SERIES B REDEEMABLE PREFERRED STOCK
AND
WARRANT
PURCHASE AGREEMENT
AMONG
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.,
XXXXXX X. XXXXXXX,
XXXXXX X. XXXXXXX,
XXXXXX XXXXX, XX.,
AND
THE SEVERAL INVESTORS NAMED IN SCHEDULE 1
Dated as of December 6, 1994
TABLE OF CONTENTS
ARTICLE 1. THE PREFERRED STOCK AND THE
WARRANTS..............................................................................................1
Section 1.1. Purchase and Sale of Preferred Stock.........................................1
Section 1.2. Purchase and Sale of Warrants................................................1
Section 1.3. Closing......................................................................2
Section 1.4. Related Transactions.........................................................2
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE FOUNDERS.........................2
Section 2.1. Organization, Qualifications and Corporate Power.............................2
Section 2.2. Authorization of Agreements, Etc.............................................3
Section 2.3. Validity.....................................................................3
Section 2.4. Authorized Capital Stock.....................................................4
Section 2.5. Litigation; Compliance with Law..............................................4
Section 2.6. Proprietary Information of Third Parties.....................................5
Section 2.7. Title to Properties..........................................................6
Section 2.8. Leasehold Interests..........................................................7
Section 2.9. Insurance....................................................................7
Section 2.10. Taxes........................................................................7
Section 2.11. Other Agreements.............................................................7
Section 2.12. Patents, Trademarks, Etc.....................................................8
Section 2.13. Loans and Advances...........................................................8
Section 2.14. Assumption, Guaranties, Etc. of Indebtedness of Other Persons................8
Section 2.15. Significant Customers and Suppliers..........................................9
Section 2.16. Governmental Approvals.......................................................9
Section 2.17. Financial Statements.........................................................9
Section 2.18. Absence of Undisclosed Liabilities...........................................9
Section 2.19. Absence of Changes..........................................................10
Section 2.20. Employee Benefit Plans......................................................10
Section 2.21. Disclosure..................................................................11
Section 2.22. Brokers.....................................................................12
Section 2.23. Transactions with Affiliates................................................12
Section 2.24. Employees...................................................................12
Section 2.25. Foreign Corrupt Practices Act..............................................12
Section 2.26. Environmental Regulations...................................................12
Section 2.27. Disclosure..................................................................13
ARTICLE 3. REPRESENTATION AND WARRANTIES OF THE INVESTORS........................................14
ARTICLE 4. CONDITIONS PRECEDENT TO THE PURCHASE OF THE PREFERRED STOCK AND
WARRANTS BY INVESTORS.................................................................14
ARTICLE 5. CONDITIONS PRECEDENT..................................................................16
ARTICLE 6. COVENANTS OF THE COMPANY..............................................................16
Section 6.1. Financial Statements, Reports, Etc..........................................16
Section 6.2. Corporate Existence.........................................................17
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Section 6.3. Properties, Business, Insurance.............................................17
Section 6.4. Inspection, Consultation, and Advice........................................17
Section 6.5. Restrictive Agreements Prohibited...........................................17
Section 6.6. Transactions with Affiliates................................................17
Section 6.7. Use of Proceeds.............................................................18
Section 6.8. Board of Directors Meetings.................................................18
Section 6.9. Bylaws......................................................................18
Section 6.10. Maintenance of Ownership of Investments.....................................18
Section 6.11. Distributions by Investments................................................18
Section 6.12. Compliance with Laws........................................................18
Section 6.13. Keeping of Records and Books of Account.....................................19
Section 6.14. Employee Stock Plans........................................................19
Section 6.15. Piggyback Registration Rights. .............................................19
Section 6.16. Registration Procedures. ...................................................20
Section 6.17. Expenses. ..................................................................21
ARTICLE 7. MISCELLANEOUS.........................................................................22
Section 7.1. Survival of Agreements......................................................22
Section 7.2. Brokerage...................................................................22
Section 7.3. Parties in Interest.........................................................22
Section 7.4. Notices.....................................................................22
Section 7.5. Governing Law...............................................................23
Section 7.6. Entire Agreement............................................................23
Section 7.7. Counterparts................................................................23
Section 7.8. Amendments..................................................................23
Section 7.9. Severability................................................................23
Section 7.10. Titles and Subtitles........................................................23
Section 7.11. Certain Defined Terms.......................................................23
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CROSS REFERENCE OF DEFINED TERMS
Term Section
affiliate Section 7.12
AJF Preamble
Agreement Preamble
Articles Section 2.4(d)
Closing Section 1.3
Closing Date Section 1.3
Common Stock Section 2.4(a)
Company Preamble
Company Benefit Plans Section 2.20(a)
Contracts Section 2.11
Xxxxx Preamble
Disclosure Schedule Article 2
EWF Preamble
Employees Section 2.20(a)
Environmental Permits Section 2.26
ERISA Section 2.20(a)(i)
Financial Statements Section 2.17
Founder Preamble
General Partnership Interest Section 2.1(b)
Hazardous Materials Section 2.26(g)
Intellectual Property Section 2.12
Investment Section 2.1(b)
Investor Preamble
Memorandum Section 2.4(b)
person Section 7.12
Preferred Stock Background
Real Property Section 2.7(a)
Recapitalization Background
Registration Expenses Section 6.17
Selling Expenses Section 6.17
Shareholders Agreement Section 2.4(e)
Warrants Background
Warrant Shares Background
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SCHEDULES AND EXHIBITS
Schedule 1 Preferred Stock and Warrant Shares Purchased
Schedule 2 Disclosure Schedule
Schedule 3 Accredited Investor Certificates
Exhibit A Form of Warrant Agreement
Exhibit B Opinion of Company Counsel
Exhibit C Amended and Restated Articles of Incorporation
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SERIES B REDEEMABLE PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
THIS SERIES B REDEEMABLE PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
("Agreement") is made and entered into as of December 6, 1994, among
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC., a Florida corporation (the
"Company"), XXXXXX X. XXXXXXX, a resident of the State of Florida ("AJF"),
XXXXXX X. XXXXXXX, a resident of the State of Florida ("EWF"), XXXXXX XXXXX,
XX., a resident of the State of Florida ("Xxxxx"), and the several persons named
in the attached Schedule 1 (such persons are hereinafter referred to
individually as an "Investor," and, collectively as the "Investors"). AJF, EWF,
and Xxxxx are sometimes hereinafter referred to individually as a "Founder" and
collectively as the "Founders."
BACKGROUND
A. The Investors desire to invest in the Company to enable the Company to
undertake the repurchase of $2,963,084 in principal amount of Senior
Subordinated Project Financing Notes due 1998, $2,500,000 in principal
amount of Amended and Restated Senior Subordinated Project Acquisition
Notes due 1998, and 21,358 shares of Series A Redeemable Preferred
Stock of the Company for an aggregate $5,000,000 (the
"Recapitalization").
B. The Investors desire to purchase (i) an aggregate of 30,000 shares of
the Series B Redeemable Preferred Stock of the Company, par value $.01
(the "Preferred Stock"), at a price of $100.00 per share and (ii)
warrants initially exercisable for 65,950 shares of common stock (the
"Warrant Shares") at an exercise price of $.01 per Warrant Share (the
"Warrants"), on the terms and subject to the conditions set forth in
this Agreement.
C. The Company desires to obtain additional equity capital through the
issuance and sale to the Investors of the Preferred Stock and the
Warrants, on the terms and subject to the conditions set forth in this
Agreement. The Founders are the controlling shareholders of the Company
and will receive a direct benefit from the issuance and sale by the
Company of the Preferred Stock and the Warrants.
AGREEMENT
For and in consideration of the premises and the mutual covenants and
agreements contained in this Agreement and for other good and valuable
consideration, the receipt and legal sufficiency of which is hereby
acknowledged, the parties hereby agree:
ARTICLE 1. THE PREFERRED STOCK AND THE WARRANTS
SECTION 1.1 PURCHASE AND SALE OF PREFERRED STOCK. The Company agrees to
issue and sell to each Investor, and each Investor agrees to purchase from the
Company, the number of shares of Preferred Stock set forth opposite the name of
such Investor on Schedule 1 hereto under the caption "Preferred Shares
Purchased" at a purchase price of $100.00 per share.
SECTION 1.2 PURCHASE AND SALE OF WARRANTS. The Company agrees to issue
and sell to each Investor, and each Investor agrees to purchase from the
Company, a Warrant to purchase a number of Warrant Shares equal to the product
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of the number of shares of Preferred Stock under the caption "Preferred Shares
Purchased" on Schedule 1 hereto MULTIPLIED BY 2.198 (rounded to the nearest
whole share), which number of Warrant Shares is set forth opposite the name of
such Investor on Schedule 1 hereto under the caption "Warrant Shares Purchased."
Each Warrant shall be substantially in the form of Exhibit A attached hereto.
SECTION 1.3 CLOSING. The closing of the purchase and sale of the
Preferred Stock and the Warrants shall take place at the offices of the Company,
0000 Xxxxxxxxxx Xxxxx, Xxxxx Xxxxxxx, Xxxxxxx 00000, at 10:00 a.m., Eastern
Standard Time, on November 30, 1994, or at such other location, date, and time
as may be agreed upon between the Investors and the Company (such closing being
called the "Closing" and such date and time being called the "Closing Date"). At
the Closing, the Company shall issue and deliver to each Investor a stock
certificate or certificates in definitive form, registered in the name of each
Investor, representing the Preferred Stock being purchased by each Investor and
the right to purchase Warrant Shares on the terms set forth in the Warrant. As
payment in full for the Preferred Stock and the Warrants, and against delivery
of the certificates evidencing the Preferred Stock and the Warrants purchased,
on the Closing Date, each Investor shall deliver to the Company a cashier's
check payable to the order of the Company, in the amount set forth opposite the
name of such Investor on Schedule 1 under the heading "Aggregate Purchase
Price," or shall transfer such sum to an account designated in writing by the
Company by wire transfer.
SECTION 1.4 RELATED TRANSACTIONS. At the Closing, the Company and the
Founders shall deliver (i) a certificate with respect to the matters described
in Section 4(f) hereof, and (ii) the opinion of Xxxx X. Xxxxxx, P.A., counsel to
the Company, in substantially the form of Exhibit B hereto.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE FOUNDERS
For the purpose of inducing the Investors to purchase the Shares and
the Warrants, the Company and each Founder represents and warrants to each
Investor that, except as otherwise set forth in the Disclosure Schedule attached
hereto as Schedule 2 (the "Disclosure Schedule") by means of an explicit
reference to the particular representation or warranty as to which exception is
taken, which in each case shall constitute the sole representation and warranty
as to which such exception shall apply:
SECTION 2.1 ORGANIZATION, QUALIFICATIONS AND CORPORATE POWER
(a) The Company is a corporation duly incorporated, validly
existing, and in good standing under the laws of the State of Florida
and is duly licensed or qualified to transact business as a foreign
corporation and is in good standing in each jurisdiction in which the
nature of the business transacted by it or the character of the
properties owned or leased by it requires such licensing or
qualification. The Company has the corporate power and authority to (i)
own and hold its properties and carry on its business as now conducted
and as proposed to be conducted, (ii) execute, deliver, and perform
each of this Agreement and the Warrants, (iii) issue, sell, and deliver
the Preferred Stock, and (iv) issue and deliver the Warrants and the
Warrant Shares issuable upon exercise of the Warrants.
(b) Section 2.1(b) of the Disclosure Schedule contains a true
and correct list of (i) each corporation some or all of the securities
of which are held by the Company (an "Investment"), indicating with
respect to each Investment, the number and type of securities
outstanding and the number and type of securities held by the Company,
and (ii) each general or limited partnership owned in whole or in part
by the Company (a "General Partnership Interest"). Except for
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Investments and General Partnership Interests listed on Section 2.1(b)
of the Disclosure Schedule, the Company does not (i) own of record or
beneficially, directly or indirectly, (A) any shares of capital stock
or securities convertible into capital stock of any corporation, (B)
any debt securities of any corporation, or (C) any participating
interest in or any indebtedness of any partnership, joint venture,
limited liability company, or other non-corporate business enterprise
or (ii) control, directly or indirectly, any other entity.
SECTION 2.2 AUTHORIZATION OF AGREEMENTS, ETC.
(a) The Company is not in violation of or default under any
provision of its Amended and Restated Articles of Incorporation, or
Bylaws, of any material provision of any indenture, contract,
agreement, mortgage, deed of trust, loan, commitment, judgment, decree,
order, or obligation to which it is a party or by which any of its
properties or assets are bound, or of any provision of any Federal,
state, or local statute, rule, or governmental regulation applicable to
the Company. The execution and delivery by the Company of this
Agreement and each of the other agreements, documents, and instruments
contemplated hereby, the performance by the Company of its obligations
hereunder and thereunder, the issuance, sale, and delivery of the
Preferred Stock and the Warrants, and the issuance and delivery of the
Warrant Shares upon exercise of the Warrants, have been duly authorized
by all requisite corporate action on the part of the Company and its
officers, directors, and shareholders and will not result in any such
violation, conflict with, result in a breach of, or constitute (with
due notice or lapse of time or both) a default under any such
provision, require any consent or waiver under any such provision, or
result in the creation or imposition of any lien, charge, restriction,
claim, or encumbrance of any nature whatsoever upon any of the
properties or assets of the Company. There is no such provision which
materially and adversely affects, or so far as the Company is presently
aware, in the future may materially and adversely affect, the condition
(financial or otherwise), business, property, prospects, assets, or
liabilities of the Company.
