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Exhibit 4
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INVESTMENT AND STOCKHOLDER AGREEMENT
BY AND AMONG
CALIFORNIA HOUSING FINANCE, L.P.
CAPITAL PACIFIC HOLDINGS, INC.
CAPITAL PACIFIC HOLDINGS, L.L.C.,
THE SUBSIDIARIES OF CAPITAL PACIFIC HOLDINGS, INC.
SET FORTH ON THE SIGNATURE PAGES HERETO,
AND
THE STOCKHOLDERS OF
CAPITAL PACIFIC HOLDINGS, INC. NAMED HEREIN
DATED SEPTEMBER 29, 1997
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THIS INVESTMENT AND STOCKHOLDER AGREEMENT (this "Agreement"), dated
September 29, 1997, is by and among CAPITAL PACIFIC HOLDINGS, INC., a Delaware
corporation (the "Company"), CAPITAL PACIFIC HOLDINGS, L.L.C., a Delaware
limited liability company, THE SUBSIDIARIES OF THE COMPANY SET FORTH ON THE
SIGNATURE PAGES HERETO (the "Subsidiaries"), CALIFORNIA HOUSING FINANCE, L.P.,
a Delaware limited partnership (the "Purchaser") and CPH2, L.L.C. and CPH3,
L.L.C., each a Delaware limited liability company (CPH2, L.L.C. and CPH3,
L.L.C. are herein sometimes individually referred to as a "Stockholder" and
collectively as the "Stockholders.)"
WHEREAS, simultaneously with the execution of this Agreement, the
Stockholders and the Purchaser have entered into a Stock Purchase Agreement
(the "Stock Purchase Agreement"), pursuant to which the Stockholders shall
sell, and the Purchaser shall buy, 2,484,340 shares (the "Shares") of Common
Stock, $.10 par value, of the Company (the "Common Stock") for $10,000,000 (the
"Purchase Price") and the Purchasers, the Stockholders and Nationsbank, N.A. as
escrow agent have entered into an Escrow Agreement (the "Escrow Agreement")
pursuant to which the Stock and the Purchase Price are escrowed pending the
consummation of the transactions contemplated by this Agreement;
WHEREAS, the Company, the Subsidiaries and the Purchaser have agreed
that on the terms and conditions contained herein the Company and the
Subsidiaries shall transfer substantially all of their respective assets to
Capital Pacific Holdings L.L.C., a newly organized Delaware limited liability
company (the "New L.L.C.") and the Purchaser shall contribute $30,000,000 to
the capital of the New L.L.C. and execute a counterpart of the Amended and
Restated Limited Liability Company Agreement of the New L.L.C. in the form of
Exhibit A (the "New L.L.C. Agreement") in return for a 32.07% membership
interest in the New L.L.C.;
WHEREAS, simultaneously with the execution of this Agreement the
Purchaser and the Company have entered into a Registration Rights Agreement in
the form of Exhibit B with respect to the Shares (the "Registration Rights
Agreement" and together with the Stock Purchase Agreement, the New L.L.C.
Agreement, this Agreement, and all other documents pursuant to which the
Company and the Subsidiaries contribute their assets to the New L.L.C. and the
Escrow Agreement, the "Related Agreements");
WHEREAS, the Company, the Subsidiaries and the Stockholders have
agreed to conduct all of the Company's and the Subsidiaries' future and
existing business activities in the New L.L.C. or in future limited liability
companies or limited partnerships in which Purchaser shall have a 42.76%
interest (32.07% directly through its ownership of such future interests and
10.69% indirectly through its ownership of the Shares (subject to adjustment as
provided herein)) as the result of its capital investment in the New L.L.C. and
the purchase of the Shares;
WHEREAS, the Company, the Subsidiaries and the Stockholders have
agreed to grant Purchaser the opportunity to provide equity, construction and
development financing for future
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projects of the Company and its future affiliates for which outside financing
in excess of $1 million is required;
WHEREAS, the Company, the Purchaser and the Stockholders desire to
impose certain restrictions on the disposition and transfer of all of the
shares of Common Stock owned by the Purchaser and the Stockholders, and the
limited liability company interests in the New L.L.C. and each future limited
liability company or limited partnership owned by the Company, the Subsidiaries
and the Purchaser, and the purchase of further Common Stock in the Company and
to set forth certain voting agreements with respect to such Common Stock and
limited liability company and partnership interests and to create certain
purchase and sale rights and options with respect to such Common Stock and
limited liability interests.
NOW, THEREFORE, in consideration of the premises, and the
representations, warranties, covenants and agreements set forth herein, the
parties agree as follows:
ARTICLE I
THE TRANSACTION
SECTION 1.01 THE TRANSACTION. On the terms and subject to the
conditions set forth in this Agreement:
(a) on or prior to the Closing Date (defined below), the Company
and each of the Subsidiaries shall transfer all of their respective properties,
contracts, rights and other assets of every kind, both tangible and intangible,
excluding only the Excluded Assets (as defined in Section 5.1 of the New L.L.C.
Agreement) (the assets to be so transferred are referred to herein as the
"Transferred Assets") to the New L.L.C. in exchange for 100% of the membership
interests in the New L.L.C., and the New L.L.C. will assume all of the
liabilities of the Company and the Subsidiaries (whether known or unknown)
provided that liabilities arising with respect to the period after the Closing
Date shall be allocated among the New L.L.C., the Mirror Companies and the
Future Affiliate in accordance with Section 6.05(c) below;
(b) after completion of the transfers set forth in paragraph (a),
on the Closing Date the Purchaser shall contribute to the capital of the New
L.L.C. the sum of $30,000,000 in exchange for newly issued membership interests
in the New L.L.C. equal to 32.07% of the outstanding membership interests in
the New L.L.C. after taking into account such issuance (and the membership
interests of the Company and the Subsidiaries shall be diluted accordingly to
67.93%);
(c) immediately after completion of the contribution described in
clause (b) above, the Purchaser shall consummate the purchase from the
Stockholders of the Shares for the Purchase Price pursuant to the Stock
Purchase Agreement and the Escrow Agreement;
(d) on the Closing Date, the parties hereto shall execute and
deliver the documents and consummate the transactions described in Section 5.02
of this Agreement.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY,
THE SUBSIDIARIES AND THE NEW L.L.C.
Each of the Company, the Subsidiaries, the New L.L.C., jointly and
severally represents and warrants to the Purchaser as of the date hereof and as
of the Closing Date:
SECTION 2.01 ORGANIZATION, QUALIFICATIONS AND CORPORATE POWER. Each of the
Company, the New L.L.C. and each Subsidiary is a corporation or limited
liability company duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization. Each of the Company, the
Subsidiaries and the New L.L.C. (a) has or will have all on the Closing Date
necessary power and authority and all governmental licenses, authorizations and
consents and approvals required to own its properties now owned or proposed to
be owned immediately after the Closing Date and to carry on its business as now
conducted, (b) is or will be on the Closing Date duly qualified under the laws
of each jurisdiction in which qualification is required to own, lease or
license its properties so owned, leased or licensed or proposed to be owned,
leased or licensed immediately after the Closing Date or to carry on its
business as now conducted or so proposed to be conducted immediately after the
Closing Date except where the failure to so qualify will not have a Material
Adverse Effect and (c) has all necessary power and authority to execute and
deliver each of the Related Agreements to which it is or may become a party and
to consummate the transactions contemplated thereby.
SECTION 2.02 INTEREST OWNERSHIP. Immediately before the consummation of
the transactions contemplated to take place on the Closing Date, the Company
and one or more of its wholly-owned subsidiaries will be collectively the
beneficial and record owner of all of the outstanding membership interests of
the New L.L.C. Immediately after the consummation of the transactions
contemplated by this Agreement to take place on the Closing Date, the persons
and entities listed on Schedule 2.02 will be the sole legal, record and
beneficial owners of the number and percentage of issued and outstanding shares
of each class of the Company's Common Stock and membership interests in the New
L.L.C. set forth opposite its name on Schedule 2.02. The Subsidiaries and
Bayhill Escrow shall immediately before the Closing Date constitute all of the
direct and indirect subsidiaries of the Company.
SECTION 2.03 AUTHORIZATION OF AGREEMENTS. The execution and delivery by
each of the Company, the Subsidiaries and the New L.L.C. of the Related
Agreements to which they are party and the performance of their respective
obligations under the Related Agreements to which they are party have been duly
authorized by all necessary corporate or limited liability company action on
the part of the Company, the Subsidiaries and the New L.L.C.
SECTION 2.04 VALIDITY. This Agreement has been, and each other Related
Agreement to which they are party upon its execution and delivery as provided
herein will be, duly executed and delivered by the Company, the Subsidiaries,
and the New L.L.C. and this Agreement constitutes and each other Related
Agreement upon its execution and delivery as provided herein will be, the
legal, valid and binding obligation of such entity, enforceable against such
entity in
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accordance with its terms, except as the enforceability hereof may be limited
(i) by bankruptcy, insolvency, reorganization or other similar laws affecting
the enforcement of creditors' rights generally and (ii) by general equitable
principles regardless of whether considered in a proceeding in equity or at
law.
SECTION 2.05 GOVERNMENTAL APPROVALS. Subject to the continued accuracy of
the representations and warranties of the Purchaser set forth in Section 3.04
of the Stock Purchase Agreement, no registration or filing with, or consent or
approval of, or other action by, any Federal, state or other governmental
agency or instrumentality or regulatory body is necessary for the valid
execution, delivery and performance by the Company, the Subsidiaries, or the
New L.L.C. of the Related Agreements, other than (i) satisfaction by the
Company of its future periodic reporting obligations under the Securities
Exchange Act of 1934 and the associated regulations and (ii) revisions to the
Subdivision Approvals as defined in Schedule 2.08 to reflect the transactions
contemplated by this Agreement which will be obtained prior to or following the
Closing in the ordinary course of business the failure to obtain which prior to
Closing will not (except in the case of any Subdivision Approval marked with an
asterisk in Schedule 2.08, if any) have a Material Adverse Effect.
