<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 Exchange Act of 1934
JANUARY 16, 1996
-------------------------------------------------
(Date of Report--Date of Earliest Event Reported)
LIBERTE INVESTORS
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
MASSACHUSETTS 16802 75-1328153
- ---------------------------- ------------ -------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
600 NORTH PEARL STREET, SUITE 420, DALLAS, TEXAS 75201
-------------------------------------------------------
(Address of Principal Executive Offices)
(214) 720-8950
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
INAPPLICABLE
-------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
EXHIBIT INDEX ON PAGE 4.
Liberte--Form 8-K Page 1 of 70
<PAGE> 2
ITEM 5. OTHER EVENTS.
On January 16, 1996, Liberte Investors, a Massachusetts business trust
("Liberte") entered into a Stock Purchase Agreement (the "Stock Purchase
Agreement") with Hunter's Glen/Ford, Ltd., a Texas limited partnership
("Hunter's Glen"), pursuant to which Liberte has agreed to sell 7,137,863 newly
issued shares of common stock to Hunter's Glen for $20,342,910 ($2.85 per
share). Under certain circumstances, Hunter's Glen will purchase an additional
964,576 newly issued shares of common stock at $2.85 per share for an
additional $2,749,041. After the sale Hunter's Glen would own 37% or 40% of
the outstanding shares of common stock of Liberte. The partners of Hunter's
Glen are Gerald J. Ford and certain family interests. On January 19,
1996, Hunter's Glen made a down-payment of $2,000,000, to be held in escrow
pending closing of the sale of shares pursuant to the terms and conditions of
the Stock Purchase Agreement. Both Liberte and Hunter's Glen had a right to
terminate the Stock Purchase Agreement at any time after January 26, 1996, if
Liberte had not received an opinion from Bear, Stearns & Co. Inc., Liberte's
investment banker ("Bear Stearns"), that the proposed sale of shares to
Hunter's Glen pursuant to the Stock Purchase Agreement is fair, from a
financial point of view, to Liberte's shareholders. On January 23, 1996,
Liberte received the written opinion of Bear Stearns that such proposed sale
is fair, from a financial point of view, to Liberte's public shareholders.
Prior to the sale of the shares pursuant to the Stock Purchase
Agreement, Liberte will be reorganized into a newly formed Delaware corporation
that will succeed to all of the assets and liabilities of Liberte. The
offering of common stock of the newly formed Delaware corporation in connection
with the reorganization of Liberte will be made only by means of a prospectus
transmitted to Liberte's existing shareholders. Upon such reorganization,
shareholders of Liberte will automatically become shareholders of common stock
of the newly formed Delaware corporation on a share for share basis.
At the closing, Mr. Ford will become Chairman and Chief Executive
Officer of Liberte. Liberte's board of directors will be expanded from three
to five members, and Mr. Ford and one of his designees will join Liberte's
board. Consummation of the transactions contemplated by the Stock Purchase
Agreement is subject to a number of conditions, including the approval by
Liberte's shareholders of the sale of shares and the reorganization of Liberte
from a Massachusetts business trust into a Delaware corporation.
For additional information, please refer to the Stock Purchase
Agreement and the press release attached as exhibits hereto.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
EXHIBITS
NO. DESCRIPTION
- --- -----------
4.1 Stock Purchase Agreement dated as of January 16, 1996, between
Liberte Investors, a Massachusetts business trust, and Hunter's
Glen/Ford Ltd., a Texas limited partnership.
99.1 Press Release, dated January 17, 1996.
[SIGNATURE ON THE NEXT PAGE]
Liberte--Form 8-K 2
<PAGE> 3
SIGNATURE
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.
Dated: January 24, 1996
LIBERTE INVESTORS
By: /s/ BRADLEY S. BUTTERMORE
Bradley S. Buttermore
Senior Vice President, Treasurer
and Secretary
Liberte--Form 8-K 3
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
NO. DESCRIPTION NO. PAGE
- --- --------------- ----
<S> <C> <C>
4.1 Stock Purchase Agreement dated as of January 16, 1996, between Liberte Investors, a
Massachusetts business trust, and Hunter's Glen/Ford, Ltd., a Texas limited partnership . . . . . . . 5
99.1 Press Release, dated January 17, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
</TABLE>
Liberte--Form 8-K 4
<PAGE> 1
EXHIBIT 4.1
==========================================================
STOCK PURCHASE AGREEMENT
BETWEEN
LIBERTE INVESTORS
AND
HUNTER'S GLEN/FORD, LTD.
January 16, 1996
==========================================================
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C> <C>
I. PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Purchase of the Shares . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.3 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.4 Transfer Restrictions . . . . . . . . . . . . . . . . . . . . 2
Section 1.5 Lack of Marketability . . . . . . . . . . . . . . . . . . . . 3
(a) No Registration . . . . . . . . . . . . . . . . . . . 3
(b) No Transfer . . . . . . . . . . . . . . . . . . . . . 3
(c) Limited Registration Rights . . . . . . . . . . . . . 3
II. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.1 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.2 Conditions to the Company's and Newco's Obligation to Close . 3
(a) Representations and Warranties . . . . . . . . . . . . 3
(b) Covenants . . . . . . . . . . . . . . . . . . . . . . 3
(c) Closing Certificate . . . . . . . . . . . . . . . . . 3
(d) Litigation . . . . . . . . . . . . . . . . . . . . . . 4
(e) Approvals . . . . . . . . . . . . . . . . . . . . . . 4
(f) Legal Opinion . . . . . . . . . . . . . . . . . . . . 4
(g) Secretary's Certificate . . . . . . . . . . . . . . . 4
(h) Other . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.3 Conditions to the Purchaser's Obligation to Close . . . . . . 4
(a) Representations and Warranties . . . . . . . . . . . . 4
(b) Covenants . . . . . . . . . . . . . . . . . . . . . . 4
(c) Closing Certificate . . . . . . . . . . . . . . . . . 4
(d) Litigation . . . . . . . . . . . . . . . . . . . . . . 4
(e) Approvals . . . . . . . . . . . . . . . . . . . . . . 5
(f) Reorganization . . . . . . . . . . . . . . . . . . . . 5
(g) Listing . . . . . . . . . . . . . . . . . . . . . . . 5
(h) Environmental Matters . . . . . . . . . . . . . . . . 5
(i) No Material Adverse Change . . . . . . . . . . . . . . 5
(j) Legal Opinion . . . . . . . . . . . . . . . . . . . . 5
(k) Secretary's Certificate of the Company . . . . . . . . 5
(l) Secretary's Certificate of Newco . . . . . . . . . . . 6
(m) Other . . . . . . . . . . . . . . . . . . . . . . . . 6
III. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.1 Representations and Warranties of the Company and Newco . . . 6
(a) Organization . . . . . . . . . . . . . . . . . . . . . 6
(b) Power and Authority . . . . . . . . . . . . . . . . . 7
(c) Execution, Delivery, and Enforceability . . . . . . . 7
(d) Consents . . . . . . . . . . . . . . . . . . . . . . . 7
(e) Conflicts . . . . . . . . . . . . . . . . . . . . . . 7
(f) Compliance With Applicable Laws . . . . . . . . . . . 7
(g) Permits . . . . . . . . . . . . . . . . . . . . . . . 8
(h) Registration Rights . . . . . . . . . . . . . . . . . 8
(i) Compliance with Organizational Documents . . . . . . . 8
(j) Corporate and Accounting Records . . . . . . . . . . . 8
(k) Enforceability of Current Transfer Restrictions . . . 8
(l) Employee Benefit Plans . . . . . . . . . . . . . . . . 8
(m) Capitalization . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
(n) Issuance of the Shares . . . . . . . . . . . . . . . . 10
(o) Exchange Act Reports . . . . . . . . . . . . . . . . . 10
(p) Financial Statements . . . . . . . . . . . . . . . . . 10
(q) Material Contracts . . . . . . . . . . . . . . . . . . 11
(r) Investments . . . . . . . . . . . . . . . . . . . . . 12
(s) Environmental Matters . . . . . . . . . . . . . . . . 12
(t) Litigation . . . . . . . . . . . . . . . . . . . . . . 12
(u) Taxes . . . . . . . . . . . . . . . . . . . . . . . . 12
(v) Subsidiaries . . . . . . . . . . . . . . . . . . . . . 13
(w) No Broker . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.2 Representations and Warranties of the Purchaser . . . . . . . 13
(a) Organization . . . . . . . . . . . . . . . . . . . . . 13
(b) Power and Authority . . . . . . . . . . . . . . . . . 13
(c) Execution, Delivery, and Enforceability . . . . . . . 13
(d) Consents . . . . . . . . . . . . . . . . . . . . . . . 13
(e) Conflicts . . . . . . . . . . . . . . . . . . . . . . 14
(f) Compliance with Applicable Laws . . . . . . . . . . . 14
(g) Funding of the Purchase. . . . . . . . . . . . . . . . 14
(h) Sophisticated Investor . . . . . . . . . . . . . . . . 14
(i) No Broker . . . . . . . . . . . . . . . . . . . . . . 15
IV. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.1 Reasonable Efforts to Close . . . . . . . . . . . . . . . . . 15
Section 4.2 Access to the Company . . . . . . . . . . . . . . . . . . . . 15
Section 4.3 Operation of the Company and Newco Pending the Closing . . . 15
(a) Representations, Warranties, and Covenants . . . . . . 15
(b) Operate the Business in the Ordinary Course . . . . . 15
(c) No Material Adverse Change . . . . . . . . . . . . . . 15
(d) No Transactions in Shares . . . . . . . . . . . . . . 15
(e) No Dividends . . . . . . . . . . . . . . . . . . . . . 15
(f) No Borrowing . . . . . . . . . . . . . . . . . . . . . 16
(g) No Liens . . . . . . . . . . . . . . . . . . . . . . . 16
(h) No Changes to Contracts . . . . . . . . . . . . . . . 16
(i) Real Property . . . . . . . . . . . . . . . . . . . . 16
(j) Extraordinary Corporate Transactions . . . . . . . . . 16
(k) Board Composition . . . . . . . . . . . . . . . . . . 16
(l) Amendments . . . . . . . . . . . . . . . . . . . . . . 16
(m) Properties . . . . . . . . . . . . . . . . . . . . . . 16
(n) Rights . . . . . . . . . . . . . . . . . . . . . . . . 16
(o) Compensation . . . . . . . . . . . . . . . . . . . . . 16
(p) Accounting . . . . . . . . . . . . . . . . . . . . . . 16
(q) Acquisitions . . . . . . . . . . . . . . . . . . . . . 17
(r) Loans to Affiliates . . . . . . . . . . . . . . . . . 17
(s) Capital Expenditures . . . . . . . . . . . . . . . . . 17
(t) No Agreements Concerning the Foregoing . . . . . . . . 17
Section 4.4 Charter and Bylaws . . . . . . . . . . . . . . . . . . . . . 17
Section 4.5 Shareholder Meeting . . . . . . . . . . . . . . . . . . . . . 17
Section 4.6 Proxy Statement/Prospectus . . . . . . . . . . . . . . . . . 17
Section 4.7 Delaware Section 203 . . . . . . . . . . . . . . . . . . . . 18
Section 4.8 Stock Exchange Application . . . . . . . . . . . . . . . . . 18
Section 4.9 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.10 No Shopping . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.11 Registration Rights . . . . . . . . . . . . . . . . . . . . . 19
Section 4.12 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.13 No Disclosure of Confidential Information . . . . . . . . . . 19
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
(a) Advisors . . . . . . . . . . . . . . . . . . . . . . . 19
(b) Public Information . . . . . . . . . . . . . . . . . . 19
(c) Required by Law . . . . . . . . . . . . . . . . . . . 19
(d) Tax Returns . . . . . . . . . . . . . . . . . . . . . 19
Section 4.14 No Options . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.15 No Waiver of Transfer Restrictions . . . . . . . . . . . . . 19
Section 4.16 Press Release . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.17 Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . 20
Section 4.18 Notification of Certain Matters . . . . . . . . . . . . . . . 20
Section 4.19 Newco Matters . . . . . . . . . . . . . . . . . . . . . . . . 20
V. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.1 Indemnification of the Purchaser . . . . . . . . . . . . . . 20
(a) Breaches of Representations and Warranties . . . . . . 20
(b) Breaches of Covenants . . . . . . . . . . . . . . . . 20
Section 5.2 Indemnification Procedure . . . . . . . . . . . . . . . . . . 21
(a) Notice . . . . . . . . . . . . . . . . . . . . . . . . 21
(b) Defense of Claim . . . . . . . . . . . . . . . . . . . 21
(c) Survival . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.3 Non-Exclusivity of Remedies . . . . . . . . . . . . . . . . . 21
VI. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 6.1 Termination of this Agreement . . . . . . . . . . . . . . . . 21
(a) Consent . . . . . . . . . . . . . . . . . . . . . . . 21
(b) Purchaser's Discretion . . . . . . . . . . . . . . . . 22
(c) Down Payment . . . . . . . . . . . . . . . . . . . . . 22
(d) Fairness Opinion . . . . . . . . . . . . . . . . . . . 22
(e) Fiduciary Out . . . . . . . . . . . . . . . . . . . . 22
(f) Shareholder Vote . . . . . . . . . . . . . . . . . . . 22
(g) Breach by the Purchaser . . . . . . . . . . . . . . . 22
(h) Breach by the Company or Newco . . . . . . . . . . . . 22
(i) Outside Date . . . . . . . . . . . . . . . . . . . . . 23
Section 6.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . 23
(a) General . . . . . . . . . . . . . . . . . . . . . . . 23
(b) Release of Down Payment . . . . . . . . . . . . . . . 23
(c) Break-Up Fee . . . . . . . . . . . . . . . . . . . . . 23
(d) Breach by the Purchaser . . . . . . . . . . . . . . . 23
Section 6.3 Confidentiality of Certain Information . . . . . . . . . . . 23
VII. ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 7.1 Pre-Arbitration Meeting . . . . . . . . . . . . . . . . . . . 24
Section 7.2 Arbitration Proceedings . . . . . . . . . . . . . . . . . . . 24
Section 7.3. Place of Arbitration . . . . . . . . . . . . . . . . . . . . 24
Section 7.4 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 7.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 7.6 Equitable Remedies . . . . . . . . . . . . . . . . . . . . . 24
VIII. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.2 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.3 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 25
(a) Affiliate . . . . . . . . . . . . . . . . . . . . . . 25
(b) Applicable Law . . . . . . . . . . . . . . . . . . . . 25
(c) Business Day . . . . . . . . . . . . . . . . . . . . . 25
(d) Claim . . . . . . . . . . . . . . . . . . . . . . . . 25
(e) Confidential Information . . . . . . . . . . . . . . . 25
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
(f) Contract . . . . . . . . . . . . . . . . . . . . . . . 25
(g) Environmental Claim . . . . . . . . . . . . . . . . . 25
(h) Environmental Law . . . . . . . . . . . . . . . . . . 26
(i) Environmental Noncompliance . . . . . . . . . . . . . 26
(j) Hazardous Material . . . . . . . . . . . . . . . . . . 26
(k) Law Affecting Creditors' Rights . . . . . . . . . . . 26
(l) Lawsuit . . . . . . . . . . . . . . . . . . . . . . . 26
(m) Lien . . . . . . . . . . . . . . . . . . . . . . . . . 26
(n) Material Adverse Change . . . . . . . . . . . . . . . 26
(o) Person . . . . . . . . . . . . . . . . . . . . . . . . 27
(p) Proposal . . . . . . . . . . . . . . . . . . . . . . . 27
(q) Tax . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 8.4 Effects of the Reorganization . . . . . . . . . . . . . . . . 27
Section 8.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 27
Section 8.6 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 8.7 Further Assurances . . . . . . . . . . . . . . . . . . . . . 27
Section 8.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 8.9 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 8.10 Injunctive Relief . . . . . . . . . . . . . . . . . . . . . . 28
Section 8.11 No Assignment . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 8.12 No Third-Party Beneficiaries . . . . . . . . . . . . . . . . 28
Section 8.13 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 8.14 Performance on Business Days . . . . . . . . . . . . . . . . 28
Section 8.15 Plural and Singular Words . . . . . . . . . . . . . . . . . . 28
Section 8.16 Pronouns . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 8.17 Severability . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 8.18 Successors . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 8.19 Survivability . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 8.20 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SIGNATURE PAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
iv
<PAGE> 6
INDEX OF EXHIBITS
EXHIBIT DESCRIPTION
A Legal Opinion
B Registration Rights Agreement
C Agreement Clarifying Registration Rights
v
<PAGE> 7
<TABLE>
<CAPTION>
INDEX OF DEFINED TERMS
Defined Term Page
------------------------------------------------------------------------- ----
<S> <C>
accredited investor . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Alternative Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Audited Financial Statements . . . . . . . . . . . . . . . . . . . . . . 10
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Clarification Agreement . . . . . . . . . . . . . . . . . . . . . . . . 19
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . 8
Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . 25
Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Disclosure Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Down Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Environmental Claim . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Environmental Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Environmental Noncompliance . . . . . . . . . . . . . . . . . . . . . . 26
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Escrow Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 10
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Hazardous Material . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Interim Financial Statements . . . . . . . . . . . . . . . . . . . . . . 10
Investment Banker . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Law Affecting Creditors' Rights . . . . . . . . . . . . . . . . . . . . 26
Lawsuit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . 26
Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Newco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
NOL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Proxy Statement/Prospectus . . . . . . . . . . . . . . . . . . . . . . . 17
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purchaser Indemnitees . . . . . . . . . . . . . . . . . . . . . . . . . 20
Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . 19
Rules of Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
</TABLE>
vi
<PAGE> 8
<TABLE>
<CAPTION>
Defined Terms Page
------------------------------------------------------------------------- ----
<S> <C>
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Transfer Restriction Opinion . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
vii
<PAGE> 9
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement"), dated as of
January 16, 1996, is between Liberte Investors, a Massachusetts business trust
(the "Company"), and Hunter's Glen/Ford, Ltd., a Texas limited partnership (the
"Purchaser").
RECITALS
WHEREAS, the Company desires to reorganize into a Delaware
corporation ("Newco");
WHEREAS, following such reorganization, the Purchaser desires
to purchase from Newco at least 37% of the common stock of Newco (the "Common
Stock") on a fully diluted basis;
WHEREAS, the Company desires to cause Newco to sell such
shares of Common Stock to the Purchaser; and
WHEREAS, the Company and the Purchaser therefore desire to
enter into this Agreement pursuant to which the Purchaser will purchase such
shares of Common Stock from Newco, upon the terms and conditions set forth in
this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and
the terms and conditions of this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and intending to be legally bound by this Agreement, the Company and the
Purchaser agree as follows:
I. PURCHASE AND SALE
SECTION 1.1 PURCHASE OF THE SHARES. At the Closing, the
Company shall cause Newco to sell to the Purchaser, and the Purchaser shall
purchase from Newco, 7,137,863 shares of Common Stock (the "Shares"), provided
that if the Company, Newco, and the Purchaser are each reasonably satisfied
that the purchase of 8,102,439 shares of Common Stock would not cause Newco's
use of the Company's net operating loss ("NOL") carryforwards to be restricted
under Section 382 of the Internal Revenue Code of 1986, as amended (the
"Code"), the Company shall instead cause Newco to sell to the Purchaser, and
the Purchaser shall instead purchase from Newco, 8,102,439 shares of Common
Stock, which shall then be considered the "Shares" for all purposes of this
Agreement.
SECTION 1.2 PURCHASE PRICE. The purchase price (the
"Purchase Price") for the Shares shall be $20,342,910 if the number of Shares
is 7,137,863 or $23,091,951 if the number of Shares is 8,102,439 ($2.85 per
Share, although the Purchaser may not purchase other than the number of shares
of Common Stock specified in Section 1.1).