(b) The Preferred Stock has been duly authorized and, when
issued in accordance with this Agreement, will be validly issued, fully
paid, and nonassessable. The Warrants have been duly authorized and,
when issued in accordance with this Agreement, will be validly issued.
The Preferred Stock and the Warrants, when issued in accordance with
this Agreement, will be free and clear of all liens, charges,
restrictions, claims, and encumbrances imposed by or through the
Company, except as reflected on the certificates evidencing the
Preferred Stock. The Warrant Shares have been duly and validly reserved
for issuance upon exercise of the Warrants, and the Warrant Shares,
when so issued, will be duly authorized, validly issued, fully paid,
and nonassessable and will be free and clear of all liens, charges,
restrictions, claims, and encumbrances imposed by or through the
Company, except as reflected on the certificates evidencing the
Warrants and the Warrant Shares. Neither the issuance, sale, and
delivery of the Preferred Stock and the Warrants nor the issuance and
delivery of the Warrant Shares is subject to any preemptive right,
right of first refusal, or other right in favor of any person.
SECTION 2.3 VALIDITY. Each of this Agreement and the Warrants have been
duly and validly executed and delivered by the Company and constitutes the
legal, valid, and binding obligation of the Company, enforceable against the
Company in accordance with its terms.
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SECTION 2.4 AUTHORIZED CAPITAL STOCK. Immediately prior to the
Closing:
(a) the authorized capital stock of the Company will consist
of (i) Twenty-Nine Thousand (29,000) shares of Series A Redeemable
Preferred Stock; Thirty-six Thousand Five Hundred (36,500) shares of
Series B Redeemable Preferred Stock, and (ii) Five Million (5,000,000)
shares of common stock (the "Common Stock");
(b) Seven Hundred Twenty Five Thousand and One (725,001)
shares of Common Stock will be validly issued and outstanding, fully
paid and nonassessable, and after giving effect to the Recapitalization
described in the Private Placement Memorandum (the "Memorandum"), 2,036
shares of Series A Redeemable Preferred Stock and 30,000 shares of
Series B Redeemable Preferred Stock will be issued and outstanding will
be validly issued and outstanding, fully paid and nonassessable;
(c) all issued and outstanding shares of Common Stock and
Series A Redeemable Preferred Stock are owned of record and
beneficially by the persons and in the amounts set forth in Section 2.4
of the Disclosure Schedule;
(d) the relative rights, powers, preferences, qualifications,
limitations, and restrictions in respect of each class of authorized
capital stock of the Company are as set forth in the Company's Amended
and Restated Articles of Incorporation (the "Articles"), a copy of
which is attached as Exhibit C hereto, and all such rights, powers,
preferences, qualifications, limitations, and restrictions are valid,
binding, and enforceable and in accordance with all applicable laws;
(e) except as set forth in Section 2.4 of the Disclosure
Schedule, (i) no person owns of record or is known to the Company to
own beneficially any shares of any equity stock, (ii) no subscription,
warrant, option, convertible security, or other right (contingent or
other) to purchase or otherwise acquire equity securities of the
Company is authorized or outstanding, and (iii) there is no commitment
by the Company to issue shares, subscriptions, warrants, options,
convertible securities, or other such rights or to distribute to
holders of any of its equity securities any evidence of indebtedness or
assets, except as contemplated by this Agreement; and
(f) except as set forth in the Articles and in the
Shareholders Agreement dated June 2, 1993 (the "Shareholders
Agreement"), the Company has no obligation (contingent or other) to
purchase, redeem, or otherwise acquire any of its equity securities or
any interests therein or to pay any dividend or make any other
distribution in respect thereof. Except as set forth in the
Shareholders Agreement, there are no voting trusts or agreements,
preemptive rights, or proxies relating to any securities of the Company
(whether or not the Company is a party thereto). All of the outstanding
securities of the Company were issued in compliance with all applicable
Federal and state securities laws.
SECTION 2.5 LITIGATION; COMPLIANCE WITH LAW. Except as set forth in
Section 2.5 of the Disclosure Schedule, there is no (a) action, suit, claim,
proceeding, or investigation pending or, to the knowledge of the Company or the
Founders, threatened against or affecting the Company, at law or in equity, or
before or by any Federal, state, municipal, or other governmental department,
commission, board, bureau, agency, or instrumentality, domestic or foreign, (b)
arbitration proceeding relating to the Company pending under collective
bargaining agreements or otherwise, or (c) governmental inquiry pending or, to
the knowledge of the Company or the Founders, threatened against or affecting
the Company, (including without limitation any inquiry as to the qualification
of the Company to hold or receive any license or permit), and there is no basis
known to the Company of the Founders for any of the foregoing. The Company is
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not subject to any order, writ, injunction, or decree of any court or of any
Federal, state, municipal, or other governmental department, commission, board,
bureau, agency, or instrumentality, domestic or foreign. There is no action or
suit by the Company pending or threatened against any other person. The Company
is in material compliance with all laws, rules, regulations, and orders
applicable to the Company's business, operations, properties, assets, licenses,
and other authorizations required to conduct its business as conducted and as
proposed to be conducted. There is no existing law, rule, regulation, or order,
and neither the Company nor any Founder, after due inquiry, is aware of any
proposed law, rule, regulation, or order, whether Federal or state, which would
prohibit or restrict the Company from, or otherwise materially adversely affect
the Company in, conducting its business in any jurisdiction in which it is now
conducting business or in which it proposes to conduct business within the
foreseeable future.
SECTION 2.6 PROPRIETARY INFORMATION OF THIRD PARTIES. After reasonable
investigation, neither the Company nor any Founder is aware that any significant
employee or consultant of the Company is obligated under any contract or other
agreement, or subject to any judgment, decree, or order of any court or
administrative agency, that would conflict with the obligation of such employee
to use best efforts to promote the interests of the Company. To the knowledge of
the Company or the Founders, no third party has claimed or has reason to claim
that any person employed by or affiliated with the Company has (a) violated or
may be violating any of the terms or conditions of any employment,
non-competition, or non-disclosure agreement between such employee and such
third party, (b) disclosed or may be disclosing, or utilized or may be
utilizing, any trade secret or proprietary information or documentation of such
third party, or (c) interfered or may be interfering in the employment
relationship between such third party and any of the Company's present or former
employees. No third party has requested information from the Company which
suggests that such a claim might be contemplated. To the knowledge of the
Company and the Founders, no person employed by or affiliated with the Company
has employed or proposes to employ any trade secret or any information or
documentation proprietary to any former employer, and to the knowledge of the
Company and the Founders, no person employed by or affiliated with the Company
has violated any confidential relationship which such person may have had with
any third party, in connection with the development, manufacture, or sale of any
product or proposed product, or the development or sale of any service or
proposed service of the Company, and the Company has no reason to believe there
will be any such employment or violation. To the knowledge of the Company and
the Founders, none of the execution or delivery of this Agreement, or the
carrying on of the business of the Company by its officers, employees, or
agents, or the conduct or proposed conduct of the business of the Company, will
conflict with or result in a breach of the terms, conditions, or provisions of
or constitute a default under any contract, covenant, or instrument under which
any such person is obligated.
SECTION 2.7 TITLE TO PROPERTIES
(a) The Memorandum contains a list of the material tracts of
real property owned by the Company ("Real Property") and a summary
description of the proposed use thereof and the number of buildable
lots remaining in each such tract. Except as reflected in title
insurance binders for the tracts of Real Property, the Company has good
and marketable fee simple title to the Real Property, free and clear of
all mortgages, liens, charges, encumbrances, and purchase options and
other rights to or against such property, other than such minor
imperfections of title, liens, easements, zoning restrictions, or
encumbrances, if any, as are not substantial in character, amount, or
extent, and do not, severally or in the aggregate, detract from the
value or interfere with the present uses of the Real Property, or
otherwise impair the business and operations of the Company, except for
claims of subcontractors, laborers, and materialmen which have
performed work or provided services to such property and which are
unpaid within normal payment terms.
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(b) All improvements on the Real Property conform in all
material respects to all applicable state and local laws, use
restrictions, building ordinances, and health and safety ordinances,
and the property is zoned for the various purposes for which the Real
Property and improvements thereon are presently being used.
(c) The Company, has received no written notice of any pending
or threatened condemnations, planned public improvements, annexation,
special assessments, zoning or subdivision changes, or other claims
which would in the aggregate materially and adversely affect the Real
Property.
(d) There is no private restrictive covenant or governmental
use restriction (including zoning) known to the Company after
reasonable inquiry, on all or any portion of the Real Property which
prohibits the current or contemplated use of the Real Property.
(e) All licenses, permits, and approvals required for the
occupancy and operation of the Real Property have been obtained and are
in full force and effect and the Company has received no notices of
violations in connection with such items.
(f) The Company does not have in its possession any studies or
reports which indicates any defects in the design or construction of
any of the improvements on the Real Property.
(g) There are no past due taxes, assessments, or other charges
affecting the Real Property.
(h) The Company has good and marketable title to all personal
properties and assets owned by it, free and clear of all mortgages,
pledges, security interests, liens, charges, claims, restrictions and
other encumbrances, except liens for current taxes not yet due and
payable and minor imperfections of title, if any, not material in
nature or amount and not materially detracting from the value or
impairing the use of the personal property subject thereto or impairing
the operations or proposed operations of the Company. The Company owns
or leases all personal properties and assets necessary to the operation
of its business as now conducted. All of such personal properties and
assets are in good operating condition (normal wear and tear excepted),
are reasonably fit for the purposes for which such personal properties
and assets are presently used, are adequate and usable for the
continued operation of the business of the Company as the same is
presently conducted, and none of such personal properties and assets
are in need of maintenance or repairs except for ordinary, routine
maintenance and repairs, the cost of which will not vary materially
from historic patterns.
SECTION 2.8 LEASEHOLD INTERESTS. Each lease or agreement to which the
Company is a party under which it is a lessee of any property, real or personal,
is a valid and subsisting agreement without any default of the Company
thereunder and, to the best of the Company's knowledge, without any default
thereunder of any other party thereto. No event has occurred and is continuing
which, with due notice or lapse of time or both, would constitute a default or
event of default by the Company under any such lease or agreement or, to the
best of the Company's knowledge, by any other party thereto. The Company's
possession of such property has not been disturbed and, to the best of the
Company's knowledge, no claim has been asserted against the Company adverse to
its rights in such leasehold interests.
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SECTION 2.9 INSURANCE. All of the properties and business of the
Company of an insurable nature are insured to the extent usually insured by
persons or entities engaged in the same or similar businesses against loss or
damage of the kind customarily insured against by such persons or entities. The
Company is not in default regarding the provisions of any such policy. The
Company has not, since inception, self-insured against any risk ordinarily
insured against by similar businesses. The Company has not received any notice
from any of its insurers that any insurance premiums will be increased in the
future or that any insurance coverage presently in force will not be available
in the future on substantially the same terms as are now in effect. There are no
outstanding requirements or recommendations by any current insurer or
underwriter with respect to the Company which require or recommend changes in
the conduct of the business or require any repairs or other work to be done to
the assets and properties of the Company.
SECTION 2.10 TAXES. The Company has filed or obtained filing extensions
for all tax returns, Federal, state, county, and local, required to be filed by
it, and the Company has paid or established adequate reserves (in accordance
with generally accepted accounting principles) for the payment of all taxes
shown to be due by such returns as well as all other taxes, assessments, and
governmental charges which have become due or payable, including, without
limitation, all taxes which the Company is obligated to withhold from amounts
owing to employees, creditors, and third parties. The Federal income tax returns
of the Company have never been audited by the Internal Revenue Service and no
state income or sales tax returns of the Company have been audited. No
deficiency assessment with respect to or proposed adjustment of the Company's
Federal, state, county, or local taxes is pending or, to the best of the
Company's knowledge, threatened. There is no tax lien, whether imposed by any
Federal, state, county, or local taxing authority, outstanding against the
assets, properties, or business of the Company. Neither the Company nor any of
its shareholders has ever filed a consent pursuant to Section 341(f) of the IRC
(as hereinafter defined), relating to collapsible corporations.
SECTION 2.11 OTHER AGREEMENT. The Company is not a party to or
otherwise bound by any written or oral contract, obligation, agreement,
commitment, restriction, or the like which individually or in the aggregate
could materially adversely affect the business, prospects, financial condition,
operations, property, or affairs of the Company. The Company has provided to the
Investors access to copies of all obligations, agreements, and the like
(referred to individually as a "Contract" and collectively as the "Contracts").
