AGREEMENT AND PLAN OF MERGER
among
FAIRFIELD COMMUNITIES, INC.,
FC PALMAIRE, INC.,
THE BERKLEY GROUP, INC.
and
PALM RESORT GROUP, INC.
Dated as of December 10, 1997
i
TABLE OF CONTENTS
PAGE
ARTICLE I
THE MERGER.......................................................1
1.1 The Merger..................................................1
1.2 Closing.....................................................1
1.3 Effective Time..............................................2
1.4 Effect of the Merger........................................2
1.5 Articles of Incorporation...................................2
1.6 Bylaws......................................................2
1.7 Directors...................................................2
1.8 Officers....................................................2
ARTICLE II
EFFECTS OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES...............2
2.1 Effect on Capital Stock.....................................2
2.2 Surrender and Payment for Shares............................3
2.3 Transfer of Shares After the Effective Time.................3
ARTICLE III
REPRESENTATIONS AND WARRANTIES...................................3
3.1 Representations and Warranties of Fairfield and Merger Sub..3
3.2 Representations and Warranties of Shareholder
and Palm Resort............................................4
3.3 Additional Representation of Shareholder....................10
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS........................10
4.1 No Solicitation.............................................10
4.2 Conduct of Business Prior to Effective Time.................11
4.3 Access to Information.......................................12
4.4 Investigation by Fairfield..................................13
4.5 Inspection..................................................13
4.6 Regulatory Compliance.......................................13
4.7 Covenants of Fairfield......................................13
ARTICLE V
ADDITIONAL AGREEMENTS............................................13
5.1 Confidentiality.............................................13
5.2 Indemnification of Shareholder..............................14
5.3 Indemnification of Fairfield................................14
5.4 Procedures for Indemnity....................................14
5.5 Exclusivity Of Indemnification For Contractual Breaches.....15
5.6 Reasonable Efforts..........................................16
5.7 Expenses and Fees...........................................16
5.8 Consents....................................................16
5.9 Repayment of PPM Loan; Release of Claims....................16
5.10 Delivery of Information....................................16
5.11 Tax Matters................................................16
ARTICLE VI
CONDITIONS PRECEDENT; CLOSING....................................20
6.1 Conditions to Each Party's Obligation to Effect the Merger..20
6.2 Conditions to Obligations of Palm Resort and Shareholder....21
6.3 Conditions to Obligations of Fairfield and Merger Sub.......21
6.4 Frustration of Closing Conditions...........................22
6.5 Closing Documents and Procedures............................22
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER................................24
7.1 Termination.................................................24
7.2 Effect of Termination.......................................25
7.3 Amendment...................................................25
7.4 Extension; Waiver...........................................25
ARTICLE VIII
GENERAL PROVISIONS...............................................25
8.1 Survival of Representations and Warranties..................25
8.2 Notices.....................................................25
8.3 Definitions.................................................26
8.4 Interpretation..............................................28
8.5 Counterparts................................................28
8.6 Entire Agreement; No Third-party Beneficiaries..............28
8.7 Governing Law...............................................28
8.8 Assignment..................................................29
8.9 Enforcement.................................................29
AGREEMENT AND PLAN OF MERGER dated as of December 10, 1997 (this
"Agreement"), among FAIRFIELD COMMUNITIES, INC., a Delaware corporation
("Fairfield"), FC PALM-AIRE, INC., a Florida corporation and a wholly owned
subsidiary of Fairfield ("Merger Sub"), THE BERKLEY GROUP, INC., a Florida
corporation ("Shareholder") and PALM RESORT GROUP, INC., a Florida corporation
("Palm Resort").
WHEREAS, the respective Boards of Directors of Fairfield, Merger Sub,
Shareholder and Palm Resort each have determined that it is in the best
interests of their respective stockholders for Merger Sub to merge with and into
Palm Resort (the "Merger"), upon the terms and subject to the conditions set
forth in this Agreement;
WHEREAS, Shareholder holds all of the outstanding capital stock of Palm
Resort;
WHEREAS, the respective Boards of Directors of Fairfield, Merger Sub
and Palm Resort have each determined that the Merger and the other transactions
contemplated under this Agreement are consistent with, and in furtherance of,
their respective business strategies and goals; and
WHEREAS, Fairfield, Merger Sub, Shareholder and Palm Resort desire to
make certain representations, warranties, covenants and agreements in connection
with the transactions contemplated by this Agreement and also to prescribe
various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereto agree
as follows:
ARTICLE I
THE MERGER
I.1 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the Florida Business Corporation Act
(the "FBCA"), Merger Sub shall be merged with and into Palm Resort at the
Effective Time (as hereinafter defined). Following the Merger, the separate
corporate existence of Merger Sub will cease and Palm Resort will continue as
the surviving corporation (the "Surviving Corporation") and will succeed to and
assume all the rights and obligations of Merger Sub in accordance with the FBCA.
I.2 Closing. The closing of the Merger (the "Closing") will take place
at 10:00 a.m. on the date that is two business days after the expiration of the
Inspection Period (the "Closing Date"), at the offices of Xxxxx, Day, Xxxxxx &
Xxxxx, 2300 Xxxxxxxx Xxxx Center, 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000, unless
another date, time or place is agreed to in writing by all of the parties
hereto.
I.3 Effective Time. Subject to the provisions of this Agreement, as
soon as practicable on or after the Closing Date the parties shall deliver
Articles of Merger (the "Articles of Merger") executed in accordance with the
relevant provisions of the FBCA to the Florida Department of State for filing as
required under the FBCA and shall make all other filings or recordings required
under the FBCA. The Merger shall become effective at such time (the "Effective
Time") as the Articles of Merger are accepted for filing by the Florida
Department of State (or such later time as stated in the Articles of Merger and
permitted by the Florida Department of State), which will be the Closing Date or
as soon as practicable thereafter.
I.4 Effect of the Merger. The Merger shall have the effects set forth
in Section 607.1106 of the FBCA.
I.5 Articles of Incorporation. Articles of incorporation of Palm Resort
shall be amended to read in their entirety as set forth in Exhibit A attached
hereto and shall be the articles of incorporation of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable law.
I.6 Bylaws. The bylaws of Palm Resort shall be amended to read in their
entirety as set forth in Exhibit B and shall be the bylaws of the Surviving
Corporation following the Merger until thereafter changed or amended as provided
therein or by applicable law.
I.7 Directors. The directors of Merger Sub at the Effective Time shall
be the directors of the Surviving Corporation following the Merger, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
I.8 Officers. The officers of Merger Sub at the Effective Time shall be
the officers of the Surviving Corporation following the Merger, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
ARTICLE II
EFFECTS OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
II.1 Effect on Capital Stock. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of the
capital stock of the constituent corporations:
(a) Merger Consideration. All of the shares of Common Stock,
par value $1.00 per share, of Palm Resort (the "Palm Resort Common
Stock") issued and outstanding immediately prior to the Effective Time
(other than shares of Palm Resort Common Stock, if any, to be canceled
under Section 2.1(c)), shall be converted into the right to receive a
cash payment in an aggregate amount equal to $6,500,000 (the "Merger
Consideration").
(b) Certificates. All shares of Palm Resort Common Stock to be
converted into the right to receive the Merger Consideration pursuant
to this Section 2.1 shall cease to be outstanding, shall be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares of Palm Resort Common Stock shall
thereafter cease to have any rights with respect to such shares of Palm
Resort Common Stock, except the right to receive for each of the shares
of Palm Resort Common Stock, upon the surrender of such certificate in
accordance with Section 2.2, the amount of Merger Consideration
specified in Section 2.2.
(c) Treasury Shares. Shares of Palm Resort Common Stock, if
any, held by Palm Resort as treasury stock immediately prior to the
Effective Time shall cease to be outstanding, shall be canceled and
retired without payment of any consideration therefor, and shall cease
to exist.
(d) Stock of Merger Sub. Each share of common stock, par value
$.01 per share, of Merger Sub issued and outstanding immediately prior
to the Effective Time shall be converted into and exchanged for one
validly issued, fully paid and nonassessable share of common stock of
the Surviving Corporation.
II.2 Surrender and Payment for Shares. At the Closing, the Shareholder
will deliver to Fairfield a certificate or certificates representing all of the
shares of Palm Resort Common Stock outstanding immediately prior to the
Effective Time. Fairfield shall deliver to Shareholder the Merger Consideration
by wire transfer of immediately available funds to such account as is designated
by Shareholder at least two business days prior to the Closing.
II.3 Transfer of Shares After the Effective Time. No transfers of
shares of Palm Resort Common Stock shall be made on the stock transfer books of
Palm Resort after the close of business on the day prior to the date of the
Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
III.1 Representations and Warranties of Fairfield and Merger Sub.
Fairfield and Merger Sub represent and warrant to Palm Resort and Shareholder as
follows:
(a) Organization. Each of Fairfield and Merger Sub is a
corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation.
(b) Binding Agreement. Each of Fairfield and Merger Sub has
full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby and
has taken all necessary corporate action to authorize the execution and
delivery of this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by Fairfield and Merger Sub and constitutes the valid and
binding agreement of Fairfield and Merger Sub enforceable in accordance
with its terms.
(c) Governmental Approvals. No consent, approval, order, or
authorization of, or declaration, filing, or registration with, any
Governmental Entity is required to be obtained or made by Fairfield or
Merger Sub in connection with the execution, delivery, or performance
by Fairfield and Merger Sub of this Agreement or the consummation by
Fairfield and Merger Sub of the transactions contemplated hereby, other
than such consents, approvals, orders, or authorizations that, if not
obtained, and such declarations, filings, or registrations that, if not
made, would not, individually or in the aggregate, have a material
adverse effect on Fairfield and its Subsidiaries considered as a whole.
(d) Broker's Fee. Fairfield has not made any agreement or
taken any other action which might cause anyone to become entitled to a
broker's fee or commission as a result of the transactions contemplated
under this Agreement, except for the engagement by Fairfield of any
financial advisor, broker, agent or finder for which Fairfield will
have full liability for the payment of any such broker's fee or
commission.
(e) Merger Sub. Merger Sub is a newly formed direct wholly
owned subsidiary of Fairfield formed solely for the purpose of engaging
in this transaction. As of the Effective Time, Merger Sub will not have
conducted any business nor will it own any significant assets or owe
any significant liabilities.
III.2 Representations and Warranties of Shareholder and Palm Resort.
Shareholder and Palm Resort hereby jointly and severally represent and warrant
to Fairfield and Merger Sub as follows:
(a) Organization. Palm Resort is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Florida. Palm Resort has full power to own its properties and to carry
on the business currently being conducted by it, and does not conduct
business in any state other than Florida. Palm Resort does not now own
and has never owned any capital stock or any equity interest in any
corporation, limited liability company, partnership or other entity
other than its ownership of the Interest and has no Subsidiary other
than the Partnership.
(b) Binding Agreement. The execution, delivery, and
consummation of this Agreement has been duly authorized by each of the
Shareholder and Palm Resort and approved by all necessary action. This
Agreement has been duly executed and delivered by Palm Resort and
Shareholder and constitutes the valid and binding agreement of each of
them enforceable in accordance with its terms.
(c) No Breach. Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in
the breach of any term or provision of, or constitute a default under,
or be in violation of any charter provision, bylaw, agreement,
instrument, order, law or regulation to which Shareholder, Palm Resort
and/or the Partnership is a party or which is otherwise applicable,
(ii) result in the creation or imposition of any Lien upon any of the
property or assets of the Shareholder, Palm Resort or the Partnership,
(iii) violate any Applicable Law binding upon the Shareholder, Palm
Resort, or the Partnership, or (iv) violate the terms of or constitute
a default under, any note, bond, mortgage, indenture, or other contract
between third parties and the Shareholder, Palm Resort or the
Partnership or by which the Shareholder, Palm Resort or the Partnership
may be bound or result in the termination, acceleration or amendment
thereof, except, in the case of clauses (ii) and (iii) above, for any
such conflicts, violations or Liens that would not, individually or in
the aggregate, have a material adverse effect on Palm Resort or the
Partnership.
(d) Governmental Approvals. No consent, approval, order, or
authorization of, or declaration, filing, or registration with, any
Governmental Entity is required to be obtained or made by Shareholder,
Palm Resort or the Partnership in connection with the execution,
delivery, or performance by Shareholder and Palm Resort of this
Agreement or the consummation by it of the transactions contemplated
hereby.
