ASSET PURCHASE AGREEMENT
AMONG
THE FORTRESS GROUP, INC.
AND
X. X. XXXXXX CONSTRUCTION, INC.
AND
XXXXX XXXXXX
Asset Purchase Agreement
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made as of this
28 of February, 1997, between The Fortress Group, Inc., a Delaware corporation
("Fortress"), Fortress-Florida, Inc., a Delaware corporation (the "Purchaser")
and X. X. Xxxxxx Construction, Inc., a Florida corporation ("DWHC" - "Seller")
and Xxxxx Xxxxxx (the "Principal").
WHEREAS, DWHC is engaged in the business of constructing and selling
unattached residential single-family homes in Xxxxx, St. Xxxxx, and Clay
Counties, Florida (the "Business"),
WHEREAS, DWHC desires to sell and Purchaser desires to purchase
substantially all of the Assets (as defined below) of the Business, except those
certain Excluded Assets (as defined below).
NOW THEREFORE, in consideration of the mutual covenants of the parties
set forth in this Agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 Agreement to Sell and Purchase. Upon the terms and subject to the
conditions set forth herein and in reliance on the respective representations
and warranties of the parties, DWHC shall sell the Assets to Purchaser, and
Purchaser shall purchase the Assets from DWHC on the Closing Date and at the
time and place of Closing referred to below, for the consideration and in
accordance with the provisions of Article II hereof.
1.2 Assets. The term "Assets" means all the assets of, including,
without limitation, the following:
(a) Balance Sheet Assets. All of the assets reflected on
DWHC's balance sheet as of December 31, 1996 attached hereto as
Schedule 1.2(a) (collectively, the "Balance Sheet"), except for those
assets disposed of after December 31, 1996 in the ordinary course of
business consistent with past practices and this Agreement, and all
assets subsequently acquired. Purchaser acknowledges that distributions
of cash were made to shareholders prior to the entering into of this
Agreement and that additional distributions will be made to
shareholders for estimated 1996 income tax payments due because of DWHC
earnings for 1996 prior to closing.
(b) Real Property. All real property on Schedule 1.2(b)
hereto, together with (i) all buildings, fixtures, and improvements
located thereon or attached thereto, (ii) all easements, franchises,
licenses, permits, and rights-of-way appurtenant to or
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otherwise benefiting the real property or the buildings, fixtures, or
improvements located thereon, and (iii) all development rights, mineral
rights, water rights, utility capacity reservations, and other rights
and appurtenances affecting or pertaining to the real property or the
buildings, fixtures, or improvements located thereon. The real property
described on Schedule 1.2(b) shall be listed under two headings:
"Developed Real Estate" and "Real Property Leases". The real estate
listed under the Heading "Developed Real Estate" shall be referred to
herein as the "Real Property". Schedule 1.2(b) discloses the current
price of each (x) owned lot, (y) model house, and (z) 'spec' house.
Purchaser acknowledges that Seller has optioned property
adjacent to land known as the Xxxxxx Tract. Seller shall have the right
to modify any and all plans, plats, permits or approvals to allow
Seller to access for development of the optioned property through the
Xxxxxx Tract. Access shall mean the ability for Seller to extend roads,
water, sewer, drainage, electric and any other utilities or
conveniences necessary for development of the adjacent property.
Prior to January 1, 1998, Purchaser agrees to complete, and
dedicate to the City of Jacksonville, Jacksonville Electric Authority
and United Water of Florida or Utility Company as appropriate, at
Purchaser's expense, the portion of the subdivision streets, together
with all utilities, including, but not limited to, water, sewer,
drainage and electric, from XxXxxxxx Road to the end of the cul-de-sac
of Road "B" as shown on the approved engineering plans titled XxXxxxxx
Subdivision, stamped and certified by Xxxx Xxxx, P. E. on August 14,
1996.
Seller shall retain at the February 28, 1997 closing, title to
the Tract "A" and a 7-1/2 foot utility easement reservation along each
side of Tract "A" as shown on Exhibit MR-1 attached hereto, it being
the intent that Tract "A" will connect the current end of Road "B"
together with adjacent easements, to the optioned property.
Purchaser also acknowledges that the Mitigation Parcel as
shown on Exhibit MR-2, attached hereto, shall be excluded from the
Asset Purchase Agreement.
(c) Acquired Contracts. All rights and benefits of DWHC in
each sales agreement described on Schedule 1.2(c ) hereto under which
DWHC is obligated to construct a residence or other building (the
"Acquired Contracts") and all such agreements, arrangements,
commitments, contracts and options relating to its Business that DWHC
enters into after the date hereof in the ordinary course of business
consistent with past practices and this Agreement.
(d) Land Contracts. All rights and benefits of DWHC in the
land contracts described in Schedule 1.2(d), hereto ("Land Contracts");
provided, however, letters of credit connected with Land Contracts are
not included in the conveyance and shall be replaced by Purchaser prior
to or at the time of closing.
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(e) Deposits. All deposits relating to any Acquired Contract
or the Business and all xxxxxxx money and escrowed amounts in respect
thereof to the extent of DWHC's rights or benefits therein described in
Schedule 1.2(e), except contested deposits identified as such in
Section 1.2, Excluded Assets.
(f) Personal Property. All equipment, furniture, furnishings,
inventory, machinery, software, supplies, tools, vehicles, and other
personal property used exclusively in connection with the home-building
business of DWHC (the "Personal Property") generally described in
Schedule 1.2(f), but not including the furniture listed as Excluded
Assets in Schedule 1.2.
(g) Intellectual Property. Subject to a non-exclusive right in
Xxxxx X. Xxxxxx to use the same, all rights and benefits of DWHC in:
(i) all architectural, building, and engineering designs, drawings,
specifications, and plans described in Schedule 1.2(g), (ii) all
processes, know-how, technical data, and other trade secrets, if any,
(the " Trade Secrets"), (iii) all sales forms and promotional and
advertising materials, (iv) all copyrights, patents, trademarks, and
applications, registrations, and renewals with respect thereto
described under the heading "Intellectual Property" on Schedule 1.2(a)
hereto, including the name "X. X. Xxxxxx Construction" (collectively,
the "Intellectual Property") and identified in Schedule 1.2(g), and (v)
all other proprietary information or rights, if any, acquired since the
date hereof; provided, however, the right to use the name "X. X. Xxxxxx
Construction" shall be limited to a period of three years and further
subject to a duty in Purchaser to use its good faith effort to preserve
the good will value of the name. The rights and benefits with respect
to each transferred trademark shall also include all goodwill
associated therewith. Purchaser agrees not to license to any third
party, other than Xxxxx X. Xxxxxx, the right to use any intellectual
property within 150 miles of Jacksonville, Florida. In the event of a
material default by purchaser under this agreement or the Land Purchase
Agreement attached hereto as Exhibit E, Purchaser shall lose the
right to use the name X.X. Xxxxxx Construction and it may be used by
DWHC, its successors or assigns.
(h) Permits. To the extent assignable and transferable, all
approvals, authorizations, certificates, consents, franchises,
licenses, permits, rights, variances, and waivers acquired to be used
in connection with DWHC's home-building business, and all agreements
with governmental and other authorities in the nature thereof.
(i) Cash and Accounts Receivable. All of DWHC's cash on hand,
on deposit, or invested and all accounts and notes receivable.
(j) Third Party Warranties. To the extent assignable, all
rights and benefits under any manufacturer's, subcontractor's,
supplier's, merchant's, repairmen's or other third-party warranties,
guarantees, and service or replacement programs relating to any Asset
or the Business.
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(k) Books and Records. All of the books, instruments, papers,
and records of whatever nature and wherever located that relate to the
home-building business of DWHC, whether in written form or another
storage media, including without limitation (i) accounting and
financial records, (ii) property records and reports, (iii) customer,
subcontractor, and supplier lists, (iv) environmental records and
reports, (v) personnel and labor relations records, and (vi) property,
sales, or transfer tax records and returns, provided that such books,
instruments, papers, and records shall exclude any documents relating
exclusively to the Excluded Assets, the formation of DWHC, corporate
minutes and stock records, other organizational documents, and the
income tax records and returns of DWHC; provided, however, Purchaser
will make all of the Books and Record available to DWHC after the
Closing as needed.
1.2 Excluded Assets. Notwithstanding Section 1.2 hereof, DWHC retains
all of its right, title, and interest in, to, and under the assets, interests,
franchises, properties, and rights described on Schedule 1.2 hereto
(collectively with any other items excluded pursuant to this Section 1.2, the
"Excluded Assets").
1.3 Consents. Promptly after the date hereof and except as otherwise
provided herein, DWHC shall use reasonable efforts to obtain all approvals,
consents, notices, and waivers required to transfer any Asset to the Purchaser.
These efforts may continue after closing. Purchaser shall have responsibility to
obtain approvals to permit Purchaser to assume the Liabilities described in
Section 2.1(a) hereof (collectively, the "Consents"), in form and substance
satisfactory to the Purchaser and DWHC shall use its best efforts to assist
Purchaser in obtaining those approvals. Except as provided in Section 2.4(b), in
the event those approvals are not obtained, Purchaser shall pay off the
liabilities at closing. Schedule 4.7 hereto describes each Consent.
ARTICLE II
CONSIDERATION AND MANNER OF PAYMENT
2.1 Purchase Price. The consideration for the Assets purchased by
Purchaser shall be determined and paid as follows:
(a) Assumed Liabilities. The assumption at Closing of the
Assumed Liabilities (as hereinafter defined) by Purchaser;
(b) Cash. Subject to a post-closing adjustment pursuant to
Section 2.2, below, at Closing Purchaser shall wire transfer in
immediately available funds to an account or accounts of DWHC at a bank
or banks specified in writing at least one (1) business day prior to
the Closing Date the greater of $9,000,000 or 75% of the Net Worth of
DWHC on the Balance Sheet Date; provided, however, the amount wired
shall not exceed 90% of that Net Worth. The term "Net Worth" means the
excess of DWHC's total assets over its total liabilities. For purposes
of this Agreement, the "Balance Sheet Date" shall mean December 31,
1996 unless the Closing takes place after March 1, 1997 in which case
the Balance Sheet Date shall mean the last day of the month for the
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month immediately preceding the month in which the Closing takes place.
Notwithstanding the foregoing, if the reason the Closing does not take
place on or before March 1, 1997 is the failure of DWHC to provide
Fortress the Schedules called for under this Agreement by February 25,
1997, the Balance Sheet Date will remain December 31, 1996. DWHC's
balance sheet for the Balance Sheet Date is attached hereto as
Exhibit A.
(c) Preferred Stock. At Closing Fortress shall deliver to DWHC
Fortress Class B Convertible Preferred Stock having a value equal to
the difference between (i) the Net Worth of DWHC on the Balance Sheet
Date and (ii) the cash wired under subsection (b), above. The Fortress
Class B Convertible Preferred Stock will have a par value of $100, a
liquidation value of $100 and each share of preferred stock will be
convertible into 10 shares of Fortress Common Stock. After conversion
the Fortress Common Stock will not be subject to a lock-up. The Class B
Convertible Preferred Stockholders will have the right to convert all
or part of his Class B Convertible Preferred Stock to Fortress Common
Stock at any time. Additionally, if a Holder chooses to convert after
the first anniversary of the Closing, then, Fortress agrees that if the
value of 10 shares of Fortress Common Stock is less than $100 on the
date of conversion, Fortress will give such cash or issue such
additional Fortress Common Stock to Class B Convertible Preferred
Stockholder to insure that he/she will receive value equal to $100 for
each Class B Convertible Preferred Share converted. At Closing the
Certificate of Designation of the Fortress Class B Convertible
Preferred will be attached as Exhibit B, which shall conform to the
foregoing principal terms.
The continuous offering of Fortress Common Stock pursuant to the
conversion rights of the Class B Convertible Preferred Stock will be
registered under the Securities Act of 1933, as amended (the "1933
Act"), and any applicable state securities laws effective promptly
following the Closing and for so long as any of the Class B Convertible
Preferred Stock shall remain unexercised. Fortress heretofore has filed,
and the Securities and Exchange Commission ("SEC") has approved, a shelf
registration statement on Form S-1 relating to the registration of an
additional three million shares of common stock. Because the numbers
used for the filing are "stale" as defined by the SEC, it is necessary
to file with the most current quarter-ended financial information on
file with SEC. Fortress hereby covenants to do so promptly and use its
best efforts to maintain the effectiveness of such registration with the
SEC for so long as any of the Class B Convertible Preferred Stock issued
hereunder shall remain outstanding, subject to any future, temporary
suspensions in the use thereof that may be necessary from time to time
to effect an amendment thereof in compliance with the 1933 Act and any
applicable state securities laws.
