UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities and Exchange Act of 1934
(Amendment No. 25)*
Major Realty Corp.
----------------------------------------------------------------
(Name of Issuer)
Common Stock
- -----------------------------------------------------------------
(Title of Class of Securities)
560840-10-0
- -----------------------------------------------------------------
(CUSIP Number)
Donn E. Davis, 134 S. 13th Street, Suite 400,
Lincoln, NE 68508, (402) 434-7300
- -----------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
March 9, 1998
- -----------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition that is the subject of
this Schedule 13D, and is filing this schedule because of Sections
240.133d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following
box |_|.
NOTE: Schedules filed in paper format shall include a signed
original and five copies of the schedule, including all exhibits.
See Section 240.13d-7(b) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to
the subject class of securities, and for any subsequent
amendment containing information which would alter disclosures
provided in a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934 ("Act") or otherwise
subject to the liabilities of that section of the Act but shall
be subject to all other provisions of the Act (however, see the
Notes).
CUSIP No. 560840-10-0
<TABLE>
<CAPTION>
<S> <C>
- -----------------------------------------------------------------
1 | NAME OF REPORTING PERSON
| I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
|
| Acceptance Insurance Company
| 47-0619971
|
- -----------------------------------------------------------------
2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
| (a) |_|
| (b) |_|
- -----------------------------------------------------------------
3 | SEC USE ONLY
|
- -----------------------------------------------------------------
4 | SOURCE OF FUNDS*
|
| Not Applicable
- -----------------------------------------------------------------
5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
| PURSUANT TO ITEMS 2(d) or 2(e) |_|
- -----------------------------------------------------------------
6 | CITIZENSHIP OR PLACE OF ORGANIZATION
|
| Nebraska
- -----------------------------------------------------------------
<S> <C> <C> <C>
Number of | 7 SOLE VOTING POWER 2,280,500 shares
Shares |--------------------------------------------------
Beneficially | 8 SHARED VOTING POWER 0 shares
Owned by |--------------------------------------------------
Each | 9 SOLE DISPOSITIVE POWER 2,280,500 shares
Reporting |--------------------------------------------------
Person | 10 SHARED DISPOSITIVE POWER 0 shares
With |--------------------------------------------------
CUSIP No. 560840-10-0
<S> <C>
- -----------------------------------------------------------------
11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
| PERSON
|
| 4,647,924 shares
|
- ----------------------------------------------------------------
12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
| SHARES* |_|
|
- -----------------------------------------------------------------
13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
|
| 50.2%
|
- -----------------------------------------------------------------
14 | TYPE OF REPORTING PERSON*
|
| CO
|
- -----------------------------------------------------------------
</TABLE>
Introduction
This Statement of Schedule 13D is filed on behalf of
Acceptance Insurance Company, a Nebraska corporation ("AIC"), and
is a restatement, pursuant to Rule 13d-2(e), of the entire text
of a Statement on Schedule 13D originally filed with the
Securities and Exchange Commission (the "Commission") on July 9,
1987 (the "Original Statement") by Samelson Real Estate Partners,
Inc., a Michigan corporation ("SREPI") with respect to the common
stock, par value $.01 per share (the "Common Stock") of Major
Realty Corporation, a Delaware corporation (the "Issuer").
Included within this restatement are amendments to Items 2, 3, 4,
5, 6 and 7, which constitute the 25th Amendment to this Schedule
13D. SREPI is a wholly-owned subsidiary of Acceptance Insurance
Companies Inc. ("Acceptance"), a Delaware corporation, which,
until an amendment to its Certificate of Incorporation changing
its name, was named Stoneridge Resources, Inc. ("Stoneridge").
Commencing with the 21st Amendment to SREP's statement's
statement on Schedule 13D, another wholly-owned subsidiary of
Acceptance, Acceptance Insurance Holdings Inc., a Nebraska
corporation ("AIH"), and AIH's wholly-owned subsidiary, AIC,
joined SREPI in filing amendments to SREPI's Statement of
Schedule 13D with respect to the Common Stock.
On March 6, 1998, the Issuer announced that it had entered
into an Agreement and Plan of Merger ( the "PBD Merger
Agreement") with PBD Holdings, Inc. ("PBD Holdings"), an
affiliate of Pembroke Companies, Inc. and Blackacre Capital
Group, L.P., pursuant to which PBD Holdings will be merged into
the Issuer, and all of the outstanding shares of the Issuer will
be converted into the right to receive $1.25 per share in cash.
Holders of a majority of the outstanding shares of the Common
Stock, including AIC, have entered into a stockholder agreement
with PBD Holdings ("Stockholder Agreement") pursuant to which
they have agreed to execute written consents approving the PBD
Merger Agreement and the merger contemplated therein. On March
2, 1998, the Board of Directors of the Issuer approved the PBD
Merger Agreement and the merger contemplated therein. On March
6, 1998, Acceptance, the parent company of AIC, issued its own
press release announcing AIC's execution of the Stockholder
Agreement. A copy of the Stockholder Agreement, the Merger
Agreement, the press release of PBD Holdings and the press
release of Acceptance are attached hereto as Exhibits 45, 46, 47
and 48, respectively.
Item 1. Security and Issuer.
--------------------
This Schedule 13D Statement relates to the shares of
Common Stock, $0.01 par value per share (the "Shares"), of
Major Realty Corp., a Delaware corporation ("Major Realty"),
which has its principal executive offices at 5728 Major Blvd.,
Suite 301, Orlando, FL 32819.
Item 2. Identity and Background.
------------------------
The person filing this Schedule 13D is AIC, a Nebraska
corporation, whose principal place of business is Omaha,
Nebraska. The address of AIC's principal business and principal
office is 222 South 15th Street, Suite 600 North, Omaha, NE
68102. AIC's principal business is the property and casualty
insurance business. During the last five years, AIC has neither
been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) nor been a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction in which as a result of such proceeding AIC was or
is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with
respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
--------------------------------------------------
On or about June 30, 1987, SREPI purchased 505,000 shares of
the Common Stock for a total consideration (including broker's
fees) of approximately $5,328,500. Such funds were obtained
through a margin loan by McDonald & Company Securities, Inc. of
approximately $2,613,000, a margin loan by Jeffries Group, Inc.
of approximately $50,875 and from capital contributions by the
shareholders of SREPI.
SREPI purchased an additional 4,000 shares of the Common
Stock in market transactions on July 9 and July 15, 1987 for a
total consideration (including broker's fees) of approximately
$43,150. Such funds were obtained through a margin loan by
McDonald & Company Securities, Inc. of approximately $15,637.50,
a margin loan by Bear, Stearns & Co. of approximately $5,937.50
and from capital contributions by the shareholders of SREPI.
On August 17, 1987, SREPI purchased 700,000 shares of the
Common Stock, and an option to purchase an additional 482,300
shares of the Common Stock for a total consideration of
approximately $9,525,110. Such funds were obtained through a
bank loan of approximately $4,375,000 and from capital
contributions by the shareholders of SREPI.
On September 1, 1987, October 6, 1987 and October 13, 1987,
SREPI purchased an additional 61,500 shares of the Common Stock
for a total consideration (including broker's fees) of
approximately $914,225. Such funds were obtained through margin
loans of approximately $305,475 from Jeffries and Co., Inc.;
through a margin loan of approximately $151,637.50 from Bear,
Stearns and Co., Inc.; and from capital contributions of
approximately $457,112.50 made by the shareholders of SREPI.
On May 9 and 11, 1988, SREPI purchased an additional 76,500
shares of the Common Stock for a total consideration (including
broker's fees) of approximately $843,762.50. Such funds were
obtained through margin loans of approximately $146,131.25 from
Jeffries and Co., Inc. and from capital contributions of
approximately $697,631.25 made by the shareholders of SREPI.
During December 1988 and January 1989, SREPI purchased an
additional 57,000 shares of the Common Stock for a total
consideration (including broker's fees) of approximately
$585,175. Such funds were obtained through margin loans of
approximately $287,411 from Jeffries and Co., Inc. and from
capital contributions made by the sole shareholder of SREPI.
During March 1989, SREPI purchased an additional 36,500
shares of the Common Stock for a total consideration (including
broker's fees) of approximately $452,950. Such funds were
obtained through margin loans of approximately $226,475 from
Jeffries and Co., Inc. and from capital contributions made by the
sole shareholder of SREPI.
During March 1989, SREPI purchased an additional 168,000
shares of the Common Stock for a total consideration (including
broker's fees) of approximately $2,081,695. Such funds were
obtained through margin loans of approximately $1,040,847 from
Jeffries and Co., Inc. and from capital contributions made by the
sole shareholder of SREPI.
During March, April, May and June 1989, SREPI purchased an
additional 144,000 shares of the Common Stock for a total
consideration (including broker's fees) of approximately
$1,768,201. Such funds were obtained through margin loans of
approximately $884,100 from Autranet, Inc., Jeffries and Co.,
Inc., Shearson Lehman Hutton and Raymond James & Associates, Inc.
and from capital contributions made by the sole shareholder of
SREPI. In addition, during May and June 1989, George F. Valassis
("GFV"), a director of Stoneridge, acquired 111,000 shares of
Common Stock for a total consideration of $1,378,702. The funds
used to acquire Mr. Valassis' stock were obtained through margin
loans of $207,527 from Morrison, McKeown & Young, Inc. and the
balance from personal funds. Information is included herein with
respect to GFV solely because of his position as a director of
Stoneridge and SREPI disclaims any beneficial ownership of shares
owned by GFV.
Between June 2, 1989 and June 6, 1989, SREPI purchased an
additional 105,300 shares of the Common Stock for a total
consideration (including broker's fees) of approximately
$1,320,890. Such funds were obtained through margin loans of
approximately $660,445 from Jeffries and Co., Inc. and from
Oppenheimer & Co., Inc. and from capital contributions made by
the sole shareholder of SREPI. In addition, between June 2, 1989
and June 6, GFV acquired 32,000 shares of Common Stock for a
total consideration of $399,810. The funds used to acquire Mr.
Valassis' stock were obtained through margin loans of $61,530
from Morrison, McKeown & Young, Inc. and the balance from
personal funds. Information is included herein with respect to
GFV solely because of his position as a director of Stoneridge
and SREPI disclaims any beneficial ownership of shares owned by
GFV.
Between June 6 and June 14 1989, GSV acquired an additional
15,000 shares of Common Stock for a total consideration of
$189,375. The funds used to acquire Mr. Valassis' stock were
obtained from personal funds. Information is included herein
with respect to GFV solely because of his position as director of
Stoneridge, and SREPI disclaims any beneficial ownership of
shares owned by GFV.
Since the filing of the Fifteenth Amended Statement, GFV
acquired 108,500 shares of Common Stock for a total consideration
of $1,400,707.25. In addition, on October 12, 1989 GFV acquired
671,641 shares of common stock of Major Acquisition Corporation
("MAC") for a total consideration of $9,607,153.50. These shares
of common stock of MAC were converted into 671,641 shares of
Common Stock of Issuer upon completion of the merger of MAC with
and into the Issuer (the "Merger"). The funds used to acquire
the Issuer's Common Stock and MAC's common stock by GFV were
obtained from personal funds. Information is included herein
with respect to GFV solely because of his position as director of
Stoneridge, and SREPI disclaims any beneficial ownership of
shares beneficially owned by GFV.
In April 1990, Stoneridge purchased 416,500 shares of the
Common stock in exchange for 682,500 shares of Stoneridge's
authorized and unissued common stock. Stoneridge has transferred
the shares it acquired to SREPI as a capital contribution.
Between June 19, 1990 and December 28, 1990, SREPI
purchased an additional 6,200 shares of the Common Stock in open
market transactions for an aggregate purchase price of
approximately $57,350. Funds for the purchases were derived as
follows: $28,675 was provided by margin loans from Dain Bosworth
Incorporated and the balance was a capital contribution from
Acceptance derived from its working capital. On the dates
identified below, SREPI transferred the indicated number of
shares of the Issuer's Common Stock for a cash payment of
$2,199,375 with the remaining value constituting a capital
contribution on behalf of Stoneridge to AIC:
December 28, 1990 140,220 shares
December 31, 1990 204,780 shares
AIC derived the funds for such payments from working capital
from AIC's business and operations.
On July 5, 1991, SREPI transferred to AIC 416,667 shares of
the Common Stock for a cash payment of $2,000,000 with the
remaining value constituting a capital contribution on behalf of
Acceptance to AIC.
On or about October 1991, (i) the outstanding margin
borrowings form Jeffries and Co. which had been incurred to
finance certain prior purchases of Common Stock was refinanced
through a loan from Patricia Investments, Inc. ("PII") in the
amount of $268,000; and (ii) the outstanding margin borrowings
from Oppenheimer and Co. which had been incurred to finance prior
purchases of Common Stock was refinanced through a loan from
Valassis Enterprises, LP ("VELP") in the amount of $340,028. At
that time, the general partners of VELP were George Valassis and
Franklin Enterprises, Inc., the sole shareholder of which was Mr.
Valassis. Amounts outstanding under the loans from PII and VELP
were evidenced by certain demand notes, which were attached to
the 23rd amendment to the Original Statement.
The Common Stock was acquired by AIC as a contribution by
its immediate parent, AIH. AIH acquired the Common Stock as
contribution from its immediate parent, Acceptance. Acceptance
acquired the Common Stock by a dividend from its wholly-owned
subsidiary, SREPI. No funds were received or paid by any of
these corporations in connection with the transfer of the Common
Stock. These events all occurred concurrently on February 19,
1993, and certificates for the Common Stock were submitted to the
transfer agent of the Issuer for transfer on March 8, 1993.
On October 18, 1995, Acceptance, the parent company of AIC,
agreed to replace PNC Bank, Kentucky, Inc. ("PNC") as the
principal lender to the Issuer by consolidating the PNC loan to
the Issuer of approximately $4.1 million with a subordinated loan
of approximately $0.9 million (which was due January of 1996)
from Acceptance to the Issuer. The resulting Restated and
Consolidated Promissory Note was dated October 18, 1995 and made
by the Issuer to Acceptance in the original principal amount of
$5,064,144.29. Acceptance could convert all or a portion of the
outstanding balance of that Note into shares of the Common Stock
at a conversion price equal to the average closing price of the
Common Stock as reported by NASDAQ during the thirty day period
immediately preceding the date of AIC's notice to the Issuer of
its election to convert. Repayment of the Note is secured by a
mortgage on certain of the Issuer's property. In August 1996,
Acceptance assigned the Note to AIC to increase the surplus of
AIC. As of April 1, 1997, AIC and the Issuer consolidated
accrued interest of $386,584.03 into the Restated and
Consolidated Promissory Note, bringing the total balance as of
that date to $5,450,728.32. As of March 6, 1998, the balance of
the Note is approximately $2.5 million.
Item 4. Purpose of Transaction.
-----------------------
SREPI acquired the shares of Common Stock of the Issuer for
the purpose of acquiring an equity investment in the Issuer.
SREPI then believed the Issuer was undervalued and that the
Issuer's value could be maximized by adopting a clearly defined
plan that included intensive management. SREPI acquired
additional stock as described in Item 3 to this Statement,
believing such purchases to be a good investment. During the
entire time SREPI and AIC held the Common Stock, each of them
were open to a range of possible transactions respecting the
Common Stock, including without limitation (a) continuing to hold
its investment in the Common Stock, (b) acquiring additional
shares of the Common Stock (subject to availability of shares at
prices deemed favorable by it and the availability of financing)
from time to time in the open market, in privately negotiated
transactions, by tender offer or otherwise, (c) entering into
voting or similar agreements or otherwise acting in concert with
other major shareholders of the Issuer, (e) attempting to dispose
of shares of the Common Stock held by it in the open market, in
privately negotiated transactions or otherwise, to one or more
persons, which may include the Issuer, or (f) engage in a
combination of such actions. The possible activities of SREPI
and AIC were subject to change at any time, and neither SREPI nor
AIC at any time provided any assurance that it would actually
purchase any additional shares of Common Stock, seek to influence
the Issuer, engage in a business combination with the Issuer,
seek control of the Issuer or take any of the other actions
described above.
During the time they held the Common Stock, SREPI and AIC
sought to influence management in formulating and implementing
future policy and developing a program to realize the potential
value of the Issuer's assets and business. SREPI and AIC through
its directors and officers, intended to seek representation on
the Issuer's Board of Directors.
On December 30, 1986, Samelson Development Company ("SDC"),
a 5% shareholder in SREPI, submitted a letter from Mr. Samelson
along with a proposed letter of intent to the Issuer (which are
attached as Exhibit 3 to the Original Statement) by which SDC
offered to enter into an agreement to purchase 3,200,000 newly
issued shares of Common Stock from the Issuer for an aggregate
price of $40,000,000. The letter from Mr. Samelson described
certain perceived benefits to the Issuer which would result from
the proposed transaction. The proposed price was based on the
public information available to SDC at the time, which did not
include the loss of $4,005,000 subsequently reported by the
Issuer in 1986.
On July 9, 1987, Mr. Samelson sent a letter (attached to the
first amendment to the Original Statement as Exhibit 5) and a
copy of the Original Statement to Warren M. Cason, Vice Chairman
of the Board of the Issuer. Mr. Samelson's letter asked Mr.
Cason to consider (1) a transaction similar to that described in
the December 30, 1986 proposed letter of intent or any fair
alternative, (2) restructuring the Issuer's Board of Directors
and giving SREPI three board seats, (3) an employment contract
for the current President of the Issuer, and (4) the formation of
a search committee for a new chief executive officer of the
Issuer. Mr. Samelson's letter concluded with a request to meet
to form plans to enhance the Issuer's value and to expand its
business. Mr. Samelson subsequently received a telephone call
from Mr. Cason regarding the statement in Item 4 of the Original
Statement concerning the Issuer's response to the December 30,
1986 proposed letter of intent. According to Mr. Cason, the
Issuer's position is that the proposed letter of intent was
rejected by the Issuer in the course of a March 23, 1987
telephone call from Mr. Cason.
On March 5, 1987, Gerald Van Wyke, on behalf of Samelson
Development Company, sent a letter to Alvin Lawing, President of
the Issuer, stating that the Issuer must respond to the December
30, 1986 proposed letter of intent by March 19, 1987 or Samelson
Development Company would assume that no transaction would occur
between the two companies. The letter from Mr. Van Wyke to Mr.
Lawing is attached to the second amendment to the Original
Statement as Exhibit 7.
On August 17, 1987, representatives of SREPI met with
representatives of the Issuer to begin discussions.
On November 19, 1987, Stoneridge sent a letter to Mr. Lawing
in which Stoneridge proposed a merger transaction with the Issuer
that would result in the Issuer's stockholders receiving $12.50
value per share in cash and securities. A copy of the letter is
attached to the third amendment to the Original Statement as
Exhibit 8. On November 20, 1987, the Issuer responded with a
press release stating that the Issuer has determined not to
pursue the Stoneridge proposal at this time. A copy is attached
as Exhibit 9 to the third amendment to the Original Statement.
Stoneridge's response to the Issuer is attached to the third
amendment to the Original Statement as Exhibit 10.
On February 4, 1988, SREPI delivered to the Issuer a letter
in which SREPI demanded the right to inspect and make copies of
the list of the Issuer's stockholders and other related
information in order to permit SREPI to communicate with the
Issuer's other stockholders. A copy of the letter is attached to
the fourth amendment to the Original Statement as Exhibit 13. On
February 12, 1988, SREPI filed a Complaint in the Court of
Chancery for Newcastle County, Delaware requesting a court order
directing the Issuer, its officers, agents and employees to
permit SREPI to inspect and make copies of the documents
requested in the aforementioned letter. A copy of the Complaint
is attached to the fourth amendment to the Original Statement as
Exhibit 14. On February 22, 1988, as a result of the Issuer's
agreement to provide the requested stock list materials, SREPI
and the Issuer filed a Stipulation and Order which was entered in
said Court of Chancery on February 23, 1988, pursuant to which
the action was dismissed. A copy of the Stipulation and Order is
attached to the fourth amendment to the Original Statement as
Exhibit 15.
