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Exhibit 1.2
WCI COMMUNITIES, INC.
AND EACH OF THE GUARANTORS LISTED ON EXHIBIT A HERETO
$100,000,000
10 5/8% Senior Subordinated Notes due 2011
Purchase Agreement
June 4, 2001
UBS WARBURG LLC
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WCI Communities, Inc.
$100,000,000
10 5/8% Senior Subordinated Notes due 2011
PURCHASE AGREEMENT
June 4, 2001
New York, New York
UBS WARBURG LLC
299 Park Avenue
New York, New York 10171
Ladies & Gentlemen:
WCI Communities, Inc., a Delaware corporation (the "COMPANY"), proposes
to issue and sell to UBS Warburg LLC ("UBS") (the "INITIAL PURCHASER")
$100,000,000 in aggregate principal amount of 10 5/8% Series A Senior
Subordinated Notes due 2011 (the "SERIES A NOTES"), subject to the terms and
conditions set forth herein. The Series A Notes will be issued pursuant to an
indenture (the "INDENTURE"), to be dated the Closing Date (as defined), among
the Company, the Guarantors (as defined) and The Bank of New York, as trustee
(the "TRUSTEE"). The Notes (as defined) will be fully and unconditionally
guaranteed (the "GUARANTEES") as to payment of principal, interest, premium and
liquidated damages, if any, on an unsecured senior subordinated basis, jointly
and severally by each entity listed on Exhibit A hereto (collectively, the
"GUARANTORS"). Capitalized terms used herein and not otherwise defined shall
have the meanings assigned to such terms in the Indenture.
1 Issuance of Securities. The Company proposes, upon the terms and
subject to the conditions set forth herein, to issue and sell to the Initial
Purchaser an aggregate of $100,000,000 in principal amount of Series A Notes.
The Series A Notes and the Series B Notes (as defined) issuable in exchange
therefor are collectively referred to herein as the "NOTES."
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Securities Act of 1933,
as amended (the "ACT"), the Series A Notes (and all securities issued in
exchange therefor or in substitution thereof) shall bear the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
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INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THE NOTE EVIDENCED HEREBY IN AN OFFSHORE
TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN THE TIME
PERIOD REFERRED TO UNDER RULE 144(k) (TAKING INTO ACCOUNT THE
PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF
APPLICABLE) UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE
OF THE TRANSFER OF THIS SECURITY RESELL OR OTHERWISE TRANSFER
THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED
INVESTOR (AS DEFINED IN RULE 501 (a) (1), (2), (3) or (7)
UNDER THE SECURITIES ACT) THAT, PRIOR TO SUCH TRANSFER,
FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S.
BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR THIS SECURITY),
(D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES
ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED
BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON
TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THIS SECURITY WITHIN ONE YEAR AFTER THE ORIGINAL ISSUANCE OF
THIS SECURITY, IF THE PROPOSED TRANSFEREE IS AN ACCREDITED
INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO
THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT
TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S
UNDER THE SECURITIES ACT.
2 Offering. The Series A Notes will be offered and sold to the Initial
Purchaser pursuant to an exemption from the registration requirements under the
Act. The Company has prepared a final offering memorandum, dated June 4, 2001
(the "OFFERING MEMORANDUM"), relating to the Company and its subsidiaries and
the Series A Notes.
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The Initial Purchaser has advised the Company that the Initial
Purchaser will make offers (the "EXEMPT RESALES") of the Series A Notes on the
terms set forth in the Offering Memorandum, as amended or supplemented, solely
to (i) persons whom the Initial Purchaser reasonably believes to be "qualified
institutional buyers," as defined in Rule 144A under the Act ("QIBs") and (ii)
non U.S. persons outside the United States in reliance upon Regulation S
("REGULATION S") under the Act (each, a "REG S INVESTOR"). The QIBs and the
Reg S Investors are collectively referred to herein as the "ELIGIBLE
PURCHASERS." The Initial Purchaser will offer the Series A Notes to such
Eligible Purchasers initially at a price equal to 105.25% of the principal
amount thereof. Such price may be changed at any time without notice.
Holders (including subsequent transferees) of the Series A Notes will
have the registration rights set forth in the Registration Rights Agreement
dated June 8, 2001 relating thereto (the "REGISTRATION RIGHTS AGREEMENT"), to be
dated the Closing Date, for so long as such Series A Notes constitute "TRANSFER
RESTRICTED SECURITIES" (as defined in the Registration Rights Agreement).
Pursuant to the Registration Rights Agreement, the Company and the Guarantors
will agree to file with the Securities and Exchange Commission (the
"COMMISSION"), under the circumstances set forth therein, (i) a registration
statement under the Act (the "EXCHANGE OFFER REGISTRATION STATEMENT") relating
to the Company's 10 5/8% Series B Senior Subordinated Notes due 2011 (the
"SERIES B NOTES") and Guarantees thereof to be offered in exchange for the
Series A Notes and Guarantees thereof (the "EXCHANGE OFFER") and (ii) a shelf
registration statement pursuant to Rule 415 under the Act (the "SHELF
REGISTRATION STATEMENT" and, together with the Exchange Offer Registration
Statement, the "REGISTRATION STATEMENTS") relating to the resale by certain
holders of the Series A Notes, and to use their reasonable best efforts to cause
such Registration Statements to be declared effective and to consummate the
Exchange Offer. This Agreement, the Notes, the Guarantees, the Indenture and the
Registration Rights Agreement are hereinafter referred to collectively as the
"OPERATIVE DOCUMENTS."
3 Purchase, Sale and Delivery. (a) On the basis of the representations,
warranties and covenants contained in this Agreement, and subject to its terms
and conditions, the Company agrees to issue and sell to the Initial Purchaser,
and the Initial Purchaser agrees to purchase from the Company, the principal
amount of Series A Notes set forth opposite the name of such Initial Purchaser
on Exhibit B. The purchase price for the Series A Notes will be $990 per $1,000
principal amount Series A Note.
(b) Delivery of the Series A Notes shall be made, against payment of
the purchase price therefor, at the offices of Latham & Watkins, New York, New
York or such other location as may be mutually acceptable. Such delivery and
payment shall be made at 9:00 a.m., New York City time, on June 8, 2001 or at
such other time as shall be agreed upon by the Initial Purchaser and the
Company. The time and date of such delivery and payment are herein called the
"CLOSING DATE."
(c) On the Closing Date, one or more Series A Notes in definitive
global form, registered in the name of Cede & Co., as nominee of The Depository
Trust Company ("DTC"), having an aggregate amount corresponding to the aggregate
principal amount of the Series A Notes (the "GLOBAL NOTE") sold pursuant to
Exempt Resales to Eligible Purchasers shall be delivered by the Company to the
Initial Purchaser (or as the Initial Purchaser directs), against
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payment by the Initial Purchaser of the purchase price therefor, by wire
transfer of same day funds, to an account designated by the Company, provided
that the Company shall give at least two business days' prior written notice to
the Initial Purchaser of the information required to effect such wire transfer.
The Global Note shall be made available to the Initial Purchaser for inspection
not later than 9:30 a.m. on the business day immediately preceding the Closing
Date.
4 Agreements of the Company and the Guarantors. Each of the Company and
the Guarantors covenants and agrees with the Initial Purchaser as follows:
(a) To advise the Initial Purchaser promptly upon becoming
aware and, if requested by the Initial Purchaser, confirm such advice
in writing, (i) of the issuance by any state securities commission of
any stop order suspending the qualification or exemption from
qualification of any Notes or the related Guarantees for offering or
sale in any jurisdiction, or the initiation of any proceeding for such
purpose by any state securities commission or other regulatory
authority and (ii) of the happening of any event that makes any
statement of a material fact made in the Offering Memorandum untrue or
that requires the making of any additions to or changes in the Offering
Memorandum in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. The Company
and the Guarantors shall use their reasonable best efforts to prevent
the issuance of any stop order or order suspending the qualification or
exemption of any Notes or the related Guarantees under any state
securities or Blue Sky laws and, if at any time any state securities
commission or other regulatory authority shall issue an order
suspending the qualification or exemption of any Notes or the related
Guarantees under any state securities or Blue Sky laws, the Company and
the Guarantors shall use their reasonable best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time.
(b) To furnish the Initial Purchaser and those persons
identified by the Initial Purchaser to the Company, without charge, as
many copies of the Offering Memorandum, and any amendments or
supplements thereto, as the Initial Purchaser may reasonably request.
The Company and the Guarantors consent to the use of the Offering
Memorandum, and any amendments and supplements thereto required
pursuant hereto, by the Initial Purchaser in connection with Exempt
Resales.
(c) Not to amend or supplement the Offering Memorandum for a
period of forty days from the Closing Date if in the opinion of counsel
for the Initial Purchaser the Offering Memorandum is required by law to
be delivered in connection with Exempt Resales and in connection with
market-making activities of the Initial Purchaser unless the Initial
Purchaser shall previously have been advised thereof and shall not have
objected thereto in writing within a reasonable time after being
furnished a copy thereof, unless in the opinion of Simpson Thacher &
Bartlett, counsel to the Company, it is legally required to do so. The
Company and the Guarantors shall for a period of forty days from the
Closing Date promptly prepare, upon the Initial Purchaser's request,
any amendment or supplement to the Offering Memorandum that may be
necessary or advisable in connection with such Exempt Resales or such
market making activities.
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(d) If, during the period referred to in 4(c) above, any event
shall occur as a result of which, in the judgment of the Company and
the Guarantors or in the reasonable opinion of counsel for the Company
and the Guarantors or counsel for the Initial Purchaser, it becomes
necessary or advisable to amend or supplement the Offering Memorandum
in order to make the statements therein, in the light of the
circumstances when such Offering Memorandum is delivered to an Eligible
Purchaser, not misleading, or if it is necessary or advisable to amend
or supplement the Offering Memorandum to comply with applicable law,
the Company agrees (i) to notify the Initial Purchaser and (ii)
forthwith to prepare an appropriate amendment or supplement to such
Offering Memorandum so that the statements therein as so amended or
supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that such Offering Memorandum will
comply with applicable law.
