Exhibit (e)(4)
AGREEMENT AND PLAN OF MERGER
by and among
PARTNERSHIP ACQUISITION CO.
and
CONDO ACQUISITION CO.
(as Purchasers),
FORTRESS MANAGEMENT, INC.
and
FORTRESS HOLDING-VIRGINIA, LLC.
(as the Partners)
and
THE PARTNERSHIPS
(listed on the signature pages herein)
dated as of June 14, 2002
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which
it is attached but is inserted for convenience only.
Page
No.
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ARTICLE I THE MERGER............................................................................................ 2
1.01 The Merger........................................................................................ 2
1.02 Closing........................................................................................... 2
1.03 Deposit Amount.................................................................................... 2
1.04 Effective Time.................................................................................... 3
1.05 Organizational Documents of the Surviving Entities................................................ 3
1.06 Directors and Officers of the Surviving Entities.................................................. 3
1.07 Effects of the Merger............................................................................. 3
1.08 Pre-Tax Loss Adjustment........................................................................... 3
1.09 Insurance Matters................................................................................. 4
1.10 401(k) Plan....................................................................................... 4
1.11 Sale of Fortress Management Shares................................................................ 5
1.12 Indemnity Agreement............................................................................... 5
1.13 Further Assurances................................................................................ 6
ARTICLE II CONVERSION OF THE PARTNERSHIP INTERESTS.............................................................. 6
2.01 Conversion of the Partnership Interests........................................................... 6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE PARTNERS AND THE PARTNERSHIPS................................. 6
3.01 Formation; Qualification; Capitalization.......................................................... 6
3.02 Authority......................................................................................... 7
3.03 No Conflicts...................................................................................... 7
3.04 Governmental Approvals and Filings................................................................ 8
3.05 No Continuing Obligations......................................................................... 8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASERS......................................................... 8
4.01 Organization...................................................................................... 8
4.02 Authority......................................................................................... 8
4.03 No Conflicts...................................................................................... 8
4.04 Financing......................................................................................... 9
ARTICLE V COVENANTS OF THE PARTNERS AND THE PARTNERSHIPS........................................................ 9
5.01 Regulatory and Other Approvals.................................................................... 9
5.02 Conduct of Business............................................................................... 9
5.03 Fulfillment of Conditions......................................................................... 10
ARTICLE VI COVENANTS OF PURCHASER............................................................................... 10
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6.01 Regulatory and Other Approvals.................................................................... 10
6.02 Fulfillment of Conditions......................................................................... 10
ARTICLE VII CONDITIONS TO OBLIGATIONS OF PURCHASERS............................................................. 11
7.01 Representations and Warranties.................................................................... 11
7.02 Performance....................................................................................... 11
7.03 Officers' Certificates............................................................................ 11
7.04 Orders and Laws................................................................................... 11
7.05 Regulatory Consents and Approvals................................................................. 11
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF THE PARTNERSHIPS...................................................... 12
8.01 Representations and Warranties.................................................................... 12
8.02 Performance....................................................................................... 12
8.03 Officers' Certificates............................................................................ 12
8.04 Orders and Laws................................................................................... 12
8.05 Regulatory Consents and Approvals................................................................. 12
8.06 Waiver Letter..................................................................................... 13
8.07 Computer Access and Transfer Agreement............................................................ 13
ARTICLE IX SURVIVAL; NO OTHER REPRESENTATIONS................................................................... 13
9.01 Survival; No Other Representations................................................................ 13
ARTICLE X TERMINATION........................................................................................... 13
10.01 Termination...................................................................................... 13
10.02 Effect of Termination............................................................................ 14
ARTICLE XI DEFINITIONS.......................................................................................... 14
11.01 Definitions...................................................................................... 14
ARTICLE XII MISCELLANEOUS....................................................................................... 18
12.01 Notices.......................................................................................... 18
12.02 Entire Agreement................................................................................. 19
12.03 Expenses......................................................................................... 20
12.04 Mortgage Services Arrangement.................................................................... 20
12.05 Public Announcements............................................................................. 20
12.06 Confidentiality.................................................................................. 20
12.07 Waiver........................................................................................... 20
12.08 Amendment........................................................................................ 21
12.09 No Third Party Beneficiary....................................................................... 21
12.10 No Assignment; Binding Effect.................................................................... 21
12.11 Headings......................................................................................... 21
12.12 Invalid Provisions............................................................................... 21
12.13 Governing Law.................................................................................... 21
12.14 Counterparts..................................................................................... 21
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EXHIBITS AND ANNEXES
EXHIBIT A - Escrow Agreement
EXHIBIT B-1 - Officer's Certificate
EXHIBIT B-2 - Officer's Certificate
EXHIBIT C-1 - Secretary's Certificate
EXHIBIT C-2 - Secretary's Certificate
EXHIBIT D - Officer's Certificate of Purchaser
EXHIBIT E - Secretary's Certificate of Purchaser
EXHIBIT F - Waiver Letter
EXHIBIT G - Computer Access and Transfer Agreement
EXHIBIT H - Joint Venture Agreement
ANNEX I - Allocation of Merger Consideration among the Partnerships
ANNEX II - Allocation of Escrow amount among the Partners
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of June 14, 2002, is made
and entered into by and among Partnership Acquisition Co., a Texas corporation
("Homebuilding Purchaser"), and Condo Acquisition Co., a Texas corporation
("Condo Purchaser" and, together with Homebuilding Purchaser, "Purchasers"),
each of the limited partnerships referred to below (each, a "Partnership" and
collectively, the "Partnerships"), Fortress Management, Inc., a Texas
corporation and sole general partner of each Partnership ("Fortress
Management"), and Fortress Holding-Virginia, LLC, a Delaware limited liability
company and sole limited partner of each Partnership ("FHV" and, together with
Fortress Management, the "Partners"). Capitalized terms not otherwise defined
herein have the meanings set forth in Section 11.01.