(e) Partnership Capitalization; Title to Partnership
Interests. Except as otherwise set forth in the Partnership Agreement,
Palm Resort owns and holds the Interest beneficially and of record and
free and clear of any Liens and of any right of assignment or options
of any third party. Palm Resort has paid in full and is not in default
with respect to any capital contribution required to be paid by it
pursuant to the Partnership Agreement. There are no rights, options,
subscriptions, or other agreements of any kind to purchase or to
acquire, receive or be issued any interest in respect of the Interest
existing in favor of any person, and there are no agreements of any
kind to which Palm Resort is a party, other than the Partnership
Agreement and this Agreement, providing for or restricting the
governance or control of the Partnership or the issuance or transfer,
directly or indirectly, of any interest in the Interest. Except as set
forth in the Partnership Agreement, Palm Resort has no agreements or
commitments of any kind in its capacity as a general partner of the
Partnership to cause the Partnership to contribute, make loans, or
guarantee the contribution or loan of any Person, whether directly or
indirectly, and after the Closing with respect to the Partnership,
Fairfield shall not be deemed to have assumed, been assigned or
otherwise be obligated or responsible for any such agreement or
commitment to the Partnership. The Partnership Agreement is in full
force and effect.
(f) Financial Statements. Shareholder and Palm Resort have
furnished to Fairfield unaudited balance sheets of Palm Resort as of
December 31, 1996 and the related unaudited statements of operations
for the fiscal year then ended and the unaudited balance sheet of Palm
Resort as of November 30, 1997 and the related unaudited statements of
operations for the interim period then ended (the "Unaudited Financial
Statements"). Those financial statements fairly present the financial
position of Palm Resort at, and the results of operations for the
periods ending on, such dates, in a consistent manner throughout the
periods indicated and were prepared based on the books and records
maintained for Palm Resort's business. Except as disclosed in the
Unaudited Financial Statements (which includes the notes thereto), Palm
Resort has no liabilities (contingent, accrued, actual or otherwise)
that were not provided or reserved for in the November 30, 1997 balance
sheet, other than liabilities incurred since the date of the November
30, 1997 balance sheet in the ordinary course of business; and all
reserves established by Palm Resort and reflected in the November 30,
1997 balance sheet were at the times they were established, adequate
for the purposes indicated therein; subject, however, to the limitation
that Palm Resort has not accrued reserves for tax liabilities.
Fairfield acknowledges such limitation of the Unaudited Financial
Statements. Except as disclosed in the Unaudited Financial Statements,
since November 30, 1997, Palm Resort has not: (i) declared or set aside
or paid any dividend or made any payment or distribution in respect of
shares of its capital stock; (ii) made any loans or advances to any
person; (iii) entered into any transaction with any affiliate of Palm
Resort or Shareholder; (iv) incurred any indebtedness for money
borrowed; or (v) made or entered into any agreement or understanding to
do any of the foregoing.
(g) Assets. (i) Palm Resort does not have, and has not had,
any assets or properties, whether tangible or intangible, real,
personal or mixed, owned or leased other than the Interest. Palm Resort
is not a party to any leases, subleases, rental agreements, contracts
of sale, tenancies or licenses of any assets or properties. The
Interest constitutes all the properties and assets reflected in the
Unaudited Financial Statements and all the assets necessary for the
conduct by Palm Resort of its business as now conducted.
(h) Proceedings. There are currently no pending, and
Shareholder and Palm Resort are not aware of any threatened, actions,
suits, proceedings or investigations against or affecting Palm Resort
or the Interest. Palm Resort is not subject to any currently existing
order, writ, injunction or decree. The Shareholder and Palm Resort are
not aware of any actions, suits, proceedings or investigations pending
or threatened by or before any court or Governmental Entity (i) against
or affecting the Partnership or the Resort Property or arising out of
the development, construction, operation, maintenance or management of
the Resort Property or (ii) that would prevent or hinder the
performance by Shareholder or Palm Resort of its obligations under this
Agreement.
(i) Compliance With Laws. Palm Resort and to the knowledge of
Shareholder and Palm Resort, the Partnership, are and have at all times
been, in compliance in all material respects with all applicable laws,
rules, regulations and orders. There are no pending or, to the
knowledge of Shareholder and Palm Resort, proposed laws or governmental
rules that have been submitted in writing to any Governmental Entity
for due consideration that, if enacted, would have a material adverse
effect on Palm Resort, the Resort Property or the Partnership. Except
as set forth in Schedule 3.2(i), none of Shareholder or Palm Resort is
charged or, to each of their knowledge, threatened with, or, is under
investigation with respect to, any violation of any provision of any
applicable law, rule, regulation or order.
(j) Claims. Except as set forth in the Partnership Agreement,
there are no claims of the Partnership against, or any obligation owed
to the Partnership by, Palm Resort, or Shareholder. No affiliate of
Palm Resort or Shareholder is owed any obligation by the Partnership,
or holds a claim against the Partnership, except as set forth on
Schedule 3.2(j).
(k) PPM Loan. Schedule 3.2(k) sets forth a true, complete and
correct list of all documents relating to indebtedness for money
borrowed from, or any other obligations or liabilities of Palm Resort
or the Partnership to, PPM Brokerage Service, Inc. ("PPM;" all such
indebtedness, obligations and liabilities, the "PPM Loan"), including,
without limitation, promissory notes and all mortgages and other
collateral security instruments that secure the PPM Loan and encumber
the Resort Property, including all amendments or supplements thereto
(collectively, the "PPM Loan Documents"). The PPM Loan Documents are in
full force and effect and have not been further modified or amended.
PPM is the sole obligee of the PPM Loan. As of December 19, 1997 the
outstanding principal balance of and accrued interest on the PPM Loan
was $3,620,975 and $399,302, respectively, and no penalties, fees or
other amounts are due or payable with respect to the PPM Loan except
expenses of $30,000. For purposes of this Agreement, "PPM Loan Amount"
shall mean $4,050,277.
(l) Partnership Agreement and Marketing Agreements. To the
best knowledge of Shareholder and Palm Resort, neither partner of the
Partnership is in violation of either the Partnership Agreement or any
marketing agreements to which either entity is subject.
(m) Adverse Change. Since the date of the Unaudited Financial
Statements, Palm Resort has not made or experienced any material
adverse change in its working capital, financial condition, assets,
liabilities, reserves, business, operations or prospects.
(n) Employees. Palm Resort does not have, and has not had, any
employees and has no obligation to contribute any amount to any Person
in respect of the compensation, accrued benefits, or vacation and sick
leave of any Person. Palm Resort is not a party to any collective
bargaining agreements.
(o) Environmental Matters. Palm Resort has not and, to the
knowledge of Shareholder and Palm Resort, the Partnership and the
Resort Property have not been associated with any spill, disposal,
discharge or release of any hazardous materials (which includes any
hazardous or toxic substance, material or waste which is regulated by
any Governmental Entity) into or upon or over any real property or into
or upon ground or surface water including without limitation in either
case, any real property that is or has been leased by Palm Resort or
the Partnership.
(p) Broker's Fee. Neither Palm Resort nor Shareholder has made
any agreement or taken any other action which might cause anyone to
become entitled to a broker's fee or commission as a result of the
transactions contemplated under this Agreement.
(q) Capitalization. The authorized capital stock of Palm
Resort consists of 7,500 shares of Palm Resort Common Stock, of which
100 shares are issued and outstanding. All outstanding shares of Palm
Resort Common Stock have been duly authorized and validly issued, are
fully paid and nonassessable, and are owned by Shareholder. No options,
warrants, subscriptions, rights of conversion or exchange exist that
may obligate Palm Resort to issue any additional capital stock. Neither
Palm Resort nor Shareholder is party to shareholder, voting or similar
agreement or arrangement of any kind affecting or restricting the sale,
transfer, disposition, voting or other rights of or relating to the
Palm Resort Common Stock, other than the Partnership Agreement. Set
forth on Schedule 3.2(q) are the number and percentage of shares of
Palm Resort Common Stock held of record by Shareholder.
(r) Benefit Plans; Labor Relations. Palm Resort has no
"employee benefit plan," as such term is defined in Section 3(3) of
ERISA or other plan, program, policy, contract or arrangement providing
for bonuses, pensions, deferred pay, stock or stock related awards,
severance pay, salary continuation or similar benefits,
hospitalization, medical, dental or disability benefits, life insurance
or other employee benefits, or compensation to or for any current or
former employees, agents, directors, or independent contractors of Palm
Resort ("Palm Resort Employees") or any beneficiaries or dependents of
any Palm Resort employees.
(s) Taxes.
(i) All Tax Returns (as defined in paragraph (iv)
below) required to be filed by Palm Resort or Shareholder have
been duly filed on a timely basis with the appropriate
federal, state, local and foreign tax authorities, or requests
for extensions to file such returns or reports have been
timely filed and granted and have not expired, and all such
Tax Returns are complete and accurate in all material
respects. Palm Resort and the Shareholder have paid or made
adequate provision in the Unaudited Financial Statements for
all Taxes (as defined in paragraph (iv) below) shown as due
from each of them on such Tax Returns. No claim has been made
by any authority in a jurisdiction where Palm Resort does not
file Tax Returns that it is or may be subject to taxation by
that jurisdiction. The Unaudited Financial Statements reflect
adequate reserves for all Taxes payable by Palm Resort for all
taxable periods and portions thereof accrued through the date
of such financial statements, and no deficiencies for any
Taxes have been proposed, asserted or assessed against Palm
Resort that are not adequately reserved for, except for
inadequately reserved Taxes and inadequately reserved
deficiencies that would not, individually or in the aggregate,
have a material adverse effect on Palm Resort. There are no
liens for Taxes (other than for current Taxes not yet due and
payable) on the assets of Palm Resort. No requests for waivers
of the time to assess any Taxes against Palm Resort have been
granted or are pending, except for requests with respect to
such Taxes that have been adequately reserved for in the
Unaudited Financial Statements. Palm Resort is not a party to
or bound by any agreement providing for the allocation or
sharing of Taxes; except by reason of its inclusion in the
consolidated federal tax returns of Shareholder as noted
below. Palm Resort has not filed a consent pursuant to or
agreed to the application of Section 341(f) of the Code. Palm
Resort has disclosed on its federal income tax returns all
positions taken therein that could give rise to a substantial
understatement of federal income tax within the meaning of
Section 6662 of the Code. All Taxes that are required by the
laws of the United States, any state or political subdivision
thereof, or any foreign country to be withheld or collected by
Palm Resort have been duly withheld or collected and, to the
extent required, have been paid to the proper Governmental
Entities or properly deposited as required by applicable laws.
Except as set forth in Schedule 3.2(s), the statute of
limitations for all Tax Returns of Palm Resort has expired for
all federal, state, local and foreign Tax purposes. Neither
Palm Resort nor Shareholder has received any notice of
deficiency or assessment from any federal, state, local or
foreign taxing authority with respect to liabilities for Taxes
of Palm Resort which has not been fully paid or finally
settled. No power of attorney has been executed by, or on
behalf of, Palm Resort or Shareholder with respect to any
matter relating to Taxes applicable to Palm Resort which is
currently in force. Palm Resort is not a party to any
agreement, contract, or other arrangement that would result,
separately or in the aggregate, in the requirement to pay any
"excess parachute payments" within the meaning of Section 280G
of the Code. Palm Resort is not a party to a tax sharing or
tax indemnity agreement or any other agreement of a similar
nature that remains in effect. Palm Resort (i) has not been a
member of an affiliated group filing a consolidated federal
income tax return except with respect to the consolidated
federal income tax return of Shareholder and (ii) has no
liability for the taxes of any person (other than Palm Resort)
under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or
successor, by contract or otherwise.
(ii) Schedule 3.2(s) sets forth each state in which
Palm Resort has collected or remitted any sales and/or use
Taxes since September 1, 1992. To the knowledge of Palm Resort
and Shareholder, Palm Resort has not conducted activities in
any other state that would require such Taxes to be collected
or remitted. No claim has ever been made since September 1,
1992 by any authority in a jurisdiction where Palm Resort does
not pay sales and/or use Taxes that it is or may be subject to
a requirement to remit such Taxes in that jurisdiction.
(iii) Palm Resort is not liable for the Taxes of any
person as a "transferee" within the meaning of Section 6901 of
the Code.
(iv) For purposes of this Agreement, "Taxes" shall
mean all taxes, charges, fees, levies, penalties or other
assessments imposed by any United States federal, state, local
or foreign taxing authority, including, but not limited to,
income, gross receipts, excise, property, sales, use (or any
similar taxes), transfer, franchise, payroll, withholding,
social security, business license fees, or other taxes
including any interest, penalties or additions thereto. For
purposes of this Agreement, "Tax Return" shall mean any
return, report, information return, schedule or other document
(including any related or supporting information) required to
be supplied to a taxing authority with respect to Taxes.