(e) To reasonably cooperate with the Initial Purchaser and
counsel for the Initial Purchaser in connection with the qualification
or registration of the Series A Notes and the Guarantees thereof under
the securities or Blue Sky laws of such jurisdictions as the Initial
Purchaser may reasonably request and to continue such qualification in
effect so long as required for the distribution of the Series A Notes
pursuant to Exempt Resales, which distribution shall not exceed forty
days from the Closing Date; provided, however, that neither the Company
nor any Guarantor shall be required in connection therewith to register
or qualify as a foreign corporation where it is not now so qualified or
to take any action that would subject it to service of process in suits
or taxation, in each case, other than as to matters and transactions
relating to the Offering Memorandum or Exempt Resales, in any
jurisdiction where it is not now so subject.
(f) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement becomes effective or is
terminated, to pay all costs, expenses, fees and taxes incident to the
performance of the obligations of the Company and the Guarantors
hereunder, including in connection with: (i) the preparation, printing,
filing and distribution of the Offering Memorandum (including, without
limitation, financial statements) and all amendments and supplements
thereto required pursuant hereto, (ii) the preparation (including,
without limitation, duplication costs) and delivery of all agreements,
correspondence and all other documents prepared and delivered in
connection herewith, (iii) the issuance, transfer and delivery of the
Series A Notes and the Guarantees endorsed thereon to the Initial
Purchaser, (iv) the qualification or registration of the Notes and the
related Guarantees for offer and sale under the securities or Blue Sky
laws of the several states (including, without limitation, the cost of
printing and mailing a preliminary and final Blue Sky Memorandum and
the reasonable fees and disbursements of counsel for the Initial
Purchaser relating thereto), (v) furnishing such copies of the Offering
Memorandum, and all amendments and supplements thereto, as may be
requested for use in connection with Exempt Resales, (vi) the
preparation of certificates for the Notes (including, without
limitation, printing and engraving thereof), (vii) the fees,
disbursements and expenses of the Company's and the Guarantors' counsel
and accountants, (viii) all fees and expenses (including fees and
expenses of counsel) of the Company and the Guarantors in connection
with the approval of the Notes by DTC for "book-entry" transfer, (ix)
rating the Notes by rating agencies, (x) unless otherwise paid
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by the Trustee with respect to its counsel, the reasonable fees and
expenses of the Trustee and its counsel, (xi) the performance by the
Company and the Guarantors of their other obligations under this
Agreement and the other Operative Documents and (xii) "roadshow" travel
and other expenses incurred by the Company in connection with the
marketing and sale of the Notes.
(g) To use the proceeds from the sale of the Series A Notes in
the manner described in the Offering Memorandum under the caption "Use
of Proceeds."
(h) Unless otherwise required by law, not to voluntarily
claim, and to reasonably resist any attempts to claim, the benefit of
any usury laws against the holders of any Notes.
(i) To do and perform all reasonable things required to be
done and performed under this Agreement by them prior to or after the
Closing Date and to satisfy all conditions precedent on their part to
the delivery of the Series A Notes.
(j) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act)
that would be integrated with the sale of the Series A Notes in a
manner that would require the registration under the Act of the sale to
the Initial Purchaser or the Eligible Purchasers of the Series A Notes
or to take any other action that would result in the Exempt Resales not
being exempt from registration under the Act.
(k) For so long as any of the Notes remain outstanding and
during any period in which the Company and the Guarantors are not
subject to Section 13 or 15(d) of the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT"), to make available, upon request, to
any holder or beneficial owner of Series A Notes in connection with any
sale thereof and any prospective purchaser of such Series A Notes from
such holder or beneficial owner, the information required by Rule
144A(d)(4) under the Act.
(l) To cause the Exchange Offer to be made in the appropriate
form to permit registered Series B Notes and the Guarantees thereof to
be offered in exchange for the Series A Notes and the Guarantees
thereof and to comply in all material respects with all applicable
federal and state securities laws in connection with the Exchange
Offer.
(m) To comply in all material respects with all of its
agreements set forth in the Registration Rights Agreement and all of
its agreements set forth in the representation letters to DTC relating
to the approval of the Notes by DTC for "book-entry" transfer.
(n) With the cooperation of the Initial Purchaser, to effect
the inclusion of the Notes in PORTAL and to obtain approval of the
Series A Notes by DTC for "book-entry" transfer.
(o) During a period of three years following the Closing Date,
to deliver without charge to the Initial Purchaser, as it may
reasonably request, promptly upon their becoming available, copies of
(i) all reports or other publicly available information that
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the Company and the Guarantors shall deliver to their security holders
and (ii) all reports, financial statements and proxy or information
statements filed by the Company with the Commission or any national
securities exchange and such other publicly available information
concerning the Company or any of its subsidiaries, including without
limitation, press releases.
(p) Prior to the Closing Date, to furnish to the Initial
Purchaser, as soon as they have been prepared in the ordinary course by
the Company, copies of any unaudited interim financial statements for
any period subsequent to the periods covered by the financial
statements appearing in the Offering Memorandum.
(q) Not to take, directly or indirectly, any action designed
to, or that might reasonably be expected to, cause or result in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Notes. Except as
permitted by the Act, neither the Company nor any Guarantor will
distribute any (i) preliminary offering memorandum, (ii) offering
memorandum, including, without limitation, the Offering Memorandum, or
(iii) other offering material in connection with the offering and sale
of the Notes.
(r) To use its reasonable best efforts to do and perform all
things required or necessary to be done and performed under this
Agreement prior to the Closing Date and to satisfy all conditions
precedent to the delivery of the Series A Notes and the Guarantees
thereof.
5 Representations and Warranties.
(a) The Company and the Guarantors, jointly and severally,
represent and warrant to the Initial Purchaser that:
(i) The Offering Memorandum as of its date and as of the
Closing Date does not and will not, and any supplement or amendment to
it will not, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the
representations and warranties contained in this paragraph shall not
apply to statements in or omissions from the Offering Memorandum (or
any supplement or amendment thereto) made in reliance upon and in
conformity with information relating to the Initial Purchaser furnished
to the Company and the Guarantors in writing by the Initial Purchaser
expressly for use therein. No stop order preventing the use of the
Offering Memorandum, or any amendment or supplement thereto, or any
order asserting that any of the transactions contemplated by this
Agreement are subject to the registration requirements of the Act, has
been issued.
(ii) Each of the Company and its subsidiaries (A) has been
duly incorporated or organized, as the case may be, and is validly
existing as a corporation, limited partnership or limited liability
company, as the case may be, in good standing under the laws of its
jurisdiction of incorporation or organization, (B) has all requisite
power and
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authority to carry on its business as it is currently being conducted
and as described in the Offering Memorandum (other than Bay Colony --
Gateway, Inc. with respect to Arizona and California) and to own, lease
and operate its properties, and (C) is duly qualified and is in good
standing as a foreign corporation, limited partnership or limited
liability company, as the case may be, authorized to do business in
each jurisdiction in which the nature of its business or its ownership
or leasing of property requires such qualification, except in the case
of clause (B) or (C) where the failure to have all requisite power and
authority or to be so qualified would not reasonably be expected to (x)
result, individually or in the aggregate, in a material adverse effect
on the properties, business, results of operations, condition
(financial or otherwise), or affairs of the Company and its
subsidiaries, taken as a whole, (y) interfere with or adversely affect
the issuance or marketability of the Notes or (z) draw into question
the validity of this Agreement or any other Operative Document or the
transactions described in the Offering Memorandum under the caption
"Use of Proceeds" or, in any material respect, the transactions
described under the fifth and sixth paragraphs under the caption
"Recent Developments" (any of the events set forth in clauses (x), (y)
or (z), a "MATERIAL ADVERSE EFFECT").
(iii) The Company has no subsidiaries other than the entities
listed on Exhibit C attached hereto and the Company has not invested in
any Joint Ventures other than the entities listed on Exhibit C hereto.
(iv) All of the outstanding capital stock of each subsidiary
of the Company is owned, directly or indirectly, by the Company, free
and clear of any security interest, claim, lien, limitation on voting
rights or encumbrance, except for any such security interest, claim,
lien, limitation on voting rights or encumbrance disclosed in the
Offering Memorandum; and all such securities have been duly authorized,
validly issued, and are fully paid and nonassessable and were not
issued in violation of any preemptive or similar rights.
(v) Each material joint venture, partnership and material
limited liability company in which the Company or any subsidiary has an
interest is listed on Exhibit C hereto, other than Bighorn Development,
L.P. (collectively, the "JOINT VENTURES"), and (A) has been duly
organized and is validly existing and in good standing under the laws
of its jurisdiction of organization, (B) has all requisite power and
authority to carry on its business as it is currently being conducted
and as described in the Offering Memorandum and to own, lease and
operate its properties, and (C) is duly qualified and is in good
standing as a foreign limited partnership or limited liability company,
as the case may be, authorized to do business in each jurisdiction in
which the nature of its business or its ownership or leasing of
property requires such qualification, except where the failure to be so
qualified could not reasonably be expected to result in a Material
Adverse Effect.
(vi) Other than as disclosed in the Offering Memorandum, there
are not currently any outstanding subscriptions, rights, warrants,
calls, commitments of sale or options to acquire, or instruments
convertible into or exchangeable for, any capital stock or other equity
interest of the Company's subsidiaries.
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(vii) When the Series A Notes and the Guarantees thereof are
issued and delivered pursuant to this Agreement, no Series A Note or
Guarantee thereof will be of the same class (within the meaning of Rule
144A under the Act) as securities of the Company or any Guarantor that
are listed on a national securities exchange registered under Section 6
of the Exchange Act or that are quoted in a United States automated
inter-dealer quotation system.
(viii) Each of the Company and the Guarantors has all
requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement and each of the other Operative
Documents to which it is a party and to consummate the transactions
contemplated hereby and thereby, including, without limitation, the
corporate power and authority to issue, sell and deliver the Notes and
to issue and deliver the related Guarantees as provided herein and
therein.
(ix) This Agreement has been duly and validly authorized,
executed and delivered by the Company and each Guarantor and is the
legal, valid and binding agreement of the Company and each Guarantor,
enforceable against each of them in accordance with its terms, subject
to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity.
