Exhibit 99.4
Execution Copy
PURCHASE AGREEMENT
among
WCI COMMUNITIES,
INC.
and
BEAR, STEARNS & CO.
INC.
Dated as of September 28, 2005
PURCHASE AGREEMENT
($25,000,000 Subordinated Notes)
THIS PURCHASE AGREEMENT, dated as of
September 28, 2005 (this “ Purchase Agreement
”), is entered into among WCI Communities, Inc., a Delaware
corporation (the “ Company ”), on the one hand,
and Bear, Stearns & Co. Inc., on the other hand (the “
Purchaser ”).
WITNESSETH:
WHEREAS, the Company proposes to
issue and sell to the Purchaser Twenty Five Million Dollars
($25,000,000) in aggregate principal amount of unsecured junior
subordinated interest notes of the Company, bearing interest at a
fixed rate of 7.25% per annum through the interest payment date in
October 2015 and a variable rate, reset quarterly, equal to LIBOR
(as defined in the Indenture (as defined below)) plus 2.50%
thereafter; (the “ Securities ”); and
WHEREAS, the Securities will be
issued pursuant to a Junior Subordinated Indenture (the “
Indenture ”), to be dated as of the Closing Date (as
defined below), between the Company and JPMorgan Chase Bank,
National Association, a national banking association, as trustee
(in such capacity, the “ Trustee ”).
NOW, THEREFORE, in consideration of
the mutual agreements and subject to the terms and conditions
herein set forth, the parties hereto agree as follows:
1. Definitions . This
Purchase Agreement, the Indenture and the Securities are
collectively referred to herein as the “ Operative
Documents .” All other capitalized terms used but not
defined in this Purchase Agreement shall have the respective
meanings ascribed thereto in the Indenture.
2. Purchase and Sale of the
Securities .
(a) The Company agrees to sell to
the Purchaser, and the Purchaser agrees to purchase from the
Company the $25,000,000 in aggregate principal amount of Securities
for an aggregate amount (the “ Purchase Price ”)
equal to Twenty Five Million Dollars ($25,000,000). The Purchaser
shall be responsible for the rating agency costs and
expenses.
(b) Delivery or transfer of, and
payment for, the Securities shall be made at 10:00 A.M. Chicago
time (11:00 A.M. New York time), on September 28, 2005 or such
later date (not later than October 28, 2005) as the parties may
designate (such date and time of delivery and payment for the
Securities being herein called the “ Closing Date
”). The Securities shall be transferred and delivered to the
Purchaser against the payment of the Purchase Price to the Company
made by wire transfer in immediately available funds on the Closing
Date to a U.S. account designated in writing by the Company on or
prior to the Closing Date.
(c) Delivery of the Securities shall
be made at such location, and in such names and denominations, as
the Purchaser shall designate on or prior to the Closing Date. The
Company agrees to have the Securities available for inspection and
checking by the Purchaser in Chicago, Illinois, on or prior to the
Closing Date. The closing for the purchase and sale of the
Securities shall occur at the offices of Mayer, Brown, Rowe &
Maw LLP, 71 South Wacker Drive, Chicago, Illinois 60606, or such
other place as the parties hereto shall agree.
3. Conditions . The
obligations of the parties under this Purchase Agreement are
subject to the following conditions:
(a) The representations and
warranties contained in Section 4 hereof shall be accurate
in all material respects (without giving effect to any materiality
qualifiers therein) as of the date of delivery of the
Securities.
(b) [Reserved] .