(t) Voting Requirements. The affirmative vote of the
Shareholder (the "Palm Resort Shareholder Approval") to approve this
Agreement is the only vote of the holders of capital stock of Palm
Resort necessary to approve this Agreement and the transactions
contemplated by this Agreement.
(u) No Misleading Statement. To the best knowledge of
Shareholder and Palm Resort, neither this Agreement nor any other
document, certificate, financial statement or other instrument
delivered to Fairfield in connection herewith contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein,
in light of the circumstances under which they were made, not
misleading.
III.3 Additional Representation of Shareholder. Shareholder represents
and warrants on behalf of Shareholder to Fairfield and Merger Sub that
Shareholder has relied and will rely upon his own tax advisors for advice and
counseling in regard to the structure, accounting or tax treatment and all other
tax or accounting issues relating to the transactions contemplated by the
parties hereunder. Shareholder has not relied, nor will Shareholder rely, on
Fairfield or its tax advisors, for any tax advice or counseling in regard to the
transactions contemplated hereunder.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
IV.1 No Solicitation. Prior to the Effective Time, Palm Resort and
Shareholder will not (a) offer for sale the Interest or any interest in Palm
Resort; (b) solicit any offers to purchase or make any attempts by preliminary
conversations or negotiations to dispose of the Interest or any equity interest
in Palm Resort to any person, firm or entity, other than to Fairfield, or to
engage in any type of business combination with any person, firm or entity,
other than Fairfield; or (c) provide anyone with any written or oral offer to
sell, invitation to purchase or any offering or sales material with respect to
the Interest or any equity interest in Palm Resort.
IV.2 Conduct of Business Prior to Effective Time. Except for
transactions specifically permitted by this Agreement or consented to in writing
by Fairfield, prior to the Effective Time Palm Resort shall (and the Shareholder
will cause Palm Resort to):
(a) operate its business only in the ordinary course, and employ no
persons;
(b) neither make, nor incur any obligation to make, any capital
expenditures;
(c) make no sale or other disposition of the Interest or any equity
interest in Palm Resort;
(d) not enter into, amend, rescind or terminate any contract,
arrangement or commitment;
(e) not declare, set aside or make any dividend, distribution, loan or
other advance to Shareholder or any other person (except the payment to
Shareholder of the $369,000 marketing fee shown on Schedule 3.2(j) (the
"Marketing Fee") and not more than $5,000 of operating cash distributed to
Shareholder;
(f) not amend its Articles of Incorporation or Bylaws, nor issue any
additional shares of capital stock, or any options, warrants or other
securities under which any additional shares of its capital stock might be
directly or indirectly authorized or issued;
(g) not fail to comply in any material respect with the laws,
regulations, ordinances or governmental actions or orders applicable to
Palm Resort;
(h) not make any material tax elections or settle or compromise any
material tax liability;
(i) not take any action that would materially adversely affect the
ability of Palm Resort or Shareholder to obtain the consents required for
Palm Resort and Shareholder to consummate the transactions contemplated
hereby or materially adversely affect the ability of Palm Resort or
Shareholder to perform their respective covenants and agreements under this
Agreement;
(j) not change its method of accounting in effect January 1, 1997 or
during any other period included in the Unaudited Financial Statements;
(k) not change its method of reporting income and deductions for
federal or state income taxes in effect January 1, 1997 or during any other
period included in the Unaudited Financial Statements;
(l) not permit or authorize any transfer, sale, assignment or other
disposition of any of the assets of the Partnership other than in the
ordinary course of business consistent with past practices;
(m) promptly notify Fairfield in writing of any action, suit,
proceeding or investigation commenced, pending or threatened before or by
any Governmental Entity concerning or affecting any of the Interest,
Partnership or Resort Property of which Palm Resort or Shareholder becomes
aware;
(n) provide Fairfield copies of any notices of any event of which Palm
Resort or Shareholder becomes aware that may have a material adverse effect
on the Partnership, specifically including, but not limited to, notices of
intent to accelerate and notices of acceleration of any debt secured by the
Resort Property;
(o) not permit or otherwise authorize the Partnership to make any
distributions to, or redeem or purchase the interests of the partners of
the Partnership, or make or repay any loans, advances or capital
contributions made to the Partnership by Palm Resort, Shareholder or any of
their affiliates;
(p) not permit or otherwise authorize any sale or other disposition of
the Resort Property, or any part thereof, nor enter into or permit the
Partnership to enter into any agreement for such purposes, except in the
ordinary course of business consistent with past practices;
(q) not amend or modify or permit any amendment or modification of the
Partnership Agreement; and
(r) not, without the prior written consent of Fairfield permit or
otherwise authorize any financing, refinancing, extension, renewal or
modification of any debt of the Partnership other than draws under the
existing construction financing with Bank Atlantic and the receivables
financing with Xxxxxx Financial, Inc.
IV.3 Access to Information. Between the date hereof and the Closing,
Shareholder and Palm Resort (i) shall give Fairfield and Fairfield's
representatives access during normal business hours and upon reasonable notice
to all books and records relating to the Interest, the Resort Property and the
Partnership for purposes of an audit of such books and records and inspection of
the business of Palm Resort (the "Inspection") and all of the personal property
owned by the Partnership, to the extent such books and records are within the
control or in the possession of Shareholder or Palm Resort, and (ii) shall cause
Palm Resort's officers to furnish Fairfield and Fairfield's representatives with
any other information that is to be delivered pursuant to this Agreement.
IV.4 Investigation by Fairfield. During the period from the date of
this Agreement through the earlier to occur of the Closing or December 31, 1997
(the "Inspection Period"), Shareholder and Palm Resort shall provide to
Fairfield copies of documents reasonably requested by Fairfield relating to the
Partnership, the Resort Property and the Interest and the collectibility,
enforceability and other legal matters related to the Interest, the Resort
Property and the Partnership. Such documents shall be for the purpose of
enabling Fairfield to evaluate, prior to the end of the Inspection Period,
whether Fairfield wishes to proceed with the transactions contemplated by this
Agreement.
IV.5 Inspection. At or prior to the expiration of the Inspection
Period, Fairfield shall have the right to terminate this Agreement without cause
and for whatever reason or no reason and without liability on the part of either
Fairfield, Shareholder or Palm Resort by delivering to Palm Resort, at or prior
to the expiration of the Inspection Period, written notice of Fairfield's
election to terminate this Agreement.
IV.6 Regulatory Compliance. Shareholder and Palm Resort shall permit
Fairfield to register or amend existing registrations with Governmental Entities
of the Resort Property and/or the vacation ownership intervals relating to the
Resort Property from the date of this Agreement to reflect the anticipated
effects or, if after the Closing, the effects, of the consummation of the
transactions contemplated by this Agreement as required in accordance with
applicable law or as Fairfield may reasonably deem necessary, and shall
cooperate with Fairfield in effecting such registrations or amendments.
IV.7 Covenants of Fairfield. Except for actions specifically permitted
by this Agreement or consented in writing by Palm Resort, prior to the Effective
Time, Fairfield shall not take any action that would materially adversely affect
the ability of Fairfield to obtain the consents required for Fairfield to
consummate the transactions contemplated hereby or materially adversely affect
the ability of Fairfield to perform its covenants and agreements under this
Agreement.
ARTICLE V
ADDITIONAL AGREEMENTS
V.1 Confidentiality. The terms of this Agreement and related
agreements, the terms of all transactions contemplated hereby, and all
confidential and proprietary information furnished to any party pursuant to this
Agreement, or in connection with the transactions contemplated by this
Agreement, shall be treated as confidential, and none of the parties shall use
or disclose such information except with the prior written consent of the other
parties hereto; provided, however, Fairfield may disclose such information (a)
to its representatives, advisors and agents for purposes of its investigation
during the Inspection Period or (b) to comply with any legal requirement;
provided, further, however, Shareholder and Palm Resort may disclose such
information to comply with any legal requirement if prompt advance notice is
provided to Fairfield at least two business days prior to any such disclosure so
that Fairfield may seek a protective order or other appropriate remedy.
V.2 Indemnification of Shareholder. Fairfield agrees to indemnify and
hold Shareholder harmless from and against all expenses, losses, costs,
deficiencies, liabilities and damages (including, without limitation, reasonable
attorneys' fees and expenses) incurred or suffered by Shareholder from or
arising out of (a) any breach of a representation or warranty made by Fairfield
in or pursuant to this Agreement, (b) any breach of the covenants or agreements
made by Fairfield in this Agreement, (c) any inaccuracy in any certificate
delivered by Fairfield pursuant to this Agreement, or (d) indebtedness of the
Partnership under the existing construction financing/with Bank Atlantic, the
existing receivables financing with Xxxxxx Financial, Inc., the existing
guaranty of such indebtedness by shareholder, or any breach of the terms or
provisions of such indebtedness or guaranty thereof, to the extent arising after
the Closing or as a result of the consummation of the Merger.
V.3 Indemnification of Fairfield. Shareholder shall indemnify and hold
Fairfield and its affiliates and their respective directors, officers,
employees, agents and attorneys harmless from and against all expenses, losses,
costs, deficiencies, liabilities and damages (including, without limitation,
reasonable attorneys' fees and expenses) incurred or suffered by Fairfield,
Merger Sub or any Subsidiary (including without limitation Palm Resort) of
Fairfield resulting from or arising out of (a) any breach of a representation or
warranty made by Shareholder or Palm Resort in or pursuant to this Agreement,
(b) any breach of the covenants or agreements made by Shareholder or Palm Resort
in this Agreement, or (c) any inaccuracy in any certificate delivered by
Shareholder or Palm Resort pursuant to this Agreement.
V.4 Procedures for Indemnity.
(a) Whenever any claim shall arise or any proceeding shall be
instituted involving any person in respect of which indemnity may be
sought pursuant to Section 5.2 or 5.3, such person (the "Indemnified
Party") shall promptly notify (in no event later than ten business days
after receipt of such notice) the person against whom such indemnity
may be sought (the "Indemnifying Party") thereof in writing, including,
when known, the facts constituting the basis for such claim or
proceeding and the amount or an estimate of the amount of the
indemnified liability arising therefrom (such notification being the
"Claims Notice"). To the extent that any Claims Notice relates to the
assertion of a claim, the commencement of a suit, action or proceeding
or the imposition of a penalty or assessment by a third party that is
not an Indemnified Party (a "Third-Party Claim"), the Indemnified Party
shall include with the Claims Notice any written demand, complaint,
petition, summons or similar document relating thereto that is then in
the Indemnified Party's possession. The failure by an Indemnified Party
to timely furnish to the Indemnifying Party any notice document
required to be furnished under this Section 5.4(a) shall not relieve
the Indemnifying Party from any liability or obligation hereunder,
except to the extent that such failure materially prejudices the
ability of the Indemnifying Party to defend such matter.
(b) In connection with any Third-Party Claim, the Indemnifying
Party at its sole cost and expense may, upon written notice to the
Indemnified Party, elect to assume the defense thereof. If the
Indemnifying Party has so elected to assume the defense of any such
Third-Party Claim, such defense shall be conducted by counsel chosen by
the Indemnifying Party, provided that such counsel is reasonably
satisfactory to the Indemnified Party. The Indemnified Party shall be
entitled to participate in (but not control) the defense of any such
Third-Party Claim, with its counsel and at its own expense. If the
Indemnifying Party has elected to assume the defense of any Third-Party
Claim as provided herein, the Indemnified Party shall not be entitled
to indemnification as to fees and expenses of any counsel retained by
the Indemnified Party after the time at which the Indemnifying Party
has so elected. The Indemnified Party shall not settle or compromise
any Third-Party Claim without the prior written consent of the
Indemnifying Party, which shall not be unreasonably withheld. In the
event that the Indemnifying Party shall assume the defense of any
Third-Party Claim, it shall not compromise or settle such Third-Party
Claim unless (i) the Indemnified Party gives its prior written consent,
which shall not be unreasonably withheld, or (ii) the terms of the
compromise or settlement of such Third-Party Claim provide that the
Indemnified Party shall have no responsibility for the discharge of any
settlement amount and impose no other obligations or duties on the
Indemnified Party, and the compromise or settlement discharges all
rights against the Indemnified Party with respect to such Third-Party
Claim. If a firm offer is made to settle a pending or threatened
Third-Party Claim for which the Indemnified Party may be entitled to
indemnification hereunder and the Indemnifying Party desires to accept
and agree to such offer, the Indemnifying Party shall give written
notice to the Indemnified Party to that effect. If the Indemnified
Party fails to consent to such firm offer within ten calendar days
after its receipt of such notice, the Indemnifying Party may continue
to contest or defend such Third-Party Claim and, in such event, the
maximum liability of the Indemnifying Party as to such Third-Party
Claim shall not exceed the amount of such settlement offer. The
Indemnified Party shall cooperate with the defense of any such
Third-Party Claim and shall provide such personnel, technical support
and access to information as may be reasonably requested by the
Indemnifying Party in connection with such defense.
