Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
by and among
CENDANT CORPORATION
CARDIGAN ACQUISITION CORPORATION
and
EQUIVEST FINANCE, INC.
dated
December 16, 2001
TABLE OF CONTENTS
-----------------
Page
ARTICLE I THE MERGER ..........................................................2
Section 1.1 The Merger ...........................................2
Section 1.2 Closing ................ ..... .......................2
Section 1.3 Effective Time .......................................2
Section 1.4 Effects of the Merger ................................3
Section 1.5 Certificate of Incorporation and Bylaws
of the Surviving Corporation .......................3
Section 1.6 Directors and Officers ...............................3
Section 1.7 Subsequent Actions ...................................3
Section 1.8 Stockholders' Meeting ................................4
Section 1.9 Merger Without Meeting of Stockholders ...............5
ARTICLE II CONVERSION OF SECURITIES ...........................................6
Section 2.1 Conversion of Capital Stock ..........................6
Section 2.2 Exchange of Certificates .............................6
Section 2.3 Dissenting Shares ....................................8
Section 2.4 Option Plan ..........................................9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY ....................9
Section 3.1 Corporate Organization; Authority; No Violation......10
Section 3.2 Capitalization; Subsidiaries ........................12
Section 3.3 Company SEC Documents; Company Financial Statements;
Company Public Offering Statements ................14
Section 3.4 Directors, Officers, Employees, Employee Benefit
Plans; ERISA ......................................15
Section 3.5 Intellectual Property ...............................18
Section 3.6 Assets ..............................................19
Section 3.7 Litigation ..........................................19
Section 3.8 Real Property .......................................20
Section 3.9 Exempt Assets .......................................23
Section 3.10 Contracts ...........................................23
Section 3.11 Absence of Undisclosed Liabilities ..................25
Section 3.12 Licenses; Compliance with Laws ......................25
Section 3.13 Environmental Matters ...............................26
Section 3.14 Tax Matters .........................................28
Section 3.15 Accounts Receivable .................................31
Section 3.16 Absence of Certain Changes or Events ................32
Section 3.17 Affiliated Transactions .............................32
Section 3.18 Insurance ...........................................33
Section 3.19 Brokers and Finders .................................34
Section 3.20 Debt Instruments ....................................34
Section 3.21 Resorts .............................................34
Section 3.22 Associations ........................................36
Section 3.23 Equivest Vacation Club ..............................37
Section 3.24 Certain Definitions .................................39
Section 3.25 No Liability for Affiliate Obligations ..............41
Section 3.26 Information in the Proxy Statement ..................41
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER ........42
Section 4.1 Organization ........................................42
Section 4.2 Authorization; Validity of Agreement;
Necessary Action ..................................42
Section 4.3 Consents and Approvals; No Violations ...............43
Section 4.4 Information in the Proxy Statement ..................43
Section 4.5 Financing ...........................................43
Section 4.6 Brokers and Finders .................................43
Section 4.7 Ownership of Purchaser; No Prior Activities .........44
Section 4.8 Ownership of Shares .................................44
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER .............................44
Section 5.1 Interim Operations of the Company ...................44
Section 5.2 No Solicitation .....................................48
Section 5.3 Acquisition Proposals ...............................50
ARTICLE VI ADDITIONAL AGREEMENTS .............................................51
Section 6.1 Additional Agreements ...............................51
Section 6.2 Notification of Certain Matters .....................51
Section 6.3 Access; Confidentiality .............................52
Section 6.4 Consents and Approvals ..............................54
Section 6.5 Publicity ...........................................55
Section 6.6 Directors' and Officers' Insurance
and Indemnification ...............................56
Section 6.7 Litigation ..........................................57
Section 6.8 State Takeover Laws .................................57
Section 6.9 Employees Benefits ..................................57
Section 6.10 Resignations and Appointments .......................58
ARTICLE VII CONDITIONS .......................................................58
Section 7.1 Conditions to Each Party's Obligations
to Effect the Merger ..............................58
Section 7.2 Conditions to Obligations of the Purchaser ..........59
Section 7.3 Conditions to Obligations of the Company ............60
ARTICLE VIII TERMINATION .....................................................61
Section 8.1 Termination .........................................61
Section 8.2 Effect of Termination ...............................62
ARTICLE IX MISCELLANEOUS .....................................................63
Section 9.1 Amendment and Modification ..........................63
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Section 9.2 Non-survival of Representations and Warranties ......63
Section 9.3 Expenses ............................................63
Section 9.4 Notices .............................................63
Section 9.5 Interpretation ......................................65
Section 9.6 Certain Tax Elections ...............................65
Section 9.7 Counterparts ........................................66
Section 9.8 Entire Agreement; No Third-Party Beneficiaries ......66
Section 9.9 Severability ........................................66
Section 9.10 Governing Law .......................................67
Section 9.11 Assignment ..........................................67
Section 9.12 Headings ............................................67
Section 9.13 Jurisdiction and Venue ..............................67
Section 9.14 Acknowledgements ....................................67
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INDEX OF DEFINED TERMS
----------------------
Nasdaq ........................................................................4
Acquisition Agreement ........................................................50
Acquisition Proposal .........................................................51
Acquisition Proposal Interest ................................................50
Action .......................................................................19
affiliates ...................................................................65
Agreement .....................................................................1
Amenities ....................................................................39
Assignee .....................................................................67
Association ..................................................................36
Average Premium ..............................................................57
Balance Sheet ................................................................25
Balance Sheet Date ...........................................................25
Bankruptcy Case ..............................................................41
Xxxxxxx Stock Purchase Agreement ..............................................1
CBA ..........................................................................15
Certificate of Merger .........................................................2
Certificates ..................................................................7
Closing .......................................................................2
Closing Date ..................................................................2
Code .........................................................................17
Company .......................................................................1
Company Board of Directors ....................................................1
Company Employees ............................................................58
Company Public Offering Statements ...........................................14
Company SEC Documents ........................................................14
Confidentiality Agreement ....................................................49
Controlled Associations ......................................................58
D&O Insurance ................................................................56
Debt Instrument ..............................................................40
Debtors ......................................................................41
DGCL ..........................................................................1
Dissenting Shares .............................................................8
DS&R .........................................................................37
Effective Time ................................................................3
Environmental Claim ..........................................................27
Environmental Laws ...........................................................28
ERISA ........................................................................16
ERISA Affiliate ..............................................................16
Exchange Act ..................................................................5
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Exempt Assets ................................................................23
Expense Reimbursement ........................................................63
Federal Class Action .........................................................20
Final Judgment ...............................................................20
Florida Action ...............................................................20
GAAP .........................................................................14
Governmental Authority .......................................................12
Hyperion .....................................................................52
Improvements .................................................................22
Intellectual Property ........................................................19
IRS ..........................................................................16
Laws .........................................................................26
Lease ........................................................................20
Leased Real Property .........................................................20
Liens ........................................................................13
Loans Receivable .............................................................24
Material Adverse Effect ......................................................10
Material Contracts ...........................................................24
Materials of Environmental Concern ...........................................28
Merger ........................................................................1
Merger Consideration ..........................................................6
Mortgage .....................................................................40
Option ........................................................................9
Option Plan ...................................................................9
Order ........................................................................12
Owned Real Property ..........................................................20
Parent ........................................................................1
Parent Plans .................................................................58
Paying Agent ..................................................................7
PBGC .........................................................................17
Permits ......................................................................25
Permitted Liens ..............................................................19
Person .......................................................................65
PIK Issuances ................................................................45
Plan .........................................................................16
Proxy Statement ...............................................................4
Purchaser .....................................................................1
Purchaser Common Stock ........................................................6
Real Property ................................................................20
Representatives ..............................................................48
Resort Documents .............................................................35
Resorts ......................................................................14
Restraints ...................................................................59
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SEC ...........................................................................4
Securities Act ...............................................................14
Series 2 Preferred Stock ......................................................1
Share Issuances ..............................................................45
Shares ........................................................................1
Special Meeting ...............................................................4
Stock Purchase Agreements .....................................................1
Stockholder ...................................................................1
Subsidiary ...................................................................10
Superior Proposal ............................................................49
Surviving Corporation .........................................................2
Tax ..........................................................................31
Tax Claim ....................................................................29
Tax Claims ...................................................................29
Tax Return ...................................................................31
Taxes ........................................................................31
Termination Fee ..............................................................62
Transactions .................................................................10
Trust ........................................................................37
Trust Agreement ..............................................................37
VOI ..........................................................................40
VOI Laws .....................................................................40
VOI Receivables ..............................................................40
VOI Registrations ............................................................41
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AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER (hereinafter referred to as this
"Agreement"), dated December 16, 2001, by and among Cendant Corporation, a
Delaware corporation ("Parent"), Cardigan Acquisition Corporation, a Delaware
corporation and a wholly-owned subsidiary of Parent (the "Purchaser"), and
Equivest Finance, Inc., a Delaware corporation (the "Company").
WHEREAS, the Board of Directors of each of Parent, the
Purchaser and the Company has approved, and deems it advisable and in the best
interests of its respective stockholders to enter into this Agreement and the
transactions contemplated hereunder, including to consummate a transaction
whereby the Purchaser will merge with and into the Company (the "Merger"), with
the Company being the surviving corporation, in accordance with the General
Corporation Law of the State of Delaware (the "DGCL") and upon the terms and
subject to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company (the "Company
Board of Directors") has determined that the consideration to be paid for each
issued and outstanding shares of common stock, par value $0.01, of the Company
(collectively the "Shares") in the Merger is fair to the holders of such Shares
and has resolved to recommend that the holders of such Shares approve this
Agreement, upon the terms and subject to the conditions set forth herein;
WHEREAS, as a condition and further inducement to Parent and
the Purchaser to enter into this Agreement and incur the obligations set forth
herein, certain stockholders of the Company (each, a "Stockholder") concurrently
herewith are entering into stock purchase agreements (the "Stock Purchase
Agreements"), dated as of the date hereof, with the Purchaser, in the forms
attached hereto as Exhibits X-0, X-0 and A-3, respectively, (such Stock Purchase
Agreement attached hereto as Exhibit A-1, the "Xxxxxxx Stock Purchase
Agreement") pursuant to which each such Stockholder has agreed, among other
things, to sell the Shares and/or the shares of Series 2 Class A Cumulative
Redeemable Preferred Stock, par value $3.00 per share (the "Series 2 Preferred
Stock"), of the Company held by each such Stockholder upon payment by Parent of
the applicable purchase price pursuant to the Stock Purchase Agreements, upon
the terms and subject to the conditions set forth therein; and
WHEREAS, the Company, Parent and Purchaser desire to make
certain representations, warranties, covenants and agreements in connection with
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, the
parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the DGCL, the
Purchaser shall be merged with and into the Company at the Effective Time.
Following the Effective Time, the Company shall be the surviving corporation
(the "Surviving Corporation"), shall become a subsidiary of Parent and shall
succeed to and assume all the rights and obligations of the Purchaser in
accordance with the DGCL.
Section 1.2 Closing. Subject to the satisfaction or waiver of all
the conditions to closing contained in Article VII hereof, the closing of the
Merger (the "Closing") will take place at 10:00 a.m. on a date to be specified
by the parties (the "Closing Date"), which shall be no later than the second day
after satisfaction or waiver of the conditions set forth in Article II (other
than those conditions that by their nature are to be satisfied at the Closing,
but subject to the fulfillment or waiver of those conditions). The Closing will
be held at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, Xxxx Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at such other location as is agreed to by
the parties hereto.
Section 1.3 Effective Time. Subject to the provisions of this
Agreement, as soon as practicable following the Closing, the parties shall cause
the Merger to be consummated by filing a certificate of merger (the "Certificate
of Merger") executed in accordance with the relevant provisions of the DGCL and
shall make all other filings or recordings required under the DGCL to effectuate
the Merger. The Merger shall become effective at such time as the Certificate of
Merger is duly filed with the Secretary of State of the State of Delaware, or at
such subsequent date or time as Parent and the Company shall agree and specify
in the Certificate of Merger (the time the Merger becomes effective being
hereinafter referred to as the "Effective Time").
Section 1.4 Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
Section 1.5 Certificate of Incorporation and Bylaws of the
Surviving Corporation. The certificate of incorporation and the bylaws of the
Purchaser, as in effect immediately prior to the Effective Time, shall be the
certificate
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of incorporation and the bylaws of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law, except that the
first article of the certificate of incorporation of the Purchaser shall be
amended as of the Effective Time to read in its entirety as follows: "The name
of the corporation is Equivest Finance, Inc.", and (ii) the fourth article of
the certificate of incorporation of the Purchaser shall be amended as of the
Effective Time to read in its entirety as follows: "The total number of shares
of stock of which the Corporation shall have authority to issue is 28,377,870
shares of Common Stock, each having a par value of $.01."
Section 1.6 Directors and Officers. Subject to applicable Law (as
defined in Section 3.12), the directors of the Purchaser shall, from and after
the Effective Time, become the directors of the Surviving Corporation until
their successors shall have been duly elected, appointed or qualified or until
their earlier death, resignation or removal in accordance with the certificate
of incorporation and the bylaws of the Surviving Corporation. The officers of
the Company shall, from and after the Effective Time, become the officers of the
Surviving Corporation until their successors shall have been duly elected,
appointed or qualified or until their earlier death, resignation or removal in
accordance with the certificate of incorporation and the bylaws of the Surviving
Corporation.
Section 1.7 Subsequent Actions. If at any time after the
Effective Time the Surviving Corporation shall determine, in its sole
discretion, or shall be advised, that any deeds, bills of sale, assignments,
assurances or any other actions or things are necessary or desirable to vest,
perfect or confirm of record or otherwise in the Surviving Corporation its
right, title or interest in, to or under any of the rights, properties or assets
of either of the Company or the Purchaser acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the Merger or
otherwise to carry out this Agreement, then the officers and directors of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of either the Company or the Purchaser, all such deeds, bills of
sale, instruments of conveyance, assignments and assurances and to take and do,
in the name and on behalf of each of such corporations or otherwise, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title or interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Agreement.
Section 1.8 Stockholders' Meeting.
(a) If required by applicable Law or the applicable rules and
regulations of The Nasdaq Stock Market, Inc. ("Nasdaq") in order to consummate
the Merger, the Company, acting through the Company Board of Directors, shall,
in accordance with applicable Law, the Company's certificate of incorporation
and bylaws and the applicable rules and regulations of Nasdaq:
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(i) duly call, give notice of, convene and hold a
special meeting of its stockholders (the "Special Meeting")
as soon as reasonably practicable following the execution of
this Agreement for the purpose of considering and taking
action upon this Agreement;
(ii) prepare and file with the Securities and Exchange
Commission (the "SEC") a preliminary proxy or information
statement relating to the Merger and this Agreement and use
its reasonable efforts to obtain and furnish the information
required to be included by the SEC in the Proxy Statement
(as hereinafter defined) and, after consultation with
Parent, respond promptly to any comments made by the SEC
with respect to the preliminary proxy or information
statement and cause a definitive proxy or information
statement (the "Proxy Statement") to be mailed to its
stockholders;
(iii) subject to Section 5.2(c), include in the Proxy
Statement the recommendation of the Company Board of
Directors that stockholders of the Company vote in favor of
the approval of this Agreement; and
(iv) use its reasonable best efforts to solicit from
holders of Shares proxies in favor of this Agreement and
take all other action reasonably necessary or advisable to
secure the approval of stockholders required by the DGCL,
any other applicable Law and the Company's certificate of
incorporation to effect the Merger.
(b) If applicable Law or the applicable rules and regulations
of Nasdaq require a vote of the stockholders of the Company in order to
consummate the Merger, Parent and Purchaser (and/or one or more of the
Stockholders) may, in lieu of requiring the Company call a special meeting of
its stockholders as contemplated above, elect to approve this Agreement by
written consent without a meeting of the Company's stockholders, as permitted by
the certificate of incorporation and bylaws of the Company and to the extent
permitted by the rules and regulations of Nasdaq . If Parent and Purchaser
(and/or one or more of the Stockholders) elect to approve this Agreement by
written consent, the Company shall take all actions necessary to permit and
assist Parent and the Purchaser to take such action by written consent,
including, without limitation, making and assisting in such filings with the
SEC, and preparing and mailing an information statement and such other
materials, as may be required under the federal securities laws and the DGCL.
4
(c) Parent agrees to vote, or cause to be voted, all of the
Shares then owned by it, the Purchaser or any of its other Subsidiaries and
affiliates in favor of the approval of this Agreement.
(d) Each of Parent and the Purchaser will furnish to the
Company the information relating to it reasonably requested by the Company and
required by the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "Exchange Act") to be set forth in the
Proxy Statement.
Section 1.9 Merger Without Meeting of Stockholders.
Notwithstanding Section 1.8, in the event that Parent, the Purchaser or any
other Subsidiary of Parent shall acquire at least 90% of the outstanding shares
of each class of the stock of the Company of which class there are outstanding
shares (within the meaning of Section 253 of the DGCL), the parties hereto
agree, at the request of Parent and subject to Article VII, to take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after such acquisition, without a meeting of stockholders of the
Company, in accordance with Section 253 of the DGCL.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holders
of any Shares or Series 2 Preferred Stock, or common stock, par value $0.01 per
share, of the Purchaser (the "Purchaser Common Stock"):
(a) Purchaser Common Stock. Each issued and outstanding share
of Purchaser Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock.
All Shares that are owned by the Company as treasury stock and any Shares and
shares of Series 2 Preferred Stock owned by Parent, the Purchaser or any other
wholly-owned Subsidiary of Parent or the Purchaser shall be cancelled and
retired and shall cease to exist, and no consideration shall be delivered in
exchange therefor.
(c) Conversion of Shares. Each issued and outstanding Share
(other than Shares to be cancelled in accordance with Section 2.1(b) and other
than Dissenting Shares (as defined in Section 2.3(a)) shall be converted into
the right to receive $3.00 in cash, without interest (the "Merger
Consideration"). From and
5
after the Effective Time, all such Shares shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to exist, and each
holder of a certificate representing any such Shares shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration therefor upon the surrender of such certificate in accordance with
Section 2.2, without interest thereon.
(d) Series 2 Preferred Stock. Each issued and outstanding
share of Series 2 Preferred Stock (other than shares to be cancelled in
accordance with Section 2.1(b)) shall be cancelled and retired and the holder of
each such share shall cease to have any rights with respect thereto, except the
right to receive an aggregate amount in cash equal to $1,000 per share plus
accrued and unpaid dividends through the Effective Time.
Section 2.2 Exchange of Certificates.
(a) Paying Agent. Parent shall designate a bank or trust
company reasonably acceptable to the Company to act as agent for the holders of
Shares in connection with the Merger (the "Paying Agent") and to receive the
funds to which holders of Shares shall become entitled pursuant to Section
2.1(c). Prior to the Effective Time, Parent or the Purchaser shall deposit, or
cause to be deposited, with the Paying Agent the aggregate Merger Consideration.
For purposes of determining the amount of Merger Consideration to be so
deposited, Parent and the Purchaser shall assume that no stockholder of the
Company will perfect any right to appraisal of his, her or its Shares. Such
funds shall be invested by the Paying Agent as directed by Parent or the
Surviving Corporation, in its sole discretion, pending payment thereof by the
Paying Agent to the holders of the Shares. Earnings from such investments shall
be the sole and exclusive property of Parent and the Surviving Corporation, and
no part of such earnings shall accrue to the benefit of holders of Shares or
Series 2 Preferred Stock.
(b) Exchange Procedures. Promptly after the Effective Time,
Parent or the Purchaser shall cause the Paying Agent to mail to each holder of
record of a certificate or certificates, which immediately prior to the
Effective Time represented outstanding Shares (the "Certificates"), whose shares
were converted pursuant to Section 2.1 into the right to receive the Merger
Consideration (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Paying Agent and shall be in such
form and have such other provisions as Parent may reasonably specify) and (ii)
instructions for effecting the surrender of the Certificates in exchange for
payment of the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive, and Parent shall
cause the Paying
6
Agent to promptly pay, in exchange therefor the Merger Consideration for each
Share formerly represented by such Certificate and the Certificate so
surrendered shall forthwith be cancelled. If payment of the Merger Consideration
is to be made to a Person other than the Person in whose name the surrendered
Certificate is registered, it shall be a condition precedent of payment that (x)
the Certificate so surrendered shall be properly endorsed or shall be otherwise
in proper form for transfer, and (y) the Person requesting such payment shall
have paid any transfer and other Taxes (as defined in Section 3.14) required by
reason of the payment of the Merger Consideration to a Person other than the
registered holder of the Certificate surrendered or shall have established to
the satisfaction of the Surviving Corporation that such Tax either has been paid
or is not required to be paid. Until surrendered as contemplated by this Section
2.2, each Certificate shall represent at any time after the Effective Time only
the right to receive the aggregate Merger Consideration relating thereto. If any
holder of Shares shall be unable to surrender such holder's Certificates because
such Certificates have been lost, mutilated or destroyed, such holder may
deliver in lieu thereof an affidavit and indemnity bond (if reasonably required
by the Surviving Corporation) in form and substance and with surety reasonably
satisfactory to the Surviving Corporation.
(c) Transfer Books; No Further Ownership Rights in Shares. At
the Effective Time, the stock transfer books of the Company shall be closed and
thereafter there shall be no further registration of transfers of Shares on the
records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided for herein or by applicable Law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Article II.
(d) Termination of Fund; No Liability. At any time following
six months after the Effective Time, the Surviving Corporation shall be entitled
to require the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) made available to the Paying Agent and not
disbursed (or for which disbursement is pending subject only to the Paying
Agent's routine administrative procedures) to holders of Certificates, and
thereafter such holders shall be entitled to look only to the Surviving
Corporation (subject to abandoned property, escheat or other similar Laws) only
as general creditors thereof with respect to the Merger Consideration payable
upon due surrender of their Certificates, without any interest thereon.
Notwithstanding the foregoing, neither the Surviving Corporation nor the Paying
Agent shall be liable to any holder of a Certificate for Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar Law.
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Section 2.3 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the
contrary, Shares outstanding immediately prior to the Effective Time and held by
a holder who has not voted in favor of this Agreement or consented thereto in
writing and who has complied with Section 262 of the DGCL ("Dissenting Shares")
shall not be converted into a right to receive the Merger Consideration, unless
such holder fails to perfect or withdraws or otherwise loses his or her right to
appraisal. A holder of Dissenting Shares shall be entitled to receive payment of
the appraised value of such Shares held by him or her in accordance with Section
262 of the DGCL, unless, after the Effective Time, such holder fails to perfect
or withdraws or loses his or her right to appraisal, in which case such Shares
shall be converted into and represent only the right to receive the Merger
Consideration, without interest thereon, upon surrender of the Certificate or
Certificates representing such Shares pursuant to Section 2.2.
(b) The Company shall give Parent (i) prompt notice of any
written demands for appraisal of any Shares, attempted withdrawals of such
demands and any other instruments served pursuant to the DGCL and received by
the Company relating to rights of appraisal and (ii) the opportunity to
participate in the conduct of all negotiations and proceedings with respect to
demands for appraisal under the DGCL. Except with the prior written consent of
Parent, the Company shall not voluntarily make any payment with respect to any
demands for appraisal or settle or offer to settle any such demands for
appraisal.
Section 2.4 Option Plan. Effective as of the Effective Time, each
outstanding stock option, stock equivalent right or right to acquire Shares
(each, an "Option") granted under the Company's 1997 Long-Term Incentive Plan,
as amended, (the "Option Plan"), whether or not then exercisable or vested,
shall, immediately prior to the Effective Time, be cancelled and, in
consideration of such cancellation, Parent shall, or shall cause the Purchaser
to, pay to the holder of each such Option an amount in cash equal to the product
of (a) the excess, if any, of the Merger Consideration over the exercise price
of each such Option multiplied by (b) the number of Shares subject thereto
without regard to whether previously vested (such payment, if any, to be net of
applicable withholding and excise Taxes). Prior to the Effective Time, the
Company shall take all actions necessary to permit the actions contemplated by
the preceding sentence and to assure that, as of the Effective Time, the Option
Plan shall terminate and all rights under any provision of any other plan,
program or arrangement providing for the issuance or grant of any other interest
in respect of the capital stock of the Company or any Subsidiary of the Company
shall be cancelled. The Company shall provide notices to each holder of an
Option which provides for an acknowledgement that, among other things, upon the
cash-out of the Option as provided for in this Section 2.4, such Option shall be
cancelled and the
8
former holders of such Option shall have no further rights with respect to such
Option.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Except as set forth in the schedule of exceptions to the
Company's representations and warranties set forth herein delivered to Parent
prior to the execution of this Agreement, the Company represents and warrants to
Parent and the Purchaser as set forth below. Disclosure made with reference to
one or more schedules shall be deemed disclosed with respect to another schedule
if and to the extent that such disclosure is clearly referenced on such other
schedule. Disclosure of any matter in the schedule of exceptions shall not be
deemed an admission that such matter is material.
Section 3.1 Corporate Organization; Authority; No Violation.
(a) The Company and each of its Subsidiaries is a corporation or
other entity duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and has all requisite corporate or
similar power and authority to own, lease, operate or otherwise hold its
properties and assets and to carry on its business as now being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power and authority would not reasonably be expected to have a
material adverse effect, individually or in the aggregate, on the business,
results of operations, assets, liabilities or condition (financial or otherwise)
of the Company and its Subsidiaries taken as a whole (including the Company's
ability to consummate each of the Transactions) (a "Material Adverse Effect").
The Company and each of its Subsidiaries are duly qualified or licensed and in
good standing as a foreign corporation or other entity authorized to do business
under the Laws of each jurisdiction where the character of the properties owned,
leased or used by it or the nature of its activities makes such qualification or
licensing necessary, except where the failure to be so qualified or licensed or
in good standing would not reasonably be expected to have a Material Adverse
Effect. Schedule 3.1(a) sets forth a complete and correct list of each
Subsidiary of the Company and of all jurisdictions in which the Company and each
such Subsidiary is qualified or licensed to do business. As used in this
Agreement, "Subsidiary" of any Person means any entity, whether incorporated or
unincorporated, in which such Person, owns, directly or indirectly, at least a
majority of the securities or ownership interests having by their terms ordinary
voting power to elect a majority of the board of directors or other Persons
performing similar functions.
9
(b) The Company has full corporate power and authority to execute
and deliver this Agreement and has the full corporate power and authority to
perform the transactions provided for or contemplated by this Agreement,
including, but not limited to, the Merger (collectively, the "Transactions").
The execution, delivery and performance by the Company of this Agreement, and
the consummation by it of the Transactions, have been duly and validly
authorized by the Company Board of Directors, and no other corporate action on
the part of the Company is necessary (other than, if required by applicable Law
with respect to the Merger, the approval of this Agreement by holders of a
majority of the Shares and the holders of 66-2/3% of the Series 2 Preferred
Stock and the filing of the Certificate of Merger pursuant to the DGCL) to
authorize the execution and delivery by the Company of this Agreement and the
consummation by it of the Transactions. This Agreement has been duly executed
and delivered by the Company and, assuming due and valid authorization,
execution and delivery hereof by the other parties hereto, is a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms.
(c) The Company Board of Directors, at a meeting duly called and
held, has unanimously (i) determined that this Agreement and the Merger are
advisable and fair to and in the best interests of the stockholders of the
Company, (ii) duly and validly approved and taken all corporate action required
to be taken by the Company Board of Directors to authorize the consummation of
the Transactions, and (iii) resolved to recommend that the stockholders of the
Company approve this Agreement, and none of the aforesaid actions by the Company
Board of Directors has been amended, rescinded or modified. The action taken by
the Company Board of Directors constitutes approval of the Transactions by the
Company Board of Directors under Section 203 of the DGCL, and, to the knowledge
of the Company, no other state takeover statute is applicable to the
Transactions. The Company has received the opinion of its financial advisor,
Milestone Advisors, LLC, to the effect that as of the date hereof, the Merger
Consideration is fair to holders of Common Stock (excluding the Xxxxxxx Funding
Group, Inc. and its affiliates) from a financial point of view, a true and
correct copy of which opinion has been furnished to the Purchaser
(d) Subject to Section 1.9, the affirmative vote of the holders
of a majority of the outstanding Shares and the holders of 66-2/3% of the Series
2 Preferred Stock are the only votes of the holders of any class or series of
the Company's capital stock necessary to approve this Agreement. No vote of any
class or series of the Company's capital stock is necessary to approve any of
the Transactions other than the Merger.
(e) Except as set forth on Schedule 3.1(e), assuming, with
respect to the Merger, the approval of this Agreement by holders of a majority
of the
10
Shares and the holders of 66-2/3% of the Series 2 Preferred Stock is received to
the extent required by applicable Law, none of the execution, delivery or
performance of this Agreement by the Company, the consummation by the Company of
the Transactions or compliance by the Company with any of the provisions of this
Agreement will (i) conflict with or result in any breach of any provision of the
(x) certificate of incorporation, the bylaws or similar organizational documents
of the Company or any of its Subsidiaries, or (y) state securities or blue sky
laws or the DGCL, (ii) require any filing by the Company with, or permit,
authorization, consent or approval of, any court, arbitral tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency, or any other federal, state, local or foreign authority or
forum (a "Governmental Authority") (except for (A) compliance with any
applicable requirements of the Exchange Act, (B) any filings as may be required
under the DGCL in connection with the Merger, including without limitation, the
Certificate of Merger, (C) the filing with the SEC and Nasdaq of (1) the Proxy
Statement and (2) such reports under Section 13(a) or 13(d) of the Exchange Act
as may be required in connection with this Agreement and the Transactions, (D)
such filings and approvals as may be required by any applicable state
securities, blue sky or takeover Laws), and (E) the VOI Registrations (as
defined in Section 3.24) listed on Schedule 3.1(e)), (iii) result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any Material Contract (as defined in Section 3.10), or (iv) violate any
order, writ, injunction, decree, consent decree, statute, rule or regulation
("Order") applicable to the Company, any Subsidiary of the Company or any of
their respective properties or assets, except in the case of clauses (i)(y),
(ii) or (iv) where (x) any failure to obtain such permits, authorizations,
consents or approvals, (y) any failure to make such filings, or (z) any such
violations, breaches or defaults would not reasonably be expected to have a
Material Adverse Effect.
Section 3.2 Capitalization; Subsidiaries.
(a) Capitalization. The authorized capital stock of the Company
consists solely of (i) 50,000,000 Shares, of which there are 28,377,870 Shares
issued and outstanding as of the date hereof and no Shares issued and held in
the treasury of the Company, (ii) 1,000,000 shares of Preferred Stock, par value
$3.00 per share, of which 15,000 shares have been designated as Series 2
Preferred Stock, 11,983 shares of which are issued and outstanding as of the
date hereof, and (iii) a total of 3,500,000 Shares reserved for issuance
pursuant to the Option Plan, outstanding Options and outstanding warrants. No
other class of capital stock of the Company is authorized or outstanding, and,
except as set forth on Schedule 3.2(b) or Schedule 3.2(c), there are no
securities convertible into or exchangeable for any shares of its capital stock
or containing any profit participation features. All of the outstanding, shares
of capital stock of the Company have been duly authorized and
11
validly issued and are fully paid and non-assessable and not subject to any
preemptive or similar rights. Except as set forth on Schedule 3.2(a) or as set
forth in Section 3.2(b) or (c) below, there are no warrants, options,
agreements, call rights, conversion rights, exchange rights, preemptive rights
or other rights or commitments or understandings which call for the issuance,
sale, delivery, pledge, transfer, redemption or other disposition of any shares
of capital stock of the Company or any of its Subsidiaries or any securities
convertible into or other rights to acquire, any shares of capital stock of the
Company or any of its Subsidiaries or obligates the Company to grant, offer or
enter into any of the foregoing. Except as set forth on Schedule 3.2(a), none of
the outstanding shares of the Company's capital stock is subject to any voting
trust, transfer restrictions or other similar arrangements that relates to the
voting or control of such capital stock or rights. Except for ownership of its
Subsidiaries as set forth on Schedule 3.1(a) hereto, neither the Company nor any
Subsidiary of the Company has, directly or indirectly, any joint venture,
partnership or similar relationship with, or any ownership interest in, any
Person.
