ASSET PURCHASE AGREEMENT
Seller: THE FORECAST GROUP, L.P.
Buyer: HOVNANIAN ENTERPRISES, INC.
Dated: January 4, 2002
SECTION 1. DEFINITIONS; PURCHASE AND SALE; CLOSING 2
1.1 Definitions 2
1.3 Purchase of the Assets by the Buyer 11
1.4 Disposition of Buyer's Shares by the Seller 12
1.5 Call Right 14
1.6 Purchase Price Adjustment 14
1.7 Option to Purchase Premier 15
1.8 Closing 15
1.9 Purchase Price Allocation 16
1.10 Further Assurances 16
1.11 Representative 16
1.12 Satisfaction of Debt 16
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SELLER 16
2.1 The Assets 17
2.2 Material Contracts 18
2.3 Permits 19
2.4 Real Property 19
2.5 Operating Condition 21
2.6 Insurance 21
2.7 Bank Accounts, Powers, etc. 21
2.8 Compliance with Applicable Laws 22
2.9 No Brokers or Finders 22
2.10 Environmental Compliance 22
2.11 Information Generally 23
2.12 No Conflicts; Government Approvals; Third-Party Consents 23
2.13 Legal Proceedings 23
2.14 Acquisition for Investment 23
2.15 Construction Defect Claims 23
2.16 Taxes 24
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE BUYER 24
3.1 Organization and Related Matters 24
3.2 Authorization 24
3.3 Licenses Held by the Seller 25
3.4 No Conflicts; Government Approvals; Third-Party Consents 25
3.5 No Brokers or Finders 25
3.6 Legal Proceedings 25
3.7 Financing 25
3.8 SEC Reports; Financial Statements 26
3.9 Compliance with Requirements for Short-Form Registration 26
3.10 Capitalization 26
3.11 No Vote Required 26
3.12 Not an Investment Company 27
3.13 Registration of the Buyer's Shares; Securities Laws
Compliance 27
SECTION 4. COVENANTS PRIOR TO CLOSING 27
4.1 Access 27
4.2 Preservation of Business Prior to the Closing Date 28
4.3 Notification of Certain Matters 28
4.4 Permits and Approvals 28
4.5 Reserved Insurance 29
SECTION 5. ADDITIONAL CONTINUING COVENANTS 29
5.1 Non-Competition 29
5.2 Nondisclosure of Proprietary Data 30
5.3 Tax Cooperation 31
5.4 Access to Books and Records 31
5.5 Registration of the Buyer's Shares 31
5.6 Change of Control 33
SECTION 6. CONDITIONS OF PURCHASE 33
6.1 General Conditions 33
6.2 Conditions to Obligations of the Buyer 33
6.3 Conditions to Obligations of the Seller 35
SECTION 7. TERMINATION OF OBLIGATIONS; SURVIVAL 37
7.1 Termination of Agreement 37
7.2 Effect of Termination 37
7.3 Effect of Closing Over Known Unsatisfied Conditions 38
SECTION 8. INDEMNIFICATION 38
8.1 Indemnification by Seller and Xxxxxxx 38
8.2 Indemnification by the Buyer 39
8.3 Procedure 40
8.4 Survival 41
8.5 Indemnification Thresholds 41
SECTION 9. LIMITATION OF REMEDIES 42
9.1 Breach of Representations 42
9.2 No Other Warranties 42
9.3 No Personal Liability of Any Other Person 42
9.4 Failure to Perform Obligations 42
SECTION 10. GENERAL 42
10.1 Amendments; Waivers 42
10.2 Schedules; Exhibits; Integration 42
10.3 Efforts; Further Assurances 42
10.4 Governing Law 43
10.5 Transfer; Successors and Assigns 43
10.6 Headings 43
10.7 Counterparts 43
10.8 Publicity and Reports 43
10.9 Confidentiality 43
10.10 Appointment of Reference; Waiver of Jury Trial 44
10.11 Parties in Interest 44
10.12 Knowledge Convention 44
10.13 Notices 44
10.14 Expenses 46
10.15 Remedies; Waiver 46
10.16 Attorneys' Fees 46
10.17 Representation by Counsel; Interpretation 46
10.18 Severability 46
10.19 No Offset by Buyer 47
10.20 No Offset by the Seller or Xxxxxxx 47
10.21 Cross Default with Securities Purchase Agreement 47
Exhibits
Exhibit A Assets and Hold-Back Properties
Exhibit B Form of Lot Option Agreement
Exhibit C Form of ROFO Agreement
Exhibit D Form of Non-Competition and Option Agreement
Exhibit E Form of Park Xxxxxxx Option Agreement
Exhibit F Form of Consulting Agreement
Exhibit G Form of Forecast Development Option and Purchase Agreement
Exhibit H Form of Indemnification and Release Agreement
Exhibit I Xxxxxxx Projects
Exhibit J Form of the Seller's Certificate
Exhibit K Form of OM&M Legal Opinion
Exhibit L Form of the Buyer's Certificate
Exhibit M Form of the ST&B Legal Opinion
Exhibit N Form of Assignment and Assumption Agreement
Schedules
Schedule 1.1 Consolidated Forecast Entities
Schedule 1.9 Purchase Price Allocation Schedule
Schedule 1.12 Debt
Schedule 2.6.1 Policies
Schedule 5.1.1 Excluded Employees
Schedule 5.1.2 Permissible Condominium Projects
Schedule 6.3.4 Assumption of Guarantees
Buyer's Disclosure Schedule
Seller's Disclosure Schedule
A S S E T P U R C H A S E A G R E E M E N T
THIS ASSET PURCHASE AGREEMENT is entered into as of January (2), 2002
(the "Effective Date"), by and among (a)HOVNANIAN ENTERPRISES, INC., a
Delaware corporation (the "Buyer"), (b)THE FORECAST GROUP, L.P., a California
limited partnership (the "Seller"), and (c)XXXXX X. XXXXXXX, an individual
("Xxxxxxx").
THE PARTIES ENTER THIS AGREEMENT on the basis of the following facts,
understandings and intentions:
A. Prior to the Effective Date, the Parties hereto (among others)
entered into an Option Agreement dated as of October 27, 2001 (the "Option
Date") pursuant to which the Seller, Forecast PP2, LLC, a Delaware limited
liability company, and Forecast Homes, Inc., a California corporation
(Forecast PP2, LLC and Forecast Homes, Inc. shall collectively be referred to
as the "Securities Sellers"), granted to the Buyer, in exchange for Two
Million Dollars ($2,000,000) (the "Option Consideration"), the option to
purchase (a) the limited partnership interest and the general partnership
interest (the "Securities") of Securities Partnership, L.P., a California
limited partnership (the "Securities Partnership") pursuant to the Securities
Purchase Agreement (as defined in Recital C below), and (b) certain assets
owned by the Seller pursuant to this Agreement.
B. As of the Effective Date, the Seller is the owner of the assets
listed on Exhibit A (the "Assets and Hold-Back Properties") attached hereto.
C. Simultaneously herewith, the Buyer, the Securities Sellers and
Xxxxxxx are entering into an agreement dated as of the Effective Date (the
"Securities Purchase Agreement") pursuant to which the Buyer shall purchase
all of the Securities from the Securities Sellers.
D. At the Closing (and as a condition thereto), the Buyer and
Xxxxxxx shall enter into a lot option agreement (the "Lot Option Agreement")
in the form attached hereto as Exhibit B (the "Form of Lot Option Agreement")
pursuant to which the Buyer shall have the option to purchase the Hold-Back
Properties.
E. At the Closing (and as a condition thereto), the Buyer and
Xxxxxxx shall enter into an agreement (the "ROFO Agreement") in the form
attached hereto as Exhibit C (the "Form of ROFO Agreement") pursuant to which
Xxxxxxx shall grant to the Buyer a right of first offer with respect to
certain real property described therein.
F. At the Closing (and as a condition thereto), the Buyer, Premier
Group, Inc., a California corporation ("Premier"), and Prestige Homes, L.P.,
a California limited partnership ("Prestige"), shall enter into an agreement
(the "Non-Competition and Option Agreement") in the form attached hereto as
Exhibit D (the "Form of Non-Competition and Option Agreement") pursuant to
which each of Premier and Prestige shall agree, as more particularly set
forth therein, to certain restrictions on its ability to (a) compete with the
Buyer in the Homebuilding Business (as defined herein), and (b) solicit
certain persons for employment.
G. At the Closing (and as a condition thereto), the Buyer and
Xxxxxxx shall enter into an option agreement (the "Park Xxxxxxx Option
Agreement") in the form attached hereto as Exhibit E (the "Form of Park
Xxxxxxx Option Agreement") pursuant to which the Buyer shall have the option
to purchase certain real property described therein.
H. At the Closing (and as a condition thereto), the Buyer and
Xxxxxxx shall enter into a consulting agreement (the "Consulting Agreement")
in the form attached hereto as Exhibit F (the "Form of Consulting Agreement")
pursuant to which Xxxxxxx shall provide certain consulting services to the
Buyer with respect to the Homebuilding Business.
I. At the Closing (and as a condition thereto), the Buyer and
Forecast Development, L.P., a California limited partnership ("Forecast
Development"), shall enter into an agreement (the "Forecast Development
Option and Purchase Agreement") in the form attached hereto as Exhibit G (the
"Form of Forecast Development Option and Purchase Agreement") pursuant to
which Forecast Development shall grant to the Buyer an option to purchase
Forecast Development's limited partnership interest in Premier.
J. At the Closing (and as a condition thereto), the Buyer and the
Seller shall enter into an indemnification and release agreement (the
"Indemnification and Release Agreement") in the form attached hereto as
Exhibit H (the "Form of Indemnification and Release Agreement") pursuant to
which (a)the Buyer shall indemnify and release the Seller with respect to any
claims with respect to the Assets, and (b)the Seller shall indemnify and
release the Buyer with respect to any claims regarding the Excluded Assets.
K. Prior to the Effective Date, the Buyer shall have delivered to
the Seller a copy of the resolutions adopted by the Buyer's Board approving
the execution, delivery, and performance of this Agreement and the
transactions contemplated hereby and each agreement, certificate, instrument
or other document to be delivered pursuant hereto to which the Buyer is a
party.
L. Subject to the terms and conditions of this Agreement, the Seller
desires to sell and the Buyer desires to buy all of the Assets at the Closing
in consideration for, among other things, the Purchase Price.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants and promises
of the Parties, the Parties to this Agreement, intending to be legally bound,
agree as follows:
SECTION 1. DEFINITIONS; PURCHASE AND SALE; CLOSING
1.1 Definitions.
1.1.1. General. For all purposes of this Agreement, except as
otherwise expressly provided herein:
(a) the terms defined in this Section 1 have the meanings
assigned to them in this Section 1 and include the plural as well as the
singular;
(b) all accounting terms not otherwise defined in this
Agreement have the meanings assigned to them under GAAP;
(c) unless otherwise specified, all references in this
Agreement to designated "Sections," subsections and other subdivisions are to
the designated Sections, subsections and other subdivisions of the body of
this Agreement;
(d) pronouns of either gender or neuter shall include, as
appropriate, the other pronoun forms;
(e) the words "herein," "hereof," "hereby" and "hereunder"
and other words of similar import refer to this Agreement as a whole and not
to any particular Section, subsection or other subdivision; and
(f) the words "made available" shall mean a document that
(i)is filed with the SEC and accessible on the SEC's website as of the
Effective Date, or (ii)was placed in the document room accessible by the
Buyer and its representatives for purposes of conducting its due diligence
investigation on or before October 22, 2001, or (iii)is referenced in a title
report or title policy with respect to Real Property delivered to the Buyer
or placed in said room on or before October 22, 2001.
1.1.2. Definitions. As used in this Agreement and the Exhibits
and Schedules delivered pursuant to this Agreement, the following definitions
shall apply:
(a) "Account" shall have the meaning set forth in Section
2.7.
(b) "Action" means any action, complaint, claim, demand,
accusation, petition, investigation, suit or other proceeding, including,
without limitation, those under or relating to Environmental Laws, whether
civil, criminal, administrative or investigative, in Law or in equity, or
before any arbitrator or Governmental Entity.
(c) "Additional Consideration" shall have the meaning set
forth in Section 1.6.1.
(d) "Affiliate" means a Person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is
under common control with, a specified Person.
(e) "Agreement" means this Asset Purchase Agreement by and
among the Buyer, the Seller and Xxxxxxx, as the same may be amended or
supplemented from time to time in accordance with its terms, together with
all of the Exhibits and Schedules attached hereto or incorporated herein by
reference.
(f) "Approval" means any approval, authorization, consent,
qualification or registration, or any waiver of any of the foregoing,
required to be obtained from, or any notice, statement or other communication
required to be filed with or delivered to, any Governmental Entity or any
other Person.
(g) "Assets" shall mean all of the assets owned by the
Seller, the Consolidated Forecast Entities and Xxxxxxx (other than the
Excluded Assets) that are primarily used in the Homebuilding Business,
including, without limitation, those which are listed as Assets on Exhibit A
attached hereto.
(h) "Auditors" means Ernst & Young LLP, independent public
accountants.
(i) "Buyer" shall have the meaning set forth in the
introductory paragraph of this Agreement.
(j) "Buyer's Board" shall mean the board of directors of the
Buyer.
(k) "Buyer's SEC Reports" shall mean the following reports
filed by the Buyer with the SEC, in the form filed with the SEC, except to
the extent permitted by Regulation S-T under the Securities Act: (i)its
Annual Report to Shareholders and Annual Report on Form 10-K for the fiscal
years ended September 30, 2000 and September 30, 2001, (ii)its Proxy
Statement for its 2001 Annual Meeting of Shareholders, (iii)its Quarterly
Report on Form 10-Q for the quarter ended December 31, 2001, (iv)any Current
Reports on Form 8-K filed by it after September 30, 2001, and (v)any
amendments and supplements to any such reports filed by the Buyer with the
SEC.
(l) "Buyer's Shares" shall mean the Common Stock conveyed to
Seller pursuant to Section 1.3.1 hereof.
(m) "Call Payment" shall have the meaning set forth in
Section 1.5.
(n) "Cash Purchase Portion" shall have the meaning set forth
in Section 1.3.1.
(o) "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as subsequently amended.
(p) "Change of Control" shall mean, in a transaction or
series of related transactions, (i) the liquidation, winding up, or
dissolution of the Buyer, whether voluntary or involuntary, (ii) the sale of
all or substantially all of the assets of the Buyer, (iii) the reorganization
or recapitalization of the Buyer, or (iv) the sale, merger, or consolidation
of the Buyer in which the holders of the securities of the Buyer immediately
prior to such transaction(s) hold less than fifty percent (50%) of the voting
power of the surviving entity after such transaction(s).
(q) "Change of Control Payment" shall have the meaning set
forth in Section 1.4.4.
(r) "Closing" means the consummation of the purchase and
sale of the Assets pursuant to the terms of this Agreement.
(s) "Closing Date" shall mean February 1, 2002 or such other
date as the Parties may mutually agree in writing.
(t) "Closing Price" shall have the meaning set forth in
Section 1.3.1.
(u) "Closing Refund" shall have the meaning set forth in
Section 1.6.1.
(v) "Code" means the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
(w) "Collateral Agreements" means, collectively, the Lot
Option Agreement, the ROFO Agreement, the Non-Competition and Option
Agreement, the Park Xxxxxxx Option Agreement, the Forecast Development Option
and Purchase Agreement, the Consulting Agreement, the Assignment and
Assumption Agreement and the Indemnification and Release Agreement.
(x) "Common Stock" shall mean shares of the Class A common
stock of the Buyer, par value $.01 per share.
(y) "Consolidated Forecast Entities" means, collectively,
the entities listed on Schedule 1.1 attached hereto, and their subsidiaries
and predecessors engaged in the Homebuilding Business.
(z) "Consolidated Net Worth" means the aggregate book value
of the Hold-Back Properties, the Assets and the Securities, plus any amounts
credited to or deposited by or on behalf of (i) the Seller with respect to
any Contract relating to the Assets, or (ii) the Securities Partnership with
respect to any Contract less any Liabilities relating to the Assets of the
Consolidated Forecast Entities and assumed by Buyer pursuant to this
Agreement, the Securities Agreement or any Collateral Agreement (other than
the Excluded Liabilities); provided, however, that the determination of the
Consolidated Net Worth shall not take into account any stepped-up basis of
the Assets resulting from the transactions contemplated hereby.
(aa) "Consulting Agreement" shall have the meaning set forth
in Recital H.
(bb) "Contract" means any agreement, arrangement, bond,
commitment, franchise, indemnity, indenture, instrument, lease, license or
understanding, whether or not in writing, entered into by the Buyer, the
Seller or any of the Consolidated Forecast Entities, as applicable,
specifically excluding, however, the Collateral Agreements.
(cc) "Controlled Entity" means any entity (i) in which the
direct or indirect beneficial ownership (as described in Rule 13d-3 under the
Exchange Act) of at least fifty-one percent (51%) of its voting securities is
held by Xxxxxxx, or (ii) with respect to which Xxxxxxx has the contractual
right to exercise control.
(dd) "Covered Counties" shall have the meaning set forth
in Section 5.1.2.
(ee) "Day" shall mean Xxxxx X. Day, a natural person.
(ff) "days" shall mean calendar days, unless specifically
provided to the contrary in a particular instance in this Agreement.
(gg) "Debt" shall have the meaning set forth in Section
1.12.
(hh) "Development Status" shall have the meaning set forth
in Section 2.4.1.
(ii) "Disclosure Schedule" means a disclosure schedule
attached to this Agreement and prepared by or on behalf of the Buyer or the
Seller, as applicable, which disclosure schedules set forth with specificity
exceptions to the representations and warranties of the Buyer and the Seller,
respectively, contained in this Agreement.
(jj) "Divestiture Period" shall have the meaning set forth in
Section 1.4.2.
(kk) "Effective Date" means the date this Agreement is
duly authorized, executed and delivered by each Party to the other, as more
particularly set forth in the introductory paragraph of this Agreement.
(ll) "Encumbrance" means any claim, charge, mortgage, title
restriction, title defect, easement, encumbrance, lease, covenant, security
interest, hypothecation, lien, option, pledge, rights of others, or
restriction of any kind, imposed by Contract or Law, except for any
restrictions on transfer generally arising under any applicable federal or
state securities law.
