SECURITIES PURCHASE AGREEMENT
Sellers: FORECAST PP2, LLC
FORECAST HOMES, INC.
Buyer: HOVNANIAN ENTERPRISES, INC.
Dated: January 4, 2002
SECTION 1. DEFINITIONS; PURCHASE AND SALE; CLOSING 2
1.1 Definitions 2
1.2 Transfer of the Securities by the Sellers 9
1.3 Purchase of the Securities by the Buyer 9
1.4 Closing 9
1.5 Purchase Price Allocation 9
1.6 Further Assurances 9
1.7 Representative 10
1.8 Satisfaction of Debt 10
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SELLERS 10
2.1 The Group; the Sellers 10
2.2 Capitalization 11
2.3 Subsidiaries 11
2.4 Financial Statements; Changes; Contingencies 12
2.5 No Material Adverse Changes 12
2.6 Absence of Certain Changes 13
2.7 Taxes 14
2.8 Compliance with Applicable Laws 15
2.9 Absence of Unethical Business Practices 15
2.10 Material Contracts 15
2.11 Adequacy of Assets 17
2.12 Intangible Property 17
2.13 Labor Relations 17
2.14 Minute Books 18
2.15 Accounting Records 18
2.16 Insurance 18
2.17 Employees 19
2.18 Employee Benefit Plans 19
2.19 No Brokers or Finders 21
2.20 Accounts Receivable 21
2.21 SEC Reports 22
2.22 Information Generally 22
2.23 No Conflicts; Government Approvals; Third-Party Consents 22
2.24 Legal Proceedings 22
2.25 Receipt of Agreements; Access to Information 23
2.26 Intercompany Obligations 23
2.27 Land Purchase Contracts 23
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE BUYER 23
3.1 Organization and Related Matters 23
3.2 Authorization 23
3.3 No Conflicts; Government Approvals; Third-Party Consents 24
3.4 Investment Representation 24
3.5 No Brokers or Finders 24
SECTION 4. COVENANTS PRIOR TO CLOSING 24
4.1 Access 24
4.2 Preservation of Business Prior to the Closing Date 24
4.3 Notification of Certain Matters 25
4.4 Approvals 25
4.5 No Shop 25
4.6 Financial Statements 26
4.7 Intercompany Obligations 26
4.8 Tax Status of Securities Partnership 26
SECTION 5. ADDITIONAL CONTINUING COVENANTS 26
5.1 Non-Competition 26
5.2 Nondisclosure of Proprietary Data 26
5.3 Tax Returns 26
5.4 Tax Cooperation 27
5.5 Section 754 Election 27
5.6 Cooperation 28
5.7 Employees and Employee Benefits 28
5.8 Assumption of Office Lease 28
5.9 Use of Name 29
5.10 Change of Control 29
5.11 Insurance 29
SECTION 6. CONDITIONS OF PURCHASE 29
6.1 General Conditions 29
6.2 Conditions to Obligations of the Buyer 30
6.3 Conditions to Obligations of the Sellers 31
SECTION 7. TERMINATION OF OBLIGATIONS; SURVIVAL 33
7.1 Termination of Agreement 33
7.2 Effect of Termination 33
7.3 Effect of Closing Over Known Unsatisfied Conditions 34
SECTION 8. INDEMNIFICATION 34
8.1 Indemnification by the Sellers and Xxxxxxx 34
8.2 Indemnification by the Buyer 36
8.3 Procedure 36
8.4 Survival 37
8.5 Limitation of Remedies 37
8.6 Sellers Jointly and Severally Liable 38
SECTION 9. LIMITATION OF REMEDIES 38
9.1 Breach of Representations 38
9.2 No Other Warranties 38
9.3 No Personal Liability of Any Other Person 38
9.4 Failure to Perform Obligations 38
SECTION 10. GENERAL 38
10.1 Amendments; Waivers 38
10.2 Schedules; Exhibits; Integration 39
10.3 Efforts; Further Assurances 39
10.4 Governing Law 39
10.5 Transfer; Successors and Assigns 39
10.6 Headings 39
10.7 Counterparts 39
10.8 Publicity and Reports 40
10.9 Confidentiality 40
10.10 Appointment of Referee; Waiver of Jury Trial 40
10.11 Parties in Interest 40
10.12 Knowledge Convention 40
10.13 Notices 41
10.14 Expenses 42
10.15 Remedies; Waiver 42
10.16 Attorneys' Fees 42
10.17 Representation by Counsel; Interpretation 42
10.18 Severability 43
10.19 No Offset 43
10.20 No Offset by the Sellers or Xxxxxxx 43
10.21 Cross Default with Asset Purchase Agreement 43
Exhibits
Exhibit A Form of Indemnification and Release Agreement
Exhibit B Form of Partnership Interest Assignment
Exhibit C Form of the Sellers' Certificate
Exhibit D Form of OM&M Legal Opinion
Exhibit E Form of the Buyer's Certificate
Exhibit F Form of ST&B Legal Opinion
Exhibit G Form of Assignment and Assumption Agreement
Schedules
Schedule 1.1 Consolidated Forecast Entities
Schedule 1.2 Intangible Rights
Schedule 1.5 Allocation of Purchase Price Among the Sellers
Schedule 1.8 Debt
Schedule 2.1.1 Ownership Schedule
Schedule 2.4.1 Financial Statements of the Group
Schedule 2.16.1 Policies
Schedule 2.26 Intercompany Obligations
Schedule 4.2.3 Excluded Employees
Schedule 6.3.5 Assumption of Guarantees
Buyer's Disclosure Schedule
Sellers' Disclosure Schedule
S E C U R I T I E S P U R C H A S E A G R E E M E N T
THIS SECURITIES 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)(i) FORECAST HOMES, INC., a California
corporation ("Forecast Homes"), and (ii)FORECAST PP2, LLC, a Delaware limited
liability company ("Forecast PP2") (each, a "Seller," and collectively, the
"Sellers"), 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 Forecast Group, L.P., a
California limited partnership (the "Group"), transferred certain of its
tangible assets to a certain entity (such transfer of tangible assets shall
be referred to as the "Asset Transfer").
B. On or before January 9, 2002, the Group shall have transferred
its intangible assets to Securities Partnership, L.P., a California limited
partnership (the "Securities Partnership") (such transfer of intangible
assets shall be referred to as the "Securities Transfer").
C. As of the Effective Date, (a) Forecast Homes is the sole general
partner of Securities Partnership, and (b) Forecast PP2 is the sole limited
partner of Securities Partnership.
D. Simultaneously herewith, the Buyer, the Group, and Xxxxxxx are
entering into an agreement (the "Asset Purchase Agreement") pursuant to which
the Group shall sell certain of its assets to the Buyer.
E. Prior to the Effective Date, the Buyer shall have delivered to
the Sellers 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.
F. At the Closing (and as a condition thereto), the Buyer and
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") pursuant to which
Premier shall agree, as more particularly set forth therein, to certain
restrictions on its ability to (a) compete with the Buyer in the Homebuilding
Business, and (b) solicit certain persons for employment.
G. At the Closing (and as a condition thereto), the Buyer and
Xxxxxxx shall enter into a lot option agreement (the "Lot 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 an agreement (the "ROFO Agreement") pursuant to
which Xxxxxxx shall grant to the Buyer an option/right of first offer with
respect to certain real property.
I. At the Closing (and as a condition thereto), the Buyer and
Xxxxxxx shall enter into an option agreement (the "Park Xxxxxxx Option
Agreement") pursuant to which the Buyer shall have the option to purchase
certain real property described therein.
J. At the Closing (and as a condition thereto), the Buyer and
Xxxxxxx shall enter into a consulting agreement (the "Consulting Agreement")
pursuant to which Xxxxxxx shall provide certain consulting services to the
Buyer with respect to the Homebuilding Business.
K. 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") pursuant to which Forecast Development shall
grant to the Buyer an option to purchase Forecast Development's ownership
interest in Premier.
L. At the Closing (and as a condition thereto), the Buyer, Xxxxxxx
and the Sellers shall enter into an indemnification and release agreement
(the "Indemnification and Release Agreement") in the form attached hereto as
Exhibit A (the "Form of Indemnification and Release Agreement") pursuant to
which (i) the Buyer shall indemnify and release the Sellers with respect to
any claims with respect to the Assets and the Securities, and (ii) the
Sellers and Xxxxxxx shall indemnify and release the Buyer with respect to any
claims regarding Excluded Assets.
M. Subject to the terms and conditions of this Agreement, the
Sellers desire to sell and the Buyer desires to buy all of the partnership
interests in Securities Partnership (the "Securities") 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)has been placed in the data room accessible by the
Buyer and its representatives for purposes of conducting its due diligence
investigation 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) "Action" means any action, complaint, claim, demand,
accusation, petition, investigation, suit or other proceeding, whether civil,
criminal, administrative or investigative, in law or in equity, or before any
arbitrator or Governmental Entity.
(b) "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.
(c) "Affiliate Agreements" shall have the meaning set
forth in Section 2.10.1.
(d) "Agreement" means this Securities Purchase Agreement
by and among the Buyer, the Sellers 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.
(e) "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.
(f) "Asset Purchase Agreement" shall have the meaning set
forth in Recital D.
(g) "Asset Transfer" shall have the meaning set forth in
Recital A.
(h) "Assets" shall have the meaning set forth in the
Asset Purchase Agreement.
(i) "Assignments and Assumption Agreement" shall have the
meaning set forth in Section 6.3.4.
(j) "Auditors" means Ernst & Young LLP, independent
public accountants to the Group.
(k) "Buyer" shall have the meaning set forth in the
introductory paragraph of this Agreement.
(l) "Buyer's Board" shall mean the board of directors of
the Buyer.
(m) "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).
(n) "Closing" means the consummation of the purchase and
sale of the Securities pursuant to the terms of this Agreement.
(o) "Closing Date" shall mean January --, 2002 or such
other date as the Parties may mutually agree in writing.
(p) "Code" means the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
(q) "Collateral Agreements" means, collectively, the Lot
Option Agreement, the ROFO Agreement, the Non-Competition and Option
Agreement, the Park Xxxxxxx Option Agreement, the Consulting Agreement, the
Forecast Development Option and Purchase Agreement, the Assignment and
Assumption Agreement and the Indemnification and Release Agreement.
(r) "Company Names" shall mean the registered trademarks
"Forecast," "The Forecast Group," "America's Home," "New Beginnings" and
"Homes for a New Generation."
(s) "Consolidated Forecast Entities" shall mean,
collectively, the entities listed on Schedule 1.1 (the "Consolidated Forecast
Entities") attached hereto.
(t) "Consulting Agreement" shall have the meaning set
forth in Recital J.
(u) "Contract" means any agreement, arrangement, bond,
order, commitment, franchise, indemnity, indenture, instrument, lease,
license, sales and purchase order or obligation or understanding, inclusive
of amendments, express or implied, whether or not in writing, entered into by
at least the Buyer, Xxxxxxx, the Sellers or any Consolidated Forecast Entity,
as applicable, specifically excluding, however, the Collateral Agreements.
(v) "Contract Property" shall have the meaning set forth
in Section 2.27.
(w) "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.
(x) "Day" shall mean Xxxxx X. Day, a natural person.
(y) "days" shall mean calendar days, unless specifically
provided to the contrary in a particular instance in this Agreement.
(z) "Debt" shall have the meaning set forth in Section
1.8.
(aa) "Disclosure Schedule" means a disclosure schedule
attached to this Agreement and prepared by or on behalf of the Buyer or the
Sellers, as applicable, which disclosure schedules set forth with specificity
exceptions to the representations and warranties of the Buyer and the
Sellers, respectively, contained in this Agreement.
