<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported): APRIL 14, 2000
------------------------------
THE WRITER CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
COLORADO 0-08305 84-0510478
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
6061 SOUTH WILLOW DRIVE, SUITE 232, ENGLEWOOD, COLORADO 80111
(Address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code: (303) 779-4100
-----------------------------
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE> 2
ITEM 1: CHANGES IN CONTROL OF REGISTRANT
1. On April 14, 2000, The Writer Corporation ("Writer") entered into an
Agreement and Plan of Merger ("Merger Agreement") with Standard Pacific Corp.
("Standard Pacific") pursuant to which a wholly-owned subsidiary of Standard
Pacific, TWC Acquisition Corp. ("Newco") will acquire all assets and liabilities
of Writer. Pursuant to the Merger Agreement, Newco will pay to the shareholders
of Writer $3.35 for each share of common stock of Writer in a combination of
cash and common stock of Standard Pacific ("Merger Consideration"). The common
stock portion of the Merger Consideration will equal the quotient of $3.35
divided by the price of Standard Pacific's stock multiplied by the number of
Writer shares electing common stock as merger consideration. Pursuant to the
Merger Agreement, the valuation price of Standard Pacific common stock cannot be
less than $11.00 per share nor more than $13.50 per share. The Merger Agreement
permits Writer to terminate the merger without penalty if the price of Standard
Pacific shares falls below $8.25 per share and allows Standard Pacific to
terminate the merger if its share price rises above $15.75 per share. In
addition, not more than sixty percent (60%) of the total Merger Consideration
will consist of Standard Pacific common stock and not less than fifty percent
(50%) will consist of cash. The Merger Agreement is subject to the approval of
the Writer shareholders. The form of Merger Agreement is attached hereto as
Exhibit 2.1.
ITEM 7: EXHIBITS
Exhibit 2.1: Plan and Agreement of Merger by and among The Writer Corporation,
Standard Pacific Corporation and TWC Acquisition Corp. dated April
14, 2000
Exhibit 2.2: List of Omitted Schedules
2
<PAGE> 3
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Registrant:
THE WRITER CORPORATION
- ------------------------------------
Date: April 26, 2000
By: /s/ Daniel J. Nickless
-------------------------------------
Printed Name: Daniel J. Nickless
---------------------------
Title: President
----------------------------------
3
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
2.1 Plan and Agreement of Merger by and among The Writer
Corporation, Standard Pacific Corporation and TWC
Acquisition Corp. dated April 14, 2000
2.2 List of Omitted Schedules
</TABLE>
<PAGE> 1
Exhibit 2.1
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
DATED AS OF APRIL __, 2000
AMONG
STANDARD PACIFIC CORP.,
THE WRITER CORPORATION
AND
TWC ACQUISITION CORP.
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I THE MERGER...................................................................................1
SECTION 1.1 The Merger.........................................................................1
SECTION 1.2 Effective Time.....................................................................1
SECTION 1.3 Closing of the Merger..............................................................2
SECTION 1.4 Effects of the Merger..............................................................2
SECTION 1.5 Certificate of Incorporation and Bylaws............................................2
SECTION 1.6 Directors..........................................................................2
SECTION 1.7 Officers.......................................................................... 2
SECTION 1.8 Conversion of Shares...............................................................3
SECTION 1.9 Payment for Shares and Exchange of Certificates....................................7
SECTION 1.10 Stock Options.....................................................................10
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY..................................................11
SECTION 2.1 Organization and Qualification; Subsidiaries......................................11
SECTION 2.2 Capitalization of Company and its Subsidiaries....................................11
SECTION 2.3 Authority Relative to this Agreement; Recommendation..............................13
SECTION 2.4 SEC Reports; Financial Statements.................................................13
SECTION 2.5 Consents and Approvals; No Violations.............................................14
SECTION 2.6 No Default........................................................................14
SECTION 2.7 No Undisclosed Liabilities; Absence of Changes....................................15
SECTION 2.8 Litigation........................................................................16
SECTION 2.9 Compliance with Applicable Law....................................................16
SECTION 2.10 Employee Benefit Plans; Labor Matters.............................................17
SECTION 2.11 Environmental Laws and Regulations................................................19
SECTION 2.12 Taxes.............................................................................21
SECTION 2.13 Intellectual Property.............................................................22
SECTION 2.14 Real Property.....................................................................23
SECTION 2.15 Projects......................................................................... 24
SECTION 2.16 Assets........................................................................... 26
SECTION 2.17 Contracts.........................................................................27
SECTION 2.18 Insurance.........................................................................28
SECTION 2.19 Product Warranties................................................................29
SECTION 2.20 Certain Business Practices........................................................29
SECTION 2.21 Brokers...........................................................................29
SECTION 2.22 Year 2000.........................................................................29
SECTION 2.23 Transactions With Affiliates......................................................30
SECTION 2.24 Suppliers, Distributors and Subcontractors........................................30
SECTION 2.25 Opinion of Financial Advisor......................................................30
SECTION 2.26 Accuracy of Information...........................................................30
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO........................................30
SECTION 3.1 Organization......................................................................30
SECTION 3.2 Capitalization of Parent and its Subsidiaries.....................................31
SECTION 3.3 Authority Relative to this Agreement..............................................31
SECTION 3.4 SEC Reports; Financial Statements.................................................32
SECTION 3.5 Consents and Approvals; No Violations.............................................32
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 3.6 No Default........................................................................33
SECTION 3.7 No Undisclosed Liabilities; Absence of Changes....................................33
SECTION 3.8 Litigation........................................................................33
SECTION 3.9 Compliance with Applicable Law....................................................33
SECTION 3.10 Brokers...........................................................................34
SECTION 3.11 Year 2000.........................................................................34
SECTION 3.12 Accuracy of Information...........................................................34
ARTICLE IV COVENANTS .................................................................................34
SECTION 4.1 Conduct of Business of Company....................................................34
SECTION 4.2 Preparation of Form S-4 and the Proxy Statement...................................36
SECTION 4.3 Other Potential Acquirers.........................................................38
SECTION 4.4 Comfort Letters...................................................................39
SECTION 4.5 Meetings of Shareholders..........................................................40
SECTION 4.6 NYSE Listing......................................................................40
SECTION 4.7 Access to Information; Confidentiality............................................40
SECTION 4.8 Additional Agreements; Reasonable Efforts.........................................41
SECTION 4.9 Public Announcements..............................................................41
SECTION 4.10 Notification of Certain Matters...................................................41
SECTION 4.11 Affiliates........................................................................42
SECTION 4.12 Lock-up Letter Agreement..........................................................42
SECTION 4.13 Indemnification and Insurance.....................................................42
SECTION 4.14 Use of Writer Name................................................................43
SECTION 4.15 Agreement of Management Group.....................................................44
SECTION 4.16 Consents..........................................................................45
SECTION 4.17 SEC Reports.......................................................................45
SECTION 4.18 Taxes.............................................................................45
SECTION 4.19 Termination of Profit Sharing Plan................................................45
SECTION 4.20 Termination of Nonqualified Profit Sharing Plan...................................45
ARTICLE V CONDITIONS TO CONSUMMATION OF THE MERGER....................................................46
SECTION 5.1 Conditions to Each Party's Obligations to Effect the Merger.......................46
SECTION 5.2 Conditions to the Obligations of Company..........................................46
SECTION 5.3 Conditions to the Obligations of Parent and Newco.................................47
ARTICLE VI TERMINATION; AMENDMENT; WAIVER.............................................................49
SECTION 6.1 Termination.......................................................................49
SECTION 6.2 Effect of Termination.............................................................50
SECTION 6.3 Fees and Expenses.................................................................50
SECTION 6.4 Amendment.........................................................................51
SECTION 6.5 Extension; Waiver.................................................................51
ARTICLE VII MISCELLANEOUS.............................................................................52
SECTION 7.1 Survival of Representations and Warranties........................................52
SECTION 7.2 Entire Agreement; Assignment......................................................52
SECTION 7.3 Validity..........................................................................52
SECTION 7.4 Notices...........................................................................52
SECTION 7.5 Governing Law.....................................................................53
SECTION 7.6 Descriptive Headings..............................................................53
SECTION 7.7 Parties in Interest...............................................................53
SECTION 7.8 Certain Definitions...............................................................53
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 7.9 Specific Performance..............................................................54
SECTION 7.10 Construction Defects..............................................................54
SECTION 7.11 Counterparts......................................................................54
</TABLE>
TABLE OF EXHIBITS
<TABLE>
<S> <C>
Exhibit A.........................................................Form of Certificate of Merger
Exhibit B............................................................Form of Articles of Merger
Exhibit C...................................................Form of Management Member Agreement
Exhibit D......................................................Form of Lock-Up Letter Agreement
Exhibit E...................................................Form of Writer Employment Agreement
Exhibit F.................................................Form of Nickless Employment Agreement
</TABLE>
iii
<PAGE> 5
TABLE OF DEFINED TERMS
<TABLE>
<CAPTION>
Cross Reference
Term in Agreement Page
- ---- --------------- ----
<S> <C> <C>
Acquisition Real Property Section 2.14..........................22
affiliate Section 7.8(a)........................51
Aggregate Cash Consideration Section 1.8(d).........................5
Aggregate Merger Consideration Section 1.8(a)(ii).....................3
Agreement Preamble...............................1
Articles of Merger Section 1.2............................1
business day Section 7.8(b)........................51
capital stock Section 7.8(c)........................51
Cash Election Shares Section 1.8(c)(i)......................5
CBCA Section 1.1............................1
CCIOA Section 2.15(b).......................24
Certificate of Merger Section 1.2............................1
Certificates Section 1.8(a)(ii).....................3
Change in Control of Parent Section 4.14(b).......................41
Closing Date Section 1.3............................2
Closing Section 1.3............................2
Code Preamble...............................1
Company Board Section 2.3(a)........................12
Company D&O Insurance Section 4.13(b).......................40
Company Disclosure Schedule Section 2.1(a)........................10
Company Financial Adviser Section 2.25..........................28
Company Permits Section 2.9...........................16
Company Plans Section 1.10..........................10
Company Preamble...............................1
Company SEC Reports Section 2.4(a)........................13
Company Securities Section 2.2(a)(ii)....................11
Company Stock Option Section 1.10..........................10
Confidential Material Section 4.7(c)........................38
Contracts Section 2.17(a).......................25
DGCL Section 1.1............................1
Dissenting Shares Section 1.8(g).........................7
Effective Time Section 1.2............................1
Election Deadline Section 1.8(b)(ii).....................4
Election Form Record Date Section 1.8(b)(i)......................4
Election Section 1.8(b)(i)......................4
Employee Plans Section 2.10(a).......................16
Enforcement Exceptions Section 2.3(a)........................12
Entitlements Section 2.15(c).......................24
Environmental Law Section 2.11(b)(i)....................19
ERISA Affiliate Section 2.10(a).......................16
ERISA Section 2.10(a).......................16
Exchange Act Person Section 4.14(b)(i)....................41
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C> <C>
Exchange Act Section 2.2(d).......................12
Exchange Agent Section 1.9(a)........................7
Exchange Ratio Section 1.8(a)(i).....................3
Excluded Shares Section 1.8(a)........................3
Fee Real Property Section 2.14.........................22
Form of Election Section 1.8(b)(i).....................4
Form S-4 Section 4.2(c).......................35
Governmental Entity Section 2.5(a).......................13
Hazardous Substance Section 2.11(b)(ii)..................20
HSR Act Section 2.5(a).......................13
Incumbent Board Section 4.14(b)(i)...................41
Indemnified Parties Section 4.13(a)......................40
Information Systems and Equipment Section 2.22(b)......................28
Insurance Policies Section 2.18(a)......................27
Intellectual Property Section 2.13(a)......................21
Investments Section 1.9(a)........................7
IRS Section 2.10(b)......................16
Leases Section 2.14.........................22
Letter of Transmittal Section 1.9(b)........................8
Lien Section 2.2(c).......................12
Lock Up Agreement Section 4.12 ........................40
Mailing Date Section 1.8(b)(i).....................4
Management Group Section 4.15.........................42
Management Member Agreement Section 4.15.........................42
Material Adverse Effect on Company Section 2.1(b).......................11
Material Adverse Effect on Parent Section 3.1(b).......................29
Material Intellectual Property Section 2.13(b)......................21
Maximum Cash Election Amount Section 1.8(d)........................5
Maximum Share Number Section 1.8(c)........................5
Merger Consideration Section 1.8(a)........................3
Merger Section 1.1...........................1
Newco Preamble..............................1
Non-Election Cash Section 1.8(e)(c).....................6
Non-Election Shares Section 1.8(b)(ii)....................4
Notice of Superior Proposal Section 4.3(b).......................36
NYSE Section 1.8(a)(ii)....................3
Option Payment Section 1.10.........................10
Other Interests Section 2.1(c).......................11
Parent Common Stock Section 1.8(a)(i).....................3
Parent Permits Section 3.9..........................32
Parent Preamble..............................1
Parent SEC Reports Section 3.4..........................30
Parent Securities Section 3.2(b).......................30
Payment Fund Section 1.9(a)........................7
Per Share Cash Amount Section 1.8(a)(i).....................3
person Section 7.8(d).......................51
Projects Section 2.15(a)......................23
Proration Factor Section 1.8(c)(ii)....................5
</TABLE>
v
<PAGE> 7
<TABLE>
<S> <C> <C>
Proxy Statement Section 4.2(c).......................35
Real Property Section 2.14.........................22
Representative Section 1.8(b)(i).....................4
SEC Section 2.4(a).......................13
Securities Act Section 2.4(a).......................13
Share and Shares Section 1.8(a)........................2
Stock Election Shares Section 1.8(c)........................5
subsidiary or subsidiaries Section 7.8(e).......................51
Subsidiary Securities Section 2.2(b)(ii)...................12
Superior Proposal Section 4.3(c).......................37
Surviving Corporation Section 1.1...........................1
Tax or Taxes Section 2.12(a)(i)...................20
Tax Return Section 2.12(a)(ii)..................20
Third Party Acquisition Section 4.3(c).......................37
Third Party Section 4.3(c).......................37
Valuation Period Section 1.8(a)(ii)....................3
Valuation Price Section 1.8(a)(ii)....................3
Writer Name Section 4.14(a)......................41
Year 2000 Compliant Section 2.22(b)......................28
</TABLE>
vi
<PAGE> 8
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is dated as of
April __, 2000 by and among Standard Pacific Corp., a Delaware corporation
("PARENT"), TWC Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent ("NEWCO"), and The Writer Corporation, a Colorado
corporation ("COMPANY").
WHEREAS, the Boards of Directors of Parent, Newco and Company have each
(i) determined that the Merger is in the best interests of their respective
stockholders and (ii) approved the Merger in accordance with this Agreement;
WHEREAS, each of Parent, Newco and Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger; and
WHEREAS, for federal income Tax purposes it is intended that the Merger
shall qualify as a reorganization under the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended (the "CODE");
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained and
intending to be legally bound Parent, Newco and Company hereby agree as follows:
1. ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER. At the Effective Time and upon the terms and
subject to the conditions of this Agreement and in accordance with the Delaware
General Corporation Law (the "DGCL") and the Colorado Business Corporation Act
(the "CBCA"), Company shall be merged with and into Newco (the "MERGER").
Following the Merger, Newco shall continue as the surviving corporation (the
"SURVIVING CORPORATION") and the separate corporate existence of Company shall
cease.
SECTION 1.2 EFFECTIVE TIME. Subject to the terms and conditions set
forth in this Agreement, a Certificate of Merger substantially in the form of
Exhibit A (the "CERTIFICATE OF MERGER") and Articles of Merger substantially in
the form of Exhibit B (the "ARTICLES OF MERGER") shall each be duly executed and
acknowledged by Newco and Company and thereafter delivered to the Secretaries of
State of the States of Delaware and Colorado, for filing pursuant to the DGCL
and the CBCA, respectively, on the Closing Date. The Merger shall become
effective at such time as a properly executed and certified copy of the
Certificate of Merger and Articles of Merger are duly filed with the Secretaries
of State of the States of Delaware and Colorado in accordance with the DGCL and
the CBCA, respectively, or such later time upon which Parent and Company may
agree and set forth in the Certificate of Merger and the Articles of Merger (the
time the Merger becomes effective being referred to herein as the "EFFECTIVE
TIME").
Page 1
<PAGE> 9
SECTION 1.3 CLOSING OF THE MERGER. The closing of the Merger (the
"CLOSING") will take place at 10:00 a.m. California time on a date (the "CLOSING
DATE") to be specified by the parties, which shall be no later than the third
(3rd) business day after satisfaction of the latest to occur of the conditions
set forth in Article V, at the offices of Gibson, Dunn & Crutcher LLP, 4 Park
Plaza, Irvine, California 92614, unless another time, date or place is agreed to
in writing by the parties hereto.
SECTION 1.4 EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in the DGCL and the CBCA. Without limiting the generality of the
foregoing and subject thereto, at the Effective Time, all of the properties,
rights, privileges, powers and franchises of Company and Newco shall vest in the
Surviving Corporation and all debts, liabilities and duties of Company and Newco
shall become the debts, liabilities and duties of the Surviving Corporation.
SECTION 1.5 CERTIFICATE OF INCORPORATION AND BYLAWS. The certificate of
incorporation of Newco in effect at the Effective Time shall be the certificate
of incorporation of the Surviving Corporation until thereafter amended as
provided therein and in accordance with applicable law; provided that Article
One of the certificate of incorporation of the Surviving Corporation shall be
amended in its entirety to read as follows: "The name of the corporation is The
Writer Corporation." The bylaws of Newco in effect at the Effective Time shall
be the bylaws of the Surviving Corporation until thereafter amended as provided
therein and in accordance with applicable law.
SECTION 1.6 DIRECTORS. The persons named below shall be the initial
directors of the Surviving Corporation, each to hold office in accordance with
the certificate of incorporation and bylaws of the Surviving Corporation until
such director's successor is duly elected or appointed and qualified:
Arthur E. Svendsen
Stephen J. Scarborough
Andrew H. Parnes
George S. Writer, Jr.
SECTION 1.7 OFFICERS. The officers of Company at the Effective Time
together with the persons named below, shall serve as the initial officers of
the Surviving Corporation, each to hold office in accordance with the
certificate of incorporation and bylaws of the Surviving Corporation until such
officer's successor is duly elected or appointed and qualified:
Stephen J. Scarborough Assistant Secretary
Clay A. Halvorsen Assistant Secretary
Andrew H. Parnes Assistant Treasurer
John M. Stephens Assistant Treasurer
Page 2
<PAGE> 10
SECTION 1.8 CONVERSION OF SHARES.
(a) Conversion. Subject to the election, allocation and proration
provisions set forth below, at the Effective Time, each share of common stock,
$0.10 par value per share, of Company (individually a "SHARE" and collectively
the "SHARES") issued and outstanding immediately prior to the Effective Time
(other than (i) Shares held by any of Company's subsidiaries, (ii) Shares held
by Parent, Newco or any other subsidiary of Parent, and (iii) Dissenting Shares
as to which appraisal rights have been perfected under the CBCA (collectively,
the "EXCLUDED SHARES")) shall, by virtue of the Merger and without any action on
the part of Newco, Company or the holder thereof, be converted into the "MERGER
CONSIDERATION" as follows:
(i) the right to receive a number of shares of Parent's common
stock, $0.01 par value per share, including accompanying Preferred Share
Purchase Rights issued pursuant to that certain Rights Agreement between Parent
and First Chicago Trust Company of New York, as rights agent ("PARENT COMMON
STOCK"), equal to the quotient (calculated to the nearest 0.0001) of $3.35 (the
"PER SHARE CASH AMOUNT") divided by the Valuation Price (the "EXCHANGE RATIO");
or
(ii) the right to receive in cash, without interest, the Per
Share Cash Amount,
provided, however, that, in any event, if between the date of
this Agreement and the Effective Time the outstanding shares of Parent Common
Stock or Shares shall have been changed into a different number of shares or a
different class, by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the Exchange Ratio
and the Per Share Cash Amount shall be correspondingly adjusted to reflect such
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares. The "VALUATION PRICE" means the arithmetic
average of the New York Stock Exchange, Inc. (the "NYSE") closing sale prices
for Parent Common Stock (as reported in The Wall Street Journal or, in the
absence thereof, by another authoritative source) for the twenty consecutive
trading-day period ending on the third business day immediately prior to the
anticipated Closing Date (the "VALUATION PERIOD"); provided, however that if
such mean is less than $11.00 per share, the Valuation Price shall equal $11.00
per share, and if the mean is greater than $13.50 per share, the Valuation Price
shall equal $13.50 per share.
Each Share issued and outstanding immediately prior to the Effective
Time (excluding the Excluded Shares) shall at the Effective Time no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each certificate previously evidencing any such Shares
("CERTIFICATES") shall thereafter represent the right to receive only the Merger
Consideration. The holders of Certificates shall cease to have any rights with
respect to the Shares previously represented thereby, except as otherwise
provided herein or by law. Such Certificates previously evidencing such Shares
shall be exchanged for (A) certificates evidencing whole shares of Parent Common
Stock issued in consideration therefor or (B) the Per Share Cash Amount
multiplied by the number of Shares previously evidenced by the canceled
Certificate or (C) a combination of such certificates and cash, in each case in
accordance with the allocation procedures of this Section 1.8 and upon the
surrender of such Certificates in accordance with the provisions of Section 1.9,
without interest. No fractional shares of Parent
Page 3
<PAGE> 11
Common Stock shall be issued and, in lieu thereof, a cash payment shall be made
pursuant to Section 1.9(e The aggregate of the Merger Consideration provided
in exchange for all Shares is referred to herein as the "AGGREGATE MERGER
CONSIDERATION."
(b) Election.
(i) Election forms in such form as mutually agreed to by the
parties (each a "FORM OF ELECTION") and a Letter of Transmittal shall be mailed
by the Company with the Proxy Statement (the date of such mailing being referred
to herein as the "MAILING DATE"), to each holder of record of Shares as of ten
(10) business days prior to the Mailing Date (the "ELECTION FORM RECORD DATE"
Each Election Form shall permit the holder (or the beneficial owner through
appropriate and customary documentation and instructions) to make an
unconditional election (an "ELECTION") to receive (subject to the allocation and
proration procedures set forth below) one or a combination of the following in
exchange for all of such holder's Shares: (A) cash, or (B) Parent Common Stock.
Alternatively, each Election Form will permit the holder to indicate that such
holder has no preference as to the receipt of cash or Parent Common Stock for
such holder's Shares. Holders of record of Shares who hold such Shares as
nominees, trustees or in other representative capacities (a "REPRESENTATIVE")
may submit multiple Forms of Election, provided that such Representative
certifies that each such Form of Election covers all the Shares held by such
Representative for a particular beneficial owner.
(ii) Any Shares (excluding the Excluded Shares) with respect
to which the holder (or the beneficial owner, as the case may be) shall not have
submitted to the Exchange Agent an effective, properly completed Election Form
on or before 5:00 p.m. (New York City time) on the 25th day following the
Mailing Date (or such other time and date as Parent and Company may mutually
agree) (the "ELECTION DEADLINE") shall be deemed to be Shares with respect to
which a Non-Election has been made (the "NON-ELECTION SHARES").
(iii) Parent shall make available (or shall cause the Exchange
Agent to make available) one or more separate Election Forms to all persons who
become holders (or beneficial owners) of Shares between the Election Form Record
Date and the close of business on the business day prior to the Election
Deadline upon such holder's request to the Exchange Agent, and Company shall
provide to the Exchange Agent all information reasonably necessary for it to
perform as specified herein.
(iv) Any election shall have been properly made only if the
Exchange Agent shall have actually received a properly completed Election Form
by the Election Deadline. An Election Form shall be deemed properly completed
only if accompanied by one or more Certificates (or affidavits and
indemnification regarding the loss or destruction of such Certificates
reasonably acceptable to Parent or the guaranteed delivery of such Certificates)
representing all Shares covered by such Election Form, together with a duly
executed Letter of Transmittal. Any Election Form may be revoked or changed by
the person submitting such Election Form at or prior to the Election Deadline.
In addition, all Election Forms shall automatically be revoked if the Exchange
Agent is notified in writing by Newco and Company that this Agreement has been
terminated in accordance with its terms and the Merger has been abandoned, and
Parent shall cause the Certificates to be promptly returned without charge to
the
Page 4
<PAGE> 12
person submitting the Election Form upon written request to that effect from
such person. If an Election Form is revoked prior to the Election Deadline, the
Shares represented by such Election Form shall be deemed to be Non-Election
Shares (unless thereafter covered by a duly completed Election Form).
(v) Parent will have the discretion, which it may delegate in
whole or in part to the Exchange Agent, to determine whether Forms of Election
have been properly completed, signed and submitted or revoked and to disregard
immaterial defects in Forms of Election. If Parent (or the Exchange Agent) shall
determine that any purported Election was not properly made, such purported
Election shall have no force and effect and the holder making such purported
Election shall for purposes hereof be deemed to have made a Non-Election. The
decision of Parent (or the Exchange Agent) in all such matters shall be
conclusive and binding. Neither Parent nor the Exchange Agent will be under any
obligation to notify any person of any defect in a Form of Election submitted to
the Exchange Agent. The Exchange Agent shall also make all computations
contemplated by this Section 1.8 and all such computations shall be conclusive
and binding on the holders of Shares.
