EXHIBIT 10.2
COBBLESTONE GOLF GROUP, INC.
11 1/2% Series A Senior Notes due 2003
PURCHASE AGREEMENT
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May 29, 1996
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BA SECURITIES, INC.
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
Subject to the terms and conditions herein contained, Cobblestone Golf
Group, Inc., a Delaware corporation (the "Company"), and all of its subsidiaries
(collectively the "Guarantors" and, together with the Company, the "Issuers"),
jointly and severally propose to issue and sell to Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ") and BA Securities, Inc. (together with DLJ, the
"Initial Purchasers"), an aggregate of $70,000,000 principal amount of 11 1/2%
Series A Senior Notes due 2003 (the "Notes") and the related irrevocable and
unconditional guarantees (the "Guarantees") by the Guarantors (collectively, the
"Securities"). The Securities are to be issued pursuant to the provisions of an
Indenture (the "Indenture"), to be dated as of June 4, 1996, by and among the
Issuers and Norwest Bank Minnesota, National Association, as trustee (the
"Trustee"). In connection with the closing contemplated by this Agreement, the
Issuers will enter into (i) the Registration Rights Agreement (as hereinafter
defined) and (ii) a credit facility and each of its related documents with a
syndicate of banks represented by Bank of America NT&SA which
is evidenced by that certain Second Amended and Restated Credit Agreement to be
dated as of June 4, 1996, by and among the Company, Cobblestone Holdings, Inc.
("Holdings"), the various financial institutions party thereto and Bank of
America NT&SA (collectively, with each of the documents related thereto, the
"New Credit Facility"). The Securities and the Indenture are more fully
described in the Offering Memorandum (as hereinafter defined). Capitalized terms
used herein without definition shall have the respective meanings ascribed
thereto in the Offering Memorandum.
1. Delivery and Payment. Delivery to you of and payment for the
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Securities shall be made at 10:00 A.M., New York City time, on June 4, 1996
(such time and date being referred to as the "Closing Date") at the offices of
Latham & Watkins at 885 Third Avenue, New York, New York 10022, or such other
place as DLJ shall reasonably designate. The Closing Date and the location of
delivery of, and the form of payment for the Securities may be varied by
agreement between DLJ and the Company.
One or more of the Securities in definitive form, registered in the
name of Cede and Co., as nominee of The Depository Trust Company ("DTC"), or
such other names as you shall request in writing not later than one full
business day prior to the Closing Date, having an aggregate principal amount
corresponding to the aggregate principal amount of Securities resold pursuant to
Rule 144A under the Securities Act of 1933, as amended, and the rules and
regulations promulgated by the Securities and Exchange Commission (the
"Commission"), thereunder (the "Act"), as such rule may be amended from time to
time ("Rule 144A"), to qualified institutional buyers ("QIBs") within the
meaning of Rule 144A (collectively, the "Global Securities"), and one or more
Securities in definitive form shall be registered in such names and issued in
such denominations as you shall request in writing not later than one business
day prior to the Closing Date, having an aggregate principal amount
corresponding to the aggregate principal amount of the Securities sold to
Institutional Accredited Investors (as defined herein) (collectively, the
"Certificated Securities"), shall be delivered by the Issuers to you on the
Closing Date with any transfer taxes payable upon initial issuance thereof duly
paid by the Company, for your respective accounts against payment of the
Purchase Price (as hereinafter defined) by wire transfer of same day funds to
such bank account as the Company shall designate at least two business days
prior to the Closing Date. The Global Securities and Certificated Securities in
definitive form shall be made available to you at the offices of DLJ (or at such
other place as shall be acceptable to you) for inspection not later than 9:30
A.M., New York City time, on the business day next preceding the Closing Date.
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2. Offering of the Securities and the Initial Purchasers'
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Representations.
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(a) You have advised the Company that it is your intention, as
promptly as you deem appropriate after the Company shall have furnished you
with copies of the Offering Memorandum, to resell the Securities pursuant
to the procedures and upon the terms set forth in the Offering Memorandum.
(b) Each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that it:
(i) is not acquiring the Securities with a view to any
distribution thereof or with any present intention of offering or
selling any of the Securities in a transaction that would violate the
Act or the securities laws of any state of the United States or any
other applicable jurisdiction;
(ii) will solicit offers for Securities only from, and will
offer Securities only to, persons that it reasonably believes are (y)
QIBs in transactions meeting the requirements of Rule 144A, or (z)
other institutional "accredited investors" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Act ("Institutional Accredited
Investors"));
(iii) will offer and sell the Securities only (y) to persons
who it reasonably believes to be QIBs or (z) to institutions which it
reasonably believes are Institutional Accredited Investors that
execute and deliver a letter containing certain representations and
agreements in the form attached as Annex A to the Offering Memorandum;
(iv) is an Institutional Accredited Investor with such
knowledge and experience in financial and business matters as are
necessary in order to evaluate the merits and risks of an investment
in the Securities;
(v) has not and will not offer or sell the Securities by any
form of general solicitation or general advertising, including but not
limited to, the methods described in Rule 502(c) under the Act; and
(vi) will, during its initial distribution of the
Securities, unless prohibited by applicable law, furnish to each
person to whom
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it offers any Securities a copy of the preliminary offering memorandum
(as defined) or inform each such person that a copy of such
preliminary offering memorandum is available upon request and will,
during its initial distribution of the Securities, furnish to each
person to whom it sells any Securities a copy of the Offering
Memorandum (as then amended or supplemented).
3. Agreements to Sell and Purchase. On the basis of the
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representations and warranties contained in this Agreement, and subject to the
terms and conditions contained in this Agreement, the Issuers jointly and
severally agree to issue and sell to the Initial Purchasers, and each Initial
Purchaser agrees, severally and not jointly, to purchase from the Issuers,
Securities in the respective principal amount set forth opposite the name of
such Initial Purchaser in Schedule I hereto, plus such amount as they may
individually become obligated to purchase pursuant to Section 8 hereof, at a
purchase price per Security equal to the percentage of the principal amount
thereof set forth in the table on the cover page of the Offering Memorandum
under the heading "Proceeds to the Company" (the "Purchase Price").
The Securities will be offered and sold to you without being
registered under the Act in reliance on an exemption therefrom. The Issuers
have prepared a preliminary offering memorandum dated May 13, 1996 (such
preliminary offering memorandum is referred to herein as the "preliminary
offering memorandum"), and an offering memorandum dated May 29, 1996 (such
offering memorandum, in the form first furnished to the Initial Purchasers for
use in connection with the offering of the Securities, is referred to herein as
the "Offering Memorandum"), setting forth information regarding the Issuers and
the Securities. The Issuers hereby confirm that they have authorized the use of
the preliminary offering memorandum and the Offering Memorandum in connection
with the offering and resale of the Securities.
Holders (including subsequent transferees) of the Securities will have
the registration rights set forth in the Registration Rights Agreement (the
"Registration Rights Agreement"), to be dated the Closing Date, in substantially
the form of Exhibit A hereto, for so long as such Securities constitute
"Registrable Securities" (as defined in the Registration Rights Agreement).
Pursuant to the Registration Rights Agreement, the Issuers will agree to file
with the Commission under the circumstances set forth therein (i) a registration
statement under the Act (the "Exchange Offer Registration Statement"),
registering an issue of senior notes and related guarantees identical in all
material respects to the Securities (the "Exchange Securities"), to be offered
in exchange for the Securities (the "Exchange Offer"), or (ii), under certain
circumstances, a registration statement pursuant to Rule 415 under the Act (the
"Shelf
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Registration Statement" and collectively, with the Exchange Offer Registration
Statement, the "Registration Statements").
4. Agreements of the Issuers. Each of the Issuers, jointly and
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severally, agrees with each of you that:
(a) It will advise you promptly and, if requested by you, confirm
such advice in writing, of the happening of any event during the period as
in your judgment you are required to deliver an Offering Memorandum in
connection with sales of the Securities by you which makes any statement of
a material fact made in the Offering Memorandum untrue or which requires
the making of any additions to or changes in the Offering Memorandum (as
amended or supplemented from time to time) in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) It will notify you promptly of (i) the receipt of any comments
from any state securities commission or any other regulatory authority that
relate to the preliminary offering memorandum or the Offering Memorandum,
(ii) of the suspension of qualification of the Securities for offering or
sale in any jurisdiction, or the initiation of any proceeding for such
purpose by any state securities commission or any other regulatory
authority. Each of the Issuers shall use its best efforts to prevent the
issuance of any stop order or order suspending the qualification or
exemption of the Securities under any state securities or Blue Sky laws,
and, if at any time any state securities commission or any other regulatory
authority shall issue an order suspending the qualification or exemption of
the Securities under any state securities or Blue Sky laws, the Issuers
shall use every reasonable effort to obtain the withdrawal or lifting of
such order at the earliest possible time.
(c) Promptly after the execution of this Agreement, and from time to
time thereafter for such period as in your judgment the Offering Memorandum
is required to be delivered in connection with sales of the Securities by
you, it will furnish to you, without charge, as many copies of the Offering
Memorandum (and of any amendment or supplement to the Offering Memorandum)
as you may reasonably request.
(d) If, during such period as in your judgment you are required to
deliver the Offering Memorandum in connection with sales of the Securities
by you, any event shall occur as result of which it becomes necessary to
amend or supplement the Offering Memorandum in order to make the
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statements therein, in light of the circumstances existing as of the date
the Offering Memorandum is delivered to a purchaser, not misleading, or if
it is necessary to amend or supplement the Offering Memorandum so that the
statements in the Offering Memorandum, as so amended or supplemented, will
not, in light of the circumstances existing as of the date the Offering
Memorandum is so delivered, be misleading, or so that the Offering
Memorandum will comply with applicable law, it will so amend or supplement
the Offering Memorandum and will furnish to you without charge such number
of copies thereof as you may reasonably request.
