PURCHASE AGREEMENT
AMONG
QUAIL CONSTRUCTION, LLC
CAMDEN CROSSING, LLC
QUAIL REAL ESTATE, LLC
FORTRESS HOLDING-VIRGINIA, LLC
THE FORTRESS GROUP, INC.
AND
JLG INVESTMENTS, LLC
DATED: OCTOBER 16, 2001
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") is made as of this 16th day
of October, 2001, among Fortress Holding - Virginia, LLC, a Delaware limited
liability company ("Seller"), The Fortress Group, Inc., a Delaware corporation
("Fortress"), Quail Construction, LLC, a Washington limited liability company
("Quail Construction"), Camden Crossing, LLC, an Oregon limited liability
company ("Camden Crossing"), Quail Real Estate, LLC, a Washington limited
liability company ("Quail Real Estate" and collectively with Quail Construction
and Camden Crossing, the "Acquired Companies"), and JLG Investments, LLC, a
Washington limited liability company ("Purchaser").
WHEREAS, the Acquired Companies are engaged in the business of
constructing and selling residential single-family homes in the States of
Washington and Oregon (the "Business"),
WHEREAS, Seller owns all of the outstanding membership interests
("Interests") in the Acquired Companies,
WHEREAS, Seller desires to sell, transfer, and assign to Purchaser, and
Purchaser desires to purchase and acquire all of the Interests for the
consideration and on the terms set forth in this Agreement, including Fortress'
promise to loan Purchaser operating capital,
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
SALE OF INTERESTS AND SHARES
INTERESTS. Upon the terms and subject to the conditions set forth herein
and in reliance on the respective representations and warranties of the parties,
the Seller will sell and transfer all of the Interests to Purchaser, and
Purchaser will purchase the Interests from the Seller 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 Section 2.1 hereof.
ARTICLE II
CONSIDERATION AND MANNER OF PAYMENT
2.1 Working Capital Loan. In partial consideration for Purchaser's
promise to purchase the Interests, Fortress promises to make a working capital
loan to Purchaser in the amount of $859,513.18 at Closing. The loan will be
evidenced by a Secured Promissory Note and Security Agreement in the form of and
containing the terms and conditions set forth in Exhibits A and B, respectively,
attached hereto and made a part hereof.
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2.2 Cash Consideration. The purchase price (the "Purchase Price")
for the Interests and the terms of payment will be as follows: At Closing
Purchaser shall pay to Seller $1.00 cash.
ARTICLE III
CLOSING
3.1 TIME AND PLACE OF CLOSING. The purchase and sale provided for in
this Agreement will take place at the offices of Hagen, Dye, Xxxxxxx &
XxXxxxxxx, 000 X.X. Xxxxx Xxxxxx, Xxxxx 0000 Xxxxxxxx, Xxxxxx 00000, or at such
other place as the parties may agree upon, at 9:00 a.m. (local time) on October
16, 2001 (the "Closing", sometimes referred to as the "Closing Date") or such
sooner date as the parties may agree in writing
3.2 DELIVERIES. At Closing, the Seller, Acquired Companies, Xxx X.
Xxxxx, Xxxxx Xxxxx, L. Xxxx Xxxxx, and Purchaser will respectively deliver the
closing documents as set forth in the Deliveries Check List attached as Exhibit
C hereto and hereby incorporated by reference (the "Deliveries Check List").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER AND
ACQUIRED COMPANIES
The Acquired Companies, Fortress, and Seller each jointly and severally
represent and warrant to Purchaser as follows:
4.1 CORPORATE POWER AND AUTHORITY; EFFECT OF AGREEMENT. Fortress is
a corporation validly existing and in good standing under the laws of the State
of Delaware. Each of Seller, Quail Construction, Camden Crossing, and Quail Real
Estate is a limited liability company validly existing and in good standing
under the laws of their organization. Seller, Fortress, and the Acquired
Companies have full corporate power and authority to execute and deliver this
Agreement and to perform their obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Acquired Companies, Fortress, and Seller and performance by them of their
obligations under this Agreement and the consummation by them of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of each, in accordance with applicable law and the respective
Certificates of Incorporation and By-laws and Certificates of Formation and
operating agreements of the entities. This Agreement has been duly and validly
executed and delivered by the Acquired Companies, Fortress, and Seller and
constitutes the valid and binding obligations of each, 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, or the application of equitable principles.
