SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-A/A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
KOGER EQUITY, INC.
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Florida 1-9997 59-2898045
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(State or incorporation (Commission (IRS Employer
or organization) File Number) Identification No.)
3986 Boulevard Center Drive, Suite 101
Jacksonville, Florida 32207
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(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
COMMON STOCK PURCHASE RIGHTS
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(Title of Class)
AMERICAN STOCK EXCHANGE
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Name of each exchange on which each class
is to be registered
Securities to be registered pursuant to Section 12(g) of the Act:
NONE
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(Title of Class)
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Item 1. Description of Securities to be Registered.
On September 30, 1990, the Board of Directors (the "Board") of Koger
Equity, Inc. (the "Company") declared a dividend of one Common Stock purchase
right (a "Right") for every outstanding share of the Company's common stock, par
value $.01 per share, (the "Common Stock"). The Rights were distributed to
stockholders of record as of the close of business on October 11, 1990 (the
"Dividend Record Date"). The terms of the Rights are set forth in a Common Stock
Rights Agreement (the "Rights Agreement") between the Company and Wachovia Bank
and Trust Company, N.A., the initial rights agent whose successor is First Union
National Bank of North Carolina, a national association, (the "Rights Agent")
appointed pursuant to First amendment to Koger Equity, Inc. Common Stock Rights
Agreement, dated as of March 22, 1993 (the "First Amendment"). The Rights
Agreement provided for the issuance of one Right for every share of Common Stock
issued and outstanding on the Dividend Record Date and for each share of Common
Stock which was or is issued after that date and prior to the "Distribution
Date" (as defined below).
Each Right entitles the holder to purchase from the Company one share
of Common Stock at a price of $50 per share, subject to adjustment. The Rights
will expire on September 30, 2000 (the "Expiration Date"), or the earlier
redemption of the Rights, and are not exercisable until the Distribution Date.
No separate Rights certificates have been issued. Until the
Distribution date (or earlier redemption or expiration of the Rights), (i) the
Rights will be evidenced by the Common Stock certificates and will be
transferred with and only with such Common Stock certificates, (ii) new Common
Stock certificates issued after the Dividend Record Date upon transfer or new
issuance of the Company's Common Stock contained a notation incorporating the
Rights Agreement by reference and (iii) the surrender for transfer of any of the
Company's Common Stock certificates also constitutes the transfer of the Rights
associated with the Common Stock represented by such certificate.
The Rights will separate from the Common Stock and Rights certificates
will be issued on the Distribution Date. Unless otherwise determined by a
majority of the Continuing Directors (as defined below), the Distribution Date
will occur on the earlier of (i) the fifteenth business day following the later
of the date of a public announcement that a person, including affiliates or
associates or associates of such person (an "Acquiring Person"), except as
described below, has acquired or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding shares of Common Stock or the date
on which an executive officer of the Company has actual knowledge that an
Acquiring Person became such (the "Stock Acquisition Date") or (ii) the
fifteenth business day following commencement of a tender offer or exchange
offer that would result in any person or its affiliates and associates owning
15% or more of the Company's outstanding Common Stock. In any event, the Board
of Directors may delay the distribution of the certificates. After the
Distribution Date, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to holders of record of the Company's Common Stock
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as of the close of business on the Distribution Date and such separate Rights
Certificates alone will evidence the Rights. "Continuing Director" shall mean
any director of the Company who was either (i) a Director prior to the time a
Person becomes an Acquiring Person and is not an Affiliate of such Person or
(ii) nominated for his or her term of office by a majority of the Continuing
Directors in office at the time of such nomination.
Pursuant to the Second Amendment to the Koger Equity, Inc. Common Stock
Rights Agreement, dated as of December 21, 1993, (the "Second Amendment"), TCW
Special Credits, a California general partnership, the TCW Group, Inc. and their
Affiliates (collectively "TCW") will not be considered an Acquiring Person, and
shall be an "Exempt Person", but only so long as TCW is the Beneficial Owner of
shares of Common Stock outstanding in an amount not in excess of an aggregate of
the higher of (i) 23% of the shares of Common Stock then outstanding and (ii)
4,047,350 shares of Common Stock, as adjusted for any stock splits, stock
dividends or other recapitalizations of the Company on or after December 21,
1993. Pursuant to Amendment No. 3 to the Rights Agreement, dated as of October
10, 1996 (the "Third Amendment"), collectively (x) AP-KEI Holdings, LLC, a
Delaware limited liability company ("Apollo"), and its Affiliates [as that term
is defined in the Stock Purchase Agreement dated as of October 10, 1996 between
the Company and Apollo (the "Stock Purchase Agreement")] will not be considered
an Acquiring Person, and shall be an "Exempt Person", but only so long as
neither Apollo nor any of its Affiliates (as defined in the Stock Purchase
Agreement) is the Beneficial Owner (as defined in the Stock Purchase Agreement)
of any Prohibited Security (as defined in the Stock Purchase Agreement) and (y)
any person who is an Affiliate of Apollo to the extent that such Affiliate would
be an Acquiring Person as a result of Beneficially Owning any Permitted
Securities (as defined in the Stock Purchase Agreement) will not be considered
an Acquiring Person and shall be an Exempt Person. At October 10, 1996, the TCW
Group, Inc. and their affiliates beneficially own approximately 3.28% of the
outstanding Common Stock. At October 10, 1996, Apollo and its Affiliates
beneficially own 22.57% of the outstanding Stock with the right to acquire an
additional 2.43% or in the aggregate 25% of the outstanding Common Stock either
from the Company or in the market at the option of the Company which holdings
would be Permitted Securities (as defined in the Stock Purchase Agreement). In
addition, any employee benefit plan of the Company will not be considered an
Acquiring Person. Under the provisions described above, the continued holding of
such shares by Exempt Persons will not cause the Rights to be exercisable. Any
transfer of shares held by an Exempt Person to a third party who, after such
transfer, beneficially owns 15% or more of the outstanding shares of Common
Stock would cause the Rights to become exercisable, except in the case of a
foreclosure by a pledgee of Apollo or its Affiliates of Permitted Securities (as
defined in the Stock Purchase Agreement) if such pledgee purchases the
securities at the foreclosure sale, in which case the pledgee may only vote the
Permitted Securities in accordance with the recommendation of the Company's
Board of Directors. In addition, any institution of a tender or exchange offer
by an Exempt Person would also trigger the exercisability of the Rights.
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If, at any time after the Stock Acquisition Date, the Company were
acquired in a merger or other business combination, or more than 25% of its
assets or earning power were sold, each holder of a Right would have the right
to exercise such Right and thereby receive common stock of the acquiring company
with a market value of two times the exercise price of the Right. For example,
if the exercise price is $50, the holder of each Right would be entitled to
receive $100 in market value of the acquiring company's common shares (e.g., 10
shares if the per share market value is $10) for $50. Also, in the event that
(i) any person or group or affiliated or associated persons (other than the
Company, its subsidiaries, employee benefit plans and an Exempt Person) shall
become an Acquiring Person, or (ii) an Acquiring Person engages in one of a
number of self-dealing transactions specified in the Rights Agreement, each
holder of a Right will, upon payment of the exercise price, have the right to
receive shares of the Company's Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a market value of two
times the exercise price of the Right. If the exercise price is $50, the holder
of each right would be entitled to receive $100 in market value of the Company's
common stock for $50. Following the occurrence of any of the events described in
this paragraph (as defined in the Rights Agreement, a "Common Stock Event"), any
rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person (or any affiliates,
associates or transferees of any Acquiring Person) shall immediately become null
and void.
The Board may, at its option, at any time after any Person becomes an
Acquiring Person, exchange all or part of the then outstanding and exercisable
Rights for shares of Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date of declaration of the
Rights (such exchange ratio being hereinafter referred to as the "Exchange
Ratio"). The Board, however, may not effect an exchange at any time after any
person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, any entity holding Common
Stock for or pursuant to the terms of any such plan or any Exempt Person),
together with all affiliates of such Person, becomes the beneficial owner of 50%
or more of the Common Stock then outstanding. Immediately upon the action of the
Board ordering the exchange of any Rights and without any further action and
without any notice, the right to exercise such Rights will terminate and the
only right thereafter of a holder of such Rights will be to receive that number
of shares of Common Stock equal to the number of such Rights held by the holder
multiplied by the Exchange Ratio.
The exercise price of the Rights, and the number of whole or fractional
shares of the Common Stock or other securities or property issuable upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision, combination
or reclassification of, the Common Stock, (ii) upon the grant to holders of the
Common Stock of certain rights or warrants to subscribe for shares of the Common
Stock or convertible securities at less than the current market price of the
Common Stock of evidences of indebtedness or assets (excluding cash dividends
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paid out of the earnings or retained earnings of the Company and certain other
distributions) or of subscription rights or warrants (other than those referred
to above).
With certain exceptions, no adjustments in the exercise price of the
Rights will be required until cumulative adjustments equal at least 1% in such
price. The Company is not obligated to issue fractional shares of any securities
upon the exercise of the Rights and, in lieu thereof, at the election of the
Company, an adjustment in cash may be made based on the market price of such
securities on the last trading date prior to the date of exercise.
At any time prior to the Expiration Date, the Company, by a majority
vote of the Continuing Directors then in office, may redeem the Rights at a
redemption price of $.01 per Right (the "Redemption Price"), as described in the
Rights Agreement. Immediately upon the action of the Continuing Directors
electing to redeem the Rights, the right to exercise the Rights will terminate
and the only right of the holders of Rights will be to receive the Redemption
Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
Neither the distribution of the Rights nor the subsequent separation of
the Rights on the Distribution Date will be a taxable event for the Company or
its stockholders. Holders of Rights may, depending upon the circumstances,
recognize taxable income upon the occurrence of a Common Stock Event. In
addition, holders of Rights may have taxable income as a result of (i) an
exchange by the Company of shares of Common Stock for Rights as described above
or (ii) certain anti-dilution adjustments made to the terms of the Rights after
the Distribution Date. A redemption of the Rights would be a taxable event to
holders.
The Rights Agreement may be amended by the Continuing Directors at any
time prior to the Distribution Date without the approval of the holders of the
Rights, provided, however no amendment may prejudice the rights of an Exempt
Person. From and after the Distribution Date, the Rights Agreement may be
amended without the approval of the holders of the Rights in order to cure any
ambiguity, to correct any defective or inconsistent provisions, to change any
time period for redemption or any other time period under the Rights Agreement
or to make any other changes that do not adversely affect the interests of the
holders of the Rights (other than any Acquiring Person or its affiliates,
associates or transferees).
As of October 10, 1996, there were 20,884,776 shares of Common Stock
outstanding. Each share of Common Stock outstanding on the Dividend Record Date
received one Right. As long as the Rights are attached to the Common Stock, the
Company has issued and will issue one Right with each newly issued share of
Common Stock so that all shares of Common Stock outstanding on the Distribution
Date will have attached Rights.
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The exercise of the Rights may have certain anti-takeover effects. The
Rights distribution will not be dilutive of shareholder's ownership of the
Company and will not affect reported earnings per share. The Company will
receive no proceeds from the distribution of the Rights.
The Rights Agreement (including as exhibits thereto the form of Rights
Certificate and the Summary of Rights) and the First Amendment and the form of
Second Amendment specifying the terms of the Rights are attached hereto as
exhibits hereto and are hereby incorporated herein by reference. The foregoing
description of the Rights does not purport to be complete and therefore is
qualified in its entirety by reference to such exhibits.
Item 2. Exhibits.
The exhibits which are filed with this amendment are set forth in the
Exhibit Index which appears at page 8 hereof.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this amendment to the registration
statement to be signed on its behalf by the undersigned, thereto duly
authorized.
KOGER EQUITY, INC.
Date: November 7, 1996 By: ___________________________
W. Lawrence Jenkins
Vice President/Administration
and Corporate Secretary
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EXHIBIT INDEX
The following designated exhibits are filed herewith:
Exhibits
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1. Rights Agreement ("Rights Agreement") dated
as of September 30, 1990 between the Koger
Equity, Inc. (the "Company") and Wachovia
Bank and Trust Company, N.A. as Rights Agent.*
2. Form of Common Stock Purchase Rights
Certificate (attached as Exhibit A to the Rights
Agreement). Pursuant to the Rights Agreement,
printed Common Stock Purchase Rights
Certificates will not be mailed until the
Distribution Date (as defined in the Rights
Agreement).*
3. Summary of Common Stock Purchase Rights
(attached as Exhibit B to the Rights Agreement).*
4. First Amendment to Koger Equity, Inc.
Common Stock Rights Agreement dated as of March 22,
1993, between the Company and First Union National
Bank of North Carolina, a national association.**
5. Second Amendment to Koger Equity, Inc.
Common Stock Rights Agreement dated as of
December 21, 1993, between the Company
and First Union National Bank of North
Carolina, a national association.**
6. Amendment No.3 to Rights Agreement dated
as of October 10, 1996, between the Company
and First Union National Bank of North
Carolina, a national association.***
* Filed with original Form 8-A
** Filed with amendment on Form 8-A/A,
dated December 21, 1993
*** Filed herewith
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EXHIBIT INDEX (Continued)
Exhibits
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7. Stock Purchase Agreement, dated as of October
10, 1996, between the Company and AP-KEI
Holdings, LLC.***
* Filed with original Form 8-A
** Filed with amendment on Form 8-A/A,
dated December 21, 1993
*** Filed herewith
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Exhibit 6
Amendment No. 3 to the Rights Agreement
---------------------------------------
This Amendment, dated as of October 10, 1996, amends the Common Stock
Rights Agreement dated as of September 30, 1990, as amended by the First
Amendment thereto dated as of March 22, 1993 and the Second Amendment thereto
dated as of December 21, 1993 (the "Rights Agreement"), between Koger Equity,
Inc., a Florida corporation (the "Company"), and First Union National Bank of
North Carolina, as successor Rights Agent (the "Rights Agent"). Terms defined in
the Rights Agreement and not otherwise defined herein are used herein as so
defined.
W I T N E S S E T H:
--------------------
WHEREAS, on September 30, 1990 the Board of Directors of the Company
authorized the issuance of Rights to purchase, on the terms and subject to the
provisions of the Rights Agreement, shares of the Company's Common Stock; and
WHEREAS, on September 30, 1990, the Board of Directors of the Company
authorized and declared a dividend distribution of one Right for every share of
Common Stock of the Company outstanding on the Dividend Record Date and
authorized the issuance of one Right (subject to certain adjustments) for each
share of Common Stock of the Company issued between the Dividend Record Date and
the Distribution Date; and
WHEREAS, the Distribution Date has not occurred; and
WHEREAS, pursuant to Section 27 of the Rights Agreement, the Continuing
Directors have unanimously approved an amendment of certain provisions of the
Rights Agreement as set forth below;
NOW, THEREFORE, the Rights Agreement is hereby amended as follows:
1. Section 1(v) is amended by adding to the end thereof the
following:
"; and collectively (x) AP-KEI Holdings, LLC, a Delaware
limited liability company ("Apollo"), and its Affiliates (as that term
is defined in the Stock Purchase Agreement dated as of October 10, 1996
between the Company and Apollo (the "Stock Purchase Agreement")), only
so long as neither Apollo nor any of its Affiliates (as defined in the
Stock Purchase Agreement) is the Beneficial Owner (as defined in the
Stock Purchase Agreement) of any Prohibited Security (as defined in the
Stock Purchase Agreement) and (y) any person who is an Affiliate of
Apollo to the extent that
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such Affiliate would be an Acquiring Person as a result of Beneficially
Owning any Permitted Securities (as defined in the Stock Purchase
Agreement)."
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 3
to the Rights Agreement to be duly executed as of the day and year first above
written.
KOGER EQUITY, INC.
By: s/Victor A. Hughes, Jr.
-----------------------
Title: Chairman of the Board
Attest:
By: s/W. Lawrence Jenkins
---------------------
Secretary
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By: Eleanor G. Autry
----------------
Title: Vice President
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Exhibit 7
Execution Counterpart
================================================================================
STOCK PURCHASE AGREEMENT
between
AP-KEI HOLDINGS, LLC
and
KOGER EQUITY, INC.
