EARNOUT AGREEMENT
Exhibit 99.3
THIS EARNOUT AGREEMENT (this “Agreement”) is entered into as of October 25, 2010, by and among
Avatar Holdings Inc. (the “Issuer”), Avatar Properties Inc., a wholly owned subsidiary of the
Issuer (the “Purchaser”), JEN I, L.P., a Delaware limited partnership and Jen Residential LP, a
Delaware limited partnership (collectively, the “Recipients”, and collectively with the Issuer and
the Purchaser, the “Parties”). Capitalized terms used but not otherwise defined herein shall have
the meanings ascribed to them in the Master Transaction Agreement.
WHEREAS, the Issuer, the Purchaser and certain other parties (including parties affiliated
with the Recipients) are all parties to the Master Transaction Agreement, dated as of the date
hereof (the “Master Transaction Agreement”).
WHEREAS, in furtherance of the transactions contemplated by the Master Transaction Agreement,
the Parties desire to provide for the issuance to the Recipients, subject to the achievement of
certain agreed performance metrics as further detailed herein relating to the CantaMia Property, of
such number of shares of common stock of the Issuer (the “Issuer Stock”) as determined by the
calculation method hereinafter set forth, it being acknowledged and agreed that no such issuance
shall occur unless the Average Unit Contribution is greater than or equal to $87,603 and the
Project Contribution is greater than the Minimum Project Contribution Threshold as of the Milestone
Date, all as hereinafter defined.
NOW, THEREFORE, in consideration of the mutual promises set forth herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties
hereby agree as set forth in the foregoing recitals (which shall constitute in their entirety a
part of this Agreement) and as follows:
Section 1. Definitions.
“Actual Phase I Expenses” has the meaning set forth in Section 2(c).
“Agreement” has the meaning set forth in the Preamble.
“Arizona Operations” means the operations of the CantaMia Property, Xxxxxxxx Ranch Property,
Blossom Hills Property, PV-Sereno Property, PV-Golf Property and any other communities acquired by
JCH AZ after the date of this Agreement but excluding Rio Rico and Estancia and other Arizona
properties acquired by Purchaser, until such time as they are under the day to day management of
Xxxx Xxxxx III and/or owned by JCH AZ or any successor by merger or otherwise and/or such
properties are managed by Purchaser’s employees or representatives located in Arizona (e.g., such
assets are no longer managed from Florida or another location outside of Arizona).
“Average Unit Contribution” has the meaning set forth in Section 2(d)(ii).
“Budgeted Expenses” has the meaning set forth in Section 2(c).
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“Business Combination” has the meaning set forth in Section 4(b).
“CantaMia Property” means the CantaMia Land and XxxxxXxx Xxxxx 0 xxx Xxxxx 0 as defined in the
Master Transaction Agreement.
“Commencement Date” has the meaning set forth in Section 2(d)(i).
“Development Budget” means the budget relating to the development of the CantaMia Property
attached hereto as Exhibit A.
“Earnout Amount” has the meaning set forth in Section 2(b).
“Earnout Report” has the meaning set forth in Section 3(a).
“Earnout Shares” has the meaning set forth in Section 2(a).
“Excess Expense” has the meaning set forth in Section 2(c).
“Exchange Cap” has the meaning set forth in Section 5.
“Exchangeable Property” has the meaning set forth in Section 4(b)(i).
“Final Earnout Report” has the meaning set forth in Section 3(a).
“Issue Price” means $19.04.
“Issuer” has the meaning set forth in the Preamble.
“Issuer Stock” has the meaning set forth in the Recitals.
“Land Development Expenditures” means the all costs and expenses associated with the land and
land development contemplated by the Development Budget.
“Master Transaction Agreement” has the meaning set forth in the Recitals.
“Maximum Earnout” has the meaning set forth in Section 2(b).
“Maximum Issuable Shares” has the meaning set forth in Section 5.
“Maximum Project Contribution Threshold” has the meaning set forth in Section
2(b)(ii).
“Milestone Date” has the meaning set forth in Section 2(a).
