[Execution Copy]
________________________________________________________________________________
$5,000,000
FIVE-YEAR CONVERTIBLE DEBENTURE
DEBENTURE PURCHASE AGREEMENT
dated
December 22, 1997
between
BUCKHEAD AMERICA CORPORATION
and
BAY HARBOUR MANAGEMENT, L.C.
________________________________________________________________________________
DEBENTURES PURCHASE AGREEMENT dated as of December 22, 1997 (the
"Agreement"), between BUCKHEAD AMERICA CORPORATION, a Delaware
corporation (the "Company"), and BAY HARBOUR MANAGEMENT, L.C., a
Florida limited company, for its managed accounts (the "Purchaser").
The parties hereto agree as follows:
Issuance of Securities and Reservation of Reserved Shares. Subject to the
terms and conditions of this Agreement, the Company has authorized the issuance
of Five Year Convertible Debentures (the "Debentures") in substantially the form
of Exhibit A hereto in the aggregate principal amount of $5,000,000, and the
Company has authorized the reservation of a sufficient number of shares of
Common Stock, par value $.01 per share (the "Common Stock"), of the Company to
provide for conversion of the Debentures (such reserved shares being referred to
herein as the "Reserved Shares").
2. Purchase, Sale and Delivery. On the basis of the representations,
warranties, covenants and agreements, but subject to the terms and conditions,
set forth in this Agreement, at the Closing (as defined below), the Company
agrees to sell and deliver to the Purchaser, and the Purchaser agrees to
purchase from the Company, the Debentures at 100% of the aggregate principal
amount of the Debentures (the "Purchase Price"). The closing (the "Closing") for
the consummation of the transactions contemplated by this Agreement shall take
place on December 22, 1997 at the offices of Xxxxxx, Xxxxx & Xxxxx, 0000 Xxxxxx
xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or on such other date and location as
the Purchaser and the Company may mutually agree (such date of the Closing being
herein referred to as the "Closing Date"). The Purchase Price shall be delivered
to the Company in funds payable at Closing by wire transfer of immediately
available Federal funds (instructions for which will be provided by the Company
to the Purchaser prior to the Closing Date), against receipt of the Debentures
issued to the order of the Purchaser's designees (each a "Managed Account" and
collectively, the "Managed Accounts") as set forth in Annex I hereto in the
respective principal amount set forth beside the name of Managed Account.
3. Representations and Warranties of the Company. The Company represents
and warrants, and agrees, as follows:
(a) Organization. The Company and each of the subsidiaries of the
Company (each a "Subsidiary" and, collectively, the "Subsidiaries"), are
corporations duly organized, validly existing and in good standing under the
laws of their respective jurisdictions of incorporation, and are duly qualified
and in good standing to do business in each jurisdiction in which such
qualification is necessary because of the property owned or leased or because of
the nature of business conducted by it, except for those jurisdictions where the
failure to be so qualified would not, individually or in the aggregate, have a
material adverse effect on the condition (financial or otherwise), assets,
liabilities, operations, earnings, business or prospects of the Company and its
Subsidiaries, taken as a whole (a "Material Adverse Effect").
(a) Capital Stock; Indebtedness; Liens.
(i) The authorized capital stock of the Company as of the date
hereof consists of 3,000,000 shares of Common Stock, par value $.01 per share,
and 200,000 shares of Preferred Stock, par value $100 per share, of which
1,897,779 shares of Common Stock and 30,000 shares of Preferred Stock are
validly issued and outstanding, fully paid and non-assessable, with no personal
liability attaching to the ownership thereof. All outstanding shares of capital
stock of the Company are duly authorized and not subject to any pre-emptive
rights. Except for such 1,897,780 shares of Common Stock, 30,000 shares of
Preferred Stock, the options set forth in Schedule 1(b)(ii), there are no other
shares of capital stock or other securities of the Company issued or
outstanding.
(ii) Except as set forth in Schedule 1(b)(ii), there are no
options, warrants, rights, calls, contracts, commitments or agreements to which
the Company is a party or is bound relating to any shares of capital stock or
other securities of the Company, whether or not outstanding. Except for certain
former stockholders of Lodgekeeper, Inc. for whom the Company maintains a S-3
registration statement with File No. 333-37691 (the "Lodgekeeper S- 3"), no
person has any right to cause the Company to effect the registration under the
Securities Act of 1933, as amended (the "Securities Act"), of Common Stock or
any other securities of the Company. There are no voting trusts, voting
agreements, proxies or other agreements or instruments with respect to the
voting of the Company's capital stock to which the Company is a party or, to the
best of the Company's knowledge, among or between any persons other than the
Company.
(c) Authorization of Agreement. The execution, delivery and
performance by the Company of this Agreement are within the Company's corporate
powers and have been duly authorized by all requisite corporate action by the
Company; and this Agreement has been duly executed and delivered by the Company
and constitutes the valid and binding obligation of the Company, enforceable in
accordance with its terms.
