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AGREEMENT AND PLAN OF MERGER
AMONG
FAIRFIELD COMMUNITIES, INC.,
FC OCEAN RANCH , INC.,
XXXXX X. XXXXXXX,
XXXXX X. XXXXXXX,
XXXXXX XXXXXXX
AND
OCEAN RANCH DEVELOPMENT, INC.
DATED AS OF DECEMBER 10, 1997
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TABLE OF CONTENTS
PAGE
ARTICLE I
THE MERGER.........................................................1
1.1 The Merger....................................................1
1.2 Closing.......................................................1
1.3 Effective Time................................................2
1.4 Effect of the Merger..........................................2
1.5 Articles of Incorporation.....................................2
1.6 Bylaws........................................................2
1.7 Directors.....................................................2
1.8 Officers......................................................2
ARTICLE II
EFFECTS OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES.................2
2.1 Effect on Capital Stock.......................................2
2.2 Surrender and Payment for Shares..............................3
2.3 Transfer of Shares After the Effective Time...................3
ARTICLE III
REPRESENTATIONS AND WARRANTIES.....................................4
3.1 Representations and Warranties of Fairfield and Merger Sub....4
3.2 Representations and Warranties of Shareholders
and Ocean Ranch...............................................4
3.3 Additional Representation of Shareholders.....................11
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS..........................11
4.1 No Solicitation...............................................11
4.2 Conduct of Business Prior to Effective Time...................11
4.3 Access to Information.........................................13
4.4 Investigation by Fairfield....................................13
4.5 Inspection....................................................13
4.6 Regulatory Compliance.........................................13
4.7 Covenants of Fairfield........................................13
ARTICLE V
ADDITIONAL AGREEMENTS..............................................14
5.1 Confidentiality...............................................14
5.2 Indemnification of Shareholders...............................14
5.3 Indemnification of Fairfield..................................14
5.4 Procedures for Indemnity......................................14
5.5 Exclusivity Of Indemnification For Contractual Breaches.......16
5.6 Reasonable Efforts............................................16
5.7 Expenses and Fees.............................................16
5.8 Consents......................................................16
5.9 Repayment of PPM Loan; Release of Claims......................16
5.10 Delivery of Information......................................16
5.11 Tax Matters..................................................17
ARTICLE VI
CONDITIONS PRECEDENT; CLOSING......................................20
6.1 Conditions to Each Party's Obligation to Effect the Merger....20
6.2 Conditions to Obligations of Ocean Ranch and Shareholders.....21
6.3 Conditions to Obligations of Fairfield and Merger Sub.........21
6.4 Frustration of Closing Conditions.............................22
6.5 Closing Documents and Procedures..............................22
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER..................................24
7.1 Termination...................................................24
7.2 Effect of Termination.........................................24
7.3 Amendment.....................................................25
7.4 Extension; Waiver.............................................25
ARTICLE VIII
GENERAL PROVISIONS.................................................25
8.1 Survival of Representations and Warranties....................25
8.2 Notices.......................................................25
8.3 Definitions...................................................27
8.4 Interpretation................................................28
8.5 Counterparts..................................................28
8.6 Entire Agreement; No Third-party Beneficiaries................29
8.7 Governing Law.................................................29
8.8 Assignment...................................................29
8.9 Enforcement...................................................29
AGREEMENT AND PLAN OF MERGER dated as of December 10, 1997 (this
"Agreement"), among FAIRFIELD COMMUNITIES, INC., a Delaware corporation
("Fairfield"), FC Ocean Ranch, Inc., a Florida corporation and a wholly owned
subsidiary of Fairfield ("Merger Sub"), XXXXX X. XXXXXXX, XXXXX X. XXXXXXX,
XXXXXX XXXXXXX and OCEAN RANCH DEVELOPMENT, INC., a Florida corporation ("Ocean
Ranch").
WHEREAS, the respective Boards of Directors of Fairfield, Merger Sub and
Ocean Ranch each have determined that it is in the best interests of their
respective stockholders for Merger Sub to merge with and into Ocean Ranch (the
"Merger"), upon the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, Xxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxx and Xxxxxx Xxxxxxx
(collectively, the "Shareholders" and each a "Shareholder") hold all of the
outstanding capital stock of Ocean Ranch;
WHEREAS, the respective Boards of Directors of Fairfield, Merger Sub and
Ocean Ranch have each determined that the Merger and the other transactions
contemplated under this Agreement are consistent with, and in furtherance of,
their respective business strategies and goals; and
WHEREAS, Fairfield, Merger Sub, Shareholders and Ocean Ranch desire to make
certain representations, warranties, covenants and agreements in connection with
the transactions contemplated by this Agreement and also to prescribe various
conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereto agree
as follows:
ARTICLE I
THE MERGER
I.1 The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the Florida Business Corporation Act (the
"FBCA"), Merger Sub shall be merged with and into Ocean Ranch at the Effective
Time (as hereinafter defined). Following the Merger, the separate corporate
existence of Merger Sub will cease and Ocean Ranch will continue as the
surviving corporation (the "Surviving Corporation") and will succeed to and
assume all the rights and obligations of Merger Sub in accordance with the FBCA.
I.2 Closing. The closing of the Merger (the "Closing") will take place at
10:00 a.m. on the date that is two business days after the expiration of the
Inspection Period (the "Closing Date"), at the offices of Xxxxx, Day, Xxxxxx &
Xxxxx, 2300 Xxxxxxxx Xxxx Center, 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000, unless
another date, time or place is agreed to in writing by all of the parties
hereto.
I.3 Effective Time. Subject to the provisions of this Agreement, as soon as
practicable on or after the Closing Date the parties shall deliver Articles of
Merger (the "Articles of Merger") executed in accordance with the relevant
provisions of the FBCA to the Florida Department of State for filing as required
under the FBCA and shall make all other filings or recordings required under the
FBCA. The Merger shall become effective at such time (the "Effective Time") as
the Articles of Merger have been accepted for filing by the Florida Department
of State (or such later time as stated in the Articles of Merger and permitted
by the Florida Department of State), which will be the Closing Date or as soon
as practicable thereafter.
I.4 Effect of the Merger. The Merger shall have the effects set forth in
Section 607.1106 of the FBCA.
I.5 Articles of Incorporation. Articles of incorporation of Ocean Ranch
shall be amended to read in their entirety as set forth in Exhibit A attached
hereto and shall be the articles of incorporation of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable law.
I.6 Bylaws. The bylaws of Ocean Ranch shall be amended to read in their
entirety as set forth in Exhibit B and shall be the bylaws of the Surviving
Corporation following the Merger until thereafter changed or amended as provided
therein or by applicable law.
I.7 Directors. The directors of Merger Sub at the Effective Time shall be
the directors of the Surviving Corporation following the Merger, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
I.8 Officers. The officers of Merger Sub at the Effective Time shall be the
officers of the Surviving Corporation following the Merger, until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
ARTICLE II
EFFECTS OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
II.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of the
capital stock of the constituent corporations:
(a) Merger Consideration. All of the shares of Common Stock, par value
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$1.00 per share, of Ocean Ranch (the "Ocean Ranch Common Stock") issued and
outstanding immediately prior to the Effective Time (other than shares of Ocean
Ranch Common Stock, if any, to be canceled under Section 2.1(c)), shall be
converted into the right to receive a cash payment in an aggregate amount equal
to $7,000,000 (the "Merger Consideration").
(b) Certificates. All shares of Ocean Ranch Common Stock to be converted
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into the right to receive the Merger Consideration pursuant to this Section 2.1
shall cease to be outstanding, shall be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such shares of Ocean
Ranch Common Stock shall thereafter cease to have any rights with respect to
such shares of Ocean Ranch Common Stock, except the right to receive for each of
the shares of Ocean Ranch Common Stock, upon the surrender of such certificate
in accordance with Section 2.2, the amount of Merger Consideration specified in
Section 2.2.
(c) Treasury Shares. Shares of Ocean Ranch Common Stock, if any, held by
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Ocean Ranch as treasury stock immediately prior to the Effective Time shall
cease to be outstanding, shall be canceled and retired without payment of any
consideration therefor, and shall cease to exist.
(d) Stock of Merger Sub. Each share of common stock, par value $.01 per
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share, of Merger Sub issued and outstanding immediately prior to the Effective
Time shall be converted into and exchanged for one validly issued, fully paid
and nonassessable share of common stock of the Surviving Corporation.
II.2 Surrender and Payment for Shares. At the Closing the Shareholders will
deliver to Fairfield a certificate or certificates representing all of the
shares of Ocean Ranch Common Stock outstanding immediately prior to the
Effective Time. Each Shareholder will be entitled to receive the amount of
Merger Consideration equal to the product, rounded to the nearest whole number,
of (a) the Merger Consideration multiplied by (b) a fraction, the numerator of
which is the aggregate number of shares of Ocean Ranch Common Stock represented
by the certificate or certificates so surrendered and the denominator of which
is the aggregate number of shares of Ocean Ranch Common Stock issued and
outstanding (the "Ocean Ranch Stock Percentage"). Fairfield shall deliver to
each Shareholder the amount in cash which the Shareholder is entitled to receive
under this Section 2.2 by wire transfer of immediately available funds to such
account as shall have been designated by such Shareholder at least two business
days prior to the Closing.
II.3 Transfer of Shares After the Effective Time. No transfers of shares of
Ocean Ranch Common Stock shall be made on the stock transfer books of Ocean
Ranch after the close of business on the day prior to the date of the Effective
Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
III.1 Representations and Warranties of Fairfield and Merger Sub. Fairfield
and Merger Sub represent and warrant to Ocean Ranch and Shareholders as follows:
(a) Organization. Each of Fairfield and Merger Sub is a corporation duly
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organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation.
(b) Binding Agreement. Each of Fairfield and Merger Sub has full corporate
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power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby and has taken all necessary corporate action to
authorize the execution and delivery of this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Fairfield and Merger Sub and constitutes the valid and binding
agreement of Fairfield and Merger Sub enforceable in accordance with its terms.
(c) Governmental Approvals. No consent, approval, order, or authorization
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of, or declaration, filing, or registration with, any Governmental Entity is
required to be obtained or made by Fairfield or Merger Sub in connection with
the execution, delivery, or performance by Fairfield and Merger Sub of this
Agreement or the consummation by Fairfield and Merger Sub of the transactions
contemplated hereby, other than such consents, approvals, orders, or
authorizations that, if not obtained, and such declarations, filings, or
registrations that, if not made, would not, individually or in the aggregate,
have a material adverse effect on Fairfield and its Subsidiaries considered as a
whole.
(d) Broker's Fee. Fairfield has not made any agreement or taken any other
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action which might cause anyone to become entitled to a broker's fee or
commission as a result of the transactions contemplated under this Agreement,
except for the engagement by Fairfield of any financial advisor, broker, agent
or finder for which Fairfield will have full liability for the payment of any
such broker's fee or commission.
(e) Merger Sub. Merger Sub is a newly formed direct wholly owned subsidiary
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of Fairfield formed solely for the purpose of engaging in this transaction. As
of the Effective Time, Merger Sub will not have conducted any business nor will
it own any significant assets or owe any significant liabilities.
III.2 Representations and Warranties of Shareholders and Ocean Ranch.
Shareholders and Ocean Ranch hereby jointly and severally represent and warrant
to Fairfield and Merger Sub as follows:
(a) Organization. Ocean Ranch is a corporation duly organized, validly
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existing and in good standing under the laws of the State of Florida. Ocean
Ranch has full power to own its properties and to carry on the business
currently being conducted by it, and does not conduct business in any state
other than Florida. Ocean Ranch does not now own and has never owned any capital
stock or any equity interest in any corporation, limited liability company,
partnership or other entity other than its ownership of the Interest and has no
Subsidiary other than the Partnership.
(b) Binding Agreement. The execution, delivery, and consummation of this
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Agreement has been duly authorized by each of the Shareholders and Ocean Ranch
and approved by all necessary action. This Agreement has been duly executed and
delivered by Ocean Ranch and each Shareholder and constitutes the valid and
binding agreement of each of them enforceable in accordance with its terms.
(c) No Breach. Neither the execution of this Agreement nor the consummation
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of the transactions contemplated hereby will (i) result in the breach of any
term or provision of, or constitute a default under, or be in violation of any
charter provision, bylaw, agreement, instrument, order, law or regulation to
which any Shareholder, Ocean Ranch and/or the Partnership is a party or which is
otherwise applicable, (ii) result in the creation or imposition of any Lien upon
any of the property or assets of the Shareholders, Ocean Ranch or the
Partnership, (iii) violate any Applicable Law binding upon the Shareholders,
Ocean Ranch, or the Partnership, or (iv) violate the terms of or constitute a
default under, any note, bond, mortgage, indenture, or other contract between
third parties and the Shareholders, Ocean Ranch or the Partnership or by which
the Shareholders, Ocean Ranch or the Partnership may be bound or result in the
termination, acceleration or amendment thereof, except, in the case of
clauses (ii) and (iii) above, for any such conflicts, violations or Liens that
would not, individually or in the aggregate, have a material adverse effect on
Ocean Ranch or the Partnership.
(d) Governmental Approvals. No consent, approval, order, or authorization
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of, or declaration, filing, or registration with, any Governmental Entity is
required to be obtained or made by any Shareholder, Ocean Ranch or the
Partnership in connection with the execution, delivery, or performance by
Shareholders and Ocean Ranch of this Agreement or the consummation by it of the
transactions contemplated hereby.
