corporation holds a Promissory Note issued
by Sheridan Square Associates of Lawton, a subsidiary
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partnership of CAP II, dated April 8, 1993 in the principal amount of $2,300,000
and SLH Lending Corp. holds a Promissory Note issued by Sheridan Square
Associates of Lawton, dated April 8, 1993, in the principal amount of $1,100,000
(collectively, the "Sheridan Notes");
WHEREAS, (i) SLB Lending Corp. is owed $171,978.06 from SHPII and
$624.99 from SHPIV and (ii) Subsidized Housing Partners Inc. (collectively with
SLB Lending Corp., the "SHP Noteholders") is owed $2,000 from SHPI and $1,414.70
from SHPII (such amounts owing to the SHP Noteholders collectively referred to
as the "SHP Notes").
WHEREAS, the C+R Interest, the CAP Interest, the CAP II Interest,
the Liberty Interest, the Liberty II Interest, the Liberty III Interest, the
Housing Interest, the Freedom Interest, the Sharpstown Interest, the SHSII
Interest, the Sheridan Notes and the SHP Notes are collectively referred to as
the "Interests." C+R, CAP, CAP II, Liberty Partnership, Liberty II Partnership,
Liberty III Partnership, C/R Special Partnership, Freedom Partnership, SHPI,
SHPII, SHPIV, SHPV and Sharpstown Partnership are collectively referred to as
the "Partnerships";
WHEREAS, DA desires to sell the Freedom Interest, the Liberty III
Interest and the Sharpstown Interest;
WHEREAS, LB I Group desires to (a) sell the C+R Interest, the CAP
Interest, the Liberty II Interest, the Housing Interest and the SHSII Interest
(b) cause AHA to sell the CAP II Interest, (c) cause Liberty to sell the Liberty
Interest, (d) cause SLH Lending Corp. and Lehman Capital Corporation to sell the
Sheridan Square Notes and (e) cause the SHP Noteholders to sell the SHP Notes.
WHEREAS, Purchaser desires to purchase the Interests from the
Seller, and Seller desires to sell the Interests to the Purchaser, upon the
terms hereinafter set forth, for the consideration set forth herein.
NOW THEREFORE, in consideration of the mutual covenants
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contained herein and intending to be legally bound hereby, the parties hereto
agree as follows:
ARTICLE I
PURCHASE AND SALE OF INTERESTS
1.1 Transfer of Interests. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date, (a) the Seller shall sell,
convey, assign and transfer to the Purchaser and (b) the Purchaser shall
purchase, acquire and accept from the Seller, all of Seller's right, title and
interest in the Interests.
1.2 Purchase Price. In consideration for the sale and transfer of
the Interests the Purchaser shall pay the applicable Sellers, in the aggregate,
in cash either (i) in the case where Seller chooses Option One as set forth in
Sections 6.2 and 6.3, $2,895,567 or (ii) in the case where Seller chooses Option
Two as set forth in Sections 6.2 and 6.3, $2,645,567 (in the alternative, the
"Purchase Price"), reduced in each case by the amount of any Additional
Distributions (as defined).
1.3 Assumption of Obligations. In connection with the sale and
purchase of the CAP II Interest and the Liberty Interest, the applicable
Purchaser agrees to assume, pay, perform, discharge and satisfy, when due, and
be responsible for all duties and obligations of the Seller (or any of their
affiliates) related to the Interests arising on and after the Closing, excluding
obligations arising from conduct or actions occurring prior to the Closing.
1.4 Closing.
(a) Upon the terms and subject to the conditions of this
Agreement, the consummation of the transactions contemplated by this Agreement
(the "Closing") will take place on the first business day following the
satisfaction or waiver of the conditions set forth in Article II hereof, at
10:00 a.m., at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919
Third Avenue, New York, New York, or at such other time and place
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as shall be agreed upon by the parties. The date on which the Closing occurs is
hereinafter referred to as the "Closing Date."
(b) At the Closing, the Seller shall deliver or cause to be
delivered to the applicable Purchaser (unless previously delivered), the
following: (i) a duly executed Assignment and Assumption Agreement, in
substantially the form of Exhibit A hereto; (ii) the Shares duly endorsed for
transfer to the applicable Purchaser or accompanied by a duly executed stock
power relating thereto; (iii) a certificate of the Corporate Secretary of LB I
Group or DA, as applicable, evidencing that the Seller has taken all corporate
action necessary to authorize the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby; (iv) the Seller's
Officer's Certificate; and (v) such other documents of title, assignments,
instruments of sale, conveyance or transfer or other documents and certificates
duly executed as the Purchaser may reasonably request prior to the Closing Date
in order to effect the transactions contemplated by this Agreement.
(c) At the Closing, the applicable Purchaser shall deliver
or cause to be delivered to the Seller (unless previously delivered), the
following: (i) the Purchase Price, in immediately available funds by wire
transfer to an account or accounts at a United States bank or banks as specified
in writing by the Seller at least one business day prior to the Closing; (ii) if
the applicable Purchaser is a corporation or limited liability company,
certified corporate resolutions of the Purchaser evidencing that the Purchaser
has taken all corporate action necessary to authorize the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby;
(iii) if the applicable Purchaser is a partnership, certified resolutions of the
partnership signed by all general partners thereof evidencing that the Purchaser
has taken all partnership action necessary to authorize the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby; (iv) the Purchaser's Certificate; and (v) such other documents and
certificates duly executed as the Seller may reasonably request prior to the
Closing Date in order to effect the transactions contemplated by this Agreement.