“Minimum Average Unit Contribution Threshold” has the meaning set forth in Section
2(a).
“Minimum Project Contribution Threshold” has the meaning set forth in Section 2(a).
“Net Cash Flow” has the meaning set forth in Section 2(d)(i).
“Parties” has the meaning set forth in the Preamble.
“Project Contribution” has the meaning set forth in Section 2(d)(i).
“Purchaser” has the meaning set forth in the Preamble.
“Rate Change Threshold” has the meaning set forth in Section 2(b)(i).
“Recipients” has the meaning set forth in the Preamble.
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“Registration Rights Agreement” has the meaning set forth in the Master Transaction Agreement.
“Special Accountant” has the meaning set forth in Section 3(b).
“SG&A” has the meaning set forth in Section 2(d)(i).
Section 2. The Earnout.
(a) In the event that the Average Unit Contribution relating to the CantaMia Property as of
December 31, 2014 (the “Milestone Date”) equals to or is greater than $87,603 (the “Minimum Average
Unit Contribution Threshold”) and the Project Contribution relating to the CantaMia
Property as of the Milestone Date exceeds $59 million (subject to prior adjustment pursuant to
Section 2(c), the “Minimum Project Contribution Threshold”), the Recipients shall be
entitled to receive, and the Issuer shall issue to the Recipients, such number of shares of Issuer
Stock equal to the Earnout Amount (as defined below), divided by the Issue Price (the “Earnout
Shares”).
(b) The earnout amount (the “Earnout Amount”) shall be determined as follows, subject to a
maximum Earnout Amount (the “Maximum Earnout”) of $8 million:
(i) In the event that the Project Contribution equals $64 million (subject to prior
adjustment pursuant to Section 2(c), the “Rate Change Threshold”), the Earnout
Amount shall be $2 million;
(ii) In the event that the Project Contribution equals or exceeds $72 million (subject
to prior adjustment pursuant to Section 2(c), the “Maximum Project Contribution
Threshold”), the Earnout Amount shall be $8 million; and
(iii) In the event that the Project Contribution exceeds the Minimum Project
Contribution Threshold and is less than the Rate Change Threshold, the Earnout Amount shall
be equal to the product of (a) $2 million multiplied by (b) a fraction, the numerator of
which is the amount by which the Project Contribution exceeds the Minimum Project
Contribution Threshold, and the denominator of which is $5 million.
(iv) In the event that the Project Contribution exceeds the Rate Change Threshold and
is less than the Maximum Project Contribution Threshold, the Earnout Amount shall be equal
to the sum of (a) $2 million plus (b) the product of (i) $6 million multiplied by (ii) a
fraction, the numerator of which is the amount by which the Project Contribution exceeds
the Rate Change Threshold (it being agreed that for this purpose, in no event shall the
numerator be in excess of $8 million), and the denominator of which is $8 million.
For illustrative purposes only (assuming no adjustments have been made pursuant to Section
2(c)):
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(i) In the event that the Project Contribution equals to $61 million, the Earnout Amount
would be:
(A) $2 million X (B)
|
$(61 million — 59 million) | = $800,000 | ||
| $5 million |
(ii) In the event that the Project Contribution equals to $71 million, the Earnout Amount
would be:
(A) $2 million + (B) (i) $6 million X
|
$(71 million — 64 million) | = $7,250,000 | ||
| $8 million |
(c) In the event that the actual expenses for the period commencing on the Commencement Date
through the Milestone Date relating to the first phase of development of the CantaMia Property (the
“Actual Phase I Expenses”) exceed the estimate for such amounts set forth in the Development Budget
(the “Budgeted Expenses”) by more than $500,000 (other than as a result of any changes to the
Development Budget by or on behalf of the Purchaser to the scope of work or the timing of any
expenditures relating to the CantaMia Property, including modifications of any annual HOA
assessments outlined in Exhibit A, and excluding any expenditures relating to the vertical
construction of homes on the CantaMia Property) (the amount of such excess over $500,000, the
“Excess Expense”), each of the Minimum Project Contribution Threshold, the Maximum Project
Contribution Threshold and the Rate Change Threshold shall be deemed to be increased by the amount
of such Excess Expense.