(e) Whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, it will pay and be responsible
for all costs, expenses, fees and taxes incurred in connection with or
incident to (i) the printing, filing, processing and distribution and
delivery of the Offering Memorandum, each preliminary offering memorandum
and all amendments and supplements thereto, (ii) the printing, processing,
execution, distribution and delivery of this Agreement, the Indenture, any
memoranda describing state securities or Blue Sky laws and all other
agreements, memoranda, correspondence and other documents printed,
distributed and delivered in connection with the offering of the
Securities, (iii) the registration or qualification of the Securities for
offer and sale under the securities or Blue Sky laws of the jurisdictions
referred to in paragraph (h), below (including, in each case, the
reasonable fees and disbursements of counsel relating to such registration
or qualification and memoranda relating thereto and any filing fees in
connection therewith), (iv) furnishing such copies of the preliminary
offering memorandum and the Offering Memorandum, all amendments and
supplements to any of them as may be reasonably requested by the Initial
Purchasers, (v) the inclusion of the Securities on the National
Association of Securities Dealers, Inc. (the "NASD"), Automatic Quotation
System-PORTAL ("PORTAL") and the approval of the Securities by DTC for
"book-entry" transfer, (vi) the rating of the Securities by investment
rating agencies and (vii) the performance by each of the Issuers of its
other obligations under this Agreement, including (without limitation) the
fees of the Trustee, the cost of its personnel and other internal costs,
the cost of printing and engraving the certificates representing the
Securities and all expenses and taxes incident to the sale and delivery of
the Securities to the Initial Purchasers.
(f) It will furnish to each Initial Purchaser, without charge, two
(2) signed copies (plus one additional signed copy to your legal counsel)
of the Registration Statements as first filed with the Commission and of
each
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amendment or supplement to it, including each post effective amendment and
all exhibits filed therewith.
(g) It will not make any amendment or supplement to any preliminary
offering memorandum or the Offering Memorandum, of which you shall not
previously have been advised and provided a copy within two business days
prior to the first use thereof (or such reasonable amount of time as is
necessitated by the exigency giving rise to the need for such amendment or
supplement), or to which you shall reasonably object; and it will prepare
and provide you with, promptly upon your reasonable request, any amendment
or supplement to the Offering Memorandum which may be necessary or
advisable in connection with the resale of the Securities by you.
(h) It will cooperate with you and your counsel in connection with
the registration or qualification of the Securities for offer and sale to
and by the Initial Purchasers under the state securities or Blue Sky laws
of such jurisdictions as you may request. The Issuers will continue such
qualification in effect so long as required by law for distribution of the
Securities (provided, that the Issuers shall not be obligated to qualify as
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a foreign corporation or a foreign partnership, as the case may be, in any
jurisdiction in which it is not so qualified or to take any action that
would subject it to taxation or to general consent to service of process in
any jurisdiction in which it is not now so subject).
(i) For so long as and at any time that it is not subject to Section
13 or 15(d) of the Securities Exchange Act of 1934 and the Commission's
rules and regulations thereunder (the "Exchange Act"), the Company, upon
request of any holder of the Securities, will furnish to such holder, and
to any prospective purchaser or purchasers of the Securities designated by
such holder, information satisfying the requirements of subsection
(d)(4)(i) of Rule 144A under the Act; provided, however, that the Company's
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obligations under this Section 4(i) shall terminate upon the earlier of (i)
the date the Exchange Offer is concluded and the exchange of the Exchange
Securities for the Securities tendered therein is consummated or (ii) the
date the Shelf Registration Statement is declared effective by the
Commission; provided further that, notwithstanding the foregoing proviso,
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the Company shall be obligated to deliver, upon request, any information
required by Rule 144A(d)(4) under the Act to prospective purchasers of the
Securities during any period during which, pursuant to the Registration
Rights Agreement, the Shelf Registration Statement is required to be
effective, but such effectiveness has been suspended or revoked for any
reason
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(j) It will, so long as any of the Securities are outstanding,
deliver to the Initial Purchasers, without charge, a copy of each report or
such other publicly available information furnished to holders of the
Securities, or filed with the Commission, whether or not required by law or
pursuant to the Indenture, and such other publicly available information
concerning the Company and its subsidiaries as you may reasonably request,
at the same time as such reports or other information are furnished to such
holders.
(k) It will not voluntarily claim, and will actively resist any
attempts to claim, the benefit of any usury laws against the holders of the
Securities.
(l) It will use the proceeds from the sale of the Securities in the
manner described in the Offering Memorandum under the caption "Use of
Proceeds."
(m) It will cooperate with you to cause the Securities to be
designated as eligible for trading through PORTAL in accordance with the
rules and regulations of the NASD.
(n) It will not, and will ensure that no affiliate (as such term is
defined in the Commission's Rule 501(b) under the Act) of the Company will
offer, sell or solicit offers to buy or otherwise negotiate in respect of
any "security" (as defined in the Act) which could be integrated with the
offer and sale of the Securities in a manner that would require the
registration of the Securities under the Act.
(o) Except in connection with the Exchange Offer or the filing of the
Shelf Registration Statement, as the case may be, it will not, and will not
authorize or knowingly permit any person acting on its behalf to, solicit
any offer to buy or offer to sell the Securities by means of any form of
general solicitation or general advertising (as such terms are used in
Regulation D under the Act), or in any manner involving a public offering
within the meaning of Section 4(2) of the Act.
(p) It will cause each Security to bear the following legend until
such legend shall no longer be necessary or advisable because the
Securities are no longer subject to the restrictions on transfer described
therein:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSAC-
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TION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED
HEREBY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR ANY APPLICABLE EXEMPTION
THEREFROM.
EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED
THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE
HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (b) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR
FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN
CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT,
(c) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (d) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES
ACT OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF THE COMPANY SO REQUESTS) (2) TO THE COMPANY OR (3) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
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ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNTIED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO NOTIFY ANY PURCHASER
FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS
SET FORTH IN (A) ABOVE.
(q) It will use its best efforts to do and perform all things
required to be done and performed under this Agreement by it prior to or
after the Closing Date and to satisfy all conditions precedent to the
delivery of the Securities.
5. Representations and Warranties. Each of the Issuers jointly and
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severally, represents and warrants to each of you that:
(a) Each of the preliminary offering memorandum and the Offering
Memorandum, as of its date, contains all the information that, if requested
by a prospective purchaser of the Securities, would be required to be
provided pursuant to Rule 144A(d)(4) under the Act. The Offering Memorandum
does not, and at the Closing Date will not, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that the
representations and warranties contained in this paragraph (a) shall not
apply to statements in or omissions from the preliminary offering
memorandum or the Offering Memorandum (or any supplement or amendment to
them), made in reliance upon and in conformity with information relating
to the Initial Purchasers furnished to the Issuers in writing by or on
behalf of the Initial Purchasers expressly for use therein. Each of the
Issuers acknowledges for all purposes under this Agreement (including this
paragraph and Section 6 hereof) that the statements set forth in the third
paragraph (first four sentences), fourth paragraph (second sentence), under
the caption "Plan of Distribution" and in the last paragraph of the cover
page in any preliminary offering memorandum and in the Offering Memorandum
constitute the only written information furnished to the Issuers by or on
behalf of the Initial Purchasers expressly for use in the Offering
Memorandum (or any amendment or supplement to any of them), and that the
Initial Purchasers shall not be deemed to have provided any information
(and therefore are not responsible for any statements or omissions),
pertaining to any arrangement or agreement with respect to any party other
than the Initial Purchasers. On the date hereof, at the date of the
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Offering Memorandum, and any amendment or supplement thereto (if
different), and at the Closing Date, the Indenture will conform in all
material respects to the requirements of the Trust Indenture Act of 1939,
as amended, and the rules and regulations promulgated pursuant thereto
(collectively, the "TIA"), which would be applicable to an Indenture
qualified under the TIA. No contract or document of a character required
to be described in the Offering Memorandum, were the Offering Memorandum to
be the form of prospectus contained in a registration statement under the
Act on Form S-1, has not been described as so required.
(b) No action has been taken and no statute, rule, regulation or
order has been enacted, adopted or issued by any governmental body, agency
or official which prevents the issuance of the Securities, suspends the
effectiveness of the Offering Memorandum, prevents or suspends the use of
any preliminary offering memorandum or suspends the sale of the Securities
in any jurisdiction referred to in Section 4(h) hereof; no injunction,
restraining order or order of any nature by any Federal or state court of
competent jurisdiction has been issued with respect to the Issuers which
would prevent or suspend the issuance or sale of the Securities, the
effectiveness of the Offering Memorandum, or the use of any preliminary
offering memorandum or the Offering Memorandum in any jurisdiction referred
to in Section 4(h) hereof; no action, suit or proceeding before any court
or arbitrator or any governmental body, agency or official, domestic or
foreign, is pending against or, to the best knowledge of the Issuers, could
reasonably be expected to be threatened against the Issuers which, if
adversely determined, could materially interfere with or adversely affect
the issuance of the Securities or in any manner draw into question the
validity of the New Credit Facility or the Registration Rights Agreement,
this Agreement, the Indenture or the Securities; and the Issuers have
complied, in all material respects, with every request of the Commission,
or any securities authority or agency of any jurisdiction for additional
information (to be included in the Offering Memorandum or otherwise).
(c) The Indenture has been duly authorized by each of the Issuers
and, when duly executed and delivered by each of the Issuers in accordance
with its terms, will be a legal, valid and binding agreement of each of the
Issuers, enforceable against each of the Issuers in accordance with its
terms, except as rights of indemnity or contribution, or both, may be
limited by state and Federal laws and except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws affecting creditors' rights and
remedies generally and to
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general principles of equity (regardless of whether enforcement is sought
in a proceeding at law or in equity) and except to the extent that a waiver
of rights or defenses under any usury laws may be unenforceable.