(mm) "Environmental Laws" means any past or present
federal, state or local codes, regulations, rules, statutes, ordinances or
similar items of any Governmental Entities, and any covenants running with
the land, that relate to environmental, health, industrial hygiene,
pollution, or safety matters, including, without limitation, the Clean Air
Act, CERCLA, the Federal Water Pollution Control Act, the Hazardous Materials
Transportation Act, the Resource Conservation and Recovery Act of 1976, the
Toxic Substances Control Act, any other applicable Laws of any jurisdiction
in which any of the Combined Forecast Entities is conducting or has during
any specifically referenced time period set out in this Agreement conducted
business and any judicial or administrative decrees, interpretations,
judgments or Orders with respect thereto.
(nn) "Environmental Reports" shall have the meaning set
forth in Section 2.4.9.
(oo) "Equity Securities" means any capital stock or other
equity interest or any securities convertible into or exchangeable for
capital stock or any other rights, warrants or options to acquire any of the
foregoing securities.
(pp) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and the related regulations and published
interpretations.
(qq) "Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
(rr) "Excluded Assets" shall mean, collectively, the Hold-
Back Property and the Xxxxxxx Projects.
(ss) "Excluded Employees" shall have the meaning set forth in
Section 5.1.1.
(tt) "Excluded Liabilities" shall mean any and all known and
unknown Liabilities (i)associated with the Excluded Assets or arising as a
result of or in connection with the ownership or use of the Excluded Assets
by the Seller, including, without limitation, under any Environmental Law,
and (ii)of the Seller, Xxxxxxx or any of their Affiliates relating to,
pertaining to, or arising out of the Assets with respect to income or other
Taxes for periods or portions thereof ending on or prior to the Closing Date,
including, without limitation, any Taxes arising in connection with the
consummation of the transactions contemplated hereby.
(uu) "Executive Officers" means, (i)with respect to the
Seller, collectively, Messrs. Xxxxxxx, Day, Xxxxxxxx and Xxxxxxx Xxxxxxxx,
and (ii)with respect to the Buyer, collectively, Messrs. Xxx Xxxxxxxxx,
Geaton XxXxxxxxx, Xxxxx Xxxxxxxx and Xxxxx Xxxxxx.
(vv) "Exhibit" means an exhibit attached to, or
incorporated by reference in, this Agreement.
(ww) "Final Balance Sheet" shall have the meaning set
forth in Section 1.6.2.
(xx) "Financial Statements" means the audited financial
statements dated October 31, 2001 prepared by the Auditors with respect to
the assets and liabilities of the Seller.
(yy) "Forecast Development" shall have the meaning set
forth in Recital I.
(zz) "Forecast Development Option and Purchase Agreement"
shall have the meaning set forth in Recital I.
(aaa) "Fundamental Default" means a default (beyond any
applicable cure period) by the Buyer under any of Section 1.3, 1.4.4, 1.4.5,
1.5 or 1.6.1.
(bbb) "GAAP" means generally accepted accounting principles
in the United States, as in effect from time to time, consistently applied.
(ccc) "Xxxxxxxx" shall mean Xxxxx Xxxxxxxx, a natural
person.
(ddd) "Governmental Entity" means any government or any
agency, bureau, board, commission, court, department, official, political
subdivision, tribunal or other instrumentality of any government, whether
federal, state or local, domestic or foreign.
(eee) "Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the related regulations
and published interpretations.
(fff) "Hazardous Substance" means substances that are
defined or listed in, or otherwise classified pursuant to, any applicable
Laws as "hazardous substances," "solid wastes," "oil," "petroleum,"
"hazardous materials," "hazardous wastes" or "toxic substances."
(ggg) "Hold-Back Properties" shall mean those properties
listed as Hold-Back Properties on Exhibit A attached hereto.
(hhh) "Homebuilding Business" means the business of the
Consolidated Forecast Entities, including, by way of limitation, the
construction of single-family, for sale residential housing and the sale-
leaseback of model homes in the applicable homebuilding communities.
(iii) "Indemnifiable Claim" means any Loss for or against
which any party is entitled to indemnification as set forth in Section 5.6 or
8.
(jjj) "Indemnification and Release Agreement" shall have the
meaning set forth in Recital J.
(kkk) "Indemnified Party" means the party entitled to
indemnity as set forth in Section 8.
(lll) "Indemnifying Party" means the party obligated to
provide indemnification as set forth in Section 8.
(mmm) "IRS" means the Internal Revenue Service or any
successor entity.
(nnn) "knowledge of the Buyer" and words of similar import
and effect shall have the meaning set forth in Section 10.12.
(ooo) "knowledge of the Seller" and words of similar import
and effect shall have the meaning set forth in Section 10.12.
(ppp) "Law" means any constitutional provision, statute or
other law, rule, regulation, or interpretation of any Governmental Entity and
any Order.
(qqq) "Liability" means any liability or obligation of any
kind, character or description, contingent or otherwise, known or unknown,
whether liquidated or unliquidated, secured or unsecured, and/or joint or
several.
(rrr) "Lock-Out Period" shall have the meaning set forth in
Section 1.4.1.
(sss) "Loss" means any cost, damage, disbursement, expense,
liability, loss, deficiency, obligation, penalty or settlement of any kind or
nature, contingent or otherwise, that is not recaptured through insurance
proceeds or any other form of rebate, credit or reimbursement, including,
without limitation, interest or other carrying costs, penalties, reasonable
legal, accounting and other professional fees and expenses incurred in the
investigation, collection, prosecution and defense of claims and amounts paid
in settlement.
(ttt) "Lot Option Agreement" shall have the meaning set forth
in Recital D.
(uuu) "Market Price," as applied to any publicly-traded
class of security on any specified day, means the average closing market
price (regular way) of such security on the New York Stock Exchange (or any
other major exchange on which such security is listed or any market on which
such security is included) for the trailing five (5)-trading days at the
close of markets immediately preceding the specified day.
(vvv) "material adverse effect," means, with respect to a
Person or a specific parcel of Real Property or the Homebuilding Business, as
applicable, any change or effect that has resulted or could reasonably be
expected to result in Losses, together with any other change or effect,
suffered in excess of Five Hundred Thousand Dollars ($500,000); provided,
however, that a decline or forecasted decline in general economic conditions
or matters generally affecting homebuilding businesses in one or more real
estate markets in which such Person conducts business or operates or any Real
Property is located, or homebuilding companies in general (including, without
limitation, the cost or availability of energy or energy-related products,
changes in or affecting interest rates, securities markets, accounting
principles, practices or conventions, applicable laws and regulations,
homebuilding starts, closings, building and/or permit moratoria, zoning
changes or comparable events or events in the nature of the foregoing) shall
not be deemed to have a material adverse effect.
(www) "Material Contract" shall have the meaning set forth
in Section 2.2.1.
(xxx) "Maximum Proceeds" shall have the meaning set forth
in Section 1.4.5.
(yyy) "Maximum Share Allocation" shall mean that number of
Buyer's Shares equal to nineteen and nine-tenths percent (19.9%) of the
number of all shares of outstanding Common Stock as of the end of the trading
day on the Closing Date.
(zzz) "Minimum Proceeds" shall have the meaning set forth
in Section 1.4.5.
(aaaa) "Monthly Repurchase Amount" shall have the meaning
set forth in Section 1.3.2.
(bbbb) "Monthly Repurchase Price" shall have the meaning set
forth in Section 1.3.2.
(cccc) "Monthly Sale Amount" shall have the meaning set
forth in Section 1.4.2.
(dddd) "Net Worth Deficiency" shall have the meaning set
forth in Section 1.6.1.
(eeee) "Net Worth Surplus" shall have the meaning set forth
in Section 1.6.1.
(ffff) "Non-Competition and Option Agreement" shall have the
meaning set forth in Recital F.
(gggg) "Notice of Dispute" shall have the meaning set forth
in Section 1.6.2.
(hhhh) "Option Consideration" shall have the meaning set
forth in Recital A.
(iiii) "Option Date" shall have the meaning set forth in
Recital A.
(jjjj) "Order" means any decree, injunction, judgment,
order, ruling, assessment or writ, including, without limitation, those
arising under any Environmental Law.
(kkkk) "Park Xxxxxxx Option Agreement" shall have the
meaning set forth in Recital G.
(llll) "Party" means any party to this Agreement.
(mmmm) "Permit" means any license, permit, franchise,
certificate of authority, order or any waiver of the foregoing, required to
be issued by any Governmental Entity.
(nnnn) "Permitted Encumbrance" shall have the meaning set
forth in Section 2.4.2.
(oooo) "Person" means any association, corporation,
individual, partnership, limited liability company, trust or any other entity
or organization, including any Governmental Entity.
(pppp) "Policies" shall have the meaning set forth in
Section 2.6.1.
(qqqq) "Premier" shall have the meaning set forth in Recital
F.
(rrrr) "Premier Option" shall have the meaning set forth in
Section 1.7.
(ssss) "Premier Shareholders" shall have the meaning set
forth in Section 1.7.
(tttt) "Xxxxxxx" has the meaning set forth in the
introductory paragraph of this Agreement.
(uuuu) "Xxxxxxx Projects" shall mean the assets transferred
by the Seller to a third-party prior to the Effective Date and listed on
Exhibit I (the "Xxxxxxx Projects") attached hereto.
(vvvv) "Property Documents" shall have the meaning set
forth in Section 2.4.2.
(wwww) "Purchase Price" shall have the meaning set
forth in Section 1.3.1.
(xxxx) "Real Property" shall have the meaning set forth in
Section 2.4.1.
(yyyy) "Recital" shall mean one of the introductory
paragraphs to this Agreement.
(zzzz) "Registration Deadline" shall have the meaning set
forth in Section 1.3.2.
(aaaaa) "Registration Statement" shall have the meaning set
forth in Section 5.5.1.
(bbbbb) "Representative" shall mean Xxxxxxx (and any designee
or nominee so named by Xxxxxxx).
(ccccc) "ROFO Agreement" shall have the meaning set forth in
Recital E.
(ddddd) "Sale Proceeds" shall mean the aggregate sales
proceeds (net of any and all out-of-pocket costs, brokers' fees, filing fees
and other related transaction costs, fees and expenses) from the sales or
sales by Xxxxxxx from time to time of the Buyer' Shares (whether such sales
are on the open market or to the Buyer pursuant to the terms of this
Agreement) during any specified time period or for any specified number of
Buyer's Shares in accordance with Section 1.4.
(eeeee) "Salomon" shall mean Xxxxxxx Xxxxx Xxxxxx Inc.
(fffff) "Schedule" means any schedule attached to, or
incorporated by reference in, this Agreement.
(ggggg) "SEC" shall mean the United States Securities and
Exchange Commission.
(hhhhh) "SEC Reports" means reports filed by a Person with
the SEC.
(iiiii) "Securities" shall have the meaning set forth in
Recital A.
(jjjjj) "Securities Act" shall mean the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder.
(kkkkk) "Securities Partnership" shall have the meaning set
forth in Recital A.
(lllll) "Securities Purchase Agreement" shall have the
meaning set forth in Recital C.
(mmmmm) "Securities Sellers" shall have the meaning set
forth in Recital A.
(nnnnn) "Seller" has the meaning set forth in the
introductory paragraph of this Agreement.
(ooooo) "Share Allocation" shall have the meaning set forth
in Section 1.3.1.
(ppppp) "Subsidiary" means any Person in which the Buyer has
a direct or indirect equity or ownership interest in excess of ten percent
(10%).
(qqqqq) "Tax" means any foreign, federal, state, county or
local income, sales and use, excise, franchise, real and personal property,
transfer, gross receipt, capital stock, production, business and occupation,
disability, employment, payroll, severance or withholding tax or charge
imposed by any Governmental Entity, and any interest and/or penalties (civil
or criminal) or addition to tax related thereto or to the nonpayment thereof.
(rrrrr) "Tax Proceeding" shall have the meaning set forth in
Section 5.3.
(sssss) "Tax Return" means a report, return or other
information required to be supplied to a Governmental Entity with respect to
Taxes including, where permitted or required, combined or consolidated
returns for any group of entities that includes the Consolidated Forecast
Entities including any amendments thereof.
(ttttt) "Title Company" means Orange Coast Title Company in
Santa Ana, California (Attention: Xx. Xxxxx Xxxxxxxx).
(uuuuu) "Title Policy" means for each parcel of Real
Property, a CLTA Standard Coverage Owner's Policy of Title Insurance (with no
endorsements thereto and no indemnification provided to the Title Company by
Seller), with an effective date as of the Closing Date naming the Buyer as
the insured.
(vvvvv) "Transfer" means the transfers by the Seller of
(i)the Excluded Assets to a third party, and (ii)certain intangible property
to Securities Partnership.
(wwwww) "WARN Act" means the Worker Adjustment and
Retraining Notification Act.
1.2 Transfer of the Assets by the Seller and Assumption of Liabilities
by the Buyer. Subject to the terms and conditions of this Agreement, (a)the
Seller shall sell all of the Assets to the Buyer on the Closing Date, and
(b)the Buyer shall assume all of the Liabilities associated with the Assets
and Securities (but specifically excluding the Excluded Liabilities).
1.3 Purchase of the Assets by the Buyer.
1.3.1. Purchase Price. Subject to the terms and conditions of
this Agreement, the Buyer shall purchase the Assets from the Seller for a
purchase price of One Hundred Fifteen Million Five Hundred Thousand Dollars
($115,500,000) (the "Purchase Price"), of which (a)Seventy Million Dollars
($70,000,000) shall be payable in cash (the "Cash Purchase Portion"), and
(b)Forty-Five Million Five Hundred Thousand Dollars ($45,500,000) shall be
payable in Common Stock, the number of shares of which shall not exceed the
Maximum Share Allocation, and shall be determined by dividing Forty-Five
Million Five Hundred Thousand Dollars ($45,500,000) by the Market Price of
the Common Stock on the Closing Date (the "Closing Price"), and rounding such
quotient to the nearest number of whole shares (the "Share Allocation"). In
the event that the calculation set forth above yields a number of shares of
Common Stock that exceeds the Maximum Share Allocation, then (i) Buyer shall
pay to the Seller cash (which shall be deemed a part of the Cash Purchase
Portion) in an amount equal to the Closing Price multiplied by the number
equal to the difference between the Share Allocation and the Maximum Share
Allocation, and (ii) the Share Allocation shall be deemed equal to the
Maximum Share Allocation. The amount of the Cash Purchase Portion and the
Share Allocation shall be subject to adjustment as provided below, and from
and after any such adjustment(s), the terms "Buyer's Shares," "Share
Allocation" and "Purchase Price" shall refer to such adjusted amounts.
1.3.2. Registration of the Buyer's Shares. After the Closing
Date, in accordance with Section 5.6, the Buyer shall cause all of the
Buyer's Shares to be fully registered under the Securities Act and freely
transferable. The Buyer shall inform the Seller of the form and content of
the financial statements of the Consolidated Forecast Entities that the Buyer
reasonably and in good faith expects the SEC to require (with specific
reference to the applicable SEC rule or comment). The Seller agrees to use
commercially reasonable efforts, in good faith, to prepare the financial
statements of the Consolidated Forecast Entities so that the form and content
of such financial statements are consistent with the previous sentence. If
for any reason the Buyer does not or is unable to fully register all of the
Buyer's Shares under the Securities Act on or before the day that is six (6)
months after the Closing Date (the "Registration Deadline"), then the Buyer
shall purchase all of the Buyer's Shares from the Seller as follows:
(a) On or before the fifth (5th) day of each calendar month
following the Registration Deadline, for eighteen (18) consecutive months,
the Buyer shall, in accordance with this Section 1.3.2, purchase from the
Seller a number of the Buyer's Shares equal to the Share Allocation divided
by eighteen (the "Monthly Repurchase Amount").
(b) The purchase price to be paid by the Buyer to the Seller
for the purchase of the Buyer's Shares pursuant to subsection (a) above shall
be the Market Price as of the day of repurchase multiplied by the Monthly
Repurchase Amount (the "Monthly Repurchase Price").
(c) The Buyer shall remit the Monthly Repurchase Price
within two (2) business days of its receipt of the certificates representing
the applicable Buyer's Shares and any stock powers or endorsements necessary
to evidence the transfer of the applicable Buyer's Shares to the Buyer.
(d) Within five (5) days after the final repurchase by the
Buyer of the Buyer's Shares in accordance with this Section 1.3.2, the Buyer
or the Seller, as the case may be, shall make any payment to the other that
may be required by either Section 1.4.5(a) or 1.4.5(b).
1.3.3. Equitable Adjustment. The Share Allocation shall be
subject to proportionate adjustment in the event of any stock split, reverse
stock split, dividend payable in stock, reclassification, combination or
extraordinary distribution, or any other event in the nature of any of the
foregoing, whereby the Buyer issues, without consideration, additional shares
of its Common Stock with a record date prior to the Closing Date, and in such
case the term "Buyer's Shares" shall refer to such adjusted amount.
1.4 Disposition of Buyer's Shares by the Seller.
1.4.1. Lock-Out Period. Subject to Section 1.4.4, during the
period from the Closing Date to the last day of the calendar month in which
the six (6) month anniversary of the Closing Date occurs (the "Lock-Out
Period"), the Seller shall not sell the Buyer's Shares without the Buyer's
prior written consent. The Parties agree that the Seller may, in its sole
and absolute discretion, at any time, pledge and/or hypothecate the Buyer's
Shares; provided, however, that the lender thereunder shall agree in writing
to take such pledge or hypothecation subject to the terms of this Agreement
applicable to the Buyer's Shares.
1.4.2. Divestiture Period. Subject to Section 1.4.4, during the
period between the first day following the Lock-Out Period and the last day
of the calendar month in which the two (2) year anniversary of the Closing
Date occurs (the "Divestiture Period"), the Buyer and the Seller shall cause
a third party mutually selected by the Buyer and the Representative to sell
all of the Buyer's Shares pursuant to the following procedures:
(a) The Buyer shall pay for any and all (i)brokers' fees and
commissions incurred in connection with any disposition of the Buyer's
Shares, and (ii)out-of-pocket costs, brokers' fees and commissions, filing
fees, auditing fees and other related transaction costs, fees and expenses
incurred by the Seller in connection with any unusual transaction for the
sale of the Buyer's Shares if such sale transaction is proposed by the Buyer.
(b) The Buyer shall have the right to select the broker
engaged in such disposition of the Buyer's Shares if (i) such broker requires
a lesser commission arrangement than the broker selected by the Seller, (ii)
the Seller consents in writing to the engagement of such broker (which
consent shall not be unreasonably withheld or delayed), and (iii) the Buyer's
selection of such broker does not in any way prejudice the interests of the
Seller.
(c) Each calendar month, the Seller shall sell that number
of the Buyer's Shares (the "Monthly Sale Amount") equal to the Share
Allocation divided by eighteen (18), rounded off to the nearest number of
whole shares.