(c) Over-Election of Parent Common Stock. Notwithstanding anything
contained in this Agreement to the contrary, if the aggregate number of Shares
covered by Elections electing to receive Parent Common Stock (the "STOCK
ELECTION SHARES") exceeds the number of Shares which equals 60% of the
outstanding Shares at the Effective Time (the "MAXIMUM SHARE NUMBER"), then:
(i) all Shares covered by Elections to receive cash (the "CASH
ELECTION SHARES") and all Non-Election Shares shall be converted into the right
to receive the Per Share Cash Amount; and
(ii)(A) a proration factor shall be determined by dividing the
Maximum Share Number by the aggregate number of Stock Election Shares (the
"PRORATION FACTOR"); and
(B) each Stock Election Share shall be converted on a
consistent basis into the right to receive (1) a fractional share of Parent
Common Stock equal to the Exchange Ratio multiplied by the Proration Factor, and
(2) the right to receive cash in an amount equal to the Per Share Cash Amount
multiplied by the difference between one and the Proration Factor.
(d) Over-Election of Cash. Notwithstanding anything contained in this
Agreement to the contrary, if the sum of (A) the aggregate number of Cash
Election Shares multiplied by the Per Cash Amount plus (B) the aggregate cash
amount to be paid pursuant to Section 1.9(e), plus (C) the number of Dissenting
Shares multiplied by the Per Share Cash Amount, plus (D) the aggregate amount of
any other amounts paid by Parent or Company (or persons related to Company or
Parent within the meaning of Treasury Regulation Sections 1.368-1(e) and
1.368-1T(e)) to, or on behalf of, any shareholder of Company in connection with
the sale or other disposition of the Shares in connection with the Merger for
purposes of Treasury Regulations Section 1.368-1(e) and 1.368-1T(e), plus (E)
any extraordinary dividend distributed by Company prior to and in connection
with the Merger for purposes of Treasury Regulations Section 1.368-1T(e)
(collectively, the "AGGREGATE CASH CONSIDERATION"), exceeds 50% of the Aggregate
Merger Consideration (the "MAXIMUM CASH ELECTION AMOUNT"), then:
Page 5
<PAGE> 13
(i) all Stock Election Shares and all Non-Election Shares
shall be converted into the right to receive Parent Common Stock, at the
Exchange Ratio;
(ii) the elections of the Management Group shall be adjusted
as set forth in the Management Member Agreement substantially in the form
attached hereto as Exhibit C, which provides that the number of Cash Election
Shares held by the Management Group, to the extent necessary, shall be reduced
to allow each shareholder of the Company that is not a member of the Management
Group to receive cash for all Cash Election Shares held by such Shareholder, or
as close as possible to all cash, provided, that in no event shall the Aggregate
Cash Consideration exceed 50% of the Aggregate Merger Consideration; and
(iii) If the Aggregate Cash Consideration continues to exceed
50% of the Aggregate Merger Consideration after the adjustment pursuant to the
Management Member Agreement, the cash amount that each remaining Cash Election
Share shall receive shall be reduced on a pro rata basis with all other
remaining Cash Election Shares such that the Aggregate Cash Consideration shall
equal 50% of the Aggregate Merger Consideration, and each such Cash Election
Share shall be entitled to receive a fractional share of Parent Common Stock
equal to (A) the difference in the Per Share Cash Amount and the per share
amount paid in cash pursuant to this paragraph (iii), divided by (B) the
Valuation Price.
(e) No Over-Election. If neither the Aggregate Cash Consideration
exceeds the Maximum Cash Election Amount, nor the number of Stock Election
Shares exceeds the Maximum Share Number, then:
(i) all Cash Election Shares shall be converted into the right
to receive the Per Share Cash Amount;
(ii) all Stock Election Shares shall be converted into the
right to receive Parent Common Stock at the Exchange Ratio; and
(iii) an appropriate allocation will be made on a consistent
basis among Non-Election Shares so that (1) the Aggregate Cash Consideration and
(2) the aggregate value, at the Valuation Price, of the Parent Common Stock
issued as part of the Merger Consideration each equal fifty percent (50%) of the
aggregate Merger Consideration paid for all Shares, using the following formula:
each Non-Election Share will be converted into the right to receive (y) a cash
amount equal to (A) the difference between the Maximum Cash Election Amount and
the Aggregate Cash Consideration (without taking into consideration the
Non-Election Shares), divided by (B) the number of Non-Election Shares (the
"NON-ELECTION CASH") and (z) a fractional share of Parent Common Stock equal to
(Y) the difference between the Per Share Cash Amount and the Non-Election Cash,
divided by (Z) the Valuation Price. Notwithstanding the foregoing, if the Stock
Election Shares are greater than 50% of the Outstanding Shares at the Effective
Time, but less than 60% of such Shares, then all Non-Election Shares shall be
treated as Cash Election Shares.
Page 6
<PAGE> 14
(f) Each Share owned by Parent or any direct or indirect wholly owned
subsidiary of Parent or Company immediately prior to the Effective Time by
virtue of the Merger and without any action on the part of Newco, Company or the
holder thereof, shall be canceled and extinguished without any conversion
thereof and no payment shall be made with respect thereto.
(g) Notwithstanding anything in this Agreement to the contrary, each
Share that is issued and outstanding immediately prior to the Effective Time and
that is held by a shareholder who has properly demanded and perfected such
shareholder's rights to dissent from the Merger and to be paid the fair value of
such Shares in accordance with Title 7, Article 113 of the CBCA (the "DISSENTING
SHARES"), shall not be converted into or exchangeable for the right to receive
the Merger Consideration, but the holder thereof shall be entitled to such
rights as are granted by the CBCA and the Surviving Corporation shall make all
payments to the holders of such Shares with respect to such demands in
accordance with the CBCA; provided, however, that if such holder shall have
failed to perfect or shall have lost the right to dissent and receive payment
under the CBCA, each Share held by such holder shall thereupon be deemed to have
been converted into and to have become exchangeable for, as of the Effective
Time, solely the right to receive Merger Consideration as follows: subject to
compliance with Section 1.9, the holder of such Dissenting Shares shall be
entitled to receive the same combination of cash (without interest) and Parent
Common Stock as a holder of the same number of Shares with respect to which a
Non-Election was made. Company shall give reasonably prompt notice to Newco and
Parent of any demands received by Company for payment under Title 7, Article 113
of the CBCA, and Newco and Parent shall have the right to participate in all
negotiations and proceedings with respect to such demands. Company shall not,
except with the prior written consent of Newco and Parent, make any payment with
respect to, or settle or offer to settle, such demands.
(h) Each issued and outstanding share of capital stock of Newco shall
continue as a validly issued, fully paid and nonassessable share of common
stock, par value of $0.0l per share, of the Surviving Corporation. Each
certificate representing any such shares of Newco shall continue to represent
the same number of shares of common stock of the Surviving Corporation.
SECTION 1.9 PAYMENT FOR SHARES AND EXCHANGE OF CERTIFICATES.
(a) Exchange Agent. From time to time following the Effective Time, as
required by subsections (b) and (c) below, Parent shall cause to be deposited in
trust with First Chicago Trust Company of New York, or such other agent or
agents as may be appointed by Parent (the "EXCHANGE AGENT") (i) certificates
representing the shares of Parent Common Stock issuable pursuant to Section 1.8
in exchange for Shares and (ii) the aggregate cash portion of the Merger
Consideration to which holders of Shares shall be entitled at the Effective Time
pursuant to the provisions of Section 1.8 (the "PAYMENT FUND").
Parent shall cause the Exchange Agent to make the payments provided for
in Section 1.8 out of the Payment Fund. The Exchange Agent shall invest
undistributed portions of the Payment Fund as Parent directs ("INVESTMENTS");
provided, however, that the maturities of Investments shall be such as to permit
the Exchange Agent to make prompt payment to former holders of Shares entitled
thereto as contemplated by the provisions of this Article I. All net
Page 7
<PAGE> 15
earnings of Investments shall be paid to Parent as and when requested by Parent.
If for any reason (including losses) the Payment Fund is inadequate to pay the
amounts to which holders of Shares shall be entitled under the provisions of
this Article I, Parent shall in any event be liable for payment thereof.
The Payment Fund shall not be used for any purpose except as expressly
provided in this Agreement. If any Merger Consideration deposited with the
Exchange Agent for purposes of paying for the Shares pursuant to the provisions
of this Article I remains unclaimed following the expiration of one year after
the Effective Time, such Merger Consideration (together with accrued interest)
shall be delivered to Parent by the Exchange Agent, and thereafter, holders of
certificates that immediately prior to the Effective Time represented Shares
shall be entitled to look only to the Surviving Corporation (subject to
abandoned property, escheat or similar laws) as general creditors thereof.
(b) Exchange. As soon as reasonably practicable after the Effective
Time, Parent shall cause the Exchange Agent to mail to each holder of record of
a Certificate or Certificates that immediately prior to the Effective Time
represented outstanding Shares and which are converted into the right to receive
the Merger Consideration pursuant to the provisions of Section 1.8: (i) a letter
of transmittal (which shall specify that delivery shall be effected and risk of
loss and title to the Certificates shall pass only upon proper delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for payment of the
Merger Consideration for the Shares represented thereby (collectively, the
"LETTER OF TRANSMITTAL"), unless such holder shall have submitted a Letter of
Transmittal together with the Form of Election pursuant to Section 1.8(b).
Upon surrender of a Certificate for cancellation to the Exchange Agent,
together with such Letter of Transmittal duly executed and completed in
accordance with its terms, the holder of such Certificate shall be entitled to
receive following the Effective Time in exchange therefor (i) a check
representing that amount in cash as determined pursuant to the provisions of
Section 1.8 and, if applicable, the cash consideration to which such holder
would be entitled on account of a fractional share of Parent Common Stock that
such holder has the right to receive pursuant to the provisions of Section
1.9(e), and (ii) a certificate representing that number of whole shares of
Parent Common Stock as determined pursuant to the provisions of Section 1.8, and
the Certificate so surrendered shall forthwith be canceled.
No interest will be paid or accrued on any cash payable upon the
surrender of the Certificates. If the payment is to be made to a person other
than the person in whose name a Certificate surrendered is registered, it shall
be a condition of payment that (A) the Certificate so surrendered shall be
properly endorsed or otherwise in proper form to evidence and effect the
transfer to such person or persons as reasonably determined by Parent and (B)
the person requesting such payment shall pay any transfer or other taxes
required by reason of the payment to a person other than the registered holder
of the Certificate surrendered or establish to the satisfaction of Parent that
such tax has been paid or is not applicable. Until surrendered in accordance
with the provisions of this Section 1.9, each Certificate shall represent for
all purposes whatsoever only the right to receive the Merger Consideration
applicable thereto, without any interest thereon.
Page 8
<PAGE> 16
(c) Distributions with Respect to Unexchanged Shares. With respect to
Stock Election Shares and Non-Election Shares entitled to receive Parent Common
Stock, no dividends or other distributions with respect to Parent Common Stock
with a record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate for Shares with respect to the Parent Common Stock
represented thereby and no cash payment in lieu of fractional Shares shall be
paid to any such holder pursuant to the provisions of Section 1.9(e) until the
surrender of such Certificate in accordance with the provisions of this Section
1.9. Subject to the effect of applicable laws, following surrender of any such
Certificate, there shall be (i) issued to the holder a certificate representing
whole shares of Parent Common Stock and (ii) paid in connection therewith to
holder, without interest, (A) the amount of any cash payable in lieu of a
fractional share to which such holder is entitled pursuant to the provisions of
Section 1.9(e), (B) the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such whole Parent
Common Stock, and (C) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the Effective Time but before
such surrender and a payment date after such surrender payable with respect to
such whole Parent Common Stock.
(d) No Further Ownership Rights in Shares Exchanged. All cash paid and
Parent Common Stock issued upon the surrender for exchange of Shares in
accordance with the provisions of this Article I shall be deemed to have been
paid and issued in full satisfaction of all rights pertaining to such Shares.
(e) No Fractional Shares. No certificates or scrip representing
fractional Parent Common Stock shall be issued in connection with the Merger,
and such fractional share interests will not entitle the owner thereof to vote
or to any rights of a stockholder of Parent. Notwithstanding any other provision
of this Agreement, each record holder of Shares exchanged pursuant to the Merger
who would otherwise have been entitled to receive a fraction of a share of
Parent Common Stock (after taking into account all Shares delivered by such
holder) shall receive, in lieu thereof, a cash payment (without interest) equal
to such fraction multiplied by the Valuation Price. The parties acknowledge that
payment of the cash consideration in lieu of issuing fractional shares was not
separately bargained for consideration, but merely represents a mechanical
rounding off for purposes of simplifying the corporate and accounting
complexities that would otherwise be caused by the issuance of fractional
shares.
(f) No Transfers. After the Effective Time, there shall be no transfers
on the stock transfer books of the Surviving Corporation of the Shares that were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation or Parent for any
reason, they shall be canceled and exchanged as provided in this Article I,
except as otherwise provided by law.
(g) No Liability. None of Parent, Newco, Company or the Exchange Agent
shall be liable to any person in respect of any Merger Consideration (or
dividends or distributions with respect thereto) delivered to a public official
pursuant to any applicable abandoned property,
Page 9
<PAGE> 17
escheat or similar law. If any Certificate shall not have been surrendered prior
to seven years after the Effective Time (or immediately prior to such earlier
date on which any Merger Consideration payable to the holder of such Certificate
pursuant to the provisions of this Article I would otherwise escheat to or
become the property of any Governmental Entity, any such Merger Consideration
shall, to the extent permitted by applicable law, become the property of Parent,
free and clear of all claims or interest of any person previously entitled
thereto.
(h) Lost Certificate. If any Certificate for Shares shall have been
lost, stolen or destroyed, the Exchange Agent shall issue in exchange therefor,
upon the making of an affidavit of that fact by the holder thereof in form
reasonably satisfactory to Parent, such Merger Consideration as may be required
pursuant to the provisions of this Article I; provided, however, that Parent or
its Exchange Agent may, in its discretion, require the delivery of a suitable
bond or indemnity.
(i) Return of Merger Consideration. Any portion of the Aggregate Merger
Consideration made available to the Exchange Agent to pay for Dissenting Shares
for which appraisal rights have been perfected shall be returned to Parent,
promptly upon demand.
SECTION 1.10 STOCK OPTIONS. Company shall take all action, including
delivery of, not less than 30 days' prior to the Closing Date, notice of the
Merger and cancellation of outstanding options, necessary so that each option to
purchase Shares (each, a "COMPANY STOCK OPTION") issued pursuant to the
provisions of any Company Stock Option plan or agreement (the "COMPANY PLANS")
outstanding immediately prior to the Effective Time shall be canceled
immediately prior to the Effective Time in exchange for the right to receive, at
the holder's option: (i) cash in an amount equal to the product of (A) the
number of Shares of stock subject to such Company Stock Option immediately prior
to the Effective Time and (B) the excess, if any, of the Per Share Cash Amount
over the per share exercise price of such Company Stock Option (the "OPTION
PAYMENT") or (ii) the number of Shares of Parent Common Stock determined by
dividing the value of the Option Payment by the Valuation Price. Such cash and
shares of Parent Common Stock shall be delivered or issued by the Surviving
Corporation immediately following the Effective Time. All applicable taxes
attributable to the exercise of Company Stock Options and the Option Payment
made hereunder or to distributions contemplated hereby shall be deducted from
the amounts payable under this Section 1.10 or, if no such amounts are payable
in cash, then the amount of such taxes shall be paid to the Company by each
respective option holder by personal check. Notwithstanding the foregoing, any
Company Stock Option with an exercise price greater than the Per Share Cash
Amount immediately prior to the Effective Time shall be cancelled immediately
prior to the Effective Time, without any payment being made therefor. Company
shall use its reasonable best efforts to obtain the consent of each holder of
company Stock Options to the foregoing treatment of such Company Stock Options
to the extent required under the Company Plans.
Page 10
<PAGE> 18
2. ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company hereby represents and warrants to each of Parent and Newco as
follows:
SECTION 2.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Section 2.1 of the Disclosure Schedule delivered by Company to
Parent dated the date of this Agreement (the "COMPANY DISCLOSURE SCHEDULE")
identifies each directly and indirectly owned subsidiary of Company and its
respective jurisdiction of incorporation or organization, as the case may be and
the percentage of each subsidiary's outstanding capital stock or other equity
interests owned by Company or another subsidiary of Company. Except as set forth
in Section 2.1(a) of the Company Disclosure Schedule, each of Company and its
subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has all
requisite power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted. Company has heretofore delivered
to Newco or Parent accurate and complete copies of the charter and bylaws (or
similar governing documents, including in the case of partnerships, the
partnership agreement), as currently in effect, of Company and its subsidiaries.
Writer Homes, Inc. and Writer Peninsula, Inc. have no assets, liabilities or
ongoing operations, other than unliquidated contingent liabilities for
infrastructure warranties and homeowner warranties.
(b) Each of Company and its subsidiaries is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed and in good standing would
not have a Material Adverse Effect on Company. The term "MATERIAL ADVERSE EFFECT
ON COMPANY" means any change or effect that (i) is or is reasonably likely to be
materially adverse to the business, assets, results of operations, condition
(financial or otherwise) or prospects of Company and its subsidiaries, taken as
whole, or (ii) would or would be reasonably likely to impair the ability of
Company to consummate the transactions contemplated hereby.
(c) Section 2.1(c) of the Company Disclosure Schedule sets forth a true
and complete list of each equity investment held by Company or any of its
subsidiaries in any other person other than Company's subsidiaries
(collectively, "OTHER INTERESTS"). The Other Interests are free and clear of all
Liens on any other limitation or restriction.
(d) Company is not a "foreign person" as that term is defined in
Section 1445 of the Code and any applicable regulations promulgated thereunder.
SECTION 2.2. CAPITALIZATION OF COMPANY AND ITS SUBSIDIARIES.
(a) The authorized capital stock of Company consists solely of
10,000,000 Shares, of which 7,462,480 Shares are issued and outstanding.
Page 11
<PAGE> 19
(i) All of the outstanding Shares have been validly issued and
are fully paid, nonassessable and free of preemptive rights or any right of
first refusal and Company has no liability under the provisions of applicable
Federal and state securities laws by reason of the issuance or sale thereof.
495,250 Shares are reserved for issuance and issuable upon or otherwise
deliverable in connection with the exercise of outstanding Company Stock Options
issued pursuant to Company Plans.
(ii) Set forth in Section 2.2(a) of the Company Disclosure
Schedule is a true and complete list of all outstanding or authorized Company
Stock Options, warrants, calls, rights, commitments or any other agreements of
any character that may obligate Company or its subsidiaries to issue any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of Company. Except as set forth above in this
Section 2.2(a) or in Section 2.2(a) of the Company Disclosure Schedule, there
are outstanding (A) no shares of capital stock or other voting securities of
Company, (B) no securities of Company or its subsidiaries convertible into or
exchangeable for shares of capital stock or voting securities of Company, (C) no
options or other rights to acquire from Company or its subsidiaries, and no
obligations of Company or its subsidiaries to issue any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of Company, and (D) no equity equivalent interests in the
ownership or earnings of Company or its subsidiaries or other similar rights
(collectively "COMPANY SECURITIES"). There are no outstanding obligations of
Company or its subsidiaries to repurchase, redeem or otherwise acquire any
Company Securities. There are no shareholder agreements, voting trusts or other
agreements or understandings to which Company is a party or by which it is bound
relating to the voting or registration of any shares of capital stock of
Company.
(b) (i) Except as set forth in Section 2.2(b) of the Company
Disclosure Schedule, all of the outstanding capital stock of Company's
subsidiaries (A) is owned by Company, directly or indirectly, free and clear of
any Lien or any other limitation or restriction (including any restriction on
the right to vote or sell the same, except as may be provided as a matter of
law), and (B) have been validly issued and are fully paid, nonassessable and
free of preemptive rights or any right of first refusal and neither Company nor
any subsidiary has any liability under the provisions of applicable Federal and
state securities laws by reason of the issuance or sale thereof.
(ii) Except as set forth above or in Section 2.2(b) of
the Company Disclosure Schedule, there are outstanding (A) no shares of capital
stock or other voting securities of any of the subsidiaries of Company, (B) no
securities of Company or its subsidiaries convertible into or exchangeable for
shares of capital stock or voting securities of Company subsidiaries, (C) no
options or other rights to acquire from Company or its subsidiaries, and no
obligations of Company or its subsidiaries to issue any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of any Company subsidiary, and (D) no equity equivalent
interests in the ownership or earnings of any Company subsidiary or other
similar rights (collectively "SUBSIDIARY SECURITIES"). There are no outstanding
obligations of Company or its subsidiaries to repurchase, redeem or otherwise
acquire any Subsidiary Securities. There are no shareholder agreements, voting
trusts or other agreements or understandings to which Company is a party or by
which it is bound relating to the voting or registration of any Subsidiary
Securities.
Page 12
<PAGE> 20
(c) "LIEN" means, with respect to any asset, any security, mortgage,
lien, pledge, charge, security interest, conditional sale agreements, title
retention agreements, claims, charges, easements, licenses, rights-of-way,
covenants, conditions, restrictions, options, adverse or equitable claims, or
encumbrance of any kind in respect of such asset.
(d) The Shares constitute the only class of equity securities of
Company or its subsidiaries registered or required to be registered under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT").
SECTION 2.3. AUTHORITY RELATIVE TO THIS AGREEMENT; RECOMMENDATION.
(a) Company has all necessary corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Company (the "COMPANY BOARD") and no other corporate
proceedings on the part of Company are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby except the approval and
adoption of this Agreement by the holders of two-thirds of the outstanding
Shares. This Agreement has been duly and validly executed and delivered by
Company and constitutes a valid, legal and binding agreement of Company
enforceable against Company in accordance with its terms except that (i) such
enforcement may be subject to applicable bankruptcy, insolvency or other similar
laws, now or hereafter in effect, affecting creditors' rights generally, and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceedings therefor may be brought (collectively,
the "ENFORCEMENT EXCEPTIONS").
(b) The Company Board has unanimously resolved to recommend that the
shareholders of Company approve and adopt this Agreement and vote in favor of
the Merger.
SECTION 2.4. SEC REPORTS; FINANCIAL STATEMENTS.
(a) Company has filed all required forms, reports and documents
(collectively, "COMPANY SEC REPORTS") with the Securities and Exchange
Commission (the "SEC"), and has complied in all material respects with all
applicable requirements of the Securities Act of 1933, as amended (the
"SECURITIES ACT") and the Exchange Act, each as in effect on the dates such
forms, reports and documents were filed. None of such Company SEC Reports,
including, without limitation, any financial statements or schedules included or
incorporated by reference therein, contained when filed any untrue statement of
a material fact or omitted to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein in light of the circumstances under which they were made not misleading.
The financial statements of Company (including the consolidated statements of
income and cash flow) included in Company SEC Reports comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the
Page 13
<PAGE> 21
SEC promulgated under the Exchange Act and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto) and
fairly present the consolidated financial position of Company and its
consolidated subsidiaries as of the dates thereof and their consolidated results
of operations and statement of cash flows for the periods indicated (subject, in
the case of unaudited interim financial statements, the exceptions permitted by
Form 10-Q under the Exchange Act.
(b) Company has heretofore made available or promptly will make
available to Parent a complete and correct copy of any amendments or
modifications that are required to be filed with the SEC, but have not yet been
filed with the SEC, to any agreements, documents or other instruments that
previously had been filed by Company with the SEC.
SECTION 2.5. CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) Except for filings, permits, authorizations, consents and approvals
as may be required under, and other applicable requirements of, the Securities
Act, the Exchange Act, state securities or blue sky laws, the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), and the filing
and recordation of the Certificate of Merger as required by the DGCL and the
CBCA, no filing with or notice to, and no material permit, authorization,
consent or approval of, any United States or foreign court or tribunal, or
administrative, governmental or regulatory body, agency or authority (each a
"GOVERNMENTAL ENTITY") is necessary for the execution and delivery of this
Agreement by Company or the consummation of the transactions contemplated hereby
by Company.
(b) Except as set forth in Section 2.5(b) of the Company Disclosure
Schedule, neither the execution, delivery and performance of this Agreement by
Company, nor the consummation by Company of the transactions contemplated
hereby, will (i) conflict with or result in any breach of any provision of the
respective charter or bylaws (or similar governing documents) of Company or any
of its subsidiaries; (ii) result in a violation or breach of or constitute (with
or without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration or Lien), or
impair the rights of Company or its subsidiaries under any of the terms,
conditions or provisions of any material note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to which Company
or any of its subsidiaries is a party or by which any of them or any of their
respective properties or assets may be bound; or (iii) violate any order, writ,
injunction, decree, law, statute, rule or regulation applicable to Company or
any of its subsidiaries or any of their respective properties or assets which
violation could have a Material Adverse Effect on Company.
SECTION 2.6. NO DEFAULT. None of Company or any of its subsidiaries is
in breach, default or violation (and no event has occurred that, with notice or
the lapse of time or both, would constitute a breach, default or violation) of
any term, condition or provision of (a) its charter or bylaws (or similar
governing documents), (b) any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which Company or any of
its subsidiaries is now a party or by which any of them or any of their
respective properties or
Page 14
<PAGE> 22
assets may be bound or (c) any order, writ, injunction, decree, law, statute,
rule or regulation applicable to Company or any of its subsidiaries or any of
their respective properties or assets except, in the case of (b) or (c), for
violations, breaches or defaults that would not have a Material Adverse Effect
on Company. All outstanding indebtedness of the Company and its subsidiaries may
be prepaid without penalty and without the consent of any lender or other third
party.
SECTION 2.7. NO UNDISCLOSED LIABILITIES; ABSENCE OF CHANGES.
(a) Except as reflected in Company's 1999 year end audited financial
statements included in Company's Annual Report on Form 10-K for the year ended
December 31, 1999, none of Company or its subsidiaries has any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, that
would be required by generally accepted accounting principles to be reflected on
a consolidated balance sheet of Company (including the notes thereto), other
than liabilities incurred in the ordinary course of business consistent with
past practice since December 31, 1999.
