<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the period ended MARCH 31, 1998.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the transition period from N/A to N/A.
Commission File Number: 1-4785
DEL WEBB CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 86-0077724
(State or other jurisdiction (IRS Employer Identification Number)
of incorporation or organization)
6001 NORTH 24TH STREET, PHOENIX, ARIZONA 85016
(Address of principal executive offices) (Zip Code)
(602) 808-8000
(Registrant's phone number, including area code)
NONE
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ___
As of April 30, 1998 Registrant had outstanding 18,098,084 shares of common
stock.
<PAGE> 2
DEL WEBB CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED
MARCH 31, 1998
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements:
Consolidated Balance Sheets as of March 31, 1998,
June 30, 1997 and March 31, 1997............................ 1
Consolidated Statements of Earnings for the three and nine
months ended March 31, 1998 and 1997........................ 2
Consolidated Statements of Cash Flows for the nine
months ended March 31, 1998 and 1997........................ 3
Notes to Consolidated Financial Statements.................... 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................... 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings............................................. 18
Item 6. Exhibits and Reports on Form 8-K.............................. 18
<PAGE> 3
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, June 30, MARCH 31,
1998 1997 1997
(UNAUDITED) (UNAUDITED)
- -----------------------------------------------------------------------------------------------------------
ASSETS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Real estate inventories (Notes 2, 3 and 6) $ 1,107,277 $ 939,684 $ 948,151
Cash and short-term investments 13,746 24,715 15,387
Receivables 33,638 28,892 26,052
Property and equipment, net 32,990 20,937 21,073
Deferred income taxes (Note 4) -- 6,526 8,916
Income taxes receivable (Note 4) 2,029 -- --
Other assets (Note 7) 107,907 65,908 62,126
- -----------------------------------------------------------------------------------------------------------
$ 1,297,587 $ 1,086,662 $ 1,081,705
===========================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
- -----------------------------------------------------------------------------------------------------------
Notes payable, senior and subordinated debt (Note 3) $ 736,717 $ 563,068 $ 573,951
Contractor and trade accounts payable 74,205 70,827 70,429
Accrued liabilities and other payables 77,041 79,959 65,901
Home sale deposits 81,874 69,476 78,752
Deferred income taxes (Note 4) 116 -- --
Income taxes payable (Note 4) -- 3,502 5,355
- -----------------------------------------------------------------------------------------------------------
Total liabilities 969,953 786,832 794,388
- -----------------------------------------------------------------------------------------------------------
Shareholders' equity:
Common stock, $.001 par value. Authorized 30,000,000
shares; issued 18,035,966 shares at March 31, 1998,
17,691,118 shares at June 30, 1997 and 17,692,632 shares
at March 31, 1997 18 18 18
Additional paid-in capital 165,156 160,308 160,351
Retained earnings 168,173 145,922 133,480
- -----------------------------------------------------------------------------------------------------------
333,347 306,248 293,849
Less cost of common stock in treasury, 124,509 shares at
June 30, 1997 and 102,499 shares at March 31, 1997 -- (1,914) (1,580)
Less deferred compensation (5,713) (4,504) (4,952)
- -----------------------------------------------------------------------------------------------------------
Total shareholders' equity 327,634 299,830 287,317
- -----------------------------------------------------------------------------------------------------------
$ 1,297,587 $ 1,086,662 $ 1,081,705
===========================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE> 4
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
- -------------------------------------------------------------------------------------------
1998 1997 1998 1997
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues (Note 5) $254,714 $280,317 $781,692 $838,294
- -------------------------------------------------------------------------------------------
Costs and expenses (Note 5):
Home construction, land and other 194,644 213,373 596,625 644,212
Interest (Note 6) 9,473 12,398 31,472 35,680
Selling, general and administrative 38,847 39,584 114,672 117,204
- -------------------------------------------------------------------------------------------
242,964 265,355 742,769 797,096
- -------------------------------------------------------------------------------------------
Earnings before income taxes and
extraordinary item 11,750 14,962 38,923 41,198
Income taxes (Note 4) 4,230 5,386 14,012 14,831
- -------------------------------------------------------------------------------------------
Earnings before extraordinary item 7,520 9,576 24,911 26,367
Extraordinary item:
Loss from extinguishment of debt
(net of tax) -- 1,285 -- 1,285
- -------------------------------------------------------------------------------------------
Net earnings $ 7,520 $ 8,291 $ 24,911 $ 25,082
===========================================================================================
Weighted average shares outstanding 17,890 17,630 17,740 17,584
===========================================================================================
Weighted average shares outstanding -
assuming dilution 18,749 17,884 18,350 17,888
===========================================================================================
Net earnings per share:
Earnings before extraordinary item $ .42 $ .54 $ 1.40 $ 1.50
Extraordinary item -- .07 -- .07
- -------------------------------------------------------------------------------------------
$ .42 $ .47 $ 1.40 $ 1.43
===========================================================================================
Net earnings per share - assuming dilution:
Earnings before extraordinary item $ .40 $ .54 $ 1.36 $ 1.47
Extraordinary item -- .07 -- .07
- -------------------------------------------------------------------------------------------
$ .40 $ .46 $ 1.36 $ 1.40
===========================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 5
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
- -----------------------------------------------------------------------------------------------------
1998 1997
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers related to community home sales $ 587,147 $ 613,483
Cash received from commercial land and facility sales 21,063 8,217
Cash paid for costs related to community home construction (383,293) (429,777)
- -----------------------------------------------------------------------------------------------------
Net cash provided by community sales activities 224,917 191,923
Cash paid for land acquisitions at operating communities (14,687) (6,334)
Cash paid for lot development at operating communities (77,033) (70,288)
Cash paid for amenity development at operating communities (34,868) (41,915)
- -----------------------------------------------------------------------------------------------------
Net cash provided by operating communities 98,329 73,386
Cash paid for costs related to communities in the pre-operating stage (107,493) (63,090)
Cash received from customers related to conventional homebuilding 165,259 178,092
Cash paid for land, development, construction and other costs related to
conventional homebuilding (161,158) (163,097)
Cash received from residential land development project 4,649 5,717
Cash paid for corporate activities (47,092) (33,465)
Interest paid (46,340) (42,199)
Cash paid for income taxes (11,587) (8,672)
- -----------------------------------------------------------------------------------------------------
NET CASH USED FOR OPERATING ACTIVITIES (105,433) (53,328)
- -----------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (15,038) (2,396)
Investments in life insurance policies (2,749) (1,505)
- -----------------------------------------------------------------------------------------------------
NET CASH USED FOR INVESTING ACTIVITIES (17,787) (3,901)
- -----------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings 297,035 478,865
Repayments of debt (186,986) (421,324)
Proceeds from exercise of common stock options 4,869 1,077
Stock repurchases (8) (1,708)
Dividends paid (2,659) (2,634)
- -----------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 112,251 54,276
- -----------------------------------------------------------------------------------------------------
NET DECREASE IN CASH AND SHORT-TERM INVESTMENTS (10,969) (2,953)
CASH AND SHORT-TERM INVESTMENTS AT BEGINNING OF PERIOD 24,715 18,340
- -----------------------------------------------------------------------------------------------------
CASH AND SHORT-TERM INVESTMENTS AT END OF PERIOD $ 13,746 $ 15,387
=====================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 6
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
- ----------------------------------------------------------------------------------------------------------
1998 1997
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Reconciliation of net earnings to net cash used for operating activities:
Net earnings $ 24,911 $ 25,082
Allocation of non-cash common costs in costs and expenses, excluding interest 183,050 190,215
Amortization of capitalized interest in costs and expenses 31,472 35,680
Deferred compensation amortization 1,359 1,321
Depreciation and other amortization 4,623 4,736
Deferred income taxes on earnings before extraordinary item 6,639 3,696
Extraordinary loss from extinguishment of debt (net of tax) -- 1,285
Net increase in home construction costs (17,497) (33,475)
Land acquisitions (70,509) (27,198)
Lot development (131,782) (111,400)
Amenity development (62,953) (72,048)
Pre-acquisition costs (13,676) (17,694)
Net change in other assets and liabilities (61,070) (53,528)
- ----------------------------------------------------------------------------------------------------------
Net cash used for operating activities $(105,433) $ (53,328)
==========================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 7
DEL WEBB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Del Webb
Corporation and its subsidiaries ("Company"). In the opinion of
management, the accompanying unaudited consolidated financial statements
contain all adjustments (consisting of only normal recurring adjustments,
primarily eliminations of all significant intercompany transactions and
accounts) necessary to present fairly the financial position, results of
operations and cash flows for the periods presented.
The Company develops residential communities ranging from small-scale,
non-amenitized communities within its conventional homebuilding operations
to large-scale, master-planned communities with extensive amenities. The
Company currently conducts its operations in Arizona, California, Florida,
Illinois, Nevada, South Carolina and Texas. The Company's primary
activities involve the development of large-scale, master-planned
communities with extensive amenities for active adults age 55 and over.
The Company designs, develops and markets these communities, controlling
all phases of the master plan development process from land selection
through the construction and sale of homes. Within its communities, the
Company is usually the exclusive builder of homes.
These consolidated financial statements should be read in conjunction with
the consolidated financial statements and the related disclosures
contained in the Company's Annual Report on Form 10-K for the year ended
June 30, 1997, filed with the Securities and Exchange Commission.
In the Consolidated Statements of Cash Flows, the Company defines
operating communities as communities generating revenues from home
closings. Communities in the pre-operating stage are those not yet
generating revenues from home closings.
The results of operations for the three and nine months ended March 31,
1998 are not necessarily indicative of the results to be expected for the
full fiscal year.
5
<PAGE> 8
DEL WEBB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(2) REAL ESTATE INVENTORIES
The components of real estate inventories are as follows:
<TABLE>
<CAPTION>
In Thousands
- --------------------------------------------------------------------------------------------
March 31, June 30, March 31,
1998 1997 1997
(Unaudited) (Unaudited)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Home construction costs $ 199,515 $ 182,018 $ 211,275
Unamortized improvement and amenity costs 574,560 489,142 487,905
Unamortized capitalized interest 57,785 46,121 46,054
Land held for housing 245,556 174,930 155,430
Land and facilities held for future development or
sale 29,861 47,473 47,487
- --------------------------------------------------------------------------------------------
$1,107,277 $ 939,684 $ 948,151
============================================================================================
</TABLE>
At March 31, 1998 the Company had 479 completed homes and 680 homes under
construction that were not subject to a sales contract. These homes
represented $54.7 million of home construction costs at March 31, 1998. At
March 31, 1997 the Company had 352 completed homes and 730 homes under
construction (representing $47.0 million of home construction costs) that
were not subject to a sales contract.
Included in land and facilities held for future development or sale at
March 31, 1998 were 207 acres of residential land, commercial land and
worship sites that are currently being marketed for sale at the Company's
communities and conventional homebuilding operations.
During the nine months ended March 31, 1998, the Company acquired the
initial portions of land for (i) a planned active adult community in the
Chicago area town of Huntley, Illinois, (ii) a planned large-scale
master-planned community in the southern Las Vegas valley and (iii) a
planned smaller-scale, less-amenitized community in northern California.
Accordingly, capitalized pre-acquisition costs previously classified as
other assets for these communities are now classified as part of real
estate inventories.
In January 1998 the Company acquired certain assets and assumed certain
liabilities at two operating age-restricted communities in central Florida
for a total purchase price of approximately $45 million. The two
communities had approximately 2,600 homes remaining to be constructed and
closed as of the date of acquisition.
At Sun City Palm Desert, the Company has decided to move forward with
development of a portion of a second phase at that community. This portion
is planned for an additional 1,000 homes.
6
<PAGE> 9
DEL WEBB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3) NOTES PAYABLE, SENIOR AND SUBORDINATED DEBT
Notes payable, senior and subordinated debt consists of the following:
<TABLE>
<CAPTION>
In Thousands
- ---------------------------------------------------------------------------------------
March 31, June 30, March 31,
1998 1997 1997
(Unaudited) (Unaudited)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
9 3/4% Senior Subordinated Debentures due 2003, net $ 97,978 $ 97,670 $ 97,567
9% Senior Subordinated Debentures due 2006, net 97,834 97,628 97,560
9 3/4% Senior Subordinated Debentures due 2008, net 145,249 144,889 144,855
Notes payable to banks under a revolving credit
facility and short-term lines of credit 311,000 185,990 205,000
Real estate and other notes 84,656 36,891 28,969
- ---------------------------------------------------------------------------------------
$736,717 $563,068 $573,951
=======================================================================================
</TABLE>
In January 1998 the amount of the Company's senior unsecured revolving
credit facility was increased from $350 million to $400 million.
At March 31, 1998 the Company had $288.0 million outstanding under its
$400 million senior unsecured revolving credit facility and $23.0 million
outstanding under its $25 million of short-term lines of credit. In May
1998 the Company completed a public offering of $200 million in principal
amount of 9 3/8% Senior Subordinated Debentures due 2009. The
approximately $195 million of net proceeds of the offering were used to
reduce the amount outstanding under the revolving credit facility. After
giving effect to this use of proceeds, as of March 31, 1998, the Company
would have had the capacity to borrow $55.0 million under the credit
facility and short term lines of credit under then-existing covenants. The
Company is negotiating an amendment to the credit facility to revise
certain debt-related covenants and increase the amount of the credit
facility to $450 million, all of which would be available to borrow,
subject to compliance by the Company with the revised covenants.
At March 31, 1998, under the most restrictive of the covenants in the
Company's debt agreements, $14.5 million of the Company's retained
earnings was available for payment of cash dividends and for the
acquisition by the Company of its common stock.
7
<PAGE> 10
DEL WEBB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(4) INCOME TAXES
The components of income taxes are:
<TABLE>
<CAPTION>
In Thousands
(Unaudited)
- --------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
1998 1997 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Current:
Federal $ (613) $ 3,954 $ 6,962 $ 9,357
State (269) 454 411 1,778
- --------------------------------------------------------------------------------
(882) 4,408 7,373 11,135
- --------------------------------------------------------------------------------
Deferred:
Federal 4,756 1,593 6,069 3,956
State 356 (615) 570 (260)
- --------------------------------------------------------------------------------
5,112 978 6,639 3,696
- --------------------------------------------------------------------------------
$ 4,230 $ 5,386 $ 14,012 $ 14,831
================================================================================
</TABLE>
8
<PAGE> 11
DEL WEBB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(5) REVENUES AND COSTS AND EXPENSES
The components of revenues and costs and expenses are:
<TABLE>
<CAPTION>
In Thousands
(Unaudited)
- ---------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Homebuilding:
Communities $186,828 $220,728 $582,512 $633,713
Conventional 48,265 53,289 150,491 166,013
- ---------------------------------------------------------------------------------------------------
Total homebuilding 235,093 274,017 733,003 799,726
Land and facility sales 17,213 3,827 41,344 30,061
Other 2,408 2,473 7,345 8,507
- ---------------------------------------------------------------------------------------------------
$254,714 $280,317 $781,692 $838,294
===================================================================================================
Costs and expenses:
Home construction and land:
Communities $137,585 $164,449 $436,638 $476,625
Conventional 39,901 45,694 125,802 140,441
- ---------------------------------------------------------------------------------------------------
Total homebuilding 177,486 210,143 562,440 617,066
Cost of land and facility sales 16,252 2,690 32,040 24,751
Other cost of sales 906 540 2,145 2,395
- ---------------------------------------------------------------------------------------------------
Total home construction, land and other 194,644 213,373 596,625 644,212
Interest 9,473 12,398 31,472 35,680
Selling, general and administrative 38,847 39,584 114,672 117,204
- ---------------------------------------------------------------------------------------------------
$242,964 $265,355 $742,769 $797,096
===================================================================================================
</TABLE>
9
<PAGE> 12
DEL WEBB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(6) INTEREST
The following table shows the components of interest:
<TABLE>
In Thousands
(Unaudited)
- ------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
- ------------------------------------------------------------------------------------
1998 1997 1998 1997
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest incurred and capitalized $17,133 $13,086 $43,136 $38,073
====================================================================================
Amortization of capitalized interest
in costs and expenses $ 9,473 $12,398 $31,472 $35,680
====================================================================================
Unamortized capitalized interest in real
estate inventories at period end $57,785 $46,054
====================================================================================
Interest income $ 206 $ 369 $ 761 $ 1,166
====================================================================================
</TABLE>
Interest income is included in other revenues.
(7) OTHER ASSETS
Other assets are summarized as follows:
<TABLE>
<CAPTION>
In Thousands
- ------------------------------------------------------------------------------------
March 31, June 30, March 31,
1998 1997 1997
(Unaudited) (Unaudited)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pre-acquisition costs $ 50,721 $ 30,876 $ 28,199
Cash surrender values of life insurance policies 22,635 20,083 17,355
Prepaid expenses, deposits and other 34,551 14,949 16,572
- ------------------------------------------------------------------------------------
$107,907 $ 65,908 $ 62,126
====================================================================================
</TABLE>
Substantially all of pre-acquisition costs at March 31, 1998 consists of
costs incurred for the acquisition of an environmentally-sensitive
property by the Company for the purpose of exchanging the property with
the United States Bureau of Land Management for property in the Las Vegas
area for property to be included in the Company's Anthem Las Vegas
Project, substantially all of which would be for Sun City Anthem. Any
exchange is subject to regulatory approvals and other conditions. If an
exchange is effected, these costs will be reclassified to be part of real
estate inventories.
Cash surrender values of life insurance policies relate to policies
acquired in connection with certain executive benefit plans.
10
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion of the results of operations and financial condition
should be read in conjunction with the accompanying consolidated financial
statements and notes thereto and the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1997, filed with the Securities and Exchange
Commission.
CERTAIN CONSOLIDATED FINANCIAL AND OPERATING DATA
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED CHANGE ENDED CHANGE
MARCH 31, MARCH 31,
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 AMOUNT PERCENT 1998 1997 AMOUNT PERCENT
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA :
Number of net new orders:(1)
Sun Cities Phoenix(2) 393 372 21 5.6% 927 994 (67) (6.7%)
Sun Cities Las Vegas(3) 308 272 36 13.2% 826 751 75 10.0%
Sun City Palm Desert 162 118 44 37.3% 315 183 132 72.1%
Sun City Roseville 196 153 43 28.1% 509 347 162 46.7%
Sun City Hilton Head 103 92 11 12.0% 273 228 45 19.7%
Sun City Georgetown 118 132 (14) (10.6%) 311 325 (14) (4.3%)
Florida communities(4) 122 N/A 122 N/A 122 N/A 122 N/A
Other communities(5) 99 N/A 99 N/A 172 N/A 172 N/A
Coventry Homes 432 335 97 29.0% 983 849 134 15.8%
- ------------------------------------------------------------------------------------------------------------------------------------
Total current communities 1,933 1,474 459 31.1% 4,438 3,677 761 20.7%
Completed operations:
Sun City Tucson(6) N/A 20 (20) (100.0%) N/A 58 (58) (100.0%)
Terravita(7) 1 89 (88) (98.9%) N/A 192 (192) (100.0%)
Coventry Homes - So. California(8) N/A 55 (55) (100.0%) N/A 152 (152) (100.0%)
- ------------------------------------------------------------------------------------------------------------------------------------
Total 1,934 1,638 296 18.1% 4,438 4,079 359 8.8%
====================================================================================================================================
Number of home closings:
Sun Cities Phoenix(2) 292 271 21 7.7% 913 769 144 18.7%
Sun Cities Las Vegas(3) 241 277 (36) (13.0%) 772 808 (36) (4.5%)
Sun City Palm Desert 84 69 15 21.7% 202 162 40 24.7%
Sun City Roseville 147 118 29 24.6% 420 446 (26) (5.8%)
Sun City Hilton Head 90 105 (15) (14.3%) 270 290 (20) (6.9%)
Sun City Georgetown 75 151 (76) (50.3%) 298 438 (140) (32.0%)
Florida communities(4) 71 N/A 71 N/A 71 N/A 71 N/A
Other communities(5) 5 N/A 5 N/A 5 N/A 5 N/A
Coventry Homes 259 277 (18) (6.5%) 825 914 (89) (9.7%)
- ------------------------------------------------------------------------------------------------------------------------------------
Total current communities 1,264 1,268 (4) (0.3%) 3,776 3,827 (51) (1.3%)
Completed operations:
Sun City Tucson(6) N/A 23 (23) (100.0%) N/A 102 (102) (100.0%)
Terravita(7) 6 120 (114) (95.0%) 118 307 (189) (61.6%)
Coventry Homes - So. California(8) N/A 56 (56) (100.0%) 20 126 (106) (84.1%)
- ------------------------------------------------------------------------------------------------------------------------------------
Total 1,270 1,467 (197) (13.4%) 3,914 4,362 (448) (10.3%)
====================================================================================================================================
</TABLE>
11
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
CERTAIN CONSOLIDATED FINANCIAL AND OPERATING DATA (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED CHANGE ENDED CHANGE
MARCH 31, MARCH 31,
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 AMOUNT PERCENT 1998 1997 AMOUNT PERCENT
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BACKLOG DATA:
Homes under contract at March 31:
Sun Cities Phoenix(2) 706 778 (72) (9.3%)
Sun Cities Las Vegas(3) 587 585 2 0.3%
Sun City Palm Desert 239 133 106 79.7%
Sun City Roseville 369 278 91 32.7%
Sun City Hilton Head 162 131 31 23.7%
Sun City Georgetown 215 265 (50) (18.9%)
Florida communities(4) 256 N/A 256 N/A
Other communities(5) 167 N/A 167 N/A
Coventry Homes 616 507 109 21.5%
- ------------------------------------------------------------------------------------
Total current communities 3,317 2,677 640 23.9%
Completed operations:
Sun City Tucson(6) N/A 1 (1) (100.0%)
Terravita(7) 2 189 (187) (98.9%)
Coventry Homes - So. California(8) N/A 49 (49) (100.0%)
- ------------------------------------------------------------------------------------
Total(9) 3,319 2,916 403 13.8%
====================================================================================
Aggregate contract sales amount
(dollars in millions) $ 663 $ 566 $ 97 17.1%
====================================================================================
Average contract sales amount per
home (dollars in thousands) $ 200 $ 194 $ 6 3.1%
====================================================================================
AVERAGE REVENUE PER HOME
CLOSING :
Sun Cities Phoenix(2) $ 158,500 $ 163,700 $ (5,200) (3.2%) $ 157,800 $ 161,900 $ (4,100) (2.5%)
Sun Cities Las Vegas(3) 200,300 184,100 16,200 8.8% 198,600 179,500 19,100 10.6%
Sun City Palm Desert 228,000 232,600 (4,600) (2.0%) 228,500 225,600 2,900 1.3%
Sun City Roseville 224,500 221,700 2,800 1.3% 214,700 210,600 4,100 1.9%
Sun City Hilton Head 173,100 174,500 (1,400) (0.8%) 169,300 165,900 3,400 2.0%
Sun City Georgetown 195,800 176,500 19,300 10.9% 198,700 180,300 18,400 10.2%
Florida Communities(4) 97,900 N/A N/A N/A 97,900 N/A N/A N/A
Other Communities(5) 130,000 N/A N/A N/A 130,000 N/A N/A N/A
Coventry Homes 186,400 149,200 37,200 24.9% 177,900 151,000 26,900 17.8%
Weighted average current
communities 184,200 176,600 7,600 4.3% 183,500 173,800 9,700 5.6%
Completed operations:
Sun City Tucson(6) N/A 164,200 N/A N/A N/A 167,100 N/A N/A
Terravita(7) 379,300 286,800 92,500 32.3% 307,000 291,800 15,200 5.2%
Coventry Homes - So. California(8) N/A 213,400 N/A N/A 186,600 222,000 (35,400) (15.9%)
Total weighted average 185,100 186,800 (1,700) (0.9%) 187,300 183,300 4,000 2.2%
====================================================================================================================================
</TABLE>
12
<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
CERTAIN CONSOLIDATED FINANCIAL AND OPERATING DATA (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED CHANGE ENDED CHANGE
MARCH 31, MARCH 31,
- -----------------------------------------------------------------------------------------------------------------------------
1998 1997 AMOUNT PERCENT 1998 1997 AMOUNT PERCENT
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING STATISTICS:
Costs and expenses as a percentage of revenues:
Home construction, land and other 76.4% 76.1% 0.3% 0.4% 76.3% 76.8% (0.5%) (0.7%)
Interest 3.7% 4.4% (0.7%) (15.9%) 4.0% 4.3% (0.3%) (7.0%)
Selling, general and administrative 15.3% 14.1% 1.2% 8.5% 14.7% 14.0% 0.7% 5.0%
Ratio of home closings to homes
under contract in backlog at
beginning of period 51.8% 53.4% (1.6%) (3.0%) 151.1% 136.4% 14.7% 10.8%
============================================================================================================================
</TABLE>
1 Net of cancellations. The Company recognizes revenue at close of escrow.
2 Includes Sun City West and Sun City Grand. The Company began taking new
home sales orders at Sun City Grand in October 1996. Home closings began
at Sun City Grand in February 1997.
3 Includes Sun City Summerlin and Sun City MacDonald Ranch.
4 In January 1998 the Company acquired certain assets and assumed certain
liabilities at two operating age-restricted communities in central
Florida. Included in this acquisition was a backlog of 205 homes at these
two communities at the date of acquisition.
5 Represents three smaller-scale communities in Arizona and California at
which net new order activity began in the nine months ended March 31,
1998. Home closings also began at one of these communities in March 1998.
6 The Company completed net new order activity at Sun City Tucson in
February 1997. Home closings at Sun City Tucson were completed in April
1997.
7 The Company completed net new order activity at Terravita in April 1997.
Home closings at Terravita were virtually complete at March 31, 1998.
8 The Company completed net new order activity for its Coventry Homes
southern California operations in June 1997. Home closings for these
operations were completed in August 1997.
9 A majority of the backlog at March 31, 1998 is currently anticipated to
result in revenues in the next 12 months. However, a majority of the
backlog is contingent primarily upon the availability of financing for the
customer and, in certain cases, sale of the customer's existing residence
or other factors. Also, as a practical matter, the Company's ability to
obtain damages for breach of contract by a potential home buyer is limited
to retaining all or a portion of the deposit received. In the nine months
ended March 31, 1998 and 1997, cancellations of home sales orders as a
percentage of new home sales orders written during the period were 14.2
percent and 17.5 percent, respectively. See "Forward Looking Information;
Certain Cautionary Statements."
13
<PAGE> 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
REVENUES. Revenues decreased to $254.7 million for the three months ended March
31, 1998 from $280.3 million for the three months ended March 31, 1997,
primarily from a decrease in home closings. This decrease in home closings and
the resulting decrease in net earnings were primarily due to a lower beginning
backlog and to decreased home closings at Terravita, Coventry Homes' southern
California operations and Sun City Tucson, reflecting the completion of those
operations.
