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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 31, 1998
CALTON, INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
NEW JERSEY 1-8846 22-2433361
- ---------------------------- ----------------------- -----------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation Identification Number)
500 CRAIG ROAD
MANALAPAN, NEW JERSEY 07726
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(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (732) 780-1800
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<PAGE>
Item 2. Acquisition or Disposition of Assets
------------------------------------
On December 31, 1998, Calton, Inc. ("Calton" or the "Company") announced that it
had completed the previously announced sale of Calton Homes, Inc. ("Calton
Homes"), its wholly owned single family homebuilding subsidiary, to Centex Real
Estate Corporation ("CREC"), the homebuilding subsidiary of Centex Corporation
(NYSE:CTX), one of the nation's largest homebuilders (the "Sale Transaction").
The purchase price for the stock of Calton Homes, which was paid in cash at
closing, was $48.1 million, subject to a $5.2 million holdback, and is subject
to certain post closing adjustments. Calton has entered into an agreement to
provide consulting services to an affiliate of CREC over a three year period for
$1.3 million per year.
The shareholders of Calton, Inc. approved the sale of the stock of Calton Homes,
Calton's primary operating subsidiary, to CREC at a special meeting held at the
Company's headquarters on December 30, 1998.
After giving effect to the Sale Transaction, the Company has net
assets, excluding the $5.2 million holdback of approximately $43.5 million,
consisting almost exclusively of cash and cash equivalents.
Following the sale, Calton will remain a public company and pursue a strategy
described in the proxy statement issued to its shareholders in connection with
the sale of Calton Homes. The overall strategy involves the initiation of a
significant stock repurchase program, shifting the Company's business focus to
providing various services to participants in the homebuilding industry,
including equity and debt financing, financial advisory services and consulting
services and investing in, acquiring or combining with one or more operating
businesses within or outside of the homebuilding industry. If within the next 18
months, the Company has not redeployed a substantial portion of the sale
proceeds, or developed a plan to redeploy a substantial portion of the proceeds
within a reasonable timeframe, the Company will be liquidated and dissolved.
Upon completion of the Sale Transaction, substantially all of the employees of
Calton and Calton Homes continued their employment with Calton Homes. The
current officers of Calton are Anthony J. Caldarone, Chairman, President and
Chief Executive Officer, David J. Coppola, Vice President and Treasurer, and
Mary Magee, Secretary. Each of the Company's directors continued to serve on the
Board.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
------------------------------------------------------------------
(a) Unaudited Pro Forma Condensed Consolidated Financial Statements
The following unaudited pro forma condensed consolidated financial information
gives effect to (i) the Sale Transaction; (ii) the sale of the Company's
homebuilding assets in Florida which was effected as of November 30, 1997 and
(iii) the winddown of the Company's homebuilding assets in California, Chicago
and Pennsylvania as if such transactions had occurred on August 31, 1998 for
balance sheet data and December 1, 1994 for statement of operations data. These
pro forma financial statements are presented for illustrative purposes only, and
are not necessarily indicative of the operating results and financial position
that might have been achieved had the transactions described above occurred on
the dates indicated, nor are they necessarily indicative of operating results
and financial position which may occur in the future.
The condensed consolidated historical statements of operations data for the
periods presented are derived from the historical financial statements of the
Company. These pro forma statements should be read in conjunction with the
Company's Annual Report on Form 10-K for the fiscal
2
<PAGE>
year ended November 30, 1997 and quarterly report on Form 10-Q for the nine
month period ended August 31, 1998. The historical financial statements as of
and for the nine months ended August 31, 1998 have been prepared in accordance
with generally accepted accounting principles applicable to interim financial
information and, in the opinion of the Company's management, include all
adjustments necessary for a fair presentation of information for such periods.
