Exhibit 10
SECOND AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
by and between
THE FORTRESS GROUP, INC.
and
PROMETHEUS HOMEBUILDERS LLC
Dated as of February 19, 1998
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS...........................................................................................2
Section 1.1. Defined Terms..............................................................................2
ARTICLE II. PURCHASE AND SALE OF SECURITIES.....................................................................13
Section 2.1. Purchase and Sale of Securities...........................................................13
Section 2.2. Consideration.............................................................................13
Section 2.3. Right to Assign...........................................................................13
ARTICLE III. CLOSING............................................................................................14
Section 3.1. Location of Closings......................................................................14
Section 3.2. First and Second Closings.................................................................14
Section 3.3. Subsequent Purchases and Sales............................................................14
Section 3.4. Deliveries by the Company at Closing......................................................15
Section 3.5. Deliveries by the Purchaser at Closing....................................................15
Section 3.6. Certificates; Opinions....................................................................15
Section 3.7. Ancillary Agreements......................................................................15
Section 3.8. Form of Documents and Instruments.........................................................16
Section 3.9. Further Purchases.........................................................................16
Section 3.10. Redelivery and Cancellation of Warrants...................................................16
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................................16
Section 4.1. Organization of the Company...............................................................16
Section 4.2. Capitalization of the Company.............................................................17
Section 4.3. Authorization of Issuance.................................................................18
Section 4.4. Authorization.............................................................................18
Section 4.5. Noncontravention..........................................................................18
Section 4.6. Consents and Approvals....................................................................19
Section 4.7. Subsidiaries..............................................................................19
Section 4.8. Employee Benefit Plans and Other Agreements...............................................20
Section 4.9. SEC Filings...............................................................................25
Section 4.10. Absence of Undisclosed Liabilities; Guarantees............................................25
Section 4.11. Absence of Certain Changes................................................................26
Section 4.12. Compliance With Laws......................................................................26
Section 4.13. Litigation................................................................................27
Section 4.14. True and Complete Disclosure..............................................................27
Section 4.15. Taxes.....................................................................................27
Section 4.16. Properties................................................................................29
Section 4.17. Environmental Matters.....................................................................31
Section 4.18. Insurance.................................................................................33
Section 4.19. Condition of Tangible Assets..............................................................33
Section 4.20. Contracts and Commitments.................................................................33
Section 4.21. Books and Records.........................................................................34
Section 4.22. Labor Matters.............................................................................34
Section 4.23. Payments..................................................................................34
Section 4.24. Information...............................................................................34
Section 4.25. Board Recommendations.....................................................................35
Section 4.26. Intellectual Property.....................................................................35
Section 4.27. Securities Offerings......................................................................35
Section 4.28. No Agreements to Sell the Assets or the Company...........................................36
Section 4.29. No Brokers................................................................................36
Section 4.30. Transactions with Certain Persons.........................................................36
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PURCHASER..........................................................36
Section 5.1. Organization of the Purchaser.............................................................36
Section 5.2. Authorization.............................................................................37
Section 5.3. Noncontravention..........................................................................37
Section 5.4. Consents and Appeals......................................................................37
Section 5.5. Purchase for Investment...................................................................38
Section 5.6. Disclosure Documents......................................................................38
Section 5.7. No Brokers................................................................................38
ARTICLE VI. ACTIONS BY THE COMPANY AND THE PURCHASER PRIOR TO THE SECOND CLOSING................................39
Section 6.1. Meeting of Stockholders; Proxy Statement; Certificate Amendments..........................39
Section 6.2. Stock Exchange Approval...................................................................40
Section 6.3. Continuing Operations.....................................................................40
Section 6.4. Press Releases............................................................................42
Section 6.5. Additional Financial Statements...........................................................42
Section 6.6. Investigations and Access.................................................................42
Section 6.7. Notification of Certain Matters...........................................................43
Section 6.8. No Solicitation...........................................................................43
Section 6.9. Further Assurances........................................................................44
Section 6.10. HSR Act Notification......................................................................44
Section 6.11. Employee Matters..........................................................................45
Section 6.12. Action by the Company.....................................................................45
Section 6.13. Liability Insurance.......................................................................45
Section 6.14. Confidentiality...........................................................................45
Section 6.15. Action following Stockholder Approval.....................................................46
ARTICLE VII. CONDITIONS TO ALL CLOSINGS.........................................................................46
Section 7.1. Conditions to Each Party's Obligations....................................................46
Section 7.2. Conditions to the Company's Obligations...................................................46
Section 7.3. Conditions to the Purchaser's Obligations.................................................47
ARTICLE VIII. SECOND AND SUBSEQUENT CLOSINGS....................................................................48
Section 8.1. Conditions to Each Party's Obligations at the Second Closing..............................48
Section 8.2. Conditions to the Purchaser's Obligations at the Second and Subsequent Closings..........48
ARTICLE IX. INDEMNIFICATION.....................................................................................49
Section 9.1. Survival of Representations, Etc.........................................................49
Section 9.2. Indemnification by the Company...........................................................49
Section 9.3. Indemnification by the Purchaser.........................................................49
Section 9.4. Losses...................................................................................50
Section 9.5. Defense of Claims........................................................................50
Section 9.6. Tax Treatment of Indemnity...............................................................51
ARTICLE X. MISCELLANEOUS........................................................................................51
Section 10.1. Termination..............................................................................51
Section 10.2. In the Event of Termination:.............................................................53
Section 10.3. Fees and Expenses........................................................................53
Section 10.4. Injunctive Relief........................................................................53
Section 10.5. Independent Determination................................................................53
Section 10.6. Brokers, etc.............................................................................54
Section 10.7. Assignment...............................................................................54
Section 10.8. Notices..................................................................................54
Section 10.9. Choice of Law............................................................................55
Section 10.10. Entire Agreement; Amendments and Waivers.................................................55
Section 10.11. Counterparts.............................................................................56
Section 10.12. Invalidity...............................................................................56
Section 10.13. Headings.................................................................................56
Section 10.14. Limitation of Liability..................................................................56
Section 10.15. Abstention from Voting...................................................................56
Section 10.16. Mutual Agreement.........................................................................56
Section 10.17. Apportionment of Stock Between Class ABI Preferred Stock and
Class ABII Preferred Stock ............................................................56
Section 10.18. Merger of Company........................................................................56
SCHEDULES
Schedule 4.2
Schedule 4.5
Schedule 4.6
Schedule 4.7
Schedule 4.8
Schedule 4.9
Schedule 4.10
Schedule 4.11
Schedule 4.12
Schedule 4.13
Schedule 4.15
Schedule 4.16(a)
Schedule 4.16(b)
Schedule 4.16(c)
Schedule 4.16(d)
Schedule 4.16(e)
Schedule 4.16(f)
Schedule 4.16(j)
Schedule 4.16(k)
Schedule 4.16(s)
Schedule 4.17
Schedule 4.18
Schedule 4.20
Schedule 4.26
Schedule 4.27
Schedule 6.3
Schedule 6.3(e)
Schedule 6.3(i)
EXHIBITS
Exhibit A Form of Class ABI Certificate of Designations
Exhibit B Form of Class ABII Certificate of Designations
Exhibit C Form of Amended and Restated Registration Rights
Agreement
Exhibit D Form of Amended and Restated Warrant Agreement
Exhibit E Form of Amended and Restated Stockholders Agreement
Exhibit F Form of Bylaws Amendments
Exhibit G Form of Certificate Amendments
Exhibit H Form of Bylaws Amendments-Subsidiaries
Exhibit I Form of Supplemental Warrant Agreement
DOCUMENT INDEX
Document Tab
Amended and Restated Stock Purchase Agreement------------------------------- 1
Form of Class ABI Certificate of Designations--------------------------------A
Form of Class ABII Certificate of Designations-------------------------------B
Form of Amended and Restated Registration Rights Agreement-------------------C
Form of Amended and Restated Warrant Agreement-------------------------------D
Form of Amended and Restated Stockholders Agreement--------------------------E
Form of Bylaws Amendments----------------------------------------------------F
Form of Certificate Amendments-----------------------------------------------G
Form of Bylaws Amendments-Subsidiaries---------------------------------------H
Form of Supplemental Warrant Agreement---------------------------------------I
This SECOND AMENDED AND RESTATED STOCK PURCHASE AGREEMENT, dated as of
February 19, 1998, is made by and between (i) The Fortress Group, Inc., a
Delaware corporation (the "Company") and (ii) Prometheus Homebuilders LLC (the
"Purchaser").
RECITALS
WHEREAS, the Company and the Purchaser entered into that certain stock
purchase agreement, dated as of August 14, 1997 (the "First Agreement").
WHEREAS, the Company and the Purchaser entered into that certain Amended
and Restated Stock Purchase Agreement, dated as of September 30, 1997 (the
"Second Agreement"), amending and restating the First Agreement.
WHEREAS, the Company and the Purchaser desire to amend and restate in its
entirety the Second Agreement as set forth herein.
WHEREAS, the Second Agreement, as amended and restated as set forth herein
shall be referred to as the "Agreement".
WHEREAS, Prometheus Homebuilders Funding Corp. has assigned all its
interest in the Purchaser to Lazard Freres Strategic Realty Investors II L.P.
WHEREAS, the Company has sold and desires to issue and sell to the
Purchaser, and the Purchaser desires to purchase from the Company, (i) an
aggregate of 40,000 shares of its newly issued Class AA Convertible Preferred
Stock, $0.01 par value per share, having the rights, designations and
preferences set forth in the Class AA Certificate of Designations and (ii) an
aggregate of 35,000 shares of its newly issued Class AB Preferred Stock
apportioned between Class ABI Convertible Redeemable Preferred Stock, $0.01 par
value per share, having the rights, designations and preferences set forth in
the Class ABI Certificate of Designations and Class ABII Convertible Redeemable
Preferred Stock, $0.01 par value per share, having the rights, designations and
preferences set forth in the Class ABII Certificate of Designations, together
with an aggregate of 1,000,000 warrants (the "Warrants") to purchase initially
one share of Common Stock at an initial exercise price of $7.00 per share as
further described in the Warrant Agreement together with an aggregate of up to
5,714,286 warrants (the "Supplemental Warrants") to purchase initially one share
of Common Stock at an exercise price of $0.01 per share as further described in
the Supplemental Warrant Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and premises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. Defined Terms. As used herein, the terms below shall have the
following meanings:
"Affiliate" shall mean any entity controlling, controlled by or under
common control with the Company. For the purposes of this definition,
"control" shall have the meaning presently specified for that word in Rule
405 promulgated by the Commission under the Securities Act.
"Agreement" shall mean this Stock Purchase Agreement as amended and
restated, together with all schedules and exhibits referenced herein.
"Alternative Transaction" shall have the meaning set forth in Section
6.8.
"Ancillary Agreements" means the Warrant Agreement, the Supplemental
Warrant Agreement, the Stockholders Agreement and the Registration Rights
Agreement.
"Applicable Law" means any statute, law, rule, or regulation or any
judgment, order, writ, injunction or decree of any Governmental Entity to
which a specified person or property is subject.
"Benefit Arrangement" means any employment, consulting, severance or
other similar contract, arrangement or policy and each plan, arrangement
(written or oral), program, agreement or commitment providing for insurance
coverage (including without limitation any self-insured arrangements),
workers' compensation, disability benefits, supplemental unemployment
benefits, vacation benefits, retirement benefits, life, health or accident
benefits (including without limitation any "voluntary employees'
beneficiary association" as defined in Section 501(c)(9) of the Code
providing for the same or other benefits) or for deferred compensation,
profit-sharing bonuses, stock options, stock appreciation rights, stock
purchases or other forms of incentive compensation or post-retirement
insurance, compensation or benefits which (A) is not a Welfare Plan,
Pension Plan or Multiemployer Plan, (B) is entered into, maintained,
contributed to or required to be contributed to, as the case may be, by the
Company or an ERISA Affiliate or under which the Company or any ERISA
Affiliate may incur any liability, and (C) covers any present or former
employees, directors or consultants of the Company (with respect to their
relationship with such entities).
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"Board of Directors" means the Board of Directors of the Company.
"Business" means the business of the Company as described more fully
in the "Business" section of the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
bank holiday in New York, New York.
"Bylaws" means the Bylaws of the Company as in effect on the date
hereof and as may be amended from time to time.
"Bylaws Amendments" means the amendments in substantially the form set
forth in Exhibit F and Exhibit H attached hereto and any other amendments
to the bylaws of the Company and any of its Subsidiaries reasonably
necessary in connection with the transactions contemplated under this
Agreement and the Ancillary Agreements (including amendments required to
give effect to the Supermajority provisions of the Stockholders Agreement).
"Certificate Amendments" means the amendments in substantially the
form set forth in Exhibit G attached hereto and any other amendments to the
Certificate of Incorporation or the certificates of incorporation of the
Company's Subsidiaries reasonably necessary in connection with the
transactions contemplated under this Agreement and the Ancillary
Agreements, including, without limitation, (a) an increase to the
authorized number of shares of Common Stock of the Company if necessary,
(b) the terms and conditions of the designations, rights and preference of
the Preferred Stock set forth in the Preferred Stock Certificates of
Designations, (c) certain amendments to the Class AA Certificate of
Designations and (d) such other changes to the Certificate of Incorporation
as are reasonably necessary to give effect to the rights, preferences and
designations of the Preferred Stock contained in the Preferred Stock
Certificates of Designations and the provisions of this Agreement and the
Ancillary Agreements (including the voting provisions set forth in the
Stockholders Agreement, if requested by the Purchaser).
"Certificate of Incorporation" means the Certificate of Incorporation
of the Company as amended or restated and as in effect on the date hereof.
"Claim" shall have the meaning set forth in Section 9.5.
"Claim Notice" shall have the meaning set forth in Section 9.5.
"Class AA Certificate of Designations" means the Certificate of
Designations, Preferences and Relative, Participating, Optional and Other
Special Rights and Qualifications, Limitations and Restrictions thereof of
the Class AA Convertible Preferred Stock, $0.01 par value per share, of the
Company, adopted on September 30, 1997, as the same shall be amended as set
forth in the Certificate Amendments.
3
"Class AA Per Share Purchase Price" shall mean the price of $1000 per
share for the Class AA Preferred Stock.
"Class AA Preferred Stock" means the 6% - 12% Class AA Convertible
Preferred Stock, $0.01 par value per share, of the Company.
"Class ABI Certificate of Designations" means the Certificate of
Designations, Preferences and Relative, Participating, Optional and Other
Special Rights and Qualifications, Limitations and Restrictions thereof of
the Class AB Convertible Redeemable Preferred Stock, $0.01 par value per
share, of the Company, substantially in the form attached thereto as
Exhibit A.
"Class ABII Certificate of Designations" means the Certificate of
Designations, Preferences and Relative, Participating, Optional and Other
Special Rights and Qualifications, Limitations and Restrictions thereof of
the Class ABII Convertible Redeemable Preferred Stock, $0.01 par value per
share, of the Company, substantially in the form attached thereto as
Exhibit B.
"Class ABI Per Share Purchase Price" shall mean the price of $1000 per
share for the Class ABI Preferred Stock.
"Class ABII Per Share Purchase Price" shall mean the price of $1000
per share for the Class ABII Preferred Stock.
"Class AB Preferred Stock" means the Class ABI Preferred Stock and the
Class ABII Preferred Stock.
"Class ABI Preferred Stock" means the 12% Class ABI Convertible
Redeemable Preferred Stock, $0.01 par value per share, of the Company.
"Class ABII Preferred Stock" means the 12% Class ABII Convertible
Redeemable Preferred Stock, $0.01 par value per share, of the Company.
"Closing" shall mean the consummation of any purchase of Preferred
Stock.
"Closing Date" means, with respect to the consummation of any purchase
of Preferred Stock, the third Business Day following the date on which the
conditions set forth herein with respect thereto shall be satisfied or duly
waived, or if the Company and the Purchaser mutually agree on a different
date in this Agreement or otherwise, the date upon which they have mutually
agreed.
"Code" means the Internal Revenue Code of 1986, as it may be amended
from time to time.
"Commission" means the United States Securities and Exchange
Commission.
"Commitment" shall have the meaning set forth in Section 4.11.
4
"Common Stock" means the common stock, par value $0.01 per share, of
the Company.
"Company" shall have the meaning set forth in the first paragraph
hereof.
"Company Employee Plan" shall have the meaning set forth in Section
4.8(a).
"Company Indemnified Parties" shall have the meaning set forth in
Section 9.3.
"Company Pension Plan" shall have the meaning set forth in Section
4.8(a).
"Contract" shall mean any written or oral agreement, contract, lease,
commitment, understanding, instrument or obligation to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of their respective properties may be bound.
"Conversion Shares" means the shares of Common Stock issuable upon the
conversion of the Preferred Stock.
"Employee Plans" means all Benefit Arrangements, Multiemployer Plans,
Pension Plans and Welfare Plans.
"Encumbrance" means any claim, lien, mortgage, deed of trust, deed to
secure debt, pledge, option, charge, easement, security interest,
right-of-way, encumbrance or other rights of third parties of any nature,
and, with respect to any securities, any agreements, understandings or
restrictions affecting the voting rights or other incidents of record or
beneficial ownership pertaining to such securities.
"Environmental Conditions" means (1) the Release or threatened Release
of any Hazardous Material (whether or not upon a Facility or any former
Facility or the Real Property or other property and whether or not such
Release constituted at the time thereof a violation of any Environmental
Law), or (2) the state of the environment, including natural resources
(e.g., flora and fauna) soil, surface water, ground water, wetlands or
ambient air, as a result of which the Company has or may become liable
under any Environmental Laws or by reason of which any Facility, any former
Facility or any of the Real Property or the other assets of the Company may
suffer or be subjected to any Encumbrances.
"Environmental Laws" means any and all applicable Federal, state,
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, legally binding decrees, or other requirement of any Governmental
Entity (including, without limitation, common law) regulating, relating to
or imposing liability or standards of conduct concerning protection of the
environment or of human health or relating to exposure of any kind to
Hazardous Materials, as has been, is now, or may at any time hereafter be,
in effect.
