EXHIBIT 1
STOCK EXCHANGE AGREEMENT
By and Among
BUFFTON CORPORATION,
and
XXXX XXXXXXX
and
XXXX-XXXXXX XXXXXX
and
HOTELS OF DISTINCTION, INC.
Dated as of April 11, 1997
TABLE OF CONTENTS
PAGE
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TABLE OF CONTENTS........................................................... i
TABLE OF DEFINED TERMS...................................................... iii
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TABLE OF CONTENTS
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1. Exchange of Stock...................................................................... 1
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2. Closing........................................................................... 1
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3. Certain Definitions............................................................... 1
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4. Representations and Warranties of Buffton......................................... 3
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a. Organization................................................................. 3
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b. Capitalization............................................................... 3
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c. Authorization and Validity of Agreement...................................... 3
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d. No Approvals or Notices Required; No Conflict with Instruments to which Buffton
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is a Party.................................................................. 4
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e. SEC Filings; Financial Statements........................................... 4
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f. Litigation.................................................................. 4
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g. Voting Requirements......................................................... 5
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i
5. Representations and Warranties of Xxxxxxx and Xxxxxx................................ 5
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a. Organization and Compliance with Law........................................... 5
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b. Capitalization................................................................. 5
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c. Authorization and Validity of Agreement........................................ 5
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d. No Approvals or Notices Required; No Conflict with Instruments to which Hotels
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is a Party..................................................................... 6
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e. Financial Statements; Material Contracts; Liabilities.......................... 6
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f. Conduct of Business in the Ordinary Course; Absence of Certain Changes and
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Events......................................................................... 6
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g. Certain Fees................................................................... 7
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h. Litigation..................................................................... 7
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i. Employee Liabilities........................................................... 7
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j. Taxes.......................................................................... 7
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k. Environmental.................................................................. 7
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l. No Severance Payments.......................................................... 8
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m. Insurance..................................................................... 8
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n. Title to Property............................................................. 8
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6. Investment and Other Representations by Xxxxxxx and Xxxxxx......................... 8
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7. Tax Treatment...................................................................... 10
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8. Registration Rights................................................................ 10
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a. Demand Registration Right (Registration of Buffton Common Stock on Request)
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.............................................................................. 10
ii
b. Piggyback Registration Rights................................................. 12
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c. Registration Procedures....................................................... 12
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d. Seller's Information.......................................................... 13
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e. Preparation; Reasonable Investigation......................................... 13
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9. Release of Claims by Xxxxxxx and Mathot............................................ 13
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10. Sale of Current Technology; Buffton Name Change.................................... 13
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11. Purchase of Buffton Common Stock by Xxxxxxx and Xxxxxx............................. 13
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12. Cooperation in Litigation.......................................................... 13
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13. Expenses........................................................................... 13
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14. Further Assurances................................................................. 14
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15. Public Announcements............................................................... 14
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16. Survival of Representations and Warranties......................................... 14
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17. Amendments......................................................................... 14
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18. Entire Agreement................................................................... 14
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19. Notices............................................................................ 14
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20. Counterparts....................................................................... 15
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21. Governing Law...................................................................... 15
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22. Severability....................................................................... 15
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23. Headings 15
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24. Entire Agreement; Third Party Beneficiaries........................................ 15
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SIGNATURE PAGE.......................................................................... 16
iii
TABLE OF DEFINED TERMS
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DEFINED TERM PAGE
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Agreement................................................................ 1
Buffton.................................................................. 1
Buffton Common Stock..................................................... 1
Buffton SEC Filings...................................................... 4
Buffton Subsidiaries..................................................... 3
CERCLA................................................................... 2
Closing.................................................................. 1
Disadvantageous Condition................................................ 1
Hotels................................................................... 1
Entity................................................................... 1
Environmental Laws....................................................... 2
Exchange Act............................................................. 2
Existing Stockholders Agreement.......................................... 5
Governmental Authority................................................... 2
Hotels Financial Statements.............................................. 6
Hotels Disclosure Letter................................................. 5
Hotels Stock............................................................. 1
Knowledge................................................................ 2
v
Laws..................................................................... 2
Material Adverse Change.................................................. 2
Material Adverse Effect.................................................. 2
Mathot................................................................... 1
Permitted Liens.......................................................... 2
Registrable Securities................................................... 2
Registration Expenses.................................................... 2
Registration Rights Holders.............................................. 10
Requesting Holder........................................................ 10
SEC...................................................................... 4
Securities Act........................................................... 3
Stock Exchange........................................................... 1
Tax or Taxes............................................................. 3
Tax Return............................................................... 3
Xxxxxxx.................................................................. 1
vi
STOCK EXCHANGE AGREEMENT
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THIS STOCK EXCHANGE AGREEMENT (this "Agreement"), dated as of April 11,
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1997, is entered into by and among Xxxx Xxxxxxx ("Xxxxxxx"), Xxxx-Xxxxxx Xxxxxx
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("Mathot"), Hotels of Distinction, Inc., a Florida corporation ("Hotels"), and
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Buffton Corporation, a Delaware corporation ("Buffton").
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W I T N E S S E T H :
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WHEREAS, Xxxxxxx and Xxxxxx own 100 shares of the Common Stock, par value
$1.00 per share, of Hotels (the "Hotels Stock"), being all of the issued and
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outstanding capital stock of Hotels; and
WHEREAS, Buffton desires to acquire from Xxxxxxx and Mathot, all of the
Hotels Stock, solely in exchange for 300,000 shares of newly issued Common
Stock, par value $.05 per share, of Buffton (the "Buffton Common Stock");
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NOW, THEREFORE, in consideration of the premises and the mutual covenants,
representations and warranties herein contained and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and
upon the terms and subject to the conditions contained herein, the parties
hereto agree as follows:
STOCK EXCHANGE AGREEMENT
1. Exchange of Stock. Upon and subject to the terms and conditions of
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this Agreement, contemporaneously with the execution of this Agreement, (a)
Xxxxxxx and Xxxxxx shall assign, transfer and deliver to Buffton all of the
Hotels Stock free and clear of any and all liens, equities, claims, prior
assignments, mortgages, charges, security interests, pledges, restrictions or
encumbrances whatsoever, and, (b) in exchange therefor, Buffton shall assign,
transfer and deliver to Xxxxxxx 180,000 shares of Buffton Common Stock and to
Mathot 120,000 shares of Buffton Common Stock, free and clear of any and all
liens, equities, claims, prior assignments, mortgages, charges, security
interests, pledges, restrictions or encumbrances whatsoever (the foregoing being
herein called the "Stock Exchange").
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2. Closing. At or prior to the closing of the Stock Exchange (the
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"Closing"):
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x. Xxxxxxx has delivered to Xxxxxxx and Mathot the items and
documents listed on Schedule 2.a hereto, including the employment
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agreements and stock options described therein and certificates
representing the shares of Buffton Common Stock issued to Xxxxxxx and
Mathot.
x. Xxxxxxx, Xxxxxx and Hotels have delivered to Buffton the items and
documents listed on Schedule 2.b hereto, including stock powers executed by
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Xxxxxxx and Xxxxxx transferring to Buffton the certificates representing
all of the shares of issued and outstanding Hotels Stock, and Xxxxxxx and
Mathot will hold such certificates in trust for Buffton and will deliver
them to Buffton at or promptly after the Closing.