3
<PAGE>
CALTON, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
AS OF AUGUST 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Historical Impact of Sale
(unaudited) Transaction (1) Pro Forma
----------------- --------------- ---------
ASSETS
Cash and cash equivalents ....... $ 2,496 $ 40,873 (2) $ 40,956
(2,413)
Receivables ..................... 5,485 (4,589) 6,123
5,227 (3)
Inventories ..................... 71,899 (71,899) --
Commercial land ................. 252 -- 252
Deferred financing fees ......... 2,293 (2,293) --
Prepaids and other assets ....... 1,454 (932) 522
-------- -------- --------
TOTAL ASSETS .................... $ 83,879 $(36,026) $ 47,853
======== ======== ========
LIABILITIES & EQUITY
LIABILITIES
Purchase money mortgages ........ $ 2,649 $ (2,649) $ --
Revolving credit agreement ...... 25,000 (25,000) --
Warrants ........................ (122) -- (122)
-------- -------- --------
Total debt ...................... 27,527 (27,649) (122)
Accounts payable and accrued
liabilities ................... 22,441 (20,579) 1,862
-------- -------- --------
Total liabilities ............... 49,968 (48,228) 1,740
-------- -------- --------
EQUITY
Common stock .................... 267 -- 267
Paid in capital ................. 27,318 5,125 32,443
Retained earnings ............... 6,326 7,077 13,403
-------- -------- --------
Total equity ............... 33,911 12,202 46,113
-------- -------- --------
TOTAL LIABILITIES & EQUITY ...... $ 83,879 $(36,026) $ 47,853
======== ======== ========
Fully Diluted Book Value
Per Share ..................... $ 1.18(5)(6) $ 1.59(5)(6)
======== ========
- ----------
NOTES:
(1) Bracketed amounts reflect the historical balances of Calton Homes, Inc.
included in the sale.
(2) Net cash received at closing resulting from $48.1 million in gross
proceeds less $2.0 million of estimated closing costs and a $5,227,000
holdback.
(3) Holdback amount.
(4) The pro forma net gain as if the closing of the transaction occurred on
August 31, 1998 is approximately $7.1 million after a $5.1 million book
tax provision. The expected net gain upon closing the transaction is
approximately $5.0 million after a $3.6 million book tax provision that is
charged to Paid-in-Capital due to the recognition of the net operating
loss carryforward.
(5) Based upon 26,755,000 shares outstanding as of September 30, 1998 and the
assumed exercise of a total of approximately 3,100,000 options and
warrants and assumed proceeds upon exercise of all options and warrants of
$1,326,000.
(6) Subsequent to August 31, 1998, the Company repurchased an aggregate of
1,028,000 shares of Common Stock and options to acquire 685,000 shares of
Common Stock held by a former employee were acquired and cancelled, thus
reducing the dilutive effect of these options. If such transactions had
been effected at August 31, 1998, the fully diluted book value per share
would have been $1.19 (historical) and $1.63 (pro forma).
THE PRO FORMA FINANCIAL INFORMATION SET FORTH ABOVE WAS PREPARED IN
ACCORDANCE WITH THE APPLICABLE RULES AND REGULATIONS OF THE SECURITIES AND
EXCHANGE COMMISSION AND IS NOT INTENDED TO REFLECT A PROJECTION OF FUTURE
RESULTS SUBSEQUENT TO THE CLOSING OF THE SALE TRANSACTION.
4
<PAGE>
CALTON, INC.
UNAUDITED PROFORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED AUGUST 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Historical Impact of Sale Pro forma
(unaudited) Transaction Results (1)
----------- -------------- -----------
Revenues ........................... $51,764 $(45,932) $ 5,832(2)
Costs and Expenses
Cost of revenues ................. 43,552 (38,064) 5,488(2)
Selling, general &
administrative ................. 6,557 (5,082)(4) 1,475(3)
------- -------- -------
50,109 (43,146) 6,963
------- -------- -------
Income (loss) from operations ...... 1,655 (2,786) (1,131)
Other charges (credits)
Interest expense, net ............. 675 (627) 48
Other income ...................... -- -- --
------- -------- -------
Income (loss) before income
taxes ............................ 980 (2,159) (1,179)
Provision (benefit) in lieu of
income taxes ..................... 411 (993) (582)
------- -------- -------
Net income (loss) .................. $ 569 $ (1,166) $ (597)
======= ======== =======
Basic and diluted net income
(loss) per share ................. $ .02 $ (.02)
======= =======
Basic weighted average shares
outstanding ...................... 26,689 26,689
======= =======
Diluted weighted average shares
outstanding ...................... 27,780
=======
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NOTES:
(1) Excludes impact of $1.3 million per annum consulting agreement and impact
of the return on investment of the remaining capital for the ongoing
business.
