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EXHIBIT 10.27
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made as of January
15, 1998 ("Effective Date"), 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
The Acquired Companies and the Key Employees collectively own, or will
at Closing collectively own, one hundred percent (100%) of the outstanding
partnership or other equity interests in the Partnership;
Seller owns one hundred percent (100%) of the issued and outstanding
shares of capital stock of each Acquired Company (the "Shares");
Seller desires to sell, and Buyer desires to purchase, all of the
Shares, for the consideration and on the terms set forth in this Agreement; and
The Key Employees and Buyer desire to enter into the "Option" and the
"Buyer's Option (as defined herein), pursuant to which, if exercised, the Key
Employees shall sell and Buyer shall purchase all of the partnership interests
or other equity interests in the Partnership owned by the Key Employees (the
"KE Partnership Interests"), for the consideration and on the terms set forth
in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
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For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"ACQUIRED COMPANIES"---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.
"ADJUSTMENT AMOUNT"--as defined in Section 2.6.
"ADJUSTMENT NOTE"--as defined in Section 2.7(b).
"XXXXX COMPANIES"--The Xxxxx Companies, Inc., and Adro Construction,
Inc., both Florida corporations, each a wholly owned Subsidiary of
Newmark, and any of their Subsidiaries.
"APPLICABLE CONTRACT"--any Contract (a) under which the Partnership or
any Acquired Company has or may acquire any rights, (b) under which
the Partnership or any Acquired Company has or may become subject to
any obligation or liability, or (c) by which the Partnership or any
Acquired Company or any of the assets owned or used by the Partnership
or any Acquired Company is or may become bound.
"APPLICABLE LAND CONTRACTS"--as defined in Section 3.17(a)(xv).
"APPLICABLE LOAN CONTRACTS"--as defined in Section 3.17(a)(xvi).
"ARBITRATION COVENANT"--as defined in Section 12.17.
"ATHENA" -- Xxxxxx Xxxxxxxxxx Investors, L.P., a Delaware limited
partnership, and a general partner of the Partnership.
"ATHENA REDEMPTION"--as defined in Section 2.3.
"ATHENA REDEMPTION AGREEMENT" -- as defined in Section 2.3(a).
"ATHENA RELEASE" -- as defined in Section 2.5(a)(v).
"BALANCE SHEET"--as defined in Section 3.4.
"BEST EFFORTS"--the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that
such result is achieved as expeditiously as possible; provided,
however, that an obligation to use Best Efforts under this Agreement
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does not require the Person subject to that obligation to take actions
that would result in a Material Adverse Effect in the benefits to such
Person of this Agreement and the Contemplated Transactions.
"BREACH"--a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument
delivered pursuant to this Agreement will be deemed to have occurred
if there is or has been any inaccuracy in or breach of, or any failure
to perform or comply with, such representation, warranty, covenant,
obligation, or other provision.
"BUY NOTICE"--as defined in Section 10.10(a).
"BUYER"-- Westbrooke Acquisition Corp., a Florida corporation, a
wholly owned subsidiary of Newmark.
"BUYER'S CERTIFICATE"--as defined in Section 2.5(c)(vi).
"BUYER'S OPTION"--as defined in Section 10.10.
"BUYER'S STOCK POWERS"--as defined in Section 2.5(c)(v).
"CAPITAL PURCHASE PRICE"--as defined in Section 10.10(b).
"CERTIFICATE OF REDEMPTION" -- as defined in Section 2.5(a)(v).
"CLOSING"--as defined in Section 2.4.
"CLOSING DATE"--the date and time as of which the Closing actually
takes place.
"CLOSING FINANCIAL STATEMENTS"--as defined in Section 2.7(a).
"COMBINED FINANCIAL STATEMENTS" -- the combined financial statements
of the Acquired Companies, with the accounts of the Partnership
consolidated therein.
"CONSENT"--any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS"--all of the transactions contemplated by
this Agreement and the documents, instruments and agreements delivered
in connection with or under this Agreement, including without
limitation:
(a) the sale of the Shares by Seller to Buyer;
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(b) the execution, delivery, and performance of the Take-Out Loan,
the Take-Out LOC, the Athena Redemption, the Loan
Satisfaction, the Promissory Notes, the Athena Redemption
Agreement, the New Partners Agreement, the Loan Satisfaction
Agreement, the Adjustment Note, if any, the Seller Adjustment
Note, if any, the Replacement Note, the Pacific USA Guaranty,
the Pledge Agreement, the Substitute LOC, the Seller
Employment Agreement, the KE Employment Agreements, the Seller
Noncompetition Agreement, the KE Noncompetition Agreements,
the Seller Release, the KE First Releases and the KE Second
Releases;
(c) the performance by all parties hereto, of their respective
covenants and obligations under this Agreement and the
documents, instruments and agreements delivered in connection
with or under this Agreement;
(d) the grant of the Option to each of the Key Employees and
Buyer's acquisition and ownership of the KE Partnership
Interests to the extent that each Key Employee exercises his
or her Option and, in that event, the execution, delivery and
performance of the instruments required to be executed at the
Option Closing; and
(e) Buyer's acquisition and ownership of the Shares and exercise
of control over the Acquired Companies.
"CONTRACT"--any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied)
that is legally binding on all parties thereto.
"CUMULATIVE NET INCOME" -- as defined in Section 2.2(b)(1).
"DAMAGES"--as defined in Section 11.2.
"DISCLOSURE LETTER"--the disclosure letter delivered by Seller to
Buyer concurrently with the execution and delivery of this Agreement.
"EMPLOYMENT AGREEMENTS"--the Seller Employment Agreement and the KE
Employment Agreements.
"ENCUMBRANCE"--any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security
interest, right of first refusal, or restriction of any kind,
including any restriction on use, voting, transfer, receipt of income,
or exercise of any other attribute of ownership.
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"ENVIRONMENT"--soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream
sediments, ambient air (including indoor air), plant and animal life,
and any other environmental medium or natural resource.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES"--any cost, damages,
expense, liability, obligation, or other responsibility arising from
or under Environmental Law or Occupational Safety and Health Law and
consisting of or relating to:
(a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational
safety and health, and regulation of chemical substances or
products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands
and response, investigative, remedial, or inspection costs and
expenses arising under Environmental Law or Occupational
Safety and Health Law;
(c) financial responsibility under Environmental Law or
Occupational Safety and Health Law for cleanup costs or
corrective action, including any investigation, cleanup,
removal, containment, or other remediation or response actions
("Cleanup") required by applicable Environmental Law or
Occupational Safety and Health Law (whether or not such
Cleanup has been required or requested by any Governmental
Body or any other Person) and for any natural resource
damages; or
(d) any other compliance, corrective, investigative, or remedial
actions required under Environmental Law or Occupational
Safety and Health Law.
The terms "removal," "remedial," and "response action,"
include the types of activities covered by the United States
Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. Section 9601 et seq., as amended
("CERCLA").
"ENVIRONMENTAL LAW"--any Legal Requirement that requires or relates
to:
(a) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous
substances or materials, violations of discharge limits, or
other prohibitions and of the commencement of activities, such
as resource extraction or construction, that could have
significant impact on the Environment;
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(b) preventing or reducing to levels deemed acceptable under legal
tolerances (if any) the release of pollutants or hazardous
substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or minimizing
the hazardous characteristics of wastes that are generated;
(d) assuring that products (including dwelling units constructed
by the Partnership or any Acquired Company) are designed,
formulated, packaged, and used so that they do not present
unreasonable risks to human health or the Environment when
used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to levels deemed acceptable under legal tolerances
(if any) the risks inherent in the transportation of hazardous
substances, pollutants, oil, or other potentially harmful
substances;
(g) cleaning up pollutants that have been released, preventing the
threat of release, or paying the costs of such clean up or
prevention, all to the extent of legal tolerances, if any; or
(h) making responsible parties pay private parties, or groups of
them, for damages done to their health or the Environment, or
permitting self-appointed representatives of the public
interest to recover for injuries done to public assets.
"ERISA"--the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act
or any successor law.
"ESCROW AGREEMENT (ADDITIONAL CONSIDERATION)"--as defined in Section
2.5(a)(xiii).
"ESCROW AGREEMENT (SHARES)"--as defined in Section 2.5(a)(xi).
"FACILITIES"--any real property, leaseholds, or other interests
currently or formerly owned or operated by the Partnership or any
Acquired Company and any buildings, plants, structures, equipment or
other tangible properties or assets (including motor vehicles, tank
cars, and rolling stock) currently or formerly owned or operated by
the Partnership or any Acquired Company.
"GAAP"--generally accepted United States accounting principles,
applied on a basis consistent with the basis on which the Balance
Sheet and the other financial statements referred to in Section 3.4
were prepared.
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"GOVERNMENTAL AUTHORIZATION"--any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise
made available by or under the authority of any Governmental Body or
pursuant to any Legal Requirement.
"GOVERNMENTAL BODY"--any:
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department,
official, or entity and any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or
taxing authority or power of any nature.
"HAZARDOUS ACTIVITY"--the distribution, generation, handling,
importing, management, manufacturing, processing, production,
refinement, Release, storage, transfer, transportation, treatment, or
use (including any withdrawal or other use of groundwater) of
Hazardous Materials in, on, under, about, or from the Facilities or
any part thereof into the Environment, and any other act, business,
operation, or thing that increases the danger, or risk of danger, or
poses an unreasonable risk of harm to persons or property on or off
the Facilities, or that, by reason of such activities, may affect the
value of the Facilities, the Partnership or the Acquired Companies.
"HAZARDOUS MATERIALS"--any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under
or pursuant to any Environmental Law, including any admixture or
solution thereof, and specifically including petroleum and all
derivatives thereof or synthetic substitutes therefor and asbestos or
asbestos-containing materials.
"INACTIVE WESTBROOKE COMPANIES"--as defined in Section 2.5(a)(vi).
"INTELLECTUAL PROPERTY ASSETS" --as defined in Section 3.22.
"INTERIM BALANCE SHEET"--as defined in Section 3.4.
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"IRC"--the Internal Revenue Code of 1986 or any successor law, and
rulings and regulations issued by the IRS pursuant to the Internal
Revenue Code or any successor law.
"IRS"--the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of
the Treasury.
"KE ASSIGNMENT"--as defined in Section 10.1(a).
"KE DISCLOSURE LETTERS"--the disclosure letters delivered by the Key
Employees to Buyer concurrently with the execution and delivery of
this Agreement.
"KE EMPLOYMENT AGREEMENTS"--as defined in Section 2.5(b)(i).
"KE NONCOMPETITION AGREEMENTS"--as defined in Section 2.5(b)(ii).
"KE PARTNERSHIP INTERESTS"-- the partnership or other equity interests
in the Partnership owned by the Key Employees on the Closing Date.
"KE FIRST CERTIFICATE"--as defined in Section 2.5(b)(iii).
"KE FIRST RELEASES"--as defined in Section 2.5(b)(vi).
"KE SECOND CERTIFICATE"--as defined in Section 10.1(c).
"KE SECOND RELEASES"--as defined in Section 10.1(b).
"KEY EMPLOYEES"--Xxxxxx X. Xxxxxxxxxx, Xxxxxxx X. Xxxxxxx and Xxxxx
Xxxxxxx. The Key Employees are parties to this Agreement solely for
purposes of Section 2.5(b), 10 and 12.4 hereof.
"KNOWLEDGE"--an individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
(a) such individual is actually aware of such fact or other
matter;
(b) such individual has received written notice of such fact or
other matter; or
(c) such fact or other matter is ascertainable from a reasonable
inquiry made in the Ordinary Course of Business regarding
another fact or matter of which such individual is actually
aware or has received written notice.
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A Person (other than an individual) will be deemed to have "Knowledge"
of a particular fact or other matter if any individual who is serving,
or who has at any time served, as a director, officer, partner,
executor, or trustee of such Person (or in any similar capacity) has,
or at any time had, Knowledge of such fact or other matter. Seller
and each Key Employee will be deemed to have "Knowledge" of a
particular fact or other matter if any one or more of them or any
other employee of the Partnership or any of the Acquired Companies
has, or at any time had, Knowledge of such fact or other matter
(provided that such other employee's regular duties include or
included responsibility for, or communication of, such fact or other
matter).
"LEGAL REQUIREMENT"--any federal, state, local, municipal, foreign,
international, multinational, or other administrative or judicial
Order, constitution, law, ordinance, principle of common law,
regulation, ruling statute, or treaty.
"LOAN SATISFACTION"--as defined in Section 2.3.
"LOAN SATISFACTION AGREEMENT" -- as defined in Section 2.3(b).
"MASTER DISCLOSURE LIST" -- as defined in Section 11.1.
"MATERIAL ADVERSE EFFECT"-- for a specific Person, a change or effect
on the business, operations, property, financial condition, prospects
or assets of such Person, taken as a whole that is, or with the
passage of time, will be materially adverse to the business,
operations, property, financial condition, prospects or assets of such
Person. With respect to the Partnership or any of the Acquired
Companies, Material Adverse Effect shall mean a change or effect on
the business or assets of the Partnership and the Acquired Companies,
taken as a whole.
"XXXXXX GUARANTY RECEIPT" -- as defined in Section 2.5(a)(viii)
"NET INCOME" -- as defined in Section 2.2(b)(3).
"NEWMARK GUARANTY"--as defined in Section 2.7.
"NEW PARTNERS AGREEMENT"--as defined in Section 10.1.
"NONCOMPETITION AGREEMENTS"--the Seller Noncompetition Agreement and
the KE Noncompetition Agreements.
"NOTE AFFIDAVIT"--as defined in Section 2.5(a)(xii).
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"OCCUPATIONAL SAFETY AND HEALTH LAW"--any Legal Requirement designed
to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any governmental program
and any program promulgated or sponsored by insurance companies
furnishing coverage to the Partnership or any Acquired Company, that
is designed to provide safe and healthful working conditions.
"OPTION"--as defined in Section 10.
"OPTION CLOSING"--as defined in Section 10.1.
"OPTION CLOSING DATE"--as defined in Section 10.1.
"OPTION PERIOD"--as defined in Section 10.1.
"ORDER"--any award, decision, injunction, judgment, order, decree,
ruling, subpoena, or verdict entered, issued, made, or rendered by any
court, administrative agency, or other Governmental Body or by any
arbitrator.
"ORDINARY COURSE OF BUSINESS"--an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only
if:
(a) such action is reasonably consistent with the past practices
of such Person from time to time and is taken in the ordinary
course of the normal day-to-day operations of such Person; and
(b) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of
directors (or by any Person or group of Persons exercising
similar authority), in the ordinary course of the normal
day-to-day operations of such Persons.
"ORGANIZATIONAL DOCUMENTS"--(a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership
agreement and any statement of partnership authority of a general
partnership; (c) the limited partnership agreement, the certificate of
limited partnership and affidavit of capital contributions of a
limited partnership; (d) any charter or similar document adopted or
filed in connection with the creation, formation, or organization of a
Person; and (e) any amendment to any of the foregoing.
"PACIFIC USA GUARANTY"--as defined in Section 2.5(c)(iii).
"PARTNERSHIP AGREEMENT"--that certain Agreement of Partnership among
the Acquired Companies, Athena, and the Inactive Westbrooke Companies,
dated as of January 1, 1995.
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"PERSON"--any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability
company or limited liability partnership, joint venture, estate,
trust, association, organization, labor union, or other entity or
Governmental Body.
"PROCEEDING"--any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by
or before, or otherwise involving, any Governmental Body or
arbitrator.
"PROMISSORY NOTES"--means the Non-Negotiable Promissory Note as
defined in Section 2.5(c)(i), the Negotiable Promissory Note as
defined in Section 2.5(c)(ii), and any Replacement Note.
"PUSA ENTITY"--as defined in Section 2.2(b)(3)(ix).
"RELATED PERSON"--with respect to a specified individual:
(a) each other member of the specified individual's Family;
(b) any Person that is directly or indirectly controlled by the
specified individual or one or more members of the specified
individual's Family;
(c) any Person in which such individual or members of the
specified individual's Family hold (individually or in the
aggregate) a Material Interest; and
(d) any Person with respect to which the specified individual or
one or more members of such individual's Family serves as a
director, officer, general partner, executor, or trustee (or
in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly
or indirectly controlled by, or is directly or indirectly
under common control with the specified Person;
(b) any Person that holds a Material Interest in the specified
Person;
(c) each Person that serves as a director, officer, general
partner, executor, or trustee of the specified Person (or in a
similar capacity);
(d) any Person in which the specified Person holds a Material
Interest;
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(e) any Person with respect to which the specified Person serves
as a general partner or trustee (or in a similar capacity);
and
(f) any Related Person of any individual described in clause (b)
or (c).
For purposes of this definition, (a) the "Family" of a specified
individual includes (i) the specified individual, (ii) the specified
individual's spouse, (iii) any other natural person who is related to
the specified individual or the specified individual's spouse within
the second degree, and (iv) any other natural person who resides with
the specified individual, and (b) "Material Interest" means direct or
indirect beneficial ownership (as defined in Rule 13d-3 under the
Exchange Act) of voting securities or other voting interests
representing at least 20% of the outstanding voting power of a Person
or equity securities or other equity interests representing at least
20% of the outstanding equity securities or equity interests in a
Person.
"RELEASE"--any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment,
whether intentional or unintentional.
"RENEWAL LOC"--as defined in Section 2.8.
"REPLACEMENT NOTE"--a negotiable Promissory Note to be issued by Buyer
in replacement of the Non-Negotiable Promissory Note, in accordance
with the provisions of Section 6.B.
"REPRESENTATIVE"--with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative
of such Person, including without limitation, legal counsel,
accountants, and financial advisors.
"RESTATED PARTNERSHIP AGREEMENT"--as defined in Section 2.5(b)(iv).
"SALE CLOSING"--as defined in Section 10.10(c).
"SECURITIES ACT"--the Securities Act of 1933, as amended, or any
successor law, and regulations and rules issued pursuant to that Act
or any successor law.
"SECURITIES EXCHANGE ACT"--the Securities Exchange Act of 1934, as
amended, or any successor law, and regulations and rules issued
pursuant to that Act or any successor law.
"SELLER"--Xxxxx X. Xxxx.
"SELLER ADJUSTMENT NOTE"--as defined in Section 2.7(b).
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"SELLER'S CERTIFICATE"--as defined in Section 2.5(a)(viii).
"SELLER'S CLOSING DOCUMENTS"--as defined in Section 3.2(a).
"SELLER EMPLOYMENT AGREEMENT"--as defined in Section 2.5(a)(iii).
"SELLER NONCOMPETITION AGREEMENT"--as defined in Section 2.5(a)(iv).
"SELLER RELEASE"--as defined in Section 2.5(a)(ii).
"SELLING KEY EMPLOYEE"--as defined in Section 10.10.
"SHARE CERTIFICATES" -- as defined in Section 2.5(a)(1).
"SHARES"-- as defined in the Recitals of this Agreement.
"STATEMENT OF AUTHORITY"--as defined in Section 2.5(b)(v).
"STOCK POWERS" -- as defined in Section 2.5(a)(1).
"SUBSIDIARY" or "SUBSIDIARIES"--with respect to any Person (the
"Owner"), any corporation or other Person of which securities or other
interests having the power to elect a majority of that Person's board
of directors or similar governing body, or otherwise having the power
to direct the business and policies of that Person (other than
securities or other interests having such power only upon the
happening of a contingency that has not occurred) are held by the
Owner or one or more of its Subsidiaries.
"SUBSTITUTE COLLATERAL"--as defined in Section 2.8.
"SUBSTITUTE GUARANTEES"--as defined in Section 2.5(c)(xii).
"SUBSTITUTE LOC"--as defined in Section 2.8.
"TAKE-OUT LENDER" -- as defined in Section 2.3(c).
"TAKE-OUT LOAN"--as defined in Section 2.3(c).
"TAKE-OUT LOC"--as defined in Section 2.3(d).
"TAXES"--shall mean all foreign, federal, state, county, local and
other taxes, levies, impositions, deductions, charges and withholdings
for which Seller, the Partnership or
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any Acquired Company is liable, including, without limitation, income
or franchise taxes or other taxes imposed on or with respect to net
income, or capital gain, gross receipts, profits, sales, use,
occupation, value added, ad valorem, transfer, withholding, payroll,
employment, excise or property taxes, and shall include any interest,
penalties or additions thereto.
"TAX RETURN"--any return (including any information return), report,
statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted
to, any Governmental Body in connection with the determination,
assessment, collection, or payment of any Tax or in connection with
the administration, implementation, or enforcement of or compliance
with any Legal Requirement relating to any Tax.
"THREAT OF RELEASE"--a substantial likelihood of a Release that may
require action in order to prevent or mitigate damage to the
Environment that may result from such Release.
"THREATENED"--a claim, Proceeding, dispute, action, or other matter
will be deemed to have been "Threatened" if any demand or statement
has been made (orally or in writing) or any notice has been given
(orally or in writing), or if any other event has occurred or any
other circumstances exist, that indicate that such a claim,
Proceeding, dispute, action, or other matter is likely to be asserted,
commenced, taken, or otherwise pursued in the future; provided that,
for purposes of Section 3.15 hereof, a claim, Proceeding, dispute,
action or other matter will be deemed to have been "Threatened" only
if a demand or statement has been made in writing or a notice has been
given in writing that would lead a prudent Person to conclude that
such a claim, Proceeding, dispute, action, or other matter is likely
to be asserted, commenced, taken, or otherwise pursued in the future.
2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 Shares
Subject to the terms and conditions of this Agreement, at the
Closing, Seller will sell and transfer the Shares to Buyer,
and Buyer will purchase the Shares from Seller.
2.2 Purchase Price
(a) The purchase price (the "Purchase Price") for the
Shares will be TWELVE MILLION THREE HUNDRED FORTY-ONE THOUSAND
DOLLARS ($12,341,000), plus the Adjustment Amount, and the
Additional
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Consideration. The Purchase Price (exclusive of the Additional
Consideration) shall be paid by delivery of the Promissory
Notes and, if applicable, the Adjustment Note.
(b) In addition to the consideration paid at the Closing,
as set forth above, Buyer and Newmark jointly and severally
agree, subject to the contingencies set forth below, to pay
Seller additional consideration (herein called the "Additional
Consideration") as set forth below. Seller's right to receive
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"). The term "Subject Entities" means:
(x) the Acquired Companies and the Partnership, the Net Income
of which shall be based upon their Combined Financial
Statements; and (y) any other Person that is a member of the
Pacific USA or Newmark consolidated group for financial
accounting purposes and that is placed under Seller's
operational control (which neither Buyer, Newmark nor Pacific
USA shall have any obligation to do), subject to applicable
restrictions in this Agreement and the Seller Employment
Agreement, and provided that: (i) Seller and Buyer shall have
executed an amendment to this Agreement acknowledging the
application of this Section to such other Person; and (ii) the
Net Income of such other Person shall be considered only to
the extent that such Net Income is included in the net income
of Pacific USA, Newmark or their Subsidiaries for financial
accounting purposes. Additional Consideration shall be
calculated and payable as follows:
(1) Additional Consideration shall be based on the
consolidated Net Income of the Subject Entities,
before federal and state income taxes, for the
Calculation Years and shall be payable only if the
Subject Entities achieve the Cumulative Net Income
for each such Calculation Year. For purposes of this
Section, the fiscal year end is December 31,
regardless of any Subject Entity's actual fiscal year
end. "Cumulative Net Income" for each Calculation
Year shall be as follows:
Cumulative
----------
Net Income
----------
1998: $3,400,000
1999: $7,040,000
2000: $10,920,000
2001: $15,040,000
2002: $19,400,000
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Notwithstanding the foregoing, if Cumulative Net
Income is not achieved for any Calculation Year
(each, an "Earlier Calculation Year") and Additional
Consideration for the Earlier Calculation Year is
therefore not paid, but Cumulative Net Income for any
subsequent Calculation Year is achieved, the
Additional Consideration for each such Earlier
Calculation Year shall be paid, together with payment
of the Additional Consideration for Calculation Year
for which Cumulative Net Income is achieved.
