false
0001721386
0001721386
2024-01-08
2024-01-08
0001721386
LSEA:CommonStockParValue0.0001PerShareMember
2024-01-08
2024-01-08
0001721386
LSEA:WarrantsExercisableForCommonStockMember
2024-01-08
2024-01-08
iso4217:USD
xbrli:shares
iso4217:USD
xbrli:shares
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
January 8, 2024
LANDSEA
HOMES CORPORATION
(Exact name of registrant as specified in
its charter)
Delaware |
001-38545 |
82-2196021 |
|
|
|
(State or other jurisdiction |
(Commission |
(IRS Employer |
of incorporation) |
File Number) |
Identification No.) |
1717 McKinney Ave., Suite 1000 |
|
|
Dallas, Texas |
|
75202 |
(Address of principal executive offices) |
|
(Zip Code) |
Registrant’s telephone number, including
area code: (949) 345-8080
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section
12(b) of the Act:
Title of Each Class |
|
Trading Symbol(s) |
|
Name of Each Exchange on Which Registered |
Common Stock, par value $0.0001 per share |
|
LSEA |
|
The Nasdaq Capital Market |
Warrants exercisable for Common Stock |
|
LSEAW |
|
The Nasdaq Capital Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter) |
|
|
Emerging growth company |
☐ |
|
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. |
☐ |
Item
1.01 Entry into a Material Definitive Agreement.
On January 8, 2024, Landsea Homes Corporation,
a Delaware corporation (the “Company”), entered into a Membership Interest Purchase Agreement (the “Purchase
Agreement”) with Antares Acquisition, LLC, a Texas limited liability company (“Antares”), and the
individuals and entities identified in the Purchase Agreement as sellers (collectively, the “Sellers”), pursuant
to which the Company agreed to acquire (the “Acquisition”) all the outstanding membership interests of Antares
for an aggregate cash purchase price of $185.0 million, subject to certain post-closing adjustments with respect to transaction
expenses and total shareholders’ equity, in each case, as further described in the Purchase Agreement. The Purchase Agreement
contains customary representations, warranties and covenants of the parties. The closing of the Acquisition is subject to customary
closing conditions.
In connection with the Acquisition, the Company
has obtained a conditionally bound representation and warranty insurance policy that will provide coverage for certain losses incurred
as a result of breaches of certain specified representations and warranties of Antares and the Sellers contained in the Purchase
Agreement, provided that the recovery under such policy is subject to certain exclusions, policy limits and certain other terms
and conditions.
The foregoing description of the Purchase
Agreement is not complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, which is
attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference. The representations, warranties
and covenants contained in the Purchase Agreement were made only for the purposes of such agreement and as of specific dates,
were made solely for the benefit of the parties to the Purchase Agreement and may be intended not as
statements of fact, but rather as a way of allocating risk to one of the parties if those statements prove to be inaccurate.
Item
7.01 Regulation FD Disclosure.
On
January 9, 2024, the Company issued a press release announcing the execution of the Purchase Agreement, a copy of which is being
furnished as Exhibit 99.1 attached hereto.
The
information in this Item 7.01 (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 the
Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that
section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange
Act, except as expressly set forth by specific reference in such a filing.
Item
9.01 Financial Statements and Exhibits.
(d) Exhibits
*
Certain schedules and exhibits to this agreement have been omitted pursuant to Item 601(b)(10) of Regulation S-K and the
Company agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted schedule and/or exhibit
upon request.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
|
LANDSEA HOMES CORPORATION |
|
|
|
Date: January 9, 2024 |
By: |
/s/ Kelly Rentzel |
|
|
Name: Kelly Rentzel |
|
|
Title: General Counsel |
EXHIBIT 10.1
MEMBERSHIP INTEREST PURCHASE AGREEMENT
by and among
LANDSEA HOMES CORPORATION,
Antares
Acquisition, LLC,
and
THE SELLERS
Dated
as of January 8, 2024
Article 1 PURCHASE AND SALE OF THE INTERESTS; CLOSING |
2 |
1.1 Closing |
2 |
1.2 Purchase and Sale of the Membership Interests |
2 |
1.3 Payments at Closing |
2 |
1.4 Purchase Price Adjustment |
2 |
1.5 Deposit |
5 |
1.6 Withholding |
7 |
Article 2 REPRESENTATIONS AND WARRANTIES RELATING TO THE SELLERs |
7 |
2.1 Power and Authorization; Enforceability |
7 |
2.2 No Violation or Conflict; Consents |
7 |
2.3 Ownership |
8 |
2.4 Legal Proceedings; Judgments |
8 |
2.5 Brokers |
9 |
Article 3 REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY |
9 |
3.1 Organization and Good Standing |
9 |
3.2 Power and Authorization; Enforceability |
9 |
3.3 No Violation or Conflict; Consents |
9 |
3.4 Capitalization and Related Matters |
10 |
3.5 No Subsidiaries |
11 |
3.6 Compliance with Laws |
11 |
3.7 Litigation |
12 |
3.8 Financial Statements |
12 |
3.9 Liabilities |
14 |
3.10 Absence of Certain Changes and Events |
15 |
3.11 Property |
15 |
3.12 Material Contracts |
20 |
3.13 Insurance; Warranty Coverage |
23 |
3.14 Permits |
24 |
3.15 Intellectual Property |
24 |
3.16 Employees |
25 |
3.17 Employee Benefits |
26 |
3.18 Environmental Matters |
29 |
3.19 Tax Matters |
30 |
3.20 Related Party Transactions |
32 |
3.21 Business Collateral |
33 |
3.22 Personal Property |
33 |
3.23 Brokers |
33 |
3.24 No Other Representations or Warranties |
33 |
Article 4 REPRESENTATIONS AND WARRANTIES OF BUYER |
33 |
4.1 Organization and Good Standing |
33 |
4.2 Power and Authorization; Enforceability |
34 |
4.3 No Violation or Conflict |
34 |
4.4 Brokers |
34 |
4.5 Investment |
34 |
4.6 Available Funds |
35 |
4.7 No Other Representations or Warranties |
35 |
Article 5 CERTAIN COVENANTS OF THE PARTIES |
35 |
5.1 Efforts |
35 |
5.2 Conduct of the Business by the Sellers and the Company |
36 |
5.3 Access to Information |
39 |
5.4 Public Announcements |
39 |
5.5 Tax Matters |
40 |
5.6 Exclusivity |
43 |
5.7 Cooperation with Purchaser’s Auditors and SEC Filing Requirements |
43 |
5.8 Company Indebtedness |
44 |
5.9 Non-Compete / Non-Solicitation |
44 |
5.10 Regulatory Matters |
46 |
5.11 Cooperation with Title Insurance |
47 |
5.12 Financial Reporting Platform |
47 |
5.13 R&W Insurance Policy |
47 |
5.14 Confidentiality |
47 |
5.15 Further Actions |
49 |
5.16 Excluded Businesses |
49 |
5.17 Specified Homes |
49 |
5.18 Bonuses |
49 |
5.19 Employees |
49 |
5.20 Corporate Credit Cards and Accounts |
50 |
5.21 Grant of Trademark License |
50 |
5.22 Closing Property Statement |
51 |
Article 6 CLOSING CONDITIONS |
51 |
6.1 Conditions to Each Party’s Obligation to Effect the Transaction |
51 |
6.2 Conditions to Obligations of Sellers and the Company |
52 |
6.3 Conditions to Obligations of Buyer |
52 |
6.4 No Waiver |
55 |
Article 7 INDEMNIFICATION |
55 |
7.1 Indemnification by the Sellers |
55 |
7.2 Indemnification by Buyer |
55 |
7.3 R&W Insurance Policy. |
56 |
7.4 Claims |
56 |
7.5 Survival |
59 |
7.6 Certain Limitations on Indemnification |
59 |
7.7 Certain Other Restrictions on Indemnification |
60 |
7.8 Calculation and Mitigation of Losses |
60 |
7.9 Manner of Payment |
61 |
7.10 Special Rule for Fraud |
61 |
7.11 Exclusive Remedy |
61 |
Article 8 TERMINATION |
62 |
8.1 Termination of Agreement |
62 |
8.2 Notice of Termination; Effect of Termination |
63 |
Article 9 MISCELLANEOUS |
63 |
9.1 Fees and Expenses. |
63 |
9.2 Notices |
63 |
9.3 Assignment and Benefit |
65 |
9.4 Amendment, Modification and Waiver |
65 |
9.5 Interpretation |
65 |
9.6 Governing Law |
66 |
9.7 Waiver of Jury Trial |
66 |
9.8 Consent to Jurisdiction |
66 |
9.9 Section Headings |
67 |
9.10 Severability |
67 |
9.11 Counterparts; Third-Party Beneficiaries |
67 |
9.12 Entire Agreement |
67 |
9.13 Disclosure Schedules |
67 |
9.14 Specific Performance |
68 |
Schedules
A – Sellers
Exhibits
A – Definitions
B – Membership Interests
C – Amended and Restated Model Home Lease Arrangement
D – RESERVED
E – RESERVED
F-1 – Form of Exclusive Title Services Agreement
F-2 – Form of Exclusive Marketing Services Agreement
G-1 – Form of Amended and Restated Office Lease Agreement (840 Interstate)
G-2 – Form of Sublease (S3 and MC Title)
H – Estimated Total Shareholders’ Equity Spreadsheet
I – Antares Acquisition LLC Financial Statements – May 2023
J – Estimated Closing Statement
K – Form of Reciprocal Indemnification Agreement
L – Form of Owned and Controlled Real Property Closing Property
Statement
M – Form of Section 5.22 Owned and Controlled Real Property Closing
Property Statement
MEMBERSHIP INTEREST PURCHASE AGREEMENT
This MEMBERSHIP INTEREST PURCHASE
AGREEMENT (this “Agreement”) is dated as of January 8, 2024, by and among Landsea Homes Corporation, a Delaware
corporation company (“Buyer”), Antares Acquisition, LLC, a Texas limited liability company (the “Company”),
and the entities and individuals identified on Schedule A (each a “Seller” and, collectively, the “Sellers”).
Buyer, the Company and each of the Sellers are each referred to in this Agreement individually as a “Party” and collectively
as the “Parties.” The Parties agree that capitalized terms used in this Agreement shall have the meaning set forth
herein, as further set forth or referenced to in Exhibit A attached hereto.
BACKGROUND
| A. | Each Seller owns the percentage of the membership interests of the Company (collectively, the “Membership
Interests”) indicated on Exhibit B attached hereto, which collectively constitutes all of the issued and outstanding
equity interests of the Company. |
| B. | On the terms and subject to the conditions set forth in this Agreement and in exchange for the consideration
set forth in Section 1.3, Buyer desires to purchase from Sellers, and Sellers desire to sell, assign, convey and deliver to Buyer
all of Sellers’ right, title and interest in and to the issued and outstanding Membership Interests, after which the Company shall
become a wholly-owned Subsidiary of Buyer (the “Transaction”). |
| C. | Consistent with Revenue Ruling 99-6, Situation 2, the Parties hereto agree to treat, for United States
federal and other applicable income Tax purposes, the sale by Sellers of the Membership Interests to Buyer as follows: (a) as to the Sellers,
as a sale of the Membership Interests by the Sellers to Buyer governed by Section 741 of the Code; (b) as to Buyer, as if the Company
had distributed its assets in liquidation of the Company to the Sellers, and as if the Sellers had sold to Buyer such assets received
from the Company. |
| D. | Prior to the execution and delivery of this Agreement, (a) Buyer deposited the non-refundable sum of $500,000.00
(such amount, the “Prior Escrow Deposit”) with First American Title Insurance Company (the “Escrow Agent”)
pursuant to that certain Escrow Agreement, dated August 23, 2023, by and among Buyer and the Sellers (the “Prior Escrow Agreement”),
which amount has previously been released to Sellers, and (b) Buyer deposited an additional non-refundable sum of $300,000.00 (such amount,
the “Existing Escrow Deposit”) with the Escrow Agent pursuant to that certain Escrow Agreement, dated December 14,
2023, by and among Buyer and the Sellers (the “Escrow Agreement”). |
AGREEMENT
In consideration of the mutual
covenants, conditions and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, it is agreed as follows:
Article
1
PURCHASE AND SALE OF THE INTERESTS; CLOSING
| 1.1 | Closing.
The consummation of the Transaction (the “Closing”)
shall take place electronically through an e-mail exchange of fully executed copies of this
Agreement and the Transaction Documents, on a date and time to be specified by the Parties
hereto, which (i) shall be no earlier than January 8, 2024 and (ii) shall be no later than
the third (3rd) Business Day following the later of January 3, 2024 and the satisfaction
or waiver of all conditions to the obligations of the Parties set forth in Article 6
(other than conditions with respect to actions the respective Parties will take at the Closing
itself, but subject to the satisfaction or waiver of those conditions), or at such other
place, time and date as may be agreed to in writing by Buyer and Sellers. The date on which
the Closing occurs is referred to in this Agreement as the “Closing Date.” |
| 1.2 | Purchase and Sale of the
Membership Interests. On the terms and subject to the
conditions set forth in this Agreement, at the Closing, each Seller will sell, assign, convey,
transfer and deliver to Buyer, and Buyer will purchase and acquire from such Seller, all
right, title and interest in and to all of the Membership Interests held by such Seller,
free and clear of all Liens (other than Permitted Liens), in exchange for such Seller’s
Pro Rata Portion of the Estimated Closing Date Purchase Price, subject to the terms and adjustments
described in this Article 1. |
| 1.3 | Payments at Closing.
At the Closing, (i) Buyer will pay, or cause to be paid, to each Seller such Seller’s
Pro Rata Portion of the Estimated Closing Date Purchase Price (less the sum of the Prior
Escrow Deposit and the Purchase Price Deposit, which Purchase Price Deposit, pursuant to
clause (ii) below, shall be distributed from the Purchase Price Escrow Account and applied
to the Estimated Closing Date Purchase Price) by wire transfer of immediately available funds,
in each case, to each Seller to the account or accounts designated in writing by such Seller,
and (ii) Buyer, the Company and the Sellers will cause the Escrow Agent to distribute to
each Seller such Seller’s Pro Rata Portion of the Purchase Price Deposit held in the
Purchase Price Escrow Account by wire transfer of immediately available funds, in each case,
to each Seller to the account or accounts designated in writing by such Seller. For the avoidance
of doubt, the Existing Escrow Deposit was paid as an addition to, and not as part of, the
Closing Date Purchase Price, and the Existing Escrow Deposit will not reduce the amount of
the Closing Date Purchase Price payable to Sellers hereunder. |
| 1.4 | Purchase Price Adjustment. |
Estimated Closing
Statement. No later than five (5) Business Days prior to the anticipated Closing Date, Sellers will prepare and furnish to Buyer
a statement in the form attached hereto as Exhibit J (the “Estimated Closing Statement”) reflecting (i) Sellers’
estimate of the Total Shareholders’ Equity of the Company as of the close of business on the date immediately prior to the Closing
Date (the “Estimated Closing Total Shareholders’ Equity”), calculated in a manner consistent with Exhibit
H hereto and in accordance with the Accounting Principles, (ii) Sellers’ good-faith estimate of each component of the Transaction
Expenses as of the Closing Date (the “Estimated Closing Transaction Expenses”), and (iv) the Sellers’ good-faith
estimate of the purchase price (the “Estimated Closing Date Purchase Price”), which will equal:
| (A) | the Base Purchase Price; |
| (B) | plus the Estimated Closing Total Shareholders’ Equity; |
| (C) | minus the Total Shareholders’ Equity Target; and |
| (D) | minus the Estimated Closing Transaction Expenses. |
| 1.4.2 | Closing Statement. As promptly as practicable, but no later than ninety (90) days after
the Closing Date, Buyer will cause to be prepared and delivered to Sellers a written statement (the “Closing Statement”)
setting forth (i) Buyer’s calculation of the Total Shareholders’ Equity of the Company as of the Closing, calculated in a
manner consistent with Exhibit H hereto and in accordance with the Accounting Principles (the “Closing Total Shareholders’
Equity”), (ii) Buyer’s good-faith calculations of each component of the Transaction Expenses of the Company as of the
Closing Date (the “Closing Transaction Expenses”), and (iii) Buyer’s good-faith estimate of the Closing Date
Purchase Price. As to any amounts which differ from those provided by Sellers, Buyer shall provide the reasons supporting Buyer’s
revisions to the amounts provided by Sellers. |
| 1.4.3 | Statement Dispute Notice and Resolution Period. If a majority (by number) of Sellers jointly
disagree with the calculations set forth in the Closing Statement delivered by Buyer pursuant to Section 1.4.2, Sellers may, within
thirty (30) days after receipt of the Closing Statement, deliver a written notice to Buyer (a “Statement Dispute Notice”)
specifying in reasonable detail each item or amount (including such items or amounts on the Closing Statement impacted thereby) that Sellers
dispute (the “Disputed Items”), the amount in dispute for each Disputed Item and the reasons supporting Sellers’
positions. Sellers will be deemed to have agreed with all other items and amounts contained in the Closing Statement that are not Disputed
Items. If Sellers fail to deliver a Statement Dispute Notice within such thirty (30)-day period, Buyer’s calculation of the Closing
Total Shareholders’ Equity and the Closing Transaction Expenses will be deemed accepted by Sellers and will be final, conclusive
and binding on the Parties. If a Statement Dispute Notice is duly delivered pursuant to this Section 1.4.3, Buyer and Sellers
will, during the thirty (30) days following such delivery (the “Resolution Period”), use commercially reasonable efforts
to reach agreement on the Disputed Items, and if Buyer and Sellers are able to reach an agreement, Buyer will promptly revise the Closing
Statement to reflect such agreement and the same will then be deemed the Closing Statement. |
| 1.4.4 | Independent Accounting Firm. If, upon the conclusion of the Resolution Period, or any mutually-agreed
upon extension of the Resolution Period, Buyer and Sellers are unable to reach agreement on all of the Disputed Items, they will jointly
engage and submit the unresolved Disputed Items (the “Unresolved Items”) to the Independent Accounting Firm for resolution
in accordance with the terms of this Section 1.4.4. The Independent Accounting Firm (i) will make a determination with respect
to the Unresolved Items and in a manner consistent with this Section 1.4.4, (ii) will use the definitions as set forth in this
Agreement with no consideration given to any proposed modification of such definitions, and (iii) will be authorized to make any adjustments
required to be made for the Closing Statement to comply with the provisions of this Agreement. Each Party will provide the other Party
with a copy of all materials provided to, and communications with, the Independent Accounting Firm and no Party (or any of its Affiliates
or Representatives) will engage in any ex parte communication with the Independent Accounting Firm at any time with respect to the Unresolved
Items. The Independent Accounting Firm may review the books and records of the Company to the extent necessary to obtain an understanding
of the positions of Buyer and Sellers. The Independent Accounting Firm will deliver to Buyer and Sellers no later than thirty (30) days
after its engagement, a written report setting forth (a) its determination of the values of the Unresolved Items and (b) the justifications
for its determinations. Such determination of the Independent Accounting Firm will be final, conclusive and binding upon Buyer and Sellers
(absent fraud or manifest error) and Buyer will promptly revise the Closing Statement to reflect the Independent Accounting Firm’s
calculations for the Unresolved Items upon receipt of such report, including each component of the Closing Total Shareholders’ Equity
and the Closing Transaction Expenses and such final revised Closing Statement and each component part shall be deemed the Closing Statement
for all purposes hereunder. The fees and expenses of the Independent Accounting Firm will be borne pro rata as between Buyer, on the one
hand, and Sellers, on the other hand, based upon the proportionate net deviation of the Closing Date Purchase Price based on the respective
adjustments for the Unresolved Items proposed by Buyer and Sellers, as set forth in the Closing Statement in the case of Buyer and the
Statement Dispute Notice in the case of Sellers, from the determination of the final Closing Date Purchase Price made by the Independent
Accounting Firm. The date on which the Closing Total Shareholders’ Equity and the Closing Transaction Expenses are finally determined
in accordance with this Section 1.4 is referred to as the “Determination Date.” |
| 1.4.5 | Adjustment to Purchase Price. The “Adjustment Amount” means an amount
equal to (a) the Closing Date Purchase Price (as finally agreed upon or determined pursuant to this Section 1.4), less (b)
the Estimated Closing Date Purchase Price. If the Adjustment Amount is a positive amount, then promptly, and in any event within five
(5) Business Days following the Determination Date, Buyer will pay or cause to be paid to each Seller, by wire transfer of immediately
available funds to the account or accounts designated in writing by such Seller, such Seller’s Pro Rata Portion of the Adjustment
Amount. If the Adjustment Amount is a negative amount (the absolute value of such amount, the “Shortfall Amount”),
then promptly, and in any event within five (5) Business Days following the Determination Date, each Seller will pay or cause to be paid
to Buyer, by wire transfer of immediately available funds to the account or accounts designated in writing by Buyer, each Seller’s
Pro Rata Portion of the Shortfall Amount. Any payment of an Adjustment Amount shall be treated as an adjustment to the Closing Date Purchase
Price for all Tax purposes unless otherwise required by applicable Law. |
| 1.4.6 | Balance Sheet Changes. The Total Shareholders’ Equity of the Company will not be subject
to adjustment for changes in the balance sheet of the Company attributable to its ordinary course business activities (e.g. construction
starts, lot takedowns, etc. in the ordinary course of business of the Company consistent with past practices), unless such changes actually
increase or decrease the Closing Total Shareholders’ Equity, as calculated in a manner consistent with Exhibit H hereto and
in accordance with the Accounting Principles. A spreadsheet showing the method of calculation of the Total Shareholders’ Equity
of the Company for purposes of this Agreement is attached hereto as Exhibit H. |
| 1.5.1 | Purchase Price Deposit. Within one (1) Business Day of the execution of this Agreement,
Buyer shall cause a sum equal to $5,000,000.00 (such amount, together with any and all interest thereafter earned thereon, the “Purchase
Price Deposit”) to be transferred to the account in which the Existing Escrow Deposit is held (the “Purchase Price
Escrow Account”) to be held by the Escrow Agent for the periods and distributed as provided in the terms of this Agreement and
the Escrow Agreement. |
| 1.5.2 | Payment of Purchase Price Deposit. |
| (a) | Subject to terms of Section 1.5.2(b) and Section 1.5.3 below, Buyer, the Company and the
Sellers shall cause the Escrow Agent to distribute the Purchase Price Deposit (i) if the Closing occurs, to the Sellers at the Closing
in accordance with Section 1.3, or (ii) in the event of a Qualifying Termination, to the Company by wire transfer of immediately
available funds, in such account or accounts designated by the Company, provided that (A) if Buyer delivers a Deposit Dispute Notice within
the Deposit Dispute Window and the Sellers are determined to be the Prevailing Party in accordance with Section 1.5.2, within three
(3) Business Days of such determination, or (B) if Buyer does not deliver a Deposit Dispute Notice within the Deposit Dispute Window,
within three (3) Business Days of the end of the Deposit Dispute Window. |
| (b) | Following the occurrence of a Qualifying Termination, the Sellers shall provide a written notice to Buyer
and Escrow Agent of the Qualifying Termination, which shall include (i) confirmation that the Sellers have determined that a Qualifying
Termination has occurred, (ii) confirmation of the provision of this Agreement by which the Sellers have elected to terminate this Agreement,
and (iii) a detailed description of the facts and reasons supporting the Sellers’ determination that a Qualifying Termination has
occurred (a “Qualifying Termination Notice”). If Buyer disagrees with the Sellers’ determination that a Qualifying
Termination has occurred, Buyer may, within ten (10) Business Days after receipt of the Qualifying Termination Notice (the “Deposit
Dispute Window”), deliver a written notice to the Sellers (a “Deposit Dispute Notice”) that includes a detailed
written description of each item that Buyer disputes in the Qualifying Termination Notice and the facts and reasons supporting Buyer’s
position that a Qualifying Termination has not occurred. If Buyer has delivered a Deposit Dispute Notice within the Deposit Dispute Window,
the Purchase Price Deposit shall be distributed to the prevailing party (the “Prevailing Party”) as such (A) is determined
by a court of competent jurisdiction, or (B) is agreed among the Parties hereto in writing. The non-Prevailing Party shall reimburse the
Prevailing Party for its legal fees and court costs relating to any dispute hereunder no later than three (3) Business Days following
written demand delivered by the Prevailing Party to the non-Prevailing Party hereunder. |
| (c) | The Parties hereby agree that the payment of the Purchase Price Deposit to the Company and the recovery
of attorneys’ fees and court costs in accordance with Section 1.5.2(b) shall be the sole and exclusive remedy of the Company,
the Sellers and their respective Affiliates and representatives pursuant to this Agreement and any other Transaction Documents executed
in connection with the Transaction in the event of a Qualifying Termination, as liquidated damages. |
| 1.5.3 | Refund of Purchase Price Deposit. Following the termination of this Agreement other than
a Qualifying Termination (a “Release Termination”), Buyer shall deliver written notice to Sellers and Escrow Agreement
which shall include (i) confirmation that Buyer has determined that a Release Termination has occurred, (ii) confirmation of the provision
of this Agreement by which Buyer has elected to terminate this Agreement, and (iii) a detailed description of the facts and reasons supporting
Buyer’s determination that a Release Termination has occurred (a “Release Termination Notice”). If Sellers disagree
with Buyer’s determination that a Release Termination has occurred, Sellers may, within ten (10) Business Days after receipt of
the Release Termination Notice (the “Deposit Release Dispute Window”), deliver a written notice to Buyer (a “Deposit
Release Dispute Notice”) that includes a detailed written description of each item that the Sellers dispute in the Release Termination
Notice and the facts and reasons supporting Sellers’ position that a Release Termination has not occurred. If Sellers have delivered
a Deposit Release Dispute Notice, the Purchase Price Deposit shall be distributed to the prevailing party (the “Prevailing RT
Party”) as such (A) is determined by a court of competent jurisdiction, or (B) is agreed among the Parties hereto in writing.
The non-Prevailing RT Party shall reimburse the Prevailing RT Party for its legal fees and court costs relating to any dispute hereunder
no later than three (3) Business Days following written demand delivered by the Prevailing RT Party to the non-Prevailing RT Party hereunder. |
| 1.5.4 | The Parties covenant and agree that as promptly as practicable following the determination of which Party
or Parties are entitled to receive the Purchase Price Deposit in connection with a Qualifying Termination or a Release Termination in
accordance with this Section 1.5, they shall, by written instruction, cause the Escrow Agent to distribute the Purchase Price Deposit
to Buyer or the Company, as applicable, in accordance with the provisions of this Section 1.5 by wire transfer of immediately available
funds, in such account or accounts designated by the recipient Party. |
| 1.6 | Withholding.
Notwithstanding anything to the contrary in this
Agreement, Buyer and the Company (and any other Person that has a withholding obligation
with respect to any payment made pursuant to this Agreement) shall be entitled to deduct
and withhold from any amounts otherwise payable pursuant to this Agreement to any Person
such amounts as are required to be deducted and withheld under the Code (or any provision
of applicable Law with respect to the making of such payment) with respect to such payment;
provided that, it shall be a condition to any deduction or withholding from any amounts payable
to Sellers hereunder that Buyer provide Sellers written notice of the basis for such withholding
at least ten (10) Business Days prior to the subject payment. To the extent that amounts
are so deducted and withheld, such deducted and withheld amounts shall be timely remitted
to the appropriate Governmental Authority and shall be treated for all purposes of this Agreement
as having been paid to such Person in respect of whom such deduction and withholding were
made. Notwithstanding the foregoing, the Parties shall reasonably cooperate with one another
to minimize any such withholding obligation. |
Article
2
REPRESENTATIONS AND WARRANTIES RELATING TO THE SELLERs
Except as set forth in the Seller
Disclosure Schedule, which exceptions or disclosures set forth therein will be deemed to be part of the representations and warranties
made under this Agreement, each Seller represents and warrants to Buyer as follows:
| 2.1 | Power and Authorization;
Enforceability. Each of the Sellers has all requisite
right, power and authority to execute and deliver this Agreement and the other Transaction
Documents, if any, to which such Seller is, or is specified to be, a party (collectively,
the “Seller Transaction Documents”), to perform its obligations under
this Agreement and under the Seller Transaction Documents and to carry out the Transaction.
All necessary action has been taken by each Seller to authorize the execution, delivery and
performance by it of this Agreement and each other Seller Transaction Document to which such
Seller is a Party. Each Seller has duly executed and delivered this Agreement and, at or
prior to the Closing, will have duly executed and delivered each other Seller Transaction
Document. Assuming that this Agreement and each of the other Seller Transaction Documents
are valid and binding obligations of each of the other Parties hereto and thereto, this Agreement
is, and each other Seller Transaction Document, when duly executed and delivered at or prior
to the Closing by such Seller will be, the legal, valid and binding obligation of the Seller,
enforceable against such Seller in accordance with its respective terms, except as the enforceability
of such obligations may be limited by the Enforceability Exceptions. |
| 2.2 | No Violation or Conflict; Consents.