(d) Authorization of Debentures. The issuance, sale and delivery of
the Debentures are within the Company's corporate powers and have been duly
authorized by all requisite corporate action of the Company, and when issued,
sold and delivered in accordance with the provisions of this Agreement, each
Debenture will constitute the valid and binding obligation of the Company,
enforceable in accordance with its terms.
(e) Authorization of Shares. Each Debenture is convertible into Common
Stock in accordance with the terms of this Agreement and of each Debenture. The
Company has duly reserved a sufficient number of shares of Common Stock for
issuance upon conversion of each Debenture. The reservation, issuance and
delivery of the Reserved Shares are within the Company's corporate powers and
have been duly authorized by all requisite corporate action of the Company, and
when issued and delivered in accordance with the terms of this Agreement and the
terms of the Debentures, the Reserved Shares will be validly issued and
outstanding, fully paid and non-assessable with no personal liability attaching
to the ownership thereof, and not subject to preemptive or any other similar
rights of the shareholders of the Company or others. The stockholders of the
Company have no preemptive rights with respect to the Debentures, the Reserved
Shares or the Common Stock.
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(f) Non-Contravention; No Required Consents. The execution, delivery
and performance of this Agreement, the issuance, sale and delivery of the
Debentures and the reservation, issuance and delivery of the Reserved Shares,
and compliance with the provisions hereof and thereof by the Company will not
(i) violate any applicable provision of law, statute, rule or regulation, or any
ruling, writ, injunction, order, judgment, or decree of any court,
administrative agency or other governmental body applicable to the Company, any
of the Subsidiaries or any of their properties or assets or (ii) conflict with
or result in any breach of any of the terms, conditions or provisions of, or
constitute (with due notice or lapse of time, or both) a default (or give rise
to any right of termination, cancellation or acceleration) under or result in
the creation of any lien, security interest, charge or encumbrance upon any of
the properties or assets of the Company under the Company's or any Subsidiary's
certificate of incorporation or bylaws, or (x) any material note, indenture,
mortgage, lease, contract, agreement or instrument to which the Company is a
party or by which it or any of its properties or assets are bound or affected or
(y) any material note, indenture, mortgage, lease, agreement or other contract,
agreement or instrument to which any Subsidiary is a party or by which it or any
of its properties or assets are bound or affected. Except for the filing of any
notice subsequent to the Closing that may be required under applicable Federal
or state securities laws or the Nasdaq Stock Market (which, if required, shall
be filed on a timely basis as may be so required), no consent, approval or
authorization of, or declaration to, or filing with, any Person is required for
the valid authorization, execution, delivery, and performance by the Company of
this Agreement or for the valid authorization, issuance, sale and delivery of
the Debentures or for the valid authorization, reservation, issuance and
delivery of the Reserved Shares. The term "Person", as used herein, means an
individual, a corporation, a partnership, a limited liability company, a trust,
an unincorporated association or any other entity or organization, including,
without limitation, a government or political subdivision or an agency,
instrumentality or official thereof.
(g) Litigation. Except as disclosed in the Reports (as defined below),
there are no actions, suits, claims, investigations or legal or administrative
or arbitration proceedings pending or, to the knowledge of the Company or any
Subsidiary, threatened against or affecting the Company or any Subsidiary,
whether at law or in equity, or before or by any Federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality which individually or in the aggregate would, if adversely
determined, have a Material Adverse Effect, or which in any manner draws into
question the validity of this Agreement, the Debentures or the Reserved Shares
or the transactions contemplated hereby or thereby.
(h) Financial Statements. The consolidated financial statements of the
Company and the Subsidiaries set forth in the (i) Company's Annual Report on
Form 10-KSB for the year ended December 31, 1996, reported on by KPMG Peat
Marwick LLP and (ii) Company's Quarterly Reports on Form 10-QSB for the three
month periods ended March 31, 1997, June 30, 1997, and September 30, 1997, in
each case fairly present the consolidated financial position of the Company and
the Subsidiaries as of such dates and the consolidated results of operation and
cash flows for such periods then ended in conformity with GAAP. KPMG Peat
Marwick LLP is an independent accountant as defined under the Securities Act and
the rules and regulations promulgated thereunder.
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(i) Absence of Changes. Since September 30, 1997, the Company and each
Subsidiary has been operated in the ordinary course of business consistent with
past practice and there has not been (i) any material adverse change in the
condition (financial or otherwise), assets, liabilities, operations, earnings,
business or prospects of the Company and its Subsidiaries, taken as a whole; or
(ii) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of Common Stock, or any direct or
indirect redemption, purchase or other acquisition of any such shares of Common
Stock.
(j) No Defaults. Neither the Company nor any Subsidiary is in default
(i) under its certificate of incorporation or bylaws, or any indenture,
mortgage, lease, purchase or sales order, or any other contract, agreement or
instrument to which the Company or any Subsidiary is a party or by which they or
any of their properties are bound or affected or (ii) with respect to any order,
writ, injunction or decree of any court or any Federal, state, municipal or
other domestic or foreign governmental department, commission, board, bureau,
agency or instrumentality, which defaults individually or in the aggregate would
have a Material Adverse Effect. There exists no condition, event or act which
constitutes, or which after notice, lapse of time, or both, would constitute, a
default under any of the foregoing, which defaults individually or in the
aggregate would have a Material Adverse Effect.
