1
Exhibit 1
INVESTMENT AGREEMENT
Between
ATLANTIC GULF COMMUNITIES CORPORATION
and
AP-AGC, LLC
Dated as of February 7, 1997
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TABLE OF CONTENTS
Page
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1. DEFINITIONS: CERTAIN REFERENCES . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Other Defined Terms . . . . . . . . . . . . . . . . . . . 6
SECTION 1.3 Terms Defined in Note Agreement . . . . . . . . . . . . . 7
SECTION 1.4 Terms Generally . . . . . . . . . . . . . . . . . . . . . 8
2. FUNDING AND CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.1 The Funding . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.2 Transactions at the Closing . . . . . . . . . . . . . . . 9
SECTION 2.3 Funding Time and Place . . . . . . . . . . . . . . . . . . 10
SECTION 2.4 Closing Time and Place . . . . . . . . . . . . . . . . . . 10
3. CONDITIONS TO THE FUNDING AND THE CLOSING . . . . . . . . . . . . . . . . 10
SECTION 3.1 Conditions Precedent to the
Obligations of the Investor
at the Funding . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.2 Conditions Precedent to the
Obligations of the Investor
at the Closing . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.3 Conditions Precedent to
Obligations of the Company
at the Closing . . . . . . . . . . . . . . . . . . . . . 13
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . . . 15
SECTION 4.1 Due Authorization; No Conflicts;
Validity . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.2 Capitalization of the Company . . . . . . . . . . . . . . 16
SECTION 4.3 SEC Documents . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.4 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.5 Approvals . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.6 Licenses, Etc. . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.7 Contracts . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.8 Finder's Fees . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.9 Employee Benefits . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.10 Securities Law Matters . . . . . . . . . . . . . . . . . . 20
SECTION 4.11 State Takeover Statutes . . . . . . . . . . . . . . . . . 20
SECTION 4.12 1996 Financial Statements . . . . . . . . . . . . . . . . 20
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5. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR . . . . . . . . . . . . . . 21
SECTION 5.1 Due Authorization; No Conflicts;
Validity . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 5.2 Approvals . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 5.3 Acquisition for Own Account . . . . . . . . . . . . . . . 22
SECTION 5.4 Finder's Fees . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 5.5 Financing . . . . . . . . . . . . . . . . . . . . . . . . 23
6. COVENANTS OF THE PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 6.1 Transfer Restrictions; Legends . . . . . . . . . . . . . . 23
SECTION 6.2 Stockholders Meeting . . . . . . . . . . . . . . . . . . . 24
SECTION 6.3 Pre-Closing Activities . . . . . . . . . . . . . . . . . . 25
SECTION 6.4 No Inconsistent Agreements . . . . . . . . . . . . . . . . 27
SECTION 6.5 Xxxx-Xxxxx-Xxxxxx . . . . . . . . . . . . . . . . . . . . 27
SECTION 6.6 Exclusivity . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6.7 Affirmative Covenants . . . . . . . . . . . . . . . . . . 30
SECTION 6.8 Publicity . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.9 Reservation of Shares . . . . . . . . . . . . . . . . . . 34
SECTION 6.10 The Board . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.11 Indemnification of Board . . . . . . . . . . . . . . . . . 34
SECTION 6.12 Co-Investment Opportunity . . . . . . . . . . . . . . . . 35
SECTION 6.13 Approved Business Plan . . . . . . . . . . . . . . . . . . 36
7. SURVIVAL AND INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.1 Survival Periods . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.2 Indemnification by the Company . . . . . . . . . . . . . . 36
SECTION 7.3 Indemnification by the Investor . . . . . . . . . . . . . 37
SECTION 7.4 Notification . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.5 Registration Statements . . . . . . . . . . . . . . . . . 39
8. REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 8.1 Demand Registrations . . . . . . . . . . . . . . . . . . . 39
SECTION 8.2 Piggyback Registrations . . . . . . . . . . . . . . . . . 40
SECTION 8.3 Indemnification by the Company . . . . . . . . . . . . . . 40
SECTION 8.4 Indemnification by the Investor . . . . . . . . . . . . . 41
SECTION 8.5 Notification . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 8.6 Other Indemnification . . . . . . . . . . . . . . . . . . 42
SECTION 8.7 Contribution . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 8.8 Registration Covenants of the
Company . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 8.9 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 8.10 Transfer of Registration Rights . . . . . . . . . . . . . 46
SECTION 8.11 Other Registration Rights . . . . . . . . . . . . . . . . 46
SECTION 8.12 Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.13 Limitation on Requirement to File
or Amend Registration Statement . . . . . . . . . . . . . 47
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9. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 9.2 Effect of Termination . . . . . . . . . . . . . . . . . . 48
SECTION 9.3 Fees Due Upon Termination . . . . . . . . . . . . . . . . 49
10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 10.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 10.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.3 Amendment; Waiver . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.4 Severability . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.5 Headings . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 10.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . 52
SECTION 10.7 Maximum Interest Rate . . . . . . . . . . . . . . . . . . 52
SECTION 10.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 10.9 Assignment . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10.10 Third-Party Beneficiaries . . . . . . . . . . . . . . . . 53
SECTION 10.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10.12 Submission to Jurisdiction;
Waiver of Jury Trial . . . . . . . . . . . . . . . . . . 53
SCHEDULE I Disclosure Schedule
EXHIBIT A Form of Amended and Restated Certificate of
Incorporation
EXHIBIT B Form of Class A, Class B and Class C Warrants
EXHIBIT C Form of Secured Note Agreement
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INVESTMENT AGREEMENT dated as of February 7, 1997, by and
between Atlantic Gulf Communities Corporation, a corporation organized and
existing under the laws of the State of Delaware (the "Company"), and AP-AGC,
LLC, a limited liability company organized and existing under the laws of the
State of Delaware (the "Investor").
WHEREAS, the Company and the Investor desire to enter into
this Agreement pursuant to which, among other things, (a) at the Funding (all
capitalized terms used in these Recitals, as defined below), the Investor will
lend to the Company, and the Company will borrow from the Investor, the Loan
Amount, and (b) at the Closing, the Company will issue to the Investor, and
the Investor will acquire from the Company, the Preferred Shares and the
Warrants, all on the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, concurrently with the execution of this Agreement,
the Company and the Investor are entering into the Note Agreement;
WHEREAS, the Board of Directors of the Company has received
the opinion of Tallwood Associates, Inc., its financial advisor that the
transactions contemplated by this Agreement and the other Transaction Documents
are fair, from a financial point of view, to the stockholders of the Company;
WHEREAS, the Board of Directors of the Company (the "Board")
has determined that it is in the best interests of the Company to enter into
this Agreement and the other Transaction Documents, and the managing member of
the Investor has approved this Agreement and the other Transaction Documents;
and
NOW, THEREFORE, for and in consideration of the mutual
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS: CERTAIN REFERENCES
SECTION 1.1 Definitions. The terms defined in this
Article I, whenever used in this Agreement, shall have the following meanings
for all purposes of this Agreement:
"Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder, as the same may be amended from
time to time.
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"Agreement" means this Investment Agreement, including all
Exhibits and Schedules.
"Amended and Restated Certificate of Incorporation" means
the Amended and Restated Certificate of Incorporation of the Company in the
form of Exhibit A, to be filed with the Delaware Secretary of State, including
therein the Series A Preferred Stock Certificate of Designation and the Series
B Preferred Stock Certificate of Designation.
"Approval" means each authorization, approval, consent,
license, filing and registration by, with or from any Government Authority,
self-regulatory organization or stock exchange, necessary to authorize or
permit the execution, delivery or performance of this Agreement or any other
Transaction Document or for the validity or enforceability hereof or thereof.
"Approved Business Plan" means a Business Plan of the
Company that has been approved by the Investor.
"Bank Warrants" means the 1,500,000 warrants for the
purchase of Common Stock issued on September 30, 1996 pursuant to the
Prepayment Agreement dated as of September 30, 1996 among the financial
institutions listed on the signature pages thereof, The Chase Manhattan Bank
and the Company.
"Business Combination" means a complete liquidation or
dissolution of the Company or a merger or consolidation of the Company, or a
sale of all or substantially all of the Company's assets.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Company as filed with the Delaware Secretary of State, as
amended through the date hereof.
"Change of Control" means: (i) an acquisition by any
Person or group (as defined for purposes of Section 13(d) under the Exchange
Act) (excluding the Company or an employee benefit plan of the Company or a
corporation controlled by the Company's stockholders) of 25% or more of the
Common Stock or other voting securities of the Company; (ii) a change in a
majority of the Incumbent Board (excluding any individuals approved by a vote
of at least a majority of the Incumbent Board other than in connection with an
actual or threatened proxy contest); (iii) failure of the requisite number of
Investor Designees to be members of the Board (other than as a result of the
Investor's failure to nominate a successor to an Investor Designee who has
resigned or been removed as a director); or
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(iv) consummation of a Business Combination (other than a Business Combination
in which all or substantially all of the stockholders of the Company receive or
own upon consummation thereof 50% or more of the stock of the Company resulting
from the Business Combination, at least a majority of the board of directors of
the resulting corporation are members of the Incumbent Board, and after which
no Person owns 25% or more of the stock of the resulting corporation who did
not own such stock immediately before the Business Combination), excluding, in
each case, the transactions contemplated by this Agreement.
"Class A Warrants" means the 1,666,667 Warrants for the
Purchase of Common Stock of the Company to be issued by the Company pursuant to
this Agreement, in the form of Exhibit B.
"Class B Warrants" means the 1,666,667 Warrants for the
Purchase of Common Stock of the Company to be issued by the Company pursuant to
this Agreement, in the form of Exhibit B.
"Class C Warrants" means the 1,666,666 Warrants for the
Purchase of Common Stock of the Company to be issued by the Company pursuant to
this Agreement, in the form of Exhibit B.
"Conversion Shares" means the shares of Common Stock
issuable or issued upon conversion of the Preferred Shares.
"Default Change in Control" means a Change in Control (a)
of the type referred to in clauses (ii) or (iii) of the definition thereof or
(b) of the type referred to in clauses (i) and (ii) of the definition thereof,
provided that the percentage thresholds referred to in such clauses (i) and
(iv) shall be 40% instead of 25%.
"Disclosure Schedule" means the Disclosure Schedule of the
Company attached hereto as Schedule I, as it may be amended or supplemented
from time to time by the Company with the written consent of the Investor.
"Effective Date" means the date on which the Amended and
Restated Certificate of Incorporation is filed with the Delaware Secretary of
State and becomes effective.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder, as the same
may be amended from time to time.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules thereunder.
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"Incumbent Board" means, prior to the Closing, the Board as
constituted on the day after execution and delivery of this Agreement and,
following the Closing, the Board as constituted immediately following the
Closing.
"Instrument" means any contract, agreement, indenture,
mortgage, security, document or writing under which any obligation is
evidenced, assumed or undertaken, or any Lien is granted or perfected.
"Letter Agreement" means that certain letter agreement,
dated November 19, 1996, between the Company and the Investor as amended by
that certain letter agreement dated January 14, 1997, between the Company and
the Investor.
"Loan Documents" means the Note Agreement and each
instrument or document required to be executed and delivered by the Company or
any Subsidiary pursuant thereto.
"Major Transaction" means any material transaction which is
not described in an Approved Business Plan, including any (i) recapitalization,
redemption or reclassification of, or distribution or dividend on, the
Company's capital stock (except in the case of the Series A Preferred Stock and
Series B Preferred Stock in accordance with their respective terms), (ii)
amendment of its certificate of incorporation or by-laws, (iii) liquidation,
winding-up or dissolution of the Company or any Significant Subsidiary (as
defined in SEC Regulation S-X) of the Company, (iv) consolidation of the
Company with, or merger of the Company with or into, any other Person, except a
merger of a wholly owned Subsidiary of the Company into the Company, with the
Company surviving such merger, (v) sale, transfer, lease or encumbrance of a
significant amount of assets of the Company other than in respect of sales of
Predecessor Assets (as referred to in the Company's annual report on Form 10-K
for the year ended December 31, 1995 and as set forth in Section 1.1 of the
Disclosure Schedule), (vi) special dividend or distribution with respect to, or
repurchase, redemption or other acquisition of, equity securities of the
Company or any rights, warrants or options in respect of such equity
securities, (vii) capital expenditure or investment by the Company in excess of
$500,000, (viii) entering into or materially amending (including by waiver) any
material contract, (ix) significant new financing or refinancing, (x) issuance
of securities (other than employee and director stock options to acquire up to
2,000,000 shares of Common Stock and the issuance of the Common Stock
thereunder), (xi) transactions which would result in a Change of Control, or
(xii) material transaction the nature of which prevents specificity in the
Approved Business Plan.
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"Material Adverse Effect" means a material adverse effect
on (i) the business, operations, property, condition (financial or otherwise)
or prospects of the Company and its Subsidiaries taken as a whole, (ii) the
ability of the Company to perform its obligations under this Agreement or any
of the other Transaction Documents, or (iii) the validity or enforceability of
this Agreement or any of the other Transaction Documents or the material rights
or remedies of the Investor thereunder (in any capacity).
"Maximum Loan Amount" means $10,000,000.
"Note Agreement" means the Secured Note Agreement dated the
date hereof by and between the Company and the Investor in the form of Exhibit
C.
"Payment Default" means a Default referred to in any of
subsection (a), (e), (g) or (h) of Section 8.1 of the Note Agreement, whether
or not any requirement for the giving of notice, the lapse of time, or both, or
any other condition thereto, has been satisfied.
"Preferred Shares" means the 25,000 shares of Series A
Preferred Stock to be issued to the Investor pursuant to this Agreement at the
Closing.