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ARTICLE II
CONDITIONS
2.1 Conditions to Each Party's Obligations. The respective
obligation of Seller and Purchaser to effect the transactions contemplated by
this Agreement shall be subject to the satisfaction at or prior to the Closing
of the following conditions:
(a) Subject to Section 5.16 hereto, the third party consents
set forth on Schedule 2.1 hereto (collectively, the "Authorizations") shall have
occurred, been filed or been obtained and not rescinded. Subject to Section 5.8,
Seller shall pay the costs associated with obtaining the Authorizations;
provided that no party hereto shall have liability to any other arising from or
related to any failure to obtain Authorizations of the limited partners of the
Partnerships to the transactions contemplated hereby; provided further that no
party hereto shall be required to pay to any party providing an Authorization
any amount in respect of such Authorization.
(b) There shall not (i) be in effect any statute,
regulation, order, decree or judgment of any Governmental Entity which makes
illegal or enjoins or prevents the consummation of the transactions contemplated
by this Agreement or (ii) have been commenced or threatened any action or
proceeding by any Governmental Entity which seeks to prevent or enjoin the
transactions contemplated by this Agreement.
2.2 Conditions to Obligations of the Purchaser. The obligation of
the Purchaser to effect the transactions contemplated by this Agreement shall be
further subject to the satisfaction at or prior to the Closing of the following
conditions:
(a) The representations and warranties of the Seller in this
Agreement shall be true and correct in all mate-
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rial respects as of the date hereof and as of the Closing Date with the same
effect as though such representations and warranties had been made at and as of
such time, other than representations and warranties that expressly speak as of
a specific date or time (which need only be true and correct as of such date or
time).
(b) The Seller shall have performed in all material respects
all obligations required to be performed by it under this Agreement at or prior
to the Closing.
(c) The Seller shall have delivered or caused to be
delivered to the Purchaser each of the documents specified in Section 1.4(b)
hereof.
(d) The Purchaser shall have received from Seller a
certificate, dated the Closing Date, duly executed by an officer of Seller,
reasonably satisfactory in form to the Purchaser, to the effect of (a) and (b)
above (the "Seller's Officer's Certificate").
2.3 Conditions to Obligations of the Seller. The obligation of the
Seller to effect the transactions contemplated by this Agreement shall be
further subject to the satisfaction at or prior to the Closing of the following
conditions:
(a) The representations and warranties of the Purchaser and
Related in this Agreement shall be true and correct in all material respects as
of the date hereof and as of the Closing Date with the same effect as though
such representations and warranties had been made at and as of such time, other
than representations and warranties that speak as of a specific date or time
(which need only be true and correct in all material respects as of such date or
time).
(b) The Purchaser and Related shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing.
(c) The Purchaser shall have delivered or caused
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to be delivered to the applicable Seller each of the documents specified in
Section 1.4(c) hereof.
(d) The Seller shall have received from the Purchaser and
Related a certificate, dated the Closing Date, duly executed by all general
partners, an executive officer and the chief financial officer or chief
accounting officer, if such positions exist, of the Purchaser and Related,
reasonably satisfactory in form to the Seller, to the effect of (a) and (b)
above (the "Purchaser's Certificate").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as follows:
3.1 Organization; Good Standing; Authority. As of the date hereof,
each of LB I Group, DA, AHA, Liberty, GAP, Assisted, Liberty II, Liberty III,
Housing, Freedom, SHSII and Sharpstown is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and each
has all requisite power and authority to enter into and perform its obligations
under this Agreement.
3.2 Authorization; Binding Agreement. The execution, delivery and
performance of this Agreement and the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the part of LB
I Group, DA, AHA and Liberty. Subject to Section 8.7 hereof, this Agreement
constitutes a valid and binding obligation of each of LB I Group, DA, AHA and
Liberty, enforceable against each in accordance with its terms, except to the
extent that such enforceability may be limited by bankruptcy, insolvency or
other similar laws relating to creditors' rights generally and general equitable
principles.
3.3 No Conflict. The execution, delivery and performance by the
Seller of this Agreement and the consummation by the Seller of the transactions
contemplated hereby, will not (i)
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result in or constitute a material default, breach or violation of any of the
terms, conditions or provisions of the certificates of incorporation (or any
amendments or restatements thereof) or bylaws of the Seller, (ii) result in a
material violation of any provision of, or require any consent, authorization or
approval under, any judicial, administrative or arbitration order, award,
judgment, writ, injunction or decree applicable to, or any governmental permit
or license issued to, the Seller or by which its assets are bound, (iii)
conflict with, result in a material breach of, constitute a material default or
event of default (whether by notice or the lapse of time, or both) under or
accelerate or permit the acceleration of the performance required by the Seller
or require any consent, authorization or approval under, any indenture,
mortgage, lease, agreement or instrument to which the Seller is a party or by
which the Seller or its assets may be bound or (iv) result in the creation of
any lien, claim, option, security interest, charge or other encumbrance (an
"Encumbrance") upon the Interests, except, in each case, where failure to
satisfy such provision could not reasonably be expected to result in a material
adverse effect on the transfer of the Interests or the business of the
Partnerships or the issuers of the Shares.
3.4 Capitalization. The outstanding capital of C+R consists of
2,500 shares of common stock, par value $1.00 per share; the outstanding capital
of CAP consists of 1,000 shares of common stock, par value $1.00 per share; the
outstanding capital of Assisted consists of 2,500 shares of common stock, par
value $1.00 per share; the outstanding capital of Liberty II consists of 100
shares of common stock, par value $1.00 per share; the outstanding capital of
Liberty III consists of 100 shares of common stock, par value $1.00 per share;
the outstanding capital of Housing consists of 1,000 shares of common stock, par
value $1.00 per share; the outstanding capital of Freedom consists of 1,100
shares of common stock, par value $1.00 per share; the outstanding capital of
Sharpstown consists of 1,000 shares of common stock, par value $1.00 per share;
the outstanding capital stock of SHSII consists of 100 shares of common stock,
par value $1.00 per share (the shares of each entity being collectively referred
to as the "Shares"). The Shares have been duly authorized,
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validly issued, fully paid and are non-assessable.