(x) The Indenture has been duly and validly authorized by the
Company and each Guarantor and, when duly executed and delivered by the
Company and each Guarantor, will be the legal, valid and binding
agreement of the Company and each Guarantor, enforceable against each
of them in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization or similar laws
affecting the rights of creditors generally and subject to general
principles of equity. On the Closing Date, the Indenture will conform
in all material respects to the requirements of the Trust Indenture Act
of 1939, as amended (the "TRUST INDENTURE ACT"), and the rules and
regulations of the Commission applicable to an indenture which is
qualified thereunder. The Offering Memorandum contains a summary of
certain terms of the Indenture, which is accurate in all material
respects.
(xi) The Registration Rights Agreement has been duly and
validly authorized by the Company and each Guarantor and, when duly
executed and delivered by the Company and each Guarantor, will be the
legal, valid and binding obligation of the Company and each Guarantor,
enforceable against each of them in accordance with its terms, subject
to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity. The Offering
Memorandum contains a summary of certain terms of the Registration
Rights Agreement, which is accurate in all material respects.
(xii) The Series A Notes have been duly and validly authorized
by the Company for issuance and sale to the Initial Purchaser pursuant
to this Agreement and, when issued and authenticated in accordance with
the terms of the Indenture and delivered against payment therefor in
accordance with the terms hereof and thereof, will
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be the legal, valid and binding obligations of the Company, enforceable
against it in accordance with their terms and entitled to the benefits
of the Indenture, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization or similar laws affecting the
rights of creditors generally and subject to general principles of
equity.
(xiii) The Guarantees of the Series A Notes have been duly and
validly authorized by each of the Guarantors and, when executed and
delivered in accordance with the terms of the Indenture and when the
Series A Notes have been issued and authenticated in accordance with
the terms of the Indenture and delivered against payment therefor in
accordance with the terms hereof and thereof, will be the legal, valid
and binding obligations of each of the Guarantors, enforceable against
each of them in accordance with their terms and entitled to the
benefits of the Indenture, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization or similar laws
affecting the rights of creditors generally and subject to general
principles of equity. The Offering Memorandum contains a summary of
certain terms of the Guarantees, which is accurate in all material
respects.
(xiv) The Series B Notes have been duly and validly authorized
for issuance by the Company and, when issued and authenticated in
accordance with the terms of the Exchange Offer and the Indenture, will
be the legal, valid and binding obligations of the Company, enforceable
against it in accordance with their terms and entitled to the benefits
of the Indenture, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization or similar laws affecting the
rights of creditors generally and subject to general principles of
equity.
(xv) The Guarantees of the Series B Notes have been duly and
validly authorized by each of the Guarantors and, when executed and
delivered in accordance with the terms of the Indenture and when the
Series B Notes have been issued and authenticated in accordance with
the terms of the Exchange Offer and the Indenture, will be the legal,
valid and binding obligations of each of the Guarantors, enforceable
against each of them in accordance with their terms and entitled to the
benefits of the Indenture, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization or similar laws
affecting the rights of creditors generally and subject to general
principles of equity.
(xvi) The Credit Agreement has been duly and validly
authorized by the Company and each subsidiary party thereto and is the
legal, valid and binding obligation of the Company and each subsidiary
party thereto, enforceable against each of them in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity.
(xvii) Each of the Company, its subsidiaries and the Joint
Ventures (other than Bighorn Development L.P.) is not and, after giving
effect to the Offering, will not be, (A) in violation of its charter or
bylaws, (B) in default in the performance of any bond, debenture, note,
indenture, mortgage, deed of trust or other agreement or instrument to
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which it is a party or by which it is bound or to which any of its
properties is subject, which singly or in the aggregate, could
reasonably be expected to have a Material Adverse Effect or (C) in
violation of any local, state, federal or foreign law, statute,
ordinance, rule, regulation, requirement, judgment or court decree
(including, without limitation, environmental laws, statutes,
ordinances, rules, regulations, judgments or court decrees) applicable
to it or any of its assets or properties (whether owned or leased),
which singly or in the aggregate, could reasonably be expected to have
a Material Adverse Effect. Except as could not reasonably be expected
to have a Material Adverse Effect to the best knowledge of the Company
and the Guarantors, there exists no condition that, with notice, the
passage of time or otherwise, would constitute a default under any such
document or instrument.
(xviii) Except as could not reasonably be expected to have a
Material Adverse Effect none of (A) the execution, delivery or
performance by the Company or any Guarantor of this Agreement or any of
the other Operative Documents to which it is a party and (B) the
issuance and sale of the Notes and the issuance of the Guarantees,
violates, conflicts with or constitutes a breach of any of the terms or
provisions of, or will violate, conflict with or constitute a breach of
any of the terms or provisions of, or a default under (or an event that
with notice or the lapse of time, or both, would constitute a default
under), or require consent under, or result in the imposition of a lien
or encumbrance on any properties of the Company or any of its
subsidiaries, or an acceleration of any indebtedness of the Company or
any of its subsidiaries pursuant to, (1) the charter or bylaws of the
Company or any of its subsidiaries, (2) any bond, debenture, note,
indenture, mortgage, contract, license, lease, deed of trust or other
agreement or instrument to which the Company or any of its subsidiaries
is a party or by which any of them or their property is or may be
bound, (3) any statute, rule or regulation applicable to the Company or
any of its subsidiaries or any of their assets or properties or (4) any
judgment, injunction, order or decree of any court or governmental
agency or authority having jurisdiction over the Company or any of its
subsidiaries or any of their assets or properties, except the liens and
encumbrances imposed by the Senior Facility and the consents to
issuance of the Notes and related Guarantees pursuant to the Senior
Facility and such other consents or waivers which have been obtained or
will be obtained prior to the Closing Date. No consent, approval,
authorization or order of, or filing, registration, qualification,
license or permit of or with, (A) any court or governmental agency,
body or administrative agency or (B) any other person is required for
(1) the execution, delivery and performance by each of the Company and
the Guarantors of this Agreement or any of the other Operative
Documents to which it is a party or (2) the issuance and sale of the
Notes, the issuance of the Guarantees and the transactions contemplated
hereby and thereby, except such as have been or will be obtained and
made on or prior to the Closing Date (or, in the case of the
Registration Rights Agreement, will be obtained and made under the Act,
the Trust Indenture Act, and state securities or Blue Sky laws and
regulations).
(xix) Except as otherwise disclosed in the Offering
Memorandum, there is (A) no action, suit, investigation, litigation or
proceeding before or by any court, arbitrator or governmental agency,
body or official, domestic or foreign, now pending or, to the best
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knowledge of the Company and the Guarantors, threatened or contemplated
to which the Company or any of its subsidiaries is or may be a party or
to which the business or property of the Company or any of its
subsidiaries, is or may be subject, (B) no statute, rule, regulation or
order that has been enacted, adopted or issued by any governmental
agency or that has been proposed by any governmental body and (C) no
injunction, restraining order or order of any nature by a federal or
state court or foreign court of competent jurisdiction to which the
Company or any of its subsidiaries is or may be subject or to which the
business, assets or property of the Company or any of its subsidiaries
is or may be subject, that, in the case of clauses (A), (B) and (C)
above, could reasonably be expected to have a Material Adverse Effect.
(xx) No action has been taken and no statute, rule, regulation
or order has been enacted, adopted or issued by any governmental agency
that prevents the issuance of the Notes or the Guarantees or prevents
or suspends the use of the Offering Memorandum to the knowledge of the
Company; no injunction, restraining order or order of any nature by a
federal or state court of competent jurisdiction has been issued that
prevents the issuance of the Notes or the Guarantees or prevents or
suspends the sale of the Notes or the Guarantees in any jurisdiction
referred to in Section 4(e) hereof; and every request of any securities
authority or agency of any jurisdiction for additional information has
been complied with in all material respects.
(xxi) There is (A) no significant unfair labor practice
complaint pending against the Company or any of its subsidiaries nor,
to the best knowledge of the Company and the Guarantors, threatened
against any of them, before the National Labor Relations Board, any
state or local labor relations board or any foreign labor relations
board, and no significant grievance or significant arbitration
proceeding arising out of or under any collective bargaining agreement
is so pending against the Company or any of its subsidiaries or, to the
best knowledge of the Company and the Guarantors, threatened against
any of them, (B) no significant strike, labor dispute, slowdown or
stoppage pending against the Company or any of its subsidiaries nor, to
the best knowledge of the Company and the Guarantors, threatened
against any of them and (C) to the best knowledge of the Company and
the Guarantors, no union representation question existing with respect
to the employees of the Company or any of its subsidiaries. To the best
knowledge of the Company and the Guarantors, no collective bargaining
organizing activities are taking place with respect to the Company or
any of its subsidiaries. None of the Company or any of its subsidiaries
has violated (A) any federal, state or local law or foreign law
relating to discrimination in hiring, promotion or pay of employees,
(B) any applicable wage or hour laws or (C) any provision of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
or the rules and regulations thereunder, except those violations that
could not reasonably be expected to have a Material Adverse Effect.
(xxii) None of the Company or any of its subsidiaries has
violated any foreign, federal, state or local law or regulation
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or
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contaminants (collectively, "ENVIRONMENTAL LAWS"), which violation
could reasonably be expected to have a Material Adverse Effect.
(xxiii) There is no alleged liability, or to the best
knowledge of the Company and the Guarantors, potential liability
(including, without limitation, alleged or potential liability or
investigatory costs, cleanup costs, governmental response costs,
natural resource damages, property damages, personal injuries or
penalties) of the Company or any of its subsidiaries arising out of,
based on or resulting from (A) the presence or release into the
environment of any Hazardous Material (as defined) at any location,
whether or not owned by the Company or such subsidiary, as the case may
be, or (B) any violation or alleged violation of any Environmental Law,
which alleged or potential liability is required to be disclosed in the
Offering Memorandum, other than as disclosed therein, or could
reasonably be expected to have a Material Adverse Effect. The term
"HAZARDOUS MATERIAL" means (i) any "hazardous substance" as defined by
the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, (ii) any "hazardous waste" as defined by the
Resource Conservation and Recovery Act, as amended, (iii) any petroleum
or petroleum product, (iv) any polychlorinated biphenyl, and (v) any
pollutant or contaminant or hazardous, dangerous or toxic chemical,
material, waste or substance regulated under or within the meaning of
any other law relating to protection of human health or the environment
or imposing liability or standards of conduct concerning any such
chemical material, waste or substance.