(e) Partnership Capitalization; Title to Partnership Interests. Except as
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otherwise set forth in the Partnership Agreement, Ocean Ranch owns and holds the
Interest beneficially and of record and free and clear of any Liens and of any
right of assignment or options of any third party. Ocean Ranch has paid in full
and is not in default with respect to any capital contribution required to be
paid by it pursuant to the Partnership Agreement. There are no rights, options,
subscriptions, or other agreements of any kind to purchase or to acquire,
receive or be issued any interest in respect of the Interest existing in favor
of any person, and there are no agreements of any kind to which Ocean Ranch is a
party, other than the Partnership Agreement and this Agreement, providing for or
restricting the governance or control of the Partnership or the issuance or
transfer, directly or indirectly, of any interest in the Interest. Except as set
forth in the Partnership Agreement, Ocean Ranch has no agreements or commitments
of any kind in its capacity as a general partner of the Partnership to cause the
Partnership to contribute, make loans, or guarantee the contribution or loan of
any Person, whether directly or indirectly, and after the Closing with respect
to the Partnership, Fairfield shall not be deemed to have assumed, been assigned
or otherwise be obligated or responsible for any such agreement or commitment to
the Partnership. The Partnership Agreement is in full force and effect.
(f) Financial Statements. Shareholders and Ocean Ranch have furnished to
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Fairfield unaudited balance sheets of Ocean Ranch as of December 31, 1996 and
the related unaudited statements of operations for the fiscal year then ended
and the unaudited balance sheet of Ocean Ranch as of November 30, 1997 and the
related unaudited statements of operations for the interim period then ended
(the "Unaudited Financial Statements"). Those financial statements fairly
present the financial position of Ocean Ranch at, and the results of operations
for the periods ending on, such dates, in a consistent manner throughout the
periods indicated and were prepared based on the books and records maintained
for Ocean Ranch's business. Except as disclosed in the Unaudited Financial
Statements (which includes the notes thereto), Ocean Ranch has no liabilities
(contingent, accrued, actual or otherwise) that were not provided or reserved
for in the November 30, 1997 balance sheet, other than liabilities incurred
since the date of the November 30, 1997 balance sheet in the ordinary course of
business; and all reserves established by Ocean Ranch and reflected in the
November 30, 1997 balance sheet were at the times they were established,
adequate for the purposes indicated therein. Except as disclosed in the
Unaudited Financial Statements, since November 30, 1997, Ocean Ranch has not:
(i) declared or set aside or paid any dividend or made any payment or
distribution in respect of shares of its capital stock; (ii) made any loans or
advances to any person; (iii) entered into any transaction with any affiliate of
Ocean Ranch or either Shareholder; (iv) incurred any indebtedness for money
borrowed; or (v) made or entered into any agreement or understanding to do any
of the foregoing.
(g) Assets. (i) Ocean Ranch does not have, and has not had, any assets or
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properties, whether tangible or intangible, real, personal or mixed, owned or
leased other than the Interest. Ocean Ranch is not a party to any leases,
subleases, rental agreements, contracts of sale, tenancies or licenses of any
assets or properties. The Interest constitutes all the properties and assets
reflected in the Unaudited Financial Statements and all the assets necessary for
the conduct by Ocean Ranch of its business as now conducted.
(h) Proceedings. There are currently no pending, and Shareholders and Ocean
Ranch are not aware of any threatened, actions, suits, proceedings or
investigations against or affecting Ocean Ranch or the Interest. Ocean Ranch is
not subject to any currently existing order, writ, injunction or decree. The
Shareholders and Ocean Ranch are not aware of any actions, suits, proceedings or
investigations pending or threatened by or before any court or Governmental
Entity (i) against or affecting the Partnership or the Resort Property or
arising out of the development, construction, operation, maintenance or
management of the Resort Property or (ii) that would prevent or hinder the
performance by any Shareholder or Ocean Ranch of its obligations under this
Agreement.
(i) Compliance With Laws. Ocean Ranch and to the knowledge of Shareholders
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and Ocean Ranch, the Partnership, are and have at all times been, in compliance
in all material respects with all applicable laws, rules, regulations and
orders. There are no pending or, to the knowledge of Shareholders and Ocean
Ranch, proposed laws or governmental rules that have been submitted in writing
to any Governmental Entity for due consideration that, if enacted, would have a
material adverse effect on Ocean Ranch, the Resort Property or the Partnership.
Except as set forth in Schedule 3.2(i), none of Shareholders or Ocean Ranch is
charged or, to each of their knowledge, threatened with, or, is under
investigation with respect to, any violation of any provision of any applicable
law, rule, regulation or order.
(j) Claims. Except as set forth in the Partnership Agreement, there are no
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claims of the Partnership against, or any obligation owed to the Partnership by,
Ocean Ranch, or any Shareholder. No affiliate of Ocean Ranch or any Shareholder
is owed any obligation by the Partnership, or holds a claim against the
Partnership, except as set forth on Schedule 3.2(j).
(k) PPM Loan. Schedule 3.2(k) sets forth a true, complete and correct list
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of all documents relating to indebtedness for money borrowed from, or any other
obligations or liabilities of Ocean Ranch or the Partnership to, PPM Brokerage
Service, Inc. ("PPM;" all such indebtedness, obligations and liabilities, the
"PPM Loan"), including, without limitation, promissory notes and all mortgages
and other collateral security instruments that secure the PPM Loan and encumber
the Resort Property, including all amendments or supplements thereto
(collectively, the "PPM Loan Documents"). The PPM Loan Documents are in full
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force and effect and have not been further modified or amended. PPM is the sole
obligee of the PPM Loan. As of December 19, 1997, the outstanding principal
balance of and accrued interest on the PPM Loan was $201,709.50 and $112,379.37,
respectively, and no penalties, fees or other amounts are due or payable with
respect to the PPM Loan. For purposes of this Agreement, "PPM Loan Amount" shall
mean $314,088.87.
(l) Capital Contribution Loan. Schedule 3.2(l) sets forth a true, complete
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and correct list of all documents relating to indebtedness for money borrowed
from, or any other obligations or liabilities of Ocean Ranch or the Partnership
to, any Shareholder or an affiliate of any Shareholder in connection with the
capital contribution of Ocean Ranch to the Partnership (the "Capital
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Contribution Loan"), including, without limitation, promissory notes and all
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mortgages and other collateral security instruments that secure the Capital
Contribution Loan, including all amendments or supplements thereto
(collectively, the "Capital Contribution Loan Documents"). Xxxxx X. Xxxxxxx is
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the sole obligee of the Capital Contribution Loan. The Capital Contribution Loan
Documents are in full force and effect and have not been further modified or
amended. As of December 19, 1997, the outstanding principal balance of and
accrued interest on the Capital Contribution Loan was $1,500,000 and $249,375,
respectively, and no penalties, fees or other amounts are due or payable with
respect to the Capital Contribution Loan. For purposes of this Agreement,
"Capital Contribution Loan Interest Amount" shall mean $249,375.
(m) Partnership Agreement and Marketing Agreements. To the best knowledge
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of Shareholders and Ocean Ranch, neither partner of the Partnership is in
violation of either the Partnership Agreement or any marketing agreements to
which either entity is subject.
(n) Adverse Change. Since the date of the Unaudited Financial Statements,
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Ocean Ranch has not made or experienced any material adverse change in its
working capital, financial condition, assets, liabilities, reserves, business,
operations or prospects.
(o) Employees. Ocean Ranch does not have, and has not had, any employees
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and has no obligation to contribute any amount to any Person in respect of the
compensation, accrued benefits, or vacation and sick leave of any Person. Ocean
Ranch is not a party to any collective bargaining agreements.
(p) Environmental Matters. Ocean Ranch has not and, to the knowledge of
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Shareholders and Ocean Ranch, the Partnership and the Resort Property have not
been associated with any spill, disposal, discharge or release of any hazardous
materials (which includes any hazardous or toxic substance, material or waste
which is regulated by any Governmental Entity) into or upon or over any real
property or into or upon ground or surface water including without limitation in
either case, any real property that is or has been leased by Ocean Ranch or the
Partnership.
(q) Broker's Fee. Neither Ocean Ranch nor any Shareholder has made any
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agreement or taken any other action which might cause anyone to become entitled
to a broker's fee or commission as a result of the transactions contemplated
under this Agreement.
(r) Capitalization. The authorized capital stock of Ocean Ranch consists of
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1,000 shares of Ocean Ranch Common Stock, of which 100 shares are issued and
outstanding. All outstanding shares of Ocean Ranch Common Stock have been duly
authorized and validly issued, are fully paid and nonassessable, and are owned
by Shareholders. No options, warrants, subscriptions, rights of conversion or
exchange exist that may obligate Ocean Ranch to issue any additional capital
stock. Neither Ocean Ranch nor any Shareholder is party to any shareholder,
voting or similar agreement or arrangement of any kind affecting or restricting
the sale, transfer, disposition, voting or other rights of or relating to the
Ocean Ranch Common Stock, other than the Partnership Agreement. Set forth on
Schedule 3.2(r) are the number and percentage of shares of Ocean Ranch Common
Stock held of record by each Shareholder.
(s) Benefit Plans; Labor Relations. Ocean Ranch has no "employee benefit
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plan," as such term is defined in Section3(3) of ERISA or other plan, program,
policy, contract or arrangement providing for bonuses, pensions, deferred pay,
stock or stock related awards, severance pay, salary continuation or similar
benefits, hospitalization, medical, dental or disability benefits, life
insurance or other employee benefits, or compensation to or for any current or
former employees, agents, directors, or independent contractors of Ocean Ranch
("Ocean Ranch Employees") or any beneficiaries or dependents of any Ocean Ranch
employees.
(t) Taxes.
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(i) All Tax Returns (as defined in paragraph (v) below) required to be
filed by Ocean Ranch or any Shareholder have been duly filed on a timely basis
with the appropriate federal, state, local and foreign tax authorities, or
requests for extensions to file such returns or reports have been timely filed
and granted and have not expired, and all such Tax Returns are complete and
accurate in all material respects. Ocean Ranch and the Shareholders have paid or
made adequate provision in the Unaudited Financial Statements for all Taxes (as
defined in paragraph (v) below) shown as due from each of them on such Tax
Returns. No claim has been made by any authority in a jurisdiction where Ocean
Ranch does not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. The Unaudited Financial Statements reflect adequate reserves for
all Taxes payable by Ocean Ranch for all taxable periods and portions thereof
accrued through the date of such financial statements, and no deficiencies for
any Taxes have been proposed, asserted or assessed against Ocean Ranch that are
not adequately reserved for, except for inadequately reserved Taxes and
inadequately reserved deficiencies that would not, individually or in the
aggregate, have a material adverse effect on Ocean Ranch. There are no liens for
Taxes (other than for current Taxes not yet due and payable) on the assets of
Ocean Ranch. No requests for waivers of the time to assess any Taxes against
Ocean Ranch have been granted or are pending, except for requests with respect
to such Taxes that have been adequately reserved for in the Unaudited Financial
Statements. Ocean Ranch is not a party to or bound by any agreement providing
for the allocation or sharing of Taxes. Ocean Ranch has not filed a consent
pursuant to or agreed to the application of Section 341(f) of the Code. Ocean
Ranch has disclosed on its federal income tax returns all positions taken
therein that could give rise to a substantial understatement of federal income
tax within the meaning of Section 6662 of the Code. All Taxes that are required
by the laws of the United States, any state or political subdivision thereof, or
any foreign country to be withheld or collected by Ocean Ranch have been duly
withheld or collected and, to the extent required, have been paid to the proper
Governmental Entities or properly deposited as required by applicable laws.
Except as set forth in Schedule 3.2(t), the statute of limitations for all Tax
Returns of Ocean Ranch has expired for all federal, state, local and foreign Tax
purposes. Neither Ocean Ranch nor any Shareholder has received any notice of
deficiency or assessment from any federal, state, local or foreign taxing
authority with respect to liabilities for Taxes of Ocean Ranch which has not
been fully paid or finally settled. No power of attorney has been executed by,
or on behalf of, Ocean Ranch or any Shareholder with respect to any matter
relating to Taxes applicable to Ocean Ranch which is currently in force. Ocean
Ranch is not a party to any agreement, contract, or other arrangement that would
result, separately or in the aggregate, in the requirement to pay any "excess
parachute payments" within the meaning of Section 280G of the Code. Ocean Ranch
is not a party to a tax sharing or tax indemnity agreement or any other
agreement of a similar nature that remains in effect. Ocean Ranch (i) has not
been a member of an affiliated group filing a consolidated federal income tax
return and (ii) has no liability for the taxes of any person (other than Ocean
Ranch) under Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by contract or
otherwise.
(ii) Schedule 3.2(t) sets forth each state in which Ocean Ranch has
collected or remitted any sales and/or use Taxes since September 1, 1992. To the
knowledge of Ocean Ranch and Shareholders, Ocean Ranch has not conducted
activities in any other state that would require such Taxes to be collected or
remitted. No claim has ever been made since September 1, 1992 by any authority
in a jurisdiction where Ocean Ranch does not pay sales and/or use Taxes that it
is or may be subject to a requirement to remit such Taxes in that jurisdiction.
(iii) Ocean Ranch has validly elected under Section 1362 of the Code to be
an "S corporation" (the "S Election"). The S Election has been in continuous
effect since the formation of Ocean Ranch, has not been terminated, and is in
full force and effect. Neither Ocean Ranch nor any Shareholder has taken any
action that would cause Ocean Ranch no longer to qualify for the S Election.
Neither Ocean Ranch nor any Shareholder is aware of any fact or circumstance on
the basis of which the S Election could be challenged.
(iv) Ocean Ranch is not liable for the Taxes of any person as a
"transferee" within the meaning of Section 6901 of the Code.
(v) For purposes of this Agreement, "Taxes" shall mean all taxes, charges,
fees, levies, penalties or other assessments imposed by any United States
federal, state, local or foreign taxing authority, including, but not limited
to, income, gross receipts, excise, property, sales, use (or any similar taxes),
transfer, franchise, payroll, withholding, social security, business license
fees, or other taxes including any interest, penalties or additions thereto. For
purposes of this Agreement, "Tax Return" shall mean any return, report,
information return, schedule or other document (including any related or
supporting information) required to be supplied to a taxing authority with
respect to Taxes.
(u)Voting Requirements. The affirmative vote of the Shareholders (the
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"Ocean Ranch Shareholder Approval") to approve this Agreement is the only vote
of the holders of capital stock of Ocean Ranch necessary to approve this
Agreement and the transactions contemplated by this Agreement.