HOME CONSTRUCTION, LAND AND OTHER COSTS. The decrease in home construction, land
and other costs to $194.6 million for the 1998 quarter compared to $213.4
million for the 1997 quarter was primarily due to the decrease in home closings.
These costs as a percentage of revenues increased to 76.4 percent for the 1998
quarter compared to 76.1 percent for the 1997 quarter. The increase was
primarily due to a large, low-margin land sale at Coventry Homes' Phoenix
operations in the 1998 quarter, partially offset by a higher profit margin on
home closings resulting from a change in mix of product and home closings among
the Company's communities and conventional home building operations.
INTEREST. As a percentage of revenues, amortization of capitalized interest was
3.7 percent for the 1998 quarter compared to 4.4 percent for the 1997 quarter.
This decrease was primarily due to an increase in pre-operating communities, at
which interest is being capitalized on qualified assets but at which interest
amortization on home closings has not yet begun.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. As a percentage of revenues,
selling, general and administrative expenses increased to 15.3 percent for the
1998 quarter compared to 14.1 percent for the 1997 quarter. This increase
resulted primarily from spreading relatively fixed overhead over lower revenues.
NET NEW ORDER ACTIVITY AND BACKLOG. Total net new orders in the 1998 quarter
were 18.1 percent higher than in the 1997 quarter. Net new orders at operations
that were selling homes in the third quarter of both fiscal 1998 and fiscal 1997
increased 16.1 percent.
The increase in total net new orders was largely due to the commencement of
Florida community operations in January 1998 and net new order activity at three
smaller-scale communities in Arizona and California in the current fiscal year.
These increases were partially offset by declines attributable to the recently
completed operations of Terravita, Coventry Homes' southern California
operations and Sun City Tucson.
The increase in net new orders at operations that were selling homes in the
third quarter of both fiscal 1998 and fiscal 1997 was largely due to increases
at Sun City Roseville and Sun City Palm Desert, which management believes may
indicate continued improvement in the California real estate economy. In
addition, both of these California communities benefited from the introduction
of new product offerings, which management believes had a positive impact on new
orders. Management believes that the increase in net new orders at the Sun
Cities Las Vegas is due to the continued strength of the Las Vegas market. At
Sun City Hilton Head, management believes that the increase in net new orders
may be partially due to the fact that important commercial and service-related
businesses have announced development plans for the area adjacent to Sun City
Hilton Head. Coventry Homes' net new orders increased as a result of increases
in Phoenix and Las Vegas.
The number of homes under contract at March 31, 1998 was 13.8 percent higher
than at March 31, 1997. Management believes that this backlog increase was
largely due to the same factors that produced the increase in net new orders.
Backlog decreases also were experienced at the Sun Cities Phoenix (where Sun
City West is approaching completion) and Sun City Georgetown (where sales have
leveled after satisfaction of initial local pent-up demand).
14
<PAGE> 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
NINE MONTHS ENDED MARCH 31, 1998 AND 1997
REVENUES. Revenues decreased to $781.7 million for the nine months ended March
31, 1998 from $838.3 million for the nine months ended March 31, 1997. This
decrease was due to the decreased closings at Terravita, Coventry Homes'
southern California operations and Sun City Tucson, reflecting the completion of
those operations.
HOME CONSTRUCTION, LAND AND OTHER COSTS. The decrease in home construction, land
and other costs to $596.6 million for the 1998 period compared to $644.2 million
for the 1997 period was primarily due to the decrease in home closings. These
costs as a percentage of revenues decreased to 76.3 percent for the 1998 period
compared to 76.8 percent for the 1997 period, with the decrease primarily due to
improved margins on land and facility sales. The improved margins on land and
facility sales were primarily due to the declining volume of lower-margin land
sales at a subtantially complete residential land development project in
Phoenix.
INTEREST. As a percentage of revenues, amortization of capitalized interest was
4.0 percent for the 1998 period compared to 4.3 percent for the 1997 period.
This decrease resulted primarily from the same factors that produced the
decrease for the three-month period.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. As a percentage of revenues,
selling, general and administrative expenses increased to 14.7 percent for the
1998 period compared to 14.0 percent for the 1997 period. This increase resulted
primarily from the same factors that produced the increase for the three-month
period.
NET NEW ORDER ACTIVITY AND BACKLOG. Total net new orders in the 1998 period were
8.8 percent higher than in the 1997 period. Net new orders at operations that
were selling homes in both the 1998 and 1997 periods increased 12.7 percent. The
number of homes under contract at March 31, 1998 was 13.8 percent higher than at
March 31,1997. See "Three Months Ended March 31, 1998 and 1997 -- Net New Order
Activity and Backlog."
LIQUIDITY AND FINANCIAL CONDITION OF THE COMPANY
In January 1998 the Company acquired certain assets and assumed certain
liabilities at two operating age-restricted communities in central Florida for a
total purchase price of approximately $45 million, which was funded by
borrowings under its $400 million senior unsecured revolving credit facility
(the "Credit Facility"). Also in January 1998, the amount of the Credit Facility
was increased from $350 million to $400 million.
The cash flow for each of the Company's communities can differ substantially
from reported earnings, depending on the status of the development cycle. The
initial years of development or expansion require significant cash outlays for,
among other things, land acquisition, obtaining master plan and other approvals,
construction of amenities (including golf courses and recreation centers), model
homes, sales and administration facilities, major roads, utilities, general
landscaping and interest. Since these costs are capitalized, this can result in
income reported for financial statement purposes during those initial years
significantly exceeding cash flow. However, after the initial years of
development or expansion, when these expenditures are made, cash flow can
significantly exceed earnings reported for financial statement purposes, as
costs and expenses include amortization charges for substantial amounts of
previously expended costs.
During the nine months ended March 31, 1998 the Company generated $224.9 million
of net cash from community sales activities, used $126.6 million of cash for
land and lot and amenity development at operating communities, paid $107.5
million for costs related to communities in the pre-operating stage, generated
$4.1 million of net cash from conventional homebuilding operations and used
$100.3 million of cash for other operating activities. The resulting $105.4
million of net cash used for operating activities (which was primarily
attributable to expenditures for communities not yet generating home sales
revenues) was funded mainly through utilization of cash and short-term
investments existing at the beginning of the period and from borrowings under
the Company's senior unsecured revolving credit facility.
15
<PAGE> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
At March 31, 1998 the Company had $13.7 million of cash and short-term
investments, $288.0 million outstanding under the Credit Facility and $23.0
million outstanding under its $25 million of short-term lines of credit. Under
existing covenants, the Company had the ability to borrow an additional $59.8
million of the available capacity at March 31, 1998 under the Credit Facility
and short-term lines of credit.
At March 31, 1998, under the most restrictive of the covenants in the Company's
debt agreements, $14.5 million of the Company's retained earnings was available
for payment of cash dividends and for the acquisition by the Company of its
common stock.
In May 1998 the Company completed a public offering of $200 million in principal
amount of 9 3/8% Senior Subordinated Debentures due 2009 (the "Offering").
The approximately $195 million of net proceeds from the Offering were used to
repay a portion of the amounts outstanding under the Credit Facility. After
giving effect to this use of proceeds, as of March 31, 1998 the Company would
have had the capacity to borrow $55.0 million under the credit facility and
short term lines of credit under then-existing covenants.
The Company is currently experiencing a period of substantial growth and has
under development, among other projects: (i) Sun City Lincoln Hills, planned as
the successor to Sun City Roseville; (ii) Anthem Las Vegas, which will include
Sun City Anthem (planned as the successor to Sun City Summerlin), Anthem Country
Club (a non-age-restricted golf course community) and a conventional home
building component (Coventry Anthem); (iii) Anthem Phoenix, planned to include a
non-age-restricted country club community and a conventional home building
component and which may also include an active adult community at a later date;
and (iv) Sun City at Huntley, located in Huntley, Illinois (near Chicago).
In periods of significant growth, such as the Company is now experiencing, the
Company will require significant additional capital resources, whether from
issuances of equity or by incurring additional indebtedness. The Company
currently anticipates that it will require material additional capital resources
for these communities.
The Company is negotiating an amendment to the credit facility to revise certain
debt-related covenants and increase the amount of the credit facility to $450
million, all of which would be available, subject to compliance by the Company
with the revised covenants. If, however, the amendment negotiations are not
successfully concluded and the Company cannot obtain sufficient capital from
other sources to fund its development and expansion expenditures, its projects
may be delayed, possibly as early as the first quarter of fiscal 1999, resulting
in cost increases and adverse effects on the Company's results of operations.
While, based upon the negotiations to date, the Company believes an amendment
will be obtained, no assurance can be given as to whether any such amendment
will be available to the Company, as to the terms on which it might be available
or as to the availability or cost of any future financing.
As a result of the Offering and anticipated future borrowings under the Credit
Facility, the Company expects to be more highly leveraged than it has been in
recent years. The Company's degree of leverage from time to time will affect its
interest incurred and capital resources, which could limit its ability to
capitalize on business opportunities or withstand adverse changes. If the
Company is at any time unable to service its debt, refinancing or obtaining
additional financing may be required and may not be available or available on
terms acceptable to the Company.
16
<PAGE> 19
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
FORWARD LOOKING INFORMATION; CERTAIN CAUTIONARY STATEMENTS
Certain statements contained in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations" section that are not historical
results are forward looking statements. These forward looking statements involve
risks and uncertainties including, but not limited to, risks associated with
financing and leverage, the development of future communities and new geographic
markets, governmental regulation, including land exchanges with governmental
entities, environmental considerations, competition, the geographic
concentration of the Company's operations, the cyclical nature of real estate
operations and other conditions generally, fluctuations in labor and material
costs, natural risks that exist in certain of the Company's market areas and
other matters set forth in the Company's Form 10-K for the year ended June 30,
1997. Actual results may differ materially from those projected or implied.
Further, certain forward looking statements are based upon assumptions of future
events, which may not prove to be accurate.
YEAR 2000 ISSUE
The year 2000 issue is the result of computer programs being written using two
digits (rather than four) to define the applicable year. Computer programs that
have time-sensitive software may not recognize dates beginning in the year 2000,
which could result in miscalculations or system failures. The large majority of
the computer software used by the Company is already year 2000 compliant. The
Company is currently working to resolve any remaining potential impact of the
year 2000 on the processing of date-sensitive information by the Company's
computerized information systems. Based on current information, the costs of
addressing potential problems are not expected to have a material adverse impact
on the Company's financial position, results of operations or cash flows in
future periods. However, the failure of the Company, its contractors, suppliers
or financial institutions to resolve the year 2000 issue in a timely manner
could result in a material financial risk. The Company is assessing the effect
of a failure of its contractors, suppliers or financial institutions to
adequately address the year 2000 issue.
17
<PAGE> 20
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In December 1997 a lawsuit was filed by eight Terravita residents, individually
and, purportedly, on behalf of an alleged class consisting of all Terravita
residents. The complaint principally arises from disagreements over the value
of the Terravita golf course (and related assets) and representations allegedly
made relating to operation of the golf club and the Terravita community. The
Company has reached a settlement agreement with certain of the named plaintiffs,
which is subject to court approval, and management of the Company believes that
the disagreements are likely to be resolved, perhaps by June 30, 1998, without
any material adverse financial impact. Certain class members have opted out of
the proposed settlement and objections to the settlement have been filed with
the court. There can be no assurance that the settlement agreement will be
approved by the court, that the disagreements will be resolved by June 30, 1998
or that class members opting out of a completed settlement will not file
litigation seeking damages. The Company believes it has meritorious defenses to
all claims and will vigorously defend any such litigation that is brought.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 10.2 Fifth Amendment to Amended and Restated
Revolving Loan Agreement, entered into as of October
1, 1997 by and among Del Webb Corporation and Bank of
America National Trust and Savings Association as
Agent, and Bank One Arizona, NA, as Co-Agent.
Exhibit 10.3 Sixth Amendment to Amended and Restated Revolving Loan
Agreement, entered into as of December 1, 1997 by and
among Del Webb Corporation and Bank of America National
Trust and Savings Association as Agent, and Bank One
Arizona, NA as Co-Agent.
Exhibit 10.4 Seventh Amendment to Amended and Restated Revolving Loan
Agreement entered into as of January 15, 1998 by and
among Del Webb Corporation and Bank of America National
Trust and Savings Association as Agent, and Bank One
Arizona, NA as Co-Agent.
Exhibit 27 Financial Data Schedule
Exhibit 27.1 Restated 03/31/97 Financial Data Schedule
Exhibit 99.1 Asset Acquisition Agreement, entered into as of December
22, 1997 by and among Del Webb Communities, Inc. and
Spruce Creek Golf and Country Club, Inc., Spruce Creek
Golf and Country Club Homeowners' Association, Inc. and
Spruce Creek Preserve Homeowners' Association, Inc.
(b) The Company did not file any reports on Form 8-K during the period covered
by this report.
18
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, who are duly authorized to do so.
DEL WEBB CORPORATION
(REGISTRANT)
Date: May 14, 1998 /s/ Philip J. Dion
-------------------- -------------------------------------------------
Philip J. Dion
Chairman and Chief Executive Officer
Date: May 14, 1998 /s/ John A. Spencer
-------------------- -------------------------------------------------
John A. Spencer
Senior Vice President and Chief Financial Officer
19
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Numbered
Exhibit Number Description Page
- -------------- --------------------------------------------------------- ------------
<S> <C> <C>
Exhibit 10.2 Fifth Amendment to Amended and Restated Revolving Loan
Agreement, entered into as of October 1, 1997 by and among
Del Webb Corporation and Bank of America National Trust and
Savings Association as Agent, and Bank One Arizona, NA,
as Co-Agent.
Exhibit 10.3 Sixth Amendment to Amended and Restated Revolving Loan
Agreement, entered into as of December 1, 1997 by and
among Del Webb Corporation and Bank of America National
Trust and Savings Association as Agent, and Bank One
Arizona, NA as Co-Agent.
Exhibit 10.4 Seventh Amendment to Amended and Restated Revolving Loan
Agreement entered into as of January 15, 1998 by and
among Del Webb Corporation and Bank of America National
Trust and Savings Association as Agent, and Bank One
Arizona, NA as Co-Agent.
Exhibit 27 Financial Data Schedule
Exhibit 27.1 Restated 03/31/97 Financial Data Schedule
Exhibit 99.1 Asset Acquisition Agreement, entered into as of December
22, 1997 by and among Del Webb Communities, Inc. and
Spruce Creek Golf and Country Club, Inc., Spruce Creek
Golf and Country Club Homeowners' Association, Inc. and
Spruce Creek Preserve Homeowners' Association, Inc.
</TABLE>
<PAGE> 1
EXHIBIT 10.2
FIFTH AMENDMENT TO AMENDED AND
RESTATED REVOLVING LOAN AGREEMENT
This Fifth Amendment to Amended and Restated Revolving Loan
Agreement ("Fifth Amendment") is entered into as of October 1, 1997 by and among
DEL WEBB CORPORATION, a Delaware corporation ("Borrower"), each bank whose name
is set forth on the signature pages of this Fifth Amendment (collectively, the
"Banks" and individually a "Bank"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, a national banking association (the "Agent") and BANK ONE, ARIZONA,
NA, a national banking association (the "Co-Agent"). This Fifth Amendment is one
of the Loan Documents referred to in the Loan Agreement defined below. All terms
and agreements set forth in the Loan Agreement which are generally applicable to
the Loan Documents shall apply to this Fifth Amendment. Capitalized terms not
otherwise defined herein shall have the meanings given them in the Loan
Agreement.
RECITALS
A. Borrower, the Banks, the Agent and the Co-Agent have previously
made and entered into that certain Amended and Restated Revolving Loan
Agreement, dated as of June 27, 1995, as amended by that certain First Amendment
to Amended and Restated Revolving Loan Agreement, dated as of December 15, 1995,
that certain Second Amendment to Amended and Restated Revolving Loan Agreement,
dated as of July 22, 1996, that certain Third Amendment to Amended and Restated
Revolving Loan Agreement, dated as of March 31, 1997, and that certain Fourth
Amendment to Amended and Restated Revolving Loan Agreement, dated April 29, 1997
(the "Loan Agreement"), pursuant to which the Banks agreed to make revolving
loans to Borrower in the aggregate principal amount of up to $350,000,000 (the
"Loan"). The Loan is evidenced by the Loan Agreement and the various Line A
Notes and Line B Notes executed by Borrower in favor of the Banks.
B. Borrower has requested that certain modifications and amendments
be made to the Loan Agreement and, subject to the terms and conditions contained
herein, the Banks and the Agent have agreed to such modifications and
amendments, as more fully set forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Borrower, the Banks and the Agent
hereby agree as follows:
1. Amendments to Loan Agreement.
1.1 Section 1.1 Section 1.1 of the Loan Agreement is amended as
follows:
-1-
<PAGE> 2
(a) The definition of "Commitment Reduction Date" is restated
in its entirety to read as follows:
"'Commitment Reduction Date' means June 30, 1999."
(b) The definition of "Line A Commitment" is restated in its
entirety to read as follows:
"'Line A Commitment' means, subject to Sections 2.4 and 2.5,
$257,000,000. The respective Pro Rata Shares of the Banks with
respect to the Line A Commitment are set forth in Schedule
1.2."
(c) The definition of "Maturity Date" is restated in its
entirety to read as follows:
"'Maturity Date' means December 31, 2001."
(d) The definition of "Line B Commitment" is restated in its
entirety to read as follows:
"'Line B Commitment' means, subject to Sections 2.4 and 2.5,
$93,000,000. The respective Pro Rata Shares of the Banks with
respect to the Line B Commitment are set forth in Schedule
1.2."
(e) A new definition is added to Section 1.1 of the Loan
Agreement as follows:
"'Newer Public 9-3/4% Senior Subordinated Debt' means the
Indebtedness outstanding under Borrower's Indenture, dated
January 21, 1997 with respect to $150,000,000 of 9-3/4% Senior
Subordinated Debentures due 2008."
(f) The definition of "Subsidiary" is restated in its entirety
to read as follows:
"'Subsidiary' of a Person means any corporation, association,
partnership, limited liability company, joint venture or other
business entity of which more than 50% of the voting stock,
membership interests or other equity interests (in the case of
Persons other than corporations or limited liability
companies), is owned or controlled directly or indirectly by
the Person, or
-2-
<PAGE> 3
one or more of the Subsidiaries of the Person, or a
combination thereof."
1.2 Section 2.5. The reference to the "Quarterly Payment Date in
October, 1997" contained in Section 2.5 of the Loan Agreement (as adjusted to
"October, 1998" by letter agreement dated August 19, 1996) is hereby amended to
instead read "Quarterly Payment Date in October, 1999".
1.3 Section 2.11. Section 2.11 of the Loan Agreement is hereby
amended in its entirety to read as follows:
"2.11 Senior Debt. Without limitation, all outstanding
principal and interest under the Notes constitutes "Senior
Debt", as that term is defined in the Indenture for the Newer
Public 9-3/4% Senior Subordinated Debt, the Indenture for the
Public 9-3/4% Senior Subordinated Debt and the Indenture for
the Public 9.00% Senior Subordinated Debt.
1.4 Section 6.8.
(a) Section 6.8(d) of the Loan Agreement is hereby amended in
its entirety to read as follows:
"(d) Liens on Real Property acquired (whether before or after
the Closing Date) by Borrower or any of its Subsidiaries that
both (i) secure solely Non-Recourse Debt and (ii) (A) secure
solely purchase money indebtedness with respect to the Real
Property (which indebtedness, within the limitations set out
below, may include a profit or a revenue sharing component
arising from such Real Property for the benefit of the seller)
or (B) encumbered the Real Property at the time of its
acquisition by Borrower or its Subsidiary or were placed
thereon to refinance or borrow an amount up to the purchase
price within 90 days after the acquisition (which
indebtedness, within the limitations set out below, may
include a profit or a revenue sharing component arising from
such Real Property for the benefit of the seller). Profit or
revenue sharing rights in favor of a seller of Real Property
shall be permissible hereunder only if the aggregate of
Borrower's Real Property purchase cost and direct construction
costs for all Real Property then subject to such rights does
not, when added to any amount calculated under Sections 6.8(g)
and (h), at any time exceed 10% of Tangible Net Worth.
-3-
<PAGE> 4
(b) The following language is added to the Loan Agreement as a
new Section 6.8(g):
"(g) Liens that may exist on property of Borrower or one of
its Subsidiaries that has been used in the construction of
improvements on real property that is not then owned by
Borrower or one of its Subsidiaries, or Liens on such real
property, provided that (i) Borrower or a Guarantor Subsidiary
holds a written contractual or other legal right to acquire
title to such real property (or to direct the acquisition of
such title) and intends to do so and (ii) the cost to Borrower
or the Subsidiary of any and all such improvements, together
with the amounts calculated under the last sentence of Section
6.8(d) and under Section 6.8(h), do not, in the aggregate,
exceed 10% of Tangible Net Worth at any time; and"
(c) The following language is added to the Loan Agreement as a
new Section 6.8(h):
"(h) Liens otherwise permissible under Section 6.8(d) with
respect to Real Property owned by Borrower or one of its
Subsidiaries on which Real Property improvements have been
constructed by Borrower or a Subsidiary, provided that the
cost to Borrower or a Subsidiary of such improvements,
together with the amounts calculated under the last sentence
of Section 6.8(d) and under Section 6.8(g) do not, in the
aggregate, exceed 10% of Tangible Net Worth at any time."
1.5 Section 6.16. Section 6.16(d)(iii)(B) of the Loan Agreement is
hereby amended in its entirety to read as follows:
"(B) 50% of the cumulative amount of Net Income (giving
account to any net loss), as of the most recently ended Fiscal
Quarter, from and after the Fiscal Quarter beginning one year
prior to the Commitment Reduction Date."
1.6 Schedule 1.2. Schedule 1.2 ("Bank Group Commitments") to the
Loan Agreement is amended and restated in its entirety in the schedule attached
to this Fifth Amendment as Annex I.
2. Extension Fee. Concurrently with or prior to the effectiveness of this
Fifth Amendment, Borrower agrees to pay to the Agent for the account of the
Banks, pro rata according to their Pro Rata Shares, an extension fee equal to
$87,500. This extension fee is fully earned upon the effectiveness of this Fifth
Amendment.
-4-
<PAGE> 5
3. Borrower's Representations and Warranties. Borrower hereby represents
and warrants that except as previously disclosed to the Banks in writing, all of
the representations and warranties contained in the Loan Documents are true and
correct on and as of the date of this Fifth Amendment as though made on that
date and, after giving effect to this Fifth Amendment, no Event of Default shall
be continuing.
4. Conditions Precedent. The effectiveness of this Fifth Amendment is
conditioned upon the due execution hereof by all of the Banks and upon the
satisfaction by Borrower of each of the following conditions on or before
October 15, 1997:
(a) Borrower shall have delivered or caused to be delivered to
the Agent executed original counterparts of this Fifth Amendment and
Exhibit "A" hereto, sufficient in number for distribution to the Agent,
the Banks and Borrower;
(b) Borrower shall have delivered to the Agent executed
original replacement Line A Notes and Line B Notes, for each Bank, in the
forms of Exhibit "B" and Exhibit "C" hereto. Such replacement notes shall
reflect the changes in the Line A and Line B Commitments reflected on
Annex I hereto;
(c) Borrower shall have paid to the Agent the extension fee
described in Section 2 hereof;
(d) The Agent shall have received a certification from a
Responsible Official of Borrower as to the matters set forth in Section 3
hereof;
(e) The Agent shall have received from Borrower such
documentation as may be required to establish the authority of Borrower to
execute, deliver and perform any of the Loan Documents to which it is a
Party, including, without limitation, this Fifth Amendment and the
replacement Line A Notes and Line B Notes. Such documentation shall
include certified corporate resolutions, incumbency certificates, and such
other certificates or documents as the Agent shall reasonably require;
(f) The Agent shall have received a written legal opinion of
in-house counsel to Borrower and each Guarantor, in form and substance
satisfactory to the Agent, regarding the execution, delivery, performance
and enforceability of this Fifth Amendment, the Guarantors' Consent hereto
and the replacement Line A Notes and Line B Notes;
(g) The Agent shall have received a written certification from
a Responsible Official of Borrower that Borrower and its Subsidiaries are
in compliance with all the terms and provisions of the Loan Documents and
after giving effect to this Fifth Amendment no Default or Event of Default
shall be continuing;
-5-
<PAGE> 6
5. Return of Canceled Notes to Borrower. Upon the effectiveness of this
Fifth Amendment in accordance herewith, including the delivery by Borrower of
all documents required under Section 4 hereof, the Banks shall return the Line A
Notes and Line B Notes that have been replaced pursuant hereto to Borrower, in
each case marked "Canceled."
6. Amendment to Other Loan Documents. Each of the Loan Documents is hereby
amended such that all references to the Loan Agreement contained therein shall
be deemed to be made with respect to the Loan Agreement as amended hereby. Each
of the Loan Documents are hereby further amended such that any reference
contained therein to any document amended hereby shall be deemed to be made with
respect to such document as amended hereby. Each reference to Loan Documents
generally shall be deemed to include this Fifth Amendment.
7. Loan Documents in Full Force and Effect. Except as modified hereby, the
Loan Documents remain in full force and effect.
8. Governing Law. This Fifth Amendment shall be governed by, and construed
in accordance with, the Laws of the State of California.
9. Severability. If any provision of this Fifth Amendment is held invalid
or unenforceable by any court of competent jurisdiction, such holding shall not
invalidate or render unenforceable any other provision hereof.
10. Counterparts. This Fifth Amendment may be executed in counterparts and
any party may execute any counterpart, each of which shall be deemed to be an
original and all of which, taken together, shall be deemed to be one and the
same document.
11. Prior Agreements. This Fifth Amendment contains the entire agreement
between Borrower, the Banks and the Agent with respect to the subject matter
hereof, and all
-6-
<PAGE> 7
prior negotiations, understandings, and agreements with respect thereto are
superseded by this Fifth Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Fifth
Amendment to be duly executed as of the date first above written.
