EXHIBIT I TO
AMENDMENT No. 9
Prometheus Homebuilders LLC
c/o Lazard Freres Real Estate Investors L.L.C.
Thirty Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
July 31, 2001
Mr. Xxxxxx Xxxxx
000 Xxxx Xxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Dear Mr. Short:
After giving effect to Paragraph (4)(c) (i) and (ii) of the
Recognition Agreement referred to below, Prometheus Homebuilders LLC
("Prometheus") will own (i) 28,500 shares (the "Preferred Shares") of the Class
AAA Convertible Redeemed Preferred Stock of The Fortress Group, Inc., a Delaware
corporation ("Fortress"), and (ii) 5,937,500 warrants (the "Warrants"), each to
purchase one share of the common stock, $.01 par value, of Fortress (the "Common
Shares"). Prometheus hereby agrees to sell to you, and you hereby agree to
purchase from Prometheus, (i) 3,500 of the Preferred Shares (the "Purchased
Shares") and (ii) 729,167 Warrants (the "Purchased Warrants"). The Purchased
Warrants are subject to adjustment as set forth in the Supplemental Warrant
Agreement, dated February 4, 1999, as amended by the Recognition Agreement. The
Purchased Shares and the Purchased Warrants are hereinafter referred to,
collectively, as the "Securities". Prometheus and you hereby acknowledge and
agree that Prometheus shall not sell or transfer to you any right or entitlement
to receive any dividend which shall have accrued, but not been paid, on any of
the Preferred Shares on or prior to the date of the Closing referred to below
(the "Unpaid Dividends").
The sale and purchase of the Securities hereunder shall be
consummated upon the following terms and subject to the following conditions:
(1) Purchase Price. The purchase price, which you shall pay to
Prometheus at the Closing referred to below, shall total $3,500,000 in
the aggregate, of which (a) $1,750,000 shall be payable by wire
transfer to such account as Prometheus shall designate to you in
writing and (b) $1,750,000 shall be payable by your execution, issuance
and delivery to Prometheus of your secured promissory note in such
principal amount, which shall be in the form attached hereto as Exhibit
A (the "Note").
(2) Closing. The purchase and sale of the Securities shall be
consummated at a closing (the "Closing") to take place at the address
of Prometheus set forth above promptly following the execution and
delivery of this
Mr. Xxxxxx Xxxxx
July 31, 2001
Page 2
letter agreement by each of Prometheus and you (or at such other place,
or such other date or time, as Prometheus and you shall agree in
writing). At the Closing:
(a) Prometheus shall:
(i) execute and deliver to you a Pledge, Security and
Voting Trust Agreement in the form attached hereto as Exhibit
B (the "P, S & VT Agreement"); and
(ii) execute and deliver, or cause to be executed and
delivered, to you such other closing documents (including an
assignment of the Purchased Shares and Purchased Warrants) as
are customary in transactions substantially similar to the
purchase of the Securities, as contemplated hereby, as you may
reasonably request.
(b) You shall:
(i) cause the cash portion of the purchase price
referred to in clause (a) of Paragraph (1) hereof to be wire
transferred to Prometheus and execute, issue and deliver the
Note to Prometheus;
(ii) execute and deliver to Prometheus the P, S & VT
Agreement and execute and deliver, or cause to be executed and
delivered, to Prometheus such other closing documents
(including stock powers and other instruments of transfer and
conveyance and such documents as Fortress may require to cause
the Purchased Shares to be reissued to Prometheus, as voting
trustee, under the P, S & VT Agreement) as are customary in
transactions substantially similar to the sale of the
Securities, as contemplated hereby, as Prometheus may
reasonably request.
(3) Recognition Agreement. At the Closing, Prometheus, you and
Fortress shall enter into a mutually agreeable Recognition Agreement in
the form attached hereto as Exhibit C.
(4) Representations and Warranties.
(a) Prometheus hereby represents and warrants to you as
follows:
(i) Prometheus is a duly organized and validly
existing limited liability company.
(ii) The execution and delivery by Prometheus of this
letter agreement and each other agreement, document or
instrument to be executed and delivered by Prometheus
hereunder, and the consummation by Prometheus of each of the
transactions contemplated hereby or thereby, have been duly
Mr. Xxxxxx Xxxxx
July 31, 2001
Page 3
authorized by all necessary corporate action on the part of
Prometheus.