"Promissory Note" means a Secured Convertible Promissory
Note of the Company issuable under the Note Agreement in the form attached as
an exhibit to the Note Agreement, in an aggregate principal amount not to
exceed the Maximum Loan Amount.
"SEC" means the United States Securities and Exchange
Commission.
"SEC Documents" means all documents filed by the Company
with the SEC since January 1, 1995.
"Series A Preferred Stock" means a new series of preferred
stock of the Company to be designated 20% Cumulative Redeemable Convertible
Preferred Stock, Series A, liquidation preference $1,000 per share, the terms
of which shall be as set forth in the Series A Preferred Stock Certificate of
Designations.
"Series A Preferred Stock Certificate of Designation" means
the Statement of Designations setting forth the terms of the Series A Preferred
Stock included within the Amended and Restated Certificate of Incorporation.
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"Series B Preferred Stock" means a new series of preferred
stock of the Company to be designated 20% Cumulative Redeemable Convertible
Preferred Stock, Series B, liquidation preference $10 per share, the terms of
which, if issued, shall be as set forth in the Series B Preferred Stock
Certificate of Designations.
"Series B Preferred Stock Certificate of Designation" means
a Statement of Designations setting forth the terms of the Series B Preferred
Stock included within the Amended and Restated Certificate of Incorporation.
"Specified Investor Amount" means 5,000 shares of Series A
Preferred Stock.
"Transaction Documents" means this Agreement, the Warrants,
the Amended and Restated Certificate of Incorporation, the Loan Documents and
each exhibit, schedule, certificate and document to be executed or delivered
pursuant hereto or thereto.
"Transaction Expenses" means the out-of-pocket expenses of
the Investor and its Affiliates, including the reasonable fees and expenses of
lawyers, accountants, appraisers, consultants and other advisors relating to
the discussion, evaluation, negotiation and documentation of the Transaction
Documents and the Funding and Closing.
"Warrants" means the 5,000,000 in aggregate Class A
Warrants, Class B Warrants and Class C Warrants to be issued by the Company to
the Investor at the Closing.
"Warrant Shares" means the 5,000,000 shares of Common Stock
issuable upon exercise of the Warrants.
SECTION 1.2 Other Defined Terms. Each of the following
terms is defined in the Section of this Agreement set forth opposite such term
below:
Defined Term Section
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Additional Investor Designee . . . . . . . . . . . . . . . . 3.2(h)
Alternative Proposal . . . . . . . . . . . . . . . . . . . . 6.6(b)
Alternative Transaction . . . . . . . . . . . . . . . . . . . 6.6(a)
Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . 4.9
Board . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Change of Position . . . . . . . . . . . . . . . . . . . . . 6.6(c)
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . 2.4
Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . 2.2(c)
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Common Stock . . . . . . . . . . . . . . . . . . . . . . . 4.2
Company . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Demand Registration . . . . . . . . . . . . . . . . . . . . 8.1
Eligible Transferee . . . . . . . . . . . . . . . . . . . . 8.10
Funding . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
Funding Date . . . . . . . . . . . . . . . . . . . . . . . 2.3
indemnified party . . . . . . . . . . . . . . . . . . . . . 7.2
Investor . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Investor Designees . . . . . . . . . . . . . . . . . . . . 3.2(h)
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 7.2
Licenses . . . . . . . . . . . . . . . . . . . . . . . . . 4.6
Loan Amount . . . . . . . . . . . . . . . . . . . . . . . . 2.1
Multiemployer Plan . . . . . . . . . . . . . . . . . . . . 4.9
Multiple Employer Plan . . . . . . . . . . . . . . . . . . 4.9
NASD . . . . . . . . . . . . . . . . . . . . . . . . . 8.8(p)
Notice of Superior Proposal . . . . . . . . . . . . . . . . 6.6(c)
Options . . . . . . . . . . . . . . . . . . . . . . . . . 4.2
Original Investor Designee . . . . . . . . . . . . . . . . 3.1(d)
Piggyback Registration . . . . . . . . . . . . . . . . . . 8.2(a)
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . 6.2(b)
Purchase Price . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
Registrable Securities . . . . . . . . . . . . . . . . . . 8.1
Registration Statement . . . . . . . . . . . . . . . . . . 8.8(a)
Representatives . . . . . . . . . . . . . . . . . . . . . . 6.7(b)
Stockholders Approval . . . . . . . . . . . . . . . . . . . 4.1
Stockholders Meeting . . . . . . . . . . . . . . . . . . . 6.2(a)
Superior Proposal . . . . . . . . . . . . . . . . . . . . . 6.6(c)
Termination Fee . . . . . . . . . . . . . . . . . . . . . . 6.6(c)
SECTION 1.3 Terms Defined in Note Agreement. As used in this
Agreement, each of the following terms (and any defined terms included within
the definitions of the following terms) shall have the meaning ascribed to it
in the Note Agreement.
Affiliate Foothill Loan Documents
Business Day GAAP
Business Plan Government Authority
Code Hazardous Materials
Contractual Obligation Indebtedness
Deeds of Trust Issuance Date
Default Joint Venture
Dollars or $ Lien
Due Diligence Fee Mortgages
Agreement Obligations
Environmental Laws Person
ERISA Plan
Event of Default Reorganization Plan
Excluded Subsidiaries Requirement of Law
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Responsible Officer Subsidiary
Revolving Loans
Security Documents
SECTION 1.4 Terms Generally. The definitions in Sections
1.1, 1.2 and 1.3 shall apply equally to both the singular and plural forms of
the terms defined. Whenever the context may require, any pronoun shall include
the corresponding masculine, feminine and neuter forms. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase
"without limitation." All references herein to Articles, Sections, Exhibits
and Schedules shall be deemed references to Articles and Sections of, and
Exhibits and Schedules to, this Agreement unless the context shall otherwise
require. Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with GAAP. The
terms and conditions of this Agreement shall be deemed to apply to any
Subsidiary of the Company as though such entity were the Company, except where
such application would be manifestly inappropriate.
ARTICLE II
FUNDING AND CLOSING
SECTION 2.1 The Funding. If the Company wishes to borrow
under the Note Agreement up to the Maximum Loan Amount, the Company will give
the Investor a written request for such loan, including in such request the
amount of funds it wishes to borrow and a reasonably detailed description of
the Company's proposed use of such funds. The Investor shall notify the
Company in writing within 10 business days of such request whether or not the
Investor, in its absolute discretion, approves such use of funds. If the
Investor does not approve such use of funds, then the Investor shall have no
obligation to make such loan and the rights and obligations of the parties
under this Agreement shall be unaffected by such request of the Company. If
the Investor does approve such use of funds, then the consummation of such loan
(the "Funding") shall take place on the twentieth business day following such
notice from the Investor, subject to all of the conditions to the Funding
having been complied with or waived by the Investor. On the terms and subject
to the conditions contained herein and in the Note Agreement, at the Funding,
the Company shall issue and deliver to the Investor a Promissory Note with a
face amount equal to the amount of the loan being made (the "Loan Amount"),
duly executed by the Company, dated the date of the Funding and registered in
the name of the Investor, against delivery by the Investor of the Loan Amount
in immediately available funds by
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wire transfer to a bank account designated by the Company to the Investor in
writing not less than two Business Days prior to the Funding Date.
SECTION 2.2 Transactions at the Closing. On the terms and
subject to the conditions contained herein, at the Closing:
(a) Acquisition of Preferred Shares. The Investor will
purchase from the Company, and the Company will issue and sell to the Investor,
the Preferred Shares and the Warrants, for a purchase price of $25,000,000 (the
"Purchase Price"), payable as described in the immediately following sentence.
The Company shall issue and deliver to the Investor one or more stock
certificates representing the Preferred Shares, each duly executed by the
Company and registered in the name of the Investor, and if the Funding shall
have occurred, shall pay to the Investor in cash the amount of accrued and
unpaid interest due on the Promissory Note, against delivery to the Company of
the Purchase Price payable (i) if the Funding shall not have occurred, in
immediately available funds by wire transfer (to a bank account designated by
the Company to the Investor in writing not less than two Business Days prior to
the Closing Date) or (ii) if the Funding shall have occurred, in the form of
(x) presentation of the Promissory Note for renewal and conversion, together
with (y) immediately available funds (by wire transfer as aforesaid) of an
amount equal to $25,000,000 reduced by the outstanding principal amount of the
Promissory Note. If the Funding has occurred, the Investor shall present the
original Promissory Note to the Company at the Closing for renewal and
conversion, and a legend shall be placed thereon stating that the Promissory
Note has been converted into Preferred Shares and stating the number of
Preferred Shares into which it has been converted, which legend shall be
acknowledged on the Promissory Note by the Company and the Investor. From and
after the Closing, the Promissory Note shall not evidence an indebtedness for
borrowed money of the Company, but shall evidence the repurchase obligations
and other monetary obligations of the Company and the co-makers of the
Promissory Note to the holders of the Preferred Shares as set forth in Section
8 of the Series A Preferred Stock Certificate of Designations. From and after
the Closing Date, the Promissory Note (legended as set forth above, if
applicable) shall be held by the Investor together with the stock
certificate(s) evidencing the Preferred Shares, and rights in the Promissory
Note shall be transferable pro-rata only to holders of the Preferred Shares.
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(b) Issuance of Warrants. The Company will issue and deliver
to the Investor certificates representing the Warrants, each duly executed by
the Company, dated the Closing Date, and registered in the name of the
Investor.
(c) Refund of Commitment Fee. The Investor will deliver to
the Company $1,000,000, representing the return of the commitment fee (the
"Commitment Fee") paid by the Company to the Investor pursuant to the Letter
Agreement, payable in immediately available funds by wire transfer (to a bank
account designated by the Company to the Investor in writing not less than two
Business Days prior to the Closing Date).
(d) Allocation of Purchase Price. The Purchase Price shall
be allocated $24,900,000 to the Preferred Shares and $100,000 to the Warrants.
SECTION 2.3 Funding Time and Place. If applicable, the
closing of the loan of the Loan Amount and delivery of the Promissory Note
shall take place at 10 a.m., New York City time, on the date determined
pursuant to Section 2.1, at the offices of Wachtell, Lipton, Xxxxx & Xxxx, 00
Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, xx at such other time and place as the
parties may mutually determine in writing. The actual date on which the
Funding shall occur is referred to herein as the "Funding Date."
SECTION 2.4 Closing Time and Place. The closing of the
acquisition of the Preferred Shares and the issuance of the Warrants shall take
place at 10 a.m., New York City time, on the Effective Date, which shall be no
later than the second Business Day following the satisfaction or waiver of the
conditions to the Closing described in Sections 3.2 and 3.3, at the offices of
Wachtell, Lipton, Xxxxx & Xxxx, 51 West 52nd Street, New York, New York, or on
such other day or at such other time and place as the parties may mutually
determine in writing (the "Closing"). The actual date on which the Closing
shall occur is referred to herein as the "Closing Date."
ARTICLE III
CONDITIONS TO THE FUNDING AND THE CLOSING
SECTION 3.1 Conditions Precedent to the Obligations of the
Investor at the Funding. The obligations of the Investor to be discharged
under this Agreement at the Funding are subject to (a) the Closing not having
occurred, (b) this Agreement remaining in full force and effect and (c)
satisfaction at or prior to the Funding (unless expressly waived in writing by
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the Investor at or prior to the Funding) of the conditions to the Funding set
forth in the Note Agreement.
SECTION 3.2 Conditions Precedent to the Obligations of the
Investor at the Closing. The obligations of the Investor to be discharged
under this Agreement at the Closing are subject to satisfaction of the
following conditions at or prior to the Closing (unless expressly waived in
writing by the Investor at or prior to the Closing):
(a) Compliance by the Company. Each of the terms, covenants
and conditions of this Agreement and the other Transaction Documents to be
complied with and performed by the Company at or prior to the Closing shall
have been complied with and performed by the Company, and the representations
and warranties made by the Company in this Agreement shall be true and correct
in all material respects at and as of the Closing with the same force and
effect as though such representations and warranties had been made at and as of
the Closing, except for representations and warranties that are expressly made
as of a specific time, which shall be true and correct as of such time.
(b) No Legal Action. No action, suit, investigation or other
proceeding relating to the transactions contemplated hereby shall have been
instituted or threatened before any court or by any Government Authority or
body that restrains or prohibits or seeks to restrain or prohibit the
transactions contemplated hereby or to obtain material damages or other
material relief in connection therewith.
(c) Regulatory Matters. There shall have been received, and
shall be in full force and effect, all requisite Approvals with respect to the
transactions to be consummated at the Closing. The transactions to be
consummated at the Closing on the terms and conditions herein provided shall
not violate any applicable law or governmental regulation, and shall not
subject the Investor to any tax, penalty or liability, or require the Investor
to register or qualify, under or pursuant to any applicable law or governmental
regulation. There shall not have occurred, and there shall not be pending or
threatened, any change in law, regulation or regulatory practice that has or
would reasonably be expected to have a Material Adverse Effect.
(d) Legal Opinion. The Company shall have furnished to the
Investor on the Closing Date the opinions of Arent Fox Xxxxxxx Xxxxxxx & Xxxx,
counsel to the Company, and Greenberg, Traurig, Hoffman, Lipoff, Xxxxx &
Quentel, P.A., special Florida counsel to the Company, dated the Closing Date,
in the form and substance reasonably acceptable to the Investor.
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(e) Transaction Documents. Each of the Transaction Documents
required to be delivered at or before the Closing shall have been executed and
delivered and shall be in full force and effect.