(b) Schedule 3.2(b) lists all existing warrants to purchase
capital stock of the Company and, with respect to such warrants, the number of
shares issuable, and the purchase price payable therefor upon exercise of such
warrant. True, complete and correct copies of each agreement pursuant to which
any such warrants have been issued, as amended to date, have been provided to
the Purchaser or its representatives. After the Effective Time, no such warrant
will remain or purport to remain outstanding and convertible into cash, property
or securities of the Parent, the Purchaser or the Surviving Corporation. There
has been no adjustment to the exercise price or the number of shares issuable
pursuant to any such warrant pursuant to any provision thereof providing for an
adjustment thereto.
(c) The Company has outstanding Options granted under the Option
Plan to purchase 1,263,100 Shares. All of such Options have been granted to
employees, consultants or directors of the Company in the ordinary course of
business consistent with past practice. Schedule 3.2(c) sets forth a listing of
all outstanding Options.
(d) Subsidiaries. Except as set forth on Schedule 3.2(d), all of
the outstanding shares of the Company's wholly owned Subsidiaries (and all of
the shares of non-wholly owned Subsidiaries owned, directly or indirectly, by
the Company) are owned, directly or indirectly, by the Company, free and clear
of any liens, charges, pledges, security interests, mortgages, claims,
encumbrances, options, rights of first refusal and other proscriptions,
restrictions, conditions or covenants or similar rights whatsoever ("Liens").
All of the outstanding shares of capital stock of each of such Subsidiaries
owned by the Company have been duly authorized and validly issued and are fully
paid, non-assessable and free of preemptive or similar rights. There are no
warrants, options, agreements, call rights, conversion rights,
12
exchange rights, preemptive rights or other rights or commitments or
understandings relating to the issuance, sale, delivery, pledge, transfer,
redemption or other disposition by the Company or its Subsidiaries (including
any right of conversion or exchange under any outstanding security or other
instrument) of the capital stock of any of the Company's Subsidiaries.
Section 3.3 Company SEC Documents; Company Financial Statements;
Company Public Offering Statements.
(a) Except as set forth on Schedule 3.3(a), since December 31,
1998, the Company has filed in a timely manner all required reports, schedules,
forms, statements and other documents (including exhibits and all other
information incorporated therein) that it was required to file with the
Securities and Exchange Commission (the "Company SEC Documents"). As of their
respective filing dates and the date of any amendment and restatement or
supplement by a subsequently filed Company SEC Document, (i) the Company SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Company SEC Documents, and (ii) no Company SEC
Document contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company and its Subsidiaries
included in the Company SEC Documents complied as to form, as of their
respective dates of filing with the SEC, in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with United
States generally accepted accounting principles ("GAAP") (except, in the case of
unaudited statements, as permitted by Form 10-Q or Form 10-QSB of the SEC)
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present the consolidated financial
position of the Company and its Subsidiaries, as of the dates thereof and the
consolidated results of their operations, cash flows and changes in their
financial position for the periods then ended (except as otherwise expressly
noted therein and subject, in the case of unaudited interim statements, to
normal year-end audit adjustments that are not material).
(b) Except as set forth on Schedule 3.3(b), (i) the public
offering statements of the Company and its Subsidiaries filed with Governmental
Authorities in connection with registration of the resorts in which the Company
or any of its Subsidiaries owns VOIs ("Resorts") (the "Company Public Offering
Statements") comply in all material respects with the requirements of VOI Laws
(as defined in Section 3.24) applicable to such Company Public Offering
Statements, and (ii) no Company Public Offering Statement when filed (or when
amended and
13
restated or as supplemented by a subsequently filed Company Public Offering
Statement) contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Company and its Subsidiaries have provided copies of the
relevant Company Public Offering Statements to purchasers of VOIs in accordance
with VOI Laws and otherwise complied in all material respects with all relevant
VOI Laws.
Section 3.4 Directors, Officers, Employees, Employee Benefit
Plans; ERISA.
(a) Schedule 3.4(a) contains a complete and accurate list of the
names and titles of all current directors and officers of the Company and each
Subsidiary of the Company. The Purchaser or its representatives have been
provided with or have had made available to them a complete and accurate
schedule of the employees of the Company and each Subsidiary of the Company
whose base salary for the year ended December 31, 2001, will be $100,000 or more
or who will receive bonuses during such fiscal year (or, if not yet determined,
received in the preceding fiscal year) of $50,000 or more setting forth the
rates of compensation payable to each such person as of the date hereof.
(b) Except as set forth in Schedule 3.4(b), there is no (i)
collective bargaining agreement or any other agreement with any labor
organization to which the Company or any Subsidiary of the Company is a party
applicable to the employees of the Company or any of its Subsidiaries (a "CBA");
(ii) unfair labor practice complaint pending or, to the Company's knowledge,
threatened against the Company or any of its Subsidiaries before the National
Labor Relations Board or any other federal, state, local or foreign agency;
(iii) pending or, to the Company's knowledge, threatened or affecting the
Company, strike, slowdown, work stoppage, lockout or other collective labor
action by or with respect to any employees of the Company or any of its
Subsidiaries; (iv) grievance or unfair dismissal proceeding pending against the
Company or any of its Subsidiaries; (v) pending, or to the Company's knowledge,
threatened Action by employees of the Company or any of its Subsidiaries
alleging discrimination based on race, color, creed, age, sex, sexual
orientation, national origin, religion or disability; (vi) other pending or, to
the Company's knowledge, threatened material claim by employees of the Company
or any of its Subsidiaries, including those based on statute, contract or tort;
(vii) material pending arbitration proceeding arising out of or under any CBA to
which the Company or any of its Subsidiaries is a party; or (viii) pending or,
to the Company's knowledge, threatened representation question or union
organizing activities with respect to employees of the Company or any of its
Subsidiaries. None of the Company or any of its Subsidiaries is in default with
respect to any material term or condition of any CBA and, to the Company's
knowledge, no event has occurred
14
which through the passage of time or the giving of notice, or both, would
constitute such a default thereunder. During the past three years, neither the
Company nor any of its Subsidiaries has effectuated (x) a "plant closing" (as
defined in the WARN Act) affecting any site of employment or one or more
facilities or operating units within any site of employment or facility of the
Company or any of its Subsidiaries, or (y) a "mass layoff" (as defined in the
WARN Act) affecting any site of employment or facility of the Company or any of
its Subsidiaries; nor has the Company or any of its Subsidiaries been affected
by any transaction or engaged in layoffs or employment terminations sufficient
in number to trigger application of any similar state, local or foreign Law.
Except as set forth on Schedule 3.4(b), neither the Company's nor any of its
Subsidiaries' employees has suffered an "employment loss" (as defined in the
WARN Act) since three months prior to the date of this Agreement. Except as set
forth on Schedule 3.4(b), to the Company's knowledge, the Company and its
Subsidiaries have at all times properly classified each of their respective
employees as employees and each of its independent contractors as independent
contractors, as applicable. There is no Action (as defined in Section 3.7(a))
pending, or, to the Company's knowledge, threatened against the Company or any
of its Subsidiaries by any Person challenging or questioning the classification
by the Company of any Person as an independent contractor, including without
limitation, any claim for unpaid benefits, for or on behalf of, any such
Persons.
(c) Schedule 3.4(c) contains a complete and accurate list of each
pension, retirement, profit sharing, savings, stock option, restricted stock,
severance, termination, bonus, fringe benefit, insurance, supplemental benefit,
medical, education reimbursement or other employee benefit plan, including each
"employee benefit plan" as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974 ("ERISA"), and all employment or severance
agreements, in any case, sponsored, maintained or contributed or required to be
contributed to or entered into by the Company or any trade or business, whether
or not incorporated (an "ERISA Affiliate"), all of which together with the
Company would be deemed a "single employer" within the meaning of Section 4001
of ERISA, in each case, for the benefit of current or former directors or
employees of the Company or any of its Subsidiaries (each a "Plan"). Complete
and accurate copies of the following items relating to each Plan listed on
Schedule 3.4(c), where applicable, have been made available to Purchaser or its
representatives:
(i) all material Plan documents and related trust
agreements including amendments thereto;
(ii) the most recent determination letter received from
the Internal Revenue Service (the "IRS") with respect to
each such Plan that is intended to be qualified under
Section 401 of the Internal Revenue Code of 1986, as amended
(the "Code");
15
(iii) the most recent summary plan description, summary
of material modifications and all material communications to
participants; and
(iv) the three most recent Annual Reports (5500
Series), actuarial reports and accompanying schedules for
each Plan.
(d) Each of the Plans that is intended to be "qualified" within
the meaning of Section 401(a) of the Code has been determined by the IRS to be
so qualified and, to the Company's knowledge, no event has occurred and no
condition exists that is likely to adversely affect the qualification of any
such Plan.
(e) Neither the Company nor any Subsidiary of the Company nor any
ERISA Affiliate has any liability with respect to a plan termination under Title
IV of ERISA or a funding deficiency under Section 412 of the Code or Section 302
of ERISA. No condition exists that presents a material risk to the Company, any
Subsidiary of the Company or any ERISA Affiliate of incurring any liability
under Section 302 or Title IV of ERISA, other than liability for premiums due
the Pension Benefit Guaranty Corporation ("PBGC") (which premiums have been paid
when required to be paid). Insofar as the representation made in this Section
3.4(e) applies to Sections 4064, 4069 or 4204 of Title IV of ERISA, it is made
with respect to any employee benefit plan, program, agreement or arrangement
subject to Title IV of ERISA to which the Company or any ERISA Affiliate made,
or was required to make, contributions during the five (5)-year period ending on
the last day of the most recent plan year ended prior to the Closing Date.
(f) No Plan that is a "single employer plan" within the meaning
of Section 3(41) of ERISA is subject to Title IV or Section 302 of ERISA. Except
as set forth on Schedule 3.4(f), with respect to each Plan that is a
"multiemployer plan" within the meaning of Section 3(37) of ERISA: (i) neither
the Company nor any ERISA Affiliate has made or suffered a "complete withdrawal"
or a "partial withdrawal," as such terms are respectively defined in Sections
4203 and 4205 of ERISA (or any liability resulting therefrom has been satisfied
in all material respects); (ii) no event has occurred that presents a material
risk of a partial withdrawal; (iii) to the Company's knowledge, neither the
Company nor any ERISA Affiliate has any material contingent liability under
Section 4204 of ERISA; (iv) to the Company's knowledge, no circumstances exist
that present a material risk that any such plan will go into reorganization; and
(v) to the Company's knowledge, the aggregate withdrawal liability of the
Company and its ERISA Affiliates, computed as if a complete withdrawal by the
Company and the ERISA Affiliates had occurred under each such Plan on the date
hereof, would not exceed $200,000.
16
(g) Except as set forth on Schedule 3.4(g), each Plan has
been operated and administered in all material respects in accordance with its
terms and applicable Laws, including but not limited to ERISA and the Code.
(h) Except as disclosed on Schedule 3.4(h), no Plan provides
medical, surgical, hospitalization, death or similar benefits (whether or not
insured) for employees or former employees of the Company or any Subsidiary of
the Company for periods extending beyond their retirement or other termination
of service, other than coverage mandated by applicable Law.
(i) No amounts payable under the Plans or otherwise will fail
to be deductible for federal income tax purposes by virtue of Section 162(m) or
280G of the Code.
(j) Except as set forth on Schedule 3.4(j) or in Section 2.4
of this Agreement, the consummation of the Transactions will not, either alone
or in combination with another event, (i) entitle any current or former employee
or officer of the Company, any Subsidiary of the Company or any ERISA affiliate
to severance pay, unemployment compensation or any other payment, or (ii)
accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee or officer.
(k) Except as set forth on Schedule 3.4(k), there are no
pending or, to the Company's knowledge, threatened claims by or on behalf of any
Plan, by any employee or beneficiary covered under any such Plan, or otherwise
involving any such Plan (other than routine claims for benefits with respect to
which there is any risk that the Company or any of its Subsidiaries could be
expected to incur any material liability).
(l) There are no pending or, to the Company's knowledge,
threatened claims by or on behalf of any "employee benefit plan" within the
meaning of Section 3(3) of ERISA that is or has ever been sponsored, maintained,
contributed to or required to be contributed to by any entity that is or has
ever been an ERISA Affiliate of the Company with respect to which there is any
risk that the Company or any of its Subsidiaries could be expected to incur any
material liability.
Section 3.5 Intellectual Property. Except as set forth on
Schedule 3.5, the Company and its Subsidiaries own or possess licenses or other
legally enforceable rights (free and clear of any Liens) to use all Intellectual
Property necessary to conduct the business now operated by them and such
Intellectual Property does not conflict with, infringe upon, misappropriate or
otherwise violate any Intellectual Property of others. For purposes of this
Agreement, the term "Intellectual Property" means any trademark, service xxxx,
trade name, mask work,
17
copyright, patent, computer programs, domain names, software license, other data
base, invention, trade secret, know-how (including any registrations or
applications for registration of any of the foregoing) or any other similar type
of intellectual property right.
Section 3.6 Assets. Except as set forth in Schedule 3.6 and
except for Intellectual Property which is the subject of Section 3.5 above and
Real Property which is the subject of Section 3.8 below, the Company and its
Subsidiaries have good and valid title to all of their properties and assets
owned by them, free and clear of all Liens, except for Permitted Liens.
"Permitted Liens" means (i) statutory Liens imposed by Law for Taxes that are
not yet due and payable, or are being contested in good faith by proper
proceedings and which have been adequately reserved for in accordance with GAAP
on the Balance Sheet (ii) Liens which are purchase money Liens arising in the
ordinary course of business for amounts which are not in default; (iii)
carriers', warehousemen's, mechanics, landlords', materialmen's, repairmen's or
other substantially similar Liens arising under Law for amounts not yet due and
payable; (iv) easements, rights-of-way and other similar instruments whether or
not recorded in the public land records or filed in other public records and
which do not, individually or in the aggregate, interfere with the use or
marketability of the relevant asset; (v) zoning, subdivision and other
applicable Laws; and (vi) amendments, extensions, renewals or replacements of
any Lien referred to in clauses (i) through (v) above, to the extent that the
scope, duration and effect of the Lien so amended, extended, renewed or replaced
remains the same in all material respects.
Section 3.7 Litigation.
(a) Except as set forth on Schedule 3.7(a), (i) there is no
claim, charge, demand, action, suit, judicial, administrative or other
proceeding, arbitration or investigation (each, an "Action") pending or, to the
Company's knowledge, threatened, against the Company or any of its Subsidiaries
before any Governmental Authority, and (ii) there is no Order of any
Governmental Authority outstanding against the Company or any such Subsidiary or
affecting any of their respective properties or assets.
(b) Each plaintiff in the action captioned Xxxxxxx x. Xxxxxxx
Funding, Case No. 96-10615-CA-20, in the 11th Judicial Circuit, Dade County,
Florida (the "Florida Action") is a member of the class certified by the United
States District Court for the Southern District of New York in the action
captioned In re Xxxxxxx Funding Group, Inc. Securities Litigation, MDL No. 1153
(JES), 96 Civ. 2583 (JES) (the "Federal Class Action"), and did not elect to
exclude himself, herself or itself from that class. All of the claims asserted
by the plaintiffs in the Florida Action are included within the definition of
"Settled Claims" in the Final Order and Judgment, dated March 30, 1999 (the
"Final Judgment") in the Federal
18
Class Action, and such claims therefore were released and discharged pursuant to
a Final Judgment. The plaintiffs in the Florida Action were sent notice of the
Final Judgment in the Federal Class Action.
Section 3.8 Real Property.
(a) Schedule 3.8(a) sets forth a list of each parcel of real
property owned by the Company and its Subsidiaries (including all land,
interests in buildings, structures, improvements and fixtures located thereon
and all easements and other rights and interests appurtenant thereto owned by
the Company or any such Subsidiary, the "Owned Real Property") and all real
property material to any Resort or to the sales and marketing or other business
of the Company and its Subsidiaries leased by the Company and its Subsidiaries
(including all leasehold or subleasehold estates and other rights to use or
occupy any land, buildings (including sales kiosks), and improvements thereon,
the "Leased Real Property" and collectively with the Owned Real Property, the
"Real Property"). The Real Property constitutes all of the real property owned,
leased, occupied or otherwise utilized which is material to the businesses of
the Company and its Subsidiaries. Except as set forth on Schedule 3.8(a), the
Company or its Subsidiaries have title to or a valid leasehold interest in the
Real Property. A complete and accurate copy of each lease including all
amendments, modifications and supplements thereto and agreements relating
thereto for each of the Leased Real Property (a "Lease") has been provided or
made available to Purchaser or its representatives and such Leases are itemized
on Schedule 3.8(a). Each Lease is valid and binding upon the Company or the
applicable Subsidiary, and the Company or such Subsidiary has performed all
material obligations required to be performed by it under each Lease prior to
the date hereof and possesses and quietly enjoys the Leased Real Property.
(b) Schedule 3.8(b) sets forth a complete, true and correct
summary of VOIs in inventory at each Resort as of September 30, 2001.
(c) With respect to each parcel of Owned Real Property, the
Company or its Subsidiaries has good and marketable indefeasible fee simple
title, free and clear of all Liens, except Permitted Liens.
(d) All of the Owned Real Property is free from any use or
occupancy restrictions, except those imposed by applicable zoning laws,
ordinances and regulations, none of which materially interfere with the use of
the Real Property in connection with the business of the Company and its
Subsidiaries, and from all special Taxes or assessments. No assessment for
public improvement or otherwise which is due and remains unpaid has been made
against Owned Real Property other than Permitted Liens and, to the Company's
knowledge, there is no currently
19
proposed or pending assessment for public improvements or otherwise, in each
such case, which is material to the Company and its Subsidiaries.
(e) Neither the Company nor any Subsidiary of the Company has
caused any work or improvements to be performed upon or made to any of the Owned
Real Property for which there remains outstanding any material payment
obligation that would or might serve as the basis for any Lien (other than a
Permitted Lien) in favor of the Person which performed the work.
(f) [Intentionally Omitted]
(g) There are no outstanding claims made by or against the
Company or any applicable Subsidiary with respect to title or ownership of the
Owned Real Property. With respect to the Owned Real Property for which owner's
title policies have not been delivered to Purchaser, no covenant, condition or
restriction encumbers such property which would materially affect its use or
marketability for its intended purpose.
(h) Except for sales of VOIs out of inventory set forth on
Schedule 3.8(b) in the ordinary course of business consistent with past practice
or as set forth on Schedule 3.8(h), none of the Owned Real Property is subject
to any option, right of first refusal, right of first offer or other obligation
to sell, transfer, dispose of, grant any interest in or lease any of the Owned
Real Property or any portion thereof or interest therein to any Person, in any
such case, which is material to the business and operations of such property.
(i) Except as set forth on Schedule 3.8(i) and except for
VOIs (as defined in Section 3.24) sold in the ordinary course of business, there
are no Persons other than the Company and its Subsidiaries that have a
possessory interest (except for transient guests, VOI owners, invitees and
licensees, in each case, in the ordinary course of business) or easement
interest (other than Permitted Liens) in any of the Owned Real Property.
(j) None of the Company or any of its Subsidiaries has
received any notice of any pending, threatened or contemplated condemnation
proceeding affecting the Owned Real Property or any part thereof or of any sale
or other disposition of the Owned Real Property or any part thereof in lieu of
condemnation.
(k) To the Company's knowledge, each of the parcels included
in the Owned Real Property is assessed for real estate tax purposes as a wholly
independent tax lot, separate from any adjoining land, buildings, structures or
other improvements not owned by the Company or any of its Subsidiaries.
20
(l) None of the Company or any of its Subsidiaries has
received any written notices from any Governmental Authority stating or alleging
that any improvements upon or constituting a part of the Real Property (the
"Improvements") violate any applicable zoning and other land use ordinances,
building codes or other applicable Laws.
(m) To the Company's knowledge, there is full and free access
to and from each parcel of Owned Real Property from a public roadway, except
where the absence of access would not reasonably be expected to interfere with
intended business at such Owned Real Property.
(n) To the Company's knowledge, all requisite certificates of
occupancy and other material permits or approvals required with respect to the
buildings, structures and Improvements on any of the Real Property and the
occupancy and use thereof have been obtained and are currently in effect.
(o) The continued operation of the Real Property is not
dependent on facilities located at other premises and the continued maintenance
and operation of any other premises is not dependent on facilities located at or
upon the Real Property. No building or other improvement not part of the Real
Property now relies on the Real Property or any part thereof or any interest
therein to fulfill any municipal or governmental requirement and the Real
Property does not rely on any premises not included within the Real Property to
fulfill any governmental or municipal requirement.
(p) The Company and its Subsidiaries are the sole owners and
holders of the lessee's interest in each of the Leases free and clear of any
Liens, other than Permitted Liens. With respect to each of the Leases, (i) such
Lease is legal, valid, binding, enforceable and in full force and effect and has
not expired; (ii) the Transactions do not require the consent of any other party
to such Lease (except for those lease consents to be obtained pursuant to
Section 3.1(e)), except as set forth on Schedule 3.8(p); (iii) there are no
material disputes with respect to such Lease; (iv) the Company and its
Subsidiaries do not owe, nor will they owe in the future, any brokerage
commissions or finder's fees with respect to such Lease which is not paid; and
(v) except set forth on Schedule 3.8(p), the Company and its Subsidiaries have
not subleased, licensed or otherwise granted any Person the right to use or
occupy such Leased Real Property or any portion thereof.
(q) None of the Leased Real Properties is subject to any
sublease, license or other agreement in which the Company or any Subsidiary of
the Company has granted to any other Person any right to the use, occupancy or
enjoyment of the Leased Real Property or any part thereof.
21
(r) To the Company's knowledge, none of the Company or any of
its Subsidiaries or any of the landlords under the Leases is in default (past
applicable notice and cure periods) in the keeping, observing or performing of
any term, covenant, agreement, provision, condition or limitation contained in
the Leases on the part of the Company, any such Subsidiary or any such landlord
to be observed and/or performed thereunder and no act has been committed or
event or circumstance exists which, with notice or lapse of time, or both, could
constitute a material default in the keeping, observing or performing by the
Company, any such Subsidiary or any such landlord of any term, covenant,
agreement, provision, condition or limitation contained in the Leases on the
part of the Company, any such Subsidiary or any such landlord to be observed
and/or performed. All rent and other sums and charges due and payable by the
Company or any Subsidiary of the Company under each of the Leases have been
paid, other than any such sums and charges subject to an applicable grace period
set forth in such Leases or such sums and charges as are being disputed in good
faith.
Section 3.9 Exempt Assets. The fair market value of any assets of
the Company and its Subsidiaries (other than Exempt Assets) does not exceed $50
million. For purposes of this Agreement, "Exempt Assets" shall mean assets,
which are exempted pursuant to 16 C.F.R. ss.802.02 of the regulations under the
Xxxx-Xxxxx Xxxxxx Antitrust Improvements Act of 1976, as amended. The Company
acknowledges that Parent and the Purchaser are entering into this Agreement in
reliance upon the valuation of the Company's and its Subsidiaries' assets
provided by the Company as set forth in this Section 3.9.
Section 3.10 Contracts.
(a) Except as set forth on Schedule 3.10(a), there are no
outstanding agreements, commitments, purchase orders, or contracts to which the
Company or any Subsidiary of the Company is a party or to which the Company or
any such Subsidiary is bound which (i) involve the annual payment or receipt by
or to the Company or any such Subsidiary of more than $250,000, (ii) except as
set forth on Schedule 3.4(a), involve employment, severance, termination of
employment, consulting, or retirement provisions, (iii) contain provisions
limiting the ability of the Company, any of its Subsidiaries or any of their
affiliates to sell or buy any products or services to or from any other Person,
engage in any line of business or compete with any Person, (iv) relating to
participation in or affiliation with, VOI networks, (v) relating to the
borrowing of money or the guarantee of any such obligation of any Person other
than a wholly owned Subsidiary of the Company by the Company or any of its
Subsidiaries, in each case in excess of $1,000,000 (which scheduled borrowings
represent more than 95% of the outstanding indebtedness of the Company and its
Subsidiaries), (vi) otherwise materially affect the businesses of the Company or
any such Subsidiary (including all non-competition and management agreements and
22
arrangements), or (vii) provide for indemnification of any Person by the Company
or any of its Subsidiaries except for customary indemnification provisions
included in contracts entered into in the ordinary course of business consistent
with past practice (collectively, the "Material Contracts"). Complete and
accurate copies of the Material Contracts have been provided or made available
to the Purchaser or its representatives. Except as set forth on Schedule 3.10(a)
each of the Material Contracts is a legal, valid and binding obligation of the
Company or the applicable Subsidiary, enforceable by and against it in
accordance with its terms (except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar applicable Law of
general application affecting enforcement of creditors' rights and as limited by
general principles of equity that restrict the availability of equitable
remedies). None of the Company, any Subsidiary of the Company, or the other
parties thereto are in material default in respect of any such Material
Contracts.
(b) Except as set forth on Schedule 3.10(b), neither the
Company nor any of its Subsidiaries is a party to any written or oral loan
agreement, note or borrowing arrangement (including, without limitation, credit
enhancements, commitments, guarantees and interest-bearing assets) pursuant to
which another Person has borrowed money from the Company or any of its
Subsidiaries (collectively, "Loans Receivable"), other than any Loan Receivable
the unpaid principal balance of which (together with any other Loans Receivables
involving the same or related parties) does not exceed $100,000. Each Loan
Receivable (i) is evidenced by notes, agreements or other evidences of
indebtedness which are true, genuine and what they purport to be and have been
made available to the Purchaser or its representatives, (ii) to the extent
secured, has been secured by valid Liens which have been perfected, and (iii) is
the legal, valid and binding obligation of the obligor named therein,
enforceable in accordance with its terms (except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar applicable
Law of general application affecting enforcement of creditors' rights and as
limited by general principles of equity that restrict the availability of
equitable remedies). No such Loan Receivable or Lien related thereto has been
waived, modified, altered, satisfied, cancelled or subordinated in any material
respect (other than as reflected in documents referenced in clause (i) above),
or rescinded, and the related property has not been released from the Lien, in
whole or in any part, in a manner which materially interferes with the benefits
of the security intended to be provided by the applicable Lien. Except as
disclosed on Schedule 3.10(b), there is no monetary default, there is no
material non-monetary breach, violation or event of acceleration existing under
any Loan Receivable, and no event (other than payments due but not yet
delinquent) which, with the passage of time or with notice and the expiration of
any grace or cure period, would constitute a material default, breach, violation
or event of acceleration. The Company and its Subsidiaries have not waived any
material default, breach, violation or event of acceleration of any such Loan
Receivable. The Company and its Subsidiaries have duly performed in all material
23
respects all of their respective obligations under all Loans Receivables to the
extent such obligations to perform have accrued.
Section 3.11 Absence of Undisclosed Liabilities. Except as set
forth on Schedule 3.11, neither the Company nor any Subsidiary of the Company
has any material liability whether accrued or unaccrued, contingent or fixed,
liquidated or unliquidated, disputed or undisputed, absolute, determined,
indeterminable or otherwise which was not disclosed, reflected or reserved
against on the consolidated balance sheet of the Company (the "Balance Sheet"),
as of September 30, 2001 included in the Company SEC Documents (the "Balance
Sheet Date"), other than liabilities which have been or are incurred after the
Balance Sheet Date in the ordinary course of business and consistent with past
practice (each of which liabilities, if greater than $100,000, are also set
forth on Schedule 3.11) or in connection with the Transactions.
Section 3.12 Licenses; Compliance with Laws.
(a) The Company and its Subsidiaries hold all material
licenses, franchises, easements, variances, exemptions, permits and
authorizations necessary (the "Permits") for the lawful conduct of their
respective businesses, as presently conducted, under and pursuant to, and such
businesses are not being conducted in violation in any material respect of, any
applicable laws, statutes, regulations, rules, ordinances, decrees, orders and
judgments (collectively, "Laws") of any Governmental Authority. The Company and
the Subsidiaries are in compliance in all material respects with the terms of
the Permits.
(b) The Company and its Subsidiaries and, to the Company's
knowledge, each Person acting as an agent of the Company and its Subsidiaries,
are in compliance in all material respects with all federal, state, local and
foreign Laws having the purpose or effect of prohibiting unlawful discrimination
against customers or potential customers and, to the Company's knowledge,
neither the Company nor any of its Subsidiaries has received any complaints from
any Person or Governmental Authority that the Company or any of its Subsidiaries
or any Person acting as an agent of the Company or any of its Subsidiaries has
engaged in any unlawful discrimination.
Section 3.13 Environmental Matters.
(a) Except as set forth on Schedule 3.13(a), the Company, its
Subsidiaries and their respective businesses are in compliance in all material
respects with all applicable Environmental Laws, which compliance includes, but
is not limited to, the possession by the Company and its Subsidiaries of permits
and other governmental authorizations required under applicable Environmental
Laws,
24
and compliance with the terms and conditions thereof. Except as set forth
on Schedule 3.13(a), none of the Company or any of its Subsidiaries has received
any communication (written or oral), whether from a Governmental Authority,
citizens group, employee or otherwise, that alleges that any of the Company, its
Subsidiaries or their respective businesses are not in such compliance in all
material respects, to the Company's knowledge, there are no circumstances that
may prevent or interfere with such compliance in all material respects in the
future. All permits and other governmental authorizations currently held by the
Company or any of its Subsidiaries pursuant to the Environmental Laws are
identified in Schedule 3.13(a).
(b) Except as set forth on Schedule 3.13(b), there is no
material Environmental Claim pending or, to the Company's knowledge, threatened
against the Company or any of its Subsidiaries, or, to the Company's knowledge,
against any Person whose liability for any Environmental Claim the Company or
any such Subsidiary has or may have retained or assumed either contractually or
by operation of Law.
(c) Except as set forth on Schedule 3.13(c), there are no
past or present actions, activities, circumstances, conditions, events or
incidents, including, without limitation, the release, emission, discharge or
disposal of any Material of Environmental Concern, that could form the basis of
any material Environmental Claim against the Company or any of its Subsidiaries
or, to the Company's knowledge, against any Person whose liability for any
Environmental Claim the Company or any such Subsidiary has or may have retained
or assumed either contractually or by operation of Law.
(d) Without in any way limiting the generality of the
foregoing, (i) all on-site and off-site locations where the Company or any of
its Subsidiaries has stored, disposed or arranged for the disposal of Materials
of Environmental Concern are identified on Schedule 3.13(d), (ii) all
underground storage tanks, and the capacity and contents of such tanks, located
on property owned, operated, or leased by the Company or any of its Subsidiaries
are identified on Schedule 3.13(d), (iii) except as set forth on Schedule
3.13(d), there is no asbestos contained in or forming part of any building,
building component, structure or office space owned or leased by the Company or
any of its Subsidiaries, (iv) except as set forth on Schedule 3.13(d), no
polychlorinated biphenyls (PCB's) are used or stored at any property owned or
leased by the Company or any of its Subsidiaries, (v) except as set forth on
Schedule 3.13(d), all underground storage tanks owned, operated, or leased by
the Company or any of its Subsidiaries and which are subject to regulation under
the federal Resource Conservation and Recovery Act (or equivalent state or local
law regulating underground storage tanks) meet the technical standards
prescribed at Title 40 Code of Federal Regulations Part 280 which became
effective December 22, 1998 (or any applicable state or local Law requirements
which are
25
more stringent than such technical standards or which became effective before
such date), and (vi) all properties formerly owned or operated by the Company,
or any Subsidiary, affiliate, or predecessor thereof are identified on Schedule
3.13(d).
(e) For purposes of this Agreement:
(i) "Environmental Claim" means any claim, action,
cause of action, investigation or notice (written or oral)
by any Person alleging potential liability (including,
without limitation, potential liability for investigatory
costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or
penalties) arising out of, based on or resulting from (a)
the presence, or release into the environment of any
Material of Environmental Concern at any location, whether
or not owned by the Company or any of its Subsidiaries or
(b) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law.
