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ASSET PURCHASE AGREEMENT
Dated as of March 24, 1999
By and Among
Westminster Homes of Alabama, LLC
Westminster Homes of Mississippi, LLC
Washington Homes, Inc.
Xxxxxxx Homes, Inc.
and
Xxxxx X. Xxxxxxx
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
1.Definitions 3
2.Basic Transaction 3
(a) Purchase and Sale of Assets 3
(b) Assumption of Liabilities 3
(c) Contracts 3
(d) Purchase Price 3
(e) The Closing 3
(f) Deliveries at the Closing 3
(g) Prorations 3
(h) Second Closing 3
(i) Allocation 3
(j) Employees 3
(k) Land Development Limited Liability Company 3
(l) Right of First Refusal on Future Developments 3
(m) Name Change 9
(n) Lease of Office Space 9
(o) Intellectual Property 3
3.Representations and Warranties of Xxxxxxx 3
(a) Organization of Xxxxxxx 3
(b) Authorization of Transaction 3
(c) Noncontravention 3
(d) Brokers' Fees 3
(e) Title to Assets 3
(f) Subsidiaries 3
(g) Financial Statements 3
(h) Events Subsequent to Year End 11
(i) Undisclosed Liabilities 3
(j) Legal Compliance 12
(k) Tax Matters 12
(l) Real Property 3
(m) Intellectual Property 3
(n) Tangible Personal Property 15
(o) Contracts 15
(p) Litigation 3
(q) Employees 3
(r) Employee Benefits 16
(s) Environment, Health, and Safety 16
(t) Third Party Consents 3
(u) Disclosure 3
4.Representations and Warranties of Buyer 3
(a) Organization of Buyer 17
(b) Authorization of Transaction 17
(c) Noncontravention 17
(d) Brokers' Fees 3
5. Pre-Closing Covenants 3
(a) General 3
(b) Notices and Consents 18
(c) Operation of Business 18
(d) Preservation of Business 18
(e) Full Access 18
(f) Notice of Development; Change in Disclosure Schedules 3
(g) Exclusivity 19
(h) Title Reports 19
(i) Surveys 3
(j) Press Releases and Public Announcements 3
6.Conditions to Obligation to Close 20
(a) Conditions to Obligation of Buyer 20
(b) Conditions to Obligation of Xxxxxxx 21
7.Termination 22
(a) Termination of Agreement 22
(b) Effect of Termination 23
8. Post-Closing Covenants 23
(a) General 23
(b) Litigation Support 23
(c) Transition 3
(d) Confidentiality 24
(e) Access to Records 24
(f) Covenant Not to Compete 24
(g) Warranty Work on Recent Deliveries 25
(h) Marketing and Promotional Materials 25
(i) Use of Non-Transerred Assets 25
(j) Land Contracts 26
(k) Madison Employees 3
9.Remedies for Breaches of This Agreement 26
(a) Survival of Representations and Warranties 26
(b) Indemnification Provisions for Benefit of Buyer 26
(c) Indemnification Provisions for Benefit of Xxxxxxx 27
(d) Matters Involving Third Parties 27
(e) Determination of Adverse Consequences 28
(f) Basket and Cap 28
(g) Insurance Coverage 28
(h) Contractor Indemnification 29
10. Miscellaneous 29
(a) No Third-Party Beneficiaries 29
(b) Entire Agreement 29
(c) Succession and Assignment 29
(d) Counterparts 29
(e) Headings 29
(f) Notices 29
(g) Governing Law 30
(h) Amendments and Waivers 30
(i) Severability 30
(j) Expenses 31
(k) Construction 31
(l) Incorporation of Exhibits and Disclosure Schedules 31
(m) Specific Performance 31
(n) Bulk Transfer Laws 32
(o) Dispute Resolution 32
Exhibits
A. Assumption of Liabilities by Buyer
B. Allocation of Purchase Price
C. Third Party Consents
D. Financial Statements
E. Opinion of Counsel for Breland
F. Century Land Company, LLC
G. Lot Option Agreements
H. Opinion of Counsel for Buyer
Disclosure Schedule
Schedule 1A - Land Under Development
Schedule 1B - Inventory of Lots and Houses in Various Stages of
Completion, Work in Process, Completed Homes, Model Homes
Schedule 2 - Tangible Personal Property
Schedule 3 - Intellectual Property
Schedule 4 - Leases
Schedule 5A - Land Contracts
Schedule 5B - Sales Contracts and Customer Deposits
Schedule 6 - Engineering and Environmental Studies
Schedule 7 - Contracts with Suppliers and Subcontractors
Schedule 8 - Plans, Permits and Budgets for Lots, Subdivisions,
Developments and Houses
Schedule 9 - Other Excluded Assets
Schedule 10 - Other Liabilities and Obligations Assumed
Schedule 11 - Exceptions to Representations and Warranties
Schedule 12 - Warranty Claims
Schedule 13 - Litigation
Schedule 14 - Employee Exceptions
Schedule 15 - Employee Agreements
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") entered into as of March
24, 1999, by and among WESTMINSTER HOMES OF ALABAMA, LLC, an Alabama limited
liability company ("WHA"), WESTMINSTER HOMES OF MISSISSIPPI, LLC, a Mississippi
limited liability company ("WHM"), WASHINGTON HOMES, INC., a Maryland
corporation ("WHI"), XXXXXXX HOMES, INC., an Alabama corporation ("BHI"), and
Xxxxx X. Xxxxxxx ("LWB"). WHA, WHM and WHI are herein referred to collectively
as "Buyer" and BHI, and LWB are herein referred to collectively as "Xxxxxxx".
Buyer and Xxxxxxx are referred to collectively as the "Parties" and individually
as a "Party". References to Xxxxxxx or Buyer shall be construed as including
each of the Persons individually which constitute Xxxxxxx or Buyer.
WHEREAS, BHI is an entity wholly owned by LWB, and are engaged in the
design, construction and sale of single family homes and the development of land
in connection therewith in Alabama; and
WHEREAS, WHA and WHM have been organized as wholly owned subsidiaries of
WHI for the purpose of entering the homebuilding business in Alabama and
Mississippi; and
WHEREAS, Xxxxxxx wishes to sell its assets and Buyer wishes to purchase
certain assets owned by Xxxxxxx; and
WHEREAS, LWB and WHI are joining in this Agreement for the purposes, among
other things, of providing post-closing indemnification for the representations,
warranties and covenants contained herein.
NOW, THEREFORE, in consideration of the premises and the mutual promises
made herein, and in consideration of the representations, warranties, and
covenants contained herein, the Parties agree as follows.
1. Definitions.
"Acquired Assets" means all right, title, and interest in and to the
following assets of Xxxxxxx on the Closing Date: (a) real property (Schedule 1A
of the Disclosure Schedule sets forth a listing of land under development and
Schedule 1B sets forth a listing of the inventory of lots and houses in various
stages ofthe real property set forth on Schedules 1A and 1B of the Disclosure
Schedule (Schedule 1A sets forth a listing of land under development and
Schedule 1B sets forth a listing of the inventory of lots and completion, work
in process, completed homes and model homes as of the Effective Date) and any
Improvements, raw materials and supplies, manufactured and purchased parts in
connection therewith; (b) the tangible personal property (including office
furniture, fixtures and equipment, computer equipment, model home furniture and
fixtures, automobiles, trucks, construction and other equipment) including any
manufacturer's warranties in connection therewith, the major items of which as
of the Effective Date are listed on Schedule 2 of the Disclosure Schedule, (c)
the name "Xxxxxxx Homes," the trade marks and trade names listed on Schedule 3
of the Disclosure Schedule, (d) leases, as listed on Schedule 4 of the
Disclosure Schedule, and rights thereunder, (e) the contracts and option
agreements for the purchase of lots or land in development, and deposits in
connection therewith (the "Land Contracts"), which Land Contracts as of the
Effective Date are listed as Schedule 5A and the contracts for the sale of
homes, whether completed or under construction, (the "Sales Contracts") and any
deposits in connection therewith whether held directly or in trust accounts (the
"Customer Deposits"), including all rights thereunder, (Schedule 5B of the
Disclosure Schedule sets forth a list of Sales Contracts along with the Customer
Deposit for each contract, loan status, and construction status as of the
Effective Date), (f) the engineering and environmental studies relating to real
property sold hereunder, as listed on Schedule 6 of the Disclosure Schedule, (g)
lists of and contracts with suppliers and subcontractors, including those listed
on Schedule 7 of the Disclosure Schedule, which are in effect on the Effective
Date, (h) architectural and other plans, permits and budgets for lots,
subdivisions, developments and houses for the real property listed in Schedule
1A and 1B, (i) to the extent reflected in the calculation of the Purchase Price,
all claims, deposits, prepayments, refunds, causes of action, causes in action,
rights of recovery, rights of setoff, and rights of recoupment (excluding any
such item relating to the payment of Taxes) relating to assets sold hereunder,
(j) all franchises, approvals, permits, licenses, orders, registrations,
certificates, and similar rights obtained from governments and governmental
agencies used in connection with any Acquired Asset, and (k) the books, records,
ledgers, files, electronic media storage, computer software, documents,
correspondence, customer lists, plats, architectural plans, drawings, and
specifications, creative materials, advertising, promotional and marketing
materials, studies, reports, and other printed or written materials in
connection with the Acquired Assets; (l) cash and cash equivalents (including
restricted cash and Customer Deposits)., (m) all rights of Xxxxxxx under all
employee agreements between employees and Xxxxxxx, Madison or BH as listedhouses
in various stages of completion, work in process, completed homes and model
homes as of the Effective Date) and any Improvements, raw materials and
supplies, manufactured and purchased parts in connection therewith; (b) the
tangible personal property (including office furniture, fixtures and equipment,
computer equipment, model home furniture and fixtures, automobiles, trucks,
construction and other equipment) including any manufacturer's warranties in
connection therewith, the major items of which as of the Effective Date are
listed on Schedule 2 of the Disclosure Schedule; (c) the name "Xxxxxxx Homes,"
the trade marks, trade names and copyrighted material listed on Schedule 3 of
the Disclosure Schedule; (d) leases, as listed on Schedule 4 of the Disclosure
Schedule, and rights thereunder; (e) the contracts and option agreements for the
purchase of lots or land in development, and deposits in connection therewith
(the "Land Contracts"), which Land Contracts as of the Effective Date are listed
on Schedule 5A and the contracts for the sale of homes, whether completed or
under construction (the "Sales Contracts") including all rights thereunder,
(Schedule 5B of the Disclosure Schedule sets forth a list of Sales Contracts
along with the Customer Deposit for each contract, loan status, and construction
status as of the Effective Date); (f) all engineering and environmental studies
relating to real property sold hereunder, as listed on Schedule 6 of the
Disclosure Schedule; (g) lists of and contracts with suppliers and
subcontractors, including those listed on Schedule 7 of the Disclosure Schedule,
which are in effect on the Effective Date; (h) architectural and other plans,
permits and budgets for lots, subdivisions, developments and houses for the real
property listed in Schedule 1A and 1B; (i) to the extent reflected in the
calculation of the Purchase Price, all claims, deposits, prepayments, employee
receivables, escrows, refunds, causes of action, causes in action, rights of
recovery, rights of setoff, and rights of recoupment (excluding any such item
relating to the payment of Taxes) relating to assets sold or conveyed hereunder;
(j) to the extent transferable, all franchises, approvals, permits, licenses,
orders, registrations, certificates, and similar rights obtained from
governments and governmental agencies used in connection with any Acquired
Asset; (k) the books, records, ledgers, files, electronic media storage,
computer software, documents, correspondence, customer lists, plats,
architectural plans, drawings, and specifications, creative materials,
advertising, promotional and marketing materials, studies, reports, Intellectual
Property and other printed or written materials in connection with the Acquired
Assets; and (l) all rights of Xxxxxxx under all employee agreements between
employees and Xxxxxxx, Madison on Schedule 15 (the "Employment Agreements") and
(n) all equity ownership interest in Xxxxxxx Realty Inc., an Alabama
corporation.or BHI as listed on Schedule 15 (the "Employment Agreements"). The
foregoing notwithstanding, the Acquired Assets shall not include the Excluded
Assets, as hereinafter defined.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
under the Securities Exchange Act of 1934.