"Environmental Permits" means any and all permits, licenses,
registrations, notifications, exemptions and any other authorization
required under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
5
"ERISA Affiliate" means any entity which is (or at any relevant time
was) a member of a "controlled group of corporations" with, under "common
control" with, a member of an "affiliated service group" with, or otherwise
required to be aggregated with the Company, as set forth in Section 414(b),
(c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Committee" shall have the meaning set forth in Section
7.3(f).
"Existing Preferred Stock" means the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock, the Series D
Preferred Stock and the Series E Preferred Stock of the Company.
"Existing Preferred Stock Certificates of Designations" means the
Company's (i) Certificate of Designations, Preferences and Relative,
Participating, Optional and Other Special Rights and Qualifications,
Limitations and Restrictions thereof of the Series A 11% Cumulative
Convertible Preferred Stock, $0.01 par value per share, (ii) Certificate of
Designations, Preferences and Relative, Participating, Optional and Other
Special Rights and Qualifications, Limitations and Restrictions thereof of
the Series B Convertible Preferred Stock, $0.01 par value per share, (iii)
Certificate of Designations, Preferences and Relative, Participating,
Optional and Other Special Rights and Qualifications, Limitations and
Restrictions thereof of the Series C Convertible Preferred Stock, $0.01 par
value per share, (iv) Certificate of Designations, Preferences and
Relative, Participating, Optional and Other Special Rights and
Qualifications, Limitations and Restrictions thereof of the Series D 6%
Convertible Redeemable Preferred Stock, $0.01 par value per share and (v)
Certificate of Designations, Preferences and Relative, Participating,
Optional and Other Special Rights and Qualifications, Limitations and
Restrictions thereof of the Series E Preferred Stock.
"Existing Stockholders Agreement" shall mean that certain Stockholders
Agreement, dated as of April 15, 1996, by and among Xxxxxxx X. Xxxxx, Xx.,
Xxxxx X. Xxxxxxx, Xx., Xxxxxxxx Xxxxxxxx, Xxxxxxx X. Xxxx and Xxxx Xxxx,
Co-Trustees of the Xxxx Grantor Trust of 1993, Xxxxx X. XxXxxxxx, Xx.,
Xxxxx X. Xxxxxxxx, Xxxxx XxXxxxxx, Xxxxx Xxxxxxxx, Xxxxxx X. Xxxxxxxxxx,
Xxxxxx X. Xxxxxxxxxxx, Xxxxx X. Xxxxxxx, J. Xxxxxxxxxxx Xxxxxxx, Xxxxxx
Xxxxx, Lanold X. Xxxxxxxx and Xxxxxxxx X. Xxxxx.
"Facilities" means the offices, buildings and other improvements and
all other real property and related facilities, including the Real
Property, which are owned, leased or operated by the Company or any of its
Subsidiaries.
"Financial Product Agreement" shall mean any (a) interest rate,
currency, commodity or other swap, cap, floor, collar, insurance or similar
agreement or arrangement, (b) put, call, futures or forward contract,
straddle, commodities contract, option or warrant other than outstanding
options or warrants for Common Stock, (c) repurchase or reverse repurchase
or similar agreement or arrangement or (d) any other financial, derivative,
hedge, or speculative product, service or agreement, contract or
arrangement.
"First Closing" shall have the meaning set forth in Section 3.2(a).
6
"Fixtures and Equipment" shall mean all of the furniture, fixtures,
furnishings, machinery and equipment owned by the Company or any of its
Subsidiaries.
"Further Purchase" shall have the meaning set forth in Section 3.9.
"GAAP" shall have the meaning set forth in Section 4.9.
"Governmental Entity" means any court or tribunal in any jurisdiction
(domestic or foreign) or any public, governmental, or regulatory body,
agency, department, commission, board, bureau, or other authority or
instrumentality (domestic or foreign).
"Hazardous Materials" means any hazardous substance, gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products, polychlorinated biphenyls, ureaformaldehyde insulation, asbestos
or asbestos-containing materials, pollutants, contaminants, radioactivity,
and any other materials or substances of any kind, whether solid, liquid or
gas, that is regulated pursuant to any Environmental Law or that gives rise
to liability under any Environmental Law.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Indemnified Parties" shall have the meaning set forth in Section 9.3.
"Indenture" shall mean that certain Indenture, dated as of May 21,
1996, by and between The Fortress Group, Inc. and IBJ Xxxxxxxx Bank & Trust
Company, as amended by that certain First Supplemental Indenture, dated as
of May 21, 1996, and that certain Second Supplemental Indenture, dated as
of May 27, 1997, between the same parties.
"Liabilities" shall mean, as to any person, all debts, adverse claims,
liabilities and obligations, direct, indirect, absolute or contingent of
such person, whether known or unknown, accrued, vested or otherwise,
whether in contract, tort, strict liability or otherwise and whether or not
actually reflected, or required by GAAP to be reflected, in such person's
or entity's balance sheets or other books and records, including without
limitation (i) obligations arising from non-compliance with any law, rule
or regulation of any Government Entity or imposed by any court or any
arbitrator of any kind, (ii) all indebtedness or liability of such person
for borrowed money, or for the purchase price of property or services
(including trade obligations), (iii) all obligations of such person as
lessee under leases, capital or other, (iv) liabilities of such person in
respect of plans covered by Title IV of ERISA, or otherwise arising in
respect of plans for the Company's employees or former
7
employees or their respective families or beneficiaries, (v) reimbursement
obligations of such person in respect of letters of credit, (vi) all
obligations of such person arising under acceptance facilities, (vii) all
liabilities of other persons or entities, directly or indirectly,
guaranteed, endorsed (other than for collection or deposit in the ordinary
course of business) or discounted with recourse by such person or with
respect to which the person in question is otherwise directly or indirectly
liable, (viii) all obligations secured by any Encumbrance on property of
such person, whether or not the obligations have been assumed, and (ix) all
other items which have been, or in accordance with GAAP would be, included
in determining total liabilities on the liability side of the balance
sheet.
"Losses" shall have the meaning set forth in Section 9.2.
"Material Adverse Effect" with respect to any person or entity shall
mean an event, occurrence or condition that has had or reasonably would be
expected to have a material adverse effect on the business, condition
(financial or otherwise), assets, liabilities, working capital, operations
or prospects of such person or entity and its Subsidiaries (if any), taken
as a whole.
"Material Agreements" shall mean all of the following Contracts to
which the Company or any of its Subsidiaries is a party: (a) all Contracts
which (i) involve payments by or to any Person, of more than $50,000 in
cash or other property or services, or (ii) extend for a term of more than
thirty (30) days from the date hereof (unless the same is (y) cancelable on
not more than thirty (30) days' notice without fee, premium or penalty or
(z) motor vehicle or equipment leases not involving payments in excess of
$50,000), (b) all loan agreements and commitments, credit agreements,
indentures, promissory notes, mortgages, deeds of trust, pledge or security
agreements, factoring agreements, conditional sales Contracts, letters of
credit or other agreements or instruments evidencing, securing or issued in
connection with any Liability, (c) all operating leases or capital leases
for equipment to which the Company is a party, involving annual payments in
excess of $50,000 per lease, (d) all union, labor or collective bargaining
Contracts, (e) all consulting, management, development, leasing brokerage
or similar agreements with total obligations in excess of $50,000, (f) any
guarantee of any Liability or other obligations of any Person other than
guarantees by the Company of the obligations of its wholly owned
Subsidiaries, (g) each joint venture, partnership, operating or similar
agreement, (h) each agreement relating to any outstanding commitment for
capital expenditures involving future payments which, together with future
payments under all other agreements, Contracts or commitments relating to
the same capital project, exceed $50,000, (i) any agreement, Contract or
commitment relating to a disposition or an acquisition of the assets
(except in respect of the disposition or acquisition of assets with a fair
market value of less than $50,000) or securities of, or any interest in,
any Person or other business enterprise, (j) any agreement, Contract or
commitment in respect of any Liability of whatever nature (including,
without limitation, open account indebtedness) to any Affiliate of the
Company, or any agreement, Contract or commitment with or to any Affiliate
of the Company, (k) any agreement, Contract or commitment containing any
covenant limiting the freedom of the Company to undertake, conduct or
engage in any business or activity or to compete with any Person in any
geographic area, (l) any Financial Product Agreement, (m) any construction,
development, service, supply and maintenance agreement (unless the same is
(y) cancelable on not more than thirty (30) days' notice without fee,
premium or penalty or (z) does not involve payments in excess of $50,000),
(n) all leases of Real Property and (o) all agreements not entered into in
the ordinary course of business;
"Multiemployer Plan" means any "multiemployer plan," as defined in
Section 4001(a)(3) or 3(37) of ERISA, which (A) the Company or any ERISA
Affiliate maintains, administers, contributes to or is required to
contribute to, or, after September 25, 1980, maintained, administered,
8
contributed to or was required to contribute to, or under which the Company
or any ERISA Affiliate may incur any liability and (B) covers any employee
or former employee of the Company or any ERISA Affiliate (with respect to
their relationship with such entities).
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means any "employee pension benefit plan" as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan) which (A) the
Company or any ERISA Affiliate maintains, administers, contributes to or is
required to contribute to, or, within the five years prior to the Closing
Date, maintained, administered, contributed to or was required to
contribute to, or under which the Company or any ERISA Affiliate may incur
any liability and (B) covers any employee or former employee of the Company
or any ERISA Affiliate (with respect to their relationship with such
entities).
"Permits" shall mean all licenses, permits, orders, consents,
approvals, registrations, authorizations, qualifications and filings
required by any federal, state, local or foreign laws or governmental or
regulatory bodies and all industry or other non-governmental
self-regulatory organizations.
"Permitted Encumbrances" means (i) any mechanic's or materialmen's
lien or similar Encumbrances arising in the ordinary course of business
with respect to amounts not yet due and payable or which are being
contested in good faith by appropriate proceedings and for which
appropriate reserves have been established, (ii) Encumbrances for Taxes not
yet due and payable or which are being contested in good faith by
appropriate proceeding, for which appropriate reserves have been
established, (iii) easements, licenses, covenants, rights of way and
similar Encumbrances which, individually or in the aggregate, would not
materially and adversely affect the marketability or value of the property
encumbered thereby or materially interfere with the operations of the
Company.
"Person" means any individual, co-partner, association, partnership,
joint venture, limited liability company, trust, estate or other entity or
organization.
"Preferred Stock" means the Class AA Preferred Stock, the Class ABI
Preferred Stock and the Class ABII Preferred Stock.
"Preferred Stock Certificates of Designations" shall mean the Class AA
Certificate of Designations, the Class ABI Certificate of Designations and
the Class ABII Certificate of Designations.
"Preferred Stock Director" shall mean the three directors elected by
the holders of the Preferred Stock in the manner set forth in the Preferred
Stock Certificates of Designations.
"Preferred Stock Liquidation Preference" shall mean $1,000 per share
of Preferred Stock, plus any accrued and unpaid dividends thereon.
9
"Proceeding" means any action, suit or proceeding, whether civil,
criminal, administrative, arbitrative or investigative, any appeal in such
an action, suit or proceeding, and any inquiry or investigation that could
reasonably be expected to lead to such an action, suit or proceeding.
"Proprietary Rights" shall have the meaning set forth in Section
4.26(a).
"Proxy Materials" means the proxy statement and other proxy materials
(as amended and supplemented) to be used to solicit proxies on behalf of
the board of directors of the Company in connection with the Stockholders
Meeting.
"Purchase Price" shall mean the Class AA Per Share Purchase Price
multiplied by the number of shares of Class AA Preferred Stock to be
purchased and sold at a particular Closing plus the Class ABI Per Share
Purchase Price multiplied by the number of shares of Class ABI Preferred
Stock to be purchased and sold at a particular Closing plus the Class ABII
Per Share Purchase Price multiplied by the number of shares of Class ABII
Preferred Stock to be purchased and sold at a particular Closing.
"Purchaser" shall have the meaning set forth in the first paragraph
hereof.
"Purchaser Indemnified Parties" shall have the meaning set forth in
Section 9.2.
"Registration Rights Agreement" means the Amended and Restated
Registration Rights Agreement substantially in the form of Exhibit C
attached hereto.
"Regulation D" shall have the meaning set forth in Section 4.27(b).
"Regulations" means any laws, statutes, ordinances, regulations,
rules, notice requirements, court decisions and orders of any foreign,
federal, state or local government and any other governmental department or
agency, including without limitation Environmental Laws, energy, motor
vehicle safety, public utility, zoning, building and health codes,
occupational safety and health laws and laws respecting employment
practices, employee documentation, terms and conditions of employment and
wages and hours.
"Release" means and includes any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment or the workplace of any Hazardous Materials,
and otherwise as defined in any Environmental Law.
"Schedules" shall have the meaning set forth in Section 10.10.
"SEC Filings" shall have the meaning set forth in Section 4.9.
"Second Closing" shall have the meaning set forth in Section 3.2(b).
10
"Securities" means the Preferred Stock, the Warrants and the
Supplemental Warrants.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred Stock" means the shares of Series A 11% Cumulative
Convertible Preferred Stock, $0.01 par value per share, of the Company
outstanding on the date hereof.
"Series B Preferred Stock" means the shares of Series B Convertible
Preferred Stock, $0.01 par value per share, of the Company outstanding on
the date hereof.
"Series C Preferred Stock" means the shares of Series C Convertible
Preferred Stock, $0.01 par value per share, of the Company to be issued in
accordance with existing contractual provisions.
"Series D Preferred Stock" means the shares of Series D 6% Convertible
Redeemable Preferred Stock, $0.01 par value per share, of the Company
outstanding on the date hereof or to be issued in accordance with existing
contractual provisions.
"Series E Preferred Stock" means the shares of Series E Preferred
Stock, $0.01 par value per share, of the Company outstanding on the date
hereof.
"Shareholder Undertakings" means the undertakings delivered by the
Company to the Purchaser on the date of this Agreement pursuant to the
Stockholders Voting Agreement by all the stockholders party to the
Stockholders Voting Agreement including the proxy of each such person to
vote in favor of the Stockholder Approval.
"Stockholder Approval" shall have the meaning set forth in Section
8.1(a).
"Stockholders Agreement" means the Amended and Restated Stockholders
Agreement substantially in the form of Exhibit E attached hereto.
"Stockholders Meeting" shall have the meaning set forth in Section
6.1(a).
"Stockholders Voting Agreement" shall mean that certain Stockholders
Voting Agreement, dated as of September 30, 1997, by and among the Company,
the Purchaser and certain stockholders named therein.
"Subsequent Closing" shall mean each Closing of a Subsequent Purchase.
"Subsequent Purchase" shall have the meaning set forth in Section
3.3(a).
"Subsidiary" means, with respect to any Person, (a) any corporation of
which at least a majority in interest of the outstanding voting stock
(having by the terms thereof voting power under ordinary circumstances to
11
elect a majority of the directors of such corporation, irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
or controlled by such Person, by one or more Subsidiaries of such Person,
or by such Person and one or more of its Subsidiaries, or (b) any corporate
or non-corporate entity in which such Person, one or more Subsidiaries of
such Person, or such person and one or more Subsidiaries of such Person,
directly or indirectly, at the date of determination thereof, has an
ownership interest and 100% of the revenue of which is included in the
consolidated financial reports of such Person consistent with GAAP.
"Supplemental Warrant Agreement" means that certain Warrant Agreement
by and between the Company and the Purchaser substantially in the form
attached hereto as Exhibit I pursuant to which the Company shall at the
first Subsequent Closing issue the Supplemental Warrants to the Purchaser
or its designee.
"Supplemental Warrants" shall have the meaning set forth in the
recitals hereto.
"Tax" or "Taxes" means any federal, state, local or foreign net or
gross income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, (including taxes under Code Sec.
59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property,
personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax, governmental fee or
like assessment or charge of any kind whatsoever, including any interest,
penalty or addition thereto, whether disputed or not, imposed by any
governmental authority or arising under any Tax law or agreement,
including, without limitation, any joint venture or partnership agreement.
"Tax Return" means any return, declaration, report, claim for refund
or information or return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendments thereof.
"Third Party Notice" shall have the meaning set forth in Section 9.5.
"Title Policies" shall have the meaning set forth in Section 4.16(a).
"Transaction" means, taken together, the transactions contemplated
under this Agreement.
"Transaction Expenses" means the reasonable fees and expenses incurred
by the Purchaser, including, but not limited to, fees and expenses of legal
counsel, accountants and consultants and travel expenses in connection with
the preparation of the Agreement and the Purchaser's due diligence
examination relating to the Agreement and the transactions contemplated
hereby, including, without limitation, Xxxx-Xxxxx-Xxxxxx filing fees, if
any.
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"Warrant Agreement" means that certain Amended and Restated Warrant
Agreement by and between the Company and the Purchaser substantially in the
form attached hereto as Exhibit D, pursuant to which the Company has at the
First Closing and shall at the first Subsequent Closing, issue the Warrants
to the Purchaser.
"Warrants" shall have the meaning set forth in the recitals hereto.
"Warrant Shares" means the Common Stock issuable upon the exercise of
the Warrants and the Supplemental Warrants.
"Welfare Plan" means any "employee welfare benefit plan" as defined in
Section 3(1) of ERISA, which (A) the Company or any ERISA Affiliate
maintains, administers, contributes to or is required to contribute to, or
under which the Company or any ERISA Affiliate may incur any liability and
(B) covers any employee or former employee of the Company or any ERISA
Affiliate (with respect to their relationship with such entities).
ARTICLE II.