(bb) "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.
(cc) "Employed Group" shall have the meaning set forth in
Section 2.5.6.
(dd) "Encumbrance" means any claim, mortgage, charge,
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.
(ee) "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.
(ff) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and the related regulations and published
interpretations.
(gg) "Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder
(hh) "Excluded Assets" shall mean, collectively, the Hold-
Back Property and the Xxxxxxx Projects.
(ii) "Excluded Employees" shall have the meaning set forth
in Section 4.2.3.
(jj) "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 Sellers, including, without limitation, under any Environmental Law
and (ii)of the Sellers, 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.
(kk) "Executive Officers" means (i)with respect to the
Sellers, 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.
(ll) "Exhibit" means an exhibit attached to, or
incorporated by reference in, this Agreement.
(mm) "Final Balance Sheet" shall have the meaning set
forth in Section 1.6.2 of the Asset Purchase Agreement.
(nn) "Financial Statements" shall have the meaning set
forth in Section 2.4.1.
(oo) "Forecast Development Option and Purchase Agreement"
shall have the meaning set forth in Recital K.
(pp) "Forecast Employee Plan" shall have the meaning set
forth in Section 2.18.1.
(qq) "Forecast 401(k) Plan" shall have the meaning set
forth in Section 5.7.2.
(rr) "Forecast Homes" has the meaning set forth in the
introductory paragraph of this Agreement.
(ss) "Forecast PP2" shall have the meaning set forth in
the introductory paragraph of this Agreement.
(tt) "GAAP" means generally accepted accounting principles
in the United States, as in effect from time to time, consistently applied.
(uu) "Xxxxxxxx" shall mean Xxxxx Xxxxxxxx, a natural
person.
(vv) "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.
(ww) "Group" has the meaning set forth in Recital A.
(xx) "Group's SEC Reports" shall have the meaning set
forth in Section 2.21.
(yy) "Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the related regulations
and published interpretations.
(zz) "Hold-Back Property" shall have the meaning set forth
in the Asset Purchase Agreement.
(aaa) "Homebuilding Business" shall have the meaning set
forth in the Asset Purchase Agreement.
(bbb) "Indemnifiable Claim" means any Loss for or against
which any party is entitled to indemnification as set forth in Section 8.
(ccc) "Indemnification and Release Agreement" shall have
the meaning set forth in Recital L.
(ddd) "Indemnified Party" means the party entitled to
indemnity as set forth in Section 8.
(eee) "Indemnifying Party" means the party obligated to
provide indemnification as set forth in Section 8.
(fff) "Intangible Property" means any trade secret, secret
process or other confidential information or know-how and any and all Marks.
(ggg) "Intangible Rights" shall have the meaning set forth
in Section 1.2.
(hhh) "Intercompany Obligations" shall have the meaning set
forth in Section 2.26.
(iii) "IRS" means the Internal Revenue Service or any
successor entity.
(jjj) "knowledge of the Buyer" and words of similar import
and effect shall have the meaning set forth in Section 10.12.
(kkk) "knowledge of the Sellers" and words of similar
import and effect shall have the meaning set forth in Section 10.12.
(lll) "Park Xxxxxxx Option Agreement" shall have the
meaning set forth in Recital I.
(mmm) "Land Purchase Contracts" shall have the meaning set
forth in Section 2.27.
(nnn) "Law" means any constitutional provision, statute or
other law, rule, regulation, or interpretation of any Governmental Entity and
any Order.
(ooo) "Liability" means any liability or obligation of any
kind, character or description, known or unknown, contingent or otherwise,
whether liquidated or unliquidated, secured or unsecured and/or joint or
several.
(ppp) "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.
(qqq) "Lot Option Agreement" shall have the meaning set
forth in Recital G.
(rrr) "Xxxx" means any brand name, copyright, patent,
service xxxx, trademark, tradename and all registrations or application for
registration of any of the foregoing.
(sss) "material adverse effect" means, with respect to a
Person 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 $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.
(ttt) "Material Contract" shall have the meaning set forth
in Section 2.10.1.
(uuu) "Non-Competition and Option Agreement" shall have the
meaning set forth in Recital F.
(vvv) "Office Lease" shall have the meaning set forth in
Section 5.8.
(www) "Order" means any decree, injunction, judgment,
order, ruling, assessment or writ.
(xxx) "Party" means any party to this Agreement.
(yyy) "Permissible Condominium Projects" shall have the
meaning set forth in the Asset Purchase Agreement.
(zzz) "Permit" means any license, permit, franchise,
certificate of authority, order or any waiver of the foregoing, required to
be issued by any Governmental Entity in relation to the Securities.
(aaaa) "Person" means any association, corporation,
individual, partnership, limited liability company, trust or any other entity
or organization, including any Governmental Entity.
(bbbb) "Policies" shall have the meaning set forth in
Section 2.16.1.
(cccc) "Premier" shall have the meaning set forth in
Recital F.
(dddd) "Xxxxxxx" has the meaning set forth in the
introductory paragraph of this Agreement.
(eeee) "Xxxxxxx Project" shall have the meaning set forth in
the Asset Purchase Agreement.
(ffff) "Purchase Price" shall have the meaning set forth in
Section 1.3.
(gggg) "Recital" shall mean one of the introductory
paragraphs to this Agreement.
(hhhh) "Representative" shall mean Xxxxxxx (and any
designee or nominee so named by Xxxxxxx).
(iiii) "ROFO Agreement" shall have the meaning set
forth in Recital H.
(jjjj) "Salomon" shall mean Xxxxxxx Xxxxx Xxxxxx Inc.
(kkkk) "Schedule" means any schedule attached to, or
incorporated by reference in, this Agreement.
(llll) "SEC" shall mean the United States Securities
and Exchange Commission.
(mmmm) "Securities" shall have the meaning set forth
in Recital L.
(nnnn) "Securities Act" shall mean the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder.
(oooo) "Securities Partnership" shall have the meaning
set forth in Recital B.
(pppp) "Securities Transfer" shall have the meaning
set forth in Recital B.
(qqqq) "Seller" has the meaning set forth in the
introductory paragraph of this Agreement.
(rrrr) "Subsidiary" means any Person in which the
applicable Person has a direct or indirect equity or ownership interest in
excess of ten percent (10%).
(ssss) "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.
(tttt) "Tax Indemnitees" shall have the meaning set
forth in Section 8.1.3.
(uuuu) "Tax Proceeding" shall have the meaning set
forth in Section 5.4.1.
(vvvv) "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 Sellers, Xxxxxxx the
Group or Securities Partnership, including any amendments thereof.
(wwww) "WARN Act" means the Worker Adjustment and
Retraining Notification Act.
(xxxx) "Xxxxx Fargo" shall mean Xxxxx Fargo Home Mortgage
Company.
1.2 Transfer of the Securities by the Sellers. Subject to the terms and
conditions of this Agreement, the Sellers shall sell all of the Securities
outstanding on the Closing Date to the Buyer at the Closing by executing and
delivering to the Buyer or its nominee an assignment agreement, in the form
attached hereto as Exhibit B (the "Form of Partnership Interest Assignment").
In addition, the Sellers shall assign to the Buyer those certain intangible
rights listed on Schedule 1.2 (the "Intangible Rights").
1.3 Purchase of the Securities by the Buyer. Subject to the terms and
conditions of this Agreement, the Sellers shall sell the Securities and
assign the Intangible Rights to the Buyer for a purchase price of Forty-Two
Million Five Hundred Thousand Dollars ($42,500,000) (the "Purchase Price"),
all of which shall be payable in cash.
1.4 Closing. The Closing will take place (a) at the offices of
O'Melveny & Xxxxx LLP, 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx
00000, 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 Purchase Price to the Sellers 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, and (ii)execute any and all documents that the
Sellers and any other interested party in the transactions contemplated
hereunder shall deem necessary to perfect the intentions of the Parties to
this Agreement.
1.5 Purchase Price Allocation. Each Party agrees that (a) the Purchase
Price being paid by the Buyer for the Securities and the assignment of the
Intangible Rights shall be allocated among the Sellers as set forth in
Schedule 1.5 prepared in accordance with tax rules under Section 1060 and
Section 755 of the Code (the "Allocation of Purchase Price Among the
Sellers"), and (b)none of the Parties shall cause to be filed any Tax Return
or otherwise take any position for federal or state income Tax purposes which
is materially inconsistent with the allocations set forth in Schedule 1.5.
Each Party acknowledges that the treatment of the transactions evidenced by
this Agreement for federal income Tax purposes may not correspond to the
technical requirements for GAAP, and each Party reserves the right to report
the transactions evidenced by this Agreement for GAAP in a manner different
than the reporting for federal income Tax purposes.
1.6 Further Assurances. At any time and from time to time after the
Closing Date, upon the written request of the Buyer or the Sellers to the
other, as applicable, and without any cost or expense to the responding
Party, the Buyer and the Sellers, 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 Securities, or
(b) to otherwise carry out the intent and purposes of this Agreement.
1.7 Representative. Each Seller hereby appoints the Representative to
represent such 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 such Seller as to any
or all of the transactions contemplated under the terms of this Agreement.
Without giving notice to any Seller, the Representative shall have full and
irrevocable authority on behalf of each 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 Sellers 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 1.7,
and (f) act in connection with all matters arising out of, based upon, or in
connection with, this Agreement and the transactions contemplated hereby.
Each Seller understands and agrees that the Representative has been appointed
as the Representative of the other Seller. 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 any Seller or any other Person. Any certificate to be
delivered by the Sellers at the Closing may be executed and delivered by the
Representative on behalf of all of the Sellers.
1.8 Satisfaction of Debt. The Parties agree that the Buyer shall,
simultaneous with the Closing, and as a condition thereto, satisfy any and
all outstanding debt listed on Schedule 1.8 attached hereto (the "Debt")
without any credit or reduction in the Purchase Price payable to the Seller
under this Agreement or the Asset Purchase Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Parties agree that the sale of the Securities shall be without
representation or warranty by the Sellers, 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, 2.1.2, 2.2 and
2.7 (as such survival is limited by Section 8.4.1), 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 Sellers, the Buyer's right to promptly
bring any Action against the Sellers 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 Sellers represent and warrant to the Buyer
as follows:
2.1 The Group; the Sellers.
2.1.1 Ownership at the Closing. At the Closing, each Seller
shall have good and marketable title to, and sole record and beneficial
ownership of, all of the Securities set forth opposite its name on Schedule
2.1.1 (the "Ownership Schedule"), all of which are to be transferred to the
Buyer by each Seller pursuant to this Agreement free and clear of all
Encumbrances.
2.1.2 Transfer of Unencumbered Title to the Securities. Upon the
Closing, the Sellers shall transfer to the Buyer legal and beneficial
ownership of, and all right to vote, all of the Securities, free and clear of
all Encumbrances.
2.1.3 Formation; Power and Authority. The Securities Partnership
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 and to carry on its business as now conducted and
is duly qualified to do business in the jurisdictions listed on the Seller's
Disclosure Schedule, except where the failure to so qualify will not have a
material adverse effect. Forecast Homes has been duly incorporated and is
validly existing in good standing under the Laws of the State of California
and has corporate power and authority to enter into this Agreement and to
consent to the transfer of the Securities to the Buyer. Forecast PP2 has
been duly formed and is validly existing in good standing as a limited
liability company under the Laws of the State of Delaware, with the power
under the limited liability company statute of the State of Delaware and its
limited liability company agreement to enter into this Agreement, perform its
obligations hereunder and to transfer, convey and sell to the Buyer at the
Closing the Securities to be sold to the Buyer by such Seller. The Sellers
are duly qualified or registered to transact business in each jurisdiction in
which they conduct 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, businesses
operations, earnings, properties or condition of the Seller. The Sellers
have made available to the Buyer true, correct and complete copies of all
organizational or constituent documents of each of the Sellers and the
Consolidated Forecast Entities.
