Exhibit 10.1: Master Transaction Agreement, dated February 9, 2005
MASTER TRANSACTION AGREEMENT
BY AND AMONG
MERITAGE HOMES CORPORATION,
MERITAGE HOMES OF FLORIDA, INC.,
COLONIAL HOMES, INC.,
COLONIAL SHORES, L.L.C.
AND
THE COLONIAL COMPANY
Dated February 9, 2005
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS........................................................... 2
1.1 Definitions............................................................... 2
ARTICLE II PURCHASE AND SALE OF ASSETS........................................... 8
2.1 Closing................................................................... 8
2.2 Assets to be Purchased.................................................... 9
2.3 Excluded Assets Not Being Transferred; Option Agreement................... 11
2.4 Liabilities............................................................... 12
2.5 Purchase Price; Adjustment; and Warranty and Reserve Administration....... 14
2.6 Allocation of Purchase Price.............................................. 16
2.7 Risk of Loss.............................................................. 16
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER AND MERITAGE.................. 16
3.1 Organization and Qualification............................................ 16
3.2 Authority Relative to this Agreement...................................... 17
3.3 No Conflicts.............................................................. 17
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER.............................. 17
4.1 Organization and Qualification............................................ 17
4.2 Authority Relative to this Agreement...................................... 17
4.3 Legal Capacity and Authority of Selling Parties........................... 18
4.4 No Conflicts.............................................................. 18
4.5 No Consents............................................................... 18
4.6 Ownership Interests....................................................... 18
4.7 Financial Statements...................................................... 18
4.8 Absence of Undisclosed Liabilities........................................ 18
4.9 No Material Adverse Changes............................................... 19
4.10 Absence of Certain Developments........................................... 19
4.11 Permitted Liens; Good Title to and Condition of Assets.................... 20
4.12 Legal Descriptions of Real Property....................................... 21
4.13 Real Property............................................................. 21
4.14 Acquired Contracts........................................................ 24
4.15 Warranties................................................................ 25
4.16 Environmental Matters..................................................... 25
4.17 Tax Matters............................................................... 27
4.18 Restrictions on Business Activities....................................... 29
4.19 Intellectual Property..................................................... 29
4.20 Litigation................................................................ 29
4.21 Employees................................................................. 30
4.22 Employee Benefit Plans.................................................... 30
4.23 Insurance................................................................. 31
4.24 Affiliate Transactions.................................................... 31
4.25 Compliance with Laws...................................................... 32
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4.26 Permits................................................................... 32
4.27 Membership Records; Minute Books.......................................... 33
4.28 Budgets................................................................... 33
4.29 Hurricane Damage.......................................................... 33
4.30 Disclosure................................................................ 33
4.31 Condominiums.............................................................. 33
4.32 Retail Sales Contracts.................................................... 34
4.33 Covenants, Conditions and Restrictions.................................... 34
4.34 Associations.............................................................. 34
4.35 Coastal Construction Control Line......................................... 35
ARTICLE V CONDUCT OF COLONIAL PENDING THE CLOSING............................... 35
5.1 Conduct of Business Pending the Closing................................... 35
5.2 Business Relationships.................................................... 36
5.3 Notification of Certain Matters........................................... 37
5.4 Required Approvals........................................................ 37
ARTICLE VI ADDITIONAL AGREEMENTS................................................. 37
6.1 Employment; Transition Matters............................................ 37
6.2 Break-Up Fee.............................................................. 38
6.3 No Negotiations........................................................... 38
6.4 Public Announcements...................................................... 39
6.5 Confidentiality........................................................... 39
6.6 Further Assurances........................................................ 39
6.7 Right to Enter and Inspect................................................ 40
6.8 Tax on Prior Sales........................................................ 40
6.9 Transfer of Permits....................................................... 40
6.10 Intentionally Omitted..................................................... 41
6.11 Declarant's and Developer's Rights........................................ 41
6.12 Intentionally Omitted..................................................... 41
6.13 General Contractor License; Agent......................................... 41
6.14 Sterling Oaks Subdivision................................................. 41
6.15 Right of First Refusal.................................................... 42
6.16 Intentionally Omitted..................................................... 42
6.17 Xxxxx River Lease......................................................... 42
6.18 Association Reserves...................................................... 42
ARTICLE VII CONDITIONS............................................................ 42
7.1 Conditions to Obligation of Seller........................................ 42
7.2 Conditions to Obligations of Meritage and Buyer........................... 43
ARTICLE VIII CLOSING............................................................... 45
8.1 Seller's Obligations...................................................... 45
8.2 Buyer's Obligations....................................................... 47
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8.3 Transfer Fees, Title Costs, and Closing Costs and Other Fees; Prorations.. 47
ARTICLE IX SURVIVAL AND INDEMNITIES.............................................. 48
9.1 Survival of Representations and Warranties................................ 48
9.2 Nature of Statements...................................................... 48
9.3 Arbitration............................................................... 48
ARTICLE X TERMINATION/REMEDIES.................................................. 49
10.1 Termination............................................................... 49
10.2 Effect of Termination..................................................... 49
10.3 Specific Performance...................................................... 49
ARTICLE XI GENERAL PROVISIONS.................................................... 49
11.1 Notices................................................................... 49
11.2 Counterparts.............................................................. 50
11.3 Governing Law; Venue...................................................... 50
11.4 Assignment................................................................ 51
11.5 Gender and Number......................................................... 51
11.6 Schedules and Exhibits.................................................... 51
11.7 Waiver of Provisions...................................................... 51
11.8 Costs..................................................................... 51
11.9 Amendment................................................................. 51
11.10 Severability.............................................................. 51
11.11 Binding Effect............................................................ 51
11.12 Construction.............................................................. 52
11.13 Time Periods.............................................................. 52
11.14 Headings.................................................................. 52
11.15 Commission................................................................ 52
11.16 Access to Records......................................................... 52
11.17 Entire Agreement.......................................................... 52
11.18 Enforcement of Rights..................................................... 52
11.19 Radon Gas................................................................. 53
11.20 Taxes..................................................................... 53
11.21 CDD....................................................................... 53
11.22 Association Disclosure.................................................... 53
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TABLE OF CONTENTS
EXHIBIT LIST
Exhibit A - Asset Agreement
Exhibit B - Real Property Agreement
Exhibit C - Option Agreement
Exhibit D - Indemnification Agreement
Exhibit E - Dispute Resolution Procedures
Exhibit F - Xxxxxxxxxxx Employment Agreement
Exhibit G - Non-Disclosure and Non-Compete Agreement
Exhibit H - Statutory Warranty Deed and Affidavit of Owner
Exhibit I - Xxxx of Sale and Assumption Agreement
Exhibit J - License Agreement
Exhibit K - Association Disclosure
Exhibit L - Memorandum of Right of First Refusal
Exhibit M - Form of Memorandum of Agreement
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MASTER TRANSACTION AGREEMENT
This Master Transaction Agreement (the "AGREEMENT") is made as of February
9, 2005, by and among Meritage Homes Corporation, a Maryland corporation
("MERITAGE"), Meritage Homes of Florida, Inc., an Arizona corporation ("BUYER"),
Colonial Homes, Inc., a Florida corporation and its wholly-owned subsidiary
Colonial Shores, L.L.C., a Florida limited liability company (together,
"COLONIAL") and The Colonial Company, an Alabama corporation ("PARENT," and
together with Colonial, the "SELLER").
RECITALS
1. Colonial owns and operates the Colonial Homes land development,
homebuilding and sales operations in the State of Florida, excluding the Florida
Panhandle (the "COLONIAL BUSINESS"). This Agreement shall constitute the master
agreement pursuant to which Seller shall sell and Buyer shall have the right to
purchase the Colonial Business.
2. Concurrently herewith, the parties are entering into that Agreement
of Purchase and Sale of Assets in the form attached as EXHIBIT A hereto ("ASSET
AGREEMENT") which sets forth the terms and conditions pursuant to which Buyer
will acquire from Colonial the personal, intangible and intellectual property of
the Colonial Business.
3. Concurrently herewith, the parties are entering into that Agreement
of Purchase and Sale of Real Property in the form attached as EXHIBIT B hereto
("REAL PROPERTY AGREEMENT") which sets forth the terms and conditions pursuant
to which Buyer will acquire from Colonial (i) the finished lots, substantially
finished lots and homes under construction in the residential communities known
as Colonial Pointe, Indigo Lakes, Laurel Lakes and Rookery Pointe and (ii) the
homes under construction in the residential communities known as Colonial Shores
(collectively, the "PURCHASED REAL PROPERTY").
4. Concurrently herewith, the parties are entering into that Option and
Development Agreement in the form attached as EXHIBIT C hereto (the "OPTION
AGREEMENT"), including the related form of memorandum of option agreement, which
sets forth the terms and conditions pursuant to which Colonial will grant to
Buyer an option to acquire the following real property assets: as finished, all
of the single family lots and certain of the condominium units within the
residential communities known as Colonial Shores and Renaissance and all of the
single family lots and certain of the condominium units within the residential
communities known as Xxxxx River (excluding the "Marina" project), Xxxxx (Naples
100) and Smeja (Xxxxxx 150) (the "OPTIONED REAL PROPERTY").
Collectively, the Purchased Real Property and the Optioned Real Property
are referred to as the "OWNED REAL PROPERTY".
5. If Colonial enters into any purchase or option contracts to acquire
real property before the Closing, Colonial will assign to Buyer its right under
such contracts or options and will obtain any necessary consents for such
assignments (such real property referred to herein as "FUTURE CONTRACTED REAL
PROPERTY"). As of the date of this Agreement, Colonial has entered
into, and will assign to Buyer, the purchase contract for an approximately 328
acre parcel located in Xxx County Florida (the "XXXXXX 328 PROPERTY").
6. The Option Agreement also sets forth the terms and conditions upon
which Buyer is authorized to pursue and control all entitlements and approvals
and to manage the construction of onsite and offsite subdivision improvements
for the Optioned Real Property.
7. Concurrently herewith, the parties are entering into that
Indemnification Agreement in the form attached as EXHIBIT D hereto (the
"INDEMNIFICATION AGREEMENT") which sets forth the terms, conditions and
limitations pursuant to which the parties will indemnify each other for certain
losses or breaches of the representations and warranties contained in this
Agreement and the other agreements delivered at the Closing.
In consideration of the covenants and mutual agreements set forth herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and in reliance upon the representations and warranties
contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The following terms will have the meanings set forth
below where used in this Agreement and identified with initial capital letters.
"ABOVEGROUND STORAGE TANK" will have the meaning ascribed to such term in
Sections 6901, et seq., as amended, of RCRA, or any applicable state or local
statute, law, ordinance, code, rule, regulation, order ruling or decree
governing Aboveground Storage Tanks.
"ACCOUNTING ARBITRATOR" will have the meaning set forth in Section
2.5B(4).
"ACQUIRED ASSETS" will have the meaning set forth in Section 2.2A.
"ACQUIRED CONTRACTS" will have the meaning set forth in Section 1.2I of
the Asset Agreement.
"ADJUSTED BOOK EQUITY" will mean total equity of Colonial (including
Colonial's cash balances) as reflected on the Preliminary Closing Balance Sheet
and the Final Closing Balance Sheet, as the case may be, which are to be
prepared in accordance with Adjusted GAAP.
"ADJUSTED GAAP" will mean GAAP, including, without limitation, appropriate
accruals for warranty and other reserves and bonuses, and except that the
Optioned Real Property and Excluded Assets (other than the assets relating to
the Sterling Oaks subdivision) and Excluded Liabilities will be omitted.
"AGREEMENT" means this Master Transaction Agreement.
"APPLICABLE LAWS" will mean all federal, state, regional, local or other
governmental or quasi-governmental statutes, laws, rules, regulations, codes,
ordinances, orders, plans, injunctions, decrees, rulings or judicial or
administrative interpretations thereof, including without limitation
Environmental Laws and the Condominium Act, which are or may be
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applicable to Seller, Buyer, the Colonial Business, the Acquired Assets, the
Owned Real Property or the use, development or condition thereof or otherwise
related to any of the Acquired Assets or Owned Real Property.
"ASSET AGREEMENT" will have the meaning set forth in the recitals.
"ASSETS" will have the meaning set forth in Section 1.2 of the Asset
Agreement.
"ASSOCIATIONS" will mean all property owners and condominium owners
associations applicable to the Owned Real Property.
"ASSUMED CONSTRUCTION CLAIMS" will have the meaning set forth in Section
2.4A(2).
"ASSUMED LIABILITIES" will have the meaning set forth in Section 2.4A.
"XXXX OF SALE" will have the meaning set forth in Section 8.1F.
"BONDS" will have the meaning set forth in Section 4.23.
"XXXXXX 328 PROPERTY" will have the meaning set forth in the recitals.
"BREAK-UP FEE" will have the meaning set forth in Section 6.2A.
"BUYER" will have the meaning set forth in the recitals.
"CCRS" will have the meaning set forth in Section 4.33.
"CLOSING" will have the meaning set forth in Section 2.1.
"CLOSING DATE" will have the meaning set forth in Section 2.1.
"CODE" will mean the Internal Revenue Code of 1986, as amended.
"COLONIAL BUSINESS" will have the meaning set forth in the recitals.
"CONDOMINIUM ACT" will mean Chapter 718, Florida Statutes, and all rules
promulgated by the Division of Florida Land Sales, Condominiums, and Mobile
Homes of the Department of Business and Professional Regulation.
"CONDOMINIUM ASSOCIATION" will have the meaning set forth in Section
4.31B.
"CONDOMINIUM PROJECTS" will mean the following projects within the Owned
Real Property which have been developed or are being development as condominium
under the Condominium Act.
"CONSTRUCTION CLAIMS" will mean all claims, including, without limitation,
claims for breach of contract, claims for breach of express or implied warranty,
construction defect claims, claims for lost profits, consequential damages and
incidental damages (but not punitive damages) with respect to Assumed
Construction Claims, and all losses, costs and expenses relating to any
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work which has been done, or any corrective work that is to be done, on a
completed Housing Unit or on streets, gradings, landscaping and homeowners'
association improvements and all other similar subdivision work.
"CONTRACT ASSIGNMENTS" will have the meaning set forth in Section 8.1H.
"DEED" will have the meaning set forth in Section 8.1A.
"DISAPPROVED TITLE EXCEPTIONS" will have the meaning set forth in Section
5.2C of the Real Property Agreement
"DISCHARGE" will mean any manner of spilling, leaking, dumping,
discharging, releasing or emitting, as any of such terms may further be defined
in any Environmental Law, into any medium including, without limitation, ground
water, surface water, soil or air.
"DISPUTE" will have the meaning set forth in EXHIBIT E.
"DISPUTE NOTICE" will have the meaning set forth in EXHIBIT E.
"ENVIRONMENTAL LAW" or "ENVIRONMENTAL LAWS" will mean all federal, state,
regional, local or other governmental or quasi-governmental statutes, laws,
Applicable Laws, rules, regulations, codes, ordinances, orders, plans,
injunctions, decrees, rulings or judicial or administrative interpretations
thereof, as amended from time to time, which govern or relate to pollution,
protection of the environment, protection of endangered or threatened species of
flora or fauna, public health and safety, air emissions, water discharges,
hazardous or toxic substances, solid or hazardous waste or occupational health
and safety, historic preservation, the protection of historic and natural and
archeological resources, and the development and use of land as any of these
terms are or may be defined in such statutes, laws, rules, regulations, codes,
ordinances, orders, plans, injunctions, decrees, rulings or judicial or
administrative interpretations thereof, including, without limitation: the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendment and Reauthorization Act of 1986, 42 U.S.C.
Section 9601, et seq. (collectively "CERCLA"); the Solid Waste Disposal Act, as
amended by the Resource Conversation and Recovery Act of 1976 and subsequent
Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. Sections 6901, et seq.
(collectively "RCRA"); the Hazardous Materials Transportation Act, as amended,
49 U.S.C. Sections 1801, et seq.; the Clean Water Act, as amended, 33 U.S.C.
Section 1311, et seq.; the Clean Air Act, as amended, 42 U.S.C. Section
7401-7642; the Toxic Substances Control Act, as amended, 15 U.S.C. Sections
2601, et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act as
amended, 7 U.S.C. Section 136-136y ("FIFRA"); the Emergency Planning and
Community Right-to-Know Act of 1986 as amended, 42 U.S.C. Sections 11001, et
seq. (Title III of XXXX) ("EPCRA"); and the Occupational Safety and Health Act
of 1970, as amended, 29 U.S.C. Sections 651, et seq. ("OSHA"); the National
Environmental Policy Act; and the National Historic Preservation Act.
"ERISA" will mean Title IV of the Employee Retirement Income Security Act
of 1974, as amended.
"ESCROW" will have the meaning set forth in Section 5.1 of the Real
Property Agreement.
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"ESCROW AGENT" will have the meaning set forth in Section 5.1 of the Real
Property Agreement.
"EVALUATION INFORMATION" will have the meaning set forth in Section 6.5.
"EXCLUDED ASSETS" will have the meaning set forth in Section 2.3A.
"EXCLUDED LIABILITIES" will have the meaning set forth in Section 2.4B.
"FINAL CLOSING BALANCE SHEET" will have the meaning set forth in Section
2.5B(3).
"FINANCIAL STATEMENTS" will have the meaning set forth in Section 4.7.
"FLORIDA PANHANDLE" will mean the counties of Bay, Xxxxxxx, Escambia,
Franklin, Gadsden, Gulf, Holmes, Jackson, Xxxxxxxxx, Xxxx, Liberty, Okaloosa,
Santa Xxxx, Wakulla, Xxxxxx and Washington in the State of Florida.
"FUTURE CONTRACTED REAL PROPERTY" will have the meaning set forth in the
recitals.
"FUTURE LAND PROFIT" will have the meaning set forth in Section 2.3B.
"GAAP" will mean generally accepted accounting principles, consistently
applied with past practice, except that with respect to Colonial, GAAP includes
capitalized interest with respect to land under development but excludes
capitalized interest with respect to the construction of Housing Units.
"GOVERNMENTAL AUTHORITY" will mean any nation or government, any state or
other political subdivision thereof, any county, city, regional and local public
body and all agencies and subdivisions thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including, without limitation, any government authority, agency,
department, board, commission or instrumentality of the United States, any State
of the United States, or any political subdivision thereof and any tribunal or
arbitrator(s) of competent jurisdiction and any self-regulatory organizations.
"HANDLE" will mean any manner of generating, accumulating, storing,
treating, disposing of, transporting, transferring, labeling, handling,
manufacturing or using, as any of such terms may further be defined in any
Environmental Law, of any Hazardous Substances or Waste.
"HAZARDOUS SUBSTANCES" will be construed broadly to include any toxic or
hazardous substance, material or waste and any other contaminant, pollutant or
constituent thereof, whether liquid, solid, semi-solid, sludge and/or gaseous,
including without limitation, chemicals, compounds, by-products, pesticides,
asbestos containing materials, petroleum or petroleum products, polychlorinated
biphenyls, airborne, waterborne or soil contamination, the presence of which
requires or may require investigation or remediation under any Environmental
Laws or which are or become regulated, listed, or controlled by, under, or
pursuant to any Environmental Laws, including, without limitation, RCRA, CERCLA,
the Hazardous Materials Transportation Act, the Toxic Substances Control Act,
the Clean Air Act, the Clean Water Act, FIFRA, EPCRA and OSHA, or any similar
federal, state, regional or local statute, or any future amendments to, or
regulations implementing such statutes, laws, ordinances, codes, rules,
regulations, orders,
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rulings, or decrees or which has been or will be determined or interpreted at
any time by any Governmental Authority to be a hazardous or toxic substance
regulated under any other statute, law, regulation, order, code, rule, order or
decree.
"HOUSING UNIT" will mean (i) a residential dwelling constructed or to be
constructed on a lot, together with the associated lot or (ii) any condominium
unit.
"INDEMNIFICATION AGREEMENT" will have the meaning set forth in the
recitals.
"INTELLECTUAL PROPERTY" will have the meaning set forth in Section 1.2E of
the Asset Agreement.
"KNOWLEDGE OF SELLER" will have the meaning set forth in the first
paragraph of Article III.
"LAND USE ENTITLEMENTS" will have the meaning set forth in Section 4.26B.
"LICENSE AGREEMENT" will have the meaning set forth in Section 1.3 of the
Asset. Agreement.
"MERITAGE" will have the meaning set forth in the recitals.
"NON-DISCLOSURE AND NON-COMPETE AGREEMENT" will have the meaning set forth
in Section 7.2L.
"NOTICES" will have the meaning set forth in Section 4.16B.
"OPENING DATE" will have the meaning set forth in Section 5.1 of the Real
Property Agreement.
"OPTION AGREEMENT" will have the meaning set forth in the recitals.
"OPTIONED REAL PROPERTY" will have the meaning set forth in the recitals.
"OWNED REAL PROPERTY" will have the meaning set forth in the recitals.
"PARENT" will mean The Colonial Company.
"PERMITS" will have the meaning set forth in Section 4.26A.
"PERMITTED EXCEPTIONS" will have the meaning set forth in Section 5.2C of
the Real Property Agreement.
"PERMITTED LIENS" will have the meaning set forth in Section 4.11.
"PERMITTED MATERIALS" will mean (i) reasonable amounts of gasoline and oil
or other vehicle lubricants stored in the vehicles and equipment used on the
Owned Real Property, (ii) reasonable amounts of fertilizers, herbicides and/or
pesticides and ordinary, everyday painting and cleaning supplies, used only in
the ordinary course of completing and maintaining the
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buildings, landscaping and improvements on the Owned Real Property and (iii)
standard building components and materials which are properly and lawfully
installed in or incorporated into the improvements and may lawfully remain
therein in accordance with Applicable Laws, taking into account the nature,
purpose and intended use and occupancy thereof; provided that in all cases all
such components, materials, substances and other items referred to in clauses
(i) through (iii), above, are stored, transported, used, installed, incorporated
and disposed of, in accordance with all Applicable Laws.
"XXXXXXXXXXX EMPLOYMENT AGREEMENT" will have the meaning set forth in
Section 6.1A.
"PERSON" will mean any natural person, corporation, general or limited
partnership, limited liability company, trust, sole proprietorship or other
entity, organization or association of any kind.
"PRELIMINARY CLOSING BALANCE SHEET" will mean a projected balance sheet as
of January 31, 2005, which shall be prepared using a balance sheet as of
December 31, 2004, and adjusted to reflect projected activity during January
2005 prior to the Closing.
"PROCEEDINGS" will mean claims, suits, actions, arbitrations, dispute
resolution proceedings, judgments, penalties, fines or administrative or
judicial investigations or proceedings.
"PROPERTY LEASES" will have the meaning set forth in Section 4.14I.
"PURCHASE PRICE" will have the meaning set forth in Section 2.5A(1).
"PURCHASED REAL PROPERTY" will have the meaning set forth in the recitals.
"REAL PROPERTY AGREEMENT" will have the meaning set forth in the recitals.
"REPORT SUPPLEMENT" will have the meaning set forth in Section 5.2B of the
Real Property Agreement.
"REPORTS" will have the meaning set forth in Section 5.2A of the Real
Property Agreement.
"RESERVES" will mean the reserves for Unassumed Construction Claims as
reflected on the Final Closing Balance Sheet.
"RETAIL SALES CONTRACTS" will have the meaning set forth in Section 4.32.
"RETAINED CONDOMINIUM PARCELS" will have the meaning set forth in Section
2.2D.
"RETAINED DEBT" will have the meaning set forth in Section 2.4B(6).
"SEC" will mean the Securities and Exchange Commission.
"SELLER" will mean collectively Colonial Homes, Inc., Colonial Shores,
L.L.C. and The Colonial Company.
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"SUPPLEMENTAL TITLE REVIEW PERIOD" will have the meaning set forth in
Section 5.2B of the Real Property Agreement.
"SURVEY" will have the meaning set forth in Section 5.2A of the Real
Property Agreement.
"TAXES" will mean any and all federal, state, local or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
Section 59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, payroll, employment, recapture,
disability, real property, personal property, sales, use, transfer,
registration, value-added, alternative or add-on minimum, estimated, "roll-back"
and any other taxes, assessments, or government charges of any kind whatsoever,
including any interest, penalty or addition thereto, whether disputed or not.
"TAX RETURNS" will mean any return, declaration, report, claim to refund
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"TITLE COMPANY" means First American Title Insurance Company.
"TITLE POLICY" will have the meaning set forth in Section 5.2D of the Real
Property Agreement.
"TRANSACTION AGREEMENTS" will have the meaning set forth in Section 11.17.
"UNASSUMED CONSTRUCTION CLAIMS" will have the meaning set forth in Section
2.4B(5).
"UNDERGROUND STORAGE TANK" will have the meaning ascribed to such term in
Section 6901 et seq., as amended, of RCRA, or any applicable state or local
statute, law, ordinance, code, rule, regulation, order ruling or decree
governing Underground Storage Tanks.
"WASTE" will be construed broadly to include any abandoned or disposed
agricultural wastes, biomedical wastes, biological wastes, bulky wastes,
construction and demolition debris, garbage, household wastes, industrial solid
wastes, liquid wastes, recyclable materials, sludge, solid wastes, special
wastes, used oils, white goods and yard trash as those terms are defined under
any applicable Environmental Laws.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 Closing. The closing of the purchase and sale of the Acquired Assets
(the "CLOSING") will take place at the offices of Xxxxxxxxx Xxxxxxx, P.A. in
Dallas, Texas at such time as agreed to by Buyer and Seller no less than three
business days prior to the anticipated Closing. The parties anticipate that the
Closing will occur during the first two weeks of February 2005. Except as set
forth in the following sentence, the "CLOSING DATE" for purposes of this
Agreement and the other Transaction Agreements will be the date on which the
Closing occurs. Notwithstanding the previous sentence, the parties agree to
account for the business activity
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occurring during the period between the Closing Date and the Closing as if the
Closing had occurred on January 31, 2005.
2.2 Assets to be Purchased.
A. Upon the terms and subject to the conditions set forth herein,
and in reliance on the respective representations and warranties of the parties
contained herein and in the Asset Agreement and the Real Property Agreement, at
the Closing, Colonial agrees to sell, convey, grant, assign and transfer to
Buyer and Buyer agrees to purchase and acquire from Colonial all of the
Purchased Real Property, the Assets and any other assets, properties, or rights
of every nature, kind, description, tangible and intangible, whether real,
personal or mixed, whether accrued, contingent or otherwise and whether now
existing or hereinafter acquired relating in any way to or used or held for use
in connection with the Colonial Business, whether directly or indirectly owned
(other than the Excluded Assets) (collectively, the "ACQUIRED ASSETS"). A
detailed listing of the Purchased Real Property (by lot) is included on Schedule
2.2A.
B. The parties agree that the Acquired Assets include:
(1) An easement or perpetual right to use the approximately
2-3 acre portion of the "Marina" project identified on Schedule 2.2B(1)
that provides access to the boat launch and park area of the "Marina"
project. For purposes of this Section 2.2B(1), the "Marina" project means
that certain parcel described in the Memorandum of Right of First Refusal
(attached as EXHIBIT L to this Agreement) as "Owned Property." The parties
agree that the 2-3 acre parcel will be conveyed to the Xxxxx River
homeowners association pursuant to Section 7.1.21 of the Option Agreement
and Exhibit L to be delivered thereunder.
(2) Fifty percent (50%) of any net recoveries received by
Seller in that certain lawsuit titled Colonial Homes, Inc. vs. Minanis,
Inc., in the Circuit Court of the Twentieth Judicial Circuit, Xxxxxxx
County, Florida, Civil Division, Case No. 04-2886-CA.
C. Prior to or at the Closing, Colonial will transfer, dedicate
or convey by Deed to the applicable homeowners association or municipality those
parcels of real property located in the Sterling Oaks, Colonial Pointe, Indigo
Lakes, Rookery Pointe and Laurel Lakes subdivisions which are identified on
Schedule 2.2C. Buyer will provide Schedule 2.2C to Colonial prior to the
Closing. Seller agrees to transfer, dedicate or convey after the Closing by Deed
to the applicable homeowners association or municipality those parcels of real
property located in the Moody, Smela, Smeja and Colonial Shores projects that
are dedicated and/or reserved as common areas from time to time when required by
Buyer in the ordinary course of development of the respective projects. In
addition, Buyer will not assume any covenants, conditions and restrictions
relating to these subdivisions except for those that run with the Purchased Real
Property.
D. At the Closing, Colonial will retain title to certain
condominium units under construction in the Xxxxxx at Renaissance project,
certain land designated for condominium development within the Xxxxxx at
Renaissance project, and certain lands within the Xxxxx River
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project designated for future condominium development (the "RETAINED CONDOMINIUM
PARCELS"), which Retained Condominium Parcels are identified on Schedule 2.2A.
The parties agree that after the Closing, Buyer may improve the Retained
Condominium Parcels, and, if it elects to do so, shall be financially
responsible for future vertical construction of these units. In connection with
the Retained Condominium Parcels, the following terms and conditions will apply.
(1) The parties agree that some of these units represent
condominiums under construction, some represent condominiums sold but not
under construction, some represent condominiums neither sold nor under
construction, and others represent land that is designated for future
condominium development.
(2) The book value of the Retained Condominium Parcels under
construction on the Closing Date will be included for purposes of
calculating the Purchase Price paid at Closing, and the Purchase Price
includes the price to be paid for the land included within the Retained
Condominium Parcels in Xxxxxx at Renaissance.
(3) Colonial will, within ten (10) days of instruction from
Meritage, convey individual condominium units within the Retained
Condominium Parcels directly to third party retail buyers (or to Buyer) as
and when instructed by Buyer. Buyer shall pay all costs of Colonial in
connection with such retail sales conveyances, and shall be entitled to
all proceeds due Colonial from said closings.Colonial shall be responsible
for conveying title to such individual condominium unit in the Retained
Condominium Parcels to the third party homebuyers. Colonial shall also
convey one or more condominium units or one or more portions of the
Retained Condominium Parcels directly to Buyer at any time upon Buyer's
election. Colonial shall have the same obligations with respect to the
conveyance of title and the delivery of closing documents as to the
Retained Condominium Parcels as it does with respect to the Purchased Real
Property.
(4) The parties will file and record a memorandum of
agreement in the form attached to this Agreement as EXHIBIT M.
(5) Buyer agrees to pay all costs for vertical construction
performed after the Closing Date with respect to these units as invoices,
bills or charges are received. The parties agree that the lot and
improvement costs associated with the units in Xxxxxx at Renaissance that
are under construction as of the Closing Date are part of the Purchase
Price and thus Buyer will have paid for those lots at the Closing. With
respect to those units on which vertical construction has not commenced
construction as of the Closing Date (whether sold or unsold) Buyer shall
pay to Colonial the associated unit lot cost upon commencement of vertical
construction.
(6) Colonial agrees that Buyer shall have the unlimited
right and unlimited access to direct or oversee vertical construction
associated with the Retained Condominium Units, which right shall include
all necessary easements for ingress, egress and construction.
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(7) Buyer is in the process of submitting with the
appropriate Florida regulatory authorities prospectuses that will enable
it to sell and construct condominium units in these projects. In
connection therewith Buyer acknowledges that in certain situations the
third party homebuyers in these projects may have rescission rights. In
this regard, Buyer agrees that any cancellations resulting from such
rescission rights will not be deemed a breach or violation of any
representation, warranty or covenant of Colonial contained in this
Agreement.
(8) Colonial will cooperate and join in any of the following
that relate to the Retained Condominium Parcels all at Buyer's direction:
the platting and replatting of land; the filing of condominium
prospectuses; and recording of condominium declarations and other
instruments of record; provided Colonial will take no action to affect
title to the Retained Condominium Parcels property without Buyer's express
written direction.
(9) Colonial agrees to provide any further assurances
reasonably requested by Buyer to confirm and/or effectuate the terms
hereof.
2.3 Excluded Assets Not Being Transferred; Option Agreement.
A. (x) Colonial will retain (i) any of its assets relating to the
Sterling Oaks subdivision (other than the profits from the sale of the remaining
units), (ii) any of its assets relating to the "Marina" project, except for the
parcel referred to in Section 2.2B(1) of this Agreement, (iii) the Retained
Condominium Parcels, subject to Section 2.2D, (iv) any of its assets relating to
its business in the Florida Panhandle, (v) cash bonds relating to land
development and (vi) the assets listed on Schedule 2.3A and (y) Parent and its
subsidiaries will retain all of their assets relating to its land development
and construction business in the Florida Panhandle (collectively, the "EXCLUDED
ASSETS").
B. At the Closing, Buyer and Colonial will enter into the Option
Agreement pursuant to which Buyer will have the option to acquire from Colonial
the Optioned Real Property. A detailed listing of the Optioned Real Property is
included on Schedule 2.3B. The parties agree that the purchase price for the
Optioned Real Property will generally include (i) the cost of the lots plus (ii)
the cost of all improvements, including capitalized interest on the cost basis
and improvements of the real property at a rate not to exceed LIBOR plus 200
basis points, plus (iii) $35,000,000 (the "FUTURE LAND PROFIT") which shall be
subject to and payable in accordance with the terms and conditions set forth in
the Option Agreement. Colonial will provide the Buyer at the Closing an extended
optionee's title policy covering the Optioned Real Property to be acquired
pursuant to the Option Agreement. If Buyer utilizes Colonial's existing title
insurance company, the cost of the extended policy will be paid 50% by Colonial
and 50% by Buyer. If Buyer utilizes a different title insurance company,
Colonial will pay 50% of the cost of the extended policy that would have been
charged had Colonial's existing title insurance company been used and Buyer will
pay the remainder of any such cost. As more fully provided for in the Option
Agreement, such optionee's policy will include a commitment to issue an owners
title policy naming Buyer as the insured in the amount of the purchase price
(excluding the Future Land Profit) for the Optioned Real Property under the
Option Agreement, insuring that the estate or interest to the Optioned Real
Property will become vested in Buyer, subject only to title exceptions approved
by Buyer prior to its acquisition of the lots.
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C. The Option Agreement sets forth the terms and conditions upon
which Buyer is authorized to pursue and control all entitlements and approvals
and to manage the construction of onsite and offsite subdivision improvements
for the Optioned Real Property.
2.4 Liabilities.
A. Assumed Liabilities. Upon the terms and subject to the
conditions of this Agreement, at the Closing, Buyer will assume from and
after the Closing Date, and perform and pay when due, only the following
liabilities and no others (the "ASSUMED LIABILITIES"):
(1) the obligations under the Acquired Contracts solely to
the extent arising out of events occurring on or after the Closing Date
(excluding any breaches thereof that began prior to the Closing Date, the
exclusion for which will continue until Buyer has notice thereof and
reasonable opportunity to cure);
(2) any Construction Claim that arises out of or is related
to any Housing Unit acquired hereunder that closes after the Closing (the
"ASSUMED CONSTRUCTION CLAIMS"), in each case other than Construction
Claims pending or, to the Knowledge of Seller, threatened on or prior to
the Closing;
(3) all liabilities or obligations reflected on the Final
Closing Balance Sheet; and
(4) borrowed money/bank debt (other than the Retained Debt,
which Buyer will pay off concurrently with the Closing).
B. Excluded Liabilities. Notwithstanding any other provision of
this Agreement, neither Buyer nor Meritage will assume, acquire or be
responsible for any liabilities, obligations or expenses, whether fixed or
contingent, known or unknown, matured or unmatured, executory or
non-executory, to the extent such liability or obligations arise out of
acts, omissions or occurrences on or prior to the Closing Date, even if
they do not become known until after such date, relating to or consisting
of (collectively, the "EXCLUDED LIABILITIES"):
(1) liabilities and obligations not reflected on the Final
Closing Balance Sheet;
(2) except as reflected on the Final Closing Balance Sheet,
all liabilities and obligations relating to the Sterling Oaks, Colonial
Pointe, Indigo Lakes, Rookery Pointe and Laurel Lakes subdivisions, other
than Construction Claims arising out of Housing Units closed in these
subdivisions after the Closing;
(3) liabilities, obligations and expenses (including Taxes)
of Seller under this Agreement or with respect to or arising out of the
consummation of the transactions contemplated by this Agreement;
(4) (a) any Taxes (including deferred Tax liabilities)
applicable to Colonial or the Colonial Business arising out of or relating
to periods prior to the Closing Date or as a result of the transactions
contemplated by this Agreement, (b) any liabilities
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or obligations or expenses of the Colonial related to pending or
threatened litigation against Colonial, the Colonial Business, the
Acquired Assets or the Owned Real Property (including, without limitation,
the matters listed in Section 4.20 of the Seller's Disclosure Schedule),
(c) any liabilities, obligations or expenses arising from or relating to
or consisting of any lien, encumbrance or claim affecting the title to the
Acquired Assets or the Owned Real Property, other than Permitted Liens,
(d) any liabilities, obligations or expenses under any contracts arising
out of or relating to periods prior to the Closing Date, unless the
obligation is reflected on the Final Closing Balance Sheet in accordance
with GAAP, (e) any liabilities, obligations or expenses relating to any
environmental matter or condition, (f) any liabilities or obligations
relating to performance or surety bonds relating to land development
activities on the Optioned Real Property and (g) any liability or
obligation to or in respect of any employees or former employees of
Colonial, including without limitation: (i) any employment agreement,
whether or not written, between Colonial and any person (excluding the
bonuses between Colonial and Xxxx Xxxxxxxx, Xxxxx Xxxxxxx and Xxxx Xxxx in
an amount not to exceed $130,000 in the aggregate), (ii) under any
employee plan at any time maintained, contributed to or required to be
contributed to by or with respect to Colonial or under which Colonial may
incur liability, or any contributions, benefits or liabilities therefor,
or any liability with respect to Colonial's withdrawal or partial
withdrawal from or termination of any employee plan or (iii) with respect
to any claim of an unfair labor practice, or any claim under any state
unemployment compensation or worker's compensation law or regulation or
under any federal or state employment discrimination law or regulation,
except as to (d), (e) , (f) and (g), the extent set forth on the Final
Closing Balance Sheet;
(5) any Construction Claim that is not an Assumed
Construction Claim ("UNASSUMED CONSTRUCTION CLAIMS");
(6) debt related to the Optioned Real Property in an amount
equal to the cost of such projects (the "RETAINED DEBT");
(7) any remaining costs or expenses necessary to complete
any Housing Unit closed prior to the Closing Date;
(8) checks outstanding on the Closing Date;
(9) any other costs to complete reflected on the Closing
Balance Sheet as an excluded item; and
(10) any obligation or liability in excess of $102,000 (which
$102,000 amount Buyer will be responsible for in connection with the
closing of homes in the Renaissance project) relating to that certain
promissory note in favor of the Renaissance Community Association in the
original principal amount of $117,000.
Anything contained in this Agreement to the contrary notwithstanding,
Buyer will not assume the Excluded Liabilities, which Excluded Liabilities will
at and after the Closing remain the exclusive responsibility of Seller. Seller
will discharge all Excluded Liabilities in accordance with their terms (subject
to Seller's right to contest obligations believed in good faith not to be then
due) and Applicable Law.
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2.5 Purchase Price; Adjustment; and Warranty and Reserve Administration.
A. Purchase Price.
(1) At Closing, in addition to assuming the Assumed Liabilities,
Meritage will cause Buyer to pay to Colonial, for the Acquired Assets and
in immediately available funds, an amount equal to (i) the Adjusted Book
Equity of Colonial based on the Preliminary Closing Balance Sheet plus
(ii) a premium of $40,000,000 (together, the "PURCHASE PRICE").
(2) The Purchase Price will be adjusted to account for Colonial's
cash balances as set forth in Section 2.5B(2).
(3) In addition to the Purchase Price for the Acquired Assets
(which includes the Purchased Real Property), at the Closing, Buyer and
Colonial will enter into the Option Agreement pursuant to which Buyer will
have the option to acquire the Optioned Real Property. The purchase price
for certain lots comprising the Optioned Real Property will include an
allocable portion of the Future Land Profit of $35,000,000 as set forth in
Section 2.1 and the Option Agreement.
B. Adjustment.
(1) For the purpose of making an initial determination of Adjusted
Book Equity, Seller will deliver to Meritage, at least five days prior to
the Closing, the Preliminary Closing Balance Sheet, prepared in accordance
with Adjusted GAAP consistent with the December 31, 2004 balance sheet
attached as Schedule 2.5B(1).
(2) Cash balances reflected on the Preliminary Closing Balance
Sheet will be used by Colonial first to payoff any borrowed money/bank
debt referred to in Section 2.4A(4). Any remaining cash balances will be
retained by Colonial and will reduce the Purchase Price by an equal
amount.
(3) No later than one month after the Closing Date, Meritage will
deliver to Seller a balance sheet reflecting the actual closing balances
for Colonial as of the Closing Date, prepared in accordance with Adjusted
GAAP (the "FINAL CLOSING BALANCE SHEET").
(4) The Final Closing Balance Sheet will become final and binding
on the parties unless within 15 business days following delivery thereof
to Seller, Seller notifies Buyer in writing that Seller objects thereto.
If Seller objects to the Final Closing Balance Sheet, and after good faith
consultation with respect to the objection, the parties are unable to
reach an agreement within 15 days, then the parties will resolve the
dispute in the manner provided in EXHIBIT E; provided, however, that the
arbitrator will be an accounting firm of national repute (other than (i)
PricewaterhouseCoopers or (ii) Deloitte & Touche or KPMG, the firms
currently or previously serving as auditors for Seller and Meritage,
respectively) as may be mutually agreed upon by Meritage and Seller (the
"ACCOUNTING ARBITRATOR"). The determination of the Accounting Arbitrator
will be final and binding on all parties, and judgment on the arbitration
award may be enforced in any
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court having jurisdiction over the subject matter of the controversy.
Buyer and Seller will each pay the cost of their own accounting and other
professionals and will bear equally the fees and expenses of the
Accounting Arbitrator.
(5) Within five business days of the determination of the Final
Closing Balance Sheet (as set forth in Section 2.5B(4)), (i) in the event
the Adjusted Book Equity of Colonial on the Final Closing Balance Sheet is
greater than the Adjusted Book Equity of Colonial on the Preliminary
Closing Balance, Buyer will pay to Colonial an amount equal to such
difference or (ii) in the event the Adjusted Book Equity of Colonial on
the Final Closing Sheet is less than the Adjusted Book Equity of Colonial
on the Preliminary Closing Balance Sheet, Colonial will pay to Buyer an
amount equal to such difference. Such payment shall not be subject to the
indemnification procedures or limitations set forth in the Indemnification
Agreement delivered hereunder, and will be treated by the parties as an
adjustment to the Purchase Price.
C. Warranty and Reserve Administration. As set forth in this Section
2.5C, for a period of [ * ] after the Closing Date, Buyer will administer
certain Unassumed Construction Claims for Colonial. Buyer will administer and
discharge (but is not financially responsible for) Unassumed Construction Claims
in accordance with Colonial's normal procedures to the extent of [ * ]. Buyer
will administer the Unassumed Construction Claims consistent with its normal
procedures, which Seller acknowledges include taking certain actions to cure or
mitigate problems as a preemptive measure against a drawn out or contentious
battle with a homeowner or homeowners. Seller further acknowledges that these
procedures may include discharging warranty claims in the ordinary course of
business for customer goodwill reasons. Buyer's administration of the Unassumed
Construction Claims is subject to the following additional provisions:
(1) Buyer's responsibility extends only to corrective work
relating to Housing Units and does not extend to litigation or to
corrective work on streets, gradings, landscaping and homeowners'
associations improvements and similar work. In no case is Buyer obligated
to defend any litigation with respect to Unassumed Construction Claims or
similar construction defect matters.
(2) For claims above [ * ], Buyer will obtain Seller's advance
approval. If Seller does not approve of Buyer's proposed disposition of
the claim, Seller will administer the claim and be responsible for all
costs incurred relating thereto.
(3) In the event that costs related to Unassumed Construction
Claims exceed [ * ], Buyer's obligation to administer and discharge
Unassumed Construction Claims will cease unless and until Seller provides
to Buyer in advance, and replenishes thereafter, a cash reserve of [ * ],
from which Buyer can continue to administer pending and future Unassumed
Construction Claims.
(4) Except in cases of gross negligence, Seller agrees to hold
harmless Buyer with respect to Buyer's acts or omissions in connection
with its administration and discharge of Unassumed Construction Claims
pursuant to this Section 2.5C.
-----------------
* Confidential information on this page has been omitted and filed
separately with the Securities Exchange Commission pursuant to a
Confidential Treatment Request.
- 15 -
(5) At the end of the [ * ] administration period, Buyer will
promptly return to Seller any remaining Reserves.
(6) During the warranty administration period, Buyer will provide
to Colonial a quarterly report, in a form mutually acceptable to Buyer and
Colonial, which summarizes warranty expenditures and the related
reductions to the Reserves. Buyer will provide such report within 30 days
of the end of each fiscal quarter (March 31, June 30, September 30 and
December 31) commencing with the June 30, 2005 quarter-end; provided,
however, the June 30, 2005 report shall reflect activity for the period
between the Closing Date and June 30, 2005. Buyer's failure to provide
this report will not be considered a breach of this Agreement unless
Colonial provides to Buyer written notice of such failure and Buyer fails
to provide the report with 10 business days of such notice.
