EXHIBIT I
INVESTOR AND REGISTRATION RIGHTS AGREEMENT
THIS INVESTOR AND REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is
entered into as of October 17, 1996, between Homestead Village Incorporated, a
Maryland corporation ("Homestead"), and Security Capital Pacific Trust, a
Maryland real estate investment trust ("PTR").
WHEREAS, on the date hereof, the parties are entering into a series of
transactions as described in that certain Merger and Distribution Agreement,
dated as of May 21, 1996, among Security Capital Atlantic Incorporated
("Atlantic"), PTR, Security Capital Group Incorporated ("SCG") and Homestead
(the "Merger Agreement"), pursuant to which, among other things, Homestead will
acquire all of PTR's assets relating to its operation of extended-stay lodging
facilities;
WHEREAS, pursuant to the Merger Agreement, PTR and Homestead are entering
to a Funding Commitment Agreement (the "Funding Commitment Agreement"), pursuant
to which PTR will agree to make certain loans to Homestead, which loans will be
secured by mortgages, and the notes evidencing such loans will be convertible
into shares of Common Stock, $0.01 par value per share ("Common Stock"), of
Homestead on the terms and conditions described therein;
WHEREAS, pursuant to a Warrant Purchase Agreement (the "Warrant Purchase
Agreement"), dated as of May 21, 1996, among Homestead, SCG, Atlantic and PTR,
Homestead has agreed to issue to PTR warrants to acquire Common Stock; and
WHEREAS, the execution of this Agreement is a condition to the consummation
of the transactions contemplated by the Merger Agreement, the Funding Commitment
Agreement and the Warrant Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereto agree as follows:
Section 1. Board Representation. Until March 31, 1998 and for so long
thereafter as PTR shall continue to have the right to convert in excess of $20
million in principal amount of loans made pursuant to the Funding Commitment
Agreement, Homestead shall not increase the number of members of its Board of
Directors to more than seven (7) members and PTR shall be entitled to designate
one person for nomination to the Homestead Board of Directors (such person, a
"Nominee") and Homestead will use its best efforts to cause the election of such
Nominee. The Nominee of PTR may, but need not, include the same person or
persons nominated by SCG pursuant to the Investor Agreement of even date
herewith between SCG and
Homestead or the person nominated by Atlantic pursuant to the Investor and
Registration Rights Agreement of even date herewith between Atlantic and
Homestead.
Section 2. Inspection. Until March 31, 1998 and for so long thereafter as
PTR shall continue to have the right to convert any principal amount of loans
made, pursuant to the Funding Commitment Agreement, at any time during regular
business hours and as often as reasonably requested of Homestead's officers,
Homestead shall permit PTR or any authorized employee, agent or representative
of PTR to examine and make copies and abstracts from the records and books of
account of, and to visit the properties of, Homestead and to discuss the
affairs, finances, and accounts of Homestead with any of its officers or
directors; provided, that all costs and expenses of such inspection shall be
borne by PTR.
Section 3. Registration Rights.
(a) Demand. At any time prior to the first anniversary of the date on
which the Common Stock is registered under Section 12(b) or 12(g) of the
Exchange Act of 1934, as amended (the "Exchange Act"), PTR may request one
registration of all or any part of its Registrable Securities (as defined
in sub-section (h) below) under the Securities Act of 1933, as amended (the
"Securities Act"), by delivering written notice (which notice shall state
that PTR intends to dispose of such securities through a public
distribution thereof) to Homestead specifying the number of Registrable
Securities that PTR desires to distribute and Homestead shall use its
reasonable efforts to effect the registration of such Registrable
Securities under the Securities Act in accordance with the further
provisions of this Section 3.
(b) Shelf Registration. At any time after the first anniversary of
the date on which the Common Stock is registered under Section 12(b) or
12(g) of the Exchange Act, PTR may request, on up to three separate
occasions, registration of all or any part of its Registrable Securities
pursuant to Rule 415 under the Securities Act by delivering written notice
(which notice shall state that PTR intends to dispose of such securities
through a public distribution thereof) to Homestead and Homestead shall use
its reasonable efforts to effect the registration of such Registrable
Securities under the Securities Act in accordance with the further
provisions of this Section 3.