"Assumed Liabilities" means liabilities of Xxxxxxx as of the Closing Date
as follows: (a) liabilities and obligations of Xxxxxxx as listed on Schedule 10
including accounts payable, construction debt, land acquisition and development
debt, (b) all obligations of Xxxxxxx under the Sales Contracts (including
obligations to real estate brokers in connection therewith), and under the Land
Contracts (the Sales Contracts as of the Effective Date are listed on Schedule
5A and the Land Contracts as of the Effective Date are listed on Schedule 5B),
(c) obligations under leases (which as of the Effective Date are listed on
Schedule 4), (d) the obligation to perform warranty work for customers who
purchased homes from Xxxxxxx prior to the Effective Date but only to the extent
set forth in 8(g) and the obligation to perform warranty work for customers who
purchased homes after the Effective Date, provided, however, that the Assumed
Liabilities shall not include (i) any Liability of Xxxxxxx for income, transfer,
sales, use, and other Taxes whether or not arising in connection with the
consummation of the transactions contemplated hereby (including any income Taxes
arising because Xxxxxxx is transferring the Acquired Assets), (ii) any Liability
of Xxxxxxx for the unpaid Taxes of any Person, as a transferee or successor, by
contract, or otherwise, (iii) any obligation of Xxxxxxx to indemnify any Person,
unless contained in a contract assumed, (iv) any Liability of Xxxxxxx for costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby, (v) any Liability or obligation of Xxxxxxx under this
Agreement, or (vi) any Liability or obligation to any current or former
employees of Xxxxxxx to provide such persons with employment or in connection
with any Employee Benefit Plan.
"BHI" has the meaning set forth in the preface above.
"BHM" means Xxxxxxx Homes of Mississippi, L.L.C. an Alabama limited
liability company wholly owned by LWB and LWB as custodian for his minor child.
"BP" means Xxxxxxx Properties, Inc., an Alabama corporation.
"Xxxxxxx" has the meaning set forth in the preface above.
"Buyer" has the meaning set forth in the preface above.
"Closing" has the meaning set forth in section 2(e) below.
"Closing Date" has the meaning set forth in section 2(e) below.
"Confidential Information" means any business or technical information used
exclusively by Xxxxxxx and which has economic value to Xxxxxxx because it has
been deliberately maintained as confidential by Xxxxxxx. Confidential
Information shall not include general business or technical information of
Xxxxxxx, even ifto the extent such information hasnot become generally available
to the public.
"Customer Deposits" means any deposit held by Xxxxxxx in connection with a
Sales Contract whether held directly or in a trust account.
"Disclosure Schedule" means the compilation of Schedules described in this
Agreement, which shall be certified by Xxxxxxx to be true and correct as of the
date of execution of this Agreement and at Closing.
"Effective Date" means December 31, 1998.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation or
retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), (d) Employee Welfare Benefit Plan or (e) any other material
fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA Sec.
3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA Sec.
3(1).
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof) concerning pollution or protection of the environment, public
health and safety, or employee health and safety, including laws and regulations
relating to (i) emissions, discharges, releases, or threatened releases of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials
or wastes into ambient air, surface water, ground water, or lands or (ii)
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes, or (iii) laws and
regulations relating to the development of land, such as, storm water
management, erosion and sediment control, and use of wetlands.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" means (i) assets listed on Schedule 9 including notes
receivable from affiliates and mortgage and note receivable and a small aircraft
owned by Xxxxxxx, (ii) cash and cash equivalents (including restricted cash and
Customer Deposits), (iii) the corporate stock, membership interests and
organizational documents of BHI, its qualification to conduct business as a
foreign corporation, taxpayer and other identification numbers, seals, minute
books, stock transfer books, blank stock certificates, tax returns and other
documents relating to the organization, maintenance, and existence of BHI, (iv)
any of the rights of Xxxxxxx under this Agreement, and (v) any rights in or
assets of the Employee Benefit Plans of Xxxxxxx.
Xxxxxxx, (vi) any licenses or permits which are not transferable, and (vii)
Xxxxxxx'x insurance policies, but not including title insurance to be provided
to Buyer at Closing.
"Extremely Hazardous Substance" has the meaning set forth in Sec. 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"Final Disclosure Schedule" has the meaning set forth in section 5(f)(iii)
and which shall be certified by Xxxxxxx to be true and correct as of the Closing
Date.
"Final Purchase Price" has the meaning set forth in section 2(d)(iv).
"Financial Statements" has the meaning set forth in section 3(g) below.
"Improvements" means individually and collectively buildings, improvements,
structures fixtures, raw materials and supplies and other personal property
owned by Xxxxxxx and used in connection with the real property sold hereunder.
"Indemnified Party" has the meaning set forth in section 9(d) herein.
"Indemnifying Party" has the meaning set forth in section 9(d) herein.
"Intellectual Property" means the following developed byowned or licensed
to and used by Xxxxxxx: (a) all trademarks, service marks, trade dress, logos,
trade names, and corporate or company names of Xxxxxxx, together with all
translations, adaptations, derivations, and combinations thereof and including
all goodwill associated therewith, and all applications, registrations, and
renewals in connection therewith, (b) all copyrightable works of Xxxxxxx, all
copyrights of Xxxxxxx, and all applications, registrations, and renewals of
Xxxxxxx in connection therewith, (c) all trade secrets and confidential business
information of Xxxxxxx (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals),
(f)(d) all computer software of Xxxxxxx (including data and related
documentation), and (g)(e) all copies and tangible embodiments thereof (in
whatever form or medium).
"Knowledge" or "Xxxxxxx'x Knowledge" means the actual knowledge of LWB or
his knowledge of facts which upon reasonable inquiry would lead to actual
knowledge.
"Land Contracts" has the meaning set forth in this section 1 under the
definition of "Acquired Assets".
"Liability" means any liability (whether known or unknown, asserted or
unasserted, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, and whether due or to become due), including any liability for
Taxes.
"LWB" has the meaning set forth in the preface above.
"Madison" means Madison Homes Holding Company, L.L.C., an Alabama limited
liability company, and its subsidiaries, all wholly ownedof which are controlled
by LWB and its subsidiaries.
"Multiemployer Plan" has the meaning set forth in ERISA Sec. 3(37).
"Operational Adjustment" means the net result obtained by adjusting the
amount of all"Net Worth" means the amount determined by deducting the book value
of Assumed Liabilities and Acquired Assets to reflect differences between the
Effective Date and the Closing Date.from the book value of Acquired Assets.
"Ordinary Course of Business" means the ordinary course of business for
Xxxxxxx consistent with past custom and practice (including with respect to
quantity and frequency).
"Other Agreements" means (a)Agreement" means the Asset Purchase Agreement
of even date with this Agreement between Buyer, BHM, BPand LWB and (b) the
Agreement of even date herewith between Buyer and LWB.
"Parties or Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Permitted Exceptions" means (a) mechanics', carriers', workers',
repairers' and other similar liens arising or incurred in the Ordinary Course of
Business relating to obligations as to which there is no default on the part of
Xxxxxxx or its subcontractors; (b) all liens for Taxes both general and special,
and other governmental charges which are not due and payable as of the Closing;
(c) all easements, rights-of-way, covenants, conditions, restrictions,
reservations, licenses, agreements and other matters of record on the Effective
Date; (d) all electric power, telephone, gas, sanitary sewer, storm sewer, water
and other utility lines, pipelines, service lines and facilities of any nature
now located on, over or under the Acquired Assets, and all licenses, easements,
rights-of-way and other agreements relating thereto but, with respect to the
Acquired Assets, only to the extent that such matters do not adversely affect,
except in insubstantial ways, Buyer's ability to use the Acquired Assets in its
business, for the purposes for which they were intended to be used; (e) all
exiting public and private roads and streets (whether dedicated or undedicated)
and all railroad lines and rights-of-way affecting the Acquired Assets.
"Purchase Price" has the meaning set forth in section 2(d) below.
"Right of First Refusal" means the right of Buyer (a) to be offered
building lots prior to their being offered to any other Person and (b) the right
for a 30 day period after written notice to be offered lots on the same terms
(including financing) as would be available pursuant to a bonafide offer from an
independent third party. These rights shall not apply to the offer and sale of
individual residentialindividual lots to customers.
"Sales Contracts" was the meaning set forth in this section 1 under the
definition of "Acquired Assets".
"Security Interest" means any mortgage, pledge, deed of trust, lien,
encumbrance, charge, or other security interest, other than (a) mechanic's,
materialmen's, and similar liens, and (b) liens for Taxes not yet due and
payable or for Taxes that the taxpayer is contesting in good faith through
appropriate proceedings.
