1
EXHIBIT 10.131
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
2
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....................................................................8
Section 2.04. Use of Proceeds..........................................................................10
ARTICLE III.
REPRESENTATIONS AND WARRANTIES..........................................................................10
Section 3.01. Representations and Warranties of the Company............................................10
Section 3.02. Representations and Warranties of Purchasers.............................................26
ARTICLE IV.
ADDITIONAL AGREEMENTS OF THE PARTIES....................................................................28
Section 4.01. Taking of Necessary Action...............................................................28
Section 4.02. Conduct of Business......................................................................28
Section 4.03. Financial Statements and Other Reports...................................................29
Section 4.04. Access...................................................................................30
Section 4.05. Lost, Stolen, Destroyed or Mutilated Securities..........................................31
Section 4.06. No Termination of Obligations Upon Change of Control.....................................31
Section 4.07. Restrictions on Sale or Transfer; Legend.................................................31
Section 4.08. Further Assurances.......................................................................33
Section 4.09. Solicitation.............................................................................33
Section 4.10. Board Representation.....................................................................33
Section 4.11. Board of Directors Approvals.............................................................36
Section 4.12. Preemptive Rights........................................................................37
Section 4.13. Adjustments..............................................................................39
Section 4.14. [Reserved]...............................................................................39
Section 4.15. Financing Fees; Advisory Fees............................................................39
Section 4.16. Shareholder Approval.....................................................................40
Section 4.17. Notices of Purchasers....................................................................41
-i-
3
ARTICLE V.
CONDITIONS OF CLOSING...................................................................................41
Section 5.01. Conditions of Purchase at Closing........................................................41
Section 5.02. Conditions of Sale at Closing............................................................42
Section 5.03. Conditions of Purchase of Remaining Shares...............................................43
Section 5.04. Conditions of Sale of Remaining Shares...................................................45
ARTICLE VI.
[RESERVED]..............................................................................................46
ARTICLE VII.
MISCELLANEOUS...........................................................................................46
Section 7.01. Survival of Representations and Warranties...............................................46
Section 7.02. Notices..................................................................................46
Section 7.03. Entire Agreement; Amendment..............................................................48
Section 7.04. Counterparts.............................................................................48
Section 7.05. Governing Law............................................................................48
Section 7.06. Public Announcements.....................................................................48
Section 7.07. Expenses.................................................................................48
Section 7.08. Indemnification..........................................................................49
Section 7.09. Successors and Assigns...................................................................50
Section 7.10. Jurisdiction.............................................................................50
Section 7.11. Specific Performance.....................................................................51
Section 7.12. Captions.................................................................................51
Section 7.13. Severability.............................................................................51
Section 7.14. Mutual Waiver of Jury Trial..............................................................51
Section 7.15. Exculpation..............................................................................51
Section 7.16. Obligations..............................................................................51
Section 7.17. Schedules................................................................................51
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
-ii-
4
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.
5
"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).
2
6
"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 (including
reimbursement obligations with respect thereto) (other than
3
7
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.
4
8
"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).
"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
5
9
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.
"SUBSEQUENT CLOSING" shall have the meaning set forth in
Section 5.03(b).
6
10
"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 or hypothecated
receivables (land or timeshare) of the Company or any
7
11
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 time and from time to time prior to expiration of the
Commitment Period
8
12
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
9
13
than the conditions 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 of its business requires
such qualification, except
10
14
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 the
11
15
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, license,
judgment, order, decree, ruling, injunction,
12
16
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
13
17
or obligations 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
14
18
pending 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
19
(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
16
20
Agreement, issued or granted any option, warrant, call,
commitment, subscription, right to purchase or 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
17
21
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 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,
18
22
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 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.
19
23
(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 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
20
24
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
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
21
25
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, 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 Section 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.
22
26
(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
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. Sections 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
23
27
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 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.
24
28
(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. Sections 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
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
25
29
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. Section 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.
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
26
30
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.
(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.
27
31
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").
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;
28
32
(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.
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
29
33
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.
(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.
30
34
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, 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
31
35
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. 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.
32
36
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 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
33
37
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 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,
34
38
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 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
35
39
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 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;
36
40
(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;
(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
37
41
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
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
38
42
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 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
39
43
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 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
40
44
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 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
41
45
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.
(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:
42
46
(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.
(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
43
47
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.
(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.
44
48
(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:
(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.
45
49
(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]
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:
46
50
(a) If to Purchasers, to:
▇/▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, L.P.
37th Floor
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Mr. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
With copies to:
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
2300 ▇▇▇▇▇▇▇▇ ▇▇▇▇ Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(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.
47
51
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.
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
48
52
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 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.
49
53
(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, 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
50
54
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.
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.
51
55
[Signature Page Follows]
52
56
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
53
57
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
54