SECTION 1.3 PAYMENT. On or before 5:00 p.m., Central
Time, on January 19, 1996, the Purchaser shall make a $2,000,000 down payment
on the Purchase Price (including any interest earned on such amount, but less
any escrow fees and expenses, the "Down Payment") to such financial institution
or other Person mutually acceptable to the Company and the Purchaser as escrow
agent (the "Escrow Agent"), pursuant to an escrow agreement in form and
substance satisfactory to the Company and the Purchaser in their reasonable
discretion. The Down Payment shall be held in interest bearing investments
agreed to by the
STOCK PURCHASE AGREEMENT
1
<PAGE> 10
Company and the Purchaser until such time as the Down Payment is applied or
released pursuant to the terms of this Agreement. At the Closing, the
Purchaser shall pay an amount equal to the Purchase Price less the Down Payment
to Newco by wire transfer of immediately available funds to such account as
Newco shall specify to the Purchaser in writing, the Down Payment shall be
delivered by the Escrow Agent to Newco, and Newco shall deliver to the
Purchaser the certificate or certificates evidencing the Shares.
SECTION 1.4 TRANSFER RESTRICTIONS. The Purchaser may not
directly or indirectly (including by operation of law) assign, bequeath, sell,
or otherwise transfer or dispose of (collectively, "Transfer") any of the
Shares unless: (a) such Transfer is pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "Securities Act"),
and the securities laws of any applicable state or other jurisdiction, or such
Transfer is exempt from registration under such laws, and (b) such Transfer
does not violate the Transfer restrictions to be set forth in Newco's
Certificate of Incorporation. Each stock certificate representing the Shares
and any subsequent stock certificates deriving from such certificates shall
bear the following legends:
THE ISSUANCE OF THE SHARES OF COMMON STOCK
REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE OR OTHER JURISDICTION. THESE SHARES MAY NOT BE TRANSFERRED
UNLESS SUCH TRANSFER IS REGISTERED UNDER THE SECURITIES ACT AND THE
SECURITIES LAWS OF ANY APPLICABLE STATE OR OTHER JURISDICTION, OR SUCH
TRANSFER IS EXEMPT FROM REGISTRATION UNDER SUCH LAWS. ANY PERSON
DESIRING TO TRANSFER THESE SHARES PURSUANT TO SUCH AN EXEMPTION SHALL
DELIVER TO THE COMPANY AN OPINION FROM LEGAL COUNSEL ACCEPTABLE TO THE
COMPANY OPINING UPON THE AVAILABILITY OF SUCH EXEMPTION, WHICH OPINION
SHALL BE IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY.
THE COMPANY'S CERTIFICATE OF INCORPORATION ALSO
RESTRICTS THE TRANSFER OF THE COMPANY'S EQUITY SECURITIES, INCLUDING
THESE SHARES, IN CONNECTION WITH THE PRESERVATION OF CERTAIN TAX
ATTRIBUTES OF THE COMPANY. A COPY OF THE COMPANY'S CERTIFICATE OF
INCORPORATION IS ON FILE AT THE COMPANY'S PRINCIPAL OFFICE.
IN ADDITION, THE TRANSFER OF THESE SHARES IS
RESTRICTED UNDER A STOCK PURCHASE AGREEMENT, DATED AS OF JANUARY 16,
1996, BETWEEN THE COMPANY AND HUNTER'S GLEN/FORD, LTD. A COPY OF THIS
AGREEMENT IS ON FILE AT THE COMPANY'S PRINCIPAL OFFICE.
IN ACCORDANCE WITH THE PROVISIONS OF SECTION 151(f)
OF THE DELAWARE GENERAL CORPORATION LAW, THE COMPANY WILL FURNISH
WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS THE POWERS,
DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL, OR
OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF OF THE
COMPANY AND THE QUALIFICATIONS, LIMITATIONS, OR RESTRICTIONS OF SUCH
PREFERENCES AND/OR RIGHTS.
STOCK PURCHASE AGREEMENT
2
<PAGE> 11
Notwithstanding the foregoing, the legends placed on
subsequent stock certificates shall be revised as circumstances warrant,
including removing the first legend to the extent such legend is not required
under applicable securities laws. In addition, nothing in this section shall
prohibit the Purchaser from encumbering, hypothecating, mortgaging, or pledging
any of the Shares.
SECTION 1.5 LACK OF MARKETABILITY. The Purchaser
acknowledges that:
(A) NO REGISTRATION. Based upon the
representations and warranties of the Purchaser set forth in this
Agreement, Newco will not register the issuance of the Shares under:
(i) the Securities Act, based upon the exemption from registration set
forth in Section 4(2) of such act and Regulation D promulgated under
such act, (ii) the Texas Securities Act, based upon the exemption set
forth in Rule 109.13(k) promulgated under such act, and (iii) the
securities laws of any other state or jurisdiction.
(B) NO TRANSFER. The Purchaser must hold the
Shares indefinitely until the Transfer of such Shares is: (i) registered under
the Securities Act and the securities laws of any applicable state or other
jurisdiction, or such Transfer is exempt from registration under such laws, and
(ii) permitted under the Transfer restrictions contained in this Agreement and
Newco's Certificate of Incorporation.
(C) LIMITED REGISTRATION RIGHTS. Except as
contemplated under Section 4.11, Newco will be under no obligation to
register the Purchaser's transfer of its Shares under the Securities
Act or the securities laws of any state or other jurisdiction.
II. CLOSING
SECTION 2.1 CLOSING DATE. The consummation of the
purchase of the Shares (the "Closing") shall occur as soon as practicable after
the conditions set forth in Sections 2.2 and 2.3 have been satisfied or waived.
The date of the Closing is referred to in this Agreement as the "Closing Date."
The Closing shall occur on such day at the offices of Gibson, Dunn & Crutcher,
1717 Main Street, Suite 5400, Dallas, Texas 75201, commencing at 10:00 a.m., or
at such other place and time as the Company, Newco, and the Purchaser shall
agree.
SECTION 2.2 CONDITIONS TO THE COMPANY'S AND NEWCO'S
OBLIGATION TO CLOSE. The Company's and Newco's obligation to close shall be
subject to the satisfaction of the following conditions, which the Company and
Newco may waive:
(A) REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Purchaser set forth in this
Agreement shall have been true and correct as of the date of this
Agreement and the Closing Date as though made as of such time.
(B) COVENANTS. The Purchaser shall have
performed in all material respects all agreements, covenants, and
obligations that it is required to perform under this Agreement prior
to the Closing.
(C) CLOSING CERTIFICATE. The Purchaser shall
have delivered to Newco a certificate confirming the satisfaction of
the conditions set forth in Paragraphs (a) and (b) above.
STOCK PURCHASE AGREEMENT
3
<PAGE> 12
(D) LITIGATION. No injunction shall have been
granted against Newco, the Company, or the Purchaser enjoining any
transaction contemplated by this Agreement.
(E) APPROVALS. All material governmental and
third-party approvals, authorizations, and consents with respect to
the transactions contemplated by this Agreement, including those items
described or referred to in Section 3.1(d), shall have been obtained.
(F) LEGAL OPINION. The Company and Newco shall
have received from their legal counsel an opinion, in form and
substance satisfactory to them in their reasonable discretion, dated
as of the Closing Date, opining that upon the reorganization of the
Company, Newco succeeded to the Company's NOL carryforwards, and the
transactions contemplated under this Agreement as identified in such
opinion will not restrict Newco's use of such NOL carryforwards under
Section 382 of the Code. In addition, the Company and Newco shall
have obtained the Transfer Restriction Opinion for the Purchaser,
which shall be in form and substance satisfactory to them in their
reasonable discretion and addressed to them as well as the Purchaser.
(G) SECRETARY'S CERTIFICATE. The Purchaser shall
have delivered to the Company and Newco a Secretary's Certificate, in
form and substance satisfactory to them in their reasonable
discretion, which shall include:
(I) PARTNERSHIP CERTIFICATE. A
copy of the Purchaser's Certificate of Limited
Partnership, certified by the Texas Secretary of
State not more than five days before the Closing
Date.
(II) PARTNERSHIP AGREEMENT. A copy
of the Purchaser's Agreement of Limited Partnership.
(H) OTHER. The Purchaser shall have delivered to
the Company and Newco such other certificates, documents, and
instruments as they may reasonably request in connection with this
Agreement.
SECTION 2.3 CONDITIONS TO THE PURCHASER'S OBLIGATION TO
CLOSE. The Purchaser's obligation to close shall be subject to the
satisfaction of the following conditions, which the Purchaser may waive:
(A) REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company and Newco set forth in
this Agreement shall have been true and correct as of the date of this
Agreement and the Closing Date as though made as of such time, without
taking into account any updates made to Schedules 3.1(s), 3.1(t), or
3.1(u) of the Disclosure Letter.
(B) COVENANTS. The Company and Newco shall have
performed in all material respects all agreements, covenants, and
obligations that they are required to perform under this Agreement
prior to the Closing.
(C) CLOSING CERTIFICATE. The Company and Newco
shall have delivered to the Purchaser a certificate confirming the
satisfaction of the conditions set forth in Paragraphs (a) and (b)
above.
(D) LITIGATION. No injunction shall have been
granted against Newco, the Company, or the Purchaser enjoining any
transaction contemplated by this Agreement. In addition, no Lawsuit
shall be pending or threatened before any court or
STOCK PURCHASE AGREEMENT
4
<PAGE> 13
governmental agency seeking to enjoin the Closing or seeking damages
against the Company, Newco, or the Purchaser or any of their
respective directors, officers, or partners, as a result of any of the
transactions contemplated by this Agreement, provided that nothing in
this paragraph shall affect the right of the Company and Newco to seek
redress for the Purchaser's breach of this Agreement.
(E) APPROVALS. All material governmental and
third-party approvals, authorizations, and consents with respect to
the transactions contemplated by this Agreement, including these items
described or referred to in Section 3.2(d), shall have been obtained.
(F) REORGANIZATION. The Company and Newco shall
have completed all of the transactions contemplated in the Proposal,
other than the termination of the Company.
(G) LISTING. The Common Stock shall have been
approved for listing on either the New York Stock Exchange, the
American Stock Exchange, or the National Market of the National
Association of Securities Dealers Automated Quotation System.
(H) ENVIRONMENTAL MATTERS. No Environmental
Noncompliance shall exist and no Environmental Claims shall have been
made with respect to any property ever owned by the Company or Newco,
except where such Environmental Noncompliance or Environmental Claims
would not, individually or in the aggregate, have a material adverse
effect on the business, financial condition, assets, results of
operations, or prospects of the Company or Newco. In addition,
neither the Company nor Newco shall have received any Claims from any
governmental entity seeking any information or alleging any violation
of any Environmental Law, except where such violations would not,
individually or in the aggregate, have a material adverse effect on
the business, financial condition, assets, results of operations, or
prospects of the Company or Newco.
(I) NO MATERIAL ADVERSE CHANGE. The Company
shall not have undergone any Material Adverse Change during the period
beginning on the date of the Interim Financial Statements until the
date of the reorganization, and Newco shall not have undergone any
Material Adverse Change since the reorganization.
(J) LEGAL OPINION. The Purchaser shall have
received from the Company's and Newco's legal counsel, which counsel
shall be acceptable to the Purchaser in its reasonable discretion, one
or more opinions, in form and substance satisfactory to the Purchaser
in its reasonable discretion, dated as of the Closing Date, opining
upon the matters set forth in Exhibit A to this Agreement. The
Purchaser acknowledges that the following law firms used by the
Company are acceptable to the Purchaser: (i) Gibson, Dunn & Crutcher,
(ii) Hale & Dorr, (iii) Hughes & Luce, L.L.P., and (iv) Morris,
Nichols, Arsht & Tunnell.
(K) SECRETARY'S CERTIFICATE OF THE COMPANY. The
Company shall have delivered to the Purchaser a Secretary's
Certificate, in form and substance satisfactory to the Purchaser in
its reasonable discretion, which shall include:
(I) DECLARATION OF TRUST. A copy
of the Company's Declaration of Trust certified by
the Massachusetts Secretary of State not more than
five days before the Closing Date.
(II) BYLAWS. A copy of the
Company's Bylaws.
STOCK PURCHASE AGREEMENT
5
<PAGE> 14
(III) RESOLUTIONS. A copy of the
resolutions that the Company's Board of Trustees and
shareholders adopted approving this Agreement and the
Proposal and the sale of the Shares to the Purchaser,
as applicable.
(IV) INCUMBENCY CERTIFICATE. An
incumbency certificate setting forth the names,
offices, and signatures of the Company's officers who
execute any documents on behalf of the Company in
connection with this Agreement.
(L) SECRETARY'S CERTIFICATE OF NEWCO. Newco
shall have delivered to the Purchaser a Secretary's Certificate, in
form and substance satisfactory to the Purchaser in its reasonable
discretion, which shall include:
(I) CHARTER. A copy of the Newco's
Certificate of Incorporation certified by the
Delaware Secretary of State not more than five days
before the Closing Date.
(II) BYLAWS. A copy of Newco's
Bylaws.
(III) GOOD STANDING CERTIFICATE. A
long-form certificate from the Delaware Secretary of
State, dated as of the Closing Date or a reasonable
number of days before such date, stating that Newco
is in existence and good standing under the laws of
the State of Delaware and describing each document
comprising Newco's Certificate of Incorporation.
(IV) RESOLUTIONS. A copy of the
resolutions that Newco's Board of Directors adopted
approving this Agreement and the Proposal and the
sale of the Shares to the Purchaser, as applicable.
(V) INCUMBENCY CERTIFICATE. An
incumbency certificate setting forth the names,
offices, and signatures of Newco's officers who
execute any documents on behalf of Newco in
connection with this Agreement.
(M) OTHER. The Company and Newco shall have
delivered to the Purchaser such other certificates, documents, and
instruments as the Purchaser may reasonably request in connection with
this Agreement.
III. REPRESENTATIONS AND WARRANTIES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND NEWCO. The Company and Newco jointly and severally represent and warrant
to the Purchaser as follows (provided that such representations and warranties
shall be made by Newco immediately prior to the Closing):
(A) ORGANIZATION. The Company is a business
trust validly existing under the laws of the Commonwealth of
Massachusetts and is qualified to transact business as a foreign
business trust in each jurisdiction where the failure to qualify could
have a material adverse effect upon the business, financial condition,
assets, results of operations, or prospects of the Company. At the
Closing, Newco will be a corporation validly existing and in good
standing under the laws of the State of Delaware and will be qualified
to transact business in each jurisdiction where the failure to qualify
could have a material adverse effect upon the business, financial
STOCK PURCHASE AGREEMENT
6
<PAGE> 15
condition, assets, results of operations, or prospects of Newco. The
Company has delivered to the Purchaser true and complete copies of the
Company's Declaration of Trust and Bylaws and at or before the Closing
Newco will have delivered to the Purchaser true and complete copies of
its Certificate of Incorporation and Bylaws.
(B) POWER AND AUTHORITY. The Company possesses
the power and authority to execute, deliver, and perform this
Agreement, and at the Closing Newco will possess the power and
authority to perform this Agreement, subject to obtaining any
approval, authorization, consent, or waiver or giving any notice
described or referred to in Section 3.1(d). Other than as described
or referred to in Section 3.1(d), no approvals, authorizations,
consents, or waivers or the giving of any notice are required for
Newco to assume the Company's obligations under this Agreement,
including the sale of the Shares to the Purchaser. The Company
possesses, and at the Closing Newco will possess, the power and
authority to own its properties and carry on its business as presently
conducted by the Company.
(C) EXECUTION, DELIVERY, AND ENFORCEABILITY. The
Company has duly authorized, executed, and delivered this Agreement,
and this Agreement constitutes a valid, legal, and binding obligation
of the Company, and at the Closing this Agreement will constitute a
valid, legal, and binding obligation of Newco, enforceable against the
Company and Newco in accordance with its terms, subject to any Law
Affecting Creditors' Rights and the approval of the Proposal and the
sale of the Shares to the Purchaser by the Company's shareholders.
(D) CONSENTS. Except as described in Schedule
3.1(d) of the letter from the Company to the Purchaser delivered upon
the execution and delivery of this Agreement that describes certain
exceptions and other items in connection with the representations and
warranties of the Company and Newco under this Agreement (the
"Disclosure Letter"), the execution and delivery of this Agreement by
the Company, and the consummation of the transactions contemplated by
this Agreement by the Company and Newco, do not require the Company or
Newco to obtain, give, or make any approval, consent, filing,
registration, notice, or take any other action, by or with any third
party or governmental entity, except where the failure to obtain,
give, or make such approval, consent, filing, registration, notice, or
other action would not, individually or in the aggregate, have a
material adverse effect on the business, financial condition, assets,
results of operations, or prospects of the Company or Newco, or on the
Company's or Newco's ability to consummate the transactions
contemplated by this Agreement.
(E) CONFLICTS. Except as described in Schedule
3.1(e) of the Disclosure Letter, the Company's execution and delivery,
and the Company's and Newco's performance, of this Agreement will not
conflict with, constitute a breach or violation of, result in a Lien
against, or give rise to any default or right of acceleration,
cancellation, or termination with respect to any arrangement or
Contract to which the Company or Newco is a party or by which any of
their assets are bound (or give rise to an event that with notice,
lapse of time, or both, would result in such a conflict, breach,
violation, Lien, default, or right), including the Company's
Declaration of Trust and Bylaws and Newco's Certificate of
Incorporation and Bylaws, except where the conflict, breach,
violation, Lien, default, or right of acceleration, cancellation, or
termination would not, individually or in the aggregate, have a
material adverse effect on the business, financial condition, assets,
results of operations, or prospects of the Company or Newco, or on the
Company's or Newco's ability to consummate the transactions
contemplated by this Agreement.
(F) COMPLIANCE WITH APPLICABLE LAWS. The Company
and Newco have complied with all Applicable Laws the violation of
which would, individually or
STOCK PURCHASE AGREEMENT
7
<PAGE> 16
in the aggregate, have a material adverse effect on the business,
financial condition, assets, results of operations, or prospects of
the Company or Newco. The Company's execution and delivery, and the
Company's and Newco's performance, of this Agreement will not violate
any Applicable Laws. In addition, at the date of this Agreement, no
Lawsuit by or before any court or other governmental entity exists, or
to the knowledge of the Company or Newco is threatened, that would
prohibit the Company or Newco from consummating any of the
transactions contemplated by this Agreement or seek damages with
respect to any such transaction.
(G) PERMITS. Except as described in Schedule
3.1(g) of the Disclosure Letter, the Company and Newco possess all
authorizations, certificates, franchises, licenses, and permits
necessary for the lawful conduct of their respective business, except
where the failure to possess such authorizations, certificates,
franchises, licenses, and permits would not, individually or in the
aggregate, have a material adverse effect on the business, financial
condition, assets, results of operations, or prospects of the Company
or Newco.
(H) REGISTRATION RIGHTS. Except as described in
Schedule 3.1(h) of the Disclosure Letter and the Registration Rights
Agreement, neither the Company has, nor will Newco have as of the
Closing Date, any obligation to register any shares of beneficial
interest or any shares of Common Stock, respectively.
(I) COMPLIANCE WITH ORGANIZATIONAL DOCUMENTS.
Except as described in Schedule 3.1(i) of the Disclosure Letter, the
Company is in compliance with all provisions of its Declaration of
Trust and Bylaws, and at the Closing, Newco will be in compliance with
all provisions of its Certificate of Incorporation and Bylaws.
(J) CORPORATE AND ACCOUNTING RECORDS. The minute
books of the Company accurately reflect in all material respects all
actions taken to the date of this Agreement by the Company's Board of
Trustees, committees of its Board of Trustees, and shareholders,
except for those matters described in Schedule 3.1(j) of the
Disclosure Letter for which minutes of such actions have not yet been
prepared or approved. The stock certificate books and records of the
Company accurately reflect the ownership of the shares of beneficial
interest in the Company. The Company maintains accounting records
that fairly reflect, in all material respects, the Company's
transactions.