1.4.3. Extension of Divestiture Period. The Divestiture Period
shall be deemed to extend for the necessary number of days required to
dispose of the Buyer's Shares pursuant to this Section 1.4.
1.4.4. Change of Control. In the event of a Change of Control,
the Buyer shall, within five (5) days of such Change of Control (a)repurchase
any and all remaining outstanding Buyer's Shares for a per share price equal
to one hundred and fifteen percent (115%) of the Closing Price (the "Change
of Control Payment"), and (b)deliver payment thereof to the Seller, without
demand, deduction, offset or delay; provided, however, that such payment
shall be net of any adjustment required pursuant to either Section 1.4.5(a)
or 1.4.5(b). Within five (5) days after the Seller's receipt of the Change
of Control Payment, the Buyer or the Seller, as the case may be, shall make
any payment to the other that may be required by either Section 1.4.5(a) or
1.4.5(b).
1.4.5. Adjustment Based on Market Price of the Buyer's Shares.
(a) Minimum Proceeds. If the aggregate Sales Proceeds from
the sales of the Buyer's Shares (including sales to the Buyer pursuant to
Section 1.3.2, 1.4.4 or 1.5) do not equal or exceed Forty Million Nine
Hundred Fifty Thousand Dollars ($40,950,000) (the "Minimum Proceeds"), then
the Buyer shall, within five (5) days after the last sale of the Buyer's
Shares, deliver to the Seller (without demand, deduction, offset or delay)
cash in an amount equal to the difference between (i)the Minimum Proceeds,
and (ii)the Sale Proceeds.
(b) Maximum Proceeds. If, at any time during the
Divestiture Period, the aggregate Sales Proceeds from the sales of the
Buyer's Shares (including sales of the Buyer's Shares to the Buyer pursuant
to Section 1.3.2, 1.4.4 or 1.5) exceed Fifty-Two Million Three Hundred
Twenty-Five Thousand Dollars ($52,325,000) (the "Maximum Proceeds"), then the
Seller shall, within five (5) days after the last sale of the Buyer's Shares,
deliver to the Buyer (without demand, deduction, offset or delay) (i)cash in
an amount equal to the difference between (A)such aggregate Sale Proceeds,
and (B)the Maximum Proceeds, and (ii)any and all certificates, stock powers
or endorsements required to transfer any remaining unsold Buyer's Shares to
the Buyer in exchange for Ten Dollars ($10) in consideration.
(c) Limitations on Adjustments. The payments of the Buyer
or the Seller required by this Section 1.4.5 shall be made only (i) with
respect to those Buyer's Shares sold during the Divestiture Period, and (ii)
if none of such sales is a "block" or other non-customary sale or trade at a
discount to the then-current Market Price, regular way that were not mutually
agreed upon in advance. Any payment made pursuant to this Section 1.4.5
shall be treated as an adjustment to the Purchase Price.
1.5 Call Right. During the time period beginning on the one (1) year
anniversary of the Closing Date and ending on the two (2) year anniversary of
the Closing Date, the Buyer may elect to repurchase all remaining Buyer's
Shares then owned by the Seller by (a) providing not less than ten (10) days'
prior written notice to the Representative of such election (which election
shall be irrevocable and unconditional), and (b) delivering to the Seller, in
exchange for the certificate representing such Buyer's Shares and any
necessary stock powers or endorsements, an amount in immediately available
funds equal to the product of the number of the then-remaining Buyer's Shares
and one hundred fifteen percent (115%) of the Closing Price (the "Call
Payment"); provided, however, that such payment shall be net of any
adjustment required pursuant to either Section 1.4.5(a) or 1.4.5(b).
1.6 Purchase Price Adjustment.
1.6.1. Closing Refund; Additional Consideration. If the
Consolidated Net Worth included on the Final Balance Sheet is (a) less than
One Hundred Forty-Five Million Dollars ($145,000,000) (the amount of such
difference being the "Net Worth Deficiency"), the Seller shall pay to the
Buyer an amount, in immediately available funds, equal to the Net Worth
Deficiency multiplied by 1.55 (the "Closing Refund"), or (b) greater than One
Hundred Forty-Five Million Dollars ($145,000,000) (the amount of such
difference being the "Net Worth Surplus"), the Buyer shall pay to the Seller
an amount, as additional consideration, in immediately available funds, equal
to the Net Worth Surplus multiplied by 1.55 (the "Additional Consideration")
and such payment shall be a decrease or an increase in the Purchase Price, as
appropriate. Any Closing Refund or Additional Consideration shall be paid
within five (5) business days after the Final Balance Sheet becomes final and
binding on the Parties pursuant to Section 1.6.2. Any late payment (i) by
the Seller of the Closing Refund, or (ii) by the Buyer of the Additional
Consideration, shall bear interest at one percent (1%) per month, compounded
monthly.
1.6.2. Final Balance Sheet.
(a) The Parties shall cause the Auditors, within sixty (60)
days following the Closing Date, at the Buyer's sole cost and expense, to
deliver to each of the Parties, a balance sheet regarding the Consolidated
Net Worth as of January 31, 2002 (as it may be adjusted pursuant to this
Section 1.6.2, the "Final Balance Sheet"), together with a written notice
stating whether there is a Net Worth Deficiency or a Net Worth Surplus and,
if applicable, specifying the amount thereof. During the preparation of the
Final Balance Sheet, the Seller shall have the right to be present at each
discussion between the Buyer and the Auditors in respect of the audit and to
observe the work performed by the Buyer and the Auditors in connection with
their preparation of the Final Balance Sheet. After the Closing, the Buyer
shall allow the Auditors access to such books and records that were
transferred to the Buyer by the Seller at the Closing as the Auditors may
reasonably require for such audit. The Final Balance Sheet shall be prepared
in accordance with GAAP as the Auditors determine is applicable to an
Exchange Act reporting company with registered equity securities. In the
event the Closing occurs prior to January 31, 2002, the Buyer shall, from the
Closing Date through January 31, 2002, operate the Homebuilding Business in
the ordinary course of business, which shall include the sale-leaseback of
model homes.
(b) If either of the Parties disputes any item(s) on the
Final Balance Sheet, such disputing Party shall notify the other Party in
writing thereof (the "Notice of Dispute") within thirty (30) days after the
Auditor's delivery of the Final Balance Sheet to each of the Buyer and the
Seller, which Notice of Dispute shall set forth in reasonable detail the
items in dispute, the basis for dispute and the amounts being disputed. If
neither of the Parties delivers a Notice of Dispute within the aforesaid
thirty (30)-day period, the Final Balance Sheet shall become final and
binding upon, and non-appealable by, all Parties at the end of such period
and any Closing Refund or Additional Consideration evidenced by the Final
Balance Sheet delivered pursuant to Section 1.6.2, if applicable, shall be
paid pursuant to Section 1.6.1.
(c) If either of the Parties timely delivers a Notice of
Dispute to the other Party, the Representative and the Buyer shall attempt in
good faith to resolve such dispute(s). If the Representative and the Buyer
are unable to resolve any disputed item(s) within ten (10) business days
after the non-disputing Party's receipt of the Notice of Dispute, such
disputed item(s) shall be submitted by the disputing Party within five (5)
days after the expiration of such ten (10) business day period to one of the
"Big 5" accounting firms which is independent of both the Seller and the
Buyer and not heretofore engaged by either Party, chosen with the mutual
consent of the Representative and the Buyer. This accounting firm shall be
instructed to resolve such disputed item(s) based upon the presentations of
the Seller and the Buyer within twenty (20) days after the initial submission
as aforesaid. The resolution of disputes by the accounting firm so selected
shall be set forth in writing and shall become final and binding upon, and
non-appealable by, all Parties, and the Final Balance Sheet shall become
final and binding upon the date of such resolution. The costs and expenses
of such resolution, including, without limitation, the costs and fees of the
efforts of the accounting firm retained to resolve such dispute, shall be
paid by the losing party.
(d) Between the Closing Date and the completion of the Final
Balance Sheet, the Buyer shall afford the Seller and its representatives
reasonable access during normal working hours to all books, records,
correspondence, files, financial statements, operating data and all other
information with respect to the business of the Consolidated Forecast
Entities as in existence prior to the Closing Date, and shall provide to the
Seller, the Auditors and their respective representatives such operating and
financial data and any other information with respect to the business of the
Consolidated Forecast Entities, as in existence prior to the Closing Date as
they may from time to time reasonably request for the purpose of preparing
the Final Balance Sheet and resolving any disputed items. The Seller shall
perform those procedures normally performed in a year-end closing and take
such other reasonable measures as are reasonably necessary to prepare the
Final Balance Sheet. The Buyer shall make reasonably available to the Seller
the appropriate officers and employees of the business of the Seller for
purposes of assisting the Seller, the Auditors or their respective
representatives, at no cost to Seller, in the preparation of the Final
Balance Sheet and resolving any disputed items.
1.6.3. Survival. The Parties' obligations under Sections 1.3,
1.4, 1.5 and 1.6 shall survive the Closing Date and remain in full force and
effect.
1.7 Option to Purchase Premier. On or prior to the Closing Date,
Xxxxxxx and the other shareholders of Premier at that time (collectively, the
"Premier Shareholders"), shall, pursuant to the terms and provisions of the
Non-Competition and Option Agreement, grant to the Buyer an option to
purchase the assets of Premier (the "Premier Option"). The Premier Option
shall terminate, at Xxxxxxx'x sole discretion, upon a Fundamental Default by
the Buyer.
1.8 Closing. The Closing will take place (a) at the offices of
O'Melveny & Xxxxx LLP, 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx,
at 10:00 a.m. (Pacific Time) on January --, 2002, or (b)on such other date or
at such other location as the Representative and the Buyer may mutually agree
in writing. In no case shall the Closing occur after the date specified in
Section 7.1, unless extended by the mutual written agreement of the Parties
as provided in Section 7.1. At the Closing, the Buyer shall (i)pay the Cash
Purchase Portion to the Seller in cash by wire transfer of immediately
available federal funds to such account(s) as shall be specified in
instructions from the Representative to the Buyer at least three (3) business
days prior to the Closing, (ii) issue and deliver the Buyer's Shares to the
Seller registered in the name of such Persons in such denominations as shall
be specified in instructions from the Representative at least three (3)
business days prior to the Closing, and (iii) execute any and all documents
that the Seller and any other interested party in the transactions
contemplated hereunder shall deem necessary to perfect the intentions of the
Parties to this Agreement, including, without limitation, documents
reasonably and customarily required by the Title Company and/or any escrow
holder.
1.9 Purchase Price Allocation. The Parties shall not cause to be filed
any Tax Return or otherwise take any position for federal or state income Tax
purposes which is inconsistent with the allocations set forth on Schedule 1.9
(the "Purchase Price Allocation Schedule") attached hereto, prepared in
accordance with the tax rules under Sections 1060 and 755 of the Code which
have been agreed upon through arms-length negotiations by the Buyer and the
Seller and which represent the respective fair market value of the Assets.
1.10 Further Assurances. At any time and from time to time after the
Closing Date, upon the written request of the Buyer or the Seller to the
other, as applicable, and without any cost or expense to the responding
Party, the Buyer and the Seller, as applicable, shall execute and deliver
such instruments of conveyance, assignment and transfer and other documents
as the Buyer or the Seller, as applicable, may reasonably request to (a)
transfer to and vest in the Buyer (or any of its Subsidiaries) and to put the
Buyer (or any of its Subsidiaries) in possession of, the Assets, or (b) to
otherwise carry out the intent and purposes of this Agreement.
1.11 Representative. The Seller hereby appoints the Representative to
represent the Seller in connection with any part or all of the transactions
contemplated by this Agreement and to take any and all action on its behalf
under this Agreement that may be taken or received by the Seller as to any or
all of the transactions contemplated under the terms of this Agreement.
Without giving notice to the Seller, the Representative shall have full and
irrevocable authority on behalf of the Seller to (a) deal with the Buyer,
(b)accept and give notices and other communications relating to this
Agreement, (c) settle any disputes relating to this Agreement, (d) waive any
condition to the obligations of the Seller included in this Agreement, (e)
execute any document or instrument that the Representative may deem necessary
or desirable in the exercise of the authority granted under this Section
1.11, and (f) act in connection with all matters arising out of, based upon,
or in connection with, this Agreement and the transactions contemplated
hereby. The Buyer shall be entitled to rely on the advice, information,
instructions and decisions of the Representative evidenced by a writing
signed by him without any obligation independently to verify, authenticate or
seek the confirmation or approval of the Representative's advice,
information, instructions or decisions or any other facts from the Seller or
any other Person. Any certificate to be delivered by the Seller at the
Closing may be executed and delivered by the Representative on behalf of the
Seller.
1.12 Satisfaction of Debt. The Parties agree that the Buyer shall,
simultaneously with the Closing, satisfy any and all debt relating to the
Assets or the Homebuilding Business generally set forth on Schedule 1.12 (the
"Debt") attached hereto.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Parties agree that the sale of the Assets shall be without
representation or warranty by the Seller, express or implied, except as
specifically set forth in this Agreement. Other than with respect to the
representations and warranties contained in Sections 2.1.1 and 2.16 (as
limited by Section 8.1.1), none of the representations and warranties
contained herein shall survive the Closing; provided, however that to the
extent that the making of any such representation or warranty constituted
actual fraud (and as further limited by Section 8.1.2) on the part of the
Seller, the Buyer's right to bring any Action against the Seller thereunder
and to such extent shall survive the Closing and shall remain in full force
and effect until the date that is ninety (90) days after the expiration of
the applicable statutory period; provided, however, such Action shall be
filed in accordance with Section 10.10 by the Buyer within ninety (90) days
after the Buyer's knowledge thereof or the claim (and the applicable remedy)
shall be automatically waived. Except as otherwise specifically indicated on
the Seller's Disclosure Schedule as to the particular section as to which an
exception is being disclosed, the Seller represents and warrants to the Buyer
as follows:
2.1 The Assets.
2.1.1. Ownership at the Closing. At the Closing, the Seller shall
have good and marketable title to, and sole record and beneficial ownership
of, the Assets, all of which are to be transferred to the Buyer by the Seller
pursuant to this Agreement free and clear of Encumbrances, except Permitted
Encumbrances and those exceptions set forth on the Seller's Disclosure
Schedule.
2.1.2. Transfer of Unencumbered Title to the Assets. Upon the
Closing, the Seller shall transfer to the Buyer legal and beneficial
ownership of the Assets, free and clear of all Encumbrances other than the
Permitted Encumbrances and those exceptions set forth on the Seller's
Disclosure Schedule.
2.1.3. Formation; Power and Authority. The Seller is a duly
formed and validly existing limited partnership, in good standing, under the
laws of the State of California with the power under the California Revised
Limited Partnership Act and its partnership agreement to own, lease and
operate its properties, to carry on its business as now conducted, to enter
into this Agreement and to transfer, convey and sell to the Buyer at the
Closing the Assets. The Seller is duly qualified or registered to transact
business in each jurisdiction in which it conducts its businesses, except
where the failure, individually or in the aggregate, to be so qualified or
registered could not reasonably be expected to have a material adverse effect
on the assets, business operations, earnings, properties or condition of the
Seller. The Seller has made available to the Buyer true, correct and
complete copies of all organizational or constituent documents of the Seller
and each of the Consolidated Forecast Entities.
2.1.4. Authorization. The execution, delivery and performance of
this Agreement and the transactions contemplated hereby by the Seller have
been duly and validly authorized by all necessary partnership action on the
part of the Seller. This Agreement has been duly executed and delivered by
the Seller and constitutes the legal, valid and binding obligation of the
Seller, enforceable against the Seller in accordance with its terms except as
may be limited by bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to or limiting creditors' rights generally and
equitable principles.
2.1.5. Absence of Certain Changes. Except as set forth on the
Seller's Disclosure Schedule and with respect to the Transfer, since October
31, 2001, the Consolidated Forecast Entities (a)have preserved and maintained
their Assets generally in accordance with past practice, and (b)have not
suffered a material adverse effect.
2.1.6. Compliance with Applicable Laws. Except as denoted in the
description of Actions pending against the Seller that is set forth on the
Seller's Disclosure Schedule, to the Seller's knowledge, the Consolidated
Forecast Entities are in material compliance with all applicable Laws with
respect to the Assets, except where the noncompliance, individually or in the
aggregate, could not reasonably be expected to have a material adverse effect
on the Assets. Except as denoted in the description of Actions pending
against the Seller that is set forth on the Seller's Disclosure Schedule, to
the Seller's knowledge, no Action has been filed, commenced or threatened in
writing against any of the Consolidated Forecast Entities alleging a failure
to so comply with applicable Laws, nor has any Governmental Entity provided
any Consolidated Forecast Entities with written notice regarding a present
intention to commence an Action based upon the Seller's noncompliance with
applicable Laws.
2.1.7. Adequacy of Assets. The assets of Securities Partnership
and the Assets include all assets and properties of every kind and
description, real, personal or mixed, tangible or intangible, the use of
which is reasonably necessary to enable the Buyer to conduct the Homebuilding
Business substantially as conducted prior to the Effective Date.
2.2 Material Contracts.
2.2.1. Descriptions. The Seller's Disclosure Schedule lists each
Contract (each, a "Material Contract," and collectively, the "Material
Contracts") that:
(a) shall obligate the successor owner of any of the Assets
to pay a contractor or subcontractor an amount in excess of Two Hundred and
Fifty Thousand Dollars ($250,000) over a one (1)-year period;
(b) shall obligate the successor owner of any of the Assets
to pay to any party other than a contractor or subcontractor an amount in
excess of Fifty Thousand Dollars ($50,000) over a one (1)-year period;
(c) represents an indenture, loan or credit agreement in
excess of Fifty Thousand Dollars ($50,000), or provides for or evidences a
loan or extension of credit, a letter of credit or any security or guaranty
in excess of Fifty Thousand Dollars ($50,000) in respect thereof, to which
any of the Assets is bound;
(d) provides a guaranty or indemnity (other than indemnities
that are provided in the ordinary course of business, e.g., mechanics lien
indemnities, among others) by the owner of any of the Assets;
(e) contains a right of first refusal, first offer
obligation or purchase option with respect to any of the Assets, except as
otherwise set forth or described in this Agreement and/or the Collateral
Agreements;
(f) expressly limits or restricts the ability of the owner
of any of the Assets to conduct any type of business in any manner or place;
and
(g) represents (i)a sales agency, broker or finder Contract,
(ii)a loan origination or customer referral Contract that involves an
aggregate payment over a one (1) year period in excess of Fifty Thousand
Dollars ($50,000), (iii)consulting, advisory, marketing, management and other
service agreements that are not terminable by the owner of any Asset without
further liability on not more than thirty (30) days' notice and provides for
annual payments per individual agreement exceeding Fifty Thousand Dollars
($50,000), or (iv)a performance, completion, surety or other bond or
performance guarantee of more than Fifty Thousand Dollars ($50,000), in each
instance to which the owner of any Asset is a party or bound.