(d) The Notes have been duly authorized by the Company and, on the
Closing Date, will have been duly executed by the Company and will, when
issued, executed, authenticated and delivered in accordance with the
Indenture and paid for in accordance with the terms of this Agreement,
constitute legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as rights of
indemnity or contribution, or both, may be limited by state and Federal
laws and except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws affecting creditors' rights and remedies generally and to
general principles of equity (regardless of whether enforcement is sought
in a proceeding at law or in equity), and except to the extent that a
waiver of rights or defenses under any usury laws may be unenforceable. The
Notes will be entitled to the benefits of the Indenture and will conform in
all material respects to the descriptions thereof in the Offering
Memorandum.
(e) The Guarantees have been duly authorized by each of the
Guarantors and, on the Closing Date, will have been duly executed by each
of the Guarantors and will, when issued, executed and delivered in
accordance with the Indenture, constitute legal, valid and binding
obligations of each of the Guarantors, enforceable against each of the
Guarantors in accordance with their terms, except as rights of indemnity or
contribution, or both, may be limited by state and Federal laws and except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws affecting
creditors' rights and remedies generally and to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law
or in equity), and except to the extent that a waiver of rights or defenses
under any usury laws may be unenforceable. The Guarantees will be entitled
to the benefits of the Indenture and will conform in all material respects
to the descriptions thereof in the Offering Memorandum.
(f) This Agreement has been duly authorized and validly executed and
delivered by each of the Issuers and constitutes a valid and legally
binding agreement of each of the Issuers, enforceable against each of the
Issuers in accordance with its terms (assuming due execution and delivery
by you of this Agreement), except as rights of indemnity or contribution,
or both, may be
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limited by state and Federal laws and except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws affecting creditors' rights and
remedies generally and to general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity) and
except to the extent that a waiver of rights or defenses under any usury
laws may be unenforceable.
(g) The execution and delivery of this Agreement, the Indenture and
the Securities by the Issuers, the issuance and sale of the Securities, the
performance of this Agreement and the Indenture and the consummation of the
transactions contemplated by this Agreement and the Indenture will not
conflict with or result in a breach or violation of (A) any of the
respective charters, bylaws or partnership agreement, as the case may be,
of each of the Issuers or (B) any of the terms or provisions of, or
constitute a default or cause an acceleration of any obligation under or
result in the imposition or creation of (or the obligation to create or
impose) any security interest, mortgage, pledge, claim, lien, encumbrance
or adverse interest of any nature (each, a "Lien"), with respect to, any
obligation, bond, agreement, note, debenture, or other evidence of
indebtedness, or any indenture, mortgage, deed of trust or other agreement,
lease or instrument to which the Issuers are a party or by which it or any
of them is bound, or to which any properties of the Issuers is or may be
subject, or (C) contravene any order of any court or governmental agency,
body or official having jurisdiction over the Issuers or any of their
properties, or violate or conflict with any statute, rule or regulation or
administrative regulation or decree or court decree applicable to the
Issuers, or any of their respective assets or properties except in the case
of (B) or (C) above, where such conflict, breach, violation, acceleration
or default could not reasonably be expected to result in a Material Adverse
Effect (as hereinafter defined).
(h) The New Credit Facility and the Registration Rights Agreement
have each been duly and validly authorized by each of the Issuers, as
applicable, and on the Closing Date will have been duly executed and
delivered by each of the Issuers, as applicable, and when duly executed and
delivered by each of the other parties thereto in accordance with its
terms, will be a legal, valid and binding agreement of each of the Issuers,
as applicable, in accordance with its terms, except as rights of indemnity
or contribution, or both, may be limited by state and Federal laws and
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar
laws affecting
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creditors' rights and remedies generally and to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law
or in equity) and except to the extent that any waiver of rights or
defenses under any usury laws may be unenforceable. The New Credit Facility
and the Registration Rights Agreement conform in all material respects with
the descriptions thereof in the Offering Memorandum.
(i) No authorization, approval or consent or order of, or filing
with, any court or governmental body, agency or official is necessary in
connection with the transactions contemplated by this Agreement, the New
Credit Facility and the Registration Rights Agreement, except such as may
be required by the NASD or have been obtained and made under the Act, the
TIA or state securities or Blue Sky laws or regulations. None of the
Issuers nor any of their affiliates is presently doing business with the
government of Cuba or with any person or affiliate located in Cuba.
(j) Each of the Issuers has been duly organized, is validly existing
as a corporation or a general partnership, as the case may be, under the
laws of its jurisdiction of incorporation or organization, as the case may
be, and has the requisite power and authority to carry on its business as
it is currently being conducted or as described in the Offering Memorandum
as proposed to be conducted, and to own, lease and operate its properties,
as applicable, to authorize the offering of the Securities, to execute,
deliver and perform this Agreement, the New Credit Facility and the
Registration Rights Agreement and to issue, sell and deliver the
Securities, and each of the Issuers is duly qualified and is in good
standing as a foreign corporation or a foreign general partnership, as the
case may be, authorized to do business in each jurisdiction where the
operation, ownership or leasing of property or the conduct of its business
requires such qualification, except where the failure to be so qualified
could not reasonably be expected to have a material adverse effect, whether
singly or in the aggregate, on the properties, business, results of
operations, affairs, condition (financial or otherwise), or prospects of
the Issuers taken as a whole (a "Material Adverse Effect");
(k) The consolidated capitalization of the Issuers is as set forth in
the Offering Memorandum, under the caption "Capitalization" in the column
"Actual" and, after consummation of the Offering, will be as set forth in
the column "As Adjusted."
(l) All of the issued and outstanding shares of capital stock of, or
other ownership interests in, each Guarantor have been duly authorized and
14
validly issued, and all, except for the minority interests disclosed in the
Offering Memorandum under the caption "Business-Organizational Structure,"
of the shares of capital stock of or other ownership interests in each
Guarantor are owned directly or indirectly by the Company. All such shares
of capital stock or other ownership interests are fully paid and
nonassessable, and are owned free and clear of any Lien except Liens that
arise under the New Credit Facility. There are no outstanding
subscriptions, rights, warrants, options, calls, convertible or
exchangeable securities, commitments of sale, or Liens related to or
entitling any person to purchase or otherwise to acquire any shares of the
capital stock of, or other ownership interest in, any Guarantor (except for
the minority interests disclosed in the Offering Memorandum under the
caption "Business-Organizational Structure").
(m) None of the Issuers are (A) in violation of its respective
charter or bylaws or (B) in default in the performance of any obligation,
bond, agreement, debenture, note or any other evidence of indebtedness, or
any indenture, mortgage, deed of trust or other contract, lease or other
instrument to which the Issuers is a party or by which any of them is
bound, or to which any of the property or assets of the Issuers is subject,
except in the case of (B) as could not reasonably be excepted to have a
Material Adverse Effect.
(n) There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, pending against or
affecting the Issuers or any of their respective assets or properties,
which is required to be disclosed in the Offering Memorandum (except as
disclosed therein), or which could have a Material Adverse Effect, or which
might materially and adversely affect the performance by any of the Issuers
of its obligations pursuant to this Agreement or the transactions
contemplated hereby or thereby and, to the best knowledge of the Issuers,
no such action, suit or proceeding is contemplated or threatened.
(o) (i) The Issuers are not in violation of any Federal, state or
local laws and regulations relating to pollution or protection of human
health or the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata), including,
without limitation, laws and regulations relating to emissions, discharges,
releases or threatened releases of toxic or hazardous substances, materials
or wastes, or petroleum and petroleum products ("Materials of Environmental
Concern"), or otherwise relating to the protection of human health and
safety, or the use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern (collectively, "Environmental Laws"),
which violation includes, but
15
is not limited to, noncompliance with, or lack of, any permits or other
governmental authorizations, except to the extent that any such violation
could not reasonably be expected to have a Material Adverse Effect or
otherwise require disclosure in the Offering Memorandum; and (ii) (A) the
Issuers have not received any communication (written or oral), whether from
a governmental authority or otherwise, alleging any such violation or
noncompliance, and, to the best knowledge of the Issuers, there are no
circumstances, either past, present or that are reasonably foreseeable,
that may lead to such violation in the future, (B) there is no pending or,
to the best knowledge of the Issuers, threatened claim, action,
investigation or notice (written or oral) by any person or entity alleging
potential liability for investigatory, cleanup, or governmental responses
costs, or natural resources or property damages, or personal injuries,
attorney's fees or penalties relating to (x) the presence, or release into
the environment, of any Material of Environmental Concern at any location
owned or operated by the Issuers now or in the past, or (y) circumstances
forming the basis of any violation, or alleged violation, of any
Environmental Law (collectively, "Environmental Claims"), and (C) to the
best knowledge of the Issuers, there are no past or present actions,
activities, circumstances, conditions, events or incidents that could form
the basis of any Environmental Claim against the Issuers or against any
person or entity whose liability for any Environmental Claim the Issuers
had retained or assumed either contractually or by operation of law, that
in the case of either (A), (B) or (C) of this subparagraph (ii), could
reasonably be expected to have a Material Adverse Effect or otherwise
require disclosure in the Offering Memorandum. In the ordinary course of
its business, the Issuers have conducted "Phase I assessments", which
generally consist of an investigation of environmental conditions at the
subject property (not including soil or groundwater sampling or analysis),
as well as a review of available information regarding the site and
conditions at other sites in the vicinity. Based upon these Phase I
assessments, the Issuers have conducted additional investigations, as
recommended, regarding environmental conditions at the properties; on the
basis of such investigations, the Issuers have reasonably concluded that
the costs and liabilities identified as a result of any such investigations
could not reasonably be expected to have a Material Adverse Effect.
(p) The Issuers are not in violation of any Federal, state or local
law relating to discrimination in the hiring, promotion or pay of employees
nor any applicable wage or hour laws, except as could not reasonably be
expected to have a Material Adverse Effect. There is (A) no significant
unfair labor practice complaint pending against the Issuers or, to the best
knowledge
16
of the Issuers, threatened against any of them, before the National Labor
Relations Board or any state or local labor relations board, and no
material grievance or material arbitration proceeding arising out of or
under any collective bargaining agreement is so pending against the Issuers
or, to the best knowledge of the Issuers, threatened against any of them,
and (B) no labor dispute in which the Issuers are involved nor, to the best
knowledge of the Issuers, is any labor dispute imminent, other than routine
disciplinary and grievance matters. The Issuers are in compliance with all
applicable provisions of the Employee Retirement Income Security Act of
1974, as amended, and the regulations and published interpretations
thereunder, except for such non-compliance as could not reasonably be
expected to result in a Material Adverse Effect.
