Exhibit 10.15
SALE AND PURCHASE AGREEMENT
This SALE AND PURCHASE AGREEMENT (this "Agreement"), dated as of
October 26, 1998, is made and entered into by and between TRAFALGAR HOUSE
PROPERTY, INC., a Delaware corporation ("Seller") and BEAZER HOMES CORP., a
Tennessee corporation ("Buyer").
Buyer and Seller hereby agree as follows:
1. Definitions
In this Agreement the following terms shall have the following
meanings:
"Assignment and Assumption Agreement" means an agreement for the
assignment and assumption of the Assumed Obligations to be delivered by Buyer to
Seller on Closing pursuant to clause 4 in form and substance acceptable to
Seller and Buyer;
"Assumed Obligations" means those obligations of the Seller in respect
of the Business set out in Exhibit B hereto; and
"August Balance Sheet" means the balance sheet of the Business showing
the Net Assets as at 8/29/98 annexed as Exhibit A hereto
"Bridgewater Asset" means all those 43 lots of land at Xxxxxxxxxxx
Xxxxxxxx, Xxxxxxxxxxx Xxxxxxxx, Xxx Xxxxxx;
"Business" means the Pennsylvania, New Jersey, Maryland and Virginia
operations of the Seller;
"Contracts" means land sale and land purchase agreements described on
Exhibit E;
"Determination Date" means as of the close of business on the day
immediately preceding the day of the Closing;
"Draft Disclosure Schedule" means the draft disclosure schedule of the
Seller to be prepared by Seller and delivered to Buyer under clause 5(c) ;
"Estimated Purchase Price" means an amount equal to the net book value
of the Net Assets shown on the August Balance Sheet minus US$ 29,000,000.
"Excluded Assets" means cash, all assets and liabilities of the South
Riding Business and the Other Land set out in Exhibit J, cash equivalents
intercompany receivables and any categories of assets not included on the August
Balance Sheet;
"Excluded Liabilities" means bank debt, intercompany payables, any
categories of liabilities not included on the August Balance Sheet and
litigation and claims against the Business with respect to the period prior to
the Closing Date;
"Final Balance Sheet" means the balance sheet of the Business showing
the Net Assets of the Business excluding any Impaired Assets as at the
Determination Date prepared by Seller and reviewed by Messrs. Xxxxxx Xxxxxxxx as
provided below.
"Final Net Worth" means the net book value of the Net Assets as at the
Determination Date, which amount is based on the Final Balance Sheet of the
Business prepared in accordance with United Kingdom generally accepted
accounting principles ("UK GAAP") applied on a basis consistent with prior
periods;
"Impaired Assets" shall mean those Net Assets: (i) as to which there
exists as of the Closing Date a material breach of the representations and
warranties of the Seller set forth in clauses 8 b), c), d), e), f), g), h), i),
j), k) and l) herein and which have not been cured by Seller; or] (ii) the
subject of additional disclosures by Seller in the Closing Disclosure Schedule
or any other notification or schedule made by Seller in writing and delivered to
Buyer before the Closing Date, or (iii) for which the Seller has not procured
the Required Approvals on or before the Closing Date and in each instance,
either not capable of conveyance by the Seller to Buyer at Closing without a
Required Approval or incapable of use for residential housing developments;
"Land" means the real properties described in Exhibit C;
"Leases" means the leases described in Exhibit D;
"Net Assets" means all the net operating assets of the Business and
those described on the August Balance Sheet excluding Excluded Assets and
Excluded Liabilities;
"Partnership Agreements" means the joint ventures and partnerships
described in Exhibit F; and
"Performance Guarantees" means all those letters of credit, bonds and
cash escrows of the Seller described in Exhibit G;
"Permits" means the permits listed in the Closing Disclosure Schedule;
"Purchase Price" means Final Net Worth less US$ 29,000,000;
"Required Approvals" means the approvals from third parties required
under the Required Contracts, Required Leases, Required Permits, and Required
Partnerships set out in Exhibit I prior to assignment to the Buyer under the
Assignment and Assumption Agreement;
"South Riding Agreement" means an agreement for the sale and purchase
of the South Riding Business.
"South Riding Business" means the South Riding division and operations
of Seller or its successor at South Riding;
2. Sale and Purchase
a) Buyer will purchase the Net Assets of the Business described in the
Final Balance Sheet and shall assume, pay and perform the Assumed Obligations.
(b) Buyer shall have an option to exclude the Bridgewater Asset from
the Net Assets being purchased by Buyer hereunder by notice to Seller at Closing
but on condition only that there shall be no corresponding reduction of the
Purchase Price. If Buyer opts to exclude the Bridgewater Asset and Seller
subsequently sells the Bridgewater Asset after the Closing Date, Buyer shall
receive 50% of the proceeds of sale from such disposal;
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(c) The Final Net Worth shall be determined on the Determination Date
on the basis of the Final Balance Sheet. The Final Balance Sheet shall be
prepared by the Seller in accordance with UK GAAP applied on a basis consistent
with prior periods. Messrs. Xxxxxx Xxxxxxxx ("AA") shall audit the Final Balance
Sheet and deliver their opinion to the Buyer and the Seller within 30 days of
the Determination Date.
(d) Within thirty (30) days following the delivery of the AA audited
Final Balance Sheet, Buyer shall deliver to Seller a notice of objection (an
"Objection Notice") or a notice of acceptance (an "Acceptance Notice") with
respect to the Final Balance Sheet. If an Acceptance Notice is delivered to
Seller or if no Objection Notice is delivered to Seller within such thirty (30)
day period, such Final Balance Sheet and the calculation of the Final Net Worth
shall be final and binding on the parties. If an Objection Notice is given and
the parties are unable to reach agreement within fifteen (15) days of its date,
any unresolved disputed items shall be promptly referred to KPMG Peat Marwick in
New York, New York ("KPMG") for resolution. The resolution of the dispute by
KPMG shall be final and binding on the parties. The fees and expenses of KPMG
shall be divided equally between the parties if the amount in dispute is less
than five (5) percent of the Purchase Price. If the amount in dispute is
greater, then the fees and expenses of KPMG shall be paid by the losing party.