(7) Colonial shall have 30 days from the receipt of each quarterly
report to review Buyer's calculations and object. If Colonial objects to
Buyer's calculations, it shall provide written notice to Buyer of its
objection and the parties shall meet and attempt to resolve Colonial's
objections. If the parties are unable to resolve such objections within 15
days of such written notice, the parties shall settle the dispute in the
manner provided in EXHIBIT E, provided, however, that the arbitrator will
be an accounting firm of national repute (other than
PricewaterhouseCoopers or Deloitte & Touche or KPMG) as may be mutually
agreed upon by Buyer and Colonial. If Colonial does not object to Buyer's
quarterly report as provided in this Section 2.5C, it will be deemed to
have accepted Buyer's calculations.
2.6 Allocation of Purchase Price. The Purchase Price and the Assumed
Liabilities will be allocated among the Acquired Assets in accordance with
Section 197 and 1060 of the Code and the regulations thereunder. Such allocation
will be reported consistently by Buyer and Seller on Internal Revenue Service
Form 8594, Asset Acquisition Statement, which will be filed with Buyer's and
Seller's Federal income tax returns for the tax year that includes the Closing
Date. Buyer and Seller agree that 90% of the Purchase Price premium (90% of
$40,000,000) will be treated as goodwill by the Buyer and that the $35,000,000
Future Land Profit will be treated by Buyer as an expense, (i.e., included as a
part of lot cost and expensed through cost of sales as property is sold) and by
Seller as ordinary income.
2.7 Risk of Loss. All risk of loss with respect to the Acquired Assets
on or before the Closing Date will remain the sole risk of Colonial.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER AND MERITAGE
As of the date hereof and as of the Closing Date, Buyer and Meritage
hereby represent and warrant to Seller, the following:
3.1 Organization and Qualification. Each of Buyer and Meritage is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite power and
authority to own and operate its properties and to
----------------
* Confidential information on this page has been omitted and filed
separately with the Securities Exchange Commission pursuant to a
Confidential Treatment Request.
- 16 -
carry on its business as now conducted in every jurisdiction where the failure
to do so would have a material adverse effect on its business, properties or
ability to conduct the business currently conducted by it.
3.2 Authority Relative to this Agreement. Each of Buyer and Meritage has
the requisite power and authority to enter into this Agreement and to carry out
its obligations hereunder. The execution and delivery of this Agreement by Buyer
and Meritage and the consummation by Buyer and Meritage of the transactions
contemplated hereby have been duly authorized by each of them, and no other
actions or proceedings, corporate or otherwise, on the part of Buyer or Meritage
are necessary to authorize this Agreement and such transactions. This Agreement
has been duly executed and delivered by each of Buyer and Meritage and
constitutes a valid and binding obligation of each of them, enforceable in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization or other similar laws relating to the
enforcement of creditors' rights generally and by general principles of equity.
3.3 No Conflicts. Neither Buyer or Meritage is subject to or obligated
under (i) any provision of its articles of incorporation or bylaws or other
organizational documents, (ii) any material agreement, arrangement or
understanding, (iii) any material license, franchise or permit or (iv) any law,
regulation, order, judgment or decree which would be breached or violated, or in
respect of which a right of termination or acceleration would arise, or pursuant
to which any encumbrance on any of its assets would be created, by its
execution, delivery, and performance of this Agreement and the consummation by
it of the transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
For Purposes of this Article IV, the term "KNOWLEDGE OF SELLER" means that
no facts or information have come to the attention of the executive officers of
Colonial or Parent or Xxxxxxx Xxxxxxxxxxx and after reasonable inquiry that
would make him or her aware of any inaccuracy of the representations or
warranties of Seller set forth in this Agreement. Except as set forth in the
disclosure schedule delivered by Seller to Buyer at or prior to the execution
hereof that is arranged in the numbered and lettered sections contained in this
Agreement (the "SELLER'S DISCLOSURE SCHEDULE"), as of the date hereof and as of
the Closing Date, Seller hereby represents, warrants and agrees as follows, to
and for the benefit of Buyer and Meritage:
4.1 Organization and Qualification. Each of Colonial and Parent is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite power and
authority to own and operate its properties and to carry on its business as now
conducted in every jurisdiction where the failure to do so would have a material
adverse effect on its business, properties or ability to conduct the business
currently conducted by it.
4.2 Authority Relative to this Agreement. Each of Colonial and Parent
has the requisite power and authority to enter into this Agreement and to carry
out its obligations hereunder. The execution and delivery of this Agreement by
Colonial and Parent and the consummation by Colonial and Parent of the
transactions contemplated hereby have been duly authorized, and no actions or
proceedings, corporate or otherwise, on the part of Colonial and
- 17 -
Parent are necessary to authorize this Agreement and such transactions. This
Agreement has been duly executed and delivered by each of Colonial and Parent
and constitutes a valid and binding obligation of each Colonial and Parent
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization or other similar laws
relating to the enforcement of creditors' rights generally and by general
principles of equity.
4.3 Legal Capacity and Authority of Selling Parties. Each of Colonial
and Parent possesses the legal capacity to execute and deliver each document to
which it is a party, to perform its obligations thereunder, and to consummate
the transactions contemplated thereby. With respect to each document
contemplated by this Agreement to which Colonial and Parent is, or should be, a
party, each of Colonial and Parent has or will duly execute and deliver such
documents, which will be a valid, legal and binding obligation of each Colonial
and Parent enforceable against each Colonial and Parent in accordance with its
terms, as the case may be.
4.4 No Conflicts. Except as set forth on Section 4.4 of the Seller's
Disclosure Schedule, neither Colonial or Parent is subject to or obligated under
(i) any provision of its articles of incorporation, bylaws or other
organizational documents, (ii) any agreement, arrangement or understanding,
(iii) any license, franchise or permit or (iv) any law, regulation, order,
judgment, or decree, which would be breached or violated, or in respect of which
a right of termination or acceleration would arise, or pursuant to which any
encumbrance on any of its assets would be created, by its execution, delivery,
and performance of this Agreement and the consummation by it of the transactions
contemplated hereby.
4.5 No Consents. Except as set forth on Section 4.5 of the Seller's
Disclosure Schedule, no authorization, consent or approval of, or filing with,
any public body, court, or authority or pursuant to any Acquired Contract is
necessary on the part of Seller for the consummation by Seller of the
transactions contemplated by this Agreement.
4.6 Ownership Interests. Except as disclosed on Section 4.6 of the
Seller's Disclosure Schedule, Colonial does not own any stock, partnership
interest, joint venture interest or any other security issued by or equity
interest in any other corporation, organization, association or other entity.
4.7 Financial Statements. Seller has provided: (a) the audited financial
statements of the Colonial Business for and as of the fiscal years ended
December 31, 2003, 2002 and 2001 and (b) the unaudited consolidated financial
statements of the Colonial Business for and as of the period ended December 31,
2004 (the "FINANCIAL STATEMENTS"). The Financial Statements have been prepared
in accordance with GAAP on a consistent basis throughout the periods involved
and fairly present the financial position of the Colonial Business as of the
dates thereof and the results of its operations and cash flows for the periods
then ended; provided that the November 30, 2004 Financial Statements have been
prepared in accordance with Adjusted GAAP. The Financial Statements are attached
hereto as Section 4.7 of the Seller's Disclosure Schedule.
4.8 Absence of Undisclosed Liabilities.
A. There are no obligations or liabilities relating to or
affecting the Colonial Business, the Acquired Assets or the Owned Real Property
(whether accrued, absolute,
- 18 -
contingent, liquidated, unliquidated or otherwise, whether due or to become due
and regardless of when asserted), except: (i) liabilities reflected in the
Financial Statements or disclosed in the notes thereto, (ii) liabilities which
have arisen in the ordinary course of business after the date of the Financial
Statements and (iii) liabilities specifically disclosed on Section 4.8 of the
Seller's Disclosure Schedule.
B. In accordance with Section 2.5B(3), Seller will deliver the
Final Closing Balance Sheet, prepared in accordance with Adjusted GAAP. There
will be no obligations or liabilities relating to or affecting the Colonial
Business, the Acquired Assets or the Owned Real Property (whether accrued,
absolute, contingent, liquidated, unliquidated or otherwise, whether due or to
become due and regardless of when asserted), except: (i) liabilities reflected
in the Final Closing Balance Sheet, (ii) liabilities which have arisen in the
ordinary course of business after the date of the Final Closing Balance Sheet
and (iii) liabilities specifically disclosed on Section 4.8 of the Seller's
Disclosure Schedule.
4.9 No Material Adverse Changes. Except as set forth on Section 4.9 of
the Seller's Disclosure Schedule or in the Financial Statements, since December
31, 2003, there has not been any material adverse change in the assets,
financial condition or operating results, customer, employee or supplier
relations, business condition or prospects or financing arrangements related to
the Colonial Business, the Acquired Assets or the Owned Real Property.
4.10 Absence of Certain Developments. Except as set forth on Section 4.10
of the Seller's Disclosure Schedule or except as contemplated in and consistent
with the terms of this Agreement since the date of the Financial Statements,
Seller has not, in respect of the Colonial Business:
A. changed its accounting methods or practices (including any
change in depreciation or amortization policies or rates) or revalued any of its
assets;
B. other than distributions necessary for Colonial, Parent or
Parent's ultimate owners to pay taxes in respect of Colonial, declared or paid
any dividend or distributions;
C. borrowed any amount under existing lines of credit, or
otherwise incurred or become subject to any indebtedness, except in the ordinary
course of business and in a manner and in amounts that are in keeping with
historical practice;
D. discharged or satisfied any lien (other than property taxes
and assessments, business and personal property taxes, mechanic's liens and
similar items discharged in the ordinary course of business consistent with past
practices) or encumbrance;
E. except as is reasonably necessary for the ordinary operation
of the Colonial Business and in a manner and in amounts that are in keeping with
historical practice, mortgaged, pledged, or subjected to any lien, charge, or
other encumbrance, any of Colonial's assets with a fair market value in excess
of $25,000, except liens for current property taxes not yet due and payable;
- 19 -
F. sold, assigned or transferred (including, without limitation,
transfers to any employees, shareholders or affiliates) any assets or canceled
any debts or claims, except in the ordinary course of business and consistent
with past practices;
G. sold, assigned or transferred any patents, trademarks, trade
names, copyrights, trade secrets or other intangible assets, or disclosed any
proprietary or confidential information to any person other than Meritage or
Buyer;
H. suffered any extraordinary loss or waived any material right
or claim, including any write-off or compromise of any contract or other account
receivable;
I. taken any other action or entered into any other transaction
other than in the ordinary course of business and in accordance with past custom
and practice, or entered into any transaction with an employee, shareholder,
member, partner or officer of Seller or any other entity associated with the
Colonial Business;
J. suffered any theft, damage, destruction or loss of or to any
property or properties owned or used by it, whether or not covered by insurance;
K. increased the annualized level of compensation of or granted
any extraordinary bonuses, benefits or other forms of direct or indirect
compensation to any employee, officer, director or consultant that aggregate in
excess of $25,000, or increased, terminated or amended or otherwise modified any
plans for the benefit of employees;
L. except as is reasonably necessary for the ordinary operation
of the Colonial Business and in a manner and in amounts that are in keeping with
historical practice, made any capital expenditures or commitments for property,
plant and equipment that aggregate in excess of $25,000;
M. engaged or agreed to engage in any extraordinary transactions
or distributions, or except as is reasonably necessary for the ordinary
operation of the Colonial Business and in keeping with historical practice,
entered into any contract, written or oral, that involves consideration or
performance by it of a value exceeding $25,000 or a term exceeding one year;
N. made any loans, advances or commitments to, or guarantees in
excess of $50,000 for the benefit of, any persons; or
O. made charitable contributions or pledges, which in the
aggregate exceed $10,000.
4.11 Permitted Liens; Good Title to and Condition of Assets. Colonial's
title to the Acquired Assets and the Purchased Real Property is free and clear
of all liens and encumbrances other than those listed on Section 4.11 of the
Seller's Disclosure Schedule and Permitted Exceptions (collectively, the
"PERMITTED LIENS"). All of the Acquired Assets and the Purchased Real Property
are in good condition and repair, ordinary wear and tear excepted, and are
usable in the ordinary course of business. The Acquired Assets and the Owned
Real Property represent all of the assets of the Colonial Business and all of
the assets necessary or required by Buyer to
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continue to operate the Colonial Business as conducted prior to the Closing.
Colonial owns, or leases under valid leases, all property, machinery, equipment
and other tangible and intangible assets necessary for the conduct of the
Colonial Business. None of the assets attributable to, or necessary to the
operation of, the Colonial Business, as conducted immediately prior to the
Closing, are held or owned by an entity other than Colonial. There are no
shareholders, partners or affiliates of Colonial, including Parent, that own any
assets, licenses, permits or other authorizations relating to the Acquired
Assets, the Owned Real Property or the Colonial Business.
4.12 Legal Descriptions of Real Property. Section 4.12 of the Seller's
Disclosure Schedule sets forth a complete and accurate legal description for
each parcel of Owned Real Property.
4.13 Real Property. Except as set forth on Section 4.13 of the Seller's
Disclosure Schedule:
A. With respect to any agreements, arrangements, contracts,
leases, licenses, covenants, conditions, deeds, deeds of trust, rights-of-way,
easements, mortgages, restrictions, surveys, title insurance policies and other
documents granting to Colonial title to or an interest in or otherwise affecting
the Owned Real Property, no breach or event of default exists, and no condition
or event has occurred that with the giving of notice, the lapse of time, or both
would constitute a breach or event of default, by Colonial or any other person.
B. The Owned Real Property has all necessary access to and from
public highways, streets and roads and no pending or, to the Knowledge of
Seller, threatened proceeding or other fact or condition exists that could limit
or result in the termination of such access.
C. Electric, gas (if applicable), sewage, telephone and water
utility facilities are available for connection and service to homes constructed
or being constructed on the Owned Real Property, which facilities are in
compliance in all respects with all Applicable Laws, subject to such
installation and connection charges with respect thereto which in the ordinary
course of business are payable upon issuance of certificates of occupancy which
have not yet been procured.
D. No condemnation, eminent domain or similar proceeding exists,
is pending or, to the Knowledge of Seller, is threatened with respect to, or
that could affect, any of the Owned Real Property.
E. Any buildings and improvements on the Owned Real Property to
the extent installed or constructed by Colonial are in compliance with all
Applicable Laws and do not violate, in any material respect, (i) any set-back,
(ii) zoning law, ordinance, regulation, statute or other governmental
restriction in the nature thereof, or (iii) any restrictive covenant affecting
any such Owned Real Property.
F. There are no parties in possession of any portion of the Owned
Real Property as lessees, tenants at sufferance or trespassers.
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G. Except as incurred in the ordinary course of business after
the date of the Financial Statements, there are no unpaid charges, debts,
liabilities, claims or obligations arising from the construction, occupancy,
ownership, use or operation of the Owned Real Property. No Owned Real Property
is subject to any condition or obligation to any Governmental Authority or other
person requiring the owner or any transferee thereof to donate land, money or
other property or to make off-site public improvements. With respect to the
Owned Real Property, Colonial has fully funded any homeowners association
reserves relating to maintenance, repairs, capital improvements, operating
deficiencies and similar items for which Colonial is or will be responsible
pursuant to the respective terms of the association documents, Florida law or as
otherwise required in the normal course of business (i.e., to the extent such
items are due and payable before Closing).
H. Except as set forth on Section 4.7 or 4.10 of the Seller's
Disclosure Schedule, no developer-related fees, charges or assessments for
public improvements or otherwise made against the Owned Real Property or any
lots included therein are due and unpaid, including without limitation those for
construction of sewer lines, water lines, storm drainage systems, electric
lines, natural gas lines, streets (including perimeter streets), roads and
curbs, other than as may be required in the ordinary course of completing such
project from its current (incomplete) status or as may be contemplated in the
conditions of approval and contained in the Land Use Entitlements for such
projects.
I. There is no moratorium applicable to any of the Owned Real
Property on (i) the issuance of building permits for the construction of houses,
or certificates of occupancy therefor or (ii) the purchase of sewer or water
taps.
J. Each of the lots included in the Owned Real Property is stable
and otherwise suitable for the construction of a residential structure suitable
to the soil conditions thereon, as set forth in the soil report related to each
such subdivision.
K. Except as set forth in the Reports or Surveys, the Owned Real
Property does not contain "wetlands," as defined, or subject to regulation by,
the Army Corps of Engineers, the Environmental Protection Agency, the Florida
Department of Environmental Protection, the South Florida Water Management
District or Xxx and Xxxxxxx Counties and the municipalities located therein, or,
to the Knowledge of Seller, a level of radon or radon's daughter above action
levels of the U.S. Environmental Protection Agency and is not located within nor
does the Owned Real Property include a "critical", "preservation",
"conservation," "habitat conservation area," area of recognized historical or
archeological importance or similar type of area subject to regulation under any
Environmental Laws. No portion of the Owned Real Property is situated within a
"noise cone" such that the Federal Housing Administration will not approve
mortgages due to the noise level classification of such real property.
L. The Owned Real Property has not been used as a gravesite,
landfill or waste disposal area.
M. No Proceeding, claim or demand is pending or, to the Knowledge
of Seller, threatened which involves any of the Owned Real Property, or against
Seller with respect to any of the Owned Real Property. including without
limitation proceedings, claims or demands involving construction defects or
deficiencies, or against the Associations. All of the developed
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Owned Real Property and the lots included therein are in compliance with all
Applicable Laws, including without limitation, zoning and subdivision laws and
ordinances and the Owned Real Property is zoned to permit single family home
construction; none of the development-site preparation and construction work
performed on the Owned Real Property has concentrated or diverted surface water
or percolating water improperly onto or from the Owned Real Property or caused
or resulted in a release of any Hazardous Substance in violation of any
Environmental Law.
N. Colonial has not granted to any person any contract or other
right to the use of any portion of the Owned Real Property or to the furnishing
or use of any facility or amenity on or relating to the Owned Real Property.
O. Neither Colonial or Parent is a "foreign person" within the
meaning of Sections 1445 and 7701 of the Code.
P. Subject to the Reserves, all of the Housing Units,
improvements and buildings on the Owned Real Property were constructed in a good
and workmanlike manner, substantially comply with Applicable Laws, are
structurally sound, are in good and proper working condition and repair, normal
wear and tear, normal maintenance and normal warranty and customer services
matters excepted, are free of mold, asbestos, radon and radon's daughter and are
useful for their intended purposes.
Q. Any improvements and buildings included within the Owned Real
Property are located within the boundary lines of the Owned Real Property and do
not encroach upon the land of any adjacent owner; to the Knowledge of Seller, no
improvements of any third Person encroach upon the Owned Real Property and no
Person has any unrecorded right, title or interest in the real property
constituting the Owned Real Property, whether by right of adverse possession,
prescriptive easement or otherwise.
R. The recorded easements, rights-of-way, covenants and other
title exceptions and survey matters do not adversely affect the current
beneficial use of the Owned Real Property. The Owned Real Property is being
developed and used in compliance with all covenants, easements and restrictions
affecting the Owned Real Property, and all obligations of Colonial on the Owned
Real Property with regard to such covenants, easements and restrictions have
been and are being performed in a proper and timely manner.
S. Except as set forth on Section 4.16 of the Seller's Disclosure
Schedule:
(1) To the Knowledge of Seller, all property adjacent to the
Owned Real Property is free from Hazardous Substances (other than
Permitted Materials), and is not in violation of any Environmental Law.
(2) No environmental lien in favor of any Governmental
Authority has attached to any of the Owned Real Property.
T. There are no historical or archeological materials or
artifacts of any kind or any Indian ruins of any kind located on the Owned Real
Property.
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U. No part of the Owned Real Property is "critical habitat" as
defined in the Federal Endangered Species Act, 16 U.S.C. Sections 1531 et seq.,
as amended, or in regulations promulgated thereunder, nor are any "endangered
species" or "threatened species" located on the Owned Real Property, as defined
therein, or under any similar state or local Environmental Law.
V. The Owned Real Property is not within a flood plain, flood way or
flood control district as reflected in the currently adopted 100-year flood
plain of the Federal Emergency Management Agency.
W. Neither Colonial or Parent have any liability for any Taxes, or
any interest or penalty in respect thereof, of any nature that may be assessed
against Buyer or Meritage or that are or may become a lien against the Owned
Real Property, other than the lien for current real property taxes, special
taxes and assessments paid with taxes not yet delinquent.
X. All work performed on or about the Owned Real Property or to any
improvements located thereon within six months prior to the date of this
Agreement has been paid for or will be reflected in the Final Closing Balance
Sheet.
Y. Except as set forth on Section 4.13 of the Seller's Disclosure
Schedule, to the Knowledge of Seller, the representations set forth in this
Section 4.13 are true and correct with respect to the Future Contracted Property
and there are no conditions affecting the Future Contracted Property that would
lead Seller to the good faith belief that the properties cannot be developed in
accordance with Seller's project feasibility plans currently in existence.
4.14 Acquired Contracts.
A. Section 4.14 of the Seller's Disclosure Schedule lists as of the
date hereof all of the material Acquired Contracts. The provisions of this
Section 4.14 will also apply to all Acquired Contracts entered into following
the date of this Agreement and prior to the Closing.
B. Each of the Acquired Contracts is valid, binding and in full
force and effect on Colonial and, to the Knowledge of Seller, is valid, binding
and in full force and effect on the other parties to the Acquired Contracts.
Except as set forth on Section 4.14 of the Seller's Disclosure Schedule, if
applicable, no Acquired Contract has been amended or supplemented in any way and
Colonial has not and no party thereto has, assigned any of its rights or
delegated any of its duties thereunder. True and complete copies of the Acquired
Contracts have been delivered to Meritage.
C. Except as set forth on Section 4.14 of the Seller's Disclosure
Schedule, no breach or default exists under any Acquired Contract and no event
has occurred with respect thereto that with the lapse of time or action or
inaction by Colonial or, to the Knowledge of Seller, any other party thereto,
would result in a breach thereof or a default thereunder.
D. Except as specifically disclosed on Section 4.14 of the Seller's
Disclosure Schedule, (i) since the date of the Financial Statements, no supplier
or materialman has indicated that it will stop or decrease the rate of business
done with Colonial, except for changes in the ordinary course of the Colonial
Business, (ii) Colonial has performed in all material respects the obligations
which were or are now required to be performed by each in connection with the
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Acquired Contracts and Colonial has not been advised of or received any claim of
default under any Acquired Contract, (iii) Colonial has no present expectation
or intention of not fully performing any obligation pursuant to any Acquired
Contract and (iv) there has been no breach and, to the Knowledge of Seller,
there is no anticipated breach by any other party to any Acquired Contract.
E. Upon the assignment of each Acquired Contract to Buyer pursuant
hereto, and subject to any consent requirements contained therein, all rights of
Colonial with respect to each Acquired Contract will inure to Buyer and each
Acquired Contract will be enforceable by Buyer in the same manner as such
Acquired Contract is enforceable by Colonial.
F. The assignment to Buyer of all of Colonial's right, title and
interest in, to and under each Acquired Contract pursuant hereto will be free
and clear of any lien except for Permitted Liens.
G. Except as set forth on Section 4.14 of the Seller's Disclosure
Schedule, as of the Closing Date, Colonial will not owe any amount (whether
absolute, contingent or otherwise) with respect to any Acquired Contract other
than amounts properly recorded in the Final Closing Balance Sheet in accordance
with GAAP.
H. Except as disclosed on Section 4.14 of the Seller's Disclosure
Schedule, no Acquired Contract (i) requires Colonial to make purchases or pay
for services in excess of the requirements of the Colonial Business or (ii)
guarantees any obligation of another person.
I. Colonial has paid all rental and other payments due under each
personal property lease and real property lease (collectively, the "PROPERTY
LEASES") under which Colonial is the lessee in accordance with its terms. With
respect to each such Property Lease, Colonial has been in peaceable possession
of the buildings, equipment, machinery, Owned Real Property, vehicles or other
tangible property covered thereby since the commencement of the original term of
such Property Lease. No indulgence, postponement or waiver of Colonial's
obligations under any such Property Lease has been granted by the lessor.
Subject to the terms of the Property Leases, Colonial possesses full right and
power to occupy or possess, as the case may be, all of the buildings, equipment,
machinery, real property, vehicles and other tangible property covered by such
Property Leases.
J. With respect to any written or oral agreement, arrangement,
commitment, contract or lease that Colonial entered into, after the date hereof,
such agreement, arrangement, commitment, contract or lease will satisfy all the
representations and warranties set forth in this Section 4.14.
4.15 Warranties. Except as set forth on Section 4.15 of the Seller's
Disclosure Schedule, Colonial has not given or made any other express warranties
to third parties with respect to any property or products sold or services
performed by Colonial and there are no facts or the occurrence of any event
forming the basis of any present claim against Colonial for liabilities due to
any express or implied warranty. Section 4.15 of the Seller's Disclosure
Schedule includes forms of Colonial's residential sales contracts containing
applicable guaranty, warranty and indemnity provisions.
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4.16 Environmental Matters.
A. Colonial has at all times been in compliance with all
Environmental Laws governing the Colonial Business, properties and assets,
including, without limitation: (i) all requirements relating to the Discharge
and Handling of Hazardous Substances, (ii) all requirements relating to notice,
record keeping and reporting, (iii) all requirements relating to obtaining and
maintaining Permits for the ownership of its properties and assets and the
operation of its business, including Permits relating to the Handling and
Discharge of Hazardous Substances or (iv) all applicable writs, orders,
judgments, injunctions, governmental communications, decrees, informational
requests or demands issued pursuant to, or arising under, any Environmental
Laws.
B. Except as set forth on Section 4.16 of the Seller's Disclosure
Schedule, there are no, and, to the Knowledge of Seller, there is no basis for,
any orders, warning letters, notices of violation (collectively "NOTICES") or
Proceedings against or involving Colonial, the Colonial Business, the Acquired
Assets or the Owned Real Property issued by any Governmental Authority or third
party with respect to any Environmental Laws or Permits issued to Colonial
thereunder in connection with, related to, or arising out of the ownership by
Colonial of its properties or assets or the operation of their business which
have not been resolved to the satisfaction of the issuing Governmental Authority
or third party in a manner that would not impose any obligation, burden or
continuing liability on Buyer in the event that the transactions contemplated by
this Agreement are consummated, or which could have an adverse effect on the
Colonial Business, the Acquired Assets, the Owned Real Property or Colonial's
financial condition or results of operations including, without limitation: (i)
Notices or Proceedings related to Colonial being potentially responsible parties
for a federal, state, regional or local environmental cleanup site or for
corrective action under any applicable Environmental Laws, (ii) Notices or
Proceedings in connection with any federal, state, regional or local
environmental cleanup site, or in connection with any of the real property or
premises where Colonial has transported, transferred or disposed of Hazardous
Substances, (iii) Notices or Proceedings relating to Colonial being responsible
to undertake any response or remedial actions or clean-up actions of any kind or
(iv) Notices or Proceedings related to Colonial being liable under any
Environmental Laws for personal injury, property damage, natural resource damage
or clean up obligations.
C. Except for the Permitted Materials and except as set forth on
Section 4.16 of the Seller's Disclosure Schedule, Colonial has not Handled or
Discharged, nor allowed or arranged for any third party to Handle or Discharge,
Hazardous Substances to, at or upon: (i) any location other than a site lawfully
permitted to receive such Hazardous Substances, (ii) any of the Owned Real
Property or (iii) any site which: (a) pursuant to CERCLA or any similar state
law has been placed on the National Priorities List or its state equivalent or
(b) with respect to which the Environmental Protection Agency or the relevant
state agency or other Governmental Authority has notified Colonial that such
governmental authority has proposed or is proposing to place on the National
Priorities List or its state equivalent. There has not occurred, nor is there
presently occurring, a Discharge, or, to the Knowledge of Seller, threatened
Discharge, of any Hazardous Substance on, into or beneath the surface of, or
adjacent to, any of the Owned Real Property in an amount or otherwise requiring
a Notice or report to be made to a Governmental Authority or in violation of any
applicable Environmental Laws.
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D. Section 4.16 of the Seller's Disclosure Schedule identifies the
operations and activities and locations thereof, if any, which have been
conducted and are being conducted by Colonial on any of the Owned Real Property
which have involved the Handling or Discharge of Hazardous Substances, other
than Permitted Materials.
E. Except as set forth on Section 4.16 of the Seller's Disclosure
Schedule, Colonial does not use, and has never used, any Aboveground Storage
Tanks or Underground Storage Tanks, and there are not now nor, to the Knowledge
of Seller, have there ever been any Underground Storage Tanks beneath any of the
Owned Real Property that are required to be registered and/or upgraded under
applicable Environmental Laws.
F. Section 4.16 of the Seller's Disclosure Schedule identifies (i)
all environmental audits, assessments or occupational health studies undertaken
by Colonial or their agents or, to the Knowledge of Seller, undertaken by any
Governmental Authority or any third party, relating to or affecting Colonial or
any of the Owned Real Property, (ii) the results of any ground, water, soil, air
or asbestos monitoring undertaken by Colonial or their agents or, and to the
extent available or made known to Colonial, undertaken by any Governmental
Authority or any third party, relating to or affecting Colonial or any of the
Owned Real Property, which indicate the presence of Hazardous Substances at
levels requiring a notice or report to be made to a governmental authority or in
violation of any applicable Environmental Laws, (iii) all material written
communications between Colonial and any Governmental Authority arising under or
related to Environmental Laws and (iv) all outstanding citations issued under
OSHA, or similar state or local statutes, laws, ordinances, codes, rules,
regulations, orders, rulings or decrees, relating to or affecting either
Colonial or any of the Owned Real Property.
4.17 Tax Matters.
A. Except for current filings, which are the subject of extensions
under applicable procedures and which are identified in Section 4.17 of the
Seller's Disclosure Schedule, Colonial and Parent have filed all Tax Returns
that they were required to file prior to the date hereof. All such Tax Returns
were correct and complete in all respects. Except as set forth on Section 4.17
of the Seller's Disclosure Schedule, all Taxes owed by Colonial or owed by
Parent in respect of Colonial (whether or not shown on any Tax Return), the due
date of which preceded the date hereof, have been paid. Except as set forth on
Section 4.17 of the Seller's Disclosure Schedule, all other Taxes due and
payable by Colonial or owed by Parent in respect of Colonial, with respect to
periods ending on or as of the date of the Closing (whether or not a Tax Return
is due on such date) have been paid or are accrued on the applicable Financial
Statements or will be accrued on the Final Closing Balance Sheet.
B. Except as set forth on Section 4.17 of the Seller's Disclosure
Schedule, with respect to each taxable period for Colonial ending prior to the
date hereof or prior to the date of the Closing: (i) except for taxable periods
which are open either such taxable period has been audited by the relevant
taxing authority or the time for assessing or collecting Taxes with respect to
each such taxable period has closed and each taxable period is not subject to
review by any relevant taxing authority, (ii) no deficiency or proposed
adjustment which has not been settled or otherwise resolved for any amount of
Taxes has been asserted or assessed by any taxing authority against Colonial or
Parent, (iii) neither Parent nor Colonial has consented to extend the time in
which any Taxes may be assessed or collected by any taxing authority, (iv)
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neither Parent nor Colonial has requested or been granted an extension of the
time for filing any Tax Return to a date later than the Closing, (v) there is no
action, suit, taxing authority proceeding or audit or claim for refund now in
progress, pending or, to the Knowledge of Seller, threatened against or with
respect to Colonial or Parent regarding Taxes, (vi) neither Parent nor Colonial
has made an election or filed a consent under Section 341(f) of the Code (or any
corresponding provision of state, local or foreign law), (vii) there are no
liens on the assets of Colonial relating or attributable to Taxes (other than
liens for sales and payroll Taxes not yet due and payable and liens for
non-delinquent current real property taxes, special taxes, and assessments paid
with real property taxes), and, to the Knowledge of Seller, there is no
reasonable basis for the assertion of any claim relating or attributable to
Taxes which, if adversely determined, would result in any such lien (other than
those noted in the preceding parenthetical) on the assets of Colonial, (viii)
Colonial has not been a member of an affiliated group (as defined in Section
1504 of the Code) or filed or been included in a combined, consolidated or
unitary income Tax Return, (ix) Colonial is not a party to or bound by any tax
allocation or tax sharing agreement and has no current or potential contractual
or other obligation to indemnify any other person with respect to Taxes, (x) to
the Knowledge of Seller, no taxing authority will claim or assess any additional
Taxes against Colonial for any period for which Tax Returns have been filed,
(xi) no claim has ever been made by a taxing authority in a jurisdiction where
Colonial or Parent does not file Tax Returns that Colonial or Parent is or may
be subject to Taxes assessed by such jurisdiction, (xii) neither Colonial nor
Parent have a permanent establishment in any foreign country, as defined in the
relevant tax treaty between the United States of America and such foreign
country, (xiii) true, correct and complete copies of all income and sales Tax
Returns filed by or with respect to Colonial for the past three years have been
furnished or made available to Meritage, (xiv) Colonial or Parent, as
applicable, has disclosed on each Tax Return filed by Colonial or Parent, as
applicable, all positions taken thereon that could give rise to a substantial
understatement of penalty of federal income Taxes within the meaning of Code
Section 6662, (xv) no sales or use Tax will be payable by Colonial as a result
of this transaction, and there will be no non-recurring intangible tax,
documentary stamp tax, or other excise tax (or comparable tax imposed by an
Governmental Authority) as a result of this transaction, (xvi) each of Colonial
and Parent has withheld and paid all Taxes required to have been withheld and
paid in connection with any amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party, and all Forms W-2 and
1099 required with respect thereto have been properly completed and timely
filed, and (xvii) none of the Assumed Liabilities is an obligation to make a
payment that will not be deductible under Code Section 280G.
C. Except as set forth on Section 4.17 of the Seller's Disclosure
Schedule, there is no "roll-back" Tax pertaining to or affecting the Owned Real
Property that is being conveyed to Buyer that would be owed by, or become an
obligation of, Buyer or Meritage.
D. Parent (and any predecessor of Parent) has been a validly
electing S corporation within the meaning of Code Sections 1361 and 1362 at all
times during its existence and Parent will be an S corporation up to and
including the Closing Date.
E. Colonial and each subsidiary set forth on Section 4.6 of the
Seller's Disclosure Schedule has been a validly electing "qualified subchapter S
subsidiary" within the
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meaning of Code Section 1361(b)(3)(B) at all times during its existence and
Colonial will be qualified subchapter S subsidiary up to and including the
Closing Date.
F. Neither Parent nor Colonial has any potential liability for any
Tax under Code Section 1374. Neither Parent nor any qualified subchapter S
subsidiary of Parent, including Colonial, has, in the past 10 years, (i)
acquired assets from another corporation in a transaction in which Parent's Tax
basis for the acquired assets was determined, in whole or in part, by reference
to the Tax basis of the acquired assets (or any other property) in the hands of
the transferor or (ii) acquired the stock of any corporation that is a qualified
subchapter S subsidiary.
G. Seller has paid all applicable State of Florida sales and use tax
on its initial purchase of the furniture, fixtures and equipment to be conveyed
to Buyer hereunder. Seller's engagement of the broker referred to in Section
11.15 of this Agreement will not result in the inability of Buyer to rely on the
Florida sales tax exemption for occasional sales pursuant to Rule 12A-1.037 of
the Florida Administrative Code.
4.18 Restrictions on Business Activities. With respect to the Acquired
Assets and the Owned Real Property, there are no agreements (non-compete or
otherwise), arrangements, commitments, judgments, injunctions, orders or decrees
to which Colonial is party or otherwise binding on Colonial, the Colonial
Business, the Acquired Assets or the Retained Property that has or reasonably
could be expected to have the effect of prohibiting or impairing the conduct
necessary or required by Buyer to continue to operate the Colonial Business as
conducted prior to the Closing.
4.19 Intellectual Property. Section 4.19 of the Seller's Disclosure
Schedule sets forth a description of the Intellectual Property for which
Colonial or Parent has rights to use in the conduct of the Colonial Business.
The conduct of the Colonial Business as presently conducted and the conduct and
the use and exploitation of the Intellectual Property do not infringe or
misappropriate any rights held or asserted by any person, and no person is
infringing on the Intellectual Property. Except as set forth in the Acquired
Contracts, no payments are required for the continued use of the Intellectual
Property. None of the Intellectual Property has ever been declared invalid or
unenforceable, or is the subject of any pending or threatened action for
opposition, cancellation, declaration, infringement, invalidity,
unenforceability, or misappropriation or like claim, action, or proceeding.
Except as set forth on Section 4.19 of the Seller's Disclosure Schedule, all
house plans used by the Colonial Business are owned outright by Colonial or are
licensed to Colonial without payment of any fee, and may be assigned without
cost to Buyer. Seller has all rights of ownership necessary to grant Buyer and
Meritage the rights granted under the License Agreement.
4.20 Litigation. Except as set forth on Section 4.20 of the Seller's
Disclosure Schedule, there are no suits, claims, actions, arbitrations,
investigations or proceedings entered against, now pending, or, to the Knowledge
of Seller, threatened against Colonial, the Colonial Business, the Acquired
Assets or the Owned Real Property or any other party before any court,
arbitration, administrative or regulatory body or any governmental agency which
may result in any judgment, order, award, decree, liability or other
determination which will or could reasonably be expected to have any effect upon
Colonial, the Acquired Assets, the Owned Real Property or the Colonial Business.
Except as set forth on Section 4.20 of the Seller's Disclosure Schedule, neither
Colonial nor, to the Knowledge of Seller, any other party is subject to any
-29-
continuing court or administrative order, writ, injunction or decree applicable
to the Colonial Business, the Acquired Assets or the Owned Real Property or to
their property or employees, and neither Colonial nor any other party is in
default with respect to any order, writ, injunction or decree of any court or
federal, state, municipal, or other governmental department, commission, board,
agency or instrumentality applicable to the Colonial Business.
4.21 Employees. Attached on Section 4.21 of the Seller's Disclosure
Schedule is a list of names, current annual rates of salary, bonus, employee
benefits, accrued vacation and sick time, sick pay and other compensation,
severance, benefits and perquisites, including the provision of company owned
automobiles, of all the employees and agents of Colonial whose work relates,
directly or indirectly, to the Colonial Business. To the Knowledge of Seller, no
key employee of Colonial, and no group of Colonial's employees, has any plans to
terminate his, her or its employment. Colonial is not a party to any collective
bargaining agreement with any labor union or association. There are no
discussions, negotiations, demands or proposals that are pending or that have
been conducted or made with or by any labor union or association, and there are
no pending or, to the Knowledge of Seller, threatened labor disputes, strikes or
work stoppages that may affect Colonial or the Colonial Business. Colonial is in
material compliance with all federal and state laws respecting employment and
employment practices, terms and conditions of employment, and wages and hours,
and are not engaged in any unfair labor practices. Except as accrued on the
Final Closing Balance Sheet or as set forth on Section 4.21 of the Seller's
Disclosure Schedule, Colonial may terminate any employee, with or without cause,
without liability or obligation, other than for salary and bonuses accrued
through the date of any such termination and for the obligations of Colonial
referred to in Section 4.22 below.
4.22 Employee Benefit Plans.
A. With respect to all employees and former employees of Colonial,
except as set forth on Section 4.22 of the Seller's Disclosure Schedule,
Colonial does not presently maintain, contribute to or have any liability
(including current or potential multi-employer plan withdrawal liability under
ERISA) under any: (i) non-qualified deferred compensation or retirement plan or
arrangement which is an "employee pension benefit plan" as such term is defined
in Section 3(2) of ERISA, (ii) defined contribution retirement plan or
arrangement designed to satisfy the requirements of section 401(a) of the Code,
which is an employee pension benefit plan, (iii) defined benefit pension plan or
arrangement designed to satisfy the requirements of Section 401(a) of the Code,
which is an employee pension benefit plan, (iv) "multi-employer plan" as such
term is defined in Section 3(37) of ERISA, (v) unfunded or funded medical,
health, or life insurance plan or arrangement for present or future retirees or
present or future terminated employees which is an "employee welfare benefit
plan" as such term is defined in Section 3(1) of ERISA, except as required by
Section 4980B of the Code or Sections 601 through 609 of ERISA or (vi) any other
employee welfare benefit plan.
B. With respect to each of the employee benefit plans listed on
Section 4.22 of the Seller's Disclosure Schedule, Colonial has furnished to
Buyer true and complete copies of: (i) the plan documents (including any related
trust agreements), (ii) the most recent determination letter received from the
Internal Revenue Service, (iii) the latest actuarial valuation, (iv) the latest
financial statement, (v) the last Form 5500 Annual Report and (vi) all related
trust agreements, insurance contracts or other funding agreements which
implement such employee benefit plan. Neither Colonial, nor any of its
respective officers, partners, employees
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or any other "fiduciary", as such term is defined in Section 3(21) of ERISA, has
any liability for failure to comply with ERISA or the Code for any action or
failure to act in connection with the administration or investment of such
plans.
C. With respect to each plan listed on Section 4.22 of the Seller's
Disclosure Schedule: (i) Colonial has performed all obligations required to be
performed by it under each such plan and each such plan has been established and
maintained in accordance with its terms and in compliance with all applicable
laws, statutes, rules and regulations, including but not limited to the Code and
ERISA, (ii) there are no actions, suits or claims pending or threatened or
anticipated (other than routine claims for benefits) against any such plan,
(iii) each such plan can be amended or terminated after the Closing in
accordance with its terms, without liability to Colonial, Buyer or Meritage and
(iv) there are no inquiries or proceedings pending or threatened by the Internal
Revenue Service or the Department of Labor with respect to any such plan.
D. With respect to the insurance contracts or funding agreements
which implement any of the employee benefit plans listed on Section 4.22 of the
Seller's Disclosure Schedule, such insurance contracts or funding agreements are
fully insured or the reserves under such contracts are sufficient to pay claims
incurred.
E. Each plan listed on Section 4.22 of the Seller's Disclosure
Schedule that is intended to be qualified under Section 401(a) of the Code has
been determined by the Internal Revenue Service to so qualify and each trust
created thereunder has been determined by the Internal Revenue Service to be
exempt from tax under Section 501(a) of the Code and nothing has occurred since
the date of the most recent determination that would be reasonably likely to
cause any such plan or trust to fail to qualify under Section 401(a) of the
Code.
F. With respect to each plan listed on Section 4.22 of the Seller's
Disclosure Schedule that is intended to be qualified under Section 401(a) of the
Code, a "partial termination" will be deemed to have occurred and each "affected
employee" will become fully vested in his or her accrued benefit and/or account
balance in such plan, or plans, as of the Closing Date. The term partial
termination and affected employee shall be defined by reference to Code Section
411(d)(3) and the regulations and interpretations issued thereunder.
4.23 Insurance. Section 4.23 of the Seller's Disclosure Schedule lists and
briefly describes each insurance policy and fidelity bond, including performance
improvement bonds, maintenance bonds, labor and material bonds and other bonds
related to the Owned Real Property (collectively, the "BONDS"), maintained by
Colonial with respect to their properties or business, and sets forth the date
of expiration of each such insurance policy. All of such insurance policies and
Bonds are in full force and effect and Colonial is not in default with respect
to its obligations under any of such insurance policies or Bonds. Except as set
forth on Section 4.23 of the Seller's Disclosure Schedule, there is no claim of
Colonial pending under any of such policies or Bonds as to which coverage has
been questioned, denied or disputed by the underwriters of such policies or
Bonds and there has been no threatened termination of, or material premium
increase with respect to, any of such policies. The insurance coverage of
Colonial is customary for entities of similar size engaged in similar lines of
business.
4.24 Affiliate Transactions. Except as set forth on Section 4.24 of the
Seller's Disclosure Schedule, neither Colonial or Parent nor any employee,
officer, member, shareholder
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or affiliate thereof, or any member of their immediate family, or any entity in
which any of such persons owns any beneficial interest (other than a publicly
held corporation whose stock is traded on a national securities exchange or in
the over-the-counter market and less than 1% of the stock of which is
beneficially owned by any of such persons) has any agreement with Colonial or
any interest in any property (real, personal or mixed, tangible or intangible)
used in or pertaining to the Colonial Business. For purposes of the preceding
sentence, the members of the immediate family of a person will consist of the
spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and
daughters-in-law and brothers- and sisters-in-law of such person.
4.25 Compliance with Laws. Colonial and Parent and their respective
officers, agents, employees, members, shareholders and affiliates have
materially complied with all Applicable Laws, which affect the Colonial
Business. No claims have been filed against Colonial alleging a violation of any
Applicable Laws, except as set forth on Section 4.25 of the Seller's Disclosure
Schedule. Without limiting the generality of the foregoing, Colonial has not
materially violated, or received a notice or charge asserting any violation of,
OSHA, or any other state, federal, regional and local acts (including rules and
regulations thereunder) regulating or otherwise affecting employee health and
safety. Colonial has not given or agreed to give any money, gift or similar
benefit (other than incidental gifts of articles of nominal value) to any actual
or potential customer, supplier, governmental employee or any other person in a
position to assist or hinder Colonial in connection with any actual or proposed
transaction.
4.26 Permits.
A. Colonial possesses all approvals, authorizations, certificates,
consents, franchises, licenses and permits necessary for the lawful conduct of
its business (collectively, the "PERMITS"), including but not limited to the
Permits listed in Section 4.26 of the Seller's Disclosure Schedule. Such Permits
are in full force and effect, no violations have occurred with respect thereto,
and to the Knowledge of Seller, no basis exists for any limitation, revocation
or withdrawal thereof.