(c) Simpson Thacher & Bartlett
LLP, counsel for the Company (the “Company Counsel”),
shall have delivered an opinion, dated the Closing Date, addressed
to the Purchaser and the Trustee, in substantially the form set out
in Annex A-I hereto and (ii) the Company shall have
furnished to the Purchaser the opinion of the Company’s
General Counsel or a certificate signed by the Company’s
Chief Executive Officer, President, a Vice President, Chief
Financial Officer, Treasurer or Assistant Treasurer, dated the
Closing Date, addressed to the Purchaser, in substantially the form
set out in Annex A-II hereto. In rendering their opinion,
the Company Counsel may rely as to factual matters upon
certificates or other documents furnished by officers and directors
of the Company and by government officials (provided, however, that
copies of any such certificates or documents are delivered to the
Purchaser) and by and upon such other documents as such counsel
may, in their reasonable opinion, deem appropriate as a basis for
the Company Counsel’s opinion. The Company Counsel may
specify the jurisdictions in which they are admitted to practice
and that they are not admitted to practice in any other
jurisdiction and are not experts in the law of any other
jurisdiction. If the Company Counsel is not admitted to practice in
the State of New York, the opinion of the Company Counsel may
assume, for purposes of the opinion, that the laws of the State of
New York are substantively identical, in all respects material to
the opinion, to the internal laws of the state in which such
counsel is admitted to practice. Such Company Counsel Opinion shall
not state that they are to be governed or qualified by, or that
they are otherwise subject to, any treatise, written policy or
other document relating to legal opinions, including, without
limitation, the Legal Opinion Accord of the ABA Section of Business
Law (1991).
(d) The Company and the Purchaser
shall have been furnished the opinion of Mayer, Brown, Rowe &
Maw LLP, special tax counsel for the Purchaser, dated the Closing
Date, addressed to the Purchaser, the Company and the Trustee, in
substantially the form set out in Annex B hereto.
(e) [ Reserved ].
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(f) The Purchaser shall have
received the opinion of Gardere Wynne Sewell LLP, special counsel
for the Trustee, dated the Closing Date, addressed to the
Purchaser, in substantially the form set out in Annex D
hereto.
(g) [ Reserved ].
(h) The Company shall have furnished
to the Purchaser a certificate of the Company, signed by the Chief
Executive Officer, President or a Vice President, and Chief
Financial Officer, Treasurer or Assistant Treasurer of the Company,
dated the Closing Date, as to (i) and (ii) below.
(i) the representations and
warranties in this Purchase Agreement are true and correct in all
material respects (without giving effect to any materiality
qualifiers therein) on and as of the Closing Date with the same
effect as if made on the Closing Date, and the Company has complied
in all material respects with all the agreements and satisfied in
all material respects all the conditions on its part to be
performed or satisfied at or prior to the Closing Date;
and
(ii) since the date of the Interim
Financial Statements (as defined below), there has been no material
adverse change in the condition (financial or other), earnings,
business or assets of the Company and its subsidiaries, whether or
not arising from transactions occurring in the ordinary course of
business (a “ Material Adverse Change
”).
(i) Subsequent to the execution of
this Purchase Agreement, there shall not have been any change, or
any development involving a prospective change, in or affecting the
condition (financial or other), earnings, business or assets of the
Company and its subsidiaries, whether or not occurring in the
ordinary course of business, the effect of which is, in the
Purchaser’s judgment, so material and adverse as to make it
impractical or inadvisable to proceed with the purchase of the
Securities.
(j) Prior to the Closing Date, the
Company shall have furnished to the Purchaser and its counsel such
further information, certificates and documents as the Purchaser or
its counsel may reasonably request.
If any of the conditions specified
in this Section 3 shall not have been fulfilled when and as
provided in this Purchase Agreement, or if any of the opinions,
certificates and documents mentioned above or elsewhere in this
Purchase Agreement shall not be reasonably satisfactory in form and
substance to the Purchaser or its counsel, this Purchase Agreement
and all the Purchaser’s obligations hereunder may be canceled
at, or at any time prior to, the Closing Date by the Purchaser.
Notice of such cancellation shall be given to the Company in
writing or by telephone or facsimile confirmed in
writing.
Each certificate signed by any
officer of the Company and delivered to the Purchaser or the
Purchaser’s counsel in connection with the Operative
Documents and the transactions contemplated hereby and thereby
shall be deemed to be a representation and warranty of the Company
and not by such officer in any individual capacity.
