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ASSET PURCHASE AGREEMENT
Dated as of March 24, 1999
By and Among
Westminster Homes of Alabama, LLC
Westminster Homes of Mississippi, LLC
Washington Homes, Inc.
Xxxxxxx Homes of Mississippi, LLC
Xxxxxxx Properties, Inc.
and
Xxxxx X. Xxxxxxx
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
Recitals 6
1. Definitions 1
2. Basic Transaction 7
(a) Purchase and Sale of Assets 7
(b) Assumption of Liabilities 7
(c) Contracts 7
(d) Purchase Price 7
(e) The Closing 8
(f) Deliveries at the Closing 8
(g) Prorations 8
(h) Second Closing 9
(i) Allocation 9
(j) Employees 9
(k) Land Development Limited Liability Company 9
(l) Right of First Refusal on Future Developments 9
(m) Name Change 9
(n) Lease of Office Space 9
(o) Intellectual Property 10
3. Representations and Warranties of Xxxxxxx 10
(a) Organization of Xxxxxxx 10
(b) Authorization of Transaction 10
(c) Noncontravention 10
(d) Brokers' Fees 11
(e) Title to Assets 11
(f) Subsidiaries 11
(g) Financial Statements 11
(h) Events Subsequent to Year End 11
(i) Undisclosed Liabilities 12
(j) Legal Compliance 12
(k) Tax Matters 13
(l) Real Property 13
(m) Intellectual Property 15
(n) Tangible Personal Property 15
(o) Contracts 16
(p) Litigation 16
(q) Employees 16
(r) Employee Benefits 16
(s) Environment, Health, and Safety 17
(t) Third Party Consents 17
(u) Disclosure 17
4. Representations and Warranties of Buyer 17
(a) Organization of Buyer 17
(b) Authorization of Transaction 17
(c) Noncontravention 18
(d) Brokers' Fees 18
5. Pre-Closing Covenants 18
(a) General 18
(b) Notices and Consents 18
(c) Operation of Business 18
(d) Preservation of Business 19
(e) Full Access 19
(f) Notice of Development; Change in Disclosure Schedules 19
(g) Exclusivity 19
(h) Title Reports 20
(i) Surveys 20
(j) Press Releases and Public Announcements 20
6. Conditions to Obligation to Close 20
(a) Conditions to Obligation of Buyer 20
(b) Conditions to Obligation of Xxxxxxx 21
7. Termination 22
(a) Termination of Agreement 22
(b) Effect of Termination 23
8. Post-Closing Covenants 23
(a) General 23
(b) Litigation Support 23
(c) Transition 24
(d) Confidentiality 24
(e) Access to Records 24
(f) Covenant Not to Compete 25
(g) Warranty Work on Recent Deliveries 25
(h) Marketing and Promotional Materials 26
(i) Use of Non-Transerred Assets 26
(j) Land Contracts 26
(k) Madison Employees 26
9. Remedies for Breaches of This Agreement 26
(a) Survival of Representations and Warranties 26
(b) Indemnification Provisions for Benefit of Buyer 26
(c) Indemnification Provisions for Benefit of Xxxxxxx 27
(d) Matters Involving Third Parties 27
(e) Determination of Adverse Consequences 28
(f) Basket and Cap 28
(g) Insurance Coverage 29
(h) Contractor Indemnification 29
10. Miscellaneous 29
(a) No Third-Party Beneficiaries 29
(b) Entire Agreement 29
(c) Succession and Assignment 29
(d) Counterparts 30
(e) Headings 30
(f) Notices 30
(g) Governing Law 30
(h) Amendments and Waivers 30
(i) Severability 31
(j) Expenses 31
(k) Construction 31
(l) Incorporation of Exhibits and Disclosure Schedules 31
(m) Specific Performance 32
(n) Bulk Transfer Laws 32
(o) Dispute Resolution 32
Exhibits
A. Assumption of Liabilities by Buyer
B. Allocation of Purchase Price
C. Third Party Consents
D. Financial Statements
E. Opinion of Counsel for Breland
F. Joint VentureLimited Liability Company Term SheetCentury
Land Company, LLC
G. Lot Option Agreements
H. Opinion of Counsel for Buyer
Disclosure Schedule
Schedule 1A - Land Under Development
Schedule 1B - Inventory of Lots and Houses in Various
Stages of Completion, Work in Process,
Completed Homes, Model Homes
Schedule 2 - Tangible Personal Property
Schedule 3 - Intellectual Property
Schedule 4 - Leases
Schedule 5A - Land Contracts
Schedule 5B - Sales Contracts and Customer Deposits
Schedule 6 - Engineering and Environmental Studies
Schedule 7 - Contracts with Suppliers and Subcontractors
Schedule 8 - Plans, Permits and Budgets for Lots,
Subdivisions, Developments and Houses
Schedule 9 - Other Excluded Assets
Schedule 10 - Other Liabilities and Obligations Assumed
Schedule 11 - Exceptions to Representations and Warranties
Schedule 12 - Warranty Claims
Schedule 13 - Litigation
Schedule 14 - Employee Exceptions
Schedule 15 - Employee Agreements
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") entered
into as of March 24, 1999, by and among WESTMINSTER HOMES OF
ALABAMA, LLC, an Alabama limited liability company ("WHA"),
WESTMINSTER HOMES OF MISSISSIPPI, LLC, a Mississippi limited
liability company ("WHM"), WASHINGTON HOMES, INC., a Maryland
corporation ("WHI"), XXXXXXX HOMES OF MISSISSIPPI, L.L.C., an
Alabama limited liability company ("BHM"), XXXXXXX PROPERTIES,
INC., an Alabama corporation ("BP"), and Xxxxx X. Xxxxxxx
("LWB"). WHA, WHM and WHI are herein referred to collectively as
"Buyer" and BP, BHM, and LWB are herein referred to collectively
as "Xxxxxxx". Buyer and Xxxxxxx are referred to collectively as
the "Parties" and individually as a "Party". References to
Xxxxxxx or Buyer shall be construed as including each of the
Persons individually which constitute Xxxxxxx or Buyer.
WHEREAS, BHM and BP are entities wholly owned by LWB, and
are engaged in the design, construction and sale of single family
homes and the development of land in connection therewith in
Alabama and Mississippi; and
WHEREAS, WHA and WHM have been organized as wholly owned
subsidiaries of WHI for the purpose of entering the homebuilding
business in Alabama and Mississippi; and
WHEREAS, Xxxxxxx wishes to sell its assets and Buyer wishes
to purchase certain assets owned by Xxxxxxx; and
WHEREAS, LWB and WHI are joining in this Agreement for the
purposes, among other things, of providing post-closing
indemnification for the representations, warranties and covenants
contained herein.
NOW, THEREFORE, in consideration of the premises and the
mutual promises made herein, and in consideration of the
representations, warranties, and covenants contained herein, the
Parties agree as follows.
1. Definitions.
"Acquired Assets" means all right, title, and interest in
and to the following assets of Xxxxxxx on the Closing Date: (a)
real property (Schedule 1A of the Disclosure Schedule sets forth
a listing of land under development and Schedule 1B sets forth a
listing of the inventory of lots and houses in various stages
ofthe real property set forth on Schedules 1A and 1B of the
Disclosure Schedule (Schedule 1A sets forth a listing of land
under development and Schedule 1B sets forth a listing of the
inventory of lots and completion, work in process, completed
homes and model homes as of the Effective Date) and any
Improvements, raw materials and supplies, manufactured and
purchased parts in connection therewith; (b) the tangible
personal property (including office furniture, fixtures and
equipment, computer equipment, model home furniture and fixtures,
automobiles, trucks, construction and other equipment) including
any manufacturer's warranties in connection therewith, the major
items of which as of the Effective Date are listed on Schedule 2
of the Disclosure Schedule, (c) the name "Xxxxxxx Homes," the
trade marks and trade names listed on Schedule 3 of the
Disclosure Schedule, (d) leases, as listed on Schedule 4 of the
Disclosure Schedule, and rights thereunder, (e) the contracts and
option agreements for the purchase of lots or land in
development, and deposits in connection therewith (the "Land
Contracts"), which Land Contracts as of the Effective Date are
listed as Schedule 5A and the contracts for the sale of homes,
whether completed or under construction, (the "Sales Contracts")
and any deposits in connection therewith whether held directly or
in trust accounts (the "Customer Deposits"), including all rights
thereunder, (Schedule 5B of the Disclosure Schedule sets forth a
list of Sales Contracts along with the Customer Deposit for each
contract, loan status, and construction status as of the
Effective Date), (f) the engineering and environmental studies
relating to real property sold hereunder, as listed on Schedule 6
of the Disclosure Schedule, (g) lists of and contracts with
suppliers and subcontractors, including those listed on Schedule
7 of the Disclosure Schedule, which are in effect on the
Effective Date, (h) architectural and other plans, permits and
budgets for lots, subdivisions, developments and houses for the
real property listed in Schedule 1A and 1B, (i) to the extent
reflected in the calculation of the Purchase Price, all claims,
deposits, prepayments, refunds, causes of action, causes in
action, rights of recovery, rights of setoff, and rights of
recoupment (excluding any such item relating to the payment of
Taxes) relating to assets sold hereunder, (j) all franchises,
approvals, permits, licenses, orders, registrations,
certificates, and similar rights obtained from governments and
governmental agencies used in connection with any Acquired Asset,
and (k) the books, records, ledgers, files, electronic media
storage, computer software, documents, correspondence, customer
lists, plats, architectural plans, drawings, and specifications,
creative materials, advertising, promotional and marketing
materials, studies, reports, and other printed or written
materials in connection with the Acquired Assets; (l) cash and
cash equivalents (including restricted cash and Customer
Deposits)., (m) all rights of Xxxxxxx under all employee
agreements between employees and Xxxxxxx, Madison or BH as
listedhouses in various stages of completion, work in process,
completed homes and model homes as of the Effective Date) and any
Improvements, raw materials and supplies, manufactured and
purchased parts in connection therewith; (b) the tangible
personal property (including office furniture, fixtures and
equipment, computer equipment, model home furniture and fixtures,
automobiles, trucks, construction and other equipment) including
any manufacturer's warranties in connection therewith, the major
items of which as of the Effective Date are listed on Schedule 2
of the Disclosure Schedule; (c) the name "Xxxxxxx Homes," the
trade marks, trade names and copyrighted material listed on
Schedule 3 of the Disclosure Schedule; (d) leases, as listed on
Schedule 4 of the Disclosure Schedule, and rights thereunder; (e)
the contracts and option agreements for the purchase of lots or
land in development, and deposits in connection therewith (the
"Land Contracts"), which Land Contracts as of the Effective Date
are listed on Schedule 5A and the contracts for the sale of
homes, whether completed or under construction (the "Sales
Contracts") including all rights thereunder, (Schedule 5B of the
Disclosure Schedule sets forth a list of Sales Contracts along
with the Customer Deposit for each contract, loan status, and
construction status as of the Effective Date); (f) all
engineering and environmental studies relating to real property
sold hereunder, as listed on Schedule 6 of the Disclosure
Schedule; (g) lists of and contracts with suppliers and
subcontractors, including those listed on Schedule 7 of the
Disclosure Schedule, which are in effect on the Effective Date;
(h) architectural and other plans, permits and budgets for lots,
subdivisions, developments and houses for the real property
listed in Schedule 1A and 1B; (i) to the extent reflected in the
calculation of the Purchase Price, all claims, deposits,
prepayments, employee receivables, escrows, refunds, causes of
action, causes in action, rights of recovery, rights of setoff,
and rights of recoupment (excluding any such item relating to the
payment of Taxes) relating to assets sold or conveyed hereunder;
(j) to the extent transferable, all franchises, approvals,
permits, licenses, orders, registrations, certificates, and
similar rights obtained from governments and governmental
agencies used in connection with any Acquired Asset; (k) the
books, records, ledgers, files, electronic media storage,
computer software, documents, correspondence, customer lists,
plats, architectural plans, drawings, and specifications,
creative materials, advertising, promotional and marketing
materials, studies, reports, Intellectual Property and other
printed or written materials in connection with the Acquired
Assets; and (l) all rights of Xxxxxxx under all employee
agreements between employees and Xxxxxxx, Madison on Schedule 15
(the "Employment Agreements") and (n) all equity ownership
interest in Xxxxxxx Realty Inc., an Alabama corporation.or BHI as
listed on Schedule 15 (the "Employment Agreements"). The
foregoing notwithstanding, the Acquired Assets shall not include
the Excluded Assets, as hereinafter defined.