(v)No Misleading Statement. To the best knowledge of Shareholders and Ocean
-----------------------
Ranch, neither this Agreement nor any other document, certificate, financial
statement or other instrument delivered to Fairfield in connection herewith
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein, in
light of the circumstances under which they were made, not misleading.
III.3 Additional Representation of Shareholders. Each Shareholder
represents and warrants on behalf of such Shareholder to Fairfield and Merger
Sub that each Shareholder has relied and will rely upon his own tax advisors for
advice and counseling in regard to the structure, accounting or tax treatment
and all other tax or accounting issues relating to the transactions contemplated
by the parties hereunder. No Shareholder has relied, nor will any Shareholder
rely, on Fairfield or its tax advisors, for any tax advice or counseling in
regard to the transactions contemplated hereunder.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
IV.1 No Solicitation. Prior to the Effective Time, Ocean Ranch and
Shareholders will not (a) offer for sale the Interest or any interest in Ocean
Ranch; (b) solicit any offers to purchase or make any attempts by preliminary
conversations or negotiations to dispose of the Interest or any equity interest
in Ocean Ranch to any person, firm or entity, other than to Fairfield, or to
engage in any type of business combination with any person, firm or entity,
other than Fairfield; or (c) provide anyone with any written or oral offer to
sell, invitation to purchase or any offering or sales material with respect to
the Interest or any equity interest in Ocean Ranch.
IV.2 Conduct of Business Prior to Effective Time. Except for transactions
specifically permitted by this Agreement or consented to in writing by
Fairfield, prior to the Effective Time Ocean Ranch shall (and the Shareholders
will cause Ocean Ranch to):
(a) operate its business only in the ordinary course, and employ no
persons;
(b) neither make, nor incur any obligation to make, any capital
expenditures;
(c) make no sale or other disposition of the Interest or any equity
interest in Ocean Ranch;
(d) not enter into, amend, rescind or terminate any contract, arrangement
or commitment;
(e) not declare, set aside or make any dividend, distribution, loan or
other advance to any Shareholder or any other person;
(f) not amend its Articles of Incorporation or Bylaws, nor issue any
additional shares of capital stock, or any options, warrants or other securities
under which any additional shares of its capital stock might be directly or
indirectly authorized or issued;
(g) not fail to comply in any material respect with the laws, regulations,
ordinances or governmental actions or orders applicable to Ocean Ranch;
(h) not make any material tax elections or settle or compromise any
material tax liability;
(i) not take any action that would materially adversely affect the ability
of Ocean Ranch or Shareholders to obtain the consents required for Ocean Ranch
and Shareholders to consummate the transactions contemplated hereby or
materially adversely affect the ability of Ocean Ranch or Shareholders to
perform their respective covenants and agreements under this Agreement;
(j) not change its method of accounting in effect January 1, 1997 or during
any other period included in the Unaudited Financial Statements;
(k) not change its method of reporting income and deductions for federal or
state income taxes in effect January 1, 1997 or during any other period included
in the Unaudited Financial Statements;
(l) not permit or authorize any transfer, sale, assignment or other
disposition of any of the assets of the Partnership other than in the ordinary
course of business consistent with past practices;
(m) promptly notify Fairfield in writing of any action, suit, proceeding or
investigation commenced, pending or threatened before or by any Governmental
Entity concerning or affecting any of the Interest, Partnership or Resort
Property of which Ocean Ranch or any Shareholder becomes aware;
(n) provide Fairfield copies of any notices of any event of which Ocean
Ranch or any Shareholder becomes aware that may have a material adverse effect
on the Partnership, specifically including, but not limited to, notices of
intent to accelerate and notices of acceleration of any debt secured by the
Resort Property;
(o) not permit or otherwise authorize the Partnership to make any
distributions to, or redeem or purchase the interests of the partners of the
Partnership, or make or repay any loans, advances or capital contributions made
to the Partnership by Ocean Ranch, any Shareholder or any of their affiliates;
(p) not permit or otherwise authorize any sale or other disposition of the
Resort Property, or any part thereof, nor enter into or permit the Partnership
to enter into any agreement for such purposes, except in the ordinary course of
business consistent with past practices;
(q) not amend or modify or permit any amendment or modification of the
Partnership Agreement; and
(r) not, without the prior written consent of Fairfield permit or otherwise
authorize any financing, refinancing, extension, renewal or modification of any
debt of the Partnership other than draws under the existing construction
financing with Bank Atlantic.
IV.3 Access to Information. Between the date hereof and the Closing,
Shareholders and Ocean Ranch (i) shall give Fairfield and Fairfield's
representatives access during normal business hours and upon reasonable notice
to all books and records relating to the Interest, the Resort Property and the
Partnership for purposes of an audit of such books and records and inspection of
the business of Ocean Ranch (the "Inspection") and all of the personal property
owned by the Partnership, to the extent such books and records are within the
control or in the possession of Shareholders or Ocean Ranch, and (ii) shall
cause Ocean Ranch's officers to furnish Fairfield and Fairfield's
representatives with any other information that is to be delivered pursuant to
this Agreement.
IV.4 Investigation by Fairfield. During the period from the date of this
Agreement through the earlier to occur of the Closing or December 31, 1997 (the
"Inspection Period"), Shareholders and Ocean Ranch shall provide to Fairfield
copies of documents reasonably requested by Fairfield relating to the
Partnership, the Resort Property and the Interest and the collectibility,
enforceability and other legal matters related to the Interest, the Resort
Property and the Partnership. Such documents shall be for the purpose of
enabling Fairfield to evaluate, prior to the end of the Inspection Period,
whether Fairfield wishes to proceed with the transactions contemplated by this
Agreement.
IV.5 Inspection. At or prior to the expiration of the Inspection Period,
Fairfield shall have the right to terminate this Agreement without cause and for
whatever reason or no reason and without liability on the part of either
Fairfield, any Shareholder or Ocean Ranch by delivering to Ocean Ranch, at or
prior to the expiration of the Inspection Period, written notice of Fairfield's
election to terminate this Agreement.
IV.6 Regulatory Compliance. Shareholders and Ocean Ranch shall permit
Fairfield to register or amend existing registrations with Governmental Entities
of the Resort Property and/or the vacation ownership intervals relating to the
Resort Property from the date of this Agreement to reflect the anticipated
effects or, if after the Closing, the effects, of the consummation of the
transactions contemplated by this Agreement as required in accordance with
applicable law or as Fairfield may reasonably deem necessary, and shall
cooperate with Fairfield in effecting such registrations or amendments.
IV.7 Covenants of Fairfield. Except for actions specifically permitted by
this Agreement or consented in writing by Ocean Ranch, prior to the Effective
Time, Fairfield shall not take any action that would materially adversely affect
the ability of Fairfield to obtain the consents required for Fairfield to
consummate the transactions contemplated hereby or materially adversely affect
the ability of Fairfield to perform its covenants and agreements under this
Agreement.
ARTICLE V
ADDITIONAL AGREEMENTS
V.1 Confidentiality. The terms of this Agreement and related agreements,
the terms of all transactions contemplated hereby, and all confidential and
proprietary information furnished to any party pursuant to this Agreement, or in
connection with the transactions contemplated by this Agreement, shall be
treated as confidential, and none of the parties shall use or disclose such
information except with the prior written consent of the other parties hereto;
provided, however, Fairfield may disclose such information (a) to its
representatives, advisors and agents for purposes of its investigation during
the Inspection Period or (b) to comply with any legal requirement; provided,
further, however, Shareholders and Ocean Ranch may disclose such information to
comply with any legal requirement if prompt advance notice is provided to
Fairfield at least two business days prior to any such disclosure so that
Fairfield may seek a protective order or other appropriate remedy.
V.2 Indemnification of Shareholders. Fairfield agrees to indemnify and hold
each Shareholder harmless from and against all expenses, losses, costs,
deficiencies, liabilities and damages (including, without limitation, reasonable
attorneys' fees and expenses) incurred or suffered by such Shareholder from or
arising out of (a) any breach of a representation or warranty made by Fairfield
in or pursuant to this Agreement, (b) any breach of the covenants or agreements
made by Fairfield in this Agreement, (c) any inaccuracy in any certificate
delivered by Fairfield pursuant to this Agreement, or (d) indebtedness of the
Partnership under the existing construction financing with Bank Atlantic, the
existing guaranty of such indebtedness by any Shareholder, or any breach of the
terms or provisions of such indebtedness or guarantees thereof, to the extent
arising after the Closing or as a result of the consummation of the Merger.
V.3 Indemnification of Fairfield. Shareholders shall jointly and severally
indemnify and hold Fairfield and its affiliates and their respective directors,
officers, employees, agents and attorneys harmless from and against all
expenses, losses, costs, deficiencies, liabilities and damages (including,
without limitation, reasonable attorneys' fees and expenses) incurred or
suffered by Fairfield, Merger Sub or any Subsidiary (including without
limitation Ocean Ranch) of Fairfield resulting from or arising out of (a) any
breach of a representation or warranty made by any Shareholder or Ocean Ranch in
or pursuant to this Agreement, (b) any breach of the covenants or agreements
made by any Shareholder or Ocean Ranch in this Agreement, or (c) any inaccuracy
in any certificate delivered by any Shareholder or Ocean Ranch pursuant to this
Agreement.
V.4 Procedures for Indemnity. (a) Whenever any claim shall arise or any
proceeding shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 5.2 or 5.3, such person (the
"Indemnified Party") shall promptly notify (in no event later than ten business
days after receipt of such notice) the person against whom such indemnity may be
sought (the "Indemnifying Party") thereof in writing, including, when known, the
facts constituting the basis for such claim or proceeding and the amount or an
estimate of the amount of the indemnified liability arising therefrom (such
notification being the "Claims Notice"). To the extent that any Claims Notice
relates to the assertion of a claim, the commencement of a suit, action or
proceeding or the imposition of a penalty or assessment by a third party that is
not an Indemnified Party (a "Third-Party Claim"), the Indemnified Party shall
include with the Claims Notice any written demand, complaint, petition, summons
or similar document relating thereto that is then in the Indemnified Party's
possession. The failure by an Indemnified Party to timely furnish to the
Indemnifying Party any notice document required to be furnished under this
Section 5.4(a) shall not relieve the Indemnifying Party from any liability or
obligation hereunder, except to the extent that such failure materially
prejudices the ability of the Indemnifying Party to defend such matter.
(b) In connection with any Third-Party Claim, the Indemnifying Party at its
sole cost and expense may, upon written notice to the Indemnified Party, elect
to assume the defense thereof. If the Indemnifying Party has so elected to
assume the defense of any such Third-Party Claim, such defense shall be
conducted by counsel chosen by the Indemnifying Party, provided that such
counsel is reasonably satisfactory to the Indemnified Party. The Indemnified
Party shall be entitled to participate in (but not control) the defense of any
such Third-Party Claim, with its counsel and at its own expense. If the
Indemnifying Party has elected to assume the defense of any Third-Party Claim as
provided herein, the Indemnified Party shall not be entitled to indemnification
as to fees and expenses of any counsel retained by the Indemnified Party after
the time at which the Indemnifying Party has so elected. The Indemnified Party
shall not settle or compromise any Third-Party Claim without the prior written
consent of the Indemnifying Party, which shall not be unreasonably withheld. In
the event that the Indemnifying Party shall assume the defense of any
Third-Party Claim, it shall not compromise or settle such Third-Party Claim
unless (i) the Indemnified Party gives its prior written consent, which shall
not be unreasonably withheld, or (ii) the terms of the compromise or settlement
of such Third-Party Claim provide that the Indemnified Party shall have no
responsibility for the discharge of any settlement amount and impose no other
obligations or duties on the Indemnified Party, and the compromise or settlement
discharges all rights against the Indemnified Party with respect to such
Third-Party Claim. If a firm offer is made to settle a pending or threatened
Third-Party Claim for which the Indemnified Party may be entitled to
indemnification hereunder and the Indemnifying Party desires to accept and agree
to such offer, the Indemnifying Party shall give written notice to the
Indemnified Party to that effect. If the Indemnified Party fails to consent to
such firm offer within ten calendar days after its receipt of such notice, the
Indemnifying Party may continue to contest or defend such Third-Party Claim and,
in such event, the maximum liability of the Indemnifying Party as to such
Third-Party Claim shall not exceed the amount of such settlement offer. The
Indemnified Party shall cooperate with the defense of any such Third-Party Claim
and shall provide such personnel, technical support and access to information as
may be reasonably requested by the Indemnifying Party in connection with such
defense.
(c) Any claim for indemnification hereunder that is not a Third-Party Claim
shall be asserted by the Indemnified Party by promptly delivering notice thereof
to the Indemnifying Party. If the Indemnifying Party does not respond to such
notice within 45 days after receipt thereof, it shall have no further right to
contest the validity of such claim.
V.5 Exclusivity Of Indemnification For Contractual Breaches. No party
hereto is making any representation, warranty or covenant other than those
contained herein. Except with respect to the covenants in Section 5.1 and the
covenants and indemnities in Section 5.11, following the Closing, the rights of
the parties under the provisions of Sections 5.2 and 5.3 shall be the sole and
exclusive remedy available to the parties with respect to claims or damages
arising out of breaches of the representations and warranties or other
contractual obligations of the parties set forth in this Agreement.
V.6 Reasonable Efforts. Upon the terms and subject to the conditions set
forth in this Agreement, each of the parties will use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all other things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including (i) the obtaining of all other
necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and filings
(including filings with Governmental Entities, if any) and the taking of all
other reasonable steps as may be necessary to obtain all necessary approvals or
waivers form, or to avoid any action or proceeding by any Governmental Entity,
(ii) the obtaining of all necessary consents, approvals or waivers from third
parties, and (iii) the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by, and to fully carry out
the purposes of, this Agreement. In further connection with and without limiting
the foregoing, Ocean Ranch and Shareholders shall make appropriate personnel,
contractors and advisors of Ocean Ranch available to Fairfield and provide such
information as may be requested by Fairfield for the purposes of conducting the
Inspection.