"Subsidiary" means any corporation, limited liability company or
partnership with respect to which a specified Person (or a Subsidiary thereof)
owns a majority of the common stock or has the power to vote or direct the
voting of sufficient securities to elect a majority of the directors.
"Survey" has the meaning set forth in section 7(i)5(i) below.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental, customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment, disability,
real property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Title Reports" has the meaning set forth in section 5(h).
"Third Party Claim" has the meaning set forth in section 9(d) herein.
"WHA" has the meaning set forth in the preface above.
"WHI" has the meaning set forth in the preface above.
"WHM" has the meaning set forth in the preface above.
2. Basic Transaction.
(a) Purchase and Sale of Assets. On and subject to the terms and
conditions of this Agreement, Buyer agrees to purchase from Xxxxxxx, and Xxxxxxx
agrees to sell, transfer, convey, and deliver to Buyer, all of the Acquired
Assets at the Closing for the consideration specified below in this 2.
section 2. Buyer shall specify prior to Closing, which assets will be purchased
by each of the entities constituting the Buyer.
(b) Assumption of Liabilities. On and subject to the terms and conditions
of this Agreement, Buyer agrees to assume and become responsible for all of the
Assumed Liabilities at the Closing. Buyer will not assume or have any
responsibility, however, with respect to any other obligation or Liability of
Xxxxxxx not included within the definition of Assumed Liabilities. At the
Closing, Xxxxxxx will be released from any further liability on the Assumed
Liabilities, except as otherwise provided herein.
(c) Contracts. On and subject to the terms and conditions of this
Agreement, the Parties agree to enter into, or , to the extent within the power
of the Parties, cause the appropriate entities to enter into, the Lot Option
Agreements as listed and outlined on Exhibit G at the Closing in the form agreed
to by the Parties and the appropriate entities, as applicable.
(d) Purchase Price. (i) Buyer agrees to pay to Xxxxxxx a net purchase
price (the "Purchase Price") which shall reflect the assumption of the Assumed
Liabilities but which shall be an amount which is calculated as[$2,200,000] plus
the difference between (A) the depreciated book value of the Acquired Assets as
of the Closing Date, and (B) the book value of the Assumed Liabilities as of the
Closingthe Net Worth of BHI as of the Effective Date. The Purchase Price will
be adjusted to the Closing Date as set forth in section 2(d)(iv) below to
determine the final Purchase Price.
(ii) An estimate of the Purchase Price (the "Estimated Purchase
Price") has been determined to be $3,884,745$577,441 based upon the unaudited
books and records of BHI as of December 31, 1998. This Estimated Purchase Price
will be adjusted for any changes resulting from an audit by independent public
accountants of the books and records of Xxxxxxx, which will be completed prior
to Closing.
Closing. (iii) Prior to or at Closing, Xxxxxxx will inform Buyer
of its best good faith estimate of the Operational Adjustment. On the Closing
Date, Buyer will transfer by wire in immediately available funds for the account
of Breland80%If, as a result of the changes resulting from such audit the
combined Purchase Price under this and the otherOther Agreement changes by more
than $500,000 from the Estimated Purchase Price, plus the estimated Operational
Adjustment if it isthen either Buyer or Xxxxxxx may cancel this Agreement prior
to Closing by notice to the other a positive number or less the estimated
Operational Adjustment if it is a negative xxxxxx.Xxxxx.
(iii) On the Closing Date, Buyer will transfer by wire in
immediately available funds for the account of Xxxxxxx 90% of the Estimated
Purchase Price.
(iv) On the Closing Date, Xxxxxxx will be required to have a Net Worth
equal to its Net Worth as of the Effective Date plus the amount of net income
after taxes earned by BHI subsequent to December 31, 1998. To the extent Net
Worth at Closing is determined to be below that amount,the amount determined in
accordance with the previous sentence, the Purchase Price will be adjusted lower
in an amount equal to the amount of such shortfall of Net Worth which will
determine the finalFinal Purchase Price. In order to determine the Net Worth of
BHI at Closing and the Final Purchase Price, following the Closing. Closing,
_____________________,XxXxxxx, Xxxxx and Associates, the independent public
accountants for Xxxxxxx, will certify to Buyer its determination of the final
Purchase Price and Operational Adjustment based upon financial statementsNet
Worth of BHI as of theEffective Date, which have been certified by independent
public accountants,Closing, and the Vice President of Finance of WHI will
certify to Xxxxxxx itsfinal determination of such Net the Purchase Price and
Operational Adjustment which shall be madeWorth in consultation with Deloitte &
Touche. To the extent there are differences, they will be promptly submitted
and resolved by Ernst & Young, an independent "Big Five" public accounting firm
not affiliated with any Party.Young whose fees shall be split evenly between the
Parties.
(e) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxxx in Madison,
Alabama, commencing at 9:00 a.m. local time on the later of April 13, 1999 or
the fifth business day following the satisfaction or waiver of all conditions to
the obligations of the Parties to consummate the transactions contemplated
hereby (other than conditions with respect to actions the respective Parties
will take at the Closing itself) or such other date as the Parties may mutually
determine (the "Closing Date"); provided, however, that the Closing Date shall
not be later than May 15, 1999.
(f) Deliveries at the Closing. At the Closing, (i) Xxxxxxx will deliver
to Buyer the various certificates, instruments, and documents specified in
section 6(a) herein; (ii) Buyer will deliver to Xxxxxxx the various
certificates, instruments, and documents specified in section 6(b) herein; (iii)
Xxxxxxx will deliver to Buyer and record among land and other records, as
necessary, good and sufficient general warranty deeds, assignments, certificates
of title and bills of sale so as to transfer or assign all of Xxxxxxx'x right,
title toand interest in the Acquired Assets to Buyer and such further
instruments of sale, transfer, conveyance, and assignment as Buyer and its
counsel may reasonably request, all in such form as they shall reasonably
approve and all at the sole cost and expense of Xxxxxxx; (iv) Buyer will execute
and deliver to Xxxxxxx an assumption in the form attached hereto as Exhibit A
and such other instruments of assumption as Xxxxxxx and its counsel may
reasonably request; (v) Buyer will deliver to Xxxxxxx by wire transfer in
immediately available funds 90% of the Estimated Purchase Price; and (vi) Buyer
shall receive possession and control of all other Acquired Assets.
(g) Prorations. At Closing, real property taxes, personal property taxes,
rent and utilities will be prorated between Buyer and Xxxxxxx as of the
ClosingEffective Date in the manner customarily used in real estate transactions
in the jurisdictions where the properties are located.
(h) Second Closing. A second closing shall occur at such time as the
finalFinal Purchase Price has been determined. Buyer shall deliver to Xxxxxxx
by wire transfer in immediately available funds the balance of the Final
Purchase Price plus interest at the rate of 6% per annum on any amount owing
over 30 days from the Closing Date commencing 30 days following the Closing
Date. If the Final Purchase Price is determined to be lower than the funds
previously remitted to Xxxxxxx pursuant to section 2(d)(iii), Xxxxxxx will
refund the difference to Buyer at the secondClosing.
InClosing. In the event pursuant to 2(c)section 2(d) there are
differences between Xxxxxxx and Buyer'sfinal determination of the Final Purchase
Price, Buyer will pay (by wire transfer of immediately available funds) all
undisputed amounts, and only amounts in dispute will be submitted to Ernst &
Young for determination.
(i) Allocation. The consideration for the Acquired Assets shall be
allocated by the Parties pursuant to Exhibit B attached hereto. Such allocation
and the form of the transaction as set forth in this Agreement and the other
documents and agreements referred to in this Agreement shall be used for
preparation and filing of Internal Revenue Service Form 8594 with respect to the
transaction contemplated hereby, and no Party hereto shall take or assert any
position inconsistent therewith. Prior to the Closing, the Parties shall
cooperate in connection with the preparation, execution and filing with the
Internal Revenue Service of all necessary information returns required by
Section 1060 of the Internal Revenue Code of 1986, as amended, relating to the
allocation of the consideration for the Acquired Assets.
(j) Employees. At the time of Closing, Buyer may, but shall be under no
obligation to, provide employment to employees of Xxxxxxx and establish
arrangements with independent contractors who serve as sales representatives.
Buyer shall have no obligation to employees or former employees of Xxxxxxx and
shall not adopt or become liable for any obligation under any Employee Benefit
Plan of Xxxxxxx. At the time of Closing, Xxxxxxx shall and LWB shall cause BHI
and Madison to assign to Buyer all interest in the Employee Agreements listed on
Schedule 15.
(k) Land Development Joint Xxxxxxx.Xxxxxxx Liability Xxxxxxx.Xxxxxxx For
a period of five (5) years following the Closing, LWB shall conduct all land
development activities (with only specified exceptions) for residential building
lots through a joint venture to be formed with WHI,limited liability company,
50% owned by LWB and 50% owned by WHI or its Affiliate, tentatively named
Century Land Company, L.L.C. ("Century"), which shall be organized and operated
in accordance with Exhibit H.F.
(l) Right of First Refusal on Future Developments.Developments For a
period of five (5) years following the Closing or within a reasonable time
thereafter, Buyer is hereby granted a Right of First Refusal to purchase all
residential building lots developed by LWB and his affiliates.Affiliates.
(m) Name Change. (m) Name Change BHI shall at the time of Closing or
within a reasonable time thereafter, change its name to no longer use the name
"Xxxxxxx" or a similar name.
(n) Lease of Office Xxxxx.Xxxxx At the time of Closing, Buyer shall have
the right to lease a portion of office space sufficient for the conduct of its
business from Xxxxxxx on a month to monthnet net basis at the rate of $_____ten
dollars ($10) per square foot per year in the building located at 000 Xxxxxxxx
Xxxxx Xxxxxxxxx, Xxxxxxx Xxxxxxx.
Madison, Alabama. Such lease shall be cancelable on 30 days advance notice.
(o) Intellectual Property At the time of Closing, LWB shall cause Madison
to license on an exclusive or nonexclusive basis as indicated on Schedule 3
certain Intellectual Property owned by Madison and BHI and Madison shall cancel
the Licensing Agreement between them for use of such property.
3. Representations and Warranties of Xxxxxxx. BHI and LWB jointly and
severally represent and warrant to Buyer that the statements contained in this
section 3 are true and correct as of the date of this Agreement and will be true
and correct as of the Closing Date as though then made and as though the Closing
Date were substituted for the Effective Date throughout this section 3, except
as set forth in Schedule 11 to the Disclosure Schedule accompanying this
Agreement.
