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 September 30, 2000.
[ ] Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 For the
Transition Period From -_______________ to ________________.
Commission file number 0-22562
<TABLE>
<CAPTION>
CROSSMANN COMMUNITIES, INC.
<S> <C>
INDIANA 35-1880120
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(State of incorporation) (I.R.S. Identification No.)
9210 NORTH MERIDIAN STREET
INDIANAPOLIS, IN 46260
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(Address of principal executive offices) (Zip Code)
(317) 843-9514
----------------------------------------
(Telephone number)
</TABLE>
Indicate by check mark whether the registrant (1) has filed all documents and
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
periods 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
There were 10,417,045 Common shares outstanding as of November 14, 2000.
<PAGE>
CROSSMANN COMMUNITIES, INC.
FORM 10-Q
INDEX
Part I. Financial Information.
Item 1. Financial Statements.
Consolidated balance sheets as of September 30, 2000 (unaudited) and December
31, 1999.
Consolidated unaudited statements of income for the Three Months Ended
September 30, 2000 and 1999, and for the Nine Months ended September 30, 2000
and 1999.
Consolidated unaudited statements of cash flows for the Nine Months Ended
September 30, 2000 and 1999.
Notes to consolidated unaudited financial statements for the Nine Months Ended
September 30, 2000 and1999.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Part II. Other Information
Item 1. Legal Proceedings.
Item 2. Changes in Securities.
Item 3. Defaults upon Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
Signatures.
<PAGE>
PART I. FINANCIAL INFORMATION.
Item 1. Financial Statements
<TABLE>
<CAPTION>
CROSSMANN COMMUNITIES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<S> <C> <C>
SEPTEMBER 30, 2000 DECEMBER 31, 1999
-------------------- ------------------
(UNAUDITED)
--------------------
ASSETS
Cash and cash equivalents $ 10,609,916 $ 13,635,911
Unfunded settlements 2,776,704 1,286,099
Retainages 401,113 1,198,342
Real estate inventories 263,790,426 259,995,959
Furniture and equipment, net 4,858,148 4,753,141
Investments in joint ventures 30,020,027 27,669,884
Goodwill, net 16,366,161 17,597,512
Other assets 15,935,771 13,738,257
-------------------- ------------------
Total assets $ 344,758,266 $ 339,875,105
==================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and other liabilities $ 16,891,162 $ 31,436,645
Notes payable 131,472,288 119,959,088
-------------------- ------------------
Total liabilities 148,363,450 151,395,733
Commitments and contingencies
Shareholders' equity:
Common shares 47,036,453 63,616,282
Retained earnings 149,358,363 124,863,090
-------------------- ------------------
Total shareholders' equity 196,394,816 188,479,372
-------------------- ------------------
Total liabilities and shareholders' equity $ 344,758,266 $ 339,875,105
==================== ==================
<FN>
See accompanying notes.
</TABLE>
<TABLE>
<CAPTION>
CROSSMANN COMMUNITIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
<S> <C> <C> <C> <C>
2000 1999 2000 1999
------------- ------------- ------------- -------------
Sales of residential real estate $148,769,374 $170,990,809 $408,982,634 $397,648,561
Cost of residential real estate sold 118,527,298 135,612,917 326,653,338 316,250,420
------------- ------------- ------------- -------------
Gross profit 30,242,076 35,377,892 82,329,296 81,398,141
Selling, general and
administrative 15,141,667 16,094,778 44,656,523 41,980,907
------------- ------------- ------------- -------------
Income from operations 15,100,409 19,283,114 37,672,773 39,417,234
Other income, net 2,317,530 2,127,247 3,650,055 4,447,339
Interest expense (459,852) (534,627) (1,761,502) (1,558,335)
------------- ------------- ------------- -------------
1,857,678 1,592,620 1,888,553 2,889,004
------------- ------------- ------------- -------------
Income before income taxes 16,958,087 20,875,734 39,561,326 42,306,238
Income taxes 6,345,850 8,234,191 15,066,053 16,792,122
------------- ------------- ------------- -------------
Net income $ 10,612,237 $ 12,641,543 $ 24,495,273 $ 25,514,116
============= ============= ============= =============
Weighted average number of
common shares outstanding:
Basic 10,490,420 11,593,170 10,862,002 11,568,617
Diluted 10,661,394 11,642,978 11,036,520 11,792,517
============= ============= ============= =============
Net income per common share:
Basic $ 1.01 $ 1.09 $ 2.26 $ 2.21
Diluted $ 1.00 $ 1.09 $ 2.22 $ 2.16
============= ============= ============= =============
<FN>
See accompanying notes.
</TABLE>
<TABLE>
<CAPTION>
Crossmann Communities, Inc.
and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)
<S> <C> <C>
NINE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
--------------------- ---------------------
2000 1999
--------------------- ---------------------
OPERATING ACTIVITIES:
Net Income $ 24,495,273 $ 25,514,116
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation 872,409 292,308
Amortization 1,206,495 532,921
Equity in earnings of affiliates (1,438,543) (2,391,063)
Cash provided (used) by changes in:
Retainages 797,229 (10,444)
Amounts due from related parties (144) (325,591)
Real estate inventories (3,794,467) (55,613,506)
Other assets (3,663,119) (5,304,451)
Accounts payable (12,667,923) (4,742,074)
Accrued expenses and other liabilities (1,877,560) 313,641
--------------------- ---------------------
Net cash flows from operating activities 3,929,650 (41,734,143)
INVESTING ACTIVITIES:
Purchases of furniture and equipment (977,416) (870,057)
Investments in joint ventures (911,600) (4,766,147)
Business acquisitions -0- (4,363,760)
--------------------- ---------------------
Net cash used by investing activities (1,889,016) (9,999,964)
FINANCING ACTIVITIES:
Proceeds from bank borrowing 171,456,875 194,166,879
Principal payments on bank borrowing (159,896,875) (155,717,000)
Payments on notes and long-term debt (46,800) (1,281,258)
Repurchase of common shares (16,795,167)
Proceeds from sale of common shares 215,338 488,176
--------------------- ---------------------
Net cash provided by financing activities (5,066,629) 37,656,797
--------------------- ---------------------
Net decrease in cash and cash equivalents (3,025,995) (14,077,310)
Cash and cash equivalents at beginning of period 13,635,911 18,011,456
--------------------- ---------------------
Cash and cash equivalents at end of period $ 10,609,916 $ 3,934,146
===================== =====================
<FN>
See accompanying notes.
</TABLE>
CROSSMANN COMMUNITIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
Crossmann Communities, Inc. ("Crossmann" or the "Company") is engaged
primarily in the development, construction, marketing and sale of new
single-family homes for first-time and first move-up buyers. The Company also
acquires and develops land for construction of such homes and originates
mortgage loans for the buyers. The Company operates in Indianapolis, Ft.
Wayne, Lafayette and Southern Indiana; Cincinnati, Columbus and Dayton, Ohio;
Lexington, Kentucky; Memphis and Nashville, Tennessee; Charlotte and Raleigh,
North Carolina; and in Myrtle Beach, South Carolina.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, the unaudited consolidated financial statements
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of the Company, all adjustments (consisting of normal recurring
accruals) considered necessary to present fairly the consolidated financial
statements have been included.
NEW ACCOUNTING PRONOUNCEMENT
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting fpr
Derivative Instruments and Hedging Activities." We have not completed our
assessment of the impact of this standard, as amended, however, it is not
expected to have a material impact on the Company's consolidated results of
operations, financial position or cash flows.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS.
Management's discussion and analysis may include certain "forward-looking
statements," as defined in the Private Securities Litigation Reform Act of
1995. Such statements may involve unstated risks, uncertainties and other
factors that may cause actual results to differ materially.
The Company's business and the homebuilding industry in general are subject to
changes in economic conditions, including, but not limited to, employment
levels, interest rates, the availability of credit, and consumer confidence.
The Company's success over the past several years has been influenced by a
variety of factors including favorable economic conditions in its principal
markets, the availability of capital for expansion, and low interest rates.
To the extent these conditions do not continue, the Company's operating
results may be adversely affected.
The Company's business is also subject to weather-related seasonal factors
that can affect quarter-to-quarter results of operations. Adverse weather
conditions during the first and second quarters of the year usually restrict
site development work, and construction limitations generally result in fewer
closings during this period. Results of operation during the first half of
the year also tend to reflect increased costs associated with adverse weather.
Warmer, dryer weather during the second half of the year generally permits
higher closings and greater field efficiency.
RESULTS OF OPERATIONS: THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THE
THREE MONTHS ENDED SEPTEMBER 30, 1999.
Sales decreased approximately $22.2 million, to approximately $148.8 million
in the third quarter of 2000 from approximately $171.0 million for the same
period in 1999, a decline of 13.0%. Crossmann closed fewer homes in this
quarter compared to the prior year; 1,194 homes were closed in the third
quarter of 2000 compared to 1,434 homes closed during the third quarter of
1999. The decline in unit closings was due in part to the closing of
Crossmann's Louisville, Kentucky market. In 1999, Louisville generated 45
closings during the third quarter. The decline also reflects the slowing
orders Crossmann experienced in late 1999 and early 2000. During that period,
prevailing home mortgage interest rates were on average 150 basis points
higher than during the same period the prior year. Order activity in late
1998 and early 1999 was extraordinarily strong , giving rise to very large
closing volume in the third quarter of 1999.
Gross profit decreased approximately $5.1 million, to approximately $30.2
million for the third quarter of 2000 from approximately $35.4 million for the
third quarter of 1999. This represents a gross margin of 20.3% of sales in
the third quarter of 2000 as compared to 20.7% of sales in the third quarter
of 1999. The lower margin in 2000 is due in part to increased use of financing
assistance programs in 2000 compared to 1999.
Selling, general and administrative expenses decreased approximately $953,000,
or 5.9%, to approximately $15.1 million for the third quarter of 2000 from
approximately $16.1 million for the third quarter of 1999. This decline
reflects lower commission expense on the lower sales volume. Selling, general
and administrative expenses increased as a percentage of sales to 10.2% in the
third quarter of 2000 from 9.4% in the third quarter of 1999.
Other income net of expenses increased approximately $190,300 for the three
months ended September 30, 2000, from approximately $2.1 million in 1999 to
approximately $2.3 million in 2000. The increase was due to higher earnings
from land development joint ventures and other miscellaneous sources. Trinity
Homes LLC ("Trinity"), a homebuilding joint venture in Indianapolis, generated
approximately $876,900, down slightly from the $1.0 million it contributed in
1999.
Income before income taxes decreased approximately $3.9 million, or 18.8%, to
approximately $17.0 million. The Company's effective tax rate was 37.4% in the
third quarter of 2000 as compared to 39.4% in the third quarter of 1999. Net
income decreased approximately $2.0 million, or 16.1%, to approximately $10.6
million. Net income as a percentage of sales decreased to 7.1% in the third
quarter of 2000, compared to 7.4% in the third quarter of 1999.
RESULTS OF OPERATIONS: NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THE
NINE MONTHS ENDED SEPTEMBER 30, 1999.
Sales increased approximately $11.3 million, or 2.9%, to approximately $409.0
million for the nine months ended September 30, 2000 from approximately $397.6
million for the nine months ended September 30, 1999. Sales were higher as a
result of a higher average selling price, approximately $124,100 per home for
the nine months ended September 30, 2000 as compared to approximately $118,000
during the same period in 1999, an increase of 5.2%. Closings were down
slightly; 3,296 homes were closed in the nine months ended September 30,
2000, compared to 3,372 homes closed during the nine months ended September
30,1999, a decline of 2.3%.
Gross profit increased approximately $931,200, to approximately $82.3 million.
This represents a gross margin of 20.1% of sales in the first nine months of
2000 as compared to 20.5% of sales in the first nine months of 1999. The lower
margin in 2000 is due in part to increased use of financing assistance
programs in 2000 compared to 1999 and to low margins on inventory dispositions
in the Louisville market.
Selling, general and administrative expenses increased approximately $2.7
million, or 6.4%, to approximately $44.7 million. This increase is principally
increased sales commissions on the higher sales volume. Crossmann s fixed
selling, general and administrative expenses are generally lower; the Company
has reduced fixed spending to help offset slowing revenue in the third
quarter. Selling, general and administrative expenses as a percentage of
sales increased to 10.9% in the first nine months of 2000, compared to 10.6%
in the first nine months of 1999.
Other income net of expenses decreased approximately $797,300 from
approximately $4.4 million for the first nine months of 1999 to approximately
$3.7 million in 2000. The decrease is due principally to lower earnings from
the Trinity joint venture. Trinity contributed approximately $1.4 million in
2000 compared to approximately $2.4 million in 1999.
Income before income taxes decreased approximately $2.7 million, or 6.5%, to
approximately $39.6 million. The Company's effective tax rate was 38.1% in
the first nine months of 2000 as compared to 39.7% in the first nine months of
1999. Net income decreased approximately $1.0 million, or 4.0%, to
approximately $24.5 million. Net income as a percentage of sales decreased to
6.0% in 2000, down from 6.4% in 1999.
CHANGES IN FINANCIAL POSITION
Retainages
Retainages are funds withheld from the Company in escrow, awaiting completion
of work on the home that may have been delayed by weather. Retainages
declined approximately 66.5% since December 31, 1999, reflecting completion of
this work and the collection of the escrow. This change is seasonal in
nature. Lawns, landscaping and certain concrete work may be impossible to
install in the winter and spring; they are completed for homeowners during the
summer and early fall.
Inventory
Real estate inventories increased approximately 1.5%, almost even with the
December 31, 1999 level. This inventory level is relatively low, matching the
investment at midwinter. This reflects the Management's efforts to reduce
land investment in underperforming markets, such as Louisville, and to
strengthen the land position in markets that are relatively strong.
Notes payable
Notes payable increased approximately $11.5 million during the first nine
months of 2000; however, accounts payable were approximately $12.7 million
lower. This reflects an insignificant timing difference in the presentment of
vendor payments. Total liabilities were approximately 2.2% lower at September
30, 2000 than at December 31, 1999.
CAPITAL RESOURCES AND LIQUIDITY
At September 30, 2000, the Company had approximately $10.6 million in cash and
cash equivalents.
The Company's primary uses of capital are home construction costs and the
purchase and development of land. Real estate inventories were approximately
$263.8 million, or 76.6% of total assets, at September 30, 2000, compared to
$260.0 million or 76.5% of total assets at December 31, 1999. Capital is
also used for the addition and improvement of equipment used in administering
the business and for model home furnishings.
The Company also used cash in the first nine months of the year to repurchase
1,070,500 shares at a total cost of $16,795,167, of which 202,700 shares were
purchased in the third quarter of 2000. This program was authorized October
8, 1999 by the Board of Directors. The total authorization was 15% of the
total shares then outstanding or 1.7 million shares. As of September 30,
2000, the Company had repurchased 1,253,000 shares under this program.
Cash expenditures were financed with cash from operations and with borrowings
on a $100.0 million unsecured line of credit, with Bank One, Indiana, N.A. as
agent. The line of credit bears interest at the banks's prime lending rate,
but permits portions of the outstanding balance to be committed for fixed
periods of time at a rate equal to LIBOR plus 1.45%. The credit facility
matures March 31, 2003. At September 30, 2000, $67.6 million was outstanding
on this line. On October 20, 2000, Crossmann increased the size of its line
of credit to $135.0 million to accommodate an acquisition. This transaction
is described below under "Future Trends."
The Company also has approximately $63.9 million in senior notes outstanding.
Of this total, $16.7 million is payable through 2004 at a fixed interest rate
of 7.625%, payable quarterly. On December 21, 2000, the Company will make a
scheduled reduction in the outstanding principal balance of these notes of
$2,777,778. Crossmann has an additional $50.0 million in notes outstanding,
payable through 2008 at a fixed interest rate of 7.75%, payable quarterly.
Annual principal reductions of $8,333,334 begin June 11, 2003.
The note agreements and the bank's line of credit require compliance with
certain financial and operating covenants and place certain limitations on the
Company's investments in land and unconsolidated joint ventures. The
agreements also restrict payments of cash dividends on the common shares by
the Company.
The Company's credit arrangements are expected to provide adequate liquidity
for planned internal growth and capital expenditures. In the event that the
Company seeks to accelerate growth through the acquisition of large parcels of
land or of other homebuilding companies, additional capital may be needed.
The Company believes that such capital could be obtained from banks or other
financing alternatives, from the issuance of additional shares, or from seller
financing; however, there can be no assurances that the Company would be able
to secure the necessary capital.
BACKLOG
A home is included in "backlog" upon execution of a sales contract by the
customer; sales and cost of sales are recognized when the title is transferred
and the home is delivered to the buyer at "closing." The Company generally
builds upon the execution of a sales contract by a customer and after approval
of financing, although it also builds a limited number of homes on
speculation. The standard sales contract used by the Company provides for an
earnest money deposit of $1,000. The contract usually includes a termination
provision under which the earnest money is refunded in the event that mortgage
financing is not available on terms specified in the contract, and may include
other contingencies. Cancellations by buyers with approved financing occur
infrequently.
Backlog at September 30, 2000 was 2,021 homes with an aggregate sales value of
approximately $252.0 million, compared to 2,508 homes with an aggregate sales
value of approximately $295.0 million at September 30, 1999. The decline in
the number of homes in backlog is approximately 19.4%. Starting backlog was
lower, with 1,496 in backlog at January 1, 2000, compared to 1,744 at January
1, 1999. New orders in the first nine months of 2000 were lower as well: 3,821
contracts were written in the first nine months of 2000 as compared to 4,136
in 1999, a decrease of 7.6%. This decline is due in part to the closing of
the Louisville market, which contributed 106 orders in the first nine months
of 1999, compared to 37 in 2000, and to an uncertain interest rate
environment.
Although year-to-date orders are lower in 2000 than in 1999, order trends
appear to be improving. During the third quarter of 2000, 1,150 contracts
were written compared to 910 in the third quarter of 1999, an increase of
26.4%.
OTHER BUSINESS CONDITIONS
Interest rates
The housing industry is affected by consumer confidence levels and prevailing
economic conditions in genereal and by job availability and interest rates in
particular. Most of the markets in which Crossmann operates have experienced
a contraction in the total number of permits issued in 2000 compared to 1999.
This general tightening is the result of increases in borrowing costs for
consumers over the course of the past 18 months.
Inflation
The Company, as well as the homebuilding industry in general, may be adversely
affected during periods of high inflation, primarily because of higher land
and construction costs. To date, inflation has not had a material adverse
effect on the Company's business, financial condition, and results of
operations. However, there is no assurance that inflation will not have a
material adverse impact on the Company's future business, financial condition,
and results of operations.
Weather
The Company's business is subject to weather-related seasonal factors which
can affect quarterly results of operations. Adverse weather may interfere
with construction activity, and may affect order activity as well.
FUTURE TRENDS
Housing permits in all Crossmann's markets have contracted during the first
nine months of 2000 compared to 1999 levels, due to higher mortgage interest
rates. As this occurs, the Company faces discounting from some competitors as
builders seek to maintain their share of a shrinking housing market.
Crossmann may elect to meet this pricing challenge on a limited basis in order
to move inventory.
Lower closings and margin pressure are likely to generate lower net income in
2000 compared to 1999. However, management is optimistic that, by taking
appropriate action, it can still generate above average returns even at a
lower volume level.
Paragon Title LLC
One step Crossmann has taken to improve margins is to reduce the cost of
closing its real estate transactions. Crossmann generally pays for a title
policy on each piece of property it conveys. The charge for this policy has
always been paid to various outside title companies. On August 8, 2000,
Crossmann formed its own title company, Paragon Title LLC ("Paragon'), which
will issue title policies for a portion of Crossmann's closings. Paragon
acquired the assets of Crossmann's primary title insurance provider in
Indianapolis, Service Title LLC, (principally office equipment) at book value
and hired its employees. Management estimates this acquisition will save
approximately $500 per home when Paragon issues the title policy. Currently
Paragon issues titlework only for closings in Indianapolis. During 2001,
Paragon will expand to Crossmann's other markets.
Trinity Homes LLC
Crossmann has elected to improve its volume in 2000 by acquiring Trinity Homes
LLC in its entirety. On October 20, Crossmann acquired 100% of Trinity
Homes LLC. Crossmann had previously acquired a 50% interest in the
Indianapolis homebuilder in October of 1997. Crossmann purchased the
outstanding 50% interest pursuant to the 1997 joint venture agreement.
In 1999, Trinity closed 536 units with revenue of approximately $115.4 million
and pretax income of approximately $7.9 million, of which Crossmann reflected
50%, or $3.96 million, in Crossmann's "Other Income." During the first nine
months of 2000, Trinity closed 400 units, and had revenue of approximately
$86.8 million and pretax income of $2.88 million. Crossmann assumes
Trinity's backlog of 311 homes, with an aggregate sales value of approximately
$66.8 million.
With this acquisition, Crossmann strengthens its dominant position in the
Indianapolis metropolitan market.
<TABLE>
<CAPTION>
Historical Closing Information
<S> <C> <C> <C>
Year Ended December 31:
Pro Forma
Crossmann Trinity Combined
---------
1999 Indianapolis 2,412 536 2,915
1999 Company total 5,100 536 5,636
Nine Months Ended September 30:
2000 Indianapolis 1,441 400 1,841
2000 Company total 3,296 400 3,696
</TABLE>
The acquisition of Trinity marks a departure from Crossmann's longstanding
emphasis on the entry-level and first move-up purchaser. In 1999, Crossmann's
average selling price was $119,474. Trinity serves principally a first- or
second-time move-up purchaser at an average price of approximately $215,000,
with some homes exceeding $1 million in price. The Company is comfortable
diversifying its product line to other price points in Indianapolis because of
its knowledge of the market and because Trinity's management will continue
running the high-end operation.
Historically, Trinity's gross margins have run approximately 16% (compared to
Crossmann's 20.1%), and its pretax net operating margin has been approximately
6.0% (compared to Crossmann's 9.7%). Including Trinity will add to earnings,
but margins in the near future will be somewhat lower compared to prior
periods. One of Crossmann's objectives in acquiring Trinity is to improve
Trinity's operations. Association with Crossmann has already given Trinity
increased access to land and capital since the venture was formed three years
ago; the complete combination should generate further efficiencies due to
shared purchasing and systems and lower borrowing costs. However, it may be
several quarters until savings from these improvements are realized.
Crossmann issued cash for the equity interest in Trinity, giving rise to
approximately $3.5 million in goodwill. The Company also assumed
approximately $30 million in debt. Concurrent with the transaction, Crossmann
modified its credit agreement with Bank One, Indiana, N.A. to accommodate the
higher inventory levels.
The closing was effective October 1, 2000.
Nashville, Tennessee
Crossmann has made the decision to withdraw from the Nashville market and
redeploy capital invested there to markets where it can generate higher
returns. Shutdown of this market is not expected to have a material effect on
the Company's financial performance. At September 30, 2000, Crossmann had
approximately $7.0 million invested in Nashville, compared to $344.5 million
in total assets. The Nashville market contributed 95 closings in 1999 and 83
during the first nine months of 2000.
PART II. OTHER INFORMATION
The following items for which provision is made in the applicable regulations
of the Securities and Exchange Commission are not required under the related
explanations or are inapplicable and therefore have been omitted:
Item 1. Legal Proceedings.
Item 2. Changes in Securities.
Item 3. Defaults Upon Senior Securities.
Item 5. Other Information.
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
<TABLE>
<CAPTION>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) Exhibits
<S> <C>
Exhibit
Number Description of Exhibit
3.1 Amended and restated Articles of Incorporation of Crossmann Communities,
Inc.(Incorporated by reference to Exhibit 3.1 to Form S-1 Registration Statement No.
33-68396.)
3.2 Bylaws of Crossmann Communities, Inc. (Incorporated by reference to Exhibit 3.2
to Form S-1 Registration Statement No. 33-68396.)
4.1 Specimen Share Certificate for Common Shares. (Incorporated by reference to
Exhibit 2.9 to Form S-1 Registration Statement No. 33-68396.)
10.1 1993 Outside Director Stock Option Plan. (Incorporated by reference to Exhibit 10.2
to Form S-1 Registration Statement No. 33-68396.)
10.2 1993 Employee Stock Option Plan, As amended as of May 22, 1996. (Incorporated
by reference to Exhibit 10.3 to Form 10-Q dated August 13, 1996.)
10.37 Note Agreement dated as of December 19, 1995, $25,000,000 7.625% Senior Notes
due December 9, 2004, by Crossmann Communities, Inc., et al. (Incorporated by
reference to Exhibit 10.37 to From 10-K dated March 18, 1996.)
10.38 7.625% Senior Note due December 19, 2004, issued to Combined Insurance
Company by Crossmann Communities, Inc., et al. (Incorporated by reference to
Exhibit 10.38 to Form 10-K dated March 18, 1996.)
10.39 7.625% Senior Note due December 19, 2004, issued to Minnesota Mutual Life
Insurance company by Crossmann Communities, Inc., et al. (Incorporated by
reference to Exhibit 10.39 to Form 10-K dated March 18, 1996.)
10.40 Note Agreement dated as of June 11, 1998, $50,000,000 7.75% Senior Notes due
June 11, 2008, by Crossmann Communities, Inc., et al. (Incorporated by reference
to Exhibit 10.46 to Form 10-Q dated August 14, 1998.)
10.41 Form of 7.75% Senior Note due June 11, 2008, issued to various insurance companies
by Crossmann Communities, Inc. et al. (Incorporated by reference to Exhibit 10.45
to Form 10-Q dated August 14, 1998.)
10.42 Credit Agreement, dated April 1, 1999, among Crossmann Communities, Inc. and
Bank One, Indianapolis N.A. (as "Agent') and the Lenders Parties Thereto.
(Incorporated by reference to Exhibit 10.16 to Form 10-Q dated May 13, 1999)
10.43 First Amendment to Credit Agreement, dated June 11, 1999, among Crossmann
Communities, Inc. and Bank One, Indiana N.A. (As "Agent') and the Lenders Party
Thereto. (Incorporated by reference to Exhibit 10.43 to Form 10-Q dated August 13,
1999.)
10.44 Promissory Note, dated June 11, 1999, in favor of Bank One, Indiana, N.A.
(Incorporated by reference to Exhibit 10.44 to Form 10-Q dated August 13, 1999.)
10.45 Promissory Note, dated June 11, 1999, in favor of Fifth Third Bank, Indiana.
(Incorporated by reference to Exhibit 10.45 to Form 10-Q dated August 13, 1999.)
10.46 Promissory Note, dated June 11, 1999, in favor of Huntington National Bank of
Indiana. (Incorporated by reference to Exhibit 10.46 to Form 10-Q dated August
13, 1999.)
10.47 Promissory Note, dated June 11, 1999, in favor of PNC Bank of Ohio, N.A.
(Incorporated by reference to Exhibit 10.47 to Form 10-Q dated August 13, 1999.)
10.48 Promissory Note, dated June 11, 1999, in favor of KeyBank National Association.
(Incorporated by reference to Exhibit 10.48 to Form 10-Q dated August 13, 1999.)
10.49 Asset Purchase Agreement, dated June 18, 1999 by and among Crossmann
Communities, Inc., Crossmann Communities of North Carolina, Inc., Homes by Huff
& Co., Inc., Mitchell T. Huff, Thomas A. Huff and Thomas C. Huff. (Incorporated
by reference to Exhibit 10.49 to Form 10-Q dated August 13, 1999.)
10.50 Employment contract dated June 18, 1999, by and among Crossmann Communities
of North Carolina, Inc., Crossmann Communities, Inc. and Mitchell T. Huff.
(Incorporated by reference to Exhibit 10.50 to Form 10-Q dated August 13, 1999.)
10.51 Fourth Amendment to Credit Agreement, dated October 20, 2000, among Crossmann
Communities, Inc. and Bank One, Indiana, N.A. (As "Agent") and the Lenders Party
Thereto.
10.52 Membership Interest Purchase Agreement dated October 20, 2000 by and among
Crossmann Communities Partnership, Trinity Homes, Inc. and Pyramid Mortgage
Co., Inc.
10.53 Membership Interest Purchase Agreement dated October 20, 2000 by and among
Crossmann Communities Partnership, John E. McKenzie, James D. McKenzie, and
Mark W. Thune.
10.54 Employment contract dated October 20, 2000 by and among Trinity Homes, LLC,
Crossmann Communities, Inc. and John E. McKenzie.
10.55 Employment contract dated October 20, 2000 by and among Trinity Homes, LLC,
Crossmann Communities, Inc. and James D. McKenzie.
10.56 Nonsolicitation Agreement dated October 20, 2000 by and among Crossmann
Communities Partnership, Trinity Homes, LLC, and together with Crossmann
Comminities Partnership and Trinity Homes, Inc.
10.57 Nondisclosure, Noncompetition and Nonsolicitation Agreement dated October 20,
2000 by and among Crossmann Communities, Inc., together with Crossmann
Communities Partnership, and Trinity Homes, LLC, and John E. McKenzie.
10.58 Nondisclosure, Noncompetition and Nonsolicitation Agreement dated October 20,
2000 by and among Crossmann Communities, Inc., together with Crossmann
Communities Partnership, and Trinity Homes, LLC, and James D. McKenzie
10.59 Nondisclosure, Noncompetition and Nonsolicitation Agreement dated October 20,
2000 by and among Crossmann Communities Partnership, Trinity Homes, LLC,
and Pyramid Mortgage.
10.60 Asset Purchase Agreement, dated August 8, 2000 by and among Paragon Title, LLC
and Service Title, Inc.
10.61 Employment Agreement dated August 9, 2000 by and among Paragon Title, LLC,
Crossmann Communities, Inc. and Linda Givens.
19.1 Lease by and between Pinnacle Properties LLC ("Landlord") and Crossmann
Communities, Inc. (Tenant"), 9202 North Meridian Street, Suite 300, Indianapolis,
Indiana 46260, executed April 18, 1994. (Incorporated by reference to Exhibit 19.1
to Form 10-Q dated August 12, 1994.)
27.1 Financial Data Schedule for the quarter ended September 30, 2000.
</TABLE>
(b) Reports on Form 8-K.
None.
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities
and Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
CROSSMANN COMMUNITIES, INC.
/s/ Jennifer A. Holihen
Jennifer A. Holihen
Director, Chief Financial Officer;
Treasurer; Secretary;
(Principal Financial and Accounting Officer)
Dated: November 14, 2000
EXHIBIT 10.51
FOURTH AMENDMENT TO CREDIT AGREEMENT
CROSSMANN COMMUNITIES, INC., an Indiana corporation (the "Borrower"),
BANK ONE, INDIANA, NA, a national banking association, individually and as
Agent (the "Agent") for the Lenders (the "Lenders") parties to that certain
Credit Agreement dated as of April 1, 1999, as amended (collectively, the
"Agreement"), and the Lenders, agree to further amend the Agreement by this
Fourth Amendment to Credit Agreement (the "Amendment") as follows.
1. DEFINITIONS. The definition of "Fourth Amendment" is hereby
added to the Article I of the Agreement, and the definitions of "Commitment"
and "Current Subsidiary"appearing in Article I are hereby amended and restated
in their respective entireties as follows:
"Commitment" means, for each Lender, the obligation of such Lender
to make Loans not exceeding the amount set forth opposite its signature on
the Fourth Amendment or as set forth in any Notice of Assignment relating to
any assignment that has become effective pursuant to Section 12.3.2, as such
amount may be modified from time to time pursuant to the terms hereof.
"Current Subsidiary" means any of Deluxe Homes of Lafayette, Inc., an
Indiana corporation, Crossmann Community Partnership, an Indiana general
partnership, Merit Realty, Inc., an Indiana corporation, Crossmann Communities
of Ohio, Inc. (formerly known as Deluxe Homes of Ohio, Inc.), an Ohio
corporation, Crossmann Mortgage Corporation, an Indiana corporation, Deluxe
Aviation, Inc., an Indiana corporation, Cutter Homes, Ltd., a Kentucky
corporation, Crossmann Communities of Tennessee, LLC, a Tennessee limited
liability company, Crossmann Investments, Inc., an Indiana corporation,
Crossmann Communities of North Carolina, Inc., a North Carolina corporation,
Pinehurst Builders, LLC, a South Carolina limited liability company, Crossmann
Management, Inc., an Indiana corporation, Deluxe Homes of Ohio, Inc., an Ohio
corporation, Trinity Homes, LLC, an Indiana limited liability company, and
each entity hereafter becoming a Current Subsidiary in accordance with the
procedures set forth in Section 4.3 of this Agreement.
"Fourth Amendment" means that agreement entitled "Fourth Amendment to
Credit Agreement" entered into among the Borrower, the Lenders, and the Agent
effective as of October 20, 2000.
All other terms defined in the Agreement and used in this Amendment shall have
their respective meanings stated in the Agreement unless otherwise defined
herein.
2. INCREASE IN AGGREGATE COMMITMENT. The Borrower has requested
an increase in the Aggregate Commitment to $135,000,000, and the Agent and
the Lenders agree that upon the execution and delivery of this Amendment and
the Promissory Note payable to the order of Bank One in the form attached
hereto as Exhibit "A," as well as delivery of all other agreements,
documents, and instruments required by this Amendment, all conditions
precedent and procedures required by the Agreement shall be satisfied, and the
Aggregate Commitment shall increase to $135,000,000.
3. ab RATABLE LOANS. Section 2.3 of the Agreement is hereby amended
and
restated in its entirety as follows:
2.3 Ratable Loans. Each Advance hereunder shall consist of Loans
made from the several Lenders ratably in proportion to the ratio that their
respective Commitments bear to the Aggregate Commitment.
4. ACQUISITION OF TRINITY HOMES, LLC. The Agent and the Lenders
hereby consent to the use of proceeds of the Revolving Loan by the Borrower to
acquire one hundred percent (100%) of the membership interests of Trinity
Homes, LLC, an Indiana limited liability company ("Trinity"), and waive any
Defaults or Unmatured Defaults that the use of proceeds of the Revolving Loan
for such purpose or the acquisition of Trinity might otherwise trigger under
the Section 6.2 of the Agreement, regarding the use of proceeds of the
Revolving Loan, or under Section 6.14 of the Agreement which contains a
prohibition as to the acquisition by the Borrower of Subsidiaries. The
consents and waivers set forth herein are subject to and contingent upon the
Borrower complying contemporaneously herewith with the requirements of Section
4.3 of the Agreement in order that Trinity become a Current Subsidiary for all
purposes of the Agreement, including but not limited to the delivery by
Trinity of its Guaranty Agreement in the form of Exhibit "C" attached
hereto, and the delivery by the Borrower of a Compliance Certificate duly
completed in the form of Exhibit "F" to the Agreement.
5. REPRESENTATIONS AND WARRANTIES. To induce the Agent and the
Lenders to enter into this Amendment, the Borrower affirms that the
representations and warranties contained in the Agreement are correct as of
the date of this Amendment, except that (i) they shall be deemed also to refer
to this Amendment, as well as all documents named herein, and (ii) Section 5.4
shall be deemed also to refer to the most recent audited and unaudited
financial statements of the Borrower delivered to the Lenders.
6. EVENTS OF DEFAULT. The Borrower certifies that no Default or
Unmatured Default under the Agreement, as amended by this Amendment, has
occurred and is continuing as of the execution date of this Amendment except
as shall have been expressly waived herein.
7. CONDITIONS PRECEDENT. As conditions precedent to the
effectiveness of this Amendment, the Agent shall first receive with sufficient
copies for the Lenders the following contemporaneously with the execution and
delivery of this Amendment, each duly executed, dated and in form and
substance satisfactory to the Lenders:
(i) A certified copy of a Resolution of the Board of Directors of the
Borrower authorizing the execution, delivery and performance, respectively, of
this Amendment, its Promissory Note payable to the order of Bank One, and the
other Loan Documents provided for in this Amendment to which the Borrower is a
party.
(ii) A certificate of the Secretary of the Board of Directors of the
Borrower certifying the names of the officer or officers authorized to sign
this Amendment and the other Loan Documents provided for in this Amendment to
which the Borrower is a party, together with a sample of the true signature of
each such officer.
(iii) A certified copy of a Resolution of General Partner of
Crossmann Communities Partnership, an Indiana general partnership, authorizing
the execution, delivery and performance, respectively, of its Reaffirmation of
Guaranty Agreement and the other Loan Documents provided for in this Amendment
to which Crossmann Communities Partnership is a party.
(iv) A certificate of the General Partner of Crossmann Communities
Partnership certifying the names of the officer or officers authorized to
sign its Reaffirmation of Guaranty Agreement and the other Loan Documents
provided for in this Amendment to which Crossmann Communities Partnership is a
party, together with a sample of the true signature of each such officer.
(v) A certified copy of a Resolution of the Board of Directors of
Deluxe Homes of Lafayette, Inc., an Indiana corporation, authorizing the
execution, delivery and performance, respectively, of its Reaffirmation of
Guaranty Agreement and the other Loan Documents provided for in this Amendment
to which Deluxe Homes of Lafayette, Inc. is a party.
(vi) A certificate of the Secretary of the Board of Directors of
Deluxe Homes of Lafayette, Inc. certifying the names of the officer or
officers authorized to sign its Reaffirmation of Guaranty Agreement and the
other Loan Documents provided for in this Amendment to which Deluxe Homes of
Lafayette, Inc. is a party, together with a sample of the true signature of
each such officer.