2.1.4 Authorization. The execution, delivery and performance of
this Agreement and the transactions contemplated hereby by each Seller have
been duly and validly authorized by such Seller's board of directors (or
other comparable governing body) and, if necessary, the shareholders of such
Seller, and by all other necessary corporate or partnership action on the
part of such Seller. This Agreement has been duly executed and delivered by
each Seller and constitutes the legal, valid and binding obligation of each
Seller, enforceable against each 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.
2.2 Capitalization. Schedule 2.1.1 lists the sole general partner and
the sole limited partner of the Securities Partnership, together with their
percentage interests in the Securities Partnership, as of the Effective Date.
All such interests in Securities Partnership have been duly authorized and
validly issued, free of any pre-emptive rights or other Encumbrances and are
fully paid, with no obligation to make any contribution to the capital of the
Securities Partnership or other liability attaching to the ownership of such
interests, except for the liability of the sole general partner of the
Securities Partnership under the partnership agreement of the Securities
Partnership and the California Revised Limited Partnership Act. As of the
Closing Date, there shall not be any (a) outstanding options, warrants,
Contracts or other rights to subscribe for or purchase, or Contracts or other
obligations to issue or rights to acquire, any interest in the Securities
Partnership, or to restructure or recapitalize the Securities Partnership, or
(b) outstanding Contracts to repurchase, redeem or otherwise acquire any
interest in the Securities Partnership.
2.3 Subsidiaries. Except as set forth on the Sellers' Disclosure
Schedule, Securities Partnership does not directly or indirectly own any
beneficial or record interest in any corporation, partnership, joint venture,
trust or other Person other than ordinary cash-management investments.
2.4 Financial Statements; Changes; Contingencies.
2.4.1 Audited Financial Statements. For financial reporting
purposes, the financial statements of the Group are attached to Schedule
2.4.1 (the "Financial Statements of the Group"). The Sellers have delivered
to the Buyer audited balance sheets for the Group at October 31, 2001, 2000
and 1999 and the related audited statements of operations, equity and cash
flows for the years ended October 31, 2001, 2000 and 1999 (the "Financial
Statements"). The Financial Statements have been prepared in conformity with
GAAP as applicable to an Exchange Act reporting company with registered
equity securities (except for changes, if any, required by GAAP and disclosed
therein) and present fairly, in all material respects, the financial position
of the Group at October 31, 2001, 2000 and 1999 and the results for the years
then ended.
2.4.2 No Undisclosed Liabilities. Except as set forth on
Schedule 2.4.1, to the Seller's knowledge, the Consolidated Forecast Entities
shall have no material Liabilities (contingent or otherwise) or obligations,
in each case that are required to be disclosed by GAAP, other than (a) the
Liabilities reflected in the most recent Financial Statements, (b)Liabilities
incurred since the date thereof in the ordinary course of business generally
consistent with past practices that cannot, individually, in the aggregate,
reasonably be expected to have a material adverse effect, and (c)Liabilities
specifically delineated as to nature and amount on the Seller's Disclosure
Schedule.
2.5 No Material Adverse Changes. Except as set forth on Schedule 2.4.1
and resulting from the Asset Transfer, from and after October 31, 2001, there
has not been, occurred or arisen, whether or not in the ordinary course of
business:
2.5.1 to the Sellers' knowledge, any change in or event affecting
the Consolidated Forecast Entities that has had a material adverse effect on
the Consolidated Forecast Entities, taken as a whole;
2.5.2 to the Sellers' knowledge, any strike or other labor
dispute pertaining to the Homebuilding Business;
2.5.3 to the Sellers' knowledge, any Loss (whether or not covered
by insurance) of any property of the Consolidated Forecast Entities
(including, without limitation, the Assets) that has involved a material Loss
or Losses to the Consolidated Forecast Entities, taken as a whole, or with
respect to such Property in excess of all applicable insurance coverage
(excepting deductible amounts);
2.5.4 any declaration, set aside or payment of any distribution
with respect to Securities Partnership's partnership or other equity
interests (whether in cash or in kind) or redemption, purchase or other
acquisition by Securities Partnership of any of its partnership or other
equity interests;
2.5.5 any capital expenditure (or series of related capital
expenditures) by any Consolidated Forecast Entity (a)outside the ordinary
course of business generally consistent with past practices, or (b)for assets
other than land in excess of Fifty Thousand Dollars ($50,000);
2.5.6 other than one-time bonuses paid prior to the Closing Date,
and compensation increases for individuals earning less than One Hundred
Thousand Dollars ($100,000) on an annualized basis, any (a) percentage
increase in the bonus, salaries, fringe benefits or other compensation paid
by any Consolidated Forecast Entity to any of its partners, members,
officers, managers, employees, agents or consultants (collectively, the
"Employed Group") or made any other change in the employment terms for any of
the Employed Group outside the ordinary course of business or inconsistent
with past practices, (b)grant of severance or termination pay to any present
or former member of the Employed Group outside the ordinary course of
business, (c)loan or advance of money or other property by any Consolidated
Forecast Entity to any present or former member of the Employed Group, or
(d)establishment, adoption, entrance into, material amendment or termination
of any Forecast Employee Plan. Nothing in this Section 2.5.6 shall serve to
prevent the Group, Sellers, Xxxxxxx or any Consolidated Forecast Entity from
extending any existing Forecast Employee Plan, or substituting another
provider for any existing Forecast Employee Plan or other service utilized in
providing for employee payroll activities or Employee Plans;
2.5.7 any material delay or postponement of the payment of any
accounts payable or other liabilities by any Consolidated Forecast Entity in
a manner inconsistent with their ordinary course of business or any
occasional or recurring past practices;
2.5.8 any assumption, creation, guarantee or incurrence by any
Consolidated Forecast Entity of any indebtedness, whether absolute or
contingent (other than to finance the acquisition, development or
construction of real property or in the ordinary course of business generally
in accordance with past practices);
2.5.9 any settlement of any lawsuit by, or any initiation of, any
lawsuit against, any Consolidated Forecast Entity, other than those (a)
Orders or Actions that are set forth on the Sellers' Disclosure Schedule, and
(b) settlements, lawsuits and/or Actions that, individually or in the
aggregate, could not reasonably be expected to have a material adverse effect
upon the Securities Partnership, the Assets or the Consolidated Forecast
Entities, taken as a whole;
2.5.10 any change, in any material respect, in any of the
accounting practices or principles used by the Consolidated Forecast
Entities;
2.5.11 the making of any loans, advances, capital
contributions or investments made by the Consolidated Forecast Entities in or
to any Person outside the ordinary course of business generally consistent
with past practices;
2.5.12 any acquisition (by merger, consolidation or
acquisition of stock or assets) by any Consolidated Forecast Entity of any
corporation, limited liability company, partnership or other business
organization or division thereof or substantially all of the assets thereof;
2.5.13 any material settlement, material agreement or
material arrangement concerning any alleged construction defect of any home
constructed or sold by any Consolidated Forecast Entity, whether or not such
alleged defect were covered by or subject to any warranty provided by such
Consolidated Forecast Entity, involving an individual amount in excess of One
Hundred Thousand Dollars ($100,000); or
2.5.14 any Encumbrance, transfer, lease, license or other
disposition of any Asset or of the assets of any Consolidated Forecast Entity
or the making of any loans, advances, capital contributions or investments by
the Consolidated Forecast Entities in or to any Person other than in the
ordinary course of business generally in accordance with past practices.
2.6 Absence of Certain Changes. Except as set forth on Schedule 2.4.1,
from and after October 31, 2001, the Consolidated Forecast Entities have
(a)used commercially reasonable efforts to preserve their business and
goodwill, including the goodwill of their customers, employees,
subcontractors, suppliers and other Persons having material business
relations with them, and (b)maintained their intangible assets in a
commercially reasonable manner generally consistent with past practices.
2.7 Taxes.
2.7.1 Filing of Returns. Except as provided on the Sellers'
Disclosure Schedule, all Tax Returns required to be filed by or on behalf of
any Consolidated Forecast Entity have been duly and timely filed (taking into
account any extensions), and, to Xxxxxxx'x knowledge, such Tax Returns are
true, correct and complete in all material respects and have been prepared in
accordance with applicable Laws. Except as provided on the Sellers'
Disclosure Schedule, all Taxes (whether or not shown as payable on the Tax
Returns or on subsequent assessments with respect thereto) have been paid in
full and no other Taxes or penalties are payable by any Consolidated Forecast
Entity or the Sellers (as such Taxes related to the income of such
Consolidated Forecast Entity) with respect to items or periods covered by
such Tax Returns (whether or not shown or reportable on such Tax Returns) or
with respect to any period or portion thereof ending on or prior to the
Closing Date other than Taxes which are not yet due. Each of the
Consolidated Forecast Entities has withheld and paid over all Taxes required
to have been withheld and paid over, and complied with all information
reporting and backup withholding requirements, including maintenance of
required records with respect thereto, in connection with amounts paid or
owing to any employee, creditor, independent contractor or other third party.
Except as set forth on the Sellers' Disclosure Schedule, an extension of
time, within which to file any such Tax Return which has not been filed, has
not expired.
2.7.2 Liens. There are no liens on any of the assets of the
Consolidated Forecast Entities with respect to Taxes, other than liens for
(a)Taxes not yet due and payable, or (b)Taxes that are being contested in
good faith through appropriate procedures and/or proceedings and for which
adequate reserves have been established.
2.7.3 Tax Returns. Except as set forth on the Seller's
Disclosure Schedule, the Sellers have made available to the Buyer true and
complete copies of (a)all income tax audit reports, statements of
deficiencies, closing or other agreements received by or on behalf of the
Consolidated Forecast Entities relating to Taxes, and (b)all Tax Returns for
the Consolidated Forecast Entities for all periods from and after the Group's
1999 taxable year. None of the Consolidated Forecast Entities has ever been
a member of an affiliated group filing consolidated Tax Returns. The
Consolidated Forecast Entities do not do business in or derive income from
any state, local, territorial or foreign Taxing jurisdiction other than those
for which all Tax Returns have been furnished to the Buyer.
2.7.4 Tax Deficiencies; Audits; Statutes of Limitations. The Tax
Returns of any Consolidated Forecast Entity are not currently being audited
by a government or taxing authority with jurisdiction, nor, is any such audit
pending or threatened (either in writing or verbally, formally or
informally). No deficiencies exist or are expected to be asserted with
respect to Taxes of any Consolidated Forecast Entity. Except as set forth on
the Sellers' Disclosure Schedule, none of the Consolidated Forecast Entities
has received notice (either in writing or verbally, formally or informally)
or, to the Sellers' knowledge, expects to receive notice that it has not
filed a Tax Return or paid Taxes required to be filed or paid by it. None of
the Consolidated Forecast Entities is a party to any action or proceeding for
assessment or collection of Taxes, or, has such event been asserted or
threatened (either in writing or verbally, formally or informally) against
any Consolidated Forecast Entity or any of its assets (including, without
limitation, the Assets). No waiver or extension of any statute of
limitations is in effect with respect to Taxes or Tax Returns of any
Consolidated Forecast Entity.