STOCK EXCHANGE AGREEMENT
PAGE 2
3. Certain Definitions. As used in this Agreement, the following terms
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shall have the meanings ascribed to them below:
a. A "Disadvantageous Condition" shall exist for purposes of this
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Agreement if Buffton shall furnish to the Requesting Holders a certified
resolution of Buffton's Board of Directors stating that in the good faith
judgment of such Board of Directors it would (because of the existence of,
or in anticipation of, any acquisition or financing activity, or the
inability for reasons beyond Buffton's control to provide any required
financial statements, or any other event or condition of similar
significance to Buffton) be significantly disadvantageous to Buffton for a
registration statement to be maintained effective, or to be filed and
become effective.
b. "Entity" means a corporation, limited liability company,
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association, partnership of any kind, organization, trust, joint venture or
other legal entity.
c. "Environmental Laws" shall mean all Laws relating to (i) the
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control of any potential pollutant or protection of the air, water or land,
(ii) solid, gaseous or liquid waste generation, handling, treatment,
storage, disposal or transportation, and (iii) exposure to hazardous, toxic
or other substances alleged to be harmful. The term "Environmental Laws"
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shall include, but not be limited to, the Clean Air Act, 42 U.S.C. (S) 7401
et seq., the Clean Water Act, 33 U.S.C. (S) 1251 et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. (S) 6901, et seq., the Toxic
Substances Control Act, 15 U.S.C. (S) 2601 et seq., the Safe Drinking Water
Act, 42 U.S.C. (S) 300f et seq. and
STOCK EXCHANGE AGREEMENT
PAGE 3
the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), 42 U.S.C. (S) 9601 et seq.
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d. "Exchange Act" means the Securities Exchange Act of 1934, as
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amended (the "Exchange Act").
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e. "Governmental Authority" means any federal, state, local or
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foreign government or governmental entity or municipality or subdivision
thereof or any authority, department, commission, panel, board, bureau,
agency, court or instrumentality.
f. "Knowledge" of any party shall mean the collective knowledge of
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such party's officers, directors and employees who in the normal scope of
their employment would know, or would reasonably be expected to have
knowledge of, the matters in question.
g. "Laws" means all applicable codes, statutes, laws, permits, rules,
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regulations, ordinances, orders, policies, determinations, judgments,
writs, injunctions, decrees and common law and equitable rules, causes of
action, remedies and principles of any applicable state, commonwealth,
nation, territory, possession, province, county, parish, town, township,
village, municipality, court, judicial body, administrative agency, or
other Governmental Authority, as may be amended, modified, supplemented or
superseded from time to time.
STOCK EXCHANGE AGREEMENT
PAGE 4
h. "Material Adverse Change" with respect to any party shall mean a
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material adverse change in the business, financial condition or results of
operations of such party and its subsidiaries, taken as a whole; provided,
however, that in no event shall the term "Material Adverse Change" be
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deemed to include (a) changes in national economic conditions or industry
conditions generally, (b) changes, or possible changes, in federal, state
or local statutes and regulations applicable to both Buffton and Hotels, or
(c) with respect to Hotels, the loss of employees, customers or suppliers
by Hotels as a direct or indirect consequence of any announcement relating
to the Stock Exchange.
i. "Material Adverse Effect" on any Entity or person shall mean any
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material adverse effect on the business, financial condition or results of
operations of such person or Entity and its subsidiaries, taken as a whole;
j. "Permitted Liens" shall mean (A) liens for taxes not due and
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payable or which are being contested in good faith, (B) mechanics',
warehousemen's and other statutory liens incurred in the ordinary course of
business, and (C) defects and irregularities in title and encumbrances
which are not substantial in character or amount and do not materially
impair the use of the property or asset in question.
k. "Registrable Securities" means the Buffton Common Stock received
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by Xxxxxxx and Xxxxxx pursuant hereto. As to any particular Registrable
Securities, such securities shall cease to be Registrable Securities when
(a) a registration statement with respect to the sale of such securities
STOCK EXCHANGE AGREEMENT
PAGE 5
shall have become effective under the Securities Act and such securities
shall have been disposed of in accordance with such registration statement,
(b) such securities have been transferred pursuant to Rule 144 or Rule 144A
(or any successor provisions) under the Securities Act, or (c) such
securities have ceased to be outstanding.
l. "Registration Expenses" means all expenses incident to Buffton's
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performance of or compliance with Section 8 including (without limitation)
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all registration, filing and American Stock Exchange fees, all fees and
expenses of complying with securities or blue sky laws, all word
processing, duplicating and printing expenses, messenger and delivery
expenses, the reasonable fees and disbursements of counsel for Buffton and
of its independent public accountants, including the expenses of any
special audits or "cold comfort" letters required by or incident to such
performance and compliance, but excluding underwriting discounts and
commissions and transfer taxes, if any, relating to the Registrable
Securities being registered.
m. "Securities Act" means the Securities Act of 1933, as amended.
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n. "Tax" or "Taxes" means any and all federal, state, local or
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foreign taxes of any kind or character whatever imposed under any Law or by
any Governmental Authority, including without limitation franchise, income,
sales, withholding, property and other taxes.
STOCK EXCHANGE AGREEMENT
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o. "Tax Return" means a Tax return, declaration, report, claim for
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refund, information statement or other form required to be filed pursuant
to any Law or by any Governmental Authority.
4. Representations and Warranties of Buffton. Buffton represents and
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warrants to Xxxxxxx and Mathot that on the date hereof and as of the Closing
Date:
a. Organization. Buffton and each of its corporate subsidiaries (the
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"Buffton Subsidiaries") is a corporation duly organized, validly existing
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and in good standing under the Laws of the jurisdiction in which it is
organized and has all requisite corporate power and authority and all
necessary permits, licenses, consents, and authorizations from Governmental
Authorities to own, lease and operate all of its properties and assets and
to carry on its business as now being conducted, except where the failure
to have such Governmental Authority would not, either individually or in
the aggregate, have a Material Adverse Effect. Buffton and each Buffton
Subsidiary is in compliance with all applicable Laws, except where failure
to be in such compliance would not, either individually or in the
aggregate, have a Material Adverse Effect. Buffton has heretofore
delivered to Hotels true and complete copies of the Articles of
Incorporation and Bylaws, as in existence on the date hereof, of Buffton.
b. Capitalization. The authorized capital stock of Buffton consists
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of 30,000,000 shares of Buffton Common Stock, par value $.05 per share, and
5,000,000 shares of preferred stock, par value $.01 per share. As of March
31, 1997, there were issued and outstanding
STOCK EXCHANGE AGREEMENT
PAGE 7
6,672,328 shares of Buffton Common Stock and no shares of preferred stock,
and 54,550 shares of Buffton Common Stock were held as treasury shares. All
issued shares of Buffton Common Stock are validly issued, fully paid and
nonassessable and no holder thereof is entitled to preemptive rights. All
shares of Buffton Common Stock issued pursuant to this Agreement are
validly issued, fully paid and nonassessable and do not violate the
preemptive rights of any Entity or person.
c. Authorization and Validity of Agreement. Buffton has all
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requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. The execution and delivery by Buffton
of this Agreement and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action. This Agreement has been duly executed and delivered by Buffton and
is the valid and binding obligation of Buffton, enforceable against Buffton
in accordance with its terms, except as such enforceability may be limited
or affected by (i) bankruptcy, insolvency, reorganization, moratorium,
liquidation, arrangement, fraudulent transfer, fraudulent conveyance and
other similar Laws (including court decisions) now or hereafter in effect
and affecting the rights and remedies of creditors generally or providing
for the relief of debtors, (ii) the refusal of a particular court to grant
equitable remedies, including, without limitation, specific performance and
injunctive relief, and (iii) general principles of equity (regardless of
whether such remedies are sought in a proceeding in equity or at law) and
except as the enforceability of any indemnification provision contained in
this Agreement may be limited by applicable federal or state securities or
other Laws.
