CONTRIBUTION AGREEMENT BY AND AMONG SECURE AMERICA ACQUISITION CORPORATION, ULTIMATE ESCAPES HOLDINGS, LLC, ULTIMATE RESORT HOLDINGS, LLC AND THE MEMBER REPRESENTATIVE Dated as of September 2, 2009
CONTRIBUTION AGREEMENT
BY
AND AMONG
SECURE
AMERICA ACQUISITION CORPORATION,
ULTIMATE
ESCAPES HOLDINGS, LLC,
ULTIMATE
RESORT HOLDINGS, LLC
AND
THE
MEMBER REPRESENTATIVE
Dated
as of September 2, 2009
TABLE
OF CONTENTS
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Page
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| ARTICLE I CONTRIBUTIONS |
2
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1.1
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Contribution
by Secure Prior to Closing
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2
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1.2
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Issuance
of Membership Interests to Secure
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2
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1.3
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Closing
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2
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1.4
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No
Liability
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3
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1.5
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Taking
of Necessary Action; Further Action
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3
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1.6
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Outstanding
Company Derivative Securities
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3
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| ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
3
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2.1
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Due
Organization and Good Standing.
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3
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2.2
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Title
to Securities; Capitalization
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4
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2.3
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Subsidiaries.
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6
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2.4
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Authorization;
Binding Agreement
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7
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2.5
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Governmental
Approvals
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7
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2.6
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No
Violations
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8
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2.7
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Company
Financial Statements.
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8
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2.8
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Absence
of Certain Changes.
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9
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2.9
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Absence
of Undisclosed Liabilities
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10
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2.10
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Compliance
with Laws
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10
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2.11
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Regulatory
Agreements; Permits.
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10
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2.12
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Litigation.
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11
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2.13
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Restrictions
on Business Activities
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11
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2.14
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Material
Contracts.
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12
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2.15
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Intellectual
Property.
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13
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2.16
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Employee
Benefit Plans
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15
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2.17
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Taxes
and Returns.
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16
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2.18
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Finders
and Investment Bankers.
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18
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2.19
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Title
to Properties; Assets.
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18
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2.20
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Employee
Matters.
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21
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2.21
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Environmental
Matters.
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22
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2.22
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Transactions
with Affiliates
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23
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2.23
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Insurance
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23
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2.24
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Books
and Records
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23
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2.25
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Board
Approval; Required Vote
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23
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2.26
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Information
Supplied
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24
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2.27
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Accounts
Receivable
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24
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2.28
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Representations
and Warranties
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24
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| ARTICLE III REPRESENTATIONS AND WARRANTIES OF SECURE |
24
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3.1
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Due
Organization and Good Standing
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25
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3.2
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Capitalization.
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25
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3.3
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Authorization;
Binding Agreement
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26
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3.4
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Governmental
Approvals
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26
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3.5
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No
Violations
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27
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3.6
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SEC
Filings and Secure Financial Statements.
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28
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3.7
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Absence
of Undisclosed Liabilities
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29
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3.8
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Information
Supplied
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29
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3.9
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Absence
of Certain Changes.
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30
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3.10
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Taxes
and Returns.
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30
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3.11
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Employee
Benefit Plans
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32
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3.12
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Employee
Matters
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32
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3.13
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Material
Contracts.
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32
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3.14
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Litigation
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33
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3.15
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Transactions
with Affiliates
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33
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3.16
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Trust
Fund
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33
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3.17
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Investment
Company Act
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33
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3.18
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Finders
and Investment Bankers
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33
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3.19
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Title
to Properties
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33
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3.20
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Indebtedness
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34
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3.21
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NYSE
Amex Listing
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34
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3.22
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Board
Approval
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34
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3.23
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Insurance
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34
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3.24
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Environmental
Matters
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34
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3.25
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Intellectual
Property
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34
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3.26
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Regulatory
Agreements; Permits.
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34
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3.27
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Representations
and Warranties
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35
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| ARTICLE IV COVENANTS |
35
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4.1
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Conduct
of Business of the Company and of Secure.
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35
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4.2
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Access
and Information; Confidentiality.
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39
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4.3
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No
Solicitation.
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39
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4.4
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Restrictive
Covenants.
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41
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4.5
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Member
Representative.
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42
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| ARTICLE V ADDITIONAL COVENANTS OF THE PARTIES |
43
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5.1
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Notification
of Certain Matters
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43
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5.2
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Commercially
Reasonable Best Efforts.
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44
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5.3
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Survival
of Representations, Warranties and Covenants;
Indemnification.
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45
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5.4
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Public
Announcements
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46
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5.5
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Option
Plan
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46
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5.6
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Proxy
Statement.
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47
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5.7
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Reservation
of Secure Common Stock and Earn-Out Payment
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47
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5.8
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Special
Meetings; Mailing of Proxy Statement
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48
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5.9
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[Intentionally
Deleted].
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48
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5.10
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Directors
and Officers of Secure
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48
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5.11
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Other
Actions
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48
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5.12
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Required
Information
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49
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5.13
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Charter
Protections; Directors’ and Officers’ Liability Insurance
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49
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5.14
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Intentionally
Deleted.
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49
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5.15
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Merger
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49
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5.16
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Derivative
Securities
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49
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5.17
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Further
Assurances
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50
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5.18
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Founders’
Stock
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50
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| ARTICLE VI CONDITIONS TO CLOSING |
50
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6.1
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Conditions
to Each Party’s Obligations
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50
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6.2
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Conditions
to Obligations of Secure
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51
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6.3
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Conditions
to Obligations of the Company
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53
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6.4
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Frustration
of Conditions
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54
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| ARTICLE VII TERMINATION AND ABANDONMENT |
54
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7.1
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Termination
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54
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7.2
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Effect
of Termination
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55
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7.3
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Fees
and Expenses
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55
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7.4
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Amendment
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56
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7.5
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Waiver
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56
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| ARTICLE VIII TRUST FUND WAIVER |
56
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8.1
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Trust
Fund Waiver.
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56
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| ARTICLE IX MISCELLANEOUS |
57
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9.1
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Survival
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57
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9.2
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Notices
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57
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9.3
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Binding
Effect; Assignment
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58
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9.4
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Governing
Law; Jurisdiction
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58
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9.5
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Waiver
of Jury Trial
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59
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9.6
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Counterparts
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59
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9.7
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Interpretation
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59
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9.8
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Entire
Agreement
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60
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9.9
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Severability
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60
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9.10
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Specific
Performance
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60
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9.11
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Third
Parties
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60
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EXHIBITS:
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Exhibit
A:
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Form
of Stock Incentive Plan
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Exhibit
B:
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Form
of Amended and Restated Operating Agreement
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Exhibit
C:
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Form
of Voting Agreement
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Exhibit
D:
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Form
of Registration Rights Agreement
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Exhibit
E:
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Form
of Indemnification and Escrow Agreement
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Exhibit
F:
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Form
of Underwriter Letter Agreement
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Exhibit
G:
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Form
of Founders’ Letter Agreement
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THIS
CONTRIBUTION AGREEMENT (this “Agreement”) is made and
entered into as of September 2, 2009 by and among Secure America Acquisition
Corporation, a Delaware corporation (“Secure”), Ultimate Resort
Holdings, LLC, a Delaware limited liability company (“Ultimate Resort”), Ultimate
Escapes Holdings, LLC, a Delaware limited liability company (the “Company”), and the
representative (the “Member Representative”) of the
holders of the issued and outstanding membership interests of the Company and
Ultimate Resort. Secure, the Company, Ultimate Resort and the Member
Representative are sometimes referred to herein individually as a “Party” and collectively as the
“Parties.”
RECITALS
WHEREAS,
each of Private Escapes Holdings, LLC, a Delaware limited liability company
(“Private Escapes”), and
Ultimate Resort has entered into a definitive agreement with the Company
pursuant to which Private Escapes and Ultimate Resort shall each contribute to
the Company the Member Contribution Property (as hereinafter defined), on terms
and conditions substantially similar to and in accordance with those presented
by Ultimate Resort to Secure (the “Company Transactions”), in
exchange for membership units in the Company, such that Ultimate Resort and
Private Escapes shall be members (each, a “Member,” and together, the
“Members”) of the
Company;
WHEREAS,
Secure wishes to contribute the Secure Contribution Property to the Company in
exchange for the issuance to Secure of 4,687,500 units in the Company (each, a
“Unit,” and
collectively, the “Units”); provided such number
of Units shall be subject to adjustment upward on a one for one basis to the
extent less than 6,250,000 shares of Secure Common Stock (as such term is
hereafter defined) are not converted into cash or subject to expected retirement
based upon forward contracts immediately following the Closing;
WHEREAS,
the board of directors of Secure has declared it to be advisable and in the best
interests of Secure and its stockholders to contribute the Secure Contribution
Property to the Company and to consummate the transactions contemplated hereby
on the terms and conditions set forth herein; and
WHEREAS,
the Company and each of the Members have declared it to be advisable and in the
best interests of each respective entity and its owners to consummate the
Company Transactions and to consummate the transactions contemplated hereby on
the terms and conditions set forth herein; and
WHEREAS,
the Parties desire that only the Units to be held by the Members be exchangeable
for shares of common stock of Secure, $0.0001 par value per share (“Secure Common Stock”), all as
to be set forth in the Amended and Restated Operating Agreement of the Company,
in the form attached hereto as Exhibit B (the “Operating Agreement”), as
further described herein.
NOW,
THEREFORE, in consideration of the foregoing and the mutual representations,
warranties, covenants and agreements herein contained, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties hereby agree as follows:
1
ARTICLE
I
CONTRIBUTIONS
1.1 Contributions to the Company
by the Members and Secure.
(a) Subject
to and upon the terms and conditions of this Agreement and the other agreements
contemplated hereby, Secure will contribute and deliver to the Company on the
Closing Date as of the Effective Time (as each such term is hereinafter defined)
a minimum of Twenty Million Dollars ($20,000,000) in immediately available funds
(collectively, the “Secure Contribution
Property”). Subject to the minimum threshold set forth above,
the Secure Contribution Property shall equal up to Seventy Percent (70%) of the
amount of cash held in the Trust Fund (as hereinafter defined) on the Closing
Date (i.e., after
payments for any conversions by holders of shares of Secure Common Stock into a
pro rata portion of the cash held in the Trust Fund), less the following
amounts: (a) all of Secure’s accrued expenses and expenses of the
transactions contemplated hereby; (b) an aggregate of Three Million Dollars
$3,000,000) payable to Company at Closing to satisfy certain tax liabilities
incurred by Ultimate Resort in relation to the transactions contemplated hereby
(the “Member Tax
Liability”); (c) any and all tax liabilities of Secure; (d) broker and/or
financial advisory fees payable to ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., Inc. and SunTrust
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ in connection with the transactions contemplated hereby; (e)
Secure’s deferred underwriting discounts and commissions owed in connection with
the IPO (as hereinafter defined) in the amount agreed pursuant to the
letter agreement attached hereto as Exhibit F; and (f)
payments made in relation to bridge loan arrangements, forward contracts or
other mechanics entered into in connection with obtaining the Required Secure
Vote (as hereinafter defined).
(b) As a
condition to the contribution by Secure of the Secure Contribution Property,
each Member will have contributed and delivered to the Company, no later than
the Closing Date, all of its respective right title and interest in and to those
entities and their respective assets listed under Section 2.1 to the Company
Disclosure (the “Member
Contribution Property”).
1.2 Issuance of Membership
Interests to Secure. On the Closing and at the Effective Time,
subject to the terms and conditions set forth herein and in the Operating
Agreement, the Company shall issue to Secure 4,687,500 Units pursuant to Section
3 of the Operating Agreement; provided such number of Units shall be subject to
adjustment upward on a one for one basis to the extent less than 6,250,000
shares of Secure Common Stock are not converted into cash or subject to expected
retirement based upon forward contracts immediately following the
Closing.
1.3 Closing. Unless
this Agreement shall have been terminated and the transactions contemplated by
this Agreement abandoned pursuant to the provisions of Article VII, the closing
of the transactions contemplated by this Agreement (the “Closing”) shall take place on
the date on which all of the conditions set forth in Article VI have been
satisfied or waived, as the case may be, and when the Secure Contribution
Property is contributed to the Company, which contribution shall be consummated
and be effective at the time the amendment to Secure’s certificate of
incorporation eliminating the text of Article FIFTH thereof in its entirety has
been duly filed with the Secretary of State of the State of Delaware or at such
other subsequent date or time as Secure and Ultimate Resort may agree and
specify in any certificate of amendment with respect thereto in accordance with
the General Corporation Law of the State of Delaware (the “Effective Time”), but in no
event later than October 29, 2009 (the “Closing Date”). The
Closing shall take place at the offices of Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C. in New York, New York.
2
1.4 No
Liability. Notwithstanding any other provision of this
Agreement, Secure shall not be liable to any Member for any shares of Secure
Common Stock or any amount of cash properly paid to a public official pursuant
to any applicable abandoned property, escheat or similar law.
1.5 Taking of Necessary Action;
Further Action. If, at any time and from time to time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement, the officers and directors of Secure and the
Member Representative shall be and are fully authorized and directed, in the
name of and on behalf of Secure, on the one hand, and in the name of and on
behalf of Ultimate Resort and the Company, on the other hand, to take, or cause
to be taken, all such lawful and necessary action as is not inconsistent with
this Agreement.
1.6 Outstanding Company
Derivative Securities. The Company shall, and shall cause its
Subsidiaries to, cause all outstanding options, warrants and other derivative
securities of the Company or any Subsidiary to have been terminated or that all
holders thereof shall have exercised such securities prior to the Effective
Time. Such exercise may be made contingent upon the occurrence of the
Closing and no Person shall have any right to acquire any ownership or other
equity interest in the Company or any Subsidiary (other than Secure at
Closing).
ARTICLE
II
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The
following representations and warranties by Ultimate Resort and the Company are
qualified by those disclosures and exceptions set forth in the Company
disclosure schedule (the “Company Disclosure Schedule”).
The Company Disclosure Schedule shall be arranged in sections corresponding
to the numbered and lettered sections and subsections contained in
this Section 2;
provided, that if any section or subsection of the Company Disclosure Schedule
discloses an item or information in such a way as to make its relevance to the
disclosure required on another section or subsection of the Company Disclosure
Schedule reasonably apparent, then the applicable item or information will be
deemed to have been also disclosed in such other section or subsection of the
Company Disclosure Schedule. From the date hereof through the Effective Time,
Ultimate Resort and the Company hereby make the representations and warranties
set forth below to Secure with respect to the Company on the basis that the
Company Transactions have been consummated.
2.1 Due Organization and Good
Standing.
(a) Each
of the Company and each subsidiary of the Company listed on Section 2.1 of the Company
Disclosure Schedule (each a “Company Subsidiary” and
collectively, the “Company
Subsidiaries”) is a corporation, limited liability company or other
entity, duly incorporated, formed, or organized, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation, formation, or
organization and has all requisite corporate, limited liability, or other
organizational power and authority to own, lease and operate its respective
properties and to carry on its respective business as now being conducted. Each
of the Company and each Company Subsidiary is duly qualified or licensed and in
good standing to do business in each jurisdiction in which the character of the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so duly qualified or licensed and in good standing would not reasonably be
expected to result in a Company Material Adverse Effect. The Company has
heretofore made available to Secure accurate and complete copies of the
Company’s certificate of formation and Operating Agreement, as amended to date
and as currently in effect (the “Company Organization
Documents”) and the equivalent organizational documents of each of the
Company Subsidiaries, each as amended to date and as currently in effect (the
“Company Subsidiary
Organization Documents”). None of the Company or any Company Subsidiary
is in violation of any Company Organization Document or Company Subsidiary
Organization Document, as the case may be.
3
(b) To
the knowledge of the Company, the minute books of the Company and each Company
Subsidiary contain true, complete and accurate records of all meetings and
consents in lieu of meetings of its respective board of directors or managers,
if applicable (and any committees thereof), similar governing bodies and Members
(“Corporate
Records”). Copies of all such Corporate Records of the Company
have been heretofore made available to Secure or Secure’s counsel.
(c) The
transfer and ownership records of the Company contain true, complete and
accurate records of the securities ownership as of the date of such records and
the transfers involving the membership interests of the Company (the “Membership Interests”) and
other securities of the Company. Copies of all such records of the
Company have been heretofore made available to Secure or Secure’s
counsel.
For
purposes of this Agreement, the term “Company Material Adverse
Effect” shall mean any change or effect that, individually or in the
aggregate, has, or would reasonably be expected to have, a material adverse
effect upon the assets, liabilities, business, financial condition or operating
results of the Company and the Company Subsidiaries, taken as a whole, except
any changes or effects after the date hereof directly or indirectly attributable
to (i) general political, economic, financial, capital market or industry-wide
conditions (except to the extent that the Company is affected in a
disproportionate manner relative to other companies in the industries in which
the Company and the Company Subsidiaries conduct business), (ii) the
announcement of the execution of this Agreement, or the pendency of the
consummation of the transactions contemplated by this Agreement, (iii) any
condition described in the Company Disclosure Schedule, (iv) any change in GAAP
or interpretation thereof after the date hereof, (v) the execution by the
Company and performance of or compliance by the Company with this Agreement,
(vi) any failure to meet any financial or other projections, or (vii) any breach
by Secure of this Agreement.
2.2 Title to Securities;
Capitalization. i) The Members collectively hold of
record and own all of the Membership Interests, and such Membership Interests
are held free and clear of any restrictions on transfer, Encumbrances (other
than as disclosed on Section 2.2(a) of the
Company Disclosure Schedule, any restriction under the Securities Act of
1933, as amended (the “Securities Act”), or any state
“blue sky” securities Laws), Taxes, warrants, purchase rights, contracts,
assignments, commitments, equities, claims and demands. No Member is a party to
any option, warrant, purchase right, or other contract or commitment that could
require such Member to sell, transfer, or otherwise dispose of his Membership
Interest, other than this Agreement. Other than as disclosed on Section 2.2(a) of the
Company Disclosure Schedule, no Member is a party to any voting trust,
proxy, or other agreement or understanding with respect to the voting of his
Membership Interest, other than this Agreement. The Membership Interests held by
the Members are not subject to preemptive rights, conversion price adjustment
rights or rights of first refusal created by any agreement to which any Member
is a party.
4
(b) Except
as disclosed on Section 2.2(b) of the
Company Disclosure Schedule, and except for the Membership Interests held
by the Members, no membership or other equity or voting interest of the Company,
or options, warrants or other rights to acquire any such membership or other
equity or voting interest, of the Company is issued and outstanding. The
Membership Interests are duly authorized, validly issued, fully paid and
non-assessable and were not issued in material violation of any applicable
foreign, federal or state securities Laws or the Company Organization Documents.
The Company has not entered into any other agreements or commitments to issue
any membership interests and has not split, combined or reclassified the
Membership Interests.
(c) Except
as otherwise described on Section 2.2(c) of the
Company Disclosure Schedule, the Company directly or indirectly owns all
of the capital stock of, or other equity interests in, the Company Subsidiaries.
There are no (i) outstanding options, warrants, puts, calls, convertible
securities, preemptive or similar rights, (ii) bonds, debentures, notes or other
Indebtedness having general voting rights or that are convertible or
exchangeable into securities having such rights, or (iii) subscriptions or other
rights, agreements, arrangements, contracts or commitments of any character,
relating to the issued or unissued membership interests of, or other equity
interests in, the Company or any of the Company Subsidiaries or obligating the
Company or any of the Company Subsidiaries to issue, transfer, deliver or sell
or cause to be issued, transferred, delivered, sold or repurchased any options
or membership interests of, or other equity interest in, the Company or any of
the Company Subsidiaries or securities convertible into or exchangeable for such
shares or equity interests, or obligating any of the Company Subsidiaries to
grant, extend or enter into any such option, warrant, call, subscription or
other right, agreement, arrangement or commitment for such equity interest.
There are no outstanding obligations of the Company or any Company Subsidiaries
to repurchase, redeem or otherwise acquire any membership interests, capital
stock of, or other equity interests in, the Company or any of the Company
Subsidiaries or to provide funds to make any investment (in the form of a loan,
capital contribution or otherwise) in any other entity.
(d) Other
than as set forth on Section 2.2(d) of the
Company Disclosure Schedule, there are no stockholders or members
agreements, voting trusts or other agreements or understandings to which the
Company or any Company Subsidiary is a party with respect to the voting of the
Membership Interests or the capital stock or equity interests of any Company
Subsidiary.
(e) Section 2.2(e) of the
Company Disclosure Schedule lists all of the Company’s
Indebtedness. As used in this Agreement, “Indebtedness” means (A) all
indebtedness for borrowed money or for the deferred purchase price of property
or services (other than Expenses and current trade liabilities incurred in the
ordinary course of business and payable in accordance with customary practices),
(B) any other indebtedness that is evidenced by a note, bond, debenture, credit
agreement or similar instrument, (C) all obligations under financing leases, (D)
all obligations in respect of acceptances issued or created, (E) all liabilities
secured by an Encumbrance on any property and (F) all guarantee
obligations. Notwithstanding the foregoing in no event shall
Indebtedness include any liability to any of the members of the Company’s
destination clubs.
5
(f) From
December 31, 2008 through the date hereof, except as otherwise described on
Section 2.2(f) of the
Company Disclosure Schedule, the Company has not declared or paid any
distribution or dividend in respect of the Membership Interests and has not
repurchased, redeemed or otherwise acquired any Membership Interest of the
Company, and the board of managers of the Company has not authorized any of the
foregoing.