(xxiv) Each of the Company and its subsidiaries has such
permits, licenses, franchises, entitlements and authorizations of
governmental or regulatory authorities ("PERMITS"), including, without
limitation, under any applicable Environmental Laws, as are necessary
to own, lease and operate its respective properties and to conduct its
businesses, except where the failure to have such permits could not
reasonably be expected to have a Material Adverse Effect; except as
could not reasonably be expected to have a Material Adverse Effect,
each of the Company and its subsidiaries has fulfilled and performed
all of its obligations with respect to such permits and no event has
occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other impairment of
the rights of the holder of any such permit; and, except as described
in the Offering Memorandum, such permits contain no restrictions that
are materially burdensome to the Company or such subsidiary, as the
case may be.
(xxv) Except as could not reasonably be expected to have a
Material Adverse Effect, or as disclosed in the Offering Memorandum
each of the Company and its subsidiaries has (A) good and marketable
title in fee simple to all of the properties (excluding land banks,
certain golf clubs, homeowner associations and district properties),
including improvements thereon, and assets described in the Offering
Memorandum as so owned by it, free and clear of all liens, charges,
encumbrances and restrictions, other than in the ordinary course of
business consistent with past practice, (B) possession under all
material leases to which any of them is a party as lessee and each of
which lease is valid and binding and no default exists thereunder, (C)
all licenses,
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certificates, permits, authorizations, approvals, franchises,
entitlements and other rights from, and has made all declarations and
filings with, all federal, state and local authorities, all
self-regulatory authorities and all courts and other tribunals (each,
an "AUTHORIZATION") necessary to engage in the business conducted by
any of them in the manner described in the Offering Memorandum, and (D)
no reason to believe that any governmental body or agency is
considering limiting, suspending or revoking any such Authorization and
no knowledge of any pending or threatened condemnation proceedings,
zoning changes or other similar proceedings or actions that would
effect the size, use of, improvements on, construction on or access to
any of the properties belonging to the Company or any of its
subsidiaries. All such Authorizations are valid and in full force and
effect and each of the Company and its subsidiaries is in compliance in
all respects with the terms and conditions of all such Authorizations
and with the rules and regulations of the regulatory authorities having
jurisdiction with respect thereto, except as could not reasonably be
expected to have a Material Adverse Effect. Each of the properties,
belonging to the Company or any Subsidiary, complies with all
applicable codes, laws and regulations (including without limitation,
building and zoning laws) except to the extent disclosed in the
Offering Memorandum and except for such failures to comply that would
not reasonably be expected to result in a Material Adverse Effect. No
person, except as disclosed in the Offering Memorandum, has an option
or right of first refusal to purchase all or a material part of any
material property, belonging to the Company or any Subsidiary, or any
interest therein, except as occurs in the ordinary course of the
Company's business.
(xxvi) Except as would not reasonably be expected to have a
Material Adverse Effect, each of the Company and its subsidiaries owns,
possesses or has the right to employ all patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential
information, software, systems or procedures), trademarks, service
marks and trade names, inventions, computer programs, technical data
and information (collectively, the "INTELLECTUAL PROPERTY") presently
employed by it in connection with the businesses now operated by it,
free and clear of and without violating any right, claimed right,
charge, encumbrance, pledge, security interest, restriction or lien of
any kind of any other person, and none of the Company or any of its
subsidiaries has received any notice of infringement of or conflict
with asserted rights of others with respect to any of the foregoing.
The use of the Intellectual Property in connection with the business
and operations of the Company or any of its subsidiaries does not
infringe on the rights of any person, except such infringements as
could not reasonably be expected to have a Material Adverse Effect.
(xxvii) All material tax returns required to be filed by the
Company or any of its subsidiaries in all jurisdictions have been so
filed, except for those with respect to which extensions have been
granted, and all taxes, including withholding taxes, penalties and
interest, assessments, fees and other charges due or claimed to be due
from such entities or that are due and payable have been paid,
including in certain cases payments based upon good faith estimates of
the Company, other than those being contested in good faith and for
which adequate reserves have been provided or those currently payable
without
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penalty or interest. To the knowledge of the Company and the
Guarantors, there are no proposed additional tax assessments against
the Company or any of its subsidiaries, or the assets or property of
the Company or any of its subsidiaries, except those tax assessments
for which adequate reserves have been established or with respect to
which would not reasonably be expected to be a Material Adverse Effect.
(xxviii) Each of the Company and its subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that: (A) transactions are executed in accordance with
management's general or specific authorizations; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain accountability for assets; (C), where appropriate, access to
assets is permitted only in accordance with management's general or
specific authorization; and (D) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect thereto.
(xxix) Each of the Company and its subsidiaries maintains
insurance covering its properties, operations, personnel and
businesses, insuring against such losses and risks as are customary for
similar businesses. None of the Company or any of its subsidiaries has
received notice from any insurer or agent of such insurer that
substantial capital improvements or other expenditures will have to be
made in order to continue such insurance.
(xxx) None of the Company or any of its subsidiaries is an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended (the "INVESTMENT COMPANY ACT").
(xxxi) There are no holders of securities of the Company or
any of its subsidiaries who, by reason of the execution by the Company
or any of the Guarantors of this Agreement or any other Operative
Document to which it is a party or the consummation by the Company or
any of the Guarantors of the transactions contemplated hereby and
thereby, have the right to request or demand that the Company or any of
its subsidiaries register under the Act or analogous foreign laws and
regulations securities held by them other than pursuant to the
Registration Right Agreement.
(xxxii) None of the Company or any of its subsidiaries has (A)
taken, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or
manipulation of the price of any security of the Company or any of its
subsidiaries to facilitate the sale or resale of the Notes or (B) since
the date of the Offering Memorandum (1) sold, bid for, purchased or
paid any person any compensation for soliciting purchases of the Notes
or (2) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company or
any of its subsidiaries.
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(xxxiii) The accountants who have certified or will certify
the financial statements included or to be included as part of the
Offering Memorandum are independent accountants as required by the Act.
(xxxiv) The historical financial statements, together with
related schedules and notes thereto, comply as to form in all material
respects with the requirements applicable to registration statements on
Form S-1 under the Act and present fairly in all material respects the
financial position and results of operations of the Company and its
subsidiaries and of Florida Design Communities, Inc. and its related
entities at the dates and for the periods indicated. Such financial
statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the
periods presented. The other financial and statistical information and
data included in the Offering Memorandum derived from the historical
financial statements, are accurately presented in all material respects
and prepared on a basis consistent with the financial statements
included in the Offering Memorandum and the books and records of the
Company, its subsidiaries and of Florida Design Communities, Inc. and
its related entities.
(xxxv) No registration under the Act of the Series A Notes or
the Guarantees thereof is required for the sale of the Series A Notes
to the Initial Purchaser as contemplated hereby or for the Exempt
Resales assuming (A) that the purchasers who buy the Series A Notes in
the Exempt Resales are Eligible Purchasers and (B) the accuracy of the
Initial Purchaser's representations regarding the absence of general
solicitation in connection with the sale of Series A Notes to the
Initial Purchaser and the Exempt Resales contained herein. No form of
general solicitation or general advertising (as defined in Regulation D
under the Act) was used by the Company or any of the Guarantors or any
of their representatives (other than the Initial Purchaser, as to which
the Company and the Guarantors make no representation or warranty) in
connection with the offer and sale of any of the Series A Notes or the
Guarantees thereof or in connection with Exempt Resales, including, but
not limited to, articles, notices or other communications published in
any newspaper, magazine, or similar medium or broadcast over television
or radio, or any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising. No securities of
the same class as the Notes have been issued and sold by the Company or
any of its subsidiaries within the six-month period immediately prior
to the date hereof.
(xxxvi) The execution and delivery of this Agreement, the
other Operative Documents and the sale of the Series A Notes to be
purchased by Eligible Purchasers will not involve any prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975
of the Internal Revenue Code of 1986. The representation made by the
Company and the Guarantors in the preceding sentence is made in
reliance upon and subject to the accuracy of, and compliance with, the
representations and covenants made or deemed made by Eligible
Purchasers as set forth in the Offering Memorandum under the caption
"Notice to Investors."
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(xxxvii) The statistical and market-related data included in
the Offering Memorandum, including but not limited to the data in the
Section entitled "Florida Real Estate Market," are based on or derived
from sources which the Company and the Guarantors believe to be
reliable and accurate in all material respects.
(xxxviii) Since 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, (i) there has not been any
material adverse change, or any development that is reasonably likely
to result in a material adverse change, in the capital stock or the
long-term debt, or material increase in the short-term debt, of the
Company or any of its subsidiaries from that set forth in the Offering
Memorandum, (ii) no dividend or distribution of any kind shall have
been declared, paid or made by the Company or any of its subsidiaries
on any class of its capital stock, except for dividends paid by the
Company to Watermark Communities Inc. ("WATERMARK") to enable Watermark
to pay the subordinated notes of Watermark held by Communities Finance
Company, LLC and (iii) none of the Company or any of its subsidiaries
shall have incurred any liabilities or obligations other than in the
ordinary course consistent with past practice, direct or contingent,
that are material, individually or in the aggregate, to the Company and
its subsidiaries, taken as a whole, and that are required to be
disclosed on a balance sheet or notes thereto in accordance with
generally accepted accounting principles and are not disclosed on the
latest balance sheet or notes thereto included in the Offering
Memorandum nor have any of the Company or its subsidiaries entered into
a transaction not in the ordinary course of business. Since the date
hereof and since the dates as of which information is given in the
Offering Memorandum, there shall not have occurred any change, or any
development which, singly or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect.
(xxxix) The Offering Memorandum, as of its date, and each
amendment or supplement thereto, as of its date, contains the
information specified in, and meets the requirements of, Rule
144A(d)(4) under the Act.
(xl) Prior to the effectiveness of any Registration Statement,
the Indenture is not required to be qualified under the Trust Indenture
Act.
(xli) None of the Company, the Guarantors nor any of their
respective affiliates or any person acting on its or their behalf
(other than the Initial Purchaser, as to whom the Company and the
Guarantors make no representation) has engaged or will engage in any
directed selling efforts within the meaning of Regulation S with
respect to the Series A Notes and all such persons will comply with the
offering restrictions requirement contained in Regulation S, to the
extent applicable.