(d) Additional Consideration. Additional consideration up to a
maximum of $6,000,000, contingent upon the financial performance of
Fortress-Florida, Inc. for the years ended December 31, 1997, 1998,
1999, 2000, 2001 and 2002 as set forth in Annex I attached hereto and
made a part hereof.
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Adjustments to the Purchase Price.
(a) Closing Balance Sheet. (1) Within thirty (30) days after
Closing, DWHC will deliver to Fortress and DWHC's current auditor an
unaudited balance sheet for DWHC dated as of the close of business on
the date of the Closing. Purchaser shall allow any former employees of
Seller to assist in preparing the balance sheet. Fortress' auditor
shall prepare an audited closing balance sheet of DWHC (as it may be
adjusted pursuant to subsection 2.2(a)(2) below, the "Closing Balance
Sheet"), which Closing Balance Sheet shall set forth the financial
condition, assets and liabilities of DWHC as of the close of business
on the date of the Closing. The Closing Balance Sheet shall be prepared
in accordance with generally accepted accounting principles ("GAAP")
which shall be applied consistent with past DWHC practices; provided,
however, no adjustment will be recognized for purposes of this section
2.2(a) based upon a change in accounting treatment or policy with
respect to an item. The Closing Balance Sheet shall include footnotes
and shall include all adjustments which would be made if the date of
the Closing were year-end.
(b) Dispute. If the Sellers shall determine in good faith that
the Closing Balance Sheet has not been prepared in accordance with the
procedures described in Section 2.2(a) above, the Sellers shall notify
Purchaser in writing thereof ("Sellers' Notice") within thirty (30)
days after delivery of the Closing Balance Sheet to the Sellers, which
notice shall set forth in reasonable detail the alleged nonconformance
with such procedures and the amount(s) in dispute. If the Sellers do
not so notify Purchaser within such period, the Closing Balance Sheet
shall become final and binding upon all parties at the end of such
period.
(c) Dispute Resolution. If the Sellers do so notify Purchaser,
the Sellers and Purchaser shall attempt in good faith to resolve such
dispute(s). If Purchaser and the Sellers are unable to resolve any
disputed item within ten (10) days after receipt of Sellers' Notice,
such disputed item(s), shall be submitted to a group of three
accounting firms, one chosen by DWHC, one chosen by Purchaser and a
third chosen by the other two (the "Arbitrators") (other than
Purchaser's public auditor or the auditor of the Acquired Companies or
regular auditors or their successors. The Arbitrators shall be
instructed to arbitrate such disputed item(s) and determine the Net
Worth of the Acquired Companies (as defined below) within thirty (30)
days. For purposes of the decision of the Arbitrators, a majority vote
shall control. The resolution of disputes by the Arbitrators so
selected shall be set forth in writing and shall be conclusive and
binding upon and non-appealable by the parties, and the Closing Balance
Sheet shall become final and binding upon the date of such resolution.
The costs of such resolution by such accounting firm shall split by the
parties. The term "Net Worth" means the excess of the total assets of
DWHC over its total liabilities, determined in accordance with GAAP
applied consistent with past DWHC practices; provided, however, no
adjustment will be recognized for purposes of this Section 2.2 based
upon a change in accounting treatment or policy with respect to an
item.
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(d) Closing Balance Sheet. The Purchase Price shall be adjusted
down, on a dollar-for-dollar basis, to the extent that the Net Worth of
DWHC reflected on the Closing Balance Sheet is less than the Net Worth
reflected on Exhibit A. The additional consideration will be returned
to Fortress within 10 business days from the date the amount is
determined, divided between cash and Preferred Stock as if the audited
Financial Statement had been used at Closing pursuant to Section 2.1.
For example, if Purchaser paid 9 Million Dollars in cash and 2 Million
Dollars in preferred stock at closing and the net worth at closing is
determined to be 8 Million Dollars, DWHC would return 1.8 Million
Dollars in cash and 1.2 Million Dollars in preferred stock.
2.3 Closing and Related Expenses and Related Taxes. Purchaser shall pay
at the Closing any stamp or other sales, transfer or transaction tax ("Transfer
Tax") imposed under the laws of the United States or any state, county,
municipality or other subdivision thereof on the direct or indirect transfer of
the Assets by DWHC to Purchaser.
2.4 Assumed Liabilities.
(a) On the Closing Date, DWHC shall assign to Purchaser and
Purchaser shall assume, discharge and perform in a timely fashion and
shall indemnify and hold harmless Xxxxx Xxxxxx and DWHC, its officers,
directors and employees from each and every obligation with respect to
the liabilities (whether arising by contract, at law or otherwise) set
forth on Schedule 2.4 attached hereto (the "Assumed Liabilities").
(b) Working with DWHC, Fortress will attempt to secure Releases
from all such assumed liabilities. If any of the assumed liabilities
(and all documents related thereto) have not been Released by all
necessary parties on the Closing Date, Fortress shall deposit with each
respective financial institution or creditor twenty-five (25%) percent
of the loan balance on each assumed liability at Closing as collateral
for the Guaranteed Obligation. Any such deposited additional collateral
shall be at least 2 Million Dollars for all assumed liabilities. If any
of the Releases (and all documents related thereto) have not been
obtained or executed by all necessary parties either prior to or within
60 days after Closing, then Fortress agrees to pay cash or other
immediately available funds to or as directed by DWHC to discharge the
Guaranteed Obligations in full immediately and without further notice
or demand from DWHC. DWHC may also negotiate with the lenders a
provision that the assumed liabilities will be due and payable in total
on that date. "Releases" shall mean an absolute, unconditional and
complete release of Xxxxx Xxxxxx, DWHC and each of its affiliates, and
their respective properties from any liability, obligation or lien
related to the Guaranteed Obligations. During the period of time Xxxxx
Xxxxxx or DWHC has any liability for the assumed liabilities, Purchaser
shall not distribute any cash or assets from Purchaser except in the
ordinary course of the operation of the business. Further, funds
flowing from assumed liabilities shall not be used by Purchaser for the
construction of non- presold houses. If the releases are not obtained
within 60 days, DWHC and Xxxxx
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Xxxxxx shall be entitled to a money judgment against Purchaser in the
amount of the guaranteed obligations plus 50 percent of any profits
Purchaser may have made between the date of closing and the date of
collection of that judgment. Any recovery under the money judgment
shall first be used to pay the balance due on the assumed liabilities
and Purchaser may pay the amount due any lender and receive a credit in
that amount against the judgment amount.
2.5 Excluded Liabilities. For purposes of this Agreement "Excluded
Liabilities" shall mean the following except to the extent included on Schedule
2.4 hereof: (a) any liabilities or obligations owed for any broker or similar
services rendered in connection with the transactions contemplated hereby, (b)
any liabilities due employees except for accrued commissions due for sold homes
and those listed on Schedule 2.4(a), (c) any liabilities or obligations with
respect to any Environmental Requirements (as defined in Article 4.19 hereof) in
connection with the Real Property for conditions that existed, or conduct
relating to the period, prior to the Closing Date, (d) any expenses incurred by
DWHC in connection with this Agreement or the transactions contemplated hereby,
(e) any liabilities or obligations with respect to any pending or threatened
action, alternate dispute resolution process, arbitration, charge, claim,
counterclaim, inquiry, investigation, legal action, litigation, suit, or other
proceeding, whether involving private parties or involving or before any
administrative or other governmental authority (collectively, "Legal
Proceeding") to the extent not reserved in DWHC's balance sheet for the period
ended December 31, 1996 arising out of operations of the Business prior to
Closing, (f) any product liabilities in respect of construction work performed
prior to the Balance Sheet Date on homes completed and closed prior to the
Balance Sheet Date, (g) any Taxes (as defined in Article 4.9(a) hereof), (h)
warranty obligations in excess of $250 of direct cost per home (whether in
respect of express or implied warranties) on homes completed and closed prior to
the Balance Sheet Date, (i) any liability associated with contested deposits
excluded pursuant to Section 1.2.
2.6 Taxes, Assessments, etc. Any ad valorem, real property, personal
property, or similar taxes and homeowners' or property owners' association dues
and assessments associated with the Assets that are imposed or accrue after
January 1, 1997 shall be paid by Purchaser. DWHC shall be responsible for and
shall pay and indemnify the Purchaser against and for any Taxes or assessments
due and owing for periods prior to January 1, 1997.
2.7 Tax Reporting and Allocations. The Purchaser and DWHC agree to
allocate among the Assets (a) the consideration to be paid to DWHC pursuant
hereto and (b)) the Assumed Liabilities as set forth in Schedule 2.6. The final
allocation shall be attached to this Agreement not later than 90 days after
Closing.
ARTICLE III
CLOSING
3.1 Time and Place of Closing. The purchase and sale (the "Closing")
provided for in this Agreement will take place at the offices of Xxxxxx and
Xxxxxx at 10:00 a.m. local
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time) on February 28, 1997, with an effective date of January 1, 1997, or at
such other time and place as the parties may agree. Time is of the essence.
3.2 Deliveries. At the Closing DWHC and Fortress will respective
deliver at Closing the closing documents as set forth on the Deliveries Check
List for the Closing of the Asset Purchase Agreement among The Fortress Group,
Inc. and X. X. Xxxxxx Construction and Xxxxx Xxxxxx, February 28, 1997, (the
"Deliveries Check List") herein incorporated by reference.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF DWHC
AND PRINCIPAL
DWHC represents and warrants that all of the following representations
and warranties in this Article IV are true and correct at the date of this
Agreement and shall be true at the time of Closing. Such representations and
warranties as are made at the time of Closing by DWHC shall survive the Closing.
4.1 Corporate Power and Authority; Effect of Agreement. DWHC is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Florida and has all requisite power and authority to carry
on the Business and to own or hold under lease the Assets. DWHC has all
requisite corporate power and authority to execute and deliver this Agreement,
to consummate the transactions contemplated hereby and thereby and to perform
its obligations hereunder. The execution and delivery of this Agreement by DWHC
and performance by DWHC of its obligations under this Agreement and the
consummation by DWHC of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of DWHC, and its
stockholders, in accordance with applicable law and the Articles of
Incorporation and Bylaws of DWHC. This Agreement has been duly and validly
executed and delivered by DWHC and constitutes the valid and binding obligations
of DWHC, enforceable in accordance with their respective terms, except to the
extent that such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general applicability
relating to or affecting creditors' rights generally.
4.2 Capitalization. The issued capital stock of DWHC is listed on
Schedule 4.2, and is issued only to the holders reflected on such Schedule.
4.3 Assets Used in the Business. The Assets constitute all of the
rights, properties, privileges and other assets used in the conduct of the
Business, as conducted during the twelve months preceding the date of this
Agreement, except for assets sold, disposed of or discarded in the ordinary
course of business.
4.4 Title to Personal Property. Except as disclosed in Schedule 4.7,
DWHC is the owner of all of the Personal Property free and clear of any
Encumbrances.
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4.5 Financial Statements. Except as set forth in Schedule 4.5, DWHC has
delivered to Fortress as Schedule 4.5 copies of the following financial
statements (the "Financial Statements").
(a) Audited Balance Sheets, Income Statements, Statements of
Stockholders' Equity, and Statements of Cash Flows for the years ended
December 31, 1994, and 1995.
(b) Unaudited Balance Sheet, Income Statement, Statements of
Stockholders' Equity, and Statement of Cash Flows for the year ended
December 31, 1996.
(c) Unaudited Balance Sheets and Income Statements for the
three months ended March 31, 1994, 1995 and 1996, the three months
ended June 30, 1994, 1995 and 1996, and the three months ended
September 30, 1994, 1995 and 1996.
Each of the Financial Statements is accurate and complete in all
material respects, is consistent with the books and records of DWHC (which, in
turn, are accurate and complete in all material respects) and fairly presents
DWHC's financial condition, assets and liabilities as of their respective dates
and thereto in accordance with GAAP, consistently applied among the periods
which are subject of the Financial Statements, except unaudited interim
financial statements which were or are subject to normal and recurring year-end
adjustments which were not and are not expected to be material in amount and the
addition of required footnotes thereto.
