EXHIBIT 2
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AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
▇▇▇▇▇▇▇ HOMES, INC.,
a Delaware corporation,
APOLLO REAL ESTATE INVESTMENT FUND, L.P.,
a Delaware limited partnership,
BLACKACRE WPH, LLC,
a Delaware limited liability company,
HIGHRIDGE PACIFIC HOUSING INVESTORS, L.P.,
a California limited partnership,
AP WP PARTNERS, L.P.,
a Delaware limited partnership,
AP WESTERN GP CORPORATION,
a Delaware corporation,
AP LHI, INC.,
a California corporation
and
LAMCO HOUSING, INC.,
a California corporation
DATED AS OF SEPTEMBER 12, 2000
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TABLE OF CONTENTS
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RECITALS ...........................................................................................1
ARTICLE I DEFINITIONS................................................................................2
1.1 Certain Defined Terms..........................................................................2
1.2 Other Defined Terms............................................................................8
ARTICLE II REORGANIZATION.............................................................................8
2.1 Formation of Newco; Effective Time.............................................................8
2.2 Merger A.......................................................................................9
2.3 Effect of Merger A on Securities of ▇▇▇▇▇▇▇, Merger Sub and Newco...........................10
2.4 Dividends, Etc................................................................................10
2.5 WP Partners' and WP LLC's Contribution........................................................11
2.6 Merger B......................................................................................12
ARTICLE III CLOSING...................................................................................12
3.1 Closing.......................................................................................12
3.2 WP Partners' Obligations at Closing...........................................................12
3.3 ▇▇▇▇▇▇▇ Obligations at Closing................................................................13
3.4 Newco Obligations at Closing..................................................................13
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE WP PARTNERS.........................................14
4.1 WP Partners and WP Parents....................................................................14
4.2 Subsidiaries..................................................................................15
4.3 Authorization.................................................................................16
4.4 Non-Contravention.............................................................................17
4.5 Financial Statements; No Undisclosed Liabilities..............................................17
4.6 Absence of Certain Changes....................................................................18
4.7 Title to Assets...............................................................................18
4.8 Real Property.................................................................................19
4.9 Intellectual Property.........................................................................21
4.10 Litigation....................................................................................21
4.11 Employee Benefit Matters......................................................................22
4.12 Taxes.........................................................................................24
4.13 Compliance With Law...........................................................................25
4.14 Contracts and Commitments.....................................................................26
4.15 Permits and Other Operating Rights............................................................26
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TABLE OF CONTENTS (CONTINUED)
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4.16 Labor Matters.................................................................................27
4.17 Environmental Matters.........................................................................27
4.18 Warranty Obligations..........................................................................28
4.19 Homeowner Associations........................................................................29
4.20 Assets Necessary to the WP Business...........................................................29
4.21 Accuracy of Information Furnished.............................................................29
4.22 No Brokers....................................................................................29
4.23 Disclaimer....................................................................................30
4.24 LLC...........................................................................................30
4.25 Non-Controlled WP Entities....................................................................31
ARTICLE V REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇.................................................31
5.1 ▇▇▇▇▇▇▇ Organization..........................................................................31
5.2 Subsidiaries..................................................................................31
5.3 Authorization.................................................................................32
5.4 Non-Contravention.............................................................................33
5.5 SEC Filings; Financial Statements; No Undisclosed Liabilities.................................33
5.6 Absence of Certain Changes....................................................................34
5.7 Title to Assets...............................................................................35
5.8 Real Property.................................................................................35
5.9 Intellectual Property.........................................................................37
5.10 Litigation....................................................................................38
5.11 Employee Benefit Matters......................................................................38
5.12 Taxes.........................................................................................40
5.13 Compliance With Law...........................................................................42
5.14 Contracts and Commitments.....................................................................42
5.15 Permits and Other Operating Rights............................................................43
5.16 Labor Matters.................................................................................43
5.17 Environmental Matters.........................................................................43
5.18 Warranty Obligations..........................................................................44
5.19 Homeowner Associations........................................................................45
5.20 Assets Necessary to the ▇▇▇▇▇▇▇ Business......................................................45
5.21 Accuracy of Information Furnished.............................................................45
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TABLE OF CONTENTS (CONTINUED)
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5.22 No Brokers....................................................................................46
5.23 Disclaimer....................................................................................46
5.24 Non-Controlled ▇▇▇▇▇▇▇ Entities...............................................................46
ARTICLE VI CERTAIN COVENANTS.........................................................................46
6.1 Access to Information.........................................................................46
6.2 Conduct of Businesses Pending Closing.........................................................47
6.3 No Solicitation of Transactions...............................................................50
6.4 Authorizations................................................................................50
6.5 Contribution to WP LLC........................................................................51
6.6 Acknowledgements..............................................................................51
6.7 Public Announcements..........................................................................52
6.8 Registration Statement........................................................................52
6.9 ▇▇▇▇▇▇▇ Stockholder Meeting...................................................................53
6.10 Listing Application...........................................................................53
6.11 Affiliate Letters.............................................................................53
6.12 Non-Disclosure of Proprietary Data............................................................53
6.13 Section 341(f) Consent........................................................................53
6.14 Newco Stock Option Plan.......................................................................54
ARTICLE VII CONDITIONS TO THE OBLIGATIONS OF ▇▇▇▇▇▇▇..................................................54
7.1 Accuracy of Representations and Warranties....................................................54
7.2 Performance...................................................................................54
7.3 HSR Act.......................................................................................54
7.4 Absence of Governmental Orders................................................................54
7.5 Officers' Certificates........................................................................54
7.6 Certain Agreements............................................................................55
7.7 Stockholder Approval..........................................................................55
7.8 Form S-4......................................................................................55
7.9 Listing.......................................................................................55
7.10 WP Required Consents..........................................................................55
7.11 FIRPTA Matters................................................................................55
7.12 Employment Agreement..........................................................................55
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TABLE OF CONTENTS (CONTINUED)
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ARTICLE VIII CONDITIONS TO THE OBLIGATIONS OF THE WP PARTNERS..........................................55
8.1 Accuracy of Representations and Warranties....................................................55
8.2 Performance...................................................................................56
8.3 HSR Act.......................................................................................56
8.4 Absence of Governmental Orders................................................................56
8.5 Officers' Certificates........................................................................56
8.6 Certain Agreements............................................................................56
8.7 Stockholder Approval..........................................................................56
8.8 Form S-4......................................................................................56
8.9 Listing.......................................................................................56
8.10 ▇▇▇▇▇▇▇ Required Consents.....................................................................56
8.11 Employment Agreement..........................................................................56
ARTICLE IX INDEMNIFICATION...........................................................................56
9.1 Survival of Representations and Warranties....................................................56
9.2 Indemnification by the WP Partners............................................................57
9.3 Indemnification by ▇▇▇▇▇▇▇....................................................................57
9.4 General Indemnification Provisions............................................................57
9.5 Limitations on Indemnification................................................................59
9.6 Stock Indemnification Payments................................................................59
ARTICLE X [INTENTIONALLY OMITTED]...................................................................60
ARTICLE XI TERMINATION...............................................................................60
11.1 Termination...................................................................................60
11.2 Written Notice................................................................................61
11.3 Effect of Termination.........................................................................61
11.4 Waiver........................................................................................61
ARTICLE XII GENERAL PROVISIONS........................................................................61
12.1 Expenses, Taxes, Etc..........................................................................61
12.2 Notices.......................................................................................62
12.3 Disclosure Schedules..........................................................................63
12.4 Interpretation................................................................................63
12.5 Severability..................................................................................64
12.6 Assignment....................................................................................64
12.7 No Third-Party Beneficiaries..................................................................64
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TABLE OF CONTENTS (CONTINUED)
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12.8 Amendment.....................................................................................64
12.9 No Other Remedies.............................................................................64
12.10 Further Assurances............................................................................64
12.11 Mutual Drafting...............................................................................65
12.12 Governing Law.................................................................................65
12.13 Dispute Resolution............................................................................65
12.14 Consent to Jurisdiction; Waivers..............................................................66
12.15 Waiver of Jury Trial..........................................................................66
12.16 Counterparts..................................................................................66
12.17 Entire Agreement..............................................................................66
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TABLE OF CONTENTS (CONTINUED)
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EXHIBITS:
EXHIBIT A ..................................................................Non-Competition Agreements
EXHIBIT B ...............................................................Registration Rights Agreement
EXHIBIT C ......................................................................Stockholders Agreement
EXHIBIT D .................................................................Charter and Bylaws of Newco
EXHIBIT E ............................................................Charter and Bylaws of Merger Sub
EXHIBIT F .........................................................................Merger A Agreement
EXHIBIT G ...................................................................▇▇▇▇▇▇▇ Affiliate Letter
EXHIBIT H ...........................................................................WP LLC Assignment
EXHIBIT I ........................Opinion of ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP and other WP Partners counsel
EXHIBIT J ...............................................Opinion of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
EXHIBIT K .........................................................................WP Affiliate Letter
EXHIBIT L ..........................................................▇▇▇▇▇ ▇▇▇▇▇▇▇ Employment Agreement
EXHIBIT M ...............................................................Form of Indemnity Calculation
SCHEDULES:
2.1(b) .............................................................Directors and Officers of Newco
12.4(a) ............................................WP Partnership and WP Entities Knowledge Persons
12.4(b) ...................................................................▇▇▇▇▇▇▇ Knowledge Persons
WP DISCLOSURE SCHEDULE:
SECTION 1.1 ..........................................................................Financing Consents
SECTION 4.1 ..................................................................WP Partners and WP Parents
SECTION 4.2 ................................................................................Subsidiaries
SECTION 4.3(c) ...............................................................................Authorization
SECTION 4.4 ...........................................................................Non-Contravention
SECTION 4.5(a) ........................................................................Financial Statements
SECTION 4.6 ..................................................................Absence of Certain Changes
SECTION 4.7 .............................................................................Title to Assets
SECTION 4.8(a) .......................................................................Leased Real Property
SECTION 4.8(b) .........................................................................Owned Real Property
SECTION 4.8(c) ..............................................................................Land Contracts
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TABLE OF CONTENTS (CONTINUED)
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SECTION 4.8(d) .........................................................Other Real Property Representations
SECTION 4.9 .......................................................................Intellectual Property
SECTION 4.10 ..................................................................................Litigation
SECTION 4.11 ....................................................................Employee Benefit Matters
SECTION 4.12 .......................................................................................Taxes
SECTION 4.14 ...................................................................Contracts and Commitments
SECTION 4.15 ..........................................................Permits and Other Operating Rights
SECTION 4.16 ...............................................................................Labor Matters
SECTION 4.17 .......................................................................Environmental Matters
SECTION 4.18 ........................................................................Warranty Obligations
SECTION 4.19 ......................................................................Homeowner Associations
SECTION 4.20 .........................................................Assets Necessary to the WP Business
SECTION 4.25 ..................................................................Non-Controlled WP Entities
SECTION 6.2 .........................................................Conduct of Business Pending Closing
▇▇▇▇▇▇▇ DISCLOSURE SCHEDULE:
SECTION 1.1 ..........................................................................Financing Consents
SECTION 5.2 ................................................................................Subsidiaries
SECTION 5.3(b) ...............................................................................Authorization
SECTION 5.4 ...........................................................................Non-Contravention
SECTION 5.6 ..................................................................Absence of Certain Changes
SECTION 5.7 .............................................................................Title to Assets
SECTION 5.8(a) ........................................................................Leased Real Property
SECTION 5.8(b) .........................................................................Owned Real Property
SECTION 5.8(c) ..............................................................................Land Contracts
SECTION 5.8(d) .........................................................Other Real Property Representations
SECTION 5.9 .......................................................................Intellectual Property
SECTION 5.10 ..................................................................................Litigation
SECTION 5.11 ....................................................................Employee Benefit Matters
SECTION 5.12 .......................................................................................Taxes
SECTION 5.14 ...................................................................Contracts and Commitments
SECTION 5.15 ..........................................................Permits and Other Operating Rights
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TABLE OF CONTENTS (CONTINUED)
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SECTION 5.16 ...............................................................................Labor Matters
SECTION 5.17 .......................................................................Environmental Matters
SECTION 5.18 ........................................................................Warranty Obligations
SECTION 5.19 ......................................................................Homeowner Associations
SECTION 5.20 ....................................................Assets Necessary to the ▇▇▇▇▇▇▇ Business
SECTION 5.24 .............................................................Non-Controlled ▇▇▇▇▇▇▇ Entities
SECTION 6.2 .........................................................Conduct of Business Pending Closing
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of September
12, 2000, by and among ▇▇▇▇▇▇▇ Homes, Inc., a Delaware corporation ("▇▇▇▇▇▇▇"),
Apollo Real Estate Investment Fund, L.P., a Delaware limited partnership
("Apollo"), Blackacre WPH, LLC, a Delaware limited liability company
("Blackacre"), Highridge Pacific Housing Investors, L.P., a California limited
partnership ("Highridge"), AP WP Partners, L.P., a Delaware limited partnership
("APWP"), AP Western GP Corporation, a Delaware corporation ("AP Western"), AP
LHI, Inc., a California corporation ("APLHI"), and Lamco Housing, Inc., a
California corporation ("Lamco" and, together with Apollo, Blackacre, Highridge,
APWP, AP Western and APLHI, the "WP Partners").
RECITALS
A. The WP Partners hold all of the partnership interests in
Western Pacific Housing Development Limited Partnership, a California limited
partnership ("WPHD"), and Western Pacific Development II Limited Partnership, a
California limited partnership ("WPHD II"), and all of the membership interests
in WPH-▇▇▇▇▇▇, LLC, a Delaware limited liability company ("WPHL" and, together
with WPHD and WPHD II, the "WP Parents"; the respective partnership and
membership interests in the WP Parents are referred to herein as the "WP
Interests").
B. The WP Partners and the Board of Directors of ▇▇▇▇▇▇▇ have
approved, and deem it advisable and in the best interests of their respective
companies, stockholders, partners and members to consummate the reorganization
(the "Reorganization") provided for herein, pursuant to which, among other
things, ▇▇▇▇▇▇▇ Holdings, Inc. ("Newco"), will acquire (i) all of the common
stock of ▇▇▇▇▇▇▇ through the merger of Merger Sub (as defined below) with
▇▇▇▇▇▇▇ and (ii) all of the WP Interests through the contribution of the WP
Interests from the WP Partners to WPH-▇▇▇▇▇▇▇, LLC, a Delaware limited liability
company to be wholly owned by certain of the WP Partners ("WP LLC"), and the
contribution of the WP Interests from WP LLC to Newco in exchange for shares of
Newco.
C. For federal income tax purposes, it is intended that the
transfers by WP LLC pursuant to the Reorganization qualify as an exchange under
the provisions of Section 351 of the Code (as defined below) and Merger A and
Merger B (both as defined below), as applicable, qualify as a "reorganization"
within the meaning of Section 368(a) of the Code.
D. In order to induce the WP Partners to enter into this
Agreement, The ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Foundation, a Hawaii non-profit
corporation (the "Foundation"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as sole trustee for the
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Revocable Living Trust and the ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1998 Qualified
Annuity Trust (collectively with the Foundation, "▇▇▇▇▇ ▇▇▇▇▇▇▇"), is
concurrently herewith entering into a Voting Agreement with Apollo, Blackacre
and Highridge pursuant to which ▇▇▇▇▇ ▇▇▇▇▇▇▇ will agree to vote his ▇▇▇▇▇▇▇
shares in favor of the Reorganization at the meeting of the stockholders of
▇▇▇▇▇▇▇ held in connection with the Reorganization (the "▇▇▇▇▇▇▇ Stockholder
Meeting").
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E. In order to induce the parties hereto to enter into this
Agreement, the WP Partners and ▇▇▇▇▇▇▇ have provided for the execution and
delivery of certain ancillary agreements, including Non-Competition Agreements,
and a Stockholders Agreement and Registration Rights Agreement providing for
certain voting and other restrictions with respect to the shares of Newco Common
Stock (as defined below) to be beneficially owned by ▇▇▇▇▇ ▇▇▇▇▇▇▇, WP LLC and
the WP Partners.
F. The WP Partners and ▇▇▇▇▇▇▇ desire to make certain
representations, warranties, covenants and agreements in connection with the
transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such definitions to be
equally applicable to both the singular and plural forms of the terms defined):
"ACTION" means any claim, action, suit or arbitration, or any
other proceeding, in each instance by or before any Governmental Authority or
any nongovernmental arbitration, mediation or other nonjudicial dispute
resolution body.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations under the Exchange Act.
"AGREEMENT" means this Agreement and Plan of Reorganization,
including all schedules and exhibits hereto, as it may be further amended from
time to time as herein provided.
"AGREEMENT DATE" means September 12, 2000.
"ANCILLARY AGREEMENTS" means, collectively, the
Non-Competition Agreements, the Stockholders Agreement, the Registration Rights
Agreement, the WP LLC Assignment and the GP Assignments.
"APLHI" has the meaning specified in the Recitals.
"ANTITRUST AUTHORITIES" has the meaning specified in Section
6.4(c).
"APOLLO" has the meaning specified in the Recitals.
"AP WESTERN" has the meaning specified in the Recitals.
"APWP" has the meaning specified in the Recitals.
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"BANKERS TRUST" means Bankers Trust Company, a New York
banking corporation.
"BLACKACRE" has the meaning specified in the Recitals.
"BOOKS AND RECORDS" means all of the following which pertain
to the conduct of the WP Business or ▇▇▇▇▇▇▇ Business, as applicable: books,
records, manuals and other materials, accounting books and records, continuing
property records for property, plant and equipment, files, computer tapes,
disks, other storage media and records, advertising matter, catalogues, price
lists, correspondence, mailing lists, lists of customers and suppliers,
distribution lists, photographs, production data, sales and promotional
materials and records, purchasing materials and records, personnel records,
credit records, manufacturing and quality control records and procedures,
blueprints, research and development files, data and laboratory books, patent
and trademark files and disclosures, media materials and plates, sales order
files, litigation files, deeds, easements and other instruments relating to the
Real Property, any Tax Returns filed by the WP Entities, including all work
papers and calculations in support of such Tax Returns, and any comparable
information with respect to predecessors of the WP Entities to the extent
available.
"BYLAWS" means a corporation's bylaws, code of regulations or
equivalent document.
"CHARTER" means a company's certificate of formation,
operating agreement, partnership agreement, articles of association, articles of
incorporation, certificate of incorporation, or equivalent organizational
documents.
"CLOSING" means the closing of the transactions contemplated
by this Agreement as specified in Section 3.1.
"CLOSING DATE" has the meaning specified in Section 3.1.
"CODE" means the United States Internal Revenue Code of 1986,
as amended, and any successor statute thereto, and the rules and regulations of
the IRS thereunder.
"CONFIDENTIALITY AGREEMENT" means the Confidentiality
Agreement, dated May 1, 2000, between ▇▇▇▇▇▇▇ and WPHD.
"CONTRIBUTION" has the meaning specified in Section 2.5.
"EFFECTIVE TIME" has the meaning specified in Section 2.1.
"ENCUMBRANCE" means any interest (including any security
interest), pledge, mortgage, lien, charge, adverse claim or other right of third
Persons.
"ENVIRONMENTAL LAWS" means all laws, regulations, ordinances,
codes, policies, Governmental Orders and consent decrees currently in effect,
and any judicial and administrative interpretations thereof, of Governmental
Authorities, or any common law doctrines, in effect from time to time relating
to pollution or protection of the environment and natural resources,
3
including those relating to emissions, discharges, Releases or threatened
Releases of Hazardous Material into the environment (including ambient air,
surface water, groundwater or land), or otherwise relating to the manufacture,
processing, distribution, use, possession, treatment, storage, disposal,
transport or handling of Hazardous Material.
"ENVIRONMENTAL PERMITS" means all permits, approvals,
identification numbers, licenses and other authorizations required under any
applicable Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto, and the rules and
regulations thereunder.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and any successor statute thereto, and the rules and regulations of the
SEC thereunder.
"FINANCIAL STATEMENTS" has the meaning specified in Section
4.5(a).
"FORM S-4" has the meaning specified in Section 6.8.
"GAAP" means U.S. generally accepted accounting principles,
unless expressly described otherwise.
"GOVERNMENTAL AUTHORITY" means any international, national,
Federal, state, municipal or local government, governmental authority,
regulatory or administrative agency, governmental commission, department, board,
bureau, agency or instrumentality, court, tribunal, arbitrator or arbitral body.
"GOVERNMENTAL ORDER" means any order, writ, rule, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority.
"GP ASSIGNMENTS" has the meaning specified in Section 3.2(d).
"HAZARDOUS MATERIAL" means any substance, pollutant, material
or waste which is regulated or shall become regulated under any applicable
Environmental Law, including any such materials regulated as hazardous or toxic
substances or material, and including without limitation any crude oil or
fraction thereof and petroleum products.
"HIGHRIDGE" has the meaning specified in the Recitals.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended, Section 7A of the ▇▇▇▇▇▇▇ Act, 15 U.S.C. Section 18A,
and the regulations promulgated thereunder.
"IRS" means the Internal Revenue Service.
"LAMCO" has the meaning specified in the Recitals.
"LIABILITIES" means any and all debts, liabilities and
obligations of any nature whatsoever, whether accrued or fixed, absolute or
contingent or mature or unmatured.
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"MATERIAL ADVERSE EFFECT" means any event(s) with respect to,
change(s) in, or effect(s) on, a Person which, individually or in the aggregate,
is reasonably likely to be adverse to the business, results of operations or
financial condition of such Person in a manner that is material to such Person.
"MERGER A" has the meaning specified in Section 2.2.
"MERGER A AGREEMENT" has the meaning specified in Section 2.2.
"MERGER B" has the meaning specified in Section 2.6.
"MERGER SUB" has the meaning specified in Section 2.2.
"NEWCO" has the meaning specified in the recitals.
"NEWCO CLASS A COMMON STOCK" has the meaning specified in
Section 2.1.
"NEWCO CLASS B COMMON STOCK" has the meaning specified in
Section 2.5.
"NEWCO COMMON STOCK" means, collectively, Newco Class A Common
Stock and Newco Class B Common Stock.
"NON-COMPETITION AGREEMENTS" means the Non-Competition
Agreements between Newco and each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ Manchester and
▇▇▇▇▇ ▇▇▇▇▇▇▇, substantially in the form of Exhibit A.
"PERMITTED LIENS" means any (a) mechanics', carriers',
workers' and other similar liens arising in the ordinary course of business
which are not delinquent and which in the aggregate are not material in amount,
and do not interfere with the present use of the assets of the WP Entities or
the ▇▇▇▇▇▇▇ Entities, as applicable, to which they apply; (b) liens for current
Taxes and assessments not yet due and payable; (c) usual and customary
non-monetary real property Encumbrances that do not and will not interfere with
the operation of that portion of the WP Business or ▇▇▇▇▇▇▇ Business, as
applicable, currently conducted on such property or the Business as a whole; and
(d) all applicable zoning ordinances and land use restrictions.
"PERSON" shall include any individual, trustee, firm,
corporation, partnership, limited liability company, Governmental Authority or
other entity, whether acting in an individual, fiduciary or any other capacity.
"PROXY STATEMENT/PROSPECTUS" has the meaning specified in
Section 6.8.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement among Newco, ▇▇▇▇▇ ▇▇▇▇▇▇▇, WP LLC, Apollo, Blackacre and Highridge,
substantially in the form of Exhibit B.
"RELEASE" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment (including
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the abandonment or discarding of barrels, containers and other closed
receptacles containing any Hazardous Material).
"REORGANIZATION" has the meaning specified in the Recitals.
"▇▇▇▇▇▇▇" has the meaning specified in the Recitals.
"▇▇▇▇▇▇▇ BALANCE SHEET" has the meaning specified in Section
5.5(b).
"▇▇▇▇▇▇▇ BUSINESS" means the ▇▇▇▇▇▇▇ Entities' business of
designing, constructing, marketing and selling single-family homes, townhomes
and condominiums in Arizona, California, Colorado, Hawaii, Oregon and
Washington.
"▇▇▇▇▇▇▇ COMMITMENTS" has the meaning specified in Section
5.14.
"▇▇▇▇▇▇▇ COMMON STOCK" has the meaning specified in Section
2.3.
"▇▇▇▇▇▇▇ DISCLOSURE SCHEDULE" means the Disclosure Schedule
dated as of the Agreement Date, as amended in accordance with this Agreement, as
delivered to the WP Partners by ▇▇▇▇▇▇▇ and forming a part of this Agreement.
"▇▇▇▇▇▇▇ ENTITIES" means, collectively, ▇▇▇▇▇▇▇ and the
▇▇▇▇▇▇▇ Subsidiaries.
"▇▇▇▇▇▇▇ INDEMNIFIED PARTIES" has the meaning specified in
Section 9.2.
"▇▇▇▇▇▇▇ INTELLECTUAL PROPERTY" has the meaning specified in
Section 5.9.
"▇▇▇▇▇▇▇ LEASED REAL PROPERTY" has the meaning specified in
Section 5.7(b).
"▇▇▇▇▇▇▇ LOSS" has the meaning specified in Section 9.2.
"▇▇▇▇▇▇▇ OWNED REAL PROPERTY" has the meaning specified in
Section 5.8(b).
"▇▇▇▇▇▇▇ REAL PROPERTY" has the meaning specified in Section
5.8(b).
"▇▇▇▇▇▇▇ REQUIRED CONSENTS" means those consents, waivers,
approvals, orders and authorizations of, notices to, and registrations,
declarations, designations, qualifications and filings with, Governmental
Authorities and third Persons, domestic or foreign, (a) set forth in ▇▇▇▇▇▇▇
Disclosure Schedule Section 5.3(b), (b) required in order to eliminate the items
set forth in ▇▇▇▇▇▇▇ Disclosure Schedule Section 5.4 from such section, (c) that
otherwise are necessary in order to make the representations and warranties set
forth in Sections 5.3(b) and 5.4 true and correct as of the Closing Date and (d)
with respect to financings of the ▇▇▇▇▇▇▇ Entities, set forth on ▇▇▇▇▇▇▇
Disclosure Schedule Section 1.1.
"▇▇▇▇▇▇▇ STOCKHOLDER MEETING" has the meaning specified in the
Recitals.
"▇▇▇▇▇▇▇ SUBSIDIARIES" means, collectively, the Persons in
which ▇▇▇▇▇▇▇ has a direct or indirect equity or ownership interest in excess of
10%.
6
"SEC" means the United States Securities and Exchange
Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and any successor statute thereto, and the rules and regulations of the SEC
thereunder.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement
between Newco, ▇▇▇▇▇ ▇▇▇▇▇▇▇, WP LLC, Apollo, Blackacre and Highridge,
substantially in the form of Exhibit C.
"TAX" means any federal, state, local, or foreign income,
gross receipts, license, payroll, parking, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
Sec. 59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated tax, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not, including such
item for which Liability arises as a transferee, successor-in-interest or by
contract, or as a result of being a member of an affiliated or combined group.
"TAX RETURN" means any return, declaration, report, claim for
refund, information return or statement relating to Taxes, including any
schedules or attachments thereto, and including any amendment thereof.
"TAXING AUTHORITY" means any Governmental Authority
responsible for the imposition or collection of any Tax.
"WPHD" has the meaning specified in the Recitals.
"WPHD II" has the meaning specified in the Recitals.
"WPHI" has the meaning specified in Section 2.1.
"WPHL" has the meaning specified in the Recitals.
"WP BALANCE SHEET" has the meaning specified in Section
4.5(b).
"WP BUSINESS" means the WP Entities' business of designing,
constructing, marketing and selling single-family homes, townhomes and
condominiums in California.
"WP COMMITMENTS" has the meaning specified in Section 4.14.
"WP DISCLOSURE SCHEDULE" means the Disclosure Schedule dated
as of the Agreement Date, as amended in accordance with this Agreement, as
delivered to ▇▇▇▇▇▇▇ by the WP Partners and forming a part of this Agreement.
"WP ENTITIES" means, collectively, the WP Parents and the WP
Subsidiaries.
"WP INTELLECTUAL PROPERTY" has the meaning specified in
Section 4.9.
7
"WP INTERESTS" has the meaning specified in the Recitals.
"WP LEASED REAL PROPERTY" has the meaning specified in Section
4.7(b).
"WP LLC" has the meaning specified in the Recitals.
"WP LLC ASSIGNMENT" has the meaning specified in Section 3.2.
"WP OWNED REAL PROPERTY" has the meaning specified in Section
4.8(b).
"WP PARENTS" has the meaning specified in the Recitals.
"WP PARTNERS" has the meaning specified in the Recitals.
"WP PARTNERS INDEMNIFIED PARTIES" has the meaning specified in
Section 9.3.
"WP PARTNERS LOSS" has the meaning specified in Section 9.3.
"WP REAL PROPERTY" has the meaning specified in Section
4.8(b).
"WP REQUIRED CONSENTS" means those consents, waivers,
approvals, orders and authorizations of, notices to, and registrations,
declarations, designations, qualifications and filings with, Governmental
Authorities and third Persons, domestic or foreign, (a) set forth in WP
Disclosure Schedule Section 4.3(c), (b) required in order to eliminate the items
set forth in WP Disclosure Schedule Section 5.4 from such section, (c) that
otherwise are necessary in order to make the representations and warranties set
forth in Sections 4.3(c) and 4.4 true and correct as of the Closing Date and (d)
with respect to financings of the WP Entities, set forth on WP Disclosure
Schedule Section 1.1.
"WP SUBSIDIARIES" means, collectively, the Persons in which
any WP Parent has a direct or indirect equity or ownership interest in excess of
10%.
1.2 OTHER DEFINED TERMS. In addition to the terms defined in
Section 1.1, certain other terms are defined elsewhere in this Agreement and,
whenever such terms are used in this Agreement, they shall have their respective
defined meanings.
ARTICLE II
REORGANIZATION
2.1 FORMATION OF NEWCO; EFFECTIVE TIME.
(a) NEWCO. Immediately following the Agreement Date, ▇▇▇▇▇▇▇
and the WP Partners shall form Newco as a corporation under the laws of the
State of Delaware. The Charter and Bylaws of Newco shall be substantially in the
forms set forth in Exhibit D. In connection with such formation, each of ▇▇▇▇▇▇▇
and Western Pacific Housing, Inc. ("WPHI") shall purchase 100 shares of Class A
common stock, par value $0.001 per share, of Newco ("Newco Class A Common
Stock"), which shares shall be issued to each of ▇▇▇▇▇▇▇ and WPHI at a price of
$1.00 per share.
8
(b) DIRECTORS AND OFFICERS OF NEWCO. The directors and
officers of Newco shall be the Persons set forth on Schedule 2.1(b). Each such
officer and director shall remain in office until his or her successors are duly
appointed or elected in accordance with applicable law.
(c) EFFECTIVE TIME. The term "Effective Time" shall mean the
time and date which is the date and time of the filing of the certificate of
merger relating to Merger A with the Secretary of State of the State of Delaware
(or such other date and time as may be specified in such certificate as may be
permitted by law) or such other time and date as ▇▇▇▇▇▇▇ and the WP Partners may
agree upon.
2.2 MERGER A.
(a) ORGANIZATION OF MERGER SUB. Immediately prior to the
Closing Date, ▇▇▇▇▇▇▇ and the WP Partners shall cause Newco to form ▇▇▇▇▇▇▇
Reorganization Sub, Inc. as a corporation under the laws of the State of
Delaware and as a wholly owned subsidiary of Newco ("Merger Sub"). Merger Sub
shall be organized for the sole purpose of effectuating Merger A as contemplated
herein. The Charter and Bylaws of Merger Sub shall be substantially in the forms
set forth in Exhibit E. The authorized capital stock of Merger Sub shall consist
of 100 shares of common stock, par value $0.001 per share, all of which shall be
issued to Newco at a price of $1.00 per share.
(b) ACTIONS OF DIRECTORS AND OFFICERS. Immediately prior to
the Closing Date, ▇▇▇▇▇▇▇ and the WP Partners shall cause (i) Newco to elect the
directors of Newco as the directors of Merger Sub, (ii) the directors of Merger
Sub to elect the officers of ▇▇▇▇▇▇▇ as the officers of Merger Sub, (iii) the
directors of Newco to ratify and approve this Agreement and the Agreement and
Plan of Merger substantially in the form of Exhibit F (the "Merger A
Agreement"), (iv) the Merger A Agreement to be executed on behalf of the parties
thereto, and (v) the directors and officers of Merger Sub to take such steps as
may be necessary or appropriate to complete the organization of the Merger Sub
and to approve the Merger A Agreement.
(c) ACTIONS OF NEWCO AND MERGER SUB. Immediately prior to the
Closing Date, ▇▇▇▇▇▇▇ and the WP Partners shall cause Newco to ratify and
approve this Agreement, and shall cause Newco, as the sole shareholder of Merger
Sub, to adopt the Merger A Agreement. ▇▇▇▇▇▇▇ and the WP Partners shall cause
Newco and Merger Sub to perform their respective obligations under this
Agreement and the Merger A Agreement.
(d) MERGER A. Upon the terms and subject to the conditions
herein set forth and in the Merger A Agreement, Merger Sub shall be merged with
and into ▇▇▇▇▇▇▇ ("Merger A") in accordance with the applicable provisions of
the laws of the State of Delaware. ▇▇▇▇▇▇▇ shall be the surviving corporation in
Merger A and shall continue its corporate existence under the laws of the State
of Delaware. As a result of Merger A, ▇▇▇▇▇▇▇ shall become a wholly owned
subsidiary of Newco. The effects and consequences of Merger A shall be as set
forth in the Merger A Agreement.
(e) NAME CHANGES. Concurrently with the Effective Time,
▇▇▇▇▇▇▇ and the WP Partners shall cause ▇▇▇▇▇▇▇ to file with the Secretary of
State of Delaware an amendment to
9
its Charter to change its name to ▇▇▇▇▇▇▇ Residential, Inc. and shall cause
Newco to file with the Secretary of State of Delaware an amendment to its
Charter to change its name to ▇▇▇▇▇▇▇ Homes, Inc.
2.3 EFFECT OF MERGER A ON SECURITIES OF ▇▇▇▇▇▇▇, MERGER
SUB AND NEWCO.
(a) MERGER SUB STOCK. At the Effective Time of Merger A, each
share of the common stock of Merger Sub outstanding immediately prior to the
Effective Time shall be converted into and shall become one share of common
stock of the surviving corporation of Merger A.
(b) CONVERSION OF ▇▇▇▇▇▇▇ STOCK. (i) Subject to Section
2.3(b)(ii), at the Effective Time, each share of common stock, par value $0.01
per share, of ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇ Common Stock") issued and outstanding at the
Effective Time shall be converted into one share of Newco Class A Common Stock.
Upon such conversion, all such shares of ▇▇▇▇▇▇▇ Common Stock shall be cancelled
and cease to exist, and each certificate theretofore representing any such
shares shall, without any action on the part of the holder thereof, be deemed to
represent an equivalent number of shares of Newco Class A Common Stock.
(ii) At the Effective Time, each share of ▇▇▇▇▇▇▇ Common
Stock which is held in the treasury of ▇▇▇▇▇▇▇ immediately prior to the
Effective Time shall, by virtue of Merger A, cease to be outstanding
and shall be cancelled and retired without payment of any consideration
therefor.
(iii) At the Effective Time, each outstanding option to
purchase shares of ▇▇▇▇▇▇▇ Common Stock issued pursuant to the ▇▇▇▇▇▇▇
Homes, Inc. Amended and Restated 1992 Stock Option Plan and 1998
Employee Stock Purchase Plan (each, a "▇▇▇▇▇▇▇ Option") shall be
assumed by Newco in such manner that it is converted into an option to
purchase shares of Newco Class A Common Stock, with each such ▇▇▇▇▇▇▇
Option to otherwise be exercisable upon the same terms and conditions
as then are applicable to such ▇▇▇▇▇▇▇ Option, including the number of
shares and exercise price provided thereby. At the Effective Time,
Newco shall assume all rights and obligations of ▇▇▇▇▇▇▇ under such
plan as in effect at the Effective Time and shall continue such plan in
accordance with its terms.
(c) NEWCO STOCK HELD BY ▇▇▇▇▇▇▇. At the Effective Time of
Merger A, the 100 shares of Newco Class A Common Stock issued to each of ▇▇▇▇▇▇▇
and WPHI pursuant to Section 2.1 shall be redeemed by Newco and cease to be
outstanding in consideration of a $100 payment by Newco to each of ▇▇▇▇▇▇▇ and
WPHI.
2.4 DIVIDENDS, ETC. (a) Notwithstanding any other provisions
of this Agreement, no dividends or other distributions declared after the
Effective Time on Newco Class A Common Stock shall be paid with respect to any
shares of ▇▇▇▇▇▇▇ Common Stock, until a certificate representing such shares of
▇▇▇▇▇▇▇ Common Stock (a "▇▇▇▇▇▇▇ Certificate") is surrendered for exchange as
provided herein. Subject to the effect of applicable laws, following surrender
of any such ▇▇▇▇▇▇▇ Certificate, there shall be paid to the holder of the Newco
Class A Common Stock issued in exchange therefor, without interest, (i) at the
time of such surrender,
10
the amount of dividends or other distributions with a record date after the
Effective Time theretofore payable with respect to such whole shares of Newco
Class A Common Stock and not paid, less the amount of any withholding taxes
which may be required thereon, and (ii) at the appropriate payment date, the
amount of dividends or other distributions with a record date after the
Effective Time but prior to surrender and a payment date subsequent to surrender
payable with respect to such whole shares of Newco Class A Common Stock, less
the amount of any withholding taxes which may be required thereon.
(b) At or after the Effective Time, there shall be no
transfers on the stock transfer books of ▇▇▇▇▇▇▇ of the shares of ▇▇▇▇▇▇▇ Common
Stock which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, certificates representing any such shares are presented to
the surviving corporation of Merger A or Newco, they shall be cancelled and
exchanged for certificates for the consideration, if any, deliverable in respect
thereof pursuant to this Agreement and the Merger A Agreement in accordance with
the procedures set forth in this Article II. ▇▇▇▇▇▇▇ Certificates surrendered
for exchange by any person constituting an Affiliate of ▇▇▇▇▇▇▇, shall not be
exchanged until Newco has received an Affiliate Letter from such Person
substantially in the form of Exhibit G.
(c) None of ▇▇▇▇▇▇▇, Newco, the surviving corporation of
Merger A or any other Person shall be liable to any former holder of shares of
▇▇▇▇▇▇▇ Common Stock for any amount properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(d) In the event that any ▇▇▇▇▇▇▇ Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such ▇▇▇▇▇▇▇ Certificate to be lost, stolen or destroyed and, if
required by Newco, the posting by such person of a bond in such reasonable
amount as Newco may direct as indemnity against any claim that may be made
against it with respect to such ▇▇▇▇▇▇▇ Certificate, Newco will issue in
exchange for such lost, stolen or destroyed ▇▇▇▇▇▇▇ Certificate the unpaid
dividends and distributions on shares of Newco Class A Common Stock as provided
in Section 2.4(a), deliverable in respect thereof pursuant to this Agreement and
the Merger A Agreement.
2.5 WP PARTNERS' AND WP LLC'S CONTRIBUTION. Upon the terms and
subject to the conditions herein set forth, on the business day immediately
following the date of the Effective Time, the WP Partners shall cause WP LLC to
contribute, transfer, convey, assign and deliver to Newco, and Newco shall
accept and acquire from WP LLC, free and clear of all Encumbrances, all of the
rights, title and interest of WP LLC in and to the WP Interests (the
"Contribution"). In consideration of the Contribution, WP LLC and Bankers Trust
shall receive an aggregate number of shares of Class B common stock, par value
$0.001 per share, of Newco ("Newco Class B Common Stock) equal to the number of
shares of Newco Class A Common Stock to be issued as of the Effective Time
pursuant to the terms of Section 2.3. From such aggregate number of shares of
Newco Class B Common Stock, Bankers Trust shall receive the amount determined in
accordance with that certain Amended and Restated Loan Agreement, dated as of
____, 1998, by and among WPHD, Bankers Trust and the other parties named
therein, and WP LLC shall receive the remainder.
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2.6 MERGER B.
(a) PRIVATE LETTER RULING. ▇▇▇▇▇▇▇ and the WP Partners shall
jointly submit to the IRS as soon as practicable a private letter ruling request
(the "Ruling Request") with respect to the Merger B transaction structure
described and defined in this Section 2.6. In the event that ▇▇▇▇▇▇▇ and the WP
Partners receive a ruling by the IRS in connection with the Ruling Request that
the Contribution qualifies as an exchange under Section 351 of the Code in
connection with Merger B (a "Favorable Ruling"), then the parties, upon the
terms and subject to the conditions herein set forth, shall implement Merger B
as soon as practicable after the Closing. ▇▇▇▇▇▇▇ and the WP Partners shall
cooperate in good faith with respect to the preparation and submission of the
Ruling Request and any dealings with the IRS with respect thereto with a view to
obtaining a Favorable Ruling as promptly as practicable (whether before or after
the Closing). All communications with the IRS shall be held jointly with the
representatives of ▇▇▇▇▇▇▇ and the WP Partners identified in the Ruling Request
and all representations and factual statements and information in the Ruling
Request shall be true, correct and complete in all material respects. ▇▇▇▇▇▇▇
and the WP Partners agree that the receipt of a Favorable Ruling shall not
constitute a condition to Closing.
(b) MERGER B. As soon as practicable after receipt of a
Favorable Ruling (but in no event prior to the Closing), ▇▇▇▇▇▇▇ and the WP
Partners shall cause ▇▇▇▇▇▇▇ to be merged with and into Newco ("Merger B") in
accordance with Section 253 of the Delaware General Corporation Law ("Section
253"). Newco shall be the surviving corporation in Merger B and shall continue
its corporate existence under the laws of the State of Delaware. The effects and
consequences of Merger B shall be as set forth in Section 253. If a Favorable
Ruling is not received or the Ruling Request is withdrawn, then upon the
occurrence of such event this Section 2.6(b) shall have no further force and
effect and Merger B shall not occur.
ARTICLE III
CLOSING
3.1 CLOSING. Subject to the fulfillment or waiver of the
conditions precedent set forth in Articles VII and VIII, the consummation of the
transactions contemplated by this Agreement and the Merger A Agreement (the
"Closing") shall begin at the offices of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, San
Francisco, California, at 8:00 a.m., local time, (a) on the last business day of
the month in which all such conditions are fulfilled or waived, effective as of
11:59 p.m. as of the last calendar day of such month, or (b) at such other date,
time or place as the parties hereto may agree upon in writing. The date on which
the transactions contemplated by Section 2.5 hereof are consummated is referred
to herein as the "Closing Date."
3.2 WP PARTNERS' OBLIGATIONS AT CLOSING. At the Closing,
the WP Partners shall deliver or cause to be delivered to ▇▇▇▇▇▇▇ and Newco:
(a) An assignment, in substantially the form of Exhibit
H, evidencing the Contribution (the "WP LLC Assignment");
(b) Certificates of duly authorized officers of the WP
Partners, each dated the Closing Date, certifying as to the matters requested by
▇▇▇▇▇▇▇ pursuant to Section 7.5;
12
(c) Each Ancillary Agreement, duly executed by WP LLC, the WP
Partner and/or officer thereof indicated therein as a signatory thereto;
(d) Assignments to Newco or a newly-formed Person wholly-owned
by Newco, free and clear of any Encumbrances and without any charges, and the
assumption by Newco or such newly-formed Person of the duties thereunder as of
the Closing, of the general partner and managing member interests in the WP
Entities not otherwise included in the Contribution (the "GP Assignments");
(e) The Charter and Bylaws, as amended to date, of each WP
Entity, and all corporate seals, minute books, stock transfer books or
equivalent company records, of each WP Entity; and
(f) The opinion or opinions of ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP and
other WP Partners counsel, as applicable, substantially in the form of Exhibit
I-1.
3.3 ▇▇▇▇▇▇▇ OBLIGATIONS AT CLOSING. At the Closing,
▇▇▇▇▇▇▇ shall deliver or cause to be delivered to the WP Partners:
(a) Certificates of duly authorized officers of ▇▇▇▇▇▇▇, each
dated the Closing Date, certifying as to the matters requested by the WP
Partners pursuant to Section 8.5;
(b) Each Ancillary Agreement to which Newco and/or ▇▇▇▇▇
▇▇▇▇▇▇▇ is a party, duly executed by Newco and/or ▇▇▇▇▇ ▇▇▇▇▇▇▇, as applicable;
and
(c) The opinion of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
substantially in the form of Exhibit J.
3.4 NEWCO OBLIGATIONS AT CLOSING. At the Closing, Newco shall
deliver or cause to be delivered to WP LLC and Bankers Trust certificates
representing the Newco Class B Common Stock in the respective amounts determined
in accordance with Section 2.5 and registered in the name of WP LLC and Bankers
Trust, respectively. At the Closing, Newco shall deliver to ▇▇▇▇▇▇▇ and the WP
Partners a certificate to the effect that Newco (a) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full power and authority to own its assets and properties and
to conduct its business as and where it is then being conducted and (b) has full
power and authority to enter into the Ancillary Agreements to which it is a
party and to consummate the transactions contemplated hereby.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE WP PARTNERS
Each of the WP Partners, jointly and severally, represents and
warrants to ▇▇▇▇▇▇▇ as follows.
4.1 WP PARTNERS AND WP PARENTS. (a) WP PARTNERS ORGANIZATION.
Apollo is a limited partnership duly organized, validly existing and in good
standing under the laws of the State of Delaware and has full power and
authority to own its assets and properties and to conduct its business as and
where it is now being conducted. Blackacre is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full power and authority to own its assets and properties and
to conduct its business as and where it is now being conducted Highridge is
limited partnership duly organized, validly existing and in good standing under
the laws of the State of California and has full power and authority to own its
assets and properties and to conduct its business as and where it is now being
conducted. APWP is a limited partnership duly organized, validly existing and in
good standing under the laws of the State of Delaware and has full power and
authority to own its assets and properties and to conduct its business as and
where it is now being conducted AP Western is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full power and authority to own its assets and properties and to conduct
its business as and where it is now being conducted. APLHI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California and has full power and authority to own its assets and properties and
to conduct its business as and where it is now being conducted. Lamco is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California and has full power and authority to own its assets
and properties and to conduct its business as and where it is now being
conducted.
(b) WP PARENTS ORGANIZATION. Each of WPHD and WPHD II is a
limited partnership duly organized, validly existing and in good standing under
the laws of the State of California and has full power and authority to own its
assets and properties and to conduct its business as and where it is now being
conducted. WPHL is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Delaware and has full power
and authority to own its assets and properties and to conduct its business as
and where it is now being conducted.
(c) TRANSACT BUSINESS. Each WP Partner and WP Parent is duly
qualified to transact business as a foreign Person and is in good standing in
every jurisdiction in which the character of its properties, owned or leased, or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified or in good standing would not have a Material
Adverse Effect on the WP Entities or the WP Business.
(d) CHARTER AND BYLAWS. The WP Partners have delivered to
▇▇▇▇▇▇▇ complete and correct copies of the Charter and Bylaws of each WP Partner
and WP Parent as in effect as of the Agreement Date.
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(e) WP INTERESTS CAPITALIZATION. WP Disclosure Schedule
Section 4.1 contains an accurate and complete list of the WP Parents, the
percentage of each class of ownership interests owned therein and the names and
percentage ownership of all partners and members therein. Except as set forth in
WP Disclosure Schedule Section 4.1, (i) all WP Interests are owned directly by
the WP Partners, free and clear of any Encumbrance, (ii) there are no voting
trusts, voting agreements or similar understandings applicable to such WP
Interests and there are no options, warrants or other rights, agreements or
commitments (other than this Agreement) obligating the WP Partners or any WP
Parent to issue, sell or transfer any shares of capital stock, ownership
interests or other securities (equity or otherwise) of any WP Parent. All of the
outstanding WP Interests are duly authorized, validly issued, fully paid,
nonassessable (except for the WP Interests constituting general partner
interests) and are without, and were not issued in violation of, preemptive
rights or any applicable law. Upon delivery to Newco of the WP Interests
pursuant to the Contribution, the WP Interests will have been transferred to
Newco, free and clear of any Encumbrances. None of the WP Partners has received
any notice of any adverse claim to their respective title to the WP Interests.
(f) NO BENEFICIAL OWNERSHIP IN ▇▇▇▇▇▇▇. No WP Partner or
Affiliate thereof beneficially owns any shares of ▇▇▇▇▇▇▇ Common Stock.
4.2 SUBSIDIARIES. (a) ORGANIZATION. Each WP Subsidiary is an
entity duly organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation and has full power and authority to own its
assets and properties and to conduct its business as and where it is now being
conducted.
(b) TRANSACT BUSINESS. Each WP Subsidiary is duly qualified to
transact business as a foreign Person and is in good standing in every
jurisdiction in which the character of its properties, owned or leased, or the
nature of its activities makes such qualification necessary, except where the
failure to be so qualified or in good standing would not have a Material Adverse
Effect on the WP Entities or the WP Business.
(c) CHARTER AND BYLAWS. The WP Partners have delivered to
▇▇▇▇▇▇▇ complete and correct copies of the Charter and Bylaws each WP
Subsidiary as in effect as of the Agreement Date.
(d) WP SUBSIDIARIES CAPITALIZATION. WP Disclosure Schedule
Section 4.2 contains an accurate and complete list of: (i) the name of each WP
Subsidiary; (ii) the name of each other partnership, limited liability company,
corporation, joint venture or other Person in which any of the WP Parents has,
directly or indirectly, any material equity interest; (iii) in the case of each
corporation specified in clauses (i) and (ii) above, (A) the jurisdiction of its
incorporation; (B) the capitalization thereof and the percentage of each class
of voting capital stock owned directly or indirectly by each of the WP Parents
and (C) the names and percentage ownerships of all Persons known by the WP
Partners to be record or beneficial owners of shares of capital stock of each
such corporation; and, (iv) in the case of each unincorporated entity specified
in clauses (i) and (ii) above, the equivalent of the information provided
pursuant to the preceding clause (iii) with respect to corporate entities.
Except as set forth in WP Disclosure Schedule Section 4.2, (i) all shares of
capital stock of each corporation and ownership interests of each unincorporated
entity identified in the preceding sentence are owned directly or
15
indirectly by the WP Parents, free and clear of any Encumbrance, (ii) there are
no voting trusts, voting agreements or similar understandings applicable to such
shares of capital stock or ownership interests and there are no options,
warrants or other rights, agreements or commitments (other than this Agreement)
obligating the WP Partners or any WP Entity to issue, sell or transfer any
shares of capital stock, ownership interest or other securities (equity or
otherwise) of any WP Subsidiary. All of the outstanding capital stock,
partnership interests, membership interests and other interests of each WP
Subsidiary is duly authorized, validly issued, fully paid, nonassessable (except
for such interests constituting general partner interests) and is without, and
was not issued in violation of, preemptive rights or any applicable law. Except
as listed on WP Disclosure Schedule Section 4.2, neither WP Partner nor any
Affiliate thereof beneficially owns any capital stock, partnership interest,
membership interest or other equity interest in any WP Subsidiary.
4.3 AUTHORIZATION. (a) Each of the WP Partners has full power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by each of the WP Partners
has been duly authorized by all necessary corporate, partnership or company
action, as the case may be, on the part of the WP Partners. This Agreement has
been duly executed and delivered by the WP Partners. This Agreement constitutes
a legal, valid and binding obligation of each of the WP Partners, enforceable
against each of the WP Partners in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and general principles of equity (regardless of whether enforceability
is considered in a proceeding at law or in equity).
(b) Each WP Partner has full power and authority to enter into
the Ancillary Agreements to which it is a party and to consummate the
transactions contemplated thereby. The execution and delivery of the Ancillary
Agreements and the consummation of the transactions contemplated thereby by the
WP Partners who are parties thereto have been duly authorized by all necessary
corporate, partnership or company action, as the case may be, on the part of
such WP Partner. Each Ancillary Agreement to which a WP Partner is a party, when
executed and delivered by such WP Partner, will constitute a legal, valid and
binding obligation of such WP Partner, enforceable against such WP Partner in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and general principles
of equity (regardless of whether enforceability is considered in a proceeding at
law or in equity).
(c) Except (i) for compliance with the notification, filing
and waiting period requirements of the HSR Act or (ii) as otherwise set forth in
WP Disclosure Schedule Section 4.3(c), no consent, waiver, approval, order or
authorization of, notice to, or registration, declaration, designation,
qualification or filing with, any Governmental Authority or third Person,
domestic or foreign, is or has been or will be required on the part of any WP
Partner or WP Entity in connection with the execution and delivery of this
Agreement or any Ancillary Agreement or the consummation by the WP Partners of
the transactions contemplated hereby or thereby, other than where the failure to
obtain such consents, waivers, approvals, orders or authorizations or to make or
effect such registrations, declarations, designations, qualifications or filings
will not (x) prevent or materially delay consummation of the transactions
contemplated by
16
this Agreement and the Ancillary Agreements, (y) prevent such WP Partner from
performing its obligations under this Agreement and the Ancillary Agreements or
(z) result in a Material Adverse Effect on the WP Entities or the WP Business.
4.4 NON-CONTRAVENTION. Except as set forth in WP Disclosure
Schedule Section 4.4, neither the execution and delivery of this Agreement or
any Ancillary Agreement by any WP Partner, nor the consummation by any of them
of the transactions contemplated hereby or thereby, will violate or conflict
with, or result in the acceleration of rights, benefits or payments under, (a)
any provision of the Charter or Bylaws of any WP Partner or WP Entity, (b) any
statute, law, regulation or Governmental Order to which any WP Partner or WP
Entity or any of its assets or properties may be bound or subject, (c) any debt,
note, bond, indenture, Encumbrance, lease, license, instrument, contract,
commitment or other agreement to which any WP Partner or WP Entity is a party or
by which it or any of its assets or properties may be bound or subject, except,
with respect to clauses (b) and (c), for such violations and conflicts which
will not (i) prevent or materially delay consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements, (ii) prevent such
WP Partner from performing its obligations under this Agreement and the
Ancillary Agreements or (iii) result in a Material Adverse Effect on the WP
Entities or the WP Business.
4.5 FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES. (a) WP
Disclosure Schedule Section 4.5(a) sets forth (i) the audited combined
consolidated balance sheet for the WP Parents as at March 31, 2000 and ▇▇▇▇▇ ▇▇,
▇▇▇▇, (▇▇) the unaudited combined consolidated balance sheet for the WP Parents
as at June 30, 2000 and June 30, 1999, (iii) the audited combined consolidated
statements of income, partners' capital and cash flows including the footnotes
thereto of the WP Partners for each of the three fiscal years ended March 31,
2000 and (iv) the unaudited combined consolidated statements of income,
partners' capital and cash flows including the footnotes thereto of the WP
Partners for the quarters ended June 30, 2000 and June 30, 1999 (collectively,
the "Financial Statements"). Except as set forth in WP Disclosure Schedule
Section 4.5(a), the Financial Statements have been prepared from the books and
records of the WP Entities in accordance with GAAP applied on a basis consistent
with prior periods, and the audited Financial Statements have been examined and
are accompanied by the unqualified reports of Ernst & Young LLP, independent
certified public accountants. Except as set forth in WP Disclosure Schedule
Section 4.5(a), the balance sheets included in the Financial Statements present
fairly, in all material respects, the financial condition of the WP Entities as
at the dates thereof, and the income statements included in the Financial
Statements present fairly, in all material respects, the results of operations
of the WP Entities for the periods covered thereby. The books and records of the
WP Entities from which the Financial Statements were prepared were complete and
accurate in all material respects at the time of such preparation and accurately
reflect all material transactions of the WP Entities when taken as a whole. The
WP Entities have accounting controls sufficient to ensure that such transactions
are (x) executed in accordance with management's general or specific
authorization and (y) are recorded in conformity with GAAP so as to maintain
accountability of assets.
(b) The WP Entities have no Liabilities, except for
Liabilities (i) reflected in the balance sheet as at June 30, 2000 included in
the Financial Statements (the "WP Balance Sheet"), (ii) incurred by the WP
Entities in the ordinary course of business and consistent with past practices
since the date of the Balance Sheet, (iii) which in the aggregate are less than
17
$2,000,000 or (iv) otherwise disclosed in the WP Disclosure Schedule. As used in
this Section 4.5(b), the term "Liabilities" excludes any Liabilities under
permits, licenses, orders, approvals, authorizations, contracts, agreements or
commitments for future payments or performance where the applicable WP Entity is
not currently in violation of or default under any provision thereof.
4.6 ABSENCE OF CERTAIN CHANGES. Except as set forth in WP
Disclosure Schedule Section 4.6, since the date of the WP Balance Sheet:
(a) The WP Entities, taken as a whole, have not suffered any
damage or destruction adversely affecting the WP Business or the tangible assets
owned or leased by the WP Entities that has had or is reasonably likely to
result in a loss, cost or expense to the WP Entities, taken as a whole, in
excess of $2,000,000;
(b) Except pursuant to debt agreements existing on the date of
the WP Balance Sheet, no WP Entity has incurred, assumed or become subject to
any additional indebtedness for money borrowed or purchase money indebtedness,
including capitalized leases;
(c) No WP Entity has made any change in the compensation
levels of the senior executives of such WP Entity (i.e., vice presidents and
above), any change in the manner in which other employees of such WP Entity
generally are compensated, or any provision of additional or supplemental
benefits for employees of such WP Entity generally, except normal periodic
increases, promotions or payments under compensation plans effected in the
ordinary course of business and consistent with past practices;
(d) No WP Entity has entered into any transaction not in the
ordinary course of business, except as contemplated by this Agreement or any
Ancillary Agreement;
(e) Except for changes affecting the single-family home,
townhome and/or condominium construction industry generally (nationwide or in
specific locales), no Material Adverse Effect has occurred;
(f) There have been no Encumbrances on the assets or
properties of any WP Entity, other than Permitted Liens;
(g) None of the WP Entities have made any material change
in its accounting principles; and
(h) No WP Entity has agreed, whether in writing or otherwise,
to take any action described in this Section 4.6.
4.7 TITLE TO ASSETS. Except as set forth in WP Disclosure
Schedule Section 4.7, each WP Entity has good title to all of the assets and
properties (including WP Owned Real Property) used in the conduct of the WP
Business (including those reflected on the WP Balance Sheet), except for assets
and properties sold, consumed or otherwise disposed of in the ordinary course of
business and consistent with past practices since the date of the WP Balance
Sheet, free and clear of any Encumbrance, other than Permitted Liens.
18
4.8 REAL PROPERTY.
(a) LEASED REAL PROPERTY. Except for real property leases and
subleases the failure of which to possess or hold would not in the aggregate
result in a WP Partners Loss in the aggregate in excess of $2,000,000 or which
are part of the WP Entities' model home leaseback program, WP Disclosure
Schedule Section 4.8(a) contains an accurate and complete list of all real
property leased or subleased to the WP Entities as of the Agreement Date (the
"WP Leased Real Property" and, together with the WP Owned Real Property, the "WP
Real Property"). All leases and subleases of such WP Leased Real Property by the
WP Entities (x) are legal, valid and binding obligations of the WP Entities,
enforceable against the WP Entities in accordance with their terms, except as
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity), and
are in full force and effect, and (y) originals or copies of which that were
accurate and complete as of the date provided have been made available to
▇▇▇▇▇▇▇ for review. Except as disclosed in WP Disclosure Schedule Section
4.8(a), the WP Entities enjoy peaceful and undisturbed possession under all
leases and subleases of WP Leased Real Property, and, to the knowledge of the WP
Partners and the WP Entities, all lessors under any lease or sublease of WP
Leased Real Property (1) are not (with or without notice or the lapse of time,
or both) in material breach or default thereunder, (2) have performed all
material obligations required to be performed by it thereunder, and (3) have not
given written notice to the WP Partners or the WP Entities of their intent to
terminate such lease or sublease of WP Leased Real Property.
(b) OWNED REAL PROPERTY. WP Disclosure Schedule Section 4.8(b)
contains an accurate and complete list and brief description of all real
property in which the WP Entities own an interest as of August 31, 2000 (except
for the WP Land Contract Property and WP Option Real Property (as such terms are
defined below) and WP Leased Real Property). Such real property, together with
all such real property in which the WP Entities own an interest as of the
Agreement Date, is referred to herein as the "WP Owned Real Property." Except as
set forth on WP Disclosure Schedule Section 4.8(b), the WP Owned Real Property
has all (i) appropriate zoning, (ii) preliminary plan approval, (iii) utilities
(or utilities are able to be timely obtained) and (iv) necessary access to and
from public highways, streets and roads for construction and residential
purposes (or such access will be timely obtained).
(c) LAND CONTRACTS. WP Disclosure Schedule Section 4.8(c)
contains an accurate and complete list and brief description of all written
agreements, arrangements, contracts, and commitments as of September 7, 2000 to
which any of the WP Entities is a party or entered into on behalf thereof
pursuant to which any of the WP Entities (i) is obligated to purchase any
developed or undeveloped real property, whether or not such obligation is
subject to conditions (the "WP Land Contract Property") as of the Agreement Date
or (ii) possesses an option to acquire any developed or undeveloped real
property (the "WP Option Real Property"). In addition, WP Disclosure Schedule
Section 4.8(c) contains an accurate and complete list of all deposits or other
moneys that would be forfeited or paid as a result of a failure to exercise the
option on any such WP Option Real Property.
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(d) OTHER REAL PROPERTY REPRESENTATIONS.
(i) NO CONDEMNATION. No condemnation, eminent domain, or
similar Action is pending or, to the knowledge of the WP Partners or
the WP Entities, is threatened with respect to any WP Real Property
which would, if successful, have a Material Adverse Effect on the WP
Business.
(ii) COMPLIANCE WITH LAWS. To the knowledge of the WP
Partners and the WP Entities, the buildings and improvements on the
developed WP Owned Real Property and the WP Leased Real Property and
the subdivision of and improvements on the undeveloped WP Owned Real
Property do not violate (A) any applicable law, including any building,
set-back, or zoning law, ordinance, regulation, or statute, or
Governmental Order or (B) any enforceable restrictive covenant
affecting any such property, except for any violations which,
individually or in the aggregate, will not have a Material Adverse
Effect on the WP Business.
(iii) SITE OBLIGATIONS. Except as set forth on WP
Disclosure Schedule Section 4.8(d), to the knowledge of the WP Partners
and the WP Entities, no WP Real Property is subject to any condition or
obligation to any Governmental Authority or other Person requiring the
owner or any transferee thereof to donate or otherwise transfer for
less than fair value land or any interest therein, money or other
property or to make off-site public improvements, other than
obligations that would not have a Material Adverse Effect on the WP
Business.
(iv) ASSESSMENTS. No material development fees, in-lieu
fees, school fees or charges or other developer-related charges or
assessments by any Governmental Authority or any other Person for
public facilities or improvements or otherwise made against the
developed WP Owned Real Property or any lots included therein are past
due and unpaid (other than those set forth on the WP Balance Sheet or
on WP Disclosure Schedule Section 4.8(d)).
(v) SUBDIVISION STANDARDS. Except as set forth on WP
Disclosure Schedule Section 4.8(d), to the knowledge of the WP Partners
and the WP Entities, the developed WP Owned Real Property and all lots
included therein conform in all material respects to the appropriate
Governmental Authority's subdivision standards, subdivision maps and
any conditions of approval or recordation thereof and there is no
material impediment to subdivision approval or issuance and recordation
of subdivision maps for the undeveloped WP Owned Real Property, such
approval to allow development of the undeveloped WP Owned Real Property
for construction and sale of single-family homes, townhomes and/or
condominiums at the density and materially in the manner currently
anticipated by any of the WP Entities.
(vi) MORATORIA. Except as set forth on WP Disclosure
Schedule Section 4.8(d), to the knowledge of the WP Partners and the WP
Entities, there is no moratorium applicable to any of the WP Owned Real
Property to the extent any of the WP Entities plans further development
thereof on (A) the issuance of building permits for the construction of
houses, or certificates of occupancy therefor, or (B) the purchase or
20
issuance of sewer or water taps or permits, to the extent any of the WP
Entities plans or is required to rely on public water or sewer
facilities.
(vii) ENVIRONMENTAL MATTERS AND WETLANDS. Except as set
forth on WP Disclosure Schedule Section 4.8(d), (A) none of the WP Real
Property on which any of the WP Entities intends to construct
residential dwellings is located within a "habitat for threatened or
endangered plants or animals" or a "critical," "preservation,"
"conservation" or similar type of area which will materially affect any
of the WP Entities' present development plans therefor, (B) no portion
of the WP Real Property which any of the WP Entities has developed or
intends to develop for residential lots and dwellings is situated
within a "noise cone" such that the Federal Housing Administration will
not approve mortgages due to the noise level classification of such
Real Property and (C) no wetlands exist which are reasonably likely to
restrict development of any of the WP Real Property as currently
contemplated by any of the WP Entities.
(viii) NO FOREIGN WP PARTNERS. No
WP Partner is a "foreign person" within the meaning of Sections 1445
and 7701 of the Code.
(ix) ZONING AND UTILITIES. No WP Entities own or have
any interest in, or are contractually obligated to acquire or obtain
any interest in, any real property which does not have, or will not
have prior to such acquisition or obtaining of interest, residential
zoning under any applicable general, special or specific plans and
under any applicable zoning laws and regulations and the provision of
potable water, sewage and other utilities available to the boundary of
the land.
4.9 INTELLECTUAL PROPERTY. WP Disclosure Schedule Section 4.9
contains an accurate and complete list of (a) all patents throughout the world,
(b) all trademarks, trade names and service marks and applications therefor
throughout the world, (c) all copyrights and applications therefor throughout
the world, (d) all software and computer programs, and (e) all licenses relating
to patents, patent rights, know how, trade secrets, trademarks, trade names,
service marks, software and computer programs or other intellectual property, in
each case issued to or used or held for use by the WP Entities in the operation
of the WP Business (collectively, the "WP Intellectual Property"; provided,
however, that WP Disclosure Schedule Section 4.9 need not contain any WP
Intellectual Property consisting of "off-the shelf" software or computer
programs). Except as set forth in WP Disclosure Schedule Section 4.9, the WP
Entities are the sole and exclusive owner or licensee of, with all right, title
and interest in and to (free and clear of any Encumbrances, other than Permitted
Liens), the WP Intellectual Property. To the knowledge of the WP Partners and
the WP Entities, the use of any such WP Intellectual Property in the conduct of
the WP Business as presently conducted does not violate any rights of any third
Person, the violation of which would result in losses, costs or expenses in the
aggregate in excess of $2,000,000. The WP Entities have not received written
notice that the use of any such WP Intellectual Property in the conduct of the
WP Business as presently conducted violates any rights of any third Person the
violation of which would result in losses, costs or expenses in the aggregate in
excess of $2,000,000.
4.10 LITIGATION. Except as described in WP Disclosure
Schedule Section 4.10, there is no Action pending or, to the knowledge of the
WP Partners and the WP Entities,
21
threatened against the WP Entities, whether at law or in equity, or before or by
any Governmental Authority which (a) seeks damages or other monetary relief in
excess of $2,000,000, (b) seeks injunctive relief which if granted could have a
Material Adverse Effect on the WP Business or (c) relates to the transactions
contemplated by this Agreement or any Ancillary Agreement. Except as described
in WP Disclosure Schedule Section 4.10, none of the WP Entities nor any of their
properties or assets currently are subject to or bound by any Governmental Order
(other than any Governmental Order that may be applicable generally to the
industry in which the WP Business operates).
4.11 EMPLOYEE BENEFIT MATTERS. (a) WP Disclosure Schedule
Section 4.11 sets forth an accurate and complete list of (i) each "employee
benefit plan" (as defined in Section 3(3) of ERISA) that is maintained by any WP
Partner, WP Entity or other person or entity that, together with any WP Partner
or WP Entity, is treated as a single employer under Section 414(b), (c), (m) or
(o) of the Code (each such other person or entity, an "ERISA WP Affiliate") for
the benefit of any current or former employees of any WP Partner or WP Entity or
any of the ERISA WP Affiliates (the "WP Employees"); (ii) to the extent not
disclosed pursuant to the preceding clause (i), each plan, contract, program,
policy, practice or arrangement, whether written or oral, funded or unfunded,
providing stock options, stock ownership, stock purchase or award, phantom
stock, stock appreciation rights, deferred compensation, retirement, insurance,
flexible spending, dependent care, fringe benefit, vacation pay, holiday pay,
sick pay, workers compensation, severance or termination pay, supplemental
unemployment benefits, employee loans, severance, educational assistance,
incentive, bonus, or other profit-sharing arrangements for the benefit of the WP
Employees (all plans, programs or arrangements described in the preceding clause
(i) and this clause (ii) being collectively referred to as "WP Employee Plans");
and (iii) an accurate and complete list of all employment, managerial, advisory,
or consulting agreements, employee confidentiality agreements, employee
severance agreements and all other material agreements, policies or arrangements
maintained by the WP Partners or WP Entities or any of the ERISA WP Affiliates
with respect to the WP Employees or individuals who are independent contractors
providing services to any WP Partner or WP Entity or any of the ERISA WP
Affiliates (all agreements, policies or arrangements described in this clause
(iii) being collectively referred to as "WP Employee Agreements"). The WP
Partners have delivered or made available to ▇▇▇▇▇▇▇ copies, which were accurate
and complete as of the date so delivered, of all such (1) documents and (if
applicable) summary plan descriptions as comprise, describe or similarly relate
to the WP Employee Plans and WP Employee Agreements (including the most recent
annual report on Form 5500, if applicable), and (2) summary description(s) of
any such WP Employee Plans and WP Employee Agreements not otherwise in writing,
and except as described in WP Disclosure Schedule Section 4.11, there have been
no changes to such documents as of the Agreement Date.
(b) Except as disclosed in WP Disclosure Schedule Section
4.11, (i) each WP Employee Plan that is intended to be qualified under Section
401(a) of the Code is so qualified in form and operation in all material
respects, and nothing has occurred which could adversely affect the qualified
status of any such WP Employee Plan; (ii) each WP Employee Plan and WP Employee
Agreement has been operated or administered in accordance with its provisions
and in material compliance with the statutes, rules and regulations governing
such WP Employee Plan or WP Employee Agreement; (iii) no "disqualified person"
or "party in interest" (as defined in Section 4975 of the Code and Section 3(14)
of ERISA, respectively) has engaged in any
22
"prohibited transaction" (as defined in Section 4975(c) of the Code or Section
406 of ERISA, respectively) which could subject the WP Partners, the WP
Entities, the ERISA WP Affiliates, any WP Employee Plan (or their related
trusts) or ▇▇▇▇▇▇▇ or Newco, to any material liability under Section 4975 of the
Code or Section 502(i) or (l) of ERISA; (iv) with respect to each WP Employee
Plan, no event has occurred and there has been no failure to act upon the part
of any WP Partner, any WP Entity or any fiduciary or "plan official" (as defined
in Section 412 of ERISA) with respect to such WP Employee Plan that could
subject the WP Partners, the WP Entities, the ERISA WP Affiliates, any WP
Employee Plan or ▇▇▇▇▇▇▇ or Newco, to the imposition of any material Tax or
penalty; (v) there are no Actions or audits, investigations or examinations by
any Governmental Authority pending (other than routine claims for benefits)
regarding any WP Employee Plan or WP Employee Agreement; (vi) no WP Employee
Plan is subject to Section 412 of the Code or Title IV of ERISA, and no WP
Partner, WP Entity or ERISA WP Affiliate has maintained or been obligated to
make contributions to any such WP Employee Plan during the six-year period
ending on the Agreement Date; (vii) no steps have been taken by any WP Partner,
WP Entity or ERISA WP Affiliate to terminate any WP Employee Plan; (viii) each
WP Employee Plan that is a "group health plan" (as defined in Section 5000(b)(1)
of the Code) has been operated and administered in compliance with the
continuation coverage requirements of Section 4980B of the Code and Part 6 of
Title I of ERISA and the Medicare secondary payor provisions of Section 1826(b)
of the Social Security Act, and the regulations promulgated thereunder; (ix) no
WP Partner, WP Entity or ERISA WP Affiliate currently contributes to any
"multiemployer plan" (as defined in Section 3(37) of ERISA), and there has not
been any complete or partial withdrawal from or termination of participation in
any such WP Employee Plan that could result in withdrawal liability or similar
liability for the WP Partners, the WP Entities, the ERISA WP Affiliates, the
▇▇▇▇▇▇▇ Entities, their Affiliates or Newco, whether directly or as a result of
controlled group liability; and (x) all contributions, premiums and other
payments that would normally be made or paid with respect to any WP Employee
Plan on behalf of the WP Business or the WP Employees by the Closing Date will
have been made by the Closing Date.
(c) Except as set forth in this Agreement or WP Disclosure
Schedule Section 4.11, the execution of, and performance of the transactions
contemplated by, this Agreement will not (either together with or upon the
occurrence of any additional or subsequent events) constitute an event under any
WP Employee Plan or WP Employee Agreement that could result in any payment
(whether severance pay or otherwise), acceleration, vesting or increase in
benefits with respect to any current or former employee of any WP Partner or WP
Entity or any of the ERISA WP Affiliates, whether or not any such payment would
be an "excess parachute payment"" (as defined in Section 280G of the Code).
(d) No WP Partner or WP Entity nor any of the ERISA WP
Affiliates is required to maintain, contribute to or make payments under any WP
Employee Plan or WP Employee Agreement by the law or applicable custom or rule
of any jurisdiction outside of the United States.
(e) Each WP Employee Plan and WP Employee Agreement complies
with all applicable requirements of (i) the Age Discrimination in Employment Act
of 1967, as amended, and the regulations thereunder; (ii) Title VII of the Civil
Rights Act of 1964, as amended, and the regulations thereunder; and (iii) all
other applicable laws. All amendments and actions required
23
to bring each of the WP Employee Plans and WP Employee Agreements into
conformity with all applicable provisions of the Code, ERISA and other
applicable laws have been made or taken, except to the extent that such
amendments or actions are not required by law to be made or taken until a date
after the Closing Date and are disclosed in WP Disclosure Schedule Section 4.11.
(f) Except as set forth in WP Disclosure Schedule Section
4.11, upon Closing ▇▇▇▇▇▇▇ or Newco or one or more of their Affiliates, as
applicable, may terminate any WP Employee Plan or WP Employee Agreement or may
cease contributions to or making payments under any WP Employee Plan or WP
Employee Agreement without incurring any liability, other than a benefit
liability accrued in accordance with the terms of such Plan or Agreement
immediately prior to such termination or cessation of contributions.
(g) All individuals who are or were performing consulting or
other services for any WP Partner or WP Entity or any of the ERISA WP Affiliates
are or were correctly classified by the such WP Partner, WP Entity or ERISA WP
Affiliate as either "independent contractors" or "employees," as the case may
be, and, at the Closing Date, will qualify for such classification.
4.12 TAXES. (a) Except as set forth in WP Disclosure Schedule
Section 4.12, (i) the WP Entities have timely filed or caused to be timely filed
(or will timely file or cause to be timely filed) with the appropriate Taxing
Authorities all Tax Returns required to be filed on or prior to the Closing Date
(taking into account all extensions of due dates) by or with respect to the WP
Entities and have timely paid or adequately provided for (or will timely pay or
adequately provide for) all Taxes owed by the WP Entities (whether or not shown
on any Tax Return) for the period up to and including the Closing Date, except
where the failure to file such Tax Returns or pay any such Taxes would not, or
could not reasonably be expected to, in the aggregate result in losses, costs or
expenses to the WP Entities, taken as whole, in excess of $2,000,000 after the
Closing Date, (ii) all such Tax Returns were or will be correct and complete in
all material respects, and (iii) all withholding Tax requirements imposed on or
with respect to the WP Entities have been or will be satisfied in full in all
respects. No written claim has been made to the WP Partners or the WP Entities
by any Taxing Authority in any jurisdiction where the WP Entities do not file
Tax Returns asserting that any of them are required to file a Tax Return.
(b) Except as set forth in WP Disclosure Schedule Section
4.12, (i) there have been no examinations or audits with respect to any Tax
Return of, or which included, the WP Entities, and (ii) no assessment,
deficiency or adjustment for any Taxes has been asserted in writing or, to the
knowledge of the WP Partners and the WP Entities, is proposed with respect to
any Tax Return of, or which includes, the WP Entities.
(c) Except as set forth in WP Disclosure Schedule Section
4.12, there is not in force any extension of time with respect to the due date
for the filing of any Tax Return of or with respect to or which includes the WP
Entities or any waiver or agreement for any extension of time for the assessment
or payment of any Tax of or with respect to or which includes the WP Entities.
24
(d) The WP Balance Sheet fully accrues all actual and
contingent liabilities for Taxes with respect to all periods through the dates
thereof in accordance with GAAP. The WP Entities will establish, in the ordinary
course of business and consistent with its past practices, reserves adequate for
the payment of all Taxes (other than income taxes) for the period from June 30,
2000 through the Closing Date.
(e) All Tax allocation or sharing agreements or arrangements
with respect to the WP Entities have been or will be cancelled on or prior to
the Closing Date. No payments are or will become due by the WP Entities after
the Closing Date pursuant to any such agreement or arrangement.
(f) Except as set forth in WP Disclosure Schedule Section
4.12, none of the property of the WP Entities is held in an arrangement for
which partnership Tax Returns are required to be filed, no WP Entity owns an
interest in a partnership and no WP Entity owns any interest in any controlled
foreign corporation (as defined in Section 957 of the Code) or passive foreign
investment company (as defined in Section 1296 of the Code).
(g) Except as set forth in WP Disclosure Schedule Section
4.12, none of the property of the WP Entities is subject to a safe-harbor lease
(pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954 as in effect
after the Economic Recovery Act of 1981 and before the Tax Reform Act of 1986)
or is "tax-exempt use property" (within the meaning of Section 168(h) of the
Code) or "tax-exempt bond financed property" (within the meaning of Section
168(g)(5) of the Code).
(h) Except as set forth in WP Disclosure Schedule Section
4.12, none of the WP Entities will be required to include any amount in income
for any taxable period beginning after the Closing Date as a result of a change
in accounting method for any taxable period ending on or before the Closing Date
or pursuant to any agreement with any Taxing Authority with respect to any such
taxable period.
(i) No WP Entity has consented to have the provisions of
Section 341(f)(2) of the Code apply with respect to a sale of its stock.
(j) Except as set forth in WP Disclosure Schedule Section
4.12, none of the WP Entities will, as a result of the transactions contemplated
by this Agreement, be obligated to make a payment to an individual that would be
a "parachute payment" as defined in Section 280G of the Code without regard to
whether such payment is reasonable compensation for personal services performed
or to be performed in the future.
(k) Except as set forth in WP Disclosure Schedule Section
4.12, no power of attorney has been granted with respect to any matter relating
to Taxes of the WP Entities which is currently in force.
(l) Except as set forth in WP Disclosure Schedule Section
4.12, each WP Entity is taxed as a partnership for income tax purposes.
4.13 COMPLIANCE WITH LAW. Except with respect to
Environmental Laws (which are covered separately in Section 4.17), since
December 31, 1996, no WP Entity has
25
violated any law, statute, rule, regulation or Governmental Order which has
subjected it to fines or penalties in excess of $2,000,000 in the aggregate. As
of the Agreement Date, each WP Entity is in compliance in all material respects
with all laws, statutes, rules, regulations and Governmental Orders applicable
to such WP Entity or by which the properties or assets of such WP Entity are
bound or subject, except where the noncompliance with which would not, in the
aggregate, result in the imposition on the WP Entities, taken as a whole, of
fines or penalties in excess of $2,000,000.
4.14 CONTRACTS AND COMMITMENTS. WP Disclosure Schedule Section
4.14 contains an accurate and complete list as of the Agreement Date of each
contract, agreement or commitment of the WP Entities (a) to which any WP Entity
or any of its assets or properties is bound and which requires total payments to
or by a WP Entity of at least $2,000,000 annually; (b) to which any WP Entity or
any of its assets or properties is bound or subject and which has a remaining
term longer than one year, which requires total payments by the WP Entities,
taken as a whole, of at least $2,000,000 during such term and which is not
terminable on 30 or fewer days' notice without penalty; (c) containing covenants
limiting the freedom of any WP Entity to compete in any line of business or with
any Person in any geographical area; (d) calling for the proposed acquisition of
any operating business or any assets outside the ordinary course of business and
with a purchase price in excess of $2,000,000; (e) relating to the proposed
purchase or sale of any material assets or properties of the WP Entities, taken
as a whole; (f) to which any WP Entity is a party or by which any of its assets
or properties are bound relating to indebtedness for borrowed money, including
capital leases, security agreements relating thereto and any amendment or waiver
thereof, and (g) with the WP Partners or any Affiliate thereof (collectively,
the "WP Commitments;" PROVIDED, that WP Commitments shall not include (i)
contracts granting any WP Entity an option to purchase land, (ii) conditions,
covenants and restrictions for real property owned by any WP Entity, or (iii)
agreements between any WP Entity and any contractor or developer made in the
ordinary course of business). Each WP Commitment is a legal, valid and binding
obligation of the applicable WP Entity, enforceable against such WP Entity in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and general principles
of equity (regardless of whether enforceability is considered in a proceeding at
law or in equity). Except as set forth in WP Disclosure Schedule Section 4.14,
no WP Entity is, nor to the knowledge of the WP Partners or the WP Entities is
any other party thereto, in default under any of the WP Commitments where such
default would result, in the aggregate, in a Liability in excess of $2,000,000.
Except as set forth in WP Disclosure Schedule Section 4.14, since December 31,
1998, no WP Partner or WP Entity has received written notice of cancellation or
termination of any WP Commitment from any other party thereto.
4.15 PERMITS AND OTHER OPERATING RIGHTS. Except as set forth
in WP Disclosure Schedule Section 4.15 and except with respect to Environmental
Permits (which are covered separately in Section 4.17), all permits, licenses,
orders, approvals and authorizations required by any applicable law, statute,
regulation or Governmental Order, or by the property and contract rights of
third Persons, reasonably necessary to permit the operation of the WP Business
in the manner currently conducted by the WP Entities and to permit the current
occupancy of the WP Real Property by the WP Entities have been obtained or are
reasonably expected to be obtained by the WP Entities, except where the failure
to possess such permit,
26
license, order, approval, authorization or rights would not result in a Material
Adverse Effect on the WP Entities or the WP Business. No WP Partner or WP Entity
has received written notice from any Governmental Authority that any such
permit, license, order, approval or authorization has been, or will be, revoked
or terminated.
4.16 LABOR MATTERS. No employee of the WP Entities is covered
under any collective bargaining agreement. Except to the extent set forth in WP
Disclosure Schedule Section 4.16: (a) there is no unfair labor practice
complaint against any of the WP Entities pending or, to the knowledge of the WP
Partners and the WP Entities, threatened before the National Labor Relations
Board or any comparable state or local Governmental Authority, (b) there is no
labor strike, slowdown or work stoppage actually pending or, to the knowledge of
the WP Partners and the WP Entities, threatened against or directly affecting
any of the WP Entities, and (c) no grievance or any Action arising out of or
under collective bargaining agreements is pending or, to the knowledge of the WP
Partners and the WP Entities, threatened against any WP Entities.
4.17 ENVIRONMENTAL MATTERS. Except as set forth in
WP Disclosure Schedule Section 4.17, to the knowledge of the WP Partners and
the WP Entities:
(a) the WP Entities have not used, generated, treated, stored
or disposed of any Hazardous Material at any properties owned, leased or
operated by the WP Entities, other than Hazardous Material customarily used,
generated, treated, stored or disposed of in connection with businesses similar
to the WP Business;
(b) the WP Entities have not caused the release, discharge,
spillage, loss, seepage or filtration of any Hazardous Material and no such
occurrence is threatened on, under, about or from such properties;
(c) the WP Entities have not engaged in, and are not engaged
in, the use, generation, production, manufacture, treatment, storage, disposal
or transportation of Hazardous Material, other than those Hazardous Materials
customarily used, generated, produced, manufactured, treated, stored, disposed
or transported in connection with businesses similar to the WP Business;
(d) to the knowledge of the WP Partners and the WP Entities,
none of the properties owned, leased or operated by the WP Entities contains or
has contained any underground or above-ground tanks for the storage of Hazardous
Material and has not been remediated;
(e) the WP Entities have disposed of all wastes, including
those containing any Hazardous Material, in substantial compliance with all
applicable Environmental Laws and Environmental Permits, and, to the knowledge
of the WP Partners and the WP Entities, the WP Entities have never received any
written notice or claim of Liability for any off-site contamination;
(f) Environmental Permits have been obtained and are in full
force and effect, or are in the process of being obtained, for the operations
conducted at all properties owned, leased or operated by the WP Entities;
27
(g) none of the properties owned, leased or operated by the WP
Entities are listed or, to the knowledge of the WP Partners and the WP Entities,
proposed for listing on the National Priorities List under CERCLA or on the
CERCLIS or any similar state list of sites requiring investigation or cleanup;
(h) the WP Entities and each property owned, leased or
operated by the WP Entities has been and is in substantial compliance with all,
and is not in violation of any, Environmental Laws and Environmental Permits,
and there are no Governmental Orders outstanding, no claims with respect to
Environmental Laws have been instituted or filed, and none are pending or, to
the knowledge of the WP Partners and the WP Entities, threatened relating to the
WP Entities or their business, operations, assets or properties, owned, leased
or operated; and
(i) the WP Partners have provided or made available to ▇▇▇▇▇▇▇
true, accurate and complete copies of any written information in the possession
of the WP Partners and the WP Entities (other than where such disclosure would
result in the loss of the attorney-client privilege) which pertains to the
environmental history of all the properties owned, leased or operated by the WP
Entities.
4.18 WARRANTY OBLIGATIONS.
(a) Except as set forth on WP Disclosure Schedule Section
4.18, none of the WP Entities, to the knowledge of the WP Partners and the WP
Entities, has any warranty claims that are not covered by Homebuyers Warranty
Corporation, National Home Insurance Company or warranties from subcontractors
that materially exceed the amounts reserved therefor on the WP Balance Sheet or
any aggregate amounts properly accrued on the books and records of any of the WP
Entities since the date of the WP Balance Sheet.
(b) Except as set forth on WP Disclosure Schedule Section
4.18, to the knowledge of the WP Partners and the WP Entities, no product
manufactured, sold, leased or delivered by any of the WP Entities (except
pursuant to applicable law) is subject to any material guaranty, warranty, or
other indemnity beyond the applicable standard terms and conditions of sale or
lease.
(c) To the knowledge of the WP Partners and the WP Entities,
except as set forth on WP Disclosure Schedule Section 4.18, none of the WP
Entities has any material Liability not fully covered by insurance arising out
of any injury to individuals or property as a result of the ownership,
possession, or use of any product manufactured, sold, leased or delivered by any
of the WP Entities.
(d) All sales by the WP Entities have been made in accordance
with all federal and state consumer disclosure laws and regulations, including,
if applicable, the California Subdivided Lands Act and the regulations enacted
thereunder.
28
4.19 HOMEOWNER ASSOCIATIONS.
(a) WP Disclosure Schedule Section 4.19 contains an accurate
and complete list of all homeowner associations (the "WP Homeowner
Associations") in which any of the WP Entities has or has had declarant rights.
(b) Except as set forth on WP Disclosure Schedule Section
4.19, to the knowledge of the WP Partners and the WP Entities, (i) all
restrictive covenants and other documents used by any of the WP Entities in
connection with the creation and operation of the WP Homeowner Associations (A)
in which any of the WP Entities previously had declarant rights complied in all
material respects with applicable laws at the time the same were promulgated,
and (B) in which any of the WP Entities currently has declarant rights currently
comply in all material respects with applicable laws, and (ii) all material
disclosures and deliveries of information and documents required by applicable
laws as to such WP Homeowner Associations and their creation and operation have
been materially complied with.
(c) To the knowledge of the WP Partners and the WP Entities,
WP Disclosure Schedule Section 4.19 contains an accurate and complete list of
all amounts in excess of $2,000,000 owing between the WP Homeowners Associations
and any of the WP Entities.
(d) To the knowledge of the WP Partners and the WP Entities,
no other claims exist by a WP Homeowner Association against any of the WP
Entities, and to the knowledge of the WP Partners and the WP Entities, each WP
Homeowner Association has been operated, so long as any of the WP Entities has
participated therein, in accordance with applicable laws.
4.20 ASSETS NECESSARY TO THE WP BUSINESS. Except as set forth
in WP Disclosure Schedule Section 4.20, immediately before the Effective Time
the WP Entities will hold or have the right to use in the WP Business all of the
assets and properties (including all licenses and agreements) currently being
used (except those disposed of in the ordinary course of business or otherwise
as contemplated or permitted by this Agreement) or which are reasonably
necessary to permit the operation of the WP Business in the manner currently
conducted by the WP Entities.
4.21 ACCURACY OF INFORMATION FURNISHED. No representation or
warranty made by the WP Partners in this Article IV and the related WP
Disclosure Schedule contains any untrue statement of material fact or omits to
state, in light of the circumstances under which it has been made, a material
fact necessary to make such representation or warranty not misleading; PROVIDED,
HOWEVER, that no representation or warranty is made as to projections, forecasts
or other forward looking information furnished by any WP Partner or WP Entity to
▇▇▇▇▇▇▇.
4.22 NO BROKERS. None of the WP Partners, WP Entities nor any
of their directors, officers, employees, partners or members has employed any
broker, finder or investment banker (other than ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇
Securities Corporation) or incurred any Liability for any brokerage fees,
commissions, finders' fees or similar fees in connection with the transactions
contemplated by this Agreement or any Ancillary Agreement (other than
29
the fees and expenses of ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation and
certain fees payable to Bankers Trust).
4.23 DISCLAIMER. Except as otherwise expressly set forth in
this Article IV, the WP Partners expressly disclaim any representations or
warranties of any kind or nature, express or implied, as to the condition, value
or quality of the assets or properties currently or formerly used, operated,
owned, leased, controlled, possessed, occupied or maintained by the WP Entities.
THE WP PARTNERS SPECIFICALLY DISCLAIM ANY REPRESENTATION OR WARRANTY OF
MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH
RESPECT TO SUCH ASSETS OR PROPERTIES, OR ANY PART THEREOF, OR AS TO THE
WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR
PATENT, IT BEING UNDERSTOOD THAT SUCH ASSETS AND PROPERTIES ARE BEING ACQUIRED
THROUGH THE CONTRIBUTION "AS IS, WHERE IS" ON THE CLOSING DATE, AND IN THEIR
PRESENT CONDITION, WITH ALL FAULTS, AND THAT ▇▇▇▇▇▇▇ SHALL RELY ON ITS OWN
EXAMINATION AND INVESTIGATION THEREOF.
4.24 LLC. At the time of the formation of Newco pursuant
to Section 2.2 and at the Closing Date:
(a) WP LLC shall (i) be a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware with full power and authority to own its assets and properties and to
conduct its business, (b) be duly qualified to transact business as a foreign
Person and shall be in good standing in every jurisdiction in which the
character of its properties, owned or leased, or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
or in good standing would not have a Material Adverse Effect on WP LLC, the WP
Entities or the WP Business and (c) have full power and authority to enter into
the Ancillary Agreements to which it is a party and to consummate the
transactions contemplated thereby.
(b) The execution and delivery of the Ancillary Agreements to
which it is a party and the consummation of the transactions contemplated
thereby by the WP LLC shall have been duly authorized by all necessary company
action on the part of WP LLC, and each Ancillary Agreement to which WP LLC is a
party, when executed and delivered by WP LLC, will constitute a legal, valid and
binding obligation of WP LLC, enforceable against WP LLC in accordance with its
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity).
(c) No consent, waiver, approval, order or authorization of,
notice to, or registration, declaration, designation, qualification or filing
with, any Governmental Authority or third Person, domestic or foreign, which
shall not have been obtained prior to the Closing is or has been or will be
required on the part of WP LLC in connection with the execution and delivery of
any Ancillary Agreement or the consummation by WP LLC of the transactions
contemplated hereby or thereby, other than where the failure to obtain such
consents, waivers, approvals, orders or authorizations or to make or effect such
registrations, declarations,
30
designations, qualifications or filings will not (x) prevent or materially delay
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements, (y) prevent WP LLC from performing its obligations under
the Ancillary Agreements or (z) result in a Material Adverse Effect on WP LLC,
the WP Entities or the WP Business.
(d) Neither the execution and delivery of any Ancillary
Agreement by WP LLC, nor the consummation by it of the transactions contemplated
hereby or thereby, will violate or conflict with, or result in the acceleration
of rights, benefits or payments under, (i) any provision of the Charter or
Bylaws of WP LLC, (ii) any statute, law, regulation or Governmental Order to
which WP LLC or any of its assets or properties may be bound or subject, (c) any
debt, note, bond, indenture, Encumbrance, lease, license, instrument, contract,
commitment or other agreement to which WP LLC is a party or by which it or any
of its assets or properties may be bound or subject, except, with respect to
clauses (ii) and (iii), for such violations and conflicts which will not (A)
prevent or materially delay consummation of the transactions contemplated by
this Agreement and the Ancillary Agreements, (B) prevent WP LLC from performing
its obligations under the Ancillary Agreements or (iii) result in a Material
Adverse Effect on WP LLC, the WP Entities or the WP Business.
4.25 NON-CONTROLLED WP ENTITIES. WP Disclosure Schedule
Section 4.25 contains an accurate and complete list of all WP Entities in which
neither the WP Partners, the WP Parents nor any Affiliates thereof hold a
general partner or managing member interest (the "Non-Controlled WP Entities").
Notwithstanding anything to the contrary herein, all representations and
warranties made by the WP Partners pursuant to this Article IV with respect to
the Non-Controlled WP Entities are made only to the knowledge of the WP Partners
and the WP Entities (other than the Non-Controlled WP Entities).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇
5.1 ▇▇▇▇▇▇▇ ORGANIZATION. (a) ORGANIZATION. ▇▇▇▇▇▇▇ is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has full corporate power and corporate
authority to own its assets and properties and to conduct its business as and
where it is now being conducted.
(b) TRANSACT BUSINESS. ▇▇▇▇▇▇▇ is duly qualified to transact
business as a foreign corporation and is in good standing in every jurisdiction
in which the character of its properties, owned or leased, or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified or in good standing would not have a Material Adverse Effect on
▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ Subsidiaries taken as a whole.
5.2 SUBSIDIARIES. (a) ORGANIZATION. Each ▇▇▇▇▇▇▇ Subsidiary is
an entity duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has full power and authority to own its
assets and properties and to conduct its business as and where it is now being
conducted.
(b) TRANSACT BUSINESS. Each ▇▇▇▇▇▇▇ Subsidiary is duly
qualified to transact business as a foreign Person and is in good standing in
every jurisdiction in which the character
31
of its properties, owned or leased, or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified or in good
standing would not have a Material Adverse Effect on ▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇
Subsidiaries taken as a whole.
(c) CHARTER AND BYLAWS. ▇▇▇▇▇▇▇ has delivered to the
WP Partners complete and correct copies of the Charter and Bylaws of ▇▇▇▇▇▇▇
and each ▇▇▇▇▇▇▇ Subsidiary as in effect as of the Agreement Date.
(d) ▇▇▇▇▇▇▇ SUBSIDIARIES CAPITALIZATION. ▇▇▇▇▇▇▇ Disclosure
Schedule Section 5.2 contains an accurate and complete list of: (i) the name of
each ▇▇▇▇▇▇▇ Subsidiary; (ii) the name of each other partnership, limited
liability company, corporation, partnership or other entity in which ▇▇▇▇▇▇▇
has, directly or indirectly, any material equity interest; (iii) in the case of
each corporation specified in clauses (i) and (ii) above, (A) the jurisdiction
of its incorporation; (B) the capitalization thereof and the percentage of each
class of voting capital stock owned directly or indirectly by ▇▇▇▇▇▇▇ and (C)
the names and percentage ownership's of all Persons known by ▇▇▇▇▇▇▇ to be
record or beneficial owners of shares of capital stock of each such corporation;
and, (iv) in the case of each unincorporated entity specified in clauses (i) and
(ii) above, the equivalent of the information provided pursuant to the preceding
clause (iii) with respect to corporate entities. Except as set forth in ▇▇▇▇▇▇▇
Disclosure Schedule Section 5.2, (i) all shares of capital stock of each
corporation and ownership interests of each unincorporated entity identified in
the preceding sentence are owned directly or indirectly by ▇▇▇▇▇▇▇, free and
clear of any Encumbrance, (ii) there are no voting trusts, voting agreements or
similar understandings applicable to such shares of capital stock or ownership
interests and there are no options, warrants or other rights, agreements or
commitments (other than this Agreement) obligating ▇▇▇▇▇▇▇ to issue, sell or
transfer any shares of capital stock, ownership interest or other securities
(equity or otherwise) of any ▇▇▇▇▇▇▇ Subsidiary. All of the outstanding capital
stock and ownership interest of each ▇▇▇▇▇▇▇ Subsidiary is duly authorized,
validly issued, fully paid, nonassessable (except for such ownership interests
constituting general partner interests) and is without, and was not issued in
violation of, preemptive rights or any applicable law.
5.3 AUTHORIZATION. (a) ▇▇▇▇▇▇▇ has full corporate power and
corporate authority to enter into this Agreement and to consummate the
transactions contemplated hereby and thereby. Subject only to the approval of
this Agreement and the transactions contemplated hereby by the holders of a
majority of the outstanding shares of ▇▇▇▇▇▇▇ Common Stock, the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and thereby by ▇▇▇▇▇▇▇ have been duly authorized by all necessary
corporate action on the part of ▇▇▇▇▇▇▇. This Agreement has been duly executed
and delivered by ▇▇▇▇▇▇▇. This Agreement constitutes a legal, valid and binding
obligation of ▇▇▇▇▇▇▇, enforceable against ▇▇▇▇▇▇▇ in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity).
(b) Except (i) for compliance with the applicable
requirements, if any, of the Exchange Act, the Securities Act, and applicable
state securities or "Blue Sky" laws, (ii) for the filing and recordation of
appropriate merger and similar documents as required by Delaware law, (iii) for
compliance with the notification, filing and waiting period requirements of the
▇▇▇ ▇▇▇,
▇▇
(iv) the approval of this Agreement and the transactions contemplated hereby by
the holders of a majority of the outstanding shares of ▇▇▇▇▇▇▇ Common Stock, or
(v) as otherwise set forth in ▇▇▇▇▇▇▇ Disclosure Schedule Section 5.3(b), no
consent, waiver, approval, order or authorization of, notice to, or
registration, declaration, designation, qualification or filing with, any
Governmental Authority or third Person, domestic or foreign, is or has been or
will be required on the part of ▇▇▇▇▇▇▇ in connection with the execution and
delivery of this Agreement or the consummation by ▇▇▇▇▇▇▇ of the transactions
contemplated hereby or thereby, other than where the failure to obtain such
consents, waivers, approvals, orders or authorizations or to make or effect such
registrations, declarations, designations, qualifications or filings is not
reasonably likely to (x) prevent or materially delay consummation of the
transactions contemplated by this Agreement, (y) prevent ▇▇▇▇▇▇▇ from performing
its obligations under this Agreement or (z) result in a Material Adverse Effect
on ▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ Subsidiaries taken as a whole.
5.4 NON-CONTRAVENTION. Except as set forth in ▇▇▇▇▇▇▇
Disclosure Schedule Section 5.4, neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
violate or conflict with, or result in the acceleration of rights, benefits or
payments under, (a) any provision of ▇▇▇▇▇▇▇'▇ Charter or Bylaws, (b) any
statute, law, regulation or Governmental Order to which ▇▇▇▇▇▇▇ or the assets or
properties of ▇▇▇▇▇▇▇ are bound or subject or (c) any agreement, contract or
commitment to which ▇▇▇▇▇▇▇ is a party or by which it or any of its properties
may be bound or subject, except, with respect to clause (b) and (c), for such
violations and conflicts which are not reasonably likely to (i) prevent or
materially delay consummation of the transactions contemplated by this
Agreement, (ii) prevent ▇▇▇▇▇▇▇ from performing its obligations under this
Agreement or (iii) result in a Material Adverse Effect on ▇▇▇▇▇▇▇ and the
▇▇▇▇▇▇▇ Subsidiaries taken as a whole.
5.5 SEC FILINGS; FINANCIAL STATEMENTS; NO UNDISCLOSED
LIABILITIES. (a) ▇▇▇▇▇▇▇ has filed and made available to the WP Partners all
forms, reports, documents and other information required to be filed by ▇▇▇▇▇▇▇
with the SEC pursuant to the Exchange Act, since December 31, 1996
(collectively, the "▇▇▇▇▇▇▇ SEC Reports"). The ▇▇▇▇▇▇▇ SEC Reports (i) at the
time filed complied as to form in all material respects with the applicable
requirements of the Exchange Act and the rules and regulations thereunder and
(ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the Agreement Date, then on the date of such filing) contain any
untrue statement of a material fact or omit to state a material fact required to
be stated in the ▇▇▇▇▇▇▇ SEC Reports or necessary in order to make the
statements in the ▇▇▇▇▇▇▇ SEC Reports, in the light of the circumstances under
which they were made, not misleading. None of the ▇▇▇▇▇▇▇ Subsidiaries is
required to file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any related notes) contained in the ▇▇▇▇▇▇▇ SEC Reports, including
any ▇▇▇▇▇▇▇ SEC Reports filed after the Agreement Date through the Closing,
complied or will comply as to form in all material respects with the applicable
published rules and regulations of the SEC with respect thereto, was or will be
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted for
presentation in Quarterly Reports on Form 10-Q), and fairly presented or will
fairly present the consolidated financial position of ▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇
Subsidiaries taken as a whole as at the respective dates and the consolidated
results of its
33
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material in amount
with respect to ▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ Subsidiaries taken as a whole. The
unaudited balance sheet of ▇▇▇▇▇▇▇ as at June 30, 2000 included in the ▇▇▇▇▇▇▇
SEC Reports is referred to herein as the "▇▇▇▇▇▇▇ Balance Sheet."
(c) ▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ Subsidiaries have no Liabilities,
except for Liabilities (i) reflected in the ▇▇▇▇▇▇▇ Balance Sheet, (ii) incurred
by ▇▇▇▇▇▇▇ and/or the ▇▇▇▇▇▇▇ Subsidiaries in the ordinary course of business
and consistent with past practices since the date of the ▇▇▇▇▇▇▇ Balance Sheet,
(iii) which in the aggregate are less than $2,000,000 or (iv) otherwise
disclosed in the ▇▇▇▇▇▇▇ Disclosure Schedule. As used in this Section 5.5, the
term "Liabilities" excludes any Liabilities under permits, licenses, orders,
approvals, authorizations, contracts, agreements or commitments for future
payments or performance where ▇▇▇▇▇▇▇ and/or the ▇▇▇▇▇▇▇ Subsidiary is not
currently in violation of or default under any provision thereof.
5.6 ABSENCE OF CERTAIN CHANGES. Except as set forth in
▇▇▇▇▇▇▇ Disclosure Schedule Section 5.6, since the date of the ▇▇▇▇▇▇▇
Balance Sheet:
(a) ▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ Subsidiaries, taken as a whole,
have not suffered any damage or destruction adversely affecting the ▇▇▇▇▇▇▇
Business or the tangible assets owned or leased by the ▇▇▇▇▇▇▇ Entities that has
had or is reasonably likely to result in a loss, cost or expense to the ▇▇▇▇▇▇▇
Entities, taken as a whole, in excess of $2,000,000;
(b) Except pursuant to debt agreements existing on the date of
the ▇▇▇▇▇▇▇ Balance Sheet, no ▇▇▇▇▇▇▇ Entity has incurred, assumed or become
subject to any additional indebtedness for money borrowed or purchase money
indebtedness, including capitalized leases;
(c) No ▇▇▇▇▇▇▇ Entity has made any change in the compensation
levels of the senior executives of such ▇▇▇▇▇▇▇ Entity (i.e., vice presidents
and above), any change in the manner in which other employees of such ▇▇▇▇▇▇▇
Entity generally are compensated, or any provision of additional or supplemental
benefits for employees of such ▇▇▇▇▇▇▇ Entity generally, except normal periodic
increases, promotions or payments under compensation plans effected in the
ordinary course of business and consistent with past practices;
(d) No ▇▇▇▇▇▇▇ Entity has entered into any transaction
not in the ordinary course of business, except as contemplated by this
Agreement;
(e) Except for changes affecting the single-family home,
townhome and/or condominium construction industry generally (nationwide or in
specific locales), no Material Adverse Effect has occurred;
(f) There have been no Encumbrances on the assets or
properties of any ▇▇▇▇▇▇▇ Entity, other than Permitted Liens;
(g) None of the ▇▇▇▇▇▇▇ Entities have made any material
change in its accounting principles; and
34
(h) No ▇▇▇▇▇▇▇ Entity has agreed, whether in writing or
otherwise, to take any action described in this Section 5.6.
5.7 TITLE TO ASSETS. Except as set forth in ▇▇▇▇▇▇▇ Disclosure
Schedule Section 5.7, each ▇▇▇▇▇▇▇ Entity has good title to all of the assets
and properties (including ▇▇▇▇▇▇▇ Owned Real Property) used in the conduct of
the ▇▇▇▇▇▇▇ Business (including those reflected on the ▇▇▇▇▇▇▇ Balance Sheet),
except for assets and properties sold, consumed or otherwise disposed of in the
ordinary course of business and consistent with past practices since the date of
the ▇▇▇▇▇▇▇ Balance Sheet, free and clear of any Encumbrance, other than
Permitted Liens.
5.8 REAL PROPERTY. (a) LEASED REAL PROPERTY. Except for real
property leases and subleases the failure of which to possess or hold would not
in the aggregate result in a ▇▇▇▇▇▇▇ Loss in the aggregate in excess of
$2,000,000 or which are part of the ▇▇▇▇▇▇▇ Entities' model home leaseback
program, ▇▇▇▇▇▇▇ Disclosure Schedule Section 5.8(a) contains an accurate and
complete list of all real property leased or subleased to the ▇▇▇▇▇▇▇ Entities
as of the Agreement Date (the "▇▇▇▇▇▇▇ Leased Real Property" and, together with
the ▇▇▇▇▇▇▇ Owned Real Property, the "▇▇▇▇▇▇▇ Real Property"). All leases and
subleases of such ▇▇▇▇▇▇▇ Leased Real Property by the ▇▇▇▇▇▇▇ Entities (x) are
legal, valid and binding obligations of the ▇▇▇▇▇▇▇ Entities, enforceable
against the ▇▇▇▇▇▇▇ Entities in accordance with their terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and general principles of equity (regardless of whether enforceability
is considered in a proceeding at law or in equity), and are in full force and
effect, and (y) originals or copies of which that were accurate and complete as
of the date provided have been made available to the WP Partners for review.
Except as disclosed in ▇▇▇▇▇▇▇ Disclosure Schedule Section 5.8(a), the ▇▇▇▇▇▇▇
Entities enjoy peaceful and undisturbed possession under all leases and
subleases of ▇▇▇▇▇▇▇ Leased Real Property, and, to the knowledge of the ▇▇▇▇▇▇▇
Entities, all lessors under any lease or sublease of ▇▇▇▇▇▇▇ Leased Real
Property (1) are not (with or without notice or the lapse of time, or both) in
material breach or default thereunder, (2) have performed all material
obligations required to be performed by it thereunder, and (3) have not given
written notice to the ▇▇▇▇▇▇▇ Entities of their intent to terminate such lease
or sublease of ▇▇▇▇▇▇▇ Leased Real Property.
(b) OWNED REAL PROPERTY. ▇▇▇▇▇▇▇ Disclosure Schedule Section
5.8(b) contains an accurate and complete list and brief description of all real
property in which the ▇▇▇▇▇▇▇ Entities own an interest as of September 11, 2000
(except for the ▇▇▇▇▇▇▇ Land Contract Property and ▇▇▇▇▇▇▇ Option Real Property
(as such terms are defined below) and ▇▇▇▇▇▇▇ Leased Real Property). Such real
property, together with all such real property in which the ▇▇▇▇▇▇▇ Entities own
an interest as of the Agreement Date, is referred to herein as the "▇▇▇▇▇▇▇
Owned Real Property." Except as set forth on ▇▇▇▇▇▇▇ Disclosure Schedule Section
5.8(b), the ▇▇▇▇▇▇▇ Owned Real Property has all (i) appropriate zoning, (ii)
preliminary plan approval, (iii) utilities (or utilities are able to be timely
obtained) and (iv) necessary access to and from public highways, streets and
roads for construction and residential purposes (or such access will be timely
obtained).
(c) LAND CONTRACTS. ▇▇▇▇▇▇▇ Disclosure Schedule Section
5.8(c) contains an accurate and complete list and brief description of all
written agreements, arrangements,
35
contracts, and commitments as of September 10, 2000 to which any of the ▇▇▇▇▇▇▇
Entities is a party or entered into on behalf thereof pursuant to which any of
the ▇▇▇▇▇▇▇ Entities (i) is obligated to purchase any developed or undeveloped
real property, whether or not such obligation is subject to conditions (the
"▇▇▇▇▇▇▇ Land Contract Property") as of the Agreement Date or (ii) possesses an
option to acquire any developed or undeveloped real property (the "▇▇▇▇▇▇▇
Option Real Property"). In addition, ▇▇▇▇▇▇▇ Disclosure Schedule Section 5.8(c)
contains an accurate and complete list of all deposits or other moneys that
would be forfeited or paid as a result of a failure to exercise the option on
any such ▇▇▇▇▇▇▇ Option Real Property.
(d) OTHER REAL PROPERTY REPRESENTATIONS.
(i) NO CONDEMNATION. No condemnation, eminent domain, or
similar Action is pending or, to the knowledge of the ▇▇▇▇▇▇▇ Entities,
is threatened with respect to any ▇▇▇▇▇▇▇ Real Property which would, if
successful, have a Material Adverse Effect on the ▇▇▇▇▇▇▇ Business.
(ii) COMPLIANCE WITH LAWS. To the knowledge of the
▇▇▇▇▇▇▇ Entities, the buildings and improvements on the developed
▇▇▇▇▇▇▇ Owned Real Property and the ▇▇▇▇▇▇▇ Leased Real Property and
the subdivision of and improvements on the undeveloped ▇▇▇▇▇▇▇ Owned
Real Property do not violate (A) any applicable law, including any
building, set-back, or zoning law, ordinance, regulation, or statute,
or Governmental Order or (B) any enforceable restrictive covenant
affecting any such property, except for any violations which,
individually or in the aggregate, will not have a Material Adverse
Effect on the ▇▇▇▇▇▇▇ Business.
(iii) SITE OBLIGATIONS. Except as set forth on ▇▇▇▇▇▇▇
Disclosure Schedule Section 5.8(d), to the knowledge of the ▇▇▇▇▇▇▇
Entities, no ▇▇▇▇▇▇▇ Real Property is subject to any condition or
obligation to any Governmental Authority or other Person requiring the
owner or any transferee thereof to donate or otherwise transfer for
less than fair value land or any interest therein, money or other
property or to make off-site public improvements, other than
obligations that would not have a Material Adverse Effect on the
▇▇▇▇▇▇▇ Business.
(iv) ASSESSMENTS. No material development fees, in-lieu
fees, school fees or charges or other developer-related charges or
assessments by any Governmental Authority or any other Person for
public facilities or improvements or otherwise made against the
developed ▇▇▇▇▇▇▇ Owned Real Property or any lots included therein are
past due and unpaid (other than those set forth on the ▇▇▇▇▇▇▇ Balance
Sheet or on ▇▇▇▇▇▇▇ Disclosure Schedule Section 5.8(d)).
(v) SUBDIVISION STANDARDS. Except as set forth on
▇▇▇▇▇▇▇ Disclosure Schedule Section 5.8(d), to the knowledge of the
▇▇▇▇▇▇▇ Entities, the developed ▇▇▇▇▇▇▇ Owned Real Property and all
lots included therein conform in all material respects to the
appropriate Governmental Authority's subdivision standards, subdivision
maps and any conditions or approval or recordation thereof and there is
no material impediment to subdivision approval or issuance and
recordation of subdivision maps for the undeveloped ▇▇▇▇▇▇▇ Owned Real
Property, such approval to allow development of the
36
undeveloped ▇▇▇▇▇▇▇ Owned Real Property for construction and sale of
single-family homes, townhomes and/or condominiums at the density and
materially in the manner currently anticipated by any of the ▇▇▇▇▇▇▇
Entities.
(vi) MORATORIA. Except as set forth on ▇▇▇▇▇▇▇
Disclosure Schedule Section 5.8(d), to the knowledge of the ▇▇▇▇▇▇▇
Entities, there is no moratorium applicable to any of the ▇▇▇▇▇▇▇ Owned
Real Property to the extent any of the ▇▇▇▇▇▇▇ Entities plans further
development thereof on (A) the issuance of building permits for the
construction of houses, or certificates of occupancy therefor, or (B)
the purchase or issuance of sewer or water taps or permits, to the
extent any of the ▇▇▇▇▇▇▇ Entities plans or is required to rely on
public water or sewer facilities.
(vii) ENVIRONMENTAL MATTERS AND WETLANDS. Except as set
forth on ▇▇▇▇▇▇▇ Disclosure Schedule Section 5.8(d), (A) none of the
▇▇▇▇▇▇▇ Real Property on which any of the ▇▇▇▇▇▇▇ Entities intends to
construct residential dwellings is located within a "habitat for
threatened or endangered plants or animals" or a "critical,"
"preservation," "conservation" or similar type of area which will
materially affect any of the ▇▇▇▇▇▇▇ Entities' present development
plans therefor, (B) no portion of the ▇▇▇▇▇▇▇ Real Property which any
of the ▇▇▇▇▇▇▇ Entities has developed or intends to develop for
residential lots and dwellings is situated within a "noise cone" such
that the Federal Housing Administration will not approve mortgages due
to the noise level classification of such ▇▇▇▇▇▇▇ Real Property and (C)
no wetlands exist which are reasonably likely to restrict development
of any of the Real Property as currently contemplated by any of the
▇▇▇▇▇▇▇ Entities.
(viii) NO FOREIGN ▇▇▇▇▇▇▇ ENTITIES. No ▇▇▇▇▇▇▇
Entity is a "foreign person" within the meaning of Sections 1445
and 7701 of the Code.
(ix) ZONING AND UTILITIES. No ▇▇▇▇▇▇▇ Entities own or
have any interest in, or are contractually obligated to acquire or
obtain any interest in, any real property which does not have, or will
not have prior to such acquisition or obtaining of interest,
residential zoning under any applicable general, special or specific
plans and under any applicable zoning laws and regulations and the
provision of potable water, sewage and other utilities available to the
boundary of the land.
5.9 INTELLECTUAL PROPERTY. ▇▇▇▇▇▇▇ Disclosure Schedule Section
5.9 contains an accurate and complete list of (a) all patents throughout the
world, (b) all trademarks, trade names and service marks and applications
therefor throughout the world, (c) all copyrights and applications therefor
throughout the world, (d) all software and computer programs, and (e) all
licenses relating to patents, patent rights, know how, trade secrets,
trademarks, trade names, service marks, software and computer programs or other
intellectual property, in each case issued to or used or held for use by the
▇▇▇▇▇▇▇ Entities in the operation of the ▇▇▇▇▇▇▇ Business (collectively, the
"▇▇▇▇▇▇▇ Intellectual Property"; provided, however, that ▇▇▇▇▇▇▇ Disclosure
Schedule Section 5.9 need not contain any ▇▇▇▇▇▇▇ Intellectual Property
consisting of "off-the shelf" software or computer programs). Except as set
forth in ▇▇▇▇▇▇▇ Disclosure Schedule Section 5.9, the ▇▇▇▇▇▇▇ Entities are the
sole and exclusive owner or licensee of, with all right, title and interest in
and to (free and clear of any Encumbrances, other than Permitted Liens), the
37
▇▇▇▇▇▇▇ Intellectual Property. To the knowledge of the ▇▇▇▇▇▇▇ Entities, the use
of any such ▇▇▇▇▇▇▇ Intellectual Property in the conduct of the ▇▇▇▇▇▇▇ Business
as presently conducted does not violate any rights of any third Person, the
violation of which would result in losses, costs or expenses in the aggregate in
excess of $2,000,000. The ▇▇▇▇▇▇▇ Entities have not received written notice that
the use of any such ▇▇▇▇▇▇▇ Intellectual Property in the conduct of the ▇▇▇▇▇▇▇
Business as presently conducted violates any rights of any third Person the
violation of which would result in losses, costs or expenses in the aggregate in
excess of $2,000,000.
5.10 LITIGATION. Except as described in ▇▇▇▇▇▇▇ Disclosure
Schedule Section 5.10, there is no Action pending or, to the knowledge of the
▇▇▇▇▇▇▇ Entities, threatened against the ▇▇▇▇▇▇▇ Entities, whether at law or in
equity, or before or by any Governmental Authority which (a) seeks damages or
other monetary relief in excess of $2,000,000, (b) seeks injunctive relief which
if granted could have a Material Adverse Effect on the ▇▇▇▇▇▇▇ Business or (c)
relates to the transactions contemplated by this Agreement. Except as described
in ▇▇▇▇▇▇▇ Disclosure Schedule Section 5.10, none of the ▇▇▇▇▇▇▇ Entities nor
any of their properties or assets currently are subject to or bound by any
Governmental Order (other than any Governmental Order that may be applicable
generally to the industry in which the ▇▇▇▇▇▇▇ Business operates).
5.11 EMPLOYEE BENEFIT MATTERS. (a) ▇▇▇▇▇▇▇ Disclosure Schedule
Section 5.11 sets forth an accurate and complete list of (i) each "employee
benefit plan" (as defined in Section 3(3) of ERISA) that is maintained by any
▇▇▇▇▇▇▇ Entity or other person or entity that, together with any ▇▇▇▇▇▇▇ Entity,
is treated as a single employer under Section 414(b), (c), (m) or (o) of the
Code (each such other person or entity, an "ERISA ▇▇▇▇▇▇▇ Affiliate") for the
benefit of any current or former employees of any ▇▇▇▇▇▇▇ Entity or any of the
ERISA ▇▇▇▇▇▇▇ Affiliates (the "▇▇▇▇▇▇▇ Employees"); (ii) to the extent not
disclosed pursuant to the preceding clause (i), each plan, contract, program,
policy, practice or arrangement, whether written or oral, funded or unfunded,
providing stock options, stock ownership, stock purchase or award, phantom
stock, stock appreciation rights, deferred compensation, retirement, insurance,
flexible spending, dependent care, fringe benefit, vacation pay, holiday pay,
sick pay, workers compensation, severance or termination pay, supplemental
unemployment benefits, employee loans, severance, educational assistance,
incentive, bonus, or other profit-sharing arrangements for the benefit of the
▇▇▇▇▇▇▇ Employees (all plans, programs or arrangements described in the
preceding clause (i) and this clause (ii) being collectively referred to as
"▇▇▇▇▇▇▇ Employee Plans"); and (iii) an accurate and complete list of all
employment, managerial, advisory, or consulting agreements, employee
confidentiality agreements, employee severance agreements and all other material
agreements, policies or arrangements maintained by the ▇▇▇▇▇▇▇ Entities or any
of the ERISA ▇▇▇▇▇▇▇ Affiliates with respect to the ▇▇▇▇▇▇▇ Employees or
individuals who are independent contractors providing services to any ▇▇▇▇▇▇▇
Entity or any of the ERISA ▇▇▇▇▇▇▇ Affiliates (all agreements, policies or
arrangements described in this clause (iii) being collectively referred to as
"▇▇▇▇▇▇▇ Employee Agreements"). ▇▇▇▇▇▇▇ has delivered or made available to the
WP Partners copies, which were accurate and complete as of the date so
delivered, of all such (1) documents and (if applicable) summary plan
descriptions as comprise, describe or similarly relate to the ▇▇▇▇▇▇▇ Employee
Plans and ▇▇▇▇▇▇▇ Employee Agreements (including the most recent annual report
on Form 5500, if applicable), and (2) summary description(s) of any such ▇▇▇▇▇▇▇
Employee Plans and ▇▇▇▇▇▇▇ Employee Agreements not otherwise in writing, and
except
38
as described in ▇▇▇▇▇▇▇ Disclosure Schedule Section 5.11, there have been no
changes to such documents as of the Agreement Date.
(b) Except as disclosed in ▇▇▇▇▇▇▇ Disclosure Schedule Section
5.11, (i) each ▇▇▇▇▇▇▇ Employee Plan that is intended to be qualified under
Section 401(a) of the Code is so qualified in form and operation in all material
respects, and nothing has occurred which could adversely affect the qualified
status of any such ▇▇▇▇▇▇▇ Employee Plan; (ii) each ▇▇▇▇▇▇▇ Employee Plan and
▇▇▇▇▇▇▇ Employee Agreement has been operated or administered in accordance with
its provisions and in material compliance with the statutes, rules and
regulations governing such ▇▇▇▇▇▇▇ Employee Plan or ▇▇▇▇▇▇▇ Employee Agreement;
(iii) no "disqualified person" or "party in interest" (as defined in Section
4975 of the Code and Section 3(14) of ERISA, respectively) has engaged in any
"prohibited transaction" (as defined in Section 4975(c) of the Code or Section
406 of ERISA, respectively) which could subject the ▇▇▇▇▇▇▇ Entities, the ERISA
▇▇▇▇▇▇▇ Affiliates, any ▇▇▇▇▇▇▇ Employee Plan (or their related trusts) or
▇▇▇▇▇▇▇ or Newco, to any material liability under Section 4975 of the Code or
Section 502(i) or (l) of ERISA; (iv) with respect to each ▇▇▇▇▇▇▇ Employee Plan,
no event has occurred and there has been no failure to act upon the part of any
▇▇▇▇▇▇▇ Entity or any fiduciary or "plan official" (as defined in Section 412 of
ERISA) with respect to such ▇▇▇▇▇▇▇ Employee Plan that could subject the ▇▇▇▇▇▇▇
Entities, the ERISA ▇▇▇▇▇▇▇ Affiliates, any ▇▇▇▇▇▇▇ Employee Plan or the WP
Entities or Newco, to the imposition of any material Tax or penalty; (v) there
are no Actions or audits, investigations or examinations by any Governmental
Authority pending (other than routine claims for benefits) regarding any ▇▇▇▇▇▇▇
Employee Plan or ▇▇▇▇▇▇▇ Employee Agreement; (vi) no ▇▇▇▇▇▇▇ Employee Plan is
subject to Section 412 of the Code or Title IV of ERISA, and no ▇▇▇▇▇▇▇ Entity
or ERISA ▇▇▇▇▇▇▇ Affiliate has maintained or been obligated to make
contributions to any such ▇▇▇▇▇▇▇ Employee Plan during the six-year period
ending on the Agreement Date; (vii) no steps have been taken by any ▇▇▇▇▇▇▇
Entity or ERISA ▇▇▇▇▇▇▇ Affiliate to terminate any ▇▇▇▇▇▇▇ Employee Plan; (viii)
each ▇▇▇▇▇▇▇ Employee Plan that is a "group health plan" (as defined in Section
5000(b)(1) of the Code) has been operated and administered in compliance with
the continuation coverage requirements of Section 4980B of the Code and Part 6
of Title I of ERISA and the Medicare secondary payor provisions of Section
1826(b) of the Social Security Act, and the regulations promulgated thereunder;
(ix) no ▇▇▇▇▇▇▇ Entity or ERISA ▇▇▇▇▇▇▇ Affiliate currently contributes to any
"multiemployer plan" (as defined in Section 3(37) of ERISA), and there has not
been any complete or partial withdrawal from or termination of participation in
any such ▇▇▇▇▇▇▇ Employee Plan that could result in withdrawal liability or
similar liability for the WP Partners, the WP Entities, their Affiliates, the
▇▇▇▇▇▇▇ Entities, the ERISA ▇▇▇▇▇▇▇ Affiliates or Newco, whether directly or as
a result of controlled group liability; and (x) all contributions, premiums and
other payments that would normally be made or paid with respect to any ▇▇▇▇▇▇▇
Employee Plan on behalf of the ▇▇▇▇▇▇▇ Business or the ▇▇▇▇▇▇▇ Employees by the
Closing Date will have been made by the Closing Date.
(c) Except as set forth in this Agreement or ▇▇▇▇▇▇▇
Disclosure Schedule Section 5.11, the execution of, and performance of the
transactions contemplated by, this Agreement will not (either together with or
upon the occurrence of any additional or subsequent events) constitute an event
under any ▇▇▇▇▇▇▇ Employee Plan or ▇▇▇▇▇▇▇ Employee Agreement that could result
in any payment (whether severance pay or otherwise), acceleration, vesting or
increase in benefits with respect to any current or former employee of any
▇▇▇▇▇▇▇ Entity or any
39
of their ERISA ▇▇▇▇▇▇▇ Affiliates, whether or not any such payment would be an
"excess parachute payment"" (as defined in Section 280G of the Code).
(d) No ▇▇▇▇▇▇▇ Entity nor any of their ERISA ▇▇▇▇▇▇▇
Affiliates is required to maintain, contribute to or make payments under any
▇▇▇▇▇▇▇ Employee Plan or ▇▇▇▇▇▇▇ Employee Agreement by the law or applicable
custom or rule of any jurisdiction outside of the United States.
(e) Each ▇▇▇▇▇▇▇ Employee Plan and ▇▇▇▇▇▇▇ Employee Agreement
complies with all applicable requirements of (i) the Age Discrimination in
Employment Act of 1967, as amended, and the regulations thereunder; (ii) Title
VII of the Civil Rights Act of 1964, as amended, and the regulations thereunder;
and (iii) all other applicable laws. All amendments and actions required to
bring each of the ▇▇▇▇▇▇▇ Employee Plans and ▇▇▇▇▇▇▇ Employee Agreements into
conformity with all applicable provisions of the Code, ERISA and other
applicable laws have been made or taken, except to the extent that such
amendments or actions are not required by law to be made or taken until a date
after the Closing Date and are disclosed in ▇▇▇▇▇▇▇ Disclosure Schedule Section
5.11.
(f) Except as set forth in ▇▇▇▇▇▇▇ Disclosure Schedule Section
5.11, upon Closing ▇▇▇▇▇▇▇ or Newco or one or more of their Affiliates, as
applicable, may terminate any ▇▇▇▇▇▇▇ Employee Plan or ▇▇▇▇▇▇▇ Employee
Agreement or may cease contributions to or making payments under any ▇▇▇▇▇▇▇
Employee Plan or ▇▇▇▇▇▇▇ Employee Agreement without incurring any liability,
other than a benefit liability accrued in accordance with the terms of such Plan
or Agreement immediately prior to such termination or cessation of
contributions.
(g) All individuals who are or were performing consulting or
other services for any ▇▇▇▇▇▇▇ Entity or any of their ERISA ▇▇▇▇▇▇▇ Affiliates
are or were correctly classified by the such ▇▇▇▇▇▇▇ Entity or ERISA ▇▇▇▇▇▇▇
Affiliate as either "independent contractors" or "employees," as the case may
be, and, at the Closing Date, will qualify for such classification.
5.12 TAXES. (a) Except as set forth in ▇▇▇▇▇▇▇ Disclosure
Schedule Section 5.12, (i) the ▇▇▇▇▇▇▇ Entities have timely filed or caused to
be timely filed (or will timely file or cause to be timely filed) with the
appropriate Taxing Authorities all Tax Returns required to be filed on or prior
to the Closing Date (taking into account all extensions of due dates) by or with
respect to the ▇▇▇▇▇▇▇ Entities and have timely paid or adequately provided for
(or will timely pay or adequately provide for) all Taxes owed by the ▇▇▇▇▇▇▇
Entities (whether or not shown on any Tax Return) for the period up to and
including the Closing Date, except where the failure to file such Tax Returns or
pay any such Taxes would not, or could not reasonably be expected to, in the
aggregate result in losses, costs or expenses to the ▇▇▇▇▇▇▇ Entities, taken as
whole, in excess of $2,000,000 after the Closing Date, (ii) all such Tax Returns
were or will be correct and complete in all material respects, and (iii) all
withholding Tax requirements imposed on or with respect to the ▇▇▇▇▇▇▇ Entities
have been or will be satisfied in full in all respects. No written claim has
been made to the ▇▇▇▇▇▇▇ Entities by any Taxing Authority in any jurisdiction
where the ▇▇▇▇▇▇▇ Entities do not file Tax Returns asserting that any of them
are required to file a Tax Return.
40
(b) Except as set forth in ▇▇▇▇▇▇▇ Disclosure Schedule Section
5.12, (i) there have been no examinations or audits with respect to any Tax
Return of, or which included, the ▇▇▇▇▇▇▇ Entities, and (ii) no assessment,
deficiency or adjustment for any Taxes has been asserted in writing or, to the
knowledge of the ▇▇▇▇▇▇▇ Entities, is proposed with respect to any Tax Return
of, or which includes, the ▇▇▇▇▇▇▇ Entities.
(c) Except as set forth in ▇▇▇▇▇▇▇ Disclosure Schedule Section
5.12, there is not in force any extension of time with respect to the due date
for the filing of any Tax Return of or with respect to or which includes the
▇▇▇▇▇▇▇ Entities or any waiver or agreement for any extension of time for the
assessment or payment of any Tax of or with respect to or which includes the
▇▇▇▇▇▇▇ Entities.
(d) The ▇▇▇▇▇▇▇ Balance Sheet fully accrues all actual and
contingent liabilities for Taxes with respect to all periods through the dates
thereof in accordance with GAAP. The ▇▇▇▇▇▇▇ Entities will establish, in the
ordinary course of business and consistent with its past practices, reserves
adequate for the payment of all Taxes for the period from June 30, 2000 through
the Closing Date.
(e) All Tax allocation or sharing agreements or arrangements
with respect to the ▇▇▇▇▇▇▇ Entities have been or will be cancelled on or prior
to the Closing Date. No payments are or will become due by the ▇▇▇▇▇▇▇ Entities
after the Closing Date pursuant to any such agreement or arrangement.
(f) Except as set forth in ▇▇▇▇▇▇▇ Disclosure Schedule Section
5.12, none of the property of the ▇▇▇▇▇▇▇ Entities is held in an arrangement for
which partnership Tax Returns are required to be filed, no ▇▇▇▇▇▇▇ Entity owns
an interest in a partnership and no ▇▇▇▇▇▇▇ Entity owns any interest in any
controlled foreign corporation (as defined in Section 957 of the Code) or
passive foreign investment company (as defined in Section 1296 of the Code).
(g) Except as set forth in ▇▇▇▇▇▇▇ Disclosure Schedule Section
5.12, none of the property of the ▇▇▇▇▇▇▇ Entities is subject to a safe-harbor
lease (pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954 as in
effect after the Economic Recovery Act of 1981 and before the Tax Reform Act of
1986) or is "tax-exempt use property" (within the meaning of Section 168(h) of
the Code) or "tax-exempt bond financed property" (within the meaning of Section
168(g)(5) of the Code).
(h) Except as set forth in ▇▇▇▇▇▇▇ Disclosure Schedule Section
5.12, none of the ▇▇▇▇▇▇▇ Entities will be required to include any amount in
income for any taxable period beginning after the Closing Date as a result of a
change in accounting method for any taxable period ending on or before the
Closing Date or pursuant to any agreement with any Taxing Authority with respect
to any such taxable period.
(i) No ▇▇▇▇▇▇▇ Entity has consented to have the provisions of
Section 341(f)(2) of the Code apply with respect to a sale of its stock.
(j) Except as set forth in ▇▇▇▇▇▇▇ Disclosure Schedule Section
5.12, none of the ▇▇▇▇▇▇▇ Entities will, as a result of the transactions
contemplated by this Agreement, be obligated to make a payment to an individual
that would be a "parachute payment" as defined in
41
Section 280G of the Code without regard to whether such payment is reasonable
compensation for personal services performed or to be performed in the future.
(k) Except as set forth in ▇▇▇▇▇▇▇ Disclosure Schedule Section
5.12, no power of attorney has been granted with respect to any matter relating
to Taxes of the ▇▇▇▇▇▇▇ Entities which is currently in force.
(l) Except as set forth in ▇▇▇▇▇▇▇ Disclosure Schedule Section
5.12, each ▇▇▇▇▇▇▇ Entity is taxed as a partnership for income tax purposes.
5.13 COMPLIANCE WITH LAW. Except with respect to Environmental
Laws (which are covered separately in Section 5.17), since December 31, 1996, no
▇▇▇▇▇▇▇ Entity has violated any law, statute, rule, regulation or Governmental
Order which has subjected it to fines or penalties in excess of $2,000,000 in
the aggregate. As of the Agreement Date, each ▇▇▇▇▇▇▇ Entity is in compliance in
all material respects with all laws, statutes, rules, regulations and
Governmental Orders applicable to such ▇▇▇▇▇▇▇ Entity or by which the properties
or assets of such ▇▇▇▇▇▇▇ Entity are bound or subject, except where the
noncompliance with which would not, in the aggregate, result in the imposition
on the ▇▇▇▇▇▇▇ Entities, taken as a whole, of fines or penalties in excess of
$2,000,000.
5.14 CONTRACTS AND COMMITMENTS. ▇▇▇▇▇▇▇ Disclosure Schedule
Section 5.14 contains an accurate and complete list as of the Agreement Date of
each contract, agreement or commitment of the ▇▇▇▇▇▇▇ Entities (a) to which any
▇▇▇▇▇▇▇ Entity or any of its assets or properties is bound and which requires
total payments to or by a ▇▇▇▇▇▇▇ Entity of at least $2,000,000 annually; (b) to
which any ▇▇▇▇▇▇▇ Entity or any of its assets or properties is bound or subject
and which has a remaining term longer than one year, which requires total
payments by the ▇▇▇▇▇▇▇ Entities, taken as a whole, of at least $2,000,000
during such term and which is not terminable on 30 or fewer days' notice without
penalty; (c) containing covenants limiting the freedom of any ▇▇▇▇▇▇▇ Entity to
compete in any line of business or with any Person in any geographical area; (d)
calling for the proposed acquisition of any operating business or any assets
outside the ordinary course of business and with a purchase price in excess of
$2,000,000; (e) relating to the proposed purchase or sale of any material assets
or properties of the ▇▇▇▇▇▇▇ Entities, taken as a whole; (f) to which any
▇▇▇▇▇▇▇ Entity is a party or by which any of its assets or properties are bound
relating to indebtedness for borrowed money, including capital leases, security
agreements relating thereto and any amendment or waiver thereof, and (g) with
▇▇▇▇▇▇▇ or any Affiliate thereof (collectively, the "▇▇▇▇▇▇▇ Commitments";
PROVIDED, that ▇▇▇▇▇▇▇ Commitments shall not include (i) contracts granting any
▇▇▇▇▇▇▇ Entity an option to purchase land, (ii) conditions, covenants and
restrictions for real property owned by any ▇▇▇▇▇▇▇ Entity, or (iii) agreements
between any ▇▇▇▇▇▇▇ Entity and any contractor or developer made in the ordinary
course of business). Each ▇▇▇▇▇▇▇ Commitment is a legal, valid and binding
obligation of the applicable ▇▇▇▇▇▇▇ Entity, enforceable against such ▇▇▇▇▇▇▇
Entity in accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity). Except as set forth in ▇▇▇▇▇▇▇ Disclosure
Schedule Section 5.14, no ▇▇▇▇▇▇▇ Entity is, nor to the knowledge of the ▇▇▇▇▇▇▇
Entities is any other party thereto, in default under any of the ▇▇▇▇▇▇▇
Commitments where such default would result, in the aggregate,
42
in a Liability in excess of $2,000,000. Except as set forth in ▇▇▇▇▇▇▇
Disclosure Schedule Section 5.14, since December 31, 1998, no ▇▇▇▇▇▇▇ Entity has
received written notice of cancellation or termination of any ▇▇▇▇▇▇▇ Commitment
from any other party thereto.
5.15 PERMITS AND OTHER OPERATING RIGHTS. Except as set forth
in ▇▇▇▇▇▇▇ Disclosure Schedule Section 5.15 and except with respect to
Environmental Permits (which are covered separately in Section 5.17), all
permits, licenses, orders, approvals and authorizations required by any
applicable law, statute, regulation or Governmental Order, or by the property
and contract rights of third Persons, reasonably necessary to permit the
operation of the ▇▇▇▇▇▇▇ Business in the manner currently conducted by the
▇▇▇▇▇▇▇ Entities and to permit the current occupancy of the ▇▇▇▇▇▇▇ Real
Property by the ▇▇▇▇▇▇▇ Entities have been obtained or are reasonably expected
to be obtained by the ▇▇▇▇▇▇▇ Entities, except where the failure to possess such
permit, license, order, approval, authorization or rights would not result in a
Material Adverse Effect on the ▇▇▇▇▇▇▇ Entities or the ▇▇▇▇▇▇▇ Business. No
▇▇▇▇▇▇▇ Entity has received written notice from any Governmental Authority that
any such permit, license, order, approval or authorization has been, or will be,
revoked or terminated.
5.16 LABOR MATTERS. No employee of the ▇▇▇▇▇▇▇ Entities is
covered under any collective bargaining agreement. Except to the extent set
forth in ▇▇▇▇▇▇▇ Disclosure Schedule Section 5.16: (a) there is no unfair labor
practice complaint against any of the ▇▇▇▇▇▇▇ Entities pending or, to the
knowledge of the ▇▇▇▇▇▇▇ Entities, threatened before the National Labor
Relations Board or any comparable state or local Governmental Authority, (b)
there is no labor strike, slowdown or work stoppage actually pending or, to the
knowledge of the ▇▇▇▇▇▇▇ Entities, threatened against or directly affecting any
of the ▇▇▇▇▇▇▇ Entities, and (c) no grievance or any Action arising out of or
under collective bargaining agreements is pending or, to the knowledge of the
▇▇▇▇▇▇▇ Entities, threatened against any ▇▇▇▇▇▇▇ Entities.
5.17 ENVIRONMENTAL MATTERS. Except as set forth in ▇▇▇▇▇▇▇
Disclosure Schedule Section 5.17, to the knowledge of the ▇▇▇▇▇▇▇ Entities:
(a) the ▇▇▇▇▇▇▇ Entities have not used, generated, treated,
stored or disposed of any Hazardous Material at any properties owned, leased or
operated by the ▇▇▇▇▇▇▇ Entities, other than Hazardous Material customarily
used, generated, treated, stored or disposed of in connection with businesses
similar to the ▇▇▇▇▇▇▇ Business;
(b) the ▇▇▇▇▇▇▇ Entities have not caused the release,
discharge, spillage, loss, seepage or filtration of any Hazardous Material and
no such occurrence is threatened on, under, about or from such properties;
(c) the ▇▇▇▇▇▇▇ Entities have not engaged in, and are not
engaged in, the use, generation, production, manufacture, treatment, storage,
disposal or transportation of Hazardous Material, other than Hazardous Material
customarily used, generated, produced, manufactured, treated, stored, disposed
or transported in connection with businesses similar to the ▇▇▇▇▇▇▇ Business;
43
(d) to the knowledge of the ▇▇▇▇▇▇▇ Entities, none of the
properties owned, leased or operated by the ▇▇▇▇▇▇▇ Entities contains or has
contained any underground or above-ground tanks for the storage of Hazardous
Material and has not been remediated;
(e) the ▇▇▇▇▇▇▇ Entities have disposed of all wastes,
including those containing any Hazardous Material, in substantial compliance
with all applicable Environmental Laws and Environmental Permits, and, to the
knowledge of the ▇▇▇▇▇▇▇ Entities, the ▇▇▇▇▇▇▇ Entities have never received any
written notice or claim of Liability for any off-site contamination;
(f) Environmental Permits have been obtained and are in full
force and effect, or are in the process of being obtained, for the operations
conducted at all properties owned, leased or operated by the ▇▇▇▇▇▇▇ Entities;
(g) none of the properties owned, leased or operated by the
▇▇▇▇▇▇▇ Entities are listed or, to the knowledge of the ▇▇▇▇▇▇▇ Entities,
proposed for listing on the National Priorities List under CERCLA or on the
CERCLIS or any similar state list of sites requiring investigation or cleanup;
(h) the ▇▇▇▇▇▇▇ Entities and each property owned, leased or
operated by the ▇▇▇▇▇▇▇ Entities has been and is in substantial compliance with
all, and is not in violation of any, Environmental Laws and Environmental
Permits, and there are no Governmental Orders outstanding, no claims with
respect to Environmental Laws have been instituted or filed, and none are
pending or, to the knowledge of the ▇▇▇▇▇▇▇ Entities, threatened relating to the
▇▇▇▇▇▇▇ Entities or their business, operations, assets or properties, owned,
leased or operated; and
(i) ▇▇▇▇▇▇▇ has provided or made available to the WP Partners
true, accurate and complete copies of any written information in the possession
of the ▇▇▇▇▇▇▇ Entities (other than where such disclosure would result in the
loss of the attorney-client privilege) which pertains to the environmental
history of all the properties owned, leased or operated by the ▇▇▇▇▇▇▇ Entities.
5.18 WARRANTY OBLIGATIONS.
(a) Except as set forth on ▇▇▇▇▇▇▇ Disclosure Schedule Section
5.18, none of the ▇▇▇▇▇▇▇ Entities, to the knowledge of the ▇▇▇▇▇▇▇ Entities,
has any warranty claims that are not covered by Homebuyers Warranty Corporation,
National Home Insurance Company or warranties from subcontractors that
materially exceed the amounts reserved therefor on the ▇▇▇▇▇▇▇ Balance Sheet or
any aggregate amounts properly accrued on the books and records of any of the
▇▇▇▇▇▇▇ Entities since the date of the ▇▇▇▇▇▇▇ Balance Sheet.
(b) Except as set forth on ▇▇▇▇▇▇▇ Disclosure Schedule Section
5.18, to the knowledge of the ▇▇▇▇▇▇▇ Entities, no product manufactured, sold,
leased or delivered by any of the ▇▇▇▇▇▇▇ Entities (except pursuant to
applicable law) is subject to any material guaranty, warranty, or other
indemnity beyond the applicable standard terms and conditions of sale or lease.
44
(c) To the knowledge of the ▇▇▇▇▇▇▇ Entities, except as set
forth on ▇▇▇▇▇▇▇ Disclosure Schedule Section 5.18, none of the ▇▇▇▇▇▇▇ Entities
has any material Liability not fully covered by insurance arising out of any
injury to individuals or property as a result of the ownership, possession, or
use of any product manufactured, sold, leased or delivered by any of the ▇▇▇▇▇▇▇
Entities.
(d) All sales by the ▇▇▇▇▇▇▇ Entities have been made in
accordance with all federal and state consumer disclosure laws and regulations,
including, if applicable, the California Subdivided Lands Act and the
regulations enacted thereunder.
5.19 HOMEOWNER ASSOCIATIONS.
(a) ▇▇▇▇▇▇▇ Disclosure Schedule Section 5.19 contains an
accurate and complete list of all homeowner associations (the "▇▇▇▇▇▇▇ Homeowner
Associations") in which any of the ▇▇▇▇▇▇▇ Entities has or has had declarant
rights.
(b) Except as set forth on ▇▇▇▇▇▇▇ Disclosure Schedule Section
5.19, to the knowledge of the ▇▇▇▇▇▇▇ Entities, (i) all restrictive covenants
and other documents used by any of the ▇▇▇▇▇▇▇ Entities in connection with the
creation and operation of the ▇▇▇▇▇▇▇ Homeowner Associations (A) in which any of
the ▇▇▇▇▇▇▇ Entities previously had declarant rights complied in all material
respects with applicable laws at the time the same were promulgated, and (B) in
which any of the ▇▇▇▇▇▇▇ Entities currently has declarant rights currently
comply in all material respects with applicable laws, and (ii) all material
disclosures and deliveries of information and documents required by applicable
laws as to such ▇▇▇▇▇▇▇ Homeowner Associations and their creation and operation
have been materially complied with.
(c) To the knowledge of the ▇▇▇▇▇▇▇ Entities, ▇▇▇▇▇▇▇
Disclosure Schedule Section 5.19 contains an accurate and complete list of all
amounts in excess of $2,000,000 owing between the ▇▇▇▇▇▇▇ Homeowners
Associations and any of the ▇▇▇▇▇▇▇ Entities.
(d) To the knowledge of the ▇▇▇▇▇▇▇ Entities, no other claims
exist by a ▇▇▇▇▇▇▇ Homeowner Association against any of the ▇▇▇▇▇▇▇ Entities,
and to the knowledge of the ▇▇▇▇▇▇▇ Entities, each ▇▇▇▇▇▇▇ Homeowner Association
has been operated, so long as any of the ▇▇▇▇▇▇▇ Entities has participated
therein, in accordance with applicable laws.
5.20 ASSETS NECESSARY TO THE ▇▇▇▇▇▇▇ BUSINESS. Except as set
forth in ▇▇▇▇▇▇▇ Disclosure Schedule Section 5.20, immediately before the
Effective Time the ▇▇▇▇▇▇▇ Entities will hold or have the right to use in the
▇▇▇▇▇▇▇ Business all of the assets and properties (including all licenses and
agreements) currently being used (except those disposed of in the ordinary
course of business or otherwise as contemplated or permitted by this Agreement)
or which are reasonably necessary to permit the operation of the ▇▇▇▇▇▇▇
Business in the manner currently conducted by the ▇▇▇▇▇▇▇ Entities.
5.21 ACCURACY OF INFORMATION FURNISHED. No representation or
warranty made by ▇▇▇▇▇▇▇ in this Article V and the related ▇▇▇▇▇▇▇ Disclosure
Schedule contains any untrue statement of material fact or omits to state, in
light of the circumstances under which it has been made, a material fact
necessary to make such representation or warranty not misleading; provided,
however, that no representation or warranty is made as to projections,
45
forecasts or other forward looking information furnished by any ▇▇▇▇▇▇▇ Entity
to the WP Partners.
5.22 NO BROKERS. Neither ▇▇▇▇▇▇▇ nor any of its directors,
officers or employees has employed any broker, finder or investment banker
(other than ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.) or incurred any Liability for any
brokerage fees, commissions, finders' fees or similar fees in connection with
the transactions contemplated by this Agreement or any Ancillary Agreement
(other than the fees and expenses of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.).
5.23 DISCLAIMER. Except as otherwise expressly set forth in
this Article V, ▇▇▇▇▇▇▇ expressly disclaims any representations or warranties of
any kind or nature, express or implied, as to the condition, value or quality of
the assets or properties currently or formerly used, operated, owned, leased,
controlled, possessed, occupied or maintained by ▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇
Subsidiaries. ▇▇▇▇▇▇▇ SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF
MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH
RESPECT TO SUCH ASSETS OR PROPERTIES, OR ANY PART THEREOF, OR AS TO THE
WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR
PATENT, IT BEING UNDERSTOOD THAT SUCH ASSETS AND PROPERTIES ARE BEING ACQUIRED
THROUGH THE REORGANIZATION "AS IS, WHERE IS" ON THE CLOSING DATE, AND IN THEIR
PRESENT CONDITION, WITH ALL FAULTS, AND THAT THE WP PARTNERS SHALL RELY ON ITS
OWN EXAMINATION AND INVESTIGATION THEREOF.
5.24 NON-CONTROLLED ▇▇▇▇▇▇▇ ENTITIES. ▇▇▇▇▇▇▇ Disclosure
Schedule Section 5.24 contains an accurate and complete list of all ▇▇▇▇▇▇▇
Entities in which neither ▇▇▇▇▇▇▇ nor any Affiliates thereof hold a general
partner or managing member interest (the "Non-Controlled ▇▇▇▇▇▇▇ Entities").
Notwithstanding anything to the contrary herein, all representations and
warranties made by ▇▇▇▇▇▇▇ pursuant to this Article V with respect to the
Non-Controlled ▇▇▇▇▇▇▇ Entities are made only to the knowledge of ▇▇▇▇▇▇▇ and
the ▇▇▇▇▇▇▇ Entities (other than the Non-Controlled ▇▇▇▇▇▇▇ Entities).
ARTICLE VI
CERTAIN COVENANTS
6.1 ACCESS TO INFORMATION. (a) From the Agreement Date through
the Closing Date, but subject to any rights of third Persons, upon reasonable
notice, the WP Partners shall (i) afford the officers, employees and authorized
agents and representatives of ▇▇▇▇▇▇▇ reasonable access during normal business
hours to the offices, properties and Books and Records of the WP Entities and
(ii) furnish to the officers, employees and authorized agents and
representatives of ▇▇▇▇▇▇▇ such additional financial and operating data and
other information regarding the assets, properties and Liabilities of the WP
Entities and the WP Business (or legible copies thereof) as ▇▇▇▇▇▇▇ may from
time to time reasonably request; PROVIDED, HOWEVER, that such investigation
shall not unreasonably interfere with any of the businesses or operations of the
WP Partners or the WP Entities. Without limiting the generality of the
foregoing, the WP Partners shall cooperate fully with ▇▇▇▇▇▇▇'▇ investigation of
such assets, properties and
46
Liabilities and the WP Business and provide copies of such documents in its
possession as ▇▇▇▇▇▇▇ may reasonably request to confirm the title to any and all
properties or assets owned or leased by the WP Entities. No WP Partners
Indemnified Party shall be responsible for any bodily injury suffered by any of
the officers, employees or authorized agents and representatives of ▇▇▇▇▇▇▇
conducting any investigation of the WP Entities' assets and properties. No
investigation by ▇▇▇▇▇▇▇ shall affect the representations and warranties of the
WP Partners.
(b) From the Agreement Date through the Closing Date, but
subject to any rights of third Persons, upon reasonable notice, ▇▇▇▇▇▇▇ shall
(i) afford the officers, employees and authorized agents and representatives of
the WP Partners reasonable access during normal business hours to the offices,
properties and Books and Records of ▇▇▇▇▇▇▇ and (ii) furnish to the officers,
employees and authorized agents and representatives of the WP Entities such
additional financial and operating data and other information regarding the
assets, properties and Liabilities of ▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ Business (or
legible copies thereof) as the WP Partners may from time to time reasonably
request; PROVIDED, HOWEVER, that such investigation shall not unreasonably
interfere with any of the businesses or operations of ▇▇▇▇▇▇▇. Without limiting
the generality of the foregoing, ▇▇▇▇▇▇▇ shall cooperate fully with the WP
Partners' investigation of such assets, properties and Liabilities and the
▇▇▇▇▇▇▇ Business and provide copies of such documents in its possession as the
WP Partners may reasonably request to confirm the title to any and all
properties or assets owned or leased by ▇▇▇▇▇▇▇. No ▇▇▇▇▇▇▇ Indemnified Party
shall be responsible for any bodily injury suffered by any of the officers,
employees or authorized agents and representatives of the WP Partners conducting
any investigation of ▇▇▇▇▇▇▇'▇ assets and properties. No investigation by the WP
Partners shall affect the representations and warranties of ▇▇▇▇▇▇▇.
6.2 CONDUCT OF BUSINESSES PENDING CLOSING. From the Agreement
Date through the Closing Date, except as set forth in WP Disclosure Schedule
Section 6.2 or ▇▇▇▇▇▇▇ Disclosure Schedule Section 6.2, or as required by this
Agreement or otherwise consented to or approved by the parties in writing, which
consent or approval shall not be unreasonably withheld:
(a) The WP Partners shall cause the WP Entities to operate the
WP Business only in its usual, regular and ordinary manner and substantially in
the same manner as heretofore conducted. The WP Partners shall cause the WP
Entities to use commercially reasonable efforts to (i) preserve the WP Business;
(ii) keep available to Newco the services of the present officers, employees,
agents and independent contractors of the WP Entities; (iii) maintain the assets
of the WP Business in their current state of repair, order and condition, usual
and ordinary wear and tear excepted and subject to requirements in the ordinary
course of business; and (iv) maintain in effect insurance upon the assets of the
WP Entities and with respect to the conduct of the WP Business in such amounts
and of such kinds comparable in all material respects to that in effect on the
Agreement Date.
(b) The WP Partners shall cause the WP Entities not to:
(i) amend the Charter or Bylaws of any WP Entities or WP
Subsidiaries, except for the purpose of organizing entities for the
purpose of acquiring land in the ordinary course of business;
47
(ii) incur or assume or become subject to any additional
indebtedness for money borrowed or purchase money indebtedness, except
in the ordinary course of business and consistent with past practices;
(iii) declare or pay any dividend or make any other
distribution to any of the WP Partners, other than distributions for
payment of income Taxes due to the taxable income of the WP Entities;
(iv) redeem or otherwise acquire any shares or interest
of capital stock or other equity of any WP Entity or issue any capital
stock or other equity of any WP Entity or any option, warrant or right
relating thereto or any securities exchangeable for or convertible into
any such shares or equity;
(v) permit or allow any WP Entities' assets or
properties to be subject to any additional Encumbrance (other than
Permitted Liens) or sell, transfer, lease or otherwise dispose of any
such assets or properties, in each case except in the ordinary course
of business and consistent with past practices;
(vi) grant any increase in salaries or commissions
payable or to become payable to any employee of the WP Entities, or to
any sales agent or representative of the WP Entities, except normal
periodic increases in salaries and commissions in accordance with the
WP Entities' existing compensation practices;
(vii) make any capital expenditure or commitment
therefor for additions to property, equipment or facilities in excess
of $500,000 in the aggregate per month, other than land acquisitions
and expenditures associated with home building in the ordinary course
of business and consistent with past practices;
(viii) license, sell, transfer, pledge, modify,
disclose, dispose of or permit to lapse any right under or respecting,
or enter into any settlement regarding the breach or infringement of,
any material WP Intellectual Property;
(ix) terminate, renew, enter into or
amend any WP Commitment or contract or agreement which would
qualify as a WP Commitment;
(x) establish or adopt any severance
pay plan or arrangement with respect to, or for the benefit of,
employees;
(xi) make any change in any method of
accounting or accounting practice or policy, other than those
required by GAAP;
(xii) engage in any transactions with a WP Entity, other
than transactions in the ordinary course and consistent with past
practices; or
(xiii) agree, whether in writing or
otherwise, to do any of the foregoing.
(c) ▇▇▇▇▇▇▇ shall cause the ▇▇▇▇▇▇▇ Entities to operate the
▇▇▇▇▇▇▇ Business only in its usual, regular and ordinary manner and
substantially in the same manner as heretofore
48
conducted. ▇▇▇▇▇▇▇ shall cause the ▇▇▇▇▇▇▇ Entities to use commercially
reasonable efforts to (i) preserve the ▇▇▇▇▇▇▇ Business; (ii) keep available to
Newco the services of the present officers, employees, agents and independent
contractors of the ▇▇▇▇▇▇▇ Entities; (iii) maintain the assets of the ▇▇▇▇▇▇▇
Business in their current state of repair, order and condition, usual and
ordinary wear and tear excepted and subject to requirements in the ordinary
course of business; and (iv) maintain in effect insurance upon the assets of the
▇▇▇▇▇▇▇ Entities and with respect to the conduct of the ▇▇▇▇▇▇▇ Business in such
amounts and of such kinds comparable in all material respects to that in effect
on the Agreement Date.
(d) ▇▇▇▇▇▇▇ shall cause the ▇▇▇▇▇▇▇ entities not to:
(i) amend the Charter or Bylaws of any
▇▇▇▇▇▇▇ Entities, except for the purpose of organizing entities for
the purpose of acquiring land in the ordinary course of business;
(ii) incur or assume or become subject to any additional
indebtedness for money borrowed or purchase money indebtedness, except
in the ordinary course of business and consistent with past practices;
(iii) declare or pay any dividend or make any other
distribution to any stockholder of ▇▇▇▇▇▇▇;
(iv) redeem or otherwise acquire any shares or interest
of capital stock or other equity of any ▇▇▇▇▇▇▇ Entity or issue any
capital stock or other equity of any ▇▇▇▇▇▇▇ Entity or any option,
warrant or right relating thereto or any securities exchangeable for or
convertible into any such shares or equity;
(v) permit or allow any ▇▇▇▇▇▇▇ Entities' assets or
properties to be subject to any additional Encumbrance (other than
Permitted Liens) or sell, transfer, lease or otherwise dispose of any
such assets or properties, in each case except in the ordinary course
of business and consistent with past practices;
(vi) grant any increase in salaries or commissions
payable or to become payable to any employee of the ▇▇▇▇▇▇▇ Entities,
or to any sales agent or representative of the ▇▇▇▇▇▇▇ Entities, except
normal periodic increases in salaries and commissions in accordance
with the ▇▇▇▇▇▇▇ Entities' existing compensation practices;
(vii) make any capital expenditure or commitment
therefor for additions to property, equipment or facilities in excess
of $500,000 in the aggregate per month, other than land acquisitions
and expenditures associated with home building in the ordinary course
of business and consistent with past practices;
(viii) license, sell, transfer, pledge, modify,
disclose, dispose of or permit to lapse any right under or respecting,
or enter into any settlement regarding the breach or infringement of,
any material ▇▇▇▇▇▇▇ Intellectual Property;
(ix) terminate, renew, enter into or amend any
▇▇▇▇▇▇▇ Commitment or contract or agreement which would qualify as a
▇▇▇▇▇▇▇ Commitment;
49
(x) establish or adopt any severance pay plan or
arrangement with respect to, or for the benefit of, employees;
(xi) make any change in any method of accounting
or accounting practice or policy, other than those required by GAAP;
(xii) engage in any transactions with a ▇▇▇▇▇▇▇ Entity,
other than transactions in the ordinary course and consistent with past
practices; or
(xiii) agree, whether in writing or otherwise, to do
any of the foregoing.
6.3 NO SOLICITATION OF TRANSACTIONS. (a) From the Agreement
Date through the Closing Date, none of the WP Partners nor any of their
representatives, Affiliates, directors, officers, employees, subsidiaries or
agents will solicit, consider, encourage or accept any inquiries, proposals or
offers to acquire, or offer or sell, or agree to sell, any of the WP Interests
or the securities, assets or properties of any WP Entities (other than sales of
properties in the ordinary course of business consistent with past practices) or
assist any third Person in preparing or soliciting such an inquiry, proposal or
offer. The WP Partners shall not have, and shall cause such representatives,
Affiliates, directors, officers, employees, subsidiaries and agents not to have,
any discussions, conversations, negotiations or other communication with, or
provide any information or data to, any Person(s) expressing an interest in
making or effecting any such inquiry, proposal or offer.
(b) From the Agreement Date through the Closing Date, neither
▇▇▇▇▇▇▇ nor any of its representatives, Affiliates, directors, officers,
employees, subsidiaries or agents will solicit, consider, encourage or accept
any inquiries, proposals or offers to acquire, or offer or sell, or agree to
sell, any of the securities, assets or properties of ▇▇▇▇▇▇▇ (other than sales
of properties in the ordinary course of business consistent with past practices
or exercises of options or sales of stock of ▇▇▇▇▇▇▇ by officers or employees of
▇▇▇▇▇▇▇ (other than ▇▇▇▇▇ ▇▇▇▇▇▇▇)) or assist any third Person in preparing or
soliciting such an inquiry, proposal or offer. ▇▇▇▇▇▇▇ shall not have, and shall
cause such representatives, Affiliates, directors, officers, employees,
subsidiaries and agents not to have, any discussions, conversations,
negotiations or other communication with, or provide any information or data to,
any Person(s) expressing an interest in making or effecting any such inquiry,
proposal or offer.
6.4 AUTHORIZATIONS. (a) Each of ▇▇▇▇▇▇▇ and the WP Partners
shall cooperate in the preparation of any filing required under the HSR Act and
shall submit such filing within 30 days of the Agreement Date.
(b) Each of ▇▇▇▇▇▇▇ and the WP Partners as promptly as
practicable after the Agreement Date, shall (i) deliver, or cause to be
delivered, all notices and make, or cause to be made, all such declarations,
designations, registrations, filings and submissions under all statutes, laws,
regulations and Governmental Orders applicable to it as may be required for it
to consummate the transactions contemplated hereby and by the Ancillary
Agreements in accordance with the terms of this Agreement and the Ancillary
Agreements; (ii) use commercially reasonable efforts to obtain, or cause to be
obtained, all authorizations, approvals, orders, consents and waivers from all
Persons necessary to consummate the foregoing; and
50
(iii) use commercially reasonable efforts to take, or cause to be taken, all
other actions necessary, proper or advisable in order for it to fulfill its
respective obligations hereunder and to carry out the intentions of the parties
expressed herein.
(c) Each party shall use its commercially reasonable efforts
to satisfy the conditions to Closing applicable to it in Articles VII and VIII
as soon as commercially practicable.
(d) ▇▇▇▇▇▇▇ and the WP Partners shall comply substantially
with any additional requests for information, including requests for production
of documents and production of witnesses for interviews or depositions, by the
Antitrust Division of the United States Department of Justice, the United States
Federal Trade Commission or the antitrust or competition law authorities of any
State of the United States (the "Antitrust Authorities").
(e) Each party shall use its commercially reasonable efforts,
and shall cooperate fully with the other, to prevent the entry in any Action
brought by an Antitrust Authority or any other Person of any Governmental Order
which would prohibit, make unlawful or materially delay the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements.
6.5 CONTRIBUTION TO WP LLC. Prior to the Closing Date,
the WP Partners shall contribute the WP Interests, or cause the WP Interests
to be contributed, to WP LLC.
6.6 ACKNOWLEDGEMENTS. (a) In order to induce the WP Partners
to enter into and perform this Agreement and the Ancillary Agreements, ▇▇▇▇▇▇▇
acknowledges and agrees with the WP Partners as follows: THE REPRESENTATIONS AND
WARRANTIES SET FORTH IN ARTICLE IV OF THIS AGREEMENT CONSTITUTE THE SOLE AND
EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF THE WP PARTNERS IN CONNECTION WITH
THE TRANSACTIONS CONTEMPLATED HEREBY AND BY THE ANCILLARY AGREEMENTS. THERE ARE
NO REPRESENTATIONS, WARRANTIES, COVENANTS, UNDERSTANDINGS OR AGREEMENTS, ORAL OR
WRITTEN, IN RELATION THERETO AMONG THE PARTIES OTHER THAN THOSE INCORPORATED
HEREIN AND THEREIN. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET
FORTH IN ARTICLE IV OF THIS AGREEMENT, ▇▇▇▇▇▇▇ DISCLAIMS RELIANCE ON ANY
REPRESENTATIONS OR WARRANTIES, EITHER EXPRESS OR IMPLIED, BY OR ON BEHALF OF THE
WP PARTNERS OR ANY EMPLOYEES, REPRESENTATIVES OR AGENTS OF ANY OF SUCH PERSONS.
Nothing in this Section 6.5 shall be deemed to lessen in any way ▇▇▇▇▇▇▇'▇
reliance on, and right to enforce, any covenant or agreement contained in this
Agreement.
(b) In order to induce ▇▇▇▇▇▇▇ to enter into and perform this
Agreement, the WP Partners acknowledge and agrees with ▇▇▇▇▇▇▇ as follows: THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN ARTICLE V OF THIS AGREEMENT
CONSTITUTE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇ TO
THE WP PARTNERS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY AND BY
THE ANCILLARY AGREEMENTS. THERE ARE NO REPRESENTATIONS, WARRANTIES, COVENANTS,
UNDERSTANDINGS OR
51
AGREEMENTS, ORAL OR WRITTEN, IN RELATION THERETO AMONG THE PARTIES OTHER THAN
THOSE INCORPORATED HEREIN AND THEREIN. EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES EXPRESSLY SET FORTH IN ARTICLE V OF THIS AGREEMENT, THE WP PARTNERS
DISCLAIM RELIANCE ON ANY REPRESENTATIONS OR WARRANTIES, EITHER EXPRESS OR
IMPLIED, BY OR ON BEHALF OF ▇▇▇▇▇▇▇ OR ANY EMPLOYEES, REPRESENTATIVES OR AGENTS
OF ANY OF SUCH PERSONS. Nothing in this Section 6.5 shall be deemed to lessen in
any way the WP Partner's reliance on, and right to enforce, any covenant or
agreement contained in this Agreement.
6.7 PUBLIC ANNOUNCEMENTS. Neither ▇▇▇▇▇▇▇, the WP Partners nor
the representatives of any of them shall make any public announcement with
respect to this Agreement, the Ancillary Agreements or the transactions
contemplated hereby or thereby without the prior written consent of the other
party hereto. The foregoing notwithstanding, any such public announcement may be
made if required by applicable statute, law, regulation, Governmental Order, the
NASD or NASDAQ rule or listing agreement, provided that the party required to
make such public announcement, to the extent reasonably possible, shall confer
with the other party concerning the timing and content of such public
announcement before the same is made.
6.8 REGISTRATION STATEMENT. ▇▇▇▇▇▇▇ and the WP Partners shall
cooperate and promptly prepare and file with the SEC as soon as practicable a
Registration Statement on Form S-4 (the "Form S-4") under the Securities Act,
with respect to the Newco Common Stock issuable in the Reorganization, a portion
of which Registration Statement shall also serve as the proxy statement with
respect to the ▇▇▇▇▇▇▇ Stockholder Meeting (the "Proxy Statement/Prospectus").
The respective parties will cause the Proxy Statement/Prospectus and the Form
S-4 to comply as to form in all material respects with the applicable provisions
of the Securities Act, the Exchange Act and the rules and regulations
thereunder. ▇▇▇▇▇▇▇ and the WP Partners shall use all reasonable efforts to have
the Form S-4 declared effective by the SEC as promptly as practicable and to
keep the Form S-4 effective as long as is necessary to consummate the
Reorganization. ▇▇▇▇▇▇▇ and the WP Partners shall, as promptly as practicable,
provide copies of any written comments received from the SEC with respect to the
Form S-4 to each other and advise the WP Partners of any verbal comments with
respect to the Form S-4 received from the SEC. ▇▇▇▇▇▇▇ and the WP Partners shall
use their best efforts to obtain, prior to the effective date of the Form S-4,
all necessary state securities law or "Blue Sky" permits or approvals required
to carry out the transactions contemplated by this Agreement. ▇▇▇▇▇▇▇ agrees
that the written information concerning the ▇▇▇▇▇▇▇ Entities provided by it for
inclusion in that the Proxy Statement/Prospectus and each amendment or
supplement thereto at the time of mailing thereof and at the time of the ▇▇▇▇▇▇▇
Stockholder Meeting, or, in the case of the Form S-4 and each amendment or
supplement thereto, at the time it is filed or becomes effective, will not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The WP
Partners agree that the written information concerning the WP Partners and the
WP Entities provided by it for inclusion in the Proxy Statement/Prospectus and
each amendment or supplement thereto, at the time of mailing thereof and at the
time of the ▇▇▇▇▇▇▇ Stockholder Meeting, or, in the case of written information
concerning the WP Partners and the WP Entities provided by the WP Partners for
inclusion in
52
the Form S-4 or any amendment or supplement thereto, at the time it is filed or
becomes effective, will not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. No amendment or supplement to the Proxy
Statement/Prospectus will be made by ▇▇▇▇▇▇▇ or the WP Partners without the
approval of the WP Partners or ▇▇▇▇▇▇▇, respectively. ▇▇▇▇▇▇▇ and the WP
Partners will advise the WP Partners and ▇▇▇▇▇▇▇, respectively, promptly after
it receives notice thereof, of the time when the Form S-4 has become effective
or any supplement or amendment has been filed, the issuance of any stop order,
the suspension of the qualification of the Newco Common Stock issuable in
connection with the Reorganization for offering or sale in any jurisdiction, or
any request by the SEC for amendment of the Proxy Statement/Prospectus or the
Form S-4 or comments thereon and responses thereto or requests by the SEC for
additional information.
6.9 ▇▇▇▇▇▇▇ STOCKHOLDER MEETING. ▇▇▇▇▇▇▇ will, as soon as
practicable and in no event later than 45 days after the Form S-4 is declared
effective by the SEC, duly call, give notice of, convene and hold the ▇▇▇▇▇▇▇
Stockholder Meeting. ▇▇▇▇▇▇▇ shall, through its Board of Directors, recommend to
its stockholders adoption and approval of this Agreement and the Merger A
Agreement.
6.10 LISTING APPLICATION. ▇▇▇▇▇▇▇ shall promptly cause Newco
to prepare and submit to NASDAQ a listing application covering the shares of
Newco Common Stock issuable in the Reorganization, and shall use reasonable
efforts to obtain, prior to the Effective Time, approval for the listing of such
Newco Common Stock on The Nasdaq Stock Market, subject to official notice of
issuance.
6.11 AFFILIATE LETTERS. At least 30 days prior to the Closing
Date, the WP Partners shall deliver to ▇▇▇▇▇▇▇ a list of names and addresses of
those persons who were, in the WP Partners' reasonable judgment, at the record
date for the ▇▇▇▇▇▇▇ Stockholder Meeting, Affiliates of the WP Partners and WP
LLC and who will receive any securities in any of the transactions contemplated
hereby. The WP Partners shall use all reasonable efforts to deliver or cause to
be delivered to Newco, prior to the Closing Date, from each of the Affiliates of
the WP Partners and WP LLC identified in the foregoing list, an Affiliate Letter
in the form attached hereto as Exhibit K. Newco shall be entitled to place
legends as specified.
6.12 NON-DISCLOSURE OF PROPRIETARY DATA. Each of the parties
agrees that such party will not, at any time, make use of, divulge or otherwise
disclose, directly or indirectly, any trade secret or other proprietary data or
confidential information concerning the business or policies of any WP Entity or
of ▇▇▇▇▇▇▇ obtained in connection with the negotiation, execution, or
performance of this Agreement or any Ancillary Agreement. The parties'
obligations under this Section 6.12 with respect to any trade secret or other
proprietary data or confidential information of ▇▇▇▇▇▇▇ or the WP Entities is
independent of any obligations under the Confidentiality Agreement and shall
survive the termination of this Agreement if this Agreement is terminated prior
to Closing.
6.13 SECTION 341(f) CONSENT. At any time following the
Contribution, ▇▇▇▇▇▇▇ and the WP Partners shall cause Newco, within five (5)
business days of receipt by Newco of a written request by WP LLC or one or more
of the WP Partners (or their respective successors) to
53
file a statement with the IRS stating that Newco consents to have the provisions
of section 341(f) of the Code apply to it (the "Section 341(f) Consent"). A copy
of the Section 341(f) Consent shall be simultaneously delivered to WP LLC or the
requesting WP Partner(s). Notice to the stockholders of Newco of the filing of
the Section 341(f) Consent shall be provided in a Form 8-K filed by Newco with
the SEC at the time Newco files the Section 341(f) Consent. ▇▇▇▇▇▇▇ and the WP
Partners shall cause Newco to cause any subsidiary corporation it controls to
file a statement of consent under Section 341(f) of the Code, to the extent
required by Section 341(f)(6) of the Code.
6.14 NEWCO STOCK OPTION PLAN. ▇▇▇▇▇▇▇ and the WP Partners
shall cooperate and work in good faith in order for Newco, within a reasonable
time after the Agreement Date, to adopt a stock option plan with terms and
provisions comparable to the ▇▇▇▇▇▇▇ Homes, Inc. Amended and Restated 1992 Stock
Option Plan and to grant options thereunder to certain employees of the ▇▇▇▇▇▇▇
Entities and the WP Entities.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF ▇▇▇▇▇▇▇
The obligations of ▇▇▇▇▇▇▇ to effect the transactions
contemplated herein shall be subject to the fulfillment satisfaction or waiver,
on or before the Closing Date, of each of the following conditions:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the WP Partners contained in Article IV and
taken as a whole shall be true and correct in all material respects at and as of
the Closing Date with the same effect as though made at and as of the Closing
Date, except that representations and warranties made as of, or in respect of,
only a specified date or period shall be true and correct in all material
respects in respect of, or as of, such date or period.
7.2 PERFORMANCE. The WP Partners shall have performed and
complied in all material respects with all agreements and obligations required
by this Agreement to be performed or complied with by them on or prior to the
Closing Date.
7.3 HSR ACT. Any waiting period (and any extension thereof)
under the HSR Act applicable to the transactions contemplated hereby shall have
expired or shall have been terminated.
7.4 ABSENCE OF GOVERNMENTAL ORDERS. No temporary or
permanent Governmental Order shall be in effect which prohibits or makes
unlawful consummation of the transactions contemplated hereby.
7.5 OFFICERS' CERTIFICATES. The WP Partners shall have
furnished ▇▇▇▇▇▇▇ with such certificates of their officers certifying as to
compliance with the conditions set forth in this Article VII as may be
reasonably requested by ▇▇▇▇▇▇▇.
54
7.6 CERTAIN AGREEMENTS. Each party to the Ancillary
Agreements shall have duly authorized and executed the Ancillary Agreements
and shall have delivered the same to ▇▇▇▇▇▇▇.
7.7 STOCKHOLDER APPROVAL. This Agreement and the transactions
contemplated hereby shall have been approved in the manner required by
applicable law and NASDAQ by the holders of the issued and outstanding shares of
capital stock of ▇▇▇▇▇▇▇.
7.8 FORM S-4. The Form S-4 shall have become effective and
shall be effective at the Effective Time, and no stop order suspending
effectiveness of the Form S-4 shall have been issued, no action, suit,
proceeding or investigation by the SEC to suspend the effectiveness thereof
shall have been initiated and be continuing, or, to the knowledge of ▇▇▇▇▇▇▇ or
the WP Partners, threatened, and all necessary approvals under state securities
laws relating to the issuance or trading of the Newco Common Stock to be issued
in connection with the Reorganization shall have been received.
7.9 LISTING. The Newco Common Stock to be issued in connection
with the Reorganization shall have been approved for listing on The Nasdaq Stock
Market, subject only to official notice of issuance.
7.10 WP REQUIRED CONSENTS. The WP Entities shall have
obtained the WP Required Consents.
7.11 FIRPTA MATTERS. The WP Entities shall have delivered to
Newco separate statements (in such form as may be reasonably requested by
counsel to ▇▇▇▇▇▇▇) signed under penalty of perjury by each of the WP Partners,
certifying as to such WP Partner's non-foreign status for purposes of United
States income taxation and setting forth such WP Partner's tax identification
number and home or office address.
7.12 EMPLOYMENT AGREEMENT. Newco shall have entered into
an employment agreement with ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ substantially in the form of
Exhibit L.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF THE WP PARTNERS
The obligations of the WP Partners to effect the transactions
contemplated herein shall be subject to the fulfillment, satisfaction or waiver,
on or before the Closing Date, of each of the following conditions:
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of ▇▇▇▇▇▇▇ contained in Article V and taken as a
whole shall be true and correct in all material respects at and as of the
Closing Date with the same effect as though made at and as of the Closing Date,
except that representations and warranties made as of, or in respect of, only a
specified date or period shall be true and correct in all material respects in
respect of, or as of, such date, or period.
55
8.2 PERFORMANCE. ▇▇▇▇▇▇▇ shall have performed and complied in
all material respects with all agreements and obligations required by this
Agreement to be performed or complied with by it on or prior to the Closing
Date.
8.3 HSR ACT. Any waiting period (and any extension thereof)
under the HSR Act applicable to the transactions contemplated hereby shall have
expired or shall have been terminated.
8.4 ABSENCE OF GOVERNMENTAL ORDERS. No temporary or
permanent Governmental Order shall be in effect which prohibits or makes
unlawful consummation of the transactions contemplated hereby.
8.5 OFFICERS' CERTIFICATES. ▇▇▇▇▇▇▇ shall have furnished the
WP Partners with such certificates of its officers certifying as to compliance
with the conditions set forth in this Article VIII as may be reasonably
requested by the WP Partners.
8.6 CERTAIN AGREEMENTS. Each party to the Ancillary
Agreements shall have duly authorized and executed the Ancillary Agreements
and shall have delivered the same to the WP Partners.
8.7 STOCKHOLDER APPROVAL. This Agreement and the transactions
contemplated hereby shall have been approved in the manner required by
applicable law and NASDAQ by the holders of the issued and outstanding shares of
capital stock of ▇▇▇▇▇▇▇.
8.8 FORM S-4. The Form S-4 shall have become effective and
shall be effective at the Effective Time, and no stop order suspending
effectiveness of the Form S-4 shall have been issued, no action, suit,
proceeding or investigation by the SEC to suspend the effectiveness thereof
shall have been initiated and be continuing, or, to the knowledge of ▇▇▇▇▇▇▇ or
the WP Partners, threatened, and all necessary approvals under state securities
laws relating to the issuance or trading of the Newco Common Stock to be issued
in connection with the Reorganization shall have been received.
8.9 LISTING. The Newco Common Stock to be issued in connection
with the Reorganization shall have been approved for listing on The Nasdaq Stock
Market, subject only to official notice of issuance.
8.10 ▇▇▇▇▇▇▇ REQUIRED CONSENTS. ▇▇▇▇▇▇▇ shall have
obtained the ▇▇▇▇▇▇▇ Required Consents.
8.11 EMPLOYMENT AGREEMENT. Newco shall have entered into
an employment agreement with ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ substantially in the form of
Exhibit L.
ARTICLE IX
INDEMNIFICATION
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the WP Partners in Article IV and of
▇▇▇▇▇▇▇ in Article V shall survive for a period
56
of 21 months from the Closing; PROVIDED, HOWEVER, that the representations and
warranties contained in Sections 4.12 and 5.12 shall survive until the
applicable statute of limitations with respect to Taxes has expired. If written
notice of a claim has been given prior to the expiration of the applicable
representations and warranties by a party in whose favor such representations
and warranties have been made to the party that made such representations and
warranties, then the relevant representations and warranties shall survive as to
such claim, until the claim has been finally resolved.
9.2 INDEMNIFICATION BY THE WP PARTNERS. Except as otherwise
limited by this Article IX, the WP Partners shall jointly and severally
indemnify, defend and hold harmless ▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇'▇ Affiliates,
shareholders, officers, directors, employees, subsidiaries, successors and
assigns (collectively, the "▇▇▇▇▇▇▇ Indemnified Parties") from and against, and
pay or reimburse the ▇▇▇▇▇▇▇ Indemnified Parties for, any and all losses,
damages, claims, costs and expenses, interest, awards, judgments, fines, and
penalties (including reasonable legal costs and expenses) suffered or incurred
by them (hereinafter a "▇▇▇▇▇▇▇ Loss") arising out of or resulting from:
(a) the inaccuracy of any representation or warranty of
the WP Partners set forth in Article IV; or
(b) any other breach or violation of this Agreement by
the WP Partners.
9.3 INDEMNIFICATION BY ▇▇▇▇▇▇▇. Except as otherwise limited by
this Article IX, ▇▇▇▇▇▇▇ shall indemnify, defend and hold harmless the WP
Partners and their Affiliates, shareholders, officers, directors, employees,
subsidiaries, successors and assigns (collectively, the "WP Partners Indemnified
Parties") from and against, and pay or reimburse the WP Partners Indemnified
Parties for, any and all losses, damages, claims, costs and expenses, interest,
awards, judgments, fines, and penalties (including reasonable legal costs and
expenses) actually suffered or incurred by them (hereinafter a "WP Partners
Loss") arising out of or resulting from:
(a) the inaccuracy of any representation or warranty of
▇▇▇▇▇▇▇ set forth in Article V; or
(b) any other breach or violation of this Agreement by
▇▇▇▇▇▇▇.
9.4 GENERAL INDEMNIFICATION PROVISIONS. (a) For the purposes
of this Section 9.4 and Sections 9.5 and 9.6, the term "Indemnitee" shall refer
to the Person or Persons indemnified, or entitled, or claiming to be entitled,
to be indemnified, pursuant to the provisions of Section 9.2 or 9.3, as the case
may be; the term "Indemnitor" shall refer to the person having the obligation to
indemnify pursuant to such provisions; and "Losses" shall refer to WP Partners
Losses or ▇▇▇▇▇▇▇ Losses, as the case may be. Losses shall be determined without
reduction based on the amount thereof which may fall below standards based on
materiality or specified amounts.
(b) Within a reasonable time following the determination
thereof, an Indemnitee shall give the Indemnitor notice of any matter which an
Indemnitee has determined has given or could give rise to a right of
indemnification under this Agreement (regardless of whether a claim for
indemnification otherwise would be prohibited by Section 9.5(a)), stating the
57
amount of the Loss, if known, and method of computation thereof, all with
reasonable particularity and containing a reference to the provisions of this
Agreement in respect of which such right of indemnification is claimed or
arises. The obligations and Liabilities of an Indemnitor under this Article IX
with respect to Losses arising from claims of any third party that are subject
to the indemnification provided for in this Article IX ("Third Party Claims")
shall be governed by and contingent upon the following additional terms and
conditions: If an Indemnitee shall receive notice of any Third Party Claim, the
Indemnitee shall promptly give the Indemnitor notice of such Third Party Claim
and shall permit the Indemnitor, at its option, to undertake the defense of such
Third Party Claim by counsel of its own choice and at its expense; PROVIDED,
HOWEVER, that the failure of the Indemnitee to notify the Indemnitor during the
required notification period shall only relieve the Indemnitor from its
obligation to indemnify the Indemnitee pursuant to this Article IX to the extent
that the Indemnitor is actually prejudiced by such failure (whether as a result
of the forfeiture of substantive rights or defenses or otherwise). If the
Indemnitor acknowledges in writing its obligation to indemnify the Indemnitee
hereunder against any Losses that may result from such Third Party Claims
(subject to the limitations set forth herein), then the Indemnitor shall be
entitled, at its option, to assume and control the defense of such Third Party
Claim at its expense and through counsel of its reasonable choice if it gives
notice to the Indemnitee within 20 calendar days of the receipt of notice of
such Third Party Claim from the Indemnitee of its intention to do so. If the
Indemnitor elects to assume and control the defense of any such Third Party
Claim, the Indemnitee shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise or settlement of the
Third Party Claim, but the fees and expenses of such counsel will be at the
expense of the Indemnitee, unless (i) the Indemnitor has agreed to pay such fees
and expenses, (ii) any relief other than the payment of money damages is sought
against the Indemnitee, or (iii) the Indemnitee has been advised by its counsel
that there may be one or more defenses reasonably available to it which are
different from or additional to those available to the Indemnitor and which can
not be effectively raised by Indemnitor, and in any such case that portion of
the fees and expenses of such separate counsel that are reasonably related to
matters covered by the indemnification provided by this Article IX will be paid
by the Indemnitor. Expenses of counsel to the Indemnitee shall be reimbursed on
a current basis by the Indemnitor if there is no dispute as to the obligation of
the Indemnitor to pay such amounts pursuant to this Article IX. In the event the
Indemnitor exercises its right to undertake the defense against any such Third
Party Claim as provided above, the Indemnitee shall cooperate with the
Indemnitor in such defense and make available to the Indemnitor, at the
Indemnitor's expense, all witnesses, pertinent records, materials and
information in its possession or under its control relating thereto as is
reasonably required by the Indemnitor. Similarly, in the event the Indemnitee
is, directly or indirectly, conducting the defense against any such Third Party
Claim, the Indemnitor shall cooperate with the Indemnitee in such defense and
make available to it, at the Indemnitor's expense, all such witnesses, records,
materials and information in its possession or under its control relating
thereto as is reasonably required by the Indemnitee. No such Third Party Claim,
except the settlement thereof which involves the payment of money only (by a
party or parties other than the Indemnitee) and for which the Indemnitee is
released by the third party claimant and is totally indemnified by the
Indemnitor, may be settled by the Indemnitor without the written consent of the
Indemnitee. No Third Party Claim which is being defended in good faith by the
Indemnitor shall be settled by the Indemnitee without the written consent of the
Indemnitor.
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9.5 LIMITATIONS ON INDEMNIFICATION. (a) No claim or claims may be made
against an Indemnitor for indemnification pursuant to Section 9.2(a) or Section
9.3(a), as the case may be, unless the collective Losses of the Indemnitees with
respect to such Sections shall exceed in the aggregate an amount equal to
$5,000,000, in which case the Indemnitor shall be obligated to the Indemnitee
only for the amount of the Loss or Losses in excess of $5,000,000.
(b) In addition to the provisions and limitations as provided in (i)
Section 9.1 with respect to the period of survival of representations and
warranties and (ii) Section 9.5(a) with respect to dollar amounts of Losses for
which indemnification for breaches of representations and warranties is not
available: (A) the WP Partners shall not be liable for any ▇▇▇▇▇▇▇ Loss (1) to
the extent ▇▇▇▇▇▇▇ Losses relate to breaches of the WP Partners' representations
and warranties contained in Sections 4.5, 4.6, 4.8, 4.9, 4.10, 4.13, 4.14, 4.15,
4.16, 4.17, 4.18, 4.19, 4.20, 4.21 (solely with respect to representations and
warranties contained in the Sections listed in this clause (1)) and/or 4.22 and
exceed (in the aggregate) an amount equal to $15,000,000, (2) to the extent
▇▇▇▇▇▇▇ Losses relate to breaches of the WP Partners' representations and
warranties contained in Sections 4.7, 4.11, 4.12, 4.21 (solely with respect to
representations and warranties contained in the Sections listed in this clause
(2)), and/or 4.23 and exceed (in the aggregate) an amount equal to $25,000,000
or (3) for which a claim for indemnification relating to such a breach is not
asserted hereunder within the applicable survival period as provided in Section
9.1; and (B) ▇▇▇▇▇▇▇ shall not be liable for any WP Partners Loss (4) to the
extent WP Partners Losses relate to breaches of ▇▇▇▇▇▇▇'▇ representations and
warranties contained in Sections 5.5, 5.6 5.8, 5.9, 5.10, 5.13, 5.14, 5.15,
5.16, 5.17, 5.18, 5.19, 5.20, 5.21 (solely with respect to representations and
warranties contained in the Sections listed in this clause (4)) and/or 5.22 and
exceed (in the aggregate) an amount equal to $15,000,000, (5) to the extent WP
Partners Losses relate to breaches of ▇▇▇▇▇▇▇'▇ representations and warranties
contained in Sections 5.7, 5.11, 5.12, 5.21 (solely with respect to
representations and warranties contained in the Sections listed in this clause
(5)) and/or 5.23 and exceed (in the aggregate) an amount equal to $25,000,000 or
(6) for which a claim for indemnification relating to such a breach is not
asserted hereunder within the applicable survival period as provided in Section
9.1. The immediately preceding sentence notwithstanding, the liability of the WP
Partners for ▇▇▇▇▇▇▇ Losses pursuant to clauses (1) and (2) shall not exceed, in
the aggregate, $25,000,000, and the liability of ▇▇▇▇▇▇▇ for WP Partner Losses
pursuant to clauses (4) and (5) shall not exceed, in the aggregate, $25,000,000.
(c) Notwithstanding any other provision of this Agreement, the Liability of
any Indemnitor for Losses shall be determined on a basis that is net of the
amount of any such Losses covered by insurance after subtracting deductibles and
retroactive premiums and other co-payments required to be made by an Indemnitee.
9.6 STOCK INDEMNIFICATION PAYMENTS. (a) Any indemnification obligations of
the WP Partners pursuant to Section 9.2 shall be satisfied by payment in shares
of Newco Class A Common Stock and/or shares of Newco Class B Common Stock to
Newco. The number of shares of Stock delivered by the WP Partners in
satisfaction of an indemnification obligation shall be determined in accordance
with Section 9.6(c) below.
(b) Any indemnification obligations of ▇▇▇▇▇▇▇ pursuant to Section 9.3
shall be satisfied by payment in shares of Newco Class A Common Stock and/or
Newco Class B
59
Common Stock to WP LLC, the number of which shares shall be determined in
accordance with Section 9.6(c) below.
(c) The aggregate number of shares of Newco Class A Common Stock and/or
Newco Class B Common Stock paid by ▇▇▇▇▇▇▇ or the WP Partners in satisfaction of
an indemnification obligation pursuant to paragraph (a) or (b) of this Section
9.6 shall be equal to (i)(x) the amount of the Losses for which indemnification
is owed by ▇▇▇▇▇▇▇, MULTIPLIED BY the number of shares of Newco Common stock
owned by WP LLC and Bankers Trust on the Closing Date, MINUS (y) the amount of
the Losses for which indemnification is owed by the WP Partners, MULTIPLIED BY
the number of shares of Newco Common stock owned by the stockholders of ▇▇▇▇▇▇▇
on the Closing Date, ALL DIVIDED BY (ii) (x) the number of shares of Newco
Common Stock owned by the stockholders of ▇▇▇▇▇▇▇ on the Closing Date,
MULTIPLIED BY the ▇▇▇▇▇▇▇ Common Stock Market Value, MINUS (y) the amount of the
Losses for which indemnification is owed by ▇▇▇▇▇▇▇ (all rounded to nearest
whole share). For purposes of this Section 9.6(c), the term "▇▇▇▇▇▇▇ Common
Stock Market Value" shall mean the average closing price per share of ▇▇▇▇▇▇▇
Common Stock on NASDAQ (as reported in THE WALL STREET JOURNAL or, if not
reported therein, any other authoritative source) for the twenty (20)
consecutive trading days (whether or not actual trading occurred during such
period) ending one (1) trading day preceding the Closing Date.
(d) An example of calculations made pursuant to this Section 9.6 is
attached as Exhibit M.
ARTICLE X
[INTENTIONALLY OMITTED]
ARTICLE XI
TERMINATION
11.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing:
(a) by the mutual written consent of ▇▇▇▇▇▇▇ and the WP Partners; or
(b) by either ▇▇▇▇▇▇▇, on the one hand, or the WP Partners, on the other
hand, if (i) the approval of ▇▇▇▇▇▇▇'▇ stockholders required by Sections 7.7 and
8.7 shall not have been obtained at a meeting duly convened therefor or at any
adjournment thereof, or (ii) a United States federal or state court of competent
jurisdiction or United States federal or state governmental, regulatory or
administrative agency or commission shall have issued an order, decree or ruling
or taken any other action permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such order,
decree, ruling or other action shall have become final and non-appealable;
PROVIDED, HOWEVER, that the party seeking to terminate this Agreement pursuant
to this clause (ii) shall have used all reasonable efforts to remove such
injunction, order or decree; or (iii) if the Closing shall not have occurred by
January 31, 2000 (which date may be extended at the sole option of either party
to February 28, 2001); PROVIDED, HOWEVER, that the right to terminate this
Agreement pursuant to this
60
subsection shall not be available to any party or parties whose failure to
fulfill any obligation under this Agreement shall have been the cause of, or
shall have resulted in, the failure of the Closing to occur prior to such date;
or
(c) by ▇▇▇▇▇▇▇, as a result of the breach in any material respect of any of
the representations and warranties of the WP Partners contained in Article IV or
the failure by the WP Partners to perform and comply in any material respect
with any of the agreements and obligations required by this Agreement to be
performed or complied with by the WP Partners, provided that such breach or
failure is not cured within 30 days of the WP Partners' receipt of a written
notice from ▇▇▇▇▇▇▇ that such a breach or failure has occurred; or
(d) by the WP Partners, as a result of the breach in any material respect
of any of the representations and warranties of ▇▇▇▇▇▇▇ contained in Article V
or the failure by ▇▇▇▇▇▇▇ to perform and comply in any material respect with any
of the agreements and obligations required by this Agreement to be performed or
complied with by ▇▇▇▇▇▇▇, provided that such breach or failure is not cured
within 30 days of ▇▇▇▇▇▇▇'▇ receipt of a written notice from a WP Partner that
such a breach or failure has occurred.
11.2 WRITTEN NOTICE. In order to terminate this Agreement pursuant to
Section 11.1, the party so acting shall give written notice of such termination
to the other parties, specifying the grounds thereof.
11.3 EFFECT OF TERMINATION. In the event of the termination of this
Agreement in accordance with Section 11.1, this Agreement (other than Sections
6.6 and 12.1, which shall survive the termination hereof) shall become void and
have no effect, with no liability on the part of any party or its Affiliates,
directors, officers, employees, shareholders or agents in respect thereof;
PROVIDED, HOWEVER, that nothing in this Section 11.3 shall deprive the WP
Partners, on the one hand, and ▇▇▇▇▇▇▇, on the other, from bringing any Action
for breach of the Agreement by the other.
11.4 WAIVER. At any time prior to the Closing, ▇▇▇▇▇▇▇, on the one hand,
and the WP Partners, on the other hand, may (a) extend the time for the
performance of any of the obligations or other acts of the other party hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto or (c) waive compliance with
any of the agreements or conditions contained herein.
ARTICLE XII
GENERAL PROVISIONS
12.1 EXPENSES, TAXES, ETC. Except as otherwise provided herein or in any
Ancillary Agreement, in the event that the Closing occurs, Newco shall pay all
reasonable fees and expenses incurred by each party hereto in connection with
this Agreement, the Ancillary Agreements and the transactions contemplated
hereby. Except as otherwise provided herein or in any Ancillary Agreement, in
the event that the Closing does not occur, each party shall pay all such fees
and expenses incurred by it in connection with this Agreement, the Ancillary
Agreements and the transactions contemplated hereby and thereby; PROVIDED,
HOWEVER, that (a) the filing fee in connection with the HSR Act filing, (b) the
filing fee in connection with the
61
filing of the Form S-4 or Proxy Statement/Prospectus with the SEC, (c) the
expenses incurred in connection with printing and mailing the Form S-4 and the
Proxy Statement/Prospectus and (d) all sales, use, documentary, stamp and excise
Taxes and all transfer, filing, recordation and similar Taxes and fees
(including all real estate transfer Taxes and conveyance and recording fees, if
any) incurred by any party or the WP Entities in connection with this Agreement,
the Ancillary Agreements and the transactions contemplated hereby and thereby
will be borne equally by ▇▇▇▇▇▇▇, on the one hand, and the WP Partners, on the
other hand.
12.2 NOTICES. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
as of the date delivered or mailed if delivered personally or by recognized
overnight delivery service or mailed by registered or certified mail (postage
prepaid, return receipt requested), or sent by facsimile transmission
(confirmation received) to the parties at the following addresses and facsimile
transmission numbers (or at such other address or number for a party as shall be
specified by like notice), except that notices after the giving of which there
is a designated period within which to perform an act and notices of changes of
address or number shall be effective only upon receipt:
(a) if to the WP Partners:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
c/o Western Pacific Housing
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
AND
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
Apollo Real Estate Advisors
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
AND
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Blackacre WPH, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
62
AND
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to ▇▇▇▇▇▇▇:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ Homes, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
12.3 DISCLOSURE SCHEDULES. The WP Disclosure Schedule and the ▇▇▇▇▇▇▇
Disclosure Schedule shall be divided into sections corresponding to the sections
and subsections of this Agreement. Disclosure of any matter in either the WP
Disclosure Schedule or the ▇▇▇▇▇▇▇ Disclosure Schedule shall not be deemed to
imply that such matter is or is not material. Disclosure of any matter in the WP
Disclosure Schedule or the ▇▇▇▇▇▇▇ Disclosure Schedule shall not constitute an
admission or raise any inference that such matter constitutes a violation of law
or an admission of Liability or facts supporting Liability.
12.4 INTERPRETATION. (a) When a reference is made in this Agreement to
Sections, subsections, Schedules or Exhibits, such reference shall be to a
Section, subsection, Schedule or Exhibit to this Agreement unless otherwise
indicated. The words "include," "includes" and "including" when used herein
shall be deemed in each case to be followed by the words "without limitation."
The table of contents and the headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. The words "herein" and "hereby" and similar
references mean, except where a specific Section or Article reference is
expressly indicated, the entire Agreement rather than any specific Section or
Article. Except as otherwise expressly provided herein, all monetary amounts
referenced in this Agreement shall mean U.S. dollars. All capitalized terms
defined herein are equally applicable to both the singular and plural forms of
such terms.
(b) Any references in this Agreement to the "knowledge" of the WP Partners
and the WP Entities, or to matters "known" to the WP Partners and the WP
Entities, shall mean the actual knowledge without inquiry or investigation of
only the Persons listed on Schedule 12.4(a). Any references in this Agreement to
the "best knowledge" or "knowledge" of ▇▇▇▇▇▇▇
63
shall mean the actual knowledge without inquiry or investigation of only the
Persons listed on Schedule 12.4(b). Anything herein to the contrary
notwithstanding, no Person listed on any of such schedules shall have any
personal Liability with respect to any of the matters set forth in this
Agreement or any representation or warranty herein being or becoming untrue,
inaccurate or incomplete
12.5 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the greatest extent possible.
12.6 ASSIGNMENT. This Agreement may not be assigned by operation of law
or otherwise.
12.7 NO THIRD-PARTY BENEFICIARIES. This Agreement is for the sole benefit
of the parties hereto and their permitted assigns and nothing herein expressed
or implied shall give or be construed to give to any Person, other than the
parties hereto and such assigns, any legal or equitable rights or remedies
hereunder.
12.8 AMENDMENT. This Agreement may not be amended or modified except by an
instrument in writing signed by the WP Partners and ▇▇▇▇▇▇▇. In the case of
▇▇▇▇▇▇▇, such amendment may be made by action taken or authorized by ▇▇▇▇▇▇▇'▇
Board of Directors at any time before or after approval of the matters presented
in connection with the Reorganization by the stockholders of ▇▇▇▇▇▇▇, but after
any such approval, no amendment shall be made which by law requires further
approval by such stockholders without such further approval.
12.9 NO OTHER REMEDIES. Except as provided in Sections 11.3 and 12.13, any
and all remedies herein expressly conferred upon a party hereby are deemed
exclusive of any other remedy conferred hereby or by law or equity on such
party. In particular, the remedies provided by Article IX for Losses shall be
exclusive of any other rights or remedies available to a party against the other
party, either at law or in equity, in relation to any breach, default or
nonperformance of any representation, warranty, covenant, agreement or
undertaking made or entered into by such other party pursuant to this Agreement
or the transactions contemplated hereby. Notwithstanding any provision hereof,
neither party shall be liable hereunder to any ▇▇▇▇▇▇▇ Indemnified Party or WP
Partners Indemnified Party for any incidental or consequential damages, damages
for loss of profits or opportunities or exemplary or punitive damages,
regardless of the circumstances from which such damages arose.
12.10 FURTHER ASSURANCES. Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to evidence and
64
reflect the transactions described herein and contemplated hereby and to carry
into effect the intents and purposes of this Agreement.
12.11 MUTUAL DRAFTING. This Agreement is the joint product of ▇▇▇▇▇▇▇ and
the WP Partners and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of ▇▇▇▇▇▇▇ and the WP Partners and shall
not be construed for or against any party hereto.
12.12 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Delaware applicable to
agreements made and to be performed entirely within such State (without giving
effect to such State's choice of law principles).
12.13 DISPUTE RESOLUTION. Except as otherwise provided in Section 11.3, any
dispute, controversy or claim between the parties relating to, arising out of or
in connection with this Agreement (or any subsequent agreements or amendments
thereto), including as to its existence, enforceability, validity,
interpretation, performance or breach or as to indemnification or damages,
including claims in tort, whether arising before or after the termination of
this Agreement (any such dispute, controversy or claim being herein referred to
as a "Dispute"), shall be settled without litigation and only by use of the
following alternative dispute resolution procedure:
(a) At the written request of the WP Partners, on the one hand, or ▇▇▇▇▇▇▇,
on the other hand, each party shall appoint a knowledgeable, responsible
representative to meet and negotiate in good faith to resolve any Dispute. The
discussions shall be left to the discretion of the representatives. Upon
agreement, the representatives may utilize other alternative dispute resolution
procedures such as mediation to assist in the negotiations. Discussions and
correspondence among the parties' representatives for purposes of these
negotiations shall be treated as confidential information developed for the
purposes of settlement, exempt from discovery and production, and without the
concurrence of both parties shall not be admissible in the arbitration described
below or in any lawsuit. Documents identified in or provided with such
communications, which are not prepared for purposes of the negotiations, are not
so exempted and may, if otherwise admissible, be admitted in the arbitration.
(b) If negotiations between the representatives of the parties do not
resolve the Dispute within 60 days of the initial written request, the Dispute
shall be submitted to binding arbitration by a panel of three arbitrators (each
of which shall have at least ten years of experience in the industry in which
the WP Business operates or some material aspect thereof relating to the matter
subject to arbitration) pursuant to the Commercial Arbitration Rules, as then
amended and in effect, of the American Arbitration Association (the "Rules").
Any party may demand such arbitration in accordance with the procedures set out
in the Rules. The WP Partners and ▇▇▇▇▇▇▇ shall each select one arbitrator, and
the two arbitrators so selected shall select the third arbitrator. The
arbitration shall take place in San Francisco, California. The arbitration
hearing shall be commenced within 60 days of such party's demand for
arbitration. The arbitrators shall control the scheduling (so as to process the
matter expeditiously) and any discovery. The parties may submit written briefs.
At the arbitration hearing, each party may make written and oral presentations
to the arbitrators, present testimony and written evidence and
65
examine witnesses. No party shall be eligible to receive, and the arbitrators
shall not have the authority to award, incidental or consequential damages,
damages for loss of profits or opportunities or exemplary or punitive damages.
The arbitrators shall rule on the Dispute by issuing a written opinion within 30
days after the close of hearings. The arbitrators' decision shall be binding and
final. Judgment upon the award rendered by the arbitrators may be entered in any
court having jurisdiction.
(c) Each party will bear its own costs and expenses in submitting and
presenting its position with respect to any Dispute to the arbitrators. ▇▇▇▇▇▇▇,
on the one hand, and the WP Partners, on the other hand, shall pay one-half of
the fees and expenses of the arbitrators and the American Arbitration
Association.
(d) Notwithstanding any other provision of this Agreement, any party may
commence an Action to compel compliance with this Section 12.13.
12.14 CONSENT TO JURISDICTION; WAIVERS. Subject to Section 12.13, each of
the parties hereto irrevocably submits to the exclusive jurisdiction of (a) the
Delaware Chancery Court, and (b) the United States District Court for Delaware,
for the purposes of any Action arising out of this Agreement or any transaction
contemplated hereby. Each of the parties hereto agrees to commence any Action
relating hereto either in the United States District Court for Delaware or if
such Action may not be brought in such court for jurisdictional reasons, in the
Delaware Chancery Court. Each of the parties hereto further agrees that service
of any process, summons, notice or document by U.S. registered mail to such
party's respective address set forth in Section 12.2 shall be effective service
of process for any Action in Delaware with respect to any matters to which it
has submitted to jurisdiction in this Section 12.14. Each of the parties hereto
irrevocably and unconditionally waives any objection to the laying of venue of
any Action arising out of this Agreement or any transaction contemplated hereby
in (i) the Delaware Chancery Court, or (ii) the United States District Court for
Delaware, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such Action brought in any such
court has been brought in an inconvenient forum.
12.15 WAIVER OF JURY TRIAL. Each of the parties hereto irrevocably and
unconditionally waives trial by jury in any Action relating to this Agreement or
any transaction contemplated hereby, and for any counterclaim with respect
thereto.
12.16 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
12.17 ENTIRE AGREEMENT. This Agreement, together with all Schedules and
Exhibits hereto, and the documents and instruments and other agreements among
the parties delivered pursuant hereto, including the Ancillary Agreements,
constitute the entire agreement and supersede all prior agreements and
undertakings, both written and oral, other than the Confidentiality Agreement,
among the WP Partners and ▇▇▇▇▇▇▇ with respect to the subject matter hereof.
66
IN WITNESS WHEREOF, ▇▇▇▇▇▇▇ and the WP Partners have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
▇▇▇▇▇▇▇ HOMES, INC.,
a Delaware corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
APOLLO REAL ESTATE INVESTMENT FUND, L.P.,
a Delaware limited partnership
By: APOLLO REAL ESTATE ADVISORS, L.P.,
a Delaware limited partnership,
Its General Partner
By: APOLLO REAL ESTATE MANAGEMENT, INC.,
a Delaware corporation,
Its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its Vice President
BLACKACRE WPH, LLC,
a Delaware limited liability company
By: BLACKACRE CAPTIAL GROUP, L.P.,
a Delaware limited partnership,
Its Managing Member
By: BLACKACRE CAPTIAL MANAGEMENT CORP.
a Connecticut corporation,
Its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its Vice President
HIGHRIDGE PACIFIC HOUSING INVESTORS, L.P.,
a California limited partnership
By: WPH ACQUISITIONS, INC.,
a California corporation,
Its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Its CFO and Secretary
AP WP PARTNERS, L.P.,
a Delaware limited partnership
By: AP WP OPERATING CORPORATION,
a Delaware corporation,
Its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its Vice President
AP WESTERN GP CORPORATION,
a Delaware corporation
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
Name:
Title:
AP LHI, INC.,
a California corporation
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Its Vice President
LAMCO HOUSING, INC.
a California corporation
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Its Vice President