Exhibit 10.3
EXECUTION COPY
AGREEMENT OF PURCHASE AND SALE OF REAL PROPERTY
BY AND AMONG
MERITAGE CORPORATION,
MTH-HOMES NEVADA, INC.,
PERMA-BILT, A NEVADA CORPORATION
AND
ZENITH NATIONAL INSURANCE CORP.
Dated October 7, 2002
AGREEMENT OF PURCHASE AND SALE OF REAL PROPERTY
This AGREEMENT OF PURCHASE AND SALE OF REAL PROPERTY (the
"Agreement") is made as of October 7, 2002, by and among MERITAGE
CORPORATION, a Maryland corporation ("Meritage or Parent"); MTH-HOMES
NEVADA, INC., an Arizona corporation ("Buyer"); PERMA-BILT, a Nevada
corporation ("Seller") and ZENITH NATIONAL INSURANCE CORP., a Delaware
corporation ("Zenith"). Collectively, Seller and Zenith are referred to
herein as "Selling Parties."
RECITALS
1. Pursuant to this Agreement, the Asset Agreement (as defined
below) and the Master Agreement (as defined below), Buyer will acquire the
Business.
2. The parties to this Agreement have concurrently entered into a
Master Transaction Agreement ("Master Agreement"), Agreement of Purchase and
Sale of Assets ("Asset Agreement"), and Indemnification Agreement, all
described in the Master Agreement. All capitalized terms contained herein
but not otherwise defined will have the meaning ascribed to them in the
Master Agreement.
In consideration of the covenants and mutual agreements set forth
herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in reliance upon the
representations and warranties contained herein, the parties agree as
follows:
ARTICLE I
PURCHASE AND SALE OF REAL PROPERTY
1.1 Agreement. This Agreement, together with the Master Agreement
and Indemnification Agreement, each incorporated herein by reference, will
constitute a binding contract on the part of Seller to sell and Buyer to
purchase the real property assets of the Business.
1.2 Real Property Assets to be Purchased. Upon the terms and
subject to the conditions set forth herein and in the Master Agreement, and
in reliance on the respective representations and warranties of the parties
contained in the Master Agreement, at the Closing, Seller agrees to sell,
convey, grant, assign, and transfer to Buyer and Buyer agrees to purchase,
assume, and acquire from Seller all of the Real Property Assets. The "Real
Property Assets" are the following, provided, however, that the Real
Property Assets shall not include any Excluded Assets:
A. All of Seller's right, title, and interest in and to all
real property assets, whether or not disclosed on the Final Closing
Balance Sheet, including all of Seller's right, title, and interest
in and to all (1) land, and buildings, fixtures, and improvements
located thereon or attached thereto; (2) lots under development and
finished lots, and all houses under development, completed homes,
and model homes (collectively, those assets under Clauses (1) and
(2) are the "Owned Real Property"); (3) purchase contracts, and
option agreements for the purchase of lots or land for development
and related escrow instructions and deposits (the "Contracted Real
Property"); and (4) to the extent transferable, easements,
franchises, licenses, permits, and rights-of-way appurtenant to or
otherwise benefiting, and all development rights, mineral rights,
water rights, utility capacity reservations, and other rights and
appurtenances affecting or pertaining to, the items described in
Clauses (1), (2) and (3) (collectively, with the Owned Real
Property and the Contracted Real Property, the "Real Property").
Schedule 4.2 as referenced in Section 4.2 sets forth the Reports or
a listing of the Reports in respect of the Real Property;
B. To the extent transferable, all of Seller's rights, title,
and interest in and to all rights and benefits in, to and under all
(1) the contracts referred to in Section 1.2A(3) above; (2) sale
agreements or other contracts and related escrow instructions and
escrow deposits relating to the sale of lots, homes or other
aspects of the Real Property; (3) contracts with suppliers,
materialmen, contractors, subcontractors and others furnishing any
work or materials to or for any of the Real Property; (4)
reimbursement and indemnity agreements pertaining to or of any
improvement, performance, payment, maintenance, fidelity, lien
release, or other bonds, undertakings or similar sureties; (5)
contracts with architects, designers, engineers, planners,
environmental consultants, surveyors, and other consultants; (6)
commission, listing and brokerage agreements; (7) office and
storage leases; (8) management service and construction supervisor
contracts or agreements; (9) model home furniture, fixtures and
equipment leases and any model home lease or sale agreements; and
(10) all rights under all contracts, agreements or understandings
to which Seller is a party or by which Seller or any of its assets
are bound that relate to Real Property Assets, excluding Excluded
Contracts (collectively, the "Real Property Acquired Contracts");
C. To the extent transferable, all of Seller's rights, title,
and interest in and to all (1) architectural, building, and
engineering designs, drawings, specifications, and plans; (2) all
proprietary information or rights including any and all plans, and
other project related information of prior and currently active
real estate projects; (3) copyrights, whether registered or not,
patents, trademarks, whether registered or not, and applications,
registrations, and renewals with respect thereto; (4) goodwill
associated therewith; and (5) all agreements or licenses relating
thereto. The foregoing is hereinafter referred to as the "Real
Property Intellectual Property;"
D. To the extent transferable, all of Seller's right, title,
and interest in and to all approvals, authorizations, certificates,
consents, franchises, licenses, permits, rights, variances,
subdivision maps, plans, entitlements, and waivers acquired, being
acquired, applied for, or used, and all agreements with all
environmental, feasibility, archeological, engineering, soils, and
other reports of tests or inspections in respect of the Real
Property, and any waivers, and approvals from or to any
Governmental Authority, department, board, commission, bureau or
any other entity or instrumentality, and other authorities in the
nature thereof, all as related to the Real Property; and
E. To the extent transferable, all of Seller's rights, title
and interest in and to any manufacturer's, subcontractor's,
supplier's, merchant's, repairmen's, or other third-party
warranties, guarantees, and service or replacement programs
relating to Assumed Construction Claims.