For illustrative purposes only, if the amount of Budgeted Expenses is $21.5 million and the
amount of Actual Phase I Expenses is determined to be $22.5 million, then the Minimum Project
Contribution Threshold, the Maximum Project Contribution Threshold and the Rate Change Threshold
hereunder shall be adjusted to be $59.5 million, $72.5 million and $64.5 million, respectively.
(d) For the purposes of this Agreement:
(i) “Project Contribution” means the cumulative net cash flow in respect of the
closing of home sales, construction and operating activities (including sales and
marketing) relating to the CantaMia Property (“Net Cash Flow”), without taking into account
any Land Development Expenditures, for the period commencing on October 1, 2010 (the
“Commencement Date”) and ending on the Milestone Date.
For the purposes of this Agreement, Net Cash Flow will be determined in accordance with
GAAP, subject to the following paragraph, and based on the general categories reflected on
the model attached as Exhibit B hereto, it being acknowledged and agreed that the
categories listed on Exhibit B are intended to
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be an illustrative and not a comprehensive list of such general categories, subject to
adjustments to: (1) exclude expenditures relating to the construction of homes on the
CantaMia Property, the sale of which is not closed prior to the Milestone Date, (2) include
any amounts paid or accrued after the Milestone Date and relating to closing of home sales
on the CantaMia Property which closings occurred prior to the Milestone Date, and (3) be
reduced by an additional amount equal to one percent of the gross revenue relating to
closed home sales with unexpired warranties as of the Milestone Date (which amount shall
include the amounts in respect of the base home price, and any premiums and options, less
any incentives paid), as warranty and other reserves for home sales on the CantaMia
Property closed prior to the Milestone Date.
For the purpose of calculating the cash outflows included in Net Cash Flow, selling,
general and administrative expenses (“SG&A”) included in the calculation shall: (a) include
the direct expenditures or costs, as set forth on Exhibit C-1, associated with the
sales of homes on the CantaMia Property that are closed prior to the Milestone Date, (b)
include all of the divisional SG&A directly allocable to the CantaMia Property as set forth
in Exhibit C-2A, following the Commencement Date but prior to the Milestone Date,
and (c) include an allocation of the other components of divisional SG&A, as set forth in
Exhibit C-2B, from the homebuilding operations of the Arizona Operations following
the Commencement Date but prior to the Milestone Date, multiplied (in the case of clause
(c) only) by a fraction the numerator of which is the number of actual closings prior to
the Milestone Date relating to the CantaMia Property and the denominator of which is the
total number of closings of home sales by the Arizona Operations prior to the Milestone
Date; provided that the aggregate amount allocated to the CantaMia Property
pursuant to clauses (b) and (c) shall be no less than $2,000,000, and (d) exclude all other
corporate overhead allocations other than costs incurred at the corporate level of the
Purchaser for services that directly benefit the CantaMia Property and that replace, reduce
or are otherwise in substitution for, services of the type provided or made available to
the CantaMia Property prior to the Closing (including, without limitation, insurance that
Purchaser can reasonably demonstrate to management are corporate level expenses directly
allocable to the CantaMia Property).
Notwithstanding the foregoing in this Section 2(d)(i), the Project Contribution in
respect of the CantaMia Property shall be deemed to be $0 if the Average Unit Contribution
is less than Minimum Average Unit Contribution Threshold as of the Milestone Date.
(ii) “Average Unit Contribution,” means the result of (A) the Project Contribution
divided by (B) the aggregate number of closed home sales on the CantaMia Property closed
during the period commencing on the Commencement Date and ending on the Milestone Date.
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Section 3. Determination of Earnout Amount and Issuance of Earnout Shares.