(q) Except as could not reasonably be expected to have a Material
Adverse Effect, each of the Issuers has good and marketable title, free and
clear of all Liens (except for Permitted Liens (as defined in the
Indenture)), to all property and assets described in the Offering
Memorandum as being owned by it and such properties and assets are in the
condition and suitable for use as so described. All leases to which any of
the Issuers is a party are valid and binding and no default has occurred
and is continuing thereunder (in the case of defaults by persons other than
the Issuers, to the best knowledge of the Issuers), which could result in a
Material Adverse Effect, and the Issuers enjoy peaceful and undisturbed
possession under all such leases to which any of them is a party as lessee
with such exceptions as do not interfere with the use made or proposed to
be made by the Issuers.
(r) The Issuers maintain insurance at least in such amounts and
covering at least such risks as is adequate for the conduct of their
respective businesses and the value of their respective properties and as
is customary for companies engaged in similar businesses in similar
industries.
(s) Ernst & Young LLP, the firm of accountants that has certified or
shall certify the applicable consolidated financial statements of the
Company and subsidiaries and the other financial statements included or to
be included as part of the Offering Memorandum, are independent public
accountants with respect to the Issuers, as would be required under the
Act. The consolidated financial statements and the other financial
statements, together with related schedules and notes, set forth in the
Offering Memorandum, comply as to form in all material respects with the
requirements applicable to registration statements on Form S-1 under the
Act and fairly present the consolidated financial position of the Company
and the financial position of its subsidiaries
17
at the respective dates indicated and the results of their operations and
their cash flows, as applicable, for the respective periods indicated, and
were prepared in accordance with generally accepted accounting principles
in the United States of America ("GAAP"), consistently applied throughout
such periods subject in the case of interim statements to normal recurring
adjustments. The consolidated historical ratios of earnings to fixed
charges of the Company and the consolidated pro forma ratios of earnings to
--- -----
fixed charges of the Company included in the Offering Memorandum under the
caption "Selected Consolidated Financial Information" have been calculated
in compliance with Item 503(d) of the Commission's Regulation S-K. The
other financial and statistical information and data included in the
Offering Memorandum, historical and pro forma, are accurately presented and
--- -----
prepared on a basis consistent with the financial statements and the books
and records of the Issuers.
(t) Subsequent to the respective dates as of which information is
given in the Offering Memorandum and up to the Closing Date, except as set
forth in the Offering Memorandum, neither the Company nor any of the
Guarantors has incurred any liabilities or obligations, direct or
contingent, which are material to the Company and the Guarantors, taken as
a whole, nor entered into any transaction not in the ordinary course of
business and there has not been, singly or in the aggregate, any material
adverse change, or any development which could reasonably be expected to
involve a material adverse change, in the properties, business, results of
operations, condition (financial or otherwise), affairs or prospects of the
Company and the Guarantors, taken as a whole (a "Material Adverse Change").
(u) The Company and each of the Guarantors have filed (or have had
filed on their behalf) all material tax returns required to be filed by any
of them prior to the date hereof under applicable law, other than those
filings being contested in good faith. All such tax returns and amendments
thereto are true, correct and complete in all material respects. The
Company and each of the Guarantors have paid (or have had paid on their
behalf) all material taxes, including all Federal, state, local and foreign
taxes, and other assessments of a similar nature (whether imposed directly
or through withholding), including any interest, additions to tax, or
penalties applicable thereto, other than those taxes being contested in
good faith and for which adequate reserves have been provided or those
currently payable without penalty or interest. To the best of the
Company's and each of the Guarantors' knowledge, there are no tax items of
a material nature that are currently under
18
examination by the Internal Revenue Service or any other domestic or
foreign governmental authority responsible for the administration of any
such taxes.
(v) (i) Each of the Issuers has all certificates, consents,
exemptions, orders, permits, licenses, authorizations, or other approvals
or rights (each, an "Authorization"), of and from, and has made all
declarations and filings with, all Federal, state, local and other
governmental authorities, all self-regulatory organizations and all courts
and other tribunals, necessary or required to own, lease, license and use
its properties and assets and to conduct its business in the manner
described in the Offering Memorandum, except to the extent that the failure
to obtain or file could not reasonably be expected to have a Material
Adverse Effect, (ii) all such Authorizations are valid and in full force
and effect, except as could not reasonably be expected to have a Material
Adverse Effect, (iii) the Issuers are in compliance in all material
respects with the terms and conditions of all such Authorizations and with
the rules and regulations of the regulatory authorities and governing
bodies having jurisdiction with respect thereto and (iv) the Issuers have
received no notice of proceedings relating to the revocation or
modification of any such Authorization. The Issuers possess the patents,
patent rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks
and trade names (collectively, "Intellectual Property"), presently employed
by them in connection with the businesses now operated by them, and the
Issuers have not received any notice of infringement of or conflict with
asserted rights of others with respect to the foregoing except as could not
reasonably be expected to have a Material Adverse Effect. The use of such
Intellectual Property in connection with the business and operations of the
Issuers does not infringe on the rights of any person.
(w) The Issuers maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.
(x) Neither the Issuers nor any agent acting on their behalf has
taken or will take any action that is reasonably likely to cause the
issuance or
19
sale of the Securities to violate Regulation G, T, U, or X of the Board of
Governors of the Federal Reserve System, in each case as in effect on the
Closing Date.
(y) None of the Issuers is (i) an "investment company" or a company
"controlled" by an investment company within the meaning of the Investment
Company Act of 1940, as amended, or (ii) a "holding company" or a
"subsidiary company" of a holding company, or an "affiliate" thereof within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
(z) No holder of any security of any Issuer has any right to require
registration of any security of any Issuer except for the rights under the
Registration Rights Agreement. No holder of any security of any Issuer has
or will have any right to require registration of such security by virtue
of the transactions contemplated by this Agreement.
(aa) Except as disclosed in the Offering Memorandum, there are no
business relationships or related party transactions which would be
required to be disclosed therein by Item 404 of Regulation S-K of the
Commission if the Offering Memorandum were a prospectus contained in a
registration statement on Form S-1 filed under the Act.
(bb) On the Closing Date, the Securities will have been approved for
inclusion on the PORTAL system, subject to official notice of issuance.
(cc) Neither the Company nor any affiliate (as such term is defined in
Rule 501(b) under the Act) of the Company has, directly or through any
agent, sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any "security" (as defined in the Act) which is
or will be integrated with the sale of the Securities in a manner that
would require registration of the offering and sale of the Securities under
the Act.
(dd) None of the Issuers and any officer, director or other person
(other than you, as to whom the Issuers make no representation), acting on
their behalf has engaged, in connection with the offering of the
Securities, in any form of general solicitation or general advertising,
including but not limited to the methods described in Rule 502(c) under the
Act.
(ee) Assuming the accuracy of your representations contained in
Section 3 hereof and your compliance with your agreements therein set
forth;
20
it is not necessary, in connection with the sale and delivery of the
Securities to you and the offer and resale of the Securities by you, in
each case in the manner contemplated by this Agreement and the Offering
Memorandum, to register the Securities under the Act or to qualify the
Indenture under the TIA.
(ff) The Company has delivered to the Initial Purchasers a true and
correct copy of the New Credit Facility in the form substantially as it
will be executed and delivered on the Closing Date, together with all
related agreements and all schedules and exhibits thereto, and there have
been no amendments, alterations, modifications or waivers of any of the
provisions of the New Credit Facility from the form which has been
delivered to the Initial Purchasers; there exists as of the date hereof
(after giving effect to the transactions contemplated by the New Credit
Facility), no event or condition which would constitute a default or an
event of default (in each case as defined in the New Credit Facility),
under the New Credit Facility which would result in a Material Adverse
Effect or materially adversely effect the ability of the Issuers to
consummate the transactions contemplated by this Agreement.
(gg) Each certificate signed by any officer of any of the Issuers and
delivered to the Initial Purchasers or counsel for the Initial Purchasers
in connection with the transactions contemplated by this Agreement shall be
deemed to be a representation and warranty by the Issuers to each Initial
Purchaser as to the matters covered thereby.
(hh) At the Closing Date after giving effect to the transactions
contemplated hereby, (a) each of the Company's and the Guarantors' assets
will exceed its respective liabilities and (b) each of the Company and the
Guarantors will be solvent, will be able to pay its respective debts as
they mature, will own property with fair saleable value greater than the
amount required to pay its respective debts as they come due and will have
capital sufficient to carry on its business as then constituted.
(ii) CEL Golf Group, Inc., a Georgia corporation and wholly owned
subsidiary of the Company does not currently have, and has not engaged in,
any business.