"Borrower" "Banks"
DEL WEBB CORPORATION BANK ONE, ARIZONA, NA, as a Bank
By: ________________________________ By: ________________________________
John A. Spencer
Senior Vice President ________________________________
Printed Name and Title
"Agent"
BANK OF AMERICA NATIONAL
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
TRUST AND SAVINGS ASSOCIATION, as a Bank
as Agent
By: ________________________________
By: ________________________________
________________________________
________________________________ Printed Name and Title
Printed Name and Title
BANKBOSTON, N.A. (formerly known as
"Co-Agent" The First National Bank of Boston)
BANK ONE, ARIZONA, NA, as Co-Agent
By: ________________________________
By: ________________________________ ________________________________
Printed Name and Title
________________________________
Printed Name and Title
-7-
<PAGE> 8
GUARANTY FEDERAL BANK, F.S.B. FIRST UNION NATIONAL BANK,
formerly known as First Union National
Bank of North Carolina
By: ________________________________
________________________________ By: ________________________________
Printed Name and Title
________________________________
Printed Name and Title
CREDIT LYONNAIS LOS ANGELES
BRANCH
FLEET NATIONAL BANK
By: ________________________________
By: ________________________________
________________________________
Printed Name and Title ________________________________
Printed Name and Title
NATIONSBANK, N.A., formerly known as
NationsBank, N.A. (Carolinas)
By: ________________________________
________________________________
Printed Name and Title
BANK OF HAWAII
By: ________________________________
________________________________
Printed Name and Title
-8-
<PAGE> 9
EXHIBIT A
GUARANTORS' CONSENT
The undersigned do each hereby (a) consent to that certain Fifth
Amendment to Amended and Restated Revolving Loan Agreement, dated as of October
1, 1997, by and among Del Webb Corporation ("Borrower"), the Banks named
therein, Bank of America National Trust and Savings Association, as Agent, and
Bank One, Arizona, NA, as Co-Agent, and (b) reaffirm (i) their respective
obligations under that certain Subsidiary Guaranty, dated as of June 27, 1995,
and (ii) that the Subsidiary Guaranty remains in full force and effect.
Dated: October 1, 1997
Asset One Corp., an Arizona Del Webb Communities, Inc.,
corporation an Arizona corporation
By: _______________________________
Donald V. Mickus By: _______________________________
Treasurer Donald V. Mickus
Treasurer
Del Webb California Corp.,
an Arizona corporation Del Webb Conservation Holding Corp., an
Arizona corporation
By: _______________________________
Donald V. Mickus By: _______________________________
Treasurer Donald V. Mickus
Treasurer
Del Webb Commercial Properties
Corporation, an Arizona corporation Del Webb Home Construction, Inc.,
an Arizona corporation
By: _______________________________
Donald V. Mickus By: _______________________________
Treasurer Donald V. Mickus
Treasurer
Exhibit A
Page 1 of 5
<PAGE> 10
Del Webb Communities of Nevada, Inc. Del Webb's Coventry Homes of Nevada,
(formerly known as Del Webb Kingswood Inc., an Arizona corporation (formerly
Parke, Inc.), an Arizona corporation known as Del Webb of Nevada, Inc.)
By: _______________________________ By: _______________________________
Donald V. Mickus Donald V. Mickus
Treasurer Treasurer
The Villages at Desert Hills, Inc. Del Webb's Coventry Homes Construction
(formerly known as Del Webb Lakeview of Tucson Co., an Arizona corporation
Corporation), an Arizona corporation
By: _______________________________
By: _______________________________ Donald V. Mickus
Donald V. Mickus Treasurer
Treasurer
Del Webb's Coventry Homes of Tucson,
Del Webb's Coventry Homes Construction Inc., an Arizona corporation
Co., an Arizona corporation
By: _______________________________
By: _______________________________ Donald V. Mickus
Donald V. Mickus Treasurer
Treasurer
Del E. Webb Cactus Development Corp.,
Del Webb's Coventry Homes, Inc., an Arizona corporation
an Arizona corporation
By: _______________________________
By: _______________________________ Donald V. Mickus
Donald V. Mickus Treasurer
Treasurer
Exhibit A
Page 2 of 5
<PAGE> 11
Del E. Webb Development Co., L.P., Fairmount Mortgage, Inc., an Arizona
a Delaware limited partnership corporation
By: Del Webb Communities, Inc.,
general partner By: _______________________________
Richard W. Day
Treasurer
By:________________________
Donald V. Mickus
Treasurer Glen Harbor Joint Venture, an Arizona
general partnership
Del E. Webb Foothills Corporation, By: Del E. Webb Glen Harbor
an Arizona corporation Development Corporation,
general partner
By: _______________________________
Donald V. Mickus By:_________________________
Treasurer Donald V. Mickus
Treasurer
Del E. Webb Glen Harbor Development
Corporation, an Arizona corporation Terravita Commercial Corp., an Arizona
corporation
By: _______________________________
Donald V. Mickus By: _______________________________
Treasurer Donald V. Mickus
Treasurer
DW Aviation Co., an Arizona
corporation
Terravita Corp., an Arizona corporation
By: _______________________________
Donald V. Mickus By: _______________________________
Treasurer Donald V. Mickus
Treasurer
Exhibit A
Page 3 of 5
<PAGE> 12
Terravita Home Construction Co., New Mexico Asset Corporation,
an Arizona corporation an Arizona corporation
By: _______________________________ By: _______________________________
Donald V. Mickus Donald V. Mickus
Treasurer Treasurer
Trovas Company, an Arizona corporation Del Webb Texas Limited Partnership,
an Arizona limited partnership
By: _______________________________ By: Del Webb Southwest Co.,
Donald V. Mickus an Arizona corporation
Treasurer
By:_________________________
Trovas Construction Co., an Arizona Donald V. Mickus
corporation Treasurer
By: _______________________________ New Mexico Asset Limited Partnership
Donald V. Mickus (formerly known as New Mexico
Treasurer Investment Co. Limited Partnership), an
Arizona limited partnership
Del Webb Limited Holding Co., By: Del Webb Corporation, a Delaware
an Arizona corporation corporation
By: _______________________________ By:_________________________
Donald V. Mickus Donald V. Mickus
Treasurer Treasurer
Del Webb Southwest Co., an Arizona Bellasera Corp., an Arizona corporation
corporation
By: _______________________________
By: _______________________________ Donald V. Mickus
Donald V. Mickus Treasurer
Treasurer
Exhibit A
Page 4 of 5
<PAGE> 13
Del Webb's Sunflower of Tucson, Inc., an
Arizona corporation
By: _______________________________
Donald V. Mickus
Treasurer
Exhibit A
Page 5 of 5
<PAGE> 14
EXHIBIT B
LINE A NOTE
$________________ ______________, 1997
Los Angeles, California
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
______________________________________________________ (the "Bank"), the
principal amount of __________________________________________________________
($_____________) or such lesser aggregate amount of Advances as may be made by
the Bank with respect to the Line A Commitment under the Loan Agreement referred
to below, together with interest on the principal amount of each Advance made
hereunder and remaining unpaid from time to time from the date of each such
Advance until the date of payment in full, payable as hereinafter set forth.
Reference is made to the Amended and Restated Revolving Loan Agreement,
dated as of June 27, 1995, as amended by the First Amendment thereto, dated
December 15, 1995, by the Second Amendment thereto, dated July 22, 1996, by the
Third Amendment thereto, dated March 31, 1997, by the Fourth Amendment thereto,
dated April 29, 1997 and by the Fifth Amendment thereto, dated ____________,
1997, by and among the undersigned, as Borrower, the Banks which are parties
thereto, Bank One, Arizona, NA, as Co-Agent, and Bank of America National Trust
and Savings Association, as Agent for the Banks (as amended, the "Loan
Agreement"). Terms defined in the Loan Agreement and not otherwise defined
herein are used herein with the meanings given those terms in the Loan
Agreement. This is one of the Line A Notes referred to in the Loan Agreement,
and any holder hereof is entitled to all of the rights, remedies, benefits and
privileges provided for in the Loan Agreement as originally executed or as it
may from time to time be supplemented, modified or amended. The Loan Agreement,
among other things, contains provisions for acceleration of the maturity hereof
upon the happening of certain stated events upon the terms and conditions
therein specified.
The principal indebtedness evidenced by this Line A Note shall be
payable as provided in the Loan Agreement and in any event on the Maturity Date.
Interest shall be payable on the outstanding daily unpaid principal
amount of Advances from the date of each such Advance until payment in full and
shall accrue and be payable at the rates and on the dates set forth in the Loan
Agreement both before and after default and before and after maturity and
judgment, with interest on overdue principal and interest to bear interest at
the rate set forth in Section 3.7 of the Loan Agreement, to the fullest extent
permitted by applicable Law.
Exhibit B
Page 1 of 2
<PAGE> 15
Each payment hereunder shall be made to the Agent at the Agent's Office
for the account of the Bank in immediately available funds not later than 11:00
a.m. (San Francisco time) on the day of payment (which must be a Banking Day).
All payments received after 11:00 a.m. (San Francisco time) on any particular
Banking Day shall be deemed received on the next succeeding Banking Day. All
payments shall be made in lawful money of the United States of America.
The Bank shall use its best efforts to keep a record of Advances made
by it and payments received by it with respect to this Line A Note, and such
record shall be presumptive evidence of the amounts owing under this Line A
Note.
The undersigned hereby promises to pay all costs and expenses of any
rightful holder hereof incurred in collecting the undersigned's obligations
hereunder or in enforcing or attempting to enforce any of such holder's rights
hereunder, including reasonable attorneys' fees and disbursements, whether or
not an action is filed in connection therewith.
The undersigned hereby waives presentment, demand for payment,
dishonor, notice of dishonor, protest, notice of protest and any other notice or
formality, to the fullest extent permitted by applicable Laws.
This Line A Note shall be delivered to and accepted by the Bank in the
State of California, and shall be governed by, and construed and enforced in
accordance with, the local Laws thereof.
This Line A Note replaces, amends and restates that certain Line A
Note, dated as of July 22, 1996, in the principal amount of $____________,
heretofore delivered by the undersigned to the Bank pursuant to the Loan
Agreement.
DEL WEBB CORPORATION, a Delaware
corporation
By:_____________________________________
John A. Spencer
Senior Vice President
Exhibit B
Page 2 of 2
<PAGE> 16
EXHIBIT C
LINE B NOTE
$_____________ ______________, 1997
Los Angeles, California
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
________________________________________________________ (the "Bank"), the
principal amount of __________________________________________________ DOLLARS
($____________) or such lesser aggregate amount of Advances as may be made by
the Bank with respect to the Line B Commitment under the Loan Agreement referred
to below, together with interest on the principal amount of each Advance made
hereunder and remaining unpaid from time to time from the date of each such
Advance until the date of payment in full, payable as hereinafter set forth.
Reference is made to the Amended and Restated Revolving Loan Agreement,
dated as of June 27, 1995, as amended by the First Amendment thereto, dated
December 15, 1995, by the Second Amendment thereto, dated July 22, 1996, by the
Third Amendment thereto, dated March 31, 1997, by the Fourth Amendment thereto,
dated April 29, 1997 and by the Fifth Amendment thereto, dated ____________,
1997, by and among the undersigned, as Borrower, the Banks which are parties
thereto, Bank One, Arizona, NA, as Co-Agent, and Bank of America National Trust
and Savings Association, as Agent for the Banks (as amended, the "Loan
Agreement"). Terms defined in the Loan Agreement and not otherwise defined
herein are used herein with the meanings given those terms in the Loan
Agreement. This is one of the Line B Notes referred to in the Loan Agreement,
and any holder hereof is entitled to all of the rights, remedies, benefits and
privileges provided for in the Loan Agreement as originally executed or as it
may from time to time be supplemented, modified or amended. The Loan Agreement,
among other things, contains provisions for acceleration of the maturity hereof
upon the happening of certain stated events upon the terms and conditions
therein specified.
The principal indebtedness evidenced by this Line B Note shall be
payable as provided in the Loan Agreement and in any event on the Maturity Date.
Interest shall be payable on the outstanding daily unpaid principal
amount of Advances from the date of each such Advance until payment in full and
shall accrue and be payable at the rates and on the dates set forth in the Loan
Agreement both before and after default and before and after maturity and
judgment, with interest on overdue principal and interest to bear interest at
the rate set forth in Section 3.7 of the Loan Agreement, to the fullest extent
permitted by applicable Law.
Exhibit C
Page 1 of 2
<PAGE> 17
Each payment hereunder shall be made to the Agent at the Agent's Office
for the account of the Bank in immediately available funds not later than 11:00
a.m. (San Francisco time) on the day of payment (which must be a Banking Day).
All payments received after 11:00 a.m. (San Francisco time) on any particular
Banking Day shall be deemed received on the next succeeding Banking Day. All
payments shall be made in lawful money of the United States of America.
The Bank shall use its best efforts to keep a record of Advances made
by it and payments received by it with respect to this Line B Note, and such
record shall be presumptive evidence of the amounts owing under this Line B
Note.
The undersigned hereby promises to pay all costs and expenses of any
rightful holder hereof incurred in collecting the undersigned's obligations
hereunder or in enforcing or attempting to enforce any of such holder's rights
hereunder, including reasonable attorneys' fees and disbursements, whether or
not an action is filed in connection therewith.
The undersigned hereby waives presentment, demand for payment,
dishonor, notice of dishonor, protest, notice of protest and any other notice or
formality, to the fullest extent permitted by applicable Laws.
This Line B Note shall be delivered to and accepted by the Bank in the
State of California, and shall be governed by, and construed and enforced in
accordance with, the local Laws thereof.
This Line B Note replaces, amends and restates that certain Line B
Note, dated as of July 22, 1996, in the principal amount of $_______________ ,
heretofore delivered by the undersigned to the Bank pursuant to the Loan
Agreement.
DEL WEBB CORPORATION, a Delaware
corporation
By:_____________________________________
John A. Spencer
Senior Vice President
Exhibit C
Page 2 of 2
<PAGE> 18
ANNEX I
DEL WEBB CORPORATION
BANK GROUP COMMITMENTS
<TABLE>
<CAPTION>
Line "A" Line "B" Total
Syndicate Bank Pro Rata Share $257,000,000 $93,000,000 $350,000,000
- -------------- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Bank of America NT & SA 24.28571429% $ 62,414,286 $ 22,585,714 $ 85,000,000
Bank One, Arizona, NA 18.57142857% $ 47,728,571 $ 17,271,429 65,000,000
NationsBank, N.A 12.85714286% $ 33,042,857 $ 11,957,143 45,000,000
Guaranty Federal, F.S.B 11.42857143% $ 29,371,429 $ 10,628,571 40,000,000
The First National Bank of Boston 10.00000000% $ 25,700,000 $ 9,300,000 35,000,000
First Union National Bank 7.14285714% $ 18,357,143 $ 6,642,857 25,000,000
Bank of Hawaii 5.71428571% $ 14,685,714 $ 5,314,286 20,000,000
Fleet National Bank 5.71428571% $ 14,685,714 $ 5,314,286 20,000,000
Credit Lyonnais 4.28571429% $ 11,014,286 $ 3,985,714 15,000,000
TOTAL: 100.00000000% $257,000,000 $ 93,000,000 $350,000,000
</TABLE>
ANNEX I
Page 1 of 1
<PAGE> 1
EXHIBIT 10.3
SIXTH AMENDMENT TO AMENDED AND
RESTATED REVOLVING LOAN AGREEMENT
This Sixth Amendment to Amended and Restated Revolving Loan
Agreement ("Sixth Amendment") is entered into as of December 1, 1997 by and
among DEL WEBB CORPORATION, a Delaware corporation ("Borrower"), each bank whose
name is set forth on the signature pages of this Sixth Amendment (collectively,
the "Banks" and individually a "Bank"), BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, a national banking association (the "Agent") and BANK ONE,
ARIZONA, NA, a national banking association (the "Co-Agent"). This Sixth
Amendment is one of the Loan Documents referred to in the Loan Agreement defined
below. All terms and agreements set forth in the Loan Agreement which are
generally applicable to the Loan Documents shall apply to this Sixth Amendment.
Capitalized terms not otherwise defined herein shall have the meanings given
them in the Loan Agreement.
RECITALS
A. Borrower, the Banks, the Agent and the Co-Agent have previously
made and entered into that certain Amended and Restated Revolving Loan
Agreement, dated as of June 27, 1995, as amended by that certain First Amendment
to Amended and Restated Revolving Loan Agreement, dated as of December 15, 1995,
that certain Second Amendment to Amended and Restated Revolving Loan Agreement,
dated as of July 22, 1996, that certain Third Amendment to Amended and Restated
Revolving Loan Agreement, dated as of March 31, 1997, that certain Fourth
Amendment to Amended and Restated Revolving Loan Agreement, dated April 29, 1997
and that certain Fifth Amendment to Amended and Restated Revolving Loan
Agreement, dated October 1, 1997 (the "Loan Agreement"), pursuant to which the
Banks agreed to make revolving loans to Borrower in the aggregate principal
amount of up to $350,000,000 (the "Loan"). The Loan is evidenced by the Loan
Agreement and the various Line A Notes and Line B Notes executed by Borrower in
favor of the Banks.
B. Borrower has requested that certain modifications and amendments
be made to the Loan Agreement and, subject to the terms and conditions contained
herein, the Banks and the Agent have agreed to such modifications and
amendments, as more fully set forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Borrower, the Banks and the Agent
hereby agree as follows:
1. Amendment to Loan Agreement. Section 2.12(a) of the Loan Agreement is
amended such that the reference to "$5,000,000" therein shall instead read
"$10,000,000."
-1-
<PAGE> 2
2. Borrower's Representations and Warranties. Borrower hereby represents
and warrants that except as previously disclosed to the Banks in writing, all of
the representations and warranties contained in the Loan Documents are true and
correct on and as of the date of this Sixth Amendment as though made on that
date and, after giving effect to this Sixth Amendment, no Event of Default shall
be continuing.
3. Effective Date. This Sixth Amendment shall become effective upon its
due execution, on or before December 8, 1997, by (a) Borrower, (b) the Agent,
(c) Banks constituting the Majority Banks and (d) all indicated signatories to
the Guarantors' Consent appended hereto. If this Sixth Amendment is not so duly
executed by all such signatories on or before December 8, 1997, then any
signatures hereon on such date shall be of no further force or effect. If so
duly and timely executed, this Sixth Amendment shall thereupon be effective as
of the date hereof.
4. Amendment to Other Loan Documents. Each of the Loan Documents is hereby
amended such that all references to the Loan Agreement contained therein shall
be deemed to be made with respect to the Loan Agreement as amended hereby. Each
of the Loan Documents are hereby further amended such that any reference
contained therein to any document amended hereby shall be deemed to be made with
respect to such document as amended hereby. Each reference to Loan Documents
generally shall be deemed to include this Sixth Amendment.
5. Loan Documents in Full Force and Effect. Except as modified hereby, the
Loan Documents remain in full force and effect.
6. Governing Law. This Sixth Amendment shall be governed by, and construed
in accordance with, the Laws of the State of California.
7. Severability. If any provision of this Sixth Amendment is held invalid
or unenforceable by any court of competent jurisdiction, such holding shall not
invalidate or render unenforceable any other provision hereof.
8. Counterparts. This Sixth Amendment may be executed in counterparts and
any party may execute any counterpart, each of which shall be deemed to be an
original and all of which, taken together, shall be deemed to be one and the
same document.
9. Prior Agreements. This Sixth Amendment contains the entire agreement
between Borrower, the Banks and the Agent with respect to the subject matter
hereof, and all
-2-
<PAGE> 3
prior negotiations, understandings, and agreements with respect thereto are
superseded by this Sixth Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Sixth
Amendment to be duly executed as of the date first above written.
"Borrower" "Banks"
DEL WEBB CORPORATION BANK ONE, ARIZONA, NA, as a Bank
By: ________________________________ By: ________________________________
John A. Spencer
Senior Vice President ________________________________
Printed Name and Title
"Agent"
BANK OF AMERICA NATIONAL
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
TRUST AND SAVINGS ASSOCIATION, as a Bank
as Agent
By: ________________________________
By: ________________________________
________________________________
________________________________ Printed Name and Title
Printed Name and Title
BANKBOSTON, N.A. (formerly known as
"Co-Agent" The First National Bank of Boston)
BANK ONE, ARIZONA, NA, as Co-Agent
By: ________________________________
By: ________________________________ ________________________________
Printed Name and Title
________________________________
Printed Name and Title
-3-
<PAGE> 4
GUARANTY FEDERAL BANK, F.S.B. BANK OF HAWAII
By: ________________________________ By: ________________________________
________________________________ ________________________________
Printed Name and Title Printed Name and Title
CREDIT LYONNAIS LOS ANGELES FIRST UNION NATIONAL BANK,
BRANCH formerly known as First Union National
Bank of North Carolina
By: ________________________________
By: ________________________________
________________________________
Printed Name and Title ________________________________
Printed Name and Title
NATIONSBANK, N.A., formerly known as
NationsBank, N.A. (Carolinas) FLEET NATIONAL BANK
By: ________________________________ By: ________________________________
________________________________ ________________________________
Printed Name and Title Printed Name and Title
-4-
<PAGE> 5
EXHIBIT A
GUARANTORS' CONSENT
The undersigned do each hereby (a) consent to that certain Sixth
Amendment to Amended and Restated Revolving Loan Agreement, dated as of
____________, 1997, by and among Del Webb Corporation ("Borrower"), the Banks
named therein, Bank of America National Trust and Savings Association, as Agent,
and Bank One, Arizona, NA, as Co-Agent, and (b) reaffirm (i) their respective
obligations under that certain Subsidiary Guaranty, dated as of June 27, 1995,
and (ii) that the Subsidiary Guaranty remains in full force and effect.
Dated: ______________, 1997
Asset One Corp., an Arizona Del Webb Communities, Inc.,
corporation an Arizona corporation
By: _______________________________
Donald V. Mickus By: _______________________________
Treasurer Donald V. Mickus
Treasurer
Del Webb California Corp.,
an Arizona corporation Del Webb Conservation Holding Corp., an
Arizona corporation
By: _______________________________
Donald V. Mickus By: _______________________________
Treasurer Donald V. Mickus
Treasurer
Del Webb Commercial Properties
Corporation, an Arizona corporation Del Webb Home Construction, Inc.,
an Arizona corporation
By: _______________________________
Donald V. Mickus By: _______________________________
Treasurer Donald V. Mickus
Treasurer
Exhibit A
Page 1 of 5
<PAGE> 6
Del Webb Communities of Nevada, Inc. Del Webb's Coventry Homes of Nevada,
(formerly known as Del Webb Kingswood Inc., an Arizona corporation (formerly
Parke, Inc.), an Arizona corporation known as Del Webb of Nevada, Inc.)
By: _______________________________ By: _______________________________
Donald V. Mickus Donald V. Mickus
Treasurer Treasurer
The Villages at Desert Hills, Inc. Del Webb's Coventry Homes Construction
(formerly known as Del Webb Lakeview of Tucson Co., an Arizona corporation
Corporation), an Arizona corporation
By: _______________________________
By: _______________________________ Donald V. Mickus
Donald V. Mickus Treasurer
Treasurer
Del Webb's Coventry Homes of Tucson,
Del Webb's Coventry Homes Construction Inc., an Arizona corporation
Co., an Arizona corporation
By: _______________________________
By: _______________________________ Donald V. Mickus
Donald V. Mickus Treasurer
Treasurer
Del E. Webb Cactus Development Corp.,
Del Webb's Coventry Homes, Inc., an Arizona corporation
an Arizona corporation
By: _______________________________
By: _______________________________ Donald V. Mickus
Donald V. Mickus Treasurer
Treasurer
Exhibit A
Page 2 of 5
<PAGE> 7
Del E. Webb Development Co., L.P., Fairmount Mortgage, Inc., an Arizona
a Delaware limited partnership corporation
By: Del Webb Communities, Inc.,
general partner By: _______________________________
Richard W. Day
Treasurer
By:________________________
Donald V. Mickus
Treasurer Glen Harbor Joint Venture, an Arizona
general partnership
Del E. Webb Foothills Corporation, By: Del E. Webb Glen Harbor
an Arizona corporation Development Corporation,
general partner
By: _______________________________
Donald V. Mickus By:_________________________
Treasurer Donald V. Mickus
Treasurer
Del E. Webb Glen Harbor Development
Corporation, an Arizona corporation Terravita Commercial Corp., an Arizona
corporation
By: _______________________________
Donald V. Mickus By: _______________________________
Treasurer Donald V. Mickus
Treasurer
DW Aviation Co., an Arizona
corporation
Terravita Corp., an Arizona corporation
By: _______________________________
Donald V. Mickus By: _______________________________
Treasurer Donald V. Mickus
Treasurer
Exhibit A
Page 3 of 5
<PAGE> 8
Terravita Home Construction Co., New Mexico Asset Corporation,
an Arizona corporation an Arizona corporation
By: _______________________________ By: _______________________________
Donald V. Mickus Donald V. Mickus
Treasurer Treasurer
Trovas Company, an Arizona corporation Del Webb Texas Limited Partnership,
an Arizona limited partnership
By: _______________________________ By: Del Webb Southwest Co.,
Donald V. Mickus an Arizona corporation
Treasurer
By:_________________________
Trovas Construction Co., an Arizona Donald V. Mickus
corporation Treasurer
By: _______________________________ New Mexico Asset Limited Partnership
Donald V. Mickus (formerly known as New Mexico
Treasurer Investment Co. Limited Partnership), an
Arizona limited partnership
Del Webb Limited Holding Co., By: Del Webb Corporation, a Delaware
an Arizona corporation corporation
By: _______________________________ By:_________________________
Donald V. Mickus Donald V. Mickus
Treasurer Treasurer
Del Webb Southwest Co., an Arizona Bellasera Corp., an Arizona corporation
corporation
By: _______________________________
By: _______________________________ Donald V. Mickus
Donald V. Mickus Treasurer
Treasurer
Exhibit A
Page 4 of 5
<PAGE> 9
Del Webb's Sunflower of Tucson, Inc., an
Arizona corporation
By: _______________________________
Donald V. Mickus
Treasurer
Exhibit A
Page 5 of 5
<PAGE> 1
EXHIBIT 10.4
SEVENTH AMENDMENT TO AMENDED AND
RESTATED REVOLVING LOAN AGREEMENT
This Seventh Amendment to Amended and Restated Revolving Loan
Agreement ("Seventh Amendment") is entered into as of January 15, 1998 by and
among DEL WEBB CORPORATION, a Delaware corporation ("Borrower"), each bank whose
name is set forth on the signature pages of this Seventh Amendment
(collectively, the "Banks" and individually a "Bank"), BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, a national banking association (the "Agent") and
BANK ONE, ARIZONA, NA, a national banking association (the "Co-Agent"). This
Seventh Amendment is one of the Loan Documents referred to in the Loan Agreement
defined below. All terms and agreements set forth in the Loan Agreement which
are generally applicable to the Loan Documents shall apply to this Seventh
Amendment. Capitalized terms not otherwise defined herein shall have the
meanings given them in the Loan Agreement.