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4. Representations and
Warranties of the Company . The Company represents and
warrants to, and agrees with the Purchaser, as follows:
(a) Neither the Company, nor any of
its “Affiliates” (as defined in Rule 501(b) of
Regulation D (“ Regulation D ”) under the
Securities Act (as defined below)), nor any person acting on its or
their behalf, has, directly or indirectly, made offers or sales of
any security, or solicited offers to buy any security, under
circumstances that would require the registration of any of the
Securities under the Securities Act of 1933, as amended (the
“ Securities Act ”).
(b) Neither the Company, nor any of
its Affiliates, nor any person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with any offer
or sale of any of the Securities.
(c) The Securities (i) are not and
have not been listed on a national securities exchange registered
under section 6 of the Securities Exchange Act of 1934, as amended
(the “ Exchange Act ”), or quoted on a U.S.
automated inter-dealer quotation system and (ii) are not of an
open-end investment company, unit investment trust or face-amount
certificate company that are, or are required to be, registered
under section 8 of the Investment Company Act of 1940, as amended
(the “ Investment Company Act ”), and the
Securities otherwise satisfy the eligibility requirements of Rule
144A(d)(3) promulgated pursuant to the Securities Act (“
Rule 144A(d)(3) ”).
(d) Neither the Company, nor any of
its Affiliates, nor any person acting on its or their behalf, has
engaged, or will engage, in any “directed selling
efforts” within the meaning of Regulation S under the
Securities Act with respect to the Securities.
(e) The Company is not and,
immediately following consummation of the transactions contemplated
hereby and the application of the net proceeds therefrom, will not
be, an “investment company” within the meaning of
section 3(a) of the Investment Company Act.
(f) The Company has not paid or
agreed to pay to any person any compensation for soliciting another
to purchase any of the Securities, except for the commission the
Company has agreed to pay to Cohen Bros. & Company (or to the
Company’s introducing agent on behalf of Cohen Bros. &
Company) pursuant to the letter agreement between the Company and
Cohen Bros. & Company, dated September 14 ,
2005.
(g) [ Reserved ].
(h) [ Reserved ].
(i) The Indenture has been duly
authorized by the Company and, on the Closing Date, will have been
duly executed and delivered by the Company and, assuming that the
Indenture is the valid and legally binding obligation of the
Trustee, will be a legal, valid and binding obligation of the
Company enforceable against it in accordance with its terms,
subject to (i) the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors’ rights generally, (ii)
general equitable principles (whether considered in a proceeding in
equity or at law) and (iii) an implied covenant of good faith and
fair dealing (the “ Enforceability Exceptions
”).
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(j) [ Reserved ].
(k) The Securities have been duly
authorized by the Company and, on the Closing Date, will have been
duly executed and delivered to the Trustee for authentication in
accordance with the Indenture and, when authenticated in the manner
provided for in the Indenture and delivered to the Purchaser
against payment therefor in accordance with this Purchase
Agreement, will constitute legal, valid and binding obligations of
the Company entitled to the benefits of the Indenture, enforceable
against the Company in accordance with their terms, subject to the
Enforceability Exceptions.
(l) This Purchase Agreement has been
duly authorized, executed and delivered by the Company.