(b) Without limiting the generality of the foregoing, except as set
forth in Section 2.7 of the Company Disclosure Schedule, since December 31,
1999, Company and its subsidiaries have conducted their respective businesses
and operations in, and have not engaged in any transaction other than according
to, the ordinary and usual course of business consistent with past practice, and
there has not occurred any:
(i) event, change, condition or occurrence which, individually
or in the aggregate, has had or is reasonably likely to have a Material Adverse
Effect on Company;
(ii) damage, destruction or other casualty loss (whether or
not covered by insurance) with respect to any material asset or property owned,
leased or otherwise used by Company or any of its subsidiaries;
(iii) declaration, setting aside or payment of any dividend or
other distribution in respect of the capital stock of Company or any of its
subsidiaries (other than wholly owned subsidiaries) or any repurchase,
redemption or other acquisition by Company or any of its subsidiaries of any
outstanding shares of capital stock or other securities of, or other ownership
interests in, Company or any of its subsidiaries;
(iv) amendment of any term of any outstanding security of
Company or any of its subsidiaries;
(v) incurrence, assumption or guarantee by Company or any of
its subsidiaries of any indebtedness for borrowed money;
(vi) creation or assumption by Company or any of its
subsidiaries of any Lien on any material asset, other than in the ordinary
course of business consistent with past practices;
Page 15
<PAGE> 23
(vii) loan, advance or capital contributions made by Company
or any of its subsidiaries to, or investment in, any person;
(viii) transaction or commitment made, or any contract or
agreement entered into, by Company or any of its subsidiaries relating to its
assets or business (including the acquisition or disposition of any assets) or
any relinquishment by Company or any of its subsidiaries of any contract,
agreement or other right, in either case, material to Company and its
subsidiaries, taken as a whole, other than transactions and commitments in the
ordinary course of business consistent with past practices and those
contemplated by this Agreement;
(ix) labor dispute, other than routine individual grievances,
or any activity or proceeding by a labor union or representative thereof to
organize any employees of Company or any of its subsidiaries, or any lockouts,
strikes, slowdowns, work stoppages or, to Company's knowledge, threats thereof
by or with respect to such employees;
(x) increase in the compensation payable or that could become
payable by Company or any of its subsidiaries to (A) officers of Company or any
of its subsidiaries or (B) any employee of Company or any of its subsidiaries
whose annual cash compensation is Fifty Thousand Dollars ($50,000) or more;
(xi) liabilities being imposed upon or incurred by Company or
its subsidiaries that will equal or exceed Fifty Thousand Dollars ($50,000) for
any single instance or One Hundred Fifty Dollars ($150,000) in the aggregate;
(xii) change by Company or any of its subsidiaries in its
accounting principles, practices or methods; or
(xiii) action or event that would have required the consent of
Parent pursuant to Section 4.1 had such action or event occurred after the date
of this Agreement.
SECTION 2.8. LITIGATION. Except as set forth in Section 2.8 of the
Company Disclosure Schedule, (i) there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of Company, threatened against
Company or any of its subsidiaries or any of their respective properties or
assets, and (ii) no such suit, claim, action, proceeding or investigation has
been pending, whether or not since settled or otherwise resolved, at any time
since January 1, 1997, where in the case of clause (ii) above the amount in
controversy exceeded $10,000. None of Company or its subsidiaries is subject to
any outstanding order, writ, injunction or decree.
SECTION 2.9. COMPLIANCE WITH APPLICABLE LAW. Company and its
subsidiaries hold all material permits, licenses, variances, exemptions, orders
and approvals of all Governmental Entities necessary for the lawful conduct of
their respective businesses (the "COMPANY PERMITS"). Company and its
subsidiaries are in compliance with the terms of Company Permits, except where
the failure to comply would not have a Material Adverse Effect on Company. The
businesses of Company and its subsidiaries have not been and are not being
conducted in violation of any law, ordinance or regulation of any Governmental
Entity, except for violations of any laws, ordinances or regulations that do not
and, insofar as reasonably can be foreseen in
Page 16
<PAGE> 24
the future, will not have a Material Adverse Effect on Company. No investigation
or review by any Governmental Entity with respect to Company or its subsidiaries
is pending or, to the knowledge of Company, threatened, nor has any Governmental
Entity indicated an intention to conduct the same.
SECTION 2.10. EMPLOYEE BENEFIT PLANS; LABOR MATTERS.
(a) Section 2.10(a) of the Company Disclosure Schedule lists, with
respect to Company, its subsidiaries and any trade or business which is treated
as a single employer with Company within the meaning of Section 414(b), (c),
(m), or (o) of the Code ("ERISA AFFILIATE") each compensation or benefit plan,
agreement, policy, practice, program, or arrangement, whether or not subject to
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
maintained by Company, its subsidiaries or other ERISA Affiliates, for the
benefit of any employee, former employee, independent contractor or director of
Company, its subsidiaries, or other ERISA Affiliates (including, without
limitation, any employment and/or consulting agreement, any pension, savings,
profit-sharing, bonus, medical, insurance, disability, severance, executive
compensation, fringe benefit, incentive, stock option, performance pay, loan or
loan guarantee, plant closing, change of control, equity-based or deferred
compensation plans, programs, policies and/or arrangements) (collectively, the
"EMPLOYEE PLANS"). Without limiting the foregoing, Schedule 2.10(a) of the
Company Disclosure Schedule lists all Company Stock Options issued and
outstanding under any Company Plan, including the employee, exercise price,
vesting schedule and expiration date of such Company Stock Options.
(b) Company has provided or made available to Parent (i) a current,
accurate and complete copy of each Employee Plan and related Plan documents
(including trust documents, insurance policies, or contracts, employee booklets,
and summary plan descriptions); (ii) any correspondence between Company, its
subsidiaries, or other ERISA Affiliates and the Department of Labor and/or the
Internal Revenue Service (the "IRS") related to such Employee Plans; and (iii)
copies of the Form 5500, including all schedules attached thereto and actuarial
reports, if any, filed for the past three Plan years.
(c) Company, its subsidiaries, and other ERISA Affiliates have
complied, and currently are in compliance, with the applicable provisions of
ERISA, the Code and all other applicable laws with respect to each of the
Employee Plans, except where such noncompliance which, individually or in the
aggregate, has not had and would not reasonably be expected to have a Material
Adverse Effect on Company. Each Employee Plan that is intended to qualify under
Section 401(a) of the Code has received, or prior to the expiration of the
applicable remedial amendment period has filed for, a favorable determination
letter from the IRS ruling that the Plan does so qualify and that the trust is
exempt from taxation pursuant to Section 501(a) of the Code, and nothing has
occurred since the issuance of each such letter which could reasonably be
expected to cause the loss of the tax-qualified status of any Employee Plan
subject to Code Section 401(a).
(d) Company, its subsidiaries, or other ERISA Affiliates, have not
maintained, adopted or established, contributed or been required to contribute
to, or otherwise participated in or been required to participate in, any
employee benefit plan or other program or arrangement
Page 17
<PAGE> 25
subject to Title IV of ERISA (including, without limitation, a multi-employer
plan (as defined in Section 3(37) of ERISA) and a defined benefit plan (as
defined in Section 3(35) of ERISA)) or any plan otherwise subject to the minimum
funding standards of ERISA Section 302 or Code Section 412.
(e) Each Employee Plan that is a group health plan has been operated in
compliance in all material respects with Code Section 4980B and Sections 601-609
of ERISA. No Employee Plan provides welfare benefits as defined in Section 3(1)
of ERISA with respect to current or former employees of Company, its
subsidiaries or other ERISA Affiliates beyond their retirement or other
termination of service with Company, its subsidiaries or other ERISA Affiliates
(other than coverage mandated by Code Section 4980B or applicable law
(f) No audit or investigation by any Governmental Entity is pending or,
to the knowledge of Company, its subsidiaries or other ERISA Affiliates, is
threatened, nor has any reportable event (within the meaning of Section 4043 of
ERISA) (other than an event for which the 30-day notice period is waived),
prohibited transaction (within the meaning of Section 4975 of the Code or
Section 406 of ERISA), or breach of fiduciary duty occurred with respect to any
Employee Plan, or any fiduciary thereof, that has had or would be reasonably
expected to have a Material Adverse Effect on Company.
(g) All benefits due under each Employee Plan have been timely paid and
no civil or criminal action brought pursuant to the provisions of Title I,
Subtitle B, Part 5 of ERISA, or other lawsuit or claim, other than routine
uncontested claims for benefits, is pending, or to the knowledge of Company, its
subsidiaries, or other ERISA Affiliates, is threatened against any Employee Plan
or the fiduciaries of any such plan or otherwise involving or pertaining to any
such plan, and no basis exists for any such lawsuit or claim, except where such
claim or basis, if proven, would not have a Material Adverse Effect on Company.
(h) The consummation of the transactions contemplated by this Agreement
will not (i) cause any payments or benefits under any Employee Plan to be
triggered, vested or accelerated, in whole or in part, (ii) entitle any current
or former employee or other service provider of Company, its subsidiaries, or
other ERISA Affiliates to severance benefits or any other payment, or (iii)
increase the amount of compensation due any such employee or service provider.
(i) No agreement, commitment or obligation exists to materially
increase any benefit under any Employee Plan or to adopt any new Employee Plan.
There has been no amendment to, written interpretation or announcement (whether
or not written) by Company, its subsidiaries, or other ERISA Affiliates relating
to, or change in participation or coverage under, any Employee Plan which would
materially increase the expense of maintaining such Plan above the level of
expense incurred with respect to that Plan for the most recent fiscal year
included in Company's financial statements.
(j) All material contributions required to be made by Company, its
subsidiaries, or other ERISA Affiliates to any Employee Plan have been made on
or before their due dates and a reasonable amount has been accrued for
contributions to each Employee Plan for the current Plan
Page 18
<PAGE> 26
years. No Employee Plan has any material unfunded accrued benefits that are not
fully reflected in Company's financial statements. The Company Nonqualified
Profit Sharing Plan is terminable as of December 31, 1999, without liability,
except for $288,847 accrued thereunder through December 31, 1999.
(k) There are no controversies pending or, to the knowledge of Company
or its subsidiaries, threatened between Company or any of its subsidiaries and
any of their respective employees or former employees that have, or may
reasonably be expected to have, a Material Adverse Effect on Company. Neither
Company nor any of its subsidiaries is a party to any collective bargaining
agreement or other labor union contract applicable to persons employed by
Company or its subsidiaries, nor does Company know of any activities or
proceedings of any labor union to organize any such employees. There are no
strikes, slowdowns, work stoppages, lockouts or threats thereof by or with
respect to any employees of Company or any of its subsidiaries.
(l) Section 2.10(o) of the Company Disclosure Schedule sets forth a
list of (i) all employment agreements with officers or employees of Company;
(ii) all agreements with consultants obligating Company to make any remaining
payments in an amount exceeding $25,000; (iii) all severance agreements,
programs and policies of Company with or relating to its employees, except
programs and policies required to be maintained by law; and (iv) all plans,
programs, agreements and other arrangements of Company with or relating to its
employees that contain change-in-control provisions. Company has made available
to Parent copies (or descriptions in detail reasonably satisfactory to Parent)
of all such agreements, plans, programs and other arrangements.
SECTION 2.11. ENVIRONMENTAL LAWS AND REGULATIONS.
(a) Except as set forth on Section 2.11 of the Company Disclosure
Schedule or as publicly disclosed by Company in Company SEC Reports:
(i) all activities, operations and conduct of the Company or
its subsidiaries, and to the knowledge of the Company, the Real Property, and
any properties formerly owned or operated by the Company or its subsidiaries,
comply and have at all times complied with Environmental Laws in all material
respects;
(ii) there has been no disposal, release, or threatened
release of Hazardous Substances by the Company, and to the knowledge of the
Company any other person, on, under, in, from or about the Real Property, or any
properties formerly owned or operated by the Company or its subsidiaries, or
otherwise related to the operations of the Company or its subsidiaries, that has
subjected or may subject the Company or its subsidiaries to material liability
under any Environmental Law;
(iii) neither the Company nor its subsidiaries have disposed
of or arranged for disposal of Hazardous Substances on any third party property
that has subjected or reasonably could subject the Company to material liability
under any Environmental Law;
Page 19
<PAGE> 27
(iv) neither the Company nor its subsidiaries has received any
notice, demand, letter, claim or request for information alleging violation of
or liability under any Environmental Law and there are no actions, orders,
decrees, injunctions or other proceedings, or to the knowledge of the Company or
its subsidiaries, any threatened actions or claims, relating to or otherwise
alleging liability under any Environmental Law;
(v) neither the Company nor its subsidiaries has exposed any
employee or third party to any Hazardous Substance or condition which has
subjected or reasonably could subject the Company or its subsidiaries to
material liability under any Environmental Law;
(vi) no underground storage tanks, asbestos-containing
material, or polychlorinated biphenyls have ever been located by the Company, or
to the knowledge of the Company, any other person, on the Real Property or
properties formerly owned or operated by the Company or its subsidiaries;
(vii) neither the Company nor its subsidiaries has assumed by
agreement any liability of any person for cleanup, compliance or required
capital expenditures pursuant or related to any Environmental Law;
(viii) neither the Company nor its subsidiaries is required to
make any capital or other expenditures to comply with any Environmental Law nor
is there any reasonable basis on which any governmental agency could take action
that would require such capital or other expenditure;
(ix) there are no circumstances, conditions or activities
involving the Company or its subsidiaries that could reasonably be expected to
result in any liability or costs to the Company or its subsidiaries or any
restrictions on the ownership, use or transfer of the Real Property pursuant to
any Environmental Law;
(x) the Company and its subsidiaries have delivered to Parent
copies of all environmental assessments, audits, studies, and other
environmental reports in its possession or reasonably available to it relating
to the Company or its subsidiaries or the Real Property or former properties or
operations.
(b) As used herein:
(i) "ENVIRONMENTAL LAW" means any federal, state, local or
foreign law, statute, ordinance, rule, regulation, or treaty; all judicial,
administrative, and regulatory orders, judgments, decrees, permits, and
authorizations; and common law relating to: (A) the protection, investigation,
remediation, or restoration of the environment or natural resources, (B) the
handling, use, storage, treatment, disposal, release or threatened release of
any Hazardous Substance, (C) noise, odor, pollution, contamination, any injury
or threat of injury to persons or property or (D) the protection of the health
and safety of employees or the public.
(ii) "HAZARDOUS SUBSTANCE" means any substance, material, or
waste that is: (A) listed, classified or regulated in any concentration pursuant
to any Environmental Law;
Page 20
<PAGE> 28
(B) any petroleum hydrocarbon, asbestos-containing material, lead-containing
paint or plumbing, polychlorinated biphenyls, radioactive materials or radon; or
(C) any other substance, material, or waste which may be the subject of
regulatory action by any governmental entity pursuant to any Environmental Law.
SECTION 2.12. TAXES.
(a) For purposes of this Agreement:
(i) the term "TAX" (including "TAXES") means (A) all federal,
state, local, foreign and other net income, gross income, gross receipts, sales,
use, ad valorem, transfer, franchise, profits, license, lease, service, service
use, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, windfall profits, customs, duties or other taxes, fees,
assessments or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts with respect thereto, (B)
any liability for payment of amounts described in clause (A), whether as a
result of transferee liability, of being a member of an affiliated,
consolidated, combined or unitary group for any period, or otherwise through
operation of law, and (C) any liability for the payment of amounts described in
clauses (A) or (B) as a result of any tax sharing, tax indemnity or tax
allocation agreement or any other express or implied agreement to indemnify any
other person; and
(ii) the term "TAX RETURN" means any return, declaration,
report, statement, information statement and other document required to be filed
with respect to Taxes.
(b) Except as set forth in Section 2.12 of the Company Disclosure
Schedule: (i) Company and its subsidiaries have accurately prepared and timely
filed (except where extensions of time to file have been obtained) all Tax
Returns they are required to have filed and (ii) such Tax Returns are accurate
and correct in all material respects and do not contain a disclosure statement
under Section 6662 of the Code (or any predecessor provision or comparable
provision of state, local or foreign law).
(c) Company and its subsidiaries have paid or adequately provided for
all Taxes (whether or not shown on any Tax Return) they are required to have
paid or to pay.
(d) No material claim for assessment or collection of Taxes is
presently being asserted against Company or its subsidiaries, and neither
Company nor any of its subsidiaries is a party to any pending action,
proceeding, or investigation by any governmental taxing authority, nor does
Company have knowledge of any such threatened action, proceeding or
investigation.
(e) Neither Company nor any of its subsidiaries has waived any statute
of limitations in respect of Taxes or agreed to any extension of time with
respect to a tax assessment or deficiency.
(f) Neither Company nor any of its subsidiaries is a party to any
agreement, contract, arrangement or plan that has resulted or would result,
separately or in the aggregate, in connection with this Agreement or any
change-of-control of Company or any of its subsidiaries, in the payment of any
"excess parachute payments" within the meaning of Section 28OG of the Code.
Page 21
<PAGE> 29
SECTION 2.13. INTELLECTUAL PROPERTY.
(a) "INTELLECTUAL PROPERTY" means trademarks and service marks
(registered or unregistered), trade dress, trade names, names and slogans
embodying business or product goodwill or indications of origin, all
applications or registrations in any jurisdiction pertaining to the foregoing
and all goodwill associated therewith, as well as the following: (i) patents,
patentable inventions, trade secrets, discoveries, improvements, ideas,
know-how, formula, methodology, processes, technology and computer programs,
software and databases (including source code, object code, development
documentation, programming tools, drawings, specifications and data), and all
applications or registrations in any jurisdiction pertaining to the foregoing,
including all reissues, continuations, divisions, continuations-in-part,
renewals or extensions thereof; (ii) the right in any jurisdiction to limit the
use or disclosure thereof; (iii) copyrights in writings, designs, mask works or
other works, and registrations or applications for registration of copyrights in
any jurisdiction; (iv) licenses; (v) Internet Web sites, domain names and
registrations or applications for registration thereof; (vi) customer lists;
(vii) books and records describing or used in connection with any of the
foregoing; and (viii) claims or causes of action arising out of or related to
infringement or misappropriation of any of the foregoing.
(b) Section 2.13 of the Company Disclosure Schedule lists all
Intellectual Property (either registered, applied for, or common law) owned by,
registered in the name of, licensed to, or otherwise used by Company or its
subsidiaries that are material to their business or operations ("MATERIAL
INTELLECTUAL PROPERTY").
(c) All of the Material Intellectual Property is owned by Company or
its subsidiaries free and clear of any and all Liens or is used by Company or
its subsidiaries pursuant to a valid and enforceable license granting rights
sufficiently broad to permit the historical and anticipated uses of the
Intellectual Property in connection with the conduct of the Business in the
manner presently conducted.
(d) Section 2.13 of the Company Disclosure Schedule lists any licenses,
sublicenses or other agreements pursuant to which Company or its subsidiaries
grants a license to any person to use the Intellectual Property or is a licensee
of any of the Intellectual Property.
(e) The conduct of the business and operations of Company and its
subsidiaries does not conflict with valid intellectual property rights of
others. There are no conflicts with or infringements of any of the Intellectual
Property by any third party.
(f) Company has taken all commercially reasonable precautions necessary
to ensure that all Intellectual Property has been properly protected and has
been kept secret.
(g) Except as set forth in Section 2.13 of the Company Disclosure
Schedule (i) the validity of Intellectual Property and the title thereto of
Company or any subsidiary, as the case
Page 22
<PAGE> 30
may be, is not being threatened with or questioned in any litigation to which
Company or any subsidiary is a party, and (ii) the consummation of the
transactions completed hereby will not result in the loss or impairment of any
rights of Company or its subsidiaries in the Intellectual Property.
SECTION 2.14. REAL PROPERTY. Section 2.14 of the Company Disclosure
Schedule lists: (i) a description of each parcel of real property owned by
Company and any of its subsidiaries (the "FEE REAL PROPERTY"), (ii) a listing of
each lease, written or, to the knowledge of Company, oral, of real property
under which Company or any of its subsidiaries is a lessee, lessor, sublessee or
sublessor, as so designated therein (the "LEASES" and together with the Fee Real
Property, the "REAL PROPERTY"), (iii) all options or commitments to sell or
lease any real property interests to which Company or any of its subsidiaries is
a party, and (iv) all options or commitments to acquire any real property
interests (other than by lease) to which Company or any of its subsidiaries is a
party (collectively, such real property interests are referred to as the
"ACQUISITION REAL PROPERTY"). The Real Property constitutes all of the real
property interests owned, leased or occupied in whole or in part by Company or
any of its subsidiaries and there are no other Leases, licenses or other
agreements affecting the occupancy of the Real Property. Except as set forth in
Section 2.14 of the Company Disclosure Schedule:
(a) Company and its subsidiaries have good and marketable (or
indefeasible, in jurisdictions where the term "marketable" is not customarily
used) title in fee simple, or will acquire good and marketable (or indefeasible,
as the case may be) title in fee simple, to the Fee Real Property owned or
optioned by them, free and clear of all Liens, except Liens for Taxes not yet
due and such Liens or other imperfections of title as do not or will not
materially interfere with the present use or intended use by Company and its
subsidiaries or affect the value or marketing of the property affected thereby
and that do not, individually or in the aggregate, have a Material Adverse
Effect on Company. Company has delivered or made available to Parent copies of
the deeds and other instruments (as recorded) by which Company acquired such
Real Property and interests, and copies of all title insurance policies, title
insurance commitments, opinions, abstracts, and surveys relating to the Fee Real
Property or interests and the Acquisition Real Property. There are no
encumbrances or other matters of record (other than contracts for sales of
completed residences and inchoate mechanics' liens for amounts not yet due)
affecting title to any of the Fee Real Property or Acquisition Real Property
which are not disclosed in the title insurance policies and commitments.
(b) Neither Company nor any of its subsidiaries has given, nor have
they received, any notice that a breach or an event of default exists, and no
condition or event has occurred that with the giving of notice, the lapse of
time, or both would constitute a breach or event of default, by Company or any
subsidiary, or to the knowledge of Company, any other person 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 Company or any subsidiary
title to or an interest in or otherwise affecting the Fee Real Property or the
Acquisition Real Property, except for such breach or event of default that would
not, individually or in the aggregate, have a Material Adverse Effect on
Company.
Page 23
<PAGE> 31
(c) The Fee Real Property and Acquisition Real Property to be used for
homebuilding conforms, in all material respects, to the appropriate Governmental
Entity's standards, and there is no material impediment to approval for
undeveloped Real Property or the Acquisition Real Property, such approval to
allow development in the manner in which Company currently anticipates building
thereon.
(d) The developed Fee Real Property and Acquisition Real Property has
access to streets, and is serviced, in all material respects, by all utilities
and other services as is necessary for the current and intended use of such
property. The undeveloped Fee Real Property and Acquisition Real Property has
access to streets, and such Fee Real Property and Acquisition Real Property is
serviced, in all material respects, by all utilities and other services as is
necessary for the development thereof or such utilities and other services are
or will be available, in all material respects, to such property.
(e) There is no suit, action or arbitration, or legal, administrative,
or other proceeding or Governmental Entity investigation, formal or informal,
including without limitation to eminent domain or condemnation proceeding,
proceeding to establish a new assessment district or increase the assessments
imposed by an existing assessment district, or zoning change proceeding, pending
or threatened, or any judgment, moratorium or other government policy or
practice which affects any of the Fee Real Property or the Acquisition Real
Property or Company's anticipated development of any of such properties.
(f) All Leases are in good standing, valid and effective in accordance
with their respective terms, and there is not under any of such Leases, any
existing default or event of default (or event which with notice or lapse of
time, or both, would constitute a material default).
(g) There are no material encroachments on the Fee Real Property or the
Acquisition Real Property nor any encroachments by improvements on the Fee Real
Property or the Acquisition Real Property onto any easements or any adjoining
property or which would otherwise conflict with the property rights of any other
person.
(h) All of the improvements situated on any of the Real Property and
Acquisition Real Property are in good operating condition and are adequate and
suitable for the purposes for which they are presently being used, normal wear
and tear excepted.
(i) All rights to exercise any purchase or repurchase options with
respect to any portion of the Fee Real Property (whether contained in vesting
deeds or otherwise) have expired or been extinguished in accordance with their
respective terms.
SECTION 2.15. PROJECTS. Except as set forth in Section 2.15 of
Company's Disclosure Schedule:
(a) Company has not developed, constructed or otherwise participated
and does not currently intend to develop, construct or otherwise participate in
any real estate projects other than the projects identified in Section 2.15 of
the Company Disclosure Schedule (the
Page 24
<PAGE> 32
"PROJECTS" Section 2.15 of the Company Disclosure Schedule includes the total
number of units developed and under development, and the total units remaining
unsold.
(b) All work performed by Company or by subcontractors on Company's
behalf on or in any of the properties involved in the Projects has been or shall
be performed in substantial accordance with the plans and specifications
approved by all Governmental Entities (including VA and FHA, as applicable), in
compliance with all applicable laws, ordinances, and regulations, and in a good
and workmanlike manner, free from any defect or lien, other than inchoate
mechanics' liens for amounts not yet due. Each property involved in the Projects
complies in all material respects with all laws, including, without limitation,
applicable zoning, land use, subdivision, parking, traffic and fire safety laws
and the Colorado Common Interest Ownership Act (Colorado Revised Statutes
Sections 38-33.3-101 et seq.) ("CCIOA"), and Company has not received any notice
from any Governmental Entity as to any violation of any law. Company and its
subsidiaries have filed all information required by such acts.