(e) Buyer, acting reasonably, shall have the right upon written notice
to Seller to exclude Impaired Assets from the transaction contemplated by this
Agreement on or before the Closing Date and the Purchase Price shall be reduced
at the Closing Date by the allocation of net book value attributed to the
Impaired Assets in the Final Balance Sheet. In the event that the Buyer does not
notify Seller of Impaired Assets on or before the Closing Date, then the Buyer
shall be deemed to be satisfied that the Net Assets are not Impaired Assets and
the representations and warranties of the Seller shall be subject to the Closing
Disclosure Schedule. In the event that the Seller, acting reasonably, disputes
that a Net Asset is an Impaired Asset prior to the Closing Date by notice to the
Buyer ("Impaired Asset Objection Notice"), the Buyer shall pay an amount equal
to the net book value attributed to the Impaired Asset in the August Balance
Sheet ("Impaired Asset Escrow Amount") to the Escrow Agent in accordance with
clause 3 (b) and the dispute shall be referred to KPMG for resolution. The
resolution of the dispute by KPMG shall be final and binding on the parties. The
fees and expenses of KPMG shall be divided equally between the parties if the
amount in dispute is less than five (5) percent of the Purchase Price. If the
amount in dispute is greater, then the fees and expenses of KPMG shall be paid
by the losing party.
Provided always that if the number of affected lot(s) of Land under
subclauses 2(e) and 7(e) (i) exceed in number 10% or more of the total number of
lot(s) of all Land, then the Buyer shall have the right to terminate this
Agreement in accordance with clause 13.
(f) Upon the signing of this Agreement, Buyer shall deliver to
Tri-State Commercial Closings Inc in accordance with the terms of the attached
escrow agreement in Exhibit L ("the Escrow Agent"), an xxxxxxx money deposit in
the sum of one million dollars ($1,000,000) (the "Deposit"). The terms of the
escrow are that: (i) the Deposit shall be released to Seller at 9am on November
4th 1998 if Buyer has not, by notice to Seller and Escrow Agent waived its
financing contingency in clause 11E on or before November 3rd 1998 ("Waiver
Notice"), and the Escrow Agent has not received the Waiver Notice prior to the
release of the Deposit to Seller; (ii) if Seller and Escrow Agent receive the
Waiver Notice on or before November 3rd 1998, the Deposit shall be released to
Buyer.
3. Closing.
a) The closing of the transactions contemplated by this Agreement (the
"Closing") will take place at the offices of Kvaerner Inc., One Commerce Square,
0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 at 10:00 a.m. on December
4, 1998, or on such other date as is mutually agreeable to
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Buyer and Seller. The date on which the Closing occurs is referred to herein as
the "Closing Date," and the Closing shall be deemed effective as of 8:00 a.m.,
Philadelphia time, on the Closing Date.
b) Subject to the conditions set forth in this Agreement, the parties
agree to consummate the following transactions on the Closing Date:
i. the Estimated Purchase Price shall be paid by Buyer to
Seller at Closing, less the net book value of any assets which the parties agree
are Impaired Assets and less any Impaired Asset Escrow Amount, by wire transfer
or immediately available funds to the bank account of Seller notified to Buyer
in writing; and
ii. the Buyer Escrow Amount (in the amount of $2,000,000.00)
shall be paid by Buyer to the account designated by the Escrow Agent; and
iii. the Seller Escrow Amount (in the amount of $2,000,000.00)
shall be paid by Seller to the account designated by the Escrow Agent; and
iv. the Impaired Asset Escrow Amount (if any) shall be paid by
Buyer to an account designated by the Escrow Agent.
c) The Buyer Escrow Amount, the Impaired Assets Escrow Amount and the
Seller Escrow Amount shall be held by the Escrow Agent and disbursed pursuant to
the Escrow Agreement which shall be in form and substance acceptable to the
Buyer, Seller and the Escrow Agent. The foregoing funds shall serve as a source
of payment of any amounts payable upon the calculation of the Purchase Price.
d) If for any reason not directly attributable to the breach or default
of the party who is to receive a payment under this Agreement, an amount is not
paid under this Agreement on the due date for payment, then the amount shall
bear interest. Such interest shall accrue from day to day (before and after
settlement) at the annual rate of 4% above the "Prime Rate" listed in THE WALL
STREET JOURNAL on the due date for payment.
e) The Purchase Price shall be allocated as set forth on a Closing
Statement executed between the Buyer and Seller at Closing updated to reflect
any change between the August Balance Sheet and the Final Balance Sheet.
(f) In the event:
(A) the Purchase Price is less than the amount received by
Seller pursuant to clause 3b) i, Seller shall pay the difference to Buyer
promptly, or
(B) the Purchase Price is more than the amount received by
Seller pursuant to clause 3b) i, Buyer shall pay to Seller the difference
promptly (unless the difference is released by the Escrow Agent to Seller) ; or
(C) Buyer delivers to Seller the Objection Notice and/or the
Impaired Asset Objection Notice, Buyer shall pay to Seller promptly the amount,
if any, by which the undisputed portion of the Purchase Price is greater than
the Estimated Purchase Price. Within two (2) business days after the resolution
of a dispute by the parties under 2(d) and/or 2 (e), Seller shall pay to Buyer,
or Buyer shall pay to Seller, as the case may be, the amount of any further
adjustment required.
g) Payments due to or from Buyer or Seller, as the case may be,
pursuant to Clause 3 (f) and
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2(e) shall be paid in accordance with the terms of the Escrow Agreement.