(K) ENFORCEABILITY OF CURRENT TRANSFER
RESTRICTIONS. To the Company's knowledge, except as described in
Schedule 3.1(k) of the Disclosure Letter, the transfer restrictions
contained in the Company's Declaration of Trust are currently
enforceable, and have been enforced or waived in accordance with the
Declaration of Trust. At the Closing, the transfer restrictions
contained in Newco's Certificate of Incorporation will be enforceable.
(L) EMPLOYEE BENEFIT PLANS. Schedule 3.1(l) of
the Disclosure Letter lists all employee benefit plans and collective
bargaining, labor, and employment agreements or other similar benefit
arrangements to which either the Company or Newco is a party or by
which either the Company or Newco is bound that will have any effect
or impose any liability or obligation on the Company or Newco after
March 31, 1996 (collectively, the "Company Benefit Plans"), including:
(i) any profit-sharing, deferred compensation, bonus, stock option,
stock purchase, pension, retainer, consulting, retirement, severance,
welfare, or incentive plan, agreement, or arrangement, (ii) any plan,
agreement, or arrangement providing for "fringe benefits" or
perquisites to employees, officers, trustees, or agents, including
benefits relating to automobiles, clubs, vacation, child care,
parenting, sabbatical, sick leave, medical, dental, hospitalization,
life insurance, and other types of insurance, (iii) any
STOCK PURCHASE AGREEMENT
8
<PAGE> 17
employment agreement not terminable on 30 days (or less) written
notice, or (iv) any other "employee benefit plan" within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). True and complete copies of the Company
Benefit Plans, current descriptive booklets, and summary plan
descriptions of the Company Benefit Plans, any relevant trust
agreements, insurance policies, or contracts, and if applicable, the
most recent annual return on Form 5500 (or equivalent form) have been
made available to the Purchaser. To the extent applicable, the
Company Benefit Plans comply, in all material respects, with the
requirements of ERISA and the Code. Neither any Company Benefit Plan
nor the Company or Newco has incurred any liability or penalty under
Section 4975 of the Code or Section 502(i) of ERISA. Each Company
Benefit Plan has been maintained and administered in all material
respects in compliance with its terms and with ERISA and the Code to
the extent applicable to such plan. Except as described in Schedule
3.1(l) of the Disclosure Letter, there are no pending, or to the
knowledge of the Company threatened, Claims (other than pursuant to
the terms of any such plan) against or otherwise involving any of the
Company Benefit Plans and no action has been brought against or with
respect to any Company Benefit Plan, and neither the Company nor Newco
has incurred any liability to any party with respect to any Company
Benefit Plan. All contributions required to be made to the Company
Benefit Plans have been provided for or made. Except as set forth in
Schedule 3.1(l) of the Disclosure Letter, neither the Company nor
Newco maintains or contributes to any plan or arrangement that
provides or has any liability to provide life insurance or medical or
other employee welfare benefits to any employee or former employee
upon his retirement or termination of employment, and neither the
Company nor Newco has represented, promised, or contracted (whether in
oral or written form) to any employee or former employee that it would
provide such benefits. Except as described in Schedule 3.1(l) of the
Disclosure Letter, the execution of, and the performance of the
transactions contemplated by, this Agreement will not constitute an
event under any Company Benefit Plan or other policy, arrangement,
trust, or loan that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any employee. No Company
Benefit Plan is subject to Title IV of ERISA and neither the Company
nor Newco has, within six years prior to the date of this Agreement,
contributed to or had any obligation to contribute to any employee
benefit plan subject to Title IV of ERISA. For purposes of this
section, the term "Company" and the term "Newco" include any entity
required to be aggregated with the Company or Newco pursuant to Code
Section 414(b), (c), (m), or (o), respectively, and the provisions of
ERISA or the Code include regulations prescribed under such
provisions.
(M) CAPITALIZATION. The Company is authorized to
issue an unlimited number of shares of beneficial interest, 12,423,208
shares of beneficial interest have been issued, and 12,153,658 shares
of beneficial interest are outstanding. The Company is also
authorized to issue 10,000,000 shares of preferred stock, none of
which have been issued. At the Closing, Newco will be authorized to
issue 10,000,000 shares of preferred stock, par value $.01 per share,
in one or more series, and 50,000,000 shares of Common Stock, par
value $.01 per share. Immediately before the Closing, Newco will have
12,153,658 shares of Common Stock issued and outstanding. The Company
does not, and at the Closing Newco will not, have any other equity
securities outstanding, including any options, warrants, or other
rights to purchase any such securities. Except as described in
Schedule 3.1(m) of the Disclosure Letter or as contemplated under this
Agreement, there are: (i) no outstanding Contracts or other rights to
subscribe for, purchase, issue, or grant any rights to acquire any
capital stock of the Company or Newco or to restructure or
recapitalize the Company or Newco, (ii) no outstanding Contracts of
the Company or Newco to repurchase, redeem, or otherwise acquire any
of their capital stock, (iii) no outstanding
STOCK PURCHASE AGREEMENT
9
<PAGE> 18
bonds, debentures, notes, or other indebtedness having general voting
rights (or convertible into securities having general voting rights)
of the Company or Newco, or (iv) no voting trusts or other agreements
or understandings to which the Company or Newco is a party or is
bound, or to the knowledge of the Company or Newco, to which any other
Person is a party or is bound, with respect to the voting of the
capital stock of the Company and Newco. Except as described on
Schedule 3.1(m) of the Disclosure Letter, all issued and outstanding
shares of capital stock of the Company were, and of Newco will be,
duly authorized, validly issued, fully paid, and nonassessable. There
are no preemptive rights in respect of any capital stock of the
Company or Newco.
(N) ISSUANCE OF THE SHARES. Upon the Purchaser's
payment for the Shares and Newco's delivery to the Purchaser of the
certificates representing such Shares, such Shares shall be duly
authorized, validly issued, fully paid, and nonassessable, and not
issued in violation of any preemptive rights.
(O) EXCHANGE ACT REPORTS. Since June 30, 1994,
the Company has filed with the Securities and Exchange Commission (the
"Commission") all required forms, reports, and registration statements,
along with any required amendments (the "SEC Filings"). The Company
has made available to the Purchaser all SEC Filings. As of their
respective dates: (i) each SEC Filing, including the financial
statements contained in such filings, was true and complete in all
material respects, (ii) each SEC Filing, including the financial
statements contained in such filing, complied in all material respects
with the Securities Act and the Securities and Exchange Act of 1934,
as amended (the "Exchange Act"), as applicable, and the rules and
regulations promulgated under such acts, and (iii) each SEC Filing did
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such filing or necessary to
make the statements in such filing, in light of the circumstances
under which they were made, not misleading.
(P) FINANCIAL STATEMENTS.
(I) AUDITED FINANCIAL STATEMENTS.
The Company has delivered to the Purchaser the
consolidated balance sheets of the Company as of June
30, 1994 and 1995, and the respective related
consolidated statements of operations, cash flows,
and shareholders' equity for the years then ended
(collectively, the "Audited Financial Statements").
The Audited Financial Statements have been examined
by the Company's auditors, whose report is attached
to such financial statements. All Audited Financial
Statements have been prepared in conformity with
generally accepted accounting principles ("GAAP")
applied on a consistent basis (except for changes, if
any, disclosed in such financial statements). The
Audited Financial Statements present fairly, in all
material respects, the consolidated financial
condition and results of operations of the Company.
Except as described in Schedule 3.1(p) of the
Disclosure Letter: (A) the Company has not changed
any of its significant accounting policies or
procedures since June 30, 1995, and (B) the Company
has not received any annual management letters from
its auditors since June 30, 1994.
(II) UNAUDITED INTERIM FINANCIAL
STATEMENTS. The Company has delivered to the
Purchaser a consolidated balance sheet of the Company
as of September 30, 1995, and the related statements
of operations, cash flows, and shareholders' equity
for the three-month period then ended (the "Interim
Financial Statements," and collectively with the
Audited Financial Statements, the "Financial
Statements"). The Interim Financial Statements have
been prepared in conformity with GAAP applied on a
consistent basis except for changes, if any,
disclosed
STOCK PURCHASE AGREEMENT
10
<PAGE> 19
in such financial statements. The statements of
operations and cash flows present fairly the
consolidated results of operations and cash flows of
the Company for the period covered by the Interim
Financial Statements, and the balance sheet presents
fairly in all material respects the consolidated
financial condition of the Company as of its date.
The Interim Financial Statements reflect all
adjustments (which consist only of normal recurring
adjustments and include estimated provisions for
year-end adjustments) necessary for a fair
presentation. As of September 30, 1995, the Company
and its subsidiaries did not have any material
liability (actual or contingent) that, in accordance
with GAAP applied on a consistent basis, should have
been shown or reflected in the Interim Financial
Statements but was not, except for the omission of
notes with respect to contingent liabilities that in
the aggregate did not materially exceed contingent
liabilities disclosed in the most recent of the
Audited Financial Statements and that were
substantially the same type as so reported.
(III) NO MATERIAL ADVERSE CHANGES.
Except as described in Schedule 3.1(p) of the
Disclosure Letter, contemplated by this Agreement, or
disclosed in any SEC Filings filed prior to the date
of this Agreement, since September 30, 1995, the
Company and Newco have conducted their respective
businesses only in the ordinary course and in a
manner consistent with the past practice of the
Company and, whether or not in the ordinary course of
business, there has not been: (A) any change in or
event affecting the business of the Company or Newco
that has had a material adverse effect on such
business or any materially adverse change or trend in
the business, financial condition, assets, results of
operations, or prospects of the Company or Newco, (B)
any condition or action that would be proscribed by
(or require consent under) Section 4.3 had it
occurred after the date of this Agreement, or (C) any
casualty, loss, damage, or destruction of any real
property of the Company or Newco that has involved or
may involve a loss to the Company or Newco of more
than $100,000 in the aggregate.
(IV) NO OTHER LIABILITIES OR
CONTINGENCIES. Except as described in Schedule
3.1(p) of the Disclosure Letter, neither the Company
nor Newco has any material liability of any nature,
whether actual or contingent, whether due or to
become due, or whether probable of assertion or not,
except liabilities that: (A) are reflected or
disclosed in the most recent Interim Financial
Statements, or (B) were incurred after September 30,
1995 in the ordinary course of business in a manner
consistent with past practice and are not material in
amount.
(Q) MATERIAL CONTRACTS. Schedule 3.1(q) of the
Disclosure Letter sets forth an accurate list of all material
Contracts of the Company and Newco not described in any other
schedules of the Disclosure Letter (collectively with the material
Contracts of the Company described in such other schedules, the
"Material Contracts"). The Company and Newco have made available to
the Purchaser complete and correct copies of all Material Contracts,
all of which are in full force and effect. Except as set forth in
Schedule 3.1(q) of the Disclosure Letter or such other schedule of the
Disclosure Letter that describes a Material Contract, the Company and
Newco are not in violation of or default in any material respect (nor
is there any waiver in effect of any event that would constitute a
default but for such waiver) under, and no event has occurred that
(with notice or the lapse of time or both) would constitute a
violation of or default under, any Material Contract. In addition,
except as described in Schedule 3.1(q) of the Disclosure Letter or
such other schedule of the Disclosure Letter
STOCK PURCHASE AGREEMENT
11
<PAGE> 20
that describes a Material Contract, to the knowledge of the Company
and Newco, no other party to any Material Contract is in breach of the
terms, provisions, and conditions of such Material Contract and no
other party to any such contract has notified the Company or Newco
that it intends to breach, terminate, or modify such contract.
(R) INVESTMENTS. Schedule 3.1(r) of the
Disclosure Letter describes each material investment of the Company in
notes receivable and foreclosed real estate.
(S) ENVIRONMENTAL MATTERS. Except as described
in Schedule 3.1(s) of the Disclosure Letter (which the Company and
Newco may update as of the Closing Date for matters occurring since
the date of this Agreement), to the current actual knowledge of the
Company's current trustees and officers without any investigation: (i)
no Environmental Claim has been made and no Environmental
Noncompliance has occurred that could reasonably be expected to have a
material adverse effect upon the Company's business, financial
condition, assets, results of operations, or prospects, (ii) the
Company has substantially complied with all Environmental Laws and has
not been named as a potentially responsible party under any
Environmental Laws, and (iii) the Company is not subject to any
liability in connection with any release of any Hazardous Materials
into the environment or subject to any reclamation or remediation
requirements under any Environmental Laws, which liability or
requirement would not, individually or in the aggregate, have a
material adverse effect on the business, financial condition, results
of operations, or prospects of the Company or Newco.
(T) LITIGATION. Except as described in Schedule
3.1(t) of the Disclosure Letter (which the Company and Newco may
update as of the Closing Date for matters occurring since the date of
this Agreement), no Lawsuit exists, or to the knowledge of the Company
or Newco is threatened, involving the Company or Newco that could
either individually, or in the aggregate with all other Lawsuits or
threatened Lawsuits, have a material adverse effect upon the business,
financial condition, assets, results of operations, or prospects of
the Company or Newco.
(U) TAXES. Except as described in Schedule
3.1(u) of the Disclosure Letter (which the Company and Newco may
update as of the Closing Date with respect to the items described in
Subparagraphs (II), (III), and (IV) for matters occurring since the
date of this Agreement):
(I) TAX RETURNS. The Company has
timely filed all Tax reports and returns in
connection with its assets, business, and employees
and has timely paid and discharged all Tax
obligations shown on such reports and returns. Such
Tax reports and returns are accurate and complete in
all material respects and correctly computed the Tax
obligation to which each such report or return
pertained. The Company has delivered to the
Purchaser correct and complete copies of each Tax
report and return that the Company has filed during
the three years immediately preceding the date of
this Agreement and copies of all federal income tax
returns for which the Company reported an NOL for
which an NOL carryforward still exists.
(II) NO NOTICES. The Company has
not received any notice of any proposed or
outstanding Tax deficiency against or allocable to
it, and the Company has not executed any extension
agreement or waiver of any statute of limitations
with respect to the assessment or collection of any
Tax.
STOCK PURCHASE AGREEMENT
12
<PAGE> 21
(III) NO AUDITS. Neither the
Internal Revenue Service nor any other authority has
contacted the Company concerning a future audit or
examination of the Company's Tax reports and returns
and no such audit or examination has occurred during
the three years immediately preceding the date of
this Agreement or is in the process at the date of
this Agreement.
(IV) NO TAX LIENS. No Tax liens
exist with respect to any assets of the Company or
any Subsidiary.
(V) NOL CARRYFORWARDS. The Company
has, and by the Closing Date Newco will succeed to,
NOL carryforwards in excess of $200,000,000 available
for federal income and alternative minimum tax
purposes that are not limited by Section 382 of the
Code.
(VI) NO IRS AGREEMENTS. To the
knowledge of the Company's current trustees and
officers, the Company has not received a tax ruling
or entered into a closing agreement with the Internal
Revenue Service that would have any continuing effect
after the Closing.
(V) SUBSIDIARIES. Schedule 3.1(v) of the
Disclosure Letter lists all subsidiaries of the Company and Persons in
which the Company holds an equity interest (the "Subsidiaries").
(W) NO BROKER. Except as described in Schedule
3.1(w) of the Disclosure Letter, the Company does not have any
obligation or liability to any broker, finder, or other Person for any
broker or similar services with respect to the sale of the Shares to
the Purchaser.
SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER. The Purchaser represents and warrants to the Company and Newco as
follows:
(A) ORGANIZATION. The Purchaser is a limited
partnership validly existing under the laws of the State of Texas.
(B) POWER AND AUTHORITY. The Purchaser possesses
the power and authority to execute, deliver, and perform this
Agreement, subject to obtaining any approval, authorization, consent,
or waiver or giving any notice. The Purchaser also possesses the
power and authority to own its properties and carry on its business as
presently conducted.
(C) EXECUTION, DELIVERY, AND ENFORCEABILITY. The
Purchaser has duly authorized, executed, and delivered this Agreement,
and this Agreement constitutes a valid, legal, and binding obligation
of the Purchaser, enforceable against the Purchaser in accordance with
its terms, subject to any Law Affecting Creditors' Rights.
(D) CONSENTS. The execution and delivery of this
Agreement by the Purchaser and the consummation of the transactions
contemplated by this Agreement by the Purchaser do not require the
Purchaser to obtain, give, or make any approval, consent, filing,
registration, notice, or take any other action, by or with any third
party or governmental entity other than the notification report
required under the Hart-Scott- Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), except where the failure to obtain,
give, or make such approval, consent, filing, registration, notice, or
other action would not, individually or in the aggregate, have a
material adverse effect on the business, financial condition, assets,
results of operations, or
STOCK PURCHASE AGREEMENT
13
<PAGE> 22
prospects of the Purchaser, or on the Purchaser's ability to
consummate the transactions contemplated by this Agreement.
(E) CONFLICTS. The Purchaser's execution,
delivery, and performance of this Agreement will not conflict with,
constitute a breach or violation of, result in a Lien against, or give
rise to any default or right of acceleration, cancellation, or
termination with respect to any arrangement or Contract to which the
Purchaser is a party or by which any of the Purchaser's assets are
bound (or give rise to an event that with notice, lapse of time, or
both, would result in such a conflict, breach, violation, Lien,
default, or right), including the Agreement of Limited Partnership of
the Purchaser, except where the conflict, breach, violation, Lien,
default, or right of acceleration, cancellation, or termination would
not, individually or in the aggregate, have a material adverse effect
on the business, financial condition, assets, results of operations,
or prospects of the Purchaser, or on the Purchaser's ability to
consummate the transactions contemplated by this Agreement.
(F) COMPLIANCE WITH APPLICABLE LAWS. The
Purchaser has complied with all Applicable Laws the violation of which
would, individually or in the aggregate, have a material adverse
effect on the business, financial condition, assets, results of
operations, or prospects of the Purchaser, and its execution,
delivery, and performance of this Agreement will not violate any
Applicable Laws. In addition, at the date of this Agreement, no
Lawsuit by or before any court or other governmental entity exists, or
to the knowledge of the Purchaser is threatened, that would prohibit
the Purchaser from consummating the transactions contemplated by this
Agreement or seek damages with respect to any such transaction.
(G) FUNDING OF THE PURCHASE. The Purchaser
possesses adequate cash reserves and financing commitments to fund the
purchase of the Shares. To the extent that the Purchaser will finance
such purchase, such financing will not violate the margin rules of the
Federal Reserve Board, specifically Regulations G, T, U, and X.
(H) SOPHISTICATED INVESTOR.
(I) ACCREDITED INVESTOR. The
Purchaser is an "accredited investor" as defined in
Rule 501(a) under the Securities Act, which has not
been formed for the purpose of purchasing the Shares.
(II) INVESTMENT PURPOSE. The
Purchaser is acquiring the Shares for investment
purposes and not with a view to making a distribution
of such Shares.
(III) INVESTMENT EXPERIENCE. The
Purchaser has sufficient knowledge and experience to
enable it to evaluate the merits and risks of an
investment in the Shares.
(IV) FINANCIAL DISCLOSURE. Without
limiting the Purchaser's right to terminate this
Agreement pursuant to Section 6.1(b), the Purchaser
has received all of the financial and other
information of the Company that the Purchaser
considers necessary to evaluate an investment in the
Shares.
(V) ABILITY TO BEAR LOSS. The
Purchaser has the ability to bear any loss with
respect to its investment in the Shares.
(VI) PLACE OF BUSINESS. The
principal place of business of the Purchaser is
located in the State of Texas.
