Exhibit 10.19 (a)
AGREEMENT
This Agreement (the "Agreement") is entered into as of the 1st day of
April, 1996, between M.D.C. Holdings, Inc., a Delaware corporation (the
"Company"), M.D.C. Residual Holdings, Inc., a Delaware corporation and a wholly
owned subsidiary of the Company ("MDC Sub"), Financial Asset Management
Corporation, a Delaware corporation and a wholly owned subsidiary of MDC Sub
("Old FAMC"), Financial Asset Management LLC, a Colorado limited liability
company ("FAMC"), and Xxxxxxx X. Xxxxxx ("Xxxxxx").
RECITALS
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1. Xxxxxx has resigned effective as of March 31, 1996 from all
of his officer positions with the Company and its
subsidiaries and as a director of the Company and its
subsidiaries.
2. Xxxxxx, Old FAMC and MDC Sub are forming FAMC, pursuant
to which Xxxxxx is contributing $400,000 in cash and a
promissory note in the amount of $2,100,000 to FAMC, Old
FAMC is transferring an undivided 98.75% interest in
Management Agreements with AIC and CAI (the "Management
Agreements"), and certain other rights and goodwill (the "Old
FAMC Assets") to FAMC and MDC Sub is transferring an undivided
1.25% interest in the Management Agreements and certain other
rights and goodwill (the "MDC Sub Assets") to FAMC in exchange
for Xxxxxx'x 20% membership interest in FAMC (the "FAMC
Interest"), Old FAMC's 79% membership interest in FAMC and MDC
Sub's 1% membership interest in FAMC, respectively.
3. Xxxxxx has agreed to serve as President and Chief Executive
Officer of FAMC pursuant to an Employment Agreement dated as
of the date hereof in the form attached hereto as
Exhibit A (the "Employment Agreement").
4. The Company, in connection with Xxxxxx'x resignation from his
positions with the Company, has agreed to purchase from Xxxxxx
425,642 shares of the Company's common stock, $.01 par value
("MDC Shares"), owned by Xxxxxx.
5. MDC Sub, Old FAMC and Xxxxxx will enter into an operating
agreement in the form attached hereto as Exhibit B
(the "Operating Agreement").
6. Xxxxxx and FAMC desire to have options to sell and purchase,
respectively, the FAMC Interest upon the terms and
conditions set forth herein.
AGREEMENT
---------
NOW, THEREFORE, the parties hereto agree as follows:
1. Issuance and Acquisition. Simultaneously with the execution
and delivery of this Agreement:
(i) Old FAMC is contributing the Old FAMC Assets to FAMC in
exchange for an 79% membership interest in FAMC. MDC Sub is contributing the MDC
Sub Assets to FAMC in exchange for a 1% membership interest in FAMC. Xxxxxx is
contributing $2,500,000 to FAMC, payable $400,000 in cash and $2,100,000 by
delivery of the Promissory Note in the form attached hereto as Exhibit C (the
"Note"), in exchange for the FAMC Interest at the Closing defined herein. In
connection with the Note, the Company shall deliver to Xxxxxx at the beginning
of each month during the term of the Note written notice of the most current
M.D.C. Holdings, Inc. Corporate Borrowing Rate applicable under the Note. The
Note shall be secured pursuant to a Pledge Agreement in the form attached hereto
as Exhibit D (the "Pledge Agreement"); and
(ii) The Company is purchasing from Xxxxxx, and Xxxxxx is
selling to the Company, upon the terms and conditions set forth in this
Agreement, the MDC Shares at a purchase price of $7.125 per share, an aggregate
of $3,032,699.25.
