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COMMON STOCK
PURCHASE AGREEMENT
AMONG
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.,
AND
THE SEVERAL INVESTORS NAMED IN SCHEDULE 1
Dated as of April 15, 1996
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TABLE OF CONTENTS
ARTICLE 1. THE COMMON STOCK 1
Section 1.1. Purchase and Sale of Common Stock. 1
Section 1.2. Issuance of Warrants. 1
Section 1.3. Closing. 1
Section 1.4. Related Transactions. 2
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
FOUNDERS 2
Section 2.1. Organization, Qualifications and Corporate Power 2
Section 2.2. Authorization of Agreements, Etc. 2
Section 2.3. Validity. 3
Section 2.4. Authorized Capital Stock. 3
Section 2.5. Litigation; Compliance with Law. 4
Section 2.6. Proprietary Information of Third Parties. 4
Section 2.7. Title to Properties 5
Section 2.8. Leasehold Interests. 6
Section 2.9. Insurance. 6
Section 2.10. Taxes. 6
Section 2.11. Other Agreements. 7
Section 2.12. Patents, Trademarks, Etc. 7
Section 2.13. Loans and Advances. 7
Section 2.14. Assumption, Guaranties, Etc. of Indebtedness of Other
Persons. 8
Section 2.15. Governmental Approvals. 8
Section 2.16. Financial Statements. 8
Section 2.17. Absence of Undisclosed Liabilities. 8
Section 2.18. Absence of Changes. 9
Section 2.19. Employee Benefit Plans. 9
Section 2.20. Disclosure. 10
Section 2.21. Brokers. 10
Section 2.22. Transactions with Affiliates. 11
Section 2.23. Employees. 11
Section 2.24. Foreign Corrupt Practices Act. 11
Section 2.25. Environmental Regulations. 11
Section 2.26. Disclosure. 12
ARTICLE 3. REPRESENTATION AND WARRANTIES OF THE INVESTORS 12
ARTICLE 4. CONDITIONS PRECEDENT TO THE PURCHASE OF THE COMMON
STOCK AND WARRANTS BY INVESTORS 13
ARTICLE 5. CONDITIONS PRECEDENT 14
ARTICLE 6. COVENANTS OF THE COMPANY 15
Section 6.1. Financial Statements, Reports, Etc. 15
Section 6.2. Corporate Existence. 15
Section 6.3. Properties, Business, Insurance. 15
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Section 6.4. Inspection, Consultation, and Advice. 16
Section 6.5. Restrictive Agreements Prohibited. 16
Section 6.6. Transactions with Affiliates. 16
Section 6.7. Use of Proceeds. 16
Section 6.8. Board of Directors Meetings. 16
Section 6.9. Bylaws. 16
Section 6.10. Maintenance of Ownership of Investments. 17
Section 6.11. Distributions by Investments. 17
Section 6.12. Compliance with Laws. 17
Section 6.13. Keeping of Records and Books of Account. 17
Section 6.14. Employee Stock Plans. 17
Section 6.15. Piggyback Registration Rights. 17
Section 6.16. Registration Procedures. 18
Section 6.17. Expenses. 19
ARTICLE 7. MISCELLANEOUS 20
Section 7.1. Survival of Agreements. 20
Section 7.2. Brokerage. 20
Section 7.3. Parties in Interest. 20
Section 7.4. Notices. 20
Section 7.5. Governing Law. 21
Section 7.6. Entire Agreement. 21
Section 7.7. Counterparts. 21
Section 7.8. Amendments. 21
Section 7.9. Severability. 21
Section 7.10. Titles and Subtitles. 21
Section 7.11. Certain Defined Terms. 21
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CROSS REFERENCE OF DEFINED TERMS
TERM SECTION
affiliate Section 7.11
AJF Preamble
Agreement Preamble
Articles Section 2.4(d)
Closing Section 1.3
Closing Date Section 1.3
Common Stock Background
Company Preamble
Company Benefit Plans Section 2.19(a)
Contracts Section 2.11
▇▇▇▇▇ Preamble
Disclosure Schedule Article 2
EWF Preamble
Employees Section 2.19(a)
Environmental Permits Section 2.25(e)
ERISA Section 2.19(a)(i)
Financial Statements Section 2.16
Founder Preamble
General Partnership Interest Section 2.1(b)
Hazardous Materials Section 2.25(g)
Intellectual Property Section 2.12
Investment Section 2.1(b)
Investor Preamble
Memorandum Section 2.7(a)
person Section 7.11
Real Property Section 2.7(a)
Registration Expenses Section 6.17
Selling Expenses Section 6.17
Shareholders Agreement Section 2.4(f)
Warrants Section 1.2
Warrant Shares Section 1.3
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SCHEDULES AND EXHIBITS
Schedule 1 Common Stock Purchased
Schedule 2 Disclosure Schedule
Schedule 3 Accredited Investor Certificates
Exhibit A Form of Warrant Agreement
Exhibit B Opinion of Company Counsel
Exhibit C Amended and Restated Articles of Incorporation
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COMMON STOCK
PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT ("Agreement") is made and entered into
as of April 15, 1996, among TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC., a
Florida corporation (the "Company"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, a resident of the State
of Florida ("AJF"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, a resident of the State of Florida
("EWF"), ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇., a resident of the State of Florida ("▇▇▇▇▇"), and
the several persons named in the attached SCHEDULE 1 (such persons are
hereinafter referred to individually as an "Investor," and, collectively as the
"Investors"). AJF, EWF, and ▇▇▇▇▇ are sometimes hereinafter referred to
individually as a "Founder" and collectively as the "Founders."
BACKGROUND
A. The Investors desire to purchase an aggregate of 39,223 shares of the
Common Stock of the Company, par value $.01 (the "Common Stock"), at a
price of $76.49 per share, on the terms and subject to the conditions set
forth in this Agreement.
B. The Company desires to obtain additional equity capital through the
issuance and sale to the Investors of the Common Stock, on the terms and
subject to the conditions set forth in this Agreement. The Founders are the
controlling shareholders of the Company and will receive a direct benefit
from the issuance and sale by the Company of the Common Stock.
AGREEMENT
For and in consideration of the premises and the mutual covenants and
agreements contained in this Agreement and for other good and valuable
consideration, the receipt and legal sufficiency of which is hereby
acknowledged, the parties hereby agree:
ARTICLE 1. THE COMMON STOCK
SECTION 1.1. PURCHASE AND SALE OF COMMON STOCK. The Company agrees to issue
and sell to each Investor, and each Investor agrees to purchase from the
Company, the number of shares of Common Stock set forth opposite the name of
such Investor on SCHEDULE 1 hereto under the caption "Common Stock Purchased" at
a purchase price of $76.49 per share.
SECTION 1.2. ISSUANCE OF WARRANTS. The Company agrees to issue and deliver
to each Investor, a warrant (the "Warrant") which may become exercisable for
Common Stock at the time of the Company's initial public offering. Each Warrant
shall be substantially in the form of EXHIBIT A attached hereto.
SECTION 1.3. CLOSING. The closing of the purchase and delivery of the sale
of the Common Stock shall take place at the offices of the Company, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., Eastern Standard
Time, on April 15, 1996, or at such other location, date, and time as may be
agreed upon between the Investors and the Company (such closing being called the
"Closing" and such date and time being called the "Closing Date"). At the
Closing, the Company shall issue and deliver to each Investor a stock
certificate or certificates in definitive form, registered in the name of each
Investor, representing the Common Stock being purchased by each Investor and the
right to purchase Warrant Shares on the terms set forth in the Warrant. As
payment in full for the Common Stock, and against delivery of the certificates
evidencing the Common Stock purchased, on the Closing Date, each
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Investor shall deliver to the Company a cashier's check payable to the order of
the Company, in the amount set forth opposite the name of such Investor on
SCHEDULE 1 under the heading "Aggregate Purchase Price," or shall transfer such
sum to an account designated in writing by the Company by wire transfer.
SECTION 1.4. RELATED TRANSACTIONS. At the Closing, the Company and the
Founders shall deliver (i) a certificate with respect to the matters described
in Section 4(f) hereof, and (ii) the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLC,
in substantially the form of EXHIBIT B hereto.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE FOUNDERS
For the purpose of inducing the Investors to purchase the Shares, the
Company and each Founder represents and warrants to each Investor that, except
as otherwise set forth in the Disclosure Schedule attached hereto as SCHEDULE 2
(the "Disclosure Schedule") by means of an explicit reference to the particular
representation or warranty as to which exception is taken, which in each case
shall constitute the sole representation and warranty as to which such exception
shall apply:
SECTION 2.1. ORGANIZATION, QUALIFICATIONS AND CORPORATE POWER
(a) The Company is a corporation duly incorporated, validly existing,
and in good standing under the laws of the State of Florida and is duly
licensed or qualified to transact business as a foreign corporation and is
in good standing in each jurisdiction in which the nature of the business
transacted by it or the character of the properties owned or leased by it
requires such licensing or qualification. The Company has the corporate
power and authority to (i) own and hold its properties and carry on its
business as now conducted and as proposed to be conducted, (ii) execute,
deliver, and perform each of this Agreement, (iii) issue, sell, and deliver
the Common Stock, and (iv) issue and deliver the Warrants and the Warrant
Shares issuable upon exercise of the Warrants.
(b) Section 2.1(b) of the Disclosure Schedule contains a true and
correct list of (i) each corporation some or all of the securities of which
are held by the Company (an "Investment"), indicating with respect to each
Investment, the number and type of securities outstanding and the number
and type of securities held by the Company, and (ii) each general or
limited partnership owned in whole or in part by the Company (a "General
Partnership Interest"). Except for Investments and General Partnership
Interests listed on Section 2.1(b) of the Disclosure Schedule, the Company
does not (i) own of record or beneficially, directly or indirectly, (A) any
shares of capital stock or securities convertible into capital stock of any
corporation, (B) any debt securities of any corporation, or (C) any
participating interest in or any indebtedness of any partnership, joint
venture, limited liability company, or other non-corporate business
enterprise or (ii) control, directly or indirectly, any other entity.
SECTION 2.2. AUTHORIZATION OF AGREEMENTS, ETC.
(a) The Company is not in violation of or default under any provision
of its Amended and Restated Articles of Incorporation, or Bylaws, of any
material provision of any indenture, contract, agreement, mortgage, deed of
trust, loan, commitment, judgment, decree, order, or obligation to which it
is a party or by which any of its properties or assets are bound, or of any
provision of any Federal, state, or local statute, rule, or governmental
regulation applicable to the Company. The execution and delivery by the
Company of this Agreement and each of the other
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agreements, documents, and instruments contemplated hereby, the performance
by the Company of its obligations hereunder and thereunder, the issuance,
sale, and delivery of the Common Stock, and the issuance and delivery of
the Warrant Shares upon exercise of the Warrants, have been duly authorized
by all requisite corporate action on the part of the Company and its
officers, directors, and shareholders and will not result in any such
violation, conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under any such provision,
require any consent or waiver under any such provision, or result in the
creation or imposition of any lien, charge, restriction, claim, or
encumbrance of any nature whatsoever upon any of the properties or assets
of the Company. There is no such provision which materially and adversely
affects, or so far as the Company is presently aware, in the future may
materially and adversely affect, the condition (financial or otherwise),
business, property, prospects, assets, or liabilities of the Company.
(b) The Common Stock has been duly authorized and, when issued in
accordance with this Agreement, will be validly issued, fully paid, and
nonassessable. The Warrants have been duly authorized and, when issued in
accordance with this Agreement, will be validly issued. The Common Stock,
when issued in accordance with this Agreement, will be free and clear of
all liens, charges, restrictions, claims, and encumbrances imposed by or
through the Company, except as reflected on the certificates evidencing the
Common Stock. The Warrant Shares have been duly and validly reserved for
issuance upon exercise of the Warrants, and the Warrant Shares, when so
issued, will be duly authorized, validly issued, fully paid, and
nonassessable and will be free and clear of all liens, charges,
restrictions, claims, and encumbrances imposed by or through the Company,
except as reflected on the certificates evidencing the Warrants and the
Warrant Shares. Neither the issuance, sale, and delivery of the Common
Stock nor the issuance and delivery of the Warrant Shares is subject to any
preemptive right, right of first refusal, or other similar right in favor
of any person, which has not been waived or complied with.
SECTION 2.3. VALIDITY. Each of this Agreement and the Warrants have been
duly and validly executed and delivered by the Company and constitutes the
legal, valid, and binding obligation of the Company, enforceable against the
Company in accordance with its terms.
SECTION 2.4. AUTHORIZED CAPITAL STOCK. Immediately prior to the Closing:
(a) the authorized capital stock of the Company will consist of (i)
Twenty-Nine Thousand (29,000) shares of Series A Redeemable Common Stock;
Forty-Six Thousand Five Hundred (46,500) shares of Series B Redeemable
Preferred Stock, and (ii) Five Million (5,000,000) shares of Common Stock
(the "Common Stock");
(b) Seven Hundred Twenty Five Thousand One (725,001) shares of Common
Stock, Two Thousand Three Hundred Forty-five (2,345) shares of Series A
Redeemable Preferred Stock, and Thirty Three Thousand, Two Hundred Two
(33,202) shares of Series B Redeemable Preferred Stock will be validly
issued and outstanding, and fully paid and nonassessable;
(c) all issued and outstanding shares of Common Stock, Series A
Redeemable Preferred Stock, and Series B Redeemable Preferred Stock are
owned of record and beneficially by the persons and in the amounts set
forth in Section 2.4 of the Disclosure Schedule;
(d) the relative rights, powers, preferences, qualifications,
limitations, and restrictions in respect of each class of authorized
capital stock of the Company are as set forth in the
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Company's Amended and Restated Articles of Incorporation (the "Articles"),
a copy of which is attached as EXHIBIT C hereto, and all such rights,
powers, preferences, qualifications, limitations, and restrictions are
valid, binding, and enforceable and in accordance with all applicable laws;
(e) except as set forth in Section 2.4 of the Disclosure Schedule, (i)
no person owns of record or is known to the Company to own beneficially any
shares of any equity stock, (ii) no subscription, warrant, option,
convertible security, or other right (contingent or other) to purchase or
otherwise acquire equity securities of the Company is authorized or
outstanding, and (iii) there is no commitment by the Company to issue
shares, subscriptions, warrants, options, convertible securities, or other
such rights or to distribute to holders of any of its equity securities any
evidence of indebtedness or assets, except as contemplated by this
Agreement; and
(f) except as set forth in the Articles and in the Shareholders
Agreement dated June 2, 1993 (the "Shareholders Agreement"), the Company
has no obligation (contingent or other) to purchase, redeem, or otherwise
acquire any of its equity securities or any interests therein or to pay any
dividend or make any other distribution in respect thereof. Except as set
forth in the Shareholders Agreement, there are no voting trusts or
agreements, preemptive rights, or proxies relating to any securities of the
Company (whether or not the Company is a party thereto). All of the
outstanding securities of the Company were issued in compliance with all
applicable Federal and state securities laws.