V.7 Expenses and Fees. Except as otherwise provided in this Agreement, all
costs and expenses incurred in connection with the Merger Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
or expenses.
V.8 Consents. Ocean Ranch shall use its reasonable efforts to obtain the
Ocean Ranch Consents (as hereinafter defined) before Closing.
V.9 Repayment of PPM Loan; Release of Claims. At or prior to the Closing,
the Partnership will pay the PPM Loan Amount to PPM and the Shareholders and
their affiliates (including PPM) shall release all claims (contingent or
liquidated and known or unknown) against Ocean Ranch, the Partnership and its
partners including, without limitation, the PPM Loan and any other claims in
respect of loans, advances, project management or marketing fees or other
obligations ("Claims"), pursuant to a written release in form and substance
reasonably satisfactory to Fairfield and substantially in the form set forth in
Exhibit C hereto (the "Release").
V.10 Delivery of Information. Two business days before the end of the
Inspection Period, Shareholders shall deliver to Fairfield a certificate
executed by each Shareholder certifying that Ocean Ranch has delivered all
relevant information, documents, agreements, and other materials related to any
written request made by Fairfield during the Inspection Period.
V.11 Tax Matters.
(a) Subject to the following provisions, Fairfield shall prepare and file
(or cause to be prepared and filed) all Tax Returns relating to Ocean Ranch
which are required to be filed (taking into account all applicable extensions)
after the Closing, and shall pay all Taxes shown to be due thereon.
(b) With respect to any Tax Return of Ocean Ranch for a taxable period
ending on or prior to the Closing and not yet filed as of the Closing: (i)
within 90 days of the end of the taxable period to which such return relates,
Ocean Ranch and Fairfield shall prepare and deliver (or cause to be prepared and
delivered) to the Shareholders the financial statements of Ocean Ranch for such
taxable period; (ii) the Shareholders will direct the tax return preparer of
Ocean Ranch to prepare, at the Shareholders' expense, such Tax Returns in
accordance with the prior practice and policies of Ocean Ranch and with
applicable law; (iii) at least thirty (30) days prior to the due date for such
Tax Returns (taking into account all available extensions), the Shareholders
will deliver to Ocean Ranch completed versions of such Tax Returns; and
(iv)Ocean Ranch shall have the right to review such Tax Returns prior to their
filing and, if Ocean Ranch disputes or otherwise disagrees with any amounts
shown due on such Tax Returns, Ocean Ranch and the Shareholders shall consult in
good faith to resolve any issues arising as a result thereof; (v) after Ocean
Ranch's review of such Tax Returns and the resolution of any disputes or
disagreements described in clause (iv) hereof, Ocean Ranch shall timely sign and
file such Tax Returns and pay all amounts shown as due and owing thereon
(reserving any right to indemnification by the Shareholders if otherwise
provided by this Agreement); and (vi) Fairfield and Ocean Ranch shall provide
the Shareholders and their agents (including any return preparer) with
reasonable access during normal business hours to the records of Ocean Ranch as
needed for the preparation of such returns and with such other assistance as may
be reasonably requested by the Shareholders.
(c) With respect to each Tax Return which relates, in whole or in part, to
periods prior to Closing (other than Tax Returns prepared at the direction of
the Shareholders pursuant to Section 5.11(b) hereof), at least thirty (30) days
prior to the due date for filing such return (including applicable extensions),
Ocean Ranch will deliver to the Shareholders (i) a draft return, (ii) copies of
any workpapers or schedules used to prepare such return, and (iii) a calculation
of the excess (if any) of (A) Taxes to be paid with or with respect to such Tax
Return that relate to periods prior to Closing over (B) the amounts reserved or
otherwise provided for. If the Shareholders do not agree with the amounts set
forth on such draft Tax Return, the parties shall work diligently to resolve the
dispute.
(d) If the parties are unable to resolve any dispute described in Sections
5.11 (b) or 5.11(c) prior to the fifteenth day prior to the due date for such
Tax Return, the dispute will be submitted to Ernst & Young, LLP, or such other
nationally recognized firm of certified public accountants as the parties may
agree upon (the "Firm") with the costs of the Firm's determination to be shared
equally by the parties, except that if the Firm agrees completely with the
calculations of one party, the other party shall bear all costs of the Firm's
determination.
(e) Fairfield shall pay, or shall cause Ocean Ranch to pay, to the
Shareholders the excess, if any, of the amount accrued in the Unaudited
Financial Statements for current Taxes payable by Ocean Ranch over the aggregate
Taxes actually paid by Ocean Ranch in connection with the filing of any Tax
Returns described in Sections 5.11(b) and 5.11(c), within 5 business days of the
filing of the last such Tax Returns. The Shareholders shall pay to Fairfield (or
Ocean Ranch if directed by Fairfield) the amount of the shortfall, if any, by
which the amount accrued in the Unaudited Financial Statements for current Taxes
payable by Ocean Ranch is less than the aggregate Taxes actually paid by Ocean
Ranch in connection with the filing of any Tax Returns described in Section
5.11(c), within 5 business days of the filing of the last such Tax Returns and
receipt of written demand therefore from Fairfield together with copies of such
Tax Returns. Nothing in this Section 5.11(e) shall be read to limit the
Shareholder's indemnification of Fairfield pursuant to Section 5.3 hereof.
(f) The Shareholders shall, jointly and severally, indemnify and hold
harmless Fairfield from and against (i) all Taxes for which Ocean Ranch may be
liable arising in periods ending prior to the Closing Date and for the ratable
portion of any period that begins before and ends after the Closing Date and
(ii) all costs and expenses (including reasonable attorneys' and accountants'
fees) attributable to any contest or dispute involving the foregoing. In the
case of Taxes that are payable with respect to a taxable period that begins
before the Closing Date and ends after the Closing Date, the portion of any such
Tax that is allocable to the portion of the period ending on the Closing Date
shall be:
(i) in the case of Taxes that are either (x) based upon or related to
income or receipts, or (y) imposed in connection with any sale or other
transfer or assignment of property (real or personal, tangible or
intangible), deemed equal to the amount which would be payable if the
taxable year ended with the Closing Date; and
(ii) in the case of Taxes not described in subparagraph (i) that are
imposed on a periodic basis and measured by the level of any item, deemed
to be the amount of such Taxes for the entire period (or, in the case of
such Taxes determined on an arrears basis, the amount of such Taxes for the
immediately preceding period) multiplied by a fraction the numerator of
which is the number of calendar days in the period ending on the Closing
Date and the denominator of which is the number of calendar days in the
entire period.
For purposes of this Section 5.11(f), the Taxes attributable to Ocean Ranch by
reason of such corporation's distributive share of income, gain, or loss from,
or otherwise in respect of, any partnership in which Ocean Ranch is a member on
the Closing Date shall be determined as if such partnership's taxable year ended
on the Closing Date.
(g) Fairfield shall pay, or shall cause Ocean Ranch to pay, to the
Shareholders all refunds or credits of Taxes or similar benefit (including
any interest or similar benefit received from or credited thereon by the
applicable tax authority) received by Fairfield or Ocean Ranch (or their
respective successors and assigns) after the Closing to the extent
attributable to (i) Taxes paid prior to Closing by the Shareholders or
Ocean Ranch, or (ii) Taxes for which the Shareholders have indemnified
Fairfield or Ocean Ranch under this Agreement; provided, however, that the
Shareholders shall not be entitled to any such refund or credit to the
extent such refund or credit arises as a result of the application of a net
operating loss or similar tax benefit of Ocean Ranch which arises during a
period after the Closing Date and which is carried back to a period prior
to the Closing Date.
(h) If a Tax Return which relates in whole or in part to Taxes for
which the Shareholders might be obligated to indemnify Fairfield or Ocean
Ranch under this Agreement (including without limitation any Tax Return
filed prior to Closing or at the direction of the Shareholders pursuant to
Section 5.11(b) hereof) is audited by the Internal Revenue Service or other
tax authority, (i) Fairfield and Ocean Ranch shall promptly notify the
Shareholders of the commencement of such audit, and any failure to give
such notice will not constitute a waiver of rights to indemnity under this
Agreement for damages arising from such audit and subsequent proceedings,
except to the extent that the Shareholders are precluded by the failure to
give prompt notice from contesting the asserted Tax liability in both the
administrative and judicial forums; (ii) the Shareholders shall have the
right but not the obligation to control the dealings with such tax
authority and any ensuing litigation or administrative proceedings
(collectively, the "Tax Dispute"), including without limitation choice of
tax accountants or counsel and the right to settle or compromise such
matters, provided that the Shareholders shall consult in good faith with
Ocean Ranch and Fairfield about the Tax Dispute and will give due regard to
such parties' interests and provided, further, that with respect to any
taxable period that begins before and ends after the Closing Date, the
Shareholders shall not be entitled to settle or compromise any such Tax
Dispute without the consent of the Fairfield, which shall not be
unreasonably withheld; (iii) if the Shareholders have a right to control a
Tax Dispute pursuant to clause (ii) but do not choose to exercise such
control, Fairfield shall be entitled, but shall not be obligated, to defend
such Tax Dispute (giving due regard to the Shareholders's interests), shall
keep the Shareholders reasonably informed of the progress of such Tax
Dispute and will not settle or compromise such Tax Dispute without the
prior written consent of the Shareholders, which consent shall not be
unreasonably withheld; and (iv) all parties shall cooperate with each other
in good faith with respect to any Tax Dispute and provide such assistance
to the other parties and their agents as may be necessary for the
resolution thereof. The preparation and filing of any amended Tax Return,
the audit of which would otherwise be subject to this Section 5.11(h),
shall be subject to the principles of this Section 5.11(h).
(i) Fairfield and Ocean Ranch shall retain all records relevant to
Taxes and Tax Returns of Ocean Ranch for periods prior to or including
Closing ("Tax Records") for a period of at least seven years after the
Closing. In addition, at all times that such Tax Records are in the custody
of Fairfield, Ocean Ranch or their successors and assigns, such parties
shall permit the Shareholders and their agents (including without
limitation his tax professionals) reasonable access to such Tax Records in
accordance with the principles of this Section 5.11 to the extent the
Shareholders reasonably deems such access appropriate for Tax and financial
matters.
(j) If there is a disposition of all or substantially all of the
capital stock, of Ocean Ranch assets, or business of Ocean Ranch, Fairfield
agrees to use its reasonable best efforts to ensure that the successor to
Ocean Ranch, such assets or business is contractually obligated to and in
fact does comply with the provisions of this Section 5.11.
(k) Fairfield shall be responsible for the timely payment of all
sales, use, transfer, gains, recording, ad valorem and other similar Taxes
and fees ("Transfer Taxes"), arising out of or in connection with or
attributable to the transactions effected pursuant to this Agreement, and
all Taxes arising as a result of the Merger. Fairfield shall prepare and
timely file all necessary documentation and Tax Returns required to be
filed in respect of Transfer Taxes; provided, that the Shareholders shall
be permitted to prepare any such Tax Returns that are the primary
responsibility of the Shareholders under applicable law. Fairfield shall
provide Fairfield with final copies of the documentation and Tax Returns
referred to in the immediately preceding sentence not later than fifteen
days prior to the filing of such documentation and Tax Returns.
(l) Fairfield, Ocean Ranch and the Shareholders shall treat the day
prior to the Closing Date as the last day of the taxable year of Ocean
Ranch and shall treat the debt assumption described by Section 6.1(f) as
occurring for all Tax purposes on the day prior to the Closing Date.
ARTICLE VI
CONDITIONS PRECEDENT; CLOSING
VI.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Corporate Approval. The approval of the transactions hereunder by
------------------
Fairfield's board of directors or appropriate committee thereof shall have
been received.
(b) Consent of Fairfield's Lender. Fairfield shall have obtained all
------------------------------
applicable consents required under Fairfield's and its subsidiaries' credit
agreements.
(c) Ocean Ranch Consents. Ocean Ranch shall have obtained all
----------------------
applicable consents required from the parties identified on Schedule 6.1(c)
(the "Ocean Ranch Consents").
(d) No Injunctions or Restraints. No judgment, order, decree, statute,
----------------------------
law, ordinance, rule, regulation, temporary restraining order, preliminary
or permanent injunction or other order enacted, entered, promulgated,
enforced or issued by any court of competent jurisdiction or other
Governmental Entity or other legal restraint or prohibition (collectively,
"Restraints") preventing the consummation of the Merger shall be in effect;
provided, however, that each of the parties shall have used reasonable
efforts to prevent the entry of any such Restraints and to appeal as
promptly as possible any such Restraints that may be entered.
(e) No Litigation. There shall not be pending any suit, action or
--------------
proceeding, in each case brought by any Governmental Entity against Ocean
Ranch, Fairfield or Merger Sub with respect to or that would adversely
affect the Merger or the transactions contemplated under this Agreement.
(f) Debt Assumption. On the day prior to the Closing Date, all
----------------
liabilities and obligations of Ocean Ranch and the Partnership arising
under the Capital Contribution Loan shall have been delegated to, and
assumed by Xxxxx X. Xxxxxx and Xxxxx Xxxxxxx (the "Delegees") pursuant to a
written agreement of assumption in substantially the form set forth in
Exhibit C hereto (the "Assumption Agreement"), and Xxxxx X. Xxxxxxx, as the
sole obligee of the Capital Contribution Loan, (the "Obligee") shall have
consented to such delegation and acknowledged that Ocean Ranch and the
Partnership shall have no obligations thereunder pursuant to the Assumption
Agreement.
(g) Before the Effective Time, the Partnership shall have paid the PPM
Loan Amount to PPM and PPM shall have released Ocean Ranch and the
Partnership from any further liabilities or obligations in respect of the
PPM Loan pursuant to the Release.