(iii) At the Closing, Prometheus shall convey to you
good title to the Securities, free and clear of any liens or
encumbrances of any nature whatsoever, other than any liens or
encumbrances granted or created by you (including, but not
limited to, those created and granted by you under the P, S &
VT Agreement).
(iv) Prometheus:
(A) has three representatives on the Board
of Directors of Fortress;
(B) is therefore fully informed as to the
business, affairs and prospects of Fortress; and
(C) is not relying upon you for any
information concerning such business, affairs or
prospects or otherwise with respect to its sale of
the Securities to you hereunder and hereby waives any
claim of any nature whatsoever which it may have
against you with respect to such matters or such
information or any omission thereof or therefrom.
(b) You hereby represent and warrant to Prometheus that:
(i) you are a member of the Board of Directors of
Fortress;
(ii) you are therefore fully informed as to the
business, affairs and prospects of Fortress (the "Fortress
Information");
(iii) you have such knowledge and experience in
financial and business matters as to be capable of evaluating
the merits and risks of (and you are not relying upon
Prometheus for any Fortress Information or otherwise with
respect to) your purchase of the Securities from Prometheus
hereunder and you hereby waive any claim of any nature
whatsoever which you may have against Prometheus with respect
to any Fortress Information; and
(iv) you (A) will acquire the Purchased Shares,
Purchased Warrants and any securities acquired by you upon the
conversion, exercise or exchange of any thereof for investment
purposes only and not with a view to any distribution of any
thereof and (B) will not sell, transfer or otherwise dispose
of any of such securities other than in compliance with all
Mr. Xxxxxx Xxxxx
July 31, 2001
Page 4
applicable laws and regulations (including, but not limited
to, the federal securities laws and regulations of the United
States and the "blue sky" rules and regulations of each state
and territory thereof).
Please acknowledge your agreement to the foregoing in the
space provided for that purpose below.
Very truly yours,
PROMETHEUS HOMEBUILDERS LLC
By LF STRATEGIC REALTY
INVESTORS II L.P., its managing
member,
By LAZARD FRERES REAL
ESTATE INVESTORS L.L.C.,
its general partner,
By_____________________
Name:
Title:
Agreement acknowledged as
of the date first set forth above
/s/ Xxxxxx Xxxxx
-------------------------
Xxxxxx Xxxxx
EXHIBIT A
---------
SECURED PROMISSORY NOTE
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and adequacy
of which are acknowledged hereby, the undersigned, Xxxxxx Xxxxx (the "Payor"),
does hereby promise to pay to the order of Prometheus Homebuilders LLC (the
"Payee") the principal sum of $1,750,000, together with interest thereon, at the
times and rate set forth below. Payment of principal, interest and any other sum
due hereunder shall be made in lawful money of the United States of America.
Subject to the provisions with respect to acceleration and
prepayment set forth below, the principal amount of this Secured Promissory Note
shall be payable on the first to occur of (a) July 31, 2002 or (b) the
consummation of (i) any sale, merger or liquidation of The Fortress Group, Inc.
("Fortress"), (ii) any sale of all or any substantial amount of the assets of
Fortress or (iii) any Change of Control (as defined in the indenture under which
the 13.75% Senior Notes Due 2003 of Fortress are currently outstanding) other
than any such Change of Control caused by the acquisition by Prometheus of
beneficial ownership of additional shares of the Common Stock of Fortress.
Interest shall accrue on the unpaid principal amount of this
Secured Promissory Note outstanding from time to time at a rate equal to the
Dividend Rate applicable to the Class AAA Convertible Redeemable Preferred Stock
of Fortress (the "Preferred Stock") then in effect and whether or not any
dividend on the Preferred Stock is ever paid at that rate or at any other rate.
Such interest shall be payable as follows:
(a) In the event that any dividend (other than any
dividend which shall have accrued but not been paid on the
Preferred Stock on or prior to the date hereof) shall be paid
to the Payor or its transferee or assignee with respect to any
share or shares of the Preferred Stock, the Payor shall pay to
the Payee an amount equal to the lesser of (i) the total
amount of accrued but unpaid interest hereon then outstanding
or (ii) the total amount of such dividend.
(b) Upon the payment of any portion (including all)
of the outstanding principal balance of this Secured
Promissory Note, the Payor shall pay to the Payee all of the
accrued but unpaid interest on such portion of such
outstanding principal balance.