SECTION 2.06 ASSET TRANSFER AND ASSUMPTION OF LIABILITIES. At or prior to
the Closing, the Company and the Subsidiaries will have transferred all of
their respective assets to the New L.L.C. and the New L.L.C. shall have assumed
all of the Company's and such Subsidiaries' liabilities, provided, however,
that the Excluded Assets will not be transferred to the New L.L.C.
SECTION 2.07 CONTRAVENTION. Neither the execution, delivery and
performance of any Related Agreement by the Company, any Subsidiary, or the New
L.L.C. nor the consummation of the transactions contemplated hereby or thereby
will (with or without notice or lapse of time or both) conflict with, violate
or breach (a) any provision of the Company's, any Subsidiaries', or the New
L.L.C.'s organizational documents, (b) any law, rule, regulation or order by
which the Company, any Subsidiary, or the New L.L.C. or any of the Transferred
Assets or any of their properties may be bound or affected, or (c) subject to
obtaining the Approvals, any material agreement to which the Company, any
Subsidiary, or the New L.L.C. is a party or by which the Company, the New
L.L.C., any Subsidiary, or the Transferred Assets or any of their other
properties may be bound or affected.
SECTION 2.08 THIRD-PARTY APPROVALS. Other than as set forth in Schedule
2.08, no authorization, consent, order or approval of, notice to or
registration or filing with, or any other action by any person or entity (each
an "Approval") is required in connection with the valid execution, delivery and
performance by the Company, the Subsidiaries, or the New L.L.C. of this
Agreement or any of the Related Agreements. All Approvals will be obtained on
or prior to the Closing Date other than Approvals the failure to obtain which
will not have a Material Adverse Effect. Schedule 2.08 sets forth a list of
all material Approvals.
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SECTION 2.09 FINANCIAL INFORMATION.
(a) The audited consolidated balance sheets of the Company and the
Subsidiaries dated as of February 28, 1997, February 29, 1996 and February 28,
1995 and the unaudited consolidated balance sheet of the Company and the
Subsidiaries dated May 31, 1997 were prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis in
accordance with the past practice of the Company and fairly present the
consolidated financial position of the Company and the Subsidiaries as of their
respective dates.
(b) The audited consolidated statements of operations, statements
of changes in shareholder's equity and statements of cash flows of the Company
and the Subsidiaries for the 12-month periods ended February 28, 1997, February
29, 1996 and February 28, 1995, and the unaudited consolidated statement of
operations, statement of changes in shareholders equity and statement of cash
flows of the Company and the Subsidiaries for the three (3) month period ended
May 31, 1997 were prepared in accordance with GAAP applied on a consistent
basis in accordance with the past practice of the Company and fairly present
the consolidated results of operations, changes in shareholder's equity and
cash flows of the Company and the Subsidiaries for such period.
SECTION 2.10 LITIGATION. There is no pending or threatened litigation,
suit, action or proceeding that (a) questions the validity of any of the
Related Agreements or that seeks to prohibit or restrain the consummation of
the transactions contemplated by this Agreement or any of the Related
Agreements or (b) could reasonably be expected to have a Material Adverse
Effect.
SECTION 2.11 LICENSES. The Company, each Subsidiary and the New L.L.C.
owns, holds or possess all material permits, licenses, franchises,
registrations, qualifications or other authorizations ("Licenses") necessary to
in all material respects entitle the Company, each Subsidiary and the New
L.L.C. to use its respective name, to own or lease, operate and use its
respective assets and properties and to carry on and conduct its business, as
contemplated by the provisions of the New L.L.C. Agreement, including without
limitation the delegations of functions by the Company to the Subsidiaries
contemplated thereby, and all such Licenses are validly held and in full force
and effect. Subject to obtaining the Subdivision Approvals, no such License
will under its current terms be subject to suspension, modification,
revocation, cancellation or non-renewal as a result of the execution, delivery
or performance of any of the Related Agreements.
SECTION 2.12 COMPLIANCE WITH LAWS. Each of the Company, the Subsidiaries,
and the New L.L.C. are in compliance with each law, rule or regulation
applicable to their respective business, properties or operations except where
non-compliance will not have a Material Adverse Effect.
SECTION 2.13 NO MATERIAL ADVERSE EFFECT. Since February 28, 1997, there
has not occurred any event, act, condition or occurrence, which has (a) had a
material adverse effect upon the business, results of operations, contracts,
assets (whether tangible or intangible),
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liabilities, obligations, condition (financial or otherwise), or prospects of
the Company, the Subsidiaries or the New L.L.C. taken as a whole or (b)
impaired, hindered or adversely affected in any material respect the ability of
the Company, any Subsidiary or the New L.L.C. to perform any of their
obligations under the Related Agreements (each of (a) and (b), a "Material
Adverse Effect").
SECTION 2.14 THE TRANSFERRED ASSETS.
(a) As of the Closing Date, the New L.L.C. will have good and
marketable title to each of the Transferred Assets, subject only to liens and
encumbrances of record and other customary liens and encumbrances.
(b) The transactions contemplated to take place on the Closing
Date shall not create any liens or encumbrances on any of the Transferred
Assets other than amendments and substitutions for existing liens and
encumbrances to reflect the transfer of Transferred Assets to, and assumption
of liabilities by, the New L.L.C.
(c) The Transferred Assets together with the Excluded Assets
comprise all real property and personal property, tangible or intangible, owned
or used by the Company and the Subsidiaries (i) used or useful in the business
of the Company and the Subsidiaries as conducted immediately prior to the
Closing Date and (ii) reflected in the financial statements referred to in
Section 2.09, and immediately after the Closing the New L.L.C. shall have the
right to utilize such Transferred Assets subject to no material restrictions
(other than those to which the Company and its Subsidiaries are subject
immediately prior to the Closing).
SECTION 2.15 RESTRICTED PAYMENTS. Since February 28, 1997, neither the
Company nor the New L.L.C. has made (a) any dividend or other distribution on
(i) any shares of the Company's capital stock or (ii) any of the New L.L.C.'s
membership interests or (b) any payments in cash or otherwise, on account of
the purchase, redemption, retirement or acquisition of (i)(x) any shares of the
Company's capital stock or (y) any of the New L.L.C.'s membership interests or
(ii) any option, warrant or other right to acquire (x) shares of the Company's
capital stock or (y) any of the New L.L.C.'s membership interests.
SECTION 2.16 MISSTATEMENTS. No representation or warranty of the Company,
the Subsidiaries or the New L.L.C. contained in any Related Agreement contains
any material misstatement of fact or omits to state a material fact necessary
to make the statement contained therein not materially misleading. None of the
information regarding the actual assets, operations or liabilities of the
Company, the Subsidiaries or the New L.L.C. provided by the Company to the
Purchaser in writing prior to the date hereof, including without limitation,
the business plan set forth as Exhibit A to the New L.L.C. Agreement and
related documents (the "Information Documents") contains a material
misrepresentation of fact or omitted to state a material fact necessary to make
the information set forth in such writing at the level of detail there set
forth not materially misleading at the time of such delivery, provided,
however, that (a) the Company makes no representation whatsoever regarding any
projection of future activity of the Company other than that at the time of
such projection it represented the good faith
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expectations of the Company based upon assumptions the Company believed
reasonable at the time, (b) the Company has made available to the Purchaser
full access to all Company records in its possession or in the possession of
its consultants which records include information which provides an additional
level of detail (but does not contradict) the Information Documents.
SECTION 2.17 TAXES. Each of the Company and the Subsidiaries has filed all
material federal, state, local and foreign tax returns that are required to be
filed by it and have paid all taxes due pursuant to those returns or pursuant
to any assessment received by it.
SECTION 2.18 ENVIRONMENTAL VIOLATIONS. The Company and the Subsidiaries
have no knowledge that the Company or the Subsidiaries or their business or
properties are in violation of any applicable federal, state or local
environmental law, including without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, the
Resource Conservation and Recovery Act of 1976, as amended and the Toxic
Substances Control Act (collectively "Environmental Laws"), except violations
which will not have a Material Adverse Effect.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company, the
Subsidiaries, and the New L.L.C. that:
SECTION 3.01 ORGANIZATION AND CORPORATE POWER.
(a) The Purchaser is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Purchaser has the partnership power and authority to execute, deliver and
perform all of the Related Agreements to which it is a party.
(b) California Housing Finance L.L.C. is the sole general partner
of the Purchaser and is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the company power and authority to execute and deliver the Related Agreements
on behalf of the Purchaser.
SECTION 3.02 AUTHORIZATION OF AGREEMENTS, ETC. The execution and delivery
by the Purchaser of the Related Agreements and by its general partner on behalf
of the Purchaser and the performance by the Purchaser of its obligations
thereunder have been duly authorized by all requisite limited partnership and
limited liability company action.
SECTION 3.03 VALIDITY. This Agreement has been and each other Related
Agreement upon its execution and delivery as provided herein will be duly
executed and delivered by the Purchaser and constitutes and each other Related
Agreement upon its execution and delivery as provided herein will be, the
legal, valid and binding obligation of the Purchaser, enforceable in accordance
with its terms except as the enforceability thereof may be limited (i) by
bankruptcy,
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insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and (ii) by general equitable principles regardless
of whether considered in a proceeding in equity or at law.
SECTION 3.04 INVESTMENT REPRESENTATIONS.
(a) The Purchaser is an "accredited investor" within the meaning
of Rule 501(a) under the Securities Act and has, together with its Affiliates,
sufficient knowledge and experience in investing in companies similar to the
New L.L.C. so as to be able to evaluate the risks and merits of its investment
in the New L.L.C. and it is able financially to bear the risks thereof;
(b) The Purchaser has had an opportunity to discuss the Company's
and the New L.L.C.'s business, management and financial affairs with the
Company's management to its satisfaction and, except for reliance on the
representations and warranties contained in the Related Agreements and the
Information Documents, has relied solely upon its own diligence with respect to
the business and properties of the Company and the New L.L.C.; and
(c) The Purchaser has had full access to records of the Company in
the possession of the Company and its consultants and accountants and the
Purchaser has availed itself of such access to the extent it believed necessary
in connection with determining to effect the transactions contemplated by the
Related Agreements.