(a) Organization of Xxxxxxx. BHI is a corporation, duly organized,
validly existing, and in good standing under the laws of Alabama. BHI is wholly
-owned by LWB and no other person owns or holds any equity interest in or
rights to acquire any equity interest in BHI. LWB is an individual,
resident in the state of Alabama.
(b) Authorization of Transaction. BHI and LWB have full power and
authority to execute and deliver this Agreement, and to perform their respective
obligations hereunder and to own or lease their respective properties as now
owned or leased and conduct their businesses as now being conducted. Without
limiting the generality of the foregoing, the board of directors and
stockholders of BHI have approved and all other necessary corporate or company
action has been taken to authorize the execution, delivery, and performance of
this Agreement by BHI. This Agreement constitutes the legal, valid and binding
obligation of BHI and LWB, enforceable in accordance with its terms and
conditions except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and by judicial application of general equitable principles.
(c) Noncontravention. Subject to obtaining the consents listed on Exhibit
C, and subject to any restriction on the transfer of licenses and permits,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby including the assignments, transfers and
assumptions, referred to in section 2 above, will (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
BHI or LWB is subject or any provision of the charter or bylaws of BHI or (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which BHI or LWB is a party or by which any
of them is bound or to which any of their assets (including the Acquired Assets)
is subject or result in the imposition of any Security Interest upon any of
their assets (including the Acquired Assets). Neither BHI nor LWB is required
to give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order for the
Parties to consummate in any material respect the transactions contemplated by
this Agreement (including the assignments, transfer and assumptions referred to
in section 2 above) except for filings among the various land records to
transfer the real property sold hereunder, and transfer of the titles of
vehicles sold hereunder, all as contemplated by this Agreement.
(d) Brokers' Fees. Xxxxxxx has no Liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which Buyer could become liable or obligated.
The foregoing is not intended to cover obligations to real estate brokers under
the Sales Contracts, which obligations shall be assumed by Buyer.
(e) Title to Assets. Subject to the Permitted Exceptions and any
restriction on the transfer of licenses and permits, and except as disclosed in
the Title Reports, Xxxxxxx has good and marketable title to, valid license to
use, or a valid leasehold interest in, the properties and assets that constitute
the Acquired Assets, free and clear of all Security Interests or restrictions on
transfer.
(f) Subsidiaries. BHI has no Subsidiaries. BrelandBHI does not own or
control directly or indirectly or have any direct or indirect capital stock
ownership or equity participation in any corporation, partnership, trust, joint
venture or other business association.
(g) Financial Statements. Attached hereto as Exhibit D are the unaudited
balance sheets of BHI, BP and BHM on a combined and combining basis at December
31, 1998 (collectively the "Financial Statements"): auditedwhich have been
prepared in accordance with generally accepted accounting principles, and as
adjusted, to exclude assets which are not Acquired Assets and to exclude
liabilities which are not Assumed Liabilities. The Financial StatementsPrior to
the Closing, Xxxxxxx will provide financial statements for BHI, BP and BHM in a
combined and combining basis and which shall include a balance sheet, statement
of income, changes in stockholders' equity and cash flow at and for the year
ended December 31, 1998 (including the notes thereto) which shall be audited and
certified by an independent public accountantDeloitte & Touche LLP to be correct
and complete in all material respects and present fairly the financial condition
of BHI, BP and BHM as of such dates and the results of operations of BHI, BP and
BHM for such periods, and have been prepared in accordance with generally
accepted accounting principles and are consistent with the books and records of
BHI, Xxxxxxx.
BP and BHM and as adjusted in the manner set forth in the first sentence of this
paragraph (the "Financial Statements"). The audited financial statements as
provided by Xxxxxxx shall replace the unaudited financial statements for all
purposes of this Agreement including the calculation of the Purchase Price in
section 2(d)(ii).
(h) Events Subsequent tofiscal Year End. Since December 31, 1998, there
has not been any material adverse change in the business, financial condition,
operations, results of operations, or to Xxxxxxx'x Knowledge the future
prospects of BHI. Without limiting the generality of the foregoing, since that
date:
(i) Xxxxxxx, has not sold, leased, transferred, or assigned any of
its assets, tangible or intangible, other than for a fair consideration in the
Ordinary Course of Business;
(ii) No party has, in any material way, accelerated, terminated,
modified, or cancelled any material agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) to which BHI is a
party or by which it is bound except for changes, modifications and
cancellations of Sales Contracts and other agreements in the Ordinary Course of
Business;
(iii) BHI has not imposed or permitted to exist any Security
Interest upon any of its assets, tangible or intangible;
(iv) BHI has not experienced any material damage, destruction, or
loss (whether or not covered by insurance) to its property; and
(v) There has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary Course of
Business involving Xxxxxxx.
(vi) PaidBHI has not paid or declared any dividend, redeemed any
capital stock or membership interest, or made any distribution to its
shareholders or holders of any membership interest.
(vii) EngagedBHI has not engaged in any transaction with any
Affiliate of Xxxxxxx.
(viii) BHI has not paid any bonus or made similar compensation
payments which were not accrued for prior to the Effective Date, or adjusted any
salary to a rate greater than that paid prior to the Effective Date.
(i) Undisclosed Liabilities. Xxxxxxx does not have any Liability (and to
its Knowledge there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
Xxxxxxx giving rise to any Liability) which would affect the Acquired Assets,
except for (i) Liabilities set forth in the Financial Statements (including any
notes thereto) and (ii) Liabilities which have arisen after the Effective Date
in the Ordinary Course of Business (none of which results from, arises out of,
relates to, is in the nature of, or was caused by any breach of contract, breach
of warranty, tort, infringement, or violation of law) and except on Schedule 11.
(j) Legal Compliance. Xxxxxxx, to its Knowledge,, has complied in all
material respects with all applicable laws (including rules, regulations, codes,
plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder)
of federal, state, and local governments (and all agencies thereof), and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against it alleging any failure so
to comply which would materially and adversely affect Buyer, Xxxxxxx, the
Acquired Assets or the Assumed Liabilities.
(k) Tax Matters. Xxxxxxx has filed with the appropriate governmental
agencies all required Tax Returns and paid all amounts required to have been
shown thereon. There is no Tax, which has not or will not be paid by Xxxxxxx or
its Affiliates whichas a result of, could give rise to any Liability which would
affect the Acquired Assets or which could otherwise be imposed upon Buyer.
(l) Real Property.
(i) Schedules 1A and 1B of the Disclosure Schedule (and as updated by
the Final Disclosure Schedule) lists and describes briefly all real property and
Improvements that Xxxxxxx owns.being conveyed to Buyer. With respect to each
parcel of owned real property which constitutes part of the Acquired Assets,
except as specifically set forth on the Disclosure Schedule or disclosed in the
Title Reports:
(A) Xxxxxxx has good and marketable title to the parcel of real
property, free and clear of any Security Interest, easement, covenant, or other
restriction, except for the Permitted Exceptions and except for security
interestsSecurity Interests relating to debt which will be paid off at Closing
or is an Assumed Liability;
(B) there are no pending, or to its Knowledge, threatened
condemnation proceedings, lawsuits, or administrative actions relating to the
property or other matters adversely affecting the current use, occupancy, or
value thereof;
(C) the legal description for the parcel contained in the deed
delivered at Closing and Title Report therefor describes such parcel fully and
adequately, the buildings and Improvements thereon are located within the
boundary lines of the described parcels of land, are not in violation of any
applicable setback requirements, zoning laws, and ordinancesrequirement, zoning
law, or ordinance and none of the properties or buildings or improvements
thereon are subject to "permitted non-conforming use" or "permitted
non-conforming structure" classifications, and do not encroach on any easement
which may burden the land, and the land does not serve any adjoining property
for any purpose inconsistent with the use of the land, and the property is not
located within any flood plain or subject to any similar type restriction for
which any permits or licenses necessary to the use thereof have not been
obtained;
(D) Xxxxxxx has received or applied for all material approvals
of governmental authorities including such licenses and permits as are required
at the stage of development of the particular parcel and such parcel has been
operated and maintained in accordance with applicable laws, rules, and
regulations;
(E) there are no leases, subleases, licenses, concessions, or
other agreements, written or oral, granting to any party or parties the right of
use or occupancy of any portion of the parcel of real property;
(F) there are no outstanding options or rights of first refusal
to purchase the parcel of real property, or any portion thereof or interest
therein;
(G) there are no parties, other than Xxxxxxx, in possession of
the parcel of real property;
(H) all subdivisions or communities under development are or can
be supplied with utilities including, electricity, water, telephone, sanitary
sewer or septic tank (in conformity with Health Department regulations), and
storm sewer, and other services necessary for the operation of such communities,
including, to the extent generally available in such area, gas, cable
television, all of which services are adequate in accordance with all applicable
laws, ordinances, rules, and regulations and are provided via public roads or
via permanent, irrevocable, appurtenant easements benefiting the parcel of real
property;
(I) each parcel of developed real property abuts on and has
direct vehicular access to a public road, or has access to a public road via a
permanent, irrevocable, appurtenant easement benefiting the parcel of real
property, and access to the property is provided by paved public right-of-way;
(J) all Improvements have been constructed in a workmanlike
fashion, capable of passing inspection by appropriate authorities and with
respect to completed homes, capable of being warranted to home purchasers under
the homebuilding warranties offered by Xxxxxxx;
(K) all material obligations of Xxxxxxx to homeowner associations
required by law or by covenant have been complied with;
(L) all payment and performance bonds or guaranties issued at the
request of any party including but not limited to any state, federal or
municipal authority for purposes of bonding any on-site or off-site work in
connection with the construction of residential structures have been obtained;
and
(M) to Xxxxxxx'x Knowledge all lots are buildable in the Ordinary
Course of Business, without extraordinary cost.
(N) no moritoriammoratorium is in effect and there has been no
loss of zoning or imposition of impact fees with respect to any land parcel.