(xlii) The sale of the Series A Notes pursuant to Regulation S
is not part of a plan or scheme to evade the registration provisions of
the Act.
(xliii) None of the execution, delivery and performance of
this Agreement, the issuance and sale of the Notes, the application of
the proceeds from the issuance and sale
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of the Notes and the consummation of the transactions contemplated
thereby as set forth in the Offering Memorandum, will violate
Regulations T, U or X promulgated by the Board of Governors of the
Federal Reserve System.
(xliv) Neither the Company nor any Guarantor intends to, nor
believes that it will, incur debts beyond its ability to pay such debts
as they mature. The present fair saleable value of the assets of the
Company and each Guarantor exceeds the amount that will be required to
be paid on or in respect of its existing debts and other liabilities
(including contingent liabilities) as they become absolute and matured.
The assets of the Company and each Guarantor do not constitute
unreasonably small capital to carry out its business as conducted or as
proposed to be conducted. Upon the issuance of the Notes and the
Guarantees, the present fair saleable value of the assets of the
Company and each Guarantor will exceed the amount that will be required
to be paid on or in respect of its existing debts and other liabilities
(including contingent liabilities) as they become absolute and matured.
Upon the issuance of the Notes and the Guarantees, the assets of the
Company and each Guarantor will not constitute unreasonably small
capital to carry out its business as now conducted, including the
capital needs of the Company and such Guarantor, taking into account
the projected capital requirements and capital availability.
(xlv) Except pursuant to this Agreement, there are no
contracts, agreements or understandings between the Company and its
subsidiaries and any other person that would give rise to a valid claim
against the Company or any of its subsidiaries or the Initial Purchaser
for a brokerage commission, finder's fee or like payment in connection
with the issuance, purchase and sale of the Notes.
(xlvi) Except as discussed in the Offering Memorandum, there
are no business relationships or related party transactions required to
be disclosed therein pursuant to Item 404 of Regulation S-K of the
Commission (assuming for purposes of this paragraph that Regulation S-K
is applicable to the Offering Memorandum).
(xlvii) Each certificate signed by any officer of the Company
or any Guarantor and delivered to the Initial Purchaser or counsel for
the Initial Purchaser shall be deemed to be a representation and
warranty by the Company or such Guarantor, as the case may be, to the
Initial Purchaser as to the matters covered thereby.
Each of the Company and the Guarantors acknowledge that the Initial
Purchaser and, for purposes of the opinions to be delivered to the Initial
Purchaser pursuant to Section 8 hereof, counsel for the Company and the
Guarantors and counsel for the Initial Purchaser, will rely upon the accuracy
and truth of the foregoing representations and hereby consent to such reliance.
(b) The Initial Purchaser represents, warrants and covenants
to the Company and the Guarantors and agrees that:
(i) Such Initial Purchaser is a QIB, 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 Series A
Notes.
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(ii) Such Initial Purchaser (A) is not acquiring the Series A
Notes with a view to any distribution thereof that would violate the
Act or the securities laws of any state of the United States or any
other applicable jurisdiction and (B) will be reoffering and reselling
the Series A Notes only to (i) QIBs in reliance on the exemption from
the registration requirements of the Act provided by Rule 144A and (ii)
in offshore transactions in reliance upon, and in compliance with,
Regulation S under the Act.
(iii) No form of general solicitation or general advertising
(within the meaning of Regulation D under the Act) has been or will be
used by such Initial Purchaser or any of its representatives in
connection with the offer and sale of any of the Series A Notes,
including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium
or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising.
(iv) Such Initial Purchaser agrees that, in connection with
the Exempt Resales, it will solicit offers to buy the Series A Notes
only from, and will offer to sell the Series A Notes only to, Eligible
Purchasers. Such Initial Purchaser further (A) agrees that it will
offer to sell the Series A Notes only to, and will solicit offers to
buy the Series A Notes only from Eligible Purchasers that the Initial
Purchaser reasonably believes are QIBs or Reg S Investors and (B)
acknowledges and agrees that, in the case of such QIBs or Reg S
Investors, such Series A Notes will not have been registered under the
Act and may be resold, pledged or otherwise transferred only (1) to the
Company or any subsidiary thereof, (2) pursuant to a registration
statement which has been declared effective under the Act, (3) to a
person it reasonably believes is a "Qualified Institutional Buyer" as
defined in Rule 144A in a transaction meeting the requirements of Rule
144A, (4) pursuant to offers and sales to Non-U.S. Persons that occur
outside the United States in a transaction meeting the requirements of
Rule 904 under the Act, (5) to an Institutional "Accredited Investor"
(as defined in Rule 501 (a)(1), (2), (3) or (7) under the Act) in a
transaction meeting the requirements of Rule 144 under the Act, or (6)
pursuant to any other available exemption from the registration
requirements under the Act (and in the case of a transfer pursuant to
clause (5) or (6), based on an opinion of counsel if the company so
requests), subject in each of the foregoing cases to applicable
securities laws of any state of the United States or any other
applicable jurisdiction, and (C) acknowledges that it will, and each
subsequent holder is required to, notify any purchaser from it of the
security evidenced thereby of the resale restrictions set forth in (B)
above.
(v) Such Initial Purchaser and its affiliates or any person
acting on its or their behalf have not engaged and will not engage in
any directed selling efforts within the meaning of Regulation S with
respect to the Series A Notes or the Guarantees thereof.
(vi) The Series A Notes offered and sold by such Initial
Purchaser pursuant hereto in reliance on Regulation S have been and
will be offered and sold only in offshore transactions.
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(vii) The sale of Series A Notes offered and sold by such
Initial Purchaser pursuant hereto in reliance on Regulation S is not
part of a plan or scheme to evade the registration provisions of the
Act.
(viii) At or prior to the confirmation of sale of any Series A
Notes sold in reliance on Regulation S, it will have sent to each
distributor, dealer or other person receiving a selling concession, fee
or other remuneration that purchases Series A Notes from it during the
restricted period a confirmation or notice to substantially the
following effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933, as amended (the "Securities
Act"), and may not be offered or sold within the United States
or to, or for the account or benefit of, U.S. persons (i) as
part of their distribution at any time or (ii) otherwise until
40 days after the later of the commencement of the offering of
the Securities and the date of original issuance of the
Securities, except in accordance with Regulation S or Rule
144A or any other available exemption from registration under
the Securities Act. Terms used above have the meanings given
to them in Regulation S."
(ix) It has not and will not enter into any contractual
arrangement with any distributor with respect to the distribution of
the Series A Notes, except with its affiliates or with the prior
written consent of the Issuer.
(x) It has and will comply with all applicable laws and
regulations in each jurisdiction in which it acquires, offers, sells or
delivers Series A Notes or has in its possession or has distributed the
Offering Memorandum.
(xi) The Initial Purchaser further represents and agrees that
(a) it has not offered or sold and prior to the date six months after
the date of issue of the Series A Notes will not offer or sell any
Series A Notes to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of
their businesses or otherwise in circumstances which have not resulted
and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995,
(b) it has complied, and will comply, with all applicable provisions of
the Financial Services Act of 1986 of Great Britain with respect to
anything done by it in relation to the Series A Notes in, from or
otherwise involving the United Kingdom, and (c) it has only issued or
passed on and will only issue or pass on in the United Kingdom any
document received by it in connection with the issuance of the Series A
Notes to a person who is of a kind described in Article 9(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions)
Order 1996 of Great Britain or is a person to whom the document may
otherwise lawfully be issued or passed on.
(xii) The Initial Purchaser agrees that it will not offer,
sell or deliver any of the Series A Notes in any jurisdiction outside
the United States except under circumstances that will result in
compliance with the applicable laws thereof, and that it will take
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whatever action is required to permit its purchase and resale of the
Series A Notes in such jurisdictions. The Initial Purchaser understands
that no action has been taken to permit a public offering in any
jurisdiction outside the United States where action would be required
for such purpose.
The Initial Purchaser acknowledges that the Company and the Guarantors
and, for purposes of the opinions to be delivered to the Initial Purchaser
pursuant to Section 8 hereof, counsel for the Company and the Guarantors and
counsel for the Initial Purchaser will rely upon the accuracy and truth of the
foregoing representations and hereby consents to such reliance.
6 Indemnification.
(a) The Company and the Guarantors, jointly and severally,
agree to indemnify and hold harmless (i) the Initial Purchaser, (ii)
each person, if any, who controls the Initial Purchaser within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act
and (iii) the respective officers, directors, partners, employees,
representatives and agents of the Initial Purchaser or any controlling
person to the fullest extent lawful, from and against any and all
losses, liabilities, claims, damages and expenses whatsoever
(including, but not limited to, reasonable attorneys' fees and any and
all reasonable expenses whatsoever incurred in investigating, preparing
or defending against any investigation or litigation, commenced or
threatened, or any claim whatsoever, and any and all reasonable amounts
paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims,
damages or expenses (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a
material fact contained in the Offering Memorandum, or in any
supplement thereto or amendment thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that neither the Company nor any
Guarantor will be liable in any such case to the extent, but only to
the extent, that any such loss, liability, claim, damage or expense
arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with information relating to the
Initial Purchaser furnished to the Company and the Guarantors in
writing by or on behalf of the Initial Purchaser expressly for use
therein. This indemnity agreement will be in addition to any liability
which the Company may otherwise have, including under this Agreement.