RECITALS
A. Borrower, the Banks, the Agent and the Co-Agent have previously
made and entered into that certain Amended and Restated Revolving Loan
Agreement, dated as of June 27, 1995, as amended by that certain First Amendment
to Amended and Restated Revolving Loan Agreement, dated as of December 15, 1995,
that certain Second Amendment to Amended and Restated Revolving Loan Agreement,
dated as of July 22, 1996, that certain Third Amendment to Amended and Restated
Revolving Loan Agreement, dated as of March 31, 1997, that certain Fourth
Amendment to Amended and Restated Revolving Loan Agreement, dated April 29,
1997, that certain Fifth Amendment to Amended and Restated Revolving Loan
Agreement, dated October 1, 1997 and that certain Sixth Amendment to Amended and
Restated Revolving Loan Agreement, dated as of December 1, 1997 (as so amended,
the "Loan Agreement"), pursuant to which the Banks agreed to make revolving
loans to Borrower in the aggregate principal amount of up to $350,000,000 (the
"Loan"). The Loan is evidenced by the Loan Agreement and the various Line A
Notes and Line B Notes executed by Borrower in favor of the Banks.
B. Borrower has requested that an additional $50,000,000 be made
available as part of the Line A Commitment and that certain other modifications
and amendments be made to the Loan Agreement and, subject to the terms and
conditions contained herein, the Banks and the Agent have agreed to such
increase and such modifications and amendments, as more fully set forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Borrower, the Banks, the Co-Agent and
the Agent hereby agree as follows:
-1-
<PAGE> 2
1. Amendments to Loan Agreement.
1.1 Section 1.1 In Section 1.1 of the Loan Agreement, the definition
of "Line A Commitment" is restated in its entirety to read as follows:
"'Line A Commitment' means, subject to Sections 2.4 and 2.5,
$307,000,000. The respective Pro Rata Shares of the Banks
with respect to the Line A Commitment are set forth in
Schedule 1.2."
1.2 Section 6.13. The table in Section 6.13 of the Loan Agreement is
amended as follows:
"Period Ratio
------- -----
Jan. 1, 1998 through 2.50:1.00
June 30, 1999
July 1, 1999 through 2.35:1.00
June 30, 2000
July 1, 2000 and thereafter 2.15:1.00"
1.3 Section 6.14. Section 6.15 of the Loan Agreement is amended in
its entirety to read as follows:
"6.15 Liquidity. Permit, as of the last day of any Fiscal
Year, beginning June 30, 1995, the ratio of EBITDA for such Fiscal Year to
Specified Charges for such Fiscal Year to be less than (a) 0.50:1.00 for
the Fiscal Year ending June 30, 1995, (b) 0.75:1.00 for the Fiscal Years
ending June 30, 1996 and 1997, (c) 0.65:1.00 for the Fiscal Years ending
June 30, 1998 and 1999 or (d) 0.75:1.00 for the Fiscal Years ending June
30, 2000 or thereafter, provided that any such failing shall not
constitute an Event of Default under Section 9.1(c) unless and until
Borrower shall also permit, as of the last day of the immediately
succeeding Fiscal Quarter, the ratio of EBITDA for the four (4) Fiscal
Quarter period then ending to Specified Charges for such four (4) Fiscal
Quarter period to also be less than said specified ratio."
1.4 Schedule 1.2. Schedule 1.2 ("Bank Group Commitments") to the
Loan Agreement is amended and restated in its entirety in the schedule attached
to this Seventh Amendment as Annex I.
-2-
<PAGE> 3
1.5 Schedule 4.4. Schedule 4.4 ("Subsidiaries") to the Loan
Agreement is amended and restated in its entirety in the schedule attached to
this Seventh Amendment as Annex III.
2. Underwriting Fees. On the effective date of this Seventh Amendment,
Borrower agrees to pay underwriting fees as follows:
(a) Borrower agrees to pay to the Agent for the respective
accounts of each Bank whose aggregate Commitment is increasing pursuant to
this Seventh Amendment, a fee equal to 15 basis points times the increase
in such Bank's aggregate Commitment as shown on Annex I hereto; and
(b) Borrower agrees to pay a $5,000 fee to each Bank that does
not otherwise receive an underwriting fee pursuant to clause (a), above.
These underwriting fees are fully earned upon such effective date and are
nonrefundable.
3. Adjusting Purchase Payments. The Agent shall notify the Banks on the
first Banking Day that the conditions specified in Sections 5(a)-5(f) hereof
have been satisfied (the "Notice"). On the following Banking Day, certain of the
Banks shall purchase, and certain of the Banks shall sell, to one another, the
percentage interests in the Commitments as reflected in Annex II hereto, in
order to reallocate the then outstanding Advances under the Notes among the
Banks to correspond to the revised Pro Rata Shares of the Banks specified in
Annex I hereto. The applicable purchase price payments are specified on Annex II
hereto and referred to herein as the "Adjusting Purchase Payments." The
Adjusting Purchasing Payments shall be made to the Agent by the applicable
purchasing Banks by Federal Reserve wire transfer initiated by the payor no
later than 9:00 a.m. California time on the Banking Day following the Notice.
Upon receipt of all such payments, the Agent shall promptly send appropriate
portions thereof to the selling Banks by Federal Reserve wire transfer. The new
Pro Rata Shares shall become effective on the close of business on the day of
transfer of such funds.
4. Borrower's Representations and Warranties. Borrower hereby represents
and warrants that except as previously disclosed to the Banks in writing, all of
the representations and warranties contained in the Loan Documents are true and
correct on and as of the date of this Seventh Amendment as though made on that
date and after giving effect to this Seventh Amendment no Event of Default shall
be continuing.
5. Conditions Precedent. The effectiveness of this Seventh Amendment is
conditioned upon the satisfaction by Borrower of each of the following
conditions on or before January 23, 1998:
-3-
<PAGE> 4
(a) Borrower shall have delivered or caused to be delivered to
the Agent executed original counterparts of this Seventh Amendment and
Exhibit A hereto, sufficient in number for distribution to the Agent, the
Banks and Borrower;
(b) Borrower shall have delivered to the Agent executed
original replacement Line A Notes and Line B Notes, for each Bank, in the
forms of Exhibit B and Exhibit C hereto. Such replacement notes shall
reflect the increase in the Line A Commitment herein as well as the
alteration of the Pro Rata Share of each Bank reflected on Annex I hereto;
(c) Borrower shall have paid the Underwriting Fees required in
Section 2 hereof;
(d) The Agent shall have received from Borrower such
documentation as may be required to establish the authority of Borrower to
execute, deliver and perform any of the Loan Documents to which it is a
Party, including, without limitation, this Seventh Amendment and the
replacement Line A Notes and Line B Notes. Such documentation shall
include certified corporate resolutions, incumbency certificates, and such
other certificates or documents as the Agent shall reasonably require;
(e) The Agent shall have received a written legal opinion of
counsel(s) to Borrower and each Guarantor, in form and substance
satisfactory to the Agent, regarding the execution, delivery, performance
and enforceability of this Seventh Amendment, the Guarantors' Consent
hereto and the replacement Line A Notes and Line B Notes;
(f) The Agent shall have received a written certification from
a Responsible Official of Borrower that Borrower and its Subsidiaries are
in compliance with all the terms and provisions of the Loan Documents and
after giving effect to this Seventh Amendment no Default or Event of
Default shall be continuing;
and the satisfaction by the Banks of the following condition:
(g) The applicable Banks shall have made the Adjusting
Purchase Payments as specified in Section 3 hereof.
6. Return of Canceled Notes to Borrower. Upon the effectiveness of this
Seventh Amendment in accordance herewith, including the delivery by Borrower of
all documents required under Section 6 hereof, the Banks shall return the Line A
Notes and Line B Notes that have been replaced pursuant to Section 5(b) hereof
to the Agent for redelivery to Borrower, in each case marked "Canceled."
-4-
<PAGE> 5
7. Amendment to Other Loan Documents. Each of the Loan Documents is hereby
amended such that all references to the Loan Agreement contained therein shall
be deemed to be made with respect to the Loan Agreement as amended hereby. Each
of the Loan Documents are hereby further amended such that any reference
contained therein to any document amended hereby shall be deemed to be made with
respect to such document as amended hereby. Each reference to Loan Documents
generally shall be deemed to include this Seventh Amendment.
8. Loan Documents in Full Force and Effect. Except as modified hereby, the
Loan Documents remain in full force and effect.
9. Effective Dates. Unless otherwise specified herein, and subject to the
satisfaction of all conditions specified in Section 5, each amendment and
modification identified herein shall be deemed effective as of the date of this
Seventh Amendment, provided that the changes to the Pro Rata Shares of the Banks
identified on Annex I hereto shall be deemed effective on the date of the
Adjusting Purchase Payments described in Section 3 of this Seventh Amendment.
10. Governing Law. This Seventh Amendment shall be governed by, and
construed in accordance with, the Laws of the State of California.
11. Severability. If any provision of this Seventh Amendment is held
invalid or unenforceable by any court of competent jurisdiction, such holding
shall not invalidate or render unenforceable any other provision hereof.
12. Counterparts. This Seventh Amendment may be executed in counterparts
and any party may execute any counterpart, each of which shall be deemed to be
an original and all of which, taken together, shall be deemed to be one and the
same document. The execution hereof by any parties shall not become effective
until this Seventh Amendment, and Exhibit A hereto, is executed and delivered by
all parties hereto and thereto.
13. Prior Agreements. This Seventh Amendment contains the entire agreement
between Borrower, the Banks and the Agent with respect to the subject matter
hereof, and all
-5-
<PAGE> 6
prior negotiations, understandings, and agreements with respect thereto are
superseded by this Seventh Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Seventh
Amendment to be duly executed as of the date first above written.
"Borrower" "Banks"
DEL WEBB CORPORATION BANK ONE, ARIZONA, NA, as a Bank
By: ________________________________ By: ________________________________
John A. Spencer
Senior Vice President ________________________________
Printed Name and Title
"Agent"
BANK OF AMERICA NATIONAL
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
TRUST AND SAVINGS ASSOCIATION, as a Bank
as Agent
By: ________________________________
By: ________________________________
________________________________
________________________________ Printed Name and Title
Printed Name and Title
BANKBOSTON, N.A. (formerly known as
"Co-Agent" The First National Bank of Boston)
BANK ONE, ARIZONA, NA, as Co-Agent
By: ________________________________
By: ________________________________ ________________________________
Printed Name and Title
________________________________
Printed Name and Title
-6-
<PAGE> 7
GUARANTY FEDERAL BANK, F.S.B. BANK OF HAWAII
By: ________________________________ By: ________________________________
________________________________ ________________________________
Printed Name and Title Printed Name and Title
CREDIT LYONNAIS LOS ANGELES FIRST UNION NATIONAL BANK,
BRANCH formerly known as First Union National
Bank of North Carolina
By: ________________________________
By: ________________________________
________________________________
Printed Name and Title ________________________________
Printed Name and Title
NATIONSBANK, N.A., formerly known as
NationsBank, N.A. (Carolinas) FLEET NATIONAL BANK
By: ________________________________ By: ________________________________
________________________________ ________________________________
Printed Name and Title Printed Name and Title
-7-
<PAGE> 8
EXHIBIT A
GUARANTORS' CONSENTS
The undersigned do each hereby (a) consent to that certain Seventh
Amendment to Amended and Restated Revolving Loan Agreement, dated as of January
15, 1998, by and among Del Webb Corporation ("Borrower"), the Banks named
therein, Bank of America National Trust and Savings Association, as Agent, and
Bank One, Arizona, NA, as Co-Agent, including the increase of $50,000,000 in the
Line A Commitment contained therein and (b) reaffirm (i) their respective
obligations under that certain Subsidiary Guaranty, dated as of June 27, 1995,
and (ii) that the Subsidiary Guaranty remains in full force and effect and that,
without limitation, any indebtedness of Borrower represented by the $50,000,000
increase in the Line A Commitment constitutes "Guaranteed Obligations"
thereunder.
Dated: January 15, 1998
Asset One Corp., an Arizona Del Webb Communities, Inc.,
corporation an Arizona corporation
By: ______________________________
Donald V. Mickus By: _______________________________
Treasurer Donald V. Mickus
Treasurer
Del Webb California Corp.,
an Arizona corporation Del Webb Conservation Holding Corp., an
Arizona corporation
By: _______________________________
Donald V. Mickus By: _______________________________
Treasurer Donald V. Mickus
Treasurer
Del Webb Commercial Properties
Corporation, an Arizona corporation Del Webb Home Construction, Inc.,
an Arizona corporation
By: _______________________________
Donald V. Mickus By: _______________________________
Treasurer Donald V. Mickus
Treasurer
Exhibit A
Page 1 of 5
<PAGE> 9
Del Webb Communities of Nevada, Inc. Del Webb's Coventry Homes of Nevada,
(formerly known as Del Webb Kingswood Inc., an Arizona corporation (formerly
Parke, Inc.), an Arizona corporation known as Del Webb of Nevada, Inc.)
By: _______________________________ By: _______________________________
Donald V. Mickus Donald V. Mickus
Treasurer Treasurer
The Villages at Desert Hills, Inc. Del Webb's Coventry Homes Construction
(formerly known as Del Webb Lakeview of Tucson Co., an Arizona corporation
Corporation), an Arizona corporation
By: _______________________________
By: _______________________________ Donald V. Mickus
Donald V. Mickus Treasurer
Treasurer
Del Webb's Coventry Homes of Tucson,
Del Webb's Coventry Homes Construction Inc., an Arizona corporation
Co., an Arizona corporation
By: _______________________________
By: _______________________________ Donald V. Mickus
Donald V. Mickus Treasurer
Treasurer
Del E. Webb Cactus Development Corp.,
Del Webb's Coventry Homes, Inc., an Arizona corporation
an Arizona corporation
By: _______________________________
By: _______________________________ Donald V. Mickus
Donald V. Mickus Treasurer
Treasurer
Exhibit A
Page 2 of 5
<PAGE> 10
Del E. Webb Development Co., L.P., Fairmount Mortgage, Inc., an Arizona
a Delaware limited partnership corporation
By: Del Webb Communities, Inc.,
general partner By: _______________________________
Richard W. Day
Treasurer
By:________________________
Donald V. Mickus
Treasurer Glen Harbor Joint Venture, an Arizona
general partnership
Del E. Webb Foothills Corporation, By: Del E. Webb Glen Harbor
an Arizona corporation Development Corporation,
general partner
By: _______________________________
Donald V. Mickus By:_________________________
Treasurer Donald V. Mickus
Treasurer
Del E. Webb Glen Harbor Development
Corporation, an Arizona corporation Terravita Commercial Corp., an Arizona
corporation
By: _______________________________
Donald V. Mickus By: _______________________________
Treasurer Donald V. Mickus
Treasurer
DW Aviation Co., an Arizona
corporation
Terravita Corp., an Arizona corporation
By: _______________________________
Donald V. Mickus By: _______________________________
Treasurer Donald V. Mickus
Treasurer
Exhibit A
Page 3 of 5
<PAGE> 11
Terravita Home Construction Co., New Mexico Asset Corporation,
an Arizona corporation an Arizona corporation
By: _______________________________ By: _______________________________
Donald V. Mickus Donald V. Mickus
Treasurer Treasurer
Trovas Company, an Arizona corporation Del Webb Texas Limited Partnership,
an Arizona limited partnership
By: _______________________________ By: Del Webb Southwest Co.,
Donald V. Mickus an Arizona corporation
Treasurer
By:_________________________
Trovas Construction Co., an Arizona Donald V. Mickus
corporation Treasurer
By: _______________________________ New Mexico Asset Limited Partnership
Donald V. Mickus (formerly known as New Mexico
Treasurer Investment Co. Limited Partnership), an
Arizona limited partnership
Del Webb Limited Holding Co., By: Del Webb Corporation, a Delaware
an Arizona corporation corporation
By: _______________________________ By:_________________________
Donald V. Mickus Donald V. Mickus
Treasurer Treasurer
Del Webb Southwest Co., an Arizona Bellasera Corp., an Arizona corporation
corporation
By: _______________________________
By: _______________________________ Donald V. Mickus
Donald V. Mickus Treasurer
Treasurer
Exhibit A
Page 4 of 5
<PAGE> 12
Del Webb's Sunflower of Tucson, Inc., an
Arizona corporation
By: _______________________________
Donald V. Mickus
Treasurer
Exhibit A
Page 5 of 5
<PAGE> 13
EXHIBIT B
LINE A NOTE
$______________ ______________, 1998
Los Angeles, California
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
______________________________________________________ (the "Bank"), the
principal amount of __________________________________________________________
($_____________) or such lesser aggregate amount of Advances as may be made by
the Bank with respect to the Line A Commitment under the Loan Agreement referred
to below, together with interest on the principal amount of each Advance made
hereunder and remaining unpaid from time to time from the date of each such
Advance until the date of payment in full, payable as hereinafter set forth.
Reference is made to the Amended and Restated Revolving Loan
Agreement, dated as of June 27, 1995, as amended by that certain First Amendment
to Amended and Restated Revolving Loan Agreement, dated as of December 15, 1995,
that certain Second Amendment to Amended and Restated Revolving Loan Agreement,
dated as of July 22, 1996, that certain Third Amendment to Amended and Restated
Revolving Loan Agreement, dated as of March 31, 1997, that certain Fourth
Amendment to Amended and Restated Revolving Loan Agreement, dated April 29,
1997, that certain Fifth Amendment to Amended and Restated Revolving Loan
Agreement, dated October 1, 1997, that certain Sixth Amendment to Amended and
Restated Revolving Loan Agreement, dated as of December 1, 1997 and that certain
Seventh Amendment to Amended and Restated Revolving Loan Agreement, of even date
herewith, by and among the undersigned, as Borrower, the Banks which are parties
thereto, Bank One, Arizona, NA, as Co-Agent, and Bank of America National Trust
and Savings Association, as Agent for the Banks (as so amended, the "Loan
Agreement"). Terms defined in the Loan Agreement and not otherwise defined
herein are used herein with the meanings given those terms in the Loan
Agreement. This is one of the Line A Notes referred to in the Loan Agreement,
and any holder hereof is entitled to all of the rights, remedies, benefits and
privileges provided for in the Loan Agreement as originally executed or as it
may from time to time be supplemented, modified or amended. The Loan Agreement,
among other things, contains provisions for acceleration of the maturity hereof
upon the happening of certain stated events upon the terms and conditions
therein specified.
The principal indebtedness evidenced by this Line A Note shall be
payable as provided in the Loan Agreement and in any event on the Maturity Date.
Interest shall be payable on the outstanding daily unpaid principal
amount of Advances from the date of each such Advance until payment in full and
shall accrue and be
Exhibit B
Page 1 of 2
<PAGE> 14
payable at the rates and on the dates set forth in the Loan Agreement both
before and after default and before and after maturity and judgment, with
interest on overdue principal and interest to bear interest at the rate set
forth in Section 3.7 of the Loan Agreement, to the fullest extent permitted by
applicable Law.
Each payment hereunder shall be made to the Agent at the Agent's
Office for the account of the Bank in immediately available funds not later than
11:00 a.m. (San Francisco time) on the day of payment (which must be a Banking
Day). All payments received after 11:00 a.m. (San Francisco time) on any
particular Banking Day shall be deemed received on the next succeeding Banking
Day. All payments shall be made in lawful money of the United States of America.
The Bank shall use its best efforts to keep a record of Advances
made by it and payments received by it with respect to this Line A Note, and
such record shall be presumptive evidence of the amounts owing under this Line A
Note.
The undersigned hereby promises to pay all costs and expenses of any
rightful holder hereof incurred in collecting the undersigned's obligations
hereunder or in enforcing or attempting to enforce any of such holder's rights
hereunder, including reasonable attorneys' fees and disbursements, whether or
not an action is filed in connection therewith.
The undersigned hereby waives presentment, demand for payment,
dishonor, notice of dishonor, protest, notice of protest and any other notice or
formality, to the fullest extent permitted by applicable Laws.
This Line A Note shall be delivered to and accepted by the Bank in
the State of California, and shall be governed by, and construed and enforced in
accordance with, the local Laws thereof.
This Line A Note replaces, amends and restates that certain Line A
Note, dated as of October 1, 1997, in the principal amount of $____________,
heretofore delivered by the undersigned to the Bank pursuant to the Loan
Agreement.
DEL WEBB CORPORATION,
a Delaware corporation
By: _____________________________________
_____________________________________
Printed Name and Title
Exhibit B
Page 2 of 2
<PAGE> 15
EXHIBIT C
LINE B NOTE
$_____________ ______________, 1998
Los Angeles, California
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
________________________________________________________ (the "Bank"), the
principal amount of _______________________________________________________
($____________) or such lesser aggregate amount of Advances as may be made by
the Bank with respect to the Line B Commitment under the Loan Agreement referred
to below, together with interest on the principal amount of each Advance made
hereunder and remaining unpaid from time to time from the date of each such
Advance until the date of payment in full, payable as hereinafter set forth.
Reference is made to the Amended and Restated Revolving Loan
Agreement, dated as of June 27, 1995, as amended by that certain First Amendment
to Amended and Restated Revolving Loan Agreement, dated as of December 15, 1995,
that certain Second Amendment to Amended and Restated Revolving Loan Agreement,
dated as of July 22, 1996, that certain Third Amendment to Amended and Restated
Revolving Loan Agreement, dated as of March 31, 1997, that certain Fourth
Amendment to Amended and Restated Revolving Loan Agreement, dated April 29,
1997, that certain Fifth Amendment to Amended and Restated Revolving Loan
Agreement, dated October 1, 1997, that certain Sixth Amendment to Amended and
Restated Revolving Loan Agreement, dated as of December 1, 1997 and that certain
Seventh Amendment to Amended and Restated Revolving Loan Agreement, of even date
herewith, by and among the undersigned, as Borrower, the Banks which are parties
thereto, Bank One, Arizona, NA, as Co-Agent, and Bank of America National Trust
and Savings Association, as Agent for the Banks (as so amended, the "Loan
Agreement"). Terms defined in the Loan Agreement and not otherwise defined
herein are used herein with the meanings given those terms in the Loan
Agreement. This is one of the Line B Notes referred to in the Loan Agreement,
and any holder hereof is entitled to all of the rights, remedies, benefits and
privileges provided for in the Loan Agreement as originally executed or as it
may from time to time be supplemented, modified or amended. The Loan Agreement,
among other things, contains provisions for acceleration of the maturity hereof
upon the happening of certain stated events upon the terms and conditions
therein specified.
The principal indebtedness evidenced by this Line B Note shall be
payable as provided in the Loan Agreement and in any event on the Maturity Date.
Exhibit C
Page 1 of 2
<PAGE> 16
Interest shall be payable on the outstanding daily unpaid principal
amount of Advances from the date of each such Advance until payment in full and
shall accrue and be payable at the rates and on the dates set forth in the Loan
Agreement both before and after default and before and after maturity and
judgment, with interest on overdue principal and interest to bear interest at
the rate set forth in Section 3.7 of the Loan Agreement, to the fullest extent
permitted by applicable Law.
Each payment hereunder shall be made to the Agent at the Agent's
Office for the account of the Bank in immediately available funds not later than
11:00 a.m. (San Francisco time) on the day of payment (which must be a Banking
Day). All payments received after 11:00 a.m. (San Francisco time) on any
particular Banking Day shall be deemed received on the next succeeding Banking
Day. All payments shall be made in lawful money of the United States of America.
The Bank shall use its best efforts to keep a record of Advances
made by it and payments received by it with respect to this Line B Note, and
such record shall be presumptive evidence of the amounts owing under this Line B
Note.
The undersigned hereby promises to pay all costs and expenses of any
rightful holder hereof incurred in collecting the undersigned's obligations
hereunder or in enforcing or attempting to enforce any of such holder's rights
hereunder, including reasonable attorneys' fees and disbursements, whether or
not an action is filed in connection therewith.
The undersigned hereby waives presentment, demand for payment,
dishonor, notice of dishonor, protest, notice of protest and any other notice or
formality, to the fullest extent permitted by applicable Laws.
This Line B Note shall be delivered to and accepted by the Bank in
the State of California, and shall be governed by, and construed and enforced in
accordance with, the local Laws thereof.
This Line B Note replaces, amends and restates that certain Line B
Note, dated as of October 1, 1997 in the principal amount of $_______________ ,
heretofore delivered by the undersigned to the Bank pursuant to the Loan
Agreement.
DEL WEBB CORPORATION,
a Delaware corporation
By: _____________________________________
_____________________________________
Printed Name and Title
Exhibit C
Page 2 of 2
<PAGE> 17
ANNEX I
DEL WEBB CORPORATION
BANK GROUP COMMITMENTS
<TABLE>
<CAPTION>
Total Prior Increase in
Line "A" Line "B" Commitment Commitment Aggregate
Syndicate Bank Pro Rata Share $307,000,000 $93,000,000 $400,000,000 $350,000,000 Commitment
- -------------- -------------- ------------ ----------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Bank of America NT & SA 20.00% $ 61,400,000 $ 18,600,000 $ 80,000,000 $ 85,000,000 --
Bank One, Arizona, NA 16.25% 49,887,500 15,112,500 65,000,000 65,000,000 --
NationsBank, N.A. 12.50% 38,375,000 11,625,000 50,000,000 45,000,000 $ 5,000,000
Guaranty Federal Bank, F.S.B. 12.50% 38,375,000 11,625,000 50,000,000 40,000,000 10,000,000
BankBoston, N.A. 10.00% 30,700,000 9,300,000 40,000,000 35,000,000 5,000,000
First Union National Bank 7.50% 23,025,000 6,975,000 30,000,000 25,000,000 5,000,000
Bank of Hawaii 7.50% 23,025,000 6,975,000 30,000,000 20,000,000 10,000,000
Fleet National Bank 8.75% 26,862,500 8,137,500 35,000,000 20,000,000 15,000,000
Credit Lyonnais 5.00% 15,350,000 4,650,000 20,000,000 15,000,000 5,000,000
TOTAL: 100.00% $307,000,000 $ 93,000,000 $400,000,000 $350,000,000
</TABLE>
Annex I
Page 1 of 1
<PAGE> 18
ANNEX II
ADJUSTING PURCHASE PAYMENTS
Aggregate Principal Balance of existing Promissory Notes immediately prior to
effective date of Seventh Amendment - $271,000,000 ("Carryover Principal
Balance").