SECTION 2.5. LITIGATION; COMPLIANCE WITH LAW. There is no (a) action, suit,
claim, proceeding, or investigation pending or, to the knowledge of the Company
or the Founders, threatened against or affecting the Company, at law or in
equity, or before or by any Federal, state, municipal, or other governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, (b) arbitration proceeding relating to the Company pending under
collective bargaining agreements or otherwise, or (c) governmental inquiry
pending or, to the knowledge of the Company or the Founders, threatened against
or affecting the Company, (including without limitation any inquiry as to the
qualification of the Company to hold or receive any license or permit), and
there is no basis known to the Company or the Founders for any of the foregoing.
The Company is not subject to any order, writ, injunction, or decree of any
court or of any Federal, state, municipal, or other governmental department,
commission, board, bureau, agency, or instrumentality, domestic or foreign.
There is no action or suit by the Company pending or threatened against any
other person. The Company is in material compliance with all laws, rules,
regulations, and orders applicable to the Company's business, operations,
properties, assets, licenses, and other authorizations required to conduct its
business as conducted and as proposed to be conducted. There is no existing law,
rule, regulation, or order, and neither the Company nor any Founder, after due
inquiry, is aware of any proposed law, rule, regulation, or order, whether
Federal or state, which would prohibit or restrict the Company from, or
otherwise materially adversely affect the Company in, conducting its business in
any jurisdiction in which it is now conducting business or in which it proposes
to conduct business within the foreseeable future.
SECTION 2.6. PROPRIETARY INFORMATION OF THIRD PARTIES. After reasonable
investigation, neither the Company nor any Founder is aware that any significant
employee or consultant of the Company is obligated under any contract or other
agreement, or subject to any judgment, decree, or order of any court or
administrative agency, that would conflict with the obligation of such employee
to use best efforts to promote the interests of the Company. To the knowledge of
the Company or the Founders, no third party has claimed or has reason to claim
that any person employed by or affiliated with the Company has (a) violated or
may be violating any of the terms or conditions of any employment,
non-competition, or non-disclosure agreement between such employee and such
third party, (b) disclosed or may be disclosing,
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or utilized or may be utilizing, any trade secret or proprietary information or
documentation of such third party, or (c) interfered or may be interfering in
the employment relationship between such third party and any of the Company's
present or former employees. No third party has requested information from the
Company which suggests that such a claim might be contemplated. To the knowledge
of the Company and the Founders, no person employed by or affiliated with the
Company has employed or proposes to employ any trade secret or any information
or documentation proprietary to any former employer, and to the knowledge of the
Company and the Founders, no person employed by or affiliated with the Company
has violated any confidential relationship which such person may have had with
any third party, in connection with the development, manufacture, or sale of any
product or proposed product, or the development or sale of any service or
proposed service of the Company, and the Company has no reason to believe there
will be any such employment or violation. To the knowledge of the Company and
the Founders, none of the execution or delivery of this Agreement, or the
carrying on of the business of the Company by its officers, employees, or
agents, or the conduct or proposed conduct of the business of the Company, will
conflict with or result in a breach of the terms, conditions, or provisions of
or constitute a default under any contract, covenant, or instrument under which
any such person is obligated.
SECTION 2.7. TITLE TO PROPERTIES
(a) The Memorandum contains a list of the material tracts of real
property owned by the Company ("Real Property") and a summary description
of the proposed use thereof and the number of buildable lots remaining in
each such tract. Except as reflected in title insurance binders for the
tracts of Real Property, the Company has good and marketable fee simple
title to the Real Property, free and clear of all mortgages, liens,
charges, encumbrances, and purchase options and other rights to or against
such property, other than such minor imperfections of title, liens,
easements, zoning restrictions, or encumbrances, if any, as are not
substantial in character, amount, or extent, and do not, severally or in
the aggregate, detract from the value or interfere with the present uses of
the Real Property, or otherwise impair the business and operations of the
Company, except for claims of subcontractors, laborers, and materialmen
which have performed work or provided services to such property and which
are unpaid within normal payment terms.
(b) All improvements on the Real Property conform in all material
respects to all applicable state and local laws, use restrictions, building
ordinances, and health and safety ordinances, and the property is zoned for
the various purposes for which the Real Property and improvements thereon
are presently being used.
(c) The Company has received no written notice of any pending or
threatened condemnations, planned public improvements, annexation, special
assessments, zoning, or subdivision changes, or other claims which would in
the aggregate materially and adversely affect the Real Property.
(d) There is no private restrictive covenant or governmental use
restriction (including zoning) known to the Company after reasonable
inquiry, on all or any portion of the Real Property, which prohibits the
current or contemplated use of the Real Property.
(e) All licenses, permits, and approvals required for the occupancy
and operation of the Real Property have been obtained and are in full force
and effect and the Company has received no notices of violations in
connection with such items.
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(f) The Company does not have in its possession any studies or reports
which indicate any defects in the design or construction of any of the
improvements on the Real Property.
(g) There are no past due taxes, assessments, or other charges
affecting the Real Property.
(h) The Company has good and marketable title to all personal
properties and assets owned by it, free and clear of all mortgages,
pledges, security interests, liens, charges, claims, restrictions and other
encumbrances, except liens for current taxes not yet due and payable,
listed on Section 2.7 of the Disclosure Schedule and minor imperfections of
title, if any, not material in nature or amount and not materially
detracting from the value or impairing the use of the personal property
subject thereto or impairing the operations or proposed operations of the
Company. The Company owns or leases all personal properties and assets
necessary to the operation of its business as now conducted. All of such
personal properties and assets are in good operating condition (normal wear
and tear excepted), are reasonably fit for the purposes for which such
personal properties and assets are presently used, are adequate and usable
for the continued operation of the business of the Company as the same is
presently conducted, and none of such personal properties and assets are in
need of maintenance or repairs except for ordinary, routine maintenance and
repairs, the cost of which will not vary materially from historic patterns.
SECTION 2.8. LEASEHOLD INTERESTS. Each lease or agreement to which the
Company is a party under which it is a lessee of any property, real or personal,
is a valid and subsisting agreement without any default of the Company
thereunder and, to the best of the Company's knowledge, without any default
thereunder of any other party thereto. No event has occurred and is continuing
which, with due notice or lapse of time or both, would constitute a default or
event of default by the Company under any such lease or agreement or, to the
best of the Company's knowledge, by any other party thereto. The Company's
possession of such property has not been disturbed and, to the best of the
Company's knowledge, no claim has been asserted against the Company adverse to
its rights in such leasehold interests.
SECTION 2.9. INSURANCE. All of the properties and business of the Company
of an insurable nature are insured to the extent usually insured by persons or
entities engaged in the same or similar businesses against loss or damage of the
kind customarily insured against by such persons or entities. The Company is not
in default regarding the provisions of any such policy. The Company has not,
since inception, self-insured against any risk ordinarily insured against by
similar businesses. The Company has not received any notice from any of its
insurers that any insurance premiums will be increased in the future or that any
insurance coverage presently in force will not be available in the future on
substantially the same terms as are now in effect. There are no outstanding
requirements or recommendations by any current insurer or underwriter with
respect to the Company which require or recommend changes in the conduct of the
business or require any repairs or other work to be done to the assets and
properties of the Company.
SECTION 2.10. TAXES. The Company has filed or obtained filing extensions
for all tax returns, Federal, state, county, and local, required to be filed by
it, and the Company has paid or established adequate reserves (in accordance
with generally accepted accounting principles) for the payment of all taxes
shown to be due by such returns as well as all other taxes, assessments, and
governmental charges which have become due or payable, including, without
limitation, all taxes which the Company is obligated to withhold from amounts
owing to employees, creditors, and third parties. The Federal income tax returns
of the Company have never been audited by the Internal Revenue Service and no
state income or sales tax returns of the Company have been audited. No
deficiency assessment with respect to or proposed
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adjustment of the Company's Federal, state, county, or local taxes is pending
or, to the best of the Company's knowledge, threatened. There is no tax lien,
whether imposed by any Federal, state, county, or local taxing authority,
outstanding against the assets, properties, or business of the Company. Neither
the Company nor any of its shareholders has ever filed a consent pursuant to
Section 341(f) of the IRC (as hereinafter defined), relating to collapsible
corporations.
SECTION 2.11. OTHER AGREEMENTS. The Company is not a party to or otherwise
bound by any written or oral contract, obligation, agreement, commitment,
restriction, or the like which individually or in the aggregate could materially
adversely affect the business, prospects, financial condition, operations,
property, or affairs of the Company. The Company has provided to the Investors
access to copies of all obligations, agreements, and the like (referred to
individually as a "Contract" and collectively as the "Contracts"). Each of the
Contracts are valid, binding, and in full force and effect in all material
respects. The Company, and to the knowledge of the Company and the Founders,
each other party thereto has in all material respects performed all the
obligations required to be performed by it to date and has received no notice of
default and is not in default (with due notice or lapse of time or both) under
any of the Contracts. The Company has no present expectation or intention of not
fully performing all its obligations under each of the Contracts, and the
Company has no knowledge of any breach or anticipated breach by the other party
to any of the Contracts. There is no Contract that contains any contractual
requirement with which there is a reasonable likelihood that the Company or any
other party thereto will be unable to comply with the terms thereof. The
continuation, validity, and effectiveness of each Contract will in no way be
affected by the consummation of the transactions contemplated by this Agreement.
There exists no actual or, to the best knowledge of the Company, any threatened
termination, cancellation, or limitation of, or any amendment, modification, or
change to any Contract, which would have a material adverse effect on the
business or condition, financial or otherwise, of the Company.
SECTION 2.12. PATENTS, TRADEMARKS, ETC. The Company has sufficient title to
and ownership of, or can obtain on terms which will not adversely affect its
business, all franchises, permits, licenses, and other similar authority
necessary for the conduct of its business as now being conducted and as planned
to be conducted, and it is not in default under any of such franchises, permits,
licenses, and other similar authority. The Company possesses all patents, patent
rights, patent applications, trademarks, trademark applications, service marks,
service ▇▇▇▇ applications, trade names, copyrights, formulae, trade secrets, and
know how (collectively, "Intellectual Property") necessary or desirable to the
conduct of its business as conducted and as proposed to be conducted, and no
claim is pending or, to the knowledge of the Company and the Founders,
threatened to the effect that the operations of the Company infringe upon or
conflict with the asserted rights of any other person under any Intellectual
Property, and, to the knowledge of the Company and the Founders, there is no
basis for any such claim (whether or not pending or threatened). No claim is
pending or threatened to the effect that any such Intellectual Property owned or
licensed by the Company, or which the Company otherwise has the right to use, is
invalid or unenforceable by the Company, and, to the knowledge of the Company
and the Founders, there is no basis for any such claim (whether or not pending
or threatened). The Company is not aware of any third party which is infringing
or violating any of the Intellectual Property of the Company. To the knowledge
of the Company and the Founders, all technical information developed by and
belonging to the Company which has not been patented has been kept confidential.
The Company has not granted or assigned to any other person or entity any of the
Intellectual Property or the right to manufacture, have manufactured, assemble,
or sell the products or proposed products or to provide the services or proposed
services of the Company.
SECTION 2.13. LOANS AND ADVANCES. Except as described on Section 2.13 of
the Disclosure Schedule, the Company does not have any outstanding loans or
advances to any person and is not obligated to make any such loans or advances,
except, in each case, for advances to employees of the Company in
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respect of reimbursable business expenses anticipated to be incurred by them in
connection with their performance of services for the Company in the ordinary
course of business, consistent with past practice.
SECTION 2.14. ASSUMPTION, GUARANTIES, ETC. OF INDEBTEDNESS OF OTHER
PERSONS. The Company has not assumed, guaranteed, endorsed, or otherwise become
directly or contingently liable on any indebtedness of any other person
(including, without limitation, liability by way of agreement, contingent or
otherwise, to purchase, to provide funds for payment, to supply funds to, or
otherwise invest in the debtor, or otherwise to assure the creditor against
loss), except for (a) guaranties by endorsement of negotiable instruments for
deposit or collection in the ordinary course of business and (b) guaranties by
the Company of the debts of its subsidaries.
SECTION 2.15. GOVERNMENTAL APPROVALS. Subject to the accuracy of the
representations and warranties of the Investors set forth in Article 3 hereof,
no registration, qualification, or filing with, or consent or approval of or
other action by, any Federal, state, or other governmental agency or
instrumentality is or will be necessary for the valid execution, delivery, and
performance by the Company of this Agreement, the offer, issuance, sale and
delivery of the Common Stock, the issuance and delivery of the Warrant Shares
upon exercise of the warrants or the consummation of any other transaction
contemplated hereby, other than (i) filings pursuant to state securities laws
(all of which filings have been made as of the date hereof) in connection with
the offer and sale of the Common Stock and (ii) the filing of a notice under
Regulation D under the Securities Act.
SECTION 2.16. FINANCIAL STATEMENTS.