The obligations of the Payor under this Secured Promissory
Note are secured by a pledge of, and a first priority security interest in, the
Pledged Collateral referred to in the Pledge, Security and Voting Trust
Agreement, dated July 31, 2001 by and between the Payor and the Payee. In the
event of any sale of any of such Pledged Collateral prior to the satisfaction in
full of all of the obligations of the Payor under this Secured Promissory Note,
the proceeds of such sale shall be applied, first to the payment of any accrued
but unpaid interest hereon, second to the payment of the outstanding principal
balance hereof, and third to the satisfaction of any other obligations of the
Payor hereunder.
Notwithstanding anything to the contrary set forth
hereinabove:
(a) The outstanding principal balance of, all accrued
but unpaid interest on, and all other payment obligations of
the Payor in respect of, this Secured Promissory Note shall
automatically become due and payable without any demand or
other action by or on behalf of the Payee, immediately upon
the default by the Payor of any of its obligations under this
Secured Promissory Note or the Pledge, Security and Voting
Trust Agreement referred to above.
(b) The outstanding principal balance of this Secured
Promissory Note may be prepaid, in whole or in part, by the
Payor at any time; provided, however, that any such prepayment
shall be accompanied by (i) the payment in full of all accrued
but unpaid interest on the portion hereof which is prepaid and
(ii) the satisfaction in full of all other obligations of the
Payor hereunder.
This Secured Promissory Note shall (a) be governed by and
construed and interpreted in accordance with the laws of the State of New York
and (b) be an absolute and unconditional obligation of the Payor, which shall
not be subject to offset, claim, counterclaim or defense (other than the defense
of full payment and discharge) of any kind. In addition to all of the other
obligations of the Payor hereunder, the Payor shall pay to the Payee all of the
Payee's costs and expenses of any nature whatsoever incurred in, or relating to,
the enforcement of any of the Payor's obligations, or the collection of any
amount payable, hereunder.
IN WITNESS WHEREOF, the Payor has executed and delivered this
Secured Promissory Note on the 31st day of July, 2001.
/s/ Xxxxxx Xxxxx
------------------------------------
Xxxxxx Xxxxx
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EXHIBIT B
---------
PLEDGE, SECURITY AND VOTING TRUST AGREEMENT
-------------------------------------------
This Pledge, Security and Voting Trust Agreement, dated July
31, 2001 (this "P, S & VT Agreement"), by and between Prometheus Homebuilders
LLC ("Prometheus") and Xxxxxx Xxxxx ("Mr. Short");
W I T N E S S E T H:
--------------------
WHEREAS, Prometheus and Mr. Short are parties to a letter
agreement, dated July 31, 2001 (the "Letter Agreement"), pursuant to which
Prometheus sold to Mr. Short the Securities referred to therein (the
"Securities") and Mr. Short executed, issued and delivered to Prometheus the
Note referred to therein (the "Note"); and
WHEREAS, Prometheus and Mr. Short have agreed that, as
security for the satisfaction in full of all of Mr. Short's obligations under
the Letter Agreement, the Note and this P, S & VT Agreement (the "Secured
Obligations"), Mr. Short shall grant to Prometheus a perfected first prior
security interest in the Pledged Collateral referred to hereinbelow; and
WHEREAS, Prometheus and Mr. Short have further agreed to
provide herein for a voting trust (the "Voting Trust") with respect to all of
the Purchased Shares referred to in the Letter Agreement (the "Purchased
Shares");
NOW, THEREFORE, for good and valuable consideration (the
receipt and adequacy of which is acknowledged by each of Prometheus and Short),
Prometheus and Short do hereby covenant and agree as follows:
1. Pledge. Mr. Short hereby pledges to Prometheus, and grants
to Prometheus, a first priority security interest in, the following (the
"Pledged Collateral"):
(a) all of the Securities;
(b) all of the shares (the "Common Shares") of the common
stock of The Fortress Group, Inc. issued upon the conversion or
exercise of any of the Securities;
(c) all certificates representing any of the Securities or
Common Shares; and
(d) all dividends, interest, cash, instruments and other
property or proceeds, from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of
the foregoing (collectively, "Dividends and Distributions"); provided,
however, that such Dividends and Distributions shall not include any
Unpaid Dividends (as defined in the Letter Agreement).
2. Security for Obligations. This P, S & VT Agreement secures,
and the Pledged Collateral is security for, the full and prompt payment when due
(whether at stated maturity, by acceleration or otherwise) and the timely
performance, of all of the Secured Obligations.
