U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Date of Report
11/16/96
Commission File Number: 1-6762
KILLEARN PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
Florida 59-1095497
(State of Incorporation) (IRS Employer Identification No.)
602 Country Club Drive
Stockbridge, GA 30281
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(770) 389-2020
Item 1 Changes in Control of Registrant
On November 16, 1996, Killearn Properties, Inc. completed the transfer
of approximately forty-two percent of its assets for approximately
forty-two percent of its stock. This transaction was approved by the
shareholders on a vote held at its annual meeting on September 30,
1996. See Item 2 below.
The Split-Off was first proposed by Proactive Technologies, Inc.
(AMEX:PTE) and the material terms of the Agreement were determined
principally in negotiations between Mr. Williams and Proactive. Mark
A. Conner, Chairman of the Board and President of Proactive, is
Chairman of the Board and CEO of the Company since September 30, 1996.
As a result of the Split-Off, and assuming that it does not acquire
any additional shares of Common Stock, Proactive will beneficially own
approximately 35.5% of the outstanding Common Stock and become the
largest shareholder of the Company.
Item 2 Acquisition or Disposition of Assets
On September 30, 1996, the shareholders approved a transfer (the
"Split-Off") of certain assets of the Company, comprised principally
of the Eagle's Landing Golf Course and Country Club, the Inn at
Eagle's Landing, approximately $2 million in cash and a note, and
approximately 250 acres of commercial and industrial real estate,
subject to certain liabilities, to a newly-formed wholly owned
subsidiary of the Company ("NewSub"), and the subsequent transfer of
all of the outstanding capital stock of NewSub to J.T. Williams, Jr.,
the Company's former Chairman of the Board and Chief Executive
Officer, in exchange for 551,321 shares of Common Stock owned by Mr.
Williams and the cancellation of his option to purchase an additional
100,000 shares of Common Stock, pursuant to an Agreement dated as of
August 1, 1996, between the Company and J.T. Williams, Jr. (the
"Agreement"). A copy of the Agreement is attached to this Form 8-K as
Exhibit 1, and the terms and conditions thereof are incorporated
herein by reference.
Price Bednar delivered to the Board of Directors a written opinion,
dated July 29, 1996, which stated that, based on the assumptions and
subject to qualifications set forth therein, as of the Effective Date,
the Split-Off was fair, from a financial point of view, to the
shareholders of the Company other than J.T. Williams, Jr. The
Split-Off was first proposed by Proactive Technologies, Inc.
(AMEX:PTE)and the material terms of the Agreement were determined
principally in negotiations between Mr. Williams and Proactive.
The closing of the split-off occurred on November 16, 1996; however,
the effective date of the transfer of assets and liabilities will be
May 1, 1996.
Item 3 Bankruptcy or Receivership
Not applicable
Item 4 Changes in Registrant's Certifying Accountant
Not applicable
Item 5 Other Events
Not applicable
Item 6 Resignations of Registrant's Directors
Not applicable
Item 7 Financial Statements, Pro Forma Financial Information
a) Not applicable
b) Pursuant to paragraph (a)(4) of Item 7, proforma financial
information for the transaction that is subject to this Report on form
8-K will be filed within 60 days after the date hereof.
c) Exhibits.
Exhibit 1 - Agreement dated as of August 1, 1996, between Killearn
Properties, Inc. and J. T. Williams, Jr.
Item 8 Change in Fiscal Year
Not applicable
SIGNATURES
EXHIBIT 1
AGREEMENT DATED AS OF AUGUST 1, 1995, BETWEEN
KILLEARN PROPERTIES, INC. AND J.T. WILLIAMS, JR.
AGREEMENT
This Agreement (the "Agreement"), dated as of August 1, 1996,
by and between Killearn Properties, Inc., a Florida corporation
("Killearn"), and J.T. Williams, Jr. ("Williams").
RECITALS
WHEREAS, Killearn received a proposal from Proactive
Technologies, Inc. ("Proactive"), a significant shareholder of
Killearn, to effect the transactions contemplated by this Agreement
(such transactions being referred to herein as the "Split-Off");
and
WHEREAS, the Board of Directors of Killearn (the "Board") has
considered such proposal, and has approved this Agreement and
authorized the execution hereof; and
WHEREAS, Killearn and Williams desire to enter into this
Agreement for the purpose of setting forth the terms of the Split-
Off and certain representations, warranties and covenants made by
each to the other as an inducement to the execution and delivery of
this Agreement and the conditions precedent to the consummation of
the Split-Off;
NOW, THEREFORE, in consideration of the representations and
warranties and mutual promises and obligations contained herein,
the parties hereto hereby agree as follows:
1. THE SPLIT-OFF; OTHER AGREEMENTS; CLOSING.
(a)THE SPLIT-OFF. Subject to and in accordance with the terms
and
conditions of this Agreement, and in accordance with applicable
law, the parties hereto shall take the following actions (which
actions, taken together, shall constitute the Split-Off):
(i) FORMATION OF NEWSUB; TRANSFER OF ASSETS. Killearn
shall organize and incorporate a Florida corporation ("NewSub").