Except as reflected on Schedule 4.5, as of the date hereof and as of
the Closing, DWHC does not have any debts, liabilities or obligations of
any nature (whether accrued, absolute, contingent, direct, indirect,
perfected, inchoate, unliquidated or otherwise), except
(i) to the extent clearly and accurately reflected
and accrued for or fully reserved against in the Financial
Statements, or
(ii) for liabilities specifically delineated as to
nature and amount on the Schedules to this Agreement or
liabilities not assumed pursuant to Section 2.4,
(iii) for liabilities and obligations which have
arisen after December 31, 1995 in the ordinary course of
business consistent with past custom and practice (none of
which is a liability resulting from breach of contract,
material breach of warranty, tort, infringement claim or law
suit).
4.6 Permits. DWHC possesses the licenses necessary for the lawful
conduct of its Business, the absence of which would materially adversely affect
the Assets or the Business (collectively, the "Licenses"). Each License is
listed on Schedule 4.6 hereto.
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4.7 Real Property. Under the heading "Developed Real Estate", Schedule
1.2(b) hereto sets forth each parcel of real estate that DWHC is conveying to
Purchaser pursuant to this Agreement (the "Real Property").
(a) Access. The Real Property has all necessary access to and
from public highways, streets, and roads and no pending or, to the best
Knowledge of DWHC, threatened proceeding or other fact or condition
exists that could limit or result in the termination of such access.
Except as disclosed in Schedule 4.7(a), the Real Property is serviced
by electric, sewage, and water facilities, which facilities are in
compliance, in all material respects, with all applicable Laws.
(b) Good and Marketable Title. DWHC has good and marketable
title in fee simple to its Real Property, subject to the Permitted
Encumbrances referred to in Section 4.7 hereof.
(c) Compliance with Laws. To the Knowledge of DWHC the
buildings and improvements on the Real Property and the Leased Real
Property and the subdivision and improvements of the Real Property do
not violate, in any material respect, (i) any applicable Law, including
any building, set-back, or zoning law, ordinance, regulation, or
statute, or other governmental restriction in the nature thereof, or
(ii) any restrictive covenant affecting any such property.
(d) Subdivision Standards. To DWHC Knowledge the Real Property
and all lots included therein conform in all material respects to the
appropriate governmental authority's subdivision standards.
(e) Construction Conditions. To DWHC's Knowledge each of the
lots included in the Real Property is stable and otherwise suitable for
the construction of a residential structure by customary means and
without extraordinary site preparation measures.
4.8 Permitted Encumbrances. Except as disclosed on any of the Schedules
attached hereto, DWHC's title to the Assets is free and clear of all
Encumbrances other than Encumbrances disclosed in title commitments or assumed
liabilities (collectively, the "Permitted Encumbrances").
4.9 Litigation. Except as set forth in Schedule 4.9 (which shall
disclose the parties to, nature of, and relief sought for each matter to be
disclosed on Schedule 4.9) there is no suit, action, proceeding, investigation,
claim or order pending or, to the Knowledge of DWHC, threatened against DWHC
with respect to the Business or proposed business activities involving a claim
in excess of $150,000 which is material to DWHC before any court, or before any
Governmental Authority (collectively, "Claims").
4.10 Environment.
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(a) Except as set forth in Schedule 4.10
(i) To its best Knowledge DWHC is in compliance with
all Environmental Requirements which would have a material
adverse effect on the business of DWHC, and
(ii) DWHC possesses all required permits, licenses
and certificates, and have filed all notices or application
required thereby.
As used herein, "Environmental Requirements" shall mean all applicable
federal, state and local laws, rules, regulations, ordinances and requirements
relating to pollution and protection of the environment, all as amended or
hereafter amended.
(b) Except as disclosed in Schedule 4.10:
(i) DWHC has not been subject to, or received any
notice of, any private, administrative, or judicial action or
notice of any intended private, administrative, or judicial
action relating to the presence or alleged presence of
Hazardous Materials in, under, or upon any Real Property
currently or formerly owned by (A) DWHC, or (B) any other
person that has at any time disposed of Hazardous Materials on
behalf of DWHC which would have a material adverse effect on
the business of DWHC; and
(iii) there are no pending or, to the Knowledge of
DWHC, threatened actions or proceedings (or notice of
potential actions or proceedings) from any Governmental
Authority or any other entity regarding any matter relating to
health, safety or protection of the environment which would
have a material adverse effect on the business of DWHC.
"Hazardous Materials" for purposes of this Agreement shall include,
without limitation: (A) hazardous materials, hazardous substances, extremely
hazardous substances or hazardous wastes, as those terms are defined by the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
ss.9601 et seq. ("CERCLA"), the Resource Conservation and Recovery Act, 42
U.S.C. ss.6901 et seq. ("RCRA"), and any other Environmental and Safety
Requirements; (B) petroleum, including, without limitation, crude oil or any
fraction thereof which is liquid at standard conditions of temperature and
pressure (60 degrees Fahrenheit and 14.7 pounds per square inch absolute); (C)
any radioactive material, including, without limitation, any source, special
nuclear, or by-product material as defined in 42 U.S.C. ss.2011 et seq.; and (D)
asbestos in any form or condition.
(c) There are and have been no past or present events,
conditions, circumstances, activities, practices, incidents, or actions
which could reasonably be expected to interfere with or prevent
continued compliance with any Environmental Requirements, give rise to
any legal obligation or liability, or otherwise form the basis of any
claim, action, suit, proceeding, hearing or investigation against or
involving
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DWHC or any Real Property presently or previously owned or used by DWHC
under any Environmental Requirements or related common law theories,
except as identified in Schedule 4.10.
4.11 Compensation: Employment Agreements. DWHC has delivered to
Fortress an accurate schedule (Schedule 4.11) showing (i) all current officers,
directors and key employees of DWHC in its Business and the rate of compensation
(and the portions thereof attributable to salary, bonus and other compensation,
respectively) of each of such persons as of December 31, 1996 and the date
hereof and (ii) separately listing all employment agreements with such officers,
directors and key employees. DWHC has provided to Fortress true, complete and
correct copies of any employment agreements for persons listed on Schedule 4.11.
4.12 Business Conduct. Except as set forth on Schedule 4.12, since
December 31, 1996, DWHC has conducted its Business only in the ordinary course
consistent with past custom and practices and has incurred no liabilities other
than in the ordinary course of business consistent with past custom and
practices.
4.13 Trademarks, Service Marks, Trade Names, and Copyrights. The
trademarks, service marks, trade names, and copyrights (including computer
software and data) ("Intellectual Property") used by DWHC in the conduct of the
Business are owned by DWHC, except for such computer software as is licensed to
DWHC. The Intellectual Property is valid and in good standing, free and clear of
any Encumbrances and is not being challenged in any way. DWHC has not infringed
on nor are they now infringing on any trade xxxx, service xxxx, trade name, or
copyright of or belonging to another person. There is no claim pending against
DWHC with respect to alleged infringement of any trademark, service xxxx, trade
name, or copyright owned by any person nor, to DWHC's Knowledge, does the
operation of any aspect to the Business in the manner in which it has heretofore
been operated or is presently operated give rise to any such infringement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF FORTRESS AND PURCHASER
Fortress and Purchaser represent and warrant that the representations
and warranties set forth below are true and correct as of the date of this
Agreement and shall be true and correct at the time of Closing and that such
representations and warranties as made at the time of Closing shall survive the
Closing.
5.1 Organization. Each of Fortress and Purchaser is duly organized,
validly existing, and in good standing under the laws of the state of Delaware.
5.2 Authorization. Each of Fortress and Purchaser has full power, right
and authority to execute and deliver this Agreement and to perform their
obligations hereunder and
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thereunder. The execution and delivery of this Agreement by Fortress and
Purchaser and performance of the obligations under this Agreement have been duly
and properly authorized by all requisite corporate action in accordance with
applicable law and with the Certificate of Incorporation and by-laws of each.
This Agreement is valid and binding upon Fortress and Purchaser in accordance
with their respective terms, subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights generally.
5.3 Transaction Not a Breach. Neither the execution and delivery of
this Agreement, nor its performance will violate, conflict with, or result in a
breach of any provision of any Law, rule, regulation, order, permit, judgment,
injunction, decree or other decision of any court or other tribunal or any
Governmental Authority binding on Fortress or Purchaser or conflict with or
result in the breach of any of the terms, conditions or provisions of the
Certificate of Incorporation or the By-laws of Fortress or Purchaser or of any
contract, agreement, mortgage or other instrument or obligation of any nature to
which Fortress or Purchaser is a party or by which Fortress or Purchaser is
bound.
5.4 Opinion of Counsel As to Stock. At closing Purchaser agrees to
deliver to DWHC and its shareholders an opinion of legal counsel that Purchaser
has the legal authority to enter into and close this transaction, that the
preferred stock referred to herein is lawfully issuable by Purchaser and that
such preferred stock may legally be exchanged for common stock under the
provisions of this Agreement. That there is no current or threatened action by
any party or governmental authority that would prevent the issuance of the
preferred stock, the exchange of the preferred stock for the common stock or the
trading of the common stock.
That in his opinion, the continuous offering of Fortress Common Stock
pursuant to the conversion rights of the Class B Convertible Preferred Stock
will be registered under the Securities Act of 1933, as amended (the "1933
Act"), and any applicable state securities laws effective promptly following the
Closing and for so long as any of the Class B Convertible Preferred Stock shall
remain unexercised. Fortress heretofore has filed, and the Securities and
Exchange Commission ("SEC") has declared effective, a shelf registration
statement on Form S-1 relating to, among other things, the Common Stock issuable
upon conversion of the Class B Convertible Preferred Stock; however, the use of
such registration statement has been suspended temporarily pending the updating
of the financial statements included therein through fiscal 1996, which is
expected to be accomplished on or before the date of Closing. Fortress hereby
covenants to use its best efforts to maintain the effectiveness of such
registration with the SEC for so long as any of the Class B Convertible
Preferred Stock issued hereunder shall remain outstanding, subject to any
future, temporary suspensions in the use thereof that may be necessary from time
to time to effect an amendment thereof in compliance with the 1933 Act and any
applicable state securities laws.
5.5 Confidentiality. In the event this transaction shall not close,
Purchaser agrees to keep confidential and not disclose to any third party any
information it has learned from DWHC during its investigation of the proposed
transaction. Purchaser further agrees that if
15
this transaction shall not close, it shall not use any of the information it has
learned from DWHC to further its own business or to compete in any way against
DWHC.
ARTICLE VI
COVENANTS PRIOR TO CLOSING
6.1 Access and Cooperation; Due Diligence. Between the date of this
Agreement and the Closing, DWHC will afford to the officers and authorized
representatives of Fortress reasonable access to all of DWHC's sites,
properties, books and records during normal business hours and with prior
notice; provided, however, Fortress and its agents will be restricted to working
through Xxxxx Xxxxxx, Xxxx Xxxxxx, or Xxxx Xxxxxxx or their designee. DWHC will
furnish Fortress with such additional financial and operating data and other
information as to the business and properties of DWHC as Fortress may from time
to time reasonably request. DWHC will cooperate with Fortress, its
representatives, engineers, auditors and counsel in the preparation of any
documents or other material which may be required in connection with any
documents or materials required by this Agreement. Fortress and DWHC will treat
with strict confidence all information obtained in connection with the
negotiation and performance of this Agreement, even if this transaction shall
not close.
6.2 Business Conduct. From the date hereof through the date of Closing,
except as otherwise provided for in, or contemplated by, this Agreement, DWHC
covenants and agrees that DWHC will operate the Business in the ordinary and
usual course in substantially the same manner as it is presently operated.
6.3 Non-Negotiation. In consideration of the substantial expenditure of
time, effort and expense undertaken by Fortress in connection with its due
diligence review and the preparation and execution of this Agreement, DWHC and
the principals agree that neither they nor their representatives, agents or
employees will, after the execution of this Agreement until the earlier of (i)
the termination of this Agreement, (ii) the Closing, or March 2, 1997, directly
or indirectly, solicit, encourage, negotiate or discuss with any third party
(including by way of furnishing any information concerning DWHC) any acquisition
proposal relating to or affecting the Company, or any direct or indirect
interests in DWHC, whether by purchase of assets or stock, purchase of interest,
merger or other transaction ("Acquisition Transaction").
6.4 Schedules and Exhibits. Notwithstanding language that implies
otherwise, as of the execution of this Agreement, most Schedules and Exhibits
referred to in it have not been delivered to the other party and have not yet
been attached to the Agreement. Schedules E, M, L, and K, have been attached
to this Agreement before execution. The Schedules will be provided within a
reasonable time from the date hereof and in all events prior to Closing. Each
party hereto agrees that with respect to the representations and warranties of
such party contained in this Agreement, such party shall have the continuing
obligation until the Closing timely to supplement or amend promptly all the
schedules to this Agreement (the "Schedules"), to correct any matter which would
constitute a breach of any such party's representations and warranties herein,
or to reflect any change in the information disclosed therein. For all
16
purposes of this Agreement, including without limitation for purposes of
determining whether the conditions set forth in Sections 7.1 and 7.2 have been
fulfilled, the Schedules hereto shall be deemed to be the Schedules as amended
or supplemented pursuant to this Section 6.4.