1.3 Purchase Price. The purchase price to be paid by Buyer for the
Real Property Assets will be as provided in Section 2.5 of the Master
Agreement.
1.4 Closing. Articles VII and VIII of the Master Agreement are
incorporated herein by reference as applicable.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER
2.1 Incorporation by Reference. The representations and warranties
contained in Article III of the Master Agreement are incorporated herein by
reference.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF SELLING PARTIES
3.1 Incorporation by Reference. The representations and warranties
contained in Article IV of the Master Agreement are incorporated herein by
reference.
ARTICLE IV
TITLE MATTERS ON EXISTING PROPERTY
4.1 Escrow. An escrow for the Real Property portion of transactions
described in the Master Agreement (the "Escrow") will be established with
Xxxxxxx Title Company in Las Vegas (the "Escrow Agent" or "Title Company"),
and Buyer and Seller shall share equally the cost thereof. The date that the
executed copies of this Agreement and the Master Agreement are delivered to
Escrow Agent is referred to in this Agreement as the "Opening Date." This
Agreement and the provisions of the Master Agreement referenced herein
constitute escrow instructions to Escrow Agent. If Escrow Agent, Seller or
Buyer requires the execution of additional escrow instructions, Seller and
Buyer agree to execute reasonable additional escrow instructions; provided,
however, those instructions will be construed as applying only to Escrow
Agent's engagement. If there are any conflicts between the terms of this
Agreement or the Master Agreement, respectively, and the terms of the
printed escrow instructions, the terms of this Agreement or the Master
Agreement will control. If there are any conflicts between the terms of the
Master Agreement, on the one hand, and the terms of this Agreement or any of
the other Transaction Agreements, on the other hand, the terms of the Master
Agreement will control.
4.2 Title Matters.
A. Title Report. Schedule 4.2 sets forth a copy of the
current preliminary title reports or a list thereof (individually,
a "Report," or collectively, the "Reports") for each parcel or
parcels of Owned Real Property. Schedule 4.2 also lists each survey
(the "Survey") in Seller's possession for the Real Property, a copy
of which has been provided to Buyer.
B. Title Supplements. If, prior to Closing, Escrow Agent
issues a supplemental Report showing additional exceptions to
title, other than exceptions arising in the ordinary course of the
passage of time or the conduct of business, or arising due to acts
or omissions of Parent or Buyer, or as set forth on any prior
Report (a "Title Report Supplement"), Parent will have 10 days (a
"Supplemental Title Review Period") from the date of receipt of the
Title Report Supplement and a copy of each document referred to in
the Title Report Supplement in which to give notice of
dissatisfaction as to any additional exceptions to Seller. If
Parent has not notified Seller of its dissatisfaction prior to the
close of business on the 10th day following Parent's receipt of the
Title Report Supplement, Parent and Buyer will be deemed to have
accepted title subject to such additional exceptions.
C. Approved Title Exceptions. Except for the list of title or
survey objections shown by Parent or Buyer on Schedule 4.2C (the
"Disapproved Title Exceptions"), the exceptions to title disclosed
in each Report, and in any Title Report Supplement accepted by
Parent pursuant to Section 4.2B, are referred to in this Agreement
as the "Approved Title Exceptions." Nothing contained herein or in
any other Transaction Agreement shall require any Selling Party to
cure any Disapproved Title Exceptions.