STOCK EXCHANGE AGREEMENT
PAGE 8
d. No Approvals or Notices Required; No Conflict with Instruments to
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which Buffton is a Party. Neither the execution and delivery of this
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Agreement nor the performance by Buffton of its obligations hereunder, nor
the consummation of the transactions contemplated hereby by Buffton, will
(i) conflict with the Articles of Incorporation or Bylaws of Buffton; (ii)
assuming satisfaction of the requirements set forth in clause (iii) below,
violate any provision of Law applicable to Buffton; (iii) except for (A)
requirements of federal and state securities Law, and (B) requirements of
notice filings in such foreign jurisdictions as may be applicable, require
any consent or approval of, or filing with or notice to, any Governmental
Authority under any provision of Law applicable to Buffton; or (iv) require
any consent, approval or notice under, or violate, breach, be in conflict
with or constitute a default (or an event that, with notice or lapse of
time or both, would constitute a default) under, or permit the termination
of any provision of, or result in the creation or imposition of any lien
upon any properties, assets or business of Buffton under, any note, bond,
indenture, mortgage, deed of trust, lease, franchise, permit,
authorization, license, contract, instrument or other agreement or
commitment or any order, judgment or decree to which Buffton is a party or
by which Buffton or any of its assets or properties is bound or encumbered,
except those that have already been given, obtained or filed and except in
any of the cases enumerated in clauses (ii) through (iv), those that, in
the aggregate, would not have a Material Adverse Effect.
e. SEC Filings; Financial Statements. Buffton and each Buffton
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Subsidiary have filed all reports, registration statements, proxy
statements and other filings, together with any amendments required to be
made with respect thereto, that they have been required to file with the
STOCK EXCHANGE AGREEMENT
PAGE 9
Securities and Exchange Commission (the "SEC") under the Securities Act and
---
the Exchange Act, except where failure to file will not have a Material
Adverse Effect. All reports, registration statements, proxy statements and
other filings (including all notes, exhibits and schedules thereto and
documents incorporated by reference therein) filed by Buffton with the SEC
since January 1, 1996 through the date of this Agreement, together with any
amendments thereto, including those filings listed on Schedule 2.a hereof,
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are sometimes collectively referred to as the "Buffton SEC Filings".
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Buffton has heretofore delivered to Xxxxxxx and Xxxxxx copies of the
Buffton SEC Filings. As of the respective dates of its filing with the
SEC, the Buffton SEC Filings complied in all material respects with the
Securities Act, the Exchange Act and the rules and regulations of the SEC
promulgated thereunder, and did not or will not, as the case may be,
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
Each of the consolidated financial statements (including any related
notes or schedules) included in the Buffton SEC Filings was prepared in
accordance with generally accepted accounting principles applied on a
consistent basis (except as may be noted therein or in the notes or
schedules thereto), and fairly present, in all material respects, the
consolidated financial position of Buffton and the Buffton Subsidiaries as
of the dates thereof and the statements of income for the periods then
ended (subject, in the case of the unaudited interim financial statements,
to normal year-end audit adjustments on a basis comparable with past
periods).
STOCK EXCHANGE AGREEMENT
PAGE 10
There has been no Material Adverse Change in the consolidated
financial condition of Buffton and the Buffton Subsidiaries, or any
material event which is likely to result in such a Material Adverse Change,
since the date of the last financial statements included in the Buffton SEC
Filings.
f. Litigation. Except as disclosed in the Buffton SEC Filings,
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there are no claims, actions, suits, investigations or proceedings pending
or, to the Knowledge of Buffton, threatened against or affecting Buffton or
any of the Buffton Subsidiaries or any of its or their respective
properties at law or in equity, or any of its or their respective employee
benefit plans or fiduciaries of such plans, or before or by any
Governmental Authority, wherever located, that individually or in the
aggregate if adversely determined would have a Material Adverse Effect, or
that involve the risk of criminal liability.
g. Voting Requirements. No vote of the holders of any class or
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series of the capital stock of Buffton is necessary to approve this
Agreement and the Stock Exchange.
5. Representations and Warranties of Hotels. Hotels represents and
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warrants to Buffton that, except as set forth in the disclosure letter delivered
by Hotels to Buffton on the date hereof (the "Hotels Disclosure Letter"):
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a. Organization and Compliance with Law. Hotels is a corporation
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duly organized, validly existing and in good standing under the Laws of the
jurisdiction in which it is organized and
STOCK EXCHANGE AGREEMENT
PAGE 11
has all requisite corporate power and authority and all necessary permits,
licenses, consents, and authorizations from Governmental Authorities to
own, lease and operate all of its properties and assets and to carry on its
business as now being conducted, except where the failure to have such
Governmental Authority would not, either individually or in the aggregate,
have a Material Adverse Effect. Hotels is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except in such
jurisdictions where the failure to be duly qualified does not and would
not, either individually or in the aggregate, have a Material Adverse
Effect. Hotels is in compliance with all applicable Laws, except where
failure to be in such compliance would not, either individually or in the
aggregate, have a Material Adverse Effect and has all necessary permits,
licenses, consents and authorizations from Governmental Authorities which
are necessary to operate its business. Hotels has heretofore delivered to
Buffton true and complete copies of the Articles of Incorporation and
Bylaws, as in existence on the date hereof, of Hotels.
b. Capitalization.
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(1) The authorized capital stock of Hotels consists of 1,000
shares of Hotels Common Stock, par value $1.00 per share. As of the
date of execution of this Agreement, there were issued and outstanding
100 shares of Hotels Common Stock (60 shares held by Xxxxxxx and 40
shares held by Mathot), and no shares of Hotels Common Stock were held
as treasury shares. All issued shares of Hotels Common Stock are
validly issued, fully paid
STOCK EXCHANGE AGREEMENT
PAGE 12
and nonassessable, and no holder thereof is entitled to, or has
waived, preemptive rights. Except for that certain Stockholders'
Agreement dated as of June 30, 1990, among Hotels, Xxxxxxx and Xxxxxx
(the "Existing Stockholders Agreement"), Hotels is not a party to, and
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has no Knowledge of, any voting agreement, voting trust or similar
agreement or arrangement relating to any class or series of its
capital stock, or any agreement or arrangement providing for
registration rights with respect to any capital stock or other
securities of Hotels. The Existing Stockholders Agreement is being
cancelled and terminated hereby, without continuing liability of
Hotels.
(2) There are (A) no shares of capital stock or other equity
securities of Hotels outstanding (other than the 100 shares
outstanding as stated in Section 5(b)(i)) and (B) no outstanding
options, warrants, scrip, rights to subscribe for, calls or
commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of any class of
capital stock of Hotels, or contracts, understandings or arrangements
to which Hotels or any Hotels stockholder is a party, or by which it
is or may be bound, to issue additional shares of its capital stock or
options, warrants, scrip or rights to subscribe for, or securities or
rights convertible into or exchangeable for, any additional shares of
capital stock of Hotels.