B. Colonial also possesses (or there have been granted by the
applicable governmental authorities with respect to the Owned Real Property) the
subdivision, development, construction and sale permits, development orders,
concurrency certifications, and other authorizations, approvals, and
entitlements set forth on Section 4.26 of the Seller's Disclosure Schedule
(collectively "LAND USE ENTITLEMENTS"). With respect to the Owned Real Property,
no approvals are required as of the Closing from any Governmental Authority to
complete the development and construction of homes and the sale thereof in the
respective Owned Real Property, there are in full force and effect validly
issued building permits for each home under construction or completed and
Colonial has no notice of any pending or threatened moratorium or other
restriction that would preclude the obtaining of building permits for any homes
on such Owned Real Property not yet under construction or for which building
permits have not been obtained. No decision-making body has denied or withheld
any Land Use Entitlements.
C. All required surface water management permits for the Owned Real
Property have been issued by the South Florida Water Management District and any
other applicable governing body. The construction of all necessary surface water
management facilities has been completed in accordance with the surface water
management permits issued
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for the Owned Real Property and certified as complete by the engineer of record,
and said permits have been converted to operating permits by the applicable
agencies.
D. Except for cash bonds that are related to home construction,
which are an Acquired Asset, Colonial shall receive the benefit of all cash and
other performance bonds posted prior to the Closing in satisfaction of the
condition imposed by the Land Use Entitlements, and any assets or cash released
upon satisfaction of the requisite obligations after closing shall be paid to
Colonial.
4.27 Membership Records; Minute Books. The minute books of Colonial made
available to Meritage are the only minute books of Colonial and its subsidiaries
and contain an accurate summary of all meetings of directors (or committees
thereof) and members or shareholders or actions by written consent since the
time of incorporation of Colonial.
4.28 Budgets. Section 4.28 of the Seller's Disclosure Schedule sets forth
the site development budgets for the Owned Real Property. Such budgets include
adequate provision for (i) costs to complete remaining site improvement work and
amenities and (ii) Colonial's obligation to fund any homeowners association
reserve deficiency amounts to the extent of such obligations. Such budgets are
complete and were prepared by Colonial in good faith and the assumptions
underlying such budgets are reasonable.
4.29 Hurricane Damage. Except as set forth on Section 4.29 of the Seller's
Disclosure Schedule, none of the Owned Real Property suffered any material
damage as a result of the hurricanes that struck Florida during 2004.
4.30 Disclosure. Neither this Agreement nor the Seller's Disclosure
Schedule or Exhibits hereto contains any untrue statement of a material fact or,
to the Knowledge of Seller, omits to state a material fact necessary to make the
statements contained herein or therein, in light of the circumstances in which
they were made, not misleading, and there is no fact which has not been
disclosed to Meritage or Buyer which materially adversely affects or could
reasonably be anticipated to materially adversely affect the financial
condition, results of operations, customer, employee or supplier relations,
business condition, or prospects of Colonial, the Colonial Business, the
Acquired Assets or the Owned Real Property. To the Knowledge of Seller, (i)
there are no defects, deficiencies or inaccuracies in any of the information
furnished by Seller to Buyer or Meritage with respect to the Colonial Business
and (ii) all information furnished by Seller to Buyer or Meritage with respect
to the Colonial Business is accurate and complete.
4.31 Condominiums.
A. The Condominium Projects have been developed in accordance with
Applicable Laws, and in accordance with all of the organizational documents
applicable to each Condominium Project, including but not limited to the
declaration of condominium, articles of incorporation, bylaws and rules and
regulations applicable to the Condominium Project, and the Seller has satisfied
all of its obligations under the foregoing.
B. Each of the Condominium Projects is governed by a condominium
association organized as a not for profit corporation under the laws of the
state of Florida and in
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accordance with the Condominium Act (each a "CONDOMINIUM ASSOCIATION",
collectively the "CONDOMINIUM ASSOCIATIONS"). Each Condominium Association is
controlled by Colonial and has been operated and managed by Colonial in
accordance with Applicable Laws and the Condominium Association's organizational
documents.
C. Colonial has established and funded all requisite capital
reserves for each Condominium Associations, which reserves have not been spent
or otherwise depleted by Colonial and/or the Condominium Association, and which
reserves shall remain the property of each Condominium Association after the
Closing Date.
D. All retail sales contracts for condominium units within the
Condominium Projects comply with Applicable Laws, and the retail buyers
thereunder have been provided with all documents and materials required by
Applicable Laws.
E. True and complete copies of the offering prospectus required by
the Condominium Act and true and complete copies of all offering materials
required to be provided to retail buyers under the Condominium Act have been
delivered to Buyer.
F. All xxxxxxx money deposits received by Seller for residential
condominium units within the Condominium Projects are held in escrow with Beta
Title Company and Worthington Title Company, in accordance with the Condominium
Act. No reservation or other deposits have been accepted. Colonial's rights in
and to the escrow account holding the foregoing deposits shall be assigned to
Buyer at Closing.
G. All improvements constructed as of the Closing Date within the
Condominium Projects have been constructed pursuant Applicable Laws and the
applicable declaration of condominium, and the statutory warranties provided in
section 718.203, Florida Statutes, are hereby made and extended by Colonial, as
developer, to (i) Buyer, (ii) the respective Condominium Association, and (iii)
all retail buyers within the Condominium Project for all improvement built
before the Closing.
4.32 Retail Sales Contracts. Section 4.32 of the Seller's Disclosure
Schedule lists as of the date hereof all of the retail sales agreements Seller
has entered into concerning the sale and delivery of homes within the Owned Real
Property (the "RETAIL SALES CONTRACTS") and the xxxxxxx money deposits made
pursuant thereto. Each of the Retail Sales Contracts complies with Applicable
Laws and is valid, binding and in full force and effect and is free of default.
True and complete copies of the Retail Sales Contracts have been delivered to
Buyer. All xxxxxxx money deposits for condominium units are held with an escrow
agent pursuant to the foregoing Section 4.31, and all xxxxxxx money deposits for
single family homes have been paid directly to the Seller pursuant in accordance
with Applicable Laws.
4.33 Covenants, Conditions and Restrictions. All Housing Units conform
with the requirements of any applicable covenants, conditions, restrictions and
declarations (the "CCRs") and have received all requisite approvals required
pursuant to the CCRs.
4.34 Associations. All of the Associations are controlled by Seller in
accordance with Applicable Laws, and have been duly organized and are in good
standing under Applicable Laws, and have been operated and managed by Seller in
accordance with Applicable Laws and
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all organizational documents applicable thereto, including without limitation,
the articles of incorporation, bylaws, CCRs applicable to each Association, and
declaration of condominium applicable to each such Condominium Association. The
minute books of all Associations shall be made available to Buyer and shall be
delivered to Buyer at Closing.
4.35 Coastal Construction Control Line. No portion of the Owned Real
Property is affected by the Coastal Construction Control Line as defined in
section 161.053, Florida Statutes.
ARTICLE V
CONDUCT OF COLONIAL PENDING THE CLOSING
Colonial and Parent hereby covenant and agree that from the date hereof to
the Closing Date:
5.1 Conduct of Business Pending the Closing. Seller will take no action
except in the ordinary course, on an arm's length basis, and in accordance with
all Applicable Laws and past custom and practice, and Seller will not, directly
or indirectly, do and Seller will not permit to occur any of the following,
without the prior written consent of Meritage:
A. cancel or terminate or permit to be canceled or terminated
Colonial's current insurance (or reinsurance) policies or permit any of the
coverage thereunder to lapse, unless simultaneous with such termination,
cancellation or lapse, replacement policies providing coverage equal to or
greater than the coverage under the canceled, terminated or lapsed policies for
substantially similar premiums are in full force and effect;
B. sell, lease, encumber, or otherwise dispose of any of the
Acquired Assets or the Optioned Real Property other than, in the case of lots
and homes held for sale in the ordinary course, the sale of such lots or homes
in the ordinary course of Colonial's business as previously conducted;
C. without the prior written consent of Buyer or Meritage, acquire
or enter into any option or other agreement to acquire any real property or
other material assets;
D. default under any material contract, agreement, commitment or
undertaking;
E. violate or fail to comply with any Applicable Laws;
F. fail to maintain and repair the Acquired Assets and the Owned
Real Property in accordance with good standards of maintenance and as required
in any leases or other agreements pertaining thereto;
G. enter into or modify any employment, severance or similar
agreements or arrangements with, or adopt or amend any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
employment or other benefit plan, trust, fund or group arrangement for the
benefit or welfare of any officers, directors, employees or consultants;
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H. except in the ordinary course of business, consistent with
historical practices, modify or terminate any of the Acquired Contracts or enter
into any new contracts that would become Acquired Contracts;
I. acquire (by merger, exchange, consolidation, acquisition of stock
or assets or otherwise) any corporation, partnership, joint venture or other
business organization or division or material assets thereof;
J. issue or create any additional shares or other ownership
interests in Colonial or issue or create any warrants, obligations,
subscriptions, options or other commitments under which any additional shares or
other ownership interests in Colonial might be authorized, issued or
transferred;
K. incur any indebtedness for borrowed money or issue any debt
securities except the borrowing of working capital in the ordinary course of
business and consistent with past practice;
L. (i) enter into any contract or arrangement which results in a
financial commitment that exceeds in the aggregate $100,000 or one year or (ii)
except in the ordinary course of business consistent with historical practices,
pay any obligation or liability, fixed or contingent, other than current
liabilities;
M. waive or compromise any right or claim (other than as required to
resolve any pending or threatened litigation disclosed in the Seller's
Disclosure Schedule or warranty claims);
N. start more "spec" homes than is consistent with past practice;
O. commit any act described in Section 4.10;
P. except for distributions necessary for Colonial or Parent or
Parent's ultimate owners to pay Taxes in respect of the Colonial Business, pay
any dividends or make any distributions; or
Q. agree to do any of the actions described in the preceding clauses
A through P.
5.2 Business Relationships. Seller will exercise its best efforts to:
A. preserve intact the Acquired Assets and the Owned Real Property
and any assets associated with the Colonial Business;
B. maintain all facilities and equipment in good condition, ordinary
wear and tear excepted;
C. keep available the services of Colonial's officers and employees
as a group;
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D. maintain satisfactory relationships with suppliers, distributors,
customers and others having business relationships with Colonial; and
E. upon execution of this Agreement, adopt Meritage's policy with
respect to purchases of homes by relatives, family members and affiliates.
5.3 Notification of Certain Matters. Seller will:
X. xxxxxx on a regular basis with representatives of Meritage and
report operational matters and the general status of ongoing operations;
B. notify Meritage of any material adverse change in the Colonial
Business or in the operation of its properties and of any governmental or third
party complaints, investigations or hearings (or communications indicating that
the same may be contemplated);
C. not take any action which would render, or which reasonably may
be expected to render, any representation or warranty made by it in this
Agreement untrue at, or at any time prior to, the Closing; and
D. promptly notify Meritage if Seller discovers that any
representation or warranty made in this Agreement was when made, or has
subsequently become, untrue.
5.4 Required Approvals. As promptly as practicable after the date of this
Agreement, Meritage, Buyer and Colonial will cooperate in making all filings
required by Applicable Laws in order to consummate the transactions contemplated
by this Agreement. The parties also will cooperate with each other in obtaining
all consents for Acquired Contracts in accordance with Section 7.2C.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Employment; Transition Matters.
A. Colonial will be responsible for any severance or other payments,
including, but not limited to, other compensation, benefits and perquisites
incurred in connection therewith and during the period prior to the Closing
Date. Seller agrees to retain liability for any COBRA continuation coverage with
respect to any qualified beneficiary whose qualifying event occurs on or before
the Closing Date. The terms COBRA continuation coverage, qualified beneficiary,
and qualifying event shall be defined by reference to Section 4980B of the Code
and the regulations and interpretations issued thereunder. Subject to Section
7.2, immediately after the Closing, Buyer agrees to hire such employees of
Colonial on an "at will" basis as it determines in its sole discretion are
necessary and Colonial will cooperate with Buyer to that end. In addition, Buyer
will employ Xxxxxxx Xxxxxxxxxxx pursuant to the terms of that employment
agreement, in the form attached hereto as EXHIBIT F (the "XXXXXXXXXXX EMPLOYMENT
AGREEMENT"). Buyer shall use reasonable commercial efforts, without incurring
any material incremental monetary obligation, to credit all employees hired
pursuant to this Section 6.1A with service with Colonial for purposes of
seniority, eligibility and vesting under Buyer's employee benefit plans,
programs or arrangements which such employees may be eligible to participate.
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Buyer shall also use reasonable commercial efforts, without incurring any
material incremental monetary obligation, to waive all limitations as to
pre-existing condition exclusions and waiting periods with respect to
participation and coverage requirements applicable to employees of Buyer under
any welfare benefit plans that such employees are eligible to participate in
after the Closing, other than to the extent that exclusions or waiting periods
already in effect with respect to such employees have not been satisfied as of
the Closing Date under any welfare benefit plan maintained for employees
immediately prior to the Closing Date.
B. For a period of six months from the Closing Date, Seller will
lease to Buyer the employees listed on Schedule 6.1B. Such employees are
employed by Seller in Montgomery, Alabama and handle accounting related
functions for the Colonial Business. Buyer will reimburse Seller for the salary
and direct employment related costs incurred by Seller relating to these
employees as set forth on Schedule 6.1B. Direct employment related costs shall
not include any costs and expenses incurred as a result of Seller's violation of
any Applicable Laws in relation to said employees, including but not limited to
any violation or alleged violation of any civil rights laws, anti-discrimination
laws, wage and hour and compensation laws. Buyer shall be entitled to utilize
the services of these employees in connection with the transition of the
Colonial Business in a manner reasonably consistent with their utilization by
Seller prior to the Closing; provided, however, neither Seller or the employees
listed on Schedule 6.1B are obligated to assist Buyer with Buyer's installation
or implementation of Buyer's new computer system(s) relating to the Colonial
Business. Upon expiration of such six month period, Buyer will have the right to
interview and offer employment to the leased employees listed on Schedule 6.1B
which are identified by Colonial and Buyer with an asterisk (*); provided,
however, Buyer will be under no obligation to hire any of the leased employees.
C. For a period of six months following the Closing Date, Buyer will
be entitled to use Seller's accounting and finance related computer systems in
connection with the transition of the Colonial Business. The parties agree there
will be no charge for such use.
6.2 Break-Up Fee.
A. If the transactions contemplated by this Agreement are not
consummated due to the following: (i) a material breach of any representation,
warranty or covenant of Seller as contained herein, (ii) Colonial fails to close
the transaction without cause or (iii) Seller breaches Section 6.3 and, with
respect to clause (iii) only, prior to February 11, 2005, agrees to a term
sheet, letter of intent or definitive agreement, whether oral or in writing,
relating to the acquisition of the Colonial Business, in whole or in part,
whether through purchase, merger, consolidation or other business combination
(other than sales of inventory or immaterial portions of Colonial's assets in
the ordinary course) and such transaction is ultimately consummated, then
immediately upon the occurrence of any such event, subject to Section 10.3,
Seller will pay to Meritage the sum of [ * ] (the "BREAK-UP FEE").
B. If the transactions contemplated by this Agreement are not
consummated due to the following: (i) a material breach of any representation,
warranty or covenant of Meritage or Buyer as contained herein or (ii) Meritage
or Buyer fails to close the transaction without cause then immediately upon the
occurrence of any such event, subject to Section 10.3, Meritage will pay to
Colonial the Break-Up Fee.
--------------------
* Confidential information on this page has been omitted and filed separately
with the Securities Exchange Commission pursuant to a Confidential Treatment
Request.
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without cause then immediately upon the occurrence of any such event, subject to
Section 10.3, Meritage will pay to Colonial the Break-Up Fee.
6.3 No Negotiations. Seller will not, directly or indirectly, through any
officer, director, agent, member, shareholder, affiliate or otherwise, solicit,
initiate or encourage submission of any proposal or offer from any person or
entity (including any of its officers, directors, partners, employees, or
agents) relating to any liquidation, dissolution, recapitalization, merger,
consolidation or acquisition or purchase of all or part of the Colonial
Business, or any equity interest in Colonial, or other similar transaction or
business combination involving Colonial or such assets or business, or
participate in any negotiations regarding, or furnish to any other person any
information with respect to, or otherwise cooperate in any way with, or assist,
participate in, facilitate or encourage, any effort or attempt by any other
person or entity to do or seek any of the foregoing. Seller will promptly notify
Meritage if any such proposal or offer, or any inquiry from or contact with any
person with respect thereto, is made and will promptly provide Meritage with
such information regarding such proposal, offer, inquiry or contact as Meritage
may request.
6.4 Public Announcements. The parties hereto will not issue any press
release or public announcement, including announcements by any party for general
reception by or dissemination to employees, agents or customers, with respect to
this Agreement and the other transactions contemplated by this Agreement without
the prior written consent of the other parties hereto (which consent will not be
withheld unreasonably); provided, however, that Meritage may make any disclosure
or announcement that, in the opinion of its counsel, it is obligated to make
pursuant to applicable law or the rules or regulations of the SEC, the New York
Stock Exchange or any national securities exchange, as applicable; provided
further, that, upon execution of this Agreement and upon the Closing, Meritage
may make a public announcement of such occurrence in a press release. In the
event of any public announcement by Meritage relating to the closing, Meritage
will in good faith consider any comments from Seller regarding the text of the
announcement.
6.5 Confidentiality. Except as otherwise required by law or the rules of
any exchange on which any securities of a party will be listed, all information
marked confidential concerning a party provided to the other party (oral,
written or otherwise) in connection with this Agreement and the transactions
contemplated hereby, including all documents and copies of documents or papers
containing proprietary information ("EVALUATION INFORMATION") will be kept in
confidence by the receiving party. The party receiving such Evaluation
Information will take reasonable steps necessary to ensure the confidentiality
of the Evaluation Information by itself, its employees, agents, consultants,
advisors, members, shareholders and affiliates. Evaluation Information does not
include information that (i) is or becomes generally available to the public
other than as a result of an unauthorized disclosure by the receiving party or
its affiliates or representatives, (ii) was within or comes into the receiving
party's possession, provided that the source of such information was not known
by the receiving party to be bound by a confidentiality agreement with, or other
contractual, legal or fiduciary obligation of confidentiality to the party
providing the information, (iii) is disclosed by the receiving party to others
with the consent of the other party, (iv) is required to be disclosed to any
lender under existing credit facilities or (v) is independently developed by the
receiving party. All Evaluation
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Information will be returned to the appropriate party or destroyed if the
Closing does not occur. Nothing in this Section 6.5 will preclude either party
from competing with the other party.
6.6 Further Assurances. Subject to the terms and conditions herein, each
of the parties hereto agrees to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement, the Asset Agreement, the Real Property Agreement and the Option
Agreement, including obtaining all necessary waivers, consents and approvals and
effecting all necessary registrations and filings and submissions of information
requested by governmental authorities. Seller agrees that it will at any time
before or after the Closing, execute, acknowledge and deliver any further
consents, deeds, assignments, conveyances, other assurances, documents and
instruments of transfer either necessary to consummating the sale, transfer,
assignment, grant and conveyance of the Acquired Assets and the Optioned Real
Property as contemplated in this Agreement, the Asset Agreement, the Real
Property Agreement and the Option Agreement or as reasonably requested by Buyer
or Meritage, and will take any other action consistent with the terms of this
Agreement, the Asset Agreement, the Real Property Agreement or the Option
Agreement that may reasonably be requested by Buyer or Meritage, for the purpose
of assigning, transferring, granting, conveying and confirming to Buyer, or
reducing to possession, any or all property and rights (including the Contract
Assignments) to be conveyed and transferred by this Agreement, the Asset
Agreement, the Real Property Agreement or the Option Agreement. If requested by
Buyer or Meritage, Seller further agrees to prosecute or otherwise enforce in
their name for the benefit of Buyer or Meritage, any claims, rights or benefits
that are transferred to Buyer by this Agreement and that require prosecution or
enforcement in their name. Any prosecution or enforcement of claims, rights or
benefits under this Section 6.6 will be solely at Seller's expense. After the
Closing and for a period of six months, the parties will cooperate in good faith
and use commercially reasonable efforts (at no cost to the other party) to
resolve any issues which may arise in the transition of the Colonial Business,
including transition matters relating to Seller's post-Closing obligations under
the Option Agreement.
6.7 Right to Enter and Inspect. From time to time prior to the Closing,
Buyer may, if accompanied by one or more representatives or agents of Seller
(unless Seller directs or permits otherwise), enter the Owned Real Property and
other property of Colonial with Buyer's representatives, contractors and agents
to examine the Owned Real Property and the Acquired Assets, conduct soil tests,
environmental studies, engineering feasibility studies, and other tests and
studies and otherwise to evaluate, inspect and examine the Owned Real Property
and the Colonial Business and affairs of Colonial. Seller will make available to
Buyer, at Buyer's request and expense for copying by Buyer at any reasonable
time after the Closing Date, any and all books and records of Seller relating,
directly or indirectly, to the Colonial Business, the Acquired Assets and the
Owned Real Property which are reasonably necessary with respect to Buyer's
ongoing operations for inspection. Nothing herein will be construed as imposing
upon Buyer any obligation or liability for the fact of its discovery or required
disclosure of any defect or problem with any of the Acquired Assets or Owned
Real Property.
6.8 Tax on Prior Sales. To the extent such certificates are prepared by
the applicable state taxing authority, if applicable, Seller agrees to furnish
to Buyer certificates from the state taxing authorities and any related
certificates that Buyer may reasonably request as evidence that
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all sales and use tax liabilities of Colonial accruing before the Closing Date
have been fully satisfied or provided for.
6.9 Transfer of Permits. Colonial will use its best efforts to assist
Buyer to effect the assignment or other transfer from Colonial to Buyer as of or
as soon as practicable after the Closing Date of (i) to the extent transferable,
Permits relating to housing construction (but not Permits relating to land
development); provided, however, that such transfer shall only be effective at
such time Buyer obtains its building contractor and/or general contractor
license as contemplated by Section 6.13 and (ii) Bonds relating to housing
construction (but not Bonds relating to land development activities) and (iii)
Land Use Entitlements.
6.10 Intentionally Omitted.
6.11 Declarant's and Developer's Rights. As contemplated by the
Transaction Agreements, Colonial will transfer to Buyer the Acquired Assets,
which includes the Acquired Contracts. Notwithstanding any other provision in
these agreements, Buyer will not acquire or assume any contract between Colonial
and any homeowners association, municipality, improvement district or similar
entity listed on Schedule 6.11 hereto. The parties agree that Buyer may provide
or update Schedule 6.11 up to the Closing Date.
6.12 Intentionally Omitted.
6.13 General Contractor License; Agent. Buyer is in the process of
applying for a building contractor and/or general contractor license. Until such
time as Buyer obtains its license that will allow it to construct single-family
and low rise condominium residential housing in the State of Florida (Xxxxxxx
and Xxx Counties), Colonial agrees for a period not to exceed six months to
serve as the general contractor for construction relating to existing
subdivision projects acquired or to be acquired by Buyer from Colonial pursuant
to this Agreement. Buyer agrees to reimburse Colonial for any out-of-pocket
costs incurred by Colonial in connection with these services, but Buyer shall
not otherwise be obligated to pay Colonial a fee. Except in cases of Colonial's
gross negligence or willful misconduct, Buyer agrees to indemnify Colonial as
set forth in Section 2F of the Indemnification Agreement in connection with its
service as the general contractor. In addition, Colonial consents to Xxxxxxx
Xxxxxxxxxxx acting as Buyer's qualifying agent in connection with Buyer's
license application process.
For so long as Colonial serves as licensed building contractor for
construction relating to existing subdivision projects acquired or to be
acquired by Buyer from Colonial pursuant to this Agreement, (i) Xxxxxxx
Xxxxxxxxxxx shall be employed by both Buyer and Colonial in order to continue to
qualify Colonial as a licensed building contractor under Applicable Laws and
(ii) Buyer shall apply to be qualified as a licensed Building Contractor with
Xxxxxxx Xxxxxxxxxxx serving at its qualifying agent. During the time that
Colonial acts as the building contractor as provided in this Section 6.13,
Colonial shall act with all due care of a building contractor and shall
construct all improvements at the direction of Buyer or Meritage according to
plans and specifications approved by Buyer or Meritage.
Colonial further agrees that in connection with his continued employment
with Colonial described herein, Xxxxxxx Xxxxxxxxxxx will have authority to act
as Colonial's agent in connection
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with Colonial's condominium sales of the Retained Condominium Parcels as
contemplated by Section 2.2D.
6.14 Sterling Oaks Subdivision. As of the Closing Date, six condominium
units remain to be closed in the Sterling Oaks subdivision. Colonial will pay
over to Buyer the actual profit from the sale of the remaining Sterling Oaks
condominium units upon the earlier of (i) three business days following the
close of escrow of the sale to the third party homebuyer or (ii) March 31, 2005.
The estimated profit to be paid over to Buyer is $263,639 in the aggregate, as
set forth on Schedule 6.14.
6.15 Right of First Refusal. Upon Closing, Buyer and Colonial are entering
into a separate agreement which grants to Buyer a right of first refusal on that
certain real estate project owned by Colonial known as the "Xxxxx Xxxxxx"
project. The form of Memorandum of Right of First Refusal, which will be
executed by the parties at Closing, is attached as EXHIBIT L to this Agreement.
6.16 Intentionally Omitted.
6.17 Xxxxx River Lease. Colonial agrees to lease to Buyer for the period
equal to the lesser of (i) 24 months following Closing or (ii) ninety (90) days
after completion of the single family model homes in the Xxxxx River project,
that certain 5.446 acre parcel in the north parcel of Xxxxx (north of Xxxxxxx
Bridge Parkway) where a sales trailer and parking area are currently located.
The rent payable by Buyer to Colonial shall be $10.00 per year.
6.18 Association Reserves. At or prior to the Closing, Colonial will fund
the reserves for the Colonial Shores and Xxxxxx at Renaissance Associations in
amount necessary to establish a cash balance of $20,000 for each Association.
Colonial shall retain any legal rights to reimbursement for any payments, loans
or grants to such Associations, provided any such reimbursements do not create a
corresponding obligation of Buyer to the Association.
ARTICLE VII
CONDITIONS
7.1 Conditions to Obligation of Seller. The obligation of Seller to close
this transaction is subject to the satisfaction, in its sole and absolute
discretion (or waiver by it in writing) of the following conditions on and as of
the Closing:
A. Absence of Certain Actions and Events. There will not be
threatened, instituted, or pending any action or proceeding, before any court or
Governmental Authority or agency, domestic or foreign: (i) challenging or
seeking to make illegal, or to delay or otherwise directly or indirectly to
restrain or prohibit, the consummation of the transactions contemplated hereby,
or seeking to obtain damages in connection therewith or (ii) invalidating or
rendering unenforceable any material provision of this Agreement (including
without limitation any of the Exhibits or Schedules hereto); and there will not
be any action taken, or any statute, rule, regulation, judgment, order or
injunction proposed, enacted, entered, enforced, promulgated, issued or deemed
applicable to the transactions contemplated hereby by any federal, state or
foreign court, government or Governmental Authority or agency, which may,
directly or
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indirectly, result in any of the consequences referred to in clauses (i) and
(ii) or otherwise prohibit consummation of the transactions contemplated hereby.
B. Truthfulness of Representations and Warranties. The
representations and warranties of Buyer and Meritage set forth in Article III
will be true and correct in all material respects as of the Closing Date as if
made at and as of the Closing Date.
C. Compliance. Buyer and Meritage will in all material respects have
performed each obligation and agreement and complied with each covenant to be
performed and complied with by it hereunder at or prior to the Closing.
D. Other Agreements. The Transaction Agreements contemplated by
Section 11.17 will have been executed and performed by each of the parties
thereto.
7.2 Conditions to Obligations of Meritage and Buyer. Meritage's and
Buyer's obligations to close this transaction are subject to the satisfaction,
in their sole and absolute discretion (or waiver by Meritage in writing), of the
following conditions on and as of the Closing:
A. Financial Statements; Auditors Cooperation. Seller will have
delivered to Meritage the financial statements of the Colonial Business required
to be included by Meritage in its filings with the SEC, which financial
statements will comply with GAAP and Regulation S-X promulgated by the SEC, and
Colonial's auditors shall have agreed to (i) include consents to their reports
in Meritage's filings with the SEC and (ii) agreed to provide any necessary
comfort letters in respect of financings by Buyer or Meritage.
B. Schedules. Seller will have delivered an updated Seller's
Disclosure Schedule to Meritage immediately prior to Closing.
C. Consents and Approvals. Seller will have obtained all consents
and approvals, in a form to be mutually agreed upon by Buyer and Seller, for the
acquisition contract relating to the Xxxxxx 328 Property and the contracts and
agreements set forth on Section 4.5 of the Seller's Disclosure Schedule.
D. Absence of Material Adverse Developments. After the date hereof,
Buyer will not have discovered any fact or circumstance not disclosed herein
regarding the Colonial Business, the Acquired Assets, the Owned Real Property or
the properties, condition (financial or otherwise), results of operations or
prospects of the Colonial Business which is or could be, individually or in the
aggregate with other such facts and circumstances, materially adverse to the
Colonial Business, the Acquired Assets or the Owned Real Property.
E. No Damage or Destruction. After the date hereof, there will have
been no damage, destruction or loss of or to any property or properties owned or
used by the Colonial Business, whether or not covered by insurance, which in the
aggregate may have a material adverse effect on the Colonial Business, the
Acquired Assets, the Owned Real Property or the financial condition or results
of operations of Colonial.
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F. Environmental Matters. Buyer will be satisfied with the results
of all environmental assessments made under the Real Property Agreement.
G. Title Insurance. Title Company will have delivered all Reports
and will be prepared to issue each Title Policy (and an endorsement thereto) as
required by Section 5.2 of the Real Property Agreement.
H. Preliminary Closing Balance Sheet. Meritage will have received,
at least five days prior to the Closing, the Preliminary Closing Balance Sheet,
which will comply with Section 2.5B(1).
I. Absence of Certain Actions and Events.
(1) There will not be threatened, instituted or pending any
action or proceeding, before any court or Governmental Authority or
agency, domestic or foreign: (a) challenging or seeking to make illegal,
or to delay or otherwise directly or indirectly to restrain or prohibit,
the consummation of the transactions contemplated hereby, or seeking to
obtain damages in connection therewith, (b) seeking to prohibit direct or
indirect ownership or operation by Buyer of all or a material portion of
the Colonial Business, the Acquired Assets or the Owned Real Property or
to compel Buyer or any of its subsidiaries or affiliates to divest of or
to hold separately all or a material portion of the business, the Acquired
Assets or the Owned Real Property as a result of the transactions
contemplated hereby, (c) seeking to impose or confirm limitations on the
ability of Buyer effectively to exercise directly or indirectly full
rights of ownership of any of the Acquired Assets or Owned Real Property,
(d) seeking or causing any material diminution in the direct or indirect
benefits expected to be derived by Buyer as a result of the transactions
contemplated by this Agreement, (e) invalidating or rendering
unenforceable any material provision of this Agreement (including without
limitation any of the Exhibits or Schedules hereto) or (f) which otherwise
might materially adversely affect Buyer or any of its subsidiaries or
affiliates as determined by Buyer.
(2) There will not be any action taken, or any statute, rule,
regulation, judgment, order or injunction proposed, enacted, entered,
enforced, promulgated, issued or deemed applicable to the transactions
contemplated hereby by any federal, state or foreign court, government or
Governmental Authority or agency, which may, directly or indirectly,
prohibit consummation of the transactions contemplated hereby.
(3) There will not have occurred any of the following events
having a material adverse effect on Meritage or Buyer: (a) a declaration
of a banking moratorium or any suspension of payments in respect of banks
in the United States or any limitation by United States authorities on the
extension of credit by lending institutions, (b) a commencement of war,
armed hostilities, terrorist attack or other international or national
calamity directly or indirectly involving the United States or (c) in the
case of any of the foregoing existing at the date hereof, a material
acceleration or worsening thereof.
J. Truthfulness of Representations and Warranties. The
representations and warranties of Colonial and Parent in this Agreement and in
any certificate or other instrument delivered pursuant to the provisions hereof
or in connection with the transactions contemplated
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hereby will be true and correct in all material respects as of the Closing Date
as if made at and as of the Closing Date.
K. Compliance. Seller will in all material respects have performed
each obligation and agreement and complied with each covenant to be performed
and complied with it hereunder at or prior to the Closing.
L. Non-Compete Agreement. Meritage will have received a
Non-Disclosure and Non-Compete Agreement executed by Colonial and Parent in the
form of EXHIBIT G attached hereto (the "NON-DISCLOSURE AND NON-COMPETE
AGREEMENT").
M. Intentionally Omitted.
N. Releases. Meritage will have received payoff letters for all
loans to be paid off by Meritage at Closing.
O. Real Property Dedications. Buyer shall have received evidence
that Colonial has transferred, dedicated or conveyed by deed to the applicable
homeowners association or municipality the platted real property parcels
identified on Schedule 2.2C.
P. Intentionally Omitted.
Q. No Liens; Recognition Agreements. As of the Closing, there will
be no liens against any portion of the Optioned Real Property. To the extent
that Seller is unable to remove any such liens prior to Closing, Seller will, as
a condition to Closing, provide to Buyer one or more recognition agreements, in
form reasonably acceptable to Buyer, providing that the lien holder confirms and
recognizes Buyer's rights under the Option Agreement.
R. Other Agreements. Meritage will have received the Transaction
Agreements contemplated by Section 11.17 executed by all parties thereto and all
conditions to Closing and closing deliveries thereto will be satisfied or made
as the case may be.
ARTICLE II
CLOSING
8.1 Seller's Obligations. In addition to any other documents required to
be delivered by Seller at Closing, Seller will deliver to Buyer at Closing the
following documents, all in form and substance reasonably satisfactory in all
respects to Buyer and its counsel:
A. Deed. A Statutory Warranty Deed ("DEED"), including an affidavit
of owner, for each parcel comprising the Purchased Real Property by Colonial in
fee, in form substantially similar to EXHIBIT H hereto, subject to no defects,
exceptions, easements, encumbrances, covenants, conditions, restrictions, mining
claims or liens, except the Permitted Exceptions and Florida department of
revenue form DR-219.
B. Option Agreement. The Option Agreement executed by Parent and
Colonial.
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C. Memorandum of Option. A separate memorandum of option agreement
for each project subject to the Option Agreement, in the form attached as
Exhibit D to the Option Agreement at EXHIBIT C hereto.
D. Title Policies. The Title Policies and Reports contemplated by
the Real Property Agreement.
E. Optionee's Title Policies. The optionee's title policy for the
Optioned Real Property contemplated by Section 2.3B.
F. Xxxx of Sale. An executed Xxxx of Sale and Assumption Agreement
("XXXX OF SALE") dated as of the Closing Date, conveying to Buyer all of
Colonial's right, title and interest in and to the Assets in the form attached
hereto as EXHIBIT I.
G. FIRPTA Affidavit. An Affidavit, signed and acknowledged by
Colonial under penalties of perjury, certifying that Colonial is not a
nonresident alien, foreign corporation, foreign partnership, foreign trust,
foreign estate or other foreign person within the meaning of Section 1445 and
7701 of the Internal Revenue Code of 1986, as amended, and the associated
Treasury Regulations.
H. Acquired Contracts. Executed assignment and assumption agreements
for all Acquired Contracts, including the Xxxxxx 328 Property ("CONTRACT
ASSIGNMENTS") with the consents contemplated by Section 7.2C.
I. Intentionally Omitted.
J. Assignments Re Leases; Permits; Retail Sales Contracts; Xxxxxxx
Money Deposits. One or more executed assignments with respect to:
(1) each parcel of real estate or any item of personal
property which is leased by Colonial and which is to be assumed by Buyer
hereunder, accompanied by all consents and estoppels of lessors required
by this Agreement and the Property Leases and other leases being assigned;
(2) (x) Land Use Entitlements and (y) all assignable Permits,
including but not limited to the Permits listed in Section 4.26 of the
Seller's Disclosure Schedule, relating to housing construction issued to
Colonial by any Governmental Authority or vendor, to the extent
assignable, which in the case of Permits will be effective at such time
Buyer obtains its building contractor and/or general contractor license.
(3) all of Colonial's rights, title and interest in and to the
Retail Sales Contracts and an assumption of Colonial's obligations
pursuant to which Buyer shall assume all obligations of Colonial under the
foregoing arising after the Closing; and
(4) all of Colonial's rights in the escrow accounts holding
xxxxxxx money deposits, including accrued interest, paid under the Retail
Sales Contracts for all condominium units.
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K. Books and Records. The books, records and other data relating to
the Colonial Business, Acquired Assets and the Owned Real Property, to the
extent they can be separated from the books, records and other data of Seller
and its subsidiaries and affiliates. Where such books, records and other data
cannot be separated, Seller will provide Buyer copies or summaries of such
information.
L. Resolutions. Copies of the texts of the resolutions by which the
corporate action on the part of Colonial and Parent and necessary to approve
this Agreement and the transactions contemplated hereby were taken and
certificates executed on behalf of Colonial and Parent by their corporate
secretary certifying to Meritage and Buyer that such copies are true, correct
and complete copies of such corporate action or resolutions and that such
corporate action and resolutions were duly adopted and have not been amended or
rescinded.
M. Legal Opinion. Buyer and Meritage will have received an opinion
from Sack Xxxxxx & Xxxxxx, P.C., addressed to Buyer and Meritage, in a form and
content reasonably acceptable to Meritage and its counsel.
N. Assignment of Declarant's Rights. Other than the covenants,
conditions and restrictions referred to in Section 2.2C, an assignment and
assumption of Colonial's rights and obligations as declarant under all
covenants, conditions and restrictions applicable to the Purchased Real
Property, including but not limited to all rights in the Associations, pursuant
to which Buyer shall assume all obligations of declarant under the foregoing
arising after the Closing.
O. Other Agreements and Documents. (i) executed copies of the
Transaction Agreements, (ii) the Memorandum of Right of First Refusal and
Memorandum of Agreement, (iii) any recognition agreements as contemplated by
Section 7.2Q, (iv) such other documents as Buyer or Meritage or its counsel or
any lender of Buyer or Meritage may reasonably request in order to effectuate
the transactions contemplated under this Agreement, and (v) such other documents
as the Title Company may require in order to unconditionally commit at Closing
by the endorsement or xxxx-up of the Title Commitment to issue the Title Policy
without exception for any construction liens arising before Closing.
8.2 Buyer's Obligations. Buyer will deliver to Colonial at Closing the
following, all in form and substance reasonably satisfactory in all respects to
Colonial and Colonial's counsel:
A. Purchase Price. The Purchase Price contemplated by Section
2.5A(1).
B. Option Agreement. The Option Agreement executed by Buyer.
C. Other Agreements and Documents. (i) executed copies of the
Transaction Agreements and (ii) such other documents as Colonial or Colonial's
counsel may reasonably request in order to effectuate the transactions
contemplated under this Agreement.
8.3 Transfer Fees, Title Costs, and Closing Costs and Other Fees;
Prorations.
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A. Title Policy Fees. The cost of the extended form premium for each
Title Policy and the costs of special endorsements will be paid by Colonial and
Buyer as set forth in Section 5.2 of the Real Property Agreement.
B. Taxes. In connection with this transaction, (i) Colonial and
Buyer will each pay 50% of the cost of any documentary transfer tax, stamp tax,
real estate conveyance tax or similar tax or fee and (ii) Colonial will pay any
sales or similar taxes or assessments due and payable. The parties agree that
Colonial will pay 100% of these items relating to Buyer's future acquisition of
the Optioned Real Property.
C. Recording and Other Fees. Colonial and Buyer will each pay 50% of
the recording fees for each Deed. Rollup or catch up tax, if any, will be paid
by Colonial. Colonial will also pay all fees and expenses, including assumption
and transfer fees actually incurred by Colonial in obtaining any consents and
approvals required to be obtained by Colonial under this Agreement or otherwise
in consummating the transactions contemplated by this Agreement.
D. Prorations. To the extent not paid or accrued, real estate ad
valorem taxes and general and special assessments, utilities, rents, Association
assessments and payments on Acquired Contracts will be prorated as of the
Closing Date, based upon the most current information then available. Any
prorations and/or adjustments called for in this Agreement will be made on the
basis of a 30-day month unless otherwise specifically instructed in writing by
Colonial and Buyer. As of Closing, Colonial shall have made all assessment,
capital and reserve contributions to the Associations required by Applicable
laws.
E. Other Fees. Subject to Section 6.2 and except as otherwise
specifically provided in this Agreement, each party will bear its own legal and
accounting fees and other expenses relating to the transactions contemplated by
this Agreement.
ARTICLE III
SURVIVAL AND INDEMNITIES
9.1 Survival of Representations and Warranties. Regardless of any
investigation at any time made by or on behalf of any party hereto, or of any
information any party may have in respect thereof, all representations, and
warranties made hereunder or pursuant hereto or in connection with the
transactions contemplated hereby will survive the Closing and execution,
delivery, and recordation of the Statutory Warranty Deed for a period of [ * ].
Notwithstanding the foregoing, any claims based upon or arising out of fraud or
intentional misstatement will survive [ * ]. Any agreements, covenants,
undertakings provisions or actions contained in this Agreement, which
contemplate action by any of the parties to this Agreement after the Closing
will survive the Closing of this Agreement, including but not limited to the
agreements, covenants, undertakings, provisions and actions set forth in
Sections 2.2C, 2.2D, 2.5B, 2.5C, 6.1B, 6.4, 6.5, 6.6, 6.8, 6.9, 6.13, 6.14,
6.15, 6.17 and 6.18.
9.2 Nature of Statements. All statements contained herein, in the Seller's
Disclosure Schedule or in the Schedules and Exhibits hereto, or in any
certificate or other written instrument
------------------
* Confidential information on this page has been omitted and filed separately
with the Securities Exchange Commission pursuant to a Confidential Treatment
Request.
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delivered by or on behalf of Seller, Buyer or Meritage pursuant to this
Agreement, or in connection with the transactions contemplated hereby, will be
deemed representations and warranties by Seller, Buyer or Meritage, as the case
may be.
9.3 Arbitration. Except as provided in Section 2.5B(4), any dispute,
controversy or claim, whether contractual or non-contractual, between Meritage
and Buyer on the one hand and Seller on the other hand arising directly or
indirectly out of or connected with this Agreement, relating to the breach or
alleged breach of any representation, warranty, agreement or covenant under this
Agreement or otherwise relating to this Agreement, unless mutually settled by
Meritage, Buyer and Seller, will be resolved in accordance with the Dispute
Resolution Procedures attached as EXHIBIT E.
ARTICLE IV
TERMINATION/REMEDIES
10.1 Termination. This Agreement will be considered terminated at any
time:
A. by mutual written consent of duly authorized officers of Buyer
and Seller;
B. by Buyer, pursuant to Section 5.2 of the Real Property Agreement;
C. by either Buyer or Seller if the other party breaches any
material representation, warranty or covenant contained herein; or
D. after February 28, 2005, if not closed by then.
10.2 Effect of Termination. In the event of termination of this Agreement
as provided in Section 10.1, this Agreement will become void and there will be
no liability or further obligation hereunder on the part of Buyer, Meritage or
Seller or their respective shareholders, members, officers or directors, except
(i) each party will remain obligated for its obligations under Section 6.5 for a
period of one year and (ii) each party will remain obligated for its obligations
set forth in Section 6.2, to the extent applicable.
10.3 Specific Performance.
A. Subject to Section 10.3B, the parties to this Agreement will have
the right to obtain specific performance of the other parties' obligations to
close in the event that such parties fail to close this Agreement in accordance
with the provisions of Section 2.1. The party who is entitled to specific
performance must file and serve an action within 10 business days of the Closing
Date or waive any right to seek specific performance.
B. The right to the Break-Up Fee under Section 6.2 and the right to
specific performance under Section 10.3A will be mutually exclusive such that a
party may seek to enforce only one such right or remedy, all others being waived
upon such election.
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ARTICLE XI
GENERAL PROVISIONS
11.1 Notices. All notices, consents, and other communications hereunder
will be in writing and deemed to have been duly given when (i) delivered by
hand, (ii) sent by telecopier (with receipt confirmed), provided that a copy is
mailed by registered mail, postage pre-paid return receipt requested or (iii)
when received by the addressee, if sent by Express Mail, Federal Express, or
other express delivery service (postage pre-paid return receipt requested), in
each case to the appropriate addresses and telecopier numbers set forth below
(or to such other addresses and telecopier numbers as a party may designate as
to itself by notice to the other):
If to Buyer: Meritage Homes Corporation
0000 Xxxx Xxxxxxxx Xxxxx,
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Chief Financial Officer
and
0000 Xxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxx, Xxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxx
With a copy to: Xxxxx & Xxxxxx L.L.P.
Xxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
If to Seller: The Colonial Company
0000 Xxxxxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: X.X. XxXxxx, Xx.
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With a copy to: Sack Xxxxxx & Xxxxxx, P.C.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxx Xxxx, Esq.
11.2 Counterparts. The Transaction Agreements, as defined in Section
11.17, may be executed in any number of counterparts, and each counterpart will
constitute an original instrument, but all such separate counterparts will
constitute one and the same agreement.
11.3 Governing Law; Venue. The validity, construction, and enforceability
of this Agreement will be governed in all respects by the laws of the State of
Florida, without regard to its conflict of laws rules. Venue for any proceeding
arising herefrom shall lie in Xxxxxxx or Xxx Counties, Florida.
11.4 Assignment. This Agreement will not be assigned by operation of law
or otherwise, except that Buyer may assign all or any portion of its rights
under this Agreement to any wholly owned subsidiary, but no such assignment will
relieve Buyer or its successors of their primary liability for all obligations
of Buyer hereunder, and except that this Agreement may be assigned by operation
of law to any corporation or entity with or into which Meritage or Buyer may be
merged or consolidated or to which Meritage or Buyer transfer all or
substantially all of their assets, and such corporation or entity assumes this
Agreement and all obligations and undertakings of Meritage or Buyer, as the case
may be, hereunder. Any assignment in violation of the provisions of this
Agreement will be null and void.