3. Further Assurances. Mr. Short agrees that at any time and
from time to time, at his sole cost and expense, he will promptly execute and
deliver all further instruments and documents, and take all further action, that
may be necessary or desirable, or that Prometheus may request, in order to
perfect and protect the pledge and security interest granted hereby or to enable
Prometheus to exercise and enforce its rights and remedies hereunder with
respect to any Pledged Collateral.
4. Dividends and Distributions. All Dividends and
Distributions received by any person with respect to any of the Pledged
Collateral shall be applied in accordance with the terms of the Note.
5. Remedies Upon Default. In the event of any default by Mr.
Short in respect of any of the Secured Obligations:
(a) Prometheus may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a
secured party after default under the Uniform Commercial Code (the
"Code") in effect in the State of New York at that time, and may also,
without notice except as specified below, sell the Pledged Collateral
or any part thereof in one or more parcels at public or private sale,
at any exchange, broker's board or at any office of Prometheus or
elsewhere, for cash, on credit or for future delivery, and upon such
other terms as Prometheus may deem commercially reasonable. Mr. Short
agrees that, to the extent notice of sale shall be required by law, at
least ten days' notice to Mr. Short of the time and place of any public
sale or the time after which any private sale is to be made shall
constitute reasonable notification. Prometheus shall not be obligated
to make any sale of Pledged Collateral regardless of notice of sale
having been given. Prometheus may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor,
and such sale may, without further notice, be made at the time and
place to which it was so adjourned. Mr. Short hereby waives any claims
against Prometheus arising by reason of the fact that the price at
which any Pledged Collateral may have been sold at such a private sale
was less than the price which might have been obtained at a public
sale, even if Prometheus accepts the first offer received and does not
offer such Pledged Collateral to more than one offeree.
(b) Any cash held by Prometheus as Pledged Collateral and all
cash proceeds received by Prometheus in respect of any sale of,
collection from, or other realization upon all or any part of the
Pledged Collateral shall be applied by Prometheus:
2
(i) first, to the payment of the costs and expenses
of such sale, including, without limitation, reasonable
expenses of Prometheus, including the fees and expenses of its
counsel, and all expenses, liabilities and advances made or
incurred by Prometheus in connection therewith or otherwise
hereunder;
(ii) next, to the payment of the Secured Obligations;
and
(iii) finally, after payment in full of all of the
Secured Obligations, to Mr. Short, or to whomsoever may be
lawfully entitled to receive the same as a court of competent
jurisdiction may direct.
6. Voting Trust. Separate and apart from the pledge, grant and
existence hereunder of the pledge of, and security interest, in the Pledged
Collateral, Mr. Short and Prometheus hereby create and establish the Voting
Trust, upon the following terms and subject to the following conditions:
(a) Securities Subject to the Voting Trust. All of the
Purchased Shares shall be subject to the Voting Trust and shall be
deposited with the voting trustee referred to below promptly upon the
execution and delivery of the P, S & VT Agreement by Mr. Short.
(b) Voting Trustee.
(i) So long as Prometheus shall be in existence,
Prometheus shall be the sole trustee of the Voting Trust. In
the event of the merger of Prometheus (or any successor voting
trustee) into any other person, such other person shall become
the sole trustee of the Voting Trust. In the event of the
dissolution of Prometheus (or any successor voting trustee),
such person as Prometheus (or any successor voting trustee)
shall, prior to its dissolution, designate as its successor
shall become the sole trustee of the Voting Trust.
(ii) The voting trustee in office from time to time
shall have the sole and exclusive right and authority to cast
votes, grant consents, appoint proxies and take other similar
actions with respect to the Purchased Shares and shall do so
in its sole and absolute discretion and without any fiduciary
duty or obligation to Mr. Short or any other record or
beneficial owner of any of the Purchased Shares.
(c) Record Holder. In order to facilitate any action by the
voting trustee pursuant to Subparagraph 6(b) hereof, the voting trustee
shall at all times be the holder of record of all Purchased Shares and
each party hereto shall take, or cause to be taken, all such action as
may be necessary or helpful to cause the voting trustee to be such
holder of record.
3
(d) Term of the Voting Trust. The term of the Voting Trust
shall commence immediately following the execution and delivery of this
P, S & VT Agreement by each of the parties hereto and shall continue
until the first to occur of such time as (i) Prometheus shall cease to
be the beneficial owner of any shares of the Class AAA Convertible
Redeemable Preferred Stock of Fortress or (ii) no Purchased Shares
shall be outstanding (in either case, whether or not all of the Secured
Obligations shall have theretofore been satisfied and the pledge and
security interest granted hereunder shall have terminated).