(vii) A certified copy of a Resolution of the Board of Directors of
Crossmann Communities of Ohio, Inc., an Ohio corporation, authorizing the
execution, delivery and performance, respectively, of its Reaffirmation of
Guaranty Agreement and the other Loan Documents provided for in this Amendment
to which Crossmann Communities of Ohio, Inc. is a party.
(viii) A certificate of the Secretary of the Board of Directors of
Crossmann Communities of Ohio, Inc. certifying the names of the officer or
officers authorized to sign its Reaffirmation of Guaranty Agreement and the
other Loan Documents provided for in this Amendment to which Crossmann
Communities of Ohio, Inc. is a party, together with a sample of the true
signature of each such officer.
(ix) A certified copy of a Resolution of the Board of Directors of
Merit Realty, Inc., an Indiana corporation, authorizing the execution,
delivery and performance, respectively, of its Reaffirmation of Guaranty
Agreement and the other Loan Documents provided for in this Amendment to which
Merit Realty, Inc. is a party.
(x) A certificate of the Secretary of the Board of Directors of Merit
Realty, Inc. certifying the names of the officer or officers authorized to
sign its Reaffirmation of Guaranty Agreement and the other Loan Documents
provided for in this Amendment to which Merit Realty, Inc. is a party,
together with a sample of the true signature of each such officer.
(xi) A certified copy of a Resolution of the Board of Directors of
Crossmann Mortgage Corporation, an Indiana corporation, authorizing the
execution, delivery and performance, respectively, of its Reaffirmation of
Guaranty Agreement and the other Loan Documents provided for in this Amendment
to which Crossmann Mortgage Corporation is a party.
(xii) A certificate of the Secretary of the Board of Directors of
Crossmann Mortgage Corporation certifying the names of the officer or officers
authorized to sign its Reaffirmation of Guaranty Agreement and the other Loan
Documents provided for in this Amendment to which Crossmann Mortgage
Corporation is a party, together with a sample of the true signature of each
such officer.
(xiii) A certified copy of a Resolution of the Board of Directors of
Deluxe Aviation, Inc., an Indiana corporation, authorizing the execution,
delivery and performance, respectively, of its Reaffirmation of Guaranty
Agreement and the other Loan Documents provided for in this Amendment to which
Deluxe Aviation, Inc. is a party.
(xiv) A certificate of the Secretary of the Board of Directors of
Deluxe Aviation, Inc. certifying the names of the officer or officers
authorized to sign its Reaffirmation of Guaranty Agreement and the other Loan
Documents provided for in this Amendment to which Deluxe Aviation, Inc. is a
party, together with a sample of the true signature of each such officer.
(xv) A certified copy of a Resolution of the Board of Directors of
Cutter Homes, Ltd., a Kentucky corporation, authorizing the execution,
delivery and performance, respectively, of its Reaffirmation of Guaranty
Agreement and the other Loan Documents provided for in this Amendment to which
Cutter Homes, Ltd. is a party.
(xvi) A certificate of the Secretary of the Board of Directors of
Cutter Homes, Ltd. certifying the names of the officer or officers authorized
to sign its Reaffirmation of Guaranty Agreement and the other Loan Documents
provided for in this Amendment to which Cutter Homes, Ltd. is a party,
together with a sample of the true signature of each such officer.
(xvii) A certified copy of a Resolution of the Members of Crossmann
Communities of Tennessee, LLC, a Tennessee limited liability company,
authorizing the execution, delivery and performance, respectively, of its
Reaffirmation of Guaranty Agreement and the other Loan Documents provided for
in this Amendment to which Crossmann Communities of Tennessee, LLC is a party.
(xviii) A certificate of the Managing Member of Crossmann Communities
of Tennessee, LLC certifying the names of the officer or officers authorized
to sign its Reaffirmation of Guaranty Agreement and the other Loan Documents
provided for in this Amendment to which Crossmann Communities of Tennessee,
LLC is a party, together with a sample of the true signature of each such
officer.
(xix) A certified copy of a Resolution of the Board of Directors of
Crossmann Communities of North Carolina, Inc., a North Carolina corporation,
authorizing the execution, delivery and performance, respectively, of its
Reaffirmation of Guaranty Agreement and the other Loan Documents provided for
in this Amendment to which Crossmann Communities of North Carolina, Inc. is a
party.
(xx) A certificate of the Secretary of the Board of Directors of
Crossmann Communities of North Carolina, Inc. certifying the names of the
officer or officers authorized to sign its Reaffirmation of Guaranty Agreement
and the other Loan Documents provided for in this Amendment to which Crossmann
Communities of North Carolina, Inc. is a party, together with a sample of the
true signature of each such officer.
(xxi) A certified copy of a Resolution of the Members of
Pinehurst Builders, LLC, a South Carolina limited liability company,
authorizing the execution, delivery and performance, respectively, of its
Reaffirmation of Guaranty Agreement and the other Loan Documents provided for
in this Amendment to which Pinehurst Builders, LLC is a party.
(xxii) A certificate of the Managing Member of Pinehurst Builders,
LLC certifying the names of the officer or officers authorized to sign its
Reaffirmation of Guaranty Agreement and the other Loan Documents provided for
in this Amendment to which Pinehurst Builders, LLC is a party, together with a
sample of the true signature of each such officer.
(xxiii) A certified copy of a Resolution of the Board of Directors of
Crossmann Management, Inc., an Indiana corporation, authorizing the execution,
delivery and performance, respectively, of its Reaffirmation of Guaranty
Agreement and the other Loan Documents provided for in this Amendment to which
Crossmann Management, Inc. is a party.
(xxiv) A certificate of the Secretary of the Board of Directors of
Crossmann Management, Inc. certifying the names of the officer or officers
authorized to sign its Reaffirmation of Guaranty Agreement and the other Loan
Documents provided for in this Amendment to which Crossmann Management, Inc.
is a party, together with a sample of the true signature of each such officer.
(xxv) A certified copy of a Resolution of the Board of Directors of
Crossmann Investments, Inc., an Indiana corporation, authorizing the
execution, delivery and performance, respectively, of its Reaffirmation of
Guaranty Agreement and the other Loan Documents provided for in this Amendment
to which Crossmann Investments, Inc. is a party.
(xxvi) A certificate of the Secretary of the Board of Directors of
Crossmann Investments, Inc. certifying the names of the officer or officers
authorized to sign its Reaffirmation of Guaranty Agreement and the other Loan
Documents provided for in this Amendment to which Crossmann Investments, Inc.
is a party, together with a sample of the true signature of each such officer.
(xxvii) A certified copy of a Resolution of the Board of Directors of
Deluxe Homes of
Ohio, Inc., an Ohio corporation, authorizing the execution, delivery and
performance, respectively, of its Reaffirmation of Guaranty Agreement and the
other Loan Documents provided for in this Amendment to which Deluxe Homes of
Ohio, Inc. is a party.
(xxviii)A certificate of the Secretary of the Board of Directors of
Deluxe Homes of Ohio,Inc. certifying the names of the officer or officers
authorized to sign its Reaffirmation of Guaranty Agreement and the other Loan
Documents provided for in this Amendment to which Deluxe Homes of Ohio, Inc.
is a party, together with a sample of the true signature of each such officer.
(xxix) The Promissory Note (Revolving Loan)($60,000,000.00) payable to the
order of Bank One, Indiana, NA in the form attached hereto as Exhibit
"A."
(xxx) A Reaffirmation Guaranty Agreement from each Current Subsidiary
in the form of Exhibit "B" attached hereto, duly completed for each such
Current Subsidiary.
(xxxi) A certified copy of a Resolution of the Members of Trinity
Homes, LLC, an Indiana limited liability company, authorizing the execution,
delivery and performance, respectively, of its Guaranty Agreement and the
other Loan Documents provided for in this Amendment to which Trinity Homes,
LLC is a party.
(xxxii) The certificate of the Managing Member of Trinity Homes,
LLC certifying the names of the officer or officers authorized to sign its
Guaranty Agreement and the other Loan Documents provided for in this Amendment
to which Trinity Homes, LLC is a party, together with a sample of the true
signature of each such officer.
(xxxiii) The Guaranty Agreement of Trinity Homes, LLC in the form
attached hereto as Exhibit "C."
(xxxiv)Copies of the Articles of Organization and the Certificate of
Organization of Trinity Homes, LLC together with all amendments
certified by the Indiana Secretary of State.
(xxxv) A complete copy of the Operating Agreement of Trinity Homes,
LLC certified by the Managing Member of Trinity Homes, LLC as complete and
correct.
(xxxvi) A Certificate of Existence for Trinity Homes, LLC issued
as of a recent date by the Indiana Secretary of State.
(xxxvii) All additional fees and expenses of the Agent, including
but not limited to the Agent's reasonable attorneys' fees incurred in
connection with the drafting, negotiation, and closing of this Amendment; and
(xxxviii) Such other instruments, agreements, and documents that the
Agent or any Lender may reasonably require.
8. EFFECT OF AMENDMENT. Except as amended in this Amendment, all
of the terms and conditions of the Agreement shall continue unchanged and in
full force and effect together with this Amendment.
IN WITNESS WHEREOF, the Borrower, the Lenders, and the Agent, by their
respective duly authorized officers, have executed and delivered in Indiana
this Fourth Amendment to Credit Agreement as of October 20, 2000.
CROSSMANN COMMUNITIES, INC., an Indiana corporation
By: /s/Jennifer A. Holihen
Jennifer A. Holihen, Chief Financial
Officer, Treasurer and Secretary
9210 North Meridian Street
Indianapolis, Indiana 46260
Attention: Jennifer A. Holihen, Chief
Financial Officer, Treasurer and Secretary
Telephone: (317) 843-9514
Telecopy: (317) 571-2210
E-mail: [email protected]
Commitments
$60,000,000.00 BANK ONE, INDIANA, NA, a national banking
association, individually and as Agent
By:/s/ Richard L. Mott
Richard L. Mott, First Vice President
Bank One Center/Circle - Suite 203
111Monument Circle
Indianapolis, Indiana 46277
Attention: Patrick D. Lease, First Vice President
Telephone: (317) 321-3844
Telecopy: (317) 321-7647
E-mail: [email protected]
$18,750,000.00 HUNTINGTON NATIONAL BANK OF INDIANA
By: /s/ Russell R. Swan
Russell R. Swan, Jr., Senior Vice President
Capital Center, Suite 1800
201 North Illinois Street
Indianapolis, Indiana 46204
Attention: Russell R. Swan, Jr., Senior Vice
President
Telephone: (317) 237-2547
Telecopy: (317) 237-2505
E-mail: [email protected]
$18,750,000.00 FIFTH THIRD BANK, INDIANA
By: /s/ Erik Miner
Erik Miner, Senior Vice President
Capital Center, North Tower
251 North Illinois Street, Suite 1000
Indianapolis, Indiana 4604
Attention: Erik Miner, Senior Vice President
Telephone: (317) 383-2392
Telecopy: (317) 383-2427
E-mail: [email protected]
$18,750,000.00 PNC BANK, N.A.
By: /s/ James A. Harmann
James A. Harmann, Vice President
201 East Fifth Street, Suite 200
Real Estate Finance
Cincinnati, Ohio 45201-1198
Attention: James A. Harmann, Vice President
Telephone: (513) 651-8988
Telecopy: (513) 651-8931
E-mail: [email protected]
$18,750,000.00 KEYBANK NATIONAL ASSOCIATION
By: /s/ Jane E. Butler
Jane E. Butler, Assistant Vice President
10 West Market Street
Indianapolis, Indiana 46204
Attention: Jeffrey K. Lockhart, Vice
President
Telephone: (317) 464-8320
Telecopy: (317) 464-8301
E-Mail: [email protected]
<PAGE>
SCHEDULE OF EXHIBITS
Exhibit "A" - Promissory Note (Revolving Loan)
($60,000,000.00)(Bank One, Indiana, NA)
Exhibit "B" - Reaffirmation of Guaranty Agreement (Current
Subsidiaries)
Exhibit "C" - Guaranty Agreement (Trinity Homes, LLC)
PROMISSORY NOTE
(REVOLVING LOAN)
Indianapolis, Indiana
$60,000,000.00 Dated: October 20, 2000
Final Maturity: March 31, 2003
On or before March 31, 2003 ("Final Maturity"), CROSSMANN COMMUNITIES,
INC., an Indiana corporation (the "Maker") promises to pay to the order of
BANK ONE, INDIANA, NA, a national banking association (the "Lender") at the
principal office of BANK ONE, INDIANA, NA, a national banking association (the
"Agent") in Indianapolis, Indiana, the principal sum ofSixty Million and
00/100 Dollars ($60,000,000.00) or so much of the principal amount of the Loan
represented by this Note as may be disbursed by the Lender under the terms of
the Credit Agreement described below, and to pay interest on the unpaid
principal balance outstanding from time to time as provided in this Note.
This Note evidences indebtedness (the "Loan") incurred or to be incurred
by the Maker under a revolving line of credit extended to the Maker by the
Lender under a Credit Agreement dated as of April 1, 1999 (as amended, the
"Credit Agreement"), entered into by and among the Maker, the Lender, the
Agent, and the other lenders from time to time parties thereto. All
references in this Note to the Credit Agreement shall be construed as
references to that Agreement as it may be amended from time to time. The Loan
is referred to in the Credit Agreement as the "Revolving Loan." Subject to
the terms and conditions of the Credit Agreement, the proceeds of the Loan may
be advanced and repaid and re-advanced until Final Maturity. The principal
amount of the Loan outstanding from time to time shall be determined by
reference to the books and records of the Lender on which all Advances under
the Loan and all payments by the Maker on account of the Loan shall be
recorded. Such books and records shall be deemed prima facie to be
correct as to such matters.
The terms "Advance" and "Business Day" are used in this Note as defined
in the Credit Agreement.
Interest on the unpaid principal balance of the Loan outstanding from
time to time prior to and after maturity will accrue at the rate or rates
provided in the Credit Agreement. Prior to maturity, accrued interest shall
be due and payable on the last Business Day of each month commencing on the
last Business Day of the month in which this Note is executed. After
maturity, interest shall be due and payable as accrued and without demand.
Interest will be calculated by applying the ratio of the annual interest rate
over a year of 360 days, multiplied by the outstanding principal balance,
multiplied by the actual number of days the principal balance is outstanding.
The entire outstanding principal balance of this Note shall be due and
payable, together with accrued interest, at Final Maturity. Reference is made
to the Credit Agreement for provisions requiring prepayment of principal under
certain circumstances. Principal may be prepaid, but only as provided in the
Credit Agreement.
If any installment of interest due under the terms of this Note is not
paid within two (2) Business Days when due, then the Lender or any subsequent
holder of this Note may, subject to the terms of the Credit Agreement, at its
option and without notice, declare the entire principal amount of the Note and
all accrued interest immediately due and payable. Reference is made to the
Credit Agreement which provides for acceleration of the maturity of this Note
upon the happening of other "Defaults" as defined therein.
All payments on account of this Note shall be applied as provided in the
Credit Agreement.
The Maker and any endorsers severally waive demand, presentment for
payment and notice of nonpayment of this Note, and each of them consents to
any renewals or extensions of the time of payment of this Note without notice.
All amounts payable under the terms of this Note shall be payable with
expenses of collection, including attorneys' fees, and without relief from
valuation and appraisement laws.
This Note supersedes and replaces that certain Promissory Note dated June
19, 2000, made by the Maker to the order of the Lender in the principal amount
of $35,000,000.00, with a final maturity date of March 31, 2003.
This Note is made under and will be governed in all cases by the
substantive laws of the State of Indiana, notwithstanding the fact that
Indiana conflicts of law rules might otherwise require the substantive rules
of law of another jurisdiction to apply.
CROSSMANN COMMUNITIES, INC., an Indiana
corporation
By: /s/Jennifer A. Holihen
Jennifer A. Holihen, Chief Financial Officer,
Treasurer and Secretary
REAFFIRMATION OF GUARANTY AGREEMENT
The undersigned being a Guarantor under that certain Guaranty Agreement
dated as of [April 1, 1999\December 31, 1999] (the "Guaranty Agreement"),
pursuant to which the undersigned guaranteed the obligations of CROSSMANN
COMMUNITIES, INC., an Indiana corporation (the "Borrower") to BANK ONE,
INDIANA, NA, a national banking association, in its capacity as Agent (the
"Agent") for the ratable benefit of the Lenders ("Lenders") under the terms of
that certain Credit Agreement, as amended (the "Agreement") dated April 1,
1999, entered into by and among the Borrower, the Lenders, and the Agent,
hereby consents to the execution of that certain Fourth Amendment to Credit
Agreement to be entered into by and among the Company, the Lenders, and the
Agent dated as of even date herewith (the "Fourth Amendment"), and hereby
agrees that the Obligations (as defined in the Guaranty Agreement) shall
include the increase in the amount of the Aggregate Commitment to
$135,000,000.00, on the terms and conditions as more fully set forth in the
Fourth Amendment.
Further, the Guarantor acknowledges that while it may be the current
practice of the Agent in the past to obtain the undersigned's consent to any
amendment to or waiver of any of the terms and conditions of the Agreement,
the Agent shall not be required to continue any such practice in the future,
and any such discontinuance shall not be construed as a waiver of the Agent's
rights, in its discretion, to enter into any further amendments to or grant
any further waivers of any of the terms and conditions of the Agreement
without the consent of the undersigned, and that the Agent's failure to
request or obtain the consent of the undersigned to any such amendment or
waiver shall not affect the liability of the undersigned to the Lenders and
the Agent under the Guaranty Agreement.
IN WITNESS WHEREOF, the undersigned have signed this Reaffirmation of
Guaranty Agreement as of the 20th day of October, 2000.
____________________________________
By: /s/Jennifer A. Holihen
Jennifer A. Holihen,
Chief Financial Officer, Treasurer
and Secretary
(Printed name and title)
STATE OF Indiana )
)SS:
COUNTY OF Marion )
Before me, a Notary Public in and for the above County and State,
personally appeared Jennifer A. Holihen , the Chief Financial Officer,
Treasurer and Secretary of Crossmann Communities, Inc., an Indiana
corporation, the Managing General Partner fo CROSSMANN COMMUNITIES
PARTNERSHIP, an Indiana general partnership, who as such officer acknowledged
the execution of the foregoing Reaffirmation of Guaranty Agreement for and on
behalf of said corporation this 20th day ofOctober, 2000.
Signature: /s/ Beverly A. Dougherty
Printed: Beverly A. Dougherty
Notary Public
My Commission Expires: 5/24/2008
My County of Residence: Marion
GUARANTY AGREEMENT
This undertaking and agreement (this "Guaranty") is made by TRINITY
HOMES, LLC, an Indiana limited liability company (the "Guarantor"), in favor
of BANK ONE, INDIANA, NA, a national banking association, in its capacity as
Agent (the "Agent") for the ratable benefit of the Lenders ("Lenders") from
time to time parties to that certain Credit Agreement described below in
consideration of the loans and other credit facilities described in this
Guaranty made or to be made to or on behalf of CROSSMANN COMMUNITIES, INC., an
Indiana corporation (the "Borrower") by the Lenders under the Credit
Agreement. This Guaranty is on the following terms:
1. BACKGROUND OF THIS GUARANTY -- CERTAIN DEFINITIONS. The
Lenders, the Agent, and the Borrower are parties to a Credit Agreement dated
as of April 1, 1999 (as may be amended, collectively, the "Credit Agreement"),
under the terms of which the Lenders have agreed to extend a revolving line of
credit (referred to in the Credit Agreement as the "Revolving Loan") to the
Borrower, to issue letters of credit (the "Letters of Credit") for the account
of the Borrower, and to whom Bank One, Indiana, NA has agreed individually to
extend a revolving line of credit (the "Swing Line Loan"), subject to the
fulfillment of certain conditions, one of which is the execution and delivery
by the Guarantor of this Guaranty. This Guaranty is made by the Guarantor in
consideration of the agreement of the Lenders to make the Revolving Loan (the
"Loan"), to issue the Letters of Credit, and for Bank One, Indiana, NA to make
the Swing Line Loan. In addition to the terms "Revolving Loan,""Loan,"
"Letters of Credit," and "Swing Line Loan," the terms "Advances," "Aggregate
Commitment," "Facility Termination Date" and "Loan Document" are used in this
Guaranty as defined in the Credit Agreement. The term "Obligations" as used
in this Guaranty means all of the obligations of the Borrower in favor of the
Agent and the Lenders of every type and description, direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter
arising, including but not limited to the Borrower's obligation to repay the
principal of, interest on and expenses of collection of the Revolving Loan and
the Swing Line Loan as provided in the Credit Agreement and the other Loan
Documents, including any Advances under the Revolving Loan or Swing Line Loan
made after this date and after the initial Facility Termination Date pursuant
to any extension or extensions of the Facility Termination Date, to reimburse
the Lenders for all drawings made under the Letters of Credit and to pay all
fees associated therewith, and all other obligations incurred pursuant to the
terms of the Credit Agreement and any other Loan Document including any
obligations arising on account of any amendment to or extension of the Credit
Agreement or any other Loan Document. The term "Default" means a "Default" as
defined in the Credit Agreement.
2. THE GUARANTY. The Guarantor guarantees the full and prompt
payment of all of the Obligations when due, whether at scheduled maturity or
at maturity by virtue of acceleration on account of a Default. The Guarantor
further agrees to pay to the Lenders an amount equal to all expenses,
including reasonable attorneys' fees, paid or incurred by the Lenders after
Default in endeavoring to enforce this Guaranty. Notwithstanding any other
provision of this Guaranty, the Guarantor's liability hereunder shall be
limited to the lesser of the following amounts minus, in either case, One
Dollar ($1.00):
a. the lowest amount which would render this Guaranty a fraudulent
transfer under Section 548 of the Bankruptcy Code of 1978, as amended, or
b. if this Guaranty is subject to the Uniform Fraudulent Transfer Act
(the "UFTA") or the Uniform Fraudulent Conveyance Act (the "UFCA") or any
similar or analogous statute or rule of law, then the lowest amount which
would render this Guaranty a fraudulent conveyance under the UFTA, the UFCA,
or any such similar or analogous statute or rule of law.
The amount of the limitation imposed upon the Guarantor's liability under the
terms of the preceding sentence shall be subject to redetermination as of each
date a "transfer" is deemed to have been made on account of this Guaranty
under applicable law. The Guarantor acknowledges that information concerning
the Guarantor's financial condition is under the control of the Guarantor and
is more readily available to the Guarantor than to the Lenders, and for that
reason the Guarantor agrees that should the Guarantor claim that the amount of
its liability under this Guaranty is less than the full amount of the
Obligations because of the provisions of this paragraph, then the burden of
proving the facts which would result in such limitation shall be upon the
Guarantor.
3. FINANCIAL INFORMATION. As long as this Guaranty is in effect
the Guarantor shall furnish to the Lenders the following:
a. Annual Statements. As soon as available and in any event within
120 days after the close of each fiscal year, the consolidated and
consolidating financial statements of the Guarantor for such fiscal year,
which may the financial statements required under Article VI of the Credit
Agreement, prepared and presented in accordance with generally accepted
accounting principles, in each case setting forth in comparative form
corresponding figures for the preceding fiscal year, together with the audit
report, unqualified as to scope, of independent certified public accountants
approved by the Lenders, which approval shall not be unreasonably withheld.
b. Certificates Regarding Solvency. At such times as the Lenders
may reasonably require, a "Certificate Regarding Solvency" in the form
attached "Annex."
c. Other Information. Such other information relating to the
financial condition of the Guarantor as the Lenders may reasonably require.
Each set of annual financial statements required to be delivered by the
Guarantor to the Lenders shall be accompanied by the written representation of
the chief financial officer of the Guarantor that such financial statements
have been prepared in accordance with generally accepted accounting principles
(except that the interim statements need not include a statement of cash flows
and footnotes and need not reflect adjustments normally made at year end, if
such adjustments are not material in amount), consistently applied, (except
for changes in which the independent accountants of the Guarantor concur) and
present fairly the financial position of the Guarantor and the results of its
operation as of the dates of such statements and for the fiscal periods then
ended.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS IN CREDIT AGREEMENT.
To induce the Lenders to accept this Guaranty, the Guarantor makes each of the
representations and warranties stated in Article V of the Credit Agreement to
the Lenders, to the extent that each such representation and each such
warranty refers to a Current Subsidiary (as such term is defined in the Credit
Agreement). The Guarantor also agrees to strictly observe each of the
covenants stated in Section VI of the Credit Agreement, to the extent that
each such covenant is to be observed by a Current Subsidiary, unless the
Lenders and the Agent shall otherwise expressly consent in writing. Each of
such representations and warranties and covenants stated in the Credit
Agreement shall be incorporated by reference herein and shall be made a part
of this Guaranty.
5. GUARANTY ABSOLUTE. This Guaranty shall be absolute, continuing
and unconditional, irrespective of the irregularity, invalidity or
unenforceability of any other Loan Document and shall not be affected or
impaired by any failure, negligence or omission on the part of the Lenders to
realize upon and protect any collateral for any of the Obligations. This
Guaranty shall remain in full force and effect until all of the Obligations
have been satisfied in full and the Commitment of the Lenders to make Advances
under the Revolving Loan and the Swing Line Loan and to issue Letters of
Credit has expired. The Lenders may from time to time, without notice to the
Guarantor and without affecting the Guarantor's liability under this Guaranty:
a. obtain a security interest in any property to secure any of the
Obligations;
b. obtain the primary or secondary liability of any party or parties
in addition to the Borrower and the Guarantor with respect to any of the
Obligations;
c. extend or renew any of the Obligations for any period beyond their
original due dates;
d. release or compromise the liability of any other party or parties
which are now or may hereafter become primarily or secondarily liable with
respect to any of the Obligations;
e. release any security interest which the Lenders now has or may
hereafter obtain in any property securing any of the Obligations and permit
any substitution or exchange of any such property;
f. proceed against the Guarantor for payment of the Obligations,
whether or not the Lenders shall have resorted to any property securing any of
the Obligations or shall have proceeded against the Borrower or any other
party primarily or secondarily liable with respect to any of the Obligations;
g. amend the terms of the Credit Agreement from time to time in any
particulars, or
h. extend loans and other credit accommodations to the Borrower in
addition to the Revolving Loan, the Swing Line Loan, and the Letters of
Credit, and increase the maximum amount which may be lent to the Borrower
under the Revolving Loan or the Swing Line Loan.
6. ASSIGNMENT AND PARTICIPATIONS. The Lenders may, without notice
to the Borrower or the Guarantor, sell or otherwise assign all or any portion
of the Obligations and any participations therein, all pursuant to the terms
and provisions of the Credit Agreement, and upon any such sale or assignment,
the transferee shall have the right to enforce this Guaranty to the extent of
the transferee's interest directly against the Guarantor as fully as if the
transferee were specifically named in the Guaranty as the holder of such
interest, but the Lenders shall have the unimpaired right to enforce this
Guaranty for the benefit of the Lenders and for the benefit of any participant
in respect of whose participation the Lenders has retained such right.
7. SUBROGATION WAIVER. In order to induce the Lenders to make the
Revolving Loan and Swing Line Loan and to issue Letters of Credit for the
account of the Borrower, in reliance, in part, upon this Guaranty,
notwithstanding the fact that the Guarantor is an "insider" with respect to
the Borrower, as the term "insider" is defined in the Bankruptcy Code, the
Guarantor waives for itself, its legal representatives and assigns any right
of indemnity, reimbursement or contribution from the Borrower or any other
person obligated with respect to any of the Obligations (any such other person
being referred to hereafter in this paragraph as a "Co-Obligor") or from the
property of the Borrower or from the property of any Co-Obligor, and the
Guarantor further waives any right of subrogation to the rights of the Lenders
or the Agent against the Borrower or any Co-Obligor or the property of the
Borrower or any Co-Obligor which would otherwise arise by virtue of any
payment made by the Guarantor to the Lenders on account of this Guaranty,
whether any such right of indemnity, reimbursement, contribution or
subrogation would otherwise arise by virtue of contract, whether express or
implied, with any person or as a matter of law or equity, and the Guarantor
undertakes on behalf of itself, its legal representatives and assigns that
neither the Guarantor nor the Guarantor's legal representatives or assigns
will attempt to exercise or accept the benefits of any such right and should
the Guarantor or the Guarantor's legal representative or assigns receive any
payment or distribution of money or other property on account of such right
notwithstanding the provisions of this paragraph, such money or other property
shall be held in trust by the recipient for the Lenders and the Agent and
shall immediately be delivered to the Agent for application to the Obligations
in the same form as received, with the addition only of such endorsements or
assignments as may be necessary to perfect the title of the Agent and the
Lenders thereto.
8. OTHER WAIVERS. The Guarantor waives: (i) notice of the
acceptance of this Guaranty, (ii) notice of the existence and creation of all
or any of the Obligations, (iii) notice of nonpayment of any of the
Obligations and (iv) diligence by the Lenders in collection of the Obligations
and the protection of or realization upon any collateral for the Obligations.
9. REINSTATEMENT. If any amount which is paid to the Agent or the
Lenders by the Borrower or any other party and which is applied by the Agent
or the Lenders to the satisfaction of any of the Obligations, is returned by
the Agent or the Lenders to the Borrower or such other party or a trustee in
Bankruptcy or other legal representative of the Borrower or such other party
by virtue of a claim that such payment constituted a voidable preference under
the Bankruptcy Code or under any state insolvency law, whether such amount is
returned under court order or pursuant to settlement of the claim of
preference, then this Guaranty shall be reinstated as to such amount as though
such payment to the Agent or the Lenders had never been made and
notwithstanding any intervening return or cancellation of any note or other
instrument or agreement evidencing the reinstated Obligations.
10. MISCELLANEOUS. This Guaranty shall be binding upon the
Guarantor, upon the Guarantor's legal representatives, successors and assigns.
If any provision of this Guaranty is determined to be illegal or
unenforceable, such provision shall be deemed to be severable from the balance
of the provisions of this Guaranty and the remaining provisions shall be
enforceable in accordance with their terms.
11. CHOICE OF LAW. This Guaranty is made under and will be
governed in all cases by the substantive laws of the State of Indiana,
notwithstanding the fact that Indiana conflicts of law rules might otherwise
require the substantive rules of law of another jurisdiction to apply.
12. AUTHORITY. In order to induce the Agent and the Lenders to
accept this Guaranty and to make the Loan to the Borrower, the Guarantor
represents and warrants to the Agent and the Lenders that: (i) the Guarantor
is a limited liability company organized, existing and in good standing under
the laws of the State of Indiana; (ii) execution and delivery of this Guaranty
are within the Guarantor's corporate powers, have been duly authorized by all
necessary action and do not contravene or conflict with any provision of law
or of the Articles of Organization or the Operation Agreement of the Guarantor
or of any agreement binding upon the Guarantor or its properties, and (iii)
this Guaranty is the legal, valid and binding obligation of the Guarantor,
enforceable against the Guarantor in accordance with its terms.
13. GOVERNING LAW -- JURISDICTION. Except as may otherwise be
expressly provided in any other Loan Document, this Agreement and all other
Loan Documents are made under and will be governed in all cases by the
substantive laws of the State of Indiana, notwithstanding the fact that
Indiana conflicts of law rules might otherwise require the substantive rules
of law of another jurisdiction to apply.
14. CONSENT TO JURISDICTION. THE GUARANTOR HEREBY IRREVOCABLY
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
INDIANA STATE COURT SITTING IN MARION COUNTY, INDIANA IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE GUARANTOR
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY
WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY
LENDER TO BRING PROCEEDINGS AGAINST THE GUARANTOR IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY THE GUARANTOR AGAINST THE AGENT OR
ANY LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN MARION COUNTY,
INDIANA.
15. WAIVER OF JURY TRIAL. THE GUARANTOR, THE AGENT AND EACH LENDER
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
Dated as of October 20, 2000.
TRINITY HOMES, LLC, an Indiana limited
liability company
By: /s/ Jennifer A. Holihen
Jennifer A. Holihen, Manager
(Printed name and title)
Address: 9202 North Meridian Street
Suite 300
Indianapolis, Indiana 46260
STATE OF Indiana)
) SS:
COUNTY OF Marion)
Before me the undersigned, a Notary Public in and for said County and State,
personally appearedJennifer A. Holihen, the Manager of TRINITY HOMES, LLC,
an Indiana limited liability company, who as such authorized officer
acknowledged the execution of the foregoing Guaranty Agreement on behalf of
said corporation this 20th day of October, 2000.
/s/ Beverly A. Dougherty
Notary Public
Beverly A. Dougherty
(Printed Name)
My Commission Expires: 5/24/2008
County of Residence: Marion
<PAGE>
ANNEX
CERTIFICATE REGARDING SOLVENCY
TRINITY HOMES, LLC, an Indiana limited liability company (the
"Guarantor"), by its duly authorized officer, makes the following
representations to BANK ONE, INDIANA, NA, a national banking association, in
its capacity as agent (the "Agent") for the Lenders (the "Lenders") from time
to time parties to that certain Credit Agreement identified below, and
acknowledges that the Agent is entitled to rely and will rely upon these
representations, in providing certain financial accommodations to CROSSMANN
COMMUNITIES, INC., an Indiana corporation (the "Borrower"), pursuant to a
certain Credit Agreement entered into by and among the Agent, the Borrower,
and the Lenders dated as of April 1, 1999 (as amended, the "Credit
Agreement").
1. The assets of the Guarantor at a "fair valuation" within the meaning of
the Bankruptcy Code of 1978, as amended, (the "Code") are worth approximately
$ 60 millionas of this date.
2. The liabilities of the Guarantor, including without limitation
contingent liabilities to the extent appropriate for consideration in
determining whether the Guarantor is "insolvent", within the meaning of the
Code, but excluding the Guarantor's contingent liability under the Guaranty
Agreement (the "Guaranty") required to be given by the Guarantor under the
terms of the Credit Agreement, total approximately $ 40 million as of
September 30, 2000, the end of the last fiscal quarter of the Guarantor.
3. The Guarantor is not insolvent within the meaning of the Code, after
taking into account its contingent liability under the Guaranty.
4. After taking into account its contingent liability under the Guaranty,
the Guarantor has sufficient capital for the operation of its business as
presently conducted and at the level of operations contemplated for the
foreseeable future. The minimum amount of capital required to support the
Guarantor's operations at the level planned for the foreseeable future is $
20 million.
5. The Guarantor is currently paying its debts as they become due in the
ordinary course of its business. After taking into account its contingent
liability under the Guaranty, the Guarantor believes that it will be able to
continue to pay its debts as they become due in the ordinary course of its
business.
Dated as of October 20, 2000 .
TRINITY HOMES, LLC, an Indiana limited
liability company
By: /s/Jennifer A. Holihen
Jennifer A. Holihen, Treasurer
(Printed name and title)
EXHIBIT 10.52
683432.7
MEMBERSHIP INTEREST PURCHASE AGREEMENT
THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (the "Agreement") is made and
entered into as of the 20th day of October, 2000 (the "Effective Date"), by
and among Crossmann Communities Partnership, an Indiana partnership ("Buyer"),
Trinity Homes, Inc., an Indiana corporation ("Trinity"), and Pyramid Mortgage
Co., Inc., an Indiana corporation ("Pyramid", and together with Trinity, the
"Sellers").
RECITALS:
WHEREAS, Trinity is the holder of Four Hundred (400) units (the "Trinity
Units") in Trinity Homes, LLC, an Indiana limited liability company (the
"Company"), which constitute 44.44% of the total issued and outstanding
membership interests in the Company, and Pyramid is the holder of Fifty (50)
units (the "Pyramid Units") in the Company, which constitute 5.56% of the
total issued and outstanding membership interests in the Company (the Trinity
Units and the Pyramid Units being sometimes referred to herein, separately or
together as applicable, as the "Interests"); and
WHEREAS, Buyer, in reliance upon the representations, warranties and
covenants of the Sellers set forth in this Agreement, desires to purchase the
Interests from the Sellers, and the Sellers desire to sell, transfer and
convey the Interests to Buyer, all upon the terms and conditions set forth in
this Agreement;
NOW THEREFORE, in consideration of the covenants, representations,
warranties and mutual agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
--
ARTICLE I.
PURCHASE AND SALE OF INTERESTS
Section 1.01 . Purchase and Sale. Subject to the terms and
conditions set forth in this Agreement and on the basis of the
representations, warranties, covenants and agreements herein contained, at the
Closing, each of the Sellers shall sell, transfer, assign and deliver to
Buyer, all of its right, title and interest in and to its Interests, free and
clear of all Liens, Encumbrances and adverse claims, and Buyer agrees to
purchase, acquire and accept from the Sellers, the Interests. The effective
date of the transfers of the Interests shall be October 1, 2000, such that
Buyer shall be entitled to Sellers' proportionate share of all revenues from
the operation of the Company accruing on or after October 1, 2000 and shall be
liable for Sellers' proportionate share of all operating expenses and tax
liabilities of the Company accruing for periods on or after October 1, 2000.
In the event that the Company makes any tax distributions to its members after
the Effective Date, which distributions are in whole or in part with respect
to periods prior to October 1, 2000, Buyer shall cause the Company to
distribute to the Sellers their proportionate share of any such distributions
relating to periods prior to October 1, 2000.
Section 1.02 . Purchase PricePurchase Price. The total purchase
price (the "Purchase Price") to be paid by Buyer to the Sellers for the
Interests shall be an aggregate amount equal to Seven Million Five Hundred
Seventy Thousand and Ten Dollars ($7,570,010), of which Six Million Three
Hundred Thousand Dollars ($6,300,000) shall be payable in cash at Closing
pursuant to wire transfer instructions provided by the Sellers to Buyer at
least two (2) business days prior to Closing (the "Cash Payment").