PURCHASE AND SALE OF SECURITIES
Section 2.1. Purchase and Sale of Securities. Subject to the terms and
conditions hereof, from time to time, at the Closings, the Company has and will
sell, convey, assign, transfer, and deliver, and the Purchaser will purchase and
acquire from the Company (i) an aggregate of 40,000 shares of Class AA Preferred
Stock (including the 11,700 shares of Class AA Preferred Stock issued to the
Purchaser on September 30, 1997), (ii) an aggregate of 35,000 shares of Class AB
Preferred Stock which shall be apportioned between the Class ABI Preferred Stock
and the Class ABII Preferred Stock as set forth in Section 10.17 and (iii) an
aggregate of 1,000,000 Warrants (subject to adjustment in accordance with the
terms of the Warrant Agreement), including the 375,000 Warrants issued to the
Purchaser on September 30, 1997 and an aggregate of up to 5,714,286 Supplemental
Warrants (subject to adjustment as set forth in the Supplemental Warrant
Agreement).
Section 2.2. Consideration. Subject to the terms and conditions hereof, at
each Closing, the Purchaser shall deliver to the Company the Purchase Price with
respect to the number of shares of Preferred Stock to be purchased and sold at
such Closing by wire transfer of immediately available funds in U.S. dollars to
the account or accounts specified by the Company.
Section 2.3. Right to Assign. The Purchaser may assign its rights and
delegate its obligations created hereby to purchase Securities in accordance
with the provisions of Section 10.7.
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ARTICLE III.
CLOSING
Section 3.1. Location of Closings. Each Closing shall be held at 9:00 a.m.
Eastern Time on the applicable Closing Date at the offices of Xxxxxx & Xxxxxxx,
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
Section 3.2. First and Second Closings.
(a) First Closing. On September 30, 1997, on terms substantially similar to
those set forth herein, the Purchaser purchased and acquired from the Company,
and the Company sold, conveyed, assigned, transferred and delivered to the
Purchaser, 11,700 shares of Class AA Preferred Stock and 375,000 Warrants, and
the Purchaser paid to the Company the Purchase Price for such shares of Class AA
Preferred Stock (the "First Closing").
(b) Second Closing. Subject to the terms and conditions hereof, on February
27, 1998, the Purchaser will purchase and acquire from the Company and the
Company will sell, convey, assign, transfer and deliver to the Purchaser, 28,300
shares of Class AA Preferred Stock and the Purchaser will pay to the Company the
Purchase Price for such shares of Class AA Preferred Stock (the "Second
Closing").
Section 3.3. Subsequent Purchases and Sales.
(a) Subject to the terms and conditions hereof, following the Second
Closing, the Company shall be obligated to sell to the Purchaser, from time to
time at one or more Subsequent Closings, an aggregate of 35,000 shares of Class
AB Preferred Stock, apportioned between the Class ABI Preferred Stock and the
Class ABII Preferred Stock as set forth in Section 10.17 (each referred to as a
"Subsequent Purchase" and, together, the "Subsequent Purchases"), subject to
satisfaction or waiver of the conditions set forth in Sections 7.1 and 7.3 and
Article VIII. Subject to the terms and conditions hereof, the Closing of any
Subsequent Purchase shall occur as soon as practicable following the date on
which the conditions set forth in Article VII and Article VIII shall have been
satisfied or duly waived and the applicable notice period referred to in Section
3.3(b) below shall have expired; provided, however, that no Subsequent Purchase
shall occur within six months following the date of the Second Closing unless
the Purchaser expressly consents in writing to any such Subsequent Purchase.
Concurrently with the earlier of (i) the first sale of Class AB Preferred Stock
(or debt instrument issued as described in Section 10.16) or (ii) the date on
which the Company receives a written notice from the Purchaser notifying the
Company that it has failed to purchase the amount of Class AB Preferred Stock
required by the terms of this Agreement (which notice shall not be delivered
prior to December 31, 1998), the Company shall issue 625,000 Warrants to the
Purchaser and shall execute and deliver the Supplemental Warrant Agreement to
14
the Purchaser and shall issue the Supplemental Warrants. The Company represents
and warrants that upon satisfaction of the conditions set forth herein, no
further action is required to permit the execution and delivery of the
Supplemental Warrant Agreement and for the Warrants and the Supplemental
Warrants to be deemed issued and outstanding.
(b) At least 20 Business Days prior to any Subsequent Purchase, the Company
shall notify (which shall be in writing and irrevocable) the Purchaser of the
anticipated date of the Subsequent Closing (which shall be a Business Day) and
the number of shares of Class AB Preferred Stock the Company is requiring the
Purchaser to purchase, which shall not be fewer than 10,000 Shares of Class AB
Preferred Stock unless such purchase is of the balance of the Class AB Preferred
Stock. The Company shall be obligated to sell to the Purchaser all of the Class
AB Preferred Stock on or before December 31, 1998.
Section 3.4. Deliveries by the Company at Closing. At each Closing, the
Company shall issue and deliver to the Purchaser:
(a) certificates evidencing the Preferred Stock to be issued and
delivered at such Closing in the name of the Purchaser (or its permitted
assignee(s)) in the respective amounts as set forth in a written notice
provided to the Company by the Purchaser, free and clear of all
Encumbrances;
(b) at the First Closing, certificates evidencing 375,000 Warrants
and, at the first Subsequent Closing, certificates evidencing 625,000
Warrants and up to 5,714,286 Supplemental Warrants, in each case in the
name of the Purchaser (or its permitted assignee(s)) in the respective
amounts as set forth in a written notice provided to the Company by the
Purchaser, free and clear of all Encumbrances; and
(c) all such other documents and instruments as the Purchaser or its
counsel shall reasonably request to consummate or evidence the Transaction.
Section 3.5. Deliveries by the Purchaser at Closing.
At each Closing, the Purchaser shall deliver to the Company:
(a) immediately available funds as provided in Section 2.2;
(b) all such other documents and instruments as the Company or its
counsel shall reasonably request to consummate or evidence the Transaction.
Section 3.6. Certificates; Opinions. At each Closing, the Purchaser and the
Company shall deliver the certificates, opinions of counsel, and other documents
described in Article VII.
Section 3.7. Ancillary Agreements. (a) At the Second Closing, the Company
and the Purchaser shall enter into the Ancillary Agreements other than the
Supplemental Warrant Agreement.
15
(b) At the first Subsequent Closing, the Company and the Purchaser
shall enter into the Supplemental Warrant Agreement.
Section 3.8. Form of Documents and Instruments. All of the documents and
instruments delivered at Closing shall be in form and substance, and shall be
executed and delivered in a manner, reasonably satisfactory to the parties'
respective counsel.
Section 3.9. Further Purchases. Provided that the Company has at such time
sold all Subsequent Purchases to the Purchaser, the Company may, at its option,
request in writing on not less than thirty (30) Business Days' notice that the
Purchaser purchase in the aggregate from the Company, in proportionate amounts
and on terms otherwise identical to the terms of the securities set forth in
Section 2.1., in addition to the Securities set forth in Section 2.1, up to an
additional 13,333 shares of Class AA Preferred Stock, up to an additional 11,667
shares of Class AB Preferred Stock apportioned between Class ABI Preferred Stock
and Class ABII Preferred Stock as set forth in Section 10.17, up to an
additional 333,250 Warrants and up to an additional 1,904,762 Supplemental
Warrants (a "Further Purchase"). The Purchaser may, in its sole discretion
accede to or refuse any such request for a Further Purchase. If the Purchaser
accepts any request for a Further Purchase, all Further Purchases shall take
place in accordance with Sections 3.3 through 3.8 as if the number of Securities
set forth in Section 3.3(a) were increased by the number of additional
Securities which the Purchaser has agreed to purchase as a Further Purchase
pursuant to this Section 3.9. Purchaser shall have a right of first refusal with
respect to any bona fide offer to purchase up to $25,000,000 of equity capital
(provided that Purchaser must respond to such offer within 30 days and if
Purchaser does not accept such offer, the Company cannot raise such capital on
terms materially less favorable to the Company without first offering the
securities again to Purchaser).
Section 3.10. Redelivery and Cancellation of Warrants. From and after the
Second Closing, in the event the Purchaser defaults in any of its obligations
hereunder to fund Subsequent Purchases (otherwise than by reason of a default of
the Company), the Purchaser shall promptly redeliver to the Company for
cancellation all Warrants (but not Supplemental Warrants) received by it in
excess of one (1) Warrant for every seventy five dollars ($75) liquidation
preference of Preferred Stock issued pursuant to this Agreement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as follows:
Section 4.1. Organization of the Company. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease, and
operate its properties and to carry on its business as presently being
conducted. No actions or proceedings to dissolve the Company are pending or, to
the knowledge of the Company, threatened. The copies of the Certificate
16
of Incorporation and Bylaws heretofore delivered by the Company to the Purchaser
are accurate and complete as of the date hereof. The Company is duly qualified
or licensed to do business as a foreign corporation and is in good standing in
each jurisdiction in which the property owned, leased, or operated by it or the
conduct of its business requires such qualification or licensing, except where
the failure to do so taken in the aggregate would not have a Material Adverse
Effect on the Company.
Section 4.2. Capitalization of the Company. (a)The authorized capital stock
of the Company as of the date hereof, consists of 49,000,000 shares of Common
Stock, par value $0.01 per share and 1,000,000 shares of preferred stock. As of
the date hereof, 11,612,594 shares of Common Stock, 11,700 shares of Class AA
Preferred Stock, 10,000 shares of Series A Preferred Stock, 8,854 shares of
Series B Preferred Stock, no shares of Series C Preferred Stock, 60,000 shares
of Series D Preferred Stock and 2,500 shares of Series E Preferred Stock were
outstanding. As of the date hereof, 379,800 shares of Common Stock are reserved
for issuance upon exercise of outstanding employee stock options, 188,540 shares
of Common Stock are reserved for issuance upon conversion of the Existing
Preferred Stock and other outstanding securities, a maximum of 60,000 shares of
Series C Preferred Stock are reserved for issuance pursuant to existing
contractual agreements and a maximum of 600,000 shares of Common Stock are
reserved for issuance upon conversion of such Series C Preferred Stock. Schedule
4.2 sets forth the beneficiaries of all such reserved shares. Schedule 4.2
contains the aggregate number of outstanding options to purchase shares of
Common Stock, the weighted average exercise price with respect to such options
and the plan or other arrangements pursuant to which such options were issued.
All outstanding shares of capital stock of the Company have been validly issued
and are fully paid and nonassessable, and no shares of capital stock of the
Company are subject to, nor have any been issued in violation of, any preemptive
or similar rights.
(b) Except as set forth above in paragraph (a) of this Section 4.2, as
contemplated by this Agreement and as set forth on Schedule 4.2 hereof, there
are outstanding (i) no shares of capital stock or other voting securities of the
Company; (ii) no securities of the Company convertible into or exchangeable for
shares of capital stock or other voting securities of the Company; (iii) no
subscriptions, options, warrants, calls, commitments, preemptive rights or other
rights of any kind to acquire from the Company, and no obligation of the Company
to issue or sell, any shares of capital stock or other voting securities of the
Company or any securities of the Company convertible into or exchangeable for
such capital stock or voting securities; and (iv) no equity equivalents, stock
appreciation rights, interests in the ownership or earnings or other similar
rights of or with respect to the Company. Except as set forth on Schedule 4.2,
there are no outstanding contractual obligations of the Company to repurchase,
redeem or otherwise acquire any shares of Common Stock or any other securities
of the type described in clauses (i)-(iv) of the preceding sentence. Except as
set forth on Schedule 4.2, there are no restrictions upon the voting or transfer
of any share of the capital stock or other voting securities of the Company
pursuant to the Certificate of Incorporation, the Existing Preferred Stock
Certificates of Designations, the Bylaws or other governing documents or any
agreement or other instrument to which the Company is a party or by which the
Company is bound other than restricted stock held by certain employees. Schedule
4.2 contains a true and
17
correct list of all persons holding restricted stock (as defined under any plan
or arrangement pursuant to which it was issued), the number of shares of
restricted stock held by such persons and the document or documents which
describe such restrictions.
Section 4.3. Authorization of Issuance. Upon consummation of the
transactions contemplated hereby, the Preferred Stock acquired by the Purchaser
from the Company will be duly authorized and validly issued, fully paid and not
subject to any preemptive or similar rights. Upon consummation of the
transactions contemplated hereunder, the Conversion Shares will be duly
authorized and reserved for issuance and upon conversion in accordance with the
terms of the Preferred Stock will be validly issued, fully paid and
nonassessable and not subject to any preemptive or similar rights. Upon the
First Closing, the Warrant Shares issuable upon exercise of the Warrants will be
duly authorized and reserved for issuance and, upon exercise of the Warrants in
accordance with the terms thereof, will be validly issued, fully paid and
nonassessable and not subject to any preemptive or similar rights. Upon the
Second Closing, the Warrant Shares issuable upon the exercise of the
Supplemental Warrants will be duly authorized and reserved for issuance and,
upon exercise of the Supplemental Warrants in accordance with the terms thereof,
will be validly issued, fully paid and nonassessable and not subject to any
preemptive or similar rights.
Section 4.4. Authorization. The Company has full corporate power and
authority to execute and deliver this Agreement and the Ancillary Agreements to
which it is a party and to consummate the transactions contemplated hereby and
thereby other than the Stockholder Approval. The execution and delivery by the
Company of this Agreement has been duly authorized by all necessary corporate
action of the Company. The execution and delivery by the Company of the
Ancillary Agreements to which it is a party, and the consummation by it of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary corporate action of the Company (other than the Stockholder Approval).
This Agreement has been duly executed and delivered by the Company and
constitutes, and each Ancillary Agreement executed or to be executed by the
Company has been, or when executed will be, duly executed and delivered by the
Company and constitutes, or when executed and delivered will constitute, a valid
and legally binding obligation of the Company, enforceable against the Company
in accordance with its terms.
Section 4.5. Noncontravention. Except as set forth on Schedule 4.5, the
execution and delivery by the Company of this Agreement and the Ancillary
Agreements and the performance by it of the transactions contemplated hereby and
thereby (including the conversion/exercise of all of the Securities acquired or
to be acquired by the Purchaser hereunder) do not and will not (i) conflict with
or result in a violation of any provision of the Certificate of Incorporation or
the Bylaws, or the charter, bylaws, or other governing instruments of any of its
Subsidiaries, (ii) conflict with or result in a violation of any provision of,
or constitute (with or without the giving of notice or the passage of time or
both) a default under, or give rise (with or without the giving of notice or the
passage of time or both) to any loss of a benefit which would have a Material
Adverse Effect, or of any event of default, right of termination, cancellation,
or acceleration under, any Material Agreement including, without limitation, the
18
Indenture, (iii) result in the creation or imposition of any Encumbrance (other
than a Permitted Encumbrance) upon the properties of the Company or any of its
Subsidiaries, or (iv) violate any Applicable Law binding upon the Company or any
of its Subsidiaries. Schedule 4.5 sets forth, in reasonable detail, the
calculations of the Company demonstrating that the Company is currently in
compliance with the Indenture and that the transactions contemplated hereby do
not and will not result in an event of default under or breach of the terms of
the Indenture, or give rise to a "Change of Control Offer" as defined in the
Indenture.
Section 4.6. Consents and Approvals. No consent, approval, order,
authorization of, or declaration, filing, or registration with, any Governmental
Entity is required to be obtained or made by the Company or any of its
Subsidiaries in connection with the execution and delivery by the Company of
this Agreement and the Ancillary Agreements to which it is a party or the
consummation of the transactions contemplated hereby and thereby, other than (i)
filings under the HSR Act and expiration or termination of any applicable
waiting period required thereunder, (ii) the filing of the Certificate
Amendments with the Secretary of State of the State of Delaware, and (iii)
filings under the Exchange Act. Except as set forth on Schedule 4.6, no consent
or approval of any person other than any Governmental Entity or The Nasdaq Stock
Market, Inc. is required to be obtained or made by the Company or any of its
Subsidiaries in connection with the execution and delivery by the Company of
this Agreement and the Ancillary Agreements to which it is a party or the
consummation of the transactions contemplated hereby and thereby.
Section 4.7. Subsidiaries. (a) Except as otherwise set forth on Schedule
4.7, the Company does not own, directly or indirectly, any of the capital stock
or other securities of any corporation or partnership or have any direct or
indirect equity or ownership interest of more than five percent in any other
person, other than its Subsidiaries. Schedule 4.7 lists each such Subsidiary of
the Company as of the date hereof and its respective jurisdiction of
incorporation or formation. As set forth on Schedule 4.7, each Subsidiary of the
Company is a corporation, partnership or limited liability company duly
organized or formed, as the case may be, validly existing, and in good standing
under the laws of the jurisdiction of its incorporation or formation. Each such
Subsidiary has all requisite organizational authority to own, lease, and operate
its properties and to carry on its business as now being conducted. Except as
otherwise indicated on Schedule 4.7, no actions or proceedings to dissolve any
Subsidiary of the Company are pending.
(b) Except as otherwise indicated on Schedule 4.7 or under the Securities
Act or the rules and regulations promulgated thereunder, all the outstanding
capital stock or other equity interests of each Subsidiary of the Company is
owned directly or indirectly by the Company, free and clear of all Encumbrances
and restrictions on voting, sale, transfer or disposition. All outstanding
shares of capital stock of each Subsidiary of the Company have been validly
issued and are fully paid and nonassessable. No shares of capital stock or other
equity interests of any Subsidiary of the Company are subject to, nor have any
been issued in violation of, preemptive or similar rights.
19
(c) Except for shares of Common Stock owned by the Company or any
Subsidiary of the Company and as set forth above on Schedule 4.7, there are
outstanding (i) no shares of capital stock or other voting securities of any
Subsidiary of the Company; (ii) no securities of any Subsidiary of the Company
convertible into or exchangeable for shares of capital stock or other voting
securities of any of any Subsidiary of the Company; (iii) no subscriptions,
options, warrants, calls, commitments, preemptive rights or other rights of any
kind to acquire from any Subsidiary of the Company, and no obligation of any
Subsidiary of the Company to issue or sell, any shares of capital stock or other
voting securities of any Subsidiary of the Company or any securities of any
Subsidiary of the Company convertible into or exchangeable for such capital
stock or voting securities; and (iv) no equity equivalents, stock appreciation
rights, interests in the ownership or earnings, or other similar rights of or
with respect to any Subsidiary of the Company. There are no outstanding
contractual obligations of any Subsidiary of the Company to repurchase, redeem
or otherwise acquire any shares of capital stock or any other securities of the
type described in clauses (i)-(iv) of the preceding sentence.