W I T N E S S E T H:
WHEREAS, Fortress Management is the sole or managing general partner of
each of the following Partnerships: Wilshire Homes, Ltd., a Texas limited
partnership, Wilshire Homes San Antonio, Ltd., a Texas limited partnership,
▇▇▇▇▇▇▇▇▇▇ Homes of Texas, Ltd., a Texas limited partnership (collectively, the
"Homebuilding Partnerships"), ▇▇▇▇▇▇ Condo Partners, Ltd., a Texas limited
partnership, and Retreat at ▇▇▇▇▇▇▇▇ Oaks, Ltd., a Texas limited partnership
(collectively, the "Condo Partnerships");
WHEREAS, FHV is the sole limited partner of each Partnership;
WHEREAS, Purchasers and Fortress Management each have determined that
it is in the best interests of Purchasers and Fortress Management (in its
individual capacity, as the sole or managing general partner of each
Partnership) to merge each Partnership with and into Purchasers and each has
approved the merger of each Partnership, upon the terms and subject to the
conditions contained herein (the "Merger");
WHEREAS, FHV has approved the merger of the Partnerships into
Purchasers in accordance with the terms of this Agreement;
WHEREAS, upon the consummation of the Merger, the Partners will have
the right to receive cash consideration for each of their partnership interests
in the Partnerships (the "Partnership Interests"); and
WHEREAS, for federal income tax purposes, it is intended that the
Merger of each Partnership shall qualify, under the provisions of Section 1001
of the Code, as a sale of all of the assets of each such Partnership in exchange
for each such Partnership's allocable share of the Merger Consideration (as
defined hereafter) as set forth on Annex I hereto, followed by a distribution of
the Merger Consideration by each Partnership to its respective Partners in
complete liquidation of each Partnership.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
1.01 The Merger. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined in Section 1.04), each Homebuilding
Partnership shall be merged with and into Homebulding Purchaser and each Condo
Partnership shall be merged with and into Condo Purchaser in accordance with the
Revised Limited Partnership Act of the State of Texas (the "TRLPA"), whereupon
the separate existence of each Partnership shall cease and Purchasers shall
continue as the surviving entities of the Merger (the "Surviving Entities"). The
Partnerships and Purchasers are sometimes referred to herein as the "Constituent
Entities". As a result of the Merger, the Partnership Interests of each
Partnership shall be converted and cancelled in the manner provided in Article
II.
1.02 Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
10.01, and subject to the satisfaction or waiver (where applicable) of the
conditions set forth in Articles VII and VIII, the closing of the Merger (the
"Closing") will take place at the offices of Town & Country Title, Austin,
Texas, at 10:00 a.m., local time, on the later to occur of (i) June 26, 2002 or
(ii) the second Business Day after the day on which the last of the conditions
set forth in Articles VII and VIII has been satisfied or waived, unless another
date, time or place is agreed to in writing by the parties hereto (the "Closing
Date"). At the Closing, Purchasers will pay the Merger Consideration (as defined
in Section 2.01(a)) to the Partners in accordance with Annex I hereto, less each
Partner's pro rata share of the Deposit Amount, by wire transfer of immediately
available funds to the account of the Partners listed in Section 12.01. At the
Closing there shall also be delivered to the Partners, the Partnerships and
Purchasers the certificates and other documents and instruments required to be
delivered under Sections 7.03 and 8.03.
1.03 Deposit Amount. Upon execution of this Agreement, Purchasers will
deliver to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq., as escrow agent (the "Escrow Agent"), an
amount in cash equal to $1,500,000 (the "Deposit Amount"), by wire transfer of
immediately available funds to the account of the Escrow Agent set forth in
Section 10 of the escrow agreement being entered into on the date hereof by and
among the Partners, Purchasers and the Escrow Agent, in the form of Exhibit A
hereto (the "Escrow Agreement"). At the Closing, the Escrow Agent shall deliver
the Deposit Amount to the Partners, and the Partners shall apply the Deposit
Amount towards payment of the Merger Consideration.
1.04 Effective Time. At the Closing, certificates of merger (the
"Certificates of Merger") shall be duly prepared and executed by the Surviving
Entities and each Partnership and thereafter promptly delivered to the Secretary
of State of the State of Texas for filing, as
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provided in Section 2.11 of the TRLPA, as soon as practicable on the Closing
Date. The Merger shall become effective at the time of the filing of the
applicable Certificate of Merger with the Secretary of State of the State of
Texas (the date and time of such filing being referred to herein as the
"Effective Time").
1.05 Organizational Documents of the Surviving Entities. The articles
of incorporation of Purchasers before the Merger of each Partnership shall be
and remain the articles of incorporation of Purchasers after the Effective Time,
until the same shall thereafter be altered, amended, or repealed in accordance
with law and Purchasers' articles of incorporation. The bylaws of Purchasers as
in effect at the Effective Time shall be and remain the bylaws of Purchasers as
the Surviving Entities, until the same shall thereafter be altered, amended, or
repealed in accordance with law, Purchasers' articles of incorporation or such
bylaws.
1.06 Directors and Officers of the Surviving Entities. At the Effective
Time, each of the persons who was serving as an officer of a Purchaser
immediately prior to the Effective Time shall continue to be an officer of such
Purchaser and shall continue to serve in such capacity at the pleasure of the
board of directors of such Purchaser or, if earlier, until their respective
death or resignation. At the Effective Time, each of the persons who was serving
as a director of a Purchaser immediately prior to the Effective Time shall
continue to be a director of such Purchaser.
1.07 Effects of the Merger. Subject to the foregoing, the effects of
the Merger shall be as provided in the applicable provisions of the TRLPA.
1.08 Pre-Tax Loss Adjustment. (a) Not later than 45 days following the
Closing Date, Fortress Management, on behalf of the Partners, shall deliver to
Purchasers a certificate and supporting documentation (collectively, the
"Pre-Tax Income/Loss Certificate"), prepared by Fortress Management, in good
faith consistent with past practice and in accordance with generally accepted
accounting principles, setting forth thereon Fortress Management's calculation
of the Partnerships' Pre-Tax Income/Loss for the period beginning June 14, 2002
and ending on the Closing Date (the "Interim Period"). "Pre-Tax Income/Loss"
means the consolidated net income or net loss of the Partnerships before income
taxes and goodwill amortization. Purchasers shall have 15 Business Days (the
"Dispute Period") after receipt of the Pre-Tax Income/Loss Certificate to
independently verify that the determination of Pre-Tax Income/Loss is accurate
and to give written notice of any discrepancies to Fortress Management. If
Purchasers fail to provide written notice of any discrepancies with Fortress
Management's determination of the Pre-Tax Income/Loss within the Dispute Period,
then Fortress Management's determination of the Pre-Tax Income/Loss shall be
final and binding on each of the Purchasers and the Partnerships for all
purposes. In the event that Purchasers notify Fortress Management of any
discrepancies within the Dispute Period, and if Purchasers and Fortress
Management cannot resolve the discrepancies within 10 Business Days after such
notice is delivered to Fortress Management, their dispute shall be promptly
submitted to an independent, nationally-recognized public accounting firm
jointly selected by Purchasers and Fortress Management (the "Independent
Accountant"), which shall conduct such additional review as is necessary to
resolve the specific disagreements referred to it and, based thereon, shall
determine the Pre-Tax Income/Loss. The review of the Independent Accountant will
be restricted in scope
3
to address only those matters as to which Purchasers and Fortress Management
have not reached agreement pursuant to the preceding sentence. The Independent
Accountant's determination of the Pre-Tax Income/Loss, which shall be completed
as promptly as practicable but in no event later than 15 Business Days following
its selection, shall be confirmed by the Independent Accountant in writing to,
and shall be final and binding on, each of Purchasers and the Partnerships for
all purposes. The fees and expenses of the Independent Accountant shall be
prorated between the Partners, on the one hand, and Purchasers, on the other, in
proportion to the amounts in dispute resolved against each of them.