Simultaneously with the Closing, Buyer shall remit to Thomas D. Rush ("Rush"),
pursuant to wire transfer instructions for Rush that the Sellers furnish to
Buyer at least two (2) business days prior to Closing, the sum of One Million
Two Hundred Seventy Thousand and Ten Dollars ($1,270,010), as payment in full
of the outstanding principal balance, and accrued and unpaid interest thereon
as of the Closing date, under each of those Promissory Notes dated October 17,
1997 from John E. McKenzie, James D. McKenzie, and Mark W. Thune,
respectively, to Rush (the "Notes Payment"). The Notes Payment and the Cash
Payment by Buyer shall constitute payment in full of the Purchase Price.
ARTICLE II.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLERS
As a material inducement to Buyer to enter into this Agreement and all
other agreements and documents executed by Buyer in connection with this
Agreement and to consummate the transactions contemplated by this Agreement
and such related agreements, each of the Sellers hereby jointly and severally
represents, warrants and covenants to Buyer as follows:
Section 2.01 . Title to Interests. Each Seller is the sole
owner, of record and beneficially, and is transferring and delivering to Buyer
at the Closing, good and valid title to its Interests, free and clear of any
and all Liens, Encumbrances and adverse claims.
Section 2.02 . Authority; Power; No Violation. The execution,
delivery and performance of this Agreement and any and all related agreements
by each Seller have been authorized by all necessary corporate action on the
part of each Seller. Each Seller has the full capacity, right, power and
authority to enter into, execute and deliver this Agreement and any and all
related agreements, to consummate the transactions contemplated by this
Agreement and any and all related agreements, and to comply with and fulfill
the terms and conditions of this Agreement and any and all related agreements.
This Agreement and all related agreements each constitute a valid and binding
obligation of each Seller, enforceable in accordance with its respective terms
and conditions. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby, nor compliance by either
Seller with any of the provisions of this Agreement will:
(a) conflict with, violate, result in a breach of, constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or give rise to any right of termination, cancellation, or
acceleration under any provision of the Articles of Incorporation or Bylaws of
either Seller, or any of the terms, conditions or provisions of any note,
Lien, bond, mortgage, indenture, license, lease, contract, commitment,
agreement, understanding, arrangement, restriction or other instrument or
obligation, or any judgment, court order, or decree, to which either Seller or
any of its shareholders is a party or by which either Seller or any of its
shareholders or any of their respective properties or assets may be bound;
(b) violate any Law applicable to either Seller or any properties or
assets of either Seller; or
(c) constitute an event which, with or without notice, lapse of time, or
action by a third party, could result in the creation of any Lien upon any of
the Interests or any properties or assets of either Seller or cause the
maturity of any liability, obligation or debt of either Seller to be
accelerated or increased.
Section 2.03 . Consents and Approvals. The execution, delivery,
and performance of this Agreement and any related agreements by each Seller
and the consummation by each Seller of the transactions contemplated hereby or
thereby will not require any notice to, or consent, authorization or approval
from, any Governmental Entity or any other third party.
Section 2.04. Distributions. The Company has not declared, set aside
or paid any dividend or made or agreed to make any other distribution or
payment in respect of the membership interests of any of the Members since
September 12, 2000, and except for a single aggregate distribution of $167,000
to be made by the Company to the Sellers on the Closing date, the Company will
not make any distribution or payment in respect of any of the membership
interests of the members in the Company prior to the Closing date.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF BUYER
As a material inducement to the Sellers to enter into this Agreement and
any related agreements and documents and to consummate the transactions
contemplated by this Agreement and any related agreements, Buyer represents
and warrants to the Sellers as follows:
Section 3.01 . Authority; Consent. The execution and delivery of
this Agreement and all related agreements by Buyer and the consummation by
Buyer of the transactions contemplated hereby or thereby has been duly and
validly authorized by all necessary corporate action by Buyer. Buyer has the
full capacity, right, power and authority to enter into, execute and deliver
this Agreement and any and all related agreements, to consummate the
transactions contemplated by this Agreement and any and all related
agreements, and to comply with and fulfill the terms and conditions of this
Agreement and any and all related agreements. This Agreement and all related
agreements each constitutes a valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its respective terms and
conditions. Neither the execution and delivery of this Agreement or any
related agreement, nor the consummation of the transactions contemplated
hereby or thereby, nor compliance by Buyer with any of the provisions of this
Agreement or any related agreement will:
(a) conflict with, violate, result in a breach of, constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or give rise to any right of termination, cancellation, or
acceleration under any provision of Buyer's Articles of Incorporation or
Bylaws or under any of the terms, conditions or provisions of any note, Lien,
bond, mortgage, indenture, license, lease, contract, commitment, agreement,
understanding, arrangement, restriction or other instrument or obligation, or
any judgment, court order or decree, to which either Buyer is a party or by
which either Buyer or any of its respective properties or assets may be bound;
(b) violate any Law applicable to Buyer or any properties or assets of
Buyer; or
(c) constitute an event which, with or without notice, lapse of time, or
action by a third party, could result in the creation of any Lien, upon any of
the assets or properties of Buyer, or cause the maturity of any liability,
obligation, or debt of Buyer to be accelerated or increased.
Section 3.02 . Consents and Approvals. The execution and delivery
of this Agreement and any related agreements by Buyer and the consummation by
Buyer of the transactions contemplated hereby or thereby will not require any
notice to, or consent, authorization, or approval from any Governmental Entity
or any other third party.
ARTICLE IV.
THE CLOSING
Section 4.01 . Closing. The closing of the purchase and sale of the
Interests (the "Closing") shall take place on October 20, 2000, or as soon
thereafter as all conditions specified in Articles V and VI have been
satisfied or waived (the "Closing Date"), at the offices of Ice Miller, 34th
Floor, One American Square, Indianapolis, Indiana, or at such other place as
agreed upon by the parties.
ARTICLE V.
CONDITIONS TO THE SELLERS' OBLIGATION TO CLOSE
The obligation of the Sellers to sell the Interests and otherwise to
consummate the transactions contemplated by this Agreement at the Closing is
subject to the following conditions precedent, any or all of which may be
waived by the Sellers in their sole discretion:
Section 5.01 . Delivery. The Sellers shall have received the
Purchase Price.
Section 5.02 . No Litigation. No action, suit, proceeding, writ,
judgment, injunction, decree or similar order of any Governmental Entity
restraining, enjoining or otherwise preventing the consummation of any of the
transactions contemplated by this Agreement, or seeking any Indemnity Loss (as
defined in Section 8.01 below) or seeking to obtain any other relief as a
result of this Agreement or any of the transactions contemplated hereby shall
be pending or threatened.
Section 5.03 . Approvals. All orders, consents, permits,
governmental filings, authorizations and approvals (if any) that are required
for the consummation by the Sellers of the transactions contemplated hereby
shall have been duly made and obtained in form and substance reasonably
satisfactory to the Sellers and their counsel.
ARTICLE VI.
CONDITIONS TO BUYER'S OBLIGATION TO CLOSE
The obligation of Buyer to purchase the Interests and otherwise to
consummate the transactions contemplated by this Agreement at the Closing is
subject to the following conditions precedent, any or all of which may be
waived by Buyer in its sole discretion:
Section 6.01 . Deliveries. Buyer shall have received:
(a) membership interest transfer powers duly executed by each Seller,
authorizing the secretary of the Company, as their attorney, to transfer the
Interests to Buyer on the books of the Company;
(b) all Permits and all consents of other third parties that may
reasonably be required in connection with the execution of this Agreement or
the effectuation of the transaction contemplated herein shall have been duly
obtained and shall be in full force and effect on the Closing;
(c) a Certificate of Existence of each Seller and of WCD Associates, LLC,
an Indiana limited liability company ("WCD"), issued by the Secretary of State
of the State of Indiana and all other states in which the Company is qualified
to do business, dated as of the most recent practicable date prior to the
Closing;
(d) Employment Agreements by and among Buyer, the Company, and each of
James D. McKenzie and John E. McKenzie, in a form satisfactory to Buyer, duly
executed by each of James D. McKenzie and John E. McKenzie;
(e) Noncompete Agreements by and among Buyer, the Company, and each of
James D. McKenzie and John E. McKenzie, in a form satisfactory to Buyer, duly
executed by each of James D. McKenzie and John E. McKenzie;
(f) Noncompete Agreements by and among Buyer, the Company, and each of the
Sellers, in a form satisfactory to Buyer, duly executed by each Seller;
(g) a payoff and release agreement by Thomas D. Rush ("Rush") and by Bank
One, Indiana, N.A., as successor by merger to NBD Bank, N.A. (the "Bank"), in
form acceptable to Buyer, pursuant to which Rush and the Bank shall agree,
among other things, to terminate and release the pledges in the Interests that
were granted by the Sellers to NBD Bank, N.A., as "Collateral Agent", pursuant
to that certain Amended and Restated Master Pledge Agreement dated as of
January 19, 1999 by and among Rush, the Bank, Buyer, the Sellers, the Company,
John E. McKenzie, James D. McKenzie, and Mark W. Thune;
(h) a Membership Interest Transfer Agreement between John E. McKenzie,
James D. McKenzie, and Mark W. Thune, as "transferors", and Buyer, as
"transferee", pursuant to which John E. McKenzie, James D. McKenzie, and Mark
W. Thune shall transfer, convey and assign to Buyer their respective
membership interests in WCD, which Membership Interest Transfer Agreement
shall be in a form acceptable to Buyer (the "WCD Agreement"); and
(i) such further certificates, instruments and other documents requested
by Buyer as may be reasonably required to effectively carry out the intent of
this Agreement.
Section 6.02 . No action, suit, proceeding, writ, judgment,
injunction, decree or similar order of any Governmental Entity restraining,
enjoining or otherwise preventing the consummation of any of the transactions
contemplated by this Agreement, or seeking any Indemnity Loss (as defined in
Section 8.01 below) or seeking to obtain any other relief as a result of this
Agreement or any of the transactions contemplated hereby shall be pending or
threatened.
Section 6.03 . Approvals. All orders, consents, permits,
governmental filings, authorizations and approvals (if any) that are required
for the consummation by Buyer of the transactions contemplated hereby will
have been duly made and obtained in form and substance reasonably satisfactory
to Buyer and Buyer's counsel.
ARTICLE VII.
TAX MATTERS
Section 7.01 . Cooperation. The parties shall cooperate, and shall
cause their respective directors, officers, employees, agents, accountants and
representatives to cooperate, in preparing and filing all Returns
(including amended Returns and claims for refund), in handling audits,
examinations, investigations, and administrative, court or other proceedings
relating to Taxes attributable to the operations of the Company, in resolving
all disputes, audits and refund claims with respect to such Returns and Taxes,
and any earlier Returns and Taxes, and in all other Tax matters to which this
Agreement relates, in each case including making employees available to assist
the requesting party, timely providing information reasonably requested, and
maintaining and making available to each other all records necessary in
connection therewith. Any information obtained by a party or its Affiliates
from another party or its Affiliates in connection with any Tax matters to
which this Agreement relates shall be kept confidential, except (a) as may be
otherwise necessary in connection with the filing of Returns or claims for
refund or in conducting an audit or other proceeding relating to Taxes or as
may be otherwise reasonably required by applicable Law, or (b) for any
external disclosure in audited financial statements or regulatory filings
which a party reasonably believes is required by applicable Law.
ARTICLE VIII.
INDEMNIFICATION
Section 8.01 . Indemnification by Sellers. The Sellers shall jointly
and severally indemnify, defend, and hold the Company and Buyer harmless
from and against any and all demands, claims, actions, or causes of action,
suits, proceedings, audits, assessments, losses, settlements, penalties,
forfeitures, expenses, judgments, damages and liabilities (collectively, an
"Indemnity Loss") asserted against, suffered, incurred, sustained or required
to be paid by Buyer or the Company arising out of, relating to, or as a direct
or proximate result of (a) any misrepresentation in or breach of any
representation or warranty of either Seller contained in this Agreement or any
breach or failure of either Seller to perform any of its covenants or
obligations contained in this Agreement or any related agreement, certificate
or other instrument or document furnished or required to be furnished by
either Seller pursuant to this Agreement or in connection with the transaction
contemplated by this Agreement; (b) any failure of the Company to establish,
maintain, operate or administer any pension benefit plan or welfare benefit
plan, as those terms are defined in section 3 of the Employee Retirement
Income Security Act of 1974, as amended, in accordance with applicable Law,
including but not limited to section 401(a) of the Internal Revenue Code of
1986, as amended, and the Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"); and (c) any liability, obligation, or commitment of any
nature (absolute, accrued, contingent, or other) of the Company with respect
to providing any former or present employee medical care benefits after
termination of employment with the Company for any reason, other than as
required by COBRA; provided, however, that the Sellers' liability with respect
to (b) and (c), above, (1) shall not apply except to the extent the Indemnity
Loss attributable thereto exceeds $25,000.00, (2) shall be limited to 50% of
the aggregate Indemnity Loss attributable thereto, and (3) shall terminate at
12:01 a.m. on December 16, 2000.
Section 8.02 . Indemnification by BuyerIndemnification by Buyer.
Buyer agrees to indemnify, defend, and hold the Sellers harmless from and
against any and all Indemnity Losses asserted against, suffered, incurred,
sustained or required to be paid by either Seller arising out of, relating to,
or as a direct or proximate result of any misrepresentation in or breach of
any representation or warranty of Buyer contained in this Agreement or any
breach or failure of Buyer to perform any covenant or obligation of Buyer
contained in this Agreement, or any related agreement, certificate or other
instrument or document furnished or required to be furnished by Buyer pursuant
to this Agreement or in connection with the transaction contemplated by this
Agreement.
Section 8.03. Indemnification by Buyer. Notice. If an indemnified
party (the "Claimant") believes that it has suffered or incurred any Indemnity
Loss, it shall so notify the party which the Claimant believes has an
obligation to indemnify (the "Indemnifying Party") promptly in writing
describing such loss or expense, the amount thereof, if known, and the method
of computation of such loss or expense, all with reasonable particularity.
The parties hereby acknowledge and agree that the failure of the Indemnifying
Party to respond in writing either accepting or denying the claim contained in
the notice of Indemnity Loss provided by the Claimant within thirty (30) days
after receipt of said notice constitutes an express acknowledgment of the
Indemnifying Party's obligation to indemnify the Claimant for the amount of
the Indemnity Loss claimed in such notice.
Section 8.04 . Defense of Claims. If any action at law, suit in
equity, or administrative action is instituted by or against a third party
with respect to which the Claimant intends to claim any liability or expense
as an Indemnity Loss under this Article VIII, it shall promptly notify the
Indemnifying Party in writing of such action or suit, describing such loss or
expenses, the amount thereof, if known, and the method of computation of such
loss or expense, all with reasonable particularity. The Indemnifying Party
shall have thirty (30) business days after receipt of such notice to notify
the Claimant that it elects to conduct and control any legal or administrative
action or suit with respect to an indemnifiable claim. Until the Indemnifying
Party gives the foregoing notice, the Claimant shall have the right to defend,
contest, settle, or compromise such action or suit in the exercise of its
exclusive discretion. If the Indemnifying Party gives the foregoing notice,
the Indemnifying Party shall have the right to undertake, conduct, and
control, through counsel of its own choosing and at its sole expense, the
conduct and settlement of such action or suit, and the Claimant shall
cooperate with the Indemnifying Party in connection therewith; provided,
however, that (a) the Indemnifying Party shall not thereby consent to the
imposition of any injunction against the Claimant without the written consent
of the Claimant; (b) the Indemnifying Party shall permit the Claimant to
participate in such conduct or settlement through counsel chosen by the
Claimant, but the fees and expenses of such counsel shall be borne by the
Claimant except as provided in clause (c) below; and (c) upon a final
determination of such action or suit, the Indemnifying Party shall promptly
reimburse the Claimant, to the extent required under this Article VIII, for
the full amount of any Indemnity Loss resulting from such action or suit and
all reasonable expenses related to such Indemnity Loss incurred by the
Claimant, except fees and expenses of counsel for the Claimant incurred after
the assumption of the conduct and control of such action or suit by the
Indemnifying Party. So long as the Indemnifying Party is contesting any such
action or suit in good faith, the Claimant shall not pay or settle any such
action or suit. Notwithstanding the foregoing, pending any resolution of a
dispute by either Seller of its liability with respect to any claim or demand
whether as a Claimant or an Indemnifying Party, such claim or demand shall not
be settled without the prior written consent of Buyer. The Indemnifying Party
shall be entitled to contest the issue of its obligations of indemnification
hereunder, provided that the Indemnifying Party complies with the provisions
hereof.
Section 8.05 . Computation of Indemnity Losses. The amount of
Indemnity Losses hereunder shall be computed after giving effect to receipt of
any and all insurance proceeds with respect thereto.
Section 8.06 . Payment of Losses. The Indemnifying Party shall
pay to the Claimant in cash the amount to which the Claimant may become
entitled by reason of the provisions of Article VII or this Article VIII, such
payment to be made within ninety (90) days after such amount is finally
determined either by mutual agreement of the parties or pursuant to the final
unappealable judgment of a court of competent jurisdiction, or upon such
earlier time as is mutually agreed by Claimant and Indemnifying Party.
ARTICLE IX.
MISCELLANEOUS
Section 9.01 . Survival of Representations and Warranties. All
representations and warranties contained in this Agreement shall survive the
execution, delivery and performance hereof, notwithstanding any investigations
conducted at any time with respect thereto.
Section 9.02 . Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
Section 9.03 . Best Efforts; Cooperation. Subject to the terms
and conditions of this Agreement, each party will use its commercially
reasonable best efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary or desirable under applicable Laws
and regulations to consummate the transactions contemplated by this Agreement.
The parties each agree to execute and deliver such other documents,
certificates, agreements and other writings and to take such other actions as
may be necessary or desirable in order to consummate or implement
expeditiously the transactions contemplated by this Agreement, and from time
to time, upon the request of any party to this Agreement and without further
consideration, to execute, acknowledge and deliver in proper form any further
instruments, and take such other action as the other party may reasonably
require, in order to effectively carry out the intent of this Agreement.
Without limiting the foregoing, the Sellers agree that they shall use best
efforts to ensure that the Bank delivers to the Sellers, promptly after the
Closing, any and all certificates held by the Bank representing the Interests,
and Sellers shall promptly upon receipt of any such certificates endorse the
same for transfer to Buyer and deliver the endorsed certificates to Buyer.
Section 9.04 . Expenses. Buyer and the Sellers shall each bear
their own legal, accounting and out-of-pocket costs, expenses and fees in
connection with the preparation and closing of this Agreement and the WCD
Agreement and the negotiation and consummation of the transaction contemplated
herein and therein (the "Closing Costs"); provided, however, that Buyer agrees
that the Company shall reimburse the Sellers, in the aggregate, for up to
Eight Thousand Five Hundred Dollars ($8,500) of the Sellers' Closing Costs.
The provisions of this Section 9.04 shall not apply with respect to expenses
incurred by the parties in connection with any action for breach of this
Agreement or the WCD Agreement.
Section 9.05 . Captions. The captions of the Sections and
Articles of this Agreement are solely for convenient reference and shall not
be deemed to affect the meaning or interpretation of any paragraph hereof.
Section 9.06 . Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if served personally on the party
to whom notice is to be given, or on the date of receipt by the party to whom
notice is to be given if transmitted to such party by telefax, provided a copy
is mailed as set forth below on date of transmission, or on the third day
after mailing if mailed to the party to whom notice is to be given by
registered or certified mail, return receipt requested, postage prepaid, to
the following addresses:
If to Buyer, to:
Crossmann Communities Partnership
9210 North Meridian Street
Indianapolis, Indiana 46260
Attn: John B. Scheumann
Fax: (317) 571-2210
If to the Sellers, to:
865 West Carmel Drive, Suite 114
Carmel, Indiana 46032
Attn: James D. McKenzie
Fax: (317) 574-7601
Any party may change its address for purposes of this Section 9.06 by giving
the other parties written notice of the new address in the manner set forth
above.
Section 9.07 . Entire Agreement. This Agreement and the
agreements referenced in Articles V and VI contain the entire understanding of
the parties hereto with respect to the subject matter hereof. There are no
representations, promises, warranties, covenants or undertakings other than
those expressly set forth or provided for in this Agreement or in the
agreements expressly contemplated hereby. This Agreement and the agreements
expressly contemplated hereby supersede all prior agreements and
understandings between the parties with respect to the transactions
contemplated by this Agreement. No provision of this Agreement may be amended
or waived except in writing and no such amendment shall extend to anything
other than the specific subject matter thereof.
Section 9.08 . Governing Law. This Agreement and all
transactions contemplated hereby shall be governed, construed and enforced in
accordance with the Laws of the State of Indiana, and shall be treated in all
respects as a State of Indiana contract, without regard to any state's Laws
related to choice or conflict of laws.
Section 9.09 . Waiver of Compliance. The party for whose benefit
a warranty, representation, covenant or condition is intended may in writing
waive any inaccuracies in the warranties and representations contained in this
Agreement or waive compliance with any of the covenants or conditions
contained herein and so waive performance of any of the obligations of the
other party hereto, and any defaults hereunder; provided, however, that such
waiver must be in writing, and shall not affect or impair the waiving party's
rights with respect to any other warranty, representation or covenant or any
default hereunder, nor shall any waiver constitute a continuing waiver.
Section 9.10 . Validity of Provisions. Should any part of this
Agreement for any reason be declared by any court of competent jurisdiction to
be invalid, such decision shall not affect the validity of the remaining
portions of this Agreement, which remaining portions shall continue in full
force and effect as if this Agreement had been executed with the invalid
portion thereof eliminated therefrom, it being the intent of the parties that
they would have executed the remaining portions of this Agreement without
including any such part or portion which may for any reason be declared
invalid.
Section 9.11 . No Intention to Benefit Third Parties. The
provisions of this Agreement are not intended to, and shall not, benefit any
person other than the parties to this Agreement, the provisions hereof are not
intended to, and shall not create any third party beneficiary right in any
person.
Section 9.12 . Successors and Assigns. This Agreement shall be
binding on, and shall inure to the benefit of, the parties and their
respective successors and permitted assigns.
ARTICLE X.
DEFINITIONS
As used in this Agreement, the following terms have the meanings
indicated below:
"Affiliate" means any individual, corporation, partnership, joint
venture, association, limited liability company, joint-stock company, trust,
or unincorporated organization, that directly or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with a party.
"Encumbrances" means all liens, leases, mortgages, pledges, security
interests, conditional sales agreements, charges, claims, options, easements,
rights of way and other encumbrances of any kind or nature whatsoever.
"Governmental Entity" means any court, government agency, department,
commission, board, bureau or instrumentality of the United States, any local,
county, state or federal or political subdivision thereof, or any foreign
governmental body of any kind.
"Law" or "Laws" means any local, county, state, federal, foreign or other
law, statute, regulation, ordinance, rule, order, decree, judgment, consent
decree, settlement agreement or governmental requirement enacted, promulgated,
entered into, agreed or imposed by any Governmental Entity.
"Lien" means, with respect to any asset, mortgages, liens, claims,
charges, pledges, or other encumbrances of any nature whatsoever, including
without limitation licenses, leases, chattel or other mortgages, collateral
security arrangements, pledges, title imperfections, defect or objection
liens, security interests, conditional and installment sales agreements,
charges, easements, encroachments or restrictions, rights of third parties, or
any other interests of any kind or character whatsoever.
"Person" means any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust, or
unincorporated organization, or any governmental agency, officer, department,
commission, board, bureau, or instrumentality thereof.
"Returns" mean all returns, reports, information returns, and other
schedules, forms, exhibits, coupons or other documents (including all related
and supporting information) filed or required to be filed with any
Governmental Entity, in connection with the determination, assessment,
collection, or administration of any Taxes.
"Tax" or "Taxes" mean all federal, state, local and foreign taxes
(including excise taxes, value added taxes, occupancy taxes, employment taxes,
unemployment taxes, ad valorem taxes, customs duties, transfer taxes, and
fees), levies, imposts, fees, impositions, assessments and other governmental
charges of any nature imposed upon a Person, including all taxes and
governmental charges imposed upon any of the personal properties, real
properties, tangible or intangible assets, income, receipts, payrolls,
transactions, stock transfers, capital stock, net worth or franchises of a
Person (including all sales, use, withholding or other taxes which a Person is
required to collect and/or pay over to any government), and all related
additions to tax, penalties or interest thereon.
"Taxing Authority" means any domestic or foreign governmental authority
having responsibility for the imposition of any Tax.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the Effective Date.
"BUYER"
Crossmann Communities Partnership
By: _/s/ John B. Scheumann_______________
Printed:__John B. Scheumann______________
Chairman of the Board of Directors and
Chief Executive Officer,
Crossmann Communities, Inc.,
Its general partner
"SELLERS"
Trinity Homes, Inc.
By: /s/ James D. McKenzie
Printed:_James D. McKenzie
Its: _ President
Pyramid Mortgage Co., Inc.
By: /s/ Mark Thune
Printed:Mark Thune
Its: President
EXHIBIT 10.53
698646.4
MEMBERSHIP INTEREST PURCHASE AGREEMENT
THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (the "Agreement") is made and
entered into as of the 20th day of October, 2000 (the "Effective Date"), by
and among Crossmann Communities Partnership, an Indiana partnership ("Buyer"),
John E. McKenzie, James D. McKenzie, and Mark W. Thune (John E. McKenzie,
James D. McKenzie, and Mark W. Thune being hereinafter referred to,
collectively, as the "Sellers").
RECITALS:
WHEREAS, John E. McKenzie is the holder of 12.50 Class B Units in WCD
Associates, LLC, an Indiana limited liability company (the "Company"), James
D. McKenzie is the holder of 12.50 Class B Units in the Company, and Mark W.
Thune is the holder of 12.50 Class B Units in the Company, which collectively
represent 37.5% of the total issued and outstanding membership interests in
the Company (the units in the Company that are owned by each of the Sellers
being sometimes referred to herein, separately or together as applicable, as
the "Interests"); and
WHEREAS, Buyer, in reliance upon the representations, warranties and
covenants of the Sellers set forth in this Agreement, desires to purchase the
Interests from the Sellers, and the Sellers desire to sell, transfer and
convey the Interests to Buyer, all upon the terms and conditions set forth in
this Agreement;
NOW THEREFORE, in consideration of the covenants, representations,
warranties and mutual agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
ARTICLE I.
PURCHASE AND SALE OF INTERESTS
Section 1.01 . Purchase and Sale. Subject to the terms and
conditions set forth in this Agreement and on the basis of the
representations, warranties, covenants and agreements herein contained, at the
Closing, each of the Sellers shall sell, transfer, assign and deliver to
Buyer, all of its right, title and interest in and to its Interests, free and
clear of all Liens, Encumbrances and adverse claims, and Buyer agrees to
purchase, acquire and accept from the Sellers, the Interests.
Section 1.02 . Purchase Price. The total purchase price (the
"Purchase Price") to be paid by Buyer to the Sellers for the Interests shall
be an aggregate amount equal to One Hundred and Fifty Thousand Dollars
($150,000), which shall be payable in cash at Closing pursuant to wire
transfer instructions provided by the Sellers to Buyer at least two (2)
business days prior to Closing.
--
ARTICLE II.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLERS
As a material inducement to Buyer to enter into this Agreement and all
other agreements and documents executed by Buyer in connection with this
Agreement and to consummate the transactions contemplated by this Agreement
and such related agreements, each of the Sellers hereby jointly and severally
represents, warrants and covenants to Buyer as follows:
Section 2.01 . Title to Interests. Each Seller is the sole
owner, of record and beneficially, and is transferring and delivering to Buyer
at the Closing, good and valid title to its Interests, free and clear of any
and all Liens, Encumbrances and adverse claims.
Section 2.02 . Authority; Power; No Violation. Each Seller has
the full capacity, right, power and authority to enter into, execute and
deliver this Agreement and any and all related agreements, to consummate the
transactions contemplated by this Agreement and any and all related
agreements, and to comply with and fulfill the terms and conditions of this
Agreement and any and all related agreements. This Agreement and all related
agreements each constitute a valid and binding obligation of each Seller,
enforceable in accordance with its respective terms and conditions. Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby, nor compliance by any Seller with any of the
provisions of this Agreement will:
(a) conflict with, violate, result in a breach of, constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or give rise to any right of termination, cancellation, or
acceleration under any of the terms, conditions or provisions of any note,
Lien, bond, mortgage, indenture, license, lease, contract, commitment,
agreement, understanding, arrangement, restriction or other instrument or
obligation, or any judgment, court order, or decree, to which any Seller is a
party or by which any Seller or any of their respective properties or assets
may be bound;
(b) violate any Law applicable to any Seller or any properties or assets
of any Seller; or
(c) constitute an event which, with or without notice, lapse of time, or
action by a third party, could result in the creation of any Lien upon any of
the Interests or any properties or assets of any Seller or cause the maturity
of any liability, obligation or debt of any Seller to be accelerated or
increased.
Section 2.03 . Consents and Approvals. The execution, delivery,
and performance of this Agreement and any related agreements by each Seller
and the consummation by each Seller of the transactions contemplated hereby or
thereby will not require any notice to, or consent, authorization or approval
from, any Governmental Entity or any other third party other than Michael G.
Browning and William Olsen.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF BUYER
As a material inducement to the Sellers to enter into this Agreement and
any related agreements and documents and to consummate the transactions
contemplated by this Agreement and any related agreements, Buyer represents
and warrants to the Sellers as follows:
Section 3.01 . Authority; Consent. The execution and delivery of
this Agreement and all related agreements by Buyer and the consummation by
Buyer of the transactions contemplated hereby or thereby has been duly and
validly authorized by all necessary corporate action by Buyer. Buyer has the
full capacity, right, power and authority to enter into, execute and deliver
this Agreement and any and all related agreements, to consummate the
transactions contemplated by this Agreement and any and all related
agreements, and to comply with and fulfill the terms and conditions of this
Agreement and any and all related agreements. This Agreement and all related
agreements each constitutes a valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its respective terms and
conditions. Neither the execution and delivery of this Agreement or any
related agreement, nor the consummation of the transactions contemplated
hereby or thereby, nor compliance by Buyer with any of the provisions of this
Agreement or any related agreement will:
(a) conflict with, violate, result in a breach of, constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or give rise to any right of termination, cancellation, or
acceleration under any provision of Buyer's Articles of Incorporation or
Bylaws or under any of the terms, conditions or provisions of any note, Lien,
bond, mortgage, indenture, license, lease, contract, commitment, agreement,
understanding, arrangement, restriction or other instrument or obligation, or
any judgment, court order or decree, to which either Buyer is a party or by
which either Buyer or any of its respective properties or assets may be bound;
(b) violate any Law applicable to Buyer or any properties or assets of
Buyer; or
(c) constitute an event which, with or without notice, lapse of time, or
action by a third party, could result in the creation of any Lien, upon any of
the assets or properties of Buyer, or cause the maturity of any liability,
obligation, or debt of Buyer to be accelerated or increased.
Section 3.02 . Consents and Approvals. The execution and delivery
of this Agreement and any related agreements by Buyer and the consummation by
Buyer of the transactions contemplated hereby or thereby will not require any
notice to, or consent, authorization, or approval from any Governmental Entity
or any other third party.
ARTICLE IV.
THE CLOSING
Section 4.01 . Closing. The closing of the purchase and sale of the
Interests (the "Closing") shall take place on October 20, 2000, or as soon
thereafter as all conditions specified in Articles V and VI have been
satisfied or waived (the "Closing Date"), at the offices of Ice Miller, 34th
Floor, One American Square, Indianapolis, Indiana, or at such other place as
agreed upon by the parties.
ARTICLE V.
CONDITIONS TO THE SELLERS' OBLIGATION TO CLOSE
The obligation of the Sellers to sell the Interests and otherwise to
consummate the transactions contemplated by this Agreement at the Closing is
subject to the following conditions precedent, any or all of which may be
waived by the Sellers in their sole discretion:
Section 5.01 . Delivery. The Sellers shall have received the
Purchase Price.
Section 5.02 . No Litigation. No action, suit, proceeding, writ,
judgment, injunction, decree or similar order of any Governmental Entity
restraining, enjoining or otherwise preventing the consummation of any of the
transactions contemplated by this Agreement, or seeking any Indemnity Loss (as
defined in Section 8.01 below) or seeking to obtain any other relief as a
result of this Agreement or any of the transactions contemplated hereby shall
be pending or threatened.
Section 5.03 . Approvals. All orders, consents, permits,
governmental filings, authorizations and approvals (if any) that are required
for the consummation by the Sellers of the transactions contemplated hereby
shall have been duly made and obtained in form and substance reasonably
satisfactory to the Sellers and their counsel.
ARTICLE VI.
CONDITIONS TO BUYER'S OBLIGATION TO CLOSE
The obligation of Buyer to purchase the Interests and otherwise to
consummate the transactions contemplated by this Agreement at the Closing is
subject to the following conditions precedent, any or all of which may be
waived by Buyer in its sole discretion:
Section 6.01 . Deliveries. Buyer shall have received:
(a) membership interest transfer powers duly executed by each Seller,
authorizing the manager of the Company, as their attorney, to transfer the
Interests to Buyer on the books of the Company;
(b) all Permits and all consents of other third parties that may
reasonably be required in connection with the execution of this Agreement or
the effectuation of the transaction contemplated herein shall have been duly
obtained and shall be in full force and effect on the Closing;
(c) a Certificate of Existence for the Company, issued by the Secretary of
State of the State of Indiana and all other states in which the Company is
qualified to do business, dated as of the most recent practicable date prior
to the Closing;
(d) the written consent in all respects of William Olsen and Michael G.
Browning to the transfer of the Interests to Buyer, which consent shall be in
a form acceptable to Buyer; and
(e) such further certificates, instruments and other documents requested
by Buyer as may be reasonably required to effectively carry out the intent of
this Agreement.
Section 6.02 No action, suit, proceeding, writ, judgment,
injunction, decree or similar order of any Governmental Entity restraining,
enjoining or otherwise preventing the consummation of any of the transactions
contemplated by this Agreement, or seeking any Indemnity Loss (as defined in
Section 8.01 below) or seeking to obtain any other relief as a result of this
Agreement or any of the transactions contemplated hereby shall be pending or
threatened.
Section 6.03 . Approvals. All orders, consents, permits,
governmental filings, authorizations and approvals (if any) that are required
for the consummation by Buyer of the transactions contemplated hereby will
have been duly made and obtained in form and substance reasonably satisfactory
to Buyer and Buyer's counsel.
ARTICLE VII.
TAX MATTERS
Section 7.01 . Cooperation. The parties shall cooperate, and shall
cause their respective directors, officers, employees, agents, accountants and
representatives to cooperate, in preparing and filing all Returns
(including amended Returns and claims for refund), in handling audits,
examinations, investigations, and administrative, court or other proceedings
relating to Taxes attributable to the operations of the Company, in resolving
all disputes, audits and refund claims with respect to such Returns and Taxes,
and any earlier Returns and Taxes, and in all other Tax matters to which this
Agreement relates, in each case including making employees available to assist
the requesting party, timely providing information reasonably requested, and
maintaining and making available to each other all records necessary in
connection therewith. Any information obtained by a party or its Affiliates
from another party or its Affiliates in connection with any Tax matters to
which this Agreement relates shall be kept confidential, except (a) as may be
otherwise necessary in connection with the filing of Returns or claims for
refund or in conducting an audit or other proceeding relating to Taxes or as
may be otherwise reasonably required by applicable Law, or (b) for any
external disclosure in audited financial statements or regulatory filings
which a party reasonably believes is required by applicable Law.
Section 7.02 . Tax Distributions. In the event that Buyer receives
any tax distributions from the Company after the Effective Date, which tax
distributions are made in whole or in part with respect to periods prior to
the Effective Date, Buyer shall remit to the Sellers their proportionate share
of any such distributions relating to periods prior to the Effective Date.
ARTICLE VIII.
INDEMNIFICATION
Section 8.01 . Indemnification by Sellers. The Sellers shall jointly
and severally indemnify, defend, and hold the Company and Buyer harmless
from and against any and all demands, claims, actions, or causes of action,
suits, proceedings, audits, assessments, losses, settlements, penalties,
forfeitures, expenses, judgments, damages and liabilities (collectively, an
"Indemnity Loss") asserted against, suffered, incurred, sustained or required
to be paid by Buyer or the Company arising out of, relating to, or as a direct
or proximate result of any misrepresentation in or breach of any
representation or warranty of any Seller contained in this Agreement or any
breach or failure of any Seller to perform any of its covenants or obligations
contained in this Agreement or any related agreement, certificate or other
instrument or document furnished or required to be furnished by any Seller
pursuant to this Agreement or in connection with the transaction contemplated
by this Agreement.
Section 8.02 . Indemnification by Buyer. Buyer agrees to
indemnify, defend, and hold the Sellers harmless from and against any and all
Indemnity Losses asserted against, suffered, incurred, sustained or required
to be paid by any Seller arising out of, relating to, or as a direct or
proximate result of any misrepresentation in or breach of any representation
or warranty of Buyer contained in this Agreement or any breach or failure of
Buyer to perform any covenant or obligation of Buyer contained in this
Agreement, or any related agreement, certificate or other instrument or
document furnished or required to be furnished by Buyer pursuant to this
Agreement or in connection with the transaction contemplated by this
Agreement.