(e) Transfer of Purchased Shares. Any transfer by any person
of any of the Purchased Shares or of any interest of any nature therein
shall be subject to the terms and conditions of this Paragraph 6 and
each transferee shall take such Purchased Shares or interest therein
subject to the Voting Trust and the rights of the voting trustee
hereunder (including, but not limited to, the rights of the voting
trustee as set forth in Subparagraph 6(b)(ii) hereof). Each certificate
or instrument evidencing or constituting any of the Purchased Shares
shall bear a prominent legend describing the Voting Trust and the
provisions of the preceding sentence of this Subparagraph 6(e).
7. Term of this P, S and VT Agreement. This P, S & VT
Agreement shall create a continuing security interest in the Pledged Collateral
and shall remain in full force and effect until the last to occur of (A) the
indefeasible payment and satisfaction in full of all of the Secured Obligations
and (B) the termination of the Voting Trust pursuant to Subparagraph 6(d)
hereof.
8. Governing Law. This P, S & VT Agreement shall be governed
by, and construed and interpreted in accordance with, the laws of the State of
New York. Wherever possible, each provision of this P, S & VT Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this P, S & VT Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity and without invalidating the remaining
provisions of this P, S & VT Agreement. Unless otherwise defined herein or in
the credit agreement, terms defined in Article 9 of the Uniform Commercial Code
as in effect in the State of New York are used herein as therein defined.
4
IN WITNESS WHEREOF, each of Prometheus and Mr. Short has
caused this P, S & VT Agreement to be duly executed and delivered on the date
first above written.
PROMETHEUS HOMEBUILDERS LLC
By LF STRATEGIC REALTY
INVESTORS II L.P., its managing
member,
By LAZARD FRERES REAL
ESTATE INVESTORS L.L.C.,
its general partner,
By_____________________
Name:
Title:
/s/ Xxxxxx Xxxxx
-------------------------------------
Xxxxxx Xxxxx
5
EXHIBIT C
---------
RECOGNITION AGREEMENT
---------------------
This Recognition Agreement, dated July 31, 2001, by and among
Prometheus Homebuilders LLC ("Prometheus"), Xxxxxx Xxxxx ("Xx. Xxxxx") and The
Fortress Group, Inc. ("Fortress").
W I T N E S S E T H:
- - - - - - - - - --
WHEREAS, Prometheus and Mr. Short are parties to a letter
agreement, dated July 31, 2001 (the "Letter Agreement"); and
WHEREAS, Prometheus and Fortress are parties to a Second
Amended and Restated Registration Rights Agreement, dated as of February 3, 1999
(the "Registration Rights Agreement"), and a Supplemental Warrant Agreement,
dated as of February 4, 1999 (the "Warrant Agreement"); and
WHEREAS, as contemplated by the Letter Agreement, the parties
hereto (the "Parties") wish to provide herein for (i) Fortress to acknowledge
the transactions contemplated by the Letter Agreement and (ii) the clarification
and amendment of the Registration Rights Agreement and the Warrant Agreement;
NOW, THEREFORE, for good and valuable consideration (the
receipt and adequacy of which are acknowledged by each of the Parties), the
Parties do hereby covenant and agree as follows:
(1) Definitions.
-----------
(a) Each of the terms used herein which is defined in
the Letter Agreement shall, when so used, have the meaning
ascribed thereto in the Letter Agreement.
(b) Each of the terms used herein which is defined in
the Registration Rights Agreement and not defined in the
Letter Agreement shall, when so used, have the meaning
ascribed thereto in the Registration Rights Agreement.
(c) Each of the terms used herein which is defined in
the Warrant Agreement and not defined in the Letter Agreement
or the Registration Rights Agreement shall, when so used, have
the meaning ascribed thereto in the Warrant Agreement.
(2) Recognition.
-----------
(a) Fortress hereby recognizes, acknowledges,
consents and agrees to the execution and delivery of the
Letter Agreement by Prometheus and Mr. Short and to the
consummation by Prometheus and Mr. Short of each of the
transactions contemplated thereby.
(b) Each of the Parties hereby acknowledges and
agrees that all of the Unpaid Dividends shall be paid by
Fortress or its agent directly to Prometheus or any assignee
of Prometheus and not to Mr. Short or any holder of the
Purchased Shares other than Prometheus or any assignee of
Prometheus.