(g) The
Members are sophisticated sellers with respect to the Membership Interests, have
adequate information concerning the business and financial condition of Secure
and its Subsidiaries and their respective assets, have been given the
information necessary to make an informed decision regarding this Agreement and
the transactions contemplated hereby and have independently made their analysis
and decision to enter into and consummate this Agreement based upon such
information the Members deem appropriate. Notwithstanding the foregoing, no
information or knowledge obtained by the Members as described herein will affect
or be deemed to modify any representation or warranty contained herein or the
conditions to the obligations of the Parties to consummate the transactions
contemplated by this Agreement.
(h) The
Members are each an “accredited investor” as defined in Rule 501 of Regulation D
promulgated under the Securities Act. The financial condition of each Member is
such that he is able to bear the risk of holding the Secure Common Stock for an
indefinite period of time and the risk of loss of his entire investment. The
Members have had the opportunity to ask questions of and receive answers from
the management of Secure and its Subsidiaries concerning the investment in the
Secure Common Stock and have sufficient knowledge and experience in investing in
companies similar to Secure in terms of its stage of development so as to be
able to evaluate the risks and merits of its investment in Secure. The Members
are acquiring the Secure Common Stock for investment, for their own account, and
not for resale or with a view to distribution thereof in violation of the
Securities Act, and the rules and regulations promulgated thereunder. Except as
otherwise described on Section 2.2(h) of the
Company Disclosure Schedule, the Members have not entered into an
agreement or understanding with any other Person to resell or distribute the
Secure Common Stock.
2.3 Subsidiaries.
(a) Section 2.3(a) of the
Company Disclosure Schedule sets forth a true, complete and correct list
of each of the Company Subsidiaries and their respective jurisdictions of
incorporation, formation or organization. Except as otherwise set forth on Section 2.3(a) of the
Company Disclosure Schedule, all of the capital stock and other equity
interests of the Company Subsidiaries are owned, directly or indirectly, by the
Company free and clear of any Encumbrance (other than any restriction under the
Securities Act, or any state “blue sky” securities Laws) with respect thereto.
All of the outstanding shares of capital stock or other equity interests in each
of the Company Subsidiaries that is a corporation are duly authorized, validly
issued, fully paid and non-assessable, and with respect to the Company
Subsidiaries that are limited liability companies, are duly authorized, validly
issued, fully paid and non-assessable and were issued free of preemptive rights
and were not issued in material violation of any applicable foreign, federal or
state securities Laws. Neither the Company nor any Company Subsidiary owns,
directly or indirectly, any shares of capital stock or other equity or voting
interests (including any securities exercisable or exchangeable for or
convertible into capital stock or other equity or voting interests) in any other
Person other than publicly traded securities constituting less than five percent
(5%) of the outstanding equity of the issuing entity, other than capital stock
or other equity interest of the Company Subsidiaries owned by the Company or
another Company Subsidiary.
6
(b) Section 2.3(b) of the
Company Disclosure Schedule lists all jurisdictions in which each of the
Company and each Company Subsidiary is qualified to conduct its respective
business.
2.4 Authorization; Binding
Agreement. The Company has all requisite limited liability
company power and authority to execute and deliver this Agreement and each other
ancillary agreement related hereto to which it is a party, and to consummate the
transactions contemplated hereby and thereby. Notwithstanding anything in this
Section 2.4 to
the contrary, the affirmative vote of (i) the Members of the Company holding at
least fifty-one percent (51%) of the issued and outstanding Company Membership
Interests entitled to vote on the approval and adoption of this Agreement and
(ii) JDI Ultimate, L.L.C., a Delaware limited liability company (the “Required Company Vote”) is
necessary to approve and adopt this Agreement and to consummate the transactions
contemplated hereby. Other than as disclosed on Section 2.4(a) of the
Company Disclosure Schedule, the execution and delivery of this Agreement
and each other ancillary agreement related hereto to which it is a party and the
consummation of the transactions contemplated hereby and thereby (i) have been
duly and validly authorized by all necessary action on the part of
the Company (including the approval by its Members, subject in all cases to the
satisfaction of the terms and conditions of this Agreement, including the
conditions set forth in Article VI), and (ii) no other limited liability company
proceedings on the part of the Company are necessary to authorize the execution
and delivery of this Agreement and each other ancillary agreement related hereto
to which it is a party or to consummate the transactions contemplated hereby and
thereby. This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery of this
Agreement by the other parties hereto, constitutes the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except to the extent that enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization and moratorium laws and other
laws of general application affecting the enforcement of creditors’ rights
generally, and the fact that equitable remedies or relief (including, but not
limited to, the remedy of specific performance) are subject to the discretion of
the court from which such relief may be sought (collectively, the “Enforceability
Exceptions”).
2.5 Governmental
Approvals. Except as otherwise described in Section 2.5 of the Company
Disclosure Schedule, to the knowledge of the Company no consent,
approval, waiver, authorization or permit of, or notice to or declaration or
filing with (each, a “Consent”), any nation or
government, any state or other political subdivision thereof, any entity,
authority or body exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, including any
governmental or regulatory authority, agency, department, board, commission,
administration or instrumentality, any court, tribunal or arbitrator or any
self-regulatory organization (each, a “Governmental Authority”), on
the part of the Company or any of the Company Subsidiaries is required to be
obtained or made in connection with the execution, delivery or performance by
the Company of this Agreement and each other ancillary agreement related hereto
to which it is a party or the consummation by the Company of the transactions
contemplated hereby and thereby, other than (a) such filings as contemplated by
this Agreement, (b) for applicable requirements, if any, of the Securities Act,
the Exchange Act of 1934, as amended (the “Exchange Act”), or any state
“blue sky” securities Laws, and the rules and regulations thereunder, (c)
pursuant to Antitrust Laws, and (d) where the failure to obtain or make such
Consents or to make such filings or notifications, would not reasonably be
expected to result in a Company Material Adverse Effect or prevent consummation
of the transactions contemplated by this Agreement.
7
2.6 No
Violations. Except as otherwise described in Section 2.6 of the Company
Disclosure Schedule, to the knowledge of the Company the execution and
delivery by the Company of this Agreement and each other ancillary agreement
related hereto to which it is a party, the consummation by the Company of the
transactions contemplated hereby and thereby, and compliance by the Company with
any of the provisions hereof and thereof, will not, (a) conflict with or violate
any provision of any Company Organization Document or Company Subsidiary
Organization Document, (b) require any Consent under or result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation, amendment or
acceleration) under, any Company Material Contract, (c) result (immediately or
with the passage of time or otherwise) in the creation or imposition of any
Encumbrances (as hereafter defined) (other than any Permitted Encumbrances) upon
any of the properties, rights or assets of the Company or any of the Company
Subsidiaries, or (d) subject to obtaining the Consents from Governmental
Authorities referred to in Section 2.5, conflict
with or violate any foreign, federal, state or local Order, statute, law, rule,
regulation, ordinance, principle of common law, constitution, treaty enacted, or
any writ, arbitration award, injunction, directive, judgment, or decree,
promulgated, issued, enforced or entered by any Governmental Authority (each, a
“Law” and collectively,
the “Laws”) to which the
Company or any of the Company Subsidiaries or any of their respective assets or
properties is subject, except, in the case of clauses (b), (c) and (d) above,
for any deviations from any of the foregoing that would not reasonably be
expected to result in a Company Material Adverse Effect. Notwithstanding
anything in this Section 2.6 to the
contrary, the Required Company Vote is necessary to approve and adopt this
Agreement and to consummate the transactions contemplated hereby. For purposes
of this Agreement, “Encumbrance” means any
mortgage, pledge, security interest, attachment, right of first refusal, option,
proxy, voting trust, encumbrance, lien or charge of any kind (including any
conditional sale or other title retention agreement or lease in the nature
thereof), restrictions (whether on voting, sale, transfer, disposition or
otherwise), any subordination arrangement in favor of another Person, any filing
or agreement to file a financing statement as debtor under the Uniform
Commercial Code or any similar statute.
2.7 Ultimate Resort Financial
Statements.
(a) As
used herein, the term “Ultimate
Resort Financials” means the Ultimate Resort’s audited consolidated
financial statements (including, in each case, any related notes thereto),
consisting of the Ultimate Resort’s balance sheets, statements of income and
statements of cash flow, as of December 31, 2006, December 31, 2007 and December
31, 2008 and the unaudited consolidated financial statements as of June 30, 2009
(the “June 30, 2009
Financials”) and any subsequent quarter. True and correct copies of the
Ultimate Resort Financials are attached hereto on Section 2.7(a) of the
Company Disclosure Schedule. The Ultimate Resort Financials (i) in all
material respects accurately reflect Ultimate Resort’s books and records as of
the times and for the periods referred to therein, and (ii) were prepared in
accordance with GAAP methodologies applied on a consistent basis throughout the
periods involved (except as set forth on Section 2.7(a) of the
Company Disclosure Schedule or as disclosed in the footnotes thereto and
except for the interim financials for 2009 which are produced on a modified
GAAP/Adjusted EBITDA basis). The Ultimate Resort Financials will, as of the
Closing Date, (i) in all material respects accurately reflect Ultimate Resort’s
books and records as of the times and for the periods referred to therein, (ii)
be prepared in accordance with GAAP methodologies applied on a consistent basis
throughout the periods involved (except as set forth on Section 2.7(a) of the
Company Disclosure Schedule or as disclosed in the footnotes thereto and
except for the interim financials for 2009 which are produced on a modified
GAAP/Adjusted EBITDA basis), (iii) fairly present in all material respects the
consolidated financial position of Ultimate Resort as of the respective dates
thereof and the consolidated results of Ultimate Resort’s operations and cash
flows for the periods indicated and (iv) to the extent required for inclusion in
the Proxy Statement, will comply as of the Closing Date, (A) in all material
respects with the Securities Act, Regulation S-X and the published general rules
and regulations of the SEC and (B) will be prepared in accordance with GAAP
applied on a consistent basis throughout the periods involved (except as set
forth on Section
2.7(a) of the Company Disclosure Schedule or as disclosed in the
footnotes thereto and except for the interim financials for 2009 which are
produced on a modified GAAP/Adjusted EBITDA basis).
8
(b) To
the knowledge of the Company, Ultimate Resort has disclosed to Secure, Ultimate
Resort’s outside auditors and Ultimate Resort’s management any material fraud
that involves management or other employees who have a significant role in
Ultimate Resort’s internal controls over financial reporting.
(c) None
of the Company, any Company Subsidiary, or any manager, director, officer, or to
the Company’s knowledge, any auditor or accountant of the Company or any Company
Subsidiary or any employee of the Company or any Company Subsidiary has received
any written complaint, allegation, assertion or claim from any Governmental
Authority regarding the accounting or auditing practices, procedures,
methodologies or methods of the Company or any Company Subsidiary or their
respective internal accounting controls, including any complaint, allegation,
assertion or claim that the Company or any Company Subsidiary has engaged in
questionable accounting or auditing practices. No Key Employee and no member of
Company management has received written notice from any Governmental Authority
or any Person of any material violation of consumer protection, insurance or
securities Laws by the Company, any Company Subsidiary or any of their
respective officers, managers, directors, employees or agents.
2.8 Absence of Certain
Changes.
(a) From
December 31, 2008 through the date hereof, to the knowledge of the Company and
except as described in Section 2.8(a) of the
Company Disclosure Schedule, the Company and the Company Subsidiaries
have conducted their respective businesses in the ordinary course of business
consistent with past practice and since such time, there has not occurred any
action that would constitute a breach of Section
4.1.
9
(b) From
December 31, 2008 through the date hereof, to the knowledge of the Company,
there has not been any fact, change, effect, occurrence, event, development or
state of circumstances that has had or would reasonably be expected to result in
a Company Material Adverse Effect.
2.9 Absence of Undisclosed
Liabilities. Except as and to the extent reflected or reserved
against in the Company Financials (as of the Closing Date), to the knowledge of
the Company, from December 31, 2006 through the date hereof, neither the Company
nor any Company Subsidiary has incurred any liabilities or obligations of the
type required to be reflected on a balance sheet that is not adequately
reflected or reserved on or provided for in the Company Financials, other than
liabilities of the type that have been incurred in the ordinary course of
business consistent with past practice.
2.10 Compliance with Laws.
Except as set forth in Section 2.10 of the Company
Disclosure Schedule and to the knowledge of the Company, neither the
Company nor any of the Company Subsidiaries is in conflict with, or in default
or violation of, nor has it received, from December 31, 2006 through the date
hereof, any written notice of any conflict with, or default or violation of, (a)
any applicable Law by which it or any property or asset of the Company or any
Company Subsidiary is bound or affected, or (b) any Company Material Contract,
except, in each case, for any deviations from any of the foregoing that would
not reasonably be expected to result in a Company Material Adverse
Effect.
2.11 Regulatory Agreements;
Permits.
(a) There
are no written agreements, memoranda of understanding, commitment letters, or
cease and desist orders, to which the Company or any Company Subsidiary is a
party, on the one hand, and any Governmental Authority is a party or addressee,
on the other hand.
(b) Except
as disclosed in Section 2.11(b) of the
Company Disclosure Schedule, each of the Company, the Company
Subsidiaries, and each employee of the Company or any Company Subsidiary who is
legally required to be licensed by a Governmental Authority in order to perform
his or her duties with respect to his or her employment with the Company or such
Company Subsidiary, hold all material permits, licenses, franchises, grants,
authorizations, consents, exceptions, variances, exemptions, orders and other
authorizations of Governmental Authorities, certificates, consents and approvals
necessary to lawfully conduct the Company’s or the Company Subsidiaries’
respective business as presently conducted, and to own, lease and operate the
Company’s or the Company Subsidiaries’ respective assets and properties
(collectively, the “Company
Permits”). To the knowledge of the Company, all of the Company Permits
have been made available to Secure and all are in full force and effect, and no
suspension or cancellation of any of the Company Permits is pending or, to the
knowledge of the Company, threatened, except where the failure of any Company
Permits to have been in full force and effect, or the suspension or cancellation
of any of the Company Permits, would not reasonably be expected to result in a
Company Material Adverse Effect. The Company and the Company Subsidiaries are
not in violation in any material respect of the terms of any Company
Permit. To the knowledge of the Company, the rights and benefits of
each Company Permit will be available to the Company and the Company
Subsidiaries immediately after the Closing on terms substantially identical to
those enjoyed by the Company and the Company Subsidiaries immediately prior to
the Closing.
10
(c) No
investigation, review or market conduct examination by any Governmental
Authority with respect to the Company or any Company Subsidiary is pending or,
to the knowledge of the Company, threatened.
2.12 Litigation.
(a) Except
as disclosed in Section 2.12(a) of the
Company Disclosure Schedule, there is no private, regulatory or
governmental inquiry, action, suit, proceeding, litigation, claim, arbitration
or investigation pending before any Governmental Authority of competent
jurisdiction (each, an “Action”), or, to the knowledge
of the Company, threatened against the Company, any of the Company Subsidiaries
or any of their respective properties, rights or assets or any of their
respective managers, officers or directors (in their capacities as such) that
would reasonably be expected to result in a Company Material Adverse Effect.
There is no decree, directive, order, writ, judgment, stipulation,
determination, decision, award, injunction, temporary restraining order, cease
and desist order or other order by, or any supervisory agreement or memorandum
of understanding with any Governmental Authority (each, an “Order”) binding against the
Company, any of the Company Subsidiaries or any of their respective properties,
rights or assets or any of their respective managers, officers or directors (in
their capacities as such) that would prohibit, prevent, enjoin, restrict or
alter or delay any of the transactions contemplated by this Agreement, or that
would reasonably be expected to result in a Company Material Adverse Effect. The
Company and the Company Subsidiaries are in material compliance with all Orders.
There is no material Action that the Company or any of the Company Subsidiaries
has pending against other parties. There is no Action pending or, to the
knowledge of the Company, threatened against the Company involving a claim
against the Company for false advertising with respect to any of the Company’s
products or services.
(b) There
is no Action pending or, to the knowledge of the Member, threatened against such
Member that would reasonably be expected to, individually or in the aggregate,
prevent or delay the consummation of the transactions contemplated by this
Agreement. There is no Order binding against such Member or his Membership
Interest that would prohibit, prevent, enjoin, restrict or materially alter or
delay any of the transactions contemplated by this Agreement.
2.13 Restrictions on Business
Activities. There is no Order binding upon the Company or any
of the Company Subsidiaries that has the effect of prohibiting, preventing,
restricting or impairing in any respect, any business practice of the Company or
any of the Company Subsidiaries as their businesses are currently conducted, any
acquisition of property by the Company or any of the Company Subsidiaries, the
conduct of business by the Company or any of the Company Subsidiaries as
currently conducted, or the ability of the Company or any of the Company
Subsidiaries from engaging in business as currently conducted or from competing
with other parties, except for such Orders that would not reasonably be expected
to result in a Company Material Adverse Effect.
11
2.14 Material
Contracts.
(a) Section 2.14(a) of the
Company Disclosure Schedule sets forth a list of, and the Company has
made available to Secure, true, correct and complete copies of, each material
written contract, agreement, commitment, arrangement, lease, license, permit or
plan and each other instrument (other than this Agreement or any ancillary
agreement contemplated hereby) currently in effect to which the Company or any
Company Subsidiary is a party or by which the Company, any Company Subsidiary,
or any of their respective properties or assets are bound or affected as of the
date hereof (each, a “Company
Material Contract”) that:
(i) contains
covenants that materially limit the ability of the Company or any Company
Subsidiary (or which, following the consummation of the transactions
contemplated hereby, could materially restrict the ability of Secure or any of
its affiliates) (A) to compete in any line of business or with any Person or in
any geographic area or to sell, or provide any service or product, including any
non-competition covenants, exclusivity restrictions, rights of first refusal or
most-favored pricing clauses or (B) to purchase or acquire an interest in any
other entity, except, in each case, for any such contract that may be canceled
without any penalty or other liability to the Company or any Company Subsidiary
upon notice of 60 days or less;
(ii) involves
any joint venture, partnership, limited liability company or other similar
agreement or arrangement relating to the formation, creation, operation,
management or control of any partnership or joint venture that is material to
the business of the Company and the Company Subsidiaries, taken as a
whole;
(iii) is
not a routine operating contract and that otherwise is or may be material to the
businesses, operations, assets or condition (financial or otherwise) of the
Company and the Company Subsidiaries;
(iv) involves
any exchange traded, over the counter or other swap, cap, floor, collar,
futures, contract, forward contract, option or other derivative financial
instrument or contract, based on any commodity, security, instrument, asset,
rate or index of any kind or nature whatsoever, whether tangible or intangible,
including currencies, interest rates, foreign currency and indices;
(v) evidences
Indebtedness (whether incurred, assumed, guaranteed or secured by any asset)
having an outstanding principal amount in excess of $250,000;
(vi) involves
the acquisition or disposition (to the extent such transaction would be
consummated after the date hereof), directly or indirectly (by merger or
otherwise), of assets (other than in the ordinary course of business) or capital
stock or other equity interests of another Person;
(vii) by
its terms calls for aggregate payments by the Company or the Company
Subsidiaries under such contract of more than $250,000 per year;
(viii) with
respect to any material acquisition of another Person, pursuant to which the
Company or any Company Subsidiary has (A) any continuing indemnification
obligations in excess of $250,000 or (B) any “earn out” or other contingent
payment obligations;
12
(ix) other
than in the ordinary course of business, obligates the Company or any Company
Subsidiary to provide continuing indemnification or a guarantee of obligations
after the date hereof in excess of $250,000;
(x) is
between the Company or any Company Subsidiary and any of their respective
managers, directors or executive officers that cannot be cancelled by the
Company (or the applicable Company Subsidiary) within 60 days’ notice without
material liability, penalty or premium;
(xi) other
than in the ordinary course of business, obligates the Company or any Company
Subsidiary to make any capital commitment or expenditure in excess of $100,000
(including pursuant to any joint venture);
(xii) relates
to the development, ownership, licensing or use of any Intellectual Property
material to the business of the Company or any Company Subsidiary, other than
“shrink wrap,” “click wrap,” and “off the shelf” software agreements and other
agreements for software commercially available on reasonable terms to the public
generally with license, maintenance, support and other fees of less than
$100,000 per year (collectively, “Off-the-Shelf Software
Agreements”); or
(xiii) provides
for any standstill arrangements.
(b) Except
as disclosed on Section 2.14(b) of the
Company Disclosure Schedule, with respect to each Company Material
Contract: (i) such Company Material Contract is valid and binding and
enforceable in all respects against the Company or the Company Subsidiary party
thereto (subject to Enforceability Exceptions) and, to the Company’s knowledge,
the other party thereto, and other than such contracts that have expired by
their terms, in full force and effect; (ii) the consummation of the transactions
contemplated by the Agreement will not affect the terms, validity or
enforceability of the Company Material Contract against Secure or such Company
Subsidiary and, to the Company’s knowledge, the other party thereto; (iii) to
the knowledge of the Company, neither the Company nor any Company Subsidiary is
in breach or default in any respect, and no event has occurred that with the
passage of time or giving of notice or both would constitute a breach or default
by the Company or any Company Subsidiary, or permit termination or acceleration
by the other party thereto, under such Company Material Contract; (iv) to the
knowledge of the Company, no other party to such Company Material Contract is in
breach or default in any respect, and no event has occurred that with the
passage of time or giving of notice or both would constitute such a breach or
default by such other party, or permit termination or acceleration by the
Company or any of the Company Subsidiaries, under such Company Material
Contract, and (v) no other party to such Company Material Contract has notified
the Company or any Company Subsidiary in writing that it is terminating or
considering terminating the handling of its business by the Company or any
Company Subsidiary or in respect of any particular product, project or service
of the Company, or is planning to materially reduce its future business with the
Company or any Company Subsidiary in any manner except, with respect to each of
clauses (i) through (v), for any deviations from any of the foregoing or that
would not reasonably be expected to result in a Company Material Adverse
Effect.