(f) Closing Documents. The Company shall have delivered to
the Investor the following:
(i) a certificate of the chief executive officer and the
chief financial officer of the Company, dated the Closing Date, to the
effect that the conditions specified in Sections 3.2(a) and 3.2(j)
have been satisfied;
(ii) incumbency certificates, dated the Closing Date, for
the officers of the Company executing any of the Transaction Documents
and any certificates or documents delivered in connection with any
Transaction Documents at the Closing;
(iii) a certificate of the Secretary of State of the State
of Delaware, dated a recent date, certifying that the Company is in
good standing in such State, and that all reports, if any, have been
filed as required and that all fees in connection therewith and all
franchise taxes have been paid; and
(iv) such other certificates or documents as the Investor
or its counsel may reasonably request relating to the transactions
contemplated hereby.
(g) Stockholders Approval; Charter Amendment. The
Stockholders Approval shall have been obtained at the Stockholders Meeting and
the Amended and Restated Certificate of Incorporation shall have been filed
with the Delaware Secretary of State and shall be effective.
(h) Board Constitution. The Company shall have taken all
actions necessary to provide that the Board shall consist of seven members, and
the Company shall have caused the Original Investor Designee, the two
additional individual designated by the Investor (the "Additional Investor
Designees" and, together with the Original Investor Designee, including their
successors nominated by the Investor, the "Investor Designees"), one director
who is then an incumbent member of management of the Company and the
independent directors appointed pursuant to Section 6.10, to be appointed to
the Board, effective as of the Closing.
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(i) Expenses. The Company shall have paid or reimbursed all
theretofore unreimbursed Transaction Expenses incurred by the Investor (or made
provision satisfactory to the Investor for payment or reimbursement of such
expenses in the case of expenses incurred but not yet billed to Investor).
(j) No Default; No Change of Control; No Material Adverse
Effect. No Default shall have occurred (and, if the Funding shall have
occurred, the Company shall have paid all interest accrued and unpaid on the
Promissory Note and all other amounts, other than principal, due and owing
under the Note Agreement), no Change of Control shall have occurred, and there
shall have been no event or events causing a Material Adverse Effect, nor any
developments that would, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.
(k) Amendments to Security Documents. Any amendments to the
Security Documents that may be required to increase the dollar amount of
indebtedness secured thereby to not less than the maximum possible aggregate
Repurchase Price (as defined in the Series A Preferred Stock Certificate of
Designations), increase the amount of title insurance in respect of the
Mortgages and Deeds of Trust and "bring down" the endorsements thereon to the
Closing Date shall have been effected and shall be in form and substance
satisfactory to the Investor.
(l) Note Agreement Obligations. The Company shall have
performed all of the obligations to be performed by it on or before the
Issuance Date under Sections 3.1, 3.2 and 5.1 of the Note Agreement, other than
pursuant to clauses (s), (y) and (z) of Section 5.1 thereof.
SECTION 3.3 Conditions Precedent to Obligations of the
Company at the Closing. The obligations of the Company to be discharged under
this Agreement at the Closing are subject to satisfaction of the following
conditions at or prior to the Closing (unless expressly waived in writing by
the Company at or prior to the Closing):
(a) Compliance by the Investor. Each of the terms, covenants
and conditions of this Agreement to be complied with and performed by the
Investor at or prior to the Closing shall have been complied with and performed
by the Investor, and the representations and warranties made by the Investor in
this Agreement shall be true and correct in all material respects at and as of
the Closing with the same force and effect as though such representations and
warranties had been made at and as of the Closing, except for representations
and warranties that are
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expressly made as of a specific time, which shall be true and correct as of
such time.
(b) No Legal Action. No action, suit, investigation or other
proceeding relating to the transactions contemplated hereby shall have been
instituted or threatened before any court or by any Government Authority or
body that restrains or prohibits or seeks to restrain or prohibit the
transactions contemplated hereby or to obtain material damages or other
material relief in connection therewith.
(c) Regulatory Matters. There shall have been received, and
shall be in full force and effect, all requisite Approvals with respect to the
transactions to be consummated at the Closing. The transactions to be
consummated at the Closing on the terms and conditions herein provided shall
not violate any applicable law or governmental regulation.
(d) Investment Agreement. This Agreement shall be in full
force and effect.
(e) Closing Documents. The Investor shall have delivered to
the Company:
(i) a certificate of the managing member of the Investor,
dated the Closing Date and signed by an officer or other authorized
representative of the managing member, certifying attached copies of
the Limited Liability Company Agreement of the Investor, and the
resolutions adopted by the managing member of the Investor authorizing
the execution and delivery by the Investor of this Agreement and the
other Transaction Documents and the consummation by the Investor of
the transactions contemplated hereby and thereby; and
(ii) a certificate of the managing member of the Investor
signed by an officer or other authorized representative of the
managing member to the effect that the conditions specified in Section
3.3(a) have been satisfied.
(f) Stockholders Approval; Charter Amendment. The
Stockholders Approval shall have been obtained at the Stockholders Meeting and
the Amended and Restated Certificate of Incorporation shall have been filed
with the Delaware Secretary of State and shall be effective.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Investor
that each of the representations and warranties of the Company set forth in the
Note Agreement, which (together with the definitions of any defined terms used
therein) are incorporated by reference into this Agreement as though expressly
set forth herein (provided, however, that each reference in such representations
and warranties (x) to the "Effective Date" shall be deemed to refer herein to
the date that any such representation or warranty is made hereunder, (y) to
"Lender" shall be deemed to refer herein to the Investor and (z) to "this
Agreement" shall be deemed to refer herein to this Agreement), is true and
correct, and further that:
SECTION 4.1 Due Authorization; No Conflicts; Validity. The
Company has full power and authority to enter into and, subject to obtaining
the Stockholders Approval, perform its obligations under this Agreement and
each other Transaction Document executed or to be executed by it. The approval
of the Amended and Restated Certificate of Incorporation by a majority of the
votes entitled to be cast by all holders of Common Stock (the "Stockholders
Approval") is the only vote of the holders of any class or series of the
capital stock of the Company or any of its Subsidiaries required to approve
this Agreement, the other Transaction Documents and the transactions
contemplated hereby and thereby. The execution and delivery by the Company of
this Agreement, each other Transaction Document and each other certificate or
document executed or to be executed by it in connection with the transactions
contemplated hereby and thereby, and the performance by the Company of its
obligations hereunder and thereunder (including the issuance of the Promissory
Note, the Preferred Shares, the Warrants, the Warrant Shares and the Conversion
Shares) have been duly authorized by all necessary corporate proceedings on the
part of the Company (and no other corporate proceedings or actions on the part
of the Company or its Board or stockholders, are necessary therefor, other than
the Stockholders Approval), do not and will not conflict with, result in any
violation of, or constitute any default under, any Requirement of Law or
Contractual Obligation applicable to the Company or any Subsidiary, and will
not result in or require the creation or imposition of any Lien on any of the
properties of the Company or any Subsidiary of the Company pursuant to any
Instrument, other than pursuant to any Transaction Document, except as set
forth in Section 4.1 of the Disclosure Schedule. This Agreement has been duly
executed and
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delivered by the Company and constitutes, and each other Transaction Document
executed by the Company will, on the due execution and delivery thereof,
constitute, the valid and binding obligations of the Company enforceable in
accordance with their respective terms.
SECTION 4.2 Capitalization of the Company. (a) On the date
of this Agreement, the authorized capital stock of the Company consists of
15,665,000 shares of common stock, par value $0.10 per share ("Common Stock"),
of which (i) 9,721,720 shares are issued and outstanding, (ii) 86,227 shares
are held in the Treasury of the Company, (iii) 1,241,000 shares are reserved
for issuance upon the exercise of outstanding options to acquire Common Stock
("Options") (and no more than 822,000 Options have been authorized, issued or
granted), (iv) 1,500,000 shares are reserved for issuance pursuant to the Bank
Warrants (and 1,500,000 Bank Warrants are outstanding), and (v) 13,543 shares
are reserved for distribution in connection with disputed claims pursuant to
the Reorganization Plan. All of the outstanding shares of Common Stock are,
and all of the shares of Common Stock reserved for issuance will be, when
issued, duly authorized, validly issued, fully paid and nonassessable.
(b) After giving effect to the Amended and Restated
Certificate of Incorporation, the authorized capital stock of the Company will
at the Closing (assuming no stock option or warrant exercises) consist of: (i)
50,000,000 shares of Common Stock, of which (A) 9,721,720 shares will be
outstanding (excluding shares granted automatically to directors in lieu of
fees), (B) 15,200,000 shares will be reserved for issuance upon conversion of
the Preferred Shares, (C) 1,500,000 shares will be reserved for issuance
pursuant to the Bank Warrants, (D) 5,000,000 shares will be reserved for
issuance upon exercise of the Warrants, (E) 86,227 shares will be held in the
Treasury of the Company, (F) 822,000 (excluding stock options granted
automatically to directors) shares will be reserved for issuance upon the
exercise of outstanding Options, and (G) 13,543 shares will be reserved for
distribution in connection with disputed claims pursuant to the Reorganization
Plan; and (ii) 1,025,000 shares of preferred stock, par value $.01 per share,
of which (A) 25,000 will be designated Series A Preferred Stock, all of which
shares will be issued to the Investor at the Closing and (B) 1,000,000 will be
designated Series B Preferred Stock, none of which shares will be issued or
outstanding. No other capital stock of the Company is, or at the Closing will
be, authorized and no other capital stock is, or at the Closing will be,
issued. At the Closing, all of the Preferred Shares will be duly authorized,
and, when issued in accordance with this Agreement, will be validly issued,
fully paid and nonassessable
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and entitled to the benefits of, and have the terms and conditions set forth
in, the Amended and Restated Certificate of Incorporation.
(c) The Preferred Shares, the Conversion Shares, the Warrants
and the Warrant Shares are duly authorized by the Board and, when issued in
accordance with the Certificate of Amendment, will be validly issued, and, in
the case of the Preferred Shares, Conversion Shares and Warrant Shares, fully
paid and nonassessable.
(d) Except as set forth above or in Item 4.2 of the
Disclosure Schedule and except as contemplated by this Agreement, there are not
authorized, issued, outstanding or reserved for issuance any (i) securities or
obligations of the Company convertible into or exchangeable for any capital
stock of the Company, (ii) warrants, rights or options to subscribe for or
purchase from the Company, or stock appreciation rights in respect of, any
capital stock or any such convertible or exchangeable securities or obligations
or (iii) obligations of the Company to issue such shares, any such convertible
or exchangeable securities or obligations, or any such warrants, rights or
options. No Person has preemptive or similar rights with respect to the
securities of the Company. There are no obligations of the Company or any of
its Subsidiaries to vote or to repurchase, redeem or otherwise acquire, or to
register under the Act, any shares of capital stock of the Company or any of
its Subsidiaries.
SECTION 4.3 SEC Documents. (a) The Company has filed all
documents required to be filed with the SEC under the Act and the Exchange Act
since January 1, 1995 and has delivered to the Investor true and complete
copies of all of the SEC Documents. As of its filing date, each SEC Document
(including all exhibits and schedules thereto and documents incorporated by
reference therein) (i) complied in all material respects with the applicable
requirements of the Securities Act and the Exchange Act and (ii) did not and
does not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
(b) The Company has (i) delivered to the Investor true and
complete copies of all correspondence between the SEC and the Company or its
legal counsel, accountants or other advisors since January 1, 1995 and (ii)
disclosed to the Investor in writing the content of all material discussions
between the SEC and the Company or its legal counsel, accountants or other
advisors concerning the adequacy or form of any SEC Document
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filed with the SEC since January 1, 1995. The Company is not aware of any
issues raised by the SEC with respect to any of the SEC Documents, other than
those disclosed to the Investor pursuant to this Section 4.3(b).
SECTION 4.4 Subsidiaries. Except as set forth in Item 4.4
of the Disclosure Schedule, (a) the list of Subsidiaries of the Company filed by
the Company with its most recent Form 10-K is a true and accurate list of all of
the Subsidiaries of the Company and (b) all of the outstanding capital stock of
each Subsidiary and all of the outstanding ownership interests of each Joint
Venture have been duly authorized and validly issued, is fully paid and
nonassessable and is owned by the Company, directly or through other
Subsidiaries, free and clear of any Lien, restrictions upon voting or transfer,
claim or encumbrance of any kind, there are no rights granted to or in favor of
any third party, other than the Company or any Subsidiary of the Company, to
acquire any such capital stock, any additional capital stock or any other
securities of any such Subsidiary, and there exists no restriction on the
payment of cash dividends by any Subsidiary.
SECTION 4.5 Approvals. Except as set forth in Item 4.5 of
the Disclosure Schedule, no Approval is required to be obtained by the Company
or any Subsidiary of the Company for the consummation of the transactions
contemplated by this Agreement or by any of the Transaction Documents, except
for the expiration of the waiting period under the HSR Act, the Stockholders
Approval and except such as may be required under the Act and state securities
laws in connection with the performance by the Company of its obligations under
Article VIII.
SECTION 4.6 Licences, Etc. The Company and its Subsidiaries
hold, own and possess all such governmental, regulatory and other filings,
licenses, approvals, registrations, consents, franchises and concessions
(collectively, "Licenses") as are necessary for the ownership of the property
and conduct of the businesses of the Company and its Subsidiaries, as now
conducted and are in compliance in all material respects with their respective
obligations under such Licenses.