On April 29, 1988, Stoneridge sent a letter addressed to Mr.
Lawing, in which Stoneridge proposed a merger transaction with
the Issuer that would result in the Issuer's stockholders
receiving $13.20 nominal value per share in cash and securities.
A copy of the letter is attached to the fifth amendment to the
Original Statement as Exhibit 16. On May 3, 1988, Stoneridge
extended to 5:00 p.m., May 4, 1988, the expiration date of
Stoneridge's proposed merger transaction with the Issuer as set
forth in a letter to the Issuer dated April 29, 1988. Pursuant
to the terms of that proposal as extended on May 3, 1988, it
expired on May 4, 1988 without acceptance by the Issuer.
On May 24, 1988, Stoneridge, SREPI and Mr. Samelson,
the Chairman of the Board of Directors of both Stoneridge and
SREPI (Stoneridge, SREPI and Samelson being the "Samelson
Entities") entered into an agreement with the Issuer (the
"Samelson Agreement"). A copy of the Samelson Agreement is
attached to the eighth amendment to the Original Statement as
Exhibit 17, all of the terms and provisions of which are
incorporated therein by reference. The following only purports
to be a summary of the Samelson Agreement and reference is made
in all instances to the entire Samelson Agreement. The Samelson
Agreement provided that the Samelson Entities, their affiliates,
and persons acting in concert with them, would not, except in
certain circumstances, (a) other than pursuant to offers made to
the Issuer's Board of Directors, acquire or offer to acquire more
than 21% of the Issuer's outstanding Common Stock, calculated on
a fully-diluted basis, or any of the Issuer's assets or other
securities, (b) engage or participate in the coalition of any
proxies of consents with respect to the Issuer, except for
certain merger transactions which the Samelson Entities oppose,
(c) except in connection with the Issuer's 1989 annual meeting,
initiate stockholder proposals with respect to the Issuer, (d)
enter into a voting trust with respect to the issuer's
securities, or enter into a partnership or group for the purpose
of acquiring or holding securities of the Issuer or (e) make any
recommendation or proposal to any person to engage in any of the
foregoing. The Samelson Agreement provided that Samelson shall
be immediately appointed to the Issuer's Board of Directors, that
at the Issuer's 1988 meeting of stockholders and that any
vacancies in the Board attributable to Messrs. Samelson, Jorissen
or Savill would be filled by nominees designated by the
Stoneridge Entities. The Agreement provided that the Issuer
would amend its Rights Agreement as announced on October 14, 1987
on Form 8-K to permit the Issuer's stockholders to vote on
whether the rights created by the Rights Plan should be redeemed
in connection with certain all cash, financed offers for the
Issuer. The Samelson Agreement further provided the Issuer will
not, except as contemplated by the Agreement, (a) amend the
Rights Agreement, (b) increase the size of, or adopt a
classified, Board of Directors, (c) adopt an supermajority
amendment to its Certificate of Incorporation or Bylaws, (d)
amend its Bylaws relating to the calling of special meetings of
stockholders or adopt any provision requiring advance notice for
nominating directors or proposing stockholder action, (e)
authorize any new class of security or issue any security with
other than one vote per share or issue preferred stock at a price
below the market price of its Common Stock, (f) except in the
ordinary course of business and except with the consent of the
Stoneridge Entities, which will not by unreasonably withheld,
enter into any contracts which would permit a material event to
occur thereunder following a change in control in the Issuer,
other than under certain employment agreements or (g) take any
action requiring a stockholder vote pursuant to a proxy statement
which in the opinion of the Company's counsel, would be required
to state that a principal purpose of such action is to serve as
an "antitakeover" device. The Samelson Agreement also required
certain outstanding litigation between the Issuer and the
Samelson Entities to be terminated without prejudice. The
Samelson Agreement's term extended until 90 days before the
Issuer's 1989 Annual meeting of Stockholders, which would in no
event, occur prior to June 15, 1989. The Samelson Agreement
required the Samelson Entities to vote their stock in accordance
with the election of Directors recommended by a majority of the
Issuer's Board, so long as the Issuer is in compliance with its
obligations under the Samelson Agreement.
On February 20, 1989, Mr. Samelson wrote to the Board of
Directors of the Issuer on behalf of Stoneridge. In his letter
(the "Samelson Letter"), Mr. Samelson stated, "Stoneridge
Resources is prepared of offer a transaction in which all
stockholders of Major who desire to receive $13.00 per share in
cash for their stock will be afforded the opportunity to do so,
while permitting those who would prefer otherwise to continue to
participate in the long-term values of Major." The full text of
the Samelson Letter is attached to the tenth amendment to the
Original Statement as Exhibit 18 and is incorporated therein by
reference. In response to the Samelson Letter, on February 22,
1989 Mr. Lawing, President and CEO of the Issuer, wrote to Mr.
Samelson (the "Lawing Letter") stating, "... to facilitate the
negotiation of a transaction that would be in the best interests
of all [of the Issuer's] stockholders, [the Issuer] has
determined to grant a limited waiver, subject to the limitations,
terms and conditions set forth in this letter, to [Mr. Samelson,
Stoneridge and SREPI] and their affiliates (collectively, the
"Stoneridge Persons"), acting through their officers, agents and
employees, of that certain Agreement dated May 24, 1988 (the
"Standstill Agreement") by and among [the Issuer], Stoneridge,
Samelson Real Estate Partners, attached to the tenth amendment to
the Original Statement as Exhibit 19 and is incorporated therein
by reference. The terms of the waiver contained in the Lawing
Letter were subsequently accepted and agreed to by Stoneridge,
SREPI and Mr. Samelson.
On March 16, 1989, the Issuer issued a press release
announcing an agreement with Major Acquisition Corporation (the
"MAC Agreement"), which is an affiliate of Stoneridge. A copy of
the Issuer's press release is attached to the eleventh amendment
to the Original Statement as Exhibit 20 and is incorporated
therein by reference. Simultaneously with the execution of the
MAC Agreement, Stoneridge, Mr. Samelson, SREPI and the Issuer
entered another agreement ("Amendment") modifying the terms of
the Agreement described in the eighth amendment to the Original
Statement and filed therewith as Exhibit 17. A copy of the
Amendment is attached to the eleventh amendment to the Original
Statement as Exhibit 21 and is incorporated therein by reference.
The MAC Agreement, among other things, contemplated a
transaction between MAC and the Issuer in which all Major
stockholders would be given the option to receive either $13.40
in cash for each share of the Issuer or a right to continue to
hold common stock in the Issuer. The MAC Agreement provided in
part that the Issuer and MAC would attempt to structure the
transaction as a recapitalization in which the Issuer repurchases
shares from those stockholders wishing to elect to receive cash.
For the purpose of ascertaining the amount of financing needed to
consummate the proposed transaction as a recapitalization, MAC
held discussions with certain stockholders of the Issuer
concerning the proposed recapitalization transaction. As a
result of these discussions, certain of such stockholders owning
an aggregate of approximately 2,200,000 shares of Common Stock
indicated that if the recapitalization proposal proceeded, they
would retain their shares under the proposed recapitalization
transaction and would not elect to receive the $13.40 cash
payment contemplated by the MAC Agreement. In addition, SREPI
did not plan to tender its Common Stock (including any Common
Stock it acquires in the future) in the proposed recapitalization
transaction. The form of these indications ranged from verbal
statements of intent to written instruments in which such
stockholders agreed not to tender their shares into the proposed
transaction or to sell their shares until completion of the
transaction if it proceeds. SREPI had no voting or dispositive
power with respect to any of these shares, and none of such
stockholders had, to SREPI's knowledge, agreed to act in
conjunction with one another. Accordingly, SREPI disclaimed all
beneficial ownership of such stock.
Between May 15, 1989 and June 2, 1989, representatives of
the Issuer and MAC discussed the status of these indications
concerning financing as well as the status of the balance of the
financing necessary to complete the proposed transaction. As
part of these discussions, on June 2, 1989 the Issuer stated
"that in an effort to secure an acquisition agreement with a
greater probability of successful consummation it [was] holding
discussions with [MAC] to determine whether a mutually
satisfactory agreement can be reached between [the Issuer] and
[MAC] that would provide for [the Issuer's stockholders with the
opportunity either to receive $12.75 in cash for each share of
their common stock or to maintain their common equity interest in
the Issuer."
Discussions of the status of various aspects of the
proposed transaction continued through June 14, 1989. In
connection with finalizing these discussions, on June 14, 1989,
the Issuer and MAC issued a press release, a copy of which is
attached to the thirteenth amendment to the Original Statement as
Exhibit 22, which states in part:
"Major Realty Corporation and Major Acquisition
Corporation jointly announced today that they are proceeding
with their previously announced merger transaction.
As previously reported, on March 16, 1989, Major Realty
and Major Acquisition, a wholly-owned subsidiary of
Stoneridge Resources, Inc., signed a merger agreement that
would give Major Realty's stockholders the opportunity
either to receive $13.40 in cash for each share of their
common stock, or to maintain their common stock. If the
merger occurs after July 31, 1989, the cash consideration
offered to Major Realty's stockholders would be $13.50 per
share of common stock. The merger will require the approval
of the holders of a majority of Major Realty's outstanding
common stock.
Jeffrey P. Jorissen, President of Stoneridge Resources,
said `We have delivered the financing commitments
contemplated by the merger agreement and are committed to
complete the merger transaction with Major Realty. We see
potential for Major Realty to become a successful company,
and we believe that a majority of Major's stockholders share
that view and presently intend to retain their stock
holdings in Major.' Thomas E. Weaver, Chairman of the
Special Independent Committee of Major Realty's Board, said
`We have reviewed and accepted Stoneridge's financing
arrangements pursuant to the terms of the merger agreement.
The unique aspect of this transaction is that stockholders
have a choice on whether to take cash or receive an interest
in the company."
On October 12, 1989 the Issuer issued a press release
announcing the completion of the Merger. A copy of the Issuer's
press release is attached to the sixteenth amendment to the
Original Statement as Exhibit 23 and is incorporated therein by
reference. The Merger was completed in accordance with the
Agreement and Plan of Merger dated as of March 16, 1989, as
amended by the amendment dated as of July 31, 1989, the amendment
dated as of August 30, 1989, and the amendment dated as of
September 22, 1989 (as amended, the "Merger Agreement") between
the Issuer and MAC. The form of Merger Agreement is filed with
sixteenth amendment to the Original Statement as Exhibit 24 and
is incorporated therein by reference. Pursuant to the Merger
Agreement, the Merger was consummated by the filing of a
Certificate of Merger with the Secretary of State of Delaware
(the "Certificate of Merger"). The form of Certificate of Merger
is filed with the sixteenth amendment to the Original Statement
herewith as Exhibit 25 and is incorporated therein by reference.
In December 1990, AIC acquired 345,000 shares in order to
increase its capital by the difference between the cash payment
therefor and the market value for such shares. AIC and AIH then
were open to may acquire additional shares of Common Stock, or
dispose of shares of Common Stock, in the open market, in
privately negotiated transactions or otherwise.
On July 5, 1991, AIC acquired the 416,667 shares of the
Common Stock in order to increase its capital by the difference
between the cash payment and the market value for such shares.
On October 17, 1991, Stoneridge delivered to Mr. Samelson,
then a Director and the Chairman of the Board of the Issuer, a
letter confirming Stoneridge's request for his resignation as a
Director of the Issuer and Chairman of the Issuer's Board of
Directors and confirming Stoneridge's willingness to participate
in an action to remove the Issuer's Board by consent of a
majority of the Issuer's shareholders if Mr. Samelson chose not
to resign on October 17, 1991. At the time Stoneridge's letter
was delivered to Mr. Samelson, Mr. Samelson delivered his
resignation as a Director and Chairman of the Board of the
Issuer, effective October 17, 1991. A copy of the letter from
Stoneridge is attached to the twenty-third amendment to the
Original Statement as Exhibit 43 and is incorporated therein by
reference. Separately, Richard E. Rabbideau, a Director of the
Issuer, advised Stoneridge that he had also resigned as a
Director of the Issuer as of October 17, 1991. At such time,
neither Stoneridge, SREPI, AIH nor AIC had plans or proposals to
make any other change in the Issuer's Board of Directors, except
that Stoneridge indicated it may consider making recommendations
to the Issuer's Board of Directors regarding the filling of the
foregoing vacancies in the Issuer's Board of Directors.
Concurrently on February 19, 1993, 761,667 shares of the
Common Stock was acquired by AIC as a contribution by its
immediate parent, AIH. AIH acquired the Common Stock as
contribution from its immediate parent, Acceptance. Acceptance
acquired the Common Stock by a dividend from its wholly-owned
subsidiary, SREPI. No funds were received or paid by any of
these corporations in connection with the transfer of the Common
Stock. The purpose of the transfer of the Common Stock to AIC
was to increase its surplus.
On March 6, 1998, the Issuer announced that it had entered
into an Agreement and Plan of Merger ("PBD Merger Agreement")
with PBD Holdings, Inc. ("PBD Holdings"), an affiliate of
Pembroke Companies, Inc. ("Pembroke") and Blackacre Capital Group
L.P., pursuant to which a subsidiary of PBD Holdings will be
merged into the Issuer (the "PBD Merger"), and all of the
outstanding shares of the Issuer will be converted into the right
to receive $1.25 per share in cash. As a result of the PBD
Merger, the Issuer would become a private company, and the Common
Stock would be deregistered pursuant to Section 12(g)(4) of the
Securities Exchange Act of 1934. The Common Stock also no
longer would be quoted on the National Association of Securities
Dealers Automated Quotation System. And upon the effective date
of the PBD Merger, David Treadwell, the Issuer's Chief Executive
Officer, will have resigned from all position held with the
Issuer and all directors will have resigned.
In order to induce PBD Holdings and Pembroke to enter into
the PBD Merger Agreement, holders of a majority of the
outstanding shares of the Common Stock, including AIC (the
"Majority Stockholders"), have entered into a stockholder
agreement with PBD Holdings ("Stockholder Agreement") pursuant to
which they have agreed to execute written consents approving the
PBD Merger Agreement and the merger contemplated therein.
Pursuant to the Stockholder Agreement, each of the Majority
Stockholders grants Pembroke an exclusive and irrevocable option
to purchase all of their shares of Common Stock for $1.25, which
options are exercisable not later than June 30, 1998 if the PBD
Merger is terminated under certain specified circumstances. In
the event the stock option respecting AIC's shares of Common
Stock becomes exercisable, PBD Holdings also has the right and
obligation to simultaneously acquire the Note dated April 1, 1997
and made by the Issuer to AIC for an amount in cash equal to the
sum of the outstanding principal then due under the Note plus all
accrued interest through the date of the closing of the purchase
of the Note. PBD Holdings further agreed to pay AIC all
outstanding principal and accrued interest under the Note on the
effective date of the PBD Merger.
Pursuant to the Stockholder Agreement, each of the Majority
Stockholders also irrevocably granted and appointed Pembroke,
and Lawrence J. Cohen in his respective capacity as officer of
Pembroke, such Majority Stockholder's proxy and attorney-in-fact
to vote such stockholder's shares, or grant a consent or approval
in respect of such shares in favor of the PBD Merger and against
any other acquisition proposal, which proxy will continue until
termination of the Stockholder Agreement but no later than March
31, 1998. Each Majority Stockholder further agreed in the
Stockholder Agreement that neither it nor any of its subsidiaries
or affiliates would solicit, discuss or provide any information
to any entity respecting another acquisition proposal. And, each
Majority Stockholder agreed to use its best efforts to effect the
PBD Merger.
On March 2, 1998, the Board of Directors of the Issuer
approved the PBD Merger Agreement and the merger contemplated
therein. On March 6, 1998, Acceptance issued its own press
release announcing AIC's execution of the Stockholder Agreement.
A copy of the Stockholder Agreement, the PBD Merger Agreement,
the press release of PBD Holdings and the press release of AIC
are attached hereto as Exhibits 45, 46, 47 and 48, respectively,
and incorporated herein by this reference. Under Delaware law,
approval of the PBD Merger requires the approval of the Board of
Directors of the Issuer and the affirmative vote of a simple
majority of the shares of the Common Stock entitled to vote.
Therefore, given the Majority Stockholders hold in excess of a
simple majority of the shares entitled to vote and have committed
to approving the PBD Merger, stockholder approval is assured.
Item 5. Interest in Securities of the Issuer.
-------------------------------------
(a) According to the Issuer's most recently available
filing with the Securities and Exchange Commission, there are
6,893,378 Shares outstanding.
AIC beneficially owns 2,280,500, or approximately 33.1% of
the outstanding Shares. As the holder of the Note, AIC may be
deemed to beneficially own an additional 2,367,424 shares (as of
March 6, 1998) or approximately 25.6%, which it has the right to
acquire by virtue of the conversion rights set forth in the Note.
AIC's total beneficial ownership when considering both the
2,280,500 currently owned and the 2,367,424 which it has a right
to acquire, is approximately 50.2%. AIC has agreed with the
Issuer not to exercise these conversion rights, and disclaims
beneficial ownership of any such additional shares into which the
Note may be converted. In the event the stock option respecting
AIC's shares of Common Stock becomes exercisable under the
Stockholders Agreement described in Item 4, PBD Holdings also has
the right and obligation to simultaneously acquire the Note for
an amount in cash equal to the sum of the outstanding principal
then due under the Note plus all accrued interest through the
date of the closing of the purchase of the Note. PBD Holdings
further agreed to pay AIC all outstanding principal and accrued
interest under the Note on the effective date of the PBD Merger.
(b) AIC has the sole power to vote, or to direct the
voting of, and the sole power to dispose or to direct the
disposition of, the Shares owned by it.
(c) During the past 60 days, AIC did not effect any
transactions in the Common Stock.
(d) Not Applicable.
(e) Not Applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the Issuer.
-------------------------------------------------------
Except as to (a) the PBD Merger Agreement and the PBD Merger
contemplated therein, (b) the Note described in Item 5 (a copy of
which is attached hereto as Exhibit 49 and incorporated herein by
this reference) and (c) the Line of Credit Note described below,
AIC is not a party to any contracts, arrangements or
understandings with respect to any securities of the Issuer,
including but not limited to the transfer or voting of any of the
securities, finders fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of
profits or losses, or the giving or withholding of proxies.
The Note, dated April 1, 1997, is in the principal amount of
$5,450,728.32 and accrues interest thereon at an annual
percentage rate of 250 basis points in excess of the "prime rate"
of Citibank, N.A. (the current balance is approximately $2.5
million). Interest is compounded quarterly in arrears. The Note
is due and payable upon a change of control (defined as
beneficial ownership of 50% or more of the combined voting power
of all classes of stock of the Issuer) of the Issuer, or upon the
sale of 50% or more of the Issuer's assets. The Issuer may
prepay the Note in whole or in part at any time without penalty.
AIC has the right to convert all or a portion of the outstanding
balance of the Note into shares of the Common Stock at a
conversion price equal to the average closing price of the Common
Stock as reported by NASDAQ during the thirty day period
immediately preceding the date of AIC's notice to the Issuer of
its election to convert. Repayment of the Note is secured by a
mortgage on certain of the Issuer's property.
In the event the stock option respecting AIC's shares of
Common Stock becomes exercisable under the Stockholders Agreement
described in Item 4, PBD Holdings also has the right and
obligation to simultaneously acquire the for an amount in cash
equal to the sum of the outstanding principal then due under the
Note plus all accrued interest through the date of the closing of
the purchase of the Note. PBD Holdings further agreed to pay AIC
all outstanding principal and accrued interest under the Note on
the effective date of the PBD Merger. Because AIC has agreed to
sell the Note under the terms described above, upon the effective
date of the PBD Merger, AIC's conversion rights respecting the
Note will terminate.
As of April 1, 1997, AIC established a line of credit of up
to $500,000 (the "Line of Credit Note") in favor of the Issuer
for the purposes of meeting certain working capital obligations
of the Issuer. Interest on the Line of Credit Note accrued at
the rate of 250 basis points in excess of the prime rate of
Citibank, N.A. The principal and any accrued interest was due
and payable upon a change of control (defined as beneficial
ownership of 50% or more of the combined voting power of all
classes of stock of the Issuer) of the Issuer, or upon the sale
of 50% or more of the Issuer's assets. The Line of Credit Note
could be prepaid in whole or in part at any time. As of March 6,
1998, the Issuer had not drawn down any principal on this loan.