STOCK PURCHASE AGREEMENT
14
<PAGE> 23
(I) NO BROKER. The Purchaser does not have any
obligation or liability to any broker, finder, or other Person for any
broker or similar services with respect to the sale of the Shares to
the Purchaser.
IV. COVENANTS
SECTION 4.1 REASONABLE EFFORTS TO CLOSE. Subject to the
terms and conditions of this Agreement, the Company, Newco, and the Purchaser
shall each use commercially reasonable efforts to take promptly, or cause to be
taken promptly, all actions and to do promptly, or cause to be done promptly,
all things necessary, proper, or advisable under Applicable Law to consummate
and make effective the transactions contemplated by this Agreement as soon as
practicable, including using efforts to obtain all necessary actions or
non-actions, extensions, waivers, consents, and approvals from all applicable
governmental entities, effecting all necessary registrations, applications, and
filings (including any applicable filings under the HSR Act and state
securities laws), and obtaining any required contractual consents and
regulatory approvals.
SECTION 4.2 ACCESS TO THE COMPANY. From the date of this
Agreement through the Closing Date, the Company and Newco shall permit the
Purchaser and its advisors and representatives reasonable access to the
Company's and Newco's assets and business, including their books and records.
In addition, during this period the Company and Newco shall cause their
officers, employees, advisors, and representatives to furnish promptly to the
Purchaser and its advisors and representatives such financial and operating
information as such Persons may reasonably request, including copies of any
requested documents.
SECTION 4.3 OPERATION OF THE COMPANY AND NEWCO PENDING
THE CLOSING. Except as otherwise contemplated under this Agreement or with the
Purchaser's consent, from the date of this Agreement through the Closing Date,
the Company and Newco shall:
(A) REPRESENTATIONS, WARRANTIES, AND COVENANTS.
Use commercially reasonable efforts to: (i) operate and maintain their
assets and businesses in such a manner so that their representations
and warranties set forth in this Agreement shall continue to be true
and correct at all times prior to the Closing Date as if made on and
as of such times, (ii) refrain from taking or failing to take any
action that would result in any of the Company's or Newco's
representations and warranties set forth in this Agreement not being
true and correct at all times prior to the Closing Date as if made on
and as of such times, and (iii) satisfy all conditions to the Closing
within their control;
(B) OPERATE THE BUSINESS IN THE ORDINARY COURSE.
Operate their businesses in the ordinary course consistent with the
past practices of the Company and this Agreement and in substantial
compliance with all Applicable Laws;
(C) NO MATERIAL ADVERSE CHANGE. Not cause any
Material Adverse Change to occur to them;
(D) NO TRANSACTIONS IN SHARES. Refrain from
issuing, purchasing, redeeming, or otherwise effecting any
transactions with respect to any equity securities in the Company or
Newco, or any right to acquire any equity securities from the Company
or Newco;
(E) NO DIVIDENDS. Refrain from declaring,
issuing, making, or paying any dividend or other distribution of
assets, whether consisting of money, other tangible or intangible
personal property, real property, securities, or any other thing of
value, or splitting, combining, dividending, distributing, or
reclassifying any shares of their capital stock;
STOCK PURCHASE AGREEMENT
15
<PAGE> 24
(F) NO BORROWING. Refrain from borrowing money
or assuming or guaranteeing the indebtedness of any other Person;
(G) NO LIENS. Refrain from granting any Liens;
(H) NO CHANGES TO CONTRACTS. Refrain from
amending, modifying, or terminating any Material Contracts, or
entering into any new arrangement or Contract that could cause the
Company or Newco to pay more than $50,000;
(I) REAL PROPERTY. Refrain from purchasing any
real property;
(J) EXTRAORDINARY CORPORATE TRANSACTIONS.
Refrain from merging, selling substantially all of their assets,
reorganizing, or entering into any Contract involving any other form
of business combination or share exchange, or liquidating, winding up,
dissolving (or suffering any liquidation or dissolution), or adopting
any plan of liquidation or dissolution;
(K) BOARD COMPOSITION. Refrain from changing the
number of positions on the Company's Board of Trustees or Newco's
Board of Directors;
(L) AMENDMENTS. Refrain from amending the
Company's Declaration of Trust and Bylaws and the Newco's Certificate
of Incorporation and Bylaws;
(M) PROPERTIES. Refrain from selling, leasing,
transferring, or otherwise disposing of, other than the lease of any
property or space in the ordinary course of business consistent with
the past practices of the Company, any of the Company's or Newco's
properties, provided that the Company and Newco may sell any property
for consideration in excess of the net carrying value of such property
in their accounting records;
(N) RIGHTS. Refrain from waiving any Claim or
right of value of the Company or Newco;
(O) COMPENSATION. Refrain from: (i) increasing
the compensation or fringe benefits (including severance benefits)
payable or to become payable by the Company or Newco to any employee,
officer, director, trustee, partner, consultant, or independent
contractor as salary or wages or under any bonus, insurance, welfare,
severance, deferred compensation, pension, retirement, profit sharing,
stock option (including the granting of any stock option or stock
appreciation right or performance or restricted stock award), stock
purchase, or other employee benefit plan, or (ii) entering into,
adopting, amending in any material respect (except as required by
law), or terminating any Company Benefit Plan or any agreement,
arrangement, plan, or policy between the Company or Newco, as
applicable, and one or more of its directors, trustees, partners,
officers, employees, or independent contractors, provided that the
Purchaser shall not unreasonably withhold its consent to any new
severance arrangements for Robert Ted Enloe III after considering
whether such new arrangements have an adverse effect on the
shareholders' equity shown in the balance sheet contained in the
Interim Financial Statements;
(P) ACCOUNTING. Refrain from making any change
in any significant accounting principles or practices used by the
Company or Newco, except as required by the Commission;
STOCK PURCHASE AGREEMENT
16
<PAGE> 25
(Q) ACQUISITIONS. Refrain from acquiring any
Person (or any interest in any Person) or any material amount of
assets, or making any loans, advances, or capital contributions to, or
investments in, any Person;
(R) LOANS TO AFFILIATES. Refrain from making,
changing, or forgiving any loan between the Company or Newco and any
of their Affiliates, directors, employees, officers, related parties,
trustees, or shareholders, provided that the Purchaser shall not
unreasonably withhold its consent to the changing or forgiving of any
such loan to Robert Ted Enloe III after considering whether such
action has an adverse effect on the shareholders' equity shown in the
balance sheet contained in the Interim Financial Statements;
(S) CAPITAL EXPENDITURES. Refrain from making
capital expenditures in excess of an aggregate amount of $25,000; and
(T) NO AGREEMENTS CONCERNING THE FOREGOING.
Refrain from entering into any agreement to take any of the actions
described in Paragraphs (a) through (s) above.
SECTION 4.4 CHARTER AND BYLAWS. The Company, Newco, and
the Purchaser acknowledge that Newco's Certificate of Incorporation shall
include provisions concerning: (a) the classification of Newco's Board of
Directors into three classes and (b) the restrictions on the transfer of equity
securities in Newco to preserve certain tax attributes. The Company shall
deliver to the Purchaser a form of proposed Certificate of Incorporation and
Bylaws for Newco, which Certificate of Incorporation and Bylaws shall be
reasonably acceptable to the Purchaser, prior to the initial filing of the
Proxy Statement/Prospectus with the Commission, along with an opinion of
Morris, Nichols, Arsht & Tunnell or such other Delaware counsel as is
acceptable to the Purchaser, in the form and substance satisfactorily to the
Purchaser in its reasonable discretion, that the transfer restrictions
contained in such Certificate of Incorporation are enforceable (the "Transfer
Restriction Opinion").
SECTION 4.5 SHAREHOLDER MEETING. In accordance with the
Declaration of Trust and Applicable Law, the Company shall hold a special
meeting of its shareholders to vote upon the Proposal, the sale of the Shares
to the Purchaser, and such other matters as the Company considers necessary or
advisable in connection therewith as promptly as practicable. Except to the
extent legally required for the discharge of its fiduciary duties as advised by
counsel, the Board of Trustees of the Company shall recommend at the date of
the mailing of the Proxy Statement/Prospectus, and at all times through the
conclusion of such special meeting of shareholders (and will not withdraw such
recommendation), that the shareholders of the Company vote in favor of and
approve the Proposal, the sale of the Shares to the Purchaser, and such other
matters contemplated by this Agreement that require shareholder approval.
SECTION 4.6 PROXY STATEMENT/PROSPECTUS. As soon as
practicable after the execution and delivery of this Agreement, the Company
shall prepare the Proxy Statement/ Prospectus for use in connection with the
special meeting of its shareholders with respect to their vote on the Proposal
and the issuance of the Shares (the "Proxy Statement/Prospectus"), file the
Proxy Statement/Prospectus with the Commission, respond to comments of the
staff of the Commission, and promptly thereafter mail the Proxy
Statement/Prospectus to all holders of record (as of the applicable record
date) of shares of beneficial interest in the Company. The Company represents
and covenants that the Proxy Statement/Prospectus and any amendment or
supplement thereto, at the date of mailing to shareholders of the Company and
the date of such meeting of the Company's shareholders, will be in compliance
with all relevant rules and regulations of the Commission in all material
respects and will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated or necessary in order to make
the statements therein, in light of the circumstances under which they were
STOCK PURCHASE AGREEMENT
17
<PAGE> 26
made, not misleading, provided that the Company makes no representations or
covenants with respect to information provided to the Company in writing by the
Purchaser specifically for inclusion in the Proxy Statement/Prospectus. The
Company and the Purchaser shall cooperate with each other in the preparation
and filing of the Proxy Statement/Prospectus.
SECTION 4.7 DELAWARE SECTION 203. The Company shall
cause Newco to take such actions as are necessary to make the provisions of
Section 203 of the Delaware General Corporation Law inapplicable to the
Purchaser.
SECTION 4.8 STOCK EXCHANGE APPLICATION. As soon as
practicable after the execution and delivery of this Agreement, the Company
shall cause Newco to apply for a listing on the New York Stock Exchange. If
such application is denied, the Company shall then cause Newco to apply for a
listing on either the American Stock Exchange or the National Market of the
National Association of Securities Dealers Automated Quotation System.
SECTION 4.9 FAIRNESS OPINION. The Company shall use
commercially reasonable efforts to cause Bear, Stearns & Co. Inc. (the
"Investment Banker") to deliver its written opinion that the sale of the Shares
to the Purchaser is fair to the Company's shareholders from a financial point
of view (the "Fairness Opinion") to the Company and the Purchaser on or before
January 26, 1996. In addition, the Company and the Purchaser shall each use
commercially reasonable efforts to provide the Investment Banker with any
information concerning it that the Investment Banker reasonably requests to
prepare such opinion.
SECTION 4.10 NO SHOPPING. The Company and Newco and their
respective directors, officers, and trustees shall not, and they shall direct
and use their best efforts to cause the Company's and Newco's employees, agents
and representatives (including any investment banker, lawyer, or accountant
retained by them) not to, directly or indirectly, initiate, solicit, encourage,
or otherwise facilitate any inquiries or the making of any proposal or offer
(including any proposal or offer to the shareholders of the Company or Newco)
with respect to a merger, acquisition, consolidation, or similar transaction
involving (other than the Proposal), or any purchase of all or a significant
portion of the assets or equity securities of, the Company or Newco (any such
proposal or offer being referred to as an "Alternative Proposal") or, except to
the extent legally required for the discharge by the Company's Board of
Trustees or Newco's Board of Directors of their respective fiduciary duties as
advised by such board's counsel with respect to an unsolicited proposal or
offer from a third party, engage in any negotiations concerning or provide any
confidential information or data to, or have any discussions with, any Person
relating to an Alternative Proposal, or otherwise facilitate any effort or
attempt to make or implement an Alternative Proposal. The Company will
immediately cease and cause to be terminated any existing activities,
discussions, or negotiations with any Persons (other than the Purchaser)
conducted heretofore with respect to any of the foregoing. The Company will
take the necessary steps to inform promptly the appropriate Persons referred to
in the first sentence hereof of the obligations undertaken in this section.
The Company and Newco hereby agree to notify the Purchaser immediately if any
inquiries, proposals, or offers are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated or continued with the Company or Newco. Prior to furnishing
information to or entering into discussions or negotiations with any Person
concerning an Alternative Proposal (if otherwise so permitted pursuant to the
first sentence of this section), the Company or Newco shall receive from such
Person an executed confidentiality and standstill agreement substantially in
the form of such agreement that the Purchaser entered into with the Company,
unless requiring such confidentiality and standstill agreement would not
discharge the fiduciary duties of the Company's Board of Trustees or Newco's
Board of Directors as advised by such board's counsel. Nothing contained in
this section shall prohibit the Company or Newco from complying with Rule 14e-2
under the Exchange Act with regard to an Alternative Proposal. The Company or
Newco may only
STOCK PURCHASE AGREEMENT
18
<PAGE> 27
enter into an agreement concerning an Alternative Proposal with another Person
if prior to entering such agreement it terminates this Agreement pursuant to
Section 6.1(e).
SECTION 4.11 REGISTRATION RIGHTS. Prior to the Closing,
the Company shall cause: (a) Newco to enter into the Registration Rights
Agreement attached as Exhibit B to this Agreement (the "Registration Rights
Agreement"), and (b) Newco, Robert Ted Enloe III, and the Enloe Descendants'
Trust to enter into the Agreement Clarifying Registration Rights attached as
Exhibit C to this Agreement (the "Clarification Agreement"). Prior to the
Closing, the Purchaser shall enter into the Clarification Agreement.
SECTION 4.12 INSURANCE. The Company will cause Newco, as
of the Closing Date, to have obtained a directors' and officers' insurance
policy reasonably acceptable to the Purchaser in a coverage amount of not less
than $10,000,000.
SECTION 4.13 NO DISCLOSURE OF CONFIDENTIAL INFORMATION.
The Purchaser shall not disclose any Confidential Information at any time to
any Person. This section, however, shall not preclude the Purchaser from:
(A) ADVISORS. Disclosing information to its
accountants, lawyers, and other professional advisors, provided that
the Purchaser shall be deemed to have breached this section if any
such accountant, lawyer, or other professional advisor discloses such
information to any other Person and such information is not excluded
from the Purchaser's confidentiality obligation pursuant to Paragraph
(B), (C), or (D) below;
(B) PUBLIC INFORMATION. Disclosing information
generally available to the public other than by breach of this
section;
(C) REQUIRED BY LAW. Disclosing information
required by law or court order after promptly notifying the Company of
the requirement to disclose such information; or
(D) TAX RETURNS. Disclosing information required
in any Tax report or return.
SECTION 4.14 NO OPTIONS. Until after the third
anniversary of the Closing Date, Newco shall not grant or issue any options,
rights, or warrants to acquire any equity securities in Newco to Mr. Gerald J.
Ford or any of his Affiliates or family members. In addition, during this
period Newco shall not pay any salary or other compensation to any such Person
or permit any subsidiary or other entity under the control of Newco to pay any
such salary or compensation. In addition, until after such third anniversary,
Newco may only grant options, rights, or warrants to acquire equity securities
in Newco to its directors, officers, and employees after the Compensation
Committee of Newco's Board of Directors (or if such a committee does not exist,
the independent directors of Newco) approve such grant. The foregoing
prohibitions, however, shall not prevent Newco from granting stock options to
the management and other employees of any entity or business that Newco
acquires during the three year period.
SECTION 4.15 NO WAIVER OF TRANSFER RESTRICTIONS. From the
date of this Agreement until the Company reorganizes into a Delaware
corporation, the Company shall not waive any of the transfer restrictions set
forth in Section 5.7 of the Declaration of Trust. In addition, from the
reorganization of the Company into Newco until the Closing, Newco shall also
not waive the transfer restrictions to be contained in its Certificate of
Incorporation.
SECTION 4.16 PRESS RELEASE. Promptly after the execution
and delivery of this Agreement, the Company may issue a press release
announcing the proposed sale of Shares to
STOCK PURCHASE AGREEMENT
19
<PAGE> 28
the Purchaser. Except as required by Applicable Law or the New York Stock
Exchange regulations, such press release and any other public announcements or
filings concerning the sale of the Shares to the Purchaser shall be in a form
mutually agreed upon among the Company, Newco, and the Purchaser.
SECTION 4.17 REASONABLE EFFORTS. The Purchaser shall use
commercially reasonable efforts to: (a) cause its representations and
warranties set forth in this Agreement to be true and correct on the Closing
Date, and (b) satisfy all conditions to the Closing within its control.
SECTION 4.18 NOTIFICATION OF CERTAIN MATTERS. The Company
and Newco shall give prompt notice to the Purchaser, and the Purchaser shall
give prompt notice to the Company and Newco, of: (a) the occurrence, or
failure to occur, of any event that causes any representation or warranty
contained in this Agreement to be untrue or inaccurate at any time from the
date of this Agreement to the Closing Date, and (b) any failure of the Company,
Newco, or the Purchaser to comply with or satisfy, in any material respect, any
covenant or obligation to be complied with or satisfied by it under this
Agreement. The Company and Newco shall give prompt notice to the Purchaser,
and the Purchaser shall give prompt notice to the Company and Newco, of any
event of which such Person obtains knowledge that has had, or might reasonably
be expected to have, a material adverse effect on such Person's business,
financial condition, assets, results of operations, or prospects or which if
known as of the date of this Agreement or the Closing, would have been required
to be disclosed.
SECTION 4.19 NEWCO MATTERS. At or before the Closing, if
the conditions set forth in Section 2.2 have been satisfied or waived, the
Company shall: (a) cause the appointment of two designees of the Purchaser as
directors of Newco, one of such designees to serve until the second annual
meeting of Newco's shareholders following such appointment, and one of such
designees to serve until the third annual meeting of Newco's shareholders
following such appointment, (b) cause Newco to enter into indemnity agreements
in form and substance reasonably satisfactory to the Purchaser with the
Purchaser's two designees for director, (c) cause Newco's Certificate of
Incorporation and Bylaws to be in the form referred to in Section 4.4 of this
Agreement, (d) transfer all of the assets and liabilities of the Company to
Newco pursuant to Section 8.2 of the Company's Declaration of Trust, as
amended, (e) distribute the Common Stock of Newco that the Company receives in
exchange for its assets and liabilities to the Company's shareholders, and (f)
cause Newco to assume the Company's obligations under this Agreement.
Immediately after the Closing, Newco's Board of Directors shall consist of the
Purchaser's two designees and the three trustees of the Company immediately
before the Closing, thereafter to serve in accordance with Applicable Law and
Newco's Certificate of Incorporation and Bylaws.
V. INDEMNIFICATION
SECTION 5.1 INDEMNIFICATION OF THE PURCHASER. The
Company and Newco shall indemnify, defend, reimburse, and hold the Purchaser
and its Affiliates, agents, employees, officers, and partners (collectively,
the "Purchaser Indemnitees") harmless from any and all Claims directly or
indirectly related or arising with respect to:
(A) BREACHES OF REPRESENTATIONS AND WARRANTIES.
Any inaccuracy in any representation or warranty of the Company or
Newco set forth in this Agreement; or
(B) BREACHES OF COVENANTS. Any failure in any
material respect to perform or observe any covenant or agreement to be
performed by the Company or Newco set forth in this Agreement.
STOCK PURCHASE AGREEMENT
20
<PAGE> 29
SECTION 5.2 INDEMNIFICATION PROCEDURE. The
indemnification obligations under this Agreement shall be subject to the
following procedures:
(A) NOTICE. Any Purchaser Indemnitee seeking
indemnification with respect to any Claim shall notify the Company and
Newco of such Claim as promptly as possible.