On or prior to the Closing Date, Killearn will transfer and
contribute to NewSub, in exchange for shares of the capital stock
of NewSub (the "NewSub Shares"), the assets set forth on Exhibit A
attached hereto (the "Transferred Assets"), free and clear of all
mortgages, liens, security interests and other encumbrances
("Liens"), except as otherwise provided herein. The exact legal
descriptions of the real property described on Exhibit A, and
schedules describing all personal property identified on Exhibit A,
have been agreed upon by Killearn and Williams, and such legal
descriptions and schedules shall be utilized for purposes of
identifying the determining the Transferred Assets. Such transfer
shall be effected by means of such deeds, bills of sale and other
instruments of conveyance and assignment as shall be mutually
agreed upon by Killearn and Williams.
(ii) ASSUMPTION OF LIABILITIES. On or prior to the
Closing Date, Killearn shall cause NewSub to assume and agree to
satisfy and discharge as the same become due, the liabilities and
obligations of Killearn set forth on Exhibit B attached hereto (the
"Assumed Liabilities"). Such assumption shall be effected by means
of such assumption agreements, undertakings and other documents or
instruments as shall be mutually agreed upon by Killearn and
Williams.
(iii) EXCHANGE OF SHARES; CANCELLATION OF OPTIONS. On
the Closing Date, the Company shall transfer all of the NewSub
Shares to Williams in exchange for: (i) the 551,321 shares of
Common Stock of Killearn held by Williams and (ii) the cancellation
of the stock options to acquire 100,000 shares of Common Stock of
Killearn held by Williams as of the date hereof. At the Closing,
each party shall deliver to the other certificates representing all
of the shares of stock being transferred by it hereunder, duly
endorsed for transfer.
(iv) EFFECTIVE DATE OF SPLIT-OFF. Notwithstanding the
actual date of Closing, the transactions contemplated by this
Agreement shall be given effect as if such transactions had
occurred on May 1, 1996 (the "Effective Date"). Accordingly, the
actual amount of cash and accounts receivable to be transferred to
NewSub on the Closing Date as part of the Transferred Assets will
(i) be reduced by NewSub's pro rata portion of property taxes,
insurance premiums and other expenses associated with the assets to
be transferred to NewSub paid or incurred by the Company between
the Effective Date and the Closing Date and (ii) be increased by
the amount of income generated by the assets to be transferred to
NewSub received by the Company between the Effective Date and the
Closing Date, including the proceeds from the sale of any land
which was to be transferred to NewSub (less closing costs and
commissions in connection with the sale).
(v) VALUATION OF ASSETS. Killearn and Williams
acknowledge and agree that the Transferred Assets and the Assumed
Liabilities were identified and selected in negotiations and
discussions between Williams and Proactive with the intention that
such assets and liabilities represent approximately 42% of
Killearn's total net assets at April 30, 1996. Notwithstanding the
foregoing, and except as provided in Section 1(a)(iv) hereof, no
adjustments shall be made in the Transferred Assets or the Assumed
Liabilities to give effect to changes in such assets or liabilities
subsequent to April 30, 1996.
(b) AGREEMENTS BETWEEN KILLEARN AND NEWSUB.
(i) NINE HOLE GOLF COURSE. NewSub shall be obligated
to construct an additional nine hole golf course on the following
terms and conditions:
(A) Williams and Killearn shall mutually agree on
the legal description of the land necessary for the golf
course, which is estimated to be approximately 80 acres;
(B) NewSub shall complete and submit to Killearn
for approval the layout of the golf course (to be
designed by Tom Fazio). Killearn shall have the right to
approve the layout, which approval shall not unreasonably
be withheld. NewSub shall submit a final, approved
layout to Killearn no later than May 1, 1997.
(C) Not later than six months after approval of
the layout or within two months after receipt of all
necessary permits, whichever is later, NewSub shall
commence clearing of the land for the golf course.
NewSub shall complete the golf course within eighteen
months after clearing of the land commences.
(D) At the time clearing commences, Killearn
shall transfer to NewSub the land for the golf course,
free and clear of all Liens. Killearn agrees to place on
all property adjacent to the transferred land, as well as
the existing golf course, covenants and restrictions
similar to those recorded at O.R. Book 2022, Page 111 of
the Public Records of Henry County, Georgia. In
addition, Killearn shall place a golf play easement on
other properties owned by it adjacent to the golf
courses, the exact locations and bounds of which shall be
mutually agreed by Killearn and NewSub.
(E) Killearn shall pay to NewSub $500,000 toward
the cost of the golf course, payable 10% when clearing is
completed, 30% when grading is completed, 30% when
grassing is completed and 30% when golf play commences.
(ii) MAINTENANCE OF COUNTRY CLUB; MEMBERSHIPS. With
respect to the Eagle's Landing Golf and Country Club (the "Country
Club"):
(A) NewSub shall maintain the property comprising
the Country Club in accordance with the standards by
which such property currently is being maintained.
(B) NewSub shall offer to all purchasers of
residential lots in the Company's Eagle's Landing Country
Club Community (the "Community") golf, tennis and dining
memberships in the Country Club for initiation fees of
$25,000, $9,000 and $2,750, respectively. NewSub shall
not raise the amount of the golf membership initiation
fees for at least one year after the Closing, and shall
not raise the amount of the tennis or dining membership
initiation fees for ten years after the Closing without
Killearn's consent, which consent shall not unreasonably
be withheld.
