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EXHIBIT 2.1 (c)
AMENDMENT TO STOCK PURCHASE AGREEMENT
This Amendment to Stock Purchase Agreement ("Agreement"), is made as of
December 15, 1999 by and among XXXXX XXXX, an individual ("Seller"), WESTBROOKE
COMMUNITIES, INC., a Florida corporation, WESTBROOKE AT WEST LAKE, INC., a
Florida corporation, WESTBROOKE AT WINSTON TRAILS, INC., a Florida corporation,
WESTBROOKE AT PEMBROKE PINES, INC., a Florida corporation, and WESTBROOKE AT OAK
RIDGE, INC., a Florida corporation (each of such companies individually referred
to as an "Acquired Company" and collectively referred to as the "Acquired
Companies"), XXXXXX X. XXXXXXXXXX, XXXXXXX X. XXXXXXX and XXXXX XXXXXXX (each of
such three individuals individually referred to as a "Key Employee" and
collectively referred to as the "Key Employees"), THE WESTBROOKE PARTNERSHIP, a
Florida general partnership (the "Partnership"), PACIFIC USA HOLDINGS CORP., a
Texas corporation ("Pacific USA"), NEWMARK HOMES CORP., a Nevada corporation
("Newmark") and WESTBROOKE ACQUISITION CORP., a Florida corporation ("Buyer").
RECITALS
WHEREAS, the parties hereto entered into that certain Stock Purchase
Agreement and Addendum thereto ("Stock Purchase Agreement"), both dated as of
January 15, 1998 (capitalized terms used herein unless otherwise defined shall
have the meaning provided in the Stock Purchase Agreement);
WHEREAS, Pacific USA is engaged in confidential discussions with
Technical Olympic S.A. ("Olympic") to sell Olympic all of its interest in
Newmark (such sale the, "Olympic Transaction");
WHEREAS, as a result of the pending consummation of the Olympic
Transaction certain issues have arisen between the Seller and Buyer and Newmark
with respect to the amount, and the timing of the payment, of certain payments
due to Seller under the Stock Purchase Agreement;
WHEREAS, Seller, Buyer and Newmark desire to resolve the issues
pertaining to the amount and the timing of the payments due to the Seller;
WHEREAS, each of the Key Employees owns a KE Partnership Interest which
each Key Employee has the option to cause Buyer to acquire, but each Key
Employee is not obligated to sell his or her KE Partnership Interest to Buyer;
WHEREAS, Buyer and Newmark desire to acquire from each Key Employee the
KE Partnership Interest owned by such Key Employee, and each Key Employee
desires to sell his or her KE Partnership Interest to Buyer and Newmark, subject
to the terms and conditions hereof;
WHEREAS, in connection with the Olympic Transaction, Buyer and Newmark
desire that Seller and Key Employees enter into amendments to their respective
employment
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agreements and noncompetition agreements and in consideration for the premises
set forth herein Seller and Key Employees have agreed to enter into such
amendments; and
WHEREAS, Seller and Buyer desire to modify the survival period set
forth in Section 11.5 of the Stock Purchase Agreement.
WHEREAS, the parties desire to amend the Stock Purchase Agreement.
NOW, THEREFORE, for and in consideration of the premises and other good
and valuable consideration, the receipt and sufficient of which are hereby
acknowledged, the parties agree as follows:
1. Sale and Transfer of KE Partnership Interests; Closing.
1.1 Cancellation of Option. The Option provided in Section
10.1 of the Stock Purchase Agreement is canceled. Notwithstanding the foregoing,
the provisions of Section 10.3 (b) and (c) and Sections 10.4, 10.5 and 10.6
shall continue to apply to the sale and transfer of the KE Partnership Interests
described in this Section 1.
1.2 KE Partnership Interests. At Closing, each of the Key
Employees will sell and transfer his or her KE Partnership Interest to Buyer and
Buyer will purchase from each Key Employee his or her KE Partnership Interest.
1.3 Purchase Price. The purchase price for each of the KE
Partnership Interests ("KE Purchase Price") shall be $354,586 and the KE
Additional Consideration, as hereinafter defined. The KE Purchase Price other
than the KE Additional Consideration shall be paid on February 15, 2000.