(c) Any claim for indemnification hereunder that is not a
Third-Party Claim shall be asserted by the Indemnified Party by
promptly delivering notice thereof to the Indemnifying Party. If the
Indemnifying Party does not respond to such notice within 45 days after
receipt thereof, it shall have no further right to contest the validity
of such claim.
V.5 Exclusivity Of Indemnification For Contractual Breaches. No party
hereto is making any representation, warranty or covenant other than those
contained herein. Except with respect to the covenants in Section 5.1 and the
covenants and indemnities in Section 5.11, following the Closing, the rights of
the parties under the provisions of Sections 5.2 and 5.3 shall be the sole and
exclusive remedy available to the parties with respect to claims or damages
arising out of breaches of the representations and warranties or other
contractual obligations of the parties set forth in this Agreement.
V.6 Reasonable Efforts. Upon the terms and subject to the conditions
set forth in this Agreement, each of the parties will use all reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, and
to assist and cooperate with the other parties in doing, all other things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including (i) the obtaining of all other
necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and filings
(including filings with Governmental Entities, if any) and the taking of all
other reasonable steps as may be necessary to obtain all necessary approvals or
waivers form, or to avoid any action or proceeding by any Governmental Entity,
(ii) the obtaining of all necessary consents, approvals or waivers from third
parties, and (iii) the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by, and to fully carry out
the purposes of, this Agreement. In further connection with and without limiting
the foregoing, Palm Resort and Shareholder shall make appropriate personnel,
contractors and advisors of Palm Resort available to Fairfield and provide such
information as may be requested by Fairfield for the purposes of conducting the
Inspection.
V.7 Expenses and Fees. Except as otherwise provided in this Agreement,
all costs and expenses incurred in connection with the Merger Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
or expenses.
V.8 Consents. Palm Resort shall use its reasonable efforts to obtain
the Palm Resort Consents (as hereinafter defined) before Closing.
V.9 Repayment of PPM Loan; Release of Claims. At or prior to the
Closing, the Partnership will pay the PPM Loan Amount to PPM and the Shareholder
and its affiliates (including PPM) shall release all claims (contingent or
liquidated and known or unknown) against Palm Resort, the Partnership and its
partners including, without limitation, the PPM Loan and any other claims in
respect of loans, advances, project management or marketing fees or other
obligations ("Claims"), pursuant to a written release in form and substance
reasonably satisfactory to Fairfield and substantially in the form set forth in
Exhibit C hereto (the "Release").
V.10 Delivery of Information. Two business days before the end of the
Inspection Period, Shareholder shall deliver to Fairfield a certificate executed
by Shareholder certifying that Palm Resort has delivered all relevant
information, documents, agreements, and other materials related to any written
request made by Fairfield during the Inspection Period.
V.11 Tax Matters.
(a) Subject to the following provisions, Fairfield shall
prepare and file (or cause to be prepared and filed) all Tax Returns
relating to Palm Resort which are required to be filed (taking into
account all applicable extensions) after the Closing, and shall pay all
Taxes shown to be due thereon.
(b) With respect to any Tax Return of Palm Resort for a
taxable period ending on or prior to the Closing and not yet filed as
of the Closing: (i) within 90 days of the end of the taxable period to
which such return relates, Palm Resort and Fairfield shall prepare and
deliver (or cause to be prepared and delivered) to the Shareholder the
financial statements of Palm Resort for such taxable period; (ii) the
Shareholder will direct the tax return preparer of Palm Resort to
prepare, at the Shareholder's expense, such Tax Returns in accordance
with the prior practice and policies of Palm Resort and with applicable
law; (iii) at least thirty (30) days prior to the due date for such Tax
Returns (taking into account all available extensions), the Shareholder
will deliver to Palm Resort completed versions of such Tax Returns; and
(iv) Palm Resort shall have the right to review such Tax Returns prior
to their filing and, if Palm Resort disputes or otherwise disagrees
with any amounts shown due on such Tax Returns, Palm Resort and the
Shareholder shall consult in good faith to resolve any issues arising
as a result thereof; (v) after Palm Resort's review of such Tax Returns
and the resolution of any disputes or disagreements described in clause
(iv) hereof, Palm Resort shall timely sign and file such Tax Returns
and pay all amounts shown as due and owing thereon (reserving any right
to indemnification by the Shareholder if otherwise provided by this
Agreement); and (vi) Fairfield and Palm Resort shall provide the
Shareholder and their agents (including any return preparer) with
reasonable access during normal business hours to the records of Palm
Resort as needed for the preparation of such returns and with such
other assistance as may be reasonably requested by the Shareholder.
(c) With respect to each Tax Return which relates, in whole or
in part, to periods prior to Closing (other than Tax Returns prepared
at the direction of the Shareholder pursuant to Section 5.11(b)
hereof), at least thirty (30) days prior to the due date for filing
such return (including applicable extensions), Palm Resort will deliver
to the Shareholder (i) a draft return, (ii) copies of any workpapers or
schedules used to prepare such return, and (iii) a calculation of the
excess (if any) of (A) Taxes to be paid with or with respect to such
Tax Return that relate to periods prior to Closing over (B) the amounts
reserved or otherwise provided for. If the Shareholder do not agree
with the amounts set forth on such draft Tax Return, the parties shall
work diligently to resolve the dispute.
(d) If the parties are unable to resolve any dispute described
in Sections 5.11 (b) or 5.11(c) prior to the fifteenth day prior to the
due date for such Tax Return, the dispute will be submitted to Ernst &
Young, LLP, or such other nationally recognized firm of certified
public accountants as the parties may agree upon (the "Firm") with the
costs of the Firm's determination to be shared equally by the parties,
except that if the Firm agrees completely with the calculations of one
party, the other party shall bear all costs of the Firm's
determination.
(e) Fairfield shall pay, or shall cause Palm Resort to pay, to
the Shareholder the excess, if any, of the amount accrued in the
Unaudited Financial Statements for current Taxes payable by Palm Resort
over the aggregate Taxes actually paid by Palm Resort in connection
with the filing of any Tax Returns described in Sections 5.11(b) and
5.11(c), within 5 business days of the filing of the last such Tax
Returns. The Shareholder shall pay to Fairfield (or Palm Resort if
directed by Fairfield) the amount of the shortfall, if any, by which
the amount accrued in the Unaudited Financial Statements for current
Taxes payable by Palm Resort is less than the aggregate Taxes actually
paid by Palm Resort in connection with the filing of any Tax Returns
described in Section 5.11(c), within 5 business days of the filing of
the last such Tax Returns and receipt of written demand therefore from
Fairfield together with copies of such Tax Returns. Nothing in this
Section 5.11(e) shall be read to limit the Shareholder's
indemnification of Fairfield pursuant to Section 5.3 hereof.
(f) The Shareholder shall indemnify and hold harmless
Fairfield from and against (i) all Taxes for which Palm Resort may be
liable arising in periods ending prior to the Closing Date and for the
ratable portion of any period that begins before and ends after the
Closing Date; (ii) all Taxes imposed on Palm Resort by reason of being
a member of any affiliated group with which Palm Resort has filed a Tax
Return on a consolidated or combined basis for a taxable period ending
on or before the Closing Date; and (iii) all costs and expenses
(including reasonable attorneys' and accountants' fees) attributable to
any contest or dispute involving the foregoing. In the case of Taxes
that are payable with respect to a taxable period that begins before
the Closing Date and ends after the Closing Date, the portion of any
such Tax that is allocable to the portion of the period ending on the
Closing Date shall be:
(1) in the case of Taxes that are either (x) based
upon or related to income or receipts, or (y) imposed in
connection with any sale or other transfer or assignment of
property (real or personal, tangible or intangible), deemed
equal to the amount which would be payable if the taxable year
ended with the Closing Date; and
(2) in the case of Taxes not described in
subparagraph (i) that are imposed on a periodic basis and
measured by the level of any item, deemed to be the amount of
such Taxes for the entire period (or, in the case of such
Taxes determined on an arrears basis, the amount of such Taxes
for the immediately preceding period) multiplied by a fraction
the numerator of which is the number of calendar days in the
period ending on the Closing Date and the denominator of which
is the number of calendar days in the entire period.
For purposes of this Section 5.11(f), the Taxes attributable to Palm
Resort by reason of such corporation's distributive share of income,
gain, or loss from, or otherwise in respect of, any partnership in
which Palm Resort is a member on the Closing Date shall be determined
as if such partnership's taxable year ended on the Closing Date.
(g) Fairfield shall pay, or shall cause Palm Resort to pay, to
the Shareholder all refunds or credits of Taxes or similar benefit
(including any interest or similar benefit received from or credited
thereon by the applicable tax authority) received by Fairfield or Palm
Resort (or their respective successors and assigns) after the Closing
to the extent attributable to (i) Taxes paid prior to Closing by the
Shareholder or Palm Resort, or (ii) Taxes for which the Shareholder has
indemnified Fairfield or Palm Resort under this Agreement; provided,
however, that the Shareholder shall not be entitled to any such refund
or credit to the extent such refund or credit arises as a result of the
application of a net operating loss or similar tax benefit of Palm
Resort which arises during a period after the Closing Date and which is
carried back to a period prior to the Closing Date.
(h) If a Tax Return which relates in whole or in part to Taxes
for which the Shareholder might be obligated to indemnify Fairfield or
Palm Resort under this Agreement (including without limitation any Tax
Return filed prior to Closing or at the direction of the Shareholder
pursuant to Section 5.11(b) hereof) is audited by the Internal Revenue
Service or other tax authority, (i) Fairfield and Palm Resort shall
promptly notify the Shareholder of the commencement of such audit, and
any failure to give such notice will not constitute a waiver of rights
to indemnity under this Agreement for damages arising from such audit
and subsequent proceedings, except to the extent that the Shareholder
are precluded by the failure to give prompt notice from contesting the
asserted Tax liability in both the administrative and judicial forums;
(ii) the Shareholder shall have the right but not the obligation to
control the dealings with such tax authority and any ensuing litigation
or administrative proceedings (collectively, the "Tax Dispute"),
including without limitation choice of tax accountants or counsel and
the right to settle or compromise such matters, provided that the
Shareholder shall consult in good faith with Palm Resort and Fairfield
about the Tax Dispute and will give due regard to such parties'
interests and provided, further, that with respect to any taxable
period that begins before and ends after the Closing Date, the
Shareholder shall not be entitled to settle or compromise any such Tax
Dispute without the consent of the Fairfield, which shall not be
unreasonably withheld; (iii) if the Shareholder has a right to control
a Tax Dispute pursuant to clause (ii) but does not choose to exercise
such control, Fairfield shall be entitled, but shall not be obligated,
to defend such Tax Dispute (giving due regard to the Shareholder's
interests), shall keep the Shareholder reasonably informed of the
progress of such Tax Dispute and will not settle or compromise such Tax
Dispute without the prior written consent of the Shareholder, which
consent shall not be unreasonably withheld; and (iv) all parties shall
cooperate with each other in good faith with respect to any Tax Dispute
and provide such assistance to the other parties and their agents as
may be necessary for the resolution thereof. The preparation and filing
of any amended Tax Return, the audit of which would otherwise be
subject to this Section 5.11(h), shall be subject to the principles of
this Section 5.11(h).
(i) Fairfield and Palm Resort shall retain all records
relevant to Taxes and Tax Returns of Palm Resort for periods prior to
or including Closing ("Tax Records") for a period of at least seven
years after the Closing. In addition, at all times that such Tax
Records are in the custody of Fairfield, Palm Resort or their
successors and assigns, such parties shall permit the Shareholder and
their agents (including without limitation his tax professionals)
reasonable access to such Tax Records in accordance with the principles
of this Section 5.11 to the extent the Shareholder reasonably deems
such access appropriate for Tax and financial matters.
(j) If there is a disposition of all or substantially all of
the capital stock, of Palm Resort assets, or business of Palm Resort,
Fairfield agrees to use its reasonable best efforts to ensure that the
successor to Palm Resort, such assets or business is contractually
obligated to and in fact does comply with the provisions of this
Section 5.11.
(k) Fairfield shall be responsible for the timely payment of
all sales, use, transfer, gains, recording, ad valorem and other
similar Taxes and fees ("Transfer Taxes"), arising out of or in
connection with or attributable to the transactions effected pursuant
to this Agreement, and all Taxes arising as a result of the Merger.