(ii) Schedule 4 of the Disclosure Schedule lists and describes briefly
all leases with Xxxxxxx. Xxxxxxx has made available to Buyer correct and
complete copies of such leases as amended to the date. With respect to each
lease listed:
(A) the lease is legal, valid, binding, enforceable, and in full
force and effect and, subject to obtaining any required consents to assignment,
will continue to be so following assignment and transfer to Buyer;
(B) Xxxxxxx is not and to its Knowledge no other party is in
breach or default, and, to its Knowledge, no event has occurred which, with
notice or lapse of time, would constitute a breach or default or permit
termination, modification, or acceleration under such lease;
(C) Xxxxxxx has not and to its Knowledge no other party to the
ease has repudiated any provision thereof;
(D) to Xxxxxxx'x Knowledge there are no disputes, oral
agreements, or forbearance programs in effect as to such lease;
(E) Xxxxxxx has not assigned, transferred, conveyed, mortgaged,
deeded in trust, or encumbered any interest in the leasehold; and
(F) to Xxxxxxx'x Knowledge, all facilities leased thereunder have
received all approvals of governmental authorities (including licenses and
permits) required in connection with the operation thereof and have been
operated and maintained in accordance with applicable laws, rules, and
regulations and all facilities leased thereunder are supplied with utilities and
other services necessary for the operation of said facilities.
(m) Intellectual Property.
(i) Xxxxxxx or Madison owns or has a valid license to use all
Intellectual Property listed on Schedule 3 which constitutes all Intellectual
Property used in the operation of the business of BHI as presently conducted.
(ii) With respect to each item of Intellectual Property listed on
Schedule 3 of the Disclosure Schedule:
(A) Xxxxxxx or Madison possesses all right, title, and interest
in andor has a valid license to use the item, free and clear of any Security
Interest, license, or other restriction;
(B) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(C) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or to Xxxxxxx'x Knowledge is threatened
which challenges the legality, validity, enforceability, use, or ownership of
the item; and
(D) Xxxxxxx has never agreed to indemnify any Person for or
against any interference, infringement, misappropriation, or other conflict with
respect to the item.
(n) Tangible Personal Property. Schedule 2 of the Disclosure Schedule
lists as of the Effective Date the major items of office furniture, fixtures and
equipment, computer equipment, model home furniture and fixtures, automobiles,
trucks, construction and other equipment used in the conduct of the business of
BHI as presently conducted. Each item of personal property listed is conveyed
to Buyer in reasonably good operating"as is" condition(subject to normal wear
and tear),.
(o) Contracts. Schedules 5A, 5B, 7 and 15 of the Disclosure Schedule
lists and as updated by the Final Disclosure Schedule, will list the contracts
and other agreements to which Xxxxxxx is a party and which will be assumed by
Buyer. Other than as listed in such schedules there are no agreements necessary
or desirable for the operation of BHI which are not being assigned to and
assumed by Buyer. Xxxxxxx has made available to Buyer a correct and complete
copy of each Land Contract and Sales Contract and a written summary setting
forth the terms and conditions of each oral agreement referred to in Schedules
5A and 5B of the Disclosure Schedule. With respect to each Land Contract and
Sales Contract which is an Acquired Asset: (A) the agreement is legal, valid,
binding, enforceable, and in full force and effect; (B) subject to obtaining any
required consents to assignment as listed on Exhibit C, the agreement will
continue to be legal, valid, binding, enforceable, and in full force and effect
on identical terms following the consummation of the transactions contemplated
hereby (including the assignments and assumptions referred to in section 2
above) and is fully assignable by Xxxxxxx to Buyer; (C) no party is in material
breach or default, and no event has occurred which with notice or lapse of time
would constitute a material breach or default, or permit termination,
modification, or acceleration, under the agreement; (D) no party has repudiated
any provision of the agreement and (E) there has been no moritoriam,moratorium,
loss of zoning or imposition of impact fees with respect to any parcel which is
subject of a Land Contract.
(p) Litigation. Schedule 13 sets forth each instance in which Xxxxxxx
(i) is subject to any outstanding injunction, judgment, order, decree, ruling,
or charge or (ii) is a party or, is to its Knowledge threatened to be made a
party to any action, suit, proceeding, hearing, or investigation of, in, or
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator. None of the
actions, suits, proceedings, hearings, and investigations described could result
in any material adverse change in the business, financial condition, operations,
results of operations, or, to its Knowledge, future prospects of Xxxxxxx.
Xxxxxxx has no reason to believe that any such action, suit, proceeding,
hearing, or investigation may be brought or threatened against Buyer.
(q) Employees. Other than as set forth on Schedule 14, to its Knowledge
no executive, key employee, or group of employees has any plans to terminate
employment with BHI and no sales representative who is an independent contractor
plans to terminate its relationship with BP or BHM. Xxxxxxx is not a party to
or bound by any collective bargaining agreement, has not experienced any
strikes, grievances, claims of unfair labor practices, or other collective
bargaining disputes. Xxxxxxx has not committed any unfair labor practice. To
Xxxxxxx'x Knowledge, no organizational efforts are presently being made or
threatened by or on behalf of any labor union with respect to employees of
Xxxxxxx. Schedule 15 of the Disclosure Schedule lists all employees of BHI and
all sales representatives for BHI and specifies all who have employment
contracts with BHI, Xxxxxxx and/or Madison. Xxxxxxx has obtained the assignment
by BHI and Madison of all rights under the employment contracts to Buyer as
listed on Schedule 15.
(r) Employee Benefits.
Xxxxxxx has furnished to Buyer copies of each Employee Benefit Plan
that Xxxxxxx maintains or to which Xxxxxxx contributes or to which its employees
are subject.
(s) Environment, Health, and Safety.
(i) To its Knowledge, Xxxxxxx has complied in all material respects
with all Environmental, Health, and Safety Laws, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or notice
has been filed or commenced against it alleging any failure so to comply.
Without limiting the generality of the preceding sentence, Xxxxxxx to its
Knowledge, has obtained and been in material compliance with all of the terms
and conditions of all permits, licenses, and other authorizations which are
required under, and has materially complied with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules, and timetables which are contained in, all Environmental, Health, and
Safety Laws.
(ii) To its Knowledge, Xxxxxxx xxxxx Liability and has not
handled or disposed of any substance, arranged for the disposal of any
substance, exposed any employee or other individual to any substance or
condition, or owned or operated any property or facility in any manner that
could form the basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against Xxxxxxx
giving rise to any Liability for damage to any site, location, or body of water
(surface or subsurface), for any illness of or personal injury to any employee
or other individual, or for any reason under any Environmental, Health, and
Safety Law.
Law and to its Knowledge has no Liability in connection therewith.
(t) Third Party Consents. Exhibit C sets forth a list of all consents
necessary for the assignment and transfer to Buyer of the Acquired Assets at
Closing.
(u) Disclosure. The representations and warranties contained in this 3
do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained in this section 3 not misleading.
4. Representations and Warranties of Buyer. Buyer represents and warrants
to Xxxxxxx that the statements contained in this 4 are true and correct in all
material respects as of the date of this Agreement and will be true and correct
in all material respects as of the Closing Date (as though then made and as
though the Closing Date were substituted for the date of this Agreement
throughout this section 4).
(a) Organization of Buyer. WHA and WHM are limited liability companies
and WHI is a corporation duly organized, validly existing, and in good standing
under the laws of Alabama, Mississippi and Maryland, respectively.
(b) Authorization of Transaction. Buyer and WHI have full company or
corporate power and authority to execute and deliver this Agreement and to
perform their respective obligations hereunder. Without limiting the generality
of the foregoing, the members or board of directors of WHA, WHM and WHI have
approved and all other necessary corporate or company action has been taken to
authorize the execution, delivery and performance of this Agreement by WHA, WHM
and WHI. This Agreement constitutes the legal, valid and binding obligation of
WHA, WHM and WHI, enforceable in accordance with its terms and conditions,
except as such enforceability may be limited by bankruptcy, insolvency,
moratorium or similar laws affecting creditors' rights generally or by the
judicial application of general equitable principles.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
including the assignments and assumptions referred to in section 2 above, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Buyer is subject or any provision of
their charters, bylaws or organizational documents, or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license, instrument,
or other arrangement to which Buyer is a party or by which any of WHA, WHM or
WHI is bound or to which any of their assets is subject. Buyer does not need to
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement (including the
assignments and assumptions referred to in section 2 above).
(d) Brokers' Fees. Buyer has no Liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.payable to Xxxxxx Xxxxx The foregoing is not
intended to cover obligations to real estate brokers under the Sales Contracts.
5. Pre-Closing Covenants. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use its best efforts to take all
action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the Closing conditions set forth in
section 6 herein).
(b) Notices and Consents. Each of the Parties will give any notices to,
make any filings with, and use its best efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies in connection
with the matters referred to in section 3(c) and section 4(c) above and will use
its best efforts to obtain any necessary consent as listed in Exhibit C to the
assignment of any contracts, agreements, leases, licenses, permits, bonding and
authorizations.
(c) Operation of Business. Prior to Closing, Xxxxxxx will not engage in
any practice, take any action, or enter into any transaction outside the
Ordinary Course of Business. Without limiting the generality of the foregoing,
Xxxxxxx will not (i) undertake or enter into any material transaction without
the prior written approval of Buyer or (ii) otherwise engage in any practice,
take any action, or enter into any transaction which would result in a
distribution or transfer of a substantial portion of the assets of Xxxxxxx
provided, however, that Xxxxxxx may engage in the normal sale of homes and
purchases of materials and supplies without approval by Buyer.
(d) Preservation of Business. Xxxxxxx will use its best efforts to keep
its business and properties substantially intact, including its present
operations, physical facilities, working conditions, and relationships with
developers, lessors, subcontractors, suppliers, customers, and employees.
(e) Full Access. Xxxxxxx will permit representatives of Buyer to have
full access at all reasonable times and upon reasonable advance notice, and in a
manner so as not to interfere with the normal business operations of Xxxxxxx, to
all premises, properties, personnel, books, records (including Tax records),
contracts, and documents of or pertaining to Xxxxxxx and its business.
(f) Notice of Development; Change in Disclosure Schedules.
(i) Each Party will give the other Parties prompt written notice of
any material adverse development which could cause a breach of any of the
warranties and representations of the disclosing Party. In the event such
disclosure is reasonably deemed by the Party to whom the disclosure is made to
materially and adversely affect the transaction contemplated by this Agreement,
such Party may terminate this Agreement on written notice.
(ii) In the event a Party knows or has reason to believe that a
representation or warranty made by another Party is incorrect or untrue, such
Party shall so notify the other Parties in writing. A Party shall have no claim
against any other Party for breach of this Agreement (including any
representation or warranty), including indemnification, where such claim is
based on a representation or warranty of a Party which the claiming Party knew
was incorrect or untrue and did not so notify the Party against whom the claim
is made.