(b) At the Closing, in addition to and not including the Merger
Consideration, Purchasers shall place an additional sum of $150,000 into escrow
with the Escrow Agent pursuant to the terms of the Escrow Agreement (the
"Escrow"). To the extent that there is a Pre-Tax Loss for the Interim Period,
and such Pre-Tax Loss is less than $150,000, the Escrow Agent shall pay (i) to
the account of the Partners listed in Section 12.01 (in accordance with Annex II
hereto) the amount of such Pre-Tax Loss and (ii) to the account of Purchasers
listed in Section 12.01 the amount by which $150,000 exceeds the Pre-Tax Loss,
after payment to the Partners of the amount of the Pre-Tax Loss, in each case,
by wire transfer of immediately available funds. To the extent that there is a
Pre-Tax Loss for the Interim Period, and such Pre-Tax Loss is equal to or
greater than $150,000, the Escrow Agent shall pay $150,000 to the account of the
Partners listed in Section 12.01 (in accordance with Annex II hereto) and
Purchasers shall pay the amount by which the Pre-Tax Loss exceeds $150,000, to
the account of the Partners by wire transfer of immediately available funds. Any
payments to be made pursuant to this paragraph (b) shall be made within three
(3) Business Days after the earliest to occur of (i) the date on which
Purchasers notify Fortress Management of Purchasers' agreement with the
computation of Pre-Tax Income/Loss for the Interim Period as reflected on the
Pre-Tax Income/Loss Certificate delivered by Fortress Management, (ii) the
expiration of the Dispute Period without Purchasers having given notice of any
discrepancies to Fortress Management or (iii) the date every discrepancy
regarding the computation of Pre-Tax Income/Loss for the Interim Period is
resolved by the Independent Accountant as provided above.
1.09 Insurance Matters. The Fortress Group, Inc. ("Fortress") shall
continue to list or cause to be listed the Partnerships as named insureds under
each insurance policy covering Fortress since May 15, 1996 insofar as they
relate to the activities of the Partnerships prior to the Closing Date. In
addition, Fortress shall cause Purchasers to be named as additional insureds
under each of the such policies insofar as they relate to the activities of the
Partnerships prior to the Closing Date.
1.10 401(k) Plan. Fortress shall, with respect to all employees who are
participants in The Fortress Group, Inc. 401(k) Profit Sharing Plan (the
"Fortress 401(k) Plan") and are employees of the Partnerships to be merged with
either Purchaser, contribute and allocate to the accounts of such participants
all employer contributions (including matching contributions with respect to all
employee contributions and salary deferrals) for the portion of the current plan
year ending on the Closing Date that would otherwise have been made to the
Fortress 401(k) Plan for the current 2002 plan year but for the transactions
contemplated hereby, without regard to any year of service or last day of year
active participant requirements. Fortress shall cause the accounts of all
participants in the Fortress 401(k) Plan to be fully vested as of the
4
Closing Date. As of the Closing Date, any entity merged into either Purchaser
shall cease to be eligible to participate in the Fortress 401(k) Plan.
1.11 Sale of Fortress Management Shares. (a) Fortress shall have the
right (the "Sale Right"), to be exercised at any time on or prior to the 30th
day following the Closing Date (the "Exercise Date"), to require Purchasers to
purchase from Fortress all, but not less than all, of the 100 outstanding shares
of common stock, par value $.01 per share (the "Shares"), of Fortress Management
owned by Fortress, at an aggregate purchase price of $100 (the "Share
Consideration").
(b) The Sale Right may be exercised by Fortress by delivery of a notice
(the "Exercise Notice") to Purchasers on or prior to the Exercise Date, stating
that Fortress intends to exercise the Sale Right and certifying that Fortress
has valid title to the Shares, free and clear of all liens. As soon as
practicable after the exercise of the Sale Right, and in any event within five
Business Days thereafter, Purchasers shall pay to Fortress the Share
Consideration, by wire transfer of immediately available funds to the account of
Fortress listed in the Exercise Notice, or by any other means mutually agreed to
by Purchasers and Fortress. Simultaneously, Fortress shall assign, sell,
transfer and convey to Purchasers all of its interest in and to the Shares, by
delivering to Purchasers a certificate or certificates representing the Shares,
duly endorsed in blank or accompanied by duly executed stock powers endorsed in
blank.
(c) Purchasers agree that with respect to the sale of the Shares, they
will, if requested to do so in writing by Fortress, make an election pursuant to
Section 338(h)(10) of the Code and all comparable elections under the relevant
provisions of state and local tax Laws (the "338 Election") and complete and
execute all related forms in form reasonably satisfactory to Fortress, including
without limitation Form 8023 (Elections under Section 338 on Corporations Making
Qualified Stock Purchases).
(d) As a material inducement to Purchasers to purchase the Shares,
Fortress represents and warrants to Purchasers that Fortress Management has no
unpaid state or federal income tax liabilities of any kind or character and will
have no state or federal income tax liabilities for the current fiscal year.
Fortress hereby agrees to defend, indemnify and hold Purchasers harmless from
any state or federal income tax obligations of any kind or character, by audit
adjustment or otherwise, of Fortress Management attributable to any period of
time through the closing of the purchase of the Shares by Purchasers. The
indemnity herein made shall expressly cover and include any income tax arising
from the consummation of the Merger or from the 338 Election.
1.12 Indemnity Agreement. Purchasers agree to indemnify Fortress and
hold it harmless from and against any obligations, liabilities or losses arising
under (i) any of the leases listed on Section 3.03 of the Disclosure Schedule
and (ii) any indemnity, surety or guaranty agreement entered into on behalf of
any Partnership by Fortress with HOME of Texas prior to the date hereof and
(iii) any guaranty of Fortress under any of the bonds listed on Section 1.12 of
the Disclosure Schedule.
