EXHIBIT 4
STOCK PURCHASE AGREEMENT
dated as of
April 16, 1997
by and among
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
DEMETER HOLDINGS CORPORATION
and
CAPRICORN INVESTORS, L.P.
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
1.1 Definitions........................................................... 1
ARTICLE II
PURCHASE AND SALE
2.1 Purchase and Sale of Stock............................................ 9
2.2 Consideration........................................................ 10
2.3 Closings.............................................................. 10
2.4 Deliveries by the Sellers at the Initial Closing
and each Subsequent Closing........................................... 11
2.5 Deliveries by AIMCO at the Initial Closing
and each Subsequent Closing........................................... 12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
3.1 Organization and Qualifications; Subsidiaries......................... 13
3.2 Certificate of Incorporation and Bylaws............................... 13
3.3 Capitalization........................................................ 13
3.4 Ownership of Shares................................................... 13
3.5 Authority Relative to This Agreement.................................. 14
3.6 No Conflict; Required Filings and Consents............................ 14
3.7 Compliance............................................................ 14
3.8 SEC Reports and Financial Statements.................................. 15
3.9 Absence of Certain Changes or Events.................................. 15
3.10 Litigation............................................................ 16
3.11 Investment Representations............................................ 16
3.12 Brokers............................................................... 17
3.13 Management Arrangements............................................... 17
3.14 Disclosure............................................................ 17
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF AIMCO
4.1 Organization and Qualifications; Subsidiaries......................... 18
4.2 Charter and Bylaws.................................................... 18
4.3 Capitalization........................................................ 18
4.4 Authority Relative to This Agreement.................................. 18
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4.5 No Conflict; Required Filings and Consents............................ 19
4.6 Compliance............................................................ 19
4.7 SEC Reports and Financial Statements.................................. 19
4.8 Absence of Certain Changes or Events.................................. 20
4.9 Litigation............................................................ 20
4.10 Investment Representations............................................ 21
4.11 Brokers............................................................... 22
4.12 Disclosure............................................................ 22
ARTICLE V
COVENANTS
5.1 Notification of Certain Matters....................................... 22
5.2 Further Action, Reasonable Efforts; Consents and Approvals............ 22
5.3 Conduct of Business of NHP Pending the Closing........................ 23
5.4 Conduct of Business of AIMCO Pending the Closing...................... 23
5.5 No Solicitation....................................................... 23
5.6 Transfer Taxes........................................................ 24
5.7 Public Announcements.................................................. 24
5.8 Voting Arrangements................................................... 24
5.9 Assignment of Shareholder Rights...................................... 25
5.10 Merger Proposal....................................................... 26
5.11 Exchange Offer........................................................ 26
5.12 Spin-Off.............................................................. 28
5.13 Sellers' Put Right.................................................... 28
5.14 Resignations of Directors............................................. 29
5.15 Determination of Initial Shares....................................... 29
5.16 Trust Agreement....................................................... 29
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions to Each Party's Obligation to Effect Each Closing.......... 30
6.2 Conditions to Obligations of AIMCO to Effect the
Initial Closing and the Subsequent Closing............................ 30
6.3 Conditions to Obligations of the Sellers to Effect the Initial
Closing and the Subsequent Closing.................................... 31
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
7.1 Termination........................................................... 32
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7.2 Effect of Termination................................................. 33
7.3 Amendment or Supplement............................................... 33
7.4 Extension of Time, Waiver, Etc........................................ 33
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by the Sellers........................................ 34
8.2 Indemnification by AIMCO.............................................. 35
8.3 Procedures Relating to Indemnification................................ 35
8.4 Limitations on Indemnification........................................ 38
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 Governing Law......................................................... 39
9.2 Entire Agreement...................................................... 39
9.3 Modification; Waiver.................................................. 39
9.4 Notices............................................................... 40
9.5 Expenses.............................................................. 41
9.6 Assignment............................................................ 41
9.7 Survival.............................................................. 42
9.8 Severability.......................................................... 42
9.9 Successors and Assigns; Third Parties................................. 42
9.10 Counterparts.......................................................... 42
9.11 Interpretation; References............................................ 42
9.12 Time of Essence....................................................... 42
9.13 Remedies.............................................................. 43
9.14 Exhibits.............................................................. 43
9.15 Attorneys' Fees....................................................... 43
9.16 Waiver of Jury Trial.................................................. 43
9.17 Further Assurances.................................................... 44
9.18 Negotiation of Agreement.............................................. 44
9.19 Several Liability..................................................... 44
iii
DISCLOSURE SCHEDULE
EXHIBITS
EXHIBIT A -- Escrow Agreement
EXHIBIT B -- Guaranty
EXHIBIT C -- Registration Rights Agreement
EXHIBIT D -- Rights Agreement
EXHIBIT E -- Trust Agreement
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of April 16, 1997 (the
"AGREEMENT"), by and among Apartment Investment and Management Company, a
Maryland corporation ("AIMCO" or the "BUYER"), Demeter Holdings Corporation, a
Massachusetts corporation ("DEMETER"), and Capricorn Investors, L.P., a Delaware
limited partnership ("CAPRICORN," and together with Demeter, the "SELLERS").
WHEREAS, Demeter owns 5,619,695 shares (the "DEMETER SHARES") of
common stock, par value $.01 per share ("NHP STOCK"), of NHP Incorporated, a
Delaware corporation (together with any successors, "NHP"); and
WHEREAS, Capricorn owns 1,310,427 shares (the "CAPRICORN SHARES" and,
together with the Demeter Shares, the "SHARES") of NHP Stock;
WHEREAS, the Sellers desire to sell their respective Shares to AIMCO
in exchange for shares of Class A Common Stock, par value $.01 per share ("AIMCO
Stock"), of AIMCO and/or cash, and AIMCO desires to purchase such shares of NHP
Stock in exchange for such consideration; and
WHEREAS, AIMCO and the Sellers have previously entered into a letter
agreement, dated February 13, 1997 (the "LETTER AGREEMENT"), which provides for
AIMCO to purchase the Shares from the Sellers, and for AIMCO and the Sellers to
negotiate a further agreement for such purchase.
NOW, THEREFORE, in consideration of the foregoing and the covenants of
the parties set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, subject to the terms
and conditions set forth herein, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. The capitalized terms used in this Agreement and not
otherwise defined herein shall have the following meanings (unless the context
otherwise requires, such capitalized terms shall include the singular and plural
and the conjunctive and disjunctive forms of the terms defined):
"ACCREDITED INVESTOR" shall have the meaning ascribed thereto in
Regulation D of the Rules and Regulations promulgated under the Securities Act.
"ACQUISITION PROPOSAL" shall have the meaning ascribed thereto in
SECTION 5.8.
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"AFFILIATE" shall mean, with respect to any Person, any other Person
that directly, or indirectly through one or more intermediaries, Controls, is
Controlled by, or is under common Control with such Person.
"AIMCO GROSS ASSET VALUE" shall mean, as of any date, the total asset
value of AIMCO, as determined in good faith by the Board of Directors of AIMCO
in accordance with Treasury Regulation Section 1.856-2(d)(3) and Code Section
856.
"AIMCO SEC REPORTS" shall have the meaning ascribed thereto in SECTION
4.7.
"AIMCO STOCK" shall mean shares of Class A Common Stock, par value
$.01 per share, of AIMCO.
"BUSINESS DAY" shall mean a day other than Saturday, Sunday, or any
day on which the principal commercial banks located in California are authorized
or obligated to close under the laws of California.
"CAPRICORN SHARE PERCENTAGE" shall mean a fraction, the numerator of
which is the total number of Capricorn Shares and the denominator of which is
the total number of Shares.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.
"COMMENCEMENT DATE" shall have the meaning ascribed thereto in SECTION
5.11.
"COMMERCIALLY REASONABLE EFFORTS" or "COMMERCIALLY REASONABLE STEPS,"
when used with respect to any party, shall mean the reasonable efforts of a
party without the requirement that such party incur any unanticipated (as of the
date hereof) material and extraordinary out-of-pocket expenses, including the
making of any capital contribution, or incur any other unanticipated (as of the
date hereof) material and extraordinary burden or commence or pursue litigation
in any action, suit or proceeding, whether administrative, civil or criminal.
"CONSENTS" shall have the meaning ascribed thereto in SECTION 5.2.
"CONTRACT" shall mean, with respect to any Person, any note, bond,
indenture, lease, license, permit, franchise, deed of trust, mortgage, loan
agreement or other document, instrument, obligation or agreement, oral or
written, to which such Person or any of its subsidiaries is a party or by which
any of them or their assets or properties is bound or affected.
2
"CONTROL" (and its derivative terms "CONTROLLED," "CONTROLS," etc.)
shall mean the power and right to direct the management and policies of another
Person, whether by ownership of voting securities, the ability to elect a
majority of the board of directors or other managing board or committee,
management contract, or otherwise.
"DAMAGES" shall mean any and all costs, damages, liabilities, fines,
fees, penalties, interest obligations, assessments, deficiencies, losses
(including any unrealized loss in value of any securities), and expenses
(including, without limitation, punitive, treble, or other exemplary damages,
amounts paid in settlement, interest, court costs, costs of investigation,
reasonable fees and expenses of attorneys, accountants, actuaries, and other
experts, and other reasonable expenses of litigation or of any claim, default or
assessment).
"DEMETER SHARE PERCENTAGE" shall mean a fraction, the numerator of
which is the total number of Demeter Shares and the denominator of which is the
total number of Shares.
"DIRECT CLAIM" shall have the meaning ascribed thereto in SECTION 8.3.
"DISCLOSURE SCHEDULE" shall mean the Disclosure Schedule attached
hereto.
"ESCROW AGENT" shall mean the Person named as Escrow Agent in the
Escrow Agreement.
"ESCROW AGREEMENT" shall mean an Escrow Agreement, substantially in
the form of EXHIBIT A hereto, to be entered into by Capricorn (or any transferee
of Capricorn Shares pursuant to SECTION 5.8(c)), AIMCO and an Escrow Agent to be
named therein and reasonably acceptable to AIMCO and Capricorn.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXCHANGE OFFER" shall have the meaning ascribed thereto in SECTION
5.11.
"EXCHANGE OFFER CLOSING" shall mean AIMCO's acceptance for exchange of
shares of NHP Stock tendered pursuant to the Exchange Offer.
"GAAP" shall mean generally accepted accounting principles,
consistently applied throughout the specified period and in the immediately
prior comparable period.
"GOVERNMENTAL AUTHORITY" shall mean any government or any agency,
bureau, board, commission, court, department, authority, official, political
subdivision, tribunal or other instrumentality of any government, whether
Federal, state or local, domestic or foreign.
3
"GUARANTY" shall mean the Guaranty, substantially in the form of
EXHIBIT B hereto, to be made by Phemus for the benefit of AIMCO and its
Representatives.
"HSR ACT" shall mean Section 7A of the Xxxxxxx Act (Title II of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976), as amended (including
without limitation any successor act), and the rules and regulations promulgated
thereunder.
"HUD" means the U.S. Department of Housing and Urban Development.
"HUD CLEARANCE" shall mean approval by HUD of the participation of a
"Principal" in a "Project," each as defined in 24 C.F.R. Section 200.215,
pursuant to HUD's Previous Participation Review and Clearance procedure set
forth in 24 C.F.R. subpart H.
"INDEMNIFIED PARTY" shall have the meaning ascribed thereto in SECTION
8.3.
"INITIAL CLOSING" shall mean the closing of the transactions
contemplated by this Agreement in SECTION 2.1(a).
"INITIAL CLOSING DATE" shall mean the date on which the Initial
Closing occurs.
"INITIAL SHARES" shall have the meaning set forth in SECTION 5.15.
"IRS" shall mean the United States Internal Revenue Service or any
successor agency.
"KNOWLEDGE" shall mean, when used with respect to any Person, such
Person's actual knowledge without any duty to make any inquiry or investigation.
"LAW" shall mean any law, statute, rule, regulation, ordinance, decree
or order of any Governmental Authority.
"LIEN" shall mean any mortgage, pledge, assessment, security interest,
lease, sublease, lien, adverse claim, levy, charge, option, rights of others or
restrictions (whether on voting, sale, transfer, disposition or otherwise) or
other encumbrance of any kind, whether imposed by agreement, understanding, law
or equity, or any conditional sale contract, title retention contract, or other
contract to give or to refrain from giving any of the foregoing.
"MATERIAL ADVERSE EFFECT" shall mean, with respect to any Person, a
material adverse effect on the validity or enforceability of this Agreement, on
the ability of such Person to perform its obligations under this Agreement, if
any, or on the business, assets, condition or results of operation of such
Person.
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"MATERIAL SUBSIDIARY" shall mean, with respect to any Person, a
subsidiary of such Person that (i) constitutes a "significant subsidiary" of
such Person, within the meaning of Rule 1-02 of Regulation S-X of the SEC, (ii)
has a direct or indirect ownership interest in any other subsidiary of such
Person that is a Material Subsidiary of such Person, or (iii) is otherwise
material to the business or operations of such Person and its subsidiaries,
taken as a whole.
"MATURITY TIME" shall have the meaning set forth in the Rights
Agreement.
"MERGER" shall mean the merger of NHP and AIMCO or a subsidiary of
AIMCO pursuant to the Merger Proposal.
"MERGER PROPOSAL" shall mean the transactions proposed by AIMCO
pursuant to that certain letter, dated February 19, 1997, from AIMCO to NHP.
"MORTGAGE SUB STOCK" shall mean common stock, par value $.01 per
share, of the Mortgage Subsidiary.
"MORTGAGE SUBSIDIARY" shall mean NHP Financial Services, Ltd., a
Delaware corporation.
"NHP SEC REPORTS" shall have the meaning ascribed thereto in Section
3.8.
"NHP'S FREE CASH FLOW" shall mean, for any period, the amount of NHP's
earnings before interest, taxes, depreciation and amortization for such period,
less (i) the amount of cash payments made or obligated to be made in respect of
taxes and interest during such period, and (ii) $500,000 for each month (or
ratable portion thereof) included in such period.
"NHP'S TRANSACTION COSTS" shall mean, for any period, all of NHP's
termination, severance and transaction costs arising during such period in
respect of the Spin-Off and the Merger.
"NOTICE OF DIRECT CLAIM" shall have the meaning ascribed thereto in
SECTION 8.3.
"NOTICE OF THIRD PARTY CLAIM" shall have the meaning ascribed thereto
in SECTION 8.3.
"NOTICES" shall have the meaning ascribed thereto in SECTION 9.4.
"OFFER DOCUMENTS" shall have the meaning ascribed thereto in SECTION
5.11.
5
"OPTION" shall mean, with respect to any Person, any option, warrant,
call, right, subscription, convertible or exchangeable security or other right,
agreement, arrangement or commitment of any kind or character to which such
Person or any of its subsidiaries is a party relating to the issued or unissued
capital stock of such Person or any of its subsidiaries, or obligating such
Person or any of its subsidiaries to issue, transfer, grant or sell any shares
of capital stock of, or other equity interest in, or securities convertible into
or exchangeable for any capital stock or other equity interest in, such Person
or any of its subsidiaries.
"ORDER" shall mean any order, decree, injunction, judgment, edict,
ruling, assessment, pronouncement, determination, decision, opinion, sentence,
subpoena, writ or award issued, made, entered or rendered by any court,
administrative agency or other Governmental Authority or by any arbitrator.
"ORGANIZATIONAL DOCUMENTS" shall mean (i) with respect to a
corporation, its certificate or articles of incorporation and bylaws, (ii) with
respect to any limited liability company, its certificate of formation, articles
of organization, regulations, operating agreement and limited liability company
agreement, as applicable, (iii) with respect to any limited partnership, its
certificate of limited partnership and limited partnership agreement, (iv) with
respect to any general partnership, its partnership agreement, and (v) all other
similar organizational documents.
"OXFORD GROUP" shall mean Xx. Xxx X. Xxxxxxx, Oxford Realty Financial
Group, Inc., Oxford Corporation, Oxford Construction Services, Inc., Oxford
Development Corporation, Oxford Development Enterprises, Inc., Oxford Equities
Corporation II, Oxford Equities Corporation III, Oxford Equities Corporation,
Oxford Engineering Services, Inc., Oxford Holding Corporation, Oxford Investment
Corporation, Oxford Investment II Corporation, Oxford Management Company, Inc.,
Oxford Mortgage & Investment Corporation, Oxford Properties Corporation, Oxford
Real Estate Holdings Corporation, Oxford Residential Properties I Limited
Partnership, Oxford Realty Services Corp., Oxford Retirement Services, Inc. and
Oxford Securities Corporation, and all Affiliates, associates and subsidiaries
of any of them.
"OXFORD MANAGEMENT CONTRACTS" shall mean any Contract in effect as of
the date hereof pursuant to which NHP or any of its subsidiaries provides
management services to or for any of the Oxford Properties.
"OXFORD PROPERTIES" shall mean any property directly or indirectly
owned, controlled or sponsored by any member of the Oxford Group.
"PERSON" shall mean any natural person, corporation, general
partnership, limited partnership, limited liability company, limited liability
partnership, proprietorship, trust, union, association, court, tribunal, agency,
government, department, commission, self-regulatory organization, arbitrator,
board, bureau, instrumentality or other entity, enterprise, authority or
business organization.
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"PHEMUS" shall mean Phemus Corporation, a Massachusetts corporation.
"PROXY" shall have the meaning ascribed thereto in SECTION 5.8.
"PUT SHARES" shall have the meaning ascribed thereto in SECTION 5.13.
"REAL ESTATE AGREEMENT" shall mean the Real Estate Acquisition
Agreement to be entered into by and among AIMCO, AIMCO Properties, L.P.,
Demeter, Phemus Corporation, Capricorn and/or certain related entities on terms
substantially in accordance with the Letter Agreement.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights
Agreement, substantially in the form of EXHIBIT C hereto, to be entered into by
AIMCO and the Sellers at the Closing.
"REIT STATUS" shall mean, with respect to any Person, (a) the
qualification of such Person as a real estate investment trust under Sections
856 through 860 of the Code, (b) the applicability to such Person and its
shareholders of the method of taxation provided for in Sections 857 ET SEQ. of
the Code, and (c) the qualification and taxation of such Person as a real estate
investment trust under analogous provisions of state and local law in each state
and jurisdiction in which such Person owns property, operates or conducts
business.
"REPRESENTATIVE" shall mean, with respect to any Person, any director,
officer, employee, agent, advisor, counsel, accountant, lender or other
representative of such Person or of any Affiliate of such Person or any
Representative of any of the foregoing.
"RIGHT" shall have the meaning set forth in the Rights Agreement.
"RIGHTS AGREEMENT" shall mean a Rights Agreement, substantially in the
form of EXHIBIT D hereto, to be entered into by NHP, the Mortgage Subsidiary and
the Rights Agent to be named therein.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SELLERS' PUT CLOSING" shall have the meaning ascribed thereto in
SECTION 5.13.
"SELLERS' PUT RIGHT" shall have the meaning ascribed thereto in
SECTION 5.13.
7
"SENIOR PREFERRED STOCK" shall have the meaning ascribed thereto in
SECTION 4.3.
"SHAREHOLDERS AGREEMENT" shall have the meaning ascribed thereto in
SECTION 5.9.
"SPIN-OFF" shall mean the distribution of Rights and Mortgage Sub
Stock pursuant to the Rights Agreement.
"STOCK AND ASSET TRANSFER RESTRICTIONS AGREEMENT" shall mean the Stock
and Asset Transfer Restrictions Agreement, dated as of December 10, 1993, by and
among Oxford Holding Corporation, Oxford Management Company, Inc., Oxford
Retirement Services, Inc., Oxford Realty Services Corp., Oxford Development
Corporation, NHP-HG, Inc., NHP, Inc., NHP Property Management, Inc., Oxford
Asset Management Corporation and Xxx X. Xxxxxxx.
"SUBSEQUENT CLOSING" shall mean each closing of the transactions
contemplated by this Agreement in SECTION 2.1(b).
"SUBSEQUENT CLOSING DATE" shall mean the date on which a Subsequent
Closing occurs.
"SUBSIDIARY" shall mean, with respect to any Person, (i) any
corporation with respect to which such Person, directly or indirectly through
one or more subsidiaries, (a) owns more than 50% of the outstanding shares of
capital stock having generally the right to vote in the election of directors or
(b) has the power, under ordinary circumstances, to elect, or to direct the
election of, a majority of the board of directors of such corporation, (ii) any
partnership with respect to which (a) such Person or a subsidiary of such Person
is a general partner, (b) such Person and its subsidiaries together own more
than 50% of the interests therein, or (c) such Person and its subsidiaries have
the right to appoint or elect or direct the appointment or election of a
majority of the directors or other Person or body responsible for the governance
or management thereof, (iii) any limited liability company with respect to which
(a) such Person or a subsidiary of such Person is the manager or managing
member, or (b) such Person and its subsidiaries together own more than 50% of
the interests therein, or (c) such Person and its subsidiaries have the right to
appoint or elect or direct the appointment or election of a majority of the
directors or other Person or body responsible for the governance or management
thereof, or (iv) any other entity in which such Person has, and/or one or more
of its subsidiaries have, directly or indirectly, (a) at least a 50% ownership
interest or (b) the power to appoint or elect or direct the appointment or
election of a majority of the directors or other Person or body responsible for
the governance or management thereof.
"TAX" or "TAXES" shall mean all Federal, state, local and foreign
taxes and other assessments and governmental charges of a similar nature
(whether imposed
8
directly or through withholdings), including any interest, penalties and
additions to Tax applicable thereto.
"THIRD PARTY CLAIM" shall have the meaning ascribed thereto in SECTION
8.3.
"TRANSACTIONS" means the transactions contemplated by this Agreement
in SECTION 2.1 and SECTION 2.2 hereof.
ARTICLE II
PURCHASE AND SALE
2.1 PURCHASE AND SALE OF STOCK.
(a) Upon the terms and subject to the conditions set forth
herein, at the Initial Closing: (i) Demeter shall sell, convey, assign,
transfer and deliver to AIMCO, and AIMCO shall accept, purchase and acquire
from Demeter, a number of Demeter Shares equal to the product of (x) the number
of Initial Shares, and (y) the Demeter Share Percentage; and (ii) Capricorn
shall sell, convey, assign, transfer and deliver to AIMCO, and AIMCO shall
accept, purchase and acquire from Capricorn, a number of Capricorn Shares equal
to the product of (x) the number of Initial Shares, and (y) the Capricorn Share
Percentage. Each of Demeter and Capricorn shall retain beneficial ownership of
all Rights relating to the Initial Shares that it sells at the Initial Closing,
and AIMCO shall hold such Rights in trust for the benefit of Demeter and
Capricorn.
(b) Upon the terms and subject to the conditions set forth
herein, at each Subsequent Closing: (i) Demeter shall sell, convey, assign,
transfer and deliver to AIMCO, and AIMCO shall accept, purchase and acquire from
Demeter, a number of Demeter Shares equal to product of (x) the total number of
Shares requested by AIMCO to be purchased at such Subsequent Closing pursuant to
a notice given pursuant to SECTION 2.3(b), and (y) the Demeter Share Percentage;
and (ii) Capricorn shall sell, convey, assign, transfer and deliver to AIMCO,
and AIMCO shall accept, purchase and acquire from Capricorn, a number of
Capricorn Shares equal to the product of (x) the total number of Shares
requested by AIMCO to be purchased at such Subsequent Closing pursuant to a
notice given pursuant to SECTION 2.3(b), and (y) the Capricorn Share Percentage;
provided, however, that if any Shares have not been purchased by AIMCO hereunder
prior to October 1, 1997, all such remaining Shares shall be purchased by AIMCO
at a Subsequent Closing held on such date. Each of Demeter and Capricorn shall
retain beneficial ownership of all Rights relating to Shares sold prior to the
Maturity Time. Without limiting AIMCO's ability to sell, assign, transfer or
dispose of Shares acquired by it hereunder, with respect to Rights relating to
Shares sold prior to the Maturity Time, AIMCO shall hold such Rights in trust
for the
9
benefit of Demeter and Capricorn in accordance with the trust agreement referred
to in SECTION 5.16.
2.2 CONSIDERATION.
(a) In exchange for the sale, conveyance, assignment and
transfer of Demeter Shares: (i) at the Initial Closing and each Subsequent
Closing, AIMCO shall pay to Demeter cash in an amount equal to the product of
(x) the number of Demeter Shares being sold at such closing, and (y) $20;
provided, however, that if and to the extent that, after giving effect to such
closing, the aggregate amount of cash consideration that would have been paid to
Demeter hereunder at the Initial Closing and any Subsequent Closings exceeds
$59,473,017, in lieu of paying such excess cash amount, AIMCO may elect to
deliver to Demeter a number of shares of AIMCO Stock equal to (A) all or any
portion of such excess amount, divided by (B) $26.75; and (ii) as soon as
practicable after the Maturity Time has occurred, AIMCO shall exercise all
Rights with respect to the Demeter Shares theretofore acquired by it, and shall
deliver to Demeter all shares of Mortgage Sub Stock acquired by AIMCO upon the
exercise, conversion or maturity of such Rights or, if the Maturity Time has not
occurred prior to September 1, 1997, at the request of Demeter, AIMCO shall pay
to Demeter an additional cash amount equal to the product of (x) the number of
Demeter Shares theretofore acquired by it, and (y) $3.05.
(b) In exchange for the sale, conveyance, assignment and
transfer of Capricorn Shares: (i) at the Initial Closing and each Subsequent
Closing, AIMCO shall deliver (I) to Capricorn a number of shares of AIMCO Stock
equal to the product of (A) 80% of the number of Capricorn Shares being sold at
such closing, and (B) a fraction, the numerator of which is $20 and the
denominator of which is $26.75 and (II) to the Escrow Agent a number of shares
of AIMCO Stock equal to the product of (A) 20% of the number of Capricorn Shares
being sold at such closing, and (B) a fraction, the numerator of which is $20
and the denominator of which is $26.75; and (ii) as soon as practicable after
the Maturity Time has occurred, AIMCO shall exercise all Rights with respect to
the Capricorn Shares theretofore acquired by it, and shall deliver to Capricorn
all shares of Mortgage Sub Stock acquired by AIMCO upon the exercise, conversion
or maturity of such Rights or, if the Maturity Time has not occurred prior to
September 1, 1997, at the request of Capricorn, AIMCO shall pay to Capricorn an
additional cash amount equal to the product of (x) the number of Capricorn
Shares theretofore acquired by it, and (y) $3.05.
2.3 CLOSINGS.
(a) Upon the terms and subject to the satisfaction or waiver of
all the conditions to such closing set forth in this Agreement, the Initial
Closing and each Subsequent Closing shall take place at 10:00 a.m., Boston time,
on dates to be specified by the parties, which shall be (i) in the case of the
Initial Closing, no later than the fifth Business Day after the satisfaction or
waiver of the conditions to such closing set forth
10
in this Agreement, and no earlier than five Business Days after the date of this
Agreement, and (ii) in the case of any Subsequent Closing, on the date specified
by AIMCO in the notice given pursuant to SECTION 2.3(b) or, if any of the Shares
have not yet been purchased by AIMCO hereunder, on October 1, 1997, in each
case, at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, Xxx Xxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000-0000, unless another date or place is agreed
to in writing by the parties hereto.