True, correct and complete copies of such Material Contracts, including all
amendments and supplements, if any, have been made available to the Buyer.
2.2.2. No Breach. To the Seller's knowledge, the Seller has duly
performed, in all material respects, all its obligations under each Material
Contract to the extent that such obligations to perform have accrued. Except
as specifically set forth on the Seller's Disclosure Schedule, to the
Seller's knowledge, no breach or default, alleged breach or default, or event
which would (with the passage of time, notice or both) constitute a breach or
default thereunder in any material respect by the Seller has occurred under
any Material Contract or will occur as a result of this Agreement.
2.3 Permits. To the Seller's knowledge, the Seller possesses or
currently and reasonably anticipates that the successor owner of the Assets
should be able to obtain in the ordinary course of business, all Permits
necessary for the lawful development of the Real Property, except where the
failure to hold such Permits could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the value of such
Real Property as fully developed.
2.4 Real Property.
2.4.1. Real Property. The Seller's Disclosure Schedule sets forth
an identifying description or, if available, the street address of each
parcel of real property owned by the Seller and included in the Assets. The
real property to be sold by the Seller to the Buyer pursuant to this
Agreement is referred to herein as the "Real Property." The Seller's
Disclosure Schedule also sets forth the general (not detailed) development
status of each project included in the Assets and the Seller's reasonable
good faith estimate of the projected finished lot cost thereof, exclusive of
any and all fees and expenses of any kind or amount owed or to be paid to
unaffiliated third parties (the "Development Status"); provided, however,
that such good faith estimate shall not constitute a covenant or a guarantee
of any kind of nature. With regard to lots on which a single-family
residence may be constructed, to the Seller's knowledge, such lots have or
are reasonably expected to obtain access to streets that are, or in the
future will be, dedicated public rights-of-way or private roadways that are
reasonably expected to be connected to and serviced by electric, gas, sewage,
telephone, cable television and water facilities upon the payment of
customary fees; and the grading thereof has or is reasonably expected to be
completed pursuant to approved grading and drainage plans. Building permits
and (upon the completion of the applicable single-family residence final
inspection and approval by the local Governmental Entity) certificates of
occupancy (or their equivalent) have been, or are reasonably expected to be,
obtained (upon payment of applicable fees therefor where required by the
applicable municipality, the recording of the final plat and/or the
completion of necessary on- and off-site improvements) for all such Real
Property. Except as set forth on the Seller's Disclosure Schedule, with
regard to the Real Property which is not yet ready for construction of a
single-family residence, to the Seller's knowledge, there are no material,
unusual matters which would likely prevent, prohibit, impair or materially
delay the currently intended development, use or occupancy of such Real
Property, taken as a whole, or cause the most recent projected finished lot
cost (as listed on the Seller's Disclosure Schedule) to be materially
exceeded. No forward-looking statements shall constitute predictions,
guarantees or assurances of actual future results or the likelihood of such
results.
2.4.2. Good and Marketable Title.
(a) To the Seller's knowledge, based solely upon its review
of owner's policies of title insurance from independent title companies, the
Seller has good and marketable title in fee simple to the Real Property,
subject only to (i)the Encumbrances listed on the Seller's Disclosure
Schedule including, without limitation, the exceptions described in the
Seller's title insurance policies for each parcel of the Real Property, (ii)
liens for Taxes not yet due and payable, and (iii) such imperfections of
title, pledges, liens and encumbrances, if any, as do not (A) materially
detract from the value or materially interfere with the present or intended
use of the Assets, (B)cause or result in any absence, loss or reversion of
title, or (C) cause or result in any restriction on or inability to transfer
title (the items set forth in clauses (i), (ii) and (iii) above, being
referenced to herein as "Permitted Encumbrances"). True, correct and
complete copies of any existing surveys, plans, plats and material documents,
if any, which the Seller believes to be directly related to the current state
of the entitlements appurtenant to the Real Property (collectively, the
"Property Documents") have been made available to the Buyer, in each case to
the extent in the Consolidated Forecast Entities' possession. Other than as
set forth on the Seller's Disclosure Schedule, the Seller has no rights to
acquire any real property other than the Real Property.
(b) The Seller has, to the Seller's knowledge, valid and
binding title insurance policies and/or commitments to issue valid and
binding title insurance policies with respect to all Real Property. Copies
of such title insurance policies and commitments to issue title insurance
policies have been made available to the Buyer.
2.4.3. No Condemnation. Except as set forth on the Seller's
Disclosure Schedule, no condemnation, eminent domain or similar proceeding is
pending with respect to any Real Property.
2.4.4. Compliance with Laws. Except as set forth on the Seller's
Disclosure Schedule, the subdivisions, buildings and improvements on the Real
Property do not violate, in any material respect, (a) any applicable Law,
including, without limitation, any building set-back or zoning law,
ordinance, regulation or statute for which a variance or other lawful
exception has not been obtained, except where the noncompliance, individually
or in the aggregate, could not reasonably be expected to have a material
adverse effect on the Real Property, or (b) any restrictive covenant
affecting any such Real Property.
2.4.5. Site Obligations. Except as set forth on the Seller's
Disclosure Schedule, to the Seller's knowledge, no Real Property is currently
subject to any condition or obligation to any Governmental Entity or other
Person requiring the owner or any transferee thereof to donate land, money or
other real property or to make off-site public improvements not associated
with the Real Property or take other mitigation measures.
2.4.6. Assessments. To the Seller's knowledge, all charges or
assessments made against the owner or developer of the Real Property or any
lots included therein for installation of public improvements serving the
subdivision, including, without limitation, those for construction of sewer
lines, water lines, storm drainage systems, electric lines, natural gas
lines, streets (including perimeter streets), and roads and curbs, that are
required by any Governmental Entity prior to the granting of a building
permit for a real property lot on which construction has already commenced,
have been paid or are set forth on the most recent Financial Statement or
have been incurred since the date thereof in the ordinary course of business
consistent with past practice.
2.4.7. Subdivision Standards. Except as set forth on the Seller's
Disclosure Schedule, to the Seller's knowledge, the Real Property and all
lots included therein conform or are reasonably expected to conform, in all
material respects, to the appropriate Governmental Entity's subdivision
standards (except for variances approved by the applicable Governmental
Authority). To the Seller's knowledge, there is no material impediment to
subdivision approval for any undeveloped portion of the Real Property that
would (despite commercially reasonable measures and payments by the Buyer)
prevent, prohibit, impair or materially delay the eventual construction and
sale of homes on such Real Property.
2.4.8. Moratoria. To the Seller's knowledge, except as set forth
with specificity on the Seller's Disclosure Schedule, there is no moratorium
currently in place that is applicable to or affects any of the Real Property
as to (a)the issuance of building permits for the construction of homes or
certificates of occupancy therefor, or (b)the purchase of sewer or water
taps.
2.4.9. Soil Conditions. To the Seller's knowledge, except (a) as
set forth in the environmental reports with respect to the Real Property made
available to the Buyer (the "Environmental Reports"), (b) as set forth on the
Seller's Disclosure Schedule, or (c) to the extent included in the finished
lot costs reflected on the Seller's Disclosure Schedule, there are no soil
conditions affecting any of the lots included in the Real Property that would
materially and adversely impair, delay or prevent the construction of homes
or that would materially increase the cost of construction thereon. To
Seller's knowledge, true, correct and complete copies of all Environmental
Reports have been made available to the Buyer.
2.4.10. Certain Environmental Matters. To the Seller's knowledge,
except as set forth in the Environmental Reports or on the Seller's
Disclosure Schedule, the Real Property does not contain any material
wetlands, endangered or otherwise protected species or habitats therefor and
is not located within a "critical," "preservation," "conservation,"
"environmentally sensitive" or similar type of area, which in any case would
interfere, in any material, adverse respect, with the development thereof in
accordance with its development plan and preliminary plat.
2.4.11. Ownership. None of the Consolidated Forecast Entities, any
Controlled Entity nor Xxxxxxx owns any real property or right to acquire any
real property that may be developed for the construction of single-family
homes, other than (a)the Real Property, and (b)the real property included in
the Excluded Assets.
2.5 Operating Condition. To the Seller's knowledge, the buildings and
equipment, if any, included in the Assets, are in operating condition and are
generally adequate for their present and intended use.
2.6 Insurance.
2.6.1. Policies. The Seller's Disclosure Schedule lists all
insurance policies and bonds in excess of a face amount of One Hundred
Thousand Dollars ($100,000) with respect to the Assets and the Consolidated
Forecast Entities (the "Policies"). Except as set forth in Schedule 2.6.1,
no material disagreement or dispute exists between any of the insurers and
any of the Consolidated Forecast Entities, subject to defense arrangements
undertaken in accordance with applicable reservations of rights; provided,
however, nothing herein shall constitute a waiver of any of the Consolidated
Forecast Entities' rights against such insurers. To the Seller's knowledge,
none of the Consolidated Forecast Entities is in material default under any
such policy or bond. None of the Consolidated Forecast Entities has received
any written notice from any insurer or agent of any intent to cancel or not
renew any such policy or bond.
2.6.2. Claims. There is no material claim by any of the
Consolidated Forecast Entities pending under any of the Policies as to which
coverage has been denied to it in writing by the underwriters of such Policy.
To the Seller's knowledge, there has been no occurrence that may form the
basis of a material claim that is by or on behalf of any of the Consolidated
Forecast Entities under any such Policy. To the Seller's knowledge, no
coverage as to any material claim under any of such Policies has been denied
by the underwriters of such Policy, excluding any qualifications regarding
the underwriters reservation of rights. All premiums currently due and
payable under all such Policies have been paid in all material respects.
2.7 Bank Accounts, Powers, etc. The Seller's Disclosure Schedule lists
each bank, trust company, savings institution, brokerage firm, mutual fund or
other financial institution with which the Seller has an account (each, an
"Account") and the names and identification of all Persons authorized to draw
thereon or to have access thereto, and lists the names of each Person holding
powers of attorney or agency authority from the Seller.
2.8 Compliance with Applicable Laws. Except as set forth on the
Seller's Disclosure Schedule, (a)the Consolidated Forecast Entities have
complied, in all material respects, with all applicable Laws in the conduct
of its business, including, without limitation, the Homebuilding Business,
and (b)no material Action has been filed or commenced against the Seller
alleging a material failure to so comply.
2.9 No Brokers or Finders. Other than Salomon, no agent, broker,
finder, or investment or commercial banker, or other Person or firm acting on
behalf of the Seller in connection with the negotiation, execution or
performance of this Agreement or the transactions contemplated by this
Agreement is or will be entitled to any brokerage or finder's or similar fee
or other commission as a result of this Agreement or such transactions
contemplated hereunder; provided, however, that (a)the Buyer shall have full
responsibility for the obligations to any Person claiming a fee through
Buyer, and (b)the Seller shall have full responsibility for Salomon.
2.10 Environmental Compliance.
2.10.1. No Violation of Environmental Laws. Except as set forth in
the Environmental Reports or on the Seller's Disclosure Schedule, to the
Seller's knowledge, none of the Consolidated Forecast Entities is, in any
material respect, in violation or non-compliance with any Environmental Laws.
2.10.2. No Liability. Except as set forth in the Environmental
Reports or on the Seller's Disclosure Schedule, and, as to events occurring
prior to the Seller's acquisition of each parcel of Real Property, to the
Seller's knowledge, none of the Consolidated Forecast Entities nor any parcel
of Real Property is subject to any material Liability or Lien in connection
with any release or threatened release of any Hazardous Substance into the
environment or subject to any material reclamation or remediation
requirements under any Environmental Laws, except where the noncompliance,
individually or in the aggregate, could not reasonably be expected to have a
material adverse effect on the Real Property.
2.10.3. Not Named as a Potentially Responsible Party. To the
Seller's knowledge, none of the Consolidated Forecast Entities has, in the
three (3) years preceding the Effective Date, been named as a potentially
responsible party under CERCLA or any corresponding state Laws.
2.10.4. Hazardous Substances. Except as set forth in the
Environmental Reports or on the Seller's Disclosure Schedule, in the three
(3) years preceding the Effective Date, (a) none of the Consolidated Forecast
Entities has, in connection with the Real Property, generated, used,
transported, treated, stored, released or disposed of, or has suffered or
permitted anyone else to generate, use, transport, treat, store, release or
dispose of any Hazardous Substance in connection with the Real Property in
violation of any Environmental Laws or which would require reporting to or
notification of any Governmental Entity, (b) to the Seller's knowledge, no
asbestos or polychlorinated biphenyl or underground storage tank is contained
in or located at any Real Property, and (c) to the Seller's knowledge, any
Hazardous Substance handled or dealt with in any way in connection with any
Real Property has been and is being handled or dealt with, in all material
respects, in compliance with applicable Environmental Laws, except where the
noncompliance, individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on the Real Property.
2.10.5. No Notices. Except as set forth in the Environmental
Reports or on the Seller's Disclosure Schedule, in the three (3) years
preceding the Closing Date, none of the Consolidated Forecast Entities has
generated, used, transported, stored, released or disposed of any Hazardous
Substances in connection with the conduct of the Homebuilding Business or the
use of any property or facility currently owned or operated (and, to the
Seller's knowledge, heretofore owned or operated) by any Consolidated
Forecast Entity, which has created any Liability under any Environmental Laws
or which would require reporting to or notification of any Governmental
Entity.
2.10.6. Assumption of Liabilities. Except as set forth on the
Seller's Disclosure Schedule or in any environmental guarantees or
indemnities existing under any lending documents relating to the Real
Property or the Homebuilding Business, none of the Consolidated Forecast
Entities has contractually assumed any liability or obligation under or
relating to any Environmental Law.
2.11 Information Generally. The information prepared by the
Consolidated Forecast Entities and thereafter made available by the Seller to
the Buyer in or pursuant to this Agreement or in or pursuant to the Schedules
or Exhibits hereto does not and will not, as of the date provided, contain
any untrue statement of a material fact, and does not and will not, as of the
date provided, omit to state a material fact necessary to make the statements
or facts contained therein not misleading. Notwithstanding the foregoing,
the Seller makes no representations with respect to information prepared by
Persons other than the Consolidated Forecast Entities, Xxxxxxx or Xxxxxxx'x
Affiliates and the Seller provides no assurances with respect to future
events.
2.12 No Conflicts; Government Approvals; Third-Party Consents. Except
as set forth on the Seller's Disclosure Schedule, the execution, delivery and
performance of this Agreement by the Seller and the consummation of any of
the transactions contemplated hereby will not, to the Seller's knowledge, (a)
violate, or constitute a non-technical breach or material default (whether
upon lapse of time or notice or both) under, or results in any material
augmentation or acceleration of rights, benefits or obligations of any party
under (including the acceleration of indebtedness or any prepayment
obligation), the constituent documents of the Seller or any Contract listed
on the Seller's Disclosure Schedule, or (b) violate any Law or Order
applicable to the Seller or the Assets, except for such violations, breaches
or defaults that cannot, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the Seller or the Real
Property, taken as a whole. Except as set forth on the Seller's Disclosure
Schedule, this Agreement and/or as required under the Xxxx-Xxxxx-Xxxxxx Act,
the execution and delivery of this Agreement by the Seller and the
performance of this Agreement by the Seller shall not require a filing or
registration with, or the issuance of any Permit or Approval by, any other
Person or Governmental Entity.
2.13 Legal Proceedings. Except as set forth on the Seller's
Disclosure Schedule, (a) no Order or Action is pending or, to the Seller's
knowledge, threatened against Xxxxxxx, the Seller or any of the Consolidated
Forecast Entities or any of the Assets that, if resolved unfavorably against
such Person or Asset, individually or when aggregated with one or more other
such Orders or Actions, would have a material adverse effect on such Person
or Asset or would materially and adversely effect the Seller's ability to
materially perform this Agreement, (b) the Seller does not reasonably expect
any of such Orders or Actions, individually or in the aggregate, to have a
material adverse effect on the Seller or the Assets, (c) no Order or Action
is pending with respect to the entitlements pertaining to any Real Property,
(d) no Action is pending against the Seller that would prevent the execution,
delivery or performance of this Agreement by the Seller or the transfer,
conveyance and sale of the Assets to be sold by the Seller to the Buyer
pursuant to the terms hereof, and (e)neither the Seller nor any of the Assets
is a party to, subject to or bound by any Action or Order.
2.14 Acquisition for Investment. Xxxxxxx is an "accredited investor,"
as such term is defined in Regulation D under the Securities Act, or
otherwise has such knowledge and experience in financial and business matters
that Xxxxxxx is capable of evaluating the merits and risks of Xxxxxxx'x
investment hereunder.
2.15 Construction Defect Claims. Except with respect to those claims
of construction defects, or personal injuries stemming from such claims,
which, individually or in the aggregate, could not reasonably be expected to
have a material adverse effect on the Homebuilding Business, all (a)material
claims regarding construction defects which have been disclosed to the
underwriter of any of the Policies, and (b)claims regarding construction
defects which could reasonably be expected to exceed Fifty Thousand Dollars
($50,000) and which the division presidents of the Seller have received
written notice of such claims are set forth on the Seller's Disclosure
Schedule. Together with any Policies, the amounts reserved therefor by the
Seller on its Financial Statements in accordance with GAAP is specified, and,
to the Seller's knowledge, is reasonable under the circumstances; provided,
however, that Seller cannot and is not providing any assurance or guarantee
with respect thereto.
2.16 Taxes.
2.16.1. Other than as set forth on the Seller's Disclosure
Schedule, all Tax Returns required to be filed by or on behalf of the Seller
with respect to the Assets have been duly and timely filed (taking into
account any extensions) and such Tax Returns have been prepared in accordance
with applicable Laws and, to the best of Xxxxxxx'x knowledge, are true and
correct in all material respects.
2.16.2. All Taxes shown on the Tax Returns have been timely paid in
full and no other Taxes or penalties are payable by the Seller with respect
to items or periods covered by such Tax returns.
2.16.3. None of the Assets is tax-exempt use property within the
meaning of Section 168(h) of the Code and none of the Assets is property that
is or will be required to be treated as being owned by another person
pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code
of 1954, as amended and as in effect immediately prior to the enactment of
the Tax Reform Act of 1986.