ARTICLE VII
CONDITIONS PRECEDENT TO THE CLOSING
7.1 Conditions Precedent to Obligations of Purchaser. The obligations
of Purchaser under this Agreement to consummate the transactions contemplated
hereby will be subject to the satisfaction, at or prior to the Closing, of all
of the conditions, any one or more of which may be waived at the option of
Purchaser, set forth in the Conditions to Close set forth in Exhibit C-1
attached hereto and made a part hereof.
7.2 Conditions Precedent to Obligations of DWHC. The obligations of
DWHC under this Agreement to consummate the transactions contemplated hereby
will be subject to the satisfaction, at or prior to the Closing, of all of the
conditions, any one or more of which may be waived at the option of DWHC, set
forth in the Conditions to Close set forth in Exhibit C-2 attached hereto and
made a part hereof.
ARTICLE VIII
OTHER AGREEMENTS
8.1 Nonassignable Contracts. Without limiting the generality or effect
of any provision of this Agreement, to the extent that any Contract or License
to be assigned, transferred or contributed ("Transferred") pursuant to the terms
of this Agreement is not capable of being Transferred without the consent,
approval, novation or waiver of a third person or entity or a Governmental
Authority, or if such Transfer or attempted Transfer would constitute a breach
thereof or a violation of any Law, nothing in this Agreement will constitute a
Transfer or an attempted Transfer thereof.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification by Seller. From and after the Closing, DWHC agrees
to indemnify, defend and save Fortress and Purchaser, and their officers,
directors, employees, and agents, (each, a "Purchaser Indemnified Party"), at
all times from and after this Agreement through the Expiration Date (as
hereinafter defined) harmless from and against, and to promptly pay to a
Purchaser Indemnified Party or reimburse a Purchaser Indemnified Party for, any
and all liabilities (whether contingent, fixed or unfixed, liquidated or
unliquidated, or otherwise), obligations, deficiencies, demands, claims, suits,
actions, or causes of action, assessments, losses, costs, expenses, interest,
fines, penalties, actual or punitive damages or costs or expenses of any and all
investigations, proceedings, judgments, environmental analyses, remediations,
settlements and compromises (including reasonable fees and expenses of
attorneys, accountants and other experts) (individually and collectively, the
17
"Losses") sustained or incurred by any Purchaser Indemnified Party relating to,
resulting from, arising out of, or otherwise by virtue of any of the following:
(a) any misrepresentation or breach of a representation or
warranty made herein by DWHC, or non-compliance with or breach by DWHC
of any of the covenants or agreements contained in this Agreement or
other agreements to be performed by DWHC; and
(b) any Losses relating to, resulting from or arising out of
any violations of, or obligations under, Environmental Requirements
relating to acts, omissions, circumstances or conditions existing on
or prior to the Closing whether or not such acts, omissions,
circumstances or conditions constituted a violation of Environmental
Requirements as then in effect;
(c) the Excluded Liabilities.
This indemnity shall expire thirty-six (36) months from the date of closing.
9.2 Indemnification by Purchaser. From and after the Closing, Fortress
agrees to indemnify, defend and save DWHC, its officers, directors, employees,
stockholders (but only to the extent of misrepresentations concerning Fortress
preferred or common stock) and agents, and Xxxxx Xxxxxx and Xxxxxx Xxxxxx (each,
a "DWHC Indemnified Party") forever harmless from and against, and to promptly
pay to a DWHC Indemnified Party or reimburse a DWHC Indemnified Party for, any
and all Losses sustained or incurred by any DWHC Indemnified Party relating to,
resulting from, arising out of, or otherwise by virtue of any of the following:
(i) any misrepresentation or breach of a representation or warranty made herein
by Fortress, (ii) non-compliance with or breach by Purchaser or Fortress of any
of the covenants or agreements contained in this Agreement or any of the
Agreements to be performed by Purchaser; (iii) the Assumed Liabilities; or (iv)
violation by Purchaser of any governmental law or regulation.
9.3 Indemnification Procedure for Third Party Claims. In the event that
subsequent to the Closing any person or entity entitled to indemnification under
this Agreement (an "Indemnified Party") asserts a claim for indemnification or
receives notice of the assertion of any claim or of the commencement of any
action or proceeding by any entity who is not a party to this Agreement or an
Affiliate of such a party (including, but not limited to any domestic or foreign
court, government, or Governmental Authority or instrumentality, federal state
or local) (a "Third Party Claim") against such Indemnified Party, against which
a party to this Agreement is required to provide indemnification under this
Agreement (an "Indemnifying Party"), the Indemnified Party shall give written
notice together with a statement of any available information regarding such
claim to the Indemnifying Party within sixty (60) days after learning of such
claim (or within such shorter time as may be necessary to give the Indemnifying
Party a reasonable opportunity to respond to such claim. The Indemnifying Party
shall have the right, upon written notice to the Indemnified Party (the "Defense
Notice") within thirty (30) days after receipt from the Indemnified Party of
notice
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of such claim, which notice by the Indemnifying Party shall specify the counsel
it will appoint to defend such claim ("Defense Counsel"), to conduct at its
expense the defense against such claim in its own name, or if necessary in the
name of the Indemnified Party; provided, however, that the Indemnified Party
shall have the right to approve the Defense Counsel, which approval shall not be
unreasonably withheld, and in the event the Indemnifying Party shall propose an
alternate Defense Counsel, which shall be subject again to the Indemnified
Party's approval.
(a) In the event that the Indemnifying Party shall fail to
give such notice within 30 days, it shall be deemed to have elected not
to conduct the defense of the subject claim, and in such event the
Indemnified Party shall have the right to conduct such defense in good
faith and to compromise and settle the claim without prior consent of
the Indemnifying Party and the Indemnifying Party will be liable for
all costs, expense, settlement amounts or other Losses paid or incurred
in connection therewith.
(b) In the event that the Indemnifying Party does elect to
conduct the defense of the subject claim, the Indemnified Party will
cooperate with and make available to the Indemnifying Party such
assistance and materials as may be reasonably requested by it, all at
the expense of the Indemnifying Party, and the Indemnified Party shall
have the right at its expense to participate in the defense assisted by
counsel of its own choosing, provided that the Indemnified Party shall
have the right to compromise and settle the claim only with the prior
written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed. Without the prior written consent of
the Indemnified Party, the Indemnifying Party will not enter into any
settlement of any Third Party Claim or cease to defend against such
claim, if pursuant to or as a result of such settlement or cessation,
(i) injunctive or other equitable relief would be imposed against the
Indemnified Party, or (ii) such settlement or cessation would lead to
liability or create any financial or other obligation on the part of
the Indemnified Party for which the Indemnified Party is not entitled
to indemnification hereunder. The Indemnifying Party shall not be
entitled to control, and the Indemnified Party shall be entitled to
have sole control over, the defense or settlement of any claim to the
extent that claim seeks an order, injunction or other equitable relief
against the Indemnified Party which, if successful, could materially
interfere with the business, operations, assets, condition (financial
or otherwise) or prospects of the Indemnified Party (and the cost of
such defense shall constitute an Loss for which the Indemnified Party
is entitled to indemnification hereunder). If a firm decision is made
to settle a Third Party Claim, which offer the Indemnifying Party is
permitted to settle under this Section 9.3 and the Indemnifying Party
desires to accept and agree to such offer, the Indemnifying Party will
give written notice to the Indemnified Party to that effect. If the
Indemnified Party fails to consent to such firm offer within 30
calendar days after its receipt of such notice, the Indemnified Party
may continue to contest or defend such third Party Claim and, in such
event, the maximum liability of the Indemnifying Party as to such Third
Party Claim will not exceed the amount of such settlement offer, plus
costs and expenses paid or incurred by the Indemnified Party through
the end of such 30 day period.
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(c) Any judgment entered or settlement agreed upon in the
manner provided herein shall be binding upon the Indemnifying Party,
and shall conclusively be deemed to be an obligation with respect to
which the Indemnified Party is entitled to prompt indemnification
hereunder.
9.4 Direct Claims. It is the intent of the parties hereto that all
direct claims by an Indemnified Party against a party hereto not arising out of
Third Party Claims shall be subject to and benefit from the terms of this
Article IX. Any claim under this Article IX by an Indemnified Party for
indemnification other than indemnification against a Third Party Claim, (a
"Direct Claim") will be asserted by giving the Indemnifying Party reasonably
prompt written notice thereof, and the Indemnifying Party will have a period of
30 calendar days within which to satisfy such Direct Claim. If the Indemnifying
Party does not so respond within such 30 calendar day period, the Indemnifying
Party will be deemed to have rejected such claim, in which event the Indemnitee
will be free to pursue such remedies as may be available to the Indemnitee under
this Article IX or otherwise.
9.5 Failure to Give Timely Notice. A failure by an Indemnified Party to
give timely, complete or accurate notice as provided in Sections 9.3 and 9.4
will not affect the rights or obligations of any party hereunder except and only
to the extent that, as a result of such failure, any party entitled to receive
such notice was deprived of its right to recover any payment under its
applicable insurance coverage or was otherwise directly and materially damaged
as a result of such failure to give timely notice.
9.6 Reduction of Loss. To the extent any Loss of an Indemnified party
is reduced by receipt of payment (i) under insurance policies which are not
subject to retroactive adjustment or other reimbursement to the insurer in
respect of such payment, or (ii) from third parties not Affiliated with the
Indemnified Party, such payments (net of the expenses of the recovery thereof)
(such net payment being referred to herein as a "Reimbursement") shall be
credited against such Loss; provided, however, (x) the pendency of such payments
shall not delay or reduce the obligation of the Indemnifying Party to make
payment to the Indemnified Party in respect of such Loss, and (y) the
Indemnified Party shall have no obligation, hereunder or otherwise, to pursue
payment under or from any insurer or third party in respect of such loss. If any
Reimbursement is obtained subsequent to payment by an Indemnifying Party in
respect of a Loss, such Reimbursement shall be promptly paid over to the
Indemnifying Party. Further, if the loss of an indemnified party is reduced by
any income tax savings, the indemnifying party shall receive a credit equal to
the tax savings amount against the loss.
9.7 Subrogation. The Indemnifying Party shall be subrogated to the
Indemnified Party's rights of recovery to the extent of any Loss satisfied by
the Indemnifying Party. The Indemnified party shall execute and deliver such
instruments and papers as are necessary to assign such rights and assist in the
exercise thereof, including access to books and records of DWHC.
20
9.8 Limitation of Indemnification. Notwithstanding anything to the
contrary in this Agreement:
(a) Limitation of Years. DWHC's duty to indemnify under this
Article IX shall cease thirty-six months from the date of Closing.
(b) Threshold. DWHC's duty to indemnify under this Article IX
shall not arise until the total of all Losses sustained or incurred by
an Indemnified Party exceed $50,000 and then only for the amount by
which such Losses exceed $50,000.
ARTICLE X
DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
referred to in this Article 10:
"Affiliate Transaction" - a transaction between DWHC and any other Person or
entity that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, DWHC.
"Code" - 1986 Internal Revenue Code, as amended, and regulations issued by the
Internal Revenue Service pursuant to the Internal Revenue Code of 1986, as
amended.
"Contract" - any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
"Encumbrance" - any charge, claim, equity, judgment, lease, liability, lien,
mortgage, pledge, restriction, security interest, Tax lien, or encumbrance of
any kind.
"Government Authority" - the United States or any state, local, or foreign
government, or any subdivision, agency, or authority of any thereof.
"Hazardous Material" -- as defined in Section 4.19(b).
"Knowledge" -- an individual will be deemed to have "Knowledge" of a particular
fact if:
(a) Such individual is actually aware of such fact or other
matter; or
(b) a prudent individual could be expected to discover or
otherwise become aware of such fact or other matter during the normal
course of conducting business.
A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving, or who has at
any time served, as a director, officer, partner, executor, or trustee of such
Person (or in any similar capacity) has, or any time had, Knowledge of such fact
or other matter.
21
"Legal Requirement" -- any federal, state, local, municipal, foreign, or other
administrative order, constitution, law, ordinance, principle of common law,
regulation, statute, or treaty.
"Person" -- any individual, corporation (including non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, or other entity of
Governmental Body.