1.4 KE Additional Consideration. In addition to the
consideration paid at the Closing, Buyer and Newmark jointly and severally
agree, subject to the contingencies set forth below, to pay to each Key Employee
additional consideration (herein called the "KE Additional Consideration") as
set forth below. Each Key Employee's right to receive KE Additional
Consideration shall be contingent, and shall be based upon the Net Income of the
Subject Entities for a period of five (5) fiscal years commencing as of January
1, 1998 (individually, a "Calculation Year" and, collectively, the "Calculation
Years"). KE Additional Consideration shall be calculated and payable as follows:
(a) For the Calculation Year commencing January 1, 1999 and
ending December 31, 1999:
(i) the amount equal to 1.98% of the Net Income for
such Calculation Year; plus
(ii) $250,000 if Cumulative Net Income has been
achieved for such Calculation Year or if the last sentence in Section
2.2 (b)(1) of the Stock Purchase Agreement applies to such Calculation
Year;
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(iii) this amount shall be paid on or before 10 days
following completion of the audit for the Calculation Year, but in no
event later than April 30, 2000.
(b) For the Calculation Year commencing January 1, 2000 and
ending December 31, 2000:
(i) the amount equal to 2.50% of the Net Income
for such Calculation Year; plus
(ii) $250,000 if Cumulative Net Income has been
achieved for such Calculation Year or if the
last sentence in Section 2.2(b)(1) applies
to such Calculation Year.
(iii) this amount shall be paid on or before 10
days following completion of the audit for
the Calculation Year, but in no event later
than April 30, 2001.
(c) For the Calculation Year commencing January 1, 2001 and
ending December 31, 2001:
(i) the amount equal to 2.50% of the Net Income
for such Calculation Year; plus
(ii) $250,000 if Cumulative Net Income has been
achieved for such Calculation Year or if the
last sentence in Section 2.2(b)(1) applies
to such Calculation Year.
(iii) this amount shall be paid on or before 10
days following completion of the audit for
the Calculation Year, but in no event later
than April 30, 2002.
(d) For the Calculation Year commencing January 1, 2002 and
ending December 31, 2002:
(i) the amount equal to 2.50% of the Net Income
for such Calculation Year.
(ii) this amount shall be paid on or before 10
days following completion of the audit for
the Calculation Year, but in no event later
than April 30, 2003.
1.5 Escrow. At such time (whether at the end of a fiscal year
or during a fiscal year), but in no event prior to January 1, 2002, as the
Cumulative Net Income of the Subject Entities equals or exceeds $15,040,000,
Buyer shall escrow with a third party acceptable to the Key Employees the
estimated amount payable under Section 1.4(d)(i). Such escrow shall be
established pursuant to the KE Escrow Agreement in the form attached hereto as
Exhibit 1.5.
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2. Seller's Additional Consideration.
2.1 Cancellation of Section 2.2(b). Section 2.2(b) is hereby
deleted in its entirety as it applies to rights and obligations between the
Seller and Buyer, Newmark and Pacific USA. To the extent that Section 2.2(b) is
required for purposes of such Calculation Year or other provisions of the
Agreement or this Amendment it shall remain in effect.
2.2 Payment of Additional Consideration by Newmark and Buyer.
Buyer and Newmark shall pay Seller $4,600,000. This amount shall be paid by the
delivery by Newmark of a promissory note in the form attached hereto as Exhibit
2.2.
3. Seller Replacement Note. The Replacement Note required to be
delivered pursuant to Section 6.B.2 of the Stock Purchase Agreement in the form
attached hereto as Exhibit 3 shall be delivered at the Closing. Xxxx shall
return the original Non-Negotiable Promissory Note to Buyer at the Closing.
4. Definition of Net Income. Section 2.2(b)(3) shall be deleted in its
entirety and the following shall be substituted in place thereof:
(3) "Net Income" means, for any period in respect of
which the amount thereof shall be determined, the
aggregate of the net income for such period (taken as
a cumulative whole), before federal and state income
taxes, determined in accordance with GAAP, and based
on audited financial statements, modified as follows:
(a) an amount equal to any and all interest paid by
Buyer on the Promissory Notes, specifically excluding
the Seller Negotiable Promissory Note, shall be
deducted in accordance with GAAP from the Net Income
of the Subject Entities; and (b) to the extent
included in the consolidated net income of the
Subject Entities, Net Income shall exclude the effect
of the following items:
(i) any item of extraordinary gain or loss
characterized as such in accordance with GAAP;
(ii) any additional depreciation, amortization or
other cash or non-cash expense or income resulting
from the write-up or write-down of any asset and any
amortization of goodwill or other intangibles
relating to the acquisition of the Acquired Companies
by the Buyer or the Subject Entities by Olympic or
any other entity;
(iii) any expenses, including interest, documentary
stamp taxes, lender's attorneys' fees and origination
fees, incurred in connection with (x) the financing
of the acquisition of the Acquired Companies by
Buyer, Olympic or any other entity, including,
without limitation, the Take-Out Loan, the Take-Out
LOC, and the Promissory Notes, the Adjustment Note,
if any, the Seller Replacement Note and the
Substitute LOC (subject to the provisions of Section
3.11(f) and Subsection (z) hereof), (y) any loans
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provided to the Subject Entities by Newmark, Buyer,
Olympic or any affiliate of Newmark, Buyer or
Olympic, and (z) fees and expenses of accountants,
and other professionals (excluding attorneys)
incurred by the Acquired Companies or the Partnership
in connection with the Contemplated Transactions and
the Olympic Transaction.