(a) Not later than 30 days following the filing by the Issuer with the Securities and
Exchange Commission of its periodic report on Form 10-K beginning after its fiscal year
ended December 31, 2010 and through the filing of its periodic report on Form 10-K for its
fiscal year ended December 31,2014, the Purchaser shall cause to be prepared and delivered
to the Recipients a report (the “Earnout Report”) setting forth (1) whether there is any
Earnout Amount, (2) its computation of the Earnout Amount (if any), (3) its calculation of
the Project Contribution, (4) its calculation of the Average Unit Contribution, (5) its
calculation of the Excess Amount, if any, (6) its calculation of Net Cash Flow, and (7) all
supporting calculations and documentation with respect thereto. Unless any of the
Recipients notifies the Purchaser within 60 days after receipt of the Earnout Report
relating to its fiscal year ended December 31, 2014 (the “Final Earnout Report”) that it
objects to the computation relating to the determination of any of the foregoing items in
the Final Earnout Report, the Final Earnout Report shall be binding and conclusive for the
purposes of this Agreement. The Recipients shall have reasonable access to the books and
records and any accountant’s work papers relating to any of the foregoing during regular
business hours, to verify the computations set forth above and in the Final Earnout Report.
(b) If any of the Recipients notifies the Purchaser in writing within 60 days after
the receipt of the Final Earnout Report that it objects to the computation or applicability
of any of the items included in the Final Earnout Report, the Final Earnout Report shall be
discussed in good faith by the Parties, with a view towards reaching agreement on the
Earnout Amount. If the Parties are unable to reach agreement within 30 days after such
notification, the determination of the Earnout Amount and the resolution of any disputed
items in respect thereof shall be submitted to a mutually agreeable third party independent
auditor (the “Special Accountant”) for determination, whose determination of the Earnout
Amount shall be binding and conclusive on the Parties (provided that if the Parties
are unable to agree upon third party auditors, the Parties to the dispute shall each select
one third party independent auditor, and the independent auditors so selected shall choose
the Special Accountant). The fees, costs and expenses of the Special Accountant’s review
and report shall be shared equally among the Purchaser, on the one hand, and the
Recipients, on the other hand.
(c) On such date as the Purchaser determines in its sole discretion, within 10
Business Days following the final determination of the Earnout Amount, the Issuer shall
issue to the Recipients in the aggregate such number of Earnout Shares as determined in
accordance with Section 2(a), subject to any decrease of the Earnout Amount in
order to offset against any indemnification obligations then owed by Sellers (as defined in
the Master Transaction Agreement) pursuant to Section 8.4(d) of the Master
Transaction Agreement. Upon and following such issuance, the Earnout Shares shall be
subject to the
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terms and provisions of the Registration Rights Agreement and shall constitute
“Registrable Securities” thereunder.
(d) The Issuer agrees that the Earnout Shares will, upon issuance in accordance
herewith, be duly authorized, validly issued, fully paid and nonassessable.
Section 4. Adjustment of Earnout Shares. The number of Earnout Shares issuable to
the Recipients shall be subject to adjustment from time to time as follows:
(a) Subdivision or Combination of Issuer Stock. If the Issuer at any time following
the Closing Date subdivides (by any split, dividend or otherwise) its outstanding Issuer Stock into
a greater number of shares or pays a stock dividend or otherwise distributes shares of Issuer Stock
to the holders of Issuer Stock, the Issue Price shall be proportionately decreased (and as a result
the number of Earnout Shares issuable upon the determination of the Earnout Amount, if any, shall
be proportionately increased). If the Issuer at any time combines (by reverse split, combination
or otherwise) its outstanding Issuer Stock into a smaller number of shares, the Issue Price shall
be proportionately increased (and as a result the number of Earnout Shares issuable upon the
determination of the Earnout Amount, if any, shall be proportionately decreased) (any of the
foregoing subdivisions or consolidations of Issuer Stock, together with any Business Combination
(as defined below), an “Adjustment Event”).