PAGE 2 - PURCHASE AGREEMENT
4.2 CAPITALIZATION. The entire capital interests of the Acquired
Companies is listed on Schedule 4.2 and is held only by Seller. No legend or
other reference to any purported encumbrance appears upon any certificate
representing the Interests of the Acquired Companies. All of the outstanding
interests of the Acquired Companies have been duly authorized and validly issued
and are fully paid and nonassessable. There are no voting agreements, voting
trusts or other agreements (including cumulative voting rights), commitments or
understandings with respect to any of the Interests.
4.3 CERTIFICATE OF FORMATION, OPERATING AGREEMENT, OFFICERS. True
and complete copies of the Certificate of Formation, and all amendments thereof
to date, and the operating agreements, as amended, of Quail Construction, Camden
Crossing, and Quail Real Estate have been delivered to Purchaser. Schedule 4.3
is a true and complete list of all of the officers and managers of the Acquired
Companies.
4.4 NO CONFLICT.The execution, delivery or performance of this
Agreement, the execution and delivery by Seller of Closing documents, and the
consummation of the transactions contemplated hereby will not:
(a) conflict with or result in a violation or breach of
any of the terms, conditions, or provisions of the Certificates
of Incorporation and By-laws of Seller or Fortress or the
Certificates of Organization or the Operating Agreements of the
Acquired Companies;
(b) conflict with or result in a violation or breach of
any term or provision of any Law or Order applicable to Acquired
Companies (other than such conflicts, violations or breaches (i)
which could not in the aggregate be reasonably expected to
adversely affect the validly or enforceability of this Agreement
or to have a material adverse effect on the Condition of the
Business or (ii) as would occur solely as a result of the
identity or the legal or regulatory status of Purchaser;
(c) except as could not, individually or in the
aggregate, reasonably be expected to be materially adverse to
the Condition of the Business or to adversely affect the ability
of Seller to consummate the transactions contemplated hereby or
to perform its obligations hereunder or thereunder, (i) conflict
with or result in a violation or breach of, (ii) constitute
(with or without notice or lapse of time or both) a default
under, (iii) require the Acquired Companies, Seller, or Fortress
to obtain any consent or approval of any Person under the terms
of, (iv) result in or give to any Person any right of
termination, cancellation, or modification under, or (v) result
in the creation or imposition of an Lien upon Seller, the
Acquired Companies, or its assets under, any Contract or License
to which the Acquired Companies, Fortress, or Seller is a party
or by which any of the assets of the Acquired Companies are
bound.
PAGE 3 - PURCHASE AGREEMENT
4.5 BALANCE SHEET. Attached as Schedule 4.5 hereto is the unaudited
balance sheet of the Acquired Companies as of August 31, 2001.
4.6 LEGAL ACTIONS. Except as disclosed in Schedule 4.6 hereto, there
are no actions, suits, proceedings, or claims pending or, to the knowledge of
Seller and the Acquired Companies, threatened, before or by any court,
arbitrator, regulatory authority or government agency against or affecting the
Acquired Companies or Seller that (i) seek to enjoin or prevent the consummation
of the transaction contemplated by this Agreement or (ii) could reasonably be
expected to have a material adverse effect on the Condition of the Business.
4.7 COMPLIANCE WITH LAWS AND ORDERS. The Acquired Companies are not
in violation of or in default under any Law or Order applicable to the Business
the effect of which, individually or in the aggregate with other such violations
and defaults, could reasonably be expected to materially adverse to the
Condition of the Business.
4.8 REAL PROPERTY. Attached to Schedule 4.8 is a computer printout
listing, as of the Closing Date, each parcel of real property owned by the
Acquired Companies which is individually or in the aggregate with other owned or
leased parcels material to the Condition of the Business.
4.9 CONTRACTS. Schedule 4.9 hereto contains a true and correct list
of (i) all employment Contracts to which the Acquired Companies are a party and
(ii) all Contracts relating to Indebtedness of the Acquired Companies.
4.10 BROKERS. All negotiations relative to the Agreement and the
transactions contemplated hereby have been carried on without the intervention
of any other person on behalf of Seller or the Acquired Companies in such manner
as to give rise to any claim by any other person for a finder's fee, brokerage
commission or similar payment.