October 10, 1996
================================================================================
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TABLE OF CONTENTS
PAGE
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SECTION 1. PURCHASE AND SALE OF COMMON STOCK......................................................1
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................................2
2.1. Corporate Organization...........................................................2
2.2. Subsidiaries.....................................................................2
2.3. SEC Reports......................................................................3
2.4. Financial Statements.............................................................3
2.5. Absence of Certain Changes or Events.............................................3
2.6. Undisclosed Liabilities..........................................................4
2.7. Capitalization...................................................................4
2.8. Corporate Proceedings, etc.......................................................5
2.9. Board of Directors...............................................................6
2.10. Consents and Approvals...........................................................6
2.11. Absence of Defaults, Conflicts, etc..............................................7
2.12. Compliance with Law..............................................................7
2.13. REIT Status......................................................................8
2.14. Litigation.......................................................................8
2.15. Private Offering.................................................................9
2.16. Asset Base.......................................................................9
2.17. Broker's or Finder's Commissions.................................................9
SECTION 3. REPRESENTATIONS AND WARRANTIES OF APOLLO...............................................9
3.1. Corporate Organization...........................................................9
3.2. Apollo's Ownership of the Company Securities....................................10
3.3. Corporate Proceedings, etc......................................................10
3.4. Consents and Approvals..........................................................10
3.5. Absence of Defaults, Conflicts, etc.............................................11
3.6. Compliance with Law.............................................................11
3.7. Litigation......................................................................11
3.8. Private Offering................................................................11
SECTION 4. COMPANY COVENANTS.....................................................................12
4.1. Use of Proceeds.................................................................12
4.2. Board of Directors..............................................................12
4.3. Takeover Defenses...............................................................13
4.4. Subscription Right..............................................................14
4.5. Termination of Company Covenants................................................15
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SECTION 5. APOLLO COVENANTS......................................................................15
5.1. Standstill Agreements...........................................................15
5.2. Lockup Agreement................................................................17
5.3. Resale of Securities............................................................18
5.4. Consent Solicitation............................................................18
5.5. Special Purpose Entity..........................................................18
5.6. Limitations on Ownership and Voting.............................................18
SECTION 6. ADDITIONAL COVENANTS..................................................................19
6.1. Further Assurance...............................................................19
6.2. Financial and Business Information..............................................19
6.3. Inspection......................................................................20
6.4. Keeping of Books................................................................20
6.5. Lost, etc. Certificates Evidencing Shares; Exchange.............................21
6.6. Confidentiality.................................................................21
SECTION 7. INTERPRETATION OF THIS AGREEMENT......................................................21
7.1. Terms Defined...................................................................21
7.2. Accounting Principles...........................................................25
7.3. Directly or Indirectly..........................................................25
7.4. Governing Law...................................................................25
7.5. Paragraph and Section Headings..................................................25
SECTION 8. TERMINATION AND SURVIVAL..............................................................26
8.1. Termination.....................................................................26
8.2. Survival of Representations and Warranties......................................26
SECTION 9. MISCELLANEOUS.........................................................................26
9.1. Notices.........................................................................26
9.2. Expenses and Taxes..............................................................27
9.3. Reproduction of Documents.......................................................27
9.4. Successors and Assigns..........................................................27
9.5. Notice of Proposed Action; Equitable Remedies...................................28
9.6. Attorneys' Fees.................................................................28
9.7. Entire Agreement; Amendment and Waiver..........................................29
9.8. Limitation on Enforcement of Remedies...........................................29
9.9. Counterparts....................................................................30
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EXHIBIT A Registration Rights Agreement
EXHIBIT B(1) Opinion of Boling & McCart, a professional association,
counsel to the Company
EXHIBIT B(2) Opinion of Ropes & Gray, counsel to the Company
EXHIBIT C Articles of Incorporation of the Company
EXHIBIT D Amended and Restated Bylaws of the Company
EXHIBIT E(1) Form of Assignment and Assumption Agreement
EXHIBIT E(2) Form of Assignment and Assumption Agreement
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KOGER EQUITY, INC.
STOCK PURCHASE AGREEMENT
Dated as of October 10, 1996
AP-KEI Holdings, LLC
Two Manhattanville Road
Purchase, New York 10577
Dear Sirs:
Koger Equity, Inc., a Florida corporation (the "Company"), hereby
agrees with AP- KEI Holdings, LLC, a Delaware limited liability company
("Apollo"), as follows:
SECTION 1. PURCHASE AND SALE OF COMMON STOCK
---------------------------------
1.1. Upon the terms and subject to the conditions set forth in this
Agreement, and in reliance upon the Company's and Apollo's representations set
forth below, at the Closing (as defined below) the Company shall issue and sell
to Apollo, and Apollo shall purchase from the Company, 3,000,000 shares of its
common stock, par value $.01 per share (the "Common Stock"), at a price of
fourteen dollars and fifty cents ($14.50) per share for an aggregate cash
purchase price of forty three million five hundred thousand dollars
($43,500,000) (the "Purchase Price") (such shares, collectively, the "Shares").
Such sale and purchase shall be effected on the Closing Date by the Company's
delivering to Apollo, duly registered in its name (or in the name of its nominee
designated by Apollo prior to the Closing Date), a duly executed stock
certificate evidencing the Shares being purchased by it, against delivery by
Apollo to the Company of the Purchase Price by wire transfer of immediately
available funds to such account as the Company shall designate prior to the
Closing Date.
1.2. Concurrently with the sale and purchase of the Shares, (i) the
Company and Apollo shall execute the Registration Rights Agreement, the form of
which is attached as Exhibit A hereto (the "Registration Rights Agreement"), and
(ii) Apollo shall receive from the Company's counsel, Boling & McCart, a
professional association and Ropes & Gray, opinions, dated the Closing Date, the
form of which is attached as Exhibits B(1) and B(2) hereto.
1.3. The closing of such sale and purchase (the "Closing") shall take
place at 10:00 A.M., New York City time, on the date of this Agreement or such
other date as Apollo and the Company agree in writing (the "Closing Date"), at
the offices of Willkie Farr & Gallagher, 153 East 53rd Street, New York, New
York, or such other location as Apollo and the Company shall mutually select.
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SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to Apollo that:
2.1. Corporate Organization
----------------------
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida. Attached
hereto as Exhibits C and D, respectively, are true and complete copies of the
Amended and Restated Articles of Incorporation and the Amended and Restated
Bylaws of the Company, as amended through the date hereof (collectively, the
"Organizational Documents").
(b) The Company has all requisite power and authority and
has all necessary approvals, licenses, permits and authorizations to own its
properties and to carry on its business as now conducted. The Company has all
requisite power and authority to execute and deliver this Agreement and to
perform its obligations hereunder.
(c) The Company has filed all necessary documents to qualify
to do business as a foreign corporation in, and the Company is in good standing
under the laws of each jurisdiction in which the conduct of the Company's
business or the nature of its properties requires such qualification, except
where the failure to so qualify would not have a material adverse effect on the
business, properties, results of operations or financial condition of the
Company and its subsidiaries taken as a whole (a "Material Adverse Effect").
2.2. Subsidiaries
------------
Except as set forth on Schedule 2.2, the Company has no subsidiaries
and no interests or investments in any partnership, trust or other entity or
organization. Each subsidiary of the Company and each other entity and
organization listed on Schedule 2.2 has been duly organized, is validly existing
and in good standing under the laws of the jurisdiction of its organization, has
the corporate power and authority to own its properties and to conduct its
business and is duly registered, qualified and authorized to transact business
and is in good standing in each jurisdiction in which the conduct of its
business or the nature of its properties requires such registration,
qualification or authorization; all of the outstanding equity or other
participating interests of each subsidiary and each other entity and
organization listed on Schedule 2.2 have been duly authorized and validly
issued, are fully paid and non-assessable, and, to the extent owned by the
Company as indicated on Schedule 2.2, are owned free and clear of any mortgage,
pledge, lien, encumbrance, security interest, claim or equity.
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2.3. SEC Reports
-----------
The Company has caused to be delivered to Apollo copies of the
Company's Annual Report on Form 10-K for the fiscal years ended December 31,
1993, 1994 and 1995, Quarterly Reports on Form 10-Q for each of the first two
fiscal quarters of the Company's current fiscal year, the Company's Proxy
Statement for its annual meeting of shareholders held on May 7, 1996 and such
Reports on Form 8-K as the Company has filed during the period between January
1, 1996 and the date hereof, and will cause to be delivered to Apollo copies of
such additional documents as may be filed by the Company pursuant to the
Exchange Act on or prior to the Closing Date (collectively, the "SEC Reports").
The SEC Reports were, and those delivered prior to the Closing will be, prepared
and filed in compliance with the rules and regulations promulgated by the SEC
under the Exchange Act, and do not and will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
in order to make the statements contained therein, in light of the circumstances
under which they were made or will be made, not misleading.
2.4. Financial Statements
--------------------
The audited consolidated balance sheets of the Company and its
subsidiaries and the related notes thereto as of December 31, 1993, 1994 and
1995 and the unaudited consolidated balance sheet of the Company and its
subsidiaries and the related notes thereto as at June 30, 1996 (the "Unaudited
Consolidated Balance Sheet") present fairly the financial position of the
Company and its subsidiaries as at the dates thereof, and the related
consolidated statements of operations, changes in shareholders' equity, and cash
flows, for the fiscal periods ended on such dates, including, with respect to
all of the foregoing, the related notes thereto, present fairly the consolidated
financial position, the results of operations, cash flows and changes in
financial position of the Company and its subsidiaries for the respective
periods indicated. All such financial statements, including the schedules and
notes thereto, were prepared in accordance with generally accepted accounting
principles ("GAAP") applied consistently throughout the periods involved.
2.5. Absence of Certain Changes or Events
------------------------------------
Except as disclosed in the SEC Reports filed with the SEC prior to the
date hereof or in Schedule 2.5, since June 30, 1996, the Company and each of its
subsidiaries has conducted its business only in the ordinary course of such
business and has not (i) sold or acquired any real estate or (ii) leased all or
substantially all of any property or (iii) entered into any financing
arrangements in connection therewith or (iv) granted an option to purchase or
lease all or substantially all of any property or (v) entered into a contract to
do any of the foregoing and there has not been (a) any change, circumstance or
event that has resulted in a Material Adverse Effect or (b) any declaration,
setting aside or payment of any dividend or other distribution with respect to
the Common Stock.
-3-
<PAGE>
2.6. Undisclosed Liabilities
-----------------------
Except as set forth on Schedule 2.6, neither the Company nor any
subsidiary has any material liabilities or obligations of any nature (whether
absolute, accrued, contingent or otherwise) except for (i) liabilities or
obligations reflected or reserved against in the Unaudited Consolidated Balance
Sheet, (ii) liabilities and obligations relating to outstanding leases that are
not required to be disclosed under GAAP and (iii) current liabilities incurred
in the ordinary course of business since the date of such balance sheet.
2.7. Capitalization
--------------
(a) On the date hereof, the authorized capital stock of the
Company consists of 100,000,000 shares of its Common Stock and 50,000,000 shares
of preferred stock, par value $.01 per share (the "Preferred Stock"). The issued
and outstanding shares of capital stock of the Company as of the close of
business on the date one (1) Business Day prior to the Closing Date consisted of
17,881,556 shares of Common Stock, and the Company has not issued any shares of
Common Stock since that date except for shares issued as a result of the
exercise of any warrants, options or convertible securities or shares issued in
connection with the Company's Monthly Stock Investment Plan which are listed on
Schedule 2.7. No shares of Preferred Stock are outstanding.
(b) All the outstanding shares of capital stock of the
Company have been duly and validly issued and are fully paid and non-assessable.
Upon issuance, sale and delivery as contemplated by this Agreement, the Shares
will be duly authorized, validly issued, fully paid and non-assessable shares of
the Company, free and clear of any mortgage, pledge, lien, encumbrance, security
interest, claim or rights or interests of any third party of any nature
whatsoever.
(c) Except for the conversion rights which attach to the
warrants, options and convertible securities which are listed on Schedule 2.7
hereto and except for rights pursuant to the Company's Common Stock Rights
Agreement, dated as of September 30, 1990 (as amended from time to time, the
"Rights Agreement") and rights pursuant to the Company's Monthly Stock
Investment Plan, on the Closing Date (after giving effect to the issuance of the
Shares) there will be no shares of Common Stock or any other equity security of
the Company issuable upon conversion or exchange of any security of the Company
nor will there be any rights, options or warrants outstanding or other
agreements to acquire shares of Common Stock nor will the Company be
contractually obligated to purchase, redeem or otherwise acquire any of its
outstanding shares. No shareholder of the Company is entitled to any preemptive
or similar rights to subscribe for shares of capital stock of the Company other
than those rights of Apollo existing pursuant to this Agreement.
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<PAGE>
2.8. Corporate Proceedings, etc.
---------------------------
(a) The Company has authorized the execution, delivery and
performance of this Agreement and each of the transactions and agreements
contemplated hereby. No other corporate action (including shareholder approval)
is necessary to authorize such execution, delivery and performance, and upon
such execution and delivery this Agreement, the Registration Rights Agreement
and the Amended Rights Agreement shall constitute the valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms. The Company has authorized the issuance and delivery of the Shares
in accordance with this Agreement.
(b) The Company has duly taken such actions under Florida
law so that the execution and delivery of this Agreement, and the acquisition,
from time to time, by Apollo or its Affiliates of the Permitted Securities shall
not be an "affiliated transaction" under the provisions of ss.607.0901 of the
Florida Business Corporation Act (the "FBCA") or a "control share acquisition"
by Apollo or its Affiliates under the provisions of ss. 607.0902 of the Florida
Business Corporation Act; provided, however, that: (a) nothing in this Agreement
shall preclude the application of either of ss.607.0901 or ss.607.0902 to any
other transaction not expressly permitted under this Agreement, whether
involving Apollo or any of its Affiliates or otherwise; and (b) in the event
that Apollo or any of its Affiliates shall, at any time, be the Beneficial Owner
of any security of the Company, including without limitation, any share of
Common Stock, which is not a Permitted Security (each a "Prohibited Security"
and collectively "Prohibited Securities"), then all Permitted Securities shall
be aggregated with all Prohibited Securities in calculating whether Apollo and
its Affiliates engage or have engaged in an "affiliated transaction" or a
"control share acquisition", as the case may be. The Company has provided Apollo
with a copy of the resolutions of the Board of Directors of the Company (the
"Board of Directors") that carry out the actions described by this Section
2.8(b).
(c) The Company has duly amended the Rights Agreement (the
"Amended Rights Agreement") such that the definition of "Exempt Person"
thereunder includes (i) Apollo and its Affiliates so long as neither Apollo nor
any of its Affiliates is the Beneficial Owner of any Prohibited Security and
(ii) any person who is an "Affiliate" (using in this clause (ii) only the term
as defined in the Rights Agreement) of Apollo to the extent that such
"Affiliate" would be an Acquiring Person (as defined in the Rights Agreement) as
a result of "Beneficially Owning" (as defined in the Rights Agreement) any
Permitted Securities; provided, however, that, in the event that Apollo or any
Affiliate shall, at any time, Beneficially Own any Prohibited Security, then:
(a) nothing in this Agreement shall preclude the Company from amending and
restating the Rights Agreement in any way or adopting a new rights agreement;
and (b) all Permitted Securities shall be aggregated with all Prohibited
Securities in calculating the number of securities of the Company, including,
without
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<PAGE>
limitation, Common Stock, of which Apollo and its Affiliates are Beneficial
Owners for purposes of the Rights Agreement. The Company has provided Apollo
with a copy of the Amended Rights Agreement.