Section 4.8. Employee Benefit Plans and Other Agreements. (a) Disclosure;
Delivery of Copies of Relevant Documents and Other Information. Schedule 4.8
contains a complete list of Employee Plans which cover or have covered present
or former employees, directors or consultants of the Company or any of its
Subsidiaries (with respect to their relationship with such entities) (each, a
"Company Employee Plan"). True and complete copies of each of the following
Company Employee Plan documents have been delivered or made available by the
Company to the Purchaser: (i) each Company Employee Plan document (and, if
applicable, related trust agreements and all annuity contracts or other funding
instruments) and all amendments thereto, all reasonably available written
descriptions thereof which have been distributed to the Company's employees and
those of its ERISA Affiliates and a complete description of any Company Employee
Plan, which is not in writing (including a description of the number and level
of employees covered thereby), (ii) the most recent determination or opinion
letter issued by the Internal Revenue Service with respect to each Pension Plan
and each Welfare Plan (other than a Multiemployer Plan), which covers or has
covered employees of the Company or any of its ERISA Affiliates (with respect to
their relationship with such entities), (iii) for the three most recent plan
years, any Annual Reports on Form 5500 Series required to be filed with any
governmental agency for each Pension Plan which covers or has covered employees
or former employees of the Company or any of its ERISA Affiliates (with respect
to their relationship with such entities) (each, a "Company Pension Plan"), (iv)
any actuarial reports prepared for the last three plan years for each Pension
Plan which covers or has covered present or former employees, directors or
consultants of the Company or any of its Subsidiaries (with respect to their
relationship with such entities), (v) a tabulation of age, salary, service and
related data as of the last day of the last plan year for employees of the
Company or any of its Subsidiaries and (vi) a description setting forth the
amount of any liability of the Company or any of its Subsidiaries as of the
Closing Date for payments more than thirty (30) calendar days past due with
respect to each Welfare Plan which covers or has covered employees or former
employees of the Company or any of its Subsidiaries.
20
(b) Employee Plans.
(i) Pension Plans.
(A) The funding method used in connection with any Pension Plan which is
subject to the minimum funding requirements of ERISA is acceptable and the
actuarial assumptions used in connection with funding each such plan are
reasonable. As of the last day of the last plan year of each Pension Plan and as
of the Closing Date, the "amount of unfunded benefit liabilities" as defined in
Section 4001(a)(18) of ERISA (but excluding from the definition of "current
value" of "assets" of such Pension Plan, accrued but unpaid contributions) did
not and will not exceed zero. No "accumulated funding deficiency" (for which an
excise tax is due or would be due in the absence of a waiver) as defined in
Section 412 of the Code or as defined in Section 302(a)(2) of ERISA, whichever
may apply, has been incurred with respect to any Pension Plan with respect to
any plan year, whether or not waived. Neither the Company nor any ERISA
Affiliate has failed to pay when due any "required installment", within the
meaning of Section 412(m) of the Code and Section 302(e) of ERISA, whichever may
apply, with respect to any Pension Plan. Neither the Company nor any ERISA
Affiliate is subject to any lien imposed under Section 412(n) of the Code or
Section 302(f) of ERISA, whichever may apply, with respect to any Pension Plan.
Neither the Company nor any ERISA Affiliate has any liability for unpaid
contributions with respect to any Pension Plan.
(B) Neither the Company nor any ERISA Affiliate is required to provide
security to any Company Pension Plan under Section 401(a)(29) of the Code.
(C) Any Company Pension Plan and each related trust agreement, annuity
contract or other funding instrument is qualified and tax-exempt under the
provisions of Code Sections 401(a) (or 403(a), as appropriate) and 501(a) and
has been so qualified during the period from its adoption to date.
(D) Any Company Pension Plan and each related trust agreement, annuity
contract or other funding instrument presently complies and has been maintained
in compliance, in all material respects, with its terms and, both as to form and
in operation, with the requirements prescribed by any and all statutes, orders,
rules and regulations which are applicable to such plans, including without
limitation ERISA and the Code.
(E) The Company has paid all premiums (and interest charges and penalties
for late payment, if applicable) due the PBGC with respect to each Company
Pension Plan for each plan year thereof for which such premiums are required.
Neither the Company nor any ERISA Affiliate has engaged in, or is a successor or
parent corporation to an entity that has engaged in, a transaction described in
Section 4069 of ERISA. There has been no "reportable event" (as defined in
Section 4043(b) of ERISA and the PBGC regulations under such Section) with
respect to any Pension Plan. No filing has been made by the Company or any ERISA
Affiliate with the PBGC, and no proceeding has been commenced by the PBGC, to
terminate any Pension Plan. No condition exists and no event has occurred
21
that could constitute grounds for the termination of any Pension Plan by the
PBGC. Neither the Company nor any ERISA Affiliate has, at any time, (1) ceased
operations at a facility so as to become subject to the provisions of Section
4062(e) of ERISA, (2) withdrawn as a substantial employer so as to become
subject to the provisions of Section 4063 of ERISA, or (3) ceased making
contributions on or before the Closing Date to any Pension Plan subject to
Section 4064(a) of ERISA to which the Company or any ERISA Affiliate made
contributions during the six years prior to the Closing Date.
(ii) Multiemployer Plans.
(A) Neither the Company nor any ERISA Affiliate has, at any time, withdrawn
from a Multiemployer Plan in a "complete withdrawal" or a "partial withdrawal"
as defined in Sections 4203 and 4205 of ERISA, respectively, so as to result in
a liability, contingent or otherwise (including without limitation the
obligations pursuant to an agreement entered into in accordance with Section
4204 of ERISA), of the Company or any ERISA Affiliate. Neither the Company nor
any ERISA Affiliate has engaged in, or is a successor or parent corporation to
an entity that has engaged in, a transaction described in Section 4212(c) of
ERISA.
(B) All contributions required to be made by the Company or any ERISA
Affiliate to any Multiemployer Plan have been made when due.
(C) If, as of the Closing Date, the Company (and all ERISA Affiliates) were
to withdraw from any Multiemployer Plans to which it (or any of them) has
contributed or been obligated to contribute, it (and they) would incur no
liabilities to such plans under Title IV of ERISA.
(D) To the best of the Company's knowledge, with respect to any
Multiemployer Plan: (1) no such Multiemployer Plan has been terminated or has
been in reorganization under ERISA so as to result, directly or indirectly, in
any liability, contingent or otherwise, of the Company or any ERISA Affiliate
under Title IV of ERISA; (2) no proceeding has been initiated by any person
(including the PBGC) to terminate such Multiemployer Plan; (3) a "mass
withdrawal", as defined in PBGC Reg. Section 2640.7, with respect to such
Multiemployer Plan has not occurred; (4) the Company and the ERISA Affiliates
have no reason to believe that such Multiemployer Plan will be terminated or
will be reorganized under ERISA or that a "mass withdrawal", as defined in PBGC
Reg. Section 2640.7, will occur with respect to such Multiemployer Plan; and (5)
the Company and the ERISA Affiliates do not expect to withdraw in a "complete
withdrawal" or "partial withdrawal" from such Multiemployer Plan.
22
(iii) Welfare Plans
(A) Each Welfare Plan presently complies and has been maintained in
compliance, in all material respects, with its terms and, both as to form and
operation, with the requirements prescribed by any and all statutes, orders,
rules and regulations which are applicable to such Welfare Plan, including
without limitation ERISA and the Code.
(B) None of the Company, any ERISA Affiliate or any Welfare Plan has any
present or future obligation to make any payment to, or with respect to any
present or former employee of the Company or any ERISA Affiliate pursuant to,
any retiree medical benefit plan, or other retiree Welfare Plan, and no
condition exists which would prevent the Company from amending or terminating
any such benefit plan or Welfare Plan.
(C) Each Welfare Plan which is a "group health plan," as defined in Section
607(1) of ERISA, has been operated in material compliance with provisions of
Part 6 of Title I, Subtitle B of ERISA and 4980B of the Code at all times.
(D) Neither the Company nor any ERISA Affiliate has incurred any liability
with respect to any Welfare Plan that is a "multiemployer plan", as defined in
Section 3(37) of ERISA, under the terms of such Welfare Plan, any collective
bargaining agreement or otherwise resulting from any cessation of contributions,
cessation of obligation to make contributions or other form of withdrawal from
such Welfare Plan.
(E) If, as of the Closing Date, the Company (and all ERISA Affiliates) were
to have a cessation of contribution, cessation of obligations to make
contribution or other form of withdrawal from all Welfare Plans that are
"multiemployer plans", as defined in Section 3(37) of ERISA, it (and they) would
incur no material liabilities with respect to any such Welfare Plans under the
terms of such Welfare Plans, any collective bargaining agreement or otherwise.
(iv) Benefit Arrangements. Each Benefit Arrangement has been maintained in
all material respects in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations which are
applicable to such Benefit Arrangement, including without limitation, the Code.
Except as set forth in Schedule 4.8 and except as provided by law, the
employment of all persons presently employed or retained by the Company is
terminable at will.
(v) Unrelated Business Taxable Income. No Employee Plan (or trust or other
funding vehicle pursuant thereto) is subject to any tax under Code Section 511.
(vi) Deductibility of Payments. There is no contract, agreement, plan or
arrangement covering any present or former employee, director or consultant of
the Company or any of its Subsidiaries (with respect to his or her relationship
with such entities) that, individually or collectively, provides for the payment
by the Company of any amount (i) that is not deductible under Section 162(a)(1),
162(m) or 404 of the Code or (ii) that is an "excess parachute payment" pursuant
to Section 280G of the Code.
(vii) Fiduciary Duties and Prohibited Transactions. Neither the Company nor
any plan fiduciary of any Welfare Plan or Pension Plan, has engaged in any
transaction in violation of Sections 404 or
23
406 of ERISA or any "prohibited transaction," as defined in Section 4975(c)(1)
of the Code, for which no exemption exists under Section 408 of ERISA or Section
4975(c)(2) or (d) of the Code, or has otherwise violated the provisions of Part
4 of Title I, Subtitle B of ERISA. The Company has not knowingly participated in
a violation of Part 4 of Title I, Subtitle B of ERISA by any plan fiduciary of
any Welfare Plan or Pension Plan and has not been assessed any civil penalty
under Section 502(l) of ERISA.
(viii) Validity and Enforceability. Each Welfare Plan, Pension Plan,
related trust agreement, annuity contract or other funding instrument is legally
valid and binding and in full force and effect.
(ix) Litigation. There is no action, order, writ, injunction, judgment or
decree outstanding or claim, suit, litigation, proceeding, arbitral action,
governmental audit or investigation relating to or seeking benefits under any
Employee Plan that is pending, threatened or anticipated against the Company,
any ERISA Affiliate or any Employee Plan.
(x) No Amendments. Neither the Company nor any ERISA Affiliate has any
announced plan or legally binding commitment to create any additional Employee
Plans which are intended to cover present or former employees, directors or
consultants of the Company or any of its Subsidiaries (with respect to their
relationship with such entities) or to amend or modify any existing Company
Employee Plan.
(xi) No Other Material Liability. No event has occurred in connection with
which the Company or any ERISA Affiliate or any Employee Plan, directly or
indirectly, could be subject to any material liability (A) under any statute,
regulation or governmental order relating to any Employee Plan or (B) pursuant
to any obligation of the Company to indemnify any person against liability
incurred under any such statute, regulation or order as they relate to the
Employee Plans.
(xii) Unpaid Contributions. Neither the Company nor any ERISA Affiliate has
any liability for unpaid contributions under Section 515 of ERISA with respect
to any Pension Plan, Multiemployer Plan or Welfare Plan.
(xiii) Insurance Contracts. Neither the Company nor any Employee Plan
(other than a Multiemployer Plan) holds as an asset of any Employee Plan any
interest in any annuity contract, guaranteed investment contract or any other
investment or insurance contract issued by an insurance company that is the
subject of bankruptcy, conservatorship or rehabilitation proceedings.
(xiv) No Acceleration or Creation of Rights. Except as disclosed on
Schedule 4.8, neither the execution and delivery of this Agreement by the
Company nor the consummation of the transactions contemplated hereby (including
the conversion/exercise of all of the Securities acquired or to be acquired by
the Purchaser hereunder) will result in the acceleration or creation of any
rights of any person to
24
benefits under any Employee Plan (including, without limitation, the
acceleration of the vesting or exercisability of any stock options, the
acceleration of the vesting of any restricted stock, the acceleration of the
accrual or vesting of any benefits under any Pension Plan or the acceleration or
creation of any rights under any severance, parachute or change in control
agreement).
(xv) No Severance Payments. There are no agreements, including, without
limitation, any employment or consulting agreements to which the Company or any
of its Subsidiaries is a party that will require the Company or any of its
Subsidiaries to make a severance payment or incur or assume any other liability
as a result of the transactions contemplated by this Agreement and the Ancillary
Agreements, including, without limitation, any obligation to make any payments
upon the occurrence of a change of control.
Section 4.9. SEC Filings. The Company has filed with the Commission all
forms, reports, schedules, statements, and other documents required to be filed
by it under the Securities Act, the Exchange Act, and all other Federal
securities laws and the rules and regulations promulgated thereunder, during the
period from June 1996 to the date of this Agreement (the "SEC Filings"). A copy
of the unaudited consolidated balance sheet and statement of operations of the
Company as at and for the period ended on November 28, 1997 (the "November
Financial Statements") is annexed to Schedule 4.9. Each SEC Filing and the
November Financial Statements was prepared in accordance with, and at the time
of filing complied (or will comply) in all material respects with, the
requirements of the Securities Act, the Exchange Act or other applicable Federal
securities law and the rules and regulations promulgated thereunder, as the case
may be, except as the same was corrected or superseded in a subsequent SEC
Filing filed with the Commission. Neither the SEC Filings nor the November
Financial Statements, including, without limitation, any financial statements or
schedules included therein, at the time filed, contained any untrue statement of
a material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements contained therein, in light
of the circumstances under which they were made, not misleading, except as the
same was corrected or superseded in a subsequent SEC Filing filed with the
Commission. The consolidated historical financial statements (including, in each
case, any related notes thereto) contained in the SEC Filings and the November
Financial Statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis (except as
described therein) and each presents fairly the consolidated financial position
of the Company and its consolidated Subsidiaries at the respective dates thereof
and the consolidated results of its operations and changes in cash flows for the
period indicated (subject to normal year-end audit adjustments in the case of
any unaudited interim financial statements).
Section 4.10. Absence of Undisclosed Liabilities; Guarantees. (a) Except as
set forth on Schedule 4.10, neither the Company nor any of its Subsidiaries has
any Liabilities which are reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company (including any liabilities,
tax or otherwise, related to the "roll-up" of the homebuilding operations into
the Company).
25
(b) Except as set forth on Schedule 4.10, neither the Company nor any
of its Subsidiaries is a party to: (i) any Material Agreement relating to the
making of any advance to, or investment in, any Person other than advances or
investments made by the Company to or in its Subsidiaries; or (ii) any Material
Agreement, other than from the Company with respect to its Subsidiaries
providing for a guaranty or other contingent liability with respect to any
indebtedness for money borrowed or similar obligation of any Person.
Section 4.11. Absence of Certain Changes. Except as set forth on Schedule
4.11 or disclosed in any SEC Filings or the November Financial Statements, since
December 31, 1996: (i) there has not been any event or occurrences, or series of
events or occurrences, which have had, or may have, a Material Adverse Effect on
the Company, (ii) neither the Company nor any of its Subsidiaries has incurred
any liability or engaged in any transaction that is material to the Company and
its Subsidiaries taken as a whole, or entered into any Material Agreement,
except in the ordinary course of business consistent with past practice, or as
contemplated by this Agreement, (iii) neither the Company nor any of its
Subsidiaries is in default under (and no event has occurred which with the lapse
of time or action by a third party could result in a default under) any Material
Agreement, (iv) except for the dividends on the Common Stock and the dividends
paid on the Class AA Preferred Stock, there has not been any declaration,
setting aside or payment of any dividend or other distribution with respect to
the Preferred Stock or the Existing Preferred Stock, (v) there has not been any
commitment, contractual obligation, borrowing, capital expenditure or
transaction (each, a "Commitment") entered into by the Company or any of its
Subsidiaries, other than Commitments which would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect on the
Company, or (vi) there has not been any change in the Company's accounting
principles, practices or methods which would, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect on the Company.
Section 4.12. Compliance With Laws. Except as set forth on Schedule 4.12,
(i) the Company and its Subsidiaries are in compliance with all Applicable Laws
other than violations which do not and will not, individually or in the
aggregate, have a Material Adverse Effect on the Company; (ii) each of the
Company and its Subsidiaries has obtained and holds all material permits,
licenses, variances, exemptions, orders, franchises, approvals and
authorizations of all Governmental Entities necessary for the lawful conduct of
its business as currently conducted or the lawful ownership, use and operation
of its assets; (iii) neither the Company nor any of its Subsidiaries has
received any written notice of violation of any Applicable Law, which has not
been dismissed or otherwise disposed of, that the Company or such Subsidiary has
not so complied other than with respect to violations of Applicable Law which do
not and will not, individually or in the aggregate, have a Material Adverse
Effect on the Company; and (iv) neither the Company nor any of its Subsidiaries
is charged or, to the best knowledge of the Company, threatened with, or, to the
best knowledge of the Company, under investigation with respect to, any
violation of any Applicable Law, including Environmental Laws, relating to any
aspect of the business of the Company or any of its Subsidiaries other than
violations which do not and will not, individually or in the aggregate, have a
Material Adverse Effect on the Company.