(k) SEC Reports. The Company has delivered to the Purchaser its (i)
Annual Report on Form 10-KSB for the year ended December 31, 1996, (ii)
Quarterly Reports on Form 10-QSB for the three months ended March 31, 1997, June
30, 1997, and September 30, 1997 and (iii) Current Reports on Form 8-K and Form
8-K/A dated April 25, 1997, May 22, 1997, May 29, 1997, June 9, 1997, July 22,
1997, October 8, 1997, December 8, 1997 and December 12, 1997 (together, the
"Reports"). The description of the business, operations, properties and assets
of the Company contained in the Reports, as well as all other factual statements
concerning the Company contained therein, are true, correct and complete in all
material respects and do not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(l) Offering Exemption. Assuming the accuracy of the representations
set forth in Article 4, the offering and sale of the Debentures and the issuance
of the Reserved Shares upon conversion of the Debentures are each exempt from
registration under the Security Act pursuant to Section 4(2) of such Act.
(m) SEC Filings. The Company has timely filed all reports required to
be filed under the Securities Exchange Act of 1934, as amended, (the "Exchange
Act") and any other material reports or documents required to be filed with the
Securities and Exchange Commission ("SEC") since November 30, 1996. The Company
meets the requirements for the use of Form S-3 for the registration of the
resale of the Reserved Shares by the Purchaser.
504231.1
(m) Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Company as follows:
(a) Organization. The Purchaser is a limited company duly
organized, validly existing and in good standing under the laws of Florida, and
is duly qualified and in good standing to do business in each jurisdiction in
which such qualification is necessary because of the property owned or leased or
because of the nature of business conducted by it, except for those
jurisdictions where the failure to be so qualified would not, individually or in
the aggregate, have a Material Adverse Effect.
(b) Authorization of Agreement. The execution, delivery and
performance by the Purchaser of this Agreement are within the Purchaser's
company powers and have been duly authorized by all requisite company action by
the Purchaser; and this Agreement has been duly executed and delivered by the
Purchaser and constitutes the valid and binding obligation of the Purchaser,
enforceable in accordance with its terms.
(c) Investment Purpose. The Managed Accounts are acquiring the
Debentures for investment and not with a view to the distribution thereof except
in compliance with the Securities Act.
(d) Investment Advisor; Managed Accounts. The Purchaser is (i) an
investment adviser registered under Section 203 of the Investment Advisers Act
of 1940, (ii) authorized to act in its capacity as investment advisor on behalf
of each Managed Account to (A) execute and perform this Agreement and (B) make
the representations set forth herein, and (iii) not required to register as a
broker-dealer pursuant to Section 15 of the Exchange Act.
(e) Restricted Securities. The Purchaser understands that the
Debentures have not been registered under the Securities Act; and that each
Debenture is a restricted security within the meaning of Rule 144 under the
Securities Act.
(f) Accredited Investor. Each Managed Account is an Accredited
Investor (as that term is defined in Rule 501 of Regulation D promulgated under
the Securities Act of 1933, as amended. The Purchaser is a resident of the State
of Florida. The Managed Accounts are organized under the laws of the
jurisdiction set forth beside the name of each Managed Account in Annex I hereto
and conduct their investment activities through the offices of the Purchaser
located in Florida. The Managed Accounts do not conduct business in any other
location.
(g) Information. The Purchaser acknowledges that it has received
copies of the Reports, the Lodgekeeper S-3 and all other information requested
from the Company.
Conditions of Obligations of the Purchaser. The obligations of the
Purchaser to perform under this Agreement are subject to the satisfaction of the
following conditions at the Closing unless waived by the Purchaser:
5. Debentures. The Purchaser shall have received duly executed Debentures,
substantially in the form of exhibit A hereto, evidencing the aggregate
principal amount of $5,000,000.
504231.1
(b) Origination Fee. The Purchaser, on behalf of the Managed Accounts,
shall have received from the Company an origination fee in the amount of
$100,000 in immediately available funds.
(c) Purchaser's Fees and Expenses. The Purchaser shall have received
from the Company an amount, not to exceed $50,000, equal to all fees and
expenses paid or incurred by the Purchaser in connection with the negotiation,
execution and delivery of this Agreement and consummation of the transactions
contemplated thereby, including, without limitation, all fees and expenses of
counsel to the Purchaser, and all other related costs and expenses.
(d) Actions Authorized; Certified Copy of Authorizing Resolutions. All
action necessary to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby shall
have been duly and validly taken by the Company, and the Company shall have full
power and right to consummate the transactions contemplated hereby. The Company
shall have furnished to the Purchaser such documents relating to its corporate
existence and authority (including, without limitation, certified copies of the
Company's Certificate of Incorporation, Bylaws, resolutions and minutes of
meetings of the Board of Directors authorizing this Agreement, the Debentures
and the Reserved Shares and good standing certificates from the Secretaries of
State of the states of Delaware and Georgia, and such other matters as the
Purchaser or its counsel may reasonably request.