4. Performance at Closing.
a) On the Closing Date, Seller shall deliver to Buyer all documents and
instruments in form and in substance reasonably acceptable to Buyer's legal
counsel, the following ("Seller's Closing Documents"):
(i) a xxxx of sale to all personalty of the Business,
(ii) assignment of Seller's rights, title and interest in
plans and specifications, warranties and guarantees of the Business (where
Seller is beneficiary) pursuant to the Assignment and Assumption Agreement;
(iii) an exclusive, right and license to all marketing and the
trade name "Trafalgar House Residential" for the activities of housebuilding for
a period of five years from Closing in all States where the Seller has
housebuilding operations as of the Closing Date;
(iv) an assignment of all assignable Permits, Contracts,
Leases and Partnerships pursuant to the Assignment and Assumption Agreement;
(v) an assignment of all Required Contracts, Required Leases
and Required Permits on the Closing Date, subject to clause 7. (f), together
with copies of the Required Approvals pursuant to the Assignment and Assumption
Agreement;
(vi) a list of all Performance Guarantees to be replaced by
Buyer at Closing pursuant to the provisions of this Agreement; and
(vii) warranty deeds in favor of the Buyer for all of the
Land;
(viii) a Section 1445 Affidavit as to the non-foreign status
of the Seller together with similar withholding tax affidavits consistent with
local custom;
(ix) documents necessary for the issuance of the title
policies consistent with the Commitments;
(x) The Closing Statement referred to in clause 3(e)
(xi) an executed Take down Agreement with the South Riding
Business ("Take Down Agreement") in the terms set out in clause 14; and
(xii) the Closing Disclosure Schedule; and
(xiii) an assignment of the Assumed Obligations to Buyer
pursuant to the Assignment and Assumption Agreement; and
(xiv) Certificates of Good Standing, Corporate Resolutions,
Incumbency Certificates and Certificates of Good Standing from
the States of operation and other evidence of corporate
authority as may be reasonably requested by the Buyer as to
Seller and Guarantor and
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(xv) such other funds, documents and/or instruments as
provided for under this Agreement.
b) On the Closing Date, Buyer shall deliver to the Seller, the
Estimated Purchase Price in accordance with clause 3(b), and, in form and in
substance reasonably acceptable to Seller's legal counsel, the following:
i. an Assumption and Assignment Agreement from the Buyer in
respect of the Assumed Obligations; and
ii. the Backup Letters of Credit;
iii. Certificates of Good Standing, Corporate Resolutions,
Incumbency Certificates and Certificates of Good Standing from the States of
operation and other evidence of corporate authority as may be reasonably
requested by the Seller as to Buyer and BZH; and
iv. such other funds, documents and/or instruments as provided
for under this Agreement.
5. Sellers Obligations. From the date of this Agreement to the Closing
Date:
a) Seller shall allow Buyer access to the Land and the Business for the
purpose of Buyer's investigations. Seller shall also make available to Buyer
without charge all information and documents listed in the Draft Disclosure
Schedule and such other documents as shall be sufficient to entitle Buyer,
acting reasonably, to verify the Draft Disclosure Schedule and the Net Assets.
b) Seller shall operate the Business in the ordinary course of business
in accordance with prudent, reasonable business standards, and shall execute no
material contracts in excess of $100,000 or carry out any material actions other
than in the ordinary course of business that are not terminable on or before the
Closing Date without the written consent of Buyer.
c) Seller shall finalize the Draft Disclosure Schedule and deliver it
to Buyer within 5 working days of the date of this Agreement and shall
thereafter produce a closing disclosure schedule ("Closing Disclosure Schedule")
5 working days prior to Closing. The Closing Disclosure Schedule shall contain
specific and not generic disclosures.
6. Conditions. The obligations of Seller and Buyer under this Agreement
are conditional upon each of the following occurring at or having occurred by
the Closing Date:
a) Representations and warranties. The representations and warranties
of Seller and Buyer contained in this Agreement being true and correct; and
b) Seller's obligations. Seller shall have performed its obligations in
clause 5;
c) South Riding Business. Seller shall have executed the Takedown
Agreement;
d) Disclosures. There shall be no additional disclosure in the Closing
Disclosure Schedule
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which discloses an event or condition not disclosed in the Draft Disclosure
Schedule and admits a material adverse effect on the Business and Seller in its
sole discretion does not elect to make a price adjustment in respect thereof,
the amount of which is acceptable to Buyer and Seller; and
e) HSR Act. The parties (including Kvaerner and BZH as defined below)
shall have made all applicable filings under the HSR Act and have received
written confirmation that this Agreement can be consummated.
7. Seller's Title Evidence.
a) Seller shall promptly upon signing this Agreement furnish all title
evidence in the possession of the Seller ("Title Evidence") to the Buyer. Upon
receipt of the Title Evidence, the Buyer shall promptly obtain:
i. Title Insurance Commitment. A title examination and
commitment (together, the "Commitments") for the Land.
ii. Multiple Searches. Buyer shall obtain, bankruptcy,
litigation, judgement, UCC, tax and other customary searches with respect to the
Seller, Kvaerner (as defined below), and the Land. Buyer shall also provide
similar searches for Seller as to the Buyer and Beazer Homes (U.S.A), Inc.
("BZH") at the cost of Seller.
iii. State Taxes. A report from an approved abstracting
company listing all liens for unpaid sales or withholding taxes on file against
Seller (or against any trade name or business name used by Seller) which are on
file in the office of the County Recorder for the County for which each parcel
of the Land is located.
b) Permitted Exceptions. On the Closing Date, title to the Land shall
be free and clear of all encumbrances, excepting only (i) the lien of real
estate taxes not yet due and payable, (ii) utility easements and other
easements, covenants, conditions, building restrictions and rights-of-way of
record required by the proffers running with the Land and which otherwise do not
materially interfere with the intended development of the Land, (iii) such
matters of title as might be disclosed by a survey of the Land, or any
portion(s) thereof and which otherwise do not materially interfere with the
intended development of the Land, (iv) other imperfections of title or
restrictions imposed by zoning, land use, fire and safety, health or other laws
which do not materially detract from the value of the Land or materially
interfere with the manner in which such Land is currently being used in the
Business, (v) rights of tenants in possession or riparian or mineral rights
which do not materially detract from the value of the Land or materially impair
the operation of the Business; and (vi) requirements and exceptions set forth in
the Commitments and accepted or deemed to have been accepted by Buyer pursuant
to the remaining provisions of this clause 7.