3.5 Equity Interests. Seller is transferring to Purchaser good and
marketable title to the Interests, free and clear of any Encumbrance; the
Interests represent all of Seller's and its affiliates' interest in the
Partnerships, other than the obligations set forth in Section 5.6 hereof, and
Seller and its affiliates have never owned any equity interest in the
Partnerships other than the Interests and the obligations set forth in Section
5.6 hereof.
3.6 Convertible Securities. There are no outstanding options,
puts, calls, warrants or rights of any kind to acquire the Interests, and there
are no outstanding securities directly or indirectly convertible, exercisable or
exchangeable into the Interests, nor does the Seller have any obligations to
issue or enter into any agreements, options, puts, calls, warrants, rights or
securities.
3.7 Proxies. There are no existing proxies or arrangements that
require or permit any of the Interests to be voted by or at the direction of
anyone other than the record owner, and there are no restrictions of any kind on
the transfer of the Interests except as may be imposed by the Securities Act of
1933, the Securities and Exchange Act of 1934 or state securities laws.
3.8 Single Purpose Entities.
(a) The general partners referenced in the Recitals have not
conducted any business other than serving as general partners of the
Partnerships and taking and performing actions related or incidental thereto.
(b) Except as set forth in Schedule 6.2, the issuers of the
Shares have no material liabilities or obligations to any person or entity
(whether known or unknown, whether asserted or unasserted, whether actual or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated and
whether due or to become due). Except as set forth on Schedule
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6.2, during the past five years there have been no actions, suits, proceedings,
injunctions, judgments, orders, decrees or rulings against any issuer of an
Interest, SHPI, SHPII, SHPIV or SHPV.
(c) Each issuer of an Interest, or a parent corporation on
behalf of each issuer of an Interest, has duly, timely and properly filed or
will file within the time prescribed by law (including any applicable
extensions), all material federal, state, foreign, local and other Tax (as
defined) returns required to be filed by it with respect to it and such Tax
returns were, or when filed will be, complete and accurate. Each issuer of an
Interest, or a parent corporation on behalf of each issuer of an Interest, has
paid in full to all federal or state taxing authorities (or made adequate
provision in the Financial Statements with respect to Tax returns not yet due
for the payment of) all material Taxes due or claimed to be due on or in respect
to all such Tax returns. There is no pending or threatened Tax examination that
could result in Tax liability being imposed on an issuer of an Interest, nor is
any such person a party to any proceeding or inquiry by any Governmental
Authority for the assessment or the proposed assessment or for the collection of
Taxes, or interest or penalties with respect thereto, nor has any claim for the
assessment or proposed assessment or for the collection of Taxes, or interest or
penalties with respect thereto, been asserted that could result in Tax liability
being imposed on an issuer of an Interest. There are no liens for Taxes that are
due and unpaid on any of the properties or assets of an issuer of an Interest.
For purposes of this subsection 3.8(c), the term "material" shall mean each
event in which a claim for indemnification under Section 6.4 could exceed
$7,500.
(d) For purposes of this Agreement, the term "Tax" shall
mean all federal, state, county, local, foreign and other taxes, duties, or
similar charges imposed by any taxing authority or other Governmental Authority
on or payable by any issuer of an Interest or a member of a consolidated group
including any issuer of an Interest (including without limitation with respect
to or as a result of the transactions contemplated
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hereby) or with respect to business, operations, products, assets or properties
of any issuer of an Interest or a member of a consolidated group including any
issuer of an Interest, whether attributable to statutory or nonstatutory rules
and whether or not measured in whole or in part by net income, and including
interest, additions to tax and penalties with respect thereto, and any
obligations under the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
3.9 Encumbrances. The Interests are not subject to any
Encumbrance, agreement (written or oral), commitments or arrangements except as
set forth in the partnership agreements of the Partnerships.
3.10 Partnership Liabilities. Except as set forth on Schedule 3.10,
the Seller has not entered into any contract or agreement on behalf of the
Partnerships, or bound any of the Partnerships to any obligations other than
with the consent of the Purchaser or a co-general partner of an applicable
Partnership.
3.11 Employees. The general partners of the Partnerships have never
had any full or part time employees.
3.12 Broker's and Finder's Fee. Seller has not employed any broker,
finder, advisor or intermediary in connection with the transactions contemplated
by this Agreement that would be entitled to a broker's, finder's or similar fee
or commission in connection therewith.
3.13 Cash Balances. As of the date hereof and as of the Closing (i)
SHPI shall have cash on hand in the amount of at least $38,900 and (ii) SHPIV
shall have cash on hand in the amount of at least $22,900.
3.14 Net Worth. As of the date hereof, LB I Group has a net worth
in excess of $20.0 million, and in each of the last two fiscal years, LB I Group
had income in excess of $5.0 million.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND RELATED
Each Purchaser and Related hereby represent and warrant to Seller as
follows:
4.1 Organization and Good Standing. Related is a general
partnership duly organized, validly existing and in good standing under the laws
of the State of New York and has all requisite power and authority to enter into
and perform its obligations under this Agreement. As of the Closing, each entity
comprising the Purchaser will be an entity duly organized, validly existing and,
if applicable, in good standing under the laws of its jurisdiction of
organization and will have all requisite power and authority to perform its
obligations under this Agreement
4.2 Authority Relative to this Agreement. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
action on the part of Related. This Agreement constitutes a valid and binding
obligation of Related, enforceable against Related in accordance with its terms,
except to the extent that such enforceability may be limited by bankruptcy,
insolvency or other similar laws relating to creditors' rights generally and
general equitable principles.