2.16.4. Tax Liens. There are no tax liens on any of the Assets
with respect to Taxes, other than liens for (a) Taxes not yet due and
payable, or (b) Taxes that the Consolidated Forecast Entities are contesting
in good faith through appropriate procedures and/or proceedings which are
described on the Seller's Disclosure Schedule.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Parties agree that the purchase of the Assets shall be without
representation or warranty by the Buyer, express or implied, except as
specifically set forth in this Agreement. None of the representations and
warranties contained herein shall survive Closing; provided, however, that to
the extent that the making of any such representation or warranty constituted
actual fraud (and as further limited by Section 8.2) on the part of the
Buyer, the Seller's right to promptly bring an Action against the Buyer
thereunder and to such extent shall survive the Closing and shall remain in
full force and effect until the date that is ninety (90) days after the
expiration of the applicable statutory period; provided, however, such Action
shall be filed in accordance with Section 10.10 by the Seller within ninety
(90) days after the Seller's actual discovery thereof or the claim (and the
applicable remedy) shall automatically be waived. Except as otherwise
indicated on the Buyer's Disclosure Schedule as to the particular section as
to which an exception is being disclosed, the Buyer represents and warrants
to the Seller and Xxxxxxx as follows:
3.1 Organization and Related Matters. The Buyer is duly organized,
validly existing and in good standing under the Laws of the State of
Delaware, with the necessary corporate power and authority (a)to own and
operate its business as now being conducted and as presently proposed to be
conducted, and (b)to execute, deliver and perform this Agreement.
3.2 Authorization. The execution, delivery and performance of this
Agreement by the Buyer have been duly and validly authorized by the Buyer's
Board and by all other necessary corporate action on the part of the Buyer,
including, without limitation, the requisite vote of the holders of the
capital stock of the Buyer, and no other corporate proceedings on the part of
the Buyer are necessary to authorize this Agreement or the transactions
contemplated hereunder. This Agreement has been duly and validly executed
and delivered by the Buyer and constitutes the legal, valid and binding
obligation of the Buyer, enforceable against the Buyer in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or limiting creditors' rights
generally and equitable principles.
3.3 Licenses Held by the Seller. The Buyer acknowledges and agrees that
any licenses from the Department of Real Estate or the Contractors' Board
held by the Consolidated Forecast Entities as of the Closing Date shall not
be transferred or delivered to the Buyer, and that the Buyer shall rely upon
its own licenses, if any, to manage or develop any of the Assets acquired in
connection with this Agreement after the Closing Date.
3.4 No Conflicts; Government Approvals; Third-Party Consents. Except as
set forth on the Buyer's Disclosure Schedule, the execution, delivery and
performance of this Agreement by the Buyer, including, without limitation,
the issuance of the Buyer's Shares in connection with this Agreement, will
not, to the Buyer's knowledge, violate the provisions of, or constitute a
breach or default (whether upon lapse of time and/or the occurrence of any
act or event or otherwise) under (a) the constituent documents of the Buyer
or any of its Subsidiaries, or (b) any Law or Order to which the Buyer or its
Subsidiaries or any of their assets is subject, except for such violations,
breaches or defaults that cannot reasonably be expected to be materially
adverse to the Buyer and its Subsidiaries, taken as a whole. Except as set
forth with specificity on the Buyer's Disclosure Schedule and/or as required
under the Xxxx-Xxxxx-Xxxxxx Act, the execution and delivery of this Agreement
by the Buyer and the performance of this Agreement by the Buyer will not
require a filing or registration with, or the issuance of any Permit or
Approval by, any other third party or Governmental Entity.
3.5 No Brokers or Finders. No agent, broker, finder or investment or
commercial banker, or other Person or firms engaged by or acting on behalf of
the Buyer or its Affiliates in connection with the negotiation, execution or
performance of this Agreement, the Securities Purchase Agreement or the
transactions contemplated thereunder, is or will be entitled to any broker's
or finder's or similar fees or other commissions as a result of this
Agreement, the Securities Purchase Agreement or the transactions contemplated
thereunder; provided, however, that (a)the Buyer shall have full
responsibility for any obligations to any Person claiming a fee through the
Buyer, if any, and (b)the Seller shall have full responsibility for the
obligations to Salomon.
3.6 Legal Proceedings. Except as set forth on the Buyer's Disclosure
Schedule, there is no Order or Action pending or, to the Buyer's knowledge,
threatened against either the Buyer or any of its Subsidiaries that if
resolved unfavorably against the Buyer or any of its Subsidiaries could
reasonably be expected to have a material adverse effect on the financial
position of the Buyer and its Subsidiaries taken as a whole or on the Buyer's
ability to materially perform this Agreement, nor, to the Buyer's knowledge,
is there any outstanding judgment, settlement, decree or injunction, in each
case against the Buyer, any of its Subsidiaries or any of their respective
assets, or any statute, rule or Order of any Governmental Entity applicable
to the Buyer or any of its Subsidiaries that could reasonably be expected to
have a material adverse effect on the financial position of the Buyer and its
Subsidiaries taken as a whole or on the Buyer's ability to materially perform
this Agreement.
3.7 Financing. The Buyer currently has available sufficient funds and
authorized Common Stock, which is capable of being registered under the
Securities Act, to enable it to consummate the transactions contemplated
hereby and by the Securities Purchase Agreement and the Buyer's ability to
close the transactions in accordance with this Agreement and the Securities
Purchase Agreement is not and will not be conditioned or contingent upon the
Buyer's stock price, economic conditions or the Buyer's ability to receive
any additional funds or financing.
3.8 SEC Reports; Financial Statements. The Buyer has delivered to the
Seller the Buyer's SEC Reports. The consolidated financial statements of the
Buyer included in the Buyer's SEC Reports comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with GAAP (except, in the case of unaudited consolidated quarterly
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and present fairly, in all material respects, the consolidated
financial position of the Buyer and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited quarterly
statements, to normal year-end audit adjustments). Neither the Buyer nor any
of its Subsidiaries has any material liability (contingent or otherwise) or
obligations, in each case that are required to be disclosed by GAAP, except
liabilities that (a) are reflected or disclosed in the most recent financial
statements included in the Buyer's SEC Reports, or (b) were incurred after
the date of such most recent financial statements in the ordinary course of
business consistent with past practice.
3.9 Compliance with Requirements for Short-Form Registration. The Buyer
has complied in all material respects with all requirements under the New
York Stock Exchange (and any other major exchange on which the Buyer's
securities are listed or any major market on which the Buyer's securities are
included), the Securities Act and the Exchange Act, and has satisfied all
requirements for the use of a short-form registration of the Buyer's
securities under the Securities Act, including, without limitation, a Form S-
3.
3.10 Capitalization.
3.10.1. As of the Effective Date, the authorized capital stock of
the Buyer consists of (a) eighty-seven million (87,000,000) shares of Common
Stock, of which Twenty Million Six Hundred Seven Thousand One Hundred
Seventy-Eight (20,607,178) shares are currently issued and outstanding, (b)
thirteen million (13,000,000) shares of Class B common stock, par value $0.01
per share, of which Seven Million Four Hundred Seventy-One Thousand Six
Hundred Forty (7,471,640) shares are currently issued and outstanding, (c)
one hundred thousand (100,000) shares of preferred stock, par value $0.01 per
share, of which none are currently issued and outstanding and (d) options to
acquire Two Million Six Hundred Twenty-Three Thousand Seven Hundred Fifty-Two
(2,623,752) shares of the Buyer's Common Stock issued pursuant to the Buyer's
various option plans. Except as set forth on the Buyer's Disclosure Schedule
or pursuant to Buyer's benefit plans, as of the Effective Date, there are no
outstanding (i) Contracts, options, warrants or other rights to subscribe for
or purchase any Equity Securities of the Buyer, (ii) Contracts or other
obligations to issue or grant any rights to acquire any Equity Securities of
the Buyer, or (iii) Contracts or other obligations to restructure or
recapitulate the Buyer or any of its Subsidiaries. As of the Effective Date,
there are no outstanding Contracts of the Buyer to repurchase, redeem or
otherwise acquire any Equity Securities of the Buyer or its Subsidiaries.
3.10.2. The issuance of the Buyer's Shares has been duly authorized
by all necessary corporate action on the part of the Buyer and, when issued
pursuant to this Agreement, will be validly issued, fully paid and non-
assessable. The Buyer's Shares will be issued without any violation of
preemptive rights, co-sale rights, rights of first refusal or any other
similar right or restriction arising under the Buyer's charter or Delaware
General Corporation Law or any other document or agreement or any other
restriction, including, without limitation, restrictions on transfer.
3.11 No Vote Required. The affirmative vote of the holders of capital
stock of the Buyer is not required of any class or series of the Buyer's
capital stock in order to approve this Agreement, the Securities Purchase
Agreement or the transactions contemplated thereunder or under any Collateral
Agreement. The Buyer's Board, at a meeting duly called and held prior to the
Effective Date (a)determined that this Agreement, the Securities Purchase
Agreement and the transactions contemplated thereby, and under any Collateral
Agreement, are fair to, and in the best interests of, the stockholders of the
Buyer, and (b)approved this Agreement, the Securities Purchase Agreement, any
Collateral Agreement and the transactions contemplated thereby. Prior to the
Effective Date, the Buyer has delivered to the Seller a copy of the complete
set of minutes of the meeting and all the resolutions of the Buyer's Board.
3.12 Not an Investment Company. Neither the Buyer nor any of its
Subsidiaries is an "investment company" or an entity "controlled" by an
"investment company" within the meaning of the Investment Company Act of
1940, as amended, and the rules and regulations promulgated thereunder.
3.13 Registration of the Buyer's Shares; Securities Laws Compliance.
The Buyer's Shares shall be issued to the Seller (or its designee) in
compliance with the Securities Act, all applicable state securities laws and
all applicable rules and regulations of the New York Stock Exchange (or any
other exchange on which the Buyer's securities are listed or any other market
on which the Buyer's securities are included). The SEC has not initiated any
proceedings to remove, suspend or terminate from listing or quotation the
Buyer's common stock from any securities exchange upon which it is listed for
trading, included or designated for quotation, or threatened to initiate any
proceedings for any of such purposes. If the SEC shall enter any such stop
order at any time, the Buyer shall use its best efforts to obtain the lifting
of such order at the earliest possible moment. Additionally, the Buyer
agrees that it shall comply with the provisions of Rules 424(b), 430A and
434, as applicable, under the Securities Act and will use its best efforts to
confirm that any filings made by it under such Rule 424(b) were received in a
timely manner by the SEC. The Buyer has not received any notification from
the New York Stock Exchange (or any other exchange on which the Buyer's
securities are listed or any other market on which the Buyer's securities are
included) indicating that the Buyer's securities shall or may be removed from
listing or inclusion on such exchange or market, as applicable.
SECTION 4. COVENANTS PRIOR TO CLOSING
4.1 Access. The Seller shall cause the Consolidated Forecast Entities
to afford the Buyer, its agents and its attorneys reasonable access during
normal business hours, upon advance written notice and in such manner as will
not unreasonably interfere with the usual day-to-day conduct of the Seller's
businesses, to the offices, properties and financial records of the
Consolidated Forecast Entities as the Buyer may from time to time reasonably
request. In furtherance and not in limitation of the foregoing, the Buyer
shall be entitled to conduct or cause to be conducted (at its sole expense)
on any Real Property such soils and geological tests and environmental
inspections, audits and tests (including the taking of soils and ground water
samples) and such structural and other physical inspections as the Buyer
shall deem reasonably necessary or useful in connection with the transactions
contemplated by this Agreement, so long as such inspections, audits and tests
do not delay the Closing Date and the Buyer conducts the same in material
compliance with all Laws and upon written notice to the Seller delivered
three (3) days prior to the date of such inspection, audit or test and so
long as the Buyer causes its consultants (prior to their entry upon any Real
Property) to name the Seller as an additional insured under insurance
policies carried by such consultants. The Buyer shall cause any property
damage resulting from any such testing, inspection or audit to be promptly
repaired at the Buyer's sole cost, and the Buyer hereby agrees to indemnify,
defend and hold the Seller and the other Consolidated Forecast Entities, as
applicable, harmless from any Loss incurred by the Seller and/or the
Consolidated Forecast Entities (including, without limitation, any Loss
incurred by Seller related to any property damage and/or any personal
injury), and/or arising out of the conduct of any such tests, inspections or
audits. Notwithstanding any of the foregoing, the Buyer shall have no
obligation to indemnify or hold harmless any Person regarding any remediation
of, or any response to, any contamination or violation of Environmental Law,
or any other liability under or relating to any Environmental Law discovered,
but not actually caused, by the Buyer's tests, inspections or audits. The
Buyer's obligations hereunder shall survive the expiration or termination of
this Agreement without any limitation or qualification.
4.2 Preservation of Business Prior to the Closing Date.
4.2.1. Except as otherwise set forth on the Seller's Disclosure
Schedule, during the period beginning on the Option Date and ending on the
Closing Date, the Seller shall not sell more than five percent (5%) of the
Assets outside of the ordinary course of business in one or a series of
related transactions; provided, however, that nothing contained herein shall
limit or restrict the ability or right of any of the Consolidated Forecast
Entities' to sell lots included in the Assets to individual home buyers in
the ordinary course of business.
4.2.2. During the period beginning on the Effective Date and
ending on the Closing Date:
(a) Conduct of Business. Except as otherwise set forth on
the Seller's Disclosure Schedule, the Seller shall cause the Consolidated
Forecast Entities to conduct the Homebuilding Business generally in
accordance with their past business practices.
(b) Goodwill. The Seller shall cause the Consolidated
Forecast Entities to use commercially reasonable efforts to preserve the
goodwill of customers, suppliers and others having business relations with
the Consolidated Forecast Entities.
(c) Third Party Rights. Except with respect to (i)the
Permitted Encumbrances, (ii)those items set forth on the Seller's Disclosure
Schedule, and (iii)those items as to which the Buyer has given its written or
oral approval, the Seller shall not grant to any person any Contract or other
right to use or acquire any portion of the Real Property, or to the
furnishing or use of any facility or amenity on or relating to the Real
Property, in each case that will continue past the Closing Date.
4.3 Notification of Certain Matters. The Seller shall give prompt
written notice to the Buyer, and the Buyer shall give prompt written notice
to the Seller, of such Party's respective knowledge of (a) the occurrence, or
failure to occur, of any event that would be likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material adverse respect at any time between the Effective
Date and the Closing Date, and (b) any failure of the Buyer or the Seller, as
the case may be, to comply with or satisfy, any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement to the
extent such covenants, conditions or agreements may be qualified therein by
materiality or otherwise.
4.4 Permits and Approvals.
4.4.1. Pre-Closing. The Seller and the Buyer each agree to
cooperate and use commercially reasonable efforts to obtain all (and shall
promptly prepare all registrations, filings and applications, requests and
notices preliminary to all) Approvals and Permits that may be necessary to
consummate the transactions contemplated by this Agreement, including,
without limitation, the Approvals listed on the Seller's Disclosure Schedule
(which shall be obtained at the Seller's expense) and the Buyer's Disclosure
Schedule (which shall be obtained at the Buyer's expense).
4.4.2. Post-Closing. To the extent that the Approval of a third
party with respect to any Material Contract is required in connection with
the transactions contemplated by this Agreement but is not obtained prior to
the Closing Date, the Seller shall (but without limitation on the Buyer's
rights under Section 6.2 and without any cost to the Seller) attempt in a
commercially reasonable manner to assist the Buyer in obtaining for the Buyer
the benefits of each such Contract. Xxxxxxx and the Seller agree, for a
period of six (6) months following the Closing Date, to reasonably cooperate
with the Buyer (at no cost or expense to Xxxxxxx or the Seller) and, to the
extent permitted by Law, to permit the Buyer to use the appropriate licenses
or permits of the Seller, Xxxxxxx or the Consolidated Forecast Entities with
respect to the Assets only. In connection therewith, neither the Seller,
Xxxxxxx or any of the Consolidated Forecast Entities shall be obligated to
cooperate in the event that doing so could jeopardize such licenses or
permits. Additionally, the Buyer shall indemnify and hold the Seller,
Xxxxxxx and the Consolidated Forecast Entities harmless from and against any
loss, cost, damage or claim, including, without limitation, any attorneys'
fees and costs arising in connection with its cooperation with the Buyer or
the Buyer's use of such licenses or permits, except to the extent arising
from the Seller's willful misconduct or gross negligence.
4.5 Reserved Insurance. Prior to the Closing Date, the Buyer shall (a)
name Xxxxxxx and the Consolidated Forecast Entities as additional insureds
under the insurance policies carried by the Buyer and its Affiliates with
respect to the Homebuilding Business, and (b) provide the Representative with
evidence reasonably satisfactory to the Representative of having named
Xxxxxxx and each of the Consolidated Forecast Entities as additional insureds
under the foregoing insurance policies for ten (10) years following the
Closing. The Parties acknowledge and agree that notwithstanding any other
provision in this Agreement to the contrary, the assignment of the Policies
pursuant to this Agreement and the inclusion of the Policies as "Assets"
hereunder, the Seller, Xxxxxxx and the Consolidated Forecast Entities, as
applicable, retain the benefit of the Policies with respect to the Excluded
Assets (and any Excluded Liabilities) and shall have the right and ability to
make claims under the Policies for any and all Excluded Liabilities.
SECTION 5. ADDITIONAL CONTINUING COVENANTS
5.1 Non-Competition.
5.1.1. Restrictions on Competitive Activities. Except as
expressly set forth in Section 5.1.2, after the Closing Date and for a period
of three (3) years thereafter, each of the Seller and Xxxxxxx agrees that it
shall not (a) directly or indirectly, through an Affiliate or otherwise, for
its own benefit or that of another, engage, own or manage or act as an
employee for any Person that engages in the construction of single-family,
for sale residences or residential condominiums in the Covered Counties, and
(b) solicit for employment or employ any individual employed by the Seller or
its Affiliates as of either October 1, 2001 or the Closing Date.
Notwithstanding clause (b) of the immediately preceding sentence, Xxxxxxx may
solicit for employment or employ any individual that (i) is terminated by the
Buyer, commencing six (6) months after the Closing Date, (ii) terminates his
employment with the Buyer and is subsequently employed by a third party for
at least six (6) months, (iii) is a relative of Xxxxxxx, or (iv) is an
individual listed on Schedule 5.1.1 (the "Excluded Employees") attached
hereto; provided, however, that in the instance of clause (i) or (ii),
Xxxxxxx shall not employ such individual in a role related to homebuilding
until such time as the three (3) year anniversary of the Closing Date has
occurred.