(b) AIMCO shall give the Sellers notice of its intention to
effect a Subsequent Closing within 10 days of the AIMCO Gross Asset Value
increasing by more than $100 million from the AIMCO Gross Asset Value as of the
Initial Closing Date or as of the most recent Subsequent Closing Date, whichever
is later. Such notice shall specify (i) the date of the proposed Subsequent
Closing, which shall not be more than ten Business Days after the date of such
notice, and (ii) the number of Shares to be purchased at such Subsequent
Closing, which shall not be less than the quotient obtained by dividing (x) the
sum of (I) 5% of such increase in AIMCO Gross Asset Value, and (II) any
additional financing that AIMCO is able to obtain in connection with such
Subsequent Closing, by (y) $20. Such notice shall be accompanied by a
certificate signed by the secretary or an assistant secretary of AIMCO,
certifying as to the AIMCO Board of Directors' determination of such AIMCO Gross
Asset Value.
2.4 DELIVERIES BY THE SELLERS AT THE INITIAL CLOSING AND EACH
SUBSEQUENT CLOSING. At the Initial Closing and at the Subsequent Closing, the
Sellers shall deliver, or cause to be delivered, to AIMCO the following:
(a) STOCK CERTIFICATES. Demeter shall deliver or cause to be
delivered a certificate or certificates representing all of the Demeter Shares
to be purchased at such closing, in accordance with SECTION 2.1, accompanied by
duly executed blank stock powers or endorsed in blank for transfer, as AIMCO
requests. Capricorn shall deliver or cause to be delivered a certificate or
certificates representing all of the Capricorn Shares to be purchased at such
closing, in accordance with SECTION 2.1, accompanied by duly executed blank
stock powers or endorsed in blank for transfer, as AIMCO requests.
(b) PROOF OF AUTHORITY. Each of the Sellers shall deliver to
AIMCO a certificate, dated the Closing Date and executed by its clerk or
assistant clerk, in the case of Demeter, or the secretary or any assistant
secretary of the general partner of its general partner, in the case of
Capricorn, certifying that (i) such Seller has duly and validly taken all
corporate or partnership action, as the case may be, necessary to authorize its
execution and delivery of this Agreement and its performance of its obligations
under this Agreement, (ii) the individual(s) executing or delivering any
instruments, documents or certificates on behalf of such Seller has the power or
authority to act for or bind such Seller, and (iii) the resolutions (true and
complete copies of which shall be attached to the certificate) of the Board of
Directors of such Seller, in the case of Demeter, or of the general partner of
the general partner of such Seller, in the case
11
of Capricorn, with respect to this Agreement and the Transactions have been duly
and validly adopted and are in full force and effect.
(c) STOCK POWERS. Capricorn shall deliver or cause to be
delivered duly executed blank stock powers with respect to all shares of AIMCO
Stock delivered to the Escrow Agent pursuant to SECTION 2.2(b).
(d) OTHER. The Sellers shall deliver to AIMCO all other
documents, instruments and writings reasonably requested by AIMCO to be
delivered by the Sellers at or prior to the Closing Date pursuant to this
Agreement.
2.5 DELIVERIES BY AIMCO AT THE INITIAL CLOSING AND EACH SUBSEQUENT
CLOSING. At the Initial Closing and the Subsequent Closing, AIMCO shall
deliver, or cause to be delivered, to the Sellers the following:
(a) STOCK CERTIFICATES. AIMCO shall deliver (i) to Demeter a
certificate or certificates representing the number of shares of AIMCO Stock
specified in SECTION 2.2(a), if any, (ii) to Capricorn a certificate or
certificates representing the number of shares of AIMCO Stock specified in
SECTION 2.2(b)(i)(I), and (iii) to the Escrow Agent a certificate or
certificates representing the number of shares of AIMCO Stock specified in
Section 2.2(b)(i)(II), in each case, in such denominations and registered in
such names as Demeter, in the case of the foregoing clause (i), or Capricorn, in
the case of the foregoing clause (ii), shall specify in writing at least three
Business Days prior to the Closing.
(b) CASH CONSIDERATION. AIMCO shall (i) deliver to Demeter a
check or checks, payable in next-day funds to the order of such Persons as
Demeter shall specify in writing at least three Business Days prior to such
closing, or (ii) wire transfer funds to such account or accounts as Demeter
shall specify at least three Business Days prior to such closing, or (iii)
perform any combination of the foregoing, as Demeter may request at least three
Business Days prior to such closing, in an aggregate amount equal to the cash to
be paid by AIMCO to Demeter pursuant to SECTION 2.2(a).
(c) PROOF OF AUTHORITY. AIMCO shall deliver to the Sellers a
certificate, dated the Closing Date and executed by the secretary or any
assistant secretary of AIMCO certifying that (i) AIMCO has duly and validly
taken all corporate action necessary to authorize its execution and delivery of
this Agreement and its performance of its obligations under this Agreement, (ii)
the individual(s) executing or delivering any instruments, documents or
certificates on behalf of such Seller has the power or authority to act for or
bind AIMCO, and (iii) the resolutions (true and complete copies of which shall
be attached to the certificate) of the Board of Directors of AIMCO with respect
to this Agreement and the Transactions have been duly and validly adopted and
are in full force and effect.
12
(d) OTHER. AIMCO shall deliver to the Sellers all other
documents, instruments and writings reasonably requested by the Sellers to be
delivered by AIMCO at or prior to the Closing Date pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Subject to the Disclosure Schedule, each of the Sellers hereby
represents and warrants, severally and not jointly, to AIMCO as follows:
3.1 ORGANIZATION AND QUALIFICATIONS; SUBSIDIARIES. Such Seller and,
to such Seller's knowledge, NHP and each Material Subsidiary of NHP is a
corporation, partnership or other legal entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
organization and has the requisite power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power, authority and
governmental approvals would not, individually or in the aggregate, have a
Material Adverse Effect on such Person.
3.2 CERTIFICATE OF INCORPORATION AND BYLAWS. To such Seller's
knowledge, complete and correct copies of the certificate of incorporation and
bylaws of NHP, as amended to date, have been delivered to AIMCO under cover of a
letter dated April 4, 1997, from NHP's General Counsel. To such Seller's
knowledge, such Organizational Documents are in full force and effect and have
not been amended or modified in any respect. To such Seller's knowledge, NHP is
not in violation of any provision of its Organizational Documents. To such
Seller's knowledge, no Material Subsidiary of NHP is in violation of any
provision of its Organizational Documents, except for such violations that would
not, individually or in the aggregate, have a Material Adverse Effect on NHP.
3.3 CAPITALIZATION. To such Seller's knowledge, the authorized
capital stock of NHP as of December 31, 1996, and the number of shares of NHP
Stock issued and outstanding or subject to issuance pursuant to NHP Options as
of December 31, 1996, is as set forth in the NHP SEC Reports.
3.4 OWNERSHIP OF SHARES.
(a) Such Seller is the record and beneficial owner of the
Demeter Shares (in the case of Demeter) or the Capricorn Shares (in the case of
Capricorn), free and clear of any and all Liens.
13
(b) Except as set forth in the Shareholders Agreement, such
Seller has no right to require NHP to register such Seller's Shares under the
Securities Act, and no right to require any Person to purchase such Seller's
Shares, in each case, pursuant to any Contract.
3.5 AUTHORITY RELATIVE TO THIS AGREEMENT. Such Seller has all
necessary power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the Transactions. The execution and
delivery of this Agreement by such Seller, the performance by such Seller of its
obligations hereunder and the consummation by such Seller of the Transactions
have been duly and validly authorized by all necessary corporate or partnership
action and no other corporate or partnership proceedings on the part of such
Seller are necessary to authorize this Agreement or to consummate the
Transactions. This Agreement has been duly and validly executed and delivered
by such Seller and, assuming the due authorization, execution and delivery
thereof by AIMCO, constitutes the legal, valid and binding obligation of such
Seller, enforceable against such Seller in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws relating to creditors'
rights generally and by equitable principles to which the remedies of specific
performance and injunctive and similar forms of relief are subject.
3.6 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. The execution and
delivery of this Agreement by such Seller do not, and the performance of its
obligations under this Agreement and the consummation of the Transactions by
such Seller will not, (a) conflict with, result in a breach of, cause a
dissolution or require the consent or approval of any Person under, or violate
any provision of the Organizational Documents of such Seller or, to such
Seller's knowledge, NHP, (b) require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Authority, except
for the notification requirements of the HSR Act and the HUD Clearance, (c)
subject to the making of the filings and obtaining the approvals identified in
clause (b), conflict with or violate any Law, judgment, order, writ, injunction
or decree applicable to such Seller or, to such Seller's knowledge, NHP or by
which any property or asset of such Seller or, to such Seller's knowledge, NHP
is bound or affected, or (d) to such Seller's knowledge, conflict with or result
in any breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, result in the loss by NHP or
modification in a manner materially adverse to NHP of any material right or
benefit under, or give to others any right of termination, amendment,
acceleration, repurchase or repayment, increased payments or cancellation of, or
result in the creation of a Lien or other encumbrance on any Shares or any
property or asset of NHP or any subsidiary of NHP pursuant to, any Contract of
NHP, except, in the case of clauses (a), (b) and (c), such as would not prevent
or delay such Seller from performing its obligations under this Agreement in any
material respect, and would not, individually or in the aggregate, have a
Material Adverse Effect on such Seller or, to such Seller's knowledge, NHP.
14
3.7 COMPLIANCE. Neither such Seller nor, to such Seller's knowledge,
NHP or any subsidiary of NHP is in conflict with, or in default or violation of,
(a) any Law applicable to such Person or by which any property or asset of such
Person is bound or affected, or (b) any Contract to which such Seller, NHP or
any subsidiary of NHP is a party or by which such Person or any property or
asset of such Person is bound or affected, except for any such conflicts,
defaults or violations that would not, individually or in the aggregate, have a
Material Adverse Effect on such Seller or NHP.
3.8 SEC REPORTS AND FINANCIAL STATEMENTS. To such Seller's knowledge,
each form, report, schedule, registration statement and definitive proxy
statement filed by NHP with the SEC since August 14, 1995 and prior to the date
hereof (as such documents have been amended prior to the date hereof, the "NHP
SEC REPORTS"), as of their respective dates, complied in all material respects
with the applicable requirements of the Securities Act and the Exchange Act and
the rules and regulations thereunder. To such Seller's knowledge, none of the
NHP SEC Reports, as of their respective dates, contained or contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except for such
statements, if any, as have been modified or superseded by subsequent filings
prior to the date hereof. To such Seller's knowledge, the Sellers have made
available to AIMCO true, accurate and complete copies of all of the NHP SEC
Reports. The consolidated financial statements of NHP and its subsidiaries
included in such reports comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of the unaudited interim financial statements, as permitted by Form 10-Q of
the SEC) and fairly present (subject, in the case of the unaudited interim
financial statements, to normal, year-end audit adjustments) the consolidated
financial position of NHP and its subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended. To such Seller's knowledge, since December 31, 1996, neither NHP nor any
of its subsidiaries has incurred any liabilities or obligations (whether
absolute, accrued, fixed, contingent, liquidated, unliquidated or otherwise and
whether due or to become due) of any nature, except liabilities, obligations or
contingencies (a) which are reflected on the consolidated balance sheet of NHP
and its subsidiaries as at December 31, 1996 (including the notes thereto) or
(b) which (i) were incurred in the ordinary course of business after December
31, 1996 and consistent with past practices, (ii) are disclosed in the NHP SEC
Reports filed after December 31, 1996, or (iii) would not, individually or in
the aggregate, have a Material Adverse Effect on NHP. To such Seller's
knowledge, since August 14, 1995, NHP has timely filed with the SEC all forms,
reports and other documents required to be filed prior to the date hereof, and
no subsidiary of NHP has filed, or been required to file, any form, report or
other document with the SEC, in each case, pursuant to the Securities Act, the
Exchange Act or the rules and regulations thereunder. To such Seller's
knowledge, since December 31, 1996, there has been no change in any of the
significant accounting
15
(including tax accounting) policies, practices or procedures of NHP or any
subsidiary of NHP.
3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as contemplated by
this Agreement or as disclosed in any NHP SEC Report, to such Seller's
knowledge, since December 31, 1996, (a) NHP and its subsidiaries have conducted
their respective businesses only in the ordinary course, consistent with past
practice, and (b) there has not occurred or arisen any event that, individually
or in the aggregate, has had or, insofar as reasonably can be foreseen, is
likely in the future to have, a Material Adverse Effect on NHP other than events
or developments generally affecting the industry in which NHP operates.
3.10 LITIGATION. Except as disclosed in the NHP SEC Reports, to such
Seller's knowledge, there are no claims, suits, actions or proceedings pending,
threatened or contemplated, nor are there any investigations or reviews by any
Governmental Authority pending, threatened or contemplated, against, relating to
or affecting NHP or any of its subsidiaries, which could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on NHP, or
to prohibit or materially restrict the consummation of the Transactions, nor is
there any judgment, decree, order, injunction, writ or rule of any court,
judicial or quasi-judicial body, governmental department, commission, agency,
instrumentality or authority or any arbitrator outstanding against NHP or any of
its subsidiaries having, or which, insofar as can be reasonably foreseen, in the
future is likely to have, a Material Adverse Effect on NHP. In addition, to
such Seller's knowledge, there have not been any developments with respect to
any of the claims, suits, actions, proceedings, investigations or reviews
disclosed in the NHP SEC Reports which, insofar as can be reasonably foreseen,
in the future are likely to have a Material Adverse Effect on NHP.
3.11 INVESTMENT REPRESENTATIONS. Such Seller is an Accredited
Investor. Such Seller has reviewed the AIMCO SEC Reports. Such Seller has had
access to such additional financial and other information, and has been afforded
the opportunity to ask questions of representatives of AIMCO, and to receive
answers to those questions, as it has deemed necessary in connection with its
acquisition of shares of AIMCO Stock. Such Seller acknowledges that the shares
of AIMCO Stock that will be acquired by it pursuant to this Agreement are being
acquired in a transaction not involving any public offering within the meaning
of the Securities Act, and such shares of AIMCO Stock have not been, and may
never be, registered under the Securities Act. Such Seller agrees not to offer,
sell, transfer or otherwise dispose of any shares of AIMCO Stock received by it
pursuant to this Agreement in the absence of registration under the Securities
Act unless it delivers to AIMCO evidence reasonably satisfactory to AIMCO that
the proposed sale, transfer or other disposition may be effected without
registration under the Securities Act or an opinion of counsel, in form and
substance reasonably satisfactory to AIMCO, to such effect. Such Seller agrees
not to offer, sell, transfer or otherwise dispose of any shares of AIMCO Stock
received by it pursuant to this Agreement in violation of applicable state
securities and blue sky laws. Such Seller has such
16
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of an acquisition of shares of AIMCO Stock and
is able to bear the economic risk of a loss of an investment in shares of AIMCO
Stock and is not acquiring any shares of AIMCO Stock with a view to the
distribution thereof or any present intention of offering or selling any thereof
in a transaction that would violate the Securities Act or the securities laws of
any state or any other applicable jurisdiction. Such Seller acknowledges that
the shares of AIMCO Stock received by it pursuant to this Agreement will be in
the form of physical certificates and that, unless and until such shares of
AIMCO Stock shall have been registered under the Securities Act, the
certificates will bear a legend to the following effect:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF SUCH REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE COMPANY AN OPINION
OF COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY, IN FORM AND
SUBSTANCE SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT THE PROPOSED SALE,
TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT. THESE SECURITIES MAY NOT BE TRANSFERRED IN VIOLATION OF ANY
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.
3.12 BROKERS. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
Transactions based on any arrangement or agreement made by or on behalf of such
Seller, and such Seller agrees to indemnify and hold AIMCO and the other Seller
harmless against any damages incurred as a result of any such claims.
3.13 MANAGEMENT ARRANGEMENTS. Assuming that AIMCO meets the
definition of a "Qualified Purchaser" under the Stock and Asset Transfer
Restrictions Agreement, to the best of such Seller's knowledge, there is
currently no fact or circumstance that could reasonably be expected to result in
the loss by NHP, or modification in a manner adverse to NHP, of any right or
benefit under, or give any Person any right to cause any termination,
cancellation or non-renewal of any Oxford Management Contract, except such as
would not, individually or in the aggregate, have a Material Adverse Effect on
NHP.
3.14 DISCLOSURE. No representation or warranty of such Seller
contained in this Agreement and no statement contained in any certificate or
schedule furnished or to be furnished by or on behalf of such Seller to AIMCO or
any of its Representatives pursuant hereto contains or will contain any untrue
statement of a material fact.
17
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF AIMCO
AIMCO hereby represents and warrants each of to the Sellers, as
follows:
4.1 ORGANIZATION AND QUALIFICATIONS; SUBSIDIARIES. AIMCO and each
Material Subsidiary of AIMCO is a corporation, partnership or other legal entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has the requisite power
and authority and all necessary governmental approvals to own, lease and operate
its properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or in
the aggregate, have a Material Adverse Effect on such Person.
4.2 CHARTER AND BYLAWS. Complete and correct copies of the Charter
and bylaws of AIMCO, as amended and supplemented to date, have been filed (or
incorporated by reference) as exhibits 3.1 and 3.2, respectively, to AIMCO's
Annual Report on Form 10-K for the year ended December 31, 1996. Such
Organizational Documents are in full force and effect and have not been amended
or modified in any respect. AIMCO is not in violation of any provision of its
Organizational Documents. No Material Subsidiary of AIMCO is in violation of
any provision of its Organizational Documents, except for such violations that
would not, individually or in the aggregate, have a Material Adverse Effect on
AIMCO.
4.3 CAPITALIZATION.
(a) The authorized capital stock of AIMCO consists of (i)
150,000,000 shares of AIMCO Stock; (ii) 425,000 shares of Class B Common Stock,
par value $.01 per share ("AIMCO CLASS B COMMON STOCK"), of AIMCO; (iii)
9,034,000 shares of Preferred Stock, par value $.01 per share ("AIMCO PREFERRED
STOCK"), of AIMCO; and (iv) 966,000 shares of Cumulative Convertible Senior
Preferred Stock, par value $.01 per share (the "SENIOR PREFERRED STOCK"), of
AIMCO. As of March 11, 1997, (i) 17,569,970 shares of AIMCO Stock were issued
and outstanding, all of which were validly issued, fully paid and nonassessable;
(ii) 325,000 shares of AIMCO Class B Stock were issued and outstanding, all of
which were validly issued, fully paid and nonassessable; and (iii) no shares of
AIMCO Preferred Stock or Senior Preferred Stock were issued and outstanding.
(b) Prior to the Initial Closing, AIMCO will have reserved
1,800,000 shares of AIMCO Stock for issuance pursuant to SECTION 2.2 and SECTION
2.5 of this Agreement. When issued in accordance with the terms of this
Agreement, such shares will be duly authorized, validly issued, fully paid and
nonassessable. Assuming that the Seller's representations in SECTION 3.11 are
true and correct, when issued in
18
accordance with this Agreement, such shares will have been issued in compliance
with the Securities Act and all state securities and blue sky laws.
4.4 AUTHORITY RELATIVE TO THIS AGREEMENT. AIMCO has all necessary
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the Transactions. The execution and
delivery of this Agreement by AIMCO, the performance by AIMCO of its obligations
hereunder and the consummation by AIMCO of the Transactions have been duly and
validly authorized by all necessary corporate action and no other corporate
proceedings on the part of AIMCO are necessary to authorize this Agreement or to
consummate the Transactions. This Agreement has been duly and validly executed
and delivered by AIMCO and, assuming the due authorization, execution and
delivery thereof by the Sellers, constitutes the legal, valid and binding
obligation of AIMCO, enforceable against AIMCO in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws relating to creditors'
rights generally and by equitable principles to which the remedies of specific
performance and injunctive and similar forms of relief are subject.
4.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. The execution and
delivery of this Agreement by AIMCO do not, and the performance of its
obligations under this Agreement and the consummation of the Transactions by
AIMCO will not, (a) conflict with, result in a breach of, cause a dissolution or
require the consent or approval of any Person under, or violate any provision of
the Organizational Documents of AIMCO, (b) require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Authority, except for the notification requirements of the HSR Act and the HUD
Clearance, (c) subject to the making of the filings and obtaining the approvals
identified in clause (b), conflict with or violate any Law, judgment, order,
writ, injunction or decree applicable to AIMCO or by which any property or asset
of AIMCO is bound or affected, or (d) conflict with or result in any breach of
or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, result in the loss by AIMCO or modification in a
manner materially adverse to AIMCO of any material right or benefit under, or
give to others any right of termination, amendment, acceleration, repurchase or
repayment, increased payments or cancellation of, or result in the creation of a
Lien or other encumbrance on any property or asset of AIMCO or any subsidiary of
AIMCO pursuant to, any Contract of AIMCO, except, in the case of clauses (a),
(b) and (c), such as would not prevent or delay such Seller from performing its
obligations under this Agreement in any material respect, and would not,
individually or in the aggregate, have a Material Adverse Effect on AIMCO.
4.6 COMPLIANCE. Neither AIMCO nor any subsidiary of AIMCO is in
conflict with, or in default or violation of, (a) any Law applicable to such
Person or by which any property or asset of such Person is bound or affected, or
(b) any Contract to which AIMCO or any subsidiary of AIMCO is a party or by
which such Person or any property or asset of such Person is bound or affected,
except for any such conflicts, de-
19
faults or violations that would not, individually or in the aggregate, have a
Material Adverse Effect on AIMCO.
4.7 SEC REPORTS AND FINANCIAL STATEMENTS. Each form, report,
schedule, registration statement and definitive proxy statement filed by AIMCO
with the SEC since August 14, 1995 and prior to the date hereof (as such
documents have been amended prior to the date hereof, the "AIMCO SEC REPORTS"),
as of their respective dates, complied in all material respects with the
applicable requirements of the Securities Act and the Exchange Act and the rules
and regulations thereunder. None of the AIMCO SEC Reports, as of their
respective dates, contained or contains any untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, except for such statements, if any, as have been
modified or superseded by subsequent filings prior to the date hereof. AIMCO
has made available to the Sellers true, accurate and complete copies of all of
the AIMCO SEC Reports. The consolidated financial statements of AIMCO and its
subsidiaries included in such reports comply as to form in all material respects
with applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes thereto
or, in the case of the unaudited interim financial statements, as permitted by
Form 10-Q of the SEC) and fairly present (subject, in the case of the unaudited
interim financial statements, to normal, year-end audit adjustments) the
consolidated financial position of AIMCO and its subsidiaries as at the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended. Since December 31, 1996, neither AIMCO nor any of its
subsidiaries has incurred any liabilities or obligations (whether absolute,
accrued, fixed, contingent, liquidated, unliquidated or otherwise and whether
due or to become due) of any nature, except liabilities, obligations or
contingencies (a) which are reflected on the consolidated balance sheet of AIMCO
and its subsidiaries as at December 31, 1996 (including the notes thereto) or
(b) which (i) were incurred in the ordinary course of business after December
31, 1996 and consistent with past practices, (ii) are disclosed in the AIMCO SEC
Reports filed after December 31, 1996, or (iii) would not, individually or in
the aggregate, have a Material Adverse Effect on AIMCO. Since August 14, 1995,
AIMCO has timely filed with the SEC all forms, reports and other documents
required to be filed prior to the date hereof, and no subsidiary of AIMCO has
filed, or been required to file, any form, report or other document with the
SEC, in each case, pursuant to the Securities Act, the Exchange Act or the rules
and regulations thereunder. Since December 31, 1996, there has been no change
in any of the significant accounting (including tax accounting) policies,
practices or procedures of AIMCO or any subsidiary of AIMCO.
4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as contemplated by
this Agreement or as disclosed in any AIMCO SEC Report, since December 31, 1996,
(a) AIMCO and its subsidiaries have conducted their respective businesses only
in the ordinary course, consistent with past practice, and (b) there has not
occurred or arisen
20
any event that, individually or in the aggregate, has had or, insofar as
reasonably can be foreseen, is likely in the future to have, a Material Adverse
Effect on AIMCO other than events or developments generally affecting the
industry in which AIMCO operates.
4.9 LITIGATION. Except as disclosed in the AIMCO SEC Reports, to
AIMCO's knowledge, there are no claims, suits, actions or proceedings pending,
threatened or contemplated, nor are there any investigations or reviews by any
Governmental Authority pending, threatened or contemplated, against, relating to
or affecting AIMCO or any of its subsidiaries, which could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
AIMCO, or to prohibit or materially restrict the consummation of the
Transactions, nor is there any judgment, decree, order, injunction, writ or rule
of any court, judicial or quasi-judicial body, governmental department,
commission, agency, instrumentality or authority or any arbitrator outstanding
against AIMCO or any of its subsidiaries having, or which, insofar as can be
reasonably foreseen, in the future is likely to have, a Material Adverse Effect
on AIMCO. In addition, to AIMCO's knowledge, there have not been any
developments with respect to any of the claims, suits, actions, proceedings,
investigations or reviews disclosed in the AIMCO SEC Reports which, insofar as
can be reasonably foreseen, in the future are likely to have a Material Adverse
Effect on AIMCO.
4.10 INVESTMENT REPRESENTATIONS. AIMCO is an Accredited Investor.
AIMCO has reviewed the NHP SEC Reports. AIMCO has had access to such additional
financial and other information, and has been afforded the opportunity to ask
questions of representatives of NHP, and to receive answers to those questions,
as it has deemed necessary in connection with its acquisition of the Shares.
AIMCO acknowledges that the Shares are being acquired in a transaction not
involving any public offering within the meaning of the Securities Act, and the
Shares have not been, and may never be, registered under the Securities Act.
AIMCO agrees not to offer, sell, transfer or otherwise dispose of any of the
Shares in violation of the Securities Act or any applicable state securities or
blue sky laws. AIMCO has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of an
acquisition of the Shares and is able to bear the economic risk of a loss of an
investment in the Shares and is not acquiring the Shares with a view to the
distribution thereof or any present intention of offering or selling any thereof
in a transaction that would violate the Securities Act or the securities laws of
any state or any other applicable jurisdiction. AIMCO acknowledges that the
Shares will be in the form of physical certificates and that, unless and until
the Shares shall have been registered under the Securities Act, the certificates
may bear a legend to the following effect:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF SUCH REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE COMPANY AN OPINION
OF COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTO-
21
RY TO THE COMPANY, IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY, TO THE
EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED
WITHOUT REGISTRATION UNDER THE SECURITIES ACT. THESE SECURITIES MAY NOT BE
TRANSFERRED IN VIOLATION OF ANY APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.
