-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DzeEQpZUVLhSKbaokirKUjce7TPLrG+e3yErPwspOLRGrWTuiBIMz1DVMRC7iRtQ nVs8ueOfY6GqYz4jGPOfRA== 0000930661-98-001850.txt : 19980825 0000930661-98-001850.hdr.sgml : 19980825 ACCESSION NUMBER: 0000930661-98-001850 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19980824 SROS: NONE GROUP MEMBERS: MORGAN STANLEY DEAN WITTER & CO GROUP MEMBERS: MORGAN STANLEY REAL ESTATE FUND III, L.P. GROUP MEMBERS: MORGAN STANLEY REAL ESTATE INVESTORS III, L.P. GROUP MEMBERS: MSP REAL ESTATE FUND, L.P. GROUP MEMBERS: MSREF III SPECIAL FUND, L.P. GROUP MEMBERS: MSREF III, INC. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: BLUEGREEN CORP CENTRAL INDEX KEY: 0000778946 STANDARD INDUSTRIAL CLASSIFICATION: LAND SUBDIVIDERS & DEVELOPERS (NO CEMETERIES) [6552] IRS NUMBER: 030300793 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-38205 FILM NUMBER: 98696865 BUSINESS ADDRESS: STREET 1: 4960 BLUE LAKE DRIVE CITY: BOCA RATON STATE: FL ZIP: 33431 BUSINESS PHONE: 5619128000 MAIL ADDRESS: STREET 1: 4960 BLUE LAKE DRIVE CITY: BOCA RATON STATE: FL ZIP: 33431 FORMER COMPANY: FORMER CONFORMED NAME: PATTEN CORP DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MORGAN STANLEY DEAN WITTER & CO CENTRAL INDEX KEY: 0000895421 STANDARD INDUSTRIAL CLASSIFICATION: FINANCE SERVICES [6199] IRS NUMBER: 363145972 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 1585 BROADWAY CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2123922222 MAIL ADDRESS: STREET 1: 1585 BROADWAY STREET 2: 38TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10036 FORMER COMPANY: FORMER CONFORMED NAME: DEAN WITTER DISCOVER & CO DATE OF NAME CHANGE: 19960315 SC 13D 1 SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------- SCHEDULE 13D (RULE 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO 13d- 1(a) AND AMENDMENTS THERETO FILED PURSUANT TO 13d-2(a) BLUEGREEN CORPORATION (Name of Issuer) COMMON STOCK, PAR VALUE $0.01 PER SHARE (Title of Class of Securities) 703365 10 6 (CUSIP Number) HAROLD LUEKEN MORGAN STANLEY & CO. INCORPORATED 1221 AVENUE OF THE AMERICAS, 27TH FLOOR NEW YORK, NEW YORK 10020 (212) 762-7380 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) With a copy to David J. Lowery Jones, Day, Reavis & Pogue 2001 Ross Avenue, 23rd Floor Dallas, Texas 75201 Tel. No. (214) 220-3939 AUGUST 14, 1998 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [_]. (Continued on following pages) (Page 1 of 114 Pages) CUSIP NO. 703365106 13D Page 2 of 114 Pages ================================================================================ 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Morgan Stanley Dean Witter & Co. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [_] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not applicable - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 0 SHARES ------------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH 2,941,177 (See Item 5) REPORTING ------------------------------------------------------------ PERSON WITH 9 SOLE DISPOSITIVE POWER 0 ------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 2,941,177 (See Item 5) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,941,177 (See Item 5) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 12.6% (See Item 5) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO ================================================================================ CUSIP NO. 703365106 13D Page 3 of 114 Pages ================================================================================ 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON MSREF III, Inc. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [_] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not applicable - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 0 SHARES ------------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH 2,941,177 (See Item 5) REPORTING ------------------------------------------------------------ PERSON WITH 9 SOLE DISPOSITIVE POWER 0 ------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 2,941,177 (See Item 5) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,941,177 (See Item 5) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 12.6% (See Item 5) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN ================================================================================ CUSIP NO. 703365106 13D Page 4 of 114 Pages ================================================================================ 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Morgan Stanley Real Estate Investors III, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 0 SHARES ------------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH 80,882 (See Item 5) REPORTING ------------------------------------------------------------ PERSON WITH 9 SOLE DISPOSITIVE POWER 0 ------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 80,882 (See Item 5) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 80,882 (See Item 5) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.3% (See Item 5) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN ================================================================================ CUSIP NO. 703365106 13D Page 5 of 114 Pages ================================================================================ 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Morgan Stanley Real Estate Fund III, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 0 SHARES ------------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH 1,104,412 (See Item 5) REPORTING ------------------------------------------------------------ PERSON WITH 9 SOLE DISPOSITIVE POWER 0 ------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 1,104,412 (See Item 5) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,104,412 (See Item 5) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 4.7% (See Item 5) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN ================================================================================ CUSIP NO. 703365106 13D Page 6 of 114 Pages ================================================================================ 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON MSP Real Estate Fund, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 0 SHARES ------------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH 1,170,589 (See Item 5) REPORTING ------------------------------------------------------------ PERSON WITH 9 SOLE DISPOSITIVE POWER 0 ------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 1,170,589 (See Item 5) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,170,589 (See Item 5) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.0% (See Item 5) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN ================================================================================ CUSIP NO. 703365106 13D Page 7 of 114 Pages ================================================================================ 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON MSREF III Special Fund, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 0 SHARES ------------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH 585,294 (See Item 5) REPORTING ------------------------------------------------------------ PERSON WITH 9 SOLE DISPOSITIVE POWER 0 ------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 585,294 (See Item 5) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 585,294 (See Item 5) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.5% (See Item 5) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN ================================================================================ ITEM 1. SECURITY AND ISSUER. This Schedule 13D relates to the common stock, par value $.01 per share (the "Common Stock") of Bluegreen Corporation, a Massachusetts corporation (the "Issuer"). The principal executive offices of the Issuer are located at 4960 Blue Lake Drive, Boca Raton, Florida 33431. ITEM 2. IDENTITY AND BACKGROUND. This Schedule 13D is being filed by (i) Morgan Stanley Dean Witter & Co., a Delaware corporation ("MSDW"), (ii) MSREF III, Inc., a Delaware corporation, (iii) Morgan Stanley Real Estate Investors III, L.P., a Delaware limited partnership ("MSREI"), (iv) Morgan Stanley Real Estate Fund III, L.P., a Delaware limited partnership ("MSREF"), (v) MSP Real Estate Fund, L.P., a Delaware limited partnership ("MSP") and (vi) MSREF III Special Fund, L.P., a Delaware limited partnership ("Special Fund" and, together with MSREI, MSREF and MSP, the "Funds"). The general partner of each of the Funds is MSREF III, Inc., a wholly-owned subsidiary of MSDW. MSREF III, Inc. is also a limited partner of MSREF, MSP and Special Fund. The principal business of MSDW is to provide global financial services through its three primary businesses -- securities, asset management and credit services. The principal business of MSREF III, Inc. is to act as the general partner of the Funds. The principal business of each of the Funds is to acquire, hold and dispose of investments in real estate and real estate related asset portfolios and operating companies. The address of the principal business and office of the Funds, MSREF III, Inc. and MSDW is 1585 Broadway, New York, New York 10036. During the last five years, none of MSDW, MSREF III, Inc., MSREI, MSREF, MSP, or Special Fund, nor to the best knowledge of any of them, any of the persons listed on Appendix A attached hereto has been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. The general and limited partners of the Funds contributed, in the aggregate, $25,000,000 for the 2,941,177 shares of Common Stock purchased by them. 8 ITEM 4. PURPOSE OF TRANSACTION. The response to item 6 is incorporated herein by this reference. The principal purpose of the Funds in purchasing the shares of Common Stock and entering into the Securities Purchase Agreement (as defined herein) was to make a significant investment in the Company. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. The Funds, pursuant to the Securities Purchase Agreement, have acquired and, for purposes of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended ("Rule 13d-3") may be deemed to beneficially own, in the aggregate, 2,941,177 shares of Common Stock, or 12.6% of the total number of shares of Common Stock outstanding pursuant to Rule 13d-3 (the "Outstanding Shares"). MSREI purchased 80,882 of such shares, representing 0.3% of the Outstanding Shares; MSREF purchased 1,104,412 of such shares, representing 4.7% of the Outstanding Shares; MSP purchased 1,170,589 of such shares, representing 5.0% of the Outstanding Shares; and Special Fund purchased 585,294 of such shares, representing 2.5% of the Outstanding Shares. (The percentages set forth in the preceding sentences are based on 23,404,605 shares of Common Stock outstanding, which number was provided by the Company). Each of MSREF III, Inc. and MSDW may be deemed to have shared voting and dispositive power with respect to the shares of Common Stock held by the Funds. Except as disclosed herein, none of MSREI, MSREF, MSP, Special Fund, MSREF III, Inc. or MSDW has effected any transaction in shares of the Common Stock during the preceding 60 days. No other person is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, such securities. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. SECURITIES PURCHASE AGREEMENT Purchase of Additional Common Stock Pursuant to the Securities Purchase Agreement, dated as of August 14, 1998, among MSREI, MSREF, MSP, Special Fund and the Company (the "Securities Purchase Agreement"), the Company has the right to require the Funds, during the 18-month period commencing on August 14, 1998 (the "Commitment Period"), to purchase from the Company at any time and from time to time up to an additional 2,941,176 shares (subject to adjustment in certain circumstances) of Common Stock (the "Remaining Shares") at a purchase price per share equal to $8.50 (subject to adjustment in certain circumstances). If, on or prior to the expiration of the Commitment Period, the Company has not offered to sell to the Funds all of the Remaining 9 Shares and the Company has satisfied certain conditions, or if at any time during the Commitment Period the Funds receive notice from the Company of the occurrence of, or the execution by the Company of a definitive agreement which will result in, a Change of Control (as defined in the Securities Purchase Agreement) of the Company, the Funds will have the right to purchase any or all of the Remaining Shares not previously sold to the Funds at a purchase price per share equal to $8.50 (subject to adjustment in certain circumstances). The Securities Purchase Agreement requires that the stockholders of the Company approve any issuance of shares of Common Stock to the Funds if the shares proposed to be issued, when added to the shares of Common Stock previously issued to the Funds (or their Permitted Transferees) under the Securities Purchase Agreement, results in the Funds (and their Permitted Transferees) owning an aggregate of 20% or more of the number of shares of Common Stock issued and outstanding on August 14, 1998 (excluding any shares of Common Stock issued to the Funds or their Permitted Transferees on August 14, 1998). Board of Directors and Board Committees Pursuant to the Securities Purchase Agreement, the Company has (i) amended its bylaws to provide for a staggered board of directors and (ii) increased the number of directors serving on the Company's board of directors by two. The vacancies created by such increase have been filled by two persons designated by the Funds. For so long as the Funds or their Permitted Transferees (as defined in the Securities Purchase Agreement) own at least 70% of the aggregate number of shares of Common Stock theretofore actually issued to the Funds (or their Permitted Transferees) under the Securities Purchase Agreement (the "Required Interest"), MSREF and MSP will have the right to designate two directors on the management slat of nominees to the Company's Board of Directors (the "MSREF Designees"). If the Funds (and their Permitted Transferees) own less than the Required Interest but own, in the aggregate, at least 50% of the aggregate number shares of Common Stock theretofore actually issued to the Funds (or their Permitted Transferees) under the Securities Purchase Agreement (the "Minimum Interest"), MSP will have the right to designate one director on the management slate of nominees to the Company's Board of Directors. The MSREF Designees have the right to serve on any standing committee of the Board to the extent their participation on such committee would not exceed their proportionate representation of the full Board. Agreement to Vote The Funds have agreed to vote, and to cause the Permitted Transferees to vote, all of their shares of Common Stock for the election of the management slate of nominees (other than the MSREF Designees) to the Company's Board of Directors for so long as the Funds (and their Permitted Transferees) own, in the aggregate, at least the Minimum Interest and the MSREF Designees are serving on the Company's Board of Directors. Taking of Certain Actions For so long as the Funds own at least the Required Interest, certain material actions by the Company or its subsidiaries, including the consolidation or merger of the Company and the sale of 10 substantially all the assets of the Company, will require the affirmative vote of one of the MSREF Designees, or if the Funds do not have a representative on the Board of Directors as a result of the failure of the Company to nominate the MSREF Designees or failure of the shareholders of the Company to elect the MSREF Designees, then such action shall require the approval of the Funds and Permitted Transferees holding a majority of the share of Common Stock issued pursuant to the Securities Purchase Agreement. Preemptive Rights Each of the Funds (and their Permitted Transferees) have the right to purchase their proportionate share of any issuance (subject to certain exceptions) by the Company for cash of (i) any of its capital stock, (ii) any rights, options or warrants to purchase any such capital stock or any securities that are or may become convertible or exercisable into Common Stock and (iii) any securities that are or may become convertible or exercisable into Common Stock. Restrictions on Sale or Transfer Subject to certain exceptions, the Funds and their Permitted Transferees have agreed not to offer, sell, transfer, assign, pledge or hypothecate any shares of Common Stock issued to them prior to the earlier of (i) August 14, 2000 or (ii) six months following the date on which the Funds have purchased all the shares of Common Stock to be purchased by them under the Securities Purchase Agreement, but in no event earlier than February 14, 2000. A copy of the Securities Purchase Agreement is attached hereto as Exhibit 2 and incorporated herein by reference. VOTING AND COOPERATION AGREEMENT Pursuant to the Voting and Cooperation Agreement (the "Voting Agreement"), dated as of August 14, 1998, among MSREI, MSREF, MSP, Special Fund and certain shareholders of the Company (collectively, the "Stockholders"), each Stockholder has agreed (i) if stockholder approval is sought, to vote or cause to be voted all shares of Common Stock which such Stockholder has the power to vote or in respect of which such Stockholder has the power to direct the vote in favor of the sale and issuance of shares of Common Stock to the Funds under the Securities Purchase Agreement, (ii) to vote or cause to be voted all shares of Common Stock which such Stockholder has the power to vote or in respect of which such Stockholder has the power to direct the vote in favor of the MSREF Designees, (iii) not to take any direct or indirect action to remove either of the MSREF Designees from the Company's Board of Directors without cause and (iv) to vote all of the shares of Common Stock which such Stockholder has the power to vote or in respect of which such Stockholder has the power to direct the vote in a manner such that the Company's Restated Articles of Organization and Amended and Restated Bylaws do not, at any time, conflict with the provisions of the Voting Agreement or the Securities Purchase Agreement. See "Securities Purchase Agreement -- Purchase of Additional Common Stock" above. 11 A copy of the Voting Agreement is attached hereto as Exhibit 3 and incorporated herein by this reference. REGISTRATION RIGHTS AGREEMENT Pursuant to the Registration Rights Agreement, dated as of August 14, 1998, among MSREI, MSREF, MSP, Special Fund and the Company, after a certain period the Company is required to effect a shelf registration of shares of Common Stock held by the Funds, any of their Permitted Transferees and certain of their assignees (collectively, the "Registration Persons"). In addition, subject to certain conditions, the Registration Persons have the right (i) to require the Company to register shares of Common Stock held by such Registration Person and (ii) when the Company proposes to register Common Stock to include shares of Common Stock held by such Registration Person in such registration of Common Stock. A copy of the Registration Rights Agreement is attached hereto as Exhibit 4 and incorporated herein by this reference. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. The following are filed herewith as Exhibits to this Schedule 13D. Exhibit No. Description - ------- ----------- 1 Joint Filing Agreement 2 Securities Purchase Agreement 3 Voting and Cooperation Agreement 4 Registration Rights Agreement 12 SIGNATURE After reasonable inquiry, and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: August 14, 1998 MORGAN STANLEY DEAN WITTER & CO. By: /s/ ROBERT KOPPENOL ------------------------------------ Name: Robert Koppenol Title: Principal 13 SIGNATURE After reasonable inquiry, and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: August 14, 1998 MSREF III, INC. By:/s/ JOHN A. HENRY ------------------------------------ Name: John A. Henry Title: Vice President 14 SIGNATURE After reasonable inquiry, and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: August 14, 1998 MORGAN STANLEY REAL ESTATE INVESTORS III, L.P. By: MSREF III, Inc., its General Partner By:/s/ JOHN A. HENRY ------------------------------------ Name: John A. Henry Title: 15 SIGNATURE After reasonable inquiry, and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: August 14, 1998 MORGAN STANLEY REAL ESTATE FUND III, L.P. By: MSREF III, Inc., its General Partner By:/s/ JOHN A. HENRY ---------------------------------------- Name: John A. Henry Title: Vice President 16 SIGNATURE After reasonable inquiry, and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: August 14, 1998 MSP REAL ESTATE FUND, L.P. By: MSREF III, Inc., its General Partner By:/s/ JOHN A. HENRY ------------------------------------ Name: John A. Henry Title: Vice President 17 SIGNATURE After reasonable inquiry, and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: August 14, 1998 MSREF III SPECIAL FUND, L.P. By: MSREF III, Inc., its General Partner By: /s/ JOHN A. HENRY ------------------------------------ Name: John A. Henry Title: Vice President 18 APPENDIX A CERTAIN INFORMATION REGARDING DIRECTORS AND EXECUTIVE OFFICERS OF MORGAN STANLEY DEAN WITTER & CO. AND MSREF III, INC. Set forth below are the names of the directors and executive officers of Morgan Stanley Dean Witter & Co. ("MSDW") and MSREF III, Inc. as well as their residence or business addresses, and present principal occupations. If no address is given, the director's or executive officer's business address is that of MSDW at 1535 Broadway, New York, New York 10036. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to MSDW. Each individual is a United States citizen. 1. MORGAN STANLEY DEAN WITTER & CO. Name and Business Address Present Principal Occupation ------------------------- ---------------------------- * Robert P. Bauman Deputy Chairman of BTR plc BTR plc BTR House Carlisle Place Buckingham Gate London SW1P 1BX * Edward A. Brennan Retired; former Chairman of the Board, President and Chief Executive Officer of Sears, Roebuck and Co. * Diana D. Brooks President and Chief Executive Officer of Sotheby's Holdings, Inc. Sotheby's Holdings, Inc. 1334 York Avenue New York, NY 10021 * Daniel B. Burke Retired; former Chief Executive Officer of Capital Cities/ABC, Inc. Christine A. Edwards Executive Vice President, Chief Legal Officer and Secretary * Richard B. Fisher Chairman of the Board of Directors of Morgan Stanley & Co. Incorporated * C. Robert Kidder Chairman of the Board and Chief Borden, Inc. Executive Officer of Borden, Inc. 180 East Broad Street Columbus, Ohio 43215 * John J. Mack President and Chief Operating Officer 19 Name and Business Address Present Principal Occupation ------------------------- ---------------------------- * Miles L. Marsh Chairman and Chief Executive Officer of Fort James Corporation Fort James Corporation 75 Tri-State International Office Center Lincolnshire, IL 60069 * Michael A. Miles Special Limited Partner, Forstmann 1350 Lake Road Little & Company Lake Forest, Illinois 60045 * Allen E. Murray Retired; former Chairman of the Board of Directors and Chief Executive Officer of Mobil Corporation * Philip J. Purcell Chairman of the Board and Chief Executive Officer * Clarence B. Rogers, Jr. Chairman of the Board of Equifax, Inc. Equifax, Inc. 1600 Peachtree Street, N.W. Atlanta, Georgia 30309 John Schaefer Chief Strategic and Administrative Officer * Thomas C. Schneider Executive Vice President Robert G. Scott Executive Vice President and Chief Financial Officer * Laura D'Andrea Tyson Professor of Economics and Business Haas School of Business Administration, University of Room S 545 California, Berkeley Berkeley, California 94720-1900 ___________________ * Director 20 2. MSREF III, INC. Name and Business Address Present Principal Occupation ------------------------- ---------------------------- *James M. Allwin Managing Director of Morgan Stanley & Co. Incorporated; Chairman of MSREF III, Inc. *William M. Lewis Managing Director of Morgan Stanley & Co. Incorporated; President of MSREF III, Inc. *Owen D. Thomas Managing Director of Morgan Stanley & Co. Incorporated ___________________ * Director 21 EXHIBIT INDEX Exhibit No. Description - ------- ----------- 1 Joint Filing Agreement 2 Securities Purchase Agreement 3 Voting and Cooperation Agreement 4 Registration Rights Agreement EX-1 2 JOINT FILING AGREEMENT EXHIBIT 1 JOINT FILING AGREEMENT In connection with the beneficial ownership of shares of common stock, par value $.01 per share, of Bluegreen Corporation, Morgan Stanley Dean Witter & Co., MSREF III, Inc., Morgan Stanley Real Estate Investors III, L.P., Morgan Stanley Real Estate Fund III, L.P., MSP Real Estate Fund, L.P. and MSREF III Special Fund, L.P., hereby agree to the joint filing on behalf of such persons of all filings, including the filing of a Schedule 13D and all amendments thereto pursuant to Rule 13d-2(f)(1)(iii) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), required under the Exchange Act pursuant to which joint filing statements are permitted. IN WITNESS WHEREOF, the undersigned have caused this Joint Filing Agreement to be signed as of August 14, 1998.
MORGAN STANLEY DEAN WITTER & CO. MSREF III, INC. By: /s/ ROBERT KOPPENOL By: /s/ JOHN A. HENRY ----------------------------- ----------------------------- Name: Robert Koppenol Name: John A. Henry Title: Principal Title: Vice President MORGAN STANLEY REAL ESTATE MORGAN STANLEY REAL ESTATE FUND III, L.P. INVESTORS III, L.P. By: MSREF III, Inc., its General Partner By: MSREF III, Inc., its General Partner By: /s/ JOHN A. HENRY By: /s/ JOHN A. HENRY ---------------------------------- ---------------------------------- Name: John A. Henry Name: John A. Henry Title: Vice President Title: Vice President MSP REAL ESTATE FUND, L.P. MSREF III SPECIAL FUND, L.P. By: MSREF III, Inc., its General Partner By: MSREF III, Inc., its General Partner By: /s/ JOHN A. HENRY By: /s/ JOHN A. HENRY ---------------------------------- ---------------------------------- Name: John A. Henry Name: John A. Henry Title: Vice President Title: Vice President
EX-2 3 SECURITIES PURCHASE AGREEMENT EXHIBIT 2 SECURITIES PURCHASE AGREEMENT by and among MORGAN STANLEY REAL ESTATE FUND III, L.P., MORGAN STANLEY REAL ESTATE INVESTORS III, L.P., MSP REAL ESTATE FUND, L.P., MSREF III SPECIAL FUND, L.P. and BLUEGREEN CORPORATION Dated as of August 14, 1998 TABLE OF CONTENTS Page ARTICLE I. DEFINITIONS.............................................................. 1 Section 1.01. Definitions............................................... 1 ARTICLE II. SALE AND PURCHASE OF COMMON STOCK........................................ 8 Section 2.01. Sale and Purchase of the Common Stock..................... 8 Section 2.02. Closing................................................... 8 Section 2.03. Post-Closing Purchases.................................... 9 Section 2.04. Use of Proceeds...........................................10 ARTICLE III. REPRESENTATIONS AND WARRANTIES...........................................11 Section 3.01. Representations and Warranties of the Company.............11 Section 3.02. Representations and Warranties of Purchasers..............27 ARTICLE IV. ADDITIONAL AGREEMENTS OF THE PARTIES.....................................29 Section 4.01. Taking of Necessary Action................................29 Section 4.02. Conduct of Business.......................................29 Section 4.03. Financial Statements and Other Reports....................30 Section 4.04. Access....................................................31 Section 4.05. Lost, Stolen, Destroyed or Mutilated Securities...........32 Section 4.06. No Termination of Obligations Upon Change of Control......32 Section 4.07. Restrictions on Sale or Transfer; Legend..................32 Section 4.08. Further Assurances........................................34 Section 4.09. Solicitation..............................................34 Section 4.10. Board Representation......................................35 Section 4.11. Board of Directors Approvals..............................37 Section 4.12. Preemptive Rights.........................................39 Section 4.13. Adjustments...............................................41 Section 4.14. [Reserved]................................................41 Section 4.15. Financing Fees; Advisory Fees.............................41 Section 4.16. Shareholder Approval......................................42 -i- ARTICLE V. CONDITIONS OF CLOSING....................................................42 Section 5.01. Conditions of Purchase at Closing.........................42 Section 5.02. Conditions of Sale at Closing.............................44 Section 5.03. Conditions of Purchase of Remaining Shares................45 Section 5.04. Conditions of Sale of Remaining Shares....................47 ARTICLE VI. [RESERVED]...............................................................48 ARTICLE VII. MISCELLANEOUS............................................................48 Section 7.01. Survival of Representations and Warranties................48 Section 7.02. Notices...................................................48 Section 7.03. Entire Agreement; Amendment...............................49 Section 7.04. Counterparts..............................................50 Section 7.05. Governing Law.............................................50 Section 7.06. Public Announcements......................................50 Section 7.07. Expenses..................................................50 Section 7.08. Indemnification...........................................51 Section 7.09. Successors and Assigns....................................52 Section 7.10. Jurisdiction..............................................52 Section 7.11. Specific Performance......................................53 Section 7.12. Captions..................................................53 Section 7.13. Severability..............................................53 Section 7.14. Mutual Waiver of Jury Trial...............................53 Section 7.15. Exculpation...............................................53 Section 7.16. Obligations...............................................53 Section 7.17. Schedules.................................................53 EXHIBITS Exhibit A - Form of Notice of Issuance Exhibit B - Form of Registration Rights Agreement Exhibit C - Form of Shareholder Voting Agreements Exhibit D - Form of Legal Opinion of Company Counsel Exhibit E - Amendment to Company Bylaws -ii- SECURITIES PURCHASE AGREEMENT THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is dated as of August 14, 1998, by and among MORGAN STANLEY REAL ESTATE FUND III, L.P., a Delaware limited partnership ("MSREF III"), MORGAN STANLEY REAL ESTATE INVESTORS III, L.P., a Delaware limited partnership ("MSREI"), MSP REAL ESTATE FUND, L.P., a Delaware limited partnership ("MSP"), MSREF III SPECIAL FUND, L.P., a Delaware limited partnership ("MSREF Special") (MSREF III, MSREI, MSP and MSREF Special are herein referred to individually as a "Purchaser" and collectively as "Purchasers") and BLUEGREEN CORPORATION, a Massachusetts corporation (the "Company") . Capitalized terms not otherwise defined where used herein shall have the meanings ascribed thereto in Article I. WHEREAS, Purchasers desire to purchase from the Company, and the Company desires to sell to Purchasers, in the manner and subject to the terms and conditions (including, without limitation, the conditions set forth in Section 2.03(c)) set forth in this Agreement, shares of its Common Stock for an aggregate purchase price of up to $50,000,000; WHEREAS, the Company and Purchasers desire to set forth certain agreements herein. NOW THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements herein contained and intending to be legally bound hereby, the parties hereby agree as follows: ARTICLE I. DEFINITIONS Section 1.01. Definitions. As used in this Agreement, the following terms shall have the meanings set forth below: "Affiliate" or "affiliate" shall mean, with respect to any Person, any other Person which directly or indirectly controls or is controlled by or is under common control with such Person. As used in this definition, "control" (including its correlative meanings, "controlled by" and "under common control with") shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies of such Person, whether through ownership of securities or partnership or other ownership interests, by contract or otherwise. "Ancillary Documents" shall mean the Registration Rights Agreement and Shareholder Voting Agreements. "Applicable Law" shall mean all applicable provisions of all (i) constitutions, treaties, statutes, laws (including common law), rules, regulations, administrative positions, ordinances, codes or orders of any Governmental Entity, self-regulating organization, securities exchange or other securities trading system, (ii) Consents of, with or from any Governmental Entity, and (iii) orders, decisions, injunctions, judgments, awards and decrees of or agreement with any Governmental Entity. "Board of Directors" or "Board" shall mean the duly elected and qualified board of directors of the Company. "Business Day" shall mean any day, other than a Saturday, Sunday or a day on which banking institutions in the City of New York or Boca Raton, Florida are authorized or obligated by law or executive order to close. "Calculation Date" shall mean the first date on which all the shares of Common Stock to be sold pursuant to Sections 2.01 and 2.03 of this Agreement shall have been acquired by Purchasers. "Capitalized Lease Obligations" means an obligation that is required to be classified and accounted for as a capitalized lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined in accordance with GAAP. "Change of Control" shall mean (i) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company and its Subsidiaries; or (ii) a majority of the Board of Directors of the Company shall consist of Persons who are not Continuing Directors of the Company; or (iii) the acquisition by any Person or Group (as defined in Section 13(d) of the Exchange Act, but excluding Purchasers or the Permitted Transferees or any of their respective Affiliates) of the power, directly or indirectly, to vote or direct the voting of securities having more than 50% of the total voting power for the election of directors of the Company or of any direct or indirect holding company thereof. "Closing" and "Closing Date" shall have the meanings set forth in Section 2.02(a). "Closing Share Price" shall mean $8.50 per share of Common Stock. During the Commitment Period and for shares of Common Stock not yet sold to Purchasers, the Closing Share Price shall be adjusted in accordance with Section 4.13 hereof. "Code" shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder. "Co-Investment Partnership" shall mean any investment fund sponsored by Morgan Stanley, Dean Witter & Co. or its Affiliates to co-invest alongside Purchasers. "Commitment Period" shall mean the 18 month period commencing on the Closing Date. "Common Stock" shall mean the Common Stock, par value $.01 per share, of the Company. "Company Environmental Reports" shall have the meaning set forth in Section 3.01(t)(vi). 