The Line of Credit Note will terminate on the Closing of the PBD
Merger.
Item 7. Material to be Filed as Exhibits.
---------------------------------
Exhibit 45 Stockholder Agreement
Exhibit 46 PBD Merger Agreement
Exhibit 47 Press Release of PBD Holdings
Exhibit 48 Press Release of AIC
Exhibit 49 Restated and Consolidated Promissory Note
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
Dated: March 9, 1998 ACCEPTANCE INSURANCE COMPANY
By: /s/ Kenneth C. Coon
-----------------------------------
Kenneth C. Coon, President
Exhibit Index
-------------
Exhibit 45 Stockholder Agreement
Exhibit 46 PBD Merger Agreement
Exhibit 47 Press Release of PBD Holdings
Exhibit 48 Press Release of AIC
Exhibit 49 Restated and Consolidated Promissory Note<PAGE>
EXHIBIT 45
STOCKHOLDER AGREEMENT
AGREEMENT, dated as of March 4, 1998, among PBD Holdings, L.P., a
limited partnership existing under the laws of the State of
Delaware ("Parent"), Pembroke Acquisition, Inc., a Delaware
corporation and a wholly owned subsidiary of Parent (the
"Purchaser"), and the stockholders of Major Realty Corporation
listed in Schedule I attached hereto (each, a "Stockholder" and
collectively, the "Stockholders").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, the Purchaser and Major Realty Corporation, a
Delaware corporation (the "Company"), have entered into an
Agreement and Plan of Merger (as such agreement may hereafter be
amended from time to time, the "Merger Agreement"), pursuant to
which Purchaser will be merged with and into the Company (the
"Merger");
WHEREAS, as an inducement and a condition to entering into the
Merger Agreement, Parent has required that the Stockholders
agree, and the Stockholders have agreed, to enter into this
Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained
herein, the parties hereto agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to
any securities shall mean having "beneficial ownership" of such
securities (as determined pursuant to Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")), including pursuant to any agreement, arrangement or
understanding, whether or not in writing. Without duplicative
counting of the same securities by the same holder, securities
Beneficially Owned by a Person shall include securities
Beneficially Owned by all other Persons with whom such Person
would constitute a "group" as within the meaning of Section
13(d)(3) of the Exchange Act.
(b) "Company Common Stock" shall mean at any time the Common
Stock, $.01 par value, of the Company.
(c) "Person" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or
other entity.
(d) Capitalized terms used and not defined herein have the
respective meanings ascribed to them in the Merger Agreement.
2. OPTIONS. In order to induce Parent and the Purchaser to
enter into the Merger Agreement, each Stockholder hereby grants
to Parent an exclusive and irrevocable option (a "Stock Option")
to purchase from such Stockholder any and all shares of Common
Stock beneficially owned by such Stockholder (the "Option
Shares") at an amount (the "Purchase Price") equal to One and
25/100 Dollars ($1.25) per share, under the conditions set forth
hereinafter. Each Stock Option shall become exercisable, in
whole but not in part, if the Merger Agreement is terminated (i)
by Major Realty for any reason other than the mutual agreement of
the parties thereto or because of a material breach thereof by
Purchaser or Parent (termination of the Merger Agreement for any
reason other than the foregoing is referred to hereinafter as an
"Unexcused Major Termination") or (ii) by Purchaser (a) following
a material breach by Major of the Merger Agreement, which
material breach is caused by the intentional action of the board
of directors or an executive officer of Major after the execution
thereof, or (b) upon the failure to be met of a condition to
Purchaser's obligation to perform under the Merger Agreement,
which condition was within the control of Major (termination of
the Merger Agreement by Purchaser for one of the foregoing
reasons is referred to hereinafter as an "Allowable Purchaser
Termination"). The Stock Options and this Agreement shall
terminate automatically if (A) the Merger Agreement is terminated
(x) upon the mutual agreement of the parties thereto, (y) by
Major because of a material breach thereof by Purchaser or Parent
or (z) by Purchaser for any reason other than those giving rise
to an Allowable Purchaser Termination, or (B) Purchaser fails to
consummate the Merger within 20 days after Major sends an
information statement to its stockholders under Regulation 14C of
the Exchange Act relating to the Merger, unless the Merger
Agreement has been terminated by Major in an Unexcused Major
Termination or by Purchaser for one of the reasons giving rise to
an Allowable Purchaser Termination.
Following an Unexcused Major Termination or an Allowable
Purchaser Termination, the Stock Option shall become exercisable
and remain exercisable in whole until the date which is 60 days
after the date of the Unexcused Major Termination or Allowable
Purchaser Termination (the "60 Day Period"), so long as: (i) all
waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), required
for the purchase of the Option Shares upon such exercise shall
have expired or been waived; (ii) all other applicable consents
of any Governmental Entity required for the purchase or sale of
the Option Shares upon such exercise (if applicable) shall have
been granted or otherwise satisfied; and (iii) there shall not be
in effect any preliminary injunction or other order issued by any
Governmental Entity prohibiting the exercise of the Stock Option
pursuant to this Agreement; provided that if (i) all HSR Act
waiting periods shall not have expired or been waived, (ii) all
other applicable consents of any Governmental Entity required for
the purchase or sale of the Option Shares (if applicable) shall
not have been granted or otherwise satisfied, or (iii) there
shall be in effect any such injunction or order, in each case on
the expiration of the 60 Day Period, the 60 Day Period shall be
extended until 5 business days after the later of (A) the date of
expiration or waiver of all HSR Act waiting periods, (B) the
grant or other satisfaction of such required consents, and (C)
the date of removal or lifting of such injunction or order;
provided, however, that in no event shall the Stock Option be
exercisable after June 30, 1998; provided, further, that the
Stock Option shall terminate if any Governmental Entity shall
issue an order, decree or ruling or take any other action (which
order, decree, ruling or other action the parties hereto shall
use their best efforts to lift), which permanently restrains,
enjoins or otherwise prohibits Parent's exercise of the Stock
Option or the sale of the Option Shares to Parent by the
Stockholder. In the event that Parent wishes to exercise a Stock
Option, Parent shall send a written notice (the "Notice") to the
Stockholder identifying the place and date (not less than two nor
more than 10 business days from the date of the Notice) for the
closing of such purchase.
3. ADDITIONAL AGREEMENTS.
(a) Voting Agreement. Each Stockholder shall, during the period
commencing on the date hereof and continuing until the
termination of this Agreement in accordance with its terms, and
in any event until no later than March 31, 1998, at any meeting
of the holders of Company Common Stock, however called, or in
connection with any written consent of the holders of Company
Common Stock, vote (or cause to be voted) the Shares (if any)
then held of record or Beneficially Owned by such Stockholder,
(i) in favor of the Merger, the execution and delivery by the
Company of the Merger Agreement and the approval of the terms
thereof and each of the other actions contemplated by the Merger
Agreement and this Agreement and any actions required in
furtherance thereof and hereof; (ii) against any Acquisition
Proposal and against any action or agreement that would impede,
frustrate, prevent or nullify this Agreement, or result in a
breach in any respect of any covenant, representation or warranty
or the failure of any condition or any other obligation or
agreement of the Company under the Merger Agreement, (iii)
against any amendment to Major Realty's Certificate of
Incorporation or Bylaws and (iv) as otherwise reasonably
requested by Parent in order to carry out the purposes of the
Merger Agreement.
(b) No Inconsistent Arrangements. Each Stockholder hereby
covenants and agrees that, except as contemplated by this
Agreement and the Merger Agreement, it shall not during the term
hereof (i) transfer (which term shall include, without
limitation, any sale, gift, pledge or other disposition), or
consent to any transfer of, any or all of such Stockholder's
Shares, Company Options or any interest therein, (ii) enter into
any contract, option or other agreement or understanding with
respect to any transfer of any or all of such Shares, Company
Options or any interest therein, (iii) grant any proxy, power-of-
attorney or other authorization in or with respect to such Shares
or Company Options, (iv) deposit such Shares or Company Options
into a voting trust or enter into a voting agreement or
arrangement with respect to such Shares or Company Options, or
(v) take any other action, enter into any other transaction or,
directly or indirectly, cause any event that would in any way
restrict, limit or interfere with the performance of its
obligations hereunder or the transactions contemplated hereby or
by the Merger Agreement or result in any of the representations
and warranties of the Stockholders contained herein not being
true and correct at and as of the time immediately after the
occurrence of such action, transaction or event. Notwithstanding
anything contained in this Section to the contrary, the
Stockholder shall have the right to transfer ownership of Shares
to members of his or her immediate family or to a trust created
by the Stockholder, provided that any and all transferees and
trustees of any such trusts first agree in writing to hold such
Shares so transferred subject to this Agreement.
(c) Grant Of Irrevocable Proxy; Appointment Of Proxy.
(i) Each Stockholder, during the period commencing on the date
hereof and continuing until the termination of this Agreement in
accordance with its terms, and in any event until no later then
March 31, 1998, at any meeting of the holders of Company Common
Stock, hereby irrevocably grants to, and appoints, Parent and
Lawrence J. Cohen, in his capacity as an officer of Parent, and
any individual who shall hereafter succeed to any such office of
Parent, and each of them individually, such Stockholder's proxy
and attorney-in-fact (with full power of substitution), for and
in the name, place and stead of such Stockholder, to vote such
Stockholder's Shares, or grant a consent or approval in respect
of the Shares in favor of the various transactions contemplated
by the Merger Agreement (the "Transactions") and against any
Acquisition Proposal or any transaction inconsistent with the
Merger Agreement, and as otherwise reasonably required in order
to carry out the purposes of the Merger Agreement, and for no
other purpose.
(ii) Each Stockholder represents that any proxies heretofore
given in respect of such Stockholder's Shares are not
irrevocable, and that any such proxies are hereby revoked.
(iii) Each Stockholder understands and acknowledges that
Parent is entering into the Merger Agreement in reliance upon
such Stockholder's execution and delivery of this Agreement.
Each Stockholder hereby affirms that the irrevocable proxy set
forth in this Section 3(c) is given in connection with the
execution of the Merger Agreement, and that such irrevocable
proxy is given to secure the performance of the duties of such
Stockholder under this Agreement. Each Stockholder hereby
further affirms that the irrevocable proxy is coupled with an
interest and may under no circumstances be revoked. Each
Stockholder hereby ratifies and confirms all that such
irrevocable proxy may lawfully do or cause to be done by virtue
hereof. Such irrevocable proxy is executed and intended to be
irrevocable in accordance with the provisions of Section 212(e)
of the Delaware General Corporation Law.
(d) No Solicitation. Each Stockholder hereby agrees, in its or
his capacity as a stockholder of the Company, that neither such
Stockholder nor any of its Subsidiaries or affiliates shall (and
such Stockholder shall use its best efforts to cause its
officers, directors, employees, representatives and agents,
including, but not limited to, investment bankers, attorneys and
accountants, not to), directly or indirectly, encourage, solicit,
participate in or initiate discussions or negotiations with, or
provide any information to, any corporation, partnership, person
or other entity or group (other than Parent, any of its
affiliates or representatives) concerning any Acquisition
Proposal. Each Stockholder will immediately cease any existing
activities, discussions or negotiations with any parties
conducted heretofore with respect to any Acquisition Proposal.
Each Stockholder will immediately communicate to Parent the terms
of any proposal, discussion, negotiation or inquiry such
Stockholder, in its or his capacity as a stockholder of the
Company, receives (and will disclose any written materials
received by such Stockholder, in its or his capacity as a
stockholder of the Company, in connection with such proposal,
discussion, negotiation or inquiry) and the identity of the party
making such proposal or inquiry which it may receive in respect
of any such transaction.
(e) Company Options. If the Stockholder holds Company Options
to acquire shares of Company Common Stock, it shall, if requested
by the Company, consent to the cancellation or substitution of
its Company Options in accordance with the terms of the Merger
Agreement and shall execute all appropriate documentation in
connection with such cancellation or substitution.
(f) Best Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its best
efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement and the Merger
Agreement. Each party shall promptly consult with the other and
provide any necessary information and material with respect to
all filings made by such party with any Governmental Entity in
connection with this Agreement and the Merger Agreement and the
transactions contemplated hereby and thereby.
(g) Waiver Of Appraisal Rights. Each Stockholder hereby waives
any rights of appraisal or rights to dissent from the Merger that
it or he may have.
(h) Acquisition Of Remaining Shares. Parent agrees that, in
the event that within three years following Parent's exercise of
the Stock Option, Parent, the Purchaser or any of their
Subsidiaries acquires any additional shares of Company Common
Stock from, or pursuant to an offer made to all of the Company's
stockholders, whether by merger, consolidation, tender offer or
other similar transaction, the price paid per share of Company
Common Stock shall be no less than the Purchase Price.
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Each
Stockholder hereby represents and warrants to Parent as follows:
(a) Ownership Of Shares. Such Stockholder is the record and
Beneficial Owner of the Option Shares, as set forth on Schedule I
opposite such Stockholder's name. On the date hereof, the Option
Shares constitute all of the Shares owned of record or
Beneficially Owned by such Stockholder. Such Stockholder has
sole voting power and sole power to issue instructions with
respect to the matters set forth in Sections 2 and 3 hereof, sole
power of disposition, sole power of conversion, sole power to
demand appraisal rights and sole power to agree to all of the
matters set forth in this Agreement, in each case with respect to
all of the Option Shares with no limitations, qualifications or
restrictions on such rights, subject to applicable securities
laws and the terms of this Agreement.
(b) Power; Binding Agreement. Such Stockholder has the legal
capacity, power and authority to enter into and perform all of
such Stockholder's obligations under this Agreement. The
execution, delivery and performance of this Agreement by such
Stockholder will not violate any other agreement to which such
Stockholder is a party including, without limitation, any voting
agreement, proxy arrangement, pledge agreement, shareholders
agreement or voting trust. This Agreement has been duly and
validly executed and delivered by such Stockholder and
constitutes a valid and binding agreement of such Stockholder,
enforceable against such Stockholder in accordance with its
terms. There is no beneficiary or holder of a voting trust
certificate or other interest of any trust of which such
Stockholder is a trustee whose consent is required for the
execution and delivery of this Agreement or the consummation by
such Stockholder of the transactions contemplated hereby.
(c) No Conflicts. Except for filings under the HSR Act and the
Exchange Act, (i) no filing with, and no permit, authorization,
consent or approval of, any Governmental Entity for the execution
of this Agreement by such Stockholder and the consummation by
such Stockholder of the transactions contemplated hereby and (ii)
none of the execution and delivery of this Agreement by such
Stockholder, the consummation by such Stockholder of the
transactions contemplated hereby or compliance by such
Stockholder with any of the provisions hereof shall (A) conflict
with or result in any breach of any organizational documents
applicable to the Stockholder, (B) result in a violation or
breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration)
under any of the terms, conditions or provisions of any note,
loan agreement, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which such Stockholder is
a party or by which such Stockholder or any of its properties or
assets may be bound, or (C) violate any order, writ, injunction,
decree, judgment, order, statute, rule or regulation applicable
to such Stockholder or any of its properties or assets.
(d) No Liens. Except as permitted by this Agreement, the Option
Shares and the certificates representing such Shares are now, and
at all times during the term hereof will be, held by such
Stockholder, or by a nominee or custodian for the benefit of such
Stockholder, free and clear of all liens, proxies, voting trusts
or agreements, understandings or arrangements or any other rights
whatsoever, except for any such encumbrances or proxies arising
hereunder.
(e) No Finder's Fees. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's,
financial adviser's or other similar fee or commission in
connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of such Stockholder.
(f) Reliance By Parent. The Stockholder understands and
acknowledges that Parent is entering into, and causing Purchaser
to enter into, the Merger Agreement in reliance upon such
Stockholder's execution and delivery of this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER.
Each of Parent and the Purchaser hereby represents and warrants
to the Stockholder as follows:
(a) Power; Binding Agreement. Parent and the Purchaser each has
the power and authority to enter into and perform all of its
obligations under this Agreement. The execution, delivery and
performance of this Agreement by each of Parent and the Purchaser
will not violate any other agreement to which either of them is a
party. This Agreement has been duly and validly executed and
delivered by each of Parent and the Purchaser and constitutes a
valid and binding agreement of each of Parent and the Purchaser,
enforceable against each of Parent and the Purchaser in
accordance with its terms.
(b) No Conflicts. Except for filings under the HSR Act and the
Exchange Act, (i) no filing with, and no permit, authorization,
consent or approval of, any Governmental Entity is necessary for
the execution of this Agreement by each of Parent and the
Purchaser and the consummation by each of Parent and the
Purchaser of the transactions contemplated hereby and (ii) none
of the execution and delivery of this Agreement by each of Parent
and the Purchaser, the consummation by each of Parent and the
Purchaser of the transactions contemplated hereby or compliance
by each of Parent and the Purchaser with any of the provisions
hereof shall (A) conflict with or result in any breach of any
organizational documents applicable to either of Parent or the
Purchaser, (B) result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default (or
give rise to any third party right of termination, cancellation,
material modification or acceleration) under any of the terms,
conditions or provisions of any note, loan agreement, bond,
mortgage, indenture, license, contract, commitment, arrangement,
understanding, agreement or other instrument or obligation of any
kind to which either of Parent or the Purchaser is a party or by
which either of Parent or the Purchaser or any of their
properties or assets may be bound, or (C) violate any order,
writ, injunction, decree, judgment, order, statute, rule or
regulation applicable to either of Parent or the Purchaser or any
of their properties or assets.
6. FURTHER ASSURANCES. From time to time, at the other party's
request and without further consideration, each party hereto
shall execute and deliver such additional documents and take all
such further lawful action as may be necessary or desirable to
consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
7. STOP TRANSFER. Each Stockholder shall not request that the
Company register the transfer (book-entry or otherwise) of any
certificate or uncertificated interest representing any of the
Shares, unless such transfer is made in compliance with this
Agreement. In the event of a stock dividend or distribution, or
any change in the Company Common Stock by reason of any stock
dividend, split-up, recapitalization, combination, exchange of
shares or the like, the term "Shares" shall refer to and include
the Shares as well as all such stock dividends and distributions
and any shares into which or for which any or all of the Shares
may be changed or exchanged.
8. TERMINATION. Except as provided in Section 2 hereof, the
covenants, agreements and proxy shall terminate upon the
termination of the Merger Agreement in accordance with its terms.
9. MISCELLANEOUS.
(a) Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter
hereof and supersedes all other prior agreements and
understandings, both written and oral, between the parties with
respect to the subject matter hereof.
(b) Binding Agreement. This Agreement and the obligations
hereunder shall attach to the Shares and shall be binding upon
any person or entity to which legal or beneficial ownership of
such Shares shall pass, whether by operation of law or otherwise,
including, without limitation, a Stockholder's heirs, guardians,
administrators or successors. Notwithstanding any transfer of
Shares, the transferor shall remain liable for the performance of
all obligations of the transferor under this Agreement.
(c) Assignment. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent
of the other parties, provided that Parent may assign, in its
sole discretion, its rights and obligations hereunder to any
direct or indirect wholly owned subsidiary of Parent, but no such
assignment shall relieve Parent of its obligations hereunder if
such assignee does not perform such obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or
terminated, except upon the execution and delivery of a written
agreement executed by the parties hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given
(and shall be deemed to have been duly received if given) by hand
delivery or telecopy (with a confirmation copy sent for next day
delivery via courier service, such as Federal Express), or by any
courier service, such as Federal Express, providing proof of
delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to the Stockholders: Acceptance Insurance Company
222 South 15th Street, Suite 600 N
Omaha, NE 68102-1628
Attention: Kenneth Coon
Telecopy: 402/345-9190
copy to: Crosby, Guenzel, Davis, Dessner &
Keuster
134 So. 13th Street, Suite 400
Lincoln, NE 68508
Attention: Donn Davis, Esquire
Telecopy: 402/434-7303
if to Parent or Purchaser: c/o Pembroke Companies, Inc.