"Adverse Consequences" means all actions, suits,
proceedings, hearings, investigations, charges, complaints,
claims, demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, fines, costs, amounts paid in
settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and attorneys' fees and
expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations under the Securities Exchange Act of 1934.
"Assumed Liabilities" means liabilities of Xxxxxxx as of the
Closing Date as follows: (a) liabilities and obligations of
Xxxxxxx as listed on Schedule 10 including accounts payable,
construction debt, land acquisition and development debt, (b) all
obligations of Xxxxxxx under the Sales Contracts (including
obligations to real estate brokers in connection therewith), and
under the Land Contracts (the Sales Contracts as of the Effective
Date are listed on Schedule 5A and the Land Contracts as of the
Effective Date are listed on Schedule 5B), (c) obligations under
leases (which as of the Effective Date are listed on Schedule 4),
(d) the obligation to perform warranty work for customers who
purchased homes from Xxxxxxx prior to the Effective Date but only
to the extent set forth in section 8(g) and the obligation to
perform warranty work for customers who purchased homes after the
Effective Date, provided, however, that the Assumed Liabilities
shall not include (i) any Liability of Xxxxxxx for income,
transfer, sales, use, and other Taxes whether or not arising in
connection with the consummation of the transactions contemplated
hereby (including any income Taxes arising because Xxxxxxx is
transferring the Acquired Assets), (ii) any Liability of Xxxxxxx
for the unpaid Taxes of any Person, as a transferee or successor,
by contract, or otherwise, (iii) any obligation of Xxxxxxx to
indemnify any Person, unless contained in a contract assumed,
(iv) any Liability of Xxxxxxx for costs and expenses incurred in
connection with this Agreement and the transactions contemplated
hereby, (v) any Liability or obligation of Xxxxxxx under this
Agreement, or (vi) any Liability or obligation to any current or
former employees of Xxxxxxx to provide such persons with
employment or in connection with any Employee Benefit Plan.
"BHI" means Xxxxxxx Homes, Inc., an Alabama corporation
wholly owned by LWB.
"BHM" has the meaning set forth in the preface above.
"BP" has the meaning set forth in the preface above.
"Xxxxxxx" has the meaning set forth in the preface above.
"Buyer" has the meaning set forth in the preface above.
"Closing" has the meaning set forth in section 2(e) below.
"Closing Date" has the meaning set forth in section 2(e)
below.
"Confidential Information" means any business or technical
information used exclusively by Xxxxxxx and which has economic
value to Xxxxxxx because it has been deliberately maintained as
confidential by Xxxxxxx. Confidential Information shall not
include general business or technical information of Xxxxxxx,
even ifto the extent such information hasnot become generally
available to the public.
"Customer Deposits" means any deposit held by Xxxxxxx in
connection with a Sales Contract whether held directly or in a
trust account.
"Disclosure Schedule" means the compilation of Schedules
described in this Agreement, which shall be certified by Xxxxxxx
to be true and correct as of the date of execution of this
Agreement and at Closing.
"Effective Date" means December 31, 1998.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an
Employee Pension Benefit Plan, (b) qualified defined contribution
retirement plan or arrangement which is an Employee Pension
Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including
any Multiemployer Plan), (d) Employee Welfare Benefit Plan or (e)
any other material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in
ERISA Sec. 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in
ERISA Sec. 3(1).
"Environmental, Health, and Safety Laws" means the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Resource Conservation and Recovery Act of 1976,
and the Occupational Safety and Health Act of 1970, each as
amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof)
concerning pollution or protection of the environment, public
health and safety, or employee health and safety, including laws
and regulations relating to (i) emissions, discharges, releases,
or threatened releases of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or wastes into ambient
air, surface water, ground water, or lands or (ii) otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of
pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes, or (iii) laws and regulations relating
to the development of land, such as, storm water management,
erosion and sediment control, and use of wetlands.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Excluded Assets" means (i) assets listed on Schedule 9
including notes receivable from affiliates and mortgage and note
receivable and a small aircraft owned by Xxxxxxx, (ii) cash and
cash equivalents (including restricted cash and Customer
Deposits), (iii) the corporate stock, membership interests and
organizational documents of BP, and BHM, their qualifications to
conduct business as a foreign corporation, taxpayer and other
identification numbers, seals, minute books, stock transfer
books, blank stock certificates, tax returns and other documents
relating to the organization, maintenance, and existence of BP
and BHM, (iv) any of the rights of Xxxxxxx under this Agreement,
and (v) any rights in or assets of the Employee Benefit Plans of
Xxxxxxx.
Xxxxxxx, (vi) any licenses or permits which are not transferable,
and (vii) Xxxxxxx'x insurance policies, but not including title
insurance to be provided to Buyer at Closing.
"Extremely Hazardous Substance" has the meaning set forth in
Sec. 302 of the Emergency Planning and Community Right-to-Know
Act of 1986, as amended.
"Final Disclosure Schedule" has the meaning set forth in
section 5(f)(iii) and which shall be certified by Xxxxxxx to be
true and correct as of the Closing Date.
"Final Purchase Price" has the meaning set forth in section
2(d)(iv).
"Financial Statements" has the meaning set forth in section
3(g) below.
"Improvements" means individually and collectively
buildings, improvements, structures fixtures, raw materials and
supplies and other personal property owned by Xxxxxxx and used in
connection with the real property sold hereunder.
"Indemnified Party" has the meaning set forth in section
9(d) herein.
"Indemnifying Party" has the meaning set forth in section
9(d) herein.
"Intellectual Property" means the following developed
byowned or licensed to and used by Xxxxxxx: (a) all trademarks,
service marks, trade dress, logos, trade names, and corporate or
company names of Xxxxxxx, together with all translations,
adaptations, derivations, and combinations thereof and including
all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (b) all
copyrightable works of Xxxxxxx, all copyrights of Xxxxxxx, and
all applications, registrations, and renewals of Xxxxxxx in
connection therewith, (c) all trade secrets and confidential
business information of Xxxxxxx (including ideas, research and
development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing
and cost information, and business and marketing plans and
proposals), (f)(d) all computer software of Xxxxxxx (including
data and related documentation), and (g)(e) all copies and
tangible embodiments thereof (in whatever form or medium).
"Knowledge" or "Xxxxxxx'x Knowledge" means the actual
knowledge of LWB or his knowledge of facts which upon reasonable
inquiry would lead to actual knowledge.
"Land Contracts" has the meaning set forth in this 1 under
the definition of "Acquired Assets".
"Liability" means any liability (whether known or unknown,
asserted or unasserted, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated, and whether due or to
become due), including any liability for Taxes.
"LWB" has the meaning set forth in the preface above.
"Madison" means Madison Homes Holding Company, L.L.C., an
Alabama limited liability company, and its subsidiaries, all
wholly ownedof which are controlled by LWB and its subsidiaries.
"Multiemployer Plan" has the meaning set forth in ERISA Sec.
3(37).
"Operational Adjustment" means the net result obtained by
adjusting the amount of all"Net Worth" means the amount
determined by deducting the book value of Assumed Liabilities and
Acquired Assets to reflect differences between the Effective Date
and the Closing Date.from the book value of Acquired Assets.
"Ordinary Course of Business" means the ordinary course of
business for Xxxxxxx consistent with past custom and practice
(including with respect to quantity and frequency).
"Other Agreements" means (a)Agreement" means the Asset
Purchase Agreement of even date with this Agreement between Buyer
and BHIand LWB and (b) the Agreement of even date herewith
between Buyer and LWB.
"Parties or Party" has the meaning set forth in the preface
above.
"Person" means an individual, a partnership, a corporation,
a limited liability company, an association, a joint stock
company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department,
agency, or political subdivision thereof).
"Permitted Exceptions" means (a) mechanics', carriers',
workers', repairers' and other similar liens arising or incurred
in the Ordinary Course of Business relating to obligations as to
which there is no default on the part of Xxxxxxx or its
subcontractors; (b) all liens for Taxes both general and special,
and other governmental charges which are not due and payable as
of the Closing; (c) all easements, rights-of-way, covenants,
conditions, restrictions, reservations, licenses, agreements and
other matters of record on the Effective Date; (d) all electric
power, telephone, gas, sanitary sewer, storm sewer, water and
other utility lines, pipelines, service lines and facilities of
any nature now located on, over or under the Acquired Assets, and
all licenses, easements, rights-of-way and other agreements
relating thereto but, with respect to the Acquired Assets, only
to the extent that such matters do not adversely affect, except
in insubstantial ways, Buyer's ability to use the Acquired Assets
in its business, for the purposes for which they were intended to
be used; (e) all exiting public and private roads and streets
(whether dedicated or undedicated) and all railroad lines and
rights-of-way affecting the Acquired Assets.
"Purchase Price" has the meaning set forth in section 2(d)
below.
"Right of First Refusal" means the right of Buyer (a) to be
offered building lots prior to their being offered to any other
Person and (b) the right for a 30 day period after written notice
to be offered lots on the same terms (including financing) as
would be available pursuant to a bonafide offer from an
independent third party. These rights shall not apply to the
offer and sale of individual residentialindividual lots to
customers.
"Sales Contracts" was the meaning set forth in this section
1 under the definition of "Acquired Assets".
"Security Interest" means any mortgage, pledge, deed of
trust, lien, encumbrance, charge, or other security interest,
other than (a) mechanic's, materialmen's, and similar liens, and
(b) liens for Taxes not yet due and payable or for Taxes that the
taxpayer is contesting in good faith through appropriate
proceedings.
"Subsidiary" means any corporation, limited liability
company or partnership with respect to which a specified Person
(or a Subsidiary thereof) owns a majority of the common stock or
has the power to vote or direct the voting of sufficient
securities to elect a majority of the directors.
"Survey" has the meaning set forth in 7(i)section 5(i)
below.
