EXHIBIT 2
SECURITIES PURCHASE AGREEMENT
by and among
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ REAL ESTATE FUND III, L.P.,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ REAL ESTATE INVESTORS III, L.P.,
MSP REAL ESTATE FUND, L.P.,
MSREF III SPECIAL FUND, L.P.
and
BLUEGREEN CORPORATION
Dated as of August 14, 1998
TABLE OF CONTENTS
Page
ARTICLE I.
DEFINITIONS.............................................................. 1
Section 1.01. Definitions............................................... 1
ARTICLE II.
SALE AND PURCHASE OF COMMON STOCK........................................ 8
Section 2.01. Sale and Purchase of the Common Stock..................... 8
Section 2.02. Closing................................................... 8
Section 2.03. Post-Closing Purchases.................................... 9
Section 2.04. Use of Proceeds...........................................10
ARTICLE III.
REPRESENTATIONS AND WARRANTIES...........................................11
Section 3.01. Representations and Warranties of the Company.............11
Section 3.02. Representations and Warranties of Purchasers..............27
ARTICLE IV.
ADDITIONAL AGREEMENTS OF THE PARTIES.....................................29
Section 4.01. Taking of Necessary Action................................29
Section 4.02. Conduct of Business.......................................29
Section 4.03. Financial Statements and Other Reports....................30
Section 4.04. Access....................................................31
Section 4.05. Lost, Stolen, Destroyed or Mutilated Securities...........32
Section 4.06. No Termination of Obligations Upon Change of Control......32
Section 4.07. Restrictions on Sale or Transfer; Legend..................32
Section 4.08. Further Assurances........................................34
Section 4.09. Solicitation..............................................34
Section 4.10. Board Representation......................................35
Section 4.11. Board of Directors Approvals..............................37
Section 4.12. Preemptive Rights.........................................39
Section 4.13. Adjustments...............................................41
Section 4.14. [Reserved]................................................41
Section 4.15. Financing Fees; Advisory Fees.............................41
Section 4.16. Shareholder Approval......................................42
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ARTICLE V.
CONDITIONS OF CLOSING....................................................42
Section 5.01. Conditions of Purchase at Closing.........................42
Section 5.02. Conditions of Sale at Closing.............................44
Section 5.03. Conditions of Purchase of Remaining Shares................45
Section 5.04. Conditions of Sale of Remaining Shares....................47
ARTICLE VI.
[RESERVED]...............................................................48
ARTICLE VII.
MISCELLANEOUS............................................................48
Section 7.01. Survival of Representations and Warranties................48
Section 7.02. Notices...................................................48
Section 7.03. Entire Agreement; Amendment...............................49
Section 7.04. Counterparts..............................................50
Section 7.05. Governing Law.............................................50
Section 7.06. Public Announcements......................................50
Section 7.07. Expenses..................................................50
Section 7.08. Indemnification...........................................51
Section 7.09. Successors and Assigns....................................52
Section 7.10. Jurisdiction..............................................52
Section 7.11. Specific Performance......................................53
Section 7.12. Captions..................................................53
Section 7.13. Severability..............................................53
Section 7.14. Mutual Waiver of Jury Trial...............................53
Section 7.15. Exculpation...............................................53
Section 7.16. Obligations...............................................53
Section 7.17. Schedules.................................................53
EXHIBITS
Exhibit A - Form of Notice of Issuance
Exhibit B - Form of Registration Rights Agreement
Exhibit C - Form of Shareholder Voting Agreements
Exhibit D - Form of Legal Opinion of Company Counsel
Exhibit E - Amendment to Company Bylaws
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is dated as of
August 14, 1998, by and among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ REAL ESTATE FUND III, L.P., a
Delaware limited partnership ("MSREF III"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ REAL ESTATE INVESTORS
III, L.P., a Delaware limited partnership ("MSREI"), MSP REAL ESTATE FUND, L.P.,
a Delaware limited partnership ("MSP"), MSREF III SPECIAL FUND, L.P., a Delaware
limited partnership ("MSREF Special") (MSREF III, MSREI, MSP and MSREF Special
are herein referred to individually as a "Purchaser" and collectively as
"Purchasers") and BLUEGREEN CORPORATION, a Massachusetts corporation (the
"Company") . Capitalized terms not otherwise defined where used herein shall
have the meanings ascribed thereto in Article I.
WHEREAS, Purchasers desire to purchase from the Company, and the Company
desires to sell to Purchasers, in the manner and subject to the terms and
conditions (including, without limitation, the conditions set forth in Section
2.03(c)) set forth in this Agreement, shares of its Common Stock for an
aggregate purchase price of up to $50,000,000;
WHEREAS, the Company and Purchasers desire to set forth certain
agreements herein.
NOW THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained and intending to be
legally bound hereby, the parties hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01. Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below:
"Affiliate" or "affiliate" shall mean, with respect to any Person, any
other Person which directly or indirectly controls or is controlled by or is
under common control with such Person. As used in this definition, "control"
(including its correlative meanings, "controlled by" and "under common
control with") shall mean possession, directly or indirectly, of power to
direct or cause the direction of management or policies of such Person,
whether through ownership of securities or partnership or other ownership
interests, by contract or otherwise.
"Ancillary Documents" shall mean the Registration Rights Agreement and
Shareholder Voting Agreements.
"Applicable Law" shall mean all applicable provisions of all (i)
constitutions, treaties, statutes, laws (including common law), rules,
regulations, administrative positions, ordinances, codes or orders of any
Governmental Entity, self-regulating organization, securities exchange or
other securities trading system, (ii) Consents of, with or from any
Governmental Entity, and (iii) orders, decisions, injunctions, judgments,
awards and decrees of or agreement with any Governmental Entity.
"Board of Directors" or "Board" shall mean the duly elected and qualified
board of directors of the Company.
"Business Day" shall mean any day, other than a Saturday, Sunday or a day
on which banking institutions in the City of New York or Boca Raton, Florida
are authorized or obligated by law or executive order to close.
"Calculation Date" shall mean the first date on which all the shares of
Common Stock to be sold pursuant to Sections 2.01 and 2.03 of this Agreement
shall have been acquired by Purchasers.
"Capitalized Lease Obligations" means an obligation that is required to
be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP.
"Change of Control" shall mean (i) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all or
substantially all of the assets of the Company and its Subsidiaries; or (ii)
a majority of the Board of Directors of the Company shall consist of Persons
who are not Continuing Directors of the Company; or (iii) the acquisition by
any Person or Group (as defined in Section 13(d) of the Exchange Act, but
excluding Purchasers or the Permitted Transferees or any of their respective
Affiliates) of the power, directly or indirectly, to vote or direct the
voting of securities having more than 50% of the total voting power for the
election of directors of the Company or of any direct or indirect holding
company thereof.
"Closing" and "Closing Date" shall have the meanings set forth in Section
2.02(a).
"Closing Share Price" shall mean $8.50 per share of Common Stock. During
the Commitment Period and for shares of Common Stock not yet sold to
Purchasers, the Closing Share Price shall be adjusted in accordance with
Section 4.13 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Co-Investment Partnership" shall mean any investment fund sponsored by
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ & Co. or its Affiliates to co-invest alongside
Purchasers.
"Commitment Period" shall mean the 18 month period commencing on the
Closing Date.
"Common Stock" shall mean the Common Stock, par value $.01 per share, of
the Company.
"Company Environmental Reports" shall have the meaning set forth in
Section 3.01(t)(vi).
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"Company Property" shall mean all real property directly or indirectly
owned or leased by the Company and the Company Subsidiaries.
"Company Subsidiary" and "Company Subsidiaries" shall have the meanings
set forth in Section 3.01(d).
"Consents" shall mean any consent, approval, authorization, waiver,
permit, grant, franchise, concession, agreement, license, exemption or order
of registration, certificate, declaration or filing with, or report or notice
to, any Person or Governmental Entity.
"Continuing Director" shall mean, as of the determination date, any
Person who (i) was a member of the Board of Directors of the Company on the
Closing Date (after giving effect to the provisions of Section 4.10), or (ii)
was nominated for election or elected to the Board of Directors of the
Company with the affirmative vote of a majority of the Continuing Directors
of the Company who were members of the Board of Directors at the time of such
nomination or election.
"Currency Agreement" shall mean, in respect of a Person, any foreign
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or a beneficiary.
"Development Properties" shall have the meaning set forth in Section
3.01(r)(ix).
"Environmental Claim" shall have the meaning set forth in Section
3.01(t)(vii).
"Environmental Laws" shall have the meaning set forth in Section
3.01(t)(vii).
"Environmental Permits" shall have the meaning set forth in Section
3.01(t)(i).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"GAAP" shall mean generally accepted accounting principles in the United
States of America in effect from time to time, consistently applied.
"Governmental Entity" shall mean any court, department, body, board,
bureau, administrative agency or commission or other governmental authority
or instrumentality, whether federal, state, local or foreign.
"Hazardous Substances" shall have the meaning set forth in Section
3.01(t)(vii).
"Indebtedness" shall mean, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium (if
any) in respect of indebtedness of such Person for borrowed money, (ii) the
principal of and premium (if any) in respect of obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments, (iii) all
obligations of such Person in respect of letters of credit or other similar
instruments
3
(including reimbursement obligations with respect thereto) (other than
obligations with respect to letters of credit securing obligations (other
than obligations described in clauses (i), (ii) and (v)) entered into in the
ordinary course of business of such Person to the extent that such letters of
credit are not drawn upon or, if and to the extent drawn upon, such drawing
is reimbursed no later than the third business day following receipt by such
Person of a demand for reimbursement following payment on the letter of
credit), (iv) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services (except trade payables and other
accrued expenses incurred in the ordinary course of business), which purchase
price is due more than six months after the date of placing such property in
service or taking delivery and title thereto or the completion of such
services, (v) all Capitalized Lease Obligations of such Person, (vi) all
Indebtedness of other Persons secured by a Lien on any asset of such Person,
whether or not such Indebtedness is assumed by such Person; provided,
however, that if such obligations have not been assumed, the amount of such
Indebtedness shall be deemed to be the lesser of the principal amount of the
obligations or the fair market value of the pledged property or assets, (vii)
all Indebtedness of other Persons to the extent guaranteed by such Person,
and (viii) to the extent not otherwise included in this definition,
obligations under Currency Agreements and Interest Rate Agreements. Unless
specifically set forth above, the amount of Indebtedness of any Person at any
date shall be the outstanding principal amount of all unconditional
obligations as described above, as such amount would be reflected on a
balance sheet prepared in accordance with GAAP, and the maximum liability of
such Person, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations described above at such date.
"Interest Rate Agreement" means with respect to any Person any interest
rate protection agreement, interest rate future agreement, interest rate
option agreement, interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, interest rate hedge agreement or other
similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"Material Adverse Effect" shall mean any event, circumstance, change,
development or effect which individually or in the aggregate would have a
material adverse effect on (i) the assets, business, properties, liabilities,
condition (financial or otherwise), or results of operations of the Company
and the Company Subsidiaries taken as a whole, (ii) the ability of the
Company or any Company Subsidiary to perform its obligations under this
Agreement or the Ancillary Documents or (iii) the validity or enforceability
of this Agreement or any of the Ancillary Documents or the rights or remedies
of Purchasers hereunder and thereunder.
"Maximum Shares" shall mean that number of shares of Common Stock equal
to $50,000,000 divided by the Closing Share Price, rounded up to the next
whole number in the event the foregoing calculation results in a fractional
share.
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"Minimum Interest" shall mean ownership by Purchasers (or Permitted
Transferees) of at least 50% of the aggregate number of shares of Common
Stock theretofore actually issued to Purchasers (or Permitted Transferees)
pursuant to Sections 2.01 and 2.03 of this Agreement (as may be adjusted for
any dividends payable in shares of Common Stock or any stock split or reverse
stock split, combination, consolidation or reclassification of the Common
Stock), but excluding any shares of Common Stock issued to Purchasers (or any
Permitted Transferees) upon exercise of the preemptive rights set forth in
Section 4.12.
"Minimum Shares" shall mean that number of shares of Common Stock equal
to $25,000,000 divided by the Closing Share Price, rounded up to the next
whole number in the event the foregoing calculation results in a fractional
share.
"MSDW" shall have the meaning set forth in Section 4.15(a).
"Notice of Issuance" shall mean the notice delivered by the Company to
Purchasers in accordance with the provisions of Section 2.03, which shall be
substantially in the form attached hereto as Exhibit A.
"Parity Securities" shall mean any stock of any class or classes of the
Company deemed to rank on a parity with the Common Stock, either as to
dividends or upon liquidation, if the holders of such class or classes shall
be entitled to receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Company, as the case may be,
without preference or priority, one over the other, as between the holders of
such stock and the holders of shares of Common Stock.
"Permits" shall have the meaning set forth in Section 3.01(p).
"Permitted Interest" shall mean ownership by Purchasers (or Permitted
Transferees) of at least 33 1/3% of the aggregate number of shares of Common
Stock theretofore actually issued to Purchasers (or Permitted Transferees)
pursuant to Sections 2.01 and 2.03 of this Agreement (as may be adjusted for
any dividends payable in shares of Common Stock or any stock split or reverse
stock split, combination, consolidation or reclassification of the Common
Stock), but excluding any shares of Common Stock issued to Purchasers (or
Permitted Transferees) upon exercise of the preemptive rights set forth in
Section 4.12.
"Permitted Liens" shall mean any Lien that constitutes a "Permitted Lien"
under the Indenture for the Senior Notes as in effect on the date hereof.
"Permitted Transferee" shall mean any Purchaser, Affiliate of Purchasers,
any Co-Investment Partnership and The ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Special Situations
Investment Program and the constituent investors therein or Affiliates
thereof (provided that MSDW or any Subsidiary or Affiliate thereof has the
sole power to vote and dispose of any shares of Common Stock held by any
constituent investors) or Affiliates of such constituent investors).
5
"Person" or "person" shall mean an individual, corporation, association,
partnership, group (as defined in Section 13(d)(3) of the Exchange Act),
trust, joint venture, business trust or unincorporated organization, or a
government or any agency or political subdivision thereof.
"Projects" shall have the meaning set forth in Section 3.01(r)(ix).
"Registration Rights Agreement" shall mean the Registration Rights
Agreement to be executed by the Company and Purchasers at the Closing, which
shall be substantially in the form attached hereto as Exhibit B, as amended
from time to time in accordance with the terms thereof.
"Remaining Shares" shall have the meaning set forth in Section 2.03(a).
"Required Interest" shall mean ownership by Purchasers (or Permitted
Transferees) of at least 70% of the aggregate number of shares of Common
Stock theretofore actually issued to Purchasers (or Permitted Transferees)
pursuant to Sections 2.01 and 2.03 of this Agreement (as may be adjusted for
any dividends payable in shares of Common Stock or any stock split, reverse
stock split, combination, consolidation or reclassification of the Common
Stock), but excluding any shares of Common Stock issued to Purchasers (or
Permitted Transferees) upon exercise of the preemptive rights set forth in
Section 4.12.
"Required Shareholder Approval" shall have the meaning set forth in
Section 5.03(i).
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Securities Filings" shall have the meaning set forth in Section 3.01(h).
"SEC" shall mean the United States Securities and Exchange Commission.
"Senior Notes" shall mean the 10.5% senior secured notes due April 1,
2008 of the Company dated April 1, 1998 in the aggregate original principal
amount of $110,000,000.
"Senior Officer's Certificate" shall have the meaning set forth in
Section 4.03(a).
"Senior Securities" shall mean any stock of any class or classes of the
Company deemed to rank prior to the Common Stock, either as to dividends or
upon liquidation, if the holders of such class or classes shall be entitled
to the receipt of dividends or of amounts distributable upon dissolution,
liquidation or winding up of the Company, as the case may be, in preference
or priority to the holders of Common Stock.
"Shareholder Voting Agreement" shall mean the Voting and Cooperation
Agreement to be executed by Purchasers and the Persons listed on Schedule
5.01(i) hereto which shall be substantially in the form attached hereto as
Exhibit C, as amended from time to time in accordance with the provisions
thereof.
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"Subsequent Closing" shall have the meaning set forth in Section 5.03(b).
"Subsequent Closing Date" shall have the meaning set forth in Section
2.03(b).
"Subsidiary" shall mean, with respect to any corporation (the "parent")
any other corporation, association or other business entity of which 50% or
more of the shares of the voting stock are owned or controlled, directly or
indirectly, by the parent or one or more Subsidiaries of the parent, or by
the parent and one or more of its Subsidiaries.