Section 8.03 . Notice. If an indemnified party (the "Claimant")
believes that it has suffered or incurred any Indemnity Loss, it shall so
notify the party which the Claimant believes has an obligation to indemnify
(the "Indemnifying Party") promptly in writing describing such loss or
expense, the amount thereof, if known, and the method of computation of such
loss or expense, all with reasonable particularity. The parties hereby
acknowledge and agree that the failure of the Indemnifying Party to respond in
writing either accepting or denying the claim contained in the notice of
Indemnity Loss provided by the Claimant within thirty (30) days after receipt
of said notice constitutes an express acknowledgment of the Indemnifying
Party's obligation to indemnify the Claimant for the amount of the Indemnity
Loss claimed in such notice.
Section 8.04 . Defense of Claims. If any action at law, suit in
equity, or administrative action is instituted by or against a third party
with respect to which the Claimant intends to claim any liability or expense
as an Indemnity Loss under this Article VIII, it shall promptly notify the
Indemnifying Party in writing of such action or suit, describing such loss or
expenses, the amount thereof, if known, and the method of computation of such
loss or expense, all with reasonable particularity. The Indemnifying Party
shall have thirty (30) business days after receipt of such notice to notify
the Claimant that it elects to conduct and control any legal or administrative
action or suit with respect to an indemnifiable claim. Until the Indemnifying
Party gives the foregoing notice, the Claimant shall have the right to defend,
contest, settle, or compromise such action or suit in the exercise of its
exclusive discretion. If the Indemnifying Party gives the foregoing notice,
the Indemnifying Party shall have the right to undertake, conduct, and
control, through counsel of its own choosing and at its sole expense, the
conduct and settlement of such action or suit, and the Claimant shall
cooperate with the Indemnifying Party in connection therewith; provided,
however, that (a) the Indemnifying Party shall not thereby consent to the
imposition of any injunction against the Claimant without the written consent
of the Claimant; (b) the Indemnifying Party shall permit the Claimant to
participate in such conduct or settlement through counsel chosen by the
Claimant, but the fees and expenses of such counsel shall be borne by the
Claimant except as provided in clause (c) below; and (c) upon a final
determination of such action or suit, the Indemnifying Party shall promptly
reimburse the Claimant, to the extent required under this Article VIII, for
the full amount of any Indemnity Loss resulting from such action or suit and
all reasonable expenses related to such Indemnity Loss incurred by the
Claimant, except fees and expenses of counsel for the Claimant incurred after
the assumption of the conduct and control of such action or suit by the
Indemnifying Party. So long as the Indemnifying Party is contesting any such
action or suit in good faith, the Claimant shall not pay or settle any such
action or suit. Notwithstanding the foregoing, pending any resolution of a
dispute by any Seller of its liability with respect to any claim or demand
whether as a Claimant or an Indemnifying Party, such claim or demand shall not
be settled without the prior written consent of Buyer. The Indemnifying Party
shall be entitled to contest the issue of its obligations of indemnification
hereunder, provided that the Indemnifying Party complies with the provisions
hereof.
Section 8.05 . Computation of Indemnity Losses. The amount of
Indemnity Losses hereunder shall be computed after giving effect to receipt of
any and all insurance proceeds with respect thereto.
Section 8.06 . Payment of Losses. The Indemnifying Party shall
pay to the Claimant in cash the amount to which the Claimant may become
entitled by reason of the provisions of Article VII or this Article VIII, such
payment to be made within ninety (90) days after such amount is finally
determined either by mutual agreement of the parties or pursuant to the final
unappealable judgment of a court of competent jurisdiction, or upon such
earlier time as is mutually agreed by Claimant and Indemnifying Party.
ARTICLE IX.
MISCELLANEOUS
Section 9.01 . Survival of Representations and Warranties. All
representations and warranties contained in this Agreement shall survive the
execution, delivery and performance hereof, notwithstanding any investigations
conducted at any time with respect thereto.
Section 9.02 . Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
Section 9.03 . Best Efforts; Cooperation. Subject to the terms
and conditions of this Agreement, each party will use its commercially
reasonable best efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary or desirable under applicable Laws
and regulations to consummate the transactions contemplated by this Agreement.
The parties each agree to execute and deliver such other documents,
certificates, agreements and other writings and to take such other actions as
may be necessary or desirable in order to consummate or implement
expeditiously the transactions contemplated by this Agreement, and from time
to time, upon the request of any party to this Agreement and without further
consideration, to execute, acknowledge and deliver in proper form any further
instruments, and take such other action as the other party may reasonably
require, in order to effectively carry out the intent of this Agreement.
Section 9.04 . Expenses. Buyer and the Sellers shall each bear
their own legal, accounting and out-of-pocket costs, expenses and fees in
connection with the preparation and closing of this Agreement and the
negotiation and consummation of the transaction contemplated herein. The
provisions of this Section 9.04 shall not apply with respect to expenses
incurred by the parties in connection with any action for breach of this
Agreement.
Section 9.05 . Captions. The captions of the Sections and
Articles of this Agreement are solely for convenient reference and shall not
be deemed to affect the meaning or interpretation of any paragraph hereof.
Section 9.06 . Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if served personally on the party
to whom notice is to be given, or on the date of receipt by the party to whom
notice is to be given if transmitted to such party by telefax, provided a copy
is mailed as set forth below on date of transmission, or on the third day
after mailing if mailed to the party to whom notice is to be given by
registered or certified mail, return receipt requested, postage prepaid, to
the following addresses:
If to Buyer, to:
Crosssmann Communities Partnership
9210 North Meridian Street
Indianapolis, Indiana 46260
Attn: John B. Scheumann
Fax: (317) 571-2210
If to the Sellers, to:
865 West Carmel Drive, Suite 114
Carmel, Indiana 46032
Attn: James D. McKenzie
Fax: (317) 574-7601
Any party may change its address for purposes of this Section 9.06 by giving
the other parties written notice of the new address in the manner set forth
above.
Section 9.07 . Entire Agreement. This Agreement and the
agreements referenced in Articles V and VI contain the entire understanding of
the parties hereto with respect to the subject matter hereof. There are no
representations, promises, warranties, covenants or undertakings other than
those expressly set forth or provided for in this Agreement or in the
agreements expressly contemplated hereby. This Agreement and the agreements
expressly contemplated hereby supersede all prior agreements and
understandings between the parties with respect to the transactions
contemplated by this Agreement. No provision of this Agreement may be amended
or waived except in writing and no such amendment shall extend to anything
other than the specific subject matter thereof.
Section 9.08 . Governing Law. This Agreement and all
transactions contemplated hereby shall be governed, construed and enforced in
accordance with the Laws of the State of Indiana, and shall be treated in all
respects as a State of Indiana contract, without regard to any state's Laws
related to choice or conflict of laws.
Section 9.09 . Waiver of Compliance. The party for whose benefit
a warranty, representation, covenant or condition is intended may in writing
waive any inaccuracies in the warranties and representations contained in this
Agreement or waive compliance with any of the covenants or conditions
contained herein and so waive performance of any of the obligations of the
other party hereto, and any defaults hereunder; provided, however, that such
waiver must be in writing, and shall not affect or impair the waiving party's
rights with respect to any other warranty, representation or covenant or any
default hereunder, nor shall any waiver constitute a continuing waiver.
Section 9.10 . Validity of Provisions. Should any part of this
Agreement for any reason be declared by any court of competent jurisdiction to
be invalid, such decision shall not affect the validity of the remaining
portions of this Agreement, which remaining portions shall continue in full
force and effect as if this Agreement had been executed with the invalid
portion thereof eliminated therefrom, it being the intent of the parties that
they would have executed the remaining portions of this Agreement without
including any such part or portion which may for any reason be declared
invalid.
Section 9.11 . No Intention to Benefit Third Parties. The
provisions of this Agreement are not intended to, and shall not, benefit any
person other than the parties to this Agreement, the provisions hereof are not
intended to, and shall not create any third party beneficiary right in any
person.
Section 9.12 . Successors and Assigns. This Agreement shall be
binding on, and shall inure to the benefit of, the parties and their
respective successors and permitted assigns.
ARTICLE X.
DEFINITIONS
As used in this Agreement, the following terms have the meanings
indicated below:
"Affiliate" means any individual, corporation, partnership, joint
venture, association, limited liability company, joint-stock company, trust,
or unincorporated organization, that directly or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with a party.
"Encumbrances" means all liens, leases, mortgages, pledges, security
interests, conditional sales agreements, charges, claims, options, easements,
rights of way and other encumbrances of any kind or nature whatsoever.
"Governmental Entity" means any court, government agency, department,
commission, board, bureau or instrumentality of the United States, any local,
county, state or federal or political subdivision thereof, or any foreign
governmental body of any kind.
"Law" or "Laws" means any local, county, state, federal, foreign or other
law, statute, regulation, ordinance, rule, order, decree, judgment, consent
decree, settlement agreement or governmental requirement enacted, promulgated,
entered into, agreed or imposed by any Governmental Entity.
"Lien" means, with respect to any asset, mortgages, liens, claims,
charges, pledges, or other encumbrances of any nature whatsoever, including
without limitation licenses, leases, chattel or other mortgages, collateral
security arrangements, pledges, title imperfections, defect or objection
liens, security interests, conditional and installment sales agreements,
charges, easements, encroachments or restrictions, rights of third parties, or
any other interests of any kind or character whatsoever.
"Person" means any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust, or
unincorporated organization, or any governmental agency, officer, department,
commission, board, bureau, or instrumentality thereof.
"Returns" mean all returns, reports, information returns, and other
schedules, forms, exhibits, coupons or other documents (including all related
and supporting information) filed or required to be filed with any
Governmental Entity, in connection with the determination, assessment,
collection, or administration of any Taxes.
"Tax" or "Taxes" mean all federal, state, local and foreign taxes
(including excise taxes, value added taxes, occupancy taxes, employment taxes,
unemployment taxes, ad valorem taxes, customs duties, transfer taxes, and
fees), levies, imposts, fees, impositions, assessments and other governmental
charges of any nature imposed upon a Person, including all taxes and
governmental charges imposed upon any of the personal properties, real
properties, tangible or intangible assets, income, receipts, payrolls,
transactions, stock transfers, capital stock, net worth or franchises of a
Person (including all sales, use, withholding or other taxes which a Person is
required to collect and/or pay over to any government), and all related
additions to tax, penalties or interest thereon.
"Taxing Authority" means any domestic or foreign governmental authority
having responsibility for the imposition of any Tax.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the Effective Date.
"BUYER"
Crossmann Communities Partnership
By: _/s/ John B. Scheumann
Printed:_John B. Schuemann
Chairman of the Board of Directors and
Chief Executive Officer,
Crossmann Communities, Inc.,
Its general partner
"SELLERS"
/s/ James D. McKenzie
James D. McKenzie
/s/ John E. Mckinzie
John E. McKenzie
/s/ Mark W. Thune
Mark W. Thune
Exhibit 10.54
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement ("Agreement") is made and entered
into as of the 20th day of October, 2000 (the "Effective Date"), by and among
Trinity Homes, LLC, an Indiana limited liability company (the "Company"),
Crossmann Communities, Inc., an Indiana corporation ("Crossmann") and John E.
McKenzie (the "Executive").
PRELIMINARY STATEMENTS
The Company and Crossmann (referred to, together, herein as the
"Employers") have determined that it is in their best interests to employ the
Executive as a Vice President of the Company, and the Executive desires to
accept such position and to devote his loyalty to the Employers upon the terms
and conditions set forth in this Agreement.
TERMS AND CONDITIONS
In consideration of the mutual promises and covenants contained in this
Agreement, and intending to be legally bound, the parties hereto agree as
follows:
(ix abEmployment and Duties
(ix abGeneral. The Employers hereby employ the Executive, and the
Executive hereby agrees to serve the Employers, in the capacity of Vice
President of the Company and to perform the executive and management duties
that the Board of Directors of the Company and/or the Board of Directors of
Crossmann (the "Boards") shall reasonably assign to the Executive from time to
time.
(ix abEmployment Duties Throughout the Employment Term, as defined in
Section 2, the Executive shall: (i) devote his working hours, on a full-time
basis, to his duties under this Agreement; (ii) faithfully and loyally serve
the Employers; (iii) comply in all respects with the lawful and reasonable
directions and instructions given to him by the Boards; and (iv) use his best
efforts to promote and serve the interests of the Employers. In the event the
directions and instructions given to the Executive by the Boards conflict in
any manner, the directions and instructions given by the Board of Directors of
Crossmann shall be deemed controlling; full compliance with the express
directions and instructions of the Board of Directors of Crossmann shall be
deemed a defense to any claim of failure to comply with the directions and
instructions of the Board of Directors of the Company.
(ix abExclusive Employment Throughout the Employment Term, as defined in
Section 2, the Executive shall not render his services, directly or
indirectly, for compensation, to any other person or organization without the
prior written consent of the Employers and shall not engage in any activity
which would significantly interfere with the faithful performance of his
duties under this Agreement. The Executive, however, may perform minor
services for which he does not receive compensation, so long as such services
do not significantly interfere with the faithful performance of his duties
under this Agreement or violate the Noncompetition Agreement (as defined
herein).
(ix abLocation of Employment. The Executive hereby agrees to perform
services for the Employers in Indianapolis, Indiana and the vicinity thereof,
and the Employers shall not relocate the Executive out of Indianapolis,
Indiana or the vicinity thereof without the Executive's consent; provided,
however, that the Executive shall travel from time to time to other
geographical areas of the United States as necessary or appropriate in
connection with the performance of this employment duties under this
Agreement.
(ix abEmployment Term. The Executive's employment hereunder shall commence
on the Effective Date, and shall continue until October 20, 2003 (the "Initial
Term"); provided, however, that upon the expiration of the Initial Term, the
Employment Term shall automatically be extended for consecutive, additional
periods of one (1) year thereafter (each such one year period being referred
to herein as a "Renewal Term"), unless the Employers or the Executive shall
have given written notice to the other, at least thirty (30) days prior to the
expiration of the Initial Term, or at least thirty (30) days prior to the
expiration of the then-current Renewal Term if applicable, that the Employment
Term will expire on the last day of the Initial Term or the then-current
Renewal Term (as applicable). Notwithstanding the foregoing, the Executive's
employment hereunder shall be subject to resignation or termination in
accordance with the provisions of Section 4 hereof. As used in this
Agreement, the term "Expiration Date" shall mean (a) October 20, 2003, if
either party elects as provided above not to extend the Initial Term for any
Renewal Terms; (b) October 20 of the then-current Renewal Term, if either
party elects as provided above not to extend the then-current Renewal Term for
any additional Renewal Terms; and (c) October 20 of the Renewal Term that
immediately follows the Initial Term or the then-current Renewal Term (as
applicable) (the "Succeeding Renewal Term"), if the Employment Term has been
automatically extended for that Succeeding Renewal Term as described above.
The term "Employment Term" shall mean the period beginning on the date hereof
and ending on the earlier of the Expiration Date, the Termination Date (as
defined in Section 4 hereof), the Resignation Date (as defined in Section 4
hereof), or other date the Executive ceases to be employed by the Employers in
accordance with Section 4 hereof.
(ix abCompensation and Other Benefits. The Company or Crossmann, as
applicable, shall pay and provide the following compensation and other
benefits to the Executive for the services rendered by him under this
Agreement:
(ix abAnnual Base Salary. The Company shall pay to the Executive, in
accordance with the then prevailing payroll practices of the Company, an
annual salary of One Hundred Twenty-five Thousand Dollars and No/100
($125,000) (the "Annual Base Salary"), subject to required withholdings under
Federal, state, and local laws. The Company's obligations with respect to
payment of the Annual Base Salary shall not be effective until the Employment
Term has commenced, and the Annual Base Salary shall be pro-rated for the
calendar year 2000.
(ix abBonus. Commencing during calendar year 2001, the Executive shall be
eligible to receive an annual bonus in an amount of up to one hundred percent
(100%) of the Executive's Annual Base Salary based upon achievement of certain
operating goals established by the Employers, which shall be consistent with
those established for other employees of the Crossmann Group who are similarly
situated as the Executive, and based upon the overall performance of the
Crossmann Group.
(ix abExecutive Benefits. Except as otherwise specifically provided in
this Agreement, the Executive shall be eligible to participate, in accordance
with their respective terms and conditions, in all benefit plans presently
available or which may subsequently be made available to executives of the
Employers, including Crossmann's health care, basic life insurance,
supplemental life insurance coverage, disability coverage, business travel
accident insurance and any pension or retirement plan of any kind.
(ix abVacation Leave. The Executive shall be entitled to that number of
days of vacation leave per year that is provided to other executives of the
Employers with levels of responsibility similar to that of the Executive. The
Executive shall accrue and receive full compensation and benefits during his
vacation leave periods. Unused vacation leave time shall not carry over from
one year of the Employment Term to the next and unused vacation leave time
shall not entitle the Executive to any additional compensation.
(ix abAutomobile. The Employers shall provide the Executive with a leased
automobile during the Employment Term; provided, that the Employers' total
monthly lease payments toward the automobile shall not exceed Six Hundred
Fifty Dollars ($650.00) per month. The Employers shall reimburse the
Executive for all reasonable expenses associated with the automobile,
including gasoline and normal repair expenses, incurred by the Executive in
conducting the Employers' business, in accordance with the policies of
Crossmann.
(ix abBusiness Expenses. The Employers shall reimburse the Executive for
all reasonable business expenses incurred by the Executive in conducting the
Employers' business in accordance with the policies of Crossmann.
(ix abTermination of Employment
(ix abTermination for Cause
(ix abThe Employers may terminate the Executive's employment with the
Employers pursuant to this Agreement for Cause, as defined herein, by
providing written notice to the Executive at least twenty-four (24) hours
prior to the Termination Date, as defined in subsection (iii) below.
(ix abA termination for "Cause" means a termination by one of the Boards
for any one or more of the following reasons: (a) theft, fraud, embezzlement,
dishonest or other similar behavior by the Executive; (b) any material breach
by the Executive of the terms of this Agreement, or the Purchase Agreement or
any breach by the Executive of the terms of the Nondisclosure, Noncompetition
and Nonsolicitation Agreement dated of even date herewith executed by the
Executive (the "Noncompetition Agreement"); (c) any material neglect of duty,
incompetence, insubordination or misconduct of the Executive in discharging
any of his duties and responsibilities hereunder; (d) any act of theft or
dishonesty by the Executive or any criminal conviction or indictment of the
Executive; (e) any occurrence of the Executive reporting to work under the
influence of alcohol or illegal drugs, or the Executive being under the
influence of alcohol or illegal drugs during working hours; (f) any failure or
refusal by the Executive to comply with the policies, rules or regulations of
the Employers whether now in force or hereafter adopted; (g) any
misrepresentation or concealment by the Executive of any material fact for the
purpose of securing this Agreement; or (h) any other material act of
misconduct within the control of the Executive.
(ix abIn the case of a termination for Cause, the term "Termination Date"
as used in this subsection (a) shall mean the actual date the Executive
terminates employment with the Employers as a result of action taken by one of
the Boards, and not as a result of the Executive's resignation, as provided in
Section 4(b).
(ix abIf prior to the Expiration Date the Employers terminate the
Executive's employment for Cause, the Executive shall only be entitled to
payment of that portion of the Annual Base Salary under Section 3(a) that the
Executive earned through and including the Termination Date, at the rate of
the Annual Base Salary in effect or any portion of the year at that time.
(ix abResignation. The Executive may resign from his employment with the
Employers pursuant to this Agreement at any time by providing written notice
to the Boards of his resignation at least thirty (30) days prior to the
effective date of the resignation (the "Resignation Notice"). The effective
date of the Executive's resignation shall be that specified in the Resignation
Notice, or the actual date the Executive terminates employment with the
Employers as the result of a resignation, whichever occurs earlier (the
"Resignation Date"). If prior to the Expiration Date, the Executive resigns
his employment, and the resignation is other than for Good Reason (as
hereinafter defined), the Executive shall only be entitled to payment of that
portion of the Annual Base Salary under Section 3(a) that the Executive earned
through and including the Resignation Date, at the rate of the Annual Base
Salary in effect at that time. If prior to the Expiration Date, the Executive
resigns his employment for Good Reason, the Executive shall be entitled to
those payments and other benefits that are described in Section 4(f) below.
(ix abTermination Without Cause. The Employers may, in their sole
discretion, terminate the Executive's employment with the Employers pursuant
to this Agreement at any time without Cause, by providing written notice to
the Executive at least twenty-four (24) hours prior to the Termination Date,
as defined in this subsection (c). If, prior to the occurrence of a Change of
Control (as hereinafter defined) of Crossmann, the Employers terminate the
Executive's employment without Cause, the Company shall be obligated to
continue to pay to him that portion of the Annual Base Salary that would
otherwise have been payable for the period beginning on the Termination Date
and ending on the first to occur of (i) the Expiration Date or (ii) the first
anniversary of the Termination Date (the "Severance Payments"). Such payments
shall be made as and when the same would have been due and payable if the
Executive's employment had continued through such date, subject to the
provisions of Sections 4(d) and 4(e). If the Employers terminate the
Executive's employment without Cause prior to a Change of Control of
Crossmann, the Executive shall not be entitled to any Bonus payments for any
periods after the Termination Date. As a condition precedent to receiving the
Severance Payments, the Executive shall sign a release of all claims the
Executive has or may have against the Employers in form and substance
submitted to the Executive by the Employers. The term "Termination Date" as
used in this subsection (c) shall mean the actual date the Executive
terminates employment with the Employers as a result of action taken by one of
the Employers, and not as a result of the Executive's resignation as provided
in Section 4(b). Except as provided in this subsection (c) or in subsection
(f), the Executive shall not be eligible to receive any compensation or
benefits under this Agreement with respect to any future periods beginning on
or after the Termination Date.
(ix abDeath. If the Executive dies prior to the Expiration Date, the
Executive's estate or personal representative shall be entitled to receive
that portion of the Annual Base Salary, at the rate in effect at the
Executive's death, that portion of the Bonus attributable to the period prior
to the date of the Executive's death payable in accordance with the terms of
Section 3(b) hereof, and any other compensation or benefits that the Executive
earned through and including the date of the Executive's death. If the
Executive is entitled to receive payments from the Employers pursuant to
Section 4(c) at the time of his death, the Executive's estate or personal
representative shall be entitled to receive that portion of the Annual Base
Salary, at the rate in effect at the Executive's death, and any other
compensation or benefits, that the Executive would have been entitled to
receive under Section 4(c) through and including the date of the Executive's
death. The Executive's estate or personal representative shall not be
entitled to receive any portion of the Annual Base Salary or any other
compensation or benefits under this Agreement, with respect to any periods
ending on or after the date of the Executive's death, which was not payable in
accordance with the provisions hereof prior to the date of death.
(ix abDisability. If, prior to the Expiration Date, the Executive becomes
Permanently Disabled, as defined in this subsection (e), the Employers may
terminate the Executive's employment with the Employers as a result of the
Permanent Disability by providing written notice to the Executive at least
twenty-four (24) hours prior to the Termination Date, as defined in this
subsection (e). If prior to the Expiration Date the Executive becomes
Permanently Disabled, the Executive may resign from his employment with the
Employers pursuant to this Agreement by providing written notice to the
Employers of his resignation at least twenty-four (24) hours prior to the
Resignation Date, as defined in this subsection (e). If the Employers
terminate the Executive's employment as a result of a Permanent Disability or
the Executive resigns from employment with the Employers as a result of a
Permanent Disability, the Executive shall be entitled to receive that portion
of the Annual Base Salary under Section 3(a) that the Executive earned through
and including the Termination Date or Resignation Date, as applicable, at the
rate in effect on such date, and that portion of the Bonus attributable to the
period prior to the Termination Date or the Resignation Date, as applicable,
payable in accordance with the terms of Section 3(b) hereof. If the Executive
is entitled to receive payments from the Employers pursuant to Section 4(c) at
the time he becomes Permanently Disabled, the Executive shall be entitled to
receive the payments that the Executive would have been entitled to receive
under Section 4(c). The Executive shall not be entitled to receive any
portion of the Annual Base Salary or any other compensation or benefits under
this Agreement with respect to any future periods beginning on or after the
later of the Resignation Date, Termination Date, or the date the Executive
becomes Permanently Disabled. The Executive shall be deemed "Permanently
Disabled" when, and only when, he is deemed permanently disabled in accordance
with the disability insurance policy of the Employers in effect at the time of
the illness or injury causing the disability, or, in the event no disability
policy is then in effect, in accordance with the disability policy of the
Employers last in effect. The definition of Permanently Disabled for purposes
of this Agreement shall comply with all provisions of applicable law. The term
"Termination Date" as used in this subsection (e) shall mean the actual date
the Executive terminates employment with the Employers. The term "Resignation
Date" as used in this subsection (e) shall mean the actual date the Executive
terminates employment with the Employers as the result of a resignation.
(ix abTermination or Resignation after Change of Control. If, within
twelve (12) months immediately after the occurrence of a Change of Control of
Crossmann but prior to the Expiration Date, either the Executive's employment
shall be terminated by the Company without Cause or the Executive shall have
resigned from employment for Good Reason, the Company or Crossmann, as
applicable, shall provide the Executive with the following:
(ix abThe Company shall pay the Executive his full Annual Base Salary
prorated through the Termination Date or Resignation Date at the greater of
the rate in effect at the time the Change of Control of Crossmann occurs or at
the Termination Date/Resignation Date, plus any bonuses or incentive
compensation which pursuant to the terms of any compensation or benefit plan
have been earned or have become payable as of the Termination Date or
Resignation Date, but which have not yet been paid.
(ix abThe Company shall pay the Executive a lump sum cash payment as a
severance entitlement (the "Severance Entitlement") which, except as limited
by Section 4(f)(iv) hereunder, shall otherwise be equal to 2.99 times the
highest aggregate amount of Annual Base Salary, bonus and other cash
compensation paid by the Company to the Executive for any full calendar year
during which the Executive was employed by the Employers pursuant to the
Employment Agreement.
(ix abThe Employers shall continue to provide for the Executive and his
dependents, for a period of twelve (12) months following the Termination Date
or Resignation Date, life insurance, medical and hospitalization benefits
comparable to those provided by the Employers to the Executive and his
dependents immediately prior to the Change of Control of Crossmann, provided
that any coverage provided pursuant to this subsection (iii) shall terminate
to the extent that the Executive obtains comparable life insurance, medical or
hospitalization benefits coverage from any other employer during such twelve
(12) month period. The benefits provided under this subsection (iii) shall
not be materially less favorable to the Executive in terms of amounts,
deductibles and costs to him, if any, than such benefits provided by the
Employers to the Executive and his dependents as of the date of the Change of
Control of Crossmann. This subsection (iii) shall not be interpreted so as to
limit any benefits to which the Executive or his dependents may be entitled
under the Employer's life insurance, medical, hospitalization, dental or
disability plans following the Termination Date or Resignation Date and shall
be in addition to any COBRA rights under federal law.
(ix abNotwithstanding any other provision contained in this Agreement, if
the aggregate present value of all payments made or payable to the Executive,
whether pursuant to this Agreement or otherwise, that constitute "parachute
payments" within the meaning of Section 280G(b)(2)(A) of the Internal Revenue
Code of 1986, as amended (the "Code"), equals or exceeds three times the
Executive's "base amount" within the meaning of Section 280G of the Code, then
the amounts otherwise payable pursuant to the Agreement shall be reduced, but
not below zero, so that the aggregate present value of the Executive's
"parachute payments" does not exceed three times the Executive's benefits
under this Agreement. This reduction shall be implemented first by reducing
any non-cash benefits to the extent necessary and, second, by reducing any
cash benefits and the Severance Entitlement to the extent necessary. In each
case, the reduction shall be made starting with the latest payment or benefit.
All determinations as to what amounts paid or payable to the Executive
constitute "parachute payments" and the present value thereof shall be made in
accordance with Section 280G of the Code, and any rulings and regulations
promulgated under the Code, and shall be made within 30 days after the
Termination Date by the Company's independent auditors.
As a condition precedent to receiving the Severance Entitlement
or any of the other compensation described in this subsection (f), the
Executive shall sign a release of all claims the Executive has or may have
against the Employers in form and substance submitted to the Executive by the
Employers. The term "Termination Date" as used in this subsection (f) shall
mean the actual date the Executive terminates employment with the Employers as
a result of action taken by one of the Employers, and not as a result of the
Executive's resignation as provided in Section 4(b).
(ix abNondisclosure, Noncompetition and Nonsolicitation Agreement. On the
date hereof the Executive, Crossmann and the Company entered into the
Noncompetition Agreement. All of the terms and conditions of the
Noncompetition Agreement are incorporated herein by reference and any breach
of the Noncompetition Agreement shall be deemed to be a breach of this
Agreement.
(ix abNon-assignability; Binding Agreement
(ix abBy the Executive. The Executive shall not assign or delegate this
Agreement or any right, duty, obligation, or interest under this Agreement
without the Company's and Crossmann's prior written consent; provided,
however, that nothing shall preclude the Executive from designating
beneficiaries to receive benefits payable under this Agreement upon his death,
and nothing shall preclude the Executive's executors, administrators, or their
legal representatives, from assigning any rights under this Agreement to any
person.
(ix abBy the Company or Crossmann. This Agreement shall be binding on the
Company and Crossmann and any successor to all or substantially all of
Crossmann's or the Company's business or assets. Without limiting the prior
sentence, the Company and Crossmann will require any successor or assign
(whether direct or indirect, by purchase, consolidation, merger, or otherwise)
to all or substantially all of the business and/or assets of the Company or
Crossmann to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company or Crossmann would be required
to perform this Agreement if no such succession or assignment had occurred.
The Executive hereby agrees that the Company and/or Crossmann may assign,
delegate, or transfer this Agreement and all of their rights and obligations
under this Agreement to any of its affiliates or subsidiaries or to any
business entity that by purchase, merger, consolidation, or otherwise acquires
all or substantially all of the assets of the Company or Crossmann or to which
the Company or Crossmann transfers all or substantially all of its assets.
Upon assignment, delegation, or transfer, any such affiliate, subsidiary, or
business entity shall be deemed to be substituted for the Company and/or
Crossmann, as applicable, for all purposes of this Agreement.
(ix abBinding Effect. Except as limited under Sections 6(a) and 6(b), this
Agreement shall be binding upon and inure to the benefit of the parties, any
successors to or assigns of the Company and/or Crossmann, and the Executive's
heirs and the personal representatives or executor of the Executive's estate.
(ix abSeverability. If a court of competent jurisdiction makes a final
determination that any term or provision of this Agreement is invalid or
unenforceable, and all rights to appeal the determination have been exhausted
or the period of time during which any appeal of the determination may be
perfected has been exhausted, the remaining terms and provisions shall be
unimpaired and the invalid or unenforceable term or provision shall be deemed
replaced by a term or provision that is valid and enforceable and that most
closely approximates the intention of the parties with respect to the invalid
or unenforceable term or provision, as evidenced by the remaining valid and
enforceable terms and conditions of this Agreement.
(ix abAmendment. No provision of this Agreement may be modified, amended,
waived, or discharged in any manner except by an instrument in writing signed
by the Executive and on behalf of the Company and Crossmann by such officers
as may be specifically designated by the Boards. No agreement or
representation, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by any party which is not expressly set
forth in this Agreement.
(ix abWaiver. The waiver by any party of compliance by any other party
with any provision of this Agreement shall not operate or be construed as a
waiver of any other provision of this Agreement (whether or not similar), or a
continuing waiver or a waiver of any subsequent breach by a party of a
provision of this Agreement. Performance by any party of any act not required
of it under the terms and conditions of this Agreement shall not constitute a
waiver of the limitations on its obligations under this Agreement, and no
performance shall estop that party from asserting those limitations as to any
further or future performance of its obligations.
(ix abGoverning Law and Jurisdiction. The laws of the State of Indiana
shall govern the validity, performance, enforcement, interpretation and any
other aspect of this Agreement, notwithstanding any state's choice of law
provisions to the contrary.
(ix abNotices. All notices required or desired to be given under this
Agreement shall be in writing and shall be deemed to have been duly given (i)
on the date of service if served personally on the party to whom notice is to
be given, (ii) on the date of receipt by the party to whom notice is to be
given if transmitted to such party by telefax, provided a copy is mailed as
set forth below on the date of transmission, or (iii) on the third day after
mailing if mailed to the party to whom notice is to be given by registered or
certified mail, return receipt requested, postage prepaid, to the following
addresses:
(a) If to the Company or Crossmann, to:
Crossmann Communities, Inc.
9210 North Meridian St.
Indianapolis, IN 46260
Attn: John B. Scheumann
Tel. No.: (317) 843-9514
Fax: (317) 571-2210
<PAGE>
With a copy to:
Steven K. Humke, Esq.
ICE MILLER
One American Square
Box 82001
Indianapolis, Indiana 46282
Fax: (317) 592-4675
(b) If to the Executive, to:
865 West Carmel Drive, Suite 114
Carmel, Indiana 46032
Fax: (317) 574-7601
Any party may, by giving written notice to the other parties, change the
address to which notice shall then be sent.
(ix abPrior Agreements. This Agreement and the Noncompetition Agreement
are a complete and total integration of the understanding of the parties.
This Agreement and the Noncompetition Agreement supersede all prior or
contemporaneous negotiations, commitments, agreements, writings including
handbooks, and discussions with respect to the subject matter of this
Agreement and the Noncompetition Agreement.
(ix abHeadings. The headings of the Sections of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction of this Agreement.
(ix abCounterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same Agreement. Only one
counterpart signed by the party against which enforcement is sought needs to
be produced to evidence the existence of this Agreement.
(ix abMiscellaneous Definitions. For purposes of this Agreement:
--
(a) A "Change of Control" of Crossmann shall be deemed to occur (i)
when any person (as such term is used in Sections 13(e) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), other than
John Scheumann or Richard Crosser becomes the beneficial owner (as defined in
Rule 13d-3 promulgated under the Exchange Act) directly or indirectly of
securities of Crossmann representing 40% or more of the combined voting power
of Crossmann's then outstanding securities (assuming conversion of all
outstanding nonvoting securities into voting securities and the exercise of
all outstanding options or other convertible securities); or (ii) upon the
approval by Crossmann's shareholders of (A) a merger or consolidation of
Crossmann with or into another company (other than a merger or consolidation
in which Crossmann is the surviving corporation and which does not result in
any capital reorganization or reclassification or other change in the
ownership of Crossmann's then outstanding shares which would be deemed a
Change of Control pursuant to subsection(s) (i) or (ii) hereof), (B) a sale or
disposition of all or substantially all of Crossmann's assets other than to an
affiliate of Crossmann, or (C) a plan of liquidation or dissolution of
Crossmann.
--
(b) A termination for "Good Reason" shall mean the voluntary
cessation by the Executive of employment with the Employers, after a Change of
Control of Crossmann, which cessation occurs within ninety (90) days after (i)
the Executive's base salary was reduced to an amount less than the Executive's
base salary as of the date of this Agreement and/or (ii) the amount of the
targeted annual incentives available to the Executive (based on realization of
certain corporate and individual objectives) are materially decreased from the
amount of similar incentives available in prior years and/or (iii) the nature
and scope of the Executive's duties were materially reduced and/or (iv) a
significant adverse reduction or alteration in the scope or status of the
Executive's position, duties or responsibilities or the conditions of the
Executive's employment from those in effect immediately prior to such Change
of Control of Crossmann are effected, and/or (v) Crossmann fails to continue
this Agreement in effect or to obtain a satisfactory agreement from any
successor to assume and agree to perform this Agreement.
[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
The parties have executed this Agreement on the Effective Date.
"THE COMPANY"
TRINITY HOMES, LLC
By:/s/ John B. Scheumann
Title: Manager
"CROSSMANN"
CROSSMANN COMMUNITIES, INC.
By:/s/ John B. Scheumann
Title: Chief Executive Officer
"EXECUTIVE"
/s/ John E. McKenzie
John E. McKenzie
--
Exhibit 10.55
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement ("Agreement") is made and entered
into as of the 20th day of October, 2000 (the "Effective Date"), by and among
Trinity Homes, LLC, an Indiana limited liability company (the "Company"),
Crossmann Communities, Inc., an Indiana corporation ("Crossmann") and James D.
McKenzie (the "Executive").
PRELIMINARY STATEMENTS
The Company and Crossmann (referred to, together, herein as the
"Employers") have determined that it is in their best interests to employ the
Executive as President of the Company, and the Executive desires to accept
such position and to devote his loyalty to the Employers upon the terms and
conditions set forth in this Agreement.
TERMS AND CONDITIONS
In consideration of the mutual promises and covenants contained in this
Agreement, and intending to be legally bound, the parties hereto agree as
follows:
(ii abEmployment and Duties
(ii abGeneral. The Employers hereby employ the Executive, and the
Executive hereby agrees to serve the Employers, in the capacity of President
of the Company and to perform the executive and management duties that the
Board of Directors of the Company and/or the Board of Directors of Crossmann
(the "Boards") shall reasonably assign to the Executive from time to time.
(ii abEmployment Duties Throughout the Employment Term, as defined in
Section 2, the Executive shall: (i) devote his working hours, on a full-time
basis, to his duties under this Agreement; (ii) faithfully and loyally serve
the Employers; (iii) comply in all respects with the lawful and reasonable
directions and instructions given to him by the Boards; and (iv) use his best
efforts to promote and serve the interests of the Employers. In the event the
directions and instructions given to the Executive by the Boards conflict in
any manner, the directions and instructions given by the Board of Directors of
Crossmann shall be deemed controlling; full compliance with the express
directions and instructions of the Board of Directors of Crossmann shall be
deemed a defense to any claim of failure to comply with the directions and
instructions of the Board of Directors of the Company.