2.7.5 Special Tax Status. None of the Consolidated Forecast
Entities is a "foreign person" (as that term is defined in Section 1445 of
the Code). None of the Consolidated Forecast Entities has filed a consent
under Section 341(f) of the Code concerning collapsible corporations. None
of the Consolidated Forecast Entities has made any payments, is obligated to
make any payments, or is a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be
deductible under Section 280G of the Code. None of the Consolidated Forecast
Entities is required to recognize an adjustment to income under Section 481
of the Code for any Tax period following the Closing Date. None of the
Sellers or the Securities Partnership is liable for Taxes pursuant to
Treasury Regulation Section 1.1502-6 (or any comparable provision of state,
local or foreign Tax law), as a transferee or successor, by contract or
otherwise, or is currently under any contractual obligation to indemnify any
person with respect to any amount of Taxes, or is a party to any tax sharing
agreement or any other agreement providing for payments by any of the Sellers
or the Securities Partnership with respect to Taxes.
2.7.6 No Withholding. The transactions contemplated in this
Agreement are not subject to the withholding provisions of Section 3406 of
the Code, subchapter A of Chapter 3 of the Code or of any other provision of
Law.
2.7.7 Valid Partnership Status. The Securities Partnership and
any subsidiary of the Securities Partnership, if any, will, for tax purposes,
be treated as a partnership for all periods of its existence.
2.8 Compliance with Applicable Laws. Except as set forth on the
Sellers' Disclosure Schedule, to the Sellers' knowledge, (a) each
Consolidated Forecast Entity has complied and is in compliance, in all
material respects, with all applicable Laws in the conduct of its business,
including, without limitation, the Homebuilding Business, and (b)no
Governmental Entity has filed, commenced or, to the Seller's knowledge,
threatened an Action against any Consolidated Forecast Entity alleging a
failure to so comply, nor has any Governmental Entity indicated in writing an
intention to commence the same.
2.9 Absence of Unethical Business Practices. No Consolidated Forecast
Entity has directly or indirectly given or agreed to give any gift or similar
benefit to any customer, subcontractor, supplier, government employee or
other Person who was or is in a possible position to help or hinder any
Consolidated Forecast Entity, which gift or benefit might subject such
Consolidated Forecast Entity to any criminal proceedings in any material
respect.
2.10 Material Contracts.
2.10.1 The Consolidated Forecast Entities. The Sellers'
Disclosure Schedule lists each Contract (each, a "Material Contract," and
collectively, the "Material Contracts") that, as of the Effective Date:
(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 Consolidated Forecast Entity or any of its properties or assets is a
party or bound;
(d) expressly limits or restricts the ability of any
Consolidated Forecast Entity or an equityholder or Affiliate thereof to
compete or otherwise to generally conduct its business in any manner or
place;
(e) provides a guaranty or indemnity (other than
indemnities that are provided in the ordinary course of business consistent
with past practice, e.g., mechanics lien indemnities, among others) by any
Consolidated Forecast Entity;
(f) other than those that are available due to
information arising in relation to a resolution of the board of directors of
any Consolidated Forecast Entity or the written approval of the president of
any Consolidated Forecast Entity, grants a power of attorney, agency or
similar authority to another Person or entity;
(g) contains a right of first refusal or first offer or
other preemptive right obligation on the part of any Consolidated Forecast
Entity, except as otherwise set forth in this Agreement (or any other related
agreements);
(h) obligates any Consolidated Forecast Entity to
construct for, or sell a residence or other building or improvement to, any
Person;
(i) represents a Contract under which any Person provides
services to any Consolidated Forecast Entity in connection with the
construction of single-family, for-sale residences or the development of real
property which is not terminable by such Consolidated Forecast Entity without
further liability on not more than thirty (30) days' notice, except as
otherwise set forth in this Agreement;
(j) represents a Contract under which any Person provides
material to any Consolidated Forecast Entity in connection with the
construction of single-family, for-sale residences or the development of real
property and which is not terminable by such Consolidated Forecast Entity
without further liability within thirty (30) days' notice or less;
(k) represents a lease Contract of at least one (1)
years' duration beyond the Effective Date in which any Consolidated Forecast
Entity is the lessor or the lessee of any personal property, or holds or
operates any equipment, machinery, vehicle or other tangible personal
property owned by a third party that is directly and currently used in
connection with the Homebuilding Business, except for the AS-400 hardware
computer system;
(l) represents (i)a sales agency, broker or finder
Contract, (ii)a loan origination or customer referral Contract that involves
an aggregate payment in excess of Fifty Thousand Dollars ($50,000), (iii)a
consulting, advisory, marketing, management and other service agreements that
are not terminable by the Consolidated Forecast Entities 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 any Consolidated Forecast Entity is a party or bound;
(m) the termination, breach, default, repudiation,
nonperformance or loss of or default in the counterparty's performance of
which could reasonably be expected to have a material adverse effect on the
Consolidated Forecast Entities, taken as a whole;
(n) is between or among or affects any Consolidated
Forecast Entity, on the one hand, and any officer, director or manager of any
Consolidated Forecast Entity, any Seller, any Controlled Entity or any of
their Affiliates on the other hand (collectively, "Affiliate Agreements");
and
(o) that relates to the development of any single-family,
for-sale residences.
True, correct and complete copies of such Material Contracts, including all
amendments and supplements, if any, have been made available to the Buyer.
2.10.2 No Breach. To the Sellers' knowledge, each
Consolidated Forecast Entity has duly performed, in all material respects,
all of its obligations arising under each Material Contract listed on the
Sellers' Disclosure Schedule to the extent that such obligations to perform
have accrued. Except as specifically set forth on the Sellers' Disclosure
Schedule, to the Sellers' knowledge, no breach or default, alleged breach or
default (or notice of same), or event which would (with the passage of time,
notice or both) constitute a breach or default thereunder in any material
respect by any Consolidated Forecast Entity, or any other party or obligor
with respect thereto, has occurred under any Material Contract or will occur
as a result of this Agreement. Except as set forth on the Sellers'
Disclosure Schedule, to the Seller's knowledge, no person shall have the
contractual right to terminate or repudiate any Material Contract on less
than twenty (20) days' notice as a result of the consummation of the
transactions contemplated by this Agreement.
2.11 Adequacy of Assets. The assets of the 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.
2.12 Intangible Property. The Securities Partnership has the rights
to and ownership of all Intangible Property required for use in connection
with the Homebuilding Business as conducted prior to the Effective Date. The
Consolidated Forecast Entities do not use any Intangible Property by consent
or license of any other Person (other than those governmental agencies who
may grant such rights and/or licenses) and none of the Consolidated Forecast
Entities is required to or do make any payments to others (other than those
governmental agencies who may grant such rights and/or licenses) with respect
to any Intangible Property. To the Sellers' knowledge, the Intangible
Property is not being infringed by any Person and the Intangible Property or
any use by the Consolidated Forecast Entities of any such property does not
conflict with or infringe the rights of any Person. To the Seller's
knowledge, the Consolidated Forecast Entities have taken all reasonable steps
to protect, maintain and safeguard the Intangible Property and have made all
filings and executed all agreements necessary in connection therewith,
including obtaining registrations for certain of the Company Names from the
United States Patent and Trademark Office. No Action is pending or has been
rendered, or to the Sellers' knowledge, has been threatened in writing by any
Person or Governmental Entity which would limit, cancel or question the
validity, enforceability, ownership or use of any Intangible Property,
including the Company Names. The Consolidated Forecast Entities have the
right to use, in a manner substantially consistent with occasional or
recurring past practice, all housing plans, blueprints, elevation drawings
and specifications being used by any Consolidated Forecast Entity prior to
the Effective Date in the Homebuilding Business.
2.13 Labor Relations. Except as set forth on Schedule 2.13, (a) none
of the Consolidated Forecast Entities is a party to, nor bound by, any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor organization, nor is any such contract or
agreement presently being negotiated; (b) none of the Consolidated Forecast
Entities is the subject of any proceeding asserting that it has committed an
unfair labor practice or seeking to compel it to bargain with any labor
organization as to wages or conditions of employment, nor, to the Sellers'
knowledge, is any such proceeding threatened; (c) there is no strike, work
stoppage, slowdown or, to the Sellers' knowledge, similar labor dispute
involving the Consolidated Forecast Entities pending or threatened; (d) no
material grievance is pending or, to the Sellers' knowledge, threatened; (e)
no representation exists respecting any of the employees of the Consolidated
Forecast Entities within the past two (2) years, nor, to the Sellers'
knowledge, are there any campaigns currently being conducted to authorize
representation by any labor organizations; (f)all of the Consolidated
Forecast Entities are in material compliance with all applicable Laws,
agreements, contracts and policies relating to employment, employment
practices, wages, hours, terms and conditions of employment, except for
failures to so comply, if any, that individually or in the aggregate could
not reasonably be expected to have a material adverse effect on the
Consolidated Forecast Entities, taken as a whole; (g) no Consolidated
Forecast Entity is a party to, or otherwise bound by, any consent decree
with, or citation by, any Governmental Entity relating to employees or
employment practices; (h) each Consolidated Forecast Entity has complied in
all material respects with their material payment obligations to all
employees thereof in respect of all wages, salaries, commissions, bonuses,
benefits and other compensation due and payable to such employees under any
policy, practice, agreement, plan, program or any statute or other Law; (i)
no Consolidated Forecast Entity is liable for any material severance pay or
other payments to any employee or former employee arising from the
termination of employment under any benefit or severance policy, practice,
agreement, plan or program of the Consolidated Forecast Entities, nor will
any Consolidated Forecast Entity have any liability which exists or arises,
or may be deemed to exist or arise, under any applicable Law or otherwise, as
a result of the termination by any Consolidated Forecast Entity of any
persons employed by it on or prior to the Closing Date; (j) no Consolidated
Forecast Entity has closed any plant or facility, effectuated any layoffs of
employees or implemented any early retirement, separation or window program
within the past five (5) years that was subject to the WARN Act, nor has any
such entity planned or announced any such action or program for the future;
and (k) each Consolidated Forecast Entity is in material compliance with its
notice obligations under the WARN Act.
2.14 Minute Books. To the Seller's knowledge, the minute books of
Securities Partnership contain a complete and accurate summary of all
material actions and proceedings taken through the Effective Date by the
partners of Securities Partnership, and such minute books contain true and
complete copies of the constituent documents of Securities Partnership and
all related amendments.
2.15 Accounting Records. The Securities Partnership maintains (a)
books, records and accounts that accurately and fairly reflect their assets
and transactions, and (b) a system of internal accounting controls that have
been reviewed by the Auditors and which the Group and Securities Partnership
reasonably believe are sufficient to provide reasonable assurance that
(i)transactions are accurately and promptly recorded to permit the
preparation of fairly presented financial statements, (ii)transactions are
executed in accordance with management's general or specific authorization,
and (iii) access to the Assets is permitted only in accordance with
management's general or specific authorization.
2.16 Insurance.
2.16.1 Policies; Defaults. The Sellers' 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 Consolidated Forecast
Entities (the "Policies"). Except as set forth on Schedule 2.16.1, to the
Sellers' knowledge, no material disagreement or dispute exists between any of
the insurers and any Consolidated Forecast Entity or any Affiliate thereof,
other than with respect to whether not the standard ISO insurance contract
provisions apply to the North American Capacity ("NAC") policy for calendar
year 2001 (it being the position of the Consolidated Forecast Entities that
it does and it being the position of NAC that it does not). The Consolidated
Forecast Entities believe that this dispute relates only to the scope of
insurance coverage and not the obligation of NAC to defend and indemnify the
Consolidated Forecast Entities, NAC having already undertaken such defense
and indemnity in a number of cases now pending, subject to defense
arrangements undertaken in accordance with applicable reservation of rights;
provided, however, nothing herein shall constitute a waiver of any
Consolidated Forecast Entity's rights against such insurers. To the Sellers'
knowledge, no Consolidated Forecast Entity is in material default under any
such Policy or bond. No Consolidated Forecast Entity has received any
written notice from any insurer (inclusive of any successors-in-interest of
such insurers or any replacement insurers) or agent of any intent to cancel
or not renew any such Policy or bond.