2 "Company Property" shall mean all real property directly or indirectly owned or leased by the Company and the Company Subsidiaries. "Company Subsidiary" and "Company Subsidiaries" shall have the meanings set forth in Section 3.01(d). "Consents" shall mean any consent, approval, authorization, waiver, permit, grant, franchise, concession, agreement, license, exemption or order of registration, certificate, declaration or filing with, or report or notice to, any Person or Governmental Entity. "Continuing Director" shall mean, as of the determination date, any Person who (i) was a member of the Board of Directors of the Company on the Closing Date (after giving effect to the provisions of Section 4.10), or (ii) was nominated for election or elected to the Board of Directors of the Company with the affirmative vote of a majority of the Continuing Directors of the Company who were members of the Board of Directors at the time of such nomination or election. "Currency Agreement" shall mean, in respect of a Person, any foreign exchange contract, currency swap agreement or other similar agreement as to which such Person is a party or a beneficiary. "Development Properties" shall have the meaning set forth in Section 3.01(r)(ix). "Environmental Claim" shall have the meaning set forth in Section 3.01(t)(vii). "Environmental Laws" shall have the meaning set forth in Section 3.01(t)(vii). "Environmental Permits" shall have the meaning set forth in Section 3.01(t)(i). "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "GAAP" shall mean generally accepted accounting principles in the United States of America in effect from time to time, consistently applied. "Governmental Entity" shall mean any court, department, body, board, bureau, administrative agency or commission or other governmental authority or instrumentality, whether federal, state, local or foreign. "Hazardous Substances" shall have the meaning set forth in Section 3.01(t)(vii). "Indebtedness" shall mean, with respect to any Person on any date of determination (without duplication), (i) the principal of and premium (if any) in respect of indebtedness of such Person for borrowed money, (ii) the principal of and premium (if any) in respect of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person in respect of letters of credit or other similar instruments 3 (including reimbursement obligations with respect thereto) (other than obligations with respect to letters of credit securing obligations (other than obligations described in clauses (i), (ii) and (v)) entered into in the ordinary course of business of such Person to the extent that such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the third business day following receipt by such Person of a demand for reimbursement following payment on the letter of credit), (iv) all obligations of such Person to pay the deferred and unpaid purchase price of property or services (except trade payables and other accrued expenses incurred in the ordinary course of business), which purchase price is due more than six months after the date of placing such property in service or taking delivery and title thereto or the completion of such services, (v) all Capitalized Lease Obligations of such Person, (vi) all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; provided, however, that if such obligations have not been assumed, the amount of such Indebtedness shall be deemed to be the lesser of the principal amount of the obligations or the fair market value of the pledged property or assets, (vii) all Indebtedness of other Persons to the extent guaranteed by such Person, and (viii) to the extent not otherwise included in this definition, obligations under Currency Agreements and Interest Rate Agreements. Unless specifically set forth above, the amount of Indebtedness of any Person at any date shall be the outstanding principal amount of all unconditional obligations as described above, as such amount would be reflected on a balance sheet prepared in accordance with GAAP, and the maximum liability of such Person, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations described above at such date. "Interest Rate Agreement" means with respect to any Person any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement as to which such Person is party or a beneficiary. "Lien" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof). "Material Adverse Effect" shall mean any event, circumstance, change, development or effect which individually or in the aggregate would have a material adverse effect on (i) the assets, business, properties, liabilities, condition (financial or otherwise), or results of operations of the Company and the Company Subsidiaries taken as a whole, (ii) the ability of the Company or any Company Subsidiary to perform its obligations under this Agreement or the Ancillary Documents or (iii) the validity or enforceability of this Agreement or any of the Ancillary Documents or the rights or remedies of Purchasers hereunder and thereunder. "Maximum Shares" shall mean that number of shares of Common Stock equal to $50,000,000 divided by the Closing Share Price, rounded up to the next whole number in the event the foregoing calculation results in a fractional share. 4 "Minimum Interest" shall mean ownership by Purchasers (or Permitted Transferees) of at least 50% of the aggregate number of shares of Common Stock theretofore actually issued to Purchasers (or Permitted Transferees) pursuant to Sections 2.01 and 2.03 of this Agreement (as may be adjusted for any dividends payable in shares of Common Stock or any stock split or reverse stock split, combination, consolidation or reclassification of the Common Stock), but excluding any shares of Common Stock issued to Purchasers (or any Permitted Transferees) upon exercise of the preemptive rights set forth in Section 4.12. "Minimum Shares" shall mean that number of shares of Common Stock equal to $25,000,000 divided by the Closing Share Price, rounded up to the next whole number in the event the foregoing calculation results in a fractional share. "MSDW" shall have the meaning set forth in Section 4.15(a). "Notice of Issuance" shall mean the notice delivered by the Company to Purchasers in accordance with the provisions of Section 2.03, which shall be substantially in the form attached hereto as Exhibit A. "Parity Securities" shall mean any stock of any class or classes of the Company deemed to rank on a parity with the Common Stock, either as to dividends or upon liquidation, if the holders of such class or classes shall be entitled to receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up of the Company, as the case may be, without preference or priority, one over the other, as between the holders of such stock and the holders of shares of Common Stock. "Permits" shall have the meaning set forth in Section 3.01(p). "Permitted Interest" shall mean ownership by Purchasers (or Permitted Transferees) of at least 33 1/3% of the aggregate number of shares of Common Stock theretofore actually issued to Purchasers (or Permitted Transferees) pursuant to Sections 2.01 and 2.03 of this Agreement (as may be adjusted for any dividends payable in shares of Common Stock or any stock split or reverse stock split, combination, consolidation or reclassification of the Common Stock), but excluding any shares of Common Stock issued to Purchasers (or Permitted Transferees) upon exercise of the preemptive rights set forth in Section 4.12. "Permitted Liens" shall mean any Lien that constitutes a "Permitted Lien" under the Indenture for the Senior Notes as in effect on the date hereof. "Permitted Transferee" shall mean any Purchaser, Affiliate of Purchasers, any Co-Investment Partnership and The Morgan Stanley Special Situations Investment Program and the constituent investors therein or Affiliates thereof (provided that MSDW or any Subsidiary or Affiliate thereof has the sole power to vote and dispose of any shares of Common Stock held by any constituent investors) or Affiliates of such constituent investors). 5 "Person" or "person" shall mean an individual, corporation, association, partnership, group (as defined in Section 13(d)(3) of the Exchange Act), trust, joint venture, business trust or unincorporated organization, or a government or any agency or political subdivision thereof. "Projects" shall have the meaning set forth in Section 3.01(r)(ix). "Registration Rights Agreement" shall mean the Registration Rights Agreement to be executed by the Company and Purchasers at the Closing, which shall be substantially in the form attached hereto as Exhibit B, as amended from time to time in accordance with the terms thereof. "Remaining Shares" shall have the meaning set forth in Section 2.03(a). "Required Interest" shall mean ownership by Purchasers (or Permitted Transferees) of at least 70% of the aggregate number of shares of Common Stock theretofore actually issued to Purchasers (or Permitted Transferees) pursuant to Sections 2.01 and 2.03 of this Agreement (as may be adjusted for any dividends payable in shares of Common Stock or any stock split, reverse stock split, combination, consolidation or reclassification of the Common Stock), but excluding any shares of Common Stock issued to Purchasers (or Permitted Transferees) upon exercise of the preemptive rights set forth in Section 4.12. "Required Shareholder Approval" shall have the meaning set forth in Section 5.03(i). "Securities Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Securities Filings" shall have the meaning set forth in Section 3.01(h). "SEC" shall mean the United States Securities and Exchange Commission. "Senior Notes" shall mean the 10.5% senior secured notes due April 1, 2008 of the Company dated April 1, 1998 in the aggregate original principal amount of $110,000,000. "Senior Officer's Certificate" shall have the meaning set forth in Section 4.03(a). "Senior Securities" shall mean any stock of any class or classes of the Company deemed to rank prior to the Common Stock, either as to dividends or upon liquidation, if the holders of such class or classes shall be entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up of the Company, as the case may be, in preference or priority to the holders of Common Stock. "Shareholder Voting Agreement" shall mean the Voting and Cooperation Agreement to be executed by Purchasers and the Persons listed on Schedule 5.01(i) hereto which shall be substantially in the form attached hereto as Exhibit C, as amended from time to time in accordance with the provisions thereof. 6 "Subsequent Closing" shall have the meaning set forth in Section 5.03(b). "Subsequent Closing Date" shall have the meaning set forth in Section 2.03(b). "Subsidiary" shall mean, with respect to any corporation (the "parent") any other corporation, association or other business entity of which 50% or more of the shares of the voting stock are owned or controlled, directly or indirectly, by the parent or one or more Subsidiaries of the parent, or by the parent and one or more of its Subsidiaries. "Surviving Person" shall mean the continuing or surviving Person of a merger, consolidation or other corporate combination, the Person receiving a transfer of all or a substantial part of the properties and assets of the Company, or the Person consolidating with or merging into the Company in a merger, consolidation or other corporate combination in which the Company is the continuing or surviving Person, but in connection with which the Common Stock of the Company is exchanged or converted into the securities of any other Person or the right to receive cash or any other property. "Tax" means any federal, state, local or foreign taxes, including, but not limited to, income, gross receipts, windfall profits, premium, value added, severance, stamp, occupation, property, environmental (including Taxes under Code Section 59A), production, sales, use, license, excise, franchise, payroll, employment, withholding or similar taxes, together with any interest, additions or penalties with respect thereto and any interest in respect of such penalties. "Tax Returns" means any return, report, information return form, declaration, claim for refund, statement or other document (including any amendments thereto and including any schedule or attachment thereto) in connection with Taxes that are required to be filed with any Governmental Entity or other tax authority, or sent or provided to another party under Applicable Law. "Threshold Date" shall mean the Business Day on which the Company issues to Purchasers (or Permitted Transferees) any shares of Common Stock that, when added to the shares of Common Stock previously issued to Purchasers (or Permitted Transferees) under the terms of this Agreement, results in the ownership by Purchasers (and Permitted Transferees) of an aggregate of 20% or more of the issued and outstanding shares of Common Stock on the Closing Date (but excluding any shares of Common Stock issued to Purchasers or Permitted Transferees on the Closing Date). "Timeshare/Residential Business" shall mean the business of (i) acquiring, developing, marketing, operating and financing vacation ownership interests at resorts, (ii) acquiring residential land parcels and developing, marketing and financing subdivided residential lots to retail customers, and (iii) any other business incidental to any of the foregoing, whether or not conducted by the Company or any Company Subsidiary on the Closing Date including, without limitation, the title company business. "Total Debt to Total Market Capitalization Ratio" means as of any particular date, the ratio of (i) the Company's total Indebtedness (but excluding any Indebtedness arising from pledged 7 or hypothecated receivables (land or timeshare) of the Company or any Company Subsidiary) (less unrestricted cash of the Company) to (ii) the Company's total market capitalization (i.e., market value of the issued and outstanding Common Stock) plus the Company's total Indebtedness. "Transfer" shall have the meaning as set forth in Section 4.07(a). ARTICLE II. SALE AND PURCHASE OF COMMON STOCK Section 2.01. Sale and Purchase of the Common Stock. At the Closing, subject to all of the terms and conditions of this Agreement, including the satisfaction or waiver of the conditions set forth in Sections 5.01 and 5.02, and in reliance upon the representations, warranties, covenants and agreements of the parties set forth herein, the Company shall sell to Purchasers, and Purchasers shall purchase from the Company, that number of shares of Common Stock (which shall be a whole number of shares) equal to the Minimum Shares for an aggregate purchase price equal to such number of shares of Common Stock to be purchased multiplied by the Closing Share Price. Section 2.02. Closing. (a) Subject to the satisfaction or waiver of the conditions set forth in Sections 5.01 and 5.02 of this Agreement, the purchase and sale of the shares of Common Stock pursuant to Section 2.01 (the "Closing") shall take place at the offices of Jones, Day, Reavis & Pogue, counsel to Purchasers, at 599 Lexington Avenue, 32nd Floor, New York, New York 10017, on August ___, 1998 (the "Closing Date"), or at such other time and place as may be mutually agreed upon in writing by Purchasers and the Company. (b) At the Closing, (i) the Company will deliver to Purchasers certificates for the shares of Common Stock to be sold and issued in accordance with the provisions of Section 2.01 registered in the respective names and proportions set forth in a notice delivered by Purchasers to the Company at least two Business Days prior to the Closing Date; (ii) Purchasers shall deliver the aggregate purchase price for the shares to be sold and issued and each Purchaser, in full payment for such shares of Common Stock, will deliver to the Company in immediately available funds via wire transfer to such account or accounts as the Company shall specify in writing to Purchasers at least two Business Days prior to the Closing Date, an amount equal to its pro rata share of the purchase price to be paid by such Purchaser as set forth in the notice described in clause (i) above; and (iii) each party shall take or cause to be taken such other actions, and shall execute and deliver such other instruments or documents, as shall be required under Article V hereof. Section 2.03. Post-Closing Purchases. (a) Subject to all of the terms and conditions of this Agreement, including the satisfaction or waiver of the conditions set forth in Sections 5.03 and 5.04 hereof, the Company shall, at its election, sell to Purchasers, and Purchasers shall purchase from the Company, at any 8 time and from time to time prior to expiration of the Commitment Period up to an aggregate number of shares of Common Stock equal to the Maximum Shares less the Minimum Shares (the "Remaining Shares") for a purchase price per share equal to the Closing Share Price. In the event that the determination of the number of shares of Common Stock to be issued at any Subsequent Closing Date would result in a fractional share of Common Stock being issued to Purchasers, such fractional share shall be rounded up to the next whole number and such adjusted amount shall constitute the number of shares of Common Stock to be issued to Purchasers on such Subsequent Closing Date. If at any time the Company desires to sell and issue all or any portion of such Remaining Shares to Purchasers and has obtained approval of the Board of Directors to issue such Remaining Shares, the Company shall deliver a Notice of Issuance to each Purchaser not less than 15 Business Days prior to the proposed date of the sale and purchase set forth therein which shall set forth the number of shares of Common Stock to be sold and purchased (which shall have an aggregate minimum purchase price of $1,000,000 unless the minimum purchase price of any Remaining Shares left after giving effect to such purchase and sale shall be less than $1,000,000, in which case the number of shares of Common Stock to be purchased and sold shall be all of the unsold Remaining Shares), the aggregate purchase price thereof (which shall be equal to such number of shares of Common Stock to be sold and purchased multiplied by the Closing Share Price) and any other information required to be stated therein. All such unsold Remaining Shares shall be sold and purchased pursuant to not more than two Notices of Issuance per month each for an aggregate minimum purchase price of $1,000,000 (or the remaining amount in the case of the last sale and purchase) and shall be sold and purchased prior to expiration of the Commitment Period. Purchasers' obligations to purchase any of the Remaining Shares as requested by the Company pursuant to a Notice of Issuance shall be subject to the satisfaction or waiver of the conditions set forth in Section 5.03 of this Agreement. (b) Purchasers shall purchase the number of Remaining Shares set forth in a Notice of Issuance delivered to Purchasers on the day (which shall be a Business Day and shall not be less than 15 Business Days after delivery of the Notice of Issuance to such Purchaser) and at the location set forth therein, or at such other time and place as may be mutually agreed upon in writing by Purchasers and the Company. On each such date (each a "Subsequent Closing Date"), (i) the Company will deliver to Purchasers certificates for such Remaining Shares to be purchased registered in the respective names and denominations set forth in a notice delivered by Purchasers to the Company at least two Business Days prior to the Subsequent Closing Date, and (ii) the Purchasers, in full payment for such Remaining Shares, will deliver to the Company in immediately available funds via wire transfer to such account or accounts as the Company shall specify in writing to Purchasers at least two Business Days prior to the Subsequent Closing Date, an amount equal to the purchase price to be paid by the Purchasers (which shall be equal to the number of Remaining Shares to be purchased by the Purchasers on such Subsequent Closing Date multiplied by the Closing Share Price). (c) In the event that (i) on or prior to expiration of the Commitment Period, the Company has not offered to sell to Purchasers all of the Remaining Shares or (ii) Purchasers receive notice from the Company in accordance with Section 4.06 hereof of the occurrence of, or the execution by the Company of a definitive agreement which will result in a Change of Control and the satisfaction or waiver of all conditions of closing (other than the conditions 9 which can only be satisfied on the closing date of such transaction) required under the terms of such definitive agreement, then, in each such case, and subject to the satisfaction of the conditions set forth in Section 5.04, Purchasers shall have the right, but not the obligation, to purchase any or all Remaining Shares not sold to Purchasers as of such date at a purchase price per share equal to the Closing Share Price, and the closing for the sale and issuance shall take place within 15 Business Days following expiration of the Commitment Period or receipt of the notice described in clause (ii) above hereof, as the case may be. Notwithstanding the foregoing, Purchasers' right to purchase any Remaining Shares upon expiration of the Commitment Period under clause (i) above shall be subject to satisfaction of either of the following conditions (which shall not be conditions to Purchasers' right to purchase any Remaining Shares under clause (ii) above) in addition to those set forth in Sections 5.03 and 5.04 hereof: (i) the Company achieving total revenues of at least $220,000,000 for the 12-month period ended on the last day of the third full fiscal quarter after the Closing Date; or (ii) the Company achieving net income (excluding write-offs) of at least $15,000,000 for the 12-month period ended on the last day of the third full fiscal quarter after the Closing Date. Section 2.04. Use of Proceeds. The proceeds to be received by the Company from the sale and issuance of any shares of Common Stock to Purchasers hereunder shall be used for purposes of funding future acquisitions and development plans, expanding the Company's operations, repaying existing Indebtedness of the Company or any Company Subsidiary and such other items as the Board of Directors may approve from time to time. Notwithstanding the foregoing, the Company may utilize up to $34,000,000 of the proceeds for purposes of funding the repurchase of all or any portion of the Company's 8.25% convertible subordinated debentures due 2012 in accordance with the Company's right to call such debentures and the holders' option to elect to receive cash in lieu of shares of Common Stock as payment thereof. ARTICLE III REPRESENTATIONS AND WARRANTIES Section 3.01. Representations and Warranties of the Company. The Company represents and warrants to, and agrees with, Purchasers as follows: (a) Organization and Good Standing. The Company and each Company Subsidiary is a corporation or partnership duly organized, validly existing and in good standing under the laws of the jurisdiction in which it was incorporated or organized and has all requisite power and authority (corporate or otherwise) to own, operate and lease its properties and to carry on its business as it is now being conducted. The Company and each Company Subsidiary is duly licensed or qualified as a foreign corporation to transact business and is in good standing under the laws of each other jurisdiction in which its ownership or lease of assets or conduct 10 of its business requires such qualification, except where the failure to be so licensed or qualified in any such jurisdiction would not have a Material Adverse Effect. (b) Authorization. The Company has full corporate power and authority to enter into this Agreement and the Ancillary Documents and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and each Ancillary Document and the consummation of the transactions contemplated hereby and thereby have been duly authorized by the Board of Directors of the Company. Other than as set forth in Section 4.16, no shareholder approval or other corporate proceedings on the part of the Company are necessary to authorize the execution, delivery and performance of this Agreement and each Ancillary Document and the transactions contemplated hereby and thereby. This Agreement has been, and on or prior to the Closing Date each Ancillary Document will be, duly and validly executed and delivered by the Company. This Agreement constitutes, and upon its execution on or prior to the Closing Date each Ancillary Document will constitute, a valid and binding obligation of the Company enforceable against the Company in accordance with its terms subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights generally and to general principles of equity. (c) Capitalization. Schedule 3.01(c) sets forth as of the date hereof (i) the authorized capital stock of the Company, the number of shares of each class of capital stock issued and outstanding and the number of shares of Common Stock reserved for issuance in connection with employee benefit, stock option and dividend reinvestment plans, and (ii) all options, warrants, convertible securities, subscriptions, scrip calls, contracts, undertakings, arrangements and commitments to issue which may result in the issuance of equity securities of the Company, in each case setting forth the identity (which may be by class) of the holder thereof, the exercise or similar price and the date of expiration or termination thereof. All of the issued and outstanding shares of the Company's capital stock have been duly and validly authorized and issued and are fully paid and non-assessable and have been issued in compliance with all applicable requirements of law and are not subject to any preemptive or similar rights. Other than as set forth in Schedule 3.01(c) or pursuant to this Agreement, as of the date hereof (i) there are no options, warrants, subscriptions, scrip calls, commitments or other agreements which obligate the Company to issue, sell or transfer, or repurchase, redeem or otherwise acquire any equity securities of the Company, (ii) there are no outstanding securities or rights convertible into or exchangeable for shares of any capital stock of the Company, and (iii) there are no contracts, commitments, understandings or arrangements which obligate the Company to issue additional shares of its capital stock or equity securities or rights convertible into or exchangeable for shares of any capital stock of the Company, or options, warrants or rights to purchase or acquire any additional shares of its capital stock. Except as set forth in Schedule 3.01(c), as of the date hereof, there are no contracts, agreements or understandings between the Company and any Person granting such Person the right to require the Company to file a registration statement under the Securities Act with respect to any securities of the Company owned or to be owned by such Person or to require the Company to include such securities in any other registration statement filed by the Company under the Securities Act. The Company has duly and validly reserved from its issued and outstanding shares of Common Stock the Maximum Shares. The shares of Common Stock to be sold and issued to Purchasers during 11 the Commitment Period will, when issued to and paid for by Purchasers in accordance with this Agreement, be duly and validly authorized and issued and will be fully paid and non-assessable and will have been issued in compliance with all applicable requirements of law and not be subject to any preemptive or similar rights. (d) Capitalization of Company Subsidiaries. Schedule 3.01(d) lists as of the date hereof all Subsidiaries of the Company and their respective jurisdictions of incorporation or formation (collectively, the "Company Subsidiaries" and each individually a "Company Subsidiary"). Except as set forth in Schedule 3.01(d), as of the date hereof the Company owns, directly or indirectly, all the shares of outstanding capital stock of, or all partnership interests in, each Company Subsidiary. Except as set forth on Schedule 3.01(d), as of the date hereof there are no loans from the Company to any Company Subsidiary or from any Company Subsidiary to the Company. Except as set forth in Schedule 3.01(d), as of the date hereof (i) there are no outstanding options, warrants, scrip calls, subscriptions, commitments or other agreements which obligate any Company Subsidiary to issue, sell or transfer, or repurchase, redeem or otherwise acquire any securities of such Company Subsidiary, (ii) there are outstanding no securities or rights convertible into or exchangeable for shares of any capital stock of, or partnership interests in, any Company Subsidiary and (iii) there are no contracts, commitments, understandings or arrangements which obligate any Company Subsidiary to issue additional shares of its capital stock or partnership interests or options, warrants or rights to purchase or acquire any additional shares of its capital stock or partnership interests. All of the issued and outstanding shares of capital stock of each of the Company Subsidiaries are duly authorized, validly issued, fully paid and non- assessable and have been issued in compliance with all applicable requirements of law, and, as of the date hereof, except as set forth in Schedule 3.01(d), are owned by the Company free and clear of any Lien, preemptive rights, purchase options, purchase rights, calls, exchange rights or other claims with respect thereto. Except as set forth in Schedule 3.01(d) and for loans made to customers, including the Company Subsidiaries listed therein, as of the date hereof none of the Company or the Company Subsidiaries own directly or indirectly any interest or investment in any corporation, partnership, joint venture, business, trust or Person (other than investments in short-term investment securities). (e) No Violation. Except as set forth in Schedule 3.01(e), the execution, delivery and performance by the Company of this Agreement and the Ancillary Documents, the consummation of the transactions by the Company contemplated hereby and thereby and the compliance by the Company with any of the provisions hereof and thereof will not conflict with, violate or result in a breach of any provision of, require a Consent under, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of or accelerate the performance required by, or result in a right of termination or acceleration under, (i) any provision of the articles of organization, certificate of incorporation, bylaws or other governing instrument of the Company or any Company Subsidiary or (ii) (x) any mortgage, note, indenture, deed of trust, lease, loan agreement, warrant, registration rights agreement or other agreement or instrument binding on the Company or any Company Subsidiary or (y) assuming that the clearances, filings, Consents and approvals specified in Schedule 3.01(f) have been obtained or made and any waiting period applicable thereto has expired or been terminated, any permit, concession, grant, franchise, 12 license, judgment, order, decree, ruling, injunction, statute, law, ordinance, rule, regulation or administrative position of any Governmental Entity, self-regulating organization, securities exchange or securities trading system or any other Person, in the case of (x) or (y), binding on or otherwise applicable to the Company, the Company Subsidiaries or their respective properties or assets, and the result of which could reasonably be expected to have a Material Adverse Effect. (f) Consents. Except as set forth in Schedule 3.01(f), no Consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required in connection with the execution, delivery and performance of this Agreement and the Ancillary Documents by the Company and the consummation of the transactions by the Company hereunder and thereunder, including, without limitation, any required filings with the Federal Trade Commission ("FTC") and the Department of Justice ("DOJ") referred to in Section 4.01. (g) Financial Statements; Absence of Undisclosed Liabilities. (i) The Company has previously delivered to Purchasers copies of (a) the consolidated balance sheet of the Company and the Company Subsidiaries at March 30, 1997 and March 29, 1998, and the related consolidated statements of operations, statements of shareholders' equity and cash flows for the fiscal years ended March 31, 1996, March 30, 1997 and March 29, 1998, inclusive, as reported in the Company's Annual Report on Form 10-K for the fiscal year ended March 29, 1998, filed by the Company with the SEC under the Exchange Act, in each case accompanied by the audit report of Ernst & Young LLP, independent public accountants of the Company, and (b) the unaudited consolidated balance sheet of the Company and the Company Subsidiaries at June 28, 1998 and the related unaudited consolidated statement of operations, statements of shareholders' equity and cash flows for the three month period then ended. All of such financial statements fairly present the consolidated financial position of the Company and the Company Subsidiaries as of the dates shown and the results of the consolidated operations, statements of shareholders' equity and cash flows of the Company and the Company Subsidiaries for the respective fiscal periods or as of the respective dates therein set forth, in each case subject, as to interim statements, to changes resulting from year-end adjustments (none of which will be material in amount and effect). All of such financial statements have been prepared in accordance with GAAP consistently applied during the periods involved, except as otherwise set forth in the notes thereto. The Company has provided to Purchasers the fiscal year 1999 budget (for the fiscal year ending March 31, 1999) of the Company which was prepared in good faith and was based upon assumptions which the Company believed were reasonable. Purchasers understand that the Company's actual results may vary from the budget and no assurances can be given that the Company will meet its projections. As of the date hereof, the Company is not aware of any facts or circumstances which would cause the Company not to attain the projections of aggregate sales and net income set forth in the 1999 budget. (ii) As of the date hereof and except as otherwise contemplated by this Agreement, the Company and the Company Subsidiaries have