SECTION 4.7 Contracts. All of the material contracts of the
Company or any of its Subsidiaries that are required to be described in the SEC
Documents or to be filed as exhibits thereto are described in the SEC Documents
or filed as exhibits thereto and are in full force and effect. True and
complete copies of all such material contracts have been delivered by the
Company to the Investor. Neither the Company nor any of its Subsidiaries nor,
to the best knowledge of the Company, any other party is in breach of or in
default under any
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such contract. Except as disclosed in Item 4.7 of the Disclosure Schedule, as
of the date hereof, the Company is not a party to, nor are any assets,
properties or operations of the Company bound by, any (i) employment or
severance agreement or any consulting agreement obligating the Company to make
payments in excess of $100,000 which cannot be terminated by the Company upon
30 days notice without further obligation thereunder, (ii) lease of real
property, or lease of personal property with an annual base rental obligation
of more than $100,000 or a total remaining rental obligation of more than
$1,000,000, (iii) agreement which is over one year in length of obligation and
not terminable without penalty or damages within one year, and involves an
unsatisfied obligation of the Company of more than $5,000,000, (iv) agreement
containing covenants limiting the ability of the Company or any of its
Affiliates to compete in any line of business with any Person or in any area or
territory, (v) commitment for or relating to any lending or borrowing or the
guaranty thereof, (vi) agreement relating to any acquisition or disposition of
securities or assets containing any indemnification obligations of the Company
or any of its Subsidiaries, (vii) agreement with any Affiliate of the Company
out of the ordinary course of the Company's business (other than employment,
compensation or benefit arrangements), or (viii) other material contract,
agreement or arrangement, entered into other than in the ordinary course of
business.
SECTION 4.8 Finder's Fees. Except for Bankers Trust
Securities Corporation and Tallwood Associates, Inc., whose fees and expenses
will be paid by the Company, no broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of the Company.
SECTION 4.9 Employee Benefits. Except for the plans set
forth in Item 4.9(a) of the Disclosure Schedule (the "Benefit Plans"), there
are no employee benefit plans or arrangements of any type (including, without
limitation, plans described in Section 3(3) of ERISA), under which the Company
or any of its Subsidiaries has or in the future could have directly, or
indirectly through a Commonly Controlled Entity (within the meaning of Sections
414(b), (c), (m) and (o) of the Code), any liability with respect to any
current or former employee of the Company, any of its Subsidiaries, or any
Commonly Controlled Entity. Except for the Benefit Plan set forth in Item
4.9(b) of the Disclosure Statement, no Benefit Plan is subject to Title IV or
Section 302 of ERISA or Section 412 or 4971 of the Code or any corresponding
provision of applicable law. No Benefit Plan is a "multiemployer plan" within
the
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meaning of Section 4001(a)(3) of ERISA (a "Multiemployer Plan") or a plan that
has two or more contributing sponsors at least two of whom are not under common
control, within the meaning of Section 4063 of ERISA (a "Multiple Employer
Plan"), nor has the Company or any ERISA Affiliate of the Company, at any time
since September 2, 1974, contributed to or been obligated to contribute to any
Multiemployer Plan or Multiple Employer Plan. With respect to each Benefit
Plan the Company has delivered to the Investor complete and accurate copies of
(i) all plan texts and agreements, (ii) all material employee communications
(including summary plan descriptions), (iii) the most recent annual report,
(iv) the most recent annual and periodic accounting of plan assets, (v) the
most recent determination letter received from the Internal Revenue Service and
(vi) the most recent actuarial valuation. Except as may be set forth in Item
4.9(c) of the Disclosure Schedule, with respect to each Benefit Plan: (A) no
event has occurred and there exists no circumstance under which the Company or
any of its Subsidiaries could directly, or indirectly through a Commonly
Controlled Entity, incur any material liability under ERISA, the Code or
otherwise (other than routine claims for benefits and other liabilities arising
in the ordinary course pursuant to the normal operation of such Benefit Plan);
(B) all contributions and premiums due and owing have been made or paid on a
timely basis; and (C) all contributions made under any Benefit Plan have met
the requirements for deductibility under the Code, and all contributions that
have not been made have been properly recorded on the books of the Company or a
Commonly Controlled Entity thereof in accordance with GAAP. The Company has no
liability for life, health, medical or other welfare benefits to former
employees or beneficiaries or dependents thereof, except for health
continuation coverage as required by Section 4980B of the Code or Part 6 of
Title I of ERISA and at no expense to the Company.
SECTION 4.10 Securities Law Matters. Neither the Company nor
any Person acting on its behalf has, in connection with the sale of the
Preferred Shares and the issuance of the Warrants, engaged in (i) any form of
general solicitation or general advertising (as those terms are used within the
meaning of Rule 502(c) under the Act), (ii) any action involving a public
offering within the meaning of Section 4(2) of the Act, or (iii) any action
that would require the registration under the Act of the offering and sale of
the Preferred Shares or the issuance of the Warrants pursuant to this
Agreement, or that would violate applicable state securities or "blue sky"
laws. In reliance on the representation of the Investor set forth in Section
5.3, the offer, issuance, sale and delivery of the Preferred Shares, the
Conversion Shares, the Warrants, and the Warrant Shares, in each case as
provided in this Agreement, are
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or will be exempt from registration under the Act and any applicable state
securities or "blue sky" laws. The Company has not made and will not make,
directly or indirectly, any offer or sale of Preferred Shares or Warrants or of
securities of the same or a similar class as the Preferred Shares or Warrants
if as a result the offer and sale of the Preferred Shares and issuance of the
Warrants contemplated hereby could fail to be entitled to exemption from the
registration requirements of the Act. As used herein, the terms "offer" and
"sale" have the meanings specified in Section 2(3) of the Act.
SECTION 4.11 State Takeover Statutes. The Board has duly and
validly approved this Agreement and the other Transaction Documents and the
transactions contemplated hereby and thereby, and such approval is sufficient
to render the provisions of Section 203 of the Delaware General Corporation Law
inapplicable to this Agreement and the other Transaction Documents and the
transactions contemplated hereby or thereby, and to any future "business
combination" (as defined in Section 203) between the Investor and the Company
or their respective Affiliates. To the Company's knowledge, no other state
takeover statute or similar statute or regulation (including Florida Statutes
Sections 607.901 through 607.903) applies or purports to apply to this
Agreement.
SECTION 4.12 1996 Financial Statements. The consolidated
balance sheets of the Company and its consolidated Subsidiaries as at December
31, 1996 and the related consolidated statements of income and of cash flows
for the fiscal year ending on such date, reported on by Ernst & Young, a copy
of which will be furnished to the Investor as soon as such documents are
available, will fairly and accurately present the consolidated financial
condition of Company and its consolidated Subsidiaries as at such date, and the
consolidated results of their operations and their consolidated cash flows for
the fiscal year then ended. Such financial statements, including the related
schedules and notes thereto, will have been prepared in accordance with GAAP
applied consistently throughout the periods involved and consistently with the
financial statements of the Company and its consolidated Subsidiaries as at and
for the year ended December 31, 1995 (except for such inconsistencies as
approved by such accountants and as disclosed therein). Neither the Company nor
any of its consolidated Subsidiaries will have, at the date of the balance sheet
referred to above, any material guarantee obligation, contingent liability or
liability for taxes, or any long-term lease or unusual forward or long-term
commitment, including any interest rate or foreign currency swap or exchange
transaction, which is not reflected in the foregoing statements or in the notes
thereto.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor hereby represents and warrants to the Company
that:
SECTION 5.1 Due Authorization; No Conflicts; Validity. The
Investor has full power and authority to enter into and perform its obligations
under this Agreement and each other Transaction Document executed or to be
executed by it. The execution and delivery by the Investor of this Agreement,
each other Transaction Document and each other certificate or document executed
or to be executed by it in connection with the transactions contemplated hereby
and thereby, and the performance by the Investor of its obligations hereunder
and thereunder have been duly authorized by all necessary proceedings on the
part of the Investor, and do not and will not conflict with, result in any
violation of, or constitute any default under, any Requirement of Law or
Contractual Obligation applicable to the Investor. This Agreement constitutes,
and each other Transaction Document executed by the Investor will, on the due
execution and delivery thereof, constitute, the valid and binding obligations
of the Investor enforceable in accordance with their respective terms.
SECTION 5.2 Approvals. No Approval is required to be
obtained by the Investor for the consummation of the transactions contemplated
by this Agreement or by any of the Transaction Documents, except for the
expiration of the waiting period under the HSR Act and except such as may be
required under the Act and state securities or "blue sky" laws under Article
VIII.
SECTION 5.3 Acquisition for Own Account. The Preferred
Shares and the Warrants are being acquired by the Investor for its own account
and with no intention of distributing or reselling the Preferred Shares, the
Warrants, the Warrant Shares or the Conversion Shares, or any part thereof in
any transaction that would be in violation of the Act or the securities or
"blue sky" laws of any state, without prejudice, however, to the rights of the
Investor at all times to sell or otherwise dispose of all or any part of the
Preferred Shares, the Warrants, the Warrant Shares or the Conversion Shares
under an effective registration statement under the Act or under an exemption
from such registration available under the Act, or to pledge all or any part of
the Preferred Shares, the Warrants, the Warrant Shares or the Conversion Shares
to secure any obligation of the Investor. The Investor is capable of
evaluating the merits and risks of an investment in the Preferred Shares,
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the Warrants and the Warrant Shares, and can bear the economic risk of such
investment.
SECTION 5.4 Finder's Fees. No broker, investment banker,
financial advisor or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Investor.
SECTION 5.5 Financing. The Investor has, or will have at
the time of the Funding and the Closing, the funds necessary to fulfill its
obligations under this Agreement.
ARTICLE VI
COVENANTS OF THE PARTIES
SECTION 6.1 Transfer Restrictions; Legends. (a) Subject to
the requirements of the Act and the Exchange Act, the Preferred Shares, the
Warrants, the Warrant Shares, the Conversion Shares and the Promissory Note
shall be freely transferable; provided, however, that, unless either a Payment
Default, an Event of Default or a Default Change of Control shall have occurred
or the Stockholders Approval shall not have been received at the Stockholders
Meeting, the Investor shall not assign or otherwise transfer any of such
securities or the Promissory Note or any beneficial interest in any of such
securities or the Promissory Note until the second anniversary of the date of
this Agreement; provided that the Investor may pledge any of such securities or
the Promissory Note as security for bona fide indebtedness owed to a Person
which is not an Affiliate of the Investor.
(b) So long as the Preferred Shares, the Conversion Shares,
the Warrant Shares and the Warrants are restricted securities under the Act and
unless they shall have been previously issued pursuant to an effective
registration statement under the Act, the certificates representing such
restricted Preferred Shares, Warrant Shares, Conversion Shares and Warrants
shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND ANY
SECURITIES ISSUABLE UPON CONVERSION OR EXERCISE HEREOF MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR AN APPLICABLE
EXEMPTION FROM REGISTRATION THEREUNDER. PRIOR TO ____, 1999, SUCH
SECURITIES MAY ALSO BE SUBJECT TO CERTAIN TRANSFER RESTRICTIONS SET
FORTH IN
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AN INVESTMENT AGREEMENT RATED AS OF FEBRUARY 5, 1997 BETWEEN THE
ISSUER AND AP-AGC, LLC, A COPY OF THE APPLICABLE PROVISIONS OF WHICH
IS AVAILABLE UPON REQUEST TO THE ISSUER.
(c) After termination of the requirement that a legend be
placed upon a certificate representing Preferred Shares, Warrant Shares,
Warrants or Conversion Shares, the Company shall, upon receipt by the Company
of evidence reasonably satisfactory to it that such requirement has terminated
and upon the written request of any holder of Preferred Shares, Warrant Shares,
Warrants or Conversion Shares, issue certificates for such Preferred Shares,
Warrant Shares, Warrants or Conversion Shares, as the case may be, that do not
bear such legend.
SECTION 6.2 Stockholders Meeting. (a) The Company shall
take all action necessary, in accordance with applicable law and its
Certificate of Incorporation and By-laws, to convene to a special or annual
meeting of its stockholders (the "Stockholders Meeting") as promptly as
reasonably practicable after the date of this Agreement for the purpose of,
among other things, considering and taking action upon a resolution to adopt
the Amended and Restated Certificate of Incorporation. The Board will
recommend that holders of Common Stock vote in favor of the adoption of the
Amended and Restated Certificate of Incorporation at the Stockholders Meeting.
(b) The Company will, as soon as practicable following the
date of this Agreement, prepare and file a proxy statement (the "Proxy
Statement") with the SEC relating to the Stockholders Meeting (including any
information required to satisfy the requirements of Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder). The Company will use its
reasonable good faith efforts to respond to any comments of the SEC or its
staff and to cause the Proxy Statement to be mailed to the Company's
stockholders as promptly as practicable after responding to all such comments
to the satisfaction of the SEC or its staff. The Company will provide the
Investor with a copy of the preliminary Proxy Statement and all modifications
thereto prior to filing or delivery to the SEC and will consult with the
Investor in connection therewith. The Company will notify the Investor promptly
of the receipt of any comments from the SEC or its staff and of any request by
the SEC or its staff for amendments or supplements to the Proxy Statement or
for additional information and will supply the Investor with copies of all
correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement or the Stockholders Meeting. The Investor will cooperate and furnish
promptly all information required for inclusion in the Proxy
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Statement. If at any time prior to the Stockholders Meeting there shall occur
any event that should be set forth in an amendment or supplement to the Proxy
Statement, the Company will promptly prepare and mail to its stockholders such
an amendment or supplement. The information provided by either party for use
in the Proxy Statement shall be true and correct in all material respects
without omission of any material fact which is required to make such information
not false or misleading. No representation, covenant or agreement is made by
either party with respect to information supplied by the other party for
inclusion in the Proxy Statement.