SECTION 3.05 CONTRAVENTION. Neither the execution, delivery or performance
of any Related Agreement nor the consummation of the transactions contemplated
hereby or thereby will (with or without notice or lapse of time or both)
conflict with, violate or breach (a) any provision of the Purchaser's
organizational documents, (b) any law, rule regulation or order by which the
Purchaser or any of its properties may be bound or affected, or (c) any
material agreement to which the Purchaser is a party or by which the Purchaser
or any of its properties may be bound or affected.
SECTION 3.06 THIRD-PARTY APPROVALS. No authorization, consent, order or
approval of, notice to or registration or filing with, or any other action by
any person or entity is required in connection with the valid execution,
delivery and performance by the Purchaser of any of the Related Agreements
other than any filings necessary pursuant to Sections 13 and 16 of the
Securities Exchange Act of 1934 and associated regulations.
SECTION 3.07 FINANCIAL CAPACITY. The Purchaser will on the Closing Date
have the financial capacity to carry out its obligations under the Related
Agreements.
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SECTION 3.08 LITIGATION. There is no litigation, suit, action or
proceeding arising out of any action or inaction of Purchaser (a) that
questions the validity of any of the Related Agreements or that involves or
relates to any of the transactions contemplated by any of the Related
Agreements, (b) that could reasonably be expected to adversely affect the
Purchaser's ability to perform its obligations under the Related Agreements to
which it is a party.
SECTION 3.09 MISSTATEMENTS. No representation or warranty of Purchaser
contained in any Related Agreement contains any material misstatement of fact
or omits to state a material fact necessary to make the statement contained
therein not materially misleading.
ARTICLE IV
THE CONDITIONS TO THE CLOSING
SECTION 4.01 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY, THE NEW L.L.C.
AND THE SUBSIDIARIES. The obligations of the Company, the New L.L.C. and the
Subsidiaries to perform their respective obligations set forth below to be
performed on the Closing Date are subject to the satisfaction or waiver on or
before the Closing Date of the following conditions:
(a) Representations and Warranties of the Purchaser to be True and
Correct. The representations and warranties of the Purchaser contained in the
Related Agreements shall be true, complete and correct in all material respects
on and as of the Closing Date, with the same effect as though such
representations and warranties had been made on and as of such date, and the
general partner of the Purchaser shall have certified in writing to the Company
to such effect.
(b) The Purchaser's Performance. The Purchaser shall have
performed and complied in all material respects with all covenants and
agreements contained in the Related Agreements required to be performed or
complied with by it prior to or at the Closing Date and the general partner of
the Purchaser shall have certified to the Company in writing to such effect and
to the further effect that the conditions set forth in clauses (a) and (b) of
this Section 4.01 have been satisfied.
(c) Supporting Documents. The Company shall have received copies
of the following documents:
(i) (A) the Certificates of Limited Partnership and the
Limited Partnership Agreement, both certified as of a recent date by a member
of the Purchaser and (B) certificates of the Secretary of State of the State of
Delaware dated as of a recent date as to the due organization and good standing
of the Purchaser and its general partner.
(ii) such additional supporting documents and other
information with respect to the operations and affairs of Purchaser as the
Company or its counsel may reasonably request.
(d) Litigation. As of such Closing Date, there shall not (i) be
in effect any judgment, order, injunction or decree of any court of competent
jurisdiction, the effect of which is to
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prohibit or restrain the consummation of the transactions contemplated by this
Agreement or award any material damages (after taking into account any damages
for which full insurance coverage is not in dispute) with respect to the
transactions contemplated by this Agreement or (ii) be pending any action or
proceeding by a governmental authority which seeks any of the foregoing.
(e) No Change in Law. There shall not have been any action, or
any statute enacted, by any government or agency thereof which would in any
material respect prohibit or render the parties unable to consummate the
transactions contemplated hereby or make the transactions contemplated hereby
illegal.
(f) Approvals. All of the Approvals set forth in Schedule 2.08
hereto and bearing an asterisk shall have been received.
(g) Stock Purchase Agreement Conditions. The conditions to the
obligations of the Stockholders to be performed at the Closing of the
transactions contemplated by the Stock Purchase Agreement shall have been
satisfied.
(h) Related Agreements. The Company, the Subsidiaries, the New
L.L.C. and the Stockholders party thereto shall have received each of the
Related Agreements, duly executed, to which the Purchaser is party.
(i) Deliveries. The Purchaser shall have made, or stand willing
to make all of the deliveries required by Section 5.02(a) below.
SECTION 4.02 CONDITIONS TO THE OBLIGATIONS OF THE STOCKHOLDERS. The
obligations of the Stockholders to perform their obligations set forth below on
the Closing Date are subject to the satisfaction or waiver in writing, on or
before the Closing Date, of the conditions to the obligations of the
Stockholders to be performed at the closing of the transactions contemplated by
the Stock Purchase Agreement.
SECTION 4.03 CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER. The
obligation of the Purchaser to perform its obligations set forth below on the
Closing Date is subject to the satisfaction or waiver in writing, on or before
the Closing Date, of all of the following conditions:
(a) Representations and Warranties of the Company, the
Subsidiaries, and the New L.L.C. to be True and Correct. The representations
and warranties of the Company, the Subsidiaries, the Stockholders and the New
L.L.C. contained in the Related Agreements shall be true, complete and correct
in all respects on and as of the Closing Date, with the same effect as though
such representations and warranties had been made on and as of such date, and
an officer of the Company, the Subsidiaries, the Stockholders and the New
L.L.C. shall have respectively certified in writing to the Purchaser to such
effect.
(b) The Company's, the Subsidiaries', and the New L.L.C.'s
Performance. The Company, the Subsidiaries, the Stockholders and the New
L.L.C. shall have performed and
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complied in all material respects with all covenants and agreements contained
in this Agreement and Related Agreements to be performed prior to the Closing
Date, and an officer of the Company, the Subsidiaries and the Stockholders
shall have respectively certified to the Purchaser in writing to such effect
and to the further effect that the conditions set forth in clauses (a) and (b)
of this Section 4.03 have been satisfied.
(c) Supporting Documents. The Purchaser shall have received
copies of the following documents:
(i) (A) the Second Restated Articles of Incorporation (as
amended) and Second Amended and Restated Bylaws of the Company, both certified
as of a recent date by an officer of the Company and (B) certificates of the
Secretary of State of the State of Delaware and of the State of California
dated as of a recent date respectively certifying as to the due organization
and good standing in Delaware and qualification in California of the Company.
(ii) (A) the Certificate of Formation and the Limited
Liability Company Agreement of the New L.L.C., both certified as of a recent
date by a member of the New L.L.C. and (B) certificates of the Secretary of
State of the State of Delaware and of the State of California dated as of a
recent date respectively certifying as to the due organization and good
standing in Delaware and qualification in California of the New L.L.C.
(iii) a certificate of the Secretary or an Assistant
Secretary of the Company and the Subsidiaries dated the Closing Date and
certifying: (A) that attached thereto is a true and complete copy of all
resolutions adopted by the Board of Directors of the Company and the
Subsidiaries, as required, authorizing the execution, delivery and performance
by the Company and the Subsidiaries of this Agreement and (B) that such
resolutions are in full force and effect.
(iv) such additional supporting documents and other
information with respect to the operations and affairs of the Company and the
Subsidiaries or the New L.L.C. as the Purchaser or its counsel may reasonably
request.
(d) Litigation. As of the Closing Date, there shall not (i) be in
effect any judgment, order, injunction or decree of any court of competent
jurisdiction, the effect of which is to prohibit or restrain the consummation
of the transactions contemplated by this Agreement or award any material
damages (after taking into account any damages for which full insurance
coverage is not in dispute) with respect to the transactions contemplated by
this Agreement or (ii) be pending any action or proceeding by a governmental
authority which seeks any of the foregoing.
(e) No Change in Law. There shall not have been any action, or
any statute enacted, by any government or agency thereof which would in any
material respect prohibit or render the parties unable to consummate the
transactions contemplated hereby or make the transactions contemplated hereby
illegal.
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(f) No Material Adverse Change. There shall have occurred since
February 28, 1997 (the "Balance Sheet Date") no Material Adverse Effect
provided, however, that a writeoff of up to Eight Million Dollars ($8,000,000)
of the book value of the Company shall not be considered in determining whether
there has been a Material Adverse Effect.
(g) Stock Purchase Agreement Conditions. The conditions to the
obligations of the Purchaser to be performed at the Closing of the transactions
contemplated by the Stock Purchase Agreement shall have been satisfied.
(h) Related Agreements. The Purchaser shall have received each of
the Related Agreements, duly executed and delivered by the Company, the
Subsidiaries, the New L.L.C. and the Stockholders party thereto.
(i) Asset Transfer. The New L.L.C. shall have received good and
marketable title to each of the Transferred Assets subject only to liens and
encumbrances of record and other customary liens and encumbrances and free of
any additional liens resulting from the transactions contemplated to take place
at the Closing other than those described in Section 2.14(b) above.
(j) Approvals. The Purchaser shall have received certified copies
of all Approvals set forth on Schedule 2.08 and bearing an asterisk.
(k) Deliveries. The Company and the Stockholders shall have made,
or stand willing to make, all of the deliveries required by Sections 5.02(b)
and (c) below.
(l) Xxxxxxxxxxx Agreement. Xxxx Xxxxxxxxxxx ("Xxxxxxxxxxx") shall
have executed and delivered the side letter agreement (the "Xxxxxxxxxxx
Agreement") between Xxxxxxxxxxx and the Purchaser in the form previously
negotiated. The representations and warranties of Xxxxxxxxxxx contained in the
Xxxxxxxxxxx Agreement shall be true, complete and correct in all respects on
and as of the Closing Date, with the same effect as though such representations
and warranties had been made on and as of such date. Xxxxxxxxxxx shall have
performed and complied in all material respects with all covenants and
agreements contained in the Xxxxxxxxxxx Agreement to be performed prior to the
Closing Date.
ARTICLE V
THE CLOSING
SECTION 5.01 CLOSING DATE.
The Closing Date shall be the later of (i) October 1, 1997 and (ii)
the date upon which the conditions to the respective obligations of the Company
and the Purchaser have been satisfied or waived in writing.