(2) Reflects the sale of four parcels of commercial land included in the
historical financial statements.
(3) The Company estimates that the selling, general and administrative expense
level for the ongoing business will be approximately $1.2 million per
annum.
(4) Excludes allocation of corporate (Calton, Inc.) overhead.
THE PRO FORMA FINANCIAL INFORMATION SET FORTH ABOVE WAS PREPARED IN ACCORDANCE
WITH THE APPLICABLE RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE
COMMISSION AND IS NOT INTENDED TO REFLECT A PROJECTION OF FUTURE RESULTS
SUBSEQUENT TO THE CLOSING OF THE SALE TRANSACTION.
5
<PAGE>
<TABLE>
CALTON, INC.
UNAUDITED PROFORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED AUGUST 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
Impact of Impact of Impact of
Historical Sale Florida Sale Chicago Pro forma
(unaudited) Transaction Transaction Winddown Results (1)
----------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Revenues ................................ $ 75,241 $(47,129) $(27,267) $ (820) $ 25
-------- -------- -------- -------- --------
Costs and Expenses
Cost of revenues ...................... 65,684 (41,596) (23,319) (921) (152)
Selling, general & administrative ..... 10,580 (5,009)(3) (3,690)(3) (75)(3) 1,806(2)
Impairment of assets .................. 350 (350) -- -- --
-------- -------- -------- -------- --------
76,614 (46,955) (27,009) (996) 1,654
-------- -------- -------- -------- --------
Income (loss) from operations ........... (1,373) (174) (258) 176 (1,629)
Other charges (credits)
Interest expense, net ................. 1,086 (598) (247) (218) 23
Other income .......................... (871) -- -- -- (871)
-------- -------- -------- -------- --------
Income (loss) before income taxes ....... (1,588) 424 (11) 394 (781)
Provision (benefit) in lieu of
of income taxes ....................... (794) 128 (7) 256 (417)
-------- -------- -------- -------- --------
Net income (loss) ....................... $ (794) $ 296 $ (4) $ 138 $ (364)
======== ======== ======== ======== ========
Basic and diluted net income
(loss) per share ...................... $ (.03) $ (.01)
======== ========
Basis weighted average shares
outstanding ........................... 26,554 26,554
======== ========
Diluted weighted average
shares outstanding .................. 26,661
========
- --------------
NOTES:
(1) Excludes impact of $1.3 million per annum consulting agreement and impact of the return on investment of the
remaining capital for the ongoing business.
(2) The Company estimates that the selling, general and administrative expense level for the ongoing business will
be approximately $1.2 million per annum.
(3) Excludes allocation of corporate (Calton, Inc.) overhead.
THE PRO FORMA FINANCIAL INFORMATION SET FORTH ABOVE WAS PREPARED IN ACCORDANCE WITH THE APPLICABLE RULES AND
REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION AND IS NOT INTENDED TO REFLECT A PROJECTION OF FUTURE RESULTS
SUBSEQUENT TO THE CLOSING OF THE SALE TRANSACTION.
</TABLE>
6
<PAGE>
<TABLE>
CALTON, INC.