Neither the execution, delivery or performance by
Sellers of this Agreement and the other Seller Transaction Documents, nor the consummation
of the Transaction (with or without the passage of time or the giving of notice, or both)
will: |
| 2.2.1 | contravene, conflict with or result in a violation or breach of (a) to the extent applicable, the organizational
documents of each Seller or (b) any (i) Judgments or (ii) Laws, in each case, binding upon or applicable to each Seller or any of its
respective Affiliates or by which it or any of its respective properties or assets are bound; |
| 2.2.2 | contravene, conflict with, result in a violation or breach of, constitute a default or change of control
under, give a right to terminate, amend, accelerate, vest or cancel under or create a right of notice or consent or other right (or loss
of benefit) with respect to, any material Contract or Permit to which each Seller is a party or by which it or any of its respective properties
or assets are bound; |
| 2.2.3 | result in the creation or imposition of any Lien upon any of the assets of each Seller, other than Permitted
Liens; |
| 2.2.4 | cause a material Loss or material adverse modification of any Governmental Authorization used or held
by each Seller or any of its respective Affiliates; or |
| 2.2.5 | require any consent, approval, order, authorization or permit of, or registration, declaration or filing
with or notification to, any Governmental Authority other than as contemplated by the provisions of Section 5.10 hereof; |
except, in each case, where failure
of any of the above would not, individually or in the aggregate, reasonably be expected to prevent, or materially impair or delay, the
ability of any Seller to consummate the Transaction.
| 2.3 | Ownership.
Each Seller is the lawful record and beneficial
owner of all of the Membership Interests of the Company listed opposite such Seller’s
name on Section 2.3 of the Company Disclosure Schedule free and clear of all Liens
and any other restrictions on transfer other than Permitted Liens. Sellers have all requisite
power and authority to sell, transfer, assign and deliver the Membership Interests as provided
in this Agreement and the Seller Transaction Documents, and at the Closing, each Seller shall
transfer to Buyer good and marketable title to the Membership Interests owned by such Seller,
free and clear of all Liens and other restrictions on transfer, other than Permitted Liens.
Sellers have the sole right to vote or direct the voting of such Membership Interests on
any matter submitted to a vote of the equity holders of the Company, and Sellers have sole
decision-making authority with respect to the Membership Interests in the Company. There
are no voting trusts, voting agreements, proxies, shareholder agreements or other arrangements
relating to such Membership Interests. |
| 2.4 | Legal Proceedings; Judgments.
Each Seller is not subject to any, nor is there
any pending, Judgment that (a) relates to the Business of, or any assets owned or used by,
the Company or (b) could reasonably be expected to prevent, impede, hinder, delay, make illegal,
impose limitations or conditions on, or otherwise interfere with, the ability of such Seller
to consummate the Transaction or any other transaction contemplated by the Seller Transaction
Documents to which such Seller is a party. |
| 2.5 | Brokers.
No investment banker, broker, finder or other intermediary
is entitled to any fee or commission in connection with the Transaction based upon arrangements
or agreements made by or on behalf of such Seller. |
Article
3
REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY
Except as set forth on the Company
Disclosure Schedule, which exceptions or disclosures set forth therein will be deemed to be part of the representations and warranties
made under this Agreement, the Company and the Sellers, severally and jointly, each represent and warrant to Buyer as follows:
| 3.1 | Organization and Good
Standing. The Company is duly organized, validly existing
and in good standing under the Laws of its respective jurisdiction of organization or formation
and has all requisite corporate, limited liability company or similar power and authority
to carry on its business as presently conducted, and to own and lease the assets and properties
which it owns and leases. Section 3.1 of the Company Disclosure Schedule sets forth
each jurisdiction in which the Company is licensed or qualified to do business. The Company
is duly licensed or qualified to do business as a foreign entity and is in good standing
in each jurisdiction in which the properties owned or leased by it or the operation of its
business as currently conducted makes such licensing or qualification necessary. True, correct
and complete copies of the organizational documents of the Company currently in effect have
been provided to Buyer and reflect all amendments made thereto at any time prior to the Closing
Date, and the Company is not in material violation of any of the provisions thereof. |
| 3.2 | Power and Authorization;
Enforceability. The
Company has all requisite right, power and authority to execute and deliver this Agreement
and the other Transaction Documents to which it is, or is specified to be, a party (collectively,
the “Company Transaction Documents”), to perform its obligations under this Agreement
and under each other Company Transaction Document and to consummate the Transaction. All
necessary limited liability company action has been taken by the Company to authorize the
execution, delivery and performance by the Company of this Agreement and each other Company
Transaction Document. The Company has duly executed and delivered this Agreement and, at
or prior to the Closing, will have duly executed and delivered each other Company Transaction
Document. Assuming that this Agreement and each of the other Company Transaction Documents
are valid and binding obligations of each of the other Parties to this Agreement and each
of the other Company Transaction Documents, this Agreement is, and each other Company Transaction
Document, when duly executed and delivered at the Closing by the Company, will be, the legal,
valid and binding obligation of the Company, enforceable against it in accordance with its
respective terms, except as enforceability of such obligations may be limited by the Enforceability
Exceptions. |
| 3.3 | No Violation or Conflict; Consents.
Neither the execution, delivery or performance by the Company of this Agreement or the other
Company Transaction Documents, nor the consummation of the Transaction (with or without the
passage of time or the giving of notice, or both) will: |
| 3.3.1 | contravene, conflict with or result in a violation or breach of, to the extent applicable, (a) the organizational
documents of the Company, (b) any Judgments or (c) Laws, in each case, binding upon or applicable to the Company or by which it or any
of its respective properties or assets are bound; |
| 3.3.2 | contravene, conflict with, result in a violation or breach of, constitute a default or change of control
under, give a right to terminate, amend, accelerate, vest or cancel under or create a right of notice or consent or other right (or loss
of benefit) with respect to, any material Contract or material Permit to which the Company is a party or by which they or any of their
respective properties or assets are bound; |
| 3.3.3 | result in the creation or imposition of any Lien upon any of the assets of the Company, other than Permitted
Liens; |
| 3.3.4 | cause a loss or an adverse modification of any material Governmental Authorization used by the Company;
or |
| 3.3.5 | require any consent, approval, order, authorization or permit of, or registration, declaration or filing
with or notification to, any Governmental Authority, except for the consents and approvals set forth on Section 3.3.5 of the Company
Disclosure Schedule. |
| 3.4 | Capitalization and
Related Matters. |
| 3.4.1 | Section 3.4.1 of the Company Disclosure Schedule sets forth as of the date hereof, a complete list
of the Membership Interests, including a true, correct and complete list of the record holders of the Membership Interests, listing for
each Person: (i) his, her or its name, and if not a natural person, its type of entity and jurisdiction of incorporation or organization;
and (ii) the percentage of the Company’s membership interests owned by such Person. |
| 3.4.2 | The Membership Interests represent all issued and outstanding equity interests of the Company. All of
the issued and outstanding Membership Interests have been duly authorized and validly issued and are fully paid and non-assessable. Immediately
after the Closing, Buyer shall own all of the outstanding Membership Interests, free and clear of any Liens or any other restrictions
on transfer, other than Permitted Liens. Other than the Membership Interests, there are no issued, reserved for issuance or outstanding
(a) membership interests, shares of capital stock of, or other equity or voting interests in, the Company, (b) securities of the Company
convertible into or exchangeable or exercisable for membership interests, shares of capital stock of, or other equity or voting interests
in, the Company or containing any profit participation features, or (c) options, warrants, restricted stock or stock units, profits interests,
stock appreciation rights, phantom stock, calls, subscriptions or other rights to acquire from the Company or other obligations of the
Company to issue or allot, any membership interests, capital stock or securities convertible into, or exchangeable or exercisable for,
or evidencing the right to subscribe for, capital stock of, or other equity or voting interests in, the Company or any equity appreciation
rights or phantom equity plans. There are no outstanding obligations of the Company to repurchase, redeem or otherwise acquire or retire
for value any Membership Interests. There are no statutory or contractual equity holder preemptive or similar rights, rights of first
refusal, rights of first offer or registration rights with respect to the Membership Interests. There are no agreements with respect to
the voting or transfer of the Membership Interests to which the Company or any Seller is a party. |
| 3.4.3 | The Company has not violated any applicable federal or state securities Laws or any preemptive or similar
rights created by statute, organizational document or agreement in connection with the offer, sale, issuance or allotment of any Membership
Interests. The Company has no liability for, or obligation with respect to, the payment of dividends, distributions or similar participation
interests, whether or not declared or accumulated, and there are no restrictions of any kind which prevent the payment of the foregoing
by the Company other than applicable Law. No certificate or certificates have been issued representing any of the Membership Interests
or any other equity interest in the Company. The Company has not at any time issued or granted, and there are no outstanding or authorized,
compensatory equity or equity-linked interests with respect to the common stock, preferred stock or other capital stock of, or the common
units or preferred units of, or other equity or voting interests in the Company, including without limitation, any options, appreciation
rights, restricted stock or stock unit awards, profits interests, restricted units, phantom equity or similar awards or rights. |
| 3.5 | No Subsidiaries.
The Company does not own or have the right to acquire
any capital stock, equity interest or investment or securities (whether equity or debt) of
any nature in any Person, or securities exchangeable or exercisable therefor. |
| 3.6.1 | The Company conducts its Business in material compliance with all applicable Laws, and Governmental Authorizations
and all Real Property is in material compliance with all applicable Laws and Governmental Authorizations. During the three (3) years prior
to the date of this Agreement, neither Sellers nor the Company have received any written communication from any Governmental Authority
of any investigation, inquiry or alleged failure to comply with any applicable Laws in any material respect which is pending or remains
unresolved. The Company has filed in a timely manner all reports, documents and other materials required to be filed by such entity with
any Governmental Authority, and the information contained in each of such filings is true, correct and complete in all material respects,
except in each case where such failure would not reasonably be expected to have a Material Adverse Effect. |
| 3.6.2 | The Company (i) has not received any written notice from any Governmental Authority or private party alleging
noncompliance with any applicable Law other than routine allegations of noncompliance following customary examinations or other matters;
(ii) has not incurred any liability for failure to comply in any material respect with any applicable Law; or (iii) has not made any mandatory
or voluntary disclosure to any Governmental Authority with respect to any actual, potential or alleged violation in any material respect
of any Law by any manager, member or other direct or indirect equity holder, officer, employee or agent or concerning actual or alleged
fraud. There is no investigation, proceeding or disciplinary action currently pending or, to the Company’s Knowledge, threatened
against the Company by a Governmental Authority. The Company has filed all material reports, notifications and other filings required
to be filed with any Governmental Authority pursuant to applicable Law, and has paid all fees and assessments due and payable in connection
therewith. |
| 3.6.3 | The Company is not an “investment company” as defined in Section 3(a) of the Investment Company
Act of 1940, as amended. |
| 3.6.4 | None of the Company or any of its respective officers or directors or, to the Company’s Knowledge,
employees or agents, is a Sanctioned Person. The Company and its respective officers, directors and, to the Knowledge of the Company,
employees and agents are in compliance with, and have not previously within the past three (3) years violated in any material respect,
any Sanctions. There are no pending or, to the Company’s Knowledge, threatened claims against the Company with respect to Sanctions. |
| 3.7 | Litigation.
Except as disclosed in Section 3.7 of the Company
Disclosure Schedule, there, are no, and since January 1, 2018, there have not been any,
(a) Proceedings pending or, to the Company’s Knowledge, threatened in writing which
involve the Company, the Business or the properties or assets of the Company that (i) relates
to the Business of, or any assets owned or used by, the Company or (ii) could reasonably
be expected to prevent, impede, hinder, delay, make illegal, impose limitations or conditions
on, or otherwise interfere with, the ability of the Company to consummate the Transaction
or any other transaction contemplated by the Seller Transaction Documents to which the Company
is a party, and (b) unsatisfied Judgments against the Company, the Business or the properties
or assets of the Company. To the Company’s Knowledge, no event has occurred or circumstances
exist that are reasonably likely to give rise to, or serve as a basis for, any such Proceeding
or Judgment. There are no Proceedings pending or threatened by the Company against any Person. |
| 3.8.1 | The Company has provided Buyer with copies of the following financial statements (collectively, the “Financial
Statements”): (a) the audited balance sheet of the Company as of December 31, 2022 (including the notes thereto, if any), and
the related audited statements of income, members’ equity and cash flows for the fiscal year then ended; (b) the unaudited balance
sheet of the Company as of May 31, 2023 (including the notes thereto, if any), and the related unaudited statements of income, members’
equity and cash flows for the current year to date and the fiscal month then ended, and (c) the unaudited balance sheet of the Company
(the “Latest Balance Sheet”) as of November 30, 2023 (the “Latest Balance Sheet Date”) (including
the notes thereto, if any), and the related unaudited statements of income, members’ equity and cash flows for the current year
to date and the fiscal month then ended. Except as disclosed in Section 3.8.1 of the Company Disclosure Schedule, the Financial
Statements (including the notes thereto, if any, but excluding any interim internal financial statements of the Company) (w) were prepared
from, and are consistent, in all material respects, with, the books and records of the Company, (x) were prepared in accordance with GAAP
consistently applied throughout the periods covered thereby, and (y) fairly present the financial condition, cash flows and results of
operations of the Company in all material respects as at the dates thereof and for the periods therein referred to. |
| 3.8.2 | Except as disclosed in Section 3.8.2 of the Company Disclosure Schedule, the Financial Statements
fairly and accurately reflect, in all material respects (i) the assets, liabilities, revenues and expenses and the financial position
of the Company, and (ii) all transactions of Sellers and their Affiliates with respect to the Company. |
| 3.8.3 | There are no investigations, inquiries or investigations by any Governmental Authority pending or, to
the Knowledge of the Sellers, threatened, in each case regarding any accounting or auditing practices of Sellers (with respect to the
Business) or the Company. Since December 31, 2022, there has not been any material change in any accounting or auditing practices, including
any material change with respect to the reserve’s methodology (whether for bad debts, contingent liabilities or otherwise), of Sellers
or the Company. During the past two (2) years from the date hereof, no audit firm has declined or indicated its inability to issue an
opinion with respect to any financial statements of the Company. |
| 3.8.4 | The systems of internal controls over financial reporting with respect to the Company are sufficient in
all material respects to provide reasonable assurance that (i) as of the date the Financial Statements shall be delivered to Buyer, transactions
are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and to maintain accountability for the
assets of the Business, and (ii) the Financial Statements accurately and fairly reflect in reasonable detail the transactions and dispositions
of the assets of the Company in all materials respects. No financial statements of any Person other than the Company are required by GAAP
to be included or reflected in any of the foregoing Financial Statements. |
| 3.8.5 | Section 3.8.5 of the Company Disclosure Schedule sets forth all loans received by the Company under
the CARES Act (defined below), including any loans received under the U.S. Small Business Administration’s Paycheck Protection Program
(the “PPP Loans”). The entire amount of the PPP Loans (including interest accrued thereon) has been fully forgiven
by Texas Capital Bank (the “PPP Lender”), and no indebtedness related to the PPP Loan is outstanding. The Company is
not currently the subject of an audit, investigation or other review or inquiry by the U.S. Small Business Administration (the “SBA”)
or any other Governmental Authority with respect to the PPP Loans. As of the respective dates on which the Company submitted their application
for the PPP Loans and their application for forgiveness of the PPP Loans to the PPP Lender, the Company’s application documentation
(and all certifications made therein) was true and accurate in all material respects, and was made in compliance with all applicable Laws
and other requirements of the Paycheck Protection Program. At the time of application, the Company met all applicable eligibility requirements
for receiving the PPP Loans and remains eligible, including after taking into account all Paycheck Protection Program eligibility guidance
issued by the SBA since the time of application up to the date hereof. All of the loan proceeds of the PPP Loans have been applied to
uses constituting only allowed uses eligible for forgiveness pursuant to Section 1106(b) of the CARES Act. For purposes of this Agreement,
“CARES Act” means the Coronavirus Aid, Relief, and Economic Security Act (H.R. 748), as amended or restated, including
all other acts, regulations and guidance related thereto, including the Coronavirus Preparedness and Response Supplemental Appropriations
Act (H.R. 6074), the Families First Coronavirus Response Act (H.R. 6201), the Paycheck Protection Program and Health Care Enhancement
Act (H.R. 266), and the Paycheck Protection Program Flexibility Act of 2020 (H.R. 7010). |
| 3.8.6 | The Company has delivered to Buyer true, correct and complete copies of all letters from the Company’s
auditors to the Company relating to any audit of the Company during the twelve (12) months prior to the date of this Agreement, together
with true, correct and complete copies of all responses thereto. |
| 3.9.1 | Section 3.9.1 of the Company Disclosure Schedule sets forth all outstanding Indebtedness of
the Company as of the Latest Balance Sheet Date, and for each item of Indebtedness, identifies the debtor, the principal amount outstanding
as of the date of this Agreement (with regard to any Indebtedness for borrowed funds), the creditor, the maturity date (with respect to
any Indebtedness for borrowed funds) and the collateral, if any, securing such Indebtedness. No uncured event of default (or an event
which with notice or lapse of time or both would become a default) exists with respect to the obligations of the Company under any such
Indebtedness and the Company has not received any notification of cancellation of any such Indebtedness. Except as set forth on Section
3.9.1 of the Company Disclosure Schedule, none of the Indebtedness of the Company is subject to any prepayment premiums, penalties,
breakage costs or any other monetary obligations (other than contingent indemnification obligations for which no claim has been made)
payable thereunder in connection with the prepayment thereof in connection with the Transaction, or other restrictions that would prohibit
the prepayment thereof upon the Closing. All letters of credit, fidelity bonds and surety bonds are in full force and effect and will
continue in full force and effect immediately following the consummation of the Transaction. No default (or an event which with notice
or lapse of time or both would become a default) exists with respect to the obligations of the Company under any such letters of credit,
fidelity bonds or surety bonds and the Company has not received any notification of cancellation of any of such letters of credit, fidelity
bonds or surety bonds. |
| 3.9.2 | Except as set forth on Section 3.9.2 of the Company Disclosure Schedule, to the Knowledge of Sellers,
other than Permitted Liens, the Company does not have any material liability or obligation other than: (a) liabilities and obligations
set forth on the Latest Balance Sheet; (b) liabilities and obligations which have arisen since the Latest Balance Sheet Date in the Ordinary
Course; or (c) obligations set forth in any financial projections provided by Sellers to Buyer prior to the date hereof. |
| 3.9.3 | Except as set forth on Section 3.9.3 of the Company Disclosure Schedule, there are no municipal
utilities districts or other financing districts affecting the Owned Real Property or the Controlled Real Property. |
| 3.10 | Absence of Certain Changes
and Events. Since December 31, 2022, the Company has
conducted its respective Business in the Ordinary Course in all material respects and, except
as expressly contemplated by this Agreement or any other Transaction Document, there has
not been any: |
| 3.10.1 | event, condition, occurrence, contingency or development that (a) has had or would reasonably be expected
to have a Material Adverse Effect on the Company or (b) since the Latest Balance Sheet Date, would otherwise have been prohibited by Section 5.2; |
| 3.10.2 | change in the independent accountants of the Company or any material change in the accounting methods,
principles or practices followed by any the Company (except for any such change required by reason of a concurrent change in GAAP); |
| 3.10.3 | (a) adoption, material amendment or material modification of an Employee Benefit Plan for the benefit
of any executive officer of the Company, (b) grant of severance pay to any executive officer of the Company, or (c) material increase
in the compensation of any executive officer of the Company except, in each of (a) through (c), in the Ordinary Course or as required
by any existing Contract; |
| 3.10.4 | except as disclosed on Section 3.10.4 of the Company Disclosure Schedule, sale, assignment, transfer,
hypothecation, conveyance or lease of any material asset or property of the Company, except in the Ordinary Course (including the sale/leaseback
of model homes to Antares Model Holding, LLC), or mortgage, pledge, or imposition of any material Lien on any material asset or property
of the Company, except for Permitted Liens and except in the Ordinary Course; or |
| 3.10.5 | agreement by the Company to do any of the foregoing. |
| 3.11.1 | Section 3.11.1(a) of the Company Disclosure Schedule sets forth (i) a complete and accurate list
and description of all Owned Real Property as of August 31, 2023, including the address of such Owned Real Property, the total number
of lots that are Owned Real Property (by community) and the name of the residential real property community of which such Owned Real Property
is a part, if applicable and (ii) Exhibit L, attached hereto, sets forth a complete and accurate list in all material respects,
as of November 30, 2023, of the total number of lots that are Owned Real Property (by community) and the name of the residential real
property community of which such Owned Real Property is a part, if applicable. With respect to the Owned Real Property, (a) the Company
has title to such Owned Real Property, free and clear of all Liens, except Permitted Liens, Liens from the Company’s borrowing base
credit facilities as reflected on Section 3.11.1(a) of the Company Disclosure Schedule, or as otherwise disclosed in any title
commitment or title policy, (b) except as set forth on Section 3.11.1(b) of the Company Disclosure Schedule, the Company has not
leased the Owned Real Property or any portion of the Owned Real Property and (c) except (i) for sales of homes within the Owned Real Property
entered into by the Company and a third party homebuyer in the Ordinary Course and sales of model homes to Antares Model Holding, LLC
in the Ordinary Course and (ii) as set forth on Section 3.11.1(c) of the Company Disclosure Schedule or as otherwise provided for
in a Contract for the acquisition of the Owned Real Property, there are no outstanding options, rights of first offer or rights of first
refusal to purchase the Owned Real Property or any portion of, or interest in, the Owned Real Property that would reasonably be expected
to materially impair the continued use or value of any Owned Real Property affected thereby. |
| 3.11.2 | Section 3.11.2(a) of the Company Disclosure Schedule sets forth (i) a complete and accurate list
and description of all Controlled Real Property as of August 31, 2023, including the address of such Controlled Real Property, if available
(and, if not available, a description of the Controlled Real Property), the total number of lots, if platted or approved by Governmental
Authority that are within the Controlled Real Property (by community), the name of the residential real property community of which such
Controlled Real Property is a part, the amount of any commissions, broker fees, finder’s fees or similar compensation that may be
payable by the Company in connection with the acquisition of any Controlled Real Property, all Acquisition Contracts relating to the acquisition
of such Controlled Real Property and the amount of any deposits, option payments or similar amounts paid or payable under the applicable
Acquisition Contracts, and (ii) Exhibit L, attached hereto, sets forth a complete and accurate list in all material respects, as
of November 30, 2023, of the total number of lots that are Controlled Real Property (by community) and the name of the residential real
property community of which such Controlled Real Property is a part, if applicable. To the Knowledge of the Company, each Acquisition
Contract is in full force and effect and is valid, binding and enforceable against the counterparty and the Company, except, in each case
as enforceability of such agreements may be limited by the Enforceability Exceptions. The Company has made available to Buyer true and
correct copies of all such Acquisition Contracts, including all material amendments, modifications, assignments, supplements and renewals
thereof. Other than the Acquisition Contracts set forth in Section 3.11.2(a) of the Company Disclosure Schedule, there are no other
agreements, commitments or understandings of any kind between the counterparty and the Company regarding any Controlled Real Property
and there are no agreements, commitments or understandings of any kind that obligate the Company to pay any commissions, finder’s
fees or similar compensation in connection with the acquisition of any Controlled Real Property. As of the Closing, the Company shall
have the right to acquire each Controlled Real Property on the terms and conditions set forth in the applicable Acquisition Contract,
and the Company has not assigned or encumbered its rights under such Contract to any other party. To the Knowledge of the Company, there
is no breach of any Acquisition Contract by any party thereto and no condition or circumstance exists, which, with the giving of notice
or the passing of time, would constitute a breach of any Acquisition Contract. The Company shall not assign or encumber its rights under
any such Acquisition Contract to any other party unless this Agreement has been terminated. All such permitted assignments, if any, shall
only be made in compliance with the terms of the Acquisition Contract being assigned. Copies of all material notices given or received
by the Company under any Acquisition Contract with respect to any Controlled Property prior to the date of this Agreement are listed in
Section 3.11.2(b) of the Company Disclosure Schedule and have been provided to Buyer, and all such notices given or received after
the date of this Agreement shall be promptly provided to Buyer, but no later than the Closing Date. With respect to the Controlled Real
Property, (a) the Company has not leased the Controlled Real Property or any portion of the Controlled Real Property except as set forth
on Section 3.11.2(a) of the Company Disclosure Schedule and (b) other than any outstanding option, right of first offer or right
of first refusal held by the Company, there are no outstanding options, rights of first offer or rights of first refusal to purchase the
Controlled Real Property or any portion of, or interest in, the Controlled Real Property granted by the Company or any Affiliate thereof
and to the Knowledge of the Company no such outstanding options, rights of first offer or rights of first refusal are held by any Person
other than the Company other than as set forth on Section 3.11.2(b) of the Company Disclosure Schedule. Except for the properties
subject to the Acquisition Contracts set forth in Section 3.11.2(a) of the Company Disclosure Schedule, there are no material real
properties that the Company is obligated to buy, lease or sublease at some future date. |
| 3.11.3 | Section 3.11.3 of the Company Disclosure Schedule sets forth the address of each parcel of real
property leased by the Company (the “Leased Real Property” and together with the Owned Real Property and the Controlled
Real Property the “Real Property”). With respect to each Real Property Lease, (a) to the Knowledge of the Company,
the Company has good and valid leasehold interest in such Leased Real Property, free and clear of all Liens, except Permitted Liens, (b)
to the Knowledge of the Company, each lease related to such Leased Real Property (collectively, the “Real Property Leases”)
is legal, valid, binding, enforceable and in full force and effect, (c) the Company’s possession and quiet enjoyment of the Leased
Real Property has not been disturbed in any material respect and, to the Company’s Knowledge, there are no disputes with respect
to any such Real Property Lease and (d) the Company has not subleased, licensed or otherwise granted any Person the right to use or occupy
the Leased Real Property or any portion of the Leased Real Property. There are no pending (or, to the Knowledge of Seller, threatened)
actions or proceedings regarding condemnation or other eminent domain actions or proceedings affecting the Leased Real Property, or any
part thereof, or of any sale or other disposition of the Leased Real Property or any part thereof in lieu of condemnation. |
| 3.11.4 | Except (i) as disclosed on Sections 3.11.1, 3.11.2 and 3.11.3 of the Company Disclosure
Schedule and (ii) for acquisitions of real property in the Ordinary Course pursuant to any Acquisition Contracts existing as of the
date hereof or entered into by the Company following the date hereof in accordance with Section 5.2, the Company has no right,
title or interest in any real property, including any outstanding options, rights of first offer or right of first refusal to purchase. |
| 3.11.5 | The Company has not received any notice of any, and to the Company’s Knowledge, there is no, pending
or threatened condemnation or eminent domain Proceeding, transfer in lieu thereof, or claims that any Permits with respect to the buildings,
structures or improvements on any of the Real Property may be revoked, adversely modified or not renewed affecting any of the Real Property,
nor has the Company agreed or committed to dedicate any of the Real Property. |
| 3.11.6 | To the Company’s Knowledge, none of the Real Property or its current use or uses is in material
violation of applicable Law or any private restriction or covenant or entitlements applicable to the Real Property, including the Permitted
Liens. The Company has paid current all Property Taxes due and payable by the Company with respect to the Real Property. |
| 3.11.7 | Section 3.11.7 of the Company Disclosure Schedule sets forth (i) a true and complete list, as
of August 31, 2023, of Legacy Homes, and (ii) a true and complete number of all Legacy Homes as of November 30, 2023. |
| 3.11.8 | To the Company’s Knowledge, no part of the Owned or Controlled Real Property is subject to any building
or use restrictions that would materially restrict or prevent the Company’s intended sale to homebuyers consistent with the Company’s
current business practices. |
| 3.11.9 | All of the land used by the Company in the conduct of their Business is included in the Real Property.
All of the buildings, structures and other improvements used by the Company in the conduct of their Business are located on the Real Property.