(B) DEFENSE OF CLAIM. If any Claim is asserted
by any third party against any Purchaser Indemnitee, the Company and
Newco shall have the right, unless otherwise precluded by Applicable
Law, to conduct and control the defense, compromise, or settlement of
such Claim or threatened Claim in respect of matters embraced by their
indemnity obligations in this Article V. The Purchaser Indemnitee
shall have the right to employ counsel separate from counsel employed
by the Company and Newco in connection with any such Claim or
threatened Claim and to participate in the defense of such Claim, but
the fees and expenses of such counsel employed by the Purchaser
Indemnitee shall be at its sole expense unless: (i) the Company or
Newco shall have elected not, or after reasonable written notice shall
have failed, to assume the defense of such Claim, (ii) the engagement
of such counsel has been specifically authorized by the Company or
Newco in writing, or (iii) the parties to any such Claim or threatened
Claim (including any impleaded parties) include both the Company or
Newco and the Purchaser Indemnitee and the Purchaser Indemnitee shall
have been advised in writing by its counsel that there may be one or
more defenses available to the Purchaser Indemnitee that are
unavailable to the Company and Newco or legal conflicts of interest
pursuant to applicable rules of professional conduct between the
Company and Newco and the Purchaser Indemnitee. In the case of the
events referred to in Clauses (i), (ii), or (iii), the fees and
expenses of such counsel engaged by the Purchaser Indemnitee shall be
at the expense of the Company and Newco. The Company and Newco shall
not, without the written consent of the Purchaser Indemnitee, settle
or compromise any Claim or threatened Claim, or consent to the entry
of any judgment, that does not include as an unconditional term the
giving by the claimant or the plaintiff to the Purchaser Indemnitee a
release from all liability in respect of such Claim or threatened
Claim. The Purchaser Indemnitee may not settle or compromise any
Claim or threatened Claim without the written consent of the Company
and Newco.
(C) SURVIVAL. The indemnity obligations set
forth in this Article V shall survive the Closing or termination of
this Agreement, although any such indemnity obligation with respect to
a breach of a representation or warranty shall terminate at the
expiration of such representation or warranty as set forth in Section
8.19.
SECTION 5.3 NON-EXCLUSIVITY OF REMEDIES. The indemnity
rights provided in this Article V shall not be the exclusive remedy available
under this Agreement.
VI. TERMINATION
SECTION 6.1 TERMINATION OF THIS AGREEMENT. The Company,
Newco, and the Purchaser may terminate this Agreement under the circumstances
set forth below at any time prior to the Closing, without the approval of their
respective boards of directors/trustees, partners, or shareholders:
(A) CONSENT. The Company, Newco, and the
Purchaser may agree in writing to terminate this Agreement.
STOCK PURCHASE AGREEMENT
21
<PAGE> 30
(B) PURCHASER'S DISCRETION. The Purchaser may
terminate this Agreement in its sole discretion by written notice
delivered to the Company on or before 5:00 p.m., Central Time, on
January 19, 1996.
(C) DOWN PAYMENT. The Company or Newco may
terminate this Agreement by written notice to the Purchaser after 5:00
p.m., Central Time, on January 19, 1996, if the Purchaser has not
deposited the Down Payment with the Escrow Agent at the time of such
notice.
(D) FAIRNESS OPINION. The Company, Newco, or the
Purchaser may terminate this Agreement by written notice to the others
at anytime after January 26, 1996, if the Investment Banker has not
delivered the Fairness Opinion as of the time of such notice.
(E) FIDUCIARY OUT. The Company or Newco may
terminate this Agreement by written notice to the Purchaser if: (i)
the Company or Newco is prepared to enter into a binding agreement
relating to an Alternative Proposal, (ii) the Company or Newco gives
the Purchaser notice of the terms of such Alternative Proposal at
least five days prior to such termination, (iii) if such Alternative
Proposal involves the purchase of shares of beneficial interest in the
Company or shares of Common Stock in Newco substantially equal to the
number of Shares, the per share purchase price under such Alternative
Proposal exceeds $2.85 and the Alternative Proposal is on
substantially the same terms and conditions as this Agreement, (iv)
the Board of Trustees of the Company or the Board of Directors of
Newco has concluded, based upon advice of legal counsel with input
from an investment banker, that the failure to enter into a binding
agreement relating to an Alternative Proposal might reasonably be
expected to subject the Company's trustees or Newco's directors, as
the case may be, to liability for breach of their fiduciary duties to
the Company's or Newco's shareholders, and (v) the fee referred to in
Section 6.2(c) of this Agreement is received by the Purchaser on or
before such termination.
(F) SHAREHOLDER VOTE. The Company, Newco, or the
Purchaser may terminate this Agreement if at the special meeting of
the Company's shareholders referred to in Section 4.5, the
shareholders fail to approve in accordance with the Company's
Declaration of Trust the Proposal and the sale of the Shares to the
Purchaser, and such meeting is ended without any adjournment to
another time.
(G) BREACH BY THE PURCHASER. The Company or
Newco may terminate this Agreement by written notice to the Purchaser
if: (i) the representations and warranties of the Purchaser set forth
in this Agreement were incorrect or incomplete as of the date of this
Agreement or would be incorrect or incomplete as of the Closing, or
(ii) the Purchaser fails to perform in any material respect the
covenants and obligations that it is required to perform under this
Agreement before the Closing, provided that neither the Company nor
Newco may terminate this Agreement pursuant to this paragraph if the
Purchaser could terminate this Agreement pursuant to Paragraph (h)
below.
(H) BREACH BY THE COMPANY OR NEWCO. The
Purchaser may terminate this Agreement by written notice to the
Company and Newco if: (i) the representations and warranties of the
Company and Newco set forth in this Agreement were incorrect or
incomplete as of the date of this Agreement or would be incorrect or
incomplete as of the Closing, or (ii) the Company or Newco fails to
perform in any material respect the covenants and obligations that it
is required to perform under this Agreement before the Closing,
provided that the Purchaser may not terminate this Agreement pursuant
to this paragraph if either the Company or Newco could terminate this
Agreement pursuant to Paragraph (g) above.
STOCK PURCHASE AGREEMENT
22
<PAGE> 31
(I) OUTSIDE DATE. The Company, Newco, or the
Purchaser may terminate this Agreement by written notice to the others
if the Closing has not occurred on or before August 31, 1996, provided
that if the Closing has not occurred by such date due to a temporary
restraining order or temporary injunction, then the August 31, 1996
date shall be extended by a number of days equal to the period of such
temporary restraining order or temporary injunction, but in no event
beyond December 31, 1996.
SECTION 6.2 EFFECT OF TERMINATION. The termination of
this Agreement shall have the follow effects:
(A) GENERAL. If this Agreement is terminated
pursuant to Section 6.1, all further obligations of the Company,
Newco, and the Purchaser shall terminate, provided that the
obligations contained in this section, Section 6.3, Article V, and
Article VII, shall survive such termination. Except as specifically
set forth below, a termination under Section 6.1 shall not relieve the
Company, Newco, or the Purchaser from any liability for any breach of,
or any misrepresentation under, any representation, warranty,
covenant, or other term of this Agreement, and shall not be deemed to
constitute a waiver of any available remedy for any such breach or
misrepresentation, provided, however, that the liability of the
Company and Newco, in the aggregate, and the liability of the
Purchaser for any breach of, or any misrepresentation under, any
representation or warranty shall not exceed $2,000,000, and provided,
further, that there shall be no limitation on the liability of the
Company, Newco, or the Purchaser for any failure to perform or observe
any covenant or agreement to be performed or observed by it under this
Agreement.
(B) RELEASE OF DOWN PAYMENT. In addition to any
other remedies set forth in this section, the Escrow Agent shall
return the Down Payment to the Purchaser if this Agreement is
terminated for any reason other than pursuant to Section 6.1(g).
(C) BREAK-UP FEE. If (i) the Company or Newco
terminates this Agreement pursuant to Section 6.1(e), or (ii) the
Company, Newco, or the Purchaser terminates this Agreement pursuant to
Section 6.1(f) and the Company did not recommend that its shareholders
vote in favor of and approve the Proposal, the sale of the Shares to
the Purchaser, and such other matters contemplated by this Agreement
that require shareholder approval (or subsequently withdrew such
recommendation prior to such vote), then, in the case of either Clause
(i) or (ii), the Company and Newco shall pay to the Purchaser $500,000
in cash upon such termination.
(D) BREACH BY THE PURCHASER. If the Company or
Newco terminates this Agreement pursuant to Section 6.1(g), the Escrow
Agent shall retain the Down Payment until the amount of damages
suffered by the Company and Newco because of the reasons for the
termination has been determined. At such time, the Escrow Agent shall
deliver to the Purchaser an amount from the Down Payment equal to such
damages and then deliver the balance of the Down Payment, if any, to
the Purchaser.
SECTION 6.3 CONFIDENTIALITY OF CERTAIN INFORMATION.
Notwithstanding anything to the contrary, if this Agreement is terminated for
any reason the Purchaser's obligation to maintain the confidentiality of the
Confidential Information shall remain in full force and effect. In addition,
upon such termination the Purchaser shall deliver to the Company and Newco any
documents that it or any of its representatives possess that contain any
Confidential Information.
STOCK PURCHASE AGREEMENT
23
<PAGE> 32
VII. ARBITRATION
SECTION 7.1 PRE-ARBITRATION MEETING. The Company, Newco,
and the Purchaser (and if applicable, any Purchaser Indemnitee) shall attempt
in good faith to resolve promptly any dispute, controversy, or Claim under or
in connection with this Agreement by negotiations. If any such dispute,
controversy, or claim should arise, representatives of such Persons shall meet
at least once to attempt to resolve the matter. Any such representative may
request the other representatives to meet within 14 days after delivery of
written notice to the others of any such dispute, controversy, or Claim, at a
mutually agreed time and place.
SECTION 7.2 ARBITRATION PROCEEDINGS. If the matter has
not been resolved pursuant to negotiations within 60 days after the first
meeting of the representatives (which period may be extended by mutual
agreement), the matter shall be settled exclusively by arbitration (except as
provided in Section 7.6) conducted by three arbitrators in accordance with the
provisions of the Federal Arbitration Act (99 U.S.C. Sections 1-16), and in
accordance with the Center for Public Resources, Inc.'s Rules (the "Rules of
Arbitration") for Non-Administered Arbitration of Business Disputes. The three
arbitrators shall be selected as follows, one arbitrator shall be selected by
the Company and Newco, one arbitrator shall be selected by the Purchaser and
any Purchaser Indemnitees, and one arbitrator shall be selected by the other
two arbitrators. All arbitrators shall be individuals: (a) who meet the
qualifications set forth in Rule 7 of the Rules of Arbitration, (b) who are
attorneys or retired judges, and (c) who have past experience in settling
complex litigation involving claims relating to securities and mergers and
acquisitions. The arbitration of such matters in controversy, including the
determination of any amount of damages, shall be final and binding upon the
Company, Newco, the Purchaser, and any involved Purchaser Indemnitee to the
maximum extent permitted by law. No such Person shall seek, and no arbitrator
shall be authorized to award, any punitive damages relating to any matter
arbitrated. This agreement to arbitrate is irrevocable.
SECTION 7.3 PLACE OF ARBITRATION. Any arbitration
proceedings shall be conducted in Dallas, Texas or at such other location as
the Company, Newco, the Purchaser, and any involved Purchaser Indemnitee may
agree.
SECTION 7.4 JUDGMENTS. Any arbitration award under this
Article VII shall be final and binding, and judgment may be entered on such
award by any court having jurisdictions upon application of the Company, Newco,
the Purchaser, or any involved Purchaser Indemnitee.
SECTION 7.5 EXPENSES. Any party to an arbitration
proceeding under this Article VII shall be entitled to be reimbursed by the
other parties for its costs and expenses incurred in connection with the
arbitration proceeding, including reasonable attorneys' fees, to the extent
determined by the arbitrators. The arbitrators shall assess the costs of the
arbitration proceeding, including their fees, to the parties to the proceeding
in such proportions as the arbitrators consider reasonable under the
circumstances.
SECTION 7.6 EQUITABLE REMEDIES. Notwithstanding anything
else in this Article VII to the contrary, the Company, Newco, the Purchaser,
and any involved Purchaser Indemnitee shall be entitled to seek any equitable
remedies available under Applicable Law from any court of competent
jurisdiction, and the order or judgment of any such court shall be binding in
any arbitration proceeding pursuant to this Article VII.
STOCK PURCHASE AGREEMENT
24
<PAGE> 33
VIII. GENERAL
SECTION 8.1 AMENDMENT. No amendment or modification of
any of the provisions of this Agreement shall be effective unless in a writing
signed by the Company, Newco, and the Purchaser.
SECTION 8.2 COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original
agreement, but all of which shall constitute one and the same agreement. Any
party to this Agreement may execute and deliver this Agreement by an executed
signature page transmitted by a facsimile machine, provided that such party
promptly thereafter delivers an originally executed signature page. Any
failure to deliver such an originally executed signature page after delivering
an executed signature page transmitted by a facsimile machine, however, shall
not affect the validity, legality, or enforceability of this Agreement.
SECTION 8.3 DEFINITIONS. Terms with initial capitalized
letters that are not otherwise defined in this Agreement shall have the
meanings set forth below:
(A) AFFILIATE. The term "Affiliate" with respect
to a Person shall mean any other Person that directly or indirectly
controls, is controlled by, or is under common control with such
Person.
(B) APPLICABLE LAW. The term "Applicable Law"
with respect to a Person shall mean any decree, injunction, judgment,
law, order, ordinance, regulation, rule, statute, or writ of any
federal, state, or local governmental entity (or any agency,
department, or political subdivision of any governmental entity)
applicable to such Person's principal business and investment
activities.
(C) BUSINESS DAY. The term "Business Day" shall
mean a day that is not a Sunday, Saturday, or holiday when banks in
the State of Delaware are required or permitted to be closed.
(D) CLAIM. The term "Claim" shall mean any
action, assessment, cause of action, charge, claim, counterclaim,
defense, demand, expense, fine, interest, inquiry, investigation,
judgment, legal action, litigation, liability (joint or several),
notice, obligation, payment, penalty, proceeding, or suit (including
any damages incurred because of strict liability, any punitive
damages, any reasonable fees and expenses of accountants, lawyers,
other professional advisors, and expert witnesses, and any cost of
investigation and preparation) of any kind or nature whatsoever.
(E) CONFIDENTIAL INFORMATION. The term
"Confidential Information" shall mean any information concerning the
Company's or Newco's assets, cash flows, business, financial
condition, results of operations, or prospects.
(F) CONTRACT. The term "Contract" with respect
to a Person shall mean any agreement, authorization, commitment,
contract, decree, deed of trust, franchise, instrument, judgment,
lease, license, mortgage, order, permit, or other document or
obligation to which such Person is a party or by which any of such
Person's assets are bound.
(G) ENVIRONMENTAL CLAIM. The term "Environmental
Claim" shall mean any of the following items to the extent they relate
to any Environmental Noncompliance: (i) any Claim for personal
injury, death, or property damage, (ii) any Claim for actual or
threatened damages to natural resources, (iii) any Claim for the
recovery of response costs or remedial action under any Environmental
Law, (iv) any requirement to implement "corrective action" pursuant to
any restitution, contribution,
STOCK PURCHASE AGREEMENT
25
<PAGE> 34
or equitable indemnity to third parties or any governmental entity,
and (v) any fine, penalty, or Lien.
(H) ENVIRONMENTAL LAW. The term "Environmental
Law" shall mean: (i) the Resource Conservation and Recovery Act, as
amended by the Hazardous and Solid Waste Amendments of 1984 (42 U.S.C.
Sections 6901 et seq.), (ii) the Comprehensive Environmental Response,
Compensation and Liability Act, as amended by the Superfund Amendments
and Reauthorization Act of 1986 (42 U.S.C. Sections 9601 et seq.),
(iii) the Clean Water Act (33 U.S.C. Sections 1251 et seq.), (iv) the
Toxic Substances Control Act (15 U.S.C. Sections 2601 et seq.), (v)
the Clean Air Act (42 U.S.C. Sections 7401 et seq.), (vi) any local,
state, or foreign law, statute, regulation, or ordinance analogous to
any of the foregoing statutes; and (vii) any other federal, state,
local, or foreign law (including any common law), statute, regulation,
or ordinance regulating, prohibiting, or otherwise restricting the
placement, release, threatened release, generation, treatment, or
disposal of any substance, pollutant, or waste classified or
considered to be hazardous or toxic to human health or the
environment.
(I) ENVIRONMENTAL NONCOMPLIANCE. The term
"Environmental Noncompliance" shall mean: (i) any release of any
Hazardous Material into the environment, any storm drain, sewer,
septic system, or publicly owned treatment works in violation of any
effluent or emission limitations, standards, or other criteria or
guidelines established by any Environmental Law, (ii) any
noncompliance of physical structure, equipment, process, or premises
with the requirements of building or fire codes, zoning or land use
regulations, or ordinances or conditional use permits, (iii) any
noncompliance with federal, state, or local requirements governing
occupational safety and health, and (iv) any property design that does
not conform to the statutory or regulatory requirements of any
Applicable Law intended to protect public health, welfare, or the
environment.
(J) HAZARDOUS MATERIAL. The term "Hazardous
Material" shall mean any substance, matter, material, waste, solid,
liquid, gas, or pollutant, the generation, storage, disposal,
handling, recycling, release, threatened release, or treatment of
which is regulated, prohibited, or limited under any Environmental
Law.
(K) LAW AFFECTING CREDITORS' RIGHTS. The term
"Law Affecting Creditors' Rights" shall mean any bankruptcy,
insolvency, fraudulent conveyance or transfer, reorganization,
moratorium, or other law affecting the enforcement of creditors'
rights generally, and any general principles of equity.
(L) LAWSUIT. The term "Lawsuit" shall mean any
action, charge, claim, counterclaim, decree, injunction, inquiry,
investigation, legal action, litigation, order, proceeding, suit, or
writ.
(M) LIEN. The term "Lien" shall mean any charge,
claim, equity, judgment, lease, liability, license, lien, mortgage,
pledge, restriction, security interest, Tax lien, or encumbrance of
any kind.
(N) MATERIAL ADVERSE CHANGE. The term "Material
Adverse Change" with respect to a Person shall mean that such Person
has: (i) undergone a material adverse change with respect to its
assets, cash flows, business, financial condition, results of
operations, or prospects, (ii) materially breached or defaulted under
a material arrangement or Contract to which it is a party or by which
any of its assets are bound, or (iii) become a party to a Lawsuit that
could have a significant and detrimental effect upon it.
STOCK PURCHASE AGREEMENT
26
<PAGE> 35
(O) PERSON. The term "Person" shall mean any
association, business trust, corporation, estate, general partnership,
governmental entity (or any agency, department, or political
subdivision of a governmental entity), individual, joint stock
company, joint venture, limited liability company, limited
partnership, professional association, professional corporation,
trust, or any other organization or entity.
(P) PROPOSAL. The term "Proposal" shall mean the
proposal by the Company to: (i) amend its Declaration of Trust to
permit the transactions described in this Agreement, (ii) form Newco,
(iii) transfer all of the assets and liabilities of the Company to
Newco pursuant to Section 8.2 of the Company's Declaration of Trust,
as amended, (iv) distribute the Common Stock of Newco that the Company
receives in exchange for its assets to the Company's shareholders, and
(v) terminate the Company in accordance with the Declaration of Trust
following the Closing.
(Q) TAX. The term "Tax" shall mean any federal,
state, county, local, or foreign assessment, charge, fee, impost,
levy, duty, or tax of any kind whatsoever, including, without
limitation, all ad valorem, customs, documentary, transfer, duty,
employment, excise, franchise, gross income, gross receipts, lease,
license, net income, payroll, premium, profits, property, occupation,
sales, service, service use, stamp, severance, transaction privilege,
use, or withholding taxes or charges imposed by any governmental
authority, together with any related interest, penalties, or additions
to tax.
SECTION 8.4 EFFECTS OF THE REORGANIZATION.