5.1.2. Exceptions. Nothing contained in this Agreement shall
limit the right of Xxxxxxx, the Group or any of the Controlled Entities,
without limitation, (a) to participate in the development and construction of
single-family, for sale residences on the real property included in the
Xxxxxxx Projects and in the development and construction of those condominium
projects set forth on Schedule 5.1.2 (the "Permissible Condominium Projects")
attached hereto, (b) to hold their respective current investments or to
manage their other current businesses which are unrelated to the Homebuilding
Business and the sale of single-family homes, (c)to construct for the purpose
of selling or leasing for its own account, any development that is not
single-family residential construction, including, without limitation, multi-
family rental properties, (d) to acquire and entitle raw land for single-
family or multi-family residential or commercial, retail or industrial
development, (e) to retain or increase its ownership and/or equity interest
in Premier and to participate in any activity of Premier in connection with
the construction, development and sale of any residential property,
including, without limitation, the homebuilding business of Premier;
provided, however, that (1) if Premier executes and delivers the Non-
Competition and Option Agreement effective as of the Closing Date, Premier
shall (i) limit its construction for sale of single family homes (including
condominiums) in all of the counties in California (the "Covered Counties"),
to not more than (A) one hundred and fifty (150) in the calendar year 2002,
(B) two hundred and fifty (250) in the calendar year 2003, and (C) three
hundred fifty (350) in the calendar year 2004, and (ii)sell each such single-
family residence for a base amount (exclusive of non-standard options and
non-standard add-ons, etc.) exceeding Three Hundred Thousand Dollars
($300,000), or (2) if Premier does not execute and deliver the Non-
Competition and Option Agreement effective as of the Closing Date, Xxxxxxx
shall limit his and the Controlled Entities' construction for sale of single
family residences to (i) not more than (A)six hundred (600) homes in the
three (3) year period following the Closing Date in the Covered Counties and
(B)two hundred fifty (250) homes in any single year in the Covered Counties,
and (ii)single-family residences that sell for a for a base amount (exclusive
of non-standard options and non-standard add-ons, etc.) exceeding Three
Hundred Thousand Dollars ($300,000), (f)as a passive investor without veto
rights, to hold and make investments in securities of any corporation or
limited partnership that is registered on a national securities exchange or
admitted to trading privileges thereon or actively traded in a generally
recognized over-the-counter market, provided the Seller's equity interest
therein (other than interests in the Buyer) does not exceed five percent (5%)
of the outstanding shares or interests in such corporation or partnership,
and (g)as a passive investor in or as a secured or unsecured lender (i) to
real estate investment companies and/or investors which provide financing to
commercial and/or residential real estate owners and developers or (ii)
directly to commercial and/or residential real estate owners and developers
(which shall include the right to exercise any and all remedies available to
such party as lender with respect to defaulted loans, including, without
limitation, the right to foreclose, accept a deed-in-lieu of foreclosure and
to own, operate and/or complete the construction and/or development of any
commercial or residential project acquired as a result of any such default).
In addition, nothing herein shall limit the right of Xxxxxxx to periodically
invest in and consult with respect to any homebuilding efforts initiated by
either of his two (2) sons; provided, however, that such Xxxxxxx invested
homebuilding activities undertaken by either son shall not exceed the
construction of twelve (12) units of single-family, for sale residential
homes over any period of twelve (12) consecutive months from the Closing Date
through the third anniversary of the Closing Date. Nothing in this Section
5.1.2 shall serve to restrict or limit the rights or abilities of either of
Xxxxxxx'x sons to acquire, entitle, develop and/or construct any type or
number of developments at any time if such activity is without the investment
of Xxxxxxx and without the direct material involvement of Xxxxxxx in such
activities.
5.1.3. Special Remedies and Enforcement. The Seller recognizes
and agrees that a breach by the Seller or any Controlled Entity of any of the
covenants set forth in this Section 5.1 could cause irreparable harm to the
Buyer, that the Buyer's remedies at Law in the event of such breach would be
inadequate, and that, accordingly, in the event of such breach, a restraining
order or injunction or both may be issued pursuant to and subject to
appropriate legal proceedings against the Seller, in addition to any other
rights and remedies which are available to the Buyer (subject to the
limitations in this Agreement). If this Section 5.1 is more restrictive than
permitted by the Laws of the jurisdiction in which the Buyer seeks
enforcement hereof, this Section 5.1 shall be limited to the extent required
to permit enforcement under such Laws. Without limiting the generality of
the foregoing, the Parties intend that the covenants contained in the
preceding portions of this Section 5.1 shall be construed as a series of
separate covenants, one for each of the Covered Counties. Except for
geographic coverage, each such separate covenant shall be deemed identical in
terms. If, in any judicial proceeding, a court shall refuse to enforce any
of the separate covenants deemed included in this Section 5.1, then such
unenforceable covenant shall be deemed eliminated from these provisions for
the purpose of those proceedings to the extent necessary to permit the
remaining separate covenants to be enforced.
5.2 Nondisclosure of Proprietary Data. Each of Xxxxxxx and the Seller
agrees that the Seller will not, and agrees to cause the Consolidated
Forecast Entities to not (a)divulge or otherwise disclose any trade secret or
other proprietary data concerning the business or policies of the Seller or
its Affiliates as they relate to the Assets, or (b)divulge or otherwise
disclose to Persons other than the Buyer, any confidential information
concerning the business or policies of the Seller or its Affiliates as they
relate to the Assets, except, in each case, (i) to the extent that such
information is or hereafter becomes lawfully obtainable from other sources,
(ii) to the extent that such information is necessary or appropriate to
disclose to a Governmental Entity having jurisdiction over the disclosing
Party, (iii) as may otherwise be required by Law, or (iv) to the extent such
duty of confidentiality is waived in writing by the Buyer.
5.3 Tax Cooperation. After the Closing Date, the Seller and the Buyer
shall, and shall cause their respective Affiliates to, cooperate in a
commercially reasonable manner with each other in the preparation and filing
of all Tax Returns and any Tax investigation, audit or other proceeding with
respect to the Seller (a "Tax Proceeding") and shall provide, or cause to be
provided, any records and other information in their possession or control or
in the control of their agents reasonably requested by such other Party in
connection therewith as well as access to, and the cooperation of, their
respective Auditors at each Party's request. The Seller shall not agree to
any settlement concerning Taxes with respect to the Assets for any taxable
period which would result in an increase of more than One Million Dollars
($1,000,000) in Taxes of the Buyer for any taxable period ending after the
Closing Date, without the prior written consent of the Buyer. Except as to
the extent the Seller has indemnified such costs pursuant to the provisions
set forth in this Agreement or the Collateral Agreements, the Buyer and the
Seller shall bear their respective costs and expenses in connection with any
Tax Proceeding. Any information obtained pursuant to this Section 5.3 or
pursuant to any other Section of this Agreement providing for the sharing of
information or the review of any Tax Return or other information relating to
Taxes shall be subject to Section 10.9.
5.4 Access to Books and Records. After the Closing Date, the Buyer
shall afford the Seller and its accountants, counsel and other
representatives, reasonable access during normal business hours to the books
and records related to the Assets transferred to the Buyer by the Seller for
the period prior to the Closing Date that relate to Tax matters or any third-
party claims against the Seller relating to the business of the Consolidated
Forecast Entities during any such period. The Seller or its representatives,
may, at the Seller's own expense, make copies of such books and records. The
Buyer understands that there are certain 2000 and 1999 tax returns for
entities associated with the Consolidated Forecast Entities for which Tax
Returns have not yet been prepared and that such Tax returns are identified
on the Seller's Disclosure Schedule. The Buyer agrees after the Closing to
give the Seller's accountants and tax accountants complete access to the
information needed to prepare such returns.
5.5 Registration of the Buyer's Shares.
5.5.1. Obligations of the Buyer. Within the first six (6) months
following the Closing Date, the Buyer shall:
(a) prepare and file with the SEC a registration statement
(a "Registration Statement") to register all of the Buyer's Shares and cause
such Registration Statement to become effective;
(b) keep such Registration Statement effective for such time
as shall be required for the Seller to dispose of all of the Buyer's Shares;
(c) prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used in
connection with such Registration Statement as may be necessary to comply
with the provisions of the Securities Act with respect to the disposition of
all securities covered by such Registration Statement;
(d) furnish to Xxxxxxx and the Consolidated Forecast
Entities such number of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirement of the Securities Act and such
other documents as they may request in order to facilitate the disposition of
all of the Buyer's Shares;
(e) register and qualify the Buyer's Shares covered by such
Registration Statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Seller;
(f) provide a transfer agent and registrar for the Buyer's
Shares and a CUSIP number for such Buyer's Shares, in each case not later
than the effective date of such registration;
(g) cause all of the Buyer's shares registered pursuant
hereto to be listed on each securities exchange (or automated quotation
service) on which similar securities issued by the Buyer are then listed, or
if no such listing exists, then on either the New York Stock Exchange, the
American Stock Exchange or NASDAQ;
(h) notify Xxxxxxx and the Consolidated Forecast Entities at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act or the happening of any event which causes the prospectus
included in such registration statement, as then in effect, to include an
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing; and
(i) cause its counsel to furnish, at the request of Xxxxxxx
or any of the Consolidated Forecast Entities, on the date that any of the
Buyer's Shares are delivered to a purchaser or purchasers thereof an opinion,
dated such date, of the counsel representing the Buyer, in form and substance
as is customarily given to remove all legends from such shares.
5.5.2. Failure to Register the Buyer's Shares. In the event that
the Buyer does not fulfill its foregoing obligations, the Seller shall have
the right to cause the Buyer to promptly repurchase all of the Buyer's Shares
from the Seller pursuant to Section 1.3.2.
5.5.3. Expenses of Registration. All expenses, including, without
limitation, out-of-pocket costs incurred by Xxxxxxx, commissions, filing
fees, transaction fees, stock transfer taxes and fees of counsel (which
counsel's fee shall not exceed Ten Thousand Dollars ($10,000) except in the
event of default by the Buyer), incurred in connection with the registration
of the Buyer's Shares (including, without limitation, the filing of the
Registration Statement and any other related filings with the SEC) shall be
paid by the Buyer.
5.5.4. Protection. The Buyer agrees to indemnify, defend and hold
harmless Xxxxxxx and the Consolidated Forecast Entities against any Loss as
incurred, to which Xxxxxxx and the Consolidated Forecast Entities may become
subject, under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation), insofar as such Loss (or actions in respect
thereof as contemplated below) arises out of or is based (a)upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereto, including any information
deemed to be a part thereof pursuant to Rule 430A under the Securities Act,
or the omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not misleading;
or (b)upon any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus or prospectus (or any amendment
or supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading; and to
reimburse Xxxxxxx and the Consolidated Forecast Entities for any and all
expenses (including the fees and disbursements of counsel chosen solely by
Xxxxxxx and the Consolidated Forecast Entities) as such expenses are
reasonably incurred by Xxxxxxx and the Consolidated Forecast Entities in
connection with investigating, defending, settling, compromising or paying
any such loss, claim, damage, liability, expense or action; provided,
however, that the Buyer shall not have liability under clauses (a) and (b) to
the extent such statement was related to the Assets, Xxxxxxx or the
Consolidated Forecast Entities and was provided in writing directly to the
Buyer by Xxxxxxx specifically for inclusion in the applicable registration
statement or prospectus. The indemnity agreement set forth in this Section
5.5.4 shall be in addition to any liabilities that the Buyer may otherwise
have and shall survive the Closing Date.
5.6 Change of Control. The Buyer shall not enter into any agreement
with any third party to effect or obligate itself to effect a Change of
Control unless the surviving entity of such contemplated Change of Control
transaction shall agree to assume all of the Buyer's obligations under this
Agreement (and any other related agreements), including, without limitation,
the Buyer's obligations with respect to the Buyer's Shares and Section 10.9;
provided, however, nothing herein shall limit, modify or change in any way
Buyer's obligations arising under Sections 1.3, 1.4, 1.5 and 1.6.
SECTION 6. CONDITIONS OF PURCHASE
6.1 General Conditions. The obligations of the Parties to effect the
Closing shall be subject to the following conditions, except to the extent
waived in writing by all Parties:
6.1.1. No Orders; Legal Proceedings. No Law or Order shall have
been enacted, entered, issued or enforced by any Governmental Entity, nor
shall any Action have been instituted and remain pending at what would
otherwise be the Closing Date, which prohibits or restricts or would (if
successful) prohibit or materially restrict the transactions contemplated by
this Agreement. No Governmental Entity shall have notified any Party that
consummation of the transactions contemplated by this Agreement would
constitute a violation of any Laws of any jurisdiction or that it intends to
commence proceedings to restrain or prohibit such transactions or force
divestiture or rescission, unless such Governmental Entity shall have
withdrawn such notice and abandoned any such proceedings prior to the time
which otherwise would have been the Closing Date.
6.1.2. Approvals. All Permits and Approvals required to be
obtained from any Governmental Entity to consummate the transactions
contemplated by this Agreement shall have been received or obtained on or
prior to the Closing Date.
6.1.3. Xxxx-Xxxxx-Xxxxxx Act Approvals. If applicable, all
waiting periods (and any extensions thereof) under the Xxxx-Xxxxx-Xxxxxx Act
shall have been expired or otherwise been terminated.
6.1.4. No Prohibition. No Action, suit or proceeding shall be
pending before any court or quasi-judicial or administrative agency of any
federal, state, local or foreign jurisdiction or before any arbitrator
wherein an unfavorable result would (a) prevent consummation of any of the
transactions contemplated hereby, or (b) cause any of the transactions
contemplated hereby to be rescinded following consummation.
6.1.5. Securities Purchase Agreement. All of the Closing
conditions set forth in the Securities Purchase Agreement have been satisfied
or waived by the parties thereto.
6.2 Conditions to Obligations of the Buyer. The obligations of the
Buyer to effect the Closing shall be subject to the following conditions,
except to the extent waived in writing by the Buyer:
6.2.1. Representations and Warranties and Covenants of the Seller.
The representations and warranties of the Seller and the Consolidated
Forecast Entities contained in this Agreement (as qualified by matters set
forth as exceptions thereto in the Seller's Disclosure Schedule and as
otherwise permitted by the terms of this Agreement) shall be true in all
material respects at the Effective Date and at the Closing Date, as
applicable, with the same effect as though made at and as of such time. The
Seller and the Consolidated Forecast Entities shall have in all material
respects performed all obligations and complied with all covenants and
conditions required by this Agreement to be performed or complied with by
them at or prior to the Closing Date, and the Seller shall have delivered to
the Buyer a certificate of the Seller to such effect, dated the Closing Date,
in the form of Exhibit J (the "Form of the Seller's Certificate") attached
hereto, subject to any bring-down to reflect the then current state of facts.
6.2.2. Consents. The Seller shall have obtained (and provided
evidence to the Buyer of receipt of) any Approvals of third parties set forth
on the Seller's Disclosure Schedule.
6.2.3. FIRPTA Affidavit. The Seller shall have executed and
delivered affidavits in a form reasonably satisfactory to the Buyer
providing, among other things, under penalty of perjury, its U.S. taxpayer
identification number and that it is not a "foreign person" within the
meaning of Sections 1445 and 7701 of the Code;
6.2.4. Opinion of Counsel. O'Melveny & Xxxxx LLP, legal counsel
for the Seller, shall have delivered to the Buyer a legal opinion
substantially in the form of Exhibit K (the "Form of OM&M Legal Opinion")
attached hereto.
6.2.5. Seller's Certificates. The Seller shall have caused to be
delivered to the Buyer certificates, in a form reasonably satisfactory to the
Buyer, which shall include:
(a) copies of the resolutions that the board of directors of
the Seller and the partners thereof adopting and approving the execution,
delivery, and performance of this Agreement and each agreement, certificate,
instrument and other document to be delivered pursuant thereto to which they
are party;
(b) incumbency certificates setting forth the names, offices
and signatures of the Persons signing on behalf of them; and
(c) an officer's certificate of the Seller which certifies
that each of the transactions contemplated by the Transfer have been
completed on or prior to the Closing Date.
6.2.6. Other. The Seller shall have delivered to the Buyer such
other certificates as the Buyer may reasonably request to effect the
transactions contemplated hereby; provided, however, the Seller shall not be
obligated to undertake any step which would create obligations or liabilities
not specifically set forth in this Agreement, including, without limitation,
any obligations or liabilities to any third-parties.
6.2.7. Disclosure Documents. The Seller shall have delivered to
the Buyer copies of the Seller's SEC Reports.
6.2.8. Title Insurance. The Title Company shall be in a position
to issue Title Policies to the Buyer with respect to the Real Property, which
policies shall be subject only to the Permitted Encumbrances.
6.2.9. Lot Option Agreement. Xxxxxxx shall have validly executed
and delivered the Lot Option Agreement.
6.2.10. Non-Competition and Option Agreement. Premier shall have
validly executed and delivered the Non-Competition and Option Agreement.
6.2.11. ROFO Agreement. Xxxxxxx shall have validly executed and
delivered the ROFO Agreement.
6.2.12. Park Xxxxxxx Option Agreement. Xxxxxxx shall have validly
executed and delivered the Park Xxxxxxx Option Agreement.
6.2.13. Consulting Agreement. Xxxxxxx shall have validly executed
and delivered the Consulting Agreement.
6.2.14. Forecast Development Option and Purchase Agreement.
Forecast Development shall have validly executed and delivered the Forecast
Development Option and Purchase Agreement.
6.2.15. Indemnification and Release Agreement. Xxxxxxx and the
Seller shall have validly executed and delivered the Indemnification and
Release Agreement.
6.3 Conditions to Obligations of the Seller. The obligations of the
Seller to effect the Closing shall be subject to the following conditions,
except to the extent waived by the Seller in writing:
6.3.1. Representations and Warranties and Covenants of the Buyer.
The representations and warranties of the Buyer herein contained (as
qualified by matters set forth as exceptions thereto in the Buyer's
Disclosure Schedule) shall be true in all material respects at the Effective
Date and at the Closing Date, as applicable, with the same effect as though
made at and as of such time; the Buyer shall have in all material respects
performed all obligations and complied with all covenants and conditions
required by this Agreement to be performed or complied with by it at or prior
to the Closing Date. The Buyer shall have delivered to the Seller a
certificate of the Buyer to such effect, dated the Closing Date, the form of
which appears as Exhibit L (the "Form of the Buyer's Certificate") attached
hereto.