(iii) Two business days prior to Closing Xxxxxxx shall deliver to
Buyer a Final Disclosure Schedule updating the Disclosure Schedule of Xxxxxxx
attached hereto as of the Closing Date. The Final Disclosure Schedule may
involve updating of Schedules 1A, 1B, 5A, 5B, 7, 10, 11, 12 and 13 only for
matters occurring subsequent to the Effective Date. Such updated Disclosure
Schedule shall be substituted for the Disclosure Schedule at the date of this
Agreement for all purposes under this Agreement; provided, however, in the event
such Final Disclosure Schedule indicates matters which are materially and
adversely different than the matters in the original Disclosure Schedule, Buyer
may terminate the Agreement and in the event of such termination, the Parties
shall have no further obligation or liability to one another. In the event the
Final Disclosure Schedule reveals material changes with respect to any asset,
Buyer may elect to have such asset and any related liability excluded from being
an Acquired Asset or an Assumed Liability, provided, however, that if Buyer
elects to exclude any asset, the covenant not to compete set forth in section
8(f) shall not apply to activities with respect to such asset.
(g) Exclusivity. Xxxxxxx will not (i) solicit, initiate, or encourage
the submission of any proposal or offer from any Person relating to the
acquisition of any substantial portion of the assets of Xxxxxxx (including any
acquisition structured as a merger, consolidation, or share exchange) or (ii)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek the foregoing.
Xxxxxxx will notify Buyer immediately if any Person makes any proposal, offer,
inquiry, or contact with respect to any of the foregoing and will furnish Buyer
with copies of any written material in connection therewith.
(h) Title Reports. Xxxxxxx will obtain title insurance commitments or
binders (the "Title Reports"), at its sole expense, with respect to each parcel
of real estate that constitutes part of the Acquired Assets, on a policy form
reasonably acceptable to Buyer, issued by a title insurer satisfactory to Buyer
in an amount equal to the depreciated book value, which could insure title to
such real property to be in Buyer as of the Closing, subject only to exceptions
which are satisfactory to Buyer and which could be issued without survey
exceptions.
(i) Surveys. With respect to each parcel of real property as to which a
Title Report is to be procured pursuant to section 5(h) above (except where
platted),and which has not been platted, Xxxxxxx will procure, at its sole
expense, in preparation for the Closing a current survey of the real property
certified to Buyer, prepared by a licensed surveyor and conforming to current
ALTA Minimum Detail Requirements for Land Title Surveys, disclosing the location
of all improvements, easements, party walls, sidewalks, roadways, utility lines,
and other matters shown customarily on such surveys, and showing access
affirmatively to public streets and roads (the "Survey"). The Survey shall not
disclose any survey defect or encroachment from or onto the real property which
has not been cured or insured over prior to the Closing.
(j) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of the
other Parties; provided, however, that any Party may make any public disclosure
it believes in good faith is required by applicable law or any listing or
trading agreement concerning its publicly-traded securities in which case the
disclosing Party will use its reasonable best efforts to advise the other Party
prior to making the disclosure.
6. Conditions to Obligation to Close.
(a) Conditions to Obligation of Buyer. The obligation of Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) The representations and warranties set forth in section 3 above
shall be true and correct in all material respects at and as of the Closing
Date;
(ii) Xxxxxxx shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) Xxxxxxx shall have procured all of the third party consents
specified in Exhibit C, all of the Title Reports specified in section 5(h) above
and a title insurance policy in connection therewith shall be issued to Buyer,
and all of the Surveys specified in section 5(i) above;
(iv) No action, suit, or proceeding shall be pending or to Xxxxxxx'x
Knowledge threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement, (B)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, (C) affect adversely the right of Buyer to own, license
or lease the Acquired Assets or, to operate the former business of Xxxxxxx (and
no such injunction, judgment, order, decree, ruling, or charge shall be in
effect); Xxxxxxx shall have delivered to Buyer a certificate to the effect that
each of the conditions specified above in section 6(a)(i)-(iv) has been
satisfied in all respects;
(v) All applicable waiting periods (and any extensions thereof)
under HSR shall have expired or otherwise been terminated, no "second request"
for information under HSR shall have been received and Xxxxxxx and Buyer shall
have received all other authorizations, consents, and approvals of governments
and governmental agencies referred to in section 3(c) and section 4(c) above;
(vi) Buyer shall have received from counsel to Xxxxxxx an opinion
in form and substance as set forth in Exhibit E attached hereto, addressed to
Buyer, and dated as of the Closing Date;
(vii) Buyer shall have received audited balance sheet and statement
of income, changes in stockholders' equity and cash flow at and for the year
ended December 31, 1998 for BHI, BHM and BP on a combined basis, meeting the
requirements of Regulation S-X of the Securities and Exchange Commission all as
audited and certified by independent certified public accountants,Deloitte &
Touche LLP, and such financial statements shall not differ materially and
adversely from the Financial Statements for such period attached to this
Agreement as Exhibit D;
(viii) All actions to be taken by Xxxxxxx in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby (including but not limited to certified resolutions
approving the transaction, certificates of good standing, and certified
organizational documents) will be reasonably satisfactory in form and substance
to Buyer and its counsel; and
(ix) Buyer shall have received an affidavit from Xxxxxxx that it
is not a "foreign person" for withholding purposes under Sec. 1445 of the
Internal Revenue Code of 1986, as amended. Buyer may waive any condition
specified in this section 6(a) if it executes a writing so stating at or prior
to the Closing.
(x) WHI and LWB shall have entered into the organizational and
operating agreements for the land development limited liability company as
outlined on Exhibit F, and Buyer shall have entered into the Lot Option
Agreements with such company as listed on Exhibit G.
(b) Conditions to Obligation of Xxxxxxx. The obligation of Xxxxxxx to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) The representations and warranties set forth in section 4 above
shall be true and correct in all material respects at and as of the Closing
Date;
(ii) Buyer shall have performed and complied with all of its covenants
hereunder in all material respects through the Closing;
(iii) No action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling, or charge
shall be in effect);
(iv) Buyer shall have delivered to Xxxxxxx a certificate to the
effect that each of the conditions specified above in section 6(b)(i)-(iii) is
satisfied in all respects;
(v) All applicable waiting periods (and any extensions thereof)
under HSR shall have expired or otherwise been terminated and no second request
for information under HSR shall have been received and Xxxxxxx and Buyer shall
have received all other authorizations, consents, and approvals of governments
and governmental agencies referred to in section 3(c) and section 4(c) above;
(vi) All actions to be taken by Buyer in connection with consummation
of the transactions contemplated hereby and all certificates, opinions,
instruments, and other documents required to effect the transactions
contemplated hereby (including but not limited to certified resolutions
approving the transaction, certificates of good standing, and certified
organizational documents) will be reasonably satisfactory in form and substance
to Xxxxxxx. Xxxxxxx may waive any condition specified in this section 6(b) if
it executes a writing so stating at or prior to the Closing.
(vii) Xxxxxxx shall be released from all liabilities being assumed
or paid off by Buyer at Closing.
(viii) Xxxxxxx shall have received from counsel to Buyer an opinion
in form and substance as set forth in Exhibit H attached hereto, addressed to
Xxxxxxx, and dated the Closing Date.
(ix) WHI and LWB shall have entered into the organizational and
operating agreements for the land development limited liability company outlined
in Exhibit F and Buyer shall have entered into the Lot Option Agreements with
such company as listed on Exhibit G.
7. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(i) The Parties may terminate this Agreement by mutual written
consent at any time prior to the Closing;
(ii) Buyer or WHI may terminate this Agreement prior to Closing by
giving written notice to Xxxxxxx following review by Buyer of the Title
Reports, the Surveys, and the Final Disclosure Schedule, and other information
concerning the business and operations of Xxxxxxx if they areBuyer in its sole
discretion is not satisfied with the disclosures contained therein or the
information obtained.
(iii) Buyer or WHI may terminate this Agreement by giving written
notice to Xxxxxxx at any time prior to the Closing (A) in the event Xxxxxxx or
LWB has breached any representation, warranty, or covenant contained in this
Agreement in any material respect, Buyer has notified Xxxxxxx or LWB of the
breach, and the breach has continued without cure for a period of 14 days after
the notice of breach or (B) if the Closing shall not have occurred on or before
May 15, 1999, by reason of the failure of any condition precedent under 6(a)
hereof.
hereof (unless the failure results primarily from Buyer itself breaching any
representation, warranty or covenant contained in this Agreement).
(iv) Xxxxxxx or LWB may terminate this Agreement by giving written
notice to Buyer at any time prior to the Closing (A) in the event Buyer or WHI
has breached any representation, warranty, or covenant contained in this
Agreement in any material respect, Xxxxxxx has notified Buyer or WHI of the
breach, and the breach has continued without cure for a period of 14 days after
the notice of breach or (B) if the Closing shall not have occurred on or before
May 15, 1999, by reason of the failure of any condition precedent under section
6(b) hereof (unless the failure results primarily from Xxxxxxx itself breaching
any representation, warranty, or covenant contained in this Agreement).
(v) Buyer or Xxxxxxx may terminate this Agreement pursuant to
section2 (d)(ii).
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to section 7 (a)(i) or (ii)(a)(i), (ii) or (v) above, all rights and
obligations of the Parties hereunder shall terminate without any Liability of
any Party to any other Party. If any partyParty terminates pursuant to section
7 (a)(iii) or (iv) the other partyParty shall be liable for damages in
connection therewith.
therewith, provided, however, that if this Agreement is terminated because
Deloitte & Touche are unable to complete their audit of the financial statements
required by section 3(g) and 6(a)(vii) by May 15, 1999, the Parties shall have
no further obligation to each other hereunder. Termination of this Agreement
shall also constitute a termination of the Other Agreement and termination of
the Other Agreement shall constitute termination of this Agreement; both
terminations shall be considered to result from the same cause.
8. Post-Closing Covenants. The Parties agree as follows with respect to the
period following the Closing.
(a) General. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, each of
the Parties will take such further action (including the execution and delivery
of such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under section 9 below).
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand (other than by a
Party against another Party to this Agreement) in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving Xxxxxxx, each of the other Parties will cooperate with the contesting
or defending Party and its counsel in the contest or defense, make available its
personnel, and provide such testimony and access to its books and records as
shall be necessary in connection with the contest or defense, all at the sole
cost and expense of the contesting or defending Party (unless the contesting or
defending Party is entitled to indemnification therefor under 9 below).