(c) Fortress hereby acknowledges that, subject to all
of the terms and conditions of the Letter Agreement and the P,
S & VT Agreement (including, but not limited to the pledge and
first security interest created and granted to Prometheus
under the P, S & VT Agreement and the Voting Trust created and
established under the P, S & VT Agreement), Mr. Short is the
owner of the Securities and entitled to all of the rights of
the holder and owner of the Securities.
(3) Registration Rights Agreement. Each of the Parties hereby
acknowledges and agrees that, notwithstanding anything to the contrary
set forth in the Registration Rights Agreement:
(a) Prometheus and any assignee of Prometheus shall
be the only persons who shall have the right to request any
Demand Registration pursuant to Section 2 of the Registration
Rights Agreement. Without limiting the generality of the
foregoing, it is expressly acknowledged and agreed that Mr.
Short shall have no such right, except to the extent that
Prometheus (or any assignee thereof) shall, in its sole and
absolute discretion, assign such right to Mr. Short subsequent
to the date hereof.
(b) For purposes of Section 3 of the Registration
Rights Agreement, Mr. Short shall be deemed to be a Holder of
Registrable Securities and, as such, shall be entitled to the
Piggyback Registrations provided for therein, upon all of the
terms (and subject to all of the conditions) set forth
therein. The foregoing shall not reduce, limit or otherwise
affect, in any way, the rights of Prometheus (under Section 3
or otherwise) as a Holder of Registrable Securities.
(4) Warrant Agreement. Notwithstanding anything to the
contrary set forth in the Warrant Agreement or in any Warrants or
Warrant Certificates issued or issuable thereunder:
(a) Each of the Parties hereby consents and agrees to
the election by Prometheus and Mr. Short on the date hereof
(notwithstanding that the date hereof is neither on nor after
September 30, 2001) to adjust the number of Common Shares
issuable upon exercise of the Warrants as of the date hereof
and (ii) Prometheus and Mr. Short do hereby make, and Fortress
does hereby agree to and accept, such election.
2
(b) Each of the Parties hereby agrees that:
(i) each Warrant shall, at all times
hereafter during which such Warrant shall be
exercisable, be so exercisable for the purchase of
exactly one Common Share;
(ii) any adjustment hereafter made pursuant
to Sections 5 or 10 of the Warrant Agreement shall be
appropriately made to the number of Warrants
outstanding or issuable under the Warrant Agreement
(and not to the number of Common Shares issuable upon
the exercise of any Warrant); and
(iii) the exercise price of the Warrant
shall, from time to time as necessary, be
appropriately adjusted to reflect and give effect to
the terms and intent of the foregoing.
(c) Each of the Parties hereby acknowledges and
agrees that, by reason of the provisions of Subparagraphs
(4)(a) and (b) hereof, an aggregate of _______ Warrants, each
exercisable to purchase one Common Share at the current
exercise price of $_____ per Common Share, are currently
outstanding. As promptly as practicable following the
execution and delivery of this Recognition Agreement by each
of the Parties, Prometheus shall deliver to Fortress all of
the outstanding Warrant Certificates, in exchange for which
Fortress shall issue, execute and deliver to Prometheus and
Mr. Short Warrant Certificates evidencing _______ and ________
Warrants, respectively.
(5) Continued Effect of Agreements. Except as otherwise
expressly provided herein, following the execution and delivery of this
Recognition Agreement by each of the Parties, each of the Letter
Agreement, Registration Rights Agreement, Warrant Agreement, Warrant,
Warrant Certificates and other agreements, instruments or other
documents heretofore entered into, or otherwise executed and delivered,
by any of the Parties with or to any of the other Parties, shall
continue to be and remain in full force and effect in accordance with
all of the terms and conditions thereof.
(6) Governing Law. This Recognition Agreement shall be
governed by, and construed and interpreted in accordance with, the laws
of the State of New York.
3
IN WITNESS WHEREOF, each of Prometheus, Mr. Short and Fortress
has caused this Recognition Agreement to be duly executed and delivered on the
date first above written.
PROMETHEUS HOMEBUILDERS LLC
By LF STRATEGIC REALTY
INVESTORS II L.P., its managing
member,
By LAZARD FRERES REAL
ESTATE INVESTORS L.L.C.,
its general partner,
By_____________________
Name:
Title:
/s/ Xxxxxx Xxxxx
-------------------------------------
Xxxxxx Xxxxx
THE FORTRESS GROUP, INC.
By:________________________________
Name:
Title:
4