"Tax" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental,
customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration,
value added, alternative or add-on minimum, estimated, or other
tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim
for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any
amendment thereof.
"Title Reports" has the meaning set forth in section 5(h).
"Third Party Claim" has the meaning set forth in section
9(d) herein.
"WHA" has the meaning set forth in the preface above.
"WHI" has the meaning set forth in the preface above.
"WHM" has the meaning set forth in the preface above.
2. Basic Transaction.
(a) Purchase and Sale of Assets. On and subject to the
terms and conditions of this Agreement, Buyer agrees to purchase
from Xxxxxxx, and Xxxxxxx agrees to sell, transfer, convey, and
deliver to Buyer, all of the Acquired Assets at the Closing for
the consideration specified below in this 2.
section 2. Buyer shall specify prior to Closing, which assets
will be purchased by each of the entities constituting the Buyer.
(b) Assumption of Liabilities. On and subject to the
terms and conditions of this Agreement, Buyer agrees to assume
and become responsible for all of the Assumed Liabilities at the
Closing. Buyer will not assume or have any responsibility,
however, with respect to any other obligation or Liability of
Xxxxxxx not included within the definition of Assumed
Liabilities. At the Closing, Xxxxxxx will be released from any
further liability on the Assumed Liabilities, except as otherwise
provided herein.
(c) Contracts. On and subject to the terms and conditions
of this Agreement, the Parties agree to enter into, or, to the
extent within the power of the Parties, cause the appropriate
entities to enter into, the Lot Option Agreements as listed and
outlined on Exhibit G at the Closing in the form agreed to by the
Parties and the appropriate entities, as applicable.
(d) Purchase Price. (i) Buyer agrees to pay to Xxxxxxx a
net purchase price (the "Purchase Price") which shall reflect the
assumption of the Assumed Liabilities but which shall be an
amount which is calculated as[$2,200,000] plus the difference
between (A) the depreciated book value of the Acquired Assets as
of the Closing Date, and (B) the book value of the Assumed
Liabilities as of the Closing(A) $2,700,000$3,000,000 plus (B)
the Net Worth of BHM and BP as of the Effective Date. The
Purchase Price will be adjusted to the Closing Date as set forth
in section 2(d)(iv) below to determine the final Purchase Price.
(ii) An estimate of the Purchase Price (the "Estimated
Purchase Price") has been determined to be $3,884,745$4,689,787
based upon the unaudited books and records of BHM and BP as of
December 31, 1998. This Estimated Purchase Price will be
adjusted for any changes resulting from an audit by independent
public accountants of the books and records of Xxxxxxx, which
will be completed prior to Closing.
Closing. (iii) Prior to or at Closing, Xxxxxxx
will inform Buyer of its best good faith estimate of the
Operational Adjustment. On the Closing Date, Buyer will transfer
by wire in immediately available funds for the account of
Breland80%If, as a result of the changes resulting from such
audit the combined Purchase Price under this and the otherOther
Agreement changes by more than $500,000 from the Estimated
Purchase Price, plus the estimated Operational Adjustment if it
isthen either Buyer or Xxxxxxx may cancel this Agreement prior to
Closing by notice to the other a positive number or less the
estimated Operational Adjustment if it is a negative
xxxxxx.Xxxxx.
(iii) On the Closing Date, Buyer will transfer by wire
in immediately available funds for the account of Xxxxxxx 90% of
the Estimated Purchase Price.
(iv) On the Closing Date, Xxxxxxx will be required to
have a Net Worth equal to its Net Worth as of the Effective Date
plus the amount of net income earned by BHM and BP subsequent to
December 31, 1998 less income or other applicable taxes payable
on such net income of BHM and BP. To the extent Net Worth at
Closing is determined to be below that amount,the amount
determined in accordance with the previous sentence, the Purchase
Price will be adjusted lower in an amount equal to the amount of
such shortfall of Net Worth which will determine the finalFinal
Purchase Price. In order to determine the Net Worth of BHM and
BP at Closing and the Final Purchase Price, following the
Closing. Closing, _____________________,XxXxxxx, Xxxxx and
Associates, the independent public accountants for Xxxxxxx, will
certify to Buyer its determination of the final Purchase Price
and Operational Adjustment based upon financial statementsNet
Worth of BHM and BP as of theEffective Date, which have been
certified by independent public accountants,Closing, and the Vice
President of Finance of WHI will certify to Xxxxxxx itsfinal
determination of such Net the Purchase Price and Operational
Adjustment which shall be madeWorth in consultation with Deloitte
& Touche. To the extent there are differences, they will be
promptly submitted and resolved by Ernst & Young, an independent
"Big Five" public accounting firm not affiliated with any
Party.Young whose fees shall be split evenly between the Parties.
(e) The Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place
at the offices of Xxxxxxx in Madison, Alabama, commencing at 9:00
a.m. local time on the later of April 13, 1999 or the fifth
business day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the
transactions contemplated hereby (other than conditions with
respect to actions the respective Parties will take at the
Closing itself) or such other date as the Parties may mutually
determine (the "Closing Date"); provided, however, that the
Closing Date shall not be later than May 15, 1999.
(f) Deliveries at the Closing. At the Closing, (i)
Xxxxxxx will deliver to Buyer the various certificates,
instruments, and documents specified in section 6(a) herein; (ii)
Buyer will deliver to Xxxxxxx the various certificates,
instruments, and documents specified in section 6(b) herein;
(iii) Xxxxxxx will deliver to Buyer and record among land and
other records, as necessary, good and sufficient general warranty
deeds, assignments, certificates of title and bills of sale so as
to transfer or assign all of Xxxxxxx'x right, title toand
interest in the Acquired Assets to Buyer and such further
instruments of sale, transfer, conveyance, and assignment as
Buyer and its counsel may reasonably request, all in such form as
they shall reasonably approve and all at the sole cost and
expense of Xxxxxxx; (iv) Buyer will execute and deliver to
Xxxxxxx an assumption in the form attached hereto as Exhibit A
and such other instruments of assumption as Xxxxxxx and its
counsel may reasonably request; (v) Buyer will deliver to Xxxxxxx
by wire transfer in immediately available funds 90% of the
Estimated Purchase Price; and (vi) Buyer shall receive possession
and control of all other Acquired Assets.
(g) Prorations. At Closing, real property taxes, personal
property taxes, rent and utilities will be prorated between Buyer
and Xxxxxxx as of the ClosingEffective Date in the manner
customarily used in real estate transactions in the jurisdictions
where the properties are located.
(h) Second Closing. A second closing shall occur at such
time as the finalFinal Purchase Price has been determined. Buyer
shall deliver to Xxxxxxx by wire transfer in immediately
available funds the balance of the Final Purchase Price plus
interest at the rate of 6% per annum on any amount owing over 30
days from the Closing Date commencing 30 days following the
Closing Date. If the Final Purchase Price is determined to be
lower than the funds previously remitted to Xxxxxxx pursuant to
section 2(d)(iii), Xxxxxxx will refund the difference to Buyer at
the secondClosing.
InClosing. In the event pursuant to 2(c)section 2(d)
there are differences between Xxxxxxx and Buyer'sfinal
determination of the Final Purchase Price, Buyer will pay (by
wire transfer of immediately available funds) all undisputed
amounts, and only amounts in dispute will be submitted to Ernst &
Young for determination.
(i) Allocation. The consideration for the Acquired Assets
shall be allocated by the Parties pursuant to Exhibit B attached
hereto. Such allocation and the form of the transaction as set
forth in this Agreement and the other documents and agreements
referred to in this Agreement shall be used for preparation and
filing of Internal Revenue Service Form 8594 with respect to the
transaction contemplated hereby, and no Party hereto shall take
or assert any position inconsistent therewith. Prior to the
Closing, the Parties shall cooperate in connection with the
preparation, execution and filing with the Internal Revenue
Service of all necessary information returns required by Section
1060 of the Internal Revenue Code of 1986, as amended, relating
to the allocation of the consideration for the Acquired Assets.
(j) Employees. At the time of Closing, Buyer may, but
shall be under no obligation to, provide employment to employees
of Xxxxxxx and establish arrangements with independent
contractors who serve as sales representatives. Buyer shall have
no obligation to employees or former employees of Xxxxxxx and
shall not adopt or become liable for any obligation under any
Employee Benefit Plan of Xxxxxxx. At the time of Closing,
Xxxxxxx shall and LWB shall cause BHI and Madison to assign to
Buyer all interest in the Employee Agreements listed on Schedule
15.
(k) Land Development Joint Xxxxxxx.Xxxxxxx Liability
Xxxxxxx.Xxxxxxx For a period of five (5) years following the
Closing, LWB shall conduct all land development activities (with
only specified exceptions) for residential building lots through
a joint venture to be formed with WHI,limited liability company,
50% owned by LWB and 50% owned by WHI or its Affiliate,
tentatively named Century Land Company, L.L.C. ("Century"), which
shall be organized and operated in accordance with Exhibit H.F.
(l) Right of First Refusal on Future
Developments.Developments For a period of five (5) years
following the Closing or within a reasonable time thereafter,
Buyer is hereby granted a Right of First Refusal to purchase all
residential building lots developed by LWB and his
affiliates.Affiliates.
(m) Name Change. (m) Name Change BHM and BP shall at the
time of Closing or within a reasonable time thereafter, change
their names to no longer use the name "Xxxxxxx" or a similar
name.
(n) Lease of Office Xxxxx.Xxxxx At the time of Closing,
Buyer shall have the right to lease a portion of office space
sufficient for the conduct of its business from Xxxxxxx on a
month to monthnet net basis at the rate of $_____ten dollars
($10) per square foot per year in the building located at 000
Xxxxxxxx Xxxxx Xxxxxxxxx, Xxxxxxx Xxxxxxx.
Madison, Alabama. Such lease shall be cancelable on 30 days
advance notice.
(o) Intellectual Property At the time of Closing, LWB shall
cause Madison to license on an exclusive or nonexclusive basis as
indicated on Schedule 3 certain Intellectual Property owned by
Madison and BHI and Madison shall cancel the Licensing Agreement
between them for use of such property.
3. Representations and Warranties of Xxxxxxx. BP, BHM and LWB
jointly and severally represent and warrant to Buyer that the
statements contained in this section 3 are true and correct as of
the date of this Agreement and will be true and correct as of the
Closing Date as though then made and as though the Closing Date
were substituted for the Effective Date throughout this section
3, except as set forth in Schedule 11 to the Disclosure Schedule
accompanying this Agreement.
(a) Organization of Xxxxxxx. BP is a corporation, and BHM
is a limited liability company, both of which are duly organized,
validly existing, and in good standing under the laws of Alabama.
BHM is duly authorized to operate in the state of Mississippi as
a foreign limited liability company. BP is wholly-owned by LWB
and BHM is wholly owned by LWB and LWB as custodian for his minor
child and no other person owns or holds any equity interest in or
rights to acquire any equity interest in BP or BHM. LWB is an
individual, resident in the state of Alabama.