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SECTION 5.02 DELIVERIES AT CLOSING. On the Closing Date on the terms and
subject to the conditions of this Agreement:
(a) The Purchaser shall:
(i) contribute, by wire transfer of immediately available
funds, the sum of Thirty Million Dollars ($30,000,000) to an account of the New
L.L.C. specified in writing by the Company;
(ii) deliver to the Escrow Agent a signed counterpart of
the joint escrow instructions in the form of Exhibit A to the Escrow Agreement
(the "Joint Escrow Instructions");
(iii) execute and deliver a signed counterpart of the New
L.L.C. Agreement in the form of Exhibit A, provided however, that Exhibit D to
such New L.L.C. Agreement is subject to change in the discretion of the Company
to reflect the writeoff described in Section 2.13 hereof (or any portion
thereof) provided that there shall be no change in the aggregate Percentage
Interest (as defined therein) of the Company and the Subsidiaries;
(iv) execute and deliver a signed counterpart of the
Registration Rights Agreement;
(v) execute and deliver such other documents, agreements
and certificates as are reasonably necessary to document the transactions
contemplated by this Agreement.
(b) The Stockholders shall deliver to the Escrow Agent an executed
counterpart of the Joint Escrow Instructions.
(c) The Company shall:
(i) deliver an executed counterpart of the New L.L.C.
Agreement in the form of Exhibit A (with any change contemplated by Section
5.02(a)(iii) above);
(ii) execute and deliver a signed counterpart of the
Registration Rights Agreement;
(iii) cause Xxxx Xxxxxxxxxxx to execute and deliver the
Xxxxxxxxxxx Agreement; and
(iv) execute and deliver such other documents, agreements
and certificates as are reasonably necessary to document the transactions
contemplated by this Agreement.
(d) The New L.L.C. shall execute and deliver to the Company such
documents, agreements and certificates including assumptions of liabilities as
are reasonably necessary to document the transactions contemplated by this
Agreement.
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ARTICLE VI
CERTAIN AGREEMENTS BETWEEN THE COMPANY
AND THE PURCHASER AND FARALLON
SECTION 6.01 NON-COMPETE AND NON-SOLICITATION.
In consideration of the access to confidential and proprietary information
regarding the business operations of the Company to which Purchaser shall have
access as the result of the transactions contemplated by the Related
Agreements, the Purchaser agrees that during the Restrictions Period (as
defined below) (i) it shall not, directly or indirectly, conduct or invest in
any tract homebuilding or production homebuilding activity (but excepting any
land development activity even if for the ultimate purpose of homebuilding)
within a 100 mile radius of any current or future project of the Company, the
New L.L.C. or any Future Affiliate or Mirror Company or of any real property
which is the subject of any purchase agreement or option contract to which the
Company or any of the Subsidiaries or the New L.L.C. or any Future Affiliate or
Mirror Company is at any time a party provided however, that in the event any
such activity by the Purchaser was commenced prior to the acquisition of any
such project or the entering into of such purchase agreement or option contract
of the Company, the New L.L.C., any Future Affiliate or any Mirror Company, the
continuation of such activity of the Purchaser shall not be a breach of this
Section 6.01; and (ii) it shall not directly or indirectly hire or solicit the
hiring of any current or future employee of the Company, the New L.L.C. or any
Future Affiliate or Mirror Company. The Purchaser shall cause all of its
affiliates directly or indirectly controlled by Farallon Capital Management,
L.L.C. ("Farallon Controlled Affiliate") to comply with the foregoing
restrictions. The Purchaser acknowledges that the breach of this Section 6.01
shall cause irreparable harm to the Company, the New L.L.C. or a Future
Affiliate or Mirror Company as the case may be, which harm cannot be
reasonably, adequately or fully redressed by the payment of damages.
Accordingly, the Company shall be entitled, in addition to any other right it
may have in law or in equity, to an injunction enjoining the Purchaser and the
Farallon Controlled Affiliates from any breach or threatened breach of this
Agreement. Purchaser hereby waives the defense in any equitable proceeding
that there is an adequate remedy at law for any such breach and Purchaser shall
cause the Farallon Controlled Affiliates described above to waive such defense.
The "Restrictions Period" shall mean the period from the Closing Date until one
year from the date on which the Purchaser is entitled to a direct and indirect
interest in any Mirror Company as the result of Section 6.02(d) below which is
less than ten percent (10%).
SECTION 6.02 CONDUCT OF COMPANY BUSINESS.
(a) Existing Business. The Company and the Subsidiaries agree
that they will, and the Stockholders will cause the Company and the
Subsidiaries to, conduct all of the business of the Company and the
Subsidiaries and all other subsidiaries of the Company existing as of the
Closing Date (the "Existing Business") exclusively through the New L.L.C.
(which conduct of business shall for the purposes of this Section 6.02 include
the delegations of functions to certain Subsidiaries of the Company
contemplated by Section 3.4(a) of the New L.L.C. Agreement).
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(b) Future Business. The Company and the Subsidiaries agree that
they will, and the Stockholders will cause the Company and the Subsidiaries and
all other subsidiaries of the Company and the Subsidiaries to, conduct all
business (for avoidance of doubt, this shall include all future business
activities of the Company and the Subsidiaries) other than the Existing
Business ("New Business") exclusively through the New L.L.C. or through one or
more Mirror Companies as further set forth in Section 6.02(c) below. The
Company, the Subsidiaries and the Stockholders agree that a "Mirror Company"
shall mean a limited liability company (or limited partnership for projects in
Texas or other states in which a substantial tax or other benefit to the
Purchaser or the Company makes use of a limited partnership more reasonable)
formed by the Purchaser and the Company and the Subsidiaries. The Company, the
Subsidiaries and the Stockholders agree that (1) each Mirror Company operating
agreement shall be in the form of the operating agreement attached hereto as
Exhibit C (appropriately conformed if the entity is a limited partnership) and
that the Company, the Subsidiaries and the Purchaser shall enter into each such
operating agreement, and (2) each Mirror Company will be structured so as to be
a pass-through entity for federal and state tax purposes. The Company, the
Subsidiaries and the Stockholders acknowledge and agree the Purchaser's right
to an interest in each Mirror Company as set forth in Exhibit C and Section
6.02(d) in consideration of the capital contribution of $30,000,000 by the
Purchaser to the New L.L.C.
(c) Structure of New Business. The parties agree that:
(i) New Business which consists of a new project requiring $1
million or less in New Capital (as defined below) shall be (x) subject to the
approval of the Purchaser, which approval shall not be unreasonably withheld
or delayed (provided, however, that in the event that the New L.L.C. is in a
25% Net Cash Flow Deficit Position as defined in the New L.L.C. Agreement, then
such consent may be withheld by Purchaser in its sole discretion) and (y), if
the Purchaser consents as provided in clause (x), conducted in the New L.L.C.
or, where it is commercially reasonable to do so (taking into account without
limitation the acquisition, development and construction financing needs of the
New L.L.C. and such project), in a Mirror Company or a wholly-owned limited
liability company or limited partnership subsidiary of the New L.L.C.;
(ii) New Business not approved by the Purchaser as provided in
clause (i)(x) and New Business in each case which consists of a new project
which requires New Capital in excess of $1 million which the Purchaser declines
to provide pursuant to Section 6.03 below shall be (x) conducted through a
limited liability company or limited partnership (a "Future Affiliate") in
which a Mirror Company and the source of such New Capital shall be the members
or partners, and (y) the form of limited liability company or partnership
agreement of the Future Affiliate and the terms on which such New Capital is
obtained shall be as agreed between the Company and the source of such New
Capital; and
(iii) which consists of a new project which requires Outside
Capital in excess of $1 million which the Purchaser elects to provide shall be
conducted through a Future Affiliate (x) in which a Mirror Company and the
Purchaser shall be the members or partners, and (y) which is governed by an
operating agreement substantially in the form of Exhibit D hereto
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and on economic terms determined in accordance with Section 6.03 below. For
purposes of this Agreement, the term "New Capital" means any and all financing,
whether debt or equity, including borrowings by the Company, guaranties and
other recourse financial obligations, other than credit lines available from
time to time (other than any credit lines or amendments obtained with respect
to such specific New Business).
(d) Ownership. The percentage membership or partnership interest
of the Purchaser and the Company and the Subsidiaries in any Mirror Company
shall be identical at all times to such entity's membership interest in the New
L.L.C., i.e., immediately upon the consummation of the transactions
contemplated to take place on the Closing Date, 32.07% for the Purchaser and
67.93% for the Company and the Subsidiaries collectively. In the event of any
transaction in which any Company Interests of either the Company and the
Subsidiaries, on the one hand, or the Purchaser on the other are transferred or
any new membership or partnership interests in the New LLC or any Mirror
Company are issued or redeemed, the Company and the Purchaser shall agree in
writing on the effect of such transaction on (x) the foregoing percentages, and
(y) the percentages set forth in Sections 7.02(a) and 7.03 hereof. In the
event of any transaction in which any Common Stock owned by the Purchaser or
the Stockholders is transferred, or any Common Stock is issued or redeemed, the
Company Percentage described in Section 7.03 shall be adjusted accordingly. In
addition to the foregoing direct ownership of any Mirror Company, the Purchaser
shall indirectly participate in any Mirror Company through its then ownership
of Common Stock (immediately upon the consummation of the transactions
contemplated to take place on the Closing Date, the indirect participation
shall equal 10.69%).
(e) The "Company Interests." The membership and partnership
interests of either the Company and the Subsidiaries or the Purchaser in the
New L.L.C. and any Mirror Company shall collectively be referred to herein as
their respective "Company Interests."
SECTION 6.03 RIGHT OF FIRST OPPORTUNITY ON FINANCING.
(a) In the event the Company wishes to pursue any New Business
opportunity requiring New Capital in excess of $1 million (a "Financing
Opportunity") it shall give Purchaser a reasonable opportunity to furnish such
financing provided the Company shall have no obligation to Purchaser whatsoever
in connection with any Financing Opportunity which was brought to the Company's
attention by a third party willing, and in the Company's reasonable judgment,
such third party is financially able to provide all of such financing.