Each parcel of the Real Property has access to and from an adjacent public or private road or street with adequate ingress and egress
available to such Real Property for all purposes used or operated by the Company, and the Company has received no notice of, and has no
Knowledge of, any pending or threatened action or dispute which would materially impair or interfere with such access. |
| 3.11.10 | Section 3.11.10 of the Company Disclosure Schedule sets forth a true and complete list, as of
the date hereof, of all homeowner associations affecting the Owned Real Property or Controlled Real Property (each, a
“Homeowner Association”). All assessments and related charges of any Homeowner Association applicable to any
Owned Real Property have been paid when due. To the Company’s Knowledge, there are no Proceedings pending or threatened in
writing which involve any Homeowner Association. To the Knowledge of the Company all Legacy Homes and homes subject to a purchase
Contract with the Company conform with the requirements of any applicable covenants, conditions, restrictions and declarations (the
“CCRs”) or have been approved by the architectural control committee (or similar body) of the applicable
Homeowner Association and the building plans for such homes received all requisite approvals pursuant to the CCRs. The Company has
not received any notices of, nor to the Company’s Knowledge, is there any pending violation of any CCRs by the Company that
have not been fully resolved as of the date hereof. |
| 3.11.11 | To the Knowledge of the Company, all improvements and fixtures constructed by the Company on, under, over
or within the Owned Real Property comply in all material respects with applicable Law and any applicable CCRs. |
| 3.11.12 | To the Knowledge of the Company, no part of the Real Property has been affected as a result of any fire,
explosion, earthquake, flood, hurricane, drought, windstorm, accident, outbreak, strike or other labor disturbance, embargo, moratorium,
requisition or cancellation of contract, permit, violation, incentive or concession by any Governmental Authority, riot, activities of
armed forces or acts of God or any public enemy, or any other casualty, the occurrence of which would materially impair the value of any
particular parcel of Real Property or the manner and extent of the current or contemplated use, occupancy and operation thereof or that
would result in any Governmental Authority denying Permits necessary for, or otherwise have the effect of prohibiting, the construction,
use or occupancy of the Real Property for single-family dwellings. |
| 3.11.13 | The Company has received no notice of and has no Knowledge of any pending or proposed special area or
other assessments, except for any such assessments currently payable as reflected in the title insurance commitments delivered to or obtained
by Buyer in connection herewith, affecting the Real Property or any proposed or pending public improvements which may give rise to any
such assessments affecting the Owned or Controlled Real Property. |
| 3.11.14 | Except for normal trade payables for homes under construction generated in the Ordinary Course, there
has been no labor or materials of any kind furnished to or for the benefit of any Owned Real Property for which payment in full has not
been made or will be made in the Ordinary Course. |
| 3.11.15 | Except as set forth in the Acquisition Contracts and on Section 3.11.15 of the Company Disclosure Schedule,
all of the Owned Real Property, (i) has received final plat approval, with all infrastructure improvements described or referenced in
the final plat completed, (ii) has no conditions to the issuance of building permits for the construction of single-family residences
on the lots, other than payment of standard and ordinary permit and impact fees required upon issuance of building permits; (iii) has
no condition to the issuance of certificates of occupancy for single-family residences on the lots other than construction of such residence
in accordance with the approved plans, and (iv) to the extent that a home has been constructed, or is currently under construction, has
approval by the applicable Homeowners Association (or the requisite Architectural Control Committee or similar body) as to all of the
designs and plans and specifications for the dwellings which that have been or are being constructed on the lots (to the extent required
by the applicable CCRs). |
| 3.11.16 | Except as set forth in Section 3.11.16 of the Company Disclosure Schedule, the Company has not
received written notice of any new or material increases in existing impact fees, or other fees that will be levied in connection with
the development of the Owned or Controlled Real Property, nor has the Company received any written notice of any policy or action, nor
is it aware of any such action, precluding or inhibiting (1) issuance of building permits with respect to the Owned or Controlled Real
Property; or (2) issuance of certificates of occupancy for completed residences on the Owned or Controlled Real Property. |
| 3.11.17 | Except as set forth in Section 3.11.17 of the Company Disclosure Schedule, and applicable CCRs
(or purchase Contract) or unless constituting a Permitted Lien, to the Company’s Knowledge, (i) there are no shared expense agreements,
repayment agreements, reimbursement agreements, or development payback agreements that affect all or any portion of the Real Property,
and (ii) all on-site and off-site improvements necessary to obtain a building permit for a single-family residential dwelling to be constructed
on each lot owned by the Company and a certificate of occupancy for a completed single-family residential dwelling constructed on each
lot owned by the Company have been completed and accepted by all applicable Governmental Authorities. |
| 3.11.18 | Section 3.11.18 of the Company Disclosure Schedule lists all current agreements (whether verbal
or written) to pay assessments in connection with any portion of the Owned or Controlled Real Property (other than pursuant to CCRs included
in the public record), and further sets forth the Homeowner Associations for which the Real Property is subject to, and the current assessment
amount, if applicable. The Company has delivered to Buyer existing budgets that are in the Company’s possession, if any, applicable
to the Owned or Controlled Real Property as well as any and all notices received by the Company from any Homeowner Association regarding
payment of assessments which are currently applicable to the Owned or Controlled Real Property or which may materially affect the Owned
or Controlled Real Property in the future (and will deliver any such additional budgets or notices following the date of this Agreement
until such time as the Closing occurs). |
| 3.12.1 | Section 3.12.1 of the Company Disclosure Schedule sets forth a true and complete list, as
of the date hereof, of each of the following Contracts (collectively, the “Material Contracts”) to which the Company
is a party or by with the Company or any of its assets or the Business are currently bound (and any amendments, supplements and modifications
thereto): |
| (a) | any Contract providing for the sale, assignment, lease, transfer or conveyance of any asset of the Company
with a value in excess of $100,000, excluding any retail homebuyer purchase and sale agreement entered into in the Ordinary Course that
conform in all material respects to the Company’s standard form contract (as provided to Buyer prior to the date hereof) and any
sale contracts relating to the sale by the Company of model homes to Antares Model Holding, LLC in the Ordinary Course; |
| (b) | any Contract for the acquisition or disposition of any asset entered into since January 1, 2020, with
a purchase price in excess of $100,000, excluding any retail homebuyer purchase and sale agreement and Acquisition Contracts in the Ordinary
Course and that conform in all material respects to the Company’s standard form sales Contract (as provided to Buyer prior to the
date hereof); |
| (c) | any Contract relating to Indebtedness for borrowed money of the Company or any Contract under which the
Company has guaranteed the Indebtedness for borrowed money of any other Person, in each case in excess of $100,000, or any Contract relating
to the issuance of letters of credit; |
| (d) | any Contract granting a Lien upon any material asset of the Company that requires annual aggregate payments
by such party in excess of $100,000, other than (i) any Contract relating to Indebtedness for borrowed money of the Company entered into
in the Ordinary Course and (ii) Permitted Liens; |
| (e) | any partnership, limited liability company, joint venture agreement or any Contract involving the sharing
of revenues, profits, Losses, costs, or liabilities by the Company with any other Person in any case in which the Company participates
as a partner, member or joint venturer that is material to the Company; |
| (f) | any Contract that limits the ability of the Company to engage or compete in any line of business or in
any geographic area, including provisions for exclusivity; |
| (g) | material sales agency, sales representation, distributorship, broker or franchise Contract that is (A)
not terminable without penalty on 90 days’ notice or less and (B) requires payment by the Company in excess of $100,000 per annum; |
| (h) | material Contract granting rights in material Intellectual Property (A) to the Company and (B) from the
Company to any third parties, in each case except for (1) licenses with respect to off-the-shelf, shrinkwrap or clickwrap software applications
(including software provided as a service), (2) licenses with respect to open source materials, (3) licenses or other rights to display
or use the Trademarks or names of third parties, (4) licenses granted by the Company to its resellers, customers or distribution partners
in the Ordinary Course and (5) non-disclosure agreements entered into by the Company in the Ordinary Course; |
| (i) | any Contract with any Governmental Authority; |
| (j) | each Real Property Lease and each Acquisition Contract; |
| (k) | any CCRs or similar instruments relating to any Homeowner Association; |
| (l) | any Contract with suppliers of the Company that, (i) is entered into by the Company on a national level,
(ii) includes provisions for exclusivity, or (iii) includes provisions for rebates; any Contract that relates to any relationship or arrangement
with a title insurer or any reinsurance company (including any agency or broker agreements); |
| (m) | any Contract that relates to work share, marketing services, alliance, outsourcing or similar agreements
or arrangements with strategic partners (including companies such as mortgage originators, realtors, title companies, escrow companies
and other settlement service providers); |
| (n) | any Contract that grants any exclusive marketing, distribution, Intellectual Property, or other similar
rights to any third party or otherwise purports to prohibit or limit, in any material respect, the right of the Company or any of its
Affiliates (including, in accordance with the terms of the contracts in effect on the date hereof, Buyer or any of its Affiliates after
the Closing) to make, sell, market, advertise or distribute any products or services or use, transfer, license, distribute or enforce
any Intellectual Property (other than any restrictions on sublicensing or transfer set forth in the license agreements relating to any
off-the-shelf, shrinkwrap or clickwrap software applications); |
| (o) | any Contract pursuant to which the Company grants rights of first offer, rights of first refusal or similar
provisions, or containing exclusivity, non-compete or non-solicitation provision or that otherwise purports to limit in any material respect
either the type of business or the geographic area in which the Company or any Affiliates of the Company (including, in accordance with
the terms of the Contracts in effect on the date hereof, Buyer or any of its Affiliates after the date hereof) may engage in business; |
| (p) | any Contract pursuant to which the Company grants a third party “most favored nation” status
or purports to require the Company or any of its Affiliates (including, in accordance with the terms of the contracts in effect on the
date hereof, Buyer or any of its Affiliates after the Effective Time) to offer a third party the same or better price for a product or
service if the Company or such Affiliate offers a lower price for the same product or service to another third party; |
| (q) | each Contract under which the Company has advanced or loaned any other Person outstanding amounts in the
aggregate for such Person exceeding $100,000; |
| (r) | each outstanding power of attorney with respect to the Company; |
| (s) | each material Contract that calls for performance over a period of more than three (3) months (other than
those that are terminable at will or upon not more than thirty (30) days’ notice by the Company without any liability or other obligation
to the Company), except for Contracts for the construction or sale of homes in the Ordinary Course of Business and that conform to the
Company’s standard form sales Contract (as provided to Buyer prior to the date hereof) in all material respects; |
| (t) | any development agreement with any Governmental Authority; |
| (u) | any Contract of surety, guarantee or indemnity; |
| (v) | Any Contract for construction or with design professionals that are material to the operations of the
Company; or |
| (w) | any other Contract not otherwise included in subparts (a) through (v) above (other than purchase orders
and retail home purchase agreements entered in the Ordinary Course) that requires future payments by the Company in excess of $100,000
per annum or in which $300,000 in the aggregate remains to be paid by the Company under such Contract, or provides for the Company to
receive any payments in excess of, or any property with a fair market value in excess of $100,000 per annum or in which $300,000 in the
aggregate remains payable to the Company under such Contract. |
| 3.12.2 | Except as otherwise set forth on Section 3.12.2 of the Company Disclosure Schedule, to the Knowledge
of the Company, (i) true, correct and complete copies of each written Material Contract have been delivered to Buyer, (ii) each Material
Contract is in full force and effect and is valid, binding and enforceable against each counterparty and the Company, except, in each
case as enforceability of such agreements may be limited by the Enforceability Exceptions, (iii) the Company is not currently in violation
in any material respect of any of the terms or conditions of any Material Contract, (iv) no event has occurred which with the passage
of time or the giving of notice or both would result in a material default, breach or event of noncompliance by the Company under any
such Contract, (v) no other party to any such Contract is in material breach or default thereunder and none of the Company or any Seller
has received any notice of termination, cancellation, breach or default under any such Contract, (vi) there are no renegotiations of,
attempts to renegotiate, or outstanding material rights to renegotiate any material amounts paid or payable to the Company under any of
the Material Contracts with any Person and no such Person has made written demand for such renegotiation, and (vii) the Company has not
during the two (2) years prior to the date hereof obtained or granted any waiver of or under any material provision of any such Material
Contract other than in the Ordinary Course. |
| 3.13 | Insurance; Warranty
Coverage. |
| 3.13.1 | Section 3.13.1 of the Company Disclosure Schedule contains (i) a list of each insurance policy
owned by, or maintained for the benefit of, the Company (each a “Listed Policy” and collectively, the “Listed
Policies”) and (ii) a list of all pending or threatened in writing warranty and/or defect claims made by a buyer of a home or
a Homeowner Association that has not been fully resolved and that, if adversely decided, could result in claims against the Company or
any Listed Policy in excess of $50,000. The Company is not in material default under any Listed Policy nor has the Company received any
written notice of cancellation of any Listed Policy or written notice with respect to any refusal of coverage under any Listed Policy.
Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the
Company, the Company is insured with respect to its assets and properties and the conduct of the Business in such amounts and against
such risks as are sufficient for compliance with Law and as are adequate to protect its assets and properties and the conduct of the Business. |
| 3.13.2 | To the Knowledge of the Company, Sellers have furnished Buyer with all information reasonably requested
by Buyer regarding the warranty policies entered into between the Company’s customers and StrucSure Home Warranty (each, a “Limited
Warranty”), prior to the date of this Agreement. All Legacy Homes (other than the Specified Homes) are subject to a valid Limited
Warranty. Section 3.13.2 of the Company Disclosure Schedule sets forth all warranty or defect claims for alleged damages in excess
of $50,000 related to any Legacy Homes that have not been fully resolved. |
| 3.14 | Permits.
The Company has and maintains in full force and
effect, and is in compliance with, all material Governmental Authorizations required to own,
lease and operate their respective properties or to conduct the Business consistent with
past practice (each, a “Permit”). Except as would not have a Material
Adverse Effect, all applications for or renewals of all Permits have been timely filed and
made and no such Permit will expire or be terminated as a result of the consummation of the
Transaction. There is no Proceeding pending, or to the Company’s Knowledge, threatened,
nor has the Company received any notice (written or non-written) from any Governmental Authority,
to revoke, cancel, refuse to renew or adversely modify any Permit. All material Permits required
to conduct the business of the Company as presently conducted are in the possession of the
Company and, other than Permits for homes that are completed or under construction, are listed
on Section 3.14 of the Company Disclosure Schedule. |
| 3.15 | Intellectual Property.
|
| 3.15.1 | Section 3.15.1 of the Company Disclosure Schedule contains a list as of the date of this Agreement
of all Intellectual Property (other than any incidental Intellectual Property, such as off-the-shelf, shrinkwrap or clickwrap software
applications) that are owned by or licensed to the Company (the listed items, the “Scheduled Intellectual Property”).
Other than the Scheduled Intellectual Property and any incidental Intellectual Property (including any off-the-shelf, shrinkwrap or clickwrap
software applications), the Company does not use or require the use of any Intellectual Property in the operation of the Business. |
| 3.15.2 | To the Company’s Knowledge, the Scheduled Intellectual Property is not being infringed by any third
party. |
| 3.15.3 | The Company exclusively owns, free and clear of Liens (except Permitted Liens), all Intellectual Property
owned or purported to be owned by the Company. |
| 3.15.4 | To the Company’s Knowledge, the operation of the Business of the Company does not infringe or misappropriate
any Intellectual Property of a third party. |
| 3.15.5 | No Proceedings are currently pending or, to the Company’s Knowledge, threatened in writing, that
the Company is infringing Intellectual Property owned by a third party. |
| 3.16.1 | The Company is not and has not at any time been bound by any collective bargaining or similar agreement
with respect to its employees. There is no labor strike, work stoppage, picketing, lockout, walkout or other organized work interruption
pending or, to the Company’s Knowledge, threatened against the Company, and no such entity has experienced any such labor strike,
work stoppage, picketing, lockout, walkout or other organized work interruption during the past five (5) years. There are no labor unions
or other organizations representing or, to the Company’s knowledge, purporting to represent, any employees of the Company. To the
Company’s Knowledge, no union organization campaign is in progress with respect to any employees of the Company. There are no unfair
labor practice charges against the Company pending before the National Labor Relations Board or any other Governmental Authority, nor
are there any Proceedings against the Company which are pending or, to the Company’s Knowledge, threatened by or on behalf of any
employees of the Company. |
| 3.16.2 | The Company is in material compliance with all applicable Laws respecting employment and employment practices,
classification of services providers, terms and conditions of employment of employees, former employees and prospective employees, wages
and hours, pay equity, discrimination in employment, wrongful discharge, collective bargaining, fair labor standards, occupational health
and safety, or any other labor and employment-related matters. The Company is not a party to, or otherwise bound by, any consent decree
with, or citation from, any Governmental Authority relating to employees or employment practices. |
| 3.16.3 | (a) The Company has paid in full to all of its employees or adequately accrued for in accordance with
GAAP all wages, salaries, commissions, bonuses, contributions, premiums, benefits and other compensation due to or on behalf of such employees
(other than immaterial payroll errors or discrepancies); and (b) there is no Proceeding with respect to payment of wages, salary, commissions,
bonuses, contributions, premiums, benefits, overtime pay or other compensation that is now pending or, to the Company’s Knowledge,
threatened against the Company before any Governmental Authority with respect to any Persons currently or formerly employed by the Company. |
| 3.16.4 | During the three (3) years prior to the date of this Agreement, the Company has not engaged in or effectuated
any “plant closing” or employee “mass layoff” (in each case, as defined in the Worker Adjustment Retraining and
Notification Act of 1988, as amended, or any similar state or local statute, rule or regulation) affecting any site of employment or one
or more facilities or operating units within any site of employment or facility of any such entity. |
| 3.16.5 | There are no material liabilities, whether contingent or absolute, of any of the Company relating to workers’
compensation benefits that are not fully insured against by a bona fide third-party insurance carrier. With respect to each Employee Benefit
Plan and with respect to each state workers’ compensation arrangement that is funded wholly or partially through an insurance policy
or public or private fund, all premiums required to have been paid to date under such insurance policy or fund have been paid. |
| 3.16.6 | The Compensation Spreadsheet contains a true, correct and complete list as of the date hereof of the names
and current monthly salary rates or current hourly wages, as applicable, employer, bonus opportunity, hire date, accrued vacation and
paid-time-off, principal work location and leave status of all present employees and independent contractors of the Company and each such
Person’s status as being exempt or nonexempt from the application of state and federal wage and hour Laws. No executive officer
or member of senior management of the Company has informed such entity of any plan to terminate employment with or services for any such
entity, and, to the Company’s Knowledge, no such Person or Persons currently intends to terminate employment with or services for
any such entity. |
| 3.16.7 | The Company has not used the services of any temporary employees or “leased employees” (within
the meaning of Section 414(n) of the Code). |
| 3.16.8 | In the past three (3) years, (i) no allegations of sexual harassment or sexual misconduct have been made
in writing, or, to the Company’s Knowledge, threatened to be made against or involving any current or former officer, director or
member of the senior management of the Company by any current or former officer, employee or individual service provider of the Company,
and (ii) the Company has not entered into any settlement agreements resolving, in whole or in part, allegations of sexual harassment or
sexual misconduct by any current or former officer, director or other member of senior management. |
| 3.17.1 | Section 3.17.1 of the Company Disclosure Schedule lists all material Employee Benefit Plans.
The Company does not have any plan or commitment to adopt or enter into any additional Employee Benefit Plan or to amend or terminate
any existing Employee Benefit Plan. No current or former employee or consultant of the Company participates in or receives (or is eligible
to receive) any compensation or benefits from any plan, program, arrangement or agreement maintained, adopted, entered into or contributed
to by Sellers or any Affiliate of Sellers. |
| 3.17.2 | The Company has made available to Buyer a true and complete copy, as applicable, of (a) each Employee
Benefit Plan (including any amendments thereto) and descriptions of all material terms of any such plan that is not in writing, (b) the
three (3) most recent annual reports with accompanying schedules and attachments, filed with respect to each Employee Benefit Plan required
to make such a filing, (c) the most recent summary plan description for each Employee Benefit Plan for which a summary plan description
is required by applicable Law and any other notice or description provided to employees (as well as any modifications or amendments thereto),
(d) the most recently received determination letter, if any, issued by the IRS and each currently pending application for a determination
letter with respect to any Employee Benefit Plan that is intended to qualify under Section 401(a) of the Code, (e) the three (3) most
recently prepared actuarial reports, financial statements and trustee reports, if any, relating to the Employee Benefit Plan, (f) all
material records, notices and filings concerning IRS or U.S. Department of Labor audits or investigations with respect to any Employee
Benefit Plan, and (g) all material non-routine, written communications relating to any Employee Benefit Plan and any proposed Employee
Benefit Plan. |
| 3.17.3 | Each Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter from the IRS or is the subject of a favorable opinion letter from the IRS on the form of such
Employee Benefit Plan and, to the Company’s Knowledge, there are no facts or circumstances that would be reasonably likely to adversely
affect the qualified status of any such Employee Benefit Plan. To the Knowledge of the Company, each trust established in connection with
any Employee Benefit Plan which is intended to be exempt from federal income taxation under Section 501(a) of the Code is so exempt, and
no fact or event has occurred that would reasonably be expected to adversely affect the exempt status of any such trust. |
| 3.17.4 | No Employee Benefit Plan is, and neither the Company nor any of its respective ERISA Affiliates contributes
to, has at any time contributed to or has any liability or obligation, whether fixed or contingent, with respect to (a) a “multiemployer
plan” (within the meaning of Section 3(37) of ERISA), (b) a single employer plan or other pension plan that is subject to Title
IV of ERISA, Section 302 of ERISA or Section 412 of the Code, (c) a “multiple employer plan” (within the meaning of Section
413(c) of the Code), or (d) a multiple employer welfare arrangement (within the meaning of Section 3(40) of ERISA). |
| 3.17.5 | The Company does not have any obligation to provide (whether under an Employee Benefit Plan or otherwise)
health, accident, disability, life or other welfare benefits to any current or former employees, directors, consultants or retirees (or
any spouse, beneficiary or dependent of the foregoing) beyond the termination of employment or other service of such employee, director,
consultant or retiree, other than health continuation coverage as required by Section 4980B of the Code or any similar state Law. |
| 3.17.6 | To the Knowledge of the Company, each Employee Benefit Plan has been maintained, operated and administered
in compliance in all material respects with its terms and the applicable requirements of ERISA, the Code and any other applicable Laws.
To the Knowledge of the Company, the Company has performed all obligations required to be performed by it under and is not in any respect
in default under or in violation of any Employee Benefit Plan. To the Company’s Knowledge, there has not been a default or violation
by any party to any Employee Benefit Plan. |
| 3.17.7 | All payments, benefits, contributions (including all employer contributions and employee salary reduction
contributions) and premiums related to each Employee Benefit Plan, including all wages, salaries, commissions, bonuses, benefits and other
compensation due to or on behalf of any employees or other individual service providers, have been timely paid or made in full or, to
the extent not yet due, properly accrued on the Latest Balance Sheet in accordance with the terms of the Employee Benefit Plan and all
applicable Laws. |
| 3.17.8 | To the Knowledge of the Company, no Proceeding is pending or, to the Company’s Knowledge, threatened
against, by or on behalf of any Employee Benefit Plan or the assets, fiduciaries or administrators thereof (other than claims for benefits
in the Ordinary Course). To the Knowledge of the Company, with respect to each Employee Benefit Plan, (a) no breaches of fiduciary duty
or other failures to act or comply in connection with the administration or investment of the assets of such Employee Benefit Plan have
occurred and (b) no Lien has been imposed under the Code, ERISA or any other applicable Law. There has not been any prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any Employee Benefit Plan. The Company has not
made any filing in respect of any Employee Benefit Plan under the IRS’s Employee Plans Compliance Resolution System or the Department
of Labor Delinquent Filer Program. |
| 3.17.9 | No Employee Benefit Plan, and neither the Company nor, to the Knowledge of the Company, any Employee Benefit
Plan fiduciary with respect to any Employee Benefit Plan, in any case, is the subject of an audit or investigation by the IRS, the Department
of Labor, the Pension Benefit Guaranty Corporation or any other Governmental Authority, nor is any such audit or investigation pending
or, to the Company’s Knowledge, threatened. |
| 3.17.10 | Except as disclosed on Section 3.17.10 of the Company Disclosure Schedule, neither the execution
and delivery of this Agreement, nor the consummation of the Transaction, either alone or in combination with another event (whether contingent
or otherwise) will (a) entitle any current or former employee, consultant, director or other individual service provider of the Company
to any payment, (b) increase the amount of compensation or benefits due to any such employee, consultant, director or other individual
service provider or any such group of employees, consultants, directors or other individual service providers, or (c) accelerate the vesting,
funding or time of payment of any compensation, equity award or other benefit. |
| 3.17.11 | The Company and its ERISA Affiliates are and, to the Company’s Knowledge, each professional employer
organization is, in compliance in all material respects with (a) the applicable requirements of Section 4980B of the Code and any similar
state Law, (b) the applicable requirements of HIPAA and the regulations (including the proposed regulations) thereunder, and (c) the applicable
requirements of the Patient Protection and Affordable Care Act of 2010, as amended. No Employee Benefit Plan is a voluntary employee benefit
association under Section 501(a)(9) of the Code. The obligations of all Employee Benefit Plans that provide health, welfare or similar
insurance are fully insured by bona fide third-party insurers. No Employee Benefit Plan is maintained through a human resources and benefits
outsourcing entity, professional employer organization or other similar vendor or provider. |
| 3.17.12 | Except as disclosed on Section 3.17.12 of the Company Disclosure Schedule, the Company has made
no condition or agreement with any Person, and there is no provision of any Employee Benefit Plan, that limits the right of the Company
to amend, terminate, reduce, limit, or cut back the benefits available under any Employee Benefit Plan (except to the extent such limitation
arises under ERISA or the Code). |
| 3.18 | Environmental Matters. |
| 3.18.1 | To the Knowledge of the Company, the operations of the Company are and have always been in material compliance
with all applicable Environmental Laws, which compliance includes obtaining, maintaining and materially complying with any Environmental
Permits applicable to the Business. Neither Sellers, the Company nor, to the Company’s Knowledge, any other party has used Hazardous
Materials on, from or affecting any Real Property in any manner which violates any Environmental Laws. The Company has not received any
notice of any violation of any Environmental Laws, and, to the Company’s Knowledge, no such violation exists and there have been
no claims or actions commenced or threatened in writing by any party for noncompliance therewith. To the Company’s Knowledge, there
are no underground storage tanks now located, or that were previously located, on, in, under, or within any portion of the Real Property. |
| 3.18.2 | The Company is not subject to any pending claim or, to the Company’s Knowledge, has received any
threat in writing alleging that the Company is subject to any claim of a material violation of any Environmental Law or any Environmental
Permit or has any material liability under any Environmental Law. |
| 3.18.3 | There have been no Releases of Hazardous Materials at the Owned Real Properties, or to the Company’s
Knowledge, at properties that were formerly owned, operated, leased or used by the Company, that are reasonably likely to cause the Company
to incur material liability pursuant to applicable Environmental Law. |
| 3.19.1 | The Company has timely filed, or has caused to be timely filed on its behalf, all Tax Returns required
to be filed by it, and all such Tax Returns are true, complete and accurate in all material respects. The Company has paid on a timely
basis all Taxes that were due and payable (whether or not shown on any Tax Return). |
| 3.19.2 | The Latest Balance Sheet contains an adequate accrual in accordance with GAAP for all unpaid Taxes (other
than Property Taxes) as of the Latest Balance Sheet Date. |
| 3.19.3 | No written claim has ever been made by any Governmental Authority in a jurisdiction where the Company
does not file Tax Returns that the Company is or may be subject to taxation or to a requirement to file Tax Returns in such jurisdiction,
which claim has not been resolved. |
| 3.19.4 | All Taxes that the Company is or was required by applicable Law to withhold or collect have been duly
withheld or collected (including, without limitation, in connection with amounts paid or owing to any employee, independent contractor,
creditor, the Company or other Person) and, to the extent required, have been paid to the appropriate Taxing Authority. The Transaction
contemplated herein is not subject to the tax withholding provisions of Section 3406 of the Code, or of Subchapter A of Chapter 3 of the
Code or of any other provision of applicable Laws. |
| 3.19.5 | There are no Liens for Taxes (other than Permitted Liens) on the assets of the Company. |
| 3.19.6 | The Company is not, and has not been, a party to or bound by any Tax Agreement. |
| 3.19.7 | The Company has not ever been a member of an affiliated group filing a consolidated federal income Tax
Return or any similar group for federal, state, local or foreign Tax purposes. None of the Sellers or the Company has any liability for
the Taxes of any Person under (a) Section 1.1502-6 of the Treasury Regulations (or any similar provision of state, local or foreign Law),
(b) as a transferee or successor or (c) pursuant to any contractual obligation. |
| 3.19.8 | No claim or deficiency for any Taxes has been asserted against the Company which has not been resolved
and/or paid in full. No election has been made under Section 6226(a) of the Code with respect to any imputed underpayment of the Company
attributable to any Pre-Closing Tax Period. |
| 3.19.9 | There are no pending or, to the Company’s Knowledge, threatened Tax audits or examinations of any
Tax Returns of the Company. The Company (and any predecessor of the Company) has not (a) waived any statute of limitations with respect
to Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency, which waiver is still outstanding, (b) requested
any extension of time within which to file any Tax Return, which Tax Return has not yet been filed or (c) executed or filed any power
of attorney with any Taxing Authority, which is still in effect. There are no matters under discussion with any Taxing Authority with
respect to Taxes that are likely to result in a material additional liability for Taxes with respect to the Company. No issues relating
to Taxes of the Company were raised by the relevant Taxing Authority in any completed audit or examination that would reasonably be expected
to result in a material amount of Taxes in a later taxable period. |
| 3.19.10 | None of the Sellers (with regard to their interest in the Company and the Business) or the Company has
engaged in a “reportable transaction” or a substantially similar transaction, as set forth in Treasury Regulation Section
1.6011-4(b)(1) or any other transaction requiring disclosure under analogous provisions of state, local or foreign Tax Law. If the Sellers
or the Company have entered into any such transaction such that, if the treatment claimed by it were to be disallowed, the transaction
would constitute a substantial understatement of federal income Tax within the meaning of Section 6662 of the Code, then the Sellers or
the Company, as applicable, believe that they have either (a) substantial authority for the Tax treatment of such transaction or (b) disclosed
on their Tax Return the relevant facts affecting the Tax treatment of such transaction in accordance with Section 6662 of the Code. None
of the Sellers (with regard to their interest in the Company and the Business) or the Company has participated, nor plans to participate,
in any Tax amnesty program. |
| 3.19.11 | The Company will not be required to include any item of income in, or exclude any item of deduction from,
taxable income for any period (or any portion thereof) ending after the Closing Date as a result of: (a) any instalment sale or other
transaction on or prior to the Closing Date; (b) any accounting method change or closing agreement with any Taxing Authority filed or
made on or prior to the Closing Date; (c) any prepaid amount received on or prior to the Closing; or (d) any election under Section 108(i)
of the Code made on or prior to the Closing Date. |
| 3.19.12 | The Company has not engaged in a trade or business, had a permanent establishment (within the meaning
of an applicable Tax treaty), or otherwise become subject to Tax jurisdiction in a country other than the country of its formation. The
Company (i) has not been a stockholder of a “controlled foreign corporation” as defined in Section 957 of the Code (or any
similar provision of state, local or foreign Laws) and (ii) has not been a stockholder of a “passive foreign investment company”
within the meaning of Section 1297 of the Code. |
| 3.19.13 | All transfer pricing rules applicable to the Company have been complied with in all material respects.