(iv) any gain, loss, income or expense resulting from
a change in the Subject Entities' accounting methods,
principles or practices after the Closing or the
closing of the Olympic Transaction;
(v) any expenses directly or indirectly incurred in
connection with the acquisition of the Acquired
Companies by the Buyer, Olympic or any other entity;
(vi) any income, expenses, gain or loss relating to
Xxxxx Companies;
(vii) any overhead cost related to Xxxxx Companies,
such costs to be allocated consistent with the
Partnership's current methodology of allocating costs
to jobs; and
(viii) any corporate assessments or charges from
Pacific USA, Olympic, any of their affiliates or any
other entity which acquires control of Newmark other
than the reimbursement of any out-of-pocket expenses
incurred by Pacific USA, Olympic, any affiliate of
Pacific USA, Olympic or any other entity which
acquires control of Newmark that the Subject Entities
would incur on a stand-alone basis (considering
competitive market rates at which the same could be
obtained from third party sources), and under no
circumstances will any such reimbursement exceed, on
a pro rata basis, the corresponding amounts charged
to any other affiliate of Pacific USA, Olympic or any
other entity that acquires Newmark.
(ix) in the event dividends or other distributions
(other than for debt service payments on account of
indebtedness to Buyer or a Related party of Buyer)
are paid or distributed to Buyer by any of the
Subject Entities (excluding however, Tax payments
payable by the Subject Entities under any Tax Sharing
Agreement with any party), Net Income shall include
deemed interest income on such funds equivalent to 9%
per annum.
If any Subject Entity is merged or consolidated with
or liquidated into another Person during the
Calculation Years, Net Income shall be determined
only with respect to the such Subject Entity's
operations, as such operations were conducted prior
to such merger, consolidation or liquidation.
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5. Section 11.5 shall be deleted in its entirety and the following
shall be substituted in place thereof:
11.5 Time Limitations
Seller and Key Employees will have no liability (for
indemnification or otherwise) with respect to any
representation or warranty, or covenant or obligation to be
performed and complied with in or prior to the Closing Date,
unless on or before the earlier of (a) two (2) years following
the Closing Date or (b) the date of consummation of the
Olympic Transaction (time being of the essence) Buyer notifies
Seller of a claim specifying the factual basis of that claim
in reasonable detail to the extent then known by Buyer. Buyer
will have no liability (for indemnification or otherwise) with
respect to any representation or warranty, or covenant or
obligation to be performed and complied with on or prior to
the Closing Date, unless on or before the earlier of (a) two
(2) years following the Closing Date or (b) the date of
consummation of the Olympic Transaction Seller notifies Buyer
of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by Seller.
6. Closing; Closing Obligations.
6.1 Closing. The closing (the "Closing") of the transactions
provided for in this Agreement will take place through an escrow closing
pursuant to the terms of the Closing Escrow Agreement ("Closing Escrow
Agreement").
6.2 Closing Obligations. At the Closing:
(a) Seller will deliver or cause to be delivered to
White & Case LLP which shall act as the escrow agent ("Escrow Agent") under the
Closing Escrow Agreement:
(i) an amended and restated employment
agreement in the form of Exhibit
6.2(a)(i), executed by Seller (the
"Seller Employment Agreement") to
be delivered to Westbrooke
Communities, Inc.;
(ii) an amended and restated
noncompetition agreement in the
form of Exhibit 6.2(a)(ii),
executed by Seller (the "Seller
Noncompetition Agreement") to be
delivered to Westbrooke
Communities, Inc.; and
(iii) the Non-Negotiable Promissory Note.