26
Section 4.13. Litigation. Schedule 4.13 sets forth all Proceedings pending
or, to the best knowledge of the Company, threatened against or involving the
Company or any of its Subsidiaries (or any of their respective directors or
officers in connection with the business or affairs of the Company or such
Subsidiary) or any properties or rights of the Company or any of its
Subsidiaries as of the date hereof. Except as set forth on Schedule 4.13, any
and all liabilities of the Company and its Subsidiaries under such Proceedings
that are probable and subject to reasonable estimation within the meaning of
GAAP are adequately covered (except for standard deductible amounts) by the
existing insurance maintained by the Company or estimates in accordance with
GAAP for the uninsured costs thereof are reflected in the financial statements
of the Company. Except as set forth on Schedule 4.13, the Company has no
knowledge of any facts that are likely to give rise to any additional
Proceedings that would reasonably be expected to have a Material Adverse Effect
on the Company. As of the date hereof, there are no Proceedings (including with
respect to Environmental Laws) pending or, to the best knowledge of the Company,
threatened seeking to restrain, prohibit, or obtain damages or other relief in
connection with this Agreement, the Ancillary Agreements to which the Company is
a party or the transactions contemplated hereby or thereby.
Section 4.14. True and Complete Disclosure. The representations and
warranties of the Company set forth with this Agreement, the information
included in the Schedules, and in any certificates delivered pursuant to Section
7.3 of this Agreement, when taken together, are true and accurate in all
material respects on the date as of which such information is dated and not
incomplete by omitting to state any material fact necessary to make the
statements of fact contained therein, in the light of the circumstances under
which they were made, not misleading at such date. All financial projections
prepared and furnished by the Company to the Purchaser were prepared in good
faith on the basis of assumptions believed to be reasonable at the time such
projections were prepared.
Section 4.15. Taxes. (a) Except as set forth on Schedule 4.15:
(i) The Company and all of its Subsidiaries have filed all Tax Returns
required to be filed by them on or before the Closing Date (taking into
account all extensions for filing such Tax Returns) and all such Tax
Returns are correct and complete in all material respects. Each affiliated
group with which any of the Company and its Subsidiaries files a
consolidated or combined Tax Return has filed all such Tax Returns that it
was required to file for each taxable period during which any of the
Company and its Subsidiaries was a member of the group. All such
consolidated and combined Tax Returns were correct and complete in all
materials respects;
(ii) All Taxes due and payable by the Company and/or its Subsidiaries
(whether or not shown on any Tax Return) have been timely paid in full. All
income Taxes owed by any affiliated group with which any of the Company and
its Subsidiaries files a consolidated or combined Tax Return (whether or
not shown on any Tax Return) have been paid for each taxable period during
which any of the Company and its Subsidiaries was a member of the group;
27
(iii) There are no liens or encumbrances related to Taxes on any of
the assets of the Company or its Subsidiaries (other than for current Taxes
not yet due and payable);
(iv) The Company and its Subsidiaries have withheld all Taxes required
to have been withheld and paid by them or on their behalf in connection
with amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party, and such withheld Taxes have
either been duly paid to the proper governmental authority or set aside in
accounts for such purpose;
(v) None of the Company or any of its Subsidiaries (A) has been a
member of any affiliated group filing a consolidated federal income Tax
Return (other than (i) a group the common parent of which is the Company or
(ii) a former group of members of which are owned by the Company) and (B)
has any liability for the Taxes of any person as defined in Section
7701(a)(1) of the Code (other than the Company and its Subsidiaries) under
Treas. Reg. ss. 1.1502-6 (or any similar provision of state, local, or
foreign tax), as a transferee or successor, by contract, or otherwise;
(vi) The charges, accruals and reserves for Taxes (including deferred
Taxes) currently reflected on the Financial Statements in accordance with
GAAP are adequate in the reasonable estimation of the Company to cover all
unpaid Taxes accruing or payable by the Company and its Subsidiaries in
respect of taxable periods that end on or before the Closing Date and for
any taxable periods that begin before the Closing Date and end thereafter
to the extent such Taxes are attributable to the portion of such period
ending on the Closing Date (determined under the closing of the books
method of allocation);
(vii) The Company and its Subsidiaries have no Tax deficiency or claim
assessed or, to the best of the Company's knowledge, proposed or threatened
(whether orally or in writing) against any of them, except to the extent
that adequate liabilities or reserves with respect thereto are accrued on
the Financial Statements in accordance with GAAP or (i) such deficiency or
claim is being contested in good faith by appropriate proceedings, (ii) no
such accrual is required by GAAP and (iii) the nature and amount of the
disputed Tax is set forth on Schedule 4.15.
(viii) None of the Company or any of its Subsidiaries has made any
payments, nor is any of them obligated to make any payments, and is not a
party to any agreements that could obligate it to make any payments, that
will not be deductible under Code Section 280G.
(ix) None of the assets of the Company (a) is property that is
required to be treated as being owned by any other person pursuant to the
so-called safe harbor lease provisions of former Section 168(f)(8) of the
Code, or (b) directly or indirectly secures any debt the interest on which
is tax-exempt under Section 103(a) of the Code, or (c) is "tax-exempt use
property" within the meaning of Section 168(h) of the Code.
28
(x) Except as set forth on Schedule 4.7, none of the Company or any of
its Subsidiaries is subject to any joint venture, partnership or other
arrangement or contract which is treated as a partnership for federal
income tax purposes.
(b) Schedule 4.15 lists (a) elections or material consents with respect to
Taxes affecting the Company or any of its Subsidiaries as of the date hereof,
and (b) all federal, state, local, and foreign Tax Returns that have been
audited, and indicates those Tax Returns that currently are the subject of
audit. Correct and complete copies of all federal Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to by the
Company or any of its Subsidiaries since January 1, 1994 have been delivered to
Purchaser.
Section 4.16. Properties. (a) Permits. The Company possesses all material
Permits and waivers necessary for the lawful conduct of its Business as
currently conducted, the absence of which would materially adversely affect the
Real Property or the Business of the Company. Each of the material Permits is
listed on Schedule 4.16(a) hereto. All material Permits are in full force and
effect, no material violations have occurred with respect thereto, and to the
Company's knowledge no basis exists for any limitation, revocation, or
withdrawal thereof or any denial of any extension or renewal with respect
thereto.
(b) Real Property. Schedule 4.16(b) hereto sets forth each parcel of real
property that the Company owns as of the date hereof (collectively, the "Real
Property"). The Real Property has all necessary access to and from public
highways, streets, and roads and no pending or to the best knowledge of the
Company, threatened proceeding or other fact or condition exists that could
limit or result in the termination of such access. The Real Property is
connected to and serviced by electric, gas, sewage, telephone, and water
facilities in all areas where such connections and services are available, which
facilities are in compliance, in all material respects, with all Applicable Laws
and installation and connection charges with respect thereto have been paid in
full.
(c) Under the heading "Real Property Leases", Schedule 4.16(c) hereto
describes each agreement, arrangement, contract, commitment, or lease (the "Real
Property Leases") pursuant to which the Company is the lessor or the lessee with
respect to any real property (the "Leased Real Property") as of the date hereof.
As to each Real Property Lease (a) the Company has neither delivered nor
received notice that any material breach or material event of default exists,
and (b) no condition or event of default by the Company or any other Person.
(d) Land Contracts. Under the heading "Land Contracts", Schedule 4.16(d)
hereto lists all written and oral agreements, arrangements, contracts, and
commitments to which the Company is a party or entered into on behalf thereof
pursuant to which the Company has any material obligation or right to purchase
any developed or undeveloped real property (the "Land Contract Property") as of
the date hereof. Each such parcel of developed real property included in the
Land Contract Property satisfies all of the representations and warranties set
forth herein concerning the Real Property.
29
(e) Good and Marketable Title. The Company has good and marketable title in
fee simple to its Real Property, subject to the Permitted Encumbrances and upon
acquisition of the Land Contract Property, the Land Contract Property will
likewise be owned in fee and the Company shall have good and marketable title
thereto subject only to Permitted Encumbrances and the Encumbrances listed on
Schedule 4.16(e).
(f) No Breach or Default. Except as set forth in Schedule 4.16(f) hereto,
with respect to any agreements, arrangements, contracts, covenants, conditions,
deeds, deeds of trust, rights-of-way, easements, mortgages, restrictions,
surveys, title insurance policies, and other documents granting to the Company
title to or an interest in or otherwise affecting its Real Property, no material
breach or event of default has occurred nor has any event occurred that with the
giving of notice, the lapse of time, or both would constitute a material breach
or event of default, by the Company or, to the best knowledge of the Company,
any other Person.
(g) No Condemnation. No condemnation, eminent domain, or similar proceeding
exists, is pending or, to the best knowledge of the Company is threatened with
respect to, or that could affect, in any material respect any Real Property or
Leased Real Property.
(h) Compliance with Laws. The buildings and improvements on the Real
Property and the Leased Real Property and the subdivision and improvements of
the Real Property do not violate, in any material respect (i) any Applicable
Law, including any building, set-back, or zoning law, ordinance, regulation, or
statute, or other governmental restriction in the nature thereof, or (ii) any
restrictive covenant affecting any such property.
(i) Parties in Possession. There are no parties in possession (other than
in the ordinary course of the Company's business) of any material portion of the
Real Property as lessees, tenants at sufferance, or trespassers.
(j) Unpaid Obligations. Except as set forth on Schedule 4.16(j), there are
not material unpaid charges, debts, liabilities, claims or obligations arising
from the construction, occupancy, ownership, use, or operation of the Real
Property. No such Real Property is subject to any condition or obligation to any
material Governmental Entity or other person requiring the owner or any
transferee thereof to donate land, money or other property or to make off-site
public improvements.
(k) Assessments. Except as set forth on Schedule 4.16(k), no
developer-related material charges or assessments for public improvements or
otherwise made against the Real Property or any lots included therein are
unpaid, including without limitation those for construction of sewer lines,
water lines, storm drainage systems, electric lines, natural gas lines, streets
(including perimeter streets), roads and curbs.
(l) Subdivision Standards. The Real Property and all lots included therein
conform in all material respects to the appropriate governmental authority's
subdivision standards.
30
(m) Moratoria. There is no moratorium applicable to any of the Real
Property on (i) the issuance of building permits for the construction of houses,
or certificates of occupancy therefor or (ii) the purchase of sewer or water
taps.
(n) Construction Conditions. The lots included in the Real Property are
stable and otherwise suitable in all material respects for the construction of a
residential structure by customary means and without extraordinary site
preparation measures.
(o) Environmental Matters. The Real Property does not contain wetlands or a
level of radon above action levels of the U.S. Environmental Protection Agency
and is not located within a "critical", "preservation", "conservation", or
similar type of area except where such conditions are not reasonably expected to
have a Material Adverse Effect on the Company. No material portion of the Real
Property is situated within a "noise cone" such that the Federal Housing
Administration will not approve mortgages due to the noise level classification
of such Real Property.
(p) Claims. No material Proceeding is pending or, to the best knowledge of
the Company, threatened which involves any of the Real Property or against the
Company with respect to any of the Real Property; all of the Real Property and
the lots included therein are in compliance, in all material respects, with all
applicable zoning and subdivision ordinances; none of the development-site
preparation and construction work performed on the Real Property has
concentrated or diverted surface water or percolating water improperly onto or
from the Real Property in any material respect.
(q) Third Party Rights. The Company has not granted to any Person any
contract or other right to the use of any portion of the Real Property or to the
furnishing or use of any facility or amenity on or relating to the Real Property
other than rights granted to individual homebuyers to purchase lots in the
ordinary course of business.
(r) Zoning. All of the Real Property is zoned to permit single-family home
construction and occupancy thereon, except as set forth on Schedule 4.16(s).
(s) No Foreign Sellers. The Company is not a "foreign person" within the
meaning of Sections 1445 and 7701 of the Code.
Section 4.17. Environmental Matters. (a) For purposes of this Section, the
term "Company" shall include (i) the Company, (ii) any Subsidiaries of the
Company, (iii) all partnerships, joint ventures and other entities or
organizations in which Company was at any time or is a partner, joint venturer,
member or participant, and (iv) all predecessor or former corporations,
partnerships, joint ventures, organizations, businesses or other entities,
whether in existence as of the date hereof or at any time prior to the date
hereof, the assets or obligations of which have been acquired or assumed by
Company or the Business or to which Company or the Business has succeeded.
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(b) Except as disclosed in Schedule 4.17, the Company and its Subsidiaries:
(i) are, and within the period of all applicable statutes of limitation have
been, in compliance with all applicable Environmental Laws; (ii) hold all
Environmental Permits (each of which is in full force and effect) required for
any of their current operations or for any property owned, leased or otherwise
operated by any of them; (iii) are, and within the period of all applicable
statutes of limitation have been, in compliance with all of their Environmental
Permits; and (iv) reasonably believe that each of their Environmental Permits
will be renewed before the expiration of such Environmental Permit currently in
effect, except where the failure to so comply with such Environmental Laws, hold
or comply with such Environmental Permits or timely renew such Environmental
Permits is not reasonably expected to have a Material Adverse Effect on the
Company. With respect to the Company's reasonably foreseeable future operations,
it does not anticipate any issues arising under Environmental Laws that would
prevent the Company from receiving Permits that are necessary to allow it to
conduct its Business.
(c) Except as set forth on Schedule 4.17, the Company and its Subsidiaries
have not received any notice of alleged, actual or potential responsibility for,
or any inquiry or investigation regarding, any Environmental Condition except
where such Environmental Condition is not reasonably expected to have a Material
Adverse Effect on the Company. The Company has not received any notice of any
other claim, demand or action by any individual or entity alleging any actual or
threatened injury or damage to any person, property, natural resource or the
environment arising from or relating to any Release or threatened Release of any
Hazardous Materials at, on, under, in or from any Facility or any former
Facilities, or in connection with any operations or activities of the Company or
any of its Subsidiaries except with respect to any claim, demand or action which
is not reasonably expected to have a Material Adverse Effect on the Company.
(d) Except as disclosed in Schedule 4.17 or with respect to such matters as
have been fully and finally resolved and as to which there are no remaining
obligations known or reasonably anticipated, neither the Company nor any of its
Subsidiaries has entered into or agreed to any consent decree, order, or
settlement or other agreement, nor is subject to any judgment, decree, or order
or other agreement, in any judicial, administrative, arbitral, or other forum,
relating to compliance with or liability under any Environmental Law, except
where such obligations, consent decrees, orders, settlement or other agreements
is not reasonably expected to have a Material Adverse Effect on the Company.
(e) Except as disclosed in Schedule 4.17 or for actions of third parties
occurring after the Company's or any of its Subsidiaries disposition of any real
property formerly owned or leased by the Company or any of its Subsidiaries,
Hazardous Materials have not been disposed of, emitted, discharged, transported
or otherwise Released or threatened to be Released, to or at any real property
presently or formerly owned or leased by the Company or any of its Subsidiaries,
or, to the knowledge of the Company, any other location, which Hazardous
Materials are reasonably expected to (i) give rise to liability of the Company
32
or any of its Subsidiaries under any applicable Environmental Law, except where
such liability is not reasonably expected to have a Material Adverse Effect on
the Company, or (ii) interfere with the Company's or any of its Subsidiaries'
continued operations, except where such interference is not reasonably expected
to have a Material Adverse Effect on the Company or (iii) impair the fair
saleable value of any real property owned or leased by the Company or any of its
Subsidiaries, except for such impairment as is not reasonably expected to have a
Material Adverse Effect on the Company.
(f) Except as disclosed in Schedule 4.17, neither the Company nor any of
its Subsidiaries has assumed or retained, whether by contract or by operation of
law in connection with the sale or transfer of any assets or business,
liabilities under any applicable Environmental Law arising from or associated
with or otherwise in connection with such assets or business of any kind, fixed
or contingent, known or not known, except where such liabilities are not
reasonably expected to have a Material Adverse Effect on the Company.
(g) True, complete and correct copies of the written reports, and all parts
thereof, of all environmental audits or assessments which have been conducted in
respect of any Facility or any former Facility within the past five years,
either by the Company or any attorney, environmental consultant or engineer
engaged for such purpose, have been delivered to the Purchaser and a list of all
such reports, audits and assessments and any other similar report, audit or
assessment of which the Company has knowledge is included on Schedule 4.17.
Section 4.18. Insurance. Schedule 4.18 sets forth a list of the insurance
policies held by, or for the benefit of, the Company and its Subsidiaries. Each
of the Company and its Subsidiaries carry, and will continue to carry, insurance
with reputable insurers with respect to such of their respective properties and
business, in such amounts and against such risks as is customarily maintained by
other entities of similar size engaged in similar businesses. None of such
insurance was obtained through the use of materially false or misleading
information or the failure to provide the insurer with all material information
requested in order to evaluate the liabilities and risks insured. Neither the
Company nor any of its Subsidiaries has received any notice of cancellation or
non-renewal of any current insurance policies or binders.
Section 4.19. Condition of Tangible Assets. The Facilities of the Company
and its Subsidiaries and the Fixtures and Equipment are in good operating
condition and repair (except for ordinary wear and tear) are reasonably
sufficient for the operation of the business of the Company and its Subsidiaries
as presently conducted and are in conformity, in all material respects, with all
Applicable Laws, ordinances, orders, regulations and other requirements
(including applicable zoning, environmental, motor vehicle safety or standards,
occupational safety and health laws and regulations) relating thereto currently
in effect, except where the failure to conform would not have a Material Adverse
Effect on the Company.
Section 4.20. Contracts and Commitments. Except for documents set forth on
Schedule 4.20 or listed as exhibits to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996, neither the Company nor any of its
Subsidiaries is a party to any Material Agreement except for contracts between
the Company or any of its Subsidiaries and individual home buyers for purchases
33
of homes or lots in the ordinary course of business. Except as set forth on
Schedule 4.20, neither the Company nor any of its Subsidiaries is (and, to the
knowledge of the Company, no other party is) in material breach or violation of,
or default under any Material Agreement to which it is a party, the breach or
violation of which will or may have a Material Adverse Effect on the Company.
