Exhibit (d)(1)
SECURITIES PURCHASE AGREEMENT
DATED
JUNE 17, 2002
AMONG
FG ACQUISITION CORPORATION,
LENNAR CORPORATION,
PROMETHEUS HOMEBUILDERS LLC
AND
▇▇▇▇▇▇ ▇▇▇▇▇
REGARDING PREFERRED STOCK, COMMON STOCK AND WARRANTS OF
THE FORTRESS GROUP, INC.
Article I PURCHASE OF SECURITIES.....................................1
1.1 Purchase of Shares and Warrants................................1
1.2 Purchase Price for the Preferred Shares........................2
1.3 Purchase Price for the Common Shares...........................2
1.4 Purchase Price for the Warrants................................2
Article II THE CLOSING And the sale of short's warrants...............2
2.1 Time and Place of Closing......................................2
2.2 Sellers' Actions at Closing....................................2
2.3 Buyer's Actions at Closing.....................................3
2.4 Sale of Warrants by Short......................................4
Article III REPRESENTATIONS AND WARRANTIES.............................5
3.1 Representations and Warranties of Prometheus...................5
3.2 Representations and Warranties of Short........................7
3.3 Representations and Warranties of Lennar and the Buyer.........9
3.4 Expiration of Representations and Warranties..................11
Article IV Agreements of the parties.................................11
4.1 Agreement of the Sellers......................................12
4.2 Sellers' Efforts to Fulfill Conditions........................12
4.3 Efforts of the Buyer and Lennar to Fulfill Conditions.........12
Article V CONDITIONS PRECEDENT TO CLOSING...........................12
5.1 Conditions to Buyer's Obligations.............................12
5.2 Conditions to Sellers' Obligations............................13
Article VI TERMINATION...............................................15
6.1 Right to Terminate............................................15
6.2 Effect of Termination.........................................15
Article VII ABSENCE OF BROKERS........................................16
7.1 Representations and Warranties Regarding Brokers and Others...16
Article VIII LENNAR GUARANTY...........................................17
Article IX GENERAL...................................................17
9.1 Expenses......................................................17
9.2 Access to Properties, Books and Records.......................17
9.3 Press Releases................................................17
9.4 Entire Agreement..............................................18
9.5 Benefit of Agreement..........................................18
9.6 Captions......................................................18
9.7 Assignments...................................................18
9.8 Notices and Other Communications..............................18
9.9 Governing Law.................................................20
9.10 Amendments....................................................20
9.11 Counterparts..................................................20
SECURITIES PURCHASE AGREEMENT
This is an agreement. (the "Agreement") dated June 17, 2002 among FG
Acquisition Corporation (the "Buyer"), a Delaware corporation, Lennar
Corporation ("Lennar"), a Delaware corporation, Prometheus Homebuilders LLC
("Prometheus"), a Delaware limited liability company, and ▇▇▇▇▇▇ ▇▇▇▇▇ ("Short"
and together with Prometheus, the "Sellers"), relating to the purchase by the
Buyer from the Sellers of a total of 28,500 shares (the "Preferred Shares") of
Class AAA Convertible Redeemable Preferred Stock, par value $ 0.01 per share, of
The Fortress Group, Inc. (the "Company"), a Delaware corporation, 678,130 shares
(the "Common Shares") of common stock, par value $0.01 per share, of the Company
("Common Stock") and 5,937,500 supplemental warrants (the "Warrants") to
purchase shares of Common Stock. In part as an inducement to Prometheus and
Short to enter into this Agreement, simultaneously with the execution of this
Agreement, Lennar and the Buyer are entering into a Plan and Agreement of Merger
with the Company (the "Merger Agreement") relating to a tender offer by the
Buyer for shares of the Company (the "Tender Offer") and a merger of the Buyer
and the Company (the "Merger"). The Agreement is as follows:
ARTICLE I
PURCHASE OF SECURITIES
1.1 PURCHASE OF SHARES AND WARRANTS. (a) At the Closing described in
Paragraph 2.1, the Buyer will purchase 25,000 Preferred Shares, 224,712 Common
Shares and 5,208,333 Warrants from Prometheus and Prometheus will sell 25,000
Preferred Shares, 224,712 Common Shares and 5,208,333 Warrants to the Buyer.