(d) The Company has duly taken all such actions under its
Amended and Restated Articles of Incorporation as are necessary such that the
Permitted Securities beneficially owned from time to time by Apollo and its
Affiliates shall not be deemed to be "Excess Shares", as such term is defined
therein; provided, however, that: (a) nothing in this Agreement shall preclude
the application of the Excess Share provision of the Amended and Restated
Articles of Incorporation, as in effect on the date hereof or as amended or
restated from time to time (the "Articles"), to any other acquisition of shares
of securities of the Company not expressly permitted under this Agreement,
whether by Apollo or any of its Affiliates or otherwise; and (b) in the event
that Apollo or any of its Affiliates shall, at any time, become the Beneficial
Owner of any Prohibited Security, the Permitted Securities may, to the extent
provided in the Articles, be aggregated with any Prohibited Securities in
calculating the number of shares of securities of the Company, including,
without limitation, Common Stock, for purposes of any calculation under the
Articles, including, without limitation, any so-called Excess Share calculation.
The Company has provided Apollo with a copy of the resolutions of the Board of
Directors that carry out the actions described by this Section 2.8(d).
2.9. Board of Directors
------------------
Effective immediately following the Closing, the Board of Directors of
the Company (the "Board of Directors") consists of twelve (12) directors,
including Messrs. William L. Mack, Lee S. Neibart and W. Edward Scheetz, who
have been duly elected as Disinterested Directors to the Board of Directors by
the affirmative vote of at least seven directors (each named person, together
with any person from time to time designated by Apollo to replace such person,
provided that each such designee is reasonably acceptable to the Board of
Directors, is herein referred to as an "Apollo Director"). The foregoing
election has been expressly conditioned upon the Closing under this Agreement,
and no Apollo Director shall serve as a director on the Board of Directors until
immediately following the Closing.
2.10. Consents and Approvals
----------------------
The execution and delivery by the Company of this Agreement, the
performance by the Company of its obligations hereunder and the consummation by
the Company of the transactions contemplated hereby do not require the Company
or any of its subsidiaries to obtain any consent, approval or action of, or make
any filing with or give any notice to, any corporation, person or firm or any
public, governmental or judicial authority except (a) as set forth in Schedule
2.10; and (b) such as have been duly obtained or made, as the case may be, and
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<PAGE>
are in full force and effect on the date hereof and will continue to be in full
force and effect on the Closing Date; and (c) such as would not have a Material
Adverse Effect or an Apollo Material Adverse Effect following the Closing.
2.11. Absence of Defaults, Conflicts, etc.
------------------------------------
The execution and delivery of this Agreement does not, and the
fulfillment of the terms hereof by the Company, and the issuance of the Shares
will not, (i) result in a breach of any of the terms, conditions or provisions
of, or (ii) constitute a default under, or (iii) permit the acceleration of
rights under or termination of, any indenture, mortgage, deed of trust, credit
agreement, note or other evidence of indebtedness, or other agreement of the
Company or any of its subsidiaries (collectively the "Agreements and
Instruments"), or the Organizational Documents, or any rule or regulation of any
court or federal, state or foreign regulatory board or body or administrative
agency having jurisdiction over the Company or any of its subsidiaries or over
their respective properties or businesses, which breach, default, acceleration
of rights or termination would have a Material Adverse Effect or an Apollo
Material Adverse Effect following the Closing. To the Company's knowledge, no
event has occurred and no condition exists which, upon notice or the passage of
time (or both), would constitute a default under any such Agreements and
Instruments or in any license, permit or authorization to which the Company or
any subsidiary is a party or by which any of them may be bound.
2.12. Compliance with Law
-------------------
(a) Subject to such matters as are identified in the SEC
Reports relating to governmental rules and regulations promulgated under the
Americans with Disabilities Act and environmental laws, neither the Company nor
any of its subsidiaries nor any property owned by them is in material violation
of any laws, ordinances, governmental rules or regulations to which it is
subject, including without limitation laws or regulations relating to the
environment or to occupational health and safety, and no material expenditures
are or will be required in order to cause its current operations or properties
to comply with any such law, ordinances, governmental rules or regulations.
There is no continuing order, injunction or decree to which the Company or any
of its subsidiaries is subject or by which any of their assets is bound, and to
the best knowledge of the Company neither the Company nor any of its
subsidiaries is subject to, or the target of, any inquiry or investigation which
could result in any such order, injunction or decree.
(b) To the Company's knowledge, the Company and its
subsidiaries have all licenses, permits, franchises or other governmental
authorizations necessary to the ownership of their property or to the conduct of
their respective businesses, which if violated or not obtained might have a
Material Adverse Effect. To the Company's knowledge, neither the Company nor any
subsidiary has been finally denied any application for any such licenses,
permits, franchises or other governmental authorizations necessary to its
business.
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<PAGE>
2.13. REIT Status
-----------
(a) To the Company's knowledge, which is principally based
on information provided by stockholders, as of the date hereof, (i) the Company
is a "domestically-controlled" REIT within the meaning of the Code Section
897(h)(4)(B), and (ii) non-domestic persons Holding five percent (5%) or more of
the Common Stock are set forth in Schedule 2.13. To the Company's knowledge,
except as set forth in Schedule 2.13 and interests in the Company held by Apollo
that may be attributed to an "individual", no person or entity which would be
treated as an "individual" for purposes of Section 542(a)(2) of the Code (as
modified by Section 856(h) of the Code) owns or would be considered to own
(taking into account the ownership attribution rules under Section 544 of the
Code, as modified by Section 856(h) of the Code) in excess of 9.8% of the value
of the outstanding equity interest in the Company.
(b) (i) The Company was eligible to and did validly elect to
be taxed as a real estate investment trust ("REIT") for federal income tax
purposes beginning for calendar year 1993 and has met all of the requirements to
be treated as a REIT within the meaning of Sections 856-860 of the Code since
such time. The Company has met all requirements necessary to be treated as a
REIT for purposes of the income tax provisions of each of the states in which it
owns property or conducts business (to the extent any such state recognizes REIT
status). Each subsidiary of the Company is a Qualified REIT Subsidiary as
defined in Section 856(i) of the Code. Each subsidiary of the Company organized
as a partnership (and any other subsidiary that files tax returns as a
partnership for federal income tax purposes) was and continues to be classified
as a partnership for federal income tax purposes.
(ii) The Company has operated, and intends to
continue to operate, in such a manner as to qualify as a REIT for 1996.
(iii) The Company has not taken or omitted to take
any action which has resulted in a challenge to its status as a REIT, and no
challenge to the Company's status as a REIT is pending or, to the Company's
knowledge, threatened.
2.14. Litigation
----------
(a) Except for the matters described on Schedule 2.14, there
are no actions, suits, investigations or proceedings pending, or to the
knowledge of the Company, threatened, against the Company or its subsidiaries,
or any of their respective properties or assets, by or before any court,
arbitrator or governmental body, department, commission, board, bureau, agency
or instrumentality (i) which would question the validity of this Agreement or
the Registration Rights Agreement or any action taken or to be taken pursuant
hereto or thereto, or (ii) that would have a Material Adverse Effect.
(b) Neither the Company nor its subsidiaries is in default
with respect to any judgment, order, writ, injunction, decree or award which
would result in a Material Adverse Effect.
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<PAGE>
2.15. Private Offering
----------------
The offer, sale and issuance of the Shares are exempt from the
registration requirements of the Securities Act, and neither the Company nor any
authorized agent acting on its behalf will take any action hereafter that would
cause the loss of such exemption.
2.16. Asset Base
----------
The Company and its subsidiaries do not hold "non-exempt assets" (as
such term is used in Section 802.4 of the Hart-Scott-Rodino Act) with an
aggregate fair market value of more than $15,000,000.
2.17. Broker's or Finder's Commissions
--------------------------------
Except as set forth in Schedule 2.17, no broker's or finder's fee or
commission (whether payable in cash, any equity interest in the Company or any
of its subsidiaries, or any other form of compensation) will be payable by the
Company with respect to the issuance and sale of the Shares or the transactions
contemplated hereby.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF APOLLO
----------------------------------------
Apollo represents and warrants to the Company that:
3.1. Corporate Organization
----------------------
(a) Apollo is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware.
AP-MM KEI Holdings, LLC, the managing member of Apollo, is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware. Apollo Real Estate Investment Fund II, L.P., is a limited
liability partnership duly organized, validly existing and in good standing
under the laws of the State of Delaware (the "Fund"). AP-MM KEI Holdings, LLC
owns 1% of the equity interest in Apollo and the Fund owns the remaining 99% of
the equity interest in Apollo. Apollo Real Estate Advisors II, L.P. is a limited
liability partnership duly organized, validly existing and in good standing
under the laws of the State of Delaware ("Advisors"). Advisors is the general
partner of the Fund.
(b) Apollo has all requisite power and authority and has all
necessary approvals, licenses, permits and authorizations to own its properties
and to carry on its business as now conducted. Apollo has all requisite power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder.
(c) Apollo has filed all necessary documents to qualify to
do business as a foreign limited liability company in, and Apollo is in good
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<PAGE>
standing under the laws of, each jurisdiction in which the conduct of Apollo's
business or the nature of its properties requires such qualification, except
where the failure to so qualify would not have a material adverse effect on the
business, properties, results of operations or financial condition of Apollo and
its Affiliates taken as a whole (an "Apollo Material Adverse Effect").
3.2. Apollo's Ownership of the Company Securities
--------------------------------------------
As of the date hereof, Apollo and its Affiliates Beneficially Own
1,713,240 shares of the Company's Common Stock, which include (a) 582,598 shares
of the Company's Common Stock owned outright, which are the "Existing Apollo
Shares" and (b) options to purchase a total of 1,130,642 additional shares of
Common Stock, which are the Option Shares, under and pursuant to Apollo's right
under (i) that certain Option Agreement, dated as of May 22, 1996 by and between
Kronus Property Holdings, L.L.C., an Affiliate of Apollo ("Kronus"), and TCW
Special Credits, for itself and as general partner or investment manager for
certain entities (the "TCW Option") and (ii) that certain Option Agreement dated
as of May 24, 1996 by and between Kronus and Tyndall Partners (the "Tyndall
Option") (collectively, the TCW Option and the Tyndall Option are referred to
herein as the "Options"). The information contained in the Schedule 13D filed on
behalf of Apollo Real Estate Investment Fund II, L.P. on June 25, 1996, as
amended by Amendment No. 1 thereto dated August 20, 1996 describes all shares of
the Company's Common Stock and its Affiliates Beneficially Owned by Apollo and
its Affiliates other than the Shares and is true and correct in all material
respects.
3.3. Corporate Proceedings, etc.
---------------------------
Apollo has authorized the execution, delivery and performance of this
Agreement and each of the transactions and agreements contemplated hereby. No
other company action is necessary to authorize such execution, delivery and
performance, and upon such execution and delivery this Agreement and the
Registration Rights Agreement shall constitute the valid and binding obligations
of Apollo, enforceable against Apollo in accordance with their terms.
3.4. Consents and Approvals
----------------------
Except for the filing of an amendment to its Schedule 13D with the SEC
reporting the acquisition of the Shares and in reliance on the accuracy of the
representation made by the Company in Section 2.16, the execution and delivery
by Apollo of this Agreement, the performance by Apollo of its obligations
hereunder and the consummation by Apollo of the transactions contemplated hereby
do not require Apollo to obtain any consent, approval or action of, or make any
filing with or give any notice to, any corporation, person or firm or any
public, governmental or judicial authority except such as have been duly
obtained or made, as the case may be, and are in full force and effect on the
date hereof and will continue to be in full force and effect on the Closing
Date.
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<PAGE>
3.5. Absence of Defaults, Conflicts, etc.
------------------------------------
The execution and delivery of this Agreement does not, and the
fulfillment of the terms hereof by Apollo will not, (i) result in a breach of
any of the terms, conditions or provisions of, or (ii) constitute a default
under, or (iii) permit the acceleration of rights under or termination of, any
indenture, mortgage, deed of trust, credit agreement, note or other evidence of
indebtedness, or other agreement of Apollo, or the operating agreement, or any
rule or regulation of any court or federal, state or foreign regulatory board or
body or administrative agency having jurisdiction over Apollo or over its
properties or businesses. No event has occurred and no condition exists which,
upon notice or the passage of time (or both), would constitute a default under
any such indenture, mortgage, deed of trust, credit agreement, note or other
evidence of indebtedness, or other agreement of Apollo or in any license, permit
or authorization to which Apollo is a party or by which it may be bound.
3.6. Compliance with Law
-------------------
Apollo is not in material violation of any laws, ordinances,
governmental rules or regulations to which it is subject, including without
limitation laws or regulations relating to the environment or to occupational
health and safety, and no material expenditures are or will be required in order
to cause its current operations or properties to comply with any such law,
ordinances, governmental rules or regulations. There is no continuing order,
injunction or decree to which Apollo is subject or by which any of its assets is
bound, and to the best knowledge of Apollo it is not subject to, or the target
of, any inquiry or investigation which could result in any such order,
injunction or decree.
3.7. Litigation
----------
(a) There are no actions, suits, investigations or
proceedings pending, or to the knowledge of Apollo, threatened, against Apollo,
or any of its properties or assets, by or before any court, arbitrator or
governmental body, department, commission, board, bureau, agency or
instrumentality (i) which would question the validity of this Agreement or the
Registration Rights Agreement or any action taken or to be taken pursuant hereto
or thereto, or (ii) that would have an Apollo Material Adverse Effect.
(b) Apollo is not in default with respect to any judgment,
order, writ, injunction, decree or award which would result in an Apollo
Material Adverse Effect.
3.8. Private Offering
----------------
Apollo is acquiring the Shares for its own account for investment and
not with a view towards the resale, transfer or distribution thereof, nor with
any present intention of reselling, transferring or distributing the Shares;
provided, however, that subject to Section 5.2(a), any resale, transfer or
distribution of Apollo's property shall at all times be within Apollo's control,
and without prejudice to Apollo's right at all times to sell or otherwise
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<PAGE>
dispose of all or any part of such Shares under a registration under the
Securities Act or under an exemption from said registration available under the
Securities Act.
SECTION 4. COMPANY COVENANTS
-----------------
4.1. Use of Proceeds
---------------
The Company will apply all proceeds from the sale and issuance of the
Shares to the repayment of existing indebtedness to the extent required under
its existing agreements with lenders, except to the extent that any lenders may
waive such repayment. All remaining proceeds will be held by the Company for
general corporate purposes.
4.2. Board of Directors
------------------
(a) For so long as Apollo and its Affiliates Beneficially
Own at least 3,535,199 shares of Common Stock (before giving effect to any stock
dividends, stock splits or reverse stock splits), the Company will (i) cause the
Board of Directors to consist of no more than twelve (12) directors and (ii)
nominate and use its best efforts to elect and to cause to remain as
Disinterested Directors on the Board of Directors three (3) Apollo Directors.
(b) For so long as Apollo and its Affiliates Beneficially
Own at least 2,356,799 (but less than 3,535,199) shares of Common Stock (before
giving effect to any stock dividends, stock splits or reverse stock splits), the
Company will (i) cause the Board of Directors to consist of no more than twelve
(12) directors and (ii) nominate and use its best efforts to elect and to cause
two Apollo Directors to remain as Disinterested Directors on the Board of
Directors.
(c) For so long as Apollo and its Affiliates Beneficially
Own at least 1,178,400 (but less than 2,356,799) shares of Common Stock (before
giving effect to any stock dividends, stock splits or reverse stock splits), the
Company will (i) cause the Board of Directors to consist of no more than twelve
(12) directors and (ii) nominate and use its best efforts to elect and to cause
one Apollo Director to remain as a Disinterested Director on the Board of
Directors.
(d) The Company agrees to use its best efforts to cause a
majority of the Disinterested Directors to elect or designate an individual
designated by Apollo to fill any vacancy created by the death, disability,
retirement, resignation or removal of any Apollo Director, provided that each
such designee is reasonably acceptable to the Board of Directors.