(c) Transition. Xxxxxxx will not take any action that is designed or
intended to have the effect of discouraging any developer, lessor, licensor,
customer, supplier, or other business associate of Xxxxxxx from maintaining the
same business relationships with Buyer after the Closing as it maintained with
Xxxxxxx prior to the Closing. Xxxxxxx will refer all customer inquiries
relating to the business of Xxxxxxx to Buyer from and after the Closing.
(d) Confidentiality. Xxxxxxx will treat and hold as such all of the
Confidential Information, refrain from using any of the Confidential Information
except in connection with this Agreement, and deliver promptly to Buyer or
destroy, at the request and option of Buyer, all tangible embodiments (and all
copies) of the Confidential Information which are in its possession other than
that which Xxxxxxx is required by law to keep or is necessary in connection with
Tax matters. In the event that Xxxxxxx is requested or required by oral
question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process to
disclose any Confidential Information, Xxxxxxx will notify Buyer promptly of the
request or requirement so that Buyer may seek an appropriate protective order or
waive compliance with the provisions of this section 8(d). If, in the absence
of a protective order or the receipt of a waiver hereunder, Xxxxxxx is, on the
advice of counsel, compelled to disclose any Confidential Information or else
stand liable for contempt, then Xxxxxxx may disclose the Confidential
Information; provided, however, that the disclosing person shall use its
reasonable best efforts to obtain, at the reasonable request of Buyer, an order
or other assurance that confidential treatment will be accorded to such portion
of the Confidential Information required to be disclosed as Buyer shall
designate.
(e) Access to Records. After the Closing Date, Buyer shall preserve the
records, files and papers of Xxxxxxx which are transferred to it and shall, on
reasonable notice, allow Xxxxxxx and its representatives reasonable access
thereto and the right to make copies and extracts therefrom during normal
business hours for the preparation of such Tax returns as Xxxxxxx or its parent
companiesAffiliates may be required to file and the disposition of any claim
that may be made against it, or other reasonable purpose and Buyer shall use its
best efforts not to dispose of any item thereof without giving 90 days' prior
written notice to Xxxxxxx of its intention of disposing of same, specifying the
items to be disposed of in reasonable detail. Xxxxxxx shall, within the period
of 60 days from receipt of such notice, notify Buyer of Xxxxxxx'x desire to
retain one or more items to be disposed of. Buyer shall, upon receipt of such
notice from Xxxxxxx, deliver to Xxxxxxx, at Xxxxxxx'x expense including
reimbursement for personal and out-of-pocket expenses, the items requested by
Xxxxxxx. All records, files and papers reviewed or delivered pursuant to this
Section shall be held confidential. Notwithstanding the foregoing, Buyer shall
not be liable for any inadvertent disposal of any such records, files and
papers.
(f) Covenant Not to Compete. LWB shall make himself available for
consultation with Buyer as needed for one (1) year following the Closing
provided such consultation does not unreasonably interfere with other business
activities. ForIn view of the sale of goodwill by Xxxxxxx under this Agreement,
for a period of five years from and after the Closing Date, LWB will not engage
directly or indirectly through BHI, BHM, BP, or otherwise in the construction
and sale of single family homes in Alabama and Mississippi,the Alabama counties
ofall Alabama and Mississippi,Alabama counties, including specifically Madison,
Limestone, Jefferson, Morgan, Jefferson and Xxxxxx and theMobile, and Xxxxxxx,
and all Mississippi counties ofcounties, including specifically Jackson and
Xxxxxxxx, except that the foregoing restriction shall not apply (i) to the
development of land for single family homes in a joint venturelimited liability
company jointly owned with WHI as outlined in section 2(j),2(k), (ii) the
construction and/or sale of homes on scattered lots (owned by customers) by
Madison, or LWB's(iii) the development by LWB directly or through Affiliates of
rural properties (without availability of sanitary sewer systems)service other
than individual septic tanks) provided however, that Buyer shall have for five
years after Closing a Right of First Refusal to purchase all lots on such rural
properties upon completion of development. LWB will not use the name
"Xxxxxxx""Xxxxxxx," "BHI," or a variation thereof on any entity with which he
is associated and for two years after Closing will not hire directly or through
any business with which he is associated, including Madison, any person who has
been an employee of Xxxxxxx, BHI, WHA, WHM or WHI during the preceding twenty
four (24) months, except that LWB or an Affiliate may employ the persons listed
on Schedule 14. If the final judgment of a court of competent jurisdiction
declares that any term or provision of this section 8(f) is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
(g) Warranty Work on Recent Deliveries. Buyer will provide warranty
repair work to purchasers of single family homes from Xxxxxxx who purchased
their homes within one year prior to Effective Date for one year subsequent to
date of the home purchase. In the event that such warranty repair work
undertaken pursuant to this Agreement and the Other Agreement entails costs to
Buyer which exceed $35,000 in the aggregate, or relates to houses purchased more
than one (1) year prior to Closing,the Effective Date, Xxxxxxx will reimburse
Buyer for its costs in connection therewith; provided, however, Buyer shall xxxx
Xxxxxxx for the warranty repair work at cost without xxxx-up, and Buyer will not
charge for supervision, handyman labor and administrative support. Xxxxxxx
shall be responsible for all other warranty work on deliveries by Xxxxxxx prior
to the Effective Date. During the one year period after Closing, Buyer will
furnish Xxxxxxx with a monthly report on warranty repair work performed on
deliveries by Xxxxxxx. Schedule 1612 is a list of outstanding warranty claims
as of the Effective Date.
Date. Xxxxxxx reserves the right to enforce any claim for warranty work or
indemnification from a subcontractor or supplier notwithstanding any contract
assignment to Buyer contained herein.
(h) Marketing and Promotional Materials. Buyer will receive Xxxxxxx'x
existing supply of marketing and promotional materials, including brochures,
pamphlets and other printed materials.
(i) Use of Non-Transferred Assets. Following Closing, Xxxxxxx will
permit Buyer,to the extent permitted by law, to use licenses, permits, and
bonding in place with respect to the Acquired Assets, so that there is no
disruption in the homebuilding operations acquired or the development of land in
connection therewith.
therewith. Buyer will use its best efforts to become a licensed general
contractor in Alabama.
(j) Land Contracts. With respect to any Land Contract which cannot be
transferred to Buyer as contemplated by this Agreement, Xxxxxxx will pursuant to
the direction of Buyer take down lots under such contract on behalf of Buyer and
immediately transfer them to Buyer at cost.
(k) Madison Employees. For two years subsequent to Closing, Buyer will
not hire any employee who has been an employee of Madison subsequent to Closing.
LWB will cause any Madison employee who was previously an employee of Xxxxxxx to
fully train any person, holding a comparable position and function with WHA and
WHM.
9. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties.
All of the representations and warranties of Buyer and Xxxxxxx
contained in this Agreement shall survive the Closing, and continue in full
force and effect thereafter for a period of three years following Closing.
(b) Indemnification Provisions for Benefit of Buyer.
(i) In the event Xxxxxxx breaches, or in the event any third party
alleges facts that, if true, would mean Xxxxxxx has breached any of their
representations, warranties, and covenants contained in this Agreement, and,
provided that Buyer makes a written claim for indemnification against Xxxxxxx
pursuant to section 10(f) herein, then Xxxxxxx agrees to indemnify Buyer from
and against the entirety of any Adverse Consequences Buyer may suffer through
and after the date of the claim for indemnification including any Adverse
Consequences Buyer may suffer, arising out of, relating to, in the nature of, or
caused by the breach or the alleged breach.
(ii) Xxxxxxx agrees to indemnify Buyer from and against the entirety
of any Adverse Consequences Buyer may suffer resulting from, arising out of,
relating to, in the nature of, or caused by:
(A) any Liability of Xxxxxxx which is not an Assumed Liability;
(B) any Liability of Buyer arising by operation of law, including
under any bulk transfer law of any jurisdiction or under any common law doctrine
of de facto merger or successor liability, which is not an Assumed Liability; or
(C) any Liability of Xxxxxxx for the unpaid Taxes of Xxxxxxx,
LWB or any Person controlled by LWB as a transferee or successor, by contract,
or otherwise.
(D) any Liability resulting from the operation of a business by
Xxxxxxx prior to the Closing Date except for the Assumed Liabilities.
(iii) Xxxxxxx agrees to indemnify Buyer from and against the
entirety of any Adverse Consequences Buyer may suffer resulting from, arising
out of, relating to, in the nature of, or caused by claims for severance pay
arising as a result of an employee's status as an employee of Xxxxxxx or arising
under Employee Benefit Plans of Xxxxxxx, or applicable to employees or former
employees.
(c) Indemnification Provisions for Benefit of Xxxxxxx.
(i) In the event Buyer breaches, or in the event any third party
alleges facts that, if true, would mean Buyer has breached, any of its
representations, warranties, and covenants contained in this Agreement,
including those contained in the assumption attached as Exhibit A and, provided
that Xxxxxxx makes a written claim for indemnification against Buyer pursuant to
10(f) herein, then Buyer agrees to indemnify Xxxxxxx from and against the
entirety of any Adverse Consequences Xxxxxxx may suffer through and after the
date of the claim for indemnification including any Adverse Consequences Xxxxxxx
may suffer, arising out of, relating to, in the nature of, or caused by the
breach or the alleged breach.
(ii) Buyer agrees to indemnify Xxxxxxx from and against the entirety
of any Adverse Consequences Xxxxxxx may suffer resulting from, arising out of,
relating to, in the nature of, or caused by any Assumed Liability.
(iii) Any Liability for Taxes which because they relate to matters
occurring subsequent to Closing are rightfully the obligations of Buyer, except
for real estate taxes prorated under section 2(g).
(iv) Except as otherwise provided in this Agreement, any Liability
resulting from the operation of a business by Buyer or relating to the Acquired
Assets for occurrences subsequent to Closing.
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give rise
to a claim for indemnification against any other Party (the "Indemnifying
Party") under this section 9, then the Indemnified Party shall promptly notify
each Indemnifying Party thereof in writing; provided, however, that no delay on
the part of the Indemnified Party in notifying any Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder unless and then
solely to the extent the Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the Indemnifying
Party notifies the Indemnified Party in writing within 15 days after the
Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the Third
Party Claim, (B) the Indemnifying Party provides the Indemnified Party with
reasonable evidence that the Indemnifying Party will have the financial
resources to defend against the Third Party Claim and fulfill its
indemnification obligations hereunder, and (C) the Indemnifying Party conducts
the defense of the Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with section 9(d)(ii), (A) the Indemnified
Party may retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim, (B) the Indemnified Party
will not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnifying Party, not to be withheld unreasonably, and (C) the Indemnifying
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnified Party, not to be withheld unreasonably.