(b) At the Closing described in Paragraph 2.1, the Buyer will purchase
3,500 Preferred Shares and 453,418 Common Shares from Short and Short will sell
3,500 Preferred Shares and 453,418 Common Shares to the Buyer.
(c) On August 1, 2002, the Buyer will purchase 729,167 Warrants (the
"Short Warrants") from Short and Short will sell the Short Warrants to the
Buyer.
1.2 PURCHASE PRICE FOR THE PREFERRED SHARES. The purchase price to be
paid by the Buyer for the Preferred Shares (including accrued dividends) will be
$597.6784 per Preferred Share.
1.3 PURCHASE PRICE FOR THE COMMON SHARES. The purchase price to be paid
by the Buyer for the Common Shares will be $3.68 per Common Share.
1.4 PURCHASE PRICE FOR THE WARRANTS. The purchase price to be paid by
the Buyer for the Warrants will be $3.64 per Warrant.
ARTICLE II
THE CLOSING And the sale of short's warrants
2.1 TIME AND PLACE OF CLOSING. The closing (the "Closing") of the
purchase of the Preferred Shares, the Common Shares and the Warrants (other than
the Short Warrants) will take place at the offices of ▇▇▇▇▇▇▇▇ Chance ▇▇▇▇▇▇ &
▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 a.m., New York City
time, on the date of this Agreement (the "Closing Date").
2.2 SELLERS' ACTIONS AT CLOSING. At the Closing, the Sellers will
deliver to the Buyer the following:
(a) The certificates representing all the Preferred Shares, endorsed or
accompanied by documents of assignment which comply with the requirements of
Section 8-401 of the Uniform Commercial Code as in effect in Delaware.
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(b) The certificates representing all the Common Shares, endorsed or
accompanied by documents of assignment which comply with the requirements of
Section 8-401 of the Uniform Commercial Code as in effect in Delaware.
(c) The certificates representing all the Warrants which are being sold
by Prometheus, endorsed or accompanied by documents of assignment which comply
with the requirements of Section 8-401 of the Uniform Commercial Code as in
effect in Delaware.
2.3 BUYER'S ACTIONS AT CLOSING. At the Closing, the Buyer will deliver
to the Sellers the following:
(a) To Prometheus (or, at Prometheus' instruction, to Capital Trust,
Inc. or its designee), evidence of a wire transfer of immediately available
funds to an account that has been specified by Prometheus prior to the date of
this Agreement in the amount of $34,727,232.28, in payment of the purchase price
for the 25,000 Preferred Shares, 224,712 Common Shares and 5,208,333 Warrants
that Prometheus is selling.
(b) To Prometheus (or, at Prometheus' instruction, to Capital Trust,
Inc. or its designee), evidence of a wire transfer to an account that has been
specified by Prometheus prior to the date of this Agreement in the amount
described in subparagraph (d).
(c) To Short, a certified or bank cashier's check, or evidence of a
wire transfer of immediately available funds to an account that has been
specified by Short prior to the date of this Agreement, in the amount of
$3,760,452.64, minus the amount described in subparagraph (d), in payment of the
portion to be paid to Short of the purchase price for the 3,500 Preferred Shares
and 453,418 Common Shares that Short is selling.
(d) Short directs the Buyer to pay to Prometheus (or, at Prometheus'
instruction, to Capital Trust, Inc. or its designee) at the Closing, out of the
purchase price for the Preferred
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Shares and Common Shares that Short is selling, the sum of $1,782,451.92.
Prometheus and Short agree that the payment of that amount to Prometheus at the
Closing shall constitute payment in full of all of the obligations of Short to
Prometheus under and in respect of the Secured Promissory Note dated July 31,
2001, from Short to Prometheus in the principal amount of $1,750,000.
(e) To each of the Sellers, a letter acknowledging that the Buyer will
be acquiring the Preferred Shares, Common Shares and Warrants that the Buyer is
purchasing from that Seller for investment, and not with a view to their resale
or distribution.