(C) Killearn will include in lot sales, at no
cost to the purchaser, a tennis membership for all lot
purchasers in the Community and a dining membership for
all lot purchasers in the Windsong and Villages
subdivisions, and will purchase such memberships from
NewSub if the lot purchasers accept such offers.
Killearn shall not be obligated to purchase any
memberships for lot purchasers who do not desire to
become members of the Country Club. Subject to any
memberships limits then in effect, NewSub shall make golf
memberships available to purchasers of lots from Killearn
who desire to purchase such memberships, even if NewSub
is required to recall such memberships from nonresident
members of the Country Club to do so. Killearn and
Williams acknowledge and agree that the foregoing
procedures have been in effect as a policy of Killearn
for several years; Killearn shall continue such
procedures in effect through the Closing and will pay to
NewSub on a timely basis all fees due for such
memberships for persons joining the Country Club after
April 30, 1996.
(D) NewSub will provide the members of the Board,
without payment of initiation fees, honorary memberships
for as long as Killearn is actively developing and
selling property in Eagle's Landing, but in any event for
at least four years after the Closing Date; provided,
that Killearn shall guarantee all charges made by such
persons.
(E) Provided that NewSub continues to own the
Country Club, NewSub will provide Killearn, for as long
as Killearn is actively developing and selling property
in Eagle's Landing, but in no event longer than eight
years, without payment of initiation fees, up to fifteen
memberships for builders and up to six dining memberships
for sales associates of Killearn; provided, that Killearn
shall guarantee all charges made by such persons.
(iii) GENERAL COVENANTS AND RESTRICTIONS. Each of
Killearn and NewSub shall place on all land transferred by it
subsequent to the Closing to a third party, on or before such
transfer, covenants and restrictions similar to those recorded at
O.R. Book 1070, Page 131 of the Public Records of Henry County,
Georgia.
(iv) JOINDER BY NEWSUB. On or prior to the Closing
Date, Killearn and NewSub shall enter into a written agreement
pursuant to which NewSub shall agree to be bound by the provisions
of this Agreement applicable to it, as if had been a party hereto.
(c) OTHER AGREEMENTS OF KILLEARN.
(i) LIENS ON TRANSFERRED ASSETS. Killearn shall use
its best efforts to remove from the Transferred Assets on or prior
to the Closing any and all Liens, excluding Liens associated with
the Assumed Liabilities. To the extent that Killearn is unable to
do so, until such time as Killearn has secured the release of all
such Liens from the Transferred Assets, Killearn agrees to apply
the proceeds of any payments made by Capital First Holdings, Inc.
under its notes payable to Killearn (the "Capital First Notes") to
the payment of debts secured by such Liens and shall assign to
NewSub, as security for Killearn's obligations under this Section
1(c)(i), the Capital First Notes and all related mortgages and
other security held by Killearn with respect to such notes.
Killearn further agrees for the benefit of NewSub that it will
timely pay all amounts due, and perform all of its other
obligations, under any loan or other agreements secured by such
Liens.
(ii) EMPLOYMENT AGREEMENTS. On or prior to the Closing
Date, Killearn shall enter into employment agreements with Williams
and David K. Williams, pursuant to which they will continue to
serve as President and Executive Vice President, respectively, of
the Company for periods of ten years and three years, respectively.
The employment agreement with Williams will provide for an annual
salary for the first five years of $200,000 and $150,000
thereafter, and the employment agreement with David K. Williams
will provide for an annual salary of $96,242, in each case plus
cost of living increases of 5% per year. In addition, David K.
Williams will be entitled to receive a $20,000 bonus if Killearn's
pre-tax earnings are in excess of $600,000 in any fiscal year
during the term of the Agreement. On or prior to the Closing Date,
Killearn shall enter into employment agreements with Dee Williams,
Joseph T. Williams, III and Bert Williams to serve as Director of
Landscaping and Interior Design, Chief of Construction and Head of
Sales of Eagle's Landing, respectively, for annual salaries of
$35,490, $70,000 and $60,700, respectively, in each case plus cost
of living increases of 5% per year. In addition, Bert Williams
will be paid a sales override for all land sold (other than
residential lots) in accordance with Killearn's current practices.
The agreements for Williams and Dee Williams shall provide that
their employment shall not be full time and that they shall devote
approximately one-half of their business time to the affairs of
Killearn, it being acknowledged by Killearn that the salary amounts
to be payable to them under such agreements represent approximately
one-half of the current compensation. All such agreements shall be
contain customary covenants and agreements of Killearn and the
employee, including an agreement of the employee not to compete
with Killearn within five miles of Killearn's Eagle's Landing
project for a period of five years after execution of the
agreement.
(iii) PROACTIVE LOAN. Killearn represents that
Proactive has agreed to make a $2 million loan to Killearn (the
"Proactive Loan"), the proceeds of which (subject to the
adjustments provided for herein) will be transferred to NewSub
prior to the closing as part of the Transferred Assets. The
Proactive Loan shall be made on or prior to the Closing Date
pursuant to such loan agreements, promissory notes and other
agreements and instruments, and on such terms and conditions, as
may be mutually agreed by Killearn and Proactive.
(d) CLOSING.