ARTICLE XI
NON-COMPETE AGREEMENT
The Seller, Purchaser and Principal agree to enter into the Non-Compete
Agreement attached hereto as Exhibit M at the time of Closing.
ARTICLE XII
MISCELLANEOUS
12.1 Notices, Consents, Etc. Any notices, consents or other
communication required to be sent or given hereunder by any of the parties shall
in every case be in writing and shall be deemed properly served if (i) delivered
personally, (ii) sent by registered or certified mail, in all such cases with
first class postage prepaid, return receipt requested, or (iii) delivered by a
recognized overnight courier service, to the parties at the addresses as set
forth below or at such other addresses as may be furnished in writing.
(a) If to DWHC:
Xx. Xxxxx Xxxxxx
00000 Xxx Xxxx Xxxx.
Xxxxxxxxxxxx, XX 00000
with a copy to:
Xxxxxxx X. Xxxxxx, Xx.
Holland & Knight LLP
00 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Xxxx Xxxxxx
Xxxxxx & Associates
0000 Xxxxxxxxxx Xxxx. Xxxx, Xxxxx X-0
Xxxxxxxxxxxx, XX 00000
(b) If to Purchaser:
THE FORTRESS GROUP, INC.
0000 XXXXXXX XXXX, XXXXX 000
00
XXXXXX, XX 00000
Attention: J. XXXXXXXX XXXXXXX
-----------------------------
Date of service of such notice shall be (x) the date such notice is personally
delivered, (y) three (3) days after the date of mailing if sent by certified or
registered mail, or (z) one (1) day after date of delivery to the overnight
courier if sent by overnight courier.
12.2 Severability. The unenforceability or invalidity of any provision
of this Agreement shall not affect the enforceability or validity of any other
provision unless that provision materially alters the agreement of the parties.
12.3 Documents. Each party will execute all documents and take such
other actions as the other party may reasonably request in order to consummate
the transactions provided for herein and to accomplish the purposes of this
Agreement.
12.4 Counterparts. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
12.5 Expenses. Except as otherwise specifically provided herein, each
of the parties shall pay all costs and expenses incurred or to be incurred by it
in negotiating and preparing this Agreement and in closing and carrying out the
transactions contemplated by this Agreement. DWHC shall not pay or obligate
Purchaser to pay any of such costs and expenses from the Assets. It is
understood that Purchaser shall be obligated to pay all transfer taxes and title
commitment fees.
12.6 Cooperation by the Parties. In addition to the covenants of Seller
contained in Article VII herein, the parties to this Agreement will use their
reasonable efforts, and will cooperate with each other of them, to secure all
necessary consents, approvals, authorizations, exemptions and waivers from third
parties as shall be required in order to enable each of them to effect the
transactions contemplated hereby, and will otherwise use their best efforts to
cause the consummation of such transactions in accordance with the terms and
conditions hereof.
12.7 Further Assurances. At any time or from time to time up to one
year after the Closing, each of the parties hereto shall, at the request of the
other of the parties hereto and at such other parties' expense, execute and
deliver any further instruments or documents and take all such further actions
are reasonably requested of it in order to consummate and make effective the
sale of the Assets pursuant to this Agreement. Any costs of such requests shall
be borne by the requesting party.
12.8 Governing Law. This Agreement shall be construed and governed in
accordance with the laws of the State of Florida, without giving effect to
principles of conflicts of law. If any lawsuit shall be brought under this
Agreement, venue shall be in Jacksonville, Florida.
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12.9 Headings. The subject headings of Articles and Sections of this
Agreement are included for purposes of convenience only and shall not affect the
construction or interpretation of any of its provisions.
12.10 Assignment. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns, but will not be assignable or delegable by any party without the prior
written consent of the other parties; provided, however, that nothing in the
Agreement is intended to limit Purchaser's ability to assign its rights or
delegate its responsibilities, liabilities and obligations under this Agreement
to any person at any time whether prior to or following the Closing without
consent, but no such assignment shall relieve Purchaser or Fortress of any of
its obligations, duties or liabilities hereunder.
12.11 Entire Agreement. This Agreement and all the Schedules and
Exhibits attached to the Agreement (which shall be deemed incorporated in the
Agreement and made a part hereof) set forth the entire understanding of the
parties and may be modified only by instruments assigned by both of the parties
hereto.
12.12 Third Parties. Nothing herein expressed or implied is intended or
shall be construed to confer upon or give to any person or entity, other than
the parties to this Agreement, any rights or remedies under or by reason of this
Agreement.
12.13 Interpretative Matters. Unless the context otherwise requires,
(i) all references to Articles, Sections, Schedules or Exhibits in this
Agreement, (ii) each accounting term not otherwise defined in this Agreement has
the meaning assigned to it in accordance with GAAP, and (iii) words in the
singular or plural include the singular and plural and pronouns stated in either
the masculine, feminine or neuter gender shall include the masculine, feminine
and neuter.
12.14 Termination. This Agreement may be terminated at any time prior
to the Closing:
(a) By the mutual written consent of Purchaser and DWHC;
(b) By either DWHC or Purchaser in writing, without liability
to the terminating party on account of such termination (provided the
terminating party is not otherwise in default or in breach of this
Agreement), if Purchaser or DWHC, respectively, shall (i) fail to
perform in any material respect its agreements contained herein
required to be performed prior to the Closing, or (ii) materially
breach any of its representations, warranties or covenants contained
herein; or
(c) In the event of termination of this Agreement pursuant to
this Section 12.14 the obligations of the parties hereunder shall
terminate except the confidentiality agreement provided for in Section
5.5 and each party will bear its own respective fees and costs.
Provided, however, that termination pursuant to clause (b) of Section
12.14
24
shall not relieve the defaulting party or breaching party from any
liabilities to the other party hereto.
(d) By Fortress (through its Board of Directors) at any time
if (i) in the course of their investigations of or due diligence with
respect to the DWHC if it shall discover a matter which could (in
Fortress' reasonable discretion) have an adverse effect on Fortress or
the Assets, (ii) Fortress shall have given written notice to the DWHC
of such dissatisfaction and of the particular information and/or issues
from which such dissatisfaction results, and (iii) DWHC shall have
failed to satisfy Fortress in its sole discretion with respect to the
information and/or issues identified in the notice.
(e) If this Agreement does not close by April 1, 1997, it
shall terminate.
12.15. Attorneys' Fees and Costs. In the event of litigation under the
provisions of this Agreement, each party shall be responsible for its own
respective attorney fees and costs.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
THE FORTRESS GROUP, INC.
By: __________________________________________
J. Xxxxxxxx Xxxxxxx
Chairman
FORTRESS-FLORIDA, INC.
By: __________________________________________
J. Xxxxxxxx Xxxxxxx
It duly authorized representative
X. X. XXXXXX CONSTRUCTION, INC.
By: _________________________________________
Xxxxx Xxxxxx, Chief Executive Officer
----------------------------------------------
Xxxxx Xxxxxx, Principal
25
ANNEX I
EARN-OUT
1. Definitions. For purposes of this Annex I the following terms have
the meanings referred to below:
"Pre-Tax Earnings" means the annual net income of Fortress-Florida,
Inc. (the "Enterprise") and any other entities managed by Enterprise,
before any charge for federal, state, or local income taxes, but after
consulting fees paid to Xxxxx Xxxxxx, as set forth in annual audited
financial statements of Enterprise prepared in accordance with
generally accepted accounting principles consistently applied;
provided, however, in computing income charges or expenses associated
with the purchase of the Assets will not be recognized, including the
amortization of the goodwill on the balance sheet from the transaction,
write-up of assets. No expense will be recognized for interest on funds
borrowed to finance the transaction.
In addition for the purposes calculating pre-tax earnings that are
subject to the earn out: overhead expenses will be normalized to be the
overhead expenses actually incurred for 1996 plus an adjustment for
inflation of 3% per year or the percentage of Revenue of the actual
overhead for 1996 times the current year Revenue which ever is greater.
2. Annual Earn-out Payment For Years Ended 1997, 1998, 1999, 2000,
2001, and 2002. DWHC shall be entitled to an earn-out payment for each of the
years 1997, 1998, and 1999, 2000, 2001, and 2002 up to a maximum cumulative
total of $6,000,000 as follows:
Year Amount Payable As Earn-out
---- --------------------------
1997 25% of Pre-Tax Earnings
1998 25% of Pre-Tax Earnings
1999 25% of Pre-Tax Earnings
2000 25% of Pre-Tax Earnings
2001 25% of Pre-Tax Earnings
2002 25% of Pre-Tax Earnings
If in any year DWHC has not, on a cumulative basis, received at least $1,000,000
per year, the percentage of Pre-Tax Earnings in the above table will be deemed
amended so that the cumulative payment or payments to DWHC are at least
$1,000,000 per year regardless of whether or not the Purchaser has any earnings
or not.
3. Payment. Fortress shall pay each Annual Earn-out Payment not later
10 days after March 1st for the year in question. The payment shall be
accompanied by a report setting forth in reasonable detail the calculation
thereof. Payment of the contingent consideration will take the form of Class B
Convertible Preferred Stock which will have a par value of $100, a
26
liquidation value of $100, and will convertible into Fortress Common Stock based
upon the following formula:
Each Class B Convertible Preferred share will be convertible
into sufficient Fortress Common Stock to equal $100, the price used to
determine the value of the Fortress Common Stock will be the average
price of the Fortress Common Stock 30 days prior to issuance of the
Class B Convertible Preferred Stock.
Class B Convertible Stockholder has the right to convert at
anytime all or part of his Class B Convertible Preferred Stock to
Fortress Common Stock, which will not be subject to a lock-up.
At Closing the Certificate of Designation for the Class B Convertible Preferred
Stock will be attached as Exhibit B which shall conform to the foregoing
principal terms.
4. Set-Off. Fortress may set-off against any amounts that Fortress owes
to Seller as an earn-out payment any amounts that Seller owes to Fortress, other
than the deposits credited as down payments pursuant to the provisions of the
Lots Sales Agreement, Exhibit E.
27
Deliveries Check List for the Closing of the Asset Purchase Agreement among The
Fortress Group, Inc. and X. X. Xxxxxx Construction and Xxxxx Xxxxxx,
February 28, 1997,
(a) Seller Deliveries. Seller will, at its sole cost and
expense, execute and deliver or cause to be executed and delivered to
Purchaser:
(i) A Xxxx of Sale and Assignment of personal
property (the "Assignment Agreement") in the form of Exhibit I
attached hereto, pursuant to which DWHC assigns the Assets to
Purchaser;
(ii) Certificate of Good Standing, dated not more
than twenty (20) days prior to the Closing, with respect to
DWHC issued by the office of the Secretary of State of
Florida;
(iii) With respect to each parcel of Real Property,
(A) an executed, acknowledged and recordable warranty deed to
such parcel in form and substance satisfactory to Purchaser,
and (B) all other documentation (including IRPTA and FIRPTA
affidavits and trust declarations) which Purchaser may
reasonably request;
(iv) The Lot Purchase Agreement attached hereto and
made a part hereof as Exhibit E, executed by Xxxxxx Land
Company, Inc. and Purchaser;
(v) The Right of First Refusal attached hereto and
made a part hereof as Exhibit F, executed by Xxxxxx Land
Company, Inc. and Purchaser;
(vi) Evidence that the Consents required to be
obtained by DWHC, except as otherwise provided herein, have
been obtained;
(vii) Certified copies of the Articles of
Incorporation and Bylaws of DWHC as in effect at the Closing;
(viii) A certificate from an officer of DWHC dated
the Closing, containing the information required pursuant to
Section 7.1, hereof;
(ix) Copies of resolutions of the stockholders and
Board of Directors of DWHC certified by the secretary thereof
as having been duly and validly adopted and in full force and
effect authorizing this transaction and performance of the
transactions contemplated hereby and thereby;
28
(x) At Purchaser's expense, such Uniform Commercial
Code lien searches and such other instruments, satisfactory to
counsel for Purchaser, showing that, except as disclosed in
Schedule 4.8 that there were no financing statements,
judgments, taxes or other Encumbrances outstanding against the
Assets as of the Closing or a date that is not more than five
(5) days prior to the Closing;
(xi) An opinion of Xxxxxx & Xxxxxx, counsel for DWHC,
dated as of the Closing, in the form of Exhibit G which shall
first be approved by counsel for DWHC;
(xii) Clearance certificates or similar documents
required by any state taxing authority in order to relieve
Purchaser of any obligation to withhold any portion of the
purchase price; and
(xiii) Such other documents and instruments as
Purchaser or its counsel reasonably shall deem necessary to
consummate the transactions contemplated hereby.