(ii abExclusive Employment Throughout the Employment Term, as defined in
Section 2, the Executive shall not render his services, directly or
indirectly, for compensation, to any other person or organization without the
prior written consent of the Employers and shall not engage in any activity
which would significantly interfere with the faithful performance of his
duties under this Agreement. The Executive, however, may perform minor
services for which he does not receive compensation, so long as such services
do not significantly interfere with the faithful performance of his duties
under this Agreement or violate the Noncompetition Agreement (as defined
herein).
(ii abLocation of Employment. The Executive hereby agrees to perform
services for the Employers in Indianapolis, Indiana and the vicinity thereof,
and the Employers shall not relocate the Executive out of Indianapolis,
Indiana or the vicinity thereof without the Executive's consent; provided,
however, that the Executive shall travel from time to time to other
geographical areas of the United States as necessary or appropriate in
connection with the performance of this employment duties under this
Agreement.
(ii abEmployment Term. The Executive's employment hereunder shall commence
on the Effective Date, and shall continue until October 20, 2003 (the "Initial
Term"); provided, however, that upon expiration of the Initial Term, the
Employment Term shall automatically be extended for consecutive, additional
periods of one (1) year thereafter (each such one year period being referred
to herein as a "Renewal Term"), unless the Employers or the Executive shall
have given written notice to the other, at least thirty (30) days prior to the
expiration of the Initial Term, or at least thirty (30) days prior to the
expiration of the then-current Renewal Term if applicable, that the Employment
Term will expire on the last day of the Initial Term or the then-current
Renewal Term (as applicable). Notwithstanding the foregoing, the Executive's
employment hereunder shall be subject to resignation or termination in
accordance with the provisions of Section 4 hereof. As used in this
Agreement, the term "Expiration Date" shall mean (a) October 20, 2003, if
either party elects as provided above not to extend the Initial Term for any
Renewal Terms; (b) October 20 of the then-current Renewal Term, if either
party elects as provided above not to extend the then-current Renewal Term for
any additional Renewal Terms; and (c) October 20 of the Renewal Term that
immediately follows the Initial Term or the then-current Renewal Term (as
applicable) (the "Succeeding Renewal Term"), if the Employment Term has been
automatically extended for that Succeeding Renewal Term as described above.
The term "Employment Term" shall mean the period beginning on the date hereof
and ending on the earlier of the Expiration Date, the Termination Date (as
defined in Section 4 hereof), the Resignation Date (as defined in Section 4
hereof), or other date the Executive ceases to be employed by the Employers in
accordance with Section 4 hereof.
(ii abCompensation and Other Benefits. The Company or Crossmann, as
applicable, shall pay and provide the following compensation and other
benefits to the Executive for the services rendered by him under this
Agreement:
(ii abAnnual Base Salary. The Company shall pay to the Executive, in
accordance with the then prevailing payroll practices of the Company, an
annual salary of One Hundred Twenty-five Thousand Dollars and No/100
($125,000) (the "Annual Base Salary"), subject to required withholdings under
Federal, state, and local laws. The Company's obligations with respect to
payment of the Annual Base Salary shall not be effective until the Employment
Term has commenced, and the Annual Base Salary shall be pro-rated for the
calendar year 2000.
(ii abBonus Commencing during calendar year 2001, the Executive shall be
eligible to receive an annual bonus in an amount of up to one hundred percent
(100%) of the Executive's Annual Base Salary based upon achievement of certain
operating goals established by the Employers, which shall be consistent with
those established for other employees of the Crossmann Group who are similarly
situated as the Executive, and based upon the overall performance of the
Crossmann Group.
(ii abExecutive Benefits. Except as otherwise specifically provided in
this Agreement, the Executive shall be eligible to participate, in accordance
with their respective terms and conditions, in all benefit plans presently
available or which may subsequently be made available to executives of the
Employers, including Crossmann's health care, basic life insurance,
supplemental life insurance coverage, disability coverage, business travel
accident insurance and any pension or retirement plan of any kind.
(ii abVacation Leave. The Executive shall be entitled to that number of
days of vacation leave per year that is provided to other executives of the
Employers with levels of responsibility similar to that of the Executive. The
Executive shall accrue and receive full compensation and benefits during his
vacation leave periods. Unused vacation leave time shall not carry over from
one year of the Employment Term to the next and unused vacation leave time
shall not entitle the Executive to any additional compensation.
(ii abAutomobile. The Employers shall provide the Executive with a leased
automobile during the Employment Term; provided, that the Employers' total
monthly lease payments toward the automobile shall not exceed Six Hundred
Fifty Dollars ($650.00) per month. The Employers shall reimburse the
Executive for all reasonable expenses associated with the automobile,
including gasoline and normal repair expenses, incurred by the Executive in
conducting the Employers' business, in accordance with the policies of
Crossmann.
(ii abBusiness Expenses. The Employers shall reimburse the Executive for
all reasonable business expenses incurred by the Executive in conducting the
Employers' business in accordance with the policies of Crossmann.
(ii abTermination of Employment
(ii abTermination for Cause
(ii abThe Employers may terminate the Executive's employment with the
Employers pursuant to this Agreement for Cause, as defined herein, by
providing written notice to the Executive at least twenty-four (24) hours
prior to the Termination Date, as defined in subsection (iii) below.
(ii abA termination for "Cause" means a termination by one of the Boards
for any one or more of the following reasons: (a) theft, fraud, embezzlement,
dishonest or other similar behavior by the Executive; (b) any material breach
by the Executive of the terms of this Agreement, or the Purchase Agreement or
any breach by the Executive of the terms of the Nondisclosure, Noncompetition
and Nonsolicitation Agreement dated of even date herewith executed by the
Executive (the "Noncompetition Agreement"); (c) any material neglect of duty,
incompetence, insubordination or misconduct of the Executive in discharging
any of his duties and responsibilities hereunder; (d) any act of theft or
dishonesty by the Executive or any criminal conviction or indictment of the
Executive; (e) any occurrence of the Executive reporting to work under the
influence of alcohol or illegal drugs, or the Executive being under the
influence of alcohol or illegal drugs during working hours; (f) any failure or
refusal by the Executive to comply with the policies, rules or regulations of
the Employers whether now in force or hereafter adopted; (g) any
misrepresentation or concealment by the Executive of any material fact for the
purpose of securing this Agreement; or (h) any other material act of
misconduct within the control of the Executive.
(ii abIn the case of a termination for Cause, the term "Termination Date"
as used in this subsection (a) shall mean the actual date the Executive
terminates employment with the Employers as a result of action taken by one of
the Boards, and not as a result of the Executive's resignation, as provided in
Section 4(b).
(ii abIf prior to the Expiration Date the Employers terminate the
Executive's employment for Cause, the Executive shall only be entitled to
payment of that portion of the Annual Base Salary under Section 3(a) that the
Executive earned through and including the Termination Date, at the rate of
the Annual Base Salary in effect or any portion of the year at that time.
(ii abResignation. The Executive may resign from his employment with the
Employers pursuant to this Agreement at any time by providing written notice
to the Boards of his resignation at least thirty (30) days prior to the
effective date of the resignation (the "Resignation Notice"). The effective
date of the Executive's resignation shall be that specified in the Resignation
Notice, or the actual date the Executive terminates employment with the
Employers as the result of a resignation, whichever occurs earlier (the
"Resignation Date"). If prior to the Expiration Date, the Executive resigns
his employment, and the resignation is other than for Good Reason (as
hereinafter defined), the Executive shall only be entitled to payment of that
portion of the Annual Base Salary under Section 3(a) that the Executive earned
through and including the Resignation Date, at the rate of the Annual Base
Salary in effect at that time. If prior to the Expiration Date, the Executive
resigns his employment for Good Reason, the Executive shall be entitled to
those payments and other benefits that are described in Section 4(f) below.
(ii abTermination Without Cause. The Employers may, in their sole
discretion, terminate the Executive's employment with the Employers pursuant
to this Agreement at any time without Cause, by providing written notice to
the Executive at least twenty-four (24) hours prior to the Termination Date,
as defined in this subsection (c). If, prior to the occurrence of a Change of
Control (as hereinafter defined) of Crossmann, the Employers terminate the
Executive's employment without Cause, the Company shall be obligated to
continue to pay to him that portion of the Annual Base Salary that would
otherwise have been payable for the period beginning on the Termination Date
and ending on the first to occur of (i) the Expiration Date or (ii) the first
anniversary of the Termination Date (the "Severance Payments"). Such payments
shall be made as and when the same would have been due and payable if the
Executive's employment had continued through such date, subject to the
provisions of Sections 4(d) and 4(e). If the Employers terminate the
Executive's employment without Cause prior to a Change of Control of
Crossmann, the Executive shall not be entitled to any Bonus payments for any
periods after the Termination Date. As a condition precedent to receiving the
Severance Payments, the Executive shall sign a release of all claims the
Executive has or may have against the Employers in form and substance
submitted to the Executive by the Employers. The term "Termination Date" as
used in this subsection (c) shall mean the actual date the Executive
terminates employment with the Employers as a result of action taken by one of
the Employers, and not as a result of the Executive's resignation as provided
in Section 4(b). Except as provided in this subsection (c) or in subsection
(f), the Executive shall not be eligible to receive any compensation or
benefits under this Agreement with respect to any future periods beginning on
or after the Termination Date.
(ii abDeath. If the Executive dies prior to the Expiration Date, the
Executive's estate or personal representative shall be entitled to receive
that portion of the Annual Base Salary, at the rate in effect at the
Executive's death, that portion of the Bonus attributable to the period prior
to the date of the Executive's death payable in accordance with the terms of
Section 3(b) hereof, and any other compensation or benefits that the Executive
earned through and including the date of the Executive's death. If the
Executive is entitled to receive payments from the Employers pursuant to
Section 4(c) at the time of his death, the Executive's estate or personal
representative shall be entitled to receive that portion of the Annual Base
Salary, at the rate in effect at the Executive's death, and any other
compensation or benefits, that the Executive would have been entitled to
receive under Section 4(c) through and including the date of the Executive's
death. The Executive's estate or personal representative shall not be
entitled to receive any portion of the Annual Base Salary or any other
compensation or benefits under this Agreement, with respect to any periods
ending on or after the date of the Executive's death, which was not payable in
accordance with the provisions hereof prior to the date of death.
(ii abDisability. If, prior to the Expiration Date, the Executive becomes
Permanently Disabled, as defined in this subsection (e), the Employers may
terminate the Executive's employment with the Employers as a result of the
Permanent Disability by providing written notice to the Executive at least
twenty-four (24) hours prior to the Termination Date, as defined in this
subsection (e). If prior to the Expiration Date the Executive becomes
Permanently Disabled, the Executive may resign from his employment with the
Employers pursuant to this Agreement by providing written notice to the
Employers of his resignation at least twenty-four (24) hours prior to the
Resignation Date, as defined in this subsection (e). If the Employers
terminate the Executive's employment as a result of a Permanent Disability or
the Executive resigns from employment with the Employers as a result of a
Permanent Disability, the Executive shall be entitled to receive that portion
of the Annual Base Salary under Section 3(a) that the Executive earned through
and including the Termination Date or Resignation Date, as applicable, at the
rate in effect on such date, and that portion of the Bonus attributable to the
period prior to the Termination Date or the Resignation Date, as applicable,
payable in accordance with the terms of Section 3(b) hereof. If the Executive
is entitled to receive payments from the Employers pursuant to Section 4(c) at
the time he becomes Permanently Disabled, the Executive shall be entitled to
receive the payments that the Executive would have been entitled to receive
under Section 4(c). The Executive shall not be entitled to receive any
portion of the Annual Base Salary or any other compensation or benefits under
this Agreement with respect to any future periods beginning on or after the
later of the Resignation Date, Termination Date, or the date the Executive
becomes Permanently Disabled. The Executive shall be deemed "Permanently
Disabled" when, and only when, he is deemed permanently disabled in accordance
with the disability insurance policy of the Employers in effect at the time of
the illness or injury causing the disability, or, in the event no disability
policy is then in effect, in accordance with the disability policy of the
Employers last in effect. The definition of Permanently Disabled for purposes
of this Agreement shall comply with all provisions of applicable law. The term
"Termination Date" as used in this subsection (e) shall mean the actual date
the Executive terminates employment with the Employers. The term "Resignation
Date" as used in this subsection (e) shall mean the actual date the Executive
terminates employment with the Employers as the result of a resignation.
(ii abTermination or Resignation after Change of ControlIf, within twelve
(12) months immediately after the occurrence of a Change of Control of
Crossmann but prior to the Expiration Date, either the Executive's employment
shall be terminated by the Company (other than for Cause) or the Executive
shall have resigned from employment for Good Reason, the Company or Crossmann,
as applicable, shall provide the Executive with the following:
(ii abThe Company shall pay the Executive his full Annual Base Salary
prorated through the Termination Date or Resignation Date at the greater of
the rate in effect at the time the Change of Control of Crossmann occurs or at
the Termination Date/Resignation Date, plus any bonuses or incentive
compensation which pursuant to the terms of any compensation or benefit plan
have been earned or have become payable as of the Termination Date or
Resignation Date, but which have not yet been paid.
(ii abThe Company shall pay the Executive a lump sum cash payment as a
severance entitlement (the "Severance Entitlement") which, except as limited
by Section 4(f)(iv) hereunder, shall otherwise be equal to 2.99 times the
highest aggregate amount of Annual Base Salary, bonus and other cash
compensation paid by the Company to the Executive for any full calendar year
during which the Executive was employed by the Employers pursuant to the
Employment Agreement;
(ii abThe Employers shall continue to provide for the Executive and his
dependents, for a period of twelve (12) months following the Termination Date
or Resignation Date, life insurance, medical and hospitalization benefits
comparable to those provided by the Employers to the Executive and his
dependents immediately prior to the Change of Control of Crossmann, provided
that any coverage provided pursuant to this subsection (iii) shall terminate
to the extent that the Executive obtains comparable life insurance, medical or
hospitalization benefits coverage from any other employer during such twelve
(12) month period. The benefits provided under this subsection (iii) shall
not be materially less favorable to the Executive in terms of amounts,
deductibles and costs to him, if any, than such benefits provided by the
Employers to the Executive and his dependents as of the date of the Change of
Control of Crossmann. This subsection (iii) shall not be interpreted so as to
limit any benefits to which the Executive or his dependents may be entitled
under the Employer's life insurance, medical, hospitalization, dental or
disability plans following the Termination Date or Resignation Date and shall
be in addition to any COBRA rights under federal law.
(ii abNotwithstanding any other provision contained in this Agreement, if
the aggregate present value of all payments made or payable to the Executive,
whether pursuant to this Agreement or otherwise, that constitute "parachute
payments" within the meaning of Section 280G(b)(2)(A) of the Internal Revenue
Code of 1986, as amended (the "Code"), equals or exceeds three times the
Executive's "base amount" within the meaning of Section 280G of the Code, then
the amounts otherwise payable pursuant to the Agreement shall be reduced, but
not below zero, so that the aggregate present value of the Executive's
"parachute payments" does not exceed three times the Executive's benefits
under this Agreement. This reduction shall be implemented first by reducing
any non-cash benefits to the extent necessary and, second, by reducing any
cash benefits and the Severance Entitlement to the extent necessary. In each
case, the reduction shall be made starting with the latest payment or benefit.
All determinations as to what amounts paid or payable to the Executive
constitute "parachute payments" and the present value thereof shall be made in
accordance with Section 280G of the Code, and any rulings and regulations
promulgated under the Code, and shall be made within 30 days after the
Termination Date by the Company's independent auditors.
As a condition precedent to receiving the Severance Entitlement
or any of the other compensation described in this subsection (f), the
Executive shall sign a release of all claims the Executive has or may have
against the Employers in form and substance submitted to the Executive by the
Employers. The term "Termination Date" as used in this subsection (f) shall
mean the actual date the Executive terminates employment with the Employers as
a result of action taken by one of the Employers, and not as a result of the
Executive's resignation as provided in Section 4(b).
(ii abNondisclosure, Noncompetition and Nonsolicitation Agreement. On the
date hereof the Executive, Crossmann and the Company entered into the
Noncompetition Agreement. All of the terms and conditions of the
Noncompetition Agreement are incorporated herein by reference and any breach
of the Noncompetition Agreement shall be deemed to be a breach of this
Agreement.
Non-assignability, Binding Agreement.
(ii ab By the Executive. The Executive shall not assign or delegate
this Agreement or any right, duty, obligation, or interest under this
Agreement without the Company's and Crossmann's prior written consent;
provided, however, that nothing shall preclude the Executive from
designating beneficiaries to receive benefits payable under this Agreement
upon his death, and nothing shall preclude the Executive's executors,
administrators, or their legal representatives, from assigning any rights
under this Agreement to any person.
(ii abBy the Company or Crossmann. This Agreement shall be binding on the
Company and Crossmann and any successor to all or substantially all of
Crossmann's or the Company's business or assets. Without limiting the prior
sentence, the Company and Crossmann will require any successor or assign
(whether direct or indirect, by purchase, consolidation, merger, or otherwise)
to all or substantially all of the business and/or assets of the Company or
Crossmann to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company or Crossmann would be required
to perform this Agreement if no such succession or assignment had occurred.
The Executive hereby agrees that the Company and/or Crossmann may assign,
delegate, or transfer this Agreement and all of their rights and obligations
under this Agreement to any of its affiliates or subsidiaries or to any
business entity that by purchase, merger, consolidation, or otherwise acquires
all or substantially all of the assets of the Company or Crossmann or to which
the Company or Crossmann transfers all or substantially all of its assets.
Upon assignment, delegation, or transfer, any such affiliate, subsidiary, or
business entity shall be deemed to be substituted for the Company and/or
Crossmann, as applicable, for all purposes of this Agreement.
(ii abBinding Effect. Except as limited under Sections 6(a) and 6(b),
this Agreement shall be binding upon and inure to the benefit of the parties,
any successors to or assigns of the Company and/or Crossmann, and the
Executive's heirs and the personal representatives or executor of the
Executive's estate.
(ii abSeverability. If a court of competent jurisdiction makes a final
determination that any term or provision of this Agreement is invalid or
unenforceable, and all rights to appeal the determination have been exhausted
or the period of time during which any appeal of the determination may be
perfected has been exhausted, the remaining terms and provisions shall be
unimpaired and the invalid or unenforceable term or provision shall be deemed
replaced by a term or provision that is valid and enforceable and that most
closely approximates the intention of the parties with respect to the invalid
or unenforceable term or provision, as evidenced by the remaining valid and
enforceable terms and conditions of this Agreement.
(ii abAmendment. No provision of this Agreement may be modified, amended,
waived, or discharged in any manner except by an instrument in writing signed
by the Executive and on behalf of the Company and Crossmann by such officers
as may be specifically designated by the Boards. No agreement or
representation, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by any party which is not expressly set
forth in this Agreement.
(ii abWaiver. The waiver by any party of compliance by any other party
with any provision of this Agreement shall not operate or be construed as a
waiver of any other provision of this Agreement (whether or not similar), or a
continuing waiver or a waiver of any subsequent breach by a party of a
provision of this Agreement. Performance by any party of any act not required
of it under the terms and conditions of this Agreement shall not constitute a
waiver of the limitations on its obligations under this Agreement, and no
performance shall estop that party from asserting those limitations as to any
further or future performance of its obligations.
(ii abGoverning Law and Jurisdiction. The laws of the State of Indiana
shall govern the validity, performance, enforcement, interpretation and any
other aspect of this Agreement, notwithstanding any state's choice of law
provisions to the contrary.
(ii abNotices. All notices required or desired to be given under this
Agreement shall be in writing and shall be deemed to have been duly given (i)
on the date of service if served personally on the party to whom notice is to
be given, (ii) on the date of receipt by the party to whom notice is to be
given if transmitted to such party by telefax, provided a copy is mailed as
set forth below on the date of transmission, or (iii) on the third day after
mailing if mailed to the party to whom notice is to be given by registered or
certified mail, return receipt requested, postage prepaid, to the following
addresses:
(a) If to the Company or Crossmann, to:
Crossmann Communities, Inc.
9210 North Meridian St.
Indianapolis, IN 46260
Attn: John B. Scheumann
Tel. No.: (317) 843-9514
Fax: (317) 571-2210
With a copy to:
Steven K. Humke, Esq.
ICE MILLER
One American Square
Box 82001
Indianapolis, Indiana 46282
Fax: (317) 592-4675
(b) If to the Executive, to:
865 West Carmel Drive, Suite 114
Carmel, Indiana 46032
Fax: (317) 574-7601
Any party may, by giving written notice to the other parties, change the
address to which notice shall then be sent.
(ii abPrior Agreements. This Agreement and the Noncompetition Agreement
are a complete and total integration of the understanding of the parties.
This Agreement and the Noncompetition Agreement supersede all prior or
contemporaneous negotiations, commitments, agreements, writings including
handbooks, and discussions with respect to the subject matter of this
Agreement and the Noncompetition Agreement.
(ii abHeadings. The headings of the Sections of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction of this Agreement.
(ii abCounterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same Agreement. Only one
counterpart signed by the party against which enforcement is sought needs to
be produced to evidence the existence of this Agreement.
(ii abMiscellaneous Definitions For purposes of this Agreement:
--
(a) A "Change of Control" of Crossmann shall be deemed to occur (i)
when any person (as such term is used in Sections 13(e) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), other than
John Scheumann or Richard Crosser becomes the beneficial owner (as defined in
Rule 13d-3 promulgated under the Exchange Act) directly or indirectly of
securities of Crossmann representing 40% or more of the combined voting power
of Crossmann's then outstanding securities (assuming conversion of all
outstanding nonvoting securities into voting securities and the exercise of
all outstanding options or other convertible securities); or (ii) upon the
approval by Crossmann's shareholders of (A) a merger or consolidation of
Crossmann with or into another company (other than a merger or consolidation
in which Crossmann is the surviving corporation and which does not result in
any capital reorganization or reclassification or other change in the
ownership of Crossmann's then outstanding shares which would be deemed a
Change of Control pursuant to subsection(s) (i) or (ii) hereof), (B) a sale or
disposition of all or substantially all of Crossmann's assets other than to an
affiliate of Crossmann, or (C) a plan of liquidation or dissolution of
Crossmann.
--
(b) A termination for "Good Reason" shall mean the voluntary
cessation by the Executive of employment with the Employers, after a Change of
Control of Crossmann, which cessation occurs within ninety (90) days after (i)
the Executive's base salary was reduced to an amount less than the Executive's
base salary as of the date of this Agreement and/or (ii) the amount of the
targeted annual incentives available to the Executive (based on realization of
certain corporate and individual objectives) are materially decreased from the
amount of similar incentives available in prior years and/or (iii) the nature
and scope of the Executive's duties were materially reduced and/or (iv) a
significant adverse reduction or alteration in the scope or status of the
Executive's position, duties or responsibilities or the conditions of the
Executive's employment from those in effect immediately prior to such Change
of Control of Crossmann are effected, and/or (v) Crossmann fails to continue
this Agreement in effect or to obtain a satisfactory agreement from any
successor to assume and agree to perform this Agreement.
[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
The parties have executed this Agreement on the Effective Date.
"THE COMPANY"
TRINITY HOMES, LLC
By:/s/ John B. Scheumann
Title: Manager
"CROSSMANN"
CROSSMANN COMMUNITIES, INC.
By:/s/ John B. Scheumann
Title: Chief Executive Officer
"EXECUTIVE"
/s/ James D. McKenzie
James D. McKenzie
EXHIBIT 10.56
NONDISCLOSURE, NONCOMPETITION AND
NONSOLICITATION AGREEMENT
This Nondisclosure, Noncompetition and Nonsolicitation Agreement (the
"Agreement") is made and entered into as of the 20th day of October, 2000 (the
"Effective Date"), by and among Crossmann Communities Partnership, an Indiana
partnership ("Crossmann"), Trinity Homes, LLC, an Indiana limited liability
company ("Trinity Homes", and together with Crossmann, the "Company"), and
Trinity Homes, Inc. (the "Restricted Party").
PRELIMINARY STATEMENT
Pursuant to the terms of a Membership Interest Purchase Agreement (the
"Purchase Agreement") dated of even date herewith by and among the Restricted
Party, Pyramid Mortgage Co., Inc., and Crossmann, Crossmann will acquire all
of the membership interests of the Restricted Party in Trinity Homes. As a
result of its ownership interest in Trinity Homes, the Restricted Party had
access to Confidential Information (as defined below). In consideration for
Crossmann's consummation of the Purchase Agreement, the Restricted Party
agrees to be restricted as set forth in this Agreement. Terms used but not
defined herein shall have the meanings ascribed to them in the Purchase
Agreement. This Agreement applies to the Restricted Party only and not to any
shareholder of the Restricted Party.
TERMS AND CONDITIONS
In consideration of the mutual promises and covenants contained in this
Agreement, and intending to be legally bound, the parties agree as follows:
OUTLINE ON
--
1 ab Section. Definitions.
(a)Confidential Information. "Confidential Information" shall mean all
information, whether or not originated by Trinity Homes, the Crossmann Group,
or the Restricted Party, which is not generally known other than by personnel
of Trinity Homes or the Crossman Group and which (1) is used in the business
of Trinity Homes and is proprietary to, about, or created by, Trinity Homes,
its officers, directors, employees, agents or representatives, or the
Restricted Party; or (2) is used in the business of the Crossmann Group and is
proprietary to, or about, or created by, the Crossmann Group or its officers,
directors, employees, agents or representatives and is made known to the
Restricted Party. Confidential Information includes, but is not limited to
(whether or not reduced to writing or designated as confidential):
(i)Information regarding any of Trinity Homes'or the Crossmann Group's
customers and clients and their representatives, any of Trinity Homes'or the
Crossmann Group's potential customers or leads, the identity of any contracts
(contents and parties) to which Trinity Homes or the Crossmann Group are or
were a party or are or were bound, and the type, quantity and specifications
of products and services sold to, purchased, leased, licensed or received by
Trinity Homes or the Crossmann Group;
(ii)Information relating to Trinity Homes or the Crossmann Group received by
the Restricted Party, directly or indirectly from third parties (such as
vendors) under an obligation of confidentiality, restricted disclosure or
restricted use;
(iii)Information relating to the purchase, sale or development or the
prospective purchase, sale or development of real property by Trinity Homes or
the Crossmann Group;
(iv)Any internal personnel and financial information relating to Trinity
Homes or the Crossmann Group (including the revenue, costs or profits
associated with Trinity Homes or Restricted Party); the names of Trinity
Homes'or the Crossmann Group's subcontractors, agents, independent
contractors, vendors and suppliers; Trinity Homes' or the Crossmann Group's
payroll information; Trinity Homes' or the Crossmann Group's purchasing and
internal cost information; Trinity Homes' or the Crossmann Group's internal
service and operational manuals and other information relating to Trinity
Homes or the Crossmann Group; and the manner and methods of carrying on the
business of Trinity Homes or the Crossmann Group;
(v) Information related to Trinity Homes or the Crossmann Group with respect
to their respective products, facilities and methods, systems, trade secrets
and other intellectual property; and
(vi)Marketing and developmental plans, price and cost data, price and fee
amounts, pricing and billing policies, quoting procedures, marketing
techniques, methods of obtaining business, forecasts, forecast assumptions and
volumes, future plans and potential strategies relating to Trinity Homes or
the Crossmann Group.
Notwithstanding the foregoing, the term Confidential Information does not
include (1) information that was in the public domain or generally known in
the industry at the time the Restricted Party first received, observed, or
otherwise became aware of such information, (2) information that becomes a
part of the public domain or becomes generally known in the industry other
than by the breach by the Restricted Party of its obligations under this
Agreement, (3) information that is disclosed to the Restricted Party after the
termination of this Agreement by a third party having the right to disclose
the same without violating any obligation to the Company, or (4) information
that is independently developed by the Restricted Party after the termination
of this Agreement.
"Crossmann Group" shall mean each of Crossmann, any subsidiary, parent or
affiliate of Crossmann (including without limitation Trinity Homes), and any
joint venture in which Crossmann or any of its affiliates participates.
"Restricted Area" shall mean any location within 50 miles of any city,
town, village or metropolitan area in which the Crossmann Group or Trinity
Homes conducted business, took steps to conduct business or evaluated the
prospect of conducting business prior to the Effective Date of this Agreement,
including but not limited to Indianapolis, Indiana.
"Restricted Business" shall mean any business that is substantially
similar to or competitive with the business engaged in by the Crossmann Group
or Trinity Homes, including development of real estate, construction for sale
or lease or rent of single family and/or multi-family homes, the sale of
single family and/or multi-family homes and the management of multi-family
home projects.
"Restricted Period" shall mean a period that is five (5) years from the
Effective Date of this Agreement; provided, however, that if the
Restricted Party breaches any provision of this Agreement, the Restricted
Period shall be extended for the period of the breach, plus an additional six
(6) months beyond the period of the breach.
2 ab Section. Ownership of Confidential Information. The
Restricted Party hereby acknowledges and agrees that all Confidential
Information either constituted a valuable asset of Trinity Homes, which was an
asset of Crossmann by virtue of its existing membership interests in Trinity
Homes prior to the consummation of the transactions under the Purchase
Agreement, which became an asset of the Company as a result of the
transactions set forth in the Purchase Agreement, or constitutes a valuable
asset of the Crossmann Group. The Restricted Party further acknowledges and
agrees that the Company has a need to protect the Confidential Information for
the ongoing and continued success of the Crossmann Group. All Confidential
Information is and shall remain the exclusive property of the Crossmann Group,
whether or not prepared in whole or in part by the Restricted Party, and the
Restricted Party acknowledges and agrees that he does not have any right,
title or interest in or to the Confidential Information. The Restricted Party
shall, upon the request of the Company, promptly deliver to the Company all
documents, tapes, disks, or other storage media and any other materials, and
all copies thereof in whatever form, in the possession of the Restricted Party
pertaining to Trinity Homes or the Crossmann Group including, but not limited
to, any containing Confidential Information.
3 ab Section. Non-Disclosure and Non-Use of Confidential
Information. In furtherance of this Agreement and in order to assure
adequate protection of the Crossmann Group against the wrongful use or
disclosure of the Confidential Information, the Restricted Party agrees to
hold all Confidential Information in strict confidence and solely for the
benefit of the Crossmann Group. The Restricted Party acknowledges that any
use or attempted use of any Confidential Information by the Restricted Party
or any disclosure of the Confidential Information to any third party would
constitute immediate and irreparable harm to the Crossmann Group and would be
of significant benefit to any competitor of the Crossmann Group. The
Restricted Party shall be deemed to have a fiduciary duty to protect all
Confidential Information from improper disclosure or use. Except with the
prior written consent of the Company or as required by law, the Restricted
Party agrees not to directly or indirectly disclose or use or authorize any
third party to disclose or use any Confidential Information for (a) an
indefinite duration, or (b) in the event that a court of competent
jurisdiction determines that an indefinite period is unreasonable, five (5)
years following the Effective Date. The Restricted Party's obligations set
forth in this Section 3, and the Company's rights and remedies with respect
thereto, whether legal or equitable, shall remain in full force and effect
during the period described in (a) or (b) above, as applicable; provided,
however, that if the Restricted Party breaches any provision of this
Agreement, the time period for the applicable restriction shall be extended
for the period of the breach, plus an additional six (6) months beyond the
period of the breach.
4 ab Section. Non-Competition. During the Restricted Period, the
Restricted Party shall not, directly or indirectly, engage in the Restricted
Business in the Restricted Area; nor shall the Restricted Party during the
Restricted Period, without the express written consent of the Company,
directly or indirectly engage in, own, manage, operate, join, control, lend
money or other assistance to, or participate in or be connected with, as an
officer, director, employee, partner, shareholder, member, consultant,
manager, agent, or otherwise, any individual, corporation, partnership,
limited liability company, firm, other company, business organization, or
entity that is engaged in a substantially similar or competitive business to
the Restricted Business in the Restricted Area. Without limiting the
generality of the foregoing the Restricted Party shall not, directly or
indirectly, (a) finance single family or multifamily homes, (b) manage or act
as a leasing agent for single or multifamily properties, (c) purchase, sell or
develop developed or undeveloped real property, (d) purchase or sell developed
lots, or (e) build or sell single family or multifamily homes. The Restricted
Party's obligations set forth in this Section 4 and the Company's rights and
remedies with respect thereto, whether legal or equitable, shall remain in
full force and effect during the Restricted Period. Notwithstanding any other
provision contained in this Agreement, the Restricted Party may own shares of
stock representing less than five percent (5%) of the outstanding shares of
any publicly-held company engaged in the Restricted Business.
5 ab Section. Non-Solicitation. During the Restricted Period,
the Restricted Party shall not, directly or indirectly, as an entity,
individually or on behalf of any other individual, corporation, partnership,
firm, other company, business organization, or entity, or in any other
capacity: (a) call upon, solicit, contact, or service any current, former or
potential customer or client of Trinity Homes or the Crossmann Group that the
Restricted Party called upon, solicited, contacted, or serviced prior to the
Effective Date of this Agreement; (b) call upon, solicit, contact, or service
any person or entity who is or was prior to the Effective Date of this
Agreement, any subcontractor, agent, independent contractor, vendor or
supplier of Trinity Homes or the Crossmann Group; or (c) solicit for
employment, endeavor to entice away from the Crossmann Group, recruit, hire,
or otherwise interfere with the Crossmann Group's relationship with any person
who was employed by or otherwise engaged to perform services for Trinity Homes
or the Crossmann Group during the Restricted Period. The Restricted Party's
obligations set forth in this Section 5 and the Company's rights and
remedies with respect thereto, whether legal or equitable, shall remain in
full force and effect during the Restricted Period.
6 ab Section. Reasonableness of Terms. The Company and the
Restricted Party each stipulate and agree that the terms and covenants
contained in Section 1 through Section 5 herein are fair and reasonable in
all respects to protect the legitimate interests of the Crossmann Group,
including but not limited to the geographical coverage in Section 4 and the
time periods in Sections 3, 4, and 5, and that these restrictions are
designed for the reasonable protection of the Crossmann Group's business.
7 ab Section. Remedies. The Restricted Party recognizes that any
breach of this Agreement will cause irreparable injury to the goodwill and
proprietary rights of the Crossman Group, inadequately compensable in monetary
damages. Accordingly, in addition to any other legal or equitable remedies
that may be available to the Company, the Restricted Party agrees that the
Company will be able to seek and obtain immediate injunctive relief in the
form of a temporary restraining order without notice, preliminary injunction,
or permanent injunction against the Restricted Party to enforce this
Agreement. The Company shall not be required to post any bond or other
security and shall not be required to demonstrate any actual injury or damage
to obtain injunctive relief from the courts.
8 ab Section. Claims by the Restricted Party. Any claim or cause
of action of the Restricted Party, whether for breach of this Agreement, the
Purchase Agreement, or otherwise, shall not constitute a defense to the
enforcement of this Agreement and shall not be used to prohibit injunctive
relief.
9 ab Section. Costs. In the event of a breach of this Agreement,
the Company shall be entitled to recover from the Restricted Party all costs
of enforcement, including reasonable attorney's fees, all expenses of
litigation and court and other costs.
10 ab Section. Damages. To the extent that any damages are
calculable resulting from the breach of this Agreement, the Company shall also
be entitled to recover those damages from the Restricted Party, including any
lost profits of the Company. For purposes of this Agreement, profits shall
include but are not limited to, any gross profits earned by the Restricted
Party or by the Restricted Party's new employer or business during the entire
period of the breach including prejudgment interest at ten percent (10%) per
annum from the date of the breach. Any recovery of damages by the Company
shall be in addition to and not in lieu of the injunctive relief to which the
Company is entitled. In no event shall a damage recovery be considered a
penalty or liquidated damages, but shall be considered as measurable
compensation damages for breach by the Restricted Party.
11 ab Section. Nonassignability. This Agreement shall not be
assigned or delegated by the Restricted Party without the express written
consent of the Company. The Company may assign, delegate, or transfer this
Agreement and all of its rights and obligations under this Agreement to any
affiliate or to any business entity that by merger, consolidation, or
otherwise acquires all or substantially all of the assets of the Company, or
to which the Company transfers all or substantially all of its assets. Upon
assignment, delegation or transfer, any such affiliate or entity shall be
deemed to be substituted for the Company for all purposes of this Agreement.
12 ab Section. Binding Effect. This Agreement shall be binding
upon and inure to the benefit of the parties hereto, and any permitted
successors or assigns thereof.
13 ab Section. Severability. If a court of competent
jurisdiction makes a final determination that any term or provision of this
Agreement is invalid or unenforceable, and all rights to appeal the
determination have been exhausted or the period of time during which any
appeal of the determination may be perfected has been exhausted, the remaining
terms and provisions shall be unimpaired and the invalid or unenforceable term
or provision shall be deemed replaced by a term or provision that is valid and
enforceable and that most closely approximates the intention of the parties
with respect to the invalid or unenforceable term or provision, as evidenced
by the remaining valid and enforceable terms and conditions of this Agreement.
14 ab Section. Amendment. This Agreement may not be modified,
amended, or waived in any manner except by an instrument in writing signed by
all parties to this Agreement.