2.16.2 Claims. There is no material claim by any
Consolidated Forecast Entity pending under any of the Policies as to which
coverage has been denied to it in writing by any of the issuers of the
Policies covering such claim. To the Sellers' knowledge, there has been no
occurrence that may form the basis of a material claim that is by or on
behalf of any Consolidated Forecast Entity under any such Policy that has not
been made or tendered. To 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 the Policies
have been paid in all material respects.
2.17 Employees. The Buyer has been provided with a list of the names
of all employees (including those on leave of absence or layoff status) of
each Consolidated Forecast Entity employed as of the Effective Date engaged
in the Homebuilding Business, their job title, employment date and their
aggregate annual cash compensation (all such information shall be accurate as
of the Effective Date). As of the Effective Date, except as set forth on the
Sellers' Disclosure Schedule, (a) the Consolidated Forecast Entities do not
have any outstanding loan from or to any Affiliate, or any agent, employee,
or officer of any Consolidated Forecast Entity, and (b) no material
representations, warranties or covenants have been made to, or agreements
have been reached with, any employee in material variance with the provisions
of the employee manual with respect to their employment, compensation or
benefits. Except with respect to the Excluded Employees, no executive or
employee has given written notice as of the Effective Date of their plans to
terminate employment with any Consolidated Forecast Entity during the twelve
(12) months subsequent to the Effective Date. The Sellers' Disclosure
Schedule sets forth a list of each employee of the Group who has a
management, employment or bonus contract, or contract for personal services
between any Seller and any officer, consultant, employee, or agent of any
Seller.
2.18 Employee Benefit Plans.
2.18.1 Employee Benefit Plans, Collective Bargaining and
Employee Agreements, and Similar Arrangements.
(a) Except with respect to the Excluded Employees, the
Sellers' Disclosure Schedule contains a true and complete list of all
employee benefit, bonus, auto allowance, consulting, change in control,
fringe benefit plans and collective bargaining, employment or severance
agreements or other similar arrangements, whether or not subject to ERISA
(including any funding mechanism therefor now in effect or required in the
future as a result of the transactions contemplated by this Agreement or
otherwise), whether formal or informal, oral or written, legally binding or
not, under which any current or former member of the Employed Group has any
present or future right to benefits sponsored or maintained by any
Consolidated Forecast Entity or to which any Consolidated Forecast Entity is
a party, is required to make any contribution, or by which any of them is
bound, or with respect to which any of them has any liability or obligation,
including, without limitation, (i) any profit-sharing, deferred compensation,
bonus, stock option, stock purchase, or other equity-based compensation,
pension, retainer, consulting, retirement, severance, plant closing, loan or
loan guarantee, change in control, welfare or incentive plan, agreement or
arrangement, (ii) any plan, agreement or arrangement providing for "fringe
benefits" or perquisites to any current or former member of the Employed
Group, officers, directors or agents, including, without limitation, benefits
relating to automobiles, clubs, vacation, child care, parenting, sabbatical,
sick leave, medical, dental, hospitalization, life insurance and other types
of insurance, (iii) any written employment agreement, or (iv) any other
"employee benefit plan" (within the meaning of Sections 3(3) and 3(37) of
ERISA, including, without limitation, multiemployer plans) (each, a "Forecast
Employee Plan," and collectively, the "Forecast Employee Plans").
(b) The Sellers have made available to the Buyer true and
complete copies of (i)all material documents and existing written summary
plan descriptions (and written descriptions of any oral Forecast Employee
Plans) with respect to the plans, agreements and arrangements listed on the
Sellers' Disclosure Schedule, (ii) each trust agreement, annuity or insurance
contract, or other funding instrument, if any, pertaining to each Forecast
Employee Plan, (iii)the most recent annual report (IRS Form 5500 Series),
including all schedules to such reports, if applicable, filed with respect to
each Forecast Employee Plan for which such a filing is required, (iv) the
most recent determination letter, if applicable, and (v)the most recent plan
audits, financial statements, and accountant's opinion (with footnotes) for
each Forecast Employee Plan.
(c) To the Sellers' knowledge, other than the Auditor's
inquiries respecting certain of Xxxxxxx'x individually directed off-balance
sheet 401(k) retirement plan investments: (i) each Forecast Employee Plan has
been established and administered in material compliance with the applicable
provisions of ERISA (as amended through the Effective Date), the regulations
and published authorities thereunder, and all other applicable Laws; (ii)
each Consolidated Forecast Entity has administered each Forecast Employee
Plan substantially in accordance with its terms and have performed all of its
obligations under all such plans, agreements and arrangements; (iii) each
Forecast Employee Plan that is intended to be qualified within the meaning of
Section 401(a) of the Code has received a favorable determination letter as
to its qualification, and to the Sellers' knowledge, nothing has occurred,
whether by action or failure to act, that could reasonably be expected to
cause the loss of such qualification; (iv) for each Forecast Employee Plan
with respect to which Form 5500 has been filed, no material change has
occurred with respect to the matters covered by the most recent Form 5500
since the date thereof; (v) all benefits due under each Forecast Employee
Plan have been timely paid; and (vi) there are no Actions (other than routine
uncontested claims for benefits) pending or, to the Sellers' knowledge,
threatened against such plans or their assets, or arising out of such plans,
agreements or arrangements and no facts or circumstances exist that
reasonably could give rise to any such Actions.
2.18.2 Qualified Plans. None of the Forecast Employee Plans
is, and no Consolidated Forecast Entity or any member of its "Controlled
Group" (defined as any organization which is a member of a controlled group
of organizations within the meaning of Sections 414(b), (c), (m) or (o) of
the Code) has or in the past three (3) years has had any obligation with
respect to, a stock bonus, pension or profit-sharing plan within the meaning
of Section 401(a) of the Code, or an employee pension benefit plan within the
meaning of Section 3(2) of ERISA.
2.18.3 Health Plans. To the Sellers' knowledge, (a) all
group health plans of the Consolidated Forecast Entities have been operated
in substantial compliance with the group health plan continuation coverage
requirements of Section 162(k) and Section 4980B of the Code and Title I of
ERISA to the extent such requirements are applicable, and (b) except as
required by Section 4980B of the Code, no Forecast Employee Plan provides for
any post-employment coverage.
2.18.4 Other Plans. To the Sellers' knowledge, none of the
Forecast Employee Plans is, and no Consolidated Forecast Entity has in the
past three (3) years sponsored or contributed to, a multi-employer plan (as
defined in Section 3(37) of ERISA), a multiple employer plan, any plan
subject to the minimum finding provisions of ERISA or the Code or a voluntary
employees' beneficiary association as defined in Section 501(c) of the Code.
No Forecast Employee Plan provides retiree welfare benefits and no
Consolidated Forecast Entity has any obligations to provide retiree welfare
benefits.
2.18.5 Joint and Several Liability. With respect to each
current Forecast Employee Plan maintained, or contributed to by any entity
which either is currently or was previously under common control with any
Consolidated Forecast Entity as determined under Section 414 of the Code or
Section 3(5) of ERISA, to the Sellers' knowledge, no event has occurred and
no condition exists that after the Effective Date could reasonably subject
the Buyer or any Consolidated Forecast Entity, directly or indirectly, by
reason of their affiliation with any member of their controlled group to any
Tax, fine, lien, penalty or other liability (including liability under any
indemnification agreement) under applicable laws, rules and regulations
imposed by ERISA.
2.18.6 Contributions. To the Sellers' knowledge, (a) all
material contributions and material payments to or with respect to each
Forecast Employee Plan have been timely made, and (b)the Consolidated
Forecast Entities have made adequate provision for reserves to satisfy all
contributions and payments that have not been made because they are not yet
due under the terms of such Forecast Employee Plan or related arrangement,
document or applicable Law.
2.18.7 No Change in Control Triggers. Except as set forth
on the Sellers' Disclosure Schedule, no Forecast Employee Plan provides for
any accelerated payments, deemed satisfaction of goals or conditions, new or
increased benefits, forgiveness or modification of loans or vesting
conditioned in whole or in part upon a change in control of any Consolidated
Forecast Entity, or otherwise as a result of the execution of this Agreement
or the transactions contemplated by this Agreement.
2.18.8 No Benefits Increases. No agreement, commitment or
obligation exists to increase any benefits under any Forecast Employee Plan
or to adopt any new Forecast Employee Plan.
2.18.9 No Audits or Prohibited Transactions. To the
Sellers' knowledge, (a) no audit or investigation by any Governmental Entity
is pending regarding any Forecast Employee Plan, and (b)no person acting on
behalf of any Consolidated Forecast Entity dealing with any Forecast Employee
Plan has intentionally and knowingly engaged in any prohibited transactions
(within the meaning of Section 406 of ERISA or Section 4975 of the Code) or
knowingly committed any breach of a fiduciary duty.
2.18.10 No Unfunded Benefits. No Forecast Employee Plan has
any unfunded accrued benefits that are not fully reflected in the Financial
Statements (including, without limitation, any accruals or reserves or other
provisions for any liabilities that may be triggered upon any change in
control of any Consolidated Forecast Entity) and, to the Seller's knowledge,
no "reportable event" (as such term is defined in ERISA section 4043) or
"accumulated funding deficiency" (as such term is defined in ERISA section
302 and Code section 412 (whether or not waived)) has occurred with respect
to any Seller Employee Plan.
2.19 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 Sellers 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 the transactions
contemplated hereunder; provided, however, that (a)the Buyer shall have full
responsibility for any other Person claiming through the Buyer, if any, and
(b)the Sellers shall have full responsibility for Salomon.
2.20 Accounts Receivable. Except as set forth on the Sellers'
Disclosure Schedule, the accounts and notes receivable reflected in the
Financial Statements and all accounts and notes receivable of any
Consolidated Forecast Entity arising prior to the Effective Date, other than
accounts and notes receivable from Affiliates and accounts and notes
receivable collected since then in the ordinary course of business
substantially in accordance with past practices, (a)arose from bona fide
sales or contracting transactions by the Consolidated Forecast Entities in
the ordinary course of business or substantially in accordance with past
practices, (b)represent bona fide indebtedness of the respective debtors, and
(c) to the Sellers' knowledge, are collectible in full in accordance with
their terms at their recorded amounts as of their respective due dates,
subject only to the reserve for bad debts set forth in the Financial
Statements, and are not subject to any defense or offset.
2.21 SEC Reports. The Sellers have made available to the Buyer, in
the form filed with the SEC, except to the extent permitted by Regulation S-
T, the Group's (a)Annual Report on Form 10-K for the fiscal year October 31,
2001, (b)any Current Reports on Form 8-K filed by it after October 31, 2001,
and (c)any amendments and supplements to any such reports filed by the Group
with the SEC (collectively, the "Group's SEC Reports"). The Group has timely
made all filings applicable to the Group with the SEC required by the
Exchange Act. As of their respective dates, each of the Group's SEC Reports
did not contain any untrue statement of a material fact applicable to the
Group or omit to state a material fact applicable to the Group required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
2.22 Information Generally. The information prepared by the Sellers
and thereafter made available by the Sellers 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
herein or therein, in light of the circumstances under which they were made,
not misleading.