c) Notice of Objection. If a Commitment imposes any requirement or
discloses any exception to title other than as permitted in clauses (i), (ii),
(iii), (iv) or (v) of clause 7(b), then Buyer shall have the right in its sole
discretion and upon written notice given to Seller no later than seven (7)
working days prior to the Closing Date, to object to any such requirement or
exception ("Notice of Objection"). Subject to clause 7(d), Buyer shall be deemed
to have accepted any and each requirement and/or exception set forth in the
Commitments for which no Notice of Objection shall have been given.
d) Seller's Title Rights and Obligations. Seller shall have the right,
in its sole discretion and upon written notice to Buyer given within five (5)
Business Days from and after the date any Notice of Objection shall have been
given by Buyer (the "Reply Period"), to agree at Seller's cost to cure any title
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objection so notified by Buyer whereupon Buyer shall be deemed to have withdrawn
its Notice of Objection.
e) Buyer Rights. If Seller shall not give Notice of Cure with respect
to each requirement and/or exception which is the subject of any Notice of
Objection, Buyer thereupon shall:
i. have the right to exclude those subdivided lot(s) and/or
other portion(s) of the Land affected by such requirement and/or exception from
the sale and purchase of Land contemplated by this Agreement and the Purchase
Price shall be reduced accordingly by the allocation of net book value
attributed to such lot(s) and/of portion(s) of Land on the Final Balance Sheet;
or
ii. notwithstanding any Notice of Objection close hereunder,
in which event Buyer shall be deemed to have accepted all such requirements
and/or exceptions without any further remedy or compensation.
f) Assignment of Development Contracts, Land Purchase Contracts and
Engineering Contracts. Seller and Buyer acknowledge that: (i) Required Approvals
are needed for certain of the Contracts, Leases, Permits, and Partnerships prior
to assignment to the Buyer at the Closing Date; and (ii) Buyer may exclude
Impaired Assets on or before the Closing Date; and (iii) Buyer has established a
minimum number of specific Contracts, Leases, Permits and Partnerships (referred
to as Required Contracts, Required Leases, Required Permits and Required
Partnerships respectively) as set forth in categories in Exhibit I so that, if
the relevant Contracts, Leases, Permits and Partnerships do not meet the minimum
threshold of categories in Exhibit F, then the Buyer may exercise the remedies
set forth in Exhibit I save where Buyer subsequently assigns this Agreement or
portions thereof to third parties pursuant to clause 17(e) and, using its best
efforts, is unable to procure Required Approvals by reason of the identity of
such third parties, whereupon the affected Required Contracts, Required Leases,
Required Permits or Required Partnerships shall not count towards the minimum
threshold of categories for the purposes of Exhibit F . Based on the foregoing,
Seller and Buyer agree that on the Closing Date, Seller shall assign to Buyer
all of the Assumed Obligations pursuant to the Assignment and Assumption
Agreement, in each case with the Required Approvals to meet the definition of
the Required Contracts, Required Leases, Required Permits, and Required
Partnerships in Exhibit H.
8. Representations and Warranties by Seller. Seller represents and
warrants to Buyer that, save as disclosed, as at the Closing Date as set forth
in the Closing Disclosure Schedule:
a) Corporation; Authority. Seller is duly incorporated and is in good
standing under the laws of the State of Delaware; Seller is duly qualified to
transact business in the States of Pennsylvania, Virginia, Maryland, and New
Jersey; Seller has the requisite corporate power and authority to enter into and
perform this Agreement and those Seller's Closing Documents signed by it; such
documents have been duly authorized by all necessary corporate action on the
part of Seller and have been duly executed and delivered; such execution,
delivery and performance by Seller of such documents does not conflict with or
result in a violation of Seller's Articles of Incorporation or Bylaws, or any
judgment, order, or decree of any court or arbiter to which Seller is a party;
such documents are valid and binding obligations of Seller, and are enforceable
in accordance with their terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights or by general
principles of equity.
b) Title to Land. Seller owns the Land, free and clear of all
encumbrances except the Permitted Exceptions in clause 7(b)
c) Leases. Seller has made available to Buyer a correct and complete
copy of each Lease
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and all its amendments. The information regarding the Leases contained in
attached Exhibit D is correct and complete as of the date of this Agreement. The
Leases are in full force and neither Seller, nor any tenant, is to the best
knowledge of Seller in default under the Leases.
d) Contracts. Seller has made available to Buyer a correct and complete
copy of each Contract and its amendments. To the best knowledge of Seller, the
Contracts are in full force and the Seller is not in material default under the
Contracts.
e) Partnerships. Seller has made available to the Buyer a correct and
complete copy of each Partnership Agreement and its amendments. To the best
knowledge of Seller, the Partnerships are in full force and effect and the
Seller is not in material default thereunder and there exists no obligation of
the Seller to make additional capital payments thereunder.
f) Permits. Seller has made available to Buyer a correct and complete
copy of each Permit and its amendments. To the best knowledge of Seller, the
Permits are in full force, and Seller is not in material default under the
Permits. To the best knowledge of Seller, no other Permits are required from any
governmental entity in order to operate the Land as it is now operated.
g) Environmental Laws.
Except as described in the environmental reports, studies
and/or assessments identified in the Draft Disclosure Schedule, Seller never has
used any Land, nor to the best information and belief of Seller, but without
independent investigation on its part, has the Land ever been used, for the
storage or disposal of "Hazardous Wastes" or "Toxic Substances" except as
permitted by law. Seller has delivered to Buyer copies of all environmental
reports and studies relating to the Land which are in the Draft Disclosure
Schedule.
As used herein, (i) "Hazardous Wastes" means all waste
materials subject to regulation under the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Sections.6901 et seq.,
the Resource Conservation and Recovery Act, 42 U.S.C. Sections.6901 et seq.,
or any other Environmental Law relating to hazardous waste disposal, and (ii)
"Toxic Substances" means and includes any materials which have been shown to
have significant adverse effects on human health or which are subject to
regulation under the Toxic Substance Control Act, 15 U.S.C. Sections.2601 et
seq.,
To the best of the knowledge of the Seller, (i) no underground
storage tanks are presently located on the Land and subsequently removed or
filled except as may have been disclosed in the environmental Phase I reports
with respect to the Land delivered by Seller to Purchaser; (ii) the Land has not
been used as a landfill or as a dump for garbage or refuse.