Section 4.21. Books and Records. The Company has made and kept (and given
the Purchaser access to) books and records and accounts, which, in reasonable
detail, accurately and fairly reflect the activities of the Company and each of
its Subsidiaries. The minute books of the Company and each of its Subsidiaries
previously provided to the Purchaser accurately and adequately reflect all
action previously taken by the stockholders, the board of directors and
committees of the board of directors of the Company and each of its
Subsidiaries.
Section 4.22. Labor Matters. Since January 1, 1994, neither the Company nor
any of its Subsidiaries has experienced any attempt by organized labor or its
representatives to make the Company or such Subsidiary conform to demands of
organized labor relating to its employees or to enter into a binding agreement
with organized labor that would cover the employees of the Company or any of its
Subsidiaries. The Company and its Subsidiaries are in compliance with all
Applicable Laws respecting employment practices, terms and conditions of
employment and wages and hours except where noncompliance would not have a
Material Adverse Effect on the Company and, to the Company's knowledge, are not
engaged in any unfair labor practice. There is no unfair labor practice charge
or complaint against the Company or any of its Subsidiaries pending before the
National Labor Relations Board or any other governmental agency arising out of
the activities of the Company or any of its Subsidiaries, and the Company has no
knowledge of any facts or information which would give rise thereto. There is no
labor strike or labor disturbance pending or, to the Company's knowledge,
threatened against the Company or any of its Subsidiaries. There is no grievance
currently being asserted and neither the Company nor any of its Subsidiaries has
experienced since January 1, 1994, a work stoppage or other labor difficulty
which grievance, work stoppage or other labor difficulty is reasonably likely to
have a Material Adverse Effect on the Company.
Section 4.23. Payments. Neither the Company nor any of its Subsidiaries
has, directly or indirectly, paid or delivered any fee, commission or other sum
of money or item of property, however characterized, to any finder, agent,
government official or other party, in the United States or any other country,
which is in any manner related to the business or operations of the Company or
its Subsidiaries and which the Company knows or has reason to believe to have
been illegal under any federal, state or local laws of the United States
(including, without limitation the U.S. Foreign Corrupt Practices Act) or any
other country having jurisdiction; and neither the Company nor any of its
Subsidiaries has participated, directly or indirectly, in any boycotts or other
similar practices affecting any of its actual or potential customers.
Section 4.24. Information. The information contained in the Proxy Materials
(other than information with respect to the Purchaser, or any of their
Affiliates which shall have been supplied in writing by them or any of their
authorized representatives for use in or in preparing the Proxy Materials) will
not, at the date of mailing to the Company's stockholders or at the date of the
34
Stockholders Meeting, contain any statement which, at the time and in light of
the circumstances under which it is made, is false or misleading with respect to
any material fact required to be stated therein or necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Stockholders Meeting. The Proxy Materials will comply as to form
in all material respects with the Exchange Act and the rules and regulations of
the SEC thereunder.
Section 4.25. Board Recommendations. By a vote of the directors present at
a meeting of the board of directors of the Company (which meeting was duly
called and held and at which a quorum was present at all times), the board of
directors has (i) approved and adopted (A) this Agreement, including the
issuance of the Securities, (B) the Company's entering into the Ancillary
Agreements to which it is or will be a party, and (C) the Certificate
Amendments, and (ii) resolved to recommend to the Company's stockholders
approval of the transactions contemplated hereunder and under the Ancillary
Agreements to which it is or will be a party, including issuance of the
Securities to the Purchaser pursuant to this Agreement.
Section 4.26. Intellectual Property.
(a) The Company and its Subsidiaries either own or have valid licenses or
other rights to use all patents, copyrights, trademarks, software, databases,
data, other technical information used in their businesses as presently
conducted ("Proprietary Rights"), subject to the limitations contained in the
agreements governing the use of the same, with such exceptions as would not
result in a Material Adverse Effect on the Company. There are no limitations
contained in the agreements of the type described in the immediately preceding
sentence which, upon consummation of the transactions contemplated hereunder,
will alter or impair any such rights, breach any such agreement with any third
party vendor, or require payments of additional sums thereunder, except any such
limitations that would not have a Material Adverse Effect on the Company. The
Company and its Subsidiaries are in compliance with such licenses and agreements
and, except as set forth on Schedule 4.26, there are no pending or, to the best
knowledge of the Company or any of its Subsidiaries, threatened Proceedings
challenging or questioning the validity or effectiveness of any license or
agreement relating to such property or the right of the Company or any of its
Subsidiaries to use, copy, modify or distribute the same.
(b) No person has a right, other than those set forth on Schedule 4.26 to
receive a royalty or similar payment in respect of any material Proprietary
Rights whether or not pursuant to any contractual arrangements entered into by
the Company or its Subsidiaries.
Section 4.27. Securities Offerings.
(a) Except as set forth on Schedule 4.27, since the date of its initial
public offering, the Company has not sold any securities other than securities
registered pursuant to the Securities Act. The sale of the Securities to the
Purchaser hereunder and the issuance of the Conversion Shares and the
Supplemental Warrant Shares complies with all federal and state securities laws.
(b) Neither the Company nor any affiliate (as defined in Rule 501(b) of
Regulation D under the Securities Act ("Regulation D")) of the Company has,
35
directly or through any agent (provided that no representation is made as to the
Purchaser or any person acting on their behalf), (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of any security (as
defined in the Securities Act) that is or will be integrated with the offering
and sale of the Securities in a manner that would require the registration of
the Securities under the Securities Act or (ii) engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with the offering of the Securities.
(c) Except as set forth on Schedule 4.27, neither the Company nor any of
its Subsidiaries is a party to or bound by any contract or other agreement, or
otherwise obligated, to register any of the securities of the Company or any of
its Subsidiaries under the Act.
Section 4.28. No Agreements to Sell the Assets or the Company. Except as
contemplated by this Agreement, none of the Company or any of its Subsidiaries
have any legal obligation, absolute or contingent, to any person or firm to sell
the capital stock, material assets or business of the Company or any of its
Subsidiaries or to effect any merger, consolidation, liquidation, dissolution,
recapitalization or other reorganization of the Company or any of its
Subsidiaries or to enter into any agreement with respect thereto.
Section 4.29. No Brokers. The Company has not employed, and is not subject
to the valid claim of, any broker, finder, consultant or other intermediary in
connection with the transactions contemplated hereby who might be entitled to a
fee or commission from the Company in connection with such transactions.
Section 4.30. Transactions with Certain Persons. Except as disclosed in SEC
Filings or as would not be required to be so disclosed, no officer, director or
employee of the Company or any of its Subsidiaries nor any member of any such
person's immediately family is or has been, since the Company's formation, a
party to any transaction with the Company or any of its Subsidiaries, including
without limitation, any contract, agreement or other arrangement (a) providing
for the furnishing of services by, (b) providing for the rental of real or
personal property from, or (c) otherwise requiring payments to (other than for
services as officers, directors or employees of the Company or its Subsidiaries)
any such person or corporation, partnership, trust or other entity in which any
such person has an interest as a shareholder, officer, director, trustee or
partner.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser hereby represents and warrants to the Company as follows:
Section 5.1. Organization of the Purchaser. The Purchaser is a limited
liability company duly formed and validly existing and in good standing as a
limited liability company under the laws of its jurisdiction of formation and
has full limited liability company power and authority to carry on its business
as currently being conducted.
36
Section 5.2. Authorization. The Purchaser has full limited liability
company power and authority to execute and deliver this Agreement and the
Ancillary Agreements and to consummate the transactions contemplated hereby and
thereby. The execution and delivery by the Purchaser of this Agreement and the
Ancillary Agreements, and the consummation by it of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary
limited liability company action of the Purchaser. This Agreement has been duly
executed and delivered by the Purchaser and constitutes, and each Ancillary
Agreement executed or to be executed by the Purchaser has been, or when executed
will be, duly executed and delivered by the Purchaser and constitutes, or when
executed and delivered will constitute, a valid and legally binding obligation
of the Purchaser, enforceable against the Purchaser in accordance with its
terms.
Section 5.3. Noncontravention. The execution and delivery by the Purchaser
of this Agreement and the Ancillary Agreements and the consummation by it of the
transactions contemplated hereby and thereby do not and will not (i) conflict
with or result in a violation of any provision of the limited liability company
agreement or other governing agreement of the Purchaser, (ii) conflict with or
result in a violation of any provision of, or constitute (with or without the
giving of notice or the passage of time or both) a default under, or give rise
(with or without the giving of notice or the passage of time or both) to any
right of termination, cancellation, or acceleration under, any bond, debenture,
note, mortgage, indenture, lease, agreement, or other instrument or obligation
to which the Purchaser is a party or by which the Purchaser or any of its
properties may be bound, (iii) result in the creation or imposition of any
Encumbrance upon the properties of the Purchaser, or (iv) violate any Applicable
Law binding upon the Purchaser, except, in the case of clauses (ii), (iii), and
(iv) above, for any such conflicts, violations, defaults, termination,
cancellations, accelerations, or Encumbrances which would not, individually or
in the aggregate, materially and adversely affect the ability of the Purchaser
to consummate the transactions contemplated hereby.
Section 5.4. Consents and Appeals. No consent, approval, order or
authorization of, or declaration, filing or registration with, any Government
Entity is required to be obtained or made by the Purchaser in connection with
the execution and delivery by the Purchaser of this Agreement and the Ancillary
Agreements or the consummation of the transaction contemplated hereby and
thereby other than (i) filings under the HSR Act and expiration or termination
of any applicable waiting period required thereunder and (ii) any filings
required under Section 13 and Section 16 of the Exchange Act and Rule 13d-1
under the Exchange Act and (iii) such consents, approvals, orders or
authorization which, if not made, would not, individually or in the aggregate,
materially and adversely affect the ability of the Purchaser to consummate the
transactions contemplated hereby.
37
Section 5.5. Purchase for Investment.
(a) The Purchaser is acquiring the Securities solely by and for its own
account, for investment purposes only and not for the purpose of resale or
distribution; and the Purchaser has no contract, undertaking, agreement or
arrangement with any person or entity to sell, transfer or pledge to such person
or anyone else any Securities; and the Purchaser has no present plans or
intentions to enter into any such contract, undertaking or arrangement.
(b) The Purchaser acknowledges and understands that: (i) the Securities,
the Conversion Shares and the Warrant Shares cannot be sold or transferred
without compliance with the registration provisions of the Securities Act or
compliance with exemptions, if any, available thereunder; (ii) the certificates
representing the respective Securities will include a legend thereon that refers
to the foregoing; and (iii) the Company has no obligation or intention to
register the Securities, Conversion Shares or the Warrant Shares under any
federal or state securities act or law; except to the extent, in each case, that
the terms of the Registration Rights Agreement shall otherwise provide.
(c) The Purchaser (i) is an "accredited investor" as defined in Rule 501 of
Regulation D; (ii) has such knowledge and experience in financial and business
matters in general that it has the capacity to evaluate the merits and risks of
an investment in the Securities and to protect its own interest in connection
with an investment in the Securities; (iii) has such a financial condition that
it has no need for liquidity with respect to its investment in the Securities to
satisfy any existing or contemplated undertaking, obligation or indebtedness;
and (iv) is able to bear the economic risk of its investment in the Securities
for an indefinite period of time.
Section 5.6. Disclosure Documents. None of the information with respect to
the Purchaser or any of its Affiliates which shall have been supplied in writing
by the Purchaser for inclusion in the Proxy Material will at the date of mailing
of the Proxy Material to the Company's stockholders contain any statement which,
at the time and in light of the circumstances under which it is made, is false
or misleading with respect to any material fact required to be stated therein or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Stockholders Meeting.
Section 5.7. No Brokers. The Purchaser has not employed, and is not subject
to the valid claim of, any broker, finder, consultant or other intermediary in
connection with the transactions contemplated by this Agreement who might be
entitled to a fee or commission in connection with such transactions.
38
ARTICLE VI.
ACTIONS BY THE COMPANY AND
THE PURCHASER PRIOR TO THE SECOND CLOSING
The Company and the Purchaser covenant as follows for the period from the
date hereof through the Second Closing (unless otherwise specified herein):
Section 6.1. Meeting of Stockholders; Proxy Statement; Certificate
Amendments.
(a) The Company shall take all action necessary in accordance with
Applicable Law and the Certificate of Incorporation and Bylaws to duly call,
give notice of, convene and hold a meeting of its stockholders, which meeting
may be the Company's annual meeting of stockholders (the "Stockholders
Meeting"), as promptly as practicable after the date hereof to consider and vote
upon the adoption and approval of the transaction as contemplated hereunder,
including, without limitation, the Certificate Amendments. The stockholder vote
required for the adoption and approval of the transactions contemplated
hereunder shall be the vote or votes required by Applicable Law, the Certificate
of Incorporation, the Existing Preferred Stock Certificates of Designations and
the rules of The Nasdaq Stock Market, Inc. Except as provided in Section 6.1(b)
below, the board of directors of the Company shall (i) recommend to the
Company's stockholders that they vote in favor of the adoption and approval of
all matters necessary to effectuate the transactions contemplated hereunder,
(ii) use its reasonable best efforts to solicit from the Company's stockholders
proxies in favor of such adoption and approval, and (iii) take all other action
reasonably necessary to secure a vote of the Company's stockholders in favor of
such adoption and approval. The Company has delivered the Shareholder
Undertakings committing all of its executive officers and directors who own
shares of Common Stock to vote all such shares of Common Stock in favor of the
transactions contemplated hereunder at the Stockholders Meeting.
(b) As promptly as practicable after the date hereof, the Company shall
take or cause to be taken, all actions, and do, or cause to be done, all things
reasonably necessary, proper or advisable to (i) prepare and file with the
Commission any documents or materials, including, but not limited to, the Proxy
Materials, pertaining to the issuance of the Securities and the Stockholders
Meeting, (ii) have the Proxy Materials cleared by the Commission (including with
respect to clauses (i) and (ii) by consulting with the Purchaser and responding
promptly to any comments from the Commission) and (iii) take such action as may
be required to be taken under applicable state securities or blue sky laws in
connection with the issuance of the Securities, the Conversion Shares or the
Warrant Shares except that the Company shall have no registration obligations
other than as set forth in the Registration Rights Agreement. Except to the
extent otherwise determined in good faith by the Company's board of directors in
the exercise of its fiduciary duties, taking into account the advice of outside
counsel, the Proxy Materials shall contain the recommendation of the Board of
Directors that stockholders of the Company vote in favor of the adoption and
approval of all matters necessary to effectuate the transactions contemplated
hereunder. The Company shall notify the Purchaser promptly of the receipt of any
comments on, or any requests for amendments or supplements to, the Proxy
Materials by the Commission, and the Company shall supply the Purchaser with
copies of all correspondence between it and its representatives, on the one
hand, and the Commission or members of its staff, on the other, with respect to
39
the Proxy Materials. The Company, after consultation with the Purchaser, shall
use its reasonable best efforts to respond promptly to any comments made by the
Commission with respect to the Proxy Materials. The Company and the Purchaser
shall cooperate with each other in preparing the Proxy Materials, and the
Company and the Purchaser shall each use its reasonable best efforts to obtain
and furnish the information required to be included in the Proxy Materials. The
Company and the Purchaser each agrees promptly to correct any information
provided by it for use in the Proxy Statement if and to the extent that such
information shall have become false or misleading in any material respect, and
the Company further agrees to take all steps necessary to cause the Proxy
Statement as so corrected to be filed with the Commission and to be disseminated
promptly to holders of shares of the Common Stock, in each case as and to the
extent required by Applicable Law.
Section 6.2. Stock Exchange Approval. The Company shall use its reasonable
best efforts and take all action reasonably necessary to obtain the confirmation
of The Nasdaq Stock Market, Inc. that the transactions contemplated hereby
(including the Certificate Amendments) will not violate Rule 4310 or Rule 4460
of the National Association of Securities Dealers, Inc. Manual.