no liabilities or obligations 13 of any nature (absolute, accrued, contingent or otherwise) whether due or to become due, which are not fully reflected or reserved against in the balance sheet as of June 28, 1998 included in such financial statements, except for liabilities that may have arisen in the ordinary course of business and consistent with past practice and that, either individually or in the aggregate, do not have and could not reasonably be expected to have a Material Adverse Effect. (h) Securities Filings. The Company has filed all reports, registration statements, proxy statements, schedules, forms and other documents, together with any amendments and supplements required to be made with respect thereto, that were required to be filed with (i) the SEC under the Securities Act or the Exchange Act and (ii) any applicable state securities authorities (all such reports, statements, schedules, forms and other documents are referred to herein collectively as the "Securities Filings"). As of their respective dates, the Securities Filings, including any financial statements contained therein, complied in all material respects with all of the rules and regulations of the SEC promulgated under the Securities Act or the Exchange Act and of any other regulatory authority with which they were filed, and, except as disclosed on Schedule 3.01(h), none of the Securities Filings contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading and were complete and accurate in all material respects. Except for general market and economic conditions applicable to the Company's industries in general, there are no facts known to the Company existing as of the date hereof peculiar to the Company or any Company Subsidiary which the Company has not disclosed in the Securities Filings or to Purchasers or their counsel in writing which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. (i) Compliance with Applicable Law. Neither the Company nor any Company Subsidiary is in breach of, default under, or violation of its Restated Articles of Organization, certificate of incorporation, bylaws or other governing instrument or any law, statute, order, rule, regulation, policy or guideline of any Governmental Entity applicable to the Company or any Company Subsidiary, other than such defaults or violations which, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. The business of the Company and of each Company Subsidiary has been, and is currently being, conducted in compliance with all Applicable Laws of any Governmental Entity, including, without limitation, state condominium statutes, state time share statutes, the Federal Trade Commission Act, the Truth-in-Lending Act and Regulation Z promulgated thereunder, the Fair Housing Act, the Fair Debt Collection Practices Act, the Equal Credit Opportunity Act and Regulation B promulgated thereunder, the Interstate Land Sales Full Disclosure Act, the Home Mortgage Disclosure Act and Regulation C promulgated thereunder, the Civil Rights Acts of 1964 and 1968, building codes, land use laws, environmental laws, federal and state telemarketing laws, and seller of travel or travel agency laws, except where the failure to comply, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. (j) Legal Proceedings. There are no legal, administrative, arbitration or other proceedings, claims, actions, inquiries or governmental investigations of any nature pending 14 against the Company or any Company Subsidiary as of the date hereof or to which the Company or any Company Subsidiary or any of their assets are subject as of the date hereof that were required to be disclosed in the Securities Filings which were not so disclosed, and, to the knowledge of the Company, there has not been threatened any such proceeding, claim, action, inquiry or governmental investigation against the Company or any Company Subsidiary, in each case which, either individually or in the aggregate, would, if adversely determined, have a Material Adverse Effect. Except as set forth in Schedule 3.1(j), as of the date hereof, neither the Company nor any Company Subsidiary is subject to any outstanding order, writ, judgment, injunction, or decree of any Governmental Entity. (k) Employee Benefits. (i) Each "employee benefit plan" (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and any other material employee plan, agreement or arrangement that is maintained or otherwise contributed to by the Company or the Company Subsidiaries for the benefit of their employees (collectively, "Company Plans") has been administered and is in material compliance with the terms of such plan and all Applicable Laws. Each of the Company Plans (including amendments thereto) in existence as of the date hereof is fully described in or has been included as an exhibit to the Securities Filings or is otherwise set forth in Schedule 3.01(k). (ii) As of the date hereof, there are no pending or, to the knowledge of the Company, threatened, actions, claims or lawsuits which have been asserted or instituted involving or arising out of the Company Plans, with respect to the operation or administration of such plans (other than routine benefit claims). (iii) Neither the Company nor any Company Subsidiary has incurred, and no event has occurred which would be reasonably likely to result in, any material unfunded liability under ERISA or the Code with respect to any Company Plan (other than routine expenses related to administration of the Company Plans and payment of routine benefit claims), including, but not limited to, liability resulting from a complete or partial withdrawal from a multiemployer plan within the meaning of Section 3(37) of ERISA or a termination of a Company Plan which is covered by Title IV of ERISA, but which is not a multiemployer plan. (iv) No Company Plan exists which could result in the payment to any employee of the Company or any Company Subsidiary of any money or other property or rights or accelerate or provide any other rights or benefits to any such employee as a result of the transaction contemplated by this Agreement, whether or not such payment would constitute a parachute payment within the meaning of Section 280G of the Code. (v) As of the date hereof, neither the Company nor any Company Subsidiary contributes to or is obligated to contribute to, or has contributed to or has been obligated within the past five years to contribute to, any multiemployer plan within the meaning of Section 3(37) of ERISA. 15 (vi) Except as disclosed in the Securities Filings or set forth on Schedule 3.01(k), as of the date hereof, neither the Company nor any Company Subsidiary maintains any plans or programs providing post- retirement medical benefits (except as required by law), death benefits or other post-retirement welfare benefits. (vii) The Internal Revenue Service has issued a letter for each Company Plan existing as of the date hereof that is intended to be qualified under Section 401(a) of the Code, determining that such plan is so qualified and is exempt from tax under Section 501(a) of the Code, and nothing has occurred since the date of such determination letter that has adversely affected such qualification. (l) Absence of Certain Changes. Except as set forth in the Securities Filings or on Schedule 3.01(l), since March 29, 1998 and through the date hereof, the business of the Company and each Company Subsidiary has been operated in the ordinary course of business and consistent with past practice and, except as set forth in the Securities Filings or in Schedule 3.01(l) or as specifically provided in this Agreement or the Ancillary Documents: (i) except for circumstances affecting the Company's industry generally, there has been no event, condition or change that individually or in the aggregate has had or could reasonably be expected in the foreseeable future to have a Material Adverse Effect; (ii) neither the Company nor any Company Subsidiary has sold or transferred any of the assets it owns except in the ordinary course of business and consistent with past practice (it being understood that the sale of receivables is in the ordinary course); (iii) neither the Company nor any Company Subsidiary has incurred any Indebtedness other than Indebtedness (x) to sellers of real property and to trade creditors incurred in the ordinary course of business and consistent with past practice, (y) under the Senior Notes, and (z) under the existing credit facilities with Heller Financial, Inc., Foothill Capital Corporation and Finova Capital Corporation; (iv) neither the Company nor any Company Subsidiary has changed its accounting policies or procedures as in effect on March 29, 1998; (v) except as contemplated by this Agreement, neither the Company nor any Company Subsidiary has amended or in any way altered its Restated Articles of Organization, certificate of incorporation, bylaws, partnership agreement or other governing document (provided that the foregoing shall not apply to the reorganization and restructuring of certain Company Subsidiaries on the terms previously disclosed to Purchasers); (vi) the Company has not (A) changed the number of shares of authorized capital stock of the Company, (B) except as contemplated by this Agreement, issued or granted any option, warrant, call, commitment, subscription, right to purchase or 16 agreement of any character relating to the authorized or issued and outstanding capital stock of the Company or any Company Subsidiary, or any securities convertible into shares of such stock (except for grants of options to purchase Common Stock approved by the Company's Board of Directors to be granted pursuant to director or employee benefit plans of the Company), (C) split, combined or reclassified any shares of the capital stock of the Company, (D) declared, set aside or paid any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of the capital stock of the Company, or (E) redeemed or otherwise acquired any shares of such capital stock; (vii) the Company has not increased the number of directors of the Board other than as required by Section 4.10 hereof; (viii) neither the Company nor any Company Subsidiary has acquired any real estate assets, or any other assets other than in the ordinary course of business and consistent with past practice; (ix) neither the Company nor any Company Subsidiary has entered into employment agreements with any employee (other than an agreement terminable at will without any financial penalty), or granted any increase in the compensation (including employee benefits) of any employee, except for increases (A) in the ordinary course of business and consistent with past practice, (B) as a result of collective bargaining or (C) as required by any employment or other agreement, policy or plan currently in effect; and (x) neither the Company nor any Company Subsidiary has agreed, whether in writing or otherwise, to take any action that, if taken, would render any of the representations set forth in this Section 3.01(l) untrue in any material respect. (m) Disclosure. Neither this Agreement nor any Ancillary Document nor any certificate or disclosure statement delivered by or on behalf of the Company or the Company Subsidiaries prior to the date hereof, nor any other written materials delivered by the Company to Purchasers prior to the date hereof in connection with the transactions contemplated hereby and identified in Schedule 3.01(m), as of the date thereof contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements contained herein and therein, in light of the circumstances under which they were made, not misleading. Other than competitive factors and economic conditions affecting the Company's industry generally, there are no facts known to the Company existing as of the date hereof which the Company has not disclosed to Purchasers or their counsel in writing which would cause any of the materials described in Schedule 3.01(m) to contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading. (n) Securities Law Matters. None of the Company, the Company Subsidiaries or any of their respective Affiliates or any other Person acting on their behalf has, in connection with the offer and sale of the Common Stock hereunder, engaged in (a) any form of general solicitation or general advertising (as those terms are used within the meaning of Rule 502(c) under the Securities Act), (b) assuming the accuracy of Purchasers' representations in 17 Section 3.02(d), any action involving a public offering within the meaning of Section 4(2) of the Securities Act, or (c) assuming the accuracy of Purchasers' representations in Section 3.02(d), and compliance by Purchasers and the Permitted Transferees with the terms hereof, any action that would require the registration under the Securities Act of the offering and sale of the Common Stock pursuant to this Agreement or that would violate applicable state securities or "blue sky" laws. The Company has not made and will not make, directly or indirectly, any offer or sale of Common Stock of the same or similar classes as the Common Stock if, as a result of such offer or sale, the offer and sale of the Common Stock contemplated hereby could fail to be entitled to exemption from the registration requirements of the Securities Act. As used herein, the terms "offer" and "sale" have the meanings specified in Section 2(3) of the Securities Act. (o) Brokers and Finders. Except in connection with the "fairness opinion" obtained by the Company in connection with the transactions contemplated hereby, neither the Company nor any Company Subsidiary nor any of their respective officers, directors, Affiliates, employees or agents has utilized any broker, finder, placement agent or financial advisor or incurred any liability for any fees or commissions in connection with any of the transactions contemplated hereby or by the Ancillary Documents except as provided in this Agreement. (p) Licenses and Permits. The Company and the Company Subsidiaries possess all material licenses, franchises, permits, certificates, Consents, orders, approvals and authorizations (collectively, the "Permits") and have made all declarations and filings with all Governmental Entities necessary under law or otherwise to conduct their businesses as currently being conducted, and each such Permit is valid and subsisting and in full force and effect, except where the failure to possess or do any of the foregoing could not reasonably be expected to have a Material Adverse Effect. No negotiation, application, action or proceeding is pending for the renewal or modification of any material Permits which in any case could reasonably be expected to have a Material Adverse Effect, and no application, petition, objection, opposition, action or proceeding is pending or, to the knowledge of the Company, threatened that may result in the denial of an application for renewal, revocation, modification, nonrenewal or suspension of any Permit, the issuance of a cease-and-desist order, or the imposition of any administrative or judicial sanction with respect to the Company or the Company Subsidiaries which in any case could reasonably be expected to have a Material Adverse Effect. The Timeshare/Residential Business of the Company and the Company Subsidiaries is being operated in accordance with all applicable Permits, except where the failure to comply could not reasonably be expected to have a Material Adverse Effect. (q) Material Agreements. Each contract, agreement, understanding, arrangement and commitment (the "Contracts") which is existing on the date hereof and is Material to the business, results of operations, financial condition, prospects or operations of the Company and the Company Subsidiaries is described in or has been included as an exhibit to the Securities Filings or is otherwise set forth on Schedule 3.01(q), including, without limitation, all Contracts for Indebtedness. A true and correct copy of each Contract set forth in Schedule 3.01(q) has been delivered or made available to Purchasers including, without limitation, all amendments and supplements thereto and any schedules and exhibits attached thereto. For purposes of this Section 3.01(q), a Contract is deemed "Material" if such Contract (i) has a maturity of one year 18 or more and (ii) involves (or could reasonably be expected to involve) (x) in the case of any Contracts for the sale or purchase of any real property or timeshare inventory or any Contracts relating to construction or renovation or capital expenditures or capital additions or improvements, a dollar amount in excess of $2,000,000 per annum or (y) in the case of any other Contracts not described in (x), a dollar amount in excess of $1,000,000 per annum. Each Contract referred to above and existing on the date hereof is a valid, binding and enforceable agreement of the Company or a Company Subsidiary and, no event has occurred that has caused, or with the passage of time or giving of notice would cause, nor has the execution of this Agreement caused, or will the transactions contemplated under this Agreement cause the Company or any Company Subsidiary to be in default under a material provision, or give rise to a right of acceleration, or termination under any Contract, the result of which could reasonably be expected to have a Material Adverse Effect. (r) Properties and Insurance. (i) The Securities Filings or Schedule 3.01(r)(i) set forth all of the material real property directly or indirectly owned or leased by the Company and the Company Subsidiaries as of the date hereof. Each of the Company and each Company Subsidiary has good and marketable title in fee simple to all such Company Property owned by it and good and valid title to all personal property owned by it that is material to its business, in each case, free and clear of all Liens other than the Permitted Liens, those Liens disclosed on Schedule 3.01(r)(i) and those Liens which would not, either individually or in the aggregate, have a Material Adverse Effect. The Company and the Company Subsidiaries have in full force and effect property damage, liability and other insurance with financially sound and reputable insurers at levels of coverage reasonable and customary in the Company's industry and, as of the date hereof, there is no material claim by the Company or any Company Subsidiary pending under any such insurance policies as to which coverage has been questioned, denied or disputed by the underwriters of such policies. Except as set forth in Schedule 3.01(r), policies of title insurance (issued on customary American Land Title Association forms) have been issued by national title insurance companies insuring the fee simple title of the Company or the Company Subsidiaries, as the case may be, to each of the Company Properties in amounts at least equal to the original cost thereof subject only to Permitted Liens, such policies are in full force and effect and no claim has been made under any such policy, and the Company is not aware of any fact or information which would constitute a defense by the issuer of any such policy or an exclusion from coverage, except where the failure to have such insurance could not reasonably be expected to have a Material Adverse Effect. True and correct copies of all such policies together with all exceptions referenced therein have been made available by the Company to Purchasers. (ii) Except as set forth in Schedule 3.01(r)(ii), as of the date hereof, there is no uninsured physical damage to any Company Property in excess of $50,000. Except as set forth in Schedule 3.01(r)(ii), as of the date hereof each improved Company Property is in good operating condition and repair and is structurally sound and free of defects, with no alterations or repairs being required thereto under Applicable Laws or insurance company requirements and consists of sufficient land, parking areas, driveways and other 19 improvements and lawful means of access and utility service and capacity to permit the use thereof in the manner and for the purposes for which it is presently devoted, except where the failure of any of the foregoing could not reasonably be expected to have a Material Adverse Effect. The Company has made available to Purchasers true and complete copies of all engineering reports, inspection reports, maintenance plans and other documents relating to the condition of any Company Property prepared for the Company or otherwise in the Company's or a Company Subsidiary's possession. (iii) Except as set forth in Schedule 3.01(r)(iii), and except as could not either individually, or in the aggregate, reasonably be expected to have a Material Adverse Effect, (A) no condemnation, eminent domain or rezoning proceedings are pending or threatened with respect to any of the Company Properties; (B) no road widening or change of grade of any road adjacent to any Company Property is underway or has been proposed; (C) there is no proposed change in the assessed value of any Company Property; (D) no special assessment has been made or threatened against any Company Property; and (E) no Company Property is subject to any "impact fee" or to any agreement with any Governmental Entity to pay for sewer extension, oversizing utilities, lighting or like expenses or charges for work or services by such Governmental Entity. (iv) Each of the Company Properties is an independent unit which does not rely on any facilities located on any property not included in such Company Property to fulfill any municipal or governmental requirement or for the furnishing to such Company Property of any essential building systems, utilities or customary amenities, other than facilities the benefit of which inures to the Company Properties pursuant to one or more valid easements, or facilities which are located on or abutting Company Properties and are sufficient to serve more than one property adequately and lawfully. Each of the improved timeshare Company Properties is served by public water and sanitary systems and all other utilities, and each of the improved timeshare Company Properties has lawful access to public roads, in all cases sufficient for the current use and occupancy of each Company Property. All parcels of land included in each Company Property that purport to be contiguous are contiguous and are not separated by strips, gaps or gores. No improvements constituting a part of any Company Property encroach on real property not constituting a part of such Company Property or an abutting Company Property except where such encroachments could not reasonably be expected to have a Material Adverse Effect. (v) The Company has made available to Purchasers each survey, study or report prepared by or for the Company or any Company Subsidiary in connection with any Company Property's compliance or non-compliance with the requirements of the Americans with Disabilities Act (the "ADA"), other than routine correspondence and memoranda. (vi) Schedule 3.01(r)(vi) sets forth a complete and accurate list of all Material (as defined in Section 3.01(q) of this Agreement) commitments, letters of intent, agreements, or similar written understandings existing as of the date hereof made or entered into by the Company or any Company Subsidiary to sell, mortgage, pledge or 20 hypothecate any Company Property or to otherwise enter into a Material (as defined in Section 3.01(q) of this Agreement) transaction in respect of the ownership or financing of any Company Property or to purchase or acquire an option, right of first refusal or similar right in respect of any real property, which has not yet been reduced to a written contract. The Company has made available to Purchasers a true and correct copy of each such Material commitment, letter of intent or other understanding. (vii) Except as restricted by the existing credit facilities with Heller Financial, Inc., Finova Capital Corporation and Foothill Capital Corporation and by the Senior Notes and except as set forth in Schedule 3.01(r)(vii), as of the date hereof, the Company and Company Subsidiaries have the right to sell, transfer, lease, and finance, without limitations, the Company Properties. (viii) The Company has provided to Purchasers a capital expenditure budget for each Material Company Property set forth in the Securities Filings which describes the capital expenditures which the Company has budgeted for such Company Property for the period ending March 31, 1999. The Company believes, as of the date hereof, that the costs and the schedules set forth therein are reasonable estimates and projections. Purchasers understand that the Company's actual results may vary from the budget and no assurances can be given that the Company will meet its projections. As of the date hereof, the Company is not aware of any facts or circumstances which would cause the Company to exceed the capital expenditure budget in the aggregate. (ix) The Securities Filings or Schedule 3.01(r)(i) disclose each material Company Property and Schedule 3.01(r)(ix) contains a list of each property which, as of the date hereof, the Company has under letter of intent or option which is Material (as defined in Section 3.01(q) of this Agreement), which consists of or includes a material amount of undeveloped land or which is intended to be or is in the process of being developed or materially rehabilitated ("Development Properties") and a brief description of the development or material rehabilitation intended by the Company or any Company Subsidiary to be carried out or completed therein (collectively, the "Projects"). Each Development Property is zoned for the lawful development thereon of the Project. The Company has obtained, or has no reason to believe it will not be able to obtain in the ordinary course of business, all Permits, licenses, Consents and authorizations required for the lawful development or rehabilitation thereon of such Project, except where the failure to obtain such Permits, licenses, Consents and authorizations could not reasonably be expected to have a Material Adverse Effect. The Company has made available to Purchasers all feasibility studies, soil tests, due diligence reports and other studies, tests or reports performed by or for the Company, or otherwise in the possession of the Company, which relates to the Development Properties. (s) Taxes. Each of the Company and each Company Subsidiary has filed all federal, state and local income and franchise Tax Returns which are required to be filed and all such Tax Returns are correct and complete in all material respects. The Company and each Company Subsidiary has paid all Taxes shown thereon to be due and all other taxes and assessments known to the Company or any such Company Subsidiary to be payable by it, 21 except to the extent the same have become due and payable but are not yet delinquent or to the extent the same are being contested in good faith and except to the extent any such failure would not have a Material Adverse Effect. To the extent that Tax liabilities and assessments have accrued but have not yet become payable, such Tax liabilities have been adequately reflected as liabilities on the books of the Company and the Company Subsidiaries and adequate reserves have been established for the payment thereof. Schedule 3.01(s) sets forth the fiscal year through which the consolidated Federal Income Tax Returns of the Company and the Company Subsidiaries have been examined and reported on by the Internal Revenue Service. To the Company's knowledge, there exists no dispute with the Internal Revenue Service with respect to the consolidated Federal Income Tax Returns of the Company and the Company Subsidiaries which, if adversely determined, would have a Material Adverse Effect. Except as set forth on Schedule 3.01(s), the Company is not subject to any audit by any Governmental Entity with regard to any Tax nor has any Governmental Entity asserted against the Company any liability for any Tax due and payable, but not paid, the result of which, if adversely determined, could reasonably be expected to have a Material Adverse Effect. As of the date hereof, none of the Company and the Company Subsidiaries (i) has been a member of an affiliated group filing a consolidated federal income tax return (other than a group the common parent of which is the Company), or (ii) has any liability for the taxes of any Person (other than any taxes of the Company and the Company Subsidiaries) under Treasury Regulation (S) 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract or otherwise. (t) Environmental Matters. (i) Each of the Company and each Company Subsidiary has obtained, and now is in compliance with and maintains as currently valid and effective all permits required under the Environmental Laws (the "Environmental Permits") in connection with the operation of its businesses and properties, all of which Environmental Permits are listed in Schedule 3.01(t), except where the failure to do any of the foregoing could not reasonably be expected to have a Material Adverse Effect. Except as disclosed in the Conclusions sections of the Company Environmental Reports, each of the Company and each Company Subsidiary, and each property of the Company and the Company Subsidiaries is, has been, and will be in compliance with all terms and conditions of the Environmental Permits and all Environmental Laws, except where the failure to do any of the foregoing could not reasonably be expected to have a Material Adverse Effect. (ii) Each of the Company and each Company Subsidiary has provided to Purchasers all written information and written communications (whether from a Governmental Entity, citizens' group, tenant, employee or other person) prepared or received by them or in its possession or control as of the date hereof regarding (x) alleged or suspected noncompliance in any material respect of any of the Company Properties with any Environmental Laws or Environmental Permits or (y) alleged or suspected material liability of the Company or the Company Subsidiaries under any Environmental Law. (iii) There are no environmental Liens, encumbrances or restrictions on any of the Company Properties and, to the Company's knowledge, no actions by any 22 Governmental Entity or by any Persons have been, or are in process of being, taken which are reasonably likely to subject any Company Property to such Liens, encumbrances or restrictions, except for such Liens, encumbrances or restrictions which, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. (iv) No Environmental Claim with respect to the operations or the businesses of the Company or the Company Subsidiaries, or with respect to any Company Properties, has been asserted or, to the Company's knowledge, threatened, and no circumstances exist with respect to the Company or the Company Subsidiaries or the Company Properties that would reasonably be expected to result in any liability or any Environmental Claim being asserted, in any such case, against (i) the Company or the Company Subsidiaries, or (ii) any Person whose liability for any Environmental Claims the Company or the Company Subsidiaries has or may have retained or assumed contractually, by operation of law or otherwise, except any Environmental Claim which, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. (v) Except as disclosed in Schedule 3.01(t) or set forth in the Conclusions sections of the Company Environmental Reports and except for events or circumstances which could not reasonably be expected to have a Material Adverse Effect, (i) no generation, storage, handling, disposal, treatment, spillage or release of Hazardous Substances in violation of any law has occurred or is occurring on the Company Properties, whether conducted or caused by Company or the Company Subsidiary, their predecessors, tenants or any other parties, and none of the Company or the Company Subsidiaries has been notified or anticipates being notified of potential responsibility in connection with any such activity or with any site that has been placed on, or proposed to be placed on, the National Priorities List or its state or foreign equivalents pursuant to the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. (S)(S) 9601 et seq., or analogous state or foreign laws, (ii) no Hazardous Substances are present on, in or under any Company Property in a manner or condition that is reasonably likely to give rise to an Environmental Claim, (iii) none of the Company or the Company Subsidiaries has released or arranged for the release of any Hazardous Substances at any location, (iv) no underground storage tanks, above-ground storage tanks, surface impoundments, disposal areas, pits, ponds, lagoons, open trenches or disused industrial equipment are present at any Company Property, (v) no transformers, capacitators, ballasts or other equipment containing polychlorinated biphenyls (PCBs) are present at any Company Property, except for any such transformers, capacitors, ballasts or other equipment owned by any utility company, and (vi) no asbestos or asbestos-containing material, no radon, no lead-based paint and no lead in drinking water is present at any Company Property and no employee, agent, contractor or subcontractor of the Company or the Company Subsidiaries is now or has in the past been exposed to friable asbestos or asbestos-containing material, radon, lead-based paint or lead in drinking water at the Company Property. (vi) The Company has provided Purchasers access to true and complete copies of all existing Phase I environmental reports, Phase II environmental reports, and 23 all other reports, materials and data prepared by or for the Company or the Company Subsidiaries or otherwise in the possession of any of them with respect to the environmental condition of any Company Property owned as of the date hereof (collectively, the "Company Environmental Reports"). (vii) For purposes hereof, the terms listed below shall have the following meanings: (A) "Environmental Claim" shall mean any investigation or notice (written or oral) or claims by any person including, without limit, any Government Entity, neighbors, employees and tenants, alleging potential liability (including potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries or fatalities, or penalties) arising out of, based on or resulting from (I) the presence, generation, transportation, treatment, use, storage, disposal or release of Hazardous Substances or the threatened release of Hazardous Substances at any location, or (II) activities or conditions forming the basis of any violation, or alleged violation of, or liability or alleged liability under, any Environmental Law. (B) "Environmental Laws" shall mean federal, state, local, provincial, municipal and foreign laws, ordinances, principles of common law, rules, bylaws, orders, governmental policies, statutes, regulations, agreements and treaties relating to the pollution or protection of the environment or of flora or fauna or their habitat or of human health and safety, or to the cleanup or restoration of the environment, including, but not limited to, any laws relating to (I) generation, treatment, storage, disposal or transportation of wastes, emissions or discharges or protection of the environment from the same, (II) exposure of Persons to, or release or threat of release of, Hazardous Substances, and (III) the safety and health of workers and employees. (C) "Hazardous Substances" shall mean all chemicals, pollutants, contaminants, wastes, toxic substances, petroleum or any fraction thereof, petroleum products, asbestos, radon and hazardous substances (as defined in Section 101(14) of CERCLA, 42 U.S.C. (S)(S) 6601(14)), or solid or hazardous wastes as now defined and regulated under any Environmental Laws . (u) Absence of Certain Business Practices. Neither the Company nor any Company Subsidiary nor, to the Company's knowledge, any officer or director purporting to act on behalf of the Company or any Company Subsidiary has at any time: (i) made any contributions to any candidate for political office, or failed to disclose fully any such contributions, in violation of law, (ii) made any payment of funds to, or received or retained any funds from, any state, federal or foreign governmental officer or official, or other person charged with similar public or quasi-public duties, other than payments required or allowed by Applicable Law, (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful 24 payment or (v) engaged in any material transaction, maintained any bank account or used any material amount of corporate funds except for transactions, bank accounts and funds which have been and are reflected in the normally maintained books and records of the Company and the Company Subsidiaries. (v) Books of Account; Company Charter and Bylaws. (i) The books of account and other financial records of the Company and each Company Subsidiary are in all material respects true and complete, have been maintained in accordance with good business practices, and are accurately reflected in all material respects in the financial statements included in the Securities Filings. (ii) The Company has previously delivered or made available to Purchasers true and complete copies of the Restated Articles of Organization and bylaws of the Company, as amended, and the charters, bylaws, partnership agreements, joint venture agreements or other governing documents of each Company Subsidiary, in each case, as amended through the date hereof. (iii) The minute books and other corporate records of the Company and each Company Subsidiary have been made available to Purchaser, contain in all material respects accurate records of all meetings held prior to the date hereof and accurately reflect in all material respects all other corporate action of the shareholders and board of directors and any committees of the board of directors of the Company and the Company Subsidiaries which are corporations and all actions of the partners of the Company Subsidiaries which are partnerships or joint ventures, through the date hereof. (w) Operating Company Status. The Company is primarily engaged, directly or through majority-owned Company Subsidiaries, in the production or sale of a product or service other than the investment of capital, within the meaning of the plan assets regulations issued by the Department of Labor (29 C.F.R. (S) 2510.3-101). (x) HSR Compliance. As of the date hereof, all assets of the Company and the Company Subsidiaries on a consolidated basis which do not constitute (a)(i) real property that is used primarily for office or residential purposes, including a vacation ownership interest in a resort, or (ii) assets incidental to the ownership of such real property, in either case, within the meaning of Section 802.2(d) of the Rules, Regulations and Interpretations under the HSR Act (the "HSR Rules"), or (b) a hotel or motel (other than a hotel or motel that includes a gambling casino), improvements to any such hotel or motel, including golf, swimming, tennis, restaurant, health club or parking facilities (but excluding ski facilities) or assets incidental to the ownership of any such hotel or motel, within the meaning of Section 802.2(e) of the HSR Rules or (c) real property used primarily as a golf course or a swimming or tennis club facility or assets incidental to the ownership of any such property, within the meaning of Section 802.2(b) of the HSR Rules (collectively, "Non-Exempt Assets"), do not have a value in excess of $15,000,000. 