6.3.2. Consents. The Buyer shall have obtained any and all
Approvals of third parties that are necessary in order to consummate the
transactions contemplated hereby, including, without limitation, the
Approvals set forth on the Buyer's Disclosure Schedule.
6.3.3. Opinion of Counsel. The Seller shall receive at the
Closing from Simpson, Thacher & Xxxxxxxx, an opinion dated the Closing Date,
in form and substance substantially as set forth in Exhibit M (the "Form of
the ST&B's Legal Opinion") attached hereto.
6.3.4. Assumption of Guarantees. The Buyer shall have assumed the
guarantees identified in Schedule 6.3.4 attached hereto by an instrument
acceptable to the Seller that fully and completely releases the Seller that
is a guarantor thereunder and each partner or shareholder, as applicable, of
the Seller, from any liability under such guarantees.
6.3.5. Assumption of Liabilities. The Buyer shall have assumed
all of the Liabilities of the Seller with respect to the Assets (other than
the Excluded Liabilities) pursuant to an assignment and assumption agreement
in the form attached hereto as Exhibit N (the "Form of Assignment and
Assumption Agreement"). Nothing contained herein or therein shall require
the Buyer to assume the Excluded Liabilities.
6.3.6. Secretary's Certificate. The Buyer shall have delivered to
the Seller a certificate, in a form acceptable to the Seller, which shall
include:
(a) a copy of the Buyer's certificate of incorporation
certified by the Secretary of State of the State of Delaware not more than
five (5) business days before the Closing Date;
(b) a long-form good standing certificate from the Secretary
of State of the State of Delaware, dated no earlier than five (5) business
days before the Closing Date, stating that the Buyer is in existence and in
good standing under the laws of the State of Delaware;
(c) a copy of the resolutions that the Buyer's Board or
executive committees of the Buyer adopted approving the execution, delivery
and performance of this Agreement and the transactions contemplated hereby
and each agreement, certificate, instrument or other document to be delivered
pursuant hereto to which it is a party; and
(d) an incumbency certificate setting forth the names,
offices and signatures of all of the officers signing on behalf of the Buyer.
6.3.7. Change of Ownership Filings. The Buyer shall have
completed and filed all "Change of Ownership" statements with each county in
which any Assets are located.
6.3.8. Purchase Price. The Buyer shall have delivered to the
Seller (a) the Cash Purchase Portion (less the Option Consideration) by wire
transfer of immediately available federal funds to such account or accounts
as shall be specified in instructions from the Representative prior to the
Closing Date, and (b) stock certificates evidencing all of the Buyer's
Shares.
6.3.9. Listing of the Buyer's Shares. The Buyer's Shares shall
have been listed on the New York Stock Exchange, subject to official notice
of issuance, and the Buyer shall have delivered evidence of such
authorization to the Seller.
6.3.10. Other Matters. The Buyer shall have delivered to the
Seller such other certificates, documents and instruments as the Seller may
reasonably request to effect the transactions contemplated hereby.
6.3.11. Lot Option Agreement. The Buyer shall have validly
executed and delivered the Lot Option Agreement.
6.3.12. Non-Competition and Option Agreement. The Buyer shall have
validly executed and delivered the Non-Competition and Option Agreement.
6.3.13. ROFO Agreement. The Buyer shall have validly executed and
delivered the ROFO Agreement.
6.3.14. Park Xxxxxxx Option Agreement. The Buyer shall have
validly executed and delivered the Park Xxxxxxx Option Agreement.
6.3.15. Consulting Agreement. The Buyer shall have validly
executed and delivered the Consulting Agreement.
6.3.16. Forecast Development Option and Purchase Agreement. The
Buyer shall have validly executed and delivered the Forecast Development
Option and Purchase Agreement.
6.3.17. Indemnification and Release Agreement. The Buyer shall
have validly executed and delivered the Indemnification and Release
Agreement.
6.3.18. Satisfaction of Debt. The Buyer shall have satisfied all
of the Debt pursuant to Section 1.12.
SECTION 7. TERMINATION OF OBLIGATIONS; SURVIVAL
7.1 Termination of Agreement. Anything in this Agreement to the
contrary notwithstanding, this Agreement and the transactions contemplated by
this Agreement (a)shall terminate if the Closing (including, without
limitation, the Seller's receipt of the Purchase Price) does not occur on or
before 10:00 a.m. (Pacific Time) on February 1, 2002, unless extended by
mutual consent in writing of the Buyer and the Seller, and (b)otherwise may
be terminated at any time before the Closing as follows and in no other
manner:
7.1.1. Mutual Consent. By mutual consent in writing of the Buyer
and the Seller.
7.1.2. Conditions to the Buyer's Performance Not Met. By the
Buyer, by written notice to the Seller, if any event occurs or condition
exists which would render impossible the satisfaction of one or more
conditions to the obligations of the Buyer to consummate the transactions
contemplated by this Agreement as set forth in Section 6.1 or 6.2.
Notwithstanding the foregoing, the Buyer may not terminate this Agreement
pursuant to this Section 7.1.2 if such failure of condition resulted, in
whole or in part, from the breach by the Buyer of any of its obligations
under this Agreement.
7.1.3. Conditions to the Seller's Performance Not Met. By the
Seller, by written notice to the Buyer, if any event occurs or condition
exists which would render impossible the satisfaction of one or more
conditions to the obligations of the Seller to consummate the transactions
contemplated by this Agreement as set forth in Section 6.1 or 6.3.
Notwithstanding the foregoing, the Seller may not terminate this Agreement
pursuant to this Section 7.1.3 if such failure of condition resulted, in
whole or in part, from the breach by the Seller of any of its obligations
under this Agreement.
7.1.4. Material Breach. By the Buyer or the Seller if there has
been a material misrepresentation or other material breach by the other in
its representations, warranties or covenants set forth in this Agreement;
provided, however, that if such breach is susceptible to cure, the breaching
Party shall have ten (10) business days in which to cure such breach after
actual receipt of written notice from the other Party of its intention to
terminate this Agreement if such breach continues.
7.2 Effect of Termination. In the event that this Agreement shall be
terminated pursuant to Section 7.1, all further obligations of the Parties
under this Agreement shall terminate without further liability of any Party
to any other, except that the obligations of the Parties contained in
Sections 10.9, 10.14 and 10.16 and the Buyer's indemnification obligations
pursuant to Section 4.1 shall survive any such termination. A termination
under Section 7.1 shall not relieve any Party of any liability that may
otherwise exist for a willful breach of, or for any willful misrepresentation
under, this Agreement, or be deemed to constitute a waiver of any available
remedy (including specific performance if available) for any such breach;
provided, however, that the Buyer shall not have the right to pursue any form
of injunctive relief against Xxxxxxx, the Seller or any of the Consolidated
Forecast Entities. Additionally, no termination shall give rise to the
release of the Buyer from any Loss or indemnities provided to the Seller
under this Agreement with respect to any of the Buyer's (or its agents) due
diligence.
7.3 Effect of Closing Over Known Unsatisfied Conditions.
7.3.1. Waiver. Except with respect to matters bearing on the
Buyer's Shares, if either the Buyer or the Seller elects to proceed with the
Closing, each and every such condition that is unsatisfied at the Closing
Date shall be deemed to be waived. Such decision shall, to the extent the
waiving party had knowledge as of the time of the Closing with respect
thereto, constitute a waiver of any liability for breach of, or
misrepresentation under, this Agreement in connection with such unsatisfied
condition(s) and such breach of a representation or warranty in favor of the
other.
7.3.2. Effect of Waiver. If the Buyer shall waive or be deemed to
have waived any condition set forth in Section 6.1 or 6.2, the Buyer shall be
deemed to have (a)fully released and forever discharged the Seller and its
Affiliates, the Representative, partners, shareholders, officers, directors,
agents and representatives from and on account of all claims, demands or
charges (known or unknown) with respect to the waived condition and, to the
extent that the Buyer had knowledge as of the time of the Closing with
respect thereto, any facts or circumstances giving rise to or in respect of
such waived condition, and (b) waived any opinion or certificate contemplated
by Section 6.1 or 6.2 with respect to such matters. THE BUYER, AFTER
CONSULTATION WITH LEGAL COUNSEL AND WITH FULL KNOWLEDGE OF THE CONSEQUENCES
OF ITS ACTIONS, WAIVES THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542,
WHICH PROVIDES:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS
FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR."
Buyer's Initials:
SECTION 8. INDEMNIFICATION
8.1 Indemnification by Seller and Xxxxxxx.
8.1.1. Ownership of the Assets. The Seller and Xxxxxxx shall
jointly and severally indemnify, defend and hold harmless the Buyer and its
officers, directors, stockholders and Affiliates from and against any and all
material Losses, whether or not involving a third-party claim, directly based
upon or directly arising from any material breach of the representations or
warranties made by the Seller under Section 2.1.1 only (and no other
agreement); provided, however, that the Seller's and Xxxxxxx'x
indemnification obligations hereunder shall exist only with respect to Losses
of which the Seller and Xxxxxxx are timely notified in accordance with
Section 8.3.1.
8.1.2. Indemnification for Actual Fraud. The Seller and Xxxxxxx,
as to matters concerning the Consolidated Forecast Entities, shall jointly
and severally indemnify, defend and hold harmless the Buyer and its officers,
directors, stockholders and Affiliates from and against any and all Losses,
whether or not involving a third-party claim (but expressly excluding all
homeowner allegations of fraud or similar claims or class action claims),
that are not reflected in the Financial Statements or on the Seller's
Disclosure Schedule, as a result of, or based upon or arising from, any
fraudulent misrepresentation made by the Seller in Section 2 (including,
without limitation, fraudulent misrepresentations made by the Seller in
Section 2.13 regarding actually asserted and existing homeowner fraud
claims); provided, however, that the Seller's and Xxxxxxx'x indemnification
obligations hereunder shall exist only with respect to Losses of which the
Seller and Xxxxxxx are timely notified in accordance with Section 8.3.1;
provided, further, any indemnification claim hereunder shall be filed in
accordance with Section 10.10 by the Buyer within ninety (90) days after the
Buyer's discovery thereof or the claim (and the applicable remedy) shall
automatically be waived. Such fraudulent misrepresentation under this
Section 8.1.2 (a) must constitute "actual fraud" under the California Civil
Code, (b) shall be determined based only on the actual (not imputed or
constructive) knowledge of any of the Executive Officers, and (c) must be the
subject of a final, non-appealable judgment.
8.1.3. Tax Indemnification. From and after the Closing Date, the
Seller and Xxxxxxx shall jointly and severally indemnify, defend and hold the
Buyer harmless from and against any and all Taxes (including ad valorem
taxes) with respect to the Assets for which the Buyer is liable, or that
result in Encumbrances on any of the Assets:
(a) for any Tax period of the Seller that ends on or before
the Closing Date;
(b) relating to or arising out of the Excluded Liabilities;
and
(c) any taxes asserted against the Buyer or the Consolidated
Forecast Entities due to liability directly resulting from the Transfer.
The Seller's and Xxxxxxx'x indemnification obligations under this
Section 8.1.3 shall terminate upon the expiration of the applicable statute
of limitations on assessment of the relevant Tax. The Seller's and Xxxxxxx'x
liability under this Section 8.1.3 shall include any Losses with respect to
the reasonable, necessary and actually incurred out-of-pocket costs and
expenses of the Buyer directly incurred in responding to an examination,
audit, administrative or court proceeding, or other procedure in which a Tax
authority seeks to propose an adjustment, that if pursued successfully, would
give rise to a liability for Taxes for which the Buyer would be eligible for
indemnification under this Section 8.1.3. For purposes of this Section
8.1.3, in the case of any Taxes that are imposed on a periodic basis and are
payable for a Tax period that includes (but does not end on) the Closing
Date, the portion of such Tax which relates to the portion of such Tax period
ending on the Closing Date shall (i)in the case of any Taxes, other than
Taxes based upon or related to income or receipts, be deemed to be the amount
of such Tax for the entire Tax period multiplied by a fraction the numerator
of which is the number of days in the Tax period ending on the Closing Date
and the denominator of which is the number of days in the entire Tax period,
and (ii)in the case of any Tax based upon or related to income or receipts
(including franchise Taxes to the extent based upon income, receipts or
earned surplus) be deemed equal to the amount which would be payable if the
relevant Tax period ended on the Closing Date for the Seller.
8.2 Indemnification by the Buyer. The Buyer shall indemnify and hold
harmless Xxxxxxx, the Seller, each of the Consolidated Forecast Entities and
their officers, directors, employees, stockholders and Affiliates from and
against any material Losses, whether or not involving a third-party claim,
that are not reflected on the Buyer's Disclosure Schedule as a result of, or
based upon or arising from, any fraudulent misrepresentation made by the
Buyer under Section 3; provided, however, that the Buyer's indemnification
obligations pursuant to this Section 8.2 shall exist only with respect to
Losses of which the Buyer is timely notified in accordance with Section
8.3.1; provided, further, any indemnification claim hereunder shall be filed
in accordance with Section 10.10 by the Seller or such Person within ninety
(90) days after such Person's discovery thereof or the claim (and the
applicable remedy) shall automatically be waived. Such fraudulent
misrepresentation under this Section 8.2 (a) must constitute "actual fraud"
under the California Civil Code, (b) shall be determined based on the actual
(not imputed or constructive) knowledge of the Buyer, and (c) must be the
subject of a final, non-appealable judgment. Nothing herein shall limit the
Buyer's liabilities (and indemnification obligations) with respect to any
matter pertaining to the Buyer's Shares, including, without limitation, the
disposition thereof, or any obligation of the Buyer under Section 5.5.4 or
Section 5.6.
8.3 Procedure.
8.3.1. Notice. Any Indemnified Party with respect to any Loss
shall give written notice to the Indemnifying Party, and such notice shall
(a) describe in reasonable detail the nature of the claim of Loss, (b)
provide a copy of all papers served (and/or delivered) with respect to such
claim (and/or any examination, audit or other procedure), if any, (c) set
forth the basis of the Indemnified Party's request for indemnification under
this Agreement, and (d) provide a waiver of any right to receive
indemnification for such Loss under the Securities Purchase Agreement. Such
notice to the Indemnifying Party shall be delivered by the Indemnified Party
within thirty (30) days of the Indemnified Party's knowledge of such Loss and
prior to the expiration of the applicable statutory period; provided,
however, that any delay by the Indemnified Party beyond the aforesaid thirty
(30) day period shall not waive the Indemnified Party's claim regarding such
Loss, except to the extent such delay prejudices (or could reasonably be
expected to lead to the prejudice of) the Indemnifying Party's ability to
effectively defend such claim, but in no event shall such notice be delayed
by more than ninety (90) days of the Indemnified Party's knowledge of such
Loss.
8.3.2. Defense. If any claim, demand or liability is asserted by
any third party against any Indemnified Party, the Indemnifying Party shall
have the right and shall upon the written request of the Indemnified Party,
defend any Actions brought against the Indemnified Party in respect of any
Indemnifiable Claims with counsel of its choice reasonably acceptable to the
Indemnified Party and, in the case of a Tax-related Action, tax advisors of
its choice reasonably acceptable to the Indemnified Party. In any such
action or proceeding, the Indemnified Party shall have the right to retain
its own counsel, but the fees and expenses of such counsel shall be at its
own expense unless (a) the Indemnifying Party and the Indemnified Party
mutually agree in writing to the retention of such counsel, or (b) the named
parties to any such suit, action or proceeding (including any impleaded
parties) include both the Indemnifying Party and the Indemnified Party, and
in the reasonable judgment of the Indemnified Party, representation of the
Indemnifying Party and the Indemnified Party by the same counsel would be
inadvisable due to potential conflicts of interests between them. The
Parties shall cooperate and may participate in the defense of all third-party
claims which may give rise to Indemnifiable Claims hereunder. If the
Indemnifying Party assumes the defense, (i) it shall be conclusively
established for purposes of this Agreement that the claims made in the Action
are within the scope of and subject to indemnification, but only if the
Indemnifying Party assumed the defense pursuant to clause (a) above and not
clause (b), and (ii) no compromise or settlement of such claims may be
effected by the Indemnifying Party without the Indemnified Party's written
consent (which consent shall not be unreasonably withheld) unless there is no
finding or admission of any violation of legal requirement or any violation
of the rights of any Person and no effect on any other claims that may be
made against the Indemnified Party, or the exclusive relief provided is
monetary damages that are paid in full by the Indemnifying Party. If written
notice is given to an Indemnifying Party of the commencement of any Action
and the Indemnifying Party does not, within twenty (20) days after the
Indemnified Party's written notice is given, give written notice to the
Indemnified Party of its election to assume the defense of such Action, the
Indemnifying Party shall be bound by any determination made in such Action or
any compromise or settlement effected by the Indemnified Party. In
connection with the defense of any claim, each Party shall make available to
the Party controlling such defense, any books, records or other documents
within its control that are reasonably requested in the course of or
necessary or appropriate for such defense.
8.3.3. Insurance Matters. The amount of any Loss for which
indemnification is provided under Section 8.1 or 8.2 shall be net of, and
subject to, any insurance proceeds received and the amount of any related
deductible with respect to such Loss under any insurance policy maintained by
the Buyer or the Seller. The Parties agree that, simultaneously with their
actions to obtain indemnification for a Loss from the Indemnifying Party
under this Agreement, the Indemnified Party shall use commercially reasonable
efforts to recover any insurance proceeds that may be obtainable with respect
to such Loss. The Seller shall reasonably cooperate, at no expense to the
Seller, with the Buyer in the Buyer's efforts to seek to obtain insurance to
cover any breaches or misrepresentations in the Seller's representation and
warranties contained in this Agreement, if any. If such insurance proceeds
or other contributions or reductions to the amount payable by the
Indemnifying Party under this Section 8 is made available or otherwise
determined after payment by the Indemnifying Party of any amount otherwise
required to be paid to an Indemnified Party pursuant to this Section 8, the
Indemnified Party shall repay to the Indemnifying Party promptly after such
determination (and in any event within ten (10) days after determination of
the Indemnifying Party's right to receive such insurance proceeds), any
amount the Indemnifying Party would not have had to pay pursuant to this
Section 8 had such determination been made at the time of such payment.
8.3.4. Indemnification in the Securities Purchase Agreement. Any
payment to an Indemnified Party under Section 8.1 or 8.2 otherwise due and
payable hereunder shall be decreased to the extent of any indemnification
proceeds received under Section 8 of the Securities Purchase Agreement by the
Indemnified Party with respect to the same Loss. Neither the Buyer nor the
Seller shall have any right to receive indemnification payments under both
this Agreement and the Securities Purchase Agreement for the same Loss.