(2) For each Calculation Year for which the Cumulative
Net Income has been achieved, or with respect to
which the last sentence in Section 2.2(b)(1) is
applicable, Buyer shall pay Seller $900,000; provided
that the aggregate Additional Consideration shall not
exceed $4,500,000. Any payment for a Calculation
Year will be paid on or before ten (10) days
following completion of the audit for that
Calculation Year, but in any event prior to April 30
of the year following that Calculation Year. All
payments of Additional Consideration shall be made by
bank wire transfer of immediately available funds to
an account designated by Seller in Section 12.4
hereof.
(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 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, except
any such items resulting from a breach of a
representation, warranty or obligation of Seller
under this Agreement, as determined in accordance
with the Arbitration Covenant or as otherwise agreed
by Seller and Buyer in writing;
(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;
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(iii) any expenses, including interest (exclusive
of the interest referred to in Section 2.2(b)(3)(a)),
documentary stamp taxes, lender's attorneys' fees and
origination fees, incurred in connection with (x) the
financing of the acquisition of the Acquired
Companies, including, without limitation, the
Take-Out Loan, the Take-Out LOC, and the Promissory
Notes, the Adjustment Note, if any, and the
Substitute LOC (subject to the provisions of Section
3.11(f) and Subsection (z) hereof), (y) any loans
provided to the Subject Entities by Newmark, Buyer,
or any affiliate of Newmark or Buyer, 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.
(iv) any gain, loss, income or expense resulting
from a change in the Subject Entities' accounting
methods, principles or practices after the Closing;
(v) any expenses directly or indirectly incurred
in connection with the acquisition of the Acquired
Companies by the Buyer;
(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 or any of its affiliates other than the
reimbursement of any out-of-pocket expenses incurred
by Pacific USA (or any affiliate of Pacific USA) 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.
(ix) in the event dividends or other distributions
(other than for debt service payments) 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
Pacific USA), Net Income shall include deemed
interest income on such funds equivalent to 9% per
annum.
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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;
provided, however, that if any party to such a merger
or consolidation is not a PUSA Entity, then the
circumstances described in Section 2.2(b)(6)(ii)
shall be deemed to have occurred. The term "PUSA
Entity" shall mean any entity which, at the time of
determination, has been a member of the Pacific USA
consolidated group for financial accounting purposes
in accordance with GAAP for at least six (6) months.
(4) Each payment of Additional Consideration shall be
characterized as principal and interest. The portion
of the payment that represents interest shall be
determined by using the lowest federal mid-term rate
under Section 1274 of the Code that is effective as
of the Closing Date. The remaining portion of the
payment shall constitute an installment payment of
additional purchase price for the Shares.
(5) It is understood and agreed that payment of the
Additional Consideration is contingent, since it is
based on future operations of the Subject Entities.
(6) The payment of all unpaid Additional Consideration
shall be accelerated and due and payable in full upon
the following events:
(i) termination of the Seller Employment
Agreement by Buyer other than for "cause," as defined
in such agreement or by Seller for "cause", as
defined in such agreement;
(ii) the sale or liquidation by Buyer of
substantially all of its assets to a single purchaser
or distributee or a group of associated purchasers or
distributees in one or more related transactions, or
the sale or transfer of stock of Buyer resulting in
Buyer no longer being controlled by a PUSA Entity, or
a merger or consolidation of Buyer with another
entity or any similar transaction (except solely to
or with a PUSA Entity(ies)), other than through an
orderly liquidation of assets as a result of a
decision to abandon the Florida market due to two (2)
consecutive Calculation Years of failing to meet
Cumulative Net Income.
(7) The Additional Consideration will cease and no longer
be payable in the event of a voluntary termination of
the Subject Entities' business and liquidation of
their assets as a result of a decision to abandon the
Florida
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market due to two consecutive Calculation Years of
failing to meet Cumulative Net Income.
(8) During each of the fourth and fifth Calculation
Years, Buyer shall escrow with a third party
acceptable to Seller, estimated Additional
Consideration for each such year on a quarterly
basis. Such escrow shall be established pursuant to
the Escrow Agreement (Additional Consideration)
("Escrow Agreement (Additional Consideration)" in the
form attached hereto as Exhibit 2.2(b).
(c) Buyer shall have the right to make a timely election under
Section 338(h)(10) or Section 754 of the IRC with respect to its purchase of
the Shares, and shall seek equivalent treatment of such purchase under all
applicable state and local tax laws, to the extent such treatment is available.
If required, the Acquired Companies and Seller shall join in such election.
If, as a result of a step-up in basis for Buyer as a result of Section 338 or
Section 754 of the IRC, Seller shall have an effective tax rate of greater than
the lowest capital gains rate then in effect and applicable to Seller with
respect to any purchase price paid in exchange for the Shares, then Buyer will
agree to increase the Purchase Price payable under Section 2.2(a) hereof so
that the net effective after-tax benefit to Seller reflects the rate that would
have been payable had Section 338 or Section 754 not applied. Any increase in
the Purchase Price shall increase the principal amount of the Adjustment Note,
if any, or reduce the principal amount of the Seller Adjustment Note, if any,
with any excess of that increase in the Purchase Price over the principal
amount of the Seller Adjustment Note, being the principal amount of an
Adjustment Note. Buyer and Seller agree to complete, within 120 days after the
Closing and file on a timely basis with IRS, the information required to be
prepared under the Sections 338 and 754 Regulations, including without
limitation the allocation of the adjusted gross-up basis as that term is
defined in the IRC, based upon Exhibit 2.2(c) and the Closing Financial
Statements. Buyer and Newmark agree to indemnify, defend and hold harmless
Seller, the Partnership and the Acquired Companies from and against any tax,
interest, penalty or other loss, cost, damage or liability.
2.3 Athena Redemption and Loan Satisfaction
On or before the Closing Date, Seller shall cause the Partnership to
redeem all of the partnership interests of Athena in the Partnership
(the "Athena Redemption") and to pay and satisfy in full the "Loan"
(as that term is defined in the Partnership Agreement) (the "Loan
Satisfaction"). In connection therewith, the parties agree as
follows:
(a) Simultaneously with, and subject to the occurrence
of the events described in Subsections (c) and (d) hereof, the
Athena Redemption shall be made pursuant to the Distribution
Agreement and Amendment No. 1 to the
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Agreement of Partnership of The Westbrooke Partnership, in the
form attached hereto as Exhibit 2.3(a) (the "Athena Redemption
Agreement").
(b) Simultaneously with, and subject to the occurrence of
the events described in Subsections (c) and (d) hereof, the
Loan Satisfaction shall be made pursuant to the Loan
Satisfaction Agreement in the form attached hereto as Exhibit
2.3(b) (the "Loan Satisfaction Agreement"). The amount
required to pay and satisfy the Loan in full shall be
evidenced by a written payoff estoppel document binding upon
the holder of the Loan, a copy of which shall be furnished to
Buyer prior to the Closing Date.
(c) On or before the Closing Date, the Partnership shall
obtain a loan (the "Take-Out Loan") in the amount of
$10,000,000 from NationsBank, N.A., or other commercial
lending institution reasonably acceptable to Buyer (the
"Take-Out Lender"), all of the proceeds of which shall be used
solely (i) for the "Primary Payment" due Athena under the
Athena Redemption Agreement, and (ii) the Loan Satisfaction.
The terms of the Take-Out Loan and the form and substance of
the Take-Out Loan documents shall be subject to the
Partnership's and Buyer's review and approval, not to be
unreasonably withheld. Without limiting such right of
approval, the Take-Out Loan documents shall prohibit
disbursement of the proceeds thereof to the Partnership, the
Acquired Companies or to any Person other than Athena and the
holder of the Loan, respectively (or to their order) for the
purposes above stated; and
(d) Simultaneously with the Closing of the Take-Out Loan,
at Closing Newmark will deliver to the Take-Out Lender an
irrevocable letter of credit in the amount of $10,000,000 for
the account of Newmark in favor of the Take-Out Lender (the
"Take-Out LOC").
2.4 Closing
The purchase and sale (the "Closing") provided for in this
Agreement will take place at 10:00 a.m. (local time) on
January 15, 1998, or at such other time as the parties may
agree. Subject to the provisions of Section 9, failure to
consummate the purchase and sale provided for in this
Agreement on the date and time and at the place determined
pursuant to this Section 2.4 will not result in the
termination of this Agreement and will not relieve any party
of any obligation under this Agreement.
2.5 Closing Obligations
At the Closing:
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(a) Seller will deliver or cause to be delivered to
Buyer:
(i) original certificates representing the Shares
(collectively, the "Share Certificates"),
duly endorsed (or accompanied by duly
executed stock powers ("Stock Powers") in the
form attached hereto as Exhibit 2.5(a)(1)),
with signatures guaranteed by a commercial
bank or by a member firm of the New York
Stock Exchange, for transfer to Buyer;
(ii) release in the form of Exhibit 2.5(a)(ii)
executed by Seller (the "Seller Release");
(iii) an amended and restated employment agreement
in the form of Exhibit 2.5(a)(iii), executed
by Seller (the "Seller Employment
Agreement");
(iv) noncompetition agreement in the form of
Exhibit 2.5(a)(iv), executed by Seller (the
"Seller Noncompetition Agreement");
(v) Receipt for Payment and Certificate of
Redemption in the form of Exhibit 2.5(a)(v-1)
executed on behalf of Athena and the
Partnership (the "Certificate of Redemption")
and the ten (10) Releases in the form of
Exhibit 2.5(a)(v-2) executed on behalf of
Athena (the "Athena Releases");
(vi) Assignment of Partnership Interest in the
form of Exhibit 2.5(a)(vi) executed on behalf
of Westbrooke at Spring Valley, Inc.,
Westbrooke at Rock Creek, Inc. and Westbrooke
at Xxxxxxx Xxxx, Inc., (the "Inactive
Westbrooke Companies") all Florida
corporations, and Westbrooke Communities,
Inc.;
(vii) Xxxxxx Guaranty Receipt in the form of
Exhibit 2.5(a)(viii) executed on behalf of
the lender of the Loan, and the original
promissory note evidencing the Loan marked
"paid" (the "Xxxxxx Guaranty Receipt");
(viii) a certificate executed by Seller representing
and warranting to Buyer that each of Seller's
representations and warranties in this
Agreement was accurate in all respects as of
the date of this Agreement and is accurate in
all respects as of the Closing Date as if
made on the Closing Date (giving full effect
to any supplements to the Disclosure Letter
that were delivered by Seller
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to Buyer immediately prior to Closing in
accordance with Section 5.5) ("Seller's
Certificate");
(ix) the Consents, if any, required by Section
8.3 hereof or identified in the Master
Disclosure List, the Disclosure Letter, or
any supplement thereto;
(x) the additional documents required by Section
7.4 hereof;
(xi) the Escrow Agreement (Shares) in the form of
Exhibit 2.5(a)(xi), executed by Seller (the
"Escrow Agreement (Shares)");
(xii) an affidavit regarding the place of
acceptance of delivery of the Promissory
Notes in the form of Exhibit 2.5(a)(xii)
executed by Seller (the "Note Affidavit");
and
(xiii) the Escrow Agreement (Additional
Consideration), executed by Seller.
(b) Each of the Key Employees will deliver to the
designated Person:
(i) an amended and restated employment agreement
in the form of Exhibit 2.5(b)(i), executed by
each Key Employee (collectively, the "KE
Employment Agreements") to be delivered to
Westbrooke Communities, Inc.;
(ii) noncompetition agreements in the form of
Exhibit 2.5(b)(ii), executed by the Key
Employees (collectively, the "KE
Noncompetition Agreements") to be delivered
to Westbrooke Communities, Inc.;
(iii) a certificate executed by each Key Employee
representing and warranting to Buyer such Key
Employee's representations and warranties in
this Agreement were accurate in all respects
as of the date of this Agreement and are
accurate in all respects as of the Closing
Date as if made on the Closing Date (giving
full effect to any supplements to the KE
Disclosure Letter that were delivered by such
Key Employee to Buyer prior to the Closing
Date in accordance with Section 10.8) to be
delivered to Buyer (the "KE First
Certificate");
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(iv) an amended and restated agreement of
partnership of the Partnership in the form of
Exhibit 2.5(b)(iv), executed by each of the
Key Employees (the "Restated Partnership
Agreement") to be delivered to Buyer;
(v) evidence of filing with the Florida
Department of State of a statement of
partnership authority in the form of Exhibit
2.5(b)(v) (the "Statement of Authority") to
be delivered to Buyer.
(vi) releases in the form of Exhibit 2.5(b)(vi)
executed by each of the Key Employees (the
"KE First Releases") in favor of Seller and
each of the Acquired Companies;
(vii) New Partners Agreement;
(viii) Consent of Partners to the Assignment of
Partnership Interest described in Section
2.5(a)(vi); and
(vix) The Escrow Agreement (Additional
Consideration) executed by each of the Key
Employees.
(c) Buyer or Newmark, as the case may be, will deliver or
cause to be delivered to the designated Person:
(i) non-negotiable promissory note made by Buyer
payable to Seller in the principal amount of
$3,000,000 in the form of Exhibit 2.5(c)(i)
(the "Non-Negotiable Promissory Note") to be
delivered to Seller;
(ii) negotiable promissory note made by Buyer
payable to Seller in the principal amount of
$9,341,000 in the form of Exhibit 2.5(c)(ii)
(the "Negotiable Promissory Note") to be
delivered to Seller;
(iii) guaranty by Pacific USA of the Negotiable
Promissory Note and Non-Negotiable Promissory
Note by Pacific USA in the form of Exhibit
2.5(c)(iii) (the "Pacific USA Guaranty") to
be delivered to Seller;
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(iv) pledge agreement between Buyer and Seller in
the form of Exhibit 2.5(c)(iv) (the "Pledge
Agreement") to be delivered to Seller;
(v) duly executed stock powers ("Buyer's Stock
Powers") in blank, with signatures guaranteed
by a commercial bank or by a member firm of
the New York Stock Exchange to be delivered
to the escrow agent pursuant to the Escrow
Agreement (Shares);
(vi) a certificate executed by Buyer to the effect
that, except as otherwise stated in such
certificate, each of Buyer's representations
and warranties in this Agreement was accurate
in all respects as of the date of this
Agreement and is accurate in all respects as
of the Closing Date as if made on the Closing
Date to be delivered to Seller ("Buyer's
Certificate");
(vii) the Seller Employment Agreement and the KE
Employment Agreements, executed by Westbrooke
Communities, Inc., to be delivered to Seller
and the respective Key Employees;
(viii) 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;
(ix) the Consents, if any, referenced in Schedule
4.2 hereto;
(x) the additional documents, if any, required by
Section 8.4 hereof;
(xi) evidence of corporate existence and authority
of Buyer, Pacific USA and Newmark to be
delivered to Seller and the Key Employees;
(xii) guarantees of the Applicable Loan Contracts
in substitution for existing guarantees by
Seller, in form and substance reasonably
acceptable to Buyer and the lenders
thereunder, to be delivered to the respective
lenders ("Substitute Guarantees");
(xiii) the Restated Partnership Agreement executed
by all the partners of the Partnership, to be
delivered to the Key Employees;
(xiv) the Escrow Agreement (Shares);
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(xv) the Escrow Agreement (Additional
Consideration) executed by Buyer and Newmark;
and
(xvi) the New Partners Amendment executed by all
the then partners of the Partnership.
2.6 Adjustment Amount
The "Adjustment Amount" (which may be a positive or negative
number) will be equal to (a) the combined capital of the
Acquired Companies as of 11:59 p.m. on December 31, 1997,
determined in accordance with GAAP and based on the Combined
Financial Statements, (except as follows) minus (b)
$5,000,000. For purposes of the calculation of combined
capital, the effect of the following items shall be excluded:
(i) any extraordinary gain or loss; and (ii) the expenses
described in Section 2.2(b)(3)(iii).
2.7 Adjustment Procedure
(a) Seller will prepare and will cause Ernst & Young, the
Acquired Companies' certified public accountants, to
audit the Combined Financial Statements as of 11:59
p.m. on December 31, 1997, and for the period from
the date of the Balance Sheet through the Closing
Date, including a computation of combined capital as
of 11:59 on December 31, 1997 ("Closing Financial
Statements"). Seller will deliver the Closing
Financial Statements to Buyer within sixty (60) days
after the Closing Date. If within thirty days
following delivery of the Closing Financial
Statements, Buyer has not given Seller notice of its
objection to the Closing Financial Statements (such
notice must contain a statement of the basis of
Buyer's objection), then the combined capital
reflected in the Closing Financial Statements will be
used in computing the Adjustment Amount. If Buyer
gives such notice of objection, then the issues in
dispute will be submitted for resolution to the
"Independent Accountant". The Independent Accountant
shall be an independent certified public accountant
jointly selected by Buyer's and Seller's respective
certified public accountants. If issues in dispute
are submitted to the Independent Accountant for
resolution, (i) each party will furnish to the
Independent Accountant such workpapers and other
documents and information relating to the disputed
issues as the Independent Accountant may request and
are available to that party or its Subsidiaries (or
its independent public accountants), and will be
afforded the opportunity to present to the
Independent Accountant any material relating to the
determination and to discuss the determination with
the Independent Accountant; (ii) the
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determination by the Independent Accountant, as set
forth in a notice delivered to both parties by the
Independent Accountant, will be binding and
conclusive on the parties; and (iii) Buyer and Seller
will each bear 50% of the fees of the Independent
Accountant for such determination.
(b) On the tenth business day following the final
determination of the Adjustment Amount, if the
Adjustment Amount is a positive number, such amount
shall be payable by Buyer and Newmark by the delivery
by Buyer to Seller (or Seller's custodial designee)
of a demand negotiable promissory note made by Buyer,
in the form attached hereto as Exhibit 2.7(b)(-1)
(the "Adjustment Note") and by the delivery by
Newmark to Seller (or Seller's custodial designee) of
a guaranty made by Newmark in the form attached
hereto as Exhibit 2.7(b-2) (the "Newmark Guaranty").
Seller agrees that if the Adjustment Amount is a
negative number, Seller shall pay the Adjustment
Amount to Buyer within ten (10) business days
following Buyer's written request therefor or, at
Buyer's election, Seller shall execute and deliver to
Buyer or Buyer's designee a demand negotiable
promissory note ("Seller Adjustment Note") in the
principal amount of such negative Adjustment Amount
in the form attached hereto as Exhibit 2.7(b-3).
(c) Buyer and Seller have estimated that the combined
capital on the Closing Financial Statement will be
$11,375,000. Buyer agrees to deliver to Seller a
Preliminary Adjustment Note in the amount of
$6,375,000, which is the estimated Adjustment Amount.
Buyer acknowledges that up to $2,375,000 may be
demanded for payment on or before January 31, 1998.
Once the final determination of the Adjustment Amount
is made, Section 2.7(b) shall be implemented; i.e.,
(i) if the Adjustment Amount is a negative number,
the Preliminary Adjustment Note shall be canceled,
and Seller shall pay the Adjustment Amount, plus any
amounts paid to Seller under the Preliminary
Adjustment Note, to Buyer as provided in Section
2.7(b) above, and (ii) if the Adjustment Amount is a
positive number, such amount shall be payable by
Buyer by the delivery to Seller (or Seller's
custodial designee) of the Adjustment Note, which
shall replace the Preliminary Adjustment Note and be
in the amount of the Adjustment Amount less any
principal amount paid by Buyer to Seller under the
Preliminary Adjustment Note as provided above.
2.8 Termination of Pacific USA Guaranty and Pledge; Substitution
of Collateral
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Within five (5) business days following the earlier to occur
of (a) the closing of the initial public offering of capital
stock in Newmark, (b) the sale by Pacific USA of substantially
all of the assets of Pacific Southwest Bank, or (c) June 30,
0000, Xxxxxxx shall deliver to Seller irrevocable letters of
credit substantially in the form of Exhibit 2.8(A) each in the
initial amount equal to the then outstanding principal balance
of each of the respective Promissory Notes, plus interest
thereon for one (1) year (collectively, the "Substitute LOCs")
and, in addition, the Substitute LOCs shall have been
confirmed by the Federal Home Loan Bank of Dallas in the form
of the Confirmation of Letter of Credit attached hereto as
Exhibit 2.8(B). Upon delivery of both Substitute LOCs to
Seller, the Pacific USA Guaranty and Pledge Agreement shall
terminate, and Seller, Buyer, Newmark and Pacific USA shall
execute and deliver any and all instruments necessary or
appropriate to evidence such termination (including the filing
of UCC-3 Termination Statements, if requested by Buyer), and
the parties shall issue joint written instructions to the
escrow agent under the Escrow Agreement (Shares) to deliver
the Shares and Stock Powers to Buyer.
If either the Substitute LOCs or any Renewal LOC (as
hereinafter defined) by its terms, expires prior to the
maturity date of the respective Promissory Notes secured
thereby, Newmark shall deliver to Seller not less than thirty
(30) days prior to such expiration a renewal or replacement
letter of credit in the amount of the then outstanding
principal balance of that Promissory Note, plus interest
thereon for one (1) year (each, a "Renewal LOC"). Newmark
shall renew or replace, in the same fashion, any Renewal LOC
that likewise, by its terms, expires prior to the maturity
date of the Promissory Notes. The Substitute LOC and any
Renewal LOC shall be issued by Bank United of Texas, FSB, or
any other bank acceptable to Seller, such acceptance not to be
unreasonably withheld, and, in addition, the Renewal LOC's
(and each of them) shall have been confirmed by the Federal
Home Loan Bank of Dallas in the form of the confirmation of
Letter of Credit attached hereto as Exhibit 2.8(B). If
Newmark shall fail to deliver to Seller any Renewal LOC timely
and in accordance herewith, Seller shall have the right to
present for payment and draw upon, in full, the Substitute
LOCs or any Renewal LOC then in effect within thirty (30) days
prior to the expiration of the Substitute LOC or Renewal LOC
then in effect. The Renewal LOC shall have the same terms and
be of the same quality as the Substitute LOC.
In the event Newmark is unable to deliver the Substitute LOC
by June 30, 1998, for any reason after good faith, diligent
efforts to obtain and deliver the same, then Buyer, Newmark
and Seller shall negotiate for the substitution of collateral
under the Pledge Agreement in the place and stead of the
Shares (the "Substitute Collateral"), which Substitute
Collateral shall be, in all respects, subject to the
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approval and acceptance of Seller, in his sole and absolute
discretion. In the event such parties fail to agree upon
Substitute Collateral on or before September 30, 1998, and
Seller delivers to Buyer written notice declaring such
failure, then
(a) the Promissory Notes, the Pledge Agreement and the
Pacific USA Guaranty, shall each be deemed in default
without further notice and Seller shall be
immediately entitled to exercise all rights and
remedies thereunder, including, but not limited to,
the right of acceleration; and
(b) the Take-Out Loan shall be deemed in default for all
purposes, hereto, and, in such event, Seller shall be
entitled and is hereby authorized to make demand upon
the Take-Out Lender for presentment of the Take-Out
LOC by the beneficiary thereof and to apply the
proceeds to the Take-Out Loan (the "Seller's
Demands"); provided, however, that Seller shall have
first delivered to Buyer and Newmark not less than
ten (10) days prior written notice of Seller's intent
to demand presentment. The Take-Out Lender shall be,
and is hereby, authorized to accept and implement
such Seller's Demand and to so apply the proceeds.