1.13 Further Assurances. Each party hereto will, either prior to or
after the Effective Time, execute such further documents, instruments, deeds,
bills of sale, assignments
5
and assurances and take such further actions as may reasonably be requested by
one or more of the others to consummate the Merger, to vest the Surviving
Entities with title to all assets, properties, rights, and approvals of either
of the Constituent Entities or to effect the other purposes of this Agreement.
ARTICLE II
CONVERSION OF THE PARTNERSHIP INTERESTS
2.01 Conversion of the Partnership Interests. At the Effective Time, by
virtue of the Merger and without any action on the part of the Partners:
(a) Purchase Price Allocation for Each Partnership. Each Partnership
Interest outstanding immediately prior to the Effective Time shall be converted
into the right to receive that portion of the $23,000,000 in cash as is
allocated to the assets of each such Partnership, as set forth on Annex I hereto
(the "Merger Consideration"). Purchasers and each Partnership agree that for all
income tax purposes including but not limited to the application of Section 1060
of the Code, Purchasers and each such Partnership shall allocate among the
assets sold the Merger Consideration in accordance with Annex I hereto, and that
such allocations will be used by Purchasers and each such Partnership for
purposes of meeting their respective filing obligations on Form 8594 with
respect to each such Merger.
(b) Cancellation of Partnership Interests. The Partnership Interest of
each Partnership, when converted into the right to receive cash, shall no longer
be outstanding and shall automatically be cancelled and retired and shall cease
to exist, and each holder of any such Partnership Interest shall cease to have
any rights with respect thereto, except the right to receive the amount of cash
to be delivered in consideration thereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PARTNERS AND
THE PARTNERSHIPS
Each Partner and Partnership hereby represents and warrants as of the
date hereof to Purchasers as follows:
3.01 Formation; Qualification; Capitalization. Fortress Management is a
corporation duly incorporated and validly existing under the laws of the state
of Texas. FHV is a limited liability company duly organized and validly existing
under the laws of the state of Delaware. Each Partnership is a limited
partnership duly formed under the TRLPA, and is validly existing under the laws
of the State of Texas. Each Partnership has all requisite partnership power and
authority to own, operate or lease its properties and to carry on its business
as now being conducted. All of the outstanding Partnership Interests of the
Partnerships are free of all liens, encumbrances, defects and preemptive rights
and are fully paid.
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3.02 Authority. Each Partner and Partnership has all requisite power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of each Partner and Partnership. This Agreement has been duly and validly
executed and delivered by each Partner and Partnership and constitutes the
legal, valid and binding obligation of each Partner and Partnership enforceable
against such Partner or Partnership, as the case may be, in accordance with its
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights or by general principles of equity.
3.03 No Conflicts. The execution and delivery by each Partner and
Partnership of this Agreement does not, and the performance by the Partners and
the Partnerships of their obligations under this Agreement and the consummation
of the transactions contemplated hereby will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the partnership agreement of each
Partnership;
(b) conflict with or result in a violation or breach of any term or
provision of any Law or Order applicable to any Partner or Partnership, (other
than such conflicts, violations or breaches (i) which could not in the aggregate
reasonably be expected to adversely affect the validity or enforceability of
this Agreement or to have a material adverse effect on the Partners or
Partnerships or (ii) as would occur solely as a result of the identity or the
legal or regulatory status of Purchasers or any of their affiliates); or
(c) except as disclosed in Section 3.03 of the Disclosure Schedule or
as could not, individually or in the aggregate, reasonably be expected to be
materially adverse to the Partnerships or to adversely affect the ability of any
Partner or Partnership to consummate the transactions contemplated hereby or to
perform its obligations hereunder or thereunder, (i) conflict with or result in
a violation or breach of, (ii) constitute (with or without notice or lapse of
time or both) a default under, (iii) require a Partner or Partnership to obtain
any consent or approval of any Person under the terms of, (iv) result in or give
to any Person any right of termination, cancellation, or modification under, or
(v) result in the creation or imposition of any Lien upon a Partner or
Partnership or any of their Assets and Properties under, any Contract or License
to which a Partner or Partnership is a party or by which any of its Assets and
Properties is bound.
3.04 Governmental Approvals and Filings. Except as disclosed in Section
3.04 of the Disclosure Schedule, and except for the filing of the applicable
Certificate of Merger with the Secretary of State of the State of Texas, no
consent, approval or action of, filing with or notice to any Governmental or
Regulatory Authority on the part of any Partner or Partnership is required in
connection with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby.
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3.05 No Continuing Obligations. Except as disclosed in Section 3.05 of
the Disclosure Schedule or as otherwise provided for herein or in connection
with the agreements, instruments and other transactions contemplated hereby,
following the Merger there will be no material obligations owing to the Partners
by the Partnerships or the Purchasers.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
Purchasers hereby represent and warrant as of the date hereof to the
Partners and the Partnerships as follows:
4.01 Organization. Each Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas. Each
Purchaser has full corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby.
4.02 Authority. The execution and delivery by each Purchaser of this
Agreement, and the performance by such Purchaser of its obligations hereunder,
have been duly and validly authorized by the board of directors of such
Purchaser, no other corporate action on the part of such Purchaser being
necessary. This Agreement has been duly and validly executed and delivered by
each Purchaser and constitutes the legal, valid and binding obligation of such
Purchaser enforceable against such Purchaser in accordance with its terms.
4.03 No Conflicts. The execution and delivery by each Purchaser of this
Agreement does not, and the performance by such Purchaser of its obligations
under this Agreement and the consummation of the transactions contemplated
hereby will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the articles of incorporation or bylaws (or
other comparable corporate charter document) of such Purchaser;
(b) conflict with or result in a violation or breach of any term or
provision of any Law or Order applicable to such Purchaser (other than such
conflicts, violations or breaches which could not in the aggregate reasonably be
expected to adversely affect the validity or enforceability of this Agreement);
or
(c) except as could not, individually or in the aggregate, reasonably
be expected to adversely affect the ability of such Purchaser to consummate the
transactions contemplated hereby or to perform its obligations hereunder, (i)
conflict with or result in a violation or breach of, (ii) constitute (with or
without notice or lapse of time or both) a default under, (iii) require such
Purchaser to obtain any consent or approval of any Person under the terms of, or
(iv) result in the creation or imposition of any Lien upon such Purchaser or any
of its Assets or Properties under, any Contract or License to which such
Purchaser is a party or by which any of its Assets and Properties is bound.