(ii) "Environmental Laws" means all federal,
interstate, state, local and foreign Laws relating to
pollution or protection of human health, safety or the
environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface
strata), including, without limitation, Laws relating to
emissions, discharges, releases or threatened releases of
Materials of Environmental Concern, or otherwise relating to
the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of
Environmental Concern.
(iii) "Materials of Environmental Concern" means
chemicals, pollutants, contaminants, wastes, toxic
substances, petroleum and petroleum products hazardous
substances, radioactive materials, and asbestos.
Section 3.14 Tax Matters.
(a) Except as set forth on Schedules 3.14(a)(i) through
(a)(xv):
(i) each of the Company and its Subsidiaries (x) has
timely filed all Tax Returns which are required to be filed
by it and all such Tax Returns are true, correct and
complete in all material respects and (y) has paid in full
all Taxes required to be paid by it that are due and
payable, except for any such Taxes (1) being contested in
good faith and which have been adequately reserved for in
accordance
26
with GAAP on the Balance Sheet, or (2) for which the failure
to have paid would not, individually or in the aggregate, be
material to the Company and its Subsidiaries;
(ii) neither the Company nor any of its Subsidiaries
had as of the Balance Sheet Date any material liability for
unpaid Taxes that was not reserved for in accordance with
GAAP on the Balance Sheet;
(iii) each of the Company and its Subsidiaries has
complied in all material respects with all applicable Laws
relating to the withholding of Taxes and has timely withheld
and paid over to the relevant Tax authority all amounts
required to be so withheld and paid over for all periods
under all applicable Laws, including withholding in
connection with payments to employees, independent
contractors, creditors, stockholders or other third parties,
except for Taxes for which the failure to have withheld and
have paid would not, individually or in the aggregate, be
material to the Company and its Subsidiaries;
(iv) no extension of time with respect to any date on
which a Tax Return was or is to be filed by the Company or
any of its Subsidiaries is in force, and no waiver or
agreement by the Company or any of its Subsidiaries is in
force for the extension of time for the assessment or
payment of any Tax;
(v) neither the Company nor any of its Subsidiaries has
granted any power of attorney which is currently in force
with respect to Taxes or Tax Returns;
(vi) there are no federal, state, local or foreign
audits, actions, suits, proceedings, Claims or
administrative or similar proceedings relating to Taxes or
any Tax Returns of the Company or any of its Subsidiaries
(each, a "Tax Claim," and, collectively, "Tax Claims") now
pending, and neither the Company nor any of its Subsidiaries
has received any written notice of any investigations or
proposed Tax Claim relating to Taxes or any Tax Returns of
the Company or any of its Subsidiaries. No deficiency for
any Tax has been asserted by any Governmental Authority with
respect to the Company or any of its Subsidiaries which has
not been paid in full, fully settled or adequately reserved
for in accordance with GAAP on the Balance Sheet;
27
(vii) neither the Company nor any of its Subsidiaries
has agreed to or is required to make any adjustments under
Section 481(a) of the Code (or any similar provision of
state, local and foreign Law) by reason of a change in
accounting method or otherwise for any Tax period for which
the applicable federal statute of limitations has not yet
expired;
(viii) neither the Company nor any of its Subsidiaries
has received a ruling from any Tax authority. No closing
agreement pursuant to Section 7121 of the Code (or any
similar provision of state, local or foreign Law) has been
entered into by or with respect to the Company or any of its
Subsidiaries;
(ix) neither the Company nor any of its Subsidiaries
has filed a consent pursuant to Section 341(f) of the Code
(or any predecessor provision) or agreed to have Section
341(f)(2) of the Code apply to the disposition of a
subsection (f) asset (as such term is defined in Section
341(f)(4) of the Code) owned by such entity;
(x) there are no material Liens for Taxes upon the
assets or properties of the Company or any of its
Subsidiaries, except for statutory Liens for current Taxes
not yet due and payable;
(xi) no jurisdiction where the Company or any of its
Subsidiaries does not file a Tax Return has made any written
claim that the Company or any of its Subsidiaries, as the
case may be, is required to file a Tax Return for such
jurisdiction;
(xii) neither the Company nor any of its Subsidiaries
(x) is a party to, is bound by, or has any obligation under,
any Tax sharing agreement, Tax indemnification agreement or
similar contract or arrangement with any Person (other than
the Company or its Subsidiaries) or (y) has any potential
material liability or obligation to any Person (other than
the Company and its Subsidiaries) as a result of, or
pursuant to, any such agreement, contract or arrangement;
(xiii) none of the Subsidiaries of the Company that is
a "controlled foreign corporation," as the term is used in
Section 956 of the Code, has or will acquire on or before
the Closing any "investment in United States property"
within the meaning of Section 956 of the Code;
28
(xiv) neither the Company nor any its Subsidiaries has
any deferred intercompany gain or loss arising as a result
of an intercompany transaction within the meaning of
Treasury Regulation Section 1.1502-13 (or similar provision
under state, local or foreign Law) or any excess loss
account within the meaning of Treasury Regulation Section
1.1502-19 (or similar provision under state, local or
foreign Law); and
(xv) neither the Company nor any of its Subsidiaries
has been a member of any federal, state, local or foreign
consolidated, unitary, combined or similar group other than
a group in which the Company is the common parent.
(b) The Company is not and has not been a real property
holding corporation within the meaning of Section 897(c)(2) of the Code during
the applicable periods specified in such section.
(c) Other than any Tax Returns which have not yet been
required to be filed, true and correct copies of the United States federal
income Tax Return and any state, local or foreign Tax Return for any
jurisdiction that represents five percent or more of the aggregate Taxable
income of the Company and its Subsidiaries as filed by the Company and any of
its Subsidiaries for each of the taxable years ended December 31, 2000, 1999,
1998, and 1997 have been delivered or made available to the Purchaser or its
representatives.
(d) True and correct copies of each of the following have
been delivered or made available to the Purchaser or its representatives: (i)
all audit reports, letter rulings and technical advice memoranda issued by a
Governmental Authority relating to the United States federal, state, local or
foreign Taxes due from or with respect to any of the Company or any of its
Subsidiaries and (ii) any closing agreements entered into by any of the Company
or any of its Subsidiaries with any Tax authority.
(e) As used in this Agreement, (i) "Tax" or "Taxes" means (x)
any and all taxes, assessments, customs, duties, levies, tariffs, imposts,
deficiencies and other similar governmental charges (including, but not limited
to, taxes on or with respect to net or gross income, franchise, profits, gross
receipts, sales, use, ad valorem, value added, transfer, real property transfer,
transfer gains, inventory, capital stock, license, employment, social security,
unemployment, excise, severance, stamp, occupation, estimated taxes, rent,
occupancy, recordation, bulk transfer, intangibles, gross receipts, personal
property, alternative minimum, real property, doing business, withholding,
payroll, stamp and capital), together with any interest thereon, penalties,
fines, damages, costs, fees, additions to tax or additional
29
amounts with respect thereto, imposed by the United States (federal, state or
local) or other applicable jurisdiction; (y) any liability for the payment of
any amounts described in (x) as a result of being a member of an affiliated,
consolidated, combined, unitary or similar group or as a result of transferor or
successor liability; and (z) any liability for the payments of any amounts as a
result of being a party to any Tax sharing agreement, indemnification agreement
or similar contract or arrangement or as a result of any obligation to indemnify
any other Person with respect to the payment of any amounts of the type
described in clause (x) or (y), and (ii) the term "Tax Return" includes all
returns and reports (including elections, declarations, disclosures, schedules,
estimates and information returns) required to be supplied to a Tax authority
relating to Taxes.
Section 3.15 Accounts Receivable. Except as set forth on Schedule
3.15, the accounts receivable (including the VOI Receivables) of the Company and
its Subsidiaries (other than the Loans Receivable which are the subject of
Section 3.10(b) above) as reflected on the consolidated balance sheet of the
Company and its Subsidiaries as of September 30, 2001, to the extent uncollected
on the date hereof, and the accounts receivable reflected on the books of the
Company and its Subsidiaries, are: (i) valid and existing and represent monies
due, and the Company and its Subsidiaries have made reserves reasonably
considered adequate (subject to adjustment for operations and transactions
through the Closing Date in the ordinary course of business consistent with past
practices of the Company and its Subsidiaries) for receivables not collectible
in the ordinary course of business, and (ii) (subject to the aforesaid reserves)
subject to no material refunds or other adjustments and to no material defenses,
rights of setoff, assignments, restrictions, Liens (other than Permitted Liens)
or conditions.
Section 3.16 Absence of Certain Changes or Events. Except as set
forth on Schedule 3.16 or as expressly contemplated by this Agreement, since
September 30, 2001:
(a) there have not been any changes, events, facts,
circumstances, developments or effects that have had or would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect;
(b) the Company and its Subsidiaries have conducted their
respective businesses in all material respects only in the ordinary course of
business consistent with past practice, except as otherwise contemplated in
connection with the Transactions contemplated hereunder;
(c) neither the Company nor any of its Subsidiaries has
sustained or incurred any material loss or damage with respect to their
respective
30
businesses (whether or not insured against) which has interfered with the
operation of such businesses; and
(d) neither the Company nor any of its Subsidiaries has taken
any action or failed to take any action (or agreed to do so) that, if taken
between the date hereof and the Effective Time, would constitute a violation of
any of clauses (b) through (r) of Section 5.1 below.
Section 3.17 Affiliated Transactions.
(a) Except for (x) compensation and benefits arrangements in
the ordinary course of business as disclosed on Schedule 3.4, (y) as set forth
on Schedule 3.17 and (z) any loans between the Company and a wholly-owned
Subsidiary of the Company or between wholly-owned Subsidiaries of the Company,
no holder of more than 5% of the Shares, officer or director of the Company or
any Subsidiary of the Company, or any affiliate of any of the foregoing (other
than the Company and its Subsidiaries) (i) has borrowed or loaned money or other
property to the Company or any Subsidiary of the Company which has not been
repaid or returned; (ii) has any direct or indirect material interest in any
Person which is a customer or supplier of the Company or any Subsidiary of the
Company; or (iii) is party to any other agreement, transaction or business
relationship with the Company or any of its Subsidiaries.
(b) The amount of $1,601,531 is included on the consolidated
balance sheet of the Company and its Subsidiaries as of September 30, 2001 under
the heading "Notes Payable" and such amount accurately reflects all remaining
amounts due at any time to the Debtors from the Company and its Subsidiaries in
connection with the so-called "Option B Settlement Loans," and all such amounts
set forth therein have been properly calculated in accordance with the terms of
such Option B Settlement Loans. Upon payment of the amounts set forth on the
schedule to Section 3.10 of the Xxxxxxx Stock Purchase Agreement, the Company
and its Subsidiaries will have no further liability of any kind to the Debtors
in connection with such Option B Settlement Loans.
Section 3.18 Insurance. Schedule 3.18 sets forth a list of all
material insurance policies covering the properties and activities of the
Company, its Subsidiaries and their respective businesses. All such policies are
in full force and effect and shall be kept in full force and effect through the
Closing Date. Neither the Company nor any Subsidiary of the Company has received
any notice of cancellation or nonrenewal with respect thereto. Neither the
Company nor any Subsidiary of the Company is in monetary default or material
nonmonetary default with respect to its obligations under such insurance
policies. Neither the Company nor any Subsidiary of the Company has been refused
any insurance coverage with respect to its assets or
31
properties or its business, nor has coverage been limited or cancelled in any
material respect by any insurance carrier to which the Company or any such
Subsidiary has applied for any such insurance or with which the Company or any
such Subsidiary has carried insurance, nor has there been any significant
increase in the premiums paid under any such policy during the past five years
(other than any such increases applicable generally to Persons in the industry
in which the Company and its Subsidiaries operate). All such insurance policies
are with reputable insurance carriers and provide full and adequate coverage for
all normal risks incident to the business of the Company and its Subsidiaries
and their respective properties and assets. Schedule 3.18 identifies those
pending (or, to the Company's knowledge, threatened) Actions with respect to
which an insurance carrier has denied coverage or has advised the Company or the
relevant Subsidiary that it is defending such claim under reservation of rights.
Section 3.19 Brokers and Finders. Except as set forth on Schedule
3.19, there are no broker, finder or investment banker fees or commissions owed
or to be owed by the Company or any of its Subsidiaries in connection with the
Transactions.
Section 3.20 Debt Instruments.
(a) Each form that is underlying or related to a Debt
Instrument securing or creating an interest in a VOI Receivable and that is
routinely used by the Company or its Subsidiaries, or is permitted by the
Company or its Subsidiaries to be used by others in connection with the sale of
VOIs, complies in all material respects with applicable requirements of
applicable VOI Laws.
(b) The Debt Instruments contain customary and enforceable
provisions such as to render the rights and remedies of the holders thereof
adequate for the realization of the principal benefits of the security or
property interest intended to be provided thereby against the related property.
Other than in connection with VOI Receivable financing in the ordinary course of
business consistent with past practice, none of such Debt Instruments have been
sold, leased, mortgaged, pledged, encumbered or otherwise disposed of.
(c) Each Mortgage which requires recordation to perfect the
interest in the related VOI has been properly recorded or is in the process of
being recorded in the appropriate jurisdiction (other than failures to be so
recorded which are not, individually or in the aggregate, material) and is in
compliance in all material respects with all applicable Laws of the jurisdiction
in which the related VOI is located, and all costs, fees, and expenses,
including, where applicable, recording fees, documentary stamps and intangible
taxes due in connection with the filing of each
32
Mortgage that has been filed, have been paid, except for any immaterial failures
to pay costs, fees and expenses.
Section 3.21 Resorts.
(a) Set forth on Schedule 3.21(a) are all the Resorts and
each jurisdiction in which each of those Resorts is registered with a
Governmental Authority for (i) the ownership of any VOI or Real Property or (ii)
the advertising, marketing or selling of VOIs by the Company or any of its
Subsidiaries or the soliciting of consumers to visit a Resort or a sales office
by the Company or any of its Subsidiaries. All VOI sales, and all VOIs to be
marketed, have been and remain subject to a valid registration in the states in
which the same are being marketed and sold (other than any such failures to be
so subject which are not, individually or in the aggregate, material).
(b) The Company and its Subsidiaries have good and marketable
or indefeasible title in fee simple to all VOIs of the Company or any of its
Subsidiaries free and clear of all Liens, except for Permitted Liens.
(c) Each material timeshare or condominium declaration or
covenant related to a Resort that is required to be filed in the real estate
records of the county or other local jurisdiction in which the Resort is located
has been properly filed and recorded with the appropriate county or other local
jurisdiction office in which the respective Resort is located.
(d) The Purchaser or its representatives have received or
have had made available to them complete, true and correct copies of all
material surveys, engineering reports, appraisals, certificates of occupancy and
recorded plats, Americans with Disabilities Act reports, marketing reports,
samplers and biennial sales reports, monthly occupancy and guest blend reports,
product mix reports and other reports relating to the Resorts in the possession
of the Company and its Subsidiaries. The Purchaser or its representatives have
received or have had made available to them complete, true and correct copies of
all of the title insurance policies and commitments which evidence that the
owners have good and marketable title to the insured property, or as otherwise
described therein, at the time of the acquisition of the properties described
therein.
(e) All material costs, expenses, and obligations arising
from or related to the construction of all improvements comprising the Resorts
and the purchase of all equipment, inventory, or furnishings, to the Company's
knowledge, located in or on the Resorts and promised in the Company Public
Offering Statements (including amendments to such documents) evidencing or
relating to the sale of VOIs by the Company or its Subsidiaries (the "Resort
33
Documents") have been paid and satisfied. To the Company's knowledge, all
Amenities, walkways and parking areas described in the Resort Documents are
complete in all material respects. To the Company's knowledge, each purchaser of
VOI has dedicated, free and clear, and unencumbered access to and use of all of
the Amenities of the Resorts in accordance in all material respects with the
Resort Documents. In the event any Lien on an Amenity exists, the instrument
creating such Lien requires the Lien holder to subordinate its Lien to such
owner's, user's or purchaser's right to use the Amenity. If an instrument
creating an Amenity allows Liens to be placed on the Amenity, such instrument
also requires the Lien holder to subordinate its Lien to owners', users' or
purchasers' rights.
(f) Except as set forth on Schedule 3.21(f), the sale of each
VOI, together with each VOI Receivable arising therefrom, has been effected in
compliance with all applicable VOI Laws, except where the failure to so comply
would not reasonably be expected to have a Material Adverse Effect.
(g) The Company and its Subsidiaries have made (or caused to
be made) and maintained (or caused to be maintained) all guarantees, subsidies
and maintenance fees required of developers or sellers of VOIs pursuant to
applicable Law (other than any such failures which are not, individually or in
the aggregate, material to the relevant Resort).
(h) The Company and its Subsidiaries have made (or caused to
be made) and maintained (or caused to be maintained) all deposits and reserves
required of developers or sellers of VOIs pursuant to applicable Law (other than
any such failures which are not, individually or in the aggregate, material to
the relevant Resort).
Section 3.22 Associations.
(a) Each timeshare or other form of owner's club or
association organized or managed by the Company or any of its Subsidiaries is
listed on Schedule 3.22(a) (each, an "Association") and is duly organized,
legally existing, and, except as set forth on Schedule 3.22(a), in good standing
under the laws of the jurisdiction of its incorporation or organization (except
where the failure to be so qualified or in good standing would not reasonably be
expected to have a Material Adverse Effect) and is in compliance in all material
respects with all applicable VOI Laws. The books and records of each Association
are complete, true and correct, and all funds collected from VOI owners and
others on behalf of the Associations have been properly accounted for in all
respects and expended for such purposes as are authorized under the certificate
or articles of incorporation, as the case may be, or bylaws of the applicable
Association. For purposes of this Agreement, an Association is managed by the
Company or any of its Subsidiaries if the Company or
34
any of its Subsidiaries (x) has the statutory right to elect or appoint a
majority of the members of the Association's board of governors or directors or
other governing body or (y) is directly or indirectly a party to a management
contract with the Association.
(b) Complete and correct copies of the most recent unaudited
yearly financial statements and interim unaudited financial statements of each
Association have been made available to the Purchaser or its representatives.
Such financial statements adequately reflect in all material respects the
financial condition of each Association as of the dates indicated, and there
have been no material changes to any of the Association's financial conditions
since the date of the respective Association's most recent financial statements.
(c) Except as set forth on Schedule 3.22(c), the Tax Returns
of each Association have been timely filed (giving effect to all extensions) and
are complete, true and correct in all material respects, and copies of such Tax
Returns for the most recent tax year have been made available to the Purchaser
or its representatives.
(d) The management agreements between each Association and
the Company or a Subsidiary of the Company are valid and in full force and
effect and the Company and its Subsidiaries are in compliance in all material
respects with the terms of each such agreement. Except as set forth on Schedule
3.22(d), none of the Company or its Subsidiaries has received notification of
termination of any such management agreement.
(e) Each Association maintains adequate reserves for deferred
maintenance and capital improvements as set forth in the budget approved by such
Association to the extent required in accordance with the articles of
incorporation or bylaws of such Association and applicable VOI Laws.
Section 3.23 Equivest Vacation Club.
(a) Capitalized terms used in this Section 3.23 and not
otherwise defined shall have the meanings ascribed to them in that certain
Amended and Restated Trust Agreement for Equivest Vacation Club, Inc. (the
"Trust Agreement"), dated as of December 4, 1997, by and among Equivest Vacation
Club, Inc., Xxxxxxx, Xxxxxxxx & Xxxx ("DS&R") and Equivest Vacation & Travel
Club, Inc., establishing the trust created by the Trust Agreement (the "Trust").
(b) (i) Equivest Vacation Club is a non-profit corporation
duly organized, validly existing and in good standing under the laws of the
state of North Carolina, is duly qualified to do business and in good standing
as a foreign corporation in the jurisdictions where its assets or the conduct of
its business requires
35
such qualification (except where the failure to so qualify would not reasonably
be expected to have a Material Adverse Effect), and has the full power and
authority to own, operate and lease its properties and assets and to carry on
lawfully its business as currently conducted.
(ii) A complete and correct copy of the articles of
incorporation and bylaws of Equivest Vacation Club, together
with all amendments thereto, has been made available to the
Purchaser or its representatives. Equivest Vacation Club is
not in violation of, and the transaction contemplated by
this Agreement will not violate, its articles of
incorporation or bylaws.
(iii) Except as set forth on Schedule 3.23(b)(iii),
Equivest Vacation Club is not a party to any contract or
agreement which would be required to be scheduled pursuant
to Section 3.10(a) if the Company or one of its Subsidiaries
was a party thereto.
(iv) Except as set forth on Schedule 3.23(b)(iv), there
is no litigation, suit, claim, action, arbitration,
administrative proceeding or investigation of Equivest
Vacation Club or the Trustee pending or, to the Company's
knowledge, threatened against Equivest Vacation Club or the
Trustee, by or before any Governmental Authority. Equivest
Vacation Club is in compliance in all material respects with
all applicable Laws.
(v) The Trustee of the Trust is DS&R. To the Company's
knowledge, the Trustee is authorized and qualified to
conduct the business of the Trust in all states in which any
Affiliated Resorts are located. To the Company's knowledge,
the Trustee has acted in good faith and used commercially
reasonable efforts, in the performance of its duties and
responsibilities under the Trust Agreement. To the Company's
knowledge, the Trustee has performed all of its material
duties and responsibilities under the Trust Agreement. The
Trustee has not delivered any notice of resignation and, to
the Company's knowledge, the Trustee does not intend to
resign as Trustee. The fees paid and payable to the Trustee
for services rendered in 2000 and 2001 are set forth on
Schedule 3.23(b)(v).
(c) (i) Any Vacation Interests and Beneficial Use Rights that
have been conveyed or assigned to the Trustee were so conveyed or assigned in
accordance with the requirements of the Trust Agreement and applicable Laws, and
are free and clear of any Lien, except to the extent that they are subject to
36
Subordination Agreements or other financial assurances as set forth in Schedule
3.23(c) or where the failure to convey or assign would not reasonably be
expected to have a Material Adverse Effect. The Company and its Subsidiaries
transferred, or caused to be transferred to the Trust, and, to the Company's
knowledge, the Trustee has, good record title to sufficient Vacation Interests
and Beneficial Use Rights to comply with the terms and provisions of the Trust
Agreement and to maintain the One-to-One Member to Vacation Interest Ratio
Requirement. All of the Accommodations associated with the Membership Interests
are fully furnished and ready for occupancy, and all material furnishings are
fully paid.
(ii) All documents relating to the marketing and sale
of Membership Interest comply in all material respects with
applicable Laws.
(iii) Set forth on Schedule 3.23(c)(iii) is a list of
all jurisdictions in which Equivest Vacation Club, the
Trustee, the Company, any of its Subsidiaries and/or any of
their employees, representatives or agents market or sell
Membership Interests. No Membership Interest has been
offered or marketed by such Persons as an investment.
(iv) Except as set forth on Schedule 3.23(c)(iv), the
sale evidenced by each Club Membership Agreement and each
VOI Receivable has been effected in accordance in all
material respects with all applicable VOI Laws.
Section 3.24 Certain Definitions. For purposes of this Agreement,
the following capitalized terms shall have the meanings ascribed to them in this
Section 3.24:
"Amenities" means the common elements described in the
Declarations of the Associations and other similar documents, tennis courts,
snack bars, restaurants, coffee shops, pools, golf courses, bath houses,
marinas, convenience stores, boat launches, boat stalls, camping areas, activity
centers, reading rooms, decks, picnic tables, tether ball courts, horseshoe
pits, archery ranges, putting greens, baseball diamonds, miniature golf courses,
shuffleboards, volleyball courts, private airstrips, lakes, beaches, pavilions,
playground areas, lodges, retail golf shops, pro shops, barbeque areas,
badminton courts, croquet areas, lakeside parks, paddleboats, canoes, laundry
facilities, clubhouses, resort signage, stables, corrals, entry monuments,
guardhouses, sports courts, skating rinks and other similar amenities.
37
"Debt Instrument" means promissory notes, installment notes,
installment sale contracts, chattel paper or other evidences of indebtedness
executed by a purchaser in connection with such purchaser's acquisition of a VOI
and any Mortgage related thereto.
"Mortgage" means contracts for deed, deeds of trust, conditional
sale contracts, mortgages or similar security instruments and all related
documents and instruments (including, without limitation, any security
agreements entered into in connection with or constituting a part of any
purchase agreement or any installment sales contract relating to the sale of a
VOI) creating a Lien on or security interest in a VOI and securing a loan to
acquire a VOI.
"VOI" shall mean (i) a fee simple or leasehold ownership interest
in a condominium unit or an entire timeshare resort developed or acquired by the
Company or any of its Subsidiaries coupled with the right to use and occupy one
or more residential accommodations at such timeshare resort in accordance with
the terms, provisions and conditions of the applicable declaration of
condominium, master deed and all other documents and instruments that govern the
use and occupancy of such resort's accommodations and facilities or (ii) a
certificate of beneficial interest in the Trust or Membership Interest. The term
"VOI" shall further include all rights, benefits, privileges, obligations and
liabilities granted to or imposed upon the owner of a VOI under the applicable
VOI Laws.
"VOI Laws" means the applicable provisions of (i) the Consumer
Credit Protection Act; (ii) Regulation Z of the Federal Reserve Board; (iii) the
Equal Credit Opportunity Act; (iv) Regulation B of the Federal Reserve Board;
(v) the Federal Trade Commission's 3-day cooling-off Rule for Door-to-Door
Sales; (vi) Section 5 of the Federal Trade Commission Act; (vii) the Interstate
Land Sales Full Disclosure Act; (viii) the federal postal laws; (ix) usury laws;
(x) trade practices, home and telephone solicitation, sweepstakes, anti-lottery
and consumer credit and protection Law, including the Telephone Consumer
Protection Act and the Telemarketing and Consumer Fraud and Abuse Prevention
Act; (xi) real estate sales licensing, disclosure, reporting condominium and
timeshare and escrow Law; (xii) the Americans with Disabilities Act and related
accessibility guidelines; (xiii) the Real Estate Settlement Procedures Act;
(xiv) the Truth-in-Lending Act; (xv) the Fair Housing Act; (xvi) Regulation X;
(xvii) Civil Rights Acts of 1964 and 1968; (xviii) state condominium, timeshare,
registration and seller of travel Laws; (xix) Federal Fair Debt Collection
Practices Act and applicable state debt collection Laws; (xx) the
Xxxxx-Xxxxx-Xxxxxx Act; (xxi) any state Laws concerning construction, escrow or
surety bonds; and (xxii) federal and state securities laws.
38
"VOI Receivables" shall mean, with respect to the Company and
its Subsidiaries, any Debt Instrument and all rights under all documents
evidencing, securing or otherwise pertaining to such Debt Instrument, including
without limitation Mortgages and purchase agreements, as well as all files,
books and records of the Company and its Subsidiaries pertaining to the
foregoing and the proceeds from the foregoing.
"VOI Registrations" means registrations and amendments set
forth on Schedule 3.1(e) and the related consents, approvals or exemptions under
state timeshare registration Laws or, in states that do not have specific
timeshare Laws, related real estate or securities registration Laws.
Section 3.25 No Liability for Affiliate Obligations. Except as
set forth on Schedule 3.25 hereto, neither the Company nor any Subsidiary of the
Company or any of their respective assets or liabilities is directly or
indirectly liable for any "claim" (as such term is defined in 11 U.S.C.
ss.101(5)) that has been or may be asserted against (a) The Xxxxxxx Funding
Group, Inc., Xxxxxxx Management & Development Corporation, Xxxxxxx Receivables
Corporation, Xxxxxxx Receivables Corporation II, The Processing Center, Inc.,
Resort Service Company, Inc., American Marine International, Ltd. and Aloha
Capital Corporation (collectively, the "Debtors"), or (b) any affiliate of the
Company or any of its Subsidiaries or any Debtor, including, without limitation,
(i) claims that have been scheduled in the Debtors' substantively consolidated
Chapter 11 case entitled In re Xxxxxxx Funding Group, Inc., Case No. 96-61376
commenced in the United States Bankruptcy Court for the Northern District of New
York (the "Bankruptcy Case"), (ii) claims evidenced by proofs of claim filed in
the Bankruptcy Case, (iii) claims relating to Taxes, (iv) claims under ERISA,
and (v) Environmental Claims.
Section 3.26 Information in the Proxy Statement. The Proxy
Statement, (and any amendment thereof or supplement thereto), at the date mailed
to the Company's stockholders and at the time of any meeting of Company
stockholders to be held in connection with the Merger, will not contain (by
inclusion therein or incorporation by reference) any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no
representation is made by the Company with respect to statements made therein
based on information supplied in writing by Parent or the Purchaser expressly
for inclusion or incorporation by reference in the Proxy Statement (or any
amendment thereof or supplement thereto). The Proxy Statement will comply in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder.
36
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company as
follows:
Section 4.1 Organization. Each of Parent and the Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority and
all necessary governmental approvals to own, lease and operate its properties
and assets and to carry on its business as is now being conducted, except where
the failure to be so organized and existing or to have such power, authority,
and governmental approvals would not reasonably be expected, individually or in
the aggregate, to impair in any material respect the ability of each of Parent
and the Purchaser, as the case may be, to perform its obligations under this
Agreement, or prevent or materially delay the consummation of any of the
Transactions.
Section 4.2 Authorization; Validity of Agreement; Necessary
Action. Each of Parent and the Purchaser has full corporate power and authority
to execute and deliver this Agreement and the Stock Purchase Agreements and to
consummate the Transactions. The execution, delivery and performance by each of
Parent and the Purchaser of this Agreement and the Stock Purchase Agreements (in
the case of the Purchaser) and the consummation of the Transactions have been
duly and validly authorized by the boards of directors of each of Parent and the
Purchaser, and by Parent as the sole stockholder of the Purchaser, and no other
corporate action, authority or approval on the part of Parent or the Purchaser
is necessary to authorize the execution and delivery by each of Parent and the
Purchaser of this Agreement and the Stock Purchase Agreements and the
consummation of the Transactions. This Agreement and the Stock Purchase
Agreements have been duly executed and delivered by Parent and the Purchaser
and, assuming due and valid authorization, execution and delivery hereof by the
other parties thereto, are the valid and binding obligations of each of Parent
and the Purchaser enforceable against each of them in accordance with their
respective terms (except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar applicable Law of general
application affecting enforcement of creditors' rights and as limited by general
principles of equity that restrict the availability of equitable remedies).
Section 4.3 Consents and Approvals; No Violations. None of the
execution, delivery or performance of this Agreement and the Stock Purchase
Agreements by Parent or the Purchaser, the consummation by Parent or the
Purchaser of the Transactions, or compliance by Parent or the Purchaser with any
of the
40
provisions hereof or thereof will (a) conflict with or result in any breach of
any provision of (x) the organizational documents of Parent or the certificate
of incorporation or bylaws of the Purchaser or (y) state securities or blue sky
laws or the DGCL, (b) require any filing by Parent or the Purchaser with, or
permit, authorization, consent or approval of, any Governmental Authority
(except for (i) compliance with any applicable requirements of the Exchange Act,
(ii) any filing pursuant to the DGCL, (iii) the filing or deemed filing with the
SEC and Nasdaq of (A) the Proxy Statement, and (B) such reports under Section
13(a) of the Exchange Act as may be required in connection with this Agreement,
the Stock Purchase Agreements and the Transactions, or (iv) such filings and
approvals as may be required by any applicable state securities, blue sky or
takeover Laws), or (c) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Parent, any of its Subsidiaries (including,
without limitation, the Purchaser) or any of their properties or assets, except
in the case of clause (a)(y), (b) or (c) such violations, breaches or defaults
which would not reasonably be expected, individually or in the aggregate, to
impair in any material respect the ability of each Parent and the Purchaser to
perform its obligations under this Agreement, as the case may be, or prevent the
consummation of any the Transactions.
Section 4.4 Information in the Proxy Statement. None of the
information supplied by Parent or the Purchaser in writing expressly for
inclusion or incorporation by reference in the Proxy Statement (or any amendment
thereof or supplement thereto) will, at the date mailed to the Company's
stockholders and at the time of the meeting of the Company's stockholders to be
held in connection with the Merger, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they are made, not misleading.