(e) Legal Opinion. The Purchaser shall have received an opinion dated
the Closing Date of Xxxxxx, Golden & Xxxxxxx, LLP counsel to the Company, in a
form satisfactory to the Purchaser.
(f) Representations and Warranties; Compliance; No Default. The
representations and warranties of the Company in Section 3 shall be true and
correct in all respects on and as of the Closing Date; the Company shall have
complied with all obligations, covenants and conditions required to be complied
with by it pursuant to this Agreement or the Debentures on or prior to the
Closing; and the Purchaser shall have received a certificate signed by the
Company's President and Chief Executive Officer to the foregoing effect. No
Event of Default under the Debentures and no event or condition which, with the
giving of notice or the lapse of time or both, would, unless cured or waived,
become such an Event of Default, shall have occurred and be continuing.
(g) Other Documents. The Company is delivering to the Purchaser such
other certificates or documents as the Purchaser may reasonably request.
(g) Transfer of Debentures.
(a) Restriction on Transfer. A Debenture shall not be
transferable except upon the conditions specified in this Section 6, which
conditions are intended to ensure compliance with the provisions of the
Securities Act in respect of the transfer of such Debenture.
(b) Restrictive Legend. Each Debenture shall (unless otherwise
permitted by the provisions of Section 6(d)) be stamped or otherwise imprinted
with legends in substantially the following form:
504231.1
THESE SECURITIES HAVE NOT BEEN REGISTERRED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES ACTS OR LAWS, AND HAVE BEEN ISSUED AND
SOLD IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF
SUCH ACTS AND LAWS, INCLUDING BUT NOT LIMITED TO THE EXEMPTION
CONTAINED IN SECTION 4(2) OF THE SECURITIES ACT OF 1933. THESE
SECURITIES MAY NOT BE SOLD OR TRANSFERRED UNLESS A REGISTRATION
STATEMENT HAS BECOME AND IS THEN EFFECTIVE WITH RESPECT TO SUCH
SECURITIES OR BUCKHEAD HAS RECEIVED AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO IT, TO THE EFFECT THAT THE PROPOSED SALE OR TRANSFER IS
EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND ALL APPLICABLE STATE SECURITIES ACTS AND LAWS.
(c) Each certificate or other instrument evidencing the
securities issued upon the transfer or conversion of a Debenture (and each
certificate or other instrument evidencing any untransferred balance of such
Debenture) shall bear such legend unless transferred pursuant to an effective
registration statement under the Securities Act or unless registration of future
transfer is not required by the applicable provisions of the Securities Act.
7. Registration of Registrable Stock.
(a) Mandatory Shelf Registrations.
(i) The Company shall, within 15 business days of delivery of (x)
a written request to register Registrable Stock (as defined below) by any holder
of Registrable Stock or (y) the first written notice from the Purchaser (or any
other holder of a Debenture, a "Holder") of an intent to convert a Debenture
(the "Initial Conversion Date"), file with the SEC a Shelf Registration
Statement (as defined below) relating to the offer and sale of the shares of
Common Stock or other securities issued or issuable upon conversion of the
Debentures (the "Registrable Stock") by the holders of Registrable Stock from
time to time in accordance with the methods of distribution elected by such
holders and set forth in such Shelf Registration Statement: "register,"
"registered" and "registration" each refer to a registration of Registrable
Stock effected by filing with the SEC a registration statement in compliance
with the Securities Act and the declaration or ordering by the SEC of
effectiveness of such registration statement. "Shelf Registration" means a
registration effected pursuant to this Section 7. "Shelf Registration Statement"
means a shelf registration statement of the Company filed with the SEC pursuant
to the provisions of this Section 7 which covers all of the Registrable Stock,
as applicable, on Form S-3 under Rule 415 under the Securities Act, or any
similar rule that may be adopted by the SEC, amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
(ii) The Company shall use its best efforts (x) to cause each
Shelf Registration Statement to become effective as promptly as possible but in
no event more than
504231.1
60 days after the Initial Conversion Date and thereafter, no more than 60 days
after the written request to register Registrable Stock, in each case, unless
delayed by events entirely outside the control of the Company, (y) to keep each
Shelf Registration Statement continuously effective in order to permit the
prospectus forming part thereof to be usable by the holders of Registrable Stock
for a period of at least six (6) months from the effective date thereof, and (z)
to cause all the Registrable Stock covered by each Shelf Registration Statement
as of the effective date thereof to be listed on the Nasdaq National Market or
such other principal securities market on which securities of the same class or
series issued by the Company are then listed or traded.
(iii) A request to register Registrable Stock may be made by a
holder of Registrable Stock or a Holder that has provided a notice to convert a
Debenture at any time after the Original Issue Date (as defined in the
Debenture); provided that the holders of Registrable Stock may not make more
than an aggregate of five (5) independent requests to the Company for
registration of Registrable Stock; further provided that no request shall be
made if (i) all holders of all shares of Registrable Stock are eligible to
resell the Registrable Stock pursuant to paragraph (k) of Rule 144 promulgated
under the Securities Act and (ii) all shares of Registrable Stock have been
listed on the Nasdaq National Market or such other principal securities market
on which securities of the same class or series issued by the Company are then
listed or traded.