(3) Hotels does not own any stock, partnership, equity or other
interest in any Entity.
STOCK EXCHANGE AGREEMENT
PAGE 13
c. Authorization and Validity of Agreement. Hotels has all
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requisite corporate power and authority to enter into this Agreement, to
make the representations made herein and to perform its obligations
hereunder. This Agreement has been duly executed and delivered by Hotels
and is the valid and binding obligation of Hotels, enforceable against it
in accordance with its terms, except as such enforceability may be limited
or affected by (i) bankruptcy, insolvency, reorganization, moratorium,
liquidation, arrangement, fraudulent transfer, fraudulent conveyance and
other similar Laws (including court decisions) now or hereafter in effect
and affecting the rights and remedies of creditors generally or providing
for the relief of debtors, (ii) the refusal of a particular court to grant
equitable remedies, including, without limitation, specific performance and
injunctive relief, and (iii) general principles of equity (regardless of
whether such remedies are sought in a proceeding in equity or at law) and
except as the enforceability of any indemnification provision contained in
this Agreement may be limited by applicable federal or state securities or
other Laws.
d. No Approvals or Notices Required; No Conflict with Instruments to
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which Hotels is a Party. Neither the execution and delivery of this
-----------------------
Agreement nor the performance by Xxxxxxx and Xxxxxx of their obligations
hereunder, nor the consummation of the transactions contemplated hereby by
Xxxxxxx and Mathot, will (i) conflict with the Articles of Incorporation or
Bylaws of Hotels; (ii) assuming satisfaction of the requirements set forth
in clause (iii) below, violate any provision of Law applicable to Hotels,
Xxxxxxx or Xxxxxx; (iii) except for (A) requirements of federal and state
securities Law, and (B) requirements of notice filings in such foreign
jurisdictions as may be applicable, require any consent or approval of, or
filing with or notice to, any
STOCK EXCHANGE COMMISSION
PAGE 14
Governmental Authority, under any provision of Law applicable to Hotels,
Xxxxxxx or Mathot; or (iv) require any consent, approval or notice under,
or violate, breach, be in conflict with or constitute a default (or an
event that, with notice or lapse of time or both, would constitute a
default) under, or result in any loss of any material benefit under, or
permit the termination of any provision of, or result in the creation or
imposition of any lien upon any properties, assets or business of Hotels
under, any note, bond, indenture, mortgage, deed of trust, lease,
franchise, permit, authorization, license, contract, instrument or other
agreement or commitment or any order, judgment or decree to which Hotels is
a party or by which Hotels or any of its assets or properties is bound or
encumbered, except those that have already been given, obtained or filed
and except in any of the cases enumerated in clauses (ii) through (iv),
those that, in the aggregate, would not have a Material Adverse Effect.
e. Financial Statements; Material Contracts; Liabilities. Hotels
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has no written or verbal contracts, obligations, agreements or
understandings enforceable against it or any of its assets other than those
described in the Hotels Disclosure Letter.
The December 31, 1996 financial statements and all other financial
statements of Hotels (including any related notes or schedules) provided by
or at the direction of Xxxxxxx and/or Mathot to Buffton (the "Hotels
------
Financial Statements") fairly and accurately present in all material
--------------------
respects the financial position of Hotels as of the dates thereof and the
statements of income and cash flows for the periods then ended. As of the
date hereof, Hotels has no material liabilities, absolute or
STOCK EXCHANGE AGREEMENT
PAGE 15
contingent, which are not reflected in the Hotels Disclosure Letter or the
Hotels Financial Statements.
Hotels has records that accurately and validly reflect its
transactions and accounting controls sufficient to insure that such
transactions are accurately recorded and, with respect to accounting and
financial matters, recorded in conformity with generally accepted
accounting principles.
f. Conduct of Business in the Ordinary Course; Absence of Certain
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Changes and Events. Since January 1, 1997, except as contemplated by this
------------------
Agreement or disclosed in the Hotels Disclosure Letter, Hotels has
conducted its business only in the ordinary and usual course, and there has
not been (i) any Material Adverse Change in Hotels or any condition, event
or development that reasonably may be expected to result in any such
Material Adverse Change; (ii) any change by Hotels in its accounting
methods, principles or practices; (iii) any revaluation by Hotels of any of
its assets, including, without limitation, writing down the value of
inventory or writing off notes or accounts receivable other than in the
ordinary course of business; (iv) any entry by Hotels into any commitment
or transaction material to Hotels, taken as a whole; (v) any declaration,
setting aside or payment of any dividends or distributions in respect of
the Hotels Common Stock; (vi) any damage, destruction or loss (whether or
not covered by insurance) adversely affecting the properties or business of
Hotels, taken as a whole; (vii) any increase in excess of $5,000 in
indebtedness for borrowed money; (viii) any granting of a security interest
or lien on any property or assets of Hotels, taken as a whole, other than
Permitted Liens; or (ix) any
STOCK EXCHANGE AGREEMENT
PAGE 16
increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including,
without limitation, the granting of stock options, stock appreciation
rights, performance awards or restricted stock awards), stock purchase or
other employee benefit plan or any other increase in the compensation
payable or to become payable to any officers or key employees of Hotels.
g. Certain Fees. Neither Hotels nor any of its officers, directors
------------
or employees, on behalf of Hotels or its Board of Directors (or any
committee thereof), has employed any financial advisor, broker or finder or
incurred any liability for any financial advisory, brokerage or finders'
fees or commissions in connection with the transactions contemplated
hereby.
h. Litigation. Except as disclosed in the Hotels Disclosure Letter,
----------
there are no claims, actions, suits, investigations or proceedings pending
or, to the Knowledge of Hotels, threatened against or affecting Hotels or
any of its respective properties at law or in equity, or any of its
employee benefit plans or fiduciaries of such plans, or before or by any
Governmental Authority, wherever located.
i. Employee Liability. To its Knowledge, Hotels has no material
------------------
undisclosed liability to any present or former employee, any Governmental
Authority or any other person or Entity under ERISA or any other Laws
involving the rights and/or remedies of employees.
STOCK EXCHANGE AGREEMENT
PAGE 17
j. Taxes. All Tax Returns of or relating to any Taxes that are
-----
required to be filed on or before the date hereof by or with respect to
Hotels, or any other corporation that is or was a member of an affiliated
group (within the meaning of Section 1504(a) of the Code) of corporations
of which Hotels was a member for any period ending on or prior to the date
hereof, have been duly and timely filed, and all Taxes, including interest
and penalties, due and payable pursuant to such Tax Returns have been paid
or adequately provided for in reserves established by Hotels. All Tax
Returns of or with respect to Hotels have been audited by the applicable
Governmental Authority, or the applicable statute of limitations has
expired, for all periods up to and including the tax year ended December
31, 19___. There is no material claim against Hotels with respect to any
Taxes, and no material assessment, deficiency or adjustment has been
asserted or proposed with respect to any Tax Return of or with respect to
Hotels that has not been adequately provided for in reserves established by
Hotels. The total amounts set up as liabilities for current and deferred
Taxes in the Hotels Financial Statements have been established in
accordance with generally accepted accounting principles and are sufficient
to cover the payment of all Taxes, including any penalties or interest
thereon and whether or not assessed or disputed, that are, or are hereafter
found to be, or to have been, due with respect to the operations of Hotels
through the periods covered thereby.
k. Environmental. Except as disclosed in the Hotels Disclosure
-------------
Letter, to the Knowledge of Hotels:
(1) Hotels has not caused or permitted the release or disposal
of Hazardous Materials onto, at or near any property owned, managed,
leased or operated by Hotels.