Section 6.3. Continuing Operations. From the date of this Agreement to the
earlier of (i) the Second Closing or (ii) the termination of this Agreement in
accordance with its terms, the Company and its Subsidiaries shall conduct their
business in the ordinary and usual course, and, except as set forth on Schedule
6.3, neither the Company nor any of its Subsidiaries shall, without the prior
consent of the Purchaser except as expressly contemplated hereby:
(a) purchase, sell, license, assign, transfer, convey or otherwise
acquire or dispose of any assets, securities, or businesses, unless such
transaction is provided for in the annual budget or is in the ordinary
course of business and does not involve (i) the acquisition or disposition
of homebuilding operations or any homebuilding company or entity or (ii)
land acquisitions with a value in excess of $100,000 for any transaction or
group of related transactions or with an aggregate value in excess of
$5,000,000 in any twelve (12) month period;
(b) directly or indirectly incur, refinance, repay, prepay, create,
assume, guarantee or otherwise become liable with respect to any
liabilities with an aggregate face amount in excess of $1,000,000 in the
aggregate, other than in accordance with existing credit facilities and
renewals thereof on substantially the same terms;
(c) enter into any transaction after the date hereof or materially
amend any transaction in effect on the date hereof, with any Affiliate of
the Company (other than between the Company and its Subsidiaries or between
Subsidiaries);
40
(d) split (including any reverse split), combine, or reclassify any
shares of its capital stock; adopt resolutions authorizing a liquidation,
dissolution, merger, consolidation, restructuring, recapitalization, or
other reorganization of the capital structure of the Company or any of its
subsidiaries; or make any other material changes in its capital structure;
(e) engage in any new development or redevelopment of any real
property for an amount in excess of $100,000, whether in a single
transaction or a series of related transactions;
(f) incur any capital expenditure for an amount, outside of the
approved annual budget, in excess of $50,000 per occurrence or $500,000 in
the aggregate, whether in a single transaction or a series of related
transactions or waive, release, grant or transfer any rights of value in
respect thereof or enter into any agreement or arrangement that could
adversely affect the marketability of any real estate of the Company or any
of its subsidiaries;
(g) enter into any employment agreement with any employee involving
payments in excess of $100,000 per annum or with any director or executive
officer of the Company or any of its Subsidiaries or enter into or
materially change any Benefit Arrangement ;
(h) enter into any new line of business other than the business
engaged in by the Company and its Subsidiaries on the date hereof, cease to
be engaged in any material line of business engaged in by the Company and
its Subsidiaries on the date hereof or materially change the nature of the
business engaged in by any of them on the date hereof;
(i) approve the annual operating budget of the Company for any year
after 1997;
(j) amend or take actions materially inconsistent with the approved
annual operating budget for 1997 or any subsequent year;
(k) make any general assignment for the benefit of creditors;
(l) file any petition seeking relief, or consent to the institution of
any proceeding against itself seeking to adjudicate it a bankrupt or
insolvent, under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors;
(m) institute, voluntarily dismiss, terminate or settle any litigation
or arbitration against any Person (A) involving payments for damages and
penalties in excess of $50,000 or (B) otherwise material to the Company and
its subsidiaries taken as a whole;
(n) engage, retain, pay or agree to pay the fees or expenses of any
third party consultants or advisors (other than advisors retained in the
ordinary course of business), to the extent that such fees and expenses
exceed one hundred thousand dollars ($100,000) in the aggregate;
41
(o) appoint, ratify or replace the independent accountants, change any
accounting policy or practice other than as mandated by generally accepted
accounting principles then in effect; or change any significant tax
methods, practices, procedures or policies;
(p) enter into or amend any joint venture, partnership or profit
sharing agreement or arrangement;
(q) amend to the Company's or any Subsidiary's certificate of
incorporation or bylaws; or
(r) declare or pay any dividend or make any other distribution with
respect to its capital stock, other than dividends paid by any subsidiary
to the Company or another subsidiary in the ordinary and usual course of
business or to the holders of the Preferred Stock and the Existing
Preferred Stock as required pursuant to the terms of the Preferred Stock
and the Preferred Stock Certificates of Designations;
(s) issue, sell, (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase, or otherwise) any
of its capital stock (other than upon conversion of the Preferred Stock or
the Existing Preferred Stock or upon exercise of the Warrants or the
Supplemental Warrants) or deliver or other securities other than as
contemplated herein or pursuant to stock options issued and outstanding as
of the date hereof or purchase or otherwise acquire any of its capital
stock, employee or director stock options or debt securities; or
(t) agree to do any of the foregoing.
Section 6.4. Press Releases. Except as may be required by applicable law or
by the rules of any national securities exchange, neither the Purchaser nor the
Company shall issue any press release with respect to this Agreement or the
transactions contemplated hereunder without the prior consent of the Company in
the case of the Purchaser, and of the Purchaser in the case of the Company
(which consent shall not be unreasonably withheld under the circumstances). Any
such press release required by applicable law or by the rules of any national
securities exchange shall only be made after reasonable notice to the other
party.
Section 6.5. Additional Financial Statements. During the period from the
date hereof through the Second Closing, as soon as reasonably practicable after
they become publicly available, the Company shall furnish to the Purchaser (i)
the quarterly consolidated financial statements of the Company and its
consolidated Subsidiaries, which shall have been prepared in accordance with
GAAP and on a basis consistent with past practice and (ii) all monthly financial
statements or reports of the Company and its consolidated Subsidiaries, which
shall have been prepared in a manner consistent with past practice.
Section 6.6. Investigations and Access. The Company agrees to permit the
Purchaser and its agents and representatives reasonable access during normal
business hours to (i) the premises of the Company and its Subsidiaries and (ii)
all the books, computer software application systems, files and records of the
Company and its Subsidiaries, including, but not limited to, lease, loan, real
42
estate, financial, tax and personnel files and records, and to furnish the
Purchaser such financial and operating data and other information with respect
to the business, assets and properties of the Company as the Purchaser shall
reasonably request. The Company will authorize its accountants to provide the
Purchaser, in accordance with such accountant's internal policies, with their
working papers for the Company's financial statements. The Company shall deliver
true, correct and complete copies of all resolutions, and minutes of all
meetings, reflecting any action taken by the Company stockholders, board of
directors or committees of the board of directors and by each Subsidiary during
the period from the date hereof through the First Closing.
Section 6.7. Notification of Certain Matters. The Company shall give prompt
notice to the Purchaser, and the Purchaser shall give prompt notice to the
Company, of (i) the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
any time from the date hereof to the Closing Date and (ii) any material failure
of the Company or the Purchaser, as the case may be, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder, and each party shall use all reasonable efforts to remedy such
failure. In addition, the Company shall give prompt notice to the Purchaser of
any material developments involving the operations or activities of the Company
or its Subsidiaries.
Section 6.8. No Solicitation. Until the Second Closing shall have occurred,
neither the Company nor any of its Affiliates nor any of their respective
directors, officers, employees, representatives or agents, shall directly or
indirectly solicit or initiate any discussions, submissions of proposals or
offers or negotiations with, participate in any negotiations or discussions
with, or provide any information or data of any nature whatsoever to, or
otherwise cooperate in any other way with, or assist or participate in,
facilitate or encourage any effort or attempt by, any corporation, partnership,
person or other entity or group, other than the Purchaser and its respective
partners, employees, representatives, agents and Affiliates, concerning any
Alternative Transaction, provided, however, that nothing contained in this
Section 6.8 shall prohibit the Board of Directors from (i) furnishing
information or affording access to properties, books or records to, or entering
into discussions or negotiations with, any person or entity in connection with
any unsolicited bona fide proposal by such person or entity to enter into any
Alternative Transaction or entering into an Alternative Transaction if, and only
to the extent that, (A) the Company receives the written advice of outside legal
counsel that such action is advisable to enable the Board of Directors to comply
with its fiduciary duties imposed by Applicable Law and (B) prior to furnishing
such information to, or entering into discussions or negotiations with, such
person or entity, the Company (A) provides written notice to the Purchaser to
the effect that it is furnishing information or affording access to properties,
books or records to, or entering into discussions or negotiations with, such
person or entity and (B) receives from such person or entity an executed
confidentiality agreement on terms and in form customary for similar
transactions or (ii) complying with Rule 14e-2 promulgated under the Exchange
Act, with regard to an Alternative Transaction. For purposes of this Agreement,
43
"Alternative Transaction" means any merger, consolidation (other than insofar as
such merger or consolidation relates exclusively to the acquisition by the
Company or one of its Subsidiaries of companies or businesses engaged primarily
in the same business as the Company), sale of substantial assets not in the
ordinary course, sale of shares of existing or future capital stock or other
equity securities or securities convertible into equity securities or
derivatives thereof (other than pursuant to employee stock options),
recapitalization, capital infusion, incurrence of material additional
indebtedness except pursuant to existing lines of credit or refinancings
thereof, debt restructuring or similar transaction involving the Company or any
of its Subsidiaries, or any division of the Company or any of its Subsidiaries
except, in each case, as disclosed in the Schedules to this Agreement. As part
of the written notice provided to the Purchaser pursuant to clause (i)(B) above,
the Company shall indicate the identity of the offeror and the terms and
conditions of any proposals or offers or the nature of any inquiries or
contacts, and thereafter shall use reasonable efforts to keep the Purchaser
informed, on a current basis, of the status and terms of any such proposals or
offers and the status of any such discussions or negotiations. The Company shall
not release any third party from, or waive any provision of, any confidentiality
or standstill agreement to which the Company is a party.
Section 6.9. Further Assurances. Upon the terms and subject to the
conditions contained herein, the Company agrees, both before and after each
Closing, (i) to use all reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, (ii) to execute any documents, instruments or conveyances of any kind
which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder, and (iii) to cooperate with the Purchaser
in connection with the foregoing. Without limiting the foregoing, the Company
agrees to use its reasonable best efforts (A) to obtain all necessary waivers,
consents and approvals, (B) to defend all actions challenging this Agreement or
the consummation of the transactions contemplated hereby, (C) to lift or rescind
any injunction or restraining order or other court order adversely affecting the
ability of the Company to consummate the transactions contemplated hereby, (D)
to give all notices to and make all registrations and filings with third
parties, including without limitation, submissions of information requested by
Governmental Entities and The Nasdaq National Market, Inc., and (E) to fulfill
all conditions to this Agreement. In addition, the Company will commence all
action required under this Section 6.9 by a date which is early enough to allow
the transactions contemplated hereunder to be consummated by each Closing Date.
Section 6.10. HSR Act Notification. To the extent it is determined that the
HSR Act will be applicable to the transactions as contemplated hereunder, each
of the affected parties hereto shall (i) file or cause to be filed, as promptly
as practicable after the execution and delivery of this Agreement, with the
Federal Trade Commission and the United States Department of Justice, all
reports and other documents required to be filed by such party under the HSR Act
concerning the transactions contemplated hereby and (ii) promptly comply with or
cause to be complied with any requests by the Federal Trade Commission or the
United States Department of Justice for additional information concerning the
44
Transaction, in each case so that the waiting period applicable to this
Agreement and the transaction contemplated hereby under the HSR Act shall expire
as soon as practicable after the execution and delivery), of this Agreement.
Each party hereto agrees to request, and to cooperate with the other party or
parties in requesting, early termination of any applicable waiting period under
the HSR Act.
Section 6.11. Employee Matters. On or prior to the Second Closing, the
Board of Directors shall take all actions necessary to ensure that the
acquisition of the Securities by the Purchaser (including the
conversion/exercise of all of the Securities acquired or to be acquired by the
Purchaser hereunder) and the transactions contemplated herein shall not result
in the acceleration or creation of any rights of any person to benefits under
any Employee Plan (including, without limitation, the acceleration of the
vesting or exercisability of any stock options, the acceleration of the vesting
of any restricted stock, the acceleration of the accrual or vesting of any
benefits under any Pension Plan or the acceleration or creation of any rights
under any severance, parachute or change in control agreement).
Section 6.12. Action by the Company. On the date of Stockholder Approval,
the Board of Directors shall take, or cause to be taken, all actions necessary
or desirable to (i) cause the Board of Directors to consist of fifteen (15)
directors, three of whom shall be elected by the Purchaser by delivery of a
written consent immediately following the date of Stockholder Approval and (ii)
effect the Bylaws Amendments. Prior to the Second Closing, the Board of
Directors shall take, or cause to be taken, all actions necessary or desirable
to file with the Secretary of State of the State of Delaware the Certificate
Amendments.
Section 6.13. Liability Insurance. On or prior to the appointment of the
Preferred Stock Directors to the Board of Directors, the Company shall ensure
that each person serving on the Board of Directors on and after date of such
appointment shall receive substantially the same liability insurance coverage as
a member of the Board of Directors as the Company's directors receive as of the
date hereof (including coverage for liabilities arising before the date of
taking office to the extent arising from such person's status as a prospective
member of the Board of Directors) and that such policies shall be in full force
and effect in accordance with their terms as of the date of such appointment and
in no event shall such coverage be for an amount less than $25,000,000.
Section 6.14. Confidentiality. The Company and the Purchaser agree that all
information provided to any of them or any of their representatives pursuant to
this Agreement shall be kept confidential, and such parties shall not (x)
disclose such information to any persons other than the directors, officers,
employees, financial advisors, legal advisors, accountants, consultants and
affiliates of such parties who reasonably need to have access to the
confidential information and who are advised of the confidential nature of such
information or (y) use such information in a manner which would be detrimental
to the Company or the Purchaser; provided, however, the foregoing obligation of
such parties shall not (a) relate to any information that (i) is or becomes
generally available other than as a result of unauthorized disclosure by such
parties or by persons to whom such parties have made such information available,
(ii) is or becomes available to such parties on a non-confidential basis from a
third party that is not, to such parties' knowledge, bound by any other
confidentiality agreement with the Company, or (b) prohibit disclosure of any
information if required by law, rule, regulation, court order or other legal or
governmental process.
45
Section 6.15. Action following Stockholder Approval. Immediately following
the Stockholder Approval, (i) the Board of Directors shall adopt the Bylaws
Amendments, (ii) the Certificate Amendments shall be duly filed with the
Secretary of State of the State of Delaware and (iii) the Preferred Stock
Directors shall be appointed to the Board of Directors; provided, however, that
with respect to clauses (i) and (iii) the Company shall take such actions
earlier, upon the written request of the Purchaser.
ARTICLE VII.
CONDITIONS TO ALL CLOSINGS
Section 7.1. Conditions to Each Party's Obligations. The respective
obligations of each party to consummate the transactions contemplated hereby in
respect of each Closing are subject to the satisfaction or waiver, on or prior
to the relevant Closing Date, of each of the following conditions:
(a) No Governmental or Other Proceedings or Litigation. There shall be
no injunction or court order restraining consummation of the transactions
contemplated hereunder and there shall be no pending or threatened action
or proceeding by or before a court or governmental body brought by or on
behalf of any Governmental Entity seeking to restrain or invalidate all or
any portion of the transactions contemplated hereunder, and there shall not
have been adopted any law or regulation making all or any portion of the
transactions contemplated hereunder illegal.
(b) HSR Act. To the extent that the HSR Act is applicable to the
transactions contemplated hereunder, all waiting periods (and any
extensions thereof) applicable to any such transactions under the HSR Act
shall have expired or been terminated.
Section 7.2. Conditions to the Company's Obligations. The obligation of the
Company to consummate the transactions contemplated hereby on the applicable
Closing Date is subject to the satisfaction or waiver on or prior to the
applicable Closing Date of each of the following conditions:
(a) Representations, Warranties and Covenants. All representations and
warranties of the Purchaser contained in this Agreement shall be true and
correct in all material respects at and as of the applicable Closing Date
as if such representations and warranties were made at and as of the
applicable Closing Date, and the Purchaser shall have performed in all
material respects all agreements and covenants required hereby to be
performed by it prior to or at the applicable Closing Date. There shall be
delivered to the Company a certificate (signed by the sole member of the
Purchaser) to the foregoing effect.
46
(b) Opinion of Counsel. The Purchaser shall have delivered to the
Company the opinions of Xxxxxx & Xxxxxxx, counsel to the Purchaser, in form
and substance reasonably acceptable to the Company.
(c) Certificates. The Purchaser will furnish the Company with such
certificates of its general partner and others to evidence compliance with
the conditions set forth in this Article VII as may be reasonably requested
by the Company.
Section 7.3. Conditions to the Purchaser's Obligations. The obligation of
the Purchaser to consummate the transactions contemplated hereby on the
applicable Closing Date is subject to the satisfaction or waiver on or prior to
the applicable Closing Date of each of the following conditions:
(a) Representations, Warranties and Covenants. All representations and
warranties of the Company contained in this Agreement shall be true and
correct in all material respects at and as of the applicable Closing Date
as if such representations and warranties were made at and as of the
applicable Closing Date (provided that no representation or warranty shall
be deemed breached if the action causing such representation or warranty to
be untrue as of the relevant Closing Date permitted by Section 6.3 or was
consented to by the Purchaser under Section 6.3), and the Company shall
have performed in all material respects all agreements and covenants
required hereby to be performed prior to or at the applicable Closing Date.
There shall be delivered to the Purchaser a certificate (signed by the
President and Chief Executive Officer and the Secretary of the Company) to
the foregoing effect.
(b) Consents. All consents, approvals, Permits and waivers from
Governmental Entities and other parties necessary to permit the Purchaser
and the Company to consummate the transactions contemplated hereby shall
have been obtained, unless the failure to obtain any such consent,
approval, Permit or waiver would not have a Material Adverse Effect upon
the Company or the Purchaser.
(c) Opinion of Counsel. The Company shall have delivered to the
Purchaser the opinions of Arent Fox Xxxxxxx Xxxxxxx & Xxxx, counsel for the
Company, in form and substance reasonably acceptable to the Purchaser.
(d) Certificates. The Company shall furnish the Purchaser with such
certificates of the Chief Executive Officer and the Secretary of the
Company and others to evidence compliance with the conditions set forth in
this Article VII as may be reasonably requested by the Purchaser.
(e) No Adverse Changes. Since the date of this Agreement, there shall
not have been any Material Adverse Effect on the Company.
(f) Elections of Directors. All actions shall have been taken by the
Company, its stockholders and Board of Directors so that, immediately upon
the Stockholder Approval, the Board of Directors shall consist of fifteen
47
(15) directors and the Purchaser may, by execution and delivery of a
written consent, elect three (3) members of the Board of Directors
effective as of the Stockholder Approval as set forth in Section 6.15. As
of the date of the Stockholder Approval the Company shall have established
a five-member executive committee (the "Executive Committee") of the Board
of Directors to which substantial authority for operational matters shall
be delegated, as further described in the Stockholders Agreement. The
Company shall appoint two members of the Executive Committee nominated by
the Purchaser.
(g) Ancillary Agreements. The Company shall enter into and deliver to
the Purchaser the Ancillary Agreements to which it is a party.
(h) Amendment to Existing Stockholders Agreement. If necessary, the
Existing Stockholders Agreement shall be amended to be consistent with the
terms of this Agreement and the Ancillary Agreements (including the
Stockholders Agreement).
ARTICLE VIII.
SECOND AND SUBSEQUENT CLOSINGS
Section 8.1. Conditions to Each Party's Obligations at the Second Closing.
In addition to the conditions set forth in Article VII, the respective
obligations of each party to consummate the transactions contemplated hereby on
the Second Closing and on Subsequent Closings are subject to the satisfaction or
waiver, on or prior to the date of the Second Closing or the date of any
Subsequent Closing (as the case may be), of each of the following conditions:
(a) Stockholder Approval. The holders of the requisite number of
shares of outstanding Common Stock of the Company shall have duly and
validly approved all items necessary to effectuate the transactions
contemplated hereby and under the Ancillary Agreements, including without
limitation, the Certificate Amendments (the "Stockholder Approval").