4.11 BROKERS. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
Transactions based on any arrangement or agreement made by or on behalf of
AIMCO, and AIMCO agrees to indemnify and hold the Sellers harmless against any
damages incurred as a result of any such claims.
4.12 DISCLOSURE. No representation or warranty of AIMCO contained in
this Agreement and no statement contained in any certificate or schedule
furnished or to be furnished by or on behalf of AIMCO to any Seller or any of
its Representatives pursuant hereto contains or will contain any untrue
statement of a material fact.
ARTICLE V
COVENANTS
5.1 NOTIFICATION OF CERTAIN MATTERS. Each of the parties hereto shall
give prompt notice to the other parties hereto of (a) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which would be
likely to cause (i) any representation or warranty contained in this Agreement
to be untrue or inaccurate in any material respect, or (ii) any covenant,
condition or agreement contained in this Agreement not to be complied with or
satisfied and (b) any failure of such party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder. Subject to SECTION 8.1, the delivery of any notice pursuant to this
Section shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
5.2 FURTHER ACTION, REASONABLE EFFORTS; CONSENTS AND APPROVALS. Upon
the terms and subject to the conditions hereof, each of the parties hereto shall
use commercially reasonable efforts to take, or cause to be taken, all
appropriate action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated hereby, including, without limitation,
using commercially reasonable efforts to obtain all licenses, permits, consents,
approvals, authorizations, certificates, qualifications and orders of, and make
all filings and required submissions with, all Governmental Authorities, and all
shareholders, lenders and partners of, and parties to contracts with, any of the
Sellers, AIMCO, NHP or any other Persons, in each case, as are necessary or
desirable for the consummation of the transactions contemplated hereby
(collectively "CONSENTS"). The Sellers shall, as soon as possible prior to the
Initial Closing, deliver
22
to AIMCO copies of all Consents obtained by the Sellers. AIMCO shall, as soon
as possible prior to the Initial Closing, deliver to the Sellers copies of all
Consents obtained by AIMCO. In case at any time after the Initial Closing Date
any further action is necessary or desirable to carry out the purposes of this
Agreement, AIMCO and the Sellers shall use commercially reasonable efforts to
take all such action. Prior to the Initial Closing, each party shall use its
best efforts not to take any action, or enter into any transaction, that would
cause any of its representations or warranties contained in this Agreement to be
untrue. Until all of the Shares have been sold to AIMCO, each party shall use
its best efforts not to take any action, or enter into any transaction, that
would cause (a) in the case of each of the Sellers, any of its representations
or warranties in SECTION 3.4(a), 3.11 or 3.12 to be untrue, and (b) in the case
of AIMCO, any of its representations or warranties in SECTION 4.3(b), 4.10 or
4.11 to be untrue. Notwithstanding the foregoing, the Sellers shall not be
obligated to vote, grant or withhold their consent or take any other action in
their capacities as stockholders of NHP, except to the extent specifically
provided in SECTION 5.8(a).
5.3 CONDUCT OF BUSINESS OF NHP PENDING THE CLOSING. From the date
hereof through the Initial Closing, except for the Spin-Off or as expressly
permitted or contemplated by this Agreement, unless AIMCO shall otherwise agree
in writing prior to the taking of any action prohibited by the terms of this
Section, the Sellers shall use their best efforts to cause NHP and its
subsidiaries to conduct their operations and business in the ordinary and usual
course of business and consistent with past practice and use reasonable efforts
to keep available the services of its present officers and key employees and
preserve the goodwill and business relationships with all Persons having
business relationships with it. Notwithstanding the foregoing, the Sellers shall
not be obligated to vote, grant or withhold their consent or take any other
action in their capacities as stockholders of NHP, except to the extent
specifically provided in SECTION 5.8(a).
5.4 CONDUCT OF BUSINESS OF AIMCO PENDING THE CLOSING. From the date
hereof through the Initial Closing, except as expressly permitted or
contemplated by this Agreement, unless the Sellers shall otherwise agree in
writing prior to the taking of any action prohibited by the terms of this
Section, AIMCO shall and shall cause its subsidiaries to conduct their
operations and business in the ordinary and usual course of business and
consistent with past practice and use reasonable efforts to keep available the
services of its present officers and key employees and preserve the goodwill and
business relationships with all Persons having business relationships with it.
5.5 NO SOLICITATION. Except for the Spin-Off, the Sellers shall not,
and shall not permit any of their Representatives or any other Person acting for
or on behalf of any of them to, directly or indirectly, initiate, solicit,
encourage, entertain offers with respect to, negotiate with respect to, or in
any manner encourage, recommend or agree to, any inquiry, offer or proposal
relating to (a) the sale of NHP or any of its assets or equity securities, (b)
the merger, consolidation or other combination of NHP with any Person, or (c)
the liquidation, dissolution or reorganization of NHP, except as specif-
23
ically contemplated by this Agreement. Without limiting the generality of the
foregoing, the Sellers shall not, and shall not permit any of their
Representatives or any other Person acting for or on behalf of any of them to,
furnish or cause to be furnished any information with respect to NHP or the
Shares to any Person other than AIMCO and its Representatives. If any of the
Sellers or any of their Representatives receives from any Person any offer,
proposal or informational request that may be subject to this SECTION 5.5, the
Sellers shall, as soon as possible, but in any event within three Business Days,
(w) advise AIMCO of such offer, proposal or informational request, (x) provide
AIMCO with a copy of any document or writing received by any of the Sellers or
their Representatives relating to such offer, proposal or informational request,
(y) advise such Person, by written notice, of the terms of this SECTION 5.5, and
(z) deliver a copy of such notice to AIMCO. Notwithstanding anything in this
Agreement to the contrary, nothing in this ARTICLE V shall be construed to
obligate any of the Seller's Representatives who serve as a director of NHP to
take any action or refrain from taking any action in his or her capacity as a
director of NHP.
5.6 TRANSFER TAXES. The Sellers shall be liable for, and shall
indemnify and hold AIMCO harmless against, any liability for any sales, gains,
transfer or similar Taxes resulting from the transfer to AIMCO of any Shares
pursuant to this Agreement.
5.7 PUBLIC ANNOUNCEMENTS. Until all of the Shares have been sold to
AIMCO, none of the Sellers or AIMCO shall issue or make, directly or indirectly,
any reports, statements or releases to the public with respect to this Agreement
or the transactions contemplated hereby without the prior written consent of
each of the others; provided, however, that each of the Sellers and AIMCO may,
without the prior written consent of the others, issue or make, directly or
indirectly, any report, statement or release required by Law, its fiduciary
obligations or any listing agreement or arrangement to which such Person is a
party with a national securities exchange if the other parties to this Agreement
are so notified as soon as possible in advance of such report, statement or
release.
5.8 VOTING ARRANGEMENTS.
(a) At every meeting of the stockholders of NHP, and at every
adjournment or postponement thereof, and on any matter to which the stockholders
of NHP are entitled to express consent or dissent in writing without a meeting,
with respect to all of the Shares, the Sellers shall: (i) vote in favor of (or
consent to) the Merger Proposal and any actions required in furtherance thereof;
(ii) vote against (or dissent from) any proposal or offer to acquire all or any
portion of NHP, its equity securities, its assets or its subsidiaries' assets,
whether by tender or exchange offer, merger, consolidation, business
combination, sale of assets, sale of additional interests or similar transaction
(each, an "ACQUISITION PROPOSAL"), which is not made by AIMCO or one of its
Affiliates; and (iii) vote against (or dissent from) any action or agreement
that is reasonably likely to impede, interfere with, delay or postpone the
Transactions, the
24
Merger Proposal or the Exchange Offer, or to impair the value of such
transactions to AIMCO.
(b) Except as contemplated in this Agreement (including SECTION
5.8(c)), (i) each Seller will not, and will cause its Affiliates not to,
directly or indirectly, sell, transfer, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, the Shares to be sold hereunder by such
Seller, and (ii) each Seller will not, and will cause its Affiliates not to,
directly or indirectly, grant or agree to grant any proxies or authorities with
respect to, deposit or agree to deposit into a voting trust, or enter into or
agree to enter into a voting agreement with respect to, any of the Shares;
provided, however, that any transferee of Capricorn Shares pursuant to Section
5.8(c) may grant a proxy to Xxxxxxx Holdings, Inc. to vote such Capricorn Shares
in accordance with SECTION 5.8(a).
(c) Notwithstanding anything in this Agreement to the contrary,
upon at least five Business Days prior notice to AIMCO, (i) Capricorn may
transfer any or all of the Capricorn Shares (and may assign its rights and
benefits under this Agreement with respect to such Capricorn Shares) to any of
its constituent partners that agree, severally and not jointly, and pursuant to
a written agreement reasonably acceptable to AIMCO, to be bound by the
provisions of this Agreement applicable to Capricorn with respect to the
Capricorn Shares received by such transferee, and (ii) any such transferee may
further transfer any or all of the Capricorn Shares so transferred to it (and
assign its rights and benefits under this Agreement with respect to such
Capricorn Shares) to any charitable institution that agrees, severally and not
jointly and pursuant to a written agreement reasonably acceptable to AIMCO, to
be bound by the provisions of this Agreement applicable to Capricorn with
respect to the Capricorn Shares received by such transferee. Upon the
effectiveness of each such transfer of Capricorn Shares, (i) the obligations and
agreements of the transferor thereof under this Agreement with respect to the
Capricorn Shares so transferred shall terminate with respect to such Capricorn
Shares (and no other Shares), (ii) the transferee thereof shall be entitled to
the rights of Capricorn set forth in ARTICLE II and SECTION 5.13 of this
Agreement, and shall be obligated to perform the covenants and other obligations
and agreements of the transferor thereof under this Agreement, in each case,
with respect to such Capricorn Shares transferred to such transferee (and no
other Shares); PROVIDED that (x) notwithstanding any transfer of Capricorn
Shares, the representations and warranties of Capricorn set forth in ARTICLE III
shall remain in full force and effect (except that the representations and
warranties set forth in SECTION 3.4 shall be true and correct in all material
respects only as of the date of this Agreement) and the obligations and
agreements of Capricorn set forth in ARTICLE V, VIII and IX shall remain in full
force and effect (except that Capricorn shall at any time have obligations under
SECTION 5.3 only with respect to the Capricorn Shares then owned by it and shall
have obligations under SECTIONS 5.6 AND 5.9 only with respect to the Capricorn
Shares sold by it pursuant to this Agreement), (y) each such transferee of
Capricorn Shares shall be deemed to have made the representations and warranties
of Capricorn set forth in SECTION 3.4 only with respect
25
to the Capricorn Shares transferred to such transferee and shall not be deemed
to have made any other representations or warranties, and (z) no such transferee
shall have, or be deemed to have, any obligation under SECTION 5.3.
5.9 ASSIGNMENT OF SHAREHOLDER RIGHTS. At or prior to the Initial
Closing, each Seller shall assign to AIMCO all of its rights under the Amended
and Restated Shareholders Agreement, dated as of August 15, 1995 (the
"SHAREHOLDERS AGREEMENT"), by and among NHP, the Xxxx X. Xxxxx Revocable Trust
and the Sellers.
5.10 MERGER PROPOSAL. If the Board of Directors of NHP approves the
Merger Proposal, then AIMCO shall use commercially reasonable efforts to
promptly and diligently negotiate in good faith a definitive agreement with NHP
on the terms set forth in the Merger Proposal.
5.11 EXCHANGE OFFER.
(a) If the Board of Directors of NHP has not approved the Merger
Proposal prior to the first anniversary of the date of this Agreement (such
first anniversary being the "COMMENCEMENT DATE"), then AIMCO shall commence, not
later than the Commencement Date, an offer (the "EXCHANGE OFFER") to exchange
shares of AIMCO Stock for any and all of the then outstanding shares of NHP
Stock, with the number of shares of AIMCO Stock offered in exchange for each
share of NHP Stock equal to $20 divided by $26.75; provided, however, that AIMCO
shall not be obligated to issue any fractional shares of AIMCO Stock pursuant to
the Exchange Offer and, in lieu thereof, may make cash payments; provided,
further, that AIMCO shall not be obligated to commence the Exchange Offer if any
event or circumstance shall have occurred or arisen and be continuing that would
result in the failure to satisfy any of the conditions set forth in SECTION
5.11(c). AIMCO's obligation under this SECTION 5.11(a) shall include preparing
and filing with the SEC a registration statement for the purpose of registering
under the Securities Act the shares of AIMCO Stock to be issued in the Exchange
Offer and using its best efforts to seek the effectiveness of such registration
statement and maintain the effectiveness of such registration statement until
the consummation of the Exchange Offer.
(b) AIMCO shall conduct the Exchange Offer in accordance with
all applicable laws, including without limitation, Section 14 under the Exchange
Act, and the rules and regulations thereunder. AIMCO shall cause the
information included, or incorporated by reference, in the documents (the "OFFER
DOCUMENTS") pursuant to which the Exchange Offer is made (other than information
with respect to NHP) not to contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading at the time the Offer
Documents (or any amendment or supplement thereto) are first mailed to the
stockholders of NHP.
26
(c) Notwithstanding any other provisions of the Exchange Offer,
AIMCO shall not be required to accept for exchange any shares of NHP Stock
tendered pursuant to the Exchange Offer, may postpone the exchange of shares
tendered, and may terminate or amend the Exchange Offer if at any time on or
after the date hereof and at or before the time of acceptance for exchange of
any such shares (whether or not any shares have theretofore been accepted for
exchange) pursuant to the Exchange Offer, any of the following shall occur:
(i) any change, event, occurrence or circumstance shall
have occurred, arisen or been threatened in the business, properties,
assets, liabilities, capitalization, financial condition, operations,
licenses or franchises, or results of operations of NHP, which change is
or is reasonably likely to have a Material Adverse Effect on NHP, or a
material change shall have occurred in the equity capitalization of NHP
that would be adverse to AIMCO, or AIMCO shall have become aware of any
facts relating to NHP or its operations which has or may have material
significance with respect to the value of NHP;
(ii) there shall be instituted or pending any action,
proceeding, application or counterclaim by any Governmental Authority, or
by any Person before any Governmental Authority (other than pursuant to
Section 203 of the DGCL), which (A) restrains, prohibits, materially
delays or makes illegal the making or consummation of the Exchange Offer,
(B) seeks to restrain, prohibit, materially delay or make illegal the
Exchange Offer, (C) imposes or seeks to impose any material limitation
on the ability of AIMCO or any Affiliate of AIMCO to conduct NHP's business
or own any assets of NHP, (D) imposes or seeks to impose material
limitations on the ability of AIMCO to acquire or hold or to exercise
full rights of ownership of the shares of NHP Stock including, but not
limited to, the right to vote the shares of NHP Stock purchased by it on
all matters properly presented to the stockholders of NHP, or (E) might
result in a limitation of the benefits expected to be derived by AIMCO as
a result of the transactions contemplated by the Exchange Offer or the
value of the shares of NHP Stock to AIMCO; provided, however, that AIMCO
shall use its best efforts to contest any such action, proceeding,
application or counterclaim, or to seek to have any such action,
proceeding, application or counterclaim vacated or lifted;
(iii) there shall be any action taken, or any Law or Order
shall be sought, proposed, enacted, promulgated, entered, enforced or
deemed applicable to the Exchange Offer, AIMCO or any Affiliate of AIMCO,
or any other action shall have been taken, proposed or threatened, by any
Governmental Authority that might reasonably be expected to, directly or
indirectly, result in any of the consequences
27
referred to in clauses (A) through (E) of paragraph (ii) above (other than
pursuant to Section 203 of the DGCL);
(iv) a registration statement relating to the shares of
AIMCO Stock issuable pursuant to the Exchange Offer shall not be effective
under the Securities Act or there shall be pending or threatened a
proceeding for the issuance of an order suspending the effectiveness of
any such registration statement; or
(v) any of the conditions set forth in SECTION 6.1 shall
not have been satisfied.
5.12 SPIN-OFF. Prior to the Initial Closing Date, the Sellers shall
use commercially reasonable efforts to (a) cause NHP to enter into the Rights
Agreement and issue the Rights pursuant thereto, (b) prohibit NHP from amending
or terminating the Rights Agreement without the prior written approval of AIMCO,
and (c) cause NHP to obtain the consent of The First National Bank of Boston to
the Spin-Off. After the Initial Closing, (A) AIMCO and the Sellers shall use
commercially reasonable efforts to (i) cause NHP to cause the Maturity Time to
occur as soon as possible, and (ii) cause NHP to obtain the consent of The First
National Bank of Boston to the Spin-Off, and (B) AIMCO shall (i) not permit NHP
to redeem the Rights without the prior written consent of Demeter, and (ii) to
the extent within its control and subject to any fiduciary obligations it may
have, cause NHP to appoint persons designated by Demeter as directors of the
Mortgage Subsidiary. With respect to all Rights relating to Shares sold prior
to the Maturity Time, AIMCO shall not approve or consent to any amendment of the
Rights Agreement without the prior written consent of Demeter. Prior to the
Merger, the Sellers and AIMCO shall use commercially reasonable efforts to
contribute to the Mortgage Subsidiary the amount, if any, by which (x) NHP's
Free Cash Flow for the period from February 1, 1997 until the Maturity Time,
exceeds (y) NHP's Transaction Costs for such period and, if the Maturity Time
occurs after the Merger, AIMCO shall cause NHP to contribute such amount to the
Mortgage Subsidiary prior to the Maturity Time.
5.13 SELLERS' PUT RIGHT.
(a) The Sellers shall have the right (the "SELLERS' PUT RIGHT")
to require AIMCO to acquire a number of the Shares (with respect to each Seller,
such Seller's "PUT SHARES") in exchange for (i) in the case of Demeter, cash in
an amount equal to a number of shares of AIMCO Stock equal to the number of
Demeter's Put Shares, multiplied by $20, or (ii) in the case of Capricorn, a
number of shares of AIMCO Stock equal to the number of Capricorn's Put Shares,
multiplied by $20, and divided by $26.75. The aggregate number of Put Shares
may not exceed 10% of the total number of shares of NHP Stock outstanding at the
time the Sellers' Put Right is exercised.
28
(b) The Seller's Put Right may be exercised only once (unless
the Sellers' Put Closing in respect of such exercise fails to occur as a result
of the failure to satisfy any of the conditions set forth in SECTION 6.1), and
shall be exercised by Demeter's delivery of a written notice to AIMCO specifying
(i) the number of Demeter Shares and the number of Capricorn Shares that are
requested to be acquired by AIMCO pursuant to the Sellers' Put Right, (ii) the
date and time (which shall be at least ten Business Days after such notice is
given) at which the closing (the "SELLERS' PUT CLOSING") of the purchase of the
Put Shares is to occur, and (iii) the names and denominations in which the
certificates representing shares of AIMCO Stock to be delivered at the Sellers'
Put Closing are to be issued.
(c) The Sellers' Put Closing shall take place at the principal
offices of AIMCO's counsel, Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, in Boston,
Massachusetts (or such other location as Demeter and AIMCO may agree on). At
the Sellers' Put Closing (i) AIMCO shall (x) deliver to the Sellers a
certificate or certificates representing the aggregate number of shares of AIMCO
Stock specified in SECTION 5.13(a), in such denominations and registered in such
names as Demeter shall have requested in its exercise notice to AIMCO, and (y)
wire transfer to an account specified by the Sellers at least five Business Days
prior to the Sellers' Put Closing, funds in an amount equal to the cash amount
specified in SECTION 5.13(a), and (ii) the Sellers shall deliver or cause to be
delivered a certificate or certificates representing the Put Shares, accompanied
by duly executed blank stock powers or endorsed in blank for transfer, as AIMCO
may request.
(d) AIMCO's obligation to consummate the Sellers' Put Closing
shall be subject to the conditions set forth in SECTION 6.1.
(e) In the event of any exercise of the Sellers' Put Right, the
number of Demeter Shares and Capricorn Shares to be purchased at the Initial
Closing shall be reduced by the number of each that have been sold pursuant to
the exercise of the Sellers' Put Right.
5.14 RESIGNATIONS OF DIRECTORS. Promptly after a majority of the
Shares has been sold hereunder, the Sellers shall cause all of their
Representatives who serve as a member of the board of directors of NHP or any of
its subsidiaries to resign from such boards of directors; provided, that AIMCO
has notified the Sellers that Representatives of AIMCO will be appointed to fill
any vacancies created thereby.
5.15 DETERMINATION OF INITIAL SHARES. Prior to the Initial Closing,
AIMCO shall use commercially reasonable efforts to obtain one or more
commitments from lenders to provide financing for the Transactions in an
aggregate amount equal to the cash necessary for AIMCO to complete the
Transactions. At least 5 Business Days prior to the Initial Closing, AIMCO
shall give written notice to the Sellers as to the number of Shares (the
"INITIAL SHARES") that it intends to purchase at the Initial Closing, which
shall be equal to the greater of (a) 2,500,000, and (b) the quotient obtained by
dividing
29
(i) the sum of (x) 5% of the AIMCO Gross Asset Value as of a date not more than
five Business Days prior to the Initial Closing, giving pro forma effect to
AIMCO's acquisition of the Initial Shares, and (y) the maximum amount of
financing that AIMCO was able to obtain in connection therewith, by (ii) $20.
5.16 TRUST AGREEMENT. Prior to the Initial Closing, AIMCO and the
Sellers shall enter into a trust agreement, substantially in the form of EXHIBIT
E hereto.
ARTCILE VI
CONDITIONS TO CLOSING
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT EACH CLOSING. The
respective obligations of each party to this Agreement to effect the Initial
Closing, the Subsequent Closing, the Exchange Offer Closing and the Sellers' Put
Closing (to the extent each is a party to such transactions) shall be subject to
the following conditions:
(a) GOVERNMENTAL APPROVALS. All consents, approvals and action
of Governmental Authorities required to permit the consummation of the
transactions contemplated to occur at such closing shall have been obtained or
made, free of any condition that would have a Material Adverse Effect on AIMCO
or NHP, and all required authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of waiting periods imposed by, any
Governmental Authority shall have been obtained or filed or shall have occurred.
(b) NO INJUNCTIONS. No action shall have been taken, and no
statute, rule, regulation, executive order, decree or injunction shall have been
enacted, entered, promulgated or enforced (and not repealed, superseded or
otherwise made inapplicable), by any court or Governmental Authority which
prohibits the consummation of the transactions contemplated to occur at such
closing.
(c) NO RESTRAINING ORDERS. No court of competent jurisdiction
shall have issued an order, judgment or decree (other than a temporary
restraining order) restraining, enjoining or otherwise prohibiting the
transactions contemplated to occur at such closing which has not been lifted
(each party agreeing to use its reasonable efforts to have any such injunction,
order or decree lifted).
6.2 CONDITIONS TO OBLIGATIONS OF AIMCO TO EFFECT THE INITIAL CLOSING
AND THE SUBSEQUENT CLOSING. The obligations of AIMCO to effect the Initial
Closing and the Subsequent Closing are subject to the satisfaction of the
following conditions, unless waived by AIMCO.
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Sellers contained herein that are qualified as to materiality
shall be true and correct, and those not so qualified shall be true and correct
in all material respects,
30
at and as of the Initial Closing Date and, in the case of a Subsequent Closing,
the representations and warranties of the Sellers contained in SECTIONS 3.4(a),
3.11 and 3.12 shall be true and correct at and as of the Subsequent Closing
Date, with the same force and effect as though made on and as of such date,
except for any representation or warranty that specifically relates to an
earlier date, which shall be true and correct as of such earlier date.
(b) PERFORMANCE. The Sellers shall have performed, in all
material respects, all obligations and complied, in all material respects, with
all covenants required by this Agreement to be performed or complied with by
them prior to such closing.
(c) CERTIFICATES. Each of the Sellers shall have delivered to
AIMCO a certificate, dated the Initial Closing Date or the Subsequent Closing
Date, as the case may be, and signed by the president or chief executive officer
of such Seller, in the case of Demeter, or of the general partner of the general
partner of such Seller, in the case of Capricorn, certifying as to such Seller's
compliance with SECTION 6.2(a) and SECTION 6.2(b).
(d) REAL ESTATE AGREEMENT. The Real Estate Agreement shall have
been entered into and shall not have been terminated.
(e) GUARANTY. Phemus shall have duly executed and delivered to
AIMCO the Guaranty, and shall have delivered to AIMCO a certificate, executed by
its clerk or assistant clerk, certifying that (i) Phemus has duly and validly
taken all corporate action necessary to authorize its execution and delivery of
the Guaranty and its performance of its obligations under the Guaranty, (ii) the
individual(s) executing and delivering the Guaranty on behalf of Phemus has the
power or authority to act for or bind Phemus, and (iii) the resolutions (true
and complete copies of which shall be attached to the certificate) of the Board
of Directors of Phemus, with respect to the Guaranty, have been duly and validly
adopted and are in full force and effect.
(f) ESCROW AGREEMENT. Capricorn and all transferees of
Capricorn Shares pursuant to SECTION 5.8(c) shall have duly executed and
delivered to AIMCO an Escrow Agreement.
(g) OTHER. The Sellers shall have delivered to the Buyers such
other documents and instruments, signed and properly acknowledged by the
Sellers, if appropriate, as may be reasonably required by AIMCO or otherwise in
order to effectuate the provisions of this Agreement and such closing.
6.3 CONDITIONS TO OBLIGATIONS OF THE SELLERS TO EFFECT THE INITIAL
CLOSING AND THE SUBSEQUENT CLOSING. The obligations of the Sellers to effect
the Initial Closing and the Subsequent Closing are subject to the satisfaction
of the following conditions, unless waived by the Sellers:
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(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of AIMCO contained herein that are qualified as to materiality shall
be true and correct, and those not so qualified shall be true and correct in all
material respects, at and as of the Initial Closing Date, and, in the case of a
Subsequent Closing, the representations and warranties of AIMCO contained in
SECTIONS 4.3(b), 4.10 and 4.11 shall be true and correct at and as of the
Subsequent Closing Date, with the same force and effect as though made on and as
of such date, except for any representation or warranty that specifically
relates to an earlier date, which shall be true and correct as of such earlier
date.
(b) PERFORMANCE. AIMCO shall have performed, in all material
respects, all obligations and complied, in all material respects, with all
covenants required by this Agreement to be performed or complied with by it
prior to such closing.
(c) CERTIFICATES. AIMCO shall have delivered to each of the
Sellers a certificate dated the Initial Closing Date or the Subsequent Closing
Date, as the case may be, and signed by its president or vice chairman,
certifying as to AIMCO's compliance with SECTION 6.3(a) and SECTION 6.3(b).
(d) REGISTRATION RIGHTS AGREEMENT. AIMCO shall have executed
and delivered to each of the Sellers that is to receive shares of AIMCO Stock at
such closing, a Registration Rights Agreement relating to such shares of AIMCO
Stock.