11.5 Gender and Number. The masculine, feminine or neuter pronouns used
herein will be interpreted without regard to gender, and the use of the singular
or plural will be deemed to include the other whenever the context so requires.
11.6 Schedules and Exhibits. The Seller's Disclosure Schedule, Schedules
and Exhibits referred to in this Agreement and attached to this Agreement are
incorporated in this Agreement by such reference as if fully set forth in the
text of this Agreement.
11.7 Waiver of Provisions. The terms, covenants, representations,
warranties and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any party at
any time to require performance of any provisions hereof will, in no manner,
affect the right at a later date to enforce the same. No waiver by any party of
any condition, or breach of any provision, term, covenant, representation or
warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, will be deemed to be or construed as a further or
continuing waiver of any such condition or of the breach of any other provision,
term, covenant, representation or warranty of this Agreement.
11.8 Costs. If any legal action or any arbitration or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any of the provisions of
this Agreement, the successful or
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prevailing party or parties will be entitled to recover reasonable attorneys'
fees, accounting fees and other costs incurred in that action or proceeding, in
addition to any other relief to which it or they may be entitled.
11.9 Amendment. This Agreement may not be amended except by an instrument
in writing approved by the parties to this Agreement and signed on behalf of
each of the parties hereto.
11.10 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement will remain in full force and effect and will in
no way be affected, impaired or invalidated and the court will modify this
Agreement or, in the absence thereof, the parties will negotiate in good faith
to modify this Agreement to preserve each party's anticipated benefits under
this Agreement.
11.11 Binding Effect. Subject to the provisions and restrictions of
Section 11.4, the provisions of this Agreement are binding upon and will inure
to the benefit of the parties and their respective heirs, personal
representatives, successors and assigns. No person shall become a third party
beneficiary of this Agreement.
11.12 Construction. References in this Agreement to "Sections",
"Articles", "Exhibits", "Schedules" and "Seller's Disclosure Schedule" are to
the Sections and Articles in, and the Exhibits, Schedules and Seller's
Disclosure Schedule to, this Agreement, unless otherwise noted.
11.13 Time Periods. Except as expressly provided for in this Agreement,
the time for performance of any obligation or taking any action under this
Agreement will be deemed to expire at 5:00 o'clock p.m. (Dallas, Texas time) on
the last day of the applicable time period provided for in this Agreement. If
the time for the performance of any obligation or taking any action under this
Agreement expires on a Saturday, Sunday or legal holiday, the time for
performance or taking such action will be extended to the next succeeding day
which is not a Saturday, Sunday or legal holiday.
11.14 Headings. The headings of this Agreement are for purposes of
reference only and will not limit or define the meaning of any provision of this
Agreement.
11.15 Commission. Upon the Closing of the transactions contemplated
hereby, Seller will pay a commission to Xxxxxxx X. Xxxx & Associates, LLC in the
amount due.
11.16 Access to Records. Buyer will provide Colonial with reasonable
access to books, records and documents transferred to Buyer pursuant to Section
1.2F of the Asset Agreement for a period of three years or such longer period of
time as Colonial may need for tax purposes from the Closing Date, provided
Colonial notifies Buyer of such extended requirement within 90 days of the end
of the three-year period, at which xxxx Xxxxxx will have the opportunity to
reclaim such books, records and documents (or copies thereof if still used by
Buyer) with the assistance of Buyer. Buyer will use reasonable efforts to assist
Colonial in locating requested documents but will not be responsible for the
failure to locate such documents.
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11.17 Entire Agreement. This Agreement, along with the Asset Agreement,
the Real Property Agreement, the Indemnification Agreement, the Non-Disclosure
and Non-Compete Agreement, the Option Agreement and the License Agreement, and
all certificates, schedules and other documents or agreements attached to or
deliverable under such agreements, including the Seller's Disclosure Schedule
(collectively, the "TRANSACTION AGREEMENTS") constitute the entire agreement,
including with respect to representations and warranties, between the parties
pertaining to the subject matter contained in the Transaction Agreements. All
prior and contemporaneous agreements, representations and understandings of the
parties, oral or written, are superseded by and merged in the Transaction
Agreements. No supplement, modification or amendment of the Transaction
Agreements will be binding unless in writing and executed by the parties to the
Transaction Agreements.
11.18 Enforcement of Rights. Meritage's and Buyer's rights under, and the
remedies to enforce, this Agreement are joint and several as to Seller. Meritage
and Buyer are completely free to enforce any or all of their rights under this
Agreement against either Colonial or Parent with or without the concurrence or
joinder of any other party.
11.19 Radon Gas. RADON IS A NATURALLY OCCURRING RADIOACTIVE GAS THAT, WHEN
IT HAS ACCUMULATED IN A BUILDING IN SUFFICIENT QUANTITIES, MAY PRESENT HEALTH
RISKS TO PERSONS WHO ARE EXPOSED TO IT OVER TIME. LEVELS OF RADON THAT EXCEED
FEDERAL AND STATE GUIDELINES HAVE BEEN FOUND IN BUILDINGS IN FLORIDA. ADDITIONAL
INFORMATION REGARDING RADON AND RADON TESTING MAY BE OBTAINED FROM YOUR COUNTY
HEALTH DEPARTMENT.
11.20 Taxes. BUYER HEREBY ACKNOWLEDGES THAT AD VALOREM AND NON-AD VALOREM
ASSESSMENTS SHALL BE ASSESSED AGAINST THE PROPERTY, AS A LOT WITHIN A COMMUNITY.
AN AD VALOREM TAX OR NON-AD VALOREM ASSESSMENT, INCLUDING A TAX OR ASSESSMENT
IMPOSED BY THE COUNTY, MUNICIPALITY, SPECIAL DISTRICT, OR WATER MANAGEMENT
DISTRICT, MAY NOT BE ASSESSED SEPARATELY AGAINST THE COMMON ELEMENTS UTILIZED
EXCLUSIVELY FOR THE BENEFIT OF THE OWNERS WITHIN THE COMMUNITY, REGARDLESS OF
OWNERSHIP. THE VALUE OF EACH LOT THAT IS OR HAS BEEN PART OF THE COMMUNITY AND
THAT IS DESIGNATED ON THE PLAT OR THE APPROVED SITE PLAN AS A COMMON ELEMENT FOR
THE EXCLUSIVE BENEFIT OF LOT OWNERS SHALL, REGARDLESS OF OWNERSHIP, BE PRORATED
BY THE PROPERTY APPRAISER AND INCLUDED IN THE ASSESSMENT OF ALL THE LOTS WITHIN
THE COMMUNITY WHICH CONSTITUTE INVENTORY FOR SELLER AND ARE INTENDED TO BE
CONVEYED OR HAVE BEEN CONVEYED INTO PRIVATE OWNERSHIP FOR THE EXCLUSIVE BENEFIT
OF LOT OWNERS WITHIN THE COMMUNITY.
11.21 CDD. THE XXXXX RIVER COMMUNITY DEVELOPMENT DISTRICT MAY IMPOSE AND
LEVY TAXES OR ASSESSMENTS, OR BOTH TAXES AND ASSESSMENTS, ON THE PROPERTY WITHIN
THE XXXXX RIVER PROJECT. THESE TAXES AND ASSESSMENTS PAY FOR THE CONSTRUCTION,
OPERATION, AND MAINTENANCE COSTS OF CERTAIN PUBLIC FACILITIES AND SERVICES OF
THE DISTRICT AND ARE SET ANNUALLY BY THE GOVERNING BOARD OF THE
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DISTRICT. THESE TAXES AND ASSESSMENTS ARE IN ADDITION TO COUNTY AND OTHER LOCAL
GOVERNMENTAL TAXES AND ASSESSMENTS AND ALL OTHER TAXES AND ASSESSMENTS PROVIDED
FOR BY LAW.
11.22 Association Disclosure. IF THE DISCLOSURE SUMMARY REQUIRED BY
SECTION 720.401, FLORIDA STATUTES, HAS NOT BEEN PROVIDED TO THE PROSPECTIVE
PURCHASER BEFORE EXECUTING THIS CONTRACT FOR SALE, THIS CONTRACT IS VOIDABLE BY
BUYER BY DELIVERING TO SELLER OR SELLER'S AGENT OR REPRESENTATIVE WRITTEN NOTICE
OF THE BUYER'S INTENTION TO CANCEL WITHIN 3 DAYS AFTER RECEIPT OF THE DISCLOSURE
SUMMARY OR PRIOR TO CLOSING, WHICHEVER OCCURS FIRST. ANY PURPORTED WAIVER OF
THIS VOIDABILITY RIGHT HAS NO EFFECT. BUYER'S RIGHT TO VOID THIS CONTRACT SHALL
TERMINATE AT CLOSING. The required disclosure is attached hereto as EXHIBIT "K"
attached hereto. [A DISCLOSURE MUST BE ATTACHED FOR EACH COMMUNITY AND FOR EACH
ASSOCIATION PURSUANT OT FLORIDA LAW.]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
on the date first written above by their respective officers thereunder duly
authorized.
MERITAGE HOMES CORPORATION,
a Maryland corporation
/s/ Xxxx X. Xxxxxx
------------------------------------
By: Xxxx X. Xxxxxx
Its: Co-Chief Executive Officer
MERITAGE HOMES OF FLORIDA, INC.,
an Arizona corporation
/s/ Xxxx X. Xxxxxx
------------------------------------
By: Xxxx X. Xxxxxx
Its: Chairman and CEO
COLONIAL HOMES, INC.,
a Florida corporation
/s/ Xxxx Xxxxxxx
------------------------------------
By: Xxxx Xxxxxxx
Its: President
COLONIAL SHORES, L.L.C.,
a Florida limited liability company
By: Colonial Homes, Inc.
Its: Sole Member and Manager
Xxxx Xxxxxxx
-------------------------------
By: Xxxx Xxxxxxx
Its: President
THE COLONIAL COMPANY,
an Alabama corporation
/s/ XX XxXxxx, Xx.
------------------------------------
By: XX XxXxxx, Xx.
Its: President and CEO
[SIGNATURE PAGE TO MASTER AGREEMENT]
EXHIBIT A
ASSET AGREEMENT
AGREEMENT OF PURCHASE AND SALE OF ASSETS
This Agreement of Purchase and Sale of Assets (the "AGREEMENT") is made as
of February 9, 2005, by and among Meritage Homes Corporation, a Maryland
corporation ("MERITAGE"), Meritage Homes of Florida, Inc., an Arizona
corporation ("BUYER"), Colonial Homes, Inc., a Florida corporation and its
wholly-owned subsidiary Colonial Shores, L.L.C., a Florida limited liability
company (together, "COLONIAL") and The Colonial Company, an Alabama corporation
("PARENT" and together with Colonial, the "SELLER").
RECITALS
1. The parties to this Agreement have concurrently entered into a Master
Transaction Agreement ("MASTER AGREEMENT"), an Agreement of Purchase and Sale of
Real Property ("REAL PROPERTY AGREEMENT"), an Option and Development Agreement
and an Indemnification Agreement, all described in the Master Agreement. All
capitalized terms contained herein but not otherwise defined will have the
meaning ascribed in the Master Agreement.
2. Pursuant to this Agreement, Buyer will acquire all or substantially all
of the non-real property assets of the Colonial Business.
In consideration of the covenants and mutual agreements set forth herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and in reliance upon the representations and warranties
contained herein, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1. Agreement. This Agreement, together with the Master Agreement and
Indemnification Agreement, each incorporated herein by reference, will
constitute a binding contract on the part of Colonial to sell and Buyer to
purchase certain assets of the Colonial Business unrelated to real property.
1.2. Assets to be Purchased. Upon the terms and subject to the conditions
set forth herein and in the Master Agreement, and in reliance on the respective
representations and warranties of the parties contained herein and in the Master
Agreement, at the Closing, Colonial agrees to sell, convey, grant, assign, and
transfer to Buyer and Buyer agrees to purchase and acquire from Colonial all of
the Assets held by Colonial. The term "ASSETS" will mean:
A. all assets disclosed on the Final Closing Balance Sheet, except
for the real property assets;
B. any cash and cash equivalents (subject to the provisions of
Section 2.5B(2) of the Master Agreement), current assets, accounts receivable
and notes receivable;
C. (i) all prepaid expenses and (ii) all rights to refunds, buyins
or deposits relating to housing construction;
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D. all equipment, furniture, furnishings, inventory, machinery,
software, supplies, tools, vehicles and other personal property owned or leased
by Colonial, in connection with the Colonial Business;
E. all rights and benefits in all (i) processes, know-how, technical
data and other trade secrets, (ii) sales forms and promotional and advertising
materials, (iii) copyrights, patents, trademarks and applications, registrations
and renewals with respect thereto, (iv) customer, supplier and contractor lists,
(v) software licensing and equipment rental agreements associated with computers
or data processing, (vi) copyrights, patents, trademarks and applications,
registrations, and renewals with respect thereto and (vii) goodwill associated
therewith (together, the "INTELLECTUAL PROPERTY");
F. all of the books, instruments, papers and records of whatever
nature and wherever located, whether in written form or another storage medium,
including without limitation (i) accounting and financial records, (ii) property
records and reports, (iii) environmental records and reports, (iv) personnel and
labor relations records and (v) property, sales, or transfer tax records and
returns; provided, however, that such books, instruments, papers and records
will exclude any documents relating exclusively to the Excluded Assets;
G. all rights and benefits in, to and under all vendor, supplier and
equipment lessor agreements concerning any supplies, services, equipment and
furniture utilized for office purposes;
H. at Buyer's discretion, (i) all equity interests of Colonial or
the Colonial Real Estate Company in LNH Mortgage, LLC and (ii) Colonial's
contractual or other relationship or arrangement the Beta Title Company;
I. a non-exclusive co-ownership with Colonial in the following: (1)
all rights and benefits in, to and under (i) all acquisition agreements,
purchase contracts, option agreements, leases and similar contracts for the
acquisition of real property related to the Owned Real Property and the Future
Contracted Real Property, including but not limited to, the acquisition
contracts relating to the Xxxxxx 328 Property, (ii) all sale agreements or other
contracts and related escrow instructions and escrow deposits relating to the
sale of lots, homes or other aspects of the Purchased Real Property or the
Colonial Business, (iii) contracts with suppliers, materialmen, contractors,
subcontractors and others furnishing any work or materials to or for any of the
Owned Real Property or the Colonial Business, (iv) reimbursement and indemnity
agreements pertaining to or of any improvement, performance, payment,
maintenance, fidelity, lien release, or other bonds, undertakings or similar
sureties relating to the Owned Real Property or the Colonial Business, (v)
contracts with architects, designers, engineers, planners, environmental
consultants, surveyors and other consultants relating to the Owned Real Property
or the Colonial Business, (vi) commission, listing and brokerage agreements
relating to the Owned Real Property or the Colonial Business, (vii) office and
storage leases, (viii) management service and construction supervisor contracts
or agreements relating to the Owned Real Property or the Colonial Business and
(ix) model home furniture, fixtures and equipment leases and any model home
lease or sale agreements relating to the Purchased Real Property or the Colonial
Business; (2) to the extent transferable, all the right, title and interest in
all approvals, authorizations, certificates, consents, franchises, licenses,
permits, rights, variances, subdivision maps, plans, entitlements and waivers
acquired, being acquired, applied for or used, and all agreements with, and any
waivers, licenses, permits and approvals from or to any governmental
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or quasi-governmental agency, department, board, commission, bureau or any other
entity or instrumentality, and other authorities in the nature thereof, all as
related to the Owned Real Property or the Colonial Business; (3) all agreements
with, all environmental, feasibility, archeological, engineering, soils and
other reports of tests or inspections in respect of the Owned Real Property and
the Future Contracted Real Property; (4) all rights and benefits in (x)
architectural, building and engineering designs, drawings, specifications and
plans and (y) proprietary information or rights including any and all plans and
other project related information, all as related to the Owned Real Property and
the Future Contracted Real Property ((1) through (4) collectively, the "ACQUIRED
CONTRACTS"); and
J. all rights and benefits under any manufacturer's,
subcontractor's, supplier's, merchant's, repairmen's or other third-party
warranties, guarantees and service or replacement programs relating to (i)
Assumed Construction Claims and (ii) that are necessary for Buyer to administer
Unassumed Construction Claims as set forth in Section 2.5C of the Master
Agreement.
1.3. License Agreement. Colonial will grant to Buyer and Meritage and
Meritage's subsidiaries and affiliates in the State of Florida, other than the
Florida Panhandle, an exclusive perpetual license to use the name "Colonial
Homes" and any other similar name or xxxx related to homebuilding or home sales
products or activities which may be confusingly similar to the foregoing
pursuant to the certain license agreement in the form attached as EXHIBIT K to
the Master Agreement (the "LICENSE AGREEMENT").
1.4. Purchase Price. The Purchase Price to be paid by Buyer for the Assets
will be as provided in Section 2.5A(1) of the Master Agreement.
1.5. Closing. Articles VII and VIII of the Master Agreement are
incorporated herein by reference as applicable.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF BUYER AND MERITAGE
2.1. Incorporation by Reference. The representations and warranties
contained in Article III of the Master Agreement are incorporated herein by
reference.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
3.1. Incorporation by Reference. The representations and warranties
contained in Article IV of the Master Agreement are incorporated herein by
reference.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1. Additional Agreements. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary, proper or advisable
to consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement, including obtaining all necessary waivers,
consents and approvals and effecting all necessary registrations and filings and
submissions of information requested by governmental authorities. Colonial
agrees that it will,
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at any time before or after the Closing, execute, acknowledge and deliver any
further deeds, assignments, conveyances and other assurances, documents and
instruments of transfer reasonably requested by Buyer or Meritage, and will take
any other action consistent with the terms of this Agreement that may reasonably
be requested by Buyer or Meritage, for the purpose of assigning, transferring,
granting, conveying and confirming to Buyer, or reducing to possession, any or
all property to be conveyed and transferred by this Agreement. If requested by
Buyer or Meritage, Colonial further agrees to prosecute or otherwise enforce in
its name for the benefit of Buyer or Meritage, any claims, rights, or benefits
that are transferred to Buyer by this Agreement and that require prosecution or
enforcement in its name. After the Closing and for a period of six months, the
parties will cooperate in good faith and use commercially reasonable efforts to
resolve any issues that may arise in the transition of the Colonial Business.
ARTICLE V
GENERAL PROVISIONS
5.1. Notices. All notices, consents, and other communications hereunder
will be in writing and deemed to have been duly given when (i) delivered by
hand, (ii) sent by telecopier (with receipt confirmed), provided that a copy is
mailed by registered mail, postage pre-paid return receipt requested or (iii)
when received by the addressee, if sent by Express Mail, Federal Express or
other express delivery service (postage pre-paid return receipt requested), in
each case to the appropriate addresses and telecopier numbers set forth below
(or to such other addresses and telecopier numbers as a party may designate as
to itself by notice to the other):
If to Buyer: Meritage Homes Corporation
0000 Xxxx Xxxxxxxx Xxxxx,
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Chief Financial Officer
and
0000 Xxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxx, Xxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxx
With a copy to: Xxxxx & Xxxxxx L.L.P.
Xxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
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If to Seller: The Colonial Company
0000 Xxxxxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: X.X. XxXxxx, Xx.
With a copy to: Sack Xxxxxx & Xxxxxx, P.C.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxx Xxxx, Esq.
5.2. Counterparts. This Agreement may be executed in any number of
counterparts, and each counterpart will constitute an original instrument, but
all such separate counterparts will constitute one and the same agreement.
5.3. Governing Law; Venue. The validity, construction and enforceability
of this Agreement will be governed in all respects by the laws of the State of
Florida, without regard to its conflict of laws rules. Venue for any proceeding
arising herefrom shall lie in Xxxxxxx or Xxx Counties, Florida.
5.4. Assignment. This Agreement will not be assigned by operation of law
or otherwise, except that Buyer or Meritage may assign all or any portion of
their rights under this Agreement to any wholly owned subsidiary or parent or
sister entity, but no such assignment will relieve Buyer or its successor of its
primary liability for all obligations of Buyer hereunder, and except that this
Agreement may be assigned by operation of law to any corporation or entity with
or into which Buyer may be merged or consolidated or to which Buyer transfer all
or substantially all of its assets, and such corporation or entity assumes this
Agreement and all obligations and undertakings of Buyer hereunder. Any
assignment in violation of the provisions of this Agreement will be null and
void.
5.5. Gender and Number. The masculine, feminine or neuter pronouns used
herein will be interpreted without regard to gender, and the use of the singular
or plural will be deemed to include the other whenever the context so requires.
5.6. Schedules and Exhibits. The Schedules and Exhibits referred to in
this Agreement and attached to this Agreement are incorporated in this Agreement
by such reference as if fully set forth in the text of this Agreement.
5.7. Waiver of Provisions. The terms, covenants, representations,
warranties and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any party at
any time to require performance of any provisions hereof will, in no manner,
affect the right at a later date to enforce the same. No waiver by any party of
any condition, or breach of any provision, term, covenant, representation or
warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, will be deemed to be or construed as a further or
continuing waiver of any such
A-5
condition or of the breach of any other provision, term, covenant,
representation or warranty of this Agreement.
5.8. Costs. If any legal action or any arbitration or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any of the provisions of
this Agreement, the successful or prevailing party or parties will be entitled
to recover reasonable attorneys' fees, accounting fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it or
they may be entitled.
5.9. Amendment. This Agreement may not be amended except by an instrument
in writing approved by the parties to this Agreement and signed on behalf of
each of the parties hereto.
5.10. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement will remain in full force and effect and will in
no way be affected, impaired or invalidated and the court will modify this
Agreement or, in the absence thereof, the parties will negotiate in good faith
to modify this Agreement to preserve each party's anticipated benefits under
this Agreement.
5.11. Binding Effect. Subject to the provisions and restrictions of
Section 5.4, the provisions of this Agreement are binding upon and will inure to
the benefit of the parties and their respective heirs, personal representatives,
successors and assigns.
5.12. Construction. References in this Agreement to "Sections,"
"Articles," "Exhibits," and "Schedules" are to the Sections and Articles in, and
the Exhibits and Schedules to, this Agreement, unless otherwise noted.
5.13. Time Periods. Except as expressly provided for in this Agreement,
the time for performance of any obligation or taking any action under this
Agreement will be deemed to expire at 5:00 o'clock p.m. (Dallas, Texas time) on
the last day of the applicable time period provided for in this Agreement. If
the time for the performance of any obligation or taking any action under this
Agreement expires on a Saturday, Sunday or legal holiday, the time for
performance or taking such action will be extended to the next succeeding day
which is not a Saturday, Sunday or legal holiday.
5.14. Headings. The headings of this Agreement are for purposes of
reference only and will not limit or define the meaning of any provision of this
Agreement.
5.15. Entire Agreement. This Agreement along with the Transaction
Agreements constitute the entire agreement, including with respect to
representations and warranties, between the parties pertaining to the subject
matter contained in the Transaction Agreements. All prior and contemporaneous
agreements, representations and understandings of the parties, oral or written,
are superseded by and merged in the Transaction Agreements. No supplement,
modification or amendment of the Transaction Agreements will be binding unless
in writing and executed by the parties to the Transaction Agreements.
5.16. Arbitration. Any disputes arising hereunder will be resolved
pursuant to the dispute resolution provisions of EXHIBIT E to the Master
Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
on the date first written above by their respective officers thereunder duly
authorized.
MERITAGE HOMES CORPORATION,
a Maryland corporation
____________________________________
By: Xxxx X. Xxxxxx
Its: Co-Chief Executive Officer
MERITAGE HOMES OF FLORIDA, INC.,
an Arizona corporation
____________________________________
By: Xxxx X. Xxxxxx
Its: Chairman and CEO
COLONIAL HOMES, INC.,
a Florida corporation
____________________________________
By:
Its:
COLONIAL SHORES, L.L.C.,
a Florida limited liability company
By: Colonial Homes, Inc.
Its: Sole Member and Manager
_____________________________
By:
Its:
THE COLONIAL COMPANY,
an Alabama corporation
____________________________________
By:
Its:
[SIGNATURE PAGE TO ASSET AGREEMENT]
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EXHIBIT B
REAL PROPERTY AGREEMENT
AGREEMENT OF PURCHASE AND SALE OF REAL PROPERTY
This Agreement of Purchase and Sale of Real Property (the "AGREEMENT") is
made as of February 9, 2005, by and among Meritage Homes Corporation, a Maryland
corporation ("MERITAGE"), Meritage Homes of Florida, Inc., an Arizona
corporation ("BUYER"), Colonial Homes, Inc., a Florida corporation and its
wholly-owned subsidiary Colonial Shores, L.L.C., a Florida limited liability
company (together, "COLONIAL") and The Colonial Company, an Alabama corporation
("PARENT" and together with Colonial, the "SELLER").
RECITALS
1. The parties to this Agreement have concurrently entered into a Master
Transaction Agreement ("MASTER AGREEMENT"), an Agreement of Purchase and Sale of
Assets ("ASSET AGREEMENT"), an Option and Development Agreement and an
Indemnification Agreement, all described in the Master Agreement. All
capitalized terms contained herein but not otherwise defined will have the
meaning ascribed in the Master Agreement.
2. Pursuant to this Agreement, Buyer will acquire the Purchased Real
Property.
3. Pursuant to the Asset Agreement, Buyer will acquire the Assets, which
include all the intangible assets relating to the Purchased Real Property.
In consideration of the covenants and mutual agreements set forth herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and in reliance upon the representations and warranties
contained herein, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF REAL PROPERTY
1.1 Agreement. This Agreement, together with the Master Agreement, the
Option Agreement and Indemnification Agreement, each incorporated herein by
reference, will constitute a binding contract on the part of Colonial to sell
and Buyer to purchase certain Real Property Assets of the Colonial Business.
1.2 Real Property Assets to be Purchased. Upon the terms and subject to
the conditions set forth herein and in the Master Agreement, and in reliance on
the respective representations and warranties of the parties contained herein
and in the Master Agreement, at the Closing Colonial agrees to sell, convey,
grant, assign and transfer to Buyer and Buyer agrees to purchase and acquire
from Colonial all of the Purchased Real Property which will include, but are not
limited to the following: all real property assets disclosed on Schedule 2.2A of
the Master Agreement, except for the real property parcels transferred or
dedicated pursuant to Section 2.2C of the Master Agreement, including all (i)
land and buildings, fixtures and improvements located thereon or attached
thereto, (ii) lots under development and finished lots, and all houses under
development, completed homes and model homes, (iii) easements, rights-of-way,
strips, gores, and privileges appurtenant to or otherwise benefiting the land,
(iv) all rights in and to adjacent lands and lands underlying any adjacent
streets or roads, (v) all tenements, hereditaments and appurtenances pertaining
to or otherwise benefiting, and (vi) and all development rights, mineral rights,
water rights, utility capacity reservations and other rights and
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appurtenances affecting or pertaining to, the items described in Clauses (i) and
(ii). Schedule 5.2A of this Agreement sets forth the Reports in respect of such
property.
1.3 Purchase Price. The purchase price to be paid by Buyer for the
Purchased Real Property will be as provided in Section 2.5A(1) of the Master
Agreement.
1.4 Closing. Articles II, VII and VIII of the Master Agreement are
incorporated herein by reference as applicable.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF BUYER AND MERITAGE
2.1 Incorporation by Reference. The representations and warranties
contained in Article III of the Master Agreement are incorporated herein by
reference.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Incorporation by Reference. The representations and warranties
contained in Article IV of the Master Agreement are incorporated herein by
reference.
ARTICLE IV
CONDUCT OF SELLER PENDING THE CLOSING
4.1 Incorporation by Reference. Section 5.1 of the Master Agreement is
incorporated herein by reference as applicable.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Escrow. An escrow for the Purchased Real Property (the "ESCROW") will
be established with Xxxxxxxxx Xxxxxxx LLP (the "ESCROW AGENT"). The date that
the executed copies of this Agreement and Master Agreement are delivered to
Escrow Agent is referred to in this Agreement as the "OPENING DATE." This
Agreement and the provisions of the Master Agreement referenced herein
constitute escrow instructions to Escrow Agent. If Escrow Agent requires the
execution of its standard form printed escrow instructions, Colonial and Buyer
agree to execute those instructions; however, those instructions will be
construed as applying only to Escrow Agent's engagement. If there are conflicts
between the terms of this Agreement or the Master Agreement and the terms of the
printed escrow instructions, the terms of this Agreement or the Master Agreement
will control.
5.2 Title Matters.
A. Title Reports. Schedule 5.2A of this Agreement sets forth the
current title insurance commitment issued by First American Title Insurance
Company committing to issue an ALTA Owner's Policy - Form B 1970 (rev. 10-17-70
and 10-17-84) upon satisfaction of the requirements set forth in Schedule B -
Section I thereof (each a "REPORT" and, collectively the "REPORTS") for the
status of title to each parcel or parcels of the Purchased Real Property.
Schedule 5.2A of this Agreement also lists each survey (the "SURVEY") of any
unsubdivided
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Purchased Real Property, which is acceptable to the Title Company or its title
insurer for the issuance of the extended coverage Title Policy (defined below)
for such unsubdivided real property in accordance with Section 5.2D of this
Agreement.
B. Title Supplements. If, prior to Closing, the Title Company issues
an endorsement to the Reports showing additional exceptions to title, other than
exceptions arising due to acts or omissions of Buyer or as set forth on any
prior Report (a "REPORT SUPPLEMENT"), Buyer will have 10 days (a "SUPPLEMENTAL
TITLE REVIEW PERIOD") from the date of receipt of the Report Supplement and a
copy of each document referred to in the Report Supplement in which to give
notice of dissatisfaction as to any additional exceptions to Colonial. If Buyer
is dissatisfied with any additional exceptions shown in the Report Supplement,
then Buyer may either (i) terminate this Agreement, the Asset Agreement, the
Option Agreement and the Master Agreement, (ii) accept title subject to such
additional exceptions or (iii) exclude the Purchased Real Property subject to
the Report Supplement, in which case the Purchase Price will be adjusted
accordingly. If Buyer has not notified Colonial of its election prior to the
close of business on the 10th day following Buyer's receipt of the Report
Supplement, Buyer will be deemed to have accepted title subject to such
additional exceptions.
C. Permitted Title Exceptions. Except for the list of title or
survey objections shown by Buyer on Schedule 5.2A of this Agreement (the
"DISAPPROVED TITLE EXCEPTIONS"), the exceptions to title disclosed by Schedule B
in each Report, and in any Report Supplement accepted by Buyer pursuant to
Section 5.2B, are referred to in this Agreement as the "PERMITTED EXCEPTIONS."
In any event the Disapproved Title Exceptions, whether or not specifically
listed on Schedule 5.2A, will include all monetary liens or encumbrances (other
than liens for year 2005) property taxes, existing improvement district liens,
specific assessments not due and payable when the Closing occurs or liens
relating to debt to be assumed by Buyer as determined by Buyer, the gap and
standard exceptions, and the survey exception. If, prior to Closing, any of the
Disapproved Title Exceptions are not cured by Colonial to the reasonable
satisfaction of Buyer, then Buyer may either (i) terminate this Agreement, the
Asset Agreement, the Option Agreement and the Master Agreement, (ii) accept
title subject to the Disapproved Title Exceptions or (iii) exclude the Purchased
Real Property subject to the Disapproved Title Exceptions, in which case the
Purchase Price will be adjusted accordingly. If Buyer has not notified Colonial
of its election prior to the Closing, Buyer will be deemed to have accepted
title subject to the Disapproved Title Exceptions.
D. Title Policies. At Closing, Colonial will cause the Title Company
or its title insurer to provide Buyer with an endorsed or marked-up Title
Commitment bearing the Closing date as an effective date and unconditionally
committing to issue to Buyer an ALTA Owner's Policy - Form B 1970 (rev. 10-17-70
and 10-17-84) subject only to the Permitted Exceptions (a "TITLE POLICY") for
the Purchased Real Property, issued by the Title Company or its title insurer
effective as of the Closing. The Title Policy shall name Buyer as insured in the
amount of that portion of the Purchase Price allocated to such real property,
and shall insure that the estate or interest described by Schedule A, Section 2,
of each Report (or of each Report Supplement acceptable to Buyer) to the
Purchased Real Property is vested in Buyer, subject only to the Permitted
Exceptions, and to any other matters approved in writing by Buyer. If Buyer
utilizes Colonial's existing title insurance company, the promulgated premium
for the Title Policy and all abstract and search fees relating thereto and the
promulgated premium for all endorsements issued in connection therewith, will be
paid 50% by Colonial and 50% by Buyer.
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If Buyer utilizes a different title insurance company, Colonial will pay 50% of
the cost of the Title Policy and endorsements that would have been charged had
Colonial's existing title insurance company been used and Buyer will pay the
remainder of any such cost. The Title Policy will include such endorsements
authorized to be issued in Florida as Buyer may reasonably require, including
without limitation a survey endorsement, a PUD endorsement, condominium
endorsement (for those parcels that are condominium), Florida Endorsement Form
91 (FF 9.1) (for vacant lands), and Florida Endorsement Form 9.2 (FF 9.2) (for
improved lands). The costs of any other endorsements will be borne by Buyer.
Colonial, at its expense, will use reasonable good faith efforts to satisfy all
of the Title Company's customary requirements for the issuance of such Title
Policy and endorsements, other than those, if any, within Buyer's control.
E. Additional Agreements. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary, proper or advisable
to consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement, including obtaining all necessary waivers,
consents and approvals and effecting all necessary registrations and filings and
submissions of information requested by governmental authorities. Colonial
agrees that it will, at any time before or after the Closing, execute,
acknowledge and deliver any further deeds, assignments, conveyances and other
assurances, documents and instruments of transfer reasonably requested by Buyer
or Meritage, and will take any other action consistent with the terms of this
Agreement that may reasonably be requested by Buyer or Meritage, for the purpose
of conveying, assigning, transferring, granting, conveying and confirming to
Buyer, or reducing to possession, any or all property to be conveyed and
transferred by this Agreement. If requested by Buyer or Meritage, Colonial
further agrees to prosecute or otherwise enforce in their name for the benefit
of Buyer or Meritage, any claims, rights, or benefits that are transferred to
Buyer by this Agreement and that require prosecution or enforcement in its name.
After the Closing and for a period of six months, the parties will cooperate in
good faith and use commercially reasonable efforts to resolve any issues that
may arise in the transition of the Colonial Business.
ARTICLE VI
GENERAL PROVISIONS
6.1 Notices. All notices, consents, and other communications
hereunder will be in writing and deemed to have been duly given when (i)
delivered by hand, (ii) sent by telecopier (with receipt confirmed), provided
that a copy is mailed by registered mail, postage pre-paid return receipt
requested or (iii) when received by the addressee, if sent by Express Mail,
Federal Express or other express delivery service (postage pre-paid return
receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate as to itself by notice to the other):
If to Buyer: Meritage Homes Corporation
0000 Xxxx Xxxxxxxx Xxxxx,
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Chief Financial Officer
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and
0000 Xxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxx, Xxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxx
With a copy to: Xxxxx & Xxxxxx L.L.P.
Xxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
If to Seller: The Colonial Company
0000 Xxxxxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: X.X. XxXxxx, Xx.
With a copy to: Sack Xxxxxx & Xxxxxx, P.C.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxx Xxxx, Esq.
6.2 Counterparts. This Agreement may be executed in any number of
counterparts, and each counterpart will constitute an original instrument, but
all such separate counterparts will constitute one and the same agreement.
6.3 Governing Law; Venue. The validity, construction and enforceability of
this Agreement will be governed in all respects by the laws of the State of
Florida, without regard to its conflict of laws rules. Venue for any legal
action seeking specific performance of this Agreement shall lie in Xxx County or
Xxxxxxx County, or any county in Florida wherein a portion of the subject
property lies.
6.4 Assignment. This Agreement will not be assigned by operation of law or
otherwise, except that Buyer or Meritage may assign all or any portion of their
rights under this Agreement to any wholly owned subsidiary or parent or sister
entities, but no such assignment will relieve Buyer or its successor of its
primary liability for all obligations of Buyer hereunder, and except that this
Agreement may be assigned by operation of law to any corporation or entity with
or into which Buyer may be merged or consolidated or to which Buyer transfers
all or substantially all of its assets, and such corporation or entity assumes
this Agreement and all
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obligations and undertakings of Buyer hereunder. Any assignment in violation of
the provisions of this Agreement will be null and void.
6.5 Gender and Number. The masculine, feminine or neuter pronouns used
herein will be interpreted without regard to gender, and the use of the singular
or plural will be deemed to include the other whenever the context so requires.
6.6 Schedules and Exhibits. The Schedules and Exhibits referred to in this
Agreement and attached to this Agreement are incorporated in this Agreement by
such reference as if fully set forth in the text of this Agreement.
6.7 Waiver of Provisions. The terms, covenants, representations,
warranties and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any party at
any time to require performance of any provisions hereof will, in no manner,
affect the right at a later date to enforce the same. No waiver by any party of
any condition, or breach of any provision, term, covenant, representation or
warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, will be deemed to be or construed as a further or
continuing waiver of any such condition or of the breach of any other provision,
term, covenant, representation or warranty of this Agreement.
6.8 Costs. If any legal action or any arbitration or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any of the provisions of
this Agreement, the successful or prevailing party or parties will be entitled
to recover reasonable attorneys' fees, accounting fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it or
they may be entitled.
6.9 Amendment. This Agreement may not be amended except by an instrument
in writing approved by the parties to this Agreement and signed on behalf of
each of the parties hereto.
6.10 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement will remain in full force and effect and will in
no way be affected, impaired or invalidated and the court will modify this
Agreement or, in the absence thereof, the parties will negotiate in good faith
to modify this Agreement to preserve each party's anticipated benefits under
this Agreement.
6.11 Binding Effect. Subject to the provisions and restrictions of Section
6.4, the provisions of this Agreement are binding upon and will inure to the
benefit of the parties and their respective heirs, personal representatives,
successors and assigns.
6.12 Construction. References in this Agreement to "Sections," "Articles,"
"Exhibits," and "Schedules" are to the Sections and Articles in, and the
Exhibits and Schedules to, this Agreement, unless otherwise noted.
6.13 Time Periods. Except as expressly provided for in this Agreement, the
time for performance of any obligation or taking any action under this Agreement
will be deemed to
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expire at 5:00 o'clock p.m. (Dallas, Texas time) on the last day of the
applicable time period provided for in this Agreement. If the time for the
performance of any obligation or taking any action under this Agreement expires
on a Saturday, Sunday or legal holiday, the time for performance or taking such
action will be extended to the next succeeding day which is not a Saturday,
Sunday or legal holiday.
6.14 Headings. The headings of this Agreement are for purposes of
reference only and will not limit or define the meaning of any provision of this
Agreement.
6.15 Entire Agreement. This Agreement along with the Transaction
Agreements constitute the entire agreement, including with respect to
representations and warranties, between the parties pertaining to the subject
matter contained in the Transaction Agreements. All prior and contemporaneous
agreements, representations and understandings of the parties, oral or written,
are superseded by and merged in the Transaction Agreements. No supplement,
modification or amendment of the Transaction Agreements will be binding unless
in writing and executed by the parties to the Transaction Agreements.
6.16 Arbitration. Any disputes arising hereunder will be resolved pursuant
to the dispute resolution provisions of EXHIBIT E to the Master Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
on the date first written above by their respective officers thereunder duly
authorized.
MERITAGE HOMES CORPORATION,
a Maryland corporation
______________________________________
By: Xxxx X. Xxxxxx
Its: Co-Chief Executive Officer
MERITAGE HOMES OF FLORIDA, INC.,
an Arizona corporation
______________________________________
By: Xxxx X. Xxxxxx
Its: Chairman and CEO
COLONIAL HOMES, INC.,
a Florida corporation
______________________________________
By:
Its:
COLONIAL SHORES, L.L.C.,
a Florida limited liability company
By: Colonial Homes, Inc.
Its: Sole Member and Manager
___________________________________
By:
Its:
THE COLONIAL COMPANY,
an Alabama corporation
______________________________________
By:
Its:
[SIGNATURE PAGE TO REAL PROPERTY AGREEMENT]
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EXHIBIT C
OPTION AGREEMENT
TABLE OF CONTENTS
1. OPTION.................................................................1
1.1 Grant of Option..................................................1
1.2 Term of Option...................................................2
1.3 Exercise of Option...............................................3
1.4 Unplatted Property...............................................3
1.5 Memorandum and Escrow Agreement..................................3
2. OPTION PURCHASE PRICE..................................................4
2.1 Purchase Price...................................................4
2.2 Out of Order Premium.............................................4
3. ESCROW.................................................................5
4. Title; conveyance......................................................5
4.1 Title Insurance Policy...........................................5
4.2 Deed.............................................................6
4.3 Excluded Lots....................................................7
5. CLOSING................................................................8
5.1 Closing Dates....................................................8
5.2 Deliveries by Optionor...........................................8
5.3 Deliveries by Optionee...........................................8
5.4 Actions by Escrow Agent..........................................9
5.5 Taxes and Assessments...........................................10
5.6 Closing Costs...................................................10
5.7 Closing Statement...............................................10
5.8 Deliveries Outside of Escrow....................................10
6. GOVERNMENTAL APPROVALS; PROJECT DEVELOPMENT AND USE...................10
6.1 Governmental Approvals..........................................10
6.2 Project Improvements............................................12
6.3 Costs...........................................................14
6.4 Waiver of Claims................................................15
6.5 Conveyance of Common Areas to Owners Association(s).............15
6.6 Use.............................................................16
7. OPTIONOR'S REPRESENTATIONS AND WARRANTIES.............................16
7.1 Representations and Warranties..................................16
7.2 Limitations.....................................................21
7.3 Continuing Obligation; Survival.................................21
8. OPTIONEE'S REPRESENTATIONS AND WARRANTIES.............................21
8.1 Representations and Warranties..................................21
8.2 Due Organization................................................21
8.3 Optionee's Authority; Validity of Agreements....................21
i
8.4 Survival........................................................22
9. RISK OF LOSS..........................................................22
9.1 Condemnation....................................................22
9.2 Casualty........................................................22
9.3 Pre-Plat Condemnation or Casualty of Unplatted Property.........22
10. DEFAULT; REMEDIES.....................................................23
10.1 Default by Optionor.............................................23
10.2 Optionee's Remedies.............................................23
10.3 Default by Optionee.............................................24
10.4 Optionor's Remedies.............................................24
11. BROKERS...............................................................24
12. MISCELLANEOUS PROVISIONS..............................................25
12.1 Additional Agreements...........................................25
12.2 Notices.........................................................25
12.3 Counterparts....................................................27
12.4 Governing Law; Venue............................................27
12.5 Assignment......................................................27
12.6 Gender and Number...............................................28
12.7 Schedules and Exhibits..........................................28
12.8 Waiver of Provisions............................................28
12.9 Costs...........................................................28
12.10 Amendment.......................................................28
12.11 Severability....................................................28
12.12 Binding Effect..................................................28
12.13 Construction....................................................28
12.14 Time Periods; Business Day......................................28
12.15 Headings........................................................29
12.16 Entire Agreement................................................29
12.17 Arbitration.....................................................29
ii
OPTION AND DEVELOPMENT AGREEMENT
THIS OPTION AND DEVELOPMENT AGREEMENT (this "AGREEMENT") is made and
entered into as of February 9, 2005 (the "EFFECTIVE DATE"), by and among
MERITAGE HOMES CORPORATION, a Maryland corporation ("MERITAGE"), MERITAGE HOMES
OF FLORIDA, INC., an Arizona corporation ("OPTIONEE"), COLONIAL HOMES, INC., a
Florida corporation ("COLONIAL HOMES"), COLONIAL SHORES, L.L.C., a Florida
corporation ("COLONIAL SHORES"), and THE COLONIAL COMPANY, an Alabama
corporation ("COLONIAL COMPANY"), for the purpose of setting forth the agreement
of the parties and to provide instructions to First American Title Insurance
Company ("ESCROW AGENT") with respect to the transaction contemplated by this
Agreement.
R E C I T A L S
A. The parties to this Agreement have previously entered into a Master
Transaction Agreement ("MASTER AGREEMENT"), an Agreement of Purchase and Sale of
Assets ("ASSET AGREEMENT"), an Agreement of Purchase and Sale of Real Property,
and an Indemnification Agreement, all as described in the Master Agreement.
Colonial Homes and Colonial Shores shall collectively be referred to herein as
"OPTIONOR" and Colonial Homes, Colonial Shores and Colonial Company shall
collectively be referred to herein as "COLONIAL." All capitalized terms used and
not otherwise defined herein have the meaning ascribed in the Master Agreement.
B. Pursuant to this Agreement, each party comprising Optionor (to the
extent of their respective interests as identified in Section 1.1 below) grants
to Optionee an option to purchase, upon and subject to the terms and conditions
set forth in this Agreement, the single family lots and the condominium units
described on Exhibits "A-1" through "A-3" (the "PLATTED Lots") and the real
property described on Exhibits "A-4" through "A-6" attached hereto (the
"UNPLATTED PROPERTY"). The Platted Lots and the Unplatted Property (including
any lots and condominium units into which the Unplatted Property may hereafter
be platted) shall collectively be referred to herein as the "OPTION PROPERTY").