For purposes herein, the term Environmental Law shall mean
any federal, state or local law, statute, ordinance, code, rule, regulation,
license, authorization, decision, order, injunction, decree, or rule of
common law, and any judicial interpretation of any of the foregoing, which
pertains to health, safety, any hazardous material, or the environment
(including but not limited to ground or air or water or noise pollution or
contamination, and underground or above ground tanks) and shall include
without limitation, the Solid Waste Disposal Act, 42 U.S.C. Sections. 6901 et
seq.; the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. Sections. 6901 et seq. ("CERCLA"), as amended by the
Superfund Amendments and Reauthorization Act of 1986 ("XXXX"); the Hazardous
Materials Transportation Act, 49 U.S.C. Sections. 1801 et seq.; the Federal
Water Pollution Control Act, 33 U.S.C. ss. 1251 et seq.; the Clean Air Act,
42 U.S.C. Sections. 7401 et seq.; the Toxic Substances Control Act, 15 U.S.C.
Sections. 2601 et seq.; the Safe Drinking Water Act, 42 U.S.C. Sections. 300f
et seq
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h) Rights of Others to Purchase Land. Seller has not entered into any
other contracts for the sale of the Land, nor are there any rights of first
refusal or options to purchase the Land or any other rights of others that might
prevent the consummation of this Agreement. Seller shall not enter into any
agreements or letters of intent to sell the Net Assets during the term of this
Agreement other than the sale of residential housing units in the normal course
of business.
i) Financial Statements. The financial statements for the Business
including the August Balance Sheet ("Financial Statements") that have
been supplied by Seller to Buyer are correct and complete and have been
prepared in accordance with UK GAAP . The receivable amounts listed in
the debtors' column of the Financial Statements are recoverable in the
ordinary course of the Business and the provisions are adequate to
complete the warranty work to be undertaken by Buyer under clause 10
(a) and 16.
j) Land. To the best knowledge of Seller, the Land is usable for its
current uses without materially violating any federal, state, local or other
governmental building, zoning, health, safety, platting, subdivision or other
law, ordinance or regulation, or any applicable private restriction, such use is
a legal conforming use subject to any exceptions which would not have a material
adverse effect on the Business as a whole and Seller agrees that it does not own
any other land other than that disclosed on Exhibit J.
k) Proceedings. There is no action, litigation, investigation,
condemnation or proceeding of any kind pending or to the best knowledge of
Seller threatened against Seller or any portion of the Land
l) Bonds. Seller has delivered to Buyer true and complete copies of all
performance and maintenance bonds, financial guarantees supporting such bonds,
cash escrow agreements and letters of credit ("Performance Guarantees") under
which Seller is an obligor listed in Exhibit G. On the Closing Date, Seller
shall deliver to Buyer a then current summary of the Performance Guarantees in
the form of Exhibit G. To the Seller's best knowledge, Seller is not in material
default under any of the underlying obligations for which the Performance
Guarantees have been given and there are no claims or draws currently existing
with respect to any of the Performance Guarantees.
m) Employees. Seller shall be responsible for the Severance Payment(s)
due to Xxxxxxxx Xxxxxxx, Xxxxx Xxxxxx and Xxxxxxx X'Xxxxx in the event that, on
the Closing Date, they refuse an offer of employment from the Buyer which
provides for a reasonably equivalent package of compensation and benefits
consistent with Buyer's benefits and compensation for similar executives and
officers. Seller is not a party to any collective bargaining agreement and the
employees of Seller are not, to the Seller's best knowledge, members of any
union; and
n) South Riding Agreement. Seller has provided to Buyer on the date of
execution of this Agreement a true and exact copy of the South Riding
Agreement.
9. Prorations. Seller and Buyer agree to the following prorations and
allocation of costs regarding this Agreement:
a) Title Insurance. Buyer shall pay all premiums required for the issue
of title policies and Commitments for each Land.
b) Sales Tax. Seller shall pay all state and local taxes arising from
this transaction in respect of the transfer of Land.
c) Real estate Taxes and Special Assessments. Seller will pay all
special assessments levied
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as against the Land as at the Closing Date. General real estate taxes shall be
prorated by Seller and Buyer as of the Closing Date based upon a calendar fiscal
year.
d) Recording costs. Seller will pay the costs of recording all
documents necessary to record title in the condition warranted by this
Agreement. Buyer will pay the costs of recording all other documents.
10. Buyer's Obligations.
a) Performance Guarantees. Buyer and Seller acknowledge and recognize
that two types of Performance Guarantees exist as of even date: (i) Open
Projects: Performance Guarantees issued to governmental authorities with respect
to improvements located in projects where the Seller is currently constructing
residential housing units; and (ii) Closed Projects: Performance Guarantees
issued to governmental authorities with respect to improvements located in
projects where the Seller is not currently constructing and will not construct
residential housing units in the future. The following obligations of the Buyer
shall be applicable to these two types of Performance Guarantees:
i. Open Projects: Buyer shall use its best efforts to
replace (i) those letters of credit comprised within
the Performance Guarantees in this category with
letters of credit in the same amount secured and on
the same terms; and (ii) those performance bonds
comprised within the Performance Guarantees in this
category with performance bonds in the same amount
secured and on the same terms. Buyer agrees to tender
to Seller an irrevocable letter of credit ("Backup
Letter of Credit") for the cumulative value of all
letters of credit comprised within the Performance
Guarantees in this category, issued by a national
bank having an office for drawing letters of credit
in the United States of America and having a total
number of assets of at least $25,000,000 ("Qualified
Issuer"). The Backup Letter of Credit shall amortize
upon replacement of the letters of credit in this
category. The Backup Letter of Credit shall be
drawable in multiple draws and Seller may make draws
thereunder in the amount of and upon the payment of
any amounts under the letters of credit in this
category.