13
2.15 Intellectual
Property.
(a) Section 2.15(a) of the
Company Disclosure Schedule contains a list of: (i) all registered
Intellectual Property and Intellectual Property that is the subject of a pending
application for registration, and material unregistered Intellectual Property,
in each case that is, owned by the Company or any of the Company Subsidiaries
and is material to the business of the Company (“Company Intellectual
Property”); and (ii) all material Intellectual Property, other than as
may be licensed pursuant to Off-the-Shelf Software Agreements, that is licensed
to the Company or any of the Company Subsidiaries and is material to the
business of the Company (“Licensed Intellectual
Property”). Except where failure to own, license or otherwise
possess such rights has not had and would not reasonably be expected to result
in a Company Material Adverse Effect, each of the Company and the Company
Subsidiaries (x) has all right, title and interest in and to all Company
Intellectual Property owned by it, free and clear of all Encumbrances, other
than Permitted Encumbrances, and (y) has valid rights in and to all of its
Licensed Intellectual Property. Neither the Company nor any of the Company
Subsidiaries has received any written notice alleging that it has infringed,
diluted or misappropriated, or, by conducting its business as currently
conducted, would infringe, dilute or misappropriate, the Intellectual Property
rights of any Person, and to the knowledge of the Company there is no valid
basis for any such allegation. Neither the execution nor delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
impair or materially alter the Company’s or any Company Subsidiary’s rights to
any Company Intellectual Property or Licensed Intellectual Property. All of the
rights within the Company Intellectual Property and the license rights to the
Licensed Intellectual Property are valid, enforceable and subsisting and there
is no Action that is pending or, to the knowledge of the Company, threatened
that challenges the rights of the Company or any of the Company Subsidiaries in
respect of any Company Intellectual Property or Licensed Intellectual Property
or the validity, enforceability or effectiveness thereof. The Company
Intellectual Property and the Licensed Intellectual Property constitute all
material Intellectual Property owned by or licensed to the Company or the
Company Subsidiaries and used in or necessary for the operation by the Company
and the Company Subsidiaries of their respective businesses as currently
conducted. To the knowledge of the Company, neither the Company nor any of the
Company Subsidiaries is in breach or default in any material respect (or would
with the giving of notice or lapse of time or both be in such breach or default)
under any license to use any of the Licensed Intellectual Property.
(b) For
purposes of this Agreement, “Intellectual Property” means
(i) United States, international and foreign patents and patent applications,
including divisionals, continuations, continuations in part, reissues,
reexaminations and extensions thereof and counterparts claiming priority
therefrom; utility models; invention disclosures; and statutory invention
registrations and certificates; (ii) United States and foreign registered,
pending and unregistered trademarks, service marks, trade dress, logos, trade
names, corporate names and other source identifiers, domain names, Internet
sites and web pages; and registrations and applications for registration for any
of the foregoing, together with all of the goodwill associated therewith; (iii)
United States and foreign registered and unregistered copyrights, and
registrations and applications for registration thereof; and copyrightable
works; (iv) all inventions and design rights (whether patentable or
unpatentable) and all categories of trade secrets as defined in the Uniform
Trade Secrets Act, including business, technical and financial information; and
(v) confidential and proprietary information, including know-how.
14
2.16 Employee Benefit
Plans.
(a) Section 2.16(a) of the
Company Disclosure Schedule lists, with respect to the Company and the
Company Subsidiaries, (i) all employee benefit plans (as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)), (ii) all material
loans from the Company to managers, officers and directors other than advances
for expense reimbursements incurred in the ordinary course of business, (iii)
any securities option, securities stock purchase, phantom securities, securities
appreciation right, equity-related, supplemental retirement, severance,
sabbatical, medical, dental, vision care, disability, employee relocation,
cafeteria benefit (Section 125 of the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder (the “Code”)) or dependent care
(Code Section 129), life insurance or accident insurance plans, programs,
agreements or arrangements, (iv) all bonus, pension, retirement, profit sharing,
savings, deferred compensation or incentive plans, programs, policies,
agreements or arrangements, (v) other material fringe, perquisite, or employee
benefit plans, programs, policies, agreements or arrangements, and (vi) any
current or former employment, change of control, retention or executive
compensation, termination or severance plans, programs, policies, collective
bargaining, agreements or arrangements, written or otherwise, as to which
material unsatisfied liabilities or obligations, contingent or otherwise, remain
for the benefit of, or relating to, any present or former employee, consultant,
manager or director, or which could reasonably be expected to have any material
liabilities or obligations (together, the “Company Benefit Plans”). The
term Company Benefit Plans also includes all benefit plans subject to Title IV
of ERISA in connection with which any trade or business (whether or not
incorporated) that is treated as a single employer with the Company and the
Company Subsidiaries within the meaning of Section 414(b), (c), (m) or (o) of
the Code (a “Company ERISA
Affiliate”) has any liability.
(b) Other
than as would not reasonably be expected to result in a Company Material Adverse
Effect, (i) there has been no “prohibited transaction,” as such term is defined
in Section 406 of ERISA and Section 4975 of the Code, by the Company or by any
trusts created thereunder, any trustee or administrator thereof or any other
Person, with respect to any Company Benefit Plan, (ii) each Company Benefit Plan
has been administered in material accordance with its terms and in material
compliance with the requirements prescribed by any and all applicable Laws
(including ERISA and the Code), (iii) the Company and each Company ERISA
Affiliate have performed in all material respects all obligations required to be
performed by them under, are not in any respect in default under or violation
of, and to the knowledge of the Company there has not been any default or
violation by any other party to, any of the Company Benefit Plans that are
subject to Title IV of ERISA, (iv) all contributions and premiums required to be
made by the Company or any Company ERISA Affiliate to any Company Benefit Plan
subject to Title IV of ERISA have been made on or before their due dates,
including any legally permitted extensions. Except with respect to claims for
benefits in the ordinary course, no Action has been brought, or to the knowledge
of the Company is threatened, against or with respect to any such Company
Benefit Plan, including any audit or inquiry by the IRS, United States
Department of Labor (the “DOL”) or other Governmental
Authority (other than as would not result in a Company Material Adverse Effect).
Each Company Benefit Plan that is a “nonqualified deferred compensation plan”
within the meaning of Section 409A of the Code and any awards thereunder, in
each case that is subject to Section 409A of the Code, has been operated in good
faith compliance, in all material respects, with Section 409A of the Code since
January 1, 2005.
15
(c) Except
as otherwise provided in this Agreement, any ancillary agreement related hereto
or as provided by applicable Law, with respect to the Company Benefit Plans, the
consummation of the transactions contemplated by this Agreement and any
ancillary agreement related hereto to which the Company is a party, will not,
either alone or in combination with any other event or events, (i) entitle any
current or former employee, manager, director or consultant of the Company or
any of the Company Subsidiaries to any payment of severance pay, golden
parachute payments, or bonuses, (ii) accelerate, forgive indebtedness, vest,
distribute, or increase benefits or obligation to fund benefits with respect to
any employee or director of the Company or any of the Company Subsidiaries, or
(iii) accelerate the time of payment or vesting of options to purchase
securities of the Company, or increase the amount of compensation due any such
employee, director or consultant.
(d) None
of the Company Benefit Plans contains any provision requiring a gross-up
pursuant to Section 280G or 409A of the Code or similar Tax
provisions.
(e) No
Company Benefit Plan maintained by the Company or any of the Company
Subsidiaries provides material benefits, including death or medical benefits
(whether or not insured), with respect to current or former employees of the
Company or any of the Company Subsidiaries after termination of employment
(other than (i) coverage mandated by applicable Laws, (ii) death benefits or
retirement benefits under any “employee pension benefit plan,” as that term is
defined in Section 3(2) of ERISA, or (iii) benefits, the full direct cost of
which is borne by the current or former employee (or beneficiary
thereof)).
(f) Neither
the Company nor any Company ERISA Affiliate has any liability with respect to
any (i) employee pension benefit plan that is subject to Part 3 of Subtitle B of
Title I of ERISA, Title IV of ERISA or Section 412 of the Code, or (ii)
"multiemployer plan" as defined in Section 3(37) of ERISA.
2.17 Taxes and
Returns.
(a) Definitions.
(i) For
the purposes of this Agreement, “Tax” or “Taxes” refers to any and all
federal, state, local and foreign taxes, including, without limitation, gross
receipts, income, profits, sales, use, occupation, value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, assessments, governmental charges and duties together with all
interest, penalties and additions imposed with respect to any such amounts and
any amount of any of the foregoing for which a Person may be liable by reason of
Treasury Regulations Section 1.1502-6, as a successor or transferee, or by
contract, indemnity or otherwise.
(ii) “Code” means the Internal
Revenue Code of 1986, as amended. Any reference to any particular
Code section shall include any revision, successor, predecessor to that section,
regardless of how numbered or classified, and any corresponding provision of
state, local, or foreign Tax law.
(iii) “Taxing Authority” means any
governmental authority responsible for the administration or imposition of any
Tax.
16
(iv) “Treasury Regulations” means
the United States Treasury Regulations promulgated under the
Code. Any reference to any particular Treasury Regulations section
shall include any revision, successor, predecessor to that section, regardless
of how numbered or classified, and any corresponding provision of state, local,
or foreign Tax law.
(b) Tax Returns and
Audits.
(i) As
of the Closing Date, the Company and each of the Company Subsidiaries have filed
all federal, state, local and foreign returns, estimates, information statements
and reports relating to Taxes (“Returns”) required to be filed
by the Company and each of the Company Subsidiaries with any Taxing Authority
prior to the date hereof. All such Returns are true, correct and
complete in all respects. Neither the Company nor any of the Company
Subsidiaries has requested or been granted any extension of time to file any
Return that has not been filed. The Company Disclosure Schedule lists
all Returns filed with respect to the Company. As of the Closing
Date, the Company and each of the Company Subsidiaries have paid all Taxes due
(whether or not such Taxes are shown or required to be shown on any
Return).
(ii) As
of the Closing Date, all Taxes that the Company or each of the Company
Subsidiaries is required by law to withhold or collect have been duly withheld
or collected, and have been paid over to the proper Taxing Authority to the
extent due and payable.
(iii) As
of the Closing Date, none of the Company or any of the Company Subsidiaries will
be delinquent in the payment of any Tax nor is there any material Tax deficiency
outstanding, assessed or, to the knowledge of the Company, proposed against the
Company or any of the Company Subsidiaries. Neither the Company nor
any of the Company Subsidiaries has been made aware in writing of any proposed
reassessments by any Taxing Authority of the value or other tax base of any
property owned by the Company or any of the Company
Subsidiaries. Neither the Company nor any of the Company Subsidiaries
has executed any unexpired waiver of any statute of limitations extending or
waiving the period for the assessment or collection of any Tax. There
are no liens for Taxes upon the assets of the Company or the Company
Subsidiaries, other than for current Taxes not yet due and payable.
(iv) There
is no action, audit, proceeding (whether administrative or judicial), or other
examination of any Return of the Company or any of the Company Subsidiaries by
any Taxing Authority in progress, pending, or, to the knowledge of the Company,
threatened relating to Taxes of the Company or any of the Company
Subsidiaries.
(v) No
adjustment relating to any Returns filed by the Company or any of the Company
Subsidiaries has been proposed in writing, formally or informally, by any Taxing
Authority to the Company or any of the Company Subsidiaries or any of the
officers and directors thereof.
(vi) As
of the Closing Date, neither the Company nor any of the Company Subsidiaries has
any liability for any unpaid Taxes which have not been accrued for or reserved
on the Company’s balance sheets included in the Company Financial Statements,
whether asserted or unasserted, contingent or otherwise, other than any
liability for unpaid Taxes that may have accrued since the end of the most
recent fiscal year in connection with the operation of the business of the
Company and the Company Subsidiaries in the ordinary course of
business.
17
(vii) Neither
the Company nor any of the Company Subsidiaries (A) has ever been a member of an
affiliated, combined, consolidated, or unity group filing an income Tax Return
(other than a group the common parent of which was Company), (B) is a party to
or bound by any Tax sharing or allocation agreement, or (C) is presently liable
for the Taxes of any other Person, including, but not limited to: (i) by reason
of Treasury Regulations Section 1.1502-6; (ii) as a transferee or successor; or
(iii) by contract or indemnity.
(viii) Neither
the Company nor any of the Company Subsidiaries will be required to include any
item of income in, or exclude any item of deduction from, taxable income for any
taxable period ending after the Closing Date as a result of any: (i)
adjustment pursuant to Section 481 of the Code associated with a change of
accounting method that is effective on or before the date of this Agreement;
(ii) closing agreement or other agreement with any governmental authority
executed on or before the date of this Agreement; (iii) transaction entered into
on or before the date of this Agreement and treated under the installment
method, long-term contract method, cash method, or open transaction method of
accounting; or (iv) election under Section 108(i) of the Code to defer debt
discharge income.
(ix) The
Company is, for Tax purposes, a partnership (within the meaning of Section 7701
of the Code), at no time has the Company elected or been treated as other than a
partnership for Tax purposes, and no Taxing Authority has ever challenged or
questioned the Company’s status as a partnership.
(x) Neither
the Company nor any of the Company Subsidiaries has ever distributed the stock
of another Person in a transaction that was intended to be governed in whole or
in part by Section 355 of the Code.
2.18 Finders and Investment
Bankers.
(a) Except
as set forth on Section 2.18(a) of the
Company Disclosure Schedule, the Company has not incurred, nor will it
incur, any liability for any brokerage, finder’s or other fee or commission in
connection with the transactions contemplated hereby based upon arrangements
made by or on behalf of the Company.
(b) No
Member has incurred, nor will it incur, any liability for any brokerage,
finder’s or other fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of the
Member.
2.19 Title to Properties;
Assets.
(a) “Owned Real Property” shall
mean each piece of real property owned in fee simple (or with respect to real
property located outside the United States, such other similar form of title as
may be described in the title policy for such parcel) by the Company or any of
the Company Subsidiaries (including all land, easements, development rights and
other rights and interests appurtenant thereto including interests in buildings,
structures, improvements and fixtures located thereon) which Owned Real Property
is described on Section 2.19(a) of the
Company Disclosure Schedule attached hereto and made a part
hereof. The Owned Real Property constitutes all of the real property
owned by the Company or any of the Company Subsidiaries in connection with the
businesses of the Company and the Company Subsidiaries.
18
(b) “Leased Real Property” shall
mean each property leased, subleased, licensed, or otherwise occupied by the
Company or any of the Company Subsidiaries pursuant to a lease, sublease,
license, or other occupancy agreement and all amendments, modifications, and
supplements thereto, excluding leases for individual condominium units at any
Owned Real Property, all of which condominium unit leases are with Persons not
affiliated with the Company for fair market value on reasonable and customary
terms, (each, a “Lease”)
(including all rights included in any Lease for a Leased Real Property to use or
occupy any land, buildings, including sales kiosks, and improvements thereon),
which Leased Real Property is described on Section 2.19(b) of the
Company Disclosure Schedule attached hereto and made a part
hereof. A true, correct and complete copy of each Lease for each
Leased Real Property is described on Section 2.19(b) of the
Company Disclosure Schedule, a copy of each of which has been delivered
to Secure or its representatives prior to the date hereof. The Leased
Real Property constitutes all of the real property leased, subleased, licensed,
or otherwise occupied by the Company and any of its Subsidiaries.
(c) [Intentionally
Deleted]
(d) [Intentionally
Deleted]
(e) “Real Property” shall mean,
collectively, the Owned Real Property, and the Leased Real
Property.
(f) To
the knowledge of the Company, each Lease is binding, enforceable, in full force
and effect and neither the Company nor any of its Subsidiaries have received
written notice or otherwise have knowledge that they are in default or in breach
under such Lease except for such defaults as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse
Effect. To the knowledge of the Company no event or
omission, which, with the passage of time or the giving of notice or both, would
comprise a default, except for such defaults as would not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse
Effect. To the knowledge of the Company, no landlord, sublandlord,
licensor or other Person that is a party to any Lease (other than Company or a
Company Subsidiary) is in default in respect of its obligations under such Lease
and no event or omission has occurred, which, with the passage of time or the
giving of notice or both, would cause any such Person to be in default in a
material respect of its obligations under such Lease. Neither the
Company nor any of the Company Subsidiaries have received written notice of any
claimed abatements, offsets, defenses or other bases for relief or adjustment
under any of the Leases. The transactions contemplated by this
Agreement do not require the consent of any Person or party to any Lease (or any
consent the absence of which would not cause a Company Material Adverse Effect),
and will not result in a breach of or default under such Lease, or otherwise
cause such Lease to cease to be legal, valid, binding, enforceable and in full
force and effect following the Closing. No security deposit or
portion thereof deposited with respect to any Lease has been applied in respect
of a breach or default under which Lease which has not been redeposited in full
by Company or any Company Subsidiary. Except as may be disclosed in a
Lease, the Company and the Company Subsidiaries do not owe, nor will they owe in
the future, any brokerage commissions or finder’s fees with respect to such
Lease which is not paid. No party to any Lease (except where such
party is the Company or a Company Subsidiary) has an economic interest in the
Company or a Company Subsidiary. Neither the Company nor any Company
Subsidiary has (i) assigned, subleased, licensed or otherwise granted any Person
(except where such Person is the Company or a Company Subsidiary) the right to
use or occupy such Leased Real Property or any portion thereof, or (ii)
collaterally assigned or granted any other security interest in any Lease or any
interest therein.
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(g) With
respect to the Real Property, as applicable: (i) other than any of
the rights that the members in the Company’s destination clubs may hold, which
are set forth on Section 2.19(g) of the
Company Disclosure Schedule, the Company or the Company
Subsidiaries, as the case may be, have good and marketable fee simple interest
in the Real Property and a valid leasehold interest in the Leased Real Property,
free and clear of any use or occupancy restrictions, Liens, encumbrances, and
easements or title defects, except as set forth in the Company Financials or on
any existing title insurance policy, deed, or survey, that have had or could
have a Company Material Adverse Effect on the Company’s, or any of its Company
Subsidiaries’, as the case may be, use and occupancy of the Real Property; and
(ii) neither the Company nor any of its Subsidiaries have received written
notice (A) of any condemnation, eminent domain or similar proceeding affecting
any portion of the Real Property or any access thereto or of any sale or other
disposition of the Real Property or any part thereof in lieu of condemnation or
of any possible widening of streets abutting all or any portion of the Real
Property, and, to the knowledge of the Company, no such proceedings are
contemplated, (B) of the imposition of any special taxes or assessments by a
governmental authority, or payments in lieu thereof, against all or any portion
of the Real Property, or any pending improvement liens to be made by any
governmental authority which may affect any Real Property, (C) from or on behalf
of any existing insurance carriers indicating that the insurance rates for all
or any portion of any of the Real Property will be substantially increased or
that alterations of any Real Property are required, and (D) the curtailment of
any utility service supplied to any Real Property.
(h) Prior
to the date hereof, the Company has furnished or made available to Secure or its
representatives true and correct copies of all deeds, mortgages, surveys,
licenses, leases, title insurance policies and permanent certificates of
occupancy (or documents equivalent to certificates of occupancy in the
jurisdiction where the Real Property is located) with respect to the Real
Property that are in the possession of Company or the Company
Subsidiaries.
(i) Neither
the Company nor the Company Subsidiaries have received written notice of, and to
the knowledge of the Company and the Company Subsidiaries there are no,
outstanding claims made by or against the Company or any applicable Company
Subsidiary with respect to title or ownership of the Owned Real
Property.
(j) Neither
the Company nor any of the Company Subsidiaries is obligated under or a party
to, and none of the Owned Real Property is subject to, any option, right of
first refusal, right of first offer or other obligation to sell, transfer,
dispose of, grant any interest in or lease any of the Owned Real Property or any
portion thereof or interest therein to any Person other than (x) the Company and
the Company Subsidiaries or (y) such leases, subleases, licenses, concessions or
other agreements entered into by the Company or the Company Subsidiaries in the
ordinary course of business (the documents described in this clause (y), the
“Owned Real Property
Leases”), which Owned Real Property Leases are described on Section 2.19(j) of the
Company Disclosure Schedule attached hereto and made a part
hereof. The Owned Real Property Leases are in full force and effect
and neither the Company nor any of the Company Subsidiaries have received
written notice or otherwise have knowledge that they are in default or in breach
under any such Lease except for such defaults as would not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse
Effect. To the knowledge of the Company no event or omission under
any Owned Real Property Lease, which, with the passage of time or the giving of
notice or both, would cause a default except for such defaults as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. Neither the Company nor any of the Company
Subsidiaries have received written notice of any claimed abatements, offsets,
defenses or other bases for relief or adjustment under any Owned Real Property
Lease.