(e) The Company will establish and maintain executive,
finance, audit and compensation committees of the Board of Directors, and shall
use its best efforts to elect, appoint or designate to each of such committees
and to any other committees maintained by the Company that number of Apollo
Directors that gives the Apollo Directors the same proportional representation
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<PAGE>
on any such committee as they otherwise have on the Board of Directors (but in
no case less than one Apollo Director). Notwithstanding the foregoing, no Apollo
Director shall be elected, appointed or designated to an independent committee
of the Board of Directors established for the purpose of reviewing (i) a
material proposed transaction between the Company and Apollo or any of its
Affiliates or Associates or (ii) compliance by the Company or Apollo or any of
its Affiliates with the terms of this Agreement (an "Independent Committee").
4.3. Takeover Defenses
-----------------
(a) So long as Apollo and its Affiliates Beneficially Own
only Permitted Securities, the Company shall take all such further actions under
Florida law as are necessary such that Sections 607.0901 and 607.0902 of the
Florida Business Corporation Act (or their successor provisions) relating to
affiliated transactions and control share acquisitions shall not apply to Apollo
and its Affiliates or the Company as a result of either the acquisition or
ownership by Apollo or its Affiliates of any Permitted Securities; provided,
however, that: (a) nothing in this Agreement shall cause the Company to take any
such actions to preclude the application of either of ss.607.0901 or ss.607.0902
to any other transaction not expressly permitted under this Agreement, whether
involving Apollo or its Affiliates or otherwise; and (b) in the event that
Apollo or any of its Affiliates shall, at any time, become the Beneficial Owner
of a Prohibited Security, then all Permitted Securities shall be aggregated with
all Prohibited Securities in calculating whether Apollo or its Affiliates engage
or have engaged in an "affiliated transaction" or a "control share acquisition",
as the case may be.
(b) So long as Apollo and its Affiliates Beneficially Own
only Permitted Securities, the Company will not, without the prior written
consent of Apollo, amend the Rights Agreement or adopt any new rights agreement;
provided, however, that: (a) nothing in this Agreement shall prevent the Company
from extending the expiration date of Rights granted under the Rights Agreement;
and (b) in the event that Apollo or any of its Affiliates shall, at any time,
become the Beneficial Owner of a Prohibited Security, then all Permitted
Securities shall be aggregated with all Prohibited Shares in calculating the
number of shares of securities of the Company, including, without limitation,
Common Stock, of which Apollo and its Affiliates are Beneficial Owners for
purposes of the Rights Agreement.
(c) So long as Apollo and its Affiliates Beneficially Own
only Permitted Securities, the Company will not, without the prior written
consent of Apollo, take, or fail to take, any action that causes any Permitted
Securities to be deemed "Excess Shares" under the Articles; provided, however,
that (a) nothing in this Agreement shall require the Company to take any such
actions to preclude the application of the Excess Share provision of the
Articles to any other transaction not expressly permitted under this Agreement,
whether involving Apollo or its Affiliates or otherwise; and (b) in the event
that Apollo shall, at any time, become the beneficial owner of any Prohibited
Security, then the Permitted Securities may, to the extent provided in the
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<PAGE>
Articles, be aggregated with any Prohibited Securities in calculating the number
of shares of securities of the Company, including, without limitation, Common
Stock for purposes of any calculation under the Articles, including, without
limitation, a so-called Excess Share calculation.
4.4. Subscription Right
------------------
If at any time during the term of this Agreement the Company issues
equity securities of any kind (the term "equity securities" shall include for
these purposes Common Stock and any warrants, options or other rights to acquire
equity securities (including Common Stock) and debt securities convertible into
equity securities) of the Company (other than the issuance of (a) securities
pursuant to the acquisition of another corporation by the Company by merger,
purchase of substantially all of the assets or other form of reorganization, (b)
shares of Common Stock issued pursuant to the Rights Agreement, to the extent
that Apollo is expressly excluded from receiving such shares by the terms of the
Rights Agreement, (c) Common Stock (or options or warrants to acquire Common
Stock) pursuant to an employee stock option plan, stock bonus plan, stock
purchase plan, stock investment plan, benefit plan or other management or
director equity program approved by the Board of Directors or (d) Common Stock
issued as a result of the exercise of warrants outstanding on the Closing Date),
then, as to Apollo, the Company shall, no later than the date of any such
issuance:
(i) give written notice setting forth in reasonable
detail (A) the designation and all of the terms and provisions of the securities
to be issued (the "New Securities"), including, where applicable, the voting
powers, preferences and relative participating, optional or other special
rights, and the qualification, limitations or restrictions thereof and interest
rate and maturity; (B) the price and other terms of the sale of such securities;
(C) the amount of such securities to be issued; and (D) such other information
as Apollo may reasonably request within ten (10) Business Days of such notice in
order to evaluate the issuance; and
(ii) offer to sell to Apollo on the terms and at such
price as set forth in the notice required by clause (i) of this Section 4.4 that
number of additional New Securities that would cause Apollo and its Affiliates
to Beneficially Own (A) in the case of New Securities consisting of Common Stock
or securities exercisable into, exchangeable for or convertible into Common
Stock, 25% of the sum of (1) the number of shares of Common Stock outstanding on
such date and (2) if applicable, the number of shares of Common Stock issuable
upon the exercise, exchange or conversion of such New Securities, and (B) in the
case of New Securities consisting of any other equity security, 25% of the
number of New Securities outstanding.
Apollo shall be entitled to exercise its purchase rights hereunder at
any time on or prior to the later to occur of (A) ten (10) Business Days after
receipt of such notice from the Company or (B) ten (10) Business Days after
Apollo has received any information requested by it pursuant to Section
4.4(i)(D) that is reasonably accessible to the Company. If Apollo shall not have
exercised its purchase rights within the applicable ten (10) Business Day
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<PAGE>
period, Apollo will be deemed to have forfeited such rights with respect to such
issuance of New Securities, provided, however, that the election by Apollo not
to exercise its subscription rights under this Section 4.4 in any one instance
shall not affect its right as to any subsequent issuance.
4.5. Termination of Company Covenants
--------------------------------
In addition to such remedies as the Company may otherwise have under
this Agreement or in law or equity, the obligations of the Company under
Sections 4.2 and 4.4 shall cease in the event that Apollo or any Affiliate shall
breach its obligations under any of Sections 5.1(a), 5.1(b), 5.1(d), 5.2, 5.4,
5.5 or 5.6(a).
SECTION 5. APOLLO COVENANTS
----------------
5.1. Standstill Agreements
---------------------
(a) Apollo and its Affiliates will not (i) acquire, or seek
to acquire, shares of Common Stock, or rights to acquire such shares if as a
result of any such acquisition Apollo or its Affiliates would Beneficially Own
any Prohibited Securities or (ii) acting alone or in concert with any Person,
commence or solicit support for a takeover of or merger with the Company, in
either case without the prior written consent of the Board of Directors.
(b) Following the Closing and until January 1, 1997, Apollo
agrees that Apollo and its Affiliates will become the Beneficial Owner of
additional shares of Common Stock only in (i) acquisitions directly from the
Company and/or with the prior written consent of the Board of Directors or (ii)
acquisitions of shares of Common Stock resulting from the exercise of the
Options.
(c) Apollo further agrees that if Apollo or its Affiliates
intend or propose to become the Beneficial Owner of additional shares of Common
Stock as otherwise permitted by Section 5.1(a), Apollo will (i) notify the
Company in writing of such intention or proposal at least three (3) Business
Days prior to making any such purchase and (ii) discuss with the Company during
such three (3) Business Day period the possibility of purchasing such additional
shares directly from the Company.
(d) Apollo and its Affiliates agree to vote all shares of
Common Stock Beneficially Owned by any of them (i) in accordance with the
recommendation of the Board of Directors or (ii) proportionately with all other
voting shareholders, provided, however, that Apollo and its Affiliates may vote
shares of Common Stock Beneficially Owned by them without restriction in
connection with (x) any proposal by the Board of Directors to change the
Company's status as a REIT, (y) amendments to the Organizational Documents
(other than pursuant to Section 5.4), and (z) any Extraordinary Transaction (the
covenants and agreements contained in Subsections 5.1(a), 5.1(b), 5.1(c) and
5.1(d) being herein referred to as the "Standstill Agreements").
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(e) The Standstill Agreements shall cease to be in effect
if
(i) Covenant Breach -- the Company breaches any
covenant contained in Sections 4.2, 4.3 or 4.4 of this Agreement; or
(ii) Unimpeded Market Purchases -- any person (other
than Apollo or its Affiliates) files with the SEC (A) a Schedule 13D announcing
that it Holds 15% or more of the Common Stock with an intent other than solely
for investment or (B) a Schedule 14D-1 announcing a tender offer for Common
Stock or rights to acquire shares of Common Stock or securities convertible into
shares of Common Stock in an amount which, together with the shares of Common
Stock then owned by such person, would result in such person Holding 15% or more
of the Common Stock and, in either case, the Board of Directors does not
promptly employ an available takeover defense with respect to such person; or
(iii) Amendment of Organizational Documents --
without the prior written consent of Apollo, the Company amends, modifies or
changes, or puts to a shareholder vote a proposal to amend, modify or change,
any of the Organizational Documents (including, without limitation, by the
filing of any certificate of designation) other than pursuant to Section 5.4,
provided, however, that the Company may amend its Organizational Documents by
filing certificates of designation or amendment which solely allow the Company
to obtain preferred stock financing upon customary and usual terms and
conditions for REITs; or
(iv) Significant Corporate Actions
(A) without the prior written consent of Apollo,
the Company winds up, liquidates or dissolves its affairs or enters into any
transaction of merger or consolidation involving, or conveys, sells, leases or
otherwise disposes of, all or substantially all of its assets (or agrees to do
any of the foregoing at any future time), whether in a single transaction or a
series of related transactions (or puts to a shareholder vote a proposal to take
any of the foregoing actions), except that the Company and its subsidiaries may
transfer assets among themselves (each an "Extraordinary Transaction"),
(B) without the prior written consent of Apollo,
the Company or any of its subsidiaries enters into an agreement for, or takes
corporate action to approve, the purchase, acquisition, sale, development or
disposition of (1) property or assets in one or a series of related transactions
that has a fair market value in excess $30,000,000 or (2) stock of another
entity in one or a series of related transactions in which the underlying assets
of such entity have a fair market value in excess $30,000,000, or
(C) without the prior written consent of Apollo,
the Company or any of its subsidiaries enters into an agreement for, or takes
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corporate action to approve, the issuance of shares of Common Stock in one or a
series of related issuances to any person or "group" (within the meaning of Rule
13d-5(b)(1) under the Exchange Act) in an amount exceeding 9.8% of the total
number of outstanding shares of Common Stock; or
(v) Management Matters --
(A) without the prior written consent of Apollo,
which shall not be unreasonably withheld, the Company (1) hires, terminates or
significantly alters the duties or terms and conditions of employment of any
Senior Executive or (2) amends any employment agreement, compensation agreement
or other arrangement with any Senior Executive, or
(B) without the prior written consent of Apollo,
the Company (1) pays bonuses or any other discretionary compensation (whether in
cash, stock, property or otherwise but excluding stock options) to any Senior
Executive that are in excess of 200% of the base salary of such Senior Executive
for the fiscal year with respect to which such bonuses or other discretionary
compensation are paid or (2) grants stock options to Senior Executives in excess
of industry standards at below market prices; or
(vi) REIT Status -- without the prior written consent
of Apollo, the Company elects not to be taxed as a REIT on its federal income
tax returns or knowingly fails to comply with all applicable laws, rules and
regulations of the Code relating to a REIT, or knowingly takes any action or
fails to take any action which results in the loss of its status as a REIT for
federal income tax purposes.
5.2. Lockup Agreement
----------------
(a) For a period of one year following the Closing Date,
Apollo and its Affiliates will not directly or indirectly sell, offer, contract
or grant any option to sell (including without limitation any short sale),
pledge, transfer or otherwise dispose of any shares of Common Stock, options or
warrants to acquire shares of Common Stock Beneficially Owned by them, other
than transfers to any of their Affiliates, which transfers shall be subject to
Section 9.4. Notwithstanding the foregoing, Apollo may pledge its shares of
Common Stock to any Eligible Institution (each a "Permitted Assignee"), which
may exercise all its rights in accordance with such pledge, provided that such
Permitted Assignee has complied with Section 9.4.
(b) The covenants contained in Section 5.2(a) shall cease to
be in effect upon the earlier of (i) one year following the Closing Date or (ii)
such time as the Standstill Agreements cease to be in effect.
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5.3. Resale of Securities
--------------------
Apollo covenants that it will not sell or otherwise transfer the Shares
except pursuant to an effective registration under the Securities Act or in a
transaction which, in the opinion of counsel reasonably satisfactory to the
Company, qualifies as an exempt transaction under the Securities Act and the
rules and regulations promulgated thereunder.
The certificates evidencing the Shares will bear the following legend
reflecting the foregoing restrictions on the transfer of such securities:
"The securities evidenced hereby have not been registered under the
Securities Act of 1933, as amended (the "Act"), and may not be
transferred except pursuant to an effective registration under the Act
or in a transaction which, in the opinion of counsel reasonably
satisfactory to the Company, qualifies as an exempt transaction under
the Act and the rules and regulations promulgated thereunder."
5.4. Consent Solicitation
--------------------
If the Standstill Agreements are in effect at the time of the Company's
1999 Annual Meeting of Shareholders (which meeting shall be held in the year
1999), Apollo and its Affiliates shall vote all of their shares of Common Stock
in favor of any proposal of the Board of Directors to amend the Organizational
Documents to limit or eliminate the ability of shareholders of the Company to
act by written consent in lieu of a shareholder meeting.
5.5. Special Purpose Entity
----------------------
Advisors will not transfer control of Apollo to any entity other than
an Affiliate of Advisors.
5.6. Limitations on Ownership and Voting
-----------------------------------
(a) For so long as the Standstill Agreements are in effect,
Apollo and its Affiliates shall Beneficially Own only Permitted Securities and
shall not Beneficially Own any share of Common Stock which is a Prohibited
Security. If Apollo or any Affiliate becomes aware of the Beneficial Ownership
by an Associate of Apollo or an Associate of an Affiliate of Apollo of
securities of the Company, Apollo shall report such Beneficial Ownership to the
Company within five (5) business days of the time that Apollo or such Affiliate
had knowledge of such Beneficial Ownership. In addition, Apollo and its
Affiliates shall provide such other and further information as the Company may
reasonably request so that the Company can determine whether such Associate is
an Affiliate of Apollo or any Affiliate of Apollo or whether Apollo or any
Affiliate Beneficial Owns securities of the Company Beneficially Owned by such
Associate.
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(b) To the extent that Permitted Securities Held by Apollo
and its Affiliates may include, from time to time, and for any reason
(including, without limitation, the exercise, exchange, or conversion of New
Securities or the Beneficial Ownership of Inadvertent Shares), shares of Common
Stock or other voting securities of the Company which are entitled to more than
twenty-five (25%) percent (the "Voting Limit") of the voting rights of any class
of voting securities of the Company, then Apollo and its Affiliates shall vote,
or cause to be voted, that number of such voting securities equal to the
difference between (x) the Voting Limit and (y) the number of shares of voting
securities Beneficially Owned by Apollo and its Affiliates in such class
proportionately with the vote of all other voting holders of the voting
securities in such class, excluding Apollo and its Affiliates.
(c) Any Permitted Assignee agrees to vote all of its shares
of Common Stock (i) in accordance with the recommendation of the Board of
Directors or (ii) proportionately with all other voting shareholders, provided,
however, that such Permitted Assignee may vote its shares without restriction in
connection with (x) any proposal by the Board of Directors to change the
Company's status as a REIT, (y) amendments to the Organizational Documents
(other than pursuant to Section 5.4), and (z) any Extraordinary Transaction.
SECTION 6. ADDITIONAL COVENANTS
--------------------
6.1. Further Assurance
-----------------
Each of the parties shall, from time to time, whether before or after
the Closing, execute such documents and other papers and take such further
actions as may be reasonably required or desirable to carry out the provisions
hereof and the transactions contemplated hereby.