25 Section 3.02. Representations and Warranties of Purchasers. The Purchasers, jointly and severally, represent and warrant to, and agree with, the Company as follows: (a) Organization. Each Purchaser is a limited partnership validly existing and in good standing under the laws of its jurisdiction of organization. Each Purchaser has a term continuing until at least December 31, 2007 and the Purchasers have sufficient capital to satisfy their obligations under this Agreement. (b) Authorization; No Conflicts. Each Purchaser has full power and authority to enter into this Agreement and the Ancillary Documents to which it is a party and to consummate the transactions hereby and thereby. The execution, delivery and performance by each Purchaser of this Agreement and the Ancillary Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby have been authorized by all necessary action on the part of Purchasers. This Agreement has been, and on or prior to the Closing Date the Ancillary Documents to which each Purchaser is a party will be, executed and delivered by such Purchaser and this Agreement is, and upon the execution on or prior to the Closing Date the Ancillary Documents to which each Purchaser is a party will be, the valid and binding obligation of such Purchaser, enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights generally and to general principles of equity. The execution, delivery and performance by each Purchaser of this Agreement and the Ancillary Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby and the compliance by each Purchaser with any of the provisions hereof and thereof will not conflict with, violate or result in a breach of any provision of, require a Consent under, or constitute a default (or an event, which, with notice or lapse of time or both, would constitute a default) under, (i) any organizational document of any Purchaser or (ii) any mortgage, note, indenture, deed of trust, lease, loan agreement or other agreement or instrument of any Purchaser, or (iii) assuming that the clearances, filings, Consents and approvals specified in Schedule 3.01(d) have been obtained or made and any waiting period applicable thereto has expired or been terminated, any permit, concession, grant, franchise, license, judgment, order, decree, ruling, injunction, statute, law, ordinance, rule or regulation binding or applicable to any Purchaser or its respective properties or assets. (c) Consents and Approvals. Except as set forth in Schedule 3.01(f), no Consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required on the part of Purchasers in connection with the execution, delivery and performance by each Purchaser of this Agreement and the Ancillary Documents to which it is a party and the consummation of the transactions hereby and thereby. (d) Investment Intent; Suitability. Each Purchaser is acquiring the Common Stock solely for its own account for investment and not with a view to any distribution thereof in violation of the Securities Act. Each Purchaser is an "accredited investor" as such term is defined in Rule 501 under the Securities Act. No Purchaser shall Transfer any Common Stock or other securities acquired pursuant to this Agreement except in compliance with all Applicable Law. 26 (e) Investigation by Purchasers. Each Purchaser acknowledges that it has had an opportunity to ask questions of and receive answers from the Company regarding the Company and the Company Subsidiaries and their respective businesses, assets, results of operations and financial condition and the terms and conditions of the issuance of the Common Stock. Notwithstanding anything contained herein to the contrary, no investigation by Purchasers shall in any way affect Purchasers' right to rely upon the Company's representations, warranties and covenants contained herein. (f) Investment Experience. Each Purchaser (a) has such knowledge, experience and skill in evaluating and investing in common stocks and other securities, based on actual participation in financial, investment and business matters, so that it is capable of evaluating the merits and risks of an investment in the Common Stock, (b) has such knowledge, experience and skill in financial and business matters that it is capable of evaluating the merits and risks of investment in the Company and the suitability of the Common Stock as an investment, and (c) can bear the economic risk of an investment in the Common Stock. Each Purchaser understands that an investment in the Common Stock on the terms set forth in this Agreement is speculative and involves certain risks and uncertainties. Each Purchaser has (i) received a copy of the Offering Memorandum dated March 27, 1998 relating to the Senior Notes and reviewed the "Risk Factors" set forth therein and (ii) reviewed the Securities Filings. (g) Brokers and Finders. None of the Purchasers nor any of their officers, directors, employees, Affiliates or agents has utilized any broker, finder, placement agent or financial advisor or incurred any liability for any fees or commissions in connection with any of the transactions contemplated hereby or by the Ancillary Documents. (h) Company Common Stock. As of the date hereof, Purchasers do not own any shares of Common Stock. ARTICLE IV. ADDITIONAL AGREEMENTS OF THE PARTIES Section 4.01. Taking of Necessary Action. Each of the parties hereto agrees to use all reasonable efforts to take or cause to be taken all action and to do or cause to be done all things necessary, proper or advisable under Applicable Law to consummate and make effective the transactions contemplated by this Agreement. Without limiting the foregoing, the Company and Purchasers will, and the Company shall cause the Company Subsidiaries to, each use all reasonable efforts to make all filings and obtain all Consents of Governmental Entities which may be necessary or, in the opinion of Purchasers or the Company, as the case may be, advisable for the consummation of the transactions contemplated by this Agreement and the Ancillary Documents, including, but not limited to, any filings with the FTC or DOJ under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR Act"). 27 Section 4.02. Conduct of Business. Except as otherwise required to perform its obligations under this Agreement or in any agreement contemplated herein, from the date hereof through the Closing Date, the Company shall, and shall cause each of the Company Subsidiaries to: (a) conduct its operations in the ordinary course of business in a first-class manner and consistent with past practice; (b) unless required pursuant to the terms of this Agreement or the Ancillary Agreements, or consented to in writing by Purchasers, not amend or in any way alter its Restated Articles of Organization, certificate of incorporation, bylaws, partnership agreement or other governing document (provided that the foregoing shall not restrict the reorganization and restructuring of certain of the Company Subsidiaries on the terms previously disclosed to Purchasers); (c) not engage in any other act, other than in the ordinary course of business and consistent with past practice, that could reasonably be expected to have a Material Adverse Effect or in any way delay or impair consummation of the transactions contemplated by this Agreement and the Ancillary Documents; (d) not change the number of shares of the authorized capital stock of the Company, issue or grant any option, warrant, call, commitment, subscription, right to purchase or agreement of any character relating to the authorized or issued capital stock of the Company or any Company Subsidiary, or any securities convertible into shares of such stock (except for grants of options to purchase Common Stock approved by the Board of Directors to be granted pursuant to existing Company Plans), split, combine or reclassify any shares of the capital stock of the Company, declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of the capital stock of the Company, or redeem or otherwise acquire any shares of such capital stock; (e) not increase the number of directors of the Board of Directors of the Company without the express written consent of Purchasers other than as required by Section 4.10; (f) not sell or transfer any of the assets it owns, except in the ordinary course of its business and consistent with past practice (it being understood that sales of loan receivables shall be deemed in the ordinary course of business); (g) except for seller financing and borrowings under the Company's existing credit facilities with Heller Financial, Inc., Foothill Capital Corporation and Finova Capital Corporation, not incur any Indebtedness other than Indebtedness to trade creditors incurred in the ordinary course of business and consistent with past practice; (h) not change its accounting policies or procedures in any material manner; (i) not do any other act which would reasonably be expected to cause any representation or warranty in this Agreement to be or become untrue in any material respect. 28 Section 4.03. Financial Statements and Other Reports. For so long as Purchasers or the Permitted Transferees own any shares of Common Stock (except in the case of (d) below which shall apply only for so long as Purchasers and the Permitted Transferees own in the aggregate at least the Permitted Interest), the Company covenants that it will deliver to Purchasers or the Permitted Transferees (provided, however, that delivery to any Permitted Transferee of any financial statements or other reports shall be made only to a wholly-owned (excluding the ownership interests of MSDW employees and consultants) MSDW entity as general partner, investment advisor or other representative on behalf of the Permitted Transferees), as the case may be: (a) as soon as practicable and in any event within 45 days after the end of each quarterly period (other than the last quarterly period) in each fiscal year, consolidated statements of operations, statements of shareholders' equity and cash flows of the Company for the period from the beginning of the then current fiscal year to the end of such quarterly period, and a consolidated balance sheet of the Company at the end of such quarterly period setting forth in each case in comparative form figures for the corresponding period or date in the preceding fiscal year, together with a certificate from a senior officer of the Company ("Senior Officer's Certificate") to the effect that such financial statements have been prepared in accordance with GAAP consistently applied during the periods involved (except as otherwise indicated in the notes thereto and subject to year-end adjustments) and that such financial statements fairly present the results of operations and changes in financial position, shareholders' equity, cash flows and financial position of the Company and the Company Subsidiaries as of and for the period then ended; provided however, that delivery pursuant to clause (c) below of a copy of the Company's periodic report on Form 10-Q for such period filed with the SEC shall be deemed to satisfy the requirements of this clause (a); (b) as soon as practicable and in any event within 90 days after the end of each fiscal year, a consolidated balance sheet of the Company as of the end of such fiscal year and the related consolidated statements of operations, statements of shareholders' equity and cash flows for such fiscal year, setting forth in each case in comparative form the corresponding figures from the preceding fiscal year, together with the audit report of Ernst & Young LLP, or other independent public accountants of recognized standing selected by the Company; provided, however, that delivery pursuant to clause (c) below of a copy of the Annual Report on Form 10-K of the Company for such fiscal year filed with the SEC shall be deemed to satisfy the requirements of this clause (b); (c) promptly upon transmission thereof, copies of all such financial statements, proxy statements, notices and reports as it shall send to its shareholders and to its lenders and copies of all such registration statements, other than registration statements relating to employee benefit or dividend reinvestment plans, and all such regular and periodic reports on Forms 10-K, 10-Q and 8-K (or similar or substitute forms) as it shall file with the SEC; and (d) from time to time such additional information regarding results of operations, financial condition, business or prospects of the Company and the Company Subsidiaries as Purchasers or the Permitted Transferees may reasonably request. Section 4.04. Access. 29 (a) Between the date hereof and the Closing Date and in order to permit Purchasers to complete their due diligence examination of the Company and the Company Subsidiaries, the Company shall permit representatives of Purchasers to have full access: (i) to inspect the facilities and properties of the Company and any of the Company Subsidiaries, (ii) to examine the corporate books, records, agreements and files of the Company or any of the Company Subsidiaries and make copies or extracts therefrom and (iii) to consult with the directors, officers or other employees of the Company and any of the Company Subsidiaries and the Company's independent auditors and legal counsel, all upon reasonable notice and at such reasonable times as the Purchasers may reasonably request. (b) For so long as Purchasers or the Permitted Transferees own, in the aggregate, at least the Permitted Interest, the Company will permit representatives of each Purchaser and any Permitted Transferee (provided, however, that in the case of access rights by Permitted Transferees, access rights shall be granted only to a wholly-owned (excluding the ownership interests of MSDW employees and consultants) MSDW entity as general partner, investment advisor or other representative on behalf of the Permitted Transferees) to visit and inspect any of the properties of the Company or any of the Company Subsidiaries, to examine the corporate books, records, agreements and files of the Company and the Company Subsidiaries and make copies or extracts therefrom and to advise and consult with the principal officers of the Company regarding the affairs, finances and accounts of the Company and the Company Subsidiaries, all upon reasonable notice and at such reasonable times any Purchaser or such wholly-owned MSDW entity may reasonably request. Section 4.05. Lost, Stolen, Destroyed or Mutilated Securities. Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of any certificate for any security of the Company owned by Purchasers or the Permitted Transferees and, in the case of loss, theft or destruction, upon delivery of an undertaking by the holder thereof to indemnify the Company (and, if requested by the Company, the delivery of an indemnity bond sufficient in the judgment of the Company to protect the Company from any loss it may suffer if a certificate is replaced), or, in the case of mutilation, upon surrender and cancellation thereof, the Company will issue a new certificate for an equivalent number of shares of Common Stock or other security of like tenor, as the case may be. Section 4.06. No Termination of Obligations Upon Change of Control. The Company shall promptly notify Purchasers and the Permitted Transferees (but in the case of the Permitted Transferees, such notice shall be sent only to a wholly-owned (excluding the ownership interests of MSDW employees and consultants) MSDW entity as general partner, investment advisor or other representative on behalf of the Permitted Transferees) (i) of the execution by the Company of a definitive agreement with any Person which will result in a Change of Control, (ii) of the satisfaction or waiver of all conditions of closing (other than conditions which can only be satisfied on the closing date of such transaction) required under the terms of such definitive agreement, and (iii) immediately upon consummation of a Change of Control. Upon a Change of Control of the Company, all rights and obligations of Purchasers and any Permitted Transferee who owns any shares of Common Stock hereunder (including, without limitation, all registration rights under the Registration Rights Agreement) shall continue in full force and effect unless such Purchasers or Permitted Transferees, 30 as the case may be, dispose of their respective shares of Common Stock as part of such Change of Control. Section 4.07. Restrictions on Sale or Transfer; Legend. (a) Prior to the earlier to occur of (x) the second anniversary of the Closing Date or (y) six months following the Calculation Date, but in no event earlier than the date that is 18 months from the Closing Date (the "Lock-up Period"), none of the Purchasers or Permitted Transferees will, directly or indirectly, offer, sell, transfer, assign, pledge, hypothecate (provided that nothing herein to the contrary shall restrict the bona fide pledge or hypothecation of any shares of Common Stock issued to Purchasers or any Permitted Transferee prior to the expiration of the Lock-up Period or the foreclosure of any such pledge or hypothecation so long as any pledgee remains subject to the provisions of this Section 4.07; upon any foreclosure of such pledge, the pledgee shall not have any rights or obligations under this Agreement but shall constitute a Purchaser under the Registration Rights Agreement) or otherwise dispose of (any such act, a "Transfer") any shares of Common Stock purchased hereunder, except for, and subject in each case to, compliance with all Applicable Law and receipt of any necessary governmental Consents, (i) a Transfer by Purchaser to a Permitted Transferee, provided that prior to such Transfer each such Permitted Transferee consents in writing to be bound by the restrictions on Transfer set forth in this Section 4.07, makes the representations and warranties set forth in the first sentence of Section 3.02(d) and in Section 3.02(f) to the Company and assumes all other rights and obligations of such Purchaser under this Agreement and the Registration Rights Agreement; (ii) a Transfer to the Company or to a wholly-owned direct or indirect subsidiary of the Company; and (iii) a Transfer pursuant to a sale, merger or consolidation in which the Company is a constituent corporation, or upon a Change of Control as provided in Section 4.07(b). (b) Subject to Section 4.07(c), following the Lock-up Period or the consummation of a Change of Control or delivery of notice that the events described in Section 4.06(i) and (ii) have occurred, each Purchaser and Permitted Transferee may, in its sole discretion, freely and without any limitations, transfer any shares of Common Stock owned by it, subject to compliance with all Applicable Law (including, without limitation, compliance with the Securities Act), provided, however, that if the transaction to which notice is provided under Sections 4.06(i) and (ii) is terminated, Purchasers' and the Permitted Transferees' right to Transfer any shares of Common Stock held by them shall be again subject to the provisions of this Section 4.07. (c) Each Purchaser acknowledges and agrees that as of the date hereof the shares of Common Stock have not been registered under the Securities Act or the securities laws of any state, that the shares of Common Stock will be characterized as "restricted securities" under federal securities laws and that under such laws and applicable regulations the shares of Common Stock cannot be sold or otherwise disposed of or otherwise Transferred without registration under the Securities Act or an exemption therefrom. Each Purchaser acknowledges that, except as provided in the Registration Rights Agreement, none of the Purchasers or Permitted Transferees has any right to require the Company to register the Common Stock. 31 Each Purchaser further acknowledges and agrees that each certificate of Common Stock to be issued to Purchasers or any Permitted Transferee hereunder shall bear the following legend: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF IN ABSENCE OF (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR (II) AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. THIS CERTIFICATE IS ISSUED PURSUANT TO AND SUBJECT TO THE RESTRICTIONS ON TRANSFER, VOTING AND OTHER PROVISIONS OF A SECURITIES PURCHASE AGREEMENT DATED AS OF AUGUST __, 1998 BETWEEN THE COMPANY AND THE PURCHASERS REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE WITH THE COMPANY. EXCEPT AS PROVIDED IN SUCH SECURITIES PURCHASE AGREEMENT, THE SHARES REPRESENTED BY THIS CERTIFICATE ARE NOT TRANSFERABLE AND ANY PURPORTED TRANSFER IN VIOLATION OF THE PROVISIONS OF SUCH SECURITIES PURCHASE AGREEMENT SHALL BE VOID AND OF NO FORCE AND EFFECT. Any holder of the Common Stock may request the Company to remove the legend described herein from the certificates evidencing such Common Stock by submitting to the Company such certificates, together with an opinion of counsel reasonably satisfactory to the Company to the effect that such legend is no longer required under the Securities Act. Section 4.08. Further Assurances. The Company and Purchasers shall execute and deliver, or cause to be executed and delivered, such additional instruments and other documents and shall take such further actions as the Company or Purchasers, as the case may be, may reasonably request to effectuate, carry out and comply with all of the terms of this Agreement and the Ancillary Documents and the transactions contemplated hereby and thereby, including, without limitation, making application as soon as practicable for all Consents required in connection with the transactions contemplated hereby and diligently pursuing the receipt of such Consents in good faith. Section 4.09. Solicitation. From the date hereof until the Closing Date, neither the Company nor any of the Company Subsidiaries shall, and the Company shall direct and use its reasonable best efforts to cause its directors, officers, employees, agents and representatives not to, initiate, solicit or encourage, directly or indirectly, any inquiries with respect to, or the making of, any Investment Proposal or engage in any negotiations concerning, provide any nonpublic information or data to, or have any discussions with, any Person (other than Purchasers) relating to, an Investment Proposal, or enter into any agreement with respect to, or otherwise take any action to effect or facilitate any effort or attempt to make or implement an Investment Proposal. On the date hereof, the Company and the Company Subsidiaries shall terminate all existing negotiations and discussions with any Person (other than Purchasers) relating to any Investment Proposal. For purposes of this Section 4.09, an "Investment Proposal" shall mean any proposal for the sale, exchange or issuance by the Company, whether in a private or public offering, of any shares of Common Stock or other securities or any securities, options, rights or warrants convertible into or exchangeable for any Common Stock (other than options granted in the ordinary course and shares issued upon exercise 32 of options or upon conversion of outstanding convertible debt securities) or other equity securities of the Company or any sale of all or a material portion of the assets of the Company (other than sales in the ordinary course of business) or merger with or into any other Person (whether or not the Company is the Surviving Person, but excluding any merger of a Company Subsidiary with and into the Company or any other Company Subsidiary) or any financing or any investment banking or financing services (other than as set forth in Schedule 3.01(r)(vi) or as contemplated by this Agreement) involving the Company or any of the Company Subsidiaries. Section 4.10. Board Representation. (a) On or prior to the Closing Date, the Board of Directors of the Company shall be expanded by two positions, and Michael J. Franco and John A. Henry shall be appointed to fill the vacancies created by such expansion with Mr. Henry designated as a Class I director and Mr. Franco designated as a Class III director. Thereafter, for so long as Purchasers and the Permitted Transferees own, in the aggregate, at least the Required Interest, Purchasers shall be entitled to designate an aggregate of two directors on the management slate of nominees to the Company's Board of Directors (the "Purchaser Designees") (with MSP having the right to designate one director and MSREF III having the right to designate one director) except the foregoing number of directors shall be reduced to the extent one or more Purchaser Designees have been elected to and are serving on the Board of Directors and are in a class of directors not currently standing for re- election. In the event that the aggregate interest owned by Purchasers and the Permitted Transferees shall be less than the Required Interest but equal to or greater than the Minimum Interest and Purchasers currently have two Purchaser Designees serving on the Board of Directors, then Purchasers shall cause one of the two Purchaser Designees to resign within 10 Business Days, the Board of Directors shall be reduced by one member and thereafter MSP shall be entitled to designate one member on the management slate of nominees to the Company's Board of Directors (until such time as the aggregate interest owned by Purchasers and the Permitted Transferees shall be less than the Minimum Interest, whereupon Purchasers shall within 10 Business Days cause the remaining Purchaser Designee to resign and Purchasers shall have no further rights under this Section) except the foregoing shall not apply to the extent MSP's Purchaser Designee has been elected to and is serving on the Board of Directors and is in a class of directors not currently standing for re-election. At least 90 days prior to each annual meeting of shareholders at which a Purchaser Designee will stand for election, MSREF III and MSP, as the case may be, shall provide written notice to the Company indicating the Purchaser Designee to be nominated by each such Purchaser at such annual meeting, and such notice shall set forth as to each Person proposed for nomination all information relating to such Persons that is required to be disclosed in solicitations of proxies for election of directors pursuant to Regulation 14A under the Exchange Act (including such Person's written consent to being named in the related proxy statement as a nominee and to serving as a director if elected). (b) The Company shall use its reasonable best efforts at all times to take such action as is necessary to ensure that the nominating committee of the Board of Directors (or the full Board if there is no nominating committee) of the Company shall nominate and recommend to the shareholders of the Company and the shareholders of the Company shall elect the Purchaser Designees to the Board of Directors. As a condition precedent to the 33 inclusion of any Purchaser Designee on any slate of nominees to be recommended to shareholders by the Board of Directors pursuant to Section 4.10(a), the nominating committee of the Board (or the full Board if there is no nominating committee) may review the information provided pursuant to Section 4.10(a) to evaluate in good faith such Purchaser Designee's character and fitness to serve as a director. If the nominating committee (or the full Board if there is no nominating committee) determines in good faith that any such Purchaser Designee lacks the character or fitness to serve as a director based on applicable legal and reasonable commercial standards, the nominating committee (or the full Board if there is no nominating committee) shall inform the Purchaser who nominated such Purchaser Designee of such determination, and such Purchaser shall then have the right to propose an alternative Purchaser Designee who is reasonably acceptable to the Company. All Purchaser Designees elected to the Board of Directors shall receive, during the period in which they serve, any and all benefits (including, without limitation, any director compensation and grants of stock options under the 1998 Non-Employee Director Plan) provided to the other members of the Board of Directors of the Company. (c) If at any time Purchasers and the Permitted Transferees are entitled to designate one or more nominees to the Board of Directors pursuant to this Section 4.10 and Purchasers do not have a representative on the Board, so long as Purchasers and the Permitted Transferees own, in the aggregate, at least the Minimum Interest, the Company shall permit two representatives (or in the case that Purchasers are entitled to designate only one nominee to the Board, only one representative) of Purchasers (which representatives shall be acceptable to the Company in its reasonable discretion) to attend, but not vote, as observers at each meeting of the Board of Directors or any committee of the Board empowered to act with full authority of the entire Board, including telephonic meetings, provided that each such representative executes and delivers to the Company a confidentiality agreement in a form reasonably satisfactory to the Company prior to attendance at any such meetings. The Company shall cause notice of any meeting of the Board of Directors or any such committee of the Board to be delivered to any such representatives at the same time and in the same manner as notice is given to the members of the Board of Directors. Such representatives will be entitled to receive all written materials given to the members of the Board of Directors in connection with such meetings at the time such materials and information are given to the Board of Directors. The Company shall reimburse such representatives for his or her reasonable out- of-pocket expenses incurred in connection with attending meetings of the Board of Directors or any such committee of the Board. (d) For so long as any Purchaser or Permitted Transferee has the right to designate at least one director on a management slate of nominees to the Company's Board of Directors, the Company shall use reasonable best efforts to cause the Board of Directors and the shareholders of the Company not to increase the number of members of the Board of Directors above nine without the prior written consent of each Purchaser and Permitted Transferee (unless such increase is required to comply with Applicable Law), which consent may be withheld in each Purchaser's and Permitted Transferee's reasonable discretion. In the event of a vacancy (either by death, removal or resignation) of