8
4.04 Financing. Purchasers have received a letter from Hearthstone,
Inc. pursuant to which such entity has committed to make available to Purchasers
funds sufficient to pay the Merger Consideration and to make all other necessary
payments of fees and expenses in connection with the transactions contemplated
by this Agreement.
ARTICLE V
COVENANTS OF THE PARTNERS AND THE PARTNERSHIPS
Each Partner and Partnership covenants and agrees with Purchasers that,
at all times from and after the date hereof until the Closing, each Partner and
Partnership will comply with all covenants and provisions of this Article V,
except to the extent Purchasers may otherwise consent in writing.
5.01 Regulatory and Other Approvals. Each Partner and Partnership will,
as promptly as practicable, (a) take all commercially reasonable steps necessary
or desirable to obtain all consents, approvals or actions of, make all filings
with and give all notices to Governmental or Regulatory Authorities or any other
Person required of such Partner or Partnership, as the case may be, to
consummate the transactions contemplated hereby, including without limitation
those described in Sections 3.03 and 3.04 of the Disclosure Schedule, (b)
provide such other information and communications to such Governmental or
Regulatory Authorities or other Persons as Purchasers or such Governmental or
Regulatory Authorities or other Persons may reasonably request in connection
therewith and (c) cooperate with Purchasers in connection with the performance
of its obligations under Sections 6.01 and 6.02. Each Partner and Partnership
will provide prompt notification to Purchasers when any such consent, approval,
action, filing or notice referred to in clause (a) above is obtained, taken,
made or given, as applicable, and will advise Purchasers of any communications
with any Governmental or Regulatory Authority or other Person regarding any of
the transactions contemplated by this Agreement.
5.02 Conduct of Business. The Partner and the Partnerships will conduct
the business of the Partnerships only in the ordinary course consistent with
past practice.
5.03 Fulfillment of Conditions. The Partners and the Partnerships will
execute and deliver at the Closing each agreement that the Partners and the
Partnerships are required hereby to execute and deliver as a condition to the
Closing, will take all commercially reasonable steps necessary or desirable and
proceed diligently and in good faith to satisfy each condition to the
obligations of Purchasers contained in this Agreement and will not intentionally
take or fail to take any action that could reasonably be expected to result in
the nonfulfillment of any such condition. Without limitation of the foregoing,
the Partners and the Partnerships will proceed diligently and in good faith to
cause the Closing to occur on or prior to the Termination Date.
9
ARTICLE VI
COVENANTS OF PURCHASER
Purchasers covenant and agree with the Partners and the Partnerships
that, at all times from and after the date hereof until the Closing, Purchasers
will comply with all covenants and provisions of this Article VI, except to the
extent the Partners or the Partnerships may otherwise consent in writing.
6.01 Regulatory and Other Approvals. Purchasers will, as promptly as
practicable, (a) take all commercially reasonable steps necessary or desirable
to obtain all consents, approvals or actions of, make all filings with and give
all notices to Governmental or Regulatory Authorities or any other Person
required of Purchasers to consummate the transactions contemplated hereby, (b)
provide such other information and communications to such Governmental or
Regulatory Authorities or other Persons as the Partnerships or such Governmental
or Regulatory Authorities or other Persons may reasonably request in connection
therewith and (c) cooperate with the Partners and Partnerships in connection
with the performance of their obligations under Sections 5.01. Purchasers will
provide prompt notification to the Partners and Partnerships when any such
consent, approval, action, filing or notice referred to in clause (a) above is
obtained, taken, made or given, as applicable, and will advise the Partners and
Partnerships of any communications (and, unless precluded by Law, provide copies
of any such communications that are in writing) with any Governmental or
Regulatory Authority or other Person regarding any of the transactions
contemplated by this Agreement.
6.02 Fulfillment of Conditions. Purchasers will execute and deliver at
the Closing each agreement that it is required hereby to execute and deliver as
a condition to the Closing, will take all commercially reasonable steps
necessary or desirable and proceed diligently and in good faith to satisfy each
condition to the obligations of the Partners and Partnerships contained in this
Agreement and will not take or fail to take any action that could reasonably be
expected to result in the nonfulfillment of any such condition. Without
limitation of the foregoing, Purchasers will proceed diligently and in good
faith to cause the Closing to occur on or prior to the Termination Date.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF PURCHASERS
The obligations of Purchasers hereunder to consummate the Merger are
subject to the fulfillment, at or before the Closing, of each of the following
conditions (all or any of which may be waived in whole or in part by Purchasers
in their sole discretion):
7.01 Representations and Warranties. The representations and warranties
made by the Partners and the Partnerships in this Agreement (other than those
made as of a specified date earlier than the date of this Agreement) shall be
true and correct in all material respects on and as of the Closing Date as
though such representations or warranties were made on and as of
10
the Closing Date, and the representations or warranties made as of a specified
date earlier than the Closing Date shall have been true and correct in all
material respects on and as of such earlier date.
7.02 Performance. The Partners and the Partnership shall have performed
and complied with, in all material respects, each agreement, covenant and
obligation required by this Agreement to be so performed or complied with by the
Partners or Partnerships at or before the Closing.
7.03 Officers' Certificates. (a) The Partners and the Partnerships each
shall have delivered to Purchasers (i) certificates (each an "Officer's
Certificate"), confirming satisfaction of the conditions set forth in Sections
7.01 and 7.02, dated the Closing Date and executed in the name and on behalf of
such Partners and Partnerships, as the case may be, by an officer, member or
general partner of the Partners and the Partnerships, as the case may be,
substantially in the form and to the effect of Exhibits B-1 and B-2 hereto, and
(ii) certificates (each a Secretary's Certificate"), dated the Closing Date and
executed by an officer, member or general partner of the Partners and the
Partnerships, as the case may be, substantially in the form and to the effect of
Exhibits C-1 and C-2 hereto, which shall include, (y) copies of the
Organizational Documents of the Partners and the Partnerships, and (z) copies of
resolutions of the Partners and the Partnerships approving the execution,
delivery, and performance of this Agreement.
7.04 Orders and Laws. There shall not be in effect on the Closing Date
any Order or Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of the Merger, and there shall not be pending or
threatened on the Closing Date any Action or Proceeding in, before or by any
Governmental or Regulatory Authority which could reasonably be expected to
result in the issuance of any such Order.