6.2. Financial and Business Information
----------------------------------
From and after the date hereof and for so long as Apollo is entitled to
at least one Apollo Director on the Board of Directors pursuant to Section 4.2,
the Company shall deliver to Apollo:
(a) Quarterly Statements - as soon as practicable following
the filing thereof with the SEC, a copy of each Form 10-Q of the Company.
(b) Annual Statements - as soon as practicable following the
filing thereof with the SEC, a copy of each Form 10-K of the Company.
(c) Business Plan; Projections - when and as provided to the
Board of Directors, an annual business plan of the Company and any projections
of operating results.
(d) Audit Reports - when and as provided to the Board of
Directors, one copy of each other financial report and internal control letter
submitted to the Company, or any
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committee of the Board of Directors, by independent accountants in connection
with any annual, interim or special audit made by them of the books of the
Company.
(e) Other Reports - promptly upon their becoming available,
one copy of each financial statement, report, notice or proxy statement sent by
the Company to stockholders generally, of each financial statement, report,
notice or proxy statement sent by the Company or any of its subsidiaries to the
SEC or any successor agency, if applicable, of each regular or periodic report
and any registration statement, prospectus or written communication (other than
transmittal letters) in respect thereof filed by the Company or any subsidiary
with, or received by such Person in connection therewith from, any domestic or
foreign securities exchange, the SEC or any successor agency or any foreign
regulatory authority performing functions similar to the SEC, of any press
release issued by the Company or any subsidiary, and of any material of any
nature whatsoever prepared for the SEC or any successor agency thereto or any
state blue sky or securities law commission which relates to or affects in any
way the Company or any subsidiary.
(f) Requested Information - with reasonable promptness, the
Company shall furnish Apollo with such other data and information as from time
to time may be reasonably requested subject to the restrictions in Section 6.3.
6.3. Inspection
----------
From the date of this Agreement and for so long as Apollo is entitled
to at least one Apollo Director on the Board of Directors pursuant to Section
4.2, the Company shall permit Apollo, its nominee, assignee, and its
representative to visit and inspect any of the properties of the Company and its
subsidiaries, to examine all its books of account, records, reports and other
papers not contractually or legally required of the Company to be confidential
or secret, to make copies and extracts therefrom, and to discuss its affairs,
finances and accounts with its officers, directors, key employees and
independent public accountants or any of them (and by this provision the Company
authorizes said accountants to discuss with Apollo, its nominees, assignees and
representatives the finances and affairs of the Company and any subsidiaries),
all at such reasonable times and as often as may be reasonably requested,
provided, however, that Apollo shall not be entitled to the minutes of, or any
information or advise provided to, an Independent Committee.
6.4. Keeping of Books
----------------
The Company will keep proper books of record and account, in which full
and correct entries shall be made of all financial transactions and the assets
and business of the Company and its subsidiaries in accordance with GAAP.
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6.5. Lost, etc. Certificates Evidencing Shares; Exchange
---------------------------------------------------
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any certificate evidencing any
Shares owned by one of Apollo, and (in the case of loss, theft or destruction)
of an indemnity from an Apollo in the form of an open penalty indemnity bond
issued in favor of Koger Equity, Inc. or its successors and the Company's Common
Stock Transfer Agent, First Union National Bank of North Carolina, or its
successor, with sufficient surety to indemnify it against any loss or claim
which may arise by reason of the issuance of a new certificate, and upon
surrender and cancellation of such certificate, if mutilated, the Company will
make and deliver in lieu of such certificate a new certificate of like tenor and
for the number of shares evidenced by such certificate which remain outstanding.
Upon surrender of any certificate representing any Shares for exchange at the
office of the Company, the Company at its expense will cause to be issued in
exchange therefor new certificates in such denomination or denominations as may
be requested for the same aggregate number of Shares represented by the
certificate so surrendered and registered as such holder may request.
6.6. Confidentiality
---------------
The terms of the Confidentiality Agreement, dated September 9, 1996,
between the Company and Advisors are incorporated by reference herein and each
of the Company and Apollo agrees to be bound by the terms thereof, provided,
however, that notwithstanding the terms of such agreement, if the Standstill
Agreements are not terminated before the termination of this Agreement Apollo
shall be prohibited from disclosing any confidential information provided to it
by the Company until the earlier of (i) the ninetieth (90th) day following the
termination of the Standstill Agreements and (ii) the date of filing by the
Company of the first Form 10-Q with the SEC following the termination of the
Standstill Agreements.
SECTION 7. INTERPRETATION OF THIS AGREEMENT
--------------------------------
7.1. Terms Defined
-------------
As used in this Agreement, the following terms have the respective
meanings set forth below or set forth in the Section hereof following such term:
Advisors: shall have the meaning set forth in Section 3.1(a).
Affiliate: An "affiliate" of, or a person "affiliated" with, a
specified person is (1) a person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with the person specified or (2) any relative or spouse of such person, or any
relation of such spouse, who has the same home as such person. As used in this
definition, the term "control" (including the terms "controlling", "controlled
by" and "under common control") means the possession, direct or indirect, of the
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power, whether exercised or not, to direct or cause the acquisition and/or
disposition by such person of securities of the Company, whether through the
ownership of voting securities or otherwise. To clarify the foregoing, a Person
(including, without limitation, partners, members of limited liability
companies, or co-investors) which would, under the foregoing definitions, be an
"Affiliate" solely by reason of its common control with a specified person of an
Affiliate of such specified person shall not be an "Affiliate" of such specified
person. The term Affiliates of Apollo includes, without limitation, (i), as of
the Closing Date, the persons and entities listed on Schedule 7.1; (ii) any
person employed by Apollo or any of its Affiliates who replaces any individual
named on Schedule 7.1 or who holds the same or any comparable position for
Apollo or any of its Affiliates listed on Schedule 7.1; and (iii) any Associate
which satisfies the provisions of clauses (1) and (2) of the first sentence of
this definition.
Amended Rights Agreement: shall have the meaning set forth in Section
2.8(c).
Apollo Director: shall have the meaning set forth in Section 2.9.
Apollo Material Adverse Effect: shall have the meaning set forth in
Section 3.1(c).
Articles: shall have the meaning set forth in Section 2.8(d).
Associate: The term "Associate" used to indicate a relationship with
any person means (1) any corporation or organization of which such person is an
officer or partner or is, directly or indirectly, the beneficial owner of 10
percent or more of any class of equity securities, and (2) any trust or other
estate in which such person has a substantial beneficial interest or as to which
such person serves as trustee or in a similar fiduciary capacity. To clarify the
foregoing, the Company may assert, in accordance with the definitions set forth
herein, that an Associate is an Affiliate of Apollo or any of its Affiliates or
that securities of the Company Beneficially Owned by such Associate are
Beneficially Owned by Apollo or any of its Affiliates.
Beneficial Owner: The term "Beneficial Owner" (including, without
limitation, "Beneficial Ownership" and "Beneficially Own") shall have the
meanings provided in Section 1(d) of the Rights Agreement, except that the term
"Affiliate" therein shall be defined for purposes of this Agreement as set forth
herein. In addition, for purposes of this Agreement, if Apollo or any of its
Affiliates shall form a "group" (as contemplated by Rule 13d-5(b)(1) under the
Exchange Act) with any person, including, without limitation, any Associate of
Apollo or any of its Affiliates, for the purpose of acquiring, holding, voting
or disposing of any Common Stock of the Company, Apollo and its Affiliates shall
be deemed to have acquired Beneficial Ownership of Common Stock Beneficially
Owned by such person.
Board of Directors: shall have the meaning set forth in Section 2.9.
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Business Day: shall mean a day other than a Saturday, Sunday or other
day on which banks in the State of New York are not required or authorized to
close.
Closing: shall have the meaning set forth in Section 1.3.
Closing Date: shall have the meaning set forth in Section 1.3.
Code: shall mean the Internal Revenue Code of 1986, as amended.
Common Stock: shall have the meaning set forth in Section 1.1.
Disinterested Director: shall mean "disinterested directors" as such
term is defined in Section 607.0901(1)(h) of the FBCA.
Eligible Institution: shall mean (a) a commercial bank or investment
bank organized under the laws of the United States, or any State thereof, and
having total assets in excess of $1,000,000,000; (b) a savings and loan
association or savings bank organized under the laws of the United States, or
any State thereof, and having total assets in excess of $1,000,000,000; or (c) a
finance company, insurance company or other financial institution organized
under the laws of the United States, or any State thereof, that is engaged in
purchasing or otherwise investing in commercial loans in the ordinary course of
business, having total assets in excess of $100,000,000.
Exchange Act: shall mean the Securities Exchange Act of 1934, as
amended.
Existing Apollo Shares: shall have the meaning set forth in Section
3.2.
Extraordinary Transaction: shall have the meaning set forth in Section
5.1(e)(iv)(A).
FBCA: shall have the meaning set forth in Section 2.8(b).
Fund: shall have the meaning set forth in Section 3.1(a).
Hold: shall mean to own beneficially (within the meaning of Rule 13d-3
under the Exchange Act).
Inadvertent Shares: shall have the meaning set forth in the definition
of Permitted Securities.
Independent Committee: shall have the meaning set forth in Section
4.2(e).
Material Adverse Effect: shall have the meaning set forth in Section
2.1(c).
New Securities: shall have the meaning set forth in Section 4.4.
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Options: shall have the meaning set forth in Section 3.2.
Permitted Assignee: shall have the meaning set forth in Section 5.2(a).
Permitted Securities: shall mean (a) the Shares; (b) Existing Apollo
Shares; (c) the Options and shares of Common Stock acquired by the exercise of
Options; (d) that number of shares of Common Stock, which when added to the
number of shares of Common Stock Beneficially Owned by Apollo and its Affiliates
under clauses (a), (b) and (c) above, does not exceed twenty five percent (25%)
of the total number of outstanding shares of Common Stock (determined at the
time of any acquisition of Common Stock by Apollo and its Affiliates); (e) any
securities acquired by Apollo pursuant to Section 4.4, including any securities
received upon exercise, exchange or conversion thereof; (f) any other shares of
Common Stock Beneficially Owned by Apollo or its Affiliates in excess of the
total permitted under clauses (a), (b), (c) and (d) (the "Limit") and without
actual knowledge of the fact that such shares were acquired in excess of the
Limit (the "Inadvertent Shares") and (g) any non-voting securities of the
Company Beneficially Owned by Apollo or its Affiliates that are not
exchangeable, exercisable or convertible into voting securities of the Company;
provided, however, that Inadvertent Shares shall become Prohibited Securities
unless disposed of by Apollo or its Affiliates, as the case may be, within
twenty (20) Business Days from the time that Apollo or such Affiliate has actual
knowledge that such Inadvertent Shares are owned in violation of the Limit. In
the event that a Permitted Assignee shall exercise its right to transfer
Permitted Securities to itself, the term "Permitted Securities" as to such
Permitted Assignee shall include other shares of Common Stock Beneficially Owned
by such Permitted Assignee.
Person: shall mean an individual, partnership, joint-stock company,
corporation, trust or unincorporated organization, and a government or agency or
political subdivision thereof.
Prohibited Security: shall have the meaning set forth in Section
2.8(b).
REIT: shall have the meaning set forth in Section 2.13(b)(1).
Rights Agreement: shall have the meaning set forth in Section 2.7(c).
SEC: shall mean the Securities and Exchange Commission.
SEC Reports: shall have the meaning set forth in Section 2.3.
Securities Act: shall mean the Securities Act of 1933, as amended.
Senior Executive: shall mean (a) Victor A. Hughes, Jr. and J.C. Teagle,
and any individuals named by the Board of Directors as their successors, and (b)
any person whose duties to the Company consist of all or a portion of the duties
performed by the persons referred to in clause (a).
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<PAGE>
Shares: shall have the meaning set forth in Section 1.1.
Standstill Agreements: shall have the meaning set forth in Section
5.1(d).
Subsidiary: shall mean any Person (a) of which the Company (or other
specified Person) shall own directly or indirectly through a subsidiary, a
nominee arrangement or otherwise (i) at least a majority of the outstanding
capital stock (or other shares of beneficial interest) or (ii) at least a
majority of the partnership, joint venture or similar interests, or (b) in which
the Company (or other specified Person) is a general partner or joint venturer.
Voting Stock: shall mean securities of any class or classes of a
corporation or other entity the holders of which are ordinarily, in the absence
of contingencies, entitled to elect a majority of the corporate directors (or
Persons performing similar functions).
Unaudited Consolidated Balance Sheet: shall have the meaning set forth
in Section 2.4.
7.2. Accounting Principles
---------------------
Where the character or amount of any asset or amount of any asset or
liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, this shall be done in accordance with U.S. generally
accepted accounting principles at the time in effect, to the extent applicable,
except where such principles are inconsistent with the requirements of this
Agreement.
7.3. Directly or Indirectly
----------------------
Where any provision in this Agreement refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable whether such action is taken directly or indirectly by such
Person.
7.4. Governing Law
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts made and to be
performed entirely within such State.
7.5. Paragraph and Section Headings
------------------------------
The headings of the sections and subsections of this Agreement are
inserted for convenience only and shall not be deemed to constitute a part
thereof.
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SECTION 8. TERMINATION AND SURVIVAL
------------------------
8.1. Termination
-----------
This Agreement shall terminate on the third anniversary of the Closing
Date.
8.2. Survival of Representations and Warranties
------------------------------------------
(a) Except as otherwise provided in clauses (b), (c) and (d)
of this Section, all representations and warranties made by the Company or
Apollo herein or in any certificate or other instrument delivered by the Company
or Apollo under this Agreement shall be considered to have been relied upon by
the Company or Apollo, as the case may be, and shall survive for the term of
this Agreement, regardless of any investigation made by the Company or Apollo.
(b) The representations and warranties contained in Sections
2.1(a), 2.7, 2.8 and 3.1(a) shall survive beyond the termination of this
Agreement, regardless of any investigation made by the claiming party, or on its
behalf. The representations and warranties contained in Section 2.13 of the
Company shall survive until December 31, 2000, regardless of any investigation
made by Apollo, or on Apollo's behalf.
(c) The covenants contained in Sections 4.3, 5.6, 6.6 and
9.4 shall survive beyond the termination of this Agreement.
(d) The parties agree that the sole remedy for a breach of
any representation or warranty made by the Company or Apollo herein or in any
certificate or other instrument delivered by the Company or Apollo shall be
money damages.
SECTION 9. MISCELLANEOUS
-------------
9.1. Notices.
--------
All communications under this Agreement shall be in writing and shall
be delivered by hand or mailed by overnight courier:
1) if to Apollo, Two Manhattanville Road, Purchase New York 10577, marked
for the attention of Ronald Solotruk, or at such other address as
Apollo may have furnished the Company in writing, with copies to (A)
Apollo Real Estate Management II, Inc., 1301 Avenue of Americas, 38th
Floor, New York, New York 10019, marked for the attention of W. Edward
Scheetz, (B) Willkie Farr & Gallagher, 153 East 53rd Street, New York,
New York 10022, marked for the attention of Yaacov M. Gross, Esq. and
Michael A. Schwartz, Esq. and (C) Battle Fowler LLP, 75 East 55th
Street, New York, New York 10022, marked for the attention of Martin L.
Edelman, Esq., or
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2) if to the Company, at 3986 Boulevard Center Drive, Jacksonville,
Florida, marked for the attention of Victor A. Hughes, Jr., or at such
other address as it may have furnished in writing to Apollo, with
copies to (A) Ropes & Gray, One International Place, Boston,
Massachusetts 02110, marked for the attention of William F. McCarthy,
Esq. and (B) Boling & McCart, Suite 700, 76 South Laura Street,
Jacksonville, Florida 32202, marked for the attention of Harold F.
McCart Jr., Esq.
(a) Any notice so addressed shall be deemed to be given: if
delivered by hand, on the date of such delivery; if mailed by courier, on the
first business day following the date of such mailing.