(b) Consolidation, Merger or Sale. Any consolidation or merger of the Issuer with or
into another person or entity, or any capital reorganization of the Issuer or any reclassification
of the Issuer Stock pursuant to which, in each case, the holders of Issuer Stock are entitled to
receive stock, securities, assets or other property (“Exchangeable Property”) with respect to or in
exchange for Issuer Stock is referred to herein as “Business Combination.” Prior to the
consummation of any Business Combination, the Issuer shall make appropriate provision to ensure
that the Recipients shall have the right to receive (to the extent the Recipients are ultimately
entitled to Earnout Shares hereunder), in substitution for such Earnout Shares, the same per share
consideration in Exchangeable Property as may be issued or paid to other holders of Issuer Stock in
connection with such Business Combination with respect to any Earnout Shares that the Recipients
would be entitled to receive but for such Business Combination. The Issuer shall not effect any
such Business Combination unless the successor entity (if other than the Issuer) resulting from the
Business Combination assumes, by operation of law or otherwise, the obligations of the Issuer
hereunder; it being assumed that neither the Issuer nor the successor entity, as the case may be,
shall be required to deliver any Exchangeable Property to Recipients until after the Milestone Date
(and then only to the extent Earnout Shares would otherwise be required to be distributed to the
Recipients pursuant to Section 2(a)) as set forth in this Agreement.
(c) Notification to Recipients. Within 10 days after any Adjustment Event, the Issuer
or the successor entity, as applicable, shall give written notice thereof to Recipients, which
notice shall set forth the maximum number of shares of Issuer Stock
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issuable in respect of the Maximum Earnout or the maximum amount of Exchangeable Property
payable in respect of the Earnout Shares relating to the Maximum Earnout before and after such
Adjustment Event, and the facts and figures upon which such calculations are based, it being agreed
that no Earnout Shares or Exchangeable Property shall be issuable or payable to Recipients
hereunder prior to the Milestone Date.
(d) Certain Other Actions. The Issuer (i) shall take all reasonable actions as may be
necessary under the Delaware General Corporation Law in order that the Issuer may validly and
legally issue fully paid and nonassessable shares of Issuer Stock to the Recipients at such time as
required under this Agreement and (ii) shall at all times reserve and keep available out of its
authorized but unissued shares, a sufficient number of shares of Issuer Stock to permit the
issuance of Earnout Shares, as may be adjusted hereunder.
Section 5. Alternative Payment. In the event that the Earnout Shares are in the
aggregate a number of shares of Issuer Stock that would exceed the number of shares that the Issuer
may issue under the applicable rules and regulations of NASDAQ or such other securities exchange on
which the Issuer Stock then trades (the “Exchange Cap”), then, upon determination of the Earnout
Amount in accordance with Sections 2 and 3, the Issuer shall issue to Recipient such maximum number
of shares as would not cause the aggregate number of Issuer’s issued and outstanding shares to
exceed the Exchange Cap (the “Maximum Issuable Shares”) and pay Recipients an amount in cash equal
to the product of (a) the average of the 20 prior trading day closing prices of the Issuer and (b)
the difference between the Earnout Shares and the Maximum Issuable Shares; provided that
the foregoing shall not apply if the Issuer obtains the approval of its shareholders as required by
the applicable rules and regulations of the NASDAQ or other applicable exchange for issuances of
shares of common stock in excess of the Exchange Cap.
Section 6. Operating Authority. Each of the Recipients acknowledges and agrees that
immediately following the Closing under the Master Transaction Agreement, the Purchaser shall have
the ultimate authority and control over the operation and administration of the CantaMia Property
and shall have the sole discretion to take such actions as it deems necessary or appropriate,
including, without limitation, directing the project managers of the CantaMia Property to approve
or revise any applicable budgets (whether as a result of changes in the local, regional or national
economic environment, the current or prospective operating performance of the CantaMia Property or
otherwise). Each of the Recipients further acknowledges and agrees that the exercise of authority
and control by the Purchaser pursuant to this Section 6 shall not create or increase any
liability or obligation to the Recipients, notwithstanding that such exercise of authority and
control may have an adverse impact on the Earnout Amount and the full or partial payment thereof;
provided that to the extent reasonably practicable, the Purchaser advises the Recipients in
advance of any material increase to the amount of any budgeted expenses or expenditures
contemplated by any budgets relating to the CantaMia Property and gives due consideration to the
bona fide concerns of the Recipients in advance of making any material revisions to any applicable
budgets; provided, further, however, that
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the Issuer will not take any action primarily for the purpose of avoiding any earnout payments
required hereunder.