2.4 SALE OF WARRANTS BY SHORT. (a) On August 1, 2002, at the offices of
▇▇▇▇▇▇▇▇ Chance ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at
10:00 a.m. New York City time, Short will deliver to the Buyer the certificates
representing the Short Warrants, and the Buyer will deliver to Short a certified
or bank cashier's check, or evidence of a wire transfer of immediately available
funds to an account specified at least 24 hours in advance by Short, in the
amount of $2,654,167.88 in payment of the purchase price of the Short Warrants.
(b) Until August 2, 2002, Short will not (i) sell or transfer, or enter
into an agreement which may require Short to sell or transfer, any Short
Warrants to anybody other than the Buyer, or (ii) exercise any of the Short
Warrants. At the request of the Buyer, Short will place a legend on each
certificate evidencing Short Warrants as follows:
The warrants evidenced by this certificate are
subject to an agreement which requires that they be
sold on August 1, 2002 to FG Acquisition Corporation,
and which prohibits the sale or transfer of any of
those warrants prior to August 2, 2002 to anyone
other than FG Acquisition Corporation.
(c) The obligations of the Buyer and Short with regard to the Short
Warrants will remain in effect even if the Merger takes place before August 1,
2002, and as a result of the Merger, the Short Warrants become warrants to
purchase shares of the corporation which
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survives the Merger. Short consents to the provision of the Merger Agreement
which will cause the Warrants (including the Short Warrants) to become warrants
to purchase shares of the corporation which survives the Merger, and agrees that
that provision of the Merger Agreement will constitute an amendment, effective
at the Effective Time of the Merger, of the Warrants (including the Short
Warrants).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF PROMETHEUS. Prometheus represents
and warrants to the Buyer and to Lennar as follows:
(a) Prometheus is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(b) Prometheus has all power and authority necessary to enable it to
enter into this Agreement and carry out the transactions contemplated by this
Agreement. All actions necessary to authorize Prometheus to enter into this
Agreement and carry out the transactions contemplated by it have been taken.
This Agreement has been duly executed by Prometheus and is a valid and binding
agreement of Prometheus, enforceable against Prometheus in accordance with its
terms.
(c) Except as set forth in Schedule 4.1-C to the Merger Agreement,
neither the execution or delivery by Prometheus of this Agreement or of any
document to be delivered in accordance with this Agreement nor the consummation
by Prometheus of the transactions contemplated by this Agreement or by any
document to be delivered in accordance with this Agreement will violate, result
in a breach of, or constitute a default (or an event which, with notice or lapse
of time or both would constitute a default) under, the Certificate of Formation
or Limited Liability Company Agreement of Prometheus, any agreement or
instrument to which
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Prometheus is a party or by which it is bound, any law, or any order, rule or
regulation of any court or governmental agency or other regulatory organization
having jurisdiction over Prometheus. Prometheus does not own any shares of stock
of, or other equity interests in, any other entity, other than the stock of the
Company being sold to the Buyer pursuant to this Agreement.
(d) Prometheus is not the subject of any suit or governmental
proceeding which seeks to prevent Prometheus from completing the transactions
which are the subject of this Agreement, nor, to the best of Prometheus'
knowledge, has any such suit or proceeding against Prometheus been threatened.
(e) Prometheus owns 25,000 Preferred Shares, 224,712 Common Shares and
5,208,333 Warrants (the "Prometheus Securities"), free and clear of any liens or
encumbrances (other than liens in favor of Capital Trust, Inc., which will be
discharged at the Closing), and Prometheus has full authority to sell the
Prometheus Securities as contemplated by this Agreement. Each Warrant entitles
(or, when it becomes exercisable, will entitle) the holder to acquire one share
of Common Stock for $0.04. Prometheus does not own, hold warrants to purchase,
or otherwise have the right to acquire, any shares of stock of the Company of
any class other than (x) the Prometheus Securities, (y) shares of Common Stock
Prometheus has (or will have) the right to acquire upon exercise of Warrants
included in the Prometheus Securities, and (z) Prometheus' right to acquire
Preferred Shares and Warrants from Short upon foreclosure of security interests
granted by Short to Prometheus (which will be discharged when Prometheus
receives the payment required by Paragraph 2.3(d)). Prometheus has not granted
any option or right, and is not a party to any other agreement (other than the
agreements creating the liens in favor of Capital Trust, Inc. described in the
first sentence of this subparagraph), which requires, or upon the passage of
time, the payment of money, or the occurrence of any other event, may require,
Prometheus to transfer any of the Prometheus
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Securities to anyone other than the Buyer. When the Buyer acquires the
Prometheus Securities as contemplated by this Agreement, the Buyer will become
the owner of the Prometheus Securities, free and clear of any liens,
encumbrances or claims of other persons, other than liens or encumbrances
imposed by reason of acts of the Buyer.