9.2. Expenses and Taxes
------------------
Unless otherwise specified in this Agreement, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not the
transactions contemplated by this Agreement are consummated.
The Company will pay, and save and hold Apollo harmless from any and
all liabilities (including interest and penalties) with respect to, or resulting
from any delay or failure in paying, stamp and other taxes (other than income
taxes), if any, which may be payable or determined to be payable by the Company
on the execution and delivery or acquisition of the Shares.
9.3. Reproduction of Documents
-------------------------
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by Apollo on the Closing Date (except for
certificates evidencing the Shares themselves), and (c) financial statements,
certificates and other information previously or hereafter furnished to Apollo,
may be reproduced by Apollo by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process and either Investor
may destroy any original document so reproduced. All parties hereto agree and
stipulate that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by an
Investor in the regular course of business) and that any enlargement, facsimile
or further reproduction of such reproduction shall likewise be admissible in
evidence.
9.4. Successors and Assigns
----------------------
This Agreement shall inure to the benefit of and be binding upon the
successors of the parties hereto. Neither party hereto may assign any part of
this Agreement to a third party, provided, however, that Apollo may assign its
rights and obligations hereunder to any of its
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Affiliates in connection with a transfer of Permitted Securities to such
Affiliate and provided further that (i) Apollo may assign its rights under
Section 4.3 to a Permitted Assignee and (ii) any such Permitted Assignee shall
not assign any part of this Agreement to a third party. No transfer or
assignment under this Agreement shall be valid until such Affiliate or Permitted
Assignee executes an Assignment and Assumption Agreement, in the form of which
is attached as Exhibit E(1) or E(2) hereto, as the case may be.
9.5. Notice of Proposed Action; Equitable Remedies
---------------------------------------------
(a) Upon the occurrence and during the continuance of any
breach of a representation or warranty by a party to this Agreement, the
nonbreaching party shall provide the breaching party with notice of such breach.
The nonbreaching party may, fifteen (15) Business Days after providing the
breaching party with such notice, take any of the actions permitted under this
Agreement or by law.
(b) Upon the occurrence and during the continuance of any
breach of a covenant by a party to this Agreement, the nonbreaching party shall
provide the breaching party with notice of such breach. The nonbreaching party
may, three (3) Business Days after providing the breaching party with such
notice, take any of the actions permitted under this Agreement or by law or
equity.
(c) Upon the occurrence and during the continuance of any
event that would cause the Standstill Agreements to cease to be in effect
pursuant to Sections 5.1(e)(ii), 5.1(e)(iii), 5.1(e)(iv) or 5.1(e)(v), Apollo
shall provide the Company with notice of such event. Apollo may, three (3)
Business Days after providing the Company with such notice, take any of the
actions permitted under this Agreement or by law.
(d) Each of the parties acknowledges and agrees that the
other party would be damaged irreparably in the event any of Sections 4.2, 4.3,
4.4, 4.5, 5.1(a), 5.1(c), 5.1(e)(vi), 5.2, 5.3, 5.4, 5.5 and 5.6 of this
Agreement are not performed in accordance with the specific terms or otherwise
are breached. Accordingly, each of the parties agrees that, in addition to any
other remedies available in law, the other party shall be entitled to seek
equitable relief with respect to such breaches of said Sections. The sole remedy
for breach of the provisions of Sections 5.1(e)(ii), 5.1(e)(iii), 5.1(e)(iv) and
5.1(e)(v) shall be termination of the Standstill.
9.6. Attorneys' Fees
---------------
In the event any party hereto finds it necessary to bring any suit,
action, or other proceeding at law or equity to interpret, enforce or implement
any of the terms, covenants or conditions hereof or of any instrument executed
pursuant to this Agreement, or by reason of any breach or default hereunder or
thereunder, the party prevailing in any such action or proceeding, including any
bankruptcy proceeding and/or any appeal, shall be paid all costs and reasonable
attorneys' fees by the non-prevailing party, and in the event any judgment is
secured by such prevailing party, all such costs and attorneys' fees shall be
included in any
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such judgment (attorneys' fees to be set by the court and not by the jury). No
termination of this Agreement upon any grounds or in any circumstances addressed
herein or otherwise will impair or limit a prevailing party's right to recover
from the other party its attorneys' fees and costs in accordance with the
provisions of this Section.
9.7. Entire Agreement; Amendment and Waiver
--------------------------------------
Except as expressly provided or contemplated herein, this Agreement
constitutes the entire understanding of the parties hereto and supersedes all
prior agreements or understandings with respect to the subject matter hereof
among such parties. This Agreement may be amended, and the observance of any
term of this Agreement may be waived, with (and only with) the written consent
of the Company and Apollo or their successors or assigns.
9.8. Limitation on Enforcement of Remedies
-------------------------------------
The Company hereby agrees that it will not assert against the limited
partners of Advisors or the limited partners of the Fund any claim it may have
under this Agreement by reason of any failure or alleged failure by Apollo to
meet its obligations hereunder.
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9.9. Counterparts
------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall be considered
one and the same agreement.
Very truly yours,
KOGER EQUITY, INC.
By_________________________________
Name:
Title:
AP-KEI HOLDINGS, LLC
By AP-MM KEI HOLDINGS, LLC,
its Managing Member
By KRONUS PROPERTY, INC
its Managing Member
By___________________________
Name:
Title:
Section 5.5 is hereby acknowledged
and agreed to by the undersigned:
APOLLO REAL ESTATE ADVISORS II, L.P.
By APOLLO REAL ESTATE CAPITAL
ADVISORS II, INC.,
its General Partner
By______________________________
Name:
Title:
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Exhibit A
KOGER EQUITY, INC.
AP-KEI HOLDINGS, LLC
REGISTRATION RIGHTS AGREEMENT
This Agreement, dated as of October 10, 1996, is between Koger Equity,
Inc., a Florida corporation (the "Company"), and AP-KEI Holdings, LLC, a
Delaware limited liability company (the "Investor").
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the Company and the Investor are entering into a certain Stock
Purchase Agreement dated as of October 10, 1996 (as amended and in effect from
time to time, the "Stock Purchase Agreement") pursuant to which the Company is
issuing and selling to the Investor, and the Investor is purchasing from the
Company, 3,000,000 shares of the Company's Common Stock, $.01 par value per
share (the "Common Stock"); and
WHEREAS, it is a condition to the issuance and sale by the Company, and
the purchase by the Investor, of such shares of Common Stock pursuant to the
Stock Purchase Agreement that the Company and the Investor enter into this
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1. Definitions; Certain Rules of Construction. Certain terms are used in this
Agreement with the specific meanings defined below in this Section 1. Except as
otherwise explicitly specified to the contrary or unless the context clearly
requires otherwise, (a) the capitalized term "Section" refers to sections of
this Agreement, (b) the capitalized term "Exhibit" refers to exhibits to this
Agreement, (c) references to a particular Section include all subsections
thereof, (d) the word "including" shall be construed as "including without
limitation," (e) references to a particular statute or regulation include all
rules and regulations thereunder and any successor statute, regulation or rules,
in each case as from time to time in effect, (f) words in the singular or plural
form include the plural and singular form, respectively, and (g) references to a
particular Person include such Person's successors and assigns to the extent not
prohibited by this Agreement.
1.1. "1933 Act" means the Securities Act of 1933.
1.2. "1934 Act" means the Securities Exchange Act of 1934.
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1.3. "Alliance Holders" means the Alliance Holders (as defined in the
Alliance Registration Rights Agreement.
1.4. "Alliance Registration Rights Agreement" means the Registration
Rights Agreement, as amended and in effect from time to time, among the Company
and various investment companies or other investment advisory clients (or their
nominees) of Alliance Capital Management, Inc.
1.5. "Apollo Holder" means (a) any Person that owns, or has the right
to acquire, Apollo Registrable Securities and (b) any assignee thereof in
accordance with Section 2.12.
1.6. "Apollo Holder Indemnitees" is defined in Section 2.8(a).
1.7. "Apollo Registrable Securities" means (a) any share of Common
Stock which (i) is held by the Investor and (ii) is a Permitted Security (as
defined in the Stock Purchase Agreement) and (b) any security issued as (or
issuable upon the conversion or exercise of any warrant, right, or other
security which is issued as) a dividend or other distribution with respect to,
in exchange for, or in replacement of, any share of Common Stock described in
the foregoing clause (a); provided, however, that any share of Common Stock
described in the foregoing clauses (a) or (b) which after the date hereof has
been sold to the public pursuant to a registered public offering shall cease to
be an Apollo Registrable Security. For purposes of this Agreement, the number of
Apollo Registrable Securities at any time outstanding shall be the sum of (A)
the number of shares of Common Stock then outstanding which are Apollo
Registrable Securities plus (ii) the number of shares of Common Stock which are
issuable pursuant to then exercisable or convertible securities and which upon
issuance would be Apollo Registrable Securities.
1.8. "Board of Directors" means the Board of Directors of the Company.
1.9. "Common Stock" is defined in the recitals to this Agreement.
1.10. "Company" is defined in the preamble to this Agreement.
1.11. "Company Indemnitees" is defined in Section 2.8(b).
1.12. "Demanding Stockholder" means, with respect to any offering
involving an underwriting of securities to be sold for the account of the
Company or any of its stockholders (other than a Holder), any stockholder (other
than a Holder) exercising demand registration rights in connection with such
offering.
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1.13. "Form S-3", "Form S-4" and "Form S-8" mean such respective
registration forms in effect on the date hereof (or any successor registration
forms subsequently adopted by the SEC) under the 1933 Act.
1.14. "Holders" means each of the Apollo Holders and the Alliance
Holders.
1.15. "Indemnitee" means each of the Company Indemnitees and the Apollo
Holder Indemnitees.
1.16. "Initiating Apollo Holders" is defined in Section 2.1(a).
1.17. "Investor" is defined in the preamble to this Agreement.
1.18. "Person" means any present or future natural person or any
corporation, association, partnership, limited liability company, limited
liability partnership, joint venture, joint stock or other company, business
trust, trust, organization, business or government or any governmental agency or
political subdivision thereof.
1.19. "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the 1933 Act and the automatic
effectiveness, or the declaration or ordering of effectiveness, of such
registration statement or document.
1.20. "Registrable Securities" means, collectively, the Apollo
Registrable Securities and the Alliance Registrable Securities.
1.21. "Rule 144" means Rule 144 promulgated under the 1933 Act.
--------
1.22. "SEC" means the Securities and Exchange Commission.
1.23. "Stock Purchase Agreement" is defined in the recitals to this
Agreement.
1.24. "Violation" means, with respect to any registration statement
which includes any Apollo Registrable Securities:
(a) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto;
(b) 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 in which they were
made, not misleading; or
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<PAGE>
(c) any violation or alleged violation by the Company of the
1933 Act, the 1934 Act, any state securities law or any rule or
regulation promulgated under the 1933 Act, the 1934 Act or any state
securities law in connection with any matter relating to such
registration statement.
2. Registration Rights.
--------------------
2.1. Demand Registration.
--------------------
(a) At any time after October 10, 1997, if the Company shall
receive a written request from the Apollo Holders of at least 50% of
the Apollo Registrable Securities then outstanding and entitled to
registration rights under this Section 2 (the "Initiating Apollo
Holders") that the Company effect the registration under the 1933 Act
of a number of Apollo Registrable Securities constituting at least
500,000 shares of Common Stock, then the Company shall, within five
days of the receipt thereof, give written notice of such request to all
Holders and shall, subject to the limitations of this Section 2.1, use
its best efforts to effect such a registration as soon as practicable
and in any event to file within 75 days of the receipt of such request
a registration statement under the 1933 Act covering all the
Registrable Securities which the Holders shall in writing request
(within 10 days of receipt of the notice given by the Company pursuant
to this Section 2.1(a)) to be included in such registration and to use
its reasonable best efforts to have such registration statement become
effective within 120 days after receipt of such request.
(b) If the Initiating Apollo Holders intend to distribute the
Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as part of their request
made pursuant to this Section 2.1 and the Company shall include such
information in the written notice referred to in Section 2.1(a). In
such event, the right of any Holder to include its Registrable
Securities in such registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Apollo Holders and
such Holder) to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together
with the Company as provided in Section 2.3(d)) enter into an
underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by a majority in interest
of the Initiating Apollo Holders. The Initiating Apollo Holders shall
consult with the Board of Directors regarding the selection of an
underwriter or underwriters, but approval by the Board of Directors of
any underwriter selected by the Initiating Apollo Holders shall not be
required. Notwithstanding any other provision of this Section 2.1, if,
in the case of a registration requested pursuant to Section 2.1(a), the
underwriter advises the Initiating Apollo Holders in writing that
marketing factors require a limitation of the number of shares to be
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<PAGE>
underwritten, then the Initiating Apollo Holders shall so advise the
Company and all Holders of Registrable Securities which would otherwise
be underwritten pursuant hereto, and all securities other than
Registrable Securities sought to be included in the underwriting shall
first be excluded. To the extent that further limitation is required,
the number of Registrable Securities that may be included in the
underwriting shall be allocated pro rata among all Holders desiring to
participate in such underwriting (according to the number of
Registrable Securities then held by each such Holder). No Registrable
Securities requested by any Holder to be included in a registration
pursuant to Section 2.1(a) shall be excluded from the underwriting
unless all securities other than Registrable Securities are first
excluded.
(c) Notwithstanding the foregoing provisions of this Section
2.1, in the event that the Company is requested to file any
registration statement pursuant to this Section 2.1:
(i) the Company shall not be obligated to effect the
filing of such registration statement during the six months
following the effective date of any other registration
statement pertaining to an underwritten public offering of
securities for the account of the Company; and
(ii) if the Company shall furnish to the Holders
requesting such registration statement a certificate signed by
the president of the Company (A) stating that, in the good
faith judgment of a majority of the disinterested members of
the Board of Directors, (1) an undisclosed material event (x)
has occurred and is continuing or (y) is likely to occur
within 90 days and (2) the disclosure of such undisclosed
material event would have a material adverse effect on the
Company or on a proposed material transaction involving the
Company or a substantial portion of its assets and (B)
describing in reasonable detail such undisclosed material
event, then the Company shall have the right to defer such
filing for a period of not more than 120 days after receipt of
the request of the relevant Initiating Apollo Holders;
provided, however, that the Company may not utilize the right
set forth in this Section 2.1(c)(ii) more than once in any
12-month period.
2.2. Company Registration. If (but without any obligation to do so) the
Company proposes to register any Common Stock for its own account (including for
this purpose a registration effected by the Company for stockholders other than
the Holders) under the 1933 Act in connection with the public offering of such
Common Stock solely for cash (other than a registration on Form S-8 or a
registration on Form S-4), the Company shall, at such time, promptly give each
Holder written notice of such registration. Upon the written request of any
Apollo Holder given not later than 10 business days before the anticipated
effective date of such registration (as set forth in such notice by the
Company), the Company shall, subject to the provisions of Section 2.7, use its
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<PAGE>
best efforts to cause a registration statement covering all of the Apollo
Registrable Securities that each such Apollo Holder has requested to be
registered to become effective under the 1933 Act. The Company shall be under no
obligation to complete any offering of securities it proposes to make and shall
incur no liability to any Apollo Holder for its failure to do so.