Fairfield shall prepare and timely file all necessary documentation and
Tax Returns required to be filed in respect of Transfer Taxes;
provided, that the Shareholder shall be permitted to prepare any such
Tax Returns that are the primary responsibility of the Shareholder
under applicable law. Fairfield shall provide Fairfield with final
copies of the documentation and Tax Returns referred to in the
immediately preceding sentence not later than fifteen days prior to the
filing of such documentation and Tax Returns.
V.12 Shareholder shall not be responsible for the payment of Taxes to
the extent arising from its pro-rata allocation of income in excess of $9
million that results from a change by the Partnership in the tax treatment it
elects for the period ending December 31, 1997 as compared to the tax treatment
elected for the period ending December 31, 1996.
X.00 Xxxxxxxxx shall not sell any timeshare contracts or timeshare
receivables of the Partnership prior to January 1, 1998.
ARTICLE VI
CONDITIONS PRECEDENT; CLOSING
VI.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Corporate Approval. The approval of the transactions
hereunder by Fairfield's board of directors or appropriate committee
thereof shall have been received.
(b) Consent of Fairfield's Lender. Fairfield shall have
obtained all applicable consents required under Fairfield's and its
subsidiaries' credit agreements.
(c) Palm Resort Consents. Palm Resort shall have obtained all
applicable consents required from the parties identified on Schedule
6.1(c) (the "Palm Resort Consents").
(d) No Injunctions or Restraints. No judgment, order, decree,
statute, law, ordinance, rule, regulation, temporary restraining order,
preliminary or permanent injunction or other order enacted, entered,
promulgated, enforced or issued by any court of competent jurisdiction
or other Governmental Entity or other legal restraint or prohibition
(collectively, "Restraints") preventing the consummation of the Merger
shall be in effect; provided, however, that each of the parties shall
have used reasonable efforts to prevent the entry of any such
Restraints and to appeal as promptly as possible any such Restraints
that may be entered.
(e) No Litigation. There shall not be pending any suit, action
or proceeding, in each case brought by any Governmental Entity against
Palm Resort, Fairfield or Merger Sub with respect to or that would
adversely affect the Merger or the transactions contemplated under this
Agreement.
(f) Before the Effective Time, the Partnership shall have paid
the PPM Loan Amount to PPM and PPM shall have released Palm Resort and
the Partnership from any further liabilities or obligations in respect
of the PPM Loan pursuant to the Release.
VI.2 Conditions to Obligations of Palm Resort and Shareholder. The
obligations of Palm Resort and Shareholder to effect the Merger are further
subject to the following conditions:
(a) Actions of Fairfield. Fairfield and Merger Sub shall have
performed and complied with all the covenants, agreements and
obligations and satisfied all of the conditions required by this
Agreement to be performed or complied with or satisfied by them at or
prior to the Effective Time.
(b) Representations and Warranties. The representations and
warranties of Fairfield and Merger Sub set forth in this Agreement that
are qualified as to materiality shall be true and correct, and the
representations and warranties of Fairfield and Merger Sub set forth in
this Agreement that are not so qualified shall be true and correct in
all material respects, in each case as of the date of this Agreement
and (except to the extent such representations and warranties speak as
of an earlier date) as of the Effective Time as though made on and as
of the Effective Time, except as otherwise contemplated by this
Agreement.
VI.3 Conditions to Obligations of Fairfield and Merger Sub. The
obligations of Fairfield and Merger Sub to effect the Merger are further subject
to the following conditions:
(a) Actions of Shareholder and Palm Resort. Shareholder and
Palm Resort shall have performed and complied with all covenants,
agreements and obligations and satisfied all the conditions required by
this Agreement to be performed or complied with or satisfied by them at
or prior to the Effective Time.
(b) Representations and Warranties. The representations and
warranties of Palm Resort and Shareholder set forth in this Agreement
that are qualified as to materiality shall be true and correct, and the
representations and warranties of Palm Resort and Shareholder set forth
in this Agreement that are not so qualified shall be true and correct
in all material respects, in each case as of the date of this Agreement
and (except to the extent such representations and warranties speak as
of an earlier date) as of the Effective Time as though made on and as
of the Effective Time, except as otherwise contemplated by this
Agreement.
(c) No Material Adverse Change. At any time on or after the
date of this Agreement there shall not have occurred any material
adverse change in Palm Resort.
(d) Audit and Inspection. The completion by Fairfield of the
Inspection and Fairfield's satisfaction, in its sole discretion, with
the results of the Inspection.
(e) Release. Fairfield shall have received the Release,
executed by the Shareholder and PPM.
(f) Vacation Break Merger. The Merger of FCVB Corp., a wholly
owned subsidiary of Fairfield, with and into Vacation Break U.S.A.,
Inc. (the "Vacation Break Merger") shall have been consummated.
(g) Opinion of Palm Resort Counsel. Fairfield shall have
received a favorable opinion of counsel for Shareholder and Palm Resort
with respect to the matters set forth on Schedule 6.3(g).
VI.4 Frustration of Closing Conditions. None of Fairfield, Shareholder,
Merger Sub or Palm Resort may rely on the failure of any condition set forth in
Section 6.1, 6.2 or 6.3, as the case may be, to be satisfied if such failure was
caused by such party's failure to use reasonable efforts to consummate the
Merger and the other transactions contemplated by this Agreement, as required by
and subject to Section 5.6.
VI.5 Closing Documents and Procedures. In addition to the other
obligations and procedures to be performed at the Closing, the parties will
undertake the following actions:
(a) Deliveries of Shareholder. At the Closing, Shareholder shall
deliver to Fairfield:
(i) a certificate or certificates representing
Shareholder's shares of Palm Resort Common Stock outstanding
immediately prior to the Effective Time.
(ii) a certificate executed by Shareholder certifying
that the representations and warranties set forth in Sections
3.2 and 3.3 are true and correct on and as of the Effective
Time, with the same force and effect as though such
representations and warranties had been made on, as of and
with reference to the Effective Time and that Shareholder has
performed and complied with all covenants and agreements and
satisfied all conditions required by this Agreement to be
performed or complied with or satisfied by them for the
benefit of Fairfield at or prior to the Effective Time; and
(iii) the Release, executed by the Shareholder and
its affiliates.
(b) Deliveries of Palm Resort. At the Closing, Palm Resort shall
deliver to Fairfield:
(i) a certificate of an officer of Palm Resort
certifying that the representations and warranties set forth
in Section 3.2 are true and correct on and as of the Effective
Time, with the same force and effect as though such
representations and warranties had been made on, as of and
with reference to the Effective Time and that Palm Resort has
performed and complied with all covenants and agreements and
satisfied all conditions required by this Agreement to be
performed or complied with or satisfied by it for the benefit
of Fairfield at or prior to the Effective Time;
(ii) certificates of good standing and corporate
existence for Palm Resort; and
(iii) the opinion of counsel to Palm Resort as set
forth in Section 6.3(g).
(c) Fairfield's Deliveries. At the Closing, Fairfield shall
deliver to the Shareholder:
(i) Shareholder's Palm Resort Percentage of the Merger Consideration;
(ii) evidence of payment of the PPM Loan Amount;
(iii) evidence of payment of the Marketing Fee; and
(iv) a certificate of an officer of Fairfield certifying that the
representations and warranties set forth in Section 3.1 are true and
correct on and as of the Effective Time, with the same force and effect as
though such representations and warranties had been made on, as of and with
reference to the Effective Time and that Fairfield has performed and
complied with all covenants and agreements and satisfied all conditions
required by this Agreement to be performed or complied with or satisfied by
it for the benefit of Palm Resort at or prior to the Effective Time.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
VII.1 Termination. This Agreement may be terminated, and the Merger
contemplated hereby may be abandoned, at any time prior to the Effective Time:
(a) by mutual written consent of Fairfield, Merger Sub and
Palm Resort;
(b) by either Fairfield or Palm Resort;
(i) if the Merger shall not have been consummated on
or before December 31, 1997, unless the failure to consummate
the Merger is the result of a breach of this Agreement by the
party seeking to terminate this Agreement;
(ii) if any Governmental Entity of competent
jurisdiction issues a restraint or takes any other action
permanently enjoining, restraining or otherwise prohibiting
the Merger or any of the other actions contemplated under the
Agreement and such restraint becomes final and nonappealable;
(c) by Fairfield if there has been a material violation by
Shareholder of any agreement, representation or warranty contained in
this Agreement that has rendered the satisfaction of any condition to
the obligations of Fairfield impossible and such violation or breach
has not been waived by Fairfield and is not due to Fairfield's default;
(d) by Fairfield, if the Vacation Break Merger has not been
consummated on or before December 31, 1997;
(e) by Fairfield, at or prior to the expiration of the
Inspection Period, without cause and for whatever reason and without
liability on the part of any party hereto, by delivering to Palm Resort
at or prior to the expiration of the Inspection Period, written notice
of Fairfield's election to terminate this Agreement;
(f) by either Fairfield or Palm Resort if the other shall fail
to fulfill or satisfy any condition precedent to the performance of the
first party's obligations in accordance with the terms hereof; and
(g) by Palm Resort, if there has been a material violation by
Fairfield of any agreement, representation or warranty contained in
this Agreement which has rendered the satisfaction of any condition to
the obligations of Shareholder and Palm Resort impossible and such
violation or breach has not been waived by Shareholder and Palm Resort
and is not due to Shareholder's or Palm Resort's default.
VII.2 Effect of Termination. In the event of termination of this
Agreement by Palm Resort or Fairfield as provided in Section 7.1, this Agreement
shall terminate and there shall be no liability on the part of either Palm
Resort or Fairfield, except for (a) liabilities arising from a breach of this
Agreement prior to such termination if the termination is made under Section
7.1(b)(i), and (b) liabilities arising from a breach of a provision of this
Agreement which is to be performed regardless of any such termination.
VII.3 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
VII.4 Extension; Waiver. At any time prior to the Effective Time, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (c) waive compliance with any of the agreements or conditions
contained herein. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. No other action or course of dealing, including, without
limitation, the consummation of the Merger with notice or knowledge of any
inaccuracy in the representations or breach of the warranties of the other party
or any investigation thereof, will operate as a waiver of any rights under this
Agreement. The delay or failure of any party to this Agreement to assert any of
its rights under this Agreement or otherwise shall not constitute a waiver of
such rights.
ARTICLE VIII
GENERAL PROVISIONS
VIII.1 Survival of Representations and Warranties. The respective
covenants, representations, warranties, covenants and the indemnities set forth
in this Agreement shall survive after the Effective Time and shall continue in
full force and effect.
VIII.2 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or sent by overnight courier (providing proof of delivery)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Palm Resort:
Palm Resort Group, Inc.
0000 Xxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: President
with a copy to:
Greenspoon, Marder, Hirschfeld,
Rafkin, Xxxx & Xxxxxx
Trade Centre South, Suite 700
000 Xxxx Xxxxxxx Xxxxx Xxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx , Esq.
(b) if to Shareholder:
The Berkley Group, Inc.
0000 Xxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: President
with a copy to:
Greenspoon, Marder, Hirschfeld,
Rafkin, Xxxx & Xxxxxx
Trade Centre South, Suite 700
000 Xxxx Xxxxxxx Xxxxx Xxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxxx, Esq.
(c) if to Fairfield or Merger Sub:
Fairfield Communities, Inc.