STOCK EXCHANGE AGREEMENT
PAGE 18
(2) Hotels has not caused or allowed the generation, use,
treatment, storage or disposal of Hazardous Materials in connection
with any business or other operations managed or conducted by Hotels
except in accordance with all applicable Environmental Laws.
(3) Hotels has filed all reports required by Environmental Laws.
(4) There are no facts, conditions or circumstances that could
cause Hotels to incur any loss, liability, damage, costs or expenses,
with respect to any individual event, in excess of $25,000, for (A)
violations of Environmental Laws, (B) failure to obtain an
Environmental Permit, (C) response or remedial costs under any
Environmental Law or (D) personal injury or property damage resulting
from exposure to or releases of Hazardous Materials.
(5) Hotels has not received any inquiry or notice, nor does
Hotels have any reason to suspect or believe any of them will receive
any inquiry or notice, of any actual or potential proceeding, claim,
lawsuit or loss that arises under or relates to any Environmental Law.
(6) No underground storage tanks are present on the properties
owned or operated by Hotels, and any underground storage tanks
previously removed from any
STOCK EXCHANGE AGREEMENT
PAGE 19
properties owned, managed, leased or operated by Hotels were removed
in accordance with applicable Environmental Laws.
(7) The business or any other current or prior operations
conducted or managed by Hotels have been conducted in compliance with
all applicable limitations, restrictions, conditions, standards,
prohibitions, requirements and obligations established under
applicable Environmental Laws, except where the failure to be in
compliance would not, either individually or in the aggregate, have a
Material Adverse Effect.
l. No Severance Payments. Hotels will not owe a severance payment
---------------------
or similar obligation to any of its employees, officers or directors as a
result of the Stock Exchange or the transactions contemplated by this
Agreement, nor will any of such persons be entitled to an increase in
severance payments or other benefits as a result of the Stock Exchange or
the transactions contemplated by this Agreement in the event of the
subsequent termination of their employment.
m. Insurance. The Hotels Disclosure Letter sets forth all policies
---------
of insurance currently in effect relating to the business or operations of
Hotels, and such insurance is adequate.
n. Title to Property. Except as set forth in the Hotels Disclosure
-----------------
Letter, Hotels has good and indefeasible title to all of its assets, free
and clear of all mortgages, liens, charges and encumbrances other than
Permitted Liens.
STOCK EXCHANGE AGREEMENT
PAGE 20
6. Investment and Other Representations by Xxxxxxx and Xxxxxx. Xxxxxxx
----------------------------------------------------------
and Mathot jointly and severally represent and warrant to Buffton that:
a. Each of Xxxxxxx and Xxxxxx has such knowledge of finance,
securities and investments generally and such experience and skill in
investments based on actual participation that each is capable of
evaluating the merits and risks of an investment in Buffton and the
suitability of the Buffton Common Stock acquired hereunder as an investment
for each of Xxxxxxx and Mathot.
b. The Buffton Common Stock being acquired by Xxxxxxx and Xxxxxx will
be acquired by each of Xxxxxxx and Mathot for his own account for
investment and not for the benefit of any other Entity or person or with a
view towards resale or distribution, and neither Xxxxxxx nor Xxxxxx
presently has any reason to anticipate any change in either of their
circumstances or other particular occasion or event that would cause either
Xxxxxxx or Mathot to sell his Buffton Common Stock.
c. Each of Xxxxxxx and Xxxxxx has been furnished by Buffton with all
information (or access to all information) regarding Buffton's business,
operations and financial condition, the attributes of the Buffton Stock and
the merits and risks of an investment in the Buffton Stock, that each of
Xxxxxxx and Mathot deems appropriate and necessary for each of Xxxxxxx and
Mathot's analysis of an investment in the Buffton Stock.
STOCK EXCHANGE AGREEMENT
PAGE 21
d. Each of Xxxxxxx and Xxxxxx has had an opportunity to obtain any
information from and ask questions of Buffton concerning any and all
information that each of Xxxxxxx and Mathot believed was or might be
material to an evaluation of the terms, conditions, merits and risks of an
investment in the Buffton Common Stock, and all such questions have been
satisfactorily answered, and all such information provided, to each of
Xxxxxxx and Xxxxxx'x full and complete satisfaction.
e. Each of Xxxxxxx and Mathot has adequate net worth and means of
providing for each of Xxxxxxx and Xxxxxx'x current needs and all possible
contingencies, and each of Xxxxxxx and Mathot has no need, and anticipates
no need in the foreseeable future, to sell the Buffton Common Stock.
f. Each of Xxxxxxx and Xxxxxx is able to bear all of the economic
risks of an investment in the Buffton Stock and, consequently, without
limiting the generality of the foregoing, each of Xxxxxxx and Mathot is
able to hold each of Xxxxxxx'x and Xxxxxx'x Buffton Common Stock for an
indefinite period of time and has a sufficient net worth to sustain a loss
of each of Xxxxxxx'x and Mathot's entire investment in the Buffton Common
Stock in the event such loss should occur.
g. Each of Xxxxxxx and Xxxxxx understands that (i) his investment in
the Buffton Common Stock is speculative and involves a high degree of risk
of loss by him of his entire investment and that he must bear the economic
risk of such investment for an indefinite period of time; and (ii) no
assurances, representations or warranties, direct or indirect of any nature
STOCK EXCHANGE AGREEMENT
PAGE 22
whatsoever, have been made regarding (A) any economic advantages (including
Tax) that may inure to the benefit of each of Xxxxxxx and Mathot, (B) the
approximate length of time that each of Xxxxxxx and Xxxxxx will be required
to own each of Xxxxxxx'x and Mathot's Buffton Stock or (C) any
distributions of cash or property to the stockholders of Buffton.
h. Except as provided herein or in the Employment Agreements and
Nonqualified Stock Option Agreements referred to on Schedule 2.a hereto,
------------
neither Xxxxxxx nor Xxxxxx has received any representation or warranty from
Buffton or any stockholder or any director, officer, employee or agent, as
applicable, of Buffton or any stockholder, in making their investment
decision.
i. All information made available to each of Xxxxxxx'x and Mathot and
each of Xxxxxxx and Xxxxxx'x personal advisors and representatives, if any,
in connection with their investment in the Buffton Common Stock is
confidential, shall be held in strict confidence in all respects and may
not be reproduced, distributed in whole or in part, or otherwise divulged,
or used for any other purpose, without the prior written consent of
Buffton.
j. Each of Xxxxxxx and Mathot is aware that there are substantial
restrictions on the transferability of the Buffton Common Stock and that
since the Buffton Common Stock may not be, and each of Xxxxxxx and Xxxxxx
has no right to require that it be, registered (except pursuant to the
registration rights hereafter provided) under the Securities Act or any
applicable state securities laws, the Buffton Common Stock may not be, and
each of Xxxxxxx and Mathot agrees
STOCK EXCHANGE AGREEMENT
PAGE 23
that it shall not be, sold unless first registered thereunder or unless
such sale is exempt from such registration under said Act and such laws.