All documentation required by all relevant transfer pricing Laws applicable to the Company has been timely prepared. |
| 3.19.14 | None of the Sellers or the Company has participated in or cooperated with, or has agreed to participate
in or cooperate with, or is participating in or cooperating with, an international boycott within the meaning of Section 999 of the Code. |
| 3.19.15 | The provisions of Section 197(f)(9) of the Code do not apply to any intangible asset owned by the Company. |
| 3.19.16 | The Company has always been treated as a partnership for United States federal income tax purposes. No
entity classification election pursuant to Treasury Regulations Section 301.7701-3 has ever been filed with respect to the Company. |
| 3.19.17 | The Company has not been and will not be required to recognize any taxable income or reduce any Tax asset,
as a result of any inclusion under Section 965(a) of the Code or any election under Section 965(h) of the Code. |
| 3.19.18 | Each of the Sellers and the Company have delivered or made available to Buyer complete and accurate copies
of all Tax Returns of the Company (and any predecessor of the foregoing) for any federal and state income Tax Returns and all other material
Tax Returns of the Company, in each case for which the statute of limitations on assessment has not expired, and complete and accurate
copies of all audit or examination reports and statements of deficiencies assessed against or agreed to by the Sellers or the Company
(or any predecessor of the foregoing) since 2020. |
| 3.19.19 | The Company does not own an interest in real property in any jurisdiction (x) in which a material amount
of real property transfer Tax is imposed on the transfer of an interest in real property resulting from the transactions contemplated
by this Agreement and (y) which treats the transfer of an interest (resulting from the transactions contemplated by this Agreement) in
an entity that owns an interest in real property as a transfer of the interest in real property for real property transfer Tax purposes. |
| 3.19.20 | No compensation has been or would reasonably be expected to be includable in the gross income of any “service
provider” (within the meaning of Section 409A of the Code) of the Company as a result of the operation of Section 409A of the Code. |
| 3.19.21 | Neither the execution and delivery of this Agreement, nor the consummation of the Transaction, either
alone or in combination with another event (whether contingent or otherwise) will result in any “parachute payment” under
Section 280G of the Code (or any corresponding provision of state, local or foreign Tax law). |
| 3.19.22 | There is no Contract, agreement, plan or arrangement to which the Company is a party which requires any
such entity to pay a Tax gross-up or reimbursement payment to any Person, including without limitation, with respect to any Tax-related
payments under Section 409A of the Code or Section 280G of the Code. |
| 3.20 | Related Party Transactions.
Except as set forth on Section 3.20 of the Company
Disclosure Schedule, no Related Party of the Company (a) is a party to any Contract with
the Company; (b) has any direct or indirect financial interest in, or is an officer, director,
manager, employee or consultant of, any competitor, supplier, licensor, distributor, lessor,
independent contractor or customer of the Company (it being agreed, however, that the passive
ownership of securities listed on any national securities exchange representing no more than
five percent (5%) of the outstanding voting power of any Person shall not be deemed to be
a “financial interest” in any such Person); (c) has any interest in any property,
asset or right used by the Company or necessary for the Business; (d) has outstanding any
Indebtedness owed to the Company; or (e) has received any funds from the Company since the
date of the Latest Balance Sheet, or is the obligee or beneficiary of any liability of the
Company, in each case, except for Employee Benefit Plans. |
| 3.21 | Business Collateral.
Section 3.21 of the Company Disclosure Schedule lists each letter of credit, escrowed
funds, guarantee, surety bond or other collateral given or required to be given by or on
behalf of Seller with respect to the Company or the Business (the “Business Collateral”).
Each item of Business Collateral was entered into in the Ordinary Course of Business. None
of the Business Collateral has been drawn against. |
| 3.22 | Personal Property.
To the Company’s Knowledge, all equipment and other tangible personal property used
in the Business are in good condition and repair, normal wear and tear excepted. Section
3.22 of the Company Disclosure Schedule sets forth a complete and accurate list and a
brief description of all personal property used in the Business (other than any Excluded
Personal Property) with an individual current value of $5,000 or greater (the “Material
Personal Property”) other than bundled computer equipment and model home furniture.
The Company has good and marketable title to, or a valid leasehold interest in or a valid
license for, such Material Personal Property used by it, located on any of its premises,
shown on the Latest Balance Sheet or acquired by it after the date of the Latest Balance
Sheet or as is otherwise necessary for the conduct of the Business, free and clear of any
Liens other than any Permitted Lien, except for any asset disposed of in the Ordinary Course
of Business since the date of the Latest Balance Sheet. |
| 3.23 | Brokers.
No investment banker, broker, finder or other intermediary
is entitled to any fee or commission in connection with the Transaction based upon arrangements
or agreements made by or on behalf of the Company. |
| 3.24 | No Other Representations or
Warranties. EXCEPT
FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE 2 AND THIS Article
4 AND IN ANY CERTIFICATE DELIVERED BY OR ON BEHALF OF THE SELLERS OR THE COMPANY HEREUNDER,
THE SELLERS AND THE COMPANY MAKE NO EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY, AND THE
SELLERS AND THE COMPANY HEREBY DISCLAIM ANY SUCH REPRESENTATIONS OR WARRANTIES, WITH RESPECT
TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREUNDER. |
Article
4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants
to the Sellers as follows:
| 4.1 | Organization and Good
Standing.
The Buyer is duly organized, validly existing and in good standing under the Laws of its
jurisdiction of formation and has all necessary corporate or limited liability company power
and authority, as applicable, and possesses all Governmental Authorizations necessary to
enable it to carry on its business as presently conducted, and to own and lease the assets
and properties which it owns and leases. The Buyer is duly licensed or qualified to do business
as a foreign entity and is in good standing in each jurisdiction in which the properties
owned or leased by it or the operation of its business as currently conducted makes such
licensing or qualification necessary except where such failure to be licensed or qualified
would not prevent, impede, hinder, delay, make illegal, impose limitations or conditions
on, or otherwise interfere with, the ability of the Buyer to consummate the Transaction or
any other transactions contemplated by the Buyer Transaction Documents. |
| 4.2 | Power and Authorization;
Enforceability. The
Buyer has all requisite right, power and authority to execute and deliver this Agreement
and the other Buyer Transaction Documents, to perform its obligations under this Agreement
and under the other Buyer Transaction Documents and to consummate the Transaction. All necessary
corporate or limited liability company action, as applicable, has been taken by the Buyer
to authorize the execution, delivery and performance by the Buyer of this Agreement and each
other Buyer Transaction Document. The Buyer has duly executed and delivered this Agreement
and, at or prior to the Closing, will have duly executed and delivered each other Buyer Transaction
Document. Assuming that this Agreement and each of the other Buyer Transaction Documents
are valid and binding obligations of each of the other Parties to this Agreement and to each
of the other Buyer Transaction Documents, this Agreement is, and each other Buyer Transaction
Document, when duly executed and delivered at or prior to the Closing by the Buyer, will
be, the legal, valid and binding obligation of the Buyer, enforceable against the Buyer in
accordance with its respective terms, except as enforceability of such obligations may be
limited by the Enforceability Exceptions. |
| 4.3 | No Violation or Conflict.
Neither the execution, delivery or performance by
the Buyer of this Agreement or the other Buyer Transaction Documents nor the consummation
of the Transaction (with or without the passage of time or the giving of notice, or both)
will: |
| 4.3.1 | contravene, conflict with or result in a violation or breach of, (a) to the extent applicable, the organizational
documents of the Buyer or (b) any (i) Judgments or (ii) Laws, in each case, binding upon or applicable to the Buyer or by which it or
any of its properties or assets are bound; or |
| 4.3.2 | cause a Loss or adverse modification of any material Governmental Authorization used by the Buyer; or |
| 4.3.3 | require any consent, approval, order, authorization or permit of, or registration, declaration or filing
with or notification to, any Governmental Authority. |
except, in each case, where failure of
any of the above would not, individually or in the aggregate, reasonably be expected to prevent, or materially impair or delay, the ability
of the Buyer to consummate the Transaction.
| 4.4 | Brokers.
No investment banker, broker, finder or other intermediary
is entitled to any fee or commission in connection with the Transaction based upon arrangements
or agreements made by or on behalf of the Buyer or any of its Affiliates. |
| 4.5 | Investment.
Buyer is acquiring the Membership Interests for
its own account, for investment only, and not with a view to any resale or public distribution
of the Membership Interests. Buyer acknowledges that (a) such Membership Interests have not
been registered under the Securities Act or any state securities Laws, (b) there is no public
market for such Membership Interests and there can be no assurance that a public market will
develop, and (c) it must bear the economic risk of its investment in such Membership Interests
for an indefinite period of time. Buyer is an “accredited investor” as defined
in Regulation D promulgated under Section 4(2) of the Securities Act of 1933, as amended. |
| 4.6 | Available Funds.
The obligations of Buyer under this Agreement are not contingent on the availability of financing.
Buyer has cash, available credit facilities or other sources of available funds in an aggregate
amount sufficient to consummate the Transaction and will have immediately available cash,
available credit facilities or other immediately available funds at the time of the Closing
to consummate the Transaction. |
| 4.7 | No Other Representations or
Warranties. EXCEPT
FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS Article 4 AND IN ANY CERTIFICATE
DELIVERED BY OR ON BEHALF OF THE BUYER HEREUNDER, THE BUYER MAKES NO EXPRESS OR IMPLIED REPRESENTATION
OR WARRANTY, AND THE BUYER HEREBY DISCLAIMS ANY SUCH REPRESENTATION OR WARRANTY, WITH RESPECT
TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREUNDER. |
Article
5
CERTAIN COVENANTS OF THE PARTIES
| 5.1 | Efforts.
Upon the terms and subject to the conditions in
this Agreement, each Party will use reasonable best efforts to take all action and to do
all things necessary or advisable to consummate and make effective the Transaction as promptly
as reasonably practicable following December 31, 2023, including (a) satisfaction, unless
waived by the Party to whose benefit they would otherwise accrue, of the closing conditions
in Article 6, (b) defending any Proceedings challenging the Transaction or the
performance of the obligations of any Party in connection with the Transaction, (c) obtaining,
delivering or effecting any waivers, modifications, permits, consents, approvals, authorizations,
qualifications, notices, registrations and filings that are required in connection with the
consummation of the Transaction and (d) executing and delivering any instruments and taking
any other actions, including furnishing to each other Party any assistance, books, records
or other information the other Party reasonably requires in order to carry out the intent
of the Transaction Documents, including the timely execution and delivery of all closing
deliverables and the delivery to Buyer or one or more of its designees such deeds, bills
of sale, endorsements, consents, assignments and other good and sufficient instruments of
conveyance and assignment as shall be reasonably necessary to vest at Closing in Buyer or
one or more of their designees all right, title and interest in, to and under the Membership
Interests in the manner described herein, free and clear of all Liens (other than Permitted
Liens), and in form and substance reasonably satisfactory to Buyer. From and after the Closing,
Sellers and Buyer agree to, from time to time, execute and deliver such other documents,
certificates, agreements, and other writings as any other Party reasonably requests, and
to take such other actions, as may be reasonably necessary, proper, or advisable in order
to (x) consummate or implement expeditiously the Transaction, (y) facilitate the transition
of the Company and the Business and (z) allow for the continued operation of the Company
in the Ordinary Course. Notwithstanding the foregoing in this Section 5.1, but
subject to the provisions of Section 5.10 hereof, none of Buyer or any of its Affiliates
will be obligated to make any payments, or otherwise pay any consideration, to any third
party to obtain any applicable consent, waiver or approval related to this Agreement. |
| 5.2 | Conduct of the Business by
the Sellers and the Company. From the date of this
Agreement through the earlier of the termination of this Agreement pursuant to Section 8.1
or the Closing Date, unless Buyer otherwise approves in writing (which approval will
not be unreasonably withheld, conditioned or delayed) or as otherwise expressly required
or permitted by this Agreement (other than pursuant to Section 5.1), the Sellers will,
and will cause the Company to conduct the Business in the Ordinary Course and use their commercially
reasonable efforts to (i) preserve intact the Business and keep available the services of
the employees, officers, directors and consultants of the Company, (ii) maintain the goodwill
and the existing relationships (contractual or otherwise) with all customers, suppliers,
employees, licensors, distributors and others having business relationships with the Company,
(iv) preserve in all material respects its present properties (subject to the disposition
of any such property in the Ordinary Course) and its other tangible and intangible assets,
(v) comply in all material respects with all applicable Laws and Material Contracts (including
delivering any and all notices, payments, deposits and fees and taking all actions required
to keep the Material Contracts in effect and to consummate the transactions contemplated
thereby in accordance with the terms of the Material Contracts) and use commercially reasonable
efforts to ensure that the other parties to such Material Contracts to comply with all of
their obligations under such Material Contracts; (vi) pay all applicable Taxes as such Taxes
become due and payable; and (vii) maintain all existing licenses and Permits applicable
to its operations and businesses, including continuing to process pending real property entitlements
in the Ordinary Course, and using commercially reasonable efforts to promptly process and
obtain approval of any additional licenses and Permits applicable to its operations. Without
in any way limiting any of the foregoing, except (w) as otherwise expressly contemplated
by the Transaction Documents, (x) as Buyer may otherwise approve in writing (which approval
will not be unreasonably withheld, conditioned or delayed), (y) as otherwise expressly contemplated
or required by this Agreement or (z) as set forth on Section 5.2 of the Company Disclosure
Schedule, with respect to the Company, Sellers will cause the Company to not: |
| (a) | Declare, set aside or pay any distribution payable in equity or property; or declare, set aside or pay
any cash distribution if after giving effect to such cash distribution the Closing Total Shareholders’ Equity of the Company would
be less than the Total Shareholders’ Equity Target; |
| (b) | issue, sell, pledge, dispose of, encumber or transfer or commit to issue, sell, pledge, dispose of, encumber
or transfer, any Membership Interests or any other equity interests of the Company or any other rights related to or other interests convertible
into Membership Interests or, any other equity interests of the Company (including preemptive rights, rights of first refusal, redemption
rights, repurchase rights, or “tag along” or “drag along” rights in respect of such interests); |
| (c) | reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly,
the Membership Interests or any other equity interests of the Company; |
| (d) | amend the organizational documents of the Company; |
| (e) | change the Company’s fiscal year or make any material change in any method of accounting or accounting
practice or policy of the Company other than as required by GAAP or applicable Law; |
| (f) | write up, write down or write off the book value of any assets, individually or in the aggregate, for
the Company taken as a whole, in excess of $100,000, except for depreciation and amortization in accordance with GAAP consistently applied; |
| (g) | (i) hire, promote or terminate any employee (except with respect to termination of non-key employees),
service provider, consultant or director (other than terminations by the Company for cause or due to death or disability) or materially
change the key management structure of the Company, (ii) pay, announce, promise or grant any increase in or establishment of (as applicable)
any compensation or benefits payable by the Company other than the Approved Bonuses other than in the Ordinary Course, (iii) accelerate
the vesting or payment of any compensation or benefits under any Employee Benefit Plan other than in the Ordinary Course, (iv) enter into,
adopt, amend or terminate any Employee Benefit Plan (other than renewals of any such Benefit Plans in the Ordinary Course), (v) grant
any equity or equity-linked awards or other bonus, commission or other incentive compensation to any employee or other individual service
provider of the Company other than in the Ordinary Course or (vi) grant severance pay to an employee or other individual service provider
of the Company other than in the Ordinary Course; |
| (h) | acquire (including by merger, consolidation, license or sublicense) any interest in any Person or a substantial
portion of the assets or business of any Person, or otherwise acquire any other material assets of any Person other than in the Ordinary
Course; |
| (i) | acquire or agree to acquire any asset or property, or make or agree to make any capital expenditures,
except for acquisitions of residential lots, building materials and other assets or property and construction of homes (and capital improvements
in connection therewith) made in the Ordinary Course, provided that, Sellers shall keep Buyer reasonably informed of any such pending
acquisitions and provide copies of all letters of intent, purchase agreements or other material correspondence or agreements relating
to any new Acquisition Contracts; |
| (j) | enter into any new Acquisition Contracts; |
| (k) | make, commit to make or authorize any capital expenditure, other than capital expenditures contemplated
to be made in the capital expenditure budget set forth on Section 5.2(k) of the Company Disclosure Schedule and capital expenditures
made in the Ordinary Course; |
| (l) | sell, assign, license, transfer, hypothecate, mortgage, subject to any Lien, convey, lease or otherwise
dispose of any asset or property (including transfers to any of the Company’s equity holders, employees or Affiliates), except for
(i) Permitted Liens, or (ii) homes and residential lots sold in the Ordinary Course (including the sale/leaseback of model homes to Antares
Model Holding, LLC in the Ordinary Course) after the date of this Agreement, or (iii) the disposal of building materials or other immaterial
assets in the Ordinary Course; |
| (m) | incur any new Indebtedness or assume, guarantee or endorse the obligations of or enter into any “keepwell”
or other agreements to maintain the fiscal condition of any Person, other than in the Ordinary Course; |
| (n) | create or assume any mortgage or pledge, or impose any Lien on, any asset or property, except (i) for
Permitted Liens, or (ii) as required by applicable Law; |
| (o) | waive, release, assign, settle, forgive or compromise on any loan, advance or capital contribution to,
or investment in, any officer, manager, employee or equity holder of the Company or any firm or business in which any such Person has
a direct or indirect material interest; |
| (p) | (i) waive, release, assign, settle, forgive or compromise on material rights (including any Indebtedness)
owed to the Company or waive any claims or rights of value, or (ii) except with respect to the payment of (A) any loans between the Company
and a member of the Company and (B) any Company-Level Indebtedness, pay, discharge, settle or satisfy any Proceeding to which the Company
is party which results in any payment by the Company in excess of $250,000; |
| (q) | (i) accelerate or delay the collection of notes or Accounts Receivable in advance of or beyond their regular
due dates or the dates when the same would have been collected in the Ordinary Course; (ii) delay or accelerate payment of any Company
account payable in advance of its due date or the date such liability would have been paid in the Ordinary Course; (iii) make any material
changes to cash management policies; or (iv) vary any inventory purchase practices in any material respect from past practices; |
| (r) | adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, recapitalization
or other material reorganization of the Company or any of its Subsidiaries; |
| (s) | enter into, extend, materially amend, terminate or grant any relinquishment or release of any right under
any Material Contract, Real Property Lease or any Contract that would be a Material Contract or Real Property Lease if entered into prior
to the date hereof, other than entrance into any such Contracts in the Ordinary Course (including Contracts with customers, vendors, or
clients, in the Ordinary Course and Contracts related to the sale/leaseback of model homes to Antares Model Holding, LLC in the Ordinary
Course); |
| (t) | amend or permit to lapse existing insurance policies or enter into new insurance policies, except for
renewals of policies in the Ordinary Course and as otherwise approved in writing in advance by Buyer; |
| (u) | make, change or revoke any Tax election; settle or compromise any claim, notice, audit report or assessment
in respect of Taxes; change any annual Tax accounting period; adopt or change any method of Tax accounting; file any Tax Return (except
as permitted under Section 5.5); enter into any Tax Agreement; surrender any right to claim a Tax refund; or consent to any extension
or waiver of the statute of limitations period applicable to any Tax claim or assessment; |
| (v) | materially expand the nature or scope of the business of the Company, including with respect to markets
and product offerings; or |
| (w) | agree or commit to do any of the actions set forth in clauses (a) through (v) above. |
| 5.3 | Access to Information.
From the date of this Agreement until the Closing
Date, each Seller will, and will instruct the Company to, upon reasonable advance notice,
provide Buyer and its authorized Representatives with (i) such due diligence documents and
other information in the Sellers’ possession or control as Buyer may reasonably request;
and (ii) subject to reasonable prior notice and an opportunity to be present, access to the
Company’s facilities, senior personnel (e.g. vice presidents, other management level
employees of the Company and such other individuals as Buyer may reasonably request); and
(iii) access to the books, records, Tax Returns, Contracts and financial and operating data
and other information with respect to the Company as such Persons may reasonably request.
Sellers will cooperate and will instruct its senior personnel, counsel, accountants and financial
advisors to cooperate reasonably with Buyer in its investigation of the Company. |
| 5.4 | Public Announcements.
The issuance of any press releases or other
public statements with respect to the transactions contemplated by this Agreement shall be
subject to the limitations set forth in Section 5.4 of the Company Disclosure Schedule.
None of the Company, the Sellers or their respective Affiliates shall issue any press releases
or otherwise make any public statements with respect to the transactions contemplated by
this Agreement without Buyer’s prior written consent (it being understood that such
consent shall not be required for private statements made to employees, vendors, suppliers
or other agents of the Company prior to the Closing Date that contain no information with
respect to the transactions contemplated by this Agreement that was not previously publicly
disclosed by Buyer at such time). Buyer shall provide the Sellers with a reasonable opportunity
to review and provide comments to the first press release or other public statement with
respect to the announcement of the transactions contemplated by this Agreement to be issued
by Buyer prior to issuing such press release or public statement (and Buyer shall make reasonable
accommodation of the comments provided by the Sellers), except to the extent prohibited by
applicable Law. |
| (a) | The Sellers shall prepare and timely file, or cause to be prepared and timely filed, in accordance with
past practices of the Company unless otherwise required under applicable Law, all Tax Returns of the Company required to be filed (taking
into account any applicable extension) on or before the Closing Date. Sellers or, as applicable, the Company shall pay, or cause to be
paid, all Taxes shown to be due on such Tax Returns, as required. |
| (b) | The Sellers will prepare and timely file, or cause to be prepared and timely filed, all Tax Returns with
respect to the Company for Tax periods ending on or before the Closing Date that are required to be filed after the Closing Date and will
prepare such Tax Returns in accordance with past practices of the Company unless otherwise required under applicable Law; provided that
Buyer will cooperate with and provide reasonable assistance to Sellers as needed to assist Sellers with the preparation and filing of
such Tax Returns. Sellers shall pay, or cause to be paid, all Taxes due with respect to such Tax Returns at least two (2) Business Days
before the payment of Taxes (including estimated Taxes) is due to the applicable Taxing Authority. No later than thirty (30) days prior
to the due date for filing any such Tax Return, taking into account any extensions of such filing date, the Sellers will make such Tax
Return available for review, comment and approval by Buyer (which approval will not be unreasonably withheld). If the Parties cannot agree
on the requested modifications, then any dispute as to the modifications shall be resolved by the Independent Accounting Firm; provided
that, Sellers shall be entitled to file any Tax Returns as needed to avoid the imposition of any penalties on the Company or Sellers,
in which case Sellers shall amend such Tax Returns if necessary following the decision made by the Independent Accounting Firm. |
| (c) | Buyer shall prepare and timely file, or cause to be prepared and timely filed, any Tax Return required
to be filed by the Company for a Straddle Period (a “Straddle Period Tax Return”). No later than thirty (30) days prior
to the due date for filing any such Tax Return (taking into account extensions), Buyer will make any material Straddle Period Tax Return
available for review, comment, and approval by Sellers (which approval will not be unreasonably withheld). If the Parties cannot agree
on the requested modifications, then any dispute as to the modifications shall be resolved by the Independent Accounting Firm; provided
that, Buyer shall be entitled to file any Tax Returns as needed to avoid the imposition of any penalties on the Company or Buyer, in which
case Buyer shall amend such Tax Returns if necessary following the decision made by the Independent Accounting Firm. Sellers shall pay,
or cause to be paid, all Taxes due with respect to any Straddle Period Tax Return to the extent allocable to any Pre-Closing Straddle
Period (pursuant to Section 5.5.4) to Buyer at least two (2) Business Days before payment of Taxes (including estimated Taxes)
is due to the applicable Taxing Authority. Buyer shall pay, or cause to be paid, all Taxes due with respect to any Straddle Period Tax
Return on or before the date payment of Taxes (including estimated Taxes) is due to the applicable Taxing Authority, taking into account
any extensions. |
| 5.5.2 | Tax Contests. Buyer, the Company and each of their respective Affiliates, on the one hand,
and Sellers and their Affiliates, on the other hand, will promptly notify each other upon receipt by such Party of notice of any Tax audits,
examinations, assessments or other Proceedings that pertain to a Pre-Closing Tax Period or Straddle Period or that could give rise to
indemnification under Article 7 (each, a “Tax Contest”). Any failure to so notify the other Party of any Tax
Contest shall not relieve such other Party of any liability with respect to such Tax Contest except to the extent such Party was actually
prejudiced as a result thereof. Sellers shall have the sole control of the conduct of all Tax Contests pertaining to a Pre-Closing Tax
Period if any Seller could be liable for any amount related to such Tax Contests, including any settlement or compromise thereof, provided,
however, that Sellers shall keep Buyer reasonably informed of the progress of any such Tax Contest and shall not affect any such
settlement or compromise with respect to which Buyer is liable without obtaining Buyer’s prior written consent thereto, which shall
not be unreasonably withheld, conditioned or delayed. Buyer shall have the sole control of the conduct of all the other Tax Contests,
including any settlement or compromise thereof, provided, however, that Buyer shall keep Sellers reasonably informed of
the progress of any Tax Contest that includes any Pre-Closing Straddle Period, shall give Sellers to opportunity to participate in any
such Tax Contest and shall not affect any such settlement or compromise with respect to which any Seller is liable without obtaining such
Seller’s prior written consent thereto, which shall not be unreasonably withheld, conditioned or delayed. To the extent there is
any inconsistency between the provisions of this Section 5.5.2 and Section 7.4, the provisions of this Section 5.5.2
shall control with respect to Tax Contests. |
| 5.5.3 | Books and Records; Cooperation. Buyer and Sellers will, and will cause their respective
Representatives to, (a) provide the other Party and its Representatives with such assistance as may be reasonably requested in connection
with the preparation of any Tax Return or any audit or other examination by any Taxing Authority or Proceeding relating to Taxes with
respect to the Company and (b) retain (until the expiration of the statute of limitations of the taxable periods to which the Tax Returns
relate), and provide the other Party and its Representatives with reasonable access to, all records or information that may be relevant
to such Tax Return (including analysis regarding any Tax refunds or Tax benefits), audit, examination or Proceeding, provided that,
the foregoing will be done at the expense of the Party making such request and in a manner so as not to interfere unreasonably with the
conduct of the business of the Parties. |
| 5.5.4 | Straddle Period. For purposes of this Agreement, the portion of any Tax of the Company or
any of its Subsidiaries for a Straddle Period attributable to the Pre-Closing Straddle Period will be deemed equal to the amount that
would be payable if the Straddle Period ended on the close of business on the Closing Date and included the Closing Date. The portion
of any Tax of the Company or any of its Subsidiaries for a Straddle Period attributable to a Post-Closing Straddle Period will be calculated
in a corresponding manner. |
| 5.5.5 | Purchase Price Allocation. |
| (a) | The Closing Date Purchase Price shall be allocated among the assets of the Company as of the Closing in
accordance with Section 1060 of the Code. Buyer and the Sellers shall use commercially reasonable efforts to mutually and timely agree
on such allocation and, if such agreement is timely reached, Buyer (and to the extent required by applicable law, the Sellers) shall file
Internal Revenue Service Form 8594, and all federal, state, local and foreign Tax Returns, in accordance with the mutually agreed allocation.