The Platted Lots and the lots and units created in any final plat(s) of the
Unplatted Property shall each be referred to herein individually as a "LOT" and
shall collectively be referred to herein as "LOTS".
A G R E E M E N T
NOW, THEREFORE, in consideration of the covenants, payments and mutual
agreements contained in this Agreement and in the Master Agreement and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and in reliance upon the representations and warranties contained
herein, the parties agree, and instruct Escrow Agent, as follows:
1. OPTION.
1.1 Grant of Option. Colonial Homes hereby grants to Optionee the
exclusive right and option (the "OPTION") to purchase a good and marketable fee
simple interest in the Lots described on Exhibit "A-1" and in the Unplatted
Property (the "COLONIAL HOMES OPTION PROPERTY"), upon and subject to the terms
and conditions set forth herein. Colonial Shores
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hereby grants to Optionee the exclusive right and option to purchase a good and
marketable fee simple interest in the Lots described on Exhibit "A-2" (the
"COLONIAL SHORES OPTION PROPERTY"). References in this Agreement to "Optionor"
shall be deemed to refer to Colonial Homes with respect to the Colonial Homes
Option Property and Colonial Shores with respect to the Colonial Shores Option
Property.
1.2 Term of Option.
1.2.1 First Option Period. The initial term of the Option (the
"FIRST OPTION PERIOD") shall commence on the Effective Date and shall expire on
May 31, 2005. Upon and subject to the terms of this Agreement, Optionee may
acquire all or any part of the Option Property at any time prior to the
expiration of the First Option Period, and thereafter, so long as the Option has
not expired or terminated.
1.2.2 Additional Option Periods. The Option may be extended for
fifteen (15) consecutive calendar quarters (each, an "OPTION PERIOD") in
accordance with the terms and conditions set forth in this Agreement. Following
the expiration of the First Option Period, the Option shall remain in effect
during each successive Option Period thereafter, provided that at the end of the
First Option Period and at the end of each successive Option Period thereafter:
(a) Optionor has not terminated this Agreement pursuant to Section 10.4 below
because of Optionee's default under this Agreement, as determined pursuant to
Section 10.3; and (b) Optionee has complied with the requirements of Section 1.3
of this Agreement and timely purchased the requisite cumulative number of Lots
as calculated in accordance with Exhibit "B" attached hereto so that Optionee's
right to purchase the Option Property has not expired. Notwithstanding anything
to the contrary contained in this Agreement, in the event Optionee fails to
timely exercise the Option and acquire the requisite cumulative number of Lots
by the end of any Option Period, Optionee's right to purchase the Option
Property shall not expire until after Optionee is afforded thirty (30) calendar
days written notice by Optionor to exercise the Option and ten (10) days after
the exercise to purchase the requisite number of Lots required to be purchased
before the expiration of such Option Period (each of the foregoing periods to
collectively to be referred to herein as the "CURE PERIOD"). If, at the
expiration of any Cure Period, any of Optionee's rights to purchase the Option
Property have expired because Optionee has failed to purchase the requisite
number of Lots required to be purchased before the expiration thereof, the term
of the Option and Optionee's rights under this Agreement shall terminate.
Subject to the extension of any Option Period in accordance with the terms of
this Agreement, the Option shall automatically expire on February 28, 2009, at
which time Optionee shall either purchase all then unpurchased Lots or Optionee
shall thereafter have no right to purchase Lots under this Option.
1.2.3 Extension of Option Periods. Notwithstanding anything to the
contrary contained in this Agreement, in the event that Optionor is in default
in any of its obligations, warranties or covenants hereunder or in any of its
material obligations, warranties or covenants under the Master Agreement or the
Asset Agreement, then the expiration date of the then current Option Period and
the commencement date and expiration date of each successive Option Period will
automatically be extended by the number of days from the date of Optionor's
default until such default has been cured. The Option Period also may be
extended as provided in Sections 6.1.3 and 6.2.2 below.
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1.3 Exercise of Option. Optionee may, at any time during the term of any
Option Period, exercise the Option to purchase all or any part of the Option
Property by providing Optionor with at least ten (10) days prior written notice
of the specific Lots or other part of the Option Property to be acquired and the
intended "Option Closing Date" (as hereinafter defined) therefor, which shall be
a date within the then applicable Option Period or Cure Period, as applicable.
However, Optionor may, at its election, limit the number of takedown occurrences
to no more than two (2) takedowns in any one month period. Notwithstanding
anything to the contrary herein, to maintain the Option, Optionee must, within
each Option Period, purchase the number of Lots or Option Property as is
necessary for Optionee to remain in compliance with the cumulative Lot purchase
requirements calculated in accordance with Exhibit "B" attached hereto (the
"CUMULATIVE LOT PURCHASE REQUIREMENTS"). The Option shall terminate and Optionee
shall have no further right to acquire any of the Lots if Optionee does not,
within each Option Period, acquire and complete Option Closings for Lots in the
quantities required to remain in compliance with the Cumulative Lot Purchase
Requirements and such failure is not cured during the Cure Period. Upon the
termination of Optionee's rights to acquire Lots under this Agreement due to a
default by Optionee or the failure by Optionee to acquire the requisite
cumulative number of Lots, Optionor shall retain the unapplied Deposit, and
Optionee shall have no right whatsoever to receive any refund of any portion of
the Deposit or any unapplied "Premium Credits" (as hereinafter defined).
1.4 Unplatted Property.
1.4.1 Governmental Approvals for Unplatted Property(a) . As of the
Effective Date, the Unplatted Property is not fully entitled to permit the
development thereof as single-family residential lots or condominium units.
Rather, Optionor and Optionee intend that the Unplatted Property will, during
the term of this Agreement, be zoned, entitled, platted, and developed into
single-family residential lots and/or condominium units in substantial
conformance with the conceptual plans described on Exhibits "C-1" through "C-5"
to this Agreement (the "CONCEPTUAL PLANS"). The parties' respective rights and
obligations with respect to the pursuit of all required Governmental Approvals
(as defined in Section 6.1.1 below) for the Unplatted Property is set forth in
Section 6.1 of this Agreement. At such time as any lot or condominium unit
within the Unplatted Property becomes an "Eligible Lot" (as such term is defined
in Exhibit "B" to this Agreement) such lot or condominium unit shall
automatically constitute Lots under this Agreement.
1.5 Memorandum and Escrow Agreement. Concurrently with the execution of
this Agreement, Optionor and Optionee shall execute, acknowledge (as
applicable), and deliver to Escrow Agent (a) a separate Memorandum of Option for
each of the Projects (as such term is defined in Section 6.1.1 below), each in
the form attached hereto as Exhibit "D-1" (collectively, the "MEMORANDA"); (b) a
Termination of Memorandum of Option in the form attached hereto as Exhibit "D-2"
corresponding with each of the Memoranda (each, a "TERMINATION"); and (c) the
escrow agreement in the form attached hereto as Exhibit "D-3" (the "ESCROW
AGREEMENT"). The Memoranda shall be recorded in the Official Records of the
applicable Florida County upon completion of the Closing under the Master
Agreement. Escrow Agent is hereby instructed and authorized to hold each
Termination until such time as this Agreement is terminated pursuant to Sections
10.3 and/or 10.4 of this Agreement, at which time Escrow Agent shall cause all
applicable Terminations to be recorded in the Official Records of the applicable
Florida county.
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Each Memoranda and the interest of Optionee as the optionee under this Agreement
shall, upon the Effective Date, constitute a first lien against the Option
Property.
2. Option PURCHASE PRICE.
2.1 Purchase Price. The purchase price to be paid by Optionee for each Lot
(the "PURCHASE PRICE") shall be determined in the manner set forth on Exhibit
"E-1" to this Agreement. Attached to this Agreement as Exhibit "F" is a schedule
setting forth the estimated Purchase Price for each Lot, which schedule is based
on the currently anticipated number of Lots in the Unplatted Property and other
currently available information, all as estimated as of the Effective Date
pursuant to Exhibit "E-1". Exhibit "F" shall be updated from time to time
consistent with the provisions of Exhibit "E-1". The Purchase Price shall be
payable as follows:
2.1.1 Option Deposit. On or before the Effective Date, Optionee
shall deliver to Optionor as an option deposit an amount equal to $750.00
multiplied by the total number of actual/estimated Lots within the Option
Property as set forth in column 1 on Exhibit "F". If after all of the
Governmental Approvals are obtained for any Phase in a Project, the number of
Lots within such Phase is determined to be more or less than the applicable
amount shown on Exhibit "F", then the deposit shall be adjusted accordingly and
the parties shall make such payment(s) to each other as are necessary to reflect
such adjustment.
2.1.2 Balance. At each "Option Closing" (as defined below), Optionee
shall deposit into Escrow the balance of the Purchase Price for the Lot(s)
subject to such Option Closing less the portion of the Deposit allocable to such
Lot(s), plus any applicable "Out-of-Order Premium" (as hereinafter defined), if
any, and net of all prorations, adjustments, and credits as provided herein. All
such amounts shall be payable in immediately available federal funds.
2.2 Out of Order Premium. With respect to the Projects known as Xxxxx
River, Naples 100 and Xxxxxx 150, Optionee shall, as soon as practical following
the recordation of final plats for such Projects, prepare a phasing plan or
schedule (each, a "PURCHASE SEGMENT SCHEDULE" and collectively, the "PURCHASE
SEGMENT SCHEDULES") showing the order of Optionee's intended purchase of Lots of
the same Lot Type (as defined in Exhibit "B") covered by the recorded plat(s)
for such Project (each a "PURCHASE SEGMENT" and collectively, the "PURCHASE
SEGMENTS"). There will not be any Purchase Segments and, therefore, no Purchase
Segment Schedule for the Projects known as Colonial Shares and Renaissance. The
parties anticipate that each Purchase Segment will include between fifty (50)
and eighty (80) Lots of the same Lot Type and the Lots therein shall generally
be contiguous to each other. Each Purchase Segment Schedule shall be subject to
Optionor's approval, which shall not be unreasonably withheld or delayed. If
Optionor disapproves of any Purchase Segment Schedule provided by Optionee,
Optionee and Optionor shall meet with the engineer for the Project and attempt
to resolve in good faith such matters, and if they are unable, in good faith, to
resolve such matters, such matter shall be subject to the dispute resolution
provisions of Exhibit E of the Master Agreement. Optionee may not acquire a Lot
out of order unless at the Closing therefor, Optionee pays, in addition to the
Purchase Price for such Lot, a premium with respect to such Lot in an amount
equal to ten percent (10%) of the Purchase Price for such Lot (an "OUT-OF-ORDER
PREMIUM"). A Lot shall be deemed to be acquired "out of order" if Optionee has
not previously
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closed the acquisition of seventy-five percent (75%) of the "Eligible Lots" (as
such term is defined on Exhibit "B") of the same Lot Type in the immediately
prior Purchase Segment for such Lot Type within such Project and all of the
"Eligible Lots" of the same Lot Type (as such term is defined on Exhibit "B") in
all other prior Purchase Segments for such Lot Type within such Project. Once
Optionee has (i) purchased all of the Lots in a Purchase Segment required to be
purchased prior to any Lot in a Purchase Segment for which an Out-of-Order
Premium was paid for an out-of-order purchase, and/or (ii) paid Out-of-Order
Premiums in an amount equal to the Purchase Price for all remaining Lots of the
same Lot Type in such Purchase Segment that have not been acquired by Optionee,
then Optionee shall be entitled to a credit (a "PREMIUM CREDIT") against the
Purchase Price of the next Lot(s) purchased by Optionee in an amount equal to
all Out-of-Order Premiums previously paid by Optionee for such Purchase Segment
and for which no Premium Credit previously has been provided. In addition, with
respect to any Lot in the Project known as Xxxxx River that is designated as a
"Canal Lot," Optionee may not acquire a "Canal Lot" unless either (i) Optionee
has acquired, or upon the acquisition of such "Canal Lot" will have acquired, at
least as many Lots that are not Canal Lots within the applicable Purchase
Segment as the number of Canal Lots that have been acquired by Optionee in such
Purchase Segment, or (ii) there are no Eligible Lots in such Purchase Segment
other than Lots that are Canal Lots. The Canal Lots are the 70 Lots which have a
rear yard that is immediately adjacent to the Xxxxx Canal.
3. ESCROW.
Each Closing hereunder (each, an "OPTION CLOSING") shall be consummated
through an escrow established with Escrow Agent (the "ESCROW"). This Agreement
shall constitute joint escrow instructions by Optionor and Optionee to Escrow
Agent. If required by Escrow Agent, the parties shall execute printed escrow
instructions in the standard form utilized by Escrow Agent, containing such
modifications as are mutually acceptable to Optionor, Optionee, and Escrow Agent
(the "PRINTED INSTRUCTIONS"). In the event of a conflict between the terms of
this Agreement and the terms of the Printed Instructions, the terms of this
Agreement shall govern.
4. Title; conveyance.
4.1 Title Insurance Policy. Pursuant to the Master Agreement, Optionor has
caused Xxxxxxxxx Xxxxxxx, LLP (the "CLOSING AGENT") to provide Optionee with a
title insurance commitment (the "OPTIONEE'S TITLE COMMITMENT") unconditionally
committing First American Title Insurance Company ("TITLE COMPANY") to issue to
Optionee at the Closing under the Master Agreement an ALTA Owner's Policy - Form
B 1970 (rev. 10-17-70 and 10-17-84) with Florida modifications insuring
Optionee's option rights hereunder in the Option Property subject only to the
"Permitted Exceptions" (as defined below) (the "OPTIONEE'S TITLE POLICY"). The
Optionee's Title Commitment and the Optionee's Title Policy shall name Optionee
as the insured in an amount reasonably established by Optionee at the time of
the Closing, and shall insure that good and marketable fee title to the Option
Property is vested with the applicable Optionor free of liens, encumbrances and
restrictions except for the Permitted Exceptions. The Optionee's Title Policy
will include such endorsements authorized to be issued in Florida as Buyer may
reasonably require, including without limitation, a survey endorsement (to the
extent that surveys that satisfy the requirements for such endorsement are
available), PUD endorsement, condominium endorsement (for those parcels that are
condominiums), Florida Endorsement
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Form 91 (FF 9.1)(for vacant lands), and Florida Endorsement Form 9.2 (FF
9.2)(for improved lands). The cost of the Optionee's Title Policy and the
endorsements thereto will be paid by Optionor. Optionor shall cause the
Optionee's Title Commitment to be marked-up or endorsed at the Closing to xxxx
the effective date as of the Closing, to satisfy and delete the requirements of
Schedule B-Section I, to delete the standard, gap and survey exceptions for
Schedule B-Section II and to delete any other exceptions in Schedule B-Section
II that are not Permitted Exceptions.
At each Option Closing, Optionor shall cause the Title Company (or, if
Title Company will not issue, shall cause Closing Agent) to issue to Optionee an
endorsed or marked-up title commitment unconditionally committing the Title
Company to issue to Optionee an ALTA Owner's Policy - Form B 1970 (rev. 10-17-70
and 10-17-84) with Florida modifications subject only to the applicable
Permitted Exceptions (the "LOT TITLE POLICY") for that portion of the Option
Property that was the subject thereof, insuring Optionee's ownership interest in
such Lot(s) and Option Property in the amount of the Purchase Price therefor
excluding any Future Land Profit component of such Purchase Price. At each
Option Closing, Optionor shall pay the costs of each Lot Title Policy, and
Optionee's obligations to consummate such Option Closing shall be conditioned
upon the Title Company being prepared and irrevocably committed to issue a Lot
Title Policy with respect to each Lot or other portion of the Option Property
being acquired at such Option Closing. The Lot Title Policy will include such
endorsements authorized to be issued in Florida as Buyer may reasonably require,
including without limitation, a survey endorsement (to the extent that surveys
that satisfy the requirements for such endorsement are available), PUD
endorsement, condominium endorsement (for those parcels that are condominium),
Florida Endorsement Form 91 (FF 9.1)(for vacant lands), and Florida Endorsement
Form 9.2 (FF 9.2)(for improved lands). The cost of the Lot Title Policy and the
endorsements thereto will be paid by Optionor. Optionor shall cause the Lot
Title Commitment to be marked-up or endorsed at the Option Closing to reflect
the effective date as of the Option Closing, to satisfy and delete the
requirements of Schedule B-Section I to delete the standard, gap and survey
exceptions for Schedule B-Section II and to delete any other exceptions in
Schedule B-Section II that are not applicable Permitted Exceptions.
4.2 Deed. Upon each Option Closing, fee simple title to each Lot or other
portion of the Option Property purchased shall be conveyed by Optionor to
Optionee at the Option Closing by a duly executed and acknowledged deed in the
form attached hereto as Exhibit "H", subject only to the applicable Permitted
Exceptions (each, a "DEED"). As used herein, the term "PERMITTED EXCEPTIONS"
shall be defined as (i) the title exceptions set forth on Schedule B to the
Optionee's Title Policy, (ii) the Memorandum, (iii) any matters created by or
arising from the acts of Optionee and that are not a result of a breach of any
of Optionor's obligations hereunder (e.g., a mechanic's or materialman's lien
arising out of a failure of Optionor to make a payment required hereunder), and
(iv) any other matters specifically approved or deemed approved by Optionee as
Permitted Exceptions in connection with this Agreement or otherwise in writing.
Notwithstanding any provision contained herein or in the Master Agreement,
Optionor shall, at the Closing under the Master Agreement, pay off all financial
liens and encumbrances against the Option Property so there shall, at the
Closing under the Master Agreement, be no financial liens or encumbrances
against any portion of the Option Property. The parties acknowledge that
Optionor may, after the Closing under the Master Agreement, place encumbrances
against the Option Property and Optionee shall, upon the request of Optionor,
subordinate its interests in each applicable Memoranda to secured financing
hereafter obtained by Optionor in an amount
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not to exceed eighty percent (80%) of Optionor's actual out-of-pocket costs for
the applicable Project and providing for an interest rate per annum not to
exceed LIBOR plus 200 basis points; provided, however, it shall be a condition
to Optionee's obligation to provide such subordination that such subordination
agreement contains an unconditional commitment by the lender (and its successors
and assigns) to recognize and abide by the terms and conditions of this
Agreement regardless of any default by Optionor under its loan with such lender
and regardless of the existence of or conclusion of any enforcement or
foreclosure action by such lender or any deed in lieu or other similar
resolution related thereto. Any such subordination agreement, including the
recognition provisions described above, must be in a commercially reasonable
form.
4.3 Excluded Lots. Notwithstanding the foregoing to the contrary, any Lot
subject to a lien, encumbrance, restriction or other title defect other than the
Permitted Exceptions shall be deemed an "EXCLUDED LOT" and Optionor shall have
ninety (90) days from receipt of written notice from Optionee describing such
title defect within which to cure the same to Optionee's satisfaction and
provide Optionee with notice of such cure. Once the title defect has been cured
to Optionee's satisfaction within the above-described ninety (90) day period,
such Lot shall no longer be deemed an Excluded Lot. If the title defect creating
an Excluded Lot is not cured to Optionee's satisfaction within ninety (90) days
from the date Optionor receives notice from Optionee of the title defect
pertaining to the Excluded Lot, Optionor shall notify Optionee of its inability
to cure the defect, and Optionee, within ten (10) Business Days following
receipt of such notice from Optionor, shall elect either to (a) waive the title
defect and acknowledge that the applicable Lot is no longer an Excluded Lot, or
(b) renounce its right to acquire the Excluded Lot. If Optionee fails to either
waive the title defect or renounce its right to acquire the Excluded Lot within
such ten (10) Business Day period, Optionee shall be deemed to have elected to
renounce its right to acquire the Excluded Lot. If Optionee renounces, or is
deemed to have renounced, its right to acquire an Excluded Lot pursuant to the
terms of this Section 4.3, then (i) such Excluded Lot shall no longer be subject
to the Option and Optionor may thereafter sell such Excluded Lot(s) to third
parties; (ii) Optionor shall immediately deliver to Optionee the portion of the
Deposit allocable to such Excluded Lot, and (iii) such Excluded Lot shall be
deemed a purchased Lot for purposes of calculating the cumulative number of
purchased Lots under Section 1.3. For each Excluded Lot situated within a
Project specified in Exhibit "E-2", the Future Land Profits and the Future Land
Profits payable with respect to such Project shall be reduced by the Per Lot
Future Land Profits for such Lot. Notwithstanding the foregoing to the contrary,
and except as contemplated in this Agreement or permitted in this Agreement,
neither Optionor nor any of Optionor's employees, contractors, agents, or
representatives shall take any action, fail to take any required action, or
willfully allow or consent to any action by another (Optionee and its employees,
contractors, agents, and representatives being expressly excluded from any of
the foregoing) that would cause any of the Lots to be encumbered with any matter
that is not a Permitted Exception.
5. CLOSING.
5.1 Closing Dates. As used herein, the following terms shall have the
following meanings: (a) an "OPTION CLOSING" shall mean the recordation of the
Deed for a Lot or other portion of the Option Property being purchased in the
Official Records of the applicable Florida county; and (b) an "OPTION CLOSING
DATE" shall mean the date upon which an Option Closing actually occurs.
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5.2 Deliveries by Optionor. On or before each Option Closing Date,
Optionor, at its sole cost and expense, shall deliver or cause to be delivered
into Escrow the following documents and instruments, each dated as of the
applicable Option Closing Date and fully executed and acknowledged, if
appropriate, in addition to all other items and payments required by this
Agreement to be delivered by Optionor at such Option Closing:
5.2.1 Deed. The Deed(s) conveying the Lot(s) or other portions of
the Option Property being purchased at such Option Closing to Optionee, together
with Florida Form DR 219;
5.2.2 Affidavit. Gap and construction lien affidavit in the form
required by the Escrow Agent in order to delete the standard gap and survey
title exceptions from the Lot Title Policy at each Option Closing;
5.2.3 Non-Foreign Affidavit. A Non-Foreign Affidavit in the form
attached hereto as Exhibit "I" (the "NON-FOREIGN AFFIDAVIT");
5.2.4 Proof of Authority. Such proof of Optionor's identity and
authority and authorization to enter into this Agreement and consummate the
transactions contemplated hereby as may be reasonably required by Escrow Agent
or Optionee;
5.2.5 Other. Such other documents and instruments, signed and
properly acknowledged by Optionor, if appropriate, as may be reasonably required
by Optionee or Escrow Agent or otherwise in order to effectuate the provisions
of this Agreement and the closing of the transaction contemplated herein with
respect to the Lot(s) or other portion of the Option Property being purchased at
such Option Closing.
5.3 Deliveries by Optionee. On or before each Option Closing Date,
Optionee, at its sole cost and expense, shall deliver or cause to be delivered
into Escrow the following documents and instruments, each dated as of the then
applicable Option Closing Date and fully executed and acknowledged, if
appropriate, and funds, in addition to all other items and payments required by
this Agreement to be delivered by Optionee at such Option Closing:
5.3.1 Purchase Price. The amounts specified in Section 2.1.2 plus
all of Optionee's share of the Closing Costs (and otherwise sufficient to close
the transaction contemplated herein with respect to the Lot(s) or other portion
of the Option Property being purchased at such Option Closing); and
5.3.2 Other. Such other documents and instruments, signed and
properly acknowledged by Optionee, if appropriate, as may reasonably be required
by Optionor or Escrow Agent or otherwise in order to effectuate the provisions
of this Agreement and the closing of the transaction contemplated herein with
respect to the Lot(s) or other portion of the Option Property being purchased at
such Option Closing.
5.4 Actions by Escrow Agent. When Optionee and Optionor have deposited
into Escrow the documents and funds required by this Agreement and Title Company
or Closing Agent, as applicable, is irrevocably and unconditionally committed to
issue the Lot Title Policy
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as applicable, Escrow Agent shall, in the order and manner herein below
indicated, take the following actions at each Option Closing:
5.4.1 Funds. Disburse all funds as follows:
(a) Pursuant to the "Closing Statement" (as hereinafter
defined), retain for Escrow Agent's own account all escrow fees and costs and
the fees and expenses incurred in connection with the issuance of each Lot Title
Policy for the Lot(s) or other portion of the Option Property being acquired at
such Option Closing and disburse to any other persons or entities entitled
thereto the amount of any other Closing Costs;
(b) Retain in Escrow the final [ * ] paid by Optionee pursuant
to this Agreement, which shall constitute the "Escrow Amount" (as such term is
defined in the Escrow Agreement), and pay such Escrow Amount as and when
required in accordance with the terms of the Escrow Agreement; and
(c) Disburse to Optionor an amount equal to the Purchase Price
payable for the Lot(s) or other portion of the Option Property being purchased
at such Option Closing, less the amount of the Deposit allocable thereto, less
or plus the net debit or credit to Optionor by reason of the allocations of
Closing Costs provided for herein and any applicable Out-of-Order Premium or
Premium Credit applicable to such Lot(s) or other portion of the Option
Property.
5.4.2 Recording. Cause the Deed(s) for the Lot(s) or other portion
of the Option Property being purchased and any other documents customarily
recorded and/or that the parties hereto may mutually direct to be recorded in
the Official Records of the applicable Florida county and obtain conformed
copies thereof for distribution to Optionee and Optionor.
5.4.3 Delivery of Documents. Deliver: (a) to Optionor (i) one copy
of the Non-Foreign Affidavit, and (ii) one conformed copy of each document
recorded pursuant to the terms hereof; and (b) to Optionee, (i) the original
Non-Foreign Affidavit, and (ii) one conformed copy of each document recorded
pursuant to the terms hereof.
5.4.4 Lot Title Policy. Cause Title Company or Closing Agent,
as applicable, to issue to Optionee each Lot Title Policy for the Lot(s) or
other portion of the Option Property being acquired at such Option Closing (at
the then promulgated rate approved by the insurance commissioner).
5.5 Taxes and Assessments. Real property taxes and assessments (general,
special, or other) with respect to each Lot and/or other portion of the Option
Property purchased at an Option Closing shall not be prorated, but shall be
assumed or taken subject to by Optionee; provided, however, that any amounts
(including, but not limited to, interest and/or penalties) due and owing with
respect to such Lot(s) and/or other portion of the Option Property over and
above the original amount of such tax or assessment by reason of the failure of
Optionor to timely pay
------------------------------------
* Confidential information on this page has been omitted and filed separately
with the Securities Exchange Commission pursuant to a Confidential Treatment
Request.
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all such taxes and assessments, or to take any other required action, shall be
paid by Optionor in full at or before the Option Closing for such Lot(s) and/or
other portion of the Option Property. Optionee shall have the right to protest
any tax assessments related to any portion of the Option Property.
5.6 Closing Costs. Each party shall pay its own costs and expenses arising
in connection with each Option Closing (including, without limitation, its own
attorneys' and advisors' fees, charges, and disbursements), except the following
costs (the "CLOSING COSTS"), which shall be allocated between the parties as
follows:
5.6.1 Escrow Agent's escrow fees and costs shall be paid one-half by
Optionor and one-half by Optionee;
5.6.2 The cost of each Lot Title Policy issued in connection with
such Option Closing shall be paid by Optionor;
5.6.3 All recording fees shall be paid by Optionee and all other
closing fees and costs shall be charged to and paid by Optionor and Optionee in
accordance with customary escrow practices in the applicable Florida Counties,
as determined by Title Company;
5.6.4 All documentary stamp taxes and surtax (if any) shall be
charged to and paid by Optionor.
5.7 Closing Statement. As soon as possible prior to each Option Closing
Date, Escrow Agent shall deliver to each of the parties for its review and
approval a preliminary closing statement (the "PRELIMINARY CLOSING Statement")
setting forth the Closing Costs and other amounts allocable to the parties
pursuant to the terms of this Agreement. Based on each of the party's comments,
if any, regarding the Preliminary Closing Statement, Escrow Agent shall revise
the Preliminary Closing Statement and deliver a final, signed version of a
closing statement to each of the parties at the Option Closing (the "CLOSING
STATEMENT").
5.8 Deliveries Outside of Escrow. Upon each Option Closing, Optionor shall
deliver sole and exclusive possession of the Lot(s) and/or the Option Property
purchased at such Option Closing to Optionee, subject only to the Permitted
Exceptions.
6. GOVERNMENTAL APPROVALS; PROJECT DEVELOPMENT AND USE.
6.1 Governmental Approvals.
6.1.1 Pursuit of Governmental Approvals. Subject to Section 6.1.2
below, from and after the Effective Date, Optionee shall use its reasonable
efforts to (a) obtain any and all permits and development orders from any
applicable governmental authority, quasi-governmental authority, and utility
providers and/or regulators necessary for Optionee's development of the
communities and projects in which the Lots are located or on which the Unplatted
Property is to be platted into (each, a "PROJECT" and collectively the
"PROJECTS"), and (b) obtain approval by the applicable governmental authorities,
quasi-governmental authorities, and utility providers and/or regulators of any
maps, plats, surface water management permits, and/or improvement plans and
other reports and submittals required for such development and
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the recording of the approved final plat, and (c) enter into such agreements or
other arrangements as are necessary or desirable for Optionee's intended
development of the Projects, together with any modifications, amendments,
revisions, and/or additions to any of the foregoing as are necessary or
desirable for Optionee's intended development of the Projects (collectively, the
"GOVERNMENTAL APPROVALS"). Governmental Approvals shall include the recording of
the applicable final plat(s) in the office of the recorder of the applicable
Florida County.
6.1.2 Optionor Cooperation. Optionor shall cooperate with Optionee
in its efforts to obtain the Governmental Approvals, and shall timely execute
any and all applications, consents, and other documents reasonably requested by
Optionee, regarding any of the Governmental Approvals. In addition, Optionor
shall, within fifteen (15) days of written request by Optionee, make all
dedications as may be required by any applicable governmental authority,
quasi-governmental authority, and/or utility providers or regulators in
connection with the Governmental Approvals or the development of the Projects.
Optionee shall be entitled to deal directly with each applicable governmental
authority, quasi-governmental authority, and utility providers and/or
regulators.
6.1.3 Material Deviations. Unless required by any applicable
governmental authority, quasi-governmental authority, and/or utility provider
and/or regulator, Optionee's pursuit of the Governmental Approvals shall be
consistent with any Governmental Approvals that have been previously obtained by
Optionor with respect to the Projects and the pursuit of Governmental Approvals
for the Unplatted Property shall be consistent with the respective Conceptual
Plans, although Optionee may, without the prior consent of Optionor, make
changes to existing Governmental Approvals and to the Conceptual Plans and
pending Governmental Approvals for the Unplatted Property, as applicable,
provided such proposed changes do not constitute material deviations pursuant to
this Section 6.1.3. Prior to any submittal to any governmental authority,
quasi-governmental authority, and/or utility provider and/or regulator of any
maps, plats, and/or improvement plans and other reports and submittals that
would constitute a material deviation from Governmental Approvals previously
obtained by Optionor, or with respect to any of the Unplatted Property would
constitute a material deviation from the applicable Conceptual Plan, Optionee
shall deliver a copy of such documents to Optionor for its review and approval,
which approval shall not be withheld, conditioned, or delayed unreasonably.
Within fifteen (15) days after receipt of such documents which include a
material deviation from then existing Governmental Approvals previously obtained
by Optionor or from the applicable Conceptual Plan, as applicable, Optionor
shall notify Optionee in writing of Optionor's approval or disapproval (giving
specific reasons for disapproval) of such documents. Notwithstanding the
foregoing or any other provision contained herein, Optionor shall not be
entitled to disapprove or object to any matter if such matter is required by any
applicable governmental authority, quasi-governmental authority, and/or utility
provider and/or regulator. If Optionor fails to deliver a written notice of
approval of any matter for which Optionor may disapprove prior to expiration of
such fifteen (15) day period, then Optionor shall be deemed to have disapproved
the documents constituting a material deviation from the then existing
Governmental Approvals previously obtained by Optionor or any Conceptual Plan,
as applicable. If Optionor delivers a notice of disapproval prior to expiration
of such fifteen (15) day period, or if Optionor fails to deliver a notice of
approval within such fifteen (15) day period, then Optionee and Optionor shall
promptly meet with the engineer(s) and/or the applicable governmental authority,
quasi-governmental authority, and/or utility provider and/or regulator to
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attempt to resolve in good faith to Optionor's reasonable satisfaction such
matters disapproved by Optionor prior to Optionee's submittal of the documents
constituting a material deviation from then existing Governmental Approvals or
any Conceptual Plan, as applicable, to any applicable governmental authority,
quasi-governmental authority, and/or or utility provider and/or regulator. If
Optionee and Optionor still are unable, in good faith, to resolve to Optionor's
reasonable satisfaction such matters disapproved by Optionor, such matter shall
be subject to the dispute resolution provisions of Exhibit E to the Master
Agreement. The Option Periods will automatically be extended by the number of
days involved in such dispute resolution process. For purpose of this Agreement,
any proposed change or deviation from existing Governmental Approvals previously
obtained by Optionor or any Conceptual Plan, as applicable, shall not be deemed
to be a material deviation unless such proposed change or deviation is
voluntarily proposed by Optionee, as opposed to being required by applicable
authorities, and: (a) decreases the number of Lots in any Project within the
Unplatted Property by more than ten (10); (b) changes the number of Lots in any
Project other than the Unplatted Property; (c) adversely affects access to any
Project; (d) would result in an increase of ten percent (10%) or more in the
then current budget to develop any Project other than the Project known as
Naples 100; (e) would result in an increase of fifteen percent (15%) or more in
the then current budget to develop the Project known as Naples 100 or (f) would
delay the occurrence of the Governmental Approvals by more than one hundred
twenty (120) days. For purpose of determining the 10% and 15% thresholds
described in subsections (d) and (e) in the immediately preceding sentence, the
increase, if any, in costs due to any Xxxxx River Amenity Overage, any Naples
100 Overage, or any Xxxxxx 150 Amenity Overage shall not be included in any
updated budget. The Xxxxx River Amenity Overage shall mean the actual costs, if
any, in excess of $8,350,000 incurred to construct the amenity improvements
described on Exhibit "K" as the Xxxxx River Amenities. The Naples 100 Amenity
Overage shall mean the actual costs, if any, in excess of $2,000,000 incurred to
construct the amenity improvements described on Exhibit "K" as the Naples 100
Amenities. The Xxxxxx 150 Amenity Overage shall mean the actual costs, if any,
in excess of $5,000,000 incurred to construct the amenity improvements described
on Exhibit "K" as the Xxxxxx 150 Amenities.
6.2 Project Improvements.
6.2.1 Administration of Construction. Optionee shall act as contract
administrator in coordinating the design, engineering, and construction of all
on-site, off-site and other infrastructure work and improvements for the Option
Property and any portion, if any, of the Projects in which such Option Property
is located (collectively, the "IMPROVEMENTS") including those necessary to cause
each Lot, whether now existing or hereafter created in the Unplatted Property,
to be a "Finished Lot" (as such term is defined on Exhibit "J" hereto). The
Improvements shall be constructed in conformance with plans and specifications
identified on Exhibit "G" attached hereto and such additional improvement plans
and specifications as may hereafter be prepared and approved in connection with
the Governmental Approvals (the "IMPROVEMENT PLANS"). Optionee shall exercise
reasonable care to monitor the progress of work under the "Improvements
Contracts" (as hereinafter defined), which shall require that such work be
continuously performed in a good and workmanlike manner, in accordance with all
applicable Improvement Plans and all applicable laws and including all work and
improvements required in connection with the Governmental Approvals. Optionor
shall cooperate with Optionee in connection with the design, engineering, and
construction of the Improvements and
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shall timely execute any and all documents reasonably requested by Optionor in
connection therewith (e.g., easements, etc.).
6.2.2 Improvement Contracts. Pursuant to the Transaction Agreements,
Optionor has previously sold, conveyed, granted, assigned, and transferred to
Optionee a co-ownership interest in all rights and benefits in, to, and under
all contracts and agreements relating to the design, engineering, and/or
construction of the Improvements, as and to the extent such contracts and
agreements exist as of the Effective Date (collectively, the "EXISTING
IMPROVEMENT CONTRACTS"). From and after the Effective Date, Optionee is hereby
authorized to solicit bids for any additional contracts or agreements necessary
or desirable for the design, engineering, and/or construction of any of the
Improvements. Optionee shall deliver copies of any such bids, together with
Optionee's designation of the bid Optionee desires to have accepted (the
"SELECTED BID"), to Optionor for its review. Within fifteen (15) days after
receipt of such bids, Optionor shall notify Optionee in writing of Optionor's
approval or disapproval (giving specific reasons for disapproval) of the
Selected Bid. If Optionor fails to deliver a written notice of approval prior to
expiration of such fifteen (15) day period, then Optionor shall be deemed to
have disapproved the Selected Bid. If Optionor delivers a notice of disapproval
prior to expiration of such fifteen (15) day period, or if Optionor fails to
deliver a notice of approval within such fifteen (15) day period, then Optionee
and Optionor shall promptly meet, which meeting may include any other
appropriate parties, to attempt to resolve in good faith to Optionor's
reasonable satisfaction such matters disapproved by Optionor. If Optionee and
Optionor still are unable, in good faith, to resolve to Optionor's reasonable
satisfaction such matters disapproved by Optionor, then such matter shall be
subject to the dispute resolution provisions of Exhibit E to the Master
Agreement. The Option Periods shall automatically be extended by the number of
days involved in any such dispute resolution process. Optionor shall timely
enter into all contracts with consultants and contractors relating to the
Governmental Approvals and the Improvements and all such contracts shall be in a
commercially reasonable form reasonably satisfactory to Optionee and Optionor
and shall name Optionee as a third party beneficiary of such contracts. If
Optionor fails and/or refuses to timely enter into any of such contracts and/or
Optionor and Optionee cannot agree on the format and/or content of such
contracts, then such matter(s) shall be subject to the dispute resolution
provisions of Exhibit E to the Master Agreement. If, after the conclusion of the
dispute resolution provisions of Exhibit E to the Master Agreement, Optionor
still fails and/or refuses to timely enter into any of such contracts that
Optionor is required to enter into pursuant to this Section 6.2, then Optionee
shall be entitled to enter into such contracts directly, or to retain the
services of a third party to enter into such contracts, and Optionee shall be
entitled to pursue all remedies available at law and/or in equity.
6.3 Costs. Optionor shall be responsible for payment of all fees, costs,
and expenses of obtaining the Governmental Approvals and all fees, costs and
expenses related to the construction of the Improvements. With respect to
Improvements in Projects known as Renaissance and Colonial Shores (the
"PARTIALLY SOLD PROJECTS"), any fees, costs and expenses hereafter incurred in
connection with obtaining Governmental Approvals and/or constructing the
Improvements for any Partially Sold Project, and or for repairs of Improvements
constructed after the Effective Date, and/or for establishing appropriate
reserves for the owners associations for the Partially Sold Projects all to the
extent such items exceed the Budget of Future Costs (as defined in Exhibit "E")
with respect thereto shall be allocated among all lots within such Partially
Sold Projects so that Optionor shall be responsible for the per lot or unit
excess amount
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for lots/units/homes sold and conveyed by Optionor to homebuyers prior to the
Effective Date and the excess amount allocable to the Lots subject to this
Agreement shall, subject to the provisions of Exhibit "F", increase the Purchase
Price for such Lots. Such allocation of excess costs shall not, however,
adversely affect any rights and remedies Optionee may have with respect thereto
pursuant to the Master Agreement. Conversely, to the extent the Budget of Future
Costs for a Partially Sold Project is, upon completion of the Improvements,
determined to have exceeded the actual costs incurred after the Effective Date
to obtain the Governmental Approvals for such Partially Sold Project and to
complete the Improvements for such Partially Sold Project, then the excess
budget amount for such Partially Sold Project shall be allocated between
Optionor and Optionee so that Optionee shall be entitled to a credit against the
Purchase Price for the next Lots purchased by Optionee only in the amount of
such excess attributable to Lots subject to this Option Agreement and Optionor
shall therefore receive its pro rata share of such savings with respect to
lots/units/homes sold and conveyed by Optionor to homebuyers prior to the
Effective Date. The following disbursement procedures shall apply in connection
with the payment of the costs and expenses of the Governmental Approvals and the
Improvements:
6.3.1 Disbursement Requests. Not more often than twice each month,
Optionee may deliver to Optionor a disbursement request (a "DISBURSEMENT
REQUEST") in an amount not greater than a sum equal to (a) the fees, costs and
expenses then payable with respect to the Governmental Approvals and/or the
Improvements and allocable to Lots for which a Closing has not occurred
hereunder, minus (b) any fees, costs and expenses for which a Disbursement
Request previously has been delivered by Optionee and satisfied by Optionor.
Each Disbursement Request shall include copies of invoices, paid receipts,
applications for payment, or other reasonable supporting evidence of the costs
and expenses to be paid pursuant to such Disbursement Request.
6.3.2 Payment by Optionor. Within fifteen (15) days after Optionor
receives a Disbursement Request, Optionor shall pay all amounts in such
Disbursement Request (a "DISBURSEMENT") and deliver to Optionee an unconditional
lien waiver and release (on the appropriate form under applicable law) from each
contractor, subcontractor, supplier, material provider, and other potential lien
claimants involved in that portion of the Governmental Approvals and/or
Improvements, as applicable, for which that Disbursement relates.
Notwithstanding the cure periods provided in Section 10.1, if Optionor fails to
make any Disbursement as and when required under this Agreement, Optionee shall
have the right, but not the obligation, in addition to all other remedies
available under this Agreement, to make such Disbursement. Any such Disbursement
made by Optionee shall be immediately due and payable by Optionor to Optionee
and shall accrue interest at the rate of LIBOR plus ten percent (10%) per annum
from the date such amount was due and payable until such amount is paid in full.
In addition, Optionee shall be entitled to offset said sums and interest against
the Purchase Price payable by Optionee in connection with the next Option
Closing hereunder and/or against any other sums payable by Optionee to Optionor
hereunder.
6.4 Waiver of Claims. Notwithstanding Optionee's pursuit of the
Governmental Approvals and/or Optionee's acting as contract administrator in
coordinating the design, engineering, and construction of the Improvements,
Optionee does not and will not warrant, and shall have no liability with respect
to, any claims or defects arising from or related to the
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Governmental Approvals and/or the Improvements, and Optionor and/or anyone
claiming by, through, or under Optionor hereby fully releases Optionee,
Meritage, and the current and future officers, directors, managers, trustees,
trust beneficiaries, contractors, agents and employees of Optionee and/or
Meritage and of such current and future direct and indirect owners
(collectively, the "OPTIONEE-RELATED PERSONS") from any and all claims that it
may now have or hereafter acquire against Optionee and/or any other
Optionee-Related Person for any cost, loss, liability, damage, expense, demand,
action, or cause of action arising from or related to the Governmental Approvals
and/or the Improvements other than those brought as a result of Optionee's gross
negligence, willful misconduct, or willful, material deviation from the
Improvement Plans, as modified from time-to-time. Optionor further acknowledges
and agrees that this release shall be given full force and effect according to
each of its expressed terms and provisions, including, but not limited to, those
relating to unknown and unsuspected claims, damages, and causes of action. This
waiver and release of claims shall survive each Option Closing.
6.5 Conveyance of Common Areas to Owners Association(s). All common area
tracts within the Projects known as Renaissance and Colonial Shores that have
not been conveyed to the applicable owners association(s), if any, or
governmental entities, if applicable, shall be conveyed by Optionor at the
"Closing" as such term is defined in the Master Agreement, and Optionor shall
execute, acknowledge, and cause to be recorded all such instruments required in
connection therewith. No purchase price or other payments or consideration
whatsoever shall be payable to Optionor with respect to the conveyance of such
common area tracts to such owners association(s) and/or applicable governmental
entities. Such common area tracts shall be conveyed by Optionor free and clear
of all financial liens and encumbrances created or caused to be created by
Optionor. Optionor shall be responsible for all expenses associated with the
conveyance of such common areas/tracts to such owners association(s) and/or
applicable governmental entities. For any Project other than Renaissance and
Colonial Shores in which, as of the Effective Date, all common area tracts
within such Project have not been conveyed to the applicable owners
association(s), if any, or governmental entities, if applicable, Optionor shall,
promptly upon the request of Optionee (which shall be made as and when
appropriate to facilitate the development and marketing of the Projects and the
operation of the owners associations for such Projects), execute, acknowledge,
and cause to be recorded one or more Deeds to convey such common area tracts
(other than with respect to those portions of the Xxxxx River Project that are
subject to Section 7.1.21) to any applicable owners association(s) and/or
applicable governmental entities designated by Optionee to be the entity to own,
manage, and operate such common areas/tracts. No purchase price or other
payments or consideration whatsoever shall be payable to Optionor with respect
to the conveyance of such common area tracts to such owners association(s)
and/or applicable governmental entities. Such common area tracts shall be
conveyed by Optionor free and clear of all financial liens and encumbrances
created or caused to be created by Optionor. Optionor shall be responsible for
all expenses associated with the conveyance of such common areas/tracts to such
owners association(s) and/or applicable governmental entities, and such amounts
shall be deemed to be costs of Improvements under Exhibit "E-1" of this
Agreement.
6.6 Use. Optionee shall, during the term of this Agreement, and subject to
all local laws and regulations as set forth below, have a license to use the
Option Property before its purchase thereof, and to use the common areas and/or
common elements for each Project for purposes of inspection, making surveys and
staking, obtaining topographical information, the
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installation of the Improvements and activities and the placement of trailers,
temporary facilities, and parking related thereto, showing such Lots and/or any
model homes related thereto to prospective purchasers of homes from Optionee and
parking purposes, walkways, and temporary sales facilities related thereto, the
placement of signage and billboards relating to the development of the Project
and the marketing of Lots, and such other activities as otherwise are consistent
with Optionee's development and marketing of the Lots. Optionee shall, at its
expense, comply with all existing and future laws, codes, ordinances, orders,
rules, regulations and requirements of all applicable municipal, county, state,
and federal governmental authorities pertaining to the Lots. Subject to
Optionor's payment requirements under Section 6.3 above, and subject to the
financing Optionor is permitted to obtain pursuant to Section 4.2 above,
Optionee shall keep the unpurchased Lots free and clear of all liens and
encumbrances incurred by or resulting from the acts of Optionee and its agents,
employees, contractors and representatives, and shall indemnify, defend and hold
harmless Optionor for, from and against any such liens and encumbrances.