All documents delivered to Purchaser shall be in form and
substance reasonably satisfactory to counsel for Purchaser.
(b) Purchaser Deliveries. Purchaser will execute and deliver or cause
to be executed and delivered to DWHC simultaneously with delivery of
the items referred to in subsection (a) above:
(i) wire transfer as provided in Section 2.1(b);
(ii) Preferred stock as provided in Section 2.1( c );
(iii) Assumption agreement (the "Assumption
Agreement") evidencing Purchaser's assumption of the Assumed
Liabilities in the form of Exhibit H;
(iv) The Lot Purchase Agreement attached hereto and
made a part hereof as Exhibit E, executed by Xxxxxx Land
Company, Inc. and Purchaser;
(v) The Right of First Refusal attached hereto and
made a part hereof as Exhibit f, executed by Xxxxxx Land
Company, Inc. and Purchaser;
(vi) An opinion of Xxxxxxx Xxxxxxx, counsel for
Fortress, dated as of the Closing, in the form of Exhibit III;
29
(vii) A copy of a resolution by the Boards of
Directors of Fortress and Purchaser certified by the
secretaries thereof as having been duly and validly adopted
and in full force and effect authorizing execution and
delivery of this Agreement and performance of the transactions
contemplated hereby;
(viii) Certificate from an officer of Fortress and an
officer of Purchaser, dated the Closing, containing the
information required pursuant to Section 7.2 hereof; and
(ix) The Warranty Service Agreement attached hereto
as Exhibit J and made a part hereof.
(x) The Exclusive Dealings Agreement attached hereto
and made a part hereof as Exhibit K executed by Southeastern
Supply Company and Purchaser;
(xi) The lease attached hereto and made a part hereof
as Exhibit L executed by Xxxxx X. Xxxxxx and Purchaser;
(xii) Such other documents and instruments as DWHC or
its counsel reasonable shall deem necessary to consummate the
transactions contemplated hereby.
All documents delivered to DWHC shall be in form and substance
reasonably satisfactory to counsel for DWHC.
30
EXHIBIT E
AGREEMENT FOR THE PURCHASE
AND SALE OF REAL ESTATE
THIS AGREEMENT is made and executed this 28th day of February, 1997, by
and between XXXXXX LAND COMPANY, INC., a Florida corporation ("Seller"), and
FORTRESS-FLORIDA, INC., a Delaware corporation and THE FORTRESS GROUP, INC., a
Delaware corporation ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller is the owner and/or developer of certain
parcels of land located in Duval, Clay, and St. Xxxxx counties,
Florida, as described on Exhibit A-1 attached hereto and
incorporated herein. ("The Subdivision Phases").
WHEREAS, Purchaser agrees to buy, and Seller agrees to sell, pursuant
to the terms and conditions of this Agreement the lots ("Lots") listed on
Exhibit A-1 attached hereto and by this reference made a part hereof.
NOW, THEREFORE, in consideration of the terms of this Agreement and
other good and valuable consideration paid by Purchaser to Seller, the receipt
and sufficiency of which is hereby acknowledged, Seller and Purchaser hereby
agree as follows:
1. Agreement to Buy and Sell. Seller hereby agrees to sell
and Purchaser hereby agrees to buy the lots listed on Exhibit A-1.
2. Purchase Price. The purchase price for the lots shall be
the amount per lot shown on Exhibit A-2, attached hereto and made
a part hereof. The purchase price of the Lots shall be paid in
cash at the time of closing.
3. Deposit and Takedown Schedule. Purchaser, upon its execution hereof,
shall pay as a deposit the sum of Seven Million Dollars ($7,000,000.00) (the
"Deposit") to be held by Seller and credited to the sale price of the individual
lots as more fully described below:
a) Initial Closing. Purchaser shall close on the lots
described on Exhibit B, attached hereto at the time of Closing
under the Asset Purchase Agreement between The Fortress Group, Inc.
and X. X. Xxxxxx Construction, Inc. dated February 28, 1997
Purchaser may apply against the purchase price for those lots
described on Exhibit B a portion of the deposit not to exceed
$1,000,000.00. Any balance due shall be paid in cash.
1
b) Balance of Lot Takedowns. The purchase price for the
balance of the lots will be paid in cash at the time the individual lots are
closed. A pro rata percentage of the remaining deposit (Six Milion Dollars
$6,000,000.00) shall be credited and paid against the purchase price as lots are
purchased. The amount of the deposit credited to each lot shall be the remaining
balance of the deposit divided by the remaining number of lots to be purchased
($__________ per lot). Exhibit A-2 sets forth the number of lots per subdivision
phase that Purchaser shall close upon by the end of each quarter through March
1, 2000 (the "Quarterly Take-Down Schedule"), at which time the total number of
lots described in Exhibit A-2 shall have been purchased.
4. Survey and Title Insurance. The Seller is not obligated to provide
survey or title insurance to Purchaser under this Agreement. Purchaser may,
prior to closing and at Purchaser's expense, order a title insurance commitment
and/or survey. If Purchaser obtains a title insurance commitment or a survey,
they shall show no encroachments or encumbrances upon the lots, except for
recorded easements which do not make the lot unbuildable, utility agreements,
covenants and restrictions of record, drainage, utility and other easements and
similar matters shown on the subdivision plat, none of which shall render
Seller's title uninsurable or unmarketable. If Purchaser finds objections to
Seller's title which render title unmarketable or uninsurable, the Purchaser
shall notify Seller in writing, specifying the defects, within fifteen (15) days
after receipt of the title commitment or survey. Seller shall have 6 months in
which to cure such defects. If Seller is unable to cure the defects, or if
Seller refuses to cure the defects, then the Purchaser may elect to close in
accordance with the other terms and conditions of this Agreement or to terminate
this Agreement as to the Lot or Lots affected by said defect, in which event all
further rights and obligations of the parties under this Agreement as to said
affected Lot or Lots shall cease and terminate.
5. Time for Closing.
a. Initial Closing: The Initial Closing shall take place on or
before February 28, 1997.
b. Subsequent Closings: Purchaser shall close on the minimum
number of lots per subdivision phase on or before the end of each quarter as
shown on Exhibit A-2 through the first quarter of the year 2000 at which time
the total number of lots described in Exhibit A-2 shall have been purchased.
c. Acceleration of Purchase of Additional Contracted-for Lots.
Subject to availability and completion of development by Seller, Purchaser may
purchase in each subdivision more than the minimum number of lots required to be
purchased in any given quarter. Purchaser shall notify Seller at least fourteen
(14)
2
business day prior to any closing as to which Lots are to be purchased at that
closing.
6. Closings. The Lot closings shall take place at the office
of Seller's attorney, Xxxxxx & Xxxxxx or at such other mutually
agreeable location. At the closing, the following shall occur:
a. Purchaser shall: (i) pay the Seller as specified in
Paragraph 2 above for each Lot being conveyed at the closing plus Purchaser's
closing costs and any other sums due Seller pursuant to the terms of this
Agreement; (ii) execute and/or deliver to Seller any other documents or matters
required by this Agreement.
b. Seller shall: (i) execute and deliver to Purchaser a
General Warranty Deed conveying to Purchaser the Lots being purchased at the
closing, which deed shall be subject only to the utility easements, covenants,
restrictions and similar matters of record; (ii) execute and deliver to
Purchaser an Owner's Affidavit; and (iii) deliver possession of the Lots
conveyed.
7. Closing Costs. Seller agrees to pay the release price and the
recording costs of any Partial Release of any existing mortgages. Each party
agrees to pay its own attorney's fees and Purchaser shall pay all other closing
costs. All real estate taxes and homeowner association dues allocated to the
subject Lots shall be prorated between the Purchaser and Seller at the closing
of such Lots. All real estate taxes which are due and payable at the time of any
closing of any Lots shall be paid at or before closing.
8. Inspection by Purchaser. Prior to the first closing of any lot in
any subdivision phase, the parties shall jointly inspect the subdivision
improvements required to be completed by Seller and sign a memorandum of any
work to be done as noted at the inspection. Seller shall be responsible for
repairing any damage, deficiency, or defective work revealed by such inspection
within 30 days, weather permitting,to the satisfaction of the government
authority having jurisdiction over said work, unless a later date is mutually
agreed upon in writing. Within 10 days following the earlier to occur of (i)
receipt by Purchaser of notice from Seller that it intends to seek release of
its bonds or other obligations for subdivision warranty posted for the
subdivision phase, or (ii) receipt by Seller of notice from Purchaser that it
has completed construction of its final dwelling in the subdivision phase, the
parties shall again jointly inspect the improvements. Purchaser shall be
required to repair or replace any damage to the subdivision infrastructure and
improvements, except normal wear and tear on the pavement, that occurred during
the time Purchaser owned the lots. Said repair shall take place within 30 days
after said inspection, weather permitting. Provided however, should Seller
receive notice from any governmental authority requiring repair of damage
attributable to Purchaser, Purchaser shall immediately
3
complete said repairs. All repairs shall be completed to the satisfaction of the
appropriate governmental authority having jurisdiction.
Should either party fail to make repairs an/or replacements it is obligated to
make pursuant to this Paragraph 8 within thirty days or other applicable time
period described above, then the other party shall be entitled, with
simultaneous notice to the obligated party, to make such repairs and/or
replacements. The repairing party's actual expenses thereof, plus overhead of
15% shall be paid by the obligated party to the repairing party within 30 days
after receipt of copies of invoices or other reasonable documentation of the
cost of such repairs and/or replacements incurred by the repairing party. Any
reimbursement not received within said thirty days shall bear interest at the
rate of 12% per annum from the due date until the date received by the party to
whom such payments are due.
9. Engineering Plans and Plat. Seller shall cause the preparation of
final Engineering Plans and a Plat for the subject lots. Seller shall record the
Plat in the public records of the appropriate county. All of Seller's
development work shall be performed by Seller in accordance with the applicable
Engineering Plans. Seller may make revisions to the Engineering Plans and/or
Plat provided said changes do not have a material adverse effect on the Lots.
10. Sidewalks and Purchaser Assurances. Purchaser agrees to construct,
at purchaser's sole cost and expense, any sidewalks adjacent to any lot
purchased by Purchaser, in accordance with the final Engineering Plans approved
by the appropriate county authority. Purchaser agrees that the sidewalks for any
lot shall be constructed commensurate with home construction on the said lot and
shall be completed prior to completion of the home to be built on the lot. At
the closing of the first lot in any subdivision phase, Purchaser shall replace
the sidewalk bond issued by Seller and being held by the county with a sidewalk
bond issued by purchaser. Purchaser also agrees to provide at the closing of the
first lot in any subdivision phase, any other assurance letters required by the
county that are normally associated with home construction. The provisions of
this paragraph shall survive the closing.
11. Representations and Warranties by Seller. Seller warrants and
represents to the Purchaser that at the time of certification of completion by
the appropriate County authorities, water, sewer and electric services shall be
available to the lots sufficient in capacity to accommodate one single-family
residence. The telephone and cable television service is the responsibility of
the telephone and cable television companies. Therefore, Seller cannot guarantee
its availability. However, Seller will cooperate, in the ordinary and customary
manner, with the telephone and cable
4
television companies. The warranties of this Paragraph shall not survive the
closing.
12. Default. If Purchaser fails to perform its purchase or payment
obligations under this Agreement or the Right of First Refusal Agreement (dated
February 28, 1997) or the Asset Purchase Agreement or the Exclusive Purchasing
Agreement between Southeastern Supply Company, Inc. and Fortress (dated February
28, 1997) within the time period required, all sums remaining to be held by
Seller as a deposit on all lots shall be forfeited to Seller as agreed upon
liquidated damages. In addition, the obligations of Xxxxx X. Xxxxxx, Xxxxxx Land
Company, X.X. Xxxxxx Construction, Inc. and Southeastern Supply, Inc. and Xxxxx
Xxxxxx shall terminate under the following agreements with Fortress- Florida,
Inc. and the Fortress Group, Inc.:
(a) Asset Purchase Agreement dated February 18, 1997;
(b) The Non-Compete Agreement dated February 28, 1997;
(c) The Right of First Refusal Agreement dated February
28, 1997;
(d) The Exclusive Purchase Agreement dated February 28,
1997;
(e) The Office Lease Agreement dated February 28, 1997;
and
(f) The Model Home Lease Agreements dated February 28,
1997; and
(g) The Employment Agreement of Xxxxx Xxxxxx dated
February 28, 1997.
Seller and Purchaser agree that the retention of the deposit and the termination
of the agreements are reasonable damages for Seller to receive and is not
received as a penalty or forfeiture.