(b) Registration Procedures. In connection with each Shelf
Registration Statement to be filed by the Company pursuant to this Section 7,
the Company shall:
(i) prepare and file with the SEC a Shelf Registration Statement
on Form S-3 with respect to all Registrable Stock and use its best efforts to
cause such Shelf Registration Statement to become and remain effective as
provided in this Agreement for a period of at least six (6) months or until all
registered stock is sold, which ever occurs first;
(ii) submit to the SEC, within three business days after the
Company learns that no review of the Shelf Registration Statement will be made
by the staff of the SEC or that the staff of the SEC has no further comments on
the Shelf Registration Statement, as the case may be, a request for acceleration
of effectiveness of the Shelf Registration Statement to a time and date not
later than 48 hours after the submission of such request;
prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such Shelf Registration Statement effective and current
for a period of at least six (6) months or until all registered stock is sold,
which ever occurs first, and to comply with the provisions of the Securities Act
with respect to the disposition of all shares covered by such Shelf Registration
Statement, including such amendments and supplements as may be necessary to
reflect the intended method of disposition from time to time of the prospective
seller or sellers of such Registrable Stock;
(iv) furnish (x) to the Purchaser, and its legal counsel, (1)
promptly after the same is prepared and publicly distributed, filed with the SEC
or received by the Company, one copy of the Shelf Registration Statement and any
amendment thereto, each prospectus and each amendment or supplement thereto, (2)
each letter written by or on behalf of the Company to the SEC or the staff of
the SEC and each item of correspondence from the
504231.1
SEC or the staff of the SEC relating to such Shelf Registration Statement (other
than any portion of any thereof which contains information for which the Company
has sought confidential treatment), and (y) to each selling holder of
Registrable Stock such number of copies of a prospectus in conformity with the
requirements of the Securities Act, and such other documents, as such holder may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Stock owned by such holder;
(v) use its best efforts to register or qualify the shares of
Registrable Stock covered by such Shelf Registration Statement under such other
securities or blue sky or other applicable laws of such jurisdictions within the
United States as each prospective seller shall reasonably request, to enable
such seller to consummate the public sale or other disposition in such
jurisdictions of the shares of Registrable Stock owned by such seller; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto (x) to qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 8(b)(v) or (y)
to file a general consent to service of process in any such jurisdiction; and
(vi) furnish to each prospective seller, at the expense of the
Company, a signed counterpart, addressed to the prospective sellers, of (x) an
opinion of counsel for the Company, dated the effective date of the Shelf
Registration Statement, and (y) a "comfort" letter (or, in the case of any such
Person which does not satisfy the conditions for receipt of a "comfort" letter
specified in Statement on Auditing Standards No. 72, an "agreed upon procedures"
letter), dated the effective date of the Shelf Registration Statement, signed by
the independent auditors who have certified the Company's financial statements
included in the Shelf Registration Statement, covering substantially the same
matters with respect to the Shelf Registration Statement (and the prospectus
included therein) and (in the case of the "comfort" or "agreed upon procedures"
letter) with respect to events subsequent to the date of the financial
statements, as are customarily covered (at the time of such registration) in
opinions of issuer's counsel and in "comfort" letters delivered to the
underwriters in underwritten public offerings of securities (with, in the case
of an "agreed upon procedures" letter, such modifications or deletions as may be
required under Statement on Auditing Standards No. 35); provided, however that
the Company shall only be obligated to bear the expense of the first "comfort"
letter requested by the prospective sellers and the expense to obtain a
"comfort" letter in connection with another registration shall be paid by the
prospective sellers requesting such "comfort" letter.
(c) Designation of Underwriter. In the case of any registration
effected pursuant to this Section 7, a majority in interest of the holders of
Registrable Stock shall have the right to designate the managing underwriter in
any underwritten offering, subject to the prior written consent of the Company,
which consent shall not be unreasonably withheld.
(d) Cooperation by Prospective Sellers.
(i) Each prospective seller of Registrable Stock, and each
underwriter designated in accordance with Section 7(c), will furnish to the
Company such information as the Company may reasonably require from such seller
or underwriter in connection with any Shelf Registration Statement (and the
prospectus included therein).
504231.1
(ii) The holders holding shares of Registrable Stock included in
the registration will not (until further notice by the Company) effect sales
thereof (or deliver a prospectus to any purchaser) after receipt of telegraphic
or written notice from the Company to suspend sales to permit the Company to
correct or update a registration statement or prospectus. In connection with any
offering each Holder who is a prospective seller, will not use any offering
document, offering circular or other offering materials with respect to the
offer or sale of Registrable Stock, other than the prospectuses provided by the
Company and any documents incorporated by reference therein.