2. Closing; Closing Date; and Delivery of Shares and FAMC
Interest. The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place on April 1, 1996, at the offices of the
Company, 0000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000
(the "Closing Date"). At the Closing:
(a) FAMC is delivering to Xxxxxx the FAMC Interest and
the Pledge Agreement;
(b) Xxxxxx is delivering to FAMC $400,000 in good funds,
the Note and the Pledge Agreement;
(c) the Company is delivering to Xxxxxx in good funds in full
payment for the MDC Shares in the amount of $2,706,114.25 ($3,032,699.25 less
$309,196 outstanding principal and $17,389 accrued interest on Xxxxxx'x Xxxxx
14, July 27 and October 26, 1995 Notes (the "Stock Purchase Notes")), together
with the Stock Purchase Notes marked "Cancelled";
(d) Xxxxxx is delivering to the Company the MDC Shares;
(e) the Company and Xxxxxx are delivering to each other
the Employment Agreement;
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(f) each party is delivering to the other parties hereto
a receipt of the documents, instruments or consideration referenced in this
Section 2;
(g) Xxxxxx, Old FAMC and MDC Sub are delivering the
Operating Agreement; and
(h) the Company, Old FAMC and FAMC are delivering the
Service Agreement.
3. Options. All options to purchase shares of common stock of
the Company held by Xxxxxx as of the date of this Agreement shall remain
outstanding in accordance with their respective terms.
4. Put/Call Agreements.
(a) Put Rights. On and after January 1, 1997, Xxxxxx shall
have the option (the "Put Option"), in his sole discretion, exercisable upon 90
days' prior written notice to FAMC, to elect to sell to FAMC, and in such event
FAMC shall purchase from Xxxxxx, for cash payable at closing on the closing date
specified in such notice, all of the FAMC Interest at the Put/Call Price as
defined in Section 4(d) below. The Put Option shall expire on December 31, 1998.
At any time during the term of the Put Option, should Xxxxxx'x employment under
the Employment Agreement terminate pursuant to Section 4(a) or 4(b) thereof,
such termination shall be deemed for purposes hereof an election by Xxxxxx to
exercise the Put Option effective as of the date of such termination.
(b) Call Rights. At all times on and after January 1, 1997,
FAMC shall have the option (the "Call Option"), in its sole discretion,
exercisable upon written notice to Xxxxxx, to purchase, and in such event Xxxxxx
shall sell to FAMC, for cash payable at closing on the closing date specified in
such notice, but not later than 30 days after delivery of such notice, all of
the FAMC Interest at the Put/Call Price.
(c) Change in Control. If a "Change in Control" as defined in
the Employment Agreement is closed at any time after the date of this Agreement
and on or before December 31, 1998, absent any other agreement to the contrary
between Xxxxxx and FAMC, Xxxxxx shall sell and FAMC shall purchase the FAMC
Interest at the Put/Call Price, payable in cash on the closing date of the
Change in Control.
(d) Put/Call Price. The price at which Xxxxxx shall sell, and
FAMC shall purchase the FAMC Interest pursuant to this Section 4 (the "Put/Call
Price") shall equal the following: (i) $2,500,000, as (A) increased for Xxxxxx'x
proportionate share (20%) of earnings of FAMC for all periods after March 31,
1996 to the end of the calendar month in which the notice of exercise of the Put
Option or the Call Option, as the case may be, was delivered (the "Operative
Period") calculated in accordance with generally accepted accounting principles
as in
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effect on the date hereof ("GAAP") and (B) decreased for (1) Xxxxxx'x
proportionate share (20%) of losses of FAMC for the Operative Period, calculated
in accordance with GAAP, and (2) all distributions in respect of the FAMC
Interest made during the Operative Period less (ii) the outstanding principal
amount of the Note plus accrued interest thereon as of the closing date for such
sale and purchase. Upon payment of the Put/Call Price, the Note shall be
cancelled and returned to Xxxxxx. For purposes of this paragraph, the earnings
or losses of FAMC shall exclude (i) the interest paid or accrued to FAMC in
respect of loans from FAMC to the Company or any wholly-owned subsidiary of the
Company and (ii) the amortization, gain or loss, if any, recorded with respect
to the Management Agreements. In the event of any dispute over the Put/Call
Price, the Company's independent public accountants shall be engaged to
calculate and certify the Put/Call Price prior to the scheduled closing.