a director other than a Purchaser Designee which does not cause the total number of directors to be less than seven, the Company shall use reasonable best efforts to cause the Board of Directors not to appoint a 34 replacement to fill such vacancy without the prior written consent of each Purchaser and Permitted Transferee (unless required to comply with Applicable Law and the Company's bylaws), which consent may be withheld in each Purchaser's and Permitted Transferee's reasonable discretion. (e) Each Purchaser Designee shall be entitled to serve on any standing committee of the Board except to the extent the Purchaser Designee's participation would cause the Purchaser Designees' participation on such committee to exceed their proportionate representation on the full Board, provided, however, that at least one Purchaser Designee may serve on each standing committee selected in accordance with this subsection (e). Subject to the preceding sentence, MSREF III and MSP shall each have the right to select the committees of the Board on which its Purchaser Designee will serve. The Company shall use its reasonable best efforts at all times as is necessary to ensure that each Purchaser Designee is appointed to all such committees of the Board of Directors. (f) For so long as Purchasers and the Permitted Transferees own, in the aggregate, at least the Minimum Interest and the Purchaser Designees are serving on the Board of Directors, Purchasers shall, and shall cause the Permitted Transferees, to vote all of their shares of Common Stock at any regular or special meeting of the shareholders of the Company (and any adjournments thereof) called for the purpose of electing directors to the Board, or, to the extent permitted by the Company's Restated Articles of Organization and Amended and Restated Bylaws and by Applicable Law, in any written consent executed in lieu of such a meeting of shareholders, for election of the management slate of nominees (other than the Purchaser Designees) to the Company's Board of Directors. The Purchasers shall and shall cause the Permitted Transferees to vote all of their shares of Common Stock at any regular or special meeting of the shareholders of the Company (and any adjournments thereof) called for the purpose of approving the issuance of the shares under this Agreement in favor of such issuance and the transactions contemplated by this Agreement. (g) Subject to availability on reasonable terms and at a reasonable cost, for so long as any Purchaser Designee remains on the Board of Directors, the Company shall use reasonable best efforts to maintain directors' and officers' liability insurance with financially sound and reputable insurers at a level of coverage of at least $10,000,000. (h) It is understood and agreed that the Company's Board of Directors is subject to fiduciary duties under Applicable Law, and that the Company's shareholders have rights with respect to the composition of the Board of Directors under Applicable Law and the Company's Amended and Restated Bylaws. Accordingly, for purposes of this Section 4.10, all obligations of the Company under paragraphs (a), (b), (d) and (e) hereof shall be deemed to be "to use reasonable best efforts" to cause the intended action to be taken, recognizing that the Company cannot guaranty what action its Board of Directors or stockholders may take in the future. Section 4.11. Board of Directors Approvals. Notwithstanding anything contained in the Company's Restated Articles of Organization or its bylaws, for so long as Purchasers and the Permitted Transferees own, in the aggregate, at least the Required Interest, the following actions by the Company or any Company Subsidiary shall require the affirmative vote of at least one of the 35 Purchaser Designees prior to the effectiveness or consummation of such action (provided that if Purchasers do not have a representative on the Board of Directors as a result of the failure of the Company to nominate any Purchaser Designee or failure of the shareholders of the Company to elect any Purchaser Designee, then such action shall require the approval of the Purchasers and Permitted Transferees holding a majority of the shares of Common Stock issued pursuant to this Agreement): (a) the consolidation or merger of the Company with or into another Person (other than a merger of a Company Subsidiary into the Company or another Company Subsidiary); the sale of all or substantially all of the assets of the Company; or, except for sales of receivables under the existing purchase facility with Heller Financial, Inc. or its permitted successors or assigns, (up to an aggregate of $200,000,000) the sale, assignment, transfer, lease, conveyance or other disposal of property or assets of the Company or the Company Subsidiaries in one or more related transactions where the aggregate consideration paid exceeds $50,000,000; (b) the purchase or other acquisition of the business, assets or securities of any other Person (whether by merger, another form of business combination or otherwise) in one or more related transactions where the aggregate consideration paid (exclusive of any future development costs) exceeds $50,000,000; (c) the issuance of any Senior Securities, or authorization of the issuance of any securities convertible into or exchangeable for, or options, warrants or other rights to acquire, any Senior Securities; (d) except for any issuances (i) to Purchasers or a Permitted Transferee pursuant to this Agreement or (ii) of securities upon conversion or exercise of any options, notes or debentures outstanding as of the date hereof or (iii) grants of options or issuances of securities upon exercise thereof pursuant to any existing director or employee stock option or stock benefit plan approved by the Company's Board of Directors, the issuance of Parity Securities, or authorization of the issuance of any securities convertible into or exchangeable for, or options, warrants or other rights to acquire, any Parity Securities, in each case, in excess of 8% of the then issued and outstanding shares of Common Stock or at a price per share that is less than the Closing Share Price, or at any time prior to expiration of the Commitment Period unless the Maximum Shares have been issued to Purchasers or the shareholders have failed to approve the issuance of any shares of Common Stock to be issued to Purchasers in accordance with this Agreement on or after the Threshold Date at the meeting referred to in Section 4.16; (e) the incurrence of any Indebtedness by the Company or any Company Subsidiary in an aggregate principal amount which would cause the Total Market Capitalization Ratio of the Company to be equal to or greater than 50%; (f) the declaration or payment of any dividend (other than a stock dividend) or distribution on the shares of Common Stock, or the repurchase, redemption or other acquisition of shares of Common Stock (other than in connection with "cashless" exercises of options); (g) any amendment to the Restated Articles of Organization or bylaws of the Company which could reasonably be expected to conflict with the terms of this Agreement; 36 (h) the entry into a material line of business that is unrelated to or materially different from the Timeshare/Residential Business; (i) the entry into any transaction with any Affiliate other than transactions entered into with Company Subsidiaries; and (j) the authorization or issuance of any capital stock of any Company Subsidiary, or any options, rights, warrants or securities convertible into or exchangeable for any capital stock of any Company Subsidiary (other than pursuant to employee stock option plans in existence as of the date hereof). Section 4.12. Preemptive Rights. (a) In the event the Company proposes to undertake an issuance of New Securities (as defined below) for cash after the date hereof, each Purchaser and Permitted Transferee that owns any shares of Common Stock on the date of issuance shall have the right to purchase its "proportionate share" of such New Securities on the terms and conditions set forth herein. Each Purchaser and Permitted Transferee that owns any shares of Common Stock on such date shall also have the right of over allotment such that, if any Purchaser or Permitted Transferee fails to exercise its rights hereunder to purchase its proportionate share of New Securities to the fullest extent permitted, the other Purchasers and Permitted Transferees may purchase its proportionate share of New Securities that such Purchaser or Permitted Transferee elected not to purchase. For purposes of this Section 4.12, each Purchaser's and Permitted Transferee's "proportionate share" means the number of New Securities proposed to be issued and sold multiplied by a fraction, the numerator of which is the number of shares of Common Stock issued to such Purchaser or Permitted Transferee pursuant to Article II hereof and held on such date by such Person (determined (i) during the Commitment Period, assuming that the Maximum Shares have been issued to the Purchasers or their Permitted Transferees and (ii) after the Commitment Period, based on the actual number of shares issued pursuant to Article II hereof and then held on such date by such Person) and the denominator of which is the total number of shares of Common Stock outstanding (determined (i) during the Commitment Period, on a fully diluted basis assuming full exercise and conversion of all outstanding options, warrants, rights and other securities which are convertible or exchangeable shares of Common Stock and issuance of the Maximum Shares, and (ii) after the Commitment Period, on a fully diluted basis assuming full exercise and conversion of all outstanding options, warrants, rights and other securities which are convertible or exchangeable for shares of Common Stock). (b) As used in this Section 4.12, the term "New Securities" shall mean (i) any capital stock of the Company, (ii) any rights, options or warrants to purchase any such capital stock, or to purchase any securities of any type whatsoever that are, or may become, convertible into or exercisable for any such capital stock, and (iii) any securities of any type whatsoever that are, or may become, convertible into or exercisable for any such capital stock; provided, however, that "New Securities" shall not include (A) shares of Common Stock issued upon conversion or exercise of options, debentures, notes, warrants or rights outstanding as of the date hereof, (B) securities issued pursuant to the acquisition of another corporation or legal 37 entity by the Company by merger, consolidation, purchase of all or substantially all of such other entity's assets, or acquisition transaction in which the Company participates on an arm's length basis, (C) securities (including options) issued in connection with any director or employee stock option plan approved by the Board of Directors of the Company (or any committee thereof) and the shareholders of the Company, or any shares of Common Stock issued to any employee or officer for his own investment and as part of a bona fide compensation plan approved by the Board of Directors, (D) any securities issued in replacement of, or as dividends attributable to, any securities of the Company outstanding as of the date hereof, (E) any securities issued to all holders of shares of Common Stock on a pro rata basis, (F) any securities issued (including, without limitation, any rights and any securities issued upon the exercise of such rights) in connection with a shareholders rights plan approved by the Board of Directors or (G) any securities issued upon conversion or exercise of New Securities that Purchasers previously elected not to exercise their purchase rights hereunder or as to which such purchase rights did not apply. (c) In the event the Company proposes to undertake an issuance of New Securities, it shall give Purchasers and the Permitted Transferees written notice of its intention to do so at least 20 days prior to such issuance, describing the New Securities and the price and terms upon which the Company proposes to issue the same (the "Original Notice"). Each Purchaser and Permitted Transferee may purchase (i) such number of New Securities up to such Purchaser's or Permitted Transferee's proportionate share of such New Securities ("Full Amount") plus (ii) to the extent other Purchasers or Permitted Transferees do not exercise their Full Amount, any additional New Securities that the other Purchasers or Permitted Transferees elected not to purchase in amount as agreed to by the Purchasers and Permitted Transferees electing to purchase such additional New Securities (it being understood that in no event shall the Company be required to issue, in the aggregate, an amount of New Securities in excess of the aggregate amount issuable if all Purchasers and Permitted Transferees purchased their respective Full Amounts), for the price and upon the terms and conditions pertaining to the issuance of the New Securities (notwithstanding any changes that may be made to the terms and conditions set forth in the Original Notice) by giving written notice to the Company no later than 15 days after the date of receiving the Original Notice ("Notice Date") identifying the number of New Securities to be purchased. If any Purchasers or Permitted Transferees elect to purchase any New Securities within such 15-day period, such New Securities shall be issued and sold to each of them in accordance with the terms and conditions pertaining to the issuance of the New Securities (notwithstanding any changes that may be made to the terms and conditions set forth in the Original Notice). Any New Securities that the Purchasers and Permitted Transferees elected not to purchase may be sold by the Company in accordance with the terms and conditions pertaining to such issuance of New Securities. (d) Notwithstanding anything to the contrary contained in this Section 4.12, upon any purchase of any New Securities by a Purchaser or Permitted Transferee pursuant to Section 4.12 on a later date than the issuance of the New Securities that gave rise to such Purchaser's or Permitted Transferee's purchase rights under Section 4.12, (i) the purchase price shall be adjusted by subtracting therefrom the value of any dividend or distribution received in respect of such New Securities after the date of such issuance and prior to the purchase by such Purchaser or Permitted Transferee hereunder, and (ii) the purchase price and number of shares 38 or amount to be purchased shall be adjusted to reflect any stock split, stock dividend or other combination or reclassification of the capital stock during such time. (e) Upon written notice to the Company, each Purchaser and Permitted Transferee, in their sole discretion, may terminate all of its rights under this Section 4.12, or may suspend its rights under this Section 4.12 for any period of time set forth in such notice. Section 4.13. Adjustments. If during the Commitment Period, the Company shall declare or pay a dividend on the Common Stock payable in shares of Common Stock or in rights to acquire Common Stock, or shall effect a stock split or reverse stock split, or a combination, consolidation or reclassification of the Common Stock, then the Closing Share Price shall be proportionately decreased or increased, as appropriate, to give effect to such event. Section 4.14. [Reserved]. Section 4.15. Financing Fees; Advisory Fees. (a) Subject to any rights held by any Person existing prior to the Closing Date (which the Company agrees it will not extend beyond their current term), and except for a fairness opinion relating to the transactions contemplated by this Agreement, for so long as Purchasers and Permitted Transferees own, in the aggregate, at least the Minimum Interest, in the event that the Board of Directors authorizes the Company to finance or refinance the Company or any of the Company's assets either through debt or equity offerings (other than securitizations of installment land and/or timeshare receivables) and elects to utilize the services of any investment or financial advisor or commercial (but excluding commercial banking services that are incidental to such debt or equity offerings) or investment banking firm in connection therewith, Morgan Stanley, Dean Witter & Co. or any Affiliate or subsidiary thereof ("MSDW") shall have the exclusive right to act as the Company's financial agent and advisor and to manage such financings or offerings (provided that MSDW has reasonable experience in the areas for which such services are to be provided, and provided further that the Board of Directors, in its reasonable judgement, has not determined that there exists any actual or potential conflict of interest with regard to such representation (but not including a conflict of interest that may exist as a result of Purchasers' ownership interest in the Company)), and, as compensation for such services shall be entitled to receive a fee equal to the then current market rate for similar financings or offerings expressed as a percentage of the aggregate gross proceeds received from such financing or offerings, which fees are to be paid to MSDW at the closing of such transaction. In connection with such services, the Company will enter into a placement, underwriting or other engagement agreement with MSDW or a subsidiary or Affiliate thereof, which shall contain terms and conditions customary for that type of service. (b) For so long as Purchasers and Permitted Transferees own, in the aggregate, at least the Minimum Interest, in the event the Company determines to sell all or substantially all of the assets of the Company or of all of the Company Subsidiaries, or to consolidate or merge into or with any other Person (whether or not the Company continues as the Surviving Person), or to acquire all or substantially all of the assets, business or securities of any other Person and elects to utilize the services of an investment or financial advisor or commercial (but 39 excluding commercial banking services that are incidental to such transactions) or investment banking firm in connection therewith, MSDW shall have the exclusive right to act as advisor and/or underwriter to the Company in connection with such transactions (provided that the Board of Directors, in its reasonable judgment, has not determined that there exists any actual or potential conflict of interest with regard to such representation (but not including a conflict of interest that may exist as a result of Purchasers' ownership interest in the Company)), and, as compensation for such services to be provided, MSDW shall be entitled to receive a fee equal to the then current market rate for similar transactions, which fees are to be paid to MSDW at the closing of such transaction. In connection with such services, the Company will enter into a placement, underwriting or other engagement agreement with MSDW or a subsidiary or Affiliate thereof, which shall contain terms and conditions customary for that type of service. Section 4.16. Shareholder Approval. The Company shall take all action necessary in accordance with all Applicable Law and in accordance with its Restated Articles of Organization and bylaws to convene a meeting of its shareholders as soon as reasonably practicable after the date hereof (but in no event later than the earlier to occur of (x) November 30, 1998, or (y) the Threshold Date) to consider and vote upon the issuance of the shares of Common Stock to be issued to Purchasers in accordance with this Agreement on or after the Threshold Date. The Company, acting through its Board of Directors, shall recommend to its shareholders the approval of the issuance of the shares of Common Stock to be issued to Purchasers in accordance with this Agreement, and shall use its reasonable best efforts to obtain such approval of its shareholders. Section 4.17. Notices of Purchasers. Purchasers agree to promptly notify the Company of the consummation of any Transfer to any Person (including a Permitted Transferee) of any shares of Common Stock issued to Purchasers under the terms of this Agreement. Purchasers further agree to promptly notify the Company when the Purchasers and any Permitted Transferees own less than the Required Interest, the Minimum Interest and the Permitted Interest. ARTICLE V. CONDITIONS OF CLOSING Section 5.01. Conditions of Purchase at Closing. The obligations of Purchasers to purchase the Common Stock to be purchased at the Closing are subject to satisfaction or waiver of each of the following conditions on or prior to the Closing Date: (a) Representations and Warranties; Covenants. The representations and warranties of the Company contained in this Agreement and the Ancillary Documents and in each certificate or document delivered by the Company to Purchasers in connection with the transactions contemplated hereby and thereby shall be true and correct in all material respects on and as of the date of this Agreement or the date of such Ancillary Documents, certificates or other documents, as the case may be, and on and as of the Closing Date, with the same effect as though made on and as of the Closing Date (except for representations and warranties that speak as of a specific date other than the Closing Date (which need only be true and correct in all material respects as of such date)), and the Company shall have performed all obligations and 40 complied in all material respects with all agreements, undertakings, covenants and conditions required hereunder and thereunder to be performed by it at or prior to the Closing. (b) Opinion of Counsel. Purchasers shall have received at the Closing from Choate, Hall & Stewart counsel to the Company, a favorable written opinion dated as of the Closing Date which shall be to the effect set forth in Exhibit D hereto. (c) No Injunction. There shall not be in effect any order, decree or injunction of a court or agency of competent jurisdiction which enjoins or prohibits consummation of the transactions contemplated hereby. (d) Regulatory Approvals. All Permits, Consents, authorizations, orders and approvals of, and filings and registrations with any Governmental Entity or any other Person required to be made or obtained under any federal or state law, rule or regulation in connection with the execution, delivery and performance of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby on the Closing Date shall have been obtained or made, and all statutory waiting periods thereunder in respect thereof shall have expired, in each case, without the imposition of any terms or conditions which, either individually or in the aggregate, are unduly burdensome to Purchasers or any of their Affiliates or are such that, had they been known to Purchasers prior to the date hereof, it is reasonable to conclude that Purchasers would not have entered into this Agreement or the transactions contemplated hereby. (e) Company Certificate. The Company shall have delivered to Purchasers a certificate, dated the Closing Date, signed by its chief executive officer and its chief financial officer, in form and substance satisfactory to Purchasers to the effect that the conditions set forth in this Section 5.01 hereof have been satisfied. (f) Registration Rights Agreement. (i) The Registration Rights Agreement shall have been executed and delivered by the parties thereto and shall be in full force and effect and (ii) all Consents, approvals, waivers, amendments, or authorizations required under any agreements set forth in Schedule 3.01(c) in connection with the execution, delivery and performance by the Company of the Registration Rights Agreement which are necessary in order for Purchasers to have the full benefit or enjoyment of the provisions of the Registration Rights Agreement shall have been obtained. (g) Payment of Expenses. The Company shall have paid to Purchasers the costs and expenses described in Section 7.07 hereof. (h) Appointment of Purchaser Designees. The Purchaser Designees shall have been appointed to the Board of Directors. (i) Shareholder Voting Agreements. The Shareholder Voting Agreements shall have been executed and delivered by each Person listed on Schedule 5.01(i) hereof and shall be in full force and effect. 41 (j) Amendment of Bylaws. The Company's bylaws shall have been amended to provide for a staggered board of directors in accordance with Exhibit E hereto, such amendment shall be in form and substance reasonably satisfactory to Purchasers and shall have been approved by the Board of Directors, such amendment shall have been duly filed if filing thereof is required by any Governmental Entity or the New York Stock Exchange, such amended bylaws shall be in full force and effect and copies of such amended bylaws shall have been delivered to Purchasers. (k) Exchange Listing. The maximum number of shares of Common Stock which can be issued to Purchasers prior to the Threshold Date (which shall be equal to 19.99% of the issued and outstanding shares of Common Stock on the Closing Date (but excluding any shares of Common Stock issued to Purchasers of the Permitted Transferees on the Closing Date)), shall be approved for listing on the New York Stock Exchange and the Pacific Stock Exchange subject to notice of issuance. Section 5.02. Conditions of Sale at Closing. The obligation of the Company to sell and issue the Common Stock to be sold and issued at the Closing is subject to satisfaction or waiver of each of the following conditions on or prior to the Closing Date: (a) Representations and Warranties; Covenants. The representations and warranties of Purchasers contained in this Agreement and the Ancillary Documents and in any certificates or other documents delivered by Purchasers to the Company in connection with the transactions contemplated hereby and thereby shall be true and correct in all material respects on and as of the date of this Agreement or the date of such Ancillary Documents, certificates or other documents, as the case may be, and on and as of the Closing Date with the same effect as though made on and as of the Closing Date (except for representations and warranties that speak as of a specific date other than the Closing Date (which need only be true and correct in all material respects as of such date)), and Purchasers shall have performed all obligations and complied in all material respects with all agreements, undertakings, covenants and conditions required to be performed by each of them at or prior to the Closing. (b) No Injunction. There shall not be in effect any order, decree or injunction of a court or agency of competent jurisdiction with enjoins or prohibits consummation of the transactions contemplated hereby. (c) Regulatory Approvals. All Permits, Consents, authorizations, orders and approvals of, and filings and registrations with any Governmental Entity or any other Person required to be made or obtained under any federal or state law, rule or regulation for or in connection with the execution, delivery and performance of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby on the Closing Date shall have been obtained or made, and all statutory waiting periods thereunder in respect thereof shall have expired, in each case without the imposition of any terms or conditions which, either individually or in the aggregate, are unduly burdensome to the Company or any of its Affiliates or are such that, had they been known to the Company prior to the date hereof, it is reasonable to conclude that the Company would not have entered into this Agreement or the transactions contemplated hereby. 42 (d) Exchange Listing. The maximum number of shares of Common Stock which can be issued to Purchasers prior to the Threshold Date (which shall be equal to 19.99% of the issued and outstanding shares of Common Stock on the Closing Date (but excluding any shares of Common Stock issued to Purchasers of the Permitted Transferees on the Closing Date)), shall be approved for listing on the New York Stock Exchange and the Pacific Stock Exchange subject to notice of issuance. (e) Purchasers' Certificate. Each Purchaser shall have delivered to the Company a certificate, dated the Closing Date, in form and substance satisfactory to the Company to the effect that the conditions set forth in this Section 5.02 have been satisfied. Section 5.03. Conditions of Purchase of Remaining Shares. The Purchasers' obligations to purchase the Remaining Shares on each Subsequent Closing Date shall be subject to, in each case, satisfaction or waiver of each of the following conditions on or prior to each Subsequent Closing Date: (a) Representations and Warranties; Covenants. The representations and warranties of the Company contained in this Agreement and the Ancillary Documents and in each certificate or document delivered by the Company to Purchasers in connection with the transactions contemplated hereby and thereby shall be true and correct in all material respects on and as of the Subsequent Closing Date, with the same effect as though made on or as of the Subsequent Closing Date (except for representations and warranties that speak as of a specific date other than such Subsequent Closing Date (which need only be true and correct in all material respects as of such date)), and the Company shall have performed all obligations and complied in all material respects with all agreements, undertakings, covenants and conditions required hereunder and thereunder to be performed by the Company at or prior to the Subsequent Closing Date. (b) Opinion of Counsel. Purchasers shall have received at the closing of any sale and purchase of any Remaining Shares (each a "Subsequent Closing") from Choate, Hall & Stewart or any other counsel to the Company satisfactory to Purchasers, a favorable written opinion dated as of the date of the Subsequent Closing which shall be to the effect set forth in Exhibit D hereto. (c) No Injunction. There shall not be in effect any order, decree or injunction of a court or agency of competent jurisdiction which enjoins or prohibits consummation of the sale and purchase of the Remaining Shares to be purchased by Purchasers at the Subsequent Closing. (d) Company Certificate. The Company shall have delivered to Purchasers a certificate, dated as of the Subsequent Closing Date, signed by its chief executive officer and its chief financial officer, in form and substance satisfactory to Purchasers to the effect that the conditions set forth in this Section 5.03 hereof have been satisfied. 43 (e) Payment of Expenses. The Company shall have paid to Purchasers the costs and expenses incurred by Purchasers in connection with the Subsequent Closing pursuant to Section 7.07 hereof. (f) Material Adverse Effect. Since the Closing Date, there shall not have been any change, event, occurrence or development in the assets, business, properties, liabilities, business affairs, condition (financial or otherwise), or results of operations of the Company or any Company Subsidiary that has had or could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect. (g) Market. (i) Trading generally shall not have been suspended or materially limited on or by, as the case may be, either the New York Stock Exchange or the Pacific Stock Exchange, (ii) trading of any securities of the Company or the Company Subsidiaries shall not have been suspended on the New York Stock Exchange or the Pacific Stock Exchange, (iii) a general moratorium on commercial banking activities in New York shall not have been declared by either Federal or New York State authorities and (iv) there shall not have occurred any outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis that, in any such case, in Purchasers' judgment, is material and adverse to the Company. (h) Exchange Listing. The Remaining Shares to be issued to Purchasers on the Subsequent Closing Date shall be approved for listing on the New York Stock Exchange and Pacific Stock Exchange (or such other national securities exchange or securities trading system on which the Common Stock is listed) subject to official notice of issuance and notice of results of the shareholder vote prior to the Threshold Date. (i) Shareholder Approval. For any Remaining Shares to be issued on or after the Threshold Date, the shareholders of the Company shall have duly approved the issuance of such shares of Common Stock pursuant to this Agreement (the "Required Shareholder Approval") in accordance with Section 4.16 of the Agreement and all Applicable Laws. (j) Regulatory Approvals. All Permits, Consents, authorizations, orders and approvals of, and filings and registrations with any Governmental Entity or any other Person required to be made or obtained under any federal or state law, rule or regulation in connection with the consummation of the transactions contemplated hereby on such Subsequent Closing Date shall have been obtained or made, and all statutory waiting periods thereunder in respect thereof shall have expired, in each case, without the imposition of any terms or conditions which, either individually or in the aggregate, are unduly burdensome to Purchasers or any of their Affiliates or are such that, had they been known to Purchasers prior to the date hereof, it is reasonable to conclude that Purchasers would not have entered into this Agreement or the transactions contemplated hereby. Section 5.04. Conditions of Sale of Remaining Shares. The obligation of the Company to sell and issue any Remaining Shares is subject to satisfaction or waiver of each of the following conditions on or prior to any Subsequent Closing Date: 44 (a) Representations and Warranties; Covenants. The representations and warranties of Purchaser contained in this Agreement and the Ancillary Documents and in each certificate or document delivered by Purchasers to the Company in connection with the transactions contemplated hereby and thereby shall be true and correct in all material respects on and as of the Subsequent Closing Date with the same effect as though made on and as of the Subsequent Closing Date (except for representations and warranties that speak as of a specific date other than such Subsequent Closing Date (which need only be true and correct in all material respects as of such date)), and Purchasers shall have performed all obligations and complied with all agreements, undertakings, covenants and conditions required by each of them to be performed at or prior to the Subsequent Closing Date. (b) No Injunction. There shall not be in effect any order, decree or injunction of a court or agency of competent jurisdiction with enjoins or prohibits consummation of the sale and purchase of the Remaining Shares to be sold and issued by the Company at the Subsequent Closing. (c) Purchasers' Certificate. Purchasers shall have delivered to the Company a certificate, dated as of the Subsequent Closing Date, in form and substance satisfactory to the Company to the effect that the conditions set forth in this Section 5.04 have been satisfied. (d) Shareholder Approval. For any Remaining Shares to be issued on or after the Threshold Date, the Required Shareholder Approval shall have been obtained. (e) Regulatory Approvals. All Permits, Consents, authorizations, orders and approvals of, and filings and registrations with any Governmental Entity or any other Person required to be made or obtained under any federal or state law, rule or regulation for or in connection with the consummation of the transactions contemplated hereby on such Subsequent Closing Date shall have been obtained or made, and all statutory waiting periods thereunder in respect thereof shall have expired, in each case without the imposition of any terms or conditions which, either individually or in the aggregate, are unduly burdensome to the Company or any of its Affiliates or are such that, had they been known to the Company prior to the date hereof, it is reasonable to conclude that the Company would not have entered into this Agreement or the transactions contemplated hereby. (f) Exchange Listing. The Remaining Shares to be issued to Purchasers on the Subsequent Closing Date shall be approved for listing on the New York Stock Exchange and Pacific Stock Exchange (or such other national securities exchange or securities trading system on which the Common Stock is listed) subject to official notice of issuance and notice of results of the shareholder vote prior to the Threshold Date. ARTICLE VI. [RESERVED] 45 ARTICLE VII MISCELLANEOUS Section 7.01. Survival of Representations and Warranties. All covenants and agreements and all representations and warranties made herein or in any Schedule or Exhibit hereto, or in any certificates or documents delivered in connection with the Closing shall survive the Closing for a period of 18 months following each issuance of shares of Common Stock to Purchasers pursuant to Sections 2.01 and 2.03 of this Agreement. Section 7.02. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given, if delivered personally, by telecopier or sent by overnight courier as follows: (a) If to Purchasers, to: c/o Morgan Stanley Real Estate Fund III, L.P. 37th Floor 1585 Broadway New York, New York 10036-8293 Phone: (212) 761-6084 Fax: (212) 761-0508 Attn: Mr. Michael Franco and Mr. Michael Foster With copies to: Jones, Day, Reavis & Pogue 2300 Trammell Crow Center 2001 Ross Avenue Dallas, Texas 75201 Phone: (214) 220-3939 Fax: (214) 969-5100 Attn: David J. Lowery, Esq. 46 (b) If to the Company, to: Bluegreen Corporation 4960 Blue Lake Drive Boca Raton, Florida 33431 Phone: (561) 912-8000 Fax: (561) 912-8100 Attn: Patrick E. Rondeau, Esq. Mr. John F. Chiste With a copy to: Choate, Hall & Stewart Exchange Place 53 State Street Boston, Massachusetts 02109 Phone: (617) 248-5000 Fax: (617) 248-4000 Attn: William P. Gelnaw, Esq. or to such other address or addresses as shall be designated in writing. All notices shall be effective when received. Section 7.03. Entire Agreement; Amendment. This Agreement and the Ancillary Documents and the documents described herein and therein or attached or delivered pursuant hereto or thereto set forth the entire agreement between the parties hereto with respect to the transactions contemplated by this Agreement. Any provision of this Agreement may be amended or modified in whole or in part at any time by an agreement in writing among the parties hereto (provided that agreement by the Purchasers and the Permitted Transferee shall only require agreement of the Purchasers and Permitted Transferees holding a majority of the shares of Common Stock issued pursuant to this Agreement) executed in the same manner as this Agreement. No failure on the part of any party to exercise, and no delay in exercising, any right shall operate as a waiver thereof nor shall any single or partial exercise by any party of any right preclude any other or future exercise thereof or the exercise of any other right. No investigation by Purchasers of the Company prior to or after the date hereof shall stop or prevent Purchasers from exercising any right hereunder or be deemed to be a waiver of any such right. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted. Section 7.04. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to constitute an original, but all of which together shall constitute one and the same instrument. 47 Section 7.05. Governing Law. This Agreement shall be governed by, and interpreted in accordance with, the laws of the State of Massachusetts applicable to contracts made and to be performed in that State without giving effect to the conflict of laws of that State. Section 7.06. Public Announcements. Subject to each party's disclosure obligations imposed by law and any stock exchange, the Company agrees to provide Purchasers for their review all news releases and other public disclosures that the Company anticipates distributing relating to this Agreement and the transactions contemplated hereby prior to any dissemination of the same. Purchasers shall also have the right to review and, before filing or other public dissemination, approve (which approval will not be unreasonably withheld) any statements made or information provided with respect to Purchasers or the Permitted Transferees or the transactions contemplated by this Agreement, including, without limitation, such statements intended to be included in any future Securities Filings prepared by or on behalf of the Company. Subject to its disclosure obligations imposed by law and the New York Stock Exchange or Pacific Stock Exchange, the Company shall not use the name (or any derivative thereof) of any Purchaser or Permitted Transferee in any news release or public disclosures without the prior written consent of Purchasers. Section 7.07. Expenses. The Company and the Company Subsidiaries shall bear their own costs and expenses incurred in connection with this Agreement and the Ancillary Documents and the transactions contemplated hereby and thereby, including the fees and expenses of the Company's financial advisors, accountants and counsel. Upon the Closing, the Company agrees to pay or reimburse Purchasers on the Closing Date for all reasonable out-of-pocket costs and expenses incurred by Purchasers arising in connection with Purchasers' due diligence investigation of the Company, the preparation and negotiation of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby, including, without limitation, all filing fees, travel expenses and the reasonable fees and expenses of Purchasers' counsel, accountants and consultants. On each Subsequent Closing Date, the Company agrees to pay or reimburse Purchasers for all reasonable out-of-pocket costs and expenses incurred by Purchasers arising in connection with consummating the transactions contemplated hereby, including, without limitation, all filing fees, travel expenses and the reasonable fees and expenses of Purchasers' counsel, accountants and consultants. In no event shall the Company's aggregate reimbursement obligation for the foregoing exceed $250,000. Section 7.08. Indemnification. (a) The Company agrees to indemnify and save harmless Purchasers, each person who controls Purchasers within the meaning of the Exchange Act (including the general partners thereof), and each of the respective partners, officers, directors, employees, agents and Affiliates of the foregoing in their respective capacities as such (the "Purchaser Indemnitees"), to the fullest extent lawful, from and against any and all actions, suits, claims, proceedings, costs, damages, judgments, amounts paid in settlement (subject to Section 7.08(d)) and expenses (including reasonable attorneys' fees and disbursements) (collectively, "Losses") relating to or arising out of (i) any inaccuracy in or breach of the representations, warranties, covenants or agreements made by the Company herein when made or deemed made (provided that if the Company has disclosed in writing to Purchasers any inaccuracy or breach of 48 representations or warranties prior to a Closing or Subsequent Closing and the Purchasers elect to consummate the transactions at such Closing or Subsequent Closing, the Company shall have no obligations to indemnify the Purchaser Indemnitees for such inaccuracy or breach); (ii) any other conduct by the Company or its employees or agents as a result of which, in whole or in part, any Purchaser Indemnitee is made a party to, or otherwise incurs any loss pursuant to, any action, suit, claim or proceeding arising out of or relating to any such conduct; or (iii) any action or failure to act undertaken by a Purchaser Indemnitee at the request of the Company. (b) The Company shall reimburse the Purchaser Indemnitees for all reasonable out-of-pocket expenses (including attorneys' fees and disbursements) as they are incurred in connection with investigating, preparing to defend or defending any such action, suit, claim or proceeding (including any inquiry or investigation) whether or not a Purchaser Indemnitee is a party thereto. (c) In the event that the foregoing indemnity is unavailable to any Purchaser Indemnitee for any reason, the Company agrees to contribute to any such Losses and will do so in such proportion as is appropriate to reflect the relative fault of each party in connection with the conduct which resulted in the Losses. The parties agree that it would not be just or equitable if contribution were determined by pro rata allocation or by any other method of allocation which does not take account of relative fault and other equitable considerations. The parties further agree that if and to the extent that pro rata contribution were nevertheless considered by a court, all Purchaser Indemnitees shall collectively be deemed to be one person. No Purchaser Indemnitee shall in any event have liability to the Company arising out of an inaccuracy in or breach of the representations, warranties, covenants or agreements made by the Company herein, other conduct by the Company or their employees or agents, or any action or failure to act undertaken by a Purchaser Indemnitee at the request of the Company. (d) A Purchaser Indemnitee shall give written notice to the Company of any claim with respect to which it seeks indemnification promptly after the discovery by such party of any matters giving rise to a claim for indemnification; provided that the failure of any Purchaser Indemnitee to give notice as provided herein shall not relieve the Company of its obligations under this Section 7.08 unless and to the extent that the Company shall have been prejudiced by the failure of such Purchaser Indemnitee to so notify the Company. In case any such action, suit, claim or proceeding is brought against a Purchaser Indemnitee, the Company shall be entitled to participate in the defense thereof and, to the extent that it may wish, to assume the defense thereof, with counsel satisfactory to such Purchaser Indemnitee, and after notice from the Company of its election so to assume the defense thereof, the Company will not be liable to such Purchaser Indemnitee under this Section 7.08 for any legal or other expense subsequently incurred by such Purchaser Indemnitee in connection with the defense thereof; provided, however, that (i) if the Company shall elect not to assume the defense of such claim or action or (ii) if such Purchaser Indemnitee reasonably determines that there may be a conflict between the positions of the Company and of Purchaser Indemnitee in defending such claim or action, then separate counsel shall be entitled to participate in and conduct the defense, and the Company shall be liable for any legal or other expenses reasonably incurred by Purchaser Indemnitee in connection with the defense. The Company shall not be liable for any settlement of any action, suit, claim or proceeding effected without its written consent; provided, however, 49 that the Company shall not unreasonably withhold, delay or condition its consent. The Company further agrees that it will not, without Purchaser Indemnitee's prior written consent, settle or compromise any claim or consent to entry of any judgment in respect thereof in any pending or threatened action, suit, claim or proceeding in respect of which indemnification may be sought hereunder (whether or not any Purchaser Indemnitee is an actual or potential party to such action, suit, claim or proceeding) unless such settlement or compromise includes an unconditional release of Purchasers and each other Purchaser Indemnitee from all liability arising out of such action, suit, claim or proceeding. (e) The obligations of the Company under this Section 7.08 shall survive the transfer of the shares of Common Stock or the termination of this Agreement or the consummation of the transactions contemplated hereby. (f) The rights of Purchasers under this Section 7.08 shall be in addition to any liability that the Company might otherwise have to Purchasers under this Agreement, at common law or otherwise. Section 7.09. Successors and Assigns. Subject to Applicable Law and the provisions of Section 4.07, Purchasers may assign their respective rights under this Agreement in whole or in part to any Permitted Transferee, but no such assignment shall relieve any Purchaser of its obligations hereunder. No transferee of Purchasers (or the Permitted Transferees) which is not a Permitted Transferee shall have any rights under this Agreement. The Company may not assign any of its rights or delegate any of its duties under this Agreement without the prior written consent of Purchasers. Any purported assignment in violation of this Section 7.09 shall be void. Section 7.10. Jurisdiction. The courts of the State of New York in New York County and the United States District Court for the Southern District of New York shall have jurisdiction over the parties with respect to any dispute or controversy between them arising under or in connection with this Agreement and, by execution and delivery of this Agreement, each of the parties to this Agreement submits to the jurisdiction of those courts, including, but not limited to, the in personam and subject matter jurisdiction of those courts, waives any objections to such jurisdiction on the grounds of venue or forum non conveniens, the absence of in personam or subject matter jurisdiction and any similar grounds, consents to service of process by mail (in accordance with Section 7.02) or any other manner permitted by law, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement. Section 7.11. Specific Performance. The Company acknowledges that the rights granted to Purchasers in this Agreement are of a special, unique and extraordinary character, and that any breach of this Agreement by the Company could not be compensated for by damages. Accordingly, if the Company breaches its obligations under this Agreement, Purchasers shall be entitled, in addition to any other remedies that they may have, to seek enforcement of this Agreement by a decree of specific performance requiring the Company to fulfill its obligations under this Agreement. Section 7.12. Captions. The captions contained in this Agreement are for reference purposes only and are not part of this Agreement. 50 Section 7.13. Severability. Should any part of this Agreement for any reason be declared invalid, such decision shall not affect the validity of any remaining portion, which remaining portion shall remain in full force and effect as if this Agreement had been executed with the invalid portion thereof eliminated, and it is hereby declared the intention of the parties here to that they would have executed the remaining portion of this Agreement without including therein any such part or parts which may, for any reason, be hereafter declared invalid. Section 7.14. Mutual Waiver of Jury Trial. Because disputes arising in connection with complex financial transactions are most quickly and economically resolved by an experienced and expert person and the parties wish applicable state and federal laws to apply (rather than arbitration rules), the parties desire that their disputes be resolved by a judge applying such Applicable Laws. Therefore, to achieve the best combination of the benefits of the judicial system and of arbitration, the parties hereto waive all right to trial by jury in any action, suit or proceeding brought to enforce or defend any rights or remedies under this Agreement. Section 7.15. Exculpation. Notwithstanding any provision herein to the contrary, the liability of each Purchaser shall be limited to the assets of such Purchaser and no partner, shareholder, officer, director, employee or agent of Purchaser shall have any personal liability hereunder (except to the extent provided under Applicable Law with respect to unlawful distribution or fraudulent transfers or conveyances). Section 7.16. Obligations. All obligations of Purchasers under this Agreement shall be joint and several. Section 7.17. Schedules. All references to a "Schedule" in this Agreement shall refer to the schedules included in the letter from the Company to Purchasers dated as of the date hereof which is hereby incorporated herein by reference. [Signature Page Follows] 51 IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto or by their respective duly authorized officers, all as of the date first above written. BLUEGREEN CORPORATION By: /s/ George F. Donovan --------------------------------------------- Name: George F. Donovan Title: President and Chief Executive Officer MORGAN STANLEY REAL ESTATE FUND III, L.P. By: MSREF III, Inc. Its: General Partner By: /s/ Michael J. Franco --------------------------------------------- Name: Michael J. Franco Title: Vice President MORGAN STANLEY REAL ESTATE INVESTORS III, L.P. By: MSREF III, Inc. Its: General Partner By: /s/ Michael J. Franco --------------------------------------------- Name: Michael J. Franco Title: Vice President 52 MSP REAL ESTATE FUND, L.P. By: MSREF III, Inc. Its: General Partner By: /s/ Michael J. Franco --------------------------------------------- Name: Michael J. Franco Title: Vice President MSREF III SPECIAL FUND, L.P. By: MSREF III, Inc. Its: General Partner By: /s/ Michael J. Franco --------------------------------------------- Name: Michael J. Franco Title: Vice President 53 EX-3 4 VOTING AND COOPERATION AGREEMENT EXHIBIT 3 ================================================================================ VOTING AND COOPERATION AGREEMENT by and among MORGAN STANLEY REAL ESTATE FUND III, L.P., MORGAN STANLEY REAL ESTATE INVESTORS III, L.P., MSP REAL ESTATE FUND, L.P., MSREF III SPECIAL FUND, L.P. and CERTAIN SHAREHOLDERS OF BLUEGREEN CORPORATION Dated as of August 14, 1998 ================================================================================ VOTING AND COOPERATION AGREEMENT This VOTING AND COOPERATION AGREEMENT (this "Agreement"), is made and entered into as of August 14, 1998, by and among Morgan Stanley Real Estate Fund III, L.P., a Delaware limited partnership ("MSREF III"), Morgan Stanley Real Estate Investors III, L.P., a Delaware limited partnership ("MSREI"), MSP Real Estate Fund, L.P., a Delaware limited partnership ("MSP") and MSREF III Special Fund, L.P., a Delaware limited partnership ("MSREF Special") (MSREF III, MSREI, MSP and MSREF Special are herein collectively referred to as "Purchasers") and those shareholders of BLUEGREEN CORPORATION, a Massachusetts corporation (the "Company"), who are signatories to this Agreement (collectively, the "Stockholders"). RECITALS A. Purchasers and the Company have entered into a Securities Purchase Agreement dated as of August 14, 1998 (the "Purchase Agreement"), pursuant to which the Purchasers have agreed to purchase from the Company and the Company has agreed to sell and issue to the Purchasers during the Commitment Period a number of shares of Common Stock up to the Maximum Shares upon the terms and subject to the conditions set forth in the Purchase Agreement. B. As of the date hereof, each Stockholder owns of record the number of shares of the Common Stock and other securities exercisable or convertible into shares of Common Stock set forth opposite the respective Stockholder's name on Schedule A attached hereto. C. As a condition and inducement to the willingness of Purchasers to enter into the Purchase Agreement, Purchasers have requested that each Stockholder agree, and each Stockholder has agreed, to enter into this Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereto hereby agree as follows: VII. Agreement to Vote Shares. At any meeting of the shareholders of the Company called to consider and vote upon the approval of the sale and issuance of shares of Common Stock to Purchasers (and/or their Permitted Transferees) under the Purchase Agreement (if such approval is sought) (and at any and all postponements and adjournments thereof), and in connection with any action to be taken in respect thereof by written consent of the shareholders of the Company, each Stockholder shall vote or cause to be voted (including by written consent, if applicable) all shares of Common Stock which such Stockholder has the power to vote or in respect of which such Stockholder has the power to direct the vote in favor of the sale and issuance of shares of Common Stock to Purchasers (or their Permitted Transferees) under the Purchase Agreement. IX. Board Representation. (a) For so long as Purchasers and any Permitted Transferees own, in the aggregate, at least the Required Interest, each Stockholder shall vote or cause to be voted (including by written consent, if applicable) all shares of Common Stock which such Stockholder has the power to vote or in respect of which such Stockholder has the power to direct the vote in favor of the nominees (each a "Purchaser Designee") to the Board of Directors of the Company designated by MSREF III and MSP (or their Permitted Transferees) pursuant to the provisions of Section 4.10 of the Purchase Agreement, at any regular or special meeting of the shareholders of the Company (including any adjournments thereof) called for the purpose of electing directors of the Company, except the foregoing shall not apply to the extent any Purchaser Designee has been elected to the Board of Directors and is in a class of directors not currently standing for re-election. (b) For so long as Purchasers and any Permitted Transferees own, in the aggregate, less than the Required Interest but at least the Minimum Interest, each Stockholder shall vote or cause to be voted (including by written consent, if applicable) all shares of Common Stock which such Stockholder has the power to vote or in respect of which such Stockholder has the power to direct the vote in favor of the nominee to the Board of Directors of the Company designated by MSP (or its Permitted Transferee) pursuant to the provisions of Section 4.10 of the Purchase Agreement, at any regular or special meeting of the shareholders of the Company (including any adjournments thereof) called for the purpose of electing Directors of the Company. (c) In the event any Purchaser Designee shall resign, or be removed, or be unable to serve for any reason prior to the expiration of his or her term as a director of the Company, in accordance with Section 4.10 of the Purchase Agreement, MSREF III or MSP (or their Permitted Transferees), as the case may be, shall have the right to notify the Board of Directors of a replacement Purchaser Designee, and, to the extent the shareholders of the Company shall be required to vote on the matter, each Stockholder shall vote or cause to be voted (including by written consent, if applicable) all shares of Common Stock which such Stockholder has the power to vote or in respect of which such Stockholder has the power to direct the vote in favor of the replacement Purchaser Designee to fill the unexpired term of the director nominee which such new nominee is replacing. Each Purchaser Designee shall be reasonably acceptable to the Company as provided in the Purchase Agreement. (d) Each Stockholder agrees that he or it shall not take any direct or indirect action to remove any Purchaser Designee from the Board of Directors without cause. (e) In order to effectuate the provisions of this Agreement, each Stockholder hereby agrees that when any action or vote is required to be taken by such person in his or its capacity as a stockholder pursuant to this Agreement, such person shall, subject to compliance with the Company's Amended and Restated Bylaws, use his or its reasonable best efforts to call, or cause the appropriate officers and directors of the Company to call, a special or annual meeting of the shareholders, as the case may be, or to the extent permitted by law, to execute a written consent in lieu of any such meetings. X. Conformity of Charter Documents. Each Stockholder shall vote all of the shares of Common Stock which such Stockholder has the power to vote or in respect of which such Stockholder has the power to direct the vote, at any regular or special meeting of shareholders of the Company (including by written consent, if applicable), in a manner such that the Company's Restated 2 Articles of Organization and Amended and Restated Bylaws do not, at any time, conflict with the provisions of this Agreement or the Purchase Agreement. XI. Limitation. It is expressly understood and agreed that this Agreement solely relates to matters affecting the Stockholders in their capacities as shareholders of the Company. Nothing contained herein shall in any way be construed as being applicable to any actions which any Stockholder may take in his capacity as a director of the Company. XII. Certain Representations, Warranties and Covenants of the Stockholders. Each Stockholder, severally but not jointly, represents, warrants and covenants to Purchasers as follows: 12.01. Ownership. Except as specified on Schedule A, or as disclosed in the Proxy Statement dated June 28, 1998 relating to the Company's 1998 Annual Meeting of Shareholders, Stockholder is the sole record and beneficial owner (unless otherwise indicated on Schedule A) of the shares of Common Stock set forth opposite such Stockholder's name on Schedule A and has full and unrestricted power to vote such shares of Common Stock (it being understood that, with respect to options, convertible notes and debentures, no right to vote the Common Stock shall exist unless and until the option, note or debenture is exercised or converted, as applicable). As of the date hereof, Stockholder does not own any other securities of the Company other than shares of Common Stock set forth on Schedule A and securities convertible into shares of Common Stock as more fully described on Schedule A. 12.02. Due Authorization. Stockholder has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Stockholder and the consummation by Stockholder of the transactions contemplated hereby have been duly authorized by all necessary action on the part of Stockholder. This Agreement has been duly executed and delivered by Stockholder and constitutes the valid and binding obligation of Stockholder, enforceable against Stockholder in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights generally and to general principles of equity. 12.03. No Conflicts. The execution and delivery of this Agreement by Stockholder does not, and the consummation of the transactions contemplated by this Agreement and compliance with the provisions of this Agreement will not, conflict with, result in a breach or violation of, or default (with or without notice or lapse of time or both) under, or give rise to a material obligation, a right of termination, cancellation or acceleration of any obligation or a loss of a material benefit under, or require notice to, or the consent of, any Person under any agreement, instrument, undertaking, law, rule, regulation, judgment, order, injunction, decree, determination or award binding on Stockholder, other than any such conflicts, breaches, violations, defaults, rights or losses that, individually or in the aggregate, would not (i) impair the ability of Stockholder to perform his or its obligations under this Agreement or (ii) prevent or delay the consummation of any of the transactions contemplated by this Agreement. 12.04. Reliance by Purchasers. Stockholder understands and acknowledges that Purchasers are entering into the Purchase Agreement in reliance upon Stockholder's execution and delivery of this Agreement. 3 12.05. Non-Interference. Stockholder will not, during the term of this Agreement, except as permitted by this Agreement, (i) grant any proxies or powers of attorney with respect to any of his or its shares of Common Stock in conflict with the provisions hereof, (ii) deposit any of his or its shares of Common Stock into a voting trust or enter into a voting agreement with respect to his or its shares of Common Stock, or (iii) take any action that would make any representation or warranty contained herein untrue or incorrect or have the effect of preventing such Stockholder from performing his or its obligations under this Agreement. 12.06. Survival. The representations, warranties and covenants of the Stockholders set forth in this Section 4 will survive the execution and delivery of this Agreement. XIII. Transfers. Subject to Applicable Law, each Stockholder may from time to time sell, transfer or otherwise dispose ("Transfer") of his or its shares of Common Stock (and any securities exercisable for or convertible into Common Stock) and, provided the transferee is not a Related Person (as defined below), such transferee shall acquire the shares of Common Stock (or other securities) free and clear of the terms and conditions of, and shall not be bound or have any obligations under, this Agreement. To the extent a Stockholder Transfers all or any part of his or its shares of Common Stock (or other securities) to a Related Person, such Related Person shall agree to be bound by the provisions of this Agreement as though such transferee had been a party hereto. Upon Transfer to a Related Person in accordance with this Agreement, to the extent of the Transfer, each reference to the transferring Stockholder in this Agreement will thereafter be deemed to include such Stockholder and each Related Person to whom any shares of Common Stock were Transferred, and each such Stockholder and Related Person, taken together, will thereafter have the rights and obligations of the transferring Stockholder hereunder, without enlargement or diminution. For purposes hereof, a Related Person means (i) a spouse, child (natural or adopted), grandchild or parent of the Stockholder, (ii) any trust, the beneficiaries of which include only the persons described in clause (i), or (iii) any corporation or partnership, a majority of the economic and voting interests in which are owned by the Stockholder or any person described in clauses (i) or (ii). XIV. Legend on Stock Certificates. If required by Applicable Law, each certificate evidencing shares of Common Stock subject to this Agreement will be stamped or otherwise imprinted with a legend in substantially the following form: THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE VOTING AND COOPERATION AGREEMENT, DATED AS OF AUGUST 14, 1998, BY AND AMONG MORGAN STANLEY REAL ESTATE FUND III, L.P., MORGAN STANLEY REAL ESTATE INVESTORS III, L.P., MSP REAL ESTATE FUND, L.P., MSREF III SPECIAL FUND, L.P. AND CERTAIN SHAREHOLDERS OF BLUEGREEN CORPORATION (THE "COMPANY"). A COPY OF SUCH AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST. If required by Applicable Law, the Stockholders will cause the Company to imprint such legends on certificates evidencing shares of Common Stock held by each of them which were outstanding prior 4 to the date hereof. The legend set forth in the preceding paragraph shall be removed at such time as it is no longer required by Applicable Law or a Stockholder no longer owns any shares of Common Stock and shall not be placed on any certificates issued to a transferee who is not a Related Person. XV. Term. This Agreement shall terminate at such time as Purchasers own less than the Minimum Interest, and may be terminated by Purchasers at any time upon notice by the Purchaser to the Company and the Stockholders. XVI. Miscellaneous. 16.01. Fees and Expenses. Each party hereto will pay its own expenses incidental to preparing for, entering into and carrying out this Agreement and the performance of its obligations hereunder. 16.02. Amendment. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. 16.03. Extension; Waiver. Any agreement on the part of a party to waive any provision of this Agreement, or to extend the time for any performance hereunder, will be valid against the other parties only if set forth in an instrument in writing signed on behalf of each such party. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise will not constitute a waiver of such rights. 16.04. Entire Agreement; No Third-Party Beneficiaries. This Agreement constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement, and is not intended to confer upon any Person other than the parties any rights or remedies. 16.05. Governing Law. This Agreement will be governed by, and construed in accordance with, the laws of the Commonwealth of Massachusetts, regardless of the laws that might otherwise govern under applicable conflict of laws principles thereof. 16.06. Specific Performance. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, and that such breach would cause the other parties hereto to sustain damages for which they would not have an adequate remedy at law for money damages. It is accordingly agreed that each party will be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court of competent jurisdiction, this being in addition to any other remedy to which it is entitled at law or in equity. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity will be cumulative and not alternative, and the exercise of any thereof by any party will not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. 16.07. Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction will, as to that jurisdiction, be ineffective to the extent of such 5 invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provisions will be interpreted to be only so broad as is enforceable. 16.08. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN CONNECTION WITH ANY SUCH ACTION, SUIT OR PROCEEDING. 16.09. Descriptive Headings. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. 16.10. Counterparts. This Agreement may be executed by facsimile signature and in one or more counterparts, each of which shall be deemed an original, but all of which together will be considered one and the same agreement. 16.11. Successors and Assigns. Except as otherwise provided herein, this Agreement will be binding upon and inure solely to the benefit of the parties hereto and their respective successors and permitted assigns, provided that Purchasers' rights under this Agreement may only be assigned to a Permitted Transferee. 16.12. Attorneys' Fees. In any action or proceeding brought to enforce any provision of this Agreement, or where any provision hereof is validly asserted as a defense, the successful party will be entitled to recover reasonable attorneys' fees in addition to its costs and expense and any other available remedy. 16.13. Further Assurances. The parties hereto will do such further acts and things necessary to ensure that the terms of this Agreement are carried out and observed. 16.14. After-Acquired Shares. All of the provisions of this Agreement will apply to and include all Common Stock and other voting securities of the Company acquired by any Stockholder on and after the date hereof. 16.15. Defined Terms. Capitalized terms used herein that are not otherwise defined herein have the meanings set forth in the Purchase Agreement. [Signature page follows] 6 IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be signed as of the day and year first written above. STOCKHOLDERS: /s/ Joseph C. Abeles --------------------------------------------- JOSEPH C. ABELES --------------------------------------------- SOPHIA ABELES /s/ John F. Chiste --------------------------------------------- JOHN F. CHISTE /s/ George F. Donovan --------------------------------------------- GEORGE F. DONOVAN /s/ Ralph A. Foote --------------------------------------------- RALPH A. FOOTE /s/ L. Nicolas Gray --------------------------------------------- L. NICHOLAS GRAY /s/ Daniel C. Koscher --------------------------------------------- DANIEL C. KOSCHER /s/ F. M. Myers --------------------------------------------- FREDRICK M. MYERS /s/ Elizabeth L. Myers --------------------------------------------- ELIZABETH L. MYERS /s/ Patrick E. Rondeau --------------------------------------------- PATRICK L. RONDEAU 7 /s/ J. Larry Rutherford --------------------------------------------- J. LARRY RUTHERFORD /s/ Stuart A. Shikiar --------------------------------------------- STUART A. SHIKIAR /s/ Bradford T. Whitmore --------------------------------------------- BRADFORD T. WHITMORE GRACE BROTHERS, LTD. By: /s/ Bradford T. Whitmore , ----------------------------------------- its General Partner By: Bradford T. Whitmore Its: General Partner PURCHASERS: MORGAN STANLEY REAL ESTATE FUND III, L.P. By: MSREF III, Inc., its General Partner By: /s/ Michael J. Franco ------------------------------------------ Its: Vice President MORGAN STANLEY REAL ESTATE INVESTORS, III, L.P. By: MSREF III, Inc., its General Partner By: /s/ Michael J. Franco ------------------------------------------ Its: Vice President 8 MSP REAL ESTATE FUND, L.P. By: MSREF III, Inc., its General Partner By: /s/ Michael J. Franco ------------------------------------------ Its: Vice President MSREF III SPECIAL FUND, L.P. By: MSREF III, Inc., its General Partner By: /s/ Michael J. Franco --------------------------------------------- Its: Vice President 9 SCHEDULE A OWNERSHIP OF SECURITIES