1325 Avenue of the Americas, Suite 1200
New York, New York
Attention: Lawrence J. Cohen
Telecopy: 212/399-9199
copy to: Blackacre Capital Group
450 Park Avenue, 28th Floor
New York, New York 10022
Attention: Ronald J. Kravit
Telecopy: 212/750-5305
and
Skadden, Arps, Slate, Meagher & Flom,
LLP
919 Third Avenue
New York, NY 10022-3897
Attention: Patrick J. Foye
Telecopy: (212) 735-2000
or to such other address as the person to whom notice is given
may have previously furnished to the others in writing in the
manner set forth above.
(f) Severability. Whenever possible, each provision or portion
of any provision of this Agreement will be interpreted in such
manner as to be effective and valid under applicable law but if
any provision or portion of any provision of this Agreement is
held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other
provision or portion of any provision in such jurisdiction, and
this Agreement will be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable
provision or portion of any provision had never been contained
herein.
(g) Specific Performance. Each of the parties hereto recognizes
and acknowledges that a breach by it of any covenants or
agreements contained in this Agreement will cause the other party
to sustain damages for which it would not have an adequate remedy
at law for money damages, and therefore in the event of any such
breach the aggrieved party shall be entitled to the remedy of
specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect
hereof at law or in equity shall be cumulative and not
alternative, and the exercise of any thereof by any party shall
not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise
available in respect hereof at law or in equity, or to insist
upon compliance by any other party hereto with its obligations
hereunder, and any custom or practice of the parties at variance
with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or
remedy or to demand such compliance.
(j) No Third Party Beneficiaries. This Agreement is not
intended to be for the benefit of, and shall not be enforceable
by, any person or entity who or which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware,
without giving effect to the principles of conflicts of law
thereof.
(l) Jurisdiction. Each party hereby irrevocably submits to the
exclusive jurisdiction of the State of Delaware in any action,
suit or proceeding arising in connection with this Agreement, and
agrees that any such action, suit or proceeding shall be brought
only in such court (and waives any objection based on forum non
conveniens or any other objection to venue therein). Each party
hereto hereby waives any right to a trial by jury in connection
with any such action, suit or proceeding.
(m) Descriptive Headings. The descriptive headings used herein
are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation
of this Agreement.
(n) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original,
but all of which, taken together, shall constitute one and the
same Agreement.
(o) Expenses. Except as otherwise provided herein or in the
Merger Agreement, all costs and expenses incurred in connection
with the transactions contemplated by this Agreement shall be
paid by the party incurring such expenses.
[Remainder of page intentionally left blank.
Next page is signature page.]
IN WITNESS WHEREOF, Parent, the Purchaser and the Stockholder
have caused this Agreement to be duly executed as of the day and
year first above written.
PARENT
PBD HOLDINGS, L.P.
By: PBD Holdings, Inc., General Partner
By____________________________
Name
Title
PURCHASER
PEMBROKE ACQUISITION, INC.
By____________________________
Name
Title
Schedule I
Number of Shares and Company Options Beneficially Owned
Name Of Stockholder
Shares
Options
Acceptance Insurance Company 2,280,500
*
Michael and Marian Ilitch 270,370
0
* Promissory note convertible into common stock. See Section
3.05 of the Merger Agreement.<PAGE>
EXHIBIT 46
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of March 4, 1998, among
Major Realty Corporation, a Delaware corporation (the "Company"),
PBD Holdings, L.P., a Delaware limited partnership ("BUYER"), and
Pembroke Acquisition, Inc., a Delaware corporation and a wholly
owned subsidiary of Buyer ("MERGER SUBSIDIARY").
WHEREAS, the Board of Directors of each of Buyer, the Company and
Merger Subsidiary have determined that it is advisable and in the
best interests of their respective stockholders to engage in the
transactions contemplated hereby; and
WHEREAS, the Board of Directors of the Company has unanimously
approved the merger (the "MERGER") of the Merger Subsidiary with
and into the Company in accordance with the terms of this
Agreement and the General Corporation Law of the State of
Delaware (the "DELAWARE LAW") and other applicable law; and
WHEREAS, this Agreement and the Merger shall be approved by the
stockholders of the Company for purposes of Delaware Law at such
time as the Company is in receipt of written consents approving
this Agreement and the Merger executed by the holders of that
number of shares of common stock, par value $.01 per share, of
the Company (each, a "SHARE") representing the right to cast a
majority of the votes entitled to be cast at a meeting to
consider the Agreement and the Merger; and
WHEREAS, holders of a majority of the issued and outstanding
Shares are delivering to the Company concurrently with the
execution of this Agreement written consents approving this
Agreement and the Merger as permitted by the certificate of
incorporation and bylaws of the Company and Delaware Law; and
WHEREAS, such consent constitutes the only action necessary by
stockholders of the Company required in order to authorize this
Agreement and the Merger under the Company's certificate of
incorporation and bylaws and Delaware Law;
WHEREAS, as a condition to the willingness of Buyer and Merger
Subsidiary to enter into this Agreement, the holders of 3,461,111
Shares have entered into Stockholders Agreements, each dated as
of the date hereof (the "Stockholders Agreements") with the
Buyer.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, the parties hereto
agree as follows:
ARTICLE 1
THE MERGER
SECTION 1.01. The Merger.
(a) At the Effective Time (as defined below), Merger Subsidiary
shall be merged with and into the Company in accordance with
Delaware Law, whereupon the separate existence of Merger
Subsidiary shall cease, and the Company shall be the surviving
corporation (the "SURVIVING CORPORATION").
(b) As soon as practicable after the later of (i) satisfaction
or waiver of all conditions to the Merger and (ii) the 20th
calendar day after the Company Information Statement (as defined
below) is first sent or given to the stockholders of the Company,
the Company and Merger Subsidiary will file a certificate of
merger with the Secretary of State of the State of Delaware and
make all other filings or recordings required by Delaware Law in
connection with the Merger. The Merger shall become effective at
such time as the certificate of merger is duly filed with the
Secretary of State of the State of Delaware or at such later time
as is specified in the certificate of merger (the "EFFECTIVE
TIME").
(c) From and after the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, powers and franchises
and be subject to all of the restrictions, disabilities and
duties of the Company and Merger Subsidiary, all as provided
under Delaware Law.
SECTION 1.02. Conversion of Shares At the Effective Time.
(a) Each Share held by the Company as treasury stock or owned by
Buyer or any subsidiary of Buyer immediately prior to the
Effective Time shall be canceled and cease to exist, and no
payment shall be made with respect thereto;
(b) Each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into
and become one share of common stock of the Surviving
Corporation with the same rights, powers and privileges as the
shares so converted and shall constitute the only outstanding
shares of capital stock of the Surviving Corporation; and
(c) Each Share outstanding immediately prior to the Effective
Time shall, except as otherwise provided in Section 1.02(a) or as
provided in Section 1.04 with respect to Shares as to which
appraisal rights have been exercised, by virtue of the Merger and
without any action on the part of the holder thereof be converted
into, exchanged for and represent the right to receive an amount
equal to $1.25 in cash, without interest (the "MERGER
CONSIDERATION").
SECTION 1.03. Surrender and Payment.
(a) Prior to the Effective Time, Buyer shall appoint an agent
(the "EXCHANGE AGENT") for the purpose of exchanging certificates
representing Shares for the Merger Consideration. Buyer will make
available to the Exchange Agent, in such amounts as may be needed
from time to time, the Merger Consideration to be paid in respect
of the Shares. Such funds shall be invested by the Exchange
Agent as directed by the Buyer, provided that such investments
shall be in obligations of or guaranteed by the United States of
America or any agency thereof and backed by the full faith and
credit of the United States of America, or in deposit accounts,
certificates of deposit or banker's acceptances of, repurchase or
reverse repurchase agreement with, or Eurodollar time deposits
purchased from, commercial banks with capital, surplus and
undivided profits aggregating in excess of $150 million (based on
the most recent financial statements of such bank which are then
publicly available). Promptly after the Effective Time, Buyer
will send, or will cause the Exchange Agent to send, to each
holder of Shares (other than the holders of Shares to be canceled
as set forth in Section 1.02(a) or Dissenting Shares (as defined
in Section 1.04)) at the Effective Time a letter of transmittal
for use in such exchange (which shall specify that the delivery
shall be effected, and risk of loss and title shall pass, only
upon proper delivery of the certificates representing Shares to
the Exchange Agent).
(b) Each holder of Shares that have been converted into a right
to receive the Merger Consideration, upon surrender to the
Exchange Agent of a certificate or certificates representing such
Shares, together with a properly completed and duly executed
letter of transmittal covering such Shares, will be entitled to
receive the Merger Consideration payable in respect of such
Shares. From and after the Effective Time, all shares which have
been so converted shall no longer be outstanding and shall
automatically be canceled and retired and each such certificate
shall, after the Effective Time, represent for all purposes, only
the right to receive such Merger Consideration. From and after
the Effective Time, the holders of Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with
respect to such Shares except as otherwise provided in this
Agreement or by applicable law. All cash paid upon the surrender
of certificates in accordance with the terms of this Section 1.03
shall be deemed to have been paid in full satisfaction of all
rights pertaining to the Shares previously represented by such
certificates. No interest shall accrue or be paid on the Merger
Consideration payable upon the surrender of any certificate.
(c) If any portion of the Merger Consideration is to be paid to
a Person (as defined below) other than the registered holder of
the Shares represented by the certificate or certificates
surrendered in exchange therefor, it shall be a condition to such
payment that the certificate or certificates so surrendered shall
be properly endorsed or otherwise be in proper form for transfer
and that the Person requesting such payment shall pay to the
Exchange Agent any transfer or other taxes required as a result
of such payment to a Person other than the registered holder of
such Shares or establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not payable. For purposes
of this Agreement, "PERSON" means an individual, a corporation, a
limited liability company, a partnership, an association, a trust
or any other entity or organization, including a government or
political subdivision or any agency or instrumentality thereof.
(d) After the Effective Time, the stock transfer books of the
Company shall be closed and there shall be no further
registration of transfers of Shares. If, after the Effective
Time, certificates representing Shares are presented to the
Surviving Corporation, they shall be canceled and exchanged for
the consideration provided for, and in accordance with the
procedures set forth, in this Article 1.
(e) Any portion of the Merger Consideration made available to
the Exchange Agent pursuant to Section 1.03(a) that remains
unclaimed by the holders of Shares nine months after the
Effective Time shall be returned to Buyer, upon demand, and any
such holder who has not exchanged his Shares for the Merger
Consideration in accordance with this Section prior to that time
shall thereafter look only to Buyer for payment of the Merger
Consideration in respect of his Shares. Notwithstanding the
foregoing, Buyer shall not be liable to any holder of Shares for
any amount paid to a public official pursuant to applicable
abandoned property, escheat or other similar laws. Any amounts
remaining unclaimed by holders of Shares two years after the
Effective Time (or such earlier date immediately prior to such
time as such amounts would otherwise escheat to or become
property of any governmental entity) shall, to the extent
permitted by applicable law, become the property of Buyer free
and clear of any claims or interest of any Person previously
entitled thereto.
(f) Any portion of the Merger Consideration made available to
the Exchange Agent pursuant to Section 1.03(a) to pay for Shares
for which appraisal rights have been perfected shall be returned
to Buyer, upon demand.
SECTION 1.04. Dissenting Shares.
Notwithstanding Section 1.02, Shares outstanding immediately
prior to the Effective Time and held by a holder who has not
voted in favor of the Merger or consented thereto in writing and
who has demanded appraisal for such Shares in accordance with
Delaware Law shall not be converted into a right to receive the
Merger Consideration but instead shall be converted into the
right to receive payment from the Surviving Corporation with
respect to such shares ("Dissenting Shares") in accordance with
Delaware law, unless such holder fails to perfect or withdraws or
otherwise loses his right to appraisal. If after the Effective
Time such holder fails to perfect or withdraws or loses his right
to appraisal, such Shares shall be treated as if they had been
converted as of the Effective Time into a right to receive the
Merger Consideration. The Company shall give Buyer prompt written
notice of any demands received by the Company for appraisal of
Shares, and Buyer shall have the right to participate in all
negotiations and proceedings with respect to such demands. The
Company shall not, except with the prior written consent of
Buyer, make any payment with respect to, or settle or offer to
settle, any such demands.
SECTION 1.05. Stock Options.
(a) At or immediately prior to the Effective Time, each
outstanding employee stock option to purchase Shares granted
under any employee stock option or compensation plan or
arrangement of the Company shall be canceled, and each holder of
any such option, whether or not then vested or exercisable, shall
be paid by the Company promptly after the Effective Time for each
such option an amount determined by multiplying (i) the excess,
if any, of the Merger Consideration over the applicable exercise
price of such option by (ii) the number of Shares such holder
could have purchased (assuming full vesting of all options) had
such holder exercised such option in full immediately prior to
the Effective Time, less any taxes required to be withheld by the
Company with respect thereto.
(b) Prior to the Effective Time, the Company shall (i) obtain
any consents from holders of options to purchase Shares granted
under the Company's stock option or compensation plans or
arrangements and (ii) make any amendments to the terms of such
stock option or compensation plans or arrangements that, in the
case of either clauses 1.05(b)(i) or 1.05(b)(ii), are necessary
to give effect to the transactions contemplated by Section
1.05(a). Notwithstanding any other provision of this Section,
payment may be withheld in respect of any employee stock option
until necessary consents are obtained. From and after the date
hereof no additional options or warrants shall be granted under
any Company stock option plans.
SECTION 1.06. Lost Certificates. If any certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the holder claiming such certificate to be lost,
stolen or destroyed and, if required by the Surviving
Corporation, the posting by such holder of a bond, in such
reasonable amount as the Surviving Corporation may direct, as
indemnity against any claim that may be made against it with
respect to such certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed certificate the
Merger Consideration to be paid in respect of the Shares
represented by such certificate as contemplated by this Article.
SECTION 1.07. Adjustments. If at any time during the period
between the date of this Agreement and the Effective Time, any
change in the outstanding Shares shall occur, including by reason
of any reclassification, recapitalization, stock dividend, stock
split or combination, exchange or readjustment of Shares, or any
stock dividend thereon with the record date during such period,
the price per share to be paid to holders of Shares in the Merger
shall be appropriately adjusted.
SECTION 1.08. FIRPTA. The Buyer, the Merger Subsidiary and the
Exchange Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any
holder of Shares such amounts as the Buyer, the Merger Subsidiary
or the Exchange Agent is required to deduct and withhold with
respect to the making of such payment under the United States
Internal Revenue Code of 1986, as amended, and the rules and
regulations thereunder (the "Code"), or any provision of United
States state or local or foreign tax law. To the extent that
amounts are so deducted or withheld, such amounts shall be
treated for all purposes of this Agreement as having been paid to
the holder of the Shares in respect of which such deduction and
withholding was made.
ARTICLE 2
THE SURVIVING CORPORATION
SECTION 2.01. Certificate of Incorporation. The certificate of
incorporation of Merger Subsidiary in effect at the Effective
Time shall be the certificate of incorporation of the Surviving
Corporation until amended in accordance with applicable law,
except that the name of the Surviving Corporation shall be
changed to "Major Realty Corporation".
SECTION 2.02. Bylaws. The bylaws of Merger Subsidiary in effect
at the Effective Time shall be the bylaws of the Surviving
Corporation until amended in accordance with applicable law.
SECTION 2.03. Directors and Officers. From and after the
Effective Time, until successors are duly elected or appointed
and qualified in accordance with applicable law, (a) the
directors of Merger Subsidiary at the Effective Time shall be the
directors of the Surviving Corporation, and (b) the officers of
the Company at the Effective Time shall be the officers of the
Surviving Corporation.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the letter of the Company dated the date
hereof and delivered to Buyer in connection with this Agreement
(the "Disclosure Letter") and making reference to the particular
section of this Agreement to which exception is being taken, the
Company represents and warrants to Buyer that:
SECTION 3.01. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, and has all
corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its
business as now conducted. The Company is duly qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction where the character of the property owned or leased
by it or the nature of its activities makes such qualification
necessary, except for those jurisdictions where the failure to be
so qualified would not, individually or in the aggregate, have a
material adverse effect on the condition (financial or
otherwise), business, assets or results of operations of the
Company and the Subsidiaries (as defined below) taken as a whole
(a "MATERIAL ADVERSE EFFECT"). The Company has heretofore
delivered to Buyer true and complete copies of the Company's
certificate of incorporation and bylaws as currently in effect.
SECTION 3.02. Corporate Authorization. (a) The execution,
delivery and performance by the Company of this Agreement and the
consummation by the Company of the transactions contemplated
hereby are within the Company's corporate powers and have been
duly authorized by all necessary corporate action. This Agreement
has been duly and validly executed and delivered by the Company,
and assuming the due authorization, execution and delivery by
Buyer and Merger Subsidiary, constitutes a valid and binding
agreement of the Company, enforceable against the Company in
accordance with its terms, except as may be limited by
bankruptcy, reorganization, fraudulent conveyance, insolvency and
similar laws of general application relating to or affecting the
enforcement of creditors' rights and subject to general
principles of equity.
(b) The Company's Board of Directors has approved the Merger and
this Agreement, and such approval is sufficient to render
inapplicable to the Merger and this Agreement and the
transactions contemplated by this Agreement the provisions of
Section 203 of the Delaware General Corporation Law. To the
knowledge of the Company, no other state takeover statute or
similar statute or regulation applies or purports to apply to the
Merger, this Agreement or any of the transactions contemplated by
this Agreement.
SECTION 3.03. Governmental Authorization. The execution, delivery
and performance by the Company of this Agreement and the
consummation of the Merger by the Company require no action by or
in respect of, or filing with, any governmental body, agency,
official or authority other than (a) the filing of a certificate
of merger in accordance with Delaware Law; (b) compliance with
any applicable requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR ACT"); and (c) compliance with
any applicable requirements of the Securities Exchange Act of
1934 and the rules and regulations promulgated thereunder (the
"EXCHANGE ACT").
SECTION 3.04. Non-contravention. Except as set forth in Section
3.04 of the Disclosure Letter, the execution, delivery and
performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby do not and
will not (a) contravene or conflict with the certificate of
incorporation or bylaws of the Company, (b) assuming compliance
with the matters referred to in Section 3.03, contravene or
conflict with or constitute a violation of any provision of any
law, regulation, judgment, injunction, order or decree binding
upon or applicable to the Company or any Subsidiary, (c)
constitute a default under or give rise to a right of
termination, cancellation or acceleration of any right or
obligation of the Company or any Subsidiary or to a loss of any
benefit to which the Company or any Subsidiary is entitled under
any provision of any agreement, contract or other instrument
binding upon the Company or any Subsidiary or any license,
franchise, permit or other similar authorization held by the
Company or any Subsidiary, or (d) result in the creation or
imposition of any Lien on any asset of the Company or any
Subsidiary. For purposes of this Agreement, "LIEN" means, with
respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such
asset.
SECTION 3.05. Capitalization. The authorized capital stock of the
Company consists of 12,000,000 Shares, and 1,500,000 shares of
preferred stock, par value $1.00 per share. As of January 31,
1998, there were outstanding 6,893,378 Shares, no shares of
preferred stock and employee stock options to purchase an
aggregate of 100,000 Shares. As of January 31, 1998, Acceptance
Insurance Companies held a promissory note of the Company. The
note is convertible into Common Stock at a conversion price of
$1.00 per share. The amount due under such note at February 20,
1998 was $2,541,409.76 ($2,513,511.14 principal amount,
$27,898.62 accrued interest). All outstanding shares of capital
stock of the Company have been duly authorized and validly issued
and are fully paid and nonassessable. Except as set forth in this
Section, there are outstanding (a) no shares of capital stock or
other voting securities of the Company, (b) no securities of the
Company convertible into or exchangeable for shares of capital
stock or voting securities of the Company, and (c) no options or
other rights to acquire from the Company, and no obligation of
the Company to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or
voting securities of the Company (the items in clauses 3.05(a),
3.05(b) and 3.05(c) being referred to collectively as the
"COMPANY SECURITIES"). There are no outstanding obligations of
the Company or any Subsidiary to repurchase, redeem or otherwise
acquire any Company Securities.