(c) The approvals, consents, licenses, permits, waivers or other
authorizations issued, granted or otherwise made available by any Governmental
Entity pertaining to the Projects (collectively, the "ENTITLEMENTS"), and any
agreements (for example, and not in limitation, subdivision improvement
agreements) executed in connection therewith, are in full force and effect and
no party thereto is in default thereunder. All material Entitlements necessary
or appropriate for the development and construction of the Projects are in full
force and effect, without default, and are enforceable in accordance with
Colorado law. Neither Company nor to Company's knowledge, the fee owner, if
Company is not the fee owner of any property involved in any of the Projects, is
in default under, and Company has not received any notice that any event has
occurred which with the giving of notice or the passage of time, or both, would
constitute a default under any Entitlements, contract, transaction, agreement,
covenant, condition, restriction, lease, easement, encumbrance or instrument
pertaining to the property involved in any Project. All subdivision improvement
bonds and other sureties or assurances relating in any way to any such property
and required by any applicable Governmental Entity or pursuant to any
Entitlements have been posted and are being maintained in accordance with the
requirements of such applicable Governmental Entitles and/or Entitlements and no
claim has been made thereunder or thereto.
(d) (i) Company is not obligated to pay nor is it otherwise subject to
any monetary charges, assessments or fees imposed by any Governmental Entity or
quasi-governmental entity (such as special districts, improvement districts or
the like) in connection with Company's receipt of the Entitlements or otherwise
relating to the development or improvement of the Projects.
(ii) Except for obligations contained in the agreements listed in
Section 2.15 of the Company Disclosure Schedule, Company does not have any
development or improvement obligations with respect to the Projects.
(e) Company (or to Company's knowledge, the fee owner, if Company is
not the fee owner) has made no oral or, except for the Entitlements, written
commitments or representations to, or understandings or agreements with, any
person, firm or entity, any adjoining property
Page 25
<PAGE> 33
owner or any Governmental Entity which would in any way be binding on Company or
would interfere with Company's ability to develop and improve any of the
properties involved in the current Projects with residential developments in
accordance with the Entitlements, and neither Company, the fee owner, nor
Company shall make or enter into any such commitment, representations,
understandings or agreements without Parent's written consent.
(f) No property involved in the Projects is located in an area
designated as having special flood hazards or designated as a wetland by the
army Corps of Engineers. No property involved in the Projects is located in an
area that is designated, or in the process of being designated, as a critical
habitat for any threatened or endangered species under the endangered Species
Act of 1973, as amended, or designated under any other law for the preservation
of fish, wildlife, plants, insects, forests or wetlands, or for the preservation
of any historical or archeological site under the National Historic Preservation
Act of 1979, as amended, or any other law, which any such designation would
limit, impair, delay or prohibit the construction and development of the Project
in accordance with the existing or proposed plans therefor.
(g) Company has not received any notice from any of Company's insurance
carriers of any defects or inadequacies in any of the properties involved in the
Projects, or any portion thereof, which would adversely affect the insurability
of any properties or the cost of any such insurance. There are no pending
insurance claims with respect to any portion of any such properties.
(h) There are no soil conditions that would require construction of
foundations different than those customarily built in residential projects, in
Colorado in the areas in which the Projects are located, nor, to the knowledge
of the Company, any seismic safety problems relating to any of the properties
involved in the Projects, any recent seismic activity affecting any such
properties or any active fault bisecting, underlying or adjacent to any such
properties. Company has installed foundations appropriate and customary for the
applicable soil conditions.
(i) Neither the Company nor any of its subsidiaries is in default under
any "Declaration" (as defined in CCIOA) to which it is a party, by which it is
bound, or under which it is, or has succeeded to the rights of, the "Declarant"
(as defined in CCIOA).
(j) Each Declaration affecting each current Project complies in all
respects to the applicable requirements of CCIOA or is exempt from such
requirements.
(k) All work performed with respect to the Projects has been approved
by holders of security interests in the Projects to the extent required by the
applicable Declarations or CCIOA.
(l) Other than in connection with its sales of homes to purchasers in
the ordinary course of business, neither the Company nor any of its subsidiaries
has assigned to any third party any of its respective development or other
rights under the Declarations.
SECTION 2.16 ASSETS. The assets and properties of Company and its
subsidiaries, considered as a whole, constitute all of the assets and properties
that are reasonably required for the business and operations of Company and its
subsidiaries as presently conducted. Company
Page 26
<PAGE> 34
or its subsidiaries have good and marketable title to or a valid leasehold
estate in all personal properties and assets reflected on Company's balance
sheet at December 31, 1999 (except for properties or assets subsequently sold in
the ordinary course of business consistent with past practice), in each case,
free and clear of all Liens (other than the Liens set forth in Section 2.16 of
the Company Disclosure Schedule.
SECTION 2.17 CONTRACTS.
(a) Section 2.17 of the Company Disclosure Schedule contains a complete
and accurate list of all material contracts (written or oral), undertakings,
commitments, arrangements or agreements to which Company or any of its
subsidiaries is a party or by which any of them is bound relating to or
affecting their securities, assets, properties, business or operations,
including, without limitation, the following categories (collectively, the
"CONTRACTS"):
(i) Contracts, whether or not made in the ordinary course of
business, requiring annual expenditures by or liabilities of Company and its
subsidiaries in excess of Fifty Thousand Dollars ($50,000);
(ii) promissory notes, loans, agreements, indentures,
evidences of indebtedness or other instruments relating to the lending of money,
whether as borrower, lender or guarantor;
(iii) Contracts containing covenants limiting the freedom of
Company or any of its subsidiaries to engage in any line of business or compete
with any person or operate at any location;
(iv) joint venture or partnership agreements or joint
development or similar agreements, including any agreement pursuant to which any
third party is entitled to develop any real property and/or facility on behalf
of Company or its subsidiaries;
(v) Contracts with any Federal, state or local Governmental
Entity that have a remaining term in excess of one (1) year or are not
cancelable (without material penalty, cost or other liability) within one (1)
year;
(vi) Contracts for the sale of assets, other than homes, by
the Company or its subsidiaries with a value in excess of Fifty Thousand Dollars
($50,000);
(vii) Contracts required to be filed as "material contracts"
by the Company with the SEC pursuant to the requirements of the Securities
Exchange Act of 1934; and
(viii) any other Contract that is material to Company and its
subsidiaries, taken as a whole, not otherwise listed on the Company Disclosure
Schedule.
(b) Except as set forth in Section 2.17 of the Company Disclosure
Schedule, true and complete copies of the written Contracts and descriptions of
verbal Contracts, if any, have been delivered to Parent. Each of the Contracts
is a valid and binding obligation of Company and, to Company's knowledge, the
other parties thereto, enforceable against Company in accordance
Page 27
<PAGE> 35
with its terms, except as enforcement may be limited by the Enforcement
Exceptions. No event, including, without limitation, the execution and delivery
of this Agreement, has occurred which would, on notice or lapse of time or both,
entitle the holder of any indebtedness issued pursuant to a Contract identified
in Section 2.17 of the Company Disclosure Schedule in response to paragraph (a)
above to accelerate, or which does accelerate, the maturity of any such
indebtedness.
(c) All "participation" and similar payments due or to become due with
respect to any Project (including pursuant to any Contract that relates or
related to any indebtedness to Investors Real Estate Trust with respect to the
Northpark project or to any person or entity relating to indebtedness of Writer
Peninsula, Inc. or affecting the Southpark projects) have been paid in full and
neither the Company nor any subsidiary of the Company has any liability for or
obligation to make any such participation or similar payments with respect to
any Project.
SECTION 2.18 INSURANCE.
(a) Section 2.18(a) of the Company Disclosure Schedule contains a true
and complete list (including the names and addresses of the insurers, the names
of the persons to whom such policies have been issued, the expiration dates
thereof, whether the policies are currently in effect, the annual premiums and
payment terms thereof, whether it is a "claims made" or an "occurrence" policy
and a brief description of the interests insured thereby) of all liability,
property, workers' compensation, directors' and officers' liability and other
insurance policies in effect at any time since January 1, 1992 that insure or
did insure the business, operations or employees of Company or any subsidiary of
Company or affect or relate to the ownership, use or operation of any of the
assets (both past and present) of Company or any subsidiary of Company and that
(a) have been issued to Company or any subsidiary of Company or (b) have been
issued to any person (other than Company or any subsidiary of Company) for the
benefit of Company or any subsidiary of Company (the "INSURANCE POLICIES"). The
insurance coverage provided by any of the policies described in clause (a) above
will not terminate or lapse by reason of the transactions contemplated by this
Agreement. Each Insurance Policy listed is valid and binding and in full force
and effect, no premiums due thereunder have not been paid and neither Company,
any subsidiary of Company nor the person to whom such policy has been issued has
received any notice of cancellation or termination in respect of any such policy
or is in default thereunder. The Insurance Policies were placed with financially
sound and reputable insurers and, in light of the respective business,
operations and assets of Company and its subsidiaries, are or were in amounts
and have or had coverages that are reasonable and customary for persons engaged
in such businesses and operations and having such assets. Except as set forth in
Section 2.18(a) of the Company Disclosure Schedule, neither Company, any
subsidiary of Company nor the person to whom such policy has been issued has
received notice that any insurer under any Insurance Policy is denying liability
with respect to a claim thereunder or defending under a reservation of rights
clause, or, to Company's knowledge, indicated any intent to do so or not to
renew any such policy.
(b) Section 2.18(b) of the Company Disclosure Schedule contains a
listing of all open claims made or otherwise asserted by the Company against any
insurance policy. These claims, individually or in the aggregate, if not covered
by insurance, would not have a Material Adverse Effect on Company. All material
claims under the Insurance Policies have been filed in a timely fashion.
Page 28
<PAGE> 36
SECTION 2.19 PRODUCT WARRANTIES. Section 2.19 of the Company Disclosure
Schedule sets forth complete and accurate copies of the written warranties and
guaranties by Company or any of its subsidiaries currently in effect with
respect to its products. There have not been any material deviations from such
warranties and guaranties, and neither Company, any of its subsidiaries nor any
of their respective salespersons, employees and agents is authorized to
undertake obligations to any customer or to other third parties in excess of
such warranties or guaranties. Neither Company nor any of its subsidiaries has
made any oral warranty or guaranty with respect to its products.
SECTION 2.20. CERTAIN BUSINESS PRACTICES. None of Company, any of its
subsidiaries or any directors, officers, agents or employees of Company or any
of its subsidiaries has (a) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to political activity, (b) made
any unlawful payment to foreign or domestic government officials or employees or
to foreign or domestic political parties or campaigns or violated any provision
of the Foreign Corrupt Practices Act of 1977, as amended, or (c) to Company's
knowledge, made any other unlawful payment.
SECTION 2.21. BROKERS. Except as set forth on Section 2.21 of the
Company Disclosure Schedule, no broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement, based upon arrangements made by or
on behalf of Company. The aggregate fees that the Company shall be obligated to
pay to such brokers, finders or investment bankers shall not exceed $700,000.
SECTION 2.22. YEAR 2000.
(a) Except as set forth in Section 2.22 of the Company Disclosure
Schedule, all Information Systems and Equipment of Company and its subsidiaries
are in all material respects Year 2000 Compliant.
(b) "YEAR 2000 COMPLIANT" means that all Information Systems and
Equipment accurately process date data (including, but not limited to,
calculating, comparing and sequencing), before, during and after the year 2000,
as well as same multi-century dates, or between the years 1999 and 2000, taking
into account all leap years, including the fact that the year 2000 is a leap
year, and further, that when used in combination with, or interfacing with,
other Information Systems and Equipment, shall accurately accept, release and
exchange date data, and shall in all material respects continue to function in
the same manner as it performs today and shall not otherwise materially impair
the accuracy or functionality of Information Systems and Equipment. "INFORMATION
SYSTEMS AND EQUIPMENT" means with respect to a person all computer hardware,
firmware and software, as well as other information processing systems, or any
equipment containing embedded microchips, whether directly owned, licensed,
leased, operated or otherwise controlled, including through third-party service
providers, and which, in whole or in part, are used, operated, relied upon, or
integral to, such person's conduct of their business.
Page 29
<PAGE> 37
SECTION 2.23. TRANSACTIONS WITH AFFILIATES. Except to the extent
disclosed in Company SEC Reports or in Section 2.23 of the Company Disclosure
Schedule, within the last five years there have been no transactions,
agreements, arrangements or understandings between Company or its subsidiaries,
on the one hand, and Company's affiliates (other than wholly-owned subsidiaries
of Company) or other persons, on the other hand, that would be required to be
disclosed under Item 404 of Regulation S-K under the Securities Act.
SECTION 2.24. SUPPLIERS AND SUBCONTRACTORS. The documents and
information supplied by Company to Parent or any of its representatives in
connection with this Agreement with respect to relationships and volumes of
business done with its significant suppliers and subcontractors are accurate in
all material respects. Except as set forth in Section 2.24 of the Company
Disclosure Schedule, during the last twelve (12) months, Company has received no
notices of termination or threats of termination from any of the five (5)
largest suppliers or ten (10) largest subcontractors for Company and its
subsidiaries.
SECTION 2.25. OPINION OF FINANCIAL ADVISOR. The Seidler Companies
("COMPANY FINANCIAL ADVISER") has delivered to the Board of Directors of Company
its oral opinion to the effect that the consideration to be received by the
holders of Shares pursuant to the provisions of this Agreement is fair from a
financial point of view to such holders, a written copy of which will be
received prior to the Closing, and a copy of which will be delivered to Parent
as soon as available and prior to the Closing.
SECTION 2.26. ACCURACY OF INFORMATION. None of the representations or
warranties or information provided and to be provided by Company to Parent or
Newco in this Agreement (including the Company Disclosure Schedule) contains or
will contain any untrue statement of a material fact or omits or will omit to
state any material fact necessary in order to make the statements and facts
contained herein or therein not false or misleading. The descriptions set forth
in the Company Disclosure Schedule are accurate descriptions of the matters
disclosed therein. Copies of all documents heretofore or hereafter delivered or
made available by Company to Parent or Newco pursuant hereto were or will be
complete and accurate records of such documents.
3. ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO
Parent and Newco hereby represent and warrant to Company, except as
otherwise set forth in Parent SEC Reports, that:
SECTION 3.1. ORGANIZATION.
(a) Parent and Newco are duly organized, validly existing and in good
standing under the laws of the State of Delaware and have all requisite power
and authority to own, lease and operate their properties and to carry on their
businesses as now being conducted. Parent has heretofore delivered to Company
accurate and complete copies of the certificate of incorporation and bylaws as
currently in effect of Parent and Newco.
Page 30
<PAGE> 38
(b) Each of Parent and Newco is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except in such jurisdictions where the
failure to be so duly qualified or licensed and in good standing would not have
a Material Adverse Effect on Parent. The term "MATERIAL ADVERSE EFFECT ON
PARENT" means any change or effect that is (i) reasonably likely to be
materially adverse to the business, results of operations or financial condition
of Parent and its subsidiaries, taken as a whole, or (ii) that materially
impairs the ability of Parent and/or Newco to consummate the transactions
contemplated hereby.
SECTION 3.2. CAPITALIZATION OF PARENT AND ITS SUBSIDIARIES.
(a) The authorized capital stock of Parent consists of 100,000,000
shares of Parent Common Stock, of which, as of March 1, 2000, 28,969,580 shares
of Parent Common Stock are issued and outstanding and 10,000,000 shares of
preferred stock, par value $0.01 per share, none of which are outstanding. All
of the outstanding shares of Parent Common Stock have been validly issued and
are fully paid, nonassessable and free of preemptive rights. As of March 1,
2000, 2,409,490 shares of Parent Common Stock were reserved for issuance and
issuable upon or otherwise deliverable in connection with the exercise of
outstanding options and warrants.
(b) As of the date hereof, there are outstanding (i) no shares of
capital stock or other voting securities of Parent; (ii) no securities of Parent
or its subsidiaries convertible into or exchangeable for shares of capital
stock, or voting securities of Parent; (iii) no options or other rights to
acquire from Parent or its subsidiaries and, no obligations of Parent or its
subsidiaries to issue any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of
Parent (other than pursuant to Parent's 1991 Employee Stock Incentive Plan and
1997 Stock Incentive Plan; and (iv) no equity equivalent interests in the
ownership or earnings of Parent or its subsidiaries or other similar rights
(collectively, "PARENT SECURITIES"). As of the date hereof, there are no
outstanding obligations of Parent or any of its subsidiaries to repurchase,
redeem or otherwise acquire any Parent Securities. Other than as provided
herein, there are no stockholder agreements, voting trusts or other agreements
or understandings to which Parent is a party or by which it is bound relating to
the voting of any shares of capital stock of Parent.
(c) When delivered pursuant to this Agreement each share of Parent
Common Stock issued in exchange for Shares will be fully paid, validly issued
and outstanding and not subject to assessment or claim of right by any person
claiming through Parent or Newco.
SECTION 3.3. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and
Newco has all necessary corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and
Page 31
<PAGE> 39
validly authorized by the boards of directors of Parent and Newco and by Parent
as the sole stockholder of Newco, and no other corporate proceedings on the part
of Parent or Newco are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Newco and constitutes a valid,
legal and binding agreement of each of Parent and Newco enforceable against each
of Parent and Newco in accordance with its terms, except as such enforcement may
be limited by the Enforcement Exceptions.
SECTION 3.4. SEC REPORTS; FINANCIAL STATEMENTS. Parent has filed all
required forms, reports and documents (collectively, "PARENT SEC REPORTS") with
the SEC, each of which has complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act, each as in effect on
the dates such forms, reports and documents were filed. None of such Parent SEC
Reports, including, without limitation, any financial statements or schedules
included or incorporated by reference therein, contained when filed any untrue
statement of a material fact or omitted to state a material fact required to be
stated or incorporated by reference therein or necessary in order to make the
statements therein in light of the circumstances under which they were made not
misleading. The audited consolidated financial statements of Parent (including
the consolidated statements of income and cash flow) included in the Parent SEC
Reports fairly present in conformity with generally accepted accounting
principles applied on a consistent basis (except as may be indicated in the
notes thereto) the consolidated financial position of Parent and its
consolidated subsidiaries as of the dates thereof and their consolidated results
of operations and cash flows for the periods indicated.
SECTION 3.5. CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) Except for filings, permits, authorizations, consents, and
approvals as may be required under, and other applicable requirements of, the
Securities Act, the Exchange Act, state securities or blue sky laws, the HSR Act
and the filing and recordation of the Certificate of Merger as required by the
DGCL and the CBCA, no filing with or notice to, and no material permit
authorization consent or approval of any Governmental Entity is necessary for
the execution and delivery by Parent or Newco of this Agreement or the
consummation by Parent or Newco of the transactions contemplated hereby, except
where the failure to obtain such permits, authorizations, consents or approvals
or to make such filings or give such notice would not have a Material Adverse
Effect on Parent.
(b) Neither the execution, delivery and performance of this Agreement
by Parent or Newco, nor the consummation by Parent or Newco of the transactions
contemplated hereby, will (i) conflict with or result in any breach of any
provision of each of the certificate of incorporation or bylaws (or similar
governing documents) of Parent and Newco or any of Parent's other subsidiaries,
(ii) result in a violation or breach of or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration or Lien) under any of the
terms, conditions or provisions of any material note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
Parent or Newco or any of Parent's other subsidiaries is a party or by which any
of them or any of their respective properties or assets may be bound or (iii)
violate any order, writ,
Page 32
<PAGE> 40
injunction, decree, law, statute, rule or regulation applicable to Parent or
Newco or any of Parent's other subsidiaries or any of their respective
properties or assets which violation could have a Material Adverse Effect on
Parent.
SECTION 3.6. NO DEFAULT. None of Parent or any of its subsidiaries is
in breach, default or violation (and no event has occurred that, with notice or
the lapse of time or both, would constitute a breach, default or violation) of
any term, condition or provision of (a) its certificate of incorporation or
bylaws (or similar governing documents), (b) any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which Parent or any of its subsidiaries is now a party or by which any of
them or any of their respective properties or assets may be bound or (c) any
order, writ, injunction, decree, law, statute, rule or regulation applicable to
Parent or any of its subsidiaries or any of their respective properties or
assets except, in the case of (b) or (c), for violations, breaches or defaults
that would not have a Material Adverse Effect on Parent.
SECTION 3.7. NO UNDISCLOSED LIABILITIES; ABSENCE OF CHANGES. Except as
reflected in the most recent financial statements of Parent included in the
Parent SEC Reports, none of Parent or its subsidiaries has any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise that
would be required by generally accepted accounting principles to be reflected on
a consolidated balance sheet of Parent and its consolidated subsidiaries
(including the notes thereto), other than liabilities incurred in the ordinary
course of business since September 30, 1999.
SECTION 3.8. LITIGATION. There is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of Parent threatened, against Parent
or any of its subsidiaries or any of their respective properties or assets that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on Parent or could reasonably be expected to prevent or
delay the consummation of the transactions contemplated by this Agreement. None
of Parent or its subsidiaries is subject to any outstanding order, writ,
injunction or decree that, insofar as can be reasonably foreseen in the future,
could reasonably be expected to have a Material Adverse Effect on Parent or
could reasonably be expected to prevent or delay the consummation of the
transactions contemplated hereby.
SECTION 3.9. COMPLIANCE WITH APPLICABLE LAW. Parent and its
subsidiaries hold all material permits, licenses, variances, exemptions, orders
and approvals of all Governmental Entities necessary for the lawful conduct of
their respective businesses (the "PARENT PERMITS" Parent and its subsidiaries
are in compliance with the terms of the Parent Permits, except where the failure
so to comply would not have a Material Adverse Effect on Parent. The businesses
of Parent and its subsidiaries are not being conducted in violation of any law
ordinance or regulation of any Governmental Entity except for violations that do
not and, insofar as reasonably can be foreseen in the future, will not have a
Material Adverse Effect on Parent. No investigation or review by any
Governmental Entity with respect to Parent or its subsidiaries is pending or, to
the knowledge of Parent, threatened nor, to the knowledge of Parent, has any
Governmental Entity indicated an intention to conduct the same, other than in
each case those that Parent reasonably believes will not have a Material Adverse
Effect on Parent.
Page 33
<PAGE> 41
SECTION 3.10. BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement, based upon arrangements
made by or on behalf of Parent or Newco.
SECTION 3.11. YEAR 2000. All Information Systems and Equipment of
Parent and its subsidiaries are in all material respects Year 2000 Compliant.
SECTION 3.12. ACCURACY OF INFORMATION. None of the representations or
warranties or information provided and to be provided by Parent or Newco to the
Company in this Agreement contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact necessary in
order to make the statements and facts contained herein or therein not false or
misleading. Copies of all documents heretofore or hereafter delivered or made
available by Parent or Newco to Company pursuant hereto were or will be complete
and accurate records of such documents.
4. ARTICLE IV
COVENANTS
SECTION 4.1. CONDUCT OF BUSINESS OF COMPANY. Except as contemplated by
this Agreement or as described in Section 4.1 of the Company Disclosure
Schedule, during the period from the date hereof to the Effective Time, Company
will, and will cause each of its subsidiaries to, conduct its operations in the
ordinary course of business consistent with past practice, and, to the extent
consistent therewith and with no less diligence and effort than would be applied
in the absence of this Agreement, will seek to preserve intact its current
business organizations, keep available the service of its current officers and
employees and preserve its relationships with customers, suppliers and others
having business dealings with it to the end that their goodwill and ongoing
businesses shall be unimpaired at the Effective Time. Without limiting the
generality of the foregoing, except as otherwise expressly provided in this
Agreement or as described in Section 4.1 of the Company Disclosure Schedule,
prior to the Effective Time, neither Company nor any of its subsidiaries will,
without the prior written consent of Parent and Newco (which consent shall not
be unreasonably withheld):
(a) amend its charter or bylaws (or other similar governing
instrument);
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities or equity equivalents (including, without
limitation, any stock options or stock appreciation rights), except for the
issuance and sale of Shares pursuant to options previously granted under Company
Plans or pursuant to previously granted warrants;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
make any other actual, constructive or deemed distribution in respect of its
capital stock or otherwise make any payments to shareholders in their capacity
as such, or redeem or otherwise acquire any of its securities or any securities
of any of subsidiaries;
Page 34
<PAGE> 42
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
(other than the Merger);
(e) alter, through merger, liquidation, reorganization, restructuring
or any other fashion, the corporate structure of ownership of any subsidiary;
(f) (i) incur or assume any long-term or short-term debt or issue any
debt securities, except for borrowings under existing lines of credit in the
ordinary course of business consistent with past practices provided that notice
is provided to Parent; (ii) assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or otherwise) for the
obligations of any other person except in the ordinary course of business
consistent with past practice and except for obligations of subsidiaries of
Company incurred in the ordinary course of business consistent with past
practices provided that notice is provided to Parent; (iii) make any loans,
advances or capital contributions to or investments in any other person (other
than to subsidiaries of Company or customary loans or advances to employees in
each case in the ordinary course of business consistent with past practice);
(iv) pledge or otherwise encumber shares of capital stock of Company or its
subsidiaries; or (v) mortgage or pledge any of its material assets, tangible or
intangible, or create or suffer to exist any material Lien thereupon (other than
tax liens for Taxes not yet due and Liens incurred in the ordinary course of
business securing borrowings permitted under clause (i) above);
(g) except as set forth in Section 4.1 of the Company Disclosure
Schedule or as may be required by law, enter into adopt or amend or terminate
any bonus, profit sharing, compensation, severance, termination, stock option,
stock appreciation right, restricted stock, performance unit, stock equivalent,
stock purchase agreement, pension, retirement, deferred compensation,
employment, severance or other employee benefit agreement, trust, plan, fund or
other arrangement for the benefit or welfare of any director, officer or
employee in any manner or increase in any manner the compensation or fringe
benefits of any director, officer or employee or pay any benefit not required by
any plan and arrangement as in effect as of the date hereof (including, without
limitation, the granting of stock appreciation rights or performance units);
(h) except as set forth in Section 4.1 of the Company Disclosure
Schedule, acquire, sell, lease or dispose of any assets in any single
transaction or series of related transactions having a fair market value in
excess of $50,000 in the aggregate, provided that none of the foregoing shall
limit contracting for sale and sale of completed residences in the ordinary
course of business consistent with past practices;
(i) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(j) revalue in any material respect any of its assets, including
without limitation writing down the value of inventory or writing-off notes or
accounts receivable other than in the ordinary course of business consistent
with past practices;
Page 35
<PAGE> 43
(k) (i) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof or any equity interest therein; (ii) enter into any contract or
agreement, other than in the ordinary course of business consistent with past
practice, that would be material to Company and its subsidiaries, taken as a
whole; (iii) authorize any new capital expenditure or expenditures that
individually is in excess of $50,000 or in the aggregate are in excess of
$250,000 provided that none of the foregoing shall limit any capital expenditure
required pursuant to existing Projects or other existing contracts in the
ordinary course of business consistent with past practices;
(l) make any tax election or settle or compromise any income tax
liability material to Company and its subsidiaries taken as a whole;
(m) settle or compromise any pending or threatened suit, action or
claim that (i) relates to the transactions contemplated hereby or (ii) the
settlement or compromise of which could have a Material Adverse Effect on
Company;
(n) pay, or award any increases in, any salary, wages, vacation pay,
sick pay, bonuses or other compensation except in the ordinary course of
business consistent with past practice;
(o) made any material change in the conduct of its business or
operations, or take or omit to take any actions not in the ordinary course of
business consistent with past practices;
(p) enter into any transaction, agreement, arrangement or understanding
with any affiliate of the Company, or amend or modify the terms of any existing
agreement, arrangement or understanding with any affiliate of the Company;
(q) enter into any transaction, agreement, arrangement or
understanding, or take any other action, that would prevent the Merger from
qualifying as a tax free reorganization; or
(r) take or agree in writing or otherwise commit to take any of the
actions described in Sections 4.1(a) through 4.1(q) or any action that would
make any of the representations or warranties of Company contained in this
Agreement materially untrue or incorrect.