(b) With respect to such Financing Opportunities, the Company
shall advise the Purchaser promptly thereof and shall provide Purchaser such
reasonably available information in respect of the Financing Opportunity as is
reasonably requested by Purchaser. Purchaser shall have a fifteen (15)
Business Day period from the receipt of such information in which to make an
offer with respect to any Financing Opportunity. If Purchaser makes an offer
in respect of an Financing Opportunity and if such offer is acceptable to the
Company in its sole discretion, then Purchaser shall be granted such Financing
Opportunity.
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(c) In the event (i) Purchaser declines or does not accept any such
Financing Opportunity within fifteen (15) Business Days of Purchaser's having
received all information available to the Company as is reasonably necessary to
Purchaser's determination whether to express or decline interest in such
Financing Opportunity; or (ii) the Company declines the offer which Purchaser
makes to accept such Financing Opportunity, the Company shall be free to
pursue such Financing Opportunity within sixty (60) days of the events
described in subparagraphs (i) or (ii), as the case may be, on such terms and
with such financing as it shall determine in its sole discretion, provided,
however, that the Company may not without complying again with the terms of
this Section 6.03 accept terms which are on balance less favorable to the
Company than any terms offered by the Purchaser within such fifteen (15)
Business Day period.
(d) This Section 6.03 shall have no further force or effect after the
end of the Restrictions Period.
SECTION 6.04 POTENTIAL TAX RESTRUCTURING.
The Stockholders, the New L.L.C. and the Company agree to consider in
good faith any reasonable proposal which may be made by Purchaser to
restructure its ownership interest in the Company into an equity interest in a
pass-through entity for federal and state tax purposes provided that any such
restructuring shall be at Purchaser's expense and shall not adversely affect
the interests of the shareholders of the Company (including the Stockholders)
or the respective rights of the Stockholders and the Company under the Related
Agreements.
SECTION 6.05 MINORITY CONTROLS.
(a) Business Plan. The Company shall conduct its operations through
the New L.L.C. pursuant to the New L.L.C.'s Business Plan as described in the
New L.L.C. Agreement. The "Business Plan" as referred to herein shall be the
New L.L.C.'s Business Plan as defined in the New L.L.C. Agreement and the
respective business plans of the Mirror Companies and Future Affiliates as
described in their respective operating or partnership agreements.
(b) LLC Vetoes. The Company shall not, and shall cause the New L.L.C.
and each Mirror Company not to, take any action for which consent of the
Purchaser is required under the terms of the New L.L.C. Agreement or under the
similar terms of any Mirror Company's operating or partnership agreement
without the consent of the Purchaser, which consent shall not, except as
otherwise expressly provided in any such agreement, be unreasonably withheld or
delayed.
(c) Overhead Allocation. It is contemplated in the New L.L.C.
Agreement that the Company and the Subsidiaries shall perform certain
management and construction services for the New L.L.C. and the Company and the
Purchaser contemplate that such services shall also be provided by the Company
and the Subsidiaries (or by the New L.L.C.) to Mirror Companies and Future
Affiliates under the corresponding provisions of each such entity's operating
or partnership agreement. All such services to the New L.L.C. and any Mirror
Company are to be provided at the Company's, such Subsidiaries' and, if
applicable, the New L.L.C.'s respective
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costs plus a nominal fee. The Company and the Subsidiaries agree that they
shall allocate or cause to be allocated such costs and nominal fees among such
entities and the Future Affiliates on a commercially reasonable basis.
(d) Minority Provisions with Respect to the Company. The Company, the
New L.L.C., the Stockholders, the Subsidiaries and the Purchaser agree that the
Company shall not, nor shall the Stockholders permit the Company to, do any of
the following without the consent of the Purchaser:
(i) financing or encumbering any material assets of the
Company other than in the course of the business of any New L.L.C., any Future
Affiliate or any Mirror Company;
(ii) acquiring or disposing of any material assets, licenses
or other property other than in the course of the business of any New L.L.C.,
any Future Affiliate or any Mirror Company, and other than the acquisition or
disposal of membership interests in the New L.L.C. or Mirror Company or any
Future Affiliate or Mirror Company (the transfer of which is subject to
separate restrictions in the New L.L.C. Agreement and Section 6.06 above);
(iii) making, executing or delivering any guarantee, indemnity
bond, or surety bond, or obligating the Company as surety, guarantor or
accommodation party financing or encumbering any material assets of the Company
other than in the course of the business of any New L.L.C., any Future
Affiliate or any Mirror Company;
(iv) extending any credit on behalf of the Company to any
person, firm or corporation other than in the ordinary course of business of
the New L.L.C., any Future Affiliate or any Mirror Company;
(v) entering into any transaction with any affiliate of the
Company, the Subsidiaries, the Stockholders or the New L.L.C. except which are
separately addressed in this Section 6.05(d), (x) as contemplated by any of the
Related Agreements, (y) transactions in the ordinary course of the business of
the Company reasonably consistent with its past practices, or (z) transactions
which are not material to the Company;
(vi) making any distribution or dividend of any property
(other than cash) or allow any shareholder to possess any Company assets for a
legitimate Company purpose;
(vii) issue any shares of capital stock or other rights to
acquire any capital stock of the Company or repurchase or redeem any shares of
the Company's capital stock or other securities of the Company other than
issuances of Common Stock on terms which have been offered to and not accepted
by the Purchaser;
(viii) permit the Company to merge or consolidate with any
other entity except for any such transaction in which the Company is the
surviving entity or which does not materially adverse affect the shareholders
of the Company;
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(ix) increase the base salary paid by the Company to any
person employed by the Company, or by the New L.L.C., by any Mirror Company or
by any Future Affiliate, who owns or controls in excess of three percent (3%)
of the total equity of the Company by a factor in excess of five percent (5%)
of the amount paid to such person in the immediately preceding fiscal year of
the Company or change the basis on which any bonus or similar compensation is
paid to any such person in a manner which would increase such bonus or similar
compensation in any material respect.
(e) Limitations. Section 6.05(d) shall have no further force or
effect after the end of the Restrictions Period. Nothing in any of the Related
Agreements is intended to in any way restrict the Company's discretion over any
cash of the Company (or the proceeds thereof) which is available for
dividending to its shareholders (including available cash which has been
distributed from the New L.L.C., or any Mirror Company) or to create in
Purchaser any interest in any such cash (or the proceeds thereof) other than
its interest as a shareholder of the Company.
SECTION 6.06 L.L.C. INTEREST TAG-ALONG.
(a) The definitions set forth in this Section 6.06 shall apply only to
this Section and not generally in this Agreement.
(b) Subject to the limitations set forth below, in the event the
Purchaser, on the one hand, or the Company and the Subsidiaries, on the other
hand, (the Company and the Subsidiaries collectively, or the Purchaser, being
the "Prospective L.L.C. Seller") shall receive a bona fide offer (an "Offer")
from a third party (a "Third Party") to purchase all or a portion of the
Company Interests (the "Owned Interests") owned by such Prospective L.L.C.
Seller and such Prospective L.L.C. Seller shall be willing to accept such
Offer, such Prospective L.L.C. Seller shall give notice thereof (the "Third
Party Notice") to the Purchaser or the Company, as the case may be (the
"Offeree"), describing the price and all other material terms and conditions of
the Offer. Each Offeree shall have the right and option, for a period of
twenty (20) business days after the Third Party Notice is deemed given as
herein provided, by giving the Prospective L.L.C. Seller written notice (the
"Notice of Election"), to sell to the Third Party a pro rata portion of its
Owned Interests based on the Owned Interests owned respectively by the
Prospective L.L.C. Seller and the Offeree for the same consideration and
otherwise on the same terms and conditions as contained in the Offer. The
amount of Owned Interests to be sold by any Prospective L.L.C. Seller shall be
reduced to the extent necessary to provide for such sales of Owned Interests by
the Offeree. The Prospective Seller may not sell any Owned Interests unless
any Offeree electing to be included in the sale in accordance with the terms
hereof sells at the same time and on the same terms as the Prospective Seller.
(c) At the closing of any proposed transfer pursuant to the Offer, the
Prospective L.L.C. Seller, together with the Offeree if it has elected to sell
Owned Interests pursuant to such Offer, shall deliver to the Third Party
certificates and/or other instruments representing the Interests to be sold,
free and clear of all liens and encumbrances and shall receive in exchange
therefor the consideration to be paid or delivered by the Third Party in
respect of such Owned Interests as described in the Third Party Notice.
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(d) The Prospective L.L.C. Seller and the Offeree electing to
participate in the Offer each shall bear their respective expenses (including,
without limitation, legal expenses) incurred in connection with such sale.
(e) If an Offeree shall not have given as provided herein a Notice of
Election pursuant to this Section 6.06 with respect to any Offer Notice, such
Offeree will be deemed to have waived all its rights under this Section 6.06
with respect to the transaction specified in such Third Party Notice.
(f) This Section 6.06 shall have no application to any transfer of
Interests to an entity controlled by or under common control with the
transferor provided that such affiliate transferee agrees to be bound by this
Section 6.06 to the same extent as was the transferor as evidenced by a written
adoption of the relevant provision of this Agreement in a form satisfactory to
the Purchaser or the Company, as the case may be.
(g) Any sales subject to this Section 6.06 shall be subject to the
receipt of any consents required under the Related Agreements or under any
limited partnership, limited liability company or operating agreement governing
such entity whose interests are to be transferred.
ARTICLE VII
CERTAIN AGREEMENTS AMONG THE STOCKHOLDERS
AND THE PURCHASER
The following agreements shall have effect from and after the Closing
Date until the date on which either the Stockholders, on the one hand, or the
Purchaser, on the other, is no longer the owner of any Common Stock or Company
Interests.
SECTION 7.01 TAG-ALONG.