(f) No governmental filings, authorizations, approvals or consents, or
other governmental action are required to permit Prometheus to fulfill all its
obligations under this Agreement.
(g) To the best of Prometheus' knowledge, each of the representations
and warranties contained in Paragraph 4.1 of the Merger Agreement is true and
correct in all material respects (except that each of those representations and
warranties which is qualified as to materiality or as to absence of a Material
Adverse Effect is true and correct in all respects). For the purposes of this
subparagraph, Prometheus' "knowledge" of a fact or condition means actual
awareness of that fact or condition by one or more of ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
3.2 REPRESENTATIONS AND WARRANTIES OF SHORT. Short represents and
warrants to the Buyer and to Lennar as follows:
(a) Short is an individual.
(b) Short has all power and authority necessary to enable him to enter
into this Agreement and carry out the transactions contemplated by this
Agreement without any action by any other person. This Agreement has been duly
executed by Short and is a valid and binding agreement of Short, enforceable
against him in accordance with its terms.
(c) Neither the execution or delivery of this Agreement or of any
document to be delivered in accordance with this Agreement nor the consummation
of the transactions
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contemplated by this Agreement or by any document to be delivered in accordance
with this Agreement will violate, result in a breach of, or constitute a default
(or an event which, with notice or lapse of time or both would constitute a
default) under any agreement or instrument to which Short is a party or by which
Short is bound, any law, or any order, rule or regulation of any court or
governmental agency or other regulatory organization having jurisdiction over
Short.
(d) Short is not the subject of any suit or governmental proceeding
which seeks to prevent Short from completing the transactions which are the
subject of this Agreement, nor, to the best Short's knowledge, has any such suit
or proceeding against Short been threatened.
(e) Short owns 3,500 Preferred Shares, 453,417 Common Shares and the
729,167 Short Warrants (the "Short Securities"), free and clear of any liens or
encumbrances (other than liens in favor of Prometheus, which will be discharged
at the Closing), and Short has full authority to sell the Short Securities as
contemplated by this Agreement. Each Short Warrant entitles (or, when it becomes
exercisable, will entitle) the holder to acquire one share of Common Stock for
$0.04. Short does not own, hold warrants to purchase, or otherwise have the
right to acquire, any shares of stock of the Company of any class other than the
Short Securities, the shares of Common Stock Short has (or will have) the right
to acquire upon exercise of Short Warrants, options to purchase 63,000 shares of
Common Stock and the shares of Common Stock Short has (or will have) the right
to acquire upon exercise of those options, and 1500 shares Short holds as
custodian for his children. Short has not granted any option or right, and is
not a party to any other agreement (other than the agreements creating the liens
in favor of Prometheus described in the first sentence of this subparagraph),
which requires, or upon the passage of time, the payment of money, or the
occurrence of any other event, may require Short to transfer any of the Short
Securities to anyone other than the Buyer. When the Buyer acquires the Short
Securities as contemplated by this Agreement, the Buyer
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will become the owner of the Short Securities, free and clear of any liens,
encumbrances or claims of other persons, other than liens or encumbrances
imposed by reason of acts of the Buyer.
(f) No governmental filings, authorizations, approvals or consents, or
other governmental action are required to permit Short to fulfill all his
obligations under this Agreement. (g) To the best of Short's knowledge, each of
the representations and warranties contained in Paragraph 4.1 of the Merger
Agreement is true and correct in all material respects (except that each of
those representations and warranties which is qualified as to materiality or as
to absence of a Material Adverse Effect is true and correct in all respects).