SECTION 4.2. PREPARATION OF FORM S-4 AND THE PROXY STATEMENT.
(a) Parent shall prepare and file with the SEC and any other applicable
regulatory bodies, as soon as reasonably practicable, a Registration Statement
on Form S-4 to be filed with the SEC by Parent in connection with the issuance
of shares of Parent Common Stock in the Merger (together with any amendments or
supplements thereto, the "FORM S-4") with respect to the shares of the Parent
Common Stock to be issued in the Merger. Parent and Company shall each use its
reasonable best efforts to cause the Form S-4 to be declared effective as
promptly as practical after such filing. Company and Parent shall each use their
reasonable best efforts to have a joint proxy statement of Parent and of Company
prepared by Parent and Company containing the information required by the
Exchange Act (together with any amendments or supplements thereto, the "PROXY
STATEMENT") promptly approved by the SEC under the provisions of the Exchange
Act.
Page 36
<PAGE> 44
(b) Parent shall also take any action (other than qualifying to do
business in any jurisdiction in which it is now not so qualified) required to be
taken under any applicable state securities laws in connection with the issuance
of Parent Common Stock in the Merger, and Company shall furnish all information
concerning Company and the holders of Shares as may be reasonably requested in
connection with any such action.
(c) (i) The information specifically designated as being supplied by
Company for inclusion or incorporation by reference in the Form S-4 shall not,
at the time the Form S-4 is declared effective or at the time the Proxy
Statement is first mailed to holders of Shares, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading.
(ii) The information specifically designated as being supplied by
Company for inclusion or incorporation by reference in the Proxy Statement shall
not, at the date the Proxy Statement is first mailed to holders of Shares,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading.
(iii) If at any time prior to the Effective Time, any event or
circumstance relating to Company, or its officers or directors, should be
discovered by Company which should be set forth in an amendment to the Form S-4
or a supplement to the Proxy Statement, Company shall promptly inform Parent.
(iv) All documents, if any, that Company is responsible for filing
with the SEC in connection with the transactions contemplated hereby will comply
as to form and substance in all material respects with the applicable
requirements of the Securities Act and the rules and regulations thereunder and
the Exchange Act and the rules and regulations thereunder.
(d) (i) The information specifically designated as being supplied by
Parent for inclusion or incorporation by reference in the Form S-4 shall not, at
the time the Form S-4 is declared effective or at the time the Proxy Statement
is first mailed to holders of Shares, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading.
(ii) The information specifically designated as being supplied by
Parent for inclusion or incorporation by reference in the Proxy Statement shall
not, at the date the Proxy Statement is first mailed to holders of Shares,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading.
(iii) If at any time prior to the Effective Time, any event or
circumstance relating to Parent, or its officers or directors, should be
discovered by Parent which should be set forth in an amendment to the Form S-4
or a supplement to the Proxy Statement, Parent shall promptly inform Company.
Page 37
<PAGE> 45
(iv) All documents that Parent is responsible for filing with the
SEC in connection with the transactions contemplated hereby will comply as to
form and substance in all material respects with the applicable requirements of
the Securities Act and the rules and regulations thereunder and the Exchange Act
and the rules and regulations thereunder.
SECTION 4.3. OTHER POTENTIAL ACQUIRERS.
(a) Company, its affiliates and their respective officers, directors,
employees, representatives and agents shall immediately cease any discussions or
negotiations with any parties with respect to any Third Party Acquisition
(defined below Neither Company nor any of its affiliates shall, nor shall
Company authorize or permit any of its or their respective officers, directors,
employees, representatives (including, without limitation, any investment
banker, attorney or accountant) or agents to, directly or indirectly, encourage,
solicit, participate in or initiate any inquiries, discussions or negotiations
with or provide any information or access to any person or group (other than
Parent and Newco or any designees of Parent and Newco) concerning any Third
Party Acquisition, or otherwise facilitate any effort or attempt to make or
implement a Third Party Acquisition. Company shall promptly (within one business
day of receipt) notify Parent in the event it receives any proposal or inquiry
concerning a Third Party Acquisition, including the terms and conditions thereof
and the identity of the party submitting such proposal; and shall keep Parent
fully informed of the status and any material developments concerning the same.
(b) Except as set forth in this Section 4.3(b), Company Board shall not
withdraw its recommendation of the transactions contemplated hereby or approve
or recommend, or cause Company to enter into any agreement with respect to, any
Third Party Acquisition. Notwithstanding the foregoing, if Company Board by a
majority vote determines in its good faith judgment, after consultation with and
based upon the advice of outside legal counsel, that it is required to do so in
order to comply with its fiduciary duties, Company Board may withdraw its
recommendation of the transactions contemplated hereby or approve or recommend a
Superior Proposal (defined below), but in each case only (i) after providing
reasonable written notice to Parent (a "NOTICE OF SUPERIOR PROPOSAL"), advising
Parent that Company Board has received a Superior Proposal, specifying the
material terms and conditions of such Superior Proposal and identifying the
person making such Superior Proposal and specifically stating that Company
intends to approve or recommend such Superior Proposal in accordance with this
Section 4.3(b); and (ii) if Parent does not, within ten (10) business days of
Parent's receipt of the Notice of Superior Proposal, make an offer that Company
Board by a majority vote determines in its good faith judgment (based on the
advice of a financial adviser of nationally recognized reputation) to be as
favorable to Company's shareholders as such Superior Proposal; provided,
however, that Company shall not be entitled to enter into any agreement with
respect to a Superior Proposal unless and until this Agreement is terminated by
its terms pursuant to Section 6.1. Any disclosure that Company Board may be
compelled to make with respect to the receipt of a proposal for a Third Party
Acquisition in order to comply with its fiduciary duties or Rule 14d-9 or 14e-2
will not constitute a violation of this Section 4.3(b) provided that such
disclosure states that no action will be taken by Company Board with respect to
the withdrawal of its recommendation of the transactions contemplated hereby or
the approval or recommendation of any Third Party Acquisition, except in
accordance with this Section 4.3(b).
Page 38
<PAGE> 46
(c) "THIRD PARTY ACQUISITION" means the occurrence of any of the
following events: (i) the acquisition of Company by merger or otherwise by any
person (which includes a "person" as such term is defined in Section 13(d)(3) of
the Exchange Act) other than Parent, Newco or any affiliate thereof (a "THIRD
PARTY"); (ii) the acquisition by a Third Party of more than twenty percent (20%)
of the total assets of Company and its subsidiaries taken as a whole; (iii) the
acquisition by a Third Party of ten percent (10%) or more of the outstanding
Shares; (iv) the adoption by Company of a plan of liquidation or the declaration
or payment of an extraordinary dividend; (v) the repurchase by Company or any of
its subsidiaries of more than ten percent (10%) of the outstanding Shares; (vi)
the acquisition by Company or any subsidiary by merger, purchase of stock or
assets, joint venture or otherwise of a direct or indirect ownership interest or
investment in any business whose annual revenues, net income or assets is equal
or greater than ten percent (10%) of the annual revenues, net income or assets
of Company or (vii) any similar merger, reorganization, share exchange,
consolidation or similar transaction involving the equity interests of Company.
A "SUPERIOR PROPOSAL" means any bona fide proposal to acquire directly or
indirectly for consideration consisting of cash and/or securities more than
eighty percent (80%) of the Shares then outstanding or all of substantially all
of the assets of the Company and otherwise on terms that Company Board by a
majority vote determines in its good faith judgment (based on the written advice
of a financial adviser of nationally recognized reputation) and after
consultation with its outside counsel (A) to be more favorable to Company's
shareholders than the Merger and (B) if accepted would be reasonably capable of
being consummated.
SECTION 4.4. COMFORT LETTERS.
(a) Company shall use commercially reasonable efforts to cause Deloitte
& Touche to deliver letters dated not more than five (5) days prior to the date
on which the Form S-4 shall become effective and addressed to itself and Parent
and their respective Boards of Directors in connection with financial statements
and other information derived from financial records of the Company and its
subsidiaries, in form and substance reasonably satisfactory to Parent and
customary in scope and substance for agreed-upon procedures letters delivered by
independent public accountants in connection with registration statements and
proxy statements similar to the Form S-4 and the Proxy Statement.
(b) Parent shall use commercially reasonable efforts to cause Arthur
Andersen LLP to deliver letters dated not more than five (5) days prior to the
date on which the Form S-4 shall become effective and addressed to itself and
Company and their respective Boards of Directors in connection with financial
statements and other information derived from financial records of Parent, in
form and substance reasonably satisfactory to Company and customary in scope and
substance for agreed upon procedures letters delivered by independent
accountants in connection with registration statements and proxy statements
similar to the Form S-4 and the Proxy Statement.
Page 39
<PAGE> 47
SECTION 4.5. MEETINGS OF SHAREHOLDERS. Company shall take all action
necessary in accordance with the CBCA and its charter and bylaws to duly call,
give notice of, convene, and hold a meeting of its shareholders as promptly as
practicable to consider and vote upon the adoption and approval of this
Agreement and the transactions contemplated hereby. The shareholder votes
required for the adoption and approval of the transactions contemplated by this
Agreement shall be the vote required by the CBCA and Company's certificate of
incorporation and bylaws. Company will, through its Board of Directors,
recommend to its shareholders approval of such matters subject to the provisions
of Section 4.3(b) and their fiduciary duties to shareholders under applicable
law.
SECTION 4.6. NYSE LISTING. Parent shall use all reasonable efforts to
cause the shares of Parent Common Stock to be issued in the Merger to be
approved for listing on the NYSE, subject to official notice of issuance, prior
to the Effective Time.
SECTION 4.7. ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Between the date hereof and the Effective Time, Company will give
Parent and its authorized representatives, reasonable access to all employees,
plants, offices, and other facilities and to all books and records of itself and
its subsidiaries; will permit Parent to make such inspections as Parent may
reasonably require; and will cause its officers and those of its subsidiaries to
furnish Parent with such financial and operating data and other information with
respect to the business and properties of itself and its subsidiaries as Parent
may from time to time reasonably request.
(b) Between the date hereof and the Effective Time, Company shall
furnish to Parent, as soon as available (but no later than twenty days) after
the end of each calendar month (commencing with February, 2000), an unaudited
balance sheet of Company as of the end of such month, and the related statements
of earnings, shareholders' equity (deficit); and, as soon as available (but no
later than thirty days) after the end of each calendar quarter, a statement of
cash flows for the quarter then ended each, prepared in accordance with
generally accepted accounting principles in conformity with the practices
consistently applied by Company with respect to its monthly and quarterly
financial statements. All the foregoing shall be in accordance with the books
and records of Company and shall fairly present its financial position (taking
into account the differences between the monthly and quarterly statements
prepared by such party in conformity with its past practices) as of the last day
of the period then ended.
(c) Parent and Company agree that, except as otherwise required by law,
for a period of two years from the date hereof (regardless of whether the
transactions contemplated hereby are consummated) each will hold, and will cause
its directors, officers, employees, affiliates, consultants and advisers to
hold, in confidence all documents and information furnished to it by or on
behalf of the other party in connection with the transactions contemplated by
this Agreement ("CONFIDENTIAL MATERIAL"). Each party agrees that it will use the
Confidential Material solely for the purpose of the transactions contemplated by
this Agreement and it will not use the Confidential Material in any way
detrimental to the other party. In the event that either party is requested in
any proceeding to disclose any Confidential Material, such party shall give the
other party prompt notice prior to disclosure of any Confidential Material so
that the
Page 40
<PAGE> 48
other party may seek an appropriate protective order. If, in the absence of a
protective order, a party is nonetheless compelled to disclose Confidential
Material, such party may disclose such information without liability hereunder;
provided, however, that such party will give the other party written notice of
the information to be disclosed as far in advance of its disclosure as is
practicable and, upon the request of and at the expense of such other party,
such party will use commercially reasonable efforts to obtain assurances that
confidential treatment will be accorded to such information. The term
"Confidential Material" shall not include information which was or becomes
generally available on a non-confidential basis; provided that the source of
such information was not bound by a confidentiality agreement or this Section
4.7.
SECTION 4.8. ADDITIONAL AGREEMENTS; REASONABLE EFFORTS. Subject to the
terms and conditions herein provided, each of the parties hereto agrees to use
all reasonable efforts to take or cause to be taken all action and to do or
cause to be done all things reasonably necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation, (i)
cooperating in the preparation and filing of the Proxy Statement and the Form
S-4, any filings that may be required under the HSR Act and any amendments to
any thereof; (ii) obtaining consents of all third parties and Governmental
Entities necessary, proper or advisable for the consummation of the transactions
contemplated by this Agreement; (iii) contesting any adverse legal proceeding
relating to the Merger and (iv) executing any additional instruments necessary
to consummate the transactions contemplated hereby. If at any time after the
Effective Time any further action is necessary to carry out the purposes of this
Agreement the proper officers and directors of each party hereto shall take all
such necessary action.
SECTION 4.9. PUBLIC ANNOUNCEMENTS. Parent, Newco and Company, as the
case may be, will use commercially reasonable efforts to consult with and obtain
the approval of one another before issuing any press release or otherwise making
any public statements with respect to the transactions contemplated by this
Agreement, including, without limitation, the Merger, and shall not issue any
such press release or make any such public statement prior to such consultation
except as may be required by applicable law or the rules of any applicable
securities exchange or national market system as reasonably determined by
Parent, Newco or Company, as the case may be.
SECTION 4.10. NOTIFICATION OF CERTAIN MATTERS. Company shall give
prompt notice to Parent and Newco and Parent and Newco shall give prompt notice
to Company, of (i) the occurrence or nonoccurrence of any event the occurrence
or nonoccurrence of which would be likely to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect at or prior to the Effective Time and (ii) any material failure of
Company, Parent or Newco, as the case may be, to comply with or satisfy any
covenant condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 4.10 shall not cure such breach or non-compliance or limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
Page 41
<PAGE> 49
SECTION 4.11. AFFILIATES. Parent shall not be required to maintain the
effectiveness of the Form S-4 beyond the minimum period necessary to consummate
the Merger in compliance with the Securities Act.
SECTION 4.12. LOCK-UP LETTER AGREEMENT. Concurrently with or prior to
the consummation of the transactions contemplated by this Agreement, (i) George
S. Writer, Jr. and Daniel J. Nickless (and any holder of Shares beneficially
owned by either of them) shall enter into a lock-up letter agreement with
Parent, substantially in the form attached hereto as Exhibit D (the "LOCK UP
AGREEMENT"), providing, among other things, that without the prior written
consent of Parent the shares of Parent Common Stock issued to such persons in
the Merger will not be sold until the first anniversary of the Closing Date; and
(ii) each of the other members of the Management Group (and any holder of Shares
beneficially owned by any of them) shall enter into a Lock Up Agreement,
providing, among other things, that without the prior written consent of Parent
the shares of Parent Common Stock issued in the Merger to such persons shall not
be sold until one hundred and twenty (120) days after the Closing Date.
SECTION 4.13. INDEMNIFICATION AND INSURANCE.
(a) All rights to indemnification for acts or omissions occurring at or
prior to the Effective Time now existing in favor of the current or former
directors, officers, employees or agents of Company and its subsidiaries (the
"INDEMNIFIED Parties") as provided in their respective certificates of
incorporation or bylaws (or comparable charter or organizational documents) or
applicable law shall survive the Merger and shall continue in full force and
effect in accordance with their terms for a period of six years from the
Effective Time, provided that, in the event any claim or claims are asserted or
made within such six-year period, all rights to indemnification in respect of
any such claim or claims shall continue until final disposition of any and all
such claims, and provided further that in no event shall the Surviving
Corporation be obligated to provide indemnification under this Section 4.13(a)
in excess of the indemnification Company is required to provide under its
certificate of incorporation or bylaws as in effect on the date hereof.
(b) Parent will cause to be maintained, for a period of three years
from the Effective Time, Company's current directors' and officers' insurance
and indemnification policy ("COMPANY D&O INSURANCE") covering those persons who
are currently covered by Company D&O Insurance to the extent that it provides
coverage for events occurring prior to or at the Effective Time (through the
continuation or endorsement of the policy for Company D&O Insurance or the
purchase of a tail-end rider), provided, that Parent may, in lieu of maintaining
such existing Company D&O Insurance, cause coverage to be provided under any
policy maintained for the benefit of Parent or any of its subsidiaries, so long
as the terms thereof are substantially similar to those of the existing Company
D&O Insurance. If the existing Company D&O Insurance expires, is terminated or
cancelled or is not available during such three-year period, Parent will use all
commercially reasonable efforts to cause to be obtained as much Company D&O
Insurance as can be obtained for the remainder of such period.
(c) Any Indemnified Party wishing to claim indemnification under
subparagraph (a) of this Section 4.13, upon learning of the claim, action, suit,
proceeding or investigation as to
Page 42
<PAGE> 50
which indemnification is sought, shall promptly notify the Surviving Corporation
thereof, but the failure to so notify shall not relieve the Surviving
Corporation of any liability it may have to such Indemnified Party if such
failure does not materially prejudice the Surviving Corporation. In the event of
any such claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), the Surviving Corporation shall have the
right to assume the defense thereof and the Surviving Corporation shall not be
liable to such Indemnified Parties for any legal expenses of other counsel or
any other expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof, except that if the Surviving Corporation
elects not to assume such defense or counsel for the Surviving Corporation or
for an Indemnified Party advises in good faith that there are issues which raise
conflicts of interest between the Surviving Corporation and the Indemnified
Party, the Indemnified Party may retain separate counsel satisfactory to the
Indemnified Party, and the Surviving Corporation shall pay all reasonable fees
and expenses of such counsel for the Indemnified Party promptly as statements
therefor are received, provided that the Surviving Corporation will not be
required to pay fees and expenses of more than one separate counsel for all the
Indemnified Parties with respect to any matter or group of related matters.
Notwithstanding and in addition to the foregoing, any Indemnified Party may
retain separate counsel and participate in such claim at such Indemnified
Party's sole cost and expense, provided that the Surviving Corporation shall
have sole control of the defense of such claim, and all negotiations for the
compromise or settlement thereof.
(d) The Company hereby assigns to the Surviving Corporation, effective
at Closing and thereafter, all proceeds under its insurance policies listed in
Section 2.18(a) of the Company Disclosure Schedule.
SECTION 4.14 USE OF WRITER NAME.
(a) The Surviving Corporation shall operate under the name "The Writer
Corporation" (the "WRITER NAME") until at least the earlier to occur of (i) the
date on which the employment of George S. Writer, Jr. with the Surviving
Corporation is terminated, and (ii) the fifth anniversary of the Effective Date.
Notwithstanding the foregoing, the Surviving Corporation shall be entitled to
discontinue use of the Writer Name should Mr. Writer engage in any conduct, act
or omission which the board of directors of the Surviving Corporation reasonably
determines has an adverse effect on the public image, reputation or goodwill of
the Writer Name. Mr. Writer in his discretion may require the Surviving
Corporation to discontinue use of the Writer Name in the event of a Change in
Control of Parent. Except as set forth herein, the Surviving Corporation shall
acquire all rights, title and interest in the Writer Name free and clear of any
Liens.
(b) "CHANGE IN CONTROL OF PARENT" means and shall be deemed to occur if
any of the following events occur:
(i) Any person, entity or group within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act (excluding, for this purpose, Parent or
its subsidiaries, or any employee stock ownership or other employee benefit plan
of Parent or its subsidiaries) ("EXCHANGE ACT PERSON") becomes the beneficial
owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
fifty percent (50%) or more of the combined voting power of Parent's then
outstanding voting securities entitled to vote generally in the election of
directors; or
Page 43
<PAGE> 51
(ii) Individuals who, as of the date hereof, constitute the
Board of Directors of Parent (the "INCUMBENT Board") cease for any reason to
constitute at least a majority of the Board of Directors of Parent, provided
that any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by Parent's stockholders, is approved by a
vote of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such person were a member of the Incumbent Board;
or (iii) Consummation by Parent of the sale or other disposition by Parent of
all or substantially all of Parent's assets or a merger, consolidation or other
reorganization of Parent with any other person, corporation or other entity,
other than:
(A) a merger, consolidation or reorganization that
would result in the voting securities of Parent outstanding immediately
prior thereto (or, in the case of a reorganization or merger or
consolidation that is preceded or accomplished by an acquisition or
series of related acquisitions by any Exchange Act Person, by tender or
exchange offer or otherwise, of voting securities representing 5% or
more of the combined voting power of all securities of Parent,
immediately prior to such acquisition or the first acquisition in such
series of acquisitions) continuing to represent, either by remaining
outstanding or by being converted into voting securities of another
entity, more than 50% of the combined voting power of the voting
securities of Parent or such other entity outstanding immediately after
such reorganization or merger or consolidation (or series of related
transactions involving such a reorganization or merger or
consolidation), or
(B) a merger, consolidation or other reorganization
effected to implement a recapitalization or reincorporation of Parent
(or similar transaction) that does not result in a material change in
beneficial ownership of the voting securities of Parent or its
successor; or
(iv) Approval by the stockholders of Parent or an order by a
court of competent jurisdiction of a plan of liquidation of Parent.
SECTION 4.15 AGREEMENT OF MANAGEMENT GROUP. Company shall use its best
efforts to cause each officer, director and 15% or greater shareholder of
Company (collectively, the "MANAGEMENT GROUP"), who in the aggregate shall hold
more than 48% of the outstanding Shares, to execute and deliver to Parent at or
before the execution of this Agreement an agreement substantially in the form
attached hereto as Exhibit C (the "MANAGEMENT MEMBER AGREEMENT") (i) approving
and authorizing the Merger, (ii) agreeing to vote, and granting Parent (or its
assigns) an irrevocable proxy to enable Parent (or such assign) to vote, in
favor of the Merger in any vote of Company's shareholders on such matter, and
(iii) agreeing to adjust the number of Cash Election Shares held by such member,
in the same proportion as other members of the Management Group, to the extent
necessary to allow each shareholder of Company that is not a member of the
Management Group to receive cash for all Cash Election Shares held by
Page 44
<PAGE> 52
such shareholder, or as close as possible to all cash, provided that in no event
shall the Aggregate Cash Consideration exceed 50% of the Aggregate Merger
Consideration.
SECTION 4.16 CONSENTS. Company shall use its best efforts prior to
Closing to obtain all consents and approvals listed in Section 2.5(b) of the
Company Disclosure Schedule as may be required, pursuant to the terms of the
Contracts listed on Section 2.17 of the Company Disclosure Schedule or
otherwise, to consummate the transactions contemplated by this Agreement and to
enable Surviving Corporation to continue the operations of the Company following
the Closing substantially as such operations are conducted at the date hereof.
SECTION 4.17 SEC REPORTS. From the date hereof until Closing, Company
will file all required forms, reports and documents with the SEC and will comply
in all material respects with all applicable requirements of the Securities Act
and the Exchange Act, each as in effect on the dates such forms, reports and
documents are filed. None of such forms, reports and documents, including,
without limitation, any financial statements or schedules included or
incorporated by reference therein, will contain when filed any untrue statement
of a material fact or omit to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein in light of the circumstances under which they are made not misleading.
The financial statements of Company (including the consolidated statements of
income and cash flow) included in such forms, reports and documents will comply
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC promulgated under the Exchange
Act and will have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and will fairly present the consolidated
financial position of Company and its consolidated subsidiaries as of the dates
thereof and their consolidated results of operations and cash flows for the
periods indicated (subject, in the case of unaudited interim financial
statements, the exceptions permitted by Form 10-Q under the Exchange Act).
SECTION 4.18 TAXES. Company covenants that it will file all Tax Returns
applicable to its 1999 fiscal year on or before May 31, 2000.
SECTION 4.19 TERMINATION OF PROFIT SHARING PLAN. Company shall
terminate or cause to be terminated The Writer Corporation 401(i) Profit Sharing
Plan prior to the date on which Company and/or its subsidiaries and ERISA
Affiliates become member of a "controlled group" with or under "common control"
with Parent as such terms are defined in Section 414(b) and 414(c) of the Code.