Section 4.5 Financing. Purchaser will have available to it upon
the Closing sufficient funds to consummate the Transactions, including payment
in full for all Shares outstanding at the Effective Time, subject to the terms
and conditions of this Agreement.
Section 4.6 Brokers and Finders. There are no broker, finder or
investment banker fees or commissions owed or to be owed by the Parent, the
Purchaser or any of their respective Subsidiaries in connection with the
Transactions for which the Company or any of its Subsidiaries will be
responsible.
Section 4.7 Ownership of Purchaser; No Prior Activities.
Purchaser is a direct, wholly-owned subsidiary of Parent. Purchaser was formed
solely for the purpose of engaging in the transactions contemplated by this
Agreement. Except for obligations or liabilities incurred by Purchaser in
connection with its incorporation and the transactions contemplated by this
Agreement, Purchaser has not incurred,
41
directly or indirectly, through any Subsidiary or affiliate, any obligations or
liabilities or engaged in any business activities of any type or kind whatsoever
or entered into any agreements or arrangements with any Person.
Section 4.8 Ownership of Shares. As of the date of this
Agreement, none of Parent, the Purchaser or their respective Subsidiaries or
affiliates own (directly or indirectly, beneficially or of record) any Shares
and none of Parent, the Purchaser or their respective Subsidiaries or affiliates
hold any rights to acquire any Shares except pursuant to this Agreement and the
Stock Purchase Agreements.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 Interim Operations of the Company. The Company
covenants and agrees that, except (i) as expressly contemplated by this
Agreement, or (ii) as agreed in writing by Parent, after the date hereof, and
prior to the earlier of (x) the termination of this Agreement in accordance with
Article VIII and (y) the Effective Time, the Company shall, and shall cause its
Subsidiaries to:
(a) conduct the business, operations, activities and
practices of the Company and its Subsidiaries, respectively, in the ordinary
course of business consistent with past practice;
(b) use their reasonable best efforts to preserve intact its
overall present business organization and maintain satisfactory relations with
customers, suppliers, employees, contractors, distributors and others having
business dealings with it;
(c) except for financing of VOI Receivables and draws under
existing project loans as and to the extent set forth on Schedule 5.1(c) (in
each such case in the ordinary course of business consistent with past
practice), not incur, or assume or become subject to, whether directly,
indirectly or by way of guarantee or otherwise, any indebtedness or other
liability (whether fixed or contingent, liquidated or unliquidated), including
purchase money indebtedness, except trade or business obligations or
indebtedness incurred under existing bank credit facilities in the ordinary
course of business and consistent with past practice in the aggregate not in
excess of $500,000;
(d) except for (i) shares of Series 2 Preferred Stock issued
as payment-in-kind dividends to holders in accordance with the terms of the
Series 2 Preferred Stock outstanding as of the date hereof ("PIK Issuances") and
(ii) Shares issued upon exercise of Options and warrants in accordance with
their respective
42
terms in effect as of the date hereof "Share Issuances"), not issue, sell or
dispose of any capital stock or other equity interest in the Company or any of
its Subsidiaries or any options, warrants or other rights to purchase any such
capital stock or equity interest or any securities convertible into or
exchangeable for such capital stock or equity interests or otherwise make or
effect any change in the issued and outstanding capitalization of the Company
and its Subsidiaries;
(e) except for PIK Issuances and Share Issuances, not (i)
declare any dividend or make any distribution of any assets of any kind
whatsoever to any of its stockholders (other than between the Company and its
wholly owned Subsidiaries) including, without limitation, distributions in
redemption of or as the purchase price for any capital stock or equity interest,
or in discharge or cancellation, in whole or in part, of any indebtedness,
whether in payment of principal, interest or otherwise or (ii) except as set
forth on Schedule 5.1(e), loan money to, make any investment in or enter into
any agreement or arrangement with any affiliate thereof (except between any
wholly owned Subsidiary of the Company and the Company or another wholly owned
Subsidiary) in excess of $50,000;
(f) except for property under contract as of the date hereof
as and to the extent set forth on Schedule 5.1(f) and pledged receivables in the
ordinary course of business consistent with past practice, not (i) sell, lease,
transfer, assign or otherwise dispose of any of its assets except for sales to
consumers (including sales of VOIs) or third party distributors in the ordinary
course of business consistent with past practice, (ii) license, sell, transfer,
pledge, modify, disclose, dispose of or permit to lapse any right under or
respecting, or enter into any settlement regarding the breach or infringement
of, any Intangible Property, or (iii) permit or allow any of its assets to be
subject to any additional Lien (other than Permitted Liens);
(g) except for repossession of VOI property in the ordinary
course of business consistent with past practice or as set forth on Schedule
5.1(g), not (i) purchase, lease, or otherwise acquire any assets or make any
capital expenditures or commitments therefor involving the expenditure of more
than $150,000 in the aggregate or (ii) merge or consolidate with, purchase all
or any substantial part of the assets of, or otherwise acquire any Person,
corporation or firm or division thereof;
(h) except to the extent required by applicable Law, not
increase the compensation or fringe benefits payable or to become payable by the
Company or any of its Subsidiaries to any of their respective directors,
officers or employees, other than routine increases and annual bonuses made in
the ordinary course of business and consistent with past practice;
43
(i) except to the extent required by GAAP or statutory or
regulatory accounting rules or regulatory requirements pursuant to GAAP, (i) not
change their respective accounting principles, methods or practices (including,
without limitation, any change in depreciation or amortization policies or rates
or any change in the policies pertaining to the recognition of accounts
receivable or the discharge of accounts payable or accounting for inventories),
and (ii) except to the extent required by a change in applicable Law after the
date hereof, not change their respective Tax accounting principles, methods or
practices (including, without limitation, any change in depreciation or
amortization policies or rates or any change in the policies pertaining to the
recognition of accounts receivable or the discharge of accounts payable or
accounting for inventories);
(j) not (i) settle or compromise any material Tax liability,
(ii) agree to any adjustment of any material Tax attribute, (iii) make or change
any material election with respect to Taxes (except for elections consistent
with past elections), (iv) surrender any right to claim a refund of Taxes, (v)
consent to any extension or waiver of the statute of limitation period
applicable to any Taxes, Tax Return or Tax Claim, (v) file any amended Tax
Return, or (vi) enter into any closing agreement with the IRS or any other
Governmental Authority;
(k) except to the extent required by applicable Law, not pay,
discharge or satisfy any claims or liabilities (absolute, accrued or unaccrued,
asserted or unasserted, contingent or fixed, liquidated or unliquidated,
disputed or undisputed or otherwise) other than in the ordinary course of
business consistent with past practice;
(l) not (i) amend their respective certificates of
incorporation or bylaws or comparable governing instruments, or (ii) split,
combine or reclassify their respective outstanding capital stock;
(m) except to the extent required to maintain compliance with
applicable Law, or as required by a CBA, the Company and its Subsidiaries shall
not (i) terminate, establish, implement, adopt, amend, enter into, make any new,
or accelerate the vesting or payment of any existing grants or awards under,
amend or otherwise modify (other than immaterial amendments and modifications)
any Plans (including the funding arrangements in respect thereof) or contractual
obligations relating thereto in effect as of the date of this Agreement or as
contemplated by this Agreement, (ii) waive any debts due to the Company from any
officer or director of the Company, (iii) otherwise take any action that would
reasonably be expected to materially increase any funding liability with respect
to any Plan, or (iv) exercise any discretion or authority under the terms of any
Plan or contractual obligation in any manner that would result in an
acceleration or material increase or modification of the rights of or payments
or benefits to any employee, director or consultant;
44
(n) not (i) except as set forth on Schedule 5.1(n), modify in
any material respect, amend in any material respect or terminate any of its
Material Contracts or (ii) waive, release or assign any rights or claims, other
than (in the case of both clauses (i) and (ii)) such modifications, amendments,
terminations, waivers, releases or assignments as are in the ordinary course
consistent with past practice and which, individually or in the aggregate, are
not material to the Company and its Subsidiaries taken as a whole;
(o) not enter into any agreement containing any provision or
covenant limiting in any respect the ability of the Company or any of its
Subsidiaries or affiliates (or, giving effect to the Merger, Parent or any of
its Subsidiaries or affiliates) to (i) sell or buy any products or services to
or from any other Person, (ii) engage in any line of business, or (iii) compete
with any Person;
(p) not take any action for its winding up, liquidation,
dissolution or reorganization or for the appointment of a receiver,
administrator or administrative receiver, trustee or similar officer of all or
any of its assets or revenues;
(q) not terminate, negotiate, renegotiate, adopt, amend or
enter into any CBA; and
(r) not enter into any agreement or commit to take any action
which would, if taken on or before the Closing Date, result in a breach of the
foregoing covenants contained in this Section 5.1, make any of the
representations or warranties of the Company contained in this Agreement untrue
or incorrect as of the Closing Date such that the condition set forth in Section
7.2(b) would not reasonably be expected to be satisfied, or prevent the Company
from performing or cause the Company not to perform its covenants hereunder.
Section 5.2 No Solicitation.
(a) The Company agrees that it shall immediately cease and
cause to be terminated all existing discussions, negotiations and communications
with any Persons with respect to any Acquisition Proposal (as defined in Section
5.3). From the date of this Agreement until the earlier of termination of this
Agreement or the Effective Time, the Company and its Subsidiaries and their
respective officers, directors, employees, investment bankers, attorneys,
accountants or other agents (collectively, "Representatives") shall not,
directly or indirectly, except as otherwise expressly provided in this Section
5.2 (it being understood that Xxxxxxx X. Xxxxxxx, solely in acting as Trustee of
the consolidated bankruptcy estate of the Debtors, is subject to the terms and
provisions set forth in Section 5.3 of the Xxxxxxx Stock Purchase Agreement and,
to the extent that this Section 5.2 is inconsistent with
45
Section 5.3 of the Xxxxxxx Stock Purchase Agreement, not this Section 5.2), (i)
initiate, solicit or knowingly encourage, or take any action to knowingly
facilitate the submission of, any offer or proposal which constitutes or is
reasonably expected to lead to an Acquisition Proposal, (ii) enter into any
Acquisition Agreement with respect to any Acquisition Proposal, or (iii) engage
in negotiations or discussions with, or provide any information or data to, any
Person (other than Parent, the Purchaser or any of their respective affiliates
or Representatives) relating to any Acquisition Proposal. Any violation of the
foregoing restrictions by any of the Company's Representatives, whether or not
such Representative is so authorized, shall be deemed to be a breach of this
Section 5.2 by the Company. Notwithstanding the foregoing, nothing contained in
this Section 5.2 or any other provision hereof shall prohibit the Company or the
Company Board of Directors from (i) taking and disclosing to the Company's
stockholders its position with respect to any tender or exchange offer by a
third party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange
Act, or (ii) making any disclosure to the Company's stockholders as in the
good-faith judgment of the Company Board of Directors, only after consultation
with outside legal counsel to the Company that such disclosure is required under
applicable Law or that the failure to make such disclosure is reasonably likely
to be inconsistent with the Company Board of Directors' fiduciary duties to the
Company's stockholders under applicable Law.
(b) Notwithstanding the foregoing, prior to the approval of
this Agreement by the Company's stockholders, the Company may furnish
information concerning its business, properties or assets to any Person pursuant
to a customary confidentiality agreement with terms no less favorable to the
Company than those contained in the Confidentiality Agreement, dated November
15, 2001, entered into between Parent and the Company (the "Confidentiality
Agreement") and may negotiate and participate in discussions and negotiations
with such Person concerning an Acquisition Proposal if, but only if, (x) such
Acquisition Proposal is for all of the issued and outstanding Shares or the
acquisition of substantially all of the assets of the Company and its
Subsidiaries, taken as a whole (y) such entity or group has on an unsolicited
basis, and in the absence of any violation of this Section 5.2 by the Company or
any of its Representatives, submitted a bona fide written proposal to the
Company relating to any such transaction which the Company Board of Directors
determines in good faith, after receiving advice from an investment banking
firm, involves consideration to the holders of the Shares that is superior from
a financial point of view to the Merger Consideration, considering, among other
things, the nature of the consideration being offered and any changes to the
terms of this Agreement proposed by Parent in response to such proposal and is
reasonably capable of being financed and consummated, and (z) in the good faith
judgment of the Company Board of Directors, only after consultation with outside
legal counsel to the Company, the failure to provide such information or access
or to engage in such discussions or negotiations would be inconsistent with the
Company Board of
46
Directors' fiduciary duties to the Company's stockholders under applicable Law
(an Acquisition Proposal which satisfies clauses (x), (y) and (z) being referred
to herein as a "Superior Proposal"). The Company shall promptly, and in any
event within one business day following receipt of a Superior Proposal and prior
to providing any such party with any material non-public information, notify
Parent of the receipt of the same. The Company shall promptly provide or make
available to Parent any material non-public information regarding the Company
provided or made available to any other party which was not previously provided
or made available to Parent, such additional information to be provided no later
than the date of provision or availability of such information to such other
party.
(c) Except as set forth herein, neither the Company Board of
Directors nor any committee thereof shall (i) withdraw or modify, in a manner
adverse to the Transactions, to Parent or to the Purchaser, the approval or
recommendation by the Company Board of Directors or any such committee of this
Agreement or the Merger, (ii) approve or recommend any Acquisition Proposal, or
(iii) enter into any agreement with respect to any Acquisition Proposal.
Notwithstanding the foregoing, prior to the approval of this Agreement by the
Company's stockholders, the Company Board of Directors may (subject to the terms
of this and the following sentence) withdraw or modify its approval or
recommendation of this Agreement or the Merger, approve or recommend a Superior
Proposal, or enter into an agreement with respect to a Superior Proposal, in
each case at any time after the third business day following the Company's
delivery to Parent of written notice advising Parent that the Company Board of
Directors has received a Superior Proposal, specifying the material terms and
conditions of such Superior Proposal and identifying the Person making such
Superior Proposal; provided, however, that the Company shall not enter into an
Acquisition Agreement with respect to a Superior Proposal unless the Company
shall also have terminated this Agreement in compliance with Section 5.2(d). Any
such withdrawal, modification or change of the recommendation or the Company
Board of Directors, the approval or recommendation or proposed approval or
recommendation of any Superior Proposal or the entry by the Company into any
agreement with respect to any Superior Proposal shall not change the approval of
the Company Board of Directors for purposes of causing any state takeover
statute or other state law to be inapplicable to the Transactions, including,
the Merger and the Stock Purchase Agreement.
(d) The Company may terminate this Agreement and enter into a
definitive acquisition agreement or other similar definitive agreement (each, an
"Acquisition Agreement") with respect to such Superior Proposal, provided, that,
prior to any such termination, (i) the Company has provided Parent written
notice that it intends to terminate this Agreement pursuant to this Section
5.2(d), identifying the Superior Proposal then determined to be more favorable
and the parties thereto and delivering a copy of the most recent draft of the
Acquisition Agreement for such
47
Superior Proposal in the form to be entered into, (ii) during the three-business
day period following the delivery of the notice referred to in clause (i) above,
during which Parent shall have the right to propose adjustments in the terms and
conditions of this Agreement and the Company shall have caused its financial and
legal advisors to negotiate with Parent in good faith such proposed adjustments
in the terms and conditions of this Agreement, and (iii) no earlier than
midnight, New York City time on the third full business day after the Company
has provided the notice referred to in clause (i) above, the Company delivers to
Parent (A) a written notice of termination of this Agreement pursuant to this
Section 5.2(d), and (B) a cashier's check in the amount of the Termination Fee
and the Expense Reimbursement (each as defined in Section 8.2(b)), as the same
may have been estimated by Parent in good faith prior to the date of such
delivery.
Section 5.3 Acquisition Proposals. The Company shall promptly
notify Parent and the Purchaser if any proposals are received by, any
information is requested from, or any negotiations or discussions are sought to
be initiated or continued with the Company or any of its Subsidiaries or any of
their respective Representatives, in each case in connection with any
Acquisition Proposal (as hereinafter defined) or the possibility or
consideration of making an Acquisition Proposal ("Acquisition Proposal
Interest") indicating, in connection with such notice, the name of the Person
indicating such Acquisition Proposal Interest and the material terms and
conditions of any proposals or offers. The Company agrees that it shall keep
Parent and the Purchaser reasonably informed, on a current basis, of the status
and terms of any Acquisition Proposal Interest. As used in this Agreement,
"Acquisition Proposal" means any tender or exchange offer involving the Company
or any of its Subsidiaries, any proposal for a merger, consolidation or other
business combination involving the Company or any of its Subsidiaries, any
proposal or offer to acquire in any manner a substantial equity interest in, or
a substantial portion of the business or assets of, the Company or any of its
Subsidiaries (other than immaterial or insubstantial assets or inventory in the
ordinary course of business or assets held for sale), any proposal or offer with
respect to any recapitalization or restructuring with respect to the Company or
any of its Subsidiaries or any proposal or offer with respect to any other
transaction similar to any of the foregoing with respect to the Company or any
of its Subsidiaries other than pursuant to the Transactions to be effected
pursuant to this Agreement.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Additional Agreements. Subject to the terms and
conditions as herein provided, the Company, Parent and Purchaser shall each
comply in all material respects with all applicable Laws and with all applicable
rules
48
and regulations of any Governmental Authority to achieve the satisfaction of all
the conditions set forth in Article VII, and to consummate and make effective
the Merger and the other Transactions. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers and directors of the Company, Parent and the
Purchaser shall use reasonable best efforts to take, or cause to be taken, all
such necessary actions.
Section 6.2 Notification of Certain Matters. The Company shall
give prompt notice to the Purchaser and Parent and the Purchaser shall give
prompt notice to the Company, of (a) the occurrence or non-occurrence of any
event whose occurrence or non-occurrence, as the case may be, would be likely to
cause either (i) any representation or warranty contained in this Agreement to
be untrue or inaccurate in any material respect at any time from the date hereof
to the Effective Time or (ii) any condition set forth in Article VII to be
unsatisfied at any time from the date hereof to the Closing Date (except to the
extent it refers to a specific date) and (b) any material failure of the
Company, the Purchaser or Parent, as the case may be, or any officer, director,
employee or agent thereof, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that the delivery of any notice pursuant to this Section 6.2 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice or the representations or warranties of the parties or the conditions to
the obligations of the parties hereto.
Section 6.3 Access; Confidentiality.
(a) From the date of this Agreement until the Closing, the
Company shall, and shall cause the Company's Subsidiaries to, give Parent, its
officers and a reasonable number of its employees and its authorized
representatives, reasonable access at all reasonable times during normal
business hours to the agreements, contracts, books, records, analyses,
projections, plans, systems, personnel, commitments, offices and other
facilities and properties of the Company and its Subsidiaries and their
accountants and accountants' work papers, (ii) furnish Parent on a timely basis
with such financial and operating data and other information with respect to the
business and properties of the Company and its Subsidiaries as Parent may from
time to time reasonably request in writing and use reasonable best efforts to
make available at all reasonable times during normal business hours to the
officers, employees, accountants, counsel, financing sources and other
representatives of the Parent the appropriate individuals (including management
personnel, attorneys, accountants and other professionals) for discussion of the
Company's and its Subsidiaries' business, properties, prospects and personnel as
Parent may reasonably request; provided, however, that the information provided
or made available will not be provided or made available to Persons who are
directly involved in pricing or any other competitive activity at Parent or any
Subsidiary of Parent; provided, further,
49
that Parent shall not use such information other than for purposes of assessing
the financial condition of the Company for purposes of the Transactions, and
shall not share, provide, make available or sell the information to any third
party or use the information in any manner that would reasonably be considered a
restraint on competition or result in a violation of any applicable Laws. Parent
and the Purchaser agree that any information furnished pursuant to this Section
6.3(a) will be subject to the terms of the Confidentiality Agreement.
(b) As soon as practicable after the execution of this
Agreement, the Company shall permit Parent to electronically link the Company's
financial reporting system to Parent's financial reporting system ("Hyperion").
Access to Hyperion will be provided by Parent's financial reporting staff and
the tasks necessary to complete the link to Hyperion will be led by Parent's
accounting staff, with the necessary assistance from the Company's accounting
staff and other technical staff, if necessary, at no cost to the Company and
provided that neither such installment nor the operation or use by Parent of
Hyperion shall interfere with or disrupt the normal operation of the Company's
business or its financial reporting system or violate any applicable software
licenses. Parent will provide the necessary Hyperion software to be installed on
a computer in the Company's accounting department; provided, however, that the
information retrieved from the Company's financial reporting system will not be
made available to persons who are directly involved in pricing or any other
competitive activity at Parent or any Subsidiary of Parent; provided, further,
that Parent shall not use such information other than for purposes of assessing
the financial condition of the Company for purposes of the transactions
contemplated by this Agreement, and shall not share, provide or sell the
information to any third party or use the information in any manner that could
reasonably be considered a restraint on competition or result in a violation of
any applicable Laws. Any information provided under this Section 6.3(b) shall be
subject to the terms of the Confidentiality Agreement
(c) From the date hereof until the Closing Date, the Company
shall, and shall cause its Subsidiaries to, take actions reasonably requested by
Parent to provide for the inclusion, upon Closing, of all of the Company's and
its Subsidiaries' VOI inventory in the FairShare Plus Program of Parent;
provided, however, that such cooperation shall not include the incurrence by the
Company of any cost or liability in excess of $25,000 (other than costs or
liabilities reimbursed in advance by Parent); provided, further, that the
Company shall not be required to take any actions that are reasonably likely to
disrupt the sale of the Company's VOI inventory and club interests in any
material respect unless and until all conditions to Parent's obligation to close
under this Agreement have been satisfied or waived.
(d) (i) Parent shall be entitled to conduct reasonable due
diligence on any Real Property or any other property managed or operated by the
50
Company or any of the Subsidiaries, including land and building systems thereon,
including but not limited to, title, the interior of any improvements and the
structural elements thereof, and including, but not limited to, a Phase I and
Phase II environmental site assessment of such property, including testing and
sampling for the presence of any Materials of Environmental Concern, and any
other test, analysis or inspection of such property deemed appropriate by the
Parent in the Parent's sole discretion.
(ii) The Company shall provide to Parent all
information and documents in the possession of the Company
or any of the Subsidiaries, including but not limited to,
blueprints, drawings, title surveys and title information,
operational manuals, engineering or environmental reports or
assessments, and all information, documents, and files
relating to compliance with Environmental Laws, the presence
of Materials of Environmental Concern, or Environmental
Claims, including but not limited to, the results and
analysis of all environmental testing or sampling of such
property. Information shall not be withheld from Parent
under a claim of privilege or confidentiality but Parent
shall be obligated to maintain the confidentiality of all
such information, as provided in Section 6.3(a) above.
(iii) The Company shall, and shall cause its
Subsidiaries to, fully cooperate with Parent's reasonable
environmental due diligence and Parent shall have reasonable
access to the Real Property, or any other property managed
or operated by the Company or any of its Subsidiaries, and
to the Company's or the Subsidiaries' personnel
knowledgeable about environmental matters at such Real
Property during normal business hours to perform the
environmental due diligence.
(iv) To the extent Parent elects to perform any of the
environmental due diligence described in this Section
6.3(d), Parent shall, upon the timely request of the
Company: (u) restore the effects of any intrusive sampling,
(v) indemnify the Company from any actual damages incurred
by the Company arising from the conduct of any such
environmental due diligence, (w) require the Parent's
contractors performing such due diligence to maintain
reasonably adequate liability insurance for such work, (x)
provide the Company or its representatives the opportunity
to be present for any sampling and to take split samples,
and (z) provide the Company with copies of all reports and
sampling results generated by Parent's environmental due
diligence described in this Subsection 6.3(d).
51
(e) No investigation pursuant to this Section 6.3 shall
affect any representation or warranty made by the parties hereunder.
Section 6.4 Consents and Approvals.
(a) Each of Parent, the Purchaser and the Company shall take
all reasonable actions necessary to comply promptly with all legal requirements
which may be imposed on it with respect to this Agreement and the Transactions
(which actions shall include, without limitation, furnishing all information
required in connection with approvals of or filings with any other Governmental
Authority) and shall promptly cooperate with and furnish information to each
other or their counsel in connection with any such requirements imposed upon any
of them or any of their Subsidiaries in connection with this Agreement and the
Transactions. Each of the Company, Parent and the Purchaser shall, and shall
cause their respective Subsidiaries to, take all reasonable actions necessary to
obtain (and shall cooperate with each other in obtaining) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Authority or other public or private third party required to be obtained or made
by Parent, the Purchaser, the Company or any of their respective Subsidiaries in
connection with the Transactions or the taking of any action contemplated
thereby or by this Agreement.
(b) Nothing in this Agreement shall require, or be construed
to require, Parent or the Purchaser, in connection with the receipt of any
regulatory approval, to proffer to, or agree to (i) sell or hold separate and
agree to sell, divest, discontinue or limit, before or after the Effective Time,
any assets, businesses, or interest in any assets or businesses of Parent, the
Purchaser, the Company or any of their respective affiliates (or to consent to
any sale, or agreement to sell, or discontinuance or limitation by Parent, the
Purchaser, the Company or any of their respective affiliates, as the case may
be, of any of their respective assets or businesses) or (ii) agree to any
conditions relating to, or changes or restrictions in, the operations of any
such assets or businesses which, in the case of either clause (i) or (ii), is
reasonably likely, individually or in the aggregate, to materially and adversely
impact the aggregate economic or business benefits, taken as a whole, to Parent
or the Purchaser and their affiliates, of the Transactions contemplated by this
Agreement.
(c) Prior to the Closing, each party shall promptly consult
with the other parties hereto with respect to, provide any necessary information
with respect to, and provide the other (or its counsel) copies of, all filings
made by such party with any Governmental Authority or any other information
supplied by such party to a Governmental Authority in connection with this
Agreement and the Transactions. Each party hereto shall promptly inform the
other of any communication from any Governmental Authority regarding any of the
Transactions unless otherwise prohibited by Law. If any party hereto or
affiliate thereof receives a
52
request for additional information or documentary material from any such
Government Authority with respect to the Transactions, then such party shall
endeavor in good faith to make, or cause to be made, as soon as reasonably
practicable and after consultation with the other party, an appropriate response
in compliance with such request. To the extent that transfers, amendments or
modifications of permits (including environmental permits) are required as a
result of the execution of this Agreement or consummation of the Transactions,
the Company shall use its reasonable best efforts to effect such transfers.
Section 6.5 Publicity. During the term of this Agreement, the
parties hereto shall use their reasonable best efforts to (a) develop a joint
communications plan with respect to this Agreement and the Transactions, (b)
ensure that all press releases and other public statements with respect to this
Agreement and/or any of the Transactions shall be consistent in all material
respects with such joint communication plan, and (c) consult promptly with each
other prior to issuing any press release or otherwise making any public
statement with respect to the Merger and the other Transactions. Each party
agrees to provide to the other party for review a copy of any such press release
or statement, and not issue any such press release or make any such public
statement prior to such consultation and review, unless required by applicable
Law or any listing agreement with a securities exchange.
Section 6.6 Directors' and Officers' Insurance and
Indemnification.
(a) For a period of six years after the Effective Time, the
Surviving Corporation (or any successor to the Surviving Corporation) shall (and
Parent or any successor to Parent shall, to the extent of the greater of (x) the
Surviving Corporation's financial ability or (y) the net worth of the Company as
of the date hereof, cause the Surviving Corporation to) indemnify, defend and
hold harmless the officers and directors of the Company and its Subsidiaries,
and persons who become any of the foregoing prior to the Effective Time, against
all losses, claims, damages, liabilities, costs, fees and expenses (including
reasonable fees and disbursements of counsel and judgments, fines, losses,
claims, liabilities and amounts paid in settlement (provided, that any such
settlement is effected with the written consent of the Parent or the Surviving
Corporation, which consent shall not unreasonably be withheld)) arising out of
actions or omissions solely in their capacities as such occurring at or prior to
the Effective Time to the full extent permissible under applicable provisions of
the DGCL, the terms of the Company's certificate of incorporation or bylaws, and
under any agreements as in effect at the date hereof (true and correct copies of
which have been previously provided or been made available to Parent); provided,
however, that in the event any claim or claims are asserted or made within such
six-year period, all rights to indemnification in respect of any such claim or
claims shall continue until disposition of any and all such
53
claims. The certificate of incorporation and the bylaws of the Surviving
Corporation shall contain provisions with respect to such indemnification, which
provisions shall not be amended, modified or otherwise repealed for a period of
six years from the Effective Time in any manner that would adversely affect the
rights thereunder as of the Effective Time of the officers and directors of the
Company and its Subsidiaries, and persons who become any of the foregoing prior
to the Effective Time, unless such modification is required after the Effective
Time by Law and then only to the minimum extent required by such Law.
(b) Parent or the Surviving Corporation shall maintain the
Company's existing officers' and directors' liability insurance ("D&O
Insurance") for a period of not less than six years after the Effective Time and
shall not terminate or cancel such D&O Insurance; provided, however, that Parent
may substitute therefor policies of substantially equivalent coverage and
amounts containing terms (taken as a whole) no less favorable to such directors
or officers; provided, further, that if the existing D&O Insurance expires or is
terminated or cancelled during such period, then Parent or the Surviving
Corporation shall use reasonable best efforts to obtain substantially similar
D&O Insurance; provided, further, however, that in no event shall Parent be
required in any one year to pay aggregate premiums for insurance under this
Section 6.6(b) in excess of 150% of the aggregate premiums which will be paid by
the Company in 2002 policy renewal for such purpose (the "2002 Premium"), which
true and correct amounts are set forth on Schedule 6.6(b); and provided,
further, that if Parent or the Surviving Corporation is unable to obtain the
amount of insurance required by this Section 6.6(b) for such aggregate annual
premium, Parent or the Surviving Corporation shall obtain as much insurance as
can be obtained for an annual premium not in excess of 150% of the 2002 Premium.
(c) In the event the Surviving Corporation or any of their
successors or assigns (i) consolidates with or merges into any other Person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any Person, then and in each such case, proper
provisions shall be made so that the successors and assigns of the Surviving
Corporation, as the case may be, shall assume the obligations set forth in this
Section 6.6.
(d) This Section 6.6 shall survive the consummation of the
Merger at the Effective Time, is intended to benefit the present officers and
directors of the Company and its Subsidiaries, and persons who become any of the
foregoing prior to the Effective Time, and shall be binding on all successors
and assigns of the Company and the Surviving Corporation.
Section 6.7 Litigation. In the event any claim, action, suit,
investigation or other proceeding by any Governmental Authority or other Person
54
or other legal or administrative proceeding is commenced that questions the
validity or legality of this Agreement or the transactions contemplated by this
Agreement or claims damages in connection therewith, the Company, Parent and the
Purchaser each agree to cooperate and use their reasonable best efforts, subject
to the limitations set forth in Section 6.4(b), to defend against and respond
thereto.
Section 6.8 State Takeover Laws. If any state takeover statute
becomes or is deemed to become applicable to the Company or the acquisition of
Shares pursuant to the Merger, then the Company Board of Directors shall take
all action necessary to render such statute inapplicable to the foregoing.
Section 6.9 Employees Benefits. Following the Effective Time,
Parent shall, or shall cause the Surviving Corporation to, provide the employees
of the Surviving Corporation and its Subsidiaries (collectively, "Company
Employees") with employee benefits that are no less favorable in the aggregate
than those provided to the Company Employees by the Company and/or its
Subsidiaries as of the date hereof. With respect to those Parent employee
benefit plans ("Parent Plans") in which Parent, in its sole discretion, shall
determine that Company Employees may participate on or after the Closing Date,
Parent shall, and shall cause the Surviving Corporation to, credit prior service
of Company Employees with the Company or any of its Subsidiaries, as applicable,
for purposes of eligibility and vesting under such Parent Plans to the extent
that such service was recognized under the analogous Plans, provided, however,
that such service need not be credited to the extent it would result in a
duplication of benefits. Company Employees shall also be given credit for any
deductible or co-payment amounts paid in respect of the Parent Plan year in
which the Effective Time occurs, to the extent that, following the Effective
Time, they participate in any Parent Plan during such plan year for which
deductibles or co-payments are required. Parent shall, and shall cause the
Surviving Corporation to, waive (i) any preexisting condition restriction which
was waived under the terms of any analogous Plan immediately prior to the
Effective Time or (ii) waiting period limitation which would otherwise be
applicable to a Company Employee on or after the Effective Time to the extent
such Company Employee had satisfied any similar waiting period limitation under
an analogous Plan prior to the Effective Time.