(a) Subject to the limitations set forth below, in the event the
Purchaser, on the one hand, or any of the Stockholders, on the other hand,
(each a "Prospective Seller") shall receive a bona fide offer (an "Offer")
from a third party (a "Third Party") to purchase all or a portion of the
Common Stock of the Company (the "Owned Stock") owned by such Prospective
Seller and such Prospective Seller shall be willing to accept such Offer, such
Prospective Seller shall give notice thereof (the "Third Party Notice") to the
Purchaser or the Stockholders, as the case may be (the "Offeree"), describing
the price and all other material terms and conditions of the Offer. Each
Offeree shall have the right and option, for a period of twenty (20) business
days after the Third Party Notice is deemed given as herein provided, by giving
the Prospective Seller written notice (the "Notice of Election"), to sell to
the Third Party a pro rata portion of its Owned Stock based on the number of
shares of Owned Stock owned respectively by the Prospective Seller and the
Offeree for the same consideration and otherwise on the same terms and
conditions as contained in the Offer or, in case the Purchaser is the Offeree,
the Purchaser shall be entitled to sell to the Third Party a pro rata portion
of (x) its Owned Stock for the same consideration and otherwise on the same
terms and conditions as set forth in the Offer, or, at the Purchaser's option,
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(y) its Company Interests (the "Owned Interests") for substantially equivalent
consideration and otherwise on the same terms and conditions as set forth in
the Offer; provided, however, that in the event the Third Party is unwilling or
unable to purchase the Owned Interests, the Stockholders, the Company, the New
L.L.C. and the Purchaser agree to use their respective best efforts to cause
the Company and the New L.L.C. to exchange the Owned Interests for 32.07% (as
reduced to take into account that Purchaser would be selling only its pro rata
portion of such transaction with the Third Party and adjusted pursuant to the
terms of this Agreement and to take into account any future issuance of Common
Stock by the Company) of the outstanding Common Stock in a commercially
reasonable tax-efficient manner at the Purchaser's expense, in which case the
Purchaser shall be entitled to sell such shares of Common Stock to the Third
Party Offeree for the same consideration and otherwise on the same terms and
conditions as set forth in the Offer. The amount of Owned Stock to be
transferred by the prospective Seller shall be reduced to the extent necessary
to provide for such sales by the Offeree. The Prospective Seller may not sell
any Owned Stock or Owned Interests unless any Offeree electing to be included
in the sale in accordance with the terms hereof sells at the same time.
(b) At the closing of any proposed transfer pursuant to the Offer, the
Prospective Seller, together with the Offeree if it has elected to sell Owned
Stock or Owned Interests pursuant to such Offer, shall deliver to the Third
Party certificates and/or other instruments representing the Stock or Owned
Interests to be sold, free and clear of all liens and encumbrances, together
with stock or other appropriate powers duly endorsed therefor, and shall
receive in exchange therefor the consideration to be paid or delivered by the
Third Party in respect of such Stock or Owned Interests as described in the
Third Party Notice.
(c) The provisions of this Section 7.01 shall not apply to any
transfer of Owned Stock to any person pursuant to (i) a public offering by the
Company which includes a secondary offering by a Prospective Seller or a
secondary offering by the Purchaser in accordance with its registration rights
pursuant to the Registration Rights Agreement; (ii) a transaction effected
pursuant to Rule 144 promulgated under the Securities Act of 1933; (iii) a
transaction involving a gift or for estate or personal financial planning
purposes not involving any cash or other financial consideration provided that
any transferee agrees to be bound by this Agreement to the same extent as was
the transferor as evidenced by a written adoption of the relevant provisions of
this Agreement by such transferee in a form reasonably satisfactory to the
Purchaser if the Stockholder is transferring, or the Stockholder if the
Purchaser is transferring, as the case may be (a "Transferee Adoption"); (iv) a
transaction involving a transfer to an entity controlled by or under common
control with the Prospective Seller (other than the Company, the Subsidiaries,
the New L.L.C. or any Future Affiliate) or (v) a transaction which results in
proceeds which in the aggregate with all other transfers after the Closing Date
by such Prospective Seller are not in excess of Three Million Dollars
($3,000,000). The Prospective Seller and the Offeree electing to participate
in the Offer each shall bear their respective expenses (including, without
limitation, legal expenses) incurred in connection with such sale.
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(d) If an Offeree shall not have given as provided herein a Notice of
Election pursuant to this Section 7.01 with respect to any Offer Notice, such
Offeree will be deemed to have waived all its rights under this Section 7.01
with respect to the transaction specified in such Third Party Notice.
(e) Except as expressly provided in this Section 7.01, the Prospective
Seller shall not have any obligation to any Offeree with respect to the sale of
any Owned Stock owned by such Prospective Seller in connection with this
Section 7.01. Anything herein to the contrary notwithstanding and irrespective
of whether any Notice of Election shall have been given as herein provided, the
Prospective Seller shall not have any obligation to any Offeree to sell any
Owned Stock or Owned Interests pursuant to this Section 7.01 if such
Prospective Seller decides not to accept or consummate any Offer with respect
to its Owned Stock (it being understood that any and all such decisions shall
be made by such Prospective Seller in its sole discretion).
SECTION 7.02 RIGHT OF FIRST NEGOTIATION.
(a) If at any time the Purchaser or any Farallon Controlled Affiliate
purchases from any Third Party or on an exchange or the over-the-counter market
shares of Common Stock, the Purchaser shall, simultaneously with the
consummation of such purchase, give written notice to the Stockholders
specifying the total number of shares the Purchaser or such Farallon Controlled
Affiliate purchased and the purchase price for such number of shares. Such
written notice shall constitute an offer to purchase (the "Offer to Purchase")
two times the amount of such shares from the Stockholders at the same prices
paid by Purchaser or such Farallon Controlled Affiliate for such shares, who
shall have ten Business Days to accept or decline such Offer to Purchase. If
the Stockholders accept such Offer to Purchase, the transaction shall be
consummated within ten Business Days of such acceptance and allocated between
the Stockholders as specified by CPH3, L.L.C. If the Stockholders decline or
fail to accept such Offer to Purchase such shares, then the Purchaser shall be
free for a ninety (90) day period to purchase the number of shares of Common
Stock as were the subject of the Offer to Purchase from any Third Party or on
an exchange or the over-the counter market or otherwise, but in each case, on
terms no less favorable to the Purchaser as the terms of such Offer to
Purchase, provided, however, that in the event of any such purchases on an
exchange or the over-the counter market, such purchases may be at a price of up
to 120% of the price specified in the Offer to Purchase. Any purchases by
Purchaser not completed within such ninety (90) day period or on such terms
shall be completed only through compliance again with the provisions of this
Section 7.02(a).
(b) If at any time the Stockholders or any affiliate controlled by or
under common control with any Stockholder shall have purchased any additional
shares of Common Stock, the Stockholders shall give written notice to the
Purchaser of such purchase specifying the total number of shares the
Stockholders have purchased and the purchase price for such number of shares.
Such notice shall constitute an offer to purchase (the "Stockholder Offer to
Purchase") two times the amount of such shares from the Purchaser at the same
prices as for the shares so purchased, who shall have ten Business Days to
accept or decline such Stockholder Offer to Purchase. If the Purchaser accepts
such Stockholder Offer to Purchase, the transaction shall be consummated within
ten Business Days of such acceptance. If the Purchaser declines or fails to
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accept such Stockholder Offer to Purchase, then the Stockholders shall be free
for a ninety (90) day period to sell such shares of Common Stock to any Third
Party or on an exchange or the over-the-counter market on terms no less
favorable to the Stockholder as the terms of such Stockholder Offer to
Purchase, provided, however, that in the event of any such purchases on an
exchange, such purchases may be at a price of up to 120% of the price specified
in the Stockholder Offer to Purchase. Any purchases by Stockholders not
completed within such ninety (90) day period or on such terms shall be
completed only through compliance again with the provisions of this Section
7.02(b).
SECTION 7.03 BUY-SELL AGREEMENT.
(a) Defined Terms. For the purposes of this Section 7.03, the
Purchaser and the Stockholders are referred to collectively as the "Parties"
and individually as a "Party," the Company, the New LLC and each Mirror Company
and Future Affiliate and any entity in which the New LLC or any Mirror Company
or Future Affiliate may own stock, membership interests, partnership interests
or other ownership interests as of the date that an Election Notice (as defined
below) is given are referred to collectively as the "Entities" and individually
as an "Entity," and all right, title and interest in the Company, the New LLC,
each Future Affiliate and each Mirror Company owned by the Stockholders and
their affiliates (other than the Company or any of the Subsidiaries or any
Mirror Company or Future Affiliate) on one hand, and by the Purchaser and its
affiliates (other than the Company or any of the Subsidiaries or any Mirror
Company or Future Affiliate) on the other hand, as of the date that an Election
Notice is given are referred to collectively as the "Entity Interests."
(b) Buy-Sell Election. Either the Stockholders or the Purchaser may
elect to resort to the buy-sell procedure set forth in this Section 7.03 at any
time after the expiration of thirty-six (36) months following the date of this
Agreement (the "Buy-Sell Date"). At any time from and after the Buy-Sell Date,
either the Stockholders or the Purchaser (the "Offering Party") may elect to
trigger the provisions of this Section 7.03 by delivering a written notice of
its election (the "Election Notice") to the other Party (the "Non-Offering
Party"). The Election Notice shall set forth the aggregate value of the
Entities (the "Value") determined in the Offering Party's sole discretion. The
date on which the Election Notice is received by the Non-Offering Party is the
"Election Date."
(c) Non-Offering Party's Election. Within 30 days after the Election
Date, the Non-Offering Party shall elect by written notice to the Offering
Party either to (i) purchase the Entity Interests of the Offering Party and its
affiliates (other than the Company or any of the Subsidiaries or any Mirror
Company or Future Affiliate) for a cash purchase price equal to the Purchase
Price, or (ii) sell the Entity Interests of the Non-Offering Party and its
affiliates (other than the Company or any of the Subsidiaries or any Mirror
Company or Future Affiliate) to the Offering Party for a cash purchase price
equal to the product of (A) the Purchase Price, multiplied by (B) 110%. If the
Non-Offering Party shall not respond within such 30-day period, the
Non-Offering Party shall be deemed to have elected to sell its Entity Interests
to the Offering Party. The Election Notice and the Non-Offering Party's
election (or deemed election) shall constitute each such Party's waiver of any
right it may otherwise have under the Related Agreements to consent or object
to any transfer of Entity Interests which is contemplated by such notice and
election.