ii. Closed Projects. BZH shall guarantee Buyer's obligations
under this category pursuant to clause 18 in order to
assure the performance of the maintenance work performed
by the Buyer at the expense and on behalf of the Seller
in respect of Closed Projects provided that: (i) Seller
has authorised Buyer to undertake such work; and (ii)
Seller has provided to Buyer reasonable assurances
acceptable to Buyer of a payment procedure by Seller for
the work to be performed.
b) Employees. Seller shall terminate the employment of the employees of
the Business at Closing. Buyer shall offer employment to such employees at
Closing on a reasonably equivalent package of compensation and benefits
consistent with Buyer's benefits and compensation for similar executives,
officers and employees. Provided always that Buyer shall provide sufficient
medical benefits to any such employees so that the Seller is not required to
offer continuation coverage under COBRA Seller shall be responsible for any
severance pay due to an employee that does not accept employment with Buyer on
these terms.
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11. Warranties of Buyer. Buyer hereby warrants and represents to Seller as
follows:
A. Incorporation and Corporate Power. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Tennessee with the requisite corporate power and authority to enter into this
Agreement and perform its obligations hereunder.
B. Execution, Delivery; Valid and Binding Agreement. The execution,
delivery and performance of this Agreement by Buyer and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
requisite corporate action, and no other corporate proceedings on its part are
necessary to authorize the execution, delivery or performance of this Agreement.
This Agreement has been duly executed and delivered by Buyer and constitutes the
valid and binding obligation of Buyer, enforceable in accordance with its terms,
except as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights or by general principles of equity.
C. No Breach. The execution, delivery and performance of this Agreement
by Buyer and the consummation by Buyer of the transactions contemplated hereby
do not conflict with or result in any breach of any of the provisions of,
constitute a default under, result in a violation of, result in the creation of
a right of termination or acceleration or any lien, security interest, charge or
encumbrance upon any assets of Buyer, or require any authorization, consent,
approval, exemption or other action by or notice to any court or other
governmental body, under the provisions of the Articles of Incorporation or
Bylaws of Buyer or any indenture, mortgage, lease, loan agreement or other
agreement or instrument by which Buyer is bound or affected, or any law,
statute, rule or regulation or order, judgment or decree to which Buyer is
subject.
D. Governmental Authorities; Consents. Except for the applicable
requirements of the Xxxx Xxxxx Xxxxxx (HSR) Act: (i) Buyer is not required to
submit any notice, report or other filing with any governmental authority in
connection with the execution or delivery by it of this Agreement or the
consummation of the transactions contemplated hereby; and (ii) no consent,
approval or authorization of any governmental or regulatory authority or any
other party or person is required to be obtained by Buyer in connection with its
execution, delivery and performance of this Agreement or the transactions
contemplated hereby.
E. Bank Group Approval. Buyer hereby discloses to the Seller that the
Buyer requires the waiver of certain covenants in the senior revolving credit
facility of the Buyer to consummate the transaction contemplated hereby. Buyer
agrees to use its best efforts to obtain such approval before the Closing Date.
The obligations of Buyer hereunder are subject to obtaining such approval.
12. Brokerage. No third party shall be entitled to receive any
brokerage commissions, finder's fees, fees for financial advisory services or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of either
party other than: (i) Warburg Dillon Read retained by Buyer; and (ii)Xxxxxx
Strategic Divestitures retained by Seller. Each party shall be responsible for
payment of the advisors retained by such party. Each party hereby indemnifies
the other as to the performance of their obligations in this section.
13. Termination.
a. This Agreement may be terminated at any time prior to the Closing by
the mutual consent of Buyer and Seller and either party may terminate this
Agreement if the transaction contemplated hereby has not closed by December 5,
1998,
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b. This Agreement may be terminated by Buyer in the event that: (i) the
conditions set forth in clause 5 have not been satisfied at the Closing Date; or
(ii) Seller is unable to assign to Buyer the minimum number of Required Permits,
Required Leases, the Required Contracts, and the Required Partnerships set forth
in Exhibit H; and (iii) Buyer exercises its rights under clause 2(e);
c. In the event of termination of this Agreement by Buyer or Seller,
this agreement shall become void and there shall be no liability on the party of
either Buyer or Seller, or their respective stockholders, officers or directors
except where either party is in breach.
14. South Riding Agreement.
a) In the event of the termination of the South Riding Agreement,
Seller shall provide a Right of first refusal to the Buyer to buy the property
on the same terms and conditions as provided in the South Riding Agreement.
b) Under the South Riding Agreement, the buyer shall execute the Take
Down Agreement which shall provide inter alia that (a) Buyer's liability
thereunder shall be limited to the deposits delivered thereunder and not
specifically enforceable against Buyer and that Buyer may assign the Take Down
Agreement to affiliates of Buyer and, upon such assignment, be released from
liability thereunder provided that the buyer of the South Riding Business has
the right to approve the marketing name of such affiliates (approval not to be
unreasonably withheld); (b) the Buyer shall have pre-emption rights to purchase
the Continuity Lots set out on Exhibit J; and (c) the buyer of the South Riding
Business will agree to contract with the Buyer for the sale of the Continuity
Lots under the same terms and conditions as are set out in the Letters of
Undertaking attached to the South Riding Agreement for those products presently
offered or as modified by the South Riding Business.
c) In the event that the South Riding Agreement does not close and
Seller closes a similar agreement with another buyer ("Substitute South Riding
Agreement"), the Seller shall procure that the buyer under the Substitute South
Riding Agreement shall enter into a substitute Take Down Agreement with Buyer.