(m) Neither the issue and sale of
the Securities, nor the execution and delivery of and compliance
with the Operative Documents by the Company, nor the consummation
of the transactions contemplated herein or therein, (i) will
conflict with or constitute a violation or breach of the charter or
bylaws of the Company or any Significant Subsidiary (as defined
below) of the Company or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government,
governmental authority, agency or instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any of
its Significant Subsidiaries or their respective properties or
assets (collectively, the “ Governmental Entities
”), (ii) will constitute a violation or breach of, or a
default or Repayment Event (as defined below) under, or result in
the creation or imposition of any pledge, security interest, claim,
lien or other encumbrance of any kind (each, a “ Lien
”) upon any property or assets of the Company or any of the
Company’s Significant Subsidiaries pursuant to, any contract,
indenture, mortgage, loan agreement, note, lease or other agreement
or instrument to which (A) the Company or any of its Significant
Subsidiaries is a party or by which it or any of them may be bound,
or (B) to which any of the property or assets of any of them is
subject, or any judgment, order or decree of any court,
Governmental Entity or arbitrator, except, in the case of this
clause (ii), for such conflicts, breaches, violations, defaults,
Repayment Events (as defined below) or Liens which (X) would not,
singly or in the aggregate, adversely affect the consummation of
the transactions contemplated by the Operative Documents and (Y)
would not, singly or in the aggregate, have a material adverse
effect on the condition (financial or otherwise), earnings,
business, liabilities and assets (taken as a whole) or business
prospects of the Company and its subsidiaries taken as a whole,
whether or not occurring in the ordinary course of business (a
“ Material Adverse Effect ”) or (iii) require
the consent, approval, authorization or order of any court or
Governmental Entity. As used herein, a “ Repayment
Event ” means any event or condition which gives the
holder of any note, debenture or other evidence of indebtedness (or
any person acting on such holder’s behalf) the right to
require the repurchase, redemption or repayment of all or a portion
of such indebtedness by the Company or any of its Significant
Subsidiaries prior to its scheduled maturity.
6
(n) The Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of Delaware, with all requisite corporate
power and authority to own, lease and operate its properties and
conduct the business it transacts and proposes to transact, and is
duly qualified to transact business and is in good standing as a
foreign corporation in each jurisdiction where the nature of its
activities requires such qualification, except where the failure of
the Company to be so qualified would not, singly or in the
aggregate, have a Material Adverse Effect.
(o) The Company has no Significant
Subsidiaries (as such term is defined in Rule 1-02 of Regulation
S-X) other than those subsidiaries listed in Schedule 1
attached hereto (collectively, the “ Significant
Subsidiaries ”). Each Significant Subsidiary has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction in which it is
chartered or organized, with all requisite corporate power and
authority to own, lease and operate its properties and conduct the
business it transacts and proposes to transact. Each Significant
Subsidiary is duly qualified to transact business and is in good
standing as a foreign corporation in each jurisdiction where the
nature of its activities requires such qualification, except where
the failure to be so qualified would not, singly or in the
aggregate, have a Material Adverse Effect. No Significant
Subsidiary of the Company is currently prohibited, directly or
indirectly, under any agreement or other instrument, other than as
required by applicable law, to which it is a party or is subject,
from paying any dividends to the Company, from making any other
distribution on such Significant Subsidiary’s capital stock,
from repaying to the Company any loans or advances to such
Significant Subsidiary from the Company or from transferring any of
such Significant Subsidiary ‘s properties or assets to the
Company or any other subsidiary of the Company.
(p) The Company and each of the
Company’s subsidiaries hold all necessary approvals,
authorizations, orders, licenses, consents, registrations,
qualifications, certificates and permits (collectively, the “
Governmental Licenses ”) of and from Governmental
Entities necessary to conduct their respective businesses as now
being conducted, and neither the Company nor any of the
Company’s subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such Government
License, except where the failure to be so licensed or approved or
the receipt of an unfavorable decision, ruling or finding, would
not, singly or in the aggregate, have a Material Adverse Effect;
all of the Governmental Licenses are valid and in full force and
effect, except where the invalidity or the failure of such
Governmental Licenses to be in full force and effect, would not,
singly or in the aggregate, have a Material Adverse Effect; and the
Company and its subsidiaries are in compliance with all applicable
laws, rules, regulations, judgments, orders, decrees and consents,
except where the failure to be in compliance would not, singly or
in the aggregate, have a Material Adverse Effect.
(q) All of the issued and
outstanding shares of capital stock of the Company and each of its
subsidiaries are validly issued, fully paid and non-assessable;
except as disclosed on Schedule 2 hereto, all of the issued and
outstanding capital stock of each subsidiary of the Company is
owned by the Company, directly or through subsidiaries, free and
clear of any Lien, claim or equitable right; and none of the issued
and outstanding capital stock of the Company or any subsidiary was
issued in violation of any preemptive or similar rights arising by
operation of law, under the charter or by-laws of such entity or
under any agreement to which the Company or any of its subsidiaries
is a party.