4.11 SERIES E PREFERRED. The shares of Series E 6% Cumulative,
Convertible Preferred Stock of The Fortress Group, Inc. held by Xxx X. Xxxxx and
Xxxxx Xxxxx, husband and wife and L. Xxxx Xxxxx are freely assignable. No
consent or approval of any person is required to permit the assignment.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
5.1 CORPORATE POWER AND AUTHORITY; EFFECT OF AGREEMENT. Purchaser is
a limited liability company validly existing and in good standing under the laws
of Washington. Purchaser has full corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Purchaser and performance by it of its obligations under
this Agreement and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary action on its part, in
accordance with its Certificate of Formation and operating
PAGE 4 - PURCHASE AGREEMENT
agreement. This Agreement has been duly and validly executed and delivered by
the Purchaser and constitutes its valid and binding obligation, enforceable in
accordance with its 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, or the application of equitable principles.
5.2 NO CONFLICTS. The execution and delivery by Purchaser of this
Agreement does not, and the execution and delivery by Purchaser of Closing
documents, the performance by Purchaser of his obligations under this Agreement
and the Closing documents and the consummation of the transactions contemplated
hereby and thereby will not:
(a) conflict with or result in a violation or breach of any term
or provision of any Law or Order applicable to Purchaser (other than
such conflicts, violations or breaches which could not in the aggregate
be reasonably expected to adversely affect the validly or enforceability
of this Agreement or the Closing documents to be delivered by
Purchaser).
(b) except as could not, individually or in the aggregate,
reasonably be expected to adversely effect the ability of Purchaser to
consummate the transactions contemplated hereby or by the Closing
documents to be delivered by Purchaser or to perform its obligations
hereunder or at Closing, (i) conflict with or result in a violation or
breach of, (ii) constitute (with or without notice or lapse of time or
both) a default under, (iii) require Purchaser to obtain any consent or
approval of any Person under the terms of, or (iv) result in or give to
any Person any right of termination, cancellation, or modification
under, any Contract or License to which Purchaser is a party.
5.3 LEGAL ACTIONS. There are no actions, suits, proceedings or
claims pending before or by any court, arbitrator, regulatory authority or
government agency against or affecting Purchaser that seeks to enjoin or prevent
the consummation of the transactions contemplated by this Agreement.
5.4 BROKERS. All negotiations relative to the Agreement and the
transactions contemplated hereby have been carried on without the intervention
of any other person on behalf of Purchaser in such manner as to give rise to any
claim by any other person for a finder's fee, brokerage commission or similar
payment.
ARTICLE VI
COVENANTS PRIOR TO CLOSING
COOPERATION. Seller, Fortress, the Acquired Companies, and Purchaser
shall cooperate fully with each other in furnishing any information or
performing any action
PAGE 5 - PURCHASE AGREEMENT
requested by the other party which is reasonably necessary to the timely and
successful consummation of the transactions contemplated by this Agreement.
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 following conditions, any one or more of which may be
waived at the option of Purchaser:
(a) Performance of this Agreement. All agreements, covenants,
and obligations required by the terms of this Agreement to be performed
and complied with by Seller, the Acquired Companies, and Fortress on or
before the Closing Date shall have been so performed or complied with in
all material respects.
(b) Accuracy of Representations and Warranties. The
representations and warranties of Seller, Fortress, and the Acquired
Companies contained in Article IV of this Agreement shall be true and
correct in all material respects on and as of the Closing Date as though
made at and as of such date, except to the extent that they expressly
refer to an earlier or specific time, in which case they shall be true
and correct in all material respects as of such time, and Seller shall
have delivered to Purchaser a certificate to that effect, signed on
behalf of Seller and the Acquired Companies by a duly authorized officer
of the sole member of Seller and the Acquired Companies, as the case may
be.
(c) No Legal Obstruction. There shall not be in effect on the
Closing Date any Order or Law restraining, enjoining, or otherwise
prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement.
(d) Financing. Prior to or at Closing, KeyBank shall have been
paid in full with respect to its credit facility with the Acquired
Companies in place on the date of this Agreement.
(e) Material Adverse Change. Since August 31, 2001 no material
adverse change in the Condition of the Business shall have occurred,
other than those occurring as a result of general economic or financial
conditions or other developments which are not unique to the Business
but also affect other persons who participate or are engaged in lines of
business similar to the Business.
(f) Accord and Satisfaction. Quail Construction, LLC, and
Fortress have executed and delivered an agreement entitled Accord and
Satisfaction in substantially the form and to the effect of Exhibit D,
attached hereto and made a part hereof.