(b) Authorization of Transaction. BP, BHM, and LWB have
full power and authority to execute and deliver this Agreement,
and to perform their respective obligations hereunder and to own
or lease their respective properties as now owned or leased and
conduct their businesses as now being conducted. Without
limiting the generality of the foregoing, the board of directors
and stockholders of BP, and the members of BHM have approved and
all other necessary corporate or company action has been taken to
authorize the execution, delivery, and performance of this
Agreement by BP and BHM respectively. This Agreement constitutes
the legal, valid and binding obligation of BP, BHM and LWB,
enforceable in accordance with its terms and conditions except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors'
rights generally and by judicial application of general equitable
principles.
(c) Noncontravention. Subject to obtaining the consents
listed on Exhibit C, and subject to any restriction on the
transfer of licenses and permits, neither the execution and
delivery of this Agreement nor the consummation of the
transactions contemplated hereby including the assignments,
transfers and assumptions, referred to in section 2 above, will
(i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to
which BP, BHM or LWB is subject or any provision of the charter
or bylaws of BP or the organizational documents and operating
agreement of BHM or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under any agreement, contract,
lease, license, instrument, or other arrangement to which any of
BP, BHM or LWB is a party or by which any of them is bound or to
which any of their assets (including the Acquired Assets) is
subject or result in the imposition of any Security Interest upon
any of their assets (including the Acquired Assets). None of BP,
BHM or LWB is required to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to
consummate in any material respect the transactions contemplated
by this Agreement (including the assignments, transfer and
assumptions referred to in section 2 above) except for filings
among the various land records to transfer the real property sold
hereunder, and transfer of the titles of vehicles sold hereunder,
all as contemplated by this Agreement.
(d) Brokers' Fees. Xxxxxxx has no Liability or obligation
to pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this Agreement
for which Buyer could become liable or obligated. The foregoing
is not intended to cover obligations to real estate brokers under
the Sales Contracts, which obligations shall be assumed by Buyer.
(e) Title to Assets. Subject to the Permitted Exceptions
and any restriction on the transfer of licenses and permits, and
except as disclosed in the Title Reports, Xxxxxxx has good and
marketable title to, valid license to use, or a valid leasehold
interest in, the properties and assets that constitute the
Acquired Assets, free and clear of all Security Interests or
restrictions on transfer.
(f) Subsidiaries. BP and BHM have no Subsidiaries.
BrelandBP and BHM do not own or control directly or indirectly or
have any direct or indirect capital stock ownership or equity
participation in any corporation, partnership, trust, joint
venture or other business association.
(g) Financial Statements. Attached hereto as Exhibit D are
the unaudited balance sheets of BHI, BP and BHM on a combined and
combining basis at December 31, 1998 (collectively the "Financial
Statements"): auditedwhich have been prepared in accordance with
generally accepted accounting principles, and as adjusted, to
exclude assets which are not Acquired Assets and to exclude
liabilities which are not Assumed Liabilities. The Financial
StatementsPrior to the Closing, Xxxxxxx will provide financial
statements for BHI, BP and BHM in a combined and combining basis
and which shall include a balance sheet, statement of income,
changes in stockholders' equity and cash flow at and for the year
ended December 31, 1998 (including the notes thereto) which shall
be audited and certified by an independent public
accountantDeloitte & Touche LLP to be correct and complete in all
material respects and present fairly the financial condition of
BHI, BP and BHM as of such dates and the results of operations of
BP and BHM for such periods, and have been prepared in accordance
with generally accepted accounting principles and are consistent
with the books and records of BHI, Xxxxxxx.
BP and BHM and as adjusted in the manner set forth in the first
sentence of this paragraph (the "Financial Statements"). The
audited financial statements as provided by Xxxxxxx shall replace
the unaudited financial statements for all purposes of this
Agreement including the calculation of the Purchase Price in
section 2(d)(ii).
(h) Events Subsequent tofiscal Year End. Since December
31, 1998, there has not been any material adverse change in the
business, financial condition, operations, results of operations,
or to Xxxxxxx'x Knowledge the future prospects of BP and BHM.
Without limiting the generality of the foregoing, since that
date:
(i) Xxxxxxx, has not sold, leased, transferred, or
assigned any of its assets, tangible or intangible, other than
for a fair consideration in the Ordinary Course of Business;
(ii) No party has, in any material way, accelerated,
terminated, modified, or cancelled any material agreement,
contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) to which BP or BHM is a party or
by which it is bound except for changes, modifications and
cancellations of Sales Contracts and other agreements in the
Ordinary Course of Business;
(iii) Neither BP nor BHM has imposed or permitted to
exist any Security Interest upon any of its assets, tangible or
intangible;
(iv) Neither BP nor BHM has experienced any material
damage, destruction, or loss (whether or not covered by
insurance) to its property; and
(v) There has not been any other material occurrence,
event, incident, action, failure to act, or transaction outside
the Ordinary Course of Business involving Xxxxxxx.
(vi) PaidNeither BP nor BHM has paid or declared any
dividend, redeemed any capital stock or membership interest, or
made any distribution to its shareholders or holders of any
membership interest.
(vii) EngagedNeither BP nor BHM has engaged in any
transaction with any Affiliate of Xxxxxxx.
(viii) Neither BP nor BHM has paid any bonus or made
similar compensation payments which were not accrued for prior to
the Effective Date, or adjusted any salary to a rate greater than
that paid prior to the Effective Date.
(i) Undisclosed Liabilities. Xxxxxxx does not have any
Liability (and to its Knowledge there is no basis for any present
or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand against Xxxxxxx giving rise
to any Liability) which would affect the Acquired Assets, except
for (i) Liabilities set forth in the Financial Statements
(including any notes thereto) and (ii) Liabilities which have
arisen after the Effective Date in the Ordinary Course of
Business (none of which results from, arises out of, relates to,
is in the nature of, or was caused by any breach of contract,
breach of warranty, tort, infringement, or violation of law) and
except on Schedule 11.
(j) Legal Compliance. Xxxxxxx, to its Knowledge,, has
complied in all material respects with all applicable laws
(including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, and local governments (and all agencies thereof),
and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced
against it alleging any failure so to comply which would
materially and adversely affect Buyer, Xxxxxxx, the Acquired
Assets or the Assumed Liabilities.
(k) Tax Matters. Xxxxxxx has filed with the appropriate
governmental agencies all required Tax Returns and paid all
amounts required to have been shown thereon. There is no Tax,
which has not or will not be paid by Xxxxxxx or its Affiliates
whichas a result of, could give rise to any Liability which would
affect the Acquired Assets or which could otherwise be imposed
upon Buyer.
(l) Real Property.
(i) Schedules 1A and 1B of the Disclosure Schedule (and
as updated by the Final Disclosure Schedule) lists and describes
briefly all real property and Improvements that Xxxxxxx
owns.being conveyed to Buyer. With respect to each parcel of
owned real property which constitutes part of the Acquired
Assets, except as specifically set forth on the Disclosure
Schedule or disclosed in the Title Reports:
(A) Xxxxxxx has good and marketable title to the
parcel of real property, free and clear of any Security Interest,
easement, covenant, or other restriction, except for the
Permitted Exceptions and except for security interestsSecurity
Interests relating to debt which will be paid off at Closing or
is an Assumed Liability;
(B) there are no pending, or to its Knowledge,
threatened condemnation proceedings, lawsuits, or administrative
actions relating to the property or other matters adversely
affecting the current use, occupancy, or value thereof;
(C) the legal description for the parcel contained
in the deed delivered at Closing and Title Report therefor
describes such parcel fully and adequately, the buildings and
Improvements thereon are located within the boundary lines of the
described parcels of land, are not in violation of any applicable
setback requirements, zoning laws, and ordinancesrequirement,
zoning law, or ordinance and none of the properties or buildings
or improvements thereon are subject to "permitted non-conforming
use" or "permitted non-conforming structure" classifications, and
do not encroach on any easement which may burden the land, and
the land does not serve any adjoining property for any purpose
inconsistent with the use of the land, and the property is not
located within any flood plain or subject to any similar type
restriction for which any permits or licenses necessary to the
use thereof have not been obtained;
(D) Xxxxxxx has received or applied for all
material approvals of governmental authorities including such
licenses and permits as are required at the stage of development
of the particular parcel and such parcel has been operated and
maintained in accordance with applicable laws, rules, and
regulations;
(E) there are no leases, subleases, licenses,
concessions, or other agreements, written or oral, granting to
any party or parties the right of use or occupancy of any portion
of the parcel of real property;
(F) there are no outstanding options or rights of
first refusal to purchase the parcel of real property, or any
portion thereof or interest therein;
(G) there are no parties, other than Xxxxxxx, in
possession of the parcel of real property;
(H) all subdivisions or communities under
development are or can be supplied with utilities including,
electricity, water, telephone, sanitary sewer or septic tank (in
conformity with Health Department regulations), and storm sewer,
and other services necessary for the operation of such
communities, including, to the extent generally available in such
area, gas, cable television, all of which services are adequate
in accordance with all applicable laws, ordinances, rules, and
regulations and are provided via public roads or via permanent,
irrevocable, appurtenant easements benefiting the parcel of real
property;
(I) each parcel of developed real property abuts
on and has direct vehicular access to a public road, or has
access to a public road via a permanent, irrevocable, appurtenant
easement benefiting the parcel of real property, and access to
the property is provided by paved public right-of-way;
(J) all Improvements have been constructed in a
workmanlike fashion, capable of passing inspection by appropriate
authorities and with respect to completed homes, capable of being
warranted to home purchasers under the homebuilding warranties
offered by Xxxxxxx;
(K) all material obligations of Xxxxxxx to
homeowner associations required by law or by covenant have been
complied with;
(L) all payment and performance bonds or
guaranties issued at the request of any party including but not
limited to any state, federal or municipal authority for purposes
of bonding any on-site or off-site work in connection with the
construction of residential structures have been obtained; and
(M) to Xxxxxxx'x Knowledge all lots are buildable
in the Ordinary Course of Business, without extraordinary cost.
(N) no moritoriammoratorium is in effect and there
has been no loss of zoning or imposition of impact fees with
respect to any land parcel.
(ii) Schedule 4 of the Disclosure Schedule lists and
describes briefly all leases with Xxxxxxx. Xxxxxxx has made
available to Buyer correct and complete copies of such leases as
amended to the date. With respect to each lease listed:
(A) the lease is legal, valid, binding,
enforceable, and in full force and effect and, subject to
obtaining any required consents to assignment, will continue to
be so following assignment and transfer to Buyer;
(B) Xxxxxxx is not and to its Knowledge no other
party is in breach or default, and, to its Knowledge, no event
has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination,
modification, or acceleration under such lease;
(C) Xxxxxxx has not and to its Knowledge no other
party to the lease has repudiated any provision thereof;
(D) to Xxxxxxx'x Knowledge there are no disputes,
oral agreements, or forbearance programs in effect as to such
lease;
(E) Xxxxxxx has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest
in the leasehold; and
(F) to Xxxxxxx'x Knowledge, all facilities leased
thereunder have received all approvals of governmental
authorities (including licenses and permits) required in
connection with the operation thereof and have been operated and
maintained in accordance with applicable laws, rules, and
regulations and all facilities leased thereunder are supplied
with utilities and other services necessary for the operation of
said facilities.
(m) Intellectual Property.