For the purposes of this subparagraph, Short's "knowledge" of a fact or
condition means his actual awareness of that fact or condition.
3.3 REPRESENTATIONS AND WARRANTIES OF LENNAR AND THE BUYER. Lennar and
the Buyer jointly and severally represent and warrant to the Sellers as follows:
(a) Each of Lennar and the Buyer is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware.
(b) Each of Lennar and the Buyer has all corporate power and authority
necessary to enable it to enter into this Agreement and carry out the
transactions contemplated by this Agreement. All corporate actions necessary to
authorize Lennar and the Buyer to enter into this Agreement and carry out the
transactions contemplated by it have been taken. This Agreement has been duly
executed by each of Lennar and the Buyer and is a valid and binding agreement of
each of Lennar and the Buyer, enforceable against each of them in accordance
with its terms.
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(c) Neither the execution or delivery of this Agreement or of any
document to be delivered in accordance with this Agreement nor the consummation
of the transactions contemplated by this Agreement or by any document to be
delivered in accordance with this Agreement will violate, result in a breach of,
or constitute a default (or an event which, with notice or lapse of time or both
would constitute a default) under, the Certificate of Incorporation or by-laws
of Lennar or the Buyer, any agreement or instrument to which Lennar or the Buyer
or any other subsidiary of Lennar is a party or by which any of them is bound,
any law, or any order, rule or regulation of any court or governmental agency or
other regulatory organization having jurisdiction over Lennar, the Buyer or any
other subsidiary of Lennar.
(d) No governmental filings, authorizations, approvals or consents, or
other governmental action are required to permit each of Lennar and the Buyer to
fulfill all its obligations under this Agreement.
(e) The Buyer is wholly owned by Lennar.
(f) Lennar has, and will provide to the Buyer, sufficient funds to
enable the Buyer to purchase and pay for all the Prometheus Securities and all
the Short Securities and enable the Buyer to fulfill in a timely manner all its
obligations under this Agreement and under the Merger Agreement.
(g) Neither the Buyer nor Lennar is the subject of any suit or
governmental proceeding which seeks to prevent the Buyer from completing the
transactions which are the subject of this Agreement, nor, to the best of
Lennar's or the Buyer's knowledge, has any such suit or proceeding been
threatened.
(h) The Buyer will be acquiring the Prometheus Securities and the Short
Securities for investment, and not with a view to their resale or distribution.
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3.4 EXPIRATION OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties in Paragraphs 3.1 (other than subparagraph 3.1(e)), 3.2 (other
than subparagraph 3.2(e)) and 3.3 will expire upon completion of the Closing.
After the Buyer purchases the Prometheus Securities and the Short Securities
(other than the Short Warrants) at the Closing, no party can assert a claim,
other than a claim for intentional fraud, because any matter that is the subject
and of a representation and warranty in Paragraph 3.1 (other than subparagraph
3.1(e)), 3.2 (other than subparagraph 3.2(e)) or 3.3 is not as represented and
warranted.
3.5 ACKNOWLEDGEMENT BY THE BUYER AND LENNAR. The Buyer and Lennar each
acknowledges that neither Prometheus nor Short has made any representations and
warranties to it, other than those expressly set forth in Paragraphs 3.1 and
3.2, with respect to any of the securities the Buyer is purchasing under this
Agreement, the Company or any of the transactions contemplated by this
Agreement, and that the Buyer and Lennar have been given the opportunity to ask
the Company questions, and have received answers, about the Company and the
securities the Buyer is purchasing under this Agreement.
ARTICLE IV
Agreements of the parties
4.1 AGREEMENT OF THE SELLERS. Each of the Sellers will cooperate in all
reasonable ways to cause the Merger to take place, and neither of the Sellers
will do anything which is reasonably likely to impede or delay the Tender Offer
or the Merger.
4.2 SELLERS' EFFORTS TO FULFILL CONDITIONS. Each of the Sellers will
use its or his best efforts to cause all the conditions set forth in Paragraph
5.1 to be fulfilled prior to or at the Closing.