(c) Registration Procedures. If and whenever Homestead is required by
any of the provisions of this Section 3 to use its reasonable efforts to
effect the registration of any of the Registrable Securities under the
Securities Act, Homestead shall:
(i) prepare and file with the Securities and Exchange Commission
(the "Commission") a registration statement with respect to such
securities and use its reasonable efforts to cause such registration
statement to become effective and
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remain effective for as long as shall be necessary to complete the
distribution of the Registrable Securities so registered;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for so long as shall be necessary to complete the
distribution of the Registrable Securities so registered and to comply
with the provisions of the Securities Act with respect to the sale or
other disposition of all securities covered by such registration
statement whenever PTR shall desire to sell or otherwise dispose of
the same within such period;
(iii) furnish to PTR such numbers of copies of such registration
statement, each amendment and supplement thereto, the prospectus
included in such registration statement, including any preliminary
prospectus, and any amendment or supplement thereto, and such other
documents, as PTR may reasonably request in order to facilitate the
sale or other disposition of the Registrable Securities;
(iv) use its reasonable efforts to register and qualify the
securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as PTR shall
reasonably request, and do any and all other acts and things
reasonably requested by PTR to assist it to consummate the public sale
or other disposition in such jurisdictions of the securities owned by
PTR, except that Homestead shall not for any such purpose be required
to qualify to do business as a foreign corporation in any jurisdiction
wherein it is not so qualified or to file therein any general consent
to service of process;
(v) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months,
beginning with the first fiscal quarter beginning after the effective
date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act;
(vi) use its reasonable efforts to list such securities on any
securities exchange or quotation system on which any securities of
Homestead are then listed, if the listing of such securities is then
permitted under the rules of such exchange or quotation system; and
(vii) notify PTR, at any time when a prospectus relating to the
Registrable Securities is required to be delivered under the
Securities Act, of the happening
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of any event of which it has knowledge as a result of which the
prospectus included in such registration statement, as then in effect,
contains an 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 not misleading in the light of the circumstances
then existing.
(d) Homestead's Ability to Postpone. Homestead shall have the right
to postpone the filing of a registration statement under this Section 3 for
a reasonable period of time (not exceeding 60 days) if Homestead furnishes
PTR with a certificate signed by the Chairman of the Board or the President
of Homestead stating that, in its good faith judgment, Homestead's Board of
Directors has determined that effecting the registration at such time would
adversely affect a material financing, acquisition, disposition of assets
or stock, merger or other comparable transaction or would require Homestead
to make public disclosure of information the public disclosure of that
would have a material adverse effect upon Homestead.
(e) Expenses. All expenses incurred in the registration of
Registrable Securities under this Agreement shall be paid by Homestead.
The expenses shall include, without limitation, the expenses of preparing
the registration statement and the prospectus used in connection therewith
and any amendment or supplement thereto, printing and photocopying
expenses, all registration and filing fees under Federal and state
securities laws, and expenses of complying with the securities or blue sky
laws of any jurisdictions, provided, however, that PTR shall be responsible
for the fees and disbursements of its own counsel.
(f) Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 3:
(i) Indemnity by Homestead. Without limitation of any other
indemnity provided to PTR, to the extent permitted by law, Homestead
will indemnify and hold harmless PTR and its officers, trustees and
any individual, partnership, corporation, trust, unincorporated
organization or other entity (a "Person") if any, who controls PTR
(within the meaning of the Securities Act or the Exchange Act),
against any losses, claims, damages, liabilities and expenses (joint
or several) to which they may become subject under the Securities Act,
the Exchange Act or other federal or state law, insofar as such
losses, claims, damages, liabilities and expenses (or actions in
respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i)
any untrue statement or alleged untrue statement of a material fact
contained in any registration statement (including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto),
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(ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or (iii) any violation or alleged violation by Homestead
of the Securities Act, the Exchange Act, any state securities law or
any rule or regulation promulgated under the Securities Act, the
Exchange Act or any state securities law, and Homestead will reimburse
PTR and its officers, trustees and any controlling person thereof for
any reasonable legal or other expenses incurred by them in connection
with investigating or defending any such loss, claim, damage,
liability, expense or action; provided, however, that Homestead shall
not be liable in any such case for any such loss, claim, damage,
liability, expense or action to the extent that it arises out of or is
based upon a Violation that occurs in reliance upon and in conformity
with written information furnished expressly for use in connection
with such registration by PTR or any officer, trustee or controlling
person thereof.