Each of the Contracts are valid, binding and in full force and effect in all
material respects. The Company, and to the knowledge of the Company and the
Founders, each other party thereto has in all material respects performed all
the obligations required to be performed by it to date and has received no
notice of default and is not in default (with due notice or lapse of time or
both) under any of the Contracts. The Company has no present expectation or
intention of not fully performing all its obligations under each of the
Contracts, and the Company has no knowledge of any breach or anticipated breach
by the other party to any of the Contracts. There is no Contract that contains
any contractual requirement with which there is a reasonable likelihood that the
Company or any other party thereto will be unable to comply with the terms
thereof. The continuation, validity, and effectiveness of each Contract will in
no way be affected by the consummation of the transactions contemplated by this
Agreement. There exists no actual or, to the best knowledge of the Company, any
threatened termination, cancellation, or limitation of, or any amendment,
modification, or change to any Contract, which would have a material adverse
effect on the business or condition, financial or otherwise, of the Company.
SECTION 2.12 PATENTS, TRADEMARKS, ETC. The Company has sufficient title
to and ownership of, or can obtain on terms which will not adversely affect its
business, all franchises, permits, licenses, and other similar authority
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necessary for the conduct of its business as now being conducted and as planned
to be conducted, and it is not in default under any of such franchises, permits,
licenses, and other similar authority. The Company possesses all patents, patent
rights, patent applications, trademarks, trademark applications, service marks,
service xxxx applications, trade names, copyrights, formulae, trade secrets, and
know how (collectively, "Intellectual Property") necessary or desirable to the
conduct of its business as conducted and as proposed to be conducted, and no
claim is pending or, to the knowledge of the Company and the Founders,
threatened to the effect that the operations of the Company infringe upon or
conflict with the asserted rights of any other person under any Intellectual
Property, and, to the knowledge of the Company and the Founders, there is no
basis for any such claim (whether or not pending or threatened). No claim is
pending or threatened to the effect that any such Intellectual Property owned or
licensed by the Company, or which the Company otherwise has the right to use, is
invalid or unenforceable by the Company, and, to the knowledge of the Company
and the Founders, there is no basis for any such claim (whether or not pending
or threatened). The Company is not aware of any third party which is infringing
or violating any of the Intellectual Property of the Company. To the knowledge
of the Company and the Founders, all technical information developed by and
belonging to the Company which has not been patented has been kept confidential.
The Company has not granted or assigned to any other person or entity any of the
Intellectual Property or the right to manufacture, have manufactured, assemble,
or sell the products or proposed products or to provide the services or proposed
services of the Company.
SECTION 2.14 LOANS AND ADVANCES. The Company does not have any
outstanding loans or advances to any person and is not obligated to make any
such loans or advances, except, in each case, for advances to employees of the
Company in respect of reimbursable business expenses anticipated to be incurred
by them in connection with their performance of services for the Company in the
ordinary course of business, consistent with past practice.
SECTION 2.14 ASSUMPTION, GUARANTIES, ETC. OF INDEBTEDNESS OF OTHER
PERSONS. The Company has not assumed, guaranteed, endorsed, or otherwise become
directly or contingently liable on any indebtedness of any other person
(including, without limitation, liability by way of agreement, contingent or
otherwise, to purchase, to provide funds for payment, to supply funds to, or
otherwise invest in the debtor, or otherwise to assure the creditor against
loss), except for (a) guaranties by endorsement of negotiable instruments for
deposit or collection in the ordinary course of business and (b) guaranties by
the Company of the debts of its subsidaries.
SECTION 2.15 SIGNIFICANT CUSTOMERS AND SUPPLIERS. No customer or
supplier which was or has been significant to the Company in the past three (3)
years has terminated, materially reduced, or threatened to terminate or
materially reduce its purchases from or provision of products or services to the
Company, as the case may be.
SECTION 2.16 GOVERNMENTAL APPROVALS. Subject to the accuracy of the
representations and warranties of the Investors set forth in Article 3 hereof,
no registration, qualification, or filing with, or consent or approval of or
other action by, any Federal, state, or other governmental agency or
instrumentality is or will be necessary for the valid execution, delivery, and
performance by the Company of this Agreement, the offer, issuance, sale and
delivery of the Preferred Stock and the Warrants, the issuance and delivery of
the Warrant Shares upon exercise of the warrants or the consummation of any
other transaction contemplated hereby, other than (i) filings pursuant to state
securities laws (all of which filings have been made as of the date hereof) in
connection with the offer and sale of the Preferred Stock and the Warrants and
(ii) the filing of a notice under Regulation D under the Securities Act.
SECTION 2.17 FINANCIAL STATEMENTS. The Memorandum contains true,
correct, and complete copies of: the unaudited Consolidated Balance Sheet of the
Company dated September 30, 1994, and the unaudited Consolidated Statement of
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Operations of the Company for the three months then ended, the audited
Consolidated Balance Sheet of the Company dated June 30, 1994, and June 30,
1993, and an audited Consolidated Statements of Operations, Consolidated
Statements of Changes in Shareholders' Equity, and Consolidated Statements of
Cash Flows for the fiscal years then ended, together with notes thereto and the
audit report thereon of KPMG Peat Marwick thereon (collectively, the "Financial
Statements"). The Financial Statements (i) are in accordance with the books and
records of the Company, (ii) present fairly the financial condition of the
Company as of the respective dates indicated and the results of operations for
such periods except that interim period financial statements are subject to
normal year-end audit adjustments, which in the aggregate will not materially or
adversely change such interim financial statements, (iii) have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, and (iv) reflect adequate reserves for all
liabilities and losses. The books, records, and accounts of the Company
accurately and fairly reflect, in reasonable detail, the transactions and the
assets and liabilities of the Company. The Company has not engaged in any
transaction, maintained any bank account, or used any of the funds of the
Company, except for transactions, bank accounts, and funds which have been and
are reflected in the normally maintained books and records of the Company.
SECTION 2.18 ABSENCE OF UNDISCLOSED LIABILITIES. The Company has no
material liabilities or obligations (secured or unsecured, whether accrued,
absolute, direct, indirect, contingent, or otherwise, and whether due or to
become due) that are required to be reflected in the Financial Statements by
generally accepted accounting principles which are not fully accrued or reserved
against in the Financial Statements, other than liabilities incurred in the
ordinary course of business subsequent to the date of the Financial Statements
which liabilities and obligations, individually or in the aggregate, are not
material to the financial condition or operating results of the Company.
SECTION 2.19 ABSENCE OF CHARGES. Since the date of the most recent
Consolidated Balance Sheet included in the Financial Statements and except as
reflected therein or in the Memorandum, (a) there has been no material adverse
change in the condition (financial or otherwise), business, property, assets, or
liabilities of the Company other than changes in the ordinary course of
business, none of which, individually or in the aggregate, has been materially
adverse; (b) the Company has not entered into any material transaction which was
not in the ordinary course of its business; (c) there has been no damage to,
destruction of, or loss of physical property (whether or not covered by
insurance) materially adversely affecting the business or operations of the
Company; (d) except as contemplated by this Agreement, the Company has not
declared or paid any dividend on its stock, made any distribution on its stock,
redeemed, purchased, or otherwise acquired any of its stock, granted any options
to purchase shares of its stock; (e) the Company has not increased the
compensation of any of its officers, or the rate of pay of its employees as a
group, except as part of regular compensation increases in the ordinary course
of its business, to an amount in excess of the amounts set forth in the pro
formas previously delivered to the Investors; (f) there has been no resignation
or termination of employment of any key officer or employee of the Company, and
the Company does not know of the impending resignation or termination of
employment of any such officer or employee that if consummated, would have a
material adverse effect on the business of the Company; (g) there has been no
labor dispute involving the Company or its employees and none is pending or to
the knowledge of the Company and the Founders, threatened; (h) there has been no
change, except in the ordinary course of business, in the contingent obligations
of the Company by way of guaranty, endorsement, indemnity, warranty, or
otherwise; (i) there have been no loans made by the Company to its employees,
officers, directors, or partners other than travel advances and office advances
made in the ordinary course of business; and (j) to the knowledge of the Company
and the Founders, there has been no other event or condition of any kind which
might reasonably be expected to result in a material and adverse change in the
Company's condition (financial or otherwise) or business or to impair materially
the ability of the Company to conduct its business as it is currently being
conducted.
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SECTION 2.20 EMPLOYEE BENEFIT PLANS.
(a) Section 2.20 of the Disclosure Schedule contains a true
and complete list of all the following agreements or plans which are
presently in effect or which have previously been in effect and which
cover employees of the Company ("Employees"):
(i) Any employee benefit plan as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974
("ERISA"), and any trust or other funding agency created
thereunder, or under which the Company, with respect to the
Employees, has any outstanding, present, or future obligation
or liability, or under which any Employee or former Employee
has any present or future right to benefits which are covered
by ERISA; or
(ii) Any other pension, profit sharing, retirement,
deferred compensation, stock purchase, stock option, incentive,
bonus, vacation, severance, disability, hospitalization,
medical, life insurance, or other employee benefit plan,
program, policy, or arrangement, whether written or unwritten,
formal or informal, which the Company, with respect to the
Business, maintains or to which the Company, with respect to
the Business, has any outstanding, present, or future
obligations to contribute or make payments under, whether
voluntary, contingent, or otherwise.
The plans, programs, policies, or arrangements which are described in
subparagraph (i) or (ii) above and which are listed on Section 2.20 of the
Disclosure Schedule are hereinafter collectively referred to as the "Company
Benefit Plans." The Company has delivered to the Investors true and complete
copies of all written plan documents and contracts evidencing the Company
Benefit Plans, as they may have been amended to the date hereof, together with
(A) all documents relating to any tax-qualified retirement plan maintained by
the Company, which documents are required to have been filed prior to the date
hereof with governmental authorities for each of the three most recently
completed plan years; (B) attorney's response to an auditor's request for
information for each of the three most recently completed plan years; and (C)
financial statements for each Company Benefit Plan for each of the three most
recently completed plan years.
(b) Except for the Company Benefit Plans, the Company does not
now maintain, nor has the Company at any time in the past been
obligated to make any payment or contribution to any pension,
retirement, profit-sharing, deferred compensation, stock purchase,
stock option, bonus or incentive plan, any medical, vision, dental, or
other health plan, any life insurance plan, vacation, severance,
disability, or any other employee benefit plan, program, policy, or
arrangement, whether written, unwritten, formal, or informal,
including, without limitation, any "employee benefit plan" as defined
in Section 3(3) of ERISA. The Company has not made, entered into, or
agreed to any commitment, whether written or oral, which would obligate
the Company to establish any employee benefit plan, or continue any
employment agreement or employment policy covering Employees. With
respect to all "welfare plans," as defined in Section 3(1) of ERISA,
covering Employees or former Employees, there are no obligations to
continue coverage or to make payments to or on behalf of persons who
are or may become retired or terminated Employees or their
beneficiaries, other than as may be required by Sections 601 through
608 of ERISA.
(c) The Company has complied with the continuation coverage
requirements of Section 1001 of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, and ERISA Sections 601 through
608.
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SECTION 2.21 DISCLOSURE.
(a) The Company has delivered to the Investors a true and
correct copy of (i) the Amended and Restated Articles of Incorporation
of the Company, and all amendments thereto and restatements thereof
certified by the appropriate state official; and (ii) the Bylaws of the
Company and all amendments thereto.
(b) The minute books of the Company made available to the
Investors prior to the date hereof, accurately reflect all corporate
action taken by the directors and shareholders of the Company or any
committee of the Board of Directors of the Company and contain true and
accurate copies of or originals of the respective minutes of all
meetings or consent actions of the directors, any committee of the
Board of Directors, and the shareholders.
(c) The stock record books of the Company, made available to
the Investors prior to the date hereof, accurately reflect the stock
ownership of the Company, and contain complete and accurate records
with respect to the transfer of all securities issued by the Company
and each Investment since inception.
The Company has no contract, arrangement, or understanding with any
broker, finder, or similar agent with respect to the transactions contemplated
by this Agreement, nor has the Company authorized or employed any person in
connection with the offering or sale of the Preferred Stock, or the Warrants or
any security of the Company similar to the Preferred Stock or the Warrants.
Except as permitted by Section 6.6 hereof, no Founder, director,
officer, employee, or shareholder of the Company, or member of the family of any
such person, or any corporation, partnership, trust, or other entity in which
any such person, or any member of the family of any such person, has a
substantial interest or is an officer, director, trustee, partner, or holder of
more than 5% of the outstanding equity interests thereof is a party to any
transaction with the Company, including any contract, agreement or other
arrangement providing for the employment of, furnishing of services by, rental
of real or personal property from or otherwise requiring payments to any such
person or firm.
SECTION 2.24 EMPLOYEES.
(a) No officer or key Employee has advised the Company (orally
or in writing) that he or she intends to terminate employment with the
Company. The Company has complied in all material respects with all
applicable laws relating to the employment of labor, including
provisions relating to wages, hours, equal opportunity, worker health
and safety, collective bargaining, and the payment of Social Security
and other taxes, and with ERISA.