20
(k) To
the knowledge of the Company, there are no facts or conditions affecting any of
the improvements upon or constituting a part of the Real Property (including,
but not limited to, the buildings, structures, fixtures, roofs and structural
elements thereof and the heating, ventilation, air conditioning, plumbing,
electrical, elevator mechanical, sewer, waste water, storm water, paving and
parking equipment, systems and facilities included therein) (the “Improvements”), except for
such Improvements that are in the process of being developed or constructed
(which, upon substantial completion, shall be adequate for the purposes for
which they are intended to be used in the ordinary course of business), which
would reasonably be expected to have a Company Material Adverse
Effect.
(l) There
are no Construction Contracts with amounts payable as of June 30, 2009 that
equal or exceed $1,000,000. As used herein, a “Construction Contract” shall
mean each development agreement, master architectural contract or general
contractor agreement to which the Company or any of the Company Subsidiaries is
a party with respect to any present or contemplated construction by the Company
or any Company Subsidiary for which no certificate of occupancy has been
obtained. To the Company's knowledge, it has not received written
notice that it or any other party thereto, is presently in default and there are
no facts or circumstances which, with or without the passage of time or both,
would result in a breach of any of the terms thereof by it or any such other
party, except for such defaults as would not, individually or in the aggregate
reasonably be expected to have a Company Material Adverse Effect.
2.20 Employee
Matters.
(a) Except
as set forth in Section 2.20(a) of the
Company Disclosure Schedule, there are no Actions pending or, to the
knowledge of the Company, threatened involving the Company or any Company
Subsidiary and any of their respective employees or former employees (with
respect to their status as an employee or former employee, as applicable)
including any harassment, discrimination, retaliatory act or similar claim. To
the Company’s knowledge, since June 30, 2009, there has been: (i) no labor union
organizing or attempting to organize any employee of the Company or any of the
Company Subsidiaries into one or more collective bargaining units with respect
to their employment with the Company or any of the Company Subsidiaries; and
(ii) no labor dispute, strike, work slowdown, work stoppage or lock out or other
collective labor action by or with respect to any employees of the Company or
any of the Company Subsidiaries pending with respect to their employment with
the Company or any of the Company Subsidiaries or threatened against the Company
or any of the Company Subsidiaries. Neither the Company nor any of the Company
Subsidiaries is a party to, or bound by, any collective bargaining agreement or
other agreement with any labor organization applicable to the employees of the
Company or any of the Company Subsidiaries and no such agreement is currently
being negotiated.
21
(b) Except
as set forth on Section 2.20(b) of the
Company Disclosure Schedule, to the knowledge of the Company, the Company
and the Company Subsidiaries (i) are in compliance in all material respects with
all applicable Laws respecting employment and employment practices, terms and
conditions of employment, health and safety and wages and hours, including Laws
relating to discrimination, disability, labor relations, hours of work, payment
of wages and overtime wages, pay equity, immigration, workers compensation,
working conditions, employee scheduling, occupational safety and health, family
and medical leave, and employee terminations, and have not received written
notice, or any other form of notice, that there is any Action involving unfair
labor practices against the Company or any of the Company Subsidiaries pending,
(ii) are not liable for any material arrears of wages or any material penalty
for failure to comply with any of the foregoing, and (iii) are not liable for
any material payment to any trust to any Governmental Authority, with respect to
unemployment compensation benefits, Taxes, social security or other benefits or
obligations for employees, independent contractors or consultants (other than
routine payments to be made in the ordinary course of business and consistent
with past practice). Except as would not result in any material liability to the
Company or any Company Subsidiary, there are no Actions pending or, to the
knowledge of the Company, threatened against the Company or any Company
Subsidiary brought by or on behalf of any applicant for employment, any current
or former employee, any Person alleging to be a current or former employee, or
any Governmental Authority, relating to any such Law or regulation, or alleging
breach of any express or implied contract of employment, wrongful termination of
employment, or alleging any other discriminatory, wrongful or tortious conduct
in connection with the employment relationship.
(c) Each
of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (collectively, the “Key Employees”) are currently
employed by the Company in connection with the operation of its business. Section 2.20(c) of the
Company Disclosure Schedule accurately sets forth each Key Employee’s (i)
job title, (ii) date of hire, (iii) base compensation, and (iv) additional
material compensation paid or otherwise accrued since January 1, 2007. Other
than ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, the Key Employees are employed at will.
2.21 Environmental
Matters. Neither the Company nor any of the Company
Subsidiaries have received any notice or claim, or entered into any negotiations
or agreements with any Person, that would impose a material liability or
obligation under any Environmental Law.
“Environmental Laws” means any
Law relating to (a) the protection, preservation or restoration of the
environment (including air, water vapor, surface water, groundwater, drinking
water supply, surface land, subsurface land, plant and animal life or any other
natural resource), or (b) the exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of Hazardous Substances, in each case as in
effect at the date hereof.
“Hazardous Substance” means any
substance listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous or as a pollutant or contaminant under any
Environmental Law. Hazardous Substances include any substance to which exposure
is regulated by any Governmental Authority or any Environmental Law, including
(a) petroleum or any derivative or byproduct thereof, toxic mold, asbestos or
asbestos containing material or polychlorinated biphenyls and (b) all substances
defined as Hazardous Substances, Oils, Pollutants or Contaminants in the
National and Hazardous Substances Contingency Plan, 40 C.F.R. Section
300.5.
22
2.22 Transactions with
Affiliates. Except as set forth in Section 2.22 of the Company
Disclosure Schedule, other than (a) for payment of salary for services
rendered, (b) reimbursement for reasonable expenses incurred on behalf of the
Company or any Company Subsidiary, (c) for other employee benefits made
generally available to all employees, (d) with respect to any Person’s ownership
of membership interests, capital stock or other securities of the Company or any
Company Subsidiary or such Person’s employment with the Company or any Company
Subsidiary, or (e) as stated in the Company Financials, there are no contracts
or arrangements that are in existence as of the date of this Agreement under
which there are any material existing or future liabilities or obligations
between the Company or any of the Company Subsidiaries, on the one hand, and, on
the other hand, any (y) present manager, officer or director of either the
Company or any of the Company Subsidiaries or (z) record or beneficial owner of
more than 5% of the outstanding Company Membership Interests as of the date
hereof (each, an “Affiliate
Transaction”).
2.23 Insurance. Section 2.23 of the Company
Disclosure Schedule sets forth a list of all material insurance policies
covering the properties and activities of the Company, the Company Subsidiaries
and their respective businesses. All such policies are in full force and effect
and shall be kept in full force and effect in the ordinary course of
business. Neither the Company nor any Company Subsidiary have
received any written notice of cancellation or non-renewal with respect to such
policies. Neither the Company nor any Company Subsidiary have received written
notice, nor does the Company have knowledge that it is in default with respect
to its obligations under such insurance policies. Except as set forth on Section 2.23 of the Company
Disclosure Schedule, neither the Company nor any Company Subsidiary has
been refused any insurance coverage obtained for the purpose of protecting and
insuring against any material loss or exposure, nor has any such coverage been
limited or cancelled by any insurance carrier to which the Company or any such
Company Subsidiary has applied for any such insurance or with which the Company
or any such Company Subsidiary has carried insurance, nor has there been any
significant increase in the premiums paid under any such policy during the past
five (5) years. To the knowledge of the Company, all such insurance policies
provide adequate coverage for all normal risks incident to the business of the
Company and the Company Subsidiaries and their respective properties and assets,
including construction projects. Section 2.23 of the Company
Disclosure Schedule identifies those pending (or, to the knowledge of the
Company, threatened) Actions with respect to which an insurance carrier has
denied coverage or has advised the Company or the relevant Company Subsidiary
that it is defending such claim under reservation of rights and which, if
determined or resolved adversely to the Company or the Company Subsidiaries,
could, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
2.24 Books and
Records. Except to the extent that failure to do so would not
have a Company Material Adverse Effect, all of the books and records of the
Company and the Company Subsidiaries are complete and accurate in all material
respects and, to the knowledge of the Company, have been maintained in the
ordinary course and in accordance with applicable Laws.
2.25 Board Approval; Required
Vote. The board of managers of the Company has, as of the date
of this Agreement, determined (i) that the transactions contemplated by this
Agreement are fair to, and in the best interests of the Company and its Members,
and (ii) to recommend that the Members of the Company approve this
Agreement.
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2.26 Information
Supplied. None of the information supplied or to be supplied
by the Company or the Members expressly for inclusion or incorporation by
reference in Secure’s proxy statement (as amended or supplemented, the “Proxy Statement”) (and any
amendment or supplement thereto), at the time of filing with the SEC and at the
time it becomes effective, and at the time of mailing of the Proxy Statement and
at the time of the Special Meeting, shall contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. None of the
information supplied or to be supplied by the Company or the Members expressly
for inclusion or incorporation by reference in any of the Signing Form 8-K, the
Signing Press Release, the Closing Form 8-K and the Closing Press Release (each
such capitalized term, as hereafter defined) (collectively, the “Ancillary Public Disclosures”)
will, at the time filed with the SEC, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. Notwithstanding the foregoing, the
Company and the Members make no representation, warranty or covenant with
respect to any information supplied by Secure which is contained in the Proxy
Statement including any Ancillary Public Disclosures.
2.27 Accounts
Receivable. Section 2.27 of the Company
Disclosure Schedule sets forth as of June 30 2009, all accounts, notes
and other receivables, whether or not accrued, and whether or not billed, of the
Company and/ or the Company Subsidiaries, in accordance with GAAP (the “Accounts Receivable”). All
Accounts Receivable arose in the ordinary course of business and represent bona
fide revenues of the Company and/ or the Company Subsidiaries arising from their
respective businesses. To the Company’s knowledge, none of the Accounts
Receivable are subject to any right of recourse, defense, deduction, return of
goods, counterclaim, offset, or set off on the part of the obligor.
2.28 Representations and
Warranties. The representations and warranties of the Company
included in this Agreement, as modified by the Company Disclosure Schedule, are
true and complete in all material respects and do not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading, under the circumstance under which they were made. Except
for the representations and warranties made by the Company in this Agreement,
neither the Company nor any other Person makes any representation or warranty
with respect to the Company or the Company Subsidiaries or their respective
business, operations, assets, liabilities, condition (financial or otherwise) or
prospects, notwithstanding the delivery or disclosure to Secure or any of its
affiliates or representatives of any documentation, forecasts, projections or
other information with respect to any one or more of the foregoing.
ARTICLE
III
REPRESENTATIONS AND
WARRANTIES OF SECURE
The
following representations and warranties by Secure to the Company are qualified
by those disclosures and exceptions set forth in the Secure SEC Reports, the
Additional Secure SEC Reports (each as defined below) and the Secure disclosure
schedule (the “Secure
Disclosure Schedule”). The Secure Disclosure Schedule shall be
arranged in sections corresponding to the numbered and lettered
sections and subsections contained in this Section 3;
provided, that if any section or subsection of the Secure Disclosure Schedule
discloses an item or information in such a way as to make its relevance to the
disclosure required on another section or subsection of the Secure Disclosure
Schedule reasonably apparent, then the applicable item or information will be
deemed to have been also disclosed in such other section or subsection of the
Secure Disclosure Schedule. Secure hereby represents and warrants to
the Company as follows:
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3.1 Due Organization and Good
Standing. Secure is a corporation duly incorporated or
organized, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, lease and operate its respective properties and to carry on
its respective business as now being conducted. Secure is duly qualified or
licensed and in good standing to do business in each jurisdiction where the
nature of its business or its ownership or leasing of its properties or the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure would not reasonably be expected to have a
Secure Material Adverse Effect. Secure has heretofore made available to Company
accurate and complete copies of Secure’s certificate of incorporation and
bylaws, each as amended to date and as currently in effect (the “Secure Organization
Documents”) each as amended to date and as currently in effect. Secure is
not in violation of any provision of the Secure Organization
Documents.
3.2 Capitalization.
(a) The
authorized capital stock of Secure consists of 50,000,000 shares of Secure
Common Stock and 1,000,000 shares of preferred stock, par value $.0001 per
share. As of the date hereof, (i) 12,500,000 shares of Secure Common Stock are
issued and outstanding and no shares of preferred stock are issued and
outstanding, and (ii) 37,500,000 shares of Secure Common Stock are authorized
but unissued (of which 12,075,000 are reserved for the exercise of the warrants
set forth in Section
3.2(c) below). Except as set forth herein or in Section 3.2(b) below,
no shares of capital stock or other voting securities of Secure are issued,
reserved for issuance or outstanding. All outstanding shares of Secure Common
Stock are duly authorized, validly issued, fully paid and non-assessable and not
subject to or issued in violation of any purchase option, right of first
refusal, preemptive right, subscription right or any similar right under any
provision of the General Corporation Law of the State of Delaware (the “DGCL”), the Secure
Organization Documents or any contract to which Secure is a party or by which
Secure is bound.
(b) Except
for warrants issued to Secure’s sponsors to purchase 2,075,000 shares
of Secure Common Stock (the “Sponsor Warrants”) and
warrants issued to Secure’s public stockholders to purchase 10,000,000 shares of
Secure Common Stock (the “Stockholder Warrants”), there
are no (i) outstanding options, warrants, puts, calls, convertible securities,
preemptive or similar rights, (ii) bonds, debentures, notes or other
Indebtedness having general voting rights or that are convertible or
exchangeable into securities having such rights, or (iii) subscriptions or other
rights, agreements, arrangements, contracts or commitments of any character,
relating to the issued or unissued Secure Common Stock or obligating Secure to
issue, transfer, deliver or sell or cause to be issued, transferred, delivered,
sold or repurchased any options or Secure Common Stock or securities convertible
into or exchangeable for such shares, or obligating Secure to grant, extend or
enter into any such option, warrant, call, subscription or other right,
agreement, arrangement or commitment for such common stock. The Sponsor Warrants
and the Stockholder Warrants comprise all of the Secure Warrants. Other than the
conversion rights described in the Secure SEC Reports, there are no outstanding
obligations of Secure to repurchase, redeem or otherwise acquire any shares of
Secure Common Stock, except as set forth in Section 3.2(b) of the Secure
Disclosure Schedule.
25
3.3 Authorization; Binding
Agreement. Secure has all requisite corporate power and
authority to execute and deliver this Agreement and each other ancillary
agreement related hereto to which it is a party, and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the consummation by Secure of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action on the
part of Secure (including the approval by its board of directors), and no other
corporate proceedings on the part of Secure are necessary to authorize the
execution and delivery of this Agreement and each other ancillary agreement
related hereto to which it is a party or to consummate the transactions
contemplated hereby and thereby, other than receipt of the Required Secure Vote
(as hereafter defined). Notwithstanding anything in this Section 3.3 to the
contrary, the affirmative vote of the stockholders of Secure holding at least
fifty-one percent (51%) of the issued and outstanding Secure Common Stock and a
majority of the issued and outstanding IPO Shares (as defined in Secure’s
certificate of incorporation, as amended) present and entitled to vote on the
approval and adoption of this Agreement at the Special Meeting (the “Required Secure Vote”) is
necessary to approve and adopt this Agreement and to consummate the transactions
contemplated hereby, provided, further, that
stockholders of Secure holding 3,000,000 or more of the shares of Secure Common
Stock sold in Secure’s initial public offering shall not have voted against the
transactions contemplated hereunder and exercised their conversion rights under
Secure’s certificate of incorporation to convert their shares of Secure Common
Stock into a cash payment from the Trust Fund (as hereafter defined). This
Agreement has been duly and validly executed and delivered by Secure and
(assuming the due authorization, execution and delivery hereof by the Company
and the Members) constitutes the legal, valid and binding obligation of Secure
enforceable against Secure in accordance with its terms, subject to the
Enforceability Exceptions.
3.4 Governmental
Approvals. To the knowledge of Secure, no Consent of or with
any Governmental Authority on the part of Secure is required to be obtained or
made in connection with the execution, delivery or performance by Secure of this
Agreement or any ancillary agreement related hereto to which it is
a party or the consummation by Secure of the transactions
contemplated hereby or thereby other than (a) such filings as contemplated by
this Agreement, (b) for applicable requirements of the Securities Act and
Exchange Act or any state “blue sky” securities Laws, and the rules and
regulations thereunder, including without limitation, the Proxy Statement, (c)
pursuant to Antitrust Laws, and (d) where the failure to obtain or make such
Consents or to make such filings or notifications would not reasonably be
expected to result in a Secure Material Adverse Effect or prevent the
consummation of the transactions contemplated by this Agreement.
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For
purposes of this Agreement, “Secure Material Adverse
Effect” shall mean any change or effect that, individually or in the
aggregate, has, or would reasonably be expected to have, a material adverse
effect upon the assets, liabilities, business, financial condition or operating
results of Secure, except any changes or effects after the date hereof directly
or indirectly attributable to (a) general political, economic, financial,
capital market or industry wide conditions (except to the extent that Secure is
affected in a disproportionate manner relative to other companies in the
industries in which Secure conducts business), (b) the announcement of the
execution of this Agreement, or the pendency of the consummation of the
transactions contemplated hereby, (c) any condition described in the Secure
Disclosure Schedule, (d) any change in GAAP or the interpretation thereof after
the date hereof, (e) the execution by Secure and performance of or compliance by
Secure with this Agreement, (f) any failure to meet any financial or other
projections, or (g) any breach by the Company or the Member Representative of
this Agreement.
3.5 No
Violations. To the knowledge of Secure, the execution and
delivery by Secure of this Agreement and each other ancillary agreements related
hereto and the consummation by Secure of the transactions contemplated hereby
and thereby and compliance by Secure with any of the provisions hereof or
thereof will not (a) conflict with or violate any provision of the Secure
Organization Documents, (b) require any Consent under or result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, cancellation or
acceleration) under, any Secure Material Contract, (c) result (immediately or
with the passage of time or otherwise) in the creation or imposition of any
Encumbrance (except for Permitted Encumbrances) upon any of the properties,
rights or assets of Secure or (d) subject to obtaining the Consents from
Governmental Authorities referred to in Section 3.4 hereof,
and the waiting periods referred to therein have expired, and any condition
precedent to such consent, approval, authorization or waiver has been satisfied,
conflict with, contravene or violate in any respect any Law to which Secure or
any of their respective assets or properties is subject, except, in the case of
clauses (b), (c) and (d) above, for any deviations from the foregoing that would
not reasonably be expected to result in a Secure Material Adverse
Effect. Notwithstanding anything in this Section 3.5 to the
contrary, the Required Secure Vote is necessary to approve and adopt this
Agreement and to consummate the transactions contemplated hereby, provided, further, that
stockholders of Secure holding 3,000,000 or more of the shares of Secure Common
Stock sold in Secure’s initial public offering shall not have voted against the
transactions contemplated hereunder and properly exercised their conversion
rights under Secure’s certificate of incorporation to convert their shares of
Secure Common Stock into a cash payment from the Trust Fund (as hereafter
defined). For purposes of this Agreement, the term “Permitted Encumbrances” means
(i) Encumbrances for water and sewer charges, Taxes or assessments and similar
governmental charges or levies, which either are (A) not delinquent or (B) being
contested in good faith and by appropriate proceedings, and adequate reserves
have been established on the books with respect thereto, (ii) other Encumbrances
imposed by operation of Law (including mechanics’, couriers’, workers’,
repairers’, materialmen’s, warehousemen’s, landlord’s and other similar
Encumbrances) arising in the ordinary course of business for amounts which are
not due and payable and as would not in the aggregate materially adversely
affect the value of, or materially adversely interfere with the use of, the
property subject thereto, (iii) Encumbrances incurred or deposits made in the
ordinary course of business in connection with workers’ compensation,
unemployment insurance or other types of social security, (iv) Encumbrances on
goods in transit incurred pursuant to documentary letters of credit, in each
case arising in the ordinary course of business, (v) title of a lessor under a
capital or operating lease and the terms and conditions of a lease creating any
leasehold interest, (vi) Encumbrances that will be released prior to or as of
the Closing, (vii) Encumbrances arising under this Agreement or any ancillary
agreement hereto or created by or through Secure, and (viii) such other
imperfections in title as are not, in the aggregate, reasonably likely to have a
Secure Material Adverse Effect or a Company Material Adverse Effect, as
applicable.
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3.6 SEC Filings and Secure
Financial Statements.
(a) Secure
has filed all forms, reports, schedules, statements and other documents required
to be filed or furnished by Secure with the SEC since October 23, 2007 under the
Exchange Act or the Securities Act, together with any amendments, restatements
or supplements thereto, and will file all such forms, reports, schedules,
statements and other documents required to be filed subsequent to the date of
this Agreement (the “Additional
Secure SEC Reports”). Secure has delivered to the Company copies in the
form filed with the SEC of all of the following, except to the extent available
in full without redaction on the SEC’s website through ▇▇▇▇▇ for at least two
(2) days prior to the date of this Agreement: (i) Secure’s Annual Reports on
Form 10-K for each fiscal year of Secure beginning with the first year Secure
was required to file such a form, (ii) Secure’s Quarterly Reports on Form 10-Q
for each fiscal quarter that Secure was required to file a Quarterly Report on
Form 10-Q in each of the fiscal years of Secure referred to in clause (i) above,
(iii) all proxy statements relating to Secure’s meetings of stockholders
(whether annual or special) held, and all information statements relating to
stockholder consents, since the beginning of the first fiscal year referred to
in clause (i) above, (iv) its Current Reports on Form 8-K filed since the
beginning of the first fiscal year referred to in clause (i) above, (v) all
other forms, reports, registration statements and other documents (other than
preliminary materials if the corresponding definitive materials have been
provided to the Company pursuant to this Section 3.6) filed by
Secure with the SEC since the beginning of the first fiscal year referred to in
clause (i) above (the forms, reports, registration statements and other
documents referred to in clauses (i), (ii), (iii), (iv) and (v) above, whether
or not available through ▇▇▇▇▇, are, collectively, the “Secure SEC Reports”) and (vi)
all certifications and statements required by (x) Rule 13a-14 or 15d-14 under
the Exchange Act, or (y) 18 U. S. C. §1350 (Section 906) of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act of 2002 with respect to any report referred to in clause (i) or (ii) above
(collectively, the “Certifications”). The Secure
SEC Reports were, and the Additional Secure SEC Reports will be, prepared in all
material respects in accordance with the requirements of the Securities Act and
the Exchange Act, as the case may be, and the rules and regulations thereunder.