2.23 No Conflicts; Government Approvals; Third-Party Consents. Except
as set forth on the Sellers' Disclosure Schedule, the execution, delivery and
performance of this Agreement by the Sellers and the consummation of any of
the transactions contemplated hereby will not, to the Sellers' knowledge, (a)
violate, or constitute a material 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 (including
prepayment obligations, penalties, fees or charges related to any
indebtedness) of any party under, the constituent documents of any
Consolidated Forecast Entity or any Contract listed on the Sellers'
Disclosure Schedule, or (b) violate any Law or Order applicable to any
Consolidated Forecast Entity or any of its properties or assets, except for
such violations, breaches or defaults that cannot reasonably be expected,
individually or in the aggregate, to have a material adverse effect on the
Consolidated Forecast Entities taken as a whole, or the Assets. Except as
set forth on the Sellers' Disclosure Schedule, this Agreement and/or as
required under the Xxxx-Xxxxx-Xxxxxx Act, the execution and delivery of this
Agreement by the Sellers and the performance of this Agreement by the Sellers
shall not require a filing or registration with, or the issuance of any
Permit or Approval by, any other Person or Governmental Entity.
2.24 Legal Proceedings. Except as set forth on the Sellers'
Disclosure Schedule, (a) no Order or Action is pending or, to the Sellers'
knowledge, threatened against the Sellers, any Intangible Property or any
Consolidated Forecast Entity or any of the Consolidated Forecast Entities
properties or assets that, if resolved unfavorably against such property or
Person, individually or when aggregated with one or more other such Orders or
Actions, would have a material adverse effect on such Person or property or
would materially and adversely affect the Sellers' ability to materially
perform this Agreement, (b) the Sellers do not reasonably expect any of such
Orders or Actions, individually or in the aggregate, to have a material
adverse effect on the Consolidated Forecast Entities, taken as a whole,
(c)no Action is pending against the Seller or any Consolidated Forecast
Entity that would prevent the execution, delivery or performance of this
Agreement by any Seller or the transfer, conveyance and sale of the
Securities to be sold by the Sellers to the Buyer pursuant to the terms
hereof, and (d) the Seller is not a party to, subject to or bound by any Law
or Order.
2.25 Receipt of Agreements; Access to Information. The Sellers have
received and read this Agreement. The Buyer has provided the Sellers within
a reasonable time period prior to the date hereof the opportunity to obtain
information which the Buyer possesses or can acquire without unreasonable
effort or expense with respect to the Buyer, and the Sellers have received
all additional information with respect to the Buyer that they have
requested.
2.26 Intercompany Obligations. All Contracts, liabilities or other
obligations or business relationships between each Consolidated Forecast
Entity, on the one hand, and any of the Sellers, Xxxxxxx or any Controlled
Entity, on the other hand (the "Intercompany Obligations"), have been, or
prior to the Effective Date shall be, reconciled with Schedule 2.26 (the
"Intercompany Obligations"), and none of the same shall appear on the Final
Balance Sheet. As of the Effective Date, other than pursuant to this
Agreement, no Consolidated Forecast Entity will have any Contract, Liability
or other obligation with or to any Affiliate or Seller (except as otherwise
contemplated under this Agreement or any other related agreements).
2.27 Land Purchase Contracts. The Sellers' Disclosure Schedule lists
all Contracts to which each Consolidated Forecast Entity is a party pursuant
to which such Consolidated Forecast Entity is obligated to or has an option
or other right to purchase any developed or undeveloped real property (the
"Contract Property") as of the Effective Date (the "Land Purchase
Contracts"). True and correct copies of all Land Purchase Contracts have
been made available to the Buyer. The Sellers' Disclosure Schedule also sets
forth an identifying description or, if available, the street address of each
parcel of Contract Property or another description thereof sufficient to
identify the Contract Property subject thereto.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Parties agree that the purchase of the Securities 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 Sellers 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 jurisdiction of
its organization, 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 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 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.
3.4 Investment Representation. The Buyer is acquiring the Securities
from the Sellers for the Buyer's own account, for investment purposes only
and not with a view to or for sale in connection with the public distribution
thereof. The Buyer is an "accredited investor" within the meaning of Rule
501(a) under the Securities Act, or has such knowledge and experience in
financial and business matters that the Buyer is capable of evaluating the
merits and risks of, and the Buyer is able to bear the economic risk of and
lack of liquidity inherent in, acquiring the Securities. The Buyer
acknowledges that the Securities have not been and will not be registered
under the Securities Act or qualified under any state securities or blue sky
laws. The Buyer does not currently own, beneficially or of record, any
portion of the Securities.
3.5 No Brokers or Finders. No agent, broker, finder, or investment or
commercial broker, or other person or firm acting on behalf of the Buyer 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 the transactions contemplated hereunder; provided, however,
that (a) the Sellers shall have full responsibility for Salomon, and (b) the
Buyer shall have full responsibility for obligations to any other Person
claiming through the Buyer.
SECTION 4. COVENANTS PRIOR TO CLOSING
4.1 Access. The Sellers shall afford and cause the Securities
Partnership and 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 Securities Partnership's or the
Consolidated Forecast Entities' respective businesses, to the offices,
properties and financial records of each Consolidated Forecast Entity and the
Securities Partnership as the Buyer may reasonably request from time to time.
4.2 Preservation of Business Prior to the Closing Date. During the
period beginning on the Effective Date and ending on the Closing Date:
4.2.1 Conduct of Business. Except as otherwise set forth on the
Sellers' Disclosure Schedule, the Sellers shall cause the Consolidated
Forecast Entities and the Securities Partnership to conduct the Homebuilding
Business in the ordinary course of business.
4.2.2 Goodwill. The Sellers shall use commercially reasonable
efforts to preserve the goodwill of customers, suppliers and others having
business relations with any Consolidated Forecast Entity.
4.2.3 Employees. The Sellers and the Buyer shall consult with
each other concerning, and the Sellers shall act in a commercially reasonable
manner (at no cost to the Sellers) to assist the Buyer in seeking to keep
available to the Buyer, the services of the employees of the Consolidated
Forecast Entities and any officers of the Consolidated Forecast Entities,
other than the employees listed on Schedule 4.2.3 (the "Excluded Employees"),
whom the Sellers are free to solicit for new employment at any time;
provided, however, the Buyer understands and agrees that the Sellers cannot
assure and, therefore, are not obligated to assure, that existing employees
maintain their employee status. Following the Effective Date, neither the
Sellers nor the Consolidated Forecast Entities shall, without the Buyer's
prior written consent, (a) increase the compensation or fringe benefits or
any present or former director, officer or employee of any Consolidated
Forecast Entity (except for increases in salary or wages in the ordinary
course of business consistent with past practices and one-time bonuses paid
prior to the Closing Date), (b) grant any severance or termination pay to any
present or former director, officer or employee of any Consolidated Forecast
Entity, (c) lend or advance any money or other property to any present or
former director, officer or employee of any Consolidated Forecast Entity, or
(d) establish, adopt or enter into any Forecast Employee Plan or any plan,
agreement, program, policy, trust, fund or other arrangement that would be a
Forecast Employee Plan if it were in existence as of the date of this
Agreement.
4.3 Notification of Certain Matters. The Sellers shall give prompt
written notice to the Buyer, and the Buyer shall give prompt written notice
to the Sellers, 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 Sellers,
as the case may be, to comply with or satisfy, in any material respect, any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement; provided, however, that any event, occurrence or failure of
occurrence of which a party shall notify the other party under clause (a)
above shall not be deemed a breach or default with respect to any provision
of this Agreement.
4.4 Approvals. Prior to Closing, the Sellers 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 that may be necessary to consummate the
transactions contemplated by this Agreement, including, without limitation,
the Approvals listed on the Sellers' Disclosure Schedule (which shall be
obtained at the Sellers' expense) and the Buyer's Disclosure Schedule (which
shall be obtained at the Buyer's expense). 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 Sellers shall (but without limitation
on the Buyer's rights under Section 6.2 and without any cost to the Sellers)
attempt in a commercially reasonable manner to assist the Buyer in obtaining
for the Buyer the benefits of each such Contract.
4.5 No Shop. During the time period beginning on the Effective Date and
ending on the Closing Date, none of the Consolidated Forecast Entities nor
any Affiliates thereof shall directly or indirectly solicit, initiate or
participate in any negotiations with any Person other than the Buyer
concerning any merger or sale of substantially all of the assets, sale of
equity interests or similar transactions involving the Consolidated Forecast
Entities, or directly or indirectly disclose any non-public information to
any Person with respect to this transaction other than the Buyer, its
employees, advisors and other representatives. If either Party seeks to
assert a breach of the provisions under this Section 4.5, such aggrieved
Party must (a) provide the other Party with written notice of such intended
action within thirty (30) days of such aggrieved Party's knowledge of the
basis for such breach, and (b) file and serve an action within forty-five
(45) days of such aggrieved Party's knowledge of such breach.
4.6 Financial Statements. Prior to the Effective Date, each Party shall
provide the other Party with the financial statements incorporated in such
Party's (or the Group's, if applicable) Form 10-K filed with the SEC (such
financial statements shall be certified by such Party's (or the Group's, if
applicable) independent public accountants) for the three (3) fiscal years
immediately preceding the Effective Date. Prior to the Closing Date, upon
the explicit written direction of the Buyer received by the Sellers from the
Buyer prior to the Effective Date, the Sellers shall provide the Buyer with
financial statements related to the Homebuilding Business in such form and
content and for such time periods as shall be required for the Buyer's SEC
filings in connection with the Buyer's reporting to the SEC of the Buyer's
purchase of the Securities. With reference to such requirement, the Buyer
shall concurrently reference the applicable SEC requirement (including,
without limitation, the applicable rule or SEC comment) as to the content
thereof.
4.7 Intercompany Obligations. Prior to the Effective Date, the Sellers
shall cause all Intercompany Obligations to be reconciled with Schedule 2.26.
4.8 Tax Status of Securities Partnership. From the Effective Date
through the Closing Date, the Sellers shall continue to treat Securities
Partnership as a partnership for tax purposes. Any Subsidiaries of the
Securities Partnership that are partnerships will similarly continue to be
treated for tax purposes or partnerships through the Closing Date.
SECTION 5. ADDITIONAL CONTINUING COVENANTS
5.1 Non-Competition. The Sellers agree to be bound by the terms and
provisions of Section 5.1 of the Asset Purchase Agreement to the same extent
as Xxxxxxx as if they were parties thereto.
5.2 Nondisclosure of Proprietary Data. Each of Xxxxxxx and the Sellers
agrees that it will not, and will 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 Securities Partnership as they
relate to Securities Partnership, or (b) divulge or otherwise disclose to
Persons other than the Buyer, any confidential information concerning the
business or policies of Securities Partnership as they relate to Securities
Partnership, 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 Returns.
5.3.1 Sellers' Preparation. The Sellers shall cause to be
prepared and timely filed (or provided to the Buyer for execution and filing,
if applicable) when due (taking into account all extensions properly
obtained) all Tax Returns of Securities Partnership for taxable periods
beginning before the Closing Date and ending on or prior to the Closing Date.
All Tax Returns described in this Section 5.3.1 shall be provided to the
Buyer for its information only not less than twenty (20) days prior to the
proposed filing date and shall be prepared and filed in a manner
substantially consistent with past practice and/or on the advice of the
Sellers' professional advisors or as otherwise required by Law. On such Tax
Returns, no position shall be taken, election made or method adopted without
the Buyer's written consent (which shall not be unreasonably withheld or
delayed) that is materially inconsistent with positions taken, elections made
or methods used in preparing and filing similar Tax Returns in prior periods
(provided that no positions shall be taken, elections made or methods used
which would have the effect of deferring income to periods after the Closing
Date or accelerating deductions to periods before the Closing Date).