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(g) Settlement Agreement. Purchaser, Xxx X. Xxxxx, Xxxxx Xxxxx,
L. Xxxx Xxxxx, and Fortress have executed and delivered an agreement
entitled Settlement Agreement and Release in substantially the form and
to the effect of Exhibit E, attached hereto and made a part hereof.
(h) Closing Costs. Fortress shall have delivered to Quail
Construction, LLC a total of $204,695.39 for use by it in connection
with estimated shut-down expenses, as more fully described in Schedules
7.1(h)(i) - (iv), attached hereto and made a part hereof:
(i) Trailing bills - construction - $46,595;
(ii) Contracts for phone system upgrade, phone service,
and copies - $ 37,061.21;
(iii) Severance packages - $82,039.18; and
(iv) Office Lease - $39,000.
(i) Warranty Service Agreement. Fortress has executed a copy of
the Warranty Service Agreement attached hereto as Exhibit F and made a
part hereof, and it has delivered to Quail Construction, LLC at Closing
$50,000 cash pursuant to the Agreement.
7.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The obligations
of the Seller under this Agreement to consummate the transactions contemplated
hereby will be subject to the satisfaction, at or prior to the Closing, of all
the following conditions, any one or more of which may be waived at the option
of the Seller:
(a) Performance of this Agreement. All agreements, covenants,
and obligations required by the terms of this Agreement to be performed
and complied with by Purchaser on or before the Closing Date shall have
been so performed or complied with in all material respects.
(b) Accuracy of Representations and Warranties. The
representations and warranties of Purchaser contained in Article V of
this Agreement shall be true and correct in all material respects on and
as of the Closing Date as though made at and as of such date, except to
the extent that they expressly refer to an earlier or specific time, in
which case they shall be true and correct in all material respects as of
such time, and Purchaser shall have delivered to Seller a certificate to
that effect, signed on by Purchaser.
(c) No Legal Obstruction. There shall not be in effect on the
Closing Date any Order or Law restraining, enjoining, or otherwise
prohibiting or making
PAGE 7 - PURCHASE AGREEMENT
illegal the consummation of any of the transactions contemplated by this
Agreement.
(d) Approval of Fortress Board of Directors. The Board of
Directors of Fortress shall have formally approved the transaction
contemplated by this Agreement.
(e) Financing. Prior to or at Closing, KeyBank shall have
consented in writing to the sale and purchase without a material change
in the terms or conditions of its respective credit facility with the
Acquired Companies in place on the date of this Agreement.
(f) Accord and Satisfaction. Xxx Xxxxx, has executed at least
eight (8) days prior to the Closing Date an agreement entitled Accord
and Satisfaction in substantially the form and to the effect of Exhibit
D, attached hereto and made a part hereof.
(g) Settlement Agreement. Purchaser, Xxx X. Xxxxx, Xxxxx Xxxxx,
L. Xxxx Xxxxx and Fortress have executed an agreement entitled
Settlement Agreement in substantially the form and to the effect of
Exhibit E, attached hereto and made a part hereof.
(h) Warranty Service Agreement. Purchaser has executed a copy of
the Warranty Service Agreement, Exhibit F.
ARTICLE VIII
POST-CLOSING COVENANTS
8.1 COBRA PREMIUM. Fortress covenants that it will pay on behalf of
Xxx Xxxxx COBRA premiums as necessary to insure that Xxx Xxxxx, his wife, and
minor dependents are covered under the Acquired Company's or Fortress', as the
case may be, medical, dental, and vision insurance through March 31, 2002.
8.2 401(k) VESTING. Fortress covenants that it will take all
necessary steps to insure that all employer matches made to the Fortress Group
401(k) Plan on behalf of Xxx Xxxxx as of the Closing Date are 100% vested.
8.3 INSURANCE. In consideration of the $859,513 loan hereby made by
Fortress to Quail Construction, Fortress continues to have an insurable interest
in Quail Construction and its sister entities. The interest will continue, at a
minimum, until the loan is paid in full. Fortress covenants that it will add JLG
Investments, LLC and the Acquired Companies as insured parties to its General
Commercial Liability, Builders' Risk, Workers Compensation, automobile and
umbrella insurance policies for the period commencing the Closing Date and
ending December 31, 2001 and as to Builder's Risk until the backlog is closed.