<TABLE>
<CAPTION>
Banks Making Former Share New Share of
Adjusting of Carryover Former Carryover New Adjusting Purchase Adjusting Purchase
Purchase Payments Principal Balance Pro Rata Share Principal Balance Pro Rata Share Payment to Pay Payment to Receive
- ----------------- ----------------- -------------- ----------------- -------------- -------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Bank of Hawaii $ 15,485,714 5.71428571% $ 20,325,000 7.50% $ 4,839,286
First Union National 19,357,143 7.14285714% 20,325,000 7.50% 967,857
Bank
Fleet National Bank 15,485,714 5.71428571% 23,712,500 8.75% 8,226,786
Guaranty Federal, 30,971,428 11.42857143% 33,875,000 12.50% 2,903,572
F.S.B.
BankBoston, N.A. 27,100,000 10.00000000% 27,100,000 10.00% -0- -0-
Credit Lyonnais 11,614,286 4.28571429% 13,550,000 5.00% 1,935,714
<CAPTION>
Banks Receiving Adjusting Purchase Payments
<S> <C> <C> <C> <C> <C> <C>
Bank of America 65,814,286 24.28571429% 54,200,000 20.00% 11,614,286
Bank One, 50,328,572 18.57142857% 44,037,500 16.25% 6,291,072
Arizona, NA
NationsBank, N.A. 34,842,857 12.85714286% 33,875,000 12.50% 967,857
TOTAL: $271,000,000 100.000000% $271,000,000 100.00000000% $ 18,873,215 $ 18,873,215
</TABLE>
Annex II
Page 1 of 1
<PAGE> 19
ANNEX III
SUBSIDIARIES
Annex III
Page 1 of 1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1998 AND THE CONSOLIDATED STATEMENT
OF EARNINGS FOR THE NINE MONTHS ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 13,746
<SECURITIES> 0
<RECEIVABLES> 33,638
<ALLOWANCES> 0
<INVENTORY> 1,107,277
<CURRENT-ASSETS> 0
<PP&E> 32,990
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,297,587
<CURRENT-LIABILITIES> 0
<BONDS> 736,717
0
0
<COMMON> 18
<OTHER-SE> 327,616
<TOTAL-LIABILITY-AND-EQUITY> 1,297,587
<SALES> 0
<TOTAL-REVENUES> 781,692
<CGS> 0
<TOTAL-COSTS> 628,097
<OTHER-EXPENSES> 114,672
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 38,923
<INCOME-TAX> 14,012
<INCOME-CONTINUING> 24,911
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,911
<EPS-PRIMARY> 1.40
<EPS-DILUTED> 1.36
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE IS A RESTATEMENT OF A PREVIOUSLY FILED SCHEDULE TO DISCLOSE AND
DILUTED EARNINGS PER SHARE AS NOW REQUIRED BY STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 128. THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AS OF MARCH 1997 AND THE
CONSOLIDATED STATEMENT OF EARNINGS FOR THE NINE MONTHS END MARCH 31, 1997 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 15,387
<SECURITIES> 0
<RECEIVABLES> 26,052
<ALLOWANCES> 0
<INVENTORY> 948,151
<CURRENT-ASSETS> 0
<PP&E> 21,703
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,081,705
<CURRENT-LIABILITIES> 0
<BONDS> 573,951
0
0
<COMMON> 18
<OTHER-SE> 287,299
<TOTAL-LIABILITY-AND-EQUITY> 1,081,705
<SALES> 0
<TOTAL-REVENUES> 838,294
<CGS> 0
<TOTAL-COSTS> 679,892
<OTHER-EXPENSES> 117,204
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 41,198
<INCOME-TAX> 14,831
<INCOME-CONTINUING> 26,367
<DISCONTINUED> 0
<EXTRAORDINARY> (1,285)
<CHANGES> 0
<NET-INCOME> 25,082
<EPS-PRIMARY> 1.43
<EPS-DILUTED> 1.40
</TABLE>
<PAGE> 1
EXHIBIT 99.1
ASSET ACQUISITION AGREEMENT
BY AND AMONG
DEL WEBB COMMUNITIES, INC., an Arizona Corporation,
SPRUCE CREEK GOLF AND COUNTRY CLUB, INC.,
a Florida Corporation,
SPRUCE CREEK GOLF AND COUNTRY CLUB HOMEOWNERS' ASSOCIATION, INC.,
a Florida Corporation,
and
SPRUCE CREEK PRESERVE HOMEOWNERS' ASSOCIATION, INC.,
a Florida Corporation.
December 22, 1997
<PAGE> 2
TABLE OF CONTENTS - ASSET ACQUISITION AGREEMENT
-----------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
RECITALS ......................................................................... -1-
1 Definitions ................................................................. -2-
2 Basic Transaction ........................................................... -2-
2.1 Purchase and sale of assets ....................................... -2-
2.2 Assumption of liabilities ......................................... -2-
2.3 Purchase Price .................................................... -2-
2.3.1 Purchase Price Adjustment ............................... -2-
2.3.2 Escrow Payment .......................................... -3-
2.3.3 Allocation of Purchase Price ............................ -3-
2.4 The Closing ....................................................... -3-
2.5 Documents to be Delivered at Closing .............................. -3-
2.5.1 Ancillary Agreements .................................... -3-
2.5.2 Closing Documents ....................................... -4-
3 Representations and Warranties of Sellers and Controlling Shareholders ...... -5-
3.1 Organization of Seller ............................................ -5-
3.2 Authorization of transaction ...................................... -5-
3.3 Noncontravention .................................................. -5-
3.4 Consents .......................................................... -6-
3.5 Brokers' fees ..................................................... -6-
3.6 Title to assets ................................................... -6-
3.7 Financial Statements .............................................. -6-
3.8 Events subsequent to Most Recent Fiscal Period End ................ -6-
3.9 Undisclosed liabilities ........................................... -8-
3.10 Legal compliance .................................................. -8-
3.11 Tax matters ....................................................... -8-
3.12 Real property ..................................................... -9-
3.13 Intellectual Property ............................................. -11-
3.14 Tangible assets ................................................... -13-
3.15 Inventory ......................................................... -13-
3.16 Contracts ......................................................... -13-
3.17 Prepaids and Receivables (IF APPLICABLE) .......................... -14-
3.18 Powers of Attorney ................................................ -14-
3.19 Insurance ......................................................... -14-
3.20 Litigation ........................................................ -15-
3.21 Product Warranty .................................................. -15-
3.22 Product Liability ................................................. -15-
3.23 Employees ......................................................... -15-
3.24 Employee Benefits ................................................. -15-
3.25 Guaranties ........................................................ -16-
3.26 Environmental Matters ............................................. -16-
3.27 Certain business relationships With Sellers ....................... -17-
3.28 Disclosure ........................................................ -17-
3.30 Accredited Investor Representations ............................... -18-
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
4 Representations and Warranties of Buyer .................................... -18-
4.1 Organization of Buyer ............................................ -18-
4.2 Authorization of transaction ..................................... -18-
4.3 Noncontravention ................................................. -18-
4.5 Brokers' fees .................................................... -18-
5 Pre-Closing Covenants ...................................................... -18-
5.1 General .......................................................... -18-
5.2 Notices and consents ............................................. -18-
5.3 Operation of business ............................................ -19-
5.4 Preservation of business ......................................... -19-
5.5 Full access ...................................................... -19-
5.6 Notice of developments ........................................... -19-
5.7 Exclusivity ...................................................... -19-
5.8 Title insurance .................................................. -20-
5.9 Survey ........................................................... -20-
5.10 Insurance ........................................................ -20-
5.11 Confidentiality .................................................. -20-
5.12 Employees: Compliance with WARN Act .............................. -20-
5.13 Condemnation ..................................................... -21-
6 Post-Closing Covenants ..................................................... -21-
6.1 General .......................................................... -21-
6.2 Litigation support ............................................... -21-
6.3 Confidentiality .................................................. -21-
6.4 Change of Name ................................................... -21-
6.5 Continuation of Health Plan Coverage ............................. -22-
7 Conditions to Obligation to Close .......................................... -22-
7.1 Conditions to obligation of Buyer ................................ -22-
7.2 Conditions to obligation of Sellers .............................. -23-
8 Survival; Indemnification .................................................. -24-
8.1 Survival of Representation, Warranties and Covenants ............. -24-
8.2 Indemnification Rights and Obligations ........................... -24-
8.3 Method of Asserting Claims ....................................... -25-
8.4 Payment of Indemnification Obligations ........................... -26-
9 Termination ................................................................ -27-
9.1 Termination of Agreement ......................................... -27-
9.2 Effect of termination ............................................ -27-
10 Resolution of Disputes ..................................................... -27-
11 Miscellaneous .............................................................. -28-
11.1 No third-party beneficiaries ..................................... -28-
11.2 Entire agreement ................................................. -28-
11.3 Succession and assignment ........................................ -28-
11.4 Counterparts ..................................................... -28-
11.5 Headings ......................................................... -28-
11.6 Notices .......................................................... -28-
</TABLE>
-ii-
<PAGE> 4
11.7 Governing law............................................ -30-
11.8 Amendments and waivers................................... -30-
11.9 Severability............................................. -30-
11.10 Expenses................................................. -30-
11.11 Construction............................................. -30-
11.12 Incorporation of Exhibits and Schedules.................. -31-
11.13 Failure of performance................................... -31-
11.14 Submission of jurisdiction............................... -31-
Exhibits
- --------
Exhibit A Related Entities
Exhibit B Definitions
Exhibit C Allocation of Purchase Price
Exhibit D Assignment and Assumption Agreement
Exhibit E Covenant Not to Compete
Exhibit F Consulting Agreement
Exhibit G Thompson Employment Agreement
Exhibit H Riggs Employment Agreement
Exhibit I Assignment of Development Order Agreement
Exhibit J Assignment of Developer's Rights
Exhibit K Permitted Exceptions
Exhibit L Bill of Sale
Exhibit M Financial Statements
Exhibit N Escrow Agreement
Exhibit O Utility Company Assignment Agreement
Schedules
- ---------
2.2 Assumed Liabilities
3.4 Consents
3.9 Undisclosed Liabilities
3.10 Legal Compliance
3.11.3 Tax Returns
3.11.6 Tax Basis
3.12.1 Real Property
3.12.1(d) Licenses, Permits, Approvals
3.12.1(e) Leases (Seller as Lessor)
3.12.1(l) Real Property Contracts
3.12.2 Leases (Sellers as Lessees)
3.13 Intellectual Property
3.13.3 Patents, Trademarks
3.13.4 Intellectual Property Licenses
3.14 Tangible Assets
3.15 Inventory
3.16 Contracts
3.17 Prepaids, Receivables
3.19 Insurance
3.20 Litigation
-iii-
<PAGE> 5
3.21 Warranty
3.23 Employees
3.24 Employee Benefits
3.27 Business Relationships
3x Claims, Deposits, etc.
4.4 Consents
-iv-
<PAGE> 6
ASSET ACQUISITION AGREEMENT
PREFACE
-------
This Asset Acquisition Agreement (the "Agreement") is entered into
effective as of December 22, 1997 by and among, Del Webb Communities, Inc., an
Arizona corporation ("Buyer"), Spruce Creek Golf and Country Club, Inc., a
Florida corporation ("Golf and Country Club"), Spruce Creek Golf and Country
Club Homeowners' Association, Inc., a Florida corporation ("SCGCCHOA"), and
Spruce Creek Preserve Homeowners' Association, Inc., a Florida corporation
("SCPHOA"), (Golf and Country Club, SCGCCHOA and SCPHOA hereinafter are
referred to collectively as "Sellers"). Buyer and Sellers hereinafter are
referred to singularly as "Party" and referred to collectively herein as the
"Parties." Harvey D. Erp ("H. Erp"), Brenda Erp ("B. Erp"), Jay A. Thompson
("J. Thompson") and Lori A. Thompson ("L. Thompson") (H. Erp, B. Erp, J.
Thompson and L. Thompson are the controlling shareholders of Golf and Country
Club and hereinafter are referred to collectively as "Controlling
Shareholders") have agreed to execute this Agreement in their individual
capacities to consent and agree to the terms hereof and to indicate their
agreement to convey any interest they might have individually in any of the
Acquired Assets. For valuable consideration, Spruce Creek Development Company
of Ocala, Inc., a Florida corporation ("Development Company"), has agreed to
execute this Agreement to consent to and assign its rights under the Spruce
Creek Golf and Country Club FQD Development Order.
RECITALS
--------
A. Sellers and Controlling Shareholders have developed retirement
communities in Central Florida in the past and currently have two (2)
communities under development. Sellers currently operate as the developer of
communities known as the "Spruce Creek Golf and Country Club" and the "Spruce
Creek Preserve." The Spruce Creek Golf and Country Club and the Spruce Creek
Preserve hereinafter are sometimes referred to as the "Developments." (Sellers'
operations in connection with the Spruce Creek Golf and Country Club and the
Spruce Creek Preserve are collectively referred to as the "Business").
B. SCGCCHOA and SCPHOA are the Homeowners' Associations, respectively,
of the Spruce Creek Golf and Country Club and the Spruce Creek Preserve and,
thereby, maintain the private streets, landscape buffers and drainage areas for
the Developments. SCGCCHOA and SCPHOA are executing this Agreement as "Sellers"
as an indication of their agreement to transfer any prepaid amenity fees held
by any Seller from such Seller to Buyer as successor developer.
C. Buyer desires to acquire from Sellers, and Sellers desire to sell,
transfer and assign to Buyer, the assets of Sellers which are used to operate
the Business for the purchase price and upon the terms and subject to the
conditions hereinafter set forth.
D. The Parties acknowledge and agree that Golf and Country Club will
remain as a separate entity and will continue to operate a separate business
(as permitted hereunder) following the Closing of the transaction contemplated
hereby.
E. The employees of Sellers will remain employed by Sellers subsequent
to Closing unless specifically indicated otherwise herein.
F. The Parties acknowledge and agree that Buyer shall not acquire, as a
result of this Agreement or otherwise, any interest in past, current or future
real estate projects developed by Sellers or Controlling Shareholders other
than as contemplated herein. As a condition of its proceeding with the
transactions evidenced by this Agreement, Buyer has required certain indemnity
agreements from Sellers and Controlling Shareholders to protect
-1-
<PAGE> 7
Buyer against any and all potential claims arising out of past and current or
future business operations of Sellers and Controlling Shareholders and the
entities related to Sellers listed on Exhibit A, all of which the parties agree
are separate and distinct from the assets Buyer is acquiring hereunder.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties hereby agree as follows:
1 Definitions. As used herein and in the attached Schedules and Exhibits,
capitalized terms have the meanings set forth in Exhibit B, attached hereto,
which apply to both the singular and the plural forms of such terms.
2 Basic Transaction.
2.1 Purchase and sale of assets. On and subject to the terms and
conditions of this Agreement, Buyer agrees to purchase from Sellers, and
Sellers agree to sell, transfer, convey and deliver to Buyer, all of the
Acquired Assets at the Closing for the consideration specified below in this
Section 2.
2.2 Assumption of liabilities. On and subject to the terms and conditions
of this Agreement, Buyer agrees to assume and become responsible for all of
the Assumed Liabilities at the Closing. Buyer shall not assume or have any
responsibility, however, with respect to any other obligation or Liability of
Sellers not included within the definition of Assumed Liabilities.
2.3 Purchase Price. Buyer agrees to pay to Sellers at the Closing an
amount equal to the sum of: i) the book value of the Balance Sheet Assets as
set forth on the books and records of Sellers on December 31, 1997; provided,
however, that the book value of Balance Sheet Assets for this purpose shall
include the book value of assets transferred from the books of Golf and Country
Club to Utility Company on or about December 31, 1997 equal to approximately
One Million Two Hundred Thousand Dollars ($1,200,000), plus ii) Seven Million
Dollars ($7,000,000), plus iii) the amount of customer deposits held by Sellers
on the Closing Date, less iv) the Assumed Liabilities (the sum of [i], [ii] and
[iii] shall be referred to hereinafter collectively as the "Purchase Price").
2.3.1 Purchase Price Adjustment.
(a) The book value of the Balance Sheet Assets will be
determined as of October 31, 1997. There will be pre-Closing adjustments to the
Purchase Price to the extent the book value is determined to have changed as of
December 31, 1997 based upon changes in the Balance Sheet Assets from October
31, 1997 through December 31, 1997. If feasible, within forty (40) days after
the Closing Date, Sellers shall deliver to Buyer a balance sheet of the
Business as of the Closing Date (the "Closing Date Balance Sheet") prepared by
Sellers and examined on a limited basis by KPMG Peat Marwick, reflecting the
Balance Sheet Assets sold to Buyer hereunder. Such balance sheet shall be
prepared in accordance with a method acceptable to Buyer applied on a basis
consistent with the preparation of the Most Recent Financial Statements.
(b) If Buyer has any objection to the Closing Date Balance
Sheet, Buyer shall deliver to Sellers a detailed statement describing such
objections within ten (10) days after Buyer's receipt of the Closing Date
Balance Sheet. Buyer and Sellers shall use reasonable efforts to resolve any
such objections. In the event that Buyer and Sellers are unable to finally
resolve such objections within thirty (30) days after Sellers' receipt of such
objections, Buyer and Sellers shall, within ten (10) days after such thirty-day
period, notify the Orlando, Florida office of Price Waterhouse or its successor
to resolve any remaining objections. The determination made by Price Waterhouse
or its successor shall be made within thirty (30) days, shall be set forth in
writing and shall be conclusive and binding upon the Parties hereto. The fees
and expenses of Price Waterhouse or its successor shall be shared equally by
Buyer and Sellers. Buyer will revise the Closing Date Balance Sheet to reflect
the resolution of any objections thereto pursuant to this Section 2.3.1(b).
-2-
<PAGE> 8
(c) If the aggregate book value of the Balance Sheet Assets as
reflected on the Closing Date Balance Sheet, as revised to reflect any
revisions thereto made pursuant to Section 2.3.1(b), if applicable, and as
revised to include any assets transferred from the books of Golf and
Country Club to Utility Company on or about December 31, 1997 as
contemplated above, if applicable, is less than the book value of the
Balance Sheet Assets used to determine the Purchase Price in subclause
2.3(i) above, Sellers will pay to Buyer an amount equal to such deficiency
plus interest thereon at the Applicable Rate from the Closing Date to the
date such payment is made by wire transfer or other immediately available
funds within three business days after the date on which the Closing Date
Balance Sheet is finally determined pursuant to Section 2.3.1(b). If the
aggregate book value of the Balance Sheet Assets as reflected on the
Closing Date Balance Sheet, as revised to reflect any revisions thereto
made pursuant to Section 2.3.1(b), if applicable, and as revised to
include any assets transferred from the books of Golf and Country Club to
Company on or about December 31, 1997 as contemplated above, if
applicable, is greater than the book value of the Balance Sheet Assets
used to determine the Purchase Price in subclause 2.3(i) above, Buyer will
pay to Sellers an amount equal to such excess plus interest thereon at the
Applicable Rate from the Closing Date to the date such payment is made by
wire transfer or other immediately available funds within three business
days after the date on which the Closing Date Balance Sheet is finally
determined pursuant to Section 2.3.1(b).
2.3.2 Escrow Payment. The Parties acknowledge that Buyer has placed
Two Hundred Fifty Thousand Dollars ($250,000) in an escrow account (the
"Escrow Deposit") with the Escrow Agent as a good faith deposit to be
applied at Closing against Buyer's obligation to deliver the Purchase
Price. The Escrow Deposit becomes non-refundable on full execution of this
Agreement and upon final completion of the Exhibits and Schedules hereto
(approved by Buyer and Seller) including any supplements required by
Section 5.6; provided, however, that the Escrow Deposit is refundable to
Buyer in the event of (i) default of this Agreement by Sellers or
Controlling Shareholders, (ii) failure to obtain the requisite third-party
consents identified by Buyer on or before ten (10) days prior to Closing,
or failure to obtain governmental consents to consummate the transactions
contemplated hereby, or (iii) the exercise of Buyer's rights to terminate
this Agreement as contemplated by Section 5.8, Section 5.13 and Section
9.1 hereof.
2.3.3 Allocation of Purchase Price. The Parties agree to allocate
the Purchase Price among the Acquired Assets as provided in Code Section
1060 in accordance with the allocation schedule attached hereto as Exhibit
C including the classification of a minimum of Seven Million Dollars
($7,000,000) of the Purchase Price as goodwill.
2.4 The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Holland & Knight
in Orlando, Florida, commencing at 10:00 a.m. local time on January 15, 1998,
or on such other date as shall be agreed in writing by Buyer and Sellers or as
extended by Section 7.1 hereof (the "Closing Date").
2.5 Documents to be Delivered at Closing.
2.5.1 Ancillary Agreements. At Closing, the Parties shall execute,
enter into and deliver the following documents ("Ancillary Agreements")
(the Ancillary Agreements shall be delivered to the Escrow Agent in the
event Buyer elects to pay any portion of the Purchase Price by delivering
Common Stock as contemplated hereunder):
(a) an assignment and assumption agreement ("Assignment and
Assumption Agreement") substantially in the form attached hereto as
Exhibit D related to the assignment by Sellers of the Acquired Assets set
forth on Schedules 3.13, 3.16, 3.17, 3.12.1(d), 3.24, and 3x and related
to the assumption by Buyer of the Acquired Liabilities set forth on
Schedule 2.2.
(b) a covenant-not-to-compete ("Covenant-not-to-Compete") by
and among Sellers, Controlling Shareholders, and Buyer, substantially in
the form attached hereto as Exhibit E.
-3-
<PAGE> 9
(c) a consulting agreement ("Consulting Agreement") by and between H.
Erp and Buyer, substantially in the form attached hereto as Exhibit F.
(d) an employment agreement ("Thompson Employment Agreement") by and
between J. Thompson and Buyer, substantially in the form attached hereto as
Exhibit G.
(e) an employment agreement ("Riggs Employment Agreement") by and
between David Riggs and Buyer, substantially in the form attached hereto as
Exhibit H.
(f) an agreement for transfer of land use and environmental approvals
("Assignment of Development Order Agreement"), substantially in the form
attached hereto as Exhibit I.
(g) one or more assignments of developer's rights, as appropriate
("Assignment of Developer's Rights"), substantially in the form attached hereto
as Exhibit J.
2.5.2 Closing Documents. At Closing, the Parties, as appropriate,
shall deliver the following documents and items ("Closing Documents") (the
Closing Documents shall be delivered to the Escrow Agent in the event Buyer
elects to pay any portion of the Purchase Price by delivering Common Stock as
contemplated hereunder):
(a) Deliveries by Sellers.
(1) Sellers shall execute and deliver to Buyer for recording a
special warranty deed ("Special Warranty Deed") conveying the Real Property to
Buyer free and clear of all liens, charges and encumbrances excepting only the
Permitted Exceptions attached hereto as Exhibit K and the matters previously
approved in writing by Buyer.
(2) Sellers shall deliver a bill of sale ("Bill of Sale")
transferring title to the Acquired Assets listed on Schedule 3.14 to Buyer,
substantially in the form attached hereto as Exhibit L.
(3) Sellers shall deliver certified copies of resolutions of
the Board of Directors and of their shareholders authorizing the transaction
contemplated hereby.
(4) Sellers shall deliver to Buyer an officer's certificate to
the effect that each of the conditions specified below in Section 7.1.2
through Section 7.1.8 are satisfied in all respects.
(5) Sellers shall deliver to Buyer an officer's certificate to
the effect that all representations and warranties herein, and Schedules and
Exhibits attached hereto, are true, correct and complete as of Closing;
(6) Sellers shall deliver evidence to Buyer that all recorded
financing statements reflecting a Security Interest in the Acquired Assets have
been terminated.
(7) Sellers shall deliver to Buyer the Standby Letter of Credit.
(8) Sellers shall execute and deliver to Buyer an owner's
affidavit executed by an Officer of each Seller regarding such matters as Buyer
or the title insurance company issuing the Title Commitment and the Title
Policy may reasonably require. Sellers shall cause to be delivered to Buyer the
"marked-up" Title Commitment and, when appropriate, the Title Policy and a paid
receipt for the premium due to the Title Company for the Title Commitment and
the Title Policy.
(9) Sellers shall execute and deliver to Buyer a certification
that each Seller is not a "foreign person" or a "U.S. real property holding
corporation" for purposes of Code Section 1445
-4-
<PAGE> 10
and the regulations promulgated thereunder, and a certification with
regards to the proceeds received by Sellers as a result of the transaction
contemplated hereby; and Sellers hereby covenant and agree that failure to
deliver said certification shall result in withholding, distribution and
delivery by Buyer of the portion or percentage of the Purchase Price
required to be withheld, distributed and delivered pursuant to Code Section
1445 and the regulations promulgated thereunder.
(10) Sellers shall execute and deliver to Buyer such other
documents or instruments as may be reasonably necessary to consummate the
transaction contemplated hereby.
(11) Sellers shall execute and/or otherwise cause to be
delivered an assignment of all entitlement and development rights,
including rights under all permits and approvals, not otherwise assigned,
for the Business.
(b) Deliveries by Buyer.
(1) The Purchase Price will be paid to Sellers in Cash at
Closing payable by wire transfer; provided, however, that at Buyer's option
(if Buyer elects this option, Buyer will inform Sellers of such decision on
or prior to ten (10) days prior to Closing), Buyer may pay any portion of
the Purchase Price by delivering into escrow shares of Del Webb common
stock ("Common Stock"), together with all other Closing Documents and
Ancillary Agreements to the Escrow Agent, to be held in escrow and
disbursed pursuant to the Escrow Agreement. In the event Buyer elects to
pay any portion of the Purchase Price by delivering Common Stock, the sale
shall be completed in two (2) stages as follows: (i) an initial deposit in
escrow on January 15, 1998, or on such other date as shall be agreed in
writing by Buyer and Sellers or extended as provided by Section 7.1
hereof, and (ii) the liquidation of Common Stock necessary for a Cash
transfer equal to the Purchase Price less the Assumed Liabilities to
Sellers within three (3) business days of the date of delivery to escrow.
The sale will then be closed with Cash paid from escrow to Sellers and the
Closing Documents distributed from escrow and recorded, as appropriate.
(2) Buyer shall deliver to Sellers certified copies of
resolutions of the Board of Directors of Buyer authorizing the transaction
contemplated hereby.
(3) Buyer shall deliver to Sellers an officer's certificate
to the effect that each of the conditions specified below in Section
7.2.1 through Section 7.2.4 are satisfied in all respects.
3 Representations and Warranties of Sellers and Controlling Shareholders.
Sellers and Controlling Shareholders jointly and severally represent and
warrant to Buyer that the statements contained in this Section 3 are correct
and complete as of the date of this Agreement, except as set forth in the
schedules accompanying this Agreement and initialed by the Parties (the
"Schedules"). The Schedules shall be arranged in paragraphs corresponding to
the lettered and numbered paragraphs contained in this Section 3.