15 ab Section. Waiver. The waiver by any party of compliance by
any other party with any provision of this Agreement shall not operate or be
construed as a waiver of any other provision of this Agreement (whether or not
similar), or a continuing waiver or a waiver of any subsequent breach by a
party of a provision of this Agreement. Performance by any party of any act
not required of it under the terms and conditions of this Agreement shall not
constitute a waiver of the limitations on its obligations under this
Agreement, and no performance shall estop that party from asserting those
limitations as to any further or future performance of its obligations. The
Restricted Party acknowledges and agrees that every breach of this Agreement
or any similar agreement entered into between the Company and a third party is
unique. Therefore, the failure of the Company to enforce the same, similar or
different restriction in a similar agreement or to seek a different remedy or
any other act or omission by the Company shall not be construed as a waiver or
estoppel to the enforcement of this Agreement against the Restricted Party.
16 ab Section. Prospective Employers. The Restricted Party shall
inform any prospective employer about the existence of this Agreement before
accepting new employment and shall not agree, as a term of any new employment,
that the new employer will defend the Restricted Party or pay the attorneys'
fees of the Restricted Party in the event of a lawsuit brought by the Company
to enforce the terms of this Agreement.
17 ab Section. Fair Dealing. The Restricted Party acknowledges
that the Company has negotiated this Agreement in good faith and has been fair
in its dealing with the Restricted Party. The Restricted Party shall not
raise any defense and expressly waives any defense against the Purchaser based
upon any alleged breach of good faith or fair dealing by the Company.
18 ab Section. Waiver of Any Claim for Attempted Enforcement.
The Restricted Party agrees that the Company may enforce this Agreement to the
broadest extent possible. To the extent that the Company attempts to enforce
this Agreement, but is unsuccessful in enforcing some or all of the terms of
this Agreement, the Restricted Party shall not be entitled to any relief
against the Company for such attempted enforcement. The Restricted Party
specifically waives any rights that may exist under Indiana law, including but
not limited to Indiana Code Section 22-5-3-1 et seq. (Blacklisting
statute).
19 ab Section. Governing Law, Jurisdiction and Venue. The laws
of the State of Indiana shall govern the validity, performance, enforcement,
interpretation and any other aspect of this Agreement, notwithstanding any
state's choice of law provisions to the contrary. Any dispute relating to the
validity, performance, enforcement, interpretation, or any aspect of this
Agreement shall be litigated in a court in Marion County, Indiana, which shall
be deemed to be the exclusive venue for such dispute, except that the Company,
in its sole discretion, may elect to pursue litigation in the county and State
where any breach or violation of this Agreement by the Restricted Party has
occurred.
20 ab Section. Trade Secrets Act. This Agreement incorporates
all of the protections of the Indiana Uniform Trade Secrets Act 24-2-3-1
et seq., as amended.
21 ab Section. Notices. All notices required or desired to be
given under this Agreement shall be in writing and shall be deemed to have
been duly given (i) on the date of service if served personally on the party
to whom notice is to be given, (ii) on the date of receipt by the party to
whom notice is to be given if transmitted to such party by telefax, provided a
copy is mailed as set forth below on the date of transmission, or (iii) on the
third day after mailing if mailed to the party to whom notice is to be given
by registered or certified mail, return receipt requested, postage prepaid, to
the following addresses:
(a) If to Company, to:
Crossmann Communities Partnership
9210 North Meridian Street
Indianapolis, Indiana 46260
Attn: John B. Scheumann
Fax: (317) 571-2210
With a copy to:
Steven K. Humke, Esq.
ICE MILLER
One American Square
Box 82001
Indianapolis, Indiana 46282
Fax: (317) 592-4675
(b) If to the Restricted Party, to:
865 West Carmel Drive, Suite 114
Carmel, Indiana 46032
Fax: (317) 574-7601
Any party may, by giving written notice to the other parties, change the
address to which notice shall then be sent.
22 ab Section. OPPORTUNITY TO CONSULT WITH OTHERS. THE
RESTRICTED PARTY HAS BEEN GIVEN THE OPPORTUNITY TO CONSULT WITH A LAWYER,
SPOUSE, ADVISOR, OR OTHER PERSON CONCERNING THIS AGREEMENT AND HAS EITHER
DISCUSSED THIS AGREEMENT WITH A LAWYER OR WAIVES ANY RIGHT TO DO SO.
23 ab Section. Prior Agreements. This Agreement is a complete
and total integration of the understanding of the parties, and supersede all
prior or contemporaneous negotiations, commitments, agreements, writings and
discussions with respect to the subject matter of this Agreement.
24 ab Section. Headings. The subject headings of the sections of
this Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction of this
Agreement.
25 ab Section. Joint Drafting. This Agreement shall be deemed to
have been drafted jointly by the parties and in the event of any ambiguity in
this Agreement, the same shall not be construed against any party hereto.
26 ab Section. Counterparts. This Agreement may be executed in
one or more counterparts, each of which for all purposes shall be deemed to be
an original but all of which together shall constitute one and the same
Agreement. Facsimile transmissions of original signatures shall be deemed
original signatures. Only one counterpart signed by the party against which
enforceability is sought needs to be produced to evidence the existence of
this Agreement.
--
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute this Agreement as of the Effective Date.
"THE COMPANY"
"CROSSMANN"
CROSSMANN COMMUNITIES PARTNERSHIP
By:/s/ John B. Schuemann
Chairman of the Board of Directors and
Chief Executive Officer,
Crossmann Communities, Inc.,
Its general partner
"TRINITY HOMES"
TRINITY HOMES, LLC
By:/s/ John B. Scheumann
Title: Manager
"RESTRICTED PARTY"
TRINITY HOMES, INC.
By:/s/ James McKenzie
Title: President
EXHIBIT 10.57
NONDISCLOSURE, NONCOMPETITION AND
NONSOLICITATION AGREEMENT
This Nondisclosure, Noncompetition and Nonsolicitation Agreement (the
"Agreement") is made and entered into as of the 20th day of October, 2000, by
and among Crossmann Communities, Inc., an Indiana corporation (together with
Crossmann Communities Partnership, an Indiana partnership and its subsidiary,
"Crossmann"), Trinity Homes, LLC, an Indiana limited liability company
("Trinity Homes", and together with Crossmann, the "Company"), and John E.
McKenzie (the "Restricted Party").
PRELIMINARY STATEMENT
Pursuant to the terms of a Membership Interest Purchase Agreement (the
"Purchase Agreement") dated of even date herewith by and between Trinity
Homes, Inc., an Indiana corporation of which the Restricted Party is a
shareholder ("THI"), and Crossmann, Crossmann will acquire all of the
membership interests of THI in Trinity Homes. As a result of his prior
employment by Trinity Homes and his ownership interest in THI, and as a result
of his continued employment by the Company, the Restricted Party had and will
have access to Confidential Information (as defined below). In consideration
for Crossmann's consummation of the Purchase Agreement and the Company's
employment of the Restricted Party, the Restricted Party agrees to be
restricted as set forth in this Agreement. Terms used but not defined herein
shall have the meanings ascribed to them in the Purchase Agreement.
TERMS AND CONDITIONS
In consideration of the mutual promises and covenants contained in this
Agreement, and intending to be legally bound, the parties agree as follows:
OUTLINE ON
--
1 ab Section. Definitions.
(a) Confidential Information. "Confidential Information" shall mean all
information, whether or not originated by Trinity Homes, the Crossmann Group,
or the Restricted Party, which is not generally known other than by personnel
of Trinity Homes or the Crossman Group and which (1) is used in the business
of Trinity Homes and is proprietary to, about, or created by, Trinity Homes,
its officers, directors, employees, agents or representatives, or the
Restricted Party; or (2) is used in the business of the Crossmann Group and is
proprietary to, or about, or created by, the Crossmann Group or its officers,
directors, employees, agents or representatives and is made known to the
Restricted Party. Confidential Information includes, but is not limited to
(whether or not reduced to writing or designated as confidential):
(i)Information regarding any of Trinity Homes' or the Crossmann Group's
customers and clients and their representatives, any of Trinity Homes' or the
Crossmann Group's potential customers or leads, the identity of any contracts
(contents and parties) to which Trinity Homes or the Crossmann Group are or
were a party or are or were bound, and the type, quantity and specifications
of products and services sold to, purchased, leased, licensed or received by
Trinity Homes or the Crossmann Group;
(ii)Information relating to Trinity Homes or the Crossmann Group received by
the Restricted Party, directly or indirectly from third parties (such as
vendors) under an obligation of confidentiality, restricted disclosure or
restricted use;
(iii)Information relating to the purchase, sale or development or the
prospective purchase, sale or development of real property by Trinity Homes or
the Crossmann Group;
(iv)Any internal personnel and financial information relating to Trinity
Homes or the Crossmann Group (including the revenue, costs or profits
associated with Trinity Homes or Restricted Party); the names of Trinity
Homes' or the Crossmann Group's subcontractors, agents, independent
contractors, vendors and suppliers; Trinity Homes' or the Crossmann Group's
payroll information; Trinity Homes' or the Crossmann Group's purchasing and
internal cost information; Trinity Homes' or the Crossmann Group's internal
service and operational manuals and other information relating to Trinity
Homes or the Crossmann Group; and the manner and methods of carrying on the
business of Trinity Homes or the Crossmann Group;
(v) Information related to Trinity Homes or the Crossmann Group with respect
to their respective products, facilities and methods, systems, trade secrets
and other intellectual property; and
(vi)Marketing and developmental plans, price and cost data, price and fee
amounts, pricing and billing policies, quoting procedures, marketing
techniques, methods of obtaining business, forecasts, forecast assumptions and
volumes, future plans and potential strategies relating to Trinity Homes or
the Crossmann Group.
Notwithstanding the foregoing, the term Confidential Information does not
include (1) information that was in the public domain or generally known in
the industry at the time the Restricted Party first received, observed, or
otherwise became aware of such information, (2) information that becomes a
part of the public domain or becomes generally known in the industry other
than by the breach by the Restricted Party of his obligations under this
Agreement, (3) information that is disclosed to the Restricted Party after the
termination of this Agreement by a third party having the right to disclose
the same without violating any obligation to the Company, or (4) information
that is independently developed by the Restricted Party after the termination
of this Agreement.
"Crossmann Group" shall mean each of Crossmann, any parent, subsidiary or
affiliate of Crossmann (including without limitation Trinity Homes), and any
joint venture in which Crossmann or any of its affiliates participates.
"Restricted Area" shall mean any location within 50 miles of any city,
town, village or metropolitan area in which the Crossmann Group or Trinity
Homes conducted business, took steps to conduct business or evaluated the
prospect of conducting business, during the Employment Term, including but not
limited to Indianapolis, Indiana.
"Restricted Business" shall mean any business that is substantially
similar to or competitive with the business engaged in by the Crossmann Group
or Trinity Homes, including development of real estate, construction for sale
or lease or rent of single family and/or multi-family homes, the sale of
single family and/or multi-family homes and the management of multi-family
home projects.
"Restricted Period" shall mean the Employment Term (as that term is
defined in the Employment Agreement dated of even date herewith by and between
the Company and the Restricted Party (the "Employment Agreement"), plus a
period of three (3) years; provided, however, that if the Restricted
Party's employment with the Company is terminated by the Company "without
Cause" (as that term is defined in the Employment Agreement) after a Change of
Control of Crossmann (as that term is defined in the Employment Agreement) or
if the Restricted Party shall have resigned from employment with the Company
"for Good Reason" (as that term is defined in the Employment Agreement), the
Restricted Period shall continue until the earlier to occur of (a) the date
that the Restricted Period would otherwise expire as described above or (b)
twelve (12) months from the date of termination without Cause or resignation
for Good Reason; and provided, further, that if the Restricted Party's
employment with the Company is terminated "without Cause" (as that term is
defined in the Employment Agreement) prior to the occurrence of a Change of
Control of Crossmann (as that term is defined in the Employment Agreement),
the Restricted Period shall continue until the earlier to occur of (y) the
date the Restricted Period would otherwise expire as described above, or (z)
on the second anniversary of the date of termination of the Restricted Party's
employment with the Company. Notwithstanding anything in this Agreement to
the contrary, if the Restricted Party breaches any provision of this Agreement
or the Employment Agreement the Restricted Period shall be extended for the
period of the breach, plus an additional six (6) months beyond the period of
the breach.
2 ab Section. Ownership of Confidential Information. The
Restricted Party hereby acknowledges and agrees that all Confidential
Information either constituted a valuable asset of Trinity Homes, which was an
asset of Crossmann by virtue of its existing membership interests in Trinity
Homes prior to the consummation of the transactions under the Purchase
Agreement, which became an asset of the Company as a result of the
transactions set forth in the Purchase Agreement, or constitutes a valuable
asset of the Crossmann Group. The Restricted Party further acknowledges and
agrees that the Company has a need to protect the Confidential Information for
the ongoing and continued success of the Crossmann Group. All Confidential
Information is and shall remain the exclusive property of the Crossmann Group,
whether or not prepared in whole or in part by the Restricted Party, and the
Restricted Party acknowledges and agrees that he does not have any right,
title or interest in or to the Confidential Information. The Restricted Party
shall, upon the request of the Company or at the end of the Employment Term
(as defined in the Employment Agreement), promptly deliver to the Company all
documents, tapes, disks, or other storage media and any other materials, and
all copies thereof in whatever form, in the possession of the Restricted Party
pertaining to Trinity Homes or the Crossmann Group including, but not limited
to, any containing Confidential Information.
3 ab Section. Non-Disclosure and Non-Use of Confidential
Information. In furtherance of this Agreement and in order to assure
adequate protection of the Crossmann Group against the wrongful use or
disclosure of the Confidential Information, the Restricted Party agrees to
hold all Confidential Information in strict confidence and solely for the
benefit of the Crossmann Group. The Restricted Party acknowledges that any
use or attempted use of any Confidential Information by the Restricted Party
or any disclosure of the Confidential Information to any third party would
constitute immediate and irreparable harm to the Crossmann Group and would be
of significant benefit to any competitor of the Crossmann Group. The
Restricted Party shall be deemed to have a fiduciary duty to protect all
Confidential Information from improper disclosure or use. Except with the
prior written consent of the Company or as required by law, the Restricted
Party agrees not to directly or indirectly disclose or use or authorize any
third party to disclose or use any Confidential Information for (a) an
indefinite duration, or (b) in the event that a court of competent
jurisdiction determines that an indefinite period is unreasonable, five (5)
years following the date hereof. The Restricted Party's obligations set forth
in this Section 3, and the Company's rights and remedies with respect
thereto, whether legal or equitable, shall remain in full force and effect
during the period described in (a) or (b) above, as applicable; provided,
however, that if the Restricted Party breaches any provision of this
Agreement, the time period for the applicable restriction shall be extended
for the period of the breach, plus an additional six (6) months beyond the
period of the breach.
4 ab Section. Non-Competition. During the Restricted Period, the
Restricted Party shall not, directly or indirectly, engage in the Restricted
Business in the Restricted Area; nor shall the Restricted Party during the
Restricted Period, without the express written consent of the Company,
directly or indirectly engage in, own, manage, operate, join, control, lend
money or other assistance to, or participate in or be connected with, as an
officer, director, employee, partner, shareholder, member, consultant,
manager, agent, or otherwise, any individual, corporation, partnership,
limited liability company, firm, other company, business organization, or
entity that is engaged in a substantially similar or competitive business to
the Restricted Business in the Restricted Area. Without limiting the
generality of the foregoing, the Restricted Party shall not, directly or
indirectly, (a) finance single family or multifamily homes, (b) manage or act
as a leasing agent for single or multifamily properties, (c) purchase, sell or
develop developed or undeveloped real property, (d) purchase or sell developed
lots, or (e) build or sell single family or multifamily homes. The Restricted
Party's obligations set forth in this Section 4 and the Company's rights and
remedies with respect thereto, whether legal or equitable, shall remain in
full force and effect during the Restricted Period. Notwithstanding any other
provision contained in this Agreement, the Restricted Party may own shares of
stock representing less than five percent (5%) of the outstanding shares of
any publicly-held company engaged in the Restricted Business.
5 ab Section. Non-Solicitation. During the Restricted Period,
the Restricted Party shall not, directly or indirectly, as an entity,
individually or on behalf of any other individual, corporation, partnership,
firm, other company, business organization, or entity, or in any other
capacity: (a) call upon, solicit, contact, or service any current, former or
potential customer or client of Trinity Homes or the Crossmann Group that the
Restricted Party called upon, solicited, contacted, or serviced prior to the
expiration of the Employment Term (as defined in the Employment Agreement);
(b) call upon, solicit, contact, or service any person or entity who is or was
prior to the expiration of the Employment Term (as defined in the Employment
Agreement), any subcontractor, agent, independent contractor, vendor or
supplier of Trinity Homes or the Crossmann Group; or (c) solicit for
employment, endeavor to entice away from the Crossmann Group, recruit, hire,
or otherwise interfere with the Crossmann Group's relationship with any person
who was employed by or otherwise engaged to perform services for Trinity Homes
or the Crossmann Group during the Restricted Period. The Restricted Party's
obligations set forth in this Section 5 and the Company's rights and
remedies with respect thereto, whether legal or equitable, shall remain in
full force and effect during the Restricted Period.
6 ab Section. Reasonableness of Terms. The Company and the
Restricted Party each stipulate and agree that the terms and covenants
contained in Section 1 through Section 5 herein are fair and reasonable in
all respects to protect the legitimate interests of the Crossmann Group,
including but not limited to the geographical coverage in Section 4 and the
time periods in Sections 3, 4, and 5, and that these restrictions are
designed for the reasonable protection of the Crossmann Group's business.
7 ab Section. Remedies. The Restricted Party recognizes that any
breach of this Agreement will cause irreparable injury to the goodwill and
proprietary rights of the Crossman Group, inadequately compensable in monetary
damages. Accordingly, in addition to any other legal or equitable remedies
that may be available to the Company, the Restricted Party agrees that the
Company will be able to seek and obtain immediate injunctive relief in the
form of a temporary restraining order without notice, preliminary injunction,
or permanent injunction against the Restricted Party to enforce this
Agreement. The Company shall not be required to post any bond or other
security and shall not be required to demonstrate any actual injury or damage
to obtain injunctive relief from the courts.
8 ab Section. Claims by the Restricted Party. Any claim or cause
of action of the Restricted Party, whether for breach of this Agreement, the
Purchase Agreement, the Employment Agreement or otherwise, shall not
constitute a defense to the enforcement of this Agreement and shall not be
used to prohibit injunctive relief.
9 ab Section. Costs. In the event of a breach of this Agreement,
the Company shall be entitled to recover from the Restricted Party all costs
of enforcement, including reasonable attorney's fees, all expenses of
litigation and court and other costs.
10 ab Section. Damages. To the extent that any damages are
calculable resulting from the breach of this Agreement, the Company shall also
be entitled to recover those damages from the Restricted Party, including any
lost profits of the Company. For purposes of this Agreement, profits shall
include but are not limited to, any gross profits earned by the Restricted
Party or by the Restricted Party's new employer or business during the entire
period of the breach including prejudgment interest at ten percent (10%) per
annum from the date of the breach. Any recovery of damages by the Company
shall be in addition to and not in lieu of the injunctive relief to which the
Company is entitled. In no event shall a damage recovery be considered a
penalty or liquidated damages, but shall be considered as measurable
compensation damages for breach by the Restricted Party.
11 ab Section. Nonassignability. This Agreement shall not be
assigned or delegated by the Restricted Party without the express written
consent of the Company. The Company may assign, delegate, or transfer this
Agreement and all of its rights and obligations under this Agreement to any
affiliate or to any business entity that by merger, consolidation, or
otherwise acquires all or substantially all of the assets of the Company, or
to which the Company transfers all or substantially all of its assets. Upon
assignment, delegation or transfer, any such affiliate or entity shall be
deemed to be substituted for the Company for all purposes of this Agreement.
12 ab Section. Binding Effect. This Agreement shall be binding
upon and inure to the benefit of the parties hereto, and any permitted
successors or assigns thereof.
13 ab Section. Severability. If a court of competent
jurisdiction makes a final determination that any term or provision of this
Agreement is invalid or unenforceable, and all rights to appeal the
determination have been exhausted or the period of time during which any
appeal of the determination may be perfected has been exhausted, the remaining
terms and provisions shall be unimpaired and the invalid or unenforceable term
or provision shall be deemed replaced by a term or provision that is valid and
enforceable and that most closely approximates the intention of the parties
with respect to the invalid or unenforceable term or provision, as evidenced
by the remaining valid and enforceable terms and conditions of this Agreement.
14 ab Section. Amendment. This Agreement may not be modified,
amended, or waived in any manner except by an instrument in writing signed by
all parties to this Agreement.
15 ab Section. Waiver. The waiver by any party of compliance by
any other party with any provision of this Agreement shall not operate or be
construed as a waiver of any other provision of this Agreement (whether or not
similar), or a continuing waiver or a waiver of any subsequent breach by a
party of a provision of this Agreement. Performance by any party of any act
not required of it under the terms and conditions of this Agreement shall not
constitute a waiver of the limitations on its obligations under this
Agreement, and no performance shall estop that party from asserting those
limitations as to any further or future performance of its obligations. The
Restricted Party acknowledges and agrees that every breach of this Agreement
or any similar agreement entered into between the Company and a third party is
unique. Therefore, the failure of the Company to enforce the same, similar or
different restriction in a similar agreement or to seek a different remedy or
any other act or omission by the Company shall not be construed as a waiver or
estoppel to the enforcement of this Agreement against the Restricted Party.
16 ab Section. Prospective Employers. The Restricted Party shall
inform any prospective employer about the existence of this Agreement before
accepting new employment and shall not agree, as a term of any new employment,
that the new employer will defend the Restricted Party or pay the attorneys'
fees of the Restricted Party in the event of a lawsuit brought by the Company
to enforce the terms of this Agreement.
17 ab Section. Fair Dealing. The Restricted Party acknowledges
that the Company has negotiated this Agreement in good faith and has been fair
in its dealing with the Restricted Party. The Restricted Party shall not
raise any defense and expressly waives any defense against the Purchaser based
upon any alleged breach of good faith or fair dealing by the Company.
18 ab Section. Waiver of Any Claim for Attempted Enforcement.
The Restricted Party agrees that the Company may enforce this Agreement to the
broadest extent possible. To the extent that the Company attempts to enforce
this Agreement, but is unsuccessful in enforcing some or all of the terms of
this Agreement, the Restricted Party shall not be entitled to any relief
against the Company for such attempted enforcement. The Restricted Party
specifically waives any rights that may exist under Indiana law, including but
not limited to Indiana Code Section 22-5-3-1 et seq. (Blacklisting
statute).
19 ab Section. Governing Law, Jurisdiction and Venue. The laws
of the State of Indiana shall govern the validity, performance, enforcement,
interpretation and any other aspect of this Agreement, notwithstanding any
state's choice of law provisions to the contrary. Any dispute relating to the
validity, performance, enforcement, interpretation, or any aspect of this
Agreement shall be litigated in a court in Marion County, Indiana, which shall
be deemed to be the exclusive venue for such dispute, except that the Company,
in its sole discretion, may elect to pursue litigation in the county and State
where any breach or violation of this Agreement by the Restricted Party has
occurred.
20 ab Section. Trade Secrets Act. This Agreement incorporates
all of the protections of the Indiana Uniform Trade Secrets Act 24-2-3-1
et seq., as amended.
21 ab Section. Notices. All notices required or desired to be
given under this Agreement shall be in writing and shall be deemed to have
been duly given (i) on the date of service if served personally on the party
to whom notice is to be given, (ii) on the date of receipt by the party to
whom notice is to be given if transmitted to such party by telefax, provided a
copy is mailed as set forth below on the date of transmission, or (iii) on the
third day after mailing if mailed to the party to whom notice is to be given
by registered or certified mail, return receipt requested, postage prepaid, to
the following addresses:
(a) If to Company, to:
Crossmann Communities, Inc.
9210 North Meridian Street
Indianapolis, Indiana 46260
Attn: John B. Scheumann
Fax: (317) 571-2210
With a copy to:
Steven K. Humke, Esq.
ICE MILLER
One American Square
Box 82001
Indianapolis, Indiana 46282
Fax: (317) 592-4675
(b) If to the Restricted Party, to:
865 West Carmel Drive, Suite 114
Carmel, Indiana 46032
Fax: (317) 574-7601
Any party may, by giving written notice to the other parties, change the
address to which notice shall then be sent.
22 ab Section. OPPORTUNITY TO CONSULT WITH OTHERS. THE
RESTRICTED PARTY HAS BEEN GIVEN THE OPPORTUNITY TO CONSULT WITH A LAWYER,
SPOUSE, ADVISOR, OR OTHER PERSON CONCERNING THIS AGREEMENT AND HAS EITHER
DISCUSSED THIS AGREEMENT WITH A LAWYER OR WAIVES ANY RIGHT TO DO SO.
23 ab Section. Prior Agreements. This Agreement and the
Employment Agreement are a complete and total integration of the understanding
of the parties, and supersede all prior or contemporaneous negotiations,
commitments, agreements, writings and discussions with respect to the subject
matter of this Agreement and the Employment Agreement.
24 ab Section. Headings. The subject headings of the sections of
this Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction of this
Agreement.
25 ab Section. Joint Drafting. This Agreement shall be deemed to
have been drafted jointly by the parties and in the event of any ambiguity in
this Agreement, the same shall not be construed against any party hereto.
26 ab Section. Counterparts. This Agreement may be executed in
one or more counterparts, each of which for all purposes shall be deemed to be
an original but all of which together shall constitute one and the same
Agreement. Facsimile transmissions of original signatures shall be deemed
original signatures. Only one counterpart signed by the party against which
enforceability is sought needs to be produced to evidence the existence of
this Agreement.
--
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute this Agreement as of the date first written above.
"THE COMPANY"
"CROSSMANN"
CROSSMANN COMMUNITIES, INC.
By:/s/ John B. Scheumann
Title:Chief Executive Officer
"TRINITY HOMES"
TRINITY HOMES, LLC
By:/s/ John B. Scheumann
Title: Manager
"RESTRICTED PARTY"
/s/ John E. McKenzie
John E. McKenzie
EXHIBIT 10.58
NONDISCLOSURE, NONCOMPETITION AND
NONSOLICITATION AGREEMENT
This Nondisclosure, Noncompetition and Nonsolicitation Agreement (the
"Agreement") is made and entered into as of the 20th day of October, 2000, by
and among Crossmann Communities, Inc., an Indiana corporation (together with
Crossmann Communities Partnership, an Indiana partnership and its subsidiary,
"Crossmann"), Trinity Homes, LLC, an Indiana limited liability company
("Trinity Homes", and together with Crossmann, the "Company"), and James D.
McKenzie (the "Restricted Party").
PRELIMINARY STATEMENT
Pursuant to the terms of a Membership Interest Purchase Agreement (the
"Purchase Agreement") dated of even date herewith by and between Trinity
Homes, Inc., an Indiana corporation of which the Restricted Party is a
shareholder ("THI"), and Crossmann, Crossmann will acquire all of the
membership interests of THI in Trinity Homes. As a result of his prior
employment by Trinity Homes and his ownership interest in THI, and as a result
of his continued employment by the Company, the Restricted Party had and will
have access to Confidential Information (as defined below). In consideration
for Crossmann's consummation of the Purchase Agreement and the Company's
employment of the Restricted Party, the Restricted Party agrees to be
restricted as set forth in this Agreement. Terms used but not defined herein
shall have the meanings ascribed to them in the Purchase Agreement.
TERMS AND CONDITIONS
In consideration of the mutual promises and covenants contained in this
Agreement, and intending to be legally bound, the parties agree as follows:
OUTLINE ON
--
1 ab Section. Definitions.
(a) Confidential Information. "Confidential Information" shall mean all
information, whether or not originated by Trinity Homes, the Crossmann Group,
or the Restricted Party, which is not generally known other than by personnel
of Trinity Homes or the Crossman Group and which (1) is used in the business
of Trinity Homes and is proprietary to, about, or created by, Trinity Homes,
its officers, directors, employees, agents or representatives, or the
Restricted Party; or (2) is used in the business of the Crossmann Group and is
proprietary to, or about, or created by, the Crossmann Group or its officers,
directors, employees, agents or representatives and is made known to the
Restricted Party. Confidential Information includes, but is not limited to
(whether or not reduced to writing or designated as confidential):
(i)Information regarding any of Trinity Homes' or the Crossmann Group's
customers and clients and their representatives, any of Trinity Homes' or the
Crossmann Group's potential customers or leads, the identity of any contracts
(contents and parties) to which Trinity Homes or the Crossmann Group are or
were a party or are or were bound, and the type, quantity and specifications
of products and services sold to, purchased, leased, licensed or received by
Trinity Homes or the Crossmann Group;
(ii)Information relating to Trinity Homes or the Crossmann Group received by
the Restricted Party, directly or indirectly from third parties (such as
vendors) under an obligation of confidentiality, restricted disclosure or
restricted use;
(iii)Information relating to the purchase, sale or development or the
prospective purchase, sale or development of real property by Trinity Homes or
the Crossmann Group;
(iv)Any internal personnel and financial information relating to Trinity
Homes or the Crossmann Group (including the revenue, costs or profits
associated with Trinity Homes or Restricted Party); the names of Trinity
Homes' or the Crossmann Group's subcontractors, agents, independent
contractors, vendors and suppliers; Trinity Homes' or the Crossmann Group's
payroll information; Trinity Homes' or the Crossmann Group's purchasing and
internal cost information; Trinity Homes' or the Crossmann Group's internal
service and operational manuals and other information relating to Trinity
Homes or the Crossmann Group; and the manner and methods of carrying on the
business of Trinity Homes or the Crossmann Group;
(v) Information related to Trinity Homes or the Crossmann Group with respect
to their respective products, facilities and methods, systems, trade secrets
and other intellectual property; and
(vi)Marketing and developmental plans, price and cost data, price and fee
amounts, pricing and billing policies, quoting procedures, marketing
techniques, methods of obtaining business, forecasts, forecast assumptions and
volumes, future plans and potential strategies relating to Trinity Homes or
the Crossmann Group.
Notwithstanding the foregoing, the term Confidential Information does not
include (1) information that was in the public domain or generally known in
the industry at the time the Restricted Party first received, observed, or
otherwise became aware of such information, (2) information that becomes a
part of the public domain or becomes generally known in the industry other
than by the breach by the Restricted Party of his obligations under this
Agreement, (3) information that is disclosed to the Restricted Party after the
termination of this Agreement by a third party having the right to disclose
the same without violating any obligation to the Company, or (4) information
that is independently developed by the Restricted Party after the termination
of this Agreement.
"Crossmann Group" shall mean each of Crossmann, any parent, subsidiary or
affiliate of Crossmann (including without limitation Trinity Homes), and any
joint venture in which Crossmann or any of its affiliates participates.
"Restricted Area" shall mean any location within 50 miles of any city,
town, village or metropolitan area in which the Crossmann Group or Trinity
Homes conducted business, took steps to conduct business or evaluated the
prospect of conducting business, during the Employment Term, including but not
limited to Indianapolis, Indiana.
"Restricted Business" shall mean any business that is substantially
similar to or competitive with the business engaged in by the Crossmann Group
or Trinity Homes, including development of real estate, construction for sale
or lease or rent of single family and/or multi-family homes, the sale of
single family and/or multi-family homes and the management of multi-family
home projects.
"Restricted Period" shall mean the Employment Term (as that term is
defined in the Employment Agreement dated of even date herewith by and between
the Company and the Restricted Party (the "Employment Agreement"), plus a
period of three (3) years; provided, however, that if the Restricted
Party's employment with the Company is terminated by the Company "without
Cause" (as that term is defined in the Employment Agreement) after a Change of
Control of Crossmann (as that term is defined in the Employment Agreement) or
the Restricted Party shall have resigned from employment with the Company "for
Good Reason" (as that term is defined in the Employment Agreement), the
Restricted Period shall continue until the earlier to occur of (a) the date
that the Restricted Period would otherwise expire as described above or (b)
twelve (12) months from the date of termination without Cause or resignation
for Good Reason; and provided, further, that if the Restricted Party's
employment with the Company is terminated "without Cause" (as that term is
defined in the Employment Agreement) prior to the occurrence of a Change of
Control of Crossmann (as that term is defined in the Employment Agreement),
the Restricted Period shall continue until the earlier to occur of (y) the
date the Restricted Period would otherwise expire as described above, or (z)
on the second anniversary of the date of termination of the Restricted Party's
employment with the Company. Notwithstanding anything in this Agreement to
the contrary, if the Restricted Party breaches any provision of this Agreement
or the Employment Agreement the Restricted Period shall be extended for the
period of the breach, plus an additional six (6) months beyond the period of
the breach.
2 ab Section. Ownership of Confidential Information. The
Restricted Party hereby acknowledges and agrees that all Confidential
Information either constituted a valuable asset of Trinity Homes, which was an
asset of Crossmann by virtue of its existing membership interests in Trinity
Homes prior to the consummation of the transactions under the Purchase
Agreement, which became an asset of the Company as a result of the
transactions set forth in the Purchase Agreement, or constitutes a valuable
asset of the Crossmann Group. The Restricted Party further acknowledges and
agrees that the Company has a need to protect the Confidential Information for
the ongoing and continued success of the Crossmann Group. All Confidential
Information is and shall remain the exclusive property of the Crossmann Group,
whether or not prepared in whole or in part by the Restricted Party, and the
Restricted Party acknowledges and agrees that he does not have any right,
title or interest in or to the Confidential Information. The Restricted Party
shall, upon the request of the Company or at the end of the Employment Term
(as defined in the Employment Agreement), promptly deliver to the Company all
documents, tapes, disks, or other storage media and any other materials, and
all copies thereof in whatever form, in the possession of the Restricted Party
pertaining to Trinity Homes or the Crossmann Group including, but not limited
to, any containing Confidential Information.
3 ab Section. Non-Disclosure and Non-Use of Confidential
Information. In furtherance of this Agreement and in order to assure
adequate protection of the Crossmann Group against the wrongful use or
disclosure of the Confidential Information, the Restricted Party agrees to
hold all Confidential Information in strict confidence and solely for the
benefit of the Crossmann Group. The Restricted Party acknowledges that any
use or attempted use of any Confidential Information by the Restricted Party
or any disclosure of the Confidential Information to any third party would
constitute immediate and irreparable harm to the Crossmann Group and would be
of significant benefit to any competitor of the Crossmann Group. The
Restricted Party shall be deemed to have a fiduciary duty to protect all
Confidential Information from improper disclosure or use. Except with the
prior written consent of the Company or as required by law, the Restricted
Party agrees not to directly or indirectly disclose or use or authorize any
third party to disclose or use any Confidential Information for (a) an
indefinite duration, or (b) in the event that a court of competent
jurisdiction determines that an indefinite period is unreasonable, five (5)
years following the date hereof. The Restricted Party's obligations set forth
in this Section 3, and the Company's rights and remedies with respect
thereto, whether legal or equitable, shall remain in full force and effect
during the period described in (a) or (b) above, as applicable; provided,
however, that if the Restricted Party breaches any provision of this
Agreement, the time period for the applicable restriction shall be extended
for the period of the breach, plus an additional six (6) months beyond the
period of the breach.
4 ab Section. Non-Competition. During the Restricted Period, the
Restricted Party shall not, directly or indirectly, engage in the Restricted
Business in the Restricted Area; nor shall the Restricted Party during the
Restricted Period, without the express written consent of the Company,
directly or indirectly engage in, own, manage, operate, join, control, lend
money or other assistance to, or participate in or be connected with, as an
officer, director, employee, partner, shareholder, member, consultant,
manager, agent, or otherwise, any individual, corporation, partnership,
limited liability company, firm, other company, business organization, or
entity that is engaged in a substantially similar or competitive business to
the Restricted Business in the Restricted Area. Without limiting the
generality of the foregoing the Restricted Party shall not, directly or
indirectly, (a) finance single family or multifamily homes, (b) manage or act
as a leasing agent for single or multifamily properties, (c) purchase, sell or
develop developed or undeveloped real property, (d) purchase or sell developed
lots, or (e) build or sell single family or multifamily homes. The Restricted
Party's obligations set forth in this Section 4 and the Company's rights and
remedies with respect thereto, whether legal or equitable, shall remain in
full force and effect during the Restricted Period. Notwithstanding any other
provision contained in this Agreement, the Restricted Party may own shares of
stock representing less than five percent (5%) of the outstanding shares of
any publicly-held company engaged in the Restricted Business.
5 ab Section. Non-Solicitation. During the Restricted Period,
the Restricted Party shall not, directly or indirectly, as an entity,
individually or on behalf of any other individual, corporation, partnership,
firm, other company, business organization, or entity, or in any other
capacity: (a) call upon, solicit, contact, or service any current, former or
potential customer or client of Trinity Homes or the Crossmann Group that the
Restricted Party called upon, solicited, contacted, or serviced prior to the
expiration of the Employment Term (as defined in the Employment Agreement);
(b) call upon, solicit, contact, or service any person or entity who is or was
prior to the expiration of the Employment Term (as defined in the Employment
Agreement), any subcontractor, agent, independent contractor, vendor or
supplier of Trinity Homes or the Crossmann Group; or (c) solicit for
employment, endeavor to entice away from the Crossmann Group, recruit, hire,
or otherwise interfere with the Crossmann Group's relationship with any person
who was employed by or otherwise engaged to perform services for Trinity Homes
or the Crossmann Group during the Restricted Period. The Restricted Party's
obligations set forth in this Section 5 and the Company's rights and
remedies with respect thereto, whether legal or equitable, shall remain in
full force and effect during the Restricted Period.