The unaudited Consolidated Balance Sheet of the Company dated December 31,
1995, and the unaudited Consolidated Statement of Operations of the Company for
the six (6) months then ended, are attached as Section 2.16 of the Disclosure
Schedule. The Memorandum contains true, correct, and complete copies of the
audited Consolidated Balance Sheets of the Company dated June 30, 1995, June 30,
1994, and June 30, 1993, and audited Consolidated Statements of Operations,
Consolidated Statements of Changes in Shareholders' Equity, and Consolidated
Statements of Cash Flows for the fiscal years then ended, together with notes
thereto and the audit reports thereon of KPMG Peat Marwick thereon
(collectively, the "Financial Statements"). The Financial Statements (i) are in
accordance with the books and records of the Company, (ii) present fairly the
financial condition of the Company as of the respective dates indicated and the
results of operations for such periods except that interim period financial
statements are subject to normal year-end audit adjustments, which in the
aggregate will not materially or adversely change such interim financial
statements, (iii) have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved, and
(iv) reflect adequate reserves for all liabilities and losses. The books,
records, and accounts of the Company accurately and fairly reflect, in
reasonable detail, the transactions and the assets and liabilities of the
Company. The Company has not engaged in any transaction, maintained any bank
account, or used any of the funds of the Company, except for transactions, bank
accounts, and funds which have been and are reflected in the normally maintained
books and records of the Company.
SECTION 2.17. ABSENCE OF UNDISCLOSED LIABILITIES. The Company has no
material liabilities or obligations (secured or unsecured, whether accrued,
absolute, direct, indirect, contingent, or otherwise, and whether due or to
become due) that are required to be reflected in the Financial Statements by
generally accepted accounting principles which are not fully accrued or reserved
against in the Financial Statements, other than liabilities incurred in the
ordinary course of business subsequent to the date of the Financial Statements
which liabilities and obligations, individually or in the aggregate, are not
material to the financial condition or operating results of the Company.
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SECTION 2.18. ABSENCE OF CHANGES. Since the date of the most recent
Consolidated Balance Sheet included in the Financial Statements and except as
reflected therein or in the Memorandum, (a) there has been no material adverse
change in the condition (financial or otherwise), business, property, assets, or
liabilities of the Company other than changes in the ordinary course of
business, none of which, individually or in the aggregate, has been materially
adverse; (b) the Company has not entered into any material transaction which was
not in the ordinary course of its business; (c) there has been no damage to,
destruction of, or loss of physical property (whether or not covered by
insurance) materially adversely affecting the business or operations of the
Company; (d) except as contemplated by this Agreement, the Company has not
declared or paid any dividend on its stock, made any distribution on its stock,
redeemed, purchased, or otherwise acquired any of its stock, granted any options
to purchase shares of its stock; (e) the Company has not increased the
compensation of any of its officers, or the rate of pay of its employees as a
group, except as part of regular compensation increases in the ordinary course
of its business, to an amount in excess of the amounts set forth in the pro
forma previously delivered to the Investors; (f) there has been no resignation
or termination of employment of any key officer or employee of the Company, and
the Company does not know of the impending resignation or termination of
employment of any such officer or employee that if consummated, would have a
material adverse effect on the business of the Company; (g) there has been no
labor dispute involving the Company or its employees and none is pending or to
the knowledge of the Company and the Founders, threatened; (h) there has been no
change, except in the ordinary course of business, in the contingent obligations
of the Company by way of guaranty, endorsement, indemnity, warranty, or
otherwise; (i) there have been no loans made by the Company to its employees,
officers, directors, or partners other than travel advances and office advances
made in the ordinary course of business; and (j) to the knowledge of the Company
and the Founders, there has been no other event or condition of any kind which
might reasonably be expected to result in a material and adverse change in the
Company's condition (financial or otherwise) or business or to impair materially
the ability of the Company to conduct its business as it is currently being
conducted.
SECTION 2.19. EMPLOYEE BENEFIT PLANS.
(a) Section 2.19 of the Disclosure Schedule contains a true and
complete list of all the following agreements or plans which are presently
in effect or which have previously been in effect and which cover employees
of the Company ("Employees"):
(i) Any employee benefit plan as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974 ("ERISA"), and any
trust or other funding agency created thereunder, or under which the
Company, with respect to the Employees, has any outstanding, present,
or future obligation or liability, or under which any Employee or
former Employee has any present or future right to benefits which are
covered by ERISA; or
(ii) Any other pension, profit sharing, retirement, deferred
compensation, stock purchase, stock option, incentive, bonus,
vacation, severance, disability, hospitalization, medical, life
insurance, or other employee benefit plan, program, policy, or
arrangement, whether written or unwritten, formal or informal, which
the Company, with respect to the Business, maintains or to which the
Company, with respect to the Business, has any outstanding, present,
or future obligations to contribute or make payments under, whether
voluntary, contingent, or otherwise.
The plans, programs, policies, or arrangements which are described in
subparagraph (i) or (ii) above and which are listed on Section 2.19 of the
Disclosure Schedule are hereinafter collectively referred
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to as the "Company Benefit Plans." The Company has delivered to the Investors
true and complete copies of all written plan documents and contracts evidencing
the Company Benefit Plans, as they may have been amended to the date hereof,
together with (A) all documents relating to any tax-qualified retirement plan
maintained by the Company, which documents are required to have been filed prior
to the date hereof with governmental authorities for each of the three most
recently completed plan years; (B) attorney's response to an auditor's request
for information for each of the three most recently completed plan years; and
(C) financial statements for each Company Benefit Plan for each of the three
most recently completed plan years.
(b) Except for the Company Benefit Plans, the Company does not now
maintain, nor has the Company at any time in the past been obligated to
make any payment or contribution to any pension, retirement,
profit-sharing, deferred compensation, stock purchase, stock option, bonus
or incentive plan, any medical, vision, dental, or other health plan, any
life insurance plan, vacation, severance, disability, or any other employee
benefit plan, program, policy, or arrangement, whether written, unwritten,
formal, or informal, including, without limitation, any "employee benefit
plan" as defined in Section 3(3) of ERISA. The Company has not made,
entered into, or agreed to any commitment, whether written or oral, which
would obligate the Company to establish any employee benefit plan, or
continue any employment agreement or employment policy covering Employees.
With respect to all "welfare plans," as defined in Section 3(1) of ERISA,
covering Employees or former Employees, there are no obligations to
continue coverage or to make payments to or on behalf of persons who are or
may become retired or terminated Employees or their beneficiaries, other
than as may be required by Sections 601 through 608 of ERISA.
(c) The Company has complied with the continuation coverage
requirements of Section 1001 of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, and ERISA Sections 601 through 608.
SECTION 2.20. DISCLOSURE.
(a) The Company has delivered to the Investors a true and correct copy
of (i) the Amended and Restated Articles of Incorporation of the Company,
and all amendments thereto and restatements thereof certified by the
appropriate state official; and (ii) the Bylaws of the Company and all
amendments thereto.
(b) The minute books of the Company made available to the Investors
prior to the date hereof, accurately reflect all corporate action taken by
the directors and shareholders of the Company or any committee of the Board
of Directors of the Company and contain true and accurate copies of or
originals of the respective minutes of all meetings or consent actions of
the directors, any committee of the Board of Directors, and the
shareholders.
(c) The stock record books of the Company, made available to the
Investors prior to the date hereof, accurately reflect the stock ownership
of the Company, and contain complete and accurate records with respect to
the transfer of all securities issued by the Company and each Investment
since inception.
SECTION 2.21. BROKERS. The Company has no contract, arrangement, or
understanding with any broker, finder, or similar agent with respect to the
transactions contemplated by this Agreement, nor has the Company authorized or
employed any person in connection with the offering or sale of the Common Stock,
or the Warrants or any security of the Company similar to the Common Stock or
the Warrants.
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SECTION 2.22. TRANSACTIONS WITH AFFILIATES. Except as permitted by Section
6.6 hereof, no Founder, director, officer, employee, or shareholder of the
Company, or member of the family of any such person, or any corporation,
partnership, trust, or other entity in which any such person, or any member of
the family of any such person, has a substantial interest or is an officer,
director, trustee, partner, or holder of more than 5% of the outstanding equity
interests thereof is a party to any transaction with the Company, including any
contract, agreement or other arrangement providing for the employment of,
furnishing of services by, rental of real or personal property from or otherwise
requiring payments to any such person or firm.
SECTION 2.23. EMPLOYEES.
(a) No officer or key Employee has advised the Company (orally or in
writing) that he or she intends to terminate employment with the Company.
The Company has complied in all material respects with all applicable laws
relating to the employment of labor, including provisions relating to
wages, hours, equal opportunity, worker health and safety, collective
bargaining, and the payment of Social Security and other taxes, and with
ERISA.
(b) The Company does not have any collective bargaining agreement
covering any of its Employees. There is no pending or, to the best
knowledge of the Company, threatened labor dispute involving the Company or
any of its Employees. To the best of the Company's knowledge, the Company
has amicable relations with its Employees.
SECTION 2.24. FOREIGN CORRUPT PRACTICES ACT. The Company has not made,
offered, or agreed to offer anything of value to any government official,
political party, or candidate for government office nor has it taken any action
which would cause the Company to be in violation of the Foreign Corrupt
Practices Act of 1977.
SECTION 2.25. ENVIRONMENTAL REGULATIONS.
(a) Except for failures which will not result in any material
liability or consequences to the Company, the Company has met, and
continues to meet, all applicable local, state, Federal, and national
environmental regulations.
(b) The Company has not been notified that it is potentially liable,
has not received any requests for information or other correspondence
concerning any site or facility, and is not otherwise aware that it is
considered potentially liable under the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, or any
similar state law.
(c) The Company has not entered into or received any consent decree,
compliance order, or administrative order relating to environmental
protection.
(d) The Company has neither entered into or received nor is the
Company in default under any judgment, order, writ, injunction, or decree
of any federal, state, or municipal court or other governmental authority
relating to environmental protection.
(e) The Company has all permits, licenses, approvals, consents, and
authorizations (the "Environmental Permits") relating to environmental or
health protection which are required under Federal, state, or local laws,
rules, and regulations and is in compliance with all the Environmental
Permits (including any information provided on the applications therefor);
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(f) There are no actions, suits, claims, arbitration proceedings, or
complaints pending or, to the Company's knowledge, threatened or under
consideration by any governmental authority, municipality, community,
citizen, or other entity against the Company relating to environmental
protection, nor does the Company have reason to believe that any such
actions, suits, claims, or complaints will be brought against it.
(g) No disposal, releases, burial, or placement of hazardous or toxic
substances, pollutants, contaminants, petroleum, gas products, or
asbestos-containing materials (as any of such terms may be defined under
Federal, state, or local law) (hereinafter collectively referred to as
"Hazardous Materials") has occurred on, in, at, or about any of the
Company's properties or facilities or any other facility or site to which
Hazardous Materials from the Company may have been taken at any time in the
past.
(h) To the Company's knowledge, there has been no disposal, releases,
burial, or placement of Hazardous Materials on any property not owned or
operated in the present or the past by the Company which may result or has
resulted in contamination of or beneath any of the Company's properties or
facilities.
(i) There are no above-ground and underground storage tanks on the
Real Property.
(j) No lien has arisen on the Company's properties or facilities under
Federal, state, or local laws, rules, or regulations as they relate to
environmental protection.
(k) No audit or investigation has been conducted as to environmental
matters at any of the Company's properties by any governmental agency.
SECTION 2.26. DISCLOSURE. Neither this Agreement nor any Schedule or
Exhibit hereto, contains an untrue statement of a material fact or omits a
material fact necessary to make the statements contained herein or therein not
misleading. None of the statements, documents, certificates or other items
prepared or supplied by the Company with respect to the transactions
contemplated hereby contains an untrue statement of a material fact or omits a
material fact necessary to make the statements contained therein not misleading.
The Memorandum was prepared in good faith by the Company to provide an overview
of the business of the Company and, to the best knowledge of Founders, does not
contain an untrue statement of a material fact.
ARTICLE 3. REPRESENTATION AND WARRANTIES OF THE INVESTORS
Each Investor represents and warrants to the Company as to such Investor
only, that:
(a) it is an "accredited investor" within the meaning of Rule 501
under the Securities Act, as indicated on the Investor Certification of
such Investor, annexed hereto as SCHEDULE 3;
(b) it has sufficient knowledge and experience to evaluate the risks
and merits of its investment in the Company and it is able financially to
bear the risks thereof;
(c) it has had an opportunity to ask questions of and receive answers
from and to discuss the Company's business, management, and financial
affairs with the Company's management;
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(d) the Common Stock is being acquired for its own account for the
purpose of investment and not with a view to or for sale in connection with
any distribution thereof;
(e) it was not offered nor made aware of the Company's interest in
issuing the Common Stock by any means of public advertisement or
solicitation;
(f) in connection with such Investor's purchase of the Common Stock,
it has been solely responsible for its own (i) due diligence investigation
of the Company and (ii) investment decision, and has not engaged or relied
upon any agent or "purchaser representative" to review or analyze the
Company's business and affairs or advise such Investor with respect to the
merits of the investment;
(g) it has full power and authority to execute, deliver, and perform
each of this Agreement and to purchase the Common Stock ; and, that this
Agreement will constitute the legal, valid, and binding obligation of the
Investor, enforceable against it in accordance with their respective terms;
and
(h) in the event that the Investor proposes to sell the Common Stock
or the Warrants pursuant to Rule 144A under the Securities Act, it will (A)
take reasonable steps to obtain the information required by such Rule to
establish a reasonable belief that the prospective purchaser is a
"qualified institutional buyer" as such term is defined in Rule 144A and
(B) advise the prospective purchaser that the Investor is relying on the
exemption from the registration provisions of the Securities Act available
pursuant to Rule 144A.
ARTICLE 4. CONDITIONS PRECEDENT TO THE PURCHASE OF THE COMMON STOCK AND
WARRANTS BY INVESTORS
In connection with the purchase of the Common Stock and Warrants at the
Closing, the Investors shall be entitled to receive the following certificates,
opinions, and documents or evidence reasonably satisfactory to them as to the
following, each of which requirements may be waived by the Investors. The
Company agrees to use its best efforts to cause each of such requirements to be
satisfied:
(a) The Investors shall have received from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇
LLC, an opinion dated the Closing Date, in substantially the form attached
hereto as EXHIBIT B.
(b) The representations and warranties contained in Article 2 shall be
true, complete and correct.
(c) The Company shall have performed and complied with all covenants
and agreements contained herein required to be performed or complied with
by it prior to or at the Closing Date.
(d) The Company shall have obtained any and all consents, permits and
waivers and made all filings necessary or appropriate for the consummation
of the transactions contemplated hereby.