The Secure SEC Reports did not, and the Additional Secure SEC Reports will not,
at the time they were or are filed, as the case may be, with the SEC (except to
the extent that information contained in any Secure SEC Report or Additional
Secure SEC Report has been or is revised or superseded by a later filed Secure
SEC Report or Additional Secure SEC Report) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The Certifications are
each true and correct. Secure maintains disclosure controls and procedures
required by Rule 13a-15(e) or 15d-15(e) under the Exchange Act; such controls
and procedures are effective to ensure that all material information concerning
Secure is made known on a timely basis to the individuals responsible for the
preparation of Secure’s filings with the SEC and other public disclosure
documents. Each director and executive officer of Secure has filed with the SEC
on a timely basis all statements required by Section 16(a) of the Exchange Act
and the rules and regulations thereunder since the date of Secure’s formation.
As used in this Section 3.6(a), the
term “file” shall be
broadly construed to include any manner in which a document or information is
furnished, supplied or otherwise made available to the SEC.
28
(b) The
financial statements and notes contained or incorporated by reference in the
Secure SEC Reports or to be incorporated by reference in the Additional Secure
SEC Reports (“Secure
Financials”) fairly present, or will fairly present at the time of
filing, as the case may be, the financial condition and the results of
operations, changes in stockholders’ equity, and cash flow of Secure as at the
respective dates of and for the periods referred to in such financial
statements, all in accordance with (i) GAAP and (ii) Regulation S-X or
Regulation S-K, as applicable, subject, in the case of interim financial
statements, to normal recurring year-end adjustments (the effect of which will
not, individually or in the aggregate, be materially adverse) and the omission
of notes to the extent permitted by Regulation S-X or Regulation S-K, as
applicable. Secure has designed and maintains a system of internal controls over
financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange
Act, sufficient to provide reasonable assurances regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with GAAP. No financial statements other than those of
Secure are required by GAAP to be included in the consolidated financial
statements of Secure. The Secure SEC Reports contain a description of all
non-audit services performed by Secure’s auditors for Secure since the date of
Secure’s formation and the fees paid for such services; further, all such
non-audit services were approved by the audit committee of Secure’s board of
directors (the “Secure
Board”). Secure has no off-balance sheet arrangements.
(c) Neither
Secure nor any manager, director, officer or employee of Secure has received any
written complaint, allegation, assertion or claim from any Governmental
Authority regarding the accounting or auditing practices, procedures,
methodologies or methods of Secure or its internal accounting controls,
including any complaint, allegation, assertion or claim that Secure has engaged
in questionable accounting or auditing practices. No attorney representing
Secure, whether or not employed by Secure has reported evidence of any violation
of consumer protection, insurance or securities Laws, breach of fiduciary duty
or similar violation by Secure or any of its officers, directors, employees or
agents to the Secure Board or any committee thereof or to any director or
executive officer of Secure.
3.7 Absence of Undisclosed
Liabilities. Except as and to the extent reflected or reserved
against in the Secure Financials, to the knowledge of Secure, Secure has not
incurred any liabilities or obligations of the type required to be reflected on
a balance sheet in accordance with GAAP that is not adequately reflected or
reserved on or provided for in the Secure Financials, other than liabilities of
the type required to be reflected on a balance sheet in accordance with GAAP
that have been incurred in the ordinary course of business consistent with past
practice.
3.8 Information
Supplied. None of the information supplied or to be supplied
by Secure expressly for inclusion or incorporation by reference in the Proxy
Statement will, at the time of filing with the SEC and at the time it becomes
effective, and at the time of mailing of the Proxy Statement and at the time of
the Special Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The definitive Proxy Statement will, as of the mailing
date and as of the date of the Special Meeting, comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder. None of the information supplied or to be supplied by
Secure in writing expressly for inclusion or incorporation by reference in any
of the Ancillary Public Disclosures will, at the time filed with the SEC,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. Notwithstanding the foregoing, Secure makes no representation,
warranty or covenant with respect to any information supplied by the Company or
the Members expressly for inclusion which is contained in the Proxy Statement or
any Ancillary Public Disclosures.
29
3.9 Absence of Certain
Changes.
(a) From
the date of formation of Secure through the date hereof, except as set forth in
the Secure SEC Reports, Secure has conducted its businesses in the ordinary
course of business consistent with past practice and, since such time, there has
not occurred any action that would constitute a breach of Section
4.1.
(b) From
the date of formation of Secure, except as set forth in the Secure SEC Reports,
there has not been any fact, change, effect, occurrence, event, development or
state of circumstances that has had or would reasonably be expected to result in
a Secure Material Adverse Effect.
3.10 Taxes and
Returns.
(a) Except
as set forth on Section 3.10(a) of the
Secure Disclosure Schedule, Secure has or will have timely filed, or
caused to be timely filed, all Returns and has paid, collected or withheld, or
caused to be paid, collected or withheld, all material Taxes required to be
paid, collected or withheld, other than such Taxes for which adequate reserves,
as disclosed in the Secure SEC Reports, have been established in accordance with
GAAP. Section 3.10(a)
of the Secure Disclosure Schedule sets forth each jurisdiction where
Secure files or is required to file a Return. There are no liens with respect to
any Taxes upon any of the Secure’s assets, other than (i) Taxes, the payment of
which is not yet due, or (ii) Taxes or charges being contested in good faith by
appropriate proceedings. Secure does not have any outstanding waivers or
extensions of any applicable statute of limitations to assess any material
amount of Taxes. There are no outstanding requests by Secure for any extension
of time within which to file any Return or within which to pay any Taxes shown
to be due on any Return. The Secure Disclosure Schedule lists all Returns filed
with respect to Secure. As of the Closing Date, Secure has paid all
Taxes due (whether or not such Taxes are shown or required to be shown on any
Return).
(b) Secure
has not made any change in accounting method or received a ruling from, or
signed an agreement with, any taxing authority that would reasonably be expected
to result in a Secure Material Adverse Effect following the
Closing.
(c) As
of the date hereof, Secure is not being audited by any Taxing Authority or has
been notified by any Taxing Authority that any such audit is contemplated or
pending.
(d) Since
its date of incorporation, Secure has not (i) changed any Tax accounting
methods, policies or procedures except as required by a change in Law, (ii)
made, revoked, or amended any material Tax election, (iii) filed any amended
Returns or claim for refund, or (iv) entered into any closing agreement
affecting or otherwise settled or compromised any material Tax liability or
refund.
30
(e) As
of the Closing Date, Secure will not be delinquent in the payment of any Tax
nor, except as set forth in Section 3.10(e) of the
Secure Disclosure Schedule, is there any material Tax deficiency
outstanding, assessed or, to the knowledge of Secure, proposed against
Secure. There are no liens for Taxes upon the assets of Secure, other
than for current Taxes not yet due and payable.
(f) There
is no action, audit, proceeding (whether administrative or judicial), or other
examination of any Return of Secure by any Taxing Authority in progress,
pending, or, to the knowledge of Secure, threatened relating to Taxes of
Secure.
(g) No
adjustment relating to any Returns filed by Secure has been proposed in writing,
formally or informally, by any Taxing Authority to Secure or any of the officers
and directors thereof.
(h) As
of the Closing Date, Secure does not have any liability for any unpaid Taxes
which have not been accrued for or reserved on Secure’s balance sheets included
in the financial statements contained in the SEC Reports, whether asserted or
unasserted, contingent or otherwise, other than any liability for unpaid Taxes
that may have accrued since the end of the most recent fiscal year in connection
with the operation of the business of Secure in the ordinary course of
business.
(i) Secure
(A) has never been a member of an affiliated, combined, consolidated, or unity
group filing an income Tax Return (other than a group the common parent of which
was Secure), (B) is a party to or bound by any Tax sharing or allocation
agreement, or (C) is presently liable for the Taxes of any other Person,
including, but not limited to: (i) by reason of Treasury Regulations Section
1.1502-6; (ii) as a transferee or successor; or (iii) by contract or
indemnity.
(j) Secure
will not be required to include any item of income in, or exclude any item of
deduction from, taxable income for any taxable period ending after the Closing
Date as a result of any: (i) adjustment pursuant to Section 481 of
the Code associated with a change of accounting method that is effective on or
before the date of this Agreement; (ii) closing agreement or other agreement
with any governmental authority executed on or before the date of this
Agreement; (iii) transaction entered into on or before the date of this
Agreement and treated under the installment method, long-term contract method,
cash method, or open transaction method of accounting; or (iv) election under
Section 108(i) of the Code to defer debt discharge income.
(k) Secure
has never distributed the stock of another Person in a transaction that was
intended to be governed in whole or in part by Section 355 of the
Code.
31
3.11 Employee Benefit
Plans. None of Secure or any trade or business (whether or not
incorporated) that is treated as a single employer with Secure within the
meaning of Section 414(b), (c), (m) or (o) of the Code (a “Secure ERISA Affiliate”)
maintains or has any liability in connection with any (i) employee benefit plan
(as defined in Section 3(3) of ERISA), (ii) loan to managers, officers or
directors other than advances for expense reimbursements incurred in the
ordinary course of business; (iii) securities option, securities stock purchase,
phantom securities, securities appreciation right, equity-related, supplemental
retirement, severance, sabbatical, medical, dental, vision care, disability,
employee relocation, cafeteria benefit (Code Section 125) or dependent care
(Code Section 129), life insurance or accident insurance plans, programs,
agreements or arrangements, (iv) bonus, pension, retirement, profit sharing,
savings, deferred compensation or incentive plans, programs, policies,
agreements or arrangements, (v) other material fringe, perquisite, or employee
benefit plans, programs, policies, agreements or arrangements or (vi) current or
former employment, consulting, change of control, retention or executive
compensation, termination or severance plans, programs, policies, agreements or
arrangements, written or otherwise, as to which material unsatisfied liabilities
or obligations (contingent or otherwise) remain for the benefit of, or relating
to, any present or former employee, consultant, manager or director. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not (i) result in any payment (including
severance, unemployment compensation, golden parachute, bonus or otherwise)
becoming due to any director or employee of Secure, (ii) accelerate, forgive
indebtedness, vest, distribute, or increase benefits or obligation to fund
benefits with respect to any employee or director of Secure, or (iii) result in
the acceleration of the time of payment or vesting of any such benefits. None of
Secure or any Secure ERISA Affiliate has any liability with respect to any (i)
employee pension benefit plan that is subject to Part 3 of Subtitle B of Title I
of ERISA, Title IV of ERISA or Section 412 of the Code, (ii) “multiemployer
plan” as defined in Section 3(37) of ERISA or (iii) “multiple employer plan”
within the meaning of Sections 4063 and 4064 of ERISA or Section 413(c) of the
Code.
3.12 Employee
Matters. Secure has never had any current or former paid
employees. Secure does not have any unsatisfied liability with respect to any
current or former unpaid employee.
3.13 Material
Contracts.
(a) Except
as set forth in the Secure SEC Reports filed prior to the date hereof, there are
no written contracts, agreements, leases, mortgages, indentures, notes, bonds,
liens, license, permit, franchise, purchase orders, sales orders or other
understandings, commitments or obligations (including without limitation
outstanding offers or proposals) of any kind to which Secure is a party or by or
to which any of the properties or assets of Secure may be bound, subject or
affected, which (i) creates or imposes a liability greater than
$250,000, (ii) with a term longer than one year that cannot be terminated
without payment of a material penalty and upon notice of 60 days or less or
(iii) creates any rights with respect to the Secure Common Stock (the “Secure Material Contracts”).
Except for the agreements related to the transactions contemplated by this
Agreement, all Secure Material Contracts have been filed without redaction on
the SEC’s website through ▇▇▇▇▇.
32
(b) With
respect to each Secure Material Contract: (i) the Secure Material Contract is
valid and enforceable in all respects against Secure and, to Secure’s knowledge,
the other party thereto and is in full force and effect (except as such
enforcement may be limited by the Enforceability Exceptions or other than such
contracts that have expired by their terms); (ii) to the knowledge of Secure,
Secure is not in breach or default in any material respect, and no event has
occurred that with the passage of time or giving of notice or both would
constitute such a breach or default by Secure, or permit termination or
acceleration by the other party, under the Secure Material Contract; (iii) the
consummation of the transactions contemplated by the Agreement will not affect
the terms, validity or enforceability of the Secure Material Contract against
Secure and, to Secure’s knowledge, the other party thereto; and (iv) to Secure’s
knowledge, no other party to the Secure Material Contract is in breach or
default in any respect, and no event has occurred that with the passage of time
or giving of notice or both would constitute such a breach or default by such
other party, or permit termination or acceleration by Secure, under any Secure
Material Contract except, with respect to each of clauses (i) through (iv), for
any deviations from any of the foregoing or that would not reasonably be
expected to result in a Secure Material Adverse Effect.
3.14 Litigation. There
is no Action pending, or, to the knowledge of Secure, threatened against Secure
or any of its respective subsidiaries or any of their respective properties,
rights or assets or, any of their respective officers, directors, partners,
managers or members (in their capacities as such) that would reasonably be
expected to result in a Secure Material Adverse Effect. There is no Order
binding against Secure, any of its respective subsidiaries or any of their
respective properties, rights or assets or any of their respective officers,
directors, partners, managers or members (in their capacities as such) that
would prohibit, prevent, enjoin, restrict or alter or delay any of the
transactions contemplated by this Agreement, or that would reasonably be
expected to result in a Secure Material Adverse Effect. There is no material
Action that Secure has pending against other parties.
3.15 Transactions with
Affiliates. Other than as set forth in the Secure SEC Reports,
there are no contracts or arrangements that are in existence as of the date of
this Agreement under which there are any existing or future liabilities or
obligations between Secure, on the one hand, and on the other hand, any (i)
director, officer, employee or affiliate of either Secure or (ii) record or
beneficial owner of more than 5% of the outstanding Secure Common Stock as of
the date hereof.
3.16 Trust
Fund. As of the date hereof and at the Closing Date, Secure
has no less than $79,400,000 invested in United States Government securities or
money market funds meeting certain conditions under Rule 2a-7 promulgated under
the Investment Company Act of 1940 in a trust account administered by
Continental Stock Transfer & Trust Company (the “Trust Fund”); provided that a
portion of the Trust Fund shall be utilized if needed to pay stockholders who
elect to have their shares converted to cash in accordance with the Secure
Organization Documents.
3.17 Investment Company
Act. Secure is not an “investment company” or a person
directly or indirectly “controlled” by or acting on behalf of an “investment
company”, in each case within the meaning of the Investment Company
Act.
3.18 Finders and Investment
Bankers. Except as set forth in Section 3.18 of the Secure
Disclosure Schedule, no broker, finder or investment banker is entitled
to any brokerage, finder’s or other fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
Secure.
3.19 Title to
Properties. Secure does not own, leases, sublease or has any
other interest in any real property.
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3.20 Indebtedness. Except
as set forth in the Secure SEC Reports, Secure does not have any
Indebtedness.
3.21 NYSE Amex
Listing. Secure Common Stock is listed for trading on the NYSE
Amex (the “NYSEA”).
Except as set forth in the Secure SEC Reports, there is no action or proceeding
pending or, to Secure’s knowledge, threatened against Secure by the NYSEA with
respect to any intention by such entity to prohibit or terminate the listing of
Secure Common Stock on the NYSEA.
3.22 Board
Approval. The Secure Board (including any required committee
or subgroup of the Secure Board) has, prior to the execution of this Agreement,
unanimously (i) declared the advisability of this Agreement and the transactions
contemplated hereby, (ii) determined that the transactions contemplated
hereunder are in the best interests of the stockholders of Secure, (iii)
determined that the fair market value of the Company and Company Subsidiaries is
equal to at least eighty percent (80%) of the amount held in the Trust Fund as
required by and in accordance with Secure’s certificate of incorporation, (iv)
determined that the transactions contemplated by this Agreement constitutes a
“Business Combination” as such term is defined in the Secure’s certificate of
incorporation, and (v) adopted a resolution setting forth the Charter Amendments
(as hereinafter defined) and declaring the advisability of the Charter
Amendments. The Board shall recommend to the stockholders of the
Company that they adopt and/or approve this Agreement, the Charter Amendments,
the Incentive Plan and the amendment of the outstanding warrants as provided in
Section
5.5(a).
3.23 Insurance. Section 3.23 of the Secure
Disclosure Schedule sets forth a correct and complete list of all
material insurance policies issued in favor of Secure, or pursuant to which
Secure is a named insured or otherwise a beneficiary. With respect to each such
insurance policy, (i) the policy is in full force and effect and all premiums
due thereon have been paid and (ii) Secure is not in any material respect, in
breach of or default under, and Secure has not taken any action or failed to
take any action which, with notice or the lapse of time or both, would
constitute such a breach or default, or permit termination or modification of,
any such policy.
3.24 Environmental
Matters. Except for such matters that are not reasonably
likely to result in a Secure Material Adverse Effect: (i) Secure has complied
with all applicable Environmental Laws; (ii) Secure is not subject to liability
for any Hazardous Substance disposal or contamination on any third party
property; (iii) Secure has not manufactured, treated, stored, disposed of,
arranged for or permitted the disposal of, generated, handled or released any
Hazardous Substance; and (iv) Secure is not subject to any Orders of any
Governmental Authority or subject to any indemnity or other agreement with any
third Person relating to liability under any Environmental Law or relating to
Hazardous Substances.
3.25 Intellectual
Property. Except for its corporate names Secure does not own,
license or otherwise has any right, title or interest in any Intellectual
Property whether or not registered.
3.26 Regulatory Agreements;
Permits.
(a) There
are no written agreements, memoranda of understanding, commitment letters, or
cease and desist orders, to which Secure is a party, on the one hand, and any
Governmental Authority is a party or addressee, on the other hand.
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(b) Except
as disclosed in the Secure SEC Reports, Secure holds all permits, licenses,
franchises, grants, authorizations, consents, exceptions, variances, exemptions,
orders and other authorizations of Governmental Authorities, certificates,
consents and approvals necessary to lawfully conduct its business as presently
conducted, and to own, lease and operate its assets and properties
(collectively, the “Secure
Permits”) all of which have been made available to Company and all of
which are in full force and effect, and no suspension or cancellation of any of
the Secure Permits is pending or, to the knowledge of Secure, threatened, except
where the failure of any Secure Permits to have been in full force and effect,
or the suspension or cancellation of any of the Secure Permits, would not
reasonably be expected to result in a Secure Material Adverse Effect. Secure is
not in violation in any material respect of the terms of any Secure
Permit.
3.27 Representations and
Warranties. The representations and warranties of Secure
included in this Agreement, as modified by the Secure Disclosure Schedules, are
true and complete in all material respects and do not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading, under the circumstance under which they were made. Except
for the representations and warranties made by Secure in this Agreement, neither
Secure nor any other Person makes any representation or warranty with respect to
Secure or their respective business, operations, assets, liabilities, condition
(financial or otherwise) or prospects, notwithstanding the delivery or
disclosure to the Company or any of its affiliates or representatives of any
documentation, forecasts, projections or other information with respect to any
one or more of the foregoing.
3.28 Takeover
Statutes
. To the
extent applicable, the Secure Board has taken all necessary action, including,
without limitation, the approval of this Agreement, the Operating Agreement, the
Voting Agreement, and the other transactions contemplated by this Agreement, the
Operating Agreement and the Voting Agreement, to ensure that the restrictions on
business combinations contained in Section 203 of the DGCL will not apply to the
this Agreement, the Operating Agreement, the Voting Agreement or the other
transactions contemplated by this Agreement, the Operating Agreement and the
Voting Agreement.
ARTICLE
IV
COVENANTS
4.1 Conduct of Business of the
Company and of Secure.
(a) Unless
the other Parties hereto shall otherwise consent in writing (such consent not to
be unreasonably withheld, conditioned or delayed), during the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement in accordance with Section 7.1 or the
Closing (the “Executory
Period”), except as expressly contemplated by this Agreement or as set
forth on Section
4.1(a) of the Company Disclosure Schedule with respect to the Company,
(i) the Company (and the Company Subsidiaries) and Secure shall conduct their
respective business, in all material respects in the ordinary course of business
consistent with past practice and (ii) the Company (and the Company
Subsidiaries) and Secure shall use their respective commercially reasonable
efforts consistent with the foregoing to preserve intact, in all material
respects, their respective business organization, to keep available the services
of their respective managers, directors, officers, Key Employees and
consultants, to maintain, in all material respects, existing relationships with
all Persons with whom they do significant business (including, with respect to
the Company, the Company Subsidiaries), and to preserve the possession, control
and condition of their respective assets (including, with respect to the
Company, the Company Subsidiaries).