D. Title Policies. On the Closing Date, Seller will cause the
Title Company or its title insurer to provide Buyer with (or to be
irrevocably committed to provide to Buyer post-Closing) (i) a
standard coverage owner's title policy (a "Title Policy") for the
Owned Real Property, and (ii) a standard coverage owner's title
commitment (a "Title Commitment") for the Contracted Real Property,
in each case, issued by the Title Company or its title insurer,
effective as of the Closing, naming Buyer as insured, in the amount
of that portion of the Purchase Price allocated to such portion of
the Real Property in accordance with the Master Agreement, insuring
that the estate or interest described as the insured estate in each
Report is vested in Buyer (in the case of the Owned Real Property)
or is vested in the optionor or seller (in the case of the
Contracted Real Property). Selling Parties will pay the premium of
a standard coverage title policy for each Title Policy, and any
nominal cost for obtaining each Title Commitment. Parent and Buyer
will be responsible for the difference in premium between the
standard coverage policy and any extended coverage that Buyer
requires, as well as for the premium relating to any endorsements
that Buyer or Parent is able to obtain. The Title Policy will
include such endorsements issued by the Title Company as Parent may
reasonably require, and Buyer shall obtain such endorsements as may
be available from the Title Company without ALTA surveys at a
commercially reasonable price to insure over the matters described
in Section 4.13R of the Master Agreement, the cost of all of which
endorsements will be borne by Buyer. Seller will use reasonable
good faith efforts to satisfy all of the Title Company's customary
requirements for the issuance of the Title Policies (at Seller's
expense) and extended coverage and endorsements (at Buyer's
expense), other than those, if any, within Buyer's or Parent's
control.
E. Title Insurance Indemnity. Seller agrees to deliver or
cause Title Company to deliver to Buyer, prior to Closing, copies
of all indemnities, affidavits or other agreements or documents
executed and/or delivered or to be delivered by Selling Parties to
the Title Company to induce the Title Company (i) to delete any
exception to title shown in Schedule B to any Report, (ii) to
remove any policy conditions or stipulations or exclusions from
coverage as any may appear or be shown on the policy jacket or
Schedule B of any Title Policy, or (iii) to issue any other
endorsement or affirmative coverage of any nature with respect to
any such exception to title, conditions or stipulations to coverage
or any exclusions from coverage.
ARTICLE V
TITLE MATTERS AND OTHER MATTERS ON NEWLY ACQUIRED PROPERTIES
Section 5.1 of the Master Agreement is incorporated herein by
reference as applicable.
5.1 Additional Real Property. Selling Parties hereby covenant
and agree with Buyer and Parent that from the date hereof to the
earlier of (i) Closing Date or (ii) termination of this Agreement
Seller will not acquire or enter into any option or other agreement
to acquire any real property.
ARTICLE VI
GENERAL PROVISIONS
6.1 Notices. All notices, consents, and other communications
hereunder will be in writing and deemed to have been duly given
when (a) delivered by hand, (b) sent by telecopier (with receipt
confirmed), or (c) when received by the addressee, if sent by
Express Mail, Federal Express, or other express delivery service
(with delivery confirmation), in each case to the appropriate
addresses and telecopier numbers set forth below (or to such other
addresses and telecopier numbers as a party may designate as to
itself by notice to the other):
If to Buyer: Meritage Corporation
0000 Xxxxx Xxxxxxxxxx Xxxx,
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Chief Financial Officer
With a copy to: Xxxxx & Xxxxxx L.L.P.
Xxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
If to Selling Parties: Zenith National Insurance Corp.
00000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxx
With a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxx, Esq.
6.2 Counterparts. This Agreement may be executed in any number of
counterparts and each counterpart will constitute an original instrument,
but all such separate counterparts will constitute one and the same
agreement.
6.3 Governing Law. The validity, construction, and enforceability
of this Agreement will be governed in all respects by the laws of the State
of Nevada, without regard to its conflict of laws rules.
6.4 Assignment. This Agreement will not be assigned by operation of
law or otherwise, (a) except that Buyer may assign all or any portion of its
rights under this Agreement to any wholly owned subsidiary, but no such
assignment will relieve Buyer or its successor or Parent of its primary
liability for all obligations of Buyer and Parent, respectively, hereunder,
and (b) except that this Agreement may be assigned by operation of law to
any corporation or entity with or into which Buyer may be merged or
consolidated or to which Buyer transfers all or substantially all of its
assets, and such corporation or entity assumes this Agreement and all
obligations and undertakings of Buyer hereunder, but no such assignment will
relieve Buyer or its successor or Parent of their liability for the
respective obligations of Buyer and Parent, respectively, hereunder. Any
assignment in violation of the provisions of this Agreement will be null and
void.