(i) Xxxxxxx or Madison owns or has a valid license to
use all Intellectual Property listed on Schedule 3 which
constitutes all Intellectual Property used in the operation of
the businesses of BP and BHM as presently conducted.
(ii) With respect to each item of Intellectual Property
listed on Schedule 3 of the Disclosure Schedule:
(A) Xxxxxxx or Madison possesses all right, title,
and interest in andor has a valid license to use the item, free
and clear of any Security Interest, license, or other
restriction;
(B) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
(C) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or
to Xxxxxxx'x Knowledge is threatened which challenges the
legality, validity, enforceability, use, or ownership of the
item; and
(D) Xxxxxxx has never agreed to indemnify any Person
for or against any interference, infringement, misappropriation,
or other conflict with respect to the item.
(n) Tangible Personal Property. Schedule 2 of the
Disclosure Schedule lists as of the Effective Date the major
items of office furniture, fixtures and equipment, computer
equipment, model home furniture and fixtures, automobiles,
trucks, construction and other equipment used in the conduct of
the business of BP and BHM as presently conducted. Each item of
personal property listed is conveyed to Buyer in reasonably good
operating"as is" condition(subject to normal wear and tear),.
(o) Contracts. Schedules 5A, 5B, 7 and 15 of the
Disclosure Schedule lists and as updated by the Final Disclosure
Schedule, will list the contracts and other agreements to which
Xxxxxxx is a party and which will be assumed by Buyer. Other
than as listed in such schedules there are no agreements
necessary or desirable for the operation of BP and BHM which are
not being assigned to and assumed by Buyer. Xxxxxxx has made
available to Buyer a correct and complete copy of each Land
Contract and Sales Contract and a written summary setting forth
the terms and conditions of each oral agreement referred to in
Schedules 5A and 5B of the Disclosure Schedule. With respect to
each Land Contract and Sales Contract which is an Acquired Asset:
(A) the agreement is legal, valid, binding, enforceable, and in
full force and effect; (B) subject to obtaining any required
consents to assignment as listed on Exhibit C, the agreement will
continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of
the transactions contemplated hereby (including the assignments
and assumptions referred to in section 2 above) and is fully
assignable by Xxxxxxx to Buyer; (C) no party is in material
breach or default, and no event has occurred which with notice or
lapse of time would constitute a material breach or default, or
permit termination, modification, or acceleration, under the
agreement; (D) no party has repudiated any provision of the
agreement and (E) there has been no moritoriam,moratorium, loss
of zoning or imposition of impact fees with respect to any parcel
which is subject of a Land Contract.
(p) Litigation. Schedule 13 sets forth each instance in
which Xxxxxxx (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party or,
is to its Knowledge threatened to be made a party to any action,
suit, proceeding, hearing, or investigation of, in, or before any
court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator.
None of the actions, suits, proceedings, hearings, and
investigations described could result in any material adverse
change in the business, financial condition, operations, results
of operations, or, to its Knowledge, future prospects of Xxxxxxx.
Xxxxxxx has no reason to believe that any such action, suit,
proceeding, hearing, or investigation may be brought or
threatened against Buyer.
(q) Employees. Other than as set forth on Schedule 14, to
its Knowledge no executive, key employee, or group of employees
has any plans to terminate employment with BP or BHM and no sales
representative who is an independent contractor plans to
terminate its relationship with BP or BHM. Xxxxxxx is not a
party to or bound by any collective bargaining agreement, has not
experienced any strikes, grievances, claims of unfair labor
practices, or other collective bargaining disputes. Xxxxxxx has
not committed any unfair labor practice. To Xxxxxxx'x Knowledge,
no organizational efforts are presently being made or threatened
by or on behalf of any labor union with respect to employees of
Xxxxxxx. Schedule 15 of the Disclosure Schedule lists all
employees of BP, BHM and BHI and all sales representatives for
BP, BHM and BHI and specifies all who have employment contracts
with BHI, Xxxxxxx and/or Madison. Xxxxxxx has obtained the
assignment by BHI and Madison of all rights under the employment
contracts to Buyer as listed on Schedule 15.
(r) Employee Benefits.
Xxxxxxx has furnished to Buyer copies of each Employee
Benefit Plan that Xxxxxxx maintains or to which Xxxxxxx
contributes or to which its employees are subject.
(s) Environment, Health, and Safety.
(i) To its Knowledge, Xxxxxxx has complied in all
material respects with all Environmental, Health, and Safety
Laws, and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or
commenced against it alleging any failure so to comply. Without
limiting the generality of the preceding sentence, Xxxxxxx to its
Knowledge, has obtained and been in material compliance with all
of the terms and conditions of all permits, licenses, and other
authorizations which are required under, and has materially
complied with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules,
and timetables which are contained in, all Environmental, Health,
and Safety Laws.
(ii) To its Knowledge, Xxxxxxx xxxxx
Liability and has not handled or disposed of any substance,
arranged for the disposal of any substance, exposed any employee
or other individual to any substance or condition, or owned or
operated any property or facility in any manner that could form
the basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand
against Xxxxxxx giving rise to any Liability for damage to any
site, location, or body of water (surface or subsurface), for any
illness of or personal injury to any employee or other
individual, or for any reason under any Environmental, Health,
and Safety Law.
Law and to its Knowledge has no Liability in connection
therewith.
(t) Third Party Consents. Exhibit C sets forth a list of
all consents necessary for the assignment and transfer to Buyer
of the Acquired Assets at Closing.
(u) Disclosure. The representations and warranties
contained in this section 3 do not contain any untrue statement
of a material fact or omit to state any material fact necessary
in order to make the statements and information contained in this
section 3 not misleading.
4. Representations and Warranties of Buyer. Buyer
represents and warrants to Xxxxxxx that the statements contained
in this section 4 are true and correct in all material respects
as of the date of this Agreement and will be true and correct in
all material respects as of the Closing Date (as though then made
and as though the Closing Date were substituted for the date of
this Agreement throughout this section 4).
(a) Organization of Buyer. WHA and WHM are limited
liability companies and WHI is a corporation duly organized,
validly existing, and in good standing under the laws of Alabama,
Mississippi and Maryland, respectively.
(b) Authorization of Transaction. Buyer and WHI have full
company or corporate power and authority to execute and deliver
this Agreement and to perform their respective obligations
hereunder. Without limiting the generality of the foregoing, the
members or board of directors of WHA, WHM and WHI have approved
and all other necessary corporate or company action has been
taken to authorize the execution, delivery and performance of
this Agreement by WHA, WHM and WHI. This Agreement constitutes
the legal, valid and binding obligation of WHA, WHM and WHI,
enforceable in accordance with its terms and conditions, except
as such enforceability may be limited by bankruptcy, insolvency,
moratorium or similar laws affecting creditors' rights generally
or by the judicial application of general equitable principles.
(c) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, including the assignments and
assumptions referred to in section 2 above, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Buyer is
subject or any provision of their charters, bylaws or
organizational documents, or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to
which Buyer is a party or by which any of WHA, WHM or WHI is
bound or to which any of their assets is subject. Buyer does not
need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement (including the
assignments and assumptions referred to in section 2 above).
(d) Brokers' Fees. Buyer has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this
Agreement.payable to Xxxxxx Xxxxx The foregoing is not intended
to cover obligations to real estate brokers under the Sales
Contracts.
5. Pre-Closing Covenants. The Parties agree as follows with
respect to the period between the execution of this Agreement and
the Closing.
(a) General. Each of the Parties will use its best efforts
to take all action and to do all things necessary, proper, or
advisable in order to consummate and make effective the
transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the Closing conditions set forth
in section 6 herein).
(b) Notices and Consents. Each of the Parties will give
any notices to, make any filings with, and use its best efforts
to obtain any authorizations, consents, and approvals of
governments and governmental agencies in connection with the
matters referred to in section 3(c) and section 4(c) above and
will use its best efforts to obtain any necessary consent as
listed in Exhibit C to the assignment of any contracts,
agreements, leases, licenses, permits, bonding and
authorizations.
(c) Operation of Business. Prior to Closing, Xxxxxxx will
not engage in any practice, take any action, or enter into any
transaction outside the Ordinary Course of Business. Without
limiting the generality of the foregoing, Xxxxxxx will not (i)
undertake or enter into any material transaction without the
prior written approval of Buyer or (ii) otherwise engage in any
practice, take any action, or enter into any transaction which
would result in a distribution or transfer of a substantial
portion of the assets of Xxxxxxx provided, however, that Xxxxxxx
may engage in the normal sale of homes and purchases of materials
and supplies without approval by Buyer.
(d) Preservation of Business. Xxxxxxx will use its best
efforts to keep its business and properties substantially intact,
including its present operations, physical facilities, working
conditions, and relationships with developers, lessors,
subcontractors, suppliers, customers, and employees.
(e) Full Access. Xxxxxxx will permit representatives of
Buyer to have full access at all reasonable times and upon
reasonable advance notice, and in a manner so as not to interfere
with the normal business operations of Xxxxxxx, to all premises,
properties, personnel, books, records (including Tax records),
contracts, and documents of or pertaining to Xxxxxxx and its
business.
(f) Notice of Development; Change in Disclosure Schedules.
(i) Each Party will give the other Parties prompt
written notice of any material adverse development which could
cause a breach of any of the warranties and representations of
the disclosing Party. In the event such disclosure is reasonably
deemed by the Party to whom the disclosure is made to materially
and adversely affect the transaction contemplated by this
Agreement, such Party may terminate this Agreement on written
notice.
(ii) In the event a Party knows or has reason to
believe that a representation or warranty made by another Party
is incorrect or untrue, such Party shall so notify the other
Parties in writing. A Party shall have no claim against any
other Party for breach of this Agreement (including any
representation or warranty), including indemnification, where
such claim is based on a representation or warranty of a Party
which the claiming Party knew was incorrect or untrue and did not
so notify the Party against whom the claim is made.
(iii) Two business days prior to Closing Xxxxxxx shall
deliver to Buyer a Final Disclosure Schedule updating the
Disclosure Schedule of Xxxxxxx attached hereto as of the Closing
Date. The Final Disclosure Schedule may involve updating of
Schedules 1A, 1B, 5A, 5B, 7, 10, 11, 12 and 13 only for matters
occurring subsequent to the Effective Date. Such updated
Disclosure Schedule shall be substituted for the Disclosure
Schedule at the date of this Agreement for all purposes under
this Agreement; provided, however, in the event such Final
Disclosure Schedule indicates matters which are materially and
adversely different than the matters in the original Disclosure
Schedule, Buyer may terminate the Agreement and in the event of
such termination, the Parties shall have no further obligation or
liability to one another. In the event the Final Disclosure
Schedule reveals material changes with respect to any asset,
Buyer may elect to have such asset and any related liability
excluded from being an Acquired Asset or an Assumed Liability,
provided, however, that if Buyer elects to exclude any asset, the
covenant not to compete set forth in section 8(f) shall not apply
to activities with respect to such asset.