(iv) In the event any of the conditions in section 9(d)(ii) is or
becomes unsatisfied, however, (A) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim in any manner it reasonably may deem appropriate (and
the Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (B) the Indemnifying Parties will
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim including reasonable attorneys' fees and
expenses, and (C) the Indemnifying Parties will remain responsible for any
Adverse Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party Claim to the
fullest extent provided in this section 9.
(e) Determination of Adverse Consequences. The Parties shall take
into account the time cost of money in determining Adverse Consequences for
purposes of this section 9.
(f) Basket and Cap. An Indemnified Party shall have no right to
indemnification unless and until the aggregate of all claims of the Indemnified
Party pursuant to this Agreement and the Other Agreements exceeds $
_________Agreement exceeds One Hundred Thousand Dollars ($100,000) above any
applicable insurance coverage and further an Indemnifying Party's liability for
indemnification pursuant to this Agreement and the other AgreementsOther
Agreement shall in no event exceed $________ million.$3 million above any
applicable insurance coverage. The foregoing limitations on liability shall not
apply, however, to (a) Third Party claims arising in connection with homes
delivered by Xxxxxxx prior to Effective Date including any product liability or
warranty claims in connection therewith or (b) payment of the balance of the
Purchase Price pursuant to section 2(h). The foregoing shall not limit the
amount which may be recoverable pursuant to applicable insurance coverage.
(g) Insurance Coverage. It shall not be necessary for an Indemnified
Party to first attempt to recover any Adverse Consequences from a third party
before seeking indemnity hereunder. The Adverse Consequences which an
Indemnifying Party is liable to, for or on behalf of the Indemnified Party
pursuant to this (9),section 9, shall be reduced (including, without
limitation, retroactively) through subsequent repayment as described below by an
amount equal to any insurance proceeds including, but not limited to, proceeds
from title insurance, actually received by or on behalf of such Indemnified
Party relating to the Adverse Consequences. If an Indemnified Party shall have
received or shall have been paid on its behalf an indemnity payment in respect
of any Adverse Consequences and insurance proceeds in respect of such Adverse
Consequences are also received by the Indemnified Party, then such Indemnified
Party shall pay Indemnifying Party any excess amount received. The Indemnified
Party covenants and agrees to use all reasonable efforts to collect all such
sums as are available to it under its existing insurance policies including, but
not limited to, title insurance policies, which would be applicable to any such
Adverse Consequences. All insurance policies shall contain waiver of
subrogation endorsements.
(h) Contractor Indemnification. Xxxxxxx shall retain the right to be
indemnified by contractors and subcontractors as provided in section 8(g).
10. Miscellaneous.
(a) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(b) Entire Agreement. This Agreement (including instruments referred to
herein) and the Other Agreement constitutes the entire agreement between the
Parties and supersedes any prior understandings, agreements, or representations
by or between the Parties, written or oral, to the extent they related in any
way to the subject matter hereof. Except as specifically set forth herein,
Xxxxxxx makes no representation or warranty to Buyer, express or implied,
including any implied warranty of future profitability of its business.
(c) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party; provided, however, that Buyer may (i) assign any or all of
its rights and interests hereunder to one or more of its Affiliates and (ii)
designate one or more of its Affiliates to perform its obligations hereunder (in
any or all of which cases Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder).
(d) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(e) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if sent by
facsimile transmission and confirmed by United States mail or sent by reputable
overnight delivery service and addressed to the intended recipient as set forth
below:
If to Xxxxxxx to: Copy to:
000 Xxxxxxxx Xxxxx Xxxxxxxxx Xxxx X. Xxxx
Madison, Alabama 35758 Lanier, Ford, Xxxxxx & Xxxxx
Attention: Xxxxx Xxxxxxx X.X. Xxx 0000
Telephone: 000-000-0000 Xxxxxxxxxx, Xxxxxxx 00000
Fax: 000-000-0000 Fax: 000-000-0000
If to Buyer: Copy to:
Washington Homes, Inc. Washington Homes, Inc.
0000 Xxxxxxxxxx Xxxx 0000 Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000 Xxxxxxxx, Xxxxxxxx 00000
Attention: Geaton X. XxXxxxxxx, Xx. Attention: Xxxxxxxx X. Xxxxx
Telephone: 000-000-0000 Telephone: 000-000-0000
Fax: 000-000-0000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Alabama without giving effect
to any choice or conflict of law provision or rule whether of the State of
Alabama or any other jurisdiction that would cause the application of the laws
of any jurisdiction other than the State of Alabama.
(h) Amendments and Waivers. Except as specifically provided in this
Agreement, no amendment of any provision of this Agreement shall be valid unless
the same shall be in writing and signed by the parties. No waiver by any Party
of any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(i) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(j) Expenses. Buyer and Xxxxxxx will each bear their own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby. Xxxxxxx shall be responsible
for payment of the following in connection with the transactions contemplated by
the Agreement: (i) title report fees and title insurance premiums, (ii) survey
fees, (iii) transfer taxes, (iv) sales taxes, (v) recording fees, and (vi)
expense of environmental reports, and such fees and expenses shall not be
reflected in the determination of Net Worth at the Closing Date as set forth in
section 2(d)(iv) above. Buyer shall be responsible for payment of the following
in connection with the transactions contemplated by this Agreement: (i) audit
fees of Deloitte and Touche for auditing financial statements, and (ii) any fees
or costs with respect to licenses, permits, authorizations, bonds or the like
Buyer is required to obtain.
(k) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. Nothing in the
Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Disclosure Schedule identifies
the exception with particularity and describes the relevant facts in reasonable
detail or cross references detail.another schedule. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein (unless the representation or warranty
has to do with the existence of the document or other item itself). The Parties
intend that each representation, warranty, and covenant contained herein shall
have independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty or covenant.
(l) Incorporation of Exhibits and Disclosure Schedules. The Exhibits and
Disclosure Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
(m) Specific Performance. Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted inany
court of the United States or any state thereof having jurisdiction over the
Parties and the matter, accordance with section 10(o) below, in addition to any
other remedy to which it may be entitled, at law or in equity.
(n) Bulk Transfer Laws. Buyer acknowledges that Xxxxxxx will not comply
with the provisions of any bulk transfer laws of any jurisdiction in connection
with the transactions contemplated by this Agreement, and hereby waives such
compliance subject to the agreements of Xxxxxxx to indemnify Buyer pursuant of
section 9(b).
(o) Dispute Resolution. The Parties recognize that disputes may arise in
the future concerning the Agreement or any ancillary document executed in
connection with this Agreement (a "Dispute). Therefore, the parties shall
resolve any and all such Disputes of any nature whatsoever in the following
manner:
(i) Negotiation. In the event of a Dispute, the Parties shall
attempt to settle such Dispute through informal negotiations. To this effect,
they shall consult and negotiate with each other, in good faith and, recognizing
their mutual interests, attempt to reach a just and equitable solution
satisfactory to both Parties. Notwithstanding the foregoing, nothing in this
subsection 10(o)(i) shall preclude any Party from commencing arbitration at any
time.
(ii) Arbitration. Any Dispute which remains unresolved shall be
submitted to binding arbitration in accordance with Chapter 1, Title 9 of the
United States Code (United States Arbitration Act). Arbitration shall be
administered by the American Arbitration Association ("AAA") in accordance with
its Commercial Arbitration Rules as supplemented by its Supplementary Procedures
for Complex Cases.
(iii) Situs. The situs of the arbitration shall be Huntsville,
Alabama.Nashville, Tennessee.
(iv) Number and Qualification of Arbitrators. The arbitrators shall
be decided by a panel of three neutral arbitrators. AAA shall recommend
arbitrators from its commercial panel, giving due regard to the Parties' desire
to have arbitrators with experience in hearing commercial arbitrations. From
such AAA recommended list of arbitrators Xxxxxxx shall appoint an arbitrator and
the Buyer shall appoint an arbitrator. The two party-appointed arbitrators
shall jointly and promptly appoint the third arbitrator who must be an attorney
licenses to practice and in good standing in Alabama, who shall act as
chairperson of the panel. Recognizing the intent of the Parties to obtain
impartial, independent decisions and rulings, each arbitrator shall disclose to
the Parties and to the other Parties of the panel, any professional, familial or
social relationships, present or past, with any party or counsel. Any Party may
challenge in writing the appointment or continued service of any arbitrator for
lack of independence, partiality or any other case likely to impair such
arbitrator's ability to render a fair and equitable decision. Where such
challenge is made to an arbitrator, the AAA shall uphold or dismiss the
challenge. In the event the challenge is upheld, such arbitrator shall cease to
be a member of the panel. Any arbitrator may be removed upon agreement of the
Parties.
(v) Remedies. All decisions or rulings of the panel, as well as any
interim or final award, shall be pursuant to the majority vote of the three (3)
arbitrators comprising the panel. Except as limited in this Section 10(o), the
arbitrators shall have authority to award a remedy or relief that a court of
Alabama could award or grant, including, without limitation, specific
performance of any obligation created under the Agreement, the issuance of an
injunction, pre-judgment or post-judgment interest or the imposition of
sanctions for abuse or frustration of the arbitration process.
(vi) Fees and Expenses. The arbitrators shall have the discretion
and authority to award to the prevailing Party, if any, as determined by the
arbitrators, all of its costs and fees, in such amounts as the arbitrators deem
just. "Costs and Fees" means all reasonable pre-award expenses of the
arbitration, including the arbitrators' fees, administrative fees, travel
expenses, other out-of-pocket expenses, witness fees and attorneys'and witness
fees, except each Party shall be responsible for its own attorney's fees.
(vii) Finality and Enforcement. Any decision or award rendered by
the arbitrators shall be final, binding and conclusive. The Parties hereby
agree to submit to the personal jurisdiction of the courts of the States of
Maryland, Alabama, or Mississippi for the enforcement of the award. The
decision or award may also be enforced in any other court of competent
jurisdiction.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
WESTMINSTER HOMES OF ALABAMA, L.L.C.
By:____________________________________
Name: ___________________________
Title: ___________________________
WESTMINSTER HOMES OF MISSISSIPPI, L.L.C.
By:____________________________________
Name: ___________________________
Title: ___________________________
WASHINGTON HOMES, INC.
By:____________________________________
Name: ___________________________
Title: ___________________________
XXXXXXX HOMES, INC.
By:____________________________________
Name: ___________________________
Title: ___________________________
_______________________________________
XXXXX X. XXXXXXX