3.1 Organization of Seller. Each of the Sellers is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Florida.
3.2 Authorization of transaction. Each of the Sellers has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. Without limiting the
generality of the foregoing, the board of directors of each of the Sellers has
duly authorized the execution, delivery, and performance of this Agreement by
each of the Sellers. This Agreement constitutes the valid and legally binding
obligation of each of the Sellers, enforceable in accordance with its terms and
conditions.
3.3 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2 above),
shall: (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which any Seller or Controlling
-5-
<PAGE> 11
Shareholder is subject or any provision of the charter or bylaws of any Seller
or (ii) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to which any Seller
or Controlling Shareholder is a party or by which it is bound or to which any
of its assets is subject (or result in the imposition of any Security Interest
upon any of its assets).
3.4 Consents. Sellers and Controlling Shareholders do not need to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government, governmental agency or other third party in order
for the Parties to consummate the transactions contemplated by this Agreement
(including the assignments and assumptions referred to in Section 2 above)
except as disclosed in Schedule 3.4. There are no additional notices, filings,
authorizations, consent or approvals required to convey the Acquired Assets from
Sellers to Buyer other than those set forth on Schedule 3.4.
3.5 Brokers' fees. Sellers and Controlling Shareholders have no Liability
or obligation to pay any fees, commissions, or other compensation to any broker,
finder, or agent with respect to the transactions contemplated by this Agreement
for which Buyer could become liable or obligated.
3.6 Title to assets. Sellers have good and marketable title to, or a
valid leasehold interest in, the properties and assets used by them, located on
their premises, or shown on the Most Recent Balance Sheet or acquired after the
date thereof, free and clear of all Security Interests, except for properties
and assets disposed of in the Ordinary Course of Business since the date of the
Most Recent Balance Sheet. Without limiting the generality of the foregoing,
Sellers have good and marketable title to all of the Acquired Assets, free and
clear of any Security Interest or restriction on transfer.
3.7 Financial Statements. Attached hereto as Exhibit M are the
following financial statements (collectively the "Financial Statements"): (i)
unaudited balance sheet and statements of income, changes in stockholders'
equity, and cash flow as of and for the fiscal years ended September 30, 1995,
September 30, 1996, and September 30, 1997, (the "Most Recent Fiscal Year End")
for each Seller; and (ii) unaudited balance sheet and statements of income,
changes in stockholders' equity, and cash flow (the "Most Recent Financial
Statements") as of and for the one (1) month ended October 31, 1997, (the "Most
Recent Fiscal Month End") for each Seller. The Financial Statements (including
the notes thereto) have been prepared in accordance with a method acceptable to
Buyer applied on a consistent basis throughout the periods covered thereby,
present fairly the financial condition of each Seller as of such dates and the
results of operations of each Seller for such periods, are correct and complete,
and are consistent with the books and records of each Seller (which books and
records are correct and complete).
3.8 Events subsequent to Most Recent Fiscal Period End. Since October
31, 1997, there has not been any adverse change in the business, financial
condition, operations, results of operations, or future prospects of any Seller
to the extent that such change affected the Acquired Assets or the value of the
Acquired Assets outside the Ordinary Course of Business. Without limiting the
generality of the foregoing, since that date, outside the Ordinary Course of
Business:
3.8.1 Sellers have not sold, leased, transferred, or assigned any
of their assets, tangible or intangible, other than for a fair consideration;
3.8.2 Sellers have not entered into any agreement, contract,
lease, or license (or series of related agreements, contracts, leases, and
licenses);
3.8.3 no party (including Sellers) has accelerated, terminated,
modified, or cancelled any agreement, contract, lease, or license (or series of
related agreements, contracts, leases, and licenses) to which any Seller is a
party or by which it is bound;
-6-
<PAGE> 12
3.8.4 Sellers have not imposed or granted any Security Interest upon any
of its assets, tangible or intangible;
3.8.5 Sellers have not made any capital expenditure (or series of
related capital expenditures);
3.8.6 Sellers have not made any capital investment in, any loan to, or
any acquisition of the securities or assets of, any other Person (or series of
related capital investments, loans, and acquisitions);
3.8.7 Sellers have not issued any note, bond, or other debt security or
created, incurred, assumed, or guaranteed any indebtedness for borrowed money
or capitalized lease obligation;
3.8.8 Sellers have not delayed or postponed the payment of accounts
payable and other Liabilities;
3.8.9 Sellers have not cancelled, compromised, waived, or released any
right or claim (or series of related rights and claims);
3.8.10 Sellers have not granted any license or sublicense of any rights
under or with respect to any Intellectual Property;
3.8.11 There has been no change made or authorized in the Articles of
Incorporation or bylaws of any Seller;
3.8.12 Sellers have not issued, sold, or otherwise disposed of any of
their capital stock, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise) any of
their capital stock;
3.8.13 Sellers have not declared, set aside, or paid any dividend or made
any distribution with respect to their capital stock (whether in cash or in
kind) or redeemed, purchased, or otherwise acquired any of their capital stock;
3.8.14 Sellers have not experienced any damage, destruction, or loss
(whether or not covered by insurance) to their property;
3.8.15 Sellers have not made any loan to, or entered into any other
transaction with, any of their directors, officers, and employees;
3.8.16 Sellers have not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the terms of any
existing such contract or agreement;
3.8.17 Sellers have not granted any increase in the base compensation of
any of their directors, officers, and employees;
3.8.18 Sellers have not adopted, amended, modified or terminated any
bonus, profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of their directors, officers, and employees
(or taken any such action with respect to any other Employee Benefit Plan);
3.8.19 Sellers have not made any other change in employment terms for any
of their directors, officers, and employees;
3.8.20 Sellers have not made or pledged to make any charitable or other
capital contribution;
-7-
<PAGE> 13
3.8.21 Sellers have not paid any amount to any third party with
respect to any Liability or obligation (including any costs and expenses
Sellers have incurred or may incur in connection with this Agreement and
the transactions contemplated hereby) that would not constitute an
Assumed Liability if in existence as of the Closing:
3.8.22 there has not been any other occurrence, event,
incident, action, failure to act, or transaction involving Sellers; and
3.8.23 Sellers have not committed to any of the foregoing.
3.9 Undisclosed liabilities. Except as set forth on Schedule 3.9,
each Seller has no Liability (and there is no Basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against it giving rise to any Liability).
3.10 Legal compliance. To the best of Sellers' Knowledge, each of
Sellers and the Development Company has complied with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), including, but not limited to, ADA,
fair housing laws, Florida Statutes Section 501.1375 and all rules and
regulations promulgated by the Florida Division of Land Sales and Condominiums,
and laws relating to political contributions, and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against them alleging any failure so to comply as such
relate to the operation of the Business. Each of Sellers has not received any
notices of inquiries, audits or other reviews or correspondence from
governmental agencies related to compliance or non-compliance with any laws,
rules or other regulations other that as set forth on Schedule 3.10.
3.11 Tax matters.
3.11.1 To the best of Sellers' Knowledge, each Seller has filed
all Tax Returns that it was required to file. All such Tax Returns were
correct and complete in all respects. All Taxes owed by Sellers (whether
or not shown on any Tax Return) have been paid. There are no Security
Interests on any of the Acquired Assets of Sellers that arose in
connection with any failure (or alleged failure) to pay any Tax.
3.11.2 To the best of Sellers' Knowledge, each Seller has
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party.
3.11.3 No Controlling Shareholder or director or officer (or
employee responsible for Tax matters) of Sellers expects any authority
to assess any additional Taxes for any period for which Tax Returns have
been filed. There is no dispute or claim concerning any Tax Liability of
Sellers either: (A) claimed or raised by any authority in writing or (B)
as to which any of Controlling Shareholders and the directors and
officers (and employees responsible for Tax matters) of Sellers has
Knowledge based upon personal contact with any agent of such authority.
Schedule 3.11.3 lists all federal, state, local, and foreign income Tax
Returns filed with respect to Sellers for taxable periods ended on or
after September 30, 1996, indicates those Tax Returns that have been
audited, and indicates those Tax Returns that currently are the subject
of audit. Sellers have delivered to Buyer correct and complete copies of
all federal income Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by Sellers since September
30, 1996.
3.11.4 Sellers have not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a
Tax assessment or deficiency.
3.11.5 Sellers have not been a United States real property
holding corporation within the meaning of Code Section 897(c)(2) during
the applicable period specified in Code Section 897(c)(1)(A)(ii). Each
-8-
<PAGE> 14
Seller has disclosed on its federal income Tax Returns all positions taken
therein that could give rise to a substantial understatement of federal income
Tax within the meaning of Code Section 6662.
3.11.6 Schedule 3.11.6 sets forth the basis of each Seller in its assets
as of the most recent practicable date (as well as on an estimated pro forma
basis as of the Closing giving effect to the consummation of the transactions
contemplated hereby).
3.12 Real property.
3.12.1 Schedule 3.12.1 lists and describes briefly all real property
that Sellers own and are transferring to Buyer ("Real Property"). Except as set
forth on Schedule 3.12.1, with respect to each such parcel of owned Real
Property:
(a) the identified owner has good and marketable title to the
parcel of Real Property, free and clear of any Security Interest, easement,
covenant, or other restriction, except for installments of special assessments
not yet due and payable and recorded easements, covenants, and other
restrictions that do not impair the current use, occupancy, or value, or the
marketability of title, of the property subject thereto, except for Permitted
Exceptions;
(b) there are no pending or threatened condemnation proceedings,
lawsuits, or administrative actions relating to the property or other matters
affecting adversely the current use, occupancy, or value thereof;
(c) the legal description for the parcel contained in the deed
thereof describes such parcel fully and adequately, the buildings and
improvements are located within the boundary lines of the described parcels of
land, to best of Sellers' Knowledge and the Knowledge of entities related to
Sellers and listed on Exhibit A attached hereto, are not in violation of
applicable setback requirements, zoning laws, and ordinances (and none of the
properties or buildings or improvements thereon are subject to "permitted
non-conforming structure" or similar classifications), and, to best of Sellers'
Knowledge and the Knowledge of entities related to Sellers and listed on Exhibit
A attached hereto, do not encroach on any easement that may burden the land,
and, to best of Sellers' Knowledge and the Knowledge of entities related to
Sellers and listed on Exhibit A attached hereto, the land does not serve any
adjoining property, and the property is not located within any flood plain;
(d) the Real Property and all facilities thereon have received
all required approvals of governmental authorities (including licenses and
permits) required in connection with the ownership or present operation thereof
and have been operated and maintained in accordance with applicable laws,
rules, and regulations; provided that Sellers have complied with the Spruce
Creek Golf and Country Club FQD Development Order, the Spruce Creek Preserve
Planned Unit Development Order, Construction and development permits, site plan
approvals, other development agreements or development plans, all other
development orders, zoning and land use approvals; and provided, further, that
Sellers have obtained and complied with environmental approvals and required
environmental permits from appropriate governmental agencies including, but not
limited to, the Florida Department of Environmental Protection, the Southwest
Florida Water Management District and the St. John's Water Management District,
as appropriate. Schedule 3.12.1(d) sets forth all licenses, permits and
approvals (including those expressly referenced above and including, but not
limited to, general contractors licenses, specialty or subcontractor licenses,
operational licenses, including liquor and restaurant licenses, city/county
occupational licenses, club licenses, FCC licenses, and real estate brokerage
licenses) which Sellers have obtained in connection with the Business. Schedule
3.12.1(d) sets forth all obligations which must be met to comply with the
licenses, permits and approvals set forth on Schedule 3.12.1(d) or which will
be required in the future along with the anticipated time frame, if known. With
respect to each such license, permit and approval, (A) the license, permit or
approval is legal, valid, binding, enforceable and in full force and effect (B)
the license, permit or approval shall continue to be legal, valid, binding,
enforceable, and in full force and effect on
-9-
<PAGE> 15
identical terms following the consummation of the transactions contemplated
hereby (including the assignments delivered hereunder) and (C) Sellers have not
been notified that they are in default of any such license, permit or approval,
and no event has occurred that with notice or lapse of time would constitute a
default or permit termination, modification or revocation of such license,
permit or approval. Furthermore, the Real Property otherwise fully complies with
all other statutes, ordinances, rule, regulations, orders and requirements of
federal, state, county and municipal governments, and political subdivisions,
agencies or departments thereof, or any court or any other authority pertaining
to the Real Property.
(e) there are no leases, subleases, licenses, concessions, or
other agreements, written or oral, granting to any party or parties the right of
use or occupancy of any portion of the parcel of Real Property other than as set
forth in Schedule 3.12.1(e);
(f) there are no outstanding options or rights of first refusal to
purchase the Real Property, or any portion thereof or interest therein other
than sales of lots and personal residences in the Ordinary Course of Business;
(g) there are no parties (other than Sellers) in possession of the
Real Property, other than tenants under any leases disclosed on Schedule
3.12.1(e) who are in possession of space to which they are entitled;
(h) all facilities located on the Real Property are supplied with
utilities and other services necessary for the operation of such facilities,
including gas, electricity, water, telephone, sanitary sewer, and storm sewer,
all of which services are adequate in accordance with all applicable laws,
ordinances, rules, and regulations and are provided via public roads or via
permanent, irrevocable, appurtenant easements benefitting the Real Property; and
(i) each parcel of Real Property abuts on and has direct vehicular
access to a public road, or has access to a public road via a permanent,
irrevocable, appurtenant easement benefitting the parcel of real property, and
access to the property is provided by paved public right-of-way with adequate
curb cuts available.
(j) there are no taxes, assessments or levies of any type
whatsoever arising out of or in connection with the Real Property other than
those for the current calendar year which are not past due or delinquent, and
Sellers have no Knowledge or notice that the Real Property, or any portion
thereof, is or will be subject to or affected by any special taxes, levies or
assessments.
(k) all bills for labor, services, materials and utilities, and
all trade accounts which are in any way connected with or arise from the Real
Property, or any portion thereof, are current or will be current at Closing.
(l) there are no contracts, leases or agreements now in force
between Sellers and any other parties (including governmental or quasi-
governmental authorities or utilities) with respect to or affecting the Real
Property, or any portion thereof, except those as disclosed in Schedule
3.12.1(l).
3.12.2 Schedule 3.12.2 lists and describes briefly all real property
leased or subleased to Sellers, including, but not limited to, billboards.
Schedule 3.12.2 also identifies the leased or subleased properties for which
title insurance policies are to be procured in accordance with Section 5.8
below. Sellers have delivered to Buyer correct and complete copies of the
leases and subleases listed on Schedule 3.12.2 (as amended to date). With
respect to each lease and sublease listed on Schedule 3.12.2:
(a) the lease or sublease is legal, valid, binding, enforceable,
and in full force and effect;
-10-
<PAGE> 16
(b) the lease or sublease shall continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms following
the consummation of the transactions contemplated hereby (including the
assignments and assumptions referred to in Section 2 above);
(c) no party to the lease or sublease is in breach or default, and
no event has occurred which, with notice or lapse of time, would constitute a
breach or default or permit termination, modification, or acceleration
thereunder;
(d) no party to the lease or sublease has repudiated any provision
thereof;
(e) there are no disputes, oral agreements, or forbearance programs
in effect as to the lease or sublease;
(f) with respect to each sublease, the representations and
warranties set forth in subsections 3.12.2.(a) through 3.12.2.(e) above are
true and correct with respect to the underlying lease;
(g) Sellers have not assigned, transferred, conveyed, mortgaged,
deeded in trust, or encumbered any interest in the leasehold or subleasehold;
(h) all facilities leased or subleased thereunder have received all
approvals of governmental authorities (including licenses and permits) required
in connection with the operation thereof and have been operated and maintained
in accordance with applicable laws, rules, and regulations;
(i) all facilities leased or subleased thereunder are supplied with
utilities and other services necessary for the operation of said facilities; and
(j) the owner of the facility leased or subleased has good and
marketable title to the parcel of real property, free and clear of any Security
Interest, easement, covenant, or other restriction, except for installments of
special easements not yet delinquent and recorded easements, covenants, and
other restrictions that do not impair the current use, occupancy, or value, or
the marketability of title, of the property subject thereto.
3.13 Intellectual Property.
3.13.1 Sellers own or have the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property necessary or
desirable for the operation of the businesses of Sellers as presently conducted
and as presently proposed to be conducted. Each item of Intellectual Property
owned or used by Sellers immediately prior to the Closing hereunder shall be
owned or available for use by Buyer on identical terms and conditions
immediately subsequent to the Closing hereunder. Sellers have taken all
necessary and desirable action to maintain and protect each item of
Intellectual Property that it owns or uses.
3.13.2 Sellers have not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property
rights of third parties, and none of Controlling Shareholders and the directors
and officers (and employees with responsibility for Intellectual Property
matters) of Sellers have ever received any charge, complaint, claim, demand, or
notice alleging any such interference, infringement, misappropriation, or
violation (including any claim that Sellers must license or refrain from using
any Intellectual Property rights of any third party). To the Knowledge of any
of Sellers, Controlling Shareholders and the directors and officers (and
employees with responsibility for Intellectual Property matters) of Sellers, no
third party has interfered with, infringed upon, misappropriated, or otherwise
come into conflict with any Intellectual Property rights of Sellers.
3.13.3 Schedule 3.13.3 identifies each patent or registration that has
been issued to Sellers with respect to any of their Intellectual Property,
identifies each pending patent application or application for
-11-
<PAGE> 17
registration that Sellers have made with respect to any of their Intellectual
Property, and identifies each license, agreement, or other permission that
Sellers have granted to any third party with respect to any of their
Intellectual Property (together with any exceptions). Sellers have delivered
to Buyer correct and complete copies of all such patents, registrations,
applications, licenses, agreements, and permissions (as amended to date).
Schedule 3.13.3 also identifies each trade name or unregistered trademark used
by Sellers. With respect to each item of Intellectual Property required to be
identified in Schedule 3.13.3:
(a) Sellers possess all right, title, and interest in and to the
item, free and clear of any Security Interest, license, or other restriction;
(b) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(c) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or is threatened that challenges the
legality, validity, enforceability, use, or ownership of the item; and
(d) Sellers have never agreed to indemnify any Person for or
against any interference, infringement, misappropriation, or other conflict with
respect to the item.
3.13.4 Schedule 3.13.4 identifies each item of Intellectual Property that
any third party owns and that Sellers use pursuant to license, sublicense,
agreement, or permission. Sellers have delivered to Buyer correct and complete
copies of all such licenses, sublicenses, agreements, and permissions (as
amended to date). With respect to each item of Intellectual Property required to
be identified on Schedule 3.13.4;
(a) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding, enforceable, and in full force and effect;
(b) the license, sublicense, agreement, or permission shall
continue to be legal, valid, binding, enforceable, and in full force and effect
on identical terms following the consummation of the transactions contemplated
hereby (including the assignments and assumptions referred to in Section 2
above);
(c) no party to the license, sublicense, agreement, or permission
is in breach or default, and no event has occurred that with notice or default
or permit termination, modification, or acceleration thereunder;
(d) no party to the license, sublicense, agreement, or permission
has repudiated any provision thereof;
(e) with respect to each sublicense, the representations and
warranties set forth in subsections 3.13.4.1 through 3.13.4.4 above are true
and correct with respect to the underlying license;
(f) the underlying item of Intellectual Property is not subject
to any outstanding injunction, judgment, order, decree, ruling, or charge;
(g) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, is threatened that challenges
the legality, validity, or enforceability of the underlying item of
Intellectual Property; and
(h) Sellers have not granted any sublicense or similar right with
respect to the license, sublicense, agreement, or permission.
-12-
<PAGE> 18
3.13.5 To the Knowledge of any of Sellers, Controlling Shareholders
and the directors and officers (and employees with responsibility for
Intellectual Property matters) of Sellers, Buyer shall not interfere with,
infringe upon, misappropriate, or otherwise come into conflict with, any
Intellectual Property rights of third parties as a result of this acquisition
and the continued operation of the Business as presently conducted and as
presently proposed to be conducted.
3.14 Tangible assets. Sellers own or lease all buildings, machinery,
equipment, and other tangible assets necessary for the conduct of their
businesses as presently conducted and as presently proposed to be
conducted. Schedule 3.14 sets forth all such tangible assets. Each such
tangible asset is free from known defects, has been maintained in
accordance with normal industry practice, is in good operating condition
and repair (subject to normal wear and tear), and is suitable for the
purposes for which it presently is used and presently is proposed to be
used.
3.15 Inventory. The inventory of Sellers consists of homes under
construction, completed homes but not yet sold, and homes on which there is a
contract for sale but not yet closed, materials purchased for housing and
amenity construction and landscape materials and plants, all of which is
merchantable and fit for use as a private residence or for use in construction
and landscaping of the private residences and amenities, as appropriate, and
none of which is slow-moving, damaged, or defective. Schedule 3.15 lists all
such inventory with sufficient detail to identify each separate item of
inventory. This Schedule is to be updated at Closing as provided by Section 5.6.
3.16 Contracts. Schedule 3.16 lists the following contracts and other
agreements to which any Seller is a party:
3.16.1 any agreement for the sale of a personal residence by Sellers
during the last six (6) months including the name of the purchaser of the
residence, the date of closing of such sale, and the purchase price and
including agreements which were cancelled and, if so, the reason for
cancellation;
3.16.2 any agreement (or group of related agreements) for the lease
of personal property to or from any Person;
3.16.3 any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of services, the
performance of which shall extend over a period of more than one year;
3.16.4 any agreement concerning a partnership or joint venture;
3.16.5 any agreement (or group of related agreements) under which any
Seller has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, or under which it has
imposed a Security Interest on any of its assets, tangible or intangible,
other than in the Ordinary Course of Business;
3.16.6 any agreement concerning confidentiality or noncompetition;
3.16.7 any agreement between Sellers and any of Controlling
Shareholders and their Affiliates (other than Sellers).
There are no profit sharing, stock option, stock purchase, stock appreciation,
deferred compensation, severance, or other plans or arrangements for the benefit
of any current or former directors, officers, and employees; no collective
bargaining agreements; no agreements for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual compensation
in excess of $50,000 except as disclosed on Schedule 3.16 or providing severance
benefits; no agreements under which any Seller has advanced or loaned any amount
to any of its directors, officers, and employees outside the Ordinary Course of
Business; no agreements under which the
-13-
<PAGE> 19
consequences of a default or termination could have an adverse effect on the
business, financial condition, operations, results of operations, or future
prospects of any Seller.
Sellers have delivered to Buyer a correct and complete copy of each written
agreement listed on Schedule 3.16 and a written summary setting forth the terms
and conditions of each oral agreement referred to on Schedule 3.16. With
respect to each such agreement: (A) the agreement is legal, valid, binding,
enforceable, and in full force and effect; (B) the agreement shall continue to
be legal, valid, binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby (including the assignments delivered hereunder) and Sellers have not
been notified that they are in breach or default of such agreement, and no
event has occurred that with notice or lapse of time would constitute a breach
or default, or permit termination, modification, or acceleration, under the
agreement; and (C) no party has repudiated any provision of the agreement.
3.17 Prepaids and Receivables (IF APPLICABLE). Schedule 3.17 sets forth
all the notes and amounts receivable Buyer is acquiring hereunder. All notes
and accounts receivable set forth on Schedule 3.17 are reflected properly on
their books and records, are valid receivables subject to no setoffs or
counterclaims, are current and collectible, and shall be collected in
accordance with their terms at their recorded amounts, subject only to the
reserve for bad debts set forth on the face of the Most Recent Balance Sheet
(rather than in any notes thereto) as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of Sellers.
Schedule 3.17 lists as of December 31, 1997, all receivables to be acquired
hereunder, the amount owing and the aging of such receivable, the name and last
known address of the party from whom such receivable is owing, and any security
in favor of Sellers for the repayment of such receivable. Sellers have
identified and provided Buyer complete and correct copies of all instruments,
documents and agreements evidencing such receivables and of all instruments,
documents or agreements creating security therefor.
3.18 Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of Sellers.
3.19 Insurance. Schedule 3.19 sets forth the following information with
respect to each insurance policy (including policies providing property,
casualty, liability, and workers' compensation coverage and bond and surety
arrangements) to which Sellers have been a party, a named insured, or otherwise
the beneficiary of coverage at any time within the past ten (10) years:
3.19.1 the name, address, and telephone number of the agent;
3.19.2 the name of the insurer, the name of the policyholder, and the
name of each covered insured;
3.19.3 the policy number and the period of coverage;
3.19.4 the scope (including an indication of whether the coverage was
on a claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate) of
coverage; and
3.19.5 a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each insurance policy: (A) the policy is legal, valid, binding,
enforceable, and in full force and effect; (B) the policy shall continue to be
legal, valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2 above); (C)
neither Sellers nor any other party to the policy is in breach or default
(including with respect to the payment of premiums or the giving of notices),
and no event has occurred which, with notice or the lapse of time, would
constitute such a breach or default, or permit termination, modification, or
acceleration, under the policy; and (D) no party to the policy has repudiated
any provision thereof. Sellers have been covered during the past ten (10) years
by insurance in scope and amount customary and reasonable for the
-14-
<PAGE> 20
businesses in which they have engaged during the aforementioned period.
Schedule 3.19 describes any self-insurance arrangements affecting Sellers.
3.20 Litigation. Schedule 3.20 sets forth each instance in which any Seller
(i) is subject to any outstanding injunction, judgment, order, decree, ruling,
or charge or (ii) is a party or, to the Knowledge of any of such Seller,
Controlling Shareholders and the directors and officers (and employees with
responsibility for litigation matters) of such Seller, is threatened to be made
a party to any action, suit, proceeding, hearing, or investigation of, in, or
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator. None of the
actions, suits proceedings, hearings, and investigations set forth on Schedule
3.20 could result in any adverse change in the business, financial condition,
operations, results of operations, or future prospects of any Seller. None of
Controlling Shareholders and the directors and officers (and employees with
responsibility for litigation matters) of Sellers has any reason to believe that
any such action, suit, proceeding, hearing, or investigation may be brought or,
to their Knowledge, threatened against any Seller.
3.21 Product Warranty. Each product manufactured, sold, leased, or
delivered by Sellers has been in conformity with all applicable contractual
commitments and all express and implied warranties, and Sellers have no
Liability (and, to the best of Sellers' Knowledge, there is no Basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against them giving rise to any Liability) for
replacement or repair thereof or other damages in connection therewith, subject
only to the reserve for product warranty claims set forth on the face of the
Most Recent Balance Sheet (rather than in any notes thereto) as adjusted for
the passage of time through the Closing Date in accordance with the past custom
and practice of Sellers. No product manufactured, sold, leased, or delivered by
Sellers is subject to any guaranty, warranty, or other indemnity beyond the
applicable standard terms and conditions of sale or lease. Schedule 3.21
includes copies of the standard terms and conditions of sale or lease for
Sellers (containing applicable guaranty, warranty, and indemnity provisions).