Section 7. General Provisions.
(a) Amendments and Waivers. Except as otherwise provided herein, the provisions of
this Agreement may be amended, modified or waived only with the prior written consent of the
Parties. The failure or delay of any Party to enforce any of the provisions of this Agreement
shall in no way be construed as a waiver of such provisions and shall not affect the right of such
Party thereafter to enforce each and every provision of this Agreement in accordance with its
terms. A waiver or consent to or of any breach or default by any Party in the performance by that
Party of his, her or its obligations under this Agreement shall not be deemed to be a consent or
waiver to or of any other breach or default in the performance by that Party of the same or any
other obligations of that Party under this Agreement.
(b) Remedies. The Parties shall be entitled to enforce their rights under this
Agreement specifically (without posting a bond or other security), to recover damages caused by
reason of any breach of any provision of this Agreement and to exercise all other rights existing
in their favor. The Parties agree and acknowledge that a breach of this Agreement would cause
irreparable harm and money damages would not be an adequate remedy for any such breach and that, in
addition to any other rights and remedies existing hereunder, any Party shall be entitled to
specific performance and/or other injunctive relief from any court of law or equity of competent
jurisdiction (without posting any bond or other security) in order to enforce or prevent violation
of the provisions of this Agreement.
(c) Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be prohibited, invalid, illegal or unenforceable in any respect under
any applicable law or regulation in any jurisdiction, such prohibition, invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of any other provision
of this Agreement in such jurisdiction or in any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such prohibited, invalid, illegal or
unenforceable provision had never been contained herein.
(d) Entire Agreement. Except as otherwise provided herein, this Agreement and the
Master Transaction Agreement contains the complete agreement and understanding among the parties
hereto with respect to the subject matter hereof and supersedes and preempts any prior
understandings, agreements or representations by or among the parties hereto, written or oral,
which may have related to the subject matter hereof in any way. In the event there is a conflict
with this Agreement and the Master Transaction Agreement, this Agreement shall control.
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(e) Assignment; Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit and be enforceable by the Issuer and its successors
and assigns and the other Parties and their successors and permitted assigns (whether so expressed
or not). Nothing in this Agreement shall create or be deemed to create any third party beneficiary
rights in any person or entity that is not a party to this Agreement. There shall be no assignment
of this Agreement or of any rights or obligations hereunder by any Party by operation of law or
otherwise without the prior written consent of the other Parties hereto, and any attempted
assignment without the required consents shall be void. Notwithstanding the foregoing, the Issuer
and Purchaser shall be permitted, subject to compliance with Section 4(b), to assign this
Agreement to any Person with which it engages in a Business Combination.
(f) Notices. All notices and other communications required or permitted under this
Agreement shall be in writing and shall be deemed given when delivered personally, or shall be
deemed given on the next Business Day after deposit with a guaranteed overnight delivery or courier
service, to the parties at the following addresses (or such other addresses as shall be changed by
a like notice), except as expressly provided in this Agreement:
If to the Issuer, to:
Avatar Holdings Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxx Xxxxxx, XX 00000
Attention: General Counsel
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxx Xxxxxx, XX 00000
Attention: General Counsel
With a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Simeon Gold
Xxx-Xxxx Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Simeon Gold
Xxx-Xxxx Xxxxxxx
and to:
Akerman Senterfitt LLP
Xxx Xxxxxxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxxxx
Xxx Xxxxxxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxxxx
If to any Recipient, to:
c/o JEN Partners, LLC
000 Xxxxxxx Xxxxxx
Xxxxx 000
000 Xxxxxxx Xxxxxx
Xxxxx 000
00
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx
Attention: Xxxxxx Xxxxxxxxx
With a copy to:
Xxxxx Day
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
(g) Business Days. If any time period for giving notice or taking action hereunder
expires on a day that is not a Business Day, the time period shall automatically be extended to the
Business Day immediately following such Saturday, Sunday or legal holiday.