(b) Each of the Key Employees will deliver to the
Escrow Agent:
(i) an amended and restated employment
agreement in the form of Exhibit
6.2(b)(i), executed by each Key
Employee
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(collectively, the "KE Employment
Agreements") to be delivered to
Westbrooke Communities, Inc.;
(ii) amended and restated noncompetition
agreements in the form of Exhibit
6.2(b)(ii), executed by the Key
Employees (collectively, the "KE
Competition Agreements") to be
delivered to Westbrooke
Communities, Inc.;
(iii) an Assignment of Partnership
Interest in the form of Exhibit
6.2(b)(iii); and
(iv) The KE Escrow Agreement (KE
Additional Consideration) executed
by each of the key Employees.
(c) Buyer and Newmark, as the case may be, will
deliver or cause to be delivered to the Escrow Agent:
(i) negotiable promissory note made by
Newmark payable to Seller in the
principal amount of $4,550,000 in
the form of Exhibit 2.2 (the
"Seller Negotiable Promissory
Note") to be delivered to Seller;
(ii) negotiable promissory note made by
Newmark payable to Seller in the
principal amount of $3,000,000 in
the form of Exhibit 3 (the "Seller
Replacement Note") to be delivered
to Seller;
(iii) the Seller Employment Agreement and
the KE Employment Agreements,
executed by Westbrooke Communities,
Inc., to be delivered to Seller and
the respective Key Employees;
(iv) the Seller Non-Competition
Agreement and the KE
Non-Competition Agreements,
executed by Westbrooke Communities,
Inc., to be delivered to Seller and
the respective Key Employees;
(v) evidence of corporate existence and
authority of Buyer, Pacific USA and
Newmark to be delivered to Seller
and the Key Employees; and
(vi) the KE Escrow Agreement (Additional
Consideration) executed by Buyer
and Newmark.
7. Incorporation. Except as otherwise provided herein, the terms and
provisions of the Stock Purchase Agreement shall remain in effect.
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/s/ Xxxxx Xxxx
-----------------------------------------
XXXXX XXXX
WESTBROOKE COMMUNITIES, INC.,
a Florida corporation
By: /s/ Xxxxx Xxxx
-------------------------------------
Name: Xxxxx Xxxx
Title: President
WESTBROOKE AT WESTLAKE, INC.,
a Florida corporation
By: /s/ Xxxxx Xxxx
-------------------------------------
Name: Xxxxx Xxxx
Title: President
WESTBROOKE AT WINSTON TRAILS, INC.,
a Florida corporation
By: /s/ Xxxxx Xxxx
-------------------------------------
Name: Xxxxx Xxxx
Title: President
WESTBROOKE AT PEMBROKE PINES, INC.,
a Florida corporation
By: /s/ Xxxxx Xxxx
-------------------------------------
Name: Xxxxx Xxxx
Title: President
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WESTBROOKE AT OAKRIDGE, INC.,
a Florida corporation
By: /s/ Xxxxx Xxxx
-------------------------------------
Name: Xxxxx Xxxx
Title: President
/s/ Xxxxxx Xxxxxxxxxx
-----------------------------------------
XXXXXX X. XXXXXXXXXX
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
XXXXXXX X. XXXXXXX
/s/ Xxxxx Xxxxxxx
-----------------------------------------
XXXXX XXXXXXX
THE WESTBROOKE PARTNERSHIP,
a Florida general partnership
By: /s/ Xxxxx Xxxx
-------------------------------------
Name: Xxxxx Xxxx
Title: Authorized Signer
PACIFIC USA HOLDINGS CORP.,
a Texas corporation
By: /s/ Xxxxxxx X. XxXxxx
-------------------------------------
Name: Xxxxxxx X. XxXxxx
Title: Chief Financial Advisor
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NEWMARK HOMES CORP.,
a Nevada corporation
By: /s/ Xxxxxxx X. XxXxxx
-------------------------------------
Name: Xxxxxxx X. XxXxxx
Title: Chairman
WESTBROOKE ACQUISITION CORP.,
a Florida corporation
By: /s/ Xxxxxxx X. XxXxxx
-------------------------------------
Name: Xxxxxxx X. XxXxxx
Title: President
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Exhibits will be provided upon request made to:
Newmark Homes Corp.
0000 Xxxxxxxx Xxxxx Xxxxx
Xxxxx Xxxx, Xxxxx 00000