(e) For purposes hereof, the Company guarantees to Xxxxxx
payment of the Put/Call Price in accordance with the terms of this Section 4,
including any amounts for which Xxxxxx would be liable to third parties, if any,
caused by FAMC's payment of the Put/Call Price to Xxxxxx.
5. Representations and Warranties of the Company. The Company
represents and warrants to Xxxxxx as follows:
(a) the Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power to execute, carry out and perform the provisions
of, and transactions set forth in, this Agreement and the Employment Agreement
and to purchase the MDC Shares;
(b) the execution, delivery and performance by the Company of
this Agreement, the Service Agreement and the Employment Agreement and the
purchase from Xxxxxx of the MDC Shares have been duly authorized by the Company
as evidenced by the execution of this Agreement, the Service Agreement and the
Employment Agreement by the Chairman of the Board for, and on behalf of, the
Company;
(c) neither the execution, delivery, performance of, or
compliance with, this Agreement or the Employment Agreement will result in any
breach or violation of, or be in conflict with or constitute a default under,
any mortgage, indenture, contract, agreement, lease, instrument, judgment,
decree, order, statute, rule, regulation or restriction by which the Company is
bound or affected;
(d) no consent, authorization, approval, permit, order of, or
registration or filing by, the Company with any governmental or regulatory
authority or any other person will be required in connection with the execution
and delivery of this Agreement and the performance of the transactions
contemplated hereby, except for routine filings or notifications with the United
States Securities and Exchange Commission (the "Commission") and/or the New York
Stock Exchange, Inc. and The Pacific Stock Exchange Incorporated, and except for
the consent
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and approval of the Independent Directors of AIC and CAI to the transfer and
contribution of the Management Agreements to FAMC; and
(e) no person, as a result of any action by the Company in
connection with the transactions set forth in this Agreement, has or will have,
to the best of the Company's knowledge, any right, interest or claim against or
upon the Company or Xxxxxx for any commission, fee or any other compensation as
a finder or broker or for acting in any similar capacity.
(f) the Company, as the issuer of the MDC Shares, has
available to it all information which it deems necessary and advisable in
connection with its decision to purchase the MDC Shares and has no intention of
disposing of the MDC Shares except in accordance with applicable law.
(g) the Company has not omitted to disclose to Xxxxxx or
misrepresented to Xxxxxx any material fact known to its senior management
relating to its purchase of the MDC Shares, its employment of Xxxxxx pursuant to
the Employment Agreement or the transactions contemplated by this Agreement.
6. Representations and Warranties of MDC Sub. MDC Sub represents
and warrants to Xxxxxx as follows:
(a) MDC Sub is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power to execute, carry out and perform the provisions
of, and transactions set forth in, this Agreement and the Operating Agreement;
(b) the execution, delivery and performance by MDC Sub of this
Agreement and the Operating Agreement have been duly authorized by MDC Sub as
evidenced by the execution of this Agreement and the Operating Agreement by the
Chairman of the Board for, and on behalf of, MDC Sub;
(c) neither the execution, delivery, performance of, or
compliance with, this Agreement, the Operating Agreement or the Assignment of
the Management Agreements will result in any breach or violation of, or be in
conflict with or constitute a default under, any mortgage, indenture, contract,
agreement, lease, instrument, judgment, decree, order, statute, rule, regulation
or restriction by which MDC Sub is bound or affected;
(d) no consent, authorization, approval, permit, order of, or
registration or filing by, MDC Sub with any governmental or regulatory authority
or any other person will be required in connection with the execution and
delivery of this Agreement or the Operating Agreement and the performance of the
transactions contemplated hereby or by the Operating
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Agreement except for the consent and approval of the Independent Directors of
AIC and CAI to the transfer and contribution of the Management Agreements to
FAMC; and
(e) no person, as a result of any action by MDC Sub in
connection with the transactions set forth in this Agreement or in the Operating
Agreement, has or will have, to the best of MDC Sub's knowledge, any right,
interest or claim against or upon MDC Sub or Xxxxxx for any commission, fee or
any other compensation as a finder or broker or for acting in any similar
capacity.