(e) All corporate and other proceedings to be taken by the Company in
connection with the transactions contemplated hereby and all documents
relating to such transactions shall be satisfactory in form and substance
to the Investors and its counsel, and the Investors and its counsel shall
have received all such counterpart originals or certified or other copies
of such
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documents as they reasonably may request. The Company shall have delivered
to the Investors a certificate executed by the President and Treasurer of
the Company certifying as to the fulfillment of the conditions specified in
subsections (b), (c), (d), and (i) of this Article 4.
(f) The Investors shall have received copies of the following
documents:
(i) (A) the Articles in the form of EXHIBIT C hereto, bearing
evidence of filing by the Department of State of the State of Florida,
and (B) a certificate of said Department of State, dated as of a
recent date as to the due incorporation and good standing of the
Company;
(ii) a certificate of the Secretary or an Assistant Secretary of
the Company dated the Closing Date and certifying: (A) that attached
thereto is a true and complete copy of the Bylaws of the Company as in
effect on the date of such certification; (B) that attached thereto is
a true and complete copy of all resolutions adopted by the Board of
Directors or the shareholders of the Company authorizing the
execution, delivery, and performance of this Agreement, the Warrants,
the issuance, sale, and delivery of the Common Stock, and that all
such resolutions are in full force and effect and are all the
resolutions adopted in connection with the foregoing agreements and
the transactions contemplated thereby; (C) that the Articles have not
been amended since the date of the last amendment referred to in the
certificate delivered pursuant to clause (i)(B) above; and (D) to the
incumbency and specimen signature of each officer of the Company
executing this Agreement, the Warrants, the stock certificates
representing the Common Stock, and any certificate or instrument
furnished pursuant hereto, and a certification by another officer of
the Company as to the incumbency and signature of the officer signing
the certificate referred to in this clause (ii); and
(iii) such additional supporting documents and other information
with respect to the operations and affairs of the Company as the
Investors or its counsel reasonably may request.
(g) All shareholders of the Company having any preemptive, first
refusal, or other rights with respect to the issuance of the Common Stock
or the Warrants shall have irrevocably waived the same in writing and
copies of such waivers shall have been delivered to Investors' counsel.
ARTICLE 5. CONDITIONS PRECEDENT
The obligation of the Company to issue and sell the Common Stock to the
Investors on the Closing Date is, at its option, subject to the satisfaction, on
or before the Closing Date, of the following conditions:
(a) All representations and warranties of the Investors contained in
Article 3 hereof shall be true and correct on the Closing Date with the
same effect as though such representations and warranties had been made on
and as of such date.
(b) All corporate and other proceedings to be taken by the Investors
in connection with the transactions contemplated hereby, and all documents
incidental thereto, shall be satisfactory in form and substance to the
Company and its counsel.
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(c) The Investors shall have delivered to the Company the full
purchase price for the Common Stock to be purchased hereunder.
ARTICLE 6. COVENANTS OF THE COMPANY
The Company covenants and agrees with the Investors that, unless waived in
accordance with Section 7.9 hereof, so long as any of the Common Stock is
outstanding:
SECTION 6.1. FINANCIAL STATEMENTS, REPORTS, ETC. The Company shall furnish
to the Investors:
(a) within one hundred twenty (120) days after the end of each fiscal
year of the Company, an audited balance sheet of the Company, as of the end
of such fiscal year and the related statements of income, shareholders'
equity, and changes in cash flows for such fiscal year, prepared in
accordance with generally accepted accounting principles and certified by a
firm of independent public accountants of recognized national standing
selected by the Board of Directors of the Company;
(b) within sixty (60) days after the end of each fiscal quarter (other
than the last quarter in each fiscal year) a balance sheet of the Company,
and the related statements of income, shareholders' equity, and changes in
cash flows, unaudited but prepared in accordance with generally accepted
accounting principles and certified by the Chief Financial Officer of the
Company, such balance sheet to be as of the end of such quarter and such
statements of income, shareholders' equity and changes in cash flows to be
for such quarter and for the period from the beginning of the fiscal year
to the end of such quarter, in each case with comparative statements for
the prior fiscal year;
(c) at the time of delivery of each annual financial statement
pursuant to Section 6.1(a) hereof, a certificate executed by the Chief
Financial Officer of the Company stating that such officer has caused this
Agreement, the Articles, and the Warrants to be reviewed and has no
knowledge of any default by the Company in the performance or observance of
any of the provisions of this Agreement, the Articles or the Warrants, if
such officer has such knowledge, specifying such default and the nature
thereof;
(d) at the time of delivery of each quarterly statement pursuant to
Section 6.1(b) hereof, a management narrative report explaining all
significant variances from forecasts and all significant current
developments in staffing, marketing, sales, and operations;
(e) promptly, from time to time, such other information regarding the
business, prospects, financial condition, operations, property, or affairs
of the Company as the Investors reasonably may request.
SECTION 6.2. CORPORATE EXISTENCE. The Company shall maintain and cause any
Investment in which the Company owns a controlling interest to maintain their
respective separate corporate existences, rights, and franchises in full force
and effect.
SECTION 6.3. PROPERTIES, BUSINESS, INSURANCE. The Company shall maintain
and cause any subsidiary to maintain as to their respective properties and
businesses, with financially sound and reputable insurers, insurance against
such casualties and contingencies and of such types and in such amounts as is
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customary for companies similarly situated which insurance shall be deemed by
the Company to be sufficient.
SECTION 6.4. INSPECTION, CONSULTATION, AND ADVICE. The Company shall permit
and cause any subsidiary to permit any of the Investors and such persons as the
Investors may designate, at the expense of the Company once per year, and if
more often than once per calendar year, with the additional visits at such
Investor's expense, to visit and inspect any of the properties of the Company
and any Investment, examine their books and take copies and extracts therefrom,
discuss the affairs, finances, and accounts of the Company with their officers,
employees, and public accountants and the Company hereby authorizes said
accountants to discuss with such Investors and such designees such affairs,
finances, and accounts), and consult with and advise the management of the
Company as to their affairs, finances, and accounts, all at reasonable times and
upon reasonable notice.
SECTION 6.5. RESTRICTIVE AGREEMENTS PROHIBITED. The Company shall not
become a party to any agreement which by its terms restricts the Company's
performance of this Agreement, the Articles, or the Warrants.
SECTION 6.6. TRANSACTIONS WITH AFFILIATES. Except for (a) transactions
contemplated by this Agreement, (b) transactions with the affiliated entities
listed in Section 6.6 of the Disclosure Schedule, provided that the terms of
such transactions are no less favorable to the Company than the terms available
from third parties on an arm's length basis from non-affiliated third parties,
(c) loans by shareholders up to $1,000,000 outstanding at any time, provided
that the security for such loans is limited to the real estate on which the
specific construction activities financed are located and provided further that
the interest rate and terms are no less favorable than the rate and terms
available on an arm's length basis from unaffiliated third parties, or (d) as
otherwise approved by the Board of Directors, the Company shall not enter into
any transaction with any director, officer, employee, or holder or more than 5%
of the outstanding capital stock of any class or series of capital stock of the
Company, member of the family of any such person, or any corporation,
partnership, trust, or other entity in which any such person, or member of the
family of any such person, is a director, officer, trustee, partner, or holder
of more than 5% of the outstanding capital stock thereof, except for
transactions on customary terms related to such person's employment. All
transactions with affiliates shall be reported on a quarterly basis in the
financial reports required by Section 6.1(b) hereof, including, with respect to
each transaction, the affiliate involved, the amount paid to the affiliate in
such quarter, and amounts remaining to be paid to the affiliate by the Company.
SECTION 6.7. USE OF PROCEEDS. The Company shall use the proceeds from the
sale of the Common Stock for general working capital purposes.
SECTION 6.8. BOARD OF DIRECTORS MEETINGS. The Company shall use its best
efforts to ensure that meetings of the Board of Directors of the Company are
held at least four (4) times each year and at least once each quarter.
SECTION 6.9. BYLAWS. The Company shall at all times cause its Bylaws to
provide that, (a) unless otherwise required by the laws of the State of Florida,
(i) any two (2) directors and (ii) any holder or holders of at least 66% of the
outstanding shares of Common Stock or 25% of the outstanding Common Stock, shall
have the right to call a meeting of the Board of Directors or shareholders and
(b) the number of directors fixed in accordance therewith shall in no event
conflict with any of the terms or provisions of the Articles. The Company shall
at all times maintain provisions in its Bylaws or Articles indemnifying all
directors against liability to the maximum extent permitted under the laws of
the State of Florida.
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SECTION 6.10. MAINTENANCE OF OWNERSHIP OF INVESTMENTS. The Company shall
not sell or otherwise transfer any shares of capital stock of any Investment,
except to the Company or another Investment, or permit any Investment in which
the Company owns a controlling interest, to issue, sell or otherwise transfer
any shares of its capital stock or the capital stock of any Investment except to
the Company or another Investment.
SECTION 6.11. DISTRIBUTIONS BY INVESTMENTS. The Company shall not permit
any Investment in which the Company owns a controlling interest to purchase or
set aside any sums for the purchase of, or pay any dividend, or make any
distribution on, any shares of its stock, except for dividends or other
distributions payable to the Company or another Investment in which the Company
owns a controlling interest.
SECTION 6.12. COMPLIANCE WITH LAWS. The Company shall comply with all
applicable laws, rules, regulations, and orders, noncompliance with which could
materially adversely affect its business or condition, financial or otherwise.
SECTION 6.13. KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Company shall
keep adequate records and books of account, in which complete entries will be
made in accordance with generally accepted accounting principles, consistently
applied, reflecting all financial transactions of the Company and in which, for
each fiscal year, all proper reserves for depreciation, depletion, obsolescence,
amortization, taxes, bad debts, and other purposes in connection with its
business shall be made.
SECTION 6.14. EMPLOYEE STOCK PLANS. As long as the Investors shall continue
to own any of the Common Stock, Warrants, or Warrant Shares, the Company shall
sell shares of or grant options to purchase shares of its capital stock to
Employees, officers, and directors of and consultants to the Company only
pursuant to stock option plans or stock purchase plans which have been adopted
and approved by the Company's Board of Directors and only so long as the Company
has an option to repurchase such shares upon the termination of employment with
the Company of such Employees, officers, directors, and consultants, and the
total number of shares of Common Stock as to which the Company may make such
sales or grant such options shall not exceed 10,000 shares, such number subject
to equitable adjustment for reorganizations, stock splits, stock dividends, and
like events (including shares issued or sold pursuant to (i) any such stock
option plan even though the shares were acquired upon the exercise of stock
options which were granted prior to the date hereof, and (ii) any such stock
purchase plans even though the shares acquired thereunder were purchased prior
to the date hereof). Under no circumstances shall the total number of shares of
the Company's Common Stock issued under any such stock purchase plan, plus any
shares issued or subject to issuance under any such stock option plan, exceed
10,000 shares (such number subject to equitable adjustment for reorganizations,
stock splits, stock dividends, and like events) at any time.
SECTION 6.15. PIGGYBACK REGISTRATION RIGHTS. If the Company at any time
proposes to register any of its securities under the Securities Act for sale to
the public, whether for its own account or for the account of other security
holders or both (except with respect to registration statements on Forms S-4 or
S-8 or another form not available for registering the Common Stock and shares
(if any) issuable under the warrants (the "Registrable Securities") for sale to
the public), each such time it will give written notice to Investors of its
intention so to do. Upon the written request of any Investor received by the
Company within 10 days after the giving of any such notice by the Company, to
register such number of Registrable Securities held by such Investor specified
in such written request, the Company will cause the Registrable Securities as to
which registration shall have been so requested to be included in the securities
to be covered by the registration statement proposed to be filed by the Company,
all to the extent requisite to permit the
-17-
sale or other disposition by such Investor (in accordance with its written
request) of such Registrable Securities so registered. In the event that any
registration pursuant to this Section 6.15 shall be, in whole or in part, an
underwritten public offering of Common Stock, the number of Registrable
Securities to be included in such an underwriting may be reduced if and to the
extent that the managing underwriter shall be of the opinion that such inclusion
would adversely affect the marketing of the securities to be sold by the Company
therein. In the event such a reduction is necessary, the reduction shall be
borne first by holders of Common Stock who are not Investors, and if a further
reduction is necessary in the judgment of the managing underwriter, then, all
Investors proposing to sell Registrable Securities and holders of warrants
issued in conjunction with the issuance of the Series A Redeemable Common Stock
and the Series B Redeemable Preferred Stock in the offering shall bear the
reduction on a pro-rata basis, based on the number of Registrable Securities
each Investor proposed to offer for sale in the Offering, or an Investor holding
a majority of the Registrable Securities may elect to withdraw from such
registration all Registrable Securities held by Investors as to which
registration was requested. Notwithstanding the foregoing provisions, the
Company may for any reason and without the consent of Investors withdraw any
registration statement referred to in this Section 6.15 without thereby
incurring any liability to any Investor.
SECTION 6.16. REGISTRATION PROCEDURES. If and whenever the Company is
required by the provisions of Section 6.15 hereof to use its best efforts to
effect the registration of any Registrable Securities under the Securities Act,
the Company will, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement
(which shall be on Form ▇-▇, ▇▇▇▇ ▇-▇, any successor forms thereto, or
other form of general applicability satisfactory to the managing
underwriter selected as herein provided) with respect to such securities
and use its best efforts to cause such registration statement to become and
remain effective for the period of the distribution contemplated thereby
(determined as hereinafter provided);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for the period of distribution and comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such registration statement in accordance
with the intended method of disposition set forth in such registration
statement for such period;
(c) furnish to each Investor and to each underwriter such number of
copies of the registration statement and the prospectus included therein
(including each preliminary prospectus) as such persons reasonably may
request in order to facilitate the public sale or other disposition of the
Registrable Securities covered by such registration statement;
(d) use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under the securities or
"blue sky" laws of such jurisdictions as the Shareholders, or, in the case
of an underwritten public offering, the managing underwriter reasonably
shall request, PROVIDED, HOWEVER, that the Company shall not for any such
purpose be required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to consent
to general service of process in any such jurisdiction;
(e) use its best efforts to list the Registrable Securities covered by
such registration statement with any securities exchange or NASDAQ on which
the Common Stock of the Company is then listed or quoted;
-18-
(f) notify each selling Investor at any time when a prospectus
relating to Registrable Securities is required to be delivered under the
Securities Act of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the
statements therein not misleading, and, at the request of any such
Shareholder, the Company will prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to make
the statements therein not misleading;
(g) notify the selling Investors immediately, and confirm the notice
in writing, (1) when the registration statement becomes effective, (2) of
the issuance by the Commission of any stop order or of the initiation, or
the threatening, of any proceedings for that purpose, (3) of the receipt by
the Company of any notification with respect to the suspension of
qualification of the Registrable Securities for sale in any jurisdiction or
of the initiation, or the threatening, of any proceedings for that purpose,
and (4) of the receipt of any comments, or requests for additional
information, from the Commission or any state regulatory authority. If the
Commission or any state regulatory authority shall enter such a stop order
or order suspending qualification at any time, the Company will promptly
use its best reasonable efforts to obtain the lifting of such order; and
(h) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its security
holders as soon as reasonably practicable, but not later than 15 months
after the effective date of the registration statement, an earnings
statement covering a period of at least 12 months beginning after the
effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act.