5.3.2 Buyers' Preparation. The Buyer shall cause to be prepared
and timely filed (subject to applicable extension rights) all Tax Returns of
Securities Partnership that are not described in Section 5.3.1 above. The
relevant portion of any such Tax Return prepared by the Buyer or its
Affiliates which includes any allocation of the Purchase Price under Section
1060 or Section 755 of the Code shall be provided to the Sellers for their
review and approval (which approval shall not be unreasonably withheld or
delayed) not less than twenty (20) days prior to the proposed filing date and
shall be prepared and filed in a manner substantially similar to or
substantially consistent with past practice and/or on the advice of the
Buyer's professional advisors in keeping with the terms set out in Section
1.5 of this Agreement or as otherwise required by Law.
5.4 Tax Cooperation.
5.4.1 Tax Proceedings. After the Closing Date, the Sellers 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 Securities Partnership (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 Buyer shall notify the Sellers in writing promptly upon receipt by the
Buyer or any Affiliate of any notice of any pending or threatened audits or
assessments relating to Taxes with respect to the Securities Partnership
other than Taxes as to which the Sellers have no indemnification obligation
or other liability relating to Taxes. Failure to provide such notice shall
not affect the Sellers' indemnification obligations under Section 8.1.3
unless such failure materially prejudices the Sellers. The Sellers shall
have the right to control the handling and disposition of such audit and any
administrative or court proceeding relating thereto (and to employ counsel of
their choice at the shared expense of both Parties) to the extent that such
audit or proceeding could result in increased Tax liabilities of the Sellers
for the period covered by the Tax Proceeding or an increase in their
indemnification obligations to the Buyer under this Agreement; provided,
however, that the Buyer shall have the right to participate in the Tax
Proceeding and to employ counsel of its choice at its expense. The Sellers
shall not agree to any settlement concerning Taxes of the Securities
Partnership for any taxable period which would result in an increase of more
than One Million Dollars ($1,000,000) in Taxes of the Buyer or the Securities
Partnership for any taxable period ending after the Closing Date, without the
prior written consent of the Buyer. Except in the case of the Buyer to the
extent such costs are indemnified by the Sellers, the Buyer and the Sellers
shall bear their respective costs and expenses in connection with any Tax
Proceeding. Any information obtained pursuant to this Section 5.4 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.
5.4.2 Interim Closing of Books. The Sellers' distributive share
of the Securities Partnership's income, gain, loss and deduction for the
taxable year of the Securities Partnership that includes the Closing Date
shall be determined on the basis of an interim closing of the books of the
Securities Partnership as of the close of business on the Closing Date and
shall not be based upon a proration of such items for the entire taxable
year.
5.5 Section 754 Election. With respect to the Tax year in which the
Closing occurs, the Securities Partnership and any of its subsidiaries which
are treated as partnerships for income tax purposes will have a valid
election under Section 754 in effect (and any comparable election under state
law).
5.6 Cooperation. After the Closing Date, the Buyer shall afford the
Sellers, and their respective accountants, counsel and other representatives,
reasonable access during normal business hours to the books and records of
the Group and/or Securities Partnership for the period prior to the Closing
Date that relate to Tax matters or any third-party claims against the Sellers
relating to the business of the Group and/or Securities Partnership during
any such periods. The Sellers, or their respective representatives, may, at
such Seller's own expense, make copies of such books and records. The Buyer
understands that there are certain 2001, 2000 and 1999 tax returns for
entities associated with the Group for which Tax Returns have not yet been
prepared, and that such tax returns are identified on the Sellers' Disclosure
Schedule. The Buyer agrees after the Closing to, upon reasonable prior
notice which may be written or oral, give the Sellers' accountants and tax
accountants access to the information needed to prepare such returns and the
Buyer shall cause Securities Partnership's accounting personnel to be made
available to the Sellers and their advisors for this purpose.
5.7 Employees and Employee Benefits.
5.7.1 Eligibility for Buyers; Recognition of Employee Service
Plans. The Buyer shall make available to employees of any Consolidated
Forecast Entity who continue employment with the Buyer access and a right to
participate in all of the benefit plans, programs, and policies sponsored by
the Buyer for the benefit of its employees generally, to the extent they
would otherwise be eligible under such plans, at benefit levels in the
aggregate that are the same as are generally applicable to other similarly
situated employees of the Buyer, including, without limitation, to receive
credit for all of their service prior to the Closing Date with any
Consolidated Forecast Entity under all employee benefit plans, programs and
policies sponsored by the Buyer for the benefit of employees generally to the
same extent such service was credited under the Forecast Employee Plans.
5.7.2 401(k) Plan. The Sellers shall cause the Group's 401(k)
Plan (the "Forecast 401(k) Plan") to be stopped immediately after the Closing
Date, except for any parallel plans that may be associated with the Forecast
401(k) Plan. The Buyers shall promptly file (and Seller's shall provide any
written consent or agreement to such action as is necessary to perfect such
termination) an application with the IRS for approval of plan termination and
shall promptly terminate the Forecast 401(k) Plan upon receipt of such
approval. The Sellers shall, with respect to all employees who are
participants in the Forecast 401(k) Plan, contribute and allocate to the
accounts of such participants all employer contributions (including matching
contributions with respect to all employee contributions and salary
deferrals) that would otherwise have been made to the Forecast 401(k) Plan
for the 2001 plan year (with respect to the time period prior to Closing
Date) but for the cessation of the Forecast 401(k) Plan, regardless of
whether or not such participants are credited with a year of service for such
plan year or are employed by the Group on the last day of the plan year.
5.7.3 Employees Generally. The Buyer acknowledges that it
intends to use commercially reasonable efforts to continue the employment of
the current non-executive employees of the Consolidated Forecast Entities for
a period of at least six (6) months after the Closing Date, provided that
nothing contained herein shall be construed as requiring the Buyer or the
Securities Partnership to continue the employment or position of any specific
Person.
5.8 Assumption of Office Lease. In the event that the assumption of the
tenant's entire interest in that certain office lease dated as of November 7,
2000 (and the amendment to such lease dated as of June 18, 2001) wherein PRF
is the landlord and the Group is the tenant for space being constructed by
Xxxxxxx (the "Office Lease") is not accomplished by operation of Law at the
Closing, the Buyer shall assume the tenant's entire interest in that Office
Lease. Subject to the approval of Xxxxx Fargo, the terms of the Office Lease
may be adjusted as it pertains to the demised premises to provide space for
offices for Xxxxxxx (and/or Xxxxxxx'x Affiliates) and Xxxxx Fargo. For so
long as Xxxxxxxx (or his successor), as regional manager of the Buyer, is
reasonably satisfied that the prices and services of Xxxxx Fargo are
reasonably comparable to the prices and services of the competitors of Xxxxx
Fargo, then the Buyer shall continue to engage Xxxxx Fargo for a period of at
least one (1) year after the Closing Date in the capacity engaged by the
Group as of immediately prior to the Closing Date.
5.9 Use of Name. The assets acquired by the Buyer under this Agreement
shall include the exclusive use of the "Forecast Homes" name; provided,
however, notwithstanding anything stated herein, Xxxxxxx shall have the right
to continue to use the name "Forecast" in connection with (a) its business
arrangements with Premier Homes, Inc., and (b) all of Xxxxxxx'x non-
homebuilding entities. The Buyer shall have the exclusive right to use the
name "Forecast Homes" in homebuilding activities for so long as the Buyer
uses such name on a reasonably regular basis, e.g., the Buyer has failed to
use such name for a period of twelve (12) consecutive months or more. As of
the Closing Date, the Sellers shall have all intangible rights used in the
Homebuilding Business as of the Effective Date.
5.10 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).
5.11 Insurance. The Sellers and Xxxxxxx shall assign the Policies for
the benefit of Buyer on or as promptly after the Closing as possible.
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 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 Asset Purchase Agreement. All of the Closing conditions
set forth in the Asset 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
Sellers. The representations and warranties of the Sellers contained in this
Agreement (as qualified by matters set forth as exceptions thereto in the
Sellers' 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; provided, however, that if for any reason this condition
cannot be satisfied because of an event, condition, occurrence or failure of
occurrence, or as a result of Seller's obtaining knowledge of same, between
the Option Date and the Effective Date, the fact that this condition could
not be satisfied shall not be deemed a breach of this Agreement by the
Seller. The Sellers 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 Sellers shall have delivered to the Buyer a certificate of the
Sellers to such effect, dated the Closing Date, in the form of Exhibit C (the
"Form of the Sellers' Certificate") attached hereto.
6.2.2 Consents. The Sellers shall have obtained (and provided
satisfactory evidence to the Buyer of receipt of) any Approvals of third
parties set forth on the Sellers' Disclosure Schedule, including without
limitation, that of Premier.
6.2.3 Delivery of the Securities. The Sellers shall have
executed the Partnership Interests Assignment and shall have delivered the
Securities and/or any and all instruments representing the same to the Buyer,
free of any and all Encumbrances, along with any necessary or appropriate
stock powers or endorsements.
6.2.4 FIRPTA Affidavits. Each of the Sellers shall have executed
and delivered affidavits in a form reasonably satisfactory to the Buyer,
providing, among other things, under penalty of perjury, their respective
U.S. taxpayer identification numbers and that none of them is a "foreign
person" within the meaning of Sections 1445 and 7701 of the Code.
6.2.5 Opinion of Counsel. O'Melveny & Xxxxx LLP, legal counsel
for the Sellers, shall have delivered to the Buyer a legal opinion
substantially in the form of Exhibit D (the "Form of OM&M Legal Opinion")
attached hereto.
6.2.6 Sellers' Certificates. The Sellers 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 boards of
directors of the Sellers, the partners and the shareholders 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; and
(b) incumbency certificates setting forth the names,
offices, and signatures of the Persons signing on behalf of the Sellers.
6.2.7 Other. The Sellers shall have delivered to the Buyer such
other certificates as the Buyer may reasonably request to effect the
transactions contemplated hereby; provided, however, the Sellers 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.
6.2.8 Disclosure Documents. The Sellers shall have delivered to
the Buyer copies of the Group's SEC Reports.
6.2.9 Non-Competition and Option Agreement. Premier shall have
validly executed and delivered the Non-Competition and Option Agreement.
6.2.10 Lot Option Agreement. Xxxxxxx shall have validly
executed and delivered the Lot 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. The Sellers
and Xxxxxxx shall have validly executed and delivered the Indemnification and
Release Agreement.
6.3 Conditions to Obligations of the Sellers. The obligations of the
Sellers to effect the Closing shall be subject to the following conditions,
except to the extent waived by the Sellers 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 Sellers a
certificate of the Buyer to such effect, dated the Closing Date, the form of
which appears as Exhibit E (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. Xxxxxxx Xxxxxxx & Xxxxxxxx, legal
counsel for the Buyer, shall have delivered to the Sellers a legal opinion
substantially in the form of Exhibit F (the "Form of ST&B Legal Opinion")
attached hereto.
6.3.4 Assumption of Liabilities. The Buyer shall have assumed
all of the Liabilities of each of the Consolidated Forecast Entities with
respect to the Homebuilding Business pursuant to an assignment and assumption
agreement in the form of Exhibit G (the "Form of Assignment and Assumption
Agreement") attached hereto. Nothing contained therein shall require the
Buyer to assume the Excluded Liabilities.
6.3.5 Assumption of Guarantees. The Buyer shall have assumed the
guarantees identified in Schedule 6.3.5 (the "Assumption of Guarantees") by
an instrument acceptable to the Sellers that fully and completely releases
each Seller that is a guarantor thereunder and each partner or shareholder,
as applicable, of each such Seller, from any liability under such guarantees.