SECTION 6.3 Pre-Closing Activities. From and after the date
of this Agreement until the Closing, each of the Company and the Investor shall
act with good faith towards the other, and shall use all reasonable efforts to
consummate the transactions contemplated by this Agreement, and neither the
Company nor the Investor will take any action that would prohibit or impair its
ability to consummate the transactions contemplated by this Agreement. From
the date hereof until the Closing, the Company shall conduct the business of it
and its Subsidiaries in the ordinary course consistent with past practice and
shall use all reasonable efforts to preserve intact its business organizations
and relationships with third parties, and, except as otherwise provided herein,
to keep available the services of the present directors, officers and key
employees. Without limiting the generality of the foregoing, from the date
hereof until the Closing, except as contemplated by this Agreement, without the
Investor's prior written consent the Company shall not, and shall ensure that
each of its Subsidiaries does not:
(a) adopt or propose (or agree to commit to) any change in
its certificate of incorporation or By-Laws, except as contemplated
hereby or as required to effect the transactions hereunder;
(b) take any action that would make any representation or
warranty of the Company hereunder required to be true at and as of the
Closing as a condition to the Investor's obligations to consummate the
transactions contemplated hereby inaccurate at the Closing;
(c) issue, sell, pledge or encumber any capital stock or
other securities, except (i) pursuant to Options or Bank Warrants
outstanding on the date hereof, (ii) pursuant to options granted
automatically under the Company's 1994 Non-Employee Directors Stock
Option Plan or 1996 Non-Employee Directors Stock Plan, and Common
Stock issued to directors in lieu of cash fees, or (iii) for the
issuance
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of up to $10,000,000 aggregate liquidation preference of Series B
Preferred Stock to stockholders of the Company who subscribe for such
shares pursuant to a rights offering by the Company, the terms of
which shall be reasonably acceptable to the Investor; provided that
the net proceeds of the issuance and sale of such Series B Preferred
Stock shall be used for working capital purposes (which does not
include repurchasing securities of the Company) or for investment
projects of the Company in accordance with the provisions of this
Agreement;
(d) make any material change in its accounting methods,
principles or practices except as may be required by law or applicable
accounting standards;
(e) except as described in the Approved Business Plan for
1997, (i) grant to any employee any material increase in salary or
other remuneration or any increase in severance or termination pay not
consistent with past practice; (ii) grant or approve any general
increase in salaries of all or any class of, or a substantial portion
of, its employees not consistent with past practice; (iii) pay or
award any material bonus, incentive, compensation, service award or
other like benefit for or to the credit of any employee except in
accordance with written policy or consistent with past practice; (iv)
enter into any material employment contract or severance arrangement
with any employee or adopt or amend in any material respect any of its
employee benefit plans; or (v) change in any material respect the
compensation (whether in respect of terms or method) of its agents;
(f) (i) except as permitted by the Note Agreement, enter
into or assume any loan or other Instrument pursuant to which the
Company or such Subsidiary incurs Indebtedness for borrowed money
(other than any such Instrument among the Company and its wholly owned
Subsidiaries or among the Company's wholly owned Subsidiaries) or (ii)
request or agree to any material amendment or supplement to or waiver,
termination or modification of any material existing Instrument (other
than Instruments relating to Indebtedness);
(g) declare, pay, set aside or make any dividend or
distribution (payable in cash, stock, property or obligations) on, or
combine, subdivide or reclassify, any shares of any class of its
capital stock or of its Subsidiaries (now or hereafter outstanding),
or apply any of its funds, property or assets to the purchase,
redemption, sinking fund or other retirement of any shares of any
class of its
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capital stock or of its Subsidiaries (now or hereafter outstanding);
provided, however, that this provision shall not apply in respect of
the liquidation or dissolution of one or more Excluded Subsidiaries;
or
(h) agree, commit or resolve to do any of the foregoing.
SECTION 6.4 No Inconsistent Agreements. Neither the Company
nor any of its Subsidiaries shall enter into any Instrument, or enter into any
amendment or other modification to any currently existing Instrument, that by
its terms restricts or prohibits the ability of the Company to issue Conversion
Shares upon the conversion of the Preferred Shares or Warrant Shares upon the
exercise of the Warrants, or pursuant to which the Company's ability to make
any distributions with respect to, or to redeem or repurchase any of, the
Preferred Shares or Warrant Shares will be subject to any restriction that is
more restrictive than the provisions of the Amended and Restated Certificate of
Incorporation, or restricting the Company's ability to perform any of its
obligations under this Agreement or any of the Transaction Documents, including
its obligations relating to registration rights.
SECTION 6.5 Xxxx-Xxxxx-Xxxxxx. To the extent applicable,
each of the Company and the Investor shall make all filings and furnish all
information required with respect to the transactions contemplated by this
Agreement by the HSR Act and shall use reasonable efforts to obtain the early
termination of the waiting period thereunder.
SECTION 6.6 Exclusivity. (a) The Company hereby agrees
that it will not, nor will it permit any of its Subsidiaries to, nor will it
authorize or permit any officer, director or employee of, or any investment
banker, attorney or other advisor or representative of it or any of its
Subsidiaries to, solicit or initiate, or encourage the submission of, any
proposal or transaction for a financing of the Company (other than draws under
the Foothill Facility or project financing in the ordinary course of business
consistent with past practice) or for the acquisition by a Person other than the
Investor or an Affiliate of the Investor of stock or a substantial part of the
assets of the Company through a merger or other business combination, stock or
assets acquisition or otherwise (in any such case, an "Alternative Transaction")
(or to furnish to any Person any nonpublic information concerning the business,
properties or assets of the Company (other than in connection with the sale by
the Company of properties designated for sale in an Approved Business Plan, as
required by the Foothill Loan Documents or in connection with project financing
(debt or equity)
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in the ordinary course of business consistent with past practice), or to
otherwise facilitate any inquiries or the making of any proposal) prior to the
Closing. In addition, the Company hereby agrees that it will, and will cause
its Subsidiaries, officers, directors, employees, investment bankers, attorneys
and other advisors or representatives to, terminate any other discussions or
negotiations with any third party regarding any Alternative Transaction, and
that the Company will not, nor will it permit any of its Subsidiaries to, nor
will it authorize or permit any officer, director or employee of, or any
investment banker, attorney or other advisor or representative of the Company,
or any of its Subsidiaries to have any additional discussions or negotiations
with any third party regarding such an Alternative Transaction prior to the
Closing.
(b) Notwithstanding the provisions of Section 6.6(a), prior
to the Closing, to the extent required by the fiduciary obligations of the
Board, as determined in good faith by the Board after receipt of the written
advice of its outside counsel and financial advisor, the Company may (i) in
response to an unsolicited request therefor, furnish information with respect
to the Company to the requestor pursuant to a customary confidentiality
agreement and discuss such information and the terms of this Section 6.6 (but
not the terms of any possible Alternative Proposal) with such Person and (ii)
upon receipt by the Company of an unsolicited Alternative Proposal, following
delivery to the Investor of the notice required pursuant to the last two
sentences of this Section 6.6(b), participate in negotiations regarding such
Alternative Proposal. Without limiting the foregoing, it is understood that
any violation of the restrictions set forth in the preceding sentence by any
director or executive officer of the Company or any of its Subsidiaries or any
investment banker, financial advisor, attorney or other advisor to or
representative of the Company or any of its Subsidiaries, whether or not such
person is purporting to act on behalf of the Company or any of its Subsidiaries
or otherwise, shall be deemed to be a breach of Section 6.6 by the Company. For
purposes of this Agreement, "Alternative Proposal" means any proposal (whether
or not in writing and whether or not delivered to the Company's stockholders
generally) for a Business Combination involving the Company or any proposal or
offer to conduct in any manner, directly or indirectly, an Alternative
Transaction. The Company shall promptly advise the Investor orally and in
writing of any request for information or of any Alternative Proposal, or any
inquiry with respect to or which could lead to any Alternative Proposal, the
material terms and conditions of such request, Alternative Proposal or inquiry,
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and the identity of the Person making any such Alternative Proposal or inquiry.
The Company shall keep the Investor reasonably informed of the status of any
such request, Alternative Proposal or inquiry.
(c) Prior to the Closing, neither the Board nor any committee
thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to the Investor, the approval or recommendation by the Board of
this Agreement or the transactions contemplated hereby, (ii) approve or
recommend, or propose to approve or recommend, any Alternative Proposal or
(iii) enter into any agreement with respect to any Alternative Proposal.
Notwithstanding the foregoing, if the Board receives an unsolicited Alternative
Proposal that, in the exercise of its fiduciary obligations (as determined in
good faith by the Board after receipt of the written advice of its outside
counsel and financial advisor), it determines to be a Superior Proposal, the
Board may (subject to the provisions of this Section 6.6) withdraw or modify
its approval or recommendation of this Agreement and the transactions
contemplated hereby, approve or recommend any such Superior Proposal, enter
into an agreement with respect to such Superior Proposal and terminate this
Agreement (any such action, a "Change of Position"), in each case at any time
after the second Business Day following the Investor's receipt of written
notice (a "Notice of Superior Proposal") advising the Investor that the Board
has received a Superior Proposal, specifying the material terms and conditions
of such Superior Proposal and identifying the person making such Superior
Proposal. In addition, if the Company proposes to approve or engage in any
Change of Position with respect to any Alternative Proposal, it shall prior to
or concurrently with approving or adopting such Change of Position pay to the
Investor $2,000,000 in immediately available funds (the "Termination Fee"). In
addition, the Commitment Fee shall be forfeited by the Company and the Company
shall pay to the Investor within two Business Days of request therefor, subject
to provision of documentation, an amount in cash equal to the Investor's
Transaction Expenses. For purposes of this Agreement, a "Superior Proposal"
means any bona fide Alternative Proposal which the Board determines in its good
faith reasonable judgment (after receipt of the written advice of its financial
advisor and outside counsel) to be more favorable from a financial point of
view to the Company's stockholders than the transactions contemplated by this
Agreement. Nothing contained herein shall prohibit the Company from taking and
disclosing to its stockholders a position contemplated by Rule 14e-2(a) under
the Exchange Act prior to the third business day following the Investor's
receipt of a Notice of Superior Proposal provided that the Company does not at
that time withdraw
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or modify its position with respect to the Merger or approve or recommend an
Alternative Proposal.
SECTION 6.7 Affirmative Covenants. The Company hereby
agrees that from the date hereof and so long as the Promissory Note remains
outstanding and unpaid or the Investor holds at least the Specified Investor
Amount of Series A Preferred Stock:
(a) Financial Statements. The Company shall furnish to the
Investor:
(i) as soon as available, but in any event not later than
90 days after the end of each fiscal year of the Company, a copy of
the consolidated balance sheet of the Company and its consolidated
Subsidiaries as at the and of such year and the related consolidated
statements of income and retained earnings and of cash flows for such
year, setting forth in each case in comparative form the figures for
the previous year, reported on by Ernst & Young or other independent
certified public accountants of nationally recognized standing
acceptable to the Investor;
(ii) as soon as available, but in any event not later than
90 days after the end of each fiscal year of the Company, a copy of
the consolidating balance sheet of the Company and its consolidated
Subsidiaries as at the end of such year and the related consolidating
statements of income and retained earnings and of cash flows for such
year, setting forth in each case in comparative form the figures for
the previous year, certified by a Responsible Officer as being fairly
stated in all material respects;
(iii) as soon as available, but in any event not later than
45 days after the end of each of the first three quarterly periods of
each fiscal year of the Company, the unaudited consolidated and
consolidating balance sheet of the Company and its consolidated
Subsidiaries as at the end of such quarter and the related unaudited
consolidated and consolidating statements of income and retained
earnings and of cash flows of the Company and its consolidated
Subsidiaries for such quarter and the portion of the fiscal year
through the end of such quarter, setting forth in each case in
comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material respects
when considered in relation to the consolidated and consolidating
financial statements of the Company and its consolidated Subsidiaries
(subject to normal year-end audit adjustments); all such financial
statements specified in (i), (ii) and (iii)
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above to be complete and correct in all material respects and to be
prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the
case may be, and disclosed therein);
(iv) as soon as available, but in any event not later than
45 days after the end of each quarterly period of the Company, a
report showing all sales by the Company of real property, including a
description of the property sold and the price received, certified by
a Responsible Officer as being fairly stated in all material respects;
(v) a copy of each report, certificate or other document
or information delivered to the lenders or agent under the Foothill
Loan Documents, concurrently with the delivery thereof to such lenders
or agent, including all annexes or attachments thereto; and
(vi) such other information as the Investor may reasonably
request from time to time.
(b) Access. The Company shall (and shall cause each of
its Subsidiaries to), upon reasonable notice, afford the officers, employees,
counsel, accountants, financing sources and other authorized representatives of
the Investor or any of its Affiliates ("Representatives") reasonable access
during normal business hours to its properties, books, contracts, commitments
and records (including environmental records) and personnel and advisors (who
will be instructed by the Company to cooperate) and the Company shall (and
shall cause each of its Subsidiaries to) furnish promptly to the Investor all
information concerning its business, properties and personnel as the Investor
or its Representatives may reasonably request; provided that any review will be
conducted in a way that will not interfere unreasonably with the conduct of the
Company's business, and provided, further, that no review pursuant to this
Section 6.7(b) shall affect or be deemed to modify any representation or
warranty made by the Company. The Investor will keep all information and
documents obtained pursuant to this Section 6.7(b) on a confidential basis in
accordance with Paragraph F of the Letter Agreement.