6. Indemnification.
---------------
(a) The Issuers, jointly and severally, agree to indemnify and
hold harmless (i) each of the Initial Purchasers and (ii) each person, if
any, who controls (within the meaning of Section 15 of the Act or Section
20
21
of the Exchange Act), any of the Initial Purchasers (any of the persons
referred to in this clause (ii) being hereinafter referred to as a
"controlling person"), and (iii) the respective officers, directors,
partners, employees, representatives and agents of any of the Initial
Purchasers or any controlling person (any person referred to in clause (i),
(ii) or (iii) may hereinafter be referred to as an "Indemnified Person"),
to the fullest extent lawful, from and against any and all losses, claims,
damages, judgments, actions, expenses and other liabilities (collectively,
"Liabilities"), including without limitation and as incurred, reimbursement
of all reasonable costs of investigating, preparing, pursuing or defending
any claim or action, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, including the reasonable fees and
expenses of counsel to any Indemnified Person, directly or indirectly
caused by, related to, based upon, arising out of or in connection with any
untrue statement or alleged untrue statement of a material fact contained
in the Offering Memorandum (including any amendment or supplement thereto),
or any preliminary offering memorandum, or any omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein (in light of the circumstances under which
they were made), not misleading, except insofar as such Liabilities are
caused by an untrue statement or omission or alleged untrue statement or
omission that is (x) made in reliance upon and in conformity with
information relating to either of the Initial Purchasers furnished in
writing to the Company by or on behalf of such Initial Purchaser expressly
for use in any preliminary offering memorandum or the Offering Memorandum
(or any amendment or supplement thereto), or (y) with respect to the
Initial Purchaser from whom the person asserting the Liabilities purchased
Securities, made in any preliminary offering memorandum if a copy of the
Offering Memorandum (as amended or supplemented, if the Company shall have
furnished the Initial Purchasers with such amendments or supplements
thereto on a timely basis), was not delivered by or on behalf of such
Initial Purchaser to the person asserting the Liabilities, if required by
law to have been so delivered by the Initial Purchaser seeking
indemnification, at or prior to the written confirmation of the sale of the
Securities, and it shall be finally determined by a court of competent
jurisdiction, in a judgment not subject to appeal or review, that the
Offering Memorandum (as so amended or supplemented), would have completely
corrected such untrue statement or omission. The Issuers shall notify you
promptly of the institution, threat or assertion of any claim, proceeding
(including any governmental investigation), or litigation in connection
with the matters addressed by this Agreement which involves the Issuers or
an Indemnified Person.
22
(b) In case any action or proceeding (for all purposes of this Section
6, including any governmental investigation), shall be brought or asserted
against any of the Indemnified Persons with respect to which indemnity may
be sought against any Issuer, such Indemnified Person shall promptly notify
the Company in writing; provided, that the failure to give such notice
--------
shall not relieve the Issuers of their obligations pursuant to this
Agreement. Upon receiving such notice, the Issuers shall assume, at its
sole expense, the defense thereof, with counsel reasonably satisfactory to
such Indemnified Person and, after written notice from the Issuers to such
Indemnified Person of its election so to assume the defense thereof made
within five business days after receipt of the notice from the Indemnified
Person of such action or proceeding. The Issuers shall not be liable to
such Indemnified Person hereunder for legal expenses of other counsel
subsequently incurred by such Indemnified Person in connection with the
defense thereof, other than costs of investigation, unless (i) the Issuers
agree in writing to pay such fees and expenses, or (ii) the Issuers fail
promptly to assume such defense or fails to employ counsel reasonably
satisfactory to such Indemnified Person or (iii) the named parties to any
such action or proceeding (including any impleaded parties), include both
such Indemnified Person and any of the Issuers or an affiliate of the
Issuers, and either (x) such Indemnified Person shall have been advised by
counsel that there may be one or more legal defenses available to such
Indemnified Person that are different from or additional to those available
to one or more of the Issuers or such affiliate or (y) a conflict may exist
between such Indemnified Person and any of the Issuers or such affiliate.
In the event of any of clause (i), (ii) and (iii) of the immediately
preceding sentence, if such Indemnified Person notifies the Company in
writing, the Issuers shall not have the right to assume the defense thereof
and such Indemnified Person shall have the right to employ its own counsel
in any such action and the reasonable fees and expenses of such counsel
shall be paid, as incurred, by the Issuers, regardless of whether it is
ultimately determined that an Indemnified Person is not entitled to
indemnification hereunder, it being understood, however, that the Issuers
shall not, in connection with any one such action or proceeding or separate
but substantially similar or related actions or proceedings arising out of
the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to any
local counsel) at any time for all such Indemnified Persons. Each of the
Issuers agrees to be liable for any settlement of such action or proceeding
effected with the Company's prior written consent, which consent will not
be unreasonably withheld, and the Issuers agree to indemnify and hold
harmless any Indemnified Person from and against any Liabilities by reason
of any settlement of any action effected with the written consent of the
Company.
23
Each of the Issuers agrees to be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than ten business days after receipt by the Issuers of
the aforesaid request for payment in respect of an indemnification
obligation pursuant hereto and (ii) the Indemnified Person shall not have
been reimbursed in accordance with such request prior to the date of such
settlement. None of the Issuers shall, without the prior written consent of
each Indemnified Person, settle or compromise or consent to the entry of
any judgment in or otherwise seek to terminate any pending or threatened
action, claim, litigation or proceeding in respect of which indemnification
or contribution may be sought pursuant hereto (whether or not any
Indemnified Person is a party thereto), unless such settlement, compromise,
consent or termination includes an unconditional release of each
Indemnified Person from all liability arising out of such action, claim,
litigation or proceeding.
(c) Each of the Initial Purchasers agrees, severally and not jointly,
to indemnify and hold harmless the Issuers and any person controlling
(within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act) the Issuers, and the officers, directors, partners, employees,
representatives and agents of each such person, to the same extent as the
foregoing indemnity from the Issuers to each of the Indemnified Persons,
but only with respect to claims and actions based on information relating
to such Initial Purchaser and conforming to information furnished in
writing by or on behalf of such Initial Purchaser expressly for use in the
Offering Memorandum or any preliminary offering memorandum, as applicable.
In case any action or proceeding (including any governmental
investigation), shall be brought or asserted against the Issuers, any of
their directors, any such officer, or any such controlling person based on
the Offering Memorandum or any preliminary offering memorandum in respect
of which indemnity is sought against any Initial Purchaser pursuant to the
foregoing sentence, the Initial Purchaser shall have the rights and duties
given to the Issuers (except that if the Issuers shall have assumed the
defense thereof, such Initial Purchaser shall not be required to do so, but
may employ separate counsel therein and participate in the defense thereof
but the fees and expenses of such counsel shall be at the expense of such
Initial Purchaser), and the Issuers, their directors, any such officers and
each such controlling person shall have the rights and duties given to the
Indemnified Person by Section 7(b) above.
(d) If the indemnification provided for in this Section 6 is finally
determined by a court of competent jurisdiction to be unavailable to an
indemnified party in respect of any Liabilities referred to herein, then
each
24
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a
result of such Liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by the Issuers, on the one hand, and
such Initial Purchaser, on the other hand, from the offering of the
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above, but
also the relative fault of the indemnifying parties and the indemnified
party, as well as any other relevant equitable considerations. The relative
benefits received by the Issuers, on the one hand, and any of the Initial
Purchasers (and its related Indemnified Persons), on the other hand, shall
be deemed to be in the same proportion as the total proceeds from the
Securities (net of discounts and commissions but before deducting
expenses), received by the Issuers bears to the total discounts and
commissions received by such Initial Purchaser, in each case as set forth
in the Offering Memorandum. The relative fault of the Issuers, on the one
hand, and such Initial Purchaser, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact related to information supplied by the Issuers, on the one
hand, or by such Initial Purchaser, on the other, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The indemnity and contribution
obligations of the Issuers set forth herein shall be in addition to any
liability or obligation the Issuers may otherwise have to any Indemnified
Person.
The Issuers and the Initial Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section 6(d) were determined
by pro rata allocation (even if the Initial Purchasers were treated as one
--- ----
entity for such purpose), or by any other method of allocation which does
not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an
indemnified party as a result of any Liabilities, referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 6, none of the Initial Purchasers (and their related Indemnified
Persons) shall be required to contribute, in the aggregate, any amount in
excess of the amount by which the total discounts and commissions
applicable to the Securities purchased by such Initial Purchaser exceeds
the amount of any damages and related expenses which such Initial Purchaser
(and
25
its related Indemnified Persons), has otherwise been required to pay or
incur by reason of such untrue or alleged untrue statement or omission or
alleged omission. The Initial Purchasers' obligations to contribute
pursuant to this Section 6(d) are several in proportion to the respective
aggregate principal amount of Securities purchased by each of the Initial
Purchasers hereunder and not joint.
7. Conditions to Initial Purchasers' Obligations. The respective
---------------------------------------------
obligations of the several Initial Purchasers to purchase any Securities under
this Agreement are subject to the satisfaction of each of the following
conditions on the Closing Date:
(a) All the representations and warranties of the Issuers contained
in this Agreement shall be true and correct on the Closing Date with the
same force and effect as if made on and as of the Closing Date. The Issuers
shall have performed or complied with all of their obligations and
agreements herein contained and required to be performed or complied with
by them at or prior to the Closing Date.
(b) At the Closing Date, no stop order suspending the sale of the
Securities in the United States or any jurisdiction referred to in Section
4(h) shall have been issued and no proceeding for that purpose shall have
been commenced or shall be pending or threatened.
(c) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental
agency, body or official which would, as of the Closing Date, prevent the
issuance of the Securities; and no injunction, restraining order or order
of any nature by any Federal or state court of competent jurisdiction shall
have been issued as of the Closing Date which would prevent the issuance of
the Securities. Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date, there shall not have been any downgrading or
indication that such securities have been placed on any "watch list" for
possible downgrading, nor shall any review for a possible change that does
not indicate the direction of the possible change, in the rating accorded
any of the Issuers' securities by any nationally recognized statistical
rating organization, as such term is defined for purposes of Rule 436(g)(2)
of the Act.
(d) (i) Since the earlier of the date hereof or the dates of which
information is given in the Offering Memorandum, there shall not have been
any material adverse change, (ii) since the date of the latest balance
sheet
26
included in the Offering Memorandum, there shall not have been any material
adverse change, or any development involving a prospective material adverse
change, in the capital stock or debt, of the Issuers and (iii) the Issuers
shall have no liability or obligation, direct or contingent, that is
material to the Issuers, taken as a whole, and which is not disclosed in
the Offering Memorandum.
(e) You shall have received a certificate of the Company, dated the
Closing Date, executed on behalf of the Company and the Guarantors, by the
chief executive officer and the principal financial officer of the Company
confirming, as of the Closing Date, the matters set forth in paragraphs
(a), (b), (c) and (d) of this Section 7.