SECTION 3.06. Subsidiaries.
(a) Each Subsidiary is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction
of incorporation, has all corporate powers and all material
governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted and is duly
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities makes such
qualification necessary, except for those jurisdictions where
failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect. For purposes of this
Agreement, "SUBSIDIARY" means any corporation or other entity of
which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or
other persons performing similar functions are directly or
indirectly owned by the Company. All Subsidiaries and their
respective jurisdictions of incorporation are identified in the
Company's annual report on Form 10-KSBfor the fiscal year ended
December 31, 1996 (the "COMPANY 10-K").
(b) All of the outstanding capital stock of, or other ownership
interests in, each Subsidiary, is owned by the Company, directly
or indirectly, free and clear of any Lien and free of any other
limitation or restriction (including any restriction on the right
to vote, sell or otherwise dispose of such capital stock or other
ownership interests). There are no outstanding (i) securities of
the Company or any Subsidiary convertible into or exchangeable
for shares of capital stock or other voting securities or
ownership interests in any Subsidiary, and (ii) options or other
rights to acquire from the Company or any Subsidiary, and no
other obligation of the Company or any Subsidiary to issue, any
capital stock, voting securities or other ownership interests in,
or any securities convertible into or exchangeable for any
capital stock, voting securities or ownership interests in, any
Subsidiary (the items in clauses 3.06(b)(i) and 3.06(b)(ii) being
referred to collectively as the "SUBSIDIARY SECURITIES"). There
are no outstanding obligations of the Company or any Subsidiary
to repurchase, redeem or otherwise acquire any outstanding
Subsidiary Securities.
SECTION 3.07. SEC Filings.
(a) The Company has delivered to Buyer (i) the annual reports on
Form 10-KSBfor its fiscal years ended December 31, 1996, 1995 and
1994, (ii) the quarterly report of the Company on Form 10-QSB for
the fiscal quarters ended September 30, June 30 and March 31,
1997 (such annual reports and quarterly reports are referred to
hereinafter as the "Company SEC Filings"), and (iii) its proxy or
information statements relating to meetings of, or actions taken
without a meeting by, the stockholders of the Company since
December 31, 1996.
(b) As of its filing date, each such report or statement filed
pursuant to the Exchange Act was prepared in accordance with the
applicable requirements of the Exchange Act and the rules and
regulations thereunder and did not contain any untrue statement
of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they
were made, not misleading.
SECTION 3.08. Financial Statements. The audited consolidated
financial statements and unaudited consolidated interim financial
statements of the Company included in its annual reports on Form
10-KSBand the quarterly report on Form 10-QSB referred to in
Section 3.07 fairly present, in conformity with generally
accepted accounting principles applied on a consistent basis
(except as may be indicated in the notes thereto), the
consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and their
consolidated results of operations and changes in financial
position for the periods then ended (subject to normal year-end
adjustments in the case of any unaudited interim financial
statements). For purposes of this Agreement, "BALANCE SHEET"
means the consolidated balance sheet of the Company as of
September 30, 1997, as set forth in the quarterly report of the
Company on Form 10-QSB for the quarter ended September 30, 1997
and "BALANCE SHEET DATE" means September 30, 1997.
SECTION 3.09. Disclosure Documents.
(a) Each document required to be filed by the Company with the
SEC in connection with the transactions contemplated by this
Agreement (the "COMPANY DISCLOSURE DOCUMENTS"), including,
without limitation, the information statement of the Company (the
"COMPANY INFORMATION STATEMENT") to be filed with the SEC in
connection with the Merger, and any amendments or supplements
thereto will, when filed, comply as to form in all material
respects with the applicable requirements of the Exchange Act.
(b) At the time the Company Information Statement or any
amendment or supplement thereto is first mailed to stockholders
of the Company, and at the Effective Time, the Company
Information Statement, as supplemented or amended, if applicable,
will not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under
which they were made, not misleading. At the time of the filing
of any Company Disclosure Document other than the Company
Information Statement and at the time of any distribution
thereof, such Company Disclosure Document will not contain any
untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not
misleading. The representations and warranties contained in this
Section 3.09(b) will not apply to statements or omissions
included in the Company Disclosure Documents based upon
information furnished to the Company in writing by Buyer
specifically for use therein.
SECTION 3.10. Absence of Certain Changes. Since the Balance
Sheet Date, the Company and Subsidiaries have conducted their
business in the ordinary course consistent with past practice and
there has not been:
(a) any event, occurrence or development of a state of
circumstances or facts which has had or reasonably could be
expected to have a Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of
the Company, or any issuance, grant, sale, repurchase, redemption
or other acquisition by the Company or any Subsidiary of any
outstanding shares of capital stock or other securities of, or
other ownership interests (including options, rights or warrants)
in, the Company or any Subsidiary;
(c) any amendment of any material term of any outstanding
security of the Company or any Subsidiary or any subdivision,
reclassification, recapitalization, split, combination or
exchange of any shares of capital stock of the Company (other
than in connection with outstanding options);
(d) any incurrence, assumption or guarantee by the Company or
any Subsidiary of any indebtedness for borrowed money;
(e) any creation or assumption by the Company or any Subsidiary
of any Lien on any material asset other than in the ordinary
course of business consistent with past practices;
(f) any making of any loan, advance or capital contributions to
or investment in any Person other than loans, advances or capital
contributions to or investments in wholly-owned Subsidiaries made
in the ordinary course of business consistent with past
practices;
(g) any damage, destruction or other casualty loss (whether or
not covered by insurance) affecting the business or assets of the
Company or any Subsidiary which, individually or in the
aggregate, has had or would reasonably be expected to have a
Material Adverse Effect;
(h) any transaction or commitment made, or any contract or
agreement entered into, by the Company or any Subsidiary relating
to its assets or business (including the acquisition or
disposition of any assets) or any relinquishment by the Company
or any Subsidiary of any contract or other right, in either case,
material to the Company and the Subsidiaries taken as a whole,
other than transactions and commitments in the ordinary course of
business consistent with past practice (including the contracts
for the sale of real property by the Company set forth in Section
3.21 of the Disclosure Letter) and those contemplated by this
Agreement;
(i) any change in any method of accounting or accounting
practice by the Company or any Subsidiary, except for any such
change required by reason of a concurrent change in generally
accepted accounting principles;
(j) any tax election, other than those consistent with past
practice, not required by law or any settlement or compromise of
any tax liability in either case that is material to the Company
and the Subsidiaries;
(k) any (i) grant of any severance or termination pay to any
director, officer or employee of the Company or any Subsidiary,
(ii) entering into of any employment, severance or termination,
deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any director,
officer or employee of the Company or any Subsidiary, (iii)
increase in benefits payable under any existing severance or
termination pay policies or employment agreements or (iv)
increase in compensation, bonus or other benefits payable to
directors, officers or employees of the Company or any
Subsidiary, other than in the ordinary course of business
consistent with past practice; or
(l) any labor dispute, other than routine individual grievances,
or any activity or proceeding by a labor union or representative
thereof to organize any employees of the Company or any
Subsidiary, which employees were not subject to a collective
bargaining agreement at the Balance Sheet Date, or any lockouts,
strikes, slowdowns, work stoppages or threats thereof by or with
respect to such employees.
SECTION 3.11. No Undisclosed Material Liabilities. There are no
liabilities or obligations of the Company or any Subsidiary of
any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, and there is no existing
condition, situation or set of circumstances which could
reasonably be expected to result in such a liability or
obligation, other than:
(a) liabilities or obligations disclosed or provided for in the
Balance Sheet;
(b) liabilities or obligations incurred in the ordinary course
of business consistent with past practice since the Balance Sheet
Date, which in the aggregate are not material to the Company and
the Subsidiaries, taken as a whole; and
(c) liabilities or obligations under this Agreement.
SECTION 3.12. Litigation. Except as set forth in the Disclosure
Letter or Company SEC Filings, there is no action, suit,
investigation or proceeding (or any basis therefor) pending
against, or to the knowledge of the Company, threatened against
or affecting, the Company or any Subsidiary or any of their
respective properties before any court or arbitrator or any
governmental body, agency or official (i) as of the date hereof
and (ii) which, if determined or resolved adversely to the
Company or any Subsidiary in accordance with the plaintiff's
demands, would reasonably be expected to have a Material Adverse
Effect or which in any manner challenges or seeks to prevent,
enjoin, alter or delay the Merger or any of the other
transactions contemplated hereby.
SECTION 3.13. Taxes. Except as set forth in the Balance Sheet
(including the notes thereto) and except as would not,
individually or in the aggregate, have a Material Adverse Effect,
(i) all tax returns, statements, reports and forms (collectively,
the "COMPANY RETURNS") required to be filed with any taxing
authority by, or with respect to, the Company and its
Subsidiaries have been filed in accordance with all applicable
laws, (ii) the Company and its Subsidiaries have timely paid all
taxes shown as due and payable on such Company Returns that have
been so filed, and, as of the time of filing, the Company Returns
correctly reflected the facts regarding the income, business,
assets, operations, activities and the status of the Company and
its Subsidiaries, (iii) the Company and its Subsidiaries have
made adequate provision on their books for all taxes payable by
the Company and its Subsidiaries for which no Company Return has
yet been filed, (iv) the charges, accruals and reserves for taxes
with respect to the Company and its Subsidiaries reflected on the
Balance Sheet (excluding any provision for deferred income taxes)
are adequate under United States generally accepted accounting
principles ("GAAP") to cover the tax liabilities accruing through
the date thereof, (v) there is no action, suit, proceeding,
audit, or claim with respect to tax matters now proposed or
pending against or with respect to the Company or any of its
Subsidiaries, (vi) there are no outstanding waivers or other
agreements extending any statutory periods of limitation for the
assessment of taxes of the Company and its Subsidiaries, (vii)
neither the Company nor any of its Subsidiaries has been a member
of an affiliated, consolidated, combined or unitary group.
SECTION 3.14. ERISA.
(a) Definitions. For purposes hereof the following terms have
the following meanings:
"BENEFIT ARRANGEMENT" means any employment, severance or similar
contract or arrangement (whether or not written) providing for
compensation, bonus, profit-sharing, stock option, or other stock
related rights or other forms of incentive or deferred
compensation, vacation benefits, insurance coverage (including
any self-insured arrangements), health or medical benefits,
disability benefits, worker's compensation, supplemental
unemployment benefits, workers' compensation, supplemental
unemployment benefits, severance benefits and post-employment or
retirement benefits (including compensation, pension, health,
medical or life insurance or other benefits) that (i) is not an
Employee Plan (as defined below), (ii) is entered into,
maintained, administered, contributed to or required to be
contributed to, as the case may be, by the Company or any of its
ERISA Affiliates (as defined below) and (iii) covers any employee
or former employee of the Company or any Subsidiary.
"EMPLOYEE PLAN" means any "employee benefit plan", as defined in
Section 3(3) of ERISA, that (i) is subject to any provision of
ERISA, (ii) is maintained, administered, contributed to or
required to be contributed to by the Company or any of its ERISA
Affiliates and (iii) covers any employee or former employee of
the Company or any Subsidiary.
"ERISA" means the Employee Retirement Income Security Act of
1974.
"ERISA AFFILIATE" of any entity means any other entity which,
together with such entity, would be treated as a single employer
under Section 414 of the Code.
"MULTIEMPLOYER PLAN" means each Employee Plan that is a
multiemployer plan, as defined in Section 3(37) of ERISA.
"PBGC" means the Pension Benefit Guaranty Corporation.
"TITLE IV PLAN" means an Employee Plan subject to Title IV of
ERISA other than any Multiemployer Plan.
(b) The Company has provided, or will provide prior to the
Effective Time, Buyer with a list and copies of the Employee
Plans (and, if applicable, related trust agreements) and all
amendments thereto and written interpretations thereof together
with the most recent annual report (Form 5500 including all
required Schedules thereto) and the most recent actuarial
valuation report prepared in connection with any Employee Plan.
Such list identifies each Employee Plan which is (i) a
Multiemployer plan, (ii) a Title IV Plan or (iii) maintained in
connection with any trust described in Section 501(c)(9) of the
Code. The Company has provided, or will provide prior to the
Effective Time, Buyer with complete age, salary, service and
related data as of the most recent practicable date for all
employees and former employees covered under any Title IV Plan.
(c) The fair market value of the assets of each Title IV Plan
(excluding for these purposes any accrued but unpaid
contributions) exceeds the present value of all benefits accrued
under such Title IV Plan determined on a termination basis using
the assumptions established by the PBGC. There is no unfunded
liability of the Company or any Subsidiary in respect of any
Employee Plans or Benefit Arrangements described under Sections
4(b)(5) of ERISA or 401(a)(1) of the Code, as computed using
reasonable actuarial assumptions and determined as if all
benefits under such plans are vested and payable.
(d) No transaction prohibited by Section 406 of ERISA or Section
4975 of the Code has occurred with respect to any employee
benefit plan or arrangement which is covered by Title I of ERISA,
which transaction has or will cause the Company or any of its
Subsidiaries to incur any liability under ERISA, the Code or
otherwise, excluding transactions effected pursuant to and in
compliance with a statutory or administrative exemption. No
"accumulated funding deficiency", as defined in Section 412 of
the Code, has been incurred with respect to any Employee Plan or
any trust established thereunder subject to such Section 412,
whether or not waived. No "reportable event", within the meaning
of Section 4043 of ERISA, other than a "reportable event" that
will not have a Material Adverse Effect, and no event described
in Section 4062 or 4063 of ERISA, has occurred in connection with
any Employee Plan. Neither the Company nor any ERISA Affiliate of
the Company has (i) engaged in, or is a successor or parent
corporation to an entity that has engaged in, a transaction
described in Sections 4069 or 4212(c) of ERISA or (ii) incurred,
or reasonably expects to incur prior to the Effective Time, (A)
any liability under Title IV of ERISA arising in connection with
the termination of, or a complete or partial withdrawal from, any
plan covered or previously covered by Title IV of ERISA or (B)
any liability under Section 4971 of the Code that in either case
could become a liability of the Company or any Subsidiary or
Buyer or any of its ERISA Affiliates after the Effective Time. No
condition exists that (i) could constitute grounds for
termination by the PBGC of any employee benefit plan that is
subject to Title IV of ERISA that is maintained by the Company,
any Subsidiary or any of their ERISA Affiliates or (ii) presents
a material risk of complete or partial withdrawal from any
multiemployer plan, as defined in Section 3(37) of ERISA, which
could result in the Company, any Subsidiary or Buyer or any ERISA
Affiliate of any of them incurring a withdrawal liability within
the meaning of Section 4201 of ERISA. The assets of the Company
and all of its Subsidiaries are not now, nor will they after the
passage of time be, subject to any lien imposed under Code
Section 412(n) by reason of a failure of the Company or any
Subsidiary to make timely installments or other payments required
under Code Section 412. If a "complete withdrawal" by the Company
and all of its ERISA Affiliates were to occur as of the Effective
Time with respect to all Multiemployer Plans, none of the
Company, any Subsidiary or any of their ERISA Affiliates would
incur any material withdrawal liability under Title IV of ERISA.
(e) Each Employee Plan that is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so
qualified during the period since its adoption; each trust
created under any such Plan is exempt from tax under Section
501(a) of the Code and has been so exempt since its creation. The
Company has provided, or will provide prior to the Effective
Time, Buyer with the most recent determination letter of the
Internal Revenue Service relating to each such Employee Plan.
Each Employee Plan has been maintained in material compliance
with its terms and with the requirements prescribed by any and
all applicable statutes, orders, rules and regulations, including
but not limited to ERISA and the Code.
(f) The Company has provided, or will provide prior to the
Effective Time, Buyer with a list and copies or descriptions of
each Benefit Arrangement (and, if applicable, related trust
agreements) and all amendments thereto and written
interpretations thereof. Each Benefit Arrangement has been
maintained in material compliance with its terms and with the
requirements prescribed by any and all applicable statutes,
orders, rules and regulations and has been maintained in good
standing with applicable regulatory authorities.
(g) Neither the Company nor any Subsidiary has any current or
projected liability in respect of post-employment or post-
retirement health or medical or life insurance benefits for
retired, former or current employees of the Company or any
Subsidiary, except as required to avoid excise tax under Section
4980B of the Code. No condition exists that would prevent the
Company or any Subsidiary from amending or terminating any
Employee Plan or Benefit Arrangement providing health or medical
benefits in respect of any active employee of the Company or any
Subsidiary other than limitations imposed under the terms of a
collective bargaining agreement.
(h) All contributions and payments which have either become due
and payable or should be accrued under each Employee Plan and
Benefit Arrangement, determined in accordance with prior funding
and accrual practices, will be discharged and paid or accrued,
respectively, on or prior to the Effective Time in accordance
with such practices. There has been no amendment to, written
interpretation of or announcement (whether or not written) by the
Company or any Subsidiary relating to, or change in employee
participation or coverage under, any Employee Plan or Benefit
Arrangement that would increase materially the expense of
maintaining such Employee Plan or Benefit Arrangement above the
level of the expense incurred in respect thereof for the most
recent fiscal year ended prior to the date hereof.
(i) There is no contract, plan or arrangement (written or
otherwise) covering any employee or former employee of the
Company or any Subsidiary that, individually or collectively,
could give rise to the payment of any amount that would not be
deductible pursuant to the terms of Section 280G of the Code.
(j) There has been no failure of a group health plan (as defined
in Section 5000(b)(1) of the Code) to meet the requirements of
Code Section 4980B(f) with respect to a qualified beneficiary (as
defined in Section 4980B(g)). Neither the Company nor any of its
Subsidiaries has contributed to a nonconforming group health plan
(as defined in Section 5000(c)) and no ERISA Affiliate of the
Company or any of its Subsidiaries has incurred a tax under
Section 5000(a) which is or could become a liability of the
Company or any of its Subsidiaries.
(k) No employee or former employee of the Company or any
Subsidiary will become entitled to any bonus, retirement,
severance, job security or similar benefit or enhanced such
benefit (including acceleration of vesting or exercise of an
incentive award) as a result of the transactions contemplated
hereby, either alone or in combination with another event, except
as contemplated by this Agreement.
(l) There are no pending, threatened or anticipated claims by or
on behalf of any Employee Plan or Benefit Arrangement, by any
employee or beneficiary under any such Employee Plan or Benefit
Arrangement, or otherwise involving any such Employee Plan or
Benefit Arrangement (other than routine claims for benefits).
SECTION 3.15. Compliance with Laws. The Company and each of its
Subsidiaries is and has been in compliance with, and to the
knowledge of the Company is not under investigation with respect
to and has not been threatened to be charged with or given notice
of any violation of, any applicable law, rule, regulation,
judgment, injunction, order or decree, except for matters that
have not had and could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
SECTION 3.16. Finders' Fees. There is no investment banker,
broker, finder or other intermediary which has been retained by
or is authorized to act on behalf, of the Company or any
Subsidiary who might be entitled to any fee or commission from
Buyer or any of its affiliates upon consummation of the
transactions contemplated by this Agreement.
SECTION 3.17. Other Information. None of the documents or
information delivered to Buyer in connection with the
transactions contemplated by this Agreement contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements contained therein not
misleading. The financial projections relating to the Company and
the Subsidiaries delivered to Buyer constitute the Company's best
estimate of the information purported to be shown therein and the
Company is not aware of any fact or information that would lead
it to believe that such projections are incorrect or misleading
in any material respect.
SECTION 3.18. Environmental Matters.
(a) Definitions. For purposes hereof the following terms have
the following meanings:
"ENVIRONMENTAL LAWS" means any federal, state, local or foreign
law (including, without limitation, common law), treaty, judicial
decision, regulation, rule, judgment, order, decree, injunction,
permit or governmental restriction or requirement or any
agreement with any governmental authority or other third party,
relating to human health and safety, the environment or to
pollutants, contaminants, wastes or chemicals or any toxic,
radioactive, ignitable, corrosive, reactive or otherwise
hazardous substances, wastes or materials.