Section 6.10 Resignations and Appointments.
(a) To the extent within the power or control of the Company
and its Subsidiaries, the Company shall obtain the resignations of all (i) the
members of the Boards of Governors (or other governing bodies) of the
Associations listed on Schedule 6.11 (the "Controlled Associations") and
Equivest Vacation Club, Inc. and (ii) the trustees of the Trust, and have
persons chosen by Parent appointed as (i) members of the Boards of Governors (or
other governing bodies) of the Controlled
55
Associations and Equivest Vacation Club, Inc. and (ii) trustees of the Trust
immediately prior to the Closing.
(b) Prior to the Closing, the Company shall amend the Trust
Agreement in accordance with Parent's instructions.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions, any and all of which may be waived in whole or in part by
Parent, the Purchaser and the Company, as the case may be, to the extent
permitted by applicable Law:
(a) This Agreement shall have been approved by the requisite
vote of the holders of the Shares and the Series 2 Preferred Stock, to the
extent required pursuant to the requirements of the Company's certificate of
incorporation and the DGCL.
(b) No temporary restraining order, preliminary or permanent
injunction or other judgment or order issued by any court of competent
jurisdiction or other statute, law, rule, legal restraint or prohibition
(collectively, "Restraints") shall be in effect preventing the consummation of
the Merger.
(c) No action, suit or proceeding shall have been instituted,
or shall be pending or threatened, by a Governmental Authority (i) seeking to
restrain in any material respect to prohibit the consummation of the Merger,
(ii) seeking to obtain from the Company, Parent or Purchaser or any of their
respective affiliates any damages that, individually or in the aggregate, would
be reasonably likely to result in a Material Adverse Effect, or (iii) seeking to
impose the Restraints referred to in subsection (b) above.
Section 7.2 Conditions to Obligations of the Purchaser. The obligations of
Parent and the Purchaser under this Agreement are subject to the satisfaction,
at or prior to the Closing Date, of the following conditions, unless waived by
the Purchaser in writing:
(a) The Company shall have performed and complied in all
material respects with its obligations under this Agreement required to be
performed by it at or prior to the Closing Date.
56
(b) The representations and warranties of the Company
contained in this Agreement (x) that are qualified with respect to materiality
or (y) set forth in Section 3.2 shall be true and correct in all respects, and
any such representations and warranties that are not so qualified with respect
to materiality shall be true and correct in all material respects, in each case
as of the date of this Agreement; and the representations and warranties of the
Company set forth in Sections 3.1, 3.2, 3.3(a), 3.8(c-d), 3.9, 3.11, 3.12, 3.13,
3.14, 3.17, 3.19, 3.25 and 3.26 shall be true and correct in all material
respects at and as of the Closing Date as if made at and as of such date
(disregarding for these purposes reference to materiality in specific
representations and warranties), and any other representations and warranties of
the Company shall be true and correct at and as of the Closing Date as if made
at and as of such date, except to the extent any such failures to be so true and
correct would not reasonably be expected to have a Material Adverse Effect;
provided, however, that if the representations and warranties set forth in
Section 3.7 fail to be true and correct at and as of the Closing Date as if made
at and as of such date due to Actions which have commenced between the date of
this Agreement and the Closing Date, then the condition set forth in this
Section 7.2(b) shall not be deemed fulfilled if and to the extent that any such
Actions contain claims (x) that, if adversely determined, would result in
material amount of monetary damages, or otherwise result in remedies that, could
be expected, individually or in the aggregate, to have a Material Adverse
Effect, and (y) in the reasonable opinion of the Purchaser, based on advice from
outside counsel, have a reasonable prospect of surviving a motion for summary
judgment by the Company (based on the Purchaser's good faith assessment of the
facts).
(c) The Purchaser shall have received a certificate signed by
the chief executive officer and chief financial officer of the Company to the
effect of Sections 7.2(a) and 7.2(b).
(d) There shall have been no facts, changes, events,
circumstances, developments or effects that have had or would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect,
other than a Material Adverse Effect resulting from changes which have occurred
in the timeshare industry (to the extent not affecting the Company and its
Subsidiaries to a greater extent than it affects other Persons in the timeshare
industry).
(e) The Xxxxxxx Stock Purchase Agreement shall have been
consummated in accordance with its terms.
(f) All consents, orders or approvals of, declarations or
filings with, and expirations of waiting periods imposed by, any Governmental
Authority or third party that are required for the consummation of the
transactions
57
contemplated hereby and listed on Schedule 7.1(c) shall have been obtained and
in effect.
Section 7.3 Conditions to Obligations of the Company. The
obligations of the Company under this Agreement are subject to the satisfaction
or waiver, at or prior to the Closing Date, of the following conditions, unless
waived by the Company in writing:
(a) Parent and the Purchaser shall have performed and
complied in all material respects with their respective obligations under this
Agreement required to be performed by them at or prior to the Closing Date.
(b) The representations and warranties of Parent and the
Purchaser contained in this Agreement that are qualified with respect to
materiality shall be true and correct in all respects, and such representations
and warranties 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 as of the
Closing Date as if made at and as of such date.
(c) The Company shall have received a certificate signed by
an authorized officer of the Purchaser to the effect of Sections 8.3(a) and
8.3(b).
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated and the
Transactions may be abandoned at any time before the Effective Time, whether
before or after stockholder approval thereof:
(a) By mutual written consent of Parent and the Company; or
(b) By either Parent or the Company, (i) if a Governmental
Authority shall have issued a non-appealable final order, decree or ruling or
taken any other non-appealable final action having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger (which order, decree,
ruling or other action the party seeking to terminate this Agreement shall have
used their reasonable best efforts to lift), or (ii) if there has been a breach
by the other party of any representation, warranty, covenant or agreement set
forth in this Agreement, which breach shall result in any condition set forth in
Article VII not being satisfied (and such breach is not reasonably capable of
being cured or has not been cured within 15 days after the receipt of notice
thereof), (iii) if the Bankruptcy Court Approval (as
58
defined in Section 5.5 of the Xxxxxxx Stock Purchase Agreement) shall not have
been obtained by April 30, 2002, (iv) if any of the Sellers (as defined in the
recitals of the Xxxxxxx Stock Purchase Agreement) accepts or enter into an
Alternative Transaction (as defined in Section 5.6 of the Xxxxxxx Stock Purchase
Agreement), or (v) if the Merger has not been consummated by April 30, 2002;
provided, however, that the right to terminate this Agreement pursuant to this
Section 8.1(b)(v) shall not be available to any party whose failure to fulfill
any obligation under this Agreement has been the cause of the failure of the
Merger to be consummated by such date; or
(c) By Parent, at any time prior to the Closing, if (i) the
Company Board of Directors shall have withdrawn, modified, or changed its
recommendation in respect of this Agreement in a manner adverse to the
Transactions, to Parent or to the Purchaser, (ii) the Company Board of Directors
shall have approved or recommended any proposal other than by Parent or the
Purchaser in respect of an Acquisition Proposal, or (iii) the Company shall have
violated or breached any of its obligations under Section 5.2; or
(d) By the Company, pursuant to Section 5.2(d).
Section 8.2 Effect of Termination.
(a) In the event of the termination of this Agreement as
provided in Section 8.1, written notice thereof shall forthwith be given to the
other party or parties specifying the provision hereof pursuant to which such
termination is made, and this Agreement shall forthwith become null and void and
there shall be no liability on the part of Parent, the Purchaser or the Company,
except (i) as set forth in Section 8.2 and Section 9.3 and (ii) nothing herein
shall relieve any party from liability for any breach of this Agreement.
(b) If (A) Parent shall have terminated this Agreement
pursuant to Section 8.1(b)(iv) or Section 8.1(c), or (B) both (x) Parent shall
have terminated this Agreement pursuant to Section 8.1(b)(iii) or the Company
shall have terminated this Agreement pursuant to Section 8.1(b)(iii) and (y)
within 18 months after the date of termination of this Agreement, the Company
enters into an Acquisition Agreement with respect to an Acquisition Proposal or
(C) the Company shall have terminated this Agreement pursuant to Section 8.1(d),
then the Company shall pay to Parent promptly, but in no event later than two
business days after the date of such termination if pursuant to Section
8.1(b)(iv) or 8.1(c) or simultaneously with the execution of such other
Acquisition Agreement if pursuant to Section 8.1(b)(iii) (or simultaneously with
such termination if pursuant to Section 8.1(d)), a termination fee (the
"Termination Fee") of $3,000,000 plus an amount equal to the reasonable
out-of-pocket expenses (up to a maximum of $500,000) incurred by Parent and the
Purchaser in connection with the Merger, the Stock Purchase Agreement, this
59
Agreement and the consummation of the Transactions (the "Expense
Reimbursement"), which amount shall be payable by wire transfer to such account
in the United States as Parent may designate in writing to the Company. If
Parent or the Company shall have terminated this Agreement pursuant to Section
8.1(b)(iii) and since the date hereof but prior to such termination there shall
not have been an Acquisition Proposal Interest, then the Company shall pay to
Parent promptly, but in no event later than two business days after the date of
such termination, the Expense Reimbursement, which amount shall be payable by
wire transfer to such account in the United States as Parent may designate in
writing to the Company (it being understood that if Bankruptcy Court Approval is
obtained but is subsequently reversed upon appeal, no such Expense Reimbursement
shall be payable). The Company shall not withhold any amounts on any payment
under this Section 8.2.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Amendment and Modification. Subject to applicable Law
and as otherwise provided in the Agreement, this Agreement may be amended,
modified and supplemented in any and all respects, whether before or after any
vote of the stockholders of the Company contemplated hereby, by written
agreement of the parties hereto, by action taken by their respective boards of
directors or equivalent governing bodies, but, after the Closing Date, no
amendment shall be made which decreases the Merger Consideration and, after the
approval of this Agreement by the stockholders, no amendment shall be made which
by Law requires further approval by such stockholders without obtaining such
further approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
Section 9.2 Non-survival of Representations and Warranties. None
of the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement (other than
the Stock Purchase Agreement in accordance with its terms) shall survive the
Effective Time.
Section 9.3 Expenses. Except as expressly set forth in Section
8.2(b), all fees, costs and expenses incurred in connection with this Agreement
and the Transactions shall be paid by the party incurring such fees, costs and
expenses.
Section 9.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by a nationally recognized overnight
courier service (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):
60
(a) if to Parent or the Purchaser, to:
Cendant Corporation
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and
(b) if to the Company, to:
Equivest Finance, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxxx & Xxxxxxxxx
0000 X Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
61
with a copy to counsel to the Sellers under the Xxxxxxx Stock
Purchase Agreement:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Esq.
M. O. Xxxxx, Jr., Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Section 9.5 Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. Whenever the words "include", "includes" or
"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation." As used in this Agreement, the term "affiliates"
shall have the meaning set forth in Rule 12b-2 of the Exchange Act. The table of
contents is for convenience of reference only, does not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof. The words "hereof," herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. All terms defined
in this Agreement shall have the defined meanings when used in any certificate
or other document made or delivered pursuant hereto unless otherwise defined
therein. The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such term. Unless otherwise stated, any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein. As
used in this Agreement, "Person" shall mean any individual, corporation,
partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union or entity of any kind whatsoever,
including any Governmental Authority. References to a Person are also to its
permitted successors and assigns.
Section 9.6 Certain Tax Elections. No representation or warranty
of the Company shall be treated as untrue or incorrect, nor shall the Company be
treated as having failed to perform or comply with any of its obligations under
this Agreement, to the extent that the failure of such representation or
warranty to be true and correct, or the failure to perform or comply with such
obligation, directly results from any election made by Parent or Purchaser (or
any of their affiliates) under
62
Section 338 of the Code (or any similar provision of state, local or foreign
law) with respect to the transactions contemplated by the Stock Purchase
Agreements.
Section 9.7 Counterparts. This Agreement may be executed manually
or by facsimile by the parties hereto, or xerographically or electronically by
their respective attorneys, in any number of counterparts, each of which shall
be considered one and the same agreement and shall become effective when a
counterpart hereof shall have been signed by each of the parties and delivered
to the other parties.
Section 9.8 Entire Agreement; No Third-Party Beneficiaries. This
Agreement and, to the extent applicable, the Stock Purchase Agreements:
(a) constitute the entire agreement among the parties with
respect to the subject matter hereof and thereof and supersedes all other prior
agreements and understandings, both written and oral, among the parties or any
of them with respect to the subject matter hereof and thereof (provided, that
the provisions of this Agreement shall, except as set forth herein, supersede
the provisions of the Confidentiality Agreement), and
(b) except as provided in Section 6.6, is not intended to
confer upon any Person other than the parties hereto any rights or remedies
hereunder.
Section 9.9 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by rule of law or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
Transactions are fulfilled to the extent possible.
Section 9.10 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
giving effect to the principles of conflicts of law thereof.
Section 9.11 Assignment. This Agreement shall not be assigned by
any of the parties hereto (whether by operation of Law or otherwise) without the
prior written consent of the other parties, except that the Purchaser may
assign, in its sole discretion and without the consent of any other party, any
or all of its rights, interests and obligations hereunder to (i) Parent, (ii) to
Parent and one or more direct or
63
indirect wholly-owned Subsidiaries of Parent, or (iii) to one or more direct or
indirect wholly-owned Subsidiaries of Parent (each, an "Assignee"). Any such
Assignee may thereafter assign, in its sole discretion and without the consent
of any other party, any or all of its rights, interests and obligations
hereunder to one or more additional Assignees. Any such assignment by the
Purchaser or any such Assignee will not relieve the purchaser or any such
Assignee of its obligations hereunder. Subject to the preceding sentence, but
without relieving any party hereto of any obligation hereunder, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
Section 9.12 Headings. The article and section headings contained
in this Agreement are solely for convenience of reference and shall not affect
the meaning or interpretation of this Agreement or of any term or provision
hereof.
Section 9.13 Jurisdiction and Venue. Each party hereto hereby
agrees that any proceeding relating to this agreement and the transactions
contemplated hereby shall be brought in a State Court of New York or a federal
court located in New York. Each party hereto hereby consents to personal
jurisdiction in any such action brought in any such New York or federal court,
consents to service of process by registered mail made upon such party and such
party's agent and waives any objection to venue in any such New York or federal
court and any claim that any such New York or federal court is an inconvenient
forum.
Section 9.14 Acknowledgements. The parties hereto acknowledge and
agree that (i) each party has reviewed and negotiated the terms and provisions
of this Agreement and has had the opportunity to contribute to its revision, and
(ii) each party has been represented by counsel in reviewing and negotiating
such terms and provisions. Accordingly, the rule of construction to the effect
that ambiguities are resolved against the drafting party shall not be employed
in the interpretation of this Agreement. Rather, the terms of this Agreement
shall be construed fairly as to both parties hereto and not in favor or against
either party.
64
IN WITNESS WHEREOF, Parent, the Purchaser and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
CENDANT CORPORATION
By: /s/ Xxxx X. Xxxx
----------------------------------------
Name: Xxxx X. Xxxx
Title: Secretary and Senior Vice President
CARDIGAN ACQUISITION CORPORATION
By: /s/ Xxxx X. Xxxx
----------------------------------------
Name:
Title:
EQUIVEST FINANCE, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman, President and Chief
Executive Officer
65
-3-
EXHIBIT A-1
EXECUTION COPY
STOCK PURCHASE AGREEMENT
dated December 16, 2001
among
CENDANT CORPORATION
and
CARDIGAN ACQUISITION CORPORATION
and
THE XXXXXXX FUNDING GROUP, INC.
and
XXXXXXX MANAGEMENT & DEVELOPMENT CORPORATION
and
XXXXXXX RECEIVABLES CORPORATION
and
XXXXXXX RECEIVABLES CORPORATION II
and
THE PROCESSING CENTER, INC.
and
RESORT SERVICE COMPANY, INC.
and
AMERICAN MARINE INTERNATIONAL, LTD.
and
ALOHA CAPITAL CORPORATION
Table of Contents
Page
ARTICLE 1. PURCHASE AND SALE OF TARGET SECURITIES
1.1 Agreement to Purchase and Sell...................................2
--- ------------------------------
1.2 Purchase Price...................................................2
--- --------------
ARTICLE 2. CLOSING
2.1 Closing..........................................................2
--- -------
2.2 Sellers' Closing Deliveries......................................2
------------------------------------
2.3 Purchaser's Closing Deliveries...................................3
--- ------------------------------
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
3.1 Ownership of Stock; Title........................................3
--- -------------------------
3.2 Organization.....................................................4
--- ------------
3.3 Authority........................................................4
--- ---------
3.4 No Violation; Consents and Approvals.............................4
--- ------------------------------------
3.5 Litigation.......................................................5
--- ----------
3.6 Finder's Fee.....................................................5
--- ------------
3.7 Reliance.........................................................5
--- --------
3.8 Tax Matters......................................................5
--- -----------
3.9 Outstanding Obligations..........................................5
--- -----------------------
3.10 Joint and Several Liabilities of the Company.....................6
---- --------------------------------------------
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
4.1 Organization; Authority..........................................6
--- ------------------------
4.2 No Violation.....................................................6
--- ------------
4.3 Consents and Approvals...........................................7
--- ----------------------
4.4 Financing........................................................7
--- ---------
4.5 Investment Representation........................................7
--- -------------------------
ARTICLE 5. COVENANTS.
5.1 Satisfaction of Conditions.......................................7
--- --------------------------
5.2 Transfer Taxes...................................................8
--- --------------
5.3 Solicitation.....................................................8
--- ------------
5.4 Voting...........................................................8
--- ------
5.5 Bankruptcy Court Approval........................................8
--- -------------------------
5.6 Fiduciary Duties................................................10
--- ----------------
5.7 General Release and Waiver......................................10
--- --------------------------
5.8 Certain Events..................................................12
--- --------------
5.9 Publicity.......................................................12
--- ---------
ARTICLE 6. CONDITIONS TO CLOSING; TERMINATION.
6.1 Conditions to Each Party's Obligations..........................12
--- --------------------------------------
6.2 Conditions to Obligations of the Purchaser......................13
--- ------------------------------------------
ii
6.3 Conditions to Obligations of the Sellers........................14
--- ----------------------------------------
6.4 Termination.....................................................14
--- -----------
6.5 Effect of Termination...........................................15
--- ---------------------
ARTICLE 7. MISCELLANEOUS PROVISIONS
7.1 Other Agreements................................................15
--- ----------------
7.2 Survival of Representations and Warranties......................15
--- ------------------------------------------
7.3 Transactional Costs.............................................16
--- -------------------
7.4 Successors and Assigns..........................................16
--- ----------------------
7.5 Notices.........................................................16
--- -------
7.6 Entire Agreement................................................17
--- ----------------
7.7 Amendments and Waivers..........................................17
--- ----------------------
7.8 Headings........................................................17
--- --------
7.9 Terms...........................................................17
--- -----
7.10 Governing Law; Jurisdiction and Venue...........................17
---- -------------------------------------
7.11 No Third Party Beneficiaries....................................18
---- ----------------------------
7.12 Counterparts....................................................18
---- ------------
7.13 Interpretation..................................................18
---- --------------
7.14 Acknowledgements................................................18
---- ----------------
7.15 Trustee Capacity................................................19
---- ----------------
7.16 Guarantee by Parent.............................................19
---- -------------------
ii
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement"), dated as of
December 16, 2001, is made by and among Cendant Corporation ("Parent"), Cardigan
Acquisition Corporation (the "Purchaser"), The Xxxxxxx Funding Group, Inc.
("BFG"), Xxxxxxx Management & Development Corporation ("BMDC"), Xxxxxxx
Receivables Corporation, Xxxxxxx Receivables Corporation II, The Processing
Center, Inc., Resort Service Company, Inc., American Marine International, Ltd.
and Aloha Capital Corporation (such entities are referred to herein as the
"Sellers").
R E C I T A L S
WHEREAS, BFG currently owns beneficially all of the 11,983
issued and outstanding shares of the Series 2 Class A Cumulative Redeemable
Preferred Stock, $3.00 par value (the "Series 2 Preferred Stock"), of Equivest
Finance Inc., a Delaware corporation (the "Company"), which shares have
liquidation preference of $1,000 per share plus accrued and unpaid dividends
thereon which accrue at the rate of $60 per share per annum.
WHEREAS, each of the Sellers currently owns beneficially such
number of shares of common stock, $.01 par value ("Common Stock"), of the
Company as are set forth opposite the name of such Seller on Exhibit A hereto.
WHEREAS, Parent, the Purchaser and the Company have entered
into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), which provides, among other things, for the merger of the Purchaser
with and into the Company with the Company continuing as the surviving
corporation (the "Merger") upon the terms and subject to the conditions set
forth in the Merger Agreement (capitalized terms used herein without definition
shall have the respective meanings specified in the Merger Agreement);
WHEREAS, the Sellers are debtors in a substantively
consolidated Chapter 11 case entitled In re The Xxxxxxx Funding Group, Inc.,
Case No. 96-61376 (the "Bankruptcy Case"), filed in the United States Bankruptcy
Court for the Northern District of New York (the "Bankruptcy Court") on March
29, 1996 under Chapter 11 of Title 11 of the United States Code, ss. 101-1330
(as amended, the "Bankruptcy Code").
WHEREAS, Xxxxxxx X. Xxxxxxx was appointed as Chapter 11
trustee (the "Trustee") in the Bankruptcy Case on April 18, 1996.
WHEREAS, the Sellers desire to sell to the Purchaser, and the
Purchaser desires to purchase from the Sellers, the Common Stock and the Series
2 Preferred Stock owned by the Sellers on the terms and subject to the
conditions hereinafter set forth.
1
NOW, THEREFORE, in consideration of the foregoing Recitals
(which are hereby incorporated by reference), the agreements hereafter set forth
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree to be legally bound as follows:
ARTICLE 1. PURCHASE AND SALE OF TARGET SECURITIES.
1.1 Agreement to Purchase and Sell. On the Closing Date (as defined in
Section 2.1) and upon the terms and subject to the conditions set forth in this
Agreement, each Seller shall sell, assign, transfer, convey and deliver to the
Purchaser, and the Purchaser will accept and purchase from each Seller, all of
such Seller's rights, title and interests in and to all of (a) the shares of
Common Stock held by such Seller, and (b) the shares of Series 2 Preferred Stock
held by such Seller (the shares referred to in (a) and (b), collectively, the
"Target Securities"), in each case free and clear of all Liens.
1.2 Purchase Price. Subject to the terms and conditions set forth herein,
the Purchaser shall pay or cause to be paid to the Sellers, in cash (i) $3.00
multiplied by the number of shares of Common Stock held by the Sellers as set
forth opposite their names on Exhibit A, and (ii) the sum of (x) $12,750,000
plus (y) the amount of accrued and unpaid dividends per share of Series 2
Preferred Stock since January 1, 2002 through the Closing Date, multiplied by
the number of shares of Series 2 Preferred Stock held by the Sellers as set
forth opposite their names on Exhibit A ((i) and (ii) together, the "Purchase
Price").
ARTICLE 2. CLOSING.
2.1 Closing. Consummation of the transactions contemplated hereby (the
"Closing") shall take place at the offices of Skadden, Arps, Slate, Xxxxxxx &
Xxxx LLP, Xxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., local
time, on the first business day following the day on which the last of the
conditions set forth in Sections 6.1, 6.2 and 6.3 is fulfilled or waived (other
than those conditions that by their nature are to be fulfilled at the Closing,
but subject to the fulfillment or waiver of those conditions), or at such other
time and place and on such other date as the Purchaser and the Sellers shall
agree (the "Closing Date").
2.2 Sellers' Closing Deliveries. Subject to the conditions set forth in
this Agreement, at the Closing, simultaneously with the Purchaser's deliveries
hereunder, each Seller shall deliver or cause to be delivered to the Purchaser
stock certificates representing the Target Securities owned by such Seller as
set forth on Exhibit A hereto accompanied by stock powers duly endorsed in blank
or accompanied by duly executed instruments of transfer and appropriate
signature guarantees, with all necessary transfer tax and other revenue stamps
affixed thereto.
(b) At the Closing, the Sellers will also deliver the following to the
Purchaser:
2
(i) certificates of each of the Sellers as contemplated by Section
6.2(c);
(ii) a duly executed certificate from each Seller (each, a "FIRPTA
Certificate") of non-foreign status in the form and manner that complies with
Section 1445 of the Code and the Treasury Regulations promulgated thereunder.
Notwithstanding anything to the contrary contained herein, if any Seller fails
to deliver a FIRPTA Certificate and the Purchaser elects to proceed with the
Closing, the Purchaser shall be entitled to withhold the amount required to be
withheld pursuant to Section 1445 of the Code from the Purchase Price payable to
such Seller; and
(iii) all such other certificates, documents and instruments as the
Purchaser shall reasonably request in connection with the consummation of the
transactions contemplated by this Agreement.
2.3 Purchaser's Closing Deliveries. Subject to the conditions set forth in
this Agreement, at the Closing, simultaneously with the Sellers' deliveries
hereunder, the Purchaser shall deliver or cause to be delivered to the Sellers,
the Purchase Price (less, if applicable pursuant to Section 2.2(b)(ii), any
amounts withheld by the Purchaser) in immediately available funds to a United
States account designated in writing by the Sellers.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each of the Sellers,
jointly and severally, hereby represents and warrants to Parent and the
Purchaser, as follows:
3.1 Ownership of Stock; Title.
(a) Each such Seller is the sole lawful beneficial owner of the number
and type of Target Securities set forth opposite such Seller's name on Exhibit A
hereto, which ownership is free and clear of all Liens. Except as set forth on
Schedule 3.1, the Target Securities set forth opposite each Seller's name on
Exhibit A hereof, are the only class or classes of capital stock, securities
convertible into or exchangeable for any shares of capital stock, warrants,
options, agreements, call rights, conversion rights, exchange rights, preemptive
rights or other rights or commitments or understandings which call for the
issuance, sale, delivery, pledge, transfer, redemption or other disposition of
any shares of capital stock of the Company or any of its Subsidiaries that such
Seller or any of the other Sellers owns, beneficially or of record. Except as
set forth on Schedule 3.1, such Seller is not a party to any agreement creating
rights with respect to such Seller's Target Securities in any Person, and such
Seller has the full power and, subject to approval of the Bankruptcy Court
without any stay thereof being in force, legal right to sell, assign, transfer
and deliver such Seller's Target Securities. Except as set forth on Schedule
3.1, there are no existing warrants, options, stock purchase agreements,
redemption agreements, restrictions of any nature, voting trust agreement,
proxies, calls or rights to subscribe of any character relating to the Target
Securities owned by such Seller. Such Seller has not received any notice of any
adverse claim to the ownership of
3
any such Target Securities, does not have any reason to know of any such adverse
claim that may be justified and is not aware of existing facts that would give
rise to any adverse claim to the ownership of such Target Securities. On the
Closing Date, such Seller shall have good and marketable title to such Target
Securities, free and clear of all Liens. The delivery of certificates for the
Target Securities owned by such Seller to the Purchaser pursuant to the
provisions of this Agreement will transfer to the Purchaser good and marketable
title to such Target Securities, free and clear of all Liens, except for Liens
created by the Purchaser.
(b) The Target Securities and the certificates representing the Target
Securities owned by each Seller are now, and at all times during the term hereof
will be, held by the relevant Seller or by a nominee, trustee or custodian for
the benefit of such Seller, free and clear of all Liens, except for any such
Liens arising hereunder.
3.2 Organization. Each such Seller is a corporation duly incorporated,
validly existing and in good standing under the laws of the state of its
incorporation.
3.3 Authority. Each such Seller has the requisite power and authority and
has full legal capacity necessary to execute, deliver and, subject to approval
of the Bankruptcy Court without any stay thereof being in force, perform its
obligations under this Agreement and the other agreements and instruments to be
executed and delivered by such Seller hereunder or in connection herewith and to
carry out such Seller's obligations hereunder and thereunder and the
transactions contemplated hereby and thereby. The execution and delivery to the
Purchaser of this Agreement and the other agreements and instruments to be
executed and delivered by such Seller hereunder or in connection herewith and
the consummation of the transactions contemplated hereby has been duly
authorized by such Seller and its governing bodies. No other proceedings on the
part of such Seller, other than approval of the Bankruptcy Court without any
stay thereof being in force, are necessary to authorize such execution, delivery
and performance. This Agreement has been duly and validly executed and delivered
to the Purchaser by such Seller and, subject to approval of the Bankruptcy Court
without any stay thereof being in force, constitutes a valid and binding
obligation of such Seller, enforceable against such Seller in accordance with
its terms.
3.4 No Violation; Consents and Approvals.
(a) Except as set forth on Schedule 3.4(a), the execution and delivery
of this Agreement by such Seller and the consummation of the transactions
contemplated hereby do not and will not: (i) conflict with or result in a breach
of any provision of the certificate of incorporation or bylaws or other
organizational documents of such Seller; (ii) violate, or conflict with, or
result in a breach of any provisions of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or give rise to a right of termination, cancellation, modification or
acceleration of the performance required by or a loss of a benefit under, any
note, bond, mortgage, indenture, deed of trust, lease contract or agreement by
which such Seller or any of such Seller's Target Securities are bound (except to
the extent such breach, violation or default is not reasonably likely to
materially impair the ability of the Sellers
4
to consummated the transactions contemplated hereby); (iii) constitute a
violation of any Order, to which such Seller or any of such Seller's Target
Securities are bound; or (iv) result in the creation of any Lien upon any of
such Seller's Target Securities.
(b) Except for consents and approvals of, or filings with, the
Bankruptcy Court without any stay thereof being in force, and as set forth on
Schedule 3.4(b), no consent, approval, permit, waiver, authorization, notice or
filing is required to be made or obtained in connection with the execution,
delivery and performance by such Seller of this Agreement or the consummation of
the transactions contemplated hereby.
3.5 Litigation. Except for the Bankruptcy Case and actions instituted or,
to such Seller's knowledge, threatened after the date hereof challenging or
seeking to prevent, or which arise as a result, directly or indirectly, of the
consummation of the transactions contemplated by this Agreement or the Merger
Agreement, (i) there are no suits, claims, arbitrations, mediations, actions or
proceedings pending or, such Seller's knowledge, threatened or investigations
pending or threatened against such Seller or with respect to the Target
Securities, before any Governmental Authority and (ii) such Seller and its
Target Securities are not subject to any order, judgment, injunction or decree
of any Governmental Authority, in each case, which restricts in any material
respect or prohibits or, if successful, would restrict in any material respect
or prohibit), the exercise by any party or beneficiary of its rights under this
Agreement or the performance by any party of its obligations under this
Agreement.
3.6 Finder's Fee. Such Seller has not employed, nor is such Seller subject
to a valid claim of, any broker, finder, financial adviser or other intermediary
in connection with the transactions contemplated hereby who might be entitled to
a fee or commission from Parent, the Purchaser or the Company.
3.7 Reliance. Each Seller understands and acknowledges that Parent and the
Purchaser are entering into the Merger Agreement in reliance upon such Seller's
execution and delivery of this Agreement.
3.8 Tax Matters. Since January 1, 1987, (i) BFG has never owned (directly
or indirectly) any stock of BMDC and (ii) BMDC has not owned (directly or
indirectly) any stock of BFG. BFG and BMDC have never been members of the same
affiliated group within the meaning of Section 1504 of the Internal Revenue Code
of 1986, as amended. Neither BFG nor BMDC, individually, has ever owned stock of
the Company (i) possessing at least 80 percent of the total voting power of the
Company and (ii) having a value equal to at least 80 percent of the total value
of the stock of the Company.
3.9 Outstanding Obligations. Except as set forth on Schedule 3.9, the
Company and its Subsidiaries have no outstanding liabilities or obligations to,
and there are no amounts due from the Company and its Subsidiaries to, such
Seller, and such Seller has no Claim (as defined in Section 5.7(a)) against the
Company or any of its Subsidiaries.