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(r) Neither the Company nor any of
its Significant Subsidiaries is (i) in violation of its respective
charter or by-laws or similar organizational documents or (ii) in
default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other agreement
or instrument to which the Company or any such subsidiary is a
party or by which it or any of them may be bound or to which any of
the property or assets of any of them is subject, except, in the
case of clause (ii), where such violation or default would not,
singly or in the aggregate, have a Material Adverse
Effect.
(s) There is no action, suit or
proceeding before or by any Governmental Entity, arbitrator or
court, domestic or foreign, now pending or, to the knowledge of the
Company after due inquiry, threatened against or affecting the
Company or any of the Company’s subsidiaries, except for such
actions, suits or proceedings that, if adversely determined, would
not, singly or in the aggregate, adversely affect the consummation
of the transactions contemplated by the Operative Documents or have
a Material Adverse Effect; and the aggregate of all pending legal
or governmental proceedings to which the Company or any of its
subsidiaries is a party or of which any of their respective
properties or assets is subject, including ordinary routine
litigation incidental to the business, are not expected to result
in a Material Adverse Effect.
(t) The accountants of the Company
who certified the Financial Statements (as defined below) are
independent public accountants of the Company and its subsidiaries
within the meaning of the Securities Act, and the rules and
regulations of the Securities and Exchange Commission (the “
Commission ”) thereunder.
(u) The audited consolidated
financial statements (including the notes thereto) and schedules of
the Company and its consolidated subsidiaries for the fiscal year
ended December 31, 2004 (the “ Financial Statements
”) and the interim unaudited consolidated financial
statements of the Company and its consolidated subsidiaries for the
quarter ended June 30, 2005 (the “ Interim Financial
Statements ”) provided to the Purchaser are the most
recent available audited and unaudited consolidated financial
statements of the Company and its consolidated subsidiaries,
respectively, and fairly present in all material respects, in
accordance with U.S. generally accepted accounting principles
(“ GAAP ”), the financial position of the
Company and its consolidated subsidiaries, and the results of
operations and changes in financial condition as of the dates and
for the periods therein specified, subject, in the case of Interim
Financial Statements, to year-end adjustments (which are expected
to consist solely of normal recurring adjustments). Such
consolidated financial statements and schedules have been prepared
in accordance with GAAP consistently applied throughout the periods
involved (except as otherwise noted therein).
(v) Neither the Company nor any of
its subsidiaries has any material liability, whether known or
unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become
8
due, except for (i) liabilities set forth in the
Financial Statements or the Interim Financial Statements, (ii)
normal fluctuations in the amount of the liabilities referred to in
clause (i) above occurring in the ordinary course of business of
the Company and all of its subsidiaries since the date of the most
recent balance sheet included in such Financial Statements and
(iii) liabilities as would not be expected to have a Material
Adverse Effect.
(w) Since the respective dates of
the Financial Statements and the Interim Financial Statements,
there has not been (A) any Material Adverse Change or (B) any
dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock other than regular
quarterly dividends on the Company’s common stock.
(x) The documents of the Company
filed with the Commission in accordance with the Exchange Act, from
and including the commencement of the fiscal year covered by the
Company’s most recent Annual Report on Form 10-K, at the time
they were or hereafter are filed by the Company with the Commission
(collectively, the “ 1934 Act Reports ”),
complied and will comply in all material respects with the
requirements of the Exchange Act and the rules and regulations of
the Commission thereunder (the “ 1934 Act Regulations
”), and, at the date of this Purchase Agreement and on the
Closing Date, do not and will not include 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 the
light of the circumstances under which they were made, not
misleading; and other than such instruments, agreements, contracts
and other documents as are filed as exhibits to the Company’s
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q or
Current Reports on Form 8-K, there are no instruments, agreements,
contracts or documents of a character described in Item 601 of
Regulation S-K promulgated by the Commission to which the Company
or any of its subsidiaries is a party. The Company is in compliance
in all material respects with all currently applicable requirements
of the Exchange Act that were added by the Sarbanes-Oxley Act of
2002.