(b) The Company does not have any collective bargaining
agreement covering any of its Employees. There is no pending or, to the
best knowledge of the Company, threatened labor dispute involving the
Company or any of its Employees. To the best of the Company's
knowledge, the Company has amicable relations with its Employees.
SECTION 2.25 FOREIGN CORRUPT PRACTICES ACT. The Company has not made,
offered or agreed to offer anything of value to any government official,
political party or candidate for government office nor has it taken any action
which would cause the Company to be in violation of the Foreign Corrupt
Practices Act of 1977.
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SECTION 2.26 ENVIRONMENTAL REGULATIONS.
(a) Except for failures which will not result in any material
liability or consequences to the Company, the Company has met, and
continues to meet, all applicable local, state, Federal and national
environmental regulations.
(b) The Company has not been notified that it is potentially
liable, has not received any requests for information or other
correspondence concerning any site or facility, and is not otherwise
aware that it is considered potentially liable under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended, or any similar state law.
(c) The Company has not entered into or received any consent
decree, compliance order, or administrative order relating to
environmental protection.
(d) The Company has neither entered into or received nor is
the Company in default under any judgment, order, writ, injunction, or
decree of any federal, state, or municipal court or other governmental
authority relating to environmental protection.
(e) The Company has all permits, licenses, approvals,
consents, and authorizations (the "Environmental Permits") relating to
environmental or health protection which are required under Federal,
state, or local laws, rules, and regulations and is in compliance with
all the Environmental Permits (including any information provided on
the applications therefor);
(f) There are no actions, suits, claims, arbitration
proceedings, or complaints pending or, to the Company's knowledge,
threatened or under consideration by any governmental authority,
municipality, community, citizen, or other entity against the Company
relating to environmental protection, nor does the Company have reason
to believe that any such actions, suits, claims, or complaints will be
brought against it.
(g) No disposal, releases, burial, or placement of hazardous
or toxic substances, pollutants, contaminants, petroleum, gas products,
or asbestos-containing materials (as any of such terms may be defined
under Federal, state, or local law) (hereinafter collectively referred
to as "Hazardous Materials") has occurred on, in, at, or about any of
the Company's properties or facilities or any other facility or site to
which Hazardous Materials from the Company may have been taken at any
time in the past.
(h) To the Company's knowledge, there has been no disposal,
releases, burial, or placement of Hazardous Materials on any property
not owned or operated in the present or the past by the Company which
may result or has resulted in contamination of or beneath any of the
Company's properties or facilities.
(i) There are no above-ground and underground storage tanks on
the Real Property.
(j) No lien has arisen on the Company's properties or
facilities under Federal, state, or local laws, rules, or regulations
as they relate to environmental protection.
(k) No audit or investigation has been conducted as to
environmental matters at any of the Company's properties by any
governmental agency.
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SECTION 2.27 DISCLOSURE. Neither this Agreement nor any Schedule or
Exhibit hereto, contains an untrue statement of a material fact or omits a
material fact necessary to make the statements contained herein or therein not
misleading. None of the statements, documents, certificates or other items
prepared or supplied by the Company with respect to the transactions
contemplated hereby contains an untrue statement of a material fact or omits a
material fact necessary to make the statements contained therein not misleading.
The Memorandum was prepared in good faith by the Company to provide an overview
of the business of the Company and, to the best knowledge of Founders, does not
contain an untrue statement of a material fact.
ARTICLE 3. REPRESENTATION AND WARRANTIES OF THE INVESTORS
Each Investor represents and warrants to the Company as to such
Investor only, that:
(a) it is an "accredited investor" within the meaning of Rule
501 under the Securities Act, as indicated on the Investor
Certification of such Investor, annexed hereto as Schedule 3;
(b) it has sufficient knowledge and experience to evaluate the
risks and merits of its investment in the Company and it is able
financially to bear the risks thereof;
(c) it has had an opportunity to ask questions of and receive
answers from and to discuss the Company's business, management, and
financial affairs with the Company's management;
(d) the Preferred Stock and the Warrants are being acquired
for its own account for the purpose of investment and not with a view
to or for sale in connection with any distribution thereof;
(e) it was not offered nor made aware of the Company's
interest in issuing the Preferred Stock and the Warrants by any means
of public advertisement or solicitation;
(f) in connection with such Investor's purchase of the
Preferred Stock and the Warrants, it has been solely responsible for
its own (i) due diligence investigation of the Company and (ii)
investment decision, and has not engaged or relied upon any agent or
"purchaser representative" to review or analyze the Company's business
and affairs or advise such Investor with respect to the merits of the
investment;
(g) it has full power and authority to execute, deliver, and
perform each of this Agreement and to purchase the Preferred Stock and
the Warrants; and, that this Agreement will constitute the legal,
valid, and binding obligation of the Investor, enforceable against it
in accordance with their respective terms; and
(h) in the event that the Investor proposes to sell the
Preferred Stock or the Warrants pursuant to Rule 144A under the
Securities Act, it will (A) take reasonable steps to obtain the
information required by such Rule to establish a reasonable belief that
the prospective purchaser is a "qualified institutional buyer" as such
term is defined in Rule 144A and (B) advise the prospective purchaser
that the Investor is relying on the exemption from the registration
provisions of the Securities Act available pursuant to Rule 144A.
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ARTICLE 4. CONDITIONS PRECEDENT TO THE PURCHASE OF THE PREFERRED STOCK
AND WARRANTS BY INVESTORS
In connection with the purchase of the Preferred Stock and Warrants at
the Closing, the Investors shall be entitled to receive the following
certificates, opinions, and documents or evidence reasonably satisfactory to
them as to the following, each of which requirements may be waived by the
Investors. The Company agrees to use its best efforts to cause each of such
requirements to be satisfied:
(a) The Investors shall have received from Xxxx X. Xxxxxx,
P.A. counsel for the Company and the Founders, an opinion dated the
Closing Date, in form and scope satisfactory to the Investors and its
counsel, in substantially the form attached hereto as Exhibit B.
(b) The representations and warranties contained in Article 2
shall be true, complete and correct.
(c) The Company shall have performed and complied with all
covenants and agreements contained herein required to be performed or
complied with by it prior to or at the Closing Date.
(d) The Company shall have obtained any and all consents,
permits and waivers and made all filings necessary or appropriate for
the consummation of the transactions contemplated hereby.
(e) All corporate and other proceedings to be taken by the
Company in connection with the transactions contemplated hereby and all
documents relating to such transactions shall be satisfactory in form
and substance to the Investors and its counsel, and the Investors and
its counsel shall have received all such counterpart originals or
certified or other copies of such documents as they reasonably may
request. The Company shall have delivered to the Investors a
certificate executed by the President and Treasurer of the Company
certifying as to the fulfillment of the conditions specified in
subsections (b), (c), (d) and (i) of this Article 4.
(f) The Investors shall have received copies of the following
documents:
(i) (A) the Articles in the form of Exhibit C hereto,
bearing evidence of filing by the Department of State of the
State of Florida, and (B) a certificate of said Department of
State, dated as of a recent date as to the due incorporation
and good standing of the Company;
(ii) a certificate of the Secretary or an Assistant
Secretary of the Company dated the Closing Date and certifying:
(A) that attached thereto is a true and complete copy of the
Bylaws of the Company as in effect on the date of such
certification; (B) that attached thereto is a true and complete
copy of all resolutions adopted by the Board of Directors or
the shareholders of the Company authorizing the execution,
delivery, and performance of this Agreement, the Warrants, the
issuance, sale, and delivery of the Preferred Stock, and that
all such resolutions are in full force and effect and are all
the resolutions adopted in connection with the foregoing
agreements and the transactions contemplated thereby; (C) that
the Articles have not been amended since the date of the last
amendment referred to in the certificate delivered pursuant to
clause (i)(B) above; and (D) to the incumbency and specimen
signature of each officer of the Company executing this
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Agreement, the Warrants, the stock certificates representing
the Preferred Stock, and any certificate or instrument
furnished pursuant hereto, and a certification by another
officer of the Company as to the incumbency and signature of
the officer signing the certificate referred to in this clause
(ii); and
(iii) such additional supporting documents and other
information with respect to the operations and affairs of the
Company as the Investors or its counsel reasonably may request.
(g) All shareholders of the Company having any preemptive,
first refusal, or other rights with respect to the issuance of the
Preferred Stock or the Warrants shall have irrevocably waived the same
in writing and copies of such waivers shall have been delivered to
Investors' counsel.
ARTICLE 5. CONDITIONS PRECEDENT
The obligation of the Company to issue and sell the Preferred Stock and
the Warrants to the Investors on the Closing Date is, at its option, subject to
the satisfaction, on or before the Closing Date, of the following conditions:
(a) All representations and warranties of the Investors
contained in Article 3 hereof shall be true and correct on the Closing
Date with the same effect as though such representations and warranties
had been made on and as of such date.
(b) All corporate and other proceedings to be taken by the
Investors in connection with the transactions contemplated hereby, and
all documents incidental thereto, shall be satisfactory in form and
substance to the Company and its counsel.
(c) The Investors shall have delivered to the Company the full
purchase price for the Preferred Stock and the Warrants to be purchased
hereunder.
ARTICLE 6. COVENANTS OF THE COMPANY
The Company covenants and agrees with the Investors that, unless waived
in accordance with Section 7.9 hereof, so long as any of the Preferred Stock is
outstanding:
SECTION 6.1 FINANCIAL STATEMENTS, REPORTS, ETC. The Company shall
furnish to the Investors:
(a) within one hundred twenty (120) days after the end of each
fiscal year of the Company, an audited balance sheet of the Company, as
of the end of such fiscal year and the related statements of income,
shareholders' equity, and changes in cash flows for such fiscal year,
prepared in accordance with generally accepted accounting principles
and certified by a firm of independent public accountants of recognized
national standing selected by the Board of Directors of the Company;
(b) within sixty (60) days after the end of each fiscal
quarter (other than the last quarter in each fiscal year) a balance
sheet of the Company, and the related statements of income,
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shareholders' equity, and changes in cash flows, unaudited but prepared
in accordance with generally accepted accounting principles and
certified by the Chief Financial Officer of the Company, such balance
sheet to be as of the end of such quarter and such statements of
income, shareholders' equity and changes in cash flows to be for such
quarter and for the period from the beginning of the fiscal year to the
end of such quarter, in each case with comparative statements for the
prior fiscal year;
(d) at the time of delivery of each annual financial statement
pursuant to Section 6.1(a) hereof, a certificate executed by the Chief
Financial Officer of the Company stating that such officer has caused
this Agreement, the Articles, and the Warrants to be reviewed and has
no knowledge of any default by the Company in the performance or
observance of any of the provisions of this Agreement, the Articles or
the Warrants, if such officer has such knowledge, specifying such
default and the nature thereof;
(e) at the time of delivery of each quarterly statement
pursuant to Section 6.1(b) hereof, a management narrative report
explaining all significant variances from forecasts and all significant
current developments in staffing, marketing, sales, and operations;
(f) promptly, from time to time, such other information
regarding the business, prospects, financial condition, operations,
property, or affairs of the Company as the Investors reasonably may
request.
SECTION 6.2 CORPORATE EXISTENCE. The Company shall maintain and cause
any Investment in which the Company owns a controlling interest to maintain
their respective separate corporate existences, rights, and franchises in full
force and effect.
SECTION 6.3 PROPERTIES, BUSINESS, INSURANCE. The Company shall maintain
and cause any subsidiary to maintain as to their respective properties and
businesses, with financially sound and reputable insurers, insurance against
such casualties and contingencies and of such types and in such amounts as is
customary for companies similarly situated which insurance shall be deemed by
the Company to be sufficient.
SECTION 6.4 INSPECTION, CONSULTATION, AND ADVICE. The Company shall
permit and cause any subsidiary to permit any of the Investors and such persons
as the Investors may designate, at the expense of the Company once per year, and
if more often than once per calendar year, with the additional visits at such
Investor's expense, to visit and inspect any of the properties of the Company
and any Investment, examine their books and take copies and extracts therefrom,
discuss the affairs, finances, and accounts of the Company with their officers,
employees, and public accountants and the Company hereby authorizes said
accountants to discuss with such Investors and such designees such affairs,
finances, and accounts), and consult with and advise the management of the
Company as to their affairs, finances, and accounts, all at reasonable times and
upon reasonable notice.
SECTION 6.5 RESTRICTIVE AGREEMENTS PROHIBITED. The Company shall not
become a party to any agreement which by its terms restricts the Company's
performance of this Agreement, the Articles, or the Warrants.