5
3.10 Joint and Several Liabilities of the Company. Except as set forth on
Schedule 3.10, neither the Company nor any Subsidiary of the Company nor any of
their respective assets or properties is directly or indirectly liable for or
subject to any Claim that has been or may be asserted against any of the
Sellers, the consolidated estate of the Sellers (the "Consolidated Estate"), or
any affiliate (other than the Company or its Subsidiaries) of the Sellers or of
the Company or its Subsidiaries, to the extent that such Claim is based in whole
or in part upon (x) actions (or inactions) of or by the Sellers, the
Consolidated Estate, any of their affiliates or any Person acting in concert
with them (other than the Company or its Subsidiaries) or (y) the fact that the
Company or any of its Subsidiaries were at any time an affiliate of the Sellers
or any of them, including, without limitation, (i) claims that have been
scheduled in the Bankruptcy Case, (ii) claims evidenced by proofs of claim filed
in the Bankruptcy Case, (iii) claims relating to Taxes, (iv) claims under ERISA,
and (v) Environmental Claims.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser hereby
represents and warrants to each Seller as follows:
4.1 Organization; Authority.
(a) The Purchaser is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to carry on its business as now being
conducted. The Purchaser has full power and authority necessary to execute,
deliver and perform its obligations under this Agreement and the other
agreements and instruments to be executed and delivered by the Purchaser
hereunder or in connection herewith, to carry out its obligations and to
consummate the transaction contemplated hereunder and thereunder. The execution
and delivery of this Agreement and the other agreements and instruments to be
executed and delivered by the Purchaser hereunder or in connection herewith by
the Purchaser, and the consummation by the Purchaser of the transactions
contemplated hereby, have been duly authorized pursuant to and in accordance
with the laws governing the Purchaser.
(b) This Agreement and the other agreements and instruments to be
executed and delivered by the Purchaser hereunder or in connection herewith have
been duly and validly executed, authorized and delivered by the Purchaser and
constitute valid and binding obligations of the Purchaser, enforceable against
the Purchaser in accordance with their respective terms.
4.2 No Violation. The execution and delivery by the Purchaser of this
Agreement and the transactions contemplated hereby do not and will not (i)
conflict with or result in any breach of any provision of the certificate of
incorporation, bylaws of the Purchaser, (ii) violate, or conflict with, or
result in a breach of any provisions of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or give rise to a right of termination, cancellation, modification or
acceleration of the performance required by or a loss of a benefit under, any
material agreement, permit or other instrument to which the Purchaser is a party
or to
6
which the Purchaser is subject (except to the extent such breach, violation or
default is not reasonably likely to materially impair the ability of the
Purchaser to consummate the transactions contemplated hereby or to hold the
Target Securities), or (iii) violate any material order, judgment, writ,
injunction, decree, statute, rule or regulation applicable to the Purchaser or
to which the Purchaser is subject.
4.3 Consents and Approvals. Except as set forth on Schedule 4.3, no
consent, approval, permit, waiver, authorization, notice or filing is required
to be made or obtained in connection with the execution, delivery and
performance by the Purchaser of this Agreement or the consummation of the
transactions contemplated hereby.
4.4 Financing. As of the Closing Date, the Purchaser will have available to
it financing necessary to consummate the transactions contemplated hereby.
4.5 Investment Representation. The Purchaser is accepting the Target
Securities being acquired hereunder for its own account and not for any other
person and for investment purposes only and without any view to distribute,
resell or otherwise transfer the same.
ARTICLE 5. COVENANTS.
5.1 Satisfaction of Conditions.
(a) The Purchaser and the Sellers shall cooperate with each other and
use reasonable best efforts to take or cause to be taken all actions, and do or
cause to be done all things, necessary, proper or advisable on their part under
this Agreement and applicable Laws to consummate and make effective the
transactions contemplated by this Agreement and the Merger Agreement as soon as
reasonably practicable, including preparing and filing as promptly as reasonably
practicable all documentation to effect all necessary notices, reports,
applications and other filings and to obtain as promptly as reasonably
practicable all consents, registrations, approvals, permits and authorizations
necessary or advisable to be obtained from any third party and/or any
Governmental Authority in order to consummate the transactions contemplated by
this Agreement.
(b) Nothing in this Agreement shall require, or be construed to
require, Parent or the Purchaser, in connection with the receipt of any
regulatory consent, registration, approval permit or authorization, to proffer
to, or agree to (i) sell or hold separate and agree to sell, divest, discontinue
or limit, before or after the Effective Time, any assets, businesses, or
interest in any assets or businesses of Parent, the Purchaser, the Company or
any of their respective affiliates (or to consent to any sale, or agreement to
sell, or discontinuance or limitation by Parent, the Purchaser, the Company or
any of their respective affiliates, as the case may be, of any of their
respective assets or businesses) or (ii) agree to any conditions relating to, or
changes or restrictions in, the operations of any such assets or businesses
which, in the case of either clause (i) or (ii), is reasonably likely,
individually or in the aggregate, to materially and adversely impact the
aggregate economic or business benefits, taken as a whole, to Parent or the
Purchaser and their affiliates, of the transactions contemplated by this
Agreement or the Merger Agreement.
7
5.2 Transfer Taxes. All excise, sales, use, transfer (including real
property transfer or gains), stamp, documentary, filing, recordation and other
similar Taxes and fees which may be imposed or assessed as a result of the
transactions effected pursuant to this Agreement, together with any interest,
additions or penalties with respect thereto and any interest in respect of such
additions or penalties, shall be borne by the Sellers.
5.3 Solicitation.
(a) The Sellers shall not, and shall use their reasonable best efforts
to cause their respective directors, officers, employees, representatives
(including any investment bankers, attorney or accountant retained by any such
Persons) and agents not to, directly or indirectly, take any action or refrain
from taking any action that, if taken by the Company, would result in a breach
of the Company's obligations pursuant to Sections 5.2 and 5.3 of the Merger
Agreement.
(b) Notwithstanding anything contained herein to the contrary but
subject in all cases to the terms of Sections 5.2 and 5.3 of the Merger
Agreement, this Agreement shall not limit or affect any actions taken by any
member of the Company Board of Directors nominated by, or appointed at the
request of, a Seller solely in his or her capacity as a director of the Company.
5.4 Voting. Subject to approval of the Bankruptcy Court without any stay
thereof being in force, each of the Sellers agrees (i) that all of the Target
Securities beneficially owned by such Seller, or over which such Seller has
voting power or control, directly or indirectly (including any shares of Common
Stock or shares of Series 2 Preferred Stock acquired after the date hereof), at
the record date for any meeting of stockholders of the Company called to
consider and vote to approve the Merger Agreement and/or the transactions
contemplated thereby (or any action by written consent in lieu of any such
meeting), will be present at such meeting in person or by proxy (or for purposes
of any action by written consent in lieu of any such meeting) and will be voted
by such Seller in favor thereof, and (ii) that such Seller will not vote such
Target Securities in favor of any other Acquisition Proposal.
5.5 Bankruptcy Court Approval.
(a) As soon as practicable, but in any event within four business days
following the execution of this Agreement, the Sellers shall file a motion in
form and substance reasonably satisfactory to the Purchaser (the "Motion") under
Sections 105, 363 and 1146(c) of the Bankruptcy Code seeking entry of an order
(the "Bankruptcy Court Approval") approving this Agreement and the transactions
contemplated hereby and containing the provisions set forth in (i) through (xi)
below. The Bankruptcy Court Approval, substantially in the form of which is
attached hereto as Exhibit B, shall, among other things: (i) grant the relief
requested in the Motion; (ii) ratify and approve the execution and delivery of
this Agreement by the Sellers and the Trustee on behalf of the Sellers and
authorize the Sellers' performance hereunder and to authorize them to execute
and deliver any additional documents and instruments requested by the Purchaser
and to perform thereunder in order to carry out the provisions of and
transactions contemplated
8
by this Agreement; (iii) authorize and direct the Sellers to sell the Target
Securities held by them, pursuant to the terms and conditions herein, to the
Purchaser, free and clear of all and any Liens, liabilities and Claims of every
kind or nature; (iv) authorize and direct the Trustee on behalf of the Sellers
to vote the Target Securities in accordance with the provisions of Section 5.4;
(v) determine that the Purchaser is a good faith purchaser pursuant to Section
363(m) of the Bankruptcy Code; (vi) determine that the Purchaser is not deemed
to have, de facto or otherwise, merged with or into the Sellers or to be a mere
continuation of the Sellers; (vii) determine that the Purchase Price is a fair
and reasonable price for the Target Securities held by the Sellers; (viii)
confirm the adequacy of notice to all creditors and parties in interest; (ix)
provide for the retention of jurisdiction in the Bankruptcy Court over matters
relating to the transactions contemplated in this Agreement as they relate to
the Sellers; (x) exempt the transactions contemplated hereby from transfer taxes
pursuant to Section 1146(c) of the Bankruptcy Code; and (xi) declare that
neither the Company nor any Subsidiary of the Company nor any of their
respective assets or properties is directly or indirectly liable for or subject
to any Claim that has been or may be asserted against the Sellers or any of
them, the Consolidated Estate, or any affiliate (other than the Company or its
Subsidiaries) of the Sellers or of the Company or its Subsidiaries to the extent
that such Claim is based in whole or in part upon (i) actions (or inactions) of
or by the Sellers, the Consolidated Estate, any of their affiliates or any
Person acting in concert with them (other than the Company or its Subsidiaries)
or (ii) the fact that the Company or any of its Subsidiaries were at any time
affiliates of the Sellers or any of them, including, without limitation, (A)
claims that have been scheduled in the Bankruptcy Case, (B) claims evidenced by
proofs of claim filed in the Bankruptcy Case, (C) claims relating to Taxes, (D)
claims under ERISA, and (E) Environmental Claims, and enjoin any and all holders
of any such claim from asserting, prosecuting or otherwise pursuing any such
claim against the Company or any of its Subsidiaries or any of their respective
assets or properties; provided, that if the Bankruptcy Court will not grant such
declaration and injunction for all or any of the matters enumerated in
subparagraphs (A) through (E) above, the Sellers and the Consolidated Estate
shall and hereby do (in the event that such injunction and declaration is not
granted and subject to the approval of the Bankruptcy Court without any stay
thereof being in force), jointly and severally, indemnify Parent, the Purchaser
and their successors, permitted assigns and affiliates, and their respective
officers, directors, employees, agents, representatives and affiliates
(collectively, the "Purchaser Indemnified Parties") from and against and shall
reimburse the same for and in respect of any and all losses, costs, fines,
liabilities, claims, penalties, damages (other than consequential damages) and
expenses (including all legal fees and expenses) of any nature or kind, known or
unknown, fixed, accrued, absolute or contingent, liquidated or unliquidated
(collectively "Losses") which may be suffered, sustained or incurred by, or
claimed or assessed against, any of them or to which any of them may be subject,
in connection with any and all Claims, suits or Losses which arise from or are
related to the matters set forth above but not so covered by such declaration
and injunction; provided, however, that any claims for indemnification under
this Section 5.5(a) that are not asserted against the Sellers and the
Consolidated Estate by the Purchaser Indemnified Parties on or before
substantial consummation of any Chapter 11 plan for the Sellers shall be forever
barred and discharged. The Sellers shall promptly
9
notify the Purchaser of any action taken by the Bankruptcy Court with respect to
the approval required hereunder.
(b) Each of the Sellers shall use its reasonable best efforts to seek
the Bankruptcy Court Approval on or before January 10, 2002. Each of the Sellers
shall neither take any action nor fail to take any action, which action or
failure to act would reasonably be expected to result in the failure to obtain
the Bankruptcy Court Approval. Without limiting the generality of the foregoing,
none of the Sellers shall propose any motion to the Bankruptcy Court or take
action relating to the Bankruptcy Case which is inconsistent with the terms of
this Agreement or the Bankruptcy Court Approval.
(c) Except (i) with respect to the Sellers' obligations pursuant to
Sections 1.1 and 2.2 hereof, and (ii) with respect to the Purchaser's
obligations pursuant to Sections 1.2 and 2.3 hereof, this Agreement shall be
effective as of the date hereof. Sections 1.1, 1.2, 2.2 and 2.3 hereof shall
become effective at such time as the Bankruptcy Court Approval shall be granted
without any stay thereof being in force.
5.6 Fiduciary Duties. Notwithstanding anything contained herein to the
contrary, each of the Sellers shall have the right to take or refrain from
taking any such acts as it shall have reasonably determined are necessary to
fulfill its fiduciary obligations as a debtor and debtor in possession,
including, but not limited to, the right to entertain and, if appropriate,
accept any higher and better offers to purchase the Target Securities (an
"Alternative Transaction"), and the Sellers shall not be deemed to be in breach
of any provision of this Agreement as a result of taking any such action or
refraining from taking any such action; provided, that the Sellers shall furnish
the Purchaser with written notice of the terms of any competing offer to
purchase the Target Securities and, if permitted by the Bankruptcy Court and
applicable Law, shall provide the Purchaser a reasonable opportunity to match
any such competing offer. In addition, notwithstanding anything contained herein
to the contrary, but subject in all cases to the terms of Sections 5.2 and 5.3
of the Merger Agreement, this Agreement shall not limit or affect any actions
taken by any member of the Company Board of Directors nominated by, or appointed
at the request of, a Seller solely in his or her capacity as a director of the
Company.
5.7 General Release and Waiver.
(a) Except as expressly set forth in this Section 5.7, upon the
Closing hereof, each of the Sellers (on behalf of themselves and their
controlled affiliates, successors, and assigns) and the Consolidated Estate
(collectively, the "Releasing Parties") hereby releases, remises and acquits
Parent, the Purchaser, the Company and all of their respective affiliates,
successors and assigns, and their respective officers, directors, shareholders,
members, agents, executives, consultants, independent contractors, attorneys,
and advisers (in their capacities as such) (collectively, the "Released
Parties") from any and all claims, known or unknown, which such Releasing
Parties have or may have against any of the Released Parties and any and all
liabilities which any of the Released Parties may have to such Releasing
Parties, in each case arising
10
on or prior to the Closing Date, whether denominated claims, counter-claims,
setoffs, recoupment, demands, causes of action, obligations, damages or
liabilities arising from any and all bases (all such claims and liabilities,
including, but not limited to, any and all "claims" (as defined in 11 U.S.C
101(5)) and any claims that were or could have been brought under Chapter 5 of
the Bankruptcy Code, collectively, the "Claims") that each of the Releasing
Parties has or may have; provided, however, that the release by the Releasing
Parties hereunder of Parent or any of its Subsidiaries (other than the Company
and its Subsidiary) shall be limited to Claims of a Releasing Party against
Parent or any of its Subsidiaries (other than the Company and its Subsidiaries)
to the extent that such Claims relate to the Company or any of its Subsidiaries.
Each of the Releasing Parties further agrees that such Releasing Party will not
assert, prosecute or file or permit to be asserted, prosecuted or filed on such
Releasing Party's behalf any such released Claim. This release is for any
relief, no matter how denominated, including, but not limited to, injunctive
relief, compensatory damages, or punitive damages. This release shall not apply
to any Claims that any of the Releasing Parties may have against any Released
Party arising from, relating to or in connection with, (i) Parent's or the
Purchaser's obligations pursuant to this Agreement and (ii) any of the matters
listed on Schedule 3.9 to the extent amounts are due to the Releasing Parties
with respect thereto.
(b) Each of the parties hereto acknowledges that their respective
agreements hereunder are being provided in consideration of the release
contained in this Section 5.7 and that they may not otherwise be entitled to
certain of the benefits described herein. Each of the parties hereto agrees not
to make any Claim or take any position inconsistent with such releases.
(c) Except as expressly set forth in this Section 5.7(c), each of the
Company and its Subsidiaries (on behalf of themselves and their controlled
affiliates, successors, and assigns) (collectively, the "Company Releasing
Parties") hereby releases, remises and acquits each of the Sellers and the
Consolidated Estate (collectively, the "Debtor Released Parties") from any and
all Claims which each of such Company Releasing Parties has or may have against
any of the Debtor Released Parties arising on or prior to the Closing Date;
provided, however, that nothing set forth herein shall or shall be deemed to
release, remise and acquit the Debtor Released Parties from, and the Debtor
Released Parties shall be responsible for, any Claims that the Company or any of
its Subsidiaries has or may have against the Debtor Released Parties (A) arising
from Claims asserted or threatened to be asserted by any Person against the
Company or any of its Subsidiaries to the extent that such Claims are based upon
(i) actions or inactions of or by the Sellers, the Consolidated Estate, any of
their affiliates or any Person acting in concert with them (other than the
Company and its Subsidiaries) or (ii) the fact that the Company and its
Subsidiaries were at any time affiliates of the Sellers or any of them; or (iii)
loans, advances or the provision of goods and services to or any other
liabilities of the Debtor Released Parties or their affiliates (other than the
Company and its Subsidiaries); (B) arising from, relating to or in connection
with the obligations of the Debtor Released Parties (or any of them) pursuant to
this Agreement; and (C) asserted or assertable against any of the Debtor
Released Parties under theories of contribution, subrogation or indemnification.
Each of the Company Releasing Parties further agrees that such Company Releasing
Party will not assert, prosecute or file or permit to be asserted, prosecuted or
filed on such Company Releasing Party's behalf any such released
11
Claim. This release is for any relief, no matter how denominated, including, but
not limited to, injunctive relief, compensatory damages, or punitive damages.
5.8 Certain Events. In the event of any change in the Common Stock or
Series 2 Preferred Stock by reason of a stock dividend, stock split, split-up,
recapitalization, reorganization, business combination, consolidation, exchange
of shares, or any similar transaction or other change in the capital structure
of the Company affecting the Common Stock or the Series 2 Preferred Stock or the
acquisition of additional shares of Common Stock, Series 2 Preferred Stock or
other securities or rights of the Company by any Seller: (a) the number of
Shares and/or Series 2 Preferred Stock owned by such Seller shall be adjusted
appropriately, and (b) this Agreement and the obligations hereunder shall attach
to any additional shares of Common Stock, Series 2 Preferred Stock or other
securities or rights of the Company issued to or acquired by each of the
Sellers.
5.9 Publicity.
(a) Each of the parties hereto agrees that it will not issue any press
release or otherwise make any public statement with respect to this Agreement or
the transactions contemplated hereby without the prior consent of the other
parties hereto; provided, however, that such disclosure may be made without
obtaining such prior consent if (i) the disclosure is required by Law or any
Governmental Authority, including but not limited to, any national securities
exchange, trading market or inter-dealer quotation system on which the Shares or
the common stock of Parent trade and (ii) the party making such disclosure has
first used its reasonable best efforts to consult with the other parties about
the form and substance of such disclosure.
(b) Each Seller hereby agrees to permit Parent and the Purchaser to
publish and disclose (including in all documents, statements and schedules filed
with the SEC), subject to review and approval (which approval shall not be
unreasonably withheld) of such Seller its identity and ownership of the Target
Securities and the nature of its commitments, arrangements and understandings
under this Agreement.
ARTICLE 6. CONDITIONS TO CLOSING; TERMINATION.
6.1 Conditions to Each Party's Obligations. The respective obligations of
each party under this Agreement are subject to the satisfaction, at or prior to
the Closing Date, of the following conditions, unless waived by the Purchaser
and the Sellers in writing:
(a) No temporary restraining order, preliminary or permanent
injunction or other judgment or order issued by any court of competent
jurisdiction or other statute, law, rule, legal restraint or prohibition
(collectively, "Restraints") shall be in effect preventing the consummation of
the transactions contemplated hereby.
(b) No action, suit or proceeding shall have been instituted, or shall
be pending or threatened in writing, by a Governmental Authority (i) seeking to
restrain in any material respect or to prohibit the consummation of the
transactions contemplated
12
hereby, (ii) seeking to obtain from the Sellers, the Consolidated Estate, Parent
or the Purchaser, as the case may be, or any of their respective affiliates any
material damages with respect to the transactions contemplated hereby, or (iii)
seeking to impose the Restraints referred to in subsection (a) above.
(c) All material consents, orders or approvals of, declarations or
filings with, and expirations of waiting periods imposed by, any Governmental
Authority or third party that are required for the consummation of the
transactions contemplated hereby, if any, shall have been obtained and in
effect.
6.2 Conditions to Obligations of the Purchaser. The obligations of Parent
and the Purchaser under this Agreement are subject to the satisfaction, at or
prior to the Closing Date, of the following conditions, unless waived by the
Purchaser in writing:
(a) The Sellers shall have performed and complied in all material
respects with their obligations under this Agreement required to be performed by
them at or prior to the Closing Date.
(b) The representations and warranties of the Sellers contained in
this Agreement shall be true and correct in all material respects (except for
representations and warranties qualified as to materiality, which shall be true
in all respects), in each case as of the date of this Agreement and at and as of
the Closing Date as if made at and as of such date.
(c) The Purchaser shall have received a certificate signed by each of
the Sellers to the effect of Sections 6.2(a) and 6.2(b).
(d) The conditions set forth in Sections 7.1 and 7.2 of the Merger
Agreement (other than Sections 7.1(a), 7.2(c) and 7.2(e)) shall have been
fulfilled or waived by the Purchaser.
(e) The Sellers shall have made the deliveries required by Section
2.2.
(f) The Bankruptcy Court Approval shall have been obtained, shall
contain the provisions set forth in Section 5.5(a) and shall have become a Final
Order; provided, however, that (i) if the Bankruptcy Court will not grant the
declaration and injunction described in Section 5.5(a)(xi) and (ii) the
Bankruptcy Court approves the Sellers' indemnification of the Purchaser
Indemnified Parties for such Claims or Losses as described in the proviso of
Section 5.5(a), then the failure of the Bankruptcy Court Approval to contain the
declaration and injunction set forth in Section 5.5(a)(xi) shall not be a
condition of Closing. "Final Order" shall mean an order or judgment of the
Bankruptcy Court as to which (a) the time to appeal, petition for certiorari, or
motion for reargument or rehearing has expired and as to which no appeal,
petition for certiorari, or move for reargument or rehearing shall then be
pending or, (b) in the event that an appeal, writ of certiorari, reargument or
rehearing thereof has been sought, such order of the Bankruptcy Court shall have
been affirmed by the highest court to which such order was appealed, or
certiorari has been denied, or from which reargument or rehearing was sought,
and the time to take any further appeal, petition for certiorari or move
13
for reargument or rehearing shall have expired; provided, that no order shall
fail to be a Final Order solely because of the possibility that a motion
pursuant to Rule 60 of the Federal Rules of Civil Procedure or Rule 7024 of the
Federal Rules of Bankruptcy Procedure may be filed with respect to such order.
6.3 Conditions to Obligations of the Sellers. The obligations of the
Sellers under this Agreement are subject to the satisfaction or waiver, at or
prior to the Closing Date, of the following conditions, unless waived by the
Sellers in writing:
(a) The Purchaser shall have performed and complied in all material
respects with its obligations under this Agreement required to be performed by
it at or prior to the Closing Date.
(b) The representations and warranties of the Purchaser contained in
this Agreement shall be true and correct in all material respects (except for
representations and warranties qualified as to materiality, which shall be true
in all respects), in each case as of the date of this Agreement and at and as of
the Closing Date as if made at and as of such date.
(c) The Sellers shall have received a certificate signed by an
authorized officer of the Purchaser to the effect of Sections 6.3(a) and 6.3(b).
(d) The Bankruptcy Court Approval shall have been obtained, shall contain the
provisions set forth in Section 5.5(a) (other than clauses (v), (vi) and (xi) of
Section 5.5(a), the inclusion of which in the Bankruptcy Court Approval shall
not be a condition to the obligations of the Sellers hereunder), and no stay
thereof shall be in force.
6.4 Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing:
(a) by mutual written consent of the Sellers and the Purchaser;
(b) by either the Purchaser or the Sellers, if the Closing has not
occurred on or before April 30, 2002; provided, however, that the right to
terminate this Agreement pursuant to this Section 6.4(b) shall not be available
to any party whose breach of a covenant, representation or warranty has been the
cause of the failure of the Closing to occur on or before such date;
(c) by the Purchaser, if there has been a violation or breach by any
Seller of any covenant, agreement, representation or warranty contained in this
Agreement which has rendered the satisfaction of any condition contained in
Article 6 hereof incapable of fulfillment and such violation or breach has not
been waived by the Purchaser;
(d) by the Sellers, if there has been a violation or breach by the
Purchaser of any covenant, agreement, representation or warranty contained in
this Agreement which has rendered the satisfaction of any condition contained in
Article 6
14
hereof incapable of fulfillment and such violation or breach has not
been waived by the Sellers;
(e) by either the Purchaser or the Sellers, if a Governmental
Authority shall have issued a nonappealable final order, decree or ruling or
taken any other nonappealable final action having the effect of permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated
hereby (which order, decree, ruling or other action the party seeking to
terminate this Agreement shall have used their reasonable best efforts to lift);
(f) by the Purchaser, if the Merger Agreement is terminated pursuant
to Section 8.1 of the Merger Agreement; or
(g) by the Purchaser, if the Sellers enter into or accept an
Alternative Transaction with a Person other than the Purchaser or Parent (or an
affiliate or designee of the Purchaser or Parent).
If the Purchaser or the Sellers terminate this Agreement pursuant to the
provisions hereof, such termination will be effected by written notice to the
other party specifying the provision hereof pursuant to which the termination is
made. 6.5 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 6.4, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of any party hereto or
any of its affiliates, directors, officers or stockholders, except (a) as stated
in this Section 6.5 and Article 7 which shall survive such termination, and (b)
no such termination shall relieve any party hereto of any liability for the
breach of any representation, warranty, covenant or agreement hereunder by such
party.
ARTICLE 7. MISCELLANEOUS PROVISIONS.
7.1 Other Agreements. Until the Effective Time, Parent and the Purchaser
shall not purchase any shares of Common Stock at a price per share of Common
Stock greater than $3.00 (the "Consideration Threshold") from any stockholder of
the Company (other than the Sellers) (the "Other Stockholder"), unless such
greater price is also paid to the Sellers herein; it being understood that in no
event shall any amount paid or to be paid (i) as consideration for any
settlement of any dispute or pending or threatened litigation, or as
consideration for a release of any Claims underlying such dispute or litigation,
or (ii) pursuant to an agreement for the provision of services (whether rendered
or to be rendered), in each case, to any such Other Stockholder be considered a
payment for, or a purchase of, shares of Common Stock for purposes of
determining if the price per share of Common Stock paid to the Other Stockholder
is greater than the Consideration Threshold. Parent and Purchaser shall as soon
as practicable advise the Sellers of any such settlement or agreement referred
to in subsections (i) or (ii) above.
7.2 Survival of Representations and Warranties. The representations and
warranties set forth in Article 3 hereof shall survive the Closing; provided,
however, that
15
any claims for breach of such representations and warranties that
are not asserted (i) against the Sellers by the Purchaser or (ii) against the
Purchaser by the Sellers on or before substantial consummation of any Chapter 11
plan for the Sellers shall be barred.
7.3 Transactional Costs. Except as set forth in Section 5.2, the Purchaser
shall be responsible for all of its legal, accounting, advisory and other fees
and expenses incurred in connection with this Agreement and the consummation of
the transactions contemplated hereby and the Sellers shall be responsible for
all legal, accounting (including all costs and fees), advisory and other fees
and expenses incurred by the Sellers in connection with this Agreement and the
consummation of the transactions contemplated hereby.
7.4 Successors and Assigns. This Agreement and all provisions hereof will
be binding upon and enure to the benefit of the parties hereto and their
respective successors and permitted assigns; provided, however, that neither
this Agreement nor any right, interest, or obligation hereunder may be assigned
by any party hereto without the prior written consent of the other party, except
that Parent and/or the Purchaser may assign their rights to an affiliate of
Parent or the Purchaser; provided, that no such assignment shall relieve Parent
or the Purchaser of their obligations hereunder, and provided that no party
hereto or successor or assignee has the ability to subrogate any other person to
any right or obligation under this Agreement.
7.5 Notices. All notices, requests, consents, instructions and other
communications required or permitted to be given hereunder shall be in writing
and hand delivered, sent by nationally recognized, next-day delivery service or
mailed by certified or registered mail, return receipt requested, postage
prepaid, addressed as set forth below or by facsimile transmission; receipt
shall be deemed to occur on the date of actual receipt if delivered personally
or by registered or certified mail and 12 hours from the time of transmission if
sent by facsimile.
(a) if to the Purchaser, to:
Cardigan Acquisition Corporation
c/o Cendant Corporation
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Fax: 000-000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxx, Esq.
Fax: 000-000-0000;
16
(b) if to any of the Sellers, to the address set forth
under such Seller's name on Exhibit A hereto:
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Esq.
M.O. Xxxxx, Jr., Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
or such other address or persons as the parties may from time to time designate
in writing in the manner provided in this Section.
7.6 Entire Agreement. This Agreement, together with the Schedules and
Exhibits hereto, and, to the extent relevant, the Merger Agreement represent the
entire agreement and understanding of the parties hereto with respect to the
transactions contemplated herein.
7.7 Amendments and Waivers. This Agreement may be amended, superseded,
cancelled, renewed or extended, and the terms hereof may be waived, only by a
written instrument signed by the Parent, Purchaser and the Sellers or, in the
case of a waiver, by the party waiving compliance or his or her representative.
No delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof; nor shall any waiver on the part of
any party of any such right, power or privilege, nor any single or partial
exercise of any such right, power or privilege, preclude any further exercise
thereof or the exercise of any other such right, power or privilege.
7.8 Headings. The article and section headings contained in this Agreement
are solely for convenience of reference and shall not affect the meaning or
interpretation of this Agreement or of any term or provision hereof.
7.9 Terms. All references herein to Articles, Sections, Schedules and
Exhibits shall be deemed references to such parts of this Agreement, unless the
context shall otherwise require.
7.10 Governing Law; Jurisdiction and Venue. Except as mandatorily required
by the Bankruptcy Code, this Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
choice of law principles. Except as mandatorily required by the Bankruptcy Code,
each party hereto hereby agrees that any proceeding relating to this agreement
and the transactions contemplated hereby shall be brought in a State Court of
New York or a federal court located in New York. Each party hereto hereby
consents to personal jurisdiction in any such action brought in any such New
York or federal court, consents to service of process by registered mail made
upon such party and such party's agent and waives any objection
17
to venue in any such New York or federal court and any claim that any such New
York or federal court is an inconvenient forum.
7.11 No Third Party Beneficiaries. Except as expressly contemplated in this
Agreement, this Agreement shall be binding upon and inure solely to the benefit
of each party hereto and nothing in this Agreement is intended to confer upon
any other Person any rights or remedies of any nature whatsoever under or by
reason of this Agreement.
7.12 Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
7.13 Interpretation. The table of contents is for convenience of reference
only, does not constitute part of this Agreement and shall not be deemed to
limit or otherwise affect any of the provisions hereof. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein. The definitions contained in
this Agreement are applicable to the singular as well as the plural forms of
such terms and to the masculine as well as to the feminine and neuter genders of
such term. Unless otherwise stated, any agreement, instrument or statute defined
or referred to herein or in any agreement or instrument that is referred to
herein means such agreement, instrument or statute as from time to time amended,
modified or supplemented, including (in the case of agreements or instruments)
by waiver or consent and (in the case of statutes) by succession of comparable
successor statutes and references to all attachments thereto and instruments
incorporated therein. As used in this Agreement, "Person" shall mean any
individual, corporation, partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union or entity of any kind
whatsoever, including any Governmental Authority. References to a Person are
also to its permitted successors and assigns. References to the "Sellers'
knowledge" shall mean the knowledge of any of the Sellers, after due inquiry and
reasonable investigation. As used in this Agreement, "affiliate" means as to any
Person, any other Person which, directly or indirectly, controls, or is
controlled by, or is under common control with, such Person. As used in this
definition, "control" (including, with its correlative meanings, "controlled by"
and "under common control with") shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of management or
policies of a Person, whether through the ownership of securities or partnership
or other ownership interests, by contract or otherwise.