"Surviving Person" shall mean the continuing or surviving Person of a
merger, consolidation or other corporate combination, the Person receiving a
transfer of all or a substantial part of the properties and assets of the
Company, or the Person consolidating with or merging into the Company in a
merger, consolidation or other corporate combination in which the Company is
the continuing or surviving Person, but in connection with which the Common
Stock of the Company is exchanged or converted into the securities of any
other Person or the right to receive cash or any other property.
"Tax" means any federal, state, local or foreign taxes, including, but
not limited to, income, gross receipts, windfall profits, premium, value
added, severance, stamp, occupation, property, environmental (including Taxes
under Code Section 59A), production, sales, use, license, excise, franchise,
payroll, employment, withholding or similar taxes, together with any
interest, additions or penalties with respect thereto and any interest in
respect of such penalties.
"Tax Returns" means any return, report, information return form,
declaration, claim for refund, statement or other document (including any
amendments thereto and including any schedule or attachment thereto) in
connection with Taxes that are required to be filed with any Governmental
Entity or other tax authority, or sent or provided to another party under
Applicable Law.
"Threshold Date" shall mean the Business Day on which the Company issues
to Purchasers (or Permitted Transferees) any shares of Common Stock that,
when added to the shares of Common Stock previously issued to Purchasers (or
Permitted Transferees) under the terms of this Agreement, results in the
ownership by Purchasers (and Permitted Transferees) of an aggregate of 20% or
more of the issued and outstanding shares of Common Stock on the Closing Date
(but excluding any shares of Common Stock issued to Purchasers or Permitted
Transferees on the Closing Date).
"Timeshare/Residential Business" shall mean the business of (i)
acquiring, developing, marketing, operating and financing vacation ownership
interests at resorts, (ii) acquiring residential land parcels and developing,
marketing and financing subdivided residential lots to retail customers, and
(iii) any other business incidental to any of the foregoing, whether or not
conducted by the Company or any Company Subsidiary on the Closing Date
including, without limitation, the title company business.
"Total Debt to Total Market Capitalization Ratio" means as of any
particular date, the ratio of (i) the Company's total Indebtedness (but
excluding any Indebtedness arising from pledged
7
or hypothecated receivables (land or timeshare) of the Company or any Company
Subsidiary) (less unrestricted cash of the Company) to (ii) the Company's
total market capitalization (i.e., market value of the issued and outstanding
Common Stock) plus the Company's total Indebtedness.
"Transfer" shall have the meaning as set forth in Section 4.07(a).
ARTICLE II.
SALE AND PURCHASE OF COMMON STOCK
Section 2.01. Sale and Purchase of the Common Stock. At the Closing,
subject to all of the terms and conditions of this Agreement, including the
satisfaction or waiver of the conditions set forth in Sections 5.01 and 5.02,
and in reliance upon the representations, warranties, covenants and agreements
of the parties set forth herein, the Company shall sell to Purchasers, and
Purchasers shall purchase from the Company, that number of shares of Common
Stock (which shall be a whole number of shares) equal to the Minimum Shares for
an aggregate purchase price equal to such number of shares of Common Stock to be
purchased multiplied by the Closing Share Price.
Section 2.02. Closing.
(a) Subject to the satisfaction or waiver of the conditions set forth
in Sections 5.01 and 5.02 of this Agreement, the purchase and sale of the
shares of Common Stock pursuant to Section 2.01 (the "Closing") shall take
place at the offices of ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to Purchasers, at
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, on August ___,
1998 (the "Closing Date"), or at such other time and place as may be mutually
agreed upon in writing by Purchasers and the Company.
(b) At the Closing, (i) the Company will deliver to Purchasers
certificates for the shares of Common Stock to be sold and issued in
accordance with the provisions of Section 2.01 registered in the respective
names and proportions set forth in a notice delivered by Purchasers to the
Company at least two Business Days prior to the Closing Date; (ii) Purchasers
shall deliver the aggregate purchase price for the shares to be sold and
issued and each Purchaser, in full payment for such shares of Common Stock,
will deliver to the Company in immediately available funds via wire transfer
to such account or accounts as the Company shall specify in writing to
Purchasers at least two Business Days prior to the Closing Date, an amount
equal to its pro rata share of the purchase price to be paid by such
Purchaser as set forth in the notice described in clause (i) above; and (iii)
each party shall take or cause to be taken such other actions, and shall
execute and deliver such other instruments or documents, as shall be required
under Article V hereof.
Section 2.03. Post-Closing Purchases.
(a) Subject to all of the terms and conditions of this Agreement,
including the satisfaction or waiver of the conditions set forth in Sections
5.03 and 5.04 hereof, the Company shall, at its election, sell to Purchasers,
and Purchasers shall purchase from the Company, at any
8
time and from time to time prior to expiration of the Commitment Period up to
an aggregate number of shares of Common Stock equal to the Maximum Shares
less the Minimum Shares (the "Remaining Shares") for a purchase price per
share equal to the Closing Share Price. In the event that the determination
of the number of shares of Common Stock to be issued at any Subsequent
Closing Date would result in a fractional share of Common Stock being issued
to Purchasers, such fractional share shall be rounded up to the next whole
number and such adjusted amount shall constitute the number of shares of
Common Stock to be issued to Purchasers on such Subsequent Closing Date. If
at any time the Company desires to sell and issue all or any portion of such
Remaining Shares to Purchasers and has obtained approval of the Board of
Directors to issue such Remaining Shares, the Company shall deliver a Notice
of Issuance to each Purchaser not less than 15 Business Days prior to the
proposed date of the sale and purchase set forth therein which shall set
forth the number of shares of Common Stock to be sold and purchased (which
shall have an aggregate minimum purchase price of $1,000,000 unless the
minimum purchase price of any Remaining Shares left after giving effect to
such purchase and sale shall be less than $1,000,000, in which case the
number of shares of Common Stock to be purchased and sold shall be all of the
unsold Remaining Shares), the aggregate purchase price thereof (which shall
be equal to such number of shares of Common Stock to be sold and purchased
multiplied by the Closing Share Price) and any other information required to
be stated therein. All such unsold Remaining Shares shall be sold and
purchased pursuant to not more than two Notices of Issuance per month each
for an aggregate minimum purchase price of $1,000,000 (or the remaining
amount in the case of the last sale and purchase) and shall be sold and
purchased prior to expiration of the Commitment Period. Purchasers'
obligations to purchase any of the Remaining Shares as requested by the
Company pursuant to a Notice of Issuance shall be subject to the satisfaction
or waiver of the conditions set forth in Section 5.03 of this Agreement.
(b) Purchasers shall purchase the number of Remaining Shares set forth
in a Notice of Issuance delivered to Purchasers on the day (which shall be a
Business Day and shall not be less than 15 Business Days after delivery of
the Notice of Issuance to such Purchaser) and at the location set forth
therein, or at such other time and place as may be mutually agreed upon in
writing by Purchasers and the Company. On each such date (each a "Subsequent
Closing Date"), (i) the Company will deliver to Purchasers certificates for
such Remaining Shares to be purchased registered in the respective names and
denominations set forth in a notice delivered by Purchasers to the Company at
least two Business Days prior to the Subsequent Closing Date, and (ii) the
Purchasers, in full payment for such Remaining Shares, will deliver to the
Company in immediately available funds via wire transfer to such account or
accounts as the Company shall specify in writing to Purchasers at least two
Business Days prior to the Subsequent Closing Date, an amount equal to the
purchase price to be paid by the Purchasers (which shall be equal to the
number of Remaining Shares to be purchased by the Purchasers on such
Subsequent Closing Date multiplied by the Closing Share Price).
(c) In the event that (i) on or prior to expiration of the Commitment
Period, the Company has not offered to sell to Purchasers all of the
Remaining Shares or (ii) Purchasers receive notice from the Company in
accordance with Section 4.06 hereof of the occurrence of, or the execution by
the Company of a definitive agreement which will result in a Change of
Control and the satisfaction or waiver of all conditions of closing (other
than the conditions
9
which can only be satisfied on the closing date of such transaction) required
under the terms of such definitive agreement, then, in each such case, and
subject to the satisfaction of the conditions set forth in Section 5.04,
Purchasers shall have the right, but not the obligation, to purchase any or
all Remaining Shares not sold to Purchasers as of such date at a purchase
price per share equal to the Closing Share Price, and the closing for the
sale and issuance shall take place within 15 Business Days following
expiration of the Commitment Period or receipt of the notice described in
clause (ii) above hereof, as the case may be. Notwithstanding the foregoing,
Purchasers' right to purchase any Remaining Shares upon expiration of the
Commitment Period under clause (i) above shall be subject to satisfaction of
either of the following conditions (which shall not be conditions to
Purchasers' right to purchase any Remaining Shares under clause (ii) above)
in addition to those set forth in Sections 5.03 and 5.04 hereof:
(i) the Company achieving total revenues of at least
$220,000,000 for the 12-month period ended on the last day of the third
full fiscal quarter after the Closing Date; or
(ii) the Company achieving net income (excluding write-offs) of
at least $15,000,000 for the 12-month period ended on the last day of the
third full fiscal quarter after the Closing Date.
Section 2.04. Use of Proceeds. The proceeds to be received by the
Company from the sale and issuance of any shares of Common Stock to Purchasers
hereunder shall be used for purposes of funding future acquisitions and
development plans, expanding the Company's operations, repaying existing
Indebtedness of the Company or any Company Subsidiary and such other items as
the Board of Directors may approve from time to time. Notwithstanding the
foregoing, the Company may utilize up to $34,000,000 of the proceeds for
purposes of funding the repurchase of all or any portion of the Company's 8.25%
convertible subordinated debentures due 2012 in accordance with the Company's
right to call such debentures and the holders' option to elect to receive cash
in lieu of shares of Common Stock as payment thereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of the Company. The
Company represents and warrants to, and agrees with, Purchasers as follows:
(a) Organization and Good Standing. The Company and each Company
Subsidiary is a corporation or partnership duly organized, validly existing
and in good standing under the laws of the jurisdiction in which it was
incorporated or organized and has all requisite power and authority
(corporate or otherwise) to own, operate and lease its properties and to
carry on its business as it is now being conducted. The Company and each
Company Subsidiary is duly licensed or qualified as a foreign corporation to
transact business and is in good standing under the laws of each other
jurisdiction in which its ownership or lease of assets or conduct
10
of its business requires such qualification, except where the failure to be
so licensed or qualified in any such jurisdiction would not have a Material
Adverse Effect.
(b) Authorization. The Company has full corporate power and authority
to enter into this Agreement and the Ancillary Documents and to consummate
the transactions contemplated hereby and thereby. The execution, delivery
and performance of this Agreement and each Ancillary Document and the
consummation of the transactions contemplated hereby and thereby have been
duly authorized by the Board of Directors of the Company. Other than as set
forth in Section 4.16, no shareholder approval or other corporate proceedings
on the part of the Company are necessary to authorize the execution, delivery
and performance of this Agreement and each Ancillary Document and the
transactions contemplated hereby and thereby. This Agreement has been, and on
or prior to the Closing Date each Ancillary Document will be, duly and
validly executed and delivered by the Company. This Agreement constitutes,
and upon its execution on or prior to the Closing Date each Ancillary
Document will constitute, a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights generally and to
general principles of equity.
(c) Capitalization. Schedule 3.01(c) sets forth as of the date hereof
(i) the authorized capital stock of the Company, the number of shares of each
class of capital stock issued and outstanding and the number of shares of
Common Stock reserved for issuance in connection with employee benefit, stock
option and dividend reinvestment plans, and (ii) all options, warrants,
convertible securities, subscriptions, scrip calls, contracts, undertakings,
arrangements and commitments to issue which may result in the issuance of
equity securities of the Company, in each case setting forth the identity
(which may be by class) of the holder thereof, the exercise or similar price
and the date of expiration or termination thereof. All of the issued and
outstanding shares of the Company's capital stock have been duly and validly
authorized and issued and are fully paid and non-assessable and have been
issued in compliance with all applicable requirements of law and are not
subject to any preemptive or similar rights. Other than as set forth in
Schedule 3.01(c) or pursuant to this Agreement, as of the date hereof (i)
there are no options, warrants, subscriptions, scrip calls, commitments or
other agreements which obligate the Company to issue, sell or transfer, or
repurchase, redeem or otherwise acquire any equity securities of the Company,
(ii) there are no outstanding securities or rights convertible into or
exchangeable for shares of any capital stock of the Company, and (iii) there
are no contracts, commitments, understandings or arrangements which obligate
the Company to issue additional shares of its capital stock or equity
securities or rights convertible into or exchangeable for shares of any
capital stock of the Company, or options, warrants or rights to purchase or
acquire any additional shares of its capital stock. Except as set forth in
Schedule 3.01(c), as of the date hereof, there are no contracts, agreements
or understandings between the Company and any Person granting such Person the
right to require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company owned or to be
owned by such Person or to require the Company to include such securities in
any other registration statement filed by the Company under the Securities
Act. The Company has duly and validly reserved from its issued and
outstanding shares of Common Stock the Maximum Shares. The shares of Common
Stock to be sold and issued to Purchasers during
11
the Commitment Period will, when issued to and paid for by Purchasers in
accordance with this Agreement, be duly and validly authorized and issued and
will be fully paid and non-assessable and will have been issued in compliance
with all applicable requirements of law and not be subject to any preemptive
or similar rights.
(d) Capitalization of Company Subsidiaries. Schedule 3.01(d) lists as
of the date hereof all Subsidiaries of the Company and their respective
jurisdictions of incorporation or formation (collectively, the "Company
Subsidiaries" and each individually a "Company Subsidiary"). Except as set
forth in Schedule 3.01(d), as of the date hereof the Company owns, directly
or indirectly, all the shares of outstanding capital stock of, or all
partnership interests in, each Company Subsidiary. Except as set forth on
Schedule 3.01(d), as of the date hereof there are no loans from the Company
to any Company Subsidiary or from any Company Subsidiary to the Company.
Except as set forth in Schedule 3.01(d), as of the date hereof (i) there are
no outstanding options, warrants, scrip calls, subscriptions, commitments or
other agreements which obligate any Company Subsidiary to issue, sell or
transfer, or repurchase, redeem or otherwise acquire any securities of such
Company Subsidiary, (ii) there are outstanding no securities or rights
convertible into or exchangeable for shares of any capital stock of, or
partnership interests in, any Company Subsidiary and (iii) there are no
contracts, commitments, understandings or arrangements which obligate any
Company Subsidiary to issue additional shares of its capital stock or
partnership interests or options, warrants or rights to purchase or acquire
any additional shares of its capital stock or partnership interests. All of
the issued and outstanding shares of capital stock of each of the Company
Subsidiaries are duly authorized, validly issued, fully paid and non-
assessable and have been issued in compliance with all applicable
requirements of law, and, as of the date hereof, except as set forth in
Schedule 3.01(d), are owned by the Company free and clear of any Lien,
preemptive rights, purchase options, purchase rights, calls, exchange rights
or other claims with respect thereto. Except as set forth in Schedule 3.01(d)
and for loans made to customers, including the Company Subsidiaries listed
therein, as of the date hereof none of the Company or the Company
Subsidiaries own directly or indirectly any interest or investment in any
corporation, partnership, joint venture, business, trust or Person (other
than investments in short-term investment securities).
(e) No Violation. Except as set forth in Schedule 3.01(e), the
execution, delivery and performance by the Company of this Agreement and the
Ancillary Documents, the consummation of the transactions by the Company
contemplated hereby and thereby and the compliance by the Company with any of
the provisions hereof and thereof will not conflict with, violate or result
in a breach of any provision of, require a Consent under, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of or accelerate
the performance required by, or result in a right of termination or
acceleration under, (i) any provision of the articles of organization,
certificate of incorporation, bylaws or other governing instrument of the
Company or any Company Subsidiary or (ii) (x) any mortgage, note, indenture,
deed of trust, lease, loan agreement, warrant, registration rights agreement
or other agreement or instrument binding on the Company or any Company
Subsidiary or (y) assuming that the clearances, filings, Consents and
approvals specified in Schedule 3.01(f) have been obtained or made and any
waiting period applicable thereto has expired or been terminated, any permit,
concession, grant, franchise,
12
license, judgment, order, decree, ruling, injunction, statute, law,
ordinance, rule, regulation or administrative position of any Governmental
Entity, self-regulating organization, securities exchange or securities
trading system or any other Person, in the case of (x) or (y), binding on or
otherwise applicable to the Company, the Company Subsidiaries or their
respective properties or assets, and the result of which could reasonably be
expected to have a Material Adverse Effect.
(f) Consents. Except as set forth in Schedule 3.01(f), no Consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required in connection with the execution,
delivery and performance of this Agreement and the Ancillary Documents by the
Company and the consummation of the transactions by the Company hereunder and
thereunder, including, without limitation, any required filings with the
Federal Trade Commission ("FTC") and the Department of Justice ("DOJ")
referred to in Section 4.01.