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(b) Without
limiting the generality of the foregoing clause (a), during the Executory
Period, none of the Company, any of the Company Subsidiaries, or Secure will
(except as contemplated by the terms of this Agreement or as set forth on Section 4.1(b) of the
Company Disclosure Schedule (or except as such action is in the ordinary
course of business consistent with past practice in all material respects) with
respect to the Company or Company Subsidiaries or Section 4.1(b) of the Secure
Disclosure Schedule with respect to Secure), without the prior written
consent of the other Parties (such consent not to be unreasonably withheld,
conditioned or delayed):
(i) amend,
waive or otherwise change, in any respect, any of its respective Charter
Documents;
(ii) other
than in connection with any transactions that are entered into in the normal
course of the Company’s real estate activities, authorize for issuance, issue,
grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or
dispose of any of its capital stock (and with respect to the Company, any
membership interests), or any options, warrants, commitments, subscriptions or
rights of any kind to acquire or sell any of its capital stock (and with respect
to the Company, any membership interests), or other securities or equity
interests, including any securities convertible into or exchangeable for any of
its capital stock (and with respect to the Company, any membership interests) or
equity interest of any class and any other equity-based awards, or engage in any
hedging transaction with a third Person with respect to such capital stock (and
with respect to the Company, any membership interests) or other securities or
equity interests;
(iii) split,
combine, recapitalize or reclassify any of its equity interests or issue any
other securities in respect thereof, or declare, pay or set aside any
distribution or other dividend (whether in cash, equity or property or any
combination thereof) in respect of its equity interests, or directly or
indirectly redeem, purchase or otherwise acquire or offer to acquire any of its
capital equity or other securities or equity interests, provided, however, the
Company may declare, pay or set aside any distributions in an amount equal to
the Company’s accrual for member distributions and Taxes as computed
consistently with past practices and presented on the Company Financials dated
December 31, 2008;
(iv) incur,
create, assume, prepay or otherwise become liable for any Indebtedness
(directly, contingently or otherwise), make a loan or advance to or investment
in any third party, or guarantee or endorse any indebtedness, liability or
obligation of any Person;
(v) increase
the wages, salaries or compensation of any of its Key Employees by more than
Five percent (5%), or increase bonuses for the foregoing individuals in excess
of Five percent (5%), or make commitments to advance with respect to bonuses for
fiscal year 2009 or 2010, or materially increase other benefits of any of the
foregoing individuals, or enter into, establish, materially amend or terminate
any Company Benefit Plan with, for or in respect of any current consultant,
officer, manager director or employee, in each case other than as required by
applicable Law or pursuant to the terms of any Company Benefit Plan in effect on
the date of this Agreement;
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(vi) make
or rescind any material election relating to Taxes, settle any claim, action,
suit, litigation, proceeding, arbitration, investigation, audit or controversy
relating to Taxes, file any amended Return or claim for refund, make any change
in its accounting or Tax policies or procedures, or take any action outside the
ordinary course of business whose effect would be to materially increase present
or future Tax liability or to materially decrease present or future Tax assets,
in each case except as required by applicable Law or in compliance with
GAAP;
(vii) transfer
or license to any Person or otherwise extend, materially amend or modify, permit
to lapse or fail to preserve any of the Company Intellectual Property or
Licensed Intellectual Property, other than nonexclusive licenses in the ordinary
course of business consistent with past practice, or disclose to any Person who
has not entered into a confidentiality agreement any trade secrets;
(viii) terminate
or waive or assign any material right under any Company Material Contract or any
Lease or enter into any contract (A) involving amounts potentially exceeding
$250,000 or (B) that would be a Company Material Contract or (C) with a term
longer than one year that cannot be terminated without payment of a material
penalty and upon notice of 60 days or less;
(ix) fail
to maintain its books, accounts and records in all material respects in the
ordinary course of business consistent with past practice;
(x) enter
into any new line of business;
(xi) fail
to use commercially reasonable efforts to keep in force insurance policies or
replacement or revised policies providing insurance coverage with respect to the
assets, operations and activities of the Company and the Company Subsidiaries in
an amount and scope of coverage as are currently in effect;
(xii) other
than with respect to unaudited financial statements which are prepared using
modified GAAP and Adjusted EBITDA, revalue any of its material assets or make
any change in accounting methods, principles or practices, except in compliance
with GAAP and approved by the Company’s outside auditors;
(xiii) waive,
release, assign, settle or compromise any claim, action or proceeding (including
any suit, action, claim, proceeding or investigation relating to this Agreement
or the transactions contemplated hereby), other than waivers, releases,
assignments, settlements or compromises that involve only the payment of
monetary damages (and not the imposition of equitable relief on, or the
admission of wrongdoing by, the Company or any of the Company Subsidiaries) not
in excess of $100,000 individually or in the aggregate, or otherwise pay,
discharge or satisfy any claims, liabilities or obligations, unless such amount
has been reserved in the Company Financials as of the date hereof;
37
(xiv) close
or materially reduce the Company’s or any Company Subsidiary’s activities, or
effect any layoff or other Company-initiated personnel reduction or change, at
any of the Company’s or any Company Subsidiary’s facilities;
(xv) acquire,
including by merger, consolidation, acquisition of stock or assets, or any other
form of business combination, any corporation, partnership, limited liability
company, other business organization or any division thereof, or any material
amount of assets;
(xvi) make
capital expenditures in excess of $2,000,000;
(xvii) adopt
a plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization, except for the
currently proposed transaction by the Company relating to the acquisition of
certain assets and the assumption of certain liabilities of Private Escapes
Holdings, LLC, a Delaware limited liability company (“Private Escapes”), on terms
and conditions substantially similar to and in accordance with those presented
to Secure (the “Private Escapes
Transaction”).
(xviii) voluntarily
incur any material liability or obligation (whether absolute, accrued,
contingent or otherwise);
(xix) sell,
lease, license, transfer, exchange or swap, mortgage or otherwise pledge or
encumber (including securitizations), or otherwise dispose of any material
portion of its properties, assets or rights;
(xx) enter
into any agreement, understanding or arrangement with respect to the voting of
the Membership Interest or the capital equity of any Company
Subsidiary;
(xxi) take
any action that would reasonably be expected to delay or impair the obtaining of
any consents or approvals of any Governmental Authority to be obtained in
connection with this Agreement;
(xxii) enter
into, amend, waive or terminate (other than terminations in accordance with
their terms) any Affiliate Transaction; or
(xxiii) authorize
or agree to do any of the foregoing actions.
For
purposes of this Agreement, “Charter Documents” means any
of the Company Organization Documents, Company Subsidiary Organization Documents
or Secure Organization Documents.
(c) It
is agreed that, notwithstanding anything to the contrary contained in this
Agreement, Secure and its affiliates shall be permitted to, and shall use its
commercially reasonable efforts to negotiate and execute agreements related to
the repurchase and redemption of, and other similar actions relating to, Secure
Common Stock, Secure Warrants and Secure Units.
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4.2 Access and Information;
Confidentiality.
(a) Between
the date of this Agreement and the Closing, each of the Company and the Company
Subsidiaries, on the one hand, and Secure, on the other hand, shall give, and
shall direct its accountants and legal counsel to give, Secure, on the one hand,
and the Company and the Company Subsidiaries, on the other hand, respectively,
and its respective Representatives, at reasonable times and upon reasonable
intervals and notice, and subject to any confidentiality agreements with third
Persons (the existence and scope of which have been disclosed to the other
Parties), access to all offices and other facilities and to all employees,
properties, contracts, agreements, commitments, books and records, financial and
operating data and other information (including Returns, internal working
papers, client files, client contracts and director service agreements), of or
pertaining to such Party and its subsidiaries, as the requesting Party or its
Representatives may reasonably request regarding such Party’s business, assets,
liabilities, employees and other aspects (including unaudited quarterly
financial statements, including a consolidated quarterly balance sheet and
income statement, each as they become available during the Executory Period, a
copy of each material report, schedule and other document filed with or received
by a Governmental Authority pursuant to the requirements of applicable
securities Laws, and independent public accountant’s work papers (subject to the
consent or any other conditions required by such accountant, if any)) and
instruct such Party’s Representatives to reasonably cooperate with the
requesting Party in its investigation; provided that the
requesting Party shall conduct any such activities in such a manner as not to
interfere unreasonably with the business or operations of such Party providing
such information. No information or knowledge obtained by any Party hereto
pursuant to this Section 4.2(a) will
affect or be deemed to modify any representation or warranty contained herein or
the conditions to the obligations of the Parties to consummate the transactions
contemplated hereunder.
(b) All
information obtained by the Company or any Company Subsidiary, on the one hand,
and Secure, on the other hand, pursuant to this Agreement shall be kept
confidential in accordance with and subject to the Confidentiality Agreement,
dated as of July 2, 2009, between Secure and the Company (the “Confidentiality Agreement”).
The Parties further acknowledge and agree that the existence and terms of this
Agreement are strictly confidential and that they and their respective officers,
managers, directors, employees, accountants, consultants, legal counsel,
financial advisors, agents or other representatives (collectively, the “Representatives”) shall not
disclose to the public or to any third Person the existence or terms of this
Agreement other than with the express prior written consent of the other
Parties, except as may be required by applicable Law or at the request of any
Governmental Authority having jurisdiction over such Party or any of its
Representatives, control persons or affiliates (including, without limitation,
and rules or regulations of the SEC or the Financial Industry Regulatory
Authority), or as may be required to defend any action brought against such
Person in connection with the transactions contemplated hereby, in each case in
accordance with and subject to the Confidentiality Agreement.
4.3 No
Solicitation.
(a) For
purposes of this Agreement, “Acquisition Proposal” means
(other than the transactions contemplated by this Agreement) any inquiry,
proposal or offer, or any indication of interest in making an offer or proposal,
from any Person or group at any time relating to a merger, reorganization,
recapitalization, consolidation, share exchange, business combination or similar
transaction, including any single or multi-step transaction or series of related
transactions involving any of the Company, the Company Subsidiaries or Secure on
the one hand and any third Person on the other hand, or acquisition or purchase
of assets of the Company and the Company Subsidiaries or Secure representing 50%
or more of such Person’s assets or business. Notwithstanding the
provisions of this Section 4.3, the
Company may continue to talk, solicit, negotiate, entertain, meet with any third
party or have conversations or communications whatsoever with any third party
concerning or relating to raising additional sources of capital (whether via
debt financing, equity financing or some combination thereof) when such sources
are to be used to provide support for the transactions contemplated by this
Agreement or to fund working capital and acquisitions currently being
undertaken.
39
(b) Except
as provided in Section
4.3(a) above, during the Executory Period, in order to induce the Company
and Secure to continue to commit to expend management time and financial
resources in furtherance of the transactions contemplated hereby, neither the
Company, any Company Subsidiary nor Secure, shall, directly or indirectly, and
shall not, directly or indirectly, authorize or permit any of its respective
Representatives to, (i) solicit, assist, initiate or facilitate the making,
submission or announcement of, or intentionally encourage, any Acquisition
Proposal, (ii) furnish any non-public information regarding the Company, any
Company Subsidiary, or Secure to any Person or group (other than a Party to this
Agreement or their Representatives) in connection with or in response to an
Acquisition Proposal, (iii) engage or participate in discussions or negotiations
with any Person or group with respect to, or that could be expected to lead to,
an Acquisition Proposal, (iv) withdraw, modify or qualify, or propose publicly
to withdraw, modify or qualify, in a manner adverse to Secure or the Company,
the approval and/or adoption of this Agreement, the Charter Amendments or the
transactions contemplated hereunder, the Company’s Management, or Secure
Board’s, recommendation that holders of Membership Interest or the Secure’s
stockholders, respectively, adopt this Agreement, or the Secure Board’s
recommendation that Secure’s stockholders adopt and/or approve the Charter
Amendments, (v) approve, endorse or recommend, or publicly propose to approve,
endorse or recommend, any Acquisition Proposal, (vi) negotiate or enter into any
letter of intent, agreement in principle, acquisition agreement or other similar
agreement related to any Acquisition Proposal, or (vii) release any third Person
from, or waive any provision of, any confidentiality agreement to which the
Company, any Company Subsidiary or Secure is a party (except as permitted
pursuant to Section
4.2(a)), except as determined by the Secure Board or the board of
managers of the Company, as applicable, reasonably and in good faith, after
consultation with its independent financial advisor and its outside legal
counsel, that the failure to take such action will result in a breach of its
fiduciary obligations to Secure or its stockholders, or the Company or its
members, as applicable, under applicable Delaware law. Without limiting the
foregoing, each Party agrees that it shall be responsible for the actions of its
Representatives that would constitute a violation of the restrictions set forth
in this Section
4.3 if done by such Party. Each Party shall promptly inform its
Representatives of the obligations undertaken in this Section
4.3.
40
(c) Each
Party shall notify the other Party hereto as promptly as practicable (and in any
event within 48 hours) orally and in writing of the receipt by such Party or any
of its Representatives of (i) any bona fide inquiries, proposals or offers,
requests for information or requests for discussions or negotiations regarding
or constituting any Acquisition Proposal or any bona fide inquiries, proposals
or offers, requests for information or requests for discussions or negotiations
that could be expected to result in an Acquisition Proposal, and (ii) any
request for non-public information relating to such Party, specifying in each
case the material terms and conditions thereof (including a copy thereof if in
writing or a written summary thereof if verbal) and the identity of the party
making such inquiry, proposal, offer or request for information. Each Party
shall keep the other Party hereto promptly informed of the status of any such
inquiries, proposals, offers or requests for information. During the Executory
Period, each Party shall immediately cease and cause to be terminated any
solicitations, discussions or negotiations with any Person with respect to any
Acquisition Proposal and shall direct, and use its reasonable best efforts to
cause, its Representatives to cease and terminate any such solicitations,
discussions or negotiations.
4.4 Restrictive
Covenants.
(A) Each
Key Employee covenants that, in consideration of the benefit received from the
transactions contemplated by this Agreement, for a period of Thirty
(30) months from the Closing Date (the “Non-Compete Period”), he will
not, absent Secure’s prior written approval, directly or indirectly,
individually or on behalf of any other person or entity, whether as principal,
agent, stockholder (other than as the holder of not more than 1% of the combined
voting power of the outstanding stock of a public company), officer or director
of any corporation or other business entity, or as a trustee, fiduciary or in
any other similar representative capacity, solicit any person or entity that
engages in (a) providing luxury destination club vacation opportunities or (b)
the ownership and/or operation of a business of providing luxury destination
club vacation opportunities.
(B) Each
Key Employee further covenants that until the conclusion of the Non-Compete
Period, such Key Employee will not, directly or indirectly, recruit, solicit or
induce, or attempt to recruit, solicit or induce any employee or employees of
Secure or its affiliates to terminate their employment with, or otherwise cease
their relationship with, Secure.
(C) Each
Key Employee further covenants that until the conclusion of the Non-Compete
Period, such Key Employee will not, directly or indirectly, solicit, divert or
take away, or attempt to solicit, divert or take away, the business or patronage
of any of the clients, customers or accounts, or prospective clients, customers
or accounts, of Secure or any of its affiliates.
(D) Each
Key Employee acknowledges that the restrictions contained in this Section 4.4 are
reasonable and necessary to protect the legitimate interests of Secure and
constitute a material inducement to Secure to enter into this Agreement and
consummate the transactions contemplated hereunder. Each Key Employee
acknowledges that any violation of this Section 4.4 will
result in irreparable injury to Secure and agrees that Secure shall be entitled
to preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as an equitable accounting of all earnings, profits and
other benefits arising from any violation of this Section 4.4, which
rights shall be cumulative and in addition to any other rights or remedies to
which Secure may be entitled.
In the
event that any covenant contained in this Section 4.4 should
ever be adjudicated to exceed the time, geographic, product or service, or other
limitations permitted by applicable law in any jurisdiction, then any court is
expressly empowered to reform such covenant, and such covenant shall be deemed
reformed, in such jurisdiction to the maximum time, geographic, product or
service, or other limitations permitted by applicable law. The
covenants contained in this Section 4.4 and each
provision thereof are severable and distinct covenants and
provisions. The invalidity or unenforceability of any such covenant
or provision as written shall not invalidate or render unenforceable the
remaining covenants or provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such covenant or provision in any other jurisdiction.
41
4.5 Member
Representative.
(a) Appointment of the
Representative. By virtue of the adoption of this Agreement
and approval of the transactions contemplated hereunder by Ultimate Resort, the
Company and the Members, Ultimate Resort, the Company and each Member
(regardless of whether or not such Member votes in favor of the adoption of the
Agreement and the approval of the transactions contemplated hereby, whether at a
meeting or by written consent in lieu thereof) shall be deemed to have
appointed, effective from and after the approval of the transactions
contemplated by this Agreement, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ as the Member Representative to
act as his, her or its representative and true and lawful attorney-in-fact, with
full power of substitution, in such holder’s name and on such holder’s behalf,
under this Agreement in the absolute discretion of the Member Representative in
accordance with the terms of this Section
4.5. This power of attorney and all authority hereby conferred
is irrevocable and shall not be terminated by any act of any such holder, by
operation of law, by such holder’s death or disability or by any other event,
except as expressly set forth herein. The Member Representative may
be replaced upon the affirmative vote of the holders of a majority of the
membership interests held by the Members immediately prior to the Effective
Time. Any Person or entity appointed to replace a former Member
Representative shall execute a statement agreeing to perform the duties set
forth in this Agreement. The appointment of a replacement Member
Representative shall become effective upon delivery of such statement to
Secure.
(b) Authority After the
Effective Time. From and after the Effective Time, the Member
Representative shall be authorized to: (i) take all actions required by, and
exercise all rights granted to, the Member Representative in this Agreement and
the Indemnification and Escrow Agreement (as such term is hereafter defined);
(ii) receive all notices or other documents given or to be given to the Member
Representative by Secure pursuant to this Agreement; (iii) negotiate, undertake,
compromise, defend, resolve and settle any suit, proceeding or dispute under
this Agreement; (iv) execute and deliver all agreements, certificates and
documents required by the Member Representative in connection with the
transactions contemplated by this Agreement; (v) engage special counsel,
accountants and other advisors and incur such other expenses in connection with
any of the transactions contemplated by this Agreement; and (vi) take such other
action as is necessary on behalf of the Members in connection with this
Agreement and the transactions contemplated by this Agreement, including,
without limitation, all such other matters as the Member Representative may deem
necessary or appropriate to carry out the intents and purposes of this Agreement
and the ancillary documents hereto.
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(c) Release from Liability;
Indemnification; Authority of Representative. By virtue of the
adoption of this Agreement and the approval of the transactions contemplated by
this Agreement by the Members, each Member shall be deemed to have (i) released
the Member Representative from, and agreed to indemnify the Member
Representative against, liability for any action taken or not taken by the
Member Representative in its capacity as such Member Representative in excess of
the Member Representative’s pro rata portion of any Damages (as such term is
hereafter defined), except for the liability of the Member Representative to a
Member for loss which such holder may suffer from fraud committed by the Member
Representative in carrying out its duties hereunder, and (ii) appointed, as of
such approval, the Member Representative as such Member’s true and lawful agent
and attorney-in-fact to enter into any agreement in connection with the
transactions contemplated by this Agreement, to exercise all or any of the
powers, authority and discretion conferred on such Member under any such
agreement, to give and receive notices on such Member’s behalf and to be such
Member’s exclusive representative with respect to any matter, suit, claim,
action or proceeding arising with respect to any transaction contemplated by
such agreement, including, without limitation, the defense, settlement or
compromise of any claim, action or proceeding for which Secure may be entitled
to indemnification. All actions, decisions and instructions of the
Member Representative shall be conclusive and binding upon all of the
Members.
ARTICLE
V
ADDITIONAL COVENANTS OF THE
PARTIES
5.1 Notification of Certain
Matters. Each of Secure, on one hand, and each of the Company
and the Members, on the other hand, shall give prompt notice to the other (and,
if in writing, furnish copies of) if any of the following occurs during the
Executory Period: (i) there has been a material failure on the part of the Party
providing the notice to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; (ii) receipt of any
notice or other communication in writing from any third Person alleging that the
Consent of such third Person is or may be required in connection with the
transactions contemplated by this Agreement; (iii) receipt of any notice or
other communication from any Governmental Authority in connection with the
transactions contemplated by this Agreement; (iv) the discovery of any fact or
circumstance that, or the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which, would reasonably be expected to cause or
result in any of the conditions to the transactions contemplated hereby set
forth in Article VI not being satisfied or the satisfaction of any of those
conditions being materially delayed; or (v) the commencement or threat, in
writing, of any Action against any Party or any of its affiliates, or any of
their respective properties or assets, or, to the knowledge of the Company or
Secure, as applicable, any officer, director, partner, member or manager, in his
or her capacity as such, of the Company or Secure, as applicable, or any of
their affiliates with respect to the consummation of the transactions
contemplated hereby. No such notice to any Party shall constitute an
acknowledgement or admission by the Party providing notice regarding whether or
not any of the conditions to Closing or to the consummation of the transactions
contemplated hereunder have been satisfied or in determining whether or not any
of the representations, warranties or covenants contained in this Agreement have
been breached. Moreover, no information or knowledge obtained by any Party
hereto pursuant to this Section 5.1 will
affect or be deemed to modify any representation or warranty contained herein or
the conditions to the obligations of the Parties to consummate the transactions
contemplated hereby.
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5.2 Commercially Reasonable Best
Efforts.