Fortress will also add Purchaser, Xxx X. Xxxxx, Xxxxx Xxxxx,
PAGE 8 - PURCHASE AGREEMENT
and L. Xxxx Xxxxx as insured parties under its General Commercial Liability
policy until the Expiration Date, at no cost to these parties. Fortress will
provide to the respective insured parties at Closing certificates of insurance
consistent with the foregoing.
8.4 SHUT-DOWN EXPENSES. Quail Construction covenants that it will
apply directly the cash delivered pursuant to Section 7.1(h) to the persons or
purposes, as the case may be, identified in Schedules 7.1(h)(i) - (iv) and in
the amounts corresponding with their respective names or purposes.
8.5 REAL ESTATE TAXES. Upon receipt of an invoice covering prorated
real estate taxes for the period July 1, 2001, through October 16, 2001 relating
to real estate owned by an Acquired Company as of the Closing date, Fortress
will pay the invoice amount to Quail Construction, LLC forthwith.
8.6 ACCOUNTING INFORMATION AND RECORDS. Fortress will provide
historical accounting information pertaining to the Acquired Companies to
Purchaser upon request. Fortress and Purchaser shall each preserve and maintain
all accounting and financial records of the Acquired Companies for a period of
six years after the Closing Date.
ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION BY SELLER. Subject to the limitations set forth
in Section 9.6, below, from and after the Closing, Seller and Fortress jointly
and severally agree to indemnify, defend, and save the Acquired Company, and its
officers, directors, employees, and agents, Purchaser, Xxx X. Xxxxx, and Xxxxx
Xxxx Xxxxx (each, a "Purchaser Indemnified Party"), at all times from and after
this Agreement through the Expiration Date 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, filing fees, interest, fines, penalties, actual or punitive
damages or costs or expenses of any and all investigations, proceedings
(including appeals, arbitration and mediation), judgments, settlements and
compromises (including reasonable fees and expenses of attorneys, accountants
and other experts) (individually and collectively, the "Losses") sustained or
incurred by any Purchaser Indemnified Party relating to, resulting from, arising
out of, or otherwise by virtue of --
(a) a Construction Claim. Fortress shall name each Purchaser
Indemnified Party as an additional insured under its liability insurance
policies; or
(b) any Taxes.
9.2 INDEMNIFICATION BY PURCHASER. From and after the Closing, Xxx X.
Xxxxx, Purchaser and any assignee agree to indemnify, defend, and save Seller,
Fortress, and their officers, directors, employees and agents, (a "Seller
Indemnified Party") at all times
PAGE 9 - PURCHASE AGREEMENT
from and after this Agreement through the Expiration Date harmless from and
against, and to promptly pay to a Seller Indemnified Party or reimburse a Seller
Indemnified Party for, any and all Losses sustained or incurred by a Seller
Indemnified Party relating to, resulting from, arising out of, or otherwise by
virtue of --
(a) the termination of employment of an employee of the Acquired
Company after the Closing Date; or
(b) a breach of the covenant of Quail Construction set forth in
Section Section 7.1(h).
9.3 INDEMNIFICATION PROCEDURE. In the event that subsequent to the
Closing any person or entity entitled to indemnification under this Agreement
(an "Indemnified Party") receives notice of the assertion of any claim or of the
commencement of any action or proceeding by an 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 "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 thirty (30)
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 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, 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
PAGE 10 - PURCHASE AGREEMENT
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. If a firm decision is made to
settle a Claim, which offer the Indemnifying Party is permitted to
settle under this Section 8.3 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 Claim and, in such event, the maximum liability of the
Indemnifying Party as to such 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.
(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 FAILURE TO GIVE TIMELY NOTICE. A failure by an Indemnified Party
to give timely, complete or accurate notice as provided in Sections 9.3 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.
9.5 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.
9.6 LIMITATION OF INDEMNIFICATION. Notwithstanding anything in this
Agreement to the contrary:
(a) Limitation of Years. A party's duty to indemnify under this
Article VIII shall cease thirty-six (36) months from the date of Closing
(the "Expiration Date"), and, moreover, --
PAGE 11 - PURCHASE AGREEMENT
(i) Fortress and Seller will have no liability for
indemnification with respect to any Loss described in Section
9.1 unless on or before thirty-six (36) months from the Date of
Closing Purchaser notify Fortress in writing of a claim
specifying the factual basis of that claim in reasonable detail;
and
(ii) Purchaser will have no liability for
indemnification with respect to any alleged Loss described in
Section 9.2 unless on representation or before thirty-six (36)
months from the Date of Closing Fortress notifies Purchaser in
writing of a claim specifying the factual basis of that claim in
reasonable detail.