2.3. Obligations of the Company. Whenever required under this Section 2
to use its best efforts to effect the registration of any Apollo Registrable
Securities, the Company shall, as expeditiously as reasonably possible, prepare
and file with the SEC a registration statement with respect to such Apollo
Registrable Securities and use its best efforts to cause such registration
statement to become effective, and, upon the request of the Holders of a
majority of the Registrable Securities registered thereunder, keep such
registration statement effective for up to 180 days or until such earlier date
as such Holders have informed the Company in writing that the distribution of
all Registrable Securities registered thereunder has been completed. In
addition, the Company shall:
(a) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement, and use its best efforts
to cause each such amendment and supplement to become effective, as may
be necessary to comply with the provisions of the 1933 Act with respect
to the disposition of all securities covered by such registration
statement;
(b) furnish to the Apollo Holders such reasonable number of
copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the 1933 Act, and such other
documents as they may reasonably request in order to facilitate the
disposition of Apollo Registrable Securities owned by them;
(c) use its best efforts to register or qualify the securities
covered by such registration statement under such other securities or
blue sky laws of such states and jurisdictions as shall be reasonably
requested by the Apollo Holders, except that the Company shall not be
required in connection therewith or as a condition thereto to qualify
to do business or file a general consent to service of process in any
such state or jurisdiction;
(d) in the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in
usual and customary form and including representations and warranties
by the Company relating to the business and properties of the Company,
with the managing underwriter of such offering and take all actions
reasonably requested by the managing underwriter of such offering in
furtherance of the underwriters' selling efforts; provided, however,
that each Apollo Holder participating in such underwriting shall also
enter into and perform its obligations under such an underwriting
agreement, including furnishing any opinion of counsel or entering into
a lock-up agreement reasonably requested by the managing underwriter;
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<PAGE>
(e) notify each Apollo Holder of Apollo Registrable Securities
covered by such registration statement, at any time when a prospectus
relating to Apollo Registrable Securities covered by such registration
statement is required to be delivered under the 1933 Act, of the
happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes 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 and promptly
file such amendments and supplements which may be required pursuant to
Section 2.3(a) on account of such event and use its best efforts to
cause each such amendment and supplement to become effective;
(f) furnish, at the request of any Apollo Holder requesting
registration of Apollo Registrable Securities pursuant to this Section
2, on the date that such Apollo Registrable Securities are delivered to
the underwriters for sale in connection with a registration pursuant to
this Section 2, if such securities are being sold through underwriters,
or, if such securities are not being sold through underwriters, on the
date the registration statement with respect to such securities became
effective, (i) an opinion, dated such date, of the counsel representing
the Company for the purposes of such registration, in form and
substance as is customarily given by company counsel to the
underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Apollo Holders requesting registration
of Apollo Registrable Securities and (ii) a letter dated such date,
from the independent certified public accountant of the Company, in
form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to the Apollo Holders
requesting registration of Apollo Registrable Securities; and
(g) apply for listing and use its best efforts to list the
Apollo Registrable Securities being registered on any national
securities exchange on which a class of the Company's equity securities
are listed or, if the Company does not have a class of equity
securities listed on a national securities exchange, apply for
qualification and use its best efforts to qualify the Apollo
Registrable Securities being registered for inclusion on the automated
quotation system of the National Association of Securities Dealers,
Inc.
2.4. Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 2 in
respect of the Apollo Registrable Securities of any selling Apollo Holder that
such selling Apollo Holder shall furnish to the Company such information
regarding itself, the Apollo Registrable Securities held by it, and the intended
method of disposition of such Apollo Registrable Securities as shall be required
to effect the registration of such Apollo Registrable Securities.
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2.5. Expenses of Demand Registration. All expenses (other than
underwriting discounts and commissions and fees and expenses of professionals
retained by the Apollo Holders) relating to Apollo Registrable Securities
incurred in connection with each registration, filing or qualification pursuant
to Section 2.1(a) and each registration, filing or qualification pursuant to
Section 2.10, including all registration, filing and qualification fees,
printing and accounting fees, fees and disbursements of counsel for the Company,
shall be borne by the Company; provided, however, that the Company shall not be
required to pay for any expenses of any registration proceeding begun pursuant
to Section 2.1(a) if the registration request is subsequently withdrawn at any
time at the request of the Holders of a majority of the Registrable Securities
to be registered other than as a result of a material adverse change in the
condition, business or prospects of the Company that was unknown to the Holders
of a majority of such Registrable Securities at the time of their request (in
which case all participating Holders shall bear such expenses). All underwriting
discounts and commissions relating to Apollo Registrable Securities included in
any registration effected pursuant to Section 2.1(a) or 2.10 will be borne and
paid ratably by the Apollo Holders of such Apollo Registrable Securities, and,
if it participates, the Company. All fees and expenses of professionals retained
by the Apollo Holders in connection with any registration of Apollo Registrable
Securities effected pursuant to Section 2.1(a) or 2.10 will be borne and paid
ratably by the Apollo Holders of such Apollo Registrable Securities.
2.6. Expenses of Company Registration. The Company shall bear and pay
all expenses (other than underwriting discounts and commissions and fees and
expenses of professionals retained by the Apollo Holders) incurred in connection
with any registration, filing or qualification of Apollo Registrable Securities
with respect to any registration pursuant to Section 2.2 for each Apollo Holder,
including all registration, filing and qualification fees, printing and
accounting fees, fees and disbursements of counsel for the Company. All
underwriting discounts and commissions relating to Registrable Securities
included in any registration effected pursuant to Section 2.2 will be borne and
paid ratably by the Apollo Holders of such Apollo Registrable Securities and the
Company. All fees and expenses of professionals retained by the Apollo Holders
in connection with any registration of Apollo Registrable Securities effected
pursuant to Section 2.2 will be borne and paid ratably by the Apollo Holders of
such Apollo Registrable Securities.
2.7. Underwriting Requirements. In connection with any offering
involving an underwriting of securities to be sold for the account of the
Company (including for this purpose an underwriting of securities effected by
the Company for stockholders other than the Holders), the Company shall not be
required under Section 2.2 to include any of the Holders' securities in such
underwriting unless such Holders accept the terms of the underwriting as agreed
upon between the Company and the underwriters selected by it, and then only in
such quantity, if any, as will not, in the opinion of the underwriters,
jeopardize the success of the offering by the Company. If the managing
underwriter for the offering shall advise the Company in writing that the total
number of securities, including Registrable Securities, requested by
stockholders to be included in such offering exceeds the number of securities
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that can be successfully offered, then the Company shall be required to include
in the offering only that number of securities, including Registrable
Securities, which the managing underwriter believes will not jeopardize the
success of the offering. The securities so included in the offering will be
reduced as follows:
(a) first, all securities which any Persons other than the
Company and any Demanding Stockholder seek to include in the offering
shall be reduced pro rata among such Persons in accordance with the
number of registrable securities of the Company; and
(b) if further limitation on the number of securities to be
included in the offering is required, then the number of securities
which the Company and any Demanding Stockholder seek to include in the
offering shall be reduced.
2.8. Indemnification. In the event any Apollo Registrable Securities
are included in a registration statement under this Section 2:
(a) The Company will indemnify and hold harmless each Apollo
Holder, the officers and directors of each Apollo Holder, any
underwriter (as defined in the 1933 Act) for such Apollo Holder and
each Person, if any, who controls such Apollo Holder or underwriter
within the meaning of the 1933 Act or the 1934 Act (collectively, the
"Apollo Holder Indemnitees"), against any losses, claims, damages or
liabilities (joint or several) to which they may become subject under
the 1933 Act, the 1934 Act or any other federal or state law, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any Violation. The Company will
reimburse each Apollo Holder Indemnitee for any legal or other expenses
reasonably incurred by such Apollo Holder Indemnitee in connection with
investigating or defending any such loss, claim, damage, liability or
action. The indemnity agreement contained in this Section 2.8(a) shall
not apply to amounts paid in settlement of any loss, claim, damage,
liability or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld), nor
shall the Company be liable to any Apollo Holder Indemnitee in any such
case for any such loss, claim, damage, liability or action (i) to the
extent that it arises out of or is based upon a Violation which occurs
in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by or on behalf
of such Apollo Holder Indemnitee or (ii) in the case of a sale directly
by an Apollo Holder of Apollo Registrable Securities (including a sale
of such Apollo Registrable Securities through any underwriter retained
by such Holder engaging in a distribution solely on behalf of such
Apollo Holder), such untrue statement or alleged untrue statement or
omission or alleged omission was contained in a preliminary prospectus
and corrected in a final or amended prospectus, and such Apollo Holder
failed to deliver a copy of the final or amended prospectus at or prior
to the confirmation of the sale of the Apollo Registrable Securities to
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the Person asserting any such loss, claim, damage or liability in any
case in which such delivery is required by the 1933 Act.
(b) Each Apollo Holder which includes any Apollo Registrable
Securities in any registration statement (i) will indemnify and hold
harmless the Company, its directors and officers, each Person, if any,
who controls the Company within the meaning of the 1933 Act, each agent
and any underwriter for the Company, and any other Apollo Holder or
other stockholder selling securities in such registration statement and
any of its directors and officers, and any Person who controls such
Apollo Holder or such other stockholder or such underwriter
(collectively, the "Company Indemnitees"), against any losses, claims,
damages or liabilities (joint or several) to which any Company
Indemnitee may become subject under the 1933 Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based
upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with
written information furnished by or on behalf of such Apollo Holder
expressly for use in connection with such registration and (ii) will
reimburse any legal or other expenses reasonably incurred by any
Company Indemnitee in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that
the liability of any Apollo Holder hereunder shall be limited to the
amount of proceeds received by such Apollo Holder in the offering
giving rise to the Violation; and provided, further, that the indemnity
agreement contained in this Section 2.8(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of such Holder
(which consent shall not be unreasonably withheld) nor, in the case of
a sale directly by the Company of its securities (including a sale of
such securities through any underwriter retained by the Company to
engage in a distribution solely on behalf of the Company), shall such
Apollo Holder be liable to the Company in any case in which such untrue
statement or alleged untrue statement or omission or alleged omission
was contained in a preliminary prospectus and corrected in a final or
amended prospectus, and the Company failed to deliver a copy of the
final or amended prospectus at or prior to the confirmation of the sale
of the securities to the Person asserting any such loss, claim, damage
or liability in any case in which such delivery is required by the 1933
Act.
(c) Promptly after receipt by any Indemnitee under this
Section 2.8 of notice of the commencement of any action (including any
governmental action), such Indemnitee will, if a claim in respect
thereof is to be made against any indemnifying party under this Section
2.8, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume
and control the defense thereof with counsel mutually satisfactory to
the parties; provided, however, that such Indemnitee
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shall have the right to retain its own counsel, with the fees and
expenses to be paid by the indemnifying party, if representation of
such Indemnitee by the counsel retained by the indemnifying party would
be inappropriate due to actual or potential differing interests, as
reasonably determined by either party, between such Indemnitee 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, if prejudicial to its
ability to defend such action, shall relieve such indemnifying party of
any liability to the Indemnitee under this Section 2.8 to the extent of
such prejudice, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may
have to such Indemnitee otherwise than under this Section 2.8.
(d) The obligations of the Company and the Apollo Holders
under this Section 2.8 shall survive the completion of any offering of
Apollo Registrable Securities in a registration statement whether under
this Section 2 or otherwise.
(e) If the indemnification provided for in this Section 2.8 is
unavailable to a party that would have been an Indemnitee under this
Section 2.8 in respect of any losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) referred to herein, then
each party that would have been an indemnifying party hereunder shall,
in lieu of indemnifying such Indemnitee, contribute to the amount paid
or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions or proceedings in respect
thereof) in such proportion as is appropriate to reflect the relative
fault of such indemnifying party, on one hand, and such Indemnitee, on
the other hand, in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof). The relative fault shall be determined
by reference to, among other things, whether the Violation relates to
information supplied by such indemnifying party or such Indemnitee and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such Violation. The parties agree
that it would not be just and equitable if contribution pursuant to
this Section 2.8(e) were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to in the preceding sentence. The amount paid
or payable by a contributing party as a result of the losses, claims,
damages or liabilities (or actions or proceedings in respect thereof)
referred to above in this Section 2.8(e) shall include any legal or
other expenses reasonably incurred in connection with investigating or
defending any such action or claim. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act
shall be entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation. The liability of any Apollo Holder
of Apollo Registrable Securities in respect of any contribution
obligation of such Holder (after deduction of all underwriters'
discounts and commissions paid by such Apollo Holder in connection with
the registration in question) arising under this Section 2.8(e) shall
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not in any event exceed an amount equal to the proceeds to such Apollo
Holder from the disposition of the Apollo Registrable Securities
disposed of by such Apollo Holder pursuant to such registration.
2.9. Reports Under Securities Exchange Act of 1934. With a view to
making available to the Apollo Holders the benefits of Rule 144 and any other
rule or regulation of the SEC that may at any time permit an Apollo Holder to
sell securities of the Company to the public without registration, and with a
view to making it possible for Apollo Holders to register the Apollo Registrable
Securities pursuant to a registration on Form S-3, the Company agrees to:
(a) to the extent required by the 1934 Act, use its best
efforts to make and keep public information available, as those terms
are understood and defined in Rule 144, at all times;
(b) use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under
the 1933 Act and the 1934 Act; and
(c) furnish to any Apollo Holder, so long as such Apollo
Holder owns any Apollo Registrable Securities, forthwith upon request
(i) a written statement by the Company as to its compliance with the
reporting requirements of Rule 144, the 1933 Act and the 1934 Act, or
as to its qualification as a registrant whose securities may be resold
pursuant to Form S-3, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so
filed by the Company and (iii) such other information as may be
reasonably requested in availing any Apollo Holder of any rule or
regulation of the SEC which permits the selling of any such securities
without registration or pursuant to such form.
2.10. Form S-3 Registration. In case the Company shall receive from any
Apollo Holder a written request that the Company effect a registration on Form
S-3 and any related qualification or compliance with respect to all or a part of
the Apollo Registrable Securities owned by such Holder, the Company will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and
(b) use its best efforts to effect, as soon as practicable,
such registration, qualification or compliance as may be so requested
and as would permit or facilitate the sale and distribution of all or
such portion of such Apollo Holder's Apollo Registrable Securities as
are specified in such request, together with all or such portion of the
Registrable Securities of any other Holder joining in such request as
are specified in a written request given within 20 days after receipt
of such written notice from the
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Company; provided, however, that the Company shall not be obligated to
effect any such registration, qualification or compliance, pursuant to
this Section 2.10 if:
(i) Form S-3 is not available for such offering by
the Holders;
(ii) the aggregate net offering price (after
deduction of underwriting discounts and commissions) of the
Apollo Registrable Securities specified in such request is not
at least $3,000,000;
(iii) the Company has already effected a registration
within the previous six-month period; or
(iv) the Company shall furnish to the Holders a
certificate signed by the president of the Company (A) stating
that, in the good faith judgment of a majority of the
disinterested members of the Board of Directors, (1) an
undisclosed material event (x) has occurred and is continuing
or (y) is likely to occur within 90 days and (2) the
disclosure of such undisclosed material event would have a
material adverse effect on the Company or on a proposed
material transaction involving the Company or a substantial
portion of its assets and (B) describing in reasonable detail
such undisclosed material event, in which event the Company
shall have the right to defer the filing of such Form S-3
registration for a period of not more than 120 days after
receipt of the request of the Apollo Holder or Apollo Holders
under this Section 2.10; provided, however, that the Company
shall not utilize this right more than once in any 12- month
period.
2.11. Lock-up Agreements. Each Apollo Holder agrees to enter into
lock-up agreements pursuant to which it will not, for a period of up to 180 days
(as determined by the Company) following the effective date of a registration
statement for a public offering of the Company's securities, offer, sell or
otherwise dispose of any Apollo Registrable Securities (except Apollo
Registrable Securities sold pursuant to such registration statement) without the
prior written consent of the Company and the underwriter.
2.12. Assignment of Registration Rights. The rights to cause the
Company to register Apollo Registrable Securities pursuant to this Section 2 and
all related rights, including rights to the payment of registration expenses and
to indemnification, may be assigned by any Apollo Holder to any permitted
transferee which (a) is a Permitted Assignee (as defined in the Stock Purchase
Agreement) or (b) owns, immediately after giving effect to such transfer, no
less than 500,000 shares and no more than 9.8% of the total number of shares of
Common Stock then outstanding. Any transferee to which rights under this
Agreement are transferred (i) shall, as a condition to such transfer, deliver to
the Company a written instrument by which such transferee agrees to be bound by
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the obligations imposed upon Apollo Holders under this Agreement to the same
extent as if such transferee were an Apollo Holder under this Agreement and (ii)
shall be deemed to be an Apollo Holder hereunder.