(g) Financial Statements; Absence of Undisclosed Liabilities.
(i) The Company has previously delivered to Purchasers copies of
(a) the consolidated balance sheet of the Company and the Company
Subsidiaries at March 30, 1997 and March 29, 1998, and the related
consolidated statements of operations, statements of shareholders' equity
and cash flows for the fiscal years ended March 31, 1996, March 30, 1997
and March 29, 1998, inclusive, as reported in the Company's Annual Report
on Form 10-K for the fiscal year ended March 29, 1998, filed by the
Company with the SEC under the Exchange Act, in each case accompanied by
the audit report of Ernst & Young LLP, independent public accountants of
the Company, and (b) the unaudited consolidated balance sheet of the
Company and the Company Subsidiaries at June 28, 1998 and the related
unaudited consolidated statement of operations, statements of
shareholders' equity and cash flows for the three month period then
ended. All of such financial statements fairly present the consolidated
financial position of the Company and the Company Subsidiaries as of the
dates shown and the results of the consolidated operations, statements of
shareholders' equity and cash flows of the Company and the Company
Subsidiaries for the respective fiscal periods or as of the respective
dates therein set forth, in each case subject, as to interim statements,
to changes resulting from year-end adjustments (none of which will be
material in amount and effect). All of such financial statements have
been prepared in accordance with GAAP consistently applied during the
periods involved, except as otherwise set forth in the notes thereto.
The Company has provided to Purchasers the fiscal year 1999 budget (for
the fiscal year ending March 31, 1999) of the Company which was prepared
in good faith and was based upon assumptions which the Company believed
were reasonable. Purchasers understand that the Company's actual results
may vary from the budget and no assurances can be given that the Company
will meet its projections. As of the date hereof, the Company is not
aware of any facts or circumstances which would cause the Company not to
attain the projections of aggregate sales and net income set forth in the
1999 budget.
(ii) As of the date hereof and except as otherwise contemplated
by this Agreement, the Company and the Company Subsidiaries have no
liabilities or obligations
13
of any nature (absolute, accrued, contingent or otherwise) whether due or
to become due, which are not fully reflected or reserved against in the
balance sheet as of June 28, 1998 included in such financial statements,
except for liabilities that may have arisen in the ordinary course of
business and consistent with past practice and that, either individually
or in the aggregate, do not have and could not reasonably be expected to
have a Material Adverse Effect.
(h) Securities Filings. The Company has filed all reports,
registration statements, proxy statements, schedules, forms and other
documents, together with any amendments and supplements required to be made
with respect thereto, that were required to be filed with (i) the SEC under
the Securities Act or the Exchange Act and (ii) any applicable state
securities authorities (all such reports, statements, schedules, forms and
other documents are referred to herein collectively as the "Securities
Filings"). As of their respective dates, the Securities Filings, including
any financial statements contained therein, complied in all material respects
with all of the rules and regulations of the SEC promulgated under the
Securities Act or the Exchange Act and of any other regulatory authority with
which they were filed, and, except as disclosed on Schedule 3.01(h), none of
the Securities Filings contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading and were complete and accurate in all
material respects. Except for general market and economic conditions
applicable to the Company's industries in general, there are no facts known
to the Company existing as of the date hereof peculiar to the Company or any
Company Subsidiary which the Company has not disclosed in the Securities
Filings or to Purchasers or their counsel in writing which, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(i) Compliance with Applicable Law. Neither the Company nor any
Company Subsidiary is in breach of, default under, or violation of its
Restated Articles of Organization, certificate of incorporation, bylaws or
other governing instrument or any law, statute, order, rule, regulation,
policy or guideline of any Governmental Entity applicable to the Company or
any Company Subsidiary, other than such defaults or violations which, either
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect. The business of the Company and of each Company
Subsidiary has been, and is currently being, conducted in compliance with all
Applicable Laws of any Governmental Entity, including, without limitation,
state condominium statutes, state time share statutes, the Federal Trade
Commission Act, the Truth-in-Lending Act and Regulation Z promulgated
thereunder, the Fair Housing Act, the Fair Debt Collection Practices Act, the
Equal Credit Opportunity Act and Regulation B promulgated thereunder, the
Interstate Land Sales Full Disclosure Act, the Home Mortgage Disclosure Act
and Regulation C promulgated thereunder, the Civil Rights Acts of 1964 and
1968, building codes, land use laws, environmental laws, federal and state
telemarketing laws, and seller of travel or travel agency laws, except where
the failure to comply, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
(j) Legal Proceedings. There are no legal, administrative, arbitration
or other proceedings, claims, actions, inquiries or governmental
investigations of any nature pending
14
against the Company or any Company Subsidiary as of the date hereof or to
which the Company or any Company Subsidiary or any of their assets are
subject as of the date hereof that were required to be disclosed in the
Securities Filings which were not so disclosed, and, to the knowledge of the
Company, there has not been threatened any such proceeding, claim, action,
inquiry or governmental investigation against the Company or any Company
Subsidiary, in each case which, either individually or in the aggregate,
would, if adversely determined, have a Material Adverse Effect. Except as set
forth in Schedule 3.1(j), as of the date hereof, neither the Company nor any
Company Subsidiary is subject to any outstanding order, writ, judgment,
injunction, or decree of any Governmental Entity.
(k) Employee Benefits.
(i) Each "employee benefit plan" (within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and any other material employee plan, agreement or arrangement
that is maintained or otherwise contributed to by the Company or the
Company Subsidiaries for the benefit of their employees (collectively,
"Company Plans") has been administered and is in material compliance with
the terms of such plan and all Applicable Laws. Each of the Company
Plans (including amendments thereto) in existence as of the date hereof
is fully described in or has been included as an exhibit to the
Securities Filings or is otherwise set forth in Schedule 3.01(k).
(ii) As of the date hereof, there are no pending or, to the
knowledge of the Company, threatened, actions, claims or lawsuits which
have been asserted or instituted involving or arising out of the Company
Plans, with respect to the operation or administration of such plans
(other than routine benefit claims).
(iii) Neither the Company nor any Company Subsidiary has
incurred, and no event has occurred which would be reasonably likely to
result in, any material unfunded liability under ERISA or the Code with
respect to any Company Plan (other than routine expenses related to
administration of the Company Plans and payment of routine benefit
claims), including, but not limited to, liability resulting from a
complete or partial withdrawal from a multiemployer plan within the
meaning of Section 3(37) of ERISA or a termination of a Company Plan
which is covered by Title IV of ERISA, but which is not a multiemployer
plan.
(iv) No Company Plan exists which could result in the payment to
any employee of the Company or any Company Subsidiary of any money or
other property or rights or accelerate or provide any other rights or
benefits to any such employee as a result of the transaction contemplated
by this Agreement, whether or not such payment would constitute a
parachute payment within the meaning of Section 280G of the Code.
(v) As of the date hereof, neither the Company nor any Company
Subsidiary contributes to or is obligated to contribute to, or has
contributed to or has been obligated within the past five years to
contribute to, any multiemployer plan within the meaning of Section 3(37)
of ERISA.
15
(vi) Except as disclosed in the Securities Filings or set
forth on Schedule 3.01(k), as of the date hereof, neither the Company nor
any Company Subsidiary maintains any plans or programs providing post-
retirement medical benefits (except as required by law), death benefits
or other post-retirement welfare benefits.
(vii) The Internal Revenue Service has issued a letter for each
Company Plan existing as of the date hereof that is intended to be
qualified under Section 401(a) of the Code, determining that such plan is
so qualified and is exempt from tax under Section 501(a) of the Code, and
nothing has occurred since the date of such determination letter that has
adversely affected such qualification.
(l) Absence of Certain Changes. Except as set forth in the Securities
Filings or on Schedule 3.01(l), since March 29, 1998 and through the date
hereof, the business of the Company and each Company Subsidiary has been
operated in the ordinary course of business and consistent with past practice
and, except as set forth in the Securities Filings or in Schedule 3.01(l) or
as specifically provided in this Agreement or the Ancillary Documents:
(i) except for circumstances affecting the Company's industry
generally, there has been no event, condition or change that individually
or in the aggregate has had or could reasonably be expected in the
foreseeable future to have a Material Adverse Effect;
(ii) neither the Company nor any Company Subsidiary has sold
or transferred any of the assets it owns except in the ordinary course of
business and consistent with past practice (it being understood that the
sale of receivables is in the ordinary course);
(iii) neither the Company nor any Company Subsidiary has
incurred any Indebtedness other than Indebtedness (x) to sellers of real
property and to trade creditors incurred in the ordinary course of
business and consistent with past practice, (y) under the Senior Notes,
and (z) under the existing credit facilities with ▇▇▇▇▇▇ Financial, Inc.,
Foothill Capital Corporation and Finova Capital Corporation;
(iv) neither the Company nor any Company Subsidiary has
changed its accounting policies or procedures as in effect on March 29,
1998;
(v) except as contemplated by this Agreement, neither the
Company nor any Company Subsidiary has amended or in any way altered its
Restated Articles of Organization, certificate of incorporation, bylaws,
partnership agreement or other governing document (provided that the
foregoing shall not apply to the reorganization and restructuring of
certain Company Subsidiaries on the terms previously disclosed to
Purchasers);
(vi) the Company has not (A) changed the number of shares of
authorized capital stock of the Company, (B) except as contemplated by
this Agreement, issued or granted any option, warrant, call, commitment,
subscription, right to purchase or
16
agreement of any character relating to the authorized or issued and
outstanding capital stock of the Company or any Company Subsidiary, or
any securities convertible into shares of such stock (except for grants
of options to purchase Common Stock approved by the Company's Board of
Directors to be granted pursuant to director or employee benefit plans of
the Company), (C) split, combined or reclassified any shares of the
capital stock of the Company, (D) declared, set aside or paid any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of the capital stock of the Company, or
(E) redeemed or otherwise acquired any shares of such capital stock;
(vii) the Company has not increased the number of directors of
the Board other than as required by Section 4.10 hereof;
(viii) neither the Company nor any Company Subsidiary has
acquired any real estate assets, or any other assets other than in the
ordinary course of business and consistent with past practice;
(ix) neither the Company nor any Company Subsidiary has
entered into employment agreements with any employee (other than an
agreement terminable at will without any financial penalty), or granted
any increase in the compensation (including employee benefits) of any
employee, except for increases (A) in the ordinary course of business and
consistent with past practice, (B) as a result of collective bargaining
or (C) as required by any employment or other agreement, policy or plan
currently in effect; and
(x) neither the Company nor any Company Subsidiary has
agreed, whether in writing or otherwise, to take any action that, if
taken, would render any of the representations set forth in this Section
3.01(l) untrue in any material respect.
(m) Disclosure. Neither this Agreement nor any Ancillary Document nor
any certificate or disclosure statement delivered by or on behalf of the
Company or the Company Subsidiaries prior to the date hereof, nor any other
written materials delivered by the Company to Purchasers prior to the date
hereof in connection with the transactions contemplated hereby and identified
in Schedule 3.01(m), as of the date thereof contained any untrue statement of
a material fact or omitted to state a material fact necessary in order to
make the statements contained herein and therein, in light of the
circumstances under which they were made, not misleading. Other than
competitive factors and economic conditions affecting the Company's industry
generally, there are no facts known to the Company existing as of the date
hereof which the Company has not disclosed to Purchasers or their counsel in
writing which would cause any of the materials described in Schedule 3.01(m)
to contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements contained therein, in light of
the circumstances under which they were made, not misleading.
(n) Securities Law Matters. None of the Company, the Company
Subsidiaries or any of their respective Affiliates or any other Person acting
on their behalf has, in connection with the offer and sale of the Common
Stock hereunder, engaged in (a) any form of general solicitation or general
advertising (as those terms are used within the meaning of Rule 502(c) under
the Securities Act), (b) assuming the accuracy of Purchasers' representations
in
17
Section 3.02(d), any action involving a public offering within the meaning
of Section 4(2) of the Securities Act, or (c) assuming the accuracy of
Purchasers' representations in Section 3.02(d), and compliance by Purchasers
and the Permitted Transferees with the terms hereof, any action that would
require the registration under the Securities Act of the offering and sale of
the Common Stock pursuant to this Agreement or that would violate applicable
state securities or "blue sky" laws. The Company has not made and will not
make, directly or indirectly, any offer or sale of Common Stock of the same
or similar classes as the Common Stock if, as a result of such offer or sale,
the offer and sale of the Common Stock contemplated hereby could fail to be
entitled to exemption from the registration requirements of the Securities
Act. As used herein, the terms "offer" and "sale" have the meanings
specified in Section 2(3) of the Securities Act.
(o) Brokers and Finders. Except in connection with the "fairness
opinion" obtained by the Company in connection with the transactions
contemplated hereby, neither the Company nor any Company Subsidiary nor any
of their respective officers, directors, Affiliates, employees or agents has
utilized any broker, finder, placement agent or financial advisor or incurred
any liability for any fees or commissions in connection with any of the
transactions contemplated hereby or by the Ancillary Documents except as
provided in this Agreement.
(p) Licenses and Permits. The Company and the Company Subsidiaries
possess all material licenses, franchises, permits, certificates, Consents,
orders, approvals and authorizations (collectively, the "Permits") and have
made all declarations and filings with all Governmental Entities necessary
under law or otherwise to conduct their businesses as currently being
conducted, and each such Permit is valid and subsisting and in full force and
effect, except where the failure to possess or do any of the foregoing could
not reasonably be expected to have a Material Adverse Effect. No
negotiation, application, action or proceeding is pending for the renewal or
modification of any material Permits which in any case could reasonably be
expected to have a Material Adverse Effect, and no application, petition,
objection, opposition, action or proceeding is pending or, to the knowledge
of the Company, threatened that may result in the denial of an application
for renewal, revocation, modification, nonrenewal or suspension of any
Permit, the issuance of a cease-and-desist order, or the imposition of any
administrative or judicial sanction with respect to the Company or the
Company Subsidiaries which in any case could reasonably be expected to have a
Material Adverse Effect. The Timeshare/Residential Business of the Company
and the Company Subsidiaries is being operated in accordance with all
applicable Permits, except where the failure to comply could not reasonably
be expected to have a Material Adverse Effect.
(q) Material Agreements. Each contract, agreement, understanding,
arrangement and commitment (the "Contracts") which is existing on the date
hereof and is Material to the business, results of operations, financial
condition, prospects or operations of the Company and the Company
Subsidiaries is described in or has been included as an exhibit to the
Securities Filings or is otherwise set forth on Schedule 3.01(q), including,
without limitation, all Contracts for Indebtedness. A true and correct copy
of each Contract set forth in Schedule 3.01(q) has been delivered or made
available to Purchasers including, without limitation, all amendments and
supplements thereto and any schedules and exhibits attached thereto. For
purposes of this Section 3.01(q), a Contract is deemed "Material" if such
Contract (i) has a maturity of one year
18
or more and (ii) involves (or could reasonably be expected to involve) (x) in
the case of any Contracts for the sale or purchase of any real property or
timeshare inventory or any Contracts relating to construction or renovation
or capital expenditures or capital additions or improvements, a dollar amount
in excess of $2,000,000 per annum or (y) in the case of any other Contracts
not described in (x), a dollar amount in excess of $1,000,000 per annum. Each
Contract referred to above and existing on the date hereof is a valid,
binding and enforceable agreement of the Company or a Company Subsidiary and,
no event has occurred that has caused, or with the passage of time or giving
of notice would cause, nor has the execution of this Agreement caused, or
will the transactions contemplated under this Agreement cause the Company or
any Company Subsidiary to be in default under a material provision, or give
rise to a right of acceleration, or termination under any Contract, the
result of which could reasonably be expected to have a Material Adverse
Effect.
(r) Properties and Insurance.
(i) The Securities Filings or Schedule 3.01(r)(i) set forth
all of the material real property directly or indirectly owned or leased
by the Company and the Company Subsidiaries as of the date hereof. Each
of the Company and each Company Subsidiary has good and marketable title
in fee simple to all such Company Property owned by it and good and valid
title to all personal property owned by it that is material to its
business, in each case, free and clear of all Liens other than the
Permitted Liens, those Liens disclosed on Schedule 3.01(r)(i) and those
Liens which would not, either individually or in the aggregate, have a
Material Adverse Effect. The Company and the Company Subsidiaries have in
full force and effect property damage, liability and other insurance with
financially sound and reputable insurers at levels of coverage reasonable
and customary in the Company's industry and, as of the date hereof, there
is no material claim by the Company or any Company Subsidiary pending
under any such insurance policies as to which coverage has been
questioned, denied or disputed by the underwriters of such policies.