4.3 No Conflict. The execution, delivery and performance by
Related of this Agreement and the consummation by Purchaser and Related of the
transactions contemplated hereby, will not (i) result in or constitute a
material default, breach or violation of any of the terms, conditions or
provisions of the partnership agreement of Related (or any amendment or
restatement thereof) or the organizational documents and operating agreements of
the Purchaser, (ii) result in a material violation of any provision of, or
require any consent, authorization or approval under, any judicial,
administrative or arbitration order, award,
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judgment, writ, injunction or decree applicable to, or any governmental permit
or license issued to, Related or Purchaser or by which their assets are bound or
(iii) conflict with, result in a material breach of, constitute a material
default or event of default (whether by notice or the lapse of time, or both)
under or accelerate or permit the acceleration of the performance required by
Related or Purchaser, or require any consent, authorization or approval under,
any indenture, mortgage, lien, lease, agreement or instrument to which Related
or Purchaser is a party or by which Related, Purchaser or their assets may be
bound, except, in each case, where failure to satisfy such provision could not
reasonably be expected to result in a material adverse effect on the transfer of
the Interests.
4.4 Purchase for Investment. The Interests acquired by Purchaser
under the terms of this Agreement are being acquired by Purchaser for its own
account for the purpose of investment and not with a view to, or for resale in
connection with, any distribution or public offering thereof.
4.5 Broker's and Finder's Fee. Neither Related nor Purchaser has
employed any broker, finder, advisor or intermediary in connection with the
transactions contemplated by this Agreement which would be entitled to a
broker's, finder's or similar fee or commission in connection therewith or upon
the consummation thereof.
4.6 No Pending Property Sales. Except as set forth on Schedule 4.6
hereof, Related is not aware of any pending sales of real property or interests
therein by any Partnership that is scheduled to close within 60 days of the date
hereof.
ARTICLE V
CERTAIN COVENANTS AND AGREEMENTS
5.1 Reasonable Efforts.
(a) Upon the terms and subject to the conditions
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of this Agreement, each of the parties hereto agrees to use its reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary or advisable under this Agreement and applicable laws
and regulations to consummate and make effective the transactions contemplated
by this Agreement as promptly as practicable including, but not limited to, the
preparation and filing of all forms, registrations and notices required to be
filed to consummate the transactions contemplated by this Agreement and the
taking of such actions as are necessary to obtain any approvals, consents,
orders, exemptions or waivers necessary or advisable in order to consummate the
transactions contemplated by this Agreement.
(b) Each party shall promptly consult with the other with
respect to, provide any necessary information with respect to and provide the
other copies of, all filings made by such party with any Governmental Entity or
any other information supplied by such party to a Governmental Entity in
connection with this Agreement and the transactions contemplated by this
Agreement. The Seller and the Purchaser further covenant and agree, with respect
to a threatened or pending preliminary or permanent injunction or other order,
decree or ruling or statute, rule, regulation or executive order that would
adversely affect the ability of the parties hereto to consummate the
transactions contemplated by this Agreement, to use their best efforts to
prevent the entry, enactment or promulgation thereof, as the case may be.
(c) Each party shall give the other prompt notice of (i) the
occurrence, or non-occurrence, of any event the occurrence or non-occurrence of
which would be likely to cause any representation or warranty of such party
contained in this Agreement to be untrue or inaccurate at or prior to the
Closing Date, and (ii) any failure of such party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 5.1 shall not limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
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<PAGE>
5.2 Further Assurances. Each party shall from time to time after
the Closing, without additional consideration, execute and deliver such further
instruments and take such other action as may be reasonably requested by the
other party to make effective the transactions contemplated by this Agreement;
provided however, that no party hereto shall be required to incur any costs to
satisfy this provision.
5.3 Taxes.
(a) Related or the Purchaser shall pay or cause to be paid
and shall indemnify, defend and hold harmless the Seller for any stock transfer
taxes, including any interest, penalty, or addition thereto, or other payments
required to be made by the Seller, Related, the Purchaser, the Partnerships or
any other party to any Governmental Entity or other Person in connection with
the transfer of the Interests pursuant to the terms of the Agreement; provided
however, that this provision shall not be construed to apply to any income tax,
real estate transfer tax, capital gains tax or fees or charges related thereto.
(b) The Seller shall pay or cause to be paid and shall
indemnify, defend and hold harmless the Purchaser for any real estate transfer
taxes, including any interest, penalty, or addition thereto, or other payments
required to be made by the Seller, Related, the Purchaser, the Partnerships or
any other party to any Governmental Entity or other Person in connection
therewith; provided however, that this provision shall not be construed to apply
to any income tax, stock transfer tax, capital gains tax or fees or charges
related thereto.
(c) Each of the Seller, Related and the Purchaser will be
responsible for the preparation of any tax returns with respect to any taxes
payable in connection with the transfer of the Interests for which it is liable.
(d) At the Purchaser's option, Seller will join with the
Purchaser in making an election under Section 338(h)(10) of the Internal Revenue
Code (the "Code") by filing Form 8023 and
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<PAGE>
any corresponding elections under state tax law (collectively, the "Election")
with respect to the purchase and sale of the Shares hereunder. The Seller will
pay any federal, state, local, or foreign tax attributable to the Election with
respect to the purchase and sale of the Shares hereunder.
5.4 Fees and Expenses. Except as otherwise provided in this
Agreement, whether or not the transactions contemplated by this Agreement are
consummated, each party shall bear its own fees and expenses incurred in
connection with the transactions contemplated by this Agreement.
5.5 Publicity. All press releases and public announcements
relating to this Agreement or the sale of the Interests shall be prepared
jointly by the parties hereto. Except as otherwise required by law, neither the
Purchaser nor the Seller shall, and each of them shall cause their respective
affiliates, representatives and agents not to, issue or cause the publication of
any press release or public announcement with respect to the transactions
contemplated by this Agreement without the express prior approval of the other
party.
5.6 Current Payments. Related, the Related GPs and Seller have
caused the Partnerships to, concurrently with the execution of this Agreement,
pay to Seller the current amounts due to Seller from the Partnerships, as set
forth on Schedule 5.6 hereto, totaling $2,920,574.00 (the "Current Payment").