3. Legend. Each certificate representing any Apollo Registrable Security shall
bear on its face substantially the following legends:
(a) "THESE SECURITIES ARE SUBJECT TO THE PROVISIONS OF A
CERTAIN REGISTRATION RIGHTS AGREEMENT DATED AS OF OCTOBER __, 1996, AS
AMENDED AND IN EFFECT FROM TIME TO TIME, AMONG THE CORPORATION AND THE
STOCKHOLDER NAMED THEREIN, A COPY OF WHICH IS ON FILE AT THE OFFICES OF
THE CORPORATION."
(b) Any legends required by (i) the Stock Purchase Agreement
or (ii) the laws of any applicable jurisdiction.
4. Specific Performance. The parties recognize that their respective rights
under this Agreement are unique, and, accordingly, each party shall, in addition
to such other remedies as may be available to it at law or in equity, have the
right to enforce its rights hereunder by actions for injunctive relief and
specific performance to the extent permitted by law. This Agreement is not
intended to limit or abridge any rights of either party which may exist apart
from this Agreement.
5. Notices. All notices, demands and other communications required to be given
pursuant to this Agreement shall be in writing and shall be deemed to have been
received if given in writing (including telex, telecopy or similar
teletransmission) addressed as provided below (or to the addressee at such other
address as the addressee shall have specified by notice actually received by the
addressor), and if either (a) actually delivered in fully legible form to such
address (evidenced in the case of a telex by receipt of the correct answer back)
or (b) in the case of a letter, three days shall have elapsed after the same
shall have been deposited in the mails (i) with first-class (air mail if to or
from outside the United States of America) postage prepaid and registered or
certified, with return receipt requested, or (ii) with express delivery postage
prepaid, with receipt required for delivery.
If to the Company, to it at 3986 Boulevard Center Drive, Jacksonville,
Florida 32207, telecopy number (904) 398-3403, to the attention of Victor A.
Hughes, Jr., with a copy to each of (a) Ropes & Gray, One International Place,
Boston, Massachusetts 02110, telecopy number (617) 951-7050, to the attention of
William F. McCarthy, Esq., and (b) Boling & McCart, 76 South Laura Street, Suite
700, Jacksonville, Florida 32202, to the attention of Harold F. McCart, Jr.,
Esq.
If to the Investor, to it at 1301 Avenue of the Americas, 38th Floor,
New York, New York 10019, telecopy number (212) 261-4060, to the attention of W.
Edward Scheetz, with a copy to each of (a) Willkie Farr & Gallagher, 153 East
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53rd Street, New York, New York 10022, to the attention of each of Yaacov M.
Gross, Esq. and Michael A. Schwartz, Esq., and (b) Battle Fowler LLP, 75 East
55th Street, New York, New York 10022, to the attention of Martin L. Edelman,
Esq.
6. Binding Effect; Assignment. This Agreement shall be binding upon, and inure
to the benefit of, the parties and their respective personal representatives,
successors and permitted assigns; provided, however, that the Company shall not
have the right to assign its rights and obligations hereunder, or any interest
herein, without the prior written consent of the holders of a majority of the
Apollo Registrable Securities then outstanding.
7. Course of Dealing; Amendments, Waivers and Consents. No course of dealing
between the parties shall operate as a waiver of any party's rights under this
Agreement. Each party acknowledges that if any party, without being required to
do so by this Agreement, gives any notice or information to, or obtains any
consent from, the other party, such party shall not by implication have amended,
waived or modified any provision of this Agreement, or created any duty to give
any such notice or information or to obtain any such consent on any future
occasion. No delay or omission on the part of any party in exercising any right
under this Agreement shall operate as a waiver of such right or any other right
hereunder or thereunder. A waiver on any one occasion shall not be construed as
a bar to or waiver of any right or remedy on any future occasion. No amendment,
waiver or consent with respect to this Agreement shall be binding unless it is
in writing and signed by each of the Company and the holders of a majority of
the Registrable Securities then outstanding.
8. No Contrary Agreement. The Company shall not enter into any agreement which
conflicts with the Investor's rights under this Agreement; provided, however,
that the Investor hereby acknowledges and agrees that the Company may from time
to time grant registration rights to other stockholders of the Company to the
extent that such registration rights do not conflict with the Investor's rights
under this Agreement.
9. Termination. This Agreement, and the respective rights and obligations of the
parties hereunder, shall terminate on the date upon which all Apollo Holders own
less than 1,178,400 shares of Apollo Registrable Securities.
10. General. If any provision of this Agreement shall be found by any court of
competent jurisdiction to be invalid or unenforceable, the parties hereby waive
such provision to the extent that it is found to be invalid or unenforceable.
Such provision shall, to the maximum extent allowable by law, be modified by
such court so that it becomes enforceable, and, as modified, shall be enforced
as any other provision hereof, all the other provisions hereof continuing in
full force and effect. The headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation hereof. This Agreement constitutes the entire understanding of
the parties with respect to the subject matter hereof and supersedes any and all
prior understandings and agreements, whether written or oral, with respect to
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such subject matter. This Agreement may be executed in counterparts, which
together shall constitute one and the same instrument. This Agreement shall be
governed by and construed in accordance with the laws (other than the conflict
of laws rules) of the State of New York.
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IN WITNESS WHEREOF, each of the undersigned has caused this Agreement
to be executed by a duly authorized officer as an agreement under seal as of the
date first above written.
KOGER EQUITY, INC.
By: s/Victor A. Hughes, Jr.
-----------------------
Name: Victor A. Hughes, Jr.
Title: Chairman of the Board
AP-KEI HOLDINGS, LLC
By AP-MM KEI HOLDINGS, LLC,
its Managing Member
By KRONUS PROPERTY, INC.,
its Managing Member
By: s/W. Edward Scheetz
-------------------
W. Edward Scheetz
Vice President
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Exhibit B(1)
BOLING & McCART
A PROFESSIONAL ASSOCIATION
ATTORNEYS AT LAW
SUITE SEVEN HUNDRED
SEVENTY-SIX SOUTH LAURA STREET
JACKSONVILLE, FLORIDA 32202
HAROLD F. McCART, JR.* TELEPHONE
CORPORATION & BUSINESS LAW (904) 354-6543
SECURITIES LAW Fax No.
(904) 354-9009
JOHN L. BOLING
WILLS, ESTATES &
ESTATE PLANNING
*ALSO MEMBER OF GEORGIA BAR
October 10, 1996
Ropes & Gray
One International Place
Boston, MA 02110-2624
AP-KEI Holdings, LLC
Two Manhattanville Road
Purchase, New York 10577
Re: Koger Equity, Inc.
Ladies/Gentlemen:
We have acted as counsel to Koger Equity, Inc., a Florida corporation
(the "Corporation"), in connection with the transactions contemplated by the
Stock Purchase Agreement dated as of October 10, 1996, by and between the
Corporation and AP-KEI Holdings, LLC, a Delaware limited liability company
("Apollo" and the "Agreement," respectively). This opinion is provided to you at
the request of the Corporation in connection with the opinion required by
Section 1(b) of the Agreement. Except as otherwise indicated herein, capitalized
terms used in this opinion letter are defined as set forth in the Agreement.
In rendering the following opinions, we have relied, with your
approval, as to all factual matters that affect our opinions, solely on our
examination of the following documents and have made no independent verification
of the facts asserted to be true and correct in those documents, including the
factual representations and warranties contained in the Agreement.
A. Officer's Certificate dated October 10, 1996, from W. Lawrence
Jenkins, in his capacity as Vice President/Administrator and
Corporate Secretary of the Corporation.
B. Letter from the Corporation's transfer agent dated October 10,
1996.
C. Amended and Restated Articles of Incorporation of the
Corporation (the "Articles of Incorporation").
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D. Bylaws, as Amended and Restated on August 21, 1996, of the
Corporation (the "Bylaws").
E. The Agreement.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Corporation has been incorporated and organized under the
Florida Business Corporation Act and its status as a Florida corporation is
active; and the Corporation is qualified to do business in every jurisdiction in
which the nature of its Business or the ownership of its property or assets
requires it to be so qualified.
2. The Corporation has the corporate power and authority to enter into
the Agreement and to perform its obligations thereunder.
3. The Corporation has authorized the execution, delivery, and
performance of the Agreement and each of the transactions and agreements
contemplated hereby, and no other corporate action is necessary to authorize
such execution, delivery and performance. The Agreement and the Registration
Rights Agreement have been executed and delivered on behalf of the Corporation
and constitute the valid and binding obligations of the Corporation, enforceable
against the Corporation in accordance with their terms. The Corporation has
authorized the issuance and delivery of the Shares in accordance with the
Agreement.
Our opinion concerning the validity, binding effect and enforceability
of the Agreement means that (a) the Agreement constitutes an effective contract
under Florida law, (b) the Agreement is not invalid in its entirety because of
specific statutory prohibitions or public policy and is not subject in its
entirety to a contractual defense, and (c) subject to the last sentence of this
paragraph, some remedy will be available if the Corporation is in material
default under the Agreement. This opinion does not mean that (i) any particular
remedy is available upon a material default, or (ii) every provision of the
Agreement will be upheld or enforced in any or each circumstance by a court.
Furthermore, the validity, binding effect, and enforceability of the Agreement
may be limited or otherwise affected by (A) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, or other similar statutes,
rules, regulations, or other laws affecting the enforcement of creditors' rights
and remedies generally, and (B) the unavailability of, or limitation on the
availability of, a particular right or remedy (whether in a proceeding in equity
or at law) because of an equitable principle or as a requirement as to
commercial reasonableness, conscionability, or good faith.
4. Section 2.7(a) of the Agreement accurately sets forth the authorized
and issued capital stock of the Corporation.
5. Except for the conversion rights which attach to the warrants,
options and convertible securities which are listed on Schedule 2.7 to the
Agreement and except for rights pursuant to the Rights Agreement, to the best of
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our knowledge, after giving effect to the issuance of the Shares, there are no
shares of Common Stock or any other equity security of the Corporation issuable
upon conversion or exchange of any security of outstanding or other agreements
to acquire shares of Common Stock nor is the Corporation contractually obligated
to purchase, redeem or otherwise acquire any of its outstanding shares. No
shareholder of the Corporation is entitled to any preemptive or similar rights
to subscribe for shares of capital stock of the Corporation other than those
rights of Apollo existing pursuant to the Agreement.
6. All the outstanding shares of capital stock of the Corporation have
been validly issued and are fully paid and non-assessable. Upon issuance, sale
and delivery, the Shares will be authorized, validly issued, fully paid and
non-assessable shares of the Corporation, free and clear of any mortgage,
pledge, lien, encumbrance, security interest, claim or rights or interests of
any third party of any nature whatsoever.
7. To our knowledge, the execution and delivery by the Corporation of
the Agreement, the performance by the Corporation of its obligations thereunder
and the consummation by the Corporation of the transactions contemplated thereby
do not require the Corporation or any of its subsidiaries to obtain any consent,
approval or action of, or make any filing with or give any notice to, any
corporation, person or firm or any public, governmental or judicial authority
except (a) as set forth in Schedule 2.10 to the Agreement; (b) such as have been
obtained or made, as the case may be, and are in full force and effect on the
date hereof; and (c) such as would not have a Material Adverse Effect or an
Apollo Material Adverse Effect following the Closing.
8. To our knowledge, the execution and delivery of the Agreement will
not, and the fulfillment of the terms thereof by the Corporation, and the
issuance of the Shares will not, (i) result in a breach of any of the terms,
conditions or provisions of, or constitute a default under, or permit the
acceleration of rights under or termination of, any indenture, mortgage, deed of
trust, credit agreement, note or other evidence of indebtedness, any
Organizational Document, or other agreement to which the Corporation or any of
its subsidiaries is bound or any of their respective properties may be bound or
affected, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any rule or regulation of any court or federal,
state or foreign regulatory board or body or administrative agency having
jurisdiction over the Corporation or any of its subsidiaries or over their
respective properties or businesses which breach, default, acceleration of
rights or termination would have a Material Adverse Effect or an Apollo Material
Adverse Effect following the Closing. To our knowledge, no event has occurred
and no condition exists which, upon notice or the passage of time (or both),
would constitute a default under any Agreements and Instruments or in any
license, permit or authorization to which the Corporation or any subsidiary is a
party or by which any of them may be bound.
9. The Corporation has amended the Rights Agreement such that the
definition of "Exempt Person" thereunder includes (a) Apollo and its Affiliates
so long as neither Apollo nor any of its Affiliates is the Beneficial Owner of
any Prohibited Security and (b) any person who is an "Affiliate" (using in this
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clause (b) only the term as defined in the Rights Agreement) of Apollo to the
extent that such "Affiliate" would be an Acquiring Person (as defined in the
Rights Agreement) as a result of "Beneficially Owning" (as defined in the Rights
Agreement) any Permitted Securities.
10. The Corporation has taken all such actions under its Amended and
Restated Articles of Incorporation as are necessary such that the Permitted
Securities beneficially owned from time to time by Apollo and its Affiliates
shall not be deemed to be "Excess Shares", as such term is defined therein.
11. The Board of Directors of the Company consists of twelve (12)
directors and Messrs. William L. Mack, Lee S. Niebert and W. Edward Scheetz have
been duly elected as Disinterested Directors to the Board of Directors by the
affirmative vote of at least seven (7) disinterested Directors, as that term is
defined in Florida Statutes, ss.607.0901(1)(h).
The phrases "we have actual knowledge", "to our knowledge", or similar
wording means the conscious awareness, without independent investigation, of
facts or other information by attorneys in this firm who have rendered legal
services in connection with the Agreement. The phrase to the effect that the
Agreement does not violate any applicable law means that the transactions
contemplated by the Agreement neither are prohibited by, nor subject the
Corporation to a fine, penalty or other similar sanction under any statute or
regulation of the State of Florida that a lawyer in Florida exercising customary
professional diligence would reasonably recognize as being directly applicable
to the Corporation and the Agreement.
This opinion is furnished to you by us as counsel for the Corporation
solely for your benefit, and is rendered solely in connection with the
transactions to which this opinion relates. This opinion may be relied upon only
in connection with such transactions and in connection with any transaction
consummated by the Corporation with respect to which the opinions set forth
herein are material; and may not be relied upon by any other person or persons
without our prior written consent.
The undersigned is an attorney at law and is a member of the Florida
Bar in good standing. The undersigned is admitted to the practice of law in the
State of Florida. Nothing herein shall constitute an opinion as to the
applicability or effect of the laws of any jurisdiction other than the State of
Florida. The opinions set forth herein are based solely on laws in force and
effect on the date hereof. This opinion is as of October 10, 1996, and we
undertake no obligation and disclaim any obligation to advise you of any change
in any matter set forth herein.
Very truly yours,
BOLING & McCART
(a professional association)
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Exhibit B(2)
ROPES & GRAY
ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110+2624
(617)951-7000
FAX: (617) 951-7050 OCTOBER 10, 1996
30 KENNEDY PLAZA ONE FRANKLIN SQUARE
PROVIDENCE, RI 02903-2328 1301 K STREET, N.W.
(401) 455-4400 SUITE 800 EAST
FAX:(401) 455-4401 WASHINGTON, DC 20005-3333
(202) 626-3900
FAX:(202) 626-3961
October 10, 1996
AP-KEI Holdings, LLC
Two Manhattanville Road
Purchase, New York 10577
Ladies and Gentlemen:
We have acted as special counsel to Koger Equity, Inc., a Florida
corporation (the "Company"), in connection with the transactions contemplated by
the Stock Purchase Agreement dated as of October 10, 1996 (the "Agreement"), by
and between the Company and AP-KEI Holdings, LLC, a Delaware limited liability
company ("Apollo"), and as such are familiar with the proceedings taken by them
in connection therewith. This opinion is provided to you at the request of the
Company in