(f) On the Closing Date, you shall have received:
(1) an opinion (satisfactory to you and your counsel), dated the
Closing Date, of Latham & Watkins, special counsel for the
Issuers, to the effect that:
(i) the Company and each of the following Guarantors:
Escondido Consulting, Inc., a California corporation,
Carmel Mountain Ranch Golf Club, Inc., a California
corporation, OVLC Management Corporation, a California
corporation, OVLC Financial Corporation, a California
corporation, Ocean Vista Land Company, a California
corporation, Golf Course Inns of America, Inc., a
California corporation, C-RHK, Inc., a California
corporation and Whispering Palms Country Club Joint
Venture, a California general partnership, (collectively,
the "California Guarantors"), has the requisite corporate
or partnership power, as the case may be, and authority to
execute, deliver and perform its obligations under this
Agreement; this Agreement has been duly authorized by all
necessary corporate or partnership action, as the case may
be, executed and delivered by the Company and each of the
California Guarantors;
(ii) the Company has the requisite corporate power and
authority to execute, deliver and perform its obligations
under the Notes, the Indenture and the Registration Rights
Agreement and to authorize, issue, sell and
27
deliver the Notes; each of the Notes and the Indenture
have been duly authorized by all necessary corporate
action, executed and delivered by the Company;
(iii) each of the California Guarantors has the requisite
corporate or partnership power, as the case may be, to
execute, deliver, and perform its obligations under its
respective Guarantees, the Indenture and the Registration
Rights Agreement, and to authorize, issue and deliver the
Guarantees; each of the Guarantees, the Indenture and the
Registration Rights Agreement have been duly authorized by
all necessary corporate or partnership action, as the case
may be, executed and delivered by each of the California
Guarantors;
(iv) when issued, executed and authenticated and delivered in
accordance with the provisions of the Indenture and paid
for by you in accordance with the terms of this Agreement,
the Notes will constitute legal, valid and binding
obligations of the Company, enforceable against the
Company in accordance with their terms and entitled to the
benefits of the Indenture, except as rights of indemnity
or contribution, or both, may be limited by laws or court
decisions and except as such enforceability may be limited
by the effect of bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws now
or hereafter in effect relating to or affecting the rights
or remedies of creditors and to general principles of
equity (regardless of whether enforcement is considered in
a proceeding at law or in equity) and the discretion of
the court before which any proceeding therefor may be
brought, and except to the extent that a waiver of rights
or defenses under any usury laws may be unenforceable;
(v) when executed in accordance with the provisions of the
Indenture and delivered to you in accordance with the
terms of this Agreement, the Guarantees, assuming due
authorization, execution and delivery thereof by the Non-
California Guarantors (as hereinafter defined) will
constitute legal, valid and binding obligations of each of
28
the Guarantors, enforceable against each of the Guarantors
in accordance with their respective terms and entitled to
the benefits of the Indenture, except as rights of
indemnity or contribution, or both, may be limited by laws
or court decisions and except as such enforceability may
be limited by the effect of bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other
similar laws now or hereafter in effect relating to or
affecting the rights or remedies of creditors and to
general principles of equity (regardless of whether
enforcement is considered in a proceeding at law or in
equity) and the discretion of the court before which any
proceeding therefor may be brought, and except to the
extent that a waiver of rights or defenses under any usury
laws may be unenforceable;
(vi) the Indenture, assuming due authorization, execution and
delivery thereof by the Trustee and the Non-California
Guarantors, will be a legal, valid and binding agreement
of each of the Issuers, enforceable against each of the
Issuers in accordance with its terms, except as rights of
indemnity or contribution, or both, may be limited by laws
or court decisions and except as such enforceability may
be limited by the effect of bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other
similar laws now or hereafter in effect relating to or
affecting the rights or remedies of creditors and to
general principles of equity (regardless of whether
enforcement is considered in a proceeding at law or in
equity) and the discretion of the court before which any
proceeding therefor may be brought, and except to the
extent that a waiver of rights or defenses under any usury
laws may be unenforceable;
(vii) the Company and each of the California Guarantors is a
duly incorporated, or in the case of a partnership,
formed, and a validly existing corporation or general
partnership, as the case may be, and with respect to each
corporate California Guarantor, in good standing under the
laws of its jurisdiction of organization, has
29
the requisite corporate or partnership power and
authority, as the case may be, to own, lease and operate
its properties and to conduct its business as described in
the Offering Memorandum; based solely on certificates from
public officials, such counsel shall confirm that the
Company is qualified as a foreign corporation and is in
good standing in the State of California;
(viii) neither the Company nor any of its subsidiaries is (a) an
"investment company" or a company "controlled" by an
investment company within the meaning of the Investment
Company Act of 1940, as amended, or (b) a "holding
company" or a "subsidiary company" of a holding company,
or an "affiliate" thereof within the meaning of the Public
Utility Holding Company Act of 1935, as amended;
(ix) no authorization, approval, consent or order of, or filing
with, any court or governmental body or agency is required
for the consummation by the Issuers of the transactions
contemplated by this Agreement and the Registration Rights
Agreement, except that such counsel need express no
opinion with respect to state securities or Blue Sky laws
or regulations;
(x) the execution and delivery of this Agreement, the
Indenture and the Registration Rights Agreement, the
issuance and sale of the Securities, the performance of
its obligations under this Agreement, the Securities, the
Indenture and the Registration Rights Agreement and the
consummation of the transactions contemplated by this
Agreement, the Indenture and the Registration Rights
Agreement will not conflict with or result in a breach or
violation of any of the respective charters, bylaws or
partnership agreements of the Company or any of the
California Guarantors or the terms or provi-sions of, or
constitute a default under, any statute, rule or
regulation or any agreement or instrument (identified to
such counsel in writing by the Company as material to the
Company and its subsidiaries, taken as a whole), any order
of any court or governmental agency, body
30
or official having jurisdiction over the Company or any of
the Guarantors or any of their properties (identified to
such counsel in writing by the Company as material to the
Company and its subsidiaries, taken as a whole);
(xi) the Registration Rights Agreement (A) has been duly and
validly authorized by each of the Company and the
California Guarantors, as applicable, and on the Closing
Date will have been duly executed and delivered by each of
the Company and the California Guarantors, as applicable,
in accordance with its terms, and (B) assuming due
authorization, execution and delivery thereof by the Non-
California Guarantors, will be a legal, valid and binding
agreement of each of the Issuers, as applicable,
enforceable against each of the Issuers, as applicable, in
accordance with its terms, except as rights of indemnity
or contribution, or both, may be limited by laws or court
decisions and except as such enforceability may be limited
by the effect of bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws now
or hereafter in effect relating to or affecting the rights
or remedies of creditors and to general principles of
equity (regardless of whether enforcement is considered in
a proceeding at law or in equity) and the discretion of
the court before which any proceeding therefor may be
brought, and except to the extent that a waiver of rights
or defenses under any usury laws may be unenforceable. The
Registration Rights Agreement conforms in all material
respects with the descriptions thereof in the Offering
Memorandum;
(xii) all of the issued and outstanding shares of capital stock
of, or other ownership interests in each California
Guarantor have been duly and validly authorized and
issued, and based solely on such counsel's review of the
relevant stock records and the recitations as to such
matters in the resolutions authorizing the issuance
thereof, the shares of capital stock of, or other
ownership interests in, each California Guarantor are
owned of record, directly or through subsidiaries, by the
Com-
31
pany, except for the minority interests disclosed in the
Offering Memorandum under the caption "Business-
Organizational Structure," and are fully paid and non-
assessable, and; to the best of such counsel's knowledge,
there are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities or commitments for
sale, or liens related to or entitling any person to
purchase or otherwise acquire any shares of capital stock
or any other equity interest in each California Guarantor;
(xiii) all of the outstanding shares of capital stock of the
Company have been duly and validly authorized and issued
and are fully paid and non-assessable; and based solely on
such counsel's review of the relevant stock records and
the recitations as to such matters in the resolutions
authorizing the issuance thereof, all of the outstanding
shares of capital stock in the Company are owned of record
by Holdings and; to the best of such counsel's knowledge,
there are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities or commitments for
sale, or liens related to or entitling any person to
purchase or otherwise acquire any shares of capital stock
or any other equity interest in the Company;
(xiv) the Securities conform in all material respects to the
description thereof in the Offering Memorandum under the
caption "Description of Senior Notes"; and
(xv) assuming the accuracy of the representations and
warranties of the Initial Purchasers in Section 2(b) of
this Purchase Agreement and of the Issuers in Section
5(ad) of this Purchase Agreement, the issuance and sale of
the Securities to the Initial Purchasers and the offering,
resale and delivery of the Securities by the Initial
Purchasers, in each case, in the manner disclosed in the
Offering Memorandum, are exempt from the registration
requirements of Section 5 of the Act and it is not
necessary to qualify the Indenture under the TIA.
32
In giving their opinion required by subsection (f)(1) of this Section
7, such counsel (i) may state that such opinions are limited to matters
governed by the Federal laws of the United States of America, the laws of
the States of New York and California, and the General Corporation Law of
the State of Delaware, and (ii) shall state that such counsel has
participated in conferences with officers and other representatives of the
Issuers, representatives of the independent public accountants for the
Issuers, your representatives and your counsel in connection with the
preparation of the Offering Memorandum and such counsel shall advise you
that, on the basis of the foregoing, although such counsel has not
independently verified the accuracy, completeness or fairness of such
statements (except as indicated above) and relying to a large extent as to
materiality on management of the Company, no facts came to such counsel's
attention that caused such counsel to believe that the Offering Memorandum
(as amended or supplemented), as of its date and as of the Closing Date
contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. Without
limiting the foregoing, such counsel may further state that it assumes no
responsibility for, and has not independently verified, the accuracy,
completeness or fairness of the financial statements, notes and schedules
and other financial, statistical, numerical and accounting data included in
or omitted from the Offering Memorandum.