(i) Unless this Agreement is terminated pursuant to
Section 5, the closing (the "Closing") of the Split-Off shall be
held at a place and on a date, as soon as practicable after the
satisfaction of the conditions precedent to the Split-Off set forth
in Section 7, mutually agreed upon by Killearn and Williams (the
"Closing Date").
(ii) At the Closing, Killearn and Williams shall
execute and deliver to each other such agreements, instruments,
documents and certificates, make or confirm such filings and take
such other actions as are provided for by the terms hereof or may
otherwise be required to give effect (as of the Closing) to the
Split-Off.
2. REPRESENTATIONS AND WARRANTIES OF KILLEARN. Killearn
covenants, represents and warrants to Williams that:
(a) ORGANIZATION AND GOOD STANDING. Killearn is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Florida, and has full corporate
power and authority to own its assets and to carry on its business
as presently conducted.
(b) AUTHORIZATION; VALIDITY. Killearn has full power,
capacity and authority to execute, deliver and perform this
Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement
have been duly and validly authorized by all necessary corporate
action on the part of Killearn, subject only to the approval of
this Agreement and the transactions contemplated hereby by the
shareholders of Killearn. This Agreement has been duly and validly
executed and delivered by Killearn and is the legal, valid and
binding obligation of Killearn, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization and other laws of general
application affecting the enforcement of creditors' rights
generally and by the availability of equitable remedies.
(c) NO CONFLICTS; VIOLATIONS. The execution, delivery and
performance of this Agreement do not and will not (i) contravene
the Articles of Incorporation or Bylaws of Killearn; (ii) with or
without the giving of notice or the passage of time or both,
constitute a default under, result in a breach of (or would
constitute a default or result in a breach with the giving of
notice, lapse of time or both), result in the termination of,
result in the acceleration of performance of, require any consent,
approval or waiver under, or result in the imposition of any Liens
upon any property or assets of Killearn or its subsidiaries, under
any agreement, contract, commitment, lease or other instrument to
which Killearn or its subsidiaries is a party or by which any of
the property or assets of Killearn or its subsidiaries is bound,
which default, breach, termination, acceleration, consent, approval
or waiver, or imposition could reasonably be expected to,
individually or in the aggregate, materially and adversely affect
the Transferred Assets, (iii) violate any approvals, licenses,
permits, franchises or other governmental authorizations applicable
to the Transferred Assets, or (iv) violate any law, statute or
regulation or any judgment, order, decree, ruling or other decision
of any governmental authority, court or arbitrator applicable to
Killearn or its subsidiaries.
(d) LITIGATION; DISPUTES. There is no action, suit,
proceeding or investigation pending, or to the best knowledge of
Killearn, threatened against or relating to the Transferred Assets,
before any court, governmental, administrative or regulatory
authority or arbitrator, which (i) could reasonably be expected to,
individually or in the aggregate, materially and adversely affect
the Transferred Assets, taken as a whole, or (ii) could reasonably
be expected to prevent the performance in any material respect of
this Agreement or any of the actions contemplated hereby or declare
the same unlawful or cause the rescission thereof.
(e) NO CONSENTS. Except for applicable requirements of the
Securities Act of 1934 (the "1934 Act") and the approval of the
shareholders of Killearn contemplated by this Agreement, and other
than filing and recordation of appropriate title transfer documents
with respect to the Transferred Assets, no filing with or notice
to, and no permit, authorization, consent or approval of, any
public body or authority or any third party, is necessary for the
execution and delivery by Killearn of this Agreement or the
consummation by Killearn of the transactions contemplated hereby.
(f) OPINION OF FINANCIAL ADVISOR. Killearn has received the
opinion of its financial advisor, Price Bednar LLP that the Split-
Off is fair, from a financial point of view, to the shareholders of
Killearn other than Williams.
3. REPRESENTATIONS AND WARRANTIES OF WILLIAMS. Williams
covenants, represents and warrants to Killearn that:
(a) AUTHORIZATION; VALIDITY. Williams has full power,
capacity and authority to execute, deliver and perform this
Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement
have been duly and validly authorized by all necessary action on
the part of Williams. This Agreement has been duly and validly
executed and delivered by Williams and is the legal, valid and
binding obligation of Williams, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization and other laws of general
application affecting the enforcement of creditors' rights
generally and by the availability of equitable remedies.
(b) NO CONFLICTS; VIOLATIONS. The execution, delivery and
performance of this Agreement do not and will not (i) with or
without the giving of notice or the passage of time or both,
constitute a default under, result in a breach of (or would
constitute a default or result in a breach with the giving of
notice, lapse of time or both), result in the termination of,
result in the acceleration of performance of, require any consent,
approval or waiver under, any agreement, contract, commitment,
lease or other instrument to which Williams is a party or by which
any of his property or assets is bound, which default, breach,
termination, acceleration, consent, approval or waiver, or
imposition could reasonably be expected to, individually or in the
aggregate, adversely affect Williams' ability to perform this
Agreement or any of the actions contemplated hereby; or (ii)
violate any law, statute or regulation or any judgment, order,
decree, ruling or other decision of any governmental authority,
court or arbitrator applicable to Williams.
(c) NO CONSENTS. No filing with or notice to, and no permit,
authorization, consent or approval of, any public body or authority
or any third party, is necessary for the execution and delivery by
Williams of this Agreement or the consummation by Williams of the
transactions contemplated hereby.