UNAUDITED PROFORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
Impact of Impact of Impact of
Historical Sale Florida Sale Chicago Pro forma
(unaudited) Transaction Transaction Winddown Results (1)
----------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Revenues ................................ $ 126,588 $ (69,455) $ (56,283) $ (820) $ 30
--------- --------- --------- --------- ---------
Costs and Expenses
Cost of revenues ...................... 110,419 (59,759) (49,958) (921) (219)
Selling, general & administrative ..... 14,928 (7,324)(3) (5,133)(3) (75)(3) 2,396(2)
Impairment of assets .................. 750 (350) (100) -- 300
--------- --------- --------- --------- ---------
126,097 (67,433) (55,191) (996) 2,477
--------- --------- --------- --------- ---------
Income from operations .................. 491 (2,022) (1,092) 176 (2,447)
Other charges (credits)
Interest expense, net ................. 1,264 (697) (308) (218) 41
Other income .......................... (1,096) -- -- -- (1,096)(4)
--------- --------- --------- --------- ---------
Income before income taxes .............. 323 (1,325) (784) 394 (1,392)
Provision for income taxes .............. 209 (468) (502) 244 (517)
--------- --------- --------- --------- ---------
Net income .............................. $ 114 $ (857) $ (282) $ 150 $ (875)
========= ========= ========= ========= =========
Basic and diluted net income ............ $ .00 $ (.03)
per share ............................. =========
Basis weighted average shares ........... 26,567 26,567
outstanding ........................... ========= =========
Diluted weighted average
shares outstanding .................... 26,811
=========
- --------------
NOTES:
(1) Excludes impact of $1.3 million per annum consulting agreement and impact of the return on investment of the
remaining capital for the ongoing business.
(2) The Company estimates that the selling, general and administrative expense level for the ongoing business will
be approximately $1.2 million per annum.
(3) Excludes allocation of corporate (Calton, Inc.) overhead.
(4) Includes $571,000 of pretax interest income on a tax refund related to prior years and $525,000 of pre-tax
income from the collection of a note previously reserved.
THE PRO FORMA FINANCIAL INFORMATION SET FORTH ABOVE WAS PREPARED IN ACCORDANCE WITH THE APPLICABLE RULES AND
REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION AND IS NOT INTENDED TO REFLECT A PROJECTION OF FUTURE RESULTS
SUBSEQUENT TO THE CLOSING OF THE SALE TRANSACTION.
</TABLE>
7
<PAGE>
<TABLE>
CALTON, INC.
UNAUDITED PROFORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
Impact of Impact of Impact of
Historical Sale Florida Sale Chicago Pro forma
(unaudited) Transaction Transaction Winddown Results (1)
----------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Revenues ............................... $ 122,435 $ (75,023) $ (37,829) $ (8,291) $ 1,292
--------- --------- --------- --------- ---------
Costs and Expenses
Cost of revenues ..................... 105,645 (64,919) (32,472) (7,545) 709
Selling, general & administrative .... 14,953 (7,231)(3) (4,646)(3) (564)(3) 2,512(2)
Impairment of assets ................. -- -- -- -- --
--------- --------- --------- --------- ---------
120,598 (72,150) (37,118) (8,109) 3,221
--------- --------- --------- --------- ---------
Income from operations ................ 1,837 (2,873) (711) (182) (1,929)
Other charges (credits)
Interest expense, net ................ 1,266 (116) (193) (549) 408
Other income ......................... (460) -- -- -- (460)(4)
--------- --------- --------- --------- ---------
Income before income taxes ............. 1,031 (2,757) (518) 367 (1,877)
Provision for income taxes ............. 578 (1,678) (290) 146 (1,244)
--------- --------- --------- --------- ---------
Net income ............................. $ 453 $ (1,079) $ (228) $ 221 $ (633)
========= ========= ========= ========= =========
Basic and diluted net .................. $ .02 $ (.02)
income per share .................... ========= =========
Basis and diluted weighted
average shares outstanding ........... 26,501 26,501
========= =========
- --------------
NOTES:
(1) Excludes impact of $1.3 million per annum consulting agreement and impact of the return on investment of the
remaining capital for the ongoing business.
(2) The Company estimates that the selling, general and administrative expense level for the ongoing business will
be approximately $1.2 million per annum.
(3) Excludes allocation of corporate (Calton, Inc.) overhead.
(4) The collection of a note previously reserved.
THE PRO FORMA FINANCIAL INFORMATION SET FORTH ABOVE WAS PREPARED IN ACCORDANCE WITH THE APPLICABLE RULES AND
REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION AND IS NOT INTENDED TO REFLECT A PROJECTION OF FUTURE RESULTS
SUBSEQUENT TO THE CLOSING OF THE SALE TRANSACTION.
</TABLE>
8
<PAGE>
<TABLE>
CALTON, INC.