Company employees employed by the Surviving Corporation will be credited for
time employed at Company for purposes of participation and vesting in the
Standard Pacific Retirement and Savings Plan.
SECTION 4.20 TERMINATION OF NONQUALIFIED PROFIT SHARING PLAN. Company
shall terminate or cause to be terminated the Company Nonqualified Profit
Sharing Plan effective as of December 31, 1999, except for the obligation to pay
amounts accrued and unpaid as of December 31, 1999.
Page 45
<PAGE> 53
5. ARTICLE V
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 5.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE
MERGER. The respective obligations of each party hereto to effect the Merger are
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) this Agreement and any other matters submitted for the purpose of
approving the transactions contemplated hereby shall have been approved and
adopted by the requisite vote of the shareholders of Company;
(b) no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
United States court or United States Governmental Entity which prohibits,
restrains, enjoins or restricts the consummation of the Merger or which would
prohibit or limit the Surviving Corporation from exercising all rights and
privileges pertaining to its ownership or operation of the assets and business
of Company taken as a whole;
(c) any waiting period applicable to the Merger under the HSR Act shall
have terminated or expired; and
(d) the Form S-4 shall have become effective under the Securities Act
and shall not be the subject of any stop order that remains in effect, and no
proceeding seeking such an order shall be pending or threatened, and Parent
shall have received all state securities laws or "blue sky" permits and
authorizations necessary to issue shares of Parent Common Stock in exchange for
Shares in the Merger.
SECTION 5.2. CONDITIONS TO THE OBLIGATIONS OF COMPANY. The obligation
of Company to effect the Merger is subject to the satisfaction at or prior to
the Effective Time of the following conditions:
(a) the representations of Parent and Newco contained in this Agreement
or in any other document delivered pursuant hereto shall be true and correct in
all material respects at and as of the Effective Time with the same effect as if
made at and as of the Effective Time (except to the extent such representations
expressly related to an earlier date, in which case such representations shall
be true and correct as of such earlier date) and, at the Closing, Parent and
Newco shall have delivered to Company a certificate to that effect;
(b) each of the covenants and obligations of Parent and Newco to be
performed at or before the Effective Time pursuant to the terms of this
Agreement shall have been duly performed at or before the Effective Time and, at
the Closing, Parent and Newco shall have delivered to Company a certificate to
that effect;
(c) the shares of Parent Common Stock issuable to Company shareholders
pursuant to this Agreement and such other shares required to be reserved for
issuance in connection with the Merger shall have been authorized for listing on
the NYSE upon official notice of issuance;
Page 46
<PAGE> 54
(d) Company shall have received the opinion of legal counsel to Parent
as to the matters reasonably agreed upon by the parties;
(e) Parent shall have obtained the consent or approval of each person
whose consent or approval shall be required in connection with the transactions
contemplated hereby under any loan or credit agreement, note, mortgage,
indenture, lease, or other agreement or instrument, except those for which
failure to obtain such consents and approvals would not, in the reasonable
opinion of Company, individually or in the aggregate, have a Material Adverse
Effect on Parent;
(f) the average price of Parent's common stock over the Valuation
Period shall be no less than $8.25 per share;
(g) the Surviving Corporation shall have executed and delivered at the
Closing, each dated the Closing Date, an employment agreement substantially in
the form attached hereto as Exhibit E with George S. Writer, Jr., and an
employment agreement substantially in the form attached hereto as Exhibit F with
Daniel J. Nickless;
(h) Company shall have received an opinion from its outside tax counsel
to the effect that the Merger will constitute a tax-free reorganization within
the meaning of Section 368(a) of the Code, dated the Closing Date, which opinion
may be based upon reasonable representations of fact provided by officers of
Parent and Company; and
(i) there shall have been no events, changes or effects with respect to
Parent or its subsidiaries having or which could reasonably be expected to have
a Material Adverse Effect on Parent.
SECTION 5.3. CONDITIONS TO THE OBLIGATIONS OF PARENT AND NEWCO. The
respective obligations of Parent and Newco to effect the Merger are subject to
the satisfaction at or prior to the Effective Time of the following conditions:
(a) the representations of Company contained in this Agreement or in
any other document delivered pursuant hereto shall be true and correct in all
material respects at and as of the Effective Time with the same effect as if
made at and as of the Effective Time (except to the extent such representations
expressly related to an earlier date, in which case such representations shall
be true and correct as of such earlier date) and, at the Closing, Company shall
have delivered to Parent and Newco a certificate to that effect;
(b) each of the covenants and obligations of Company to be performed at
or before the Effective Time pursuant to the terms of this Agreement shall have
been duly performed at or before the Effective Time and, at the Closing, Company
shall have delivered to Parent and Newco a certificate to that effect;
(c) Parent shall have received from each member of the Management Group
an executed copy of the lock-up letter referred to in Section 4.12 substantially
in the form attached hereto as Exhibit D;
Page 47
<PAGE> 55
(d) the shares of Parent Common Stock issuable to Company shareholders
pursuant to this Agreement and such other shares required to be reserved for
issuance in connection with the Merger shall have been authorized for listing on
the NYSE upon official notice of issuance;
(e) Parent shall have received the opinion of legal counsel to Company
as to the matters reasonably agreed upon by the parties;
(f) Company shall have obtained the consent or approval of each person
in form reasonably satisfactory to Parent, whose consent or approval shall be
required in order to permit the succession by the Surviving Corporation pursuant
to the Merger to any obligation right or interest of Company or any subsidiary
of Company under any other agreement or instrument, except for those for which
failure to obtain such consents and approvals would not, in the reasonable
opinion of Parent, individually or in the aggregate, have a Material Adverse
Effect on Company;
(g) Parent shall have received an opinion from its outside tax counsel
or accountants to the effect that the Merger will constitute a tax-free
reorganization within the meaning of Section 368(a) of the Code, dated the
Closing Date, which opinion may be based upon reasonable representations of fact
provided by officers of Parent and Company;
(h) the aggregate number of Dissenting Shares shall not exceed 5% of
the total number of Shares;
(i) all proceedings to be taken by or on behalf of Company in
connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Parent, and Parent shall have received copies of all such documents
and other evidences as Parent may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in
connection therewith;
(j) Parent shall have received at or before execution of this Agreement
from each member of the Management Group an agreement substantially in the form
attached hereto as Exhibit C;
(k) as of the date of execution of this Agreement, in the aggregate the
Management Group shall have the right to vote Shares representing more than
forty-eight percent (48%) of the combined voting power of the outstanding
Shares;
(l) the average price of Parent's common stock over the Valuation
Period shall be no greater than $15.75 per share;
(m) there shall have been no events, changes or effects with respect to
Company or its subsidiaries which could or which could reasonably be expected to
(i) materially impair the ability of Company to consummate the transactions
contemplated hereby or (ii) when considered in the aggregate with breaches of
representations (ignoring for the purposes of this clause any qualifications by
Material Adverse Effect or otherwise by material adversity and any materiality
qualification or words or similar import contained in such representations or
warranties), result in a Material Adverse Effect on Company;
Page 48
<PAGE> 56
(n) George S. Writer, Jr. shall have executed and delivered at the
Closing an employment agreement, dated the Closing Date, substantially in the
form attached hereto as Exhibit E, and Daniel J. Nickless shall have executed
and delivered at the Closing an employment agreement, dated the Closing Date,
substantially in the form attached hereto as Exhibit F;
(o) The Company's Series 1993 A Convertible Unsecured Promissory Notes
shall be prepaid by Parent at Closing, and shall not have been converted prior
to Closing;
(p) Newco shall have received title insurance policies, endorsements to
existing title insurance policies held by Company, or unconditional commitments
to issue such title policies or endorsements (subject to Newco's payment of the
premiums therefor) in form and substance satisfactory to Parent, from title
insurance companies approved by Parent, indicating that fee ownership of all Fee
Real Property is vested in Newco; and
(q) the opinion from Company Financial Advisor referred to in Section
2.25 shall not have been modified or withdrawn and a copy of the written opinion
shall have been delivered to Parent.
6. ARTICLE VI
TERMINATION; AMENDMENT; WAIVER
SECTION 6.1 TERMINATION. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after approval and adoption of this Agreement by the shareholders of Company:
(a) by mutual written consent of Parent, Newco and Company;
(b) by Parent and Newco or Company if (i) any court of competent
jurisdiction in the United States or other United States Governmental Entity
shall have issued a final order, decree or ruling or taken any other final
action restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action is or shall have become nonappealable,
(ii) the Merger has not been consummated by August 31, 2000, or (iii) a
condition to the obligation of either party to close the transaction becomes
impossible to fulfill and the party or parties in whose favor the condition
exists has not waived the condition after fifteen (15) days written notice from
the other party; provided that no party may terminate this Agreement pursuant to
clauses (ii) or (iii) if such party's failure to fulfill any of its obligations
under this Agreement shall have been the reason that the Effective Time shall
not have occurred on or before said date or the condition not met;
(c) by Company if (i) there shall have been a breach of any
representation or warranty on the part of Parent or Newco set forth in this
Agreement or if any representation or warranty of Parent or Newco shall have
become untrue, and such breach shall not have been
Page 49
<PAGE> 57
cured or such representation or warranty shall not have been made true within
twenty (20) business days after notice by Company thereof except for any breach
or inaccuracies that, individually or in the aggregate, have not had, and would
not reasonably be expected to have a Material Adverse Effect on Parent, (ii)
there shall have been a breach by Parent or Newco of any of their respective
covenants or agreements hereunder having a Material Adverse Effect on Parent or
materially adversely affecting (or materially delaying) the consummation of the
Merger, and Parent or Newco, as the case may be, has not cured such breach
within twenty (20) business days after notice by Company thereof, or (iii) the
Company Board has received a Superior Proposal and has complied with the
provisions of Section 4.3(b) and concurrently complies with the provisions
Section 6.3; provided that Company may not terminate this Agreement pursuant to
clauses (i) or (ii) if Company has breached any of its obligations hereunder in
any material respect; or
(d) by Parent and Newco if (i) there shall have been a breach of any
representation or warranty on the part of Company set forth in this Agreement or
if any representation or warranty of Company shall have become untrue, and such
breach shall not have been cured or such representation or warranty shall not
have been made true within twenty (20) business days after notice by Parent or
Newco thereof except for any breach or inaccuracies that individually or in the
aggregate have not had, and would not reasonably be expected to have, a Material
Adverse Effect on Company; (ii) there shall have been a breach by Company of its
covenants or agreements hereunder having a Material Adverse Effect on Company or
materially adversely affecting (or materially delaying) the consummation of the
Merger, and Company has not cured such breach within twenty (20) business days
after notice by Parent or Newco thereof; (iii) the Company Board shall have
recommended to Company's shareholders a Superior Proposal; (iv) the Company
Board shall have withdrawn or materially weakened its recommendation of this
Agreement or the Merger, provided that neither Parent nor Newco may terminate
this Agreement pursuant to clauses (i) or (ii) if either Parent or Newco has
breached any of its obligations hereunder in any material respect.
SECTION 6.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 6.1, this Agreement shall
forthwith become void and have no effect without any liability on the part of
any party hereto or its affiliates, directors, officers or stockholders other
than the provisions of this Section 6.2 and Sections 4.7 and 6.3. Nothing
contained in this Section 6.2 shall relieve any party from liability for any
breach of this Agreement.
SECTION 6.3 FEES AND EXPENSES.
(a) If this Agreement is terminated pursuant to Section 6.1(c)(iii) or
Section 6.1(d)(i), (ii), (iii) or (iv), then Parent and Newco will suffer direct
and substantial damages, which damages cannot be determined with reasonable
certainty. To compensate Parent and Newco for such damages, and in recognition
of the time, efforts and expenses incurred by Parent with respect to Company and
the opportunity that the Merger represents to Parent, Company shall pay to
Parent the amount of One Million Seven Hundred Fifty Thousand Dollars
($1,750,000) as liquidated damages immediately upon the occurrence of the event
described in this Section 6.3(a) giving rise to such damages, plus Parent's
out-of-pocket expenses incurred in connection with the
Page 50
<PAGE> 58
transactions contemplated by this Agreement, provided, however, that in the
event of a termination pursuant to Section 6.1(d)(i) or (ii), if the breach of
representation or warranty or covenant first occurs (i.e. in the case of a
breach of representation or warranty, such representation or warranty first
becomes inaccurate) after the date of this Agreement for reasons wholly outside
of the control of Company, then Company shall not be required to pay the
foregoing liquidated damages but shall be required to pay to Parent the amount
of Parent's out-of-pocket expenses incurred in connection with the transactions
contemplated by this Agreement. It is specifically acknowledged that the amount
to be paid pursuant to this Section 6.3(a) represents liquidated damages and not
a penalty, and that the agreements contained in this Section 6.3(a) are an
integral part of the transactions contemplated by this Agreement and that,
without these agreements, Parent and Newco would not enter into this Agreement.
(b) The liquidated damages and expense reimbursement payable pursuant
to Section 6.3(a) shall be paid within one business day after the first to occur
of the events described therein.
(c) Except as otherwise provided in this Section 6.3, above, each of
the parties hereto shall bear its own costs and expenses.
(d) Company expressly acknowledges that the amount of the liquidated
damages is reasonable and that Company has received advice of counsel with
respect to the reasonableness thereof. If, however, the amount of the liquidated
damages is determined by a court or tribunal of competent jurisdiction to be
excessive, thereby rendering the provisions of this Agreement requiring payment
of the liquidated damages to be unenforceable, it is the intent of the parties
that the amount of the liquidated damages shall be judicially reformed and
interpreted to reduce such liquidated damages to the minimum extent necessary,
but only to the minimum extent necessary, to cause the provisions of this
Agreement requiring payment of the liquidated damages to thereby become
enforceable.
SECTION 6.4 AMENDMENT. This Agreement may be amended by action taken by
Company, Parent and Newco at any time before or after approval of the Merger by
the shareholders of Company but after any such approval no amendment shall be
made which requires the approval of such shareholders under applicable law
without such approval. This Agreement (including the Company Disclosure
Schedule) may be amended only by an instrument in writing signed on behalf of
all the parties hereto.
SECTION 6.5 EXTENSION; WAIVER. At any time prior to the Effective Time,
each party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document certificate or writing delivered pursuant hereto or (c) waive
compliance by the other party with any of the agreements or conditions contained
herein. Any agreement on the part of any party hereto to any such extension or
waiver shall be valid only if set forth in an instrument, in writing, signed on
behalf of such party. The failure of any party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.
Page 51
<PAGE> 59
7. ARTICLE VII
MISCELLANEOUS
SECTION 7.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made herein shall terminate upon the Effective
Time or upon the termination of this Agreement pursuant to Article VI above.
This Section 7.1 shall not limit any covenant or agreement of the parties hereto
which by its terms requires performance after the Effective Time.
SECTION 7.2. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (including
the Company Disclosure Schedule) (a) constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and supersedes all
other prior agreements and understandings both written and oral and all
contemporaneous oral agreements and understandings between the parties with
respect to the subject matter hereof (including, without limitation, that
certain letter agreement between Company and Parent dated January 28, 2000), and
(b) shall not be assigned by operation of law or otherwise; provided, however,
that Newco may assign any or all of its rights and obligations under this
Agreement to any subsidiary of Parent, but no such assignment shall relieve
Newco of its obligations hereunder if such assignee does not perform such
obligations.
SECTION 7.3. VALIDITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (iv) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
SECTION 7.4. NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed given upon
personal delivery or three (3) business days after being mailed by certified or
registered mail, postage prepaid, return receipt requested, or one (1) business
day after being sent via a nationally recognized overnight courier service if
overnight courier service is requested from such service or upon receipt of
electronic or other confirmation of transmission if sent via facsimile, to the
parties, their successors in interest or their assignees at the following
addresses and telephone numbers, or at such other addresses or telephone numbers
as the parties may designate by written notice in accordance with this Section
7.4:
if to Parent or Newco: Standard Pacific Corp.
15326 Alton Parkway
Irvine, California 92618
Facsimile: (949) 789-1609
Attention: Clay A. Halvorsen
Page 52
<PAGE> 60
with a copy to: Gibson, Dunn & Crutcher LLP
4 Park Plaza
Irvine, California 92614
Facsimile: (949) 451-4220
Attention: Leonard J. McGill
if to Company to: The Writer Corporation
6061 S. Willow Drive, #232
Englewood, CO 80111
Facsimile: (303) 779-1199
Attention: George S. Writer, Jr.
with a copy to: Clanahan, Tanner, Downing and Knowlton, PC
730 Seventeenth Street, Suite 500
Denver, Colorado 80202-3580
Facsimile: (720) 359-9501
Attention: Brian D. Fitzgerald
SECTION 7.5. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
the principles of conflicts of law thereof.
SECTION 7.6. DESCRIPTIVE HEADINGS. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 7.7. PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its successors and
permitted assigns and, except as provided in Section 7.2, nothing in this
Agreement express or implied is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
SECTION 7.8. CERTAIN DEFINITIONS. For the purposes of this Agreement
the term:
(a) "AFFILIATE" means a person that, directly or indirectly, through
one or more intermediaries controls, is controlled by or is under common control
with the first-mentioned person;
(b) "BUSINESS DAY" means any day other than a day on which the NYSE is
closed;
(c) "CAPITAL STOCK" means common stock, preferred stock, partnership
interests, limited liability company interests or other ownership interests
entitling the holder thereof to vote with respect to matters involving the
issuer thereof;
(d) "PERSON" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization or other
legal entity; and
Page 53
<PAGE> 61
(e) "SUBSIDIARY" or "SUBSIDIARIES" of Company, Parent, the Surviving
Corporation or any other person means any corporation, partnership, limited
liability company, association, trust, unincorporated association or other legal
entity of which Company, Parent, the Surviving Corporation or any such other
person, as the case may be (either alone or through or together with any other
subsidiary), owns, directly or indirectly, more than 50% of the capital stock
the holders of which are generally entitled to vote for the election of the
board of directors or other governing body of such corporation or other legal
entity. Notwithstanding the foregoing, subsidiaries of the Company shall be
deemed to include WRT Financial L.P.
SECTION 7.9. SPECIFIC PERFORMANCE. The parties hereby acknowledge and
agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to the consummation of the Merger, will cause irreparable injury to the
other parties, for which damages, even if available, will not be an adequate
remedy. Accordingly, each party hereby consents to the issuance of injunctive
relief by any court of competent jurisdiction to compel performance of such
party's obligations, to the granting by any court of the remedy of specific
performance of its obligations hereunder, and to the waiver of any bond
requirement that might otherwise be imposed upon the party seeking such
injunctive relief; provided, however, that if a party hereto is entitled to
receive any payment or reimbursement of expenses pursuant to Section 6.3 it
shall not be entitled to specific performance to compel the consummation of the
Merger.
SECTION 7.10. CONSTRUCTION DEFECTS. Notwithstanding anything contained
elsewhere herein, the Company shall indemnify and hold harmless Parent and Newco
against any and all claims, actions, suits, proceedings, demands, assessments,
judgments, costs and expenses (including attorneys' fees) relating to or arising
out of the construction or sale of homes built or delivered by the Company prior
to Closing. The terms of this Section 7.10 shall survive the Closing.
SECTION 7.11. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which shall constitute one and the same agreement.
Page 54
<PAGE> 62
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
STANDARD PACIFIC CORP., a Delaware
corporation
By: /s/ Stephen J. Scarborough
----------------------------------------------
Name: Stephen J. Scarborough
--------------------------------------------
Title: CEO and President
-------------------------------------------
By: /s/ Andrew H. Parnes
----------------------------------------------
Name: Andrew H. Parnes
--------------------------------------------
Title: Vice President - Finance
-------------------------------------------
TWC ACQUISITION CORP., a Delaware
corporation
By: /s/ Stephen J. Scarborough
----------------------------------------------
Name: Stephen J. Scarborough
--------------------------------------------
Title: CEO and President
-------------------------------------------
By: /s/ Andrew H. Parnes
----------------------------------------------
Name: Andrew H. Parnes
--------------------------------------------
Title: Treasurer
-------------------------------------------
THE WRITER CORPORATION, a Colorado
corporation
By: /s/ George S. Writer, Jr.
----------------------------------------------
Name: George S. Writer, Jr.
--------------------------------------------
Title: Chairman of the Board
-------------------------------------------
By: /s/ Daniel J. Nickless
----------------------------------------------
Name: Daniel J. Nickless
--------------------------------------------
Title: President
-------------------------------------------
Page 55
<PAGE> 63
EXHIBIT A-1
FORM OF
CERTIFICATE OF MERGER
OF
THE WRITER CORPORATION
(A COLORADO CORPORATION)
WITH AND INTO
TWC ACQUISITION CORP.
(A DELAWARE CORPORATION)
UNDER SECTION 252 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
The undersigned corporation, TWC Acquisition Corp., hereby certifies that:
FIRST: The name and state of incorporation of each of the constituent
corporations is:
The Writer Corporation, a Colorado corporation ("the
Disappearing Corporation"), and
TWC Acquisition Corp., a Delaware corporation (the "Surviving
Corporation").
SECOND: An Agreement and Plan of Merger has been approved, adopted, certified,
executed and acknowledged by each of the aforesaid constituent
corporations in accordance with the provisions of subsection (c) of
Section 252 of the Delaware General Corporation Law, to wit, by The
Writer Corporation in accordance with the laws of the State of its
incorporation and by TWC Acquisition Corp. in the same manner as is
provided in Section 251 of the Delaware General Corporation Law.
THIRD: The name of the surviving corporation of the merger is The Writer
Corporation.
FOURTH: Upon the effectiveness of the merger, the Certificate of Incorporation
of the Surviving Corporation shall be the Certificate of Incorporation
of TWC Acquisition Corp., provided that Article I of the certificate of
incorporation of the Surviving Corporation shall be amended to read in
its entirety as follows:
"The name of the corporation is The Writer Corporation."
FIFTH: The Surviving Corporation is a corporation of the State of Delaware.
SIXTH: The executed Agreement and Plan of Merger is on file at the principal
place of business of the Surviving Corporation at: ___________________
<PAGE> 64
SEVENTH: A copy of the Agreement and Plan of Merger will be furnished by the
Surviving Corporation, on request and without cost, to any stockholder
of The Writer Corporation or TWC Acquisition Corp.
EIGHTH: The authorized capital stock of The Writer Corporation is 10,000 shares
of common stock, $0.10 par value per share.
IN WITNESS WHEREOF, the undersigned has executed and subscribed to this
Certificate of Merger on behalf of TWC Acquisition Corp. as its authorized
officer.
Dated:
------------------
TWC Acquisition Corp.,
a Delaware corporation
By:
----------------------------------------
Name:
Title:
<PAGE> 65
EXHIBIT B
ARTICLES OF MERGER
OF
THE WRITER CORPORATION
WITH AND INTO
TWC ACQUISITION CORP.
These ARTICLES OF MERGER (these "Articles") are executed this _____ day
of ______________, 2000, pursuant to Sections 7-111-103, 7-111-105 and 7-111-107
and other applicable provisions of the Colorado Business Corporation Act, by The
Writer Corporation, a Colorado corporation ("Writer") and TWC Acquisition Corp.,
a Delaware corporation ("TWC"). Writer and TWC do hereby submit the following
Articles of Merger and certify that:
1. The name and state of incorporation of each of the constituent
corporations is as follows:
(a) The Writer Corporation, a Colorado corporation ("Writer"); and
(b) TWC Acquisition Corp., a Delaware corporation ("TWC").
2. The Agreement And Plan Of Merger dated as of April __, 2000 among
Standard Pacific Corp., The Writer Corporation and TWC Acquisition Corp. (the
"Agreement and Plan of Merger") as approved by the Boards of Directors of both
Writer and TWC is attached hereto as Exhibit A.
3. The number of votes cast for the Agreement and Plan of Merger by the
shareholders of each of Writer and TWC were sufficient for approval.
4. The address of the principal office of the surviving corporation is:
c/o Standard Pacific Corp.
15326 Alton Parkway
Irvine, California 92618
Attention: Mr. Clay A. Halvorsen
5. The effective date of the merger shall be ______________________,
2000.
IN WITNESS WHEREOF, the undersigned have executed these Articles of
Merger this _____ day of ________________, 2000.
The Writer Corporation TWC Acquisition Corp.
By: By:
------------------------ ------------------------
Name: Name:
---------------------- ----------------------
Title: Title:
--------------------- ---------------------
<PAGE> 66
Exhibit C
To
Merger Agreement
FORM OF MANAGEMENT MEMBER VOTING AGREEMENT AND IRREVOCABLE
PROXY
THIS MANAGEMENT MEMBER VOTING AGREEMENT AND IRREVOCABLE PROXY (this
"AGREEMENT") is made and entered into as of April ___, 2000 (the "EFFECTIVE
DATE") by and among the appointee selected as set forth in Section 7.1 (the
"APPOINTEE"), in his or her capacity as Secretary of Standard Pacific Corp., a
Delaware corporation ("STANDARD PACIFIC"), and the undersigned stockholder (the
"STOCKHOLDER") of The Writer Corporation, a Colorado corporation (the
"COMPANY").
A. On the Effective Date, the Stockholder is the owner of ________
shares (the "SHARES") of common stock of the Company, par value $0.10 per share
(the "COMMON STOCK");
B. Concurrent herewith, the Company, Standard Pacific, and TWC
Acquisition Corporation, a Delaware corporation and wholly owned subsidiary of
Standard Pacific ("ACQUISITION"), have entered into an Agreement and Plan of
Merger of even date herewith (as the same may be amended or modified in
accordance with its terms, the "MERGER AGREEMENT") pursuant to which the Company
will merge into Acquisition, with Acquisition as the surviving corporation (the
"MERGER");
C. It is a condition to Standard Pacific and Acquisition entering into
the Merger Agreement that the Stockholder enter into this Agreement.