(g) Exclusivity. Xxxxxxx will not (i) solicit, initiate, or
encourage the submission of any proposal or offer from any Person
relating to the acquisition of any substantial portion of the
assets of Xxxxxxx (including any acquisition structured as a
merger, consolidation, or share exchange) or (ii) participate in
any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any
Person to do or seek the foregoing. Xxxxxxx will notify Buyer
immediately if any Person makes any proposal, offer, inquiry, or
contact with respect to any of the foregoing and will furnish
Buyer with copies of any written material in connection
therewith.
(h) Title Reports. Xxxxxxx will obtain title insurance
commitments or binders (the "Title Reports"), at its sole
expense, with respect to each parcel of real estate that
constitutes part of the Acquired Assets, on a policy form
reasonably acceptable to Buyer, issued by a title insurer
satisfactory to Buyer in an amount equal to the depreciated book
value, which could insure title to such real property to be in
Buyer as of the Closing, subject only to exceptions which are
satisfactory to Buyer and which could be issued without survey
exceptions.
(i) Surveys. With respect to each parcel of real property
as to which a Title Report is to be procured pursuant to section
5(h) above (except where platted),and which has not been platted,
Xxxxxxx will procure, at its sole expense, in preparation for the
Closing a current survey of the real property certified to Buyer,
prepared by a licensed surveyor and conforming to current ALTA
Minimum Detail Requirements for Land Title Surveys, disclosing
the location of all improvements, easements, party walls,
sidewalks, roadways, utility lines, and other matters shown
customarily on such surveys, and showing access affirmatively to
public streets and roads (the "Survey"). The Survey shall not
disclose any survey defect or encroachment from or onto the real
property which has not been cured or insured over prior to the
Closing.
(j) Press Releases and Public Announcements. No Party
shall issue any press release or make any public announcement
relating to the subject matter of this Agreement prior to the
Closing without the prior written approval of the other Parties;
provided, however, that any Party may make any public disclosure
it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded
securities in which case the disclosing Party will use its
reasonable best efforts to advise the other Party prior to making
the disclosure.
6. Conditions to Obligation to Close.
(a) Conditions to Obligation of Buyer. The obligation of
Buyer to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the
following conditions:
(i) The representations and warranties set forth in 3
above shall be true and correct in all material respects at and
as of the Closing Date;
(ii) Xxxxxxx shall have performed and complied with all
of its covenants hereunder in all material respects through the
Closing;
(iii) Xxxxxxx shall have procured all of the third
party consents specified in Exhibit C, all of the Title Reports
specified in section 5(h) above and a title insurance policy in
connection therewith shall be issued to Buyer, and all of the
Surveys specified in section 5(i) above;
(iv) No action, suit, or proceeding shall be pending or
to Xxxxxxx'x Knowledge threatened before any court or
quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by
this Agreement, (B) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation, (C)
affect adversely the right of Buyer to own, license or lease the
Acquired Assets or, to operate the former business of Xxxxxxx
(and no such injunction, judgment, order, decree, ruling, or
charge shall be in effect); Xxxxxxx shall have delivered to Buyer
a certificate to the effect that each of the conditions specified
above in section 6(a)(i)-(iv) has been satisfied in all respects;
(v) All applicable waiting periods (and any extensions
thereof) under HSR shall have expired or otherwise been
terminated, no "second request" for information under HSR shall
have been received and Xxxxxxx and Buyer shall have received all
other authorizations, consents, and approvals of governments and
governmental agencies referred to in section 3(c) and section
4(c) above;
(vi) Buyer shall have received from counsel to Xxxxxxx an
opinion in form and substance as set forth in Exhibit E attached
hereto, addressed to Buyer, and dated as of the Closing Date;
(vii) Buyer shall have received audited balance sheet and
statement of income, changes in stockholders' equity and cash
flow at and for the year ended December 31, 1998 for BHI, BHM and
BP on a combined basis, meeting the requirements of Regulation S-
X of the Securities and Exchange Commission all as audited and
certified by independent certified public accountants,Deloitte &
Touche LLP, and such financial statements shall not differ
materially and adversely from the Financial Statements for such
period attached to this Agreement as Exhibit D;
(viii) All actions to be taken by Xxxxxxx in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required
to effect the transactions contemplated hereby (including but not
limited to certified resolutions approving the transaction,
certificates of good standing, and certified organizational
documents) will be reasonably satisfactory in form and substance
to Buyer and its counsel; and
(ix) Buyer shall have received an affidavit from
Xxxxxxx that it is not a "foreign person" for withholding
purposes under Sec. 1445 of the Internal Revenue Code of 1986, as
amended. Buyer may waive any condition specified in this section
6(a) if it executes a writing so stating at or prior to the
Closing.
(x) WHI and LWB shall have entered into the
organizational and operating agreements for the land development
limited liability company as outlined on Exhibit F, and Buyer
shall have entered into the Lot Option Agreements with such
company as listed on Exhibit G.
(b) Conditions to Obligation of Xxxxxxx. The obligation
of Xxxxxxx to consummate the transactions to be performed by it
in connection with the Closing is subject to satisfaction of the
following conditions:
(i) The representations and warranties set forth in 4
above shall be true and correct in all material respects at and
as of the Closing Date;
(ii) Buyer shall have performed and complied with all
of its covenants hereunder in all material respects through the
Closing;
(iii) No action, suit, or proceeding shall be pending
or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement or (B) cause
any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect);
(iv) Buyer shall have delivered to Xxxxxxx a
certificate to the effect that each of the conditions specified
above in section 6(b)(i)-(iii) is satisfied in all respects;
(v) All applicable waiting periods (and any extensions
thereof) under HSR shall have expired or otherwise been
terminated and no second request for information under HSR shall
have been received and Xxxxxxx and Buyer shall have received all
other authorizations, consents, and approvals of governments and
governmental agencies referred to in section 3(c) and section
4(c) above;
(vi) All actions to be taken by Buyer in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required
to effect the transactions contemplated hereby (including but not
limited to certified resolutions approving the transaction,
certificates of good standing, and certified organizational
documents) will be reasonably satisfactory in form and substance
to Xxxxxxx. Xxxxxxx may waive any condition specified in this
section 6(b) if it executes a writing so stating at or prior to
the Closing.
(vii) Xxxxxxx shall be released from all liabilities
being assumed or paid off by Buyer at Closing.
(viii) Xxxxxxx shall have received from counsel to
Buyer an opinion in form and substance as set forth in Exhibit H
attached hereto, addressed to Xxxxxxx, and dated the Closing
Date.
(ix) WHI and LWB shall have entered into the
organizational and operating agreements for the land development
limited liability company outlined in Exhibit F and Buyer shall
have entered into the Lot Option Agreements with such company as
listed on Exhibit G.
7. Termination.
(a) Termination of Agreement. Certain of the Parties may
terminate this Agreement as provided below:
(i) The Parties may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(ii) Buyer or WHI may terminate this Agreement prior to
Closing by giving written notice to Xxxxxxx following review by
Buyer of the Title Reports, the Surveys, and the Final Disclosure
Schedule, and other information concerning the business and
operations of Xxxxxxx if they areBuyer in its sole discretion is
not satisfied with the disclosures contained therein or the
information obtained.
(iii) Buyer or WHI may terminate this Agreement by
giving written notice to Xxxxxxx at any time prior to the
Closing (A) in the event Xxxxxxx or LWB has breached any
representation, warranty, or covenant contained in this Agreement
in any material respect, Buyer has notified Xxxxxxx or LWB of
the breach, and the breach has continued without cure for a
period of 14 days after the notice of breach or (B) if the
Closing shall not have occurred on or before May 15, 1999, by
reason of the failure of any condition precedent under 6(a)
hereof.
hereof (unless the failure results primarily from Buyer itself
breaching any representation, warranty or covenant contained in
this Agreement).
(iv) Xxxxxxx or LWB may terminate this Agreement by
giving written notice to Buyer at any time prior to the Closing
(A) in the event Buyer or WHI has breached any representation,
warranty, or covenant contained in this Agreement in any material
respect, Xxxxxxx has notified Buyer or WHI of the breach, and the
breach has continued without cure for a period of 14 days after
the notice of breach or (B) if the Closing shall not have
occurred on or before May 15, 1999, by reason of the failure of
any condition precedent under section 6(b) hereof (unless the
failure results primarily from Xxxxxxx itself breaching any
representation, warranty, or covenant contained in this
Agreement).
(v) Buyer or Xxxxxxx may terminate this Agreement
pursuant to section 2 (d)(ii).
(b) Effect of Termination. If any Party terminates this
Agreement pursuant to section 7 (a)(i) or (ii)(a)(i), (ii) or (v)
above, all rights and obligations of the Parties hereunder shall
terminate without any Liability of any Party to any other Party.
If any partyParty terminates pursuant to section 7 (a)(iii) or
(iv) the other partyParty shall be liable for damages in
connection therewith.
therewith, provided, however, that if this Agreement is
terminated because Deloitte & Touche are unable to complete their
audit of the financial statements required by section 3(g) and
6(a)(vii) by May 15, 1999, the Parties shall have no further
obligation to each other hereunder. Termination of this
Agreement shall also constitute a termination of the Other
Agreement and termination of the Other Agreement shall constitute
termination of this Agreement; both terminations shall be
considered to result from the same cause.
8. Post-Closing Covenants. The Parties agree as follows with
respect to the period following the Closing.
(a) General. In case at any time after the Closing any
further action is necessary or desirable to carry out the
purposes of this Agreement, each of the Parties will take such
further action (including the execution and delivery of such
further instruments and documents) as any other Party reasonably
may request, all at the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to indemnification
therefor under section 9 below).
(b) Litigation Support. In the event and for so long as
any Party actively is contesting or defending against any action,
suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand (other than by a Party against another Party to
this Agreement) in connection with (i) any transaction
contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or
transaction on or prior to the Closing Date involving Xxxxxxx,
each of the other Parties will cooperate with the contesting or
defending Party and its counsel in the contest or defense, make
available its personnel, and provide such testimony and access to
its books and records as shall be necessary in connection with
the contest or defense, all at the sole cost and expense of the
contesting or defending Party (unless the contesting or defending
Party is entitled to indemnification therefor under section 9
below).
(c) Transition. Xxxxxxx will not take any action that is
designed or intended to have the effect of discouraging any
developer, lessor, licensor, customer, supplier, or other
business associate of Xxxxxxx from maintaining the same business
relationships with Buyer after the Closing as it maintained with
Xxxxxxx prior to the Closing. Xxxxxxx will refer all customer
inquiries relating to the business of Xxxxxxx to Buyer from and
after the Closing.
(d) Confidentiality. Xxxxxxx will treat and hold as such
all of the Confidential Information, refrain from using any of
the Confidential Information except in connection with this
Agreement, and deliver promptly to Buyer or destroy, at the
request and option of Buyer, all tangible embodiments (and all
copies) of the Confidential Information which are in its
possession other than that which Xxxxxxx is required by law to
keep or is necessary in connection with Tax matters. In the
event that Xxxxxxx is requested or required by oral question or
request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar
process to disclose any Confidential Information, Xxxxxxx will
notify Buyer promptly of the request or requirement so that Buyer
may seek an appropriate protective order or waive compliance with
the provisions of this section 8(d). If, in the absence of a
protective order or the receipt of a waiver hereunder, Xxxxxxx
is, on the advice of counsel, compelled to disclose any
Confidential Information or else stand liable for contempt, then
Xxxxxxx may disclose the Confidential Information; provided,
however, that the disclosing person shall use its reasonable best
efforts to obtain, at the reasonable request of Buyer, an order
or other assurance that confidential treatment will be accorded
to such portion of the Confidential Information required to be
disclosed as Buyer shall designate.