"ENVIRONMENTAL PERMITS" means all permits, licenses, franchises,
certificates, approvals and other similar authorizations of
governmental authorities relating to or required by Environmental
Laws and affecting, or relating in any way to, the business of
the Company or any Subsidiary as currently conducted.
(b) Except as set forth in the Company 10-K:
(i) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has
been filed, no penalty has been assessed, and no investigation,
action, claim, suit, proceeding or review (or any basis therefor)
is pending or, to the knowledge of the Company or any Subsidiary,
is threatened by any governmental entity or other Person with
respect to any matters relating to the Company or any Subsidiary
and relating to or arising out of any Environmental Law which,
individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect;
(ii) The Company is in compliance with all Environmental Laws and
has been and is in compliance with all Environmental Permits,
except where any noncompliance or failure to receive
Environmental Permits could not reasonably be expected to result
in a Material Adverse Effect; and
(iii) there are no liabilities of or relating to the Company
or any Subsidiary of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise
arising under or relating to any Environmental Law that have had
or may reasonably be expected to have a Material Adverse Effect,
and there are no facts, conditions, situations or set of
circumstances which could reasonably be expected to result in or
be the basis for any such liability.
(c) There has been no environmental investigation, study, audit,
test, review or other analysis conducted of which the Company has
knowledge in relation to the current or prior business of the
Company or any Subsidiary or any property or facility now or
previously owned or leased by the Company or any Subsidiary which
has not been delivered to Buyer at least five days prior to the
Effective Time.
(d) For purposes of this Section, the terms "COMPANY" and
"SUBSIDIARY" shall include any entity which is, in whole or in
part, a predecessor of the Company or any Subsidiary.
SECTION 3.19. Vote Required. The only vote of the holders of any
class or series of capital stock of the Company necessary to
approve the Merger is the affirmative vote of the holders of a
majority of the outstanding Shares.
SECTION 3.20. Anti-Takeover Plan; State Takeover Statutes.
Neither the Company nor any Subsidiary has in effect any plan,
scheme, device or arrangement, commonly or colloquially known as
a "poison pill" or "anti-takeover" plan or any similar plan,
scheme, device or arrangement. The Board of Directors of the
Company has approved the Merger and this Agreement. Except for
Section 203 of Delaware Law, no state takeover statute or similar
statute or regulation applies or purports to apply to the Merger,
this Agreement or any of the transactions contemplated by this
Agreement.
SECTION 3.21. Material Contracts.
(a) Except as set forth in the Company SEC Filings and Section
3.21 of the Disclosure Letter, neither the Company nor any
Subsidiary is a party to or bound by:
(i) any lease (whether of real or personal property) providing
for annual rentals of $25,000 or more;
(ii) any agreement with a term of at least one year for the
purchase of materials, supplies, goods, services, equipment or
other assets providing for either (A) annual payments by the
Company and the Subsidiaries of $50,000 or more or (B) aggregate
payments by the Company and the Subsidiaries of $50,000 or more;
(iii) any sales, distribution or other similar agreement with
a term of at least six months, providing for the sale by the
Company or any Subsidiary of materials, supplies, goods,
services, equipment or other assets that provides for (A) annual
payments to the Company and the Subsidiaries of $100,000 or more
and (B) does not by its terms permit the Company or any
Subsidiary to pass any increase in the costs of such materials,
supplies, goods, services, equipment or other assets on to the
counterparty thereto;
(iv) any partnership, joint venture or other similar agreement or
arrangement;
(v) any agreement relating to the acquisition or disposition of
any business (whether by merger, sale of stock, sale of assets or
otherwise);
(vi) any agreement relating to asset sale programs, indebtedness
for borrowed money or the deferred purchase price of property (in
either case, whether incurred, assumed, guaranteed or secured by
any asset);
(vii) any option, license, franchise or similar agreement;
(viii) any agency, dealer, sales representative, marketing or
other similar agreement;
(ix) any agreement that limits the freedom of the Company or any
Subsidiary or any officer or key employee to compete in any line
of business or with any Person or in any area or which would so
limit the freedom of the Company or any Subsidiary after the
Effective Time;
(x) any other agreement, commitment, arrangement or plan not
made in the ordinary course of business that is material to the
Company and the Subsidiaries, taken as a whole.
As used herein, the term "AFFILIATE" means, with respect to any
Person, any other Person directly or indirectly controlling,
controlled by or under common control with such Person.
(b) Each agreement, contract, plan, lease, arrangement or
commitment disclosed in any Section of the Disclosure Letter or
required to be disclosed pursuant to this Section is a valid and
binding agreement of the Company or a Subsidiary, as the case may
be, and is in full force and effect, and none of the Company, any
Subsidiary or, to the knowledge of the Company, any other party
thereto is in default or breach in any material respect under the
terms of any such agreement, contract, plan, lease, arrangement
or commitment, and, to the knowledge of the Company, no event or
circumstance has occurred that, with notice or lapse of time or
both, would constitute any event of default thereunder. True and
complete copies of each such agreement, contract, plan, lease,
arrangement or commitment have been delivered to Buyer.
SECTION 3.22. Properties.
(a) The Company and the Subsidiaries have good and marketable,
indefeasible, fee simple title to, or in the case of leased
property and assets have valid leasehold interests in, all
property and assets (whether real, personal, tangible or
intangible) reflected on the Balance Sheet or acquired after the
Balance Sheet Date, except for properties and assets sold since
the Balance Sheet Date in the ordinary course of business
consistent with past practices. None of such property or assets
is subject to any Lien, except:
(i) Liens disclosed on the Balance Sheet;
(ii) Liens for taxes not yet due or being contested in good faith
(and for which adequate accruals or reserves have been
established on the Balance Sheet); or
(iii) Liens which do not materially detract from the value or
materially interfere with any present or intended use of such
property or assets.
(b) There are no developments affecting any such property or
assets pending or, to the knowledge of the Company threatened,
which might materially detract from the value, materially
interfere with any present or intended use or materially
adversely affect the marketability of any such property or
assets. The Company has delivered or made available to the Buyer
complete and correct copies of all leases of real property and
material personal property to which it or any of its Subsidiaries
is a party. All such leases are valid, subsisting and effective
in accordance with their terms and there does not exist
thereunder any material default or event or condition which,
after notice or lapse of time or both, would constitute a
material default thereunder. All physical properties owned or
used by Company or any of its Subsidiaries and all equipment
necessary for the operation of its businesses are in good
operating condition.
SECTION 3.23. Licenses and Permits. Section 3.23 of the
Disclosure Letter correctly describes each material license,
franchise, permit, certificate, approval or other similar
authorization affecting, or relating in any way to, the assets or
business of the Company and its Subsidiaries together with the
name of the government agency or entity issuing such permit. All
permits or other similar authorizations (whether material or not)
are valid and in full force and effect and neither the Company
nor any Subsidiary is in default under, and no condition exists
that with notice or lapse of time or both would constitute a
default under, the Permits. No permits or other similar
authorizations (whether material or not) will be terminated or
impaired or become terminable, in whole or in part, as a result
of the transactions contemplated hereby.
SECTION 3.24. Receivables. All accounts, notes receivable and
other receivables (other than receivables collected since the
Balance Sheet Date) reflected on the Balance Sheet are, and all
accounts and notes receivable arising from or otherwise relating
to the business of the Company and its Subsidiaries as of the
Effective Time will be, valid, genuine and fully collectible in
the aggregate amount thereof, subject to normal and customary
trade discounts, less any reserves for doubtful accounts recorded
on the Balance Sheet. All accounts, notes receivable and other
receivables arising out of or relating to such business of the
Company and its Subsidiaries as of the Balance Sheet Date have
been included in the Balance Sheet, and all accounts, notes
receivable and other receivables arising out of or relating to
the Business as of the Effective Time will be included on the
books of the Company in accordance with generally accepted
accounting principles applied on a consistent basis.
SECTION 3.25. Labor Matters. The Company and the Subsidiaries
are in compliance with all currently applicable laws respecting
employment and employment practices, terms and conditions of
employment and wages and hours, and are not engaged in any unfair
labor practice, failure to comply with which or engagement in
which, as the case may be, would reasonably be expected to have a
Material Adverse Effect. There is no unfair labor practice
complaint pending or, to the knowledge of the Company, threatened
against the Company or any Subsidiary before the National Labor
Relations Board. Neither the Company nor any of its Subsidiaries
has any knowledge of any strikes, slowdowns, work stoppages,
lockouts, or threats thereof, by or with respect to any employees
of Company of any of its Subsidiaries which could have a Material
Adverse Effect.
SECTION 3.26. Required and Other Consents.
(a) Section 3.26(a) of the Disclosure Letter sets forth each
agreement, contract or other instrument binding upon the Company
or its Affiliates requiring a consent as a result of the
execution, delivery and performance of this Agreement, except
such consents as would not, individually or in the aggregate,
have, or reasonably be expected to have, a Material Adverse
Effect if not received by the Effective Time (each such consent,
a "REQUIRED CONSENT" and together the "REQUIRED CONSENTS").
(b) Section 3.26(b) of the Disclosure Letter sets forth every
other consent (each such consent, an "OTHER CONSENT" and together
the "OTHER CONSENTS") under such agreements, contracts or other
instruments or such Permits that is necessary or desirable with
respect to the execution, delivery and performance of this
Agreement.
SECTION 3.27. Intellectual Property. The Company and its
Subsidiaries own, or are licensed or otherwise have the rights to
use, all patents, trademarks, trade names, copyrights,
technology, trade secrets, know-how and processes (collectively,
"INTELLECTUAL PROPERTY RIGHTS") material to or necessary for the
conduct of their respective businesses, as presently conducted.
No claims are pending by any person against the Company or any of
its Subsidiaries as to the use of any Intellectual Property
Rights and, to the Company's best knowledge, the use by the
Company or any of its Subsidiaries of all Intellectual Property
Rights does not infringe on the rights of any person. To the
Company's best knowledge, no third person is infringing on the
Intellectual Property Rights of the Company or any of its
Subsidiaries.
SECTION 3.28. Insurance. The Company maintains, and has
maintained, without interruption, during the past three years,
policies or binders of insurance covering such risks, and events,
including personal injury, property damage and general liability,
in amounts the Company reasonably believes adequate for its
business and operations.
SECTION 3.29. Related Party Transactions. Except as described in
the Company's reports filed with the SEC, there have been no
transactions between the Company and any officer, director or 10%
stockholder which have involved an amount in excess of $60,000
("Related Party Transaction").
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Company that:
SECTION 4.01. Existence and Power. Buyer is a limited partnership
duly organized, and Merger Subsidiary is a corporation duly
incorporated, under the laws of the State of Delaware, and each
is validly existing and in good standing under the laws of the
State of Delaware and has all necessary powers and all material
governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted. Since the
date of its incorporation, Merger Subsidiary has not engaged in
any activities other than in connection with or as contemplated
by this Agreement or in connection with arranging any financing
required to consummate the transactions contemplated hereby.
SECTION 4.02. Authorization. The execution, delivery and
performance by Buyer and Merger Subsidiary of this Agreement and
the consummation by Buyer and Merger Subsidiary of the
transactions contemplated hereby are within each of Buyer's and
Merger Subsidiary's respective powers and have been duly
authorized by all necessary action (including all necessary
action of their respective partners and stockholders). This
Agreement has been duly and validly executed and delivered by
Buyer and Merger Subsidiary, and assuming the due authorization,
execution and delivery by the Company, constitutes a valid and
binding agreement of Buyer and Merger Subsidiary, enforceable
against Buyer and Merger Subsidiary in accordance with its terms,
except as may be limited by bankruptcy, reorganization,
fraudulent conveyance, insolvency and similar laws of general
application relating to or affecting the enforcement of
creditors' rights and subject to general principles of equity.
SECTION 4.03. Governmental Authorization. The execution,
delivery and performance by Buyer and Merger Subsidiary of this
Agreement and the consummation by Buyer and Merger Subsidiary of
the transactions contemplated by this Agreement require no action
by or in respect of, or filing with, any governmental body,
agency, official or authority other than (a) the filing of a
certificate of merger in accordance with Delaware Law, (b)
compliance with any applicable requirements of the HSR Act and
(c) compliance with any applicable requirements of the Exchange
Act.
SECTION 4.04. Non-contravention. The execution, delivery and
performance by Buyer and Merger Subsidiary of this Agreement and
the consummation by Buyer and Merger Subsidiary of the
transactions contemplated hereby do not and will not (a)
contravene or conflict with the certificate of limited
partnership or partnership agreement or certificate of
incorporation or bylaws of Buyer or Merger Subsidiary,
respectively, (b) assuming compliance with the matters referred
to in Section 4.03, contravene or conflict with any provision of
law, regulation, judgment, order or decree binding upon Buyer or
Merger Subsidiary, or (c) constitute a default under or give rise
to any right of termination, cancellation or acceleration of any
right or obligation of Buyer or Merger Subsidiary or to a loss of
any benefit to which Buyer or Merger Subsidiary is entitled under
any agreement, contract or other instrument binding upon Buyer or
Merger Subsidiary, except, in the case of clause (b) and (c), for
such matters as would not materially adversely affect the ability
of Buyer and Merger Subsidiary to consummate the transactions
contemplated by this Agreement.
SECTION 4.05. Disclosure Documents. The information with respect
to Buyer and its subsidiaries that Buyer furnishes to the Company
in writing specifically for use in any Company Disclosure
Document will not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under
which they were made, not misleading (i) in the case of the
Company Information Statement at the time the Company Information
Statement or any amendment or supplement thereto is first mailed
to stockholders of the Company and (ii) in the case of any
Company Disclosure Document other than the Company Information
Statement, at the time of the filing thereof and at the time of
any distribution thereof.
SECTION 4.06. Finders' Fees. There is no investment banker,
broker, finder or other intermediary who might be entitled to any
fee or commission from the Company or any of its affiliates upon
consummation of the transactions contemplated by this Agreement.
ARTICLE 5
COVENANTS OF THE COMPANY
The Company agrees that:
SECTION 5.01. Conduct of the Company. From the date hereof until
the Effective Time, the Company and the Subsidiaries shall
conduct their business in the ordinary course consistent with
past practice and shall use their best efforts to preserve intact
their business organizations and relationships with third parties
and to keep available the services of their present officers and
employees. Without limiting the generality of the foregoing, from
the date hereof until the Effective Time, the Company shall:
(a) carry on its business in, and only in, the ordinary course
of business in the same manner as heretofore and, to the extend
consistent with such business, use all reasonable efforts to
preserve intact its present business organization, keep available
the services of its present officers and employees, and preserve
its goodwill and its relationships with customers, suppliers and
others having business dealings with it;
(b) consistent with prior practice, maintain all of its
structures, equipment and other tangible personal property in
good repair, order and condition, except for depletion,
depreciation, ordinary wear and tear and damage by unavoidable
casualty;
(c) keep in full force and effect insurance comparable in amount
and scope of coverage to insurance now carried by it;
(d) perform in all respects all of its obligations under
agreements, contracts and instruments relating to or affecting
its properties, assets and business, except to the extent that
the failure to do so in any instance or in the aggregate would
not have a Material Adverse Effect;
(e) continue to collect amounts receivable and pay accounts
payable utilizing normal procedures and without discounting or
accelerating payment of such accounts except in the ordinary
course of business consistent with prior practice;
(f) maintain its books of accounts and records in the usual,
regular and ordinary manner consistent with past practice and not
make any change to its accounting (including tax accounting)
methods, principles or practices, except as may be required by
GAAP or by applicable tax laws;
(g) comply in all respects with all statutes, laws, ordinances,
rules and regulations applicable to it and to the conduct of its
business, except to the extent that the failure to do so in any
instance or in the aggregate would not have a Material Adverse
Effect;
(h) not amend its Certificate of Incorporation or By-Laws;
(i) not materially increase the annual level of compensation of
any of its employees, increase the annual level of compensation
payable or to become payable by it to any of its executive
officers, or grant any unusual or extraordinary bonus, benefit or
other direct or indirect compensation to any employee, director
or consultant, other than to non-executive employees in the
ordinary course of business consistent with past practice;
(j) except in the ordinary course, consistent with past
practice, not enter into, assume or amend in any respect any
agreement, contract or commitment of the character referred to in
Section 3.21;
(k) not merge or consolidate with, or agree to merge or
consolidate with, or purchase substantially all the assets of, or
otherwise acquire any business or any corporation, partnership,
association or other business organization or division thereof;
(l) not acquire any material properties or assets or sell,
assign, transfer, convey, lease or otherwise dispose of any of
its material properties or assets, except for fair consideration
in the ordinary course of business consistent with prior
practice, which includes sales of real property pursuant to
contracts described in Section 3.21 of the Disclosure Letter;
(m) not purchase for cash and cancel any options outstanding
under Company stock option plans or otherwise amend such plans;
(n) promptly advise Buyer in writing of any materially adverse
change in the financial condition, operations or business of
Company or any of its Subsidiaries;
(o) not declare or pay dividends (cash or otherwise) or make any
distribution on, or directly or indirectly redeem, purchase or
otherwise acquire, any of its outstanding capital shares;
(p) not affect any recapitalization or any split or other
reclassification of shares;
(q) not authorize the creation or issuance of or issue, sell or
dispose of, or create any obligation to issue, sell or dispose
of, any of its capital shares or any securities or obligations
convertible into or exchangeable for, any of its capital shares
(other than pursuant to stock options or warrants heretofore
outstanding);
(r) not create, incur, assume, guarantee or otherwise become
directly or indirectly liable with respect to any indebtedness
for borrowed money, other than indebtedness incurred in the
ordinary course of business consistent with past practice under
agreements existing on the date hereof and identified in writing
to Buyer;
(s) not subject any of its properties or assets (whether
tangible or intangible) to any encumbrance, other than in the
ordinary course of business;
(t) not engage in any Related Party Transaction;
(u) not enter into any agreement or understanding to do or
engage in any of the foregoing;
(v) not, and shall not permit any Subsidiary to, make any
material tax election or settle or compromise any material
contested tax liability (whether with respect to amount or
timing), in each case without the prior written consent of Buyer
which consent shall not be unreasonably withheld; and
(w) not, and shall not permit any Subsidiary to, (i) take or
agree or commit to take any action that would make any
representation and warranty of the Company hereunder inaccurate
in any respect at, or as of any time prior to, the Effective Time
or (ii) omit or agree or commit to omit to take any action
necessary to prevent any such representation or warranty from
being inaccurate in any respect at any such time.
SECTION 5.02. Company Information Statement. As promptly as
practicable following the date hereof, the Company (a) will
prepare and file with the SEC, will use its best efforts to have
cleared by the SEC and will thereafter mail to its stockholders
as promptly as practicable the Company Information Statement and
all other related materials, if any, (b) include in any Company
Information Statement the determination of the Board of Directors
to the effect that the Board of Directors, having determined that
each of them, by virtue of his service on the Board of Directors
of Acceptance Insurance Companies, has a conflict of interest
that will prevent him from passing on the fairness of this
Agreement and the transactions contemplated hereby and (c) will
otherwise comply with all legal requirements applicable to such
action. Buyer, Merger Subsidiary and the Company shall cooperate
with each other in the preparation of the Company Information
Statement, and the Company shall notify Buyer of the receipt of
any comments of the SEC with respect to the Company Information
Statement and of any request by the SEC for any amendment or
supplement thereto or for additional information and shall
provide to Buyer promptly copies of all correspondence between
the Company or any representative of the Company and the SEC. The
Company shall give Buyer and its counsel the opportunity to
review the Company Information Statement prior to its being filed
with the SEC and shall give Buyer and its counsel the opportunity
to review all amendments and supplements to the Company
Information Statement and all responses to requests for
additional information and replies to comments prior to their
being filed with, or sent to, the SEC. If at any time prior to
the Effective Time any event or circumstance relating to any
party hereto, or their respective officers or directors, any
party hereto, or their respective officers or directors, should
be discovered by such party which should be set forth in an
amendment or a supplement to the Company Information Statement,
such party shall promptly inform the Company and Buyer thereof
and take appropriate action in respect thereof.