4. CERTAIN AGREEMENTS.
(a) SHAREHOLDER APPROVAL; PROXY STATEMENT. Killearn shall
duly call, give notice of, convene and hold a meeting of its
shareholders as promptly as practicable (which meeting may be
Killearn's annual meeting of shareholders) for the purpose of
voting upon the Split-Off. As soon as reasonably practicable after
the date hereof, Killearn shall prepare and file with the
Securities and Exchange Commission (the "SEC") a proxy statement in
accordance with the requirements of the 1934 Act for the purpose of
soliciting proxies from the holders of Killearn's Common Stock.
The Proxy Statement shall submit to Killearn's shareholders for
their consideration and approval the transactions contemplated
hereby, and such other matters related to the Split-Off as are
consistent with the terms of this Agreement as Williams shall
reasonably request. Subject to the fiduciary duties of the Board
to Killearn's shareholders under applicable law, as determined by
the Board in good faith after considering the written advice of
outside counsel, Killearn shall, through the Board, recommend to
its shareholders approval of all such matters submitted to the
shareholders for their consideration and vote, and shall use its
best efforts to secure the approval of its shareholders of this
Agreement and the transactions contemplated hereby. Williams and
Killearn shall promptly furnish each other all information and
documents, and take such other actions, as may reasonably be
requested in connection with any action by either of them in
connection with this Section 4(a). If at any time prior to the
Closing Date any event with respect to Killearn or Williams shall
occur which is required to be described in an amendment of, or a
supplement to, the Proxy Statement, then Killearn or Williams, as
the case may be, shall promptly notify the other party in writing
of such event, and an amendment or supplement to the Proxy
Statement describing such event shall be promptly filed with the
SEC and, to the extent required by law, disseminated to the
shareholders of Killearn. Each of Killearn and Williams
represents, warrants and covenants to the other that the
information supplied or to be supplied by it or him for inclusion
in the Proxy Statement, including any amendments or supplements
thereto, will not, either at the date mailed to shareholders or at
the time of such meeting of shareholders, 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 light of the circumstances under which they
were made, not misleading.
(b) SEC REPORTS. Killearn shall file all reports,
registrations and statements, together with any amendments required
thereto, required to be filed with the SEC under the 1934 Act after
the date hereof and on or before the Closing Date (the "Interim SEC
Reports"), including, but not limited to, reports on Form 10-QSB
and Form 8-K. Such Interim SEC Reports shall, as of their
respective dates, comply in all material respects with all rules
and regulations promulgated by the SEC and will not contain any
untrue statement of a material fact or omit to state a fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
are made, not misleading. No Interim SEC Report containing
information about this Agreement or the transactions contemplated
hereby (except for information generally concerning the terms and
conditions of this Agreement and the status of the transactions
contemplated hereby) shall be filed without Williams' prior review
of such information.
(c) SOLICITATION. Unless this Agreement is terminated
pursuant to Section 5,
(i) Killearn shall not initiate, solicit or encourage
(including by way of furnishing nonpublic information or
assistance) any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any
Competing Transaction, enter into discussions or negotiate with any
person or entity in furtherance of such inquiries or to obtain a
Competing Transaction, or agree to or endorse any Competing
Transaction, or authorize any of its officers or directors to take
any such action, and Killearn shall instruct and use its reasonable
best efforts to cause its directors, officers, agents and
representatives (including, without limitation, any investment
banker, financial advisor, attorney or accountant retained by
Killearn) not to take any such action. If Killearn receives any
offer or proposal, written or otherwise, that constitutes, or may
reasonably be expected to lead to, any Competing Transaction,
Killearn promptly shall inform Williams of such offer or proposal
and furnish Williams with a copy thereof if such offer or proposal
is in writing.
(ii) Nothing contained in this Agreement shall prohibit
Killearn, subject to authorization by the Board, from (A)
furnishing information to, or entering into discussions or
negotiations with, any person or entity that, after the date
hereof, makes a bona fide proposal to enter into a Competing
Transaction, that after the date hereof had not been initiated,
solicited or encouraged by Killearn or any of its affiliates (other
than Williams), or (B) recommending or endorsing any, or entering
into any definitive agreement with respect to any, such Competing
Transaction if, with respect to either (A) or (B) above, (I) the
Board determines in good faith (after considering the written
opinion of outside counsel) that such action is required for the
Board to comply with its fiduciary duties to Killearn's
shareholders under applicable law, (II) the Board reasonably
believes that the proposal is made in good faith, and (III) prior
to furnishing nonpublic information to such person or entity,
Killearn receives from such person or entity an executed
confidentiality agreement on customary terms.
(iii) For purposes of this Agreement, a "Competing
Transaction" shall mean any of the following (other than the
transactions contemplated under this Agreement) involving Killearn
or any of its subsidiaries: (A) any merger, consolidation, share
exchange, business combination, sale of securities,
recapitalization, liquidation, dissolution or other similar
transaction; (B) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of 10% or more of the assets of
Killearn and its subsidiaries, taken as a whole, in a single
transaction or series of transactions; (C) any tender offer or
exchange offer for 10% or more of the outstanding shares of capital
stock of Killearn; (D) after the date hereof, any person having
acquired beneficial ownership or the right to acquire beneficial
ownership of, or any "group" (as such term is defined under Section
13(d) of the 1934 Act and the rules and regulations promulgated
thereunder) having been formed which beneficially owns or has the
right to acquire beneficial ownership of, 10% or more of the then
outstanding shares of capital stock of Killearn; or (E) any public
announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.