(e) Access to Records. After the Closing Date, Buyer
shall preserve the records, files and papers of Xxxxxxx which are
transferred to it and shall, on reasonable notice, allow Xxxxxxx
and its representatives reasonable access thereto and the right
to make copies and extracts therefrom during normal business
hours for the preparation of such Tax returns as Xxxxxxx or its
parent companiesAffiliates may be required to file and the
disposition of any claim that may be made against it, or other
reasonable purpose and Buyer shall use its best efforts not to
dispose of any item thereof without giving 90 days' prior written
notice to Xxxxxxx of its intention of disposing of same,
specifying the items to be disposed of in reasonable detail.
Xxxxxxx shall, within the period of 60 days from receipt of such
notice, notify Buyer of Xxxxxxx'x desire to retain one or more
items to be disposed of. Buyer shall, upon receipt of such
notice from Xxxxxxx, deliver to Xxxxxxx, at Xxxxxxx'x expense
including reimbursement for personal and out-of-pocket expenses,
the items requested by Xxxxxxx. All records, files and papers
reviewed or delivered pursuant to this Section shall be held
confidential. Notwithstanding the foregoing, Buyer shall not be
liable for any inadvertent disposal of any such records, files
and papers.
(f) Covenant Not to Compete. LWB shall make himself
available for consultation with Buyer as needed for one (1) year
following the Closing provided such consultation does not
unreasonably interfere with other business activities. ForIn
view of the sale of goodwill by Xxxxxxx under this Agreement, for
a period of five years from and after the Closing Date, LWB will
not engage directly or indirectly through BHI, BHM, BP, or
otherwise in the construction and sale of single family homes in
Alabama and Mississippi,the Alabama counties ofall Alabama and
Mississippi,Alabama counties, including specifically Madison,
Limestone, Jefferson, Morgan, Jefferson and Xxxxxx and theMobile,
and Xxxxxxx, and all Mississippi counties ofcounties, including
specifically Jackson and Xxxxxxxx, except that the foregoing
restriction shall not apply (i) to the development of land for
single family homes in a joint venturelimited liability company
jointly owned with WHI as outlined in 2(j),section 2(k), (ii)
the construction and/or sale of homes on scattered lots (owned
by customers) by Madison, or LWB's(iii) the development by LWB
directly or through Affiliates of rural properties (without
availability of sanitary sewer systems)service other than
individual septic tanks) provided however, that Buyer shall have
for five years after Closing a Right of First Refusal to purchase
all lots on such rural properties upon completion of development.
LWB will not use the name "Xxxxxxx""Xxxxxxx," "BHI," or a
variation thereof on any entity with which he is associated and
for two years after Closing will not hire directly or through any
business with which he is associated, including Madison, any
person who has been an employee of Xxxxxxx, BHI, WHA, WHM or WHI
during the preceding twenty four (24) months, except that LWB or
an Affiliate may employ the persons listed on Schedule 14. If
the final judgment of a court of competent jurisdiction declares
that any term or provision of this section 8(f) is invalid or
unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the
power to reduce the scope, duration, or area of the term or
provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified
after the expiration of the time within which the judgment may be
appealed.
(g) Warranty Work on Recent Deliveries. Buyer will provide
warranty repair work to purchasers of single family homes from
Xxxxxxx who purchased their homes within one year prior to
Effective Date for one year subsequent to date of the home
purchase. In the event that such warranty repair work undertaken
pursuant to this Agreement and the Other Agreement entails costs
to Buyer which exceed $35,000 in the aggregate, or relates to
houses purchased more than one (1) year prior to Closing,the
Effective Date, Xxxxxxx will reimburse Buyer for its costs in
connection therewith; provided, however, Buyer shall xxxx Xxxxxxx
for the warranty repair work at cost without xxxx-up, and Buyer
will not charge for supervision, handyman labor and
administrative support. Xxxxxxx shall be responsible for all
other warranty work on deliveries by Xxxxxxx prior to the
Effective Date. During the one year period after Closing, Buyer
will furnish Xxxxxxx with a monthly report on warranty repair
work performed on deliveries by Xxxxxxx. Schedule 1612 is a list
of outstanding warranty claims as of the Effective Date.
Date. Xxxxxxx reserves the right to enforce any claim for
warranty work or indemnification from a subcontractor or supplier
notwithstanding any contract assignment to Buyer contained
herein.
(h) Marketing and Promotional Materials. Buyer will
receive Xxxxxxx'x existing supply of marketing and promotional
materials, including brochures, pamphlets and other printed
materials.
(i) Use of Non-Transferred Assets. Following Closing,
Xxxxxxx will permit Buyer,to the extent permitted by law, to use
licenses, permits, and bonding in place with respect to the
Acquired Assets, so that there is no disruption in the
homebuilding operations acquired or the development of land in
connection therewith.
therewith. Buyer will use its best efforts to become a licensed
general contractor in Alabama and Mississippi.
(j) Land Contracts. With respect to any Land Contract
which cannot be transferred to Buyer as contemplated by this
Agreement, Xxxxxxx will pursuant to the direction of Buyer take
down lots under such contract on behalf of Buyer and immediately
transfer them to Buyer at cost.
(k) Madison Employees. For two years subsequent to
Closing, Buyer will not hire any employee who has been an
employee of Madison subsequent to Closing. LWB will cause any
Madison employee who was previously an employee of Xxxxxxx to
fully train any person, holding a comparable position and
function with WHA and WHM.
9. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties.
All of the representations and warranties of Buyer and
Xxxxxxx contained in this Agreement shall survive the Closing,
and continue in full force and effect thereafter for a period of
three years following Closing.
(b) Indemnification Provisions for Benefit of Buyer.
(i) In the event Xxxxxxx breaches, or in the event
any third party alleges facts that, if true, would mean Xxxxxxx
has breached any of their representations, warranties, and
covenants contained in this Agreement, and, provided that Buyer
makes a written claim for indemnification against Xxxxxxx
pursuant to section 10(f) herein, then Xxxxxxx agrees to
indemnify Buyer from and against the entirety of any Adverse
Consequences Buyer may suffer through and after the date of the
claim for indemnification including any Adverse Consequences
Buyer may suffer, arising out of, relating to, in the nature of,
or caused by the breach or the alleged breach.
(ii) Xxxxxxx agrees to indemnify Buyer from and
against the entirety of any Adverse Consequences Buyer may suffer
resulting from, arising out of, relating to, in the nature of, or
caused by:
(A) any Liability of Xxxxxxx which is not an
Assumed Liability;
(B) any Liability of Buyer arising by operation
of law, including under any bulk transfer law of any jurisdiction
or under any common law doctrine of de facto merger or successor
liability, which is not an Assumed Liability; or
(C) any Liability of Xxxxxxx for the unpaid
Taxes of Xxxxxxx, LWB or any Person controlled by LWB as a
transferee or successor, by contract, or otherwise.
(D) any Liability resulting from the operation
of a business by Xxxxxxx prior to the Closing Date except for
the Assumed Liabilities.
(iii) Xxxxxxx agrees to indemnify Buyer from and
against the entirety of any Adverse Consequences Buyer may suffer
resulting from, arising out of, relating to, in the nature of, or
caused by claims for severance pay arising as a result of an
employee's status as an employee of Xxxxxxx or arising under
Employee Benefit Plans of Xxxxxxx, or applicable to employees or
former employees.
(c) Indemnification Provisions for Benefit of Xxxxxxx.
(i) In the event Buyer breaches, or in the event any
third party alleges facts that, if true, would mean Buyer has
breached, any of its representations, warranties, and covenants
contained in this Agreement, including those contained in the
assumption attached as Exhibit A and, provided that Xxxxxxx makes
a written claim for indemnification against Buyer pursuant to
section 10(f) herein, then Buyer agrees to indemnify Xxxxxxx from
and against the entirety of any Adverse Consequences Xxxxxxx may
suffer through and after the date of the claim for
indemnification including any Adverse Consequences Xxxxxxx may
suffer, arising out of, relating to, in the nature of, or caused
by the breach or the alleged breach.
(ii) Buyer agrees to indemnify Xxxxxxx from and against
the entirety of any Adverse Consequences Xxxxxxx may suffer
resulting from, arising out of, relating to, in the nature of, or
caused by any Assumed Liability.
(iii) Any Liability for Taxes which because they
relate to matters occurring subsequent to Closing are rightfully
the obligations of Buyer, except for real estate taxes prorated
under section 2(g).
(iv) Except as otherwise provided in this Agreement,
any Liability resulting from the operation of a business by Buyer
or relating to the Acquired Assets for occurrences subsequent to
Closing.
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party
Claim") which may give rise to a claim for indemnification
against any other Party (the "Indemnifying Party") under this
section 9, then the Indemnified Party shall promptly notify each
Indemnifying Party thereof in writing; provided, however, that no
delay on the part of the Indemnified Party in notifying any
Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless and then solely to the extent the
Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to
defend the Indemnified Party against the Third Party Claim with
counsel of its choice reasonably satisfactory to the Indemnified
Party so long as (A) the Indemnifying Party notifies the
Indemnified Party in writing within 15 days after the Indemnified
Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and
against the entirety of any Adverse Consequences the Indemnified
Party may suffer resulting from, arising out of, relating to, in
the nature of, or caused by the Third Party Claim, (B) the
Indemnifying Party provides the Indemnified Party with reasonable
evidence that the Indemnifying Party will have the financial
resources to defend against the Third Party Claim and fulfill its
indemnification obligations hereunder, and (C) the Indemnifying
Party conducts the defense of the Third Party Claim actively and
diligently.
(iii) So long as the Indemnifying Party is conducting
the defense of the Third Party Claim in accordance with section
9(d)(ii), (A) the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the
defense of the Third Party Claim, (B) the Indemnified Party will
not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party, not to be
withheld unreasonably, and (C) the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written
consent of the Indemnified Party, not to be withheld
unreasonably.
(iv) In the event any of the conditions in section
9(d)(ii) is or becomes unsatisfied, however, (A) the Indemnified
Party may defend against, and consent to the entry of any
judgment or enter into any settlement with respect to, the Third
Party Claim in any manner it reasonably may deem appropriate (and
the Indemnified Party need not consult with, or obtain any
consent from, any Indemnifying Party in connection therewith),
(B) the Indemnifying Parties will reimburse the Indemnified Party
promptly and periodically for the costs of defending against the
Third Party Claim including reasonable attorneys' fees and
expenses, and (C) the Indemnifying Parties will remain
responsible for any Adverse Consequences the Indemnified Party
may suffer resulting from, arising out of, relating to, in the
nature of, or caused by the Third Party Claim to the fullest
extent provided in this section 9.
(e) Determination of Adverse Consequences. The Parties
shall take into account the time cost of money in determining
Adverse Consequences for purposes of this section 9.