(e) OTHER. AIMCO shall have delivered such other documents and
instruments, properly signed and acknowledged if appropriate, as reasonably may
be required in order to effectuate the provisions of this Agreement and such
closing.
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
7.1 TERMINATION. This Agreement may be terminated and abandoned at
any time prior to the Initial Closing:
(a) by the mutual written consent of AIMCO and Demeter;
(b) by AIMCO or Demeter if (i) any Governmental Authority, the
consent of which is a condition to the obligations of AIMCO and any of the
Sellers to consummate the Initial Closing, shall have determined not to grant
its consent and all appeals of such determination shall have been taken and have
been unsuccessful, or (ii) any court of competent jurisdiction shall have issued
an order, judgment or decree (other than a temporary restraining order)
restraining, enjoining or otherwise prohibiting the
32
Initial Closing, and such order, judgment or decree shall have become final and
nonappealable;
(c) by AIMCO if there has been a material breach by any of the
Sellers of any representation, warranty, covenant or agreement set forth in this
Agreement, which breach has not been cured within ten business days following
receipt by the breaching party of notice of such breach;
(d) by Demeter if there has been a material breach by AIMCO of
any representation, warranty, covenant or agreement set forth in this Agreement,
which breach has not been cured within ten business days following receipt by
the breaching party of notice of such breach; and
(e) by AIMCO or Demeter if the Initial Closing has not occurred
by May 31, 1997; provided, however, that (i) AIMCO shall not be entitled to
terminate this Agreement pursuant to this SECTION 7.1(e) if a knowing or willful
breach of this Agreement by AIMCO has prevented the Initial Closing from
occurring by such date, and (ii) Demeter shall not be entitled to terminate
this Agreement pursuant to this SECTION 7.1(e) if a knowing or willful breach of
this Agreement by any Seller has prevented the Initial Closing from occurring by
such date.
7.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by AIMCO or either Seller as provided in SECTION 7.1, this Agreement
shall forthwith become void and there shall be no liability on the part of
AIMCO, the Sellers or their respective officers or directors; provided, however,
that if AIMCO terminates this Agreement with respect to only one of the Sellers,
or if only one of the Sellers terminates this Agreement, AIMCO and the other
Seller shall remain obligated under this Agreement; provided, further, that if
this Agreement is so terminated by a party because one or more of the conditions
to such party's obligations hereunder is not satisfied as a result of the other
party's willful failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies for breach of contract or
otherwise, including, without limitation, Damages relating thereto, shall
survive such termination unimpaired.
7.3 AMENDMENT OR SUPPLEMENT. This Agreement may be amended or
supplemented in writing by AIMCO and Demeter and, solely with respect to any
change to SECTION 2.1(a)(ii), 2.1(b)(ii) or 5.8(c), Capricorn.
7.4 EXTENSION OF TIME, WAIVER, ETC. At any time prior to the
Subsequent Closing:
(a) AIMCO may extend the time for the performance of any of the
obligations or acts of either of the Sellers and Demeter may extend the time for
the performance of any of the obligations or acts of AIMCO;
33
(b) AIMCO may waive any inaccuracies in the representations and
warranties of either Seller contained herein or in any document delivered
pursuant hereto, and either Seller may do the same with respect to AIMCO for
such Seller; or
(c) AIMCO may waive compliance with any of the agreements or
conditions of either Seller contained herein, and either Seller may do the same
with respect to AIMCO for such Seller; provided, that no failure or delay by any
party in exercising any right hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right hereunder.
ARTICLE VII
INDEMNIFICATION
8.1 INDEMNIFICATION BY THE SELLERS. Subject to SECTION 9.7, from and
after the Initial Closing, each of the Sellers shall, severally and not jointly,
indemnify, reimburse, defend and hold harmless AIMCO and its Representatives
for, from and against all demands, claims, actions, causes of action and
Damages, asserted against, resulting to, imposed on or suffered or incurred by
AIMCO or its Representatives, directly or indirectly, in connection with any of
the following:
(a) any breach of, or inaccuracy in, any representation or
warranty of such Seller in this Agreement or any certificate, instrument or
other document delivered pursuant hereto or in connection herewith;
(b) any breach of any covenant of such Seller contained in this
Agreement;
(c) claims made by any member of the Oxford Group arising in
connection with the sale of the Shares hereunder other than claims arising (i)
as a result of AIMCO not meeting the definition of a "Qualified Purchaser" under
the Stock and Asset Transfer Restrictions Agreement, or (ii) as a result of
AIMCO failing to satisfy the net worth or managed units requirements of Section
4 of the Stock and Asset Transfer Restrictions Agreement (iii) as a result of a
"Termination for Financial Performance," as defined in any Oxford Management
Contract, based on the relevant property's financial performance after the
Initial Closing Date, (iv) as a result of a "For Cause Termination," as defined
in any Oxford Management Contract, based on an event or circumstance arising
after the Initial Closing Date, unless, and to the extent that, any such event
or circumstance arises as a result of any action or inaction by NHP, the Sellers
or any of their affiliates prior to the Initial Closing Date, (v) as a result of
any failure by AIMCO to satisfy any fiduciary obligations (whether express or
implied) under any Oxford Management Contract after the Initial Closing Date; or
34
(d) the loss by NHP or any of its subsidiaries, or modification
in a manner adverse to NHP or any of its subsidiaries, of any right or benefit
under, or any termination, cancellation or non-renewal of, any Oxford Management
Contract, and such loss, modification, termination, cancellation or non-renewal
occurs on or before the first anniversary of the Initial Closing Date, unless
such loss, modification, termination, cancellation or non-renewal occurs (i) as
a result of AIMCO not meeting the definition of a "Qualified Purchaser" under
the Stock and Asset Transfer Restrictions Agreement, (ii) as a result of AIMCO
failing to satisfy the net worth or managed units requirements of Section 4 of
the Stock and Asset Transfer Restrictions Agreement, (iii) as a result of a
"Termination for Financial Performance," as defined in such Oxford Management
Contract, based on the relevant property's financial performance after the
Initial Closing Date, (iv) as a result of a "For Cause Termination," as defined
in such Oxford Management Contract, based on an event or circumstance arising
after the Initial Closing Date, unless, and to the extent that, any such event
or circumstance arises as a result of any action or inaction by NHP, the Sellers
or any of their affiliates prior to the Initial Closing Date, (v) as a result of
any failure by AIMCO to satisfy any fiduciary obligations (whether express or
implied) under any such Oxford Management Contract after the Initial Closing
Date, or (vi) at the request or with the consent of AIMCO.
8.2 INDEMNIFICATION BY AIMCO. Subject to SECTION 9.7, from and after
the Initial Closing, AIMCO shall indemnify, reimburse, defend, and hold harmless
the Sellers and their Representatives for, from, and against all demands,
claims, actions or causes of action, and Damages, asserted against, resulting
to, imposed on, or suffered or incurred by any of the Sellers or their
Representatives, directly or indirectly, in connection with any of the
following:
(a) any breach of, or inaccuracy in, any representation or
warranty of AIMCO contained in this Agreement or any certificate, instrument or
other document delivered pursuant hereto or in connection herewith; or
(b) any breach of covenant of AIMCO contained in this Agreement.
8.3 PROCEDURES RELATING TO INDEMNIFICATION.
(a) Each person to be indemnified pursuant to SECTION 8.1 or
SECTION 8.2 (an "INDEMNIFIED PARTY") agrees to give prompt notice (a "NOTICE OF
THIRD PARTY CLAIM") to the indemnifying party of the assertion of any claim, or
the commencement of any suit, action or proceeding, brought against or sought to
be collected from such indemnified party (each, a "THIRD PARTY CLAIM"), in
respect of which indemnity may be sought by such indemnified party under SECTION
8.1 or SECTION 8.2; provided that the omission so to promptly notify the
indemnifying party with respect to a Third Party Claim brought against or sought
to be collected from such indemnified party will not relieve the indemnifying
party from any liability which it may have to such indemnified party under
SECTION 8.1 or SECTION 8.2 except as otherwise provided in SECTION 8.4 or to
35
the extent that such failure has materially prejudiced such indemnifying party
with respect to the defense of such Third Party Claim. If any indemnified party
shall seek indemnity under SECTION 8.1 or SECTION 8.2 with respect to a Third
Party Claim brought against or sought to be collected from such indemnified
party, the indemnifying party shall be entitled to participate therein and, to
the extent that it wishes, to assume and direct the defense and settlement
thereof with counsel satisfactory to such indemnified party; provided that if
any Third Party Claim brought against or sought to be collected from any
indemnified party includes a request for injunctive or other equitable relief
that, if granted, is reasonably likely to have a Material Adverse Effect or a
similar effect on such indemnified party, such indemnified party shall be
entitled to control and direct the defense and settlement thereof and in such
event the legal and other expenses subsequently incurred by such indemnified
party in connection with the defense thereof shall be paid by the indemnifying
party. After notice from the indemnifying party to an indemnified party of its
election to assume and direct the defense and settlement of a Third Party Claim
brought against or sought to be collected from such indemnified party which such
indemnifying party is entitled to assume and direct under the terms hereof, the
indemnifying party shall not be liable to such indemnified party under SECTION
8.1 or SECTION 8.2, as the case may be, for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided that such
indemnified party shall have the right to employ counsel to represent such party
if in the reasonable judgment of such party, it is advisable for such party to
be represented by separate counsel because the representation of both the
indemnified party and the indemnifying party in such matter could present such
counsel with a potential conflict of interest and in such event the fees and
expenses of such separate counsel shall be paid by the indemnifying party.
Notwithstanding the foregoing provisions of this SECTION 8.3(a), the
indemnifying party shall not (A) without the prior written consent of an
indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which such indemnified party is, or with reasonable
foreseeability, could have been a party and indemnity could have been sought
hereunder by such indemnified party for a Third Party Claim brought against or
sought to be collected from such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
arising out of such proceeding (provided that, whether or not such a release is
required to be obtained, the indemnifying party shall remain liable to such
indemnified party in accordance with SECTION 8.1 or SECTION 8.2 in the event
that a Third Party Claim is subsequently brought against or sought to be
collected from such indemnified party) or (B) be liable for any settlement of
any Third Party Claim brought against or sought to be collected from an
indemnified party effected without such indemnifying party's written consent
(which shall not be unreasonably withheld), but if settled with such
indemnifying party's written consent, or if there is a final judgment for the
plaintiff in any such Third Party Claim, such indemnifying party agrees (to the
extent stated above) to indemnify the indemnified party from and against any
loss, liability, claim, damage or expense by reason or such settlement or
judgment. The indemnification required by SECTION 8.1 or SECTION 8.2, as the
case may be, shall be made by periodic payments of the amount thereof during the
course of
36
the investigation or defense, as and when bills are received or loss, liability,
claim, damage or expense is incurred.
(b) In the event any indemnified party should have a claim
(each, a "DIRECT CLAIM") against any indemnifying party under SECTION 8.1 or
SECTION 8.2 that does not involve a Third Party Claim being asserted against or
sought to be collected from such indemnified party, the indemnified party shall
deliver notice (a "NOTICE OF DIRECT CLAIM") of such claim with reasonable
promptness to the indemnifying party. The failure by any indemnified party so
to notify the indemnifying party shall not relieve the indemnifying party from
any liability which it may have to such indemnified party under SECTION 8.1 or
SECTION 8.2 except as otherwise provided in SECTION 8.4 or to the extent that
the indemnifying party demonstrates that it has been materially prejudiced by
such failure. If the indemnifying party does not notify the indemnified party,
within 30 calendar days following its receipt of a Notice of Direct Claim, that
the indemnifying party disputes its liability to the indemnified party under
SECTION 8.1 or SECTION 8.2, as the case may be, such claim specified by the
indemnified party in such Notice of Direct Claim will be conclusively deemed a
liability of the indemnifying party under SECTION 8.1 or SECTION 8.2, as the
case may be, and the indemnifying party shall pay the amount of such liability
to the indemnified party on demand, or, in the case of any notice in which the
amount of the claim (or any portion thereof) is estimated, on such later date
when the amount of such claim (or such portion thereof) becomes finally
determined.
(c) If the indemnifying party has timely disputed its liability
with respect to a Third Party Claim or a Direct Claim, the indemnifying party
and the indemnified party agree to proceed in good faith to negotiate a
resolution of such dispute and, if not resolved through negotiations, such
dispute will be resolved by arbitration held in Denver, Colorado in accordance
with the Commercial Arbitration Rules of the American Arbitration Association
(the "AAA") then in effect unless the parties mutually agree otherwise. Notice
of the demand for arbitration shall be filed in writing by the indemnified party
with the indemnifying party and with the AAA and shall be made within a
reasonable time after the dispute has arisen. Within 30 days after the date the
arbitration notice is filed with the AAA, the indemnified party and the
indemnifying party shall select one person to act as arbitrator. If the parties
are unable to agree upon an arbitrator within 10 days, the arbitrator shall be
selected by the AAA within 30 days thereafter. The arbitrator shall be
independent and impartial. The arbitrator shall promptly schedule all discovery
and the other steps to be taken in resolution of any controversy, dispute or
claim and otherwise assume sufficient initiative and control to effect the
sufficient and expeditious resolution of the dispute. The award rendered by the
arbitrator shall be final and judgment may be entered upon it in accordance with
applicable law in any court having jurisdiction thereof. Any liability that the
indemnifying party agrees to assume, or that is determined by the arbitrator to
be a liability of the indemnifying party under SECTION 8.1 or SECTION 8.2 will
be conclusively deemed a liability of the indemnifying party. Except by written
consent of the Person sought to be joined, no arbitration arising out of or
relating to this Agreement shall include, by consolidation, joinder or in any
other manner, any Person not a party to, or otherwise
37
bound by, this Agreement. The provisions of this Agreement to arbitrate and any
other written agreement to arbitrate referred to herein shall be specifically
enforceable under the prevailing arbitration law. Each party hereto expressly
consents to, and waives any future objection to, such forum and arbitration
rules.
(d) If Demeter or Phemus is obligated to indemnify AIMCO or any
of its Representatives under this ARTICLE VIII, Demeter or Phemus, as the case
may be, will succeed to, and stand in place of NHP or AIMCO in respect of any,
similar claims or causes of action of NHP or AIMCO may have against third
parties in connection with any matter for which Demeter or Phemus is obligated
to indemnify AIMCO or any of its Representatives, but only to the extent that
Demeter or Phemus, as the case may be, has indemnified AIMCO or any of its
Representatives for such matter. In such event, AIMCO shall cooperate with
Demeter and Phemus in a reasonable manner, at the cost and expense of Demeter or
Phemus, as the case may be, in prosecuting any such subrogated right or claim,
including without limitation, signing claims or bringing actions in the name of
NHP or AIMCO.
(e) Each of AIMCO and its Representatives may give notice of a
claim under the Escrow Agreement in an amount equal to any amount for which it
may be entitled to indemnification under this ARTICLE VIII upon notice to
Capricorn specifying in reasonable detail the basis for such claim. Neither the
giving of any such notice, nor the failure to give any such notice, of a claim
under the Escrow Agreement will constitute an election of remedies or limit
AIMCO or any of its Representatives in any manner in the enforcement of any
other remedies that may be available to it.
8.4 LIMITATIONS ON INDEMNIFICATION.
(a) The obligations to indemnify and hold harmless a party
hereto, (i) pursuant to SECTION 8.1(a) and SECTION 8.2(a), shall terminate when
the applicable representation or warranty terminates pursuant to SECTION 9.7,
(ii) pursuant to SECTION 8.1(b) and SECTION 8.2(b), shall not terminate, and
(iii) pursuant to SECTION 8.1(c) and SECTION 8.1(d), shall terminate after the
first anniversary of the Initial Closing Date; provided, however, that, as to
clauses (i) and (iii) above, such obligation to indemnify and hold harmless
shall not terminate with respect to any item as to which the person to be
indemnified or the related party thereto shall have, before the expiration of
the applicable period, previously made a claim by delivering a notice (stating
in reasonable detail the basis of such claim) to the indemnifying party.
(b) The Sellers shall have no liability under SECTION 8.1, and
AIMCO shall have no liability under SECTION 8.2, unless and until the aggregate
Damages for which indemnification is sought under such Section exceed
$1,000,000, and then only for the amount by which such Damages exceed
$1,000,000; provided, however, that such limitation shall not apply to any
intentional breach or any of the matters referred to in SECTION 8.4(c).
38
(c) In the event that the Sellers are obligated to indemnify
AIMCO or any of its Representatives pursuant to SECTION 8.1(a), (c) or (d) as a
result of a loss by NHP or any of its subsidiaries, or modification in a manner
adverse to NHP or any of its subsidiaries, of any right or benefit under, or any
termination, cancellation or non-renewal of, any Contract, in effect as of the
Initial Closing Date, pursuant to which NHP or any of its subsidiaries provides
property management services (including, without limitation, services provided
to or for the Oxford Properties), Damages shall be calculated by multiplying (i)
that portion of the aggregate annualized revenues lost by NHP and its
subsidiaries as a result of all such losses, modifications, terminations,
cancellations and non-renewals (reduced by the amount of any compensatory
payments received in respect thereof, other than payments by the Sellers and
Phemus under this Agreement or the Guaranty) that exceeds $3.0 million, by (ii)
3.6.
(d) In the event that AIMCO or its Representatives are entitled
to indemnification by any of the Sellers for any Damages under SECTION 8.1(c) or
(d) or for a breach of the representations set forth in ARTICLE III (other than
SECTIONS 3.4, 3.5, 3.11 and 3.12), if, and only to the extent that such breach
of representation relates to NHP and not to such Seller, the aggregate liability
of such Seller shall be limited to an amount equal to the product of (i) the
aggregate amount of such Damages, multiplied by (ii) 42.9% in the case of
Demeter, and 10.1% in the case of Capricorn.
(e) Each Seller's liability to AIMCO and its Representatives
under this ARTICLE VIII shall not exceed the aggregate consideration paid to
such Seller hereunder. AIMCO's liability to each Seller and its Representatives
under this ARTICLE VIII shall not exceed the aggregate consideration paid to
such Seller hereunder.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 GOVERNING LAW. This Agreement and the legal relations among the
parties hereto shall be governed by and construed and enforced in accordance
with the laws of the State of Delaware, without regard to its principles of
conflicts of law.
9.2 ENTIRE AGREEMENT. This Agreement, including the exhibits and
schedules attached hereto, constitutes the entire agreement among the parties
pertaining to the subject matter hereof and supersedes all prior agreements,
understandings, letters of intent, negotiations and discussions, whether oral or
written, of the parties, including that certain letter agreement, dated February
13, 1997, among AIMCO and the Sellers, and there are no warranties,
representations or other agreements, express or implied, made to any party by
any other party in connection with the subject matter hereof except as
specifically set forth herein or in the documents delivered pursuant hereto or
in connection herewith.
39
9.3 MODIFICATION; WAIVER. No supplement, modification, waiver or
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any provision of this Agreement shall
be deemed or shall constitute a waiver of any other provision hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
9.4 NOTICES. All notices, consents, requests, reports, demands or
other communications hereunder (collectively, "NOTICES") shall be in writing and
may be given personally, by registered mail, or by Federal Express (or other
reputable overnight delivery service):
if to AIMCO, to it at:
0000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xx. Xxxxx Xxxxxxxxx
Telephone: (000) 000-0000
and
00000 Xxxxxxx 000, Xxxxxxxx F-240
X.X. Xxx 0000
Xxxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
if to Demeter, to it at:
c/o Harvard Management Company, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Mr. Xxx Xxxxxx
Xxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
40
with a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx Xxxx, Esq.
Telephone: (000) 000-0000
if to Capricorn, to it at:
00 Xxxx Xxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxx, Xx.
Telephone: (000) 000-0000
with a copy to:
O'Melveny & Xxxxx LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Drake Tempest, Esq.
Telephone: (000) 000-0000
or to such other address or such other person as the addressee party shall have
last designated by notice to the other party. All Notices shall be deemed to
have been given (i) when delivered personally, (ii) three days after being sent
by registered mail, or (iii) one day after being sent by Federal Express (or
other reputable overnight delivery service).
9.5 EXPENSES. Whether or not the transactions contemplated by this
Agreement shall be consummated, all fees and expenses incurred by any party
hereto in connection with this Agreement shall be borne by such party.
Notwithstanding the preceding sentence, AIMCO shall pay one-half and the
Sellers, collectively, shall pay one-half of all HSR Act fees for filings made
in connection with the Transactions.
9.6 ASSIGNMENT.
(a) Except as specifically provided to the contrary in SECTION
5.8(c) and SECTION 9.6(b), no party hereto shall have the right, power, or
authority to assign or pledge this Agreement or any portion of this Agreement,
or to delegate any duties or obligations arising under this Agreement,
voluntarily, involuntarily, or by operation of law, without the prior written
consent of the other parties hereto.
(b) AIMCO may assign any or all of its rights and interest in
this Agreement to any corporation (i) with respect to which AIMCO owns, directly
or
41
indirectly, a majority of the outstanding capital stock and (ii) that is
designated by AIMCO to purchase any or all of the Shares pursuant to this
Agreement. Notwithstanding any such assignment, AIMCO shall remain liable to
perform all obligations required to be performed by it hereunder. In the event
of any such assignment, all of the Sellers' representations and warranties shall
be deemed to be made to AIMCO and such designee, and all covenants and
agreements of the Sellers herein shall be deemed to be made for the benefit of
AIMCO and such designee.
9.7 SURVIVAL. All representations and warranties in this Agreement
(other than SECTIONS 3.4(a), 3.5, 4.3(b) and 4.4) shall survive only until the
first anniversary of the Initial Closing. The representations and warranties in
SECTIONS 3.4(a), 3.5, 4.3(b) and 4.4 shall survive the Initial Closing and any
Subsequent Closing indefinitely. All representations and warranties shall
survive notwithstanding any investigation conducted with respect thereto or any
knowledge acquired as to the accuracy or inaccuracy of any such representation
or warranty.
9.8 SEVERABILITY. Any provision or part of this Agreement which is
invalid or unenforceable in any situation in any jurisdiction shall, as to such
situation and such jurisdiction, be ineffective only to the extent of such
invalidity and shall not affect the enforceability of the remaining provisions
hereof or the validity or enforceability of any such provision in any other
situation or in any other jurisdiction.
9.9 SUCCESSORS AND ASSIGNS; THIRD PARTIES. Subject to and without
waiver of the provisions of SECTION 9.6, all of the rights, duties, benefits,
liabilities and obligations of the parties shall inure to the benefit of, and be
binding upon, their respective successors, assigns, heirs and legal
representatives. Except as specifically set forth or referred to herein,
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 hereto and their
successors or permitted assigns, any rights or remedies under or by reason of
this Agreement.
9.10 COUNTERPARTS. This Agreement may be executed in as many
counterparts as may be deemed necessary and convenient, and by the different
parties hereto on separate counterparts each of which, when so executed, shall
be deemed an original, but all such counterparts shall constitute one and the
same instrument.
9.11 INTERPRETATION; REFERENCES. Any use of masculine, feminine or
neuter pronouns herein shall not be limiting, but shall be construed as
referring to persons of any gender, as the context may require. Any use of the
singular or plural form herein shall not be limiting, but shall be construed as
referring to either the plural or singular, as the context may require.
References to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a
Schedule or an Exhibit attached to this Agreement, and references to an
"Article," a "Section" or a "Subsection" are, unless otherwise specified, to an
Article, a Section or a Subsection of this Agreement. The Article and Section
headings of this Agreement are for convenience of reference only and shall not
be
42
deemed to modify, explain, restrict, alter or affect the meaning or
interpretation of any provision hereof.
9.12 TIME OF ESSENCE. Time shall be of the essence with respect to
all matters contemplated by this Agreement.
9.1 REMEDIES.
(a) In the event of a breach by AIMCO or any of the Sellers of
its obligations under ARTICLE II or SECTION 5.5, 5.8 or 5.13 of this Agreement,
the non-breaching party, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. AIMCO and the Sellers agree
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by any of them of any of the provisions of ARTICLE II or
SECTION 5.5, 5.8 or 5.13 of this Agreement and hereby further agree that, in the
event of any action for specific performance in respect of such breach, they
shall waive the defense that a remedy at law would be adequate.
(b) The sole and exclusive liability of the Sellers to AIMCO,
and of AIMCO to the Sellers, for money Damages under or in connection with this
Agreement or the transactions contemplated hereby (including without limitation,
for any breach or inaccuracy of any representation or warranty or for any breach
of any covenant required to be performed hereunder) and the sole and exclusive
remedy of AIMCO and the Sellers with respect to any of the foregoing, shall be
as expressly set forth in ARTICLE VIII and the Sellers and AIMCO hereby waive,
release and agree not to assert any other remedy for money Damages; provided,
however, that the foregoing shall not limit AIMCO or the Sellers in any way from
exercising any rights or securing any remedies in connection with this Agreement
or the transactions contemplated hereby as a result of a fraudulent breach of
any representation, warranty or covenant hereunder.
9.14 EXHIBITS. All exhibits attached hereto are hereby incorporated
by reference as though set out in full herein.
9.15 ATTORNEYS' FEES. In the event that any party hereto brings an
action or proceeding against the other party to enforce or interpret any of the
covenants, conditions, agreements or provisions of this Agreement, the
prevailing party in such action or proceeding shall be entitled to recover all
costs and expenses of such action or proceeding, including, without limitation,
attorneys' fees, charges, disbursements and the fees and costs of expert
witnesses.
9.16 WAIVER OF JURY TRIAL. Consistent with SECTION 8.2, each party to
this Agreement further waives its respective right to a jury trial of any claim
or cause of action arising out of this Agreement or any dealings between any of
the parties hereto relating to the subject matter of this Agreement. The scope
of this waiver is intended to be all-encompassing of any and all disputes that
may be filed in any court and that
43
relate to the subject matter of this Agreement, including, without limitation,
contract claims, tort claims and all other common law and statutory claims.
This waiver is irrevocable, meaning that it may not be modified either orally or
in writing, and this waiver shall apply to any subsequent amendments,
supplements or other modifications to this Agreement or to any other document or
agreement relating to the Transactions.
9.17 FURTHER ASSURANCES. Each of the parties shall, without further
consideration, use reasonable efforts to execute and deliver such additional
documents and take such other action as the other parties, or any of them, may
reasonably request to carry out the intent of this Agreement and the
Transactions.
9.18 NEGOTIATION OF AGREEMENT. Each of the parties acknowledges that
it has been represented by independent counsel of its choice throughout all
negotiations that have preceded the execution of this Agreement and that it has
executed the same with consent and upon the advice of said independent counsel.
Each party and its counsel cooperated in the drafting and preparation of this
Agreement and the documents referred to herein, and any and all drafts relating
thereto shall be deemed the work product of the parties and may not be construed
against any party by reason of its preparation. Accordingly, any rule of law or
any legal decision that would require interpretation of any ambiguities in this
Agreement against the party that drafted it is of no application and is hereby
expressly waived. The provisions of this Agreement shall be interpreted in a
reasonable manner to effect the intentions of the parties and this Agreement.