7.05 Regulatory Consents and Approvals. All consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory Authority
necessary to permit Purchaser, the Partners and the Partnerships to perform
their obligations under this Agreement and to consummate the Merger (a) shall
have been duly obtained, made or given, (b) shall not be subject to the
satisfaction of any condition that has not been satisfied or waived and (c)
shall be in full force and effect.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF THE PARTNERSHIPS
The obligations of the Partners and the Partnerships to consummate the
Merger are subject to the fulfillment, at or before the Closing, of each of the
following conditions (all or any of which may be waived in whole or in part by
the Partners and the Partnerships in their sole discretion):
8.01 Representations and Warranties. The representations and warranties
made by Purchasers in this Agreement shall be true and correct in all material
respects on and as of the
11
Closing Date as though such representations or warranties were made on and as of
the Closing Date.
8.02 Performance. Purchasers shall have performed and complied with, in
all material respects, each agreement, covenant and obligation required by this
Agreement to be so performed or complied with by Purchasers at or before the
Closing.
8.03 Officers' Certificates. (a)(i) Purchasers shall have delivered to
the Partners and the Partnerships a certificate ("Officer's Certificate of
Purchaser"), confirming satisfaction of the conditions set forth in Sections
8.01 and 8.02, dated the Closing Date and executed in the name and on behalf of
Purchaser, respectively, by an officer, substantially in the form and to the
effect of Exhibit D hereto, and (ii) a certificate ("Secretary's Certificate of
Purchaser"), dated the Closing Date and executed by an officer of Purchaser,
respectively, substantially in the form and to the effect of Exhibit E hereto,
which shall include, (y) copies of the Organizational Documents of Purchaser,
and (z) copies of resolutions of the board of directors of Purchasers approving
the execution, delivery, and performance of this Agreement.
8.04 Orders and Laws. There shall not be in effect on the Closing Date
any Order or Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of the Merger, and there shall not be pending or
threatened on the Closing Date any Action or Proceeding in, before or by any
Governmental or Regulatory Authority which could reasonably be expected to
result in the issuance of any such Order.
8.05 Regulatory Consents and Approvals. All consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory Authority
necessary to permit Purchaser, the Partners and the Partnerships to perform
their obligations under this Agreement and to consummate the transactions
contemplated hereby and thereby (a) shall have been duly obtained, made or
given, (b) shall not be subject to the satisfaction of any condition that has
not been satisfied or waived and (c) shall be in full force and effect.
8.06 Waiver Letter. The waiver letter in the form of Exhibit F hereto
shall have been executed by ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Waiver Letter").
8.07 Computer Access and Transfer Agreement. Purchasers and Fortress
shall have executed and delivered the Computer Access and Transfer Agreement in
the form of Exhibit G hereto.
ARTICLE IX
SURVIVAL; NO OTHER REPRESENTATIONS
9.01 Survival; No Other Representations. (a) The representations and
warranties contained in Section 3.01 and 3.02 will survive the Closing until the
expiration of the applicable statute of limitations. All other representations
and warranties contained in this Agreement shall not survive the Closing, and
there shall be no liability in respect thereof, whether such liability has
accrued prior to the Closing Date or after the Closing Date, on the part of
either party or its
12
officers, directors, employees, agents and affiliates. This Section shall not
limit in any way the survival and enforceability of any covenant or agreement of
the parties hereto which by its terms contemplates performance after the Closing
Date, which shall survive for the respective periods set forth herein.
(b) Notwithstanding anything to the contrary contained in this
Agreement, it is the explicit intent of each party hereto that the Partners and
the Partnerships are making no representation or warranty whatsoever, express or
implied, including but not limited to any implied representation or warranty as
to condition, merchantability or suitability as to any of the Assets and
Properties, except those representations and warranties expressly set forth in
Article II. IT IS EXPRESSLY UNDERSTOOD THAT PURCHASERS TAKE THE ASSETS AND
PROPERTIES OF THE PARTNERSHIPS "AS IS" AND "WHERE IS".
ARTICLE X
TERMINATION
10.01 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned by either the Partners, on the
one hand, or Purchaser, on the other, upon notification to the non-terminating
party by the terminating party at any time following July 31, 2002 (such date,
the "Termination Date"), if the Merger shall not have been consummated on or
prior to such date and such failure to consummate the Merger is not caused by a
breach of this Agreement by the terminating party.
10.02 Effect of Termination. (a) Upon termination of this Agreement
pursuant to Section 10.01, the Partners shall be entitled to retain the full
Deposit Amount (which shall be their sole remedy with respect to such
termination) and the Escrow Agent shall be instructed to deliver the Deposit
Amount to the Partners as a termination fee to reimburse the Partners for, among
other things, their cost and expenses incurred in the transaction contemplated,
provided however, if at the time of such termination the representations and
warranties of the Partners and the Partnerships contained herein are not true
and correct in all material respects or the Partners and the Partnerships shall
have failed to perform and comply with, in all material respects, the agreements
and covenants required by this Agreement to be so performed or complied with by
the Partners and the Partnerships at or before the Closing (including the
requirement to effect the Closing if all conditions thereto have been satisfied
or waived in accordance with the terms hereof), Purchasers shall be entitled to
the return of the Deposit Amount and the Escrow Agent shall be instructed to
deliver the Deposit Amount to Purchasers as promptly as practicable following
such termination.
(b) Subject to paragraph (a) above, if this Agreement is validly
terminated pursuant to Section 10.01, this Agreement will forthwith become null
and void, and there will be no liability or obligation on the part of the
Partnerships or Purchasers (or any of their respective officers, directors,
employees, agents or other representatives or affiliates), except that the
provisions with respect to expenses in Section 12.03 will continue to apply
following any such termination, and except that, if this Agreement has been
terminated due to a failure of the Partners or the Partnerships (i) to comply
with the covenants contained in Section 5.03 or (ii) to
13
effect the Closing if required to do so hereunder, then in addition to the
return of the Deposit Amount, Purchasers shall also be entitled to pursue any
rights or remedies against the Partners or the Partnerships which Purchasers may
have at Law or in equity (including, without limitation, the right to specific
performance).
ARTICLE XI
DEFINITIONS
11.01 Definitions. (a) Defined Terms. As used in this Agreement, the
following defined terms have the meanings indicated below:
"338 Election" has the meaning ascribed to it in Section 1.11(c).
"Assets and Properties" means all assets and properties of every kind,
nature, character and description (whether real, personal or mixed, whether
tangible or intangible, whether absolute, accrued, contingent, fixed or
otherwise and wherever situated), including the goodwill related thereto,
operated, owned or leased by such Person, including without limitation cash,
cash equivalents, investment assets, accounts and notes receivable, chattel
paper, documents, instruments, general intangibles, real estate, equipment,
inventory, goods and Intellectual Property.