Expenses. All expenses incurred in complying with this Section 7,
including, without limitation, all registration and filing fees (including all
expenses incident to filing with the National Association of Securities Dealers,
Inc.), fees and expenses of complying with securities and "blue sky" laws,
printing expenses and fees and disbursements of counsel for the Company and
reasonable fees and disbursements of one counsel for the holders of Registrable
Stock, and of the independent certified public accountants shall be paid by the
Company; provided, however, that all underwriting discounts and selling
commissions applicable to the Registrable Stock covered by registrations
effected pursuant to this Section 7 shall not be borne by the Company but shall
be borne by the seller or sellers.
504231.1
(f) Indemnification.
(i) The Company shall indemnify and hold harmless the seller of
any shares of Registrable Stock registered under the Securities Act pursuant to
this Section 7, each underwriter of such shares, if any, each broker or any
other person acting on behalf of such seller and each other person, if any, who
controls any of the foregoing persons, within the meaning of the Securities Act
or the Exchange Act, against any losses, claims, damages or liabilities, joint
or several, to which any of the foregoing persons may become subject under the
Securities Act, or the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in any registration statement under which such Registrable Stock
was registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or any
document prepared or furnished by the Company incident to the registration or
qualification of any Registrable Stock pursuant to this Section 7, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or, with respect to any prospectus, necessary to make the
statements therein in light of the circumstances under which they were made, not
misleading, or any violation by the Company of the Securities Act or state
securities or "blue sky" laws applicable to the Company and relating to action
or inaction required of the Company in connection with such registration or
qualification under such state securities or blue sky laws; and shall reimburse
such seller, such underwriter, broker or other person acting on behalf of such
seller and each such controlling person for any legal or any other expenses
reasonably incurred by any of them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, the
Company shall not be liable in such case (i) to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any
registration statement under which such Registrable Stock was registered under
the Securities Act, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by such seller or
underwriter expressly for use therein and (ii) with respect to any preliminary
prospectus to the extent that any such loss, claim, damage or liability of such
seller results from the fact that such seller or underwriter sold shares of
Registrable Stock to a person to whom there was not sent or given, at or prior
to the written confirmation of such sale, a copy of the final prospectus, or of
the final prospectus as then amended or supplemented, if the Company has
previously furnished copies thereof to such seller or underwriter.
(ii) Each prospective seller of Registrable Stock and any
underwriter acting on its behalf shall indemnify and hold harmless (in the same
manner and to the same extent as set forth in (i) above) the Company, each
director of the Company, each officer of the Company who shall sign any Shelf
Registration Statement and any person who controls the Company within the
meaning of the Securities Act or the Exchange Act, with respect to any untrue
statement or omission from any Shelf Registration Statement, any preliminary
prospectus or prospectus contained therein, or any amendment or supplement
thereof, or any registration or qualification under state securities or "blue
sky" laws, if such untrue statement or omission was made in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by such seller or such underwriter, as the case may be,
504231.1
specifically for use in the preparation of any Shelf Registration Statement,
preliminary prospectus, prospectus or amendment or supplement; provided that the
maximum amount of liability in respect of such indemnification shall be limited,
in the case of each prospective seller of Registrable Stock, to an amount equal
to the net proceeds actually received by such prospective seller from the sale
of Registrable Stock effected pursuant to such registration, except in the case
of an intentional misrepresentation by such prospective seller or underwriter.
(iii) Notwithstanding the foregoing provisions of this Section 7,
if pursuant to an underwritten public offering of Common Stock, the Company, the
selling shareholders and the underwriters enter into an underwriting or purchase
agreement relating to such offering which contains provisions covering
indemnification among the parties thereto in connection with such offering, the
indemnification provisions of Section 7(f) shall be deemed inoperative for
purposes of such offering to the extent inconsistent therewith.
Each party entitled to indemnification under this Section 7(f)
(the "indemnified party") shall give notice to the party required to provide
indemnification (the "indemnifying party") promptly after such indemnified party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the indemnifying party (at its expense) to assume the defense of any
claim or any litigation resulting therefrom, provided that the counsel who shall
conduct the defense of such claim or litigation, shall be reasonably
satisfactory to the indemnified party and shall not, without the indemnified
party's consent (which consent shall not be unreasonably withheld), be counsel
to the indemnifying party, and the indemnified party may participate in such
defense, but only at such indemnified party's expense, and provided, further,
that the omission by any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its obligations under this Section
7(f) except to the extent that the omission results in a failure of actual
notice to the indemnifying party and such indemnifying party is damaged solely
as a result of the failure to give notice. No indemnifying party, in the defense
of any such claim or litigation, shall, except with the consent of each
indemnified party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation.
8. Covenants. The Company agrees that:
(a) Information. The Company shall deliver to each Holder:
(i) (A) as soon as available and in any event within 5 days after
filing of each of the Company's Quarterly Reports on Form 10-QSB (or other
applicable form) and Current Reports on Form 8-K with the SEC, copies of each of
such reports; and (B) as soon as available and in any event within 10 days after
filing of each of the Company's Annual Reports on Form 10-KSB (or other
applicable form) including copies of the Company's Annual Report to Shareholders
and Proxy Statement with the SEC, copies of each of such reports;
(ii) promptly upon the mailing thereof to the shareholders of the
Company generally, copies of all information (other than as described in clause
(i)) so mailed;
(iii) simultaneously with the delivery of each set of financial
statements referred to above, a certificate of the chief financial officer or
the chief accounting officer of the
504231.1
Company stating whether any Event of Default, as defined in the Debentures, or
any condition or event which, with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default, exists on the date of
such certificate and, if any Event of Default or any such condition or event
then exists, setting forth the details thereof and the action which the Company
is taking or proposes to take with respect thereto;
(iv) from time to time such additional information regarding the
financial position or business of the Company and its Subsidiaries as any Holder
may reasonably request (it being understood and agreed that no Holder shall be
entitled to request any confidential or proprietary information of the Company
and its Subsidiaries pursuant to this clause (iv)).