For purposes hereof, the period of distribution of Registrable Securities
in a firm commitment underwritten public offering shall be deemed to extend
until each underwriter has completed the distribution of all securities
purchased by it, and the period of distribution of Registrable Securities in any
other registration shall be deemed to extend until the earlier of the sale of
all Registrable Securities covered thereby or 180 days after the effective date
thereof.
In connection with each registration hereunder, each Shareholder will
furnish to the Company in writing such information with respect to it as a
stockholder as reasonably shall be necessary in order to assure compliance with
federal and applicable state securities laws.
In connection with each registration pursuant to Section 6.15 hereof
covering an underwritten public offering, the Company and each Investor agree to
enter into a written agreement with the managing underwriter selected in the
manner herein provided in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
underwriter and companies of the Company's size and investment stature.
SECTION 6.17. EXPENSES. All reasonable expenses incurred by the Company in
complying with Section 6.15 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, fees and expenses
(including counsel fees) incurred in connection with complying with state
securities or "blue sky" laws, fees of the National Association of Securities
Dealers, Inc., transfer taxes, fees of transfer agents and registrars, costs of
insurance, and the reasonable fees and disbursements of one counsel for the
sellers of Registrable
-19-
Securities, but excluding any Selling Expenses, are called "Registration
Expenses." All underwriting discounts and selling commissions applicable to the
sale of Registrable Securities are called "Selling Expenses."
(a) The Company shall pay all Registration Expenses attributable to
the shares of Common Stock and Registrable Securities of Investors included
in the Registration in connection with each registration statement under
Section 6.15 hereof.
(b) All Selling Expenses in connection with each registration
statement under Section 6.15 hereof shall be borne by the Investor and any
other selling stockholder in proportion to the number of shares sold by
Investor, or by such other selling stockholders.
ARTICLE 7. MISCELLANEOUS
SECTION 7.1. SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations, and warranties made herein, or any certificate or instrument
delivered to the Investors pursuant to or in connection with this Agreement
shall survive the execution and delivery of this Agreement, and the closing of
the transactions contemplated hereby and thereby.
SECTION 7.2. BROKERAGE. Each party hereto will indemnify and hold harmless
the others against and in respect of any claim for brokerage or other
commissions relative to this Agreement or to the transactions contemplated
hereby, based in any way on agreements, arrangements, or understandings made or
claimed to have been made by such party with any third party.
SECTION 7.3. PARTIES IN INTEREST. All representations, covenants, and
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not. Without limiting the
generality of the foregoing, all representations, covenants, and agreements
benefiting the Investors shall inure to the benefit of any and all subsequent
holders from time to time of the Common Stock or the Warrants. Notwithstanding
the foregoing, the right to purchase the Common Stock hereunder pursuant to
Section 1.1 may not be sold, transferred, or otherwise assigned except to an
affiliate of the Investors, a successor to substantially all the business and
assets of the Investors.
SECTION 7.4. NOTICES. All notices, requests, consents, and other
communications required or permitted hereunder shall be in writing and shall be
effective when delivered in person or by a courier service, postage prepaid,
addressed as follows:
(a) if to the Company:
Transeastern Properties of South Florida, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
with a copy (which shall not constitute notice) to:
▇▇▇▇ ▇. ▇▇▇▇▇▇, P.A.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
-▇▇-
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
and a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLC
990 One Live Oak Center
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇, Esq.
(b) if to the Investors: At the address of such Investor on SCHEDULE 1
hereto.
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
SECTION 7.5. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida, irrespective of
the choice of law provisions thereof.
SECTION 7.6. ENTIRE AGREEMENT. This Agreement, including the Schedules and
Exhibits hereto, and the other documents delivered pursuant hereto constitute
the full and entire agreement of the parties with respect to the subject matter
hereof and thereof. All Schedules and Exhibits hereto are hereby incorporated
herein by reference.
SECTION 7.7. 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 7.8. AMENDMENTS. This Agreement may not be amended or modified, and
no provisions hereof may be waived, without the written consent of the Company
and the holders of at least two-thirds of the outstanding shares of Common Stock
and Warrant Shares.
SECTION 7.9. SEVERABILITY. If any provision of this Agreement shall be
declared void or unenforceable by any judicial or administrative authority to
the extent possible, it shall be modified in such manner as to be valid, legal,
and enforceable but so as to most nearly retain the intent of the parties and,
if such modification is not possible, such provision shall be severed from this
Agreement, and in either case, the validity and enforceability of any other
provision and of the entire Agreement shall not be affected thereby.
SECTION 7.10. TITLES AND SUBTITLES. The title and subtitles used in this
Agreement are for convenience only and are not to be considered in construing or
interpreting any term or provision of this Agreement.
SECTION 7.11. 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):
-21-
(a) "affiliate" shall mean, with respect to any person, any person
directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such other person.
(b) "person" shall mean an individual, corporation, trust,
partnership, joint venture, limited liability company, unincorporated
organization, government agency, or any agency or political subdivision
thereof, or other entity.
IN WITNESS WHEREOF, the Company and the Investors have executed this
Agreement as of the day and year first above written.
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA,
INC.
By: _____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Attest:
-----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇., Secretary
INVESTORS:
------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------
▇▇▇▇ ▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee
------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
-22-
SCHEDULE 1
TO
COMMON STOCK
AND
WARRANT PURCHASE AGREEMENT
COMMON STOCK AGGREGATE
INVESTOR NAME AND ADDRESS PURCHASED PURCHASE PRICE DATE PURCHASED
------------------------- --------- -------------- --------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Taxpayer ID No.: ###-##-#### 36,606 $2,800,000.00 April 15, 1996
▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 654 $50,000.00 May 7, 1996
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 654 $50,000.00 May 3, 1996
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee of the
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Rev. Living Trust
9/1/93
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 1,309 $100,000.00 __________
TOTALS 39,223 $3,000,000.00
SCHEDULE 2
TO
COMMON STOCK
AND
WARRANT PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SCHEDULE 2
TO
COMMON STOCK PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 2.1 (B) COMPANIES WHOSE SECURITIES ARE HELD BY TRANSEASTERN
Transeastern Wellington Properties, Inc.
Transeastern Pembroke Villages, Inc.
Transeastern Hollywood Apartments, Inc.
Transeastern Plantation Apartments, Inc.
Transeastern Abeerdeen Properties
Transeastern Finance, Inc.
Transeastern Properties at the Cove, Inc.
Transeastern Pembroke Properties, Inc.
100% of the common stock of the foregoing companies is owned by
Transeastern Properties of South Florida, Inc.
SECTION 2.4 CURRENT OWNERS OF TRANSEASTERN COMMON STOCK, PREFERRED STOCK
AND WARRANTS
See Attachment 1 hereto.
SECTION 2.7 All PERSONAL property/equipment owned by Transeastern.
Bank of North America holds a lien on corporate office
furniture.
SECTION 2.13 Loans by Transeastern to anyone.
None.
SECTION 2.16 Unaudited balance sheet date ended 12/31/95.
See Attachment 2 hereto.
SECTION 2.18(F) MATERIAL CHANGES
Since the date of the most recent Consolidated Balance Sheet,
Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Vice President of Construction, has
resigned.
SECTION 2.19 EMPLOYEE BENEFIT PLANS
The Company provides group hospitalization coverage for all of
its full-time employees after four months service. The limits
of such coverage are $1,000,000 per covered person. The Company
pays 75% of the cost of such coverage for all employees, with
the remaining 25% of the cost for employee coverage and 100% of
the cost of any dependent coverage being paid by such
employees. Such coverage is provided by Blue Cross/Blue Shield.
The Company provides one week paid vacation to employees after
one year; 2 weeks after 2 years; and 3 weeks for salaried
employees after 3 years. There is no limit on the amount of
vacations which officers are entitled to take.
The Company provides life insurance coverage on the lives of
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇. The
beneficiaries of such policies are the Company and the wives of
such respective officers.
The Company has no severance policy.
SECTION 2.22 TRANSACTIONS WITH AFFILIATES
The Company leases office space from University Financial
Plaza Associates, Ltd. ("University"), a limited partnership
formed in June, 1994 for the purpose of acquiring the office
building located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇. Such lease pre-dates the formation of University and
was negotiated with its predecessor in title, Metropolitan Life
Insurance Company. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇. own 100% of the stock of the corporate
general partner of University, three Class A limited partner
units and 1.59 Class B limited partner units in University.
The Company also has various loans from officers and affiliates
as disclosed in the Financial Statements attached as Exhibit
"A" to the Private Placement Memorandum.
SECTION 6.6 AFFILIATES
Transeastern Construction, Inc.
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.
CONSOLIDATED PROFIT AND LOSS STATEMENT
FOR ALL LOCATIONS
FOR ALL DEPARTMENTS
FOR THE PERIOD JULY 1, 1995 TO DECEMBER 31, 1995
CURRENT PERIOD YEAR TO DATE CURRENT PERIOD YTD
AMOUNT AMOUNT BUDGET BUDGET
-------------- ------------- -------------- -------------
Revenue
Housing Revenue-Base Price $17,776,543.19 $17,776,543.19 $19,506,000.00 $19,506,000.00
Housing Revenue-Option/Upgrade 499,321.99 499,321.99 .00 .00
Revenue-Lot Sales 385,500.00 385,500.00 .00 .00
Revenue-Land Sales 14,707,000.00 14,707,000.00 14,662,000.00 14,662,000.00
------------- ------------- ------------ -------------
Total Revenue $33,368,365.18 $33,368,365.18 $34,168,000.00 $34,168,000.00
------------- ------------- ------------ -------------
Cost of Sales
Cos-Inv & CC (Housing) $15,561,140.55 $15,561,140.55 $16,644,000.00 $16,644,000.00
Cos-Commissions (Housing) 724,313.41 724,313.41 368,100.00 368,100.00
Cos-Closed Job Exp (Housing) (31,338.82) (31,338.82) .00 .00
Cos-Inv & CC (Lot Sales) 236,546.41 236,546.41 .00 .00
Cos-Inv & CC (Land Sales) 12,983,976.64 12,983,976.64 13,148,000.00 13,148,000.00
------------- ------------- ------------- -------------
Total Cost of Sales $29,474,638.19 $29,474,638.19 $30,160,100.00 $30,160,100.00
------------- ------------- ------------- -------------
Gross Margin $ 3,893,726.99 $ 3,893,726.99 $ 4,007,900.00 $ 4,007,900.00
Equity Income (Loss) from JV 326,004.00 326,004.00 797,000.00 797,000.00
------------- ------------- ------------- -------------
Total Equity Income (Loss) $ 326,004.00 $ 326,004.00 $ 797,000.00 $ 797,000.00
------------- ------------- ------------- -------------
Other Income
Other Income-Rental $ 24,054.60 $ 24,054.60 .00 .00
Other Income-Management Fees 63,321.93 63,321.93 .00 .00
Other Income-Club Membership 136,020.00 136,020.00 .00 .00
Other Income-Int. & Misc. 182,938.08 182,938.08 45,000.00 45,000.00
------------- ------------- ------------- -------------
Total Other Income $ 406,334.61 $ 406,334.61 $ 45,000.00 $ 45,000.00
------------- ------------- ------------- -------------
Selling Expenses
Salaries & Wages-Sales $ 178,422.82 $ 178,422.82 $ 178,425.00 $ 178,425.00
Employee Taxes/Benefits-Sale 19,416.84 19,416.84 19,531.00 19,531.00
Advertising 631,068.32 631,068.32 620,827.00 620,827.00
Promotional Expenses 35,905.41 35,905.41 35,910.00 35,910.00
Model Expense 219,520.96 219,520.96 210,935.00 210,935.00
Sales Office Expense 78,591.77 78,591.77 80,331.00 80,331.00
Inventory Home Costs 1,281.72 1,281.72 1,357.00 1,357.00
Misc. Sales Expense 8,378.53 8,378.53 8,368.00 8,368.00
Total Selling Expenses $ 1,172,586.37 $ 1,172,586.37 $ 1,155,684.00 $ 1,155,684.00
============= ============= ============= ==============
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.