UNAUDITED PROFORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
Impact of
Chicago,
Impact of Impact of California and
Historical Sale Florida Sale Pennsylvania Pro forma
(unaudited) Transaction Transaction Winddown Results (1)
----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Revenues ................................ $ 180,843 $(136,370) $ (22,632) $ (12,680) $ 9,161
--------- --------- --------- --------- ---------
Costs and Expenses
Cost of revenues ...................... 159,690 (121,643) (19,300) (11,451) 7,296
Selling, general & administrative ..... 18,845 (10,325)(3) (3,518)(3) (1,603)(3) 3,399(2)
Impairment of assets .................. 1,593 (548) (889) -- 156
Restructuring charges ................. 1,940 -- -- (1,100) 840
--------- --------- --------- --------- ---------
182,068 (132,516) (23,707) (14,154) 11,691
--------- --------- --------- --------- ---------
Income (loss) from operations ........... (1,225) (3,854) 1,075 1,474 (2,530)
Other charges (credits)
Interest expense, net ................. 1,847 (318) (227) (558) 744
Other income .......................... (765) -- -- -- (765)(4)
--------- --------- --------- --------- ---------
Income (loss) before income taxes ....... (2,307) (3,536) 1,302 2,032 (2,509)
Provision for income taxes .............. 831 (2,301) 560 (237) (1,147)
--------- --------- --------- --------- ---------
Net income (loss) ....................... $ (3,138) $ (1,235) $ 742 $ 2,269 $ (1,362)
========= ========= ========= ========= =========
Basic and diluted net income
(loss) per share ...................... $ (.12) $ (.05)
========= =========
Basis and diluted weighted
average Shares outstanding ............ 26,210 26,210
========= =========
- --------------
NOTES:
(1) Excludes impact of $1.3 million per annum consulting agreement and impact of the return on investment of the
remaining capital for the ongoing business.
(2) The Company estimates that the selling, general and administrative expense level for the ongoing business will
be approximately $1.2 million per annum.
(3) Excludes allocation of corporate (Calton, Inc.) overhead.
(4) The collection of a note previously reserved.
THE PRO FORMA FINANCIAL INFORMATION SET FORTH ABOVE WAS PREPARED IN ACCORDANCE WITH THE APPLICABLE RULES AND
REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION AND IS NOT INTENDED TO REFLECT A PROJECTION OF FUTURE RESULTS
SUBSEQUENT TO THE CLOSING OF THE SALE TRANSACTION.
</TABLE>
9
<PAGE>
(B) EXHIBITS
Exhibit 2. Amended and Restated Stock Purchase Agreement effective
September 2, 1998 among Calton, Inc., Calton Homes, Inc. and Centex Real Estate
Corp. (incorporated by reference to Annex I of the Registrant's Proxy Statement
for Special Meeting of Shareholders filed with the Securities and Exchange
Commission on December 4, 1998).
Exhibit 2.1. Amendment No. 1 to Amended and Restated Stock Purchase
Agreement dated as of December 28, 1998 among Calton, Inc., Calton Homes, Inc.
and Braewood Development Corp. (assignee of Centex Real Estate Corp.).
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has fully caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CALTON, INC.
(Registrant)
By: /s/
----------------------------------
David J. Coppola, Vice President
Dated: January 5, 1999
Exhibit 2.1
AMENDMENT NO. 1 TO
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
This AMENDMENT NO. 1 TO AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
(this "Amendment") is made and entered into this 28th day of December 1998
between Calton, Inc., a New Jersey corporation ("Calton"), Calton Homes, Inc., a
New Jersey corporation (the "Company"), and Braewood Development Corp., a Nevada
corporation (the "Purchaser").
In consideration of the mutual covenants and agreements set forth herein
and for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree to amend that certain Amended and Restated Stock
Purchase Agreement, effective as of September 2, 1998 (the "Agreement"), among
Calton, the Company and the Purchaser, by assignment from Centex Real Estate
Corporation, a Nevada corporation, as follows:
Section 1. Defined Terms. All capitalized terms used but not defined in
this Amendment have the respective meanings ascribed to such terms in the
Agreement.