Notwithstanding anything to the contrary in this Agreement, the provisions of
this Agreement shall only apply to Newco after it is formed and assumes the
Company's obligations under this Agreement in connection with the
reorganization of the Company, at which time Newco shall be deemed to be a
party to this Agreement. In addition, upon the termination of the Company, the
Company shall be deemed released from all of its obligations under this
Agreement, which obligations Newco will have assumed.
SECTION 8.5 ENTIRE AGREEMENT. This Agreement constitutes
the entire agreement and understanding between the Company, Newco, and the
Purchaser and supersedes all prior agreements and understandings, both written
and oral, with respect to the subject matter of this Agreement, except that any
confidentiality or standstill agreements between the Company and the Purchaser
shall remain in full force and effect until the Closing.
SECTION 8.6 EXPENSES. The Company, Newco, and the
Purchaser shall each bear its own accounting and legal fees and other costs and
expenses with respect to the negotiation and preparation of this Agreement and
the Closing. The Purchaser shall bear any Tax imposed in connection with the
issuance of the Shares to it pursuant to this Agreement.
SECTION 8.7 FURTHER ASSURANCES. The Company, Newco, and
the Purchaser each covenants that it will execute and deliver to the other such
certificates, documents, and instruments, and do such acts, as may be required
to carry out the intent and purposes of this Agreement.
SECTION 8.8 GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED AND INTERPRETED ACCORDING TO, AND GOVERNED BY, THE LAWS OF THE STATE
OF DELAWARE, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER THE
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW OF THE STATE OF DELAWARE.
SECTION 8.9 HEADINGS. Article and section
headings are used in this Agreement only as a matter of convenience, are not a
part of this Agreement, and shall not have any effect upon the construction or
interpretation of this Agreement.
STOCK PURCHASE AGREEMENT
27
<PAGE> 36
SECTION 8.10 INJUNCTIVE RELIEF. Any breach or violation
by the Purchaser of its confidentiality obligations under this Agreement shall
entitle the Company or Newco to an injunction restraining any further or
continued breach or violation. Such right to an injunction shall be in
addition to and cumulative of (and not in lieu of) any other remedy to which
the Company or Newco is entitled because of such breach or violation.
SECTION 8.11 NO ASSIGNMENT. Neither the Company, Newco,
nor the Purchaser may assign its benefits or delegate its duties under this
Agreement, provided that the Company shall cause Newco to assume the Company's
duties under this Agreement and the Purchaser may assign this Agreement to
Gerald J. Ford or his Affiliates if such assignee assumes the Purchaser's
obligations under this Agreement.
SECTION 8.12 NO THIRD-PARTY BENEFICIARIES. Except with
respect to Newco and the Purchaser Indemnitees, this Agreement is solely for
the benefit of the parties to this Agreement and no other Person shall have any
right, interest, or claim under this Agreement.
Section 8.13 NOTICES. All notices and other
communications in connection with this Agreement shall be in writing and deemed
to have been delivered on the day of delivery if delivered by hand, overnight
express, regular mail, or facsimile transmission, or three days after the date
of posting if mailed by registered or certified mail, postage prepaid, return
receipt requested, addressed to each party at its address set forth below (or
to such other address to which such party has notified the other party in
accordance with this section to send such notices or communications):
Company/Newco: Liberte Investors
600 N. Pearl Street
Suite 420, LB #168
Dallas, Texas 75201
Attn: Robert Ted Enloe III
Telephone No. (214) 720-8950
Facsimile No. (214) 720-8954
Purchaser: Hunter's Glen/Ford, Ltd.
200 Crescent Court, Suite 1350
Dallas, Texas 75202
Attn: Gerald J. Ford
Telephone No. (214) 871-5131
Facsimile No. (214) 871-5199
SECTION 8.14 PERFORMANCE ON BUSINESS DAYS. If any event or the
expiration of any period provided for in this Agreement is scheduled to occur
or expire on a day that is not a Business Day, such event shall occur or such
period shall expire on the next succeeding day that is a Business Day.
SECTION 8.15 PLURAL AND SINGULAR WORDS. Whenever the plural of a
word is used in this Agreement, that word shall, if appropriate, include the
singular of that word. Whenever the singular of a word is used in this
Agreement, that word shall, if appropriate, include the plural of that word.
SECTION 8.16 PRONOUNS. Whenever a pronoun of a particular gender
is used in this Agreement, that pronoun shall, if appropriate, also refer to
the other gender and the neuter. Whenever a neuter pronoun is used in this
Agreement, that pronoun shall, if appropriate, also refer to the masculine and
feminine gender.
SECTION 8.17 SEVERABILITY. Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of
STOCK PURCHASE AGREEMENT
28
<PAGE> 37
such prohibition or unenforceability (but shall be construed and given effect
to the extent possible), without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION 8.18 SUCCESSORS. This Agreement shall be binding upon and
shall inure to the benefit of each party to this Agreement and its heirs, legal
representatives, permitted assigns, and successors, provided that this section
shall not permit the assignment or other transfer of this Agreement, whether by
operation of law or otherwise, if such assignment of other transfer is not
otherwise permitted under this Agreement.
SECTION 8.19 SURVIVABILITY. The representations and warranties
contained in this Agreement shall expire at 5:00 p.m., Central Time, on the
first anniversary of the Closing Date, provided that: (a) the representations
and warranties contained in Sections 3.1(a), 3.1(n), and 3.2(a) shall survive
forever, subject to all defenses available under Applicable Law, including the
expiration of the applicable statute of limitations, and (b) the
representations and warranties contained in Section 3.1(u) shall continue until
the expiration of the applicable statute of limitations. In addition, if
notice of a breach of a representation or warranty is delivered before such
representation or warranty expires, such representation or warranty shall
continue indefinitely until such claim is resolved. All covenants and
agreements of the Company, Newco, and the Purchaser shall be continuing and
survive the Closing.
SECTION 8.20 WAIVER. No provision of this Agreement shall be
considered waived unless such waiver is in writing and signed by the party to
this Agreement that benefits from the enforcement of such provision. No waiver
of any provision in this Agreement, however, shall be deemed a waiver of a
subsequent breach of such provision (or right arising under such provision) or
a waiver of a similar provision. In addition, a waiver of any breach or a
failure to enforce any term or condition of this Agreement shall not in any way
affect, limit, or waive a party's rights under this Agreement at any time to
enforce strict compliance thereafter with every term and condition of this
Agreement.
[SIGNATURES ON THE NEXT PAGE]
STOCK PURCHASE AGREEMENT
29
<PAGE> 38
IN WITNESS WHEREOF, the Company and the Purchaser have each executed
and delivered this Agreement as of the date first written above.
LIBERTE INVESTORS
By: /s/ Robert Ted Enloe III
-------------------------
Name: Robert Ted Enloe III
Title: President
HUNTER'S GLEN/FORD, LTD.
By: /s/ Gerald J. Ford
-------------------------
Name: Gerald J. Ford
Title: General Partner
STOCK PURCHASE AGREEMENT
30
<PAGE> 39
EXHIBIT A
LEGAL OPINION
<PAGE> 40
EXHIBIT A
LEGAL OPINION
1. The Company is validly existing as a Massachusetts business trust.
2. Newco is validly existing and in good standing as a Delaware
corporation.
3. The Company has the power and authority to executive, deliver, and
perform the Agreement.
4. Newco has the power and authority to assume the Company's obligations
under the Agreement and perform it.
5. The Company has duly authorized, executed, and delivered the
Agreement, which constitutes a valid, legal, and binding obligation of
the Company, enforceable against the Company in accordance with the
Agreement's terms.
6. Newco has duly assumed the Company's obligations under the Agreement,
which constitutes a valid, legal, and binding obligation of Newco,
enforceable against Newco in accordance with the Agreement's terms.
7. The Company's execution, delivery, and performance of the Agreement
does not violate the Company's Declaration of Trust, Bylaws, or
certain Contracts scheduled in connection with this opinion.
8. Newco's assumption of the Company's obligations under the Agreement
and performance of the Agreement will not violate its Certificate of
Incorporation, Bylaws, or certain Contracts scheduled in connection
with this opinion.
9. The Proposal, the sale of the Shares to the Purchaser, and such other
matters contemplated by this Agreement and identified in such opinion
have been approved by all necessary action on the part of the Company,
its Board of Trustees, and its shareholders.
10. The Shares have been duly authorized and upon their issuance pursuant
to the terms of the Agreement, will be validly issued, fully paid, and
nonassessable, and are not subject to any preemptive rights.
11. Upon the reorganization of the Company, Newco succeeded to the
Company's NOL carryforwards, and the transactions contemplated by this
Agreement and identified in such opinion will not restrict Newco's use
of such NOL carryforwards under Section 382 of the Code.
<PAGE> 41
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
<PAGE> 42
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "AGREEMENT") is made
and entered into as of __________________, 1996, by and between
_________________, a Delaware corporation (the "COMPANY"), and Hunter's
Glen/Ford, Ltd., a Texas limited partnership (the "INVESTOR").
RECITALS:
A. Pursuant to that certain Stock Purchase Agreement (herein so
called) dated as of January 16, 1996 between the Investor and Liberte
Investors, a Massachusetts business trust (the "TRUST"), the Investor agreed,
subject to certain conditions, to purchase 8,102,439 shares of Common Stock
(hereinafter defined) from the Company.
B. Pursuant to the terms of the Stock Purchase Agreement it is a
condition to the obligations of the Investor thereunder that the Company grant
certain registration rights with respect to the shares of Common Stock to be
purchased by the Investor pursuant to the Stock Purchase Agreement.
C. Pursuant to the terms of the Stock Purchase Agreement the
Trust agreed to cause the Company to grant certain registration rights with
respect to the shares of Common Stock to be purchased by the Investor pursuant
to the Stock Purchase Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
AGREEMENTS:
1. Definitions.
As used in this Agreement, the following capitalized terms
shall have the following meanings:
Affiliate: A Person that directly, or indirectly through one
or more intermediaries, controls, is controlled by, or is under common control
with a specified Person.
1
<PAGE> 43
Closing Date: The closing date of the purchase of the Shares
by the Investor from the Company.
Common Stock: The common stock, par value $.01 per share, of
the Company.
Enloe Offering: An Underwritten Offering pursuant to the
exercise of demand registration rights by the Enloe Trust or successor holders
of such rights.
Enloe Shares: The shares of Common Stock owned by the Enloe
Trust, Robert Ted Enloe III through his Keogh plan, and Mr. Enloe's spouse, to
the extent that such persons have registration rights.
Enloe Trust: Enloe Descendants' Trust.
Exchange Act: The Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations promulgated thereunder.
Person: An individual, partnership, corporation, limited
liability company, trust or unincorporated organization, or a government or
agency or political subdivision thereof.
Prospectus: The prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and by all other amendments and
supplements to the prospectus, including all material incorporated by reference
into such prospectus.
Registrable Securities: (a) The Shares and (b) any securities
issued or issuable with respect to the Shares by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise. Any Registrable Security
will cease to be a Registrable Security when (i) a registration statement
covering such Registrable Security has been declared effective by the SEC and
the Registrable Security has been disposed of pursuant to such effective
registration statement, (ii) the Registrable Security is sold under
circumstances in which all of the applicable conditions of Rule 144 (or any
similar provisions then in force) under the Securities Act are met, (iii) the
Registrable Security has been otherwise transferred, the Company has delivered
a new certificate or other evidence of ownership for it not bearing a legend
restricting further transfer under securities laws, and it may be resold
without subsequent registration under the Securities Act, or (iv) with respect
to Section 2(a) of this Agreement, the Registrable Security may be sold under
Rule 144(k) of the Securities Act.
Registration Expenses: See Section 5 hereof.
Registration Statement: The Registration Statement of the
Company that covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the
2
<PAGE> 44
Prospectus included therein, all amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such Registration Statement.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended from
time to time, and the rules and regulations promulgated thereunder.
Shares: The shares of Common Stock purchased by the Investor
from the Company pursuant to the Stock Purchase Agreement.
Stock Purchase Agreement: See the recitals to this Agreement.
Underwritten Registration or Underwritten Offering: A
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.
2. Registration Rights.
(a) Shelf Registration. At any time during the period
commencing on the first anniversary of the Closing Date and ending when the
holders of the Registrable Securities (i) own, in the aggregate, less than 5%
of the issued and outstanding shares of Common Stock and (ii) are not
Affiliates of the Company, upon the written request any holder or holders of
not less than 20% of the Registrable Securities, the Company shall file a
"shelf" registration statement on any appropriate form pursuant to Rule 415 (or
similar rule that may be adopted by the SEC) under the Securities Act (a "Shelf
Registration") for all of the then Registrable Securities and all of the Enloe
Shares, subject to the request of any holder to exclude any Registrable
Securities or Enloe Shares as provided below. Within ten (10) days after
receipt of a request for a Shelf Registration, the Company shall give written
notice of such registration request to all non-requesting holders of
Registrable Securities and all holders of Enloe Shares and shall exclude from
such registration all Registrable Securities or Enloe Shares with respect to
which the Company received written requests for exclusion therefrom within
fifteen (15) days after the receipt of the notice by the applicable holder.
Subject to Section 4(a) and 4(b) hereof, the Company agrees to
use commercially reasonable efforts to cause the Shelf Registration to become
effective and thereafter to keep it continuously effective, and to prevent the
happening of any event of the kind described in Sections 4(c)(3), (4), (5) or
(6) hereof that requires the Company to give notice pursuant to the last
paragraph of Section 4 hereof, for a period terminating on the second year
anniversary of the date on which the SEC declares the Shelf Registration
effective, or such shorter period as shall terminate on the date on which all
the Registrable Securities and Enloe Shares covered by the Shelf Registration
have been sold pursuant to such Shelf Registration, or such period that may be
an extended period pursuant to the last paragraph of Section 4 hereof. The
Company shall only be obligated to file one Shelf Registration which obligation
shall be deemed to have been satisfied
3
<PAGE> 45
when a Shelf Registration has been filed, declared effective and remained
effective for a substantial portion of the foregoing two year period, unless
the Registrable Securities and Enloe Shares covered by such Shelf Registration
shall have been sold prior to the expiration of such two year period. The
offerings of Registrable Securities and Enloe Shares pursuant to the Shelf
Registration shall not be in the form of an Underwritten Offering. The Enloe
Shares shall be deemed to be "Registrable Securities" under Sections 3, 4, 5,
6, and 8 of this Agreement for purposes of implementing the provisions of this
Section 2(a).
(b) Demand Registration.
At any time during the period commencing on the first
anniversary of the Closing Date and ending when the holders of the Registrable
Securities (i) own, in the aggregate, less than 5% of the issued and
outstanding shares of Common Stock and (ii) are not Affiliates of the Company,
any holder or holders of not less than 20% of the Registrable Securities may
make two written requests (a "Demand Notice") for registration under the
Securities Act (a "Demand Registration") of the Registrable Securities held by
such holder or holders; provided, however, that the number of shares of
Registrable Securities requested to be registered shall have a "fair market
value" (determined pursuant to the next sentence) in excess of $5,000,000. For
purposes of this Agreement, fair market value of the Registrable Securities
shall be determined as follows: (i) if the security is listed on any
established stock exchange or a national market system, including, without
limitation, the National Market System of the National Association of
Securities Dealers Automated Quotation System, its fair market value shall be
the closing sales price or the closing bid if no sales were reported, as quoted
on such system or exchange (or the largest such exchange) on the business day
immediately preceding the date of the Demand Notice (or if there are no sales
or bids for such date, then for the last preceding business day for such sales
or bids), as reported in The Wall Street Journal or similar publication; (ii)
if the security is regularly quoted by a recognized securities dealer but
selling prices are not reported, its fair market value shall be the mean
between the high bid and low asked prices for the security on the date of the
Demand Notice (or if there are no quoted prices for such date, then for the
last preceding business day on which there were quoted prices); or (iii) in the
absence of an established market for the security, the fair market value shall
be determined in good faith by the Company's Board of Directors, with reference
to the Company's net worth, prospective earning power, dividend-paying capacity
and other relevant factors, including the goodwill of the Company, the economic
outlook in the Company's industry, the Company's position in the industry and
its management, and the values of stock of other corporations in the same or a
similar line of business (all of such factors determined as of the date of the
Demand Notice).
Within ten days after receipt of each Demand Notice, the
Company shall give written notice of such registration request to all
non-requesting holders of Registrable Securities and shall, subject to the
provisions of the following paragraph, include in such registration all
Registrable Securities with respect to which the Company received written
requests for inclusion therein within 15 days after the receipt of the notice
of such demand registration request by the applicable holder. Both the Demand
Notice and any request to have Registrable Securities included in a Demand
Registration will specify the number of shares of Registrable Securities
proposed to be sold and will also specify the intended method of disposition
thereof. A registration requested pursuant to this
4
<PAGE> 46
Section 2(b) will not be deemed to have been effected unless the Registration
Statement relating thereto has become effective under the Securities Act;
provided, however, that if, after such Registration Statement has become
effective, the offering of the Registrable Securities pursuant to such
registration is interfered with by any stop order, injunction or other order or
requirement of the SEC or other governmental agency or court, such registration
will be deemed not to have been effected and the right to request a Demand
Registration hereunder shall be reinstated. The holder or holders requesting a
registration pursuant to this Section 2(b) may, at any time prior to the
effective date of the Registration Statement relating to such registration,
revoke such request with respect to their Registrable Securities by providing a
written notice to the Company revoking such request the Company shall withdraw
such Registration Statement, such registration will be deemed not to have been
effected, and the right to request a Demand Registration hereunder shall be
reinstated.
The offering of Registrable Securities pursuant to a Demand
Registration shall be in the form of an Underwritten Offering. If the managing
underwriter or underwriters of such offering advise the Company and the holders
of Registrable Securities that the number of shares of Registrable Securities
requested to be included in such offering is sufficiently large to materially
and adversely affect the success of such offering, the Company will include in
such registration the aggregate number of Registrable Securities which in the
opinion of such managing underwriter or underwriters can be sold without any
such material adverse effect and the Registrable Securities to be included in
such registration shall be allocated, (i) first to the holder or holders making
such demand, (ii) second among the other holders of Registrable Securities pro
rata (according to the Registrable Securities proposed to be included in such
offering by such holders) to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount recommended by such
managing underwriter or underwriters, and (iii) third among the Company and any
other holders of registration rights in respect of securities of the Company in
accordance with the terms of the agreements granting such rights. No Investor
shall be entitled to effect a Demand Notice under this Section 2(b) within 180
days after the closing date of an Underwritten Offering; provided, however,
that this restriction on effecting a Demand Notice shall not apply if such
Underwritten Offering was pursuant to an Enloe Offering that has been
completed. The holder or holders giving the Demand Notice shall select the
managing underwriter or underwriters of an underwriter offering under this
subsection 2(b), such managing underwriter or underwriters to be reasonably
acceptable to the Company.
No registration pursuant to a request or requests referred to
in this subsection 2(b) shall be deemed to be a Shelf Registration.