(c) Notices. The Company shall promptly give notice to
the Investor of:
(i) the occurrence of any Default or Event of Default;
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(ii) any (A) default or event of default under any
Contractual Obligation of the Company or, to the knowledge of the
Company, any of its Subsidiaries or (B) litigation, investigation or
administrative or other proceeding which may exist at any time between
the Company or, to the knowledge of the Company, any of its
Subsidiaries and any Government Authority, which in the case of either
clause (A) or clause (B), if not cured or if adversely determined, as
the case may be, would have a Material Adverse Effect;
(iii) any litigation or administrative or other proceeding
affecting the Company or, to the knowledge of the Company, any of its
Subsidiaries, in which the amount involved or sought is in excess of
$500,000 or in which injunctive or similar relief is sought;
(iv) any default under, or revocation of, or notice
threatening to revoke, any operating permit or license material to the
Company's business;
(v) its having become aware that any representation or
warranty contained herein is or has become untrue in any material
respect; and
(vi) any development or event which would reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a
statement of a Responsible Officer setting forth details of the occurrence
referred to therein and stating what action the Company proposes to take with
respect thereto.
(d) Environmental Laws. The Company shall:
(i) comply with, and use its reasonable efforts to insure
compliance by all tenants and subtenants, if any, with, all Environmental Laws
and obtain and comply with and maintain, and insure that all tenants and
subtenants obtain and comply with and maintain, any and all licenses,
approvals, registrations or permits required by Environmental Laws, except in
each case to the extent that failure to do so would not reasonably be expected
to have a Material Adverse Effect; and
(ii) conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions required
under Environmental Laws and promptly comply with all lawful orders and
directives of all Government Authorities respecting Environmental Laws, except
to the extent that the same are being contested in good faith by appropriate
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proceedings and the pendency of such proceedings or delay in such actions would
not reasonably be expected to have a Material Adverse Effect.
(e) Business Plan. The Company shall furnish to the Investor
on or before the tenth day following approval by the Board, but in no event
later than December 31 of each fiscal year and within 10 days (after approval
by the Board, if applicable) of any amendment, modification or update thereto,
a Business Plan of the Company for the next succeeding fiscal year in a form
and in substance satisfactory to the Investor setting forth in reasonable
detail a projected statement for such fiscal year's income and cash flow with a
projected balance sheet as of the close of the succeeding fiscal year end,
accompanied by a statement of a Responsible Officer that the Business Plan
projected statements of income, cash flow and balance sheet for the succeeding
fiscal year have been adopted by the Board. The Company shall at all times
conduct its business substantially in accordance with the Business Plan and
shall not materially modify such Business Plan without the prior written
approval of the Investor.
(f) Major Transactions. Except as permitted by this
Agreement, the Company shall not engage in, or enter into any agreement with
respect to, or (except subject to the prior written approval of the Investor)
resolve to engage in or to enter into any agreement with respect to, any Major
Transaction, without the prior written consent of the Investor (it being agreed
that (i) the approval (x) of a majority of the Investor Designees at a meeting
of the Board, (y) of one or more Investor Designees at a meeting of the
Executive Committee of the Board or (z) of all members of the Board, including
the Investor Designees, by a written directors consent shall be deemed to be
written consent of the Investor and (ii) any action by the Company in respect
of the Series A Preferred Stock and the Series B Preferred Stock, including
dividend payments thereon and redemption thereof, in accordance with their
terms shall not be deemed to be Major Transactions).
SECTION 6.8 Publicity. The parties will cooperate with each
other in the development and distribution of all news releases and other public
information disclosures with respect to this Agreement or any of the
transactions contemplated hereby and shall not issue any public announcement or
statement with respect hereto or thereto without prior notification to the other
party, and, until 30 days after the Closing Date, except as required by law, the
reasonable approval of the other party.
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SECTION 6.9 Reservation of Shares. From and after the
Closing, the Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized and unissued stock, (a) solely for the
purpose of effecting the conversion of the Preferred Shares, such number of
shares of Common Stock as shall be sufficient to effect the conversion of all
of the Preferred Shares and (b) solely for the purpose of issuing shares of
Common Stock upon the exercise of Warrants, such number of shares of Common
Stock which may then be deliverable upon exercise of all of the Warrants.
SECTION 6.10 The Board. The Company shall take all actions
necessary so that: (a) as of the date of this Agreement and until the Closing,
the full Board shall consist of ten directors, one of whom shall be the
Original Investor Designee (who shall be in the class of directors whose term
of office expires at the annual meeting in 1999; provided, however, that, if no
Funding has occurred and this Agreement is terminated in accordance with its
terms, the Investor shall cause the Original Investor Designee to promptly
resign from the Board), and (b) as of and after the Closing, the Board shall
consist of seven directors, who shall be the Original Investor Designee, the
Additional Investor Designees (one of each of whom shall be in each of the
other classes of directors), one member of the incumbent management of the
Company and three independent directors (satisfying the standard of
independence established in the rules of the New York Stock Exchange, Inc.) who
shall be selected by the Incumbent Board with the approval of the Investor
(which shall not be unreasonably withheld). Subject to applicable law, the
Company shall take all action necessary to effect any such election or
appointment, including timely mailing to its stockholders the information
required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder (and the Investor shall provide to the Company on a timely basis all
information required to be included in the Proxy Statement with respect to the
Original Investor Designee and the Additional Investor Designees). From and
after the Effective Date, the voting rights of holders of the Preferred Shares
voting shall be as set forth in the Amended and Restated Certificate of
Incorporation. So long as any amounts are owed under the Promissory Note, at
least one member of the Board shall be designated by the Investor.
SECTION 6.11 Indemnification of Board. From and after the
Closing, the Amended and Restated Certificate of Incorporation and By-laws of
the Company, however amended, will at all times contain provisions exculpating
and indemnifying its directors to the fullest extent permitted under applicable
law. The By-laws of the Company shall always contain provisions consistent
with the provisions of this Section 6.11. The
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Company shall maintain valid policies of directors and officers indemnity
insurance with financially sound and reputable insurers in such amounts, with
such deductibles and against such risks and losses as are reasonable for the
business and assets of the Company.
SECTION 6.12 Co-Investment Opportunity. Except with respect
to projects, including joint ventures, of the Company or any Subsidiary
existing on the date of this Agreement as set forth in Section 6.12 of the
Disclosure Schedule, as long as the Investor owns at least the Specified
Investor Amount of Preferred Stock, the Investor will have a right of first
offer to participate in new joint venture community development projects
proposed to be entered into by the Company, until the Investor has invested at
least $60,000,000 in cash in such projects; provided, however, that the
provisions of this Section 6.12 shall not apply to any project in which the
Company's participation and commitment shall be in the form of (a) its expertise
and business efforts or (b) the contribution or real property (or equity
interests in real property), as opposed to capital contributions. Subject to
the foregoing, if the Company proposes to enter into any new community
development project (including any new joint venture, partnership or similar
arrangement with any third party), the Company will inform the Investor thereof
and will offer the Investor the opportunity to invest in such proposed project
for one week before offering such opportunity to any third party. To the extent
reasonably available to the Company, the Company shall give the Investor such
information regarding the proposal as the Investor may reasonably request to
enable it to make an investment decision. If the Investor fails to advise the
Company within 10 Business Days after receipt of any such offer in writing of
its intention to proceed with due diligence and negotiation with respect to such
proposed investment, the Investor shall be deemed to have rejected such offer.
If the Investor discloses to the Company its intention, within such 10 Business
Day period, to proceed with due diligence and negotiation with respect to such
proposed investment, then the Investor and the Company agree to negotiate with
each other in good faith with respect to such proposed investment for up to 20
Business Days following the Investor's receipt of such information. If, after
the Company and the Investor have discussed the proposed transaction for such
20-Business Day period, the Investor determines either not to invest in such
project, or not to invest the full amount that the Company requires for such
project, or has not committed to the Company to make such investment, on
substantially the terms and conditions offered to the Investor, then the Company
may enter into an agreement with or consummate a transaction with other
potential investors with regard to the proposed investment (or the amount
required in excess of the
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amount to be committed by the Investor), provided that the Company may not
offer terms to another potential investor materially more favorable in the
aggregate than the terms offered to the Investor unless the Company first
offers such terms to the Investor. Nothing herein shall be deemed to imply any
commitment on the part of the Investor to invest in the Company or any project
proposed by the Company, except as expressly provided in this Agreement. So
long as any principal amount is outstanding under the Promissory Note, in
connection with the Investor's rights described above, the Company will offer
the Investor the opportunity to conduct due diligence investigations with
respect to such projects and will comply with the terms of the Due Diligence
Fee Agreement.
SECTION 6.13 Approved Business Plan. Within 30 days after
the date hereof, the Company shall deliver to the Investor a draft of the
Business Plan for 1997-1998, and the Company and the Investor shall exercise
reasonable efforts to reach agreement on the Approved Business Plan.
ARTICLE VII
SURVIVAL AND INDEMNIFICATION
SECTION 7.1 Survival Periods. All representations and
warranties contained in this Agreement shall survive for thirty months from the
Closing Date, and shall thereupon terminate and cease to be of further force
and effect, except that any representation or warranty as to which notice of a
breach giving rise to a right of indemnification has been given prior to the
end of such thirty month period shall survive until any such right of
indemnification has been finally resolved. The covenants and agreements
contained in this Agreement, other than those which by their terms only apply
until the Closing Date, shall survive the Closing in accordance with their
terms. The representations and warranties and the survival periods set forth
above shall apply regardless of any investigation made by or on behalf of any
Person.
SECTION 7.2 Indemnification by the Company. Subject to the
provisions of Section 7.1, the Company agrees to indemnify and hold harmless
the Investor and its Affiliates and their respective officers, directors,
agents, employees, subsidiaries, partners and controlling persons (each, an
"indemnified party") to the fullest extent permitted by law from and against
any and all losses, claims, damages, expenses (including reasonable fees,
disbursements and other charges of counsel) or other liabilities
("Liabilities") resulting from any breach of any covenant, agreement,
representation or warranty
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of the Company in this Agreement or in any other Transaction Document;
provided, however, that the Company shall not be liable under this Section 7.2:
(i) for any amount paid in settlement of claims without its consent (which
consent shall not be unreasonably withheld) or (ii) to the extent that it is
finally judicially determined that such Liabilities resulted primarily from a
breach by the Investor of any representation, warranty, covenant or agreement
of the Investor contained in this Agreement or the willful misconduct of the
Investor; provided, further, that, if and to the extent that such
indemnification is unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of such indemnified
liability that shall be permissible under applicable laws. In connection with
the obligation of the Company to indemnify for Liabilities as set forth above,
the Company further agrees to reimburse each indemnified party for all such
expenses (including reasonable fees, disbursements and other charges of
counsel) as they are incurred by such indemnified party.
SECTION 7.3 Indemnification by the Investor. Subject to the
provisions of Section 7.1, the Investor agrees to indemnify and hold harmless
the Company and their respective Affiliates, officers, directors, agents,
employees, subsidiaries, partners and controlling persons (each, an
"indemnified party") to the fullest extent permitted by law from and against
any and all Liabilities resulting from any breach of any covenant, agreement,
representation or warranty of the Investor in this Agreement or in any other
Transaction Document; provided, however, that the Investor shall not be liable
under this Section 7.3: (i) for any amount paid in settlement of claims
without the Investor's consent (which consent shall not be unreasonably
withheld) or (ii) to the extent that it is finally judicially determined that
such Liabilities resulted primarily from a breach by the Company of any
representation, warranty, covenant or agreement of the Company contained in
this Agreement or the willful misconduct of the Company; provided, further,
that, if and to the extent that such indemnification is unenforceable for any
reason, the Investor shall make the maximum contribution to the payment and
satisfaction of such indemnified liability that shall be permissible under
applicable laws. In connection with the obligation of the Investor to
indemnify for Liabilities as set forth above, the Investor further agrees to
reimburse each indemnified party for all such expenses (including reasonable
fees, disbursements and other charges of counsel) as they are incurred by such
indemnified party.
SECTION 7.4 Notification. Each indemnified party under this
Article VII or Article VIII will, promptly after the
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receipt of notice of the commencement of any action or other proceeding against
such indemnified party in respect of which indemnity may be sought from any
indemnifying party under this Article VII or Article VIII, notify such
indemnifying party in writing of the commencement thereof. The omission of any
indemnified party so to notify any indemnifying party of any such action shall
not relieve such indemnifying party from any liability that it may have to such
indemnified party (a) other than pursuant to this Article VII or Article VIII or
(b) under this Article VII or Article VIII unless, and only to the extent that,
such omission results in forfeiture of substantive rights or defenses. In case
any such action or other proceeding shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
such indemnifying party shall be entitled to participate therein and, to the
extent that either may wish, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party; provided, however, that any
indemnified party may, at its own expense, retain separate counsel to
participate in such defense. Notwithstanding the foregoing, in any action or
proceeding in which any indemnifying party and an indemnified party are, or are
reasonably likely to become, a party, such indemnified party shall have the
right to employ separate counsel at the expense of such indemnifying party and
to control its own defense of such action or proceeding if, in the reasonable
opinion of counsel to such indemnified party, (i) there are or may be legal
defenses available to such indemnified party or to other indemnified parties
that are different from or additional to those available to such indemnifying
party or (ii) any conflict or potential conflict exists between such
indemnifying party and such indemnified party that would make such separate
representation advisable in the view of the indemnified party; provided,
however, that (A) any such separate counsel employed by the indemnified party at
the expense of such indemnifying party shall be reasonably satisfactory to such
indemnifying party, (B) the indemnified party will not, without the prior
written consent of such indemnifying party settle, compromise or consent to the
entry of any judgment in such action or proceeding unless such settlement,
compromise or consent includes an unconditional release of such indemnifying
party from all liability arising or that may arise out of such action or
proceeding relating to any matter subject to indemnification hereunder and (C)
in no event shall such indemnifying party be required to pay fees and expenses
under this Article VII or Article VIII for more than one firm of attorneys
representing the indemnified parties in any jurisdiction in any one legal action
or group of related legal actions. The rights accorded to indemnified parties
hereunder shall be in addition to any rights that any indemnified party may have
at common law, by separate agreement or otherwise.