(2) an opinion (satisfactory to you and your counsel), dated the
Closing Date, of Quarles & Brady, special Arizona counsel for the Company,
to the effect that:
(i) Bellows Golf Group, Inc., (the "Arizona Guarantor"), has
the requisite corporate power and authority to execute,
deliver and perform its obligations under this Agreement;
this Agreement has been duly authorized by all necessary
corporate action, executed and delivered by the Arizona
Guarantor;
(ii) the Arizona Guarantor has the requisite corporate power to
execute, deliver, and perform its obligations under its
Guarantees, the Indenture and the Registration Rights
Agreement, and to authorize, issue and deliver its
Guarantees; each of its Guarantees and the Indenture have
been duly authorized by all necessary corporate
33
action executed and delivered by the Arizona Guarantor;
(iii) the Arizona Guarantor is a duly incorporated and validly
existing corporation, in good standing under the laws of
the State of Arizona, has the requisite corporate power and
authority to own, lease and operate its properties and to
conduct its business as described in the Offering
Memorandum;
(iv) the execution and delivery of this Agreement, the Indenture
and the Registration Rights Agreement to the issuance and
sale of its Guarantees, the performance of its obligations
under this Agreement, the Guarantees, the Indenture and the
Registration Rights Agreement and the consummation of the
transactions contemplated by this Agreement, the Indenture
and the Registration Rights Agreement will not conflict
with or result in a breach or violation of the charter or
bylaws of the Arizona Guarantor;
(v) all of the issued and outstanding shares of capital stock
of, or other ownership interests in, the Arizona Guarantor
have been duly and validly authorized and issued, and based
solely on such counsel's review of the relevant stock
records and the recitations as to such matters in the
resolutions authorizing the issuance thereof, the shares of
capital stock of, or other ownership interests in, the
Arizona Guarantor are owned of record, directly or through
subsidiaries, by the Company, and are fully paid and non-
assessable, and; to the best of such counsel's knowledge,
there are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities or commitments for
sale, or liens related to or entitling any person to
purchase or otherwise acquire any shares of capital stock
or any other equity interest in the Arizona Guarantor.
In giving their opinion required by subsection (f)(2) of this Section
7, such counsel may state that such opinion is limited to matters governed
by the Federal laws of the United States of America and the laws of the
State of Arizona.
34
(3) an opinion (satisfactory to you and your counsel), dated the Closing
Date, of Page & Addison, special Texas counsel for the company, to the effect
that:
(i) Each of Cobblestone Texas, Inc., a Texas corporation, Pecan
Grove Golf Club, Inc., a Texas corporation, CSR Golf Group,
Inc., a Texas corporation, Lakeway Golf Clubs, Inc., a
Texas corporation, Woodcrest Golf Club, Inc., a Texas
corporation, Liquor Club at Pecan Grove, Inc., a Texas
corporation and TGFC, Inc., a Texas corporation,
(collectively, the "Texas Guarantors") has the requisite
corporate power and authority to execute, deliver and
perform its obligations under this Agreement; this
Agreement has been duly authorized by all necessary
corporate action, executed and delivered by the Texas
Guarantors;
(ii) each of the Texas Guarantors has the requisite corporate
power to execute, deliver, and perform its obligations
under their respective Guarantees, the Indenture and the
Registration Rights Agreement, and to authorize, issue and
deliver their respective Guarantees; each of their
respective Guarantees and the Indenture have been duly
authorized by all necessary corporate action, executed and
delivered by each of the Texas Guarantors;
(iii) each of the Texas Guarantors is a duly incorporated and
validly existing corporation, in good standing under the
laws of its jurisdiction of organization, has the requisite
corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Offering Memorandum;
(iv) the execution and delivery of this Agreement, the
Indenture, and the Registration Rights Agreement, the
issuance and sale of their respective Guarantees, the
performance of their obligations under this Agreement,
their respective Guarantees, the Indenture and the
Registration Rights Agreement and the consummation of the
transactions contemplated by this Agreement, the Indenture
and the Registration Rights Agreement will not conflict
with or result in a breach or violation of the
35
respective charters or bylaws of each of the Texas
Guarantors; and
(v) all of the issued and outstanding shares of capital stock
of, or other ownership interests in, each Texas Guarantor
have been duly and validly authorized and issued, and based
solely on such counsel's review of the relevant stock
records and the recitations as to such matters in the
resolutions authorizing the issuance thereof, the shares of
capital stock of, or other ownership interests in, each of
the Texas Guarantors are owned of record, directly or
through subsidiaries, by the Company, except for the
minority interests disclosed in the Offering Memorandum
under the caption "Business-Organizational Structure," and
are fully paid and non-assessable, and; to the best of such
counsel's knowledge, there are no outstanding
subscriptions, rights, warrants, options, calls,
convertible securities or commitments for sale, or liens
related to or entitling any person to purchase or otherwise
acquire any shares of capital stock or any other equity
interest in each Texas Guarantor.
In giving their opinion required by subsection (f)(3) of this Section
7, such counsel may state that such opinion is limited to matters governed
by the Federal laws of the United States of America and the laws of the
State of Texas.
(4) an opinion (satisfactory to you and your counsel), dated the Closing
Date, of Lionel, Sawyer & Collins, special Nevada counsel to the Company, to the
effect that:
(i) Foothills Holding Company, a Nevada corporation (the
"Nevada Guarantor"), has the requisite corporate power and
authority to execute, deliver and perform its obligations
under this Agreement; this Agreement has been duly
authorized by all necessary corporate action, executed and
delivered by the Nevada Guarantor;
(ii) the Nevada Guarantor has the requisite corporate power to
execute, deliver, and perform its obligations under
36
its Guarantees and the Indenture, and to authorize, issue
and deliver its Guarantees; each of its Guarantees and the
Indenture have been duly authorized by all necessary
corporate action executed and delivered by the Nevada
Guarantor;
(iii) the Nevada Guarantor is a duly incorporated and validly
existing corporation, in good standing under the laws of
its jurisdiction of organization, has the requisite
corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Offering Memorandum; based solely on certificates from
public officials, the Nevada Guarantor is qualified as a
foreign corporation and is in good standing in the State of
Arizona;
(iv) the execution and delivery of this Agreement, the Indenture
and the Registration Rights Agreement, the issuance and
sale of its Guarantees, the performance of its obligations
under this Agreement, its Guarantees, the Indenture and the
Registration Rights Agreement and the consummation of the
transactions contemplated by this Agreement, the Indenture
and the Registration Rights Agreement will not conflict
with or result in a breach or violation of the charter or
bylaws of the Nevada Guarantor;
(v) all of the issued and outstanding shares of capital stock
of, or other ownership interests in, the Nevada Guarantor
have been duly and validly authorized and issued, and based
solely on such counsel's review of the relevant stock
records and the recitations as to such matters in the
resolutions authorizing the issuance thereof, the shares of
capital stock of, or other ownership interests in, the
Nevada Guarantor are owned of record, directly or through
subsidiaries, by the Company, and are fully paid and non-
assessable, and; to the best of such counsel's knowledge,
there are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities or commitments for
sale, or liens related to or entitling any person to
purchase or
37
otherwise acquire any shares of capital stock or any other
equity interest in the Nevada Guarantor.
In giving their opinion required by subsection (f)(4) of this Section
7, such counsel may state that such opinion is limited to matters governed
by the Federal laws of the United States of America and the laws of the
State of Nevada.
(5) an opinion (satisfactory to you and your counsel), dated the
Closing Date, of Young, Goldman & Van Beek, special Virginia counsel to the
Company, to the effect that:
(i) Virginia Golf Country Club, Inc., a Virginia corporation
(the "Virginia Guarantor"), has the requisite corporate
power and authority to execute, deliver and perform its
obligations under this Agreement; this Agreement has been
duly authorized by all necessary corporate action, executed
and delivered by the Virginia Guarantor;
(ii) the Virginia Guarantor has the requisite corporate power to
execute, deliver, and perform its obligations under its
Guarantees and the Indenture, and to authorize, issue and
deliver its Guarantees; each of its Guarantees and the
Indenture have been duly authorized by all necessary
corporate action executed and delivered by the Virginia
Guarantor;
(iii) the Virginia Guarantor is a duly incorporated and validly
existing corporation, in good standing under the laws of
the Commonwealth of Virginia has the requisite corporate
power and authority to own, lease and operate its
properties and to conduct its business as described in the
Offering Memorandum;
(iv) the execution and delivery of this Agreement, the Indenture
and the Registration Rights Agreement, the issuance and
sale of its Guarantees, the performance of its obligations
under this Agreement, its Guarantees, the Indenture and the
Registration Rights Agreement and the consummation of the
transactions contemplated
38
by this Agreement, the Indenture and the Registration
Rights Agreement will not conflict with or result in a
breach or violation of the charter or bylaws of the
Virginia Guarantor;
(v) all of the issued and outstanding shares of capital stock
of, or other ownership interests in, the Virginia Guarantor
have been duly and validly authorized and issued, and based
solely on such counsel's review of the relevant stock
records and the recitations as to such matters in the
resolutions authorizing the issuance thereof, the shares of
capital stock of, or other ownership interests in, the
Virginia Guarantor are owned of record, directly or through
subsidiaries, by the Company, and are fully paid and non-
assessable, and; to the best of such counsel's knowledge,
there are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities or commitments for
sale, or liens related to or entitling any person to
purchase or otherwise acquire any shares of capital stock
or any other equity interest in the Virginia Guarantor.
In giving their opinion required by subsection (f)(5) of this Section
7, such counsel may state that such opinion is limited to matters governed
by the Federal laws of the United States of America and the laws of the
Commonwealth of Virginia.
(6) In addition, you shall be entitled to rely on an opinion in form and
substance satisfactory to you and your counsel with respect to the New Credit
Facility.
(g) You shall have received an opinion dated the Closing Date, of
Skadden, Arps, Slate, Meagher & Flom, counsel for the Initial Purchasers,
in form and substance reasonably satisfactory to you.
(h) You shall have received letters on and as of the date hereof as
well as on and as of the Closing Date, in form and substance satisfactory
to you, from Ernst & Young LLP, independent public accountants complying
with Rule 2-01 of Regulation S-X of the Commission, with respect to the
financial statements and certain financial and statistical information
contained in the Offering Memorandum as you shall reasonably request.