5. TERMINATION.
(a) TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned, but not later
than the Closing Date:
(i) by mutual written consent of Williams and
Killearn; or
(ii) by either Killearn or Williams, in the event of
(a) a breach by the other party of any representation or warranty
contained herein, which breach cannot be or has not been cured
within thirty (30) days after the giving of written notice to the
breaching party of such breach and which breach or breaches would
result in a failure to satisfy any condition set forth in Section
7 or (b) a material breach by the other party of any of the
covenants or agreements contained herein, which breach cannot be or
has not been cured within thirty (30) days after the giving of
written notice to the breaching party of such breach; provided that
the non-breaching party provides the breaching party with a written
notice of termination within ten days after the earlier of the
expiration of such 30-day period or the date it receives a written
notice from the breaching party stating that it is unable or
unwilling to cure such breach; or
(iii) by either Williams or Killearn, if the Closing has
not taken place on or before October 31, 1996, unless the failure
to consummate the Closing on or prior to such date is solely due to
such party's fault; or
(iv) by either Williams or Killearn, if (A) there shall
be a final nonappealable order of a federal or state court
restraining or prohibiting the consummation of the Split-Off, or
(B) there shall be any action taken, or any statute, rule,
regulation or order enacted, promulgated or issued or deemed
applicable to the Split-Off by any governmental authority, which
would make the consummation of the Split-Off illegal; or
(v) by Killearn if, in the exercise of its good faith
judgment as to its fiduciary duties to Killearn's shareholders
under applicable law, the Board (upon the written advice from its
outside counsel) determines that such termination is required;
provided, however, that the right of termination by Killearn
contemplated by this Section 5(a)(v) may only be exercised if,
prior to or contemporaneously with the determination by the Board
to terminate this Agreement, Killearn shall have entered into a
binding agreement with respect to a Competing Transaction after
having complied with the provisions of Section 4(c); or
(vi) by Killearn, if the shareholders of Killearn do
not approve the Split-Off at the shareholders' meeting, or any
adjournment thereof, referred to in Section 4(a).
(b) EFFECT OF TERMINATION. In the event of a termination of
this Agreement pursuant to Section 5(a), written notice thereof
shall promptly be given to the other party, and this Agreement
shall terminate and the transactions contemplated hereby shall be
abandoned without further action by the parties hereto. In the
event of the termination of this Agreement pursuant to Section
5(a), this Agreement shall forthwith become void, there shall be no
liability on the part of Killearn or any of its officers or
directors to Williams, or on the part of Williams to Killearn or
its officers or directors, and all rights and obligations of any
party hereto shall cease.
6. CONDUCT OF BUSINESS PRIOR TO CLOSING. Except as may otherwise
be contemplated by this Agreement or otherwise consented to or
approved in writing by Williams, after the execution hereof,
Killearn will:
(a) conduct its business only in the ordinary course of
business consistent with past practices and use its best efforts to
preserve its business, organization, goodwill and relationships
with persons having dealings with it;
(b) maintain its properties (including the Transferred
Assets) in good working order and repair (reasonable wear and tear
excepted); and
(c) (i) not amend its Articles of Incorporation or Bylaws;
(ii) not issue or agree to issue any additional shares of capital
stock of any class or series or securities convertible into or
exchangeable for shares of capital stock or issue any options,
warrants or other rights to acquire any shares of capital stock;
(iii) not merge or consolidate with or acquire all or substantially
all of the assets or business of any other corporation or entity;
(iv) not incur, assume or guarantee any indebtedness for money
borrowed secured by the Transferred Assets, other than in the
ordinary course of business; (v) not settle any claims, actions or
proceedings affecting the Transferred Assets or the Assumed
Liabilities, except in the ordinary course of business; (vi) not
make any wage or salary increase or agree to pay any pension or
retirement allowance not required by existing plans or agreements
or enter into any employment or consulting agreement, bonus or
employee benefit plan; (vii) not permit or allow any of the
Transferred Assets to be subjected to any Liens, except for Liens
for taxes not yet due or as otherwise incurred in the ordinary
course of business and consistent with past practices; (viii) not
lease, sell, transfer or otherwise dispose of any of the
Transferred Assets, except in the ordinary course of business and
consistent with past practices; (ix) not declare, pay or set aside
for payment any dividend or other distribution in respect to its
capital stock, or redeem, purchase or otherwise acquire, directly
or indirectly, any shares of its capital stock; (x) not amend or
revise in any material respect any material agreement it may have
with any third party with respect to, or affecting, the Transferred
Assets or the Assumed Liabilities; or (xi) not agree, whether in
writing or otherwise, to take any action described in this Section
6(c).
7. CONDITIONS PRECEDENT TO CLOSING.
(a) CONDITIONS PRECEDENT TO CLOSING BY EACH PARTY. The
respective obligations of Killearn and Williams to effect the
Split-Off is subject to the fulfillment at or prior to the Closing
Date of the following conditions precedent:
(i) SHAREHOLDER APPROVAL. This Agreement and the
transactions contemplated hereby shall have been approved by the
affirmative vote of the holders of a majority of the outstanding
Killearn Common Stock, excluding shares held directly by Williams,
in accordance with applicable law.