5.7 Additional Distributions. Seller agrees that upon the request
of Related, Seller will join with Related and the Related GPs in causing the
applicable Partnerships to distribute to Related or the Related GPs or their
assignee the amounts set forth on Schedule 5.7 hereto. The Purchase Price set
forth in Section 1.2 will be reduced dollar-for-dollar to the extent any such
payments are assigned by Related or the Related GPs to Seller and actually paid
to Seller prior to or at the Closing ("Additional Distributions"). In addition
to the potential distributions set forth on Schedule 5.7 hereto, if C+R receives
additional cash as a result of property sales after the date hereof, at
Related's request Seller will join with Related and
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<PAGE>
the applicable Related GP in causing C+R to distribute up to $461,588 to the
applicable Related GP (or its assignee).
5.8 Authorizations. Purchaser, Related and Seller shall use their
reasonable efforts to obtain or cause to be obtained all Authorizations;
provided, however, no party hereto shall be required to pay to any party
providing an Authorization any amount in respect of such Authorization. Other
than as set forth on Schedule 2.1 hereto, no party hereto shall be obligated to
obtain the consents of limited partners of any Partnership and there shall be no
obligation on any party to indemnify another for any loss that results from
failure to obtain other limited partner consents.
5.9 Confidentiality. The Purchaser, Related and the Seller shall
at all times maintain the confidentiality of all confidential and/or proprietary
information of the Seller, Related and the Purchaser, and will not disclose such
information or use it for any purpose other than its evaluation of the proposed
transaction, without the prior consent of the other, or as otherwise required by
law. The Purchaser, Related and the Seller shall at all times maintain the
confidentiality of all confidential and/or proprietary information of the
Partnerships, except to the extent such disclosure is necessary or beneficial to
Seller in its defense of any litigation involving the Partnerships or as
otherwise required by law or judicial order. Purchaser, Related and Seller will
not disclose the existence or terms of this Agreement without the consent of the
other, except in accordance with the provisions of the next succeeding sentence.
Notwithstanding the provisions of this Section 5.9, the Purchaser, Related and
the Seller may disclose such information to their professional advisors and
selected financial institutions and investors in the course of negotiating the
financing of the proposed transactions, or as required in connection with any
borrowing or sale of securities by the Purchaser in order to comply with any
legal requirements. For the purpose of this Agreement, the term "confidential
and/or proprietary information" does not include information that (a) becomes
generally available to the public other than as a result of a disclosure not
permitted hereunder or (b) becomes available to the disclosing
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<PAGE>
person on a non-confidential basis from a source other than the Purchaser,
Related or a Partnership (in the case of Seller), or Seller (in the case of the
Purchaser and Related), provided that such source is not known by the disclosing
person to be bound by a confidentiality agreement.
5.10 Access to Information. From the date hereof until thirty days
following the Closing, the Seller shall permit representatives of the Purchaser
to have reasonable access during normal business hours (and upon advance notice)
to the Seller's management, records (including records on computer disc) and
facilities for the purpose of facilitating the transition. Related agrees that
the Purchaser will not interfere with the operations of the Seller's business or
disclose or use any confidential information with respect to the Seller obtained
at any time or in any manner and will not use such information in its business.
5.11 Access to Partnership Files. From the date hereof until the
conclusion of any litigation relating to the Interests or the Partnerships in
which LB I Group or Lehman Brothers Inc. or its affiliates are defendants, LB I
Group or its affiliates and their respective counsel, accountants and agents
shall have reasonable access during normal business hours (and upon advance
notice) to the records (including records on computer disc) of the Partnerships
or related to the Interests, for the purpose of defending such litigation. The
Seller agrees that it will not interfere with the operations of the Purchaser's
business or, except in connection with such litigation, disclose or use any
confidential information with respect to the Partnerships or the Interests
obtained at any time or in any manner and will not use such information in its
business.
5.12 Purchasing Entity. Related shall cause an affiliate of Related
to be the Purchaser of the C+R Interest, CAP Interest, CAP II Interest, Liberty
Interest, Liberty II Interest, Liberty III Interest, Housing Interest, Freedom
Interest and Sharpstown Interest (the "Related Interests"). At least five days
prior to closing, Related shall identify to the Seller the Purchaser(s) of the
Related Interests and the Purchasers of the
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SHSII Interest, the Sheridan Notes and the SHP Notes, and will forward all
organizational documents and operating and related agreements of such Purchasers
to Seller for Seller's review and comment.
5.13 Control of Litigation. Notwithstanding the sale of the
Interests, LB I Group and its affiliates shall retain the sole and exclusive
right to control any and all litigation set forth on Schedule 6.2 hereto.
5.14 No Action. Prior to Closing, without the prior written consent
of Related, Seller shall not cause the Partnerships to take, and shall not
permit the issuer of the Shares to take, any action outside the ordinary course
of business, unless the Seller determines that causing such actions are
otherwise required to be taken by the Seller or the general partners of the
Partnerships in their good faith performance of their fiduciary duties to the
limited partners of the Partnerships; provided that Seller shall notify Related
of any such action taken by it at the earliest time reasonably practicable.
5.15 Transfer of Additional Interests. By this Agreement, the
parties intend to transfer all of Seller's interest in the Partnerships as well
as all of Seller's interest in lower tier partnerships for which a Partnership
serves as limited partner or general partner ("Derivative Partnerships"). If
prior to the Closing either party hereto determines that not all the interests
in the Derivative Partnerships are included in the Interests to be transferred
hereunder, the parties will amend this Agreement to include the Seller's
interest in such Derivative Partnerships in the definition of "Interests" and
such additional interests in the Derivative Partnerships will be transferred at
the Closing, upon the terms and conditions of this Agreement, without additional
purchase price. If after the Closing either party hereto determines that not all
the interests in the Derivative Partnerships were transferred at the Closing,
the parties will consummate the transfer of Seller's interest in the Derivative
Partnerships upon terms and conditions reasonably acceptable to all parties
hereto, but without additional purchase
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price.