VI.2 Conditions to Obligations of Ocean Ranch and Shareholders. The
obligations of Ocean Ranch and Shareholders to effect the Merger are further
subject to the following conditions:
(a) Actions of Fairfield. Fairfield and Merger Sub shall have
----------------------
performed and complied with all the covenants, agreements and obligations
and satisfied all of the conditions required by this Agreement to be
performed or complied with or satisfied by them at or prior to the
Effective Time.
(b) Representations and Warranties. The representations and warranties
------------------------------
of Fairfield and Merger Sub set forth in this Agreement that are qualified
as to materiality shall be true and correct, and the representations and
warranties of Fairfield and Merger Sub set forth in this Agreement that are
not so qualified shall be true and correct in all material respects, in
each case as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Effective Time as though made on and as of the Effective Time, except as
otherwise contemplated by this Agreement.
VI.3 Conditions to Obligations of Fairfield and Merger Sub. The obligations
of Fairfield and Merger Sub to effect the Merger are further subject to the
following conditions:
(a) Actions of Shareholders and Ocean Ranch. Shareholders and Ocean
----------------------------------------
Ranch shall have performed and complied with all covenants, agreements and
obligations and satisfied all the conditions required by this Agreement to
be performed or complied with or satisfied by them at or prior to the
Effective Time.
(b) Representations and Warranties. The representations and warranties
------------------------------
of Ocean Ranch and Shareholders set forth in this Agreement that are
qualified as to materiality shall be true and correct, and the
representations and warranties of Ocean Ranch and Shareholders set forth in
this Agreement that are not so qualified shall be true and correct in all
material respects, in each case as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an
earlier date) as of the Effective Time as though made on and as of the
Effective Time, except as otherwise contemplated by this Agreement.
(c) No Material Adverse Change. At any time on or after the date of
----------------------------
this Agreement there shall not have occurred any material adverse change in
Ocean Ranch.
(d) Audit and Inspection. The completion by Fairfield of the
----------------------
Inspection and Fairfield's satisfaction, in its sole discretion, with the
results of the Inspection.
(e) Release. Fairfield shall have received the Release, executed by
-------
the Shareholders and PPM.
(f) Vacation Break Merger. The Merger of FCVB Corp., a wholly owned
----------------------
subsidiary of Fairfield with and into Vacation Break U.S.A., Inc. (the
"Vacation Break Merger") shall have been consummated.
(g) Opinion of Ocean Ranch Counsel. Fairfield shall have received a
-------------------------------
favorable opinion of counsel for Shareholders and Ocean Ranch with respect
to the matters set forth on Schedule 6.3(g).
VI.4 Frustration of Closing Conditions. None of Fairfield, Shareholders,
Merger Sub or Ocean Ranch may rely on the failure of any condition set forth in
Section 6.1, 6.2 or 6.3, as the case may be, to be satisfied if such failure was
caused by such party's failure to use reasonable efforts to consummate the
Merger and the other transactions contemplated by this Agreement, as required by
and subject to Section 5.6.
VI.5 Closing Documents and Procedures. In addition to the other obligations
and procedures to be performed at the Closing, the parties will undertake the
following actions:
(a) Deliveries of Shareholders. At the Closing, Shareholders shall
---------------------------
deliver to Fairfield:
(i) a certificate or certificates representing each Shareholder's
shares of Ocean Ranch Common Stock outstanding immediately prior to
the Effective Time.
(ii) a certificate executed by each Shareholder certifying that
the representations and warranties set forth in Sections 3.2 and 3.3
are true and correct on and as of the Effective Time, with the same
force and effect as though such representations and warranties had
been made on, as of and with reference to the Effective Time and that
Shareholders have performed and complied with all covenants and
agreements and satisfied all conditions required by this Agreement to
be performed or complied with or satisfied by them for the benefit of
Fairfield at or prior to the Effective Time;
(iii) the Release, executed by the Shareholders and their
affiliates; and
(iv) the Assumption Agreement, executed by the Delegees and the
Obligee.
(b) Deliveries of Ocean Ranch. At the Closing, Ocean Ranch shall
---------------------------
deliver to Fairfield:
(i) a certificate of an officer of Ocean Ranch certifying
that the representations and warranties set forth in Section 3.2
are true and correct on and as of the Effective Time, with the
same force and effect as though such representations and
warranties had been made on, as of and with reference to the
Effective Time and that Ocean Ranch has performed and complied
with all covenants and agreements and satisfied all conditions
required by this Agreement to be performed or complied with or
satisfied by it for the benefit of Fairfield at or prior to the
Effective Time;
(ii) certificates of good standing and corporate existence
for Ocean Ranch;
(iii) the opinion of counsel to Ocean Ranch as set forth in
Section 6.3(h); and
(iv) the Assumption Agreement, executed by Ocean Ranch.
(c) Fairfield's Deliveries. At the Closing, Fairfield shall deliver to
----------------------
the Shareholders:
(i) each Shareholder's Ocean Ranch Percentage of the Merger
Consideration;
(ii) evidence of payment of the PPM Loan Amount;
(iii) evidence of payment of the Capital Contribution Loan
Interest Amount; and
(iv) a certificate of an officer of Fairfield certifying
that the representations and warranties set forth in Section 3.1
are true and correct on and as of the Effective Time, with the
same force and effect as though such representations and
warranties had been made on, as of and with reference to the
Effective Time and that Fairfield has performed and complied with
all covenants and agreements and satisfied all conditions
required by this Agreement to be performed or complied with or
satisfied by it for the benefit of Ocean Ranch at or prior to the
Effective Time.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
VII.1 Termination. This Agreement may be terminated, and the Merger
contemplated hereby may be abandoned, at any time prior to the Effective Time:
(a) by mutual written consent of Fairfield, Merger Sub and Ocean
Ranch;
(b) by either Fairfield or Ocean Ranch;
(i) if the Merger shall not have been consummated on or before
December 31, 1997, unless the failure to consummate the Merger is the
result of a breach of this Agreement by the party seeking to terminate
this Agreement;
(ii) if any Governmental Entity of competent jurisdiction shall
have issued a restraint or taken any other action permanently
enjoining, restraining or otherwise prohibiting the Merger or any of
the other actions contemplated under the Agreement and such restraint
shall have become final and nonappealable;
(c) by Fairfield if there has been a material violation by
Shareholders of any agreement, representation or warranty contained in this
Agreement that has rendered the satisfaction of any condition to the
obligations of Fairfield impossible and such violation or breach has not
been waived by Fairfield and is not due to Fairfield's default;
(d) by Fairfield, if the Vacation Break Merger has not been
consummated on or before December 31, 1997;
(e) by Fairfield, at or prior to the expiration of the Inspection
Period, without cause and for whatever reason and without liability on the
part of any party hereto, by delivering to Ocean Ranch at or prior to the
expiration of the Inspection Period, written notice of Fairfield's election
to terminate this Agreement;
(f) by either Fairfield or Ocean Ranch if the other shall fail to
fulfill or satisfy any condition precedent to the performance of the first
party's obligations in accordance with the terms hereof; and
(g) by Ocean Ranch, if there has been a material violation by
Fairfield of any agreement, representation or warranty contained in this
Agreement which has rendered the satisfaction of any condition to the
obligations of Shareholders and Ocean Ranch impossible and such violation
or breach has not been waived by Shareholders and Ocean Ranch and is not
due to Shareholders' or Ocean Ranch's default.
VII.2 Effect of Termination. In the event of termination of this Agreement
by Ocean Ranch or Fairfield as provided in Section 7.1, this Agreement shall
terminate and there shall be no liability on the part of either Ocean Ranch or
Fairfield, except for (a) liabilities arising from a breach of this Agreement
prior to such termination if the termination is made under Section 7.1(b)(i),
and (b) liabilities arising from a breach of a provision of this Agreement which
is to be performed regardless of any such termination.
VII.3 Amendment. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
VII.4 Extension; Waiver. At any time prior to the Effective Time, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (c) waive compliance with any of the agreements or conditions
contained herein. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. No other action or course of dealing, including, without
limitation, the consummation of the Merger with notice or knowledge of any
inaccuracy in the representations or breach of the warranties of the other party
or any investigation thereof, will operate as a waiver of any rights under this
Agreement. The delay or failure of any party to this Agreement to assert any of
its rights under this Agreement or otherwise shall not constitute a waiver of
such rights.
ARTICLE VIII
GENERAL PROVISIONS
VIII.1 Survival of Representations and Warranties. The respective
covenants, representations, warranties, covenants and the indemnities set forth
in this Agreement shall survive after the Effective Time and shall continue in
full force and effect. VIII.2 Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be deemed given
if delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to Ocean Ranch:
Ocean Ranch Development, Inc.
0000 Xxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: President
with a copy to:
Greenspoon, Marder, Hirschfeld,
Rafkin, Xxxx & Xxxxxx
Trade Center South, Suite 700
000 Xxxx Xxxxxxx Xxxxx Xxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxxx, Esq.
(b) if to Shareholders:
Xxxxx X. Xxxxxxx
0000 Xxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Xxxxx X. Xxxxxxx
0000 Xxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Xxxxxx Xxxxxxx
0000 Xxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
in each case, with a copy to:
Greenspoon, Marder, Hirschfeld,
Rafkin, Xxxx & Xxxxxx
Trade Center South, Suite 700
000 Xxxx Xxxxxxx Xxxxx Xxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxxx, Esq.
(c) if to Fairfield or Merger Sub:
Fairfield Communities, Inc.
00000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xx. Xxxx X. XxXxxxxxx
with a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
VIII.3 Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person;
(b) "Code" means the Internal Revenue Code of 1986, as amended, and
all regulations promulgated thereunder, as in effect from time to time;
(c) an "environmental law" means any law, statute, regulation, rule,
order, decree, judgment, consent decree, settlement agreement or
governmental requirement, which relates to or otherwise imposes liability
or standards of conduct concerning mining or reclamation of mined land,
discharges, emissions, releases or threatened releases of noises, odors or
any pollutants, contaminants or hazardous or toxic wastes, substances or
materials, whether as matter or energy, into ambient air, water, or land,
or otherwise relating to the manufacture, processing, generation,
distribution, use, treatment, storage, disposal, cleanup, transport or
handling of pollutants, contaminants, or hazardous wastes, substances or
materials, including (but not limited to) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Superfund Amendments
and Reauthorization Act of 1986, as amended, the Resource Conservation and
Recovery Act of 1976, as amended, the Toxic Substances Control Act of 1976,
as amended, the Federal Water Pollution Control Act Amendments of 1972, the
Clean Water Act of 1977, as amended, any so-called "Superlien" law, and any
other similar Federal, state or local statutes;
(d) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and all regulations promulgated thereunder, as in effect from
time to time;
(e) "Governmental Entity" means any government or any court, arbitral
tribunal, administrative agency or commission or other governmental or
other regulatory authority or agency, federal, state, local or foreign;
(f) "Interest" means the 45% general partner interest in the
Partnership held beneficially and of record by Ocean Ranch;
(g) "knowledge" of any person means actual knowledge and, if such
person is not an individual, actual knowledge of the directors and
executive officers or partners of such person;
(h) "Liens" means liens, charges, pledges, options, mortgages, deeds
of trust, security interests, conditional sales agreements, claims,
restrictions (whether on voting, sale, transfer, disposition or otherwise),
and other encumbrances, adverse claims and interests of every type and
description, whether imposed by law, agreement, understanding or otherwise;
(i) "material adverse change" or "material adverse effect" means, when
used in connection with Ocean Ranch or Fairfield, any change or effect that
is materially adverse to the business, properties, assets, financial
condition, prospects, or results of operations of such party and its
Subsidiaries taken as a whole;
(j) "Partnership" means Ocean Ranch Vacation Group, a Florida general
partnership;
(k) "Partnership Agreement" means that certain Ocean Ranch Vacation
Group Joint Venture Agreement of the Partnership, dated as of January 10,
1996, between Vacation Break at Ocean Ranch, Inc., and Ocean Ranch
Development, Inc.;
(l) "person" means an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity;
(m) "Personal Property" means (a) all tangible personal property owned
by the Partnership and located on, attached to, and used in connection with
the operation of the Resort Property including furniture, fixtures and
equipment, (b) the Partnership's interest in all personal property,
licenses, permits, plans, studies and utility arrangements with respect to
the Resort Property, (c) the Partnership's interest in all service,
maintenance, management or other contracts relating to the ownership or
operation of the Resort Property, and (d) the Partnership's interest in all
warranties and guaranties, if any, relating to the Resort Property;
(n) "Resort Property" means that certain resort property known as
Ocean Ranch owned by the Partnership, including the land upon which the
Resort Property is situated, together with all rights appurtenant thereto,
the building, fixtures and other improvements now or hereafter situated
thereon and all leases and/or occupancy agreements for space in such
improvements, including any and all amendments and modifications thereto
and any and all acceptance, guaranty or other agreements related thereto,
and the Personal Property; and
VIII.4 Interpretation. When a reference is made in this Agreement to a
Section, Exhibit or Schedule, such reference shall be to a Section of, or an
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
VIII.5 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signet by each of
the parties and delivered to the other parties.
VIII.6 Entire Agreement; No Third-party Beneficiaries. This Agreement (a)
constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement and (b) are not intended to confer upon any
person other than the parties any rights or remedies.
VIII.7 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Florida, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
VIII.8 Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned, in whole or in part, by operation of
law or otherwise by any of the parties without the prior written consent of the
other parties, except that Merger Sub may assign, in its sole discretion, any of
or all its rights, interests and obligations under this Agreement to Fairfield
or to any direct wholly owned corporate subsidiary of Fairfield. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
VIII.9 Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Florida or in Florida state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any federal court located in the State of Florida or
any Florida state court in the event any dispute arises out of this Agreement or
the transactions contemplated by this Agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court and (c) agrees that it will not bring any action
relating to this Agreement or the transactions contemplated by this Agreement in
any court other than a federal court sitting in the State of Florida or an
Florida state court.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, Fairfield, Merger Sub and Ocean Ranch have caused this
Agreement to be signed by their respective officers thereunto duly authorized
and Shareholders have signed this Agreement, all as of the date first written
above.
FAIRFIELD COMMUNITIES, INC.