(ii) GOVERNMENTAL ACTION. There shall not be in effect
a final nonappealable order of a federal or state court restraining
or prohibiting the consummation of the Split-Off, nor shall any
action have been taken, or any statute, rule, regulation or order
enacted, promulgated or issued or deemed applicable to the Split-
Off by any governmental authority, which would make the
consummation of the Split-Off illegal.
(iii) CONSENTS. Killearn and Williams shall have
obtained all consents of lenders and other third parties as may be
necessary for the consummation of the transactions contemplated
hereby.
(iv) LITIGATION. No action, suit, investigation or
proceeding before any court or any governmental authority shall
have been commenced, pending or threatened against Killearn or
Williams seeking to prevent, restrain or alter the transactions
contemplated hereby.
(b) CONDITIONS PRECEDENT TO CLOSING BY KILLEARN. The
obligation of Killearn to effect the Split-Off is subject to the
fulfillment at or prior to the Closing Date of the following
conditions precedent, any one or more of which may be waived by
Killearn:
(i) REPRESENTATIONS; COVENANTS. The representations
and warranties of Williams contained in Section 3 hereof shall be
true and correct in all material respects as of the Closing Date.
Williams shall have performed in all material respects all
obligations and agreements, and complied in all material respects
with all covenants and conditions contained in this Agreement to be
performed or complied with by him prior to or at the Closing.
(ii) FAIRNESS OPINION. The fairness opinion referred
to in Section 2(f) shall be in effect, and shall not have been
modified in any material adverse respect or withdrawn on or prior
to the date of mailing of the Proxy Statement.
(iii) PROACTIVE LOAN. Killearn shall have received the
$2 million proceeds of the Proactive Loan.
(b) CONDITIONS PRECEDENT TO CLOSING BY WILLIAMS. The
obligation of Williams to effect the Split-Off is subject to the
fulfillment at or prior to the Closing Date of the following
condition precedent, which may be waived by Williams:
(i) REPRESENTATIONS; COVENANTS. The representations
and warranties of Killearn contained in Section 2 hereof shall be
true and correct in all material respects as of the Closing Date.
Killearn shall have performed in all material respects all
obligations and agreements, and complied in all material respects
with all covenants and conditions contained in this Agreement to be
performed or complied with by it prior to or at the Closing.
8. MISCELLANEOUS.
(a) NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each and
every representation and warranty contained herein shall expire
with, and be terminated and extinguished by, the Split-Off, or the
termination of this Agreement pursuant to Section 5 or otherwise;
and thereafter neither Williams, Killearn, nor any officer or
director of Killearn shall be under any liability whatsoever with
respect to any such representation or warranty. This Section 8(a)
shall have no effect upon any other obligation of the parties
hereto, whether to be performed before or after the Closing.
(b) ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This
Agreement represents the entire understanding of the parties hereto
and thereto with reference to the transactions contemplated hereby
and supersede any and all other oral or written agreements
heretofore made. Nothing in this Agreement expressed or implied,
is intended to confer upon any person, other than the parties
hereto or their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this
Agreement.
(c) MODIFICATION. This Agreement may be modified only by
written instruments properly executed by the parties hereto.
(d) GOVERNING LAW. This Agreement has been entered into and
shall be construed and enforced in accordance with the laws of the
State of Florida without reference to the choice of law principles
thereof.
(e) EXPENSES. Each party hereto will bear all expenses
incurred by it or him in connection with this Agreement and the
transactions contemplated hereby; provided, however, that Killearn
shall bear all expenses related to actions required to be taken to
effect the Split-Off, including expenses associated with the
transfer of assets to NewSub and obtaining any necessary consents
or approvals of third parties.
(f) WAIVER. No waiver by any party hereto, whether express
or implied, of its rights under any provision of this Agreement
shall constitute a waiver of such party's rights under such
provisions at any other time or a waiver of such party's rights
under any other provision of this Agreement. No failure by any
party hereto to take any action with respect to any breach of this
Agreement or default by another party hereto shall constitute a
waiver of the former party's right to enforce any provision of this
Agreement or to take action against such breach or default or any
subsequent breach or default by such other party. All waivers must
be in writing to be effective, and all waivers by the Company must
be approved by a majority of the Board then in office, excluding
Williams and David K. Williams.
(g) SEVERABILITY. In the event that any one or more of the
provisions contained in this Agreement shall be declared invalid,
void or unenforceable, the remainder of the provisions of this
Agreement shall remain in full force and effect.
(h) COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same
instrument.
(i) SECTION HEADINGS. The section headings in this Agreement
are for convenience of reference only and shall not be deemed to
alter or affect any provision hereof.
(j) SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. No party shall assign its
rights or delegate its obligations under this Agreement, unless and
until any such assignment or delegation shall have first been
consented to in a written instrument executed by the other party.
(k) LITIGATION; PREVAILING PARTY. In the event of any
litigation with regard to this Agreement, the prevailing party
shall be entitled to receive from the non-prevailing party, and the
non-prevailing party shall immediately pay upon demand, all
reasonable fees and expenses of counsel for the prevailing party.