SECTION 6.6 TRANSACTIONS WITH AFFILIATES. Except for (a) transactions
contemplated by this Agreement, (b) transactions with the affiliated entities
listed in Section 6.6 of the Disclosure Schedule, provided that the terms of
such transactions are no less favorable to the Company than the terms available
from third parties on an arm's length basis from non-affiliated third parties,
(c) loans by shareholders up to $1,000,000 outstanding at any time, provided
that the security for such loans is limited to the real estate on which the
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specific construction activities financed are located and provided further that
the interest rate and terms are no less favorable than the rate and terms
available on an arm's length basis from unaffiliated third parties, or (d) as
otherwise approved by the Board of Directors, the Company shall not enter into
any transaction with any director, officer, employee, or holder or more than 5%
of the outstanding capital stock of any class or series of capital stock of the
Company, member of the family of any such person, or any corporation,
partnership, trust, or other entity in which any such person, or member of the
family of any such person, is a director, officer, trustee, partner, or holder
of more than 5% of the outstanding capital stock thereof, except for
transactions on customary terms related to such person's employment. All
transactions with affiliates shall be reported on a quarterly basis in the
financial reports required by Section 6.1(b) hereof, including, with respect to
each transaction, the affiliate involved, the amount paid to the affiliate in
such quarter, and amounts remaining to be paid to the affiliate by the Company.
SECTION 6.7 USE OF PROCEEDS. The Company shall use the proceeds from
the sale of the Preferred Stock and the Warrants as a part of the purchase price
to acquire $2,963,084 in principal amount of the Company's Senior Subordinated
Project Financing Notes due 1998, $2,500,000 in principal amount of the
Company's Amended and Restated Senior Subordinated Project Acquisition Notes due
1998, and 21,358 shares of Series A Redeemable Preferred Stock, and expenses of
the transactions contemplated hereby. The remainder of the purchase price will
be borrowed from NationsBank.
SECTION 6.8 BOARD OF DIRECTORS MEETINGS. The Company shall use its best
efforts to ensure that meetings of the Board of Directors of the Company are
held at least four (4) times each year and at least once each quarter.
SECTION 6.9 BYLAWS. The Company shall at all times cause its Bylaws to
provide that, (a) unless otherwise required by the laws of the State of Florida,
(i) any two (2) directors and (ii) any holder or holders of at least 66% of the
outstanding shares of Common Stock or 25% of the outstanding Preferred Stock,
shall have the right to call a meeting of the Board of Directors or shareholders
and (b) the number of directors fixed in accordance therewith shall in no event
conflict with any of the terms or provisions of the Articles. The Company shall
at all times maintain provisions in its Bylaws or Articles indemnifying all
directors against liability to the maximum extent permitted under the laws of
the State of Florida.
SECTION 6.10 MAINTENANCE OF OWNERSHIP OF INVESTMENTS. The Company shall
not sell or otherwise transfer any shares of capital stock of any Investment,
except to the Company or another Investment, or permit any Investment in which
the Company owns a controlling interest, to issue, sell or otherwise transfer
any shares of its capital stock or the capital stock of any Investment except to
the Company or another Investment.
SECTION 6.11 DISTRIBUTIONS BY INVESTMENTS. The Company shall not permit
any Investment in which the Company owns a controlling interest to purchase or
set aside any sums for the purchase of, or pay any dividend, or make any
distribution on, any shares of its stock, except for dividends or other
distributions payable to the Company or another Investment in which the Company
owns a controlling interest.
SECTION 6.12 COMPLIANCE WITH LAWS. The Company shall comply with all
applicable laws, rules, regulations, and orders, noncompliance with which could
materially adversely affect its business or condition, financial or otherwise.
SECTION 6.13 KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Company shall
keep adequate records and books of account, in which complete entries will be
made in accordance with generally accepted accounting principles, consistently
applied, reflecting all financial transactions of the Company and in which, for
-17-
each fiscal year, all proper reserves for depreciation, depletion, obsolescence,
amortization, taxes, bad debts, and other purposes in connection with its
business shall be made.
SECTION 6.14 EMPLOYEE STOCK PLANS. As long as the Investors shall
continue to own any of the Preferred Stock, Warrants, or Warrant Shares, the
Company shall sell shares of or grant options to purchase shares of its capital
stock to Employees, officers, and directors of and consultants to the Company
only pursuant to stock option plans or stock purchase plans which have been
adopted and approved by the Company's Board of Directors and only so long as the
Company has an option to repurchase such shares upon the termination of
employment with the Company of such Employees, officers, directors, and
consultants, and the total number of shares of Common Stock as to which the
Company may make such sales or grant such options shall not exceed 10,000
shares, such number subject to equitable adjustment for reorganizations, stock
splits, stock dividends, and like events (including shares issued or sold
pursuant to (i) any such stock option plan even though the shares were acquired
upon the exercise of stock options which were granted prior to the date hereof,
and (ii) any such stock purchase plans even though the shares acquired
thereunder were purchased prior to the date hereof). Under no circumstances
shall the total number of shares of the Company's Common Stock issued under any
such stock purchase plan, plus any shares issued or subject to issuance under
any such stock option plan, exceed 10,000 shares (such number subject to
equitable adjustment for reorganizations, stock splits, stock dividends, and
like events) at any time.
SECTION 6.15 PIGGYBACK REGISTRATION RIGHTS. If the Company at any time
proposes to register any of its securities under the Securities Act for sale to
the public, whether for its own account or for the account of other security
holders or both (except with respect to registration statements on Forms S-4 or
S-8 or another form not available for registering the Warrant Shares for sale to
the public), each such time it will give written notice to Investors of its
intention so to do. Upon the written request of any Investor received by the
Company within 10 days after the giving of any such notice by the Company, to
register such number of Warrant Shares held by such Investor specified in such
written request, the Company will cause the Warrant Shares as to which
registration shall have been so requested to be included in the securities to be
covered by the registration statement proposed to be filed by the Company, all
to the extent requisite to permit the sale or other disposition by such Investor
(in accordance with its written request) of such Warrant Shares so registered.
In the event that any registration pursuant to this Section 6.15 shall be, in
whole or in part, an underwritten public offering of Common Stock, the number of
Warrant Shares to be included in such an underwriting may be reduced if and to
the extent that the managing underwriter shall be of the opinion that such
inclusion would adversely affect the marketing of the securities to be sold by
the Company therein. In the event such a reduction is necessary, the reduction
shall be borne first by holders of common stock who are not Investors, and if a
further reduction is necessary in the judgment of the managing underwriter,
then, all Investors proposing to sell Warrant Shares and holders of warrants
issued in conjunction with the issuance of the Series A Redeemable Preferred
Stock in the offering shall bear the reduction on a pro-rata basis, based on the
number of Warrant Shares each Investor proposed to offer for sale in the
Offering, or an Investor holding a majority of the Warrant Shares may elect to
withdraw from such registration all Warrant Shares held by Investors as to which
registration was requested. Notwithstanding the foregoing provisions, the
Company may for any reason and without the consent of Investors withdraw any
registration statement referred to in this Section 6.15 without thereby
incurring any liability to any Investor.
SECTION 6.16 REGISTRATION PROCEDURES. If and whenever the Company is
required by the provisions of Section 6.15 hereof to use its best efforts to
effect the registration of any Warrant Shares under the Securities Act, the
Company will, as expeditiously as possible:
-18-
(a) prepare and file with the Commission a registration
statement (which shall be on Form X-0, Xxxx X-0, any successor forms
thereto, or other form of general applicability satisfactory to the
managing underwriter selected as herein provided) with respect to such
securities and use its best efforts to cause such registration
statement to become and remain effective for the period of the
distribution contemplated thereby (determined as hereinafter provided);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for the period of distribution and comply with the
provisions of the Securities Act with respect to the disposition of all
Warrant Shares covered by such registration statement in accordance
with the intended method of disposition set forth in such registration
statement for such period;
(c) furnish to each Investor and to each underwriter such
number of copies of the registration statement and the prospectus
included therein (including each preliminary prospectus) as such
persons reasonably may request in order to facilitate the public sale
or other disposition of the Warrant Shares covered by such registration
statement;
(d) use its best efforts to register or qualify the Warrant
Shares covered by such registration statement under the securities or
"blue sky" laws of such jurisdictions as the Shareholders, or, in the
case of an underwritten public offering, the managing underwriter
reasonably shall request, provided, however, that the Company shall not
for any such purpose be required to qualify generally to transact
business as a foreign corporation in any jurisdiction where it is not
so qualified or to consent to general service of process in any such
jurisdiction;
(e) use its best efforts to list the Warrant Shares covered by
such registration statement with any securities exchange or NASDAQ on
which the Common Stock of the Company is then listed or quoted;
(f) notify each selling Investor at any time when a prospectus
relating to Warrant Shares is required to be delivered under the
Securities Act of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the
statements therein not misleading, and, at the request of any such
Shareholder, the Company will prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Warrant Shares, such prospectus will not contain an untrue statement of
a material fact or omit to state any fact necessary to make the
statements therein not misleading;
(g) notify the selling Investors immediately, and confirm the
notice in writing, (1) when the registration statement becomes
effective, (2) of the issuance by the Commission of any stop order or
of the initiation, or the threatening, of any proceedings for that
purpose, (3) of the receipt by the Company of any notification with
respect to the suspension of qualification of the Warrant Shares for
sale in any jurisdiction or of the initiation, or the threatening, of
any proceedings for that purpose, and (4) of the receipt of any
comments, or requests for additional information, from the Commission
or any state regulatory authority. If the Commission or any state
regulatory authority shall enter such a stop order or order suspending
qualification at any time, the Company will promptly use its best
reasonable efforts to obtain the lifting of such order; and
-19-
(h) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders as soon as reasonably practicable, but not
later than 15 months after the effective date of the registration
statement, an earnings statement covering a period of at least 12
months beginning after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act.
For purposes hereof, the period of distribution of Warrant Shares in a
firm commitment underwritten public offering shall be deemed to extend until
each underwriter has completed the distribution of all securities purchased by
it, and the period of distribution of Warrant Shares in any other registration
shall be deemed to extend until the earlier of the sale of all Warrant Shares
covered thereby or 180 days after the effective date thereof.
In connection with each registration hereunder, each Shareholder will
furnish to the Company in writing such information with respect to it as a
stockholder as reasonably shall be necessary in order to assure compliance with
federal and applicable state securities laws.
In connection with each registration pursuant to Section 6.15 hereof
covering an underwritten public offering, the Company and each Investor agree to
enter into a written agreement with the managing underwriter selected in the
manner herein provided in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
underwriter and companies of the Company's size and investment stature.
SECTION 6.17 EXPENSES. All reasonable expenses incurred by the Company
in complying with Section 6.15 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, fees and expenses
(including counsel fees) incurred in connection with complying with state
securities or "blue sky" laws, fees of the National Association of Securities
Dealers, Inc., transfer taxes, fees of transfer agents and registrars, costs of
insurance, and the reasonable fees and disbursements of one counsel for the
sellers of Warrant Shares , but excluding any Selling Expenses, are called
"Registration Expenses". All underwriting discounts and selling commissions
applicable to the sale of Warrant Shares are called "Selling Expenses".
(a) The Company shall pay all Registration Expenses
attributable to the Warrant Shares of Investors included in the
Registration in connection with each registration statement under
Section 6.15 hereof.
(b) All Selling Expenses in connection with each registration
statement under Section 6.15 hereof shall be borne by the Investor and
any other selling stockholder in proportion to the number of shares
sold by Investor, or by such other selling stockholders.
ARTICLE 7. MISCELLANEOUS
SECTION 7.1 SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations, and warranties made herein or in the Warrants, or any
certificate or instrument delivered to the Investors pursuant to or in
connection with this Agreement and the Warrants shall survive the execution and
delivery of this Agreement, the Warrants, and the closing of the transactions
contemplated hereby and thereby.
SECTION 7.2 BROKERAGE. Each party hereto will indemnify and hold
harmless the others against and in respect of any claim for brokerage or other
commissions relative to this Agreement or to the transactions contemplated
hereby, based in any way on agreements, arrangements or understandings made or
claimed to have been made by such party with any third party.
SECTION 7.3 PARTIES IN INTEREST. All representations, covenants, and
agreements contained in this Agreement by or on behalf of any of the parties
-20-
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not. Without limiting the
generality of the foregoing, all representations, covenants, and agreements
benefiting the Investors shall inure to the benefit of any and all subsequent
holders from time to time of the Preferred Stock or the Warrants.
Notwithstanding the foregoing, the right to purchase the Preferred Stock and the
Warrants hereunder pursuant to Section 1.1 may not be sold, transferred, or
otherwise assigned except to an affiliate of the Investors, a successor to
substantially all the business and assets of the Investors.
SECTION 7.4 NOTICES. All notices, requests, consents, and other
communications required or permitted hereunder shall be in writing and shall be
effective when delivered in person or by a courier service, postage prepaid,
addressed as follows:
(a) if to the Company:
Transeastern Properties of South Florida, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxx Xxxxxxx, XX 00000,
Attention: Xxxxxx X. Xxxxxxx, President
with a copy (which shall not constitute notice) to:
Xxxx X. Xxxxxx, P.A.
0000 Xxxxxxxxx Xxxx.
Xxx Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000,
Attention: Xxxx Xxxxxx, Esq.
(b) if to the Investors:
At the address of such Investor on Schedule 1 hereto.
or, in any such case, at such other address or addresses as shall have
been furnished in writing by such party to the others.