Inspection of Property, Books and Records. The Company will keep,
and will use its best efforts to cause each Subsidiary to keep, proper books of
record and account in which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and activities; and will
permit, and will cause each Subsidiary to permit, representatives of any Holder
at such Holder's expense to visit and inspect any of their respective
properties, to examine and make abstracts from any of their respective books and
records and to discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public accountants, all at
such reasonable times, upon reasonable notice and as often as may reasonably be
desired (it being understood and agreed that no Holder shall be entitled to
request any confidential or proprietary information of the Company and its
Subsidiaries pursuant to this subsection (e)).
(c) Use of Proceeds. The Company will use the proceeds of the sale of
the Debentures for working capital, renovation of existing hotel properties and
other valid corporate purposes.
(d) SEC Filings and S-3 Requirements. The Company will timely file all
reports required to be filed under the Exchange Act and any other material
reports or documents required to be filed in order for the Company to meet the
requirements for use of Form S-3 for registration of the resale of the Reserved
Shares by the Purchaser.
9. Miscellaneous.
(a) Survival of Representations, Warranties and Agreements. All repre-
sentations and warranties hereunder shall survive the Closing. All statements
contained in any certificate or other instrument delivered by the Company or
pursuant to this Agreement or in connection with the transactions contemplated
by this Agreement shall constitute representations and warranties by the Company
under this Agreement.
(b) Entire Agreement; Benefit. This Agreement and the Schedules and
Exhibits hereto, and the Debentures, contain the entire agreement between the
Company and the Purchaser with respect to the transactions contemplated hereby
and supersede all prior agreements or understandings among the parties with
respect thereto. This Agreement and the terms and provisions hereof are for the
sole benefit of the Company, the Purchaser, the Managed Accounts and their
respective successors and permitted assigns.
504231.1
(c) Headings. Descriptive headings are for convenience only and shall
not control or affect the meaning or construction of any provision of this
Agreement.
(d) Notices. All notices or other communications provided for in this
Agreement shall be in writing and shall be sent by confirmed telecopy (with an
undertaking to provide a hard copy) or delivered by hand or sent by overnight
courier service prepaid to the address specified below.
(d) If to the Company:
Buckhead America Corporation
0000 Xxxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Chief Executive Officer
Telecopy: 770-393-2480
with a copy to:
Arnall Golden & Xxxxxxx, LLP
2800 One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: B. Xxxxxx Xxxxx, Xx.
Telecopy: 000-000-0000
If to the Purchaser:
Bay Harbour Management, L.C.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xx. Xxxxxxx Xxxxxxxxxx
Telecopy: 000-000-0000
with a copy to:
Xxxxxx, Xxxxx & Xxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopy: 000-000-0000
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith.
(e) Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
504231.1
(f) Amendments. This Agreement shall not be altered or otherwise
amended except pursuant to an instrument in writing signed by each of (i) the
Company and (ii) the Purchaser, so long as it holds the Debentures or any of the
Reserved Shares issued upon conversion thereof.
(f) Assignment. This Agreement shall not be assignable by either party
without the consent of the other party, except that the Agreement, or the rights
under this Agreement, in whole or in part, may be assigned by the Purchaser to
any party (or parties) who purchases a Debenture.
(h) Expenses; Documentary Taxes; Indemnification.
(i) The Company shall pay (A) all out-of-pocket expenses of the
Purchaser, including fees and disbursements of counsel for the Purchaser, in
connection with the preparation of this Agreement, (B) all out-of-pocket
expenses of each Holder, including fees and disbursements of counsel for such
Holder, in connection with any waiver or consent under this Agreement or under
the Debenture or any amendment of this Agreement or the Debenture or any default
or alleged default under this Agreement or under the Debenture and (C) if an
Event of Default, as defined in the Debenture, occurs, all out-of-pocket
expenses incurred by each Holder, including fees and disbursements of counsel,
in connection with such Event of Default and collection, bankruptcy, insolvency
and other enforcement proceedings resulting therefrom. The Company shall
indemnify each Holder against any transfer taxes, documentary taxes, assessments
or charges made by any governmental authority by reason of the execution and
delivery of this Agreement or the Debenture or any conversion of the Debenture.