5.16 Sale of Sharpstown Interest.
(a) If the Authorization of the lender under the first
mortgage on the property owned by Sharpstown as set forth on Schedule 2.1 hereto
is not obtained prior to November 25, 1997, upon the satisfaction of all the
other closing conditions, the parties hereto shall proceed with the sale of the
Interests other than the Sharpstown Interest (the "Other Interests").
(b) If the parties hereto proceed with the sale of the Other
Interests pursuant to paragraph (a) above, the purchase price for the Other
Interests shall be the Purchase Price set forth in Section 1.2 hereto, and this
Agreement shall remain in full force and effect with respect to the Other
Interests.
(c) With respect to the Sharpstown Interest, if the
Authorization of the lender set forth in Schedule 2.1 is obtained prior to
January 31, 1998, and the Other Interests have been transferred pursuant to
paragraph (a) above, the parties will consummate the sale of the Sharpstown
Interest for a purchase price of $1.00 and on the terms and conditions set forth
in this Agreement.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification at Option of Seller. The parties hereto agree
that Sections 6.1, 6.4, 6.5, 6.6 and 6.7 hereof shall apply in all cases. In
addition, the Seller shall, in its sole determination, choose which set of
Sections 6.2 and 6.3, Option One or Option Two, shall apply to this Agreement.
Seller shall make such determination no later than 6:00 p.m. New York City time
on October 29, 1997 by sending written notice to Related by the means set forth
in Section 8.3.
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Option One
6.2 Indemnification of Purchaser. Upon the terms and subject to
the conditions of this Article VI, LB I Group agrees to indemnify and hold
harmless Purchaser and its Affiliates against any and all actions, suits,
proceedings, hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues, penalties,
fines, costs, amounts paid in settlement, obligations, taxes, liens, losses,
liabilities (whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), expenses, and fees, including
court costs and reasonable attorney's fees and expenses (collectively, "Losses")
resulting from, arising out of, relating to, in the nature of, or caused by (i)
any failure by Seller to perform or otherwise fulfill or comply with any
provision of this Agreement, (ii) any breach or violation of any representation
or warranty of Seller hereunder and (iii) any act or omission to act of LB I
Group, DA, AHA, Liberty, GAP, Assisted, Liberty II, Liberty III, Housing,
Freedom, SHSII or Sharpstown in their capacities as general partners in relation
to the Interests arising out of conduct or actions occurring prior to the
Closing, including, without limitation, any liabilities resulting from the
litigation set forth on Schedule 6.2 hereto; provided however, that this clause
(iii) shall not be construed to require LB I Group to indemnify and hold
harmless Purchaser and its Affiliates (including entities for which Purchaser
and its Affiliates serves as general partner) against any liability for Losses
that Purchaser and its Affiliates (including entities for which Purchaser and
its Affiliates serves as general partner) has or may have on the date hereof
without giving effect to the transfer of the Interests.
6.3 Indemnification of Seller. Upon the terms and subject to the
conditions of this Article VI, Related agrees to indemnify and hold harmless
Seller and its affiliates against any and all Losses resulting from, arising out
of, relating to, in the nature of, or caused by (i) any failure by Related or
Purchaser to perform or otherwise fulfill or comply with any provi-
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<PAGE>
sion of this Agreement, (ii) any breach or violation of any representation or
warranty of Related or Purchaser hereunder, (iii) any act or omission to act of
Related, Purchaser, the Related GPs, or their transferees occurring on or after
the Closing and (iv) the consummation of the transactions contemplated by this
Agreement; provided however that nothing contained in this Section 6.3 shall
apply to any matters arising from actions taken in the ordinary course of
business related to SHPI, SHPII, SHPIV or SHPIV.
Option Two
6.2 Indemnification of Purchaser. Upon the terms and subject to
the conditions of this Article VI, LB I Group agrees to indemnify and hold
harmless Purchaser and its Affiliates against any and all actions, suits,
proceedings, hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues, penalties,
fines, costs, amounts paid in settlement, obligations, taxes, liens, losses,
liabilities (whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), expenses, and fees, including
court costs and reasonable attorney's fees and expenses (collectively, "Losses")
resulting from, arising out of, relating to, in the nature of, or caused by (i)
any failure by Seller to perform or otherwise fulfill or comply with any
provision of this Agreement, (ii) any breach or violation of any representation
or warranty of Seller hereunder, (iii) any act or omission to act of SHSII in
its capacity as general partner of SHPI, SHPII, SHPIV or SHPV occurring prior to
the Closing and (iv) any litigation set forth on Schedule 6.2 hereto; provided
however, that neither clause (iii) nor clause (iv) shall be construed to require
LB I Group to indemnify and hold harmless Purchaser and its Affiliates
(including entities for which Purchaser and its Affiliates serves as general
partner) against any liability for Losses that Purchaser and its Affiliates
(including entities for which Purchaser and its Affiliates serves as general
partner) has or may have on the date hereof without giving effect to the
transfer of the Interests.
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6.3 Indemnification of Seller. Upon the terms and subject to the
conditions of this Article VI, Related agrees to indemnify and hold harmless
Seller and its affiliates against any and all Losses resulting from, arising out
of, relating to, in the nature of, or caused by (i) any failure by Related or
Purchaser to perform or otherwise fulfill or comply with any provision of this
Agreement, (ii) any breach or violation of any representation or warranty of
Related or Purchaser hereunder, (iii) any act or omission to act of Seller,
Related, Purchaser, the Related GPs, or their transferees in their capacity as
general partner in relation to the Interests whether occurring prior to, upon or
after the Closing and (iv) the consummation of the transactions contemplated by
this Agreement; provided however, that Related will not be liable for
indemnification of Seller for any judgment against AHA, Liberty or GAP as a
result of any litigation set forth on Schedule 6.2 hereto; provided further
however, that the preceding proviso shall not be construed to transfer from
Related or Purchaser to Seller any liability that Related or Purchaser may have
without regard to the transfer of the Interests; provided still further however
that with respect to SHPI, SHPII, SHPIV and SHPIV, this Section 6.3 shall apply
only to matters arising from actions after the Closing and taken outside the
ordinary course of business.