Each of Xxxxxxx and Xxxxxx also acknowledges that he is responsible for
compliance with all conditions on transfer imposed by any federal or state
securities law or regulation and for any expenses incurred by Buffton for
legal or accounting services in connection with reviewing any such proposed
transfer except as provided in Section 8 hereof.
k. Each of Xxxxxxx and Mathot is an "Accredited Investor" within the
meaning of Regulation D of the General Rules and Regulations under the
Securities Act.
l. Each of Xxxxxxx and Xxxxxx understands and agrees that a legend
may be placed on each certificate evidencing the Buffton Common Stock in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE SOLD, OR
TRANSFERRED, EXCEPT UPON SUCH REGISTRATION OR UPON DELIVERY
TO THE CORPORATION OF AN OPINION OF COUNSEL SATISFACTORY TO
THE CORPORATION THAT REGISTRATION IS NOT REQUIRED FOR SUCH
SALE OR TRANSFER.
STOCK EXCHANGE AGREEMENT
PAGE 24
m. To their Knowledge, there are no material misstatements, errors,
misrepresentations or omissions in any Tax Return filed by Hotels.
n. Except as disclosed in the Hotels Disclosure Letter, there are no
claims, actions, suits, investigations or proceedings pending or, to the
Knowledge of Xxxxxxx or Xxxxxx, threatened against or affecting Hotels
before or by any Governmental Authority or arbitrator, wherever located.
x. Xxxxxxx and Mathot have all requisite capacity and authority to
enter into this Agreement, to make the representations made herein and to
perform their obligations hereunder. This Agreement has been duly executed
and delivered by Xxxxxxx and Xxxxxx and is the valid and binding obligation
of Xxxxxxx and Mathot, enforceable against them in accordance with its
terms, except as such enforceability may be limited or affected by (i)
bankruptcy, insolvency, reorganization, moratorium, liquidation,
arrangement, fraudulent transfer, fraudulent conveyance and other similar
Laws (including court decisions) now or hereafter in effect and affecting
the rights and remedies of creditors generally or providing for the relief
of debtors, (ii) the refusal of a particular court to grant equitable
remedies, including, without limitation, specific performance and
injunctive relief, and (iii) general principles of equity (regardless of
whether such remedies are sought in a proceeding in equity or at law) and
except as the enforceability of any indemnification provision contained in
this Agreement may be limited by applicable federal or state securities or
other Laws.
STOCK EXCHANGE AGREEMENT
PAGE 25
7. Tax Treatment. Xxxxxxx and Xxxxxx each acknowledge that neither
-------------
Buffton nor any of its officers, directors, employees, attorneys, accountants or
agents has made any representations or warranties of any nature whatsoever with
respect to the consequences of the Stock Exchange or any of the other
transactions contemplated hereby to either Xxxxxxx or Mathot under any Tax Law.
8. Registration Rights.
-------------------
a. Demand Registration Right (Registration of Buffton Common
---------------------------------------------------------
Stock on Request).
-----------------
(1) Request. Upon the written request of either Xxxxxxx or
-------
Mathot (the "Requesting Holder") that Buffton effect the registration
-----------------
under the Securities Act of all of such Requesting Holder's
Registrable Securities, Buffton shall promptly give written notice of
such requested registration to the other if Xxxxxxx or Xxxxxx and to
any other person or Entity with demand or incidental registration
rights granted by Buffton (the Requesting Holder, the other of Xxxxxxx
or Mathot and all such other persons and Entities being herein called
"Registration Rights Holders") and shall use Buffton's best efforts to
---------------------------
effect, as expeditiously as possible, the registration under the
Securities Act of:
i) the Registrable Securities that Buffton has been so
requested to register by such Requesting Holder;
STOCK EXCHANGE AGREEMENT
PAGE 26
ii) all other Registrable Securities that Buffton has been
requested to register in such registration by the other of
Xxxxxxx or Xxxxxx who is not the Requesting Holder by written
request to Buffton received within 15 days after the other of
Xxxxxxx or Mathot receives notice of such pending registration;
and
iii) all other Buffton Common Stock which any other
Registration Rights Holders may have requested be included in
such pending registration.
(2) Certain Limitations. The foregoing notwithstanding, Buffton
-------------------
shall not be obligated to file or cause to become effective any
registration statement pertaining to Registrable Securities of a
Requesting Holder, (i) if less than 100,000 shares will be included in
such registration statement or (ii) at any time during the existence
of a Disadvantageous Condition. Except as provided in Section 2.7,
-----------
Xxxxxxx and Xxxxxx together may only require one demand registration
pursuant to this Section 8.a. (i.e., if Xxxxxxx is a Requesting Holder
----------- ----
and Mathot does not elect to participate in such registration, Mathot
shall have no further right to request registration pursuant to this
Section 8.a.
-----------
(3) Registration Statement Form. Registrations under this
---------------------------
Section 8.a shall be on such appropriate registration form of the SEC
-----------
as shall be selected by Buffton.
STOCK EXCHANGE AGREEMENT
PAGE 27
(4) Expenses. Buffton shall pay all Registration Expenses in
--------
connection with the one registration which becomes effective pursuant
to this Section 8.a.
-----------
(5) Effective Registration Statement. A registration requested
--------------------------------
pursuant to this Section 8.a shall not be deemed to have been effected
-----------
unless a registration statement relating thereto has become effective
under the Securities Act and the registration statement has remained
effective for a period of at least 90 days (or such shorter period in
which all Registrable Securities included in such registration have
actually been sold thereunder). Buffton may discontinue any effective
registration statement requested if and so long as a Disadvantageous
Condition shall exist.
(6) Underwriters. Xxxxxxx and Xxxxxx shall have no right to
------------
require an underwritten public offering, but if any registration
effected pursuant to this Section 8.a is an underwritten public
-----------
offering, the managing underwriter or underwriters thereof and the
price, terms and provisions of the offering shall be determined by the
holders of 60% or more of the Registrable Securities and other Buffton
Common Stock included in such registration, but any such underwriter
must be reasonably acceptable to Buffton and may be selected by
Buffton if the required 60% concurrence cannot be achieved.
(7) Apportionment in Registrations Requested. If a registration
----------------------------------------
requested pursuant to this Section 8.a or pursuant to Section 8.b is
----------- -----------
an underwritten offering and the managing underwriter advises Buffton
in writing (with a copy to the Requesting Holder and
STOCK EXCHANGE AGREEMENT
PAGE 28
any other stockholders who requested inclusion of Registrable
Securities or other Buffton Common Stock in the registration) that, in
its opinion, the number of Registrable Securities requested to be
included in such registration exceeds the number that can be sold in
such offering or would in any other manner adversely effect such
offering, Buffton shall include in such registration all of such
Registrable Securities that Buffton is advised can be sold in such
offering. To the extent that such number is less than the total number
of Registrable Securities and other Buffton Common Stock requested to
be included in such registration, the number of Registrable Securities
to be so included shall be reduced on a pro rata basis among all
holders, whose Buffton Common Stock are included in such registration
such that each holder whose Buffton Common Stock is so included shall
be entitled to include such number of shares of Buffton Common Stock
included in such offering, determined by multiplying the number of
shares of Buffton Common Stock requested to be included by the
Registration Rights Holders by a fraction the numerator of which is
equal to the sum of the number of shares of Buffton Common Stock that
such managing underwriter has advised may be included in such
registration, and the denominator of which is the total number of
shares of Buffton Common Stock requested to be included in such
registration by all holders. Subject to the limitations on number of
shares stated in Section 7.a.(2), in the event of any such reduction
at the request of an underwriter, either pursuant to the initial
demand registration by Xxxxxxx and/or Mathot or a subsequent one
pursuant to this sentence, Xxxxxxx and Xxxxxx, and if there is no
other registration within the next 12 months pursuant to which the
shares unsold because of such reduction can be sold
STOCK EXCHANGE AGREEMENT
PAGE 29
pursuant to Section 8.b, Xxxxxxx and Mathot shall be entitled to
exercise one additional demand right pursuant to this Section 8.a in
order to sell such unsold shares.