7. OPTIONOR'S REPRESENTATIONS AND WARRANTIES.
7.1 Representations and Warranties. Each of Colonial Homes, Colonial
Shores and Colonial Company jointly and severally acknowledges, covenants,
represents, and warrants to Optionee that the following are true in all material
respects as of the Effective Date and will be true, in all material respects, as
of each Option Closing, and in entering into this Agreement Optionee is, in
addition to the representations and warranties contained in Article IV of the
Master Agreement, relying upon the following:
7.1.1 Due Organization and Authorization. Each of Colonial Homes,
Colonial Shores and Colonial Company is duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation. The
individual(s) executing this Agreement and the instruments, documents, and
agreements referenced herein or to be executed in connection herewith on behalf
of Colonial Homes, Colonial Shores and Colonial Company have the legal power,
right, and actual authority to bind such entities to the terms hereof and
thereof, and the execution, delivery, and performance hereof and thereof does
not violate any provision of any document governing the organization and/or
operation and management of such entity.
7.1.2 Optionor's Authority; Validity of Agreements. Optionor has
full right, power, and authority to sell the Option Property to Optionee as
provided in this Agreement and to carry out its obligations hereunder. This
Agreement is, and all other instruments, documents and agreements to be executed
and delivered by Optionor in connection with this Agreement shall be, duly
executed and delivered by Optionor and the valid, binding and enforceable
obligations of Optionor (except as enforcement may be limited by bankruptcy,
insolvency or similar laws) and do not, and as of each Option Closing will not,
violate any provisions of any agreement or judicial order to which Optionor is a
party or to which Optionor or the Projects is subject.
7.1.3 Sole Owner. Optionor is the sole owner of fee simple interest
to the Option Property. Except as permitted pursuant to Section 4.2 above,
Optionor shall not take any action to affect title to the Option Property while
this Agreement is in effect, and the sole and exclusive possession of each Lot
or other portion of the Option Property purchased shall be delivered to Optionee
on or before the date of the Option Closing therefor.
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7.1.4 No Third-Party Rights. Except for any matter identified in the
existing Optionee's Title Policy, there are no leases, occupancy agreements,
easements, licenses or other agreements that grant third-parties any possessory
or usage rights to all or any part of the Option Property or the Projects.
Notwithstanding the foregoing, the parties acknowledge that there is presently a
farm lease affecting the Xxxxxx 150 Project and Optionor intends to continue to
have one or more farm leases in effect as to that Project during the term of
this Agreement, provided, however, that all such farm leases must be able to be
terminated by the Optionor upon no more than thirty (30) days notice to the
tenants under such farm leases, and provided further that Optionor shall cause
such farm leases to be terminated as and when required in order for Optionor to
construct Improvements and deliver Lots as and when required by Optionee
pursuant to this Agreement.
7.1.5 Litigation. To Optionor's knowledge, (a) there are no actions,
investigations, suits, or proceedings (other than tax appeals or protests)
pending or threatened that affect the Option Property or the Projects, the
ownership or operation thereof, or that question the validity or enforceability
of the transaction contemplated herein or that would materially and adversely
affect Optionor's ability to perform its obligations under this Agreement and
(b) there are no judgments, orders, awards or decrees currently in effect and
that that have not been fully discharged prior to the Effective Date with
respect to the ownership or operation of the Option Property or the Projects or
that would materially and adversely affect Optionor's ability to perform its
obligations under this Agreement.
7.1.6 Zoning and Condemnation. To Optionor's knowledge and except as
disclosed in the Reports delivered by Colonial to Optionee pursuant to the
Master Agreement, there are no pending proceedings to alter or restrict the
zoning or other use restrictions applicable to the Option Property or the
Projects, or to condemn all or any portion of the Option Property or the
Projects by eminent domain proceedings or otherwise.
7.1.7 Violations of Laws and Agreements. To Optionor's knowledge,
the execution, delivery and performance by Optionor of this Agreement and such
other instruments and documents to be executed and delivered in connection
herewith by Optionor does not, and shall not, result in any violation of, or
conflict with, or constitute a default under, any provisions of any agreement of
Optionor or any mortgage, deed of trust, indenture, lease, security agreement,
or other instrument, covenant, obligation, or agreement to which Optionor or the
Option Property or the Projects is subject, or any judgment, law, writ, decree,
order, injunction, rule, ordinance or governmental regulation or requirement
affecting Optionor or the Option Property or the Projects.
7.1.8 Bankruptcy. There are no attachments, levies, executions,
assignments for the benefit of creditors, receiverships, conservatorships or
voluntary or involuntary proceedings in bankruptcy or any other debtor relief
actions contemplated by Optionor or filed by Optionor, or to Optionor's
knowledge, pending in any current judicial or administrative proceeding against
Optionor.
7.1.9 No Violations of Environmental Laws. To Optionor's knowledge,
without any independent inquiry or investigation, (i) the Projects and the
Option Property are not in violation, nor have there been or are currently under
investigation for violation of any federal,
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state, regional, local or other governmental law, ordinance, regulation, order
or permit relating to industrial hygiene, worker health and safety, or to the
environmental conditions in, at, on or under or about the Option Property or the
Projects, including, but not limited to, soil and groundwater conditions
("ENVIRONMENTAL LAWS"); (ii) the Option Property and the Projects have not been
subject to a deposit of any Hazardous Substance (as defined below); (iii)
neither Optionor nor any third party has used, generated, manufactured, stored
or disposed in, at, on or under the Option Property or the Projects any
Hazardous Substance; and (iv) there is not now in, on or under the Option
Property or the Projects any underground or above ground storage tanks or
surface impoundments, any asbestos containing materials or any polychlorinated
biphenyls used in hydraulic oils, electrical transformers or other equipment.
Optionor hereby assigns to Optionee as of the Close of Escrow all claims,
counterclaims, defenses and actions, whether at common law or pursuant to any
other applicable federal, state or other laws which Optionor may have against
any third party or parties relating to the existence or presence of any
Hazardous Substance in, at, on, under or about the Option Property or the
Projects. For purpose of this Agreement, the term "HAZARDOUS SUBSTANCE" shall be
deemed to include any wastes, materials, substances, pollutants and other
matters regulated by Environmental Laws.
7.1.10 No Liens. To Optionor's knowledge, there are no mechanic's or
materialman's liens or similar claims or liens now asserted against the Option
Property or the Projects for work performed or commenced prior to the date
hereof; and Optionor shall timely satisfy and discharge any and all obligations
relating to work performed on or conducted at or materials delivered to the
Option Property or the Projects prior to the Option Closings therefor in order
to prevent the filing of any claim or mechanic's lien with respect thereto, but
Optionor shall not be responsible for any amounts due to consultants or others
performing work at Optionee's request and Optionee shall timely pay all such
amounts when due.
7.1.11 No Other Commitments. Except as may be disclosed in the
existing Optionee's Title Policy or in the Reports delivered by Optionor to
Optionee, and except as may hereafter be made in the normal course of pursuit of
Governmental Approvals, Optionor has not made any commitment or representation
to any governmental authority, or any adjoining or surrounding property owner,
which would in any way be binding on Optionee or would interfere with Optionee's
ability to develop and improve the Option Property or the Projects as
residential developments, and Optionor shall not make any such commitment or
representation which would affect the Option Property or the Projects or any
portion thereof prior to the Close of Escrow, without Optionee's written
consent.
7.1.12 No Default. To Optionor's knowledge, Optionor is not in
default under the provisions of any deed of trust or other encumbrances, liens,
or restrictions that affect the Option Property or the Projects. Optionor shall
pay all amounts when due with regard to the Option Property or the Projects
until the Closing therefor.
7.1.13 Endangered Species. To Optionor's knowledge, and except as
may be shown on Schedule 7.1.13, there are no endangered species or protected
natural habitat, flora or fauna on the Option Property or the Projects nor are
there any areas on or near the Option Property or the Projects that are
designated as wetlands or otherwise subject to the United States Army Corps of
Engineers' Section 404 permit requirements.
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7.1.14 Xxxxx/Underground Tanks. To Optionor's knowledge, there are
no xxxxx, drilling holes, wellheads, or underground storage tanks located on or
under the Option Property or the Projects.
7.1.15 Landfill/Waste Disposal Site. Optionor has not used the
Option Property or the Projects and, to Optionor's knowledge, neither the Option
Property nor any of the Projects has ever been used as a landfill, waste
disposal site, or burial site.
7.1.16 No Other Agreements. There are no shared expense agreements,
repayment agreements, reimbursement agreements, or development payback
agreements that affect all or any portion of the Option Property or the
Projects.
7.1.17 No Defects or Deficiencies. No defects or deficiencies which
are material (which for purposes of this Section shall mean they would, in the
aggregate, cost more than $25,000.00 to remedy) exist with respect to any of the
Improvements or any of the existing improvements on or with respect to the
Option Property and/or the Projects.
7.1.18 Property Materials. To Optionor's knowledge, there are no
defects, deficiencies, or inaccuracies in any of the information furnished by
Optionor to Optionee with respect to the Option Property and the Projects, and
all information furnished by Optionor to Optionee with respect to the Option
Property and the Projects is true, accurate, and complete.
7.1.19 Covenants, Conditions and Restrictions. Optionor is currently
the Declarant under all existing covenants, conditions and restrictions and
condominium declarations (collectively, the "RESTRICTIONS") currently applicable
to the Projects, and, as such, currently has the unilateral right to supplement,
amend, and revoke the Restrictions. At the "Closing", as such term is defined in
the Master Agreement, Optionor shall execute, acknowledge, and cause to be
recorded an assignment to Optionee of all of the declarant's and/or developer's
rights under the applicable Restrictions and all voting and other rights with
respect to any property owners association governing the Projects known as
Renaissance and Colonial Shores. In connection therewith, full and complete
control of all applicable boards of directors and/or other governing bodies with
respect to such Projects shall be transferred to Optionee, provided that so long
as Optionee retains control of each such governing body, Optionee shall allow
Optionor to appoint one representative to such governing body. With respect to
each of the Projects other than Renaissance and Colonial Shores, Optionor shall,
promptly upon the request of Optionee at any time after Optionee has acquired at
least one (1) Lot in such Project, execute, acknowledge, and cause to be
recorded an assignment to Optionee of all of declarant's and/or developer's
rights under the existing Restrictions and all voting and other rights with
respect to any property owners association governing such Project. In connection
therewith, full and complete control of all applicable boards of directors
and/or other governing bodies with respect to such Projects shall be transferred
to Optionee, provided that so long as Optionee retains control of each such
governing body, Optionee shall allow Optionor to appoint one representative to
such governing body. Each assignment of Declarant's rights shall provide that
the Declarant's rights with respect to a Project will be revested in Optionor in
the event this Agreement is terminated prior to the purchase by Optionee of all
Lots within such Project, subject, however, to a non-exclusive reservation in
favor of Optionee of all Declarant's and/or developers rights necessary or
convenient to Optionee's development, marketing, and sale of the Lots then owned
by Optionee.
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Similarly, Optionee shall transfer control of each governing body with respect
to such Project in the event this Agreement is terminated prior to the purchase
by Optionee of all Lots within such Project. After the Effective Date, Optionor
shall not supplement, amend, or remove the Restrictions without Optionee's prior
written consent. During the term of this Agreement, and subject to Optionor's
approval, which shall not be unreasonably withheld, Optionee shall have the
right to record declarations of covenants, conditions and restrictions and
condominium declarations for those Projects that currently do not have
appropriate declarations of covenants, conditions and restrictions and
condominium declarations and thereupon such items shall be deemed to be
Restrictions hereunder.
7.1.20 Cooperation Re: Xxxxx River Estate Community Development
District. Optionor agrees, at its cost, to cooperate with Optionee in appointing
Optionee's representatives to the governing board of the Xxxxx River Estates
Community Development District following the Closing, and to cause Optionor's
employees, officers, agents and board appointees to cooperate with Optionee in
the same manner. This cooperation shall include, but not be limited to, causing
Optionor's appointee(s) to the governing board to resign at Optionee(s)
direction; provided that Optionee shall allow Optionor to appoint one
representative to such governing board.
7.1.21 Xxxxx Xxxxxx. At the Closing, Optionor and Optionee shall
execute and cause to be recorded in the applicable Florida county an agreement
in the form attached hereto as Exhibit "L" (the "XXXXX XXXXXX AGREEMENT"). The
Xxxxx Xxxxxx Agreement, among other things, confirms Optionor's commitment to
convey to the Owner's Association for the Xxxxx River Project that area depicted
as an exhibit to the Xxxxx Xxxxxx Agreement as and when required to facilitate
Optionee's development and sale of the Xxxxx River Project and the use of such
area as common areas for the benefit of residents who live in the Xxxxx River
Project. The Xxxxx Xxxxxx Agreement further requires Optionor and Optionee to
cooperate in connection with any proposed re-configuration or modifications to
the property subject to the Xxxxx Xxxxxx Agreement in connection with Optionor's
proposed development of certain real property adjacent thereto, which real
property is subject to the Right of First Refusal referred to in the Master
Agreement. It is understood and agreed that any proposed relocation or
modification to such property shall only be done if it can be accomplished
without creating any liability with respect to any existing buyers of homes
within the Xxxxx River Project and provided further that the Optionor shall be
responsible for any costs and expenses associated with any such proposed
relocation or modifications. Notwithstanding the foregoing, it is agreed that
the park contemplated to be constructed on the property which is the subject of
the Xxxxx Xxxxxx Agreement shall remain situated as currently contemplated in
plans previously provided by Optionor to Optionee and by Optionor to third party
homebuyers unless it is relocated and/or reconfigured in such a manner as to
provide the same river front footage, the same proximity to the Xxxxx River
Project, and the same functionality and amenities. In any event, all of the
property subject to the Xxxxx River Agreement shall be conveyed to the
applicable owner's association no later than two (2) years following the
Effective Date.
7.2 Limitations.
7.2.1 Optionor's Knowledge. All representations made in this
Agreement to Optionor's knowledge (or lack thereof) shall have the same meaning
as Knowledge of Seller.
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7.2.2 Conflicting Information. If, following the Effective Date,
Optionor becomes aware of new information, conditions, or events that result in
any representation or warranty of Optionor being untrue in any material respect,
then Optionor shall provide Optionee with prompt notice thereof, in which event
each Lot affected thereby shall be deemed to be an Excluded Lot and Section 4.3
above shall apply, except that the cure shall be with respect to the new
information, conditions, or events, rather than a title defect.
7.3 Continuing Obligation; Survival. Prior to any termination of this
Agreement, Optionor shall not take any action, fail to take any required action,
or willfully allow or consent to any action by another that would cause any of
Optionor's representations or warranties to become untrue. All of the
representations, warranties, and agreements of Optionor set forth in this
Agreement shall be true upon the Effective Date, shall be deemed to be repeated
at and as of each Option Closing Date, and shall survive the delivery of each
Deed and each Option Closing until the three-year anniversary of the last Option
Closing hereunder.
8. OPTIONEE'S REPRESENTATIONS AND WARRANTIES.
8.1 Representations and Warranties. Each of Optionee and Meritage jointly
and severally acknowledges, covenants, represents, and warrants to Optionor that
the following are true in all material respects as of the Effective Date and
will be true in all material respects as of each Option Closing, and in entering
into this Agreement Optionor is relying upon the following:
8.2 Due Organization. Each of Optionee and Meritage is duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation.
8.3 Optionee's Authority; Validity of Agreements. Optionee has full right,
power, and authority to purchase and acquire the Lots from Optionor as provided
in this Agreement and to carry out its obligations hereunder. The individual(s)
executing this Agreement and the instruments referenced herein on behalf of
Optionee have the legal power, right, and actual authority to bind Optionee to
the terms hereof and thereof. This Agreement is, and all instruments, documents
and agreements to be executed and delivered by Optionee in connection with this
Agreement shall be, duly authorized, executed and delivered by Optionee and
shall be valid, binding, and enforceable obligations of Optionee (except as
enforcement may be limited by bankruptcy, insolvency, or similar laws) and do
not, and as of each Option Closing Date will not, violate any provision of any
agreement or judicial order to which Optionee is a party or to which Optionee is
subject.
8.4 Survival. All of the representations and warranties of Optionee set
forth in this Agreement shall be true upon the Effective Date, shall be deemed
to be repeated at and as of each Option Closing Date (except as otherwise set
forth in writing to Optionor) and shall survive the delivery of each Deed and
each Option Closing until the three-year anniversary of the last Option Closing
hereunder.
9. RISK OF LOSS.
9.1 Condemnation. If, prior to any Option Closing, all or any portion of
any Lot is taken by condemnation or eminent domain (or is the subject of a
pending or contemplated taking which has not been consummated), Optionor shall
immediately notify Optionee of such fact. In
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such event, each of the affected Lots shall be deemed an Excluded Lot and
Section 4.3 above shall apply, except that (a) the cure shall be with respect to
the condemnation or eminent domain (or the pending or contemplated taking which
has not been consummated), and (b) if such Lot no longer is deemed to be an
Excluded Lot pursuant to Section 4.3, then (i) Optionee shall be deemed to have
accepted such Lot subject to the taking affecting such Lot and without a
reduction in the Purchase Price therefor, (ii) Optionee shall have the right to
participate in the negotiation of any award for such taking, and (iii) Optionor
shall assign and turn over at the Option Closing for such Lot, and Optionee
shall be entitled to receive and keep, all awards for the taking that affected
such Lot.
9.2 Casualty. Prior to an Option Closing, the entire risk of loss or
damage by earthquake, hurricane, tornado, flood, landslide, fire, sinkhole or
other casualty with respect to the Projects shall be borne and assumed by
Optionor. If, prior to the Option Closing therefor, any damage occurs to any
portion of a Lot as a result of any earthquake, hurricane, tornado, flood,
landslide, fire, sinkhole or other casualty, the party which discovers such
casualty shall immediately notify the other party of such fact. In such event,
such Lot shall be deemed an Excluded Lot and Section 4.3 above shall apply,
except that (a) the cure shall be with respect to the damage, and (b) if such
Lot no longer is deemed to be an Excluded Lot pursuant to Section 4.3, (i)
Optionee shall be deemed to have accepted such Lot subject to the damage or
destruction and without a reduction in the Purchase Price therefor, (ii)
Optionee shall have the right to participate in any adjustment of the insurance
claim therefor, and (iii) Optionor shall assign and turn over at the Option
Closing for such Lot, and Optionee shall be entitled to receive and keep, all
insurance proceeds payable with respect to such damage or destruction (which
shall then be repaired or not at Optionee's option and cost).
9.3 Pre-Plat Condemnation or Casualty of Unplatted Property. If
condemnation or eminent domain proceedings or a casualty as described in Section
9.1 or 9.2 above at any time affect any part of the Unplatted Property prior to
the time the Unplatted Property is subdivided into Lots, then the provisions of
Sections 9.1 and/or 9.2, as applicable, shall be applied to the affected
portions of the Unplatted Property, with reference to Lots therein to be deemed
to refer to the proposed lots shown in the applicable Conceptual Plan.
10. DEFAULT; REMEDIES.
10.1 Default by Optionor. Optionor shall not be deemed to be in default
under this Agreement: (a) with respect to any monetary obligation of Optionor
unless the default is not cured within the greater of thirty (30) days after
Optionor's receipt of notice of such default from Optionee or such longer period
as is provided in specific provisions of this Agreement, or (b) with respect to
any non-monetary obligation of Optionor unless the default is not cured within
forty-five (45) days after Optionor's receipt of notice from Optionee or such
longer period as is provided in specific provisions of this Agreement; provided
that the failure to execute, acknowledge, or deliver instruments or documents on
any Option Closing Date shall be subject to the notice and cure provisions of
clause "(a)"; and provided further, that if such non-monetary default is capable
of being cured within a reasonable period of time, but is not reasonably capable
of being cured within such forty-five (45) day period, Optionor shall not be
deemed in default under this Agreement so long as Optionor commences the cure
within such forty-five (45) day period and thereafter diligently pursues such
cure to completion within such reasonable
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period of time, subject, however, to Optionee's right to seek provisional or
other extraordinary relief immediately if specifically provided for in this
Agreement. A default by Optionor under this Agreement shall constitute a default
by Optionor under the Master Agreement and each other Agreement executed
pursuant thereto, and a default by Optionor under the Master Agreement and/or
any other Agreement executed pursuant thereto shall constitute a default by
Optionor under this Agreement which default shall not be subject to the
additional cure periods set forth in this Section 10.1.
10.2 Optionee's Remedies. Upon Optionor's default under this Agreement,
and provided Optionee is not in default under this Agreement, Optionee may waive
such default and proceed in accordance with the terms of this Agreement
(including, without limitation, Section 1.2.3) or pursue Optionee's remedies
provided for in this Agreement, including that (a) Optionee may terminate the
Option by notice to Optionor and Escrow Agent, whereupon any unapplied portion
of the Deposit shall be immediately returned to Optionee, and Optionor shall
promptly pay to Optionee an amount equal to the sum of any unapplied Premium
Credit(s), the actual fees, costs and expenses incurred by Optionee in
connection with this Agreement, and any other amounts then due and owing under
this Agreement, or (b) proceed with any remedies available to Optionee at law or
in equity, which may, without limitation, include the bringing of an action
against Optionor for specific performance and/or recovery of the Deposit, any
unapplied Premium Credit(s), and any other damages suffered or incurred by
Optionee as a result of Optionor's default under this Agreement. Nothing in this
Section 10 shall limit or prevent Optionee from enforcing Optionor's obligations
and liabilities that survive the termination of the Option and this Agreement.
In addition to the remedies provided above, if Colonial fails to pay Optionee
any amount which may become payable to Optionee pursuant to this Agreement, then
interest shall accrue thereon at the rate of LIBOR plus ten percent (10%) per
annum until such amount is paid in full and in addition to any other remedy
which Optionee may be entitled to, Optionee shall be entitled to offset such
amounts against any amounts payable by Optionee pursuant to this Agreement or
the Master Agreement.
10.3 Default by Optionee. Optionee shall not be deemed to be in default
under this Agreement: (a) with respect to any monetary obligation of Optionee
unless the default is not cured within the greater of thirty (30) days after
Optionee's receipt of notice of such default from Optionor or such longer period
as is provided in the applicable provisions of this Agreement, or (b) with
respect to any non-monetary obligation of Optionee unless the default is not
cured within forty-five (45) days after Optionee's receipt of notice from
Optionor or such longer period as is provided in the applicable provisions of
this Agreement; provided that the failure to execute, acknowledge or deliver
instruments or documents on either Option Closing Date shall be subject to the
notice and cure provisions of the foregoing clause "(a)" and provided, further,
that if such non-monetary default is capable of being cured within a reasonable
period of time but is not reasonably capable of being cured within such
forty-five (45) day period, Optionee shall not be deemed in default under this
Agreement so long as Optionee commences the cure within such forty-five (45) day
period and thereafter diligently pursues such cure to completion within such
reasonable period of time, subject, however, to Optionor's right to seek
provisional or other extraordinary relief immediately if specifically provided
for in this Agreement.
10.4 Optionor's Remedies. Upon Optionee's default under this Agreement,
and provided Optionor is not then in default under this Agreement, Optionor may,
as its sole and
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exclusive remedy, terminate this Agreement by notice to Optionee and Escrow
Agent, whereupon the Deposit and any paid Out-of-Order Premiums shall be
retained by Optionor, and Optionee shall have no right whatsoever to receive any
refund of any portion of the Deposit and any paid Out-of-Order Premiums and any
unapplied Premium Credits, as liquidated damages and not as a penalty, Optionee
and Optionor acknowledging that it would be impractical and extremely difficult
to establish the actual damages that Optionor may suffer as a result of a
default by Optionee hereunder and, therefore, Optionee and Optionor agree that
the sum of the Deposit, any paid Out-of-Order Premiums, and any unapplied
Premium Credits has been calculated in good faith, under the circumstances
existing at the time this Agreement is entered into, as a reasonable estimate of
the amount of damages likely to be suffered by Optionor as a result of
Optionee's default. Nothing in this Section 10 shall limit or prevent Optionor
from enforcing Optionee's obligations and liabilities that survive the
termination of the Option and this Agreement.
11. BROKERS.
Optionee and Optionor hereby represent and warrant to and agree with each
other that neither Optionee nor Optionor has had, and shall not have, any
dealings with any third party to whom the payment of any broker's fee, finder's
fee, commission or other similar compensation ("COMMISSION") shall or may become
due or payable in connection with the transaction contemplated hereby, other
than as set forth in the Master Agreement (the "BROKER"). Any Commission due and
payable to the Broker in connection with the transaction contemplated hereby
shall be paid by Optionor as contemplated in the Master Agreement. Optionor
shall indemnify, defend, protect, and hold Optionee harmless from and against
any and all claims incurred by Optionee by reason of any breach or inaccuracy of
the representation, warranty, and agreement of Optionor contained in this
Section. Optionee shall indemnify, defend, protect, and hold Optionor harmless
from and against any and all Claims incurred by Optionor by reason of any breach
or inaccuracy of the representation, warranty, and agreement of Optionee
contained in this Section. The provisions of this Section shall survive each
Option Closing and the termination of this Agreement.
12. MISCELLANEOUS PROVISIONS.
12.1 Additional Agreements. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary, proper or advisable
to consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement, including obtaining all necessary waivers,
consents and approvals and effecting all necessary registrations and filings and
submissions of information requested by governmental authorities. Each of
Colonial Homes, Colonial Shores and Colonial Company agrees that it will, at any
time before or after an Option Closing, execute, acknowledge and deliver any
further deeds, assignments, conveyances and other assurances, documents and
instruments of transfer reasonably requested by Optionee or Meritage, and will
take any other action consistent with the terms of this Agreement that may
reasonably be requested by Optionee or Meritage, for the purpose of conveying,
assigning, transferring, granting, conveying and confirming to Optionee, or
reducing to possession, any or all property to be conveyed and transferred by
this Agreement. If requested by Optionee or Meritage, each of Colonial Homes,
Colonial Shores, and Colonial Company further agrees to
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prosecute or otherwise enforce in its name for the benefit of Optionee or
Meritage, any claims, rights, or benefits that are transferred to Optionee by
this Agreement and that require prosecution or enforcement in its name. After
each Option Closing and for a period of six months following the final
acquisition of Lots by Optionee hereunder, the parties will cooperate in good
faith and use commercially reasonable efforts to resolve any issues that may
arise in the transition of the Colonial Business.
12.2 Notices. All notices, consents, and other communications hereunder (a
"NOTICE") will be in writing and deemed to have been duly given when (i)
delivered by hand, (ii) sent by telecopier (with receipt confirmed), provided
that a copy is mailed by registered mail, postage pre-paid return receipt
requested or (iii) when received by the addressee, if sent by Express Mail,
Federal Express or other express delivery service (postage pre-paid return
receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate as to itself by Notice to the other):
If to Optionee: Meritage Homes Corporation
0000 Xxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Chief Financial Officer
and Meritage Homes of Florida, Inc.
00000 Xxxx Xxxxx Xx. Xxxx Xx. 0
Xxxx Xxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx Xxxxxxxxxxx
With a copy to: Xxxxx & Xxxxxx L.L.P.
Xxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
and
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With a copy to: Xxxxxxxxx Xxxxxxx, LLP
0000 X. Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: C. Xxxxxxx Xxxxx, Esq.
If to Optionor: Colonial Homes, Inc.
Colonial Shores, L.L.C.
The Colonial Company
0000 Xxxxxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: President
With a copy to: Sack Xxxxxx & Xxxxxx, P.C.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxx Xxxx, Esq.
To Escrow Agent: First American Title Insurance Company
00000 X.X. Xxxxxxx 00 Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxx Xxxxxx
To Closing Agent: Xxxxxxxxx Xxxxxxx, LLP
000 X. Xxxxxxx Xxxxx, Xxxxx 000 Xxxx
Xxxx Xxxx Xxxxx, Xxxxxxx, 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx Xxxxxxxxx, Esq.
Each required copy of each Notice given hereunder shall be dispatched to the
specified recipient(s) at the same time and using the same delivery method as
that used for the Notice. The inability to deliver a Notice because of a changed
address of which no Notice was given or an inoperative facsimile number for
which no Notice was given of a substitute number, or any rejection or other
refusal to accept any Notice, shall be deemed to be the receipt of the Notice as
of the date of such inability to deliver or rejection or refusal to accept. Any
Notice to be given by any party hereto may be given by legal counsel for such
party. Telephone numbers are
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provided herein for convenience only and shall not alter the manner of giving
Notice set forth in this Section 12.2.
12.3 Counterparts. This Agreement may be executed in any number of
counterparts, and each counterpart will constitute an original instrument, but
all such separate counterparts will constitute one and the same agreement.
12.4 Governing Law; Venue. The validity, construction, and enforceability
of this Agreement will be governed in all respects by the laws of the State of
Florida, without regard to its conflict of laws rules. Venue for any proceeding
arising herefrom shall lie in Xxx or Xxxxxxx Counties, Florida.
12.5 Assignment. This Agreement will not be assigned by operation of law
or otherwise, except that Optionee or Meritage may assign all or any portion of
their rights under this Agreement to (a) any wholly owned subsidiary or parent
or sister entities, (b) to any landbankers with whom Optionee or Meritage enters
into one or more landbanking transaction(s) with for all or part of the Option
Property, (c) to any entity in which Optionee or Meritage owns 49% or more of
the ownership interest therein or which Optionee or Meritage otherwise controls,
or (d) to any corporation or entity with or into which Optionee may be merged or
consolidated or to which Optionee transfers all or substantially all of its
assets. However, no such assignment will relieve Optionee or its successor of
its primary liability for all obligations of Optionee hereunder. Any assignment
in violation of the provisions of this Agreement will be null and void.
12.6 Gender and Number. The masculine, feminine or neuter pronouns used
herein will be interpreted without regard to gender, and the use of the singular
or plural will be deemed to include the other whenever the context so requires.
12.7 Schedules and Exhibits. The Schedules and Exhibits referred to in
this Agreement and attached to this Agreement are incorporated in this Agreement
by such reference as if fully set forth in the text of this Agreement.
12.8 Waiver of Provisions. The terms, covenants, representations,
warranties, and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any party at
any time to require performance of any provisions hereof will, in no manner,
affect the right at a later date to enforce the same. No waiver by any party of
any condition, or breach of any provision, term, covenant, representation, or
warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, will be deemed to be or construed as a further or
continuing waiver of any such condition or of the breach of any other provision,
term, covenant, representation, or warranty of this Agreement.
12.9 Costs. If any legal action or any arbitration or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default, or misrepresentation in connection with any of the provisions
of this Agreement, the successful or prevailing party or parties will be
entitled to recover reasonable attorneys' fees, accounting fees,
C-27
and other costs incurred in that action or proceeding, in addition to any other
relief to which it or they may be entitled.
12.10 Amendment. This Agreement may not be amended except by an instrument
in writing approved by the parties to this Agreement and signed on behalf of
each of the parties hereto.
12.11 Severability. If any term, provision, covenant, or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void,
or unenforceable, the remainder of the terms, provisions, covenants, and
restrictions of this Agreement will remain in full force and effect and will in
no way be affected, impaired, or invalidated and the court will modify this
Agreement or, in the absence thereof, the parties will negotiate in good faith
to modify this Agreement to preserve each party's anticipated benefits under
this Agreement.
12.12 Binding Effect. Subject to the provisions and restrictions of
Section 12.5, the provisions of this Agreement are binding upon and will inure
to the benefit of the parties and their respective successors and assigns.
12.13 Construction. References in this Agreement to "Sections,"
"Articles," "Exhibits," and "Schedules" are to the Sections and Articles in, and
the Exhibits and Schedules to, this Agreement, unless otherwise noted.
12.14 Time Periods; Business Day. Except as expressly provided for in this
Agreement, the time for performance of any obligation or taking any action under
this Agreement will be deemed to expire at 5:00 o'clock p.m. (Dallas, Texas
time) on the last day of the applicable time period provided for in this
Agreement. As used herein, the term "BUSINESS DAY" shall mean a day that is not
a Saturday, Sunday, or legal holiday. In the event that the date for the
performance of any covenant or obligation under this Agreement shall fall on a
Saturday, Sunday, or legal holiday, the date for performance thereof shall be
extended to the next Business Day. Similarly, in the event that the date for the
performance of any covenant or obligation under this Agreement that involves
Escrow Agent shall fall on a Business Day on which Escrow Agent is closed for
business to the public, the date for performance thereof shall be extended to
the next Business Day on which Escrow Agent is open for business to the public.
12.15 Headings. The headings of this Agreement are for purposes of
reference only and will not limit or define the meaning of any provision of this
Agreement.
12.16 Entire Agreement. This Agreement, along with the Transaction
Agreements, constitutes the entire agreement, including with respect to
representations and warranties, between the parties pertaining to the subject
matter contained in the Transaction Agreements. All prior and contemporaneous
agreements, representations, and understandings of the parties, oral or written,
are superseded by and merged in the Transaction Agreements. No supplement,
modification, or amendment of the Transaction Agreements will be binding unless
in writing and executed by the parties to the Transaction Agreements.
12.17 Arbitration. Any disputes arising hereunder will be resolved
pursuant to the dispute resolution provisions of Exhibit E to the Master
Agreement. However, it is
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acknowledged and agreed that any action for specific performance of Optionor's
obligations hereunder may be initiated in the counties in Florida in which the
Option Property is located.
Remainder of this page intentionally left blank.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
on the date first written above by their respective officers thereunder duly
authorized.
MERITAGE HOMES CORPORATION,
a Maryland corporation
---------------------------------------------
By:
----------------------------------------
Its:
----------------------------------------
MERITAGE HOMES OF FLORIDA, INC.,
an Arizona corporation
---------------------------------------------
By:
----------------------------------------
Its:
----------------------------------------
COLONIAL HOMES, INC.,
a Florida corporation
---------------------------------------------
By:
----------------------------------------
Its:
----------------------------------------
COLONIAL SHORES, L.L.C.,
a Florida limited liability company
---------------------------------------------
By:
----------------------------------------
Its:
----------------------------------------
THE COLONIAL COMPANY,
an Alabama corporation
---------------------------------------------
By:
----------------------------------------
Its:
----------------------------------------
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ESCROW AGENT:
First American Title Insurance Company, the Escrow Agent under the foregoing
Option and Development Agreement, does hereby (i) accept the foregoing Option
and Development Agreement as its escrow instructions and (ii) accepts employment
to handle the escrow established by the Agreement in accordance with the terms
set forth therein. By accepting the escrow, Escrow Agent agrees to be the
designated "reporting person" under Section 6045(e) of the U.S. Internal Revenue
Code with respect to the real estate transaction described in the foregoing
Option and Development Agreement and to prepare, file, and deliver such
information, returns, and statements as the U.S. Treasury Department may require
in connection therewith, including Form 1099-B.
First American Title Insurance Company
By:
----------------------------------------
Name:
----------------------------------------
Its:
----------------------------------------
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EXHIBIT D
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "AGREEMENT"), is made as of February
9, 2005, by and among Meritage Homes Corporation, a Maryland corporation
("MERITAGE"), Meritage Homes of Florida, Inc., an Arizona corporation,
("BUYER"), Colonial Homes, Inc., a Florida corporation and its wholly-owned
subsidiary Colonial Shores, L.L.C., an Arizona limited liability company
(together, "COLONIAL"), and The Colonial Company, an Alabama corporation
("PARENT," and together with Colonial, the "SELLER").
RECITALS
1. As of the date hereof, Meritage, Buyer and Seller entered into a Master
Transaction Agreement (the "MASTER AGREEMENT"), an Agreement of Purchase and
Sale of Assets, an Agreement of Purchase and Sale of Real Property and an Option
and Development Agreement pursuant to which Buyer has agreed to purchase from
Colonial and Colonial has agreed to sell to Buyer the assets of the Colonial
Business. Capitalized terms not otherwise defined shall have the meanings
ascribed to them in the Master Agreement.
2. As a material condition to the consummation of the Master Agreement,
Seller, Buyer and Meritage are willing to enter into this Indemnification
Agreement.
In consideration of the premises, the mutual promises of the parties set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller, Buyer and Meritage,
intending to be legally bound, agree as follows:
AGREEMENT
1. Indemnification of Buyer and Meritage by Seller. Subject to the
limitations set forth in Section 4 of this Agreement, and without giving effect
to materiality, Seller will indemnify and defend Buyer and Meritage and their
direct and indirect parent companies, subsidiaries and affiliates, and their
respective officers, directors, shareholders, successors and assigns, from and
against any and all costs, expenses, losses, damages, fines, penalties or
liabilities (including, without limitation, interest which may be imposed in
connection therewith, court costs, litigation expenses, and reasonable
attorneys' and accounting fees) (collectively, "LOSSES") incurred by them,
directly or indirectly, with respect to, in connection with, arising from, or
alleged to result from, arise out of, or be in connection with:
A. a breach by Colonial or Parent of any representation, warranty,
covenant, restriction or agreement made by Colonial or Parent and contained in
the Master Agreement, any of the Transaction Agreements, the Seller's Disclosure
Schedule or in any certificate or other document delivered by such parties to
Buyer or Meritage thereunder;
B. any Excluded Liabilities;
C. any salary, bonus, profit sharing, severance, success fee,
commission or similar item owed or alleged to be owed to Xxxxxxx Xxxxxxxxxxx in
connection with his employment with Colonial, Parent or any of their affiliates
prior to the Closing Date or arising out of the Master Agreement and related
transactions;
D-1
D. any other claim, contingency, debt, suit, cause of action,
investigation or proceeding of any kind whatsoever, including those listed on
the Seller's Disclosure Schedule other than Assumed Liabilities, whether
instituted or commenced prior to or after the Closing Date and which relates to
or arises from the Colonial Business or the Acquired Assets on or before the
Closing Date; and
E. any Losses arising from unrecorded liens which relate to work
performed on any of the Owned Real Property prior to the Closing Date, except
and to the extent reflected as a liability on the Final Closing Balance Sheet.
2. Indemnification of Seller by Buyer and Meritage. Buyer and Meritage
each, jointly and severally, will indemnify and defend Seller and their direct
and indirect subsidiaries and affiliates, and their respective officers,
directors, shareholders, successors and assigns from and against any Losses
incurred by them, directly or indirectly, with respect to, in connection with,
arising from, or alleged to result from, arise out of, or be in connection with:
A. a breach by the Buyer of any representation, warranty, covenant,
restriction or agreement made by Buyer and contained in the Master Agreement or
in any certificate or other document delivered by Buyer to the Seller
thereunder;
B. any Losses directly caused by Buyer's negligent actions or
willful misconduct in connection with its entry onto the Owned Real Property
during its inspection and diligence procedures;
C. any Assumed Liabilities;
D. any other claim, contingency, debt, suit, cause of action,
investigation or proceeding of any kind whatsoever instituted or commenced after
the Closing Date which relates to or arises from Buyer's operation of the
Colonial Business after the Closing Date (except for any claims arising out of
Seller's liabilities or obligations to Buyer under the Master Agreement or any
of the Transaction Agreements);
E. any Losses incurred by Colonial resulting from a breach by
Meritage of Section 18 of that certain Agreement of Purchase and Sale, by and
between Rockpoint/Ronto Naples, L.L.C and Colonial, dated October 22, 2004, as
amended by that First Amendment to Agreement of Purchase and Sale, dated January
5, 2005 and that Second Amendment to Agreement of Purchase and Sale, dated
January 11, 2005, which was assigned to Meritage pursuant to the Master
Agreement; and
F. any Losses incurred by Colonial resulting from (i) its service as
Buyer's general contractor and agent pursuant to, and subject to the limitations
of, Section 6.13 of the Master Agreement and (ii) its post-Closing conveyance of
the Retained Condominium Parcels as contemplated by Section 2.2D of the Master
Agreement (except for any claims arising out of Seller's gross negligence,
willful misconduct or breach of Section 2.2D).
3. Procedure for Indemnification.
A. The party which is entitled to be indemnified hereunder (the
"INDEMNIFIED PARTY") shall promptly give notice hereunder to the party required
to indemnify (the "INDEMNIFYING
D-2
PARTY") after obtaining written notice of any claim as to which recovery may be
sought against the indemnifying party because of the indemnity in Section 1 and
Section 2 hereof and, if such indemnity shall arise from the claim of a third
party, shall permit the Indemnifying Party to assume the defense of any such
claim and any litigation resulting from such claim, provided that, Buyer or
Meritage may, in their discretion, undertake, at Seller's cost and expense, the
defense of any claim for which Seller is responsible hereunder with respect to
any lots, land, rights to purchase lots or land, project or subdivision within
the Owned Real Property. Notwithstanding the foregoing, the right to
indemnification hereunder shall not be affected by any failure of an Indemnified
Party to give such notice, or delay by an Indemnified Party in giving such
notice, unless, and then only to the extent that, the rights and remedies of the
Indemnifying Party shall have been prejudiced as a result of the failure to
give, or delay in giving, such notice. Failure by an Indemnifying Party to
notify an Indemnified Party of its election to defend any such claim or action
by a third party within 10 days after notice thereof shall have been given to
the Indemnifying Party shall be deemed a waiver by the Indemnifying Party of its
right to defend such claim or action.
B. If the Indemnifying Party assumes the defense of such claim or
litigation, the Indemnifying Party shall take all steps necessary in the defense
or settlement of such claim or litigation, and will hold the Indemnified Party
harmless from and against any and all damages caused by or arising out of any
settlement approved by the Indemnifying Party or any judgment in connection with
such claim or litigation. The Indemnifying Party shall not, in the defense of
such claim or any litigation resulting therefrom, consent to entry of any
judgment (other than a judgment of dismissal on the merits without costs) except
with the written consent of the Indemnified Party, or enter into any settlement
(except with the written consent of the Indemnified Party) which does not
include as an unconditional term thereof the giving by the claimant or the
plaintiff to the Indemnified Party of a release from all liability in respect of
such claim or litigation.
C. If the Indemnifying Party does not assume the defense of any such
claim by a third party or litigation after receipt of notice from the
Indemnified Party to do so, the Indemnified Party may defend against such claim
or litigation in such manner as it deems appropriate, and unless the
Indemnifying Party shall deposit with the Indemnified Party a sum equivalent to
the total amount demanded in such claim or litigation plus the Indemnified
Party's estimate of the costs of defending the same, the Indemnified Party may
settle such claim or litigation on such terms as it may deem appropriate and the
Indemnifying Party shall promptly reimburse the Indemnified Party for the amount
of such settlement and for all damages incurred by the Indemnified Party in
connection with the defense against or settlement of such claim or litigation.
D. The Indemnifying Party shall promptly reimburse the Indemnified
Party for the amount of any judgment rendered with respect to any claim or
litigation by a third party in such litigation and for all damage incurred by
the Indemnified Party in connection with the defense against such claim or
litigation, whether or not resulting from, arising out of, or incurred with
respect to, the act of a third party.
E. Anything in this Section 3 to the contrary notwithstanding, the
party not primarily responsible for the defense of a claim or litigation may,
with counsel of its choice and at its expense, participate in the defense of any
such claim or litigation.
F. Buyer and Meritage may at their option set-off any of Seller's
indemnification obligations arising under this Agreement against the Future Land
Profit component
D-3
of the purchase price for the Optioned Real Property. Any such set-off will be
against future lot takedowns by Buyer until such indemnification obligations are
satisfied. In addition, Buyer and Seller agree that if Buyer elects to acquire
substantially all of the Optioned Real Property pursuant to the Option
Agreement, Buyer's final [ * ]payment of the Future Land Profit, or such lesser
portion that is then otherwise payable, (the "HOLDBACK AMOUNT") will be placed
into escrow at such time payment is due under the Option Agreement. The Holdback
Amount will be placed into an escrow account at a bank or trust company mutually
acceptable to Buyer and Colonial [ * ]. Buyer and Meritage may at their option,
as a non-exclusive remedy, set-off any of Seller's indemnification obligations
arising under this Agreement against the Holdback Amount. The form of the escrow
agreement to be entered into is attached as EXHIBIT A to this Agreement. In
addition, Buyer and Meritage may at their option, as a non-exclusive remedy,
set-off any of Seller's indemnification obligations arising under Section 1E of
this Agreement against any amounts payable under the Master Agreement, the
Option Agreement (including but not limited to the Holdback Amount) or any of
the Transaction Documents.
G. The parties agree that if the Indemnifying Party fails to
promptly reimburse the Indemnified Party for the amount of any valid
indemnification claim hereunder, the Indemnifying Party shall be entitled to
interest on the amount of such claim, which interest shall accrue at a rate of [
* ] per annum.
4. Limits on Indemnity; Certain Procedures and Provisions.
A. For purposes of the indemnification pursuant to Section 1, any
qualifications relating to materiality, material adverse changes or the like
will be disregarded.
B. The parties agree that the indemnification obligation of Seller
will be capped (the "INDEMNIFICATION CAP") at a total of [ * ]; provided,
however, that Seller shall remain obligated to discharge all Excluded
Liabilities as set forth in the following paragraph.