NOW, THEREFORE, to induce Standard Pacific and Acquisition to enter
into, and in consideration of their entering into, the Merger Agreement, and in
consideration of the mutual covenants and agreements set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. DEFINITIONS. All terms not defined herein shall have the meaning
ascribed to such term in the Merger Agreement.
2. VOTING.
2.1 Irrevocable Proxy.
(a) Pursuant to Section 7-107-203 of the Colorado Business Corporation
Act, the Stockholder hereby constitutes and appoints the Appointee for the Term
(as hereinafter defined) to act, with full power of substitution, as the
Stockholder's true and lawful proxy and attorney-in-fact to vote at any and all
meetings of the stockholders of the Company, whether annual or special, and at
any adjournment or adjournments or postponements of any such meetings, and to
execute and deliver any written consent in respect of, all voting securities of
the Company which
<PAGE> 67
the Stockholder beneficially owns or has a right to vote as of the date of any
such meeting or written consent, in the manner and for the purposes set forth in
this Agreement.
(b) THE PROXY AND POWER OF ATTORNEY GRANTED HEREIN SHALL BE IRREVOCABLE
DURING THE TERM, SHALL BE DEEMED TO BE COUPLED WITH AN INTEREST SUFFICIENT IN
LAW TO SUPPORT AN IRREVOCABLE PROXY. The proxy and power of attorney granted
herein shall revoke all prior proxies granted by the Stockholder, which in any
way conflicts herewith. The vote of the Appointee shall control in any conflict
between the Appointee's vote of any voting securities of the Company and a vote
by the Stockholder of such securities. The Stockholder shall not grant any proxy
or power of attorney to any person which conflicts with the proxy and power
granted herein, and any attempt to do so shall be null and void.
(c) The power of attorney granted herein is a durable power of attorney
and shall survive the disability or incompetence of the Stockholder.
(d) The proxy granted herein shall remain in full force and effect and
be enforceable against any donee, transferee or assignee of the Shares.
(e) The matters upon which the Appointee may vote as proxy holder are:
(i) all matters upon which stockholders of the Company would
be entitled to vote in connection with the Merger, the Merger Agreement and the
transactions contemplated thereby, and
(ii) all matters proposed by persons or entities not
affiliated with Standard Pacific (each, an "ALTERNATIVE PROPOSAL") upon which
stockholders of the Company would be entitled to vote in connection with any
proposal:
(A) (1) to change the persons who constitute the Board of
Directors of the Company as of the date hereof, (2) to change the present
capitalization of the Company or any amendment of the Company's certificate of
incorporation or by-laws, (3) to undertake any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company and any Third Party, (4) to undertake a sale, lease,
transfer or disposition of any assets of the Company outside the ordinary course
of business, or any assets that are material to its business whether or not in
the ordinary course of business, or a reorganization, recapitalization,
dissolution or liquidation of the Company, (5) to undertake any material change
in the Company's corporate structure or affecting its business, or (6) to
undertake any other action that is intended, or could reasonably be expected, to
impede, interfere with, frustrate, postpone, nullify, delay, postpone or
materially adversely affect the Merger or any of the other transactions
contemplated by the Merger Agreement, or any of the transactions contemplated by
this Agreement or would reasonably be likely to result in any of the conditions
to the Company's obligations under the Merger Agreement not being fulfilled, or
(B) for any Third Party Acquisition.
<PAGE> 68
2.2 Voting Agreement.
(a) If the proxy and power of attorney described in Section 2.1 is for
any reason invalidated or unenforceable, then at any meeting of the stockholders
of the Company, however called, or any postponement thereof, in any action by
written consent of the stockholders of the Company, or in any other
circumstances upon which a vote, consent or approval of the stockholders of the
Company with respect to the Merger or Merger Agreement, or the transactions
contemplated thereby or Alternative Proposals is sought, the Stockholder shall
vote (or cause to be voted) the Shares and all other voting securities of the
Company that the Stockholder may own or have the right to vote as of the date of
such vote as follows:
(i) in favor of the Merger, the adoption of the Merger
Agreement, other matters relating to the approval of the terms of the Merger or
the Merger Agreement and each or any of the transactions contemplated thereby;
and
(ii) against any Alternative Proposal.
(b) This Agreement shall be considered a Voting Agreement pursuant to
the provisions of Section 7-107-302 of the Colorado Business Corporation Act.
3. ELECTION OF MERGER CONSIDERATION
3.1 Right to Election. The Stockholder shall have the right to elect
the merger consideration to be received by the Stockholder for his or her Common
Stock as set forth in Section 1.8 of the Merger Agreement.
3.2 Adjustments. Notwithstanding the provisions of Section 3.1, should
the Aggregate Cash Consideration exceed the Maximum Cash Election Amount, a
proportionate adjustment shall be made in the cash component of the
Stockholder's Merger Consideration on a consistent basis, sufficient such that
the Aggregate Cash Consideration shall equal 50% of the Aggregate Merger
Consideration, or as close as possible to, without being greater than, 50% of
the Aggregate Merger Consideration.
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The Stockholder
represents and warrants to the Appointee, Standard Pacific and Acquisition as
follows:
(a) the Stockholder is the record and beneficial owner of the Shares
and has the sole right to vote such Shares as set forth herein;
(b) the Stockholder does not own, have the right to acquire or have the
right to vote any other voting securities of the Company;
<PAGE> 69
(c) the Stockholder has the full legal right, capacity, power and
authority to enter into and perform all of its obligations under this Agreement,
including without limitation to appoint the Appointee as its proxyholder and to
vote the Shares as set forth in this Agreement, with no limitations,
qualifications or restrictions on such rights;
(d) the execution and delivery of this Agreement by the Stockholder and
the consummation of the transactions contemplated hereby will not violate any
other agreement to which the Stockholder is a party including, without
limitation, any voting agreement, stockholders' agreement, voting trust or proxy
agreement;
(e) this Agreement has been duly and validly executed and delivered by
the Stockholder and constitutes a legal, valid and binding agreement of the
Stockholder, enforceable in accordance with its terms;
(f) no consent or approval of or filing with any governmental or other
regulatory body is required for the Stockholder to enter into or perform all of
its obligations under this Agreement; and
(g) the Stockholder understands and acknowledges that Standard Pacific
and Acquisition are entering into the Merger Agreement in reliance upon the
Stockholder's execution and delivery of this Agreement.
5. COVENANTS OF THE STOCKHOLDER.
While this Agreement is in effect, without the prior written consent of
Standard Pacific, the Stockholder:
(a) shall not directly or indirectly, make any offer, sale, assignment,
transfer, encumbrance, contract to sell, pledge, short sale, grant of an option
to purchase or other disposition of any Shares or other securities of the
Company that the Stockholder may own or have the right to acquire or vote, or
securities convertible, exchangeable or exercisable for Common Stock or
derivatives of Common Stock or rights to acquire Common Stock, or request that
the Company register the transfer (book-entry or otherwise) of any certificate
or uncertificated interest representing any such interests; or
(b) shall not take any action inconsistent with the purposes and
provisions contained in this Agreement, or
(c) to the extent the following acts or omissions in connection with a
Third Party Acquisition are made to the undersigned as a stockholder of the
Company: (i) shall immediately cease any discussions or negotiations with any
parties with respect to any Third Party Acquisition, (ii) shall not, directly or
indirectly, encourage, solicit, participate in or initiate any inquiries,
discussions or negotiations with or provide any information or access to any
person or group (other than Standard Pacific and Acquisition or any designees of
Standard Pacific and Acquisition) concerning any Third Party Acquisition,
including, without limitation, through any investment banker, attorney or
accountant, or other agents, or otherwise facilitate any effort or
<PAGE> 70
attempt to make or implement a Third Party Acquisition, (iii) shall promptly
(within one business day of receipt) notify Standard Pacific if the Stockholder
receives any proposal or inquiry concerning a Third Party Acquisition, including
the terms and conditions thereof and the identity of the party submitting such
proposal, and shall keep Standard Pacific fully informed of the status and any
material developments concerning the same.
Notwithstanding the foregoing, no provision of this Agreement shall
limit or otherwise restrict the Stockholder with respect to any act or omission
that the Stockholder determines in his or her good faith judgment, in his or her
capacity as a director of the Company, after consultation with and based upon
the advice of legal counsel, that he or she is required to do in order to comply
with his or her fiduciary duties with respect to matters presented to the Board
of Directors of the Company.
6. TERMINATION. The term of this Agreement (the "TERM") shall commence
on the Effective Date and terminate upon the earlier to occur of (a) the
effective date of the Merger, and (b) the termination of the Merger Agreement in
accordance with its terms.
7. THE APPOINTEE.
7.1 Appointment and Vacancies. The Appointee shall be the Secretary of
Standard Pacific. In the case of resignation, death, or disability of the
Appointee, the vacancy shall be filled by the person succeeding the Appointee as
Secretary of Standard Pacific. If the Appointee is no longer the Secretary of
Standard Pacific, the Appointee shall resign effective immediately.
7.2 Compensation. The Appointee shall not be entitled to any
compensation for his or her services.
7.3 Appointee's Liability. The Stockholder shall not bring any action
or proceeding against the Appointee in his or her capacity as the Shareholder's
proxy holder or attorney-in-fact or for any actions taken pursuant to and
consistent with this Agreement.
8. MISCELLANEOUS.
8.1 Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
8.2 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
8.3 Notices. Any notice required or permitted to be given under the
provisions of this Agreement shall be in writing and shall be deemed to have
been duly given on the date of delivery if delivered personally to the party to
whom notice is to be given (or to the appropriate address below), or on the
third day after mailing if mailed to the party to whom notice is to be given by
certified or registered mail, return receipt requested, postage prepaid, or by
courier, if to
<PAGE> 71
the Stockholder at the address set forth on the books and records of the Company
for the Stockholder, and if to the Appointee, Standard Pacific or Acquisition at
the principal corporate offices of Standard Pacific.
8.4 Governing Law: Enforceability: Validity. This Agreement shall be
governed in all respects by the internal laws of the State of Colorado and shall
be specifically enforceable in any court of competent jurisdiction in Colorado
in accordance with its terms against each of the parties hereto. The Stockholder
hereby irrevocably submits to the jurisdiction of the courts of the State of
Colorado or the United States Federal Courts sitting therein, in any action or
proceeding brought to enforce or otherwise arising out of or relating to this
Agreement. The Stockholder irrevocably consents to the service of any and all
process in any action or proceeding relating hereto by the mailing of copies of
such process to the Stockholder by registered or certified mail at the address
maintained for the Stockholder on the Company's books and records. In addition,
the Stockholder hereby irrevocably waives to the fullest extent permitted by law
any objection which the Stockholder may now or hereafter have to the laying of
venue in any such action or proceeding in the courts of the State of Colorado or
the United States Federal Courts sitting therein, and hereby further irrevocably
waives any claim that any such forum is an inconvenient forum.
8.5 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.
8.6 Entire Agreement; Amendment; Waiver. This Agreement constitutes the
entire agreement among the parties hereto with respect to the subject matter
contained herein and supersedes all prior and contemporaneous agreements and
understandings, express or implied, between the parties with respect to such
subject matter. Neither this Agreement nor any provision hereof may be waived,
modified, amended, changed, discharged or terminated, except by an agreement in
writing signed by the party against whom enforcement of any waiver,
modification, change, amendment, discharge or termination is sought.
8.7 Injunctive Relief. The Stockholder acknowledges that irreparable
damage could occur if any of the obligations of the Stockholder under this
Agreement are not performed in accordance with their specific terms or were
otherwise breached. If any provision of this Agreement is breached, the
aggrieved party may be without an adequate remedy at law and may therefore elect
to institute and prosecute proceedings in any court of competent jurisdiction to
enforce specific performance or to enjoin the continuing breach of such
provision. By seeking or obtaining any such relief, the aggrieved party will not
be precluded from seeking or obtaining other relief to which it may be entitled.
<PAGE> 72
8.8 Attorneys' Fees and Costs. If either party to this Agreement brings
any action or proceeding, at law or equity, to enforce this Agreement or on
account of any breach of this Agreement, the prevailing party shall be entitled
to recover from the non-prevailing party the reasonable attorneys' fees and
costs of the prevailing party incurred in such action.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed and delivered on the date first above written.
STOCKHOLDER
By:
------------------------------
Name:
----------------------------
APPOINTEE
By:
------------------------------
Name: Clay A. Halvorsen
<PAGE> 73
EXHIBIT D
FORM OF
FORM OF LOCKUP AGREEMENT
Standard Pacific Corp.
15326 Alton Parkway
Irvine, California 92618
Re: Transfer of Common Stock of Standard Pacific Corp.
Ladies and Gentlemen:
The undersigned, an officer or director of The Writer Corporation (the
"Company"), or a 15% or greater holder of common stock of the Company (including
for such determination, rights to acquire such common stock), understands that
the Company has entered into an Agreement and Plan of Merger (the "Merger
Agreement") by and among the Company, Standard Pacific Corp., a Delaware
corporation ("Standard Pacific"), and TWC Acquisition Corp., a Delaware
corporation and wholly owned subsidiary of Standard Pacific ("Acquisition"),
pursuant to which the Company will merge into Acquisition (the "Merger"), and
the stockholders of the Company will be entitled to receive cash and/or shares
of common stock of Standard Pacific ("Common Stock") as merger consideration.
The undersigned further understands that it is a condition of Standard Pacific
and Acquisition to the closing of the transactions contemplated in the Merger
Agreement that the undersigned enter into this letter agreement.
In order to induce Standard Pacific and Acquisition to close the
transactions contemplated by the Merger Agreement, the undersigned agrees, for
the benefit of Standard Pacific and Acquisition, that the undersigned will not,
without the prior written consent of Standard Pacific, directly or indirectly,
make any offer, sale, assignment, transfer, encumbrance, contract to sell,
pledge, short sale, grant of an option to purchase or other disposition of any
Common Stock or securities convertible, exchangeable or exercisable for Common
Stock or derivatives of Common Stock or rights to acquire Common Stock
beneficially owned (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) by the undersigned during the period
commencing on the effective date of the Merger and ending on the day that is 120
days after such date, other than transfers (i) as a gift or gifts (provided that
any donee agrees in writing to be bound by the terms hereof), or (ii) to
immediate family members or a trust established for the undersigned and/or their
benefit (provided that any such transferee agrees in writing to be bound by the
terms hereof).
The undersigned confirms that he, she or it understands that Standard
Pacific and Acquisition will rely upon the representations set forth in this
agreement in proceeding with the closing of the transactions contemplated by the
Merger Agreement. This agreement shall be binding on the undersigned and his,
her or its respective successors, heirs, personal
<PAGE> 74
representatives and assigns. The undersigned agrees and consents to the entry of
stop transfer instructions with Standard Pacific's transfer agent against the
transfer of Common Stock or securities convertible into or exchangeable or
exercisable for Common Stock held by the undersigned except in compliance with
this agreement.
Very truly yours,
Dated: , 2000 -----------------------------------
------------- Signature
-----------------------------------
Printed Name and Title (if applicable)
<PAGE> 75
EXHIBIT E
FORM OF
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is made and entered into
effective as of _______, 2000 (the "EFFECTIVE DATE") by and between The Writer
Corporation, a Delaware corporation ("EMPLOYER"), and __________ ("EXECUTIVE").
WHEREAS, Employer desires to employ Executive as its Chief Executive
Officer, and Executive desires to be so employed by Employer, upon the terms and
subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Employer and Executive, intending
to be legally bound, agree as follows:
1. Employment. Employer hereby employs Executive as its Chief Executive
Officer upon the terms and conditions herein provided. Executive hereby agrees
to be so employed and to fulfill the duties of Chief Executive Officer as such
duties may be defined from time to time by Employer's Board of Directors.
Executive represents to Employer that he has no outstanding commitments
inconsistent with any of the terms of this Agreement or the duties to be
rendered by him hereunder.
2. Duties and Powers. Executive shall devote his full and exclusive
time and attention to the business of Employer and of any subsidiaries or
affiliates of Employer, perform all duties in a professional and prudent manner,
and devote the best of his skill, energy, experience and judgment to such
duties. Executive shall have all the powers associated with his position as
Chief Executive Officer, subject to all lawful policies and guidelines as may be
established by the Board of Directors of Employer. Executive shall not engage in
any activity or own any interest that would conflict with the interests of
Employer or would interfere with his responsibilities to Employer and the
performance of his duties hereunder; provided, however, that Executive may: (i)
make passive investments of less than 1% of the publicly traded securities of
any corporation; and (ii) engage in activities involving charitable,
educational, religious and similar types of organizations, and similar type
activities, to the extent that such activities do not conflict with or detract
from the performance by Executive of his duties and obligations hereunder.
3. Compensation and Benefits. For all services rendered by Executive
pursuant to this Agreement, Employer shall compensate Executive as follows:
(a) Base Compensation. In consideration of the full and faithful
performance by Executive of his obligations hereunder, subject to the terms and
conditions set forth herein, Employer shall pay to Executive an annual salary of
__________ (such annual salary as it may be increased from time to time, the
"BASE COMPENSATION"). Executive's Base Compensation
<PAGE> 76
will be paid in accordance with Employer's customary payroll practices, and will
be prorated based upon the number of days elapsed in any partial year. Base
Compensation shall be reviewed annually by Employer's Board of Directors and may
be increased at the discretion of the Board of Directors.
(b) Bonus. In consideration of the full and faithful performance by
Executive of his obligations hereunder, subject to the terms and conditions set
forth herein, Employer shall pay to Executive an annual profit sharing bonus
(the "PROFIT SHARING BONUS") equal to 2% of the pre-tax net profits earned by
Employer for each of calendar years 2000 and 2001 after deduction of a parent
company overhead burden equal to 1% of all sales of Employer. A separate set of
accounting records covering all of Employer's activities will be maintained by
the Standard Pacific Corp. accounting staff. The Profit Sharing Bonus will be
paid in cash in a lump sum (after standard federal and state tax withholdings)
upon completion of the Standard Pacific Corp. annual audit for each of 2000 and
2001.
(c) Benefits. Executive shall be entitled, as an employee of Employer,
to employee retirement and welfare benefits substantially comparable to those
employee benefits made available to other senior management of Employer,
including, but not limited to, (i) no less than four weeks of vacation per year
and (ii) a $400 per month, non-accountable car allowance.
(d) Expenses. Executive shall be entitled to reimbursement by Employer
for his ordinary and necessary business expenses incurred in the performance of
his duties under this Agreement if supported by reasonable documentation as
required by Employer in accordance with its usual practices.
(e) Liability for Taxes. Employer shall have no liability for any taxes
attributable to any payment made under this Agreement except for customary
employer liability for federal and state employee taxes. Employer may withhold
from any such payment such amounts as may be required by applicable provisions
of the Internal Revenue Code, other tax laws, and the rules and regulations of
the Internal Revenue Service and other tax agencies in effect at the time of any
such payment.
4. Term and Termination of Employment.
(a) Term. The term of this Agreement shall commence on the date hereof
and end on ___________, 2002 (the "TERM"), unless this Agreement is earlier
terminated as provided herein. This Agreement shall be extended, renewed or
re-negotiated only by a written document. If this Agreement is not so extended,
renewed or re-negotiated by _____________, 2002, any employment of Executive
thereafter will be at-will pursuant to Employer's policies then in effect, and
Executive shall have no further rights hereunder.
(b) Termination Rights. Notwithstanding any other provision contained
in this Agreement, and subject only to the payment of any amounts required under
Sections 4(c), (d) and (e), either Executive or Employer may terminate
Executive's employment hereunder at any time with or without Good Reason (as
defined in paragraph (f) below) and with or without Cause (as defined in
paragraph (f) below) at his or its election upon prior written notice (a
<PAGE> 77
"TERMINATION NOTICE") to the other (other than termination based on the
Executive's death which shall not require a Termination Notice to be effective).
A Termination Notice shall be effective upon delivery to the other party and the
termination shall be effective as of the date set forth in such Termination
Notice (the "TERMINATION DATE").
(c) Termination by Employer Without Cause or by Executive for Good
Reason.
(i) If Executive's employment is terminated by Employer
without Cause or by Executive for Good Reason within two years of the Effective
Date, then Executive shall be entitled to receive (i) the unpaid balance of his
Base Compensation through such two year period and (ii) a pro rata portion of
his Profit Sharing Bonus for the calendar year in which the termination occurs
(the "SEVERANCE PAYMENT"). The Base Compensation portion of the Severance
Payment shall be paid in accordance with Employer's customary payroll practices
over the remainder of the two-year period. The Profit Sharing Bonus portion of
the Severance Payment shall be paid in cash in a lump sum (after standard
federal and state tax withholdings) upon completion of the Standard Pacific
audit for the applicable calendar year and shall be prorated based on the actual
number of days Executive is employed by Employer divided by 365. Executive shall
not be required to mitigate the amount of any Severance Payments by seeking
employment or otherwise.
(ii) Upon such a termination of employment, during the period
in which Executive is entitled to receive the Severance Payment, he shall also
continue to participate in all health benefits offered generally to senior
management of Employer through such period on the same terms and conditions as
such senior management. The benefits to be provided under this Section 4(c)(ii)
shall be reduced to the extent of the receipt of substantially equivalent
coverage by the Executive from any successor employer.
(iii) Executive acknowledges and agrees that the provisions of
this Section 4(c) state his entire and exclusive rights, entitlements and
remedies against Employer, its successors, assigns, affiliates, employees and
representatives for termination of his employment without any Cause shown by
Employer or upon termination for Good Reason; provided, however, that Executive
also shall be entitled to receive all Base Salary, benefits and expense
reimbursement which have accrued as of the Termination Date. As a material
inducement to Employer to enter into this Agreement, Executive represents that
he will make no other claims in any such event.
(d) Termination for Death or Permanent Disability. If Executive's
employment by Employer is terminated because of death or Permanent Disability,
then, subject to all applicable laws, Executive (or Executive's estate) shall be
entitled to receive only that Base Compensation, benefits and expense
reimbursements which have accrued as of the Termination Date. Executive shall
not be entitled to any Profit Sharing Bonus for the year in which the
termination occurs or any subsequent year. Subject to all applicable laws,
"PERMANENT DISABILITY" shall mean the inability of Executive, by reason of any
ailment or illness, or physical or mental condition, to devote substantially all
of his time during normal business hours to the daily performance of Executive's
duties as required under this Agreement for a period of six (6) months in the
aggregate in any eight (8) month period.
<PAGE> 78
(e) Termination by Employer for Cause or Termination by the Executive
without Good Reason. If Executive elects to terminate his employment under this
Agreement without Good Reason, or if Executive is terminated for Cause, then
Executive shall not be entitled to receive any severance pay or compensation
except such Base Compensation, benefits and expense reimbursement as shall have
accrued prior to the Termination Date. Executive shall not be entitled to any
Profit Sharing Bonus for the year in which the termination occurs or any
subsequent year. Executive acknowledges and agrees that the provisions of this
Section 5(e) state his entire and exclusive rights, entitlements and remedies
against Employer, its successors, assigns, affiliates and representatives if he
elects to terminate his employment without Good Reason and/or is terminated with
Cause. As a material inducement to Employer to enter into this Agreement,
Executive represents to Employer that he will make no other claim in any such
event.
(f) Definitions.
(i) For purposes of this Agreement, the term "CAUSE" shall mean the
occurrence or existence of any of the following with respect to Executive, as
determined by a majority of the disinterested directors of the Board:
(A) Executive's failure or refusal to perform his duties as
reasonably required by this Agreement, provided that termination of
Executive's employment pursuant to this subparagraph (A) shall not
constitute valid termination for cause unless Executive shall have
first received written notice from Employer stating with
specificity the nature of such failure or refusal and affording
Executive at least five (5) days to correct the act or omission
complained of;
(B) gross negligence, insubordination, material violation by
Executive of any duty of loyalty to Employer or its affiliates or
of any rules applicable to all employees of Employer generally, or
any other material misconduct on the part of Executive, provided
that termination of Executive's employment pursuant to this
subparagraph (B) shall not constitute valid termination for cause
unless Executive shall have first received written notice from
Employer stating with specificity the nature of such failure or
refusal and affording Executive at least five (5) days to correct
the act or omission complained of;
(C) Executive's failure to report to work for any consecutive
five-day period, other than for vacation, excused absences or
reasonable medical or personal reasons;
(D) Executive's conviction by, or entry of a plea of guilty or
nolo contendere in, a court of competent and final jurisdiction for
any crime involving moral turpitude or any felony punishable by
imprisonment in the jurisdiction involved;
<PAGE> 79
(E) whether prior to or subsequent to the date hereof,
Executive's engaging in dishonest or fraudulent actions or
omissions which result directly or indirectly in any demonstrable
material harm to Employer or its affiliates, monetarily or
otherwise, including, without limitation, any fraudulent act or
actions in connection to the acquisition of The Writer Corporation,
a Colorado corporation ("Predecessor"), by Employer and Standard
Pacific Corp. and any knowing or willful inaccuracy of any of the
representations and warranties of Predecessor in the Agreement and
Plan of Merger among such parties dated _____, 2000 or any schedule
or exhibit thereto;
(F) the repeated non-prescription use of any controlled
substance, or the repeated use of alcohol or any other
non-controlled substance which in the Board's reasonable
determination renders Executive unfit to serve in his capacity as
an officer or employee of Employer or its affiliates;
(G) sexual harassment by Executive that has been reasonably
substantiated and investigated; or
(H) Executive's physical destruction of substantial property.
(ii) For purposes of this Agreement, "GOOD REASON" shall mean any of
the following (without Executive's written consent):
(A) a relocation of Employer's principal executive offices to
a location more than 50 miles from the location at which Executive
performed Executive's duties on the Effective Date, except for
reasonable travel required by Employer's business; or
(B) any material breach by Employer of any provision of this
Agreement;
provided that (x) Executive gives written notice to Employer of his
election to terminate his employment for such reason within 30 days after the
time he becomes aware of the existence of facts or circumstances constituting
Good Reason and (y) Employer is afforded at least five (5) days following such
notice to correct the relocation or material breach complained of.