(a) Subject
to the terms and conditions of this Agreement, prior to the expiration of the
Executory Period, each Party shall use commercially reasonable best efforts, and
shall cooperate fully with the other Parties, to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable Laws and regulations to consummate the transactions
contemplated by this Agreement (including the receipt of all Requisite
Regulatory Approvals), and to comply as promptly as practicable with all
requirements of Governmental Authorities applicable to the transactions
contemplated by this Agreement. In furtherance and not in limitation of the
foregoing, to the extent required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and any other Laws that are designed to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade (“Antitrust Laws”), each Party
hereto agrees to make any required filing or application under Antitrust Laws,
as applicable, with respect to the transactions contemplated hereby as promptly
as practicable, to supply as promptly as reasonably practicable any additional
information and documentary material that may be requested pursuant to Antitrust
Laws and to take all other actions necessary, proper or advisable to cause the
expiration or termination of the applicable waiting periods under Antitrust Laws
as soon as practicable, including by requesting early termination of the waiting
period provided for under the Antitrust Laws. All costs and expenses payable in
respect of any filings, applications and other actions taken by any Party hereto
pursuant to Antitrust Laws shall be paid by the Company up front and One Hundred
percent (100%) of the foregoing costs and expenses shall be reimbursed to the
Company by Secure at the Effective Time.
(b) Secure,
on the one hand, and the Company, on the other hand, shall, in connection with
the efforts referenced in Section 5.2(a) to
obtain all requisite approvals and authorizations for the transactions
contemplated by this Agreement under any Antitrust Law, use its commercially
reasonable efforts to: (i) cooperate in all respects with each other in
connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a private
Person; (ii) keep the other Party reasonably informed of any communication
received by such Party from, or given by such Party to, the Federal Trade
Commission (the “FTC”),
the Antitrust Division of the Department of Justice (the “DOJ”) or any other U. S. or
foreign Governmental Authority and of any communication received or given in
connection with any proceeding by a private Person, in each case regarding any
of the transactions contemplated hereby; and (iii) permit the other Party and
its outside counsel to review any communication given by it to, and consult with
each other in advance of any meeting or conference with, the FTC, the DOJ or any
other Governmental Authority or, in connection with any proceeding by a private
Person, with any other Person, and to the extent permitted by the FTC, the DOJ
or such other applicable Governmental Authority or other Person, give the other
Party the opportunity to attend and participate in such meetings and
conferences.
(c) In
furtherance and not in limitation of the covenants of the Parties contained in
Section 5.2(a)
and Section
5.2(b), if any objections are asserted with respect to the transactions
contemplated hereby under any Antitrust Law or any other applicable Law or if
any suit is instituted (or threatened to be instituted) by the FTC, the DOJ or
any other applicable Governmental Authority or any private Person challenging
any of the transactions contemplated hereby as violative of any Antitrust Law or
any other applicable Law or which would otherwise prevent, materially impede or
materially delay the consummation of the transactions contemplated hereby,
Secure and the Company shall use its commercially reasonable best efforts to
resolve any such objections or suits so as to permit consummation of the
transactions contemplated by this Agreement, including in order to resolve such
objections or suits which, in any case if not resolved, could reasonably be
expected to prevent, materially impede or materially delay the consummation of
the transactions contemplated hereby.
44
(d) In
the event that any administrative or judicial action or proceeding is instituted
(or threatened to be instituted) by a Governmental Authority or private Person
challenging the transactions contemplated by this Agreement, or any other
ancillary agreement contemplated hereby, Secure and the Company shall cooperate
in all respects with each other and use its respective commercially reasonable
best efforts to contest and resist any such Action or proceeding and to have
vacated, lifted, reversed or overturned any decree, judgment, injunction or
other Order, whether temporary, preliminary or permanent, that is in effect and
that prohibits, prevents or restricts consummation of the transactions
contemplated by this Agreement.
(e) Prior
to the expiration of the Executory Period, the Company shall use its
commercially reasonable efforts to obtain any Consents of third Persons with
respect to any Company Material Contract or Lease as may be necessary or
appropriate for the consummation of the transactions contemplated hereby or
required by the terms of any contract as a result of the execution, performance
or consummation of the transactions contemplated hereby; provided, however, that the
Company shall not be required to incur expenses exceeding $25,000 in the
aggregate in connection with obtaining Consents with respect to any Company
Material Contract or Lease that will be effective and valid prior to the
Effective Time; provided, further, that Secure
shall, upon the Closing, reimburse the Company for all costs associated with
obtaining Consents of third Persons with respect to any Company Material
Contract or Lease.
(f) Notwithstanding
anything herein to the contrary, neither Secure nor the Company shall be
required to agree to any term, condition or modification with respect to
obtaining any Consents or Requisite Regulatory Approvals in connection with the
consummation of the transactions contemplated by this Agreement that would
result in, or would be reasonably likely to result in a Company Material Adverse
Effect or a Secure Material Adverse Effect.
5.3 Public
Announcements. Secure and the Company agree that no public
release or announcement concerning this Agreement or the transactions
contemplated hereby shall be issued by either Party or any of their affiliates
without the prior written consent of the other Party (which consent shall not be
unreasonably withheld, conditioned or delayed), except as such release or
announcement may be required by applicable Law or the rules or regulations of
any securities exchange, in which case the applicable Party shall use reasonable
best efforts to allow the other Party reasonable time to comment on such release
or announcement in advance of such issuance; provided, however, that either
Secure or the Company may make any public statement in response to specific
questions by the press, analysts, investors or those attending industry
conferences or financial analyst conference calls, so long as any such
statements are not inconsistent with previous public releases or announcements
made by Secure or the Company in compliance with this Agreement.
45
5.4 Option
Plan. Secure shall establish an incentive option or other
equity plan for the directors, employees and consultants of Secure and their
respective affiliates including, without limitation, the Company, in
substantially the form attached as Exhibit A (“Incentive Plan”), which
includes grant documentation. Secure shall use commercially reasonably efforts
to obtain all necessary approval and authorization from the holders of Secure
Common Stock for such Incentive Plan including, without limitation, including
such Incentive Plan in the Proxy Statement. Such Incentive Plan shall
generally provide for a three (3) year vesting period. The number of shares of
Secure Common Stock authorized and reserved for issuance under the Incentive
Plan shall equal 1,200,000.
5.5 Proxy
Statement.
(a) Promptly
after the date of this Agreement, Secure shall prepare and file with the SEC the
Proxy Statement, for the purpose of, among other things, soliciting proxies from
holders of Secure Common Stock to vote, at a meeting of the holders of Secure
Common Stock to be called for such purpose (the “Special Meeting”), in favor
of, among other things, (i) the adoption of the Incentive Plan, (ii) an
amendment of Secure’s certificate of incorporation providing, among other
things, for the amendment of the definition of the term, “Business Combination,”
as defined therein (the “First
Charter Amendment”), (iii) the adoption of this Agreement and the
approval of the transactions contemplated hereby, including, without limitation,
the transactions contemplated hereunder, (iv) an amendment of Secure’s
certificate of incorporation providing for, among other things, the elimination
of the text of Article FIFTH thereof in its entirety and to increase the number
of authorized shares of Secure Common Stock (the “Second Charter Amendment” and
together with the First Charter Amendment, the “Charter Amendments”), (vi) the
amendment of all outstanding warrants to purchase Secure Common Stock to have an
exercise price of $8.80 per share, a redemption trigger once the price per share
reaches $15.05 and a term of four (4) years from Closing, and (vii) an
adjournment or postponement proposal.
(b) The
Company acknowledges that a substantial portion of the Proxy Statement shall
include disclosure regarding the Company and its management, operations and
financial condition. Accordingly, the Company agrees to promptly provide Secure
with the information concerning the Company, its management and operations and
financial condition required to be included in the Proxy Statement. The Company
shall make its, and cause each Company Subsidiary to make its, managers,
directors, officers and employees available to Secure and its counsel in
connection with the drafting of the Proxy Statement and responding in a timely
manner to comments on the Proxy Statement from the SEC.
(c) Secure,
with the assistance of the Company, shall promptly respond to any SEC comments
on the Proxy Statement and shall use reasonable best efforts to have the Proxy
Statement cleared by the SEC under the Exchange Act as soon after filing as
practicable.
(d) Secure
shall bear all expenses of the Proxy Statement, including fees and expenses, if
any, of legal counsel or other advisors.
46
(e) Secure
shall make all necessary filings with respect to the transactions contemplated
hereunder under the Securities Act and the Exchange Act and applicable “blue
sky” laws and the rules and regulations thereunder.
(f) Secure
will advise the Company, promptly after it receives notice thereof, of the time
when the Proxy Statement has been cleared by the SEC under the Exchange Act or
any supplement or amendment to the Proxy Statement has been filed, or any
request by the SEC for amendment of the Proxy Statement or comments thereon and
responses thereto or requests by the SEC for additional information. No
amendment or supplement to the Proxy Statement shall be filed without the
approval of the Company, which approval shall not be unreasonably
withheld.
(g) If
at any time prior to the Effective Time, any information relating to Secure or
the Company, or any of their respective subsidiaries, affiliates, officers or
directors, should be discovered by Secure or the Company, as applicable, that
should be set forth in an amendment or supplement to the Proxy Statement, so
that such documents would not include any misstatement of a material fact or
omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, the Party
which discovers such information shall promptly notify the other Party hereto
and an appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the stockholders of the Secure.
5.6 Reservation of Secure Common
Stock and Earn-Out Payment. Secure hereby agrees there shall
be reserved for issuance and/or delivery such number of shares of Secure Common
Stock as shall be required for issuance and delivery in accordance with the
terms of the Operating Agreement as well as that amount to be reserved under the
Incentive Plan. Secure covenants that it will authorize the number of shares of
Secure Common Stock as shall from time to time be sufficient to issue any Secure
Common Stock issuable in accordance with the terms of the Operating Agreement
and under the Incentive Plan.
5.7 Special Meetings; Mailing of
Proxy Statement. As promptly as practicable following the
execution of this Agreement, Secure, acting through the Secure Board, shall, in
accordance with applicable Law:
(a) duly
call, give notice of, convene and hold the Special Meeting for the purposes
described in Section
5.5. Except as otherwise expressly permitted by Section 4.3(b),
Secure shall (i) use reasonable best efforts to solicit the approval and/or
adoption of this Agreement or the Charter Amendments by the stockholders of
Secure and (ii) include in the Proxy Statement (a) the Secure Board’s
declaration of the advisability of this Agreement and the Charter Amendments and
its recommendation to the stockholders of Secure that they approve and/or adopt
this Agreement, the Charter Amendments and the transactions contemplated
hereunder and (b) all other requests or approvals necessary to consummate the
transactions contemplated by this Agreement, including, without limitation, the
proposals set forth in Section 5.5 (other
than those with regarding adjournment or postponement of the Special Meeting).
Notwithstanding the foregoing, Secure may adjourn or postpone the Special
Meeting as and to the extent permitted by applicable Law provided such
adjournment or postponement is consistent with this Agreement; and
47
(b) promptly
transmit any amendment or supplement to its stockholders, if at any time prior
to the Special Meeting there shall be discovered any information that should be
set forth in an amendment or supplement to the Proxy Statement.
5.8 [Intentionally
deleted].
5.9 Directors and Officers of
Secure. Secure and the Company shall take all necessary action so that
the board of directors of Secure immediately after the Effective Time shall
consist of a total of six (6) members, which shall consist of two (2) members
designated by Secure and four (4) members designated by the Company, with a
total of four (4) “independent” board members (as defined by the
rules and regulations of the SEC and the Nasdaq Stock Market Rules), and that
the persons listed on Schedule 5.9 are
appointed to the positions of officers of Secure immediately after the Effective
Time, to serve in such positions effective immediately after the Effective
Time. The Founders (as such term is hereafter defined) and the
Members shall enter into a voting agreement (the “Voting Agreement”) pursuant
to which they agree to vote for the designees to the board of directors of
Secure in accordance with this Section 5.9 through
the annual meeting of the stockholders of Secure to be held in
2012.
5.10 Other Actions.
Notwithstanding anything to the contrary in Section
5.3:
(a) as
promptly as practicable after the execution of this Agreement, Secure and the
Company shall mutually agree on and issue a press release announcing the
execution of this Agreement (the “Signing Press Release”).
Immediately after the issuance of the Signing Press Release, Secure shall
prepare and file a Current Report on Form 8-K pursuant to the Exchange Act to
report the execution of this Agreement, attaching this Agreement and the Signing
Press Release thereto (“Signing
Form 8-K”), which the Company shall review, comment upon and approve
(which approval shall not be unreasonably withheld, conditioned or delayed)
prior to filing.
(b) as
promptly as practicable after the voting results at the Special Meeting are
known, Secure shall prepare a draft Form 8-K announcing such results, and
announcing the Closing, if applicable, together with, or incorporating by
reference, the financial statements prepared by the Company and its accountant,
and such other information that may be required to be disclosed with respect to
such results, including the transactions contemplated hereunder, if applicable,
in any report or form to be filed with the SEC (“Closing Form 8-K”), which the
Company shall review, comment upon and approve (which approval shall not be
unreasonably withheld, conditioned or delayed) prior to filing. As promptly as
practicable after the voting results at the Special Meeting are known, Secure
and the Company shall mutually agree on and issue a press release announcing
such voting results and, if applicable, the consummation of the transactions
contemplated hereunder (“Closing Press Release”).
Concurrently with the Closing, Secure shall distribute the Closing Press Release
and shall file the Closing Form 8-K with the SEC.
5.11 Required
Information. In connection with the preparation of the Signing
Form 8-K, the Signing Press Release, the Proxy Statement/Prospectus, the Closing
Form 8-K, the Closing Press Release, or any other report, statement, filing
notice or application made by or on behalf of Secure and/or the Company to any
Government Authority, the NYSEA or other third Person in connection with the
transactions contemplated hereby, and for such other reasonable purposes, the
Company and Secure each shall, upon request by the other, furnish the other with
all information concerning themselves, their respective directors, officers,
managers, members and stockholders and such other matters as may be reasonably
necessary or advisable in connection with the transactions contemplated
hereunder, or any other report, statement, filing, notice or application made by
or on behalf of the Company or Secure to any third party and/or any Governmental
Authority in connection with the transactions contemplated hereby.
48
5.12 Charter Protections;
Directors’ and Officers’ Liability Insurance. All rights to
indemnification or advancement of expenses for acts or omissions occurring
through the Closing Date now existing in favor of the current or former
directors and officers of the Company and each Company Subsidiary as provided in
the Company’s Organization Documents and Subsidiary Organization Documents or in
any agreements providing for indemnification or advancements shall survive the
transactions contemplated hereunder and shall continue in full force and effect
in accordance with their terms. For a period of six (6) years after the Closing
Date, Company shall cause to be maintained in effect the current policies of
directors’ and officers’ liability insurance maintained by the Company and each
Company Subsidiary, respectively (or policies of at least the same coverage and
amounts containing terms and conditions which are no less advantageous), with
respect to claims arising from facts and events that occurred prior to the
Closing Date, covering the directors and officers of, and each other Person
currently covered by such liability insurance, of the Company and each Company
Subsidiary.
5.13 Merger. If
Secure or any of its successors or permitted assigns (i) consolidates with or
merges into any other Person and shall not be the continuing or surviving entity
of such consolidation or merger, or (ii) transfers or conveys all or
substantially all of its properties and assets to any Person, then, in each such
case, to the extent necessary, proper provision shall be made so that the
successors and assigns of such Person assume the obligations of such Person
pursuant to this Agreement, including, without limitation, the payment of the
Earn-Out Payments.
5.14 Derivative
Securities. The Company shall use its best efforts to take any
and all actions necessary to ensure that all outstanding options, warrants and
other derivative securities of the Company or any Company Subsidiary shall have
been terminated or exercised prior to Closing.
5.15 Further
Assurances. The Company, Ultimate Resort and Secure shall
further cooperate with each other and use their respective commercially
reasonable best efforts to take or cause to be taken all actions, and do or
cause to be done all things, necessary, proper or advisable on their part under
this Agreement and applicable Laws to consummate the transactions contemplated
by this Agreement as soon as practicable, including preparing and filing as soon
as practicable all documentation to effect all necessary notices, reports and
other filings and to obtain (in accordance with this Agreement) as soon as
practicable all consents, registrations, approvals, permits and authorizations
necessary or advisable to be obtained from any third Person and/or any
Governmental Authority.
5.16
Founders’
Stock. Certain shares of Secure Common Stock held by the
Secure America Acquisition Holdings, LLC, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, S.
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ (collectively, the “Founders”) shall be
transferred to Secure prior to the Effective Time pursuant to the terms of that
certain side letter dated as of August 31, 2009, by and among the Founders,
Secure and the Company, a copy of which is attached hereto as Exhibit G.
49
5.17 Certain
Activities. The parties understand and agree that Secure may
enter into bridge loan arrangements, forward contracts or other mechanics the
result of which will be an obligation to buy-back shares of Secure immediately
after the Effective Time; provided that such contracts do not require Secure to
utilize more than $26 million in cash.
ARTICLE
VI
CONDITIONS TO
CLOSING
6.1 Conditions to Each Party’s
Obligations. The obligations of each Party to consummate the
transactions described herein shall be subject to the satisfaction or waiver
(where permissible), at or prior to the Closing Date of the following
conditions:
(a) Lender and Member
Approvals. The Required Company Vote shall have been obtained and the
Company shall have received the written consent of the lenders set forth on
Schedule 6.1(a)
to the transactions contemplated by this Agreement (the “Lender
Approvals”).
(b) Stockholder Approval.
The (i) Required Secure Vote shall have been obtained in accordance with the
DGCL and Secure’s certificate of incorporation, as amended, and the rules and
regulations of the NYSEA or the Nasdaq Stock Market, LLC, as applicable, (ii)
the stockholders of Secure holding 3,000,000 or more of the shares of Secure
Common Stock sold in Secure’s IPO shall not have voted against the transactions
contemplated hereunder and exercised their conversion rights under Secure’s
certificate of incorporation, as amended, to convert their shares of Secure
Common Stock into a cash payment from the Trust Fund, (iii) the Charter
Amendments and the Incentive Plan shall have been duly adopted and approved by
the stockholders of Secure in accordance with the DGCL and Secure’s certificate
of incorporation, as amended, and the rules and regulations of the NYSEA or the
Nasdaq Stock Market, LLC, as applicable,, and (iv) and the First Charter
Amendment shall have become effective under the DGCL.
(c) Antitrust Laws. The
applicable waiting period (and any extension thereof) under any Antitrust Laws
shall have expired or been terminated.
50
(d) Requisite Regulatory
Approvals and Consents. All authorizations, approvals and permits
required to be obtained from or made with any Governmental Authority in order to
consummate the transactions contemplated by this Agreement (the “Requisite Regulatory
Approvals”), and all Consents from third Persons that are required in
connection with the transactions contemplated by this Agreement, shall have been
obtained or made.
(e) No Law. No
Governmental Authority shall have enacted, issued, promulgated, enforced or
entered any Law (whether temporary, preliminary or permanent) or Order that is
then in effect and has the effect of making the transactions contemplated
hereunder illegal or otherwise preventing or prohibiting consummation of the
transactions contemplated hereunder.
(f) Operating
Agreement. Secure, the Company and the Members shall have duly
executed and delivered the Operating Agreement.
(g) Series A Preferred Voting
Stock. A certificate of designation with respect to the Series
A Preferred Voting Stock (as defined in the Operating Agreement) shall have been
duly adopted by the Secure Board in accordance with the DGCL and Secure’s
certificate of incorporation, as amended, and shall have become effective under
the DGCL.
(h) Voting Agreement. The
Members shall have duly executed and delivered the Voting Agreement in the form
attached hereto as Exhibit
C.
(i) Registration Rights
Agreement. The Registration Rights Agreement, in the form
attached hereto as Exhibit D, shall have
been duly executed and delivered.
(j) Indemnification and Escrow
Agreement. The Indemnification and Escrow Agreement, in the
form attached as Exhibit E (the “Indemnification and Escrow
Agreement”), shall have been duly executed and delivered.
(k) Resignations. All
resignations from the directors and managers of Secure and the Company,
respectively, as would be necessary to achieve the board compositions required
by the Voting Agreement and the Operating Agreement, respectively.
(l) Consummation of the Company
Transactions. The Company Transactions shall have been
consummated.
6.2 Conditions to Obligations of
Secure. The obligations of Secure to consummate the transactions
contemplated by this Agreement are subject to the satisfaction or waiver by
Secure, at or prior to the Effective Time, of the following additional
conditions:
(a) Representations and
Warranties. Each of the representations and warranties of the Company set
forth in this Agreement shall be true and correct in all material respects, and
with respect to representations and warranties qualified by materiality or
Company Material Adverse Effect qualifiers true and correct in all respects, as
of the date of this Agreement and as of the Closing Date as though made as of
the Closing Date, except to the extent that such representations and warranties
refer specifically to an earlier date, in which case such representations and
warranties shall have been true and correct as of such earlier
date.
(b) Agreements and
Covenants. The Company and the Members shall have performed in all
material respects all of their respective material obligations and complied with
all of their respective material agreements and covenants to be performed or
complied with by them under this Agreement at or prior to the Closing
Date.
(c) No
Litigation. No action, suit or proceeding shall be pending or
threatened before any Governmental Authority which is reasonably likely to (i)
prevent consummation of any of the transactions contemplated by this Agreement
or (ii) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation.
51
(d) Officer Certificate.