b. Piggyback Registration Rights. If Buffton at any time proposes to
-----------------------------
register any of its Common Stock under the Securities Act (other than a
registration on Form X-0, Xxxx X-0 or any successor or similar form, or in
connection with a tender offer, merger or other acquisition), for sale for
its own account in an underwritten offering or for sale pursuant to a
registration for others, it shall each such time give prompt written notice
to Xxxxxxx and Xxxxxx of its intention to do so. Upon the written request
of either Xxxxxxx or Mathot made within 15 days after the date of receipt
of such notice, Buffton shall use its best efforts to effect the
registration under the Securities Act of all Registrable Securities that
Buffton has been so requested to register by Xxxxxxx and/or Mathot, to the
extent requisite to permit the disposition of such Registrable Securities
so to be registered, provided, that if, at any time after giving written
notice of its intention to register any Buffton Common Stock and prior to
the effective date of the registration statement filed in connection with
such registration, Buffton shall determine for any reason not to register
or to delay registration of such Buffton Common Stock, Buffton may, at its
election, give written notice of such determination to Xxxxxxx and Xxxxxx
and, thereupon, (a) in the case of a determination not to register, Buffton
shall be relieved of its obligation to register any Registrable Securities
in connection with such registration (but not from its obligation to pay
the Registration Expenses in connection therewith), without prejudice.
Buffton shall pay all Registration Expenses in connection with each
registration of Registrable Securities pursuant to this Section 8.b.
-----------
STOCK EXCHANGE AGREEMENT
PAGE 30
c. Registration Procedures.
-----------------------
(1) Procedures. If and whenever Buffton is required to use its
----------
best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Articles II and III, Buffton
----------- ---
shall as expeditiously as possible:
i) prepare and as soon thereafter as is reasonably
practicable file with the SEC the requisite registration
statement to effect such registration and thereafter use
commercially reasonable efforts to cause such registration
statement to become effective;
ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the
provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement until
such time as all of such securities have been disposed of in
accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such registration statement or 90
days after the effective date of the registration statement,
whichever is shorter;
STOCK EXCHANGE AGREEMENT
PAGE 31
iii) furnish without charge to each seller of Registrable
Securities covered by such registration statement such number of
conformed copies of such registration statement and of each such
amendment and supplement thereto, such number of copies of the
prospectus contained in such registration statement (including
each preliminary prospectus and any summary prospectus) and any
other prospectus filed under Rule 424 or Rule 430A under the
Securities Act, conforming with the requirements of the
Securities Act and such other documents as such seller may
reasonably request;
iv) use commercially reasonable efforts to register or
qualify all securities under such other securities or blue sky
laws of such jurisdictions in the United States as each seller
thereof shall reasonably request, keep such registration or
qualification in effect for so long as such registration
statement remains in effect and take any other action that may be
reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the
securities owned by such seller, except that Buffton shall not
for any such purpose be required to qualify generally to do
business as a foreign entity in any jurisdiction wherein it would
not but for the requirements of this Section 8.c be obligated to
-----------
be so qualified or to consent to general service of process in
any such jurisdiction; and
STOCK EXCHANGE AGREEMENT
PAGE 32
v) cause any shares registered pursuant hereto to be listed
for trading on the American Stock Exchange.
d. Seller's Information. Buffton may require each proposed seller of
--------------------
Registrable Securities as to which any registration is being effected to
promptly furnish Buffton, as a condition precedent to including such
seller's Registrable Securities in any registration, such information
regarding such seller and the intended method of distribution of such
Registrable Securities by such seller as Buffton may from time to time
reasonably request in writing.
e. Preparation; Reasonable Investigation. In connection with the
-------------------------------------
preparation and filing of each registration statement under the Securities
Act pursuant to this Agreement, Buffton shall give the sellers of
Registrable Securities, their underwriters, if any, and their respective
counsel, a reasonable period of time prior to the filing thereof to review
and comment upon such registration statement, each prospectus included
therein, and each amendment thereof or supplement thereto, and shall give
each of them such opportunities to discuss the business of Buffton with its
officers and the independent public accountant who has certified its
financial statements as shall be necessary, in the opinion of each such
seller's and each such underwriter's respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.
9. Release of Claims by Xxxxxxx and Mathot. Xxxxxxx and Xxxxxx, jointly
---------------------------------------
and severally, hereby waive, release, cancel and discharge any and all
contractual, legal and other claims and rights of every kind or nature
whatsoever which they or either of them may have against Hotels as an officer,
STOCK EXCHANGE AGREEMENT
PAGE 33
director, shareholder, employee or otherwise and agree to, and do hereby, cancel
and terminate the Existing Stockholders Agreement.
10. Sale of Current Technology; Buffton Name Change. Buffton has provided
-----------------------------------------------
to Xxxxxxx and Mathot a copy of the draft proxy statement filed with the SEC
describing the proposed sale of substantially all of the assets of Current
Technology, Inc. ("CTI"), a subsidiary of Buffton, to a subsidiary of Xxxxxxx
---
Corporation, pursuant to a February 17, 1997 Asset Purchase Agreement, subject
to shareholder approval and the satisfaction of the conditions stated in such
Asset Purchase Agreement (the "CTI Sale"). Buffton agrees that it will use
--------
commercially reasonable best efforts to consummate the CTI Sale, and, after such
consummation, change the name of Buffton to BFX Hospitality Group, Inc. In the
event Buffton is successful in consummating the CTI sale, it agrees to redeploy
the proceeds from the CTI Sale together with other cash and assets of Buffton
and the Buffton Subsidiaries into the hospitality industry, in implementation of
a business plan approved by the Buffton board of directors.
11. Purchase of Buffton Common Stock by Xxxxxxx and Mathot. Xxxxxxx and
------------------------------------------------------
Mathot severally agree that each of them will, within 120 days after the closing
of the CTI Sale, purchase 100,000 shares of Buffton Common Stock in the open
market at market prices so long as they are able to make such purchases at a
price of $3.00 per share or less.
12. Cooperation in Litigation. In the event that a claim is asserted
-------------------------
against Buffton, or any of its direct or indirect subsidiaries, relating to,
based in whole or in part on events or conditions occurring
STOCK EXCHANGE AGREEMENT
PAGE 34
or existing in connection with, or arising out of, Hotels or its business or
operations, each of Xxxxxxx and Xxxxxx agrees to cooperate with Buffton in the
defense of any such claim at Buffton's expense.
13. Expenses. Each party hereto shall bear the legal, accounting and
--------
other expenses incurred by such party in connection with the Stock Exchange and
this Agreement, and the other agreements and transactions contemplated hereby.