39
(i) Prior to the Closing Date, the Issuers shall have furnished to
you such further information, certificates and documents as you may
reasonably request.
(j) The Issuers shall not have failed at or prior to the Closing Date
to perform or comply with any of the agreements herein contained and
required to be performed or complied with by the Issuers at or prior to the
Closing Date.
(k) The Securities shall have been approved for inclusion on the
PORTAL system, subject to notice of official issuance.
(l) All transactions that are contemplated by the Registration Rights
Agreement and the New Credit Facility to have been consummated at or prior
to the Closing Date shall have been consummated prior to or simultaneously
with the consummation of the purchase and sale of the Securities hereunder.
(m) The Unit Offering shall have been consummated and the proceeds
therefrom shall have been contributed to the Company.
(n) You shall have received a certificate of the Company, dated the
Closing Date, executed on behalf of the Company, by the chief executive
officer and the chief financial officer of the Company as to the solvency
of the Company and its subsidiaries, taken as a whole, in form and
substance, satisfactory to you.
8. Effective Date of Agreement, Defaults and Termination. This
-----------------------------------------------------
Agreement shall become effective upon the later of (i) the execution and
delivery of this Agreement by the parties hereto, and (ii) the delivery of the
Offering Memorandum to the Initial Purchasers for their use in connection with
sales of the Securities. Notwithstanding the foregoing, this Agreement shall
not become effective until the purchase agreement for the Unit Offering shall
have been executed and delivered by the parties thereto.
This Agreement may be terminated at any time on or prior to the
Closing Date by the Initial Purchasers by notice to the Company if any of the
following has occurred: (i) subsequent to the date of the Offering Memorandum
or the date of this Agreement, any Material Adverse Change which, in the
judgment of DLJ, impairs the investment quality of the Securities, (ii) any
outbreak or escalation of hostilities or other national or international
calamity or crisis or material adverse change in the financial markets of the
United States or elsewhere or any other substantial
40
national or international calamity or emergency if the effect of such outbreak,
escalation, calamity, crisis or emergency would, in DLJ's judgment, make it
impracticable or inadvisable to market the Securities or to enforce contracts
for the sale of the Securities, (iii) any suspension or limitation of trading
generally in securities on the New York or American Exchanges or the National
Association of Securities Dealers Automated Quotation National Market, PORTAL or
the over-the-counter markets or any setting of minimum prices for trading on
such exchanges or markets, (iv) any declaration of a general banking moratorium
by either Federal or New York state authorities, (v) the taking of any action by
any Federal, state or local government or agency in respect of its monetary or
fiscal affairs that in DLJ's judgment has a material adverse effect on the
financial markets in the United States, and would, in DLJ's judgment, make it
impracticable or inadvisable to market the Securities or to enforce contracts
for the sale of the Securities, (vi) any securities of the Issuers shall have
been downgraded or placed on any "watch list" for possible downgrading or
reviewed for a possible change that does not indicate the direction of the
possible change by any "nationally recognized statistical rating organization,"
as such term is defined for purposes of Rule 436(g)(2) of the Act, or (vii) the
enactment, publication, decree or other promulgation of any Federal, state or
local statute, regulation, rule or order of any court or other governmental
authority which would in the judgment of DLJ have a Material Adverse Effect or
make it inadvisable or impractical to market the Securities.
If this Agreement shall be terminated by the Initial Purchasers
pursuant to clause (i), (vi) or (vii) of the second paragraph of this Section 8
or because of the failure or refusal on the part of the Issuers to comply with
the terms or to fulfill any of the conditions of this Agreement, the Issuers
jointly and severally agree to reimburse you for all reasonable out-of-pocket
expenses (including the reasonable fees and disbursements of counsel) incurred
by you. Notwithstanding any termination of this Agreement, the Issuers shall be
liable, jointly and severally, for all expenses which they agree to pay pursuant
to Section 4 hereof. If this Agreement is terminated pursuant to this Section
8, such termination shall be without liability of any Initial Purchaser to the
Issuers.
If on the Closing Date either of the Initial Purchasers shall fail or
refuse to purchase the Securities which it has agreed to purchase hereunder on
such date, and the aggregate principal amount of such Securities that such
defaulting Initial Purchaser or Initial Purchasers, as the case may be, agreed
but failed or refused to purchase does not exceed 10% of the total principal
amount of such Securities to be purchased on such date by all Initial
Purchasers, each non-defaulting Initial Purchaser shall be obligated to purchase
the Securities that such defaulting Initial Purchaser agreed but failed or
refused to purchase on such date; provided that in no event shall the aggregate
--------
41
principal amount of Securities that any Initial Purchaser has agreed to purchase
pursuant to Section 2 hereof be increased pursuant to this Section 8 by an
amount in excess of one-ninth of such principal amount of Securities without the
written consent of such Initial Purchaser. If, on the Closing Date, any of the
Initial Purchasers shall fail or refuse to purchase the Securities and the total
principal amount of Securities with respect to which such default occurs exceeds
10% of the total amount of Securities to be purchased on such date by all
Initial Purchasers and arrangements satisfactory to you and the Issuers for the
purchase of such Securities are not made within 48 hours after such default,
this Agreement shall terminate without liability on the part of the non-
defaulting Initial Purchaser and the Issuers, except as otherwise provided in
this Section 8. In any such case that does not result in termination of this
Agreement, either you or the Issuers may postpone the Closing Date for not
longer than seven (7) days, in order that the required changes, if any, in the
Offering Memorandum or any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve a defaulting Initial
Purchaser from liability in respect of any default of any such Initial Purchaser
under this Agreement.
9. Notices. Notices given pursuant to any provision of this
-------
Agreement shall be addressed as follows: (a) if to any of the Issuers, to them
at 3702 Via De La Valle, Suite 202, Del Mar, California 92014, with a copy to
Latham & Watkins, 633 W. Fifth Street, Suite 4000, Los Angeles, California
90071-20007, Attention: Elizabeth A. Blendell, Esq. (b) if to any Initial
Purchaser, to Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park
Avenue, New York, New York 10172, Attention: Debt Capital Markets, with a copy
to Skadden, Arps, Slate, Meagher & Flom at 300 South Grand Avenue, Suite 3400,
Los Angeles, California 90071, Attention: Gregg A. Noel, Esq. or (c) in any
case to such other address as the person to be notified may have requested in
writing.
10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK AS APPLIED TO
CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
11. Severability. Any determination that any provision of this
------------
Agreement may be, or is, unenforceable shall not affect the enforceability of
the remainder of this Agreement.
12. Successors. Except as otherwise provided, this Agreement has
----------
been and is made solely for the benefit of and shall be binding upon the
Issuers, the Initial Purchasers, any Indemnified Person referred to herein and
their respective
42
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The terms "successors and assigns" shall not include a purchaser of
any of the Securities from any of the several Initial Purchasers merely because
of such purchase.
13. Certain Definitions. For purposes of this Agreement, (a)
-------------------
"business day" means any day on which the New York Stock Exchange, Inc. is open
for trading and (b) "subsidiary" has the meaning set forth in Rule 405 of the
Securities Act.
14. Counterparts. This Agreement may be executed in one or more
------------
counterparts and, if executed in one or more counterparts, the executed
counterparts shall each be deemed to be an original, and all such counterparts
shall together constitute one and the same instrument.
15. Headings. The headings herein are inserted for convenience of
--------
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
16. Survival. The indemnity and contribution provisions and the
--------
other agreements, representations and warranties of the Issuers, their officers
and directors and of the Initial Purchasers set forth in or made pursuant to
this Agreement shall remain operative and in full force and effect, and will
survive delivery of and payment for the Securities, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
any of the Initial Purchasers or by or on behalf of the Issuers or the officers
or directors of the Issuers or any controlling person of the Issuers, (ii)
acceptance of the Securities and payment for them hereunder and (iii)
termination of this Agreement.
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Please confirm that the foregoing correctly sets forth the agreement
among the Issuers and you.
Very truly yours,
COBBLESTONE GOLF GROUP, INC.,
BELLOWS GOLF GROUP, INC., CARMEL MOUNTAIN RANCH GOLF,
COBBLESTONE TEXAS, INC., C-RHK, INC., CSR GOLF GROUP,
INC.. ESCONDIDO CONSULTING, INC., FOOTHILLS HOLDING
COMPANY, INC., GOLF COURSE INNS OF AMERICA, INC.,
LAKEWAY GOLF CLUBS, INC., OCEANSIDE GOLF MANAGEMENT
CORPORATION, OCEAN VISTA LAND COMPANY, OVLC FINANCIAL
CORPORATION, OVLC MANAGEMENT CORPORATION, PECAN GROVE
GOLF CLUB, INC., TGFC CORPORATION, VIRGINIA GOLF COUNTRY
CLUB, INC., WHISPERING PALMS COUNTRY CLUB JOINT VENTURE,
A GENERAL PARTNERSHIP, WOODCREST GOLF CLUB, INC.
By: /s/ Stefan C. Karnavas
---------------------------------------
Name: Stefan C. Karnavas
Title: Vice President, Chief Financial
Officer, Treasurer and Secretary
LAKEWAY CLUBS, INC.
By: /s/ Laurie Ann Wright
--------------------------------------
Name: Laurie Ann Wright
Title: President, Treasurer and
Secretary
LIQUOR CLUB AT PECAN GROVE, INC.
By: /s/ Timothy S. O'Hern
--------------------------------------
Name: Timothy S. O'Hern
Title: President, Treasurer and
Secretary
The foregoing Purchase Agreement
is hereby confirmed and accepted
as of the date first above written.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ David F. Posnick
--------------------------
Name: David F. Posnick
Title: Vice President
BA SECURITIES, INC.
By: /s/
--------------------------
Name:
Title:
SCHEDULE I
Principal
Amount
---------
Donaldson, Lufkin & Jenrette Securities Corporation $56,000,000
BA Securities, Inc. 14,000,000
----------
$70,000,000
===========
47