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SECTION 7.5 Registration Statements. Notwithstanding
anything to the contrary in this Article VII, the indemnification and
contribution provisions of Article VIII shall govern any claim made with respect
to registration statements filed pursuant thereto or sales made thereunder.
ARTICLE VIII
REGISTRATION RIGHTS
SECTION 8.1 Demand Registrations. At any time and from time
to time after the Closing, the Company shall, upon the written demand of the
Investor, use its best efforts to effect the registration (a "Demand
Registration") under the Act (by means of a "shelf" registration statement
pursuant to Rule 415 under the Act, if so requested and if the Company is
eligible therefor at such time) of such number of Registrable Securities (as
defined below) then beneficially owned by the Investor as shall be indicated in
a written demand sent to the Company by the Investor; provided, however, that:
(a) the Company shall be obligated under this Agreement to effect no more than
(i) two Demand Registrations so long as the Company is not eligible to file
Form S-3 under the Act, and (ii) five Demand Registrations if the Company is
eligible to file Form S-3; and (b) a Demand Registration shall not count as
such until it has become effective, except that if, after it has become
effective, the offering of Registrable Securities pursuant to such registration
is interfered with by any stop order, injunction or other order or requirement
of the SEC or any other Government Authority, such registration shall be deemed
not to have been effected unless such stop order, injunction or other order or
requirement shall subsequently have been vacated or otherwise removed. If a
Demand Registration is initiated by the Investor, no other securities may be
offered in such offering by the Company without the Investor's consent. Upon
receipt of the written demand of the Investor, the Company shall expeditiously
effect the registration under the Act of the Registrable Securities covered by
such request and use its best efforts to have such registration become and
remain effective as provided in Section 8.8. The Investor shall have the right
to select the underwriters for a Demand Registration.
As used in this Agreement, "Registrable Securities" shall mean
(a) any Preferred Shares, (b) any Conversion Shares, (c) any Warrant Shares,
(d) any other shares of Common Stock acquired by the Investor and (e) any
securities issued or issuable with respect to any Preferred Shares, Conversion
Shares, Warrant Shares by way of stock dividend or stock split, or in
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connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise.
SECTION 8.2 Piggyback Registrations. (a) If the Company
proposes to register any of its securities under the Act for sale for cash
(otherwise than in connection with the registration of securities issuable
pursuant to an employee stock option, stock purchase or similar plan or
pursuant to a merger, exchange offer or a transaction of the type specified in
Rule 145(a) under the Act), the Company shall give the Investor notice of such
proposed registration at least 20 days prior to the filing of a registration
statement. At the written request of the Investor delivered to the Company
within 10 Business Days after the receipt of the notice from the Company,
stating the number of Registrable Securities that the Investor wishes to sell
or distribute publicly under the registration statement proposed to be filed by
the Company, the Company shall use its best efforts to register under the Act
the sale of such Registrable Securities, and to cause such registration (a
"Piggyback Registration") to become and remain continuously effective as
provided in Section 8.8;
(b) If a Piggyback Registration is an underwritten primary
registration on behalf of the Company, and the managing underwriters thereof
advise the Company in writing that in their opinion the number of securities
requested to be included in the registration exceeds the number which can be
sold in the offering without adversely affecting the offering, the Company
shall include in the registration (i) first, that portion of the Registrable
Securities that the Investor proposes to sell representing 10% of such
offering, (ii) second, the securities the Company proposes to sell, and (iii)
third, the remaining Registrable Securities the Investor proposes to sell.
SECTION 8.3 Indemnification by the Company. In the event of
any registration of any Registrable Securities under the Act, the Company
shall, and hereby does, indemnify and hold harmless the Investor, each of its
directors and officers, each other Person who participates as an underwriter in
the offering or sale of such Registrable Securities and each other Person, if
any, who controls the Investor or any such underwriter within the meaning of
Section 15 and Section 20 of the Act against any losses, claims, damages or
liabilities, joint or several, to which the Investor or any such director or
officer or underwriter or controlling Person may become subject under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any registration statement under which
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the Registrable Securities were registered under the Act, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances in which they were made not
misleading, and the Company shall reimburse the Investor and each such
director, officer, underwriter and controlling Person for any legal or any
other expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, liability, action or proceeding; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement in reliance upon and in conformity with
written information about the Investor furnished to the Company through an
instrument duly executed by or on behalf of the Investor specifically stating
that it is for use in the preparation thereof. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Investor or any such director, officer or controlling Person and shall
survive the transfer of the Registrable Securities by the Investor.
SECTION 8.4 Indemnification by the Investor. The Company
may require, as a condition to including any Registrable Securities in any
registration statement filed pursuant to Section 8.1 or 8.2, that the Company
shall have received an undertaking satisfactory to it from the Investor to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 8.3) the Company, each director of the Company, each officer
of the Company signing such registration statement, each other Person who
participates as an underwriter in the offering or sale of such Registrable
Securities and each other Person, if any, who controls the Company within the
meaning of Section 15 and Section 20 of the Act with respect to any untrue
statement or alleged untrue statement in or omission or alleged omission from
such registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein or any amendment or supplement thereto, if
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
about the Investor furnished to the Company through an instrument duly executed
by the Investor specifically stating that it is for use in the preparation of
such registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement. Such
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indemnity shall remain in full force and effect, regardless of any investigation
made by or on behalf of the Company or any such director, officer or controlling
Person and shall survive the transfer by the seller of the securities of the
Company being registered.
SECTION 8.5 Notification. The procedures set forth in
Section 7.4 shall apply to any claim for indemnification pursuant to Section
8.3 or 8.4.
SECTION 8.6 Other Indemnification. Indemnification similar
to that specified in this Article VIII (with appropriate modifications) shall
be given by the Company and the Investor with respect to any required
registration or other qualification of Registrable Securities under any federal
or state law or regulation of any Government Authority other than the Act.
SECTION 8.7 Contribution. In order to provide for just and
equitable contribution in circumstances in which the indemnity agreement
provided for in this Article VIII is for any reason held to be unenforceable by
the indemnified parties although applicable in accordance with its terms in
respect of any Liabilities suffered by an indemnified party referred to
therein, each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such Liabilities, in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and of
the liable selling stockholders on the other in connection with the statements
or omissions which resulted in such Liabilities, as well as any other relevant
equitable considerations. The relative fault of the Company on the one hand
and of the liable selling stockholders (including, in each case, that of their
respective officers, directors, employees, agents and controlling Persons) on
the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company, on the one hand, or by or on behalf of the selling stockholders,
on the other, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
SECTION 18.8 Registration Covenants of the Company. If any
Registrable Securities of the Investor are to be registered pursuant to Section
8.1 or 8.2, the Company covenants and agrees that it shall use its best efforts
to effect the registration and cooperate in the sale of the Registrable
Securities to be registered and shall as expeditiously as possible:
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(a) (i) prepare and file with the SEC a registration
statement with respect to the Registrable Securities (as well as any
necessary amendments or supplements thereto) (a "Registration
Statement") and (ii) use its best efforts to cause the Registration
Statement to become effective;
(b) prior to the filing described above in Section 8.8(a),
furnish to the Investor copies of the Registration Statement and any
amendments or supplements thereto and any prospectus forming a part
thereof, which documents shall be subject to the review and approval
of counsel for the Investor;
(c) notify the Investor, promptly after the Company shall
receive notice thereof, of the time when the Registration Statement
becomes effective or when any amendment or supplement or any
prospectus forming a part of the Registration Statement has been
filed;
(d) notify the Investor promptly of any request by the SEC
for the amending or supplementing of the Registration Statement or
prospectus or for additional information and promptly deliver to the
Investor copies of any comments received from the SEC;
(e) (i) advise the Investor after the Company shall receive
notice or otherwise obtain knowledge of the issuance of any order by
the SEC suspending the effectiveness of the Registration Statement or
any amendment thereto or of the initiation or threatening of any
proceeding for that purpose and (ii) promptly use its best efforts to
prevent the issuance of any stop order or to obtain its withdrawal
promptly if a stop order should be issued;
(f) (i) prepare and file with the SEC such amendments and
supplements to the Registration Statement and each prospectus forming
a part thereof as may be necessary to keep the Registration Statement
continuously effective for the period of time necessary to permit the
Investor to dispose of all its Registrable Securities and (ii) comply
with the provisions of the Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement during
such period in accordance with the intended methods of disposition by
the Investor set forth in the Registration Statement;
(g) furnish to the Investor such number of copies of the
Registration Statement, each amendment and supplement thereto, the
prospectus included in the Registration Statement (including each
preliminary prospectus) and such
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other documents as the Investor may request in order to facilitate the
disposition of the Registrable Securities owned by the Investor;
(h) use its best efforts to register or qualify such
Registrable Securities under such other securities or "blue sky" laws
of such jurisdictions as determined by the underwriters after
consultation with the Company and the Investor and do any and all other
acts and things which may be reasonably necessary or advisable to
enable the Investor to consummate the disposition in such jurisdictions
of the Registrable Securities (provided that the Company shall not be
required to (i) qualify generally to do business in any jurisdiction in
which it would not otherwise be required to qualify but for this
Section 8.8(h), (ii) subject itself to taxation in any such
jurisdiction, or (iii) consent to general service of process in any
such jurisdiction);
(i) notify the Investor, at any time when a prospectus
relating thereto is required to be delivered under the Act, of the
happening of any event as a result of which the Registration Statement
would contain an untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading, and, at the request of the
Investor, prepare a supplement or amendment to the Registration
Statement so that the Registration Statement shall not, to the
Company's knowledge, contain an untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading;
(j) if the Common Stock is not then listed on a securities
exchange, use its best efforts, consistent with the then-current
corporate structure of the Company, to facilitate the listing of the
Common Stock on a stock exchange or on the NASDAQ Stock Market;
(k) provide a transfer agent and registrar, which may be a
single entity, for all the Registrable Securities not later than the
effective date of the Registration Statement;
(l) enter into such customary agreements (including an
underwriting agreement in customary form, including customary
indemnification provisions and customary lock-up arrangements of the
issuer and its directors and executive officers) and take all such
other action, if any, as the Investor or the underwriters shall
reasonably request
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in order to expedite or facilitate the disposition of the Registrable
Securities pursuant to this Article VIII;
(m) (i) make available for inspection by the Investor, any
underwriter participating in any disposition pursuant to the
Registration Statement and any attorney, accountant or other agent
retained by the Investor or any such underwriter all relevant
financial and other records, pertinent corporate documents and
properties of the Company as any of them may request in connection
with their "due diligence" investigations of the Company and (ii)
cause the Company's officers, directors and employees to supply all
relevant information reasonably requested by the Investor or any such
underwriter, attorney, accountant or agent in connection with the
Registration Statement;
(n) use its best efforts to cause the Registrable Securities
covered by the Registration Statement to be registered with or
approved by such other governmental authorities as may be necessary to
enable the Investor to consummate the disposition of such Registrable
Securities;
(o) cause the Company's independent public accountants to
provide to the underwriters, if any, and the selling holders, if
permissible, a comfort letter in customary form and covering such
matters of the type customarily covered by comfort letters;
(p) cooperate and assist in any filings required to be made
with the National Association of Securities Dealers, Inc. (the
"NASD"); and
(q) use all reasonable efforts to facilitate the distribution
and sale of any Registrable Securities to be offered pursuant to this
Agreement, including without limitation by making road show
presentations, holding meetings with potential investors and taking
such other actions as shall be appropriate or as shall be requested by
the lead managing underwriter of an underwritten offering.
SECTION 8.9 Expenses. In connection with any Demand
Registration pursuant to Section 8.1 or any Piggyback Registration pursuant to
Section 8.2, the Company shall pay all registration, filing and NASD fees, all
fees and expenses of complying with securities or "blue sky" laws (including
fees and disbursements of underwriters' counsel); provided, however, that the
Investor shall pay its pro rata share of any commissions, fees and
disbursements of underwriters customarily paid by
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sellers of securities (based upon offering proceeds to be received by it). In
any Demand Registration or Piggyback Registration, the Company shall be
responsible for the fees and disbursements of counsel for the Company and of
its independent public accountants, printing costs and premiums and other costs
of policies of insurance against Liabilities arising out of the public offering
of the Registrable Securities. The Investor shall be responsible for the fees
and disbursements of counsel for the Investor.
SECTION 8.10 Transfer of Registration Rights. The Investor
(or any Eligible Transferee) may transfer all or any portion of its rights
under this Article VIII to any transferee of an amount of Registrable
Securities equal to or exceeding 10% of the outstanding class of such
Registrable Securities at the time of transfer (each transferee that receives
such minimum number of such Registrable Securities, an "Eligible Transferee"),
and any Eligible Transferee shall be treated as the "Investor" for all purposes
under this Article VIII; provided, however, that the Company shall be obligated
under this Agreement to effect no more than that number of Demand Registrations
set forth in the proviso in Section 8.1 on behalf of all Eligible Transferees
in the aggregate. Any transfer of registration rights pursuant to this Section
8.10 shall be effective upon receipt by the Company of (i) written notice from
the Investor or the transferring Eligible Transferee, as the case may, stating
the name and address of the new Eligible Transferee and identifying the amount
of Registrable Securities with respect to which the rights under this Agreement
are being transferred and (ii) a writing from such new Eligible Transferee
agreeing to be bound by the terms of this Article VIII. The Eligible
Transferees may exercise their rights hereunder in such priority as they shall
agree upon among themselves.