The Company shall have delivered to Secure a certificate, dated the Closing
Date, signed by the chief executive officer or chief financial officer of the
Company, certifying in such capacity as to the satisfaction of the conditions
specified in Sections
6.2(a), 6.2(b), 6.2(c) and 6.2(f).
(e) Secretary’s
Certificate. The Company shall have delivered to Secure a true copy of
the resolutions of the board of managers of the Company and Ultimate Resort
authorizing the execution of this Agreement and the consummation of the
transactions contemplated herein, certified by the Secretary or similar officer
of the Company and Ultimate Resort, as applicable.
(f) Company Material Adverse
Effect. No Company Material Adverse Effect shall have occurred since the
date of this Agreement.
(g) Employment
Agreements. Secure shall have received employment agreements from ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇▇▇▇▇, in form and substance
mutually acceptable to each of such Persons (the “Employment
Agreements”).
(h) Legal Opinion. Secure
shall have received an opinion of the Company’s counsel, ▇▇▇▇▇▇▇▇▇ Traurig, LLP,
which opinion shall have reasonable qualifications, assumptions and exceptions
and shall be limited to opinions on the authorization of the Company and
Ultimate Resort and the enforceability of this Agreement and the documents
related hereto against the Company and Ultimate Resort, and in a form reasonably
acceptable to Secure’s counsel, and dated as of the Closing Date.
(i) Proposed
Transaction. The Private Escapes Transaction shall have been
consummated on terms and conditions substantially similar to and in accordance
with those presented to Secure.
(j) Underwriting
Commissions. Secure shall have delivered the duly executed
letter agreement, in the form attached hereto as Exhibit F, pursuant
to which the deferred underwriters’ discount and commissions payable pursuant to
that certain Underwriting Agreement entered into between Secure and SunTrust
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, as representative of itself and the several underwriters
referenced therein, dated as of October 23, 2009, shall have been reduced to the
amounts set forth in such letter agreement.
(k) Warrants. Each
outstanding warrant to purchase Secure Common Stock shall be amended to have an
exercise price of $8.80, a redemption trigger once the price per share reaches
$15.05 and a term of four (4) years from Closing.
(l) Company Derivative
Securities. All Company and Company Subsidiary outstanding
options, warrants and other derivative securities shall have been terminated or
exercised.
(m) Orlando
Lease. Secure shall receive, to its sole satisfaction,
verification from an independent third party that the terms of the lease by and
between the Company and La Mirada Plaza, LLC, a Florida limited liability
company, are fair, reasonable and at prevailing market rates for similarly
situated properties in the Orlando metropolitan area.
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6.3 Conditions to Obligations of
the Company. The obligations of the Company to consummate the
transactions contemplated hereunder are subject to the satisfaction or waiver by
the Company, at or prior to the Closing Date, of the following additional
conditions:
(a) Representations and
Warranties. Each of the representations and warranties of Secure set
forth in this Agreement shall be true and correct in all material respects, and
with respect to representations and warranties qualified by materiality or
Secure Material Adverse Effect qualifiers true and correct in all respects, as
of the date of this Agreement and as of the Closing Date as though made as of
the Closing Date, except to the extent that such representations and warranties
refer specifically to an earlier date, in which case such representations and
warranties shall have been true and correct as of such earlier
date.
(b) Agreements and
Covenants. Secure shall have performed, in all material respects, its
material obligations and complied with, in all material respects, its material
agreements and covenants to be performed or complied with by it under this
Agreement at or prior to the Closing Date.
(c) No
Litigation. No action, suit or proceeding shall be pending or
threatened before any Governmental Authority which is reasonably likely to (i)
prevent consummation of any of the transactions contemplated by this Agreement
or (ii) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation.
(d) Officer Certificate.
Secure shall have delivered to the Company a certificate, dated the Closing
Date, signed by the chief executive officer or chief financial officer of
Secure, certifying in such capacity as to the satisfaction of the conditions
specified in Sections 6.3(a), 6.3(b), 6.3(c) and 6.3(f).
(e) Secretary’s
Certificate. Secure shall have delivered to the Company a true copy of
the resolutions of the Secure Board authorizing the execution of this Agreement
and the consummation of the transactions contemplated herein, certified by the
Secretary of Secure, or a similar officer.
(f) Secure Material Adverse
Effect. No Secure Material Adverse Effect shall have occurred since the
date of this Agreement.
(g) Legal Opinion. The
Company shall have received an opinion of Secure’s counsel, Mintz, Levin, Cohn,
Ferris, Glovsky & Popeo, P.C., which opinion shall have reasonable
qualifications, assumptions and exceptions and shall be limited to opinions on
the authorization of Secure and the enforceability of this Agreement and the
documents related hereto against Secure, and in a form reasonably acceptable to
the Company’s counsel, and dated as of the Closing Date.
(h) Special Meeting. The
Required Secure Vote shall have been obtained such that those proposals and
actions (other those regarding adjournment) described in Section 5.5,
including the transactions contemplated hereunder, shall have been adopted in
accordance with the DGCL and Secure’s certificate of incorporation, as
amended.
53
6.4 Frustration of
Conditions. Neither Secure nor the Company may rely on the
failure of any condition set forth in this Article VI to be satisfied if such
failure was caused by such Party’s failure to comply with or perform any of its
covenants or obligations set forth in this Agreement.
ARTICLE
VII
TERMINATION AND
ABANDONMENT
7.1 Termination. This
Agreement may be terminated and the transactions contemplated hereby may be
abandoned at any time prior to the earlier of Closing, notwithstanding any
approval of the matters presented in connection with the transactions
contemplated hereunder by the stockholders of Secure or the Members (the date of
any such termination, the “Termination Date”), as
follows:
(a) by
mutual written consent of each of the Company and Secure at any
time;
(b) by
written notice by either Secure or the Company if the Closing conditions set
forth in Section
6.1 have not been satisfied by the Company or Secure, as the case may be
(or waived by Secure or the Company as the case may be) by the Closing Date;
provided, however, that the right to terminate this Agreement under this Section 7.1(b) shall
not be available to Secure or the Company due to failure by Secure, on one hand,
or the Company or any Company Subsidiary, on the other hand, to fulfill any
obligation under this Agreement;
(c) by
written notice by either Secure or the Company, if any Governmental Authority
shall have enacted, issued, promulgated, enforced or entered any Order or Law
that is, in each case, then in effect and is final and non-appealable and has
the effect of permanently restraining, enjoining or otherwise preventing or
prohibiting the transactions contemplated by this Agreement; provided, however, that the
right to terminate this Agreement under this Section 7.1(c) shall
not be available to any Party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, any such Order or Law to have
been enacted, issued, promulgated, enforced or entered;
(d) by
written notice by Secure, if there has been a material breach by the Company of
any of its representations, warranties, material covenants or material
agreements contained in this Agreement that would result in a failure of a
condition set forth in Section 6.2 (a “Terminating Company Breach”);
provided, however, that if such
Terminating Company Breach is curable by the Company prior to the Closing Date,
then Secure may not terminate this Agreement under this Section 7.1(d) for
twenty (20) calendar days after delivery of written notice from Secure to
Company of such Terminating Company Breach, provided Company continues to
exercise commercially reasonable best efforts to cure such breach (it being
understood that Secure may not terminate this Agreement pursuant to this Section 7.1(d) if it
shall have materially breached this Agreement or if such Terminating Company
Breach by the Company is cured during such twenty (20) calendar day
period);
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(e) by
written notice by the Company, if there has been a material breach by Secure of
any of its representations, warranties, material covenants or material
agreements contained in this Agreement that would result in a failure of a
condition set forth in Section 6.3 (a “Terminating Secure Breach”);
provided, however, that if such
Terminating Secure Breach is curable by Secure prior to the Closing Date, then
Company may not terminate this Agreement under this Section 7.1(e) for
twenty (20) calendar days after delivery of written notice from Company to
Secure of such Terminating Secure Breach, provided Secure continues to exercise
commercially reasonable best efforts to cure such Terminating Secure Breach (it
being understood that the Company may not terminate this Agreement pursuant to
this Section
7.1(e) if it shall have materially breached this Agreement or if such
Terminating Secure Breach by the Secure is cured during such twenty (20)
calendar day period);
(f) by
written notice by either Secure or Company, if, at the Special Meeting
(including any adjournment or postponement thereof at which this Agreement is
voted upon), the Required Secure Vote is not obtained, the Charter Amendments
are not adopted in accordance with the DGCL and Secure’s certificate of
incorporation, as amended, and the rules and regulations of the NYSEA or the
Nasdaq Stock Market, LLC, as applicable, or if the Required Company Vote or
Lender Approvals are not obtained; provided, however, that the
right to terminate this Agreement under this Section 7.1(f) shall
not be available to Secure where the failure to obtain the Required Secure Vote
or the adoption of the Charter Amendments as aforesaid shall have resulted from
Secure’s breach of this Agreement; and provided, further, that the
right to terminate this Agreement under this Section 7.1(f) shall
not be available to the Company where the failure to obtain the Lender Approvals
shall have resulted from the Company’s breach of this Agreement;
(g) by
written notice by Secure if the Closing conditions set forth in Section 6.2 have
not been satisfied by the Company (or waived by Secure) by the Closing Date;
provided, however, that the
right to terminate this Agreement under this Section 7.1(g) shall
not be available to Secure if Secure is in material breach of any
representation, warranty or covenant contained in this Agreement;
or
(h) by
written notice by Company if the Closing conditions set forth in Section 6.3 have not
been satisfied by Secure (or waived by Company) by the Closing Date; provided, however, that the
right to terminate this Agreement under this Section 7.1(h) shall
not be available to Company if Company is in material breach of any
representation, warranty or covenant contained in this Agreement.
7.2 Effect of
Termination. In the event of the termination of this Agreement pursuant
to Section 7.1,
this Agreement shall forthwith become void (to the fullest extent permitted by
applicable law), and there shall be no liability on the part of any Party hereto
or any of their respective affiliates or the directors, officers, partners,
members, managers, employees, agents or other Representatives of any of them,
and all rights and obligations of each Party hereto shall cease, except as set
forth in this Section
7.2 and in Section 7.3 and
Article VIII. Without limiting the foregoing, Section 4.2(b), this
Section 7.2,
Section 7.3,
Article VIII and Section 9.4 shall
survive the termination of this Agreement.
7.3 Fees and
Expenses. Except as otherwise set forth in this Agreement,
including without limitation Section 5.5(d), all
Expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by Secure, unless such transactions have been
terminated in accordance with Section 7.1, in which
case the Expenses shall be paid by the Party incurring such Expenses. As used in
this Agreement, “Expenses” shall include all
out-of-pocket expenses (including all fees and expenses of counsel, accountants,
investment bankers, financing sources, experts and consultants to a Party hereto
and its affiliates) incurred by a Party or on its behalf in connection with or
related to the authorization, preparation, negotiation, execution or performance
of this Agreement or any ancillary agreement related hereto, the preparation,
and filing of the Proxy Statement, the solicitation of the Required Secure Vote
and all other matters related to the consummation of the transactions
contemplated hereunder.
55
7.4 Amendment. This
Agreement may only be amended pursuant to a written agreement signed by each of
the Parties hereto.
7.5 Waiver. At
any time prior to the Effective Time, subject to applicable Law, any Party
hereto may in its sole discretion (i) extend the time for the performance of any
obligation or other act of any other non-affiliated Party hereto, (ii) waive any
inaccuracy in the representations and warranties by such other non-affiliated
Party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance by such other non-affiliated Party with any agreement or
condition contained herein. Any such extension or waiver shall be valid only if
set forth in an instrument in writing signed by the Party or Parties to be bound
thereby. Notwithstanding the foregoing, no failure or delay by the Company or
Secure in exercising any right hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise of any other right hereunder.
ARTICLE
VIII
TRUST FUND
WAIVER
8.1 Trust Fund
Waiver. The parties acknowledge and agree that the provisions
of this Section
8.1 shall only apply in the event that the Closing does not occur as
contemplated herein.
(a) The
Company, Ultimate Resort and the Member Representative each acknowledge that
Secure is a blank check company formed for the purpose of acquiring one or more
businesses or assets (an “Initial Business
Combination”). The Company and the Member Representative each further
acknowledges that Secure’s sole assets consist of the cash proceeds of the IPO
and private placements of its securities, in each case, consummated on October
29, 2007, and that substantially all of those proceeds have been deposited in
the Trust Fund for the benefit of Secure, certain of its public stockholders and
the underwriters of the IPO. The monies in the Trust Fund may be disbursed only
(i) to Secure in limited amounts from time to time, as set forth in the
prospectus relating to the IPO, in order to permit Secure to pay its operating
expenses; (ii) if Secure completes the transactions contemplated hereunder,
which constitutes an Initial Business Combination, then to certain Persons and
in certain amounts; and (iii) if Secure fails to complete an Initial Business
Combination within the allotted time period and liquidates, subject to the terms
of the agreement governing the Trust Fund, to Secure in limited amounts to
permit Secure to pay the costs and expenses of its liquidation and dissolution,
and then to Secure’s public stockholders (as such term is defined in the
agreement governing the Trust Fund). For and in consideration of Secure’s
entering into this Agreement, the receipt and sufficiency of which is hereby
acknowledged, the Company and the Member Representative, on behalf of his, her
or itself and any of their respective managers, directors, officers, affiliates,
members, shareholders, trustees or subsidiaries, hereby irrevocably waive any
right, title, interest or claim of any kind (any “Claim”) they have or may have
in the future in or to any monies in the Trust Fund and agree not to seek
recourse against Secure’s directors or officers, the Trust Fund or any funds
distributed therefrom, as a result of, or arising out of, any Claims against
Secure arising under this Agreement and the other transactions and transaction
documents contemplated thereunder.
56
(b) In
the event the Company or the Member Representative commence any action or
proceeding based upon, in connection with, relating to or arising out of any
matter relating to Secure, which proceeding seeks, in whole or in part, relief
against the Trust Fund and/or its assets or the Secure’s public stockholders,
whether in the form of money damages or injunctive relief, the prevailing party
shall be entitled to recover from the non-prevailing party the associated legal
fees and costs in connection with any such action.
ARTICLE
IX
MISCELLANEOUS
9.1 Survival. The
Confidentiality Agreement and the Company’s and the Member Representative’s
waiver set forth in Section 8.1(a), shall
survive termination of this Agreement in accordance with Section
7.1.
9.2 Notices. All
notices, consents, waivers and other communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered in person, by
facsimile or other electronic means, receipt confirmed, or on the next Business
Day when sent by reliable overnight courier to the respective Parties at the
following addresses (or at such other address for a Party as shall be specified
by like notice):
(i) if to
the Company and the Members, to:
Ultimate
Escapes Holdings, LLC
▇▇▇▇ ▇.
▇▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇, President
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
with a
copy to (but which shall not constitute notice to the Company or the
Members):
▇▇▇▇▇▇▇▇▇
Traurig LLP
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇
▇. Annex, Esq.
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
57
(ii) if
to the Member Representative to:
▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇.
▇▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
with a
copy to (but which shall not constitute notice to the Member
Representative):
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇
▇. Annex, Esq.
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
(iii) if
to Secure (before the Closing) to:
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn: C.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
with a
copy to (but which shall not constitute notice to Secure):
Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇
▇. ▇▇▇▇, Esq.
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
9.3 Binding Effect;
Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the Parties hereto and their
respective successors and permitted assigns. This Agreement shall not be
assigned by operation of Law or otherwise without the prior written consent of
the other Parties, and any assignment without such consent shall be null and
void; provided
that no such assignment shall relieve the assigning Party of its obligations
hereunder.
9.4 Governing Law;
Jurisdiction. This Agreement shall be governed by, construed
and enforced in accordance with the Laws of the State of Delaware without regard
to the conflict of laws principles thereof. All Actions arising out of or
relating to this Agreement shall be heard and determined exclusively in any
state or federal court located in Delaware. The Parties hereto hereby (A) submit
to the exclusive jurisdiction of any Delaware state or federal court for the
purpose of any Action arising out of or relating to this Agreement brought by
any Party hereto and (B) irrevocably waive, and agree not to assert by way of
motion, defense or otherwise, in any such Action, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that the Action is
brought in an inconvenient forum, that the venue of the Action is improper, or
that this Agreement or the transactions contemplated hereby may not be enforced
in or by any of the above-named courts. Secure and the Company agree that a
final judgment in any Action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by Law. Secure and the Company irrevocably consents to the service of
the summons and complaint and any other process in any other Action or
proceeding relating to the transactions contemplated by this Agreement, on
behalf of itself or its property, by personal delivery of copies of such process
to such Party. Nothing in this Section 9.4 shall
affect the right of any Party to serve legal process in any other manner
permitted by Law.
58
9.5 Waiver of Jury
Trial. Each of the Parties hereto hereby waives to the fullest
extent permitted by applicable Law any right it may have to a trial by jury with
respect to any Action directly or indirectly arising out of, under or in
connection with this Agreement or the transactions contemplated hereby. Each of
the Parties hereto (i) certifies that no representative, agent or attorney of
any other party has represented, expressly or otherwise, that such other party
would not, in the event of any Action, seek to enforce that foregoing waiver and
(ii) acknowledges that it and the other Parties hereto have been induced to
enter into this Agreement by, among other things, the mutual waivers and
certifications in this Section
9.5.
9.6 Counterparts. This
Agreement may be executed and delivered (including by facsimile or other
electronic transmission) in one or more counterparts, and by the different
Parties hereto in separate counterparts, each of which when executed shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.
9.7 Interpretation. The
article and section headings contained in this Agreement are solely for the
purpose of reference, are not part of the agreement of the Parties and shall not
in any way affect the meaning or interpretation of this Agreement. As used in
this Agreement, (i) the term “Person” shall mean and include
an individual, a partnership, a joint venture, a corporation, a limited
liability company, a trust, an association, an unincorporated organization, a
Governmental Authority and any other entity, (ii) unless otherwise specified
herein, the term “affiliate,” with respect to
any Person, shall mean and include any Person, directly or indirectly, through
one or more intermediaries controlling, controlled by or under common control
with such Person, (iii) the term “subsidiary” of any specified
Person shall mean any corporation a majority of the outstanding voting power of
which, or any partnership, joint venture, limited liability company or other
entity a majority of the total equity interests of which, is directly or
indirectly (either alone or through or together with any other subsidiary) owned
by such specified Person, (iv) the term “knowledge,” when used with
respect to the Company or Ultimate Resort, shall mean the actual knowledge after
reasonable inquiry of the Key Employees, and, when used with respect to Secure,
shall mean the actual knowledge of C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ after
reasonable inquiry, and (v) the term “Business Day” means any day on
which the principal offices of the SEC in Washington, D.C. are open to accept
filings, or, in the case of determining a date when any payment is due, any day
on which banks are not required or authorized to close in the State of Delaware.
Whenever the words “include,” “includes” or “including” are used in this
Agreement, they shall be deemed to be followed by the words “without
limitation”. The words “hereof,” “herein,” “hereby” and “hereunder” and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. The Parties have
participated jointly in the negotiation and drafting of this Agreement.
Consequently, in the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties
hereto, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provision of this
Agreement.
59
9.8 Entire
Agreement. This Agreement and the documents or instruments
referred to herein, including any exhibits attached hereto and the Disclosure
Schedules referred to herein (and including without limitation the
Indemnification and Escrow Agreement), which exhibits and Disclosure Schedules
are incorporated herein by reference and the Confidentiality Agreement embody
the entire agreement and understanding of the Parties hereto in respect of the
subject matter contained herein. There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein. This Agreement and such other
agreements supersede all prior agreements and the understandings among the
Parties with respect to such subject matter.
9.9 Severability. In
case any provision in this Agreement shall be held invalid, illegal or
unenforceable in a jurisdiction, such provision shall be modified or deleted, as
to the jurisdiction involved, only to the extent necessary to render the same
valid, legal and enforceable, and the validity, legality and enforceability of
the remaining provisions hereof shall not in any way be affected or impaired
thereby nor shall the validity, legality or enforceability of such provision be
affected thereby in any other jurisdiction. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
Parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the Parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated hereunder be
consummated as originally contemplated to the fullest extent
possible.
9.10 Specific
Performance. The Parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed by the Company or Secure in accordance with their specific terms or
were otherwise breached. Accordingly, the Parties further agree that prior to
the termination of this Agreement in accordance with Section 7.1, each
Party shall be entitled to seek an injunction or restraining order to prevent
breaches of this Agreement and to seek to enforce specifically the terms and
provisions hereof, this being in addition to any other right or remedy to which
such Party may be entitled under this Agreement, at law or in
equity.
9.11 Third
Parties. Except for the rights of the Indemnitees (as such
term is defined in the Indemnification and Escrow Agreement) and the Members set
forth in the Indemnification and Escrow Agreement, nothing contained in this
Agreement or in any instrument or document executed by any party in connection
with the transactions contemplated hereby shall create any rights in, or be
deemed to have been executed for the benefit of, any Person that is not a Party
hereto or thereto or a successor or permitted assign of such a
Party.
[SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF, each Party hereto has caused this Contribution Agreement to be
signed and delivered by its respective duly authorized officer as of the date
first above written.
|
By:
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/s/ C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name:
C. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
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Title: Chief Executive
Officer
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ULTIMATE
ESCAPES HOLDINGS, LLC
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By:
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/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Name:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title:
President and Chief Executive Officer
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ULTIMATE
RESORT HOLDINGS, LLC
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By:
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/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Name:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title:
President and Chief Executive Officer
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MEMBER
REPRESENTATIVE:
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/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇
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