3.22 Product Liability. Sellers have no Liability (and, to the best of
Sellers' Knowledge, there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
them giving rise to any Liability) 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 Sellers.
3.23 Employees. Schedule 3.23 (a) lists all the employees of Sellers and
includes their names, addresses, social security numbers, dates of hire, rates
of pay, and salary histories. Sellers and Buyer have agreed that the employees
listed in Schedule 3.23 (b) ("Transferred Employees") will be hired by Buyer at
Closing. To the Knowledge of any of Sellers, Controlling Shareholders and the
directors and officers (and employees with responsibility for employment
matters) of Sellers, no executive, key employee, or group of employees has any
plans to terminate employment with Sellers. No Seller is a party to or bound by
any collective bargaining agreement, nor has it experienced any strikes,
grievances, claims of unfair labor practices, or other collective bargaining
disputes. No Seller has committed any unfair labor practice. None of
Controlling Shareholders and the directors and officers (and employees with
responsibility for employment matters) of Sellers has any Knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of Sellers.
3.24 Employee Benefits.
3.24.1 Schedule 3.24 lists each Employee Benefit Plan that Sellers
maintain or to which Sellers contribute ("Seller Plans").
3.24.2 To the best of Sellers' Knowledge, each Seller Plan, and each
related trust, insurance contract, or fund, complies in form and in
operation in all respects with the applicable requirements of ERISA, the
Code, and other applicable laws.
3.24.3 To the best of Sellers' Knowledge, all required reports,
notices and descriptions have been filed with the appropriate governmental
agency or distributed to participants appropriately with respect to
-15-
<PAGE> 21
each Seller Plan. The requirements of Part 6 of Subtitle B of Title I of ERISA
and of Code Sec. 4980B have been met with respect to each Seller Plan that is
an Employee Welfare Benefit Plan.
3.24.4 All premiums or other payments for all periods ending on or
before the Closing Date have been paid with respect to each Seller Plan that is
an Employee Welfare Benefit Plan.
3.24.5 Sellers have delivered to Buyer correct and complete copies of
the Seller Plan documents and summary plan descriptions, the most recent Form
5500 Annual Report, and all related trust agreements, insurance contracts, and
other funding agreements that implement each Seller Plan.
3.24.6 Other than routine claims for benefits, no action, suit,
proceeding, hearing, or investigation with respect to the administration or
the investment of the assets of any Seller Plan is pending.
3.24.7 To the best of Sellers' Knowledge, no individual (A) who has
experienced a "qualifying event," as this term is defined in Code Section
4980B(f)(3), and (B) who either was an employee of Sellers or is a dependent or
spouse of a current or former employee of Sellers, is currently covered by a
health plan of Sellers pursuant to Code Section 4980B or Part 6 of Title I of
ERISA.
3.24.8 Neither the Sellers, nor any organization that is a member of a
controlled group of organizations within the meaning of Code Sections 414(b),
(c), (m) or (o) of which any of the Sellers is a member ("ERISA Affiliate"),
maintains currently or has ever maintained an Employee Pension Benefit Plan.
Neither the Sellers nor any ERISA Affiliate is required currently or has ever
been required to contribute to or otherwise participate in an Employee Pension
Benefit Plan. Neither the Sellers nor any ERISA Affiliate participates
currently or has ever participated in or is required currently or has ever been
required to contribute to any Multiemployer Plan.
3.25 Guaranties. No Seller is a guarantor or otherwise is liable for any
Liability or obligation (including indebtedness) of any other Person which will
survive Closing.
3.26 Environmental Matters.
3.26.1 No Third Party Claims and/or Regulatory Actions have been
asserted or assessed against Sellers or the Real Property, and no Third Party
Claims and/or Regulatory Actions are pending or threatened against Sellers or
the Real Property, arising out of or due to, or allegedly arising out of or due
to, (i) the Release on, under or from the Real Property of any Hazardous
Substances; (ii) any Contamination of the Real Property, including without
limitation, the presence of any Hazardous Substance which has come to be
located on or under the Real Property from another location; (iii) any material
violation or alleged violation of any Environmental Laws with respect to the
Real Property or Sellers' Business operations; (iv) any injury to human health
or safety or to the environment by reason of the past or present condition of,
or past or present activities on or under, the Real Property; or (v) the
generation, manufacture, storage, treatment, handling, transportation or other
use, however defined, of any Hazardous Substance on the Real Property; (any
acts, omissions, circumstances, status or condition described in or
contemplated by clauses (i) through (v) of this Section 3.26 are hereinafter
referred to collectively as an "Environmental Condition").
3.26.2 Sellers' storage, transportation, handling, use or disposal, if
any, of Hazardous Substances on or under the Real Property of Hazardous
Substances generated on or from the Real Property is currently, and at all
times has been, in compliance in all material respects with all applicable
Environmental Laws.
3.26.3 Sellers have delivered to or have caused to be delivered to
Buyer, prior to the execution and delivery of this Agreement, complete copies
of any and all Environmental Documents.
3.26.4 (i) Sellers have not transported or arranged for the
transportation of any Hazardous Substances to any location which is listed on
the EPA's National Priorities List of Hazardous Substance Sites
-16-
<PAGE> 22
(the "National Priorities List"), nor (ii) have they been identified as a
potentially responsible party at any site proposed for inclusion on the
National Priorities List, CERCLIS or any similar state list.
3.26.5 None of the Real Property is listed in the National Priorities
List or any other list maintained by any federal, state or local
governmental agency with respect to sites from which there is or has been a
Release of any Hazardous Substance or any Contamination.
3.26.6 No part of the Real Property is now being used, by Sellers (A)
as a landfill, dump or other disposal, storage, transfer or handling area
for Hazardous Substances, excepting, however, for the routine storage, use
and sale of Hazardous Substances from time to time in the Ordinary Course
of Business, in compliance with Environmental Laws; (B) for industrial,
military or manufacturing purposes; or (C) as a gasoline service station or
a similar facility for selling, dispensing, storing, transferring or
handling petroleum and/or petroleum products.
3.26.7 To the best of Sellers' Knowledge, there are no underground or
aboveground storage tanks (whether or not currently in use),
polychlorinated biphenyls (PCBs) or nuclear fuels or wastes, located on or
under the Real Property, except for two (2) five hundred (500) gallon
diesel fuel tank located, respectively, at Spruce Creek Golf and Country
Club and Spruce Creek Preserve, and supplied with fuel by Baxley and
various drums of oil located on the Real Property and used to service
vehicles and equipment.
3.26.8 There is no ongoing Release of any Hazardous Substance on,
under or from the Real Property.
3.26.9 There is not now present any Contamination of the Real Property
caused by Sellers.
3.26.10 The Real Property and the ownership, use and operation
thereon, are currently and, at all times during Sellers' ownership or
operation thereof, have been in material compliance with all applicable
Environmental Laws.
3.26.11 There are no liens against the Real Property arising under any
Environmental Laws, or based upon a Regulatory Action and/or Third Party
Claim.
3.27 Certain business relationships With Sellers. Schedule 3.27 lists all
business arrangements and relationships involving the Controlling Shareholders
and their Affiliates with Sellers within the past twelve (12) months. Schedule
3.27 lists all assets, tangible or intangible, that are used in the Business and
which are owned by Controlling Shareholders and their Affiliates (other than
Sellers).
3.28 Disclosure. No representation or warranty contained in this Agreement,
or in any certificate or document furnished or to be furnished by Sellers or
Controlling Shareholders to Buyer or its representatives in connection herewith
or pursuant hereto, contains or shall contain a material untrue statement of a
fact or omits or fails to state any material fact required to make the
statements herein or therein contained not misleading where necessary in order
to provide a prospective purchaser of the Acquired Assets with full, complete
and accurate information as to Sellers and the condition (financial and
otherwise) of the properties, assets, liabilities, and Business of Sellers. The
representations and warranties contained in this Section 3 or elsewhere in this
Agreement, or any document delivered pursuant hereto or in connection herewith,
shall not be affected or deemed waived by reason of the fact that Buyer or its
representatives knew or should have known that any such representation or
warranty is or might be inaccurate in any respect.
3.29 Homeowners' Associations. To the best of Sellers' Knowledge, Sellers
have complied with the Articles of Incorporation, Bylaws and other
organizational documents of SCGCCHOA and SCPHOA.
-17-
<PAGE> 23
3.30 Accredited Investor Representations. In the event that Buyer
chooses to satisfy its obligations to deliver the Purchase Price hereunder using
Common Stock as contemplated by Section 2.5.2(b)(1) hereof, Sellers and
Controlling Shareholders will be required to give additional representations
related to their status as Accredited Investors.
4 Representations and Warranties of Buyer. Buyer represents and warrants to
Sellers that the statements contained in this Section 4 are correct and
complete as of the date of this Agreement, except as set forth in the
Schedules. The Schedules shall be arranged in paragraphs corresponding to the
lettered and numbered paragraphs contained in this Section 4.
4.1 Organization of Buyer. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of
its incorporation.
4.2 Authorization of transaction. Buyer has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. This Agreement constitutes
the valid and legally binding obligation of Buyer, enforceable in accordance
with its terms and conditions.
4.3 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2 above),
shall (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Buyer is subject or any
provision of its charter or bylaws of Buyer or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which Buyer is a party or by which it is bound or to which any
of its assets is subject.
4.4 Consents. Buyer does not need to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
government, governmental agency or other third party in order for the Parties
to consummate the transactions contemplated by this Agreement (including the
assignments and assumptions referred to in Section 2 above) except as disclosed
in Schedule 4.4. There are no additional notices, filings, authorizations,
consents or approvals required to convey the Acquired Assets from Sellers to
Buyer other than those set forth on Schedule 4.4.
4.5 Brokers' fees. Buyer has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Sellers could become
liable or obligated.
4.6 Common Stock. If Buyer elects to pay any portion of the Purchase
Price in Common Stock, the Sellers will be protected from market downturn and
the Common Stock will be issued in a transaction exempt from federal
registration under Section 4(2) of the Securities Act or under a similar
provision and from registration under Florida law.
5 Pre-Closing Covenants. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.
5.1 General. Each of the Parties shall use its best efforts to take
all action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
Section 7 below).
5.2 Notices and consents. Sellers shall give any notices to third
parties, and Sellers shall use their best efforts to obtain any third party and
governmental consents, that Buyers may request in connection with the matters
referred to in Section 3.4 above. Each of the Parties shall give any notices
to, make any filings with, and use
-18-
<PAGE> 24
its best efforts to obtain any authorizations, consents, and approvals of
governments and governmental agencies in connection with the matters referred
to in Section 3.4 and Section 4.4 above.
5.3 Operation of business. Without Buyer's written approval, Sellers
shall not engage in any practice, take any action, or enter into any
transaction outside the Ordinary Course of Business. Without limiting the
generality of the foregoing, Sellers shall not otherwise engage in any
practice, take any action, or enter into any transaction of the sort described
in Section 3.8 above.
5.4 Preservation of business. Sellers shall keep their business and
properties substantially intact, including their present operations, physical
facilities, working conditions, and relationships with lessors, licensors,
suppliers, customers, and employees.
5.5 Full access. Sellers shall permit representatives of Buyer to have
full access to all premises, properties, personnel, books, records (including
Tax records), contracts, and documents of or pertaining to Sellers and shall
furnish Buyer with copies of such documents and instruments and with such
information with respect to the affairs of Sellers as Buyer may from
time-to-time request. Such obligations of Sellers shall include, but not be
limited to, permitting a physical inventory of the assets of Sellers and
permitting an environmental consulting or other firm selected by Buyer to
perform an assessment and investigation sufficient to permit it to provide
Buyer a "Phase I Environmental Site Assessment Report" or similar report with
respect to the "Acquired Assets," including any real estate owned or leased by
the Sellers, in scope, form, and content acceptable to Buyer. Sellers shall
permit representatives of Buyer to have further access if, after reviewing such
report, Buyer desires to have further environmental-related assessments, tests,
audits, or investigations made; provided, however, that Buyer agrees to
immediately restore any portions of the Real Property affected by such studies
to substantially the same condition said Real Property was in prior to
performance of such studies and to indemnify and hold Sellers harmless from and
against any and all loss, liability, obligation, cost, damage, claim, penalty,
judgment, fine or expense (including but not limited to attorneys' fees)
resulting or arising, directly or indirectly, from the entry upon the Real
Property or the conduct of such inspections, tests or studies by Buyer, their
employees, contractors or agents. Sellers shall cooperate with Buyer's
assessment, inspection and analysis of the Real Property. No investigation by
Buyer shall affect in any manner the representations and warranties made by
Sellers and Controlling Shareholders in this Agreement, nor any other
certificate or agreement furnished or to be furnished by Sellers to Buyer or
its representatives in connection herewith or pursuant hereto, and the right of
Buyer to rely on them. Sellers shall use their best efforts to keep Buyer fully
informed as to the affairs of Sellers and advise Buyer of all important matters
pertaining to Sellers prior to Closing. If Buyer chooses not to proceed with
the transaction contemplated hereby as a result of its due diligence
investigation on or before the expiration of the Due Diligence Period, Buyer
shall advise Sellers or Controlling Shareholders in writing, and this Agreement
shall immediately terminate as provided by Section 9 hereof; provided that
Buyer shall, within five (5) days after such termination, furnish Sellers with
copies of all surveys, reports, environmental studies, engineering reports and
other documents, studies and reports secured by Buyer during the Due Diligence
Period; provided, however, that Buyer will not be obligated to provide Sellers
with documents prepared internally by Del Webb, Buyer or their agents (title
reports and environmental reports, if any, would be returned).
5.6 Notice of developments. In the event that a representation or
warranty made hereunder by Sellers or a Schedule attached hereto is not
correct, complete or accurate at or prior to Closing, Sellers shall give prompt
written notice to the Buyer of any development causing the Sellers'
representations, warranties and Schedules to be incorrect, incomplete, or
inaccurate, and Sellers immediately shall supplement such representations,
warranties and Schedules; provided, however, that the Schedules shall not be
considered supplemented without Buyer's initialing the updated Schedules.
Further, no disclosure by Sellers pursuant to this Section 5.6, shall be deemed
to prevent or cure any misrepresentation, breach of warranty, or breach of
covenant for purposes of Buyer's right to terminate under Section 9.
5.7 Exclusivity. Sellers and Controlling Shareholders will not during
the term of this Agreement enter into any agreement, discussion, or negotiation
with, or provide information to, or solicit, encourage, entertain or consider
any inquiries or proposals from, any other corporation, firm or other person
with respect to (a) the
-19-
<PAGE> 25
possible disposition of a material portion of the Business, or (b) any business
combination involving the Business, whether by way of merger, consolidation,
share exchange or other transaction.
5.8 Title insurance. Within five (5) days of the full execution of this
Agreement, Sellers shall order at Sellers' expense, and furnish to Buyer a title
insurance commitment ("Title Commitment") issued by First American Title
Insurance Company, agreeing to issue to Buyer, upon recording of the Deed to
Buyer, an owner's policy of title insurance ("Title Insurance" or "Title
Policy"), upon a standard 1970 ALTA Form B, in the amount of the Purchase Price
insuring Buyer's title to the Real Property subject only to the Permitted
Exceptions which are attached hereto as Exhibit K and other title matters which
have been approved in writing by Buyer (all of which shall then become
collectively the "Permitted Exceptions"). Sellers shall convey marketable title
subject only to the Permitted Exceptions. Marketable title shall be determined
according to applicable Title Standards adopted by the authority of the Florida
Bar and in accordance with the law. Buyer shall have ten (10) business days from
the date of receiving said Title Commitment to examine same. If title is found
defective, Buyer shall within three (3) days thereafter, notify Sellers in
writing specifying defect(s) ("Defects"). If the Defect(s) render title
unmarketable, Sellers with have the later of thirty (30) days from receipt of
notice or the Closing Date to remove the Defects. Sellers shall, if title is
found unmarketable, use diligent effort to correct Defects in the title within
the time provided therefor. If Sellers are unable to remove the Defect(s) in the
time allowed therefor, Buyer shall either waive the Defect(s) or receive a
refund of deposit of its Escrow Deposit, thereby releasing Buyer and Sellers
from all further obligations under this Agreement. Sellers shall not further
encumber, permit or create any Defect(s) to title after the date of the issuance
of the Title Commitment.
5.9 Survey. With respect to each parcel of Real Property, and as to
which a title insurance policy is to be procured pursuant to Section 5.8 above,
Sellers shall procure in preparation for the Closing a current survey of the
Real Property certified to Buyer, prepared by a licensed surveyor and
conforming to current ALTA Minimum Detail Requirements for Land Title Surveys,
disclosing the location of all improvements, easements, party walls, sidewalks,
roadways, utility lines, and other matters shown customarily on such surveys,
and showing access affirmatively to public streets and roads (the "Survey").
Sellers shall order, at Sellers' expense the Survey from a reputable surveyor;
provided, however, if no significant Defects exist and Sellers' existing survey
describes Real Property in a manner sufficient for the Title Commitment, then
Buyer will be responsible for expenses of updating Sellers' survey as needed to
obtain Buyer's desired title coverages. Buyer shall, within ten (10) business
days after receipt of the Survey, approve or object in writing to the matters
disclosed by the Survey. Any matters disclosed by the Title Commitment to which
Buyer fails to object shall be deemed approved. If the Survey shows
encroachment on the Real Property or that improvements located on the Real
Property encroach on setback lines, easement, lands of others or violates any
restrictions, agreements, covenants or applicable governmental regulation, the
same shall constitute and be treated as a title Defect.
5.10 Insurance. Sellers shall maintain all insurance policies (including
policies providing property, casualty, liability, medical, dental and workers'
compensation coverage and bond and surety arrangements) in effect from the date
hereof through the Closing Date.
5.11 Confidentiality. The Parties will not disclose information obtained
or discovered about the other Parties during the term of this Agreement. The
Parties shall not disclose the terms of this Agreement, other than disclosures
to their respective representatives as necessary for the parties of their
representatives to perform the obligations contemplated hereunder. All press
releases and public announcements relating to the acquisition of the Business
will be agreed to and prepared jointly by Sellers and Buyer. Any Party may make
any public disclosure it believes in good faith is required by applicable law
or any listing or trading agreement concerning its publicly-traded securities
(in which case the disclosing Party shall use its reasonable best efforts to
advise the other Party prior to making the disclosure).
5.12 Employees: Compliance with WARN Act. Sellers shall use their best
efforts to cause commitments to be made to Buyer at or prior to Closing by such
employees of Sellers as Buyer, in its sole discretion, deems necessary to begin
employment with Buyer. With respect to the termination of employees, Sellers
shall comply with
-20-
<PAGE> 26
the Worker Adjustment and Retraining Notification Act of 1988 ("WARN Act") or
shall pay all penalties and other amounts due as a result of their failure to
do so.
5.13 Condemnation. In the event prior to the Closing, the Real Property,
or any portion thereof, shall be taken or condemned by any governmental
authority, or shall be subject to a bona fide threat of condemnation or other
taking, Sellers shall so notify Buyer, and Buyer shall have the option of
either (a) terminating this Agreement by giving notice thereof to Sellers,
whereupon the Escrow Deposit shall be immediately refunded by the Escrow Agent
to Buyer and this Agreement shall be deemed null and void and of no force or
affect and no Party hereto shall have any further rights, obligations, or
liability hereunder, or (b) requiring Sellers to convey the remaining portion
of the Real Property then held by Sellers to Buyer pursuant to the terms and
provisions hereof and to transfer and assign to Buyer at the Closing all of
Sellers' right, title and interest in and to such award made or that may be
made by reason of such condemnation.
6 Post-Closing Covenants. The Parties agree as follows with respect to the
period following the Closing.
6.1 General. In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
Parties shall take such further action (including the execution and delivery of
such further instruments and documents) as the other Party reasonably may
request, at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Section 8
below). Sellers acknowledge and agree that, from and after the Closing, Buyer
shall be entitled to possession of copies of all documents, books, records
(including Tax records), agreements, and financial data of any sort relating to
the Acquired Assets and Assumed Liabilities.
6.2 Litigation support. If and for so long as any Party actively is
contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing
Date involving the Acquired Assets and Assumed Liabilities, the other Party
shall cooperate with the contesting or defending Party and its counsel in the
contest or defense, make available its personnel, and provide such testimony
and access to its books and records as shall be necessary in connection with
the contest or defense, all at the sole cost and expense of the contesting or
defending Party (unless the contesting or defending Party is entitled to
indemnification therefor under Section 8 below).
6.3 Confidentiality. Sellers shall treat and hold as such all of the
Confidential Information, refrain from using any of the Confidential
Information except in connection with this Agreement, and deliver promptly to
Buyer or destroy, at the request and option of Buyer, all tangible embodiments
(and all copies) of the Confidential Information that are in their possession.
If Sellers are requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information, Sellers shall notify Buyer promptly of the request or requirement
so that Buyer may seek an appropriate protective order or waive compliance with
the provisions of this Section 6.3. If, in the absence of a protective order or
the receipt of a waiver hereunder, Sellers are, on the advise of counsel,
compelled to disclose any Confidential Information to any tribunal or else
stand liable for contempt, Sellers may disclose the Confidential Information to
the tribunal; provided, however, that Sellers shall use their best efforts to
obtain, at the request of Buyer, an order or other assurance that confidential
treatment shall be accorded to such portion of the Confidential Information
required to be disclosed as Buyer shall designate.
6.4 Change of Name. Immediately following the Closing, Golf and Country
Club shall cause to be filed with the Florida Department of State Articles of
Amendment to its Articles of Incorporation which shall effectively change its
name to a new name bearing no resemblance to its present name. Thereafter,
Sellers and Controlling Shareholders shall not use any names or titles similar
to "Spruce Creek Golf and Country Club" and "Spruce Creek Preserve."
-21-
<PAGE> 27
6.5 Continuation of Health Plan Coverage. Sellers shall be responsible
for compliance with the requirements of Code Section 4980B and Part 6 of Title
I of ERISA for all of Sellers' employees who are not Transferred Employees.
Sellers shall indemnify and hold Buyer harmless for any liability Buyer incurs
at any time on or after the Closing Date under the provisions of Code Section
4980B and Part 6 of Title I of ERISA with respect to any of Sellers' employees
who are not Transferred Employees.
7. Conditions to Obligation to Close.
7.1 Conditions to obligation of Buyer. The obligation of Buyer to
consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions at or prior to
Closing:
7.1.1 Buyer's satisfactory completion of a full due diligence review
of the Business and operations of Sellers to the extent deemed necessary
or desirable by Buyer on or prior to January 10, 1998;
7.1.2 the representations and warranties set forth in Section 3
above shall be true and correct in all material respects at and as of the
Closing Date;
7.1.3 Sellers shall have performed and complied with all of their
covenants hereunder in all respects through the Closing;
7.1.4 Sellers shall have procured all of the third party consents
specified in Section 3.4 above, all of the Title Insurance, Title
Commitments, Title Policies, and riders specified in Section 5.8 above,
indicating that Buyer will acquire title to the Real Property free and
clear of all liens, encumbrances, easements, conditions and other matters
affecting title, other than Permitted Exceptions, and all of the surveys
specified in Section 5.9 above;
7.1.5 there shall have been no material adverse change in the
Business or operation of Sellers or in their financial condition from the
date hereof through the Closing Date;
7.1.6 no action, suit, or proceeding shall be pending before any
court or quasi-judicial or administrative agency of any federal, state, or
foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement,
(B) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation, (C) affect adversely the right of Buyer
to own the Acquired Assets, and to operate the Business, or (D) affect
adversely the business, assets, properties, operation (financial or
otherwise), or prospects of Buyer with respect to its ownership of the
Acquired Assets or operation of its business as a result of such
acquisition (and no such injunction, judgment, order, decree, ruling, or
charge shall be in effect);
7.1.7 Sellers and Buyer shall have received all other
authorizations, consents, and approvals of governments and governmental
agencies referred to in Section 3.4 and Section 4.4 above;
7.1.8 That portion of the Real Property that is currently under
Development shall have received appropriate environmental approvals and
required environmental permits from the appropriate governmental agencies
including, but not limited to, the Florida Department of Environmental
Protection, the Southwest Florida Water Management District and the St.
John's River Water Management District, as appropriate, to develop the
Developments as contemplated.
7.1.9 The Parties and the Escrow Agent shall have entered into an
escrow agreement ("Escrow Agreement"), substantially in the form attached
hereto as Exhibit N.
-22-
<PAGE> 28
7.1.10 Controlling Shareholders and Buyer shall have entered into a
stock purchase agreement ("Utility Company Assignment Agreement"),
substantially in the form attached hereto as Exhibit O, and all money and
documents related to such acquisition shall be held in escrow pending
Florida Public Service Commission approval.
7.1.11 all actions to be taken by Sellers in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby shall be reasonably satisfactory in form
and substance to Buyer.
7.1.12 Sellers and Controlling Shareholders shall have executed and
delivered to Buyer the Closing Documents and Ancillary Agreements required
pursuant to Section 2.5.
If any of the conditions precedent to Buyer's obligations to close set forth in
this Section 7 have not been satisfied on or prior to the Closing Date, Buyer
may (a) terminate this Agreement as provided by Section 9.1, (b) waive in
writing, in Buyer's sole discretion, any such condition precedent without
waiving any other condition precedent or any of Buyer's rights herein, or (c)
extend the time period for satisfaction of the condition precedent for up to an
additional ten (10) days to enable such condition precedent to be satisfied by
delivering a written notice of such extension to Sellers; provided, that, the
Closing Date provided by Section 2.4 shall also be extended. If Buyer elects to
extend the time period for satisfaction of any condition precedent, and at the
expiration of such extended time period, such condition precedent still has not
been satisfied, clause (a) or (b) above shall apply.
7.2 Conditions to obligation of Sellers. The obligation of Sellers to
consummate the transactions to be performed by them in connection with the
Closing is subject to satisfaction of the following conditions:
7.2.1 the representations and warranties set forth in Section 4
above shall be true and correct in all material respects at and as of the
Closing Date;
7.2.2 Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
7.2.3 no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling, or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement or (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation (and
no such injunction, judgment, order, decree, ruling, or charge shall be in
effect);
7.2.4 Sellers and Buyer shall have received all other
authorizations, consents, and approvals of governments and governmental
agencies referred to in Section 3.4 and Section 4.4 above;
7.2.5 all actions to be taken by Buyer in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby shall be reasonably satisfactory in form
and substance to Sellers.