SECTION 7.5 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida, irrespective of
the choice of law provisions thereof.
SECTION 7.6 ENTIRE AGREEMENT. This Agreement, including the Schedules
and Exhibits hereto, and the other documents delivered pursuant hereto
constitute the full and entire agreement of the parties with respect to the
subject matter hereof and thereof. All Schedules and Exhibits hereto are hereby
incorporated herein by reference.
SECTION 7.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
-21-
SECTION 7.8 AMENDMENTS. This Agreement may not be amended or modified,
and no provisions hereof may be waived, without the written consent of the
Company and the holders of at least two-thirds of the outstanding shares of
Preferred Stock and Warrant Shares.
SECTION 7.9 SEVERABILITY. If any provision of this Agreement shall be
declared void or unenforceable by any judicial or administrative authority to
the extent possible, it shall be modified in such manner as to be valid, legal,
and enforceable but so as to most nearly retain the intent of the parties and,
if such modification is not possible, such provision shall be severed from this
Agreement, and in either case, the validity and enforceability of any other
provision and of the entire Agreement shall not be affected thereby.
SECTION 7.10 TITLES AND SUBTITLES. The title and subtitles used in this
Agreement are for convenience only and are not to be considered in construing or
interpreting any term or provision of this Agreement.
SECTION 7.11 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
(a) "affiliate" shall mean, with respect to any person, any person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such other person.
(b) "person" shall mean an individual, corporation, trust, partnership,
joint venture, limited liability company, unincorporated organization,
government agency, or any agency or political subdivision thereof, or other
entity.
-22-
+ IN WITNESS WHEREOF, the Company and the Investors have executed this
Agreement as of the day and year first above written.
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.
By:
Xxxxxx X. Xxxxxxx, President
Attest:
Xxxxxx Xxxxx, Xx., Secretary
INVESTORS:
[SIGNATURE BLANKS TO FOLLOW]
-23-
SCHEDULE 1
TO
SERIES B REDEEMABLE PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
INVESTOR NAME AND ADDRESS PREFERRED SHARES WARRANT SHARES AGGREGATE PURCHASE PRICE
PURCHASED PURCHASED
Xxxxxx X. Xxxxxxxxx 250 550 $25,000.00
0000 - XX 00 Xx.
Xxxxx Xxxxxxx, Xxxxxxx 00000
(000) 000-0000
Taxpayer ID No.: ###-##-####
Xxxxxxxxxxx Family Partnership 4,000 8,792 $400,000.00
Xxxxx Xxxxxxxxxxx
0000 Xxxxx Xxxx Xxxx.
Xxxxxxx, Xxxxxxx 00000
(000) 000-0000
Taxpayer ID No.: ###-##-####
Xxxxxx Xxxxx 1,000 2,198 $100,000.00
0000 Xxxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
(000) 000-0000
Taxpayer ID No.: ###-##-####
Xxx Xxxxxxxx 250 550 $25,000.00
00000 Xxxxxxx Xxxxx
Xxxxx Xxxxxxx, Xxxxxxx 00000
(000) 000-0000
Taxpayer ID No.: ###-##-####
Xxxxxxx Xxxxxxxxxx 2,000 4,396 $200,000.00
00000 Xxxx Xxxx Xxxxx
Xxx Xxxx Xxxxxxxxxx, Xxxxxxxxxx 00000
(000) 000-0000
Taxpayer ID No.: ###-##-####
Xxxxxxx X. Xxxxxxxxxx 300 659 $30,000.00
0 X. 00xx Xxxxxx, Xxx. 0
Xxxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000
Taxpayer ID No.: ###-##-####
Xxxx Xxxxxxxxxxx 250 550 $25,000.00
000 Xxxxxxx Xxx
Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000
Taxpayer ID No.: ###-##-####
Schedule 1 page 1 of 2
Xxxxxx Xxxxx 1,000 2,198 $100,000.00
00 Xxx Xxxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
(000) 000-0000
Taxpayer ID No.: ###-##-####
Xxxx Xxxxxx 250 550 $25,000.00
0000 XX 00xx Xxxxx
Xxxxx Xxxxxxx, Xxxxxxx 00000
(000) 000-0000
Taxpayer ID No.: ###-##-####
Xxxxxx X. Xxxxxxx, Trustee of the Xxxxxx X. 16,900 37,146 $1,690,000.00
Xxxxxxx Rev. Living Trust 9/1/93
00 Xxxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
(000) 000-0000
Taxpayer ID No.: ###-##-####
Xxxxxxx Xxxxxxxx 1,500 3,297 $150,000.00
0 Xxxxxxx Xxxxx
Xxxxxxxxxx Xxxxxxx, Xxx Xxxx 00000
(000) 000-0000
Taxpayer ID No.: ###-##-####
Xxxxx X. Xxxx 250 550 $25,000.00
27661 Nopales
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
(000) 000-0000
Taxpayer ID No.: ###-##-####
Xxxxx X. Xxxxxxxxx 250 550 $25,000.00
0000 Xxxxxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxx 00000
(000) 000-0000
Taxpayer ID No.: ###-##-####
Xxxxx Xxxxxxxx, M.D. and Xxx Xxxxxxxx 600 1,319 $60,000.00
JTWROS
0000 XX 00xx Xxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
(000) 000-0000
Taxpayer ID No.: ###-##-####
Xxxxxxx Prezzamolo 1,000 2,198 $100,000.00
0000 XX 000 Xxx
Xxxxx Xxxxxxx, Xxxxxxx 00000
(000) 000-0000
Taxpayer ID No.: ###-##-####
Xxx Xxxxxxxxx 200 440 $20,000.00
1759 Modoc
Xxxxxx, Xxxxxxxxxx 00000
(000) 000-0000
Taxpayer ID No.: ###-##-####
Schedule 1 page 2 of 2
SCHEDULE 2
TO
SERIES B REDEEMABLE PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SCHEDULE 2
TO
SERIES B REDEEMABLE PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
Section 2.1(b) Companies whose securities are held by Transeastern
Transeastern Finance, Inc.
Transeastern Properties at the Cove, Inc.
Transeastern Pembroke Properties, Inc.
100% of the common stock of the foregoing companies is owned by
Transeastern Properties of South Florida, Inc.
Section 2.4 Current Owners Of Transeastern Common Stock, Preferred Stock
and Warrants
See page 27 of Private Placement Memorandum
Section 2.5 Pending lawsuits against Transeastern Properties of South
Florida, Inc.
1. Xxxxxxxx Corp. vs. Transeastern Properties of South Florida, Inc.
Circuit Court of the 17th Judicial Circuit of Florida,
Suit for approximately $26,000.00. This is an obligation of
Transeastern Construction, Inc., a corporation owned by Xxxxxx X. Xxxxxxx,
Xxxxxx X. Xxxxxxx and Xxxxxx Xxxxx, Xx., and Transeastern Properties of South
Florida, Inc. has no liability therefore.
2. Xxxxxxxxx Corp. vs. Transeastern Properties of South Florida,
Inc. and Transeastern Construction, Inc.
Circuit Court of the 17th Judicial Circuit of Florida
Suit for approximately $34,000.00. This is an obligation of
Transeastern Construction, Inc., a corporation owned by Xxxxxx X. Xxxxxxx,
Xxxxxx X. Xxxxxxx and Xxxxxx Xxxxx, Xx., and Transeastern Properties of South
Florida, Inc. has no liability therefore.
Section 2.20 Employee Benefit Plans
The Company provides group hospitalization of its full-time employees
after four months service. The limits of such coverage are $1,000,000 per
covered person. The Company 25% of the cost of such coverage for all employees,
with the remaining 75% of the cost for employee coverage and 100% of the cost of
any dependant coverage paid by such employees. Such coverage is provide by Blue
Cross Blue Shield.
The Company provides one week paid vacation to employees. There is no
limit on the amount of vacations which officers are entitled to take. The
Company provides life insurance coverage on the lives of Xxxxxx X. Xxxxxxx,
Xxxxxx X. Xxxxxxx and Xxxxxx Xxxxx, Xx. The beneficiaries of such policies are
the Company and the wives of such respective officers.
The Company has no severance policy.
Section 2.23 Transactions with Affiliates
The Company leases office space from University Financial Plaza
Associates, Ltd. ("University"), a limited partnership formed in June, 1994 for
the purpose of acquiring the office building located at 0000 Xxxxxxxxxx Xxxxx,
Xxxxx Xxxxxxx, Xxxxxxx. Such lease pre-dates the formation of University and was
negotiated with its predecessor in title, Metropolitan Life Insurance Company.
Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxx and Xxxxxx Xxxxx, Xx. own 100% of the stock
of the corporate general partner of University, three Class A limited partner
units and 1.59 Class B limited partner units in University.
The Company also has various loans from officers and affiliates as
disclosed in the Financial Statements attached as Exhibit "A" to the Private
Placement Memorandum.
Section 6.6 Affiliates
Southeast Electric, Inc.
Transeastern Painting, Inc.
Transeastern Construction, Inc.
SCHEDULE 3
TO
SERIES B REDEEMABLE PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
ACCREDITED INVESTOR CERTIFICATES
EXHIBIT A
TO
SERIES B REDEEMABLE PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
FORM OF WARRANT
THIS WARRANT HAS BEEN, AND THE WARRANT SHARES ISSUABLE UPON EXERCISE
HEREOF WILL BE, ISSUED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933
ACT") AND OF THE FLORIDA INVESTOR PROTECTION ACT (THE "FLORIDA ACT").
SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, OR TRANSFERRED OTHER
THAN (I) PURSUANT TO AN EFFECTIVE REGISTRATION OR AN EXEMPTION
THEREFROM UNDER THE 1933 ACT AND THE FLORIDA ACT, AND (II) UPON RECEIPT
BY THE ISSUER OF EVIDENCE SATISFACTORY TO IT OF COMPLIANCE WITH THE
1933 ACT, THE FLORIDA ACT, AND THE APPLICABLE SECURITIES LAWS OF ANY
OTHER JURISDICTION. THE ISSUER SHALL BE ENTITLED TO REQUIRE AN OPINION
OF COUNSEL SATISFACTORY TO IT WITH RESPECT TO COMPLIANCE WITH THE ABOVE
LAWS.
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.
Original Issue Date: October 13, 1995 Warrant No. 94B-25
WARRANT TO PURCHASE COMMON STOCK
THIS CERTIFIES THAT IN CONNECTION WITH, and as an inducement to XXXXX
X. XXXXXXX AND XXXX X. XXXXXXX AS TENANTS, BY THE ENTIRETY (the "Holder"), to
consummate the transactions contemplated by that certain Series B Redeemable
Preferred Stock and Warrant Purchase Agreement, dated December 6, 1994 among
Holder, TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC., a Florida corporation
(the "Corporation"), and certain other parties identified therein (the "Purchase
Agreement"), Holder is entitled to purchase, on the terms and conditions
hereinafter set forth, Three Thousand Eight Hundred and Forty-Seven shares of
the Common Stock, $.01 par value, of the Corporation (the "Common Stock"), at a
price $.01 per share (the "Exercise Price"), such number of shares and such
Exercise Price being subject to adjustment upon the occurrence of the
contingencies set forth in this Warrant. Each share of Common Stock as to which
this Warrant is exercisable is a "Warrant Share" and all such shares are
collectively referred to as the "Warrant Shares").
SECTION 1. REGISTRATION OF WARRANT. This Warrant is one of a series of
Warrants (collectively, the "Transaction Warrants") issued in connection with
the transaction contemplated by the Purchase Agreement. Each Transaction Warrant
contains identical terms except for the number of Warrant Shares and the
distinctive Warrant number. The Corporation shall register this Warrant, upon
records to be maintained by the Corporation for that purpose, in the name of the
record Holder of this Warrant from time to time. The Corporation shall deem and
treat the registered Holder of this Warrant as the absolute owner hereof for the
purpose of any exercise or any distribution to the Holder hereof, and for all
other purposes, and the Corporation shall not be affected by any notice to the
contrary.
SECTION 2. EXERCISE OF WARRANT.
2.1. TIME OF EXERCISE. This Warrant may be exercised in whole
or in part, at any time or from time to time prior to 5:00 p.m., Eastern
Standard Time, December 31, 2003, unless extended as hereinafter provided. The
last day this Warrant can be exercised is hereinafter referred to as the
"Expiration Date."