(c) Incidental Registration. If, at any time during the
period commencing on the first anniversary date of the Closing Date (or with
respect to an Enloe Offering at any time commencing on the date of this
Agreement) and ending when the holders of Registrable Securities (i) own, in
the aggregate, less than 5% of the issued and outstanding shares of Common
Stock and (ii) are not Affiliates of the Company, the Company proposes to file
a registration statement under the Securities Act (other than in connection
with the Shelf Registration, a Demand Registration, a Registration Statement on
Form S-4 or S-8 or any form substituting therefor, or a registration
5
<PAGE> 47
statement relating to issuances of securities other than Common Stock (or
securities convertible into common stock) by the Company) with respect to an
offering of any class of security by the Company for its own account or for the
account of any of its security holders, then the Company shall give written
notice of such proposed filing to the holders of the Registrable Securities as
soon as practicable (but in no event less than thirty days before the
anticipated filing date), and such notice shall offer such holders the
opportunity to register such number of Registrable Securities as each such
holder may request. Each holder of Registrable Securities desiring to have its
Registrable Securities registered under this subsection 2(c) shall so advise
the Company in writing within 15 days after the date of receipt of such notice
from the Company (which request shall set forth the number of Registrable
Securities for which registration is requested). The Company shall include in
such Registration Statement all such Registrable Securities so requested to be
included therein, and, if such registration is an Underwritten Registration,
the Company shall use commercially reasonable efforts to cause the managing
underwriter or underwriters to permit the Registrable Securities requested to
be included in the registration statement for such offering to be included (on
the same terms and conditions as similar securities of the Company included
therein to the extent appropriate); provided, however, that if the managing
underwriter or underwriters of such offering informs the holders of such
Registrable Securities that the total number of securities that the Company,
the holders of Registrable Securities, or other persons propose to include in
such offering is such that the success of the offering would be materially and
adversely affected by inclusion of the securities requested to be included,
then the amount of securities to be offered for the accounts of the Company,
the holders of Registrable Securities and other holders registering securities
pursuant to registration rights shall be allocated as follows:
(i) if such registration has been initiated by the
Company as a primary offering, first to the
securities sought to be included by the Company,
second to the Registrable Securities sought to be
included by the holders thereof and the securities
sought to be included by other holders of
registration rights whose rights are not expressly
subordinated to the rights of holders of Registrable
Securities, pro rata, on the basis of the number of
securities proposed to be included in such offering
by each such holder, and third to all other
securities sought to be included by holders of
registration rights whose rights are expressly
subordinated to the rights of holders of Registrable
Securities, pro rata, on the basis of the number of
securities proposed to be included in such offering
by each such holder; and
(ii) if such registration has been initiated by another
holder of registration rights (other than pursuant to
Section 2(b) hereof), first to the securities sought
to be included by such demanding holder (the holders
of the Enloe Shares being considered as one holder
for such purpose), second to the Registrable
Securities sought to be included by the holders
thereof and the securities sought to be included by
other holders of registration rights whose rights are
not expressly subordinated to the rights of holders
of Registrable Securities, pro rata, on the basis of
the number of securities proposed to be included in
such offering, and third to the securities sought to
be included by the
6
<PAGE> 48
Company and to all other securities sought to be
included by other holders of registration rights
whose rights are expressly subordinated to the rights
of holders of Registrable Securities, pro rata, on
the basis of the number of securities proposed to be
included in such offering by the Company and each
such holder.
If the number of Registrable Securities sought to be
registered pursuant to this Section 2(c) by a holder of Registrable Securities
is reduced as provided above, such holder shall have the right to withdraw such
holder's request for registration with respect to all of the Registrable
Securities initially sought to be registered.
No registration pursuant to a request or requests referred to
in this subsection 2(c) shall be deemed to be a Shelf Registration.
3. Hold-Back Agreements.
(a) Restrictions on Public Sale by Holder of Registrable
Securities. Each holder of Registrable Securities agrees, if requested by the
managing underwriters in an Underwritten Offering, not to effect any public
sale or distribution of securities of the Company of the same class as the
securities included in the applicable registration statement, including a sale
pursuant to Rule 144 under the Securities Act (except as part of such
Underwritten Registration), during the period beginning 10 days prior to the
filing of the registration statement with respect to such Underwritten
Offering, and ending 90 days after the effective date of the registration
statement with respect to such Underwritten Offering, to the extent timely
notified in writing by the Company or the managing underwriters, or, in the
case of a shelf offering, the date of commencement of a public distribution of
Registrable Securities pursuant to such registration statement, as applicable.
(b) Restrictions on Sale of Securities by the Company.
The Company agrees not to effect any public sale or distribution of any
securities similar to those being registered, or any securities convertible
into or exchangeable or exercisable for such securities (except pursuant to a
registration statement on Form S-4 or S-8, or any substitute form that may be
adopted by the SEC) during the period beginning 10 days prior to the filing of
a Registration Statement with respect to an Underwritten Offering, and ending
90 days after the effective date of the applicable Registration Statement
(except as part of such Registration Statement (x) where the holders of a
majority of the shares of Registrable Securities to be included in such
Registration Statement consent or (y) where holders of Registrable Securities
are participating in such Registration Statement pursuant to section 2(c)
hereof, such Registration Statement was filed by the Company with respect to
the sale of securities by the Company, and no holder is simultaneously
participating in a distribution pursuant to a Registration Statement filed by
the Company pursuant to section 2(b) hereof) or the date of commencement of a
public distribution of Registrable Securities pursuant to such Registration
Statement, as applicable.
4. Registration Procedures. In connection with the
Company's registration obligations pursuant to Section 2 hereof, the Company
will use commercially reasonable efforts to
7
<PAGE> 49
effect such registration to permit the sale of such Registrable Securities in
accordance with the intended method or methods of distribution thereof, and
pursuant thereto the Company will as expeditiously as possible:
(a) prepare and file with the SEC, as soon as
practicable, a Registration Statement relating to the applicable registration
on any appropriate form under the Securities Act, which forms shall be
available for the sale of the Registrable Securities in accordance with the
intended method or methods of distribution thereof and shall include all
financial statements of the Company, and use commercially reasonable efforts to
cause such Registration Statement to become effective; provided that before
filing a Registration Statement or Prospectus or any amendments or supplements
thereto, including documents incorporated by reference after the initial filing
of the Registration Statement, the Company will furnish one counsel selected by
the holders of a majority of the shares of Registrable Securities covered by
such Registration Statement, and the underwriters, if any, copies of all such
documents proposed to be filed, which documents, subject to compliance with
applicable securities laws, will be subject to the review of such counsel and
underwriters, and the Company will not file any Registration Statement or
amendment thereto or any Prospectus or any supplement thereto (excluding any
documents incorporated by reference) to which such counsel or the underwriters,
if any, shall reasonably object; and provided further that the Company shall
have the right to delay filing or effectiveness of a Registration Statement
filed pursuant to Section 2(a) or Section 2(b) hereto for up to 120 days if the
Company's Board of Directors determines, in good faith, that the filing or
effectiveness thereof could materially interfere with a pending extraordinary
transaction involving the Company or bona fide financing plans of the Company
or would require disclosure of information, the premature disclosure of which
would not be in the best interests of the Company, but no further delays will
be permitted;
(b) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement as may be necessary to
keep the Registration Statement effective for the applicable period with
respect to the Shelf Registration or nine months with respect to a Demand
Registration, or such shorter period which will terminate when all Registrable
Securities covered by such Registration Statement have been sold; cause the
Prospectus to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Securities Act; and
comply with the provisions of all securities covered by such Registration
Statement during the applicable period in accordance with the intended method
or methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus; the Company shall not
be deemed to have used commercially reasonable efforts to keep a Registration
Statement effective during the applicable period if it voluntarily takes any
action that would result in selling holders of the Registrable Securities
covered thereby not being able to sell such Registrable Securities during that
period unless such action is required under applicable law; provided that the
foregoing shall not apply to actions taken by the Company in good faith and for
valid business reasons, including without limitation the acquisition or
divestiture of assets, so long as the Company promptly thereafter complies with
the requirements of Section 4(l) hereof, if applicable;
8
<PAGE> 50
(c) notify the selling holders of Registrable Securities
and the managing underwriters, if any, promptly, and (if requested by any such
Person) confirm such advice in writing, (1) when the Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective, (2) of any request by the SEC for amendments or
supplements to the Registration Statement or the Prospectus or for additional
information, (3) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose, (4) if at any time the representations and
warranties of the Company contemplated by paragraph (n) below cease to be true
and correct, (5) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Registrable Securities for sale
in any jurisdiction or the initiation or threatening of any proceeding for such
purpose and (6) of the happening of any event which makes any statement made in
the Registration Statement, the Prospectus or any document incorporated therein
by reference untrue or which requires the making of any changes in the
Registration Statement, the Prospectus or any document incorporated therein by
reference in order to make the statements therein not misleading;
(d) make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of the Registration Statement at the
earliest possible moment;
(e) if reasonably requested by the managing underwriter
or underwriters or a holder of Registrable Securities being sold in connection
with an Underwritten Offering and in compliance with applicable securities
laws, promptly incorporate in a Prospectus supplement or post-effective
amendment such information as the managing underwriters and the holders of a
majority in number of the Registrable Securities being sold agree should be
included therein relating to the sale of the Registrable Securities, including,
without limitation, information with respect to the number of Registrable
Securities being sold to such underwriters, the purchase price being paid
therefor by such underwriters and with respect to any other terms of the
Underwritten (or best efforts underwritten) Offering of the Registrable
Securities to be sold in such offering; and make all required filings of such
Prospectus supplement or post- effective amendment as soon as notified of the
matters to be incorporated in such Prospectus supplement or post- effective
amendment;
(f) promptly prior to the filing of any document which is
to be incorporated by reference into the Registration Statement or the
Prospectus (after initial filing of the Registration Statement), make available
representatives of the Company for discussion of such document and make such
changes in such document prior to the filing thereof as counsel for such
selling holders or underwriters may reasonably request, subject to compliance
with applicable securities laws;
(g) furnish to each selling holder of Registrable
Securities and each managing underwriter, without charge, at least one signed
copy of the Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, all documents incorporated
therein by reference and all exhibits (including those incorporated by
reference);
(h) deliver to each selling holder of Registrable
Securities and the underwriters, if any, without charge, as many copies of the
Prospectus (including each preliminary prospectus) and
9
<PAGE> 51
any amendment or supplement thereto as such Persons may reasonably request; the
Company consents to the use of the Prospectus or any amendment or supplement
thereto by each of the selling holders of Registrable Securities and the
underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any amendment or supplement
thereto;
(i) prior to any public offering of Registrable
Securities, use commercially reasonable efforts to register or qualify or
cooperate with the selling holders of Registrable Securities, the underwriters,
if any, and their respective counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions as any seller or underwriter
reasonably requests in writing and do any and all other acts or things
reasonably necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Registration
Statement;
(j) cooperate with the selling holders of Registrable
Securities and the managing underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold and not bearing any restrictive legends except as required by the
Certificate of Incorporation of the Company; and enable such Registrable
Securities to be in such denominations and registered in such names as the
managing underwriters may request at least two business days prior to any sale
of Registrable Securities to the underwriters;
(k) use commercially reasonable efforts to cause the
Registrable Securities covered by the applicable Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to enable the seller or sellers thereof or the
underwriters, if any, to consummate the disposition of such Registrable
Securities;
(l) upon the occurrence of any event contemplated by
Section 4(c) (6) above, prepare a supplement or post-effective amendment to the
Registration Statement or the related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities, the Prospectus will
not contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading;
(m) cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange on which
similar securities issued by the Company are then listed;
(n) enter into such agreements (including an underwriting
agreement) and take all such other actions in connection therewith in order to
expedite or facilitate the disposition of such Registrable Securities and in
connection therewith, whether or not an underwriting agreement is entered into
and whether or not the registration is an Underwritten Registration, (1) make
such representations and warranties to the holders of such Registrable
Securities and the underwriters, if any, in form, substance and scope as are
customarily made by issuers to underwriters in primary underwritten offerings;
(2) obtain opinions of counsel to the Company and updates thereof (which
counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing
10
<PAGE> 52
underwriters, if any, and the holders of a majority of the Registrable
Securities included in such registration, covering the matters customarily
covered in opinions requested in Underwritten Offerings and such other matters
as may be reasonably requested by such holders and underwriters); (3) obtain
"cold comfort" letters and updates thereof from the Company's independent
certified public accountants addressed to the selling holders of Registrable
Securities and the underwriters, if any, such letters to be in customary form
and covering matters of the type customarily covered in "cold comfort" letters
by underwriters in connection with primary Underwritten Offerings; (4) if an
underwriting agreement is entered into, the same shall set forth in full the
indemnification provisions and procedures of Section 6 hereof with respect to
all parties to be indemnified pursuant to said Section; and (5) the Company
shall deliver such documents and certificates as may be requested by the
holders of a majority of the Registrable Securities being sold and the managing
underwriters, if any, to evidence compliance with clause (1) above and with any
customary conditions contained in the underwriting agreement or other agreement
entered into by the Company. The above shall be done at each closing under
such underwriting or similar agreement or as and to the extent required
thereunder;
(o) make available for inspection by representatives of
the holders of the Registrable Securities, any underwriter participating in any
disposition pursuant to such registration, and any attorney or accountant
retained by the sellers or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company and cause the
Company's officers, directors and employees to supply all information
reasonably requested by any such representative, underwriter, attorney or
accountant in connection with such registration; provided that any records,
information or documents that are designated by the Company in writing as
confidential shall be kept confidential by such Persons unless disclosure of
such records, information or documents is required by court or administrative
order;
(p) comply with all applicable rules and regulations of
the SEC and make available to its security holders, as soon as reasonably
practicable, earning statements satisfying the provisions of Section 11(a) of
the Securities Act and Rule 158 thereunder (or any similar rule promulgated
under the Securities Act), covering any 12-month period (or 90 days after the
end of any 12-month period if such period is a fiscal year) (i) commencing at
the end of any fiscal quarter in which Registrable Securities are sold to
underwriters in a firm commitment or best efforts underwritten offering and
(ii) if not sold to underwriters in such an offering, commencing on the first
day of the first fiscal quarter of the Company after the effective date of a
Registration Statement; and
(q) cooperate with each seller of Registrable Securities
and each underwriter participating in the disposition of such Registrable
Securities and their respective counsel in connection with any filings required
to be made with the National Association of Securities Dealers, Inc. (the
"NASD").
The Company may require each seller of Registrable Securities
as to which any registration is being effected to furnish to the Company such
information regarding the distribution of such securities as the Company may
from time to time reasonably request in writing and to enter
11
<PAGE> 53
into agreements related to the distribution of the Registrable Securities that
are designed to insure compliance with the Exchange Act.
Each holder of Registrable Securities agrees by acquisition of
such Registrable Securities that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 4(l) hereof,
such holder will forthwith discontinue disposition of Registrable Securities
until such holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 4(l) hereof, or until it is advised in
writing (the "ADVICE") by the Company that the use of the Prospectus may be
resumed, and has received copies of any additional or supplemental filings
which are incorporated by reference in the Prospectus, and, if so directed by
the Company such holder will deliver to the Company (at the Company's expense),
all copies, other than permanent file copies then in such holder's possession,
of the Prospectus covering such Registrable Securities current at the time of
receipt of such notice. In the event the Company shall give any such notice,
the time periods regarding the effectiveness of Registration Statements set
forth in Section 2 hereof and Section 4(b) hereof shall be extended by the
number of days during the period from and including the date of the giving of
such notice pursuant to Section 4(c) (6) hereof to the date when the selling
holders of Registrable Securities covered by such registration statement shall
receive copies of the supplemented or amended prospectus contemplated by
Section 4(l) hereof or the Advice.
5. Registration Expenses. All expenses incident to the
Company's performance of or compliance with this Agreement, including without
limitation: all registration and filing fees; all fees associated with a
required listing of the Registrable Securities on any securities exchange; fees
and expenses with respect to filings required to be made with the NASD; fees
and expenses of compliance with securities or blue sky laws (including fees and
disbursements of counsel for the underwriters in connection with blue sky
qualifications of the Registrable Securities and determination of their
eligibility for investment under the laws of such jurisdictions as the managing
underwriters or holders of a majority of the Registrable Securities being sold
may designate); printing expenses, messenger, telephone and delivery expenses;
fees and disbursements of counsel for the Company and customary fees and
expenses for independent certified public accountants retained by the Company
(including the expenses of any comfort letters or costs associated with the
delivery by independent certified public accountants of a comfort letter or
comfort letters requested pursuant to Section 4(n) hereof); securities acts
liability insurance, if the Company so desires; all internal expenses of the
Company (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties); the expense of
any annual audit; and the fees and expenses of any Person, including special
experts, retained by the Company (all such expenses being herein called
"REGISTRATION EXPENSES") will be borne by the Company regardless of whether the
Registration Statement becomes effective. The Company shall not have any
obligation to pay any underwriting fees, discounts, or commissions attributable
to the sale of Registrable Securities or fees and expenses of counsel to the
holders of Registrable Securities.
12
<PAGE> 54
6. Indemnification; Contribution.
(a) Indemnification by Company. The Company agrees to
indemnify and hold harmless each holder of Registrable Securities and its
partners, and their respective officers, directors, employees, agents, and
Affiliates, and each Person who controls such Person (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) against all
losses, claims, damages, liabilities and expenses arising out of or based upon
any untrue or alleged untrue statement of a material fact contained in any
Registration Statement, Prospectus or preliminary prospectus or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
the same are caused by or contained in any information furnished in writing to
the Company by the holders of Registrable Securities expressly for use therein.
The Company will also indemnify underwriters, selling brokers, dealer managers
and similar securities industry professionals participating in the
distribution, their officers and directors and each Person who controls such
Persons (within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) to the same extent as provided above with respect to the
indemnification of the holders of Registrable Securities, if requested.
(b) Indemnification by Holder of Registrable Securities.
Each holder of Registrable Securities agrees to indemnify and hold harmless the
Company, each other holder and their respective directors, officers, employees,
agents, and Affiliates and each Person who controls the Company and as such
other Person (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) against any losses, claims, damages, liabilities and
expenses resulting from any untrue statement of a material fact or any omission
of a material fact required to be stated in the Registration Statement or
Prospectus or preliminary prospectus or necessary to make the statements
therein not misleading, to the extent, but only to the extent, that such untrue
statement or omission is contained in any information or affidavit so furnished
in writing by such holder to the Company specifically for inclusion in such
Registration Statement or Prospectus. In no event shall the liability of any
selling holder of Registrable Securities hereunder be greater in amount than
the dollar amount of the proceeds received by such holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation. The
Company shall be entitled to receive indemnities from underwriters, selling
brokers, dealer managers and similar securities industry professionals
participating in the distribution, to the same extent as provided above with
respect to information so furnished in writing by such Persons specifically for
inclusion in any Prospectus or Registration Statement.
(c) Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder will (i) give prompt notice to the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) permit such indemnifying party to assume the defense of such claim
with counsel reasonably satisfactory to the indemnified party; provided,
however, that any Person entitled to indemnification hereunder shall have the
right to employ separate counsel and to participate in the defense of such
claim, but the fees and expenses of such counsel shall be at the expense of
such Person unless (a) the indemnifying party has agreed to pay such fees or
expenses, (b) the indemnifying party shall have failed to assume the defense of
such
13
<PAGE> 55
claim and employ counsel reasonably satisfactory to such Person or (c) based
upon advice of counsel of such Person, a conflict of interest may exist between
such Person and the indemnifying party with respect to such claims (in which
case, if the Person notifies the indemnifying party in writing that such Person
elects to employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not be permitted to assume the defense of such claim
on behalf of such Person), in each of which events the fees and expenses of
such counsel shall be at the expense of the indemnifying party. The
indemnifying party will not be subject to any liability for any settlement made
without its consent (but such consent will not be unreasonably withheld), but
if settled with its written consent, or if there be a final judgment for the
plaintiff in any such action or proceeding, the indemnifying party shall
indemnify and hold harmless the indemnified parties from and against any loss
or liability (to the extent stated above) by reason of such settlement or
judgment. No indemnified party will be required to consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
(d) Contribution. If for any reason the indemnification
provided for in the preceding clauses (a) and (b) is unavailable to an
indemnified party or insufficient to hold it harmless as contemplated by the
preceding clauses (a) and (b), then each indemnifying party shall contribute to
the amount paid or payable by the indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect not
only the relative benefits received by the indemnified party and each such
indemnifying party, but also the relative fault of the indemnified party and
each such indemnifying party, as well as any other relevant equitable
considerations, provided, that no holder of Registrable Securities shall be
required to contribute an amount greater than the dollar amount of the proceeds
received by such holder with respect to the sale of the Registrable Securities
giving rise to such indemnification obligation. The relative fault of the
Company on the one hand and of the selling holders on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by such party, and the
parties' relative intent, knowledge, access to information, and opportunity to
correct or prevent such statement or omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentations.