By: /s/ X.X. XxXxxxxxx
------------------------------------
X.X. XxXxxxxxx
President and Chief Executive Officer
FC OCEAN RANCH, INC.
By: /s/ X.X. XxXxxxxxx
------------------------------------
X.X. XxXxxxxxx
President
OCEAN RANCH DEVELOPMENT, INC.
By: /s/ Xxxxxx Xxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxx
Title: President
/s/ Xxxxx X. Xxxxxxx
----------------------------------
Xxxxx X. Xxxxxxx
/s/ Xxxxx X. Xxxxxxx
----------------------------------
Xxxxx X. Xxxxxxx
/s/ Xxxxxx Xxxxxxx
----------------------------------
Xxxxxx Xxxxxxx
EXHIBIT A
SURVIVING CORPORATION
ARTICLES OF INCORPORATION
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
OCEAN RANCH DEVELOPMENT, INC.
On December 19, 1997, the Board of Directors and the shareholders of OCEAN
RANCH DEVELOPMENT, INC. duly adopted the following Amended and Restated Articles
of Incorporation pursuant to the provisions of 607.0704, 607.1003 and 607.1007
of the Florida Business Corporation Act:
ARTICLE I
NAME
The name of the corporation is Ocean Ranch Development, Inc.
ARTICLE II
PRINCIPAL OFFICE AND MAILING ADDRESS
The Corporation's principal office and mailing address is 00000 Xxxxxxxxx
Xxxxxx Xxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000.
ARTICLE III
SHARES
The Corporation shall have authority to issue 10,000 common shares with a
par value of $.01 per share.
ARTICLE IV
REGISTERED AGENT AND OFFICE
The street address of its registered office is 0000 Xxxxx Xxxx Xxxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxx 00000, and the name of its registered agent at that address
is CT Corporation System.
ARTICLE V
DIRECTORS
The Corporation initially shall have three (3) directors, whose names and
addresses are:
Name Address
Xxxx X. XxXxxxxxx 00000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Xxxxxx X. Xxxxxx 00000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Xxxxxx X. Xxxxxx 00000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
ARTICLE VI
LIMITATION ON DIRECTOR LIABILITY
A director shall not be personally liable to the Corporation or the holders
of shares of capital stock for monetary damages for breach of fiduciary duty as
a director, except (i) for any breach of the duty of loyalty of such director to
the Corporation or such holders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 607.0831 of the Florida Business Corporation Act (the "FBCA"), or
(iv) for any transaction from which such director derives an improper personal
benefit. If the FBCA is hereafter amended to authorize the further or broader
elimination or limitation of the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the FBCA, as so amended. No repeal or modification
of this Article VII shall adversely affect any right of or protection afforded
to a director of the Corporation existing immediately prior to such repeal or
modification.
ARTICLE VII
INDEMNIFICATION
The Corporation shall indemnify and advance expenses to, and may purchase
and maintain insurance on behalf of, its officers and directors to the fullest
extent permitted by law as now or hereafter in effect. Without limiting the
generality of the foregoing, the Bylaws may provide for indemnification and
advancement of expenses to officers, directors, employees and agents on such
terms and conditions as the Board of Directors may from time to time deem
appropriate or advisable.
IN WITNESS WHEREOF, the undersigned, being the President of the
Corporation, has signed these Amended and Restated Articles of Incorporation
this 19th day of December, 1997.
Xxxxxx X. Xxxxxx
Vice President
EXHIBIT B
SURVIVING CORPORATION BYLAWS
AMENDED AND RESTATED BYLAWS
OF
OCEAN RANCH DEVELOPMENT, INC.
Adopted December 19, 1997
ARTICLE I
Offices
SECTION 1. Principal Office. The principal office of Ocean Ranch
Development, Inc. (the "Corporation") may be located either within or without
the State of Florida as the board of directors (the "Board of Directors" or the
"Board") may designate or as the business of the Corporation may require from
time to time.
SECTION 2. Registered Office. The registered office of the Corporation,
required by the Florida Business Corporation Act to be maintained in the State
of Florida, may be, but need not be, identical to the principal office in the
State of Florida, and the address of the registered office may be changed from
time to time by the Board of Directors.
ARTICLE II
Shareholders
SECTION 1. Annual Meeting. The annual meeting of the shareholders shall be
held on such date as the Board may determine in each year at such hour as may be
specified in a notice of meeting or in a duly executed waiver of notice, for the
purpose of electing Directors and for the transaction of such other business as
may come before the meeting. If the day fixed for the annual meeting shall be a
legal holiday in the State of Florida, the meeting shall be held on the next
succeeding business day. If the election of Directors is not held on the day
designated in these bylaws for any annual meeting of the shareholders, or at any
adjournment of the annual meeting, the Board of Directors shall cause the
election to be held at a special meeting of the shareholders as soon thereafter
as may be convenient.
SECTION 2. Special Meetings. Special meetings of the shareholders, for any
purpose, may be called by the Board, by the holders of not less than ten percent
(10%) of all the votes entitled to be cast on any issue to be considered at the
meeting, or by the President of the Corporation.
SECTION 3. Place of Meeting. The Board may designate any place, either
within or without the State of Florida, unless otherwise prescribed by statute,
as the place of meeting for any annual meeting of shareholders. The Chairman of
the Board, if one is elected, or the President may designate any place, either
within or without the State of Florida, unless otherwise prescribed by statute,
as the place of the meeting. If no designation is made, the place of the meeting
shall be the principal office of the Corporation in the State of Florida.
SECTION 4. Notice of Meeting. Written notice stating the time, date, and
place of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered to each shareholder
of record entitled to vote at such meeting not less than ten (10) nor more than
sixty (60) days before the date of the meeting, either personally, by telegraph,
teletype, or other form of electronic communication, or by mail, by or at the
direction of the President, the Secretary, or the person or persons calling the
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail addressed to the shareholder at his address as it
appears on the stock transfer books of the Corporation, postage prepaid.
SECTION 5. Fixing of Record Date. The Board may fix a date nor more than
seventy (70) and not less than ten (10) days prior to the date set for any
meeting of the shareholders as the record date as of when the shareholders of
record entitled to notice of and to vote at such meeting and any adjournment
thereof shall be determined.
SECTION 6. Shareholders' List for Meeting. After fixing the record date for
a meeting, an alphabetical list of the names of all shareholders entitled to
notice of the meeting, arranged by voting group, with the address of and the
number, class, and series, if any, of shares held by each, shall be prepared.
The list shall, upon written demand, be available during regular business hours,
for inspection by any shareholder and at his expense for a period of ten (10)
days prior to the meeting date, or such shorter time as may exist between the
record date and the meeting, and continuing through the meeting, at the
Corporation's principal office, at a place set forth in the meeting notice in
the city where the meeting will be held, or at the office of the Corporation's
transfer agent or registrar. The Corporation shall also make the list available
at the meeting.
SECTION 7. Quorum. A majority of the outstanding shares of the Corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of the shareholders. When a meeting is adjourned, it shall not be
necessary to give any notice of the adjourned meeting if the time, date, and
place to which the meeting is adjourned are announced at the meeting at which
the adjournment is taken, and any business may be transacted at the adjourned
meeting that might have been transacted at the original date of the meeting. If,
however, following the adjournment, the Board fixes a new record date for the
adjourned meeting, notice of such adjourned meeting shall be given, in
compliance with Section 4 of this Article II, to each shareholder of record on
the new record date entitled to vote at such meeting. After a quorum has been
established at a shareholders' meeting, the subsequent withdrawal of
shareholders, so as to reduce the number of shares entitled to vote at the
meeting below the numbered required for a quorum, shall not affect the validity
of any action taken at the meeting or any adjournment thereof.
SECTION 8. Proxies. Every shareholder entitled to vote at a meeting of
shareholders, or to express consent or dissent without a meeting, or his duly
authorized attorney-in-fact, may authorize another person or persons to act for
him by proxy. The proxy must be executed in writing by the shareholder or his
duly authorized attorney-in-fact. Such proxy shall be filed with the Secretary
of the Corporation before or at the time of such meeting or at the time of
expressing such consent or dissent without a meeting. No proxy shall be valid
after eleven (11) months from the date of its execution, unless otherwise
provided in the proxy.
SECTION 9. Voting of Shares. Each outstanding share of stock entitled to
vote shall be entitled to one (1) vote upon each matter submitted to a vote at a
meeting of the shareholders.
SECTION 10. Voting of Shares by Certain Holders. Shares of stock standing
in the name of another corporation may be voted by the officer, agent, or proxy
as prescribed by the bylaws of the corporate shareholder or, in the absence of
any applicable bylaw, by such person as the Board of Directors of the corporate
shareholder may designate. Proof of such designation may be made by presentation
of a certified copy of the bylaws or other instrument of the corporate
shareholder. In the absence of such designation, or in case of conflicting
designation by the corporate shareholder, the Chairman of the Board, the
President, any Vice President, the Secretary, and the Treasurer of the corporate
shareholder shall be presumed to possess, in that order, authority to vote such
shares.
Shares of stock held by an administrator, executor, guardian, personal
representative, or conservator may be voted by him, either in person or by
proxy, without a transfer of such shares into his name.
Shares of stock standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name or the name of his
nominee.
Shares of stock standing in the name of a receiver, a trustee in bankruptcy
proceedings, or an assignee for the benefit of creditors may be voted by him or
her without the transfer thereof into his or her name.
A shareholder whose shares of stock are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of the pledgee,
and thereafter the pledgee or his nominee shall be entitled to vote the shares
so transferred.
Shares of stock owned by another corporation the majority of whose shares
of stock entitled to vote for Directors is owned or controlled by the
Corporation shall not be voted, directly or indirectly, at any meeting.
ARTICLE III
Board of Directors
SECTION 1. General Powers. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of the Corporation shall be
managed under the direction of, the Board of Directors.
SECTION 2. Number, Tenure, and Qualification. The number of Directors of
the Corporation initially shall be three (3). The number of Directors may be
increased or decreased from time to time by amendment of these bylaws, provided
that the Corporation shall always have at least one (1) director. Any increase
in the number of Directors shall be effective immediately. Any decrease in the
number of Directors shall be effective at the time of the next succeeding annual
meeting of the Shareholders unless there shall be vacancies on the Board, in
which case such decrease may become effective at any time prior to the next
succeeding annual meeting to the extent of the number of vacancies.
Except as otherwise provided by statute, the Directors shall be elected at
the annual meeting of Shareholders and, at each meeting of Shareholders for the
election of Directors at which a quorum is present, the persons receiving a
plurality of the votes cast at such election shall be elected as Directors.
Each initial director shall hold office until the first shareholders'
meeting at which Directors are elected. Thereafter, each director shall hold
office until the next annual meeting of shareholders and until his successor is
elected and qualified or until his earlier resignation, death, or removal from
office.
SECTION 3. Chairman of the Board. The Board of Directors of the Corporation
may elect a Chairman who, if so elected, shall preside at all meetings of the
Board of Directors. The Chairman shall have such other powers and shall perform
all duties as from time to time may be granted or assigned to him by the Board
of Directors and as provided by law.
SECTION 4. Annual and Regular Meetings. The annual meeting of the Board of
Directors shall be held without other notice than this bylaw immediately after
and at the same place as the annual meeting of shareholders. The Board of
Directors may provide, by resolution, the time, date, and place for the holding
of regular meetings without other notice than such resolution.
SECTION 5. Special Meetings. Special meetings of the Board of Directors may
be called by the Chairman of the Board, by the President, or by any two
Directors. The Chairman of the Board, if one is elected, or the President shall
fix the place for holding such special meeting.
SECTION 6. Notice. Notice of any special meeting shall be given at least
two (2) days before the meeting by written notice delivered personally, or by
mail, telecopy, telegram, cablegram, or other form of electronic communication
to each director at his business address, unless in case of emergency, the
Chairman of the Board, if one is elected, or the President shall prescribe a
shorter notice to be given personally or by telegraph, telecopy, cablegram, or
other electronic communication to each director at his residence or business
address. If a notice of meeting is mailed, such notice shall be deemed to be
delivered five (5) days after its deposit in the United States mail, if mailed,
postpaid and correctly addressed. Any director may waive notice of any meeting,
before or after the meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting and a waiver of any and all
objections to the place of the meeting, the time or date of the meeting, or the
manner in which it has been called or convened, except when a director states,
at the beginning of the meeting, any objection to the transaction of business
because the meeting is not lawfully called or convened.
SECTION 7. Quorum. A majority of the number of Directors fixed pursuant to
Section 2 of this Article III shall constitute a quorum for the transaction of
business at any meeting of the Board of Directors. A majority of the Directors
present, whether or not a quorum exists, may adjourn any meeting of the Board to
another time and place. Notice of any such adjourned meeting shall be given to
the Directors who were not present at the time of the adjournment and, unless
the time and place of the adjourned meeting are announced at the time of the
adjournment, to the other Directors.
SECTION 8. Manner of Acting. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
SECTION 9. Vacancies. Any vacancy occurring on the Board, including any
vacancy created by reason of an increase in the number of Directors, may be
filled by the affirmative vote of a majority of the remaining Directors though
less than a quorum of the Board of Directors. A director elected to fill a
vacancy shall hold office only until the next annual meeting of shareholders and
until his successor shall have been elected and qualified or until his earlier
resignation, removal from office, or death.
SECTION 10. Compensation. By resolution of the Board of Directors, the
Directors may be paid their expenses, if any, for attendance at each meeting of
the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board or may be paid a stated salary as director. No such payment
shall preclude any director from serving the Corporation in any other capacity
and receiving compensation therefor.
SECTION 11. Presumption of Assent. A director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken, unless
he objects at the beginning of the meeting to holding it or transacting
specified business at the meeting or he votes against or abstains from the
action taken.
SECTION 12. Constructive Presence at a Meeting. A member of the Board of
Directors may participate in a meeting of such Board by any means of
communication by which all persons participating in the meeting may
simultaneously hear each other during the meeting. Participating by such means
shall constitute presence in person at a meeting.