The duty to indemnify pursuant to Section 9.1 and 9.2 shall continue
until there is a final and complete resolution of the matters giving
rise to the causes of action.
(b) Dollar Limitation for Breach. The total Losses for which
Seller and Fortress, in the aggregate, shall provide indemnification
under this Article IX and any other provision of this Agreement shall be
$3,000,000.
(c) Consequential or Special Damages. No Indemnifying Party
shall have any liability to an Indemnified Party for any incidental,
special, consequential, punitive, or statutorily trebled damages.
(d) Exclusive Remedy. The indemnification obligations of Seller
and Fortress under this Article IX are the sole and exclusive remedy of
Purchaser, and Purchaser waives any other remedies, whether available at
law or in equity.
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 the Acquired Company.
ARTICLE X
DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
referred to in this Article 10:
"Acquired Companies" - as defined on page 2.
"Acquired Company's Product" means any goods or products, other than real
property, manufactured, sold, handled, distributed, or disposed of by an
Acquired Company and materials, parts, or equipment furnished in connection with
such goods or products; and for purposes of this definition, Acquired Company's
Product includes warranties or
PAGE 12 - PURCHASE AGREEMENT
representations made with respect to the fitness, quality, durability,
performance, or use of the Product.
"Acquired Company's Work" means work or operations performed by an Acquired
Company or on its behalf and materials, parts, or equipment furnished in
connection with the work or operations; and for purposes of this definition,
Acquired Company's Work includes warranties or representations made with respect
to the fitness, quality, durability, performance, or use of the Work.
"Board" - as defined in Section 7.2(e).
"Business" - as defined on page 2.
"Closing" and "Closing Date - as defined in Section 3.1.
"Condition of the Business" - the business, financial condition, or results of
operations of the Business.
"Condominium Unit" means a condominium or duplex unit of Camden Crossing,
Northfield, Moorecroft Station, Belmont Place, Crestwood Terrace, Ryerson
Square, Grovers Mill and Xxxxx Xxxx.
"Construction Claim" means a claim brought for or on account of property damage
or bodily injury arising out of an Acquired Company's Product or Work with
respect to a home or Condominium Unit completed by an Acquired Company and
delivered to one of its customers prior to the date of Closing.
"Deliveries Check List" - Exhibit C.
"Expiration Date" - as defined in Section 9.6(a).
"Fortress" - The Fortress Group, Inc., a Delaware corporation.
"Indebtedness" - with respect to any person means all obligations of such Person
(i) for borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, and (iii) in the nature of guarantees of the obligations described
in clauses (i) and (ii), above of any other Person.
"Indemnified Party" - as defined in Section 9.3.
"Indemnifying Party" - as defined in Section 9.3.
"Laws" - all laws, statutes, rules, regulations and ordinances of the United
States or any domestic state, county, city, or other political subdivision or of
any governmental or regulatory authority.
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"License" - any license, permit, certificate of authority, authorization,
approval and registration granted or issued by any governmental or regulatory
authority.
"Liens" - any mortgage, pledge, security interest, lease, lien, charge or other
encumbrance or any kind, or any Contract to give any of the foregoing.
"Losses" - as defined in Section 9.1.
"Order" - any writ, judgment, decree, injunction or similar order of any
governmental authority.
"Person" - any individual, corporation (including non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, or other entity, or governmental body.
"Purchaser" - as defined on page 2.
"Purchase Price" - as defined in Section 2.1.
"Purchaser Indemnified Party" - as defined in Section 9.1.
"Seller" - as defined on page 2.
"Seller Indemnified Party" - as defined in Section 9.2.
"Taxes" - any federal, state, or local income, gross receipts, franchise,
estimated, alternative minimum, add-on minimum, sales, use, transfer,
registration, value added, excise, natural resources, severance, stamp,
occupation, real property, personal property, disability, payroll, license, or
employee or other withholding tax for which an Acquired Company is liable
attributable to activities that took place on or before the Closing Date.
ARTICLE XI
MISCELLANEOUS
11.1 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.
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(a) If to Seller:
The Fortress Group, Inc.
0000 Xxxxxx Xxxxxxxxx
Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxx, President
Copy to:
Milbank Tweed Hadley & XxXxxx, LLP
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx, Esquire
Facsimile No. (000) 000-0000
(b) If to Purchaser:
Xxx X. Xxxxx
JLG Investments, LLC
0000 X.X. Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Copy to:
Hagen, Dye, Xxxxxxx & XxXxxxxxx
000 X.X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx, Esquire
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.