SECTION 5.03. Access to Information. From the date hereof until
the Effective Time, the Company will give Buyer, its counsel,
financial advisors, auditors and other authorized representatives
full access to the offices, properties, books and records of the
Company and the Subsidiaries, will furnish to Buyer, its counsel,
financial advisors, auditors and other authorized representatives
such financial and operating data and other information as such
Persons may reasonably request and will instruct the Company's
employees, counsel and financial advisors to cooperate with Buyer
in its investigation of the business of the Company and the
Subsidiaries; provided that no investigation pursuant to this
Section shall affect any representation or warranty given by the
Company to Buyer hereunder.
SECTION 5.04. Other Offers. From the date hereof until the
termination hereof, the Company and the Subsidiaries and the
officers, directors, employees or other agents of the Company and
the Subsidiaries will not, directly or indirectly, (i) take any
action to solicit, initiate, facilitate or encourage any
Acquisition Proposal (as defined below), (ii) engage in
negotiations with, or disclose any nonpublic information relating
to the Company or any Subsidiary or afford access to the
properties, books or records of the Company or any Subsidiary to,
any Person that may be considering making, or has made, an
Acquisition Proposal or (iii) enter into any agreement or
understanding requiring the Company to abandon, terminate or fail
to consummate the Merger or the other transactions contemplated
hereby. The Company will promptly (and in no event later than 24
hours after receipt of the relevant Acquisition Proposal) notify
(which notice shall be provided orally and in writing and shall
identify the Person making the relevant Acquisition Proposal and
set forth the material terms thereof) Buyer after receipt of any
Acquisition Proposal or any indication that any Person is
considering making an Acquisition Proposal or any request for
nonpublic information relating to the Company or any Subsidiary
or for access to the properties, books or records of the Company
or any Subsidiary by any Person that may be considering making,
or has made, an Acquisition Proposal and will keep Buyer fully
informed of the status and details of any such Acquisition
Proposal, indication or request. The Company shall, and shall
cause the Subsidiaries and the Company's directors, officers,
employees, financial advisors and other agents and
representatives to, cease immediately and cause to be terminated
all activities, discussions or negotiations, if any, with any
Persons conducted heretofore with respect to any Acquisition
Proposal. For purposes of this Agreement, "Acquisition Proposal"
means any offer or proposal for, or any indication of interest
in, a merger or other business combination involving the Company
or any Subsidiary or the acquisition of any equity interest in,
or a substantial portion of the assets of, the Company or any
Subsidiary, other than the transactions contemplated by this
Agreement.
SECTION 5.05. Notices of Certain Events. The Company shall
promptly notify Buyer in writing of:
(a) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the
transactions contemplated by this Agreement;
(c) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against,
relating to or involving or otherwise affecting the Company or
any Subsidiary which, if pending on the date of this Agreement,
would have been required to have been disclosed pursuant to
Section 3.12 or which relate to the consummation of the
transactions contemplated by this Agreement; and
(d) the occurrence of any event which will or may result in the
failure to satisfy, the conditions specified in Article 8.
SECTION 5.06. State Takeover Laws. The Company shall, upon the
request of Buyer or Merger Subsidiary, take all reasonable steps
to assist in any challenge by Buyer or Merger Subsidiary in
respect of the validity or applicability to the transactions
contemplated by this Agreement, including the Merger, of any
state takeover law.
SECTION 5.07. Resignations. At or prior to the Effective Time,
the Company will deliver to Buyer the resignations of David
Treadwell from all positions held with the Company and of all of
the other directors of the Company.
ARTICLE 6
COVENANTS OF BUYER
Buyer agrees that:
SECTION 6.01. Confidentiality. Prior to the Effective Time and
after any termination of this Agreement, Buyer will hold, and
will use its best efforts to cause its officers, directors,
employees, accountants, counsel, consultants, advisors and agents
to hold, in confidence, unless compelled to disclose by judicial
or administrative process or by other requirements of law or the
rules of the Nasdaq Stock Market, all confidential documents and
information concerning the Company and the Subsidiaries furnished
to Buyer in connection with the transactions contemplated by this
Agreement, including, without limitation, any stockholder lists
furnished by the Company, except to the extent that such
information can be shown to have been (a) previously known on a
nonconfidential basis by Buyer, (b) in the public domain through
no fault of Buyer, (c) later lawfully acquired by Buyer from
sources other than the Company or (d) developed independently by
Buyer; provided that Buyer may disclose such information to its
officers, directors, employees, accountants, counsel,
consultants, advisors and agents in connection with the
transactions contemplated by this Agreement and to its lenders in
connection with obtaining the financing for the transactions
contemplated by this Agreement so long as such Persons are
informed by Buyer of the confidential nature of such information
and are directed by Buyer to treat such information
confidentially. Buyer's obligation to hold any such information
in confidence shall be satisfied if it exercises the same care
with respect to such information as it would take to preserve the
confidentiality of its own similar information. If this Agreement
is terminated (a) Buyer will, and will use its best efforts to
cause its officers, directors, employees, accountants, counsel,
consultants, advisors and agents to, destroy or deliver to the
Company, upon request, all documents and other materials, and all
copies thereof, obtained by Buyer or on its behalf from the
Company in connection with this Agreement that are subject to
such confidence and (b) for a period of one year after the date
hereof, Buyer will not solicit the employment of any management
or sales employee of the Company.
SECTION 6.02. Obligations of Merger Subsidiary. Buyer will take
all action necessary to cause Merger Subsidiary to perform its
obligations under this Agreement and to consummate the Merger on
the terms and conditions set forth in this Agreement.
ARTICLE 7
COVENANTS OF BUYER AND THE COMPANY
The parties hereto agree that:
SECTION 7.01. Best Efforts. Subject to the terms and conditions
of this Agreement, each party will use its commercially
reasonable best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement.
SECTION 7.02. Certain Filings. The Company and Buyer shall
cooperate with one another (a) in connection with the preparation
of the Company Disclosure Documents and (b) in determining
whether any action by or in respect of, or filing with, any
governmental body, agency or official, or authority is required,
or any actions, consents, approvals or waivers are required to be
obtained from parties to any material contracts, in connection
with the consummation of the transactions contemplated by this
Agreement and (c) in seeking any such actions, consents,
approvals or waivers or making any such filings, furnishing
information required in connection therewith or with the Company
Disclosure Documents and seeking timely to obtain any such
actions, consents, approvals or waivers.
SECTION 7.03. Public Announcements. Buyer and the Company will
consult with each other before issuing any press release or
making any public statement with respect to this Agreement and
the transactions contemplated hereby and, except as may be
required by applicable law or any listing agreement with any
national securities exchange, will not issue any such press
release or make any such public statement prior to such
consultation.
SECTION 7.04. Further Assurances. At and after the Effective
Time, the officers and directors of the Surviving Corporation
will be authorized to execute and deliver, in the name and on
behalf of the Company or Merger Subsidiary, any deeds, bills of
sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Merger Subsidiary, any other
actions and things to vest, perfect or confirm of record or
otherwise in the Surviving Corporation any and all right, title
and interest in, to and under any of the rights, properties or
assets of the Company acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger.
ARTICLE 8
CONDITIONS TO THE MERGER
SECTION 8.01. Conditions to the Obligations of Each Party. The
obligations of the Company, Buyer and Merger Subsidiary to
consummate the Merger are subject to the satisfaction of the
following conditions:
(a) this Agreement shall have been adopted by the stockholders
of the Company in accordance with Delaware Law and the Company's
Certificate of Incorporation;
(b) any applicable waiting period under the HSR Act relating to
the Merger shall have expired;
(c) no provision of any applicable United States federal or
state statute, rule or regulation and no judgment, preliminary or
permanent injunction, order or decree shall prohibit the
consummation of the Merger or impose material limitations on the
ability of Buyer to exercise full rights of ownership of the
Company's assets or business; and
(d) all actions by or in respect of or filings with any
governmental body, agency, official, or authority or any other
third party required or necessary to permit the consummation of
the Merger shall have been obtained.
SECTION 8.02. Conditions to the Obligations of Buyer and Merger
Subsidiary. The obligations of Buyer and Merger Subsidiary to
consummate the Merger are subject to the satisfaction of the
following further conditions:
(a) (i) the Company shall have performed in all material
respects all of its obligations hereunder required to be
performed by it at or prior to the Effective Time,
(ii) the representations and warranties of the Company contained
in this Agreement and in any certificate or other writing
delivered by the Company pursuant hereto, disregarding all
qualifications contained therein relating to materiality or
Material Adverse Effect, shall be true in all material respects
at and as of the Effective Time as if made at and as of such time
and
(iii) Buyer shall have received a certificate signed by the
Chairman of the Company to the foregoing effect;
(b) there shall not be instituted or pending any action or
proceeding by any government or governmental authority or agency,
domestic or foreign, or by any other Person, domestic or foreign,
before any court or governmental authority or agency, domestic or
foreign, (i) challenging or seeking to make illegal, to delay
materially or otherwise directly or indirectly to restrain or
prohibit the consummation of the Merger, seeking to obtain
material damages or otherwise directly or indirectly relating to
the transactions contemplated by the Merger, (ii) seeking to
restrain or prohibit Buyer's ownership or operation (or that of
its Affiliates) of all or any material portion of the business or
assets of the Company and its Subsidiaries, taken as a whole, or
of Buyer and its Affiliates, taken as a whole, or to compel Buyer
or any of its Affiliates to dispose of or hold separate all or
any material portion of the business or assets of the Company and
its Subsidiaries, taken as a whole, or of Buyer and its
Affiliates, taken as a whole or (iii) that otherwise is likely to
materially adversely affect the Company and its Subsidiaries,
taken as a whole, or Buyer and its Affiliates, taken as a whole;
(c) there shall not be any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted,
enforced, promulgated, issued or deemed applicable to the Merger,
by any court, government or governmental authority or agency,
domestic or foreign, other than the application of the waiting
period provisions of the HSR Act to the Merger, that is likely,
directly or indirectly, to result in any of the consequences
referred to in clauses (i) through (iii) of paragraph (b) above;
(d) The Company shall have received all Required Consents in
form and substance reasonably satisfactory to Buyer;
(e) Buyer shall have received the resignation of the officers
and directors of the Company as contemplated by Section 5.07;
(f) Buyer shall have received all documents it may reasonably
request relating to the existence of the Company and the
Subsidiaries and the authority of the Company for this Agreement,
all in form and substance satisfactory to Buyer;
(g) Buyer shall have received the opinion of counsel to the
Company relating to the due organization of the Company, its good
standing in Delaware and Florida, the due authorization,
execution and enforceability of this Agreement, and the fact
that, to the present knowledge of such counsel after inquiry of
the officers of the Company, but without any other independent
investigation, the representations set forth in Section 3.04
hereof are true;
(h) At any time after the date of this Agreement, there shall
not have occurred any event or series of events having a Material
Adverse Effect; and
(i) Holders of more than 15% of the outstanding Shares shall not
have delivered to the Company, within 20 days after the date on
which the Company Information Statement is mailed to the
stockholders of the Company, written notice of their intent to
seek, or demand for, appraisal of their shares under Section 262
of the Delaware General Corporation Law.
SECTION 8.03. Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject
to the satisfaction of the following further conditions:
(a) (i) Buyer and Merger Subsidiary shall have performed in all
material respects all of their respective obligations hereunder
required to be performed by them at or prior to the Effective
Time,
(ii) the representations and warranties of Buyer and Merger
Subsidiary contained in this Agreement and any certificate or
other writing delivered by Buyer or Merger Subsidiary pursuant
hereto, disregarding all qualifications contained therein
relating to materiality or material adverse effect, shall be true
in all material respects at and as of the Effective Time as if
made at and as of such time and
(iii) the Company shall have received a certificate signed by
the President of Buyer and an equivalent officer of Merger
Subsidiary to the foregoing effect; and
(b) The Company shall have received all documents it may
reasonably request relating to the existence of Buyer or Merger
Subsidiary and the authority of Buyer or Merger Subsidiary for
this Agreement, all in form and substance satisfactory to the
Company.
ARTICLE 9
TERMINATION
SECTION 9.01. Termination. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective
Time (notwithstanding any approval of this Agreement by the
stockholders of the Company):
(a) by mutual written consent of the Company and Buyer;
(b) by either the Company or Buyer, if (i) the other party
hereto commits a material breach of this Agreement which is not
cured within 10 days after notice thereof is given to the
breaching party or (ii) the Merger has not been consummated by
April 20, 1998 (the "Termination Date"); provided that the right
to terminate this Agreement pursuant to this Section 9.01(b)
shall not be available to any party whose breach of any provision
of this Agreement results in the failure of the Merger to be
consummated by such time, and provided further that in the event
that the Securities and Exchange Commission (the "Commission")
reviews the Company Information Statement, the Termination Date
shall be extended by a number of days equal to the number of days
between the date that the Commission informs the Company that it
intends to review the Company Information Statement and the date
on which the Commission informs the Company that it has no
further comments on the Company Information Statement; or
(c) by either the Company or Buyer, if there shall be any law or
regulation that makes consummation of the Merger illegal or
otherwise prohibited or if any judgment, injunction, order or
decree enjoining Buyer or the Company from consummating the
Merger is entered and such judgment, injunction, order or decree
shall become final and nonappealable. The party desiring to
terminate this Agreement pursuant to clauses 9.01(b) or 9.01(c)
shall give written notice of such termination to the other party
in accordance with Section 10.01.
SECTION 9.02. Effect of Termination. If this Agreement is
terminated pursuant to Section 9.01, this Agreement shall become
void and of no effect with no liability on the part of any party
hereto, except that the agreements contained in Sections 6.01,
9.03, 10.01, 10.02, 10.04, 10.05, 10.06, 10.07, 10.08, 10.10 and
10.11 shall survive the termination hereof.
SECTION 9.03. Payment of Breakup Fees and Expenses Upon
Termination.
(a) If this Agreement is terminated by the Company pursuant to
Section 9.01(b) due to the material breach hereof by Buyer, Buyer
shall promptly pay to the Company as liquidated damages a fee in
cash in an amount equal to $500,000, plus all out-of-pocket
expenses incurred in connection with the negotiation of the
Merger by the Company, including, without limitation, reasonable
fees and expenses of legal counsel, accountants and other
professionals in connection with the negotiation and execution of
the Agreement in Principle, this Agreement and all of the
transactions contemplated herein. The deposit of $500,000 held
by Shumaker, Loop & Kendrick, LLP, as escrow agent, shall be paid
to the Company by the escrow agent as a portion of such fee.
(b) If this Agreement is terminated by the Buyer pursuant to
Section 9.01(b) due to the material breach hereof by the Company,
the Company shall promptly pay to Buyer as liquidated damages a
fee in cash in an amount equal to $500,000, plus all out-of-
pocket expenses incurred in connection with the negotiation of
the Merger by Buyer, including, without limitation, reasonable
fees and expenses of legal counsel, accountants and other
professionals in connection with the negotiation and execution of
the Agreement in Principle, this Agreement and all of the
transactions contemplated herein.
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing
(including telecopy or similar writing) and shall be given,
if to Buyer or Merger
Subsidiary, to: c/o Pembroke Companies,Inc.
1325 Avenue of the Americas, Suite 1200
New York, New York
Attention: Lawrence J. Cohen
Telecopy: 212/399-9199
with a copy to: Blackacre Capital Group
450 Park Avenue, 28th Floor
New York, New York 10022
Attention: Ronald J. Kravit
Telecopy: 212/750-5305
and
Skadden, Arps, Slate,
Meagher & Flom, LLP
919 Third Avenue
New York, NY 10022-3897
Attention: Patrick J. Foye
Telecopy: (212) 735-2000
if to the
Company, to: Major Realty Corporation
5728 Major Blvd.
Orlando, Florida
Attention: David L. Treadwell, Chairman
Telecopy: (407) 345-0439
with a copy to: Shumaker, Loop & Kendrick, LLP
Barnett Plaza - Suite 2800
101 East Kennedy Boulevard
Tampa, Florida 33602
Attention: Gregory C. Yadley
Telecopy No.: (813) 229-1660
or such other address or telecopy number as such party may
hereafter specify for the purpose by notice to the other parties
hereto. Each such notice, request or other communication shall be
effective (a) if given by telecopy, when such telecopy is
transmitted to the telecopy number specified in this Section and
the appropriate telecopy confirmation is received or (b) if given
by any other means, when delivered at the address specified in
this Section.
SECTION 10.02. Nonsurvival of Representations and Warranties.
None of the representations and warranties of the Company, Buyer
and Merger Subsidiary contained herein or in any certificate or
other writing delivered pursuant hereto shall survive the
Effective Time.
SECTION 10.03. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived
prior to the Effective Time if, and only if, such amendment or
waiver is in writing and signed, in the case of an amendment, by
the Company, Buyer and Merger Subsidiary or in the case of a
waiver, by the party against whom the waiver is to be effective;
provided that no such amendment or waiver shall, without the
further approval of the stockholders of the Company, alter or
change (i) the amount or kind of consideration to be received in
exchange for any Shares, (ii) any term of the certificate of
incorporation of the Surviving Corporation or (iii) any of the
terms or conditions of this Agreement, if such alteration or
change would adversely affect the holders of any shares of
capital stock of the Company.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof
nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 10.04. Expenses. All costs and expenses incurred in
connection with this Agreement shall be paid by the party
incurring such cost or expense.
SECTION 10.05. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns;
provided that no party may assign, delegate or otherwise transfer
any of its rights or obligations under this Agreement without the
consent of the other parties hereto.
SECTION 10.06. Governing Law. This Agreement shall be construed
in accordance with and governed by the law of the State of
Delaware without regard to the conflict of law provisions of such
State. All actions and proceedings arising out of or relating to
this Agreement shall be heard and determined in any Delaware
state or federal court.
SECTION 10.07. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 10.08. Counterparts; Effectiveness; Third Party
Beneficiaries. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party
hereto shall have received counterparts hereof signed by all of
the other parties hereto. No provision of this Agreement is
intended to confer upon any Person other than the parties hereto
any rights or remedies hereunder.
SECTION 10.09. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void,
unenforceable or against its regulatory policy, the remainder of
the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no
way be affected, impaired or invalidated. Upon such a
determination, the parties shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby be consummated as
originally contemplated to the fullest extent possible.
SECTION 10.10. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of
this Agreement is not performed in accordance with the terms
hereof and that the parties shall be entitled to specific
performance of the terms hereof in addition to any other remedy
to which they are entitled at law or in equity.
SECTION 10.11. Entire Agreement. This Agreement constitutes the
entire agreement between the parties with respect to the subject
matter hereof and thereof and supersede all prior agreements and
understandings, both oral and written, between the parties with
respect to the subject matter hereof and thereof.
[Remainder of page intentionally left blank.
Next page is signature page.]<PAGE>
IN WITNESS WHEREOF, the parties hereto have
caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
"BUYER"
PBD HOLDINGS, L.P.
By: PBD Holdings, Inc.,
General Partner
By:
Name:
Title:
"MERGER SUBSIDIARY"
PEMBROKE ACQUISITION, INC.
By:
Name:
Title:
MAJOR REALTY CORPORATION
By:
David L. Treadwell, Chairman
<PAGE>
AGREEMENT AND PLAN OF MERGER
among
MAJOR REALTY CORPORATION
(the "Company")
PBD HOLDINGS, L.P.
("BUYER")
and
PEMBROKE ACQUISITION, INC.