The proceeds of the Take-Out LOC so applied shall
constitute an absolute limit on monetary damages for
Buyer's and Newmark's default, without limiting or
affecting in any manner Seller's rights pursuant to
the provisions of the Pledge Agreement. Such amount
is agreed upon by and between Seller, Newmark and
Buyer as an absolute limit on monetary damages, for
breach of this Agreement by Buyer, Newmark and
Pacific USA due to the difficulty and inconvenience
of ascertaining and measuring actual damages, and the
uncertainty thereof; and no other monetary damages,
rights or remedies shall in any case be collectible,
enforceable or available to Seller, other than in
this Section; and Seller shall accept said proceeds
and its rights and remedies under the Pledge
Agreement as Seller's total damages and relief, but
only if, as and when Seller realizes upon the
Collateral under the Pledge Agreement. In such
event, neither Buyer, Pacific USA, nor Newmark shall
have any right or remedy against Seller, the Acquired
Companies or the Partnership, whatsoever, whether by
subrogation or otherwise, in connection with the
Take-Out LOC, and such rights and remedies, if any,
shall then be waived.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
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3.1 Organization and Good Standing
(a) Part 3.1 of the Disclosure Letter contains a complete
and accurate list for the Partnership and each
Acquired Company of its name, its jurisdiction of
organization, other jurisdictions in which it is
authorized to do business, and its outstanding
capital stock or partners' capital (setting forth, in
the case of the Acquired Companies, the identity of
each stockholder and the number of shares held by
each and, in the case of the Partnership, the
identity of each partner and the percentage
Partnership interest held by each, after giving
effect to the Athena Redemption). Each Acquired
Company is a corporation duly organized, validly
existing, and in good standing under the laws of its
jurisdiction of incorporation, with full corporate
power and authority to conduct its business as it is
now being conducted, to own or use the properties and
assets that it owns or uses, and to perform all its
obligations under Applicable Contracts. The
Partnership is a general partnership duly organized,
validly existing, and in good standing under the laws
of its jurisdiction of organization, with full
partnership power and authority to conduct its
business as it is now being conducted, to own or use
the properties and assets that it owns or uses, and
to perform all its obligations under Applicable
Contracts. The Partnership and each Acquired Company
are duly qualified to do business in, and are in
good standing under the laws of, each state or other
jurisdiction in which either the ownership or use of
the properties owned or used by it, or the nature of
the activities conducted by it, requires such
qualification.
(b) Seller has delivered to Buyer copies of the
Organizational Documents of the Partnership and each
Acquired Company, as currently in effect. The
Partnership Agreement is the sole contract governing
the subject matter thereof and has not been modified,
amended or supplemented in any respect, except for
the Athena Redemption Agreement and the New Partners
Agreement, which have been made or will be made on or
before the Closing Date.
3.2 Authority; No Conflict
(a) This Agreement constitutes the legal, valid, and
binding obligation of Seller, enforceable against
Seller in accordance with its terms. Upon the
execution and delivery by Seller, and all other
parties to the respective instruments, of the Share
Certificates, Stock Powers, Seller Release, Seller
Employment Agreement, Seller Noncompetition
Agreement, Escrow Agreement (Shares), Seller's
Certificate and the Note Affidavit,
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and additional documents required by Section 7.4
(collectively, the "Seller's Closing Documents"), the
Seller's Closing Documents will constitute the legal,
valid, and binding obligations of Seller, enforceable
against Seller in accordance with their respective
terms. Seller has the absolute and unrestricted
right, power, authority, and capacity to execute and
deliver this Agreement and the Seller's Closing
Documents and to perform his obligations under this
Agreement and the Seller's Closing Documents.
(b) Except as set forth in Part 3.2 of the Disclosure
Letter, neither the execution and delivery of this
Agreement nor the consummation or performance of any
of the Contemplated Transactions will, directly or
indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a
violation of (A) any provision of the
Organizational Documents of the Acquired
Companies or the Partnership, (B) any
resolution adopted by the board of directors
or the stockholders of any Acquired Company
or (C) any resolution or action of the
partners of the Partnership;
(ii) contravene, conflict with, or result in a
violation of, or give any Governmental Body
or other Person the right to challenge any of
the Contemplated Transactions or to exercise
any remedy or obtain any relief under, any
Legal Requirement or any Order to which the
Partnership, any Acquired Company or Seller,
or any of the assets owned or used by the
Partnership or any Acquired Company, may be
subject;
(iii) contravene, conflict with, or result in a
violation of any of the terms or requirements
of, or give any Governmental Body the right
to revoke, withdraw, suspend, cancel,
terminate, or modify, any Governmental
Authorization that is held by the Partnership
or any Acquired Company or that otherwise
relates to the business of, or any of the
assets owned or used by, the Partnership or
any Acquired Company;
(iv) cause Buyer, the Partnership or any Acquired
Company to become subject to, or to become
liable for the payment of, any Tax;
(v) contravene, conflict with, or result in a
violation or breach of any provision of, or
give any Person the right to declare a
default or
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exercise any remedy under, or to accelerate
the maturity or performance of, or to cancel,
terminate, or modify, any Applicable
Contract; or
(vi) result in the imposition or creation of any
Encumbrance upon or with respect to any of
the assets owned or used by the Partnership
or any Acquired Company, except in
connection with the Take Out Loan and the
issuance of the KE Partnership Interests.
Except as set forth in Part 3.2 of the Disclosure
Letter, neither the Seller, the Partnership nor any
Acquired Company is or will be required to give any
notice to or obtain any Consent from any Person in
connection with the execution and delivery of this
Agreement or the consummation or performance of any
of the Contemplated Transactions.
(c) Seller is acquiring the Promissory Notes for his own
account and not with a view to their distribution
within the meaning of Section 2(11) of the Securities
Act; provided, however, that nothing herein shall be
deemed to restrict the negotiability of any
Promissory Note or the Adjustment Note made payable
to and delivered to Seller hereunder, to the extent
that such Promissory Note or the Adjustment Note is
by its terms negotiable. The Seller is an "accredited
investor" as such term is defined in Rule 501(a)
under the Securities Act.
3.3 Capitalization
(a) The authorized equity securities of Westbrooke
Communities, Inc. consist of 100 shares of common
stock, par value $1.00 per share, of which 100 shares
are issued and outstanding and constitute a portion
of the Shares. Seller is and will be on the Closing
Date the record and beneficial owner and holder of
100% of such shares, free and clear of all
Encumbrances.
(b) The authorized equity securities of Westbrooke at
West Lake, Inc. consist of 7,500 shares of common
stock, par value $1.00 per share, of which 7,500
shares are issued and outstanding and constitute a
portion of the Shares. Seller is and will be on the
Closing Date the record and beneficial owner and
holder of 100% of such shares, free and clear of all
Encumbrances.
(c) The authorized equity securities of Westbrooke at
Winston Trails, Inc., consist of 7,500 shares of
common stock, par value $1.00 per share, of which
7,500 shares are issued and outstanding and
constitute a portion
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of the Shares. Seller is and will be on the Closing
Date the record and beneficial owner and holder of
100% of such shares, free and clear of all
Encumbrances.
(d) The authorized equity securities of Westbrooke at
Pembroke Pines, Inc. consist of 7,500 shares of
common stock, par value $1.00 per share, of which
7,500 shares are issued and outstanding and
constitute a portion of the Shares. Seller is and
will be on the Closing Date the record and beneficial
owner and holder of 100% of such shares, free and
clear of all Encumbrances.
(e) The authorized equity securities of Westbrooke at Oak
Ridge, Inc. consist of 100 shares of common stock,
par value $0.01 per share, of which 100 shares are
issued and outstanding and constitute a portion of
the Shares. Seller is and will be on the Closing Date
the record and beneficial owner and holder of 100% of
such shares, free and clear of all Encumbrances.
(f) No legend or other reference to any purported
Encumbrance appears upon any certificate representing
equity securities of any Acquired Company. All of the
outstanding equity securities of each Acquired
Company have been duly authorized and validly issued
and are fully paid and nonassessable. There are no
Contracts relating to the issuance, sale, or transfer
of any equity securities or other securities of any
Acquired Company. None of the outstanding equity
securities or other securities of any Acquired
Company was issued in violation of the Securities Act
or any other Legal Requirement. Except as set forth
in Part 3.3(f) of the Disclosure Letter, no Acquired
Company owns, or has any Contract to acquire, any
equity securities or other securities of any Person
(other than the Partnership) or any direct or
indirect equity or ownership interest in any other
business.
(g) All of the interests in the Partnership are owned by
the Acquired Companies in the proportions stated in
the Revised Interest Column of Exhibit 3.3, after
giving effect to the Athena Redemption. On the
Closing Date, the Acquired Companies and the Key
Employees will be the record and beneficial owners
and holders of all of the Partnership interests, in
the proportions designated in Exhibit 3.3 as "revised
interests", free and clear of all Encumbrances. No
legend or other reference to any purported
Encumbrance appears upon any certificate representing
equity securities of the Partnership. All of the
outstanding equity securities of the Partnership have
been duly authorized and validly issued and are fully
paid and nonassessable. There are no Contracts
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relating to the issuance, sale, or transfer of any
equity securities or other securities of the
Partnership. None of the outstanding equity
securities or other securities of the Partnership
were issued in violation of the Securities Act or any
other Legal Requirement. Except as set forth in Part
3.3(g) of the Disclosure Letter, the Partnership does
not own, and does not have any Contract to acquire,
any equity securities or other securities of any
Person or any direct or indirect equity or ownership
interest in any other business.
3.4 Financial Statements
Seller has delivered to Buyer: (a) audited combined balance
sheets of "Westbrooke Communities, Inc. and Affiliates" as of
December 31, 1992 through 1994, and the related audited
combined statements of income, and retained earnings, and cash
flow for the years then ended, together with the report
thereon of Ernst & Young, independent certified public
accountants, (b) audited combined balance sheets of the
Partnership as of December 31, 1995 and 1996 (the 1996 balance
sheet, including the notes thereto, is hereinafter referred to
as the "Balance Sheet"), and the related audited combined
statements of income, partners' capital, and cash flow for the
years then ended, together with the report thereon of Ernst &
Young, independent certified public accountants, (c) an
unaudited combined balance sheet of "Westbrooke Communities,
Inc., and Affiliates" as at September 30, 1997 (the "Interim
Balance Sheet"), and the related unaudited combined statements
of income, changes capital, and cash flow for the nine (9)
months then ended, including in each case the notes thereto,
if any (the "Interim Balance Sheet"), and (d) an unaudited
combined balance sheet of the Partnership, as of November 30,
1997, and the related unaudited combined statements of income,
for the eleven (11) months then ended (the "November Financial
Statements"). The financial statements and notes described in
Section 3.4(a), (b) and (c) fairly present the financial
condition and the results of operations, changes in
stockholders' equity or partners' capital (as the case may
be), and cash flow of Westbrooke Communities, Inc. and
Affiliates, or the Partnership as the case may be, as at the
respective dates of and for the periods referred to therein,
all in accordance with GAAP, subject, in the case of the
interim financial statements described in Section 3.4(c), to
normal recurring year-end adjustments (the effect of which
will not, individually or in the aggregate, constitute a
Material Adverse Effect) and the absence of notes (that, if
presented, would not differ materially from those included in
the Balance Sheet); such financial statements reflect the
consistent application of such accounting principles
throughout the periods involved, except as disclosed in the
notes to such financial statements. No financial statements of
any Person other than the Partnership and the Acquired
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Companies are required by GAAP to be included in the combined
financial statements of Westbrooke Communities, Inc. and
Affiliates or the Partnership, as the case may be. To the
Knowledge of the Partnership and the Acquired Companies, the
November Financial Statements fairly present the financial
condition and the results of operations, of the Partnership as
the case may be, as at the date of, and for the period
referred to in the November Balance Sheet, all in accordance
with GAAP, subject to the eleven (11) items described as
pending review for possible recording in the December 1997
financials in Part 3.4 of the Disclosure Letter.
3.5 Books and Records
The books of account, minute books, stock record books, and
other records of the Partnership and the Acquired Companies,
all of which have been made available to Buyer, are complete
and correct, and have been maintained in accordance with sound
business practices. The minute books of the Partnership and
the Acquired Companies contain accurate and complete records
of all meetings held of, and all action taken by, the
stockholders (or the partners of the Partnership acting on
behalf of the Partnership, as the case may be), the Boards of
Directors, and committees of the Boards of Directors of the
Acquired Companies (or the partners of the Partnership), and
no meeting of any such stockholders, partners, Board of
Directors, or committee has been held for which minutes have
not been prepared and are not contained in such minute books.
At the Closing, all of those books and records will be in the
possession of the Partnership and the Acquired Companies or
Xxxxxxx X. Xxxxxxx, Esquire, as their Representative.
3.6 Title to Properties; Encumbrances
Part 3.6 of the Disclosure Letter contains a complete and
accurate list of all real property, leaseholds, or other
interests therein owned by the Partnership and any Acquired
Company. Seller has delivered to Buyer copies of the deeds and
other instruments (as recorded) by which the Partnership or
the Acquired Companies acquired such real property and
interests, and copies of all title insurance policies in the
possession of Seller, the Partnership or the Acquired
Companies and relating to such property or interests. The
Partnership and the Acquired Companies own such real property
(with good and marketable title subject only to the matters
permitted by the following sentence), leaseholds and other
interests therein and all personal property and other assets
(whether tangible or intangible) that are reflected in the
Balance Sheet and the Interim Balance Sheet (except for assets
held under capitalized leases disclosed or not required to be
disclosed in Part 3.6 of the Disclosure Letter, and property
sold since the date
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of the Balance Sheet and the Interim Balance Sheet, as the
case may be, in the Ordinary Course of Business), and all of
the property and other assets (whether tangible or intangible)
purchased or otherwise acquired by the Partnership or the
Acquired Companies since the date of the Balance Sheet (except
for property acquired and sold since the date of the Balance
Sheet in the Ordinary Course of Business and consistent with
past practice), which subsequently purchased or acquired
properties and assets (other than non-real estate inventory
and short-term investments) are listed in Part 3.6 of the
Disclosure Letter. Except as set forth noted in the
aforementioned title insurance policies and/or as set forth in
Part 3.6 of the Disclosure Letter, all material properties and
assets reflected in the Balance Sheet and the Interim Balance
Sheet are free and clear of all Encumbrances and are not, in
the case of real property, subject to any rights of way,
building use restrictions, exceptions, variances,
reservations, or limitations of any nature except, with
respect to all such properties and assets, (a) mortgages or
security interests shown on the Balance Sheet or the Interim
Balance Sheet as securing specified liabilities or
obligations, with respect to which no default (or event that,
with notice or lapse of time or both, would constitute a
default) exists, (b) mortgages or security interests incurred
in connection with the purchase of property or assets after
the date of the Interim Balance Sheet (such mortgages and
security interests being limited to the property or assets so
acquired), with respect to which no default (or event that,
with notice or lapse of time or both, would constitute a
default) exists, (c) liens for current taxes, impact fees or
governmental assessments not yet delinquent, and (d) with
respect to real property, (i) minor imperfections of title, if
any, none of which is substantial in amount, materially
detracts from the value or materially impairs the intended use
of any of the property subject thereto, or impairs the
operations of the Partnership or any Acquired Company, and
(ii) zoning laws and other land use restrictions that do not
materially impair the present or anticipated use of any of the
property subject thereto. All buildings, plants, and
structures owned by the Partnership and the Acquired Companies
lie wholly within the boundaries of the real property owned by
the Partnership and the Acquired Companies and do not encroach
upon the property of, or otherwise conflict with the property
rights of, any other Person.
3.7 Condition and Sufficiency of Assets
The buildings, plants, structures, and equipment of the
Partnership and the Acquired Companies, including all dwelling
units constructed or being constructed by or for one or more
of the Partnership and the Acquired Companies, are
structurally sound, are in good operating condition and
repair, are in compliance with all Governmental Authorizations
and Legal Requirements (except as set forth in Part 3.7 of the
Disclosure Letter), and are adequate for the
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uses to which they are being put, and none of such buildings,
plants, structures, or equipment is in need of maintenance or
repairs except for ordinary, routine maintenance and repairs
that are not material in nature or cost. The building, plants,
structures, and equipment of the Partnership and the Acquired
Companies are sufficient for the continued conduct of the
Partnership and the Acquired Companies' businesses after the
Closing in substantially the same manner as conducted prior to
the Closing.
3.8 Accounts Receivable
All accounts receivable of the Partnership and any Acquired
Company that are reflected on the Balance Sheet or the Interim
Balance Sheet, or on the accounting records of the Partnership
and any Acquired Company as of the Closing Date (collectively,
the "Accounts Receivable"), represent or will represent valid
obligations to the Partnership or such Acquired Company.
Unless received by the Partnership or any of the Acquired
Companies prior to the Closing Date, the Accounts Receivable
are or will be collectible as of the Closing Date, net of the
reserves, if any, shown on the Balance Sheet or the Interim
Balance Sheet or as set forth in Part 3.8 of the Disclosure
Letter. Subject to such reserves, each of the Accounts
Receivable either has been or will be collected in full,
without any set-off except as are disclosed on Part 3.8 of the
Disclosure Letter. Part 3.8 of the Disclosure Letter contains
a complete and accurate list and summary of the terms of all
Accounts Receivable as of the date of the Interim Balance
Sheet, which list sets forth the payment status of such
Accounts Receivable, and any reserves as of September 30, 1997
not shown on the Balance Sheet or the Interim Balance Sheet.
3.9 Inventory
All inventory of the Partnership and the Acquired Companies,
including all dwelling units constructed or being constructed
by or for one or more of the Partnerships and the Acquired
Companies, whether or not reflected in the Balance Sheet or
the Interim Balance Sheet, consists of a quality and quantity
usable and salable in the Ordinary Course of Business, except
for obsolete items and items of below- standard quality, all
of which have been written off or written down to net
realizable value in the Balance Sheet or the Interim Balance
Sheet or on the accounting records of the Partnership and the
Acquired Companies as of the Closing Date, as the case may be.
All inventories not written off are reflected on the Balance
Sheet and the Interim Balance Sheet in accordance with GAAP.
The quantities of each item of inventory (whether raw
materials, work-in-process, or finished goods) are not
excessive, but are
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reasonable in the present circumstances of the Partnership and
the Acquired Companies.
3.10 No Undisclosed Liabilities
Except as set forth in Part 3.10 of the Disclosure Letter, the
Partnership and the Acquired Companies have no liabilities or
obligations of any nature (whether known or unknown and
whether absolute, accrued, contingent, or otherwise) except
for (a) liabilities or obligations reflected or reserved
against in the Balance Sheet or the Interim Balance Sheet and
current liabilities incurred in the Ordinary Course of
Business since the respective dates thereof; and (b)
warranties covering completed dwelling units more particularly
described in Section 3.17(a)(xiii) for which the cumulative
aggregate cost to the Partnership and the Acquired Companies
of performance of their obligations under all such warranties
shall not exceed $55,000.00.
3.11 Taxes
(a) The Partnership and the Acquired Companies have filed
or caused to be filed (on a timely basis since 1990)
all Tax Returns that are or were required to be filed
by or with respect to any of them, either separately
or as a member of a group of corporations, pursuant
to applicable Legal Requirements. Seller has
delivered to Buyer copies of, and Part 3.11 of the
Disclosure Letter contains a complete and accurate
list of, all such Tax Returns filed since 1990
relating to income or franchise taxes and ADP reports
of all such Tax Returns filed since 1996 relating to
payroll Taxes. The Partnership and the Acquired
Companies have paid, or made provision for the
payment of, all Taxes that have or may have become
due pursuant to those Tax Returns or otherwise, or
pursuant to any assessment received by Seller or any
Acquired Company, except ad valorem real property
taxes and community development district assessments,
if any, as are described generally in Part 3.11 of
the Disclosure Letter and are either (i) being
contested in good faith and as to which adequate
reserves (determined in accordance with GAAP) have
been provided in the Balance Sheet and the Interim
Balance Sheet, or (ii) are current Taxes or
assessments not yet delinquent.
(b) No audit by the IRS or relevant state tax authorities
of United States federal or state income, franchise
or payroll Tax Returns of the Partnership and each
Acquired Company has ever resulted in a material
proposed deficiency or adjustment and all assessments
pursuant to any
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and all deficiencies and adjustments (and any and all
penalties and interest thereon) have been paid in
full.
(c) The charges, accruals, and reserves with respect to
Taxes on the respective books of each Acquired
Company are adequate (determined in accordance with
GAAP) and are at least equal to that Acquired
Company's liability for Taxes (including all
liability that may exist after giving effect to any
and all agreements for special allocations with
Athena pursuant to the Athena Redemption Agreement or
otherwise). There exists no proposed tax assessment
against any Acquired Company except as disclosed in
the Balance Sheet or in Part 3.11 of the Disclosure
Letter. No consent to the application of Section
341(f)(2) of the IRC has been filed with respect to
any property or assets held, acquired, or to be
acquired by any Acquired Company. All Taxes that any
Acquired Company is or was required by Legal
Requirements to withhold or collect have been duly
withheld or collected and, to the extent required,
have been paid to the proper Governmental Body or
other Person.
(d) All Tax Returns filed by (or that include on a
consolidated basis) the Partnership or any Acquired
Company are true, correct, and complete. There is no
tax sharing agreement that will require any payment
by the Partnership or any Acquired Company after the
date of this Agreement.
(e) Except as disclosed in Part 3.11 of the Disclosure
Letter, all of the Acquired Companies have been since
they were organized, and will continue to be on the
date prior to the Closing Date, valid "S"
corporations for United States federal and state
income and franchise tax purposes and, as a result,
neither the Acquired Companies nor the Partnership
have incurred since they were organized, or will
incur through Closing, any United States federal or
state income or franchise tax liabilities.
(f) In the event the Promissory Notes shall be or become
subject to documentary stamp taxes or intangible
taxes, in any jurisdiction, Seller shall pay the same
and shall indemnify and hold Buyer, Newmark, Pacific
USA, the Partnership and the Acquired Companies
harmless from all loss, cost, damage and liability
with respect thereto and to all interest and
penalties thereon.
3.12 No Material Adverse Effect
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Since the date of the Balance Sheet, there has not been any
Material Adverse Effect with respect to the Partnership or any
Acquired Company, and no event has occurred or circumstance
exists that may result in a Material Adverse Effect.
3.13 Employee Benefits
(a) Schedule of Plans. Except as and to the extent
described in Part 3.13 of the Disclosure Letter, the
Partnership and the Acquired Companies do not
maintain and have never maintained and are not
required to contribute to and do not otherwise
participate in (and have not ever maintained,
contributed to or otherwise participated in) an
"employee benefit pension plan" or "multi-employer
plan" (as such terms are defined in ERISA), including
without limitation any pension, profit-sharing or
retirement plan, or any other retirement,
compensation, fringe benefit, stock purchase or stock
option plan or arrangement of any kind whatsoever,
whether formal or informal, providing for benefits
for or the welfare of any or all of the employees of
the Acquired Companies or the Partnership or their
beneficiaries. Part 3.13 of the Disclosure Letter
fully and accurately reflects, as of the date hereof
or as of the date noted on such schedule, the total
assets, the accrued benefits or other liabilities or
obligations, and the vested benefits or other
liabilities or obligations for each "employee pension
plan" or "multi- employer plan" or other retirement,
compensation or fringe benefit plan or arrangement of
any kind whatsoever maintained by the Partnership and
the Acquired Companies and which of such plans or
trusts the Partnership and the Acquired Companies
treats as qualified under Section 401 or Section 501
of the IRC.
(b) Reporting and Disclosure. Except as set forth in
Part 3.13 of the Disclosure Letter, the summary plan
descriptions and all other reports, documents,
statements and communication which are required to
have been filed, published or disseminated under
ERISA or other federal law and the rules and
regulations promulgated by the United States
Department of Labor under ERISA and the Treasury
Department under Section 's 401 through 415 inclusive
of the IRC with respect to the plans, trusts or other
arrangements described in subsection (a) above have
been filed, published or disseminated. Each of such
plans and trusts or arrangements which the
Partnership and the Acquired Companies treats as
qualified under Section 401 or Section 501 of the IRC
is so qualified, and no government agency or person
or entity has ever asserted that they are not so
qualified.