(g) Change in Control Agreement. Executive and Employer are
concurrently entering into a Change in Control Agreement (such agreement and any
amendments to such agreement, the "CHANGE IN CONTROL AGREEMENT").
Notwithstanding anything contained herein to the contrary, for any termination
of the employment of Executive for which the provisions of the Change in Control
Agreement apply, the provisions of the Change in Control Agreement shall control
Executive's rights and obligations upon termination of his employment, and
Executive shall not be entitled to any payments or other benefits hereunder.
<PAGE> 80
5. Nondisclosure.
(a) Confidential Information. Executive hereby acknowledges that in
connection with his employment by Employer he will be exposed to and may obtain
certain information (including, without limitation, trade secrets, know how,
procedures, plans, drawings, designs, memoranda, notes, records and employee,
customer and supplier lists whether such information has been or is made,
developed or compiled by Executive or otherwise has been or is made available to
him) regarding the business and operations of Employer and its subsidiaries or
affiliates. Executive further acknowledges that such information and procedures
are unique, valuable and deemed proprietary by Employer. For purposes of this
Agreement, such information and procedures shall be referred to as "CONFIDENTIAL
INFORMATION," except that the following shall not be considered Confidential
Information: (i) information disclosed on a non-confidential basis to third
parties by Employer (but not by Executive in violation of this Agreement), (ii)
information released from confidential treatment by written consent of Employer,
and (iii) information lawfully available to the general public.
(b) Use of Confidential Information. All Confidential Information is
and will remain the property of Employer. Executive agrees, except as otherwise
required by law, while employed by Employer hereunder and thereafter, to hold in
the strictest confidence all Confidential Information, and not to, directly or
indirectly, duplicate, sell, use, lease, commercialize, disclose or otherwise
divulge to any person or entity any portion of the Confidential Information or
use any Confidential Information for his own benefit or profit or allow any
person, entity or third party, other than Employer and authorized employees and
representatives of the same, to use or otherwise gain access to any Confidential
Information.
6. Memoranda, Notes, Records, Etc. All memoranda, notes, records,
plans, drawings, software, customer lists or other documents (including, but not
limited to, those in electronic form) made or compiled by Executive or otherwise
made available to him concerning the business of Employer or its subsidiaries or
affiliates shall be Employer's property and shall be delivered to Employer upon
the expiration or termination of Executive's employment hereunder or at any
other time upon request by Employer, and Executive shall retain no copies of
those documents. Executive shall never at any time have or claim any right,
title or interest in any material or matter of any sort prepared for or used in
connection with the business of Employer, including without limitation, any
architectural plans, drawings or designs.
7. Enforcement. The parties hereto recognize that the covenants of
Executive hereunder are special, unique and of extraordinary character.
Accordingly, it is the intention of the parties that, in addition to any other
rights and remedies which Employer may have in the event of any breach of this
Agreement, Employer shall be entitled, and hereby is expressly and irrevocably
authorized by Executive, inter alia, to demand and obtain specific performance,
including without limitation temporary and permanent injunctive relief, and all
other appropriate equitable relief against Executive in order to enforce against
Executive, or in order to prevent any breach or any threatened breach by
Executive of, the covenants and agreements contained herein. In case of any
breach of this Agreement by Executive, nothing herein contained shall be
construed to prevent Employer from seeking such other remedy in the courts as it
may elect or invoke.
<PAGE> 81
8. Miscellaneous.
(a) Non-Delegation of Duties. Executive may not delegate the
performance of any of his obligations or duties hereunder, or assign any rights
hereunder, without the prior written consent of Employer. Any such purported
delegation or assignment in the absence of such written consent shall be null
and void with no force or effect. Notwithstanding the foregoing, nothing herein
shall prevent Executive from delegating ministerial tasks to assistants of the
type that are normally assigned by executives to assistants.
(b) Binding Effect. This Agreement shall be binding on and inure to the
benefit of the parties hereto and their respective heirs, representatives,
successors and permitted assigns and any receiver, trustee in bankruptcy or
representative of the creditors of each such person.
(c) Survival of Covenants. Notwithstanding anything contained in this
Agreement, if Executive's employment is terminated for any reason whatsoever,
the covenants and agreements of Executive contained in Sections 4, 5, 6, 7, and
8, and the covenants of Employer contained in Sections 4 and 8 hereof shall
survive any such termination and shall not lapse except as provided herein.
(d) Rules of Construction.
(i) This Agreement has been negotiated and executed in, and
shall be governed by and construed in accordance with the laws of, the State of
Colorado. Captions contained in this Agreement are for convenience of reference
only and shall not be considered or referred to in resolving questions of
interpretation with respect to this Agreement.
(ii) If any provision of this Agreement is held to be illegal,
invalid or unenforceable under any present or future law, and if the rights or
obligations of any party hereto under this Agreement will not be materially and
adversely affected thereby, (A) such provision will be fully severable, (B) this
Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (C) the remaining
provisions of this Agreement will remain in full force and effect and will not
be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom and (D) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.
(e) Entire Agreement; Amendment. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter contained
herein and supersede all prior and contemporaneous agreements and
understandings, express or implied, between the parties with respect to such
subject matter. Neither this Agreement nor any provision hereof may be waived,
modified, amended, changed, discharged or terminated, except by an agreement in
writing signed by the party against whom enforcement of any waiver,
modification, change, amendment, discharge or termination is sought.
(f) Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed given upon personal delivery
or three (3) business days after being mailed by certified or registered mail,
postage prepaid, return receipt requested, or
<PAGE> 82
one (1) business day after being sent via a nationally recognized overnight
courier service if overnight courier service is requested from such service or
upon receipt of electronic or other confirmation of transmission if sent via
facsimile, to the parties, their successors in interest or their assignees at
the following addresses and telephone numbers, or at such other addresses or
telephone numbers as the parties may designate by written notice in accordance
with this Section 8(f):
if to Executive:
------------------------------------
------------------------------------
------------------------------------
if to Employer: The Writer Corporation
c/o Standard Pacific Corp.
15326 Alton Parkway
Irvine, California 92618-2338
Facsimile: (949) 789-1608
Attention: Clay A. Halvorsen
(g) Attorneys' Fees and Costs. If any party to this Agreement brings
any action or proceeding, at law or in equity, to enforce this Agreement or on
account of any breach of this Agreement, the prevailing party shall be entitled
to recover from the non-prevailing party the reasonable attorneys' fees and
costs of the prevailing party incurred in such action.
(h) Arbitration. Any dispute regarding the application, interpretation
or breach of this Agreement shall be resolved by final and binding arbitration
before the American Arbitration Association ("AAA") in accordance with AAA's
National Rules for the Resolution of Employment Disputes. Attorney's fees, costs
and damages (where appropriate) shall be awarded to the prevailing party in any
dispute, and any resolution, opinion or order of AAA may be entered as a
judgment in a court of competent jurisdiction.
<PAGE> 83
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement to be effective as of the Effective Date.
EXECUTIVE:
-------------------------------
EMPLOYER:
THE WRITER CORPORATION,
a Delaware corporation
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
<PAGE> 84
EXHIBIT F
FORM OF
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is made and entered into
effective as of _______, 2000 (the "EFFECTIVE Date") by and between The Writer
Corporation, a Delaware corporation ("EMPLOYER"), and ___________ ("EXECUTIVE").
WHEREAS, Employer desires to employ Executive as its President, and
Executive desires to be so employed by Employer, upon the terms and subject to
the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Employer and Executive, intending
to be legally bound, agree as follows:
1. Employment. Employer hereby employs Executive as its President upon
the terms and conditions herein provided. Executive hereby agrees to be so
employed and to fulfill the duties of President as such duties may be defined
from time to time by Employer's Board of Directors. Executive represents to
Employer that he has no outstanding commitments inconsistent with any of the
terms of this Agreement or the duties to be rendered by him hereunder.
2. Duties and Powers. Executive shall devote his full and exclusive
time and attention to the business of Employer and of any subsidiaries or
affiliates of Employer, perform all duties in a professional and prudent manner,
and devote the best of his skill, energy, experience and judgment to such
duties. Executive shall have all the powers associated with his position as
President, subject to all lawful policies and guidelines as may be established
by the Board of Directors of Employer. Executive shall not engage in any
activity or own any interest that would conflict with the interests of Employer
or would interfere with his responsibilities to Employer and the performance of
his duties hereunder; provided, however, that Executive may: (i) make passive
investments of less than 1% of the publicly traded securities of any
corporation; and (ii) engage in activities involving charitable, educational,
religious and similar types of organizations, and similar type activities, to
the extent that such activities do not conflict with or detract from the
performance by Executive of his duties and obligations hereunder.
3. Compensation and Benefits. For all services rendered by Executive
pursuant to this Agreement, Employer shall compensate Executive as follows:
(a) Base Compensation. In consideration of the full and faithful
performance by Executive of his obligations hereunder, subject to the terms and
conditions set forth herein, Employer shall pay to Executive an annual salary of
$________ (such annual salary as it may be increased from time to time, the
"BASE COMPENSATION"). Executive's Base Compensation will be paid in accordance
with Employer's customary payroll practices, and will be prorated based
<PAGE> 85
upon the number of days elapsed in any partial year. Base Compensation shall be
reviewed annually by Employer's Board of Directors and may be increased at the
discretion of the Board of Directors.
(b) Bonus. In consideration of the full and faithful performance by
Executive of his obligations hereunder, subject to the terms and conditions set
forth herein, Employer shall pay to Executive an annual profit sharing bonus
(the "PROFIT SHARING BONUS") equal to 2% of the pre-tax net profits earned by
Employer for each of calendar years 2000 and 2001 after deduction of a parent
company overhead burden equal to 1% of all sales of Employer. A separate set of
accounting records covering all of Employer's activities will be maintained by
the Standard Pacific Corp. accounting staff. The Profit Sharing Bonus will be
paid in cash in a lump sum (after standard federal and state tax withholdings)
upon completion of the Standard Pacific Corp. annual audit for each of 2000 and
2001.
(c) Benefits. Executive shall be entitled, as an employee of Employer,
to employee retirement and welfare benefits substantially comparable to those
employee benefits made available to other senior management of Employer,
including, but not limited to, (i) no less than four weeks of vacation per year
and (ii) a $400 per month, non-accountable car allowance.
(d) Expenses. Executive shall be entitled to reimbursement by Employer
for his ordinary and necessary business expenses incurred in the performance of
his duties under this Agreement if supported by reasonable documentation as
required by Employer in accordance with its usual practices.
(e) Liability for Taxes. Employer shall have no liability for any taxes
attributable to any payment made under this Agreement except for customary
employer liability for federal and state employee taxes. Employer may withhold
from any such payment such amounts as may be required by applicable provisions
of the Internal Revenue Code, other tax laws, and the rules and regulations of
the Internal Revenue Service and other tax agencies in effect at the time of any
such payment.
4. Term and Termination of Employment.
(a) Term. The term of this Agreement shall commence on the date hereof
and end on ______________, 2002 (the "TERM"), unless this Agreement is earlier
terminated as provided herein. This Agreement shall be extended, renewed or
re-negotiated only by a written document. If this Agreement is not so extended,
renewed or re-negotiated by ___________, 2002, any employment of Executive
thereafter will be at-will pursuant to Employer's policies then in effect, and
Executive shall have no further rights hereunder.
(b) Termination Rights. Notwithstanding any other provision contained
in this Agreement, and subject only to the payment of any amounts required under
Sections 4(c), (d) and (e), either Executive or Employer may terminate
Executive's employment hereunder at any time with or without Good Reason (as
defined in paragraph (f) below) and with or without Cause (as defined in
paragraph (f) below) at his or its election upon prior written notice (a
"TERMINATION NOTICE") to the other (other than termination based on the
Executive's death
<PAGE> 86
which shall not require a Termination Notice to be effective). A Termination
Notice shall be effective upon delivery to the other party and the termination
shall be effective as of the date set forth in such Termination Notice (the
"TERMINATION DATE").
(c) Termination by Employer Without Cause or by Executive for Good
Reason.
(i) If Executive's employment is terminated by Employer
without Cause or by Executive for Good Reason within two years of the Effective
Date, then Executive shall be entitled to receive (i) the unpaid balance of his
Base Compensation through such two year period and (ii) a pro rata portion of
his Profit Sharing Bonus for the calendar year in which the termination occurs
(the "SEVERANCE PAYMENT"). The Base Compensation portion of the Severance
Payment shall be paid in accordance with Employer's customary payroll practices
over the remainder of the two-year period. The Profit Sharing Bonus portion of
the Severance Payment shall be paid in cash in a lump sum (after standard
federal and state tax withholdings) upon completion of the Standard Pacific
audit for the applicable calendar year and shall be prorated based on the actual
number of days Executive is employed by Employer divided by 365. Executive shall
not be required to mitigate the amount of any Severance Payments by seeking
employment or otherwise.
(ii) Upon such a termination of employment, during the period
in which Executive is entitled to receive the Severance Payment, he shall also
continue to participate in all health benefits offered generally to senior
management of Employer through such period on the same terms and conditions as
such senior management. The benefits to be provided under this Section 4(c)(ii)
shall be reduced to the extent of the receipt of substantially equivalent
coverage by the Executive from any successor employer.
(iii) Executive acknowledges and agrees that the provisions of
this Section 4(c) state his entire and exclusive rights, entitlements and
remedies against Employer, its successors, assigns, affiliates, employees and
representatives for termination of his employment without any Cause shown by
Employer or upon termination for Good Reason; provided, however, that Executive
also shall be entitled to receive all Base Salary, benefits and expense
reimbursement which have accrued as of the Termination Date. As a material
inducement to Employer to enter into this Agreement, Executive represents that
he will make no other claims in any such event.
(d) Termination for Death or Permanent Disability. If Executive's
employment by Employer is terminated because of death or Permanent Disability,
then, subject to all applicable laws, Executive (or Executive's estate) shall be
entitled to receive only that Base Compensation, benefits and expense
reimbursements which have accrued as of the Termination Date. Executive shall
not be entitled to any Profit Sharing Bonus for the year in which the
termination occurs or any subsequent year. Subject to all applicable laws,
"PERMANENT DISABILITY" shall mean the inability of Executive, by reason of any
ailment or illness, or physical or mental condition, to devote substantially all
of his time during normal business hours to the daily performance of Executive's
duties as required under this Agreement for a period of six (6) months in the
aggregate in any eight (8) month period.
<PAGE> 87
(e) Termination by Employer for Cause or Termination by the
Executive without Good Reason. If Executive elects to terminate his employment
under this Agreement without Good Reason, or if Executive is terminated for
Cause, then Executive shall not be entitled to receive any severance pay or
compensation except such Base Compensation, benefits and expense reimbursement
as shall have accrued prior to the Termination Date. Executive shall not be
entitled to any Profit Sharing Bonus for the year in which the termination
occurs or any subsequent year. Executive acknowledges and agrees that the
provisions of this Section 5(e) state his entire and exclusive rights,
entitlements and remedies against Employer, its successors, assigns, affiliates
and representatives if he elects to terminate his employment without Good Reason
and/or is terminated with Cause. As a material inducement to Employer to enter
into this Agreement, Executive represents to Employer that he will make no other
claim in any such event.
(f) Definitions.
(i) For purposes of this Agreement, the term "CAUSE" shall
mean the occurrence or existence of any of the following with respect to
Executive, as determined by a majority of the disinterested directors of the
Board:
(A) Executive's failure or refusal to perform his
duties as reasonably required by this Agreement, provided that
termination of Executive's employment pursuant to this
subparagraph (A) shall not constitute valid termination for
cause unless Executive shall have first received written
notice from Employer stating with specificity the nature of
such failure or refusal and affording Executive at least five
(5) days to correct the act or omission complained of;
(B) gross negligence, insubordination, material
violation by Executive of any duty of loyalty to Employer or
its affiliates or of any rules applicable to all employees of
Employer generally, or any other material misconduct on the
part of Executive, provided that termination of Executive's
employment pursuant to this subparagraph (B) shall not
constitute valid termination for cause unless Executive shall
have first received written notice from Employer stating with
specificity the nature of such failure or refusal and
affording Executive at least five (5) days to correct the act
or omission complained of;
(C) Executive's failure to report to work for any
consecutive five-day period, other than for vacation, excused
absences or reasonable medical or personal reasons;
(D) Executive's conviction by, or entry of a plea of
guilty or nolo contendere in, a court of competent and final
jurisdiction for any crime involving moral turpitude or any
felony punishable by imprisonment in the jurisdiction
involved;
<PAGE> 88
(E) whether prior to or subsequent to the date
hereof, Executive's engaging in dishonest or fraudulent
actions or omissions which result directly or indirectly in
any demonstrable material harm to Employer or its affiliates,
monetarily or otherwise, including, without limitation, any
fraudulent act or actions in connection to the acquisition of
The Writer Corporation, a Colorado corporation
("Predecessor"), by Employer and Standard Pacific Corp. and
any knowing or willful inaccuracy of any of the
representations and warranties of Predecessor in the Agreement
and Plan of Merger among such parties dated _____, 2000 or any
schedule or exhibit thereto;
(F) the repeated non-prescription use of any
controlled substance, or the repeated use of alcohol or any
other non-controlled substance which in the Board's reasonable
determination renders Executive unfit to serve in his capacity
as an officer or employee of Employer or its affiliates;
(G) sexual harassment by Executive that has been
reasonably substantiated and investigated; or
(H) Executive's physical destruction of substantial
property.
(ii) For purposes of this Agreement, "GOOD REASON" shall mean
any of the following (without Executive's written consent):
(A) a relocation of Employer's principal executive
offices to a location more than 50 miles from the location at
which Executive performed Executive's duties on the Effective
Date, except for reasonable travel required by Employer's
business; or
(B) any material breach by Employer of any provision
of this Agreement;
provided that (x) Executive gives written notice to Employer of his
election to terminate his employment for such reason within 30 days after the
time he becomes aware of the existence of facts or circumstances constituting
Good Reason and (y) Employer is afforded at least five (5) days following such
notice to correct the relocation or material breach complained of.
(g) Change in Control Agreement. Executive and Employer are
concurrently entering into a Change in Control Agreement (such agreement and any
amendments to such agreement, the "CHANGE IN CONTROL AGREEMENT").
Notwithstanding anything contained herein to the contrary, for any termination
of the employment of Executive for which the provisions of the Change in Control
Agreement apply, the provisions of the Change in Control Agreement shall control
Executive's rights and obligations upon termination of his employment, and
Executive shall not be entitled to any payments or other benefits hereunder.
<PAGE> 89
5. Nondisclosure.
(a) Confidential Information. Executive hereby acknowledges that in
connection with his employment by Employer he will be exposed to and may obtain
certain information (including, without limitation, trade secrets, know how,
procedures, plans, drawings, designs, memoranda, notes, records and employee,
customer and supplier lists whether such information has been or is made,
developed or compiled by Executive or otherwise has been or is made available to
him) regarding the business and operations of Employer and its subsidiaries or
affiliates. Executive further acknowledges that such information and procedures
are unique, valuable and deemed proprietary by Employer. For purposes of this
Agreement, such information and procedures shall be referred to as "CONFIDENTIAL
INFORMATION," except that the following shall not be considered Confidential
Information: (i) information disclosed on a non-confidential basis to third
parties by Employer (but not by Executive in violation of this Agreement), (ii)
information released from confidential treatment by written consent of Employer,
and (iii) information lawfully available to the general public.
(b) Use of Confidential Information. All Confidential Information is
and will remain the property of Employer. Executive agrees, except as otherwise
required by law, while employed by Employer hereunder and thereafter, to hold in
the strictest confidence all Confidential Information, and not to, directly or
indirectly, duplicate, sell, use, lease, commercialize, disclose or otherwise
divulge to any person or entity any portion of the Confidential Information or
use any Confidential Information for his own benefit or profit or allow any
person, entity or third party, other than Employer and authorized employees and
representatives of the same, to use or otherwise gain access to any Confidential
Information.
6. Memoranda, Notes, Records, Etc. All memoranda, notes, records,
plans, drawings, software, customer lists or other documents (including, but not
limited to, those in electronic form) made or compiled by Executive or otherwise
made available to him concerning the business of Employer or its subsidiaries or
affiliates shall be Employer's property and shall be delivered to Employer upon
the expiration or termination of Executive's employment hereunder or at any
other time upon request by Employer, and Executive shall retain no copies of
those documents. Executive shall never at any time have or claim any right,
title or interest in any material or matter of any sort prepared for or used in
connection with the business of Employer, including without limitation, any
architectural plans, drawings or designs.
7. Enforcement. The parties hereto recognize that the covenants of
Executive hereunder are special, unique and of extraordinary character.
Accordingly, it is the intention of the parties that, in addition to any other
rights and remedies which Employer may have in the event of any breach of this
Agreement, Employer shall be entitled, and hereby is expressly and irrevocably
authorized by Executive, inter alia, to demand and obtain specific performance,
including without limitation temporary and permanent injunctive relief, and all
other appropriate equitable relief against Executive in order to enforce against
Executive, or in order to prevent any breach or any threatened breach by
Executive of, the covenants and agreements contained herein. In case of any
breach of this Agreement by Executive, nothing herein contained shall be
construed to prevent Employer from seeking such other remedy in the courts as it
may elect or invoke.
<PAGE> 90
8. Miscellaneous.
(a) Non-Delegation of Duties. Executive may not delegate the
performance of any of his obligations or duties hereunder, or assign any rights
hereunder, without the prior written consent of Employer. Any such purported
delegation or assignment in the absence of such written consent shall be null
and void with no force or effect. Notwithstanding the foregoing, nothing herein
shall prevent Executive from delegating ministerial tasks to assistants of the
type that are normally assigned by executives to assistants.
(b) Binding Effect. This Agreement shall be binding on and inure to the
benefit of the parties hereto and their respective heirs, representatives,
successors and permitted assigns and any receiver, trustee in bankruptcy or
representative of the creditors of each such person.
(c) Survival of Covenants. Notwithstanding anything contained in this
Agreement, if Executive's employment is terminated for any reason whatsoever,
the covenants and agreements of Executive contained in Sections 4, 5, 6, 7, and
8, and the covenants of Employer contained in Sections 4 and 8 hereof shall
survive any such termination and shall not lapse except as provided herein.
(d) Rules of Construction.
(i) This Agreement has been negotiated and executed in, and
shall be governed by and construed in accordance with the laws of, the State of
Colorado. Captions contained in this Agreement are for convenience of reference
only and shall not be considered or referred to in resolving questions of
interpretation with respect to this Agreement.
(ii) If any provision of this Agreement is held to be illegal,
invalid or unenforceable under any present or future law, and if the rights or
obligations of any party hereto under this Agreement will not be materially and
adversely affected thereby, (A) such provision will be fully severable, (B) this
Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (C) the remaining
provisions of this Agreement will remain in full force and effect and will not
be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom and (D) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.
(e) Entire Agreement; Amendment. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter contained
herein and supersede all prior and contemporaneous agreements and
understandings, express or implied, between the parties with respect to such
subject matter. Neither this Agreement nor any provision hereof may be waived,
modified, amended, changed, discharged or terminated, except by an agreement in
writing signed by the party against whom enforcement of any waiver,
modification, change, amendment, discharge or termination is sought.
<PAGE> 91
(f) Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed given upon personal delivery
or three (3) business days after being mailed by certified or registered mail,
postage prepaid, return receipt requested, or one (1) business day after being
sent via a nationally recognized overnight courier service if overnight courier
service is requested from such service or upon receipt of electronic or other
confirmation of transmission if sent via facsimile, to the parties, their
successors in interest or their assignees at the following addresses and
telephone numbers, or at such other addresses or telephone numbers as the
parties may designate by written notice in accordance with this Section 8(f):
if to Executive:
-----------------------------
-----------------------------
-----------------------------
if to Employer: The Writer Corporation
c/o Standard Pacific Corp.
15326 Alton Parkway
Irvine, California 92618-2338
Facsimile: (949) 789-1608
Attention: Clay A. Halvorsen
(g) Attorneys' Fees and Costs. If any party to this Agreement brings
any action or proceeding, at law or in equity, to enforce this Agreement or on
account of any breach of this Agreement, the prevailing party shall be entitled
to recover from the non-prevailing party the reasonable attorneys' fees and
costs of the prevailing party incurred in such action.
(h) Arbitration. Any dispute regarding the application, interpretation
or breach of this Agreement shall be resolved by final and binding arbitration
before the American Arbitration Association ("AAA") in accordance with AAA's
National Rules for the Resolution of Employment Disputes. Attorney's fees, costs
and damages (where appropriate) shall be awarded to the prevailing party in any
dispute, and any resolution, opinion or order of AAA may be entered as a
judgment in a court of competent jurisdiction.
<PAGE> 92
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement to be effective as of the Effective Date.
EXECUTIVE:
--------------------------------
EMPLOYER:
THE WRITER CORPORATION,
a Delaware corporation
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
<PAGE> 1
EXHIBIT 2.2
LIST OF OMITTED SCHEDULES
1. The Disclosure Schedule delivered by The Writer Corporation to Standard
Pacific Corp. pursuant to the Agreement and Plan of Merger dated as of
April 14, 2000 among Standard Pacific Corp., The Writer Corporation and
TWC Acquisition Corp.
The omitted Disclosure Schedule includes responses by The Writer
Corporation to specific sections of the Merger Agreement regarding specific
organization, capitalization, operating activities, business relationships,
financial information of the Company.
Pursuant to Item 601(b)(2) of Regulation S-K, the Company agrees to furnish
supplementally a copy of the omitted Disclosure Schedule to the Commission, upon
the Commission's request.