8.3.5. Tax Treatment of Indemnification Payments. Any payment
under Section 8.1 shall be treated as an adjustment to the Purchase Price.
8.4 Survival.
8.4.1. The Seller. The indemnification obligations of Xxxxxxx
under Sections 8.1.1 and 8.1.2 shall survive the Closing and terminate at the
expiration of the applicable statutory period. The indemnification
obligations of Xxxxxxx under Section 8.1.3 shall survive indefinitely.
8.4.2. The Buyer. The indemnification obligations of the Buyer
under Sections 5.5.4, 5.6, 8.2 and the final sentence of 4.1 shall survive
the Closing and shall terminate at the expiration of the applicable statutory
period.
8.5 Indemnification Thresholds. Neither the Seller nor Xxxxxxx shall be
obligated to indemnify the Buyer pursuant to Section 8.1 until the aggregate
amount of Losses for which such indemnification would otherwise be available
under this Agreement or under the Securities Purchase Agreement is in excess
of Six Hundred Fifty Thousand Dollars ($650,000), in which event Xxxxxxx or
the Seller, as applicable, shall be obligated to indemnify the Buyer for all
material Losses from the first dollar. The Buyer shall not be obligated to
indemnify the Seller pursuant to Section 8.2 until the aggregate amount of
Losses for which such indemnification would otherwise be available is in
excess of Six Hundred Fifty Thousand Dollars ($650,000) in which event the
Buyer shall be obligated to indemnify Xxxxxxx, the Seller or any of the
Consolidated Forecast Entities for all Losses from the first dollar;
provided, however, nothing herein shall limit the Buyer's liabilities (and
indemnification obligations) with respect to the Buyer's indemnification
obligations contained in Section 4.1 or with respect to any matter pertaining
to the Buyer's Shares, including, without limitation, the disposition
thereof, or any obligation of the Buyer under Section 5.5.4 or Section 5.6.
8.6 Seller Jointly and Severally Liable. The Seller and Xxxxxxx hereby
agree to be jointly and severally liable for any Loss for which Xxxxxxx or
any Securities Seller is liable under Section 8 of the Securities Purchase
Agreement.
SECTION 9. LIMITATION OF REMEDIES
9.1 Breach of Representations. The indemnification obligations provided
in Sections 8.1 and 8.2 shall be the sole and exclusive remedies available to
any Party from any other Party or from any of the Consolidated Forecast
Entities with respect to any Loss resulting from, or based upon or arising
from, any breach of any of the representations or warranties made under this
Agreement.
9.2 No Other Warranties. Except as expressly set forth in this
Agreement and in the Securities Purchase Agreement or the Collateral
Agreements, none of Xxxxxxx, the Seller, their counsel, sales agents, nor any
of their Affiliates or attorney of Xxxxxxx, the Seller, their counsel,
broker, or sales agents, nor any other party related in any way to any of the
foregoing (each, a "Seller Party," and collectively, the "Seller Parties")
have or shall be deemed to have made any verbal or written representations,
warranties, promises or guarantees (whether express, implied, statutory or
otherwise) to the Buyer with respect to the Assets or any other matters.
9.3 No Personal Liability of Any Other Person. Except as specifically
set forth herein, no Person (including, without limitation, the Seller) shall
have any liability to the Buyer (or any Affiliate thereof) arising under this
Agreement or in connection with the transactions contemplated under this
Agreement (or any other related agreements). Moreover, notwithstanding
anything else in this Agreement to the contrary, no officer, director or
employee of any of the Consolidated Forecast Entities shall have any
liability to the Buyer (or any Affiliate thereof) whatsoever, excepting
solely as it may pertain to Xxxxxxx pursuant to Sections 8.1.1, 8.1.2 and
8.1.3.
9.4 Failure to Perform Obligations. Except as otherwise specifically
set forth herein, the Parties agree that the performance obligations of each
of the Parties contained herein shall survive Closing, and except as
otherwise specifically set forth herein, nothing contained in this Agreement
shall restrict or limit either Party's ability to bring or maintain an Action
at Law or in equity with respect thereto.
SECTION 10. GENERAL
10.1 Amendments; Waivers. This Agreement and any Schedule or Exhibit
attached hereto may be amended only by agreement in writing of all Parties.
No waiver of any provision nor consent to any exception to the terms of this
Agreement shall be effective unless in writing and signed by the Party to be
bound and then only to the specific purpose, extent and instance so provided
by an authorized representative thereof.
10.2 Schedules; Exhibits; Integration. Each Schedule and Exhibit
delivered pursuant to the terms of this Agreement shall be in writing and
shall constitute a part of this Agreement, although Schedules need not be
attached to each copy of this Agreement. This Agreement, together with such
Schedules and Exhibits, constitutes the entire agreement among the Parties
pertaining to the subject matter hereof and supersedes all prior agreements
and understandings of the Parties in connection therewith. Without limiting
the effect of the foregoing provisions of this Section 10.2, except as
expressly set forth in this Agreement, none of the Parties is making or shall
be deemed to have made any representation, warranty or covenant of any kind,
either express or implied.
10.3 Efforts; Further Assurances. Each Party shall use its
commercially reasonable efforts to cause all conditions to its obligations
hereunder to be timely satisfied and to perform and fulfill all obligations
on its part to be performed and fulfilled under this Agreement. The Parties
shall reasonably cooperate with each other in such actions and in securing
requisite Approvals. Each Party shall execute and deliver both before and
after the Closing such further certificates and other documents and take such
other actions as any other Party may reasonably request in furtherance of and
as contemplated by this Agreement to consummate or implement the transactions
contemplated hereby or to evidence such events or matters. Nothing herein
shall modify, amend or extend the Closing Date.
10.4 Governing Law. This Agreement, the legal relations between the
Parties and any Action, whether contractual or non-contractual, instituted by
any Party with respect to matters arising under or growing out of or in
connection with or in respect of this Agreement, including, without
limitation, the negotiation, execution, interpretation, coverage, scope,
performance, breach, termination, validity, or enforceability of this
Agreement, shall be governed by and construed in accordance with the Laws of
the State of California applicable to contracts made and performed in such
State and without regard to conflicts of law doctrines.
10.5 Transfer; Successors and Assigns. Except as contemplated herein,
in the Securities Purchase Agreement or any Collateral Agreement, the Buyer
may not assign or transfer this Agreement or any of the rights hereunder
without the Seller's prior written consent, which consent shall not be
required in the a case of a proposed assignment or transfer to an Affiliate
of the Buyer so long as the Buyer (a) provides complete copies of all
relevant documentation, (b) remains fully liable under this Agreement without
any further documentation, and (c) unconditionally guarantees (i) any and all
of the obligations and performance of the proposed assignee under this
Agreement, and (ii) any and all of the Buyer's obligations under the
Securities Purchase Agreement and the Collateral Agreements. In the event
the Seller consents to any such assignment or transfer, the Seller may elect
in its sole discretion, to pursue any of its remedies solely against the
Buyer, or against the Buyer and the assignee or transferee. Any attempted
assignment in violation of this Section 10.5 shall be void.
10.6 Headings. The Table of Contents and the descriptive headings of
the Sections, subsections and other subdivisions of this Agreement and of the
Exhibits and Schedules are for convenience only and do not constitute a part
of this Agreement.
10.7 Counterparts. This Agreement may be executed in any number of
identical counterparts, each of which when executed and delivered shall be an
original, but all such counterparts shall constitute but one and the same
instrument. Any signature page of this Agreement may be from any counterpart
without impairing the legal effect of any signatures thereof, and may be
attached to another counterpart, identical in form thereto, but having
attached to it one or more additional signature pages. Delivery by any Party
or its respective representatives of telecopied (counterpart) signature pages
shall be as binding an execution and delivery of this Agreement by such Party
as if the other Party had received the actual physical copy of the entire
Agreement with an ink signature from such Party.
10.8 Publicity and Reports. The Seller and the Buyer shall coordinate
all publicity relating to the transactions contemplated by this Agreement and
no Party shall issue any press release, publicity statement or other public
notice relating to this Agreement, or the transactions contemplated by this
Agreement, without consulting with, and receiving approval from (which
approval shall not be unreasonably withheld or delayed), the other Party,
except to the extent that a particular action is required by applicable Law
or the rules of any national securities exchange; provided, however, in such
instance, the applicable Party shall use commercially reasonable efforts to
inform the other of such action in writing in advance.
10.9 Confidentiality. All information disclosed by any Party (or its
representatives) whether before or after the Effective Date, in connection
with the transactions contemplated by, or the discussions and negotiations
preceding, this Agreement to any other Party (or its representatives) shall
be kept confidential by such other Party and its representatives and shall
not be used by any such Persons other than as contemplated by this Agreement,
except (a) to the extent that such information was known by the recipient
when received, (b) to the extent that such information is or hereafter
becomes lawfully obtainable from other sources, (c) to the extent that such
information is necessary or appropriate to disclose to a Governmental Entity
having jurisdiction over the disclosing Party, (d) as may otherwise be
required by Law, or (e) to the extent such duty of confidentiality is waived
in writing by the other Party. If a Party discloses any information related
to this Agreement or the transactions contemplated hereunder pursuant to any
of clauses (a) through (e) above, then such Party shall provide the other
Party with written notice of such disclosure. If this Agreement is
terminated in accordance with its terms, each Party shall return upon written
request from the other Party all documents (and reproductions thereof)
received by it or its representatives from such other Party (and, in the case
of reproductions, all such reproductions made by the receiving Party) that
include information not within exceptions set forth in clauses (a) through
(e) above, unless the recipients provide assurances reasonably satisfactory
to the requesting Party that such documents have been destroyed.
10.10 Appointment of Reference; Waiver of Jury Trial. Any action
brought to interpret or enforce this Agreement may be tried by the reference
procedures set forth in California Code of Civil Procedure Section 638 et
seq. upon motion by any party to the appropriate Superior Court. A single
referee that is an active judge shall be appointed by the presiding judge of
the appropriate Superior Court, and the Action shall be placed on the
expedited reference calendar. Each of the Seller and the Buyer hereby waives
the right to trial by jury. During the pendency of the expedited reference
proceeding, the Seller shall pay one-half of the cost of the referee and the
Buyer shall pay the other half of such cost. Upon the conclusion of the
referenced proceeding, the losing party shall pay all remaining unpaid costs
of the referenced proceeding and shall reimburse the prevailing party (as
shall be determined by the referee) for such costs previously paid by the
prevailing party. Such reimbursement shall be included in any judgment or
final order issued in the referenced proceeding, which judgment or order
shall be non-appealable.
10.11 Parties in Interest. This Agreement shall be binding upon and
inure to the benefit of each Party, and nothing in this Agreement, express or
implied, is intended to confer upon any other Person any rights or remedies
of any nature whatsoever under or by reason of this Agreement, except for
Section 10.5 (which is intended to be for the benefit of the persons provided
for therein and may be enforced by such persons).
10.12 Knowledge Convention. Statements in this Agreement or in any
Schedule, Exhibit, certificate or other documents delivered to any Party
pursuant to this Agreement made "to the Seller's knowledge" (or words of
similar intent or effect) shall be deemed to be made to the actual (not
implied or constructive) knowledge of the applicable Executive Officers and
shall not include any other Person's knowledge. The reference to the
applicable Executive Officers shall not imply and shall not give rise to any
personal liability of such persons. Statements in this Agreement or in any
Schedule, Exhibit, certificate or other documents delivered to any Party
pursuant to this Agreement stating the "Seller's expectations" (or words of
similar intent or effect) shall be deemed to refer to the actual expectations
of Xxxxxxx and shall not include any other Person's expectations or any
guarantee thereof.
10.13 Notices. Except as otherwise expressly provided herein, all
notices, requests, approvals, consents and demands to or upon the respective
Parties hereto to be effective shall be in writing (and shall be delivered by
hand, or nationally recognized courier service), and shall be deemed to have
been duly given or made when delivered by hand, or, in the case of a
nationally recognized courier service, one (1) business day after delivery to
such courier service, addressed as follows, or to such other address as may
be hereafter notified by the respective Parties hereto:
If to the Buyer, to:
Hovnanian Enterprises, Inc.
00 Xxxxxxx 00
X.X. Xxx 000
Xxx Xxxx, Xxx Xxxxxx 00000
Attn: Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
and:
Hovnanian Enterprises, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Attn: Mr. Geaton X. XxXxxxxxx, Xx.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
10 Xxxxxxxxx Xxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Seller or Premier, to:
00000 Xxxxx Xxxxxx Xxxxx
Xxxxxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxx X. Xxxxxxx (marked "Woodlands - Personal &
Confidential" and sent only after personal (not voice-mail)
notice to Xx. Xxxxxxx)
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
00000 Xxxxx Xxxxxx Xxxxx
Xxxxxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Day, Esq. (marked "Woodlands - Personal &
Confidential" and sent only after personal (not voice-mail)
notice to Mr. Day)
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
and:
O'Melveny & Xxxxx LLP
Embarcadero Center West
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
10.14 Expenses. Except as otherwise expressly set forth herein, the
Seller and the Buyer shall each pay its own expenses incident to the
negotiation, preparation and performance of this Agreement and the
transactions contemplated hereby, including, without limitation, the fees,
expenses and disbursements of their respective advisors, accountants,
auditors and counsel. The Parties agree that the Seller shall pay the costs
and expenses incurred in connection with the Title Policies; provided,
however, that the Buyer agrees that it shall be solely responsible for any
additional costs relating to any extended coverage or endorsements beyond
that afforded by the Title Policy. The Parties agree that the Buyer shall
pay the costs of the filing fee associated with a filing under the Xxxx-
Xxxxx-Xxxxxx Act, if applicable. The Seller's expenses incurred prior to the
Closing and not otherwise specifically allocated by this Agreement shall be
paid by the Seller or by its Affiliates.
10.15 Remedies; Waiver. To the extent permitted by Law, all rights and
remedies existing under this Agreement are cumulative to and not exclusive
of, any rights or remedies otherwise available under applicable Law. No
failure on the part of any Party to exercise or delay in exercising any right
hereunder shall be deemed a waiver thereof, nor shall any single or partial
exercise preclude any further or other exercise of such or any other right.
10.16 Attorneys' Fees. In the event of any Action by any Party arising
under or out of, in connection with or in respect of, this Agreement or the
transactions contemplated hereby, the prevailing Party shall be entitled to
reasonable attorney's fees, costs and expenses incurred in such Action.
Attorney's fees incurred in enforcing any judgment in respect of this
Agreement are recoverable as a separate item. The Parties intend that the
preceding sentence be severable from the other provisions of this Agreement,
survive any judgment and, to the maximum extent permitted by Law, not be
deemed merged into such judgment.
10.17 Representation by Counsel; Interpretation. The Seller and the
Buyer each acknowledge that each Party has been represented by counsel in
connection with this Agreement and the transactions contemplated by this
Agreement. Accordingly, any rule of Law, including, without limitation,
Section 1654 of the California Civil Code, or any legal decision that would
require interpretation of any claimed ambiguities in this Agreement against
the Party that drafted it has no application and is expressly waived. The
provisions of this Agreement shall be interpreted in a reasonable manner to
effect the intent of the Buyer and the Seller.
10.18 Severability. If any provision of this Agreement is determined
to be invalid, illegal or unenforceable by any Governmental Entity, the
remaining provisions of this Agreement shall remain in full force and effect
provided that the economic and legal substance of the transactions
contemplated is not affected in any manner materially adverse to any Party.
In the event of any such determination, the Parties agree to negotiate in
good faith to modify this Agreement to fulfill as closely as possible the
original intents and purposes hereof. To the extent permitted by Law, the
Parties hereby to the same extent waive any provision of Law that renders any
provision hereof prohibited or unenforceable in any respect.
10.19 No Offset by Buyer. Notwithstanding anything in this Agreement
to the contrary, neither the Buyer nor anyone claiming through the Buyer
shall have any rights of offset under this Agreement or otherwise, in the
event of any breach hereunder by the Seller, Xxxxxxx or any Consolidated
Forecast Entity, or any Affiliate thereof, including, without limitation, any
right of offset or excuse to Buyer's performance respecting Buyer's
obligations regarding the Buyer's Shares (including, without limitation, the
disposition thereof), the price protective provisions set forth in Section
1.4.5, the adjustments to the Purchase Price set forth in Section 1.6, the
indemnification provisions of Sections 5.6 and 8.2 or under the Securities
Purchase Agreement or any of the Collateral Agreements.
10.20 No Offset by the Seller or Xxxxxxx. Notwithstanding anything in
this Agreement to the contrary, but expressly excepting any actions and/or
inactions by the Buyer or its directors, officers, employees, representatives
or agents that are directly related to the obligation of the Seller, Xxxxxxx,
or anyone claiming through any of them, none of the Seller, Xxxxxxx, nor
anyone claiming through them shall have any rights of offset under this
Agreement or otherwise, in the event of any breach hereunder by the Buyer, or
any Affiliate thereof, including, without limitation, any right of offset or
excuse to the Seller's or Xxxxxxx'x performance respecting the
indemnification provisions of Section 8.1 or under the Securities Purchase
Agreement or any of the Collateral Agreements.
10.21 Cross Default with Securities Purchase Agreement.
10.21.1. Effectiveness of this Agreement. This Agreement shall not
be operable or effective unless and until the Buyer, the Securities Sellers
and Xxxxxxx validly execute and deliver to the other parties thereto the
Securities Purchase Agreement.
10.21.2. Default by Buyer. A default by the Buyer under the
Securities Purchase Agreement shall constitute a default by the Buyer under
this Agreement.
10.21.3. Default by Securities Sellers or Xxxxxxx. A default by
the Securities Sellers and/or Xxxxxxx under the Securities Purchase Agreement
shall constitute a default by Seller and/or Xxxxxxx, as applicable, under
this Agreement.
10.21.4. Termination. In the event the Securities Purchase
Agreement is terminated pursuant to the terms thereof, this Agreement shall
be deemed terminated as of the date of such termination of the Securities
Purchase Agreement, at which time this Agreement shall be of no further force
or effect except with respect to those obligations, which, pursuant to the
express provision of this Agreement, are to survive the termination of this
Agreement. (The remainder of this page intentionally left blank.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
Effective Date.
"BUYER"
HOVNANIAN ENTERPRISES, INC., a Delaware
corporation
By: /S/Geaton XxXxxxxxx, Jr.
Its: President of Homebuilding
Operations
"SELLER"
THE FORECAST GROUP, L.P., a California
limited partnership
By: /S/Xxxxx X. Day
Its: Executive Vice President
"XXXXXXX"
XXXXX X. XXXXXXX, an individual
By: /S/Xxxxx X. Peviti