SECTION 13. Action Without a Meeting. Any action required or permitted by
law to be taken at any meeting of the Board or a committee thereof, may be taken
without a meeting if the action is taken by all members of the Board or of the
committee. The action must be evidenced by one or more written consents
describing the action taken and signed by each director or committee member. The
action so taken is effective when the last director signs the consent, unless
the consent specifies a difference effective date. A consent so signed has the
effect of a meeting vote and may be described as such in any document.
ARTICLE IV
Officers
SECTION 1. Number. The officers of the Corporation shall be a President, a
Secretary, and a Treasurer, each of whom shall be elected by the Board of
Directors. One or more Vice Presidents and such other officers and assistant
officers and agents as may be deemed necessary may be elected or appointed by
the Board of Directors.
SECTION 2. Election and Term of Office. The officers of the Corporation to
be elected by the Board of Directors shall be elected annually by the Board of
Directors at the regular meeting of the Board of Directors held after each
annual meeting of the shareholders. If the election of officers shall not be
held at such meeting, such election shall be held as soon thereafter as may be
convenient. Each officer shall hold office until his successor shall have been
elected and qualified or until his earlier resignation, removal from office, or
death.
SECTION 3. Removal. Any officer or agent elected or appointed by the Board
of Directors may be removed by the Board of Directors whenever, in its judgment,
the best interests of the Corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed. Election or appointment of an officer or agent shall not of itself
create contract rights.
SECTION 4. Vacancies. A vacancy, however occurring, in any office may be
filled by the Board of Directors for the unexpired portion of the term.
SECTION 5. President. The President shall be the principal executive
officer of the Corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business affairs of
the Corporation. He shall, when present, preside at all meetings of the
shareholders. The President shall also preside at the meetings of the Board of
Directors, unless the Board of Directors has elected a Chairman and the Chairman
is present at such meetings. The President may sign any deeds, mortgages, bonds,
contracts, or other instruments which the Board of Directors has authorized to
be executed, except in cases where the signing and execution thereof shall be
expressly delegated by the Board of Directors or by these bylaws to some other
officer or agent of the Corporation, or shall be required by law to be otherwise
signed or executed. The President shall in general perform all duties as from
time to time may be assigned to him by the Board of Directors.
SECTION 6. Vice President. In the absence of the President or in the event
of his death or his inability or refusal to act, the Vice President, if one is
elected, shall have the duties of the President, and when so acting, shall have
all the powers of, and be subject to all the restrictions upon, the President.
The Vice President, if one is elected, shall perform such other duties as from
time to time may be assigned to him by the President or the Board of Directors.
If more than one Vice President is elected, the Board of Directors shall
designate which Vice President shall serve until the election of a successor
President.
SECTION 7. Secretary. The Secretary shall: (a) keep the minutes of all the
meetings of the shareholders and the Board of Directors in one or more books
provided for that purpose; (b) see that all notices are duly given in accordance
with the provisions of these bylaws or as required by law; (c) be custodian of
the corporate records and of the seal of the Corporation and see that the seal
of the Corporation is affixed to all documents the execution of which on behalf
of the Corporation under its seal is duly authorized; (d) keep a register of the
post office address of each shareholder which shall be furnished to the
Secretary by such shareholder; (e) have general charge of the stock transfer
books of the Corporation; (f) authenticate all records of the Corporation; and
(g) in general, perform all duties incident to the office of Secretary and such
other duties as from time to time may be assigned to him by the President or by
the Board of Directors.
SECTION 8. Treasurer. The Treasurer shall: (a) have charge and custody of
and be responsible for all funds and securities of the Corporation; (b) receive
and give receipts for monies due and payable to the Corporation from any source
whatsoever, and deposit all such monies in the name of the Corporation in such
banks, trust companies, or other depositories as shall be selected in accordance
with the provisions of Article VI of these bylaws; (c) in general, perform all
of the duties incident to the office of Treasurer and such other duties as from
time to time may be assigned to him by the President or by the Board of
Directors. If required by the Board of Directors, the Treasurer shall give a
bond for the faithful discharge of his duties in such sum and with such surety
or sureties as the Board of Directors shall determine.
SECTION 9. Compensation. The compensation of the officers shall be fixed
from time to time by the Board of Directors and no officer shall be prevented
from receiving such compensation by reason of the fact that he is also a
director of the Corporation.
ARTICLE V
Resignations
Any director of the Corporation may resign by delivering written notice to
the Board of Directors or its Chairman or to the Corporation. Any officer of the
Corporation may resign at any time by giving written notice to the Corporation.
Any such resignation shall take effect when delivered unless the notice
specifies a later effective date.
ARTICLE VI
Contracts, Loans, Checks, and Deposits
SECTION 1. Contracts. The Board of Directors may authorize any officer or
officers, agent or agents to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Corporation, unless otherwise
restricted by law. Such authority may be general or confined to specific
instances.
SECTION 2. Loans. No loans shall be contracted on behalf of the Corporation
and no evidence of indebtedness shall be issued in its name unless authorized by
a resolution of the Board of Directors. Such authority may be general or
confined to specific instances.
SECTION 3. Checks, Drafts, Etc. All checks, drafts, or other orders for the
payment of money, notes, or other evidences of indebtedness issued in the name
of the Corporation, shall be signed by such officer or officers, agent or agents
of the Corporation in such manner as shall from time to time be determined by
resolution of the Board of Directors.
SECTION 4. Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies, or other depositories as the Board of Directors may
select.
ARTICLE VII
Certificates for Shares and Their Transfer
SECTION 1. Certificates for Shares. Certificates representing shares of the
Corporation shall be in such form as shall be determined by the Board of
Directors. Certificates shall be signed by the President or by such other
officers as authorized by law. All certificates for shares shall be
consecutively numbered or otherwise identified. The name and address of the
person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered on the stock transfer books of the
Corporation. All certificates surrendered to the Corporation for transfer shall
be canceled, and no new certificate shall be issued until the former certificate
for a like number of shares shall have been surrendered and canceled, except
that in case of a lost, destroyed, or mutilated certificate, a new one may be
issued therefor upon such terms and indemnity to the Corporation as the Board of
Directors may prescribe.
SECTION 2. Transfer of Shares. Transfer of shares of the Corporation shall
be made on the stock transfer books of the Corporation only when the holder of
record thereof or his legal representative, or his attorney thereunto authorized
by power of attorney duly executed and filed with the Secretary of the
Corporation, shall furnish proper evidence of authority to transfer, and when
there is surrendered for cancellation the certificate for such shares, properly
endorsed. The person in whose name shares stand on the books of the Corporation
shall be deemed by the Corporation to be the owner thereof for all purposes.
ARTICLE VIII
Fiscal Year
The fiscal year of the Corporation shall begin on January 1 and end on
December 31 in each year, except its first fiscal year, which shall begin on the
date of incorporation.
ARTICLE IX
Dividends
The Board of Directors may from time to time declare, and the Corporation
may pay, dividends on its outstanding shares in the manner and upon the terms
and conditions provided by law and its Articles of Incorporation.
ARTICLE X
Indemnification of Officers
Directors, Employees and Agents
SECTION 1. Indemnification. The Corporation shall, and does hereby,
indemnify and hold harmless to the fullest extent permitted or authorized by
current or future legislation or current or future judicial or administrative
decisions (but, in the case of any such future legislation or decisions, only to
the extent that it permits the Corporation to provide broader indemnification
rights than permitted prior to such legislation or decisions), each person
(including here and hereinafter, the heirs, executors, administrators, personal
representatives or estate of such person) who was or is a party, or is
threatened to be made a party, or was or is a witness, to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "Proceeding"), from, against and in respect
of any liability (which for purposes of this Article X shall include any
judgment, settlement, penalty or fine) or cost, charge or expense (including
attorneys' fees and expenses) asserted against him or incurred by him by reason
of the fact that such indemnified person (1) is or was a director or officer of
the Corporation or (2) is or was an employee or agent of the Corporation as to
whom the Corporation has agreed in writing to grant such indemnity or (3) is or
was serving, at the request of the Corporation, as a director, officer, employee
or trustee of another corporation, partnership, joint venture, trust or other
enterprise (including serving as a fiduciary of an employee benefit plan) or is
or was serving as an agent of such other corporation, partnership, joint
venture, trust or other enterprise, in each case, as to whom the Corporation has
agreed in writing to grant such indemnity. Each director, officer, employee or
agent of the Corporation as to whom indemnification rights have been granted
under this Section 1 of this Article X shall be referred to as an "Indemnified
Person."
Notwithstanding the foregoing, except as specified in Section 3 of this
Article X, the Corporation shall not be required to indemnify an Indemnified
Person in connection with a Proceeding (or any part thereof) initiated by such
Indemnified Person unless the authorization for such Proceeding (or any part
thereof) was not denied by the Board of Directors of the Corporation within
sixty (60) days after receipt of notice thereof from such Indemnified Person
stating his intent to initiate such Proceeding and only then upon such terms and
conditions as the Board of Directors may deem appropriate.
SECTION 2. Advance of Costs, Charges and Expenses. Costs, charges and
expenses (including attorneys' fees and expenses) incurred by an officer or
director who is an Indemnified Person in defending a Proceeding shall be paid by
the Corporation, to the fullest extent permitted or authorized by current or
future legislation or current or future judicial or administrative decisions
(but, in the case of any such future legislation or decisions, only to the
extent that it permits the Corporation to provide broader rights to advance
costs, charges and expenses than permitted prior to such legislation or
decisions), in advance of the final disposition of such Proceeding, upon receipt
of an undertaking by or on behalf of the Indemnified Person to repay all amounts
so advanced in the event that it shall ultimately be determined that such person
is not entitled to be indemnified by the Corporation as authorized in this
Article X. The Corporation may, upon approval of the Indemnified Person,
authorize the Corporation's counsel to represent such person in any Proceeding,
whether or not the Corporation is a party to such Proceeding. Such authorization
may be made by the Chairman of the Board of Directors, unless he is a party to
such Proceeding, or by the Board of Directors by majority vote, including
directors who are parties to such Proceeding.
SECTION 3. Procedure for Indemnification. Any indemnification or advance
under this Article X shall be made promptly and in any event within forty-five
(45) days upon the written request of the Indemnified Person. The right to
indemnification or advances as granted by this Article X shall be enforceable by
the Indemnified Person in any court of competent jurisdiction, if the
Corporation denies such request under this Article, in whole or in part, or if
no disposition thereof is made within forty-five (45) days. Such Indemnified
Person's costs and expenses incurred in connection with successfully
establishing his right to indemnification or advances, in whole or in part, in
any such action shall also be indemnified by the Corporation. It shall be a
defense to any such action that the claimant has not met the standard of
conduct, if any, required by current or future legislation or by current or
future judicial or administrative decisions for indemnification (but, in the
case of any such future legislation or decisions, only to the extent that it
does not impose a more stringent standard of conduct than permitted prior to
such legislation or decision), but the burden of proving such defense shall be
on the Corporation. Neither the failure of the Corporation (including its Board
of Directors or any committee thereof, its independent legal counsel, and its
shareholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct, if any, nor the fact that
there has been an actual determination by the Corporation (including its Board
of Directors or any committee thereof, its independent legal counsel, or its
shareholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
SECTION 4. Rights Not Exclusive; Contract Right; Survival. The
indemnification provided by this Article X shall not be deemed exclusive of any
other rights to which those indemnified may be entitled under any agreement,
vote of shareholders or disinterested directors or otherwise, both as to actions
in such person's official capacity and as to actions in another capacity while
holding such office, and shall continue as to an Indemnified Person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors, administrators, personal representatives and
estate of such person. All rights to indemnification and advances under this
Article X shall be deemed to be a contract between the Corporation and each
Indemnified Person who serves or served in such capacity at any time while this
Article X is in effect and, as such, are enforceable against the Corporation.
Any repeal or modification of this Article X or any repeal or modification of
relevant provisions of Florida's corporation law or any other applicable laws
shall not in any way diminish these rights to indemnification of or advances to
such Indemnified Person, or the obligations of the Corporation arising
hereunder, for claims relating to matters occurring prior to such repeals or
modification.
SECTION 5. Insurance. The Corporation may purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee, trustee or agent of another corporation,
partnership, joint venture, trust or other enterprise (including serving as a
fiduciary of an employee benefit plan), with respect to any liability asserted
against him and incurred by him in any such capacity or arising out of his
status as such, whether or not the Corporation would have the power to indemnify
him against such liability under the provisions of this Article X or the
applicable provisions of Florida law.
SECTION 6. Savings Clause. If this Article X or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify and hold harmless, and make advances
to, each Indemnified Person as to costs, charges and expenses (including
attorneys' fees), liabilities, judgments, fines and amounts paid in settlement
with respect to any Proceeding, including any action by or in the right of the
Corporation, to the full extent permitted by any applicable portion of this
Article X that shall not have been invalidated and as otherwise permitted by
applicable law.
ARTICLE XI
Seal
The Board of Directors shall provide a corporate seal which shall be circular in
form and shall have inscribed thereon the name of the Corporation, the state of
incorporation, and the words, "Corporate Seal."
ARTICLE XII
Waiver of Notice
Unless otherwise provided by law, whenever any notice is required to be
given to any shareholder or director of the Corporation under the provisions of
these bylaws or under the provisions of its Articles of Incorporation, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice. ARTICLE XIII Rules of Order
Xxxxxxx' Rules of Order, Newly Revised, shall prescribe the rules of
conduct for all meetings of the Corporation so far as not inconsistent with the
laws of Florida, with the Articles of Incorporation, or with these bylaws.
ARTICLE XIV
Amendments
These bylaws may be altered, amended, or repealed and new bylaws may be
adopted by a vote of the Board of Directors.