7.14 Acknowledgements. The parties hereto acknowledge and agree that (i)
each party has reviewed and negotiated the terms and provisions of this
Agreement and has had the opportunity to contribute to its revision, and (ii)
each party has been represented by counsel in reviewing and negotiating such
terms and provisions. Accordingly, the rule of construction to the effect that
ambiguities are resolved against
18
the drafting party shall not be employed in the interpretation of this
Agreement. Rather, the terms of this Agreement shall be construed fairly as to
both parties hereto and not in favor or against either party.
7.15 Trustee Capacity. Xxxxxxx X. Xxxxxxx is executing this Agreement on
behalf of the Sellers solely in his capacity as Trustee of the Consolidated
Estate of the Sellers in the Bankruptcy Case and shall have no personal
responsibility or liability whatsoever under this Agreement. The Trustee makes
no agreement or understanding herein in his capacity as a director of officer of
the Company and nothing herein shall limit or affect any actions taken by the
Trustee in his capacity as an officer or director of the Company.
7.16 Guarantee by Parent. Parent hereby guarantees the performance of all
obligations of the Purchaser contained in this Agreement (including, without
limitation, all payment obligations hereunder).
19
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original and all of which together shall be
considered one and the same agreement.
CENDANT CORPORATION
By: /s/ Xxxx X. Xxxx
---------------------------------------
Name: Xxxx X. Xxxx
Title: Secretary and Senior Vice President
CARDIGAN ACQUISITION CORPORATION
By: /s/ Xxxx X. Xxxx
---------------------------------------
Name: Xxxx X. Xxxx
Title: Secretary and Senior Vice President
SELLERS
THE XXXXXXX FUNDING GROUP, INC.
By: Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Trustee
XXXXXXX MANAGEMENT & DEVELOPMENT CORPORATION
By: Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Trustee
XXXXXXX RECEIVABLES CORPORATION
By: Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Trustee
20
XXXXXXX RECEIVABLES CORPORATION II
By: Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Trustee
THE PROCESSING CENTER, INC.
By: Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Trustee
RESORT SERVICE COMPANY, INC.
By: Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Trustee
AMERICAN MARINE INTERNATIONAL, LTD.
By: Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Trustee
ALOHA CAPITAL CORPORATION
By: Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Trustee
21
EXHIBIT A-2
STOCK PURCHASE AGREEMENT
dated December 16, 2001
among
CARDIGAN ACQUISITION CORPORATION
and
R. XXXXX XXXXXX
and
XXXXX XXXXXX
Table of Contents
Page
RECITALS. .............................................................1
ARTICLE 1. PURCHASE AND SALE OF THE SHARES.....................................1
1.1 Agreement to Purchase and Sell.....................................1
1.2 Purchase Price.....................................................1
ARTICLE 2. CLOSING.............................................................2
2.1 Closing............................................................2
2.2 Sellers' Closing Deliveries........................................2
2.3 Purchaser's Closing Deliveries.....................................2
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS.......................3
3.1 Ownership of Stock; Title..........................................3
3.2 Authority..........................................................3
3.3 No Violation; Consents and Approvals...............................4
3.4 Transactions with the Sellers......................................4
3.5 Finder's Fee.......................................................4
3.6 Outstanding Obligations............................................4
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.....................4
4.1 Organization; Authority............................................5
4.2 No Violation.......................................................5
4.3 Consents and Approvals.............................................5
4.4 Financing..........................................................5
4.5 Investment Representation..........................................5
ARTICLE 5. COVENANTS...........................................................6
5.1 Satisfaction of Conditions.........................................6
5.2 Transfer Taxes.....................................................6
5.3 Voting.............................................................6
5.4 General Release and Waiver.........................................7
5.5 Transfer of the Shares.............................................7
5.6 Certain Events.....................................................8
5.7 Publicity..........................................................8
ARTICLE 6. INDEMNIFICATION.....................................................8
ARTICLE 7. CONDITIONS TO CLOSING; TERMINATION..................................8
7.1 Conditions to Each Party's Obligations.............................8
7.2 Conditions to Obligations of the Purchaser.........................9
7.3 Conditions to Obligations of the Sellers...........................9
7.4 Termination.......................................................10
7.5 Effect of Termination.............................................10
ARTICLE 8. MISCELLANEOUS PROVISIONS...........................................11
8.1 Transactional Costs...............................................11
8.2 Successors and Assigns............................................11
8.3 Notices...........................................................11
8.4 Entire Agreement..................................................12
i
8.5 Amendments and Waivers............................................12
8.6 Headings..........................................................12
8.7 Terms 12
8.8 Governing Law; Jurisdiction and Venue.............................12
8.9 No Third Party Beneficiaries......................................13
8.10 Counterparts......................................................13
8.11 Interpretation....................................................13
8.12 Acknowledgements..................................................14
ii
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement"), dated as of
December 16, 2001, is made by and among Cardigan Acquisition Corporation, a
corporation incorporated under the laws of Delaware (the "Purchaser"), R. Xxxxx
Xxxxxx and Xxxxx Xxxxxx (each of R. Xxxxx Xxxxxx and Xxxxx Xxxxxx is referred to
herein as a "Seller" and, collectively, the "Sellers").
R E C I T A L S
WHEREAS, each of the Sellers currently owns beneficially and
of record such number of shares of common stock, $.01 par value ("Common
Stock"), of Equivest Finance Inc., a Delaware corporation (the "Company"), as
are set forth opposite the name of such Seller on Exhibit A hereto.
WHEREAS, Cendant Corporation ("Parent"), the Purchaser and the
Company have entered into an Agreement and Plan of Merger, dated as of the date
hereof (the "Merger Agreement"), which provides, among other things, for the
merger of the Purchaser with and into the Company with the Company continuing as
the surviving corporation (the "Merger") upon the terms and subject to the
conditions set forth in the Merger Agreement (capitalized terms used herein
without definition shall have the respective meanings specified in the Merger
Agreement);
WHEREAS, the Sellers desire to sell to the Purchaser, and the
Purchaser desires to purchase from the Sellers, the Common Stock owned by the
Sellers on the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing Recitals
(which are hereby incorporated by reference), the agreements hereafter set forth
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree to be legally bound as follows:
ARTICLE 1. PURCHASE AND SALE OF THE SHARES.
1.1 Agreement to Purchase and Sell. On the Closing Date (as defined in
Section 2.1) and upon the terms and subject to the conditions set forth in this
Agreement, each Seller shall sell, assign, transfer, convey and deliver to the
Purchaser, and the Purchaser will accept and purchase from each Seller, all of
such Seller's rights, title and interests in and to all of the shares of Common
Stock held by such Seller (the "Shares"), in each case free and clear of all
Liens. Each Seller hereby consents to the sale of the Shares by each other
Seller pursuant to this Agreement.
1
1.2 Purchase Price. Subject to the terms and conditions set forth herein,
the Purchaser shall pay or cause to be paid to the Sellers, in cash, $3.00
multiplied by the number of Shares (the "Purchase Price").
ARTICLE 2. CLOSING.
2.1 Closing. Consummation of the transactions contemplated hereby (the
"Closing") shall take place at the offices of Skadden, Arps, Slate, Xxxxxxx &
Xxxx LLP, Xxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., local
time, on the first business day following the day on which the last of the
conditions set forth in Sections 7.1, 7.2 and 7.3 is fulfilled or waived (other
than those conditions that by their nature are to be fulfilled at the Closing,
but subject to the fulfillment or waiver of those conditions), or at such other
time and place and on such other date as the Purchaser and the Sellers shall
agree (the "Closing Date").
2.2 Sellers' Closing Deliveries. Subject to the conditions set forth in
this Agreement, at the Closing, simultaneously with the Purchaser's deliveries
hereunder, each Seller shall deliver or cause to be delivered to the Purchaser
stock certificates representing the Shares owned by such Seller as set forth on
Exhibit A hereto accompanied by stock powers duly endorsed in blank or
accompanied by duly executed instruments of transfer and appropriate signature
guarantees, with all necessary transfer tax and other revenue stamps affixed
thereto.
(b) At the Closing, the Sellers will also deliver the following to the
Purchaser:
(i) certificates of each of the Sellers as contemplated by Section
7.2(b);
(ii) a duly executed certificate from each Seller (each, a "FIRPTA
Certificate") of non-foreign status in the form and manner that complies with
section 1445 of the Code and the Treasury Regulations promulgated thereunder.
Notwithstanding anything to the contrary contained herein, if any Seller fails
to deliver a FIRPTA Certificate and the Purchaser elects to proceed with the
Closing, the Purchaser shall be entitled to withhold the amount required to be
withheld pursuant to section 1445 of the Code from the Purchase Price payable to
such Seller; and
(iii) all such other certificates, documents and instruments as the
Purchaser shall reasonably request in connection with the consummation of the
transactions contemplated by this Agreement.
2.3 Purchaser's Closing Deliveries. Subject to the conditions set forth in
this Agreement, at the Closing, simultaneously with the Sellers' deliveries
hereunder, the Purchaser shall deliver or cause to be delivered to the Sellers,
the Purchase Price (less, if applicable pursuant to Section 2.2(b)(ii), any
amounts withheld by the Purchaser) in immediately available funds to a United
States account designated in writing by the Sellers.
2
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each of the Sellers,
jointly and severally, hereby represents and warrants to the Purchaser, as
follows:
3.1 Ownership of Stock; Title
(a) Each such Seller is the sole lawful record and beneficial owner of
the number and type of Shares set forth opposite such Seller's name on Exhibit A
hereto, which ownership is free and clear of all Liens. The Shares set forth
opposite each Seller's name on Exhibit A hereof, are the only class of capital
stock, securities convertible into or exchangeable for any shares of capital
stock, warrants, options, agreements, call rights, conversion rights, exchange
rights, preemptive rights or other rights or commitments or understandings which
call for the issuance, sale, delivery, pledge, transfer, redemption or other
disposition of any shares of capital stock of the Company or any of its
Subsidiaries that such Seller owns, beneficially or of record. Except as set
forth on Schedule 3.1, such Seller is not a party to any agreement creating
rights with respect to such Seller's Shares in any Person, and such Seller has
the full power and legal right to sell, assign, transfer and deliver such
Seller's Shares. Except as set forth on Schedule 3.1, there are no existing
warrants, options, stock purchase agreements, redemption agreements,
restrictions of any nature, voting trust agreement, proxies, calls or rights to
subscribe of any character relating to the Shares owned by such Seller. Such
Seller has not received any notice of any adverse claim to the ownership of any
such Shares, does not have any reason to know of any such adverse claim that may
be justified and is not aware of existing facts that would give rise to any
adverse claim to the ownership of such Shares. On the Closing Date, such Seller
shall have good and marketable title to such Shares, free and clear of all
Liens. The delivery of certificates for the Shares owned by such Seller to the
Purchaser pursuant to the provisions of this Agreement will transfer to the
Purchaser good and marketable title to such Shares, free and clear of all Liens,
except for Liens created by the Purchaser.
(b) If such Seller is married and the Shares constitute community
property or otherwise are owned or held in a manner that requires spousal or
other approval for this Agreement to be legal, valid and binding, this Agreement
has been duly authorized, executed and delivered by, and constitutes a valid and
binding agreement of, the Seller's spouse or the person giving such approval,
enforceable against such spouse or person in accordance with its terms.
(c) The Shares and the certificates representing the Shares owned by
such Seller are now, and at all times during the term hereof will be, held by
the relevant Seller, or by a nominee, trustee or custodian for the benefit of
such Seller, free and clear of all Liens, except for any such Liens arising
hereunder.
3.2 Authority. Each such Seller has the requisite power and authority and
has full legal capacity necessary to execute, deliver and perform its
obligations under this Agreement and the other agreements and instruments to be
executed and delivered by such Seller hereunder or in connection herewith and to
carry out such Seller's obligations hereunder and thereunder and the
transactions contemplated hereby and thereby. No
3
other proceedings on the part of such Seller, are necessary to authorize such
execution, delivery and performance. This Agreement has been duly and validly
executed and delivered to the Purchaser by such Seller and constitutes a valid
and binding obligation of such Seller, enforceable against such Seller in
accordance with its terms.
3.3 No Violation; Consents and Approvals.
(a) Except as set forth on Schedule 3.3(a) hereto, the execution and
delivery of this Agreement by such Seller and the consummation of the
transactions contemplated hereby do not and will not: (i) violate, or conflict
with, or result in a breach of any provisions of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, or give rise to a right of termination, cancellation, modification or
acceleration of the performance required by or a loss of a benefit under, any
note, bond, mortgage, indenture, deed of trust, lease contract or agreement by
which such Seller or any of such Seller's Shares are bound; (ii) constitute a
violation of any Order, to which such Seller or any of such Seller's Shares are
bound; or (iii) result in the creation of any Lien upon any of the assets or
properties of such Seller, including Seller's Shares.
(b) Except as set forth on Schedule 3.4(b), no consent, approval,
permit, waiver, authorization, notice or filing is required to be made or
obtained in connection with the execution, delivery and performance by such
Seller of this Agreement or the consummation of the transactions contemplated
hereby.
3.4 Transactions with the Sellers. There are no transactions, agreements,
arrangements or understandings between the Company or any of its Subsidiaries,
on the one hand, and such Seller or any of its affiliates, on the other hand,
that would be required to be disclosed under Item 404 of Regulation S-K under
the Securities Act and are not so disclosed in the Company SEC Documents.
3.5 Finder's Fee. No broker, investment banker, financial advisor or other
person is entitled to any broker's, finder's, financial adviser's or other
similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of any of the Sellers.
3.6 Outstanding Obligations.Except as set forth on Schedule 3.6, the
Company and its Subsidiaries have no outstanding liabilities or obligations to,
and there are no amounts due from the Company and its Subsidiaries to, such
Seller and such Seller has no Claim (as defined in Section 5.4) against the
Company or any of its Subsidiaries.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser hereby
represents and warrants to each Seller as follows:
4.1 Organization; Authority.
(a) The Purchaser is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite
4
corporate power and authority to carry on its business as now being
conducted. The Purchaser has full power and authority necessary to execute,
deliver and perform its obligations under this Agreement and the other
agreements and instruments to be executed and delivered by the Purchaser
hereunder or in connection herewith and to carry out its obligations hereunder
and thereunder. The execution and delivery of this Agreement and the other
agreements and instruments to be executed and delivered by the Purchaser
hereunder or in connection herewith by the Purchaser, and the consummation by
the Purchaser of the transactions contemplated hereby, have been duly authorized
pursuant to and in accordance with the laws governing the Purchaser.
(b) This Agreement and the other agreements and instruments to be
executed and delivered by the Purchaser hereunder or in connection herewith have
been duly and validly executed and delivered by the Purchaser and constitute
valid and binding obligations of the Purchaser, enforceable against the
Purchaser in accordance with their respective terms.
4.2 No Violation. The execution and delivery by the Purchaser of this
Agreement and the transactions contemplated hereby do not and will not (i)
conflict with or result in any breach of any provision of the certificate of
incorporation, bylaws of the Purchaser, (ii) violate, or conflict with, or
result in a breach of any provisions of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or give rise to a right of termination, cancellation, modification or
acceleration of the performance required by or a loss of a benefit under, any
material agreement, permit or other instrument to which the Purchaser is a party
or to which the Purchaser is subject (except to the extent such breach,
violation or default is not reasonably likely to materially impair the ability
of the Purchaser to consummate the transactions contemplated hereby or to hold
the Shares), or (iii) violate any material order, judgment, writ, injunction,
decree, statute, rule or regulation applicable to the Purchaser or to which the
Purchaser is subject.
4.3 Consents and Approvals. Except as set forth on Schedule 4.3, no
consent, approval, permit, waiver, authorization, notice or filing is required
to be made or obtained in connection with the execution, delivery and
performance by the Purchaser of this Agreement or the consummation of the
transactions contemplated hereby.
4.4 Financing. As of the Closing Date, the Purchaser will have available to
it financing necessary to consummate the transactions contemplated hereby.
4.5 Investment Representation. The Purchaser is accepting the Shares being
acquired hereunder for its own account and not for any other person and for
investment purposes only and without any view to distribute, resell or otherwise
transfer the same.
ARTICLE 5. COVENANTS.
5.1 Satisfaction of Conditions.
5
(a) The Purchaser and the Sellers shall cooperate with each other and
use reasonable best efforts to take or cause to be taken all actions, and do or
cause to be done all things, necessary, proper or advisable on its part under
this Agreement and applicable Laws to consummate and make effective the
transactions contemplated by this Agreement and the Merger Agreement as soon as
reasonably practicable, including preparing and filing as promptly as reasonably
practicable all documentation to effect all necessary notices, reports,
applications and other filings and to obtain as promptly as reasonably
practicable all consents, registrations, approvals, permits and authorizations
necessary or advisable to be obtained from any third party and/or any
Governmental Authority in order to consummate the transactions contemplated by
this Agreement.
(b) Nothing in this Agreement shall require, or be construed to
require, Parent or the Purchaser, in connection with the receipt of any
regulatory consent, registration, approval permit or authorization, to proffer
to, or agree to (i) sell or hold separate and agree to sell, divest, discontinue
or limit, before or after the Effective Time, any assets, businesses, or
interest in any assets or businesses of Parent, the Purchaser, the Company or
any of their respective affiliates (or to consent to any sale, or agreement to
sell, or discontinuance or limitation by Parent, the Purchaser, the Company or
any of their respective affiliates, as the case may be, of any of their
respective assets or businesses) or (ii) agree to any conditions relating to, or
changes or restrictions in, the operations of any such assets or businesses
which, in the case of either clause (i) or (ii), is reasonably likely,
individually or in the aggregate, to materially and adversely impact the
aggregate economic or business benefits, taken as a whole, to Parent or the
Purchaser and their affiliates, of the transactions contemplated by this
Agreement or the Merger Agreement.
5.2 Transfer Taxes. All excise, sales, use, transfer (including real
property transfer or gains), stamp, documentary, filing, recordation and other
similar Taxes and fees which may be imposed or assessed as a result of the
transactions effected pursuant to this Agreement, together with any interest,
additions or penalties with respect thereto and any interest in respect of such
additions or penalties, shall be borne by the Sellers.
5.3 Voting. Each of the Sellers agrees that all of the Shares beneficially
owned by such Seller, or over which such Seller has voting power or control,
directly or indirectly (including any shares of Common Stock or other shares of
capital stock of the Company acquired after the date hereof), at the record date
for any meeting of stockholders of the Company called to consider and vote to
approve the Merger Agreement and/or the transactions contemplated thereby (or
any action by written consent in lieu of any such meeting), will be present at
such meeting in person or by proxy (or for purposes of any action by written
consent in lieu of any such meeting) and will be voted by such Seller in favor
thereof, and that such Seller will not vote such Shares in favor of any other
Acquisition Proposal.
5.4 General Release and Waiver.
(a) Except as expressly set forth in this Section 5.4, upon the
Closing hereof, each of the Sellers (on behalf of itself and its controlled
affiliates, successors, executors, heirs and assigns) (the "Releasing Parties")
hereby releases, remises and
6
acquits the Purchaser, the Company and all of their respective affiliates,
successors and assigns, and their respective officers, directors, shareholders,
members, agents, executives, consultants, independent contractors, attorneys,
and advisers (in their capacities as such) (the "Released Parties") from any and
all claims, known or unknown, which such Releasing Parties have or may have
against any of the Released Parties arising on or prior to the Closing Date and
any and all liability which any of the Released Parties may have to such
Releasing Parties, whether denominated claims, demands, causes of action,
obligations, damages or liabilities arising from any and all bases, however
denominated (collectively, "Claims"), including, but not limited to, any Claims
pursuant to any employment relationship or agreement with the Company or as a
result of the termination thereof. Each of the Releasing Parties further agrees
that such Releasing Party will not file or permit to be filed on such Releasing
Party's behalf any such Claim. This release is for any relief, no matter how
denominated, including, but not limited to, injunctive relief, wages, back pay,
front pay, compensatory damages, or punitive damages. This release shall not
apply to (x) any Claims that either of the Sellers may have against the
Purchaser or its respective affiliates arising from, relating to or in
connection with, the Purchaser's or its respective affiliates' obligations
pursuant to this Agreement and (y) any Claims described on Schedule 5.4 hereto.
(b) Each of the parties hereto acknowledges that their respective
agreements hereunder are being provided in consideration of the release
contained in this Section 5.4 and that they may not otherwise be entitled to
certain of the benefits described herein. Each of the parties hereto agrees not
to make any claim or take any position inconsistent with such releases.
5.5 Transfer of the Shares.
Prior to the termination of this Agreement, except as otherwise provided
herein, none of the Sellers shall: (a) transfer, assign, sell, gift-over, pledge
or otherwise dispose of, or consent to any of the foregoing ("Transfer"), any or
all of the Shares or any right, title or interest therein; (b) enter into any
contract, option or other agreement, arrangement or understanding with respect
to any Transfer; (c) grant any proxy, power-of-attorney or other authorization
or consent with respect to any of the Shares; (d) deposit any of the Shares into
a voting trust, or enter into a voting agreement or arrangement with respect to
any of the Shares, or (e) take any other action that would in any way restrict,
limit or interfere with the performance of such Seller's obligations hereunder
or the transactions contemplated hereby; provided, however, that the foregoing
shall not preclude Transfers by such Sellers for estate planning purposes if the
transferee in such Transfer agrees in writing to be bound by the terms of this
Agreement.
5.6 Certain Events. In the event of any change in the Common Stock by
reason of a stock dividend, stock split, split-up, recapitalization,
reorganization, business combination, consolidation, exchange of shares, or any
similar transaction or other change in the capital structure of the Company
affecting the Common Stock or the acquisition of additional shares of Common
Stock or other securities or rights of the Company by any Seller: (a) the number
of Shares owned by such Seller shall be adjusted appropriately, and (b) this
Agreement and the obligations hereunder shall attach to any
7
additional shares of Common Stock or other securities or rights of the Company
issued to or acquired by each of the Sellers.
5.7 Publicity.
(a) Each of the Sellers agree that it will not issue any press release
or otherwise make any public statement with respect to this Agreement or the
transactions contemplated hereby without the prior consent of the Purchaser;
provided, however, that such disclosure may be made without obtaining such prior
consent if (i) the disclosure is required by Law or is required by any
Governmental Authority, including but not limited to any national securities
exchange, trading market or inter-dealer quotation system on which the Shares or
the common stock of Parent trade and (ii) the party making such disclosure has
first used its best efforts to consult with the other parties about the form and
substance of such disclosure.
(b) Each Seller hereby agrees to permit Parent and the Purchaser to
publish and disclose (including in all documents, statements and schedules filed
with the SEC) its identity and ownership of the Shares and the nature of its
commitments, arrangements and understandings under this Agreement.
ARTICLE 6. INDEMNIFICATION.
The Sellers shall, jointly and severally, indemnify the Purchaser and its
successors, permitted assigns and affiliates, and their respective officers,
directors, employees, agents, representatives and affiliates (collectively, the
"Purchaser Indemnified Parties") from and against and shall reimburse the same
for and in respect of any and all losses, costs, fines, liabilities, claims,
penalties, damages (other than consequential damages) and expenses (including
all legal fees and expenses) of any nature or kind, known or unknown, fixed,
accrued, absolute or contingent, liquidated or unliquidated (collectively
"Losses") which may be suffered, sustained or incurred by, or claimed or
assessed against, any of them or to which any of them may be subject, in
connection with any and all claims, suits or Losses which arise from or are
related to a material breach of any representation or warranty made by a Seller
that is contained in or made pursuant to Article 3 of this Agreement.
ARTICLE 7. CONDITIONS TO CLOSING; TERMINATION.
7.1 Conditions to Each Party's Obligations. The respective obligations of
each party under this Agreement are subject to the satisfaction, at or prior to
the Closing Date, of the following conditions, unless waived by the Purchaser
and the Sellers in writing:
(a) No temporary restraining order, preliminary or permanent
injunction or other judgment or order issued by any court of competent
jurisdiction or other statute, law, rule, legal restraint or prohibition
(collectively, "Restraints") shall be in effect preventing the consummation of
the transactions contemplated hereby.
8
(b) No action, suit or proceeding shall have been instituted, or shall
be pending or threatened, by a Governmental Authority (i) seeking to restrain in
any material respect to prohibit the consummation of the transactions
contemplated hereby, (ii) seeking to obtain from the Sellers or the Purchaser or
any of its affiliates any material damages, or (iii) seeking to impose the
Restraints referred to in subsection (a) above.
(c) All material consents, orders or approvals of, declarations or
filings with, and expirations of waiting periods imposed by, any Governmental
Authority or third party that are required for the consummation of the
transactions contemplated hereby, if any, shall have been obtained and in
effect.
7.2 Conditions to Obligations of the Purchaser. The obligations of the
Purchaser under this Agreement are subject to the satisfaction, at or prior to
the Closing Date, of the following conditions, unless waived by the Purchaser in
writing:
(a) The Sellers shall have performed and complied in all material
respects with their obligations under this Agreement required to be performed by
them at or prior to the Closing Date.
(b) The representations and warranties of the Sellers contained in
this Agreement shall be true and correct in all material respects (except for
representations and warranties qualified as to materiality, which shall be true
in all respects), in each case as of the date of this Agreement and at and as of
the Closing Date as if made at and as of such date.
(c) The conditions set forth in Sections 7.1 and 7.2 of the Merger
Agreement (other than Sections 7.1(a), 7.2(c) and 7.2(e)) shall have been
fulfilled or waived by the Purchaser.
(d) The Sellers shall have made the deliveries required by Section
2.2.
7.3 Conditions to Obligations of the Sellers. The obligations of the
Sellers under this Agreement are subject to the satisfaction or waiver, at or
prior to the Closing Date, of the following conditions, unless waived by the
Sellers in writing:
(a) The Purchaser shall have performed and complied in all material
respects with its obligations under this Agreement required to be performed by
it at or prior to the Closing Date.
(b) The representations and warranties of the Purchaser contained in
this Agreement that are qualified with respect to materiality shall be true and
correct in all respects, and such representations and warranties 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 at and as of the Closing Date as if made at and
as of such date.
(c) The Purchaser shall have made the deliveries required by Section
2.3.
9
7.4 Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing:
(a) by mutual written consent of the Sellers and the Purchaser;
(b) by either the Purchaser or the Sellers, if the Closing has not
occurred on or before April 30, 2002; provided, however, that the right to
terminate this Agreement pursuant to this Section 7.4(b) shall not be available
to any party whose breach of a covenant, representation or warranty has been the
cause of the failure of the Closing to occur on or before such date;
(c) by the Purchaser, if there has been a violation or breach by any
Seller of any covenant, agreement, representation or warranty contained in this
Agreement which has rendered the satisfaction of any condition contained in
Article VII hereof incapable of fulfillment and such violation or breach has not
been waived by the Purchaser;
(d) by the Sellers, if there has been a violation or breach by the
Purchaser of any covenant, agreement, representation or warranty contained in
this Agreement which has rendered the satisfaction of any condition contained in
Article VII hereof incapable of fulfillment and such violation or breach has not
been waived by the Sellers;
(e) by either the Purchaser or the Sellers, if a Governmental
Authority shall have issued a nonappealable final order, decree or ruling or
taken any other nonappealable final action having the effect of permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated
hereby (which order, decree, ruling or other action the party seeking to
terminate this Agreement shall have used their reasonable best efforts to lift);
or
(f) by the Purchaser, if the Merger Agreement is terminated pursuant
to Section 8.1 of the Merger Agreement.
If the Purchaser or the Sellers terminate this Agreement pursuant to the
provisions hereof, such termination will be effected by written notice to the
other party specifying the provision hereof pursuant to which the termination is
made.
7.5 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 7.4, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of any party hereto or
any of its affiliates, directors, officers or stockholders, except (a) as stated
in this Section 7.5 and Article 8 which shall survive such termination, and (b)
no such termination shall relieve any party hereto of any liability for the
breach of any representation, warranty, covenant or agreement hereunder by such
party.
10
ARTICLE 8. MISCELLANEOUS PROVISIONS.
8.1 Transactional Costs. Except as set forth in Section 5.2, the Purchaser
shall be responsible for all of its legal, accounting, advisory and other fees
and expenses incurred in connection with this Agreement and the consummation of
the transactions contemplated hereby and the Sellers shall be responsible for
all legal, accounting (including all costs and fees), advisory and other fees
and expenses incurred by the Sellers in connection with this Agreement and the
consummation of the transactions contemplated hereby.
8.2 Successors and Assigns. (a) This Agreement and all provisions hereof
will be binding upon and enure to the benefit of the parties hereto and their
respective successors and permitted assigns; provided, however, that neither
this Agreement nor any right, interest, or obligation hereunder may be assigned
by any party hereto without the prior written consent of the other party, except
that the Purchaser may assign its rights to an affiliate of the Purchaser;
provided, that no such assignment shall relieve the Purchaser of its obligations
hereunder, and provided that no party hereto or successor or assignee has the
ability to subrogate any other person to any right or obligation under this
Agreement.
(b) Notwithstanding anything to the contrary set forth herein, the
Purchaser may assign all or a portion of their rights under Article 6 of this
Agreement in connection with the sale of the outstanding capital stock of the
Company, the sale of all or substantially all of the assets of the Company or
the sale of any material facility of the Company.
8.3 Notices. All notices, requests, consents, instructions and other
communications required or permitted to be given hereunder shall be in writing
and hand delivered, sent by nationally-recognized, next-day delivery service or
mailed by certified or registered mail, return receipt requested, postage
prepaid, addressed as set forth below or by facsimile transmission; receipt
shall be deemed to occur on the date of actual receipt if delivered personally
or by registered or certified mail and 12 hours from the time of transmission if
sent by facsimile.
(a) if to the Purchaser, to:
Cardigan Acquisition Corporation
c/o Cendant Corporation
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Fax: 000-000-0000
11
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxx, Esq.
Fax: 000-000-0000;
(b) if to any Seller, to the address set forth under such Seller's
name on Exhibit A hereto;
or such other address or persons as the parties may from time to time designate
in writing in the manner provided in this Section.
8.4 Entire Agreement. This Agreement, together with the Schedules and
Exhibits hereto, and, to the extent relevant, the Merger Agreement represent the
entire agreement and understanding of the parties hereto with respect to the
transactions contemplated herein.
8.5 Amendments and Waivers. This Agreement may be amended, superseded,
cancelled, renewed or extended, and the terms hereof may be waived, only by a
written instrument signed by the Purchaser and the Sellers or, in the case of a
waiver, by the party waiving compliance or his or her representative. No delay
on the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof; nor shall any waiver on the part of any party
of any such right, power or privilege, nor any single or partial exercise of any
such right, power or privilege, preclude any further exercise thereof or the
exercise of any other such right, power or privilege.
8.6 Headings. The article and section headings contained in this Agreement
are solely for convenience of reference and shall not affect the meaning or
interpretation of this Agreement or of any term or provision hereof.
8.7 Terms. All references herein to Articles, Sections, Schedules and
Exhibits shall be deemed references to such parts of this Agreement, unless the
context shall otherwise require.
8.8 Governing Law; Jurisdiction and Venue. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York, without
giving effect to choice of law principles. Each party hereto hereby agrees that
any proceeding relating to this agreement and the transactions contemplated
hereby shall be brought in a State Court of New York or a federal court located
in New York. Each party hereto hereby consents to personal jurisdiction in any
such action brought in any such New York or federal court, consents to service
of process by registered mail made upon such party and such party's agent and
waives any objection to venue in any such
12
New York or federal court and any claim that any such New York or federal court
is an inconvenient forum.
8.9 No Third Party Beneficiaries. Except as expressly contemplated in this
Agreement, this Agreement shall be binding upon and inure solely to the benefit
of each party hereto and nothing in this Agreement is intended to confer upon
any other Person any rights or remedies of any nature whatsoever under or by
reason of this Agreement.