Notwithstanding anything in this Agreement to the contrary, the
Indemnification Cap will not apply to, and Seller remains obligated to discharge
any Excluded Liabilities related to:
(1) any Losses relating to any Housing Unit completed and sold
prior to the Closing Date;
(2) any Losses relating (i) to any housing development or other
land development or real estate project completed and closed
out prior to the Closing Date or (ii) to the Colonial Pointe,
Indigo Lakes, Rookery Pointe and Laurel Lakes projects or
(iii) to the Sterling Oaks project;
(3) any liens (other than liens relating to Assumed Liabilities)
relating to the Owned Real Property or other Acquired Assets;
(4) any Taxes (including deferred Tax liabilities) applicable to
Colonial or the Colonial Business arising out of or relating
to periods prior to the Closing Date or as a result of the
transactions contemplated by the Master Agreement;
--------------
* Confidential information on this page has been omitted and filed separately
with the Securities Exchange Commission pursuant to a Confidential Treatment
Request.
D-4
(5) any pending or threatened litigation existing on, or relating
to the acts or omissions first occurring prior to, the Closing
Date;
(6) any Losses relating to fraud or intentional misstatement by
Seller;
(7) any Losses relating to a breach by Seller of the
Non-Disclosure and Non-Compete Agreement;
(8) any Losses (including future clean-up or remediation costs)
relating to the presence of Arsenic on the Xxxxx project
portion of the Optioned Real Property, which presence was
noted in that certain Limited Phase II Environmental Site
Assessment dated March 15, 2002;
(9) any Losses referred to in Section 1E of this Agreement.
C. Where a Loss relates to land development or infrastructure
improvements at a project in which Colonial and Buyer each have potential
liability exposure, Colonial and Buyer hereby agree that the division of
liability shall be based each party's respective percentage of responsibility,
except that Seller shall remain responsible for claims arising out of activities
carried on prior to the Closing Date that Buyer may continue to carry on after
the Closing Date until known or discovered and after a reasonable curative
period. Buyer and Seller shall negotiate in good faith to implement the
provisions of this Section 4C where necessary. If Buyer and Seller are unable to
agree on a division of liability, the parties agree to settle the dispute
pursuant to the arbitration procedures set forth in Section 5 of this Agreement.
The parties acknowledge that except with respect to Losses related to Housing
Units closed after the Closing, Buyer shall have no responsibility for any
projects completed and closed out prior to the Closing Date or the Rookery
Pointe, Laurel Lakes, Colonial Pointe, Indigo Lakes or Eagle Cove at Sterling
Oaks projects, which responsibility is expressly retained by Seller pursuant to
Section 2.4B(2) of the Master Agreement.
5. Arbitration. Any dispute, controversy or claim, whether contractual or
non-contractual, between Meritage and Buyer on the one hand and Seller on the
other hand arising directly or indirectly out of or connected with the Master
Agreement, relating to the breach or alleged breach of any representation,
warranty, agreement or covenant under the Transaction Agreements, or otherwise
relating to the indemnification obligations set forth under this Agreement,
unless mutually settled by the parties, shall be resolved in accordance with the
dispute resolution procedures attached as EXHIBIT E to the Master Agreement,
incorporated herein by this reference.
6. Notices. All notices, consents and other communications hereunder shall
be in writing and deemed to have been duly given when (i) delivered by hand,
(ii) sent by telecopier (with receipt confirmed), provided that a copy is mailed
by registered mail, postage pre-paid return receipt requested or (iii) when
received by the addressee, if sent by Express Mail, Federal Express, or other
express delivery service (postage pre-paid return receipt requested), in each
case to the appropriate addresses and telecopier numbers set forth below (or to
such other addresses and telecopier numbers as a party may designate as to
itself by notice to the other):
D-5
If to Buyer: Meritage Homes Corporation
0000 Xxxx Xxxxxxxx Xxxxx,
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Chief Financial Officer
and
0000 Xxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxx, Xxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxx
With a copy to: Xxxxx & Xxxxxx L.L.P.
Xxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
If to Seller: The Colonial Company
0000 Xxxxxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: X.X. XxXxxx, Xx.
With a copy to: Sack Xxxxxx & Xxxxxx, P.C.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxx Xxxx, Esq.
7. Enforcement of Rights. Buyer's and Meritage's rights under, and the
remedies to enforce, this Agreement are joint and several as to the Seller.
Buyer and Meritage are completely free to enforce any or all of their rights
under this Agreement against either Colonial or Parent with or without the
concurrence or joinder of any other party. Further, nothing in this Agreement
will preclude Buyer or Meritage from seeking injunctive or other equitable
relief to enforce any covenant not to compete, confidentiality provision or
other breach, including without limitation, the right to seek specific
performance under the Master Agreement or the Non-Disclosure and Non-Compete
Agreement.
D-6
8. Assignment. This Agreement will not be assigned by operation of law or
otherwise, except that Buyer or Meritage may assign all or any portion of its
rights under this Agreement to any wholly owned subsidiary or parent or sister
entity, but no such assignment will relieve Buyer or its successor of its
primary liability for all obligations of Buyer hereunder, and except that this
Agreement may be assigned by operation of law to any corporation or entity with
or into which Buyer may be merged or consolidated or to which Buyer transfers
all or substantially all of its assets, and such corporation or entity assumes
this Agreement and all obligations and undertakings of Buyer hereunder. Any
assignment in violation of the provisions of this Agreement will be null and
void.
9. Construction. Captions and References in this Agreement to "Sections,"
"Exhibits," and "Schedules" are to the Sections and Articles in, and the
Exhibits and Schedules to, this Agreement, unless otherwise noted.
10. Gender and Number. The masculine, feminine or neuter pronouns used
herein will be interpreted without regard to gender, and the use of the singular
or plural will be deemed to include the other whenever the context so requires.
11. Entire Agreement. This Agreement along with the Transaction Agreements
constitute the entire agreement, including with respect to representations and
warranties, between the parties pertaining to the subject matter contained in
the Transaction Agreements. All prior and contemporaneous agreements,
representations and understandings of the parties, oral or written, are
superseded by and merged in the Transaction Agreements. No supplement,
modification or amendment of the Transaction Agreements will be binding unless
in writing and executed by the parties to the Transaction Agreements.
12. Counterparts. This Agreement may be executed in any number of
counterparts, and each counterpart will constitute an original instrument, but
all such separate counterparts will constitute one and the same agreement.
13. Governing Law; Venue. The validity, construction and enforceability of
this Agreement will be governed in all respects by the laws of the State of
Florida, without regard to its conflict of laws rules. Venue for any proceeding
arising herefrom shall lie in Xxxxxxx or Xxx Counties, Florida.
14. Waiver of Provisions. The terms, covenants, representations,
warranties and conditions of the Agreements may be waived only by a written
instrument executed by the party waiving compliance. The failure of any party at
any time to require performance of any provisions hereof will, in no manner,
affect the right at a later date to enforce the same. No waiver by any party of
any condition, or breach of any provision, term, covenant, representation or
warranty contained in the Transaction Agreements, whether by conduct or
otherwise, in any one or more instances, will be deemed to be or construed as a
further or continuing waiver of any such condition or of the breach of any other
provision, term, covenant, representation or warranty of the Transaction
Agreements.
15. Costs. If any legal action or any arbitration or other proceeding is
brought for the enforcement of the Transaction Agreements, or because of an
alleged dispute, breach, default or misrepresentation in connection with any of
the provisions of the Transaction Agreements, the
D-7
successful or prevailing party or parties will be entitled to recover reasonable
attorneys' fees, accounting fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be entitled.
16. Amendment. This Agreement may not be amended except by an instrument
in writing approved by the parties to this Agreement and signed on behalf of
each of the parties hereto.
17. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement will remain in full force and effect and will in
no way be affected, impaired or invalidated and the court will modify this
Agreement or, in the absence thereof, the parties will negotiate in good faith
to modify this Agreement to preserve each party's anticipated benefits under
this Agreement.
18. Binding Effect. Subject to the provisions and restrictions of Section
8, the provisions of this Agreement are binding upon and will inure to the
benefit of the parties and their respective heirs, personal representatives,
successors and assigns.
19. Headings. The headings of this Agreement are for purposes of reference
only and will not limit or define the meaning of any provision of this
Agreement.
D-8
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
on the date first written above by their respective officers thereunder duly
authorized.
MERITAGE HOMES CORPORATION,
a Maryland corporation
____________________________________________
By: Xxxx X. Xxxxxx
Its: Co-Chairman and Chief Executive Officer
MERITAGE HOMES OF FLORIDA, INC.,
an Arizona corporation
____________________________________________
By: Xxxx X. Xxxxxx
Its: Chairman and CEO
COLONIAL HOMES, INC.,
a Florida corporation
____________________________________________
By:
Its:
COLONIAL SHORES, L.L.C.,
a Florida limited liability company
By: Colonial Homes, Inc.
Its: Sole Member and Manager
_________________________________
By:
Its:
THE COLONIAL COMPANY,
an Alabama corporation
____________________________________________
By:
Its:
[SIGNATURE PAGE TO INDEMNIFICATION AGREEMENT]
D-9
EXHIBIT A
FORM OF ESCROW AGREEMENT
D-10
EXHIBIT E
DISPUTE RESOLUTION PROCEDURES
All claims, disputes and other matters in controversy (herein called
"DISPUTE") arising directly or indirectly out of or related to the Agreement, or
the breach thereof, whether contractual or noncontractual, and whether during
the term or after the termination of such Agreement, will be resolved
exclusively according to the procedures set forth in this EXHIBIT E.
1. Negotiation. The parties will attempt to settle disputes arising out of
or relating to the Agreement or the breach thereof by a meeting of two
designated representatives of each party within five days after a request by
either of the parties to the other party asking for the same.
2. Mediation. If such dispute cannot be settled at such meeting either
party within five (5) days of such meeting may give a written notice (a "DISPUTE
NOTICE") to the other party setting forth the nature of the dispute. The parties
will attempt in good faith to resolve the dispute by mediation in Dallas, Texas
under the Commercial Mediation Rules of the American Arbitration Association
("AAA") in effect on the date of the Dispute Notice. The parties will select a
person who will act as the mediator under this Paragraph 2 within 60 days of the
date of the Agreement. If the dispute has not been resolved by mediation as
provided above within thirty (30) days after delivery of the Dispute Notice,
then the dispute will be determined by arbitration in accordance with the
provisions of Paragraph 3 hereof.
3. Arbitration. Any dispute that is not settled through mediation as
provided in Paragraph B above will be resolved by arbitration in Tampa, Florida,
governed by the Federal Arbitration Act, 9 U.S.C. Section 1 et seq., and
administered by the AAA under its Commercial Arbitration Rules in effect on the
date of the Dispute Notice, as modified by the provisions of this Section C, by
a single arbitrator. The arbitrator selected, in order to be eligible to serve,
will be a lawyer with at least 15 years experience specializing in business
matters. In the event the parties cannot agree on a mutually acceptable single
arbitrator from the list submitted by the AAA, the AAA will appoint the
arbitrator who will meet the foregoing criteria. The arbitrator will base the
award on applicable law and judicial precedent and, unless both parties agree
otherwise, will include in such award the findings of fact and conclusions of
law upon which the award is based. Judgment on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof.
Notwithstanding the foregoing or anything in the Transaction Agreements to
the contrary:
A. Upon the application by either party to a court for an order
confirming, modifying or vacating the award, the court will have the power to
review whether, as a matter of law based on the findings of fact determined by
the arbitrator, the award should be confirmed, modified or vacated in order to
correct any errors of law made by the arbitrator. In order to effectuate such
judicial review limited to issues of law, the parties agree (and will stipulate
to the court) that the findings of fact made by the arbitrator will be final and
binding on the parties and
E-1
will serve as the facts to be submitted to and relied on by the court in
determining the extent to which the award should be confirmed, modified or
vacated; and
B. Either party will have the right to apply to any court for an
order to specifically enforce their rights under the Agreement and the other
Transaction Agreements, including but not limited to a party's obligation to
close the transaction and the confidentiality provisions contained in the
Agreement.
4. Costs and Attorneys' Fees. If either party fails to proceed with
mediation or arbitration as provided herein or unsuccessfully seeks to stay such
mediation or arbitration, or fails to comply with any arbitration award, or is
unsuccessful in vacating or modifying the award pursuant to a petition or
application for judicial review, the other party will be entitled to be awarded
costs, including reasonable attorneys' fees, paid or incurred by such other
party in successfully compelling such arbitration or defending against the
attempt to stay, vacate or modify such arbitration award and/or successfully
defending or enforcing the award.
5. Tolling of Statute of Limitations. All applicable statutes of
limitations and defenses based upon the passage of time will be tolled while the
procedures specified in this EXHIBIT E are pending. The parties will take such
action, if any, required to effectuate such tolling.
E-2
EXHIBIT F
XXXXXXXXXXX EMPLOYMENT AGREEMENT
EXHIBIT G
NON-DISCLOSURE AND NON-COMPETE AGREEMENT
NON-DISCLOSURE AND NON-COMPETE AGREEMENT
This Agreement (the "AGREEMENT"), is made as of February 9, 2005, by and
among Meritage Homes Corporation, a Maryland corporation ("MERITAGE"), Meritage
Homes of Florida, Inc., an Arizona corporation ("BUYER"), Colonial Homes, Inc.,
a Florida corporation and its wholly-owned subsidiary Colonial Shores, L.L.C., a
Florida limited liability company (together, "COLONIAL") and The Colonial
Company, an Alabama corporation ("PARENT," and together with Colonial, the
"SELLER").
RECITALS
1. Seller owns and operates the Colonial Business.
2. The assets of the Colonial Business will be acquired by Buyer pursuant
to a certain Master Transaction Agreement dated as of February 9, 2005 (the
"MASTER AGREEMENT"). Capitalized terms not otherwise defined shall have the
meanings ascribed to them in the Master Agreement.
3. To induce Buyer and Meritage to enter into the Master Agreement, the
Seller has agreed to execute this Agreement.
4. For purposes of Sections 1 and 2 hereof, "MERITAGE" means all joint
ventures (50% or more owned directly or indirectly), subsidiaries and parent
companies of Meritage (whether corporate, partnership or in other form).
In consideration of the premises, the mutual promises and covenants of the
parties set forth herein, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Seller, intending to be
legally bound, agrees as follows:
AGREEMENT
1. Noncompetition. For the period beginning on the Closing Date and ending
on the [ * ] (the "RESTRICTION PERIOD"), Colonial and Parent, and their
subsidiaries, affiliates, officers, directors, employees, agents and family
members will not, directly or indirectly, either as a joint venturer, partner,
member, shareholder, owner, lender, director, advisor or consultant or in any
similar capacity, engage in any homebuilding, home sales, land development, lot
development or any other business related to the sale or development of owned
residential housing (including low rise (three floors or less) condominiums) in
[ * ] (a "COMPETING BUSINESS"). The restrictions set forth in this Section 1
shall not apply to Seller's activities relating to [ * ]
-----------------
* Confidential information on this page has been omitted and filed separately
with the Securities Exchange Commission pursuant to a Confidential Treatment
Request.
G-1
2. Right of First Refusal Provisions. In the event that Seller
engages in other residential land and lot development, it must first offer the
lots or other real property to Buyer or Meritage at least 10 business days prior
to any offer to a third party. If Buyer or Meritage determines to purchase the
property, Seller will negotiate a sale to Buyer or Meritage in good faith. If no
such sale is then consummated, then Seller may pursue a sale with a third party.
If the terms of such third-party sale are different than the offer made to Buyer
or Meritage, Buyer or Meritage will have the right of first refusal to purchase
the lots within three business days of notice of the proposed sale to such a
third party. This notice must contain the specific terms and conditions thereof
and the proposed buyer. If Buyer or Meritage does not respond to the right of
first offer within 10 days or the right of first refusal within three days,
Buyer and Meritage will be deemed to have waived the applicable right. Buyer or
Meritage can substitute cash for any non-cash consideration (at the fair market
value thereof). This right will arise again if the third party offer is modified
or amended.
3. Nonsolicitation. During the Restriction Period, neither Colonial
or Parent or their subsidiaries or affiliates will recruit, hire or discuss
employment with any person who is, or within the one year period preceding the
date of such activity was, an employee of Meritage or solicit any customer or
supplier of Meritage or otherwise attempt to induce any such customer or
supplier to discontinue its relationship with Meritage. Notwithstanding the
previous sentence, (i) Colonial and Parent may utilize any subcontractor or
supplier of Meritage in connection with any activities permitted by Section 1 of
this Agreement, provided that such use does not disrupt Buyer's operations and
(ii) Seller may (x) engage Xxxxx Xxxxx as a consultant in connection with
Seller's development of the Xxxxx Xxxxxx project and (y) consult with Xxxxx
Xxxxx on a limited basis for a period not to exceed 90 days with respect to
matters exclusively involving Seller's post-Closing obligations under the Master
Agreement and Option Agreement.
4. Protection of Information. Seller recognizes and acknowledges that
Meritage's trade secrets and all other confidential and proprietary information
of a business, financial or other nature, including without limitation,
proprietary information of Meritage, as it exists from time to time
(collectively, "CONFIDENTIAL INFORMATION"), are valuable and unique assets of
Meritage and therefore agrees that, during the Restriction Period, it will not,
and will use its best efforts to ensure that its directors, officers, employees,
advisers, agents and consultants do not, disclose any Confidential Information
concerning Meritage, to any person, firm, corporation, partnership, limited
liability company, association or other entity, for any reason whatsoever,
unless previously authorized in writing to do so by Meritage. It is understood
that Confidential Information shall not include any information that is or
becomes generally available to the public other than as a result of an
unauthorized disclosure by Seller, that is disclosed by Seller in accordance
with the terms of a prior written consent of Meritage, or that is owned jointly
with Meritage. It is understood that Confidential Information includes
information pertaining to the Colonial Business which was acquired by Buyer
pursuant to the Master Agreement. For the purpose of enforcing this provision,
Meritage may resort to any remedy available to it under the law.
5. Severability. In the event that a court of competent jurisdiction
determines that the Restriction Period is unenforceable, the Restriction Period
shall mean [ * ]. Additionally, if
-------------------------
* Confidential information on this page has been omitted and filed separately
with the Securities Exchange Commission pursuant to a Confidential Treatment
Request.
G-2
any other provision of this Agreement is held to be illegal, invalid or
unenforceable under any applicable law, then such provision will be deemed to be
modified to the minimum extent necessary to render it legal, valid and
enforceable, and if no such modification will render it legal, valid and
enforceable, then this Agreement will be construed as if not containing the
provision held to be invalid, and the rights and obligations of the parties will
be construed and enforced accordingly.
6. Waiver. The waiver by either party of a breach of any provision of
this Agreement by the other shall not operate or be construed as a waiver of any
subsequent breach.
7. Injunctive Relief. Seller acknowledges and agrees that Meritage
would be irreparably harmed by any violation of Seller's obligations under
Sections 1 through 4 hereof and that, in addition to all other rights or
remedies available at law or in equity, Meritage will be entitled to injunctive
and other equitable relief to prevent or enjoin any such violation. The
prevailing party in any litigation hereunder agrees to pay any and all
reasonable costs and expenses, including attorneys' fees, incurred by the other
party.
8. Assignment by Meritage or Buyer. Nothing in this Agreement shall
preclude Meritage from consolidating or merging into or with, or transferring or
assigning all or substantially all of their assets to, another corporation or
entity that assumes this Agreement and all obligations and undertakings
hereunder. Upon such consolidation, merger or transfer of assets and assumption,
the term "Meritage" as used herein shall mean such other corporation or entity,
as appropriate, and this Agreement shall continue in full force and effect.
9. Entire Agreement. This Agreement embodies the complete agreement
of the parties hereto with respect to the subject matter hereof and supersedes
any prior written, or prior or contemporaneous oral, understandings or
agreements between the parties that may have related in any way to the subject
matter hereof. This Agreement may be amended only in writing executed by
Meritage and Seller.
10. Governing Law; Venue. This Agreement and all questions relating to
its validity, interpretation, performance and enforcement, shall be governed by
and construed in accordance with the internal laws, and not the law of
conflicts, of the State of Florida. Venue for any proceeding arising herefrom
shall lie in Xxxxxxx or Xxx Counties, Florida.
11. Arbitration. Any disputes arising hereunder will be resolved
pursuant to the dispute resolution provisions of EXHIBIT E to the Master
Agreement.
12. Notice. Any notice required or permitted under this Agreement must
be in writing and will be deemed to have been given when delivered personally or
by overnight courier service or three days after being sent by mail, postage
prepaid, at the address indicated below or to such changed address as such
person may subsequently give such notice of:
G-3
If to Buyer: Meritage Homes Corporation
0000 Xxxx Xxxxxxxx Xxxxx,
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Chief Financial Officer
and
0000 Xxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxx, Xxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxx
With a copy to: Xxxxx & Xxxxxx L.L.P.
Xxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
If to Seller: The Colonial Company
0000 Xxxxxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: X.X. XxXxxx, Xx.
With a copy to: Sack Xxxxxx & Xxxxxx, P.C.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxx Xxxx, Esq.
G-4
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
on the date first written above by their respective officers thereunder duly
authorized.
MERITAGE HOMES CORPORATION,
a Maryland corporation
__________________________________________
By: Xxxx X. Xxxxxx
Its: Co-Chairman and Chief Executive Officer
MERITAGE HOMES OF FLORIDA, INC.,
an Arizona corporation
__________________________________________
By: Xxxx X. Xxxxxx
Its: Chairman and CEO
COLONIAL HOMES, INC.,
a Florida corporation
__________________________________________
By:
Its:
COLONIAL SHORES, L.L.C.,
a Florida limited liability company
By: Colonial Homes, Inc.
Its: Sole Member and Manager
_____________________________________
By:
Its:
THE COLONIAL COMPANY,
an Alabama corporation
__________________________________________
By:
Its:
[SIGNATURE PAGE TO NON-DISCLOSURE AND NON-COMPETE AGREEMENT]
X-0
XXXXXXX X
XXXXXXXXX XXXXXXXX DEED
[NOTE: MUST USE SEPARATE DEEDS FOR XXXXXXX AND XXX COUNTIES FOR RECORDING
PURPOSES]
This instrument prepared by and to returned to:
Xxxxxxx X. Xxxxxxxxx, Esquire
Xxxxxxxxx Xxxxxxx, P.A.
000 Xxxxx Xxxxxxx Xxxxx, Xxxxx 000 Xxxx
Xxxx Xxxx Xxxxx, XX 00000
Tax Folio Identification Numbers: _______________
Social Security/Taxpayer I.D. no. of Grantee: _________________
STATUTORY WARRANTY DEED
THIS STATUTORY WARRANTY DEED is made and executed this day of February,
2005, by Colonial Homes, Inc., a Florida corporation, whose mailing address is
0000 Xxxxxxxxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000 (the
"Grantor"), to Meritage Homes of Florida, Inc., an Arizona corporation
authorized to transact business in Florida (the "Grantee"), whose mailing
address is 0000 Xxxx Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000.
That Grantor, for and in consideration of the sum of Ten and No/100
Dollars ($10.00), to Grantor in hand paid by Grantee, the receipt whereof is
hereby acknowledged, has granted, bargained and sold to Grantee and Grantee's
successors and assigns forever, the following described land (the "Property")
located in [Xxx/Xxxxxxx] County, Florida:
SEE EXHIBIT "A" ATTACHED HERETO AND MADE PART HEREOF
Together with all improvements thereon and all tenements, hereditaments,
easements and appurtenances belonging thereto or in any way appertaining to the
Property.
Subject, however, to zoning restrictions and prohibitions imposed by
governmental authority; the restrictions, easements, covenants and other matters
set forth in Exhibit "B" attached hereto and made a part hereof, without
reimposing same; and, taxes and assessments for 2004 and subsequent years.
H-1
And Grantor does hereby fully warrant the title to said Property, and
will defend the same against the lawful claims of all person whomsoever.
IN WITNESS WHEREOF, Grantor has caused this Statutory Warranty Deed to be
executed as of the day and year first written above.
WITNESSES: GRANTOR:
Colonial Homes, Inc., a Florida
(1)______________________________ corporation
Signature
_________________________________ By:_____________________________
Printed Name Name:___________________________
(2)______________________________ Its: President
Signature
_________________________________ (seal)
Printed Name
STATE OF FLORIDA )
) ss:
COUNTY OF________________________)
The foregoing instrument was acknowledged before me this day of February,
2005, by ____________________, as _____________ of Colonial Homes, Inc., a
Florida corporation, on behalf of the __________________, who is personally
known to me or produced a __________ drivers license for identification.
Notary:______________________________________
[NOTARIAL SEAL] Print Name:__________________________________
Notary Public, State of Texas
My commission expires:_______________________
[ ] Personally Known OR [ ] Produced Identification
Type of Identification Produced _________________________
H-2
EXHIBIT "A"
LEGAL DESCRIPTION
X-0
XXXXXXX "X"
RESTRICTIONS, EASEMENTS AND COVENANTS
X-0
XXXXXXXXX XX XXXXX
XXXXX XX XXXXXXX )
) ss:
COUNTY OF__________________)
BEFORE ME, the undersigned authority, personally appeared ______________
(the "AFFIANT"), who being first duly sworn upon oath by me, deposes and says
that:
A. Affiant is the ________ of Colonial Homes, Inc., a Florida
corporation (the "CORPORATION").
B. The Corporation is the fee simple owner of that certain real
property situate in [Xxx/Xxxxxxx] County, Florida and being more particularly
described as follows (the "PROPERTY"):
SEE EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF.
C. Affiant makes this affidavit on behalf of the Corporation in order
to induce First American Title Insurance Company and its Agent, Xxxxxxxxx
Traurig, P.A. (collectively, the "TITLE INSURER"), to insure the title of the
Property, and this Affidavit is to be relied upon only by the Title Insurer and
Meritage Homes of Florida, Inc., the buyer ("BUYER") of the Property.
D. There are no outstanding contracts, either oral or written, for
the furnishing of any labor, materials or services to the Property or to the
improvements on the Property, except those for which full payment has been made.
E. There have been no improvements made upon the Property within the
past ninety (90) days for which there remain any outstanding and unpaid bills
for labor, materials or supplies for which a lien or liens might be claimed by
anyone.
F. The Corporation has been in possession of said property since the
time of vesting of title to said property in the Corporation; there are no
parties who have any interest or right to claim an interest in the Property or
possession to the Property other than the Corporation.
G. The Property is free and clear of all liens (including mechanic's,
materialman's or laborer's liens), taxes, encumbrances, claims, demands and
judgments, except for the lien of real estate taxes for the year 2004 and
subsequent years, and except for other matters described in the Title Insurer's
Commitment (the "COMMITMENT").
H. There are no outstanding unrecorded easements, contracts for sale,
agreements for deed, deeds, liens or mortgages affecting the Property or any
portion thereof.
I. There are no outstanding pending assessments against the Property
by any governmental agency or authority, nor any unpaid assessments or unpaid
service charges outstanding for gas, water, garbage or sewerage services with
respect to the Property.
H-5
J. There are no federal or state tax claims, liens or penalties
assessed against the Corporation, and there are no judgments against the
Corporation unsatisfied of record in the courts of any state or of the United
States of America.
K. No proceedings in bankruptcy have ever been brought by or against
the Corporation, nor has the Corporation, made any assignment for the benefit of
creditors at any time, nor is there now in effect any assignment of rents of the
Property or any part thereof.
L. There has been no change in title to the Property from and after
the effective date of the Commitment to insure the Property which could
adversely affect the interest to be insured under the Commitment.
M. There are no matters pending against the Corporation or the
Property that could give rise to a lien that would attach to the Property
between the effective date of the Commitment and the actual date of recordation
of the documents for the pending transaction.
N. The Corporation shall not effectuate the execution of any
instrument or take any action that would adversely affect the interest to be
insured under the Commitment.
O. The Corporation shall indemnify and hold the Title Insurer and
Buyer harmless of and from all loss, cost, damage and expense of every kind,
including attorney's fees, which the Buyer and/or the Title Insurer shall or may
suffer or become liable for because of their reliance on the statements made in
this affidavit or because of any change in the title to the Property as
aforesaid, except for liens relating to the notice of commencement listed on the
title commitment.
FURTHER AFFIANT SAYETH NOT.
__________________________________
STATE OF FLORIDA )
) ss:
COUNTY OF__________________)
The foregoing instrument was sworn to and subscribed before me this day
of February, 2005, by ____________________, as _____________ of Colonial Homes,
Inc., a Florida corporation, on behalf of the __________________, who is
personally known to me or produced a _____________ drivers license for
identification.
Notary:______________________________________
[NOTARIAL SEAL] Print Name:__________________________________
Notary Public, State of Texas
My commission expires:_______________________
[ ] Personally Known OR [ ] Produced Identification
Type of Identification Produced _________________________
H-6
EXHIBIT "A"
LEGAL DESCRIPTION
H-7
EXHIBIT I
XXXX OF SALE AND ASSIGNMENT AGREEMENT
XXXX OF SALE AND ASSIGNMENT AGREEMENT
KNOW ALL MEN BY THESE PRESENTS, that Colonial Homes, Inc., a Florida
corporation and Colonial Shores, L.L.C., a Florida limited liability company
(together, the "SELLER") do hereby sell, convey, transfer, assign and set over
unto Meritage Homes of Florida, Inc., an Arizona corporation ("BUYER"), and its
successors and assigns, all of Seller's rights, title, and interest in and to
the Acquired Assets as that term is defined in that certain Master Transaction
Agreement by and among Meritage Homes Corporation, a Maryland corporation
("MERITAGE"), Buyer, Seller and The Colonial Company, an Alabama corporation,
dated February 9, 2005 ("MASTER AGREEMENT"). Capitalized terms used herein and
not otherwise defined will have the same meaning as set forth in the Master
Agreement.
As provided in the Master Agreement, Seller represents, warrants and
covenants that it is the lawful owner of the Acquired Assets, free from all
liens, claims and encumbrances except as provided in the Master Agreement and
the schedules thereto. Seller will warrant and defend the same to Meritage and
Buyer and their successors and assigns in accordance with the terms and
provisions of the Master Agreement and the Indemnification Agreement.
Seller hereby constitutes and appoints Buyer, its successors and assigns,
the true and lawful attorneys of Seller, with full power of substitution, for
Seller and in its name and stead or otherwise, by and on behalf and for the
benefit of Buyer, its successors and assigns, to demand and receive from time to
time any and all of the Acquired Assets and to give receipts and releases for or
in respect of the same and any part thereof, and from time to time to institute
and prosecute in the name of Seller or otherwise, but at the expense and for the
benefit of Meritage and Buyer, their successors and assigns, unless otherwise
provided in the Master Agreement or agreements delivered thereunder, any and all
proceedings at law, in equity, or otherwise which Meritage or Buyer, their
successors and assigns, may deem proper in order to collect, assert, or enforce
any claim, right, or title of any kind in or to the Acquired Assets and to
defend or compromise any and all actions, suits, or proceedings in respect of
any of the Acquired Assets and to do all such acts and things in relation
thereto as Buyer, its successors or assigns, deem desirable. Seller hereby
declares that the appointment made and the powers hereby granted are coupled
with an interest and are and will be irrevocable by Seller in any manner or for
any reason.
Seller covenants with Meritage and Buyer that it will do, execute, and
deliver or cause to be done, executed, and delivered all such further acts,
documents, or things, including without limitation, transfers, assignments,
conveyances, powers of attorney, and assurances for better assuring, conveying,
and confirming unto Meritage and Buyer, their successors and assigns, all and
singular, the entire right, title, and interest of Seller throughout the world
in, to, and under the Acquired Assets as Meritage and Buyer, their successors
and assigns, reasonably require.
This Xxxx of Sale and Assumption Agreement will inure to the benefit of,
and will bind Seller and Buyer and their respective successors and assigns.
I-1
IN WITNESS WHEREOF, the undersigned parties have executed this Xxxx of
Sale and Assignment Agreement to be effective as of the of February, 2005.
COLONIAL HOMES, INC.,
a Florida corporation
_______________________________
By:
Its:
COLONIAL SHORES, L.L.C.,
a Florida limited liability company
By: Colonial Homes, Inc.
Its: Sole Member and Manager
____________________________
By:
Its:
[SIGNATURE PAGE TO XXXX OF SALE AND ASSIGNMENT AGREEMENT]
I-2
EXHIBIT J
LICENSE AGREEMENT
TRADEMARK LICENSE AGREEMENT
This Trademark License Agreement (the "AGREEMENT") is entered into as of
February 9, 2005, by and among Meritage Homes Corporation, a Maryland
corporation, Meritage Homes of Florida, Inc., an Arizona corporation (together,
"BUYER"), Colonial Homes, Inc., a Florida corporation ("COLONIAL") and The
Colonial Company, an Alabama corporation ("PARENT" and together with Colonial,
"SELLER").
RECITALS
1. The parties are contemporaneously entering into that certain
Master Transaction Agreement (the "MASTER AGREEMENT") pursuant to which Buyer is
acquiring the homebuilding assets of Colonial. All capitalized terms contained
herein but are not otherwise defined will have the meaning described in the
Master Agreement.
2. Seller owns certain trademark rights in the Colonial Homes brand
and related assets.
3. As contemplated by the Master Agreement, Seller will grant to
Buyer the right and license to use the Colonial Homes trademark in connection
with Buyer's ongoing homebuilding business.
In consideration of the premises and mutual covenants set forth herein,
Seller and Buyer hereby agree as follows:
AGREEMENT
1. Grant of License. Seller hereby grants to Buyer the exclusive
right and license to use the xxxx "Colonial Homes" and any other similar name or
xxxx (including the name "Colonial" alone or in conjunction with other names to
identify subdivisions or product lines), provided that the use of such names is
related to homebuilding or home sales products (including single family homes,
condominiums and townhomes) or activities (the "COLONIAL TRADEMARKS"). The
trademark license shall be subject to the following terms and conditions:
(a) The trademark license shall be perpetual to the extent
permissible under the trademark laws. In particular, the temporal term of the
trademark license shall extend perpetually unless terminated as set forth in
Section 5 of this Agreement.
(b) The trademark license shall be irrevocable. That is, the
parties agree that even though Colonial, Parent or any of their affiliates may
have legal, equitable or contractual rights vis-a-vis Buyer pertaining to the
transactions contemplated by the Master Agreement, Seller may not terminate,
rescind or otherwise interfere with the trademark license granted herein.
(c) Subject to Section 2, the trademark license granted herein
shall be sole and exclusive, such that only Buyer may use the Colonial
Trademarks in connection with homebuilding (including single family homes,
condominiums and townhomes) and related goods and services within the
territorial scope set forth in Section 1(d), and that Seller may not hereafter
use the Colonial Trademarks within the territorial scope set forth in Section
1(d) below,
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and Seller shall not take or refrain from taking any action with respect to any
third party, including the granting of any license rights, which would interfere
with or be inconsistent with the trademark licenses granted herein.
(d) The territorial scope of the trademark license granted
herein shall be the State of Florida, except for the Florida Panhandle (the
Florida Panhandle being as defined in the Master Agreement as the counties of
Bay, Xxxxxxx, Escambia, Franklin, Gadsden, Gulf, Holmes, Jackson, Xxxxxxxxx,
Xxxx, Liberty, Okaloosa, Santa Xxxx, Wakulla, Xxxxxx and Washington).
2. Right to Use. Notwithstanding the foregoing, Parent retains the
right to use the Colonial Trademarks subject to the following:
(a) that Parent shall be permitted to use such Colonial
Trademarks, if any, as it has actually used them in the ordinary course of its
homebuilding operations in the Florida Panhandle;
(b) that Parent shall be permitted to use such Colonial
Trademarks outside the State of Florida;
(c) that Parent shall be permitted to use such Colonial
Trademarks within the State of Florida for non-residential building operations;
(d) that Parent will maintain a high standard of quality with
respect to all goods and services relating to its use of the Colonial
Trademarks; and
(e) that Parent shall take reasonable measures to allow Buyer
to monitor and confirm that Parent continues to maintain high quality standards
for any goods and services delivered under the Colonial Trademarks.
3. Quality Control.
(a) Without limiting the generality of the foregoing, if Buyer
determines there has been a material diminishment of the Colonial Trademarks,
upon written request from Buyer, Parent agrees to provide Buyer with a written
summary of its quality control processes or, alternatively, Parent shall permit
Buyer or Buyer's designee to conduct an audit of Parent's quality procedures
relating to Parent's use of the Colonial Trademarks, or such other means as may
be reasonably requested by Buyer from time to time to permit Buyer to monitor
the quality of goods and services produced by Parent under any of the Colonial
Trademarks. If as a result of such audit, Buyer identifies a material
diminishment of the Colonial Trademarks or inadequate quality procedures, which
result from actions (or lack of action) on the part of Colonial or Parent,
Colonial and Parent agree to take remedial measures (at their cost) to cure the
identified issues.
(b) In a similar fashion, upon written request from Seller,
Buyer shall provide written summaries to Parent or allow Parent to conduct a
quality assurance audit of Buyer's quality procedures with respect to the
Colonial Trademarks. If as a result of such audit, Colonial or Parent identifies
a material diminishment of the Colonial Trademarks or inadequate quality
procedures, which result from actions (or lack of action) on the part Buyer,
Buyer agrees to take remedial measures (at its cost) to cure the identified
issues.
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4. Goodwill. Except for the rights and associated goodwill granted to
Buyer hereunder, all goodwill occasioned by the use of the Colonial Trademarks
by either party shall inure to the benefit of Seller as the owner of the
Colonial Trademarks.
5. Termination. Notwithstanding the perpetual and irrevocable nature
of the trademark license granted herein, the parties agree that the trademark
license shall terminate in the event Buyer ceases to use any of the Colonial
Trademarks for a period of three (3) consecutive years, and if such abandonment
can be established by Parent with reasonable certainty. The parties agree that
Buyer's use of the Colonial Trademarks as part of a subdivision or housing line
(which shall include single family homes, condominiums or townhomes) constitutes
use for purposes of this Section 5.
6. Additional Agreements.
(a) The parties have assessed their respective businesses as
they will be conducted under this Agreement, and in view of all of the facts and
circumstances the parties have concluded that the arrangement contemplated by
this Agreement is not likely to give rise to customer confusion with respect to
any of the Colonial Trademarks. Nevertheless, if circumstances should
subsequently suggest that confusion is or may be likely with respect to the
parties' respective use of the Colonial Trademarks, Seller agrees to take
whatever steps may be reasonably necessary, including but not limited to
modifying, changing or ceasing its use of the Colonial Trademarks, to avoid any
such likelihood of confusion to the reasonable satisfaction of Buyer, in a
reasonably expedited manner and upon a written request from Buyer to do so.
(b) Parent shall take all other steps which are reasonable and
appropriate under the circumstances to mitigate any likelihood of confusion
resulting from Parent's permitted use of the Colonial Trademarks as set forth
above.
(c) All rights and obligations set forth herein shall extend to
the successors and assigns of the respective parties.
(d) No other rights of any kind or nature shall be retained by
Seller or otherwise implied under this Agreement.
7. Assignment. Buyer has the right to sublicensee, assign, transfer
or xxxxx, in whole or in part, any of the rights granted hereunder as may be
appropriate, in Buyer's sole discretion, in the conduct of its ongoing business.
8. Right to Bring Action. As the exclusive licensee under the
Colonial Trademarks, Buyer shall have the right to bring any legal action,
including but not limited to trademark infringement, against any third party and
as such may step into the shoes of Parent or Seller as though Buyer were the
owner of such trademarks for purposes of such enforcement actions, any money
damages or other remedies which may accrue subsequent to the effective date of
this Agreement shall inure to the benefit of Buyer, such rights and remedies
which shall inure to the benefit of Parent. The decision to bring or refrain
from bringing any such enforcement actions shall be at the sole discretion of
Buyer. Seller agrees to provide reasonable cooperation, including evidence,
testimony, and the like, to assist Buyer in connection with such enforcement
actions.
J-3
9. Representations and Warranties. The representations and warranties
contained in Section 4.19 of the Master Agreement are incorporated herein by
reference.
10. Notices. All notices, consents, and other communications hereunder
will be in writing and deemed to have been duly given when (i) delivered by
hand, (ii) sent by telecopier (with receipt confirmed), provided that a copy is
mailed by registered mail, postage pre-paid return receipt requested or (iii)
when received by the addressee, if sent by Express Mail, Federal Express or
other express delivery service (postage pre-paid return receipt requested), in
each case to the appropriate addresses and telecopier numbers set forth below
(or to such other addresses and telecopier numbers as a party may designate as
to itself by notice to the other):
If to Buyer: Meritage Homes Corporation
0000 Xxxx Xxxxxxxx Xxxxx,
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Chief Financial Officer
and
0000 Xxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxx, Xxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxx
With a copy to: Xxxxx & Xxxxxx L.L.P.
Xxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
If to Seller: The Colonial Company
0000 Xxxxxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: X.X. XxXxxx, Xx.
J-4
With a copy to: Sack Xxxxxx & Xxxxxx, P.C.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxx Xxxx, Esq.
11. Counterparts. This Agreement may be executed in any number of
counterparts, and each counterpart will constitute an original instrument, but
all such separate counterparts will constitute one and the same agreement.
12. Gender and Number. The masculine, feminine or neuter pronouns used
herein will be interpreted without regard to gender, and the use of the singular
or plural will be deemed to include the other whenever the context so requires.
13. Waiver of Provisions. The terms, covenants, representations,
warranties and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any party at
any time to require performance of any provisions hereof will, in no manner,
affect the right at a later date to enforce the same. No waiver by any party of
any condition, or breach of any provision, term, covenant, representation or
warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, will be deemed to be or construed as a further or
continuing waiver of any such condition or of the breach of any other provision,
term, covenant, representation or warranty of this Agreement.
14. Costs. If any legal action or any arbitration or other proceeding
is brought for the enforcement of this Agreement, or because of an alleged
dispute, breach, default or misrepresentation in connection with any of the
provisions of this Agreement, the successful or prevailing party or parties will
be entitled to recover reasonable attorneys' fees, accounting fees and other
costs incurred in that action or proceeding, in addition to any other relief to
which it or they may be entitled.
15. Amendment. This Agreement may not be amended except by an
instrument in writing approved by the parties to this Agreement and signed on
behalf of each of the parties hereto.
16. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement will remain in full force and effect and will in
no way be affected, impaired or invalidated and the court will modify this
Agreement or, in the absence thereof, the parties will negotiate in good faith
to modify this Agreement to preserve each party's anticipated benefits under
this Agreement.
17. Headings. The headings of this Agreement are for purposes of
reference only and will not limit or define the meaning of any provision of this
Agreement.
18. Entire Agreement. This Agreement along with the Transaction
Agreements constitute the entire agreement, including with respect to
representations and warranties, between
J-5
the parties pertaining to the subject matter contained in the Transaction
Agreements. All prior and contemporaneous agreements, representations and
understandings of the parties, oral or written, are superseded by and merged in
the Transaction Agreements. No supplement, modification or amendment of the
Transaction Agreements will be binding unless in writing and executed by the
parties to the Transaction Agreements.
19. Arbitration. Any disputes arising hereunder will be resolved
pursuant to the dispute resolution provisions of EXHIBIT E to the Master
Agreement.
J-6
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
on the date first written above by their respective officers thereunder duly
authorized.
MERITAGE HOMES CORPORATION,
a Maryland corporation
________________________________
By: Xxxx X. Xxxxxx
Its: Co-Chief Executive Officer
MERITAGE HOMES OF FLORIDA, INC.,
an Arizona corporation
________________________________
By: Xxxx X. Xxxxxx
Its: Chairman and CEO
COLONIAL HOMES, INC.,
a Florida corporation
________________________________
By:
Its:
THE COLONIAL COMPANY,
an Alabama corporation
________________________________
By:
Its:
[SIGNATURE PAGE TO LICENSE AGREEMENT]
J-7
EXHIBIT K
ASSOCIATION DISCLOSURE
XXXXX RIVER
IF THE DISCLOSURE SUMMARY REQUIRED BY SECTION 720.401, FLORIDA STATUTES, HAS NOT
BEEN PROVIDED TO THE PROSPECTIVE PURCHASER BEFORE EXECUTING THIS CONTRACT FOR
SALE, THIS CONTRACT IS VOIDABLE BY BUYER BY DELIVERING TO SELLER OR SELLER'S
AGENT OR REPRESENTATIVE WRITTEN NOTICE OF THE BUYER'S INTENTION TO CANCEL WITHIN
3 DAYS AFTER RECEIPT OF THE DISCLOSURE SUMMARY OR PRIOR TO CLOSING, WHICHEVER
OCCURS FIRST. ANY PURPORTED WAIVER OF THIS VOIDABILITY RIGHT HAS NO EFFECT.
BUYER'S RIGHT TO VOID THIS CONTRACT SHALL TERMINATE AT CLOSING.
DISCLOSURE SUMMARY FOR THE COMMUNITY. The following disclosure summaries have
been presented to Buyer prior to the execution of the Contract and are
incorporated herein:
1. AS A PURCHASER OF PROPERTY IN THIS COMMUNITY, YOU WILL BE
OBLIGATED TO BE A MEMBER OF A HOMEOWNERS' ASSOCIATION.
2. THERE HAVE BEEN OR WILL BE RECORDED RESTRICTIVE COVENANTS
GOVERNING THE USE AND OCCUPANCY OF PROPERTIES IN THE COMMUNITY.