Except as set forth in Schedule 3.01(r), policies of title insurance
(issued on customary American Land Title Association forms) have been
issued by national title insurance companies insuring the fee simple
title of the Company or the Company Subsidiaries, as the case may be, to
each of the Company Properties in amounts at least equal to the original
cost thereof subject only to Permitted Liens, such policies are in full
force and effect and no claim has been made under any such policy, and
the Company is not aware of any fact or information which would
constitute a defense by the issuer of any such policy or an exclusion
from coverage, except where the failure to have such insurance could not
reasonably be expected to have a Material Adverse Effect. True and
correct copies of all such policies together with all exceptions
referenced therein have been made available by the Company to Purchasers.
(ii) Except as set forth in Schedule 3.01(r)(ii), as of the
date hereof, there is no uninsured physical damage to any Company
Property in excess of $50,000. Except as set forth in Schedule
3.01(r)(ii), as of the date hereof each improved Company Property is in
good operating condition and repair and is structurally sound and free of
defects, with no alterations or repairs being required thereto under
Applicable Laws or insurance company requirements and consists of
sufficient land, parking areas, driveways and other
19
improvements and lawful means of access and utility service and capacity
to permit the use thereof in the manner and for the purposes for which it
is presently devoted, except where the failure of any of the foregoing
could not reasonably be expected to have a Material Adverse Effect. The
Company has made available to Purchasers true and complete copies of all
engineering reports, inspection reports, maintenance plans and other
documents relating to the condition of any Company Property prepared for
the Company or otherwise in the Company's or a Company Subsidiary's
possession.
(iii) Except as set forth in Schedule 3.01(r)(iii), and except
as could not either individually, or in the aggregate, reasonably be
expected to have a Material Adverse Effect, (A) no condemnation, eminent
domain or rezoning proceedings are pending or threatened with respect to
any of the Company Properties; (B) no road widening or change of grade of
any road adjacent to any Company Property is underway or has been
proposed; (C) there is no proposed change in the assessed value of any
Company Property; (D) no special assessment has been made or threatened
against any Company Property; and (E) no Company Property is subject to
any "impact fee" or to any agreement with any Governmental Entity to pay
for sewer extension, oversizing utilities, lighting or like expenses or
charges for work or services by such Governmental Entity.
(iv) Each of the Company Properties is an independent unit
which does not rely on any facilities located on any property not
included in such Company Property to fulfill any municipal or
governmental requirement or for the furnishing to such Company Property
of any essential building systems, utilities or customary amenities,
other than facilities the benefit of which inures to the Company
Properties pursuant to one or more valid easements, or facilities which
are located on or abutting Company Properties and are sufficient to serve
more than one property adequately and lawfully. Each of the improved
timeshare Company Properties is served by public water and sanitary
systems and all other utilities, and each of the improved timeshare
Company Properties has lawful access to public roads, in all cases
sufficient for the current use and occupancy of each Company Property.
All parcels of land included in each Company Property that purport to be
contiguous are contiguous and are not separated by strips, gaps or gores.
No improvements constituting a part of any Company Property encroach on
real property not constituting a part of such Company Property or an
abutting Company Property except where such encroachments could not
reasonably be expected to have a Material Adverse Effect.
(v) The Company has made available to Purchasers each survey,
study or report prepared by or for the Company or any Company Subsidiary
in connection with any Company Property's compliance or non-compliance
with the requirements of the Americans with Disabilities Act (the "ADA"),
other than routine correspondence and memoranda.
(vi) Schedule 3.01(r)(vi) sets forth a complete and accurate
list of all Material (as defined in Section 3.01(q) of this Agreement)
commitments, letters of intent, agreements, or similar written
understandings existing as of the date hereof made or entered into by the
Company or any Company Subsidiary to sell, mortgage, pledge or
20
hypothecate any Company Property or to otherwise enter into a Material
(as defined in Section 3.01(q) of this Agreement) transaction in respect
of the ownership or financing of any Company Property or to purchase or
acquire an option, right of first refusal or similar right in respect of
any real property, which has not yet been reduced to a written contract.
The Company has made available to Purchasers a true and correct copy of
each such Material commitment, letter of intent or other understanding.
(vii) Except as restricted by the existing credit facilities
with ▇▇▇▇▇▇ Financial, Inc., Finova Capital Corporation and Foothill
Capital Corporation and by the Senior Notes and except as set forth in
Schedule 3.01(r)(vii), as of the date hereof, the Company and Company
Subsidiaries have the right to sell, transfer, lease, and finance,
without limitations, the Company Properties.
(viii) The Company has provided to Purchasers a capital
expenditure budget for each Material Company Property set forth in the
Securities Filings which describes the capital expenditures which the
Company has budgeted for such Company Property for the period ending
March 31, 1999. The Company believes, as of the date hereof, that the
costs and the schedules set forth therein are reasonable estimates and
projections. Purchasers understand that the Company's actual results may
vary from the budget and no assurances can be given that the Company will
meet its projections. As of the date hereof, the Company is not aware of
any facts or circumstances which would cause the Company to exceed the
capital expenditure budget in the aggregate.
(ix) The Securities Filings or Schedule 3.01(r)(i) disclose
each material Company Property and Schedule 3.01(r)(ix) contains a list
of each property which, as of the date hereof, the Company has under
letter of intent or option which is Material (as defined in Section
3.01(q) of this Agreement), which consists of or includes a material
amount of undeveloped land or which is intended to be or is in the
process of being developed or materially rehabilitated ("Development
Properties") and a brief description of the development or material
rehabilitation intended by the Company or any Company Subsidiary to be
carried out or completed therein (collectively, the "Projects"). Each
Development Property is zoned for the lawful development thereon of the
Project. The Company has obtained, or has no reason to believe it will
not be able to obtain in the ordinary course of business, all Permits,
licenses, Consents and authorizations required for the lawful development
or rehabilitation thereon of such Project, except where the failure to
obtain such Permits, licenses, Consents and authorizations could not
reasonably be expected to have a Material Adverse Effect. The Company has
made available to Purchasers all feasibility studies, soil tests, due
diligence reports and other studies, tests or reports performed by or for
the Company, or otherwise in the possession of the Company, which relates
to the Development Properties.
(s) Taxes. Each of the Company and each Company Subsidiary has filed
all federal, state and local income and franchise Tax Returns which are
required to be filed and all such Tax Returns are correct and complete in all
material respects. The Company and each Company Subsidiary has paid all
Taxes shown thereon to be due and all other taxes and assessments known to
the Company or any such Company Subsidiary to be payable by it,
21
except to the extent the same have become due and payable but are not yet
delinquent or to the extent the same are being contested in good faith and
except to the extent any such failure would not have a Material Adverse
Effect. To the extent that Tax liabilities and assessments have accrued but
have not yet become payable, such Tax liabilities have been adequately
reflected as liabilities on the books of the Company and the Company
Subsidiaries and adequate reserves have been established for the payment
thereof. Schedule 3.01(s) sets forth the fiscal year through which the
consolidated Federal Income Tax Returns of the Company and the Company
Subsidiaries have been examined and reported on by the Internal Revenue
Service. To the Company's knowledge, there exists no dispute with the
Internal Revenue Service with respect to the consolidated Federal Income Tax
Returns of the Company and the Company Subsidiaries which, if adversely
determined, would have a Material Adverse Effect. Except as set forth on
Schedule 3.01(s), the Company is not subject to any audit by any Governmental
Entity with regard to any Tax nor has any Governmental Entity asserted
against the Company any liability for any Tax due and payable, but not paid,
the result of which, if adversely determined, could reasonably be expected to
have a Material Adverse Effect. As of the date hereof, none of the Company
and the Company Subsidiaries (i) has been a member of an affiliated group
filing a consolidated federal income tax return (other than a group the
common parent of which is the Company), or (ii) has any liability for the
taxes of any Person (other than any taxes of the Company and the Company
Subsidiaries) under Treasury Regulation (S) 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract or otherwise.
(t) Environmental Matters.
(i) Each of the Company and each Company Subsidiary has
obtained, and now is in compliance with and maintains as currently valid
and effective all permits required under the Environmental Laws (the
"Environmental Permits") in connection with the operation of its
businesses and properties, all of which Environmental Permits are listed
in Schedule 3.01(t), except where the failure to do any of the foregoing
could not reasonably be expected to have a Material Adverse Effect.
Except as disclosed in the Conclusions sections of the Company
Environmental Reports, each of the Company and each Company Subsidiary,
and each property of the Company and the Company Subsidiaries is, has
been, and will be in compliance with all terms and conditions of the
Environmental Permits and all Environmental Laws, except where the
failure to do any of the foregoing could not reasonably be expected to
have a Material Adverse Effect.
(ii) Each of the Company and each Company Subsidiary has
provided to Purchasers all written information and written communications
(whether from a Governmental Entity, citizens' group, tenant, employee or
other person) prepared or received by them or in its possession or
control as of the date hereof regarding (x) alleged or suspected
noncompliance in any material respect of any of the Company Properties
with any Environmental Laws or Environmental Permits or (y) alleged or
suspected material liability of the Company or the Company Subsidiaries
under any Environmental Law.
(iii) There are no environmental Liens, encumbrances or
restrictions on any of the Company Properties and, to the Company's
knowledge, no actions by any
22
Governmental Entity or by any Persons have been, or are in process of
being, taken which are reasonably likely to subject any Company Property
to such Liens, encumbrances or restrictions, except for such Liens,
encumbrances or restrictions which, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(iv) No Environmental Claim with respect to the operations or
the businesses of the Company or the Company Subsidiaries, or with
respect to any Company Properties, has been asserted or, to the Company's
knowledge, threatened, and no circumstances exist with respect to the
Company or the Company Subsidiaries or the Company Properties that would
reasonably be expected to result in any liability or any Environmental
Claim being asserted, in any such case, against (i) the Company or the
Company Subsidiaries, or (ii) any Person whose liability for any
Environmental Claims the Company or the Company Subsidiaries has or may
have retained or assumed contractually, by operation of law or otherwise,
except any Environmental Claim which, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(v) Except as disclosed in Schedule 3.01(t) or set forth in
the Conclusions sections of the Company Environmental Reports and except
for events or circumstances which could not reasonably be expected to
have a Material Adverse Effect, (i) no generation, storage, handling,
disposal, treatment, spillage or release of Hazardous Substances in
violation of any law has occurred or is occurring on the Company
Properties, whether conducted or caused by Company or the Company
Subsidiary, their predecessors, tenants or any other parties, and none of
the Company or the Company Subsidiaries has been notified or anticipates
being notified of potential responsibility in connection with any such
activity or with any site that has been placed on, or proposed to be
placed on, the National Priorities List or its state or foreign
equivalents pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C. (S)(S) 9601 et seq.,
or analogous state or foreign laws, (ii) no Hazardous Substances are
present on, in or under any Company Property in a manner or condition
that is reasonably likely to give rise to an Environmental Claim, (iii)
none of the Company or the Company Subsidiaries has released or arranged
for the release of any Hazardous Substances at any location, (iv) no
underground storage tanks, above-ground storage tanks, surface
impoundments, disposal areas, pits, ponds, lagoons, open trenches or
disused industrial equipment are present at any Company Property, (v) no
transformers, capacitators, ballasts or other equipment containing
polychlorinated biphenyls (PCBs) are present at any Company Property,
except for any such transformers, capacitors, ballasts or other equipment
owned by any utility company, and (vi) no asbestos or asbestos-containing
material, no radon, no lead-based paint and no lead in drinking water is
present at any Company Property and no employee, agent, contractor or
subcontractor of the Company or the Company Subsidiaries is now or has in
the past been exposed to friable asbestos or asbestos-containing
material, radon, lead-based paint or lead in drinking water at the
Company Property.
(vi) The Company has provided Purchasers access to true and
complete copies of all existing Phase I environmental reports, Phase II
environmental reports, and
23
all other reports, materials and data prepared by or for the Company or
the Company Subsidiaries or otherwise in the possession of any of them
with respect to the environmental condition of any Company Property owned
as of the date hereof (collectively, the "Company Environmental
Reports").
(vii) For purposes hereof, the terms listed below shall have
the following meanings:
(A) "Environmental Claim" shall mean any investigation or
notice (written or oral) or claims by any person including, without
limit, any Government Entity, neighbors, employees and tenants,
alleging potential liability (including potential liability for
investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries or
fatalities, or penalties) arising out of, based on or resulting from
(I) the presence, generation, transportation, treatment, use, storage,
disposal or release of Hazardous Substances or the threatened release
of Hazardous Substances at any location, or (II) activities or
conditions forming the basis of any violation, or alleged violation of,
or liability or alleged liability under, any Environmental Law.
(B) "Environmental Laws" shall mean federal, state, local,
provincial, municipal and foreign laws, ordinances, principles of
common law, rules, bylaws, orders, governmental policies, statutes,
regulations, agreements and treaties relating to the pollution or
protection of the environment or of flora or fauna or their habitat or
of human health and safety, or to the cleanup or restoration of the
environment, including, but not limited to, any laws relating to (I)
generation, treatment, storage, disposal or transportation of wastes,
emissions or discharges or protection of the environment from the
same, (II) exposure of Persons to, or release or threat of release of,
Hazardous Substances, and (III) the safety and health of workers and
employees.
(C) "Hazardous Substances" shall mean all chemicals,
pollutants, contaminants, wastes, toxic substances, petroleum or any
fraction thereof, petroleum products, asbestos, radon and hazardous
substances (as defined in Section 101(14) of CERCLA, 42 U.S.C. (S)(S)
6601(14)), or solid or hazardous wastes as now defined and regulated
under any Environmental Laws .
(u) Absence of Certain Business Practices. Neither the Company nor
any Company Subsidiary nor, to the Company's knowledge, any officer or
director purporting to act on behalf of the Company or any Company Subsidiary
has at any time: (i) made any contributions to any candidate for political
office, or failed to disclose fully any such contributions, in violation of
law, (ii) made any payment of funds to, or received or retained any funds
from, any state, federal or foreign governmental officer or official, or
other person charged with similar public or quasi-public duties, other than
payments required or allowed by Applicable Law, (iii) violated or is in
violation of any provision of the Foreign Corrupt Practices Act of 1977, (iv)
made any bribe, rebate, payoff, influence payment, kickback or other unlawful
24
payment or (v) engaged in any material transaction, maintained any bank
account or used any material amount of corporate funds except for
transactions, bank accounts and funds which have been and are reflected in
the normally maintained books and records of the Company and the Company
Subsidiaries.
(v) Books of Account; Company Charter and Bylaws.
(i) The books of account and other financial records of the
Company and each Company Subsidiary are in all material respects true and
complete, have been maintained in accordance with good business
practices, and are accurately reflected in all material respects in the
financial statements included in the Securities Filings.
(ii) The Company has previously delivered or made available to
Purchasers true and complete copies of the Restated Articles of
Organization and bylaws of the Company, as amended, and the charters,
bylaws, partnership agreements, joint venture agreements or other
governing documents of each Company Subsidiary, in each case, as amended
through the date hereof.
(iii) The minute books and other corporate records of the
Company and each Company Subsidiary have been made available to
Purchaser, contain in all material respects accurate records of all
meetings held prior to the date hereof and accurately reflect in all
material respects all other corporate action of the shareholders and
board of directors and any committees of the board of directors of the
Company and the Company Subsidiaries which are corporations and all
actions of the partners of the Company Subsidiaries which are
partnerships or joint ventures, through the date hereof.
(w) Operating Company Status. The Company is primarily engaged,
directly or through majority-owned Company Subsidiaries, in the production or
sale of a product or service other than the investment of capital, within the
meaning of the plan assets regulations issued by the Department of Labor (29
C.F.R. (S) 2510.3-101).
(x) HSR Compliance. As of the date hereof, all assets of the Company
and the Company Subsidiaries on a consolidated basis which do not constitute
(a)(i) real property that is used primarily for office or residential
purposes, including a vacation ownership interest in a resort, or (ii) assets
incidental to the ownership of such real property, in either case, within the
meaning of Section 802.2(d) of the Rules, Regulations and Interpretations
under the HSR Act (the "HSR Rules"), or (b) a hotel or motel (other than a
hotel or motel that includes a gambling casino), improvements to any such
hotel or motel, including golf, swimming, tennis, restaurant, health club or
parking facilities (but excluding ski facilities) or assets incidental to the
ownership of any such hotel or motel, within the meaning of Section 802.2(e)
of the HSR Rules or (c) real property used primarily as a golf course or a
swimming or tennis club facility or assets incidental to the ownership of any
such property, within the meaning of Section 802.2(b) of the HSR Rules
(collectively, "Non-Exempt Assets"), do not have a value in excess of
$15,000,000.