00000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xx. Xxxx X. XxXxxxxxx
with a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
VIII.3 Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with, such first person;
(b) "Code" means the Internal Revenue Code of 1986, as
amended, and all regulations promulgated thereunder, as in effect from
time to time;
(c) an "environmental law" means any law, statute, regulation,
rule, order, decree, judgment, consent decree, settlement agreement or
governmental requirement, which relates to or otherwise imposes
liability or standards of conduct concerning mining or reclamation of
mined land, discharges, emissions, releases or threatened releases of
noises, odors or any pollutants, contaminants or hazardous or toxic
wastes, substances or materials, whether as matter or energy, into
ambient air, water, or land, or otherwise relating to the manufacture,
processing, generation, distribution, use, treatment, storage,
disposal, cleanup, transport or handling of pollutants, contaminants,
or hazardous wastes, substances or materials, including (but not
limited to) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Superfund Amendments and Reauthorization Act
of 1986, as amended, the Resource Conservation and Recovery Act of
1976, as amended, the Toxic Substances Control Act of 1976, as amended,
the Federal Water Pollution Control Act Amendments of 1972, the Clean
Water Act of 1977, as amended, any so-called "Superlien" law, and any
other similar Federal, state or local statutes;
(d) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, and all regulations promulgated thereunder, as in
effect from time to time;
(e) "Governmental Entity" means any government or any court,
arbitral tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency, federal, state,
local or foreign;
(f) "Interest" means the 45% general partner interest in the
Partnership held beneficially and of record by Palm Resort;
(g) "knowledge" of any person means actual knowledge and, if
such person is not an individual, actual knowledge of the directors and
executive officers or partners of such person;
(h) "Liens" means liens, charges, pledges, options, mortgages,
deeds of trust, security interests, conditional sales agreements,
claims, restrictions (whether on voting, sale, transfer, disposition or
otherwise), and other encumbrances, adverse claims and interests of
every type and description, whether imposed by law, agreement,
understanding or otherwise;
(i) "material adverse change" or "material adverse effect"
means, when used in connection with Palm Resort or Fairfield, any
change or effect that is materially adverse to the business,
properties, assets, financial condition, prospects, or results of
operations of such party and its Subsidiaries taken as a whole;
(j) "Partnership" means Palm Vacation Group, a Florida
general partnership;
(k) "Partnership Agreement" means that certain Palm Vacation
Group Joint Venture Agreement, dated as of March 30, 1995, between
Vacation Break Resorts at Palm-Aire, Inc., and Palm Resort Group, Inc.;
(l) "person" means an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other
entity;
(m) "Personal Property" means (a) all tangible personal
property owned by the Partnership and located on, attached to, and used
in connection with the operation of the Resort Property including
furniture, fixtures and equipment, (b) the Partnership's interest in
all personal property, licenses, permits, plans, studies and utility
arrangements with respect to the Resort Property, (c) the Partnership's
interest in all service, maintenance, management or other contracts
relating to the ownership or operation of the Resort Property, and (d)
the Partnership's interest in all warranties and guaranties, if any,
relating to the Resort Property;
(n) "Resort Property" means that certain resort property known
as Palm-Aire Resort and Spa owned by the Partnership, including the
land upon which the Resort Property is situated, together with all
rights appurtenant thereto, the building, fixtures and other
improvements now or hereafter situated thereon and all leases and/or
occupancy agreements for space in such improvements, including any and
all amendments and modifications thereto and any and all acceptance,
guaranty or other agreements related thereto, and the Personal
Property; and
VIII.4 Interpretation. When a reference is made in this Agreement to a
Section, Exhibit or Schedule, such reference shall be to a Section of, or an
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
VIII.5 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signet by each of
the parties and delivered to the other parties.
VIII.6 Entire Agreement; No Third-party Beneficiaries. This Agreement
(a) constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement and (b) are not intended to confer upon any
person other than the parties any rights or remedies.
VIII.7 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Florida, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
VIII.8 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties, except that Merger Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Fairfield or to any direct wholly owned corporate subsidiary of
Fairfield. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns.
VIII.9 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Florida or in Florida state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any federal court located in the State of Florida or
any Florida state court in the event any dispute arises out of this Agreement or
the transactions contemplated by this Agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court and (c) agrees that it will not bring any action
relating to this Agreement or the transactions contemplated by this Agreement in
any court other than a federal court sitting in the State of Florida or an
Florida state court.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, Fairfield, Merger Sub and Palm Resort have caused
this Agreement to be signed by their respective officers thereunto duly
authorized and Shareholder has signed this Agreement, all as of the date first
written above.
FAIRFIELD COMMUNITIES, INC.
By:/s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx
Senior Vice President and
Chief Financial Officer
FC PALM-AIRE, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Xxxxxx X. Xxxxxx
Vice President
PALM RESORT GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
THE BERKLEY GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
EXHIBIT A
SURVIVING CORPORATION
ARTICLES OF INCORPORATION
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
VACATION BREAK USA, INC.
On December 19, 1997, the Board of Directors and the shareholders of
PALM RESORT GROUP, INC. duly adopted the following Amended and Restated Articles
of Incorporation pursuant to the provisions of 607.0704, 607.1003 and 607.1007
of the Florida Business Corporation Act:
ARTICLE I
NAME
The name of the corporation is Palm Resort Group, Inc.
ARTICLE II
PRINCIPAL OFFICE AND MAILING ADDRESS
The Corporation's principal office and mailing address is 00000
Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000.
ARTICLE III
SHARES
The Corporation shall have authority to issue 10,000 common shares with
a par value of $.01 per share.
ARTICLE IV
REGISTERED AGENT AND OFFICE
The street address of its registered office is 0000 Xxxxx Xxxx Xxxxxx
Xxxx, Xxxxxxxxxx, Xxxxxxx 00000, and the name of its registered agent at that
address is CT Corporation System.
ARTICLE V
DIRECTORS
The Corporation initially shall have three (3) directors, whose names
and addresses are:
Name Address
Xxxx X. XxXxxxxxx 00000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Xxxxxx X. Xxxxxx 00000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Xxxxxx X. Xxxxxx 00000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
ARTICLE VI
LIMITATION ON DIRECTOR LIABILITY
A director shall not be personally liable to the Corporation or the
holders of shares of capital stock for monetary damages for breach of fiduciary
duty as a director, except (i) for any breach of the duty of loyalty of such
director to the Corporation or such holders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 607.0831 of the Florida Business Corporation Act (the
"FBCA"), or (iv) for any transaction from which such director derives an
improper personal benefit. If the FBCA is hereafter amended to authorize the
further or broader elimination or limitation of the personal liability of
directors, then the liability of a director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the FBCA, as so
amended. No repeal or modification of this Article VII shall adversely affect
any right of or protection afforded to a director of the Corporation existing
immediately prior to such repeal or modification.
ARTICLE VII
INDEMNIFICATION
The Corporation shall indemnify and advance expenses to, and may purchase
and maintain insurance on behalf of, its officers and directors to the fullest
extent permitted by law as now or hereafter in effect. Without limiting the
generality of the foregoing, the Bylaws may provide for indemnification and
advancement of expenses to officers, directors, employees and agents on such
terms and conditions as the Board of Directors may from time to time deem
appropriate or advisable.
IN WITNESS WHEREOF, the undersigned, being the President of the
Corporation, has signed these Amended and Restated Articles of Incorporation
this 19th day of December, 1997.
Xxxx X. XxXxxxxxx
President
EXHIBIT B
SURVIVING CORPORATION BYLAWS
AMENDED AND RESTATED BYLAWS
OF
PALM RESORT GROUP, INC.
Adopted December 19, 1997
ARTICLE I
Offices
SECTION 1. Principal Office. The principal office of Palm Resort Group,
Inc. (the "Corporation") may be located either within or without the State of
Florida as the board of directors (the "Board of Directors" or the "Board") may
designate or as the business of the Corporation may require from time to time.
SECTION 2. Registered Office. The registered office of the Corporation,
required by the Florida Business Corporation Act to be maintained in the State
of Florida, may be, but need not be, identical to the principal office in the
State of Florida, and the address of the registered office may be changed from
time to time by the Board of Directors.
ARTICLE II
Shareholders
SECTION 1. Annual Meeting. The annual meeting of the shareholders shall
be held on such date as the Board may determine in each year at such hour as may
be specified in a notice of meeting or in a duly executed waiver of notice, for
the purpose of electing Directors and for the transaction of such other business
as may come before the meeting. If the day fixed for the annual meeting shall be
a legal holiday in the State of Florida, the meeting shall be held on the next
succeeding business day. If the election of Directors is not held on the day
designated in these bylaws for any annual meeting of the shareholders, or at any
adjournment of the annual meeting, the Board of Directors shall cause the
election to be held at a special meeting of the shareholders as soon thereafter
as may be convenient.
SECTION 2. Special Meetings. Special meetings of the shareholders, for
any purpose, may be called by the Board, by the holders of not less than ten
percent (10%) of all the votes entitled to be cast on any issue to be considered
at the meeting, or by the President of the Corporation.
SECTION 3. Place of Meeting. The Board may designate any place, either
within or without the State of Florida, unless otherwise prescribed by statute,
as the place of meeting for any annual meeting of shareholders. The Chairman of
the Board, if one is elected, or the President may designate any place, either
within or without the State of Florida, unless otherwise prescribed by statute,
as the place of the meeting. If no designation is made, the place of the meeting
shall be the principal office of the Corporation in the State of Florida.
SECTION 4. Notice of Meeting. Written notice stating the time, date,
and place of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered to each shareholder
of record entitled to vote at such meeting not less than ten (10) nor more than
sixty (60) days before the date of the meeting, either personally, by telegraph,
teletype, or other form of electronic communication, or by mail, by or at the
direction of the President, the Secretary, or the person or persons calling the
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail addressed to the shareholder at his address as it
appears on the stock transfer books of the Corporation, postage prepaid.
SECTION 5. Fixing of Record Date. The Board may fix a date nor more
than seventy (70) and not less than ten (10) days prior to the date set for any
meeting of the shareholders as the record date as of when the shareholders of
record entitled to notice of and to vote at such meeting and any adjournment
thereof shall be determined.
SECTION 6. Shareholders' List for Meeting. After fixing the record date
for a meeting, an alphabetical list of the names of all shareholders entitled to
notice of the meeting, arranged by voting group, with the address of and the
number, class, and series, if any, of shares held by each, shall be prepared.
The list shall, upon written demand, be available during regular business hours,
for inspection by any shareholder and at his expense for a period of ten (10)
days prior to the meeting date, or such shorter time as may exist between the
record date and the meeting, and continuing through the meeting, at the
Corporation's principal office, at a place set forth in the meeting notice in
the city where the meeting will be held, or at the office of the Corporation's
transfer agent or registrar. The Corporation shall also make the list available
at the meeting.
SECTION 7. Quorum. A majority of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of the shareholders. When a meeting is
adjourned, it shall not be necessary to give any notice of the adjourned meeting
if the time, date, and place to which the meeting is adjourned are announced at
the meeting at which the adjournment is taken, and any business may be
transacted at the adjourned meeting that might have been transacted at the
original date of the meeting. If, however, following the adjournment, the Board
fixes a new record date for the adjourned meeting, notice of such adjourned
meeting shall be given, in compliance with Section 4 of this Article II, to each
shareholder of record on the new record date entitled to vote at such meeting.
After a quorum has been established at a shareholders' meeting, the subsequent
withdrawal of shareholders, so as to reduce the number of shares entitled to
vote at the meeting below the numbered required for a quorum, shall not affect
the validity of any action taken at the meeting or any adjournment thereof.
SECTION 8. Proxies. Every shareholder entitled to vote at a meeting of
shareholders, or to express consent or dissent without a meeting, or his duly
authorized attorney-in-fact, may authorize another person or persons to act for
him by proxy. The proxy must be executed in writing by the shareholder or his
duly authorized attorney-in-fact. Such proxy shall be filed with the Secretary
of the Corporation before or at the time of such meeting or at the time of
expressing such consent or dissent without a meeting. No proxy shall be valid
after eleven (11) months from the date of its execution, unless otherwise
provided in the proxy.
SECTION 9. Voting of Shares. Each outstanding share of stock entitled
to vote shall be entitled to one (1) vote upon each matter submitted to a vote
at a meeting of the shareholders.
SECTION 10. Voting of Shares by Certain Holders. Shares of stock
standing in the name of another corporation may be voted by the officer, agent,
or proxy as prescribed by the bylaws of the corporate shareholder or, in the
absence of any applicable bylaw, by such person as the Board of Directors of the
corporate shareholder may designate. Proof of such designation may be made by
presentation of a certified copy of the bylaws or other instrument of the
corporate shareholder. In the absence of such designation, or in case of
conflicting designation by the corporate shareholder, the Chairman of the Board,
the President, any Vice President, the Secretary, and the Treasurer of the
corporate shareholder shall be presumed to possess, in that order, authority to
vote such shares.
Shares of stock held by an administrator, executor, guardian, personal
representative, or conservator may be voted by him, either in person or by
proxy, without a transfer of such shares into his name.
Shares of stock standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name or the name of his
nominee.
Shares of stock standing in the name of a receiver, a trustee in
bankruptcy proceedings, or an assignee for the benefit of creditors may be voted
by him or her without the transfer thereof into his or her name.
A shareholder whose shares of stock are pledged shall be entitled to
vote such shares until the shares have been transferred into the name of the
pledgee, and thereafter the pledgee or his nominee shall be entitled to vote the
shares so transferred.
Shares of stock owned by another corporation the majority of whose
shares of stock entitled to vote for Directors is owned or controlled by the
Corporation shall not be voted, directly or indirectly, at any meeting.
ARTICLE III
Board of Directors
SECTION 1. General Powers. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of the Corporation shall be
managed under the direction of, the Board of Directors.