CONSOLIDATED PROFIT AND LOSS STATEMENT
FOR ALL LOCATIONS
FOR ALL DEPARTMENTS
FOR THE PERIOD JULY 1, 1995 TO DECEMBER 31, 1995
CURRENT PERIOD YEAR TO DATE CURRENT PERIOD YTD
AMOUNT AMOUNT BUDGET BUDGET
-------------- ------------ -------------- ------------
Construction Expenses
Salaries & Wages-Field $ 48,393.01 $ 48,393.01 $ 50,000.00 $ 50,000.00
Employee Taxes/Benefits-Field 1,183.71 1,183.71 .00 .00
Warranty Expense 57,159.15 57,159.15 142,350.00 142,350.00
CIP Inventory Costs 5,194.47 5,194.47 5,195.00 5,195.00
Construction Office Expense 51,150,41 51,150,41 51,640.00 51,640.00
Community Maintenance 15,849.46 15,849.46 11,735.00 11,735.00
Other Misc. Field Expense 3,377.96 3,377.96 3,935.00 3,935.00
------------ ------------ ------------ ------------
Total construction Expense $ 182,388.17 $ 182,388.17 $ 264,855.00 $ 264,855.00
------------ ------------ ------------ ------------
General & Admin. Expenses
Salaries & Wages $ 767,998.21 $ 767,998.21 $ 702,969.00 $ 702,969.00
Employee Taxes/Benefits 112,900.87 112,900.87 116,780.00 116,780.00
Professional Fees 70,869.06 70,869.06 70,869.00 70,869.00
Auto Expense 58,291.44 58,291.44 58,291.00 58,291.00
Corporate Office Rent Expense 25,043.12 25,043.12 30,084.00 30,084.00
Corporate Office Expense 130,501.27 130,501.27 129,644.00 129,644.00
Repairs & Maintenance 5,013.56 5,013.56 5,014.00 5,014.00
Insurance 54,269.52 54,269.52 40,258.00 40,258.00
Depreciation 103,635.71 103,635.71 103,637.00 103,637.00
Travel & Entertainment 39,579.75 39,579.75 39,579.00 39,579.00
Property Taxes 501.06 501.06 25,501.00 25,501.00
Misc. Gen. & Admin. 1,120.30 1,120.30 1,821.00 1,821.00
------------ ------------ ------------ ------------
Total General & Admin. Exp. $1,369,723.87 $1,369,723.87 $1,324,447.00 $1,324,447.00
------------ ------------ ------------ ------------
Interest Expense $ 137,040.40 $ 137,040.40 .00 .00
------------ ------------ ------------ ------------
Net Income Before Income Taxes $1,764,406.79 $1,764,406.79 $2,104,914.00 $2,104,914.00
------------ ------------ ------------ ------------
Net Income $1,764,406.79 $1,764,406.79 $2,104,914.00 $2,104,914.00
============ ============ ============ ============
04/01/95
% SHARES START OF END OF CASH PD TOTAL
OWNED AMOUNT DIVIDEND DIVIDEND DIVIDEND % OF FRACTIONAL CASH
01/01/95 INVESTED PERIOD PERIOD AMOUNT SHARES CERT # SHARES PAY'T.
-------- -------- -------- -------- -------- ------ ------ ---------- ------
▇▇▇▇▇ ▇▇▇▇▇▇ 418 41,800 01/02/95 04/01/95 1,233.08 12 95 6 23.08 37.74
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 118 11,800 01/02/95 04/01/95 345.27 3 95 7 45.27 89.33
▇▇▇▇▇ ▇▇▇▇▇▇ 237 23,700 01/02/95 04/01/95 693.47 6 95 8 93.47 184.57
▇▇▇▇▇ ▇▇▇▇▇▇ 118 11,800 01/02/95 04/01/95 345.27 3 95 9 45.27 89.33
Handler Family Trust 1,204 120,400 01/02/95 04/01/95 3,522.94 35 95 10 22.94 120.33
----- ------- -------- --
2,095 209,500 6,130.03 59
===== ======= ======== ==
07/01/95
% SHARES START OF END OF CASH PD TOTAL
OWNED AMOUNT DIVIDEND DIVIDEND DIVIDEND % OF FRACTIONAL CASH
04/01/95 INVESTED PERIOD PERIOD AMOUNT SHARES CERT # SHARES PAY'T.
-------- -------- -------- -------- -------- ------ ------ ---------- ------
▇▇▇▇▇ ▇▇▇▇▇▇ 430 43,000 04/01/95 07/01/95 1,286.47 12 95 11 86.47
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 121 12,100 04/01/95 07/01/95 362.01 3 95 12 62.01
▇▇▇▇▇ ▇▇▇▇▇▇ 243 24,300 04/01/95 07/01/95 727.00 7 95 13 27.00
▇▇▇▇▇ ▇▇▇▇▇▇ 121 12,100 04/01/95 07/01/95 362.01 3 95 14 62.01
Handler Family Trust 1,239 123,900 04/01/95 07/01/95 3,706.82 37 95 15 6.82
----- ------- -------- --
2,154 215,400 6,444.30 62
===== ======= ======== ==
10/01/95
% SHARES START OF END OF CASH PD TOTAL
OWNED AMOUNT DIVIDEND DIVIDEND DIVIDEND % OF FRACTIONAL CASH
07/01/95 INVESTED PERIOD PERIOD AMOUNT SHARES CERT # SHARES PAY'T.
-------- -------- -------- -------- -------- ------ ------ ---------- ------
▇▇▇▇▇ ▇▇▇▇▇▇ 442 44,200 07/02/95 10/01/95 1,340.73 13 95 16 40.73
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 124 12,400 07/02/95 10/01/95 376.13 3 95 17 76.13
▇▇▇▇▇ ▇▇▇▇▇▇ 250 25,000 07/02/95 10/01/95 758.33 7 95 18 58.33
▇▇▇▇▇ ▇▇▇▇▇▇ 124 12,400 07/02/95 10/01/95 376.13 3 95 19 76.13
Handler Family Trust 1,276 127,600 07/02/95 10/01/95 3,870.53 38 95 20 70.53
----- ------- -------- --
2,216 221,600 6,721.87 64
===== ======= ======== ==
01/01/96
% SHARES START OF END OF CASH PD TOTAL
OWNED AMOUNT DIVIDEND DIVIDEND DIVIDEND % OF FRACTIONAL CASH
07/01/95 INVESTED PERIOD PERIOD AMOUNT SHARES CERT # SHARES PAY'T.
-------- -------- -------- -------- -------- ------ ------ ---------- ------
▇▇▇▇▇ ▇▇▇▇▇▇ 455 45,500 10/02/95 01/01/95 1,380.17 13 95 16 80.17
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 127 12,700 10/02/95 01/01/95 385.23 3 95 17 85.23
▇▇▇▇▇ ▇▇▇▇▇▇ 257 25,700 10/02/95 01/01/95 779.57 7 95 18 79.57
▇▇▇▇▇ ▇▇▇▇▇▇ 127 12,700 10/02/95 01/01/95 385.23 3 95 19 85.23
Handler Family Trust 1,314 131,400 10/02/95 01/01/95 3,985.80 39 95 20 85.80
----- ------- -------- --
2,280 228,000 6,916.00 65
===== ======= ======== ==
TRANSEASTERN PROPERTIES
SUMMARY OF PREFERRED STOCK DIVIDENDS
SERIES B
01/01/96
START OF END OF CASH PD
AMOUNT # OF DIVIDEND DIVIDEND DIVIDEND % OF FRACTIONAL AMOUNT
HOLDER INVESTED WARRANTS PERIOD PERIOD AMOUNT SHARES CERT # SHARES INVESTED
------ -------- -------- --------- -------- -------- ------ ------ ---------- --------
▇▇▇▇▇▇▇▇▇▇, A. 220,100 4,396 10/01/95 12/31/95 6,584.91
▇▇▇▇▇▇▇▇▇▇, A. 100,000 2,198 09/27/95 12/31/95 3,123.29
320,100 6,594 9,708.20 97 B 86 8.20 329,800
Bruno 110,000 2,198 10/01/95 12/31/95 3,290.96
Bruno 162,000 3,297 10/01/95 12/31/95 4,846.68
272,000 5,495 8,137.64 81 B 87 37.64 280,100
▇. ▇▇▇▇▇▇▇ Trust 440,400 8,793 10/01/95 12/31/95 13,175.80
▇. ▇▇▇▇▇▇▇ Trust 100,000 2,198 12/06/94 12/31/95 12,821.92
▇. ▇▇▇▇▇▇▇ Trust-retro payt 75,000 12/06/94 06/30/95 5,079.45
▇. ▇▇▇▇▇▇▇ Trust 77,200 1,649 10/01/95 2/31/95 2,309.65
▇. ▇▇▇▇▇▇▇ Trust 50,000 1,099 12/06/94 12/31/95 6,410.96
667,600 13,739 39,797.79 397 B 88 97.79 707,300
▇▇▇▇ 27,400 550 10/01/95 12/31/95 819.75
▇▇▇▇ 25,000 550 09/27/95 12/31/95 780.82
52,400 1,100 1,600.57 16 B 89 0.57 54,000
▇▇▇▇▇▇▇▇▇, R&E Living Tr. 21,900 440 10/01/95 12/31/95 655.20
▇▇▇▇▇▇▇▇▇, R&E Living Tr. 20,000 440 09/27/95 12/31/95 624.66
41,900 880 1,279.86 12 B 90 79.86 43,100
Aboiafia 109,600 2,198 10/01/95 12/31/95 3,278.99 32 B 91 76.99 112,800
Andreacci 27,400 550 10/01/95 12/31/95 819.75 8 B 92 19.75 28,200
▇▇▇▇▇▇▇▇▇▇▇ 440,400 8,792 10/01/95 12/31/95 13,175.80 131 B 93 75.80 453,500
▇▇▇▇▇ Johnson1 75,000 3,847 10/13/95 12/31/95 4,545.21 45 B 94 45.21 179,500
▇▇▇▇▇▇▇▇ 27,400 550 10/01/95 12/31/95 819.75 8 B 95 19.75 28,200
Ciaricurzio 27,400 550 10/01/95 12/31/95 819.75 8 B 96 19.75 28,200
▇▇▇▇▇ 110,000 2,198 10/01/95 12/31/95 3,290.96 32 B 97 90.96 113,200
▇▇▇▇▇▇▇▇▇▇ 25,000 550 09/27/95 12/31/95 780.82 7 B 98 80.82 25,700
Day 27,300 550 10/01/95 12/31/95 816.76 8 B 99 16.76 28,100
▇▇▇▇▇▇▇▇▇▇ 25,000 550 09/29/95 12/31/95 764.38 7 B 100 64.38 25,700
▇▇▇▇▇▇ 27,400 550 10/01/95 12/31/95 819.75 8 B 101 19.75 28,200
▇▇▇▇▇▇▇▇ 165,000 3,297 10/01/95 12/31/95 4,936.44 49 B 102 36.44 169,900
START OF END OF CASH PD
AMOUNT # OF DIVIDEND DIVIDEND DIVIDEND % OF FRACTIONAL AMOUNT
HOLDER INVESTED WARRANTS PERIOD PERIOD AMOUNT SHARES CERT # SHARES INVESTED
------ -------- -------- --------- -------- -------- ------ ------ ---------- --------
▇▇▇▇ Passarelli1 50,000 3,297 10/19/95 12/31/95 3,600.00 36 B 103 0.00 153,600
▇▇▇▇▇, ▇▇▇▇▇▇ 25,000 550 09/27/95 12/31/95 780.82 7 B 104 80.82 25,700
▇▇▇▇ 25,000 550 09/27/95 12/31/95 760.82 7 B 105 80.82 25,700
▇▇▇▇▇▇ 20,000 440 09/27/95 12/31/95 624.66 6 B 106 24.66 20,600
Musto 107,900 2,198 10/01/95 12/31/95 3,228.13 32 B 107 28.13 111,100
▇▇▇▇▇▇▇▇▇ 27,400 550 10/01/95 12/31/95 819.75 8 B 108 19.75 28,200
▇. ▇▇▇▇▇▇▇▇▇▇ 32,900 659 10/01/95 12/31/95 964.30 9 B 109 84.30 33,800
▇▇▇▇▇▇▇▇ 65,900 1,319 10/01/95 12/31/95 1,971.58 19 B 110 71.58 67,800
Prezzamoio 110,000 2,198 10/01/95 12/31/95 3,290.96 32 B 111 90.96 113,200
Spizzio 25,000 550 09/28/95 12/31/95 772.60 7 B 112 72.60 25,700
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. Tr. 25,000 550 09/27/95 12/31/95 780.82 7 B 113 80.82 25,700
▇▇▇▇▇ 52,100 1,100 10/01/95 12/31/95 1,558.72 15 B 114 58.72 53,600
--------- ------ -------- --- -------- ---------
3,207,100 65,951 114,585.57 1,131 1,485.57 3,320,200
========= ====== ========== ===== ======== =========
SCHEDULE 3
TO
COMMON STOCK
AND
WARRANT PURCHASE AGREEMENT
ACCREDITED INVESTOR CERTIFICATES
EXHIBIT A
TO
COMMON STOCK
AND
WARRANT PURCHASE AGREEMENT
FORM OF WARRANT
THIS WARRANT HAS BEEN, AND THE WARRANT SHARES ISSUABLE UPON EXERCISE HEREOF WILL
BE, ISSUED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT") AND OF THE FLORIDA INVESTOR
PROTECTION ACT (THE "FLORIDA ACT"). SUCH SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, OR TRANSFERRED OTHER THAN (I) PURSUANT TO AN EFFECTIVE REGISTRATION OR AN
EXEMPTION THEREFROM UNDER THE 1933 ACT AND THE FLORIDA ACT, AND (II) UPON
RECEIPT BY THE ISSUER OF EVIDENCE SATISFACTORY TO IT OF COMPLIANCE WITH THE 1933
ACT, THE FLORIDA ACT, AND THE APPLICABLE SECURITIES LAWS OF ANY OTHER
JURISDICTION. THE ISSUER SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL
SATISFACTORY TO IT WITH RESPECT TO COMPLIANCE WITH THE ABOVE LAWS.
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.
Original Issue Date: April 15, 1996 Warrant No. 96C-2
WARRANT TO PURCHASE COMMON STOCK
THIS CERTIFIES THAT IN CONNECTION WITH, and as an inducement to ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ (the "Holder"), to consummate the transactions contemplated by that
certain Common Stock Purchase Agreement, dated March 25, 1996 among Holder,
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC., a Florida corporation (the
"Corporation"), and certain other parties identified therein (the "Purchase
Agreement"), Holder may become entitled to purchase, on the terms and conditions
hereinafter set forth, a number shares of the Common Stock, $.01 par value, of
the Corporation (the "Common Stock") determined pursuant to Section 2.3 hereof,
at a price $.01 per share (the "Exercise Price"). Each share of Common Stock as
to which this Warrant is exerciseable is a "Warrant Share" and all such shares
are collectively referred to as the "Warrant Shares").
SECTION 1. REGISTRATION OF WARRANT. This Warrant is one of a series of
Warrants (collectively, the "Transaction Warrants") issued in connection with
the transaction contemplated by the Purchase Agreement. Each Transaction Warrant
contains identical terms except for the number of Warrant Shares and the
distinctive Warrant number. The Corporation shall register this Warrant, upon
records to be maintained by the Corporation for that purpose, in the name of the
record Holder of this Warrant from time to time. The Corporation shall deem and
treat the registered Holder of this Warrant as the absolute owner hereof for the
purpose of any exercise or any distribution to the Holder hereof, and for all
other purposes, and the Corporation shall not be affected by any notice to the
contrary.