Section 8.2. Conditions to the Purchaser's Obligations at the Second and
Subsequent Closings. In addition to the conditions set forth in Article VII, the
obligations of the Purchaser to consummate the transactions on the Second
Closing and on Subsequent Closings are subject to the satisfaction or waiver, on
or prior to the date of the Second Closing and the date of any Subsequent
Closing (as the case may be), of each of the following conditions:
(a) Certificate Amendments; Bylaws Amendments. The Certificate
Amendments and Bylaws Amendments in a form satisfactory to Purchaser
necessary to give effect to the transactions contemplated hereby and the
provisions of the Ancillary Documents shall have become effective in
accordance with Section 6.15.
(b) Liability Insurance. The Company shall have provided to the
Purchaser a copy of the insurance policies together with the riders and
schedules thereto which evidence compliance with the provisions set forth
in Section 6.13.
48
(c) Employment Agreements. The Company shall amend the employment
agreement of Xxxxx X. Xxxxxxx, Xx. in a form and substance satisfactory to
the Purchaser, in the Purchaser's sole discretion, to require that he
devote not less than 95% of his working time to conducting the business
affairs of the Company and to include customary non-compete provisions and,
if the Purchaser in its sole discretion so requires, enter into an
employment agreement on similar terms with J. Xxxxxxxx Xxxxxxx.
ARTICLE IX.
INDEMNIFICATION
Section 9.1. Survival of Representations, Etc. The representations,
warranties, covenants and agreements of the parties hereto contained herein
shall survive all of the Closings and shall remain in full force and effect
until December 31, 2000; provided, however, that (i) the representations and
warranties set forth in Section 4.17 shall survive until December 31, 2004; (ii)
the representations and warranties in Sections 4.1 through 4.4 and Section 4.7
shall survive indefinitely and the covenants and agreements set forth in
Articles IX and X shall remain in full force and effect indefinitely and (iii)
the representations and warranties set forth in Section 4.15 shall survive and
shall remain in full force and effect for a period equal to the applicable
statute of limitations for any Taxes imposed payable in breach of such
representations and warranties; and provided, further, that there shall be no
termination with respect to any representation or warranty as to which either
(a) a bona fide claim has been asserted prior to such date or (b) the Purchaser
had actual knowledge of any breach thereof prior to any Closing Date.
Section 9.2. Indemnification by the Company. The Company shall indemnify
and hold harmless the Purchaser and its members, Affiliates, directors,
officers, advisors, agents and employees (the "Purchaser Indemnified Parties")
to the fullest extent lawful, from and against any and all demands, damages,
penalties, claims, liabilities, obligations, actions, causes of action, and
reasonable expenses (including without limitation, costs of investigating,
preparing or defending any such claim or action and reasonable legal fees and
expenses) (collectively, "Losses"), (i) arising out of or in connection with
this Agreement, the transactions contemplated hereby, and/or the delivery,
enforcement and performance of this Agreement or the Ancillary Agreements except
to the extent that Losses with respect thereto are the result of the Purchaser's
actions or omissions, or (ii) arising by reason of or resulting from any breach
of any warranty, representation, covenant or agreement of the Company contained
in this Agreement, the Ancillary Agreements or in any certificate delivered
pursuant thereto.
Section 9.3. Indemnification by the Purchaser. The Purchaser shall
indemnify and hold harmless the Company and its Affiliates, directors, officers,
advisors, agents and employees (the "Company Indemnified Parties" and, together
with the Purchaser Indemnified Parties, the "Indemnified Parties") to the
fullest extent lawful, from and against any and all Losses (i) arising from this
49
Agreement or the Ancillary Agreements, to the extent of Losses from the
Purchaser's actions or omissions or (ii) arising by reason of or resulting from
any breach of any warranty, representation, covenant or agreement of the
Purchaser contained in this Agreement or in any certificate delivered pursuant
thereto.
Section 9.4. Losses. The term "Losses" as used in this Section 9 is not
limited to matters asserted by third parties, but includes Losses incurred or
sustained by an Indemnified Party in the absence of third party claims. Payments
by an Indemnified Party of amounts for which such Indemnified Party is
indemnified hereunder shall not necessarily be a condition precedent to
recovery.
Section 9.5. Defense of Claims. If a claim for Losses (a "Claim") is to be
made by an Indemnified Party, such Indemnified Party shall give written notice
(a "Claim Notice") to the indemnifying party as soon as practicable after such
Indemnified Party becomes aware of any fact, condition or event which may give
rise to Losses for which indemnification may be sought under this Section 9. If
any lawsuit or enforcement action is filed against any Indemnified Party
hereunder, notice thereof (a "Third Party Notice") shall be given to the
indemnifying party as promptly as practicable (and in any event within five (5)
calendar days after the service of the citation or summons). The failure of any
indemnified party to give timely notice hereunder shall not affect rights to
indemnification hereunder, except to the extent that the indemnifying party
demonstrates actual damage caused by such failure. After receipt of a Third
Party Notice, if the indemnifying party shall acknowledge in writing to the
indemnified party that the indemnifying party shall be obligated under the terms
of its indemnity hereunder in connection with such lawsuit or action, then the
indemnifying party shall be entitled, if it so elects, (i) to take control of
the defense and investigation of such lawsuit or action, (ii) to employ and
engage attorneys approved by the Indemnified Party (such approval not to be
unreasonably withheld) to handle and defend the same, at the indemnifying
party's cost, risk and expense unless the named parties to such action or
proceeding include both the indemnifying party and the Indemnified Party and the
Indemnified Party has been advised in writing by counsel that there may be one
or more legal defenses available to such Indemnified Party that are different
from or additional to those available to the indemnifying party, and (iii) to
compromise or settle such claim, which compromise or settlement shall be made
only with the written consent of the Indemnified Party, such consent not to be
unreasonably withheld. The Indemnified Party shall cooperate in all reasonable
respects with the indemnifying party and such attorneys in the investigation,
trial and defense of such lawsuit or action and any appeal arising therefrom;
and the Indemnified Party may, at its own cost, participate in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom and appoint its own counsel therefor, at its own cost. The
parties shall also cooperate with each other in any notifications to insurers.
If the indemnifying party fails to assume the defense of such claim within
fifteen (15) calendar days after receipt of the Third Party Notice, the
Indemnified Party against which such claim has been asserted will (upon
delivering notice to such effect to the indemnifying party) have the right to
undertake the defense, compromise or settlement of such claim and the
indemnifying party shall have the right to participate therein at its own cost;
provided, however, that such claim shall not be compromised or settled without
50
the written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld. In the event the Indemnified Party assumes the defense of
the claim, the Indemnified Party will keep the indemnifying party reasonably
informed of the progress of any such defense, compromise or settlement.
Notwithstanding the foregoing, the indemnifying party shall not be liable for
the reasonable fees and expenses of more than one separate firm of attorneys at
any time for any and all Indemnified Parties (which firm shall be designated in
writing by such Indemnified Party or Parties) in connection with any one such
action or proceeding arising out of the same general allegations or
circumstances.
Section 9.6. Tax Treatment of Indemnity. The parties agree that any
indemnification payments made pursuant to this Agreement shall be treated for
Tax purposes as an adjustment to the consideration for the purchase of the
Securities, unless otherwise required by applicable law, in which event
indemnification payments shall be made in an amount sufficient to indemnify the
party on a net after-Tax basis.
ARTICLE X.
MISCELLANEOUS
Section 10.1. Termination. (a)Prior to the First Closing, this Agreement
may be terminated:
(i) by the Purchaser, if there is a breach of any representation
warranty set forth in Article IV hereof or any covenant or agreement to be
complied with or performed by the Company pursuant to the terms of this
Agreement except for any breach which would not have a Material Adverse
Effect on the Company or the Purchaser; or
(ii) by the Company, if there is a material breach of any
representation or warranty set forth in Article V hereof or of any covenant
or agreement to be complied with or performed by the Purchaser pursuant to
the terms of this Agreement except for any breach which would not have a
Material Adverse Effect on the Company.
(a) Prior to the Second Closing, this Agreement may be terminated:
(i) by the Company or the Purchaser if the Stockholder Approval shall
not have been obtained on or before March 6, 1998, provided that the
Company shall not have the right to elect this termination if the Company
has not complied with all of its obligations under this Agreement;
(ii) by the Purchaser if the Second Closing shall not have occurred by
March 6, 1998.
(iii) by the Purchaser, if there is a breach of any representation or
warranty set forth in Article IV hereof or any covenant or agreement to be
complied with or performed by the Company pursuant to the terms of this
Agreement except for any breach which would not have a Material Adverse
Effect on the Company or the Purchaser; or
51
(iv) by the Company, if there is a material breach of any
representation or warranty set forth in Article V hereof or of any covenant
or agreement to be complied with or performed by the Purchaser pursuant to
the terms of this Agreement except for any breach which would not have a
Material Adverse Effect on the Company.
Section 10.2. In the Event of Termination: In the event of termination of
this Agreement:
(a) Each party will redeliver all documents, work papers and other
material of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof to the
party furnishing the same;
(b) The provisions of Sections 9 and 10.3 shall continue in full force
and effect; and
(c) Other than pursuant to Sections 9 and 10.3, no party hereto shall
have any liability or further obligation to any other party relating to the
transactions contemplated hereby, provided that no such termination shall
relieve any party from liability or a prior breach of this Agreement.
Section 10.3. Fees and Expenses. The Company shall be responsible for the
payment of all costs and expenses incurred by the Company in connection with the
transactions contemplated hereunder, regardless of whether such transactions
close, including, without limitation, all fees and expenses incurred in
connection with the Proxy Materials and the fees and expenses of the Company's
legal counsel and all third party consultants engaged by the Company to assist
in the transactions. On each Closing Date, the Company shall reimburse the
Purchaser for the Transaction Expenses (by wire transfer of same day funds). In
the event that the Agreement is terminated, other than pursuant to Section
10.1(a)(ii) or Section 10.1(b)(iv) hereof, in addition to any other rights of
the Purchaser hereunder, the Company shall promptly pay the Purchaser, by way of
liquidated damages, a termination fee of $4,000,000, plus the Transaction
Expenses (to the extent not already paid or reimbursed by the Company).
Section 10.4. Injunctive Relief. The parties hereto acknowledge and agree
that irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement, and shall be entitled to enforce specifically the provisions of this
Agreement, in any court of the United States or any state thereof having
jurisdiction, in addition to any other remedy to which the parties may be
entitled under the Agreement or at law or in equity.
Section 10.5. Independent Determination. From and after the date of the
Second Closing, all decisions on behalf of the Company as to payment of
indemnification pursuant hereto and otherwise regarding the Company's rights and
obligations pursuant to this Agreement and the Ancillary Agreements shall be
made by a committee of the board of directors consisting of all directors not
elected by the holders of the Preferred Stock voting as a separate class and a
decision of a majority of such directors shall be the decision of the committee.
Nothing contained in this Section 10.5 shall prevent any Indemnified Party from
receiving indemnification pursuant to some other source (such as, by way of
52
example, the bylaws of the Company in the event that such Indemnified Party is a
director of the Company and such director seeks indemnification due to
circumstances that do not pertain to an alleged breach of this Agreement), and
the determination as to whether indemnification pursuant to such other source is
available shall be made in accordance with the procedures applicable thereto.
Section 10.6. Brokers, etc. No brokerage fees shall be payable to any
Person in connection with the transactions contemplated hereunder, other than a
fee to be payable to Xxxxxx Xxxx, LLC by the Company (in an amount to be
negotiated).
Section 10.7. Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by the Company without the prior written
consent of the Purchaser, or by the Purchaser without the prior written consent
of the Company, except that the Purchaser may, without such consent, assign its
rights hereunder, in whole or in part, including, the right to acquire the
Preferred Stock, the Warrants and the Supplemental Warrants hereunder, to one or
more affiliates of the Purchaser. Subject to the foregoing, this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, and no other person shall have any right,
benefit or obligation hereunder.
Section 10.8. Notices. Unless otherwise provided herein, any notice,
request, instruction or other document to be given hereunder by any party to the
other shall be in writing and delivered by hand-delivery, registered first-class
mail, telex, confirmed telecopy, or air courier guaranteeing overnight delivery,
as follows:
If to the Company:
The Fortress Group, Inc.
0000 Xxxxxx Xxxxxxxxx, Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: J. Xxxxxxxx Xxxxxxx
with a copy to: Secretary
With an additional copy to:
Arent Fox Xxxxxxx Xxxxxxx & Xxxx
0000 Xxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxx
53
If to the Purchaser:
Prometheus Homebuilders LLC
c/o Lazard Freres Real Estate Investors, LLC
Thirty Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx
Xxxxx X. Xxxxx
With a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: R. Xxxxxx Xxxxxxxxx
or to such other place and with such other copies as either party may designate
as to itself by written notice to the other.
All such notices, requests, instructions or other documents shall be deemed
to have been duly given; at the time delivered by hand, if personally delivered;
four Business Days after being deposited in the mail, postage prepaid, if
mailed; when answered back, if telexed; when receipt acknowledged by addressee,
if by telecopier transmission; and on the next Business Day if timely delivered
to an air courier guaranteeing overnight delivery.
Section 10.9. Choice of Law. This Agreement shall be construed, interpreted
and the rights of the parties determined in accordance with the internal laws of
the State of New York, without regard to the conflict of law principles thereof,
except with respect to matters of law concerning the internal corporate affairs
of any corporate entity which is a party to or the subject of this Agreement,
and as to those matters the law of the jurisdiction under which the respective
entity derives its powers shall govern.
Section 10.10. Entire Agreement; Amendments and Waivers. This Agreement,
including all schedules attached hereto (each, a "Schedule" and, collectively,
the "Schedules") constitutes the entire agreement among the parties pertaining
to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties, including the written summary of proposed terms between the Company and
the Purchaser. Capitalized terms used in the Schedules but not defined therein
shall have the respective meanings ascribed to such terms in this Agreement. Any
item disclosed in one Schedule shall be deemed to have been disclosed in all
other Schedules.
54
Section 10.11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 10.12. Invalidity. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement or any other such instrument.
Section 10.13. Headings. The headings of the Articles and Sections herein
are inserted for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.
Section 10.14. Limitation of Liability. In no event shall any member,
partner or representative of the Purchaser or of any partnership which is a
partner of the Purchaser or any partner of any such partnership, or any direct
or indirect stockholder, officer, director, partner, employee or any other such
person, be personally liable for any obligation of the Purchaser under this
Agreement. In no event shall any officer, director, employee or shareholder of
the Company be personally liable for any obligation of the Company under this
Agreement.
Section 10.15. Abstention from Voting.
Neither the Purchaser nor any assignee of the Purchaser shall vote on the
resolution to be proposed to stockholders of the Company to authorize the
issuance of the Securities.
Section 10.16. Mutual Agreement.
The Company shall have the right to issue a debt instrument in lieu of all
or any portion of the Class AB Preferred Stock to be issued hereunder, provided
that such debt instrument contains terms and conditions that are no less
favorable to the Purchaser than the terms and conditions of the Class ABI
Preferred Stock (such debt to have a maturity date of December 31, 2004).
Section 10.17. Apportionment of Stock Between Class ABI Preferred Stock and
Class ABII Preferred Stock The parties will apportion the Class AB Preferred
Stock to be issued between the Class ABI Preferred Stock and the Class ABII
Preferred Stock to ensure that the Purchaser has no more than 45% of the total
voting power of the Company on the date of issuance of such Class AB Preferred
Stock with respect to the election of directors to the Board of Directors
generally (other than directors elected exclusively by holders of Preferred
Stock), but so that the Company shall issue the maximum amount of Class ABI
Preferred Stock it is permitted to issue before issuing any Class ABII Preferred
Stock.
Section 10.18. Merger of Company. Following the Second Closing, the parties
hereby acknowledge and agree that, in the event that the Purchaser, in its
discretion pursuant to the terms of the Preferred Stock and the Stockholders
Agreement, gives its consent to a merger or consolidation of the Company with a
bona fide third party in an arms length transaction ("Merger") such that,
55
following such Merger, more than 51 percent of the Common Stock of the Company
(or the surviving corporation in the Merger) is beneficially owned by such third
party, following the consummation of such Merger the Company shall have the
right to be released from its obligations under this Agreement to sell to the
Purchaser the then-unissued balance of the Preferred Stock (and any debt
instrument issuable in lieu thereof as set forth in Section 10.16) at one or
more Subsequent Closings.
[Signature Page Follows]
56
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
THE FORTRESS GROUP, INC.
By: /s/
------------------------------
Name: Xxxxx X. Xxxxxxx, Xx.
Title: President
PROMETHEUS HOMEBUILDERS LLC
By: LF Strategic Realty Investors II L.P., its member
By: Lazard Freres Real Estate Investors L.L.C.,
its general partner
By: /s/
------------------------------
Name: Xxxxx X. Xxxxx
Title: Principal
EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL
RIGHTS AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF
OF
CLASS ABI PREFERRED STOCK
OF
THE FORTRESS GROUP, INC.
EXHIBIT B
FORM OF
CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL
RIGHTS AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF
OF
CLASS ABII PREFERRED STOCK
OF
THE FORTRESS GROUP, INC.
EXHIBIT C
FORM OF
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
EXHIBIT D
FORM OF
AMENDED AND RESTATED
WARRANT AGREEMENT
EXHIBIT E
FORM OF
AMENDED AND RESTATED
STOCKHOLDER AGREEMENT
EXHIBIT F
FORM OF
BYLAWS AMENDMENTS
EXHIBIT G
FORM OF
CERTIFICATE AMENDMENTS
EXHIBIT H
FORM OF
BYLAWS AMENDMENTS-SUBSIDIARIES
EXHIBIT I
FORM OF
SUPPLEMENTAL WARRANT AGREEMENT
SCHEDULES ON FILE
AT XXXXXX & XXXXXXX
AND AVAILABLE UPON REQUEST