If such an agreement is not timely reached, each party shall be free to file its federal, state, local, and foreign Tax Returns (including
IRS Form 8594) independently as to the allocation of the Closing Date Purchase Price and shall not be required to follow the proposed
allocation of the other party. |
| (b) | In the event of any conflict or overlap between the provisions of this Section 5.5.5 and Article
7, the provisions of this Section 5.5.5 shall control. |
| 5.5.6 | Property Taxes. Notwithstanding any provision hereof to the contrary, Property Taxes will
not be pro rated, Buyer shall cause any Property Taxes owing by the Company for the 2024 fiscal year to be timely paid in full, and Sellers
shall pay or cause the Company to pay (prior to the Closing) any Property Taxes owing by the Company for the fiscal year 2023 and any
fiscal year prior to 2023. |
| 5.5.7 | Transfer Taxes. All transfer, documentary, sales, use,
stamp, registration, value added and other such Taxes and fees (including any penalties and interest) imposed in connection with the
Transaction will be shared equally by the Sellers and Buyer. |
| 5.5.8 | No Distributions. Notwithstanding anything
in the limited liability company agreement of the Company to the contrary, the Parties hereto agree that upon and following the
Closing, Sellers shall not be entitled to any distributions (including Tax distributions) from the Company. For the avoidance of
doubt any payment owing to Sellers pursuant to Section 1.4.5 shall not be considered a distribution. |
| 5.5.9 | Budget Act. Buyer shall not cause or allow
the Company to make any election under Section 6226(a) of the Code, as enacted by the Bipartisan Budget Act of 2015, (or any
successor provision or corresponding provision of state or local Tax Laws) with respect to any Pre-Closing Tax Period. |
| 5.6 | Exclusivity.
From the date of this Agreement until the earlier
of (a) the Closing or (b) the termination of this Agreement pursuant to Section 8.1
(the “Exclusivity Period”), none of the Sellers, the Company or any of
their respective officers, managers, directors, Affiliates, employees or agents shall (i)
solicit, initiate, encourage others to solicit, or encourage, entertain, facilitate or accept
any discussions, proposals or offers regarding (1) the purchase, issuance, grant, license
or disposition of any Membership Interests or any other equity interests of the Company or
of all or any portion of the assets of the Company (other than sales of Real Property or
personal property in the Ordinary Course) or (2) any merger, consolidation, business combination,
recapitalization, reorganization or similar transaction involving the Company, in each case
other than with Buyer or its Affiliates (each such transaction, a “Competing Transaction”),
(ii) negotiate with or enter into any agreement or understanding with, or provide any information
relating to the Company to any other Person with respect to any Competing Transaction or
(iii) otherwise participate in, assist, facilitate or encourage any effort or attempt by
any other Person to do any of the foregoing. None of the Sellers, the Company or any of their
respective officers, managers, directors, Affiliates, employees or agents shall directly
or indirectly authorize any other Representative to take any action prohibited under this
Section 5.6. The Sellers, the Company and their respective officers, managers, directors,
Affiliates, employees or agents will immediately cease and cause to be terminated any existing
discussions or negotiations with any Persons (other than Buyer) conducted before the date
of this Agreement with respect to any Competing Transaction for the duration of the Exclusivity
Period. During the Exclusivity Period, the Company will promptly inform Buyer in detail of
any offers, proposals or requests for information relating to any Competing Transaction made
by any third party, including the material terms and identity of the party making such offer,
proposal or request. |
| 5.7 | Cooperation with Purchaser’s
Auditors and SEC Filing Requirements.
From the date hereof through and including the first anniversary of the Closing Date, each
of the Sellers shall provide to Buyer copies of, or shall provide Buyer and its representatives,
agents and employees access to, the books and records and financial and other information
with respect to the period of the Sellers’ ownership, management, maintenance and operation
of the Company that are in the possession of the Sellers, and shall furnish Buyer with such
additional information concerning the same as Buyer shall reasonably request and which is
in the possession or control of the Sellers or any of their respective affiliates, agents,
or accountants, to enable Buyer or its assignee and their outside, third party accountants
(the “Accountants”), to prepare and file financial statements in compliance
with any or all of (a) Rule 3-05 or Article 11 of Regulation S-X under the Securities Act
of 1933, as amended, required by the Securities and Exchange Commission (the “Commission”),
(b) any other rule issued by the Commission and applicable to Buyer or its Affiliates, and
(c) any registration statement, report or disclosure statement filed with the Commission
by, or on behalf of Buyer or its Affiliates. Buyer’s auditors may conduct an audit
of the income statements and balance sheets, if necessary, of the Business for the calendar
year prior to Closing (or to the date of Closing) and the two (2) prior years, and shall
cooperate with and provide reasonable assistance to Buyer’s auditor and Accountants
in the conduct of such audit (and, in the case of any required pro forma financial statements,
reasonably cooperate with Buyer with respect to its preparation of pro forma financial statements).
Without limiting the generality of the foregoing, the Sellers agree to (i) provide to Buyer’s
auditor a customary representation letter in such form as is reasonably required by the Accountants
(with respect to periods ending as of or prior to the Closing), with such facts and assumptions
as reasonably determined by the Accountants in order to make such certificate accurate (the
“Representation Letter”), signed by the individual(s) responsible for
the Company’s financial reporting, as prescribed by generally accepted auditing standards
promulgated by the Auditing Standards Division of the American Institute of Certified Public
Accountants, which Representation Letter may be required to assist the Accountants in rendering
an opinion on such financial statements in order to comply with clauses (a), (b) and (c)
above, and (ii) to the extent that the Company’s financial statements have previously
been audited, the Sellers shall use commercially reasonable efforts to cause the auditor
of the Company’s financial statements to provide its consent to the inclusion of its
report, without exception or qualification, with respect to such audited financial statements
and to provide Buyer and/or its affiliates appropriate comfort letters in accordance with
the American Institute of Public Accountants’ professional standards. The provisions
of this Section 5.7 shall survive Closing. Buyer shall reimburse Sellers for their
reasonable out of pocket costs and expenses relating to any actions performed by them or
their accountants, consultants or agents pursuant to this Section 5.7. |
| 5.8.1 | The Sellers shall, and prior to the Closing shall, cause the Company to deliver to Buyer (i) at least
ten (10) Business Days prior to the Closing Date a draft payoff letter with respect to each item of Company-Level Indebtedness set forth
in Section 5.8.1 of the Company Disclosure Schedule and (ii) at least three (3) Business Days prior to the Closing Date, an
executed copy of a payoff letter with respect to the Company-Level Indebtedness in customary form (collectively, the “Payoff
Letters”), which Payoff Letters shall each (A) indicate the total amount required to be paid to fully satisfy all principal,
interest, prepayment premiums, penalties, breakage costs and any other monetary obligations (other than contingent indemnification obligations
for which no claim has been made) then due and payable under the applicable Company-Level Indebtedness as of the anticipated Closing Date
(and the daily accrual thereafter) (the “Payoff Amount”), (B) state that upon receipt of the Payoff Amount under the
Payoff Letter, such Company-Level Indebtedness and all related loan documents shall be terminated (other than the terms thereof that expressly
survive such termination in accordance with the terms of such documents) and (C) provide that all guarantees of Sellers and the Company
of such Company-Level Indebtedness and, to the extent secured, all Liens securing obligations in respect of the Company-Level Indebtedness
and any cash collateralization, backstopping or outstanding letters of credit on the Closing Date shall be released and terminated upon
payment of the Payoff Amount. |
| 5.9 | Non-Compete / Non-Solicitation. |
| 5.9.1 | Subject to Section 5.9.4 hereof, for a period from the date of this Agreement until one (1) year
after the Closing Date, (a) each Seller and its Affiliates (except as otherwise set forth below) shall not engage in a Competing Business
(including as a stockholder, partner, member, manager, employee, consultant or other owner or participant in any Person or entity that
engages in a Competing Business, but excluding the existing investments of Sellers set forth in Section 5.9.4 of the Company Disclosure
Schedule, and investments in publicly traded companies, not to exceed 2% of the total shares outstanding of any such company), and
(b) each Seller shall not and shall cause any Person acting on behalf of such Seller not to, directly or indirectly, (1) solicit, endeavour
to entice away from the Company, Buyer or any of their respective Affiliates, offer employment or a consulting or other position to, hire,
or otherwise interfere with the business relationship of the Company, Buyer or any of their respective Affiliates with, any of the employees,
customers or suppliers of the Company, Buyer, or any of their respective Affiliates; provided, however, that nothing
contained herein shall restrict the placement of general solicitations of employees not directed specifically to such Persons; and provided
further, that the home loan business of S3 Home Loans, LLC and the title services business of MC Title, LLC with respect to the provision
of loans and title services to customers of one or more homebuilders, will not be considered to be engaging in a Competing Business hereunder. |
| 5.9.2 | Each Seller acknowledges and represents that: (a) such Seller has consulted with independent legal counsel
regarding its, his or her rights and obligations under this Section 5.9; (b) such Seller fully understands the terms and conditions
contained herein; and (c) the restrictions and agreements in this Section 5.9 are reasonable and necessary for the protection
of the Company in all respects. If at any time a court or arbitrator’s award holds that the restrictions in this Section 5.9
are unreasonable under circumstances then existing, the Parties hereto agree that the maximum period, scope or geographical area reasonable
under such circumstances shall be substituted for the stated period, scope or area. Each Seller acknowledges that any breach or threatened
breach of the provisions of this Section 5.9 by any Seller will cause irreparable injury to Buyer for which an adequate monetary
remedy does not exist. |
| 5.9.3 | From and after the date of this Agreement, (i) none of the Sellers or their Affiliates will, directly
or indirectly, alone or in connection with any Person, engage in any conduct or make any statement, that disparages, criticizes or is
injurious to the reputation of the Company, Buyer, any of their respective Affiliates or any of their shareholders, partners, members,
investors or Representatives; and (ii) none of Buyer or its Affiliates will, directly or indirectly, alone or in connection with any Person,
engage in any conduct or make any statement, that disparages, criticizes or is injurious to the reputation of the Sellers or any of their
respective Affiliates or any of their shareholders, partners, members, investors or Representatives. Notwithstanding the foregoing sentence,
nothing in this Section 5.9.3 shall apply to or prevent the Parties or their Affiliates from (a) making any statements in connection
with defending any disputes that arise under this Agreement, (b) testifying truthfully in response to a subpoena or other legal process
or (c) communicating directly with, cooperating with, or providing information to, any federal, state or local government regulator as
required by Law. |
| 5.10 | Regulatory Matters.
Buyer shall be responsible, at is sole expense,
for preparing any applications or filings to be made to any Governmental Authority pursuant
to any applicable regulatory Law in connection with the transactions contemplated by this
Agreement (including without limitation any such applications and filings under applicable
Antitrust Laws and any applicable submissions to CFIUS). The Parties will use their reasonable
best efforts to cause any such applications or filings to be filed promptly following the
execution of this Agreement and to obtain any necessary approvals of the requisite Governmental
Authorities promptly thereafter. Subject to applicable Law, each Party will use reasonable
best efforts to furnish to each other all information required for any application or other
filing to be made pursuant to any applicable Law in connection with the transactions contemplated
by this Agreement, and each such party shall promptly inform the other parties hereto of
any oral communication with, and provide copies of written communications with, any Governmental
Authority regarding any such filings or any such transaction. No Party will independently
participate in any formal meeting with any Governmental Authority in respect of any such
filings, investigation, or other inquiry without giving the other Parties prior notice of
the meeting and, to the extent permitted by such Governmental Authority, the opportunity
to attend and/or participate. Subject to applicable Law, the Parties will use reasonable
best efforts to consult and cooperate with one another in connection with any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals made or submitted by
or on behalf of any Party relating to proceedings with respect to any approvals required
in connection with the Transaction. Any party may, as it deems advisable and necessary, reasonably
designate any competitively sensitive material provided to the other Parties under this Section
5.10 as “outside counsel only.” Such materials and the information contained
therein will be given only to the outside legal counsel of the recipient and will not be
disclosed by such outside counsel to employees, officers or directors or other Representatives
of the recipient, unless express written permission is obtained in advance from the source
of the materials. The Parties will take reasonable efforts to share information protected
from disclosure under the attorney-client privilege, work product doctrine, joint defence
privilege or any other privilege pursuant to this Section 5.10 in such a manner so
as to preserve any applicable privilege. In the event that any Proceeding is instituted (or
threatened to be instituted) by a Governmental Authority challenging the Transaction or any
other transaction contemplated by this Agreement, or any other Transaction Document, the
Parties will cooperate in all respects with each other and will use reasonable best efforts
to contest and resist any such Proceeding and to have vacated, lifted, reversed, or overturned
any Judgment, whether temporary, preliminary, or permanent, that is in effect and that prohibits,
prevents, or restricts consummation of the transactions contemplated by this Agreement. Notwithstanding
anything to the contrary in this Section 5.10, nothing in this Section 5.10
shall require either party or any of their respective Affiliates to make, or commit or agree
to make, any concession or payment to, any Governmental Authority, nor to make, or commit
or agree to make, any divestitures or similar transfers of any of their respective assets
in response to any objections from any Governmental Authority. |
| 5.11 | Cooperation with Title
Insurance.
The Sellers and the Company agree to cooperate with Buyer in obtaining such title insurance
as Buyer may reasonably require, provided that Buyer shall be solely responsible for any
and all costs and premiums for any such title policies and/or endorsements. Without limiting
the foregoing, the Sellers and the Company will use their commercially reasonable efforts
to provide and deliver or cause to be provided or delivered such customary title company
owner’s affidavits, indemnities (including “gap,” non-imputation, and mechanics
liens), no-change affidavits with respect to surveys and other documents and instruments
as may be reasonably required by any title insurance company selected by Buyer to issue any
title policies and/or endorsements in connection therewith. |
| 5.12 | Financial Reporting Platform.
For a period of six (6) months following the Closing,
in a manner consistent with past practices of the Company: |
| 5.12.1 | the Sellers shall have the right to reasonable use of the Company’s financial reporting platform/server
and accounting and IT support staff in order to store financial data, prepare financial reports and perform audits (at Sellers’
cost as provided in Section 5.12.2 below) of the following affiliated companies that are not being acquired in the Transaction
(the “Affiliate Financial Data”): MC Title, LLC/FATCO; MC Mortgage 2, LLC/S3 Mortgage; Silver Spur Investments LLC;
MC Insurance Agency, LLC; Antares Model Holding, LLC; and McAden Enterprises, Inc.; |
| 5.12.2 | the Company’s employees shall provide reasonable assistance with the preparation of such financial
reports, audits and IT support (in a manner consistent with past practices), such audits being solely at the cost of Sellers; |
| 5.12.3 | the Sellers will use reasonable best efforts to prevent their unauthorized access to Buyer’s or
the Company’s confidential information, and shall maintain the confidentiality of any such confidential information and promptly
return any such confidential information that is inadvertently obtained by them; and |
| 5.12.4 | upon or prior to the expiration of the foregoing six (6)-month period, the Sellers shall move all of the
Affiliate Financial Data to a separate financial reporting platform/server that is not maintained by the Company, and subsequently relinquish
all means by which the Sellers were able to access the Company’s platform/server. |
| 5.13 | R&W Insurance Policy.
Buyer will obtain and bind the R&W Insurance
Policy. Buyer will seek to have all of the representations and warranties provided by the
Sellers hereunder covered by such representation and warranty insurance. |
| 5.14.1 | After the Closing, and for three (3) years thereafter, the Sellers agree that the Sellers shall not, and
the Sellers shall cause their respective Affiliates and Representatives not to, (i) use for their own benefit any Buyer Confidential Information
in a manner that adversely affects the Company or the Business or (ii) disclose to any third party, except authorized personnel of the
Buyer or their Affiliates, any Buyer Confidential Information; provided, however, that the foregoing obligations of confidentiality
shall not extend to Buyer Confidential Information that is (i) properly in the public domain through no fault of such Seller or its Representatives
in violation of this Agreement or (ii) disclosed to such Seller or its Representatives by a third party who may lawfully do so and who
was not under any confidentiality obligation with respect thereto. Notwithstanding the foregoing, the Sellers may disclose such information
if required to be disclosed by any Law; provided, however, that prior to any such disclosure, the Sellers shall use commercially
reasonable efforts to (A) give Buyer written notice of such requirement prior to any such disclosure and (B) allow Buyer reasonable time
to take such steps as to limit such disclosure; and provided, further, that the Sellers shall cooperate with Buyer
(at Buyer’s sole cost and expense) in the good faith making or assertion of any available defense or privilege relating to the disclosure
of such information. Notwithstanding the foregoing, the Sellers, their Affiliates and their respective Representatives may disclose Buyer
Confidential Information to Persons to whom such disclosure is necessary for the Sellers, their Affiliates and their respective Representatives
to perform their respective obligations or exercise or enforce their respective rights and remedies under this Agreement; provided
that such Persons are advised of the confidential nature of the Confidential Information and directed to comply with the confidentiality
obligations set forth in this Section 5.14. |
| 5.14.2 | The Sellers further covenant and agree to the following: |
| (a) | Promptly following Closing, the Sellers shall promptly (and, in any event, within sixty (60) days thereof)
destroy any Buyer Confidential Information in their possession, or the possession of their Affiliates and Representatives (including purging
all such materials and all Buyer Confidential Information from their respective computers or other storage media or devices) and shall
promptly confirm having complied with such request to the best of their abilities; provided, however, the Sellers may retain
copies of Buyer Confidential Information to the extent (i) required in order to comply with any applicable Law, professional requirement
or bona fide internal document retention policies or procedures, provided such copies are accessible only by persons required to have
access to such materials for legal, compliance or information technology purposes, (ii) retained pursuant to automatic archiving and backup
procedures, so long as such Confidential Information is not readily accessible, or (iii) as reasonably required to ensure that Sellers
have appropriate financial and other information to substantiate any income, gains, losses, deductions and other items included in their
Tax Returns or in the Tax Returns of the Company for any Pre-Closing Tax Period.; |
| (b) | Following the Closing, the Sellers shall take commercially reasonable measures to limit access to any
Buyer Confidential Information to the Sellers’ employees and Representatives on a need-to-know basis (which may include, but not
be limited to, as applicable, the use of passwords/passcodes, monitoring of file access, locked filing cabinets, and other protective
measures), and, in any case, shall provide a level of security for any and all Buyer Confidential Information that is no less than the
level of security that the Sellers use to secure highly confidential trade secrets. |
| 5.15 | Further Actions.
In case at any time after the Closing any further
actions are necessary to carry out the purposes of this Agreement, each Party hereto will
take such further actions (including the execution and delivery of such further instruments
and documents) as any other such Party may reasonably request, all at the sole cost and expense
of the requesting Party. The Sellers acknowledge and agree that from and after the Closing,
Buyer will be entitled to possession of all documents, books, records (including Tax records),
agreements and financial data of any sort relating to the Company; provided, however,
(i) pending the Determination Date, the Sellers shall retain the right to reasonable access
to all such documents, books and records and other financial data relating to the Company
that is necessary to the resolution of any Disputed Items, including electronic copies thereof;
and (ii) following the Closing the Sellers shall retain the right to reasonable access to
all such documents, books and records and other financial data relating to the Company that
is necessary in order for the Sellers to prepare any Tax Returns or to substantiate any income,
gains, losses, deductions and other items included in their Tax Returns or in the Tax Returns
of the Company for any Pre-Closing Tax Period. |
| 5.16 | Excluded Businesses.
For the avoidance of doubt, the transactions contemplated by this Agreement do not include the sale or transfer of the equity or
businesses of any Affiliate of the Sellers, including MC Title, LLC and MC Mortgage 2, LLC, other than the Company and its
Subsidiaries, including the assets exclusively used by such businesses or any liabilities arising from such businesses (the
“Excluded Businesses”). |
| 5.17 | Specified Homes.
Following the Closing the Sellers shall be responsible
for handling and seeking resolution of any construction defect or warranty claims relating
to the Specified Homes. The Sellers shall have the authority to correct any alleged construction
defects and seek to settle any warranty claims relating to the Specified Homes, provided
that, any such settlement or resolution shall be subject to the provisions and limitations
of Section 7.4.2 hereof. Buyer and the Company will provide cooperation as reasonably
requested by the Sellers in connection with any such construction defect or warranty claims. |
| 5.18.1 | Success Bonuses. As set forth in the Compensation Spreadsheet, certain employees of the
Company will be paid success bonuses (collectively, the “Success Bonuses”). These Success Bonuses will be paid in their
entirety by the Sellers from the Closing Date Purchase Price. |
| 5.18.2 | Annual Bonuses. As set forth in the Compensation Spreadsheet, certain employees of the Company
will be paid annual bonuses to the extent accrued prior to the Closing. These annual bonuses, will be paid in their entirety by the Sellers
prior to the Closing. |
| 5.19 | Employees.
Buyer and the Sellers will work together using commercially
reasonable efforts to retain the Company’s existing employees following the Closing.
Buyer will offer, for the twelve (12) months following the Closing, base salary and employee
benefits (excluding equity and equity-based compensation, non-qualified deferred compensation,
transaction-related compensation, retention, severance, change in control, defined benefit
pension, and post-retirement welfare payments or benefits) that are substantially comparable,
in the aggregate, to those provided by the Company to such employee prior to the Closing.
The son and daughter of Tommy and Lisa McAden will be given the opportunity to continue as
employees of the Company following the Closing on the terms set forth in the Compensation
Spreadsheet. |
| 5.20 | Corporate Credit Cards and
Accounts.
Sellers and the Company will terminate any and all corporate credit cards and corporate accounts
with respect to which any Seller has financial responsibility effective on or before the
Closing. The Parties acknowledge and agree that following the Closing Buyer shall pay or
cause the Company to pay any amounts owing with regard to any such corporate credit cards
and accounts that were incurred in the Ordinary Course notwithstanding that the expenditures
occurred prior to the Closing; and, provided further, that Buyer shall be responsible for
opening new corporate credit cards and corporate accounts on behalf of the Company to take
effect as of the Closing. |
| 5.21 | Grant of Trademark License.
Buyer (on behalf of itself and its Affiliates)
hereby grants to the Sellers and their respective Affiliates, effective as of Closing, a
non-exclusive, royalty-free, fully paid up, transferrable, sublicensable, worldwide, irrevocable
and perpetual right and license to use the name and mark ANTARES HOMES and all associated
logos, domain names, social media accounts, and colors (collectively, the “Marks”).
Buyer further agrees (i) to act in good faith to phase out the use of the Marks by the Company
and shall complete such phase out no later than twelve (12) months from the Closing, (ii)
prior to phasing out use of the Marks, to use the Marks with the same quality standards used
by, and in connection with Business reflecting the same level of quality as used by Sellers
and its respective Affiliates as of the Closing, (iii) after phasing out use of the Marks,
Buyer shall not use any variant or colorable imitation of the Marks, (iv) Buyer shall not
use the Marks as part of any domain name, URL, email address, or other designator of an online
location or presence, and (v) Buyer shall not (i) contest or challenge Sellers’ and
their respective Affiliates’ uses of the Marks or (ii) after phasing out use of the
Marks, contest or challenge any application or registration of the Marks by Sellers or their
Affiliates. As between Buyer and Sellers, each Party shall retain the goodwill associated
with its uses of the Marks and such goodwill shall inure to the benefit of the respective
Party or its respective businesses. Upon completion of phasing out all uses of the Marks,
Buyer agrees any Intellectual Property and other rights in or to the Marks shall revert to
Sellers, and does hereby assign and agrees to assign any Intellectual Property and other
rights to the Marks to Sellers (or their respective designee); provided that any reasonable
out-of-pocket costs associated with the assignment of the Intellectual Property and other
rights to the Marks of Buyer shall be paid by Sellers. Notwithstanding the foregoing or anything
to the contrary herein, (x) Buyer shall not be required to remove or conceal any Marks from
internal records and other internal historical or archived documents and materials containing
or referencing such Marks and (y) Buyer shall have a right, at all times after the Closing,
to (A) use the Marks to the extent that Buyer or a third party would be permitted do so as
a fair use under applicable Law, and (B) describe the historical origins of the Business
in a statement that is (i) pre-approved by the Sellers in writing, or (ii) required by applicable
Law. |
| 5.22 | Closing Property Statement.
No later than five (5) Business Days prior to the
anticipated Closing Date, Sellers will prepare and furnish to Buyer, a good faith projection
of (i) all Owned Real Property and Controlled Real Property in the form attached hereto as
Exhibit M, and (ii) Legacy Homes as of the Closing Date in the form of Section
3.11.7 of the Company Disclosure Schedule (the “Closing Property Statement”).
Sellers shall use reasonable best efforts to promptly inform Buyer prior to Closing of any
known or anticipated changes to the list of or information related to the Owned Real Property,
Controlled Real Property, and Legacy Homes as of the Closing Date from the information contained
in the Closing Property Statement. |
Article
6
CLOSING CONDITIONS
| 6.1 | Conditions to Each Party’s Obligation to Effect the Transaction.
The obligation of each Party to consummate and effect the Transaction shall be subject to the satisfaction at or prior to the
Closing Date of each of the following conditions, any of which may be waived, in writing, jointly by Sellers and Buyer: |
| 6.1.1 | Approvals. All Governmental Authorizations set forth on Section 6.1.1 of the Company
Disclosure Schedule that are required to be filed or obtained prior to the Closing Date shall have been filed or obtained. |
| 6.1.2 | No Judgment. No Judgment shall have been entered in any Proceeding before any court or other
Governmental Authority having jurisdiction over any Party, and no preliminary or permanent injunction by any court or other Governmental
Authority shall have been issued, which would have the effect of (a) making the Transaction illegal or (b) otherwise preventing the consummation
of the Transaction. |
| 6.1.5 | R&W Insurance Policy. Buyer must have obtained and bound the R&W Insurance Policy
to the terms and conditions set forth in Section 6.3. |
| 6.1.6 | Exclusive Mortgage and Title Services Agreement. At or prior to the Closing, Buyer shall
have entered into (i) an exclusive Title Services Agreement with MC Title, LLC in the form attached hereto as Exhibit F-1 and (ii)
an exclusive Marketing Services Agreement with MC Mortgage 2, LLC/S3 Mortgage, in the form attached hereto as Exhibit F-2. |
| 6.1.7 | Amended and Restated Model Home Lease Agreement. Effective as of the Closing, the Company
and the Sellers shall have entered into an amended and restated lease arrangement with respect to the model homes used by the Company
and the Business as of the Closing, in the form set forth in Exhibit C. |
| 6.1.8 | Office Lease and Sublease Agreements. Effective as of the Closing, the Company and the Sellers
shall have entered into a commercial lease agreement for the office space located at 840 Interstate 20 East, Arlington, Texas 76018 (the
“Lease”) in the form set forth in Exhibit G-1. In addition, and concurrently therewith, the Company and the
Sellers agree to cause their affiliated entities, S3 Home Loans, LLC and MC Title, LLC, to enter into a sublease agreement in the form
set forth in Exhibit G-2. |
| 6.1.9 | Reciprocal Indemnification Agreement. Effective as of the Closing the Company and the Excluded
Businesses shall have entered into a Reciprocal Indemnification Agreement, in the form set forth in Exhibit K. |
| 6.1.10 | Company-Level Indebtedness. Effective as of the Closing, all Company-Level Indebtedness
shall be repaid in full by the Buyer. |
| 6.2 | Conditions to Obligations of
Sellers and the Company.