(b) The Initial Purchaser agrees to indemnify and hold
harmless (i) the Company and the Guarantors, (ii) each person, if any,
who controls the Company or any of the Guarantors within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, and (iii)
the officers, directors, partners, employees, representatives and
agents of the Company and the Guarantors, against any losses,
liabilities, claims, damages and expenses whatsoever (including, but
not limited to, reasonable attorneys' fees and any and all reasonable
expenses whatsoever incurred in investigating, preparing or
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defending against any investigation or litigation, commenced or
threatened, or any claim whatsoever and any and all reasonable amounts
paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims,
damages or expenses (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a
material fact contained in the Offering Memorandum, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, in each case to the extent, but only to the extent, that
any such loss, liability, claim, damage or expense arises out of or is
based upon any untrue statement or alleged untrue statement or omission
or alleged omission made therein in reliance upon and in conformity
with information relating to the Initial Purchaser furnished to the
Company and the Guarantors in writing by or on behalf of the Initial
Purchaser expressly for use therein; provided, however, that in no case
shall the Initial Purchaser be liable or responsible for any amount in
excess of the discounts and commissions received by such Initial
Purchaser, as set forth in the Section entitled "Plan of Distribution"
of the Offering Memorandum. This indemnity will be in addition to any
liability which the Initial Purchaser may otherwise have, including
under this Agreement.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection, notify
each party against whom indemnification is to be sought in writing of
the commencement thereof (but the failure so to notify an indemnifying
party shall not relieve it from any liability which it may have under
this Section 6 except to the extent that it has been prejudiced in any
material respect by such failure or from any liability which it may
otherwise have). In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein, and to the extent it may elect by written notice
delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall
have the right to employ its or their own counsel in any such case, but
the reasonable fees and expenses of such counsel shall be at the
expense of such indemnified party or parties unless (i) the employment
of such counsel shall have been authorized in writing by the
indemnifying parties in connection with the defense of such action,
(ii) the indemnifying parties shall not have employed counsel to take
charge of the defense of such action within a reasonable time after
written notice of commencement of the action, or (iii) such indemnified
party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional
to those available to one or all of the indemnifying parties (in which
case the indemnifying party or parties shall not have the right to
direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such
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reasonable fees and expenses of counsel shall be borne by the
indemnifying parties; provided, however, that the indemnifying party
under subsection (a) or (b) above, shall only be liable for the legal
expenses of one counsel (in addition to any local counsel) for all
indemnified parties in which any claim or action is brought. Anything
in this subsection to the contrary notwithstanding, an indemnifying
party shall not be liable for any settlement of any claim or action
effected without its prior written consent; provided, however, that
such consent was not unreasonably withheld.
7 Contribution. In order to provide for contribution in circumstances
in which the indemnification provided for in Section 6 is for any reason held to
be unavailable from an indemnifying party or is insufficient to hold harmless a
party indemnified thereunder, the Company and the Guarantors, on the one hand,
and the Initial Purchaser, on the other hand, shall contribute to the aggregate
losses, claims, damages, liabilities and expenses of the nature contemplated by
such indemnification provision (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claims asserted, but after deducting in the
case of losses, liabilities, claims, damages and expenses suffered by the
Company or any Guarantor, any contribution received by the Company and the
Guarantors from persons, other than the Initial Purchaser, who may also be
liable for contribution, including persons who control the Company or any of the
Guarantors within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act) to which the Company, the Guarantors and the Initial Purchaser may
be subject, in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Guarantors, on the one hand, and the
Initial Purchaser, on the other hand, from the offering of the Series A Notes
or, if such allocation is not permitted by applicable law or indemnification is
not available as a result of the indemnifying party not having received notice
as provided in Section 6, in such proportion as is appropriate to reflect not
only the relative benefits referred to above but also the relative fault of the
Company and the Guarantors, on the one hand, and the Initial Purchaser, on the
other hand, in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Guarantors, on the one hand, and the Initial Purchaser, on the other
hand, shall be deemed to be in the same proportion as (i) the total proceeds
from the offering of Series A Notes (net of discounts but before deducting
expenses) received by the Company and the Guarantors and (ii) the discounts and
commissions received by the Initial Purchaser, respectively. The relative fault
of the Company and the Guarantors, on the one hand, and of the 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 relates to information
supplied by the Company, any Guarantor or the Initial Purchaser and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Guarantors and the Initial
Purchaser agree that it would not be just and equitable if contribution pursuant
to this Section 7 were determined by pro rata allocation or by any other method
of allocation which does not take into account the equitable considerations
referred to above. Notwithstanding the provisions of this Section 7, (i) in no
case shall the Initial Purchaser be required to contribute any amount in excess
of the amount by which the discounts and commissions applicable to the Series A
Notes purchased by such Initial Purchaser pursuant to
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this Agreement exceeds the amount of any damages which such Initial Purchaser
has otherwise been required to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission and (ii) no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, (A) each person,
if any, who controls the Initial Purchaser within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act and (B) the respective officers,
directors, partners, employees, representatives and agents of the Initial
Purchaser or any controlling person shall have the same rights to contribution
as such Initial Purchaser, and each person, if any, who controls the Company or
any Guarantor within the meaning of Section 15 of the Act or Section 20(a) of
the Exchange Act shall have the same rights to contribution as the Company and
the Guarantors, subject in each case to clauses (i) and (ii) of this Section 7.
Any party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section 7, notify in writing such party or parties from whom
contribution may be sought, but the failure to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 7 or otherwise. No party
shall be liable for contribution with respect to any action or claim settled
without its prior written consent.
8 Conditions of Initial Purchaser's Obligations. The obligations of the
Initial Purchaser to purchase and pay for the Series A Notes, as provided
herein, shall be subject to the satisfaction of the following conditions:
(a) All of the representations and warranties of the Company
and the Guarantors contained in this Agreement shall be true and
correct in all material respects on the date hereof and on the Closing
Date with the same force and effect as if made on and as of the date
hereof and the Closing Date, respectively. For purposes of this Section
8(a) representations and warranties which are qualified by "material,"
"Material Adverse Effect" or "in all material respects" or the like
shall be true and correct in all material respects. The Company and
each Guarantor shall have performed or complied in all material
respects with all of the agreements herein contained and required to be
performed or complied with by it at or prior to the Closing Date.
(b) The Offering Memorandum shall have been printed and copies
distributed to the Initial Purchaser not later than 2:00 p.m., New York
City time, on the day following the date of this Agreement or at such
later date and time as to which the Initial Purchaser may agree, and no
stop order suspending the qualification or exemption from qualification
of the Series A Notes or the Guarantees thereof in any jurisdiction
referred to in Section 4(e) shall have been issued and no proceeding
for that purpose shall have been commenced or shall be pending or, to
the knowledge of the Company, 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 which would, as of the Closing Date, prevent the
issuance of the Series A Notes or the Guarantees thereof; no action,
suit or proceeding shall have been commenced and be pending against or
affecting or, to the best knowledge of the Company and the Guarantors,
threatened
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against, the Company or any of its subsidiaries before any court or
arbitrator or any governmental body, agency or official that, if
adversely determined, could reasonably be expected to result in a
Material Adverse Effect; and no stop order shall have been issued
preventing the use of the Offering Memorandum, or any amendment or
supplement thereto, or which could reasonably be expected to have a
Material Adverse Effect.
(d) Since the dates as of which information is given in the
Offering Memorandum, (i) there shall not have been any material adverse
change, or any development that is reasonably likely to result in a
material adverse change, in the capital stock or the long-term debt, or
material increase in the short-term debt, of the Company or any of its
subsidiaries from that set forth in the Offering Memorandum, (ii) other
than as set forth or contemplated in the Offering Memorandum, no
dividend or distribution of any kind shall have been declared, paid or
made by the Company or any of its subsidiaries on any class of its
capital stock, except for dividends paid by the Company to Watermark to
enable Watermark to pay the subordinated notes of Watermark held by
Communities Finance Company, LLC and (iii) none of the Company or any
of its subsidiaries shall have incurred any liabilities or obligations
other than in the ordinary course of business consistent with past
practice, direct or contingent, that are material, individually or in
the aggregate, to the Company and its subsidiaries, taken as a whole,
and that are required to be disclosed on a balance sheet or notes
thereto in accordance with generally accepted accounting principles and
are not disclosed on the latest balance sheet or notes thereto included
in the Offering Memorandum. Since the date hereof and since the dates
as of which information is given in the Offering Memorandum, there
shall not have occurred any material adverse change, or any development
that is reasonably likely to result in a material adverse change, in
the business, financial condition or results of operation of the
Company and its subsidiaries, taken as a whole.
(e) The Initial Purchaser shall have received certificates,
dated the Closing Date, signed on behalf of the Company and each
Guarantor, in form and substance satisfactory to the Initial Purchaser,
confirming, as of the Closing Date, the matters set forth in paragraphs
(a), (b), (c) and (d) of this Section 8 and that, as of the Closing
Date, the obligations of the Company and such Guarantor, as the case
may be, to be performed hereunder on or prior thereto have been duly
performed in all material respects.
(f) The Initial Purchaser shall have received on the Closing
Date an opinion, dated the Closing Date, in form and substance
satisfactory to the Initial Purchaser and counsel for the Initial
Purchaser, of each of Simpson Thacher & Bartlett, Michael Best &
Friedrich LLC, and Vivian Hastings, Esq., counsel for the Company and
the Guarantors, substantially to the effect set forth in Exhibits E, F
and G, respectively, hereto.
(g) At the time this Agreement is executed and at the Closing
Date, the Initial Purchaser shall have received from
PricewaterhouseCoopers LLC, independent public accountants, a customary
comfort letter addressed to the Initial Purchaser dated as of the date
of this Agreement and as of the Closing Date, and in form and substance
satisfactory to the Initial Purchaser and counsel for the Initial
Purchaser with respect to the financial
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statements and certain financial information of the Company and its
subsidiaries contained in the Offering Memorandum.
(h) The Initial Purchaser shall have received an opinion,
dated the Closing Date, in form and substance reasonably satisfactory
to the Initial Purchaser, of Latham & Watkins, counsel for the Initial
Purchaser, covering such matters as are customarily covered in such
opinions.
(i) Latham & Watkins shall have been furnished with such
documents, in addition to those set forth above, as they may reasonably
require for the purpose of enabling them to review or pass upon the
matters referred to in this Section 8 and in order to evidence the
accuracy, completeness or satisfaction in all material respects of any
of the representations, warranties or conditions herein contained.
(j) Prior to the Closing Date, the Company and the Guarantors
shall have furnished to the Initial Purchaser such further information,
certificates and documents as the Initial Purchaser may reasonably
request.
(k) The Company, the Guarantors and the Trustee shall have
entered into the Indenture and the Initial Purchaser shall have
received counterparts, conformed as executed, thereof.
(l) The Company, the Guarantors and the Initial Purchaser
shall have entered into the Registration Rights Agreement and the
Initial Purchaser shall have received counterparts, conformed as
executed, thereof.
(m) The Company shall have received all consents or waivers
required under the Senior Facility all in form and substance reasonably
satisfactory to the Initial Purchaser.
(n) The Company shall have received all consents required
under the Investor's Agreement dated as of November 30, 1998, as
amended, all in form and substance reasonably satisfactory to the
Initial Purchaser.