6 ab Section. Reasonableness of Terms. The Company and the
Restricted Party each stipulate and agree that the terms and covenants
contained in Section 1 through Section 5 herein are fair and reasonable in
all respects to protect the legitimate interests of the Crossmann Group,
including but not limited to the geographical coverage in Section 4 and the
time periods in Sections 3, 4, and 5, and that these restrictions are
designed for the reasonable protection of the Crossmann Group's business.
7 ab Section. Remedies. The Restricted Party recognizes that any
breach of this Agreement will cause irreparable injury to the goodwill and
proprietary rights of the Crossman Group, inadequately compensable in monetary
damages. Accordingly, in addition to any other legal or equitable remedies
that may be available to the Company, the Restricted Party agrees that the
Company will be able to seek and obtain immediate injunctive relief in the
form of a temporary restraining order without notice, preliminary injunction,
or permanent injunction against the Restricted Party to enforce this
Agreement. The Company shall not be required to post any bond or other
security and shall not be required to demonstrate any actual injury or damage
to obtain injunctive relief from the courts.
8 ab Section. Claims by the Restricted Party. Any claim or cause
of action of the Restricted Party, whether for breach of this Agreement, the
Purchase Agreement, the Employment Agreement or otherwise, shall not
constitute a defense to the enforcement of this Agreement and shall not be
used to prohibit injunctive relief.
9 ab Section. Costs. In the event of a breach of this Agreement,
the Company shall be entitled to recover from the Restricted Party all costs
of enforcement, including reasonable attorney's fees, all expenses of
litigation and court and other costs.
10 ab Section. Damages. To the extent that any damages are
calculable resulting from the breach of this Agreement, the Company shall also
be entitled to recover those damages from the Restricted Party, including any
lost profits of the Company. For purposes of this Agreement, profits shall
include but are not limited to, any gross profits earned by the Restricted
Party or by the Restricted Party's new employer or business during the entire
period of the breach including prejudgment interest at ten percent (10%) per
annum from the date of the breach. Any recovery of damages by the Company
shall be in addition to and not in lieu of the injunctive relief to which the
Company is entitled. In no event shall a damage recovery be considered a
penalty or liquidated damages, but shall be considered as measurable
compensation damages for breach by the Restricted Party.
11 ab Section. Nonassignability. This Agreement shall not be
assigned or delegated by the Restricted Party without the express written
consent of the Company. The Company may assign, delegate, or transfer this
Agreement and all of its rights and obligations under this Agreement to any
affiliate or to any business entity that by merger, consolidation, or
otherwise acquires all or substantially all of the assets of the Company, or
to which the Company transfers all or substantially all of its assets. Upon
assignment, delegation or transfer, any such affiliate or entity shall be
deemed to be substituted for the Company for all purposes of this Agreement.
12 ab Section. Binding Effect. This Agreement shall be binding
upon and inure to the benefit of the parties hereto, and any permitted
successors or assigns thereof.
13 ab Section. Severability. If a court of competent
jurisdiction makes a final determination that any term or provision of this
Agreement is invalid or unenforceable, and all rights to appeal the
determination have been exhausted or the period of time during which any
appeal of the determination may be perfected has been exhausted, the remaining
terms and provisions shall be unimpaired and the invalid or unenforceable term
or provision shall be deemed replaced by a term or provision that is valid and
enforceable and that most closely approximates the intention of the parties
with respect to the invalid or unenforceable term or provision, as evidenced
by the remaining valid and enforceable terms and conditions of this Agreement.
14 ab Section. Amendment. This Agreement may not be modified,
amended, or waived in any manner except by an instrument in writing signed by
all parties to this Agreement.
15 ab Section. Waiver. The waiver by any party of compliance by
any other party with any provision of this Agreement shall not operate or be
construed as a waiver of any other provision of this Agreement (whether or not
similar), or a continuing waiver or a waiver of any subsequent breach by a
party of a provision of this Agreement. Performance by any party of any act
not required of it under the terms and conditions of this Agreement shall not
constitute a waiver of the limitations on its obligations under this
Agreement, and no performance shall estop that party from asserting those
limitations as to any further or future performance of its obligations. The
Restricted Party acknowledges and agrees that every breach of this Agreement
or any similar agreement entered into between the Company and a third party is
unique. Therefore, the failure of the Company to enforce the same, similar or
different restriction in a similar agreement or to seek a different remedy or
any other act or omission by the Company shall not be construed as a waiver or
estoppel to the enforcement of this Agreement against the Restricted Party.
16 ab Section. Prospective Employers. The Restricted Party shall
inform any prospective employer about the existence of this Agreement before
accepting new employment and shall not agree, as a term of any new employment,
that the new employer will defend the Restricted Party or pay the attorneys'
fees of the Restricted Party in the event of a lawsuit brought by the Company
to enforce the terms of this Agreement.
17 ab Section. Fair Dealing. The Restricted Party acknowledges
that the Company has negotiated this Agreement in good faith and has been fair
in its dealing with the Restricted Party. The Restricted Party shall not
raise any defense and expressly waives any defense against the Purchaser based
upon any alleged breach of good faith or fair dealing by the Company.
18 ab Section. Waiver of Any Claim for Attempted Enforcement.
The Restricted Party agrees that the Company may enforce this Agreement to the
broadest extent possible. To the extent that the Company attempts to enforce
this Agreement, but is unsuccessful in enforcing some or all of the terms of
this Agreement, the Restricted Party shall not be entitled to any relief
against the Company for such attempted enforcement. The Restricted Party
specifically waives any rights that may exist under Indiana law, including but
not limited to Indiana Code Section 22-5-3-1 et seq. (Blacklisting
statute).
19 ab Section. Governing Law, Jurisdiction and Venue. The laws
of the State of Indiana shall govern the validity, performance, enforcement,
interpretation and any other aspect of this Agreement, notwithstanding any
state's choice of law provisions to the contrary. Any dispute relating to the
validity, performance, enforcement, interpretation, or any aspect of this
Agreement shall be litigated in a court in Marion County, Indiana, which shall
be deemed to be the exclusive venue for such dispute, except that the Company,
in its sole discretion, may elect to pursue litigation in the county and State
where any breach or violation of this Agreement by the Restricted Party has
occurred.
20 ab Section. Trade Secrets Act. This Agreement incorporates
all of the protections of the Indiana Uniform Trade Secrets Act 24-2-3-1
et seq., as amended.
21 ab Section. Notices. All notices required or desired to be
given under this Agreement shall be in writing and shall be deemed to have
been duly given (i) on the date of service if served personally on the party
to whom notice is to be given, (ii) on the date of receipt by the party to
whom notice is to be given if transmitted to such party by telefax, provided a
copy is mailed as set forth below on the date of transmission, or (iii) on the
third day after mailing if mailed to the party to whom notice is to be given
by registered or certified mail, return receipt requested, postage prepaid, to
the following addresses:
(a) If to Company, to:
Crossmann Communities, Inc.
9210 North Meridian Street
Indianapolis, Indiana 46260
Attn: John B. Scheumann
Fax: (317) 571-2210
With a copy to:
Steven K. Humke, Esq.
ICE MILLER
One American Square
Box 82001
Indianapolis, Indiana 46282
Fax: (317) 592-4675
(b) If to the Restricted Party, to:
865 West Carmel Drive, Suite 114
Carmel, Indiana 46032
Fax: (317) 574-7601
Any party may, by giving written notice to the other parties, change the
address to which notice shall then be sent.
22 ab Section. OPPORTUNITY TO CONSULT WITH OTHERS. THE
RESTRICTED PARTY HAS BEEN GIVEN THE OPPORTUNITY TO CONSULT WITH A LAWYER,
SPOUSE, ADVISOR, OR OTHER PERSON CONCERNING THIS AGREEMENT AND HAS EITHER
DISCUSSED THIS AGREEMENT WITH A LAWYER OR WAIVES ANY RIGHT TO DO SO.
23 ab Section. Prior Agreements. This Agreement and the
Employment Agreement are a complete and total integration of the understanding
of the parties, and supersede all prior or contemporaneous negotiations,
commitments, agreements, writings and discussions with respect to the subject
matter of this Agreement and the Employment Agreement.
24 ab Section. Headings. The subject headings of the sections of
this Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction of this
Agreement.
25 ab Section. Joint Drafting. This Agreement shall be deemed to
have been drafted jointly by the parties and in the event of any ambiguity in
this Agreement, the same shall not be construed against any party hereto.
26 ab Section. Counterparts. This Agreement may be executed in
one or more counterparts, each of which for all purposes shall be deemed to be
an original but all of which together shall constitute one and the same
Agreement. Facsimile transmissions of original signatures shall be deemed
original signatures. Only one counterpart signed by the party against which
enforceability is sought needs to be produced to evidence the existence of
this Agreement.
--
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute this Agreement as of the date first written above.
"THE COMPANY"
"CROSSMANN"
CROSSMANN COMMUNITIES, INC.
By:/s/ John B. Scheumann
Title:Chief Executive Officer
"TRINITY HOMES"
TRINITY HOMES, LLC
By:/s/ John B. Scheumann
Title: Manager
"RESTRICTED PARTY"
/s/ James D. McKenzie
James D. McKenzie
--
Exhibit 10.59
NONDISCLOSURE, NONCOMPETITION AND
NONSOLICITATION AGREEMENT
This Nondisclosure, Noncompetition and Nonsolicitation Agreement (the
"Agreement") is made and entered into as of the 20th day of October, 2000 (the
"Effective Date"), by and among Crossmann Communities Partnership, an Indiana
partnership ("Crossmann"), Trinity Homes, LLC, an Indiana limited liability
company ("Trinity Homes", and together with Crossmann, the "Company"), and
Pyramid Mortgage Co., Inc. (the "Restricted Party").
PRELIMINARY STATEMENT
Pursuant to the terms of a Membership Interest Purchase Agreement (the
"Purchase Agreement") dated of even date herewith by and among the Restricted
Party, Trinity Homes, Inc., and Crossmann, Crossmann will acquire all of the
membership interests of the Restricted Party in Trinity Homes. As a result of
its ownership interest in Trinity Homes, the Restricted Party had access to
Confidential Information (as defined below). In consideration for Crossmann's
consummation of the Purchase Agreement, the Restricted Party agrees to be
restricted as set forth in this Agreement. Terms used but not defined herein
shall have the meanings ascribed to them in the Purchase Agreement. This
Agreement applies to the Restricted Party only and not to any shareholder of
the Restricted Party.
TERMS AND CONDITIONS
In consideration of the mutual promises and covenants contained in this
Agreement, and intending to be legally bound, the parties agree as follows:
OUTLINE ON
1 ab Section. Definitions.
(a) Confidential Information. "Confidential Information" shall mean all
information, whether or not originated by Trinity Homes, the Crossmann Group,
or the Restricted Party, which is not generally known other than by personnel
of Trinity Homes or the Crossman Group and which (1) is used in the business
of Trinity Homes and is proprietary to, about, or created by, Trinity Homes,
its officers, directors, employees, agents or representatives, or the
Restricted Party; or (2) is used in the business of the Crossmann Group and is
proprietary to, or about, or created by, the Crossmann Group or its officers,
directors, employees, agents or representatives and is made known to the
Restricted Party. Confidential Information includes, but is not limited to
(whether or not reduced to writing or designated as confidential):
(i)Information regarding any of Trinity Homes' or the Crossmann Group's
customers and clients and their representatives, any of Trinity Homes' or the
Crossmann Group's potential customers or leads, the identity of any contracts
(contents and parties) to which Trinity Homes or the Crossmann Group are or
were a party or are or were bound, and the type, quantity and specifications
of products and services sold to, purchased, leased, licensed or received by
Trinity Homes or the Crossmann Group;
(ii)Information relating to Trinity Homes or the Crossmann Group received by
the Restricted Party, directly or indirectly from third parties (such as
vendors) under an obligation of confidentiality, restricted disclosure or
restricted use;
(iii)Information relating to the purchase, sale or development or the
prospective purchase, sale or development of real property by Trinity Homes or
the Crossmann Group;
(iv)Any internal personnel and financial information relating to Trinity
Homes or the Crossmann Group (including the revenue, costs or profits
associated with Trinity Homes or Restricted Party); the names of Trinity
Homes' or the Crossmann Group's subcontractors, agents, independent
contractors, vendors and suppliers; Trinity Homes' or the Crossmann Group's
payroll information; Trinity Homes' or the Crossmann Group's purchasing and
internal cost information; Trinity Homes' or the Crossmann Group's internal
service and operational manuals and other information relating to Trinity
Homes or the Crossmann Group; and the manner and methods of carrying on the
business of Trinity Homes or the Crossmann Group;
(v) Information related to Trinity Homes or the Crossmann Group with respect
to their respective products, facilities and methods, systems, trade secrets
and other intellectual property; and
(vi)Marketing and developmental plans, price and cost data, price and fee
amounts, pricing and billing policies, quoting procedures, marketing
techniques, methods of obtaining business, forecasts, forecast assumptions and
volumes, future plans and potential strategies relating to Trinity Homes or
the Crossmann Group.
Notwithstanding the foregoing, the term Confidential Information does not
include (1) information that was in the public domain or generally known in
the industry at the time the Restricted Party first received, observed, or
otherwise became aware of such information, (2) information that becomes a
part of the public domain or becomes generally known in the industry other
than by the breach by the Restricted Party of its obligations under this
Agreement, (3) information that is disclosed to the Restricted Party after the
termination of this Agreement by a third party having the right to disclose
the same without violating any obligation to the Company, or (4) information
that is independently developed by the Restricted Party after the termination
of this Agreement.
"Crossmann Group" shall mean each of Crossmann, any subsidiary, parent or
affiliate of Crossmann (including without limitation Trinity Homes), and any
joint venture in which Crossmann or any of its affiliates participates.
"Restricted Area" shall mean any location within 50 miles of any city,
town, village or metropolitan area in which the Crossmann Group or Trinity
Homes conducted business, took steps to conduct business or evaluated the
prospect of conducting business prior to the Effective Date of this Agreement,
including but not limited to Indianapolis, Indiana.
"Restricted Business" shall mean any business that is substantially
similar to or competitive with the business engaged in by the Crossmann Group
or Trinity Homes, including development of real estate, construction for sale
or lease or rent of single family and/or multi-family homes, the sale of
single family and/or multi-family homes and the management of multi-family
home projects.
"Restricted Period" shall mean a period that is five (5) years from the
Effective Date of this Agreement; provided, however, that if the
Restricted Party breaches any provision of this Agreement, the Restricted
Period shall be extended for the period of the breach, plus an additional six
(6) months beyond the period of the breach.
2 ab Section. Ownership of Confidential Information. The
Restricted Party hereby acknowledges and agrees that all Confidential
Information either constituted a valuable asset of Trinity Homes, which was an
asset of Crossmann by virtue of its existing membership interests in Trinity
Homes prior to the consummation of the transactions under the Purchase
Agreement, which became an asset of the Company as a result of the
transactions set forth in the Purchase Agreement, or constitutes a valuable
asset of the Crossmann Group. The Restricted Party further acknowledges and
agrees that the Company has a need to protect the Confidential Information for
the ongoing and continued success of the Crossmann Group. All Confidential
Information is and shall remain the exclusive property of the Crossmann Group,
whether or not prepared in whole or in part by the Restricted Party, and the
Restricted Party acknowledges and agrees that he does not have any right,
title or interest in or to the Confidential Information. The Restricted Party
shall, upon the request of the Company, promptly deliver to the Company all
documents, tapes, disks, or other storage media and any other materials, and
all copies thereof in whatever form, in the possession of the Restricted Party
pertaining to Trinity Homes or the Crossmann Group including, but not limited
to, any containing Confidential Information.
3 ab Section. Non-Disclosure and Non-Use of Confidential
Information. In furtherance of this Agreement and in order to assure
adequate protection of the Crossmann Group against the wrongful use or
disclosure of the Confidential Information, the Restricted Party agrees to
hold all Confidential Information in strict confidence and solely for the
benefit of the Crossmann Group. The Restricted Party acknowledges that any
use or attempted use of any Confidential Information by the Restricted Party
or any disclosure of the Confidential Information to any third party would
constitute immediate and irreparable harm to the Crossmann Group and would be
of significant benefit to any competitor of the Crossmann Group. The
Restricted Party shall be deemed to have a fiduciary duty to protect all
Confidential Information from improper disclosure or use. Except with the
prior written consent of the Company or as required by law, the Restricted
Party agrees not to directly or indirectly disclose or use or authorize any
third party to disclose or use any Confidential Information for (a) an
indefinite duration, or (b) in the event that a court of competent
jurisdiction determines that an indefinite period is unreasonable, five (5)
years following the Effective Date. The Restricted Party's obligations set
forth in this Section 3, and the Company's rights and remedies with respect
thereto, whether legal or equitable, shall remain in full force and effect
during the period described in (a) or (b) above, as applicable; provided,
however, that if the Restricted Party breaches any provision of this
Agreement, the time period for the applicable restriction shall be extended
for the period of the breach, plus an additional six (6) months beyond the
period of the breach.
4 ab Section. Non-Competition. During the Restricted Period, the
Restricted Party shall not, directly or indirectly, engage in the Restricted
Business in the Restricted Area; nor shall the Restricted Party during the
Restricted Period, without the express written consent of the Company,
directly or indirectly engage in, own, manage, operate, join, control, lend
money or other assistance to, or participate in or be connected with, as an
officer, director, employee, partner, shareholder, member, consultant,
manager, agent, or otherwise, any individual, corporation, partnership,
limited liability company, firm, other company, business organization, or
entity that is engaged in a substantially similar or competitive business to
the Restricted Business in the Restricted Area. Without limiting the
generality of the foregoing the Restricted Party shall not, directly or
indirectly, (a) finance single family or multifamily homes, (b) manage or act
as a leasing agent for single or multifamily properties, (c) purchase, sell or
develop developed or undeveloped real property, (d) purchase or sell developed
lots, or (e) build or sell single family or multifamily homes. The Restricted
Party's obligations set forth in this Section 4 and the Company's rights and
remedies with respect thereto, whether legal or equitable, shall remain in
full force and effect during the Restricted Period. Notwithstanding any other
provision contained in this Agreement, the Restricted Party may own shares of
stock representing less than five percent (5%) of the outstanding shares of
any publicly-held company engaged in the Restricted Business.
5 ab Section. Non-Solicitation. During the Restricted Period,
the Restricted Party shall not, directly or indirectly, as an entity,
individually or on behalf of any other individual, corporation, partnership,
firm, other company, business organization, or entity, or in any other
capacity: (a) call upon, solicit, contact, or service any current, former or
potential customer or client of Trinity Homes or the Crossmann Group that the
Restricted Party called upon, solicited, contacted, or serviced prior to the
Effective Date of this Agreement; (b) call upon, solicit, contact, or service
any person or entity who is or was prior to the Effective Date of this
Agreement, any subcontractor, agent, independent contractor, vendor or
supplier of Trinity Homes or the Crossmann Group; or (c) solicit for
employment, endeavor to entice away from the Crossmann Group, recruit, hire,
or otherwise interfere with the Crossmann Group's relationship with any person
who was employed by or otherwise engaged to perform services for Trinity Homes
or the Crossmann Group during the Restricted Period. The Restricted Party's
obligations set forth in this Section 5 and the Company's rights and
remedies with respect thereto, whether legal or equitable, shall remain in
full force and effect during the Restricted Period.
6 ab Section. Reasonableness of Terms. The Company and the
Restricted Party each stipulate and agree that the terms and covenants
contained in Section 1 through Section 5 herein are fair and reasonable in
all respects to protect the legitimate interests of the Crossmann Group,
including but not limited to the geographical coverage in Section 4 and the
time periods in Sections 3, 4, and 5, and that these restrictions are
designed for the reasonable protection of the Crossmann Group's business.
7 ab Section. Remedies. The Restricted Party recognizes that any
breach of this Agreement will cause irreparable injury to the goodwill and
proprietary rights of the Crossman Group, inadequately compensable in monetary
damages. Accordingly, in addition to any other legal or equitable remedies
that may be available to the Company, the Restricted Party agrees that the
Company will be able to seek and obtain immediate injunctive relief in the
form of a temporary restraining order without notice, preliminary injunction,
or permanent injunction against the Restricted Party to enforce this
Agreement. The Company shall not be required to post any bond or other
security and shall not be required to demonstrate any actual injury or damage
to obtain injunctive relief from the courts.
8 ab Section. Claims by the Restricted Party. Any claim or cause
of action of the Restricted Party, whether for breach of this Agreement, the
Purchase Agreement, or otherwise, shall not constitute a defense to the
enforcement of this Agreement and shall not be used to prohibit injunctive
relief.
9 ab Section. Costs. In the event of a breach of this Agreement,
the Company shall be entitled to recover from the Restricted Party all costs
of enforcement, including reasonable attorney's fees, all expenses of
litigation and court and other costs.
10 ab Section. Damages. To the extent that any damages are
calculable resulting from the breach of this Agreement, the Company shall also
be entitled to recover those damages from the Restricted Party, including any
lost profits of the Company. For purposes of this Agreement, profits shall
include but are not limited to, any gross profits earned by the Restricted
Party or by the Restricted Party's new employer or business during the entire
period of the breach including prejudgment interest at ten percent (10%) per
annum from the date of the breach. Any recovery of damages by the Company
shall be in addition to and not in lieu of the injunctive relief to which the
Company is entitled. In no event shall a damage recovery be considered a
penalty or liquidated damages, but shall be considered as measurable
compensation damages for breach by the Restricted Party.
11 ab Section. Nonassignability. This Agreement shall not be
assigned or delegated by the Restricted Party without the express written
consent of the Company. The Company may assign, delegate, or transfer this
Agreement and all of its rights and obligations under this Agreement to any
affiliate or to any business entity that by merger, consolidation, or
otherwise acquires all or substantially all of the assets of the Company, or
to which the Company transfers all or substantially all of its assets. Upon
assignment, delegation or transfer, any such affiliate or entity shall be
deemed to be substituted for the Company for all purposes of this Agreement.
12 ab Section. Binding Effect. This Agreement shall be binding
upon and inure to the benefit of the parties hereto, and any permitted
successors or assigns thereof.
13 ab Section. Severability. If a court of competent
jurisdiction makes a final determination that any term or provision of this
Agreement is invalid or unenforceable, and all rights to appeal the
determination have been exhausted or the period of time during which any
appeal of the determination may be perfected has been exhausted, the remaining
terms and provisions shall be unimpaired and the invalid or unenforceable term
or provision shall be deemed replaced by a term or provision that is valid and
enforceable and that most closely approximates the intention of the parties
with respect to the invalid or unenforceable term or provision, as evidenced
by the remaining valid and enforceable terms and conditions of this Agreement.
14 ab Section. Amendment. This Agreement may not be modified,
amended, or waived in any manner except by an instrument in writing signed by
all parties to this Agreement.
15 ab Section. Waiver. The waiver by any party of compliance by
any other party with any provision of this Agreement shall not operate or be
construed as a waiver of any other provision of this Agreement (whether or not
similar), or a continuing waiver or a waiver of any subsequent breach by a
party of a provision of this Agreement. Performance by any party of any act
not required of it under the terms and conditions of this Agreement shall not
constitute a waiver of the limitations on its obligations under this
Agreement, and no performance shall estop that party from asserting those
limitations as to any further or future performance of its obligations. The
Restricted Party acknowledges and agrees that every breach of this Agreement
or any similar agreement entered into between the Company and a third party is
unique. Therefore, the failure of the Company to enforce the same, similar or
different restriction in a similar agreement or to seek a different remedy or
any other act or omission by the Company shall not be construed as a waiver or
estoppel to the enforcement of this Agreement against the Restricted Party.
16 ab Section. Prospective Employers. The Restricted Party shall
inform any prospective employer about the existence of this Agreement before
accepting new employment and shall not agree, as a term of any new employment,
that the new employer will defend the Restricted Party or pay the attorneys'
fees of the Restricted Party in the event of a lawsuit brought by the Company
to enforce the terms of this Agreement.
17 ab Section. Fair Dealing. The Restricted Party acknowledges
that the Company has negotiated this Agreement in good faith and has been fair
in its dealing with the Restricted Party. The Restricted Party shall not
raise any defense and expressly waives any defense against the Purchaser based
upon any alleged breach of good faith or fair dealing by the Company.
18 ab Section. Waiver of Any Claim for Attempted Enforcement.
The Restricted Party agrees that the Company may enforce this Agreement to the
broadest extent possible. To the extent that the Company attempts to enforce
this Agreement, but is unsuccessful in enforcing some or all of the terms of
this Agreement, the Restricted Party shall not be entitled to any relief
against the Company for such attempted enforcement. The Restricted Party
specifically waives any rights that may exist under Indiana law, including but
not limited to Indiana Code Section 22-5-3-1 et seq. (Blacklisting
statute).
19 ab Section. Governing Law, Jurisdiction and Venue. The laws
of the State of Indiana shall govern the validity, performance, enforcement,
interpretation and any other aspect of this Agreement, notwithstanding any
state's choice of law provisions to the contrary. Any dispute relating to the
validity, performance, enforcement, interpretation, or any aspect of this
Agreement shall be litigated in a court in Marion County, Indiana, which shall
be deemed to be the exclusive venue for such dispute, except that the Company,
in its sole discretion, may elect to pursue litigation in the county and State
where any breach or violation of this Agreement by the Restricted Party has
occurred.
20 ab Section. Trade Secrets Act. This Agreement incorporates
all of the protections of the Indiana Uniform Trade Secrets Act 24-2-3-1
et seq., as amended.
21 ab Section. Notices. All notices required or desired to be
given under this Agreement shall be in writing and shall be deemed to have
been duly given (i) on the date of service if served personally on the party
to whom notice is to be given, (ii) on the date of receipt by the party to
whom notice is to be given if transmitted to such party by telefax, provided a
copy is mailed as set forth below on the date of transmission, or (iii) on the
third day after mailing if mailed to the party to whom notice is to be given
by registered or certified mail, return receipt requested, postage prepaid, to
the following addresses:
(a) If to Company, to:
Crossmann Communities Partnership
9210 North Meridian Street
Indianapolis, Indiana 46260
Attn: John B. Scheumann
Fax: (317) 571-2210
With a copy to:
Steven K. Humke, Esq.
ICE MILLER
One American Square
Box 82001
Indianapolis, Indiana 46282
Fax: (317) 592-4675
(b) If to the Restricted Party, to:
865 West Carmel Drive, Suite 114
Carmel, Indiana 46032
Fax: (317) 574-7601
Any party may, by giving written notice to the other parties, change the
address to which notice shall then be sent.
22 ab Section. OPPORTUNITY TO CONSULT WITH OTHERS. THE
RESTRICTED PARTY HAS BEEN GIVEN THE OPPORTUNITY TO CONSULT WITH A LAWYER,
SPOUSE, ADVISOR, OR OTHER PERSON CONCERNING THIS AGREEMENT AND HAS EITHER
DISCUSSED THIS AGREEMENT WITH A LAWYER OR WAIVES ANY RIGHT TO DO SO.
23 ab Section. Prior Agreements. This Agreement is a complete
and total integration of the understanding of the parties, and supersede all
prior or contemporaneous negotiations, commitments, agreements, writings and
discussions with respect to the subject matter of this Agreement.
24 ab Section. Headings. The subject headings of the sections of
this Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction of this
Agreement.
25 ab Section. Joint Drafting. This Agreement shall be deemed to
have been drafted jointly by the parties and in the event of any ambiguity in
this Agreement, the same shall not be construed against any party hereto.
26 ab Section. Counterparts. This Agreement may be executed in
one or more counterparts, each of which for all purposes shall be deemed to be
an original but all of which together shall constitute one and the same
Agreement. Facsimile transmissions of original signatures shall be deemed
original signatures. Only one counterpart signed by the party against which
enforceability is sought needs to be produced to evidence the existence of
this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute this Agreement as of the Effective Date.
"THE COMPANY"
"CROSSMANN"
CROSSMANN COMMUNITIES PARTNERSHIP
By:/s/ John B. Scheumann
Chairman of the Board of Directors and
Chief Executive Officer
"TRINITY HOMES"
TRINITY HOMES, LLC
By:/s/ John B. Schuemann
Title: Manager
"RESTRICTED PARTY"
PYRAMID MORTGAGE CO., INC.
By:/s/ Mark Thune
Title: President
EXHIBIT 10.60
August 8, 2000
Service Title, Inc.
10291 N. Meridian St.
Indianapolis, Indiana 46290
RE:ACQUISITION OF ASSETS OF SERVICE TITLE, INC.
Ladies and Gentlemen:
The purpose of this letter agreement (this "Agreement") is to set forth
the terms and conditions upon which Paragon Title, LLC, an Indiana limited
liability company ("Purchaser"), will acquire certain assets of Service Title,
Inc., an Indiana corporation ("Seller").
1. Purchase of Assets. Subject to and upon the terms and
conditions set forth in this Agreement, Seller hereby agrees to sell,
transfer, convey, assign and deliver to Purchaser, and Purchaser hereby agrees
to buy or acquire all of the assets of Seller set forth on Exhibit A (the
"Purchased Assets"). The Purchased Assets shall be transferred free and clear
of all mortgages, liens, pledges, security interests, rights of third parties,
encumbrances, or other interests of any kind or character, except for liens
for personal property taxes not yet due and payable. Purchaser will not
acquire any cash or accounts receivable of Seller.
2. Purchase Price. At the Closing, Purchaser will pay to Seller
the following amounts by check or wire transfer of immediately available
funds:
(a) One Hundred Twenty Thousand Dollars ($120,000.00) for the Purchased
Assets (the "Purchase Price");
(b) Sixty-Five Dollars ($65.00) for all pending title commitments as
itemized on Exhibit B;
(c) Three Thousand Four Hundred Eighty-Three Dollars ($3,483.00) for the
security deposit paid by Seller pursuant to that certain Agreement of Lease-
Office Building dated February 18, 1999 by and between Seller and GPI Office
Properties II, L.P. (the "Office Lease"); and
(d) the per diem amounts for the Assumed Leases/Obligations (as defined
below) as set forth on Exhibit C.
For tax purposes, the Purchase Price shall be allocated among the
Purchased Assets as set forth on Exhibit D.
3. Liabilities. Purchaser shall not assume or be liable for the
payment of any debts, liabilities, obligations, accounts payable, bank
indebtedness, obligations to employees, or other obligations of Seller of any
kind or nature, whether existing on the date of this Agreement or at Closing
or thereafter arising, and whether contingent or liquidated in amount, and
whether known or unknown by Purchaser or Seller (the "Liabilities"); provided,
however, Purchaser will assume any obligation, as itemized on Exhibit B,
related to the cost of obtaining title searches that were ordered in the
ordinary course of business by Seller prior to the Closing Date, as well as
the obligation to issue title insurance policies based upon pending
commitments (subject to Stewart Title Guaranty Company underwriting criteria)
itemized on Exhibit C. Purchaser shall also assume those real estate,
personal property equipment leases, and service agreements itemized on
Exhibit E (hereinafter the "Assumed Leases/Obligations").
4. Agreement With Respect To Debts And Taxes. Seller shall pay
all debts and all taxes attributable to the operation of the Seller's business
through the Closing, including without limitation all federal income tax,
federal withholding tax, social security tax, federal unemployment tax,
Indiana gross income tax, Indiana gross withholding tax, Indiana employment
security tax and Indiana sales tax, if applicable.
5. Conditions To Purchaser's Obligations and Seller's Obligations
To Close. The obligation of Purchaser and Seller to consummate the
transactions contemplated by this Agreement shall be conditioned upon the
following:
(a) Satisfactory completion of the operational, market, financial, legal
and governmental due diligence review of Seller, assuming full access to
Seller's financial books and records. The results of such review shall be
satisfactory to Purchaser in its sole discretion.
(b) Purchaser shall have obtained all of the requisite licensing
requirements to operate a title insurance business in Indiana.
(c) Purchaser shall have entered into an underwriting agreement with
Stewart Title Guaranty Company.
(d) Purchaser shall have hired all of the current employees of Seller.
(e) Linda Givens and Margaret Sklenar shall have been released from
any personal liability occurring after the Closing Date on Seller's existing
real estate lease with GPI Properties II, LP pursuant to the Guaranty dated
November 5, 1998.
6. Time and Place of Closing. The closing of the transactions
completed in this Agreement shall take place on August 8, 2000 (the "Closing
Date") at the offices of Ice Miller Donadio & Ryan, Indianapolis, Indiana.
Closing shall be effective at 12:01 A.M., Indianapolis, Indiana time on August
9, 2000 (the "Closing").
7. Closing Deliveries.
(a) At the Closing, Seller shall deliver or cause to be delivered to
Purchaser, the following duly executed documents and other items in the form
reasonably satisfactory to Purchaser in its sole discretion:
i) Bill of Sale from Seller to Purchaser conveying the Purchased Assets
free and clear of all liens, pledges, security interests and encumbrances in a
form reasonably acceptable to Purchaser;
ii) Certified copies of Resolutions of the Board of Directors and
Shareholders of Seller showing that all necessary action has been taken to
approve the transaction provided for in this Agreement;
iii) Assignments/assumption agreements of the Assumed Leases/Obligations;
iv) Purchaser's Assignment and Assumption Agreement upon terms and
conditions mutually acceptable to Seller and Purchaser (the "Assignment and
Assumption Agreement");
v) An assignment of the Office Lease including the personal guaranty
release required by Section 5(e) (the "Office Lease Assignment"); and
vi) Such other instruments, documents and considerations which may be
reasonably required by Purchaser to effect the transactions contemplated by
this Agreement.
(b) At the Closing, Purchaser shall deliver or cause to be delivered to
Seller, the following duly executed documents and other items in the form
reasonably satisfactory to Seller:
i) The Purchase Price;
ii) The amounts due for title searches ordered per Exhibit B;
iii) The Assignment and Assumption Agreement; and
iv) The Office Lease Assignment;
8. Certain Seller Representations. Seller hereby represents,
warrants and covenants that:
(a) No consent, authorization, order or approval of, or filing or
representation with, any governmental authority or other person is required
for the execution and delivery of this Agreement and the consummation by
Seller of the transaction contemplated by this Agreement.
(b) Seller is a corporation duly organized and validly existing under the
laws of the State of Indiana. Seller has all necessary corporate power and
authority to conduct its business as such business is now being conducted.
(c) Seller has full corporate power to enter into and perform this
Agreement. The execution and delivery of this Agreement by Seller and the
performance by Seller of all of its obligations under this Agreement have been
duly authorized and approved prior to the date hereof by the Board of
Directors and Shareholders of Seller. This Agreement has been duly executed
and delivered by a duly authorized officer of Seller.
(d) Neither the execution and delivery of this Agreement by Seller, nor
the consummation by Seller of the transactions herein contemplated, will
conflict with, violate or result in a breach of or default in any terms,
conditions or provisions of the Articles of Incorporation or the By-laws of
Seller.
(e) This Agreement and all other agreements, documents and certificates
delivered by Seller in accordance with this Agreement constitute the legally
valid and binding obligation of Seller and are enforceable against Seller in
accordance with their terms.
(f) Neither the execution and delivery of this Agreement by Seller, nor
the consummation by Seller of the transactions herein contemplated, will
conflict with, violate or result in a breach or default of any terms,
conditions or provisions of any material agreement to which Seller is bound,
any statute or administrative regulation or any order, writ, injunction,
judgment or decree of any court or any governmental authority or of any
arbitration award which is applicable to Seller.
(g) There is no litigation pending or threatened against or related to
Seller which could materially and adversely affect the Purchased Assets.
(h) There is not now and will not be at the time of Closing any damage,
destruction or loss not covered by insurance which could materially and
adversely affect the Purchased Assets.
(i) Seller shall have and convey at the time of Closing, good and
marketable title to all of the Purchased Assets free of all liens, pledges,
security interests and encumbrances.
(j) At Closing, Seller shall have duly and timely filed all state and
local sales and use tax returns required to be filed on or before the Closing
Date, and Seller shall have paid in full the tax liability shown on said
returns at or before Closing; that at Closing no unpaid deficiencies will be
in existence which have been asserted against Seller by an official or agency
as a result of the filing of said returns; and that, to the Knowledge (as
defined herein) of Seller, there is not now pending any examination with
respect to any of said returns nor does Seller know of any impending
examinations with respect to any of said returns. Seller has timely paid or
made provision for all taxes that have been shown as due and payable on the
returns that have been filed. For purposes of this Agreement, "Knowledge" or
"Seller's Knowledge" or words of like import, with respect to the existence or
absence of fact, mean the actual knowledge of any officer, director or
employee of Seller.
(k) To the best of Seller's Knowledge, Seller has complied with all
applicable federal and state laws pertaining to the employment of labor,
including the provisions thereof relating to wages, hours and the payment of
social security taxes, and are not liable for any arrears of wages, or any tax
or penalties for failure to comply with any of the foregoing. Seller is not a
party to any union or collective bargaining agreements and Seller has no
knowledge of any union organizing efforts by Seller's employees. There is no
charge or complaint of unlawful employment practice or unfair dismissal of
which Seller has received notice pending or threatened in any court or before
any federal, state or local agency (and Seller does not believe that there
exists any reasonable basis therefor).
(l) No party, other than Purchaser, shall have a right to acquire the
Purchased Assets.
(m) Seller has not employed a broker or any other person entitled to any
commission or finder's fee in connection with this Agreement or the
transaction contemplated by this Agreement.