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4.3 EFFORTS OF THE BUYER AND LENNAR TO FULFILL CONDITIONS. Each of the
Buyer and Lennar will use its best efforts to cause all the conditions set forth
in Paragraph 5.2 to be fulfilled prior to or at the Closing.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
5.1 CONDITIONS TO BUYER'S OBLIGATIONS. If the Closing does not take
place simultaneously with the execution of this Agreement, the obligations of
the Buyer at the Closing will be subject to satisfaction of the following
conditions (any or all of which may be waived by the Buyer):
(a) The representations and warranties of each of the Sellers contained
in this Agreement will, except as contemplated by this Agreement, be true and
correct in all material respects (except that representations and warranties
which are qualified as to materiality or as to absence of Material Adverse
Effect will be true and correct in all respects) at the Closing Date with the
same effect as though made on that date, and each of the Sellers will have
delivered to the Buyer a certificate dated the Closing Date and signed by the
Seller, or an officer or other authorized signatory of the Seller, as
applicable, to that effect.
(b) Each of the Sellers will have fulfilled in all material respects
all its or his obligations under this Agreement required to have been fulfilled
prior to or at the Closing.
(c) No order will have been entered by any court or governmental
authority and be in force which invalidates this Agreement or restrains Lennar
or the Buyer from completing the transactions which are the subject of this
Agreement and no action will be pending against Lennar, the Buyer or the Company
relating to the transactions which are the subject of this Agreement which
presents a reasonable likelihood of resulting in an award of damages against
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Lennar, the Buyer or the Company which would be material in relationship to the
aggregate price being paid by the Buyer for the Prometheus Securities and the
Short Securities, or would be material to the Company and its subsidiaries taken
as a whole.
(d) The Company will have executed the Merger Agreement and the Merger
Agreement will be in full force and effect.
(e) The Company will have executed an agreement to sell its operations
in Texas known as Wilshire Homes for at least $23 million not later than June
26, 2002, and the purchaser will have placed in escrow a deposit of at least
$1,500,000 with regard to that sale which is not refundable under any
circumstances, other than because of a material breach of warranty by the
Company or a failure of the Company to fulfill its obligations in a material
respect.
(f) GCH, Inc. (formerly named Genessee Custom Homes, Inc.) will have
delivered to The Genessee Company and to the Company an executed Indemnification
Agreement in the form of Exhibit 5.1-F.
(g) The Closing Date will be not later than July 31, 2002.
5.2 CONDITIONS TO SELLERS' OBLIGATIONS. If the Closing does not take
place simultaneously with the execution of this Agreement, the obligations of
each of the Sellers at the Closing will be subject to the following conditions
(any or all of which may be waived by Prometheus, except that the condition in
Paragraph 5.2(c) may only be waived as to a particular order or action by the
Seller which or who is subject to the order or is a defendant in the action):
(a) The representations and warranties of Lennar and the Buyer
contained in this Agreement will, except as contemplated by this Agreement, be
true and correct in all material respects (except that representations and
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warranties which are qualified as to materiality or as to absence of Material
Adverse Effect will be true and correct in all respects) at the Closing Date
with the same effect as though made on that date, and each of the Buyer and
Lennar will have delivered to the Sellers a certificate dated that date and
signed by the President or a Vice President of the applicable one of the Buyer
and Lennar to that effect.
(b) The Buyer will have fulfilled in all material respects all its
obligations under this Agreement required to have been fulfilled prior to or at
the Closing.
(c) No order will have been entered by any court or governmental
authority and be in force which invalidates this Agreement or restrains a Seller
from completing the transactions which are the subject of this Agreement and no
action will be pending against a Seller relating to the transactions which are
the subject of this Agreement which presents a reasonable likelihood of
resulting in an award of damages against that Seller which would be material in
relation to the aggregate purchase price that Seller will be receiving under
this Agreement.
(d) The Merger Agreement will have been executed by Lennar and by the
Buyer and will be in full force and effect.
(e) The Closing Date will be not later than July 31, 2002.
ARTICLE VI
TERMINATION
6.1 RIGHT TO TERMINATE. If the Closing does not take place
simultaneously with the execution of this Agreement, this Agreement may be
terminated at any time prior to the Closing:
(a) By mutual consent of Lennar and Prometheus.