7. Representations and Warranties of Old FAMC. Old FAMC
represents and warrants to Xxxxxx as follows:
(a) Old FAMC is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power to execute, carry out and perform the provisions
of, and transactions set forth in, this Agreement;
(b) the execution, delivery and performance by Old FAMC of
this Agreement, the Operating Agreement and the Service Agreement have been duly
authorized by Old FAMC as evidenced by the execution of this Agreement by the
Chairman of the Board for, and on behalf of, Old FAMC;
(c) neither the execution, delivery, performance of, or
compliance with, this Agreement, the Operating Agreement, the Service Agreement
or the Assignment of the Management Agreements will result in any breach or
violation of, or be in conflict with or constitute a default under, any
mortgage, indenture, contract, agreement, lease, instrument, judgment, decree,
order, statute, rule, regulation or restriction by which Old FAMC is bound or
affected;
(d) no consent, authorization, approval, permit, order of, or
registration or filing by, Old FAMC with any governmental or regulatory
authority or any other person will be required in connection with the execution
and delivery of this Agreement and the performance of the transactions
contemplated hereby, except for the consent and approval of the Independent
Directors of AIC and CAI to the transfer and contribution of the Management
Agreements to FAMC; and
(e) no person, as a result of any action by Old FAMC in
connection with the transactions set forth in this Agreement, has or will have,
to the best of Old FAMC's knowledge, any right, interest or claim against or
upon Old FAMC or Xxxxxx for any commission, fee or any other compensation as a
finder or broker or for acting in any similar capacity.
8. Representations and Warranties of FAMC. FAMC represents and
warrants to Xxxxxx as follows:
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(a) FAMC is a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Colorado and has
all requisite company power to execute, carry out and perform the provisions of,
and transactions set forth in, this Agreement, the Service Agreement and the
Pledge Agreement;
(b) the execution, delivery and performance by FAMC of this
Agreement, the Service Agreement and the Pledge Agreement have been duly
authorized by FAMC as evidenced by the execution of this Agreement by the
Manager of, and on behalf of, FAMC;
(c) neither the execution, delivery, performance of, or
compliance with, this Agreement, the Pledge Agreement, the Service Agreement or
the Assignment of the Management Agreements will result in any breach or
violation of, or be in conflict with or constitute a default under, any
mortgage, indenture, contract, agreement, lease, instrument, judgment, decree,
order, statute, rule, regulation or restriction by which FAMC is bound or
affected;
(d) no consent, authorization, approval, permit, order of, or
registration or filing by, FAMC by any governmental or regulatory authority or
any other person will be required in connection with the execution and delivery
of this Agreement, the Pledge Agreement, the Service Agreement or the Assignment
of the Management Agreements and the performance of the transactions
contemplated hereby and thereby, except for the consent and approval of the
Independent Directors of AIC and CAI to the transfer and contribution of the
Management Agreements to FAMC;
(e) no person, as a result of any action by FAMC in connection
with the transactions set forth in this Agreement, has or will have, to the best
of FAMC's knowledge, any right, interest or claim against or upon FAMC or Xxxxxx
for any commission, fee or any other compensation as a finder or broker or for
acting in any similar capacity.