SECTION 2. EXERCISE OF WARRANT.
2.1. TIME OF EXERCISE. This Warrant may be exercised in whole or in part,
at any time or from time to time prior to 5:00 p.m., Eastern Standard Time, on
the first anniversary of the Determination Date (as defined in Section 2.3
hereof), unless extended as hereinafter provided. The last day this Warrant can
be exercised is hereinafter referred to as the "Expiration Date."
2.2. MANNER OF EXERCISE. In order to exercise this Warrant, the registered
Holder hereof shall deliver to the Corporation at its principal office at ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: President, or at such
other office as shall be designated by the Corporation in writing pursuant to
Section 12 hereof on or before 5:00 p.m. Eastern Standard Time on the Expiration
Date, (i) a written notice of such registered Holder's election to exercise this
Warrant (the "Exercise Notice"), which notice may be in the form of the Notice
of Exercise attached hereto, properly executed and completed by the registered
-1-
Holder or an authorized officer thereof, (ii) a check payable to the order of
the Corporation, in an amount equal to the product of the Exercise Price
MULTIPLIED BY the number of Warrant Shares specified in the Exercise Notice, AND
(iii) this Warrant (the items specified in (i), (ii), and (iii) are collectively
the "Exercise Materials"). Upon timely receipt of the Exercise Materials, the
Corporation shall, as promptly as practicable, and in any event within ten (10)
business days after its receipt of the Exercise Materials, execute or cause to
be executed and delivered to such registered Holder a certificate or
certificates representing the number of Warrant Shares specified in the Exercise
Notice, together with cash in lieu of any fraction of a share, as hereinafter
provided, and, (x) if the Warrant is exercised in full, a copy this Warrant
marked "Exercised" or (y) if the Warrant is partially exercised, a copy this
Warrant marked "Partially Exercised" together with a new Warrant on the same
terms for the unexercised balance of the Warrant Shares. All of the certificates
evidencing Warrant Shares shall bear the legend set forth in Section 7.2 hereof.
The stock certificate or certificates shall be registered in the name of the
registered Holder of this Warrant or such other name as shall be designated in
the Exercise Notice. The date on which the Warrant shall be deemed to have been
exercised (the "Exercise Date"), and the date the person in whose name any
certificate for Warrant Shares is issued shall be deemed to have become the
holder of record of such shares, shall be the date the Corporation receives the
Exercise Materials, irrespective of the date of delivery of a certificate or
certificates evidencing the Warrant Shares, except that, if the date on which
the Exercise Materials are received by the Corporation is a date when the stock
transfer books of the Corporation are closed, the Exercise Date shall be the
date the Corporation receives the Exercise Materials, and the date such person
shall be deemed to have become the holder of the Warrant Shares shall be the
next succeeding date on which the stock transfer books are open.
2.3. CALCULATION OF WARRANT SHARES The number of Warrant Shares (if any)
issuable upon exercise of this Warrant shall be fixed on the effective date of
the first registration statement (the "Determination Date") filed on Form S-1 or
S-18 (or any successor form thereto) filed with the Securities and Exchange
Commission (the "Registration Statement"). The number of Warrant Shares issuable
under this Warrant shall be:
(a) zero if the quotient of (i) the Share Price MINUS the Purchase
Price, DIVIDED BY the Purchase Price is greater than or equal to 25%.
(b) Equal to the quotient of (i) Share Price MINUS Purchase Price
MULTIPLIED BY the number of Purchased Shares DIVIDED BY (ii) the Share
Price if the quotient of (i) the Share Price MINUS the Purchase Price
DIVIDED BY the Purchase Price is less than 25%.
(c) The capitalized terms listed below are used with the meanings
thereafter ascribed.
"PURCHASED SHARES" means the number of shares of Common Stock purchased by
Holder from the Company pursuant to the Purchase Agreement, as adjusted for any
stock splits, stock dividends, or similar transactions.
"PURCHASE PRICE" means the purchase price for one (1) share of Common Stock
purchased by Holder pursuant to the Purchase Agreement, as adjusted for any
stock splits, stock dividends, or similar transactions.
"SHARE PRICE" means the price to the public in the Registration Statement,
before deduction of underwriting discounts, fees, and expenses.
2
SECTION 3. ADJUSTMENTS TO WARRANT SHARES. The number of Warrant Shares
issuable upon the exercise hereof shall be subject to adjustment in certain
cases as set forth in this Section 3 which occur AFTER the Determination Date.
3.1. CONSOLIDATION, MERGER, OR SALE. In the event the Corporation is a
party to a consolidation, share exchange, or merger, or the sale of all or
substantially all of the assets of the Corporation to, any person, or in the
case of any consolidation or merger of another corporation into the Corporation
in which the Corporation is the surviving corporation, and in which there is a
reclassification or change of the shares of Common Stock of the Corporation,
this Warrant shall after such consolidation, share exchange, merger, or sale be
exerciseable for the kind and number of securities or amount and kind of
property of the Corporation or the corporation or other entity resulting from
such share exchange, merger, or consolidation, or to which such sale shall be
made, as the case may be (the "Successor Corporation"), to which a holder of the
number of shares of Common Stock deliverable upon the exercise (immediately
prior to the time of such consolidation, share exchange, merger, or sale) of
this Warrant would have been entitled upon such consolidation, share exchange,
merger, or sale; and in any such case appropriate adjustments shall be made in
the application of the provisions set forth herein with respect to the rights
and interests of the registered Holder of this Warrant, such that the provisions
set forth herein shall thereafter correspondingly be made applicable, as nearly
as may reasonably be, in relation to the number and kind of securities or the
type and amount of property thereafter deliverable upon the exercise of this
Warrant. The above provisions shall similarly apply to successive
consolidations, share exchanges, mergers, and sales. Any adjustment required by
this Section 3.1 because of a consolidation, share exchange, merger, or sale
shall be set forth in an undertaking delivered to the registered Holder of this
Warrant and executed by the Successor Corporation which provides that the Holder
of this Warrant shall have the right to exercise this Warrant for the kind and
number of securities or amount and kind of property of the Successor Corporation
or to which the holder of a number of shares of Common Stock deliverable upon
exercise (immediately prior to the time of such consolidation, share exchange,
merger, or sale) of this Warrant would have been entitled upon such
consolidation, share exchange, merger, or sale. Such undertaking shall also
provide for future adjustments to the number of Warrant Shares and the Exercise
Price in accordance with the provisions set forth in Section 3 hereof.
3.2. ADJUSTMENTS FOR STOCK DIVIDENDS AND SPLITS. In the event the
Corporation should at any time, or from time to time after the Original Issue
Date, fix a record date for the effectuation of a stock split or subdivision of
the outstanding shares of Common Stock or the determination of holders of Common
Stock entitled to receive a dividend or other distribution payable in additional
shares of Common Stock, or securities or rights convertible into, or entitling
the holder thereof to receive directly or indirectly, additional shares of
Common Stock (hereinafter referred to as "Common Stock Equivalents") without
payment of any consideration by such holder for the additional shares of Common
Stock or the Common Stock Equivalents (including the additional shares of Common
Stock issuable upon exercise or exercise thereof), then, as of such record date
(or the date of such dividend, distribution, split, or subdivision if no record
date is fixed), the number of Warrant Shares issuable upon the exercise hereof
shall be proportionately increased and the Exercise Price shall be appropriately
decreased by the same proportion as the increase in the number of outstanding
Common Stock Equivalents of the Corporation resulting from the dividend,
distribution, split, or subdivision. Notwithstanding the preceding sentence, no
adjustment shall be made to decrease the Exercise Price below $.01 per Share.
3.3. REVERSE STOCK SPLITS. In the event the Corporation should at any time
or from time to time after the Original Issue Date, fix a record date for the
effectuation of a reverse stock split, or a transaction having a similar effect
on the number of outstanding shares of Common Stock of the Corporation, then, as
of such record date (or the date of such reverse stock split or similar
transaction if no
3
record date is fixed), the number of Warrant Shares issuable upon the exercise
hereof shall be proportionately decreased and the Exercise Price shall be
appropriately increased by the same proportion as the decrease of the number of
outstanding Common Stock Equivalents resulting from the reverse stock split or
similar transaction.
3.4. RECLASSIFICATION. In the event the Corporation should at any time or
from time to time after the Original Issue Date, fix a record date for a
reclassification of its Common Stock, then, as of such record date (or the date
of the reclassification if no record date is set), this Warrant shall thereafter
be convertible into such number and kind of securities as would have been
issuable as the result of such reclassification to a holder of a number of
shares of Common Stock equal to the number of Warrant Shares issuable upon
exercise of this Warrant immediately prior to such reclassification, and the
Exercise Price shall be unchanged.
3.5. NO DILUTION OR IMPAIRMENT. The Corporation will not, by amendment of
its Articles of Incorporation or through reorganization, consolidation, merger,
dissolution, issue, or sale of securities, sale of assets or any other voluntary
action, void or seek to avoid the observance or performance of any of the terms
of the Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such actions as may be necessary or
appropriate in order to protect the rights of the Holder against dilution or
other impairment. Without limiting the generality of the foregoing, the
Corporation (a) will not create a par value of any share of stock receivable
upon the exercise of the Warrant above the amount payable therefor upon such
exercise, and (b) will take all such action as may be necessary or appropriate
in order that the Corporation may validly and legally issue fully paid and
non-assessable shares upon the exercise of the Warrant.
3.6. NOTICE OF ADJUSTMENT. When any adjustment is required to be
made in the number or kind of shares purchasable upon exercise of the Warrant,
or in the Exercise Price, the Corporation shall promptly notify the Holder of
such event and of the number of shares of Common Stock or other securities or
property thereafter purchasable upon exercise of the Warrants and of the
Exercise Price, together with the computation resulting in such adjustment.
SECTION 4. COVENANTS AS TO COMMON STOCK. The Corporation covenants and
agrees that all Warrant Shares which may be issued will, upon issuance, be
validly issued, fully paid and non-assessable. The Corporation further covenants
and agrees that the Corporation will at all times have authorized and reserved,
free from preemptive rights, a sufficient number of shares of its Common Stock
to provide for the exercise of the Warrant in full.
SECTION 5. NO STOCKHOLDER RIGHTS. This Warrant shall not entitle the Holder
hereof to any voting rights or other rights as a stockholder of the Corporation.
SECTION 6. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE HOLDER . The
registered Holder of this Warrant, by acceptance of this Warrant represents,
warrants, and covenants to the Corporation as follows:
(a) The Holder is acquiring this Warrant, and agrees that the exercise
of this Warrant and the acceptance of a certificate for Warrant Shares
shall constitute its representation that the Warrant Shares are being
acquired, for its own account for investment and not with a view to the
distribution thereof, subject, however, to Holder's right to transfer this
Warrant and the Warrant Shares in accordance with and subject to the
restrictions on such transfer set forth herein.
4
(b) The Holder understands that this Warrant and the Warrant Shares
have not been registered under the Securities Act of 1933, as amended (the
"Securities Act") or state securities laws, by reason of their issuance in
a transaction exempt from the registration requirements of the Securities
Act and applicable state securities laws. The Holder acknowledges being
informed that this Warrant and the Warrant Shares must be held indefinitely
unless this Warrant or the Warrant Shares are registered for sale by such
Holder under the Securities Act and applicable state securities laws or an
exemption from registration is available. The Holder understands that a
sale of the Warrant Shares made in reliance upon Rule 144 promulgated under
the Securities Act ("Rule 144") can only be made in accordance with the
terms and conditions of Rule 144 and further understands that in the event
that the exemption from registration provided by such Rule is not
available, compliance with some other exemption under the Securities Act
will be required in the absence of registration.
(c) The Holder agrees not to sell, transfer, pledge or hypothecate
this Warrant or any Warrant Shares unless a Registration statement is
effective for this Warrant or Warrant Shares under the Securities Act or,
in the written opinion of such Holder's counsel (a copy of which opinion
shall be addressed to and delivered to the Corporation, and which counsel
and which opinion shall be reasonably satisfactory to the Corporation),
such transaction will not result in any violation of the registration
requirements of the Securities Act or any applicable state securities law.
The Corporation may not, and may instruct its transfer agent not to,
transfer this Warrant or the Warrant Shares unless the Corporation has been
advised by its counsel that the Holder has complied with the provisions of
this Warrant and applicable securities laws relating to the proposed
transfer.
SECTION 7. TRANSFER OF SECURITIES.
7.1. RESTRICTION ON TRANSFER. This Warrant and the Warrant Shares and
any shares of capital stock received in respect thereof, whether by reason
of a stock split or share reclassification thereof, a stock dividend
thereon, or otherwise, shall not be transferable except upon the conditions
specified in Section 6 and this Section 7, which conditions are intended to
ensure compliance with the provisions of the Securities Act and applicable
State securities laws with respect to the transfer of such securities. The
Holder of this Warrant, by acceptance of this Warrant, agrees to be bound
by the provisions of Section 6 and this Section 7 and to indemnify and hold
harmless the Corporation against any loss or liability arising from the
disposition of this Warrant or the Warrant Shares issuable upon exercise
hereof or any interest in either thereof in violation of the provisions of
this Warrant.
7.2. RESTRICTIVE LEGEND. Each certificate for the Warrant Shares and
any shares of capital stock received in respect thereof, whether by reason
of a stock split or share reclassification thereof, a stock dividend
thereon or otherwise, and each certificate for any such securities issued
to subsequent transferees of any such certificate shall (unless otherwise
permitted by the provisions hereof) be stamped or otherwise imprinted with
a legend in substantially the following form:
Legend for Warrant Shares or other shares of capital stock:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES") HAVE
BEEN ISSUED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT") AND THE FLORIDA
INVESTOR PROTECTION ACT (THE "FLORIDA ACT") THE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD, OR TRANSFERRED OTHER THAN (I) PURSUANT TO AN
EFFECTIVE REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE 1933 ACT
AND THE FLORIDA ACT, AND (II) UPON RECEIPT BY THE ISSUER OF EVIDENCE
SATISFACTORY TO IT OF COMPLIANCE WITH THE 1933 ACT, THE FLORIDA ACT,
AND THE APPLICABLE SECURITIES LAWS OF ANY OTHER JURISDICTION. THE
5
ISSUER SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL SATISFACTORY
TO IT WITH RESPECT TO COMPLIANCE WITH THE ABOVE LAWS.