Neither the representations and warranties of Seller contained herein nor
in any certificate, Exhibit, schedule or other writing delivered to Purchaser
pursuant hereto or in connection with the sale of the Purchased Assets contain
any untrue statement of a material fact or, taken together, omit to state a
material fact necessary in order to make the statements herein and therein not
misleading. The foregoing representations and warranties of Seller are made
with the Knowledge and expectation that Purchaser is placing complete reliance
of such representations and warranties in order to enter this Agreement and
shall survive the Closing hereof.
9. Indemnification.
(a) Seller shall defend, indemnify and hold Purchaser and its successors
and their respective shareholders, officers, directors and agents harmless
from and against any and all claims, causes of action, damages, expenses,
taxes, assessments, interest, penalties, judgments, and costs, including
reasonable attorneys' fees incurred, directly or indirectly arising out of or
in any way connected with:
i) breach of any of the representations, warranties and agreements of
Seller set forth in this Agreement or any instrument or agreement delivered in
connection with this Agreement;
ii) any liability asserted by a third party or any governmental agency
against Purchaser which arises out of or is in any way connected with the
ownership or use of the Purchased Assets by Seller prior to the Closing and
not expressly assumed by Purchaser pursuant to this Agreement; and
iii) the expenses, costs or Liabilities of Seller prior to the Closing,
including but not limited to the following:
a. all of Seller's accounts payable; and
b. all compensation, retirement plans, workman's compensation, medical
insurance or any other employment costs of Seller's past, present or future
employees; provided, however, if Purchaser hires any of Seller's employees,
Purchaser shall be responsible for unused vacation days, unused sick leave
days as well as for all such employment costs that accrue after the date of
hire by Purchaser.
iv) Purchaser agrees to defend, indemnify and hold Seller harmless from
and against any and all claims, causes of action, damages, expenses, taxes,
assessments, interests, penalties, judgments, and costs, including reasonable
attorneys' fees incurred, directly or indirectly by Seller arising out of or
in any way connected with:
a. any liability asserted by a third party against Seller which arises out
of or is in any way connected with the ownership or use by Purchaser of the
Purchased Assets on and after the Closing;
b. the expenses, costs or liabilities of Purchaser on or after the
Closing, including but not limited to the following:
i. all of Purchaser's accounts payable;
ii. all compensation, vacations, retirement plans, workman's compensation,
medical insurance or any other employment costs that accrue after the date of
hire by Purchaser with respect to Purchaser's employees that it hires; and
iii. all rent, fees, charges and other covenants and obligations under the
Assumed Leases/Obligations that accrue after the date of Closing.
v) The representations, warranties and covenants of Purchaser and Seller
included or provided for herein shall survive the consummation of the
transactions contemplated by this Agreement at the Closing for two (2) years
(the "Indemnification Period") (the party or parties being indemnified
referred to as the "Indemnified Party," and the other party referred to as the
"Indemnifying Party"); provided, however that, if prior to the close of
business on the date the Indemnification Period terminates, Seller or
Purchaser shall have been notified of a claim for indemnity hereunder and such
claim shall not have been finally resolved or disposed of as of the
termination of the applicable Indemnification Period, then such claim for
indemnification will survive the termination of the applicable Indemnification
Period until such claim is finally resolved or disposed of by Purchaser and
Seller; and provided, however, that for Assumed Leases/Obligations that have a
term ending more than two (2) years after Closing, the Indemnification Period
shall expire only when said Assumed Leases/Obligations term expires.
vi) The Indemnified Party shall notify the Indemnifying Party with
reasonable promptness (and in any event within 15 days after the service of
any citation or summons) of its discovery of any matter giving rise to a claim
of indemnity pursuant hereto. With respect to any third party claim or action
that could give rise to indemnity hereunder, the Indemnifying Party will be
entitled to participate therein, and, to the extent that it may wish, to
assume the defense, conduct or settlement thereof. After notice from the
Indemnifying Party to the Indemnified Party of its election to so assume the
defense, conduct or settlement thereof, the Indemnifying Party will not be
liable to the Indemnified Party in connection with the defense, conduct or
settlement thereof. If after assuming the defense of a third party claim or
action the Indemnifying Party should obtain an award from the third party
claimant, the Indemnifying Party shall be entitled to recover its costs
including reasonable attorneys' fees of outside counsel incurred in defending
such claim and obtaining such award, from the proceeds of such award. In any
event, such claim or action may not be compromised or settled unless the
Indemnifying Party consents in writing thereto. Failure to provide notice
shall not release the Indemnifying Party of its obligations under this
Section 9.
10. Further Assurances. The parties to this Agreement agree to
execute and deliver any additional documents or writings which may reasonably
be required to consummate the Agreement set forth herein. Following the
Closing, Seller shall execute and deliver such additional instruments,
documents, conveyances or assurances and take such other actions as shall be
necessary, or reasonably requested by Purchaser, to confirm and assure the
rights and obligations provided for in this Agreement and render effective the
consummation of the transactions contemplated thereby.
11. Notices. All notices, requests, demands or other
communications hereunder shall be in writing and shall be deemed to have been
delivered on the same day, if hand delivered or three (3) business days after
it is mailed, if mailed certified mail, return receipt requested, postage
prepaid to:
Purchaser:
Paragon Title LLC
9210 N. Meridian Street
Indianapolis, Indiana 46260
Attn: Jennifer Holihen
with a copy to:
Ice Miller
One American Square Box 82001
Indianapolis, Indiana 46282
Attn: Steven K. Humke
Fax: (317) 236-2219
Seller:
Service Title, Inc.
100 W. Columbia Street
Fort Wayne, Indiana 46802
Attn: Margaret A Sklenar
Fax: (219) 422-8772.
and to:
Linda Givens
Paragon Title, LLC
10291 N. Meridian Street
Suite 375
Indianapolis, Indiana 46290
Fax: (317) 815-9287
with a copy to:
Haller & Colvin, P.C.
444 E. Main Street
Fort Wayne, Indiana 46802
Attn: Vincent J. Heiny, Esq.
Fax: (219) 422-0274
12. Confidentiality. Each of the parties to this Agreement agree
that they will not disclose the terms of the transactions contemplated by this
Agreement to any third parties (excepting counsel or accountants to Purchaser
and Seller and their respective title insurance underwriters) without the
prior written consent of the other parties to this Agreement.
13. Remedies. In the event of any breach of any provisions of
this Agreement, then non-breaching parties shall be entitled to reasonable
attorneys' fees, costs and expenses incurred for the enforcement of said
provisions, in addition to damages for the breach thereof. The remedies set
forth in this Agreement shall be cumulative and no one shall be construed as
exclusive of any remedy provided by law and failure of any party to exercise
any remedy at any time shall not operate as a waiver of the right of such
party to exercise any remedy for the same or subsequent default at any time
thereafter.
14. Entire Agreement. This Agreement (including all attachments
hereto) constitute the entire Agreement and supercede all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
15. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
16. Governing Law. This Agreement shall be governed in all
respects, including as to validity, interpretation and effect, by the internal
laws of the State of Indiana, without giving effect to the conflict of laws
rules thereof.
17. Expenses. Seller and Purchaser, will each pay their
respective expenses (including fees and expenses of legal counsel, brokers,
accountants or other representatives or consultants) in connection with the
transaction contemplated hereby.
18. Assignment, Amendment, Waivers. This Agreement shall not be
assignable or otherwise transferable by any party hereto without the prior
written consent of the other parties hereto. No amendment, modification or
discharge of this Agreement, and no waiver hereunder, shall be valid or
binding unless set forth in writing and duly executed by the party against
whom enforcement of the amendment, modification, discharge or waiver is
sought. This Agreement shall be binding upon and inure to the benefit of the
respective legal representatives and assigns of its new business.
If the foregoing terms are acceptable, please so indicate by signing one
copy of this Agreement in the space provided and returning it to the
undersigned.
Very truly yours,
PARAGON TITLE, LLC
/s/ Jennifer A. Holihen
Jennifer A. Holihen, Manager
ACCEPTED AND AGREED TO
this 8th day of August, 2000.
Service Title, Inc.
By:/s/ Linda Givens
Linda Givens, President
EXHIBIT A
Assets:
Furniture and Equipment
Network Router and Interface Card (Franklin Office)
Desk, Credenza and Chair
17" Monitor
Upgrade Server
Computer with Software, Keyboard, Mouse
Support for Aim System Second Half of 2000
Lateral File Cabinet
Lateral File Cabinet
Pens (2000)
Printer Stands (4)
Office Supplies:
Paper
Cartridges
Miscellaneous Supplies
Laser checks
Existing Files and Data
All intangibles, including, without limitation, the name Service Title, Inc.,
including all derivations thereof, and the benefit of third party
representations, warranties and guarantees, customer lists, supplier lists,
business plans and strategies, know-how, correspondence, manuals, sales
literature and promotional material, trade secrets, computer software and
programs, and all other intellectual property and proprietary rights of any
kind, whether or not patentable or registrable.
EXHIBIT B
EXHIBIT C
Lessor Item Time Period Payment Made Per
Diem Total Thru Closing Date
Ascom Hasler Postage meter 7-18-00 thru $94.50 $1.05
$56.70
10-17-00
Copelco Copier August 2000 $487.50 $15.73
$361.79
Copelco Copier August 2000 $658.61 $21.25
$488.75
Copelco Fax August 2000 $67.73 $2.19
$50.37
Copelco Fax (2) August 2000 $343.35 $11.08
$254.84
GPI Properties Office lease August 2000 $4121.82 $132.97
$3,058.31
Telimagine Phone lease 7-14-00 thru $514.50 $17.15
$257.25
8-23-00
Crossmann Office lease August 2000 $314.00 $10.13
($81.04)*
Communities
Stewart Title Office lease August 2000 $1500.00 $48.39
($387.12)*
TOTAL $4,806.46
*Unpaid lease obligations of Service Title for August
EXHIBIT D
1) All Tangible Assets $90,000.00
2) Goodwill and other intangible assets
$30,000.00
Total $120,000.00
<TABLE>
<CAPTION>
EXHIBIT E
Assumed Leases/Obligations
<S> <C> <C> <C> <C> <C> <C>
VENDOR ACCT NO COMMENCE- TERM AMT. DUE DATE PAID
MENT DATE (MOS) THRU
BCL Capital 656107 9/29/98 39 $ 404.01 1st July 2000
115 West College Drive
Marshall, MN 56258
1-507-532-3533
Copelco Capital, Inc. 1666040 9/22/99 36 $ 343.35 22nd July 2000
One International Blvd.,
10th Floor
Mahwah, NJ 07430-0631
1-800-633-4594
Copelco Capital, Inc. 124274 2/3/99 36 $ 487.50 3rd July 2000
Copelco Capital, Inc. 1381581 4/15/99 36 $ 67.73 15th July 2000
Copelco Capital, Inc. 1381582 7/14/99 36 $ 658.61 14th July 2000
GPI Office Properties II, LP GOM-275A-SerTitl 2/18/99 Expires $4121.82 1st July 2000
Gibraltar Management, Inc. 4/30/04
3815 River Crossing Pkwy,
Suite 350
Indianapolis, IN 46240
816-7777
Crossmann Communities 4/1/99 36 $ 314.00 1st July 2000
Partnership
157 Holiday Place
Franklin, IN 46033
Ascom Hasler Mailing 194410-001 Paid in 3 month intervals $ 90.00 1st 10/17/00
Systems
19 Forest Parkway
Shelton, CT 06484-6122
C\OE\UT8WDC\0\00Q
<S> <C>
VENDOR ITEM(S) AND LOCATION
BCL Capital Gestetner 3245 Copier/Fax - Franklin office
115 West College Drive
Marshall, MN 56258
1-507-532-3533
Copelco Capital, Inc. Gestetner 9867 Laser Fax - Front office
One International Blvd., AND
10th Floor Savin 3695 Laser Fax - Back office
Mahwah, NJ 07430-0631
1-800-633-4594
Copelco Capital, Inc. Ricoh 7660 Copier - Back office
Copelco Capital, Inc. Gestetner 9767 Laser Fax - Front office
Copelco Capital, Inc. Gestetner 3265 Copier - Front office
GPI Office Properties II, LP Office space -
Gibraltar Management, Inc. 10291 N. Meridian Street, Suite 275
3815 River Crossing Pkwy,
Suite 350
Indianapolis, IN 46240
816-7777
Crossmann Communities Office space -
Partnership 157 Holiday Place
157 Holiday Place
Franklin, IN 46033
Ascom Hasler Mailing Postage Meter
Systems
19 Forest Parkway
Shelton, CT 06484-6122
C\OE\UT8WDC\0\00Q
</TABLE>
<TABLE>
<CAPTION>
Exhibit E (continued)
<S> <C> <C> <C> <C> <C> <C>
VENDOR ACCT NO COMMENCE- TERM AMT. DUE DATE PAID
MENT DATE (MOS) THRU
Stewart Title Services of Indiana, 1/4/00 16 $1500 1st of the Month July 2000
Inc.
9190 Priority Way W. Drive, Suite 110
Indianapolis, Indiana 46240
Telimagine, Inc. 10/5/98 $ 443 8/23/00
311 Park Place Blvd., Suite 100
Clearwater, FL 33759
Yellow/White Pages
Search Data Agreement with Lawyers, Ticor and Chicago Title 9/28/98 36
----------------------------------------------------------- --------- -----
<S> <C>
VENDOR ITEM(S) AND LOCATION
Stewart Title Services of Indiana, Equipment Access Agreement
Inc.
9190 Priority Way W. Drive, Suite 110
Indianapolis, Indiana 46240
Telimagine, Inc. Telephone Lease
311 Park Place Blvd., Suite 100
Clearwater, FL 33759
Yellow/White Pages Telephone Advertising Agreement
Search Data Agreement with Lawyers, Ticor and Chicago Title Search Data Agreement
----------------------------------------------------------- -------------------------------
</TABLE>
Exhibit 10.61
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into this 9th
day of August, 2000, by and among Paragon Title, LLC, an Indiana limited
liability company (the "Company"), Crossmann Communities, Inc., an Indiana
corporation ("Crossmann") and Linda Givens (the "Employee").
PRELIMINARY STATEMENTS
The Company and Crossmann (collectively referred to herein as the
"Employers") have determined that it is in their best interests to employ the
Employee as Title Company Manager of the Company, and the Employee desires to
accept such position and to devote her loyalty to the Employers upon the terms
and conditions set forth in this Agreement. As a result of her employment
with the Employers, the Employee will have access to Confidential Information
(as defined herein). In consideration for the Employer's employment of the
Employee, the Employee agrees to be restricted as set forth in this Agreement.
TERMS AND CONDITIONS
In consideration of the mutual promises and covenants contained in this
Agreement, and intending to be legally bound, the parties hereto agree as
follows:
Section 1 . Employment and Duties.
(a) General. The Employers hereby employ the Employee, and the
Employee hereby agrees to serve the Employers in the capacity of Title Company
Manager of the Company and to perform the Employee and management duties that
the Board of Directors of the Company and/or the Board of Directors of
Crossmann (collectively and individually the "Boards") shall reasonably assign
to the Employee from time to time.
(b) Employment Duties. Throughout the Employment Term, as defined in
Section 2, the Employee shall: (i) devote her working hours, on a full-time
basis, to her duties under this Agreement; (ii) faithfully and loyally serve
the Employers; (iii) comply in all respects with the lawful and reasonable
directions and instructions given to her by the Boards; and (iv) use her best
efforts to promote and serve the interests of the Employers. In the event the
directions and instructions given to the Employee by the Boards conflict in
any manner, the directions and instructions given by the Board of Directors of
Crossmann shall be deemed controlling; full compliance with the express
directions and instructions of the Board of Directors of Crossmann shall be
deemed a defense to any claim of failure to comply with the directions and
instructions of the Board of Directors of the Company.
(c) Exclusive Employment. Throughout the Employment Term, as defined
in Section 2, the Employee shall not render her services, directly or
indirectly, for compensation, to any other person or organization without the
prior written consent of the Employers and shall not engage in any activity
which would significantly interfere with the faithful performance of her
duties under this Agreement. The Employee, however, may perform minor
services for which she does not receive compensation, provided that the
activity does not contravene or conflict with any other provision of this
Agreement.
Section 2 . Employment Term. The Employee's employment
hereunder shall commence as of the date of this Agreement and shall continue
until August 9, 2002. Notwithstanding the foregoing, the Employee's
employment hereunder shall be subject to resignation or termination in
accordance with the provisions of Section 4 hereof. As used in this
Agreement, the term "Expiration Date" shall mean August 9, 2002 or, if
applicable, the day thereafter on which the Employee's employment hereunder
shall automatically expire and terminate in accordance with the provisions of
this Section 2, and the term "Employment Term" shall mean the period
beginning on the date hereof and ending on the earlier of the Expiration Date,
the Termination Date, the Resignation Date, (both as defined in Section 4
hereof), or other date the Employee ceases to be employed by the Employers in
accordance with Section 4 hereof.
Section 3 . Compensation and Other Benefits. The Company or
Crossmann, as applicable, shall pay and provide the following compensation and
other benefits to the Employee for the services rendered by her under this
Agreement:
(a) Annual Base Salary. The Company shall pay to the Employee, in
accordance with the then prevailing payroll practices of the Company, an
annual salary of not less than Seventy-Five Thousand Dollars ($75,000) (the
"Annual Base Salary"), subject to required withholdings under Federal, state,
and local laws. The Company's obligations with respect to payment of the
Annual Base Salary shall not be effective until the Employment Term has
commenced. Beginning on January l, 2001 and on each January 1 thereafter
during the Employment Term (or within a reasonable time thereafter not to
exceed thirty (30) days) the Employers shall review the annual salary payable
to the Employee hereunder and shall, in their sole discretion, determine
whether or not an adjustment in the Annual Base Salary then payable hereunder
is appropriate.
(b) Employee Benefits. Except as otherwise specifically provided in
this Agreement, the Employee shall be eligible to participate, in accordance
with their respective terms and conditions, in all benefit plans presently
available or which may subsequently be made available to employees of the
Employers having levels of responsibility equivalent to that of Employee,
including Crossmann's health care, basic life insurance, supplemental life
insurance coverage, disability coverage, business travel accident insurance
and any pension or retirement plan of any kind.
(c) Vacation Leave. The Employee shall be entitled to that number of
days of vacation leave per year that is generally applicable to all personnel
of Crossmann having levels of responsibility similar to that of Employee. The
Employee shall accrue and receive full compensation and benefits during her
vacation leave periods. Unused vacation leave time shall not carry over from
one year of the Employment Term to the next and unused vacation leave time
shall not entitle the Employee to any additional compensation.
(d) Bonus. The Employee may, at the sole discretion of the Board of
Directors of the Employers, be eligible for a bonus during any year during the
Employment Term (the "Bonus") in an amount consistent with other employees of
the Company or Crossmann having similar responsibilities as the Employee.
Section 4 . Termination of Employment.
(a) Termination for Cause.
(i) The Employers may terminate the Employee's employment with the
Employers pursuant to this Agreement for Cause, as defined herein, by
providing written notice to the Employee at least twenty-four (24) hours prior
to the Termination Date, as defined in subsection (iii) below.
(ii) A termination for "Cause" means a termination by one of the
Boards for any one or more of the following reasons: (a) theft, fraud,
embezzlement, dishonest or other similar behavior by the Employee; (b) any
material breach by the Employee of the terms of this Agreement; (c) any
material neglect of duty, incompetence, insubordination or misconduct of the
Employee in discharging any of her duties and responsibilities hereunder, (d)
any act of theft or dishonesty by the Employee or any criminal conviction or
indictment of the Employee, (e) any occurrence of the Employee reporting to
work under the influence of alcohol or illegal drugs, or the Employee being
under the influence of alcohol or illegal drugs during working hours, (f) any
failure or refusal by the Employee to comply with the policies, rules or
regulations of the Employers whether now in force or hereafter adopted; (g)
any misrepresentation or concealment by the Employee of any material fact for
the purpose of securing this Agreement, or (h) any other material act of
misconduct within the control of the Employee.
(iii) In the case of a termination for Cause, the term "Termination
Date" as used in this subsection (a) shall mean the actual date the Employee
terminates employment with the Employers as a result of action taken by one of
the Boards, and not as a result of the Employee's resignation, as provided in
Section 4(b).
(iv) If prior to the Expiration Date the Employers terminate the
Employee's employment for Cause, the Employee shall only be entitled to
payment of that portion of the Annual Base Salary under Section 3(a) that
the Employee earned through and including the Termination Date at the rate of
the Annual Base Salary in effect or any portion of the year at that time and
shall not be entitled to and shall forfeit any earned or unearned Bonus for
the year or any portion of the year in which the Employee was terminated.
(b) Resignation. The Employee may resign from her employment with the
Employers pursuant to this Agreement at any time by providing written notice
to the Boards of her resignation at least sixty (60) days prior to the
effective date of the resignation (the "Resignation Notice"). The effective
date of the Employee's resignation shall be that specified in the Resignation
Notice, or the actual date the Employee terminates employment with the
Employers as the result of a resignation, whichever occurs earlier (the
"Resignation Date"). If prior to the Expiration Date, the Employee resigns
her employment, the Employee shall only be entitled to payment of that portion
of the Annual Base Salary under Section 3(a) that the Employee earned
through and including the Resignation Date, at the rate of the Annual Base
Salary in effect at that time.
(c) Termination Without Cause. The Employers may, in their sole
discretion, terminate the Employee's employment with the Employers pursuant to
this Agreement at any time without Cause, by providing written notice to the
Employee at least twenty-four (24) hours prior to the Termination Date, as
defined in this subsection (c). If the Employers terminate the Employee's
employment without Cause, the Company shall be obligated to continue to pay to
her the Annual Base Salary for two months after the Termination Date (the
"Severance Payments"); provided, however, the Employee shall not be entitled
to and shall forfeit any earned or unearned Bonus for the year or any portion
of the year in which the Employee was terminated or any year or portion of the
year in which the Employers are making Severance Payments to the Employee.
Such payments shall be made as and when the same would have been due and
payable if the Employee's employment had continued through such date, subject
to the provisions of Sections 4(d) and 4(e). The term "Termination Date" as
used in this subsection (c) shall mean the actual date the Employee terminates
employment with the Employers as a result of action taken by one of the
Employers, and not as a result of the Employee's resignation as provided in
Section 4(b). Except as provided in this subsection (c), the Employee shall
not be eligible to receive any compensation or benefits under this Agreement
with respect to any future periods beginning on or after the Termination Date.
(d) Death. If the Employee dies prior to the Expiration Date, the
Employee's estate or personal representative shall be entitled to receive that
portion of the Annual Base Salary, at the rate in effect at the Employee's
death, and any other compensation or benefits, that the Employee earned
through and including the date of the Employee's death and the Board of
Directors of the Employers may, in their sole discretion, award a Bonus to the
Employee's estate or personal representative for the period prior to the
Employee's death. If the Employee is entitled to receive payments from the
Employers pursuant to Section 4(c) at the time of her death, the Employee's
estate or personal representative shall be entitled to receive that portion of
the Annual Base Salary, at the rate in effect at the Employee's death, and any
other compensation or benefits, that the Employee would have been entitled to
receive under Section 4(c) through and including the date of the Employee's
death. The Employee's estate or personal representative shall not be entitled
to receive any portion of the Annual Base Salary or any other compensation or
benefits under this Agreement, with respect to any periods ending on or after
the date of the Employee's death, which was not payable in accordance with the
provisions thereof prior to the date of death.
(e) Disability. If prior to the Expiration Date the Employee becomes
Permanently Disabled, as defined in this subsection (e), the Employers may
terminate the Employee's employment with the Employers as a result of the
Permanent Disability by providing written notice to the Employee at least
twenty-four (24) hours prior to the Termination Date, as defined in this
subsection (e). If prior to the Expiration Date the Employee becomes
Permanently Disabled, the Employee may resign from her employment with the
Employers pursuant to this Agreement by providing written notice to the
Employers of her resignation at least twenty-four (24) hours prior to the
Resignation Date, as defined in this subsection (e). If the Employers
terminate the Employee's employment as a result of a Permanent Disability or
the Employee resigns from employment with the Employers as a result of a
Permanent Disability, the Employee shall be entitled to receive that portion
of the Annual Base Salary under Section 3(a) that the Employee earned
through and including the Termination Date or Resignation Date, as applicable,
at the rate in effect on such date and the Board of Directors of the Employers
may, in their sole discretion, award a Bonus to the Employee for the period
prior to the Termination Date or Resignation Date, as applicable. If the
Employee is entitled to receive payments from the Employers pursuant to
Section 4(c) at the time she becomes Permanently Disabled, the Employee
shall be entitled to receive the payments that the Employee would have been
entitled to receive under Section 4(c). The Employee shall not be entitled
to receive any portion of the Annual Base Salary or any other compensation or
benefits under this Agreement, including any Bonus, with respect to any future
periods beginning on or after the later of the Resignation Date, Termination
Date, or the date the Employee becomes Permanently Disabled. The Employee
shall be deemed "Permanently Disabled" when, and only when, she is deemed
permanently disabled in accordance with the disability insurance policy of the
Employers in effect at the time of the illness or injury causing the
disability, or, in the event no disability policy is then in effect, in
accordance with the disability policy of the Employers last in effect. The
definition of Permanently Disabled for purposes of this Agreement shall comply
with all provisions of applicable law. The term "Termination Date" as used in
this subsection (e) shall mean the actual date the Employee terminates
employment with the Employers. The term "Resignation Date" as used in this
subsection (e) shall mean the actual date the Employee terminates employment
with the Employers as the result of a resignation.
Section 5 . Secrecy and Confidential Information. For purposes
of Sections 5 through 8, the term Company shall include, in addition to
the Company, Crossmann and its affiliates and subsidiaries.
(a) Confidential Information. "Confidential Information" shall mean
all information, whether or not originated by the Employee, which is (1) used
in the business of the Company and is proprietary to, about, or created by the
Company; (2) designated as confidential by the Company; or (3) not generally
known by any non-Company personnel. Confidential Information includes, but is
not limited to, the following types of information (whether or not reduced to
writing or designated as confidential):
(i) Information regarding any of the Company's customers and clients,
and their representatives, potential customers or leads, the identity of any
contracts (contents and parties) to which the Company is a party or is bound,
data provided by the Company, and the type, quantity and specifications of
products and services being sold to, purchased, leased, licensed or received
by the Company;
(ii) Information received by the Company from third parties (such as
vendors) under an obligation of confidentiality, restricted disclosure or
restricted use;
(iii) Any of the Company's internal personnel and financial
information (including the revenue, costs or profits associated with any of
the Company's products); vendor and supplier names, payroll information,
purchasing and internal cost information, internal service and operational
manuals and other information of the Company; and the manner and methods of
conducting the Company's business;
(iv) Information with respect to the Company's products, facilities
and methods, systems, trade secrets and other intellectual property;
(v) Work product related to work or projects performed or about to be
performed for the Company or for its customers;
(vi) Marketing and developmental plans, price and cost data, price
and fee amounts, pricing and billing policies, quoting procedures, marketing
techniques, methods of obtaining business, forecasts, forecast assumptions and
volumes, future plans and potential strategies of the Company;
(vii) Any other information relating to the Company which may have
been obtained by Employee during her employment by the Company before or after
the date of this Agreement.
Information or documents which are generally available or accessible to
the public shall be deemed Confidential Information of the Company if the
information was retrieved, gathered, assembled or maintained by the Company in
such a manner not available to the public or for a purpose beneficial to the
Company. From time to time, the Company may, for its own benefit, choose to
place certain Confidential Information or records of the Company in the public
domain. The fact that such Confidential Information may be made available to
the public in a limited form and under limited circumstances does not change
the confidential and proprietary nature of such information, and does not
release Employee from her duties with respect to such Confidential Information
as set forth in this Agreement.
(b) Ownership of Confidential Information. The Employee recognizes
that the services she will perform under this Agreement are special, unique
and extraordinary and that, by reason of her employment under this Agreement,
she may acquire Confidential Information. The Employee hereby acknowledges
and agrees that all Confidential Information is and shall remain the exclusive
property of the Company, whether or not prepared in whole or in part by the
Employee and whether or not disclosed to or entrusted to the custody of the
Employee. Upon the termination or resignation of her employment with the
Company, as applicable, or upon the request of the Company, at any time, the
Employee shall promptly deliver to the Company all documents, tapes, disks, or
other storage media and any other materials, and all copies thereof in
whatever form, in the possession of the Employee pertaining to the business of
the Company, including, but not limited to, any containing Confidential
Information.
Section 6 . Non-Disclosure and Non-Use of Confidential
Information. In furtherance of this Agreement and in order to assure
adequate protection of the Company against the wrongful use or disclosure of
Confidential Information, the Employee agrees that she will hold all
Confidential Information of the Company in strict confidence and solely for
the benefit of the Company, and that, except as necessary to perform her
obligations to the Company under this Agreement or with the prior written
consent of the Boards, she will not directly or indirectly disclose or use or
authorize any third party to disclose or use any Confidential Information.
The Employee's obligations set forth in this Section 6, and Company's rights
and remedies with respect thereto, whether legal or equitable, shall remain in
full force and effect during the Employment Term and shall continue
indefinitely.
Section 7 . Non-Competition. For a period of three (3) years
from the Resignation Date or the Termination Date (the "Restricted Period"),
Employee shall not, directly or indirectly, engage in any activity or business
that is substantially similar to or competitive with that of the Company (the
"Restricted Business") in the following geographic areas: (a) any of the
continental United States that the Company is engaged in the Restricted
Business; (b) within 50 miles of any location in which the Company sold or
attempted to sell any products or services at any time during Employee's
employment by the Company before or after the date of this Agreement; and (c)
within 50 miles of any location where the Company has, or had, an office or
facility at any time during Employee's employment by the Company before or
after the date of this Agreement (the "Restricted Area"); provided, however,
if Employee is still employed by the Employer one year from the date of this
Agreement, the non-competition provisions pursuant to this Section 7 shall
terminate. In addition, Employee shall not during the Restricted Period,
without the express written consent of the Boards, directly or indirectly
engage in, own, manage, operate, join, control, lend money or other assistance
to, or participate in or be connected with, as an officer, director, employee,
partner, shareholder, consultant, manager, agent, or otherwise, any
individual, corporation, partnership, firm, other company, business
organization, or entity that is engaged in a Competitive Business (as defined
below) in the Restricted Area; Employee's obligations set forth in this
Section 7 and the Company's rights and remedies with respect thereto,
whether legal or equitable, shall remain in full force and effect during the
Restricted Period. Notwithstanding any other provision contained herein,
Employee may own shares of stock representing less than one percent (1%) of
the outstanding shares of any publicly-held company engaged in the Competitive
Business. The term "Competitive Business" shall mean a company which derives
more than ten percent (10%) of its gross revenues, in the aggregate, from the
title insurance business.
Section 8 . Non-Solicitation. During the Restricted Period,
Employee shall not, directly or indirectly, as an entity, individually or on
behalf of any other individual, corporation, partnership, firm, other company,
business organization, or entity, or in any other capacity, in promotion of or
otherwise with respect to a Competitive Business: (a) call upon, solicit,
contact, or service any current, as of the date hereof, or former customer or
client of the Company or any potential customer or client that the Employee
called upon, solicited, contacted, or serviced prior to the end of her
employment by the Company; (b) call upon, solicit, contact or service any
individual, corporation, partnership, other company or business of which the
Employee or the Company became aware through operation of the Company's
business prior to the end of the Employee's employment by the Company; or (c)
call upon, solicit, contact or service any person or entity who is or was,
prior to the end of the Employee's employment by the Company, a vendor or
supplier of the Company. Furthermore, during the Restricted Period, Employee
shall not, directly or indirectly, as an entity, individually or on behalf of
any other individual, corporation, partnership, firm, other company, business
organization, or entity, or in any other capacity, in promotion of or
otherwise with respect to any business or activity (whether or not a
Competitive Business), solicit for employment, endeavor to entice away from
the Company, hire, or otherwise interfere with the relationship of the Company
with any person who was employed or otherwise engaged to perform services for
the Company prior to the end of the Employee's employment by the Company.
Employee's obligations set forth in this Section 8 and the Company's rights
and remedies with respect thereto, whether legal or equitable, shall remain in
full force and effect during the Restricted Period.
Section 9 . Reasonableness of Terms. The parties each
stipulate and agree that the terms and covenants contained in Sections 5
through 8 herein are fair and reasonable in all respects to protect the
legitimate interests of the Company, including the geographical coverage in
Section 7 and the time periods in Sections 5, 6, 7 and 8, and that
these restrictions are designed for the reasonable protection of the Company's
business. Employee expressly waives any right to challenge the reasonableness
or enforceability of the terms and covenants contained in Section 5 through
Section 8 and further stipulates and agrees that she shall be estopped from
raising any such challenge.
Section 10 . Non-assignability, Binding Agreement.
(a) By the Employee. The Employee shall not assign or delegate this
Agreement or any right, duty, obligation, or interest under this Agreement
without the Company's and Crossmann's prior written consent; provided,
however, that nothing shall preclude the Employee from designating
beneficiaries to receive benefits payable under this Agreement upon her death,
and nothing shall preclude the Employee's executors, administrators, or their
legal representatives, from assigning any rights under this Agreement to any
person.
(b) By the Company or Crossmann. The Company and/or Crossmann may
assign, delegate, or transfer this Agreement and all of their rights and
obligations under this Agreement to any of its affiliates or subsidiaries or
to any business entity that by merger, consolidation, or otherwise acquires
all or substantially all of the assets of the Company or Crossmann or to which
the Company or Crossmann transfers all or substantially all of its assets.
Upon assignment, delegation, or transfer, any affiliate, subsidiary, or
business entity related to the Company and/or Crossmann shall be deemed to be
substituted for the Company and/or Crossmann, as applicable, for all purposes
of this Agreement.
(c) Binding Effect. Except as limited under Sections 10(a) and
10(b), this Agreement shall be binding upon and inure to the benefit of the
parties, any successors to or assigns of the Company and/or Crossmann, and the
Employee's heirs and the personal representatives or executor of the
Employee's estate.
Section 11 . Severability. If a court of competent
jurisdiction makes a final determination that any term or provision of this
Agreement is invalid or unenforceable, and all rights to appeal the
determination have been exhausted or the period of time during which any
appeal of the determination may be perfected has been exhausted, the remaining
terms and provisions shall be unimpaired and the invalid or unenforceable term
or provision shall be deemed replaced by a term or provision that is valid and
enforceable and that most closely approximates the intention of the parties
with respect to the invalid or unenforceable term or provision, as evidenced
by the remaining valid and enforceable terms and conditions of this Agreement.
Section 12 . Amendment. No provision of this Agreement may be
modified, amended, waived, or discharged in any manner except by an instrument
in writing signed by the Employee and on behalf of the Company and Crossmann
by such officers as may be specifically designated by the Boards. No
agreement or representation, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by any party which is not
expressly set forth in this Agreement.
Section 13 . Waiver. The waiver by any party of compliance by
any other party with any provision of this Agreement shall not operate or be
construed as a waiver of any other provision of this Agreement (whether or not
similar), or a continuing waiver or a waiver of any subsequent breach by a
party of a provision of this Agreement. Performance by any party of any act
not required of it under the terms and conditions of this Agreement shall not
constitute a waiver of the limitations on its obligations under this
Agreement, and no performance shall estop that party from asserting those
limitations as to any further or future performance of its obligations.
Section 14 . Governing Law and Jurisdiction. The laws of the
State of Indiana shall govern the validity, performance, enforcement,
interpretation and any other aspect of this Agreement, notwithstanding any
state's choice of law provisions to the contrary.
Section 15 . Notices. All notices required or desired to be
given under this Agreement shall be in writing and shall be deemed to have
been duly given (i) on the date of service if served personally on the party
to whom notice is to be given, (ii) on the date of receipt by the party to
whom notice is to be given if transmitted to such party by telefax, provided a
copy is mailed as set forth below on the date of transmission, or (iii) on the
third day after mailing if mailed to the party to whom notice is to be given
by registered or certified mail, return receipt requested, postage prepaid, to
the following addresses:
(a) If to the Company or Crossmann, to:
Crossmann Communities, Inc.
9210 North Meridian St.
Indianapolis, IN 46260
Attn: Jennifer Holihen
Tel. No.: (317) 843-9514
Fax: (317) 571-2210
(b) If to the Employee, to:
Linda Givens
Paragon Title, LLC
10291 N. Meridian Street
Suite 375
Indianapolis, IN 46290
Tel. No.: (317) 815-9280
Fax: (317) 815-9287
Any party may, by giving written notice to the other parties, change the
address to which notice shall then be sent.
Section 16 . Prior Agreements. This Agreement is a complete
and total integration of the understanding of the parties. This Agreement
supersedes all prior or contemporaneous negotiations, commitments, agreements,
writings including handbooks, and discussions with respect to the subject
matter of this Agreement.
Section 17 . Headings. The headings of the Sections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction of this
Agreement.
Section 18 . Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute one and the same Agreement. Only one
counterpart signed by the party against which enforcement is sought needs to
be produced to evidence the existence of this Agreement
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
The parties have executed this Agreement on the date first written above.
"COMPANY"
PARAGON TITLE, LLC
By:/s/ Jennifer Holihen
Jennifer Holihen, its Manager
"CROSSMANN"
CROSSMANN COMMUNITIES, INC.
By:/s/ Jennifer Holihen
Jennifer Holihen, its Chief Financial Officer, Secretary and Treasurer
"EMPLOYEE"
/s/ Linda Givens
Linda Givens