11.2 SEVERABILITY. The unenforceability or invalidity of any
provision of this Agreement shall not affect the enforceability or validity of
any other provision.
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11.3 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.
11.4 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. This Agreement may
also be executed by facsimile signature, provided an original instrument shall
be delivered to each party no later than three business days after the execution
of the Agreement.
11.5 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 an carrying out the
transactions contemplated by this Agreement.
11.6 COOPERATION BY THE PARTIES. 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.
11.7 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
as are reasonably requested of it in order to consummate and make effective the
sale of the Assets pursuant to this Agreement.
11.8 GOVERNING LAW. This Agreement shall be construed and governed in
accordance with the laws of the State of Washington applicable to a contract
executed in such State, without giving effect to conflicts and choice of law
principles.
11.9 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.
11.10 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.
11.11 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 supersedes all prior or contemporaneous agreements or negotiations
(whether in writing or oral) and may be modified only by instruments signed by
both of the parties hereto. Oral modifications are absolutely prohibited.
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11.12 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.
11.13 INTERPRETATIVE MATTERS. Unless the context otherwise requires,
(i) all references to Articles, Sections, Schedules or Exhibits are to those
contained in or attached to 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.
11.14 TERMINATION. Upon notice to the other parties hereto, the
Purchaser or the Seller may terminate this Agreement prior to the Closing under
the circumstances set forth below:
(a) Prior to Closing. This Agreement may be terminated at any time prior
to Closing:
(i) at any time prior to the Closing by the mutual written
consent of Purchaser and the Seller;
(ii) at any time prior to the Closing by either the Seller 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
the Seller, 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; and
(b) Effect of Termination. In the event of termination of this Agreement
pursuant to Subsection 11.14(a)(i) then all obligations of the parties hereunder
shall terminate and each party will be relieved on any and all claims from the
other party growing out of this Agreement and each party will bear its own
expenses and respective fees and costs.
11.15 SURVIVAL. The representations and warranties contained in
Section 4.1 and 4.2 will survive until the expiration of the applicable statute
of limitations. All other representations and warranties contained in this
Agreement will not survive the Closing, and there shall be no liability in
respect thereof.
11.16 PUBLIC ANNOUNCEMENT. Any public announcement or similar
publicity with respect to this Agreement will be issued, if at all, at such time
and in such manner as Fortress determines; provided, however, Fortress will
provide an advance copy of the public announcement to Purchaser and reasonably
consider Purchaser' proposed additions or changes to the announcement. Except as
is reasonably necessary to consummate this transaction or consented to by
Fortress in advance or required by law,
PAGE 17 - PURCHASE AGREEMENT
prior to Closing Purchaser shall keep this Agreement confidential.. Seller and
Purchaser will consult with each other concerning the means by which the
employees, customers, suppliers and other interested parties of the Acquired
Companies will be informed of the transaction.
11.17 WAIVER. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising a right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of the right,
power, or privilege, and no single or partial exercise of a right, power, or
privilege will preclude any other or further exercise of any other right, power,
or privilege. To the maximum extent permitted by applicable law, (a) no claim or
right arising out of this Agreement or the documents referred to in it can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given.
11.18 JOINTLY NEGOTIATED. The provisions of this Agreement have been
jointly negotiated by all of the parties to the Agreement, and as such, it is
agreed that no provision shall be more strictly construed against a party
regardless of which party drafted the provision.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
JLG Investments, LLC
by:_______________________
Xxx X. Xxxxx
Title: __________________
The Fortress Group, Inc. Fortress Holding-Virginia, LLC
By: _________________ By: _____________________
Xxxxxxx Xxxxxxx, Xxxxxxx Xxxxxxx,
Vice President Manager
[ATTEST] [ATTEST]
---------------------- ------------------
Xxxxxxx Xxxxx Xxxxxxx Xxxxx
Assistant Secretary Assistant Secretary
Quail Construction, LLC Camden Crossing, L.L.C.
By: ________________ By: ___________________
Xxxxx Xxxxxxxx Xxxxx Xxxxxxxx
Assistant Treasurer Manager
Quail Real Estate, L.L.C.
By: ________________
Xxxxx Xxxxxxxx
Manager
PAGE 19 - PURCHASE AGREEMENT