Number of Shares of Shares of Bluegreen Name and Address Bluegreen Options to Purchase Shares of Corporation Common Stock of Corporation Bluegreen Corporation Issuable upon Conversion Stockholder Common Stock Common Stock of Debentures and Notes ---------- ------------ ------------ ----------------------- Joseph C. Abeles/1/ 432,027 20,000 405,658 Sophia Abeles 11,574 0 36,407 John F. Chiste 0 161,140 0 George F. Donovan 102,074 781,538 0 Ralph A. Foote 13,832 142,185 0 L. Nicolas Gray 0 242,699 0 Daniel C. Koscher 1,218 363,878 0 Fredrick M. Myers 0 136,223 0 Elizabeth L. Myers 34,398 0 0 Patrick E. Rondeau 11,339 283,393 0 J. Larry Rutherford 0 30,000 0 Stuart A. Shikiar/2/ 721,182 77,288 80,145 Bradford T. Whitmore 758,146 130,261 0 Grace Brothers, Ltd. 1,676,766 0 1,782,244
- ----------------------- /1/ Includes 50,000 shares and 16,018 shares of Common Stock issuable upon conversion of $132,000 aggregate principal amount of Debentures held by family trusts for which Mr. Abeles has full and unrestricted voting power. /2/ Includes 3,034 shares of Common Stock issuable upon conversion of $25,000 aggregate principal amount of Debentures held by a family trust for which Mr. Shikiar has full and unrestricted voting power. 10 EX-4 5 REGISTRATION RIGHTS AGREEMENT EXHIBIT 4 ================================================================================ REGISTRATION RIGHTS AGREEMENT BY AND AMONG MORGAN STANLEY REAL ESTATE FUND III, L.P., MORGAN STANLEY REAL ESTATE INVESTORS III, L.P., MSP REAL ESTATE FUND, L.P., MSREF III SPECIAL FUND, L.P. AND BLUEGREEN CORPORATION DATED AUGUST 14, 1998 ================================================================================ TABLE OF CONTENTS PAGE ---- 1. Definitions............................................................... 1 2. Shelf Registration of Resales............................................. 3 3. Demand Registration....................................................... 5 4. Piggyback Registration.................................................... 7 5. Registration of Securities Other than Registrable Securities.............. 9 6. "Market Stand-Off" Agreement.............................................. 9 7. Registration Procedures................................................... 9 8. Registration Expenses.....................................................14 9. Indemnification...........................................................15 10. Rule 144..................................................................17 11. Underwritten Registrations................................................18 12. Miscellaneous.............................................................18 REGISTRATION RIGHTS AGREEMENT This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made and entered into as of August 14, 1998, by and among Morgan Stanley Real Estate Fund III, L.P., a Delaware limited partnership, Morgan Stanley Real Estate Investors III, L.P., a Delaware limited partnership, MSP Real Estate Fund, L.P., a Delaware limited partnership and MSREF III Special Fund, L.P., a Delaware limited partnership (collectively, "MSREF") and Bluegreen Corporation, a Massachusetts corporation (the "Company"). RECITALS WHEREAS, pursuant to the Securities Purchase Agreement dated August 14, 1998, by and among the Company and MSREF, MSREF has agreed to purchase shares of the Company's Common Stock in an aggregate amount of up to $50,000,000; and WHEREAS, to induce MSREF to purchase the shares of Common Stock to be purchased thereunder, the Company has agreed to provide the registration rights set forth in this Agreement; and WHEREAS, the execution and delivery by the Company of this Agreement is a condition to the obligation of MSREF to purchase any shares of Common Stock as set forth in Section 5.01 of the Securities Purchase Agreement. NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereto hereby agree as follows: 17. Definitions. For purposes of this Agreement, the following terms shall have the respective meanings set forth below: "Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in New York, New York or Boca Raton, Florida are authorized or obligated to close. "Change of Control" has the meaning in the Securities Purchase Agreement. "Common Stock" means the Common Stock, par value $.01 per share, of the Company. "Demand Notice" has the meaning set forth in Section 3(a) hereto. "Demand Registration" has the meaning set forth in Section 3(a) hereto. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as in effect from time to time. "indemnified party" has the meaning set forth in Section 8(c) hereto. "indemnifying party" has the meaning set forth in Section 8(c) hereto. "Lock-Up Period" means the period commencing on the date hereof and continuing until the earlier to occur of (i) the second anniversary of the date hereof, or (ii) six months following the first date on which all shares of Common Stock to be sold and issued to Purchasers under Sections 2.01 and 2.03 of the Securities Purchase Agreement shall have been acquired by Purchasers, but not earlier than the 18th month anniversary of the date hereof. "Losses" has the meaning set forth in Section 8(a) hereto. "Notice" has the meaning set forth in Section 3(b)(iii) hereto. "Permitted Transferee" has the meaning set forth in the Securities Purchase Agreement. "Person" means an individual, corporation, partnership, association, trust, limited liability company, joint venture or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Piggyback Registration" has the meaning set forth in Section 4(a) hereto. "Prospectus" means the prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and all other amendments and supplements to the Prospectus, including post-effective amendments, and all materials incorporated by reference or deemed to be incorporated by reference in such Prospectus. "Purchasers" means any Person comprising MSREF, any Permitted Transferee, any bona fide financial institution to which any Purchaser has transferred (including upon foreclosure of a pledge) shares of Common Stock in accordance with Section 4.07 of the Securities Purchase Agreement for the purpose of securing bona fide indebtedness of such Purchaser, and not more than two other Persons to whom Purchaser or any Permitted Transferee has assigned its rights hereunder and transferred shares of Common Stock if such Persons are subject to the volume limitations and manner of sale provisions of Rule 144. "Registrable Securities" means (i) all the shares of Common Stock beneficially owned by Purchasers as of the date hereof which have been issued to Purchasers pursuant to the Securities Purchase Agreement (ii) all shares of Common Stock which Purchasers have the obligation or right to purchase pursuant to the Securities Purchase Agreement, and (iii) all of the shares of Common Stock issued pursuant to the Securities Purchase Agreement and transferred to Purchasers as permitted by the Securities Purchase Agreement and this Agreement, until, in the case of any such security, (x) such security is effectively registered under the Securities Act and disposed of in accordance with the Registration Statement covering it, (y) such security may be disposed of by Purchasers in accordance with Rule 144(k) (or any successor provision to such Rule) under the Securities Act as confirmed in a written opinion of counsel to the Company addressed to the Purchaser holding such securities, or (z) is sold or is eligible for sale in the opinion of counsel reasonably satisfactory to the Company and the Purchasers without registration under the Securities Act and without any restrictions and in a 2 manner in which all transfer restrictions and restrictive legends with respect thereto are or may be removed upon consummation of such sale. "Registration Statement" means any registration statement of the Company under the Securities Act that covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the related Prospectus, all amendments and supplements to such registration statement (including post-effective amendments), all exhibits and all materials incorporated by reference or deemed to be incorporated by reference in such registration statement. "Registration Suspension Period" has the meaning set forth in Section 2(b) hereto. "Rule 144" means Rule 144 under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended, and all rules and regulations promulgated thereunder, as in effect from time to time. "Securities Purchase Agreement" means that Securities Purchase Agreement dated as of August 14, 1998 among MSREF and the Company. "Special Counsel" has the meaning set forth in Section 6(a) hereto. "Subsidiary" means, with respect to any corporation (the "parent") any other Person of which 50% or more of the shares of the voting stock are owned or controlled, directly or indirectly, by the parent or one or more Subsidiaries of the parent, or by the parent and one or more Subsidiaries. "Suspension Notice" has the meaning set forth in Section 2(b) hereto. "Underwritten Registration" or "Underwritten Offering" means a registration under the Securities Act in which securities of the Company are sold to an underwriter or group of underwriters for reoffering to the public. 18. Shelf Registration of Resales. (a) Obligation to File and Maintain. The Company will use its reasonable best efforts to file with the SEC and cause to become effective no later than the expiration of the Lock-Up Period or within 45 days following (i) the occurrence of a Change of Control or (ii) receipt of a notice from the Company of the execution by the Company of a definitive agreement with a Person which will result in a Change of Control, a Registration Statement under the Securities Act for the offering on a continuous or delayed basis in the future of all of the Registrable Securities (the "Shelf Registration"). The Shelf Registration shall be on an appropriate form and the Shelf Registration and any form of prospectus included therein or prospectus supplement relating thereto shall reflect such plan of distribution or method of sale as Purchasers may from time to time notify the Company, including the sale of some or all of the Registrable Securities in a public offering. The Company shall use its 3 reasonable best efforts to keep the Shelf Registration continuously effective for the period beginning on the date on which the Shelf Registration is declared effective and ending on the first date that there are no Registrable Securities (provided that the Company may terminate the effectiveness of a Shelf Registration on the fourth anniversary of the date of effectiveness thereof plus a number of days equal to the number of days in all Registration Suspension Periods relating to such Shelf Registration). During the period during which the Shelf Registration is effective, the Company shall supplement or make amendments to the Shelf Registration, if required by the Securities Act or if reasonably requested by Purchasers or an underwriter of Registrable Securities, including to reflect any specific plan of distribution or method of sale, and shall use its reasonable best efforts to have such supplements and amendments declared effective, if required, as soon as practicable after filing. (b) Black-Out Periods of Purchasers. Notwithstanding anything herein to the contrary, (i) the Company shall have the right, by written notice to Purchasers (the "Suspension Notice"), exercisable on not more than one occasion during any one-year period, from time to time, to require Purchasers not to sell under the Shelf Registration or to suspend the effectiveness thereof during the period starting with the date 30 days prior to the Company's good faith estimate, as certified in writing by an executive officer of the Company to Purchasers, of the proposed date of filing of a Registration Statement or a preliminary prospectus supplement relating to an existing shelf registration statement, in either case, pertaining to an Underwritten Offering of equity securities of the Company for the account of the Company, and ending on the date 90 days following the effective date of such Registration Statement or the date of filing of such prospectus supplement, and (ii) the Company shall be entitled to postpone or suspend (but not for a period exceeding 60 days per transaction) the filing or effectiveness of a Registration Statement otherwise required to be prepared and filed by it pursuant to this Section 2 on not more than one occasion during any 12-month period if the Company determines, in its good faith judgment, that such registration and offering or continued effectiveness would interfere with any material financing, acquisition, disposition, corporate reorganization or other material transaction involving the Company or any of its subsidiaries or any preexisting negotiations, discussions or pending proposal with respect to any such material transactions or public disclosure thereof would be required prior to the time such disclosure might otherwise be required, or when the Company is in possession of material information that it deems advisable not to disclose in a Registration Statement (either, the "Registration Suspension Period"). (c) Shelf Registrations. A Shelf Registration under this Section 2 shall not be deemed to have been effected unless such registration becomes effective pursuant to the Securities Act and is kept effective for a period of at least four years, provided, however, that no Registration Suspension Periods or periods during which there is any stop order, injunction or other order of the SEC or other governmental authority for any reason other than an act or omission or Purchasers, shall count towards such four-year period. (d) Notice. The Company shall give Purchasers prompt notice in the event that the Company has suspended sales of Registrable Securities under Section 2(b). 19. Demand Registration. (a) Requests for Registration. At any time and from time to time after the earlier of (i) expiration of the Lock-Up Period, (ii) the occurrence of a Change of Control or (iii) receipt of a notice from the 4 Company of the execution by the Company of a definitive agreement with a Person which will result in a Change of Control, each Purchaser shall have the right by written notice delivered to the Company (a "Demand Notice") to require the Company to register the number of Registrable Securities requested to be so registered in accordance with the provisions of the Securities Act (a "Demand Registration"), but in no event fewer than would result in $10,000,000 of Registrable Securities being registered or all Registrable Securities owned by the Purchaser delivering the Demand Notice if it owns less than $10,000,000 of Registrable Securities; provided, however, that no Purchaser may deliver a Demand Notice until 120 days after the effective date of the immediately preceding Demand Registration and no Purchaser may deliver a Demand Notice within 180 days after the effective date of a registration statement filed by the Company covering a firm commitment underwritten public offering (provided that the Purchaser had the right to participate in such offering under Section 4). The number of Demand Registrations pursuant to this Section 3(a) will not exceed two; provided, however, that in determining the number of Demand Registrations to which Purchasers are entitled there will be excluded (i) any Demand Registration that is an Underwritten Registration if the managing underwriter or underwriters have advised the Purchasers whose Registrable Securities are being registered in the Demand Registration that the total number of Registrable Securities requested to be included in the Demand Registration exceeds by more than 25% the number of Registrable Securities that can be sold in that offering in accordance with the provisions of this Agreement without materially and adversely affecting the success of such offering, and (ii) any Demand Registration that does not become effective or is not maintained effective for the period required pursuant to Section 3(b), unless in the case of this clause (ii) the Demand Registration does not become effective after being filed by the Company solely by reason of the refusal to proceed by the holders of Registrable Securities unless (A) the refusal to proceed is based upon the written advice of counsel relating to a matter with respect to the Company or (B) the Purchasers that requested their Registrable Securities to be included in the Demand Registration elect to pay all registration and other expenses in connection with that Demand Registration. The Company shall not be obligated to effect a Demand Registration (i) within 6 months of the effective date of a registration pursuant to Section 2 if there is a registration effective pursuant to Section 2 at the time of the Demand Notice, or (ii) within 120 days of the effective date of a previous Demand Registration pursuant to this Section 3. (b) Filing and Effectiveness. (i) The Company will file a Registration Statement relating to any Demand Registration within 30 calendar days and will use its reasonable best efforts to cause the Registration Statement to be declared effective by the SEC within 90 calendar days of the date on which the Company received the related Demand Notice. Each Demand Notice must specify the number of Registrable Securities to be registered and the intended methods of distribution of those Registrable Securities. If Purchaser delivering the Demand Notice specifies one particular type of Underwritten Offering, the method of distribution will be that type of Underwritten Offering or a series of that type of Underwritten Offerings during the period during which the Registration Statement is effective. (ii) In connection with a Demand Registration pursuant to Section 3(a), the Company will keep the Registration Statement effective for a period of not less than 180 days or such shorter period which will terminate when all Registrable Securities covered by such 5 Registration Statement have been sold. If any Demand Registration is requested to be effected as a "shelf" registration, the Company will keep the Registration Statement filed in respect of that Demand Registration effective for a period of up to one year from the date on which the SEC declares that Registration Statement effective (subject to extension pursuant to Section 6 hereof) or such shorter period which will terminate when all Registrable Securities covered by that Registration Statement have been sold pursuant to that Registration Statement. (iii) Within five Business Days after receipt of a Demand Notice, the Company will serve written notice of its receipt of the Demand Notice (the "Notice") to the other Purchasers and will, subject to the provisions of Section 2(c), include in that Demand Registration all Registrable Securities with respect to which the Company receives a written request from any such other Purchaser for inclusion therein within 15 calendar days after receipt of the Notice. (c) Priority on Demand Registration. If any of the Registrable Securities registered pursuant to a Demand Registration are to be sold in one or more firm commitment Underwritten Offerings, the Company may also provide written notice to other holders of its equity securities (other than Registrable Securities), if any, who have piggyback registration rights with respect thereto and will permit all of those holders who request to be included in the Demand Registration to include any or all equity securities held by those holders in that Demand Registration on the same terms and conditions as the Registrable Securities. Notwithstanding the foregoing, if the managing underwriter or underwriters of the Underwritten Offering to which that Demand Registration relates advises the Company and the Purchasers whose Registrable Securities are being registered that the total amount of Registrable Securities and securities that the other equity security holders intend to include in that Demand Registration is in the aggregate in excess of that number of securities which can be sold in such underwritten offering without materially and adversely affecting the success of such offering, then the Company will include in such registration (i) first, up to the full number of the Registrable Securities requested to be registered pursuant to Section 3(a) hereof to the extent such Registrable Securities requested to be registered do not exceed the largest number of securities which can be sold in such underwritten offering without materially and adversely affecting such offering and (ii) second, to the extent that the number of Registrable Securities requested to be registered pursuant to Section 3(a) hereof is less than the number of securities which can be sold in such underwritten offering without materially and adversely affecting such offering, such number of shares of equity securities the Company requests to be included in such registration and such number of other securities proposed to be sold by any other Person (the securities to be included in such underwritten offering by the Company and such other Persons to be allocated as agreed upon by the Company and such other Persons) which, in the opinion of the managing underwriter or underwriters, can be sold without materially and adversely affecting such underwritten offering. (d) Black-Out Periods of Purchaser. Subject to the conditions of this Section 3(d), (i) the Company shall have the right, exercisable on not more than one occasion during any one-year period, from time to time to require Purchasers not to sell under the registration requested pursuant to this Section 3 or to suspend the effectiveness thereof during the period starting with the date 30 days prior to the Company's good faith estimate, as certified in writing by an executive officer of the Company to Purchasers, of the proposed date of filing of a Registration Statement or a preliminary prospectus supplement relating to an existing registration statement, in either case, pertaining to an Underwritten 6 Offering of equity securities of the Company for the account of the Company, and ending on the date 90 days following the effective date of such registration statement or the date of filing of such prospectus supplement, and (ii) the Company shall be entitled to postpone or suspend (but not for a period exceeding 60 days per transaction) the filing or effectiveness of a Registration Statement otherwise required to be prepared and filed by it pursuant to this Section 3 on not more than one occasion during any 12-month period if the Company determines, in its good faith judgment, that such registration and offering or continued effectiveness would interfere with any material financing, acquisition, disposition, corporate reorganization or other material transaction involving the Company or any of its subsidiaries or preexisting negotiations, discussions or pending proposal with respect to any such material transaction or public disclosure thereof would be required prior to the time such disclosure might otherwise be required, or when the Company is in possession of material information that it deems advisable not to disclose in a registration statement. 20. Piggyback Registration. (a) Right to Piggyback. If at any time after the earlier of (i) expiration of the Lock-Up Period, (ii) the occurrence of a Change of Control or (iii) receipt of a notice from the Company of the execution by the Company of a definitive agreement with a Person which will result in a Change of Control, the Company proposes to file a Registration Statement under the Securities Act with respect to an offering of any class of equity securities (other than a registration statement (i) on Form S-4, S-8 or any successor form thereto or (ii) filed solely in connection with an offering made solely pursuant to employee benefit plans of the Company or in connection with an acquisition of any Person), whether or not for its own account, then the Company will give written notice of the proposed filing to the Purchasers as soon as practicable but in any event at least 30 calendar days before the anticipated filing date of such Registration Statement, which such notice will offer to Purchasers the opportunity to register such amount of Registrable Securities as each Purchaser may request (a "Piggyback Registration"). Subject to Section 4(b), the Company will include in each Piggyback Registration all Registrable Securities with respect to which the Company has received from any Purchaser written requests for inclusion in that Piggyback Registration within 15 days of the giving of such notice. Purchasers will be permitted to withdraw all or part of the Registrable Securities from a Piggyback Registration at any time prior to the effective date of the Piggyback Registration. The Company may at any time terminate a Piggyback Registration in its sole discretion without liability, provided that the offering to which such Piggyback Registration relates shall be terminated in its entirety. (b) Priority on Piggyback Registrations. The Company will cause the managing underwriter or underwriters of a proposed Underwritten Offering to permit the Purchasers that requested their Registrable Securities to be included in the Piggyback Registration for such offering to include therein all Registrable Securities requested to be so included in the Piggyback Registration on the same terms and conditions as any similar securities, if any, of the Company included therein. Notwithstanding the foregoing, if the managing underwriter or underwriters of the offering deliver an opinion to the Company and Purchasers to the effect that the total amount of securities which Purchasers, the Company and any other Persons having rights to participate in that registration propose to include in the Underwritten Offering exceeds the number of securities that can be sold in such offering without materially and adversely affecting such offering, then: 7 (i) if the registration is a primary registration on behalf of the Company, the Company will include therein (x) first, up to the full amount of securities the Company proposes to sell that, in the opinion of the managing underwriter or underwriters, can be sold in such offering without materially and adversely affecting such offering, (y) second, to the extent that the number of securities to be offered by the Company is less than the number of securities which can be sold in such offering without materially and adversely affecting such offering, such number of shares of Registrable Securities requested to be sold for the account of Purchasers which can be sold in such offering without materially and adversely affecting such offering (provided that if the number of such Registrable Securities requested to be registered exceeds the number of securities which can be sold in such offering without materially and adversely affecting such offering, then the number of Registrable Securities to be included in such registration shall be allocated pro rata among all Purchasers requesting inclusion in such offering on the basis of the relative number of Registrable Securities requested by each such Purchaser), and (z) third, to the extent that the number of securities to be offered by the Company and the number of Registrable Securities requested to be included in such registration pursuant to Section 4(a) hereof are, in the aggregate, less than the number of securities which can be sold in such offering without materially and adversely affecting such offering, such number of securities proposed to be sold for the account of any other Person (other than the Company and Purchasers) which can be sold in such offering without materially and adversely affecting such offering (provided that if the number of such securities of such other Persons requested to be registered exceeds the number of securities which can be sold in such offering without materially and adversely affecting such offering, then the number of securities of such other Persons shall be allocated pro rata among all such Persons on the basis of the relative number of securities each such Person has requested to be included in such registration); and (ii) if the registration is an underwritten secondary registration on behalf of holders of securities of the Company other than Purchasers, the Company will include therein: (x) first, up to the full number of securities of the Persons exercising "demand" registration rights that, in the opinion of the managing underwriter or underwriters, can be sold in such offering without materially and adversely affecting such offering, (y) second, to the extent the number of securities to be offered by such Persons exercising "demand" registration rights is less than the number of securities which can be sold in such offering without materially and adversely affecting such offering, such number of shares of Registrable Securities requested to be sold for the account of Purchasers which can be sold in such offering without materially and adversely affecting such offering (provided that if the number of such Registrable Securities requested to be registered exceeds the number of securities which can be sold in such offering without materially and adversely affecting such offering, then the number of Registrable Securities to be included in such registration shall be allocated pro rata among all Purchasers requesting inclusion in such offering on the basis of the relative number of Registrable Securities requested by each such Purchaser), and (z) third, to the extent the number of securities to be offered by such Persons exercising "demand" registration rights and the number of Registrable Securities requested to be included in such offering pursuant to Section 4(a) hereof are, in the aggregate, less than the number of securities which can be sold in such offering without materially and adversely affecting such offering, such number of securities proposed to be sold for the account of any other Person (other than such Persons exercising "demand" rights and Purchasers) which can be resold without materially and adversely affecting such offering (provided that if the number of such securities of such other Persons requested to be registered exceeds the number of securities which can be sold in such offering without materially and adversely 8 affecting such offering, then the number of securities of such other Persons shall be allocated pro rata among all such Persons on the basis of the relative number of securities each such Person has requested to be included in such registration). 21. Registration of Securities Other than Registrable Securities. Without the prior written consent of Purchasers, the Company will not grant to any Person the right to request the Company to register any securities of the Company under the Securities Act unless the rights so granted are subject to the prior rights of Purchasers set forth herein and, if exercised, would not otherwise conflict or be inconsistent in any way with the provisions of this Agreement. The Company agrees that it will not grant to any Person any rights which obligate the Company to give such Person "most favored nations" benefits with respect to the registration of any shares of equity securities of the Company or any securities convertible or exercisable into shares of any equity securities of the Company. 22. "Market Stand-Off" Agreement. Purchasers will not, to the extent requested (by timely written notice) by the managing underwriter or underwriters for any Underwritten Offering of the Company's capital stock (or any securities issued by the Company that are exercisable to purchase, convertible into or exchangeable for shares of capital stock of the Company), sell for Purchaser's account, or otherwise transfer or dispose of any Registrable Securities (except to the extent permitted in the Underwritten Offering) without the prior written consent of the Company and/or managing underwriter or underwriters for such period of time (not to exceed 90 days) from the effective date of the registration statement relating to the Underwritten Offering as the Company and/or managing underwriter or underwriters may specify. The Company may impose stop-transfer instructions with respect to the Registrable Securities of Purchasers until the end of that 90-day period in order to enforce these restrictions. In no event, however, will Purchasers be required to enter into more than one such agreement during any period of 12 consecutive months. 