ARTICLE XV
Corporate Records
The Corporation shall maintain in written form or in a form capable of
conversion into written form (a) permanent records of minutes of all meetings of
its shareholders and Board of Directors, or any committee thereof; or a record
of all action taken without a meeting of its shareholders or Board of Directors,
or any committee thereof; (b) accurate accounting records; (c) a record of its
shareholders in a form that permits preparation of a list of names and addresses
of all shareholders in alphabetical order by class of shares showing the number
and series held by each. Additionally, the Corporation shall keep a copy of (a)
its Articles of Incorporation and all amendments currently in effect; (b) its
Bylaws, or restated Bylaws, and all amendments currently in effect; (c)
resolutions adopted by its Board of Directors creating one or more classes or
series of shares and affixing their relative rights, preferences, and
limitations, if shares issued pursuant thereto are outstanding; (d) minutes of
all shareholders' meetings and records of all action taken by shareholders
without a meeting for the past three years; (e) written communications to all
shareholders, generally, or all shareholders of a class or series within the
past three years, including the financial statements furnished for the past
three years pursuant to the Florida Business Corporation Act; (f) a list of
names and business street addresses of its current Directors and officers; and
(g) its most recent annual report delivered to the Florida Department of State
pursuant to the Florida Business Corporation Act.
ARTICLE XVI
Emergency Bylaws
In the event that a quorum of the Corporation's Board of Directors cannot
readily be assembled because of a catastrophic event, the following emergency
bylaws are in effect until termination of the emergency:
(a) Notice of a meeting of the Board of Directors need only be given
to those Directors whom it is practicable to reach and may be given in any
practicable manner, including by publication and radio;
(b) One or more officers of the Corporation present at the meeting of
the Board of Directors may be deemed to be Directors for the meeting, in
order of rank and within the same rank in order of seniority, as necessary
to achieve a quorum; and
(c) The Director or Directors in attendance at a meeting shall
constitute a quorum.
The Corporation's bylaws not inconsistent with the emergency bylaws shall
remain in effect during an emergency. During an emergency as set forth herein,
the Board of Directors may:
(a) Modify lines of succession to accommodate the incapacity of any
director, officer, employee, or agent; and
(b) Relocate the principal office or designate alternative principal
or regional offices or authorize the officers to do so.
EXHIBIT C
COMPLETE AND FINAL RELEASE
WHEREAS, Ocean Ranch Development, Inc., a Florida corporation ("Ocean
Ranch"), Xxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxx and Xxxxxx Xxxxxxx (each a
"Shareholder" and collectively, the "Shareholders") have entered into the
Agreement and Plan of Merger, dated as of December 10, 1997 (the "Merger
Agreement"), among Fairfield Communities, Inc., a Delaware corporation
("Fairfield"), Fairfield Ocean Ranch, Inc., a Florida corporation and a
wholly owned subsidiary of Fairfield ("Merger Sub"), the Shareholders and
Ocean Ranch;
WHEREAS, pursuant to the Merger Agreement the Shareholders have agreed
to deliver, and in consideration of the payment of the PPM Loan Amount (as
defined in the Merger Agreement) PPM Brokerage Service, Inc. ("PPM") has
agreed to deliver, a complete and final release of all claims against Ocean
Ranch, Ocean Ranch Vacation Group, a Florida general partnership (the
"Partnership") and its partners; and
WHEREAS, each of the Shareholders acknowledges that he has read and
understands this Release, that he has conferred with his counsel concerning
the effect of this Release, and he is executing this Release of his own
free will.
NOW, THEREFORE, each of the Shareholders, for himself and his
affiliates, legal representatives, heirs, successors and assigns, and PPM,
for itself and its affiliates, successors and assigns, does hereby fully
and forever release, relinquish, acquit and discharge (a) Ocean Ranch, its
successors and assigns, and its and their shareholders, directors,
officers, attorneys, employees, agents, representatives and assets, and all
persons or entities in privity with them or any of them from (i) all debts,
obligations, liabilities, liens and duties under the PPM Loan, (ii) all
claims in respect of loans, advances, project management or marketing fees
or other obligations, and (iii) any and all actions, causes of action,
claims, suits, debts, sums of money, accounts, bonds, bills, covenants,
contracts, agreements, promises, damages, judgments, claims and demands
whatsoever, in law or equity, whether known or unknown and whether now
existing or hereafter arising including, without limitation, any matter
described on Schedule 3.2(j) to the Merger Agreement, except claims arising
under Sections 5.1, 5.2 and 5.3 of the Merger Agreement, and (b) the
Partnership, its successors, assigns and partners, and its and their
directors, officers, attorneys, employees, agents, representatives, and
assets, and all persons or entities in privity with them or any of them
from (i) all debt, obligations, liabilities, liens and duties under the
Partnership Agreement (as defined in the Merger Agreement), (ii) all claims
in respect of loans, advances, project management or marketing fees or
other obligations, and (iii) all actions, causes of action, claims, suits,
debts, sums of money, accounts, bonds, bills, covenants, contracts,
agreements, promises, damages, judgments, claims and demands whatsoever, in
law or equity, whether known or unknown and whether now existing or
hereafter arising including, without limitation, any matter described on
Schedule 3.2(j) to the Merger Agreement, except claims arising under
Sections 5.1, 5.2 and 5.3 of the Merger Agreement.
The Shareholders and PPM hereby covenant and agree with Ocean Ranch
and the Partnership to sign, seal, execute and deliver, or cause to be
signed, sealed, executed and delivered, and to make or cause to be done or
made, upon the reasonable request of Ocean Ranch or the Partnership, any
and all agreements, instruments, papers, deeds, acts or things,
supplemental, confirmatory or otherwise, as may reasonably be required by
Ocean Ranch or the Partnership for the purpose of, or in connection with,
the releases granted hereunder.
IN WITNESS WHEREOF, this Complete and Final Release is executed as of
the 19th day of December, 1997.
/s/Xxxxx X. Xxxxxxx
------------------------------
Xxxxx X. Xxxxxxx
/s/Xxxxx X. Xxxxxxx
------------------------------
Xxxxx X. Xxxxxxx
/s/Xxxxxx Xxxxxxx
-----------------------------
Xxxxxx Xxxxxxx
PPM BROKERAGE SERVICE, INC.
By: /s/Xxxxx X. Xxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxx
----------------------------------
Title: President
---------------------------------
EXHIBIT D
AGREEMENT OF ASSUMPTION
This AGREEMENT OF ASSUMPTION (the "Assumption Agreement"), is made and
entered into as of December 19, 1997, by and among Xxxxx X. Xxxxxxx ("JL"),
Ocean Ranch Development, Inc., a Florida corporation ("Ocean Ranch"), Xxxxx
X. Xxxxxx ("RM") and Xxxxx X. Xxxxxxx ("KS" and together with RM, the
"Delegees"). Capitalized terms used and not otherwise defined in this
Agreement have the meanings ascribed to those terms in the Merger Agreement
referred to below.
WHEREAS, pursuant to the terms and provisions of that certain
Agreement and Plan of Merger (the "Merger Agreement"), dated as of December
10, 1997, among Fairfield Communities, Inc., a Delaware corporation
("Fairfield"), Fairfield Ocean Ranch, Inc., a Florida corporation and a
wholly owned subsidiary of Fairfield ("Merger Sub"), JL, Xxxxx X. Xxxxxxx,
Xxxxxx Xxxxxxx and Ocean Ranch, Merger Sub will merge with and into Ocean
Ranch, with Ocean Ranch as the surviving corporation (the "Merger") and, as
a result of the Merger, Ocean Ranch will become a wholly owned subsidiary
of Fairfield;
WHEREAS, as a condition to the willingness of Fairfield and Merger Sub
to consummate the transactions contemplated by the Merger Agreement, and in
order to induce Fairfield and Merger Sub to consummate the transactions
contemplated by the Merger Agreement, each of the Delegees is willing to
assume and agree to pay, perform and discharge the Capital Contribution
Loan; and
WHEREAS, the execution and delivery by the Delegees of this Assumption
Agreement is a condition precedent to the obligations of the parties to the
Merger Agreement to consummate the transactions contemplated by the Merger
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:
1. Assumption. Ocean Ranch hereby delegates to the Delegees, and
RM, to the extent of 80% of all liabilities and obligations hereunder,
and KS, to the extent of 20% of all liabilities and obligations
hereunder, severally, hereby assume and agree to pay, perform or
otherwise discharge in full the principal amount of $1,500,000,
together with interest thereon at the rate of 6% per annum to the date
of payment thereof, as and when the same shall become due and payable
in accordance with the terms and provisions of the Capital
Contribution Loan Documents, as modified hereby.
2. Modification of Payment Terms. JL covenants and agrees with
the Delegees and Ocean Ranch that, notwithstanding any contrary
provision of the Capital Contribution Loan Documents, JL shall accept
payment of the principal amount of $1,500,000 together with interest
thereon at the rate of 6% per annum to the date of payment thereof, on
or before June 30, 1998 in full payment and satisfaction of the
Capital Contribution Loan.
3. Consent and Acknowledgment. JL hereby represents and warrants
that JL is the sole obligee of the Capital Contribution Loan and no
other person or entity has any other rights under the Capital
Contribution Loan. JL hereby acknowledges and consents to the
delegation to the Delegees and the assumption by the Delegees of the
Capital Contribution Loan. JL agrees to accept the assumption of the
Capital Contribution Loan and the agreement by the Delegees to pay the
Capital Contribution Loan as modified hereby in full substitution for
Ocean Ranch under the Capital Contribution Loan Documents. JL further
agrees that Ocean Ranch and its affiliates (other than the Delegees)
shall have no further liability with respect to the Capital
Contribution Loan.
4. Further Assurances. The Delegees hereby covenant and agree
with Ocean Ranch and JL to sign, seal, execute and deliver, or cause
to be signed, sealed, executed and delivered, and to make or cause to
be done or made, upon the reasonable request of Ocean Ranch or JL, any
and all agreements, instruments, papers, deeds, acts or things,
supplemental, confirmatory or otherwise, as may reasonably be required
by Ocean Ranch or JL for the purpose of, or in connection with, the
assumption by the Delegees of the Capital Contribution Loan.
5. Release. JL, for himself and his affiliates, legal
representatives, heirs, successors and assigns, does hereby fully and
forever release, relinquish, acquit and discharge Ocean Ranch,
Fairfield, and Ocean Ranch Vacation Group, a Florida general
partnership, and their successors and assigns, and their respective
shareholders, directors, officers, partners, attorneys, employees,
agents, representatives and assets, and all persons or entities in
privity with them or any of them from all claims, debts, obligations,
liabilities, liens and duties under the Capital Contribution Loan.
6. Miscellaneous. This Assumption Agreement is made for and shall
inure to the benefit of Ocean Ranch and its successors and assigns,
and this Assumption Agreement shall be governed by, enforced in
accordance with, and interpreted under the internal substantive laws
of the State of Florida, without giving effect to the principles
thereof relating to conflicts of law.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have signed this
Assumption Agreement personally or by their respective officers
thereunto duly authorized this 19th day of December, 1997.
/s/Xxxxx X. Xxxxxxx
---------------------------------
Xxxxx X. Xxxxxxx
OCEAN RANCH DEVELOPMENT, INC.
By: /s/Xxxxxx Xxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxx
-------------------------------
Title: President
-------------------------------
/s/Xxxxx X. Xxxxxx
---------------------------------
Xxxxx X. Xxxxxx
/s/Xxxxx Xxxxxx
---------------------------------
Xxxxx Xxxxxx
/s/Xxxxx X. Xxxxxxx
---------------------------------
Xxxxx X. Xxxxxxx
ACKNOWLEDGED AND AGREED
AS TO SECTION 5 OF
THIS ASSUMPTION AGREEMENT:
FAIRFIELD COMMUNITIES, INC.
By:/s/ Xxxxxx X. Xxxxxx
---------------------------
Xxxxxx X. Xxxxxx
Title: Senior Vice President and
Chief Financial Officer
OCEAN RANCH VACATION GROUP
By: Ocean Ranch Development, Inc.,
General Partner
By: /s/ Xxxxxx Xxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxx
------------------------------
Title: President
------------------------------
Schedule 6.3(h)
OPINION OF COUNSEL FOR
SHAREHOLDERS AND OCEAN RANCH
1. Ocean Ranch is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida, has full power to own its
properties and to the knowledge of counsel, to carry on the business currently
being conducted by it, and to the knowledge of counsel, does not conduct
business in any state other than Florida. To the knowledge of counsel, Ocean
Ranch does not now own and has never owned any capital stock or any equity
interest in any corporation, limited liability company, partnership or other
entity except the Interest.
2. The execution, delivery, and consummation of the Agreement has been duly
authorized each of the Shareholders and Ocean Ranch and approved by all
necessary action. The Agreement has been duly executed and delivered by each
Shareholder and Ocean Ranch and constitutes the valid and binding agreement of
each of them enforceable in accordance with its terms.
3. To the knowledge of counsel, neither the execution of the Agreement nor
the consummation of the transactions contemplated thereby will result in the
breach of any term or provision of, or constitute a default under, or be in
violation of any charter provision, bylaw, agreement, instrument, order, law or
regulation to which any Shareholder, Ocean Ranch and/or the Partnership is a
party or which is otherwise applicable.
4. To the knowledge of counsel, there is not (i) any pending or threatened
actions, suits, proceedings or investigations against or affecting Ocean Ranch
or the Interest or (ii) any currently existing order, writ, injunction or decree
to which Ocean Ranch is subject.
5. To the knowledge of counsel, Ocean Ranch and the Partnership are and
have at all times been, in compliance in all material respects with all
applicable laws, rules and regulations and orders.
6. To the knowledge of counsel, there is no fact or circumstance that would
cause any representation or warranty, in whole or in part, of Shareholders and
Ocean Ranch contained in the Agreement not to be true.
SCHEDULE 3.2(i)
None
SCHEDULE 3.2(j)
None
SCHEDULE 3.2(k)
None
SCHEDULE 3.2(l)
None
SCHEDULE 3.2(r)
None
SCHEDULE 3.2(t)
None
SCHEDULE 6.1(c)
None
SCHEDULE 6.3(g)
None
SCHEDULE 6.3(h)
None