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(b) By either Lennar or Prometheus if, without fault of the terminating
party, the Closing does not occur on or before July 31, 2002.
(c) By the Buyer if (i) it is determined that any of the
representations or warranties of either of the Sellers contained in this
Agreement was not complete and accurate in all material respects (or that any
representation and warranty which is limited to items which are material or will
have a Material Adverse Effect was not complete and accurate in all respects) on
the date of this Agreement or (ii) any of the conditions in Paragraph 5.1 is not
satisfied or waived by the Buyer prior to or on the Closing Date.
(d) By the Sellers if (i) it is determined that any of the
representations or warranties of the Buyer contained in this Agreement was not
complete and accurate in all material respects (or that any representation and
warranty which is limited to items which are material or will have a Material
Adverse Effect was not complete and accurate in all respects) on the date of
this Agreement or (ii) any of the conditions in Paragraph 5.2 is not satisfied
or waived by the Sellers prior to or on the Closing Date.
6.2 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Paragraph 6.1, after this Agreement is terminated, neither party will have any
further rights or obligations under this Agreement. Nothing contained in this
Paragraph will, however, relieve either party of liability for any breach of
this Agreement which occurs before this Agreement is terminated.
ARTICLE VII
ABSENCE OF BROKERS
7.1 REPRESENTATIONS AND WARRANTIES REGARDING BROKERS AND OTHERS. (a)
Each of Lennar and the Buyer represents and warrants to the Sellers that nobody
has acted as a broker, a finder or in any similar capacity with respect to
Lennar or the Buyer in connection with the transactions which are the subject of
this Agreement or the Merger Agreement, and each of the
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Sellers represents and warrants to Lennar and the Buyer that nobody has acted as
a broker, a finder or in any similar capacity with respect to either of the
Sellers in connection with the transactions which are the subject of this
Agreement or the Merger Agreement. Lennar and the Buyer jointly and severally
indemnify each of the Sellers against, and agree to hold each of the Sellers
harmless from, and each of the Sellers indemnifies each of Lennar and the Buyer
against, and agrees to hold each of them harmless from, all losses, liabilities
and expenses (including, but not limited to, reasonable fees and expenses of
counsel and costs of investigation) incurred because of any claim by anyone for
compensation as a broker, a finder or in any similar capacity by reason of
services allegedly rendered to such indemnifying party in connection with the
transactions which are the subject of this Agreement.
(b) Each of Prometheus and Short represents and warrants to Lennar and
the Buyer that (i) UBS Warburg LLC ("UBSW") has acted as a financial advisor to
the Company and its board of directors with respect to the transactions
contemplated by the Merger Agreement, (ii) the Company is responsible for the
payment to UBSW of the fees and expenses and other amounts owing to UBSW in
connection with the services it rendered as a financial advisor to the Company
and its board of directors with respect to the transactions contemplated by the
Merger Agreement, and (iii) the fees, expenses and other amounts owing to UBSW
in connection with those services will not exceed $1,450,000.
ARTICLE VIII
LENNAR GUARANTY
8.1 GUARANTY OF BUYER'S OBLIGATIONS. Lennar guarantees the fulfillment
by the Buyer of all the Buyer's obligations under this Agreement.
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ARTICLE IX
GENERAL
9.1 EXPENSES. Lennar, the Buyer and the Sellers will each pay its or
his own expenses in connection with the transactions which are the subject of
this Agreement, including legal fees and disbursements.
9.2 ACCESS TO PROPERTIES, BOOKS AND RECORDS.
(a) After the Closing, Lennar and the Buyer each will use its best
efforts to cause the Company to provide the Sellers with access to the books and
records and knowledgeable personnel of the Company and of its subsidiaries
during normal business hours in connection with the preparation of financial
statements by each of the Sellers or affiliates of Prometheus and the
preparation of tax returns by each of the Sellers or affiliates of Prometheus.
(b) After the Closing, each of the Sellers will, and Prometheus will
cause its affiliates to, provide Lennar, the Buyer and the Company with access
to their books and records relating to the Company or its subsidiaries during
normal business hours in connection with the preparation of financial statements
by Lennar, the Buyer, the Company or their respective affiliates, the
preparation of tax returns by Lennar, the Buyer, the Company or their respective
affiliates or audits of tax returns of Lennar, the Buyer, the Company or their
respective affiliates.