The obligation of Sellers and the Company to consummate and effect the Transaction shall
be subject to the satisfaction at or prior to the Closing Date of each of the following conditions,
any of which may be waived, in writing, exclusively by Sellers: |
| 6.2.1 | Representations and Warranties. (a) Each of the Fundamental Representations of Buyer shall
be true and correct in all respects on and as of the date of this Agreement and on and as of the Closing Date (except to the extent such
representations and warranties address matters as of particular dates, in which case, such representations and warranties shall be true
and correct in all respects on and as of such dates); and (b) the representations and warranties of Buyer contained in Article 4
shall be true and correct in all material respects on and as of the date of this Agreement and on and as of the Closing Date, (except
to the extent such representations and warranties address matters as of particular dates, in which case, such representations and warranties
shall be true and correct in all material respects on and as of such dates). |
| 6.2.2 | Agreements and Covenants. Buyer shall have performed and complied with all of its covenants
under this Agreement in all material respects through Closing. |
| 6.2.3 | Closing Certificate. The receipt by Sellers of a certificate, dated the Closing Date, signed
by the appropriate Representative(s) of Buyer, confirming that each of the conditions specified in Section 6.2.1 and 6.2.2
are satisfied in all respects. |
| 6.3 | Conditions to Obligations
of Buyer. The obligation of Buyer to consummate and
effect the Transaction shall be subject to the satisfaction at or prior to the Closing Date
of each of the following conditions, any of which may be waived, in writing, exclusively
by Buyer: |
| 6.3.1 | Representations and Warranties. Subject to the following sentence, (a) each of the Fundamental
Representations of the Company and each of the Sellers shall be true and correct in all respects on and as of the date of this Agreement
and on and as of the Closing Date (except to the extent such representations and warranties address matters as of particular dates, in
which case, such representations and warranties shall be true and correct in all respects on and as of such dates); and (b) each of the
other representations and warranties of each of the Sellers set forth in Article 2 and the representations and warranties of the
Company and Sellers set forth in Article 3 shall be true and correct in all material respects (without giving effect to any materiality
or Material Adverse Effect qualifiers therein that would otherwise create a “double-materiality” standard thereunder, with
the Parties agreeing that the defined term “Material Adverse Effect” in Section 3.10 and the use of the word “Material”
in the defined term “Material Contract” as defined in Section 3.12 shall be given effect for all purposes thereunder)
on and as of the date of this Agreement and on and as of the Closing Date (except to the extent such representations and warranties address
matters as of particular dates, in which case, such representations and warranties shall be true and correct in all material respects
on and as of such dates). For purposes of determining whether the conditions set forth in this Section 6.3.1 have been satisfied,
any inaccuracy in the representations and warranties of the Sellers and the Company in Section 3.11 (other than the representations
and warranties set forth in Section 3.11.7, the first sentence of Section 3.11.1 and the first sentence of Section 3.11.2)
that relate to any Owned Real Property, Controlled Real Property, or Legacy Home that became an Owned Real Property, Controlled Real Property,
or Legacy Home, respectively, after August 31, 2023 (a “Post Cut-Off Event”) shall be disregarded (and, notwithstanding
such Post Cut-Off Event the conditions described in this Section 6.3.1 as they relate to the representations and warranties of
Sellers and the Company with respect to such Post Cut-Off Event in Section 3.11 hereof shall be deemed satisfied). |
| 6.3.2 | Agreements and Covenants. Sellers and the Company shall have performed and complied with
all of their respective covenants under this Agreement in all material respects through the Closing. |
| 6.3.3 | No Material Adverse Effect. Since the date of this Agreement, there shall not have been
a Material Adverse Effect on the Company or the occurrence of any change, effect, event, occurrence, state of facts or development which
would, individually or in the aggregate, have a Material Adverse Effect on the Company. |
| 6.3.4 | Closing Certificate.
The receipt by Buyer of a certificate, dated the Closing Date, signed by the appropriate
Representative(s) of Sellers and the Chief Executive Officer of the Company, confirming that
each of the conditions specified in Sections 6.3.1, 6.3.2 and 6.3.3
are satisfied in all respects. |
| 6.3.5 | Payoff Letters and Release. All payoff letters and releases relating to the Indebtedness
set forth in Section 3.9.1 of the Company Disclosure Schedule will have been obtained by the Company which shall be compliant
with the terms of Section 5.8 and delivered to Buyer in form and substance satisfactory to Buyer. |
| 6.3.6 | Third Party Consents. All consents set forth in Section 3.3 of the Company Disclosure
Schedule will have been obtained by the Company and delivered to Buyer in form and substance reasonably satisfactory to Buyer. |
| 6.3.7 | Updated Property List. Sellers shall have delivered to Buyer, a true and accurate list and
description in all material respects of (i) all Owned Real Property and Controlled Real Property in the form attached hereto as Exhibit
L and (ii) all Legacy Homes as of the Prior Month End Date in the form of Section 3.11.7 of the Company Disclosure Schedule.
For purposes hereof, “Prior Month End Date” means (i) if the Closing Date is on or after the 18th day of
the then calendar month, the last day of the immediately preceding calendar month (the “Preceding Month”), and (ii)
if the Closing Date is prior to the 18th day of the then calendar month, the last day of the calendar month immediately preceding
the Preceding Month. |
| 6.3.8 | Certificate of Manager. The receipt by Buyer of a certificate executed by the manager of
the Company certifying: (a) to the validity of the Company’s certificate of incorporation, organization or formation (or equivalent
document) and operating agreement (or equivalent document); (b) to the validity of the resolutions duly adopted by the Company’s
manager and members authorizing the Company’s execution, delivery and performance of the Transaction Documents and the Transaction;
and (c) the incumbency of each individual who shall be authorized to sign, in the name and on behalf of the Company, each of the Transaction
Documents to which the Company is or is to become a party in connection herewith. |
| 6.3.9 | Purchased Membership Interests. Sellers shall have delivered to Buyer at the Closing the
Membership Interests purchased by Buyer as set forth hereunder, free and clear of all Liens and other restrictions on transfer other than
Permitted Liens. |
| 6.3.10 | Estimated Closing Statement. Sellers shall have delivered to Buyer at the Closing the Estimated
Closing Statement in accordance with the terms of this Agreement. |
| 6.3.11 | Resignations. The receipt by Buyer of duly executed letters of resignation of each officer,
manager and director of the Company as requested by Buyer in writing at least ten (10) Business Days in advance of the Closing, in form
and substance reasonably satisfactory to Buyer, resigning from the positions held by such individuals as requested by Buyer in writing
at least ten (10) Business Days in advance of the Closing, and effective upon the Closing. |
| 6.3.12 | Good Standing. The delivery by Sellers of the respective good standing certificates (or
equivalent document) for the Company in its jurisdiction of organization and in each jurisdiction where the Company is qualified to do
business as a foreign organization, in each case dated within thirty (30) days prior to the Closing Date. |
| 6.3.13 | FIRPTA Certificates. Each Seller shall deliver to Buyer a certificate, in form and substance
as prescribed by Treasury Regulations promulgated under Section 1445 of the Code, stating that such Seller is not a “foreign person”
within the meaning of Section 897 of the Code, Section 1446(f) of the Code and Treasury Regulation Section 1.1445-2(b) and an IRS form
W-9 claiming a complete exemption from backup withholding. |
| 6.4 | No Waiver.
Notwithstanding anything to the contrary in
this Agreement, if any of the conditions in Section 6.2 have not been satisfied, Sellers
shall have the right to proceed with the Transaction without waiving any of their rights
in this Agreement, and if the conditions specified in Section 6.3 have not been satisfied,
Buyer shall have the right to proceed with the Transaction without waiving any of its rights
in this Agreement. |
Article
7
INDEMNIFICATION
| 7.1 | Indemnification
by the Sellers.
Subject to the terms of this Article 7, each Seller severally and jointly indemnifies
and holds Buyer and its Affiliates and each of their respective officers, directors, shareholders,
managers, members, employees, agents, Representatives, successors and permitted assigns (each
a “Buyer Indemnified Party” and, collectively, the “Buyer Indemnified
Parties”) harmless against and in respect of any and all Losses, which such Buyer
Indemnified Party has suffered, incurred or become subject to arising out of, based upon
or otherwise in respect of: |
| 7.1.1 | any breach or inaccuracy of any Excluded Representation or Warranty; |
| 7.1.2 | any breach, non-compliance or non-fulfilment of any covenant or obligation of the Sellers under Section
5.9 of this Agreement; |
| 7.1.3 | any Taxes of the Company with respect to any Pre-Closing Straddle Period; |
| 7.1.4 | any Transaction Expenses to the extent not taken into account for purposes of determining the Closing
Date Purchase Price pursuant to Section 1.4; and |
| 7.1.5 | any construction defect or warranty claims with respect to any of the properties set forth on Section
7.1.5 of the Company Disclosure Schedule (the “Specified Homes”). |
For purposes of calculating the amount
of Losses to which any Buyer Indemnified Party is entitled under this Article 7, the terms “material,” “Material
Adverse Effect,” similar qualifiers or monetary qualifiers to similar effect shall be disregarded, except for the use of the defined
term “Material Adverse Effect” in Section 3.10 and the use of the word “Material” in the defined term “Material
Contract” as defined in Section 3.12, which shall not be disregarded.
| 7.2 | Indemnification by Buyer.
Subject to the terms of this Article 7, Buyer
will indemnify and hold the Sellers and their Affiliates, and each of their respective officers,
directors, shareholders, managers, members, trustees, employees, agents, Representatives,
successors and permitted assigns (each a “Seller Indemnified Party” and,
collectively, the “Seller Indemnified Parties”) harmless against and in
respect of any and all Losses which such Seller Indemnified Party has suffered, incurred
or become subject to, arising out of, based upon or otherwise in respect of: |
| 7.2.1 | any breach or inaccuracy of any representation or warranty made by Buyer in Article 4 of this Agreement; |
| 7.2.2 | any breach or non-fulfilment of any covenant or obligation of Buyer under this Agreement; and |
| 7.2.3 | the operations of the Company and its Subsidiaries by Buyer following the Closing Date (such operations
being deemed to include, without limitation, the obligation of Buyer and Company to make payment of any liability to the Sellers pursuant
to Section 5.20 hereof). |
For purposes of calculating the amount
of Losses to which any Seller Indemnified Party is entitled under this Article 7, the terms “material,” “Material
Adverse Effect,” similar qualifiers or monetary qualifiers to similar effect shall be disregarded.
| 7.3.1 | Buyer will bind and obtain an insurance policy for the benefit of Buyer for claims resulting from any
of the Seller’s or Company’s breach of their representations and warranties set forth in Article 2 and Article 3 hereof and
such insurance policy will be subject to the prior review and approval of Sellers (such approval not to be unreasonably withheld). Buyer
will seek to have all of such representations and warranties covered by such R&W Insurance Policy. The R&W Insurance Policy will
expressly waive any subrogation rights against each Seller with respect to any claim made by Buyer under the R&W Insurance Policy,
other than for claims arising from or in connection with Fraud (the “Subrogation Provision”). The R&W Insurance
Policy shall provide that the Subrogation Provision shall not be terminated, waived, or amended in a manner that is reasonably expected
to actually prejudice the Sellers without the written consent of the Sellers. |
| 7.3.2 | Buyer will pay or cause to be paid all costs required to bind and obtain the R&W Insurance Policy,
including the policy premium amount, broker fee, underwriting fee, and other corresponding taxes of such R&W Insurance Policy (“Insurance
Costs”). |
| 7.4.1 | Inter-Party Claims. In order for a Buyer Indemnified Party or a Seller Indemnified Party
(each, an “Indemnified Party”) to be entitled to any indemnification pursuant to this Article 7, the Indemnified
Party will notify the other Party or Parties from whom such indemnification is sought (the “Indemnifying Party”) in
writing promptly after the occurrence of the event giving rise to such Indemnified Party’s claim for indemnification, specifying
the amount thereof (if known and quantifiable) and the basis of such claim; provided, however, that failure to give such
notification will not affect the indemnification provided under this Agreement, except to the extent the Indemnifying Party will have
been actually and materially prejudiced as a result of such failure, or the indemnification obligations of the Indemnifying Party are
materially increased as a result of such failure (in which case, the Indemnifying Party’s obligations will only be reduced to the
extent of such material increase). If the Indemnifying Party disputes its liability with respect to any such claim, the Indemnifying Party
and the Indemnified Party will proceed to negotiate a resolution of such dispute and, if not resolved through negotiations, such dispute
will be resolved in accordance with the dispute resolutions terms of this Agreement. |
| (a) | In order for an Indemnified Party to seek indemnification under this Article 7 with respect to
any action, lawsuit, Proceeding, investigation or other claim brought against it by a third party (a “Third-Party Claim”),
such Indemnified Party must give prompt written notice to the Indemnifying Party after receiving written notice of such Third-Party Claim,
specifying the amount thereof (if known and quantifiable) and the basis of such claim; provided that, any failure to so notify
or any delay in notifying the Indemnifying Party shall not relieve the Indemnifying Party of its or his obligations hereunder except to
the extent the Indemnifying Party will have been actually and materially prejudiced as a result of such failure, or the indemnification
obligations of the Indemnifying Party are materially increased as a result of such failure (in which case, the Indemnifying Party’s
obligations will only be reduced to the extent of such material increase). With respect to any Third-Party Claim which, if adversely determined,
would entitle the Indemnified Party to indemnification pursuant to this Article 7, the Indemnifying Party shall be entitled, at
its sole cost and expense, (i) to participate in the defense of such Third-Party Claim giving rise to the Indemnified Party’s claim
for indemnification or (ii) at its option (subject to the limitations set forth below), to assume control of such defense and appoint
lead counsel reasonably acceptable to the Indemnified Party; provided that, as a condition precedent to the Indemnifying Party’s
right to assume control of such defense, it must first: (1) notify the Indemnified Party in writing within ten (10) days after the Indemnified
Party has given notice of the Third-Party Claim that the Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Losses (without any limitations other than those set forth in Section 7.6) the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of, or caused by the Third-Party Claim in accordance with the terms of this
Agreement; and (2) furnish the Indemnified Party with evidence reasonably satisfactory to the Indemnified Party that the Indemnifying
Party has sufficient resources to defend such Third-Party Claim and to satisfy its obligations to the Indemnified Party under this Article
7 in respect of such Third-Party Claim. Notwithstanding the foregoing, the Indemnifying Party shall not have the right to assume control
of such defense if the Third-Party Claim which the Indemnifying Party seeks to assume control (A) seeks non-monetary relief, (B) involves
criminal or quasi-criminal allegations, (C) involves a claim which, if adversely, determined, would be reasonably expected, in the good
faith judgment of the Indemnified Party, to establish a precedent, custom or practice adverse to the continuing business interests or
prospects of the Indemnified Party or the Company, (D) seeks Losses in excess of the Cap or (E) involves a claim that, in the good faith
judgment of the Indemnified Party, the Indemnifying Party failed or is failing to vigorously prosecute or defend (each of the foregoing,
an “Exception Claim”). |
| (b) | In the event that (i) the Indemnifying Party fails to elect to assume control of the defense of any Third-Party
Claim in the manner set forth in Section 7.4.2(a) or (ii) such Third-Party Claim is or at any time becomes, an Exception Claim,
the Indemnified Party may defend against, and consent to the entry of any Judgment or enter into any settlement with respect to, the Third-Party
Claim in any manner it may deem appropriate (and the Indemnified Party need not consult with, or obtain any consent from, any Indemnifying
Party in connection therewith). |
| (c) | If the Indemnifying Party is controlling the defense of any Third-Party Claim in accordance with Section 7.4.2(a),
(i) the Indemnified Party shall nonetheless have the right to participate in the defense of such Third-Party Claim giving rise to the
Indemnified Party’s claim for indemnification, (ii) the Indemnifying Party will not consent to the entry of any Judgment or enter
into any settlement with respect to or cease to defend such Third-Party Claim without the prior written consent of the Indemnified Party
(which consent shall not be unreasonably withheld, conditioned or delayed); provided that, the Indemnified Party shall have no
obligation of any kind to consent to the entrance of any Judgment or into any settlement unless such Judgment or settlement (1) is for
only money damages, the full amount of which shall be paid by the Indemnifying Party, (2) includes, as a condition thereof, an express,
unconditional release of the Indemnified Party from any further liability or obligation with respect to such Third-Party Claim and (3)
would not be reasonably expected, in the good faith judgment of the Indemnified Party, to establish a precedent, custom or practice materially
adverse to the continuing business interests or prospects of the Indemnified Party or the Company. |
| (d) | Irrespective of which Party controls the defense of any Third-Party Claim, the other Parties to this Agreement
will, and will cause any non-Party Affiliate to, cooperate with the controlling Party in such defense and make available to the controlling
Party all witnesses, pertinent records, materials and information in such non-controlling Party’s possession or under its control
relating thereto as is reasonably required by the controlling Party. The Parties agree that all communications between any Party and counsel
responsible for or participating in the defense of any Third-Party Claim shall, to the extent possible, be made so as to preserve any
applicable attorney-client or work-product privilege. |
| 7.5 | Survival. All
of the representations and warranties set forth in Article 2 and Article 3 hereof other than any Excluded
Representations or Warranties will terminate as of and not survive the consummation of the Transaction (and, subject to Section
7.10 hereof, Buyer’s recourse for breach of such representations and warranties shall be solely against the R&W
Insurance Policy). Subject to the limitations contained in this Article 7, any Excluded Representation or Warranty, covenants
and agreements contained in this Agreement shall survive the execution and delivery of this Agreement and the consummation of the
Transaction. Notwithstanding anything herein to the contrary, none of the Sellers will be liable with respect to any claim for
indemnification pursuant to Section 7.1.1 or Section 7.1.2, and Buyer will not be liable with respect to any claim for
indemnification pursuant to Section 7.2, unless written notice of such claim is delivered to Sellers or Buyer, as the
case may be, prior to the applicable Survival Date (if any). For purposes of this Agreement, the term “Survival
Date” shall mean such date which is twelve (12) months after the Closing Date; provided that: |
| 7.5.1 | with respect to any Fundamental Representation that constitutes an Excluded Representation or Warranty,
there shall be no Survival Date and such representation and warranty shall survive the Closing indefinitely; and |
| 7.5.2 | covenants and agreements shall survive the Closing until fully performed or observed in accordance with
their terms and the Survival Date shall be the date of such performance or observance is fully performed or observed. |
| 7.6 | Certain Limitations on
Indemnification. |
| 7.6.1 | The Sellers will have no obligation to indemnify the Buyer Indemnified Parties against Losses pursuant
to Section 7.1.1, unless the aggregate amount of such Losses exceeds $750,000 (the “Threshold”), in which case
such Buyer Indemnified Parties will be entitled to indemnification from the Sellers for the full amount of all such Losses from and including
the first dollar of all such Losses and up to $15,000,000 (the “Cap”); provided, however, that the Threshold
will not apply to Losses as provided in Section 7.10, for which there will be no minimum threshold before recovery, and in each
case, none of such Losses shall count towards the satisfaction of the Cap (and for which the Cap shall not apply). |
| 7.6.2 | Buyer not will have any obligation to indemnify the Seller Indemnified Parties against Losses pursuant
to Section 7.1.1, unless the aggregate amount of such Losses exceeds the Threshold in which case such Seller Indemnified Parties
will be entitled to indemnification from Buyer for the full amount of all such Losses from and including the first dollar of all such
Losses up to an amount not to exceed the Cap; provided, however, that the Threshold will not apply to Losses based on a
breach or inaccuracy of a Fundamental Representation of Buyer, or as provided in Section 7.10, for which, in each case, there will
be no minimum threshold before recovery, and in each case, none of such Losses shall count towards the satisfaction of the Cap (and for
which the Cap shall not apply). |
| 7.6.3 | Other than with respect to Losses recoverable pursuant to Section 7.10, in no event shall Losses
exceed the sum of the Closing Date Purchase Price. |
| 7.7 | Certain Other Restrictions
on Indemnification. |
| 7.7.1 | Notwithstanding anything contained in this Agreement to the contrary, no Indemnified Party will have any
right to indemnification under this Agreement with respect to any Losses to the extent (and only to the extent) such Losses (a) arise
solely out of changes after the Closing Date in applicable Law or interpretations or applications thereof (provided that this clause (a)
shall not apply with respect to any Taxes of the Company for a Pre-Closing Tax Period or allocable to the portion of a Straddle Period
ending on the Closing Date) or (b) are duplicative of Losses that have previously been recovered hereunder. |
| 7.7.2 | The Parties agree to treat any indemnification payments received pursuant to this Agreement for all Tax
purposes as an adjustment to the Closing Date Purchase Price to the extent permitted by applicable Law. |
| 7.8 | Calculation and Mitigation
of Losses. |
| 7.8.1 | The amount of Losses subject to indemnification pursuant to this Article 7 shall be reduced by
any insurance proceeds received by the applicable Indemnified Party with respect to such Losses (net of any deductible, co-payment or
increases in premium and all out of pocket costs related to such recovery) from any insurance carrier pursuant to any insurance coverage
in place as of the date of this Agreement. If any insurance proceeds are subsequently recovered by the Indemnified Party from an insurance
carrier after payment has been made by the Indemnifying Party to the Indemnified Party in accordance with this Article 7 with respect
to the Losses to which such insurance recoveries relate, then the Indemnified Party shall promptly remit to the Indemnifying Party such
insurance recoveries (net of any deductible, co-payment, or increases in premium and all out of pocket costs related to such recovery);
provided that, in no event shall the Indemnified Party have any obligation hereunder (a) to remit to the Indemnifying Party any
portion of such insurance recoveries in excess of the indemnification payment or payments actually received from the Indemnifying Party
with respect to such Losses or (b) to make any insurance claim or to pursue any recovery from any insurance carrier or third party with
respect thereto. |
| 7.8.2 | To the extent that any Indemnifying Party has an indemnification obligation pursuant to this Article
7 to an Indemnified Party, such Indemnified Party may set off the amount of such indemnification obligation against any amounts then
due and unpaid by such Indemnifying Party to the Indemnified Party within the time period allowed for such payment. |
| 7.8.3 | In the event that the Closing occurs, each Seller agrees that such Seller will not seek, nor will they
be entitled to, reimbursement or contribution from, subrogation to, or indemnification by, the Company under the applicable organizational
documents, this Agreement, applicable corporate Laws or any other applicable Laws or otherwise, in respect of any amounts due from any
Seller to any Buyer Indemnified Party under this Article 7 or otherwise in connection with this Agreement. Each Seller further
agrees not to make any claims against any director and officer insurance in respect of amounts due by any Seller to any Buyer Indemnified
Party under this Article 7 or otherwise in connection with this Agreement. Buyer agrees that it will not pursue any claims against
Sellers in their capacities as members, officers, managers or agents of the Company for any acts or omissions occurring prior to the Closing
under the applicable organizational documents of the Company applicable corporate Laws or any other applicable Laws or otherwise, other
than as expressly permitted by this Article 7. |
| 7.8.4 | The right to indemnification and the payment of Losses of any Buyer Indemnified Party pursuant to this
Article 7, or the availability of any other remedies contemplated hereby or otherwise available to the Buyer Indemnified Parties
at law or in equity, based upon any representation, warranty, covenant, agreement or obligation of any Seller or the Company contained
in or made pursuant to this Agreement will not be affected by any investigation made by or on behalf of any Buyer Indemnified Party or
its Affiliates, or the knowledge of any such Buyer Indemnified Party’s (or its Affiliates’) officers, directors, stockholders,
managers, members, partners, employees or agents, with respect to the accuracy or inaccuracy of, or compliance or non-compliance with,
any such representation, warranty, covenant, agreement or obligation at any time following the Party’s entrance into this Agreement;
provided that, notwithstanding the forgoing a Party shall not have liability for indemnification and the payment of Losses to any other
Party hereunder with respect to the breach of or inaccuracy with regard to a representation or warranty if the indemnified Party’s
(or its Affiliates’) officers, directors, stockholders, managers, members, partners, employees or agents had actual knowledge of
the breach or inaccuracy of any such representation, warranty at the time of its execution of this Agreement. |
| 7.9 | Manner of Payment.
Any indemnification payment made pursuant to this
Article 7 shall be effected by wire transfer of immediately available funds to an
account designated by the Seller Indemnified Party or Buyer Indemnified Party, as the case
may be, within five (5) Business Days after the determination of the amount thereof, whether
pursuant to a final Judgment, settlement or agreement among the Parties hereto. |
| 7.10 | Special Rule for Fraud.
Notwithstanding anything in this Article 7
to the contrary, in the event of any breach of a representation, warranty, covenant, agreement
or obligation by any Party hereto that constitutes Fraud, by or on behalf of (a) the Company,
any Seller or (b) Buyer, then (x) such representation, warranty, covenant, agreement or obligation
will survive the execution and delivery of this Agreement and the consummation of the Transaction
and will continue in full force and effect for the period of the applicable statute of limitations
without regard to Section 7.5, (y) the limitations set forth in this Article
7 shall not apply to any Loss that the Buyer Indemnified Parties or the Seller Indemnified
Parties, respectively, may suffer, sustain or become subject to, as a result of, arising
out of, relating to, or in connection with, any such breach and (z) none of such Losses shall
be subject to or shall count towards the satisfaction of the Cap. |
| 7.11 | Exclusive Remedy.
The Parties hereto hereby agree that, from and after
the Closing Date, the indemnification provisions set forth in this Article 7 are the
sole and exclusive provisions in this Agreement with respect to the liability of the Sellers
or Buyer for the breach, inaccuracy or nonfulfillment of any representation or warranty or
any pre-Closing covenants, agreements or other pre-Closing obligations contained in this
Agreement and the sole remedy of the Buyer Indemnified Parties and the Seller Indemnified
Parties for any claims for breach of any representation or warranty or pre-Closing covenants,
agreements or other pre-Closing obligations arising out of this Agreement or any Law or legal
theory applicable thereto; provided that nothing herein shall preclude any Party from (a)
seeking any remedy based upon Fraud or (b) enforcing its right to specific performance of
post-Closing covenants, agreements or other post-Closing obligations pursuant to Section
9.14. |
Article
8
TERMINATION
| 8.1 | Termination of Agreement.
This Agreement may be terminated at any time prior to the Closing Date as follows: |
| 8.1.1 | by mutual written consent of Buyer and the Sellers; |
| 8.1.2 | by Buyer if either (a) there has been a breach of any representation or warranty of the Sellers or the
Company contained in Article 2 and Article 3, as applicable, or (b) any of Sellers or the Company have breached or violated
any covenant of Sellers or the Company contained in this Agreement, in each case, where such breach or violation (y) would result in the
failure to satisfy a condition set forth in Section 6.1 or Section 6.3 and (z) cannot be, or has not been, cured by the
date that is fifteen (15) Business Days after Buyer notifies Sellers in writing of the breach or violation; provided, that Buyer
will not be permitted to terminate this Agreement under this Section 8.1.2 if Buyer is then in material breach of this Agreement; |
| 8.1.3 | by Sellers if either (a) there has been a breach of any representation or warranty of Buyer contained
in Article 4 of this Agreement or (b) Buyer has breached or violated any covenant of Buyer contained in this Agreement, in each
case, where such breach or violation (y) would result in the failure to satisfy a condition set forth in Section 6.1 or Section 6.2
and (z) cannot be, or has not been, cured by the date that is (15) Business Days after Sellers notify Buyer in writing of such breach
or violation; provided, that Sellers will not be permitted to terminate this Agreement under this Section 8.1.3 if the Company
or any Seller is then in material breach of this Agreement; or |
| 8.1.4 | by either Buyer or Sellers upon delivery of written notice to the other if any Governmental Authority
shall have issued or entered any Judgment, enacted any Law or taken any other action which, in any such case, permanently restrains, enjoins
or otherwise prohibits the consummation of the Transaction.; or |
| 8.1.5 | by either Buyer or Sellers, if the Closing does not occur on or before February 1, 2024 (the “Termination
Date”); provided that the right to terminate this Agreement pursuant to this clause will not be available to any Party
whose breach of any provision of this Agreement was the primary cause of the failure of the Transaction to be consummated by the Termination
Date. |
Upon any Qualifying Termination
of this Agreement the Purchase Price Deposit will be paid to the Company in accordance with Section 1.5.2 hereof.
| 8.2 | Notice of Termination; Effect
of Termination. If
Buyer or Sellers terminate this Agreement pursuant to this Article 8, then: (a) written
notice thereof will be promptly given to the other Party(ies), (b) the Transaction will be
terminated, (c) the Parties will cooperate to withdraw, to the extent practicable, all filings,
applications, and other submissions made pursuant to this Agreement from the Governmental
Authority, agency or other Person to which made, and (d) this Agreement will be void and
of no further force or effect, other than the provisions of Section 1.6, Article
7, this Article 8 or Article 9, and Exhibit A, each of which,
will survive any such termination and remain in full force and effect. Nothing in this Agreement
will be deemed to release any Party from any liability for any breach by such Party of this
Agreement prior to such termination for Fraud, or to impair the right of either Party to
compel specific performance by the other Party of its obligations under this Agreement. |
Article
9
MISCELLANEOUS
| 9.1 | Fees and Expenses. Except
as expressly set forth in this Agreement, each Party will pay all fees and expenses incurred
by it incident to preparing for, entering into and performing its obligations under this
Agreement and the consummation of the Transaction, whether or not the Transaction is consummated. |
| 9.2 | Notices.