(f) Basket and Cap. An Indemnified Party shall have no
right to indemnification unless and until the aggregate of all
claims of the Indemnified Party pursuant to this Agreement and
the Other Agreements exceeds $ _________Agreement exceeds One
Hundred Thousand Dollars ($100,000) above any applicable
insurance coverage and further an Indemnifying Party's liability
for indemnification pursuant to this Agreement and the other
AgreementsOther Agreement shall in no event exceed $________
million.$3 million above any applicable insurance coverage. The
foregoing limitations on liability shall not apply, however, to
(a) Third Party claims arising in connection with homes delivered
by Xxxxxxx prior to Effective Date including any product
liability or warranty claims in connection therewith or (b)
payment of the balance of the Purchase Price pursuant to section
2(h). The foregoing shall not limit the amount which may be
recoverable pursuant to applicable insurance coverage.
(g) Insurance Coverage. It shall not be necessary for an
Indemnified Party to first attempt to recover any Adverse
Consequences from a third party before seeking indemnity
hereunder. The Adverse Consequences which an Indemnifying Party
is liable to, for or on behalf of the Indemnified Party pursuant
to this (9),section 9, shall be reduced (including, without
limitation, retroactively) through subsequent repayment as
described below by an amount equal to any insurance proceeds
including, but not limited to, proceeds from title insurance,
actually received by or on behalf of such Indemnified Party
relating to the Adverse Consequences. If an Indemnified Party
shall have received or shall have been paid on its behalf an
indemnity payment in respect of any Adverse Consequences and
insurance proceeds in respect of such Adverse Consequences are
also received by the Indemnified Party, then such Indemnified
Party shall pay Indemnifying Party any excess amount received.
The Indemnified Party covenants and agrees to use all reasonable
efforts to collect all such sums as are available to it under its
existing insurance policies including, but not limited to, title
insurance policies, which would be applicable to any such Adverse
Consequences. All insurance policies shall contain waiver of
subrogation endorsements.
(h) Contractor Indemnification. Xxxxxxx shall retain the
right to be indemnified by contractors and subcontractors as
provided in section 8(g).
10. Miscellaneous.
(a) No Third-Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the
Parties and their respective successors and permitted assigns.
(b) Entire Agreement. This Agreement (including
instruments referred to herein) and the Other Agreement
constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or
representations by or between the Parties, written or oral, to
the extent they related in any way to the subject matter hereof.
Except as specifically set forth herein, Xxxxxxx makes no
representation or warranty to Buyer, express or implied,
including any implied warranty of future profitability of its
business.
(c) Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein
and their respective successors and permitted assigns. No Party
may assign either this Agreement or any of its rights, interests,
or obligations hereunder without the prior written approval of
the other Party; provided, however, that Buyer may (i) assign any
or all of its rights and interests hereunder to one or more of
its Affiliates and (ii) designate one or more of its Affiliates
to perform its obligations hereunder (in any or all of which
cases Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder).
(d) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but
all of which together will constitute one and the same
instrument.
(e) Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect
in any way the meaning or interpretation of this Agreement.
(f) Notices. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder shall be
deemed duly given if sent by facsimile transmission and confirmed
by United States mail or sent by reputable overnight delivery
service and addressed to the intended recipient as set forth
below:
If to Xxxxxxx to: Copy to:
000 Xxxxxxxx Xxxxx Xxxxxxxxx Xxxx X. Xxxx
Madison, Alabama 35758 Lanier, Ford, Xxxxxx & Xxxxx
Attention: Xxxxx Xxxxxxx X.X. Xxx 0000
Telephone: 000-000-0000 Xxxxxxxxxx, Xxxxxxx 00000
Fax: 000-000-0000 Fax: 000-000-0000
If to Buyer: Copy to:
Washington Homes, Inc. Washington Homes, Inc.
0000 Xxxxxxxxxx Xxxx 0000 Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000 Xxxxxxxx, Xxxxxxxx 00000
Attention: Geaton X. XxXxxxxxx, Xx. Attention: Xxxxxxxx X.
Xxxxx
Telephone: 000-000-0000 Telephone: 000-000-0000
Fax: 000-000-0000
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address
set forth above using any other means (including personal
delivery, expedited courier, messenger service, telecopy, telex,
ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the
intended recipient. Any Party may change the address to which
notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of
Alabama without giving effect to any choice or conflict of law
provision or rule whether of the State of Alabama or any other
jurisdiction that would cause the application of the laws of any
jurisdiction other than the State of Alabama.
(h) Amendments and Waivers. Except as specifically
provided in this Agreement, no amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and
signed by the parties. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence.
(i) Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any
jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(j) Expenses. Buyer and Xxxxxxx will each bear their own
costs and expenses (including legal fees and expenses) incurred
in connection with this Agreement and the transactions
contemplated hereby. Xxxxxxx shall be responsible for payment of
the following in connection with the transactions contemplated by
the Agreement: (i) title report fees and title insurance
premiums, (ii) survey fees, (iii) transfer taxes, (iv) sales
taxes, (v) recording fees, and (vi) expense of environmental
reports, and such fees and expenses shall not be reflected in the
determination of Net Worth at the Closing Date as set forth in
section 2(d)(iv) above. Buyer shall be responsible for payment
of the following in connection with the transactions contemplated
by this Agreement: (i) audit fees of Deloitte and Touche for
auditing financial statements, and (ii) any fees or costs with
respect to licenses, permits, authorizations, bonds or the like
Buyer is required to obtain.
(k) Construction. The Parties have participated jointly
in the negotiation and drafting of this Agreement. In the event
an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal,
state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. The word "including" shall mean
including without limitation. Nothing in the Disclosure Schedule
shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Disclosure
Schedule identifies the exception with particularity and
describes the relevant facts in reasonable detail or cross
references detail.another schedule. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a
copy) of a document or other item shall not be deemed adequate to
disclose an exception to a representation or warranty made herein
(unless the representation or warranty has to do with the
existence of the document or other item itself). The Parties
intend that each representation, warranty, and covenant contained
herein shall have independent significance. If any Party has
breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity)
which the Party has not breached shall not detract from or
mitigate the fact that the Party is in breach of the first
representation, warranty or covenant.
(l) Incorporation of Exhibits and Disclosure Schedules. The
Exhibits and Disclosure Schedules identified in this Agreement
are incorporated herein by reference and made a part hereof.
(m) Specific Performance. Each of the Parties acknowledges
and agrees that the other Parties would be damaged irreparably in
the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise
are breached. Accordingly, each of the Parties agrees that the
other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions
hereof in any action instituted inany court of the United States
or any state thereof having jurisdiction over the Parties and the
matter, accordance with section 10(o) below, in addition to any
other remedy to which it may be entitled, at law or in equity.
(n) Bulk Transfer Laws. Buyer acknowledges that Xxxxxxx
will not comply with the provisions of any bulk transfer laws of
any jurisdiction in connection with the transactions contemplated
by this Agreement, and hereby waives such compliance subject to
the agreements of Xxxxxxx to indemnify Buyer pursuant of section
9(b).
(o) Dispute Resolution. The Parties recognize that
disputes may arise in the future concerning the Agreement or any
ancillary document executed in connection with this Agreement (a
"Dispute). Therefore, the parties shall resolve any and all such
Disputes of any nature whatsoever in the following manner:
(i) Negotiation. In the event of a Dispute, the
Parties shall attempt to settle such Dispute through informal
negotiations. To this effect, they shall consult and negotiate
with each other, in good faith and, recognizing their mutual
interests, attempt to reach a just and equitable solution
satisfactory to both Parties. Notwithstanding the foregoing,
nothing in this subsection 10(o)(i) shall preclude any Party from
commencing arbitration at any time.
(ii) Arbitration. Any Dispute which remains unresolved
shall be submitted to binding arbitration in accordance with
Chapter 1, Title 9 of the United States Code (United States
Arbitration Act). Arbitration shall be administered by the
American Arbitration Association ("AAA") in accordance with its
Commercial Arbitration Rules as supplemented by its Supplementary
Procedures for Complex Cases.
(iii) Situs. The situs of the arbitration shall be
Huntsville, Alabama.Nashville, Tennessee.
(iv) Number and Qualification of Arbitrators. The
arbitrators shall be decided by a panel of three neutral
arbitrators. AAA shall recommend arbitrators from its commercial
panel, giving due regard to the Parties' desire to have
arbitrators with experience in hearing commercial arbitrations.
From such AAA recommended list of arbitrators Xxxxxxx shall
appoint an arbitrator and the Buyer shall appoint an arbitrator.
The two party-appointed arbitrators shall jointly and promptly
appoint the third arbitrator who must be an attorney licenses to
practice and in good standing in Alabama, who shall act as
chairperson of the panel. Recognizing the intent of the Parties
to obtain impartial, independent decisions and rulings, each
arbitrator shall disclose to the Parties and to the other Parties
of the panel, any professional, familial or social relationships,
present or past, with any party or counsel. Any Party may
challenge in writing the appointment or continued service of any
arbitrator for lack of independence, partiality or any other case
likely to impair such arbitrator's ability to render a fair and
equitable decision. Where such challenge is made to an
arbitrator, the AAA shall uphold or dismiss the challenge. In
the event the challenge is upheld, such arbitrator shall cease to
be a member of the panel. Any arbitrator may be removed upon
agreement of the Parties.
(v) Remedies. All decisions or rulings of the panel,
as well as any interim or final award, shall be pursuant to the
majority vote of the three (3) arbitrators comprising the panel.
Except as limited in this Section 10(o), the arbitrators shall
have authority to award a remedy or relief that a court of
Alabama could award or grant, including, without limitation,
specific performance of any obligation created under the
Agreement, the issuance of an injunction, pre-judgment or post-
judgment interest or the imposition of sanctions for abuse or
frustration of the arbitration process.
(vi) Fees and Expenses. The arbitrators shall have
the discretion and authority to award to the prevailing Party, if
any, as determined by the arbitrators, all of its costs and fees,
in such amounts as the arbitrators deem just. "Costs and Fees"
means all reasonable pre-award expenses of the arbitration,
including the arbitrators' fees, administrative fees, travel
expenses, other out-of-pocket expenses, witness fees and
attorneys'and witness fees, except each Party shall be
responsible for its own attorney's fees.
(vii) Finality and Enforcement. Any decision or award
rendered by the arbitrators shall be final, binding and
conclusive. The Parties hereby agree to submit to the personal
jurisdiction of the courts of the States of Maryland, Alabama, or
Mississippi for the enforcement of the award. The decision or
award may also be enforced in any other court of competent
jurisdiction.
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement as of the date first above written.
WESTMINSTER HOMES OF ALABAMA, L.L.C.
By:____________________________________
Name: ___________________________
Title: ___________________________
WESTMINSTER HOMES OF MISSISSIPPI, L.L.C.
By:____________________________________
Name: ___________________________
Title: ___________________________
WASHINGTON HOMES, INC.
By:____________________________________
Name: ___________________________
Title: ___________________________
XXXXXXX HOMES OF MISSISSIPPI, L.L.C.
By:____________________________________
Name: ___________________________
Title: ___________________________
XXXXXXX PROPERTIES, INC.
By:____________________________________
Name: ___________________________
Title: ___________________________
_______________________________________
XXXXX X. XXXXXXX