25
Section 3.02. Representations and Warranties of Purchasers. The
Purchasers, jointly and severally, represent and warrant to, and agree with, the
Company as follows:
(a) Organization. Each Purchaser is a limited partnership validly
existing and in good standing under the laws of its jurisdiction of
organization. Each Purchaser has a term continuing until at least December
31, 2007 and the Purchasers have sufficient capital to satisfy their
obligations under this Agreement.
(b) Authorization; No Conflicts. Each Purchaser has full power and
authority to enter into this Agreement and the Ancillary Documents to which
it is a party and to consummate the transactions hereby and thereby. The
execution, delivery and performance by each Purchaser of this Agreement and
the Ancillary Documents to which it is a party and the consummation of the
transactions contemplated hereby and thereby have been authorized by all
necessary action on the part of Purchasers. This Agreement has been, and on
or prior to the Closing Date the Ancillary Documents to which each Purchaser
is a party will be, executed and delivered by such Purchaser and this
Agreement is, and upon the execution on or prior to the Closing Date the
Ancillary Documents to which each Purchaser is a party will be, the valid
and binding obligation of such Purchaser, enforceable against it in
accordance with its terms subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights generally and to general principles of equity. The
execution, delivery and performance by each Purchaser of this Agreement and
the Ancillary Documents to which it is a party, and the consummation of the
transactions contemplated hereby and thereby and the compliance by each
Purchaser with any of the provisions hereof and thereof will not conflict
with, violate or result in a breach of any provision of, require a Consent
under, or constitute a default (or an event, which, with notice or lapse of
time or both, would constitute a default) under, (i) any organizational
document of any Purchaser or (ii) any mortgage, note, indenture, deed of
trust, lease, loan agreement or other agreement or instrument of any
Purchaser, or (iii) assuming that the clearances, filings, Consents and
approvals specified in Schedule 3.01(d) have been obtained or made and any
waiting period applicable thereto has expired or been terminated, any permit,
concession, grant, franchise, license, judgment, order, decree, ruling,
injunction, statute, law, ordinance, rule or regulation binding or applicable
to any Purchaser or its respective properties or assets.
(c) Consents and Approvals. Except as set forth in Schedule 3.01(f),
no Consent, approval, order or authorization of, or registration, declaration
or filing with, any Governmental Entity is required on the part of Purchasers
in connection with the execution, delivery and performance by each Purchaser
of this Agreement and the Ancillary Documents to which it is a party and the
consummation of the transactions hereby and thereby.
(d) Investment Intent; Suitability. Each Purchaser is acquiring the
Common Stock solely for its own account for investment and not with a view to
any distribution thereof in violation of the Securities Act. Each Purchaser
is an "accredited investor" as such term is defined in Rule 501 under the
Securities Act. No Purchaser shall Transfer any Common Stock or other
securities acquired pursuant to this Agreement except in compliance with all
Applicable Law.
26
(e) Investigation by Purchasers. Each Purchaser acknowledges that it
has had an opportunity to ask questions of and receive answers from the
Company regarding the Company and the Company Subsidiaries and their
respective businesses, assets, results of operations and financial condition
and the terms and conditions of the issuance of the Common Stock.
Notwithstanding anything contained herein to the contrary, no investigation
by Purchasers shall in any way affect Purchasers' right to rely upon the
Company's representations, warranties and covenants contained herein.
(f) Investment Experience. Each Purchaser (a) has such knowledge,
experience and skill in evaluating and investing in common stocks and other
securities, based on actual participation in financial, investment and
business matters, so that it is capable of evaluating the merits and risks of
an investment in the Common Stock, (b) has such knowledge, experience and
skill in financial and business matters that it is capable of evaluating the
merits and risks of investment in the Company and the suitability of the
Common Stock as an investment, and (c) can bear the economic risk of an
investment in the Common Stock. Each Purchaser understands that an
investment in the Common Stock on the terms set forth in this Agreement is
speculative and involves certain risks and uncertainties. Each Purchaser has
(i) received a copy of the Offering Memorandum dated March 27, 1998 relating
to the Senior Notes and reviewed the "Risk Factors" set forth therein and
(ii) reviewed the Securities Filings.
(g) Brokers and Finders. None of the Purchasers nor any of their
officers, directors, employees, Affiliates or agents has utilized any broker,
finder, placement agent or financial advisor or incurred any liability for
any fees or commissions in connection with any of the transactions
contemplated hereby or by the Ancillary Documents.
(h) Company Common Stock. As of the date hereof, Purchasers do not
own any shares of Common Stock.
ARTICLE IV.
ADDITIONAL AGREEMENTS OF THE PARTIES
Section 4.01. Taking of Necessary Action. Each of the parties hereto
agrees to use all reasonable efforts to take or cause to be taken all action and
to do or cause to be done all things necessary, proper or advisable under
Applicable Law to consummate and make effective the transactions contemplated by
this Agreement. Without limiting the foregoing, the Company and Purchasers
will, and the Company shall cause the Company Subsidiaries to, each use all
reasonable efforts to make all filings and obtain all Consents of Governmental
Entities which may be necessary or, in the opinion of Purchasers or the Company,
as the case may be, advisable for the consummation of the transactions
contemplated by this Agreement and the Ancillary Documents, including, but not
limited to, any filings with the FTC or DOJ under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended ("HSR Act").
27
Section 4.02. Conduct of Business. Except as otherwise required to
perform its obligations under this Agreement or in any agreement contemplated
herein, from the date hereof through the Closing Date, the Company shall, and
shall cause each of the Company Subsidiaries to:
(a) conduct its operations in the ordinary course of business in a
first-class manner and consistent with past practice;
(b) unless required pursuant to the terms of this Agreement or the
Ancillary Agreements, or consented to in writing by Purchasers, not amend or
in any way alter its Restated Articles of Organization, certificate of
incorporation, bylaws, partnership agreement or other governing document
(provided that the foregoing shall not restrict the reorganization and
restructuring of certain of the Company Subsidiaries on the terms previously
disclosed to Purchasers);
(c) not engage in any other act, other than in the ordinary course of
business and consistent with past practice, that could reasonably be expected
to have a Material Adverse Effect or in any way delay or impair consummation
of the transactions contemplated by this Agreement and the Ancillary
Documents;
(d) not change the number of shares of the authorized capital stock
of the Company, issue or grant any option, warrant, call, commitment,
subscription, right to purchase or agreement of any character relating to the
authorized or issued capital stock of the Company or any Company Subsidiary,
or any securities convertible into shares of such stock (except for grants of
options to purchase Common Stock approved by the Board of Directors to be
granted pursuant to existing Company Plans), split, combine or reclassify any
shares of the capital stock of the Company, declare, set aside or pay any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of the capital stock of the Company, or
redeem or otherwise acquire any shares of such capital stock;
(e) not increase the number of directors of the Board of Directors of
the Company without the express written consent of Purchasers other than as
required by Section 4.10;
(f) not sell or transfer any of the assets it owns, except in the
ordinary course of its business and consistent with past practice (it being
understood that sales of loan receivables shall be deemed in the ordinary
course of business);
(g) except for seller financing and borrowings under the Company's
existing credit facilities with ▇▇▇▇▇▇ Financial, Inc., Foothill Capital
Corporation and Finova Capital Corporation, not incur any Indebtedness other
than Indebtedness to trade creditors incurred in the ordinary course of
business and consistent with past practice;
(h) not change its accounting policies or procedures in any material
manner;
(i) not do any other act which would reasonably be expected to cause
any representation or warranty in this Agreement to be or become untrue in
any material respect.
28
Section 4.03. Financial Statements and Other Reports. For so long as
Purchasers or the Permitted Transferees own any shares of Common Stock (except
in the case of (d) below which shall apply only for so long as Purchasers and
the Permitted Transferees own in the aggregate at least the Permitted Interest),
the Company covenants that it will deliver to Purchasers or the Permitted
Transferees (provided, however, that delivery to any Permitted Transferee of any
financial statements or other reports shall be made only to a wholly-owned
(excluding the ownership interests of MSDW employees and consultants) MSDW
entity as general partner, investment advisor or other representative on behalf
of the Permitted Transferees), as the case may be:
(a) as soon as practicable and in any event within 45 days after the
end of each quarterly period (other than the last quarterly period) in each
fiscal year, consolidated statements of operations, statements of
shareholders' equity and cash flows of the Company for the period from the
beginning of the then current fiscal year to the end of such quarterly
period, and a consolidated balance sheet of the Company at the end of such
quarterly period setting forth in each case in comparative form figures for
the corresponding period or date in the preceding fiscal year, together with
a certificate from a senior officer of the Company ("Senior Officer's
Certificate") to the effect that such financial statements have been prepared
in accordance with GAAP consistently applied during the periods involved
(except as otherwise indicated in the notes thereto and subject to year-end
adjustments) and that such financial statements fairly present the results of
operations and changes in financial position, shareholders' equity, cash
flows and financial position of the Company and the Company Subsidiaries as
of and for the period then ended; provided however, that delivery pursuant to
clause (c) below of a copy of the Company's periodic report on Form 10-Q for
such period filed with the SEC shall be deemed to satisfy the requirements of
this clause (a);
(b) as soon as practicable and in any event within 90 days after the
end of each fiscal year, a consolidated balance sheet of the Company as of
the end of such fiscal year and the related consolidated statements of
operations, statements of shareholders' equity and cash flows for such fiscal
year, setting forth in each case in comparative form the corresponding
figures from the preceding fiscal year, together with the audit report of
Ernst & Young LLP, or other independent public accountants of recognized
standing selected by the Company; provided, however, that delivery pursuant
to clause (c) below of a copy of the Annual Report on Form 10-K of the
Company for such fiscal year filed with the SEC shall be deemed to satisfy
the requirements of this clause (b);
(c) promptly upon transmission thereof, copies of all such financial
statements, proxy statements, notices and reports as it shall send to its
shareholders and to its lenders and copies of all such registration
statements, other than registration statements relating to employee benefit
or dividend reinvestment plans, and all such regular and periodic reports on
Forms 10-K, 10-Q and 8-K (or similar or substitute forms) as it shall file
with the SEC; and
(d) from time to time such additional information regarding results
of operations, financial condition, business or prospects of the Company and
the Company Subsidiaries as Purchasers or the Permitted Transferees may
reasonably request.
Section 4.04. Access.
29
(a) Between the date hereof and the Closing Date and in order to
permit Purchasers to complete their due diligence examination of the Company
and the Company Subsidiaries, the Company shall permit representatives of
Purchasers to have full access: (i) to inspect the facilities and properties
of the Company and any of the Company Subsidiaries, (ii) to examine the
corporate books, records, agreements and files of the Company or any of the
Company Subsidiaries and make copies or extracts therefrom and (iii) to
consult with the directors, officers or other employees of the Company and
any of the Company Subsidiaries and the Company's independent auditors and
legal counsel, all upon reasonable notice and at such reasonable times as the
Purchasers may reasonably request.
(b) For so long as Purchasers or the Permitted Transferees own, in
the aggregate, at least the Permitted Interest, the Company will permit
representatives of each Purchaser and any Permitted Transferee (provided,
however, that in the case of access rights by Permitted Transferees, access
rights shall be granted only to a wholly-owned (excluding the ownership
interests of MSDW employees and consultants) MSDW entity as general partner,
investment advisor or other representative on behalf of the Permitted
Transferees) to visit and inspect any of the properties of the Company or any
of the Company Subsidiaries, to examine the corporate books, records,
agreements and files of the Company and the Company Subsidiaries and make
copies or extracts therefrom and to advise and consult with the principal
officers of the Company regarding the affairs, finances and accounts of the
Company and the Company Subsidiaries, all upon reasonable notice and at such
reasonable times any Purchaser or such wholly-owned MSDW entity may
reasonably request.
Section 4.05. Lost, Stolen, Destroyed or Mutilated Securities. Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of any certificate for any security of the Company owned by
Purchasers or the Permitted Transferees and, in the case of loss, theft or
destruction, upon delivery of an undertaking by the holder thereof to indemnify
the Company (and, if requested by the Company, the delivery of an indemnity bond
sufficient in the judgment of the Company to protect the Company from any loss
it may suffer if a certificate is replaced), or, in the case of mutilation, upon
surrender and cancellation thereof, the Company will issue a new certificate for
an equivalent number of shares of Common Stock or other security of like tenor,
as the case may be.
Section 4.06. No Termination of Obligations Upon Change of Control. The
Company shall promptly notify Purchasers and the Permitted Transferees (but in
the case of the Permitted Transferees, such notice shall be sent only to a
wholly-owned (excluding the ownership interests of MSDW employees and
consultants) MSDW entity as general partner, investment advisor or other
representative on behalf of the Permitted Transferees) (i) of the execution by
the Company of a definitive agreement with any Person which will result in a
Change of Control, (ii) of the satisfaction or waiver of all conditions of
closing (other than conditions which can only be satisfied on the closing date
of such transaction) required under the terms of such definitive agreement, and
(iii) immediately upon consummation of a Change of Control. Upon a Change of
Control of the Company, all rights and obligations of Purchasers and any
Permitted Transferee who owns any shares of Common Stock hereunder (including,
without limitation, all registration rights under the Registration Rights
Agreement) shall continue in full force and effect unless such Purchasers or
Permitted Transferees,
30
as the case may be, dispose of their respective shares of Common Stock as part
of such Change of Control.
Section 4.07. Restrictions on Sale or Transfer; Legend.
(a) Prior to the earlier to occur of (x) the second anniversary of
the Closing Date or (y) six months following the Calculation Date, but in no
event earlier than the date that is 18 months from the Closing Date (the
"Lock-up Period"), none of the Purchasers or Permitted Transferees will,
directly or indirectly, offer, sell, transfer, assign, pledge, hypothecate
(provided that nothing herein to the contrary shall restrict the bona fide
pledge or hypothecation of any shares of Common Stock issued to Purchasers or
any Permitted Transferee prior to the expiration of the Lock-up Period or the
foreclosure of any such pledge or hypothecation so long as any pledgee
remains subject to the provisions of this Section 4.07; upon any foreclosure
of such pledge, the pledgee shall not have any rights or obligations under
this Agreement but shall constitute a Purchaser under the Registration Rights
Agreement) or otherwise dispose of (any such act, a "Transfer") any shares of
Common Stock purchased hereunder, except for, and subject in each case to,
compliance with all Applicable Law and receipt of any necessary governmental
Consents, (i) a Transfer by Purchaser to a Permitted Transferee, provided
that prior to such Transfer each such Permitted Transferee consents in
writing to be bound by the restrictions on Transfer set forth in this Section
4.07, makes the representations and warranties set forth in the first
sentence of Section 3.02(d) and in Section 3.02(f) to the Company and assumes
all other rights and obligations of such Purchaser under this Agreement and
the Registration Rights Agreement; (ii) a Transfer to the Company or to a
wholly-owned direct or indirect subsidiary of the Company; and (iii) a
Transfer pursuant to a sale, merger or consolidation in which the Company is
a constituent corporation, or upon a Change of Control as provided in Section
4.07(b).
(b) Subject to Section 4.07(c), following the Lock-up Period or the
consummation of a Change of Control or delivery of notice that the events
described in Section 4.06(i) and (ii) have occurred, each Purchaser and
Permitted Transferee may, in its sole discretion, freely and without any
limitations, transfer any shares of Common Stock owned by it, subject to
compliance with all Applicable Law (including, without limitation, compliance
with the Securities Act), provided, however, that if the transaction to which
notice is provided under Sections 4.06(i) and (ii) is terminated, Purchasers'
and the Permitted Transferees' right to Transfer any shares of Common Stock
held by them shall be again subject to the provisions of this Section 4.07.
(c) Each Purchaser acknowledges and agrees that as of the date hereof
the shares of Common Stock have not been registered under the Securities Act
or the securities laws of any state, that the shares of Common Stock will be
characterized as "restricted securities" under federal securities laws and
that under such laws and applicable regulations the shares of Common Stock
cannot be sold or otherwise disposed of or otherwise Transferred without
registration under the Securities Act or an exemption therefrom. Each
Purchaser acknowledges that, except as provided in the Registration Rights
Agreement, none of the Purchasers or Permitted Transferees has any right to
require the Company to register the Common Stock.
31
Each Purchaser further acknowledges and agrees that each certificate of
Common Stock to be issued to Purchasers or any Permitted Transferee hereunder
shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF IN ABSENCE OF (I) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SHARES UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS OR (II) AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED. THIS CERTIFICATE IS ISSUED PURSUANT TO AND
SUBJECT TO THE RESTRICTIONS ON TRANSFER, VOTING AND OTHER PROVISIONS OF A
SECURITIES PURCHASE AGREEMENT DATED AS OF AUGUST __, 1998 BETWEEN THE COMPANY
AND THE PURCHASERS REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE WITH THE
COMPANY. EXCEPT AS PROVIDED IN SUCH SECURITIES PURCHASE AGREEMENT, THE SHARES
REPRESENTED BY THIS CERTIFICATE ARE NOT TRANSFERABLE AND ANY PURPORTED TRANSFER
IN VIOLATION OF THE PROVISIONS OF SUCH SECURITIES PURCHASE AGREEMENT SHALL BE
VOID AND OF NO FORCE AND EFFECT.