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(d) Purchase Price. For purposes of this Section 7.03, the "Purchase
Price" shall mean an amount equal to the sum of:
(i) the product of (A) the Applicable Percentage, multiplied by
(B) the excess of (I) the Value, over (II) the amount of non-distributed cash
held by the Company on the Buy-Sell Transfer Date (the "Non-Distributed Cash"),
plus
(ii) the product of (A) the Company Percentage, multiplied
by (B) the amount of the Non-Distributed Cash.
(e) Percentage Definition.
(i) For purposes of this Section 7.03, the term "Applicable
Percentage" shall initially mean (A) 42.76% if the Purchaser is the seller of
its Entity Interests and (B) 37.67% if the Stockholders are the sellers of
their Entity Interests; provided, however, that the Applicable Percentages
shall be subject to change from time to time in accordance with Section
6.02(d).
(ii) For purposes of this Section 7.03, the term "Company
Percentage" initially shall mean (A) 16.57% if the Purchaser is the seller of
its Entity Interests and (B) 58.38% if the Stockholders are the sellers of
their Entity Interests; provided, however, that the Company Percentage shall be
subject to adjustment as provided above in Section 6.02(d) above including,
without limitation, as the result of exercise of the warrants described in
Section 2.06(b) of the Stock Purchase Agreement.
(f) Buy-Sell Purchase Agreement; Defaults. Immediately upon the
Non-Offering Party's election or deemed election to buy or sell pursuant to
Section 7.03(c), the selling Party(ies) and the purchasing Party shall enter
into a purchase agreement in reasonable form to carry out the provisions of
this Section 7.03 (the "Buy-Sell Purchase Agreement"). The Buy-Sell Purchase
Agreement shall contain representations and warranties as to such transactions
by each of the selling Party(ies) and the purchasing Party substantially the
same (i.e., revised to reflect the parties involved, their names, respective
type of entity and interests owned and the like) as the representations and
warranties set forth in the Stock Purchase Agreement. In the event of a
default in any material respect by the purchasing Party, the selling Party(ies)
may (i) elect, by written notice to the defaulting purchasing Party to purchase
the interest of the purchasing Party, within thirty (30) days after such
notice, for a purchase price equal to ninety percent (90%) of the Purchase
Price the purchasing Party would have received were the purchasing Party
instead the selling Party pursuant to the election made by the Non-Offering
Party pursuant to Section 7.03(c), or (ii) pursue any other remedy available
under applicable law including, without limitation, injunctive relief. In the
event of a default in any material respect by the selling Party(ies), the
purchasing Party may pursue any remedy available under applicable law
including, without limitation, injunctive relief.
(g) Closing Matters. The closing of the purchase and sale pursuant to
Section 7.03 shall be held at such place as is agreed upon by the selling
Party(ies) and purchasing Party (or, failing such agreement, at the principal
place of business of the Company) within sixty (60) days after the
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Non-Offering Party's election or deemed election to sell or ninety (90) days
after the Non-Offering Party's election to purchase (the date of such closing
being herein called the "Buy-Sell Transfer Date"). At the closing, the selling
Party(ies) shall deliver to the purchasing Party assignments which shall be
sufficient to transfer good title to the Entity Interests being transferred,
free and clear of all liens, encumbrances, claims, rights and options of any
kind or character whatsoever and otherwise in form reasonably satisfactory to
both the selling Party(ies) and purchasing Party; the purchasing Party shall
deliver to the selling Party(ies) by certified or cashier's check or wire
transfer of immediately available federal funds the purchase price, determined
as set forth above, as adjusted by the prorations and credits set forth below,
and increased by an interest factor equal to interest on the purchase price at
the rate of 10% per annum, compounded quarterly, from the Election Date until
the Buy-Sell Transfer Date; and the parties shall split closing costs
(including any transfer taxes) in the manner prescribed by the Election Notice.
Upon the Buy-Sell Transfer Date, the purchasing Party shall release the selling
Party(ies) from all obligations of the selling Party(ies) under the applicable
agreements governing each Entity and all claims, obligations and liabilities of
the Entities as to which and to the extent recourse against the selling
Party(ies) could be had, in each case whether accruing or arising before or
after the date of the Buy-Sell Transfer Date. Notwithstanding the foregoing,
in no event shall the purchasing Party be obligated to release the selling
Party(ies) from (i) any claims, obligations and liabilities resulting from any
matter which has not been disclosed in writing by the selling Party(ies) to the
purchasing Party prior to the Election Date, or (ii) any matter the release of
which by the purchasing Party would constitute a breach of its fiduciary duty
to the other shareholders of the Company or its affiliates (provided that the
purchasing Party nevertheless shall waive any right to directly or indirectly
share in or benefit from any recovery in connection with the matters excepted
under this clause (ii) from the purchasing Party's release). The purchasing
Party may, at any time prior to such closing, assign to any person,
partnership, limited liability company, corporation or entity its right to
receive the assignment under this Section 7.03 provided such assignee can and
does make the same representations and warranties required of the purchasing
Party under the Buy-Sell Purchase Agreement, but such assignment shall not
relieve purchasing Party of its obligations and liabilities hereunder. It
shall be a condition to closing for the benefit of the purchasing Party that
the selling Party(ies) shall have continued to in all material respects
discharge their respective duties as required under the applicable agreements
governing each Entity until the Closing.
(h) Cooperation and Further Assurances. The Parties agree to
reasonably cooperate and take such actions and cause to be executed such
documents as may be reasonably necessary or appropriate in connection with
carrying out the provisions of this Section 7.03.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 EXPENSES. The Company, on the one hand, and the Purchaser, on
the other, shall each pay its own expenses in connection with the transactions
contemplated by this Agreement, whether or not such transactions shall be
consummated.
SECTION 8.02 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
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(a) Any representation and warranty made herein, or in any certificate
or instrument delivered to the Purchaser pursuant to or in connection with this
Agreement, shall survive the execution and delivery of this Agreement, and the
sale, transfer and delivery of the Shares pursuant to the Stock Purchase
Agreement for a period of eighteen (18) months.
(b) Indemnification for Breaches.
(i) Indemnification by the Company, the Subsidiaries, and
the New L.L.C. Each of the Company, the Subsidiaries, and the New L.L.C.,
jointly and severally, will indemnify the Purchaser and its affiliates and each
of their respective shareholders, partners, members, directors, officers,
employees, agents and Affiliates (collectively, the "Purchaser Indemnified
Persons") against and hold each Purchaser Indemnified Person harmless from any
and all liabilities, losses, damages, costs, expenses (including without
limitation, reasonable attorneys' fees and expenses) (collectively "Losses")
that the Purchaser Indemnified Persons may incur or become subject to arising
out of or due to:
(x) any breach of any of the representations and
warranties of the Company, the Subsidiaries, or the New L.L.C. contained in any
Related Agreement; or
(y) the nonfulfillment of any covenant,
undertaking, agreement or other obligation of the Company, any Subsidiary, or
the New X.XX. contained in any Related Agreement.
(ii) Indemnification by the Purchaser. The Purchaser will
indemnify the Company, the Subsidiaries, and the New L.L.C. and each of their
respective shareholders, partners, members, directors, officers, employees,
agents and Affiliates (collectively, the "Company Indemnified Persons") against
and hold each Company Indemnified Person harmless from any and all Losses that
the Company Indemnified Persons may incur or become subject to arising out of
or due to:
(x) any breach of any of the representations and
warranties of the Purchaser contained in any Related Agreement; or
(y) the nonfulfillment of any covenant,
undertaking, agreement or other obligation of the Purchaser in any Related
Agreement.
(iii) Period for Claims. Notwithstanding anything to the
contrary set forth in this Agreement, any claim for indemnification under this
Section 8.02(b) must be made in a writing delivered by the Indemnified Person
to the indemnifying party within the period of 18 months from the Closing Date.
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(c) Indemnification by the Stockholders. The Stockholders will
indemnify the Purchaser Indemnified Persons against and hold each Purchaser
Indemnified Person harmless from any and all Losses that the Purchaser
Indemnified Persons may incur or become subject to arising out of or due to:
(x) any inaccuracy or breach of any of the
representations and warranties of the Stockholders contained in any Related
Agreement; or
(y) the nonfulfillment of any covenant,
undertaking, agreement or other obligation of the Stockholders contained in any
Related Agreement.
(d) Indemnification by the New L.L.C. The New L.L.C. will indemnify
the Company and the Subsidiaries and each of their respective shareholders,
partners, members, directors, officers, employees, agents and Affiliates
(collectively, the "Assumed Liability Indemnified Persons") against and hold
each Assumed Liability Indemnified Person harmless from any and all Losses that
the Assumed Liability Indemnified Persons may incur or become subject to
arising out of or due to any of the liabilities of the Company and the
Subsidiaries assumed by the New L.L.C. as the result of the transactions
contemplated by the Related Agreements. SECTION 8.03 PARTIES IN INTEREST:
ASSIGNMENT. All representations, warranties, covenants and agreements
contained in this Agreement by or on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the
parties hereto whether so expressed or not. No party may assign its rights
hereunder without the prior written consent of the other parties hereto, except
(i) as provided in Section 7.01(c)(iii) and (iv) hereof, and (ii) the Purchaser
and any Stockholder may assign all of such rights, each to a single Affiliate.
Except as set forth in Section 7.01(c)(iii) and (iv) above, notwithstanding
anything to the contrary set forth herein, none of the representations,
warranties, covenants or agreements contained in this Agreement shall benefit
any transferee of any of the Stock or the Company Interests other than such a
single Affiliate or the parties hereto.
SECTION 8.04 WAIVER. Any of the terms or conditions of this Agreement may
be waived at any time and from time to time in writing by the party entitled to
the benefits thereof without affecting any other terms or conditions of this
Agreement.
SECTION 8.05 NOTICES, ETC. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given, if delivered in person or by courier, telegraphed, telexed or by
facsimile transmission or mailed by certified or registered mail, postage
prepaid:
If to the Stockholders: CPH2, L.L.C. or CPH3, L.L.C.