9.3 PRESS RELEASES. Lennar and the Sellers will consult with each other
before any of them issues any press releases or otherwise makes any public
statements with respect to this Agreement, except that nothing in this Paragraph
will prevent a party to this Agreement from making any statement when and as
required by law or by the rules of any securities exchange or securities
quotation system on which securities of that party or an affiliate are listed or
quoted.
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9.4 ENTIRE AGREEMENT. This Agreement contains the entire agreement
among Lennar, the Buyer and the Sellers relating to the transactions which are
the subject of this Agreement, all prior negotiations, understandings and
agreements between Lennar or the Buyer and either or both of the Sellers are
superseded by this Agreement, and there are no representations, warranties,
understandings or agreements concerning the transactions which are the subject
of this Agreement other than those expressly set forth in this Agreement.
9.5 BENEFIT OF AGREEMENT. This Agreement is for the benefit of the
parties to it, their respective successors and any permitted assigns. This
Agreement is not intended to be for the benefit of, or to give any rights to,
anybody other than the parties, their respective successors and any permitted
assigns.
9.6 CAPTIONS. The captions of the articles and paragraphs of this
Agreement are for reference only, and do not affect the meaning or
interpretation of this Agreement.
9.7 ASSIGNMENTS. Neither this Agreement nor any right of any party
under it may be assigned, except that the Buyer may assign its rights and
obligations under this Agreement to a corporation which is directly or
indirectly majority owned by Lennar.
9.8 NOTICES AND OTHER COMMUNICATIONS. Any notice or other communication
under this Agreement must be in writing and will be deemed given when it is
delivered in person or sent by facsimile (with proof of receipt at the number to
which it is required to be sent), or on the third business day after the day on
which it is mailed by first class mail from within the United States of America,
to the following addresses (or such other address as may be specified after the
date of this Agreement by the party to which the notice or communication is
sent):
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If to Prometheus:
c/o Lazard Freres Real Estate Investors, LLC
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Attention: General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Short:
▇▇▇▇▇▇ ▇▇▇▇▇
The Genesee Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇, Johnson, Robinson, ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇)▇▇▇-▇▇▇▇
If to Lennar or the Buyer:
▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Chance ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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9.9 GOVERNING LAW. (a) This Agreement will be governed by, and
construed under, the substantive laws of the State of Delaware, without giving
effect to conflicts of laws principles which would apply the laws of any other
jurisdiction.
(b) Each of Lennar, the Buyer and each of the Sellers agrees that any
action or proceeding relating to this Agreement or the transactions contemplated
by it may be brought in any Federal or state court sitting in the State of
Delaware in the United States of America and each of them (i) consents to the
jurisdiction of each of those courts in any such action or proceeding, (ii)
agrees not to seek to have the venue of any such action or proceeding changed
because of inconvenience of the forum or otherwise (except that nothing in this
Paragraph will prevent a party from removing an action from a state court to a
Federal court sitting in that state), and (iii) agrees that process in any such
action or proceeding may be served by registered mail or in any other manner
permitted by the rules of the court in which the action or proceeding is
brought.
9.10 AMENDMENTS. This Agreement may be amended only by a document in
writing signed by Lennar and each of the Sellers.
9.11 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, some of which may be signed by fewer than all the parties or may
contain facsimile copies of pages signed by some of the parties. Each of those
counterparts will be deemed to be an original copy of this Agreement, but all of
them together will constitute one and the same agreement.
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IN WITNESS WHEREOF, Lennar, the Buyer and each of the Sellers have
executed this Agreement, intending to be legally bound by it, on the day shown
on the first page of this Agreement.
LENNAR CORPORATION
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
Title: Vice President
FG ACQUISITION CORPORATION
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
Title: Secretary
PROMETHEUS HOMEBUILDERS LLC
By: LF STRATEGIC REALTY INVESTORS II L.P.,
its managing member,
By: LAZARD FRERES REAL ESTATE
INVESTORS L.L.C., its general partner
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Title: Managing Principal and Chief
Financial Officer
/S/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
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