2.1. MANNER OF EXERCISE. In order to exercise this Warrant,
the registered Holder hereof shall deliver to the Corporation at its principal
office at 0000 Xxxxxxxxxx Xxxxx, Xxxxx Xxxxxxx, Xxxxxxx 00000, Attention:
President, or at such other office as shall be designated by the Corporation in
writing pursuant to Section 12 hereof on or before 5:00 p.m. Eastern Standard
Time on the Expiration Date, (i) a written notice of such registered Holder's
-1-
election to exercise this Warrant (the "Exercise Notice"), which notice may be
in the form of the Notice of Exercise attached hereto, properly executed and
completed by the registered Holder or an authorized officer thereof, (ii) a
check payable to the order of the Corporation, in an amount equal to the product
of the Exercise Price multiplied by the number of Warrant Shares specified in
the Exercise Notice, and (iii) this Warrant (the items specified in (i), (ii),
and (iii) are collectively the "Exercise Materials"). Upon timely receipt of the
Exercise Materials, the Corporation shall, as promptly as practicable, and in
any event within ten (10) business days after its receipt of the Exercise
Materials, execute or cause to be executed and delivered to such registered
Holder a certificate or certificates representing the number of Warrant Shares
specified in the Exercise Notice, together with cash in lieu of any fraction of
a share, as hereinafter provided, and, (x) if the Warrant is exercised in full,
a copy this Warrant marked "Exercised" or (y) if the Warrant is partially
exercised, a copy this Warrant marked "Partially Exercised" together with a new
Warrant on the same terms for the unexercised balance of the Warrant Shares. All
of the certificates evidencing Warrant Shares shall bear the legend set forth in
Section 7.2 hereof. The stock certificate or certificates shall be registered in
the name of the registered Holder of this Warrant or such other name as shall be
designated in the Exercise Notice. The date on which the Warrant shall be deemed
to have been exercised (the "Exercise Date"), and the date the person in whose
name any certificate for Warrant Shares is issued shall be deemed to have become
the holder of record of such shares, shall be the date the Corporation receives
the Exercise Materials, irrespective of the date of delivery of a certificate or
certificates evidencing the Warrant Shares, except that, if the date on which
the Exercise Materials are received by the Corporation is a date when the stock
transfer books of the Corporation are closed, the Exercise Date shall be the
date the Corporation receives the Exercise Materials, and the date such person
shall be deemed to have become the holder of the Warrant Shares shall be the
next succeeding date on which the stock transfer books are open.
SECTION 3. ADJUSTMENTS TO WARRANT SHARES. The number of Warrant Shares
issuable upon the exercise hereof shall be subject to adjustment in certain
cases as set forth in this Section 3.
3.1. CONSOLIDATION, MERGER, OR SALE. In the event the
Corporation is a party to a consolidation, share exchange, or merger, or the
sale of all or substantially all of the assets of the Corporation to, any
person, or in the case of any consolidation or merger of another corporation
into the Corporation in which the Corporation is the surviving corporation, and
in which there is a reclassification or change of the shares of Common Stock of
the Corporation, this Warrant shall after such consolidation, share exchange,
merger, or sale be exercisable for the kind and number of securities or amount
and kind of property of the Corporation or the corporation or other entity
resulting from such share exchange, merger, or consolidation, or to which such
sale shall be made, as the case may be (the "Successor Corporation"), to which a
holder of the number of shares of Common Stock deliverable upon the exercise
(immediately prior to the time of such consolidation, share exchange, merger, or
sale) of this Warrant would have been entitled upon such consolidation, share
exchange, merger, or sale; and in any such case appropriate adjustments shall be
made in the application of the provisions set forth herein with respect to the
rights and interests of the registered Holder of this Warrant, such that the
provisions set forth herein shall thereafter correspondingly be made applicable,
as nearly as may reasonably be, in relation to the number and kind of securities
or the type and amount of property thereafter deliverable upon the exercise of
this Warrant. The above provisions shall similarly apply to successive
consolidations, share exchanges, mergers, and sales. Any adjustment required by
this Section 3.1 because of a consolidation, share exchange, merger, or sale
shall be set forth in an undertaking delivered to the registered Holder of this
Warrant and executed by the Successor Corporation which provides that the Holder
of this Warrant shall have the right to exercise this Warrant for the kind and
number of securities or amount and kind of property of the Successor Corporation
or to which the holder of a number of shares of Common Stock deliverable upon
exercise (immediately prior to the time of such consolidation, share exchange,
merger, or sale) of this Warrant would have been entitled upon such
consolidation, share exchange, merger, or sale. Such undertaking shall also
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provide for future adjustments to the number of Warrant Shares and the Exercise
Price in accordance with the provisions set forth in Section 3 hereof.
3.2. ADJUSTMENTS FOR STOCK DIVIDENDS AND SPLITS. In the event
the Corporation should at any time, or from time to time after the Original
Issue Date, fix a record date for the effectuation of a stock split or
subdivision of the outstanding shares of Common Stock or the determination of
holders of Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock, or securities or rights
convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon exercise or
exercise thereof), then, as of such record date (or the date of such dividend,
distribution, split, or subdivision if no record date is fixed), the number of
Warrant Shares issuable upon the exercise hereof shall be proportionately
increased and the Exercise Price shall be appropriately decreased by the same
proportion as the increase in the number of outstanding Common Stock Equivalents
of the Corporation resulting from the dividend, distribution, split, or
subdivision. Notwithstanding the preceding sentence, no adjustment shall be made
to decrease the Exercise Price below $.01 per Share.
3.3. REVERSE STOCK SPLITS. In the event the Corporation should
at any time or from time to time after the Original Issue Date, fix a record
date for the effectuation of a reverse stock split, or a transaction having a
similar effect on the number of outstanding shares of Common Stock of the
Corporation, then, as of such record date (or the date of such reverse stock
split or similar transaction if no record date is fixed), the number of Warrant
Shares issuable upon the exercise hereof shall be proportionately decreased and
the Exercise Price shall be appropriately increased by the same proportion as
the decrease of the number of outstanding Common Stock Equivalents resulting
from the reverse stock split or similar transaction.
3.4. RECLASSIFICATION. In the event the Corporation should at
any time or from time to time after the Original Issue Date, fix a record date
for a reclassification of its Common Stock, then, as of such record date (or the
date of the reclassification if no record date is set), this Warrant shall
thereafter be convertible into such number and kind of securities as would have
been issuable as the result of such reclassification to a holder of a number of
shares of Common Stock equal to the number of Warrant Shares issuable upon
exercise of this Warrant immediately prior to such reclassification, and the
Exercise Price shall be unchanged.
3.5. SALES OR DEEMED SALES OF CORPORATION SECURITIES. If and
whenever the Corporation shall, prior to a public offering, issue or sell any
shares of Common Stock or any equity or debt securities of the Corporation which
are convertible into or exchangeable for shares of Common Stock in a transaction
in which the consideration received by the Corporation (including the cash
consideration for any non-convertible securities which were issued together with
a security convertible or exchangeable for Common Stock) consists SOLELY of cash
in the aggregate not to exceed $5,000,000, then, forthwith upon such issuance or
sale, the number of Warrant Shares issuable upon the exercise of this Warrant
shall be adjusted to a number which is equal to the product of (i) the number of
Warrant Shares issuable upon exercise hereof on the Original Issue Date
multiplied by (ii) a fraction, the numerator of which is the number of shares of
Fully Diluted Common Stock immediately after such issuance or sale and the
denominator of which is the number of shares of Fully Diluted Common Stock
immediately before such issuance or sale. As used herein, the term "Fully
Diluted Common Stock" means the outstanding shares of Common Stock assuming the
conversion into Common Stock of all then outstanding convertible securities (at
-3-
the then effective conversion prices), and the exercise of all then outstanding
rights, options, and warrants, excluding the Transaction Warrants.
3.6. NO DILUTION OR IMPAIRMENT. The Corporation will not, by
amendment of its Articles of Incorporation or through reorganization,
consolidation, merger, dissolution, issue, or sale of securities, sale of assets
or any other voluntary action, void or seek to avoid the observance or
performance of any of the terms of the Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate in order to protect the rights of the
Holder against dilution or other impairment. Without limiting the generality of
the foregoing, the Corporation (a) will not create a par value of any share of
stock receivable upon the exercise of the Warrant above the amount payable
therefor upon such exercise, and (b) will take all such action as may be
necessary or appropriate in order that the Corporation may validly and legally
issue fully paid and non-assessable shares upon the exercise of the Warrant.
3.7. NOTICE OF ADJUSTMENT. When any adjustment is required to
be made in the number or kind of shares purchasable upon exercise of the
Warrant, or in the Exercise Price, the Corporation shall promptly notify the
Holder of such event and of the number of shares of Common Stock or other
securities or property thereafter purchasable upon exercise of the Warrants and
of the Exercise Price, together with the computation resulting in such
adjustment.
SECTION 4. COVENANTS AS TO COMMON STOCK. The Corporation covenants and
agrees that all Warrant Shares which may be issued will, upon issuance, be
validly issued, fully paid and non-assessable. The Corporation further covenants
and agrees that the Corporation will at all times have authorized and reserved,
free from preemptive rights, a sufficient number of shares of its Common Stock
to provide for the exercise of the Warrant in full.
SECTION 5. NO STOCKHOLDER RIGHTS. This Warrant shall not entitle the
Holder hereof to any voting rights or other rights as a stockholder of the
Corporation.
SECTION 6. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE HOLDER .
The registered Holder of this Warrant, by acceptance of this Warrant represents,
warrants, and covenants to the Corporation as follows:
(a) The Holder is acquiring this Warrant, and agrees that the
exercise of this Warrant and the acceptance of a certificate for
Warrant Shares shall constitute its representation that the Warrant
Shares are being acquired, for its own account for investment and not
with a view to the distribution thereof, subject, however, to Holder's
right to transfer this Warrant and the Warrant Shares in accordance
with and subject to the restrictions on such transfer set forth herein.
(b) The Holder understands that this Warrant and the Warrant
Shares have not been registered under the Securities Act of 1933, as
amended (the "Securities Act") or state securities laws, by reason of
their issuance in a transaction exempt from the registration
requirements of the Securities Act and applicable state securities
laws. The Holder acknowledges being informed that this Warrant and the
Warrant Shares must be held indefinitely unless this Warrant or the
Warrant Shares are registered for sale by such Holder under the
Securities Act and applicable state securities laws or an exemption
from registration is available. The Holder understands that a sale of
the Warrant Shares made in reliance upon Rule 144 promulgated under the
Securities Act ("Rule 144") can only be made in accordance with the
terms and conditions of Rule 144 and further understands that in the
-4-
event that the exemption from registration provided by such Rule is not
available, compliance with some other exemption under the Securities
Act will be required in the absence of registration.
(c) The Holder agrees not to sell, transfer, pledge or
hypothecate this Warrant or any Warrant Shares unless a Registration
statement is effective for this Warrant or Warrant Shares under the
Securities Act or, in the written opinion of such Holder's counsel (a
copy of which opinion shall be addressed to and delivered to the
Corporation, and which counsel and which opinion shall be reasonably
satisfactory to the Corporation), such transaction will not result in
any violation of the registration requirements of the Securities Act or
any applicable state securities law. The Corporation may not, and may
instruct its transfer agent not to, transfer this Warrant or the
Warrant Shares unless the Corporation has been advised by its counsel
that the Holder has complied with the provisions of this Warrant and
applicable securities laws relating to the proposed transfer.
SECTION 7. TRANSFER OF SECURITIES.
7.1. RESTRICTION ON TRANSFER. This Warrant and the Warrant
Shares and any shares of capital stock received in respect thereof, whether by
reason of a stock split or share reclassification thereof, a stock dividend
thereon, or otherwise, shall not be transferable except upon the conditions
specified in Section 6 and this Section 7, which conditions are intended to
ensure compliance with the provisions of the Securities Act and applicable State
securities laws with respect to the transfer of such securities. The Holder of
this Warrant, by acceptance of this Warrant, agrees to be bound by the
provisions of Section 6 and this Section 7 and to indemnify and hold harmless
the Corporation against any loss or liability arising from the disposition of
this Warrant or the Warrant Shares issuable upon exercise hereof or any interest
in either thereof in violation of the provisions of this Warrant.
7.2. RESTRICTIVE LEGEND. Each certificate for the Warrant
Shares and any shares of capital stock received in respect thereof, whether by
reason of a stock split or share reclassification thereof, a stock dividend
thereon or otherwise, and each certificate for any such securities issued to
subsequent transferees of any such certificate shall (unless otherwise permitted
by the provisions hereof) be stamped or otherwise imprinted with a legend in
substantially the following form:
Legend for Warrant Shares or other shares of capital stock:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES") HAVE
BEEN ISSUED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT") AND THE FLORIDA
INVESTOR PROTECTION ACT (THE "FLORIDA ACT") THE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD, OR TRANSFERRED OTHER THAN (I) PURSUANT TO AN
EFFECTIVE REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE 1933 ACT AND
THE FLORIDA ACT, AND (II) UPON RECEIPT BY THE ISSUER OF EVIDENCE
SATISFACTORY TO IT OF COMPLIANCE WITH THE 1933 ACT, THE FLORIDA ACT,
AND THE APPLICABLE SECURITIES LAWS OF ANY OTHER JURISDICTION. THE
ISSUER SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL SATISFACTORY
TO IT WITH RESPECT TO COMPLIANCE WITH THE ABOVE LAWS.