(ii) The Company hereby indemnifies and holds the Purchaser and
each Holder and their respective its affiliates, shareholders, officers,
directors, employees and agents (collectively, the "Indemnified Parties")
harmless from and against any and all actions, causes of action, suits, losses,
costs, claims, liabilities and damages, and expenses incurred in connection
therewith (irrespective of whether any such Indemnified Party is a party to the
action for which indemnification hereunder is sought), including attorneys' and
other experts' fees and disbursements (collectively, the "Indemnified
Liabilities"), incurred by the Indemnified Parties or any of them as a result
of, or arising out of, or relating to (A) any transaction financed or to be
financed in whole or in part, directly or indirectly, with the proceeds from the
sale of the Debentures; (B) the entering into and performance of this Agreement
and any other document delivered in connection herewith by any of the
Indemnified Parties, provided that no indemnity shall be sought on account of
claims arising solely out of (x) any violation of law by the Purchaser or any
Holder or (y) the breach by the Purchaser or any Holder of any contract,
agreement or instrument to which the Purchaser or such Holder is a party or (C)
the enforcement of the rights of the Indemnified Parties under this Section
9(h).
(iii) An Indemnified Party shall give notice to the Indemnifying
Party of any claim of indemnification pursuant to this Section 9(h) promptly
after such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought and shall permit the Indemnifying Party (at its expense)
to assume the defense of any claim or any litigation resulting therefrom,
provided that the counsel who shall conduct the defense of such claim or
504231.1
litigation, shall be reasonably satisfactory to the Indemnified Party and shall
not, without the Indemnified Party's consent (which consent shall not be
unreasonably withheld), be counsel to the Indemnifying Party, and the
Indemnified Party may participate in such defense, but only at such Indemnified
Party's expense and provided, further, that the omission by the Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its obligations under this Section 9(h) except to the extent that the
omission results in a failure of actual notice to the Indemnifying Party and
such Indemnifying Party is damaged solely as a result of the failure to give
notice. No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. In any case in which the Indemnifying Party does not assume the
defense of any claim or any litigation for which indemnification may or has been
sought pursuant to this Section 9(h), the Indemnified Party shall be entitled to
be represented by the counsel of such Indemnified Party's choice in connection
with the defense (including any investigation) of any third party claim against
or involving such Indemnified Party and, the Company shall pay, or reimburse
such Indemnified Party for, the fees and expenses of such counsel and all other
expenses relating to such defense. This indemnity shall survive repayment or
transfer of the Debentures, the conversion of any Debenture into Reserved Shares
or the transfer of any Reserved Shares. The Company's obligation to any
Indemnified Party under this indemnity shall be without regard to fault on the
part of the Company with respect to the violation or condition which results in
liability of any Indemnified Party. If and to the extent that the foregoing
undertaking is determined to be unenforceable for any reason, the Company hereby
agrees to make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law.
(iv) Nothing contained in this Section 9(h), or elsewhere in this
Agreement, shall be deemed an election of remedies under this Agreement or limit
in any way the liability of any party under any other agreement to which such
party is a party relating to this Agreement or the transactions contemplated by
this Agreement.
(i) Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.
(j) Further Assurances. Each party to this Agreement will perform any
and all acts and execute any and all documents as may be necessary and proper
under the circumstances in order to accomplish the intents and purposes of this
Agreement and to carry out its provisions.
(k) Construction. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
504231.1
(m) CONSENT TO JURISDICTION. EACH OF THE HOLDERS AND THE COMPANY
HEREBY SUBMITS TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW
YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE DEBENTURE OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF
THE HOLDERS AND THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE
VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
EACH OF THE HOLDERS AND THE COMPANY CONSENTS TO THE SERVICE OF PROCESS IN ANY
SUCH PROCEEDING BY THE DELIVERY (BY OVERNIGHT COURIER) TO IT AT ITS ADDRESS
SPECIFIED IN SECTION 9(D) OF THIS AGREEMENT (OR IN THE CASE OF A HOLDER OTHER
THAN THE PURCHASER, TO ITS ADDRESS AS IT APPEARS IN THE REGISTER MAINTAINED BY
THE COMPANY). EACH OF THE HOLDERS AND THE COMPANY FURTHER AGREES THAT A FINAL
JUDGMENT IN ANY SUCH PROCEEDING SHALL BE CONCLUSIVE AND BINDING AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW.
(n) WAIVER OF JURY TRIAL. THE COMPANY AND EACH OF THE HOLDERS HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
504231.1
IN WITNESS WHEREOF, this Debenture Purchase Agreement has been duly
executed by an officer of each of the parties hereto thereunto duly authorized
all on the date first above written.
BUCKHEAD AMERICA CORPORATION
By:______________________________
Name:
Title:
BAY HARBOUR MANAGEMENT, L.C.
By:______________________________
Name:
Title:
Annex I
The Debentures are to be issued to the following Managed Accounts in the
amount set forth beside the name of each Managed Account:
Jurisdiction of
Managed Account Organization Principal Amount
Trophy Hunter Investments, L.P. Florida $1,000,000.00
Lipstick, Ltd. Bahamas $750,000.00
Bay Harbour 90-1, L.P. Florida $1,250,000.00
Bay Harbour Partners, Ltd. Bahamas $2,000,000.00
------------
Total $5,000,000.00