Any holder of the Common Stock may request the Company to remove the
legend described herein from the certificates evidencing such Common Stock by
submitting to the Company such certificates, together with an opinion of counsel
reasonably satisfactory to the Company to the effect that such legend is no
longer required under the Securities Act.
Section 4.08. Further Assurances. The Company and Purchasers shall
execute and deliver, or cause to be executed and delivered, such additional
instruments and other documents and shall take such further actions as the
Company or Purchasers, as the case may be, may reasonably request to effectuate,
carry out and comply with all of the terms of this Agreement and the Ancillary
Documents and the transactions contemplated hereby and thereby, including,
without limitation, making application as soon as practicable for all Consents
required in connection with the transactions contemplated hereby and diligently
pursuing the receipt of such Consents in good faith.
Section 4.09. Solicitation. From the date hereof until the Closing
Date, neither the Company nor any of the Company Subsidiaries shall, and the
Company shall direct and use its reasonable best efforts to cause its directors,
officers, employees, agents and representatives not to, initiate, solicit or
encourage, directly or indirectly, any inquiries with respect to, or the making
of, any Investment Proposal or engage in any negotiations concerning, provide
any nonpublic information or data to, or have any discussions with, any Person
(other than Purchasers) relating to, an Investment Proposal, or enter into any
agreement with respect to, or otherwise take any action to effect or facilitate
any effort or attempt to make or implement an Investment Proposal. On the date
hereof, the Company and the Company Subsidiaries shall terminate all existing
negotiations and discussions with any Person (other than Purchasers) relating to
any Investment Proposal. For purposes of this Section 4.09, an "Investment
Proposal" shall mean any proposal for the sale, exchange or issuance by the
Company, whether in a private or public offering, of any shares of Common Stock
or other securities or any securities, options, rights or warrants convertible
into or exchangeable for any Common Stock (other than options granted in the
ordinary course and shares issued upon exercise
32
of options or upon conversion of outstanding convertible debt securities) or
other equity securities of the Company or any sale of all or a material portion
of the assets of the Company (other than sales in the ordinary course of
business) or merger with or into any other Person (whether or not the Company is
the Surviving Person, but excluding any merger of a Company Subsidiary with and
into the Company or any other Company Subsidiary) or any financing or any
investment banking or financing services (other than as set forth in Schedule
3.01(r)(vi) or as contemplated by this Agreement) involving the Company or any
of the Company Subsidiaries.
Section 4.10. Board Representation.
(a) On or prior to the Closing Date, the Board of Directors of the
Company shall be expanded by two positions, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇.
▇▇▇▇▇ shall be appointed to fill the vacancies created by such expansion with
▇▇. ▇▇▇▇▇ designated as a Class I director and ▇▇. ▇▇▇▇▇▇ designated as a
Class III director. Thereafter, for so long as Purchasers and the Permitted
Transferees own, in the aggregate, at least the Required Interest, Purchasers
shall be entitled to designate an aggregate of two directors on the
management slate of nominees to the Company's Board of Directors (the
"Purchaser Designees") (with MSP having the right to designate one director
and MSREF III having the right to designate one director) except the
foregoing number of directors shall be reduced to the extent one or more
Purchaser Designees have been elected to and are serving on the Board of
Directors and are in a class of directors not currently standing for re-
election. In the event that the aggregate interest owned by Purchasers and
the Permitted Transferees shall be less than the Required Interest but equal
to or greater than the Minimum Interest and Purchasers currently have two
Purchaser Designees serving on the Board of Directors, then Purchasers shall
cause one of the two Purchaser Designees to resign within 10 Business Days,
the Board of Directors shall be reduced by one member and thereafter MSP
shall be entitled to designate one member on the management slate of nominees
to the Company's Board of Directors (until such time as the aggregate
interest owned by Purchasers and the Permitted Transferees shall be less than
the Minimum Interest, whereupon Purchasers shall within 10 Business Days
cause the remaining Purchaser Designee to resign and Purchasers shall have no
further rights under this Section) except the foregoing shall not apply to
the extent MSP's Purchaser Designee has been elected to and is serving on the
Board of Directors and is in a class of directors not currently standing for
re-election. At least 90 days prior to each annual meeting of shareholders
at which a Purchaser Designee will stand for election, MSREF III and MSP, as
the case may be, shall provide written notice to the Company indicating the
Purchaser Designee to be nominated by each such Purchaser at such annual
meeting, and such notice shall set forth as to each Person proposed for
nomination all information relating to such Persons that is required to be
disclosed in solicitations of proxies for election of directors pursuant to
Regulation 14A under the Exchange Act (including such Person's written
consent to being named in the related proxy statement as a nominee and to
serving as a director if elected).
(b) The Company shall use its reasonable best efforts at all times to
take such action as is necessary to ensure that the nominating committee of
the Board of Directors (or the full Board if there is no nominating
committee) of the Company shall nominate and recommend to the shareholders of
the Company and the shareholders of the Company shall elect the Purchaser
Designees to the Board of Directors. As a condition precedent to the
33
inclusion of any Purchaser Designee on any slate of nominees to be
recommended to shareholders by the Board of Directors pursuant to Section
4.10(a), the nominating committee of the Board (or the full Board if there is
no nominating committee) may review the information provided pursuant to
Section 4.10(a) to evaluate in good faith such Purchaser Designee's character
and fitness to serve as a director. If the nominating committee (or the full
Board if there is no nominating committee) determines in good faith that any
such Purchaser Designee lacks the character or fitness to serve as a director
based on applicable legal and reasonable commercial standards, the nominating
committee (or the full Board if there is no nominating committee) shall
inform the Purchaser who nominated such Purchaser Designee of such
determination, and such Purchaser shall then have the right to propose an
alternative Purchaser Designee who is reasonably acceptable to the Company.
All Purchaser Designees elected to the Board of Directors shall receive,
during the period in which they serve, any and all benefits (including,
without limitation, any director compensation and grants of stock options
under the 1998 Non-Employee Director Plan) provided to the other members of
the Board of Directors of the Company.
(c) If at any time Purchasers and the Permitted Transferees are
entitled to designate one or more nominees to the Board of Directors pursuant
to this Section 4.10 and Purchasers do not have a representative on the
Board, so long as Purchasers and the Permitted Transferees own, in the
aggregate, at least the Minimum Interest, the Company shall permit two
representatives (or in the case that Purchasers are entitled to designate
only one nominee to the Board, only one representative) of Purchasers (which
representatives shall be acceptable to the Company in its reasonable
discretion) to attend, but not vote, as observers at each meeting of the
Board of Directors or any committee of the Board empowered to act with full
authority of the entire Board, including telephonic meetings, provided that
each such representative executes and delivers to the Company a
confidentiality agreement in a form reasonably satisfactory to the Company
prior to attendance at any such meetings. The Company shall cause notice of
any meeting of the Board of Directors or any such committee of the Board to
be delivered to any such representatives at the same time and in the same
manner as notice is given to the members of the Board of Directors. Such
representatives will be entitled to receive all written materials given to
the members of the Board of Directors in connection with such meetings at the
time such materials and information are given to the Board of Directors. The
Company shall reimburse such representatives for his or her reasonable out-
of-pocket expenses incurred in connection with attending meetings of the
Board of Directors or any such committee of the Board.
(d) For so long as any Purchaser or Permitted Transferee has the
right to designate at least one director on a management slate of nominees to
the Company's Board of Directors, the Company shall use reasonable best
efforts to cause the Board of Directors and the shareholders of the Company
not to increase the number of members of the Board of Directors above nine
without the prior written consent of each Purchaser and Permitted Transferee
(unless such increase is required to comply with Applicable Law), which
consent may be withheld in each Purchaser's and Permitted Transferee's
reasonable discretion. In the event of a vacancy (either by death, removal or
resignation) of a director other than a Purchaser Designee which does not
cause the total number of directors to be less than seven, the Company shall
use reasonable best efforts to cause the Board of Directors not to appoint a
34
replacement to fill such vacancy without the prior written consent of each
Purchaser and Permitted Transferee (unless required to comply with Applicable
Law and the Company's bylaws), which consent may be withheld in each
Purchaser's and Permitted Transferee's reasonable discretion.
(e) Each Purchaser Designee shall be entitled to serve on any
standing committee of the Board except to the extent the Purchaser Designee's
participation would cause the Purchaser Designees' participation on such
committee to exceed their proportionate representation on the full Board,
provided, however, that at least one Purchaser Designee may serve on each
standing committee selected in accordance with this subsection (e). Subject
to the preceding sentence, MSREF III and MSP shall each have the right to
select the committees of the Board on which its Purchaser Designee will
serve. The Company shall use its reasonable best efforts at all times as is
necessary to ensure that each Purchaser Designee is appointed to all such
committees of the Board of Directors.
(f) For so long as Purchasers and the Permitted Transferees own, in
the aggregate, at least the Minimum Interest and the Purchaser Designees are
serving on the Board of Directors, Purchasers shall, and shall cause the
Permitted Transferees, to vote all of their shares of Common Stock at any
regular or special meeting of the shareholders of the Company (and any
adjournments thereof) called for the purpose of electing directors to the
Board, or, to the extent permitted by the Company's Restated Articles of
Organization and Amended and Restated Bylaws and by Applicable Law, in any
written consent executed in lieu of such a meeting of shareholders, for
election of the management slate of nominees (other than the Purchaser
Designees) to the Company's Board of Directors. The Purchasers shall and
shall cause the Permitted Transferees to vote all of their shares of Common
Stock at any regular or special meeting of the shareholders of the Company
(and any adjournments thereof) called for the purpose of approving the
issuance of the shares under this Agreement in favor of such issuance and the
transactions contemplated by this Agreement.
(g) Subject to availability on reasonable terms and at a reasonable
cost, for so long as any Purchaser Designee remains on the Board of
Directors, the Company shall use reasonable best efforts to maintain
directors' and officers' liability insurance with financially sound and
reputable insurers at a level of coverage of at least $10,000,000.
(h) It is understood and agreed that the Company's Board of Directors
is subject to fiduciary duties under Applicable Law, and that the Company's
shareholders have rights with respect to the composition of the Board of
Directors under Applicable Law and the Company's Amended and Restated Bylaws.
Accordingly, for purposes of this Section 4.10, all obligations of the
Company under paragraphs (a), (b), (d) and (e) hereof shall be deemed to be
"to use reasonable best efforts" to cause the intended action to be taken,
recognizing that the Company cannot guaranty what action its Board of
Directors or stockholders may take in the future.
Section 4.11. Board of Directors Approvals. Notwithstanding anything
contained in the Company's Restated Articles of Organization or its bylaws, for
so long as Purchasers and the Permitted Transferees own, in the aggregate, at
least the Required Interest, the following actions by the Company or any Company
Subsidiary shall require the affirmative vote of at least one of the
35
Purchaser Designees prior to the effectiveness or consummation of such action
(provided that if Purchasers do not have a representative on the Board of
Directors as a result of the failure of the Company to nominate any Purchaser
Designee or failure of the shareholders of the Company to elect any Purchaser
Designee, then such action shall require the approval of the Purchasers and
Permitted Transferees holding a majority of the shares of Common Stock issued
pursuant to this Agreement):
(a) the consolidation or merger of the Company with or into another
Person (other than a merger of a Company Subsidiary into the Company or
another Company Subsidiary); the sale of all or substantially all of the
assets of the Company; or, except for sales of receivables under the existing
purchase facility with ▇▇▇▇▇▇ Financial, Inc. or its permitted successors or
assigns, (up to an aggregate of $200,000,000) the sale, assignment, transfer,
lease, conveyance or other disposal of property or assets of the Company or
the Company Subsidiaries in one or more related transactions where the
aggregate consideration paid exceeds $50,000,000;
(b) the purchase or other acquisition of the business, assets or
securities of any other Person (whether by merger, another form of business
combination or otherwise) in one or more related transactions where the
aggregate consideration paid (exclusive of any future development costs)
exceeds $50,000,000;
(c) the issuance of any Senior Securities, or authorization of the
issuance of any securities convertible into or exchangeable for, or options,
warrants or other rights to acquire, any Senior Securities;
(d) except for any issuances (i) to Purchasers or a Permitted
Transferee pursuant to this Agreement or (ii) of securities upon conversion
or exercise of any options, notes or debentures outstanding as of the date
hereof or (iii) grants of options or issuances of securities upon exercise
thereof pursuant to any existing director or employee stock option or stock
benefit plan approved by the Company's Board of Directors, the issuance of
Parity Securities, or authorization of the issuance of any securities
convertible into or exchangeable for, or options, warrants or other rights to
acquire, any Parity Securities, in each case, in excess of 8% of the then
issued and outstanding shares of Common Stock or at a price per share that is
less than the Closing Share Price, or at any time prior to expiration of the
Commitment Period unless the Maximum Shares have been issued to Purchasers or
the shareholders have failed to approve the issuance of any shares of Common
Stock to be issued to Purchasers in accordance with this Agreement on or
after the Threshold Date at the meeting referred to in Section 4.16;
(e) the incurrence of any Indebtedness by the Company or any Company
Subsidiary in an aggregate principal amount which would cause the Total
Market Capitalization Ratio of the Company to be equal to or greater than
50%;
(f) the declaration or payment of any dividend (other than a stock
dividend) or distribution on the shares of Common Stock, or the repurchase,
redemption or other acquisition of shares of Common Stock (other than in
connection with "cashless" exercises of options);
(g) any amendment to the Restated Articles of Organization or bylaws
of the Company which could reasonably be expected to conflict with the terms
of this Agreement;
36
(h) the entry into a material line of business that is unrelated to
or materially different from the Timeshare/Residential Business;
(i) the entry into any transaction with any Affiliate other than
transactions entered into with Company Subsidiaries; and
(j) the authorization or issuance of any capital stock of any Company
Subsidiary, or any options, rights, warrants or securities convertible into
or exchangeable for any capital stock of any Company Subsidiary (other than
pursuant to employee stock option plans in existence as of the date hereof).
Section 4.12. Preemptive Rights.
(a) In the event the Company proposes to undertake an issuance of New
Securities (as defined below) for cash after the date hereof, each Purchaser
and Permitted Transferee that owns any shares of Common Stock on the date of
issuance shall have the right to purchase its "proportionate share" of such
New Securities on the terms and conditions set forth herein. Each Purchaser
and Permitted Transferee that owns any shares of Common Stock on such date
shall also have the right of over allotment such that, if any Purchaser or
Permitted Transferee fails to exercise its rights hereunder to purchase its
proportionate share of New Securities to the fullest extent permitted, the
other Purchasers and Permitted Transferees may purchase its proportionate
share of New Securities that such Purchaser or Permitted Transferee elected
not to purchase. For purposes of this Section 4.12, each Purchaser's and
Permitted Transferee's "proportionate share" means the number of New
Securities proposed to be issued and sold multiplied by a fraction, the
numerator of which is the number of shares of Common Stock issued to such
Purchaser or Permitted Transferee pursuant to Article II hereof and held on
such date by such Person (determined (i) during the Commitment Period,
assuming that the Maximum Shares have been issued to the Purchasers or their
Permitted Transferees and (ii) after the Commitment Period, based on the
actual number of shares issued pursuant to Article II hereof and then held on
such date by such Person) and the denominator of which is the total number of
shares of Common Stock outstanding (determined (i) during the Commitment
Period, on a fully diluted basis assuming full exercise and conversion of all
outstanding options, warrants, rights and other securities which are
convertible or exchangeable shares of Common Stock and issuance of the
Maximum Shares, and (ii) after the Commitment Period, on a fully diluted
basis assuming full exercise and conversion of all outstanding options,
warrants, rights and other securities which are convertible or exchangeable
for shares of Common Stock).