6.4 Tax Indemnity. Notwithstanding any other provision of this
Agreement to the contrary, LB I Group agrees to indemnify and hold harmless
Purchaser and its Affiliates for any and all Taxes attributable to any taxable
year or period ending on or before the Closing Date resulting from (i) any
amount includible in the income of any issuer of an Interest (x) in respect of
any deferred gain or loss arising from deferred intercompany transactions (as
described in Treasury Regulation Section 1.1502-13) or (y) with respect to the
stock or obligations of any other corporation (as described in Treasury
Regulation Section 1.1502-14), (ii) any liability or obligation of any issuer of
an Interest on account of Taxes due under Treasury Regulation Section 1.1502-6,
(iii) any Tax sharing agreements to which any issuer of an Interest is or was a
party, (iv) any elections made pursuant to Treasury Regulation Section
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1.1502-20, (v) any failure of any issuer of an Interest to withhold or remit
Taxes in the ordinary course of business, (vi) any agreement or waiver executed
by or on behalf of any issuer of an Interest extending the statutory period of
limitation applicable to any assessment or audit of Tax, (vii) failure of any
issuer of an Interest to timely and properly file within the time prescribed by
law (including any applicable extensions) any federal, state, local, foreign or
other Tax return required to be filed by an issuer of an Interest or (viii)
failure of any issuer of an Interest to pay in full to (or make adequate
provision for payment in full to) any federal or state taxing authority any Tax
due or claimed to be due on or in respect of any Tax return.
6.5 Claims. Any claim for indemnity under Section 6.2, 6.3 or 6.4
shall be made by written notice from the party seeking to be indemnified (the
"Indemnitee") to the party from which indemnification is sought (the
"Indemnifying Party") specifying in reasonable detail the basis of the claim.
When an Indemnitee seeking indemnification under Section 6.2, 6.3 or 6.4
receives a notice of any claim made by third parties ("Third Party Claims")
which is to be the basis for a claim for indemnification hereunder, the
Indemnitee shall give written notice within a reasonable period thereof to the
Indemnifying Party reasonably indicating the nature of such claims and, if
known, the basis thereof. Upon notice from the Indemnitee, the Indemnifying
Party shall be entitled to assume the defense of any such Third Party Claim for
which the Indemnitee is entitled to indemnification pursuant to this Article VI,
including its compromise or settlement, and the Indemnifying Party shall pay all
reasonable costs and expenses thereof and shall be fully responsible for the
outcome thereof, provided, however, that (i) the Indemnifying Party shall not
settle any such claim without the Indemnitee's prior written consent (which
consent shall not be unreasonably withheld) unless the only remedy for such
claim is monetary damages which are paid in full by the Indemnifying Party and
(ii) the Indemnifying Party shall not, without the prior written consent of the
Indemnitee, settle or compromise any claim which does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to
Indemnitee, a release from all liability in respect to such claim. In connection
with any claim involving any remedy other than monetary damages, the
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Indemnitee shall have the right to be kept informed and be consulted in
connection with the resolution of such claim. The Indemnifying Party shall give
notice to the Indemnitee as to its intention to assume the defense of any such
Third Party Claim within ten (10) business days after the date of receipt of the
Indemnitee's notice in respect of such Third Party Claim. Until an Indemnifying
Party gives notice to the Indemnitee of its assumption of the defense of the
Third Party Claim, the Indemnitee shall control the defense thereof. If the
Indemnitee assumes the defense of any Third Party Claim because of the failure
of the Indemnifying Party to do so in accordance with this Section 6.5, the
Indemnifying Party shall pay all reasonable costs and expenses of such defense
and shall be fully responsible for the outcome thereof. Except as provided in
the foregoing sentence, the Indemnifying Party shall have no liability with
respect to any compromise or settlement thereof effected without its prior
written consent, which consent shall not be unreasonably withheld.
6.6 Non-exclusive Remedy. This Article VI shall be the exclusive
remedy available for money damages, but shall not be construed to limit any
party's right to seek specific performance or injunctive relief which is
expressly retained. Any claims by Related, Purchaser or Seller for breach of any
representation, warranty or covenant made hereunder shall be reduced to reflect
any insurance proceeds recoverable by and paid to the Indemnitee relating to
such claim, provided that the foregoing reduction shall not be applied if to do
so would excuse any insurer from any obligation to cover any loss.
6.7 Survival of Representations and Warranties. All
representations and warranties set forth herein shall survive for a period of
one year after the date hereof and shall thereafter expire, except that (a) the
representations contained in Sections 3.5, 3.12 and 4.5 shall survive
indefinitely and (b) the representations contained in Section 3.8 as to tax and
ERISA matters shall survive until the expiration of the applicable statute of
limitations.