SECTION 2. Number, Tenure, and Qualification. The number of Directors
of the Corporation initially shall be three (3). The number of Directors may be
increased or decreased from time to time by amendment of these bylaws, provided
that the Corporation shall always have at least one (1) director. Any increase
in the number of Directors shall be effective immediately. Any decrease in the
number of Directors shall be effective at the time of the next succeeding annual
meeting of the Shareholders unless there shall be vacancies on the Board, in
which case such decrease may become effective at any time prior to the next
succeeding annual meeting to the extent of the number of vacancies.
Except as otherwise provided by statute, the Directors shall be elected
at the annual meeting of Shareholders and, at each meeting of Shareholders for
the election of Directors at which a quorum is present, the persons receiving a
plurality of the votes cast at such election shall be elected as Directors.
Each initial director shall hold office until the first shareholders'
meeting at which Directors are elected. Thereafter, each director shall hold
office until the next annual meeting of shareholders and until his successor is
elected and qualified or until his earlier resignation, death, or removal from
office.
SECTION 3. Chairman of the Board. The Board of Directors of the
Corporation may elect a Chairman who, if so elected, shall preside at all
meetings of the Board of Directors. The Chairman shall have such other powers
and shall perform all duties as from time to time may be granted or assigned to
him by the Board of Directors and as provided by law.
SECTION 4. Annual and Regular Meetings. The annual meeting of the Board
of Directors shall be held without other notice than this bylaw immediately
after and at the same place as the annual meeting of shareholders. The Board of
Directors may provide, by resolution, the time, date, and place for the holding
of regular meetings without other notice than such resolution.
SECTION 5. Special Meetings. Special meetings of the Board of Directors may
be called by the Chairman of the Board, by the President, or by any two
Directors. The Chairman of the Board, if one is elected, or the President shall
fix the place for holding such special meeting.
SECTION 6. Notice. Notice of any special meeting shall be given at
least two (2) days before the meeting by written notice delivered personally, or
by mail, telecopy, telegram, cablegram, or other form of electronic
communication to each director at his business address, unless in case of
emergency, the Chairman of the Board, if one is elected, or the President shall
prescribe a shorter notice to be given personally or by telegraph, telecopy,
cablegram, or other electronic communication to each director at his residence
or business address. If a notice of meeting is mailed, such notice shall be
deemed to be delivered five (5) days after its deposit in the United States
mail, if mailed, postpaid and correctly addressed. Any director may waive notice
of any meeting, before or after the meeting. The attendance of a director at a
meeting shall constitute a waiver of notice of such meeting and a waiver of any
and all objections to the place of the meeting, the time or date of the meeting,
or the manner in which it has been called or convened, except when a director
states, at the beginning of the meeting, any objection to the transaction of
business because the meeting is not lawfully called or convened.
SECTION 7. Quorum. A majority of the number of Directors fixed pursuant
to Section 2 of this Article III shall constitute a quorum for the transaction
of business at any meeting of the Board of Directors. A majority of the
Directors present, whether or not a quorum exists, may adjourn any meeting of
the Board to another time and place. Notice of any such adjourned meeting shall
be given to the Directors who were not present at the time of the adjournment
and, unless the time and place of the adjourned meeting are announced at the
time of the adjournment, to the other Directors.
SECTION 8. Manner of Acting. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
SECTION 9. Vacancies. Any vacancy occurring on the Board, including any
vacancy created by reason of an increase in the number of Directors, may be
filled by the affirmative vote of a majority of the remaining Directors though
less than a quorum of the Board of Directors. A director elected to fill a
vacancy shall hold office only until the next annual meeting of shareholders and
until his successor shall have been elected and qualified or until his earlier
resignation, removal from office, or death.
SECTION 10. Compensation. By resolution of the Board of Directors, the
Directors may be paid their expenses, if any, for attendance at each meeting of
the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board or may be paid a stated salary as director. No such payment
shall preclude any director from serving the Corporation in any other capacity
and receiving compensation therefor.
SECTION 11. Presumption of Assent. A director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken, unless
he objects at the beginning of the meeting to holding it or transacting
specified business at the meeting or he votes against or abstains from the
action taken.
SECTION 12. Constructive Presence at a Meeting. A member of the Board
of Directors may participate in a meeting of such Board by any means of
communication by which all persons participating in the meeting may
simultaneously hear each other during the meeting. Participating by such means
shall constitute presence in person at a meeting.
SECTION 13. Action Without a Meeting. Any action required or permitted
by law to be taken at any meeting of the Board or a committee thereof, may be
taken without a meeting if the action is taken by all members of the Board or of
the committee. The action must be evidenced by one or more written consents
describing the action taken and signed by each director or committee member. The
action so taken is effective when the last director signs the consent, unless
the consent specifies a difference effective date. A consent so signed has the
effect of a meeting vote and may be described as such in any document.
ARTICLE IV
Officers
SECTION 1. Number. The officers of the Corporation shall be a
President, a Secretary, and a Treasurer, each of whom shall be elected by the
Board of Directors. One or more Vice Presidents and such other officers and
assistant officers and agents as may be deemed necessary may be elected or
appointed by the Board of Directors.
SECTION 2. Election and Term of Office. The officers of the Corporation
to be elected by the Board of Directors shall be elected annually by the Board
of Directors at the regular meeting of the Board of Directors held after each
annual meeting of the shareholders. If the election of officers shall not be
held at such meeting, such election shall be held as soon thereafter as may be
convenient. Each officer shall hold office until his successor shall have been
elected and qualified or until his earlier resignation, removal from office, or
death.
SECTION 3. Removal. Any officer or agent elected or appointed by the
Board of Directors may be removed by the Board of Directors whenever, in its
judgment, the best interests of the Corporation would be served thereby, but
such removal shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an officer or agent shall not of
itself create contract rights.
SECTION 4. Vacancies. A vacancy, however occurring, in any office may
be filled by the Board of Directors for the unexpired portion of the term.
SECTION 5. President. The President shall be the principal executive
officer of the Corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business affairs of
the Corporation. He shall, when present, preside at all meetings of the
shareholders. The President shall also preside at the meetings of the Board of
Directors, unless the Board of Directors has elected a Chairman and the Chairman
is present at such meetings. The President may sign any deeds, mortgages, bonds,
contracts, or other instruments which the Board of Directors has authorized to
be executed, except in cases where the signing and execution thereof shall be
expressly delegated by the Board of Directors or by these bylaws to some other
officer or agent of the Corporation, or shall be required by law to be otherwise
signed or executed. The President shall in general perform all duties as from
time to time may be assigned to him by the Board of Directors.
SECTION 6. Vice President. In the absence of the President or in the
event of his death or his inability or refusal to act, the Vice President, if
one is elected, shall have the duties of the President, and when so acting,
shall have all the powers of, and be subject to all the restrictions upon, the
President. The Vice President, if one is elected, shall perform such other
duties as from time to time may be assigned to him by the President or the Board
of Directors. If more than one Vice President is elected, the Board of Directors
shall designate which Vice President shall serve until the election of a
successor President.
SECTION 7. Secretary. The Secretary shall: (a) keep the minutes of all
the meetings of the shareholders and the Board of Directors in one or more books
provided for that purpose; (b) see that all notices are duly given in accordance
with the provisions of these bylaws or as required by law; (c) be custodian of
the corporate records and of the seal of the Corporation and see that the seal
of the Corporation is affixed to all documents the execution of which on behalf
of the Corporation under its seal is duly authorized; (d) keep a register of the
post office address of each shareholder which shall be furnished to the
Secretary by such shareholder; (e) have general charge of the stock transfer
books of the Corporation; (f) authenticate all records of the Corporation; and
(g) in general, perform all duties incident to the office of Secretary and such
other duties as from time to time may be assigned to him by the President or by
the Board of Directors.
SECTION 8. Treasurer. The Treasurer shall: (a) have charge and custody
of and be responsible for all funds and securities of the Corporation; (b)
receive and give receipts for monies due and payable to the Corporation from any
source whatsoever, and deposit all such monies in the name of the Corporation in
such banks, trust companies, or other depositories as shall be selected in
accordance with the provisions of Article VI of these bylaws; (c) in general,
perform all of the duties incident to the office of Treasurer and such other
duties as from time to time may be assigned to him by the President or by the
Board of Directors. If required by the Board of Directors, the Treasurer shall
give a bond for the faithful discharge of his duties in such sum and with such
surety or sureties as the Board of Directors shall determine.
SECTION 9. Compensation. The compensation of the officers shall be
fixed from time to time by the Board of Directors and no officer shall be
prevented from receiving such compensation by reason of the fact that he is also
a director of the Corporation.
ARTICLE V
Resignations
Any director of the Corporation may resign by delivering written notice
to the Board of Directors or its Chairman or to the Corporation. Any officer of
the Corporation may resign at any time by giving written notice to the
Corporation. Any such resignation shall take effect when delivered unless the
notice specifies a later effective date.
ARTICLE VI
Contracts, Loans, Checks, and Deposits
SECTION 1. Contracts. The Board of Directors may authorize any officer
or officers, agent or agents to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the Corporation, unless otherwise
restricted by law. Such authority may be general or confined to specific
instances.
SECTION 2. Loans. No loans shall be contracted on behalf of the Corporation
and no evidence of indebtedness shall be issued in its name unless authorized by
a resolution of the Board of Directors. Such authority may be general or
confined to specific instances.
SECTION 3. Checks, Drafts, Etc. All checks, drafts, or other orders for
the payment of money, notes, or other evidences of indebtedness issued in the
name of the Corporation, shall be signed by such officer or officers, agent or
agents of the Corporation in such manner as shall from time to time be
determined by resolution of the Board of Directors.
SECTION 4. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies, or other depositories as the Board of Directors
may select.
ARTICLE VII
Certificates for Shares and Their Transfer
SECTION 1. Certificates for Shares. Certificates representing shares of
the Corporation shall be in such form as shall be determined by the Board of
Directors. Certificates shall be signed by the President or by such other
officers as authorized by law. All certificates for shares shall be
consecutively numbered or otherwise identified. The name and address of the
person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered on the stock transfer books of the
Corporation. All certificates surrendered to the Corporation for transfer shall
be canceled, and no new certificate shall be issued until the former certificate
for a like number of shares shall have been surrendered and canceled, except
that in case of a lost, destroyed, or mutilated certificate, a new one may be
issued therefor upon such terms and indemnity to the Corporation as the Board of
Directors may prescribe.
SECTION 2. Transfer of Shares. Transfer of shares of the Corporation
shall be made on the stock transfer books of the Corporation only when the
holder of record thereof or his legal representative, or his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the Corporation, shall furnish proper evidence of authority to transfer, and
when there is surrendered for cancellation the certificate for such shares,
properly endorsed. The person in whose name shares stand on the books of the
Corporation shall be deemed by the Corporation to be the owner thereof for all
purposes.
ARTICLE VIII
Fiscal Year
The fiscal year of the Corporation shall begin on January 1 and end on
December 31 in each year, except its first fiscal year, which shall begin on the
date of incorporation.
ARTICLE IX
Dividends
The Board of Directors may from time to time declare, and the
Corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and its Articles of Incorporation.
ARTICLE X
Indemnification of Officers
Directors, Employees and Agents
SECTION 1. Indemnification. The Corporation shall, and does hereby,
indemnify and hold harmless to the fullest extent permitted or authorized by
current or future legislation or current or future judicial or administrative
decisions (but, in the case of any such future legislation or decisions, only to
the extent that it permits the Corporation to provide broader indemnification
rights than permitted prior to such legislation or decisions), each person
(including here and hereinafter, the heirs, executors, administrators, personal
representatives or estate of such person) who was or is a party, or is
threatened to be made a party, or was or is a witness, to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "Proceeding"), from, against and in respect
of any liability (which for purposes of this Article X shall include any
judgment, settlement, penalty or fine) or cost, charge or expense (including
attorneys' fees and expenses) asserted against him or incurred by him by reason
of the fact that such indemnified person (1) is or was a director or officer of
the Corporation or (2) is or was an employee or agent of the Corporation as to
whom the Corporation has agreed in writing to grant such indemnity or (3) is or
was serving, at the request of the Corporation, as a director, officer, employee
or trustee of another corporation, partnership, joint venture, trust or other
enterprise (including serving as a fiduciary of an employee benefit plan) or is
or was serving as an agent of such other corporation, partnership, joint
venture, trust or other enterprise, in each case, as to whom the Corporation has
agreed in writing to grant such indemnity. Each director, officer, employee or
agent of the Corporation as to whom indemnification rights have been granted
under this Section 1 of this Article X shall be referred to as an "Indemnified
Person."