(ii) Indemnity by PTR. In connection with any registration
statement in which PTR is participating, PTR will furnish to Homestead
in writing such information and affidavits as Homestead reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, will indemnify
Homestead, its directors and officers and each Person who controls
Homestead (within the meaning of the Securities Act or Exchange Act)
against any losses, claims, damages, liabilities and expenses
resulting from any Violation, but only to the extent that such
Violation is contained in any information or affidavit so furnished in
writing by PTR; provided, that the obligation to indemnify will be
several and not joint and several with any other Person and will be
limited to the net amount received by PTR from the sale of Registrable
Securities pursuant to such registration statement.
(iii) Notice; Right to Defend. Promptly after receipt by an
indemnified party under this Section 3(f) of notice of the
commencement of any action (including any governmental action), such
indemnified party will, if a claim in respect thereof is to be made
against any indemnifying party under this Section 3(f), deliver to the
indemnifying party a written notice of the commencement thereof and
the indemnifying party shall have the right to participate in, and, if
the indemnifying party agrees in writing that it will be responsible
for any costs, expenses, judgments, damages and losses incurred by the
indemnified party with respect to such claim, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof
with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the indemnifying
party, if the
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indemnified party reasonably believes that representation of such
indemnified party by the counsel retained by the indemnifying party
would be inappropriate due to actual or potential differing interests
between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to
the indemnifying party within a reasonable time of the commencement of
any such action shall relieve such indemnifying party of any liability
to the indemnified party under this Section 3(f) only if and to the
extent that such failure is prejudicial to its ability to defend such
action, and the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may
have to any indemnified party other than under this Section 3(f).
(iv) Contribution. If the indemnification provided for in this
Section 3(f) is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss,
liability, claim, damage or expense referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage
or expense in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the
indemnified party on the other hand in connection with the statements
or omissions which resulted in such loss, liability, claim, damage or
expense as well as any other relevant equitable considerations. The
relevant fault of the indemnifying party and the indemnified party
shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission
to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. Notwithstanding the
foregoing, the amount PTR shall be obligated to contribute pursuant to
this Section 3(f)(iv) shall be limited to an amount equal to the
aggregate value of the Registrable Securities distributed by PTR
pursuant to the registration statement which gives rise to such
obligation to contribute (less the aggregate amount of any damages
which PTR has otherwise been required to pay in respect of such loss,
claim, damage, liability or action or any substantially similar loss,
claim, damage, liability or action arising from the distribution of
such Registrable Securities).
(v) Survival of Indemnity. The indemnification provided by this
Section 3(f) shall be a continuing right to indemnification and shall
survive the registration and sale of any securities by any Person
entitled to indemnification hereunder and the expiration or
termination of this Agreement.
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(g) Limitations on Registration Rights.
(i) Homestead shall not, without the prior written consent of
PTR, include in any registration in which PTR has a right to
participate pursuant to this Agreement any securities of any Person
other than Atlantic and PTR.
(ii) PTR shall not, without the prior written consent of
Homestead, effect any public sale or distribution (including sales
pursuant to Rule 144 under the Securities Act) of securities of
Homestead during any period commencing 30 days prior to and ending 60
days after the effective date any registration statement filed by
Homestead on behalf of any Person (including Homestead), other than a
registration statement on Form S-8 or any successor form.