7.3. TRANSFER OF WARRANTS. Subject to the restrictions on
transfer specified in Section 6 and this Section 7, the Warrant is transferable
in accordance with this Warrant, in whole or in part, at the agency or office of
the Corporation referred to in Section 1 hereof, by the Holder hereof in person
or by a duly authorized attorney, upon surrender of this Warrant, with the Form
of Assignment attached hereto duly executed by the then registered Holder of
this Warrant or its duly authorized agent. The Corporation or its transfer
agents shall register the transfer of any Warrants transferred in compliance
with Section 6 and this Section 7 upon records to be maintained for that
purpose, upon surrender of this Warrant. Upon any such Registration of transfer,
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a new Warrant substantially in the form of this Warrant evidencing the Warrant
so transferred shall be issued to the transferee.
SECTION 8. LOST, STOLEN, MUTILATED, OR DESTROYED WARRANT. If this
Warrant is lost, stolen, mutilated, or destroyed, the Corporation shall issue a
new Warrant of like denomination and tenor as the Warrant so lost, stolen,
mutilated, or destroyed, provided the registered Holder hereof shall deliver a
lost warrant certificated in customary form, including indemnification of the
Corporation.
SECTION 9. FRACTIONAL WARRANT SHARES. The Corporation shall not be
required to issue any fractions of Warrant Shares upon exercise of this Warrant,
but the Corporation shall pay cash in respect of any fractional interest in a
Warrant Share which would otherwise be issuable in an amount equal to the same
fraction of the fair market value per share of the Common Stock on the day of
the exercise, as reasonably determined by the Board of Directors of the
Corporation.
SECTION 10. NOTICE. All notices, requests, demands, and other
communications required or permitted under this Warrant and the transactions
contemplated herein shall be in writing and shall be deemed to have been duly
given, made, and received when personally delivered the day after deposited with
a recognized national overnight delivery service prior to its dead-line for
receiving packages for next day delivery or upon the fifth day after deposited
in the United States registered or certified mail with postage prepaid, return
receipt requested, in each case addressed as set forth below:
If to the Corporation: Transeastern Properties of South Florida, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxx Xxxxxxx, Xxxxxxx 00000
Attention: President
If to the Holder hereof, to the address of such Holder appearing on the
books of the Corporation.
SECTION 11. CAPTIONS, SECTION, HEADINGS. Captions and section headings
used herein are for convenience only, and are not a part of this Warrant and
shall not be used in construing it.
SECTION 12. GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with the laws in the State of Florida, irrespective of
the choice of law provisions.
IN WITNESS WHEREOF, TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC., has
caused this Warrant to be executed in its name by its duly authorized officers
under its corporate seal, and to be dated as of the date first above written.
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.
By:
Xxxxxx X. Xxxxxxx, President
ATTEST:
Xxxxxx Xxxxx, Xx., Secretary
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FORM OF ASSIGNMENT
[To be signed only upon transfer of unexercised Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________________________ the attached Warrant to purchase the number
of full shares of Common Stock, $____ par value, of Transeastern Properties of
South Florida, Inc., issuable upon exercise of said Warrant, and appoints
________________, Attorney, to transfer such Warrant on the books of
Transeastern Properties of South Florida, Inc., with full power of substitution
in the premises.
Dated:______________________
[Signature]
_______________________________________
_______________________________________
[Address]
Signature guaranteed by a member of a national securities exchange or
national bank:
--------------------------
NOTICE
The signature above must correspond to the name as written upon the
fact of the within Warrant in every particular, without alteration or
enlargement or any change whatsoever.
FORM OF NOTICE OF EXERCISE
[To be signed only upon exercise of Warrant]
To: TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.
The undersigned registered Holder of the attached Warrant hereby
irrevocably elects to exercise the Warrant for, and to purchase thereunder, the
full number of whole shares of Common Stock, $____ par value, of Transeastern
Properties of South Florida, Inc., issuable upon exercise of said Warrant and
hereby surrenders said Warrant and delivers to Transeastern Properties of South
Florida, Inc., a check in the amount of $_________ representing the aggregate
Exercise Price for such shares. The undersigned herewith requests that the
certificates for such shares be issued in the name of, and delivered to the
undersigned, whose address is _________________________________ and social
security or tax identification number is ______________.
Dated:
NOTICE
The signature above must correspond to the name as written upon the
fact of the within Warrant in every particular, without alteration or
enlargement or any change whatsoever.
EXHIBIT B
TO
SERIES B REDEEMABLE PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
OPINION OF COMPANY COUNSEL
NOVEMBER __, 1994
The parties named in the attached Schedule I
c/o Xxxxxxx X. Xxxxxxx XX, Esq.
Powell, Goldstein, Xxxxxx & Xxxxxx
000 Xxxxxxxxx Xxxxxx X.X.
Xxxxxxx, XX 00000
Ladies and Gentlemen:
We have acted as counsel to Transeastern Properties of South Florida, Inc.,
a Florida corporation (the "Company"), in connection with (i) the preparation of
(a) the Series B Redeemable Preferred Stock and Warrant Purchase Agreement,
dated as of November 30, 1994, by and among the parties named in Schedule I
hereto (the "Purchasers") and the Company (the "Agreement") and (b) the
Warrants, dated as of November ___, 1994 by and among the parties named in
Schedule I hereto (the "Warrant Purchasers") and the Company (the "Warrant
Agreement"); and (ii) the sale and issuance up to 36,500 shares of the Series B
Redeemable Preferred Stock of the Company, $.01 par value (the "Preferred
Shares") pursuant to the Agreement and (b) the sale and delivery of warrants to
purchase up to 65,950 shares of the Common Stock (the "Warrant Shares"), $.01
par value of the Company (the "Warrants") pursuant to the Agreement. This
opinion is rendered pursuant to Article 4(a) of the Agreement. Capitalized terms
used in this opinion letter and the attachments hereto and not otherwise defined
herein shall have the meanings assigned to such terms in the Agreement.
In connection with the foregoing, we have examined:
1. An executed copy of each of the Agreement and the Warrants among the
Company, the Purchasers and the other parties listed therein (collectively,
the "Transaction Agreements");
2. The Amended and Restated Articles of Incorporation of the Company,
filed with the Florida Department of State on November __, 1994, and the
Bylaws of the Company, certified by the Secretary of the Company on
November __, 1994 (collectively, the "Charter"); and
3. The corporate proceedings of the Company relating to the execution
and delivery of the Agreement and the Warrants, and the consummation of the
transactions provided for therein.
In all such examinations, we have assumed the genuineness of all signatures
(other than signatures on behalf of the Company), the authenticity of all
documents submitted to us as originals, and the conformity to authentic original
documents of all documents submitted to us as certified, conformed or
photostatic copies. As to questions of fact material to our opinions, we have
relied on certificates of public officials, the representations and warranties
of Company set forth in the Agreement, and on certificates of officers of the
Company.
The use herein of the words "to the best of our knowledge", "known to us"
or similar language means that, during the course of our representation of the
Company, no information has come to the attention of any attorney in this Firm
involved in these transactions or otherwise regularly engaged in representing
the Company which would give us actual knowledge of the existence of any of the
documents or facts so qualified. Whenever we have made "due inquiry" as to
matters set forth herein, such inquiry was confined to reviewing documents
provided to us by the Company in the course of our representation in response to
inquiries as to such matters as we have deemed appropriate in order to render
the opinions hereinafter set forth, a review of documents of which we otherwise
have actual knowledge, to the extent we deemed such documents material and
relevant to the opinions hereinafter set forth, and obtaining certificates of
officers of the Company as to certain facts which we deemed material and
relevant to our opinion, and we have relied, with your permission, upon such
certificates in rendering this opinion.
Based on the foregoing, and subject to the further qualifications,
assumptions, and limitations hereinafter set forth, we are of the opinion that:
1. The Company is a corporation in good standing (as defined herein)
under the laws of the State of Florida. The Company is qualified to do
business as a foreign corporation and is in good standing in each state
where, based upon the nature of the business transacted by the Company or
the ownership or lease by the Company of real or personal property, the
failure to be so qualified would have a material and adverse effect on the
business or condition of the Company. Except as reflected in the Disclosure
Schedule, the Company has no subsidiaries.
2. The Company has all requisite power to (i) own, lease, and operate
its properties and to carry on its business as currently conducted and as
proposed to be conducted, (ii) execute, deliver, and perform each of the
Transaction Agreements, (iii) issue, sell, and deliver the Preferred Shares
and the Warrants, and (iv) issue and deliver the Warrant Shares upon the
exercise of the Warrants.
3. Each of the Transaction Agreements has been duly authorized,
executed, and delivered by the Company and each constitutes the legal,
valid, and binding obligations of the Company, enforceable in accordance
with their respective terms (subject to enforcement of remedies, to the
discretion of courts in awarding equitable relief and to applicable
bankruptcy, reorganization, insolvency, moratorium, and similar laws
affecting creditors' rights or debtors' relief generally).
4. The execution and delivery by the Company of the Transaction
Agreements, and the performance by the Company of its obligations
thereunder, the issuance, sale, and delivery of the Preferred Shares and
the Warrants, and the issuance and delivery of the Warrant Shares upon
exercise of the Warrants, will not violate any provision of law, the
Charter, any order of any court or other agency of government known to us
and binding upon the Company or its assets, or any indenture, agreement, or
other instrument known to us by which the Company or any of its properties
or assets is bound, or conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any such
indenture, agreement, or other instrument, or result in the creation or
imposition of any lien, charge, restriction, claim, or encumbrance of any
nature whatsoever upon any of the properties or assets of the Company.
5. The authorized capital stock of the Company consists of (i) 29,000
shares of Series A Redeemable Preferred Stock, $.01 par value; (ii) 36,500
shares of Series B Redeemable Preferred Stock, $01. Par value, and (iii)
5,000,000 shares of Common Stock, $.01 par value. Immediately prior to the
Closing, 725,001 shares of Common Stock will
be validly issued, fully paid and nonassessable, and 2,306 shares of Series
A Redeemable Preferred Stock (after giving effect to the Recapitalization)
and 30,000 shares of the Series B Redeemable Preferred Stock will be
outstanding. The designations, power, preferences, rights, qualifications,
limitations, and restrictions in respect of each class or series of
authorized capital stock of the Company are as set forth in the Charter.
Except as set forth in Schedule 2 to the Agreement, to our knowledge,
immediately prior to the Closing, no subscription, warrant, option,
convertible security, or other right (contingent or other) to purchase or
acquire equity securities of the Company was authorized or outstanding and
there was no commitment by the Company to issue shares, subscriptions,
warrants, options, convertible securities, or other such rights or to
distribute to holders of any of its equity securities any evidence of
indebtedness or asset. Except as set forth in Schedule 2 to the Agreement,
to our knowledge, the Company has no obligation (contingent or other) to
purchase, redeem, or otherwise acquire any of its equity securities or any
interest therein or to pay any dividend or make any other distribution in
respect thereof.
6. The Preferred Shares, the Warrants, and the Warrant Shares have been
duly authorized. The issuance, sale, and delivery of the Preferred Shares
and the Warrants and the issuance, sale, and delivery of the Warrant Shares
upon exercise of the Warrants have been duly authorized by all required
corporate action; assuming payment of the purchase price therefor as
provided in the Agreement, the Preferred Shares have been validly issued
and are fully paid, and nonassessable. The Warrant Shares have been duly
reserved for issuance upon conversion of the Warrants, and, when so issued,
will be validly issued, fully paid, and nonassessable. Neither the
issuance, sale, or delivery of the Preferred Shares or the Warrants, nor
the issuance or delivery of the Warrant Shares, is subject to any
preemptive right or right of first refusal of shareholders of the Company
arising under law or the Charter or Bylaws of the Company which has not
been waived, or, to our knowledge, to any contractual right of first
refusal or other right in favor of any person.
7. Except as described in Schedule 2 to the Agreement, to our
knowledge, there is no (A) action, suit, claim, proceeding, or
investigation pending or threatened against or affecting the Company at law
or in equity, or before or by the Federal, state, municipal, or other
governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, (B) arbitration proceeding relating
to the Company pending under collective bargaining agreements, or (C)
governmental inquiry pending or threatened against or affecting the Company
(including, without limitation, any inquiry as to the qualification of the
Company to hold or receive any license or permit). To our knowledge, the
Company is not subject to any order, writ, injunction, or decree of any
court or of any Federal, state, municipal, or other governmental
department, commission, board, bureau, agency, or instrumentality, domestic
or foreign.
8. Based on the opinion provided to us by Xxxxxx, Xxxxxxx & Xxxxxx, no
registration or filing with, and no consent or approval of, or other action
by any Federal, state, or other governmental agency or instrumentality is
or will be necessary for the valid execution, delivery, and performance by
the Company of the Transaction Agreements, the issuance, sale, and delivery
of the Preferred Shares and the Warrants, or the issuance, sale, and
delivery of the Warrant Shares upon exercise of the Warrants, other than
filings under
the Securities Act and applicable state securities laws, which filings, to
the extent required to be made prior to the date hereof, have been made,
and to the extent required to be made following the date hereof, we assume
will be timely made by the Company.
Very truly yours,
Xxxx X. Xxxxxx, P.A.
Attachments
EXHIBIT C
TO
SERIES B REDEEMABLE PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
AMENDED AND RESTATED ARTICLES OF INCORPORATION