15. Survival, Indemnification
a) Survival of Representations and Warranties. The representations and
warranties of Buyer and Seller contained in sections 8 and 11 shall survive the
Closing for a period of one (1) year following the Closing Date. The remaining
provisions of this Agreement shall survive the Closing Date for a period of 5
years following the Closing Date.
b) Indemnification by Seller. Seller agrees to indemnify in full Buyer
and its officers, directors, employees, agents and stockholders (collectively
"Buyer Indemnified Parties") and hold them harmless against any loss, liability,
deficiency, damage, expense or cost (including reasonable legal expenses)
(collectively "Losses") which Buyer Indemnified Parties may suffer, sustain or
become subject to, as a result of any misrepresentation in any of the
representations and warranties or any failure to perform any obligations of
Seller contained in this Agreement or with respect to any existing or claimed
litigation to which Seller is a party. Seller shall be liable to the Buyer for
any Losses (i) only if Buyer delivers to Seller written notice, setting forth in
reasonable detail the identity, nature and amount of Losses related to such
claim or claims prior to the first anniversary of the Closing Date, (ii) only if
the aggregate amount of all Buyer Losses exceeds U.S.$250,000 (the "Basket
Amount",) in which case Seller shall be obligated to indemnify the Buyer only
for the excess of the aggregate amount of all such Losses over the Basket
Amount, and (iii) in any event, in an aggregate amount not to exceed
U.S.$10,000,000.
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c) Indemnification by Buyer. Buyer agrees to indemnify in full the
Seller, and its officers, directors, employees, agents and stockholders
(collectively "Seller Indemnified Parties") and hold them harmless against any
Losses which Seller Indemnified Parties may suffer, sustain or become subject
to, as a result of any misrepresentation in any of the representations and
warranties or any failure to perform any obligations of Buyer contained in this
Agreement. Buyer shall be liable to the Seller for any Losses (i) only if Seller
delivers to Buyer written notice, setting forth in reasonable detail the
identity, nature and amount of Losses related to such claim or claims prior to
the first anniversary of the Closing Date, (ii) only if the aggregate amount of
all Seller Losses exceeds U.S.$250,000 (the "Basket Amount",) in which case
Buyer shall be obligated to indemnify the Seller only for the excess of the
aggregate amount of all such Losses over the Basket Amount, and (iii) in any
event, in an aggregate amount not to exceed U.S.$10,000,000.
16. Homeowner Warranty.
a) Buyer shall perform all work caused by any warranty claim covered by
an existing warranty given by Seller and relating to any residential housing
units closed by the Seller prior to Closing in Maryland, Virginia, Pennsylvania
or New Jersey.. Buyer reserves the right to forward any claims made under a
third party warranty program such as RWC and shall inform the Seller of such
disposition. Seller shall promptly reimburse Buyer for any work performed by
Buyer over and above expenditure incurred in excess of the aggregate provisions
for such warranty work in the Final Balance Sheet. The amount to be reimbursed
shall be the cost (including wages and benefits) of Buyer's employees allocated
to the performance of the warranty workplus a 7.5% percent xxxx up over and
above the cost of the work performed.
b) Buyer agrees to provide estimates to Seller for any warranty work
items in excess of $2,000 for Seller's review before Buyer performs such work.
If Seller elects to proceed, Seller shall authorize the recommended work within
three (3) business days of notification by the Buyer as to claims on houses
arising less than one year from the closing of the subject house and within
seven (7) days otherwise. If Seller elects, Seller may provide to Buyer a
recommendation of an alternative work procedure. In the event that Seller does
not so respond within the applicable period, the Buyer shall proceed with the
repair work. In the event that the Seller provides an alternative
recommendation, Buyer shall determine if the alternative work order is
appropriate. In the event of a dispute between the Buyer and Seller as to this
repair work, then: (i) Seller shall be responsible for the repair work; (ii)
Seller shall and does hereby indemnify the Buyer for all losses, costs, damages,
fees, or liabilities with respect to any claim made against the Buyer with
respect to Seller's failure to perform such repair work; and (iii) Seller, and
in the absence of prompt compliance by Seller, Buyer on behalf of Seller, shall
send a letter advising the claimant that warranty work is the Seller's
responsibility.
c) The provisions of this Section shall not operate as an assumption by
the Buyer of any liability of the Seller for any warranty or other product
liability claims save that Buyer undertakes to perform such work with all care
and diligence using locally accepted building practices and standards. Rather,
the provisions of this section shall operate as a mechanism for the performance
of work on behalf of the Seller by the Buyer under certain circumstances.
Furthermore, the Seller shall remain liable for the warranty claims by third
party homeowners, subject to any breach by Buyer of its performance obligations
under this clause, and the Seller hereby indemnifies the Buyer against all
losses, costs, damages, fees, or liability to any third party home owner arising
under home owner warranty claims on homes which close prior to Closing. Buyer
hereby indemnifies Seller against liabilities arising for breach of its
obligations under this clause in respect of homes which close after the Closing
Date.
17. Miscellaneous.
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a. Further Assurances.
Seller and Buyer each agree that on after the Closing Date,
they shall take all appropriate action (without incurring any out-of-pocket
expenses) and execute any documents, instruments or conveyances of any kind
which may be reasonably necessary or advisable to carry out any of the
provisions hereof, including, without limitation, putting Buyer in possession
and operating control of the Net Assets and transferring all permits and
licenses to Buyer that are transferable.
b. Cooperation and exchange of Information.
i. Seller and Buyer will provide each other with such
cooperation and information as either of them reasonably may request of the
other in filing any tax return, amended return or claim for refund, determining
a liability for taxes or a right to a refund of Taxes or in conducting any audit
or proceeding in respect of taxes. If requested, Seller shall in addition
provide Buyer with its previous 3 years' financial statements. Such cooperation
and information shall include providing copies of relevant tax returns or
portions thereof, together with accompanying schedules and related work paper
and documents relating to rulings or other determination by taxing authorities.