8.10 Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
8.11 Interpretation. The table of contents is for convenience of reference
only, does not constitute part of this Agreement and shall not be deemed to
limit or otherwise affect any of the provisions hereof. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein. The definitions contained in
this Agreement are applicable to the singular as well as the plural forms of
such terms and to the masculine as well as to the feminine and neuter genders of
such term. Unless otherwise stated, any agreement, instrument or statute defined
or referred to herein or in any agreement or instrument that is referred to
herein means such agreement, instrument or statute as from time to time amended,
modified or supplemented, including (in the case of agreements or instruments)
by waiver or consent and (in the case of statutes) by succession of comparable
successor statutes and references to all attachments thereto and instruments
incorporated therein. As used in this Agreement, "Person" shall mean any
individual, corporation, partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union or entity of any kind
whatsoever, including any Governmental Authority. References to a Person are
also to its permitted successors and assigns. References to the "Seller's
knowledge" shall mean the knowledge of any of the Sellers, after due inquiry and
reasonable investigation. As used in this Agreement, "affiliate" means as to any
Person, any other Person which, directly or indirectly, controls, or is
controlled by, or is under common control with, such Person. As used in this
definition, "control" (including, with its correlative meanings, "controlled by"
and "under common control with") shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of management or
policies of a Person, whether through the ownership of securities or partnership
or other ownership interests, by contract or otherwise.
8.12 Acknowledgements. The parties hereto acknowledge and agree that (i)
each party has reviewed and negotiated the terms and provisions of this
Agreement and has had the opportunity to contribute to its revision, and (ii)
each party has been represented by counsel in reviewing and negotiating such
terms and provisions. Accordingly, the rule of construction to the effect that
ambiguities are resolved against
13
the drafting party shall not be employed in the interpretation of this
Agreement. Rather, the terms of this Agreement shall be construed fairly as to
both parties hereto and not in favor or against either party. Subject to Article
7 hereof, the Purchaser agrees that it will consummate the purchase of the
Shares contemplated hereby at or prior to the time it consummates the purchase
of the Target Securities (as defined therein) pursuant to the terms of the Stock
Purchase Agreement, dated December 16, 2001, among Cendant Corporation, the
Purchaser and the debtors in the substantively consolidated Chapter 11 case
entitled In re: The Xxxxxxx Funding Group, Inc.
14
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original and all of which together shall be
considered one and the same agreement.
CARDIGAN ACQUISITION CORPORATION
By: /s/ Xxxx X. Xxxx
----------------------
Name: Xxxx X. Xxxx
Title: Secretary
R. XXXXX XXXXXX
/s/ R. Xxxxx Xxxxxx
--------------------
XXXXX XXXXXX
/s/ Xxxxx Xxxxxx
--------------------
15
EXHIBIT A-3
EXECUTION COPY
STOCK PURCHASE AGREEMENT
dated December 16, 2001
among
CARDIGAN ACQUISITION CORPORATION
and
C. XXXXX XXXXXX
xx
Table of Contents
Page
R E C I T A L S ..............................................................1
ARTICLE 1. PURCHASE AND SALE OF TARGET SECURITIES.............................1
---------------------------------------
1.1 Agreement to Purchase and Sell....................................1
------------------------------
1.2 Purchase Price....................................................1
--------------
ARTICLE 2. CLOSING............................................................2
--------
2.1 Closing...........................................................2
-------
2.2 Seller's Closing Deliveries.......................................2
---------------------------
2.3 Purchaser's Closing Deliveries....................................2
------------------------------
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER.......................2
---------------------------------------------
3.1 Ownership of Stock; Title.........................................2
-------------------------
3.2 Authority.........................................................3
---------
3.3 No Violation; Consents and Approvals..............................3
------------------------------------
3.4 Litigation........................................................4
----------
3.5 Finder's Fee......................................................4
------------
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER....................4
------------------------------------------------
4.1 Organization; Authority...........................................4
-----------------------
4.2 No Violation......................................................5
------------
4.3 Consents and Approvals............................................5
----------------------
4.4 Financing.........................................................5
---------
4.5 Investment Representation.........................................5
-------------------------
ARTICLE 5. COVENANTS..........................................................5
----------
5.1 Satisfaction of Conditions........................................5
--------------------------
5.2 Transfer Taxes....................................................6
--------------
5.3 Voting............................................................6
------
5.4 Transfer of the Target Securities.................................6
---------------------------------
5.5 Certain Events....................................................7
--------------
5.6 Publicity.........................................................7
---------
ARTICLE 6. INDEMNIFICATION....................................................7
----------------
6.1 Indemnification by the Seller.....................................7
-----------------------------
ARTICLE 7. CONDITIONS TO CLOSING; TERMINATION.................................7
-----------------------------------
7.1 Conditions to Each Party's Obligations............................7
--------------------------------------
7.2 Conditions to Obligations of the Purchaser........................8
------------------------------------------
7.3 Conditions to Obligations of the Seller...........................8
---------------------------------------
7.4 Termination.......................................................9
-----------
7.5 Effect of Termination.............................................9
---------------------
ARTICLE 8. MISCELLANEOUS PROVISIONS..........................................10
-------------------------
8.1 Transactional Costs..............................................10
-------------------
8.2 Successors and Assigns...........................................10
----------------------
8.3 Notices..........................................................10
-------
8.4 Entire Agreement.................................................11
----------------
8.5 Amendments and Waivers...........................................11
----------------------
i
8.6 Headings.........................................................12
--------
8.7 Terms 12
-----
8.8 Governing Law; Jurisdiction and Venue............................12
-------------------------------------
8.9 No Third Party Beneficiaries.....................................12
----------------------------
8.10 Counterparts.....................................................12
------------
8.11 Interpretation...................................................12
--------------
8.12 Acknowledgements.................................................13
----------------
ii
STOCK PURCHASE AGREEMENT
------------------------
This Stock Purchase Agreement (the "Agreement"), dated as of
December 16, 2001, is made by and among Cardigan Acquisition Corporation, a
corporation incorporated under the laws of Delaware (the "Purchaser"), and C.
Xxxxx Xxxxxx (the "Seller").
R E C I T A L S
---------------
WHEREAS, the Seller currently owns beneficially and of record
1,897,447 shares of common stock, $.01 par value ("Common Stock"), of Equivest
Finance, Inc., a Delaware corporation (the "Company").
WHEREAS, Cendant Corporation ("Parent"), the Purchaser and the
Company have entered into an Agreement and Plan of Merger, dated as of the date
hereof (the "Merger Agreement"), which provides, among other things, for the
merger of the Purchaser with and into the Company with the Company continuing as
the surviving corporation (the "Merger") upon the terms and subject to the
conditions set forth in the Merger Agreement (capitalized terms used herein
without definition shall have the respective meanings specified in the Merger
Agreement);
WHEREAS, the Seller desires to sell to the Purchaser, and the
Purchaser desires to purchase from the Seller, the Common Stock owned by the
Seller on the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing Recitals
(which are hereby incorporated by reference), the agreements hereafter set forth
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree to be legally bound as follows:
ARTICLE 1. PURCHASE AND SALE OF TARGET SECURITIES.
1.1 Agreement to Purchase and Sell. On the Closing Date (as defined in
Section 2.1) and upon the terms and subject to the conditions set forth in this
Agreement, the Seller shall sell, assign, transfer, convey and deliver to the
Purchaser, and the Purchaser will accept and purchase from the Seller, all of
such Seller's rights, title and interests in and to all of the shares of Common
Stock held by the Seller (such shares, collectively, the "Target Securities"),
in each case free and clear of all Liens.
1.2 Purchase Price. Subject to the terms and conditions set forth herein,
the Purchaser shall pay or cause to be paid to the Seller, in cash, $3.00
multiplied by the number of Target Securities (the "Purchase Price").
1
ARTICLE 2. CLOSING.
2.1 Closing. Consummation of the transactions contemplated hereby (the
"Closing") shall take place at the offices of Skadden, Arps, Slate, Xxxxxxx &
Xxxx LLP, Xxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., local
time, on the first business day following the day on which the last of the
conditions set forth in Sections 7.1, 7.2 and 7.3 is fulfilled or waived (other
than those conditions that by their nature are to be fulfilled at the Closing,
but subject to the fulfillment or waiver of those conditions), or at such other
time and place and on such other date as the Purchaser and the Seller shall
agree (the "Closing Date").
2.2 Seller's Closing Deliveries. Subject to the conditions set forth in
this Agreement, at the Closing, simultaneously with the Purchaser's deliveries
hereunder, the Seller shall deliver or cause to be delivered to the Purchaser
stock certificates representing the Target Securities owned by the Seller
accompanied by stock powers duly endorsed in blank or accompanied by duly
executed instruments of transfer and appropriate signature guarantees, with all
necessary transfer tax and other revenue stamps affixed thereto.
(b) At the Closing, the Seller will also deliver the following to the
Purchaser:
(i) a certificate of the Seller as contemplated by Section
7.2(b);
(ii) a duly executed certificate from the Seller (a "FIRPTA
Certificate") of non-foreign status in the form and manner that complies with
section 1445 of the Code and the Treasury Regulations promulgated thereunder.
Notwithstanding anything to the contrary contained herein, if the Seller fails
to deliver a FIRPTA Certificate and the Purchaser elects to proceed with the
Closing, the Purchaser shall be entitled to withhold the amount required to be
withheld pursuant to section 1445 of the Code from the Purchase Price payable to
the Seller; and
(iii) all such other certificates, documents and instruments
as the Purchaser shall reasonably request in connection with the consummation of
the transactions contemplated by this Agreement.
2.3 Purchaser's Closing Deliveries. Subject to the conditions set forth in
this Agreement, at the Closing, simultaneously with the Seller's deliveries
hereunder, the Purchaser shall deliver or cause to be delivered to the Seller,
the Purchase Price (less, if applicable pursuant to Section 2.2(b)(ii), any
amounts withheld by the Purchaser) in immediately available funds to a United
States account designated in writing by the Seller.
2
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER.The Seller, hereby
represents and warrants to the Purchaser as follows:
3.1 Ownership of Stock; Title. The Seller is the sole lawful record and
beneficial owner of the Target Securities, which ownership is free and clear of
all Liens. The Target Securities are the only class of capital stock, securities
convertible into or exchangeable for any shares of capital stock, warrants,
options, agreements, call rights, conversion rights, exchange rights, preemptive
rights or other rights or commitments or understandings which call for the
issuance, sale, delivery, pledge, transfer, redemption or other disposition of
any shares of capital stock of the Company or any of its Subsidiaries that the
Seller owns, beneficially or of record. Except as set forth on Schedule 3.1, the
Seller is not a party to any agreement creating rights with respect to the
Target Securities in any Person, and the Seller has the full power and legal
right to sell, assign, transfer and deliver the Target Securities. Except as set
forth on Schedule 3.1, there are no existing warrants, options, stock purchase
agreements, redemption agreements, restrictions of any nature, voting trust
agreement, proxies, calls or rights to subscribe of any character relating to
the Target Securities. The Seller has not received any notice of any adverse
claim to the ownership of any such Target Securities, does not have any reason
to know of any such adverse claim that may be justified and is not aware of
existing facts that would give rise to any adverse claim to the ownership of
such Target Securities. On the Closing Date, the Seller shall have good and
marketable title to such Target Securities, free and clear of all Liens. The
delivery of certificates for the Target Securities owned by the Seller to the
Purchaser pursuant to the provisions of this Agreement will transfer to the
Purchaser good and marketable title to such Target Securities, free and clear of
all Liens, except for Liens created by the Purchaser. The Target Securities and
the certificates representing the Target Securities owned by the Seller are now,
and at all times during the term hereof will be, held by the Seller, or by a
nominee, trustee or custodian for the benefit of the Seller, free and clear of
all Liens, except for any such Liens arising hereunder.
3.2 Authority. The Seller has the requisite power and authority and has
full legal capacity necessary to execute, deliver and perform its obligations
under this Agreement and the other agreements and instruments to be executed and
delivered by the Seller hereunder or in connection herewith and to carry out the
Seller's obligations hereunder and thereunder and the transactions contemplated
hereby and thereby. No other proceedings on the part of the Seller are necessary
to authorize such execution, delivery and performance. This Agreement has been
duly and validly executed and delivered to the Purchaser by the Seller and
constitutes a valid and binding obligation of the Seller, enforceable against
the Seller in accordance with its terms.
3.3 No Violation; Consents and Approvals. The execution and delivery of
this Agreement by the Seller and the consummation of the transactions
contemplated hereby do not and will not: (i) violate, or conflict with, or
result in a breach of any provisions of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or give rise to a right of termination, cancellation, modification or
acceleration of the performance required by or a loss of a benefit under,
3
any note, bond, mortgage, indenture, deed of trust, lease contract or agreement
by which the Seller or any of the Target Securities are bound; (ii) constitute a
violation of any Order to which the Seller or any of such the Target Securities
are bound; or (iii) result in the creation of any Lien upon any of the assets or
properties of the Seller, including the Target Securities.
(b) No consent, approval, permit, waiver, authorization, notice or
filing is required to be made or obtained in connection with the execution,
delivery and performance by the Seller of this Agreement or the consummation of
the transactions contemplated hereby.
3.4 Litigation. Except for actions instituted or, to the Seller's
knowledge, threatened after the date hereof challenging or seeking to prevent,
or which arise as a result, directly or indirectly, of the consummation of the
transactions contemplated by this Agreement or the Merger Agreement, (i) there
are no material suits, claims, arbitrations, mediations, actions or proceedings
pending or, to the Seller's knowledge, threatened or investigations pending or
threatened against the Seller or with respect to any material property or assets
of the Seller, including the Target Securities, before any Governmental
Authority, and (ii) the Seller and its property or assets are not subject to any
order, judgment, injunction or decree of any Governmental Authority, in each
case, which restricts in any material respect or prohibits (or, if successful,
would restrict or prohibit), the exercise by any party or beneficiary of its
rights under this Agreement or the performance by any party of its obligations
under this Agreement.
3.5 Finder's Fee. No broker, investment banker, financial advisor or other
person is entitled to any broker's, finder's, financial adviser's or other
similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of the Seller.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser hereby
represents and warrants to the Seller as follows:
4.1 Organization; Authority. The Purchaser is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to carry on its
business as now being conducted. The Purchaser has full power and authority
necessary to execute, deliver and perform its obligations under this Agreement
and the other agreements and instruments to be executed and delivered by the
Purchaser hereunder or in connection herewith and to carry out its obligations
hereunder and thereunder. The execution and delivery of this Agreement and the
other agreements and instruments to be executed and delivered by the Purchaser
hereunder or in connection herewith by the Purchaser, and the consummation by
the Purchaser of the transactions contemplated hereby, have been duly authorized
pursuant to and in accordance with the laws governing the Purchaser. This
Agreement and the other agreements and instruments to be executed and delivered
4
by the Purchaser hereunder or in connection herewith have been duly and validly
executed and delivered by the Purchaser and constitute valid and binding
obligations of the Purchaser, enforceable against the Purchaser in accordance
with their respective terms.
4.2 No Violation. The execution and delivery by the Purchaser of this
Agreement and the transactions contemplated hereby do not and will not (i)
conflict with or result in any breach of any provision of the certificate of
incorporation, bylaws of the Purchaser, (ii) violate, or conflict with, or
result in a breach of any provisions of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or give rise to a right of termination, cancellation, modification or
acceleration of the performance required by or a loss of a benefit under, any
material agreement, permit or other instrument to which the Purchaser is a party
or to which the Purchaser is subject (except to the extent such breach,
violation or default is not reasonably likely to materially impair the ability
of the Purchaser to consummate the transactions contemplated hereby or to hold
the Target Securities), or (iii) violate any material order, judgment, writ,
injunction, decree, statute, rule or regulation applicable to the Purchaser or
to which the Purchaser is subject.
4.3 Consents and Approvals. Except as set forth on Schedule 4.3, no
consent, approval, permit, waiver, authorization, notice or filing is required
to be made or obtained in connection with the execution, delivery and
performance by the Purchaser of this Agreement or the consummation of the
transactions contemplated hereby.
4.4 Financing. As of the Closing Date, the Purchaser will have available to
it financing necessary to consummate the transactions contemplated hereby.
4.5 Investment Representation. The Purchaser is accepting the Target
Securities being acquired hereunder for its own account and not for any other
person and for investment purposes only and without any view to distribute,
resell or otherwise transfer the same.
ARTICLE 5. COVENANTS.
5.1 Satisfaction of Conditions.(a) The Purchaser and the Seller shall
cooperate with each other and use reasonable best efforts to take or cause to be
taken all actions, and do or cause to be done all things, necessary, proper or
advisable on its part under this Agreement and applicable Laws to consummate and
make effective the transactions contemplated by this Agreement and the Merger
Agreement as soon as reasonably practicable, including preparing and filing as
promptly as reasonably practicable all documentation to effect all necessary
notices, reports, applications and other filings and to obtain as promptly as
reasonably practicable all consents, registrations, approvals, permits and
authorizations necessary or advisable to be obtained from any third party and/or
any Governmental Authority in order to consummate the transactions contemplated
by this Agreement.
(b) Nothing in this Agreement shall require, or be construed to
require, Parent or the Purchaser, in connection with the receipt of any
regulatory consent, registration, approval permit or authorization, to proffer
to, or agree to (i) sell or hold
5
separate and agree to sell, divest, discontinue or limit, before or after the
Effective Time, any assets, businesses, or interest in any assets or businesses
of Parent, the Purchaser, the Company or any of their respective affiliates (or
to consent to any sale, or agreement to sell, or discontinuance or limitation by
Parent, the Purchaser, the Company or any of their respective affiliates, as the
case may be, of any of their respective assets or businesses) or (ii) agree to
any conditions relating to, or changes or restrictions in, the operations of any
such assets or businesses which, in the case of either clause (i) or (ii), is
reasonably likely, individually or in the aggregate, to materially and adversely
impact the aggregate economic or business benefits, taken as a whole, to Parent
or the Purchaser and their affiliates, of the transactions contemplated by this
Agreement or the Merger Agreement.
5.2 Transfer Taxes. All excise, sales, use, transfer (including real
property transfer or gains), stamp, documentary, filing, recordation and other
similar Taxes and fees which may be imposed or assessed as a result of the
transactions effected pursuant to this Agreement, together with any interest,
additions or penalties with respect thereto and any interest in respect of such
additions or penalties, shall be borne by the Seller.
5.3 Voting. The Seller agrees that all of the Target Securities
beneficially owned by the Seller, or over which the Seller has voting power or
control, directly or indirectly (including any shares of Common Stock), at the
record date for any meeting of stockholders of the Company called to consider
and vote to approve the Merger Agreement and/or the transactions contemplated
thereby (or any action by written consent in lieu of any such meeting), will be
present at such meeting in person or by proxy (or for purposes of any action by
written consent in lieu of any such meeting) and will be voted by the Seller in
favor thereof, and that the Seller will not vote the Target Securities in favor
of any other Acquisition Proposal.
5.4 Transfer of the Target Securities. Prior to the termination of this
Agreement, except as otherwise provided herein, the Seller shall not: (a)
transfer, assign, sell, gift-over, pledge or otherwise dispose of, or consent to
any of the foregoing ("Transfer"), any or all of the Target Securities or any
right, title or interest therein; (b) enter into any contract, option or other
agreement, arrangement or understanding with respect to any Transfer; (c) grant
any proxy, power-of-attorney or other authorization or consent with respect to
any of the Target Securities; (d) deposit any of the Target Securities into a
voting trust, or enter into a voting agreement or arrangement with respect to
any of the Target Securities, or (e) take any other action that would in any way
restrict, limit or interfere with the performance of the Seller's obligations
hereunder or the transactions contemplated hereby; provided, however, that the
foregoing shall not preclude Transfers by the Seller for estate planning
purposes if the transferee in such Transfer agrees in writing to be bound by the
terms of this Agreement.
5.5 Certain Events. In the event of any change in the Common Stock by
reason of a stock dividend, stock split, split-up, recapitalization,
reorganization, business combination, consolidation, exchange of shares, or any
similar transaction or other change in the capital structure of the Company
affecting the Common Stock or the acquisition of additional shares of Common
Stock or other securities or rights of the Company by the Seller: (a) the number
of shares of Common Stock owned by the Seller
6
shall be adjusted appropriately, and (b) this Agreement and the obligations
hereunder shall attach to any additional shares of Common Stock or other
securities or rights of the Company issued to or acquired by the Seller.
5.6 Publicity.(a) The Seller agrees that it will not issue any press
release or otherwise make any public statement with respect to this Agreement or
the transactions contemplated hereby without the prior consent of the Purchaser;
provided, however, that such disclosure may be made without obtaining such prior
consent if (i) the disclosure is required by Law or is required by any
Governmental Authority, including but not limited to any national securities
exchange, trading market or inter-dealer quotation system on which the Common
Stock trades, and (ii) the Seller has first used its best efforts to consult
with the Purchaser about the form and substance of such disclosure.
(b) The Seller hereby agrees to permit Parent and the Purchaser to publish and
disclose (including in all documents, statements and schedules filed with the
SEC) its identity and ownership of the Target Securities and the nature of its
commitments, arrangements and understandings under this Agreement.
ARTICLE 6. INDEMNIFICATION.6.1 Indemnification by the Seller. The Seller shall
indemnify the Purchaser and its successors, permitted assigns and affiliates,
and their respective officers, directors, employees, agents, representatives and
affiliates from and against and shall reimburse the same for and in respect of
any and all losses, costs, fines, liabilities, claims, penalties, damages (other
than consequential damages) and expenses (including all legal fees and expenses)
of any nature or kind, known or unknown, fixed, accrued, absolute or contingent,
liquidated or unliquidated (collectively "Losses") which may be suffered,
sustained or incurred by, or claimed or assessed against, any of them or to
which any of them may be subject, in connection with any and all claims, suits
or Losses which arise from or are related to a material breach of any
representation or warranty made by the Seller that is contained in or made
pursuant to Article 3 of this Agreement.
ARTICLE 7. CONDITIONS TO CLOSING; TERMINATION.
7.1 Conditions to Each Party's Obligations. The respective obligations of
each party under this Agreement are subject to the satisfaction, at or prior to
the Closing Date, of the following conditions, unless waived by the Purchaser
and the Seller in writing:
(a) No temporary restraining order, preliminary or permanent
injunction or other judgment or order issued by any court of competent
jurisdiction or other statute, law, rule, legal restraint or prohibition
(collectively, "Restraints") shall be in effect preventing the consummation of
the transactions contemplated hereby.
(b) No action, suit or proceeding shall have been instituted, or shall
be pending or threatened, by a Governmental Authority (i) seeking to restrain in
any material respect to prohibit the consummation of the transactions
contemplated hereby, (ii) seeking to obtain from the Seller or the Purchaser or
any of its affiliates any material
7
damages with respect to the transactions contemplated hereby, or (iii) seeking
to impose the Restraints referred to in subsection (a) above.
(c) All material consents, orders or approvals of, declarations or
filings with, and expirations of waiting periods imposed by, any Governmental
Authority or third party that are required for the consummation of the
transactions contemplated hereby, if any, shall have been obtained and in
effect.
7.2 Conditions to Obligations of the Purchaser. The obligations of the
Purchaser under this Agreement are subject to the satisfaction, at or prior to
the Closing Date, of the following conditions, unless waived by the Purchaser in
writing:
(a) The Seller shall have performed and complied in all material
respects with its obligations under this Agreement required to be performed by
it at or prior to the Closing Date.
(b) The representations and warranties of the Seller contained in this
Agreement shall be true and correct in all material respects (except for
representations and warranties qualified as to materiality, which shall be true
in all respects), in each case as of the date of this Agreement and at and as of
the Closing Date as if made at and as of such date.
(c) The Purchaser shall have received a certificate signed by the
Seller to the effect of Sections 7.2(a)and 7.2(b).
(d) The conditions set forth in Sections 7.1 and 7.2 of the Merger
Agreement (other than Sections 7.1(a) and 7.2(c)) shall have been fulfilled or
waived by the Purchaser.
(e) The Seller shall have made the deliveries required by Section 2.2.
7.3 Conditions to Obligations of the Seller. The obligations of the Seller
under this Agreement are subject to the satisfaction or waiver, at or prior to
the Closing Date, of the following conditions, unless waived by the Seller in
writing:
(a) The Purchaser shall have performed and complied in all material
respects with its obligations under this Agreement required to be performed by
it at or prior to the Closing Date.
(b) The representations and warranties of the Purchaser contained in
this Agreement that are qualified with respect to materiality shall be true and
correct in all respects, and such representations and warranties 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 at and as of the Closing Date as if made at and
as of such date.
(c) The Purchaser shall have made the deliveries required by Section
2.3.
8
7.4 Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing:
(a) by mutual written consent of the Seller and the Purchaser;
(b) by either the Purchaser or the Seller, if the Closing has not
occurred on or before April 30, 2002; provided, however, that the right to
terminate this Agreement pursuant to this Section 7.4(b) shall not be available
to any party whose breach of a covenant, representation or warranty has been the
cause of the failure of the Closing to occur on or before such date;
(c) by the Purchaser, if there has been a violation or breach by the
Seller of any covenant, agreement, representation or warranty contained in this
Agreement which has rendered the satisfaction of any condition contained in
Article VII hereof incapable of fulfillment and such violation or breach has not
been waived by the Purchaser;
(d) by the Seller, if there has been a violation or breach by the
Purchaser of any covenant, agreement, representation or warranty contained in
this Agreement which has rendered the satisfaction of any condition contained in
Article VIII hereof incapable of fulfillment and such violation or breach has
not been waived by the Seller;
(e) by either the Purchaser or the Seller, if a Governmental Authority
shall have issued a nonappealable final order, decree or ruling or taken any
other nonappealable final action having the effect of permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated hereby (which
order, decree, ruling or other action the party seeking to terminate this
Agreement shall have used their reasonable best efforts to lift); or
(f) by the Purchaser, if the Merger Agreement is terminated pursuant
to Section 8.1 of the Merger Agreement.
If the Purchaser or the Seller terminates this Agreement pursuant to the
provisions hereof, such termination will be effected by written notice to the
other party specifying the provision hereof pursuant to which the termination is
made.
7.5 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 7.4, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of any party hereto or
any of its affiliates, directors, officers or stockholders, except (a) as stated
in this Section 7.5 and Article 8 which shall survive such termination, and (b)
no such termination shall relieve any party hereto of any liability for the
breach of any representation, warranty, covenant or agreement hereunder by such
party.
9
ARTICLE 8. MISCELLANEOUS PROVISIONS.
8.1 Transactional Costs. Except as set forth in Section 5.2, the Purchaser
shall be responsible for all of its legal, accounting, advisory and other fees
and expenses incurred in connection with this Agreement and the consummation of
the transactions contemplated hereby and the Seller shall be responsible for all
legal, accounting (including all costs and fees), advisory and other fees and
expenses incurred by the Seller in connection with this Agreement and the
consummation of the transactions contemplated hereby.
8.2 Successors and Assigns. (a) This Agreement and all provisions hereof
will be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns; provided, however, that neither
this Agreement nor any right, interest, or obligation hereunder may be assigned
by any party hereto without the prior written consent of the other party, except
that the Purchaser may assign its rights to an affiliate of the Purchaser who
agrees to be bound by the terms hereof; provided, that no such assignment shall
relieve the Purchaser of its obligations hereunder, and provided that no party
hereto or successor or assignee has the ability to subrogate any other person to
any right or obligation under this Agreement.
(b) Notwithstanding anything to the contrary set forth herein, the
Purchaser may assign all or a portion of their rights under Article 6 of this
Agreement in connection with the sale of the outstanding capital stock of the
Company, the sale of all or substantially all of the assets of the Company or
the sale of any material facility of the Company.
8.3 Notices. All notices, requests, consents, instructions and other
communications required or permitted to be given hereunder shall be in writing
and hand delivered, sent by nationally-recognized, next-day delivery service or
mailed by certified or registered mail, return receipt requested, postage
prepaid, addressed as set forth below or by facsimile transmission; receipt
shall be deemed to occur on the date of actual receipt if delivered personally
or by registered or certified mail and 12 hours from the time of transmission if
sent by facsimile.
(a) if to the Purchaser, to:
Cardigan Acquisition Corporation
c/o Cendant Corporation
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Fax: 000-000-0000
10
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxx, Esq.
Fax: 000-000-0000;
(b) if to the Seller:
C. Xxxxx Xxxxxx
00 Xxxx Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Fax: 000-000-0000
with a copy to:
Xxxxxx & Deutsch
00 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxx Xxxxxxx, Esq.
Fax: 000-000-0000;
or such other address or persons as the parties may from time to time designate
in writing in the manner provided in this Section.
8.4 Entire Agreement. This Agreement, together with the Schedules and
Exhibits hereto, and, to the extent relevant, the Merger Agreement represent the
entire agreement and understanding of the parties hereto with respect to the
transactions contemplated herein.
8.5 Amendments and Waivers. This Agreement may be amended, superseded,
cancelled, renewed or extended, and the terms hereof may be waived, only by a
written instrument signed by the Purchaser and the Seller or, in the case of a
waiver, by the party waiving compliance or his or her representative. No delay
on the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof; nor shall any waiver on the part of any party
of any such right, power or privilege, nor any single or partial exercise of any
such right, power or privilege, preclude any further exercise thereof or the
exercise of any other such right, power or privilege.
8.6 Headings. The article and section headings contained in this
Agreement are solely for convenience of reference and shall not affect the
meaning or interpretation of this Agreement or of any term or provision hereof.
8.7 Terms. All references herein to Articles, Sections, Schedules and
Exhibits shall be deemed references to such parts of this Agreement, unless the
context shall otherwise require.
11
8.8 Governing Law; Jurisdiction and Venue. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
without giving effect to choice of law principles. Each party hereto hereby
agrees that any proceeding relating to this agreement and the transactions
contemplated hereby shall be brought in a State Court of New York or a federal
court located in New York. Each party hereto hereby consents to personal
jurisdiction in any such action brought in any such New York or federal court,
consents to service of process by registered mail made upon such party and such
party's agent and waives any objection to venue in any such New York or federal
court and any claim that any such New York or federal court is an inconvenient
forum.
8.9 No Third Party Beneficiaries. Except as expressly contemplated in
this Agreement, this Agreement shall be binding upon and inure solely to the
benefit of each party hereto and nothing in this Agreement is intended to confer
upon any other Person any rights or remedies of any nature whatsoever under or
by reason of this Agreement.
8.10 Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
8.11 Interpretation. The table of contents is for convenience of
reference only, does not constitute part of this Agreement and shall not be
deemed to limit or otherwise affect any of the provisions hereof. Whenever the
words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." The words
"hereof," "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. All terms defined in this Agreement shall have the
defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such term. Unless otherwise stated, any agreement, instrument or
statute defined or referred to herein or in any agreement or instrument that is
referred to herein means such agreement, instrument or statute as from time to
time amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by succession of
comparable successor statutes and references to all attachments thereto and
instruments incorporated therein. As used in this Agreement, "Person" shall mean
any individual, corporation, partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union or entity of any
kind whatsoever, including any Governmental Authority. References to a Person
are also to its permitted successors and assigns. References to the "Seller's
knowledge" shall mean the knowledge of the Seller, after due inquiry and
reasonable investigation. As used in this Agreement, "affiliate" means as to any
Person, any other Person which, directly or indirectly, controls, or is
controlled by, or is under common control with, such Person. As used in this
definition, "control" (including, with its correlative meanings, "controlled by"
and "under common control with") shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of management or
policies of a Person, whether through the
12
ownership of securities or partnership or other ownership interests, by contract
or otherwise.
8.12 Acknowledgements. The parties hereto acknowledge and agree that
(i) each party has reviewed and negotiated the terms and provisions of this
Agreement and has had the opportunity to contribute to its revision, and (ii)
each party has been represented by counsel in reviewing and negotiating such
terms and provisions. Accordingly, the rule of construction to the effect that
ambiguities are resolved against the drafting party shall not be employed in the
interpretation of this Agreement. Rather, the terms of this Agreement shall be
construed fairly as to both parties hereto and not in favor or against either
party.
13
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original and all of which together shall be
considered one and the same agreement.
CARDIGAN ACQUISITION CORPORATION
By: /s/ Xxxx X. Xxxx
----------------------
Name: Xxxx X. Xxxx
Title: Secretary
C. XXXXX XXXXXX
By: /s/ C. Xxxxx Xxxxxx
----------------------
14