9. Representations and Warranties of Xxxxxx. Xxxxxx represents
and warrants to the Company, MDC Sub, Old FAMC and FAMC as follows:
(a) Xxxxxx has all requisite power and authority to enter
into this Agreement and the Operating Agreement, to sell the MDC Shares, and to
acquire the FAMC Interest;
(b) this Agreement and the Operating Agreement have been
duly executed and delivered by Xxxxxx;
(c) neither the execution, delivery, performance of, or
compliance with, this Agreement or the Operating Agreement will result in any
breach or violation of, or be in conflict with or constitute a default under,
any mortgage, indenture, contract, agreement, lease, instrument, judgment,
decree, order, statute, rule, regulation or restriction by which Xxxxxx is bound
or affected;
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(d) no consent, authorization, approval, permit, order of or
registration or filing by Xxxxxx with any governmental regulatory authority or
any other person who is or will be required in connection with the execution and
delivery of this Agreement or the Operating Agreement, the sale to the Company
of the MDC Shares except for routine filings with the Commission and/or the New
York Stock Exchange, Inc. and The Pacific Stock Exchange Incorporated;
(e) Xxxxxx has good and marketable title to the MDC Shares,
subject to payment by Xxxxxx at the Closing of the outstanding principal and all
accrued interest due on: (i) the Promissory Note payable by Xxxxxx to the
Company dated April 14, 1995 in the original principal amount of $206,434.00;
(ii) the Promissory Note payable by Xxxxxx to the Company dated July 27, 1995 in
the original principal amount of $72,970.00; and (iii) the Promissory Note
payable by Xxxxxx to the Company dated October 26, 1995 in the original
principal amount of $29,792.00, all issued pursuant to the Executive Option
Purchase Program and secured by certain of the MDC Shares, free and clear of any
liens, charges, encumbrances or claims of any nature whatsoever, and upon
execution and delivery of this Agreement by Xxxxxx to the Company and
consummation of the Closing referenced in Section 2, the Company shall receive
good and marketable title to the MDC Shares, free and clear of any liens,
charges, encumbrances or claims of any nature whatsoever.
(f) no person, as a result of any action by Xxxxxx, in
connection with the transactions set forth in this Agreement or in the Operating
Agreement, has or will have, to the best of Xxxxxx'x knowledge, any right,
interest or claim against or upon the Company for any commission, fee or other
compensation as a finder or broker, or for acting in any similar capacity;
(g) by reason of Xxxxxx'x employment relationship with the
Company, Old FAMC and their respective affiliates and his experience in
financial and business matters in general, he is capable of evaluating the MDC
Shares and the FAMC Interest and the transactions regarding such securities
contemplated hereby;
(h) Xxxxxx has been furnished with all information
relating to the Company and FAMC and their respective prospects as he has
requested, and to ask all questions and receive all answers as he has requested;
(i) Xxxxxx has been afforded access to all documents, books,
accounts and records relating to the Company and FAMC and has performed all
investigations, including a careful review of the Operating Agreement, which he
has deemed necessary and advisable in connection with his decision to sell to
the Company the MDC Shares and acquire the FAMC Interest; and
(j) Xxxxxx (i) has no present intention to sell or otherwise
dispose of the FAMC Interest, (ii) is acquiring the FAMC Interest for his own
account, (iii) is an "accredited
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investor" as that term is defined in Rule 501(a) of Regulation D under the
Securities Act of 1933, and (iv) shall not sell or otherwise transfer the FAMC
Interest except in accordance with Section 4 of this Agreement and the terms of
the Operating Agreement.
(k) Xxxxxx has not omitted to disclose or misrepresented
any material fact known to him relating to his sale of the MDC Shares.
(l) Xxxxxx has no knowledge that any of the
representations and warranties of the Company, MDC Sub and Old FAMC herein are
inaccurate.
10. Condition to Closing. Closing of this Agreement shall be
conditioned on receipt of the consents of the Independent Directors of AIC and
CAI to the transfer and contribution of the Management Agreements to FAMC.
11. Indemnifications. The Company, MDC Sub, Old FAMC and FAMC shall
indemnify and hold harmless Xxxxxx, and Xxxxxx shall indemnify and hold harmless
the Company, MDC Sub, Old FAMC and FAMC from any and all losses, costs,
liabilities, damages and expenses (including reasonable attorneys' fees and
reasonable costs of investigation), resulting from any breach of a
representation or warranty made by the indemnifying party in this Agreement.