(h) Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and performed in such state,
without regard to the principles of conflict of laws thereof (other than Section 5-1401 of the New
York General Obligations Law).
(i) Submission to Jurisdiction; Consent to Service of Process; Waiver of Jury Trial.
(i) The parties hereto hereby irrevocably submit to the exclusive jurisdiction of any federal
or state court located within the State of New York over any dispute arising out of or relating to
this Agreement and each party hereby irrevocably agrees that all claims in respect of such dispute
or any suit, action or proceeding related thereto may be heard and determined in such courts. The
parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection
which they may now or hereafter have to the laying of venue of any such dispute brought in such
court or any defense of inconvenient forum for the maintenance of such dispute. Each of the
parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
(ii) Each of the parties hereto hereby consents to process being served by any party to this
Agreement in any suit, action or proceeding by delivery of a copy thereof in accordance with the
provisions of Section 7(f).
(iii) THE PARTIES TO THIS AGREEMENT EACH HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (i) ARISING UNDER
THIS AGREEMENT OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT,
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EQUITY, OR OTHERWISE. THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREES AND CONSENTS THAT ANY
SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND
THAT THE PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
(j) Descriptive Headings; Interpretation. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this Agreement. The use of the
word “including” in this Agreement shall be by way of example rather than by limitation.
(k) No Strict Construction. The language used in this Agreement shall be deemed to be
the language chosen by the parties hereto to express their mutual intent, and no rule of strict
construction shall be applied against any party.
(l) Counterparts. This Agreement may be executed in multiple counterparts, any one of
which need not contain the signature of more than one party, but a complete set of which shall
constitute one and the same agreement.
(m) Electronic Delivery. This Agreement, the agreements referred to herein, and each
other agreement or instrument entered into in connection herewith or therewith or contemplated
hereby or thereby, and any amendments hereto or thereto, to the extent executed and delivered by
means of a photographic, photostatic, facsimile, pdf or similar reproduction of such signed writing
using a facsimile machine or electronic mail shall be treated in all manner and respects as an
original agreement or instrument and shall be considered to have the same binding legal effect as
if it were the original signed version thereof delivered in person. At the request of any party
hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute
original forms thereof and deliver them to all other parties. No party hereto or to any such
agreement or instrument shall raise the use of a facsimile machine or electronic mail to deliver a
signature or the fact that any signature or agreement or instrument was transmitted or communicated
through the use of a facsimile machine or electronic mail as a defense to the formation or
enforceability of a contract and each such party forever waives any such defense.
(n) Further Assurances. In connection with this Agreement and the transactions
contemplated hereby, the Parties shall execute and deliver any additional documents and instruments
and perform any additional acts that may be necessary or appropriate to effectuate and perform the
provisions of this Agreement and the transactions contemplated hereby.
[Signature Page Follows.]
12
IN WITNESS WHEREOF, the Parties have executed this Earnout Agreement as of the date first
written above.
| AVATAR HOLDINGS INC. |
||||
| By: | /s/ Xxxxxxxx Xxxxxxx Xxxxxxxx | |||
| Name: | Xxxxxxxx Xxxxxxx Xxxxxxxx | |||
| Title: | Executive Vice President | |||
| AVATAR PROPERTIES INC. |
||||
| By: | /s/ Xxxxxxxx Xxxxxxx Xxxxxxxx | |||
| Name: | Xxxxxxxx Xxxxxxx Xxxxxxxx | |||
| Title: | Executive Vice President | |||
| JEN I, L.P. By: JEN Partners, LLC, Its Manager |
||||
| By: | /s/ Xxxxxx X. Xxxxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxxxx | |||
| Title: | Managing Member | |||
| JEN RESIDENTIAL LP By: JEN Partners, LLC, Its Manager |
||||
| By: | /s/ Xxxxxx X. Xxxxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxxxx | |||
| Title: | Managing Member | |||