"Business Day" means a day other than Saturday, Sunday or any day on
which banks located in the States of New York, Texas or Virginia are authorized
or obligated to close.
"Certificates of Merger" has the meaning ascribed to it in Section
1.04.
"Closing" has the meaning ascribed to it in Section 1.02.
"Closing Date" has the meaning ascribed to it in Section 1.02.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Condo Partnerships" has the meaning ascribed to it in the forepart of
this Agreement.
"Condo Purchaser" has the meaning ascribed to it in the forepart of
this Agreement.
"Constituent Entities" has the meaning ascribed to it in Section 1.01.
"Contract" means any agreement, lease, license, evidence of
Indebtedness, mortgage, indenture, security agreement or other contract.
14
"Deposit Amount" has the meaning ascribed to it in Section 1.03.
"Disclosure Schedule" means the record delivered to Purchasers by the
Partnerships herewith and dated as of the date hereof, containing all lists,
descriptions, exceptions and other information and materials as are required to
be included therein by the Partnerships pursuant to this Agreement.
"Dispute Period" has the meaning ascribed to it in Section 1.08(a).
"Effective Time" has the meaning ascribed to it in Section 1.04.
"Escrow" has the meaning ascribed to it in Section 1.08(b).
"Escrow Agent" and "Escrow Agreement" have the meanings ascribed to
them in Section 1.03.
"Exercise Date" has the meaning ascribed to it in Section 1.11(a).
"Exercise Notice" has the meaning ascribed to it in Section 1.11(b).
"Existing Policy" has the meaning ascribed to it in Section 1.09(b).
"FHV" has the meaning ascribed to it in the forepart of this Agreement.
"Fortress" has the meaning ascribed to it in Section 1.09(a).
"Fortress 401(k) Plan" has the meaning ascribed to it in Section
1.10(a).
"Fortress Management" has the meaning ascribed to it in the forepart of
this Agreement.
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, or any domestic, county, city or other political subdivision.
"Homebuilding Partnerships" has the meaning ascribed to it in the
forepart of this Agreement.
"Homebuilding Purchaser" has the meaning ascribed to it in the forepart
of this Agreement.
"Indebtedness" of any Person means all obligations of such Person (i)
for borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(iv) under capital leases and (v) in the nature of guarantees of the obligations
described in clauses (i) through (iv) above of any other Person.
15
"Independent Accountant" has the meaning ascribed to it in Section
1.08(a).
"Interim Period" has the meaning ascribed to it in Section 1.08(a).
"Laws" means all laws, statutes, rules, regulations, and ordinances of
the United States or any state, county, city or other political subdivision or
of any Governmental or Regulatory Authority.
"Licenses" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.
"Liens" means any mortgage, hypothecation, pledge, assessment, security
interest, movable security, lease, lien, adverse claim, levy, defect of title,
charge or other encumbrance of any kind, or any conditional sale Contract, title
retention Contract or other Contract to give any of the foregoing and any other
rights of third parties relating to the property, including rights of set-off,
voting trusts and other encumbrances of any kind.
"Merger" has the meaning ascribed to it in the forepart of this
Agreement.
"Merger Consideration" has the meaning ascribed to it in Section
2.01(a).
"Officer's Certificate" has the meaning ascribed to it in Section
7.03(a).
"Officer's Certificate of Purchaser" has the meaning ascribed to it in
Section 8.03(a).
"Order" means any writ, judgment, decree, injunction or similar order
of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
"Organizational Documents" means (i) with respect to an entity that is
a corporation, its certificate or articles of incorporation and bylaws and any
other charter or organizational documents, (ii) with respect to an entity that
is a limited liability company, its certificate or articles of formation and
operating agreement and any other charter or organizational documents, and (iii)
with respect to an entity that is a limited partnership, its certificate of
limited partnerships and partnership agreement an any other charter or
organizational documents, in each case as amended and/or restated as of the
Closing Date.
"Partners" has the meaning ascribed to it in the forepart of this
Agreement.
"Partnerships" has the meaning ascribed to it in the forepart of this
Agreement.
"Partnerships Interests" has the meaning ascribed to it in the forepart
of this Agreement.
16
"Person" means any natural person, corporation, general partnership,
limited partnership, limited liability company, proprietorship, other business
organization, trust, union, association or Governmental or Regulatory Authority.
"Pre-Tax Income/Loss Certificate" has the meaning ascribed to it in
Section 1.08(a).
"Purchaser" has the meaning ascribed to it in the forepart of this
Agreement.
"Sale Right" "Shares" and "Share Consideration" have the meanings
ascribed to them in Section 1.11(a).
"Secretary's Certificate" has the meaning ascribed to it in Section
7.03(a).
"Secretary's Certificate of Purchaser" has the meaning ascribed to it
in Section 8.03(a).
"Surviving Entities" has the meaning ascribed to it in Section 1.01.
"Termination Date" has the meaning ascribed to it in Section 10.01(a).
"TRLPA" has the meaning ascribed to it in Section 1.01.
"Waiver Letter" has the meaning ascribed to it in Section 8.06.
(b) Construction of Certain Terms and Phrases. Unless the context of
this Agreement otherwise requires, (i) words of any gender include each other
gender; (ii) words using the singular or plural number also include the plural
or singular number, respectively; (iii) the terms "hereof," "herein," "hereby"
and derivative or similar words refer to this entire Agreement; (iv) the terms
"Article" or "Section" refer to the specified Article or Section of this
Agreement; and (v) the phrases "ordinary course of business" and "ordinary
course of business consistent with past practice" refer to the business and
practice of the Partnerships. Whenever this Agreement refers to a number of
days, such number shall refer to calendar days unless Business Days are
specified. All accounting terms used herein and not expressly defined herein
shall have the meanings given to them under GAAP.
ARTICLE XII
MISCELLANEOUS
12.01 Notices. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission or mailed (by postage prepaid registered
or certified), return receipt requested, to the parties at the following
addresses or facsimile numbers:
17
If to Purchasers, to:
Partnership Acquisition Co.
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Partner or Partnership, to:
The Fortress Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Wire Transfer Instructions of the Partners:
Bank: First Union Bank, Roanoke, VA.