Subject to the provisions of Paragraph 18 hereof, if Seller
fails to perform its obligations to sell, Purchaser may seek specific
performance of this Agreement or elect to receive the return of the then
remaining balance of the deposit.
In the event of default, the remedies set forth above shall be
the exclusive remedies of Seller and Purchaser. Seller and Purchaser acknowledge
that the remedies are not mutually available to each other and that neither may
seek to void this provision for lack of mutuality.
13. Professional Fees and Costs. Except as hereafter provided, all
legal, accounting, and other professional fees of a party in connection with
this Agreement, shall be paid by the party retaining such services. In the event
that either party brings an action or proceeding for a declaration of the rights
of the parties under this Agreement, for injunctive relief, or for any action
arising out of this Agreement, each party shall
5
pay its respective attorney's fees and costs, whether prior to trial, at trial,
or on appeal.
14. Radon Gas. Radon is a naturally occurring gas that, when it has
accumulated in a building in sufficient quantities, may present health risks to
persons who are exposed to it over time. Levels of radon that exceed federal and
state guidelines have been found in buildings in Florida. Additional information
regarding radon and radon testing may be obtained from your county public health
unit. Seller makes no representation regarding the presence or absence of radon
gas.
15. Miscellaneous Provisions:
(a) The lots to be conveyed by Seller shall be buildable lots
and any Lot which is mutually deemed not to be so shall be deleted from this
Agreement. A buildable lot shall be defined as a lot that is capable of
receiving from the appropriate governmental entities all the necessary permits
for construction of one single family residence upon presentation of approved
building construction plans and any required fees or bonds. Any clearing,
earthwork or other work necessary to prepare the lot for building shall be the
sole responsibility of Purchaser.
(b) Seller represents that to the best of Seller's knowledge
no hazardous wastes are or have been stored or located on the property to be
conveyed. This representation is only as to the best of Seller's knowledge.
(c) Seller shall bear the risk of loss prior to closing.
Purchaser shall bear the risk of loss after Closing.
(d) Time is of the essence in this Agreement.
(e) The parties represent that no real estate broker is
involved or has been involved in connection with this transaction. Each party
agrees to indemnify and hold the other harmless from any claim asserted by any
real estate broker for a commission for this transaction.
(f) Purchaser shall pay any utility hookup fees, impact fees,
or other fees and costs associated with acquiring building permits for building
homes on the individual lots.
16. Covenants and Restrictions, Homeowners Association. All proposed
lots in each subdivision will be subject to a Declaration of Covenants,
Conditions, Restrictions, and Easements and a mandatory homeowner's association
(HOA). The form and substance of the HOA documents shall be similar to those
already of record in previous phases of existing subdivisions. Purchaser
acknowledges that changes or amendments to the covenants may be made from time
to time by Seller which do not materially and adversely affect
6
Purchaser, and no prior approval of Purchaser with respect to such changes or
amendments shall be required. Seller specifically reserves the right to annex
future phases into the covenants and restrictions and homeowner's association.
17. Lot Drainage and Erosion Control. Purchaser shall adhere to the lot
drainage plans as approved by the appropriate county authorities and further
acknowledges and agrees to complete all construction in accordance with the
plans, permits, and approvals by the appropriate County, the St. Xxxxx River
Water Management District, and the U.S. Army Corp. of Engineers. Seller shall be
responsible for all erosion and sediment control pertaining to Seller's
development work with respect to each subdivision phase up to the date of the
first joint inspection of such lots pursuant to Paragraph 8, provided however,
that Seller shall not be required to install erosion and sediment controls in
areas where Seller has not commenced any ground disturbing activities (such as
the rear of virgin lots where no clearing has taken place). After said walk-
through inspection Purchaser shall be obligated, with respect to such
subdivision phase, to maintain erosion and sediment control for land
development, lakebank and inlet protection, finish on-lot grading and house
construction in accordance with all governmental requirements.
18. Development. The subdivision infrastructure, including water,
sewer, storm drainage, retention ponds, and streets shall be developed pursuant
to the previously referenced engineering plans, plat, and permits at Seller's
expense, except for sidewalks, which shall be installed at Purchaser's expense.
Deviations in the engineering plans shall be allowed to accommodate requirements
of the appropriate County, the St. Xxxxx River Water management District,
Florida Department of Environmental Protection, the U.S. Army Corps of
Engineers, or any other governmental body having jurisdiction. Should Seller be
unable to construct the subdivision infrastructure and deliver any particular
lot or lots due to permitting, environmental, or other considerations beyond the
reasonable control of Seller, then the affected lot or lots shall be removed
from this agreement and the part of the Deposit allocated to the affected lots
shall be prorated over the remaining lots not yet purchased. Purchaser
acknowledges that the some subdivisions shall be developed as approved private
subdivisions and the roads will not be dedicated to the County.
19. Sole Agreement. This contract constitutes the sole lot
purchase agreement between the parties and supersedes any prior
understandings or agreements, oral or written, between the parties.
20. This contract shall not be assignable by the Purchaser without the
prior written consent of the Seller and this Agreement shall be binding upon the
parties, their successors and assigns.
7
21. Homeowners Association. Within six months of closing on the asset
purchase agreement, Purchaser shall assume the obligations of and the rights of
Developer under the homeowners association agreement in any subdivision where
Purchaser has purchased lots. Thereafter, such obligations and rights will be
assumed as of the date of purchase of the first lot in a subdivision. In the
event of a default by Purchaser in purchasing lots, then the obligations and
rights shall revert to Seller. Seller shall retain the right to utilize or
assign easements and to appropriately modify any permits for the improvement of
the subdivision or adjacent land. Seller also retains the right to amend the
homeowner documents and covenants and restrictions to add future phases to the
subdivision.
IN WITNESS WHEREOF, the parties hereto have executed this contract as
of the day and year first above written.
Signed, sealed and delivered SELLER
in the presence of: XXXXXX LAND COMPANY, INC.
____________________________ By:_____________________________
As to SELLER Xxxxxx X. Xxxxxx, President
----------------------------
PURCHASER
FORTRESS-FLORIDA, INC. and
THE FORTRESS GROUP, INC.
____________________________ By:_____________________________
As to PURCHASER Its:
----------------------------
As to PURCHASER
8
E X H I B I T "B"
8 LOTS IN STONEBRIDGE
12 LOTS IN XXXXXX XXXXX 6
12 LOTS IN XXXXXX TRACE 3
12 LOTS IN RIDAUGHT LANDING 3 OR 4
4 LOTS IN FIRESIDE UNIT 2
9
EXHIBIT L
OFFICE BUILDING LEASE
LEASE made as of February 28, 1997, (the "Lease") between the
Landlord, XXXXX X. XXXXXX ("Landlord") and FORTRESS-FLORIDA, INC. and THE
FORTRESS GROUP, INC. ("Tenant").
Landlord leases to Tenant and Tenant leases from Landlord, the premises
(the "Premises") described in Exhibit A together with all present and future
easements, additions, improvements and other rights appurtenant thereto, upon
and subject to the BASIC TERMS and the TERMS AND CONDITIONS hereinafter set
forth.
BASIC TERM
TERM (A) The initial term of this Lease (the "Initial Term") shall
commence on the Commencement Date identified on Exhibit A
attached hereto and made a part hereof (the "Commencement
Date") and end on the Termination date identified on Exhibit A
(the "Termination Date"), unless extended or sooner terminated
as provided in the Lease.
(B) The Initial Term is hereinafter referred to as the "Term".
RENT (A) Tenant shall pay rent to Landlord at the annual rate of
the Annual Base Rent Amount set forth in Exhibit A attached
hereto and made a part hereof (the "Base Rent") in equal
monthly installments of the Monthly Base Rent Amount
identified on Exhibit A, each in advance on or before the
fifth (5th) day of each and every month during the Term. If
the Commencement Date is on a date other than the first day of
a calendar month, Base Rent for the first and last months of
the Term shall be prorated.
(B) In addition to the Base Rent, Tenant shall pay as
"Additional Rent" the amounts determined as hereinafter set
forth in subparagraphs (b) and (c) hereof. The Base Rent and
the Additional Rent are sometimes herein collectively referred
to as the "Rent".
(1) Definitions. The terms:
(a) "Calendar Year" shall mean each
calendar year in which any part of
the Term falls, through and
including the year in which the Term
expires;
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(b) "Taxes" shall mean all real
estate taxes and assessments,
special or otherwise, levied or
assessed upon or with respect to the
Premises, sales tax on the rent and
ad valorem taxes for any personal
property used in connection
therewith. Should any governmental
authority having jurisdiction over
the Premises:
(i) impose a tax,
assessment, charge or fee,
or increase a then existing
tax, assessment, charge or
fee, which Landlord shall
be required to pay, either
by way of substitution for
such real estate taxes and
ad valorem personal
property taxes, or in
addition to such real
estate taxes and ad valorem
personal property taxes, or
(ii) impose an income or
franchise tax or a tax on
rents in substitution for
or as a supplement to a tax
levied against the Premises
and/or the personal
property used in connection
with the Premises.
all such taxes, assessments, fees or
charges (hereinafter defined as "in
lieu taxes") shall be deemed to
constitute Taxes hereunder. Except
as hereinabove provided with regard
to "in lieu taxes", Taxes shall not
include any inheritance, estate,
succession, transfer, gift,
franchise, net income or capital
stock tax. In determining the amount
of Taxes for any year, the amount of
special assessments to be included
shall be limited to the amount of
the installment (plus any interest
payable thereon) of such special
assessment required to be paid
during such year if the Landlord had
elected to have such special
assessment paid over the maximum
period of time permitted by law. All
references to Taxes "for a
particular year shall be deemed to
refer to Taxes paid during such year
without regard to when such Taxes
are assessed or levied; and
(c) "Operating Expenses" shall mean
all reasonable expenses, costs and
disbursements (other than Taxes) of
every kind and nature (determined
for the applicable Calendar Year on
an accrual basis) paid or incurred
by Landlord in connection with the
ownership, management, operation and
repair of the Premises, including
casualty insurance costs, except the
following:
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(i) Principal or interest
payments on loans secured
by mortgages or trust deeds
on the Premises;
(ii) Costs of capital
improvements.
(2) Tenant shall pay to Landlord as Rent, in
addition to the Base Rent, an amount
("Expense Adjustment Amount") equal to the
additional rent payable hereunder during
each Calendar Year. The Expense Adjustment
Amount with respect to each Calendar Year
shall be paid by Tenant to the appropriate
parties.
CASUALTY If the Premises shall be damaged by fire or other casualty, then
Landlord shall repair and restore the same with reasonable
promptness; subject to reasonable delays for insurance adjustments
and delays caused by matters beyond Landlord's reasonable control.
If any such damage renders all or a substantial portion of the
Premises untenantable, Tenant shall have the right to terminate
this Lease as of the date of such damage (with appropriate
prorations of Rent being made for Tenant's possession subsequent
to the date of such damage of those tenantable portions of the
Premises) upon giving written notice to the Landlord at any time
within thirty (30) days after the date of such damage. Rent shall
xxxxx on those portions of the Premises as are, from time to time,
untenantable as a result of such damage.
CONDEMNATION If the Premises or any portion thereof shall be taken or condemned
by any competent authority for any public or quasi-public use or
purposes (a "taking"), and, as a result thereof, the Premises
cannot economically be used for the purposes for which Tenant is
then using the Premises, Tenant shall have the right, exercisable
at its sole discretion, to cancel this Lease upon not less than
ninety (90) days notice prior to the date of cancellation
designated in the notice. Tenant shall have the right to seek an
award from the condemning authority for the reasonable expenses
incurred by Tenant as a result of any taking.
TERMS AND CONDITIONS
REPAIRS Subject to the paragraph in this Lease pertaining to Casualty the
provisions of which shall override the provisions of this
paragraph, Tenant will, at Tenant's own expense, keep the Premises
in good order, repair and condition at all times during the Term,
and Tenant shall promptly and adequately repair all damage to the
Premises and replace or repair all damage or broken fixtures and
appurtenances. If the Tenant does not do so, Landlord may, but
need not, make such repairs and replacements, and Tenant shall pay
Landlord the cost thereof. Tenant shall not be obligated
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to make any repairs or replacements which the Landlord has agreed
to make under the Lease.