6.5 Gender and Number. The masculine, feminine, or neuter pronouns
used herein will be interpreted without regard to gender, and the use of the
singular or plural will be deemed to include the other whenever the context
so requires.
6.6 Waiver of Provisions. The terms, covenants and conditions of
this Agreement may be waived only by a written instrument executed by the
party waiving compliance. The failure of any party at any time to require
performance of any provisions hereof will, in no manner, affect the right at
a later date to enforce the same. No waiver by any party of any condition,
or breach of any provision, term or covenant contained in this Agreement,
whether by conduct or otherwise, in any one or more instances, will be
deemed to be or construed as a further or continuing waiver of any such
condition or waiver of the breach of any other provision, term or covenant
of this Agreement.
6.7 Costs. Except as otherwise provided in the Master Agreement, if
any legal action or any arbitration or other proceeding is brought for the
enforcement of this Agreement, or because of an alleged dispute, breach,
default, or misrepresentation in connection with any of the provisions of
this Agreement, the successful or prevailing party or parties will be
entitled to recover reasonable attorneys' fees, accounting fees, and other
costs incurred in that action or proceeding, in addition to any other relief
to which it or they may be entitled.
6.8 Amendment. This Agreement may not be amended except by an
instrument in writing approved by the parties to this Agreement and signed
on behalf of each of the parties hereto.
6.9 Severability. If any term, provision, covenant, or restriction
of this Agreement is held by a court of competent jurisdiction to be
invalid, void, or unenforceable, the remainder of the terms, provisions,
covenants, and restrictions of this Agreement will remain in full force and
effect and will in no way be affected, impaired, or invalidated and the
court will modify this Agreement or, in the absence thereof, the parties
will negotiate in good faith to modify this Agreement to preserve each
party's anticipated benefits under this Agreement.
6.10 Binding Effect. Subject to the provisions and restrictions of
Section 6.4, the provisions of this Agreement are binding upon and will
inure to the benefit of the parties and their respective heirs, personal
representatives, successors and assigns.
6.11 Construction. References in this Agreement to "Sections" and
"Articles" are to the Sections and Articles in this Agreement, unless
otherwise noted.
6.12 Time Periods. Except as expressly provided for in this
Agreement, the time for performance of any obligation or taking any action
under this Agreement will be deemed to expire at 5:00 o'clock p.m. (Las
Vegas, Nevada time) on the last day of the applicable time period provided
for in this Agreement. If the time for the performance of any obligation or
taking any action under this Agreement expires on a Saturday, Sunday or
legal holiday, the time for performance or taking such action will be
extended to the next succeeding day which is not a Saturday, Sunday or legal
holiday.
6.13 Headings. The headings of this Agreement are for purposes of
reference only and will not limit or define the meaning of any provision of
this Agreement.
6.14 Entire Agreement. This Agreement, the other Transaction
Agreements and all certificates, schedules and other documents attached to
or deliverable under such agreements (collectively, the "Agreements")
constitute the entire agreement, including with respect to representations
and warranties, between the parties pertaining to the subject matter
contained in the Agreements. All prior and contemporaneous agreements,
representations and understandings of the parties, oral or written, are
superseded by and merged in the Agreements. No supplement, modification or
amendment of the Agreements will be binding unless in writing and executed
by the parties to the Agreements.
6.15 Dispute Resolution. All Disputes shall be resolved exclusively
in accordance with the Dispute Resolution Procedures attached as Exhibit D
to the Master Transaction Agreement. Notwithstanding the foregoing, nothing
herein will prohibit the parties from pursuing equitable remedies.
6.16 No Third Beneficiaries. Except as otherwise set forth in
Sections 1 and 2 of the Indemnification Agreement and except as specifically
provided in Section 6.4 of this Agreement and similar provisions in the
other Transaction Agreements, neither this Agreement nor any other
Transaction Agreement is intended to, and none of them shall, create any
rights in any other Person other than the parties to such agreements.
Without limiting the generality of the foregoing, nothing herein or in any
other Transaction Agreement is intended to create, nor shall it create, in
the Title Company or any title insurer any right of subrogation to any
rights of Parent or Buyer arising from any representation or warranty of any
Selling Party.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the date first written above by their respective officers
thereunder duly authorized.
MERITAGE CORPORATION,
a Maryland corporation
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Co-Chief Executive Officer
MTH-HOMES NEVADA, INC.,
an Arizona corporation
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Co-Chief Executive Officer
PERMA-BILT, a Nevada Corporation
By: /s/ Xxxxxx Xxxxxxxx
------------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: President and Chief Executive Officer
ZENITH NATIONAL INSURANCE CORP.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxx
------------------------------------------
Name: Xxxxxxx X. Xxx
Title: President
[Signature Page to Real Property Agreement]