7. Rule 144. The Company hereby agrees that it will
file the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the SEC thereunder (or,
if the Company is not required to file such reports, it will, upon the request
of any holder of Registrable Securities made after the first anniversary of the
Closing Date, make publicly available other information so long as necessary to
permit sales pursuant to Rule 144 under the Securities Act), and it will take
such further action as any holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such holder to
sell Registrable Securities without registration under the Securities Act
within the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the SEC. Upon the request
14
<PAGE> 56
of any holder of Registrable Securities, the Company will deliver to such
holder a written statement as to whether it has complied with such information
and requirements.
8. Participation in Underwritten Registrations. No
Person may participate in any Underwritten Registration hereunder unless such
Person (i) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements. Nothing in this Section 8
shall be construed to create any additional rights regarding the registration
of Registrable Securities in any Person otherwise than as set forth herein.
9. Miscellaneous.
(a) Remedies. Each party hereto, in addition to being
entitled to exercise all rights provided herein or granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement to the extent available under applicable law. Each party
hereto agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Agreement
and hereby agrees to waive the defense in any action for specific performance
that a remedy at law would be adequate.
(b) Additional Registration Rights. Without the written
consent of the holders of a majority of the then outstanding Registrable
Securities, the Company will not on or after the date of this Agreement enter
into any agreement granting registration rights to, or amending registration
rights currently held by, any other Person with respect to the securities of
the Company other than the Agreement Clarifying Registration Rights in the form
attached to the Stock Purchase Agreement; provided, however, the Company may
grant incidental registration rights that are expressly junior or subordinate
to the rights granted to the holders of Registrable Securities hereunder with
respect to any incidental registration rights of the type described in Section
2(c) hereof. Any agreement entered into pursuant to such consent shall not be
amended without a further written consent of the holders of a majority of the
then outstanding Registrable Securities.
(c) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given without the written consent of the Company
and holders of at least 75% of the then outstanding Registrable Securities.
(d) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
registered first-class mail, telecopier, or air courier guaranteeing overnight
delivery:
(i) if to the Investor, at the most current
address given by the Investor to the Company, in accordance with the
provisions of this subsection, which address initially is 200 Crescent
Court, Suite 1350, Dallas, Texas 75202, Attention: General Partner;
15
<PAGE> 57
(ii) if to the Company, at the most current
address given by the Company to the Investor, in accordance with the
provision of this subsection, which address initially is 600 N. Pearl
Street, Suite 420, LB#168, Dallas, Texas 75201, Attention: President;
and
(iii) if to any transferee, at the address given by
such transferee to the Company in accordance with the provisions of
this subsection.
(e) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors, assigns and transferees
of each of the parties, including, without limitation and without the need for
an express assignment, subsequent holders of Registrable Securities; provided
that nothing herein shall be deemed to permit any assignment, transfer or other
disposition of Registrable Securities in violation of the terms of the Stock
Purchase Agreement; and provided, further, that holders of Registrable
Securities may not assign their rights under this Agreement except in
connection with the permitted transfer of Registrable Securities and then only
insofar as relates to such Registrable Securities. If any transferee shall
acquire Registrable Securities, in any manner, whether by operation of law or
otherwise, such Registrable Securities shall be held subject to all of the
terms of this Agreement, and by taking and holding such Registrable Securities,
such Person shall be conclusively deemed to have agreed to be bound by and to
perform all of the terms and provisions of this Agreement, and such Person
shall be entitled to receive the benefits hereof.
(f) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE.
(i) Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
(j) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter other than the Agreement Clarifying Registration
Rights in the form attached to the Stock Purchase Agreement..
16
<PAGE> 58
(k) Legal Fees. In any proceeding brought to enforce any
provision of this Agreement, the successful party shall be entitled to recover
reasonable attorneys' fees in addition to its costs and expenses and any other
available remedy.
(l) Third Party Beneficiary. The holders of Enloe Shares
shall be third party beneficiaries of the provisions of Section 2(a) of this
Agreement, and such holders shall be entitled to enforce such provisions of
this Agreement as if they were parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Investor
Rights Agreement as of the date first written above.
[NEWCO]
By:
-----------------------------------
Name:Robert Ted Enloe
Title:President
HUNTER'S GLEN/FORD, LTD.
By:
-----------------------------------
Name:Gerald J. Ford
Title:General Partner
17
<PAGE> 59
EXHIBIT C
AGREEMENT CLARIFYING REGISTRATION RIGHTS
<PAGE> 60
EXHIBIT C
AGREEMENT CLARIFYING REGISTRATION RIGHTS
This Agreement Clarifying Registration Rights (this "Agreement") is
dated as of ______________, 1996, and is by and among ______________, a
Delaware Corporation (the "Issuer"), R. Ted Enloe III, an individual ("Enloe"),
the Enloe Descendants' Trust, a Texas trust (the "Trust"), and Hunter's
Glen/Ford, Ltd., a Texas limited partnership ("Purchaser").
r e c i t a l s
WHEREAS, Liberte Investors, a Massachusetts business trust
("Liberte"), has previously granted Enloe registration rights in connection
with 400,000 shares of beneficial interest of Liberte ("Shares of Beneficial
Interest"), pursuant to Sections 9 and 10 of a Stock Option Agreement dated as
of May 7, 1993 as amended by the Agreement Regarding Registration Rights,
Amendment of Stock Option Agreement, and Ratification of Pledge Agreement date
as of November 13, 1995, among the Issuer, the Trust and Enloe (the "Stock
Option Agreement");
WHEREAS, in connection with the transfer of such 400,000 Shares of
Beneficial Interest to the Trust, Enloe transferred, conveyed and assigned such
registration rights (the "Trust Registration Rights") to the Trust, and Liberte
consented to such transfer, conveyance and assignment;
WHEREAS, Liberte's rights and obligations in respect of the Trust
Registration Rights and the Stock Option Agreement have been conveyed, assigned
and transferred to, and assumed by, the Issuer;
WHEREAS, on January 16, 1996, the Purchaser and Liberte entered into a
Stock Purchase Agreement (the "Stock Purchase Agreement"), pursuant to which
the Purchaser has purchased shares of the Issuer's Common Stock, par value $.01
per share (the Common Stock");
WHEREAS, the Purchaser and the Issuer have entered into a Registration
Rights Agreement dated as of the date hereof (the "Purchaser Registration
Rights Agreement"), pursuant to which the Issuer has granted the Purchaser
certain registration rights in connection with the shares of Common Stock
purchased by the Purchaser pursuant to the Stock Purchase Agreement (the
"Purchaser Registration Rights");
WHEREAS, the parties hereto desire to clarify the interaction of the
Trust Registration Rights and the Purchaser Registration Rights.
A G R E E M E N T
NOW, THEREFORE, in consideration of the above recitals and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
-1-
<PAGE> 61
1. Extension of Trust Registration Rights. The Trust
Registration Rights shall be available for and shall apply to all shares of
Common Stock held by the Trust, Enloe or Enloe's spouse, to the extent such
shares derive from (i) the 719,000 Shares of Beneficial Interest owned by the
Trust as of the date of the Stock Purchase Agreement, (ii) the 38,000 Shares of
Beneficial Interest owned by Enloe in his Keogh Plan as of the date of the
Stock Purchase Agreement, and (iii) the 2,000 Shares of Beneficial Interest
owned by Enloe's spouse as of the date of the Stock Purchase Agreement. Such
shares held by the Trust shall be deemed "Registrable Securities" under
Sections 9 and 10 of the Stock Option Agreement. Such shares held by Enloe and
Enloe's spouse shall be deemed "Registrable Securities" under Section 10 of the
Stock Option Agreement, but not under Section 9 thereof; provided, that if the
Trust exercises a demand right under Section 9 of the Stock Option Agreement,
Enloe and Enloe's spouse may include their shares in the resulting offering
pursuant to Section 10 of the Stock Purchase Agreement.
2. Effectiveness of Sections 3 and 4. The provisions of Section
3 and 4 of this Agreement shall only be effective during the period commencing
on the first anniversary date of the Closing Date (as defined in the Stock
Purchase Agreement) and ending on the date when either the Trust, Enloe, and
Enloe's spouse, on the one hand, or the Purchaser, one the other hand, no
longer owns securities of the Issuer for which it has registration rights under
the Stock Option Agreement (as modified by this Agreement) or the Purchaser
Registration Rights Agreement, as applicable.
3. Exercise of Demand Rights; Primary Offerings by the Issuer
(a) Exercise of Demand Rights by Trust. In the event the Trust
exercises demand registration rights as to securities of the Issuer owned by it
in accordance with Section 9 of the Stock Option Agreement, the Purchaser shall
be entitled to exercise its Purchaser Registration Rights in accordance with
(but only to the extent provided in) Section 2(c) of the Purchaser Registration
Rights Agreement, and Enloe and Enloe's spouse shall be entitled to exercise
their Trust Registration Rights in accordance with (but only to the extent
provided in) Section 10 of the Stock Option Agreement; provided, that in the
event such registration is an Underwritten Offering (as defined in the
Purchaser Registration Rights Agreement), if the managing underwriter or
underwriters of such Underwritten Offering informs the Issuer, the Trust,
Enloe, Enloe's spouse and the Purchaser that the total number of securities
that the Issuer proposes to register on behalf of the Trust, Enloe, Enloe's
spouse, the Purchaser, and the Issuer is such that the success of the offering
would be materially and adversely affected by inclusion of the securities
requested to be included, then the amount of securities to be offered for the
accounts of the Issuer, the Trust, Enloe, Enloe's spouse, and the Purchaser
shall be allocated as follows: first to securities sought to be included by the
Trust, Enloe and Enloe's spouse, second to securities sought to be included by
the Purchaser, and third to securities sought to be included by the Issuer.
(b) Exercise of Demand Right by the Purchaser. In the event the
Purchaser exercises demand registration rights as to securities of the Issuer
owned by it in accordance with Sections 2(b) of the Purchaser Registration
Rights Agreement, the Trust, Enloe and Enloe's spouse shall be entitled to
exercise their Trust Registration Rights in accordance with (but only to the
extent provided in) Section 10 of the Stock Option Agreement; provided, that in
the event such registration is an Underwritten Offering, if the managing
underwriter or underwriters of such Underwritten Offering informs the Issuer,
the Trust, Enloe, Enloe's
-2-
<PAGE> 62
spouse, and the Purchaser that the total number of securities that the Issuer
proposes to register on behalf of the Purchaser, the Trust, Enloe, Enloe's
spouse, and the Issuer is such that the success of the offering would be
materially and adversely affected by inclusion of the securities requested to
be included, then the amount of securities to be offered for the accounts of
the Issuer, the Trust, Enloe, Enloe's spouse and the Purchaser shall be
allocated as follows: first to securities sought to be included by the
Purchaser, second to securities sought to be included by Trust, Enloe and
Enloe's spouse and third to securities sought to be included by the Issuer.
(c) Primary Underwritten Offering by the Issuer. In the event the
Issuer proposes to file a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), in respect of a primary offering by
the Issuer and other than pursuant to exercise of a demand right by the
Purchaser pursuant to Section 2(b) of the Purchaser Registration Rights
Agreement, (i) the Trust, Enloe and Enloe's spouse shall be entitled to
exercise their Trust Registration Rights in accordance with (but only to the
extent provided in) Section 10 of the Stock Option Agreement, and (ii) the
Purchaser shall be entitled to exercise its Purchaser Registration Rights in
accordance with (but only to the extent provided in) Section 2(c) of the
Purchaser Registration Rights Agreement; provided, that in the event such
registration is an Underwritten Offering, if the managing underwriter or
underwriters of such Underwritten Offering informs the Issuer, the Trust,
Enloe, Enloe's spouse and the Purchaser that the total number of securities
that the Issuer proposes to register on behalf of the Trust, Enloe, Enloe's
spouse, the Purchaser, and the Issuer is such that the success of the offering
would be materially and adversely affected by inclusion of the securities
requested to be included, then the amount of securities to be offered for the
accounts of the Issuer, the Trust, Enloe, Enloe's spouse, and the Purchaser
shall be allocated as follows: first to securities sought to be included by the
Issuer, and second to securities sought to be included by the Trust, Enloe,
Enloe's spouse, and the Purchaser, pro rata, on the basis of the number of
Shares sought to be included by the Trust, Enloe and Enloe's spouse on the one
hand and the Purchaser on the other hand.
4. Hold-Back Agreements.
(a) The Purchaser. In the event the Trust exercises a demand
registration right in accordance with Section 9 of the Stock Purchase
Agreement, the Purchaser hereby agrees not to effect any public sale or
distribution of securities of the Issuer of the same class as the securities
included in the applicable registration statement, including a sale pursuant to
Rule 144 under the Securities Act (except as a part of the offering in respect
of the exercise of such demand right), during the period beginning 10 days
prior to the filing of the registration statement and ending 90 days after the
effective date of such registration statement with respect to such Underwritten
Offering, to the extent timely notified in writing by the Issuer or the
managing underwriters.
(b) The Trust, Enloe and Enloe's Spouse. In the event the
Purchaser exercises a demand registration right in accordance with Sections
2(b) of the Purchaser Registration Rights Agreement, the Trust, Enloe and
Enloe's spouse hereby agree not to effect any public sale or distribution of
securities of the Issuer of the same class as the securities included in the
applicable registration statement, including a sale pursuant to Rule 144 under
the Securities Act (except as a part of the offering in respect of the exercise
of such demand right), during the period beginning 10 days prior to the filing
of the registration statement, and ending 90 days after the effective date of
such registration statement, to the extent timely notified in writing by the
Issuer or the managing underwriters.
-3-
<PAGE> 63
(c) The Purchaser, the Trust, Enloe and Enloe's Spouse. In the
event the Issuer files a registration statement under the Securities Act in
respect of a primary offering by the Issuer, the Purchaser, the Trust, Enloe
and Enloe's spouse hereby agree not to effect any public sale or distribution
of securities of the Issuer of the same class as the securities included in the
applicable registration statement, including a sale pursuant to Rule 144 under
the Securities Act (except as a part of the offering in respect of the exercise
of such demand right), (i) in the event such primary offering is an
Underwritten Offering, during the period beginning 10 days prior to the filing
of the registration statement with respect to such Underwritten Offering, and
ending 90 days after the effective date of the registration statement with
respect to such Underwritten Offering, to the extent timely notified in writing
by the Issuer or the managing underwriters of such Underwritten Offering, or
(ii) in the case of a shelf offering, 90 days after the commencement of a
public distribution of Registrable Securities (as such term is defined in the
Stock Option Agreement and Purchaser Registration Rights Agreement,
respectively) pursuant to such registration statement.
5. Transferability of Trust Registration Rights. The Trust
Registration Rights held by the Trust, Enloe and Enloe's spouse shall be
transferable without consent of the Issuer or any other person to any successor
holders of Registrable Securities (as such term as defined in the Stock Option
Agreement) held by the Trust, Enloe and Enloe's spouse as of the date of this
Agreement.
6. Enloe Registration Expenses. "Registration Expenses" as
defined in Section 9(d) of the Stock Option Agreement shall not include any
underwriting fees, discounts or commissions attributable to the sale of
Registrable Securities (as such term is defined in the Stock Option Agreement).
7. Successor Registration Rights. The terms "Trust," "Enloe,"
"Enloe's spouse," and "Purchaser" as used in this Agreement shall include any
successor holders of the Registrable Securities (as such term is defined in the
Stock Option Agreement and the Purchaser Registration Rights Agreement,
respectively) held by the Trust, Enloe, Enloe's spouse, or the Purchaser as of
the date of this Agreement.
8. This Agreement Controls. In the event of a conflict or
ambiguity in interpretation between this Agreement and the Stock Option
Agreement or the Purchaser Registration Rights Agreement, or both, the
provisions of this Agreement shall control.
9. Miscellaneous.
(a) Amendments and Waivers. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given without the written consent of all
of the parties hereto.
(b) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(c) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE,
REGARDLESS OF THE CONFLICTS OF LAWS PROVISIONS THEREOF.
-4-
<PAGE> 64
(d) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
(e) Third Party Beneficiary. Enloe's spouse is a third party
beneficiary of this Agreement, and is entitled to enforce such provisions of
this Agreement as if she were a party hereto.
(f) Entire Agreement. This Agreement, the Stock Option Agreement,
and the Purchaser Registration Rights Agreement are intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. This Agreement, the Stock
Option Agreement and the Purchaser Registration Rights Agreement supersede all
prior agreements and understandings between the parties with respect to such
subject matter.
[SIGNATURES ON NEXT PAGE]
-5-
<PAGE> 65
IN WITNESS WHEREOF, each of the undersigned has executed and
delivered this Agreement as of the date first written above.
NEWCO
By:
------------------------------
Robert Ted Enloe III
President
HUNTER'S GLEN/FORD, LTD.
By:
------------------------------
Gerald J. Ford
General Partner
ENLOE DESCENDANTS' TRUST
By:
------------------------------
Robert Ted Enloe III
Investment Trustee
----------------------------------
Robert Ted Enloe III
-6-
<PAGE> 1
Exhibit 99.1
LIBERTE INVESTORS NEWS RELEASE
FOR IMMEDIATE RELEASE Contact: Ted Enloe
214/720-8950
LIBERTE INVESTORS
Dallas Investor Gerald J. Ford
To Acquire Up To 40% of a Reorganized Liberte Investors
DALLAS, TX - January 17, 1996 - Liberte Investors (NYSE/LBI) announced
that it is entered into a definitive agreement with Hunter's Glen/Ford, Ltd. to
sell 7,137,863 newly issued shares of common stock for $20,342,910 ($2.85 per
share). Under certain circumstances, Hunter's Glen will purchase an additional
964,576 newly issued shares of common stock at $2.85 per share of an additional
$2,749,041. After the sale Hunter's Glen will own 37% or 40% of the outstanding
shares of common stock. The partners of Hunter's Glen are Dallas investor
Gerald J. Ford and certain family interests.
Prior to the sale of the shares, LBI will be reorganized into a newly
formed Delaware corporation that will succeed to all of the assets and
liabilities of LBI. The offering of common stock of the newly formed Delaware
corporation in connection with the reorganization of LBI will be made only by
means of a prospectus transmitted to LBI's existing shareholders. In the
reorganization, shareholders of LBI will automatically become shareholders of
common stock of the newly formed Delaware corporation on a share for share
basis.
At the closing, Mr. Ford will become Chairman and Chief Executive
Officer of LBI. LBI's board will be expanded from three to five members, and
Mr. Ford and one of his designees will join LBI's board. The sale, which is
expected to close in the second quarter of 1996, is subject to a number of
conditions, including the approval by LBI's shareholders of the sale of shares
and the reorganization of LBI from a Massachusetts business trust into a
Delaware corporation.
Mr. Ford currently serves as Chairman and Chief Executive Officer of
First Nationwide Bank, A Federal Savings Bank, a savings bank with
approximately $14 billion of assets. Mr. Ford was formerly Chairman and Chief
Executive Officer of First United Bank Group, Inc., a bank holding company,
which was sold to Norwest Corporation in 1994. Mr. Ford was formerly Chairman
and Chief Executive Officer of First Gibraltar Bank, FSB, a Texas based savings
bank, which was sold in 1993 to Bank of America. Mr. Ford is also a director of
Norwest Corporation and Affiliated Computer Services, Inc.