SECTION 8.11 Other Registration Rights. Notwithstanding any
other provision of this Agreement, if the Company at any time grants
registration rights to any other Person on terms relating to the priority of
registration rights or periods when the Company shall be entitled to defer
filing any Registration Statement which the Investor considers preferential to
the comparable terms in this Article VIII, then the Investor shall be entitled
to registration rights with such preferential terms. The Company shall not
grant any right of registration under the Act relating to any of its securities
to any Person other than the Investor unless the Investor shall be entitled to
have included in any Piggyback Registration effected a number of Registrable
Securities requested by the Investor to be so included representing at least
10% of such offering prior to the inclusion of any securities requested to be
registered by the Persons entitled to any such other registration rights.
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SECTION 8.12 Rule 144. So long as the Company is subject to
the reporting requirements of Section 13 or 15(d) of the Exchange Act, the
Company shall take all actions reasonably necessary to enable the Investor to
sell the Registrable Securities without registration under the Act within the
limitation of the exemptions provided by Rule 144 under the Act, as such Rules
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC, including filing on a timely basis all reports required to
be filed by the Exchange Act. Upon the request of the Investor, the Company
shall deliver to the Investor a written statement as to whether it has complied
with such requirements.
SECTION 8.13. Limitation on Requirement to File or Amend
Registration Statement. Anything in this Agreement to the contrary
notwithstanding, the Company shall not be required to file, and may defer
filing, any Registration Statement, amendment, supplement or post-effective
amendment thereto or prospectus supplement, if the Company is then involved in
discussions concerning, or otherwise engaged in, an acquisition, disposition,
financing or other material transaction and the Company determines in good
faith that the making of such a filing, supplement or amendment at such time
would materially adversely affect or interfere with such transaction; provided,
however, that the Company may not so defer making such filing for more than 90
days on any one occasion or within 30 days after the termination of any such
deferral period; and provided, further that the Company shall, as soon as
practicable thereafter, make such filing, supplement or amendment. The Company
shall promptly give the Investor written notice of any such deferral,
containing a general statement of the reasons for such deferral and an
approximation of the anticipated delay, provided, however, that nothing herein
shall require the Company to disclose any terms of any such transaction or the
identity of any party thereto.
ARTICLE IX
TERMINATION
SECTION 9.1 Termination. This Agreement (other than, if and
so long as the Promissory Note remains outstanding, Sections 6.1, 6.7(f), 6.10,
6.11, 10.7, 10.12 and 10.13 and Article VII) may be terminated at any time
prior to the Closing:
(a) by mutual written consent of the Company and the
Investor;
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(b) by the Company or the Investor, if the Closing
shall not have occurred on or before May 22, 1997; provided, however, that the
right to terminate this Agreement under this clause (b) shall not be available
to any party whose failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of the Closing to occur on or
before such date;
(c) by the Investor, if the Proxy Statement has not
been mailed to stockholders of the Company by May 1, 1997;
(d) by the Company or the Investor, if any judgment,
injunction, order or decree enjoining the Investor or the Company from
consummating this Agreement is entered and such judgment, injunction, order or
decree shall become final and nonappealable; provided, however, that the party
seeking to terminate this Agreement shall have used all reasonable efforts to
remove such judgment, injunction, order or decree;
(e) by the Investor, if there has been a material
breach of any representation, warranty or material covenant or agreement of the
Company which is incurable, or, if curable, which is not cured within 30 days
of receipt of written notification from the Company identifying such breach and
demanding that it be cured;
(f) by the Company, if there has been a material
breach of any representation, warranty, or material covenant or agreement of
the Investor contained in this Agreement, which breach is incurable or, if
curable, which is not cured within 30 days of receipt of written notification
from the Investor identifying such breach and demanding that it be cured;
(g) by the Company, in accordance with the
provisions of Section 6.6(c), provided that prior to or concurrently with such
termination, the Investor shall have received the Termination Fee; or
(h) by either the Company or the Investor at any
time from March 30, 1997 until April 5, 1997 if and until any necessary consent
from Foothill Capital Corporation has not been obtained on terms reasonably
satisfactory to the Investor and the Company.
SECTION 9.2 Effect of Termination. If this Agreement is
terminated pursuant to Section 9.1, then this Agreement (except for Section
9.3, which shall remain in full force and effect, and the provisions specified
in Section 9.1, which shall remain in full force and effect if and so long as
the Promissory Note is outstanding) shall become void and of no
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effect with no liability on the part of any party hereto thereunder, except to
the extent such termination results from the breach by a party hereto of any of
its representations, warranties, covenants or agreements set forth in this
Agreement.
SECTION 9.3 Fees Due Upon Termination. (a) If this
Agreement is terminated or the Closing does not occur by 5:00 p.m., New York
City time, on May 22, 1997 for any reason whatsoever other than as a result of
a breach of this Agreement by the Investor entitling the Company not to
consummate the Closing, the Commitment Fee shall be forfeited and the Company
shall pay to the Investor within two Business Days of request therefor,
together with documentation therefor, the Investor's Transaction Expenses.
(b) If the Closing has not been consummated by May 22, 1997
as a result of either a breach by the Company of this Agreement, or a breach by
the Company of the Note Agreement which is not cured by May 22, 1997, or a
failure by 5:00 p.m., New York City time, on May 22, 1997 to obtain the
Stockholders Approval, then, in addition to the forfeiture of the Commitment
Fee, the Company shall pay to Apollo in cash, on May 23, 1997, an additional
$1,000,000 break-up fee, plus the Investor's Transaction Expenses.
(c) If the conditions for the payment of the break-up fee
referred to in Section 9.3(b) are fulfilled, and either (i) the Company
wilfully breached or breaches this Agreement or the Note Agreement or (ii) the
Company (x) enters into an agreement for an Alternative Transaction prior to
the earlier of May 22, 1998 or the date that is nine months after the date of
termination of this Agreement or (y) consummates an Alternative Transaction
prior to the earlier of May 22, 1998 or the first anniversary of the date of
termination of this Agreement, the Company shall pay an additional $1,000,000
Alternative Transaction fee to the Investor, in addition to the $1,000,000
break-up fee provided for in Section 9.3(b) above and the forfeiture of the
Commitment Fee, plus the Investor's Transaction Expenses.
(d) If the Agreement is terminated by the Company pursuant to
Section 9.1(h), and either (i) the Company wilfully breached or breaches this
Agreement or the Note Agreement or (ii) the Company enters into an agreement
for, or consummates, an Alternative Transaction prior to the 180th day after
the date of termination of this Agreement, the Company shall pay an additional
$2,000,000 Alternative Transaction fee to the Investor, in addition to the
forfeiture of the Commitment Fee, plus the Investor's Transaction Expenses.
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(e) Notwithstanding the foregoing provisions of this Section
9.3, the Company shall not be required to pay fees pursuant to this Section 9.3
if the Company shall have terminated the Agreement pursuant to Section 6.6(b)
and paid the Investor the Termination Fee and Transaction Expenses therein
specified (and the Commitment Fee shall have been forfeited by the Company).
Notwithstanding any other provision of this Agreement, in no event shall the
Investor be entitled to receive fees in excess of $3,000,000 (plus Transaction
Expenses) from the Company as a result of the termination of this Agreement.
All fees and Transaction Expenses shall be payable in cash.
ARTICLE X
MISCELLANEOUS
SECTION 1.58 Notices. All notices or other communications
given or made hereunder shall be validly given or made if in writing and
delivered by facsimile transmission or in person at, mailed by registered or
certified mail, return receipt requested, postage prepaid, or sent by a
reputable overnight courier to, the following addresses (and shall be deemed
effective at the time of receipt thereof).
If to the Company: Atlantic Gulf Communities
Corporation
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Chief Financial
Officer
with copies to: Arent Fox Xxxxxxx Xxxxxxx & Xxxx
0000 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Telecopy: (000) 000-0000
Attention: Carter Strong, Esq.
If to the Investor:
AP-ACG, LLC
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c/o Apollo Real Estate Advisors II, L.P.
Xxx Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxx Xxxxxxxxx
with a copy to:
Apollo Real Estate Advisors II, L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxxxxxxxxxx
and a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx Xxxxxxx, Esq.
Xxxxxx X. Xxxxxxx, Esq.
or to such other address as the party to whom notice is to be given may have
previously furnished notice in writing to the other in the manner set forth
above.
SECTION 10.2 Expenses. The Company will pay all Transaction
Expenses.
SECTION 10.3 Amendment; Waiver. The provisions of this
Agreement may be modified or amended, and waivers and consents to the
performance and observance of the terms hereof may be given, only by written
instrument executed and delivered by the Company and the Investor. The
failure at any time to require performance of any provision hereof shall in no
way affect the full right to require such performance at any time thereafter.
The waiver by any party to this Agreement of a breach of any provision hereof
shall not be taken or held to be a waiver of any succeeding breach of such
provision of any other provision or as a waiver of the provision itself.
SECTION 10.4 Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction
to be invalid, void or unenforceable, the validity, legality and enforceability
of the remaining provisions contained herein shall not in any way be affected
or impaired thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which
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comes as close as possible to that of the provision held to be invalid, illegal
or unenforceable.
SECTION 10.5 Headings. The Index and Article and Section
headings herein are for convenience only and shall not affect the construction
hereof.
SECTION 10.6 Entire Agreement. This Agreement and the other
Transaction Documents and paragraph E of the Letter Agreement (the remainder of
the Letter Agreement being superceded hereby) embody the entire agreement
between the parties relating to the subject matter hereof and any and all prior
oral or written agreements, representations or warranties, contracts,
understandings, correspondence, conversations, and memoranda, whether written
or oral, between the Company and the Investor, or between or among any of their
agents, representatives, parents, Subsidiaries, Affiliates, predecessors in
interest or successors in interest, with respect to the subject matter hereof.
SECTION 10.7 Maximum Interest Rate. Nothing contained in
this Agreement, the Promissory Note or any other Transaction Document shall
require the Company to pay interest at a rate exceeding the maximum rate
permitted by applicable law. If the amount of interest payable on any interest
payment date, computed pursuant to applicable law and the Transaction Documents
would exceed the maximum amount permitted by applicable law to be charged, the
amount of interest payable for its account on such interest payment date shall
be automatically reduced to such maximum permissible amount. If the amount of
interest payable for the account of the Investor in respect of any interest
computation period is reduced pursuant to the preceding sentence of this
Section and the amount of interest payable for its account in respect of any
subsequent interest computation period, computed pursuant to applicable law and
the Transaction Documents, would be less than the maximum amount permitted by
applicable law to be charged, then the subsequent interest computation period
shall be automatically increased to such maximum permissible amount; provided
that at no time shall the aggregate amount by which interest paid had been
increased pursuant to this sentence exceed the aggregate amount by which
interest has theretofore been reduced pursuant to the preceding sentence of
this Section.
SECTION 10.8 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original and both of which
together shall be deemed to be one and the same instrument.
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SECTION 10.9 Assignment. All covenants and agreements
contained in this Agreement by or on behalf of the parties hereto shall bind,
and inure to the benefit of, the respective successors and assigns of the
parties hereto; provided, however, that, subject to Section 8.10, the rights
and obligations of either party hereto may not be assigned without the prior
written consent of the other parties; provided, further, however, that prior to
the Closing, the Investor may assign all of its rights and obligations
hereunder to an Affiliate of the Investor, which shall then be treated as the
Investor for all purposes under this Agreement.
SECTION 10.10 Third-Party Beneficiaries. Except for Article
VII and Sections 8.3, 8.4, 8.6 and 8.7, this Agreement is for the sole benefit
of the parties hereto and their permitted assigns and nothing herein expressed
or implied shall give or be construed to give to any Person, other than the
parties hereto and such assigns, any legal or equitable rights hereunder.
SECTION 10.11 Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND PERFORMED ENTIRELY WITHIN SUCH STATE.
SECTION 10.12 Submission to Jurisdiction; Waiver of Jury
Trial. Each of the Company and the Investor hereby submits to the exclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York State Court sitting in the City of New York for
purposes of all legal proceedings which may arise hereunder or under any other
Transaction Documents. The parties irrevocably waive, to the fullest extent
permitted by law, any objection which they may have or hereafter have to the
laying of the venue of any such proceeding brought in such a court and any
claim that any such proceeding brought in such a court has been brought in an
inconvenient forum. The parties hereby consent to process being served in any
such proceeding by the mailing of a copy thereof by registered or certified
mail, postage prepaid, to its address specified in Section 10.1 or in any other
manner permitted by law. The Company and the Investor hereby knowingly,
voluntarily, and intentionally waive any rights they may have to a trial by
jury in respect of any litigation based hereon, or arising out of, under, or in
connection with, this agreement or any other Transaction Document, or any
course of conduct, course of dealing, statements (whether oral or written), of
the Investor or the Company. This provision is a material inducement for the
Investor's entering into this Agreement. The Company hereby irrevocably
designates Arent Fox Xxxxxxx Xxxxxxx & Xxxx, 0000 Xxxxxxxx, Xxx Xxxx, XX 00000,
as
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the designee, appointee and agent of the Company to receive, for and on behalf
of the Company, service of process in such jurisdiction in any legal action or
proceeding with respect to this Agreement or any other Transaction Document.
It is expected that a copy of such process served on such agent will be
promptly forwarded by mail to the Company at its address set forth in Section
10.1, but the failure of the Company to receive such copy shall not affect in
any way the service of such process. The Company further irrevocably consents
to the service of process of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered by
certified mail, postage prepaid, to the Company at such addresses. Nothing
herein shall affect the right of the Investor to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against the Company in any other jurisdiction.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
ATLANTIC GULF
COMMUNITIES CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President
and Chief Financial
Officer
AP-AGC, LLC
By: KRONUS PROPERTY, INC.
Manager
By: /s/ Xxxxxxx Xxxxxxxxxxxxx
----------------------------------
Name: Xxxxxxx Xxxxxxxxxxxxx
Title: Vice President