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ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination. Subject to Section 5.16 hereto, this Agreement
may be terminated at any time prior to the Closing by:
(a) Mutual consent of the Seller and Related; or
(b) The Seller if the Closing shall not have occurred on or
before November 25, 1997 (unless the failure to consummate the Closing by such
date shall be due to Seller's failure to have fulfilled any of its obligations
under this Agreement); or
(c) Either the Seller or Related if the Closing shall not
have occurred on or before December 31, 1997 (unless the failure to consummate
the Closing by such date shall be due to the failure of the party seeking to
terminate this Agreement to have fulfilled any of its obligations under this
Agreement); or
(d) Either the Seller or Related if a condition to its
obligation to perform becomes incapable of fulfillment; provided, that the
Seller or Related, as the case may be, may not seek termination pursuant to this
Section 7.1(c) if such condition is incapable of fulfillment due to the failure
of the Seller, the Purchaser or Related, as the case may be, to perform the
agreements set forth herein required to be performed by such party, at or before
the Closing; or
(e) Either the Seller or Related if any court of competent
jurisdiction or other competent Governmental Entity shall have issued a statute,
rule, regulation, order, judgment, decree or injunction or taken any other
action restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such statute, rule or regulation remains in
effect or order, judgment, decree or injunction or other action shall have
become final and nonappealable; or
(f) Related by giving written notice to the
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Seller at any time prior to the Closing in the event the Seller has materially
breached any representation, warranty or covenant herein (except for any
representations, warranties or covenants that are qualified as to materiality or
material adverse effect, which representations, warranties or covenants shall be
true and correct, or shall be complied with, in all respects) and as of the date
of such notice has not cured such breach; or
(g) The Seller by giving written notice to Related at any
time prior to the Closing in the event the Purchaser or Related has materially
breached any representation, warranty or covenant herein (except for any
representations, warranties or covenants that are qualified as to materiality or
material adverse effect, which representations, warranties or covenants shall be
true and correct, or shall be complied with, in all respects) and as of the date
of such notice has not cured such breach.
7.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 7.1 hereof, this Agreement
shall forthwith become void and have no effect, without any liability on the
part of any party hereto or its affiliates, directors, officers or stockholders,
other than the provisions of Sections 5.4, 5.5 and 5.9 hereof. Nothing contained
in this Section 7.2 shall relieve any party from liability for any breach of
this Agreement.
7.3 Amendment. This Agreement may be amended at any time by the
Seller and Related, but only by an instrument in writing signed on behalf of
each party hereto.
7.4 Extension; Waiver. At any time prior to the Closing, each of
the parties hereto may (i) extend the time for the performance of any of the
obligations or acts of any other party, (ii) waive any inaccuracies in the
representations and warranties of any other party contained herein or in any
document delivered pursuant hereto, (iii) waive compliance with any of the
agreements of any other party contained herein or (iv) waive any condition to
its obligations hereunder. Any agreement on the part of a party hereto to any
such extension or waiver shall be
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valid only if set forth in a written instrument signed on behalf of such party.
ARTICLE VIII
MISCELLANEOUS
8.1 Governing Law. All questions concerning the construction,
validity and interpretation of this agreement shall be governed by the internal
laws of the State of New York without giving effect to principles of conflicts
of law.
8.2 Specific Performance. In addition to any remedies any party
hereto may have at law, each party to this Agreement shall have the right to
specifically enforce this Agreement against the other if such other party shall
wrongfully refuse to consummate the Closing of the transactions contemplated
herein within 10 business days following a demand to do so by the other party
hereto, provided the demanding party has not materially breached any
representation, warranty or covenant herein (or, with respect to any
representation, warranty or covenant qualified by materiality or material
adverse effect, breached any such representation, warranty or covenant).
8.3 Notices. All notices, requests, permissions, waivers, and
other communications hereunder shall be in writing and shall be deemed to have
been duly given when received if delivered by hand, facsimile transmission or by
mail (registered, return receipt requested), properly addressed and postage
prepaid:
If to Seller, to:
Lehman Brothers Inc.
Diversified Asset Group
3 World Financial Center
200 Vesey Street, 29th Floor
New York, NY 10285
Attn: Doreen D. Odell
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Telephone: (212) 526-7000
Telecopier: (212) 528-9702
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Patrick J. Foye
Telephone: (212) 735-3000
Telecopier: (212) 735-2000
If to Related or Purchaser, to:
Related Capital Company
625 Madison Avenue
New York, New York 10022
Attention: Alan P. Hirmes
Telephone: (212) 421-5333
Telecopier: (212) 593-5794
with a copy to:
Arnold J. Levine
Proskauer Rose LLP
1585 Broadway
New York, New York 10038
Telephone: (212) 969-3000
Telecopier: (212) 969-2900
Such names and addresses may be changed by such notice.
8.4 Entire Agreement. This Agreement contains the entire
understanding of the parties hereto with respect to the subject matter contained
herein, and supersedes and cancels all prior agreements, negotiations,
correspondences, undertakings and communications of the parties, oral or
written, regarding such subject matter.
8.5 Counterparts. This Agreement may be executed in
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one or more counterparts and each counterpart shall be deemed to be an original.
8.6 Parties in Interest; Assignment. This Agreement shall inure to
the benefit of and be binding upon Seller and Related and their respective
successors and permitted assigns. Nothing in this Agreement, express or implied,
is intended to confer upon any person not a party to this Agreement any rights
or remedies under or by reason of this Agreement. No party to this Agreement may
assign or delegate all or any portion of its rights, obligations or liabilities
under this Agreement without the prior written consent of the other party to
this Agreement.
8.7 Internal Approvals. The parties agree that the terms of this
Agreement shall not be binding on the Seller until LB I Group receives all
necessary and proper approvals of LB I Group and its affiliates. Prior to 6:00
p.m. New York City time on October 29, 1997, LB I Group shall give notice to
Related whether such approval has been obtained; failure to give such notice
shall be considered a waiver of this provision and this Agreement shall be
binding on Seller as though this Section 8.7 was not included herein. If such
notice is timely given and indicates that approval has not been obtained, this
Agreement shall terminate in its entirety and Section 7.2 shall govern.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
RELATED CAPITAL COMPANY
By: /s/ Alan P. Hirmes
---------------------
Name:
Its:
LB I GROUP INC.
By: /s/ Rocco F. Andriola
---------------------
Name:
Its:
DA GROUP HOLDINGS INC.
By: /s/ Moshe Beaver
---------------------
Name:
Its:
ADVANTAGED HOUSING ASSOCIATES INC.
By: /s/ Doreen D. Odell
---------------------
Name:
Its:
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LIBERTY GP INC.
By: /s/ Doreen D. Odell
---------------------
Name:
Its:
HUTTON SUBSIDIZED HOUSING
SERVICES II INC.
By: /s/ Robert J. Hellman
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Name:
Its:
33