3. YOU WILL BE OBLIGATED TO PAY ASSESSMENTS TO THE ASSOCIATION.
ASSESSMENTS MAY BE SUBJECT TO PERIODIC CHANGE. IF APPLICABLE, THE CURRENT AMOUNT
IS $ _______ PER _______. YOU WILL ALSO BE OBLIGATED TO PAY ANY SPECIAL
ASSESSMENTS IMPOSED BY THE ASSOCIATION. SUCH SPECIAL ASSESSMENTS MAY BE SUBJECT
TO CHANGE. IF APPLICABLE, THE CURRENT AMOUNT IS $_NONE_ PER _____.
4. YOU MAY BE OBLIGATED TO PAY SPECIAL ASSESSMENTS TO THE RESPECTIVE
MUNICIPALITY, COUNTY, OR SPECIAL DISTRICT. ALL ASSESSMENTS ARE SUBJECT TO
PERIODIC CHANGE.
5. YOUR FAILURE TO PAY SPECIAL ASSESSMENTS OR ASSESSMENTS LEVIED BY A
MANDATORY HOMEOWNERS' ASSOCIATION COULD RESULT IN A LIEN ON YOUR PROPERTY.
6. THERE MAY BE AN OBLIGATION TO PAY RENT OR LAND USE FEES FOR
RECREATIONAL OR OTHER COMMONLY USED FACILITIES AS AN OBLIGATION OF MEMBERSHIP IN
THE HOMEOWNERS' ASSOCIATION. IF APPLICABLE, THE CURRENT AMOUNT IS $_____NONE___
PER _____.
K-1
7. THE DEVELOPER MAY HAVE THE RIGHT TO AMEND THE RESTRICTIVE
COVENANTS WITHOUT THE APPROVAL OF THE ASSOCIATION MEMBERSHIP OR THE APPROVAL OF
THE PARCEL OWNERS.
8. THE STATEMENTS CONTAINED IN THIS DISCLOSURE FORM ARE ONLY SUMMARY
IN NATURE, AND, AS A PROSPECTIVE PURCHASER, YOU SHOULD REFER TO THE COVENANTS
AND THE ASSOCIATION GOVERNING DOCUMENTS BEFORE PURCHASING PROPERTY.
9. THESE DOCUMENTS ARE EITHER MATTERS OF PUBLIC RECORD AND CAN BE
OBTAINED FROM THE RECORD OFFICE IN THE COUNTY WHERE THE PROPERTY IS LOCATED, OR
ARE NOT RECORDED AND CAN BE OBTAINED FROM THE DEVELOPER.
AS A PROSPECTIVE PURCHASER, YOU SHOULD NOT EXECUTE THIS CONTRACT UNTIL
YOU HAVE RECEIVED AND READ THE DISCLOSURE SUMMARY PRINTED ABOVE AND REQUIRED BY
SECTION 720.401, FLORIDA STATUTES.
K-2
ASSOCIATION DISCLOSURE
ROOKERY POINTE
IF THE DISCLOSURE SUMMARY REQUIRED BY SECTION 720.401, FLORIDA STATUTES, HAS NOT
BEEN PROVIDED TO THE PROSPECTIVE PURCHASER BEFORE EXECUTING THIS CONTRACT FOR
SALE, THIS CONTRACT IS VOIDABLE BY BUYER BY DELIVERING TO SELLER OR SELLER'S
AGENT OR REPRESENTATIVE WRITTEN NOTICE OF THE BUYER'S INTENTION TO CANCEL WITHIN
3 DAYS AFTER RECEIPT OF THE DISCLOSURE SUMMARY OR PRIOR TO CLOSING, WHICHEVER
OCCURS FIRST. ANY PURPORTED WAIVER OF THIS VOIDABILITY RIGHT HAS NO EFFECT.
BUYER'S RIGHT TO VOID THIS CONTRACT SHALL TERMINATE AT CLOSING.
DISCLOSURE SUMMARY FOR THE COMMUNITY. The following disclosure summaries have
been presented to Buyer prior to the execution of the Contract and are
incorporated herein:
1. AS A PURCHASER OF PROPERTY IN THIS COMMUNITY, YOU WILL BE
OBLIGATED TO BE A MEMBER OF A HOMEOWNERS' ASSOCIATION.
2. THERE HAVE BEEN OR WILL BE RECORDED RESTRICTIVE COVENANTS
GOVERNING THE USE AND OCCUPANCY OF PROPERTIES IN THE COMMUNITY.
3. YOU WILL BE OBLIGATED TO PAY ASSESSMENTS TO THE ASSOCIATION.
ASSESSMENTS MAY BE SUBJECT TO PERIODIC CHANGE. IF APPLICABLE, THE CURRENT AMOUNT
IS $ _______ PER _______. YOU WILL ALSO BE OBLIGATED TO PAY ANY SPECIAL
ASSESSMENTS IMPOSED BY THE ASSOCIATION. SUCH SPECIAL ASSESSMENTS MAY BE SUBJECT
TO CHANGE. IF APPLICABLE, THE CURRENT AMOUNT IS $_NONE_ PER _____.
4. YOU MAY BE OBLIGATED TO PAY SPECIAL ASSESSMENTS TO THE RESPECTIVE
MUNICIPALITY, COUNTY, OR SPECIAL DISTRICT. ALL ASSESSMENTS ARE SUBJECT TO
PERIODIC CHANGE.
5. YOUR FAILURE TO PAY SPECIAL ASSESSMENTS OR ASSESSMENTS LEVIED BY A
MANDATORY HOMEOWNERS' ASSOCIATION COULD RESULT IN A LIEN ON YOUR PROPERTY.
6. THERE MAY BE AN OBLIGATION TO PAY RENT OR LAND USE FEES FOR
RECREATIONAL OR OTHER COMMONLY USED FACILITIES AS AN OBLIGATION OF MEMBERSHIP IN
THE HOMEOWNERS' ASSOCIATION. IF APPLICABLE, THE CURRENT AMOUNT IS $_____NONE___
PER _____.
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7. THE DEVELOPER MAY HAVE THE RIGHT TO AMEND THE RESTRICTIVE
COVENANTS WITHOUT THE APPROVAL OF THE ASSOCIATION MEMBERSHIP OR THE APPROVAL OF
THE PARCEL OWNERS.
8. THE STATEMENTS CONTAINED IN THIS DISCLOSURE FORM ARE ONLY SUMMARY
IN NATURE, AND, AS A PROSPECTIVE PURCHASER, YOU SHOULD REFER TO THE COVENANTS
AND THE ASSOCIATION GOVERNING DOCUMENTS BEFORE PURCHASING PROPERTY.
9. THESE DOCUMENTS ARE EITHER MATTERS OF PUBLIC RECORD AND CAN BE
OBTAINED FROM THE RECORD OFFICE IN THE COUNTY WHERE THE PROPERTY IS LOCATED, OR
ARE NOT RECORDED AND CAN BE OBTAINED FROM THE DEVELOPER.
AS A PROSPECTIVE PURCHASER, YOU SHOULD NOT EXECUTE THIS CONTRACT UNTIL
YOU HAVE RECEIVED AND READ THE DISCLOSURE SUMMARY PRINTED ABOVE AND REQUIRED BY
SECTION 720.401, FLORIDA STATUTES.
K-4
ASSOCIATION DISCLOSURE
COLONIAL SHORES
IF THE DISCLOSURE SUMMARY REQUIRED BY SECTION 720.401, FLORIDA STATUTES, HAS NOT
BEEN PROVIDED TO THE PROSPECTIVE PURCHASER BEFORE EXECUTING THIS CONTRACT FOR
SALE, THIS CONTRACT IS VOIDABLE BY BUYER BY DELIVERING TO SELLER OR SELLER'S
AGENT OR REPRESENTATIVE WRITTEN NOTICE OF THE BUYER'S INTENTION TO CANCEL WITHIN
3 DAYS AFTER RECEIPT OF THE DISCLOSURE SUMMARY OR PRIOR TO CLOSING, WHICHEVER
OCCURS FIRST. ANY PURPORTED WAIVER OF THIS VOIDABILITY RIGHT HAS NO EFFECT.
BUYER'S RIGHT TO VOID THIS CONTRACT SHALL TERMINATE AT CLOSING.
DISCLOSURE SUMMARY FOR THE COMMUNITY. The following disclosure summaries have
been presented to Buyer prior to the execution of the Contract and are
incorporated herein:
1. AS A PURCHASER OF PROPERTY IN THIS COMMUNITY, YOU WILL BE
OBLIGATED TO BE A MEMBER OF A HOMEOWNERS' ASSOCIATION.
2. THERE HAVE BEEN OR WILL BE RECORDED RESTRICTIVE COVENANTS
GOVERNING THE USE AND OCCUPANCY OF PROPERTIES IN THE COMMUNITY.
3. YOU WILL BE OBLIGATED TO PAY ASSESSMENTS TO THE ASSOCIATION.
ASSESSMENTS MAY BE SUBJECT TO PERIODIC CHANGE. IF APPLICABLE, THE CURRENT AMOUNT
IS $ _______ PER _______. YOU WILL ALSO BE OBLIGATED TO PAY ANY SPECIAL
ASSESSMENTS IMPOSED BY THE ASSOCIATION. SUCH SPECIAL ASSESSMENTS MAY BE SUBJECT
TO CHANGE. IF APPLICABLE, THE CURRENT AMOUNT IS $_NONE_ PER _____.
4. YOU MAY BE OBLIGATED TO PAY SPECIAL ASSESSMENTS TO THE RESPECTIVE
MUNICIPALITY, COUNTY, OR SPECIAL DISTRICT. ALL ASSESSMENTS ARE SUBJECT TO
PERIODIC CHANGE.
5. YOUR FAILURE TO PAY SPECIAL ASSESSMENTS OR ASSESSMENTS LEVIED BY A
MANDATORY HOMEOWNERS' ASSOCIATION COULD RESULT IN A LIEN ON YOUR PROPERTY.
6. THERE MAY BE AN OBLIGATION TO PAY RENT OR LAND USE FEES FOR
RECREATIONAL OR OTHER COMMONLY USED FACILITIES AS AN OBLIGATION OF MEMBERSHIP IN
THE HOMEOWNERS' ASSOCIATION. IF APPLICABLE, THE CURRENT AMOUNT IS $_____NONE___
PER _____.
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7. THE DEVELOPER MAY HAVE THE RIGHT TO AMEND THE RESTRICTIVE
COVENANTS WITHOUT THE APPROVAL OF THE ASSOCIATION MEMBERSHIP OR THE APPROVAL OF
THE PARCEL OWNERS.
8. THE STATEMENTS CONTAINED IN THIS DISCLOSURE FORM ARE ONLY SUMMARY
IN NATURE, AND, AS A PROSPECTIVE PURCHASER, YOU SHOULD REFER TO THE COVENANTS
AND THE ASSOCIATION GOVERNING DOCUMENTS BEFORE PURCHASING PROPERTY.
9. THESE DOCUMENTS ARE EITHER MATTERS OF PUBLIC RECORD AND CAN BE
OBTAINED FROM THE RECORD OFFICE IN THE COUNTY WHERE THE PROPERTY IS LOCATED, OR
ARE NOT RECORDED AND CAN BE OBTAINED FROM THE DEVELOPER.
AS A PROSPECTIVE PURCHASER, YOU SHOULD NOT EXECUTE THIS CONTRACT UNTIL
YOU HAVE RECEIVED AND READ THE DISCLOSURE SUMMARY PRINTED ABOVE AND REQUIRED BY
SECTION 720.401, FLORIDA STATUTES.
K-6
ASSOCIATION DISCLOSURE
LAUREL LAKES
IF THE DISCLOSURE SUMMARY REQUIRED BY SECTION 720.401, FLORIDA STATUTES, HAS NOT
BEEN PROVIDED TO THE PROSPECTIVE PURCHASER BEFORE EXECUTING THIS CONTRACT FOR
SALE, THIS CONTRACT IS VOIDABLE BY BUYER BY DELIVERING TO SELLER OR SELLER'S
AGENT OR REPRESENTATIVE WRITTEN NOTICE OF THE BUYER'S INTENTION TO CANCEL WITHIN
3 DAYS AFTER RECEIPT OF THE DISCLOSURE SUMMARY OR PRIOR TO CLOSING, WHICHEVER
OCCURS FIRST. ANY PURPORTED WAIVER OF THIS VOIDABILITY RIGHT HAS NO EFFECT.
BUYER'S RIGHT TO VOID THIS CONTRACT SHALL TERMINATE AT CLOSING.
DISCLOSURE SUMMARY FOR THE COMMUNITY. The following disclosure summaries have
been presented to Buyer prior to the execution of the Contract and are
incorporated herein:
1. AS A PURCHASER OF PROPERTY IN THIS COMMUNITY, YOU WILL BE
OBLIGATED TO BE A MEMBER OF A HOMEOWNERS' ASSOCIATION.
2. THERE HAVE BEEN OR WILL BE RECORDED RESTRICTIVE COVENANTS
GOVERNING THE USE AND OCCUPANCY OF PROPERTIES IN THE COMMUNITY.
3. YOU WILL BE OBLIGATED TO PAY ASSESSMENTS TO THE ASSOCIATION.
ASSESSMENTS MAY BE SUBJECT TO PERIODIC CHANGE. IF APPLICABLE, THE CURRENT AMOUNT
IS $ _______ PER _______. YOU WILL ALSO BE OBLIGATED TO PAY ANY SPECIAL
ASSESSMENTS IMPOSED BY THE ASSOCIATION. SUCH SPECIAL ASSESSMENTS MAY BE SUBJECT
TO CHANGE. IF APPLICABLE, THE CURRENT AMOUNT IS $_NONE_ PER _____.
4. YOU MAY BE OBLIGATED TO PAY SPECIAL ASSESSMENTS TO THE RESPECTIVE
MUNICIPALITY, COUNTY, OR SPECIAL DISTRICT. ALL ASSESSMENTS ARE SUBJECT TO
PERIODIC CHANGE.
5. YOUR FAILURE TO PAY SPECIAL ASSESSMENTS OR ASSESSMENTS LEVIED BY A
MANDATORY HOMEOWNERS' ASSOCIATION COULD RESULT IN A LIEN ON YOUR PROPERTY.
6. THERE MAY BE AN OBLIGATION TO PAY RENT OR LAND USE FEES FOR
RECREATIONAL OR OTHER COMMONLY USED FACILITIES AS AN OBLIGATION OF MEMBERSHIP IN
THE HOMEOWNERS' ASSOCIATION. IF APPLICABLE, THE CURRENT AMOUNT IS $_____NONE___
PER _____.
K-7
7. THE DEVELOPER MAY HAVE THE RIGHT TO AMEND THE RESTRICTIVE
COVENANTS WITHOUT THE APPROVAL OF THE ASSOCIATION MEMBERSHIP OR THE APPROVAL OF
THE PARCEL OWNERS.
8. THE STATEMENTS CONTAINED IN THIS DISCLOSURE FORM ARE ONLY SUMMARY
IN NATURE, AND, AS A PROSPECTIVE PURCHASER, YOU SHOULD REFER TO THE COVENANTS
AND THE ASSOCIATION GOVERNING DOCUMENTS BEFORE PURCHASING PROPERTY.
9. THESE DOCUMENTS ARE EITHER MATTERS OF PUBLIC RECORD AND CAN BE
OBTAINED FROM THE RECORD OFFICE IN THE COUNTY WHERE THE PROPERTY IS LOCATED, OR
ARE NOT RECORDED AND CAN BE OBTAINED FROM THE DEVELOPER.
AS A PROSPECTIVE PURCHASER, YOU SHOULD NOT EXECUTE THIS CONTRACT UNTIL
YOU HAVE RECEIVED AND READ THE DISCLOSURE SUMMARY PRINTED ABOVE AND REQUIRED BY
SECTION 720.401, FLORIDA STATUTES.
K-8
ASSOCIATION DISCLOSURE
XXXXXX AT RENAISSANCE
IF THE DISCLOSURE SUMMARY REQUIRED BY SECTION 720.401, FLORIDA STATUTES, HAS NOT
BEEN PROVIDED TO THE PROSPECTIVE PURCHASER BEFORE EXECUTING THIS CONTRACT FOR
SALE, THIS CONTRACT IS VOIDABLE BY BUYER BY DELIVERING TO SELLER OR SELLER'S
AGENT OR REPRESENTATIVE WRITTEN NOTICE OF THE BUYER'S INTENTION TO CANCEL WITHIN
3 DAYS AFTER RECEIPT OF THE DISCLOSURE SUMMARY OR PRIOR TO CLOSING, WHICHEVER
OCCURS FIRST. ANY PURPORTED WAIVER OF THIS VOIDABILITY RIGHT HAS NO EFFECT.
BUYER'S RIGHT TO VOID THIS CONTRACT SHALL TERMINATE AT CLOSING.
DISCLOSURE SUMMARY FOR THE COMMUNITY. The following disclosure summaries have
been presented to Buyer prior to the execution of the Contract and are
incorporated herein:
1. AS A PURCHASER OF PROPERTY IN THIS COMMUNITY, YOU WILL BE
OBLIGATED TO BE A MEMBER OF A HOMEOWNERS' ASSOCIATION.
2. THERE HAVE BEEN OR WILL BE RECORDED RESTRICTIVE COVENANTS
GOVERNING THE USE AND OCCUPANCY OF PROPERTIES IN THE COMMUNITY.
3. YOU WILL BE OBLIGATED TO PAY ASSESSMENTS TO THE ASSOCIATION.
ASSESSMENTS MAY BE SUBJECT TO PERIODIC CHANGE. IF APPLICABLE, THE CURRENT AMOUNT
IS $ _______ PER _______. YOU WILL ALSO BE OBLIGATED TO PAY ANY SPECIAL
ASSESSMENTS IMPOSED BY THE ASSOCIATION. SUCH SPECIAL ASSESSMENTS MAY BE SUBJECT
TO CHANGE. IF APPLICABLE, THE CURRENT AMOUNT IS $_NONE_ PER _____.
4. YOU MAY BE OBLIGATED TO PAY SPECIAL ASSESSMENTS TO THE RESPECTIVE
MUNICIPALITY, COUNTY, OR SPECIAL DISTRICT. ALL ASSESSMENTS ARE SUBJECT TO
PERIODIC CHANGE.
5. YOUR FAILURE TO PAY SPECIAL ASSESSMENTS OR ASSESSMENTS LEVIED BY A
MANDATORY HOMEOWNERS' ASSOCIATION COULD RESULT IN A LIEN ON YOUR PROPERTY.
6. THERE MAY BE AN OBLIGATION TO PAY RENT OR LAND USE FEES FOR
RECREATIONAL OR OTHER COMMONLY USED FACILITIES AS AN OBLIGATION OF MEMBERSHIP IN
THE HOMEOWNERS' ASSOCIATION. IF APPLICABLE, THE CURRENT AMOUNT IS $_____NONE___
PER _____.
K-9
7. THE DEVELOPER MAY HAVE THE RIGHT TO AMEND THE RESTRICTIVE
COVENANTS WITHOUT THE APPROVAL OF THE ASSOCIATION MEMBERSHIP OR THE APPROVAL OF
THE PARCEL OWNERS.
8. THE STATEMENTS CONTAINED IN THIS DISCLOSURE FORM ARE ONLY SUMMARY
IN NATURE, AND, AS A PROSPECTIVE PURCHASER, YOU SHOULD REFER TO THE COVENANTS
AND THE ASSOCIATION GOVERNING DOCUMENTS BEFORE PURCHASING PROPERTY.
9. THESE DOCUMENTS ARE EITHER MATTERS OF PUBLIC RECORD AND CAN BE
OBTAINED FROM THE RECORD OFFICE IN THE COUNTY WHERE THE PROPERTY IS LOCATED, OR
ARE NOT RECORDED AND CAN BE OBTAINED FROM THE DEVELOPER.
AS A PROSPECTIVE PURCHASER, YOU SHOULD NOT EXECUTE THIS CONTRACT UNTIL
YOU HAVE RECEIVED AND READ THE DISCLOSURE SUMMARY PRINTED ABOVE AND REQUIRED BY
SECTION 720.401, FLORIDA STATUTES.
K-10
ASSOCIATION DISCLOSURE
COLONIAL POINTE
IF THE DISCLOSURE SUMMARY REQUIRED BY SECTION 720.401, FLORIDA STATUTES, HAS NOT
BEEN PROVIDED TO THE PROSPECTIVE PURCHASER BEFORE EXECUTING THIS CONTRACT FOR
SALE, THIS CONTRACT IS VOIDABLE BY BUYER BY DELIVERING TO SELLER OR SELLER'S
AGENT OR REPRESENTATIVE WRITTEN NOTICE OF THE BUYER'S INTENTION TO CANCEL WITHIN
3 DAYS AFTER RECEIPT OF THE DISCLOSURE SUMMARY OR PRIOR TO CLOSING, WHICHEVER
OCCURS FIRST. ANY PURPORTED WAIVER OF THIS VOIDABILITY RIGHT HAS NO EFFECT.
BUYER'S RIGHT TO VOID THIS CONTRACT SHALL TERMINATE AT CLOSING.
DISCLOSURE SUMMARY FOR THE COMMUNITY. The following disclosure summaries have
been presented to Buyer prior to the execution of the Contract and are
incorporated herein:
1. AS A PURCHASER OF PROPERTY IN THIS COMMUNITY, YOU WILL BE
OBLIGATED TO BE A MEMBER OF A HOMEOWNERS' ASSOCIATION.
2. THERE HAVE BEEN OR WILL BE RECORDED RESTRICTIVE COVENANTS
GOVERNING THE USE AND OCCUPANCY OF PROPERTIES IN THE COMMUNITY.
3. YOU WILL BE OBLIGATED TO PAY ASSESSMENTS TO THE ASSOCIATION.
ASSESSMENTS MAY BE SUBJECT TO PERIODIC CHANGE. IF APPLICABLE, THE CURRENT AMOUNT
IS $ _______ PER _______. YOU WILL ALSO BE OBLIGATED TO PAY ANY SPECIAL
ASSESSMENTS IMPOSED BY THE ASSOCIATION. SUCH SPECIAL ASSESSMENTS MAY BE SUBJECT
TO CHANGE. IF APPLICABLE, THE CURRENT AMOUNT IS $_NONE_ PER _____.
4. YOU MAY BE OBLIGATED TO PAY SPECIAL ASSESSMENTS TO THE RESPECTIVE
MUNICIPALITY, COUNTY, OR SPECIAL DISTRICT. ALL ASSESSMENTS ARE SUBJECT TO
PERIODIC CHANGE.
5. YOUR FAILURE TO PAY SPECIAL ASSESSMENTS OR ASSESSMENTS LEVIED BY A
MANDATORY HOMEOWNERS' ASSOCIATION COULD RESULT IN A LIEN ON YOUR PROPERTY.
6. THERE MAY BE AN OBLIGATION TO PAY RENT OR LAND USE FEES FOR
RECREATIONAL OR OTHER COMMONLY USED FACILITIES AS AN OBLIGATION OF MEMBERSHIP IN
THE HOMEOWNERS' ASSOCIATION. IF APPLICABLE, THE CURRENT AMOUNT IS $_____NONE___
PER _____.
K-11
7. THE DEVELOPER MAY HAVE THE RIGHT TO AMEND THE RESTRICTIVE
COVENANTS WITHOUT THE APPROVAL OF THE ASSOCIATION MEMBERSHIP OR THE APPROVAL OF
THE PARCEL OWNERS.
8. THE STATEMENTS CONTAINED IN THIS DISCLOSURE FORM ARE ONLY SUMMARY
IN NATURE, AND, AS A PROSPECTIVE PURCHASER, YOU SHOULD REFER TO THE COVENANTS
AND THE ASSOCIATION GOVERNING DOCUMENTS BEFORE PURCHASING PROPERTY.
9. THESE DOCUMENTS ARE EITHER MATTERS OF PUBLIC RECORD AND CAN BE
OBTAINED FROM THE RECORD OFFICE IN THE COUNTY WHERE THE PROPERTY IS LOCATED, OR
ARE NOT RECORDED AND CAN BE OBTAINED FROM THE DEVELOPER.
AS A PROSPECTIVE PURCHASER, YOU SHOULD NOT EXECUTE THIS CONTRACT UNTIL
YOU HAVE RECEIVED AND READ THE DISCLOSURE SUMMARY PRINTED ABOVE AND REQUIRED BY
SECTION 720.401, FLORIDA STATUTES.
K-12
ASSOCIATION DISCLOSURE
INDIGO LAKES
IF THE DISCLOSURE SUMMARY REQUIRED BY SECTION 720.401, FLORIDA STATUTES, HAS NOT
BEEN PROVIDED TO THE PROSPECTIVE PURCHASER BEFORE EXECUTING THIS CONTRACT FOR
SALE, THIS CONTRACT IS VOIDABLE BY BUYER BY DELIVERING TO SELLER OR SELLER'S
AGENT OR REPRESENTATIVE WRITTEN NOTICE OF THE BUYER'S INTENTION TO CANCEL WITHIN
3 DAYS AFTER RECEIPT OF THE DISCLOSURE SUMMARY OR PRIOR TO CLOSING, WHICHEVER
OCCURS FIRST. ANY PURPORTED WAIVER OF THIS VOIDABILITY RIGHT HAS NO EFFECT.
BUYER'S RIGHT TO VOID THIS CONTRACT SHALL TERMINATE AT CLOSING.
DISCLOSURE SUMMARY FOR THE COMMUNITY. The following disclosure summaries have
been presented to Buyer prior to the execution of the Contract and are
incorporated herein:
1. AS A PURCHASER OF PROPERTY IN THIS COMMUNITY, YOU WILL BE
OBLIGATED TO BE A MEMBER OF A HOMEOWNERS' ASSOCIATION.
2. THERE HAVE BEEN OR WILL BE RECORDED RESTRICTIVE COVENANTS
GOVERNING THE USE AND OCCUPANCY OF PROPERTIES IN THE COMMUNITY.
3. YOU WILL BE OBLIGATED TO PAY ASSESSMENTS TO THE ASSOCIATION.
ASSESSMENTS MAY BE SUBJECT TO PERIODIC CHANGE. IF APPLICABLE, THE CURRENT AMOUNT
IS $ _______ PER _______. YOU WILL ALSO BE OBLIGATED TO PAY ANY SPECIAL
ASSESSMENTS IMPOSED BY THE ASSOCIATION. SUCH SPECIAL ASSESSMENTS MAY BE SUBJECT
TO CHANGE. IF APPLICABLE, THE CURRENT AMOUNT IS $_NONE_ PER _____.
4. YOU MAY BE OBLIGATED TO PAY SPECIAL ASSESSMENTS TO THE RESPECTIVE
MUNICIPALITY, COUNTY, OR SPECIAL DISTRICT. ALL ASSESSMENTS ARE SUBJECT TO
PERIODIC CHANGE.
5. YOUR FAILURE TO PAY SPECIAL ASSESSMENTS OR ASSESSMENTS LEVIED BY A
MANDATORY HOMEOWNERS' ASSOCIATION COULD RESULT IN A LIEN ON YOUR PROPERTY.
6. THERE MAY BE AN OBLIGATION TO PAY RENT OR LAND USE FEES FOR
RECREATIONAL OR OTHER COMMONLY USED FACILITIES AS AN OBLIGATION OF MEMBERSHIP IN
THE HOMEOWNERS' ASSOCIATION. IF APPLICABLE, THE CURRENT AMOUNT IS $_____NONE___
PER _____.
7. THE DEVELOPER MAY HAVE THE RIGHT TO AMEND THE RESTRICTIVE
COVENANTS WITHOUT THE APPROVAL OF THE ASSOCIATION MEMBERSHIP OR THE APPROVAL OF
THE PARCEL OWNERS.
K-13
8. THE STATEMENTS CONTAINED IN THIS DISCLOSURE FORM ARE ONLY SUMMARY
IN NATURE, AND, AS A PROSPECTIVE PURCHASER, YOU SHOULD REFER TO THE COVENANTS
AND THE ASSOCIATION GOVERNING DOCUMENTS BEFORE PURCHASING PROPERTY.
9. THESE DOCUMENTS ARE EITHER MATTERS OF PUBLIC RECORD AND CAN BE
OBTAINED FROM THE RECORD OFFICE IN THE COUNTY WHERE THE PROPERTY IS LOCATED, OR
ARE NOT RECORDED AND CAN BE OBTAINED FROM THE DEVELOPER.
AS A PROSPECTIVE PURCHASER, YOU SHOULD NOT EXECUTE THIS CONTRACT UNTIL
YOU HAVE RECEIVED AND READ THE DISCLOSURE SUMMARY PRINTED ABOVE AND REQUIRED BY
SECTION 720.401, FLORIDA STATUTES.
K-14
EXHIBIT L
MEMORANDUM OF RIGHT OF FIRST REFUSAL
AGREEMENT OF RIGHT OF FIRST REFUSAL
THIS AGREEMENT OF RIGHT OF FIRST REFUSAL ("AGREEMENT") is made as of
February 9, 2005, by Colonial Homes, Inc., a Florida corporation and The
Colonial Company, an Alabama corporation ("SELLER"), and Meritage Homes of
Florida, Inc., an Arizona corporation ("BUYER"), on the terms and conditions set
forth herein.
RECITALS
A. The parties to this Agreement have previously entered into a Master
Transaction Agreement ("MASTER AGREEMENT"), an Agreement of Purchase and Sale of
Assets, an Agreement of Purchase and Sale of Real Property, an Option and
Development Agreement, an Indemnification Agreement, and certain other
agreements, all as described in the Master Agreement (collectively, the
"TRANSACTION AGREEMENTS"). All capitalized terms used and not otherwise defined
herein have the meaning ascribed in the Master Agreement.
B. Seller is the owner of an undivided fee simple interest in that
certain real property located in the County of Xxx, State of Florida, as more
particularly described on Exhibit "A" attached hereto (the "OWNED PROPERTY").
C. Seller is a party to (1) a Contract for Purchase and Sale of Real
Property dated on or about July 20, 2004, by and between Xxxxxx X. Xxxxx and
Xxxxxxxx X. Xxxxx, as sellers, and Colonial Homes, Inc., as buyer, and (2) a
Contract for Purchase and Sale of Real Property dated on or about July 20, 2004
by and between J. Xxxxxxx Xxxxxxx and Xxxxxx X. Xxxxxxx, as sellers, and
Colonial Homes, Inc., as buyer (the "UNDERLYING PURCHASE CONTRACT"), pursuant to
which Seller has the right to acquire real property adjacent to the Owned
Property, as more particularly described therein (the "CONTRACTED PROPERTY," and
together with the Owned Property, the "PROPERTY").
D. In connection with the transactions contemplated by the Transaction
Agreements, Seller desires to grant to Buyer a right of first refusal to Buyer
with respect to the Property, upon and subject to the terms and conditions set
forth in this Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Buyer and Seller hereby agree as
follows:
1. RIGHT OF FIRST REFUSAL. In the event Seller proposes to sell or
otherwise transfer all or any of the Property, or any rights thereto (including,
without limitation, any rights to acquire the Contracted Property pursuant to
the Underlying Purchase Contract), to any person or entity (a "TRANSFER"), Buyer
shall have a right of first refusal to purchase such portion of the Property on
the terms and conditions hereinafter set forth.
2. OFFER. In the event that Seller receives an offer to enter into a
Transfer that Seller proposes to accept, Seller shall deliver to Buyer and First
American Title Insurance Company ("ESCROW AGENT") a written notice (the "OFFER
NOTICE") that shall include: (a) a copy of the
L-1
written bona fide offer that sets forth all of the material terms upon which
Seller intends to consummate the proposed Transfer, including, without
limitation, (i) the name of the proposed transferee (the "PROPOSED TRANSFEREE")
and information demonstrating that the Proposed Transferee is financially
capable of performing all of its obligations under and with respect to such
offer, (ii) the portion of the Property and/or rights therein or thereto to be
transferred (the "OFFERED PROPERTY"), (iii) the bona fide cash price for which
Seller proposes to Transfer the Property (the "OFFERED PRICE"), and the terms
under which the proposed cash price is to be paid, and (iv) the proposed closing
date for the Transfer; (b) a current commitment for an ALTA Extended Coverage
Owner's Policy of Title Insurance-Form B 1970 (rev. 10-17-70 and 10-17-84)
with Florida modifications in favor of Buyer for the Offered Property; and (c)
an offer from Seller to sell the Offered Property to Buyer at the Offered Price
pursuant to the terms set forth in this Agreement.
3. EXERCISE OF RIGHT OF FIRST REFUSAL. At any time within fifteen (15)
days after receipt of an Offer Notice, Buyer may elect to purchase the Offered
Property at the purchase price determined in accordance with Section 4 below by
delivering to Seller and Escrow Agent a written notice (an "EXERCISE NOTICE") of
such election.
4. PURCHASE PRICE. The purchase price ("PURCHASE PRICE") for the
Offered Property shall be the Offered Price.
5. CLOSING. In the event Buyer exercises its right of first refusal
hereunder: (a) Buyer shall consummate the transaction described in the Offer
Notice, through an escrow established with Escrow Agent, on the later to occur
of (i) the closing date specified in the Offer or (ii) ten (10) business days
following the applicable Exercise Notice, and (b) Seller shall convey the
Property to Buyer by statutory warranty deed in the same form as that attached
to the Option Agreement as Exhibit "H", free of (a) any monetary and/or
financial liens and encumbrances (other than current taxes not yet due) and any
additional encumbrances incurred by Seller after the Agreement Date in violation
of any provision of this Agreement, and (b) all leases, possessory agreements,
licenses, operating agreement, and any other instrument affecting the Offered
Property and granting any possessory interest thereto to any person or entity
other than Buyer. Except for Seller's acquisition of the Contracted Property
pursuant to the Underlying Purchase Agreement, Seller shall not take any action
to affect title to the Property while this Agreement is in effect.
6. SELLER'S RIGHT TO TRANSFER. If the Offered Property is not purchased
by Buyer as provided in Sections 3 and 5, then the Seller may Transfer the
Offered Property, but no other portion of the Property, to the Proposed
Transferee at the Offered Price or at a higher price, provided that such sale or
other transfer is consummated within ninety (90) days after the date of delivery
of the Offer Notice. Seller's right to Transfer the Offered Property pursuant to
this Section 6 shall apply only with respect to the Offered Property, and shall
not excuse Seller from its obligations hereunder with respect to any other
portion of the Property. Furthermore, if the Offered Property is not transferred
to the Proposed Transferee within ninety (90) days after the date of delivery of
the Offer Notice, a new Offer Notice shall be given Buyer, and Buyer shall again
be offered the right of first refusal provided herein, before any of the
Property may be Transferred.
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7. UNDERLYING PURCHASE RIGHTS. If Seller, at any time, determines that
it will not consummate the purchase of the Contracted Property pursuant to the
Underlying Purchase Contract for any reason other than a default by the seller
under the Underlying Purchase Contract that would entitle Seller to receive a
return of all of Seller's xxxxxxx money deposited pursuant to the Underlying
Purchase Contract, then Seller shall offer to assign and transfer to Buyer, at
no cost to Buyer, all of its right, title, and interest in and to the Underlying
Purchase Contract, the Contracted Property, and any escrow related thereto
(including, without limitation, any xxxxxxx money deposited therein) by
delivering written notice to Buyer of such offer at least fifteen (15) days
prior to terminating or canceling the Underlying Purchase Contract. Such notice
shall include all material information in Seller's possession and/or control
regarding the Underlying Purchase Contract and the Contracted Property. Buyer
shall have until the termination or cancellation of the Underlying Purchase
Contract to exercise the offer by delivery of written notice of such exercise
and definitive instruments, in commercially reasonable form, effectuating such
assignment and transfer.
8. INJUNCTIVE RELIEF. Seller acknowledges that Seller's breach of this
Agreement would cause Buyer irreparable harm and that Buyer shall be entitled to
obtain injunctive relief from a court of competent jurisdiction in the event of
Seller's breach or threatened breach of this Agreement.
9. MISCELLANEOUS. The provisions of Section 12 of the Option Agreement
are hereby incorporated herein by this reference, except all references therein
to "Optionor" shall be deemed to mean "Seller" hereunder, all references therein
to "Optionee" shall be deemed to mean "Buyer hereunder, and all references
therein to "this Agreement," or similar import, shall be deemed to mean this
Agreement of Right of First Refusal.
Remainder of this page intentionally left blank.
Signature page(s) follow.
L-3
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
on the date first written above by their respective officers thereunder duly
authorized.
MERITAGE HOMES CORPORATION,
a Maryland corporation
/s/ Xxxx X. Xxxxxx
-------------------------------
By: Xxxx X. Xxxxxx
Its: Co-Chief Executive Officer
MERITAGE HOMES OF FLORIDA, INC.,
an Arizona corporation
/s/ Xxxx X. Xxxxxx
-------------------------------
By: Xxxx X. Xxxxxx
Its: Co-Chief Executive Officer
COLONIAL HOMES, INC.,
a Florida corporation
/s/ Xxxx X. Xxxxxxx
-------------------------------
By: Xxxx X. Xxxxxxx
Its: President
COLONIAL SHORES L.L.C.,
a Florida limited liability company
/s/ Xxxx X. Xxxxxxx
-------------------------------
By: Xxxx X. Xxxxxxx
Its: President
THE COLONIAL COMPANY,
an Alabama corporation
/s/ XX Xx Xxxx Xx.
-------------------------------
By: XX Xx Xxxx Xx.
Its: President & CEO
L-4
STATE OF Texas )
)ss:
COUNTY OF Dallas )
The foregoing instrument was acknowledged before me this 10th day of Feb.,
________________, by_____________________________________________________,
as___________________________________of________________________________________,
a Maryland corporation, on behalf of the corporation, who is personally known to
me or produced a Texas drivers license for identification.
Notary: /s/ Xxxxxx Xxxxxx
-----------------------------
[NOTARIAL SEAL] Print Name___________________________
Notary Public, State of______________
My commission expires:_______________
[ ] Personally Known OR [X] Produced Identification
Type of Identification Produced TX D.L.
STATE OF Texas )
)ss:
COUNTY OF Dallas )
The foregoing instrument was acknowledged before me this 10th day of Feb.,
_____, by________________________,as__________________of______________________ ,
a Orizona corporation, on behalf of the corporation, who is personally known to
me or produced a _____________ drivers license for identification.
Notary: /s/ Xxxxxx Xxxxxx
-----------------------------
[NOTARIAL SEAL] Print Name:__________________________
Notary Public, State of______________
My commission expires:_______________
[ ] Personally Known OR [X] Produced Identification
Type of Identification Produced TX. D.L.
X-0
XXXXX XX Xxxxx )
)ss:
COUNTY OF Dallas )
The foregoing instrument was acknowledged before me this 10th day of Feb.,
________________, by_____________________________________________________,
as___________________________________of________________________________________,
a Florida corporation, on behalf of the corporation, who is personally known to
me or produced a Alabama D.L. drivers license for identification.
Notary: /s/ Xxxxxx Xxxxxx
-----------------------------
[NOTARIAL SEAL] Print Name:__________________________
Notary Public, State of______________
My commission expires:_______________
[ ] Personally Known OR [X] Produced Identification
Type of Identification Produced Alabama D.L.
STATE OF Texas )
)ss:
COUNTY OF Dallas )
The foregoing instrument was acknowledged before me this 10th day of Feb.,
________________, by _____________________, as ______________________ of
________________________________, a Florida corporation, on behalf of the
corporation, who is personally known to me or produced a Alabama D.L. drivers
license for identification.
Notary: /s/ Xxxxxx Xxxxxx
-----------------------------
[NOTARIAL SEAL] Print Name:__________________________
Notary Public, State of______________
My commission expires:_______________
[ ] Personally Known OR [X] Produced Identification
Type of Identification Produced Alabama D.L.
L-6
STATE OF Texas )
)ss:
COUNTY OF Dallas )
The foregoing instrument was acknowledged before me this 10th day of Feb.,
____________, by _________________________________, as _____________________ of
____________________________, a Alabama corporation, on behalf of the
corporation, who is personally known to me or produced a Alabama drivers license
for identification.
Notary: /s/ Xxxxxx Xxxxxx
-----------------------------
[NOTARIAL SEAL] Print Name:__________________________
Notary Public, State of______________
My commission expires:_______________
[ ] Personally Known OR [X] Produced Identification
Type of Identification Produced Alabama D.L.
L-7
EXHIBIT A TO AGREEMENT OF RIGHT OF FIRST REFUSAL
(Description of Property)
L-8
EXHIBIT M
MEMORANDUM OF AGREEMENT
INSTR # 6645062
OR BK 04589 Pgs 4575 - 4578; (4pgs)
RECORDED 02/11/2005 03:04:34 PM
XXXXXXX XXXXX, CLERK OF COURT
This instrument prepared by, and to be XXX COUNTY, FLORIDA
returned to: RECORDING FEE 35.50
Xxxxxxx Xxxxxxxxx, Esq. DEPUTY CLERK P Xxxxxxx
Xxxxxxxxx Traurig, LLP
777 X. Xxxxxxx Drive, Suite 000 Xxxx
Xxxx Xxxx Xxxxx, Xxxxxxx, 00000
Parcel Identification Nos.________________
MEMORANDUM OF AGREEMENT
(XXXXX RIVER & XXXXXX AT RENAISSANCE)
By this Memorandum of Agreement ("MEMORANDUM") entered into this 10th day
of February, 2005, Colonial Homes, Inc., a Florida corporation ("SELLER"), and
Meritage Homes of Florida, Inc., an Arizona corporation ("BUYER"), hereby
declare and agree as follows:
A. Seller owns that certain real property located in Xxx County,
Florida and described on the attached Exhibit "A" (the "PROPERTY").
B. Seller has granted to Buyer certain rights relating to the Property
(the "PROPERTY RIGHTS") pursuant to that certain Master Transaction Agreement by
and among Buyer, Seller and certain related parties (as amended from time to
time, the "AGREEMENT").
C. Buyer and Seller desire to give actual and constructive notice to
all persons dealing with the Property of the existence of the Agreement and
Buyer's rights with respect thereto.
MEMORANDUM:
1. The foregoing recitals are true and correct and are incorporated
herein by this reference.
2. The Property Rights shall continue in full force and effect until
the date that the Agreement is terminated with respect to the Property in
accordance with the terms and conditions of the Agreement.
3. A complete copy of the Agreement can be reviewed and examined at the
office of Buyer's counsel, as set forth in the upper left-hand corner of this
Memorandum.
4. All of the terms, conditions, and agreements contained within the
Agreement are fully incorporated herein by reference as if fully set forth
herein. This Memorandum is not intended to change any of the terms of the
Agreement and in the event of any conflict between this Memorandum and the
Agreement, the Agreement shall control.
M-1
IN WITNESS WHEREOF, the parties have executed this Memorandum of Agreement
as of the date first set forth above.
WITNESSES: SELLER:
(1) /s/ Xxxxxxxx X. Xxxxxx
---------------------- COLONIAL HOMES, INC.,
Signature Florida corporation
Xxxxxxxx X. Xxxxxx
--------------------------
Printed Name
(2) /s/ Xxxxx X. Xxxx By: /s/ Xxxx X. Xxxxxxx
---------------------- -----------------------------
Signature Name: Xxxx X. Xxxxxxx
Xxxxx X. Xxxx Its President
-------------------------- (seal)
Printed Name
WITNESSES: BUYER:
(1) /s/ C. Xxxxxxx Xxxxx
---------------------- MERITAGE HOMES OF FLORIDA, INC.,
Signature an Arizona corporation
C. Xxxxxxx Xxxxx
--------------------------
Printed Name
(2) /s/ Xxxx Xxxx By: /s/ Xxxx X. Xxxxxx
---------------------- -----------------------------
Signature Name: Xxxx X. Xxxxxx
Xxxx Xxxx Its Co-Chief Executive Officer
--------------------------
Printed Name (seal)
X-0
XXXXX XX XXXXX )
) ss:
COUNTY OF DALLAS )
The foregoing instrument was acknowledged before me this 10th day of Feb.,
________________, by Xxxx X. Xxxxxxx, as President of Colonial Homes, Inc., a
Florida corporation, on behalf of the corporation, who is personally known to me
or produced a Alabama D.L. drivers license for identification.
Notary: /s/ Xxxxxx Xxxxxx
---------------------------
[NOTARIAL SEAL] Print Name:________________________
Notary Public, State of____________
My commission expires:_____________
[ ] Personally Known OR [X] Produced Identification
Type of Identification Produced Alabama D.L.
STATE OF TEXAS )
) ss:
COUNTY OF DALLAS )
The foregoing instrument was acknowledged before me this 10th day of Feb.,
_________, by ______________________, as _____________________ of Meritage
Homes of Florida, Inc., an Arizona corporation, on behalf of the corporation,
who is personally known to me or produced a TEXAS drivers license for
identification.
Notary: /s/ Xxxxxx Xxxxxx
---------------------------
[NOTARIAL SEAL] Print Name:________________________
Notary Public, State of____________
My commission expires:_____________
[ ] Personally Known OR [X] Produced Identification
Type of Identification Produced D.L.
M-3
EXHIBIT A
LEGAL DESCRIPTION (CONDO)
PARCEL VII: (Renaissance)
All of Tract "G", Renaissance, a subdivision according to the Plat thereof as
recorded in Plat Book 72, Page 18 through 30 of the Public Records of Xxx
County, Florida.
Less the following:
All of Xxxxxx I of Renaissance, a Condominium according to the Declaration of
Condominium recorded in O.R. Book 3887, Page 2824, of the Public Records of Xxx
County, Florida.
And
All of Xxxxxx XX of Renaissance, a Condominium according to the Declaration of
Condominium recorded in O.R. Book 4537, Page 1143, of the Public Records of Xxx
County, Florida.
M-4