All notices or other communications permitted or
required under this Agreement will be in writing and will be sufficiently given if and when
hand delivered to the Persons set forth below or if sent by documented overnight delivery
service or registered or certified mail, postage prepaid, return receipt requested, or by
facsimile or email, receipt acknowledged, addressed as set forth below or to such other Person
or Persons and/or at such other address or addresses as will be furnished in writing by any
Party to the other Parties. Any such notice or communication will be deemed to have been
given as of the date received, in the case of personal delivery, or on the date shown on
the receipt or confirmation therefor in all other cases. |
If to Buyer (or, following the
Closing, the Company):
Landsea Homes Corporation
1717 McKinney Ave
Suite 1000 Dallas, Texas 75202
Attn: General Counsel
Email: krentzel@landseahomes.com
With a copy (which will not constitute
notice) to:
Latham & Watkins LLP
650 Town Center Drive, 20th Floor
Costa Mesa, CA 92626
Attn: Darren Guttenberg
Email: darren.guttenberg@lw.com
If to the Sellers:
Tommy McAden
600 Silver Spur Drive
Southlake, Texas 76092
Email: tommymcaden@gmail.com
and
Lisa McAden
600 Silver Spur Drive
Southlake, Texas 76092
Email: lisamc718@gmail.com
With a copy (which will not constitute
notice) to:
Alston & Bird LLP
2200 Ross Ave. Suite 2300
Dallas, Texas 75201
Attention: Donald Hammett, Jr.
Email: Donald.Hammett@alston.com
With a copy (which will not constitute
notice) to:
Mier Law PLLC
1700 Pacific Avenue,
Suite 1740
Dallas, Texas 75201
Attention: Brian
Mier
Email: bmier@mierlaw.com
If to the Company:
Antares Acquisition, LLC
840 E I-20
Arlington, Texas 76262
Email: tommy.mcaden@antareshomes.com
With a copy (which will not constitute
notice) to:
Alston & Bird LLP
2200 Ross Ave. Suite 2300
Dallas, Texas 75201
Attention: Donald Hammett, Jr.
Email: Donald.Hammett@alston.com
With a copy (which will not constitute
notice) to:
Mier Law PLLC
1700 Pacific Avenue,
Suite 1740
Dallas, Texas 75201
Email: bmier@mierlaw.com
Any Party may at any time change the address
to which notices may be sent under this Section 9.2 by the giving of notice of the change to the other Parties in the
manner set forth in this Section 9.2.
| 9.3 | Assignment and Benefit.
Neither this Agreement nor any of the rights, interests
or obligations hereunder may be assigned, by operation of Law or otherwise, by any Party
to any other Person without the prior written consent of the other Party, and any such attempted
assignment will be null and void; provided, however, that Buyer may assign
its rights and obligations under this Agreement in whole or in part to any of its Affiliates
without the prior written consent of Sellers (provided that Buyer will remain primarily liable
hereunder following any such assignment and will be deemed to have unconditionally guaranteed
the performance of its obligations hereunder by any such assignee). |
| 9.4 | Amendment, Modification and
Waiver. Any provision of this Agreement may be amended,
modified, extended or waived, but only by a written instrument signed by Buyer and Sellers.
The waiver by a Party of any breach of any provision of this Agreement will not constitute
or operate as a waiver of any other breach of such provision or of any other provision hereof,
nor will any failure to enforce any provision hereof operate as a waiver of such provision
or of any other provision hereof. |
| 9.5.1 | Except as otherwise provided or unless the context otherwise requires, whenever used in this Agreement,
(a) the terms “include” and “including” will be deemed to be followed by the phrase “without limitation,”
(b) the word “or” will be inclusive and not exclusive, (c) all references to Sections or Articles refer to the Sections or
Articles of this Agreement, all references to Schedules (including the Company Disclosure Schedule and the Buyer Disclosure Schedule)
refer to the Schedules attached to or delivered with this Agreement, as appropriate, and all references to Exhibits refer to the Exhibits
attached to this Agreement, each of which is incorporated by reference and made a part of this Agreement for all purposes, (d) each reference
to “herein” means a reference to “in this Agreement,” (e) each reference to “$” or “dollars”
will be to United States dollars, (f) each reference to “days” will be to calendar days and (g) unless otherwise specified,
each reference to any Law will be to such Law as amended, supplemented or otherwise modified from time to time and (i) the term “made
available” (or terms with similar import) shall mean posted, and viewable by the Buyer and its representatives, in the electronic
data room established by the Sellers in connection with the transactions contemplated by this Agreement at least five (5) Business Days
prior to the date of this Agreement. |
| 9.5.2 | The provisions of this Agreement will be construed according to their fair meaning and neither for nor
against any Party irrespective of which Party caused such provisions to be drafted. Accordingly, any rule of law or legal decision that
would require interpretation of any ambiguities in this Agreement against the Party that drafted it is of no application and is hereby
expressly waived. Each Party acknowledges that it has been represented by an attorney in connection with the preparation and execution
of the Transaction Documents. |
| 9.6 | Governing Law.
This Agreement is made pursuant to, and will be
construed and enforced in accordance with, the Laws of the State of Texas, irrespective of
the principal place of business, residence or domicile of the Parties, and without giving
effect to otherwise applicable principles of conflicts of Law that would give effect to the
Laws of another jurisdiction. |
| 9.7 | Waiver of Jury Trial.
EACH PARTY HEREBY WAIVES AND COVENANTS THAT
IT WILL NOT ASSERT (WHETHER AS A PLAINTIFF, DEFENDANT OR OTHERWISE), TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE OTHER
TRANSACTION DOCUMENTS OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. EACH PARTY (A)
CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY PROCEEDING, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HAVE BEEN INDUCED TO ENTER INTO
THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION
9.7. EACH OF THE PARTIES MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN
EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES TO IRREVOCABLY
WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IN ANY PROCEEDING WHATSOEVER BETWEEN THEM
RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. |
| 9.8 | Consent to Jurisdiction.
Each Party irrevocably submits to the exclusive jurisdiction of the state and federal courts
having jurisdiction with regard to disputes arising in Dallas, Texas for purposes of any
Proceeding arising out of this Agreement or the Transaction. Each Party hereby waives, and
agrees not to assert in any such dispute, in each case to the fullest extent permitted by
applicable Law, any claim that (a) such Party is not personally subject to the jurisdiction
of such courts, (b) such Party’s property is exempt or immune from attachment or execution,
(c) such Party and such Party’s property are immune from any legal process issued by
such courts or (d) any Proceeding commenced in such courts is brought in an inconvenient
forum. Notwithstanding the foregoing in this Section 9.8, a Party may commence a Proceeding
in a court other than the above-named courts exclusively for the purposes of enforcing an
order or Judgment issued by one of the above-named courts. |
| 9.9 | Section Headings.
The section headings of this Agreement are for
reference purposes only and will not in any way affect the meaning or interpretation of this
Agreement. |
| 9.10 | Severability.
If any provision of this Agreement (or portion thereof) or the application of any such
provision (or portion thereof) to any Person or circumstance is determined by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced pursuant to
any applicable Law or public policy, all other provisions of this Agreement (or remaining
portion of such provision) will nevertheless remain in full force and effect. Upon such determination
by a court of competent jurisdiction that any provision (or portion thereof) of this Agreement
is invalid, illegal or incapable of being enforced, the Parties will negotiate in good faith
to modify this Agreement so as to effect the original intent of the Parties as closely as
possible in an acceptable manner, to the end that the Transaction as originally contemplated
is fulfilled to the extent possible. |
| 9.11 | Counterparts; Third-Party
Beneficiaries.
This Agreement may be executed in one or more counterparts, including by facsimile or PDF
transmission, each of which will be deemed an original, but all of such counterparts together
will be deemed to be one and the same agreement. This Agreement will be binding upon and
inure solely to the benefit of each Party, and, except as set forth in Section 5.5
or Article 7, nothing in this Agreement, express or implied, is intended to or will
confer upon any other Person any right, benefit or remedy of any nature whatsoever under
or by reason of this Agreement. |
| 9.12 | Entire Agreement.
This Agreement, together with the Buyer Disclosure
Schedule, the Company Disclosure Schedule, the exhibits hereto, and the other Transaction
Documents, constitute the entire agreement among the Parties with respect to the Transaction
and supersede all prior and contemporaneous letters of intent, agreements and understandings,
both written and oral, with respect to the subject matter hereof. There are no warranties,
representations, or other agreements between the Parties hereto, or on which any of them
has relied in connection with the subject matter hereof, except as specifically set forth
in this Agreement or in the other Transaction Documents. |
| 9.13 | Disclosure Schedules.
The Company and the Sellers prepared disclosure
schedules (the “Company Disclosure Schedule”). Nothing in the Company
Disclosure Schedule is intended to broaden the scope of any representation or warranty contained
in this Agreement. Any exception or qualification set forth on the Company Disclosure Schedule
with respect to a particular representation, warranty or covenant contained in this Agreement
shall be deemed to be an exception or qualification with respect to other applicable representations,
warranties and covenants contained in this Agreement to the extent that it is reasonably
inferable by Buyer from the face of such disclosure that such disclosure is applicable thereto.
The inclusion of any matter or item in the Company Disclosure Schedule shall not (a) be deemed
to be an admission or evidence of the materiality of such item, nor shall it establish a
standard of materiality for any purpose or (b) constitute, or be deemed to be, an admission
to any third party concerning such information. The reference to any document in the Company
Disclosure Schedule is deemed to include any and all exhibits, schedules, amendments, supplements,
annexes and other attachments to such document to the extent such exhibits, schedules, amendments,
supplements, annexes or other attachments have been previously made available to the applicable
Party. Matters reflected in the Company Disclosure Schedule are not necessarily limited to
the matters required by this Agreement to be disclosed in the Company Disclosure Schedule.
Such additional matters are set forth for informational purposes only and do not necessarily
include other matters of a similar nature. |
| 9.14 | Specific Performance.
Each Party acknowledges and agrees that the other Parties would be damaged irreparably if
any of the provisions of this Agreement were not performed in accordance with their specific
terms or otherwise were breached or violated. Accordingly, each Party agrees that, without
posting bond or other undertaking, the other Parties will be entitled to seek an injunction
or injunctions to prevent breaches or violations of this Agreement and to enforce specifically
this Agreement in any claim, action, cause of action or suit (whether in Contract or tort
or otherwise), litigation (whether at law or in equity, whether civil or criminal), controversy,
assessment, arbitration, investigation, hearing, charge, complaint, demand, notice or Proceeding
to, from, by or before any Governmental Authority having jurisdiction over the Parties and
the matter in addition to any other remedy to which it may be entitled, at law or in equity,
and that Party agrees to cooperate fully in any attempt by the other Parties in obtaining
any such equitable remedy. Each Party further agrees that, in the event of any action for
specific performance in respect of such breach or violation, it will not assert the defense
that a remedy at law would be adequate or that the consideration reflected in this Agreement
was inadequate or that the terms of this Agreement were not just and reasonable. |
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, each
Party has duly executed this Agreement, or has caused this Agreement to be duly executed on its behalf by a duly authorized Representative,
all as of the date first set forth above.
|
COMPANY |
|
|
|
Antares
Acquisition, LLC |
|
|
|
By: |
/s/
Tommy McAden |
|
Name: |
Tommy McAden |
|
Title: |
President |
SIGNATURE
PAGE TO MEMBERSHIP INTEREST PURCHASE AGREEMENT
|
SELLERS |
|
|
|
/s/ Tommy McAden |
|
Tommy McAden |
|
|
|
/s/ Lisa McAden |
|
Lisa McAden |
|
|
|
McAden Enterprises, Inc., |
|
a Texas corporation |
|
|
|
By: |
/s/ Tommy McAden |
|
Name: |
Tommy McAden |
|
Title: |
President |
SIGNATURE PAGE TO MEMBERSHIP INTEREST PURCHASE AGREEMENT
|
BUYER |
|
|
|
Landsea Homes Corporation |
|
|
|
By: |
/s/ Mike Forsum |
|
Name: Mike Forsum |
|
Title: President and Chief Operating Officer |
SIGNATURE PAGE TO MEMBERSHIP
INTEREST PURCHASE AGREEMENT
SCHEDULE A
SELLERS
| 3. | McAden Enterprises, Inc., a Texas corporation |
SCHEDULE B
EXCLUDED
PERSONAL PROPERTY
| ● | Office
furniture, whiteboards, personal items owned by Sellers individually. |
| ● | Computer
equipment currently used by Sellers (except for any information related to the Business contained
therein). |
EXHIBIT A
DEFINITIONS
“Accounting Principles”
means GAAP, as applied using the same accounting policies, procedures, methods, practices, categories, estimates, judgments and assumptions,
with consistent classifications, judgments and valuation and estimation methods, as those used in the preparation of the Financial Statements.
For the avoidance of doubt, calculations made in accordance with the Accounting Principles shall be based exclusively on the facts and
circumstances as they exist as of immediately prior to the Closing and shall exclude any purchase accounting or other adjustments arising
out of the consummation of the transactions contemplated by this Agreement, or otherwise give effect to the consummation of the transactions
contemplated by this Agreement (including the payment of cash in respect to the Closing Date Purchase Price or the Adjustment Amount,
or any financing transactions in connection with this Agreement, including the repayment of any Company-Level Indebtedness).
“Accounts Receivable”
means any accounts receivable of the Company, calculated in accordance with GAAP.
“Acquisition Contracts”
means all Contracts relating to the acquisition of any Controlled Real Property (including all Contracts granting the Company a right
of first refusal or right of first offer with respect to such Controlled Real Property).
“Affiliate”
means, with respect to any Person, any other Person controlling, controlled by, or under common control with such other Person. For purposes
of this definition, “control,” when used with respect to any Person, means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting securities, by Contract or otherwise, and the terms “controlling”
and “controlled” have correlative meanings. Notwithstanding the foregoing, for purposes of this Agreement, the Company
will not be considered an Affiliate of Sellers following the Closing.
“Agencies”
means the Fannie Mae, Freddie Mac, Ginnie Mae, the FHA, HUD, the USDA, and the VA.
“Antitrust Laws”
means the Sherman Act, as amended, the Clayton Act, as amended, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the rules and regulations promulgated thereunder, the Federal Trade Commission Act, as amended, all applicable foreign antitrust Laws
and all other applicable Laws issued by a Governmental Authority that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade or lessening of competition through merger or acquisition.
“Approved Bonuses”
means the pro rated annual bonuses and retention/success bonuses payable to the Company’s employees and set forth in the Compensation
Spreadsheet.
“Base Purchase Price”
means $185,000,000.00.
“Business”
means the business and operations of the Company as conducted as of the date hereof and the Closing Date.
“Business Day”
means a day, other than Saturday, Sunday or other day on which commercial banks in the states of California, New York or Texas are authorized
or required by law to close.
“Buyer Confidential
Information” means (i) all information relating, directly or indirectly, to Buyer, the Company, their respective Affiliates
or their respective businesses, including, without limitation, information related to the properties, technology, know-how, intellectual
property, development, sales, markets, condition (financial or other), methods, processes, strategies, operations, assets, liabilities,
relationships, costs, records, results of operations, cash flows or prospects (whether prepared by Buyer, the Company, their Affiliates,
their Representatives or otherwise), and (ii) the portions of all notes, analyses, compilations, studies, forecasts, interpretations or
other documents prepared by the Sellers or the Sellers’ Representatives that contain, reflect, or are based upon, in whole or in
part, any such information.
“Buyer Transaction
Documents” means those Transaction Documents to which Buyer is or, as of the Closing, will be, a party.
“CFIUS” means
the Committee on Foreign Investment in the United States.
“Closing Date Purchase
Price” means an amount equal to
(a) the
Base Purchase Price;
(b) plus,
the Closing Total Shareholders’ Equity;
(c) minus
the Total Shareholders’ Equity Target;
(d) minus
the Closing Transaction Expenses.
“Code” means
the Internal Revenue Code of 1986, as amended.
“Compensation Spreadsheet”
means that certain Excel spreadsheet dated as of November 30, 2023 prepared by the Company and delivered to Buyer prior to the date of
this Agreement and that contains the information described in Section 3.16.6 hereof.
“Competing Business”
means the business of building single family homes for sale to customers, including the marketing and sale thereof, in each case, in the
Dallas Fort Worth Metropolitan Statistical Area (MSA); provided, however, for the avoidance of doubt, excludes businesses
in title services, mortgage lending services, land acquisition and development or residential leasing.
“Confidential Information”
means, as applicable, Buyer Confidential Information or Seller Confidential Information.
“Contract”
means any contract, lease or other property agreement, license, indenture, note, bond, agreement, permit, concession, franchise, commitment,
purchase order, mortgage, partnership or joint venture agreement, instrument or other legally binding agreement, understanding or other
arrangement, whether written or oral.
“Controlled Real Property”
means all real property with respect to which the Company has an outstanding option, right of first offer or right of first refusal to
purchase.
“Copyrights”
means all registered or unregistered copyrights, all copyright registrations, applications for registration and renewals and all rights
corresponding to the foregoing throughout the world, including rights to prepare, reproduce, perform, display and distribute copyrighted
works and copies, compilations and derivative works thereof.
“Due to Members”
reflects retained earnings of the Company that have been distributed from the Members’ Equity capital accounts into a “Due
to Members” liability account that remains on the Company’s balance sheet in a manner consistent with Exhibit H hereto
and in accordance with the Accounting Principles. This capital remains in the Company and reduced the need for additional Company-Level
Indebtedness and the Company routinely pays back advances from its members through the Due to Members.
“Employee Benefit Plan”
means (a) each “employee benefit plan” (as such term is defined in Section 3(3) of ERISA or any similar plan subject to Laws
of a jurisdiction outside of the United States), (b) each employment, consulting, advisor or other service agreement or arrangement, (c)
each severance, termination, pension, retirement, supplemental retirement, excess benefit, profit sharing, bonus, incentive, deferred
compensation, retention, transaction, change in control and similar plan, program, arrangement, agreement, policy or commitment, (d) each
compensatory stock option, restricted stock, performance stock, stock appreciation, deferred stock or other equity or equity-based plan,
program, arrangement, agreement, policy or commitment, (e) each savings, life, health, disability, accident, medical, dental, vision,
cafeteria, insurance, flex spending, adoption/dependent/employee assistance, tuition, vacation, paid-time-off, other welfare fringe benefit
and (f) each other employee benefit plan, program or arrangement maintained, sponsored or contributed to by the Company or under which
the Company has any obligation or liability, whether actual or contingent, direct or indirect, to provide compensation or benefits to
or for the benefit of any of its current or former employees, consultants, managers or directors or the spouses, beneficiaries or other
dependents thereof. For the avoidance of doubt, “Employee Benefit Plan” shall include any plan sponsored or maintained by
any professional employer organization in which the Company or any of its respective employees participate.
“Enforceability Exceptions”
means applicable bankruptcy, insolvency, reorganization, moratorium and other similar existing or future Laws relating to or limiting
creditors’ rights generally, and general principles of equity relating to the availability of specific performance and injunctive
and other forms of equitable relief.
“Environmental Law”
means any applicable Law relating to the pollution or the protection of the environment or natural resources, including the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. §§ 9601 et seq.), the Hazardous Materials Transportation Act
(49 U.S.C. §§ 5101 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. §§ 6901 et seq.), the Clean Water
Act (33 U.S.C. §§ 1251 et seq.), the Clean Air Act (42 U.S.C. §§ 7401 et seq.), the Toxic Substances Control Act (15
U.S.C. §§ 2601 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. §§ 136 et seq.) and the
regulations promulgated pursuant thereto.
“Environmental Permits”
means the Governmental Authorizations required under applicable Environmental Laws reasonably necessary to operate the Business.
“ERISA” means
the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate”
means any Person that, together with the Company, would be deemed a “single employer” within the meaning of Sections 414(b),
(c), (m) or (o) of the Code.
“Excluded Personal
Property” means the personal property further described in Schedule B hereto.
“Excluded Representation
or Warranty” means any representation or warranty made in Article 2 and Article 3 of this Agreement that is excluded from coverage
by AIG Specialty Insurance Company under the R&W Insurance Policy as a result of the exclusions described in Section 4 subpart (d)
(relating to unfunded or underfunded defined benefit plans), (e) (relating to asbestos or Polychlorinated Biphenyls) or (f) (relating
to PPP Loans under the CARES Act or similar government assistance) of that certain draft Buyer-Side Representations and Warranties Insurance
Policy in the form provided to the Sellers as of January 8, 2024.
“Fraud” means,
with respect to any Party to this Agreement, an actual and intentional misrepresentation of a fact, or concealment of a fact, made with
the intent to deceive and mislead another party to this Agreement with respect to the making of any of the representations and warranties
in this Agreement and not with respect to any other matters.
“Fundamental Representations”
means (i) with respect to Sellers, the representations of each Seller set forth in Sections 2.1 (Power and Authorization; Enforceability),
2.3 (Ownership) and 2.5 (Brokers), (ii) with respect to the Company, the representations of the Company set forth in Section
3.1 (Organization and Good Standing) Sections 3.1 (Breach of Organizational Documents, Judgments or Laws), 3.2 (Power and
Authorization; Enforceability), 3.3 (No Violation or Conflict; Consents), 3.4.2 (Capitalization and Related Matters), 3.5
(Subsidiaries; Investments), 3.11.1 (Real Property), and 3.23 (Brokers) and (iii) with respect to Buyer, the representations
and warranties of Buyer set forth in Sections 4.1 (Organization and Good Standing), 4.2 (Power and Authorization; Enforceability),
Section 4.4 (Brokers) and Section 4.6 (Available Funds).
“GAAP” means
United States generally accepted accounting principles as in effect at an applicable time, as applied in a manner consistent with the
Accounting Principles.
“Governmental Authority”
means (a) the United States federal government or the government of any other country, (b) the government of any state, commonwealth,
province, county, city, territory or possession or (c) any political subdivision, courts, departments, commissions, boards, bureaus, tribunals,
agencies or other instrumentalities of any of the foregoing in clauses (a) and (b).
“Governmental Authorization”
means any approval, consent, license, permit or other authorization issued, granted, given or otherwise made available by or under the
authority of any Governmental Authority or pursuant to any Laws.
“GSSMME”
means any governmental entity or sponsored secondary mortgage market enterprise or entity that acquires, owns, insures or guarantees mortgage
loans or securities backed by mortgage loans, including, for the purpose of this Agreement, the Agencies and state and local housing finance
authorities.
“Hazardous Materials”
means any pollutants, chemicals, contaminants or wastes and any other toxic, infectious, carcinogenic, reactive, corrosive, ignitable,
flammable or otherwise hazardous substance, whether solid, liquid or gas, that is subject to regulation, control or remediation under
any Environmental Laws, including any quantity of asbestos in any form, urea formaldehyde, polychlorinated biphenyl, radon gas, crude
oil or any fraction thereof, all forms of natural gas, petroleum products or by-products or derivatives thereof.
“HIPAA” means
the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical
Health Act, and the regulations promulgated pursuant thereto, and any applicable comparable state, local and foreign Laws relating to
privacy, data security or data protection.
“Indebtedness”
means any of the following indebtedness of any Person (whether or not contingent and including all principal, accrued and unpaid interest,
prepayment premiums or penalties, related expenses, commitment and other fees, sale or liquidity participation amounts, reimbursements,
indemnities and other amounts which would be payable in connection therewith): (a) any obligations of such Person for borrowed money or
in respect of loans or advances (whether or not evidenced by bonds, debentures, notes or other similar instruments or debt securities);
(b) any obligations of such Person as lessee under any lease or similar arrangement required to be recorded as a capital lease in accordance
with GAAP; (c) all liabilities of such Person under or in connection with letters of credit or bankers’ acceptances, performance
bonds, sureties or similar obligations that have been drawn down, in each case, to the extent of such draw; (d) any obligations of such
Person to pay the deferred purchase price of property, goods or services other than those trade payables incurred in the Ordinary Course;
(e) all liabilities of such Person arising from cash/book overdrafts; (f) all liabilities of such Person under conditional sale or other
title retention agreements; (g) all obligations of such Person with respect to vendor advances or any other advances made to such Person;
(h) all liabilities of such Person arising out of interest rate and currency swap arrangements and any other arrangements designed to
provide protection against fluctuations in interest or currency rates; and (i) any liability or obligation of others guaranteed by, or
secured by, any Lien on the assets of, such Person.
“Independent Accounting
Firm” means a mutually acceptable nationally recognized firm of independent certified public accountants that has not provided
services to either the Company or Buyer and its Subsidiaries in the preceding two (2) years.
“Intellectual Property”
means all worldwide common Law and statutory rights in, to or associated with: (a) Patents; (b) Trademarks; (c) Internet domain names;
(d) Copyrights, including in computer software and databases; (e) registrations and applications for any of the foregoing clauses (a)
through (d); (f) trade secrets; and (g) all other intellectual property and proprietary rights.
“IRS”
means the United States Internal Revenue Service.
“Judgment”
means any judgment, decision, order, decree, writ, injunction or ruling entered or issued by any Governmental Authority.
“Knowledge”
as used in this Agreement, whether or not capitalized, means an individual’s actual awareness of a particular fact or other matter
without any duty of investigation. The Parties agree that the fact an individual is deemed a Knowledge party does not in and of itself
impose personal liability on such individual. For purposes of this Agreement, Knowledge of the Company or the Sellers shall mean the Knowledge
of Tommy McAden, Rollie Gonzalez and Melissa Kelly.
“Laws” means
any federal, national, provincial, state, local, United States, foreign or other law (both common and statutory law and civil and criminal
law), statute, rule, regulation, treaty, ordinance, convention, rule, code, decree, Judgment, writ, regulatory code (including statutory
instruments, guidance notes, circulars, directives, decisions, rules, regulations or restrictions), other order or other requirement or
rule of law of any Governmental Authority (including securities Laws or rules or regulations of any United States or foreign securities
exchange).
“Legacy Homes”
means all homes closed by the Company.
“Lien” means
any mortgage, deed of trust, hypothecation, pledge, lien (statutory or otherwise), lease, sublease, covenant, condition, restriction,
encumbrance, security interest, charge or encumbrance of any kind, whether voluntary or involuntary (including any conditional sale or
other title retention agreement, any lease in the nature thereof and any agreement to give any security interest) and, with respect to
equity interests, any option or other right to purchase or any restriction on voting or other rights.
“Losses”
means any and all direct or indirect losses, damages, Taxes, liabilities, penalties, fines, amounts paid in settlement, costs and expenses
(including settlement and court costs and reasonable attorneys’ fees and expenses).
“Material Adverse Effect”
means, any change, event, occurrence or circumstance that, individually or in the aggregate with all other changes, events, occurrences
and circumstances, (a) results in, or could reasonably be expected to result in, a material adverse effect on the business, results of
operations, condition (financial or otherwise), prospects, assets, or liabilities of such Person and its Subsidiaries, taken as a whole,
except to the extent resulting from: (i) changes or conditions in, or generally affecting, any industry in which the Company participates
or from generally prevailing conditions in global economies, (ii) changes in general global, national or regional political conditions
(including any outbreak or escalation of hostilities or any acts of war or terrorism) or in general regulatory or political conditions,
(iii) natural disasters or calamities, (iv) changes after the date hereof in any applicable Law or Accounting Principles, or interpretations
thereof, (v) any failure by the Company to meet its internal or published projections, budgets, plans or forecasts of its revenues, earnings
or other financial performance or results of operations (but not the events, changes, occurrences, effects, developments or state of facts
underlying such failure), (vi) the announcement or pendency of this Agreement, the Transaction Documents and the transactions contemplated
hereby and thereby, (vii) the taking of any action required to comply with the terms of this Agreement, or (viii) the taking of any action
approved or consented to in writing by Buyer (provided that, to the extent such changes, events, occurrences and circumstances disproportionately
affect the Company in any material respect relative to other similarly situated companies operating in any industry of the Company in
the cases of subclause (i) through (iv) above, the incremental disproportionate effects may be taken into account in determining whether
there has occurred a “Material Adverse Effect”); or (b) prevents or materially delays, or would reasonably be expected to
prevent or materially delay, the ability of such Person to consummate the Transaction.
“Members’ Equity”
means, as of the applicable time, the equity book value of the Company (and each component thereof) based on the balance sheet of the
Company, prepared in good faith, in a manner consistent with Exhibit H hereto and in accordance with the Accounting Principles.
“Ordinary Course”
means in the ordinary course of Business, consistent with past practices.
“Owned Real Property”
means all real property owned by the Company.
“Patents”
means all worldwide issued patents and pending patent applications, patent disclosures and rights related thereto.
“Permitted Lien”
means (a) any restriction on transfer arising under applicable securities Law or applicable organizational documents; (b) any Liens for
Taxes, assessments or other governmental charges not yet due and payable or the amount or validity of which is being contested in good
faith by appropriate Proceedings and for which adequate reserves have been established in the financial statements of the Company accordance
with GAAP; (c) mechanics’, materialman’s’, contractors’, carriers’, workers’, repairers’, liens
governed by Chapter 53 of the Texas Property Code and similar Liens arising or incurred in the Ordinary Course that are not yet due and
payable; (d) zoning, entitlement, building and other land use regulations imposed by Governmental Authorities having jurisdiction over
any Real Property which are not violated by the current or planned use and operation of such Real Property; (e) Liens listed on Section
A-1 of the Company Disclosure Schedule; and (f) Liens created by this Agreement, in connection with the Transaction or by the actions
of Buyer.