("MERGER SUBSIDIARY")
Dated as of March 4, 1998
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.01. The Merger. . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.02. Conversion of Shares At the Effective Time. . . . . . . . 2
SECTION 1.03. Surrender and Payment.. . . . . . . . . . . . . . . . . . 2
SECTION 1.04. Dissenting Shares.. . . . . . . . . . . . . . . . . . . . 4
SECTION 1.05. Stock Options.. . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.06. Lost Certificates.. . . . . . . . . . . . . . . . . . . . 5
SECTION 1.07. Adjustments.. . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 1.08. FIRPTA. . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 2 THE SURVIVING CORPORATION. . . . . . . . . . . . . . . . . . 5
SECTION 2.01. Certificate of Incorporation. . . . . . . . . . . . . . . 5
SECTION 2.02. Bylaws. . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.03. Directors and Officers. . . . . . . . . . . . . . . . . . 6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. . . . . . . . 6
SECTION 3.01. Corporate Existence and Power.. . . . . . . . . . . . . . 6
SECTION 3.02. Corporate Authorization.. . . . . . . . . . . . . . . . . 6
SECTION 3.03. Governmental Authorization. . . . . . . . . . . . . . . . 7
SECTION 3.04. Non-contravention.. . . . . . . . . . . . . . . . . . . . 7
SECTION 3.05. Capitalization. . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.06. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.07. SEC Filings.. . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.08. Financial Statements. . . . . . . . . . . . . . . . . . . 9
SECTION 3.09. Disclosure Documents. . . . . . . . . . . . . . . . . . . 9
SECTION 3.10. Absence of Certain Changes. . . . . . . . . . . . . . . . 9
SECTION 3.11. No Undisclosed Material Liabilities.. . . . . . . . . . .11
SECTION 3.12. Litigation. . . . . . . . . . . . . . . . . . . . . . . .11
SECTION 3.13. Taxes.. . . . . . . . . . . . . . . . . . . . . . . . . .11
SECTION 3.14. ERISA.. . . . . . . . . . . . . . . . . . . . . . . . . .12
SECTION 3.15. Compliance with Laws. . . . . . . . . . . . . . . . . . .15
SECTION 3.16. Finders' Fees.. . . . . . . . . . . . . . . . . . . . . .15
SECTION 3.17. Other Information.. . . . . . . . . . . . . . . . . . . .15
SECTION 3.18. Environmental Matters.. . . . . . . . . . . . . . . . . .15
SECTION 3.19. Vote Required.. . . . . . . . . . . . . . . . . . . . . .16
SECTION 3.20. Anti-Takeover Plan; State Takeover Statutes.. . . . . . .16
SECTION 3.21. Material Contracts. . . . . . . . . . . . . . . . . . . .17
SECTION 3.22. Properties. . . . . . . . . . . . . . . . . . . . . . . .18
SECTION 3.23. Licenses and Permits. . . . . . . . . . . . . . . . . . .18
SECTION 3.24. Receivables.. . . . . . . . . . . . . . . . . . . . . . .19
SECTION 3.25. Labor Matters.. . . . . . . . . . . . . . . . . . . . . .19
SECTION 3.26. Required and Other Consents.. . . . . . . . . . . . . . .19
SECTION 3.27. Intellectual Property.. . . . . . . . . . . . . . . . . .19
SECTION 3.28. Insurance.. . . . . . . . . . . . . . . . . . . . . . . .20
SECTION 3.29. Related Party Transactions. . . . . . . . . . . . . . . .20
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER. . . . . . . . . . .20
SECTION 4.01. Existence and Power . . . . . . . . . . . . . . . . . . .20
SECTION 4.02. Authorization.. . . . . . . . . . . . . . . . . . . . . .20
SECTION 4.03. Governmental Authorization. . . . . . . . . . . . . . . .21
SECTION 4.04. Non-contravention.. . . . . . . . . . . . . . . . . . . .21
SECTION 4.05. Disclosure Documents. . . . . . . . . . . . . . . . . . .21
SECTION 4.06. Finders' Fees.. . . . . . . . . . . . . . . . . . . . . .21
ARTICLE 5 COVENANTS OF THE COMPANY . . . . . . . . . . . . . . . . . .21
SECTION 5.01. Conduct of the Company. . . . . . . . . . . . . . . . . .21
SECTION 5.02. Company Information Statement.. . . . . . . . . . . . . .24
SECTION 5.03. Access to Information.. . . . . . . . . . . . . . . . . .24
SECTION 5.04. Other Offers. . . . . . . . . . . . . . . . . . . . . . .24
SECTION 5.05. Notices of Certain Events.. . . . . . . . . . . . . . . .25
SECTION 5.06. State Takeover Laws.. . . . . . . . . . . . . . . . . . .25
SECTION 5.07. Resignations. . . . . . . . . . . . . . . . . . . . . . .26
ARTICLE 6 COVENANTS OF BUYER . . . . . . . . . . . . . . . . . . . . .26
SECTION 6.01. Confidentiality.. . . . . . . . . . . . . . . . . . . . .26
SECTION 6.02. Obligations of Merger Subsidiary. . . . . . . . . . . . .26
ARTICLE 7 COVENANTS OF BUYER AND THE COMPANY . . . . . . . . . . . . .27
SECTION 7.01. Best Efforts. . . . . . . . . . . . . . . . . . . . . . .27
SECTION 7.02. Certain Filings.. . . . . . . . . . . . . . . . . . . . .27
SECTION 7.03. Public Announcements. . . . . . . . . . . . . . . . . . .27
SECTION 7.04. Further Assurances. . . . . . . . . . . . . . . . . . . .27
ARTICLE 8 CONDITIONS TO THE MERGER . . . . . . . . . . . . . . . . . .27
SECTION 8.01. Conditions to the Obligations of Each Party.. . . . . . .27
SECTION 8.02. Conditions to the Obligations of Buyer and Merger
Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
SECTION 8.03. Conditions to the Obligations of the Company. . . . . . .29
ARTICLE 9 TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . .30
SECTION 9.01. Termination.. . . . . . . . . . . . . . . . . . . . . . .30
SECTION 9.02. Effect of Termination.. . . . . . . . . . . . . . . . . .30
SECTION 9.03. Payment of Breakup Fees and Expenses Upon
Termination.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
ARTICLE 10 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . .31
SECTION 10.01. Notices. . . . . . . . . . . . . . . . . . . . . . . . .31
SECTION 10.02. Nonsurvival of Representations and Warranties. . . . . .32
SECTION 10.03. Amendments; No Waivers.. . . . . . . . . . . . . . . . .32
SECTION 10.04. Expenses.. . . . . . . . . . . . . . . . . . . . . . . .32
SECTION 10.05. Successors and Assigns.. . . . . . . . . . . . . . . . .32
SECTION 10.06. Governing Law. . . . . . . . . . . . . . . . . . . . . .33
SECTION 10.07. WAIVER OF JURY TRIAL.. . . . . . . . . . . . . . . . . .33
SECTION 10.08. Counterparts; Effectiveness; Third Party
Beneficiaries.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
SECTION 10.09. Severability.. . . . . . . . . . . . . . . . . . . . . .33
SECTION 10.10. Specific Performance.. . . . . . . . . . . . . . . . . .33
SECTION 10.11. Entire Agreement.. . . . . . . . . . . . . . . . . . . .33
<PAGE>
EXHIBIT 47
FOR IMMEDIATE RELEASE
MAJOR REALTY CORPORATION (NASDAQ-MAJR) announced today that it
has entered into an agreement and plan of merger with PBD
Holdings, L.P., an affiliate of Pembroke Companies, Inc. and
Blackacre Capital Group, L.P., pursuant to which a subsidiary of
PBD Holdings will be merged into Major, and all of the
outstanding shares of Major will be converted into the right to
receive $1.25 per share in cash. Holders of a majority of the
outstanding shares of Major common stock have entered into an
agreement with PBD Holdings pursuant to which they have agreed to
execute written consents approving the merger agreement and the
merger. The merger will be effective approximately 20 days after
Major mails to its stockholders an information statement
describing the merger transaction and the method by which
stockholders of Major may receive payment for their shares of
Major stock. Major anticipates that the information statement
will be mailed to stockholders on or about March 31, 1998. In
the event that Major or PBD Holdings breaches the agreement and
mails to consummate the merger, the merger agreement requires the
breaching party to pay a break-up fee of $500,000, plus all
expenses incurred by the other party in connection with the
proposed merger.
<PAGE>
EXHIBIT 48
Acceptance Insurance Agrees to Sell Major Realty Stake
OMAHA, Neb., March 6 /PRNewswire/ -- Acceptance Insurance
Companies Inc. (NYSE: AIF) announces today that its wholly-owned
subsidiary, Acceptance Insurance Company ("AIC") has entered into
a stockholder agreement with certain stockholders of Major Realty
Corporation (Nasdaq: MAJR) who together hold a majority interest
in Major, and PBD Holdings, Inc., an affiliate of Pembroke
Companies, Inc. and Blackacre Capital Group, L.P. Pursuant to
that stockholder agreement, Acceptance and the other signing
stockholders of Major have agreed to execute written consents
approving an agreement and plan of merger pursuant to which PBD
Holdings will be merged into Major, and all of the outstanding
shares of Major will be converted into the right to receive $1.25
per share in cash. Additionally, a loan from AIC to Major of
approximately $2.5 million will be repaid at the closing of the
transaction.
The merger will be effective approximately twenty days after
Major mails to its stockholders an Information Statement
describing the merger transaction and the method by which
stockholders of Major may receive payment for their shares of
Major stock. Major anticipates that the Information Statement
will be mailed to stockholders in late March or early April 1998.
If the merger is completed under the proposed terms,
Acceptance will have a nominal net gain on its income statement.
Acceptance Insurance is an A- rated property and casualty
insurance company concentrating in writing specialty coverage
throughout the United States not generally emphasized by standard
insurance carriers. The Company's insurance operations are
principally conducted through its six insurance subsidiaries and
one insurance agency. The Company selects underwriting
specialties within the property and casualty industry that
provide a diversified portfolio of products, with the goal of
producing underwriting results better than the industry average.
SOURCE Acceptance Insurance Companies Inc.
03/06/98
/CONTACT: William J. Gerber, Vice President of Acceptance
Insurance Companies Inc., 4020344-8800/
(AIF MAJR)
<PAGE>
EXHIBIT 49
RESTATED AND CONSOLIDATED PROMISSORY NOTE
5,450,728.32 As of April 1, 1997
Southfield, Michigan
FOR VALUE RECEIVED, the undersigned, Major Realty
Corporation, a Delaware corporation ("Major Realty" or "Major"),
promises to pay to the order of ACCEPTANCE INSURANCE COMPANIES
INC., a Delaware corporation ("AIC") at 222 South 15th Street,
Suite 600 North, Omaha, Nebraska 68102, on May 31, 1998, the sum
of FIVE MILLION, FOUR HUNDRED FIFTY THOUSAND, SEVEN HUNDRED
TWENTY EIGHT AND 32/100 DOLLARS ($5,450,728.32), together with
interest on the unpaid principal balance remaining from time to
time, from the date hereof at the rate set forth herein.
Interest on the unpaid principal balance of this Note shall
accrue and be calculated on a daily basis, based upon a three
hundred sixty (360) day year, and shall be paid upon the actual
number of days upon which the principal balance remains
outstanding from time to time, at a rate per annum equal to 250
basis points in excess of the "prime rate" of Citibank, N.A., as
announced from time to time by such financial institution (with
any change in such rate to be effective on the date of any such
change). Interest in the foregoing amount shall be compounded
quarterly in arrears on the first day of July, October, January
and April, commencing July 1, 1997.
Notwithstanding anything herein to the contrary, this Note
immediately shall be due and payable in the event of a Change in
Control of Major Realty. For purposes of this Note, a "Change in
Control" shall be deemed to have occurred:
(1) if any person (as used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended
("Exchange Act") in effect on the date hereof) or any group
of persons acting in concert, other than Mortgagor, or any
subsidiary of Mortgagor, or employee benefit plan (as
defined in Section 3(3) of ERISA) maintained by Major
Realty, or AIC becomes the "beneficial owner" (as defined in
Rule 13d-3 of the Exchange
________________________________________
THIS NOTE IS A RESTATEMENT, CONSOLIDATION AND REPLACEMENT OF (1)
THAT CERTAIN RENEWAL AND CONSOLIDATION PROMISSORY NOTE DATED AS
OF OCTOBER 18, 1995, IN THE ORIGINAL PRINCIPAL AMOUNT OF
$5,064,144.29, MADE BY MAJOR REALITY IN FAVOR OF AIC, AND (2)
THAT CERTAIN PROMISSORY NOTE DATED AS OF APRIL 1, 1997, IN THE
ORIGINAL PRINCIPAL AMOUNT OF $386,584.03, MADE BY MAJOR REALITY
IN FAVOR OF AIC. NO ADDITIONAL FUNDS HAVE BEEN ADVANCED HEREBY.
FLORIDA DOCUMENT TAX WAS PAID IN CONNECTION WITH THE EXECUTION OF
THE ORIGINAL PROMISSORY NOTES REPLACED BY THIS RESTATED AND
CONSOLIDATED PROMISSORY NOTE.<PAGE>
Act, except that a person also shall be deemed
to be the
beneficial owner of all securities which such person may have a
right to acquire, whether or not such right is presently
exercisable) directly or indirectly, of securities of Major
Realty representing fifty percent (50%) or more of the combined
voting power of all classes of Major Realty's then outstanding
securities ordinarily having the power to vote in the election of
directors ("voting stock"); or
(2) upon the sale, in a single transaction or a series
of related transactions, of fifty percent (50%) or more of
Major Realty's assets as they exist on the date hereof and
valued at book value on the date hereof.
IT IS SPECIFICALLY AGREED THAT TIME IS OF THE ESSENCE OF
THIS NOTE. For purposes of this Note the term "Business Day"
means a day that is not a Saturday, a Sunday or a day on which
institutional lenders are closed pursuant to authorization or
requirement of law.
This Note is secured by a Mortgage and Note Modification
Agreement dated of even date, executed by Major Realty in favor
of AIC which modifies that certain Mortgage and Security
Agreement dated October 11, 1989, and recorded on October 12,
1989, in Official Records Book 4123, Page 1379, as modified by
that certain Amendment to Mortgage Deed and Security Agreement
dated August 29, 1991, and recorded on August 30, 1991, in
Official Records Book 4321, Page 983, as further modified by that
certain Notice of Limitation of Future Advances recorded on March
30, 1992, in Official Records Book 4391, Page 3509, as further
modified by that certain Modification of Mortgage Deed and
Security Agreement dated October 5, 1992, and recorded on October
7, 1992, in Official Records Book 4471, Page 2237, as further
modified by that certain Amendment to Mortgage Deed and Security
Agreement dated as of January 31, 1994, and recorded March 1,
1994, in Official Records Book 4705, Page 657, as further
modified by that certain Amendment to Mortgage Deed and Security
Agreement dated as of January 31, 1995, and recorded on February
2, 1995, in Official Records Book 4851, Page 969, and as further
modified by that certain Notice of Limitation of Future Advances
dated as of January 31, 1995, and recorded February 3, 1995, in
Official Records Book 4851, Page 3487, and as further modified by
that certain Mortgage and Note Modification Agreement executed by
Mortgagor in favor of Mortgagee dated as of October 18, 1995, and
recorded on October 23, 1995, in Official Records Book 4963, Page
1991, and as further modified by those certain releases executed
and recorded by PNC Bank, Kentucky, Inc. (formerly known as
Citizens Fidelity Bank and Trust Company) and by Mortgagee, from
time to time, all of the Public Records of Orange County, Florida
(collectively, the "Mortgage").
This Note may be prepaid in whole or in part at any time
without penalty, upon five (5) days notice to AIC. All payments
on this Note shall be applied first to payment of interest and
then to payment of principal. If any payment is not made in full
within fifteen (15) Business Days after the same is due, the
holder of this Note shall have the option to declare the entire
principal and accrued interest immediately due and payable upon
notice to maker. Failure to exercise said option shall not
constitute a waiver of the subsequent right to exercise same.
Subject always to Major Realty's right to prepay this Note in
whole or in part as set forth above, AIC shall have the right
(but not the obligation), upon twenty (20) days' notice to Major
Realty, to exchange and convert, in one or more installments, all
or a portion of the outstanding indebtedness due under this Note
(principal plus accrued but unpaid interest) into shares of the
common stock, par value $0.01 per share, of Major Realty (the
"Common Stock"). In the event that AIC elects to convert all or a
portion of the indebtedness into the Common Stock, the conversion
price shall be equal to the average closing price of the Common
Stock as reported by NASDAQ during the thirty (30) day period
immediately preceding the date of AIC's notice to Major Realty of
its election. If only a portion of the indebtedness is converted
into Common Stock, the amount converted shall be credited first
against accrued and unpaid interest, and then against the
principal due hereunder. Any portion of the outstanding balance
due under this Note that is not converted into Common stock in
accordance with this provision shall remain outstanding, accrue
interest and be paid in accordance with the terms of this Note.
Upon conversion of all of the outstanding indebtedness under this
Note or otherwise upon satisfaction of all obligations and
indebtedness under this Note, AIC shall return the original Note
to Major Realty marked "Paid and Canceled" and shall execute,
acknowledge and deliver to Major Realty a satisfaction of
mortgage, UCC-3 Termination Statement, and such additional
documents as may be required to indicate that the Note has been
paid in full and that the lien of the Mortgage has been released
of record.
In the event of default and acceleration of payment of the
unpaid principal balance of the indebtedness evidenced by this
Note, the interest rate on this Note shall be increased as of the
date of default to the then current rate of interest plus three
percent (3%) or the highest rate allowed by law, whichever is
lower.
In no event shall the holder of this Note be entitled to
receive, nor shall the maker or any endorser or guarantor of its
obligation be obligated to pay, any amount as interest in excess
of the highest lawful rate permitted by applicable law. If the
holder of this Note should receive an amount which would exceed
the highest lawful rate, the amount which would constitute excess
interest shall be returned forthwith.
All persons or entities now or at any time liable, whether
primarily or secondarily, for the payment of the indebtedness
hereby evidenced, for themselves, their heirs, legal
representatives, successors and assigns, respectively, hereby (1)
expressly waive presentment, demand for payment, notice of
dishonor, protest, notice of nonpayment or protest, and diligence
in collection; (2) consent that the time of all payments or any
part thereof may be extended, rearranged, renewed or postponed by
the holder hereof and further consent that any real or personal
property securing this Note or any part of such security may be
released, exchanged, added to or substituted by the holder of
this Note, without in any way modifying, altering, releasing,
affecting or limiting their respective liability or the lien of
any instrument securing this indebtedness; (3) agree that the
holder of this Note shall not be required first to institute any
suit, or to exhaust any of its remedies against the maker of this
Note or any other person or party to become liable hereunder, in
order to force payment of this Note; (4) agree that the maker of
this Note may be released by the holder hereof from any or all
liability under this instrument, and such release shall not in
any way affect or modify the liabilities of the remaining parties
hereto; and (5) agree that if this Note becomes in default and is
placed in the hands of any attorney for collection, to pay all
costs and expenses of collection of said monies by legal action,
foreclosure or otherwise, including, but not limited to,
attorneys' fees for negotiations, trial, appellate and bankruptcy
proceedings, including fees incurred for collection and proof of
attorneys' fees, and other legal services, shall be paid by the
undersigned. Attorneys' fees shall also include hourly charges
for paralegals and other staff members operating under the
supervision of an attorney.
Any obligor to this Note shall be in default hereunder upon:
(a) nonpayment of any interest or principal hereunder within
fifteen (15) Business Days of the date such payment is due or (b)
any default under the terms and conditions of the Mortgage.
AIC, BY ITS ACCEPTANCE HEREOF, AND MAJOR REALTY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE,
THE MORTGAGE SECURING THIS NOTE, AND ANY OTHER AGREEMENT
CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL
OR WRITTEN), OR ACTIONS OF EITHER PARTY. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE ACCEPTANCE OF THIS NOTE BY AIC.
This Note may not be negotiated, assigned or otherwise
transferred without the prior written consent of Major Realty.
MAJOR REALTY CORPORATION,
a Delaware corporation
ATTEST:
/s/ David L. Treadwell
By: _____________________________
David L. Treadwell, Chairman
and Chief Executive Officer
/s/ Gregory C. Yadley
____________________________
Gregory C. Yadley, Secretary
[SEAL]