(l) NOTICES. All notices, requests and other communications
hereunder shall be in writing and may be made by (i) certified or
registered mail, return receipt requested; (ii) hand delivery;
(iii) facsimile transmittal; or (iv) by courier service, and shall
be deemed to have been duly given (a) when delivered by hand; (b)
three days after mailing, in the case of certified or registered
mail; (c) when electronic confirmation is received and recorded, in
the case of facsimile; and (d) one business day after being
forwarded to a nationally recognized overnight courier service for
overnight delivery; in each case correctly addressed to such party
at its address set forth below or such other address as such party
may specify by notice to the parties hereto:
in the case of Killearn, to it at: 100 Eagle's Landing Way
Stockbridge, Georgia 30281
Attn: Mallory E. Horne
in the case of Williams, to him at: 100 Eagle's Landing Way
Stockbridge, Georgia 30281
(m) BROKERS OR FINANCIAL ADVISORS. Except with respect to
the fees and expenses payable to Price Bednar LLP by Killearn, each
party represents and warrants that no person has or will have, as
a result of the transactions contemplated by this Agreement, any
right, interest or valid claim against such party for any
commission, fee or other compensation as a broker, finder or
financial advisor in connection with the Split-Off as a result of
any agreement between such party and any other person, and each
party agrees to indemnify the other for, and hold the other
harmless from, the payment of any such commission, fee or other
compensation.
(n) EXHIBITS. The Exhibits attached hereto shall be deemed
an integral part of this Agreement and all references to this
Agreement shall include such exhibits.
(o) PRESS RELEASES. Killearn and Williams shall consult with
each other as to the form and content of any press release or other
public disclosure of matters related to this Agreement or any of
the transactions contemplated hereby, except that nothing in this
Section 8(o) shall be deemed to prohibit Killearn from making any
disclosure which its counsel deems necessary or advisable in order
to fulfill its disclosure obligations under applicable law.
(p) ADDITIONAL AGREEMENTS. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to
use its or his best efforts in good faith to take or cause to be
taken as promptly as practicable all action and to do or cause to
be done all things necessary or advisable to consummate and make
effective the transactions contemplated by this Agreement,
including using its or his reasonable best efforts to lift or
rescind any order, decree or injunction adversely affecting its
ability to consummate the transactions contemplated herein.
Without limiting the generality of the foregoing, each party shall
execute and deliver such other instruments and shall take such
other actions as the other party may reasonably request to
effectuate the transactions contemplated by this Agreement.
IN WITNESS WHEREOF, the undersigned, thereunto duly
authorized, have hereunto set their respective hands as of the day
and year first above written.
KILLEARN PROPERTIES, INC.
By:/s/ Mallory E. Horne
Title: Independent Director
/s/ J.T. Williams, Jr.
J.T. Williams, Jr.
EXHIBIT A
TRANSFERRED ASSETS
1. All assets, real and personal, of Eagle's Landing Country
Club, Inc., including all tangible assets located in the Clubhouse
of Eagles Landing Country Club
2. All assets, real and personal, comprising the Inn at Eagle's
Landing
3. The following real property:
110 acres commercial between I-75 and Rock Quarry Road
(including approx. 30 acres of wetlands)
22.79 acres retail and office, Country Club Drive
Lot between ELSC building and guard house
21.57 acres at Publix (graded)
30.8 acres next to Dunlop/KS and adjoining 27.96 acres
30.3 acres next to Carbonic Industries on Eagle's Landing
Parkway
Eagle's Landing Golf Course and Country Club per survey of
Broward Davis & Associates, plus rear 20 feet of lot 34-
C EL II
31.0 acres next to BellSouth on Highway 42 ( 39 acres less 8
acres wetlands)
2.77 acres (3 outparcels at Publix)
Right of way on Eagle's Landing Way north of Pate's creek
Green areas adjoining the foregoing properties to the center
of creek or to the end of property retained by Killearn
4. Land to construct a new nine hole golf course (approximately
80 acres), to be determined as provided in Section 1(b)(i) of the
Agreement
5. Option to acquire real property in Coweta County, Georgia
6. Insurance policies on the life of J.T. Williams, Jr.
7. Cash in the amount of $2 million
8. Killearn's interest in the Roland Tract, Publix and Champion
Partners joint ventures
EXHIBIT B
ASSUMED LIABILITIES
1. The $3 million debt owed to First Community Bank of Henry
County, Georgia with respect to the Inn at Eagle's Landing
2. All liabilities and obligations of Killearn under the
Employment Agreement dated July 7, 1982, as amended, between
Killearn and J.T. Williams, Jr.
3. Promissory Note dated payable to J.T. Williams ($360,000
outstanding at April 30, 1996)
4. All accounts payable, accrued expenses and other liabilities
and obligations, whether absolute, contingent or otherwise,
associated with the operation of the Eagle's Landing Country Club
or Eagle's Landing Country Club, Inc., excluding First Union
mortgage.
5. All insurance policy obligations and loans with respect to the
insurance policies included within the Transferred Assets.
6. All liabilities and obligations, whether absolute, contingent
or otherwise, of Killearn (i) to the partners of any joint venture
included within the Transferred Assets and (ii) to the creditors of
any such joint venture (whether as a primary obligor, guarantor or
otherwise).