“Person”
means an individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, unincorporated organization, association, organization or other entity or form of business enterprise or Governmental
Authority.
“Post-Closing Straddle
Period” means the portion of the Straddle Period that extends from the day after the Closing Date to the end of the Straddle
Period.
“Pre-Closing Straddle
Period” means the portion of the Straddle Period that extends before the Closing Date through the Closing Date.
“Pre-Closing Tax Period”
means any period ending on or before (and including) the Closing Date and that portion of any Straddle Period ending on (and including)
the Closing Date.
“Pro Rata Portion”
means with respect to each Seller, the percentage set forth opposite such Seller’s name on Section A-2 of the Company Disclosure
Schedule.
“Proceeding”
means any action, arbitration, audit, hearing, inquiry, proceeding, audit, examination, charge, demand, notice of violation, investigation,
litigation or suit (whether civil, criminal, administrative, investigative or informal) commenced, brought, conducted or heard by or before,
or otherwise involving, any Governmental Authority or GSSMME or arbitrator.
“Property Taxes”
means all real property Taxes, personal property Taxes and similar ad valorem Taxes.
“Qualifying Termination”
means any termination of this Agreement other than a termination by Buyer due to a material breach of this Agreement by the Company or
the Sellers (that is not cured within any applicable cure period set forth in Section 8.1.2); provided that, for purposes of determining
whether a Qualifying Termination has occurred, any inaccuracy in the representations and warranties of the Sellers and the Company in
Section 3.11 (other than the representations and warranties set forth in Section 3.11.7, the first sentence of Section
3.11.1 and the first sentence of Section 3.11.2) made with respect to a Post Cut-Off Event shall be disregarded.
“Related Party”
means (a) any officer, director, employee, stockholder or Affiliate of any of the Company; (b) any individual related by blood, marriage
or adoption to any such Person in clause (a); or (c) any entity in which any such Person in clause (a) owns any beneficial interest.
“Release”
means disposing, discharging, injecting, spilling, leaking, pumping, pouring, leaching, dumping, emitting, escaping or emptying into or
upon the indoor or outdoor environment, including any soil, sediment, subsurface strata, surface water, groundwater, ambient air, the
atmosphere or any other media.
“Representative”
or “Representatives” means, with respect to a particular Person, any director, manager, member, limited or general
partner, officer, employee, agent, consultant, advisor or other representative of such Person, including outside legal counsel, accountants
and financial advisors.
“R&W Insurance
Policy” means the buyer-side representation and warranty insurance policy to be obtained by Buyer, and to be issued by the insurer
to Buyer on terms and conditions satisfactory to Buyer.
“Sanctioned Person”
means any Person that is the target of Sanctions, including (a) any Person listed in any Sanctions-related list of designated Persons
maintained by OFAC or the U.S. Department of State, by the United Nations Security Council, the European Union, or Her Majesty’s
Treasury of the United Kingdom, (b) any Person located, organized or resident in a Sanctioned Territory, or (c) any Person owned or controlled
by any such Person or Persons described in the foregoing clauses (a) and (b).
“Sanctions”
means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by relevant Governmental
Entities or GSSMMEs, including those administered by the U.S. government through the Office of Foreign Assets Control of the U.S. Department
of the Treasury (“OFAC”) or the U.S. Department of State, the United Nations Security Council, the European Union, or Her
Majesty’s Treasury of the United Kingdom.
“Sanctioned Territory”
means, at any time, a country or territory which is itself the subject or target of any Sanctions.
“Securities Act”
means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Straddle Period”
means any Tax period beginning on or before and ending after the Closing Date.
“Subsidiary”
means, with respect to any specified Person, any corporation, partnership, limited liability company, or other entity of which more than
fifty percent (50%) of the outstanding equity interests or other ownership interests having voting power to elect a majority of the board
of directors, managers or trustees of such corporation, partnership, limited liability company, or other entity is at the time directly
or indirectly owned by, or the management is otherwise controlled by, such Person (irrespective of whether, at the time, equity interests
or other ownership interests of any other class or classes of such corporation, partnership, limited liability company, or other entity
have or might have voting power by reason of the happening of any contingency) and, for this purpose, a Person owns more than fifty percent
(50%) of the outstanding equity interests or other ownership interests (other than a corporation) if such Person shall be allocated more
than fifty percent (50%) of such entity’s gains or Losses or shall be or control any managing director or general partner of such
entity.
“Tax” or
“Taxes” means all federal, state, local or foreign income taxes (including any tax on or based upon net income, gross
income or income as specially defined, or earnings, profits, or selected items of income, earnings or profits) and all gross receipts,
sales, use, transaction privilege, ad valorem, transfer, franchise, speculative builder, license, equity interest, escheat, withholding,
social security, unemployment, disability, or windfall profit taxes, alternative or add-in minimum taxes, or other taxes of any kind whatsoever,
together with any interest and any penalties and additions to tax, whether disputed or not and including any obligation to indemnify or
otherwise assume or succeed to the Tax liability of any other Person by Law, by Contract or otherwise.
“Tax Agreement”
means a Tax sharing agreement, Tax allocation agreement, Tax indemnity or other agreement, the principal purpose of which is the sharing
or allocation of, or indemnification for, Taxes.
“Tax Return”
means all federal, state, local, provincial and foreign return, declaration, report, or information return or statement relating to Taxes,
including any schedules and amendments thereto filed with or submitted to, or required to be filed with or submitted to, any Governmental
Authority, and including any amendment thereof.
“Taxing Authority”
means any Governmental Authority responsible for the assessment, imposition or collection of any Tax.
“Total Shareholders’
Equity” means, as of the applicable time, the total of Members’ Equity of the Company (and each component thereof) plus
the balance of the Due to Members account based on the balance sheet of the Company, prepared in good faith, in a manner consistent with
Exhibit H hereto and in accordance with the Accounting Principles.
“Total Shareholders’
Equity Target” means $48,000,000.00.
“Trademarks”
means all trademarks, service marks, trade dress or trade names.
“Transaction Documents”
means this Agreement, the Company Disclosure Schedule, the Seller Disclosure Schedule, and the other agreements, certificates, schedules
and documents contemplated by or delivered or executed by the Parties in connection with this Agreement, including the Buyer Transaction
Documents, the Company Transaction Documents and the Seller Transaction Documents.
“Transaction Expenses”
means, without duplication, the sum of any fees, costs and expenses incurred or to be incurred, directly or indirectly, by the Company
in connection with the drafting, negotiation, execution, delivery of this Agreement and the other Transaction Documents and the performance
and consummation of the Transaction that are accrued and unpaid through and including the Closing Date, including (a) fees, costs and
expenses of legal counsel, accountants, investment bankers, brokers or other Representatives and consultants, appraisal fees, costs and
expenses, and fees, costs and expenses related to obtaining requisite consents, approvals or waivers, (b) any transaction bonuses, retention
payments or change of control payments or other extraordinary compensation paid or payable by the Company to any service provider of the
Company (including Sellers) in connection with the drafting, negotiation, execution, delivery of this Agreement and the other Transaction
Documents and the performance or consummation of the Transaction (including any payments pursuant to “double-trigger” arrangements
resulting in payments and/or benefits provided upon a termination of employment on or following the consummation of the Closing and the
bonuses set forth in the Compensation Spreadsheet), any other extraordinary compensation paid or payable by the Company to a service provider
of the Company, and the employer portion of any employment Taxes that are incurred by the Company in connection with the payment of any
amounts described in this subclause (b), and (c) the value or amount of any distributions of assets (including cash) of the Company made
in connection with the execution of this Agreement to Sellers or any of their respective Affiliates or other related parties of Sellers;
provided that, “Transaction Expenses” shall not include any of the foregoing expenditures or payments described in
the foregoing clauses (a) – (c) that are paid by the Company prior to the calculation of the Estimated Closing Transaction Expenses
and that are included in the calculation of Company Total Shareholders’ Equity in the Closing Statement or that are paid directly
by Sellers. Transaction Expenses shall be calculated in a manner consistent with Exhibit H hereto and in accordance with the Accounting
Principles.
“Treasury Regulations”
means the regulations in force as final or temporary that have been issued by the U.S. Department of Treasury pursuant to its authority
under the Code and any successor regulations.
Other capitalized terms defined
elsewhere in the Agreement and not defined in this Exhibit A will have the meanings assigned to such terms in this Agreement
in the sections referenced below.
Term |
Section |
Accountants |
Section 5.7 |
Acquisition Contracts |
Section 3.11.2 |
Adjustment Amount |
Section 1.4.5 |
Affiliate Financial Data |
Section 5.12.1 |
Agreement |
Preamble |
Buyer |
Preamble |
Buyer Indemnified Party |
Section 7.1 |
Cap |
Section 7.6.1 |
CARES Act |
Section 3.8.5 |
CCRs |
Section 3.11.10 |
Closing |
Section 1.1 |
Closing Date |
Section 1.1 |
Closing Total Shareholders’ Equity |
Section 1.4.2 |
Closing Statement |
Section 1.4.2 |
Closing Transaction Expenses |
Section 1.4.2 |
Commission |
Section 5.6 |
Company |
Preamble |
Company Disclosure Schedule |
Section 9.13 |
Company-Level Indebtedness |
Section 5.8.1 |
Company Transaction Documents |
Section 3.2 |
Competing Transaction |
Section 5.6 |
Controlling Real Property |
Section 3.11.2 |
Deposit Dispute Notice |
Section 1.5.2(b) |
Deposit Dispute Window |
Section 1.5.2(b) |
Deposit Release Dispute Notice |
Section 1.5.3 |
Deposit Release Dispute Window |
Section 1.5.3 |
Determination Date |
Section 1.4.4 |
Disputed Items |
Section 1.4.3 |
Escrow Agent |
Recitals |
Escrow Agreement |
Recitals |
Estimated Closing Total Shareholders’ Equity |
Section 1.4.1 |
Estimated Closing Statement |
Section 0 |
Estimated Closing Transaction Expenses |
Section 0 |
Exception Claim |
Section 7.4.2(a) |
Excluded Businesses |
Section 5.16 |
Exclusivity Period |
Section 5.6 |
Existing Escrow Deposit |
Recitals |
Financial Statements |
Section 3.8 |
Homeowners Association |
Section 3.11.10 |
Indemnified Party |
Section 7.4.1 |
Indemnifying Party |
Section 7.4.1 |
Insurance Costs |
Section 7.3.2 |
Interests |
Recitals |
Latest Balance Sheet |
Section 3.8 |
Latest Balance Sheet Date |
Section 3.8 |
Leased Real Property |
Section 3.11.18 |
Legacy Homes |
Section 3.11.7 |
Limited Warranty |
Section 3.12.2 |
Listed Policy |
Section 3.13.1 |
Marks |
Section 5.21 |
Material Contracts |
Section 3.12.1 |
Material Personal Property |
Section 3.22 |
Owned Real Property |
Section 3.11.1 |
Party |
Preamble |
Payoff Amount |
Section 5.8.1 |
Payoff Letters |
Section 5.8.1 |
Permit Post Cut-Off Event |
Section 3.14 Section 6.3.1 |
PPP Lender |
Section 3.8.5 |
PPP Loans |
Section 3.8.5 |
Preceding Month Prevailing Party |
Section 6.3.7 Section 1.5.2 |
Prior Escrow Agent |
Recitals |
Prior Escrow Agreement Prior Month End Date |
Recitals Section 6.3.7 |
Prevailing RT Party |
Section 1.5.3 |
Purchase Price Deposit |
Section 1.5.1 |
Purchase Price Escrow Account |
Section 1.5.1 |
Qualifying Termination Notice |
Section 1.5.2(b) |
Real Property |
Section 3.11.18 |
Real Property Leases |
Section 3.11.18 |
Release Termination |
Section 1.5.3 |
Release Termination Notice |
Section 1.5.3 |
Representation Letter |
Section 5.7 |
Resolution Period |
Section 1.4.3 |
SBA |
Section 3.8.5 |
Scheduled Intellectual Property |
Section 0 |
Seller |
Preamble |
Seller Indemnified Party |
Section 7.2 |
Seller Transaction Documents |
Section 2.1 |
Shortfall Amount |
Section 1.4.5 |
Specified Homes |
Section 7.1.5 |
Statement Dispute Notice |
Section 1.4.3 |
Straddle Period Tax Return |
Section 5.5.1(c) |
Subrogation Provision |
Section 7.3.1 |
Survival Date |
Section 7.5 |
Success Bonuses |
Section 5.18 |
Tax Contest |
Section 5.5.2 |
Third-Party Claim |
Section 7.4.2(a) |
Threshold |
Section 7.6.1 |
Unresolved Items |
Section 1.4.4 |
EXHIBIT B
MEMBERSHIP INTERESTS
Seller |
Percentage
Membership Interests of the Company |
Tommy
McAden |
49.5% |
Lisa
McAden |
49.5% |
McAden
Enterprises, Inc., a Texas corporation |
1% |
Exhibit
B
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
LANDSEA HOMES EXPANDS TEXAS PRESENCE WITH ACQUISITION
OF DFW-BASED ANTARES HOMES
| ● | Continues Company Goal Toward Becoming One of Texas’ Top Homebuilders |
| ● | Acquisition Expands Homebuilding Footprint into 13 Cities, Including Dallas/Fort Worth Metropolitan Area |
| ● | Transaction Adds 2,298 of Owned or Controlled Lots to Landsea Homes’ Portfolio |
| ● | Increases
Entry Level and High Performance Home Offerings |
| ● | Enhances
Landsea Homes’ Transition to an Asset Light Business Model |
Dallas,
TX (January 9, 2024)—Landsea Homes Corporation (Nasdaq: LSEA) (“Landsea Homes” or the “Company”), a
publicly traded residential homebuilder, announced today that it has entered into a definitive agreement to acquire Antares Homes, a
Dallas-Fort Worth based homebuilder. The transaction, once completed, will expand Landsea Homes’ presence in the Dallas/Fort Worth
metropolitan area.
“Since entering Texas in 2021 and purchasing additional lots in August
of last year, we have been searching for the right opportunity to significantly expand our presence in Texas, and today’s announcement
achieves exactly that,” said John Ho, Chief Executive Officer of Landsea Homes. “Antares Homes shares our philosophy of building
quality homes and providing exceptional customer service, making them the perfect addition to the Landsea Homes family.”
Ho added, “Fort Worth’s growing Chisholm Trail Parkway corridor
has become an ideal location for homebuyers attracted to superior connectivity and neighborhoods that offer comprehensive communities.
Antares Homes is building new homes in 19 communities located in 13 unique, desirable locations across the Dallas-Fort Worth metro and
provides us with the perfect opportunity to achieve more size and scale in Texas.”
Antares Homes is a local, family-owned homebuilder with new homes throughout
the Dallas-Fort Worth area, including Arlington, Burleson, Forney and more. Known for specializing in quality, energy-efficient home construction
in their communities and creating life-long relationships with their homebuyers, Antares Homes has continually strived to become one of
the best homebuilders in Dallas-Fort Worth.
Landsea Homes intends to purchase Antares Homes for $232.2 million in cash,
which includes repayment of an anticipated $47.2 million of Antares Homes debt. The transaction is subject to customary working capital
adjustments upon closing. Landsea Homes expects to fund the transaction with a combination of cash and borrowings under its revolving
credit facility. The transaction has been unanimously approved by the Board of Directors for Landsea Homes, and is expected to close in
early February of 2024, subject to the satisfaction of customary closing conditions. Upon closing of this transaction, Antares Homes employees
are expected to become part of the Landsea Homes team.
Commenting on the acquisition, Tommy McAden, President of Antares Homes,
said, “Landsea Homes’ veteran homebuilding leadership team is guided by many of the same principles that we have used to build
Antares Homes. The opportunity to introduce Landsea’s High Performance Homes concept to our region and become part of one of Texas’
up and coming homebuilders makes this the perfect fit for the Antares Homes team.”
The Dallas-Fort Worth housing market has remained strong, as inventory
remains limited, economic growth remains steady and urban development continues making DFW a vibrant metropolitan area. The region’s
robust job market and continued expansion demonstrates the attractiveness and resilience of the DFW economy, and continues to attract
diverse industries and opportunities. Fort Worth remains one of the fastest-growing regions in the country.
Vestra Advisors LLC served as exclusive financial advisor to Landsea Homes.
For more information about Landsea Homes, visit www.landseahomes.com.
About Landsea
Homes Corporation
Landsea Homes Corporation (Nasdaq: LSEA) is
a publicly traded residential homebuilder based in Dallas, Texas that designs and builds best-in-class homes and sustainable master-planned
communities in some of the nation’s most desirable markets. The company has developed homes and communities in New York, Boston,
New Jersey, Arizona, Florida, Colorado, Texas and throughout California in Silicon Valley, Los Angeles, and Orange County. Landsea
Homes was named the 2022 winner of the prestigious Builder of the Year award, presented by BUILDER magazine, in recognition of a historical
year of transformation.
An award-winning homebuilder that builds suburban, single-family detached
and attached homes, mid-and high-rise properties, and master-planned communities, Landsea Homes is known for creating inspired places
that reflect modern living and provides homebuyers the opportunity to “Live in Your Element.” Our homes allow people to live
where they want to live, how they want to live – in a home created especially for them.
Driven by a pioneering commitment
to sustainability, Landsea Homes’ High Performance Homes are responsibly designed to take advantage of the latest innovations
with home automation technology supported by Apple®. Homes include features that make life easier and provide energy savings that
allow for more comfortable living at a lower cost through sustainability features that contribute to healthier living for both homeowners
and the planet.
Led by a veteran team of industry professionals who boast years of worldwide
experience and deep local expertise, Landsea Homes is committed to positively enhancing the lives of our homebuyers, employees, and stakeholders
by creating an unparalleled lifestyle experience that is unmatched.
For more information on Landsea Homes, visit: www.landseahomes.com.
Forward-Looking Statements
Certain statements in this press release may constitute “forward-looking
statements” within the meaning of the federal securities laws, including, but not limited to, our expectations for future financial
performance, business strategies or expectations for our business. These statements constitute projections, forecasts and forward-looking
statements, and are not guarantees of performance. Landsea Homes cautions that forward-looking statements are subject to numerous assumptions,
risks and uncertainties, which change over time. Words such as “may,” “can,” “should,” “will,”
“estimate,” “plan,” “project,” “forecast,” “intend,” “expect,”
“anticipate,” “believe,” “seek,” “target,” “look,” or similar expressions
may identify forward-looking statements. Specifically, forward-looking statements may include statements relating to:
*the completion or benefits of the proposed transaction with Antares Homes
(the “Acquisition”);
*the future financial performance of Landsea Homes;
*changes in the market for Landsea Homes’ products and services;
and
*other expansion plans and opportunities.
These forward-looking statements are based on information available as
of the date of the press release and our management’s current expectations, forecasts and assumptions, and involve a number of judgments,
risks and uncertainties that may cause actual results or performance to be materially different from those expressed or implied by these
forward-looking statements.
These risks and uncertainties include, but are not limited to, the risk
factors described by Landsea Homes in its filings with the Securities and Exchange Commission (“SEC”). These risk factors
and those identified elsewhere in this press release, among others, could cause actual results to differ materially from historical performance
and include, but are not limited to:
*the ability to close the Acquisition on the anticipated timeline, or
at all;
*the ability to recognize the anticipated benefits of the Acquisition,
which may be affected by, among other things, competition, the ability to integrate the acquired business and the ability of the acquired
business to grow and manage growth profitably;
*costs related to the Acquisition;
*the ability to maintain the listing of Landsea Homes’ securities
on Nasdaq;
*the outcome of any legal proceedings that may be instituted against the
Company;
*changes in applicable laws or regulations;
*the inability to launch new Landsea Homes products or services or to
profitably expand into new markets;
*the possibility that the Company may be adversely affected by other economic,
business, and/or competitive factors; and
*other risks and uncertainties indicated in Landsea Homes’ SEC reports
or documents filed or to be filed with the SEC by Landsea Homes.
Accordingly, forward-looking statements should not be relied upon as representing
our views as of any subsequent date, and you should not place undue reliance on these forward-looking statements in deciding whether or
not to invest in our securities. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances
after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable
securities laws.
###
Media Contact:
Annie Noebel
Cornerstone Communications
(949) 449-2527
anoebel@cornerstonecomms.com
Investor Relations Contact:
Drew Mackintosh, CFA
Mackintosh Investor Relations, LLC
drew@mackintoshir.com
(512) 243-5009
v3.23.4
Cover
|
Jan. 08, 2024 |
Document Type |
8-K
|
Amendment Flag |
false
|
Document Period End Date |
Jan. 08, 2024
|
Entity File Number |
001-38545
|
Entity Registrant Name |
LANDSEA
HOMES CORPORATION
|
Entity Central Index Key |
0001721386
|
Entity Tax Identification Number |
82-2196021
|
Entity Incorporation, State or Country Code |
DE
|
Entity Address, Address Line One |
1717 McKinney Ave.
|
Entity Address, Address Line Two |
Suite 1000
|
Entity Address, City or Town |
Dallas
|
Entity Address, State or Province |
TX
|
Entity Address, Postal Zip Code |
75202
|
City Area Code |
(949)
|
Local Phone Number |
345-8080
|
Written Communications |
false
|
Soliciting Material |
false
|
Pre-commencement Tender Offer |
false
|
Pre-commencement Issuer Tender Offer |
false
|
Entity Emerging Growth Company |
false
|
Common Stock, par value $0.0001 per share |
|
Title of 12(b) Security |
Common Stock, par value $0.0001 per share
|
Trading Symbol |
LSEA
|
Security Exchange Name |
NASDAQ
|
Warrants exercisable for Common Stock |
|
Title of 12(b) Security |
Warrants exercisable for Common Stock
|
Trading Symbol |
LSEAW
|
Security Exchange Name |
NASDAQ
|
X |
- DefinitionBoolean flag that is true when the XBRL content amends previously-filed or accepted submission.
+ References
+ Details
Name: |
dei_AmendmentFlag |
Namespace Prefix: |
dei_ |
Data Type: |
xbrli:booleanItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionFor the EDGAR submission types of Form 8-K: the date of the report, the date of the earliest event reported; for the EDGAR submission types of Form N-1A: the filing date; for all other submission types: the end of the reporting or transition period. The format of the date is YYYY-MM-DD.
+ References
+ Details
Name: |
dei_DocumentPeriodEndDate |
Namespace Prefix: |
dei_ |
Data Type: |
xbrli:dateItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionThe type of document being provided (such as 10-K, 10-Q, 485BPOS, etc). The document type is limited to the same value as the supporting SEC submission type, or the word 'Other'.
+ References
+ Details
Name: |
dei_DocumentType |
Namespace Prefix: |
dei_ |
Data Type: |
dei:submissionTypeItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionAddress Line 1 such as Attn, Building Name, Street Name
+ References
+ Details
Name: |
dei_EntityAddressAddressLine1 |
Namespace Prefix: |
dei_ |
Data Type: |
xbrli:normalizedStringItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionAddress Line 2 such as Street or Suite number
+ References
+ Details
Name: |
dei_EntityAddressAddressLine2 |
Namespace Prefix: |
dei_ |
Data Type: |
xbrli:normalizedStringItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- Definition
+ References
+ Details
Name: |
dei_EntityAddressCityOrTown |
Namespace Prefix: |
dei_ |
Data Type: |
xbrli:normalizedStringItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionCode for the postal or zip code
+ References
+ Details
Name: |
dei_EntityAddressPostalZipCode |
Namespace Prefix: |
dei_ |
Data Type: |
xbrli:normalizedStringItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionName of the state or province.
+ References
+ Details
Name: |
dei_EntityAddressStateOrProvince |
Namespace Prefix: |
dei_ |
Data Type: |
dei:stateOrProvinceItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionA unique 10-digit SEC-issued value to identify entities that have filed disclosures with the SEC. It is commonly abbreviated as CIK.
+ ReferencesReference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Exchange Act -Number 240 -Section 12 -Subsection b-2
+ Details
Name: |
dei_EntityCentralIndexKey |
Namespace Prefix: |
dei_ |
Data Type: |
dei:centralIndexKeyItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionIndicate if registrant meets the emerging growth company criteria.
+ ReferencesReference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Exchange Act -Number 240 -Section 12 -Subsection b-2
+ Details
Name: |
dei_EntityEmergingGrowthCompany |
Namespace Prefix: |
dei_ |
Data Type: |
xbrli:booleanItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionCommission file number. The field allows up to 17 characters. The prefix may contain 1-3 digits, the sequence number may contain 1-8 digits, the optional suffix may contain 1-4 characters, and the fields are separated with a hyphen.
+ References
+ Details
Name: |
dei_EntityFileNumber |
Namespace Prefix: |
dei_ |
Data Type: |
dei:fileNumberItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionTwo-character EDGAR code representing the state or country of incorporation.
+ References
+ Details
Name: |
dei_EntityIncorporationStateCountryCode |
Namespace Prefix: |
dei_ |
Data Type: |
dei:edgarStateCountryItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionThe exact name of the entity filing the report as specified in its charter, which is required by forms filed with the SEC.
+ ReferencesReference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Exchange Act -Number 240 -Section 12 -Subsection b-2
+ Details
Name: |
dei_EntityRegistrantName |
Namespace Prefix: |
dei_ |
Data Type: |
xbrli:normalizedStringItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionThe Tax Identification Number (TIN), also known as an Employer Identification Number (EIN), is a unique 9-digit value assigned by the IRS.
+ ReferencesReference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Exchange Act -Number 240 -Section 12 -Subsection b-2
+ Details
Name: |
dei_EntityTaxIdentificationNumber |
Namespace Prefix: |
dei_ |
Data Type: |
dei:employerIdItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionLocal phone number for entity.
+ References
+ Details
Name: |
dei_LocalPhoneNumber |
Namespace Prefix: |
dei_ |
Data Type: |
xbrli:normalizedStringItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act.
+ ReferencesReference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Exchange Act -Number 240 -Section 13e -Subsection 4c
+ Details
Name: |
dei_PreCommencementIssuerTenderOffer |
Namespace Prefix: |
dei_ |
Data Type: |
xbrli:booleanItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act.
+ ReferencesReference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Exchange Act -Number 240 -Section 14d -Subsection 2b
+ Details
Name: |
dei_PreCommencementTenderOffer |
Namespace Prefix: |
dei_ |
Data Type: |
xbrli:booleanItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionTitle of a 12(b) registered security.
+ ReferencesReference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Exchange Act -Number 240 -Section 12 -Subsection b
+ Details
Name: |
dei_Security12bTitle |
Namespace Prefix: |
dei_ |
Data Type: |
dei:securityTitleItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionName of the Exchange on which a security is registered.
+ ReferencesReference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Exchange Act -Number 240 -Section 12 -Subsection d1-1
+ Details
Name: |
dei_SecurityExchangeName |
Namespace Prefix: |
dei_ |
Data Type: |
dei:edgarExchangeCodeItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as soliciting material pursuant to Rule 14a-12 under the Exchange Act.
+ ReferencesReference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Exchange Act -Section 14a -Number 240 -Subsection 12
+ Details
Name: |
dei_SolicitingMaterial |
Namespace Prefix: |
dei_ |
Data Type: |
xbrli:booleanItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionTrading symbol of an instrument as listed on an exchange.
+ References
+ Details
Name: |
dei_TradingSymbol |
Namespace Prefix: |
dei_ |
Data Type: |
dei:tradingSymbolItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as written communications pursuant to Rule 425 under the Securities Act.
+ ReferencesReference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Securities Act -Number 230 -Section 425
+ Details
Name: |
dei_WrittenCommunications |
Namespace Prefix: |
dei_ |
Data Type: |
xbrli:booleanItemType |
Balance Type: |
na |
Period Type: |
duration |
|
X |
- Details
Name: |
us-gaap_StatementClassOfStockAxis=LSEA_CommonStockParValue0.0001PerShareMember |
Namespace Prefix: |
|
Data Type: |
na |
Balance Type: |
|
Period Type: |
|
|
X |
- Details
Name: |
us-gaap_StatementClassOfStockAxis=LSEA_WarrantsExercisableForCommonStockMember |
Namespace Prefix: |
|
Data Type: |
na |
Balance Type: |
|
Period Type: |
|
|
Landsea Homes (NASDAQ:LSEA)
Historical Stock Chart
From Apr 2024 to May 2024
Landsea Homes (NASDAQ:LSEA)
Historical Stock Chart
From May 2023 to May 2024