INSURANCE (A) Waiver of Subrogation. Landlord and Tenant each hereby waive
any and every claim for recovery from the other for any and all
loss of or damage to the Premises or to the contents thereof,
which loss or damage is covered by valid and collectible fire and
extended coverage insurance policies, to the extent that such loss
or damage is recoverable under said insurance policies. Inasmuch
as this mutual waiver will preclude the assignment of any such
claim by subrogation (or otherwise) to an insurance company (or
any other person), Landlord and Tenant each agree to give to each
insurance company which has issued, or in the future may issue, to
it policies of fire and extended coverage insurance, written
notice of the terms of this mutual waiver, and to have said
insurance policies properly endorsed, if necessary, to prevent the
invalidation of said insurance coverage by reason of said waiver.
(B) Coverage. Tenant shall carry insurance during the entire Term
insuring Tenant and Landlord as their interests may appear with
terms, coverages and in companies reasonably satisfactory to
Landlord, and with such increases in limits as Landlord may from
time to time request, but initially Tenant shall maintain the
following coverages in the following amounts:
(i) in case of personal injury to or death
of any person or persons, not less than
$1,000,000 for each injury or death to a
person and $3,000,000 for each incident
involving personal injury or death to
persons, and, in case of property damage,
not less than $1,000,000 for any one
occurrence; and
(ii) in case of fire, sprinkler leakage,
malicious mischief, vandalism, and other
extended coverage perils, for the full
insurable replacement value of all
additions, improvements and alterations to
the Premises.
(C) Certificates. Tenant shall, prior to the commencement of the
Term, furnish to Landlord certificates evidencing such coverage,
which certificates shall state that such insurance coverage may
not be changed or cancelled without at least ten (10) days prior
written notice to Landlord and Tenant. Tenant may carry all or any
part of such insurance coverages under "blanket" or "umbrella"
policies.
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WAIVER (A) To the extent not prohibited by law, Landlord and its
officers, agents, servants and employees shall not be liable for
any damage either to person or property or resulting from the loss
of use thereof sustained by Tenant or by other persons due to the
Premises becoming out of repair, or due to the happening or any
accident or even in or about the Building, or due to any act or
neglect of any other person.
(B) Without limitation of any other provisions thereof, Tenant
agrees to defend, protect, indemnify and save harmless Landlord
from and against all liability to third parties arising out of the
acts of Tenant and its servants, agents, employees, contractors,
suppliers, workmen and invitees.
NONWAIVER No waiver of any provision of this Lease shall be implied by any
failure of either Landlord or Tenant to enforce any remedy on
account of the violation of such provision, even if such violation
be continued or repeated subsequently, and no express waiver shall
affect any provision other than the one specified in such waiver
and that one only for the time and in the manner specifically
stated.
ASSIGNMENT
AND SUBLETTING
Tenant shall have the right, without Landlord's consent, upon
written notice to Landlord, to assign this Lease or sublet the
whole or any part of the Premises to any affiliated entity which
is owned or cont rolled by Tenant or which owns or controls Tenant
provided that such assignee or sublessee shall continue to use the
Premises for use which is consistent with the character and nature
of the prior use by Tenant. Tenant shall have the right to pledge
or collaterally assign its interest in the Lease as may be
requested by Tenant's lender.
REPRESENTATIONS
AND WARRANTIES
Landlord represents and warrants to Tenant that, to the best of
Landlord's actual knowledge, the present use of the premises does
not violate any applicable laws, regulations and ordinances
governing the Premises. Landlord acknowledges and agrees that in
connection with the execution of this Lease, Tenant has purchased
from Landlord the business which Landlord previously operated on
the Premises. Landlord further represents and warrants to Tenant
that, to the best of Landlord's actual knowledge, prior to the
Commencement Date, the Premises were not operated or used in
violation of any applicable environmental law. In the event the
prior operation and/or use of the Premises violated any applicable
environmental law and such violation materially and adversely
affects Tenant's use and enjoyment of the Premises, Landlord shall
be permitted fifteen (15) days
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after receipt of written notice from Tenant to bring the
Premises into compliance with such Environmental Law and to
provide reasonable evidence of the same to Tenant; provided,
however, in the event such compliance cannot reasonably be
completed or obtained within such fifteen (15) days, Landlord will
not be in default hereunder provided Landlord commences such
corrective actions within such fifteen (15) days and diligently
pursues the same to completion. Notwithstanding the foregoing, in
the event Tenant is unable to conduct its business operations in
the Premises without unreasonable limitation or interference due
to such violation, then, as Tenant's sole and exclusive remedy for
Landlord's breach of the representations and warranties provided
in this paragraph, (i) Base Rent payable hereunder shall xxxxx for
the period of such unreasonable limitation or interference, and
(ii) if the period of such unreasonable limitation or interference
shall continue for thirty (30) days, then Tenant, by notice to
Landlord prior to the end of the period of such unreasonable
limitation or interference, may terminate this Lease.
SURRENDER (A) Upon the expiration of the Term or upon the termination of
Tenant's right of possession, whether by lapse of time or at the
option of Landlord as herein provided, Tenant shall forthwith
surrender the Premises to Landlord in good order, repair and
condition, ordinary wear excepted.
(B) Any interest of Tenant in the alterations, improvements, and
additions to the Premises made or paid for by Landlord or Tenant
shall without compensation to Tenant become Landlord's property at
the termination of this Lease by lapse of time or otherwise and
such alterations, improvements and additions shall be relinquished
to Landlord in good condition, ordinary wear excepted.
COMPLIANCE Tenant shall at its expense promptly execute and comply with all
statutes, ordinances, rules, orders, regulations and requirements
of the Federal, State and City Government and of any and all their
Departments and Bureaus applicable to Premises, and for the
correction, prevention, and abatement of nuisances or other
grievances in, upon, or connected with the Premises during the
Term and shall also promptly comply with and execute all rules,
orders and regulations of the Southeastern Underwriters
Association for the prevention of fires. Notwithstanding the
provisions of this paragraph, however, Tenant shall have no
obligation to make capital improvements to the Premises unless
such capital improvements are required by conduct on the part of
Tenant constituting gross negligence or a wilful breach of this
provision.
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UTILITIES Tenant agrees that it will pay all charges for gas, electricity,
and for water used on or in connection with the Premises.
REMEDIES (A) If:
(1) Tenant shall default in the payment of the Rent and such
default shall continue for ten (10) days after written notice
to Tenant, or
(2) if Tenant shall default in the observance or performance
of any of the other covenants or conditions in this Lease
which Tenant is required to observe and perform and such
default shall continue for thirty (30) days after written
notice to Tenant, or
(3) if the interest of Tenant in this Lease shall be levied on
under execution or other legal process and such levy shall not
be cured within one hundred twenty (120) days after the date
of such levy, or
(4) if an order for relief under the Federal Bankruptcy Code
as now or hereafter in effect, shall be entered against the
Tenant and such order shall not be dismissed within one
hundred twenty (120) days after the date on which such order
was entered, or
(5) if the Tenant shall become insolvent, generally fail to
pay its debts as they become due, make an assignment for the
benefit of creditors, file a petition in bankruptcy, be
adjudicated insolvent or bankrupt, petition or apply to any
tribunal for the appointment of a receiver or any trustee for
it or a substantial part of its assets, or shall commence any
proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution, or liquidation law or
statute of any jurisdiction, whether now or hereafter in
effect, or
(6) if there shall have been filed any such petition or
application, or any such proceeding shall have been commenced
against it, which remains undismissed for a period of one
hundred twenty (120) days, or
(7) if the Tenant by any act or omission shall indicate its
consent to approval of or acquiescence in any such petition,
application or proceeding of the appointment of a receiver of
or any trustee for its or any substantial part of any of its
properties, or shall suffer any
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such receivership or trusteeship to continue undischarged for
a period of thirty (30) days or more, or
(8) if Tenant shall admit in writing Tenant's inability to
meet Tenant's debts as they mature.
(9) Tenant shall default in any of its obligations under the
Asset Purchase Agreement entered into between X.X. Xxxxxx
Construction, Inc. and Tenant dated February 18, 1997, the
agreement for the purchase and sale of real estate dated
February 28, 1997, entered into between Xxxxxx Land Company,
Inc. and Tenant or the exclusive purchase agreement entered
into between Southeastern Supply Company, Inc. and Tenant
dated February 28, 1997.
then Landlord may treat the occurrence of any one or more of the
foregoing events as a breach of this Lease, and Landlord may terminate
this Lease and the Term created hereby, in which event Landlord may
repossess the Premises and be entitled to recover as damages a sum of
money equal to the present value, discounted at 10%, of the excess of
the value of the Rent provided to be paid by Tenant for the balance of
the Term over the fair market rental value of the Premises. Should the
fair market rental value of the Premises, after deduction of all
anticipated expenses of reletting, for the balance of the Term exceed
the value of the Rent provided to be paid by Tenant for the balance of
the Term, Landlord shall have no obligation to pay to Tenant the excess
or any part thereof. All remedies afforded to Landlord hereunder or by
law are cumulative.
(B) If Landlord shall default in the performance or observance of any
of its obligations under this Lease, and such default shall continue
for a period of thirty (30) days after notice to Landlord, then Tenant,
at Tenant's option, may:
(1) cure the Landlord's default and set off the reasonable
expenses thereof against the next installments of Rent due
hereunder, or
(2) treat the occurrence of any one or more of the foregoing
events as a breach of this Lease, and Tenant may terminate
this Lease, in which event Tenant shall be entitled to recover
as damages a sum of money equal to the present value,
discounted at 10%, of the excess of the value of the fair
market rental value of the Premises over Rent provided to be
paid by Tenant for the balance of the Term.
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QUIET ENJOYMENT
The landlord covenants that the Tenant, on paying the Rent,
charges for services and other payments herein reserved and on
keeping, observing and performing all the other terms, covenants,
conditions, provisions and Tenant to be kept, observed, and
performed, shall during the Term, peaceably, and quietly have,
hold and enjoy the Premises subject to the terms, covenants,
conditions, provisions, and agreements herein contained on the
part of the Tenant to be kept, observed, and performed, shall
during the Term, peaceably and quietly have, hold and enjoy the
Premises subject to the terms, covenants, conditions, provisions,
and agreements hereof.
NOTICES All notices to be given under this Lease shall be in writing and
delivered personally or deposited in the United States mail,
certified or registered mail with return receipt requested,
postage prepaid, addressed as follows:
(a) If to Landlord, to the address set
forth for notice to Landlord in
Exhibit A or to such other person or
such other address designated by
notice sent by Landlord or Tenant.
(b) If to Tenant, to the address set
forth for notice to Tenant in
Exhibit A or to such other person or
such other address designated by
notice sent by Landlord or Tenant.
Notice by mail shall be deemed to have been given five (50)
business days after deposited in the United States mail.
MISCELLANEOUS
(A) Rights Cumulative. All rights and remedies of Landlord and
Tenant under this Lease shall be cumulative and none shall exclude
any other rights and remedies allowed by law.
(B) Terms. The necessary grammatical changes required to make the
provisions hereof apply either to corporations or partnerships or
individuals, men or women, as the case may require, shall in all
cases be assumed as though in each case fully expressed.
(C) Binding Effect. Each of the provisions of this Lease shall
extend to and shall, as the case may require, bind or inure to the
benefit not only of the Landlord and of Tenant, but also of their
respective successors or assigns.
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(D) Lease Contains All Terms. All of the representations and
obligations of Landlord and Tenant are contained herein and no
modification, waiver or amendment of this Lease or of any of its
conditions or provisions shall be binding upon the Landlord or
Tenant unless in writing signed by both parties.
(E) Captions. The captions of sections and subsections are for
convenience only and shall not be deemed to limit, construe,
affect or alter the meaning of such sections or subsections.
(F) Estoppel. Landlord confirms that, as of the Commencement Date,
except as provided herein, there is no amount due and owing by
Tenant to Landlord.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of
the date first set forth above.
LANDLORD: TENANT:
XXXXX X. XXXXXX FORTRESS-FLORIDA, INC.
By:
_______________________________ ________________________________
Its:
and
THE FORTRESS GROUP, INC.
By:
______________________________
Its:
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EXHIBIT A
LANDLORD: Xxxxx X. Xxxxxx
LOCATION: 00000 Xxx Xxxx Xxxx.
Xxxxxxxxxxxx, XX 00000
COMMENCEMENT DATE: March 1, 1997
DATE OF TERMINATION OF
INITIAL TERM: February 28, 2002
ANNUAL BASE RENT AMOUNT: $138,996
MONTHLY BASE RENT AMOUNT: $11,583
TENANT'S ADDRESS FOR NOTICE: 0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
LANDLORD'S ADDRESS FOR NOTICE: 00000 Xxx Xxxx Xxxx.
Xxxxxxxxxxxx, XX 00000