6.3.6 Secretary's Certificate. The Buyer shall have delivered to
the Sellers a certificate, in a form acceptable to the Sellers, which shall
include:
(a) 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;
(b) a copy of the resolutions that the boards of
directors 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
(c) an incumbency certificate setting forth the names,
offices, and signatures of all of the officers signing on behalf of the
Buyer.
6.3.7 Purchase Price. The Buyer shall have delivered to the
Sellers the Purchase Price 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.
6.3.8 Office Lease. The Buyer shall have assumed the Office
Lease.
6.3.9 Other Matters. The Buyer shall have delivered to the
Sellers such other certificates, documents and instruments as the Sellers may
reasonably request to effect the transactions contemplated hereby.
6.3.10 Lot Option Agreement. The Buyer shall have validly
executed and delivered the Lot Option Agreement.
6.3.11 Non-Competition and Option Agreement. The Buyer
shall have validly executed and delivered the Non-Competition and Option
Agreement.
6.3.12 ROFO Agreement. The Buyer shall have validly
executed and delivered the ROFO Agreement.
6.3.13 Park Xxxxxxx Option Agreement. The Buyer shall have
validly executed and delivered the Park Xxxxxxx Option Agreement.
6.3.14 Consulting Agreement. The Buyer shall have validly
executed and delivered the Consulting Agreement.
6.3.15 Forecast Development Option and Purchase Agreement.
Forecast Development shall have validly executed and delivered the Forecast
Development Option and Purchase Agreement.
6.3.16 Indemnification and Release Agreement. The Buyer
shall have validly executed and delivered the Indemnification and Release
Agreement.
6.3.17 Satisfaction of Debt. The Buyer shall have satisfied
all of the Debt in accordance with Section 1.8.
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 shall terminate if the Closing (including, without limitation,
the Sellers' 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 Sellers, and 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 Sellers.
7.1.2 Conditions to the Buyer's Performance Not Met. By the
Buyer, by written notice to the Sellers, 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 Sellers' Performance Not Met. By the
Sellers, 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 obligation of any Seller to consummate the transactions
contemplated by this Agreement. Notwithstanding the foregoing, the Sellers
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
Sellers of any of their obligations under this Agreement.
7.1.4 Material Breach. By the Buyer or the Sellers 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 after actual receipt of written
notice from the other Party of its intention to terminate this Agreement if
such breach continues in which to cure such breach.
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 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, any of the Sellers or
any of the Consolidated Forecast Entities. Additionally, no termination
shall give rise to the release of the Buyer from any loss, cost, claims,
damages or indemnities provided to the Sellers 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. If either the Buyer or the Sellers elect 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 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).
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 in accordance with
Section 7.3.1, the Buyer shall be deemed to have (a) fully released and
forever discharged the Sellers and their 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 the Sellers and Xxxxxxx.
8.1.1 Ownership of the Securities. Sellers 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 any Seller under Sections 2.1.1, 2.1.2 and 2.2 of this
Agreement only (and no other agreement); provided, however, that Sellers' and
Xxxxxxx'x indemnification obligations hereunder shall exist only with respect
to Losses of which Xxxxxxx is timely notified in accordance with Section
8.3.1.
8.1.2 Indemnification for Actual Fraud. Sellers 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 Sellers in Section 2 (including,
without limitation, fraudulent misrepresentations made by the Group under
Section 2.13 of the Asset Purchase Agreement regarding actually asserted and
existing homeowner fraud claims); provided, however, that Xxxxxxx'x
indemnification obligations hereunder shall exist only with respect to Losses
of which Xxxxxxx is timely notified in accordance with Section 8.3.1; and
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 by Xxxxxxx. From and after the Closing
Date, Sellers and Xxxxxxx shall jointly and severally indemnify, defend and
hold the Buyer harmless from and against any and all Taxes incurred in
periods or with respect to periods prior to the Closing Date for which the
Buyer or its Affiliates or Securities Partnership (the "Tax Indemnitees") are
liable (including, without limitation, any obligation to contribute to the
payment of any Taxes determined on a consolidated, combined or unitary basis
with respect to the Securities Partnership), or that result in Encumbrances
on any assets of the Tax Indemnitees, in each case to the extent that they
are not reflected in the Final Balance Sheet:
(a) for any Tax period of the Securities Partnership that
ends on or before the Closing Date;
(b) arising from the Securities Transfer and/or the Asset
Transfer and any other transfers, exchanges or transaction related thereto
undertaken by the Seller, Securities Partnership, any former holders of
limited partnership interests in the Group, in connection with and prior to
the purchase contemplated by this Agreement and the Asset Purchase Agreement.
(c) with respect to any Tax period of the Securities
Partnership beginning before the Closing Date but ending after the Closing
Date, but only that portion of such Taxes that relates to the portion of the
Tax period ending on and including the Closing Date;
(d) arising under any Tax sharing agreement or similar
arrangement, whether or not written, as a transferee or successor by contract
or otherwise;
(e) resulting by reason of the several liability of the
Securities Partnership pursuant to Treasury Regulations Section 1.1502-6 or
by reason of the Securities Partnership having been a member of any
consolidated, combined or unitary group on or prior to the Closing Date; or
(f) resulting from the Sellers' fraudulent actions in
connection with any covenant or breach of any of its representations or
warranties relating to Taxes set forth in Sections 2.7, 5.3, 5.4 and 5.5.
Xxxxxxx'x indemnification obligations under this Section 8.1.3 shall
automatically terminate upon the expiration of the applicable statutory
period. Xxxxxxx'x liability under this Section 8.1.3 shall include any
Losses of the Tax Indemnitees 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 a Tax Indemnitee 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 Sellers and
Securities Partnership.
8.2 Indemnification by the Buyer. The Buyer shall indemnify and hold
harmless Xxxxxxx, the Sellers, 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 of this Agreement; 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; and provided, further, any indemnification claim
hereunder shall be filed in accordance with Section 10.10 by the Seller or
such Person within sixty (60) days after such Person's actual 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 5.6.
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 Asset Purchase Agreement. Such
notice to the Indemnifying Party shall be delivered by the Indemnified Party
within thirty (30) days of the Indemnified Party's actual 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, the Securities Partnership, any Consolidated Forecast Entity or
any of the Sellers. The Parties agree that, on or prior to seeking
indemnification for a Loss from the Indemnifying Party under the Agreement,
the Indemnified Party shall use commercially reasonable efforts to recover
any insurance proceeds that may be obtainable with respect to such Loss. The
Sellers shall reasonably cooperate, at no expense to the Sellers, with the
Buyer in the Buyer's efforts to seek to obtain insurance to cover any
breaches or misrepresentations in the Sellers' 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 Asset Purchase Agreement. Any
payment to an Indemnified Party under Sections 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 Asset 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 Asset 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 Sellers. The indemnification obligations of Xxxxxxx
under Sections 8.1.1 and 8.1.2 shall survive the Closing and terminate upon
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 Section 8.2 shall survive the Closing and shall remain in full force
and effect for the applicable statutory period.
8.5 Limitation of Remedies. Neither Xxxxxxx nor any Consolidated
Forecast Entity 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 and under the Asset Purchase
Agreement is in excess of Six Hundred Fifty Thousand Dollars ($650,000), in
which event Xxxxxxx shall be obligated to indemnify the Buyer only for all
Losses from the first dollar. The Buyer shall not be obligated to indemnify
the Sellers and/or Xxxxxxx pursuant to Section 8.2 until the aggregate amount
of all Losses for which such indemnification would otherwise be available
under this Agreement and the Asset Purchase Agreement is in excess of Six
Hundred Fifty Thousand Dollars ($650,000), in which event the Buyer shall be
obligated to indemnify the Sellers only for 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 of the Asset Purchase Agreement or with
respect to any matter pertaining to the Buyer's Shares (as defined in the
Asset Purchase Agreement), including, without limitation, the disposition
thereof, or any obligation of the Buyer under Section 5.6 of the Asset
Purchase Agreement.
8.6 Sellers Jointly and Severally Liable. The Sellers and Xxxxxxx
hereby agree to be jointly and severally liable for any Loss for which
Xxxxxxx or Forecast Group, L.P. is liable under Section 8 of the Asset
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 Asset Purchase Agreement or the Collateral Agreements,
none of Xxxxxxx, the Sellers, their counsel, sales agents, nor any of their
Affiliates or attorneys of Xxxxxxx, 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 Securities 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 Sellers)
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 5.1, 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. The Buyer may not assign or
transfer this Agreement or any of the rights hereunder without the Sellers'
prior written consent, which consent shall not be required in the 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 Asset Purchase Agreement and the Collateral
Agreements. In the event the Sellers consents to any such assignment or
transfer, the Sellers may elect in their 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 detached 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 Sellers 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 or regulations of any national securities exchange; provided,
however, in such instance, the applicable Party shall use commercially
reasonable efforts to inform the other Party 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 (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 Referee; 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 Sellers and the Buyer hereby
waives the right to trial by jury. During the pendency of the expedited
reference proceeding, the Sellers and the Buyer shall each pay one-half of
the cost of the referee. 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 final, binding and
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 Sellers' knowledge" or "to the
applicable tax paying 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 foregoing
individuals' names 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 "Sellers' 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 one or more Sellers, 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
Sellers and the Buyer shall each pay their 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. Each Seller's expenses incurred prior to the Closing
and not otherwise specifically allocated by this Agreement shall be paid by
the Sellers 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 Sellers 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 Sellers.
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. 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 Sellers (or any Seller) or Xxxxxxx, or any Affiliate
thereof, including, without limitation, any right of offset or excuse to
Buyer's performance respecting Buyer's obligations hereunder or under the
Asset Purchase Agreement or any of the Collateral Agreements.
10.20 No Offset by the Sellers or Xxxxxxx. Notwithstanding anything in
this Agreement to the contrary but expressly excepting any actions and/or
inactions of the Buyer or its directors, officers, employees, representatives
or agents that are directly related to the obligations of the Seller, Xxxxxxx
or anyone claiming through any of them, none of the Sellers, Xxxxxxx nor
anyone claiming through them shall have any rights of offset under this
Agreement or otherwise, in the event of any breach hereunder or under the
Asset Purchase Agreement or any of the Collateral Agreements.
10.21 Cross Default with Asset Purchase Agreement.
10.21.1 Effectiveness of this Agreement. This Agreement
shall not be operable or effective unless and until the Buyer, The Group and
Xxxxxxx validly execute and deliver to the other parties thereto the Asset
Purchase Agreement.
10.21.2 Default by Buyer. A default by the Buyer under the
Asset Purchase Agreement shall constitute a default by the Buyer under this
Agreement.
10.21.3 Default by the Sellers or Xxxxxxx. A default by the
Sellers and/or Xxxxxxx under the Asset Purchase Agreement shall constitute a
default by the Sellers and/or Xxxxxxx, as applicable, under this Agreement.
10.21.4 Termination. In the event the Asset Purchase
Agreement is terminated pursuant to the terms thereof, this Agreement shall
be deemed terminated as of the date of such termination of the Asset 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 provisions of this Agreement, are to survive the termination of
Agreement.
(Signature pages follow.)
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
"SELLERS"
FORECAST PP2, LLC, a Delaware limited
liability company
By: /S/Xxxxx X. Day
Its: Executive Vice President
FORECAST HOMES, INC., a California
corporation
By: /S/Xxxxx X. Day
Its: Executive Vice President
"XXXXXXX"
XXXXX X. XXXXXXX, an individual