12. Release. Except as otherwise expressly provided in this Agreement,
the Employment Agreement, the Note and Pledge Agreement, Xxxxxx hereby releases
the Company, AIC, CAI and their respective subsidiaries, officers, directors and
employees from any claims, demands and causes of action he has or may have
against any of them arising out of his employment by the Company or such
subsidiaries as of the date of this Agreement.
13. Press Releases. Neither the Company, MDC Sub, Old FAMC, FAMC nor
Xxxxxx shall issue any press release or other public statement regarding the
subject matter of this Agreement without affording the other party the
opportunity to review and consent to such disclosure, which consent shall not be
unreasonably withheld; provided however, that the Company, MDC Sub, Old FAMC or
FAMC may issue such press release or other public statement if advised by its
counsel that such disclosure is required by law or stock exchange regulation.
14. Expenses. Xxxxxx agrees to pay 50% of the out-of-pocket expenses of
the Company, MDC Sub, Old FAMC and FAMC, including attorney's fees and expenses,
incurred in connection with this Agreement, the Employment Agreement, the Note,
the Pledge Agreement, the Operating Agreement and all other documents
contemplated hereby and thereby, and the transactions contemplated hereby and
thereby.
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15. Survival. The respective representations and warranties and
indemnifications of the parties contained in this Agreement shall survive the
Closing and shall remain in full force and effect until December 31, 1998.
16. Miscellaneous. (a) This Agreement and the attached Exhibits
supersede all prior agreements and understandings between the parties with
respect to the subject matter hereof and may not be modified or terminated
orally; and (b) no modification, termination or attempted waiver shall be valid
unless in writing signed by the party against whom the same is thought to be
enforced.
17. Notices. Any notice, consent or other communication made or given
in connection with this Agreement shall be in writing and shall be deemed to
have been duly given when delivered by United States registered or certified
mail, return receipt requested, to the parties at the following addresses or at
such other address as a party may specify by notice to the other.
To Xxxxxx:
Xxxxxxx X. Xxxxxx
0000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
To the Company, MDC Sub, Old FAMC or FAMC:
M.D.C. HOLDINGS, INC.
0000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: General Counsel
18. Governing Law. This Agreement shall be governed by and
construed according to the laws of the State of Colorado. As material
consideration for entering into this Agreement, each of Xxxxxx, the Company,
MDC Sub, Old FAMC and FAMC agrees that any controversy or claim arising out
of or relating to this Agreement, or the breach thereof, shall be settled by
arbitration administered by the American Arbitration Association in
accordance with the Commercial Arbitration Rules, and judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. All parties expressly agree that costs and attorneys fees related to
any such arbitration shall be awarded to the prevailing party. Any arbitration
commenced pursuant to this paragraph shall be conducted in the Denver
metropolitan area in the State of Colorado.
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19. Captions and Paragraph Headings. Captions and paragraph
headings used herein are for convenience of the parties, are not a part of this
Agreement and shall not be used in construing it.
20. Gender; Plural. Where necessary or appropriate to the meaning
of, the use of the singular and plural shall be deemed to include each other,
and the use of any gender shall be deemed to include any other gender where
appropriate to the meaning hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first set forth above.
M.D.C. HOLDINGS, INC.
By:
-----------------------------
Xxxxx X. Xxxxx,
Chairman of the Board
M.D.C. RESIDUAL HOLDINGS, INC.
By:
-----------------------------
Name: Xxxxxx X. Xxxxx
--------------------
Vice President
FINANCIAL ASSET MANAGEMENT
CORPORATION
By:
-----------------------------
Name: Xxxxx X. Xxxxx
---------------------
Chairman of the Board
FINANCIAL ASSET MANAGEMENT LLC
By:
-----------------------------
Name: Xxxxxxx X. Xxxxxx
---------------------
Manager
-------------------------------
Xxxxxxx X. Xxxxxx
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