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(c) Prohibited Transactions; Reportable Events. None of
the "employee benefit plans" or arrangements
described in subsection (a) above, none of the trusts
or arrangements created thereunder, and no trustee,
custodian or administrator or any person or entity
holding or controlling assets of such plans, trusts
or arrangements has engaged in any "prohibited
transaction" (as such term is defined in ERISA and
the IRC) which could subject such plans, trusts or
arrangements or any of them, any trusts thereunder,
any trustee, custodian or administrator thereof, or
any person or entity holding or controlling assets of
such plans, trusts or arrangements or any person or
entity dealing with such plans, trusts or
arrangements to any tax, penalty, or other cost or
liability of any kind. None of such plans, trusts or
arrangements has been terminated; and there have not
been any "reportable events" (as such term is defined
in ERISA) with respect to any such plans, trusts or
arrangements.
(d) Funding. None of such plans, trusts or arrangements
described in subsection (a) above has incurred any
"accumulated funding deficiency" (as such term is
defined in ERISA), there is no "contingent employer
liability" with respect to any of such plans, trusts
or arrangements, as determined in accordance with
Section 4062 of Title IV of ERISA, and the actually
computed present value of the benefits, accrued to
the date hereof, in which participants under all of
such plans, trusts and arrangements have an interest
(whether or not vested or forfeitable), did not in
the aggregate exceed the value of the aggregate
amount of assets of such plans, trusts and
arrangements as of such date, except as and to the
extent disclosed in Part 3.13 of the Disclosure
Letter.
(e) Other. Except as disclosed in Part 3.13 of the
Disclosure Letter, the Partnership and the Acquired
Companies have fully complied in all material
respects with all provisions of ERISA and any and all
other laws, rules, and regulations applicable to
their employee benefit plans, trusts and arrangements
described in Section 3.13(a).
3.14 Compliance with Legal Requirements; Governmental Authorizations
(a) Except for the matters described in Section 3.14(c)
and as set forth in Part 3.14(a) of the Disclosure
Letter:
(i) the Partnership and each Acquired Company is,
and at all times since January 1, 1993 has
been, in full compliance with each Legal
Requirement that is or was applicable to it
or to the
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conduct or operation of its business or the
ownership or use of any of its assets;
(ii) no event has occurred or circumstance exists
that (with or without notice or lapse of
time) (A) may constitute or result in a
violation by the Partnership or any Acquired
Company of, or a failure on the part of the
Partnership or any Acquired Company to comply
with, any Legal Requirement, or (B) may give
rise to any obligation on the part of the
Partnership or any Acquired Company to
undertake, or to bear all or any portion of
the cost of, any remedial action of any
nature; and
(iii) neither the Partnership nor any Acquired
Company has received, at any time since
January 1, 1993, any notice or other
communication (whether oral or written) from
any Governmental Body or any other Person
regarding (A) any actual, alleged, possible,
or potential violation of, or failure to
comply with, any Legal Requirement, or (B)
any actual, alleged, possible, or potential
obligation on the part of the Partnership or
any Acquired Company to undertake, or to bear
all or any portion of the cost of, any
remedial action of any nature.
(b) Part 3.14(b) of the Disclosure Letter contains a
complete and accurate list or description of each
Governmental Authorization that is held by the
Partnership or any Acquired Company or that otherwise
relates to the business of, or to any of the assets
owned or used by, the Partnership or any Acquired
Company. Each Governmental Authorization listed,
described or required to be listed or described in
Part 3.14(b) of the Disclosure Letter is valid and in
full force and effect in accordance with its terms,
has not been supplemented or modified, the permittee
has performed its obligations thereunder on a current
basis and no event exists that does or, with the
passage of time, giving of notice or both would,
cause a default on the part of the permittee or
prevent the satisfaction of conditions thereunder.
Except for the matters described in Section 3.14(c)
and as set forth in Part 3.14(b) of the Disclosure
Letter:
(i) the Partnership and each Acquired Company is,
and at all times since January 1, 1993 has
been, in full compliance with all of the
terms and requirements of each Governmental
Authorization identified or required to be
identified in Part 3.14(b) of the Disclosure
Letter;
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(ii) no event has occurred or circumstance exists
that may (with or without notice or lapse of
time) (A) constitute or result directly or
indirectly in a violation of or a failure to
comply with any term or requirement of any
Governmental Authorization listed or required
to be listed in Part 3.14(b) of the
Disclosure Letter, or (B) result directly or
indirectly in the revocation, withdrawal,
suspension, cancellation, or termination of,
or any modification to, any Governmental
Authorization listed or required to be listed
in Part 3.14(b) of the Disclosure Letter;
(iii) neither the Partnership nor any Acquired
Company has received, at any time since
January 1, 1993, any notice or other
communication (whether oral or written) from
any Governmental Body or any other Person
regarding (A) any actual, alleged, possible,
or potential violation of or failure to
comply with any term or requirement of any
Governmental Authorization, or (B) any
actual, proposed, possible, or potential
revocation, withdrawal, suspension,
cancellation, termination of, or modification
to any Governmental Authorization; and
(iv) all applications required to have been filed
for the renewal of the Governmental
Authorizations listed or required to be
listed in Part 3.14(b) of the Disclosure
Letter have been duly filed on a timely basis
with the appropriate Governmental Bodies, and
all other filings required to have been made
with respect to such Governmental
Authorizations have been duly made on a
timely basis with the appropriate
Governmental Bodies.
(v) without limiting the generality of the
foregoing, all Governmental Authorizations,
all utility capacity, and any and all on-site
and off-site infrastructure, mitigation and
improvements, and dedications or
contributions in lieu thereof, that are
necessary to obtain building permits and
certificates of occupancy for dwelling units
constructed or to be constructed on each
parcel of real property owned by any of the
Partnership and the Acquired Companies have
been obtained, completed or paid, as the case
may be, including without limitation all
"Development Work" required to be performed
by the sellers under the Oakridge Contract
and the West Lake Contract (as described in
Schedules 3.17.22 and 3.17.21, respectively
to Part 3.17(a) of the Disclosure Letter),
all of the "Work" under the Design/Build
Agreement (as described in Schedule 3.17.20
to Part 3.17(a) of the Disclosure
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Letter) and all of the "improvements" under
the Winston Trails Contract (as described in
Schedule 3.17.17 to Part 3.17(a) of the
Disclosure Letter).
(vi) all on-site and off-site infrastructure,
mitigation and improvements and all dwelling
units and other structures constructed,
installed or performed by the Partnership or
the Acquired Companies comply with all
Governmental Authorizations, all Legal
Requirements and all Applicable Contracts
with end purchasers. To Seller's Knowledge,
all such infrastructure, mitigation and
improvements constructed, installed or
performed by parties other than the
Partnership or the Acquired Companies comply
with all Governmental Authorizations and
Legal Requirements.
(vii) Seller has no Knowledge of any pending or
Threatened matter, fact or event that does
or, with the passage of time, giving of
notice or both, would prevent the
satisfaction (on a continual basis) of any
conditions precedent or subsequent to
existing or required Governmental
Authorizations for the development of land or
construction of dwelling units on any of the
real property that is the subject of the
Applicable Land Contracts.
(viii) The Partnership and/or the Acquired Companies
have complied with the requirements of the
Construction Lien Law, Chapter 713, Part I,
Florida Statutes, with respect to any
Applicable Contract pertaining to the
furnishing of labor, materials or services
for the construction of improvements.
Without limiting the generality of the
foregoing, all payments made under
construction contracts let by the Partnership
and/or the Acquired Companies have been
"proper payments" within the meaning of that
term under the Construction Lien Law.
(ix) There are no Governmental Authorizations
pertaining to dredging, filling, drainage,
surface water management, or wetlands
mitigation as to which any performance by the
permittee remains pending and under which the
remedies for violation include the
prohibition of development and construction
work on the affected land or the imposition
of damages, fines or penalties, under which
the Partnership or any of the Acquired
Companies is the permittee or to which any of
their properties are subject, except those
Governmental Authorizations disclosed in Part
3.14(b) of the Disclosure Letter.
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The Governmental Authorizations listed in Part 3.14(b) of the
Disclosure Letter collectively constitute all of the
Governmental Authorizations necessary to permit the
Partnership and the Acquired Companies to lawfully conduct and
operate their businesses in the manner they currently conduct
and operate such businesses and to permit the Partnership and
the Acquired Companies to own and use their assets in the
manner in which they currently own and use such assets.
(c) Any violations of Legal Requirements, Governmental
Authorizations or Orders by the Partnership or any
Acquired Company that may have occurred from January
1, 1993 through the present shall either: (a) be
cured prior to the Closing Date, with any and all
liabilities and fines (and interest and penalties
thereon, if any) associated therewith fully paid and
any appellate process associated therewith fully
exhausted or otherwise barred; or (b) result in a
cumulative aggregate penalties and fines to the
Partnership or any Acquired Company of less than
$50,000.
3.15 Legal Proceedings; Orders
(a) Except as set forth in Part 3.15(a) of the Disclosure
Letter, there is no pending Proceeding:
(i) that has been commenced by or against the
Partnership or any Acquired Company or that
otherwise relates to or may affect the
business of, or any of the assets owned or
used by, the Partnership or any Acquired
Company; or
(ii) that challenges, or that may have the effect
of preventing, delaying, making illegal, or
otherwise interfering with, any of the
Contemplated Transactions.
Except as set forth in Part 3.15(a) of the Disclosure Letter,
to the Knowledge of Seller, the Partnership and the Acquired
Companies, (1) no such Proceeding has been Threatened, and (2)
no event has occurred or circumstance exists that may give
rise to or serve as a basis for the commencement of any such
Proceeding. Seller has delivered to Buyer copies of all
pleadings, correspondence, and other documents relating to
each Proceeding listed in Part 3.15(a) of the Disclosure
Letter. Except as set forth in Part 3.15(a) of the Disclosure
Letter, the Proceedings listed in Part 3.15(a) of the
Disclosure Letter will not have a Material Adverse Effect with
respect to the Partnership or any Acquired Company.
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(b) Except as set forth in Part 3.15(b) of the Disclosure
Letter:
(i) there is no Order to which any of the
Partnership, the Acquired Companies or any of
the assets owned or used by the Partnership
or any Acquired Company, is subject;
(ii) neither Seller nor the Partnership or the
Acquired Companies are subject to any Order
that relates to the business of, or any of
the assets owned or used by, the Partnership
or any Acquired Company; and
(iii) no officer, partner (after giving effect to
the Athena Redemption) director and, to the
Knowledge of Seller, the Partnership and the
Acquired Companies, no agent or employee, of
the Partnership or any Acquired Company, is
subject to any Order that prohibits such
officer, director, partner, agent, or
employee from engaging in or continuing any
conduct, activity, or practice relating to
the business of the Partnership or any
Acquired Company.
(c) Except for the matters described in Section 3.14(c)
and as set forth in Part 3.15(c) of the Disclosure
Letter:
(i) the Partnership and each Acquired Company is,
and at all times since January 1, 1993 has
been, in full compliance with all of the
terms and requirements of each Order to which
it, or any of the assets owned or used by it,
is or has been subject;
(ii) no event has occurred or circumstance exists
that may constitute or result in (with or
without notice or lapse of time) a violation
of or failure to comply with any term or
requirement of any Order to which the
Partnership or any Acquired Company, or any
of the assets owned or used by the
Partnership or any Acquired Company, is
subject; and
(iii) neither the Partnership nor any Acquired
Company has received, at any time since
January 1, 1993, any notice or other
communication (whether oral or written) from
any Governmental Body or any other Person
regarding any actual, alleged, possible, or
potential violation of, or failure to comply
with, any term or requirement of any Order to
which the Partnership or any Acquired
Company, or any of the assets owned or used
by the Partnership or any Acquired Company,
is or has been subject.
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3.16 Absence of Certain Changes and Events
Except as set forth in Part 3.16 of the Disclosure Letter, and
except for the Contemplated Transactions, since the date of
the Balance Sheet, the Partnership and the Acquired Companies
have conducted their businesses only in the Ordinary Course of
Business and there has not been any:
(a) change in the Partnership or any Acquired Company's
authorized or issued capital stock or equity
interests; grant of any outstanding stock option or
right to purchase shares of capital stock or equity
interests of the Partnership or any Acquired Company;
issuance of any security convertible into such
capital stock; grant of any registration rights;
purchase, redemption, retirement, or other
acquisition by the Partnership or any Acquired
Company of any shares of any such capital stock or
Partnership interests; or declaration or payment of
any dividend or other distribution or payment in
respect of shares of capital stock or Partnership
interests;
(b) amendment to the Organizational Documents of the
Partnership or any Acquired Company;
(c) payment or increase by the Partnership or any
Acquired Company of any bonuses, salaries, or other
compensation (excluding expense reimbursements) to
any stockholder, director, officer, or (except in the
Ordinary Course of Business) employee or entry into
any employment, severance, or similar Contract with
any director, officer, or employee;
(d) adoption of, or increase in the payments to or
benefits under, any profit sharing, bonus, deferred
compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or
with any employees of the Partnership or any Acquired
Company;
(e) damage to or destruction or loss of any asset or
property of the Partnership or any Acquired Company,
whether or not covered by insurance, having a
Material Adverse Effect on the Partnership and the
Acquired Companies, taken as a whole;
(f) entry into, termination of, or receipt of notice of
termination of (i) any license, distributorship,
dealer, sales representative, joint venture, credit,
or similar agreement, or (ii) any Contract or
transaction involving a total remaining commitment by
or to the Partnership or any Acquired Company of at
least $100,000;
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(g) sale (other than sales of property in the Ordinary
Course of Business), lease, or other disposition of
any asset or property of the Partnership or any
Acquired Company or mortgage, pledge, or imposition
of any lien or other encumbrance on any material
asset or property of the Partnership or any Acquired
Company, including the sale, lease, or other
disposition of any of the Intellectual Property
Assets;
(h) cancellation or waiver of any claims or rights with a
value to the Partnership or any Acquired Company in
excess of $100,000;
(i) material change in the accounting methods used by the
Partnership or any Acquired Company; or
(j) agreement, whether oral or written, by the
Partnership or any Acquired Company to do any of the
foregoing.
3.17 Contracts; No Defaults
(a) Part 3.17(a) of the Disclosure Letter contains a
complete and accurate list and, except for the
Contemplated Transactions and as otherwise indicated
below, Seller has delivered to Buyer true and
complete copies, of:
(i) each Applicable Contract that involves the
performance of services and/or the delivery
of goods or materials by one or more of the
Partnership and the Acquired Companies of an
amount or value in excess of $100,000.
(ii) each Applicable Contract that involves the
performance of services and/or delivery of
goods or materials to the Partnership or any
Acquired Company of an amount or value in
excess of $100,000. With respect to
Applicable Contracts with the Partnership or
any Acquired Company for the furnishing of
labor, services and/or materials with
subcontractors and suppliers for the
construction of dwelling units, Seller has
furnished to Buyer construction cost
breakdown that discloses all costs to the
Partnership or any Acquired Company for the
construction of dwelling units in effect
through December 31, 1997, pursuant to
corresponding subcontracts or material supply
agreements (substantially all of which
subcontracts and material supply agreements
expired by their terms on December 31, 1997),
and a
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specimen form of contract for construction
labor, services or materials;
(iii) each Applicable Contract that was not entered
into in the Ordinary Course of Business and
that involves expenditures or receipts of one
or more of the Partnership and the Acquired
Companies in excess of $100,000;
(iv) each lease, rental or occupancy agreement,
license, installment and conditional sale
agreement, and other Applicable Contract
affecting the ownership of, leasing of, title
to, use of, or any leasehold or other
interest in, any real or personal property
(except personal property leases, licenses
and installment and conditional sales
agreements having a value per item or
aggregate payments of less than $100,000 and
with terms of less than one year);
(v) each licensing agreement or other Applicable
Contract with respect to Intellectual
Property Assets, including agreements with
current or former employees, consultants, or
contractors regarding the appropriation or
the non-disclosure of any of the Intellectual
Property Assets;
(vi) each collective bargaining agreement and
other Applicable Contract to or with any
labor union or other employee representative
of a group of employees;
(vii) each joint venture, partnership, and other
Applicable Contract (however named) involving
a sharing of profits, losses, costs, or
liabilities by the Partnership or any
Acquired Company with any other Person;
(viii) each Applicable Contract containing covenants
that in any way purport to restrict the
business activity of the Partnership or any
Acquired Company or any Affiliate of an
Acquired Company or limit the freedom of the
Partnership or any Acquired Company or any
Affiliate of an Acquired Company to engage in
any line of business or to compete with any
Person;
(ix) each Applicable Contract providing for
payments to or by any Person based on sales,
purchases, or profits, other than direct
payments for goods;
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(x) each power of attorney that is currently
effective and outstanding;
(xi) each Applicable Contract entered into other
than in the Ordinary Course of Business that
contains or provides for an express
undertaking by the Partnership or any
Acquired Company to be responsible for
consequential damages;
(xii) each Applicable Contract for capital
expenditures in excess of $25,000 (other than
relating to construction of single family
houses);
(xiii) each written warranty, guaranty, and other
similar undertaking with respect to
contractual performance extended by the
Partnership or any Acquired Company other
than in the Ordinary Course of Business. The
sole written warranties, guaranties and other
similar undertakings with respect to
contractual performance extended or arranged
by the Partnership or any Acquired Company in
connection with the sale of dwelling units
consist of warranties covering completed
dwelling units for a period of one (1) year
(or ten (10) years, in connection with the
sale of dwelling units within the Keystone
Lake project or with respect to which
purchaser financing is obtained through the
Veterans' Administration or Federal Housing
Administration, through the Bonded Builders
Service Corp. "Builder Limited Warranty
Program") following closing of sale, as to
which Seller has furnished Buyer copies of
the form(s) thereof. The cumulative
aggregate cost to the Partnership and the
Acquired Companies of performance of their
obligations under all warranties which were
previously issued by any of them to
purchasers, and that do not conform to the
form one (1) year warranty described above
will not exceed $10,000.00.
(xiv) in addition to the foregoing, each Applicable
Contract for the sale of any lot or parcel of
real property with or without a completed
dwelling unit thereon by one or more of the
Partnership and the Acquired Companies, with
respect to which Seller has, with Buyer's
permission, delivered only the following:
Seller has furnished to Buyer a copy of its
form agreement for sales of dwelling units in
each existing project, together with a
schedule of its standard pricing for each
type of dwelling unit product in each project
and for all extras and premiums.
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(xv) in addition to the foregoing, each Applicable
Contract for or related to the purchase of
real property by one or more of the
Partnership and the Acquired Companies
(collectively, the "Applicable Land
Contracts"). Seller has completed, or will
have completed as of Closing, all
acquisitions of land required as a condition
to the continued enforceability of such
Applicable Land Contracts against the sellers
thereunder through December 31, 1997. The
term of the Winston Trails Option (as
described in Schedule 3.17.17 to Part 3.17(a)
of the Disclosure Letter) expires on January
1, 2002. The seller under the Sunset Lakes
Townhouse Contract (as described in Schedule
3.17.23 to Part 3.17(a) of the Disclosure
Letter) has approved one or more applications
for Governmental Authorizations submitted by
Westbrooke Communities, Inc., pursuant to
which use of the subject land for town-houses
or attached single family residences is
requested.
(xvi) in addition to the foregoing, each Applicable
Contract for the borrowing of money for
acquisition of real property and construction
of dwelling units and related infrastructure
and improvements thereon by any one or more
of the Partnership and the Acquired Companies
(collectively, the "Applicable Loan
Contracts").
(xvii) each amendment, supplement, and modification
(whether oral or written) in respect of any
of the foregoing.
Part 3.17(a) of the Disclosure Letter sets forth the
following concerning such Contracts: the parties to
the Contracts, and the Partnership and the Acquired
Companies' office where details relating to the
Contracts are located. Part 3.17(a) of the
Disclosure Letter includes a Lot Purchase Commitment
Summary as of November 18, 1997. Seller represents
and warrants that the Partnership and the respective
Acquired Companies have substantially achieved the
lot takedowns projected through December 31, 1997.
(b) Except as set forth in Part 3.17(a) or Part 3.17(b)
of the Disclosure Letter:
(i) Seller (and Related Persons of Seller) does
not have and may not acquire any rights
under, and the Seller does not have and will
not become subject to any obligation or
liability under, any
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Contract that relates to the business of, or
any of the assets owned or used by, the
Partnership or any Acquired Company; and
(ii) no officer, director, partner (after giving
effect to the Athena Redemption), and, to the
Knowledge of Seller, the Partnership and the
Acquired Companies, no agent, employee,
consultant, or contractor, of the Partnership
or any Acquired Company is bound by any
Contract that limits the ability of such
officer, director, partner, agent, employee,
consultant, or contractor to (A) engage in or
continue any conduct, activity, or practice
relating to the business of the Partnership
or any Acquired Company, or (B) assign to the
Partnership or any Acquired Company or to any
other Person any rights to any invention,
improvement, or discovery.
(c) Except as set forth in Part 3.17(c) of the Disclosure
Letter, each Contract identified or required to be
identified in Part 3.17(a) of the Disclosure Letter
is in full force and effect and is valid and
enforceable in accordance with its terms.
(d) Except as set forth in Part 3.17(d) of the Disclosure
Letter:
(i) no event has occurred or circumstance exists
that (with or without notice or lapse of
time) may contravene, conflict with, or
result in a violation or breach of, or give
the Partnership or any Acquired Company or
other Person the right to declare a default
or exercise any remedy under, or to
accelerate the maturity or performance of, or
to cancel, terminate, or modify, any
Applicable Contract;
(ii) no Acquired Company has given to or received
from any other Person, any notice or other
communication (whether oral or written)
regarding any actual, alleged, possible, or
potential incurred violation or breach of, or
default under, any Contract;
(iii) without limiting the generality of any of the
foregoing, the Partnership, each Acquired
Company and each Person for whose conduct
they are or may be held to be responsible,
have performed all obligations and have paid
all assessments, deficits, reserves and any
other sums required to be performed or paid
by it or them through the Closing Date to any
homeowners',
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neighborhood, community, master or similar
association or entity (collectively,
"Homeowners' Associations");
(iv) as to each Applicable Loan Contract, all
conditions precedent to advances of principal
have been satisfied or waived through the
Closing Date and Seller has no Knowledge of
any matter, fact or event (whether existing
or threatened) that does or, with the passage
of time, giving of notice or both, would
cause a failure of any such condition from
the Closing Date through maturity of the term
thereof; and
(v) as to each Applicable Land Contract, all
conditions precedent to closing of
acquisitions thereunder have been satisfied
and, except as set forth in Part 3.17(d) of
the Disclosure Letter, Seller has no
Knowledge of any matter, fact or event that
does or, with the passage of time, giving of
notice or both, would prevent satisfaction of
any such condition through the respective
terms of such Applicable Land Contracts.
(e) There are no renegotiations of, attempts to
renegotiate, or outstanding rights to renegotiate any
material amounts paid or payable to the Partnership
or any Acquired Company under current or completed
Contracts with any Person and no such Person has made
written demand for such renegotiation.
(f) The Contracts relating to the sale, design,
manufacture, or provision of products, services, real
property or dwelling units by the Partnership and the
Acquired Companies have been entered into in the
Ordinary Course of Business and have been entered
into without the commission of any act alone or in
concert with any other Person, or any consideration
having been paid or promised, that is or would be in
violation of any Legal Requirement.
3.18 Insurance
(a) Except as set forth in Part 3.18(a) of the Disclosure
Letter, Seller has delivered to Buyer:
(i) true and complete copies of all policies of
insurance to which the Partnership or any
Acquired Company is a party or under which
the Partnership or any Acquired Company, or
any director of the
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Partnership or any Acquired Company, is or
has been covered at any time within the five
(5) years preceding the Closing Date;
(ii) true and complete copies of all pending
applications for policies of insurance; and
(iii) any written statement to management of the
Partnership or any of the Acquired Companies
by the auditor of the Partnership or any
Acquired Company's financial statements or
Combined Financial Statements with regard to
the adequacy of such entity's coverage or of
the reserves for claims.
(b) Part 3.18(b) of the Disclosure Letter describes:
(i) any self-insurance arrangement by or
affecting the Partnership or any Acquired
Company, including any reserves established
thereunder;
(ii) any contract or arrangement, other than a
policy of insurance, for the transfer or
sharing of any risk by the Partnership or any
Acquired Company; and
(iii) all obligations of the Partnership and the
Acquired Companies to third parties with
respect to insurance (including such
obligations under leases and service
agreements) and identifies the policy under
which such coverage is provided.
(c) Part 3.18(c) of the Disclosure Letter sets forth, for
the current policy year and each of the two (2)
preceding policy years:
(i) a summary of the loss experience under each
policy;
(ii) a statement describing each claim under an
insurance policy for an amount in excess of
$10,000, which sets forth:
(A) the name of the claimant;
(B) a description of the policy by
insurer, type of insurance, and
period of coverage; and
(C) the amount and a brief description
of the claim; and
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(iii) a statement describing the loss experience
for all claims that were self-insured,
including the number and aggregate cost of
such claims.
(d) Except as set forth on Part 3.18(d) of the Disclosure
Letter:
(i) All policies to which the Partnership or any
Acquired Company is a party or that provide
coverage to either Seller, the Partnership or
any Acquired Company, or any director or
officer of an Acquired Company:
(A) are valid, outstanding, and
enforceable;
(B) taken together, provide adequate
insurance coverage for the assets
and the operations of the
Partnership and the Acquired
Companies for all risks normally
insured against by a Person carrying
on the same business or businesses
as the Partnership and the Acquired
Companies;
(C) are sufficient for compliance with
all applicable Legal Requirements
and Contracts to which the
Partnership or any Acquired Company
is a party or by which any of them
is bound;
(D) will continue in full force and
effect following the consummation of
the Contemplated Transactions; and
(E) do not provide for any retrospective
premium adjustment or other
experienced- based liability on the
part of the Partnership or any
Acquired Company, except those for
which sufficient reserves have been
provided on the Balance Sheet and
Interim Balance Sheet for such
retrospective premium adjustments,
as set forth in Part 3.18 of the
Disclosure Letter.
(ii) None of Seller, the Partnership or any
Acquired Company has received (A) any refusal
of coverage or any notice that a defense will
be afforded with reservation of rights, or
(B) any notice of cancellation or any other
indication that any insurance policy is no
longer in full force or effect or will not be
renewed or that the issuer of any policy is
not willing or able to perform its
obligations thereunder.
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(iii) The Partnership and the Acquired Companies
have paid all premiums due, and have
otherwise performed all of their respective
obligations, under each policy to which the
Partnership or any Acquired Company is a
party or that provides coverage to the
Partnership or any Acquired Company or
director thereof.
(iv) The Partnership and the Acquired Companies
have given notice to the insurer of all
claims that may be insured thereby.
3.19 Environmental Matters
Except as set forth in Part 3.19 of the Disclosure Letter:
(a) The Partnership and each Acquired Company is in full
compliance with, and is not in violation of or liable
under, any Environmental Law. The Partnership and
each Acquired Company has cured any and all prior
events of non-compliance with and violations of, and
has satisfied all liabilities under, all
Environmental Laws. None of the Seller, the
Partnership or any Acquired Company has any Knowledge
of, nor has any of them or, to their Knowledge, any
other Person for whose conduct they are or may be
held to be responsible received, any actual or
Threatened order, notice, or other communication from
(i) any Governmental Body or private citizen acting
in the public interest, or (ii) the current or prior
owner or operator of any Facilities, of any actual or
potential violation or failure to comply with any
Environmental Law, or of any actual or Threatened
obligation to undertake or bear the cost of any
Environmental, Health, and Safety Liabilities with
respect to any of the Facilities in which Seller, the
Partnership or any Acquired Company has or had an
interest, or with respect to any Facility or other
property at, from or to which Hazardous Materials
generated, manufactured, refined, transferred,
imported, used, or processed by or for Seller, the
Partnership or any Acquired Company, or any other
Person for whose conduct they are or may be held
responsible, have been transported, treated, stored,
handled, transferred, disposed, recycled, or
received.
(b) There are no pending or, to the Knowledge of Seller,
the Partnership and the Acquired Companies,
Threatened claims, Proceedings, Encumbrances, or
other restrictions of any nature, resulting from any
Environmental, Health, and Safety Liabilities or
arising under or pursuant to any Environmental Law,
with respect to or affecting any of the Facilities in
which Seller, the Partnership or any Acquired Company
has or had an interest.
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(c) None of Seller, the Partnership or any Acquired
Company has any Knowledge of, nor has any of them
or, to their Knowledge, any other Person for whose
conduct they are or may be held responsible, received
any citation, directive, inquiry, notice, Order,
summons, warning, or other communication that relates
to Hazardous Activity, Hazardous Materials, or any
alleged, actual, or potential violation or failure to
comply with any Environmental Law, or of any alleged,
actual, or potential obligation to undertake or bear
the cost of any Environmental, Health, and Safety
Liabilities, with respect to any of the Facilities in
which Seller, the Partnership or any Acquired Company
has or had an interest, or with respect to any
property or Facility at, from or to which Hazardous
Materials generated, manufactured, refined,
transferred, imported, used, or processed by or for
Seller, the Partnership or any Acquired Company, or
any other Person for whose conduct they are or may be
held responsible, have been transported, treated,
stored, handled, transferred, disposed, recycled, or
received.
(d) None of Seller, the Partnership or any Acquired
Company, nor any other Person for whose conduct they
are or may be held responsible, has any
Environmental, Health, and Safety Liabilities with
respect to the Facilities in which Seller, the
Partnership or any Acquired Company (or any
predecessor), has or had an interest, or at any
property geologically or hydrologically adjoining the
Facilities.
(e) Neither Seller, the Partnership nor any Acquired
Company had any Knowledge of the presence, as of the
date of acquisition by the Partnership or any of the
Acquired Companies of an interest in any Facility, of
any Hazardous Materials on or in the Environment at
such Facility, or at any geologically or
hydrologically adjoining property, including any
Hazardous Materials contained in barrels, above or
underground storage tanks, landfills, land deposits,
dumps, equipment (whether moveable or fixed) or other
containers, either temporary or permanent, and
deposited or located in land, water, sumps, or any
other part of such Facility or such adjoining
property, or incorporated into any structure therein
or thereon. Except as set forth in Paragraph 3.19(e)
of the Disclosure Letter, each of the matters
disclosed in Part 3.19(e) of the Disclosure Letter
has been remediated so as to render the affected
Facility, property or asset in compliance with all
Environmental Laws and Seller, the Partnership and
the Acquired Companies have satisfied any and all
Environmental, Health and Safety Liabilities with
respect thereto.
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From and after the date of acquisition of an interest
in any Facility (as owner or operator) by the
Partnership or any of the Acquired Companies, no
Hazardous Materials have become present on or in the
Environment at the Facilities or, to the Knowledge of
Seller, the Partnership and the Acquired Companies,
at any geologically or hydrologically adjoining
property, including any Hazardous Materials contained
in barrels, above or underground storage tanks,
landfills, land deposits, dumps, equipment (whether
moveable or fixed) or other containers, either
temporary or permanent, and deposited or located in
land, water, sumps, or any other part of the
Facilities or such adjoining property, or
incorporated into any structure therein or thereon.
None of Seller, the Partnership, any Acquired
Company, or any other Person for whose conduct they
or any of them are or may be held responsible or, to
their Knowledge, any other Person, has permitted or
conducted, or has Knowledge of, any Hazardous
Activity conducted in, at or upon the Facilities in
which Seller, the Partnership or any Acquired Company
has or had an interest.
(f) From and after the date of acquisition of an interest
in any Facility (as owner or operator) by the
Partnership or any Acquired Company, there has been
no Release in violation of any Environmental Law of
any Hazardous Materials at or from such Facilities
or, to the Knowledge of Seller, the Partnership and
the Acquired Companies, at any other locations, where
any Hazardous Materials were generated, manufactured,
refined, transferred, produced, imported, used, or
processed from or by the Facilities or any
geologically or hydrologically adjoining property,
whether by Seller, the Partnership or any Acquired
Company, or any other Person.
To the Knowledge of Seller, the Partnership and the
Acquired Companies, there has been no Release prior
to the date of acquisition of an interest in any
Facility by the Partnership or any Acquired Company
(except for the matters disclosed in Part 3.19(e) of
the Disclosure Letter, each of which has been
remediated so as to render the affected Facility,
property or asset in compliance with all
Environmental Laws) in violation of any Environmental
Law, and no Threat of Release, of any Hazardous
Materials at or from such Facilities or, to the
Knowledge of Seller, the Partnership and the Acquired
Companies, at any other locations, where any
Hazardous Materials were generated, manufactured,
refined, transferred, produced, imported, used, or
processed from or by the Facilities or any
geologically or hydrologically adjoining property,
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whether by Seller, the Partnership or any Acquired
Company, or any other Person.
(g) Seller has delivered to Buyer true and complete
copies of any and all reports, studies, analyses,
tests, or monitoring possessed or initiated by
Seller, the Partnership or any Acquired Company
pertaining to Hazardous Materials or Hazardous
Activities in, on, or under the Facilities, or
concerning compliance by Seller, the Partnership or
any Acquired Company, or any other Person for whose
conduct they or any of them are or may be held
responsible, with Environmental Laws.
3.20 Employees
(a) Part 3.20 of the Disclosure Letter contains a
complete and accurate list of the following
information for each employee or director of the
Partnership and the Acquired Companies, including
each employee on leave of absence or layoff status
(but excluding any individual that is an independent
contractor); employer; name; job title; current
compensation paid or payable and any change in
compensation since January 1, 1997; vacation accrued;
service credited for purposes of vesting and
eligibility to participate under the Partnership or
any Acquired Company's pension, retirement,
profit-sharing, thrift-savings, deferred compensation
stock bonus, outstanding stock option, cash bonus,
employee stock ownership (including investment credit
or payroll stock ownership), severance pay,
insurance, medical, welfare, or vacation plan, other
employee pension benefit plan or employee welfare
benefit plan, or any other employee benefit plan or
any director plan.
(b) No Key Employee, officer or director of any Acquired
Company and, to the Knowledge of Seller, the
Partnership and the Acquired Companies, no employee
of the Partnership or any Acquired Company, is a
party to, or is otherwise bound by, any agreement or
arrangement, including any confidentiality,
noncompetition, or proprietary rights agreement,
between such employee or director and any other
Person ("Proprietary Rights Agreement") that in any
way adversely affects or will affect (i) the
performance of his duties as an employee or director
of the Partnership and the Acquired Companies, or
(ii) the ability of the Partnership or any Acquired
Company to conduct its business, including any
Proprietary Rights Agreement with Seller or the
Partnership and the Acquired Companies by any such
employee or director. No Key Employee or any director
or officer of any Acquired Company has Threatened to
terminate his employment with the Partnership or such
Acquired Company.
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(c) Part 3.20 of the Disclosure Letter also contains a
complete and accurate list of the following
information for each retired employee or director of
the Partnership and the Acquired Companies, or their
dependents, receiving benefits or scheduled to
receive benefits in the future: name, pension
benefit, pension option election, retiree medical
insurance coverage, retiree life insurance coverage,
and other benefits.
(d) There are no written employment agreements between
the Partnership or any Acquired Company and any
employee thereof, except Seller and the Key
Employees.
3.21 Labor Relations; Compliance
Except as set forth in Part 3.21 of the Disclosure Letter,
since January 1, 1993: (a) neither the Partnership nor any
Acquired Company has been or is a party to any collective
bargaining or other labor Contract; and (b) there has not
been, there is not currently pending or existing, and there is
not Threatened, (i) any strike, slowdown, picketing, work
stoppage, or employee grievance process, (ii) any Proceeding
against or affecting the Partnership or any Acquired Company
relating to the alleged violation of any Legal Requirement
pertaining to labor relations or employment matters, including
any charge or complaint filed by an employee or union with the
National Labor Relations Board, the Equal Employment
Opportunity Commission, or any comparable Governmental Body,
organizational activity, or other labor or employment dispute
against or affecting any of the Partnership and the Acquired
Companies or their premises, or (iii) any application for
certification of a collective bargaining agent. To the
Knowledge of Seller, the Partnership and the Acquired
Companies, no event has occurred or circumstance exists that
could provide the basis for any work stoppage or other labor
dispute. There is no lockout of any employees by the
Partnership or any Acquired Company, and no such action is
contemplated by the Partnership or any Acquired Company.
Except as set forth in Part 3.21 of the Disclosure Letter, (x)
the Partnership and each Acquired Company has complied in all
respects with all Legal Requirements relating to employment,
equal employment opportunity, nondiscrimination, immigration,
wages, hours, benefits, collective bargaining, the payment of
social security and similar taxes, occupational safety and
health, and plant closing; and (y) neither the Partnership nor
any Acquired Company is liable for the payment of any
compensation, damages, taxes, fines, penalties, or other
amounts, however designated, for failure to comply with any of
the foregoing Legal Requirements.
3.22 Intellectual Property
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(a) Intellectual Property Assets--The term "Intellectual
Property Assets" includes:
(i) the name Westbrooke, all fictional business
names, trading names, registered and
unregistered trademarks, service marks, and
applications, excluding the name "Xxxx" and
any name including "Xxxx" (collectively,
"Marks");
(ii) all patents, patent applications, and
inventions and discoveries that may be
patentable (collectively, "Patents");
(iii) all copyrights in both published works and
unpublished works (collectively,
"Copyrights");
(iv) all rights in mask works (collectively,
"Rights in Mask Works"); and
(v) all know-how, trade secrets, confidential
information, customer lists, software,
technical information, data, process
technology, plans, drawings, and blue prints
(collectively, "Trade Secrets"); owned, used,
or licensed by the Partnership or any
Acquired Company as licensee or licensor.
(b) Agreements--Part 3.22(b) of the Disclosure Letter
contains a complete and accurate list and summary
description, including any royalties paid or received
by the Partnership and the Acquired Companies, of all
Contracts relating to the Intellectual Property
Assets to which the Partnership or any Acquired
Company is a party or by which the Partnership or any
Acquired Company is bound, except for any license
implied by the sale of a product and perpetual, paid-
up licenses for commonly available software programs
with an original purchase price to the Partnership or
any Acquired Company of less than $50,000 under which
an Acquired Company or the Partnership is the
licensee. There are no outstanding and, to Seller's
Knowledge, no Threatened disputes or disagreements
with respect to any such agreement.
(c) Know-How Necessary for the Business
(i) One or more of the Acquired Companies or the
Partnership is the owner of all right, title,
and interest in and to each of the
Intellectual Property Assets, free and clear
of all liens, security interests, charges,
encumbrances, equities, and other adverse
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claims, and except as set forth in Part
3.22(c) of the Disclosure Letter has the
right to use without payment to a third party
all of the Intellectual Property Assets.
(ii) Except as set forth in Part 3.22(c) of the
Disclosure Letter, all former and current
employees of the Partnership and each
Acquired Company have executed written
Contracts with one or more of the Acquired
Companies or the Partnership that assign to
one or more of the Acquired Companies or the
Partnership all rights to any inventions,
improvements, discoveries, or information
relating to the business of the Partnership
or any Acquired Company. No Key Employee and,
to the Knowledge of Seller, the Partnership
and the Acquired Companies, no employee of
the Partnership or any Acquired Company has
entered into any Contract that restricts or
limits in any way the scope or type of work
in which the employee may be engaged or
requires the employee to transfer, assign, or
disclose information concerning his work to
anyone other than one or more of the Acquired
Companies or the Partnership.
(d) Patents Neither the Partnership nor any Acquired
Company nor the Seller own any Patents.
(e) Trademarks
(i) Part 3.22(e) of Disclosure Letter contains a
complete and accurate list and summary
description of all Marks. One or more of the
Acquired Companies or the Partnership is the
owner of all right, title, and interest in
and to each of the Marks, free and clear of
all liens, security interests, charges,
encumbrances, equities, and other adverse
claims.
(ii) All Marks that have been registered with the
United States Patent and Trademark Office are
currently in compliance with all formal legal
requirements (including the timely
post-registration filing of affidavits of use
and incontestability and renewal
applications), are valid and enforceable, and
are not subject to any maintenance fees or
taxes or actions falling due within ninety
days after the Closing Date.
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(iii) No Xxxx has been or is now involved in any
opposition, invalidation, or cancellation
and, to Seller's Knowledge, no such action is
Threatened with the respect to any of the
Marks.
(iv) To Seller's Knowledge, there is no
potentially interfering trademark or
trademark application of any third party.
(v) No Xxxx is infringed or, to Seller's
Knowledge, has been challenged or threatened
in any way. None of the Marks used by the
Partnership or any Acquired Company infringes
or is alleged to infringe any trade name,
trademark, or service xxxx of any third
party.
(vi) All products and materials containing a Xxxx
xxxx the proper federal registration notice
where permitted by law.
(f) Copyrights. Except as set forth in Part 3.22(f) of
the Disclosure Letter, neither the Partnership nor
any Acquired Company nor the Seller own any
Copyrights.
3.23 Certain Payments
Neither the Seller, the Partnership, the Acquired Companies
nor any director, officer, agent, employee, consultant or
contractor, of the Partnership or any Acquired Company, has
directly or indirectly:
(a) made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment to any Person,
private or public, regardless of form, whether in money,
property, or services (i) to obtain favorable treatment in
securing business, (ii) to pay for favorable treatment for
business secured, (iii) to obtain special concessions or for
special concessions already obtained, for or in respect of the
Partnership or any Acquired Company or any affiliate of the
Partnership or an Acquired Company, or (iv) in violation of
any Legal Requirement; or
(b) established or maintained any fund or asset that has
not been recorded in the books and records of the Partnership
and the Acquired Companies.
3.24 Disclosure
(a) The representation(s) and warranties of Seller in
this Agreement and the statements in the Disclosure
Letter, supplements to the Disclosure Letter
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and the Master Disclosure List, collectively, do not
omit to state a material fact necessary to make the
statements herein or therein, in light of the
circumstances in which they were made, not
misleading.
(b) No notice given pursuant to Section 5.5 will contain
any untrue statement of a material fact or omit to
state a material fact necessary to make the
statements made therein or in this Agreement, or in
the Disclosure Letter, the supplements to the
Disclosure Letter or the Master Disclosure List,
collectively, in light of the circumstances in which
they were made, not misleading.
(c) There is no fact to the Knowledge of Seller that has
specific application to Seller, the Partnership or
any Acquired Company (other than general economic or
industry conditions) that would have a Material
Adverse Effect or Threatens to have a Material
Adverse Effect upon the Partnership and the Acquired
Companies (on a consolidated basis) that has not been
set forth in this Agreement, the Disclosure Letter,
supplements to the Disclosure Letter and the Master
Disclosure List, collectively.
3.25 Relationships with Related Persons
Except as set forth in Part 3.25 of the Disclosure Letter,
neither Seller nor any Related Person of Seller or of the
Partnership or any Acquired Company:
(a) has, or since the first day of the next to last
completed fiscal year of the Partnership and the
Acquired Companies has had, any interest in any
property (whether real, personal, or mixed and
whether tangible or intangible, but excluding such
inherently personal effects as, without limitation,
desk ornaments, wall decorations, and fish tanks,
fish (living or otherwise), and related accessories,
used in or pertaining to the Partnership's or the
Acquired Companies' businesses;
(b) is, or since the first day of the next to last
completed fiscal year of the Partnership and the
Acquired Companies has owned (of record or as a
beneficial owner), an equity interest or any other
financial or profit interest in, a Person that has
(i) had business dealings or a material financial
interest in any transaction with the Partnership or
any Acquired Company other than business dealings or
transactions conducted in the Ordinary Course of
Business with the Partnership and the Acquired
Companies at substantially prevailing market prices
and on substantially prevailing market terms, or (ii)
engaged in competition with the
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Partnership or any Acquired Company with respect to
any line of the products or services of the
Partnership or any such Acquired Company (a
"Competing Business") in any market presently served
by the Partnership or any such Acquired Company
except for ownership (of records or as a beneficial
owner) of less than one percent of the outstanding
capital stock of any Competing Business that is
publicly traded on any national, regional or foreign
recognized exchange, the NASDAQ, Stock Market or the
over-the-counter market; or
(c) is a party to any Contract with, or has any claim or
right against, the Partnership or any Acquired
Company.
3.26 Brokers or Finders
Seller and his agents have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in
connection with this Agreement.
3.27 No Partnership, Joint Venture, etc.
Except for their interest in the Partnership or as set forth
in Part 3.27 of the Disclosure Letter, none of the Acquired
Companies has an interest in any general or limited
partnership, joint venture, corporation, limited liability
company, trust or other entity.
3.28 Xxxx-Xxxxx-Xxxxxx
Seller represents and warrants that the real estate inventory
reflected on the Interim Balance Sheet consists of (i)
residential property, or (ii) unproductive real property, and
that the fair market value of the remaining non-real estate
inventory assets reflected on the Interim Balance Sheet is
less than $15 Million. For purposes of this Section 3.28, the
term "residential property" shall mean: real property that is
used primarily for residential purposes, including residences,
common areas on the property (including parking and
recreational facilities), and assets incidental to the
ownership of such property, including cash, prepaid taxes or
insurance, rental receivables and the like. For purposes of
this Section 3.28, the term "unproductive real property" shall
mean: any real property, including raw land, structures or
other improvements (but excluding equipment), associated
production and exploration assets, natural resources and
assets incidental to the ownership of the real property, that
has not generated total revenues in excess of $5 million
during the thirty-six (36) months preceding Closing; provided
that unproductive real property does not include
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manufacturing or non-manufacturing facilities that have not
begun operation, manufacturing or non- manufacturing
facilities that were in operation at any time during the
twelve (12) months preceding Closing, and real property that
is either adjacent to or used in conjunction with real estate
that is not unproductive real property. "Associated
production and exploration assets" means equipment, machinery,
fixtures and other assets that are integral and exclusive
current or future exploration or production activities
associated with the carbon-based mineral reserves that are
being acquired. "Associated production and exploration
assets" do not include the following: any pipeline and
pipeline system or processing facility which transports or
processes oil and gas after it passes through the meter of a
producing field located within reserves that are being
acquired, and any pipeline or pipeline system that receives
gas directly from gas xxxxx for transportation to a natural
gas processing facility or other destination. Nothing in this
representation or warranty shall be deemed to imply that
Seller or his Representatives have determined whether any
exemption to the filing requirements of the Xxxx Xxxxx Xxxxxx
Antitrust Improvement Act has been satisfied. The provisions
of this Section shall be interpreted according to their plain
meaning and no preference shall be given to regulatory or
judicial interpretations of similar terms and provisions of
the Xxxx Xxxxx Xxxxxx Antitrust Improvement Act.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer, Newmark and Pacific USA, respectively, represent and warrant to
Seller as follows:
4.1 Organization and Good Standing
Buyer is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Florida, with
full corporate power and authority to acquire and own the
Shares.
4.2 Authority; No Conflict
(a) Buyer:
(i) This Agreement constitutes the legal, valid,
and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms. Upon the
execution and delivery by Buyer of the Escrow
Agreement (Shares), the Escrow Agreement (Additional
Consideration), the Employment Agreements, the
Non-Competition Agreement, the Promissory Notes, the
Pledge Agreement, Buyer's Stock Powers, Buyer's
Certificate, the
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Substitute Guarantees and the additional documents
required by Section 8.4 (collectively, the "Buyer's
Closing Documents"), the Buyer's Closing Documents
will constitute the legal, valid, and binding
obligations of Buyer, enforceable against Buyer in
accordance with their respective terms. Buyer has the
absolute and unrestricted right, power, and authority
to execute and deliver this Agreement and the Buyer's
Closing Documents and to perform its obligations
under this Agreement and the Buyer's Closing
Documents.
(ii) Except as set forth in Schedule 4.2, neither
the execution and delivery of this Agreement by Buyer
nor the consummation or performance of any of the
Contemplated Transactions by Buyer will, with or
without the giving of notice or passage of time:
(x) contravene, conflict with, or result
in a violation of any provision of
the Organizational Documents of
Buyer or any resolution adopted by
the board of directors or the
stockholders of Buyer,
(y) contravene, conflict with, or result
in a violation of, or give any
Governmental Body or other Person
the right to challenge any of the
Contemplated Transactions or to
exercise any remedy or obtain any
relief under, any Legal Requirement
or any Order to which Buyer is
subject, or
(z) contravene, conflict with, or result
in violation or breach of any
provision of, or give any Person the
right to declare a default or
exercise a remedy under, or to
accelerate the maturity or
performance of, or to cancel,
terminate or modify any Contract to
which Buyer is a party or by which
Buyer may be bound,
to the extent the same would have a Material Adverse
Effect upon Buyer's ability to perform its
obligations under this Agreement or any agreement
delivered by it hereunder.
(b) Newmark:
(i) This Agreement constitutes the legal, valid,
and binding obligation of Newmark, enforceable
against Newmark in accordance with its terms. Upon
the execution and delivery by Newmark of this
Agreement, the Escrow Agreement (Additional
Consideration) and any documents
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required by Section 2.5(c) (collectively, "Newmark
Closing Documents"), the Newmark Closing Documents
will constitute the legal, valid, and binding
obligations of Newmark enforceable against Newmark in
accordance with their respective terms. Newmark has
the absolute and unrestricted right, power, and
authority to execute and deliver this Agreement and
the Newmark Closing Documents and to perform its
obligations under this Agreement and the Newmark
Closing Documents.
(ii) Except as set forth in Schedule 4.2, neither
the execution and delivery of this Agreement by
Newmark nor the consummation or performance of any of
the Contemplated Transactions by Newmark will, with
or without the giving of notice or passage of time:
(x) contravene, conflict with, or result
in a violation of any provision of
the Organizational Documents of
Newmark or any resolution adopted by
the board of directors or the
stockholders of Newmark,
(y) contravene, conflict with, or result
in a violation of, or give any
Governmental Body or other Person
the right to challenge any of the
Contemplated Transactions or to
exercise any remedy or obtain any
relief under, any Legal Requirement
or any Order to which Newmark is
subject, or
(z) contravene, conflict with, or result
in violation or breach of any
provision of, or give any Person the
right to declare a default or
exercise a remedy under, or to
accelerate the maturity or
performance of, or to cancel,
terminate or modify any Contract to
which Newmark is a party or by which
Newmark may be bound,
to the extent the same would have a Material Adverse
Effect upon Newmark's ability to perform its
obligations under this Agreement or any agreement
delivered by it hereunder.
(c) Pacific USA:
(i) This Agreement constitutes the legal, valid,
and binding obligation of Pacific USA, enforceable
against Pacific USA in accordance with its terms.
Upon the execution and delivery by Pacific USA of
this Agreement and any documents required by Section
2.5(c) (collectively,
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"Pacific Closing Documents"), the Pacific Closing
Documents will constitute the legal, valid, and
binding obligations of Pacific USA enforceable
against Pacific USA in accordance with their
respective terms. Pacific USA has the absolute and
unrestricted right, power, and authority to execute
and deliver this Agreement and the Pacific Closing
Documents and to perform its obligations under this
Agreement and the Pacific Closing Documents.
(ii) Except as set forth in Schedule 4.2, neither
the execution and delivery of this Agreement by
Pacific USA nor the consummation or performance of
any of the Contemplated Transactions by Pacific USA
will, with or without the giving of notice or passage
of time:
(x) contravene, conflict with, or result
in a violation of any provision of
the Organizational Documents of
Pacific USA or any resolution
adopted by the board of directors or
the stockholders of Pacific USA,
(y) contravene, conflict with, or result
in a violation of, or give any
Governmental Body or other Person
the right to challenge any of the
Contemplated Transactions or to
exercise any remedy or obtain any
relief under, any Legal Requirement
or any Order to which Pacific USA is
subject, or
(z) contravene, conflict with, or result
in violation of any provision of, or
give any Person the right to declare
a default or exercise a remedy
under, or to accelerate the maturity
or performance of or to cancel,
terminate or modify any Contract to
which Pacific USA is a party or by
which it may be bound,
to the extent the same would have a Material Adverse
Effect upon Pacific USA's ability to perform its
obligations under this Agreement or any agreement
delivered by it hereunder.
(d) Except as set forth in Schedule 4.2, neither Buyer,
Newmark, nor Pacific USA is or will be required to give any
notice or obtain any Consent from any Person in connection
with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated
Transactions.
4.3 Investment Intent
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Buyer is acquiring the Shares and, if the Option is elected by
a Key Employee, shall acquire the electing Key Employee's KE
Partnership Interest, for its own account and not with a view
to distribution thereof within the meaning of Section 2(11) of
the Securities Act. Newmark owns 100% of the capital stock of
Buyer and is an "accredited investor," as such term is defined
in Rule 501(a) under the Securities Act.
4.4 Certain Proceedings
There is no pending Proceeding that has been commenced by or
against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering
with, any of the Contemplated Transactions. To the Knowledge
of Buyer, Newmark and Pacific USA, no such Proceeding has been
Threatened and no event has occurred or circumstance exists
that may give rise to or serve as a basis for the commencement
of any such Proceeding.
4.5 Brokers or Finders
Buyer, Newmark, Pacific USA and their respective officers and
agents have incurred no obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this
Agreement and will indemnify and hold Seller harmless from any
such payment alleged to be due by or through Buyer as a result
of the action of Buyer or its shareholders, directors,
officers or agents.
4.6 Buyer acknowledges receipt of all documents specifically
identified in the Disclosure Letter in the Master Disclosure
List or in any attachment thereto.
5. COVENANTS OF SELLER PRIOR TO CLOSING DATE
5.1 Access and Investigation
Between the date of this Agreement and the Closing Date (if
any such period exists), Seller will, and will cause the
Partnership and each Acquired Company and their
Representatives to, (a) afford Buyer and its Representatives
and prospective lenders and their Representatives
(collectively, "Buyer's Advisors") full and free access to the
Partnership's and each Acquired Company's personnel,
properties (including subsurface testing), contracts, books
and records, and other documents and data, (b) furnish Buyer
and Buyer's Advisors with copies of all such contracts, books
and records, and other existing documents and data as Buyer
may reasonably request, and (c) furnish Buyer and Buyer's
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Advisors with such additional financial, operating, and other
data and information as Buyer may reasonably request.
5.2 Operation of the Businesses of the Partnership and the
Acquired Companies
Between the date of this Agreement and the Closing Date (if
any such period exists), Seller will, and will cause the
Partnership and each Acquired Company to:
(a) conduct the business of the Partnership such Acquired
Company only in the Ordinary Course of Business;
(b) use their Best Efforts to preserve intact the current
business organization of the Partnership and each
Acquired Company, keep available the services of the
current officers, employees, and agents of the
Partnership and each Acquired Company, and maintain
the relations and good will with suppliers,
customers, landlords, creditors, employees, agents,
and others having business relationships with the
Partnership and Acquired Company;
(c) confer with Buyer concerning operational matters of a
material nature; and
(d) otherwise report periodically to Buyer concerning the
status of the business, operations, and finances of
the Partnership and each Acquired Company.
5.3 Negative Covenant
Except as otherwise expressly permitted by this Agreement,
between the date of this Agreement and the Closing Date (if
any such period exists), Seller will not, and will cause the
Partnership and each Acquired Company not to, without the
prior consent of Buyer, take any affirmative action, or fail
to take any reasonable action within their or its control, as
a result of which any of the changes or events listed in
Section 3.16 is likely to occur.
5.4 Required Approvals
Seller has or will, and has caused or will cause the
Partnership and each Acquired Company to, make all filings
required by Legal Requirements to be made by them in order to
consummate the Contemplated Transactions. Seller will, and
will cause the Partnership and each Acquired Company to, (a)
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cooperate with Buyer with respect to all filings that Buyer
elects to make or is required by Legal Requirements to make in
connection with the Contemplated Transactions, and (b)
cooperate with Buyer in obtaining all consents identified in
Schedule 4.2.
5.5 Notification
Between the date of this Agreement and the Closing Date (if
any such period exists) and thereafter, Seller will promptly
notify Buyer in writing if Seller, the Partnership or any
Acquired Company becomes aware of any fact or condition that
causes or constitutes a Breach of any of Seller's
representations and warranties as of the date of this
Agreement, or if such Seller, the Partnership or any Acquired
Company becomes aware of the occurrence after the date of this
Agreement of any fact or condition that would (except as
expressly contemplated by this Agreement) cause or constitute
a Breach of any such representation or warranty had such
representation or warranty been made as of the time of
occurrence or discovery of such fact or condition. Should any
such fact or condition require any change in the Disclosure
Letter if the Disclosure Letter were dated the date of the
occurrence or discovery of any such fact or condition, Seller
will promptly deliver to Buyer a supplement to the Disclosure
Letter specifying such change. During the same period, Seller
will promptly notify Buyer of the occurrence of any Breach of
any covenant of Seller in this Section 5 or of the occurrence
of any event that may make the satisfaction of the conditions
in Section 7 impossible or unlikely.
5.6 Payment of Indebtedness by Related Persons
Except as expressly provided in this Agreement, Seller will
cause all indebtedness owed to the Partnership or any Acquired
Company by Seller or any Related Person of Seller to be paid
in full prior to Closing.
5.7 No Negotiation
Until such time, if any, as this Agreement is terminated
pursuant to Section 9, Seller will not, and will cause the
Partnership and each Acquired Company and each of their
Representatives not to, directly or indirectly solicit,
initiate, or encourage any inquiries or proposals from,
discuss or negotiate with, provide any non-public information
to, or consider the merits of any unsolicited inquiries or
proposals from, any Person (other than Buyer) relating to any
transaction involving the sale of the business or assets
(other than in the Ordinary Course of Business) of the
Partnership or any Acquired Company, or any of the capital
stock of the Partnership or any Acquired Company, or any
merger,
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consolidation, business combination, or similar transaction
involving the Partnership or any Acquired Company.
5.8 Best Efforts
Between the date of this Agreement and the Closing Date,
Seller will use his Best Efforts to cause the conditions in
Section 7 to be satisfied.
6.A COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.A.1 Approvals of Governmental Bodies
As promptly as practicable after the date of this Agreement,
Buyer will, and will cause each of its Related Persons to,
make all filings required by Legal Requirements to be made by
them to consummate the Contemplated Transactions. Between the
date of this Agreement and the Closing Date, Buyer will, and
will cause each Related Person to, cooperate with Seller with
respect to all filings that Seller is required by Legal
Requirements to make in connection with the Contemplated
Transactions, and (ii) cooperate with Seller in obtaining all
consents identified in Part 3.2 of the Disclosure Letter;
provided that this Agreement will not require Buyer to dispose
of or make any change in any portion of its business or to
incur any other burden to obtain a Governmental Authorization.
6.A.2 Best Efforts
Except as set forth in the proviso to Section 6.1, between the
date of this Agreement and the Closing Date, Buyer will use
its Best Efforts to cause the conditions in Section 7 to be
satisfied.
6.B COVENANTS OF BUYER AFTER CLOSING DATE
6.B.1 Special Allocation Agreement
Buyer agrees that Seller shall, at Buyer's expense, have prepared at
Seller's direction the federal income tax returns for the Partnership
and each Acquired Company for the tax year ended December 31, 1997.
Before the due date for filing the Partnership's federal income tax
return for its 1997 fiscal year, Buyer further agrees to cause the
Acquired Companies to amend the Partnership Agreement at the direction
of Seller in order to make any retroactive changes to the allocation
of income, gain, loss, deductions and credits (and any items thereof)
for the tax year ended December 31, 1997 as permitted by Section 706
of the Internal Revenue Code of 1986, as amended.
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6.B.2 Replacement Note Delivery
On or before the day after the second anniversary of the Closing Date
(time being of the essence), upon and in exchange for surrender and
delivery to Buyer of the Non-Negotiable Promissory Note, Buyer shall
execute and deliver to Seller, or any other Person designated by
Seller by notice given to Buyer in accordance with Section 12.4, a
promissory note, which in all respects shall be a fully negotiable
instrument, in the form of Exhibit 6.B.2 (the "Replacement Note").
The original principal amount of the Replacement Note shall be the
outstanding principal balance of the Non-Negotiable Promissory Note on
such date, less the amount of any set off(s) made in accordance with
Section 11.8 hereof.
6.B.3 Release of Seller Guarantees
Buyer and Newmark shall use their Best Efforts to obtain and deliver
to Seller releases from liability for the matters described in Exhibit
6.B.3; provided that Buyer's and Newmark's Best Efforts shall include
the giving of its guaranty in consideration for such release, but
shall otherwise exclude any obligation to incur any out of pocket cost
or expense in connection therewith.
6.B.4 Operations
Buyer agrees that all business operations to be managed by Seller
under Seller Employment Agreement shall be conducted solely by the
Partnership, any partner of the Partnership or any other Subject
Entity.
6.B.5. Certain Indemnifications in favor of Seller.
Buyer and Newmark shall, jointly and severally, indemnify, defend and
hold Seller harmless for and will pay to Seller the amount of, any
loss, liability claim, damage, or expense arising out of, or in
connection with the matters described in Exhibit 6.B.5. Provided,
however, such obligation to indemnify, defend and hold harmless shall
not apply to such matters to the extent the same results from Seller's
material breach of any covenant, representation or warranty herein.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other
actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by Buyer, in whole or in part):
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7.1 Accuracy of Representations
(a) All of Seller's representations and warranties in
this Agreement (considered collectively), and each of
these representations and warranties (considered
individually), must have been accurate in all
material respects as of the date of this Agreement,
and must be accurate in all material respects as of
the Closing Date as if made on the Closing Date,
without giving effect to any supplement to the
Disclosure Letter delivered after the Effective Date.
(b) Each of Seller's representations and warranties in
Sections 3.3, 3.4, 3.12, and 3.24 must have been
accurate in all respects as of the date of this
Agreement, and must be accurate in all respects as of
the Closing Date as if made on the Closing Date,
without giving effect to any supplement to the
Disclosure Letter delivered after the Effective Date.
7.2 Performance by Seller and Key Employees:
(a) All of the covenants and obligations that Seller is
required to perform or to comply with pursuant to
this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and
obligations (considered individually), must have been
duly performed and complied with in all material
respects.
(b) Each document required to be delivered by Seller
pursuant to Section 2.5(a) must have been delivered,
and each of the other covenants and obligations in
Sections 5.4 and 5.8 must have been performed and
complied with in all respects.
(c) All of the covenants and obligations that the Key
Employees are required to perform or to comply with
pursuant to this Agreement at or prior to the Closing
(considered collectively) and each of these covenants
and obligations (considered individually), must have
been duly performed and complied with in all material
respects.
(e) Each document required to be delivered by the Key
Employees pursuant to Section 2.5(b) must have been
delivered.
7.3 Consents
Each of the Consents identified in subparts _____ and _____ of
Part 3.2 of the Disclosure Letter, must have been obtained and
must be in full force and effect.
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7.4 Additional Documents
Each of the following documents must have been delivered to
Buyer:
(a) opinions of Xxxx Xxxxxxxxx, P.A. and Xxxxxxx,
Xxxxxxxx & Xxxxx, P.A., each dated the Closing Date,
in the forms of Exhibit 7.4(a)-1 and Exhibit
7.4(a)-(2);
(b) estoppel certificates executed on behalf of the
holder of each Applicable Loan Contract as of the
Closing Date each in the approved form set forth in
Exhibit 7.4(b) and by the managing agent or other
authorized agent of each Homeowners' Association
dated within fifteen (15) days prior to the Closing
Date, each in the applicable form in Exhibit 7.4(b);
and
(c) such other documents as Buyer may reasonably request
for the purpose of (i) enabling its counsel to
provide the opinions referred to in Section 8.4(a),
(ii) evidencing the accuracy of any of Seller's
representations and warranties, (iii) evidencing the
performance by Seller of, or the compliance by Seller
with, any covenant or obligation required to be
performed or complied with by Seller, (iv) evidencing
the satisfaction of any condition referred to in this
Section 7, or (v) otherwise facilitating the
consummation or performance of any of the
Contemplated Transactions.
7.5 No Proceedings
Since the date of this Agreement, there must not have been
commenced or Threatened against Buyer, or against any Person
affiliated with Buyer, any Proceeding (a) involving any
challenge to, or seeking damages or other relief in connection
with, any of the Contemplated Transactions, or (b) that may
have the effect of preventing, delaying, making illegal, or
otherwise interfering with any of the Contemplated
Transactions.
7.6 No Claim Regarding Stock Ownership or Sale Proceeds
There must not have been made or Threatened by any Person any
claim asserting that such Person (a) is the holder or the
beneficial owner of, or has the right to acquire or to obtain
beneficial ownership of, any stock of, or any other voting,
equity, or ownership interest in, any of the Partnership and
the Acquired Companies, or (b) is entitled to all or any
portion of the Purchase Price payable for the Shares or the
consideration payable for any of the KE Partnership Interests.
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7.7 No Prohibition
Neither the consummation nor the performance of any of the
Contemplated Transactions will, directly or indirectly (with
or without notice or lapse of time), materially contravene, or
conflict with, or result in a material violation of, or cause
Buyer or any Person affiliated with Buyer to suffer any
Material Adverse Effect under, (a) any applicable Legal
Requirement or Order, or (b) any Legal Requirement or Order
that has been published, introduced, or otherwise formally
proposed by or before any Governmental Body.
8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to sell the Shares and to take the other actions
required to be taken by Seller at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by Seller, in whole or in
part):
8.1 Accuracy of Representations
All of Buyer's, Newmark's and Pacific USA's representations
and warranties in this Agreement (considered collectively),
and each of these representations and warranties (considered
individually), must have been accurate in all material
respects as of the date of this Agreement and must be accurate
in all material respects as of the Closing Date as if made on
the Closing Date.
8.2 Buyer's and Newmark's Performance
(a) All of the covenants and obligations that Buyer or
Newmark is required to perform or to comply with
pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these
covenants and obligations (considered individually),
must have been performed and complied with in all
material respects.
(b) Buyer and Newmark must have delivered each of the
documents required to be delivered by Buyer and
Newmark, respectively, pursuant to Section 2.5(c) and
2.3(d).
8.3 Consents
Each of the Consents identified in Subparts _____ and ______
of Part 3.2 of the Disclosure Letter must have been obtained
and must be in full force and effect.
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8.4 Additional Documents
Buyer, Newmark and Pacific USA, as the case may be, must have
caused the following documents to be delivered to Seller:
(a) opinions of Katz, Barron, Squitero, Xxxxx & Xxxxxx,
P.A. and Xxxxx, Xxxxxx & Xxxxxx, each dated the
Closing Date, in the applicable forms of Exhibit
8.4(a)-1 and Exhibit 8.4(a)-2; and
(b) such other documents as Seller may reasonably request
for the purpose of (i) enabling his counsel to
provide the opinions referred to in Section 7.4(a),
(ii) evidencing the accuracy of any representation or
warranty of Buyer, Newmark and Pacific USA, (iii)
evidencing the performance by Buyer, Newmark and
Pacific USA of, or the compliance by Buyer, Newmark
and Pacific USA with, any covenant or obligation
required to be performed or complied with by Buyer,
Newmark and Pacific USA, (ii) evidencing the
satisfaction of any condition referred to in this
Section 8, or (v) otherwise facilitating the
consummation or performance of any of the
Contemplated Transactions.
8.5 No Injunction
There must not be in effect any Legal Requirement or any
injunction or other Order that (a) prohibits the sale of the
Shares by Seller to Buyer, and (b) has been adopted or issued,
or has otherwise become effective, since the date of this
Agreement.
9. TERMINATION
9.1 Termination Events
This Agreement may, by notice given prior to or at the
Closing, be terminated:
(a) by either Buyer or Seller if a material Breach of any
provision of this Agreement has been committed by the
other party and such Breach has not been waived;
(b) (i) by Buyer if any of the conditions in Section
7 has not been satisfied as of the Closing
Date or if satisfaction of such a condition
is or becomes impossible (other than through
the failure of Buyer, Newmark or Pacific USA
to comply with its respective obligations
under this Agreement) and Buyer has not
waived such
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condition on or before the Closing Date; or
(ii) by Seller, if any of the conditions in
Section 8 has not been satisfied of the
Closing Date or if satisfaction of such a
condition is or becomes impossible (other
than through the failure of Seller to comply
with his obligations under this Agreement)
and Seller has not waived such condition on
or before the Closing Date;
(c) by mutual consent of Buyer and Seller; or
(d) by either Buyer or Seller if the Closing has not
occurred (other than through the failure of any party
seeking to terminate this Agreement or the failure of
any Related Person of that party to comply fully with
its or his obligations under this Agreement) on or
before January 15, 1998, or such later date as the
parties may agree upon.
9.2 Effect of Termination
Each party's right of termination under Section 9.1 is in
addition to any other rights it or he may have under this
Agreement or otherwise, and the exercise of a right of
termination will not be an election of remedies. If this
Agreement is terminated pursuant to Section 9.1, all further
obligations of the parties under this Agreement will
terminate, except that the obligations in Sections 12.1 and
12.3 will survive; provided, however, that if this Agreement
is terminated by a party because of the Breach of the
Agreement by the other party or because one or more of the
conditions to the terminating party's obligations under this
Agreement is not satisfied as a result of the other party's
failure to comply with its obligations under this Agreement,
the terminating party's right to pursue all legal remedies
will survive such termination unimpaired.
10. OPTION OF KEY EMPLOYEES
10.1 Option Grant and Exercise Period
Each of the Key Employees shall have the Option, as that term
is hereinafter defined, exercisable during the period (the
"Option Period") (a) commencing on the later of (i) January 1,
2000 and (ii) the day after the second anniversary of the
effectiveness of admission of the Key Employees as partners of
the Partnership in accordance with the provisions of Amendment
No. 2 of the Agreement of Partnership of The Westbrooke
Partnership, which agreement is to be executed and delivered
in the form attached hereto as Exhibit 10.1 (the "New Partners
Agreement"), and in accordance with the provisions of the
Partnership Agreement and the Florida Revised Uniform
Partnership Act of
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1995, as those terms are defined in the New Partners
Agreement, and (b) continuing through February 29, 2000. The
Option shall be exercised, if at all, by delivering to Buyer
during the Option Period, time being strictly of the essence:
(a) three (3) original counterparts of the assignment of
the electing Key Employee's KE Partnership Interest
in the form of Exhibit 10.1(b), duly executed by such
Key Employee (the "KE Assignment");
(b) release in the form of Exhibit 10.1(c) duly executed
by such Key Employee (the "KE Second Releases"); and
(c) a certificate executed by such Key Employee
representing and warranting to Buyer such Key
Employee's representations and warranties in this
Agreement were accurate in all respects as of the
date of this Agreement and are accurate in all
respects as of the then current date as if made on
that date (giving full effect to any supplements to
the KE Disclosure Letter that were delivered by such
Key Employee to Buyer prior to the Closing Date or
the date of exercise of the Option in accordance with
Section 10.8) (the "KE Second Certificate").
Subject to satisfaction of the conditions set forth in Section
10.9 below, the closing of the sale of the KE Partnership
Interest of any Key Employee exercising his or her Option
hereunder (the "Option Closing") shall occur on the date (the
"Option Closing Date") of Buyer's written acceptance of the
documents in (a) through (c) above.
Upon occurrence of any of the events described in Section
10.3(c)(ii) as to any Key Employee, such Key Employee shall be
deemed to have irrevocably waived the Option and his or her
right to exercise the same hereunder.
10.2 Definition of the Option and Option Exercise Price
The "Option" is the option of each Key Employee to sell to the
Buyer the entire right, title and interest of that Key
Employee in and to all (but not less than all) of the KE
Partnership Interest of that Key Employee, as that term is
defined in the New Partners Agreement, in consideration for
the payments described below in this Section 10 by Buyer and
Newmark:
(a) For each of the two Calculation Years beginning on
January 1, 1998, and ending on December 31, 1999:
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(i) the amount equal to 1.98% of the Net
Income, as defined in Section
2.2(b), for the respective
Calculation Year; plus
(ii) $200,000; if Cumulative Net Income
(as determined in accordance with
the provisions of Section 2.2(b))
has been achieved, or if the last
sentence in Section 2.2(b)(1) with
respect to such Calculation Year
applies; plus
(iii) an amount equal to the interest rate
calculated, during the calculation
period commencing on April 30, 1999
and continuing through the date or
dates of payment of the sums due
under this Subsection 10.2(a), on
the sum of the amounts determined
under Sections 10.2(a)(i) and (ii)
for the Calculation Year beginning
on January 1, 1998 and ending
December 31, 1998, at the lowest
federal mid-term rate under Section
1274 of the IRC that is effective on
April 30, 1999.
(b) For each Calculation Year commencing after December
31, 1999 and ending December 31, 2002:
(i) the amount equal to 2.00% of the Net
Income for the respective
Calculation Year; plus
(ii) $200,000 if Cumulative Net Income
(as determined in accordance with
the provisions of Section 2.2(b))
has been achieved, or if the last
sentence in Section 2.2(b)(1)
applies to such Calculation Year.
10.3 Payment Terms of the Option Exercise Price
(a) Buyer and Newmark jointly and severally shall make
all payments due under Section 10.2(a) and (b) for
the applicable Calculation Year at the respective
times and in the manner in which Buyer or Newmark is
obligated to make payments to Seller for that
Calculation Year pursuant to the provisions of
Section 2.2(b), except that (i) such payments
pursuant to the provisions of Section 10.2(a) shall
be due and payable on or before ten (10) days
following completion of the audit for the fiscal year
ending December 31, 1999, but in any event prior to
April 30, 2000 and (ii) all payments pursuant to the
provisions of this Section 10 shall be subject to the
provisions of Section 10.3(c)(ii).
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(b) The characterization of each payment under Sections
10.2(a)(ii) and 10.2(b)(ii) shall be in accordance
with the provisions for characterization of
Additional Consideration under Section 2.2(b)(4).
(c) It is understood and agreed that each payment
pursuant to the provisions of this Section 10 is
contingent:
(i) since it is based on future operations of the
Subject Entities; and
(ii) since it shall not be payable for any
Calculation Year during which the respective
Key Employee's employment under the
applicable KE Employment Agreement is
terminated
(A) by the employer therein for "cause"
or by that Key Employee otherwise
than for "cause" as each such term
is defined in the applicable KE
Employment Agreement, or
(B) because of the disability or death
of that Key Employee, as those terms
are contemplated by the KE
Employment Agreements, except that
any amount that otherwise would be
payable in respect of the
Calculation Year during which that
Key Employee's employment is
terminated for a reason stated in
this Section 10.3(c)(ii)(B) shall be
payable to the extent of the product
of that amount multiplied by a
fraction of which the numerator is
the number of days in that
Calculation Year expired as of the
date of termination of employment
for that reason and the denominator
is 365. If, as of the date of death
or disability of a Key Employee, the
Cumulative Net Income allocable to
the year of death or disability
and/or one or more subsequent
Calculation Year has been achieved,
then the deceased or disabled Key
Employee (or his or her estate)
shall be entitled to receive payment
of sums under Section 10.2(a)(ii)
and (iii) and (b)(ii) on account of
such Calculation Year(s), subject to
adjustment for any reduction in
Cumulative Net Income in any such
Subsequent Calculation Year(s) and
any such payment shall be made in
the time and manner required by
Section 10.2(a) and (b), as if no
death or disability had occurred.
If, as of the date of death or disability of a Key
Employee, the cumulative Net Income allocable to the
year of death or disability and/or
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one or more subsequent Calculation Year has been
achieved, then the deceased or disabled Key Employee
(or his or her estate) shall be entitled to receive
payment of sums under Section 10.2(a)(ii) and (iii)
and (b)(ii) on account of such calculation year(s),
subject to adjustment for any reduction in cumulative
Net Income in any such subsequent Calculation
Year(s), and any such payment shall be made in the
time and manner required by Section 10.2(a) and (b),
as if no death or disability had occurred.
10.4 The provisions of Section 2.2(b)(7) and (8) shall
apply to all payments under Sections 10.2(a)(ii) and
10.2(b)(ii) with the same effect as though such
provisions were sent forth herein with the reference
therein to "Additional Consideration" were changed to
"payment under Sections 10.2(a)(ii) and 10.2(b)(ii)."
10.5 Buyer shall have the right to make a timely election
under Section 754 (as applicable) of the IRC with
respect to its purchase of the KE Partnership
Interest of each Key Employee that exercises his or
her Option, and shall seek equivalent treatment of
such purchase under all applicable state and local
tax laws, to the extent such treatment is available.
If required, the Key Employees shall join in such
election. If, as a result of a step-up in basis for
Buyer as a result of Section 754 (as applicable) of
the IRC, such Key Employee(s) shall have an effective
tax rate of greater than the lowest capital gains
rate then in effect and applicable to such Key
Employee(s) with respect to any purchase price paid
in exchange for the KE Partnership Interests, then
Buyer will agree to increase the sums payable under
Section 10.2(a) or (b) hereof so that the net
effective after-tax benefit to such Key Employee(s)
reflects the rate that would have been payable by
each had Section 754 (as applicable) of the IRC not
applied.
10.6 Each of the Key Employees shall severally, but not
jointly, indemnify the Partnership and the Buyer and
hold each of them harmless for, and will pay them in
the aggregate the amount of, any liability or
reasonable expense or cost relating to any
requirement to treat as compensation any of the
payments to that Key Employee pursuant to the
provisions of this Section 10.
10.7 Representations and Warranties of Key Employees
10.7.1 Authority; No Conflict
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(a) This Agreement constitutes the legal, valid, and
binding obligation of the Key Employees, enforceable
against each of them in accordance with its terms.
Upon the execution and delivery by the Key Employees
of the Employment Agreements, the KE Noncompetition
Agreements, the New Partners Agreement, the Restated
Partnership Agreement, and the KE First Releases, the
KE Second Releases, the KE Assignment, KE First
Certificate and the KE Second Certificate,
(collectively, the "KE Closing Documents"), the KE
Closing Documents will constitute the legal, valid,
and binding obligations of the respective Key
Employee enforceable against such Key Employee in
accordance with their terms. The Key Employees each
have the absolute and unrestricted right, power, and
authority to execute and deliver this Agreement and
the KE Closing Documents and to perform their
obligations under this Agreement and the KE Closing
Documents.
(b) Except as set forth in Part 10.7.1 of the KE
Disclosure Letter, neither the execution and delivery
of this Agreement by any of the Key Employees nor the
consummation or performance of any of the
Contemplated Transactions by any Key Employee will
give any Person the right to prevent, delay, or
otherwise interfere with any of the Contemplated
Transactions pursuant to:
(i) any Legal Requirement or Order to which such
Key Employee may be subject; or
(ii) any Contract to which any Key Employee is a
party or by which any Key Employee may be
bound.
Except as set forth in Part 10.7.1 of the KE Disclosure
Letter, the Key Employees are not and will not be required to
obtain any Consent from any Person in connection with the
execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
10.7.2 Certain Proceedings
There is no pending Proceeding that has been commenced against
any Key Employee and that challenges, or may have the effect
of preventing, delaying, making illegal, or otherwise
interfering with, any of the Contemplated Transactions. To the
Key Employees' Knowledge, no such Proceeding has been
Threatened.
10.7.3 Brokers or Finders
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The Key Employees have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or
agents' commissions or other similar payment in connection
with this Agreement and will indemnify and hold Buyer harmless
from any such payment alleged to be due by or through any Key
Employee as a result of the action of any Key Employee or its
agents.
10.7.4 Ownership of KE Partnership Interests
On the Closing Date, the Key Employees will be the record and
beneficial owners and holders of all of the KE Partnership
Interests, in the proportions designated in Exhibit 3.3 as
"revised interests", free and clear of all Encumbrances. No
legend or other reference to any purported Encumbrance
appears, or shall appear, upon any certificate representing
equity securities of the Partnership. All of the KE
Partnership Interests have been duly authorized and validly
issued and are fully paid and nonassessable. None of the KE
Partnership Interests were issued in violation of the
Securities Act or any other Legal Requirement.
10.7.5 Stock Options
The Key Employees are not a party to any Contract under which
he or she holds an option to purchase Shares or an interest in
the Partnership, other than the KE Partnership Interests.
10.7.6 No Proprietary Rights Agreements
No Key Employee is a party to, or is otherwise bound by,
Proprietary Rights Agreement that in any way adversely affects
or will affect the performance of his or her duties under the
KE Employment Agreements, including any Proprietary Rights
Agreement with Seller, the Partnership or the Acquired
Companies.
10.7.7 Certain Payments
No Key Employee has directly or indirectly:
(a) made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment to any Person,
private or public, regardless of form, whether in money,
property, or services (i) to obtain favorable treatment in
securing business, (ii) to pay for favorable treatment for
business secured, (iii) to obtain special concessions or for
special concessions already obtained, for or in respect of the
Partnership or any Acquired Company or any Affiliate of the
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Partnership or an Acquired Company, or (iv) in violation of
any Legal Requirement; or
(b) established or maintained any fund or asset that has
not been recorded in the books and records of the Partnership
and the Acquired Companies.
10.7.8 Relationships with Related Persons
No Key Employee:
(a) has, or since the first day of the next to last
completed fiscal year of the Partnership and the
Acquired Companies has had, any interest in any
property (whether real, personal, or mixed and
whether tangible or intangible), used in or
pertaining to the Partnership's or the Acquired
Companies' businesses;
(b) is, or since the first day of the next to last
completed fiscal year of the Partnership and the
Acquired Companies has owned (of record or as a
beneficial owner) an equity interest or any other
financial or profit interest in, a Person that has
(i) had business dealings or a material financial
interest in any transaction with the Partnership or
any Acquired Company other than business dealings or
transactions conducted in the Ordinary Course of
Business with the Partnership and the Acquired
Companies at substantially prevailing market prices
and on substantially prevailing market terms, or (ii)
engaged in a Competing Business in any market
presently served by the Partnership or any such
Acquired Company except for less than one percent of
the outstanding capital stock of any Competing
Business that is publicly traded on any recognized
exchange or in the over-the-counter market; or
(c) is a party to any Contract with, or has any claim or
right against, the Partnership or any Acquired
Company.
10.7.9 Employment Agreements
There are no or, as of Closing shall not be any,
written employment agreements between the Partnership
or any Acquired Company and the Key Employees, except
the KE Employment Agreements.
Each Key Employee shall indemnify, defend and hold Buyer
harmless of and from any and all damages, loss, cost and
liability suffered by Buyer, including reasonable attorneys'
fees and expenses, incurred by Buyer as a result of the
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falsity of any representation or warranty made by such Key
Employee in this Agreement.
10.8 Between the date of this Agreement and the Option Closing
Date, each Key Employee will promptly notify Buyer in writing
if such Key Employee becomes aware of any fact or condition
that causes or constitutes a Breach of any of such Key
Employee's representations and warranties as of the date of
this Agreement, or if such Key Employee becomes aware of the
occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this
Agreement) cause or constitute a Breach of any such
representation or warranty had such representation or warranty
been made as of the time of occurrence or discovery of such
fact or condition. Should any such fact or condition require
any change in the KE Disclosure Letter if the KE Disclosure
Letter were dated the date of the occurrence or discovery of
any such fact or condition, such Key Employee will promptly
deliver to Buyer a supplement to the KE Disclosure Letter
specifying such change. During the same period, the Key
Employees will promptly notify Buyer of the occurrence of any
Breach of any covenant of Key Employee in this Section 10.8 or
of the occurrence of any event that may make the satisfaction
of the conditions in Section 10.9 impossible or unlikely.
10.9 Conditions to Buyer's Obligation under Option
Buyer's obligation to purchase the KE Partnership Interests is
subject to the satisfaction, at or prior to the Option
Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
10.9.1 Accuracy of Representations
All of the representations and warranties in this Agreement of
the Key Employee exercising the Option must have been accurate
in all respects as of the date of this Agreement, and must be
accurate in all respects as of the Option Closing Date as if
made on the Option Closing Date, without giving effect to any
supplement to the KE Disclosure Letter.
10.9.2 Key Employee's Performance
(a) All of the covenants and obligations that the Key
Employee exercising the Option is required to perform
or to comply with pursuant to this Agreement at or
prior to the Option Closing (considered
collectively), and each of these covenants and
obligations (considered individually),
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must have been duly performed and complied with in
all material respects.
(b) Each document required to be delivered pursuant to
Section 10.1 must have been delivered, and each of
the other covenants and obligations in Section 10
must have been performed and complied with in all
respects.
10.9.3 Seller's Performance
The conditions of Section 7 of this Agreement shall have been
satisfied or waived.
11. INDEMNIFICATION; REMEDIES
11.1 Survival; Right to Indemnification not Affected by Knowledge
All representations, warranties, covenants, and obligations in
this Agreement, the Disclosure Letter, the supplements to the
Disclosure Letter, Seller's Certificate, Buyer's Certificate,
and any other certificate or document delivered pursuant to
this Agreement and identified in this Agreement or in the
Disclosure Letter or in any supplement thereto, or in the
Master Disclosure List attached to this Agreement (the "Master
Disclosure List") will survive the Closing for the period set
forth in Section 11.5. The right to indemnification, payment
of Damages or other remedy based on such representations,
warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any Knowledge
acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement
or the Closing Date, with respect to the accuracy or
inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation. The waiver of any condition
to Closing based on the accuracy of any representation or
warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to
indemnification, payment of Damages, or other remedy based on
such representations, warranties, covenants, and obligations.
11.2 Indemnification and Payment of Damages by Seller
(a) Seller will indemnify and hold harmless Pacific USA,
Newmark, Buyer, the Partnership and the Acquired Companies,
and their respective Representatives, stockholders,
controlling persons (collectively, the "Indemnified Persons")
for, and will pay to the Indemnified Persons the amount of,
any loss, liability, claim, damage (including incidental and
consequential damages), expense (including costs of
investigation and defense and reasonable attorneys'
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fees) or diminution of value, whether or not involving a
third-party claim (collectively, "Damages"), arising, directly
or indirectly, from or in connection with:
(i) any Breach of any representation or warranty
made by Seller in this Agreement (without
giving effect to any supplement to the
Disclosure Letter), the Disclosure Letter,
the supplements to the Disclosure Letter
delivered after the Effective Date, if any,
or any other certificate or document
delivered by Seller pursuant to this
Agreement and identified in this Agreement,
in the Disclosure Letter and any supplement
thereto or in the Master Disclosure List;
(ii) any Breach of any representation or warranty
made by Seller in this Agreement as if such
representation or warranty were made on and
as of the Closing Date without giving effect
to any supplement to the Disclosure Letter,
delivered after the Effective Date, if any,
other than any such Breach that is disclosed
in a supplement to the Disclosure Letter;
(iii) any Breach by Seller of any covenant or
obligation of Seller in this Agreement; and
(iv) all matters described in Exhibit 11.2.
(b) With respect to Breach of any representation or
warranty in Section 3.19, such Damages shall include without
limitation Damages costs of cleanup, containment, or other
remediation, any bodily injury (including illness, disability,
and death, and regardless of when any such bodily injury
occurred, was incurred, or manifested itself), personal
injury, property damage (including trespass, nuisance,
wrongful eviction, and deprivation of the use of real
property), or other damage of or to any Person, including any
employee or former employee of Seller or the Partnership or
any Acquired Company or any other Person for whose conduct
they are or may be held responsible. As to any Facility owned
or operated by Buyer at the time the Breach is discovered,
Buyer will be entitled to control any such Cleanup and any
related Proceeding. The procedure described in Section 11.9
will apply to any other claim relating to a matter covered by
this Section 11.2(b). Notwithstanding the foregoing, if a
Cleanup of a Facility then owned or operated by Buyer has not
been required or requested by a Governmental Body, then
Buyer's Damages for the cost of such Cleanup under this
Section 11.2(b) shall be limited to those costs incurred by
Buyer in its reasonable business judgment.
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(c) The remedies provided in this Section 11.2 will not
be exclusive of or limit any other remedies that may be
available to Buyer or the other Indemnified Persons, except
that Buyer waives its right to seek rescission of this
Agreement.
11.3 Indemnification and Payment of Damages by Seller -- Certain
Environmental Matters
In addition to the provisions of Section 11.2 and subject to
the provisions of Section 11.6 hereof, Seller will indemnify
and hold harmless Buyer, the Partnership and the Acquired
Companies, and the other Indemnified Persons for and will pay
to Buyer, the Partnership and the Acquired Companies, and the
other Indemnified Persons the amount of any Damages (including
the Damages described in Section 11.2(b)), arising directly or
indirectly from or in connection with any Environmental,
Health and Safety Liabilities arising out of or relating to
the ownership, operation or condition at any time of any real
property, improvements, fixtures or equipment thereon that is
or was owned or operated (including operations as general
contractor or project manager by Westbrooke Communities, Inc.)
by the Partnership or any Acquired Company, other than the
residential real estate projects commonly known as Winston
Trails, Oakridge, West Lake Village, Keystone Lake.
11.4 Indemnification and Payment of Damages by Buyer
(a) Buyer will indemnify and hold harmless Seller, and
each Key Employee and their respective Representatives and
will pay to such Party the amount of any Damages arising,
directly or indirectly, from or in connection with (a) any
Breach of any representation or warranty made by Buyer to the
indemnified party in this Agreement or in any certificate,
document, instrument or agreement delivered by Buyer pursuant
to this Agreement, (b) any Breach of any representation or
warranty made by Buyer in this Agreement as if such
representation or warranty were made on and as of the Closing
Date other than any such Breach that is expressly identified
in the Buyer's Certificate as having caused the condition
specified in Section 8.1 not to be satisfied; or (c) any
Breach by Buyer of any covenant or obligation of Buyer in this
Agreement or in any certificate, document, instrument or
agreement delivered by Buyer pursuant to this Agreement, or
(d) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person
with Buyer (or any Person acting on its behalf) in connection
with any of the Contemplated Transactions.
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(b) Newmark will indemnify and hold harmless Seller, and
each Key Employee and their respective Representatives and
will pay to such Party the amount of any Damages arising,
directly or indirectly, from or in connection with (a) any
Breach of any representation or warranty made by Newmark to
the indemnified party in this Agreement or in any certificate,
document, instrument or agreement delivered by Newmark
pursuant to this Agreement, (b) any Breach of any
representation or warranty made by Newmark in this Agreement
as if such representation or warranty were made on and as of
the Closing Date other than any such Breach that is expressly
identified in the Buyer's Certificate as having caused the
condition specified in Section 8.1 not to be satisfied; or (c)
any Breach by Newmark of any covenant or obligation of Newmark
in this Agreement or in any certificate, document, instrument
or agreement delivered by Newmark pursuant to this Agreement,
or (d) any claim by any Person for brokerage or finder's fees
or commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person
with Newmark (or any Person acting on its behalf) in
connection with any of the Contemplated Transactions.
(c) Pacific USA will indemnify and hold harmless Seller,
and each Key Employee and their respective Representatives and
will pay to such Party the amount of any Damages arising,
directly or indirectly, from or in connection with (a) any
Breach of any representation or warranty made by Pacific USA
to the indemnified party in this Agreement or in any
certificate, document, instrument or agreement delivered by
Pacific USA pursuant to this Agreement, (b) any Breach of any
representation or warranty made by Pacific USA in this
Agreement as if such representation or warranty were made on
and as of the Closing Date other than any such Breach that is
expressly identified in the Buyer's Certificate as having
caused the condition specified in Section 8.1 not to be
satisfied; or (c) any Breach by Pacific USA of any covenant or
obligation of Pacific USA in this Agreement or in any
certificate, document, instrument or agreement delivered by
Pacific USA pursuant to this Agreement, or (d) any claim by
any Person for brokerage or finder's fees or commissions or
similar payments based upon any agreement or understanding
alleged to have been made by any such Person with Pacific USA
(or any Person acting on its behalf) in connection with any of
the Contemplated Transactions.
(d) Seller, the Acquired Companies and the Partnership
(the "Seller and Entities") have not participated in the
preparation of any portion of, nor reviewed, nor have any
responsibility to any of Buyer, Newmark, Pacific USA or any
other Person with respect to, any registration statement or
other filing with the federal Securities and Exchange
Commission or any state securities law authority by Pacific
USA, Newmark, Buyer or any affiliate of any of them
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(each, a "Securities Filing"). The Pacific Entities shall
indemnify and hold harmless the Seller and Entities and their
respective Representatives, stockholders, controlling persons,
affiliates, directors, officers and employees from and against
the amount of any loss, liability, claim, damage (including
incidental and consequential damages), expense (including
costs of investigation and defense and reasonable attorneys'
fees) or diminution of value, whether or not involving a third
party claim, arising or resulting from or in connection with
any Securities Filing, except to the extent that such
liabilities result from information regarding the Seller and
Entities supplied by them and upon which Buyer is entitled to
rely pursuant to the provisions of this Agreement.
11.5 Time Limitations
If the Closing occurs, Seller 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,
other than those in Sections 3.3 and 3.11, unless on or before
two (2) years following the Closing Date (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; provided that the time within which Buyer
must notify Seller shall be four (4) years following the
Closing Date with respect to any claim of Buyer in any manner
related to that certain Proceeding styled Allstate Insurance
Company x. Xxxxxxxxx [sic] Communities, Inc. and Red Dot
Builders, Inc., Case No. 96-17092 in the Circuit Court of the
11th Judicial Circuit in and for Dade County, Florida, or to
any representation, warranty, or covenant or obligation of
Seller to be performed and complied with prior to the Closing
Date in Section 3.19 solely with respect to the project known
as Keystone Lake. A claim with respect to Section 3.3 or 3.11
or a claim for indemnification or reimbursement not based upon
any representation or warranty or any covenant or obligation
to be performed and complied with on or prior to the Closing
Date, may be made at any time prior to expiration of the
applicable statute of limitations. If the Closing occurs,
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 two (2) years
following the Closing Date Seller notifies Buyer of a claim
specifying the factual basis of that claim in reasonable
detail to the extent then known by Seller.
11.6 Limitations on Amount -- Seller
Seller will have no liability (for indemnification or
otherwise) with respect to the matters described in Sections
11.2 or 11.3 until the total of all Damages with
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respect to such matters exceeds $600,000, and then only for
the amount by which such Damages exceed $600,000. However,
this Section 11.6 will not apply to any Breach of any of
Seller's representations and warranties in Section 3.11.
Notwithstanding any provision of this Agreement qualifying
Seller's obligations under any representation, warranty or
covenant (whether in the text hereof or by reference to
matters set forth in the Disclosure Letter containing such
qualifications) by materiality, all Damages incurred by any
Indemnified Person shall be applied to the deductible amounts
set forth above, as if no such qualification were imposed on
such representation, warranty or covenant.
11.7 Intentionally omitted.
11.8 Right of Set-Off
(a) Upon written notice to Seller specifying in
reasonable detail the basis for such set-off, subject to the
provisions of Section 11.8(b), Buyer may set off any amount to
which it may be entitled under this Section 11, first, against
amounts otherwise payable under the Non-Negotiable Promissory
Note, second, (to the extent of the excess of such set off
amount over the amounts otherwise payable under the
Non-Negotiable Promissory Note) against amounts otherwise
payable under the Seller Employment Agreement and, third, (to
the extent of the excess of such set off amount over the
amounts otherwise payable under the Non-Negotiable Promissory
Note and the Seller Employment Agreement) against amounts
otherwise payable on account of Additional Consideration. The
exercise of such right of set-off by Buyer in good faith,
whether or not ultimately determined to be justified, will not
constitute an event of default hereunder, under the Seller
Employment Agreement, the Non-Negotiable Promissory Note, the
Pacific USA Guaranty, the Pledge Agreement or any other
instrument securing the Non-Negotiable Promissory Note.
Neither the exercise of nor the failure to exercise such right
of set-off will constitute an election of remedies or limit
Buyer in any manner in the enforcement of any other remedies
that may be available to it.
(b) Notwithstanding the foregoing:
(i) Buyer shall have no right of setoff if
Newmark has failed to deliver the Substitute
LOC in the time and manner required by
Section 2.8, unless an award for the claim
for which such setoff is asserted has been
made by the Arbitrator in accordance with the
Arbitration Covenant.
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(ii) Except as provided in (i) above, Buyer's
right of setoff against amounts otherwise
payable under the Seller Employment Agreement
or on account of Additional Consideration, or
under the Non-Negotiable Promissory Note
prior to delivery of the Substitute LOC, are
subject to the requirement that Buyer shall,
within ten (10) business days after Seller's
written demand therefor, deposit into an
interest bearing account with an independent
custodian to which Seller consents (such
consent not to be unreasonably withheld)
immediately available funds in the amount of
the set off, to the extent of the payment
then due.
(c) Interest shall continue to accrue under the
Non-Negotiable Promissory Note as to any set off determined to
be unjustified. All interest accruing to the account
described in (ii) above shall be paid to the Party that is
entitled to receive the principal in respect of which such
interest accrues.
11.9 Procedure for Indemnification -- Third Party Claims
(a) Promptly after receipt by an indemnified party under
Section 11.2, 11.4, or (to the extent provided in the
last sentence of Section 11.3) Section 11.3 of notice
of the commencement of any Proceeding against it,
such indemnified party will, if a claim is to be made
against an indemnifying party under such Section,
give notice to the indemnifying party of the
commencement of such claim, but the failure to notify
the indemnifying party will not relieve the
indemnifying party of any liability that it may have
to any indemnified party, except to the extent that
the indemnifying party demonstrates that the defense
of such action is prejudiced by the indemnified
party's failure to give such notice.
(b) If any Proceeding referred to in Section 11.9(a) is
brought against an indemnified party and he, she or
it gives notice to the indemnifying party of the
commencement of such Proceeding, the indemnifying
party will, unless the claim involves Taxes, be
entitled to participate in such Proceeding and, to
the extent that it wishes (unless (i) the
indemnifying party is also a party to such Proceeding
and the indemnified party determines in good faith
that joint representation would be inappropriate, or
(ii) the indemnifying party fails to provide
reasonable assurance to the indemnified party of its
financial capacity to defend such Proceeding and
provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding
with counsel reasonably satisfactory to the
indemnified party and, after notice from the
indemnifying party to the indemnified party of its
election to assume the defense of such
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Proceeding, the indemnifying party will not, as long
as it diligently conducts such defense, be liable to
the indemnified party under this Section 11 for any
fees of other counsel or any other expenses with
respect to the defense of such Proceeding, in each
case subsequently incurred by the indemnified party
in connection with the defense of such Proceeding,
other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a
Proceeding, (i) no compromise or settlement of such
claims may be effected by the indemnifying party
without the indemnified party's consent (which shall
not be unreasonably withheld) unless (A) there is no
finding or admission of any violation of Legal
Requirements or any violation of the rights of any
Person and no effect on any other claims that may be
made against the indemnified party, and (B) the sole
relief, if any, provided is monetary damages that are
paid in full by the indemnifying party. If notice is
given to an indemnifying party of the commencement of
any Proceeding and the indemnifying party does not,
within ten (10) days after the indemnified party's
notice is given, give notice to the indemnified party
of its election to assume the defense of such
Proceeding, the indemnifying party will be bound by
any determination made in such Proceeding or any
compromise or settlement effected by the indemnified
party.
(c) Notwithstanding the foregoing, if an indemnified
party determines in good faith that there is a
reasonable probability that a Proceeding may
adversely affect it or its affiliates other than as a
result of monetary Damages for which it would be
entitled to indemnification under this Agreement, the
indemnified party may, by notice to the indemnifying
party, assume the exclusive right to defend,
compromise, or settle such Proceeding, but the
indemnifying party will not be bound by any
determination of a Proceeding so defended or any
compromise or settlement effected without its consent
(which may not be unreasonably withheld).
11.10 Procedure for Indemnification -- Other Claims
A claim for indemnification for any matter not involving a
third-party claim may be asserted by notice to the party from
whom indemnification is sought.
11.11 Consideration
Seller acknowledges and agrees that all indemnities made by
the Seller in favor of Buyer contained herein are made in
consideration of the specific sum of ONE
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THOUSAND DOLLARS ($1,000.00) and other good and valuable
consideration, all of which is included in the Purchase Price,
the sufficiency of which Seller hereby acknowledges.
Buyer acknowledges and agrees that all indemnities made by
Buyer in favor of Seller and contained herein are made in
consideration of good and valuable consideration, the
sufficiency of which Buyer hereby acknowledges.
12. GENERAL PROVISIONS
12.1 Expenses
Except as otherwise expressly provided in this Agreement, each
Party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and
performance of this Agreement and the Contemplated
Transactions, including all reasonable fees and expenses of
agents and Representatives. Seller will cause the Partnership
and the Acquired Companies not to incur any out-of- pocket
legal fees or expenses in connection with this Agreement or
the Contemplated Transactions, except as provided in Section
2.2(b)(3)(iii). In the event of termination of this
Agreement, the obligation of each Party to pay its own
expenses will be subject to any rights of such party arising
from a Breach by another party. Should Buyer, Seller or any
other party hereto employ an attorney or attorneys to enforce
any of the provisions hereof, the party prevailing shall be
entitled to payment by the non-prevailing party(ies) of all
reasonable costs, charges and expenses, expended or incurred
by the prevailing party, including reasonable attorneys' fees
in negotiations, arbitration and through all levels of
arbitration, trial or appellate (subject to the provisions of
the Arbitration Covenant) Proceedings, whether suit be brought
or not.
12.2 Public Announcements
Any public announcement or similar publicity with respect to
this Agreement or the Contemplated Transactions will be
issued, if at all, at such time and in such manner as Buyer
determines. Unless consented to by Buyer in advance or
required by Legal Requirements, prior to the Closing Seller
shall, and shall cause the Partnership and the Acquired
Companies to, keep this Agreement strictly confidential and
may not make any disclosure of this Agreement to any Person,
except to the extent of information that has become public
otherwise than by disclosure by Seller in contravention of any
duty of confidentiality to Buyer. Seller and Buyer will
consult with each other concerning the means by which the
Partnership and the Acquired Companies' employees, customers,
and
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suppliers and others having dealings with the Partnership and
the Acquired Companies will be informed of the Contemplated
Transactions, and Buyer will have the right to be present for
any such communication.
12.3 Confidentiality
Between the date of this Agreement and the Closing Date, Buyer
and Seller will maintain in confidence, and will cause the
directors, officers, employees, agents, and advisors of Buyer
and the Partnership and the Acquired Companies and their
respective Related Persons to maintain in confidence, and not
use to the detriment of another party or an Acquired Company
any written information stamped "confidential" when originally
furnished by another party or an Acquired Company in
connection with this Agreement or the Contemplated
Transactions, unless (a) such information is already known to
such party or to others not bound by a duty of confidentiality
or such information becomes publicly available through no
fault of such party, (b) the use of such information is
necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the
Contemplated Transactions, or (c) the furnishing or use of
such information is required by or necessary or appropriate in
connection with legal proceedings.
If this Agreement is terminated or the Contemplated
Transactions are not consummated, each party will return or
destroy as much of such written information as the other party
may reasonably request.
12.4 Notices; Wire Transfers
(a) All notices, consents, waivers, and other
communications under this Agreement must be in writing and
will be deemed to have been duly given when (a) delivered by
hand (with written confirmation of receipt), (b) sent by
telecopier (with written confirmation of receipt), provided
that a copy is mailed by registered mail, return receipt
requested, or (c) when received by the addressee, if sent by a
nationally recognized overnight delivery service or the U.S.
Postal Service express mail (receipt tracked or otherwise
acknowledged), in each case to the respective addresses and
telecopier numbers set forth below (or to such other addresses
and telecopier numbers as the respective party may designate
by notice to the other parties):
Seller: Xxxxx X. Xxxx
00 Xxxxx Xxxxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
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Copy to: Xxxxxxx Xxxxxxxxx, Esq.
Xxxx Xxxxxxxxx, P.A.
One International Place
000 XX 0xx Xxxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
If to Xxxxxxx X. Xxxxxxx: 000 Xxxxx Xxxx Xxxx
Xxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
If to Xxxxxx X. Xxxxxxxxxx: 00000 X.X. 00 Xxxxxx
Xxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
If to Xxxxx Xxxxxxx: 0000 X.X. 000xx Xxxxx
Xxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Copy to: Xxxxx X. Xxxxxxxxx, Esq.
Xxxxxxxxx & Xxxxxxxxx, P.a.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Buyer: c/o Xxxx XxXxxx
Pacific USA Holdings Corp.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Copy to: Xxxxxxx X. Xxxxxx, Esq.
Pacific USA Holdings Corp.
0000 Xxxxxxxxx Xxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
and Xxxxx X. English, Esq.
Katz, Barron, Squitero, Xxxxx & Xxxxxx, P.A.
0000 Xxxxx Xxxxxxxx Xxxxx, 0xx Xxxxx
Xxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
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(b) All bank wire transfers of funds due Seller or the Key
Employees hereunder shall be deemed received (provided that the same is
actually received on the next business day) when sent in accordance with the
following federal bank wire instructions (or in accordance with such other
federal bank wire instructions as Seller or a Key Employee respectively may
designate by notice to Buyer in accordance with this Section 12.4;
If to Seller: (to be designated)
If to Xxxxxxx X. Xxxxxxx: (to be designated)
If to Xxxxxx X. Xxxxxxxxxx: (to be designated)
If to Xxxxx Xxxxxxx: (to be designated)
12.5 Intentionally Omitted
12.6 Further Assurances
The parties agree (a) to furnish upon request to each other
such further information, (b) to execute and deliver to each
other such other documents, and (c) to do such other acts and
things, all as any other party hereto may reasonably request
for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement.
12.7 Waiver
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any
delay by any party in exercising any right, power, or
privilege under this Agreement or the documents referred to in
this Agreement will operate as a waiver or renunciation of
such right, power, or privilege, and no single or partial
exercise of any such right, power, or privilege will preclude
any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or
privilege. To the maximum extent
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permitted by applicable law, (a) no claim or right arising out
of this Agreement or the documents referred to in this
Agreement can be discharged by one party, in whole or in part,
by a waiver or renunciation of the claim or right unless in
writing signed by the other party purportedly waiving or
renouncing that claim or right; (b) no waiver that may be
given by a party will be applicable except in the specific
instance for which it is given; and (c) no notice to or demand
on one party will be deemed to be a waiver or renunciation of
any obligation of such party or of the right of the party
giving such notice or demand to take further action without
notice or demand as provided in this Agreement or the
documents referred to in this Agreement.
12.8 Entire Agreement and Modification
This Agreement supersedes all prior agreements between the
parties with respect to its subject matter (including the
Letter of Intent between Buyer and Seller dated November 25,
1997) and constitutes (along with the documents referred to in
this Agreement) a complete and exclusive statement of the
terms of the agreement between the parties with respect to the
subject matter thereof. This Agreement may not be amended
except by a written agreement executed by the party to be
charged with the amendment.
12.9 Disclosure Letter
(a) The disclosures in the Disclosure Letter, and those
in any supplement thereto, must relate only to the
representations and warranties in the Section of the
Agreement to which they expressly relate and not to
any other representation or warranty in this
Agreement; except that the disclosures in the Master
Disclosure List of the Disclosure Letter shall be
deemed to relate to any and all representations and
warranties in this Agreement, the Disclosure Letter
and any supplement.
(b) In the event of any inconsistency between the
statements in the body of this Agreement and those in
the Disclosure Letter or in any supplement thereto
(other than an exception expressly set forth as such
in the Disclosure Letter or in any supplement thereto
with respect to a specifically identified
representation or warranty), the statements in the
body of this Agreement will control.
12.10 Assignments, Successors, and No Third-Party Rights
No party may assign any of its rights or obligations under
this Agreement without the prior consent of the other parties,
and any assignment in
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contravention hereof shall be void and ineffective, except
that Buyer may assign any of its rights under this Agreement
to any Subsidiary of Buyer. Subject to the preceding sentence,
this Agreement will apply to, be binding in all respects upon,
and inure to the benefit of the successors and permitted
assigns of the parties. Nothing expressed or referred to in
this Agreement will be construed to give any Person other than
the parties to this Agreement, and the assigns permitted
pursuant to the provisions of the first sentence of Section
12.10, any legal or equitable right, remedy, or claim under or
with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of the
parties to this Agreement, their successors and such assigns.
12.11 Severability
If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the
other provisions of this Agreement will remain in full force
and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force
and effect to the extent not held invalid or unenforceable.
12.12 Section Headings; Construction
The headings of Sections in this Agreement are provided for
convenience only and will not affect its construction or
interpretation. All references to "Section" or "Sections"
refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require.
Unless otherwise expressly provided, the word "including" does
not limit the preceding words or terms.
12.13 Time of Essence
With regard to all dates and time periods set forth or
referred to in this Agreement, time is of the essence.
12.14 Governing Law
This Agreement will be governed by the laws of the State of
Florida without regard to conflicts of laws principles.
12.15 Counterparts
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This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be
deemed to constitute one and the same agreement.
12.16 Change and Assignment of Certain Names
Immediately following the Closing, Seller will not thereafter
use or permit any of their affiliates to use the names
"Westbrooke", "Westbrooke Communities", "Westbrooke Company",
Westbrooke Homebuilders", or any variant or derivative thereof
that includes the term "Westbrooke". In connection with
enabling Buyer, at or after the Closing, to use such names,
Seller, at or after the Closing, shall execute and deliver to
Buyer all Consents related to the use of such names as may be
reasonably requested by Buyer.
12.17 Arbitration.
The parties hereto mutually consent to the resolution by
arbitration of all claims or controversies ("claims") whether
or not arising out of this Agreement. This agreement to
arbitrate shall be called the "Arbitration Covenant".
(a) Claims Covered by this Arbitration Covenant.
The claims covered by this Arbitration Covenant include, but
are not limited to, claims for breach of any contract or
covenant (express or implied); tort claims; and claims for
violation of any federal, state, or other governmental law,
statute, regulation, or ordinance.
(b) Required Notice of All Claims, Statutes of
Limitations, and Procedural Prerequisites. The aggrieved
party must give written notice of any claim to other
party(ies) within the limitations periods normally applicable
to the laws or common law that are the basis for any claim
against the other party(ies); provided that the foregoing
shall not in any way extend the period of time during which
Buyer must notify Seller of a claim pursuant to the provisions
of Section 11.5 hereof. All statutes of limitation and
procedural prerequisites to suit that apply to court
litigation, apply to arbitration under this Arbitration
Covenant. Written notice to the other party(ies) shall be
sent in accordance with the provisions of Section 12.4. The
written notice by any party shall identify and describe the
nature of all claims asserted and the facts upon which such
claims are based.
(c) Representation. Any party may be represented
by an attorney or other representative selected by the party.
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(d) Discovery. Each party shall have the right
to take the deposition of witnesses designated by another
party. Each party also shall have the right to make requests
for production of documents to any party. The subpoena right
specified below shall be applicable to discovery pursuant to
this section. Additional discovery may be had only where the
Arbitrator selected pursuant to this Arbitration Covenant so
orders, upon a showing of substantial need.
(e) Designation of Witnesses. At least 30 days
before the arbitration, the parties must exchange lists of
witnesses, including any experts, and copies of all exhibits
intended to be used at the arbitration.
(f) Subpoenas. Each party shall have the right
to subpoena witnesses and documents for the arbitration.
(g) Arbitration Procedures. Except as provided
in this Arbitration Covenant, any arbitration shall be in
accordance with the then current arbitration rules of the
American Arbitration Association ("AAA") before an arbitrator
who is licensed to practice law in the State of Florida (the
"Arbitrator"). The arbitration shall take place in Miami,
Florida.
The Arbitrator shall be selected as follows. The AAA
shall give each party a list of five (5) arbitrators drawn
from its panel of arbitrators. Each party may strike all
names on the list it deems unacceptable. If only one common
name remains on the lists of all parties, that individual
shall be designated as the Arbitrator. If more than one
common name remains on the lists of all parties, the parties
shall strike names alternately until only one remains. The
party who did not initiate the claim shall strike first. If
no common name remains on the lists of all parties, the AAA
shall furnish an additional list or lists until an Arbitrator
is selected.
The Arbitrator shall apply the substantive law (and
the law of remedies, if applicable) applicable to the claim(s)
asserted. The Federal Rules of Evidence shall apply. The
Arbitrator, and not any federal, state, or local court or
agency, shall have exclusive authority to resolve any dispute
relating to the interpretation, applicability, enforceability
or formation of this Arbitration Covenant, including but not
limited to any claim that all or any party of this Arbitration
Covenant is void or voidable. NOTWITHSTANDING ANYTHING TO THE
CONTRARY IN THE AAA RULES FOR THE RESOLUTION OF DISPUTES, ANY
AWARD BY THE ARBITRATOR SHALL BE LIMITED TO ACTUAL DAMAGES,
AND THE ARBITRATOR SHALL HAVE NO AUTHORITY TO AWARD ANY OTHER
DAMAGES, INCLUDING BUT NOT LIMITED TO PUNITIVE, ADDITIONAL OR
EXEMPLARY
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DAMAGES. The arbitration shall be final and binding upon the
parties, except as provided in this Arbitration Covenant.
The Arbitrator shall have jurisdiction to hear and
rule on pre-hearing disputes and is authorized to hold
pre-hearing conferences by telephone or in person as the
Arbitrator deems necessary. The Arbitrator shall have the
authority to entertain a motion to dismiss and/or a motion for
summary judgment by any party and shall apply the standards
governing such motions under the Federal Rules of Civil
Procedure.
Any party, at its expense, may arrange for and pay
the cost of a court reporter to provide a stenographic record
of proceedings.
Any party, upon request at the close of hearing,
shall be given leave to file a post-hearing brief. The time
for filing such a brief shall be set by the Arbitrator.
Any party may bring an action in any court of
competent jurisdiction (as provided by Sub- Section (9)
hereof) to compel arbitration under this Arbitration Covenant
and to enforce an arbitration award. Except as otherwise
provided in this Arbitration Covenant, no party(ies) shall
initiate or prosecute any lawsuit or administrative action
(other than an administrative charge of discrimination) in any
way related to any claims covered by this Arbitration
Covenant.
(h) Arbitration Fees and Costs. The parties in
the dispute shall equally share the fees and costs of the
Arbitrator. Each such party will deposit funds or post other
appropriate security for its share of the Arbitrator's fee, in
an amount and manner determined by the Arbitrator, ten (10)
days before the first day of hearing. Each party shall pay
for its own costs and attorneys' fees and expenses, if any.
However, the prevailing party shall be awarded its attorneys'
fees and expenses by the Arbitrator.
(i) Judicial Review. Any party may bring an
action in any court of competent jurisdiction to compel
arbitration under this Arbitration Covenant and to enforce an
arbitration award. A party opposing enforcement of any award
may not do so in an enforcement proceeding, but must bring a
separate action in any court of competent jurisdiction to set
aside the award, where the standard of review will be the same
as that applied by an appellate court reviewing a decision of
a trial court.
(j) Requirements for Modification or Revocation.
This Arbitration Covenant shall survive Closing. It can only
be revoked or modified by a writing
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signed by the parties which specifically states an intent to
revoke or modify this Arbitration Covenant.
(k) Sole and Entire Agreement. This Arbitration
Covenant is the complete agreement of the parties on the
subject of arbitration of disputes (except for any arbitration
agreement in connection with any pension or benefit plan).
This Arbitration Covenant supersedes any prior or
contemporaneous oral or written understanding on the subject.
No party is relying on any representations, oral or written,
on the subject of the effect, enforceability or meaning of
this Arbitration Covenant, except as specifically set forth in
this Arbitration Covenant.
(l) Consideration. The promises by each of the
parties to arbitrate differences, rather than litigate them
before courts or other bodies, provide consideration for each
other.
(m) Jurisdiction; Venue. In the event the
Arbitration Covenant is found unenforceable or inapplicable to
any claim, whether sounding in contract, tort, or otherwise
arising out of, connected with, related to, or in connection
with this Agreement, any Proceeding alleging such claim shall
be brought exclusively in the courts of the State of Florida,
County of Dade, or, if it has or can acquire jurisdiction, in
the United States District Court for the Southern District of
Florida, and the parties to this Agreement consent to the
jurisdiction of such courts (and the appropriate appellate
courts) in any such Proceeding and waive any objection to
venue laid therein.
12.18 Survival
Subject to the provisions of Section 11.5, all of the terms,
provisions and conditions of this Agreement shall survive
Closing.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
SELLER:
/s/ XXXXX X. XXXX
------------------------------
XXXXX X. XXXX
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WESTBROOKE COMMUNITIES, INC.,
a Florida corporation
By: /s/ XXXXX XXXX
-------------------------
Its: President
-------------------------
WESTBROOKE AT WEST LAKE, INC.
a Florida corporation
By: /s/ XXXXX XXXX
-------------------------
Its: President
-------------------------
WESTBROOKE AT WINSTON TRAILS, INC.
a Florida corporation
By: /s/ XXXXX XXXX
-------------------------
Its: President
-------------------------
WESTBROOKE AT PEMBROKE PINES, INC.
a Florida corporation
By: /s/ XXXXX XXXX
-------------------------
Its: President
-------------------------
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000
XXXXXXXXXX XX XXX XXXXX, INC.
a Florida corporation
By: /s/ XXXXX XXXX
-------------------------
Its: President
-------------------------
/s/ XXXXXX X. XXXXXXXXXX
------------------------------
XXXXXX X. XXXXXXXXXX
/s/ XXXXXXX X. XXXXXXX
------------------------------
XXXXXXX X. XXXXXXX
/s/ XXXXX XXXXXXX
------------------------------
XXXXX XXXXXXX
THE WESTBROOKE PARTNERSHIP,
a Florida partnership
By: Westbrooke Communities, Inc.,
a Florida corporation, as Managing
General Partner
By: /s/ XXXXX XXXX
-------------------------
Its: President
-------------------------
BUYER:
WESTBROOKE ACQUISITION CORP.,
a Florida corporation
By: /s/ XXXXXXX X. XXXXXX
-------------------------
Its: President
-------------------------
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PACIFIC USA HOLDINGS CORP.,
a Texas corporation
By: /s/ XXXXXXX X. XXXXXX
-------------------------
Its: Chief Financial Officer
-------------------------
NEWMARK HOMES CORP.,
a Nevada corporation
By: /s/ XXXXXXX X. XXXXXX
-------------------------
Its: Chairman
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