(y) No labor dispute with the
employees of the Company or any of its subsidiaries exists or, to
the knowledge of the executive officers of the Company, is
imminent, except those which would not, singly or in the aggregate,
have a Material Adverse Effect.
(z) No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any Governmental Entity, other than
those that have been made or obtained, is necessary or required for
the performance by the Company of its obligations under the
Operative Documents or the consummation by the Company of the
transactions contemplated by the Operative Documents.
(aa) The Company and each subsidiary
of the Company has good and marketable title to all of its
respective real and personal properties, in each case free and
clear of all Liens and defects, except for those arising under the
Company’s Second Consolidated, Amended and Restated Revolving
Credit Construction Loan Agreement, dated as of December 31, 2004,
the WCI Hunter Mill, LLC $10 million deferred purchase price note,
the Tidewater Preserve $19.224 million deferred purchase price
notes, the Hopewell Crossing Home & Land Company, LLC $3.55
million project loan and the Kalian-Spectrum Monroe, LLC $2.157
million JV guaranteed project loan and those that would not, singly
or in the aggregate, have a
9
Material Adverse Effect; and all of the leases
and subleases under which the Company or any subsidiary of the
Company holds properties are in full force and effect, except where
the failure of such leases and subleases to be in full force and
effect would not, singly or in the aggregate, have a Material
Adverse Effect, and neither the Company nor any subsidiary of the
Company has any notice of any claim of any sort that has been
asserted by anyone adverse to the rights of the Company or any
subsidiary of the Company under any such leases or subleases, or
affecting or questioning the rights of such entity to the continued
possession of the leased or subleased premises under any such lease
or sublease, except for such claims that would not, singly or in
the aggregate, have a Material Adverse Effect.
(bb) [ Reserved ].
(cc) [ Reserved ].
(dd) The Company and each of the
Significant Subsidiaries have timely and duly filed all Tax Returns
required to be filed by them, and all such Tax Returns are true,
correct and complete in all material respects, except for any
failures to file Tax Returns that would not, singly or in the
aggregate, have a Material Adverse Effect. The Company and each of
the Significant Subsidiaries have timely and duly paid in full all
material Taxes required to be paid by them (whether or not such
amounts are shown as due on any Tax Return), except for any
failures to pay Taxes that would not, singly or in the aggregate,
have a Material Adverse Effect. There are no federal, state, or
other Tax audits or deficiency assessments proposed or pending with
respect to the Company or any of the Significant Subsidiaries, and
no such audits or assessments are threatened, except for such
audits or deficiencies that would not, singularly or in the
aggregate, have a Material Adverse Effect. As used herein, the
terms “ Tax ” or “ Taxes ”
mean (i) all federal, state, local, and foreign taxes, and other
assessments of a similar nature (whether imposed directly or
through withholding), including any interest, additions to tax, or
penalties applicable thereto, imposed by any Governmental Entity,
and (ii) all liabilities in respect of such amounts arising as a
result of being a member of any affiliated, consolidated, combined,
unitary or similar group, as a successor to another person or by
contract. As used herein, the term “ Tax Returns
” means all federal, state, local, and foreign Tax returns,
declarations, statements, reports, schedules, forms, and
information returns and any amendments thereto filed or required to
be filed with any Governmental Entity.
(ee) There are no rulemaking or
similar proceedings before the United States Internal Revenue
Service or comparable federal, state, local or foreign government
bodies which involve or affect the Company or any subsidiary,
which, if the subject of an action unfavorable to the Company or
any subsidiary, could result in a Material Adverse
Effect.
(ff) The books, records and accounts
of the Company and its subsidiaries accurately and fairly reflect,
in reasonable detail, the transactions in, and dispositions of, the
assets of, and the results of operations of, the Company and its
subsidiaries. The Company and each of its subsidiaries maintains a
system of internal accounting controls sufficient to provide
reasonable assu