(o) On or after the date hereof, (i) there shall not have
occurred any downgrading, suspension or withdrawal of, nor shall any
notice have been given of any potential or intended downgrading,
suspension or withdrawal of, or of any review (or of any potential or
intended review) for a possible change that does not indicate the
direction of the possible change in, any rating of the Company or any
Guarantor or any securities of the Company or any Guarantor (including,
without limitation, the placing of any of the foregoing ratings on
credit watch with negative or developing implications or under review
with an uncertain direction) by any "nationally recognized statistical
rating organization" as such term is defined for purposes of Rule
436(g)(2) under the Act, (ii) there shall not have occurred any change,
nor shall any notice have been given of any potential or intended
change, in the outlook for any rating of the Company or any Guarantor
or any securities of the Company or any Guarantor by any such rating
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organization and (iii) no such rating organization shall have given
notice that it has assigned (or is considering assigning) a lower
rating to the Notes than that on which the Notes were marketed.
(p) The Notes shall have been approved for trading on PORTAL.
(q) All opinions, certificates, letters and other documents
required by this Section 8 to be delivered by the Company and the
Guarantors will be in compliance with the provisions hereof only if
they are reasonably satisfactory in form and substance to the Initial
Purchaser. The Company and the Guarantors shall furnish the Initial
Purchaser with such conformed copies of such opinions, certificates,
letters and other documents as it shall reasonably request.
9 Initial Purchaser's Information. The Company and the Guarantors
acknowledge that the statements with respect to the offering of the Series A
Notes set forth in the fifth paragraph of the Section entitled "Plan of
Distribution" in the Offering Memorandum constitute the only information
relating to the Initial Purchaser furnished to the Company and the Guarantors in
writing by or on behalf of the Initial Purchaser expressly for use in the
Offering Memorandum.
10 Survival of Representations and Agreements. All representations and
warranties, covenants and agreements of the Initial Purchaser, the Company and
the Guarantors contained in this Agreement, including, but not limited to, the
agreements contained in Sections 4(f) and 11(d), the indemnity agreements
contained in Section 6 and the contribution agreements contained in Section 7,
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Initial Purchaser, any controlling
person thereof, or by or on behalf of the Company, the Guarantors or any
controlling person thereof, and shall survive delivery of and payment for the
Series A Notes to and by the Initial Purchaser. The agreements contained in
Sections 4(f), 6, 7 and 11(d) shall survive the termination of this Agreement,
including any termination pursuant to Section 11.
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11 Effective Date of Agreement; Termination.
(a) This Agreement shall become effective upon execution and
delivery of a counterpart hereof by each of the parties hereto.
(b) The Initial Purchaser shall have the right to terminate
this Agreement at any time prior to the Closing Date by notice to the
Company from the Initial Purchaser, without liability (other than with
respect to Sections 6 and 7) on the Initial Purchaser's part to the
Company or any of the Guarantors if, on or prior to such date, (i) the
Company or any of the Guarantors shall have failed, refused or been
unable to perform in any material respect any agreement on its part to
be performed hereunder, (ii) any other condition to the obligations of
the Initial Purchaser hereunder as provided in Section 8 is not
fulfilled when and as required in any material respect, (iii) in the
reasonable judgment of the Initial Purchaser, any material adverse
change shall have occurred since the respective dates as of which
information is given in the Offering Memorandum in the condition
(financial or otherwise), business, properties, assets, liabilities,
net worth, results of operations or cash flows of the Company and its
subsidiaries, taken as a whole, other than as set forth in the Offering
Memorandum, or (iv)(A) any domestic or international event or act or
occurrence has materially disrupted, or in the opinion of the Initial
Purchaser will in the immediate future materially disrupt, the market
for the Company's or any Guarantor's securities or for securities in
general; or (B) trading in securities generally on the New York Stock
Exchange, the American Stock Exchange, the Chicago Board of Options
Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade
or the Nasdaq National Market shall have been suspended or materially
limited, or minimum or maximum prices for trading shall have been
established, or maximum ranges for prices for securities shall have
been required, on such exchange or the Nasdaq National Market, or by
such exchange or other regulatory body or governmental authority having
jurisdiction; or (C) a banking moratorium shall have been declared by
federal or state authorities, or a moratorium in foreign exchange
trading by major international banks or persons shall have been
declared; or (D) there is an outbreak or escalation of armed
hostilities involving the United States on or after the date hereof, or
if there has been a declaration by the United States of a national
emergency or war, the effect of which shall be, in the Initial
Purchaser's judgment, to make it inadvisable or impracticable to
proceed with the offering or delivery of the Series A Notes on the
terms and in the manner contemplated in the Offering Memorandum; or (E)
there shall have been such a material adverse change in general
economic, political or financial conditions or if the effect of
international conditions on the financial markets in the United States
shall be such as, in the Initial Purchaser's judgment, makes it
inadvisable or impracticable to proceed with the delivery of the Series
A Notes as contemplated hereby.
(c) Any notice of termination pursuant to this Section 11
shall be by telephone or facsimile and, in either case, confirmed in
writing by letter.
(d) If this Agreement shall be terminated pursuant to any of
the provisions hereof (otherwise than pursuant to clause (iv) of
Section 11(b) or Section 11(e), in which case each party will be
responsible for its own expenses), or if the sale of the Series A
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Notes provided for herein is not consummated because any condition to
the obligations of the Initial Purchaser set forth herein is not
satisfied or because of any refusal, inability or failure on the part
of the Company or any Guarantor to perform any agreement herein or
comply with any provision hereof, the Company and the Guarantors shall
reimburse the Initial Purchaser for all reasonable out-of-pocket
expenses (including the reasonable fees and expenses of the Initial
Purchaser's counsel), incurred by the Initial Purchaser in connection
herewith.
12 Notice. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to the Initial
Purchaser shall be mailed, delivered, telecopied and confirmed in writing or
sent by a nationally recognized overnight courier service guaranteeing delivery
on the next business day to UBS Warburg LLC, 299 Park Avenue, New York, New York
10171, Attention: Corporate Finance Department, telecopy number: (212) 821-6136,
with a copy to Latham & Watkins, 885 Third Avenue, Suite 1000, New York, New
York 10022, Attention: Raymond Lin, telecopy number: (212) 751-4864; and if sent
to the Company and the Guarantors, shall be mailed, delivered, telecopied and
confirmed in writing or sent by a nationally recognized overnight courier
service guaranteeing delivery on the next business day to WCI Communities, Inc.
24301 Walden Center Drive, Suite 300, Bonita Springs, FL 34134, Attention: Chief
Financial Officer, telecopy number: (941) 498-8338, with a copy to Simpson
Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, Attention:
John Tehan, telecopy number: (212) 455-2502.
13 Parties. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Initial Purchaser, the Company, the Guarantors and
the controlling persons and agents referred to in Sections 6 and 7, and their
respective successors and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provision herein contained. The
term "successors and assigns" shall not include a purchaser, in its capacity as
such, of Notes from the Initial Purchaser.
14 Construction. This Agreement and the rights and duties of the
parties hereunder shall be governed by, and construed in accordance with, the
law of the State of New York.
15 Captions. The captions included in this Agreement are included
solely for convenience of reference and are not to be considered a part of this
Agreement.
16 Counterparts. This Agreement may be executed in various counterparts
which together shall constitute one and the same instrument.
[Signature page to follow]
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If the foregoing correctly sets forth the understanding among the
Initial Purchaser, the Company and the Guarantors please so indicate in the
space provided below for that purpose, whereupon this letter shall constitute a
binding agreement among us.
Very truly yours,
WCI COMMUNITIES, INC.
By: /s/ James P. Dietz
----------------------------------------
Name: James P. Dietz
Title: Senior Vice President
BAY COLONY-GATEWAY, INC.
By: /s/ James P. Dietz
----------------------------------------
Name: James P. Dietz
Title: Senior Vice President
FINANCIAL RESOURCES GROUP, INC.
By: /s/ James P. Dietz
----------------------------------------
Name: James P. Dietz
Title: Senior Vice President
FIRST FIDELITY TITLE, INC.
By: /s/ James D. Cullen
----------------------------------------
Name: James D. Cullen
Title: Vice President
S-1
32
FLORIDA LIFESTYLE MANAGEMENT COMPANY
By: /s/ James D. Cullen
----------------------------------------
Name: James D. Cullen
Title: Vice President
LIVINGSTON NAPLES, INC.
By: /s/ James D. Cullen
----------------------------------------
Name: James D. Cullen
Title: Vice President
LIVINGSTON ROAD, INC.
By: /s/ James D. Cullen
----------------------------------------
Name: James D. Cullen
Title: Vice President
PANTHER DEVELOPMENTS, LLC
By: /s/ James D. Cullen
----------------------------------------
Name: James D. Cullen
Title: Vice President
SUN CITY CENTER GOLF PROPERTIES, INC.
By: /s/ James P. Dietz
----------------------------------------
Name: James P. Dietz
Title: Senior Vice President
S-2
33
SUN CITY CENTER REALTY, INC.
By: /s/ James D. Cullen
----------------------------------------
Name: James D. Cullen
Title: Vice President
WATERMARK REALTY, INC.
By: /s/ James D. Cullen
----------------------------------------
Name: James D. Cullen
Title: Vice President
WI ULTRACORP OF FLORIDA, INC.
By: /s/ George R. Page
----------------------------------------
Name: George R. Page
Title: President
THE COLONY AT PELICAN LANDING GOLF CLUB, INC.
By: /s/ James D. Cullen
----------------------------------------
Name: James D. Cullen
Title: Vice President
COMMUNITIES AMENITIES, INC.
By: /s/ James D. Cullen
----------------------------------------
Name: James D. Cullen
Title: Vice President
S-3
34
COMMUNITIES HOME BUILDERS, INC.
By: /s/ James D. Cullen
----------------------------------------
Name: James D. Cullen
Title: Vice President
GATEWAY COMMUNICATIONS SERVICES, INC.
By: /s/ James D. Cullen
----------------------------------------
Name: James D. Cullen
Title: Vice President
JYC HOLDINGS, INC.
By: /s/ James P. Dietz
----------------------------------------
Name: James P. Dietz
Title: Vice President
MARBELLA AT PELICAN BAY, INC.