Notwithstanding the foregoing, except as specified in Section 3 of this
Article X, the Corporation shall not be required to indemnify an Indemnified
Person in connection with a Proceeding (or any part thereof) initiated by such
Indemnified Person unless the authorization for such Proceeding (or any part
thereof) was not denied by the Board of Directors of the Corporation within
sixty (60) days after receipt of notice thereof from such Indemnified Person
stating his intent to initiate such Proceeding and only then upon such terms and
conditions as the Board of Directors may deem appropriate.
SECTION 2. Advance of Costs, Charges and Expenses. Costs, charges and
expenses (including attorneys' fees and expenses) incurred by an officer or
director who is an Indemnified Person in defending a Proceeding shall be paid by
the Corporation, to the fullest extent permitted or authorized by current or
future legislation or current or future judicial or administrative decisions
(but, in the case of any such future legislation or decisions, only to the
extent that it permits the Corporation to provide broader rights to advance
costs, charges and expenses than permitted prior to such legislation or
decisions), in advance of the final disposition of such Proceeding, upon receipt
of an undertaking by or on behalf of the Indemnified Person to repay all amounts
so advanced in the event that it shall ultimately be determined that such person
is not entitled to be indemnified by the Corporation as authorized in this
Article X. The Corporation may, upon approval of the Indemnified Person,
authorize the Corporation's counsel to represent such person in any Proceeding,
whether or not the Corporation is a party to such Proceeding. Such authorization
may be made by the Chairman of the Board of Directors, unless he is a party to
such Proceeding, or by the Board of Directors by majority vote, including
directors who are parties to such Proceeding.
SECTION 3. Procedure for Indemnification. Any indemnification or
advance under this Article X shall be made promptly and in any event within
forty-five (45) days upon the written request of the Indemnified Person. The
right to indemnification or advances as granted by this Article X shall be
enforceable by the Indemnified Person in any court of competent jurisdiction, if
the Corporation denies such request under this Article, in whole or in part, or
if no disposition thereof is made within forty-five (45) days. Such Indemnified
Person's costs and expenses incurred in connection with successfully
establishing his right to indemnification or advances, in whole or in part, in
any such action shall also be indemnified by the Corporation. It shall be a
defense to any such action that the claimant has not met the standard of
conduct, if any, required by current or future legislation or by current or
future judicial or administrative decisions for indemnification (but, in the
case of any such future legislation or decisions, only to the extent that it
does not impose a more stringent standard of conduct than permitted prior to
such legislation or decision), but the burden of proving such defense shall be
on the Corporation. Neither the failure of the Corporation (including its Board
of Directors or any committee thereof, its independent legal counsel, and its
shareholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct, if any, nor the fact that
there has been an actual determination by the Corporation (including its Board
of Directors or any committee thereof, its independent legal counsel, or its
shareholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
SECTION 4. Rights Not Exclusive; Contract Right; Survival. The
indemnification provided by this Article X shall not be deemed exclusive of any
other rights to which those indemnified may be entitled under any agreement,
vote of shareholders or disinterested directors or otherwise, both as to actions
in such person's official capacity and as to actions in another capacity while
holding such office, and shall continue as to an Indemnified Person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors, administrators, personal representatives and
estate of such person. All rights to indemnification and advances under this
Article X shall be deemed to be a contract between the Corporation and each
Indemnified Person who serves or served in such capacity at any time while this
Article X is in effect and, as such, are enforceable against the Corporation.
Any repeal or modification of this Article X or any repeal or modification of
relevant provisions of Florida's corporation law or any other applicable laws
shall not in any way diminish these rights to indemnification of or advances to
such Indemnified Person, or the obligations of the Corporation arising
hereunder, for claims relating to matters occurring prior to such repeals or
modification.
SECTION 5. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee, trustee or agent of another corporation,
partnership, joint venture, trust or other enterprise (including serving as a
fiduciary of an employee benefit plan), with respect to any liability asserted
against him and incurred by him in any such capacity or arising out of his
status as such, whether or not the Corporation would have the power to indemnify
him against such liability under the provisions of this Article X or the
applicable provisions of Florida law.
SECTION 6. Savings Clause. If this Article X or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall nevertheless indemnify and hold harmless, and make
advances to, each Indemnified Person as to costs, charges and expenses
(including attorneys' fees), liabilities, judgments, fines and amounts paid in
settlement with respect to any Proceeding, including any action by or in the
right of the Corporation, to the full extent permitted by any applicable portion
of this Article X that shall not have been invalidated and as otherwise
permitted by applicable law.
ARTICLE XI
Seal
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the Corporation,
the state of incorporation, and the words, "Corporate Seal."
ARTICLE XII
Waiver of Notice
Unless otherwise provided by law, whenever any notice is required to be
given to any shareholder or director of the Corporation under the provisions of
these bylaws or under the provisions of its Articles of Incorporation, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
ARTICLE XIII
Rules of Order
Xxxxxxx' Rules of Order, Newly Revised, shall prescribe the rules of
conduct for all meetings of the Corporation so far as not inconsistent with the
laws of Florida, with the Articles of Incorporation, or with these bylaws.
ARTICLE XIV
Amendments
These bylaws may be altered, amended, or repealed and new bylaws may be
adopted by a vote of the Board of Directors.
ARTICLE XV
Corporate Records
The Corporation shall maintain in written form or in a form capable of
conversion into written form (a) permanent records of minutes of all meetings of
its shareholders and Board of Directors, or any committee thereof; or a record
of all action taken without a meeting of its shareholders or Board of Directors,
or any committee thereof; (b) accurate accounting records; (c) a record of its
shareholders in a form that permits preparation of a list of names and addresses
of all shareholders in alphabetical order by class of shares showing the number
and series held by each. Additionally, the Corporation shall keep a copy of (a)
its Articles of Incorporation and all amendments currently in effect; (b) its
Bylaws, or restated Bylaws, and all amendments currently in effect; (c)
resolutions adopted by its Board of Directors creating one or more classes or
series of shares and affixing their relative rights, preferences, and
limitations, if shares issued pursuant thereto are outstanding; (d) minutes of
all shareholders' meetings and records of all action taken by shareholders
without a meeting for the past three years; (e) written communications to all
shareholders, generally, or all shareholders of a class or series within the
past three years, including the financial statements furnished for the past
three years pursuant to the Florida Business Corporation Act; (f) a list of
names and business street addresses of its current Directors and officers; and
(g) its most recent annual report delivered to the Florida Department of State
pursuant to the Florida Business Corporation Act.
ARTICLE XVI
Emergency Bylaws
In the event that a quorum of the Corporation's Board of Directors
cannot readily be assembled because of a catastrophic event, the following
emergency bylaws are in effect until termination of the emergency:
(a) Notice of a meeting of the Board of Directors need only be given to
those Directors whom it is practicable to reach and may be given in any
practicable manner, including by publication and radio;
(b) One or more officers of the Corporation present at the meeting of
the Board of Directors may be deemed to be Directors for the meeting, in order
of rank and within the same rank in order of seniority, as necessary to achieve
a quorum; and
(c) The Director or Directors in attendance at a meeting shall
constitute a quorum.
The Corporation's bylaws not inconsistent with the emergency bylaws
shall remain in effect during an emergency. During an emergency as set forth
herein, the Board of Directors may:
(a) Modify lines of succession to accommodate the incapacity of any
director, officer, employee, or agent; and
(b) Relocate the principal office or designate alternative principal or
regional offices or authorize the officers to do so.
EXHIBIT C
COMPLETE AND FINAL RELEASE
WHEREAS, Palm Resort Group, Inc., a Florida corporation ("Palm
Resort"), and The Berkley Group, Inc., a Florida corporation, ("Shareholder"),
have entered into the Agreement and Plan of Merger, dated as of December 10,
1997 (the "Merger Agreement"), among Fairfield Communities, Inc., a Delaware
corporation ("Fairfield"), FC Palm-Aire, Inc., a Florida corporation and a
wholly owned subsidiary of Fairfield ("Merger Sub"), the Shareholder and Palm
Resort;
WHEREAS, pursuant to the Merger Agreement the Shareholder has agreed to
deliver, and in consideration of the payment of the PPM Loan Amount (as defined
in the Merger Agreement) PPM Brokerage Service, Inc. ("PPM") has agreed to
deliver, a complete and final release of all claims against Palm Resort, Palm
Vacation Group, a Florida general partnership (the "Partnership") and its
partners; and
WHEREAS, the Shareholder acknowledges that it has conferred with its
counsel concerning the effect of this Release.
NOW, THEREFORE, the Shareholder, for itself and its affiliates,
successors and assigns, and PPM, for itself and its affiliates, successors and
assigns, does hereby fully and forever release, relinquish, acquit and discharge
(a) Palm Resort, its successors and assigns, and its and their shareholders,
directors, officers, attorneys, employees, agents, representatives and assets,
and all persons or entities in privity with them or any of them from (i) all
debts, obligations, liabilities, liens and duties under the PPM Loan, (ii) all
claims in respect of loans, advances, project management or marketing fees or
other obligations, and (iii) any and all actions, causes of action, claims,
suits, debts, sums of money, accounts, bonds, bills, covenants, contracts,
agreements, promises, damages, judgments, claims and demands whatsoever, in law
or equity, whether known or unknown and whether now existing or hereafter
arising including, without limitation, any matter described on Schedule 3.2(j)
to the Merger Agreement, except claims arising under Sections 5.1, 5.2 and 5.3
of the Merger Agreement, and (b) the Partnership, its successors, assigns and
partners, and its and their directors, officers, attorneys, employees, agents,
representatives, and assets, and all persons or entities in privity with them or
any of them from (i) all debt, obligations, liabilities, liens and duties under
the Partnership Agreement (as defined in the Merger Agreement), (ii) all claims
in respect of loans, advances, project management or marketing fees or other
obligations, and (iii) all actions, causes of action, claims, suits, debts, sums
of money, accounts, bonds, bills, covenants, contracts, agreements, promises,
damages, judgments, claims and demands whatsoever, in law or equity, whether
known or unknown and whether now existing or hereafter arising including,
without limitation, any matter described on Schedule 3.2(j) to the Merger
Agreement, except claims arising under Sections 5.1, 5.2 and 5.3 of the Merger
Agreement.
The Shareholder and PPM hereby covenant and agree with Palm Resort and
the Partnership to sign, seal, execute and deliver, or cause to be signed,
sealed, executed and delivered, and to make or cause to be done or made, upon
the reasonable request of Palm Resort or the Partnership, any and all
agreements, instruments, papers, deeds, acts or things, supplemental,
confirmatory or otherwise, as may reasonably be required by Palm Resort or the
Partnership for the purpose of, or in connection with, the releases granted
hereunder.
IN WITNESS WHEREOF, this Complete and Final Release is executed as of
the 19th day of December, 1997.
THE BERKLEY GROUP, INC.
By:/s/Xxxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxx
---------------------------
Title: President
PPM BROKERAGE SERVICE, INC.
By:/s/ Xxxxx X. Xxxxxx
----------------------------
Name: Xxxxx X. Xxxxxx
--------------------------
Title: President
Schedule 6.3(g)
OPINION OF COUNSEL FOR
SHAREHOLDER AND PALM RESORT
1. Palm Resort is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida, has full power to own its
properties and to the knowledge of counsel, to carry on the business currently
being conducted by it, and to the knowledge of counsel, does not conduct
business in any state other than Florida. To the knowledge of counsel, Palm
Resort does not now own and has never owned any capital stock or any equity
interest in any corporation, limited liability company, partnership or other
entity except the Interest.
2. The execution, delivery, and consummation of the Agreement has been
duly authorized by the Shareholder and Palm Resort and approved by all necessary
action. The Agreement has been duly executed and delivered by Shareholder and
Palm Resort and constitutes the valid and binding agreement of each of them
enforceable in accordance with its terms.
3. To the knowledge of counsel, neither the execution of the Agreement
nor the consummation of the transactions contemplated thereby will result in the
breach of any term or provision of, or constitute a default under, or be in
violation of any charter provision, bylaw, agreement, instrument, order, law or
regulation to which Shareholder, Palm Resort and/or the Partnership is a party
or which is otherwise applicable.
4. To the knowledge of counsel, there is not (i) any pending or
threatened actions, suits, proceedings or investigations against or affecting
Palm Resort or the Interest or (ii) any currently existing order, writ,
injunction or decree to which Palm Resort is subject.
5. To the knowledge of counsel, Palm Resort and the Partnership are and
have at all times been, in compliance in all material respects with all
applicable laws, rules and regulations and orders.
6. To the knowledge of counsel, there is no fact or circumstance that
would cause any representation or warranty, in whole or in part, of Shareholder
and Palm Resort contained in the Agreement not to be true.
SCHEDULE 3.2(i)
None
SCHEDULE 3.2(j)
None
SCHEDULE 6.3(g)
None