ABA No.: ABA 051 400 549
Beneficiary: The Fortress Group, Inc., a/c # 206 520 348 9513
Wire Transfer Instructions of Purchasers:
50% of Wire Transfer to the Following:
Bank: Bank One Texas
Account No.: 636253072
ABA No.: ▇▇▇▇▇▇▇▇▇
Account Holder: Wilshire Management, Inc.
18
50% of Wire Transfer to the Following:
Bank: Bank of America, Inc.
Account No.: 001390032525
ABA No.: ▇▇▇▇▇▇▇▇▇
Account Holder: Hearthstone, Inc.
Reference: Wilshire Transaction
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt if received on a Business
Day and on the next Business Day if received on a day that is not a Business
Day, and (iii) if delivered by mail in the manner described above to the address
as provided in this Section, be deemed given upon receipt (in each case
regardless of whether such notice, request or other communication is received by
any other Person to whom a copy of such notice, request or other communication
is to be delivered pursuant to this Section). Any party from time to time may
change its address, facsimile number or other information for the purpose of
notices to that party by giving notice specifying such change to the other party
hereto.
12.02 Entire Agreement. This Agreement supersedes all prior discussions
and agreements between the parties with respect to the subject matter hereof,
including without limitation that certain letter agreement with respect to
confidentiality between the parties dated April 18, 2002, and contain the sole
and entire agreement between the parties hereto with respect to the subject
matter hereof and thereof.
12.03 Expenses. Whether or not the transactions contemplated hereby are
consummated, each party will pay its own costs and expenses incurred in
connection with the negotiation, execution and closing of this Agreement and the
transactions contemplated hereby.
12.04 Mortgage Services Arrangement. Purchasers and Fortress Mortgage,
Inc. or another mortgage company owned by Lennar Corporation shall have used
commercially reasonable efforts to reach agreement on the terms of a joint
venture agreement with respect to mortgage banking services. The parties shall
commence discussions with the use of the joint venture agreement in the form
attached hereto as Exhibit H; provided however, the parties shall not be
obligated to agree to the terms contained herein. The execution and delivery of
such a joint venture agreement shall not be a condition to the obligations of
either the Partners or the Partnership to consummate the Merger.
12.05 Public Announcements. Without the prior written consent of the
other parties hereto, neither party hereto will, and will cause their respective
representatives not to, make any release to the press or other public disclosure
at any time prior to the Closing with respect to any of the transactions
contemplated by this Agreement, except for such public disclosure as may be
necessary, in the written opinion of counsel, for the party proposing to make
the disclosure not to be in violation of or default under any applicable Law or
Order, and then only upon prior notice and review of such disclosure by the
other party.
19
12.06 Confidentiality. Each party hereto will hold, and will use its
reasonable efforts to cause its respective affiliates, directors, employees,
agents and representatives to hold, in strict confidence from any Person (other
than any such affiliate or representative), unless (i) compelled to disclose by
judicial or administrative process (including without limitation in connection
with obtaining the necessary approvals of this Agreement and the transactions
contemplated hereby of Governmental or Regulatory Authorities) or by other
requirements of Law or (ii) disclosed in an Action or Proceeding brought by a
party hereto in pursuit of its rights or in the exercise of its remedies
hereunder, all documents and information concerning the other party or any of
its Affiliates furnished to it by the other party or such other party's
representatives in connection with this Agreement or the transactions
contemplated hereby, except to the extent that such documents or information can
be shown to have been (a) previously known by the party receiving such documents
or information, (b) in the public domain (either prior to or after the
furnishing of such documents or information hereunder) through no fault of such
receiving party or (c) later acquired by the receiving party from another source
if the receiving party is not aware that such source is under an obligation to
another party hereto to keep such documents and information confidential;
provided that following the Closing the foregoing restrictions will not apply to
Purchasers' use of documents and information concerning the Partners and the
Partnerships furnished by or on behalf of the Partners and Partnerships
hereunder.
12.07 Waiver. Any term or condition of this Agreement may be waived at
any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by any
party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under
this Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
12.08 Amendment. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
12.09 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any other Person.
12.10 No Assignment; Binding Effect. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other party hereto and any attempt to
do so will be void, except (a) for assignments and transfers by operation of Law
and (b) that Purchasers may assign any or all of their rights, interests and
obligations hereunder to a directly wholly-owned subsidiary, provided that any
such subsidiary agrees in writing to be bound by all of the terms, conditions
and provisions contained herein, but no such assignment shall relieve Purchasers
of their obligations
20
hereunder. Subject to the preceding sentence, this Agreement is binding upon,
inures to the benefit of and is enforceable by the parties hereto and their
respective successors and assigns.
12.11 Headings. The headings used in this Agreement have been inserted
for convenience of reference only and do not define or limit the provisions
hereof.
12.12 Invalid Provisions. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future Law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, and (c)
the remaining provisions of this Agreement will remain in full force and effect
and will not be affected by the illegal, invalid or unenforceable provision or
by its severance herefrom.
12.13 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, except to the extent the
TRLPA is mandatorily applicable.
12.14 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
21
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party hereto as of the date
first above written.
PARTNERSHIP ACQUISITION CO.
By:__________________________
Name:
Title:
CONDO ACQUISITION CO.
By:__________________________
Name:
Title:
FORTRESS MANAGEMENT, INC.
By:_____________________________
Name:
Title:
FORTRESS HOLDING-VIRGINIA, LLC
By:_____________________________
Name:
Title:
WILSHIRE HOMES, LTD.
By: Fortress Management, Inc.
as General Partner
By:_____________________________
Name:
Title:
WILSHIRE HOMES SAN ANTONIO, LTD.
By: Fortress Management, Inc. as
General Partner
By:_____________________________
Name:
Title:
▇▇▇▇▇▇▇▇▇▇ HOMES OF TEXAS, LTD.
By: Fortress Management, Inc. as
General Partner
By:_____________________________
Name:
Title:
▇▇▇▇▇▇ CONDO PARTNERS, LTD.
By: Fortress Management, Inc. as
General Partner
By:_____________________________
Name:
Title:
RETREAT AT ▇▇▇▇▇▇▇▇ OAKS, LTD.
By: Fortress Management, Inc. as
General Partner
By:_____________________________
Name:
Title:
With respect to Sections 1.09 through 1.12 only:
THE FORTRESS GROUP, INC.
By:__________________________
Name:
Title:
ANNEX I
Allocation of Merger Consideration among the Partners
Annex I to be prepared in mutually acceptable form and with mutually
acceptable allocations initialed by the parties and attached at or prior to
Closing.
ANNEX II
Allocation of Escrow amount among the Partners