Each party shall make its employees available on a mutually convenient basis to
provide explanation of any documents or information provided hereunder: and
ii. Both parties shall provide the other with full access at
all reasonable times without charge to the offices, properties, books, records
officers, employees and other items of the Business relating to the operation of
the Business and otherwise provide all such assistance as is reasonably
requested by Seller in defending or prosecuting any litigation involving such
party (other than litigation between the parties) or the operations of the
Business prior to the Closing Date; and
iii. Each party agrees to maintain confidentiality to the
information obtained in connection with the exercise of any of the foregoing
rights other than the obligation to disclose such information in any litigation.
c. Amendment and Waiver. This Agreement may not be amended or waived
except in a writing executed by the party against which such amendment or waiver
is sought to be enforced. No course of dealing between or among any persons
having any interest in the Agreement will be deemed effective to modify or amend
any part of this Agreement or any rights or obligations of any person under or
by reason of this Agreement.
d. Notices. All notices, demands and other communications to be given
or delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally delivered or three
business days after being mailed by first class U.S. mail, return receipt
requested, or when receipt is acknowledged, if sent by facsimile, telecopy or
other electronic transmission device or one business day after deposit in
Federal Express or other nationally recognized, overnight delivery service.
Notices, demands and communications to Buyer and Seller will, unless another
address is specified in writing, be sent to the address indicated below:
Notices to Seller: Trafalgar House Property Inc.
Attention: Xxxxxxxx Xxxxxx, Esq.
x/x Xxx Xxxxxxxx Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopy: (000) 000-0000
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Notices to Buyer: Beazer Homes Corp.
0000 Xxxxxxxxx Xxxxxxxx Xxxx Xxxxx X-000
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Senior Vice President
of Corporate Development
With a copy to: Paul, Hastings, Xxxxxxxx & Xxxxxx
Suite 2400, 600 Peachtree Street, N.E.
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx, Esq.
e. Assignment. This Agreement and all of the provisions hereof will be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, except that neither this Agreement nor any of
the rights, interests or obligations hereunder may be assigned by either party
hereto without the prior written consent of the other party hereto subject to
the provisions of the next sentence. Buyer shall be entitled to transfer and
assign all or portions of this Agreement to third parties at Closing as long as
Buyer and BZH remain obligated hereunder but subject to clause 7 (f).
f. Complete Agreement. This Agreement and the Exhibits hereto and the
other documents referred to herein contain the complete agreement between the
parties and supersede any prior understandings, agreements or representations by
or between the parties, written or oral, which may have related to the subject
matter hereof in any way.
g. Governing Law. The internal law, without regard to conflicts of law
principles, of the State of New York, will govern all questions concerning the
construction, validity and interpretation of this Agreement and the performance
of the obligations imposed by this Agreement. All parties hereby submit to and
designate the courts located in New York, New York, in either State or Federal
Courts, as the jurisdiction and venue for the interpretation of this Agreement
and resolution of disputes hereunder. BUYER AND SELLER AGREE TO AND THEY HEREBY
DO WAIVE TRIAL BY JURY IN ANY ACTION PROCEEDING OR COUNTERCLAIM BROUGHT BY
EITHER OF THE PARTIES HERET AGAINST THE OTHER ON ANY MATTERS WHATSOEVER ARISING
OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT.
h. Time of the Essence. Time is of the essence of this
Agreement.
i. Press Releases and Public Announcements. No Party shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement prior to the Closing without the prior written approval
of the other Party; provided, however, that any Party may make any public
disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities in which
case the disclosing Party will use its reasonable best efforts to advise the
other Party prior to making the disclosure and shall not use the name of the
other Party without its permission unless required by applicable law
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j. Letters of Credit. All letters of credit issued pursuant to
this Agreement shall be drawable 14 days prior to their respective expiry dates
without the delivery of a qualified replacement letter of credit to the
beneficiary provided the beneficiary has given prior written notice of its
intention to draw the letter of credit affected. Where there is no default, the
beneficiary shall hold all cash received under a drawdown of a letter of credit
in a separate bank account and shall use the proceeds in accordance with the
provisions of the applicable letter of credit. The beneficiary shall return the
amount drawn upon the posting of a qualified replacement letter of credit for
the drawn letter of credit.
18. GUARANTEES.
Beazer Homes U.S.A., Inc. ("BZH") hereby guaranties the performance of
all obligations of the Buyer hereunder including all representations and
warranties and all indemnities by the Buyer hereunder. BZH acknowledges that it
will benefit from this transaction through its share ownership of Buyer, and,
accordingly, has received good and adequate consideration for the execution and
delivery of this guaranty. BZH agrees that the Seller may administer this
Agreement so as to make modifications and amendments in its discretion with
Buyer's written consent and such modifications and amendments shall not impair
or diminish the binding and enforce ability of this guaranty. BZH agrees that
the Seller may enforce any term, condition, representation, warranty or
indemnity of the Buyer hereunder against BZH without first filing suit or
otherwise attempting to enforce or exhaust any remedies available to the Seller
hereunder.
Kvaerner PLC ("Kvaerner") hereby guarantees the performance of all
obligations of the Seller hereunder including all representations and warranties
and all indemnities by the Seller hereunder. Kvaerner hereby agrees that it has
received good and adequate consideration for the execution and delivery of this
Guaranty as well as the performance of its obligations hereunder in that it is
the principal and majority shareholder of the Seller. Kvaerner agrees that the
Seller may administer this Agreement so as to make modifications and amendments
in its discretion with Seller's written consent and such modifications and
amendments shall not impair or diminish the binding and enforce ability of this
guaranty. Kvaerner agrees that the Buyer may enforce any term, condition,
representation, warranty or indemnity of the Seller hereunder against Kvaerner
without first filing suit or otherwise attempting to enforce or exhaust any
remedies available to Buyer hereunder.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
TRAFALGAR HOUSE PROPERTY, INC.
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
BEAZER HOMES CORP.
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
KVAERNER PLC
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
BEAZER HOMES USA, INC.
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
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EXHIBITS
A. AUGUST 29, 1998 BALANCE SHEET
B. ASSUMED LIABILITIES
C. LAND
D. LEASES
E. CONTRACTS
F. PARTNERSHIP AGREEMENTS
G. PERFORMANCE GUARANTEES
I. REQUIRED CONTRACTS, REQUIRED LEASES, REQUIRED PERMITS, REQUIRED
PARTNERSHIPS
J. OTHER LAND
K. CONTINUITY LOTS
L. ESCROW AGREEMENT
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