Section 2. Litigation. (a) In connection with the preparation of
Calton's financial statements for the fiscal year ended November 30, 1998,
Calton has increased the reserve for litigation for that period by $824,177.
Therefore, the form of Holdback Escrow Agreement attached as Exhibit B to the
Agreement shall be modified to provide that the Company Deposit (as defined in
the Holdback Escrow Agreement) shall be $652,085. The Company Deposit will be
funded by Purchaser on behalf of the Company. The Seller Deposit (as defined in
the Holdback Escrow Agreement) will be $1,506,915 funded through a reduction in
the sales proceeds under the Agreement. Any settlement check or other payment
for litigation or claims or associated expenses that was issued on a Company
account before Closing but not cashed until after Closing, and for which a
reduction in the Company Deposit has not been made, will be reimbursed to the
Company from the Escrow Account.
(b) The Holdback Escrow Agreement will include an annex that identifies
the litigation and claims falling into the following categories: (i) litigation
and claims involving subsidiaries of the Company, all of which will be divested
before the Effective Date, and for which the Company will have no liability or
obligation; (ii) litigation and claims in which the Company is plaintiff and for
which Calton will bear the costs of pursuit (without recourse to the funds in
the Holdback Escrow Agreement) and will receive the benefit of any recovery; and
(iii) litigation and claims in which the Company is plaintiff and for which the
Company will bear the costs of pursuit (without recourse to the funds in the
Holdback Escrow Agreement) and will receive the benefit of any recovery.
Existing counterclaims in the cases described in clause (ii) are listed on the
Litigation Schedule and will be handled in the same manner as other litigation
and claims on the Litigation Schedule. Counterclaims, if any, that may yet be
filed will be (or will not be) the obligation of Calton according to the
indemnification provisions of the Agreement. The litigation and claims in each
category are listed on the attached Annex A.
Section 3. Income. Section 12.01(d) of the Agreement is amended to
provide that in addition to other Purchase Price adjustments to be made after
Closing the Purchase Price will be
<PAGE>
increased, on or before January 31, 1998, by fifty cents ($.50) for each dollar
($1.00) of after-tax net income of the Company for the month ended December 31,
1998.
Section 4. Intercompany Transactions. On or before January 26, 1999,
Calton will deliver to Purchaser a complete schedule of all intercompany
transactions that have been made since November 30, 1998. Calton represents and
warrants that such schedule will be a complete and accurate list of such
intercompany transactions.
Section 5. Bonuses. Calton has delivered to Purchaser a list of all
performance bonuses to be paid by Calton or the Company for the fiscal year
ended November 30, 1998, and the proposed date for payment, all of which
correspond with accruals on the Pro Forma November 30, 1998 Balance Sheet. The
Company will also accrue on its books bonuses for the month of December, using
the same bonus accrual methods as were used for the fiscal year ended November
30, 1998.
Section 6. Option/Bond Release. For good and valuable consideration
Calton grants to Purchaser or its affiliated assignee the option, exercisable
until January 30, 1999, to acquire all of the partnership interests of Talcon
Title Agency, L.P., including the general and limited partnership interests, all
of which are held by Calton, for $1.00 plus Purchaser's procurement of the
release of Calton and its Affiliates, and any officers or directors of Calton or
any such Affiliates who are personally obligated, from all liability and
obligations which relate to the subdivision improvement bonds on the attached
Exhibit A which is intended to represent all of the maintenance bonds for which
Calton has provided an indemnity obligation to the issuer of the bonds and for
which Purchaser was not otherwise required to procure a release under Section
4.25 of the Agreement.
Section 7. Effect. Except as amended by this Amendment, the Agreement
remains in full force and effect.
Section 8. Counterpart Originals. This Amendment may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument. This Amendment shall be
effective when it has been executed by each of the parties either in person or
by facsimile.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date first above written.
CALTON, INC.
By:________________________________________
Anthony J. Caldarone
Chairman and Chief Executive Officer
CALTON HOMES, INC.
2
<PAGE>
By:________________________________________
Anthony J. Caldarone
Chairman and Chief Executive Officer
BRAEWOOD DEVELOPMENT CORP.
By:________________________________________
Name: Brian J. Woram
Title: Vice President