23. Registration Procedures. In connection with the Company's registration obligations pursuant to Sections 2, 3 and 4, the Company will effect those registrations to permit the sale of the Registrable Securities in accordance with the intended method or methods of distribution of those Registrable Securities, and pursuant thereto the Company will as expeditiously as possible: (a) Prepare and file with the SEC a Registration Statement or Registration Statements on any appropriate form under the Securities Act available for the sale of the Registrable Securities by Purchasers in accordance with the intended method or methods of distribution thereof, and cause each such Registration Statement to become effective and remain effective as provided herein; provided, however, that not less than five Business Days before filing a Registration Statement or Prospectus or any amendments or supplements thereto (excluding documents that would be incorporated or deemed to be incorporated therein by reference) the Company will furnish to the Purchasers whose Registrable Securities are covered by that Registration Statement, counsel for such Purchasers with respect to such registration ("Special Counsel") and the managing underwriters, if any, copies of all documents proposed to be filed, which documents will be subject to review by such Purchasers, the Special Counsel and underwriters, and the Company will not file any Registration Statement or amendment thereto or any Prospectus or any supplement thereto (excluding any documents which, upon filing, would or would be incorporated or deemed to be incorporated by reference therein) to which the Purchasers whose Registrable Securities are covered by that Registration Statement, the Special Counsel or the managing underwriter, if any, may reasonably object on a timely basis; 9 (b) Prepare and file with the SEC any amendments and post-effective amendments to each Registration Statement as may be necessary to keep the Registration Statement continuously effective for the applicable period specified in Sections 2 and 3; cause the related Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act; and comply with the provisions of the Securities Act with respect to the distribution of all securities covered by the Registration Statement during the applicable period in accordance with the intended methods of disposition by the sellers thereof set forth in the Registration Statement as so amended or to the Prospectus as so supplemented; (c) Notify Purchasers, the Special Counsel and the managing underwriters, if any, promptly, and (if requested by any of those Persons) confirm such notice in writing, (i) when a Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the Registration Statement or amendment has become effective, (ii) of any request by the SEC or any other federal or state governmental authority for amendments or supplements to a Registration Statement or related Prospectus or for additional information, (iii) of the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (iv) if at any time the representations and warranties of the Company contained in any agreement contemplated by Section 6(m) (including any underwriting agreement) cease to be true and correct in any material respect, (v) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, (vi) of the occurrence of any event which makes any statement made in the Registration Statement or related Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or which requires the making of any changes in a Registration Statement, Prospectus or document so that, in the case of the Registration Statement, 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 to make the statements therein not misleading and, in the case of the Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated or that is necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and (vii) of the Company's reasonable determination that a post-effective amendment to a Registration Statement would be appropriate; (d) Use reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement, or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest possible moment; (e) If requested by the managing underwriters, if any, or Purchasers whose Registrable Securities are being registered, (i) promptly incorporate in a Prospectus supplement or post-effective amendment such information as the managing underwriters, if any, and Purchasers agree should be included therein to comply with applicable law and (ii) make all required filings of the Prospectus supplement or such post-effective amendment as soon as practicable after the Company has received notification of the matters to be incorporated in the Prospectus supplement or post-effective 10 amendment; provided, however, that the Company will not be required to take any actions under this Section 6(e) that are not, in the reasonable opinion of counsel for the Company, in compliance with applicable law; (f) Furnish to Purchasers, the Special Counsel and each managing underwriter, if any, without charge, conformed copies of the Registration Statement and each post-effective amendment or supplement thereto, including financial statements (including schedules, all documents incorporated or deemed incorporated therein by reference and all exhibits) as Purchasers may reasonably request in order to facilitate the disposition of the Registrable Securities owned by Purchasers; (g) Deliver to Purchasers, the Special Counsel and the underwriters, if any, without charge, as many copies of the Prospectus or Prospectuses relating to those Registrable Securities (including each preliminary prospectus) and any amendment or supplement thereto as those Persons may reasonably request; and, subject to the last paragraph of this Section 6, the Company hereby consents to the use of that Prospectus or each amendment or supplement thereto by Purchasers and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by that Prospectus or any amendment or supplement thereto; (h) Cooperate with Purchasers and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold, which certificates will not bear any restrictive legends; and enable the Registrable Securities to be in such denominations and registered in such names as the managing underwriters, if any, may request at least two Business Days prior to any sale of Registrable Securities to the underwriters; (i) Use its reasonable best efforts to register or qualify such Registrable Securities covered by such Registration Statement under the State Securities or blue sky laws of such jurisdictions as Purchasers and or the underwriters, if any, may reasonably request, and do any and all other acts and things which may be reasonably necessary to consummate the disposition in such jurisdictions of the Registrable Shares of Purchasers, except that the Company shall not be required to qualify generally to do business, as a foreign corporation in any jurisdiction where, but for the requirements of this clause (i), it would not be obligated to be so qualified or consent to general service of process in any such jurisdiction; (j) Use its reasonable best efforts to cause the sale of Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities within the United States as may be necessary to enable the Purchasers or the underwriters, if any, to consummate the disposition of such Registrable Securities; (k) Upon the occurrence of any event contemplated by Section 6(c)(vi) or 6(c)(vii) hereof, promptly prepare a supplement or post-effective amendment to each Registration Statement or a supplement to the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the Purchasers of the Registrable Securities being sold thereunder, such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; 11 (l) Use its reasonable best efforts to cause all Registrable Securities covered by such Registration Statement to be (i) listed on each securities exchange, if any, on which similar securities issued by the Company are then listed or, if no similar securities issued by the Company are then so listed, on the New York Stock Exchange or another national securities exchange if the securities qualify to be so listed or (ii) authorized to be quoted on the Nasdaq National Market System or the Nasdaq SmallCap Market if the securities qualify to be so quoted; in each case, if requested by the holders of a majority of the Registrable Securities covered by such Registration Statement or the managing underwriters, if any; (m) In the event of an underwritten offering, enter into such agreements (including an underwriting agreement in form, scope and substance as is customary in underwritten offerings) and take all such other actions in connection therewith as may be requested by the managing underwriters in order to expedite or facilitate the disposition of the Registrable Securities and, in such connection, (i) make such representations and warranties to Purchasers whose Registrable Securities are being registered and the underwriters with respect to the business of the Company and its Subsidiaries, the Registration Statement, Prospectus and documents incorporated by reference or deemed incorporated by reference, if any, in each case, in form, substance and scope as are customarily made by issuers to underwriters in Underwritten Offerings and confirm those representations and warranties if and when requested; (ii) obtain opinions of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters) addressed to Purchasers and each of the underwriters, if any, covering the matters customarily covered in opinions requested in Underwritten Offerings and such other matters as may be reasonably requested by the managing underwriters; (iii) use its best efforts to obtain "comfort" letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other certified public accountants of any Subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data is, or is required to be, included in the Registration Statement), addressed to Purchasers and each of the underwriters, such letters to be in customary form and covering matters of the type customarily covered in "comfort" letters in connection with Underwritten Offerings; and (iv) deliver such documents and certificates as may be reasonably requested by Purchasers, the Special Counsel and the managing underwriters, if any, to evidence the continued validity of the representations and warranties of the Company and its Subsidiaries made pursuant to clause (i) above and to evidence compliance with any customary conditions contained in the underwriting agreement or similar agreement entered into by the Company. The foregoing actions will be taken in connection with each closing under such underwriting or similar agreement as and to the extent required thereunder; (n) Upon reasonable notice and at reasonable times during normal business hours, make available for inspection by a representative of Purchasers, any underwriter participating in any disposition of Registrable Securities and any attorney or accountant retained by Purchasers or any underwriter, all financial and other records, pertinent corporate documents and properties of the Company and its Subsidiaries, and cause the officers, directors and employees of the Company and its Subsidiaries to supply all information reasonably requested by any such representative, underwriter, attorney or accountant in connection with such Registration Statement; provided, however, that any records, information or documents that are designated by the Company in writing as confidential at the time of delivery of such records, information or documents will be kept confidential by those Persons (and such Persons shall agree in writing with the Company to keep the same confidential) unless (i) those 12 records, information or documents are in the public domain or otherwise publicly available, (ii) disclosure of those records, information or documents is required by court or administrative order or is necessary to respond to inquiries of regulatory authorities, or (iii) disclosure of those records, information or documents, in the written opinion of counsel to such Person delivered to the Company, is otherwise required by law (including, without limitation, pursuant to the requirements of the Securities Act); (o) Comply with all applicable rules and regulations of the SEC and make generally available to its security holders earning statements satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule promulgated under the Securities Act) no later than 45 calendar days after the end of any 12-month period (or 90 calendar days after the end of any 12-month period if such period is a fiscal year) (i) commencing at the end of any fiscal quarter in which Registrable Securities are sold to underwriters in a firm commitment or best efforts Underwritten Offering, and (ii) if not sold to underwriters in such an offering, commencing on the first day of the first fiscal quarter of the Company, after the effective date of a Registration Statement, which statements shall cover that 12-month period; (p) Cause its officers and other appropriate employees to participate in any presentations regarding any Underwritten Offering reasonably requested by Purchasers or the managing underwriter or underwriters participating in the disposition of those Registrable Securities, provided that so doing does not unreasonably interfere with the business of the Company; (q) Use its reasonable best efforts to take all of the steps necessary or advisable to effect the registration of the Registrable Securities covered by a Registration Statement contemplated hereby. The Company may require Purchasers to furnish to the Company such information regarding the distribution of such Registrable Securities as the Company may, from time to time, reasonably request in writing and the Company may exclude from such registration the Registrable Securities of Purchasers if Purchasers fail to furnish such information required by Applicable Law within a reasonable time after receiving such request. Each Purchaser will be deemed to have agreed by virtue of its acquisition of Registrable Securities that, upon receipt of any notice from the Company of the occurrence of any event of the kind described in Section 6(c)(ii), 6(c)(iii), 6(c)(v), 6(c)(vi) or 6(c)(vii), Purchasers will forthwith discontinue disposition of their respective Registrable Securities covered by the Registration Statement or Prospectus until Purchaser's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 6(k) hereof, or until it is advised in writing by the Company that the use of the applicable Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus. If the Company gives any such notice, the time period prescribed in Sections 2 and 3(b) will be extended by the number of days during the time period from and including the date of the giving of that notice to and including the date when each Purchaser of Registrable Securities covered by such Registration Statement shall have received (x) the copies of the supplemented or amended Prospectus contemplated by Section 6(k) hereof or (y) the written advice by the Company described above. 13 24. Registration Expenses. (a) All fees and expenses incident to the performance of or compliance with this Agreement by the Company will be borne by the Company whether or not any of the Registration Statements become effective. Those fees and expenses will include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with the National Association of Securities Dealers, Inc. and (B) of compliance with state securities or "blue sky" laws), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities in a form eligible for deposit with The Depository Trust Company and of printing or photocopying any Prospectuses), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company and, in the case of any Underwritten Offering, of the Special Counsel for the Purchasers whose Registrable Securities are being registered, (v) fees and disbursements of all independent certified public accountants referred to in Section 6(m)(iii) (including the expenses of any special audit and "comfort" letters required by or incident to such performance), (vi) fees and expenses of any "qualified independent underwriter" or other independent appraiser participating in an offering pursuant to Rule 2720(c) of the National Association of Securities Dealers, Inc. Conduct Rules, (vii) Securities Act liability insurance if the Company so desires that insurance, and (viii) fees and expenses of all other Persons retained by the Company, but excluding underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of Registrable Securities. In addition, the Company will pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit, the fees and expenses incurred in connection with the listing of the securities to be registered on any securities exchange on which similar securities issued by the Company are then listed and the fees and expenses of any Person, including special experts, retained by the Company. (b) In connection with any Demand Registration or Piggyback Registration under this Agreement, the Company will reimburse the Purchasers whose Registrable Securities are being registered in such registration for the reasonable fees and disbursements of not more than one Special Counsel, together with appropriate local counsel, chosen by the Purchasers whose Registrable Securities are being registered. 25. Indemnification. (a) Indemnification by the Company. The Company will, without limitation as to time, indemnify and hold harmless, to the fullest extent permitted by law, each Purchaser whose Registrable Securities have been registered pursuant to this Agreement, the officers, directors, partners, stockholders, and agents and employees of each of them, each Person who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) any Purchaser and the officers, directors, partners, stockholders, agents and employees of any such controlling Person, from and against all losses, claims, damages, liabilities, costs (including, without limitation, the costs of investigation and reasonable attorneys' fees and disbursements) and expenses (collectively, "Losses"), as incurred, caused by, arising out of or based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus or form of Prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make 14 the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the Company will not be liable to any Purchaser to the extent that any such Losses arise out of or are based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any preliminary prospectus if either (i) (A) such Purchaser failed to send or deliver a copy of the Prospectus with or prior to the delivery of written confirmation of the sale by such Purchaser of a Registrable Security to the Person asserting the claim from which such Losses arise and (B) the Prospectus would have completely corrected such untrue statement or alleged untrue statement or such omission or alleged omission; (ii) such untrue statement or alleged untrue statement, omission or alleged omission is completely corrected in an amendment or supplement to the Prospectus previously furnished by or on behalf of the Company with copies of the Prospectus as so amended or supplemented, and such Purchaser thereafter fails to deliver such Prospectus as so amended or supplemented prior to or concurrently with the sale of a Registrable Security to the Person asserting the claim from which such Losses arise; or (iii) such untrue statement or alleged untrue statement, omission or alleged omission was contained in any information so furnished in writing by such Purchaser to the Company expressly for use in such Registration Statement or Prospectus and was relied upon by the Company in the preparation of such Registration Statement, Prospectus or preliminary prospectus. (b) Indemnification by Purchaser of Registrable Securities. In connection with any Registration Statement in which the Registrable Securities of a Purchaser are being registered, each Purchaser will furnish to the Company in writing such information as the Company reasonably requests for use in connection with any Registration Statement or Prospectus. Each Purchaser agrees severally, but not jointly, to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors, officers, shareholders, agents and employees, each Person who controls (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) the Company, and the directors, officers, shareholders, agents or employees of such controlling Persons, from and against all Losses caused by, arising out of or based upon any untrue statement of a material fact contained in any Registration Statement, Prospectus or form of Prospectus or in any amendment or supplement thereto or in preliminary prospectus or arising out of or based upon any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by such Purchaser to the Company expressly for use in such Registration Statement or Prospectus and was relied upon by the Company in the preparation of such Registration Statement, Prospectus or preliminary prospectus. In no event will the liability of any Purchaser under this Section 8(b) be greater in amount than the dollar amount of the proceeds received by such Purchaser upon the sale of the Registrable Securities giving rise to the indemnification obligation. (c) Conduct of Indemnification Proceedings. In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Section 8(c), such Person (the "indemnified party") will promptly notify the Person against whom such indemnity may be sought (the "indemnifying party") in writing and the indemnifying party, upon request of the indemnified party, will retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and will pay the fees and disbursements of such counsel related to such proceeding; provided that the failure of any indemnified party so to notify the indemnifying party will 15 not relieve the indemnifying party of its obligations hereunder except to the extent that the indemnifying party is actually prejudiced by such failure to notify. In any such proceeding, any indemnified party will have the right to retain its own counsel, but the fees and expenses of such counsel will be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel, (ii) the indemnifying party shall have failed within in a reasonable period of time to retain counsel reasonably satisfactory to the indemnified party, or (iii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that, unless there exists a conflict among indemnified persons, the indemnifying party will not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all indemnified parties and that all such fees and expenses will be reimbursed as they are incurred. The indemnifying party will not be liable for any settlement of any proceeding effected without its prior written consent, but if settled with such consent or if there shall be a final non-appealable judgment for the plaintiff for which the indemnified person is entitled to indemnification pursuant to this Agreement, the indemnifying party agrees to indemnify the indemnified party from and against any Loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it will be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 60 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party will, without the prior written consent of the indemnified party, effect any settlement or compromise of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. (d) Contribution. If the indemnification provided for in this Section 8 is unavailable to an indemnified party under Section 8(a) or 8(b) in respect of any Losses or is insufficient to hold harmless the indemnified party (other than giving effect to the last sentence of Section 8(b)), then each applicable indemnifying party, in lieu of indemnifying the indemnified party, will contribute to the amount paid or payable by the indemnified party as a result of the Losses, in the proportion as is appropriate to reflect the relative fault of the indemnifying party or indemnifying parties, on the one hand, and the indemnified party, on the other hand, in connection with the actions, statements or omissions that resulted in the Losses as well as any other relevant equitable considerations. The relative fault of the indemnifying party or indemnifying parties, on the one hand, and the indemnified party, on the other hand, will be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or related to information supplied by, the indemnifying party or indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission and any other equitable considerations appropriate in the relevant circumstances. The amount paid or payable by 16 a party as a result of any Losses will be deemed to include any legal or other fees or expenses incurred by such party in connection with any action or proceeding. In no event will the obligation of a Purchaser under this Section 8(d) be greater in amount than the dollar amount of the proceeds (net of payment of all expenses) received by such Purchaser upon the sale of the Registrable Securities giving rise to the contribution obligation. (e) The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 8 were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 8, in no event shall an indemnifying party who is a Purchaser be required to contribute any amount in excess of the dollar amount of the proceeds (net of payment of all expenses) received by such Purchaser upon the sale of the Registrable Securities giving rise to the contribution obligation over the amount of any damages which such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (f) The indemnity, contribution and expense reimbursement obligations of the Company hereunder will be in addition to any liability the Company may otherwise have under this Agreement. The provisions of this Section 8 will survive so long as Registrable Securities remain outstanding, notwithstanding any transfer of the Registrable Securities by any holder thereof or any termination of this Agreement. 26. Rule 144. The Company agrees that it will file the reports required to be filed by it under the Securities Act and the Exchange Act in a timely manner in accordance with the requirements of the Securities Act and Exchange Act, and will cooperate with any Purchaser (including, without limitation, by making any representations as any Purchaser may reasonably request), all to the extent required from time to time to enable the Purchaser to sell Registrable Securities without registration under the Securities Act within the limitations of the exemptions provided by Rule 144. Upon the request of any Purchaser, the Company will deliver to the Purchaser a written statement as to whether it has complied with such filing requirements. If at any time the Company ceases to be required to file reports under the Securities Act and the Exchange Act, the Company will upon request of any Purchaser, make publicly available annual reports and such other information, documents and other reports of the type specified in Sections 13 and 15(d) of the Exchange Act. 27. Underwritten Registrations. If any of the Registrable Securities covered by any Shelf Registration or Demand Registration are to be sold in an Underwritten Offering, the investment banker or investment bankers and manager or managers that will manage the offering shall be Morgan Stanley, Dean Witter & Co. or a Subsidiary or Affiliate thereof ("MSDW") to the extent required by and in accordance with Section 4.15 of the Securities Purchase Agreement and if such provision does not apply, then as the Purchasers whose Registrable Securities are being registered in such Shelf Registration or Demand Registration shall select, provided that such investment banker or manager shall be reasonably satisfactory to the Company. If any Piggyback Registration is an Underwritten Offering, subject to the Company's agreement set forth in Section 4.15 of the Securities Purchase Agreement, the Company will have the right to select the investment banker or investment bankers 17 and managers to administer the offering. Each party hereto agrees that, in connection with any Underwritten Offering hereunder in which it participates, it will undertake to offer customary indemnification to the participatory underwriters. 28. Miscellaneous. (a) No Inconsistent Agreements. The Company has not, as of the date hereof, and will not, on or after the date hereof, enter into any agreement with respect to its securities which is inconsistent with the rights granted to the holders of Registrable Securities in this Agreement or otherwise conflicts with the provisions hereof. (b) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions of this Agreement may not be given, unless the Company has obtained the written consent of Purchasers. Notwithstanding the foregoing, a waiver or consent to depart from the provisions of this Agreement with respect to a matter that relates exclusively to the rights of a Purchaser whose Registrable Securities are being registered pursuant to a Registration Statement and that does not directly or indirectly affect the rights of the other Purchasers may be given only by affected Purchasers; provided, however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the immediately preceding sentence. (c) Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and delivered personally, sent by overnight courier to the parties or sent by facsimile (providing confirmation of transmission) at the following addresses or facsimile numbers (or at such other address or telecopy number for a party as will be specified by like notice): (i) if to the Company: Bluegreen Corporation 4950 Blue Lake Drive Boca Raton, Florida 33431 Attention: Patrick E. Rondeau, Esq. and Mr. John F. Chiste Facsimile: (561) 912-8100 with copies to: Choate, Hall & Stewart Exchange Place 53 State Street Boston, Massachusetts 02109 Attention: William P. Gelnaw, Esq. Facsimile: (617) 248-4000 18 (iii) if to Purchasers: c/o Morgan Stanley Real Estate Fund III, L.P. 37th Floor 1585 Broadway New York, New York 10036-8293 Attention: Mr. Michael Franco and Mr. Michael Foster Facsimile: (212) 761-0508 with a copy to: Jones, Day, Reavis & Pogue 2300 Trammell Crow Center 2001 Ross Avenue Dallas, Texas 75201 Attention: David J. Lowery, Esq. Facsimile: (214) 969-5100 All notices will be deemed to be given only when actually received. (d) Owner of Registrable Securities. The Company will maintain, or will cause its registrar and transfer agent to maintain, a stock book with respect to the Common Stock, in which all transfers of Registrable Securities of which the Company has received notice will be recorded. The Company may deem and treat the Person in whose name Registrable Securities are registered in the stock book of the Company as the owner thereof for all purposes, including, without limitation, the giving of notices under this Agreement. (e) Successors and Assigns. This Agreement will inure to the benefit of and be binding upon the successors and assigns of each of the parties and will inure to the benefit of each holder of any Registrable Securities. The Company may not assign its rights or delegate its obligations hereunder and Purchasers may assign their rights hereunder only to a Permitted Transferee in accordance with the Securities Purchase Agreement or to the other Persons described in the definition of "Purchasers" herein. (f) Counterparts. This Agreement may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (g) Headings. Article and Section headings in this Agreement are included herein for convenience of reference only and will not constitute a part of this Agreement for any other purpose. (h) Governing Law. This Agreement will be governed by, and construed in accordance with, the laws of the State of Massachusetts, without giving effect to the principles of conflict of laws of that State that would apply the laws of any other jurisdiction. Each of the parties to this Agreement hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the courts of the State of New York, and any appellate court thereof, in any action, 19 suit, or proceeding arising out of or relating to this Agreement and any such action, suit or proceeding will be brought only in such court (and waives any objection based on forum non conveniens or any other objection to venue therein). Process in any such action, suit or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 12(c) shall be deemed effective service of process on such party. (i) Entire Agreement. This Agreement constitutes the entire agreement, and supersedes all prior agreements and undertakings, both written and oral, between the parties, with respect to the subject matter of this Agreement. (j) Attorneys' Fees. In any action or proceeding brought to enforce any provision of this Agreement, or where any provision hereof is validly asserted as a defense, the prevailing party, as determined by the court, will be entitled to recover reasonable attorneys' fees and related disbursements and expenses in addition to any other available remedy. (k) Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction will, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision will be interpreted to be only so broad as is enforceable. (l) Exculpation. Notwithstanding any provision herein to the contrary, the liability of each Purchaser shall be limited to the assets of such Purchaser and no partner, shareholder, officer, director, employee or agent of Purchaser shall have any personal liability hereunder. [Signature Page Follows] 20 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. BLUEGREEN CORPORATION By: /s/ George F. Donovan --------------------------------------------- Name: George F. Donovan Title: President and Chief Executive Officer MORGAN STANLEY REAL ESTATE FUND III, L.P. By: MSREF III, Inc., its General Partner By: /s/ Michael J. Franco ----------------------------------- Name: Michael J. Franco Title: Vice President MORGAN STANLEY REAL ESTATE INVESTORS III, L.P. By: MSREF III, Inc., its General Partner By: /s/ Michael J. Franco ----------------------------------- Name: Michael J. Franco Title: Vice President MSP REAL ESTATE FUND, L.P. By: MSREF III, Inc., its General Partner By: /s/ Michael J. Franco ----------------------------------- Name: Michael J. Franco Title: Vice President 21 MSREF III SPECIAL FUND, L.P. By: MSREF III, Inc., its General Partner By: /s/ Michael J. Franco ----------------------------------- Name: Michael J. Franco Title: Vice President 22 -----END PRIVACY-ENHANCED MESSAGE-----