7.3. TRANSFER OF WARRANTS. Subject to the restrictions on transfer
specified in Section 6 and this Section 7, the Warrant is transferable in
accordance with this Warrant, in whole or in part, at the agency or office of
the Corporation referred to in Section 1 hereof, by the Holder hereof in person
or by a duly authorized attorney, upon surrender of this Warrant, with the Form
of Assignment attached hereto duly executed by the then registered Holder of
this Warrant or its duly authorized agent. The Corporation or its transfer
agents shall register the transfer of any Warrants transferred in compliance
with Section 6 and this Section 7 upon records to be maintained for that
purpose, upon surrender of this Warrant. Upon any such Registration of transfer,
a new Warrant substantially in the form of this Warrant evidencing the Warrant
so transferred shall be issued to the transferee.
SECTION 8. LOST, STOLEN, MUTILATED, OR DESTROYED WARRANT. If this Warrant
is lost, stolen, mutilated, or destroyed, the Corporation shall issue a new
Warrant of like denomination and tenor as the Warrant so lost, stolen,
mutilated, or destroyed, provided the registered Holder hereof shall deliver a
lost warrant certificated in customary form, including indemnification of the
Corporation.
SECTION 9. FRACTIONAL WARRANT SHARES. The Corporation shall not be required
to issue any fractions of Warrant Shares upon exercise of this Warrant, but the
Corporation shall pay cash in respect of any fractional interest in a Warrant
Share which would otherwise be issuable in an amount equal to the same fraction
of the fair market value per share of the Common Stock on the day of the
exercise, as reasonably determined by the Board of Directors of the Corporation.
SECTION 10. NOTICE. All notices, requests, demands, and other
communications required or permitted under this Warrant and the transactions
contemplated herein shall be in writing and shall be deemed to have been duly
given, made, and received when personally delivered the day after deposited with
a recognized national overnight delivery service prior to its dead-line for
receiving packages for next day delivery or upon the fifth day after deposited
in the United States registered or certified mail with postage prepaid, return
receipt requested, in each case addressed as set forth below:
If to the Corporation: Transeastern Properties of South Florida, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
If to the Holder hereof, to the address of such Holder appearing on the
books of the Corporation.
SECTION 11. CAPTIONS, SECTION, HEADINGS. Captions and section headings used
herein are for convenience only, and are not a part of this Warrant and shall
not be used in construing it.
SECTION 12. GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with the laws in the State of Florida, irrespective of the choice
of law provisions.
6
IN WITNESS WHEREOF, TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC., has
caused this Warrant to be executed in its name by its duly authorized officers
under its corporate seal, and to be dated as of the date first above written.
TRANSEASTERN PROPERTIES OF SOUTH
FLORIDA, INC.
By: ______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
ATTEST:
____________________________
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇., Secretary
7
FORM OF ASSIGNMENT
[To be signed only upon transfer of unexercised Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________________________ the attached Warrant to purchase the number
of full shares of Common Stock, $____ par value, of Transeastern Properties of
South Florida, Inc., issuable upon exercise of said Warrant, and appoints
________________, Attorney, to transfer such Warrant on the books of
Transeastern Properties of South Florida, Inc., with full power of substitution
in the premises.
Dated:__________________
[Signature]
____________________
____________________
[Address]
Signature guaranteed by a member of a national securities exchange or
national bank:
__________________________
NOTICE
The signature above must correspond to the name as written upon the fact of
the within Warrant in every particular, without alteration or enlargement or any
change whatsoever.
FORM OF NOTICE OF EXERCISE
[To be signed only upon exercise of Warrant]
To: TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.
The undersigned registered Holder of the attached Warrant hereby
irrevocably elects to exercise the Warrant for, and to purchase thereunder, the
full number of whole shares of Common Stock, $____ par value, of Transeastern
Properties of South Florida, Inc., issuable upon exercise of said Warrant and
hereby surrenders said Warrant and delivers to Transeastern Properties of South
Florida, Inc., a check in the amount of $_________ representing the aggregate
Exercise Price for such shares. The undersigned herewith requests that the
certificates for such shares be issued in the name of, and delivered to the
undersigned, whose address is _________________________________ and social
security or tax identification number is ______________.
Dated:____________________
NOTICE
The signature above must correspond to the name as written upon the fact of
the within Warrant in every particular, without alteration or enlargement or any
change whatsoever.
EXHIBIT B
TO
COMMON STOCK
AND
WARRANT PURCHASE AGREEMENT
OPINION OF COMPANY COUNSEL
April 15, 1996
The parties named in the attached Schedule I
c/o ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, LLC
990 One Live Oak Center
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We have acted as counsel to Transeastern Properties of South Florida, Inc.,
a Florida corporation (the "Company"), in connection with (i) the preparation of
(a) Common Stock Purchase Agreement, dated as of April 15, 1996, by and among
the parties named in Schedule I thereto (the "Purchasers") and the Company (the
"Agreement") and (b) the Warrants, dated as of April 15, 1996 by and among the
parties named in Schedule I thereto (the "Warrant Purchasers") and the Company
(the "Warrant Agreement"); and (ii) (a) the sale and issuance of 39,223 shares
of Common Stock of the Company, $.01 par value (the "Shares") pursuant to the
Agreement and (b) the sale and delivery of warrants to purchase additional
shares of the Common Stock (the "Warrant Shares"), $.01 par value of the Company
(the "Warrants") under certain circumstances, pursuant to the Agreement. This
opinion is rendered pursuant to Article 4 of the Agreement. Capitalized terms
used in this opinion letter and the attachments hereto and not otherwise defined
herein shall have the meanings assigned to such terms in the Agreement.
This opinion letter is limited by, and is in accordance with, the
January 1, 1992, edition of the Interpretive Standards applicable to Legal
Opinions to Third Parties in Corporate Transactions adopted by the Legal Opinion
Committee of the Corporate and Banking Law Section of the State Bar of Georgia,
which Interpretative Standards are attached to this opinion letter as ATTACHMENT
1, and incorporated in this opinion letter by this reference. Capitalized terms
used in this opinion letter and the attachments hereto and not otherwise defined
herein shall have the meanings assigned to such terms in the Interpretive
Standards and/or the Purchase Agreement.
In connection with the foregoing, we have examined:
1. An executed copy of each of the Agreement and the Warrants among the
Company, the Purchasers and the other parties listed therein (collectively, the
"Transaction Agreements");
2. The Amended and Restated Articles of Incorporation of the Company, filed
with the Florida Department of State on December 5, 1994, and the Bylaws of the
Company, certified by the Secretary of the Company on April 15, 1996
(collectively, the "Charter"); and
3. The corporate proceedings of the Company relating to the execution and
delivery of the Agreement and the Warrants, and the consummation of the
transactions provided for therein.
In all such examinations, we have assumed the genuineness of all
signatures (other than signatures on behalf of the Company), the authenticity of
all documents submitted to us as originals, and the conformity to authentic
original documents of all documents submitted to us as certified, conformed or
photostatic copies. As to questions of fact material to our opinions, we have
relied on certificates of
The parties named in the attached Schedule I
May ___, 1993
Page 2
public officials, the representations and warranties of Company set forth in the
Agreement, and on certificates of officers of the Company.
The use herein of the words "to the best of our knowledge", "known to us"
or similar language means that, during the course of our representation of the
Company, no information has come to the attention of any attorney in this Firm
involved in these transactions or otherwise regularly engaged in representing
the Company which would give us actual knowledge of the existence of any of the
documents or facts so qualified. Whenever we have made "due inquiry" as to
matters set forth herein, such inquiry was confined to reviewing documents
provided to us by the Company in the course of our representation in response to
inquiries as to such matters as we have deemed appropriate in order to render
the opinions hereinafter set forth, a review of documents of which we otherwise
have actual knowledge, to the extent we deemed such documents material and
relevant to the opinions hereinafter set forth, and obtaining certificates of
officers of the Company as to certain facts which we deemed material and
relevant to our opinion, and we have relied, with your permission, upon such
certificates in rendering this opinion.
We are admitted to practice in the State of Georgia. Accordingly, the
opinions set forth herein are limited to the laws of the State of Georgia and
applicable federal laws. To the extent that the laws of another jurisdiction may
govern any of the Agreements, such laws are assumed to be the same as the laws
of the State of Georgia.
Based on the foregoing, and subject to the further qualifications,
assumptions, and limitations hereinafter set forth, we are of the opinion that:
The Company is a corporation in good standing (as defined herein) under the
laws of the State of Florida. The Company is qualified to do business as a
foreign corporation and is in good standing in each state where, based upon the
nature of the business transacted by the Company or the ownership or lease by
the Company of real or personal property, the failure to be so qualified would
have a material and adverse effect on the business or condition of the Company.
Except as reflected in the Disclosure Schedule, the Company has no subsidiaries.
The Company has all requisite power to (i) own, lease, and operate its
properties and to carry on its business as currently conducted and as proposed
to be conducted, (ii) execute, deliver, and perform each of the Transaction
Agreements, (iii) issue, sell, and deliver the Shares and the Warrants, and (iv)
issue and deliver the Warrant Shares upon the exercise of the Warrants.
Each of the Transaction Agreements has been duly authorized, executed, and
delivered by the Company and each constitutes the legal, valid, and binding
obligation of the Company, enforceable in accordance with their respective terms
(subject, to enforcement of remedies, to the discretion of courts in awarding
equitable relief and to applicable bankruptcy, reorganization, insolvency,
moratorium, and similar laws affecting creditors' rights or debtors' relief
generally).
The execution and delivery by the Company of the Transaction Agreements,
and the performance by the Company of its obligations thereunder, the issuance,
sale, and delivery of the Shares and the
The parties named in the attached Schedule I
May ___, 1993
Page 3
Warrants, and the issuance and delivery of the Warrant Shares upon exercise of
the Warrants, will not violate any provision of law, the Charter, any order of
any court or other agency of government known to us and binding upon the Company
or its assets, or any indenture, agreement, or other instrument known to us by
which the Company or any of its properties or assets is bound, or conflict with,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any such indenture, agreement, or other instrument, or result in
the creation or imposition of any lien, charge, restriction, claim, or
encumbrance of any nature whatsoever upon any of the properties or assets of the
Company.
The authorized capital stock of the Company consists of (i) 29,000 shares
of Series A Redeemable Preferred Stock, $.01 par value, (ii) 46,500 shares of
Series B Redeemable Preferred Stock, $.01 par value and (iii) 5,000,000 shares
of Common Stock, $.01 par value. Immediately prior to the Closing, 725,001
shares of Common Stock will be validly issued, fully paid and nonassessable, and
2,345 shares of Series A Redeemable Preferred Stock (after giving effect to the
Recapitalization) and 33,202 shares of the Series B Redeemable Preferred Stock
will be outstanding. The designations, power, preferences, rights,
qualifications, limitations, and restrictions in respect of each class or series
of authorized capital stock of the Company are as set forth in the Charter.
Except as set forth in Schedule 2 to the Agreement, to our knowledge,
immediately prior to the Closing, no subscription, warrant, option, convertible
security, or other right (contingent or other) to purchase or acquire equity
securities of the Company was authorized or outstanding and there was no
commitment by the Company to issue shares, subscriptions, warrants, options,
convertible securities, or other such rights or to distribute to holders of any
of its equity securities any evidence of indebtedness or asset. Except as set
forth in Schedule 2 to the Agreement, to our knowledge, the Company has no
obligation (contingent or other) to purchase, redeem, or otherwise acquire any
of its equity securities or any interest therein or to pay any dividend or make
any other distribution in respect thereof.
The Shares, the Warrants, and the Warrant Shares have been duly authorized.
The issuance, sale, and delivery of the Shares and the Warrants and the
issuance, sale, and delivery of the Warrant Shares upon exercise of the Warrants
have been duly authorized by all required corporate action; assuming payment of
the purchase price therefor as provided in the Agreement, the Shares have been
validly issued and are fully paid, and nonassessable. The Warrant Shares have
been duly reserved for issuance upon conversion of the Warrants, and, when so
issued, will be validly issued, fully paid, and nonassessable. Neither the
issuance, sale, or delivery of the Shares or the Warrants, nor the issuance or
delivery of the Warrant Shares, is subject to any preemptive right or right of
first refusal of shareholders of the Company arising under law or the Charter or
Bylaws of the Company which has not been waived, or, to our knowledge, to any
contractual right of first refusal or other right in favor of any person.
Except as described in Schedule 2 to the Agreement, to our knowledge, there
is no (A) action, suit, claim, proceeding, or investigation pending or
threatened against or affecting the Company at law or in equity, or before or by
the Federal, state, municipal, or other governmental department, commission,
board, bureau, agency, or instrumentality, domestic or foreign, (B) arbitration
proceeding relating to the Company pending under collective bargaining
agreements, or (C) governmental inquiry pending or threatened against or
affecting the Company (including, without limitation, any inquiry as to the
qualification of the Company to hold or receive any license or permit). To our
knowledge, the Company is not subject to any order, writ, injunction, or decree
of any court or of any Federal, state,
The parties named in the attached Schedule I
May ___, 1993
Page 4
municipal, or other governmental department, commission, board, bureau, agency,
or instrumentality, domestic or foreign.
No registration or filing with, and no consent or approval of, or other
action by any Federal, state, or other governmental agency or instrumentality is
or will be necessary for the valid execution, delivery, and performance by the
Company of the Transaction Agreements, the issuance, sale, and delivery of the
Shares and the Warrants, or the issuance, sale, and delivery of the Warrant
Shares upon exercise of the Warrants, other than filings under the Securities
Act and applicable state securities laws, which filings, to the extent required
to be made prior to the date hereof, have been made, and to the extent required
to be made following the date hereof, we assume will be timely made by the
Company.
Very truly yours,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLC
Attachments
EXHIBIT C
TO
COMMON STOCK
AND
WARRANT PURCHASE AGREEMENT
AMENDED AND RESTATED ARTICLES OF INCORPORATION