Attention: Xxxx Xxxxxxxxxxx
c/o Capital Pacific Holdings, Inc.
0000 XxxXxxxxx Xxxx., Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telecopy No.: (000) 000-0000
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If to the Company Xxxx Xxxxxxxxxxx
or any of the Subsidiaries: Chairman of the Board
Capital Pacific Holdings, Inc.
0000 XxxXxxxxx Xxxx., Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telecopy No.: (000) 000-0000
with a copy to: Xxx Xxxxxxxxx, Esq.
Wiley, Rein & Fielding
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
If to the Purchaser: x/x Xxxxxxxx Xxxxxxx Xxxxxxxxxx, X.X.X.
Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Telecopy No.: (000) 000-0000
with a copy to: Xxxxxxxx Xxxxxx Xxxxx & Xxxx
One Chase Xxxxxxxxx Xxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxx, Esq.
Telecopy No.: (000) 000-0000
Any party may, by written notice to the other parties, change the address or
telecopy number to which notices to such party are to be delivered or mailed or
sent by facsimile transmission. All such notices or other communications shall
be effective and be deemed to have been given as of the date on which such
notices are actually received.
SECTION 8.06 ENTIRE AGREEMENT: AMENDMENT. This Agreement and the
Related Agreements set forth the entire agreement and understanding of the
parties in respect of the transactions contemplated hereby and supersede all
other agreements, arrangements and understandings relating to the subject
matter hereof, both oral and written. No representation, promise, inducement
or statement of intention has been made by either of the parties hereto which
is not embodied in this Agreement, or the written statements, certificates or
other documents delivered pursuant hereto or the Related Agreements referred to
above, and neither of the parties hereto shall be bound by or liable for any
alleged representation, promise, inducement or statement of intention not so
set forth. This Agreement and the Related Agreements may be amended or
modified only by a written instrument executed by the parties hereto or by
their successors and assigns.
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SECTION 8.07 PRESS RELEASES. None of the parties hereto shall
issue any press releases or make any public announcements of any of the
transactions contemplated by this Agreement except as may be mutually agreed to
in writing by the parties hereto; provided, however, that notwithstanding the
foregoing, each of the parties hereto shall be permitted and will cooperate
with the other party, to make such disclosures to the public or governmental
authorities as they shall deem necessary to maintain compliance with, or to
prevent violation of, applicable laws.
SECTION 8.08 GENERAL. This Agreement (i) shall be construed and
enforced in accordance with the laws of the State of Delaware without giving
effect to the choice of law principles thereof; and (ii) may be executed in two
or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument. The Section and
other headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
SECTION 8.09 SEVERABILITY. To the extent that any provision of
this Agreement which does not materially affect the intent of the parties
hereto shall be invalid or unenforceable, it shall be considered deleted
herefrom and the remainder of such provision and of this Agreement shall be
unaffected and shall continue in full force and effect.
SECTION 8.10 CERTAIN DEFINED TERMS. As used in this Agreement,
the following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):
(a) "Person" shall means an individual, corporation, trust,
partnership, joint venture, unincorporated organization, government agency or
any agency or political subdivision thereof, or other entity.
(b) an "Affiliate" of a person shall mean someone that directly, or
indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such person.
(c) "Business Day" means any day on which commercial banks are open
for business in California.
(d) The following terms shall have their respective meaning as set
forth in the referenced sections of this Agreement:
Term Section
---- -------
"Accredited investor" Section 3.04(a)
"Agreement" Recitals
"Applicable Percentage" Section 7.03(e)(i)
"Approval" Section 2.08
"Assumed Liability Indemnified Persons" Section 8.02(d)
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"Balance Sheet Date" Section 4.03(f)
"Business Plan" Section 6.05(a)
"Buy-Sell Date" Section 7.03(b)
"Buy-Sell Purchase Agreement" Section 7.03(f)
"Buy-Sell Transfer Date" Section 7.03(g)
"Common Stock" Recitals
"Company" Recitals
"Company Indemnified Persons" Section 8.02(b)(ii)
"Company Interests" Section 6.02(e)
"Company Percentage" Section 7.03(e)(ii)
"Election Date" Section 7.03(b)
"Election Notice" Section 7.03(b)
"Entity" Section 7.03(a)
"Entities" Section 7.03(a)
"Entity Interests" Section 7.03(a)
"Environmental Laws" Section 2.18
"Escrow Agreement" Recitals
"Existing Business" Section 6.02(a)
"Farallon Controlled Affiliate" Section 6.01
"Financing Opportunity" Section 6.03(a)
"Future Affiliate" Section 6.02(c)(ii)
"GAAP" Section 2.09(a)
"Information Documents" Section 2.16
"Joint Escrow Instructions" Section 5.02(a)(ii)
"Licenses" Section 2.11
"Losses" Section 8.02(b)(i)
"Xxxxxxxxxxx" Section 4.03(l)
"Xxxxxxxxxxx Agreement" Section 4.03(l)
"Material Adverse Effect" Section 2.13
"Mirror Company" Section 6.02(b)
"New Business" Section 6.02(b)
"New Capital" Section 6.02(c)(ii)
"New L.L.C." Recitals
"New L.L.C. Agreement" Recitals
"Non-Distributed Cash" Section 7.03(d)(i)
"Non-Offering Party" Section 7.03(b)
"Notice of Election" Section 6.06(b)
"Offer" Section 6.06(b)
"Offeree" Section 6.06(b)
"Offer to Purchase" Section 7.02(a)
"Offering Party" Section 7.03(b)
"Owned Interests" Section 7.01(a)
"Owned Stock" Section 7.01(a)
"Party" Section 7.03(a)
"Parties" Section 7.03(a)
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"Prospective L.L.C. Seller" Section 6.06(b)
"Prospective Seller" Section 7.01(a)
"Purchase Price" Recitals
"Purchaser" Recitals
"Purchaser Indemnified Persons" Section 8.02(b)(i)
"Registration Rights Agreement" Recitals
"Restrictions Period" Section 6.01
"Related Agreements" Recitals
"Shares" Recitals
"Subdivision Approvals" Section 2.05
"Subsidiaries" Recitals
"Stockholder(s)" Recitals
"Stockholder Offer to Purchase" Section 7.02(b)
"Stock Purchase Agreement" Recitals
"Third Party" Section 6.06(b) and 7.01
"Third Party Notice" Section 6.06(b) and 7.01
"Transferred Assets" Section 1.01(a)
"Transferee Adoption" Section 7.01(c)
"Value" Section 7.03(b)
SECTION 8.11 TERMINATION. This Agreement may be terminated by either party
hereto if the Closing shall not have occurred on or before November 18, 1997,
or such later date as may have been agreed upon by the parties hereto. Upon
termination, no party shall have any liability or obligation under this
Agreement except to observe the confidentiality provisions hereof and except to
the extent a party has breached its representations, warranties, covenants or
agreements hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CAPITAL PACIFIC HOLDINGS, INC,
By:/s/ Xxxx Xxxxxxxxxxx
------------------------------
Xxxx Xxxxxxxxxxx
Chairman
CPH2, L.L.C.
By:/s/ Xxxx Xxxxxxxxxxx
------------------------------
Xxxx Xxxxxxxxxxx
Member
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CPH3, L.L.C.
By:/s/ Xxxx Xxxxxxxxxxx
------------------------------
Xxxx Xxxxxxxxxxx
Member
CALIFORNIA HOUSING FINANCE, L.P.
By: California Housing Finance L.L.C.
Its General Partner
By: Farallon Capital Management, L.L.C.
Its Manager
By:/s/ Xxxxx Xxxxxxx
------------------------------
Xxxxx Xxxxxxx
Managing Member
CAPITAL PACIFIC HOLDINGS, L.L.C.
By: Capital Pacific Holdings, Inc.
Member
By:/s/ Xxxx Xxxxxxxxxxx
------------------------------
Xxxx Xxxxxxxxxxx
Chairman of the Board
CAPITAL PACIFIC HOMES, INC.,
a Nevada corporation (formerly Durable Homes,
Inc.)
By:/s/ Xxxx Xxxxxxxxxxx
------------------------------
Xxxx Xxxxxxxxxxx
Chairman of the Board
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XXXXX XXXXXX HOMES, INC., a Texas corporation
By:/s/ Xxxx Xxxxxxxxxxx
------------------------------
Xxxx Xxxxxxxxxxx
Chairman of the Board
X.X. XXXXXX ARIZONA, INC.,
a Delaware corporation
By:/s/ Xxxx Xxxxxxxxxxx
------------------------------
Xxxx Xxxxxxxxxxx
Chairman of the Board
X.X. XXXXXX CALIFORNIA, INC.,
a Delaware corporation
By:/s/ Xxxx Xxxxxxxxxxx
------------------------------
Xxxx Xxxxxxxxxxx
Chairman of the Board
X.X. XXXXXX HOMES OF ARIZONA, INC.,
a Delaware corporation
By:/s/ Xxxx Xxxxxxxxxxx
------------------------------
Xxxx Xxxxxxxxxxx
Chairman of the Board
X.X. XXXXXX NEVADA, INC.,
a Delaware corporation
By:/s/ Xxxx Xxxxxxxxxxx
------------------------------
Xxxx Xxxxxxxxxxx
Chairman of the Board
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PARKLAND ESTATES COMPANY, INC.,
a Delaware corporation
By:/s/ Xxxx Xxxxxxxxxxx
------------------------------
Xxxx Xxxxxxxxxxx
Chairman of the Board
NEWPORT DESIGN CENTER,
a California corporation
By:/s/ Xxxx Xxxxxxxxxxx
------------------------------
Xxxx Xxxxxxxxxxx
Chairman of the Board
XXXXXX RANCHLAND COMPANY, INC.,
a Delaware corporation
By:/s/ Xxxx Xxxxxxxxxxx
------------------------------
Xxxx Xxxxxxxxxxx
Chairman of the Board
CAPITAL PACIFIC HOMES, INC.,
a Delaware corporation (formerly Durable Homes
of California, Inc.)
By:/s/ Xxxx Xxxxxxxxxxx
------------------------------
Xxxx Xxxxxxxxxxx
Chairman of the Board
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