9.19 SEVERAL LIABILITY. The liability of Demeter and Capricorn under
this Agreement is several and not joint.
[SIGNATURE PAGES FOLLOW]
44
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
APARTMENT INVESTMENT
AND MANAGEMENT COMPANY
By: /s/ Xxxxx Xxxxxxxxx
-----------------------------
Name: Xxxxx Xxxxxxxxx
Title: Vice Chairman
DEMETER HOLDINGS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Authorized Signatory
By: /s/ Xxx X. Xxxxxx
-----------------------------
Name: Xxx X. Xxxxxx
Title: Authorized Signatory
CAPRICORN INVESTORS, L.P.
By: Capricorn Holdings, G.P.,
its General Partner
By: Xxxxxxx Holdings Inc.,
its General Partner
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
-----------------------------
Name: Xxxxxxx X. Xxxxxxx, Xx.
Title: President
45
EXHIBITS TO
STOCK PURCHASE AGREEMENT
dated as of
April 16, 1997
by and among
APARTMENT INVESTMENT AND MANAGEMENT COMPANY,
DEMETER HOLDINGS CORPORATION
and
CAPRICORN INVESTORS, L.P.
INDEX
EXHIBIT A Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C Registration Rights Agreement . . . . . . . . . . . . . . . . C-1
EXHIBIT D Rights Agreement . . . . . . . . . . . . . . . . . . . . . . D-1
EXHIBIT E Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . E-1
EXHIBIT A
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of ______ __, 1997 (the "AGREEMENT"), by
and among Apartment Investment and Management Company, a Maryland corporation
("AIMCO"), [Capricorn Investors, L.P., a Delaware limited partnership]
("CAPRICORN"), and ___________, a [national banking association] [bank
organized under the laws of ___________], as escrow agent (the "ESCROW AGENT").
WHEREAS, AIMCO has entered into a Stock Purchase Agreement, dated as
of April 16, 1997 (the "STOCK PURCHASE AGREEMENT"), with Demeter Holdings
Corporation, a Massachusetts corporation ("DEMETER"), and Capricorn Investors,
L.P., a Delaware limited partnership, which provides for AIMCO and Capricorn to
enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the covenants of
the parties set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, subject to the terms
and conditions set forth herein, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. Capitalized terms used but not otherwise defined in
this Agreement shall have the respective meanings ascribed thereto in the Stock
Purchase Agreement.
1.2 "CLOSING PRICE" shall mean, with respect to any security on any
day, the closing sale price, regular way, on such day or, in case no such sale
takes place on such day, the average of the reported closing bid and asked
prices, regular way, in each case on the principal national securities exchange
or quotation system on which such security is quoted or listed or admitted to
trading, as the case may be, or, if not quoted or listed or admitted to trading
on any national securities exchange or quotation system, the average of the
closing bid and asked prices of such security on the over-the-counter market on
the day in question as reported by the National Quotation Bureau Incorporated,
or a similar generally accepted reporting service or, if not so reported, the
market value per unit of such security on the day in question, as determined,
using valuation techniques generally accepted in the securities industry, by any
New York Stock Exchange ("NYSE") member firm selected by Escrow Agent for that
purpose.
1.3 "DETERMINATION DATE" shall mean (i) when used with respect to any
dividend or other distribution, the date fixed for the determination of the
holders of the
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securities entitled to receive such dividend or distribution, or, if a
dividend or distribution is paid or made without fixing such a date, the date
of such dividend or distribution and (ii) when used with respect to any
subdivision, combination or reclassification of securities, the date upon
which such subdivision, combination or reclassification becomes effective.
1.4 "EX-DATE" shall mean (i) when used with respect to any dividend
or distribution, the first date on which the securities on which the dividend or
distribution is payable trade regular way on the relevant exchange or in the
relevant market without the right to receive such dividend or distribution, and
(ii) when used with respect to any subdivision, combination or reclassification
of securities, the first date on which the securities trade regular way on such
exchange or in such market to reflect such subdivision, combination or
reclassification becoming effective.
1.5 "MARKET PRICE" shall mean, with respect to any security on any
date (the "SPECIFIED DATE"), the average of the daily Closing Prices with
respect to such security for the ten consecutive Trading Days for such security
ending on the third Trading Day that immediately precedes the Specified Date,
appropriately adjusted to take into account any dividends or distributions
payable on such security, or any reclassification, subdivisions or combinations
of, or similar transactions involving, such security with respect to which (i)
the Ex-Date occurs after the first of such ten consecutive Trading Days and (ii)
the Determination Date occurs prior to the Specified Date.
1.6 "TRADING DAY" shall mean, with respect to any security, (i) if
the principal trading market for the applicable security is the NYSE or another
national securities exchange, a day on which the NYSE or such other national
securities exchange is open for business, (ii) if the principal trading market
for the applicable security is the Nasdaq Stock Market, a day on which a trade
may be made on the Nasdaq Stock Market, or (iii) if the applicable security is
not listed, admitted for trading or quoted as provided in clause (i) or (ii),
any day other than a Saturday or Sunday or a day on which banking institutions
in the State of New York are authorized or obligated by law or executive order
to close.
ARTICLE II
ESCROW
2.1 ESTABLISHMENT OF ESCROW.
(a) AIMCO may, from time to time, in accordance with the Stock
Purchase Agreement, deposit with Escrow Agent certificates representing shares
of AIMCO Stock issued in the name of Capricorn (the "ESCROW SHARES"). Capricorn
shall deliver to the Escrow Agent duly executed blank stock powers for each of
the Escrow Shares. Upon receipt of such shares, Escrow Agent shall give AIMCO
written acknowledgement thereof. The Escrow Shares, any shares of AIMCO Stock,
marketable
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securities or other assets deposited by Capricorn with Escrow Agent pursuant
to SECTION 2.4, the proceeds of any sales of such securities or other assets
and any dividends or earnings thereon, as reduced by any disbursements
pursuant to SECTION 2.3, or SECTION 2.4, amounts withdrawn under SECTION
3.1(J), or losses on investments, are collectively referred to herein as the
"ESCROW FUND."
(b) Escrow Agent hereby agrees to act as escrow agent and to
hold, safeguard and disburse the Escrow Fund pursuant to the terms and
conditions hereof.
2.2 INVESTMENT OF FUNDS. Assets in the Escrow Fund, other than
shares of AIMCO Stock and marketable securities, shall be invested from time to
time as directed by Capricorn, until disbursement of the entire Escrow Fund.
2.3 CLAIMS.
(a) From time to time on or before the earlier to occur of the
Merger or the first anniversary of the Initial Closing Date, AIMCO may give
written notice (a "NOTICE") to Capricorn and Escrow Agent specifying in
reasonable detail the nature and dollar amount of any claim (a "CLAIM") it may
have against Capricorn under ARTICLE VIII of the Stock Purchase Agreement; AIMCO
may make more than one claim with respect to any underlying state of facts. If
Capricorn gives notice to AIMCO and Escrow Agent disputing any Claim (a "COUNTER
NOTICE") within 30 days following receipt by Escrow Agent of the Notice
regarding such Claim, such Claim shall be resolved as provided in SECTION
2.3(B). If no Counter Notice is received by Escrow Agent within such 30-day
period, then the dollar amount of damages claimed by AIMCO as set forth in its
Notice shall be deemed established for purposes of this Agreement and the Stock
Purchase Agreement and, at the end of such 30-day period, Escrow Agent shall (i)
deliver to AIMCO one or more certificates representing, in the aggregate, a
number of Escrow Shares equal to (x) the dollar amount claimed in the Notice,
divided by (y) the Market Price of AIMCO Stock on the date of delivery of such
Escrow Shares to AIMCO, or (ii) pay to AIMCO the dollar amount claimed in the
Notice, in each case, from (and only to the extent of) the Escrow Fund. Escrow
Agent shall not inquire into or consider whether a Claim complies with the
requirements of the Stock Purchase Agreement.
(b) If a Counter Notice is given with respect to a Claim, Escrow
Agent shall make payment with respect thereto only in accordance with (i) joint
written instructions of AIMCO and Capricorn, or (ii) a final non-appealable
order of a court of competent jurisdiction. Any court order shall be
accompanied by a legal opinion by counsel for the presenting party satisfactory
to Escrow Agent to the effect that the order is final and non-appealable.
Escrow Agent shall act on such court order and legal opinion without further
question.
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2.4 SUBSTITUTION OF ESCROW FUNDS. Capricorn may, at any time and
from time to time, deposit with Escrow Agent shares of AIMCO Stock or other
marketable securities duly indorsed in blank, or cash or cash equivalents, in
substitution of all or any portion of the Escrow Fund, and Escrow Agent shall
promptly thereafter pay and distribute to Capricorn an amount of Escrow Shares
and/or other assets then included in the Escrow Fund, as requested by Capricorn,
equal in value to the shares of AIMCO Stock, marketable securities, cash or cash
equivalents deposited by Capricorn with Escrow Agent, with shares of AIMCO Stock
and marketable securities valued for such purpose at the Market Price of such
security on the date of delivery of such Escrow Shares.
2.5 TERMINATION OF ESCROW. On the earlier to occur of the Merger or
the first anniversary of the Initial Closing Date, Escrow Agent shall pay and
distribute to Capricorn the amount of securities and other assets then included
in the Escrow Fund, unless any Claims are then pending, in which case an amount
equal to the aggregate dollar amount of such Claims (as shown in the Notices of
such Claims) shall be retained by Escrow Agent in the Escrow Fund (and the
balance paid to Capricorn), until it receives joint written instructions of
AIMCO and Capricorn or a final non-appealable order of a court of competent
jurisdiction as contemplated by SECTION 2.3(b).
2.6 OWNERSHIP OF ESCROW FUND. AIMCO and Capricorn agree that,
subject to the other terms and provisions of this Agreement, including, without
limitation, SECTION 2.3, for all purposes, including Federal and other taxes
based on income, Capricorn will be treated as the owner of all of the Escrow
Fund, and that Capricorn will report all income, if any, that is earned on, or
derived from, the Escrow Fund as its income in the taxable year or years in
which such income is properly includible and pay any taxes attributable thereto.
ARTICLE III
ESCROW AGENT
3.1 DUTIES OF ESCROW AGENT.
(a) Escrow Agent shall not be under any duty to give the Escrow
Fund held by it hereunder any greater degree of care than it gives its own
similar property and shall not be required to invest any funds held hereunder
except as directed in this Agreement. Uninvested funds held hereunder shall not
earn or accrue interest.
(b) Escrow Agent shall not be liable, except for its own gross
negligence or willful misconduct and, except with respect to claims based upon
such gross negligence or willful misconduct that are successfully asserted
against Escrow Agent, the other parties hereto shall jointly and severally
indemnify and hold harmless Escrow Agent (and any successor Escrow Agent) from
and against any and all losses, liabilities, claims, actions, damages and
expenses, including reasonable attorneys' fees
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and disbursements, arising out of and in connection with this Agreement.
Without limiting the foregoing, Escrow Agent shall in no event be liable in
connection with its investment or reinvestment of any cash held by it
hereunder in good faith, in accordance with the terms hereof, including,
without limitation, any liability for any delays (not resulting from its
gross negligence or willful misconduct) in the investment or reinvestment of
the Escrow Fund, or any loss of interest incident to any such delays.
(c) Escrow Agent shall be entitled to rely upon any order,
judgment, certification, demand, notice, instrument or other writing delivered
to it hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and may assume that the person purporting
to give receipt or advice or make any statement or execute any document in
connection with the provisions hereof has been duly authorized to do so. Escrow
Agent may conclusively presume that the undersigned representative of any party
hereto which is an entity other than a natural person has full power and
authority to instruct Escrow Agent on behalf of that party unless written notice
to the contrary is delivered to Escrow Agent.
(d) Escrow Agent may act pursuant to the advice of counsel with
respect to any matter relating to this Agreement and shall not be liable for any
action taken or omitted by it in good faith in accordance with such advice.
(e) Escrow Agent does not have any interest in the Escrow Fund
deposited hereunder but is serving as escrow holder only and having only
possession thereof. Any payments of income from this Escrow Fund shall be
subject to withholding regulations then in force with respect to United States
taxes. The parties hereto will provide Escrow Agent with appropriate Internal
Revenue Service Forms W-9 for tax identification number certification, or non-
resident alien certifications. This SECTION 3.1(e) and SECTION 3.1(b) shall
survive notwithstanding any termination of this Agreement or the resignation of
Escrow Agent.
(f) Escrow Agent makes no representation as to the validity,
value, genuineness or the collectability of any security or other document or
instrument held by or delivered to it.
(g) Escrow Agent shall not be called upon to advise any party as
to the wisdom in selling or retaining or taking or refraining from any action
with respect to any securities or other property deposited hereunder.
(h) Escrow Agent (and any successor Escrow Agent) may at any
time resign as such by delivering the Escrow Fund to any successor Escrow Agent
jointly designated by the other parties hereto in writing, or to any court of
competent jurisdiction, whereupon Escrow Agent shall be discharged of and from
any and all further obligations arising in connection with this Agreement. The
resignation of Escrow
A-5
Agent will take effect on the earlier of (i) the appointment of a successor
(including a court of competent jurisdiction) or (ii) the day which is 30
days after the date of delivery of its written notice of resignation to the
other parties hereto. If, at that time, Escrow Agent has not received a
designation of a successor Escrow Agent, Escrow Agent's sole responsibility
after that time shall be to retain and safeguard the Escrow Fund until
receipt of a designation of successor Escrow Agent or a joint written
disposition instruction by the other parties hereto or a final non-appealable
order of a court of competent jurisdiction.
(i) In the event of any disagreement between the other parties
hereto resulting in adverse claims or demands being made in connection with the
Escrow Fund or in the event that Escrow Agent is in doubt as to what action it
should take hereunder, Escrow Agent shall be entitled to retain the Escrow Fund
until Escrow Agent shall have received (i) a final non-appealable order of a
court of competent jurisdiction directing delivery of the Escrow Fund or (ii) a
written agreement executed by the other parties hereto directing delivery of the
Escrow Fund, in which event Escrow Agent shall disburse the Escrow Fund in
accordance with such order or agreement. Any court order shall be accompanied
by a legal opinion by counsel for the presenting party satisfactory to Escrow
Agent to the effect that the order is final and non-appealable. Escrow Agent
shall act on such court order and legal opinion without further question.
(j) AIMCO and Capricorn shall pay Escrow Agent compensation (as
payment in full) for the services to be rendered by Escrow Agent hereunder in
the amount of $_________ at the time of execution of this Agreement and
$_____________ annually thereafter and agree to reimburse Escrow Agent for all
reasonable expenses, disbursements and advances incurred or made by Escrow Agent
in performance of its duties hereunder (including reasonable fees, expenses and
disbursements of its counsel). Any such compensation and reimbursement to which
Escrow Agent is entitled shall be borne 50% by AIMCO, and 50% by Capricorn.
(k) No printed or other matter in any language (including,
without limitation, prospectuses, notices, reports and promotional material)
that mentions Escrow Agent's name or the rights, powers, or duties of Escrow
Agent shall be issued by the other parties hereto or on such parties' behalf
unless Escrow Agent shall first have given its specific written consent thereto.
(l) The other parties hereto authorize Escrow Agent, for any
securities held hereunder, to use the services of any United States central
securities depository it reasonably deems appropriate, including, without
limitation, the Depositary Trust Company and the Federal Reserve Book Entry
System.
3.2 LIMITED RESPONSIBILITY. This Agreement expressly sets forth
all the duties of Escrow Agent with respect to any and all matters pertinent
hereto. No implied duties or obligations shall be read into this Agreement
against Escrow Agent. Escrow
A-6
Agent shall not be bound by the provisions of any agreement among the other
parties hereto except this Agreement.
ARTICLE IV
MISCELLANEOUS PROVISIONS
4.1 GOVERNING LAW. This Agreement and the legal relations among the
parties hereto shall be governed by and construed and enforced in accordance
with the laws of the State of Delaware, without regard to its principles of
conflicts of law.
4.2 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, letters of intent, negotiations
and discussions, whether oral or written, of the parties, and there are no
warranties, representations or other agreements, express or implied, made to any
party by any other party in connection with the subject matter hereof except as
specifically set forth herein or in the documents delivered pursuant hereto or
in connection herewith.
4.3 MODIFICATION; WAIVER. No supplement, modification, waiver or
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any provision of this Agreement shall
be deemed or shall constitute a waiver of any other provision hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
4.4 NOTICES. All notices, consents, requests, reports, demands or
other communications hereunder (collectively, "NOTICES") shall be in writing and
may be given personally, by registered mail, or by Federal Express (or other
reputable overnight delivery service):
if to AIMCO, to it at:
0000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xx. Xxxxx Xxxxxxxxx
Telephone: (000) 000-0000
and
00000 Xxxxxxx 000, Xxxxxxxx F-240
X.X. Xxx 0000
Xxxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
A-7
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
if to Capricorn, to it at:
c/o Capricorn Investors, L.P.
00 Xxxx Xxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxx, Xx.
Telephone: (000) 000-0000
with a copy to:
O'Melveny & Xxxxx, LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Drake Tempest, Esq.
Telephone: (000) 000-0000
if to Escrow Agent, to it at:
___________________
___________________
Attention: ___________________
Telephone: ___________________
with a copy to:
___________________
___________________
Attention: __________________
Telephone: ___________________
or to such other address or such other person as the addressee party shall have
last designated by notice to the other party. All Notices shall be deemed to
have been given (i) when delivered personally, (ii) three days after being sent
by registered mail, or (iii) one day after being sent by Federal Express (or
other reputable overnight delivery service).
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4.5 EXPENSES. Except as set forth in SECTION 4.12, all fees and
expenses incurred by AIMCO, Capricorn or Phemus in connection with this
Agreement shall be borne by such party.
4.6 ASSIGNMENT.
(a) Except as specifically provided to the contrary in SECTION
3.1(h) or SECTION 4.6(b), no party hereto shall have the right, power, or
authority to assign or pledge this Agreement or any portion of this Agreement,
or to delegate any duties or obligations arising under this Agreement,
voluntarily, involuntarily, or by operation of law, without the prior written
consent of the other parties hereto.
(b) AIMCO may assign any or all of its rights and interest in
this Agreement to any corporation (i) with respect to which AIMCO owns, directly
or indirectly, a majority of the outstanding capital stock, and (ii) that is
designated by AIMCO to purchase any or all of the Shares pursuant to the Stock
Purchase Agreement. Notwithstanding any such assignment, AIMCO shall remain
liable to perform all obligations required to be performed by it hereunder.
4.7 SEVERABILITY. Any provision or part of this Agreement which is
invalid or unenforceable in any situation in any jurisdiction shall, as to such
situation and such jurisdiction, be ineffective only to the extent of such
invalidity and shall not affect the enforceability of the remaining provisions
hereof or the validity or enforceability of any such provision in any other
situation or in any other jurisdiction.
4.8 SUCCESSORS AND ASSIGNS; THIRD PARTIES. Subject to and without
waiver of the provisions of SECTION 4.6, all of the rights, duties, benefits,
liabilities and obligations of the parties shall inure to the benefit of, and be
binding upon, their respective successors, assigns, heirs and legal
representatives. Except as specifically set forth or referred to herein,
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 hereto and their
successors or permitted assigns, any rights or remedies under or by reason of
this Agreement.
4.9 COUNTERPARTS. This Agreement may be executed in as many
counterparts as may be deemed necessary and convenient, and by the different
parties hereto on separate counterparts each of which, when so executed, shall
be deemed an original, but all such counterparts shall constitute one and the
same instrument.
4.10 INTERPRETATION; REFERENCES. Any use of masculine, feminine or
neuter pronouns herein shall not be limiting, but shall be construed as
referring to persons of any gender, as the context may require. Any use of the
singular or plural form herein shall not be limiting, but shall be construed as
referring to either the plural or singular, as the context may require.
References to an "Article" or a "Section" are, unless otherwise specified, to an
Article or a Section of this Agreement. The Article and
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Section headings of this Agreement are for convenience of reference only and
shall not be deemed to modify, explain, restrict, alter or affect the meaning
or interpretation of any provision hereof.
4.11 TIME OF ESSENCE. Time shall be of the essence with respect to
all matters contemplated by this Agreement.
4.12 ATTORNEYS' FEES. In the event that AIMCO or Capricorn brings an
action or proceeding against the other to enforce or interpret any of the
covenants, conditions, agreements or provisions of this Agreement, the
prevailing party in such action or proceeding shall be entitled to recover all
costs and expenses of such action or proceeding, including, without limitation,
attorneys' fees, charges, disbursements and the fees and costs of expert
witnesses.
4.13 JURISDICTION; SERVICE OF PROCESS. Any action or proceeding
seeking to enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties in the courts of the State
of California, County of Los Angeles, the State of New York, County of New York,
or, if it has or can acquire jurisdiction, in the United States District Court
for the Central District of California or the United States District Court for
the Southern District of New York, and each of the parties consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein.
Process in any action or proceeding referred to in the preceding sentence may be
served on any party anywhere in the world.
4.14 WAIVER OF JURY TRIAL. Each party to this Agreement further
waives its respective right to a jury trial of any claim or cause of action
arising out of this Agreement or any dealings between any of the parties hereto
relating to the subject matter of this Agreement. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this Agreement, including,
without limitation, contract claims, tort claims and all other common law and
statutory claims. This waiver is irrevocable, meaning that it may not be
modified either orally or in writing, and this waiver shall apply to any
subsequent amendments, supplements or other modifications to this Agreement or
to any other document or agreement relating hereto.
4.15 NEGOTIATION OF AGREEMENT. Each of the parties acknowledges that
it has been represented by independent counsel of its choice throughout all
negotiations that have preceded the execution of this Agreement and that it has
executed the same with consent and upon the advice of said independent counsel.
Each party and its counsel cooperated in the drafting and preparation of this
Agreement and the documents referred to herein, and any and all drafts relating
thereto shall be deemed the work product of the parties and may not be construed
against any party by reason of its preparation. Accordingly, any rule of law or
any legal decision that would require interpretation of any ambiguities in this
Agreement against the party that drafted it is of
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no application and is hereby expressly waived. The provisions of this
Agreement shall be interpreted in a reasonable manner to effect the
intentions of the parties and this Agreement.
4.16 REMEDIES. In the event of a breach by any party of this
Agreement, a non-breaching party, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The parties hereby
agree that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by any of them of any of the provisions of this
Agreement and hereby further agree that, in the event of any action for specific
performance in respect of such breach, they shall waive the defense that a
remedy at law would be adequate.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
APARTMENT INVESTMENT
AND MANAGEMENT COMPANY
By:______________________________
Name:
Its:
[CAPRICORN INVESTORS, L.P.]
By:______________________________
Name:
Its:
[ESCROW AGENT]
By:______________________________
Name:
Its:
A-12
EXHIBIT B
GUARANTY
GUARANTY, dated as of ______ __, 1997 (the "GUARANTY"), by Phemus
Corporation, a Massachusetts corporation ("PHEMUS"), for the benefit of
Apartment Investment and Management Company, a Maryland corporation ("AIV"),
and its Representatives (collectively, "AIMCO").
WHEREAS, AIV has entered into a Stock Purchase Agreement, dated as
of April 16, 1997 (the "STOCK PURCHASE AGREEMENT"), with Demeter Holdings
Corporation, a Massachusetts corporation, and Capricorn Investors, L.P., a
Delaware limited partnership, which provides for Phemus to execute and
deliver this Guaranty.
NOW, THEREFORE, in consideration of the foregoing and the covenants
of the parties set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
subject to the terms and conditions set forth herein, the parties hereby
agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. Capitalized terms used but not otherwise defined
in this Agreement shall have the respective meanings ascribed thereto in the
Stock Purchase Agreement.
ARTICLE II
PAYMENT GUARANTY
2.1 GUARANTY OF PAYMENT. In consideration of good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Phemus hereby guaranties, as primary obligor and not as surety, the due and
punctual payment in full of all obligations of Demeter under the Stock
Purchase Agreement. This is a guaranty of payment and not of collection.
2.2 GUARANTY ABSOLUTE. Subject to SECTION 2.6, the obligations of
Phemus under the Guaranty shall be absolute, irrevocable and unconditional
under any and all circumstances, in accordance with its terms, and shall
remain in full force and effect without regard to, and shall not be released,
suspended, terminated, discharged or otherwise affected by, any act, event or
circumstance that might discharge, reduce, limit or modify Phemus's
obligations under the Guaranty or constitute a legal or equitable discharge
or defense of a guarantor.
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2.3 WAIVERS. Phemus hereby expressly waives: (a) any right it
may have to require AIMCO to proceed against Demeter, proceed against or
exhaust any security held from Demeter or pursue any other remedy in AIMCO's
power to pursue; (b) promptness, diligence, notice of acceptance and any
other notice with respect to its obligations hereunder; and (c) all
presentments, demands for payment or performance, notices of nonperformance,
protests, notices of protest, notices of dishonor, notices of acceptance of
this Guaranty, and demands and notices of every kind other than as required
by the Stock Purchase Agreement. Phemus acknowledges that it will receive
direct and indirect benefits from this Guaranty and that the waivers set
forth herein are knowingly made in contemplation of such benefits.
2.4 REINSTATEMENT OF OBLIGATIONS. If AIMCO is required by court
or otherwise to pay, return or restore to Demeter or Phemus or any other
person any amounts previously paid pursuant to the Stock Purchase Agreement,
the obligations of Phemus under this Guaranty, to the extent theretofore
discharged, shall be reinstated and revived and the rights of AIMCO shall
continue with regard to such amounts as though they had never been paid.
2.5 DISPUTED AMOUNTS. If Phemus contests any claim by AIMCO
hereunder, Phemus shall nonetheless pay to AIMCO the non-disputed portion of
such Claim not paid by the Sellers to the extent required by this Guaranty.
AIMCO may not enforce this Guaranty against Phemus with respect to the
disputed amount of such claim unless and until a final, non-appealable order,
award or judgment of a court of competent jurisdiction has been made with
respect to such contested claim which requires Demeter or Phemus to pay any
of such contested claim to or for the benefit of AIMCO, in which event Phemus
shall, unless the same is paid by Demeter when due, pay upon demand all
amounts owed thereunder (including without limitation, all damages, awarded
interest, legal costs, and attorneys' fees) to the extent required by this
Guaranty.
2.6 LIMITATION ON OBLIGATIONS. Nothing contained herein, express or
implied, is intended to, or shall be deemed to, obligate Phemus to pay any
amount if and to the extent that Demeter would not have been obligated to pay
such amount under the Stock Purchase Agreement or otherwise, by reason of any
defense, claim, cause of action, counterclaim, right or set-off or similar
right.
2.7 LIMITATION ON SUBROGATION. Notwithstanding any payment or
payments made by Phemus by reason of this Guaranty, Phemus shall not be
subrogated to any rights of AIMCO against Demeter until all obligations of
Demeter to AIMCO under the Stock Purchase Agreement shall have been paid in
full.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Phemus hereby represents and warrants to AIMCO as follows:
3.1 ORGANIZATION AND QUALIFICATIONS. Phemus is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts. Phemus was incorporated in 1987.
3.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Phemus has all
necessary power and authority to execute and deliver this Guaranty and to
perform its obligations hereunder. The execution and delivery of this
Guaranty by Phemus and the performance by Phemus of its obligations hereunder
have been duly and validly authorized by all necessary corporate action and
no other corporate proceedings on the part of such Seller are necessary to
authorize this Guaranty. This Guaranty has been duly and validly executed and
delivered by Phemus and constitutes the legal, valid and binding obligation
of Phemus, enforceable against Phemus in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws relating to creditors'
rights generally and by equitable principles to which the remedies of
specific performance and injunctive and similar forms of relief are subject.
3.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. The execution and
delivery of Guaranty by Phemus do not, and the performance of its obligations
under this Guaranty will not, (a) conflict with, result in a breach of, cause
a dissolution or require the consent or approval of any Person under, or
violate any provision of the Organizational Documents of Phemus, (b) require
any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, (c) conflict with or violate any
Law, judgment, order, writ, injunction or decree applicable to Phemus or by
which any property or asset of Phemus is bound or affected, or (d) conflict
with or result in any breach of or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, result in
the loss by Phemus or modification in a manner materially adverse to Phemus
of any material right or benefit under, or give to others any right of
termination, amendment, acceleration, repurchase or repayment, increased
payments or cancellation of, or result in the creation of a Lien or other
encumbrance on any property or asset of Phemus pursuant to, any Contract of
Phemus except, in the case of clauses (a), (b) and (c), such as would not
prevent or delay Phemus from performing its obligations under this Guaranty
in any material respect, and would not, individually or in the aggregate,
have a Material Adverse Effect on Phemus.
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3.4 HARVARD AFFILIATION. Each of Phemus and Demeter is solely
controlled by the President and the Fellows of Harvard College.
3.5 NET WORTH. Phemus has a net worth in excess of $500,000,000.
ARTICLE IV
COVENANTS OF PHEMUS
4.1 CORPORATE EXISTENCE. Except for a transaction that satisfies
the requirements of SECTION 4.2, Phemus shall do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence in accordance with its organizational documents.
4.2 LIMITATION ON SALE OF ASSETS, LIQUIDATION, ETC. Phemus shall
not, in a single transaction or through a series of related transactions, (a)
consolidate with or merge with or into any other Person, or transfer (by
lease, assignment, sale or otherwise) all or substantially all of its
properties and assets as an entirety or substantially as an entirety to
another Person or group of affiliated Persons or (b) adopt a plan (a "PLAN OF
LIQUIDATION") that provides for, contemplates or the effectuation of which is
preceded or accompanied by (regardless of whether substantially
contemporaneously, in phases or otherwise) (i) the sale, lease, conveyance or
other disposition of all or substantially all of the assets of Phemus
otherwise than as an entirety or substantially as an entirety and (ii) the
distribution of all or substantially all of the proceeds of such sale, lease,
conveyance or other disposition and all or substantially all of the remaining
assets of such Person to holders of capital stock of Phemus unless, in the
case of clause (a) or (b):
(x) either Phemus shall be the continuing Person, or the Person (if
other than Phemus) formed by such consolidation or into which Phemus is
merged or to which all or substantially all of the properties and assets of
Phemus are transferred as an entirety or substantially as an entirety (or, in
the case of a Plan of Liquidation, any Person to which assets are
transferred) (Phemus or such other Person being hereinafter referred to as
the "SURVIVING PERSON") shall be a corporation organized and validly existing
under the laws of the United States, any State thereof or the District of
Columbia, and shall expressly assume all of the obligations of Phemus under
this Guaranty; and
(y) immediately after and giving effect to such transaction and
the assumption contemplated by clause (x) above, the Surviving Person shall
have a net worth equal to or greater than the net worth of Phemus immediately
preceding the transaction.
4.3 LIQUIDITY. Phemus covenants and agrees that it will, at such
time, if any, as its obligations under the Guaranty become due, have liquid
assets at least equal to its obligations hereunder.
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ARTICLE V
MISCELLANEOUS PROVISIONS
5.1 GOVERNING LAW. This Guaranty and the legal relations among
the parties hereto shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware, without regard to its
principles of conflicts of law.
5.2 MODIFICATION; WAIVER. No supplement, modification, waiver or
termination of this Guaranty shall be binding unless executed in writing by
Phemus. No waiver of any provision of this Guaranty shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar),
nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
5.3 NOTICES. All notices, consents, requests, reports, demands or
other communications hereunder (collectively, "NOTICES") shall be in writing
and may be given personally, by registered mail, or by Federal Express (or
other reputable overnight delivery service):
if to AIMCO, to it at:
0000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xx. Xxxxx Xxxxxxxxx
Telephone: (000) 000-0000
and
00000 Xxxxxxx 000, Xxxxxxxx F-240
X.X. Xxx 0000
Xxxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
if to Phemus, to it at:
c/o Harvard Management Company, Inc.
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000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Mr. Xxx Xxxxxx
Xxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
with a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx Xxxx, Esq.
Telephone: (000) 000-0000
or to such other address or such other person as the addressee party shall
have last designated by notice to the other party. All Notices shall be
deemed to have been given (i) when delivered personally, (ii) three days
after being sent by registered mail, or (iii) one day after being sent by
Federal Express (or other reputable overnight delivery service).
5.4 EXPENSES. Except as set forth in SECTION 5.10, all fees and
expenses incurred by Phemus in connection with this Guaranty shall be borne by
Phemus.
5.5 ASSIGNMENT.
(a) Phemus shall not delegate any duties or obligations
arising under this Guaranty, voluntarily, involuntarily, or by operation of
law, without the prior written consent of AIMCO.
(b) AIMCO may assign any or all of its rights and interest in
this Guaranty to any corporation (i) with respect to which AIMCO owns,
directly or indirectly, a majority of the outstanding capital stock, and (ii)
that is designated by AIMCO to purchase any or all of the Shares pursuant to
the Stock Purchase Agreement. Notwithstanding any such assignment, AIMCO
shall remain liable to perform all obligations required to be performed by it
hereunder.
5.6 SEVERABILITY. Any provision or part of this Guaranty which is
invalid or unenforceable in any situation in any jurisdiction shall, as to
such situation and such jurisdiction, be ineffective only to the extent of
such invalidity and shall not affect the enforceability of the remaining
provisions hereof or the validity or enforceability of any such provision in
any other situation or in any other jurisdiction.
5.7 SUCCESSORS AND ASSIGNS; THIRD PARTIES. Subject to and without
waiver of the provisions of SECTION 5.5, all of the rights and benefits of
AIMCO shall inure to the benefit of AIMCO's successors and assigns. Except
as specifically set forth or
B-6
referred to herein, nothing herein expressed or implied is intended or shall
be construed to confer upon or give to any person or entity, other than AIMCO
and its successors and permitted assigns, any rights or remedies under or by
reason of this Guaranty.
5.8 INTERPRETATION; REFERENCES. Any use of masculine, feminine or
neuter pronouns herein shall not be limiting, but shall be construed as
referring to persons of any gender, as the context may require. Any use of
the singular or plural form herein shall not be limiting, but shall be
construed as referring to either the plural or singular, as the context may
require. References to an "Article" or a "Section" are, unless otherwise
specified, to an Article or a Section of this Guaranty. The Article and
Section headings of this Guaranty are for convenience of reference only and
shall not be deemed to modify, explain, restrict, alter or affect the meaning
or interpretation of any provision hereof.
5.9 TIME OF ESSENCE. Time shall be of the essence with respect to
all matters contemplated by this Guaranty.
5.10 ATTORNEYS' FEES. In the event that AIMCO brings an action or
proceeding against Phemus to enforce or interpret any of the covenants,
conditions, agreements or provisions of this Guaranty, the prevailing party
in such action or proceeding shall be entitled to recover all costs and
expenses of such action or proceeding, including, without limitation,
attorneys' fees, charges, disbursements and the fees and costs of expert
witnesses.
5.11 JURISDICTION; SERVICE OF PROCESS. Any action or proceeding
seeking to enforce any provision of, or based on any right arising out of,
this Guaranty may be brought against any of the parties in the courts of the
State of California, County of Los Angeles, the Commonwealth of
Massachusetts, County of Suffolk, or, if it has or can acquire jurisdiction,
in the United States District Court for the Central District of California or
the United States District Court for the Commonwealth of Massachusetts, and
each of the parties consents to the jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives any
objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party anywhere in
the world.
5.12 WAIVER OF JURY TRIAL. Phemus waives its respective right to
a jury trial of any claim or cause of action arising out of this Guaranty or
any dealings between any of the parties hereto relating to the subject matter
of this Guaranty. The scope of this waiver is intended to be
all-encompassing of any and all disputes that may be filed in any court and
that relate to the subject matter of this Guaranty, including, without
limitation, contract claims, tort claims and all other common law and
statutory claims. This waiver is irrevocable, meaning that it may not be
modified either orally or in writing, and this waiver shall apply to any
subsequent amendments, supplements or other modifications to this Guaranty or
to any other document or agreement relating hereto.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Phemus has executed this Guaranty as of the
date first above written.
PHEMUS CORPORATION
By:____________________________________
Name:
Its:
By:____________________________________
Name:
Its:
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EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of ________, 1997 (this
"AGREEMENT"), by and among Apartment Investment and Management Company, a
Maryland corporation (the "COMPANY"), and the persons listed on SCHEDULE A
hereto (each, an "INVESTOR").
WHEREAS, pursuant to that certain Stock Purchase Agreement, dated
as of April 16, 1997 (the "ACQUISITION AGREEMENT"), by and among the Company,
Demeter Holdings Corporation, a Massachusetts corporation ("DEMETER"), and
Capricorn Investors, L.P., a Delaware limited partnership ("CAPRICORN"), the
Investors will receive up to _____ shares of the Company's Class A Common
Stock, par value $.01 per share (the "COMMON STOCK");
WHEREAS, in connection with the Acquisition Agreement, the Company
has agreed to register for sale by the Investors and certain transferees, the
shares of Common Stock received by the Investors pursuant to the Acquisition
Agreement (collectively, the "REGISTRABLE SHARES"); and
WHEREAS, the parties hereto desire to enter into this agreement to
evidence the foregoing agreement of the Company and the mutual covenants of
the parties relating thereto.
NOW, THEREFORE, in consideration of the foregoing and the covenants
of the parties set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
subject to the terms and conditions set forth herein, the parties hereby
agree as follows:
Section 1. CERTAIN DEFINITIONS. In this Agreement the following
terms shall have the following respective meanings:
"ACCREDITED INVESTOR" shall have the meaning set forth in Rule 501
of the General Rules and Regulations promulgated under the Securities Act.
"AFFILIATE" shall mean, when used with respect to a specified
Person, another Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
the Person specified.
"COMMISSION" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
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"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, all as
the same shall be in effect at the relevant time.
"HOLDERS" shall mean (i) each of the Investors, and (ii) each
Person holding Registrable Shares as a result of a transfer or assignment to
that Person of Registrable Shares made by an Investor in accordance with this
Agreement other than pursuant to an effective registration statement or Rule
144.
"INDEMNIFIED PARTY" shall have the meaning ascribed to it in Section
4(c) of this Agreement.
"INDEMNIFYING PARTY" shall have the meaning ascribed to it in Section
4(c) of this Agreement.
"PERSON" shall mean an individual, corporation, partnership, estate,
trust, association, private foundation, joint stock company or other entity.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act providing for the sale by the Holders of
Registrable Shares in accordance with the method or methods of distribution
designated by the Holders, and the declaration or ordering of the
effectiveness of such registration statement by the Commission.
"REGISTRABLE SHARES" shall have the meaning ascribed to it in the
recitals to this Agreement.
"REGISTRATION EXPENSES" shall mean all expenses (excluding Selling
Expenses) incurred by the Company in complying with Section 2 hereof,
including, without limitation, the following: (a) all registration, filing
and listing fees; (b) fees and expenses of compliance with federal and state
securities or real estate syndication laws (including, without limitation,
reasonable fees and disbursements of counsel in connection with state
securities and real estate syndication qualifications of the Registrable
Shares under the laws of such jurisdictions as the Holders may reasonably
designate); (c) printing (including, without limitation, expenses of printing
or engraving certificates for the Registrable Shares in a form eligible for
deposit with The Depository Trust Company and otherwise meeting the
requirements of any securities exchange on which they are listed and of
printing registration statements and prospectuses), messenger, telephone,
shipping and delivery expenses; (d) fees and disbursements of counsel for the
Company; (e) fees and disbursements of all independent public accountants of
the Company (including without limitation the expenses of any annual or
special audit and "cold comfort" letters required by the managing
underwriter); (f) securities act liability insurance if the Company so
desires; (g) fees and expenses of other Persons reasonably necessary in
connection with the registration, including any experts, retained by the
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Company; (h) fees and expenses incurred in connection with the listing of the
Registrable Shares on each securities exchange on which securities of the
same class are then listed; and (i) fees and expenses associated with any
NASD filing required to be made in connection with the registration statement.
"RIGHTS" shall have the meaning ascribed to it in Section 6 of this
Agreement.
"RULE 144" shall mean Rule 144 promulgated by the Commission under
the Securities Act, as amended from time to time, or any similar rule or
regulation of the Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect at the relevant time.
"SELLING EXPENSES" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to any sale of Registrable
Shares.
Section 2. REGISTRATION.
(a) The Company shall prepare and file with the Commission a
registration statement for the purpose of effecting a Registration of the
sale of Registrable Shares by the Holders thereof; shall use its best efforts
to effect such Registration within 10 days after the effectiveness of a
registration statement filed by the Company to effect the registration of
shares of Common Stock to be issued in connection with the proposed merger of
NHP Incorporated and a subsidiary of the Company, but not later than 6 months
after the date hereof (including, without limitation, the execution of an
undertaking to file post-effective amendments and appropriate qualification
under applicable state securities and real estate syndication laws); and
shall keep such Registration continuously effective until the earlier of (i)
the third anniversary of the date hereof or, if the Company has exercised its
Suspension Right hereunder, an additional number of days after such third
anniversary equal to the aggregate number of days that the Company has
deferred a filing or suspended sales under any filed registration statement,
and (ii) the date on which all Registrable Shares have been sold pursuant to
such registration statement or Rule 144; PROVIDED, HOWEVER, that the Company
shall not be obligated to take any action to effect any such Registration,
qualification or compliance pursuant to this Section 2 in any particular
jurisdiction in which the Company would be required to execute a general
consent to service of process in effecting such Registration, qualification
or compliance unless the Company is already subject to service in such
jurisdiction.
Notwithstanding the foregoing, the Company shall have the right
(the "SUSPENSION RIGHT") to defer such filing (or suspend sales under any
filed registration statement or defer the updating of any filed registration
statement and suspend sales
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thereunder) for a period of not more than 120 days during any one-year period
ending on December 31, if the Company shall furnish to the Holders a
certificate signed by the President or any other executive officer or any
director of the Company stating that (x) in the good faith judgment of the
Company, it would be detrimental to the Company and its shareholders to file
such registration statement or amendment thereto at such time (or continue
sales under a filed registration statement), or (y) the managing underwriter
or underwriters in an underwritten offering by the Company for the account of
the Company have requested in writing that the Holders refrain from any sale
or distribution of Common Stock, and, in either case, the Company has elected
to defer the filing of such registration statement (or suspend sales under a
filed registration statement) for the period of time specified in such
certificate (which shall not exceed 120 days during any one-year period).
Upon the Company's exercise of the Suspension Right, the Holders hereby agree
not to effect any sale or distribution of shares of Common Stock during the
period specified by the Company in such certificate.
(b) The Company shall promptly notify the Holders of the
occurrence of the following events:
(i) when any registration statement relating to the
Registrable Shares or post-effective amendment thereto filed with the
Commission has become effective;
(ii) the issuance by the Commission of any stop order
suspending the effectiveness of any registration statement relating to
the Registrable Shares;
(iii) the suspension of an effective registration
statement by the Company in accordance with the last paragraph of
Section 2(a) above;
(iv) the Company's receipt of any notification of the
suspension of the qualification of any Registrable Shares covered by a
registration statement for sale in any jurisdiction; and
(v) the existence of any event, fact or circumstance
that results in a registration statement or prospectus relating to
Registrable Shares or any document incorporated therein by reference
containing an untrue statement of material fact or omitting to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading during the distribution of
securities.
The Company agrees to use its best effort to obtain the withdrawal of any order
suspending the effectiveness of any such registration statement or any state
qualification at the earliest possible moment.
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(c) The Company shall provide to the Holders, at no cost to
the Holders, a copy of the registration statement and any amendment thereto
used to effect the Registration of the Registrable Shares, each prospectus
contained in such registration statement or post-effective amendment and any
amendment or supplement thereto and such other documents as the requesting
Holders may reasonably request in order to facilitate the disposition of the
Registrable Shares covered by such registration statement. The Company
consents to the use of each such prospectus and any supplement thereto by the
Holders in connection with the offering and sale of the Registrable Shares
covered by such registration statement or any amendment thereto. The Company
shall also file a sufficient number of copies of the prospectus and any
post-effective amendment or supplement thereto with the New York Stock
Exchange (or, if the Common Stock is no longer listed thereon, with such
other securities exchange or market on which the Common Stock is then listed)
so as to enable the Holders to the benefits of the prospectus delivery
provisions of Rule 153 under the Securities Act.
(d) The Company agrees to use its best efforts to cause the
Registrable Shares covered by a registration statement to be registered with or
approved by such state securities authorities as may be necessary to enable the
Holders to consummate the disposition of such shares pursuant to the plan of
distribution set forth in the registration statement.
(e) Subject to the Company's Suspension Right, if any event,
fact or circumstance requiring an amendment to a registration statement relating
to the Registrable Shares or supplement to a prospectus relating to the
Registrable Shares shall exist, immediately upon becoming aware thereof the
Company agrees to notify the Holders and prepare and furnish to the Holders a
post-effective amendment to the registration statement or supplement to the
prospectus or any document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the purchasers of the
Registrable Shares, the prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
(f) The Company agrees to use commercially reasonable efforts
(including the payment of any listing fees) to obtain the listing of all
Registrable Shares covered by the registration statement on each securities
exchange on which securities of the same class are then listed.
(g) The Company agrees to use its best efforts to comply with
the Securities Act and the Exchange Act, and, as soon as reasonably practicable
following the end of any fiscal year during which a registration statement
effecting a Registration of the Registrable Shares shall have been effective, to
make available to its security holders an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act.
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(h) The Company agrees to cooperate with the selling Holders to
facilitate the timely preparation and delivery of certificates representing
Registrable Shares to be sold pursuant to a Registration and not bearing any
Securities Act legend; and enable certificates for such Registrable Shares to be
issued for such numbers of shares and registered in such names as the Holders
may reasonably request at least two business days prior to any sale of
Registrable Shares.
(i) If Holders notify the Company that they intend to effect an
underwritten offering of at least 300,000 Registrable Shares, the Company will
make available for inspection by any Holder disposing of such Registrable
Shares, any underwriter of such offering, and any attorney, accountant or other
agent retained by any such Holder or underwriter (collectively, the
"INSPECTORS"), all financial and other records and other information, pertinent
corporate documents and properties of any of the Company and its subsidiaries
(collectively, the "RECORDS"), as shall be reasonably necessary to enable them
to exercise their due diligence responsibility; PROVIDED, HOWEVER, that the
Records that the company determines, in good faith, to be confidential shall not
be disclosed to any Inspector unless (i) such Inspector signs a confidentiality
agreement reasonably satisfactory to the Company (which shall permit the
disclosure of such Records in such Registration Statement or the related
Prospectus if necessary to avoid or correct a material misstatement in or
material omission from such Registration Statement or Prospectus), (ii) after
consultation with counsel for the applicable Inspectors, the Holders and the
Company, the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in such Registration Statement or (iii) the release of
such Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, PROVIDED that each Holder shall, promptly after learning
that disclosure of such Records is sought in a court having jurisdiction, give
notice to the Company and allow the Company, at the Company's expense, to
undertake appropriate action to prevent disclosure of such Records.
(j) If Holders notify the Company that they intend to effect an
underwritten offering of at least 300,000 Registrable Shares, the Company will
enter into such agreements (including an underwriting agreement in form, scope
and substance as is customary in underwritten offerings) and take all such other
appropriate and reasonable actions requested by the Holders owning a majority of
the Registrable Shares being sold in connection therewith (including those
reasonably requested by the managing underwriters) in order to expedite or
facilitate the disposition of such Registrable Shares and, in such connection,
(i) use its commercially reasonable efforts to obtain opinions of counsel to the
Company and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing underwriters and
counsel to the Holders disposing of Registrable Shares), addressed to each
Holder selling Registrable Shares thereby and each of the underwriters as to the
matters customarily covered in opinions requested in underwritten offerings and
such other matters as may be reasonably requested by such counsel and
underwriters, (ii) use commercially reasonable efforts to obtain "cold comfort"
or "agreed-upon-procedures" letters and updates thereof from the independent
certified public accountants of the Company (and, if necessary, any
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other independent certified public accountants of any subsidiary of the
Company or of any business acquired by the Company for which financial
statements and financial data are, or are required to be, included in the
Registration Statement), addressed to each Holder selling Registrable Shares
covered thereby (unless such accountants shall be prohibited from so
addressing such letters by applicable standards of the accounting profession)
and each of the underwriters, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort" or
"agreed-upon-procedures" letters in connection with underwritten offerings,
and (iii) if requested and if an underwriting agreement is entered into, make
customary representations and warranties, and provide indemnification
provisions and procedures substantially to the effect set forth in Section 4
hereof with respect to all parties to be indemnified pursuant to said
Section. The above shall be done at each closing under such underwriting or
similar agreement, or as and to the extent required thereunder.
Section 3. EXPENSES OF REGISTRATION. The Company shall pay all
Registration Expenses incurred in connection with the registration,
qualification or compliance pursuant to Section 2 hereof. The Company shall
pay the fees and disbursements (not in excess of $25,000 in the aggregate) of
one counsel, other than the Company's counsel, selected to represent the Holders
by Holders owning a majority in number of the Registrable Shares. Except as set
forth in the immediately preceding sentence, each Holder shall pay the expenses
of its own counsel. All Selling Expenses incurred in connection with the sale
of Registrable Shares by any of the Holders shall be borne by the Holder selling
such Registrable Shares.
Section 4. INDEMNIFICATION.
(a) The Company will indemnify each Holder, each Holder's
officers and directors, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages and liabilities (including reasonable legal expenses), arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any registration statement or prospectus relating to
the Registrable Shares, or any amendment or supplement thereto, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
PROVIDED, HOWEVER, that the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with information furnished in
writing to the Company by such Holder or underwriter for inclusion therein.
(b) Each Holder will indemnify the Company, each of its
directors and each of its officers who signs the registration statement, each
underwriter, if any, of the Company's securities covered by such registration
statement, and each person who controls the Company or such underwriter within
the meaning of Section 15 of the Securities Act, against all claims, losses,
damages and liabilities (including reasonable
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legal fees and expenses) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such
registration statement or prospectus, or any amendment or supplement thereto,
or based on any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such registration statement or prospectus, in
reliance upon and in conformity with information furnished in writing to the
Company by such Holder for inclusion therein.
(c) Each party entitled to indemnification under this Section 4
(the "INDEMNIFIED PARTY") shall give notice to the party required to provide
indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, but the
omission to so notify the Indemnifying Party shall not relieve it from any
liability which it may have to the Indemnified Party otherwise than pursuant to
the provisions of this Section 4 and then, only to the extent of the actual
damages suffered by such delay in notification. The Indemnifying Party shall
assume the defense of such action, including the employment of counsel to be
chosen by the Indemnifying Party to be reasonably satisfactory to the
Indemnified Party, and payment of expenses. The Indemnified Party shall have
the right to employ its own counsel in any such case, but the legal fees and
expenses of such counsel shall be at the expense of the Indemnified Party,
unless the employment of such counsel shall have been authorized in writing by
the Indemnifying Party in connection with the defense of such action, or the
Indemnifying Party shall not have employed counsel to take charge of the defense
of such action or the Indemnified Party shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to the Indemnifying Party (in which case the
Indemnifying Party shall not have the right to direct the defense of such action
on behalf of the Indemnified Party), in any of which events such fees and
expenses shall be borne by the Indemnifying Party. No Indemnifying Party, in
the defense of any such claim or litigation, shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation.
(d) If the indemnification provided for in this Section 4 is
unavailable to a party that would have been an Indemnified Party under this
Section in respect of any expenses, claims, losses, damages and liabilities
referred to herein, then each party that would have been an Indemnifying Party
hereunder shall, in lieu of indemnifying such Indemnified Party, contribute to
the amount paid or payable by such Indemnified Party as a result of such
expenses, claims, losses, damages and liabilities in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the one
hand and such Indemnified Party on the other in connection with the statement or
omission which resulted in such expenses, claims, losses, damages and
liabilities, as well as any other relevant equitable considerations. The
relative fault shall be determined
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by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Indemnifying Party or
such Indemnified Party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and each holder of Registrable Shares agrees that it would not
be just and equitable if contribution pursuant to this Section were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to above in
this Section 4(d).
(e) No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
Section 5. INFORMATION TO BE FURNISHED BY HOLDERS. Each Holder shall
furnish to the Company such information as the Company may reasonably request
and as shall be required in connection with the Registration and related
proceedings referred to in Section 2 hereof. The Company's obligation to
include any Holder's Registrable Shares in a Registration hereunder shall be
subject to such Holder providing the Company with such information. The Company
shall not have any obligation to make more than three post-effective amendments
to any Registration hereunder to include any Registrable Shares of a Holder
providing such information after the effective date of such Registration, unless
such Holder agrees to pay all costs and expenses associated with any additional
post-effective amendment.
Section 6. TRANSFER OF REGISTRATION RIGHTS. The rights of each
Holder under Section 2 hereof and the related rights of each Holder hereunder
(the "RIGHTS") may be assigned by each Holder (i) if the Holder is a
corporation, to a shareholder or shareholders of such Holder, (ii) if the Holder
is a partnership, to a partner or partners of that partnership, (iii) if the
Holder is an individual, to an immediate family member, (iv) upon the death of
the Holder, to the heirs of the Holder by virtue of the Holder's will or the
laws of descent and distribution, (v) if the Holder is a corporation or a
partnership, to any Person into or with which the Holder is merged or
consolidated or to which the Holder sells all or substantially all of its
assets, (vi) in connection with a bona fide pledge of Registrable Shares, to the
pledgee, (vii) to an entity controlled by or under common control with the
Holder, or (viii) to any entity or person that acquires at least 300,000
Registrable Shares, in each case, only in connection with the transfer of
Registrable Shares issued to the Investors pursuant to the Acquisition
Agreement; PROVIDED that (w) in each case, the transferee is an Accredited
Investor, (x) such transfer is otherwise effected in accordance with applicable
securities laws and the Company shall have been provided by the transferor and
the transferee with such evidence thereof as the Company may request, including
representations by the transferee in form and content reasonably acceptable to
the Company, (y) the Company is given written notice of such transfer prior to
such transfer (or, in the case of the death of the Investor, as soon as
practicable following the death of the Investor), and (z) the transferee by
written agreement delivered to the Company acknowledges that such transferee is
bound by the
C-9
terms of this Agreement. In the event of any such permitted transfer, the
defined term "HOLDERS" shall from and after such transfer include such
transferee.
Section 7. INTENTIONALLY OMITTED.
Section 8. RULE 144 SALES.
(a) The Company covenants that, until the third anniversary of
the date hereof, it will file the reports required to be filed by the Company
under the Exchange Act, so as to enable any Holder to sell Registrable Shares
pursuant to Rule 144 under the Securities Act.
(b) In connection with any sale, transfer or other disposition
by any Holder of any Registrable Shares pursuant to Rule 144 under the
Securities Act, the Company shall cooperate with such Holder to facilitate the
timely preparation and delivery of certificates representing Registrable Shares
to be sold and not bearing any Securities Act legend, and enable certificates
for such Registrable Shares to be for such number of shares and registered in
such names as the selling Holder may reasonably request at least two business
days prior to any sale of Registrable Shares.
Section 9. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement and the legal relations among
the parties hereto shall be governed by and construed and enforced in accordance
with the laws of the State of Maryland, without regard to its principles of
conflicts of law.
(b) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, letters of intent, negotiations
and discussions, whether oral or written, of the parties, and there are no
warranties, representations or other agreements, express or implied, made to any
party by any other party in connection with the subject matter hereof except as
specifically set forth herein or in the documents delivered pursuant hereto or
in connection herewith.
(c) MODIFICATION; WAIVER. No supplement, modification,
waiver or termination of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any provision of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
(d) NOTICES. All notices, consents, requests, reports,
demands or other communications hereunder (collectively, "NOTICES") shall be
in writing and may be given personally, by registered mail, or by Federal
Express (or other reputable overnight delivery service). Notices shall be
addressed as follows: (i) if to an Investor, at such Investor's address set
forth below its signature hereon, or at such other address as the
C-10
Investor shall have furnished to the Company in writing, (ii) if to any
assignee or transferee of an Investor, at such address as such assignee or
transferee shall have furnished the Company in writing, or (iii) if to the
Company, at the following address:
0000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xx. Xxxxx Xxxxxxxxx
Telephone: (000) 000-0000
or to such other address or such other person as the addressee party shall
have last designated by notice to the other party. Any notice or other
communication required to be given hereunder to a Holder in connection with a
registration may instead be given to the designated representative of such
Holder. All Notices shall be deemed to have been given (i) when delivered
personally, (ii) three days after being sent by registered mail, or (iii) one
day after being sent by Federal Express (or other reputable overnight
delivery service).
(e) ASSIGNMENT. Except as specifically provided to the
contrary in SECTION 6, no party hereto shall have the right, power, or
authority to assign or pledge this Agreement or any portion of this
Agreement, or to delegate any duties or obligations arising under this
Agreement, voluntarily, involuntarily, or by operation of law, without the
prior written consent of the other parties hereto.
(f) SEVERABILITY. Any provision or part of this Agreement
which is invalid or unenforceable in any situation in any jurisdiction shall,
as to such situation and such jurisdiction, be ineffective only to the extent
of such invalidity and shall not affect the enforceability of the remaining
provisions hereof or the validity or enforceability of any such provision in
any other situation or in any other jurisdiction.
(g) SUCCESSORS AND ASSIGNS; THIRD PARTIES. Subject to and
without waiver of the provisions of SECTION 9(e), all of the rights, duties,
benefits, liabilities and obligations of the parties shall inure to the
benefit of, and be binding upon, their respective successors, assigns, heirs
and legal representatives. Except as specifically set forth or referred to
herein, 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 hereto
and their successors or permitted assigns, any rights or remedies under or by
reason of this Agreement.
(h) COUNTERPARTS. This Agreement may be executed in as many
counterparts as may be deemed necessary and convenient, and by the different
parties hereto on separate counterparts each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute one
and the same instrument.
(i) INTERPRETATION; REFERENCES. Any use of masculine,
feminine or neuter pronouns herein shall not be limiting, but shall be
construed as referring to
C-11
persons of any gender, as the context may require. Any use of the singular
or plural form herein shall not be limiting, but shall be construed as
referring to either the plural or singular, as the context may require.
References to a "Section" are, unless otherwise specified, to a Section of
this Agreement. The Section headings of this Agreement are for convenience
of reference only and shall not be deemed to modify, explain, restrict, alter
or affect the meaning or interpretation of any provision hereof.
(j) TIME OF ESSENCE. Time shall be of the essence with respect
to all matters contemplated by this Agreement.
(k) ATTORNEYS' FEES. In the event that any party hereto brings
an action or proceeding against the other party to enforce or interpret any of
the covenants, conditions, agreements or provisions of this Agreement, the
prevailing party in such action or proceeding shall be entitled to recover all
costs and expenses of such action or proceeding, including, without limitation,
attorneys' fees, charges, disbursements and the fees and costs of expert
witnesses.
(l) WAIVER OF JURY TRIAL. Each party to this Agreement further
waives its respective right to a jury trial of any claim or cause of action
arising out of this Agreement or any dealings between any of the parties hereto
relating to the subject matter of this Agreement. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this Agreement, including,
without limitation, contract claims, tort claims and all other common law and
statutory claims. This waiver is irrevocable, meaning that it may not be
modified either orally or in writing, and this waiver shall apply to any
subsequent amendments, supplements or other modifications to this Agreement.
(m) NEGOTIATION OF AGREEMENT. Each of the parties acknowledges
that it has been represented by independent counsel of its choice throughout all
negotiations that have preceded the execution of this Agreement and that it has
executed the same with consent and upon the advice of said independent counsel.
Each party and its counsel cooperated in the drafting and preparation of this
Agreement and the documents referred to herein, and any and all drafts relating
thereto shall be deemed the work product of the parties and may not be construed
against any party by reason of its preparation. Accordingly, any rule of law or
any legal decision that would require interpretation of any ambiguities in this
Agreement against the party that drafted it is of no application and is hereby
expressly waived. The provisions of this Agreement shall be interpreted in a
reasonable manner to effect the intentions of the parties and this Agreement.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
By:_________________________________________
Name:_______________________________________
Title:______________________________________
INVESTOR:
Name:
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Name:
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Investor's Address:
____________________________________________
____________________________________________
____________________________________________
Phone:______________________________________
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SCHEDULE A TO
REGISTRATION RIGHTS AGREEMENT
INVESTORS
C-14
EXHIBIT D
--------------------------------------------------------------------------------
NHP INCORPORATED,
NHP FINANCIAL SERVICES, LTD.
AND
THE FIRST NATIONAL BANK OF BOSTON,
RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF ________ __, 1997
--------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
RECITALS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Certain Definitions. . . . . . . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent. . . . . . . . . . . . . . . . 4
Section 3. Evidence of Rights . . . . . . . . . . . . . . . . . . . . 4
Section 4. Effect of Maturity Time. . . . . . . . . . . . . . . . . . 5
Section 5. Covenants of the Company and the Spin-Off Entity . . . . . 6
Section 6. Record Date. . . . . . . . . . . . . . . . . . . . . . . . 9
Section 7. Recapitalization of the Spin-Off Entity. . . . . . . . . . 9
Section 8. Rights of Action . . . . . . . . . . . . . . . . . . . . . 9
Section 9. Agreement of Rights Holders. . . . . . . . . . . . . . . .10
Section 10. Right Holder Not Deemed a Spin-Off Entity Shareholder. . .10
Section 11. Concerning the Rights Agent. . . . . . . . . . . . . . . .11
Section 12. Merger or Consolidation or Change of Name of Rights Agent.11
Section 13. Duties of Rights Agent . . . . . . . . . . . . . . . . . .11
Section 14. Change of Rights Agent . . . . . . . . . . . . . . . . . .13
Section 15. Termination. . . . . . . . . . . . . . . . . . . . . . .14
Section 16. Notice of Certain Events.. . . . . . . . . . . . . . . . .14
Section 17. Notices. . . . . . . . . . . . . . . . . . . . . . . . . .15
Section 18. Supplements and Amendments . . . . . . . . . . . . . . . .16
Section 19. Successors; Certain Covenants. . . . . . . . . . . . . . .16
Section 20. Benefits of this Agreement . . . . . . . . . . . . . . . .16
Section 21. Determinations and Actions by the Board of Directors, etc.17
Section 22. Severability.. . . . . . . . . . . . . . . . . . . . . . .17
Section 23. Governing Law. . . . . . . . . . . . . . . . . . . . . . .17
Section 24. Counterparts.. . . . . . . . . . . . . . . . . . . . . . .17
Section 25. Descriptive Headings.. . . . . . . . . . . . . . . . . . .17
EXHIBIT A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
D-i
RIGHTS AGREEMENT
This RIGHTS AGREEMENT, dated as of April __, 1997 (this "Agreement"),
is made and entered into by and between NHP Incorporated, a Delaware corporation
(the "Company"), NHP Financial Services, Ltd., a Delaware corporation (the
"Spin-Off Entity"), and The First National Bank of Boston, a ___________
corporation (the "Rights Agent").
RECITALS
WHEREAS, on April __, 1997, the Board of Directors of the Company
authorized and declared a dividend distribution of one right ("Right") for each
share of Common Stock, par value $.01 per share, of the Company (a "Common
Share") outstanding as of the Close of Business (as hereinafter defined) on
__________ __, 1997, (the "Record Date"), each Right representing the right to
receive, upon the Company's distribution of shares of common stock of NHP
Financial Services, Ltd., a Delaware corporation (the "Spin-Off Entity"), upon
the terms and subject to the conditions herein set forth, one-third of a Share
of the Spin-Off Entity, and further authorized and directed the issuance of one
Right with respect to each Common Share issued or delivered by the Company
(whether originally issued or delivered from the Company's treasury) after the
Record Date but prior to the Maturity Time (as hereinafter defined).
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the meanings indicated:
(a) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms, in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act (as hereinafter defined), as in effect on the
date of this Agreement.
(b) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of Massachusetts (or
such other state in which the principal office of the Rights Agent is located)
are authorized or obligated by law or executive order to close.
(c) "Close of Business" on any given date shall mean 5:00 P.M.,
Eastern time, on such date; PROVIDED, HOWEVER, that if such date is not a
Business Day it shall mean 5:00 P.M., Eastern time, on the next succeeding
Business Day.
(d) "Common Shares" shall mean the Common Stock, par value $.01
per share, of the Company.
D-1
(e) "Company" shall mean NHP Incorporated, a Delaware
corporation.
(f) "Effective Time" shall have the meaning set forth in the
Merger Agreement.
(g) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(h) "Exchange Agent" shall mean the Exchange Agent appointed
pursuant to the Merger Agreement.
(i) "Maturity Time" shall mean the earlier of the Effective Time
of the Merger and the Close of Business on December 1, 1997; provided, however,
that if the distribution of Shares pursuant to Section 4 of this Agreement is
prohibited by the terms of any agreement to which the Company or the Spin-Off
Entity is a party as in effect on the date of this Agreement and consent to such
distribution has not been obtained, or if the distribution of Shares requires
any governmental filing or approval or the effectiveness of any filing in order
to comply with applicable law, then the Maturity Time shall be deferred until
such time as any such consent is obtained, any such prohibition is no longer in
effect and all such filings or approvals have been made or obtained or such
filings have become effective.
(j) "Merger" shall mean the merger of AIMCO/NHP Acquisition
Corp., a Maryland corporation, with and into the Company pursuant to the Merger
Agreement.
(k) "Merger Agreement" shall mean the Agreement and Plan of
Merger dated as of April __, 1997 by and among Apartment Investment and
Management Company, a Maryland corporation, AIMCO/NHP Acquisition Corp., a
Delaware corporation, and the Company.
(l) "Nasdaq Stock Market" shall have the meaning set forth in
Rule 4200(v) of the Rules of the National Association of Securities Dealers,
Inc.
(m) "Person" shall mean any individual, firm, corporation,
partnership, limited liability company or other legal entity, and shall include
any successor (by merger or otherwise) of such entity.
(n) "Recapitalization" shall mean the action required pursuant
to Section 7 of this Agreement.
(o) "Registration Statement" shall mean an appropriate
registration statement (together with all amendments thereto) under the
Securities Act or the Exchange Act (as the Company determines to be appropriate)
relating to the distribution
D-2
of the Shares on the terms set forth herein and relating to the reoffering or
resale within 30 days after the distribution of securities acquired pursuant
to the distribution to the extent requested by any Person who reasonably
expects to be an Affiliate of the Spin-Off Entity upon completion of the
distribution and who requests inclusion of Shares it expects to hold no later
than five Business Days prior to the effectiveness of the Registration
Statement, which statement shall be filed with the SEC.
(p) "Right" shall have the meaning set forth in the Recitals to
this Agreement.
(q) "Rights Agent" shall mean The First National Bank of Boston
unless and until a successor Rights Agent shall have become such pursuant to the
terms of this Agreement, and thereafter, "Rights Agent" shall mean such
successor Rights Agent.
(r) "SEC" shall mean the Securities and Exchange Commission.
(s) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(t) "Share" shall mean a share of Common Stock, par value $.01
per share, of the Spin-Off Entity.
(u) "Share Registration Date" shall mean the date upon which the
Registration Statement shall have become effective.
(v) "Special Meeting" shall mean the meeting of the shareholders
of the Company to consider and vote on the approval of the Merger Agreement.
(w) "Spin-Off Entity" shall mean NHP Financial Services, Ltd.,
a Delaware corporation.
(x) "Subsidiary" when used with reference to any Person shall
mean any corporation or other entity of which a majority of the voting power of
the voting equity securities or equity interests is owned, directly or
indirectly, by such Person.
(y) "Summary of Rights to Purchase Shares" shall mean the
Summary of Rights to Purchase Shares, in substantially the form of Exhibit A
attached hereto.
(z) "Transfer Agent" shall mean the transfer agent for Shares as
appointed by the Spin-Off Entity from time to time.
D-3
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company and the Spin-Off
Entity hereby appoint the Rights Agent to act as agent for the Company and the
Spin-Off Entity, and the holders of the Rights in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment and
hereby certifies that it complies with the requirements of the New York Stock
Exchange governing transfer agents and registrars. The Company may from time to
time act as Co-Rights Agent or appoint such Co-Rights Agents as it may deem
necessary or desirable. Any actions which may be taken by the Rights Agent
pursuant to the terms of this Agreement may be taken by any such Co-Rights
Agent. To the extent that any Co-Rights Agent takes any action pursuant to this
Agreement, such Co-Rights Agent shall be entitled to all of the rights and
protections of, and subject to all of the applicable duties and obligations
imposed upon, the Rights Agent pursuant to the terms of this Agreement.
Section 3. EVIDENCE OF RIGHTS.
(a) (i) The Rights shall be evidenced by the certificates
representing Common Shares registered in the names of the record holders
thereof, (ii) the Rights shall be transferable only in connection with the
transfer of the underlying Common Shares, and (iii) the surrender for transfer
of any certificates evidencing Common Shares in respect of which Rights have
been issued shall also constitute the transfer of the Rights associated with the
Common Shares evidenced by such certificates.
(b) On the Record Date or as promptly as practicable thereafter,
the Company shall send a copy of the Summary of Rights by first-class, postage
prepaid mail, to each record holder of Common Shares as of the Close of Business
on the Record Date, at the address of such holder shown on the records of the
Company as of such date. With respect to certificates of Common Shares
outstanding as of the Record Date and until the Maturity Time, the Rights will
be evidenced by such certificates registered in the names of the holders. Until
the Maturity Time, the surrender for transfer of any certificate for Common
Shares outstanding on the Record Date shall also constitute the transfer of the
Rights associated with the Common Shares represented thereby.
(c) Rights shall be issued by the Company in respect of all
Common Shares issued or delivered by the Company (whether originally issued or
delivered from the Company's treasury) after the Record Date but prior to the
Maturity Time. Certificates evidencing such Common Shares shall have stamped
on, impressed on, printed on, written on or otherwise affixed to them the
following legend or such similar legend as the Company may deem appropriate and
as is not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange or
transaction reporting system on which the Common Shares may from time to time be
listed or quoted, or to conform to usage:
This Certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between NHP
Incorporated, NHP Financial
D-4
Services, Ltd. and The First National Bank of Boston dated as of
April __, 1997 (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on
file at the principal executive offices of NHP Incorporated. NHP
Incorporated will mail to the holder of this Certificate a copy of
the Rights Agreement without charge promptly after receipt of a
written request therefor.
With respect to such certificates containing the foregoing legend, the Rights
associated with the Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender for transfer of any such
certificate shall also constitute the transfer of the Rights associated with the
Common Shares represented thereby. In the event that the Company purchases or
acquires any Common Shares after the Record Date, any Rights associated with
such Common Shares shall be deemed canceled and retired so that the Company
shall not be entitled to exercise any Rights associated with the Common Shares
which are no longer outstanding.
Section 4. EFFECT OF MATURITY TIME.
(a) Without any action on the part of a holder of Rights, at the
Maturity Time, all Rights shall no longer be outstanding and shall automatically
cease to exist, and each record holder of Rights shall thereafter cease to have
any rights with respect to such Rights except the right to receive, without
interest, one-third of a Share of the Spin-Off Entity for each Right and cash
for fractional shares of the Spin-Off Entity in accordance with Section 4(b).
(b) No fractional Shares shall be issued with respect to
Rights. All fractional Shares that a holder of Rights would otherwise be
entitled to receive with respect to the Rights shall be aggregated and, if a
fractional share results from such aggregation, such holder shall be entitled
to receive, in lieu thereof, an amount in cash determined by multiplying (i)
the fraction of a Share to which such holder would otherwise have been
entitled by (ii) $9.15. No interest will be paid or will accrue on any cash
paid or payable in lieu of any fractional Shares.
(c) Subject to Section 4(d), as soon as reasonably practicable
after the Maturity Time, (i) the Company shall surrender to the Transfer Agent
all certificates it holds for Shares of the Spin-Off Entity along with executed
stock transfer powers and instructions to issue certificates in the names of
holders of record of Rights immediately prior to the Maturity Time (or such
other Person as may be properly designated pursuant to Section 4(e)) in
accordance with Section 4(a) and to deliver such certificates to the Rights
Agent for the benefit of the holders of Rights, (ii) the Spin-Off Entity shall
deposit (or cause to be deposited) with the Rights Agent, for the benefit of
holders of Rights, cash in an amount sufficient to pay the aggregate cash
required to be paid for fractional shares of the Spin-Off Entity pursuant to
Section 4(b), and (iii) the Rights Agent shall mail to each holder of record of
Rights immediately prior to the Maturity Time (or such other Person as may be
properly designated pursuant to Section 4(e)) the certificates for
D-5
Shares and cash to which such holder is entitled pursuant to Sections 4(a)
and 4(b), respectively.
(d) If the Maturity Time shall be the Effective Time, then (i)
the Company may, in lieu of instructing the Transfer Agent to deliver
certificates for Shares to the Rights Agent pursuant to Section 4(c)(i),
instruct the Transfer Agent to deliver certificates for all or some of the
Shares to the Exchange Agent, and instruct the Exchange Agent to deliver
certificates for such Shares upon surrender of certificates for Common Shares in
connection with the Merger, and (ii) the Spin-Off Entity may, in lieu of
depositing cash with the Rights Agent as required pursuant to Section 4(c)(ii),
deposit all or some of the cash with the Exchange Agent to deliver upon
surrender of certificates for Common Shares in connection with the Merger.
(e) The Company may instruct the Transfer Agent to issue
certificates for Shares in the name of a person other than the record holder of
Rights, and the Rights Agent or the Exchange Agent may deliver certificates for
Shares and cash to a person other than the record holder of Rights if, prior to
the Maturity Time, the Company receives (and transmits to the Rights Agent)
instructions to issue Shares in the name of and deliver Shares and cash to
another Person and such instructions are duly signed by the record holder and,
unless such record holder is a financial institution that is a member of the
Securities Transfer Agents Medallion Program (STAMP), the Stock Exchanges'
Medallion Program (SEMP) or the New York Stock Exchange, Inc. Medallion Program
(MSP) (each such entity, an "Eligible Institution"), the signature of the record
holder is guaranteed by an Eligible Institution.
Section 5. COVENANTS OF THE COMPANY AND THE SPIN-OFF ENTITY. The
Company and the Spin-Off Entity (as appropriate) covenant and agree that from
and after the Record Date until the Maturity Time.
(a) The Company and the Spin-Off Entity shall take all such
action as may be necessary to ensure that all Shares and/or other securities
delivered upon exercise of Rights, at the time of delivery of the certificates
for such securities, shall be duly and validly authorized and issued, fully paid
and nonassessable securities.
(b) The Company shall pay when due and payable any and all
federal and state transfer taxes and charges that may be payable in respect of
the issuance or delivery of the Shares; PROVIDED, HOWEVER, that the Company
shall not be required to pay any transfer tax or charge which may be payable in
respect of any transfer or delivery of Shares to a Person other than, or the
issuance or delivery of certificates representing Shares in a name other than
that of, the registered holder of the Rights immediately prior to the Maturity
Time, or to issue or deliver any certificates representing Shares until any such
tax or charge shall have been paid (any such tax or charge being payable by the
holder of such Rights at the time of surrender) or until it has been established
to the Company's reasonable satisfaction that no such tax is due.
D-6
(c) The Spin-Off Entity shall, and the Company shall cause the
Spin-Off Entity to, use its best efforts (i) to file on an appropriate form, in
connection with the filing of the proxy statement with respect to the Special
Meeting or otherwise as promptly as practicable, the Registration Statement with
respect to the Shares to be delivered upon maturity of the Rights, (ii) to cause
such Registration Statement to become effective as soon as practicable after
such filing, and (iii) to cause such Registration Statement to remain effective
(with a prospectus at all times meeting the requirements of the Securities Act)
until such time as is necessary to complete the distribution of Shares in
accordance with Section 4 and any reoffering or resale included in the
Registration Statement. The Spin-Off Entity shall also, and the Company shall
also cause the Spin-Off Entity to, take such action as may be appropriate under,
or to ensure compliance with, the securities or "blue sky" laws of the various
states in connection with the distribution of the Shares pursuant to this
Agreement. If the Spin-Off Entity shall determine that a registration statement
should be filed under any state securities laws, the Spin-Off Entity may
temporarily suspend the distribution of the Shares pursuant to this Agreement in
each relevant jurisdiction until such time as a registration statement has been
declared effective and, upon any such suspension, the Spin-Off Entity shall
issue a public announcement stating that the distribution of the Shares pursuant
to this Agreement has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding anything in this Agreement to the contrary, the Shares shall not
be distributed pursuant to this Agreement in any jurisdiction if the requisite
registration or qualification in such jurisdiction shall not have been effected
or such distribution shall not be permitted under applicable law.
(d) Notwithstanding anything in this Agreement to the contrary,
after the Record Date, the Company and the Spin-Off Entity shall not, except as
permitted by Section 18 hereof, take (or permit any of their Subsidiaries to
take) any action the purpose of which is to, or if at the time such action is
taken it is reasonably foreseeable that the effect of such action will,
eliminate or otherwise materially diminish the benefits intended to be afforded
by the Rights.
(e) Notwithstanding anything in this Agreement to the contrary,
in the event that the Company shall consolidate with or merge with or into, any
other Person other than in connection with the Merger, regardless of whether the
Company shall or shall not be the continuing or surviving corporation of such
consolidation or merger, the Maturity Time shall become the date immediately
preceding the date of the effective time or consummation of any such merger or
consolidation. Prior to the effective time or consummation of any such merger
or consolidation, the Spin-Off Entity shall, and the Company shall cause the
Spin-Off Entity to, cause a registration statement to become and remain
effective with respect to the distribution of Shares pursuant to this Agreement.
(f) The Spin-Off Entity shall, and the Company shall cause the
Spin-Off Entity to, conduct the operations of the Spin-Off Entity in the
ordinary and usual
D-7
course of business and consistent with past practice and use reasonable
efforts to keep available the services of its present officers and key
employees and preserve the goodwill and business relationships with all
Persons having business relations with it. Without limiting the generality
of the foregoing, and except as otherwise expressly permitted by this
Agreement, prior to the Maturity Time, the Spin-Off Entity shall not, and the
Company shall not permit the Spin-Off Entity to:
(i) transfer the assets of the Spin-Off Entity other
than in the ordinary course of business;
(ii) issue, sell, pledge or dispose of, grant or
otherwise create, or agree to issue, sell, pledge or dispose of, grant
or otherwise create any capital stock or other equity securities, any
debt or other securities convertible into or exchangeable for any of
its capital stock or other equity securities other than in connection
with a stock dividend, subdivision, combination or reclassification or
the exercise of options, warrants and other rights to acquire
securities issued and outstanding as of the Record Date except that
the Spin-Off Entity may (W) issue options (and securities issuable
upon exercise of such options) in connection with an amendment of
outstanding options to acquire Common Shares of the Company so that
each such option includes the right to receive the number of Shares
that would be distributed in connection with Rights that would be
associated with Common Shares obtainable upon exercise of such
options, (X) issue options (and Shares obtainable upon exercise of
such options) to acquire up to an additional 338,000 Shares (assuming
completion of the Recapitalization), provided that such options are
issued in connection with an employee stock option plan duly adopted
by the Spin-Off Entity, (Y) issue an additional 6,000 Shares (assuming
completion of the Recapitalization), provided that such Shares are
issued only to employees of the Spin-Off Entity and (Z) issue or agree
to issue Shares for an aggregate consideration of $5,000,000 at a
price per Share such that, if such Shares were issued immediately
after the Recapitalization, the price paid per Share would be $9.15;
or
(iii) declare, set aside, make or pay any dividend or
other distribution, payable in cash, stock (other than Shares),
property or otherwise, with respect to any of its capital stock or
other equity securities.
(g) The Company shall not:
(i) sell, pledge, distribute, dispose of or otherwise
transfer and shall not agree to sell, pledge, distribute, dispose of
or otherwise transfer any Shares except pursuant to the Rights; and
(ii) issue, sell, pledge or dispose of, grant or
otherwise create any Common Shares or other equity security to which
Rights attach, any debt or other securities convertible into or
exchangeable for Common Shares or
D-8
any other equity security to which Rights attach other than in
connection with a stock dividend, subdivision, combination or
reclassification or the exercise of options, warrants and other
rights to acquire securities issued and outstanding as of the
Record Date.
(h) The Company and the Spin-Off Entity shall use their best
efforts to obtain any consent and to make any filings or obtain any approvals
necessary to distribute the Shares pursuant to Section 4 of this Agreement at or
prior to the Maturity Time.
Section 6. RECORD DATE. Each Person in whose name any certificate
representing Shares is issued pursuant to Section 4 shall for all purposes be
deemed to have become the holder of record of the Shares represented thereby on,
and such certificate shall be dated, the Maturity Time; PROVIDED, HOWEVER, that
if the Maturity Time is a date upon which the share transfer books of the Spin-
Off Entity are closed, such Person shall be deemed to have become the record
holder of such securities on, and such certificate shall be dated, the next
succeeding Business Day on which the Share transfer books of the Spin-Off Entity
are open.
Section 7. RECAPITALIZATION OF THE SPIN-OFF ENTITY. As soon as
practicable on or after the Maturity Time, the Spin-Off Entity shall, and the
Company shall cause the Spin-Off Entity to, (i) declare a dividend on the Shares
payable in Shares, (ii) subdivide the outstanding Shares or (iii) combine the
outstanding Shares into a smaller number of Shares, to the extent necessary so
that the number of Shares issued and outstanding immediately thereafter is equal
to the number of Rights outstanding; immediately prior to the Maturity Time
divided by three.
Section 8. RIGHTS OF ACTION. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent
under Section 11 and Section 13 hereof, are vested in the respective
registered holders of the Common Shares; and any registered holder of any
Common Shares, without the consent of the Rights Agent or of the holder of
any other Common Shares, may in his, her or its own behalf and for his, her
or its own benefit enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
his, her or its right to exercise the Rights evidenced by such Common Shares
in the manner provided in this Agreement. Without limiting the foregoing or
any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at
law for any breach of this Agreement and shall be entitled to specific
performance of the obligations under this Agreement, and injunctive relief
against actual or threatened violations of the obligations of any Person
subject to this Agreement. Holders of Rights shall be entitled to recover
the reasonable costs and expenses, including reasonable attorneys fees,
incurred by them in any action to enforce the provisions of this Agreement.
D-9
Section 9. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by
accepting the same shall be deemed to have consented and agreed with the Company
and the Rights Agent and with every other holder of a Right that:
(a) Until the Maturity Time, the Rights shall be transferable
only in connection with the transfer of the Common Shares;
(b) Except as provided in Section 4(e), the Company and the
Rights Agent may deem and treat the person in whose name the associated Common
Share certificate is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
associated Common Share certificate made by anyone other than the Company or the
Rights Agent) for all purposes whatsoever, and neither the Company nor the
Rights Agent shall be affected by any notice to the contrary;
(c) Such holder expressly waives any right to receive any
fractional Rights and any fractional securities upon maturity of a Right, except
as otherwise provided in Section 4(b) hereof; and
(d) Notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; PROVIDED, HOWEVER, that the Company shall use
its best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 10. RIGHT HOLDER NOT DEEMED A SPIN-OFF ENTITY SHAREHOLDER.
No holder, as such, of any Right shall be entitled to vote, receive dividends or
be deemed for any purpose the holder of the Shares or any other securities of
the Spin-Off Entity which may at any time be issuable in respect of the Rights,
nor shall anything contained herein be construed to confer upon the holder of
any Right, as such, any of the rights of a shareholder of the Spin-Off Entity or
any right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 16 hereof), or to receive dividends
or subscription rights, or otherwise, until the Shares shall have been
distributed in accordance with the provisions of this Agreement.
D-10
Section 11. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, suit, action, proceeding or expense, incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability arising therefrom, directly or
indirectly. The indemnity provided herein shall survive the distribution of
Shares in respect of the Rights.
(b) The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Agreement in reliance upon any
certificate evidencing Common Shares or other securities of the Company or
certificate evidencing Shares or other securities of the Spin-Off Entity,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons, or
otherwise upon the advice of counsel as set forth in Section 13 hereof.
Section 12. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT. Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
stock transfer or corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 14
hereof.
Section 13. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company, the Spin-Off Entity and the holders of
Rights, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
D-11
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company or the Spin-Off Entity prior to
taking or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be deemed to
be conclusively proved and established by a certificate signed by any one of the
Chairman of the Board, the President or any Senior Vice President of the Company
or the Spin-Off Entity, as appropriate, and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement (except its
countersignature thereof) or be required to verify the same, but all such
statements and recitals are and shall be deemed to have been made by the Company
only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution and delivery hereof by the Rights Agent); nor shall it
be responsible for any breach by the Company of any covenant or condition
contained in this Agreement, nor shall it be responsible for any adjustment
required under the provisions of Section 7 hereof or responsible for the manner,
method or amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to the
maturity of Rights after actual notice of any such adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of stock or other securities to be
issued pursuant to this Agreement or as to whether any shares of stock or other
securities will, when issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company and the Spin-Off Entity agree that they will
perform, execute, acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Rights Agent for the carrying
out or performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the President or any Vice President of the
Company or the Spin-Off Entity, as appropriate, and to apply to such persons for
advice or instructions in connection with its duties, and it shall not be liable
for any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer.
D-12
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or the Spin-Off Entity or become pecuniarily
interested in any transaction in which the Company or the Spin-Off Entity may be
interested, or contract with or lend money to the Company or the Spin-Off Entity
or otherwise act as fully and freely as though it were not Rights Agent under
this Agreement. Nothing herein shall preclude the Rights Agent from acting in
any other capacity for the Company, the Spin-Off Entity or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be answerable
or accountable for any act, default, neglect or misconduct of any such attorneys
or agents or for any loss to the Company or the Spin-Off Entity resulting from
any such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof. The Rights Agent
shall not be under any duty or responsibility to insure compliance with any
applicable federal or state securities laws in connection with the issuance,
transfer or exchange of Rights.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
Section 14. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 calendar days' notice in writing mailed to the Company, the
Spin-Off Entity and to each transfer agent of the Common Shares and Shares by
registered or certified mail, and to the holders of the Rights by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon 30 calendar days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Shares and Shares by registered or certified mail, and to the holders of
the Rights by first-class mail. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall appoint a
successor Rights Agent. If the Company shall fail to make such appointment
within a period of 30 calendar days after giving notice of such removal or after
it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent, then the registered holder of any
Rights may apply to any court of competent jurisdiction for the appointment of a
new Rights Agent. Any successor Rights Agent, whether appointed by the Company
or by such a court, shall be a corporation organized and doing business under
the laws of the United States or of any other state of the United States so long
as such corporation is in good standing and is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to supervision
or examination by federal or state authority and which has at the time of its
appointment as
D-13
successor Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose.
Not later than the effective date of any such appointment, the Company shall
file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Shares and the Shares, and mail a notice thereof
in writing to the registered holders of the Rights. Failure to give any
notice provided for in this Section 14, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case
may be.
Section 15. [Intentionally omitted.]
Section 16. NOTICE OF CERTAIN EVENTS.
(a) In case, after the Record Date, the Company or the Spin-Off
Entity shall propose (i) to pay any dividend payable in stock of any class to
the holders of Shares or to make any other distribution to the holders of Shares
(other than a regular periodic cash dividend), (ii) to offer to the holders of
Shares rights, options or warrants to subscribe for or to purchase any
additional Shares or shares of stock of any class or any other securities,
rights or options, (iii) to effect any reclassification of its Shares (other
than a reclassification involving only the subdivision of outstanding Shares),
(iv) to effect any consolidation or merger (other than the Merger) into or with,
or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more transactions,
of assets or earning power (including, without limitation, securities creating
any obligation on the part of the Company and/or any of its Subsidiaries)
representing more than 50% of the assets and earning power of the Company and
its Subsidiaries, taken as a whole, to any other Person or Persons, or (v) to
effect the liquidation, dissolution or winding up of the Company, then, in each
such case, the Company shall give to each holder of a Right, in accordance with
Section 17 hereof, a notice of such proposed action, which shall specify the
record date for the purposes of such stock dividend, distribution or offering of
rights, options or warrants, or the date on which such reclassification,
consolidation, merger, share exchange, sale, transfer, liquidation, dissolution,
or winding up is to take place and the date of participation therein by the
holders of the Shares, if any such date is to be fixed, and such notice shall be
so given, in the case of any action covered by clause (i) or (ii) above, at
least 10 calendar days prior to the record date for determining holders of the
Common Shares for purposes of such action, and, in the case of any such other
action, at least 10 calendar days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Common Shares, whichever shall be the earlier.
D-14
(b) Upon the occurrence of the Special Meeting or the
termination of the Merger Agreement, the Company shall as soon as practicable
thereafter, make a public announcement and give to the Rights Agent and each
holder of a Right, in accordance with Section 17 hereof, a notice of the
occurrence of such event, which announcement and notice shall specify the
results of the vote on the approval of the Merger Agreement or the fact of the
termination of the Merger Agreement, and the consequences of the event to
holders of Rights; provided that no notice need be given if the Maturity Time is
expected to occur within 10 Business Days of the occurrence of the Special
Meeting.
Section 17. NOTICES.
(a) Notices or demands authorized by this Agreement to be given
or made by the Rights Agent or by the holder of any Right to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
NHP Incorporated
0000 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000-0000
Attention: President and Chief Executive Officer
(b) Notices or demands authorized by this Agreement to be given
or made by the Rights Agent or by the holder of any Right to or on the Spin-Off
Entity shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
NHP Financial Services, Ltd.
0000 Xxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: President and Chief Executive Officer
(c) Subject to the provisions of Section 14 hereof, any notice
or demand authorized by this Agreement to be given or made by the Company or the
Spin-Off Entity, or by the holder of any Right to or on the Rights Agent shall
be sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
________________________
________________________
________________________
Attention:
D-15
(d) Notices or demands authorized by this Agreement to be given
or made by the Company, the Spin-Off Entity or the Rights Agent to the holder of
any Right certificate evidencing Common Shares shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed to such holder at
the address of such holder as shown on the registry books of the Company.
Section 18. SUPPLEMENTS AND AMENDMENTS. Subject to the last sentence
of this Section 18, if the Company so directs, the Company and the Rights Agent
shall supplement or amend this Agreement without the approval of any holders of
Rights (i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time period hereunder, or
(iv) to supplement or amend the provisions hereunder in any manner which the
Company may deem desirable, which supplement or amendment shall not, in the good
faith determination of the Board of Directors of the Company, adversely affect
the interests of the holders of Rights (so long as the duties, liabilities and
indemnifications of the Rights Agent are not affected). Upon the delivery of a
certificate from an officer of the Company which states that the proposed
supplement or Amendment is in compliance with the terms of this Section 18, the
Rights Agent shall execute such supplement or amendment; provided, however, that
the failure or refusal of the Rights Agent to execute such supplement or
amendment shall not affect the validity of any supplement or amendment adopted
by the Company, any of which shall be effective in accordance with the terms
thereof. Notwithstanding anything in this Agreement to the contrary, no
supplement or Amendment shall be made which increases the period of time
remaining until the Maturity Time or terminates the Rights or makes the Rights
subject to redemption without the consent of the holders of a majority of the
issued and outstanding Rights, and this Agreement may be amended in any respect
upon the agreement of the Company, the Spin-Off Entity and the Rights Agent if
the consent of the holders of a majority of the issued and outstanding Rights
has been obtained with respect to such amendment.
Section 19. SUCCESSORS; CERTAIN COVENANTS. All the covenants and
provisions of this Agreement by or for the benefit of the Company, the Spin-Off
Entity or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 20. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Spin-Off
Entity, the Rights Agent and the holders of the Rights any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company, the Spin-Off Entity, the Rights Agent
and the holders of the Rights.
Section 21. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS,
ETC. The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board, or the Company, or as may be necessary or
advisable in the administration
D-16
of this Agreement, including, without limitation, the right and power to (i)
interpret the provisions of this Agreement, and (ii) make all determinations
deemed necessary or advisable for the administration of this Agreement
(including, without limitation, to amend the Agreement and whether any
proposed amendment adversely affects the interests of the holders of Rights).
For all purposes of this Agreement, any calculation of the number of Shares
or Common Shares or other securities outstanding at any particular time shall
be made in accordance with the last sentence of Rule l3d-3(d)(l)(i) under the
Exchange Act as in effect on the date of this Agreement. All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are done
or made by the Board of Directors of the Company in good faith, shall (x) be
final, conclusive and binding on the Company, the Rights Agent, the holders
of the Rights and all other parties, and (y) not subject the Board of
Directors of the Company to any liability to the holders of the Rights.
Section 22. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 23. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the internal
substantive laws of the State of Delaware and for all purposes shall be governed
by and construed in accordance with the internal substantive laws of such State
applicable to contracts to be made and performed entirely within such State.
Section 24. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 25. DESCRIPTIVE HEADINGS. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
[Remainder of page left intentionally blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
[SEAL]
Attest:
NHP INCORPORATED
----------------------- -----------------------
Name: Name:
Title: Title:
[SEAL]
Attest:
NHP FINANCIAL SERVICES, INC.
----------------------- -----------------------
Name: Name:
Title: Title:
[SEAL]
Attest:
THE FIRST NATIONAL
BANK OF BOSTON
----------------------- -----------------------
Name: Name:
Title: Title:
D-18
EXHIBIT A
SUMMARY OF RIGHTS TO
SHARES OF NHP FINANCIAL SERVICES, LTD.
The Board of Directors of NHP Incorporated (the "Company") has
declared a dividend distribution of one right (a "Right") for each outstanding
share of common stock, par value $.01 per share (the "Common Shares"), of the
Company. The distribution is payable on April __, 1997 (the "Record Date") to
the shareholders of record as of the close of business on the Record Date. Each
Right entitles the registered holder to receive from the Company upon maturity
of the Rights one-third of a share (the "Shares") of common stock, par value
$.01 per share, of NHP Financial Services, Ltd., a Delaware corporation (the
"Spin-Off Entity"), or any successor thereof, subject to the terms and
conditions set forth in a Rights Agreement, dated as of April__, 1997 (the
"Rights Agreement "), between the Company, the Spin-Off Entity and The First
National Bank of Boston as Rights Agent (the "Rights Agent "). No fractional
Shares will be issued and cash will be paid in lieu of fractional Shares at the
rate of $9.15 per Share. The distribution of Shares pursuant to the Rights will
result in 100% of the equity of the Spin-Off Entity being distributed to the
holders of Rights. Rights will also be issued with respect to any Common Share
issued prior to the time Shares become distributable in respect of Rights.
The Rights Agreement provides that the right to receive the Shares
shall not mature until the earlier of the Effective Time of the merger (the
"Merger") of a subsidiary of Apartment Investment and Management Company
("AIMCO") with and into the Company pursuant to an Agreement and Plan of Merger
dated as of April __, 1997 by and among AIMCO, such subsidiary and the Company
(the "Merger Agreement") December 1, 1997 (the time at which the Rights mature
being referred to as the "Maturity Time").
The Rights will be evidenced, with respect to any of the Common Share
certificates outstanding as of the Record Date, by such Common Share
certificates. Until the Maturity Time new Common Share certificates issued
after the Record Date upon transfer or new issuance of Common Shares will
contain a notation incorporating the Rights Agreement by reference. Until the
Maturity Time, the surrender for transfer of any certificates for Common Shares
will also constitute the transfer of the Rights associated with the Common
Shares represented by such certificates.
The Rights Agreement also contains certain covenants of the Company
and the Spin-Off Entity proscribing the following while the Rights are
outstanding: (i) a transfer of the assets of the Spin-Off Entity other than in
the ordinary course of business; (ii) issuance of securities by the Company
other than in connection with a stock dividend, subdivision, combination or
reclassification or the exercise of options, warrants and other rights to
acquire securities issued and outstanding as of the Record Date; (iii) issuance
DA-1
of securities by the Spin-Off Entity other than in connection with a stock
dividend, subdivision, combination or reclassification or the exercise of
options, warrants and other rights to acquire securities issued and outstanding
as of the Record Date plus (W) the Spin-Off Entity may issue options (and
securities issuable upon exercise of such options) in connection with an
amendment of outstanding options to acquire Common Shares of the Company so that
each such option includes the right to receive the number of Shares that would
be distributed in connection with Rights that would be associated with Common
Shares obtainable upon exercise of such options, (X) the Spin-Off Entity may
issue options (and Shares obtainable upon exercise of such options) to acquire
up to an additional 338,000 Shares (assuming completion of the Recapitalization
contemplated by the Rights Agreement), provided that such options are issued in
connection with an employee stock option plan duly adopted by the Spin-Off
Entity, (Y) the Spin-Off Entity may issue an additional 6,000 Shares (assuming
completion of the Recapitalization contemplated by the Rights Agreement),
provided that such Shares are issued only to employees of the Spin-Off Entity
and (Z) issue or agree to issue Shares for an aggregate consideration of
$5,000,000 at a price expected to be $9.15 per Share (assuming completion of the
Recapitalization contemplated by the Rights Agreement); and (iv) the operation
of the Spin-Off Entity otherwise than in the ordinary course of business.
The Rights Agreement may be amended by the Company without the
approval of any holders of Right Certificates in certain events, including
amendments which add other events requiring adjustment to the number of Shares
or other securities issuable upon the exercise of the Rights provided that no
amendment may be made which (i) changes the number of Shares that may be
distributed in any way that results in less than all Shares held by the Company
at the Maturity Time being distributed in respect of the Rights, or
(ii) increases the period of time remaining until the Maturity Time, without the
consent of the holders of a majority of the issued and outstanding Rights, and
the Rights Agreement may be amended in any respect upon the agreement of the
Company, the Spin-Off Entity and the Rights Agent if the consent of the holders
of a majority of the issued and outstanding Rights has been obtained with
respect to such amendment.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights is as of April __, 1997, does not purport to
be complete and is qualified in its entirety by reference to the Rights
Agreement, which is incorporated herein by this reference.
DA-2
EXHIBIT E
FORM OF TRUST AGREEMENT
This Trust Agreement (the "Agreement") is made and entered this
________day of April, 1997 by and between _____________________, a ________
corporation ("AIMCO"), and [Demeter Holdings Corporation, a Massachusetts
corporation ("Demeter")], [Capricorn Investors, L.P., a Delaware Limited
Partnership ("Capricorn")] [other Capricorn Investors] (the "Seller").
WHEREAS, AIMCO has acquired ____ shares (the "Shares") of Common
Stock, par value $.01 per share ("NHP Stock") of NHP Incorporated, a Delaware
corporation ("NHP") from the Seller pursuant to that certain Stock Purchase
Agreement dated as of April , 1997 (the "Stock Purchase Agreement"), and
WHEREAS, in order to implement certain provisions of the Stock
Purchase Agreement, AIMCO and the Seller desires to enter into this Agreement on
the terms and conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements herein contained, the parties agree as follows:
Section 1. DEFINITIONS. Initially capitalized terms used in this
Agreement shall have the meanings ascribed thereto in the Stock Purchase
Agreement unless otherwise defined herein.
Section 2. TRUST ARRANGEMENTS. In furtherance of Section 2.1 and
5.8(c) of the Stock Purchase Agreement, AIMCO has agreed that the Seller shall
retain beneficial ownership of all Rights relating to the Shares, and that AIMCO
shall hold such Rights in trust for the benefit of the Seller. In furtherance
of the foregoing, upon and after receipt of the consideration referred to in
Section 2.2(b) of the Stock Purchase Agreement, AIMCO shall become record holder
of and obtain legal title to the Shares, and without any additional action by
the Seller or AIMCO, the Seller shall remain the beneficial owner of the Rights
with all of the rights (including without limitation the right to exercise the
Rights) and any obligations of any holders of the Rights. AIMCO agrees to not
sell, transfer or otherwise convey in any respect the rights or interests of the
Seller relating to the Rights retained by the Seller hereunder (it being
understood that a sale of the Shares transfers record ownership of the Rights
and shall not be deemed to sell, transfer or otherwise convey in any respect the
rights or interests of the Seller relating to the Rights retained by the Seller
hereunder and shall not be deemed to violate this Section 2 ).
Section 3. IRREVOCABLE PROXY. AIMCO hereby constitutes and appoints
the Seller as proxy for AIMCO, with full power of substitution and hereby
authorizes and empowers the Seller to represent and vote and take all action
with respect to, in its
E-1
sole discretion (including without limitation the right to exercise the
Rights or amend the Rights Agreement), Rights attached to all of the Shares.
This proxy is coupled with an interest and shall be effective for so long as
AIMCO shall hold the Rights in trust and for the benefit of the Seller
hereunder and shall not be earlier revoked, withdrawn, amended or modified
in any respect. Notwithstanding any other provision of this Agreement,
subject to Section 4(e) hereof, AIMCO shall retain all rights with respect to
the Shares (other than the Rights) and shall retain all rights to vote such
Shares, receive dividends in respect of the Shares and sell, assign, transfer
and dispose of the Shares.
Section 4. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement and the legal relations among
the parties hereto shall be governed by and construed and enforced in accordance
with the laws of The Commonwealth of Massachusetts, without regard to its
principles of conflicts of law.
(b) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, letters of intent, negotiations
and discussions, whether oral or written, of the parties, and there are no
warranties, representations or other agreements, express or implied, made to any
party by any other party in connection with the subject matter hereof except as
specifically set forth herein or in the documents delivered pursuant hereto or
in connection herewith.
(c) MODIFICATION; WAIVER. No supplement, modification, waiver
or termination of this Agreement shall be binding unless executed in writing by
the party to be bound thereby. No waiver of any provision of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
(d) NOTICES. All notices, consents, requests, reports, demands
or other communications hereunder (collectively, "NOTICES") shall be in writing
and may be given personally, by registered mail, or by Federal Express (or other
reputable overnight delivery service):
if to AIMCO, to it at:
0000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xx. Xxxxx Xxxxxxxxx
Telephone: (000) 000-0000
and
E-2
00000 Xxxxxxx 000, Xxxxxxxx F-240
X.X. Xxx 0000
Xxxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
if to the Seller, to it at:
_____________________________
_____________________________
_____________________________
_____________________________
with a copy to:
_____________________________
_____________________________
_____________________________
_____________________________
or to such other address or such other person as the addressee party shall have
last designated by notice to the other party. All Notices shall be deemed to
have been given (i) when delivered personally, (ii) three days after being sent
by registered mail, or (iii) one day after being sent by Federal Express (or
other reputable overnight delivery service).
(e) ASSIGNMENT. No party hereto shall have the right, power, or
authority to assign or pledge this Agreement or any portion of this Agreement,
or to delegate any duties or obligations arising under this Agreement,
voluntarily, involuntarily, or by operation of law, without the prior written
consent of the other parties hereto PROVIDED; HOWEVER, that AIMCO may transfer
the Shares to any person or entity. Notwithstanding any such assignment, AIMCO
shall remain liable for any failure to perform all obligations required to be
performed by it hereunder.
(f) SEVERABILITY. Any provision or part of this Agreement which
is invalid or unenforceable in any situation in any jurisdiction shall, as to
such situation and such jurisdiction, be ineffective only to the extent of such
invalidity and shall not
E-3
affect the enforceability of the remaining provision hereof or the validity
or enforceability of any such provision in any other situation or in any
other jurisdiction.
(g) SUCCESSORS AND ASSIGNS; THIRD PARTIES. All of the rights,
duties, benefits, liabilities and obligations of the parties shall inure to the
benefit of, and be binding upon, their respective successors, assigns, heirs and
legal representatives. Except as specifically set forth or referred to herein,
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 hereto and their
successors or permitted assigns, any rights or remedies under or by reason of
this Agreement.
(h) COUNTERPARTS. This Agreement may be executed in as many
counterparts as may be deemed necessary and convenient, and by the different
parties hereto on separate counterparts each of which, when so executed, shall
be deemed an original, but all such counterparts shall constitute one and the
same instrument.
(i) INTERPRETATION; REFERENCES. Any use of masculine, feminine
or neuter pronouns herein shall not be limiting, but shall be construed as
referring to persons of any gender, as the context may require. Any use of the
singular or plural form herein shall not be limiting, but shall be construed as
referring to either the plural or singular, as the context may require.
References to a "Section" are, unless otherwise specified, to a Section of this
Agreement. The Section headings of this Agreement are for convenience of
reference only and shall not be deemed to modify, explain, restrict, alter or
affect the meaning or interpretation of any provision hereof.
(j) TIME OF ESSENCE. Time shall be of the essence with respect
to all matters contemplated by this Agreement.
(k) ATTORNEYS' FEES. In the event that any party hereto brings
an action or proceeding against the other party to enforce or interpret any of
the covenants, conditions, agreements or provisions of this Agreement, the
prevailing party in such action or proceeding shall be entitled to recover all
costs and expenses of such action or proceeding, including, without limitation,
attorneys' fees, charges, disbursements and the fees and costs of expert
witnesses.
(l) WAIVER OF JURY TRIAL. Each party to this Agreement further
waives its respective right to a jury trial of any claim or cause of action
arising out of this Agreement or any dealings between any of the parties hereto
relating to the subject matter of this Agreement. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this Agreement, including,
without limitation, contract claims, tort claims and all other common law and
statutory claims. This waiver is irrevocable, meaning that it may not be
modified either orally or in writing, and this waiver shall apply to any
subsequent amendments, supplements or other modifications, supplements or other
modifications to this Agreement.
E-4
(m) NEGOTIATION OF AGREEMENT. Each of the parties acknowledges
that it has been represented by independent counsel of its choice throughout all
negotiations that have preceded the execution of this Agreement and that it has
executed the same with consent and upon the advice of said independent counsel.
Each party and its counsel cooperated in the drafting and preparation of this
Agreement and the documents referred to herein, and any and all drafts relating
thereto shall be deemed the work product of the parties and may not be construed
against any party by reason of its preparation. Accordingly, any rule of law or
any legal decision that would require interpretation of any ambiguities in this
Agreement against the party that drafted it is of no application and is hereby
expressly waived. The provisions of this Agreement shall be interpreted in a
reasonable manner to effect the intentions of the parties and this Agreement.
(n) REMEDIES. In the event of a breach by any party of this
Agreement, a non-breaching party, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The parties hereby
agree that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by any of them of any of the provisions of this
Agreement and hereby further agree that, in the event of any action for specific
performance in respect of such breach, they shall waive the defense that a
remedy at law would be adequate.
AIMCO:
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
SELLER:
-----------------------------------
By:
--------------------------------
Authorized Signatory
By:
--------------------------------
Authorized Signatory
E-5
[The Disclosure Schedule listed in the table of contents
preceding the Stock Purchase Agreement, dated as of April 16, 1997, by and among
Apartment Investment and Management Company, Demeter Holdings Corporation and
Capricorn Investors, L.P., have been omitted. A copy of such
Schedules will be furnished supplementally to the Securities and Exchange
Commission upon request.]