By: /s/ James D. Cullen
----------------------------------------
Name: James D. Cullen
Title: Vice President
PELICAN LANDING GOLF RESORT VENTURES, INC.
By: /s/ James D. Cullen
----------------------------------------
Name: James D. Cullen
Title: Vice President
S-4
35
SARASOTA TOWER, INC.
By: /s/ George R. Page
----------------------------------------
Name: George R. Page
Title: President
TARPON COVE YACHT & RACQUET CLUB, INC.
By: /s/ James D. Cullen
----------------------------------------
Name: James D. Cullen
Title: Vice President
TIBURON GOLF VENTURES, INC.
By: /s/ James D. Cullen
----------------------------------------
Name: James D. Cullen
Title: Vice President
WATERMARK POOLS, INC.
By: /s/ Thomas McCall
----------------------------------------
Name: Thomas McCall
Title: Secretary
S-5
36
WATERMARK REALTY REFERRAL, INC.
By: /s/ James D. Cullen
----------------------------------------
Name: James D. Cullen
Title: Vice President
WCI COMMUNITIES PROPERTY MANAGEMENT, INC.
By: /s/ James D. Cullen
----------------------------------------
Name: James D. Cullen
Title: Vice President
WCI GOLF GROUP, INC.
By: /s/ James D. Cullen
----------------------------------------
Name: James D. Cullen
Title: Vice President
WCI REALTY, INC.
By: /s/ James D. Cullen
----------------------------------------
Name: James D. Cullen
Title: Vice President
BAY COLONY REALTY ASSOCIATES, INC.
By: /s/ Vivien N. Hastings
----------------------------------------
Name: Vivien N. Hastings
Title: Secretary
S-6
37
BAY COLONY OF NAPLES, INC.
By: /s/ Vivien N. Hastings
----------------------------------------
Name: Vivien N. Hastings
Title: Secretary
CORAL RIDGE COMMUNITIES, INC.
By: /s/ Vivien N. Hastings
----------------------------------------
Name: Vivien N. Hastings
Title: Secretary
CORAL RIDGE PROPERTIES, INC.
By: /s/ Vivien N. Hastings
----------------------------------------
Name: Vivien N. Hastings
Title: Secretary
CORAL RIDGE REALTY, INC.
By: /s/ Vivien N. Hastings
----------------------------------------
Name: Vivien N. Hastings
Title: Secretary
S-7
38
CORAL RIDGE REALTY SALES, INC.
By: /s/ Vivien N. Hastings
----------------------------------------
Name: Vivien N. Hastings
Title: Secretary
FLORIDA DESIGN COMMUNITIES, INC.
By: /s/ Vivien N. Hastings
----------------------------------------
Name: Vivien N. Hastings
Title: Secretary
FLORIDA NATIONAL PROPERTIES, INC.
By: /s/ Steven C. Adelman
----------------------------------------
Name: Steven C. Adelman
Title: Treasurer
GATEWAY COMMUNITIES, INC.
By: /s/ Steven C. Adelman
----------------------------------------
Name: Steven C. Adelman
Title: Treasurer
S-8
39
GATEWAY REALTY SALES, INC.
By: /s/ Vivien N. Hastings
----------------------------------------
Name: Vivien N. Hastings
Title: Secretary
HERON BAY, INC.
By: /s/ Vivien N. Hastings
----------------------------------------
Name: Vivien N. Hastings
Title: Secretary
HERON BAY GOLF COURSE PROPERTIES, INC.
By: /s/ Vivien N. Hastings
----------------------------------------
Name: Vivien N. Hastings
Title: Secretary
PELICAN BAY PROPERTIES, INC.
By: /s/ Vivien N. Hastings
----------------------------------------
Name: Vivien N. Hastings
Title: Secretary
S-9
40
PELICAN LANDING COMMUNITIES, INC.
By: /s/ Vivien N. Hastings
----------------------------------------
Name: Vivien N. Hastings
Title: Secretary
PELICAN LANDING PROPERTIES, INC.
By: /s/ Vivien N. Hastings
----------------------------------------
Name: Vivien N. Hastings
Title: Secretary
PELICAN MARSH PROPERTIES, INC.
By: /s/ Vivien N. Hastings
----------------------------------------
Name: Vivien N. Hastings
Title: Secretary
TARPON COVE REALTY, INC.
By: /s/ Vivien N. Hastings
----------------------------------------
Name: Vivien N. Hastings
Title: Secretary
S-10
41
WCI HOMES, INC.
By: /s/ Armando J. Goenaga
----------------------------------------
Name: Armando J. Goenaga
Title: Vice President
COMMUNITIES FINANCE COMPANY, LLC
By: /s/ James P. Dietz
----------------------------------------
Name: James P. Dietz
Title: Vice President
WCI CAPITAL CORPORATION
By: /s/ James D. Cullen
----------------------------------------
Name: James D. Cullen
Title: Vice President
S-11
42
Accepted and agreed to as of
the date first above written:
UBS WARBURG LLC
By: /s/ Robert. C. Crowley
----------------------------------------
Name: Robert. C. Crowley
Title: Director
By: /s/ John C. Crockett
----------------------------------------
Name: John C. Crockett
Title: Associate Director
S-12
43
EXHIBIT A
GUARANTORS
Bay Colony-Gateway, Inc.
Financial Resources Group, Inc.
First Fidelity Title, Inc.
Florida Lifestyle Management Company
Livingston Naples, Inc.
Livingston Road, Inc.
Panther Developments, LLC
Sun City Center Golf Properties, Inc.
Sun City Center Realty, Inc.
Watermark Realty, Inc.
WI Ultracorp of Florida, Inc.
The Colony at Pelican Landing Golf Club, Inc.
Communities Amenities, Inc.
Communities Home Builders, Inc.
Gateway Communications Services, Inc.
JYC Holdings, Inc.
Marbella at Pelican Bay, Inc.
Pelican Landing Golf Resort Ventures, Inc.
Sarasota Tower, Inc.
Tarpon Cove Yacht & Racquet Club, Inc.
Tiburon Golf Ventures, Inc.
Watermark Pools, Inc.
Watermark Realty Referral, Inc.
WCI Communities Property Management, Inc.
WCI Golf Group, Inc.
WCI Realty, Inc.
Bay Colony Realty Associates, Inc.
Bay Colony of Naples, Inc.
Coral Ridge Communities, Inc.
Coral Ridge Properties, Inc.
Coral Ridge Realty, Inc.
Coral Ridge Realty Sales, Inc.
Florida Design Communities, Inc. (fka WCI Lifestyles Realty, Inc.)
Florida National Properties, Inc.
Gateway Communities, Inc.
Gateway Realty Sales, Inc.
Heron Bay, Inc.
Heron Bay Golf Course Properties, Inc.
Pelican Bay Properties, Inc.
Pelican Landing Communities, Inc.
Pelican Landing Properties, Inc.
Pelican Marsh Properties, Inc.
Tarpon Cove Realty, Inc.
WCI Homes, Inc.
Communities Finance Company, LLC
WCI Capital Corporation
A-1
44
EXHIBIT B
Principal Amount
Initial Purchaser of Notes
- ----------------- --------
UBS Warburg LLC..................................... $100,000,000
------------
Total............................................... $100,000,000
============
B-1
45
EXHIBIT C
WHOLLY-OWNED SUBSIDIARIES OF WCI COMMUNITIES, INC.
Bay Colony-Gateway, Inc.
Financial Resources Group, Inc.
First Fidelity Title, Inc.
Florida Lifestyle Management Company
Livingston Naples, Inc.
Livingston Road, Inc.
Panther Developments, LLC
Sun City Center Golf Properties, Inc.
Sun City Center Realty, Inc.
Watermark Realty, Inc.
WI Ultracorp of Florida, Inc.
WCI Capital Corporation
WHOLLY-OWNED SUBSIDIARIES OF BAY COLONY-GATEWAY, INC.
Bay Colony Realty Associates, Inc.
Bay Colony of Naples, Inc.
The Colony at Pelican Landing Golf Club, Inc.
Communities Amenities, Inc.
Communities Finance Company, LLC
Communities Home Builders, Inc.
Coral Ridge Communities, Inc.
Coral Ridge Properties, Inc.
Coral Ridge Realty, Inc.
Coral Ridge Realty Sales, Inc.
Florida Design Communities, Inc.
Florida National Properties, Inc.
Gateway Communities, Inc.
Gateway Communications Services, Inc.
Gateway Realty Sales, Inc.
Heron Bay, Inc.
Heron Bay Golf Course Properties, Inc.
JYC Holdings, Inc.
Marbella at Pelican Bay, Inc.
Pelican Bay Properties, Inc.
Pelican Landing Communities, Inc.
Pelican Landing Golf Resort Ventures, Inc.
Pelican Landing Properties, Inc.
Pelican Marsh Properties, Inc.
Sarasota Tower, Inc.
Tarpon Cove Realty, Inc.
Tarpon Cove Yacht & Racquet Club, Inc.
Tiburon Golf Ventures, Inc.
Watermark Realty Referral, Inc.
WCI Communities Property Management, Inc.
C-1
46
WCI Golf Group, Inc.
WCI Homes, Inc.
WCI Realty, Inc.
Wildcat Run of Lee County, Inc.
Notes:
* Not-for-profit homeowner associations and clubs are not included in this list.
JOINT VENTURES AND PARTNERSHIP INTERESTS
Bighorn Development, L.P.
Gateway / Jones Communications, Ltd.
*Norman Estates at Tiburon, Inc., the General Partner of Norman Estates
at Tiburon Limited Partnership, is owned 50/50 by Bay Colony-Gateway,
Inc. and Medallist Operations, Inc.
Norman Estates at Tiburon Limited Partnership
Pelican Isle Yacht Club Partners, Ltd.
Pelican Landing Golf Resort Venture Limited Partnership
Pelican Landing Timeshare Ventures Limited Partnership
Tiburon Golf Venture Limited Partnership
Walden Woods Business Center, Ltd.
C-2
47
EXHIBIT E
Form of Opinion of Simpson Thacher & Bartlett
E-1
48
EXHIBIT F
Form of Opinion of Michael Best & Friedrich LLC
F-1
49
EXHIBIT G
Form of Opinion of Vivien Hastings, Esq.
F-2