(h) Registrable Security. The term Registrable Security means (i) any
shares of Common Stock issuable to PTR pursuant to the conversion of notes
issuable pursuant to the terms of the Funding Commitment Agreement or
otherwise held by PTR, (ii) any other shares of Common Stock owned by PTR
and (iii) any shares of Common Stock or other securities that may
subsequently be issued with respect to such shares of Common Stock as a
result of a stock split or dividend or any sale, transfer, assignment or
other transaction by Homestead involving the shares of Common Stock and any
securities into which the shares of Common Stock may thereafter be changed
as a result of merger, consolidation, recapitalization or otherwise. As to
any particular Registrable Securities, such securities will cease to be
Registrable Securities when they have been distributed to the public
pursuant to an offering registered under the Securities Act. All
Registrable Securities shall cease to be Registrable Securities when all
such securities may be sold in any three-month period pursuant to Rule 144,
or any successor to such rule, under the Securities Act.
Section 4. File Reports. For so long as PTR owns any Registrable
Securities, Homestead shall file on a timely basis all annual, quarterly and
other reports required to be filed by it under Section 13 and 15(d) of the
Exchange Act, and the rules and regulations of the Commission thereunder, as
amended from time to time.
Section 5. Miscellaneous.
(a) Survival of Covenants. All covenants contained herein shall survive
the execution of this Agreement and shall remain in full force and effect until
terminated in accordance with this Agreement.
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(b) Successors and Assigns. This Agreement shall be binding upon, and inure
to the benefit of, the parties hereto and their respective heirs, personal
representatives, successors, assigns and affiliates.
(c) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, sent via a recognized
overnight courier with delivery confirmed in writing or sent via facsimile to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
If to Homestead:
Homestead Village Incorporated
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xx, Xxx Xxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Xx.
Facsimile: (000) 000-0000
If to PTR:
Security Capital Pacific Trust
0000 Xxxxxx Xxxxxx Xxxxxx
Xx Xxxx, Xxxxx 00000
Attention: C. Xxxxxx Xxxxxxxxxxx
Facsimile: (000) 000-0000
(d) Waiver. No party may waive any of the terms or conditions of this
Agreement, except by a duly executed writing referring to the specific provision
to be waived.
(e) Amendment. This Agreement may be amended only by a writing duly
executed by both Homestead and PTR.
(f) Severability. Insofar as is possible, each provision of this Agreement
shall be interpreted so as to render it valid and enforceable under applicable
law and severable from the remainder of this Agreement. A finding that any such
provision is invalid or unenforceable in any jurisdiction shall not affect the
validity or enforceability of any other provision or the validity or
enforceability of such provision under the laws of any other jurisdiction.
(g) Entire Agreement. This Agreement constitutes the entire agreement, and
supersedes all other prior agreements and understandings, both written and oral,
between the parties hereto and their affiliates, with respect to the subject
matter hereof.
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(h) Expenses. Except as otherwise expressly contemplated herein to the
contrary, regardless of whether the transactions contemplated hereby are
consummated, each party hereto shall pay its own expenses incident to preparing
for, entering into and carrying out this Agreement and the consummation of the
transactions contemplated hereby.
(i) Captions. The Section and Paragraph captions herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
(j) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
(k) Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Maryland.
(l) Limitation of Liability. Any obligation or liability whatsoever of
PTR which may arise at any time under this Agreement or any obligation or
liability which may be incurred by it pursuant to any other instrument,
transaction or undertaking contemplated hereby shall be satisfied, if at all,
out of PTR's assets only. No such obligation or liability shall be personally
binding upon, nor shall resort for the enforcement thereof be had to, the
property of any of its shareholders, trustees, officers, employees or agents,
regardless of whether such obligation or liability is in the nature of contract,
tort or otherwise.
* * * * *
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IN WITNESS WHEREOF, each of the undersigned has executed this Agreement, or
caused this Agreement to be duly executed on its behalf, as of the date first
set forth above.
HOMESTEAD VILLAGE INCORPORATED
By: /s/ Xxxxx X. Xxxxxxxx, Xx.
--------------------------
Xxxxx X. Xxxxxxxx, Xx.
Chairman
SECURITY CAPITAL PACIFIC TRUST
By: /s/ C. Xxxxxx Xxxxxxxxxxx
-------------------------
C. Xxxxxx Xxxxxxxxxxx
Chairman
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