14. Preparation of Pre-Closing Tax Returns. With respect to each Tax
--------------------------------------
Return covering a taxable period ending on or before the date hereof that is
required to be filed after the date hereof for, by or with respect to Hotels,
Xxxxxxx and Mathot shall cause such Tax Return to be prepared, shall cause to be
included in such Tax Return allitems of income, gain, loss, deduction and credit
or other items required to be included therein, and shall deliver the original
of each such Tax Return to Buffton at least 30 days prior to the due date
(including extensions) of such Tax Return. If the amount of Tax shown due on
any such Tax Return exceeds the amount reflected as a current liability for such
Tax on the Hotels Financial Statements, Xxxxxxx and Xxxxxx shall pay to Buffton
the amount of such excess not less than five (5) days prior to the due date of
such Tax Return. Buffton shall grant to Xxxxxxx and Xxxxxx (or their designees)
access at all reasonable times to all the information, books and records
relating to Hotels within the possession of Hotels or Buffton to the extent
reasonably necessary to permit Xxxxxxx and Mathot (or their designees) to
prepare the Tax Return described in this Section 13.
15. Further Assurances. From time to time after the closing, upon request
-------------------
of Buffton and without further consideration, Xxxxxxx and Xxxxxx agree to
execute, acknowledge and deliver all such
STOCK EXCHANGE AGREEMENT
PAGE 35
other instruments of sale, assignment, conveyance and transfer and shall take
all such other commercially reasonable action required to effectively transfer
to and vest in Buffton, and to put Buffton in possession of, all of the Hotels
Stock and any assets of Hotels.
16. Public Announcements. Except for public statements or press releases
---------------------
which the management or board of directors of Buffton in good faith believe to
be required by law, Buffton, Tremain and Mathot will not make, or permit any
agent or affiliate to make, any public statement or press release, with respect
to the Stock Exchange or this Agreement without the prior written consent of the
other parties hereto, which shall not be unreasonably withheld, conditioned or
delayed.
17. Survival of Representations and Warranties. The representations and
------------------------------------------
warranties of the parties hereto made herein shall not be affected by any
information furnished to, or any investigation conducted by, any of them or its
representatives in connection with the subject matter of this Agreement, and
such representations and warranties shall survive the Closing.
18. Amendments. This Agreement may be amended only by a writing executed
----------
by all of the parties hereto.
19. Entire Agreement. This Agreement and the other agreements expressly
----------------
provided for herein set forth the entire understanding of the parties hereto and
supersede all prior contracts, agreements, arrangements, communications,
discussions, representations and warranties, whether oral or written,
STOCK EXCHANGE AGREEMENT
PAGE 36
between the parties. Hotels is executing this Agreement solely for the purpose
of making the representations and warranties in Section 5.
20. Notices. Any notice, request or other communication required or
-------
permitted hereunder shall be in writing and shall be deemed to have been duly
given (a) upon receipt if personally delivered or by overnight courier, (b) on
the date sent if made by facsimile transmission to the party to whom such notice
or communication is directed to the facsimile number of such person stated below
(or as otherwise provided to or obtained by the sending party) and if followed
by a telephone call to such person at the same time to the telephone number
stated below (or otherwise provided to or obtained by the sending party)
advising such person (or leaving a voice mail for such person) that the
facsimile transmission has been sent and a general statement about the contents
thereof, or (c) on the fifth business day after being sent by registered or
certified mail, return receipt requested, postage prepaid, to the parties at its
respective addresses set forth below.
if to Hotels: Hotel of Distinction, Inc.
000 Xxxxx Xxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
STOCK EXCHANGE AGREEMENT
PAGE 37
with a copy to: Xxxx-Xxxxxx Xxxxxx at the same address
and a copy to: Xxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxx & Xxxxx LLP
Xxx Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
if to Buffton: Buffton Corporation
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000-0000
Attention: Xxxxxx X. XxXxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Fulbright & Xxxxxxxx L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telephone: (000) 000-0000
STOCK EXCHANGE AGREEMENT
PAGE 38
Facsimile: (000) 000-0000
Any party by written notice to the other may change the address or the persons
to whom notices or copies thereof shall be directed.
21. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute one and the same instrument.
22. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the substantive Laws of the State of Texas without giving effect
to the principles of conflicts of law thereof.
23. Severability. If any term, provision, covenant or restriction of this
------------
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall continue in full force and effect and shall
in no way be affected, impaired or invalidated.
24. Headings. The Section heading herein are for convenience only and
--------
shall not affect the construction hereof.
STOCK EXCHANGE AGREEMENT
PAGE 39
25. Entire Agreement; Third Party Beneficiaries. This Agreement
-------------------------------------------
constitutes the entire agreement and supersedes all other prior agreements and
understandings, both oral and written, among the parties or any of them, with
respect to the subject matter hereof and neither this nor any documents
delivered in connection with this Agreement confers upon any Governmental
Authority, Entity or person not a party hereto any rights or remedies hereunder.
26. Election to Board of Directors. The Board of Directors of Buffton
------------------------------
have approved the election of Xxxxxxx and Mathot as members of such Board of
Directors promptly after the Stock Exchange has been completed.
STOCK EXCHANGE AGREEMENT
PAGE 40
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
BUFFTON CORPORATION
By /S/ Xxxxxx X. XxXxxx
----------------------------------
Xxxxxx X. XxXxxx
Chairman of the Board, President
and Chief Executive Officer
/S/ Xxxx Xxxxxxx /S/ Xxxx-Xxxxxx Xxxxxx
--------------------------------------- --------------------------------------
XXXX XXXXXXX XXXX-XXXXXX XXXXXX
HOTELS OF DISTINCTION, INC.
By /S/Xxxx Xxxxxxx
-------------------------------------
Xxxx Xxxxxxx, Chief Executive Officer
SCHEDULE 2.a
ITEMS AND DOCUMENTS DELIVERED BY BUFFTON AT OR BEFORE CLOSING
-------------------------------------------------------------
Form of Employment Agreement to be entered into between Buffton and Xxxxxxx.
Form of Employment Agreement to be entered into between Buffton and Mathot.
Form of Non Qualified Stock Option Agreement to be entered into between Buffton
and Xxxxxxx.
Form of Non Qualified Stock Option Agreement to be entered into between Buffton
and Mathot.
Buffton Annual Reports for 1994, 1995 and 1996.
Buffton form 10-Q for first quarter ending December 31, 1996.
Buffton proxy statement for 1996.
Buffton draft proxy statement filed with the SEC describing the proposed sale of
substantially all of the assets of Current Technology, Inc., a subsidiary of
Buffton, to a subsidiary of Xxxxxxx Corporation, pursuant to a February 17, 1997
Asset Purchase Agreement.
Buffton press releases for the period October 1, 1995 through April 7, 1997.
Projected balance sheet for Buffton at September 30, 1997, assuming the sale of
Current Technology has been completed.
Business Plan Summary as prepared by Xxxxxxx and reviewed by Xxxxxx XxXxxx.
Stock Certificate issued by Buffton to Xxxxxxx for 180,000 shares of Buffton
Common Stock.
Stock Certificate issued by Buffton to Mathot for 120,000 shares of Buffton
Common Stock.
SCHEDULE 2.b
ITEMS AND DOCUMENTS DELIVERED BY XXXXXXX AND XXXXXX AT OR BEFORE CLOSING
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