(b) As used in this Section 4.12, the term "New Securities" shall
mean (i) any capital stock of the Company, (ii) any rights, options or
warrants to purchase any such capital stock, or to purchase any securities of
any type whatsoever that are, or may become, convertible into or exercisable
for any such capital stock, and (iii) any securities of any type whatsoever
that are, or may become, convertible into or exercisable for any such capital
stock; provided, however, that "New Securities" shall not include (A) shares
of Common Stock issued upon conversion or exercise of options, debentures,
notes, warrants or rights outstanding as of the date hereof, (B) securities
issued pursuant to the acquisition of another corporation or legal
37
entity by the Company by merger, consolidation, purchase of all or
substantially all of such other entity's assets, or acquisition transaction
in which the Company participates on an arm's length basis, (C) securities
(including options) issued in connection with any director or employee stock
option plan approved by the Board of Directors of the Company (or any
committee thereof) and the shareholders of the Company, or any shares of
Common Stock issued to any employee or officer for his own investment and as
part of a bona fide compensation plan approved by the Board of Directors, (D)
any securities issued in replacement of, or as dividends attributable to, any
securities of the Company outstanding as of the date hereof, (E) any
securities issued to all holders of shares of Common Stock on a pro rata
basis, (F) any securities issued (including, without limitation, any rights
and any securities issued upon the exercise of such rights) in connection
with a shareholders rights plan approved by the Board of Directors or (G) any
securities issued upon conversion or exercise of New Securities that
Purchasers previously elected not to exercise their purchase rights hereunder
or as to which such purchase rights did not apply.
(c) In the event the Company proposes to undertake an issuance of New
Securities, it shall give Purchasers and the Permitted Transferees written
notice of its intention to do so at least 20 days prior to such issuance,
describing the New Securities and the price and terms upon which the Company
proposes to issue the same (the "Original Notice"). Each Purchaser and
Permitted Transferee may purchase (i) such number of New Securities up to
such Purchaser's or Permitted Transferee's proportionate share of such New
Securities ("Full Amount") plus (ii) to the extent other Purchasers or
Permitted Transferees do not exercise their Full Amount, any additional New
Securities that the other Purchasers or Permitted Transferees elected not to
purchase in amount as agreed to by the Purchasers and Permitted Transferees
electing to purchase such additional New Securities (it being understood that
in no event shall the Company be required to issue, in the aggregate, an
amount of New Securities in excess of the aggregate amount issuable if all
Purchasers and Permitted Transferees purchased their respective Full
Amounts), for the price and upon the terms and conditions pertaining to the
issuance of the New Securities (notwithstanding any changes that may be made
to the terms and conditions set forth in the Original Notice) by giving
written notice to the Company no later than 15 days after the date of
receiving the Original Notice ("Notice Date") identifying the number of New
Securities to be purchased. If any Purchasers or Permitted Transferees elect
to purchase any New Securities within such 15-day period, such New Securities
shall be issued and sold to each of them in accordance with the terms and
conditions pertaining to the issuance of the New Securities (notwithstanding
any changes that may be made to the terms and conditions set forth in the
Original Notice). Any New Securities that the Purchasers and Permitted
Transferees elected not to purchase may be sold by the Company in accordance
with the terms and conditions pertaining to such issuance of New Securities.
(d) Notwithstanding anything to the contrary contained in this
Section 4.12, upon any purchase of any New Securities by a Purchaser or
Permitted Transferee pursuant to Section 4.12 on a later date than the
issuance of the New Securities that gave rise to such Purchaser's or
Permitted Transferee's purchase rights under Section 4.12, (i) the purchase
price shall be adjusted by subtracting therefrom the value of any dividend or
distribution received in respect of such New Securities after the date of
such issuance and prior to the purchase by such Purchaser or Permitted
Transferee hereunder, and (ii) the purchase price and number of shares
38
or amount to be purchased shall be adjusted to reflect any stock split, stock
dividend or other combination or reclassification of the capital stock during
such time.
(e) Upon written notice to the Company, each Purchaser and Permitted
Transferee, in their sole discretion, may terminate all of its rights under
this Section 4.12, or may suspend its rights under this Section 4.12 for any
period of time set forth in such notice.
Section 4.13. Adjustments. If during the Commitment Period, the Company
shall declare or pay a dividend on the Common Stock payable in shares of Common
Stock or in rights to acquire Common Stock, or shall effect a stock split or
reverse stock split, or a combination, consolidation or reclassification of the
Common Stock, then the Closing Share Price shall be proportionately decreased or
increased, as appropriate, to give effect to such event.
Section 4.14. [Reserved].
Section 4.15. Financing Fees; Advisory Fees.
(a) Subject to any rights held by any Person existing prior to the
Closing Date (which the Company agrees it will not extend beyond their
current term), and except for a fairness opinion relating to the transactions
contemplated by this Agreement, for so long as Purchasers and Permitted
Transferees own, in the aggregate, at least the Minimum Interest, in the
event that the Board of Directors authorizes the Company to finance or
refinance the Company or any of the Company's assets either through debt or
equity offerings (other than securitizations of installment land and/or
timeshare receivables) and elects to utilize the services of any investment
or financial advisor or commercial (but excluding commercial banking services
that are incidental to such debt or equity offerings) or investment banking
firm in connection therewith, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ & Co. or any
Affiliate or subsidiary thereof ("MSDW") shall have the exclusive right to
act as the Company's financial agent and advisor and to manage such
financings or offerings (provided that MSDW has reasonable experience in the
areas for which such services are to be provided, and provided further that
the Board of Directors, in its reasonable judgement, has not determined that
there exists any actual or potential conflict of interest with regard to such
representation (but not including a conflict of interest that may exist as a
result of Purchasers' ownership interest in the Company)), and, as
compensation for such services shall be entitled to receive a fee equal to
the then current market rate for similar financings or offerings expressed as
a percentage of the aggregate gross proceeds received from such financing or
offerings, which fees are to be paid to MSDW at the closing of such
transaction. In connection with such services, the Company will enter into a
placement, underwriting or other engagement agreement with MSDW or a
subsidiary or Affiliate thereof, which shall contain terms and conditions
customary for that type of service.
(b) For so long as Purchasers and Permitted Transferees own, in the
aggregate, at least the Minimum Interest, in the event the Company determines
to sell all or substantially all of the assets of the Company or of all of
the Company Subsidiaries, or to consolidate or merge into or with any other
Person (whether or not the Company continues as the Surviving Person), or to
acquire all or substantially all of the assets, business or securities of any
other Person and elects to utilize the services of an investment or financial
advisor or commercial (but
39
excluding commercial banking services that are incidental to such
transactions) or investment banking firm in connection therewith, MSDW shall
have the exclusive right to act as advisor and/or underwriter to the Company
in connection with such transactions (provided that the Board of Directors,
in its reasonable judgment, has not determined that there exists any actual
or potential conflict of interest with regard to such representation (but not
including a conflict of interest that may exist as a result of Purchasers'
ownership interest in the Company)), and, as compensation for such services
to be provided, MSDW shall be entitled to receive a fee equal to the then
current market rate for similar transactions, which fees are to be paid to
MSDW at the closing of such transaction. In connection with such services,
the Company will enter into a placement, underwriting or other engagement
agreement with MSDW or a subsidiary or Affiliate thereof, which shall contain
terms and conditions customary for that type of service.
Section 4.16. Shareholder Approval. The Company shall take all action
necessary in accordance with all Applicable Law and in accordance with its
Restated Articles of Organization and bylaws to convene a meeting of its
shareholders as soon as reasonably practicable after the date hereof (but in no
event later than the earlier to occur of (x) November 30, 1998, or (y) the
Threshold Date) to consider and vote upon the issuance of the shares of Common
Stock to be issued to Purchasers in accordance with this Agreement on or after
the Threshold Date. The Company, acting through its Board of Directors, shall
recommend to its shareholders the approval of the issuance of the shares of
Common Stock to be issued to Purchasers in accordance with this Agreement, and
shall use its reasonable best efforts to obtain such approval of its
shareholders.
Section 4.17. Notices of Purchasers. Purchasers agree to promptly
notify the Company of the consummation of any Transfer to any Person (including
a Permitted Transferee) of any shares of Common Stock issued to Purchasers under
the terms of this Agreement. Purchasers further agree to promptly notify the
Company when the Purchasers and any Permitted Transferees own less than the
Required Interest, the Minimum Interest and the Permitted Interest.
ARTICLE V.
CONDITIONS OF CLOSING
Section 5.01. Conditions of Purchase at Closing. The obligations of
Purchasers to purchase the Common Stock to be purchased at the Closing are
subject to satisfaction or waiver of each of the following conditions on or
prior to the Closing Date:
(a) Representations and Warranties; Covenants. The representations
and warranties of the Company contained in this Agreement and the Ancillary
Documents and in each certificate or document delivered by the Company to
Purchasers in connection with the transactions contemplated hereby and
thereby shall be true and correct in all material respects on and as of the
date of this Agreement or the date of such Ancillary Documents, certificates
or other documents, as the case may be, and on and as of the Closing Date,
with the same effect as though made on and as of the Closing Date (except for
representations and warranties that speak as of a specific date other than
the Closing Date (which need only be true and correct in all material
respects as of such date)), and the Company shall have performed all
obligations and
40
complied in all material respects with all agreements, undertakings,
covenants and conditions required hereunder and thereunder to be performed by
it at or prior to the Closing.
(b) Opinion of Counsel. Purchasers shall have received at the Closing
from ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇ counsel to the Company, a favorable written
opinion dated as of the Closing Date which shall be to the effect set forth
in Exhibit D hereto.
(c) No Injunction. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits consummation of the transactions contemplated hereby.
(d) Regulatory Approvals. All Permits, Consents, authorizations,
orders and approvals of, and filings and registrations with any Governmental
Entity or any other Person required to be made or obtained under any federal
or state law, rule or regulation in connection with the execution, delivery
and performance of this Agreement and the Ancillary Documents and the
consummation of the transactions contemplated hereby and thereby on the
Closing Date shall have been obtained or made, and all statutory waiting
periods thereunder in respect thereof shall have expired, in each case,
without the imposition of any terms or conditions which, either individually
or in the aggregate, are unduly burdensome to Purchasers or any of their
Affiliates or are such that, had they been known to Purchasers prior to the
date hereof, it is reasonable to conclude that Purchasers would not have
entered into this Agreement or the transactions contemplated hereby.
(e) Company Certificate. The Company shall have delivered to
Purchasers a certificate, dated the Closing Date, signed by its chief
executive officer and its chief financial officer, in form and substance
satisfactory to Purchasers to the effect that the conditions set forth in
this Section 5.01 hereof have been satisfied.
(f) Registration Rights Agreement. (i) The Registration Rights
Agreement shall have been executed and delivered by the parties thereto and
shall be in full force and effect and (ii) all Consents, approvals, waivers,
amendments, or authorizations required under any agreements set forth in
Schedule 3.01(c) in connection with the execution, delivery and performance
by the Company of the Registration Rights Agreement which are necessary in
order for Purchasers to have the full benefit or enjoyment of the provisions
of the Registration Rights Agreement shall have been obtained.
(g) Payment of Expenses. The Company shall have paid to Purchasers
the costs and expenses described in Section 7.07 hereof.
(h) Appointment of Purchaser Designees. The Purchaser Designees shall
have been appointed to the Board of Directors.
(i) Shareholder Voting Agreements. The Shareholder Voting Agreements
shall have been executed and delivered by each Person listed on Schedule
5.01(i) hereof and shall be in full force and effect.
41
(j) Amendment of Bylaws. The Company's bylaws shall have been amended
to provide for a staggered board of directors in accordance with Exhibit E
hereto, such amendment shall be in form and substance reasonably satisfactory
to Purchasers and shall have been approved by the Board of Directors, such
amendment shall have been duly filed if filing thereof is required by any
Governmental Entity or the New York Stock Exchange, such amended bylaws shall
be in full force and effect and copies of such amended bylaws shall have been
delivered to Purchasers.
(k) Exchange Listing. The maximum number of shares of Common Stock
which can be issued to Purchasers prior to the Threshold Date (which shall be
equal to 19.99% of the issued and outstanding shares of Common Stock on the
Closing Date (but excluding any shares of Common Stock issued to Purchasers
of the Permitted Transferees on the Closing Date)), shall be approved for
listing on the New York Stock Exchange and the Pacific Stock Exchange subject
to notice of issuance.
Section 5.02. Conditions of Sale at Closing. The obligation of the Company
to sell and issue the Common Stock to be sold and issued at the Closing is
subject to satisfaction or waiver of each of the following conditions on or
prior to the Closing Date:
(a) Representations and Warranties; Covenants. The representations and
warranties of Purchasers contained in this Agreement and the Ancillary
Documents and in any certificates or other documents delivered by Purchasers
to the Company in connection with the transactions contemplated hereby and
thereby shall be true and correct in all material respects on and as of the
date of this Agreement or the date of such Ancillary Documents, certificates
or other documents, as the case may be, and on and as of the Closing Date
with the same effect as though made on and as of the Closing Date (except for
representations and warranties that speak as of a specific date other than
the Closing Date (which need only be true and correct in all material
respects as of such date)), and Purchasers shall have performed all
obligations and complied in all material respects with all agreements,
undertakings, covenants and conditions required to be performed by each of
them at or prior to the Closing.
(b) No Injunction. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction with enjoins or
prohibits consummation of the transactions contemplated hereby.
(c) Regulatory Approvals. All Permits, Consents, authorizations,
orders and approvals of, and filings and registrations with any Governmental
Entity or any other Person required to be made or obtained under any federal
or state law, rule or regulation for or in connection with the execution,
delivery and performance of this Agreement and the Ancillary Documents and
the consummation of the transactions contemplated hereby and thereby on the
Closing Date shall have been obtained or made, and all statutory waiting
periods thereunder in respect thereof shall have expired, in each case
without the imposition of any terms or conditions which, either individually
or in the aggregate, are unduly burdensome to the Company or any of its
Affiliates or are such that, had they been known to the Company prior to the
date hereof, it is reasonable to conclude that the Company would not have
entered into this Agreement or the transactions contemplated hereby.
42
(d) Exchange Listing. The maximum number of shares of Common Stock
which can be issued to Purchasers prior to the Threshold Date (which shall be
equal to 19.99% of the issued and outstanding shares of Common Stock on the
Closing Date (but excluding any shares of Common Stock issued to Purchasers
of the Permitted Transferees on the Closing Date)), shall be approved for
listing on the New York Stock Exchange and the Pacific Stock Exchange subject
to notice of issuance.
(e) Purchasers' Certificate. Each Purchaser shall have delivered to
the Company a certificate, dated the Closing Date, in form and substance
satisfactory to the Company to the effect that the conditions set forth in
this Section 5.02 have been satisfied.
Section 5.03. Conditions of Purchase of Remaining Shares. The Purchasers'
obligations to purchase the Remaining Shares on each Subsequent Closing Date
shall be subject to, in each case, satisfaction or waiver of each of the
following conditions on or prior to each Subsequent Closing Date:
(a) Representations and Warranties; Covenants. The representations and
warranties of the Company contained in this Agreement and the Ancillary
Documents and in each certificate or document delivered by the Company to
Purchasers in connection with the transactions contemplated hereby and
thereby shall be true and correct in all material respects on and as of the
Subsequent Closing Date, with the same effect as though made on or as of the
Subsequent Closing Date (except for representations and warranties that speak
as of a specific date other than such Subsequent Closing Date (which need
only be true and correct in all material respects as of such date)), and the
Company shall have performed all obligations and complied in all material
respects with all agreements, undertakings, covenants and conditions required
hereunder and thereunder to be performed by the Company at or prior to the
Subsequent Closing Date.
(b) Opinion of Counsel. Purchasers shall have received at the closing
of any sale and purchase of any Remaining Shares (each a "Subsequent
Closing") from ▇▇▇▇▇▇, Hall & ▇▇▇▇▇▇▇ or any other counsel to the Company
satisfactory to Purchasers, a favorable written opinion dated as of the date
of the Subsequent Closing which shall be to the effect set forth in Exhibit D
hereto.
(c) No Injunction. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits consummation of the sale and purchase of the Remaining Shares to be
purchased by Purchasers at the Subsequent Closing.
(d) Company Certificate. The Company shall have delivered to
Purchasers a certificate, dated as of the Subsequent Closing Date, signed by
its chief executive officer and its chief financial officer, in form and
substance satisfactory to Purchasers to the effect that the conditions set
forth in this Section 5.03 hereof have been satisfied.
43
(e) Payment of Expenses. The Company shall have paid to Purchasers the
costs and expenses incurred by Purchasers in connection with the Subsequent
Closing pursuant to Section 7.07 hereof.
(f) Material Adverse Effect. Since the Closing Date, there shall not
have been any change, event, occurrence or development in the assets,
business, properties, liabilities, business affairs, condition (financial or
otherwise), or results of operations of the Company or any Company Subsidiary
that has had or could reasonably be expected to have, either individually or
in the aggregate, a Material Adverse Effect.
(g) Market. (i) Trading generally shall not have been suspended or
materially limited on or by, as the case may be, either the New York Stock
Exchange or the Pacific Stock Exchange, (ii) trading of any securities of the
Company or the Company Subsidiaries shall not have been suspended on the New
York Stock Exchange or the Pacific Stock Exchange, (iii) a general moratorium
on commercial banking activities in New York shall not have been declared by
either Federal or New York State authorities and (iv) there shall not have
occurred any outbreak or escalation of hostilities or any change in financial
markets or any calamity or crisis that, in any such case, in Purchasers'
judgment, is material and adverse to the Company.
(h) Exchange Listing. The Remaining Shares to be issued to Purchasers
on the Subsequent Closing Date shall be approved for listing on the New York
Stock Exchange and Pacific Stock Exchange (or such other national securities
exchange or securities trading system on which the Common Stock is listed)
subject to official notice of issuance and notice of results of the
shareholder vote prior to the Threshold Date.
(i) Shareholder Approval. For any Remaining Shares to be issued on or
after the Threshold Date, the shareholders of the Company shall have duly
approved the issuance of such shares of Common Stock pursuant to this
Agreement (the "Required Shareholder Approval") in accordance with Section
4.16 of the Agreement and all Applicable Laws.
(j) Regulatory Approvals. All Permits, Consents, authorizations,
orders and approvals of, and filings and registrations with any Governmental
Entity or any other Person required to be made or obtained under any federal
or state law, rule or regulation in connection with the consummation of the
transactions contemplated hereby on such Subsequent Closing Date shall have
been obtained or made, and all statutory waiting periods thereunder in
respect thereof shall have expired, in each case, without the imposition of
any terms or conditions which, either individually or in the aggregate, are
unduly burdensome to Purchasers or any of their Affiliates or are such that,
had they been known to Purchasers prior to the date hereof, it is reasonable
to conclude that Purchasers would not have entered into this Agreement or the
transactions contemplated hereby.
Section 5.04. Conditions of Sale of Remaining Shares. The obligation of
the Company to sell and issue any Remaining Shares is subject to satisfaction or
waiver of each of the following conditions on or prior to any Subsequent Closing
Date:
44
(a) Representations and Warranties; Covenants. The representations and
warranties of Purchaser contained in this Agreement and the Ancillary
Documents and in each certificate or document delivered by Purchasers to the
Company in connection with the transactions contemplated hereby and thereby
shall be true and correct in all material respects on and as of the
Subsequent Closing Date with the same effect as though made on and as of the
Subsequent Closing Date (except for representations and warranties that speak
as of a specific date other than such Subsequent Closing Date (which need
only be true and correct in all material respects as of such date)), and
Purchasers shall have performed all obligations and complied with all
agreements, undertakings, covenants and conditions required by each of them
to be performed at or prior to the Subsequent Closing Date.
(b) No Injunction. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction with enjoins or
prohibits consummation of the sale and purchase of the Remaining Shares to be
sold and issued by the Company at the Subsequent Closing.
(c) Purchasers' Certificate. Purchasers shall have delivered to the
Company a certificate, dated as of the Subsequent Closing Date, in form and
substance satisfactory to the Company to the effect that the conditions set
forth in this Section 5.04 have been satisfied.
(d) Shareholder Approval. For any Remaining Shares to be issued on or
after the Threshold Date, the Required Shareholder Approval shall have been
obtained.
(e) Regulatory Approvals. All Permits, Consents, authorizations,
orders and approvals of, and filings and registrations with any Governmental
Entity or any other Person required to be made or obtained under any federal
or state law, rule or regulation for or in connection with the consummation
of the transactions contemplated hereby on such Subsequent Closing Date shall
have been obtained or made, and all statutory waiting periods thereunder in
respect thereof shall have expired, in each case without the imposition of
any terms or conditions which, either individually or in the aggregate, are
unduly burdensome to the Company or any of its Affiliates or are such that,
had they been known to the Company prior to the date hereof, it is reasonable
to conclude that the Company would not have entered into this Agreement or
the transactions contemplated hereby.
(f) Exchange Listing. The Remaining Shares to be issued to Purchasers
on the Subsequent Closing Date shall be approved for listing on the New York
Stock Exchange and Pacific Stock Exchange (or such other national securities
exchange or securities trading system on which the Common Stock is listed)
subject to official notice of issuance and notice of results of the
shareholder vote prior to the Threshold Date.
ARTICLE VI.
[RESERVED]
45
ARTICLE VII
MISCELLANEOUS
Section 7.01. Survival of Representations and Warranties. All covenants and
agreements and all representations and warranties made herein or in any Schedule
or Exhibit hereto, or in any certificates or documents delivered in connection
with the Closing shall survive the Closing for a period of 18 months following
each issuance of shares of Common Stock to Purchasers pursuant to Sections 2.01
and 2.03 of this Agreement.
Section 7.02. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given, if delivered
personally, by telecopier or sent by overnight courier as follows:
(a) If to Purchasers, to:
▇/▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, L.P.
37th Floor
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Mr. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
With copies to:
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
2300 ▇▇▇▇▇▇▇▇ ▇▇▇▇ Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
46
(b) If to the Company, to:
Bluegreen Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇
Exchange Place
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
or to such other address or addresses as shall be designated in writing. All
notices shall be effective when received.
Section 7.03. Entire Agreement; Amendment. This Agreement and the
Ancillary Documents and the documents described herein and therein or attached
or delivered pursuant hereto or thereto set forth the entire agreement between
the parties hereto with respect to the transactions contemplated by this
Agreement. Any provision of this Agreement may be amended or modified in whole
or in part at any time by an agreement in writing among the parties hereto
(provided that agreement by the Purchasers and the Permitted Transferee shall
only require agreement of the Purchasers and Permitted Transferees holding a
majority of the shares of Common Stock issued pursuant to this Agreement)
executed in the same manner as this Agreement. No failure on the part of any
party to exercise, and no delay in exercising, any right shall operate as a
waiver thereof nor shall any single or partial exercise by any party of any
right preclude any other or future exercise thereof or the exercise of any other
right. No investigation by Purchasers of the Company prior to or after the date
hereof shall stop or prevent Purchasers from exercising any right hereunder or
be deemed to be a waiver of any such right. This Agreement shall be construed
without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing any instrument to be
drafted.
Section 7.04. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original, but all
of which together shall constitute one and the same instrument.
47
Section 7.05. Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Massachusetts
applicable to contracts made and to be performed in that State without giving
effect to the conflict of laws of that State.
Section 7.06. Public Announcements. Subject to each party's disclosure
obligations imposed by law and any stock exchange, the Company agrees to provide
Purchasers for their review all news releases and other public disclosures that
the Company anticipates distributing relating to this Agreement and the
transactions contemplated hereby prior to any dissemination of the same.
Purchasers shall also have the right to review and, before filing or other
public dissemination, approve (which approval will not be unreasonably withheld)
any statements made or information provided with respect to Purchasers or the
Permitted Transferees or the transactions contemplated by this Agreement,
including, without limitation, such statements intended to be included in any
future Securities Filings prepared by or on behalf of the Company. Subject to
its disclosure obligations imposed by law and the New York Stock Exchange or
Pacific Stock Exchange, the Company shall not use the name (or any derivative
thereof) of any Purchaser or Permitted Transferee in any news release or public
disclosures without the prior written consent of Purchasers.
Section 7.07. Expenses. The Company and the Company Subsidiaries shall
bear their own costs and expenses incurred in connection with this Agreement and
the Ancillary Documents and the transactions contemplated hereby and thereby,
including the fees and expenses of the Company's financial advisors, accountants
and counsel. Upon the Closing, the Company agrees to pay or reimburse
Purchasers on the Closing Date for all reasonable out-of-pocket costs and
expenses incurred by Purchasers arising in connection with Purchasers' due
diligence investigation of the Company, the preparation and negotiation of this
Agreement and the Ancillary Documents and the consummation of the transactions
contemplated hereby and thereby, including, without limitation, all filing fees,
travel expenses and the reasonable fees and expenses of Purchasers' counsel,
accountants and consultants. On each Subsequent Closing Date, the Company
agrees to pay or reimburse Purchasers for all reasonable out-of-pocket costs and
expenses incurred by Purchasers arising in connection with consummating the
transactions contemplated hereby, including, without limitation, all filing
fees, travel expenses and the reasonable fees and expenses of Purchasers'
counsel, accountants and consultants. In no event shall the Company's aggregate
reimbursement obligation for the foregoing exceed $250,000.
Section 7.08. Indemnification.
(a) The Company agrees to indemnify and save harmless Purchasers, each
person who controls Purchasers within the meaning of the Exchange Act
(including the general partners thereof), and each of the respective
partners, officers, directors, employees, agents and Affiliates of the
foregoing in their respective capacities as such (the "Purchaser
Indemnitees"), to the fullest extent lawful, from and against any and all
actions, suits, claims, proceedings, costs, damages, judgments, amounts paid
in settlement (subject to Section 7.08(d)) and expenses (including reasonable
attorneys' fees and disbursements) (collectively, "Losses") relating to or
arising out of (i) any inaccuracy in or breach of the representations,
warranties, covenants or agreements made by the Company herein when made or
deemed made (provided that if the Company has disclosed in writing to
Purchasers any inaccuracy or breach of
48
representations or warranties prior to a Closing or Subsequent Closing and
the Purchasers elect to consummate the transactions at such Closing or
Subsequent Closing, the Company shall have no obligations to indemnify the
Purchaser Indemnitees for such inaccuracy or breach); (ii) any other conduct
by the Company or its employees or agents as a result of which, in whole or
in part, any Purchaser Indemnitee is made a party to, or otherwise incurs any
loss pursuant to, any action, suit, claim or proceeding arising out of or
relating to any such conduct; or (iii) any action or failure to act
undertaken by a Purchaser Indemnitee at the request of the Company.
(b) The Company shall reimburse the Purchaser Indemnitees for all
reasonable out-of-pocket expenses (including attorneys' fees and
disbursements) as they are incurred in connection with investigating,
preparing to defend or defending any such action, suit, claim or proceeding
(including any inquiry or investigation) whether or not a Purchaser
Indemnitee is a party thereto.
(c) In the event that the foregoing indemnity is unavailable to any
Purchaser Indemnitee for any reason, the Company agrees to contribute to any
such Losses and will do so in such proportion as is appropriate to reflect
the relative fault of each party in connection with the conduct which
resulted in the Losses. The parties agree that it would not be just or
equitable if contribution were determined by pro rata allocation or by any
other method of allocation which does not take account of relative fault and
other equitable considerations. The parties further agree that if and to the
extent that pro rata contribution were nevertheless considered by a court,
all Purchaser Indemnitees shall collectively be deemed to be one person. No
Purchaser Indemnitee shall in any event have liability to the Company arising
out of an inaccuracy in or breach of the representations, warranties,
covenants or agreements made by the Company herein, other conduct by the
Company or their employees or agents, or any action or failure to act
undertaken by a Purchaser Indemnitee at the request of the Company.
(d) A Purchaser Indemnitee shall give written notice to the Company of
any claim with respect to which it seeks indemnification promptly after the
discovery by such party of any matters giving rise to a claim for
indemnification; provided that the failure of any Purchaser Indemnitee to
give notice as provided herein shall not relieve the Company of its
obligations under this Section 7.08 unless and to the extent that the Company
shall have been prejudiced by the failure of such Purchaser Indemnitee to so
notify the Company. In case any such action, suit, claim or proceeding is
brought against a Purchaser Indemnitee, the Company shall be entitled to
participate in the defense thereof and, to the extent that it may wish, to
assume the defense thereof, with counsel satisfactory to such Purchaser
Indemnitee, and after notice from the Company of its election so to assume
the defense thereof, the Company will not be liable to such Purchaser
Indemnitee under this Section 7.08 for any legal or other expense
subsequently incurred by such Purchaser Indemnitee in connection with the
defense thereof; provided, however, that (i) if the Company shall elect not
to assume the defense of such claim or action or (ii) if such Purchaser
Indemnitee reasonably determines that there may be a conflict between the
positions of the Company and of Purchaser Indemnitee in defending such claim
or action, then separate counsel shall be entitled to participate in and
conduct the defense, and the Company shall be liable for any legal or other
expenses reasonably incurred by Purchaser Indemnitee in connection with the
defense. The Company shall not be liable for any settlement of any action,
suit, claim or proceeding effected without its written consent; provided,
however,
49
that the Company shall not unreasonably withhold, delay or condition its
consent. The Company further agrees that it will not, without Purchaser
Indemnitee's prior written consent, settle or compromise any claim or consent
to entry of any judgment in respect thereof in any pending or threatened
action, suit, claim or proceeding in respect of which indemnification may be
sought hereunder (whether or not any Purchaser Indemnitee is an actual or
potential party to such action, suit, claim or proceeding) unless such
settlement or compromise includes an unconditional release of Purchasers and
each other Purchaser Indemnitee from all liability arising out of such
action, suit, claim or proceeding.
(e) The obligations of the Company under this Section 7.08 shall
survive the transfer of the shares of Common Stock or the termination of this
Agreement or the consummation of the transactions contemplated hereby.
(f) The rights of Purchasers under this Section 7.08 shall be in
addition to any liability that the Company might otherwise have to Purchasers
under this Agreement, at common law or otherwise.
Section 7.09. Successors and Assigns. Subject to Applicable Law and the
provisions of Section 4.07, Purchasers may assign their respective rights under
this Agreement in whole or in part to any Permitted Transferee, but no such
assignment shall relieve any Purchaser of its obligations hereunder. No
transferee of Purchasers (or the Permitted Transferees) which is not a Permitted
Transferee shall have any rights under this Agreement. The Company may not
assign any of its rights or delegate any of its duties under this Agreement
without the prior written consent of Purchasers. Any purported assignment in
violation of this Section 7.09 shall be void.
Section 7.10. Jurisdiction. The courts of the State of New York in New
York County and the United States District Court for the Southern District of
New York shall have jurisdiction over the parties with respect to any dispute or
controversy between them arising under or in connection with this Agreement and,
by execution and delivery of this Agreement, each of the parties to this
Agreement submits to the jurisdiction of those courts, including, but not
limited to, the in personam and subject matter jurisdiction of those courts,
waives any objections to such jurisdiction on the grounds of venue or forum non
conveniens, the absence of in personam or subject matter jurisdiction and any
similar grounds, consents to service of process by mail (in accordance with
Section 7.02) or any other manner permitted by law, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement.
Section 7.11. Specific Performance. The Company acknowledges that the
rights granted to Purchasers in this Agreement are of a special, unique and
extraordinary character, and that any breach of this Agreement by the Company
could not be compensated for by damages. Accordingly, if the Company breaches
its obligations under this Agreement, Purchasers shall be entitled, in addition
to any other remedies that they may have, to seek enforcement of this Agreement
by a decree of specific performance requiring the Company to fulfill its
obligations under this Agreement.
Section 7.12. Captions. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
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Section 7.13. Severability. Should any part of this Agreement for any
reason be declared invalid, such decision shall not affect the validity of any
remaining portion, which remaining portion shall remain in full force and effect
as if this Agreement had been executed with the invalid portion thereof
eliminated, and it is hereby declared the intention of the parties here to that
they would have executed the remaining portion of this Agreement without
including therein any such part or parts which may, for any reason, be hereafter
declared invalid.
Section 7.14. Mutual Waiver of Jury Trial. Because disputes arising in
connection with complex financial transactions are most quickly and economically
resolved by an experienced and expert person and the parties wish applicable
state and federal laws to apply (rather than arbitration rules), the parties
desire that their disputes be resolved by a judge applying such Applicable Laws.
Therefore, to achieve the best combination of the benefits of the judicial
system and of arbitration, the parties hereto waive all right to trial by jury
in any action, suit or proceeding brought to enforce or defend any rights or
remedies under this Agreement.
Section 7.15. Exculpation. Notwithstanding any provision herein to the
contrary, the liability of each Purchaser shall be limited to the assets of such
Purchaser and no partner, shareholder, officer, director, employee or agent of
Purchaser shall have any personal liability hereunder (except to the extent
provided under Applicable Law with respect to unlawful distribution or
fraudulent transfers or conveyances).
Section 7.16. Obligations. All obligations of Purchasers under this
Agreement shall be joint and several.
Section 7.17. Schedules. All references to a "Schedule" in this
Agreement shall refer to the schedules included in the letter from the Company
to Purchasers dated as of the date hereof which is hereby incorporated herein by
reference.
[Signature Page Follows]
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IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto or by their respective duly authorized officers, all as of the date
first above written.
BLUEGREEN CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ REAL ESTATE FUND
III, L.P.
By: MSREF III, Inc.
Its: General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ REAL ESTATE
INVESTORS III, L.P.
By: MSREF III, Inc.
Its: General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
52
MSP REAL ESTATE FUND, L.P.
By: MSREF III, Inc.
Its: General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
MSREF III SPECIAL FUND, L.P.
By: MSREF III, Inc.
Its: General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
53