-23-
<PAGE> 29
7.2.6 Sellers and Controlling Shareholders shall have been released
from any liability in connection with post-Closing obligations under the
Assumed Liabilities.
7.2.7 The Parties and the Escrow Agent shall have entered into an
escrow agreement ("Escrow Agreement"), substantially in the form attached
hereto as Exhibit N.
7.2.8 Buyer shall have executed and delivered to Sellers and
Controlling Shareholders the Closing Documents and Ancillary Agreements
required pursuant to Section 2.5.
Sellers may waive any condition specified in this Section 7.2 if they execute a
writing so stating at or prior to the Closing.
8 Survival; Indemnification.
8.1 Survival of Representations, Warranties and Covenants. The
representations, warranties, covenants, indemnification provisions and
agreements of the Parties made or set forth herein or in any Ancillary
Agreement or Closing Document delivered pursuant hereto, shall survive the
execution and delivery hereof or thereof, the Closing, and any investigation
made by the Parties and shall continue in full force and effect thereafter.
Indemnification under this Section 8 shall be the sole and exclusive remedy for
any Party to this Agreement for any breach of warranty, representation,
covenant or other agreement made or set forth herein or in any Ancillary
Agreement or Closing Document delivered pursuant hereto, other than Buyer's
rights under the Special Warranty Deed.
8.2 Indemnification Rights and Obligations.
8.2.1 Sellers and Controlling Shareholders, jointly and severally,
hereby agree to indemnify Buyer (which term shall be deemed to include, for the
purposes of this Section 8, as appropriate, Buyer, Del Webb and the Entity
Related Parties of Buyer) with respect to, and hold Buyer harmless from, any
Liability or Impairment which Buyer may directly or indirectly incur or suffer
by reason of, or which results from, arises out of or is based upon (i) the
inaccuracy of any representation or warranty made by Sellers and Controlling
Shareholders herein, (ii) the failure of Sellers or Controlling Shareholders to
comply with any covenants made by Sellers or Controlling Shareholders herein;
(iii) the conduct of the Business on or prior to the date of Closing, to the
extent such Liability or Impairment was not specifically set forth as an Assumed
Liability on Schedule 2.2, (iv) the conduct of past, current or future business
by the Sellers, Controlling Shareholders and the entities related to Sellers
listed on Exhibit A attached hereto, which is unrelated to the acquisition of
the Acquired Assets hereunder, or (v) any and all finder's fees, brokerage
commissions or similar payments incurred by Sellers or Controlling Shareholders
in connection with the transactions contemplated herein.
8.2.2 Buyer hereby agrees to indemnify Sellers and Controlling
Shareholders, including Entity Related Parties of Sellers and Controlling
Shareholders, with respect to, and hold Sellers and Controlling Shareholders
harmless from, any Liability or Impairment which Sellers or Controlling
Shareholders may directly or indirectly incur or suffer by reason of, or which
results from, arises out of or is based upon (i) the inaccuracy of any
representation or warranty made by Buyer herein, (ii) the failure of Buyer to
comply with any covenants made by Buyer, (iii) the conduct of the Business by
Buyer subsequent to the Closing Date.
8.2.3 Anything herein to the contrary notwithstanding, no Party shall
make any Indemnification Claim against any other Party or for any breach of
representations, warranties or covenants contained in this Agreement until the
dollar amount of all Liabilities or Impairments suffered or incurred by the
Party seeking such indemnity hereunder shall exceed, in the aggregate, the
amount of Fifty Thousand Dollars ($50,000.00), but, if such amount is exceeded,
the indemnifying Party shall be required to pay the full amount of such
aggregate Liabilities or Impairments (without deduction for such Fifty Thousand
Dollars ($50,000.00) threshold amount) for which indemnification rights and
obligations are provided under this Section 8.
-24-
<PAGE> 30
8.2.4 Anything herein to the contrary notwithstanding, no Party shall
be liable to any other Party under this Section 8 for punitive or consequential
damages, including lost profits, except to the extent contained in a settlement,
award or judgment obtained by a third party.
8.3 Method of Asserting Claims. All Indemnification Claims by a Party
entitled to be indemnified hereunder (an "Indemnitee") by another Party hereto
(an "Indemnitor"), under this Section 8, shall be asserted and resolved as
follows:
8.3.1 Buyer is hereby designated the representative of (i) Buyer, and
(ii) the Entity Related Parties of Buyer, to the extent necessary to give
effect to the provisions of Sections 8.3 through 8.4, and in that
representative capacity, Buyer is referred to as Indemnitee or Indemnitor,
as appropriate.
8.3.2 H. Erp is hereby designated the representative of Sellers and
Controlling Shareholders to the extent necessary to give effect to the
provisions of Sections 8.3 through 8.4 hereof, and in that representative
capacity, H. Erp is referred to as the Indemnitee or Indemnitor, as
appropriate.
8.3.3 In the event that any Liability for which Indemnitor is
obligated to indemnify Indemnitee hereunder is asserted against or sought
to be collected by a third party, Indemnitee shall promptly notify the
Indemnitor of such Liability, specifying the nature of such Liability and
the amount or the estimated amount thereof to the extent then feasible to
estimate (which estimate shall not be conclusive of the final amount of
such Liability) (the "Claim Notice"). The Indemnitor shall have ten (10)
days from its receipt of the Claim Notice (the "Notice Period") to notify
Indemnitee (i) whether or not Indemnitor disputes its obligation to
indemnify Indemnitee hereunder with respect to such Liability, and (ii) if
it does not dispute such obligation to indemnify, whether or not it
desires, at its sole cost and expense, to defend or control the defenses of
Indemnitee against such Liability; provided, however, that Indemnitee is
hereby authorized prior to and during the Notice Period to file any motion,
answer or other pleading which it shall deem necessary or appropriate to
protect its interests. In the event that Indemnitor notifies Indemnitee
within the Notice Period that the Indemnitor does not dispute such
obligation to indemnify and desires to defend or control the defenses of
Indemnitee against such Liability, then, except as hereinafter provided,
the Indemnitor shall have the right to defend by appropriate proceedings,
which proceedings shall be promptly settled or brought to a final
conclusion in such a manner as to avoid any risk of Indemnitee becoming
liable for any additional Liability. If Indemnitee desires to participate
in any such defense or settlement it may do so, but it shall not be in
control of such defense or settlement and its participation shall be at its
sole cost and expense. If in the reasonable opinion of Indemnitee, any such
Liability involves an issue or matter which could have a materially adverse
effect on the business, operations, assets, properties or prospects of
Indemnitee or any division of the Indemnitee, Indemnitee shall have the
right to control the defense or settlement of any such Liability, and its
reasonable costs and expenses thereof shall be included as part of the
indemnification obligations of the Indemnitor hereunder. If the Indemnitor
disputes the Indemnitor's obligation to indemnify with respect to such
Liability or elects not to defend against such Liability, whether by not
giving timely notice as provided above or otherwise, then the amount of any
such Liability, or, if the same be contested by the Indemnitor or by
Indemnitee (but Indemnitee shall not have any obligation to contest any
such claim or demand), then that portion thereof as to which such defense
is unsuccessful, shall be conclusively deemed to be an obligation to
indemnify of the Indemnitor hereunder (subject, if the Indemnitor has
timely disputed any obligation to indemnify, to a determination that any
disputed obligation to indemnify is covered by these indemnification
provisions).
8.3.4 In the event Indemnitee should have an Indemnification Claim
against the Indemnitor which does not involve a Liability being asserted
against or sought to be collected from it by a third party, Indemnitee
shall promptly send a Claim Notice with respect to such Liability or
Impairment to the Indemnitor. If the Indemnitor does not notify Indemnitee
within the Notice Period that it disputes such Liability or Impairment, the
amount of such Liability or Impairment shall be conclusively deemed a
Liability of the Indemnitor hereunder. If an Indemnitor does respond within
the Notice Period and such response
-25-
<PAGE> 31
disputes such claim or Liability, in whole or in part, the Indemnitee shall
have no remedy other than to initiate the Resolution Process under Section 10.
8.3.5 Nothing herein shall be deemed to prevent any Indemnitee from making
an Indemnification Claim with respect to potential or contingent Liabilities or
Impairments, provided the Claim Notice sets forth the specific basis for any
such potential or contingent Liabilities or Impairments and the estimated
amount thereof to the extent then feasible and the indemnified party has
reasonable grounds to believe that such a Liability will be asserted or
Impairment will be incurred or suffered.
8.3.6 The indemnification rights under this Section 8 shall not apply
unless a Claim Notice has been delivered to Indemnitor within eighteen (18)
months following the Closing.
8.4 Payment of Indemnification Obligations.
8.4.1 In the event that any party has an obligation to indemnify another
under Section 8.3, such party shall promptly pay the indemnified party the
amount of such obligation. If there should be a dispute as to the amount or
manner of determining any indemnity obligation owed under this Section 8, the
party from which indemnification is due shall nevertheless pay, when due, such
portion, if any, of the obligation as shall not be subject to dispute. The
difference, if any, between the amount of the obligation ultimately determined
as due under this Section 8 and the portion, if any, theretofore paid shall
bear interest as provided in Section 8.4.3. Upon the payment in full of any
indemnity, obligation, either by setoff or otherwise, the party making payment
shall be subrogated to the rights of the indemnified party against any person,
firm, corporation or other entity with respect to the Liability or Impairment on
which the indemnity obligation is based.
8.4.2 An amount equal to One Million Two Hundred Thousand Dollars
($1,200,000) of the indemnity obligations of Sellers and Controlling
Shareholders will be secured by a standby letter of credit ("Standby Letter of
Credit") delivered by Sellers to Buyer at Closing to be held in escrow by First
American Title Insurance Company, as Escrow Agent, to cover indemnification
obligations on the part of Sellers and Controlling Shareholders contemplated by
this Section 8. If no Indemnification Claims are made on or before the date
that is eighteen (18) months following Closing, the Standby Letter of Credit
shall be released from escrow and terminated. If Indemnification Claims are
made prior to the date that is eighteen (18) months following Closing, a letter
of credit in an amount equal to one hundred fifty percent (150%) of said
Indemnification Claims shall continue to be held until the Indemnification
Claims are finally resolved. Any Indemnification Claims for which Buyer is
entitled to payment under this Section 8 shall be paid to Buyer by the Escrow
Agent, from the Standby Letter of Credit, to the extent that the Standby Letter
of Credit is sufficient to pay such items. To the extent that the Standby
Letter of Credit is insufficient to pay any such item in full, the payment of
such item shall be the joint and several obligation of Sellers and Controlling
Shareholders, and Sellers and Controlling Shareholders shall make full payment
of any and all such items to Buyer within ten (10) days after demand therefor.
In the event Sellers to do not timely make any payment to Buyer as required by
Section 2.3.1 hereof dealing with post-Closing adjustments to the Purchase
Price, then Buyer shall be entitled to make a claim against the Standby Letter
of Credit at such time, and, thereafter, the balance of the Standby Letter of
Credit shall continue to be held as contemplated by this section.
8.4.3 If all or part of any indemnification obligation under this
Agreement is not paid when due, then the indemnifying party or parties shall
pay the indemnified party or parties interest on the unpaid amount of the
obligation for each day from the date the amount became due until payment in
full, payable on demand, at the Applicable Rate.
-26-
<PAGE> 32
9 Termination.
9.1 Termination of Agreement. The Parties may terminate this Agreement as
provided below:
9.1.1 All Parties may terminate this Agreement by unanimous written
consent at any time prior to the Closing;
9.1.2 Buyer may terminate this Agreement by giving written notice to
Sellers on or before January 10, 1998 if Buyer is not satisfied with the
results of its continuing business, legal, and accounting due diligence of
Sellers;
9.1.3 Buyer may terminate this Agreement by giving written notice to
Sellers at any time prior to the Closing: (A) if Sellers or Controlling
Shareholders have breached any material representation, warranty, or
covenant contained in this Agreement in any material respect, Buyer has
notified Sellers of the breach, and the breach has continued without cure
for a period of ten (10) days after the notice of breach, (B) pursuant to
its rights under Section 5.8, (C) pursuant to its right under Section 5.13,
or (D) if the Closing shall not have occurred on or before January 25, 1998
(or such later date permitted herein), by reason of the failure of any
condition precedent under Section 7.1 hereof (unless the failure results
primarily from Buyer itself breaching any representation, warranty, or
covenant contained in this Agreement); and
9.1.4 Sellers may terminate this Agreement by giving written notice
to Buyer at any time prior to the Closing: (A) if Buyer has breached any
material representation, warranty, or covenant contained in this Agreement
in any material respect, Sellers have notified Buyer of the breach, and the
breach has continued without cure for a period of ten (10) days after the
notice of breach, or (B) if the Closing shall not have occurred on or
before January 25, 1998 (or such later date permitted herein), by reason of
the failure of any condition precedent under Section 7.2 hereof (unless the
failure results primarily from Sellers themselves breaching any
representation, warranty, or covenant contained in this Agreement).
9.2 Effect of termination. If any Party terminates this Agreement
pursuant to Section 9.1 above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other Party
(except for any Liability of any Party then in breach).
10 Resolution of Disputes. The following procedures ("Resolution Process")
shall be used to resolve any controversy, disagreement or dispute
(collectively, "Dispute") arising out of or relating to this Agreement:
10.1 The Parties shall attempt in good faith to resolve any Dispute
promptly by negotiations between executives who have authority to settle the
Dispute. Any Party may give another Party written notice of any Dispute not
resolved in the normal course of business ("Notice of Dispute"). Within ten (10)
days following the delivery of such Notice of Dispute, executives of all Parties
shall meet at a mutually acceptable time and place (by mutual agreement, such
meeting may be held by telephone), and thereafter as often as they deem
necessary, to exchange relevant information and to attempt to resolve the
Dispute. If the matter has not been resolved within twenty (20) days following
delivery of such Notice of Dispute, or if the Parties fail to meet within ten
(10) days, any Party may initiate mediation of the Dispute or claim as provided
in Section 10.2.
10.2 If any Dispute has not been resolved by negotiation as provided in
Section 10.1, the Parties shall endeavor to resolve the Dispute by mediation
under the then current Model Procedure for Mediation of Business Disputes of the
Center for Public Resources, Inc. ("CPR"), 366 Madison Avenue, New York, New
York 10017. The neutral third party will be jointly selected by the Parties from
the CPR Panel of Neutrals. If the Parties encounter difficulty in agreeing on a
neutral, they will seek the assistance of CPR in the selection process, at which
point the selection of the mediator shall be the exclusive decision of CPR.
Unless otherwise agreed by the Parties, the place of mediation shall be Orlando,
Florida.
-27-
<PAGE> 33
10.3 Any Dispute that has not been resolved by mediation, as provided in
Section 10.2 within forty-five (45) days of the initiation of such procedure,
shall be finally settled by arbitration conducted expeditiously in accordance
with the CPR Rules for Non-Administered Arbitration of Business Disputes by a
sole arbitrator; provided, however, that if one Party has requested the other
Party to participate in a non-binding dispute resolution procedure under
Sections 10.1 or 10.2 and the other Party has failed to participate therein, the
other Party may initiate arbitration before expiration of the above time period.
The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C.
Sections 1-16, and judgment upon the award rendered by the arbitrator may be
entered by any court having jurisdiction thereof. The place of arbitration shall
be Orlando, Florida. The arbitrator is not empowered to award damages in excess
of compensatory damages (i.e. no punitive or speculative damages) and each Party
hereby irrevocably waives any damages in excess of compensatory damages. The
decision of the arbitrator shall be final.
10.4 The Parties shall maintain all applicable books and records until
expiration of the time periods set forth in Section 8 and thereafter with
respect to those relating to any Dispute until the Resolution Process with
respect to such Dispute is completed.
10.5 The Parties shall bear their respective costs in connection with the
dispute resolution procedures described in Sections 10.1 and 10.2, except that
the Parties shall share equally the fees and expenses of any neutral third party
or arbitrator and the costs of any facility used in connection with such dispute
resolution procedures. The prevailing Party in any binding arbitration
proceeding described in Section 10.3 or any other action hereunder shall be
awarded its reasonable attorneys' fees and costs.
10.6 All negotiations relating to any of the procedures provided in this
Section 10 are confidential and shall be treated as compromise and settlement
negotiations for purposes of the rules of evidence of all applicable
jurisdictions.
11 Miscellaneous.
11.1 No third party beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
11.2 Entire agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement between the Parties and supersedes
any prior understandings, agreements, or representations by or between the
Parties, written or oral, to the extent they related in any way to the
subject matter hereof, including, but not limited to, the Letter of Intent.
11.3 Succession and assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior
written approval of the other Party; provided, however, that Buyer may: (i)
assign its rights and interests hereunder to one or more corporations
controlling, controlled by or under common control with Buyer and (ii)
designate one or more corporations controlling, controlled by or under common
control with Buyer to perform its obligations hereunder (in any or all of which
cases Buyer shall no longer be responsible for the performance of the
obligations so assigned).
11.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
11.5 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.6 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if it is sent
by registered or certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth below:
-28-
<PAGE> 34
If to Sellers: Copy to:
Spruce Creek Golf and Country Kenneth F. Oswald, Esq.
Club, Inc., Suite 110
Attn: Harvey D. Erp 600 Courtland Street
17575 S.E. 102nd Ave. Orlando, Florida 32804
Summerfield, Florida 34491 Facsimile No: (407) 647-6283
Facsimile No: (352) 347-7737
Spruce Creek Development Kenneth F. Oswald, Esq.
Company of Ocala, Inc., Suite 110
Attn: Harvey D. Erp 600 Courtland Street
17575 S.E. 102nd Ave. Orlando, Florida 32804
Summerfield, Florida 34491 Facsimile No: (407) 647-6283
Facsimile No: (352) 347-7737
If to Controlling Shareholders: Copy to:
Mr. Harvey D. Erp Kenneth F. Oswald, Esq.
17575 S.E. 102nd Ave. Suite 110
Summerfield, Florida 34491 600 Courtland Street
Facsimile No: (352) 347-7737 Orlando, Florida 32804
Facsimile No: (407) 647-6283
Ms. Brenda Erp Kenneth F. Oswald, Esq.
17575 S.E. 102nd Ave. Suite 110
Summerfield, Florida 34491 600 Courtland Street
Facsimile No: (352) 347-7737 Orlando, Florida 32804
Facsimile No: (407) 647-6283
Mr. Jay A. Thompson Kenneth F. Oswald, Esq.
17575 S.E. 102nd Ave. Suite 110
Summerfield, Florida 34491 600 Courtland Street
Facsimile No: (352) 347-7737 Orlando, Florida 32804
Facsimile No: (407) 647-6283
Ms. Lori A. Thompson Kenneth F. Oswald, Esq.
17575 S.E. 102nd Ave. Suite 110
Summerfield, Florida 34491 600 Courtland Street
Facsimile No: (352) 347-7737 Orlando, Florida 32804
Facsimile No: (407) 647-6283
If to Buyer: Copy to:
Del Webb Communities, Inc. Holland & Knight, LLP
6001 North 24th St. Attn: Glenn A. Adams, Esq.
Phoenix, Arizona 85016 200 S. Orange Ave., Suite 2600
Attn: Robert C. Jones, Esq. Orlando, Florida 32801
Facsimile No: (602) 808-8015 Facsimile No: (407) 244-5288
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger
-29-
<PAGE> 35
service, facsimile transmission, telecopy, telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim, or other communication shall
be deemed to have been duly given unless and until it actually is received by
the intended recipient; provided, however, that if notice is sent by U.S. mail
it shall be deemed received on the fifth (5th) business day after it is sent.
Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
Party notice in the manner herein set forth.
11.7 Governing law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Florida without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Florida or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Florida.
11.8 Amendments and waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by all
Parties. No waiver by any Party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by
virtue of any prior or subsequent such occurrence.
11.9 Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
11.10 Expenses. Each Party shall bear his or its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby. At Closing, Sellers shall pay
expenses of examination of title, title insurance premium, documentary stamp
taxes on the special warranty deed, recording costs, and Sellers' attorneys'
fees. With respect to title insurance, Buyer will be responsible for expenses
associated with extended owner's coverage (also known as ALTA Form 9 coverage).
Either Sellers or Buyer shall pay the cost of the Survey as contemplated by
Section 5.9. All normal and customary adjustments/prorations shall be made as
of Closing, including without limitation, rent and other income, utilities and
taxes. Real property and tangible personal property taxes assessed against the
Acquired Assets for the year in which the Closing occurs shall be prorated
between Sellers and Buyer as of the Closing Date, said proration to be based
upon the most recently available tax rates and valuations with respect to the
Acquired Assets. If the tax information shall be based on a valuation of a
larger parcel of unimproved land which includes the Real Property, then the
assessed value of the Real Property shall be based on the relative square
footage or acreage of the property to the total square footage or acreage of
such parcel. Upon the rendering of the appropriate taxing authorities of the ad
valorem tax bills for the year in which Closing occurs, any adjustment required
shall be promptly made between Buyer and Sellers. Buyer shall be responsible
for any sales tax required to be paid on the transfer of the Acquired Assets.
This provision shall survive the Closing.
11.11 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. If an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local,
or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. Nothing in the
Schedules shall be deemed adequate to disclose an exception to a representation
or warranty made herein unless the Schedules specifically identify the
exception with particularity and describe the relevant facts in detail. Without
limiting the generality of the foregoing, the mere listing (or inclusion of a
copy) of a document or other item shall not be deemed adequate to disclose an
exception to a representation or warranty made herein (unless the
representation or warranty has to do with the existence of the document or
other item itself). The Parties intend that each representation, warranty, and
covenant contained herein shall have independent significance. If any party has
breached any representation, warranty, or covenant contained herein in any
respect, the fact that there exists another
-30-
<PAGE> 36
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) that the Party has not
breached shall not detract from or mitigate the fact that the Party is in
breach of the first representation, warranty, or covenant.
11.12 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
11.13 Failure of performance. In the event Buyer fails to perform its
obligations to close as provided for with respect to the Closing, Sellers' sole
right and remedy shall be to terminate this Agreement by giving notice thereof
to Buyer and to receive from the Escrow Agent, as full liquidated damages, the
Escrow Deposit, and upon such termination and payment by the Escrow Agent, this
Agreement shall be deemed null and void and of no force or affect and no Party
hereto shall have any further rights, obligations or liabilities hereunder. If,
for any reason other than failure of Sellers to make Sellers' title marketable
after diligent effort, Sellers fail, neglect or refuse to perform this
Agreement, Buyer may seek specific performance or elect to receive the return
of Buyer's Escrow Deposit without thereby waiving any action for damages
resulting from Sellers' breach; provided, however, that Buyer's right to damages
hereunder shall be limited to a situation where Sellers or Controlling
Shareholders have transferred any Acquired Assets or the stock of Sellers' to a
third party on or prior to the date that is one (1) year from the date hereof
following a breach of this Agreement by Sellers.
11.14 Submission to jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Orange County, Florida,
in any action or proceeding arising out of or relating to this Agreement and
agrees that all claims in respect of the action or proceeding may be heard and
determined in any such court except as otherwise provided by Section 10 hereof.
Each party also agrees not to bring any action or proceeding arising out of or
relating to this Agreement in any other court. Each of the Parties waives any
defense of inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety, or other security that might be required
of any other Party with respect thereto. Any Party may make service on the
other Party by sending or delivering a copy of the process to the Party to be
served at the address and in the manner provided for the giving of notices in
Section 11.6 above. Nothing in this Section 11.14, however, shall affect the
right of any Party. Each Party agrees that a final judgment in any action or
proceeding so brought shall be conclusive and may be enforced by suit on the
judgment or in any other manner provided by law or in equity.
11.15 KNOWING WAIVER OF JURY TRIAL. THE PARTIES HERETO KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR
IN CONNECTION HEREWITH. THIS PROVISION IS A MATERIAL INDUCEMENT FOR BUYER'S
ENTERING INTO THIS AGREEMENT.
[INTENTIONALLY LEFT BLANK]
-31-
<PAGE> 37
The Parties hereto have executed this Agreement effective as of the date
first above written.
BUYER:
DEL WEBB COMMUNITIES, INC.,
an Arizona corporation
By: /s/ John A. Spencer
---------------------------------------
Name: John A. Spencer
-------------------------------------
Title: Senior Vice President
------------------------------------
SELLERS:
SPRUCE CREEK GOLF AND
COUNTRY CLUB, INC.
a(n) FLA CORP
--------------------------------------
By: /s/ Harvey D. Erp
---------------------------------------
Name: Harvey D. Erp
-------------------------------------
Title: PRESIDENT
------------------------------------
The undersigned Sellers are executing this Agreement as of the 22nd day of
December, 1997 as an indication of their agreement to transfer any prepaid
amenity fees held by any Seller from such Seller to Buyer as successor
developer.
SPRUCE CREEK PRESERVE HOMEOWNERS
ASSOCIATION, INC.,
a(n) FLA CORP
---------------------------------------
By: /s/ Harvey D. Erp
----------------------------------------
Name: Harvey D. Erp
--------------------------------------
Title: PRESIDENT
-------------------------------------
SPRUCE CREEK GOLF AND COUNTRY CLUB
HOMEOWNERS' ASSOCIATION, INC.,
a(n) FLA CORP
---------------------------------------
By: /s/ Harvey D. Erp
----------------------------------------
Name: Harvey D. Erp
--------------------------------------
Title: PRESIDENT
-------------------------------------
-32-
<PAGE> 38
The following individuals are executing this Agreement as of the 22nd day of
December, 1997, as an indication of their acknowledgement and approval,
individually, of the terms of this Agreement, and the undersigned confirm that
they do not possess any information or knowledge that would cause Sellers to
breach the covenants, representations and warranties set forth in this
Agreement.
CONTROLLING SHAREHOLDERS:
/s/ Harvey D. Erp
- ------------------------------------------
HARVEY D. ERP
/s/ Brenda Erp
- ------------------------------------------
BRENDA ERP
/s/ Jay A. Thompson
- ------------------------------------------
JAY A. THOMPSON
/s/ Lori A. Thompson
- ------------------------------------------
LORI A. THOMPSON
The following entity is executing this Agreement as of the 22nd day of
December, 1997, as an indication of its agreement to consent to and assign all
of its rights under the Spruce Creek Golf and Country Club FQD Development
Order to Buyer.
SPRUCE CREEK DEVELOPMENT
COMPANY OF OCALA, INC.,
a(n) FLA CORP
---------------------------------------
By: /s/ Harvey D. Erp
----------------------------------------
Name: Harvey D. Erp
--------------------------------------
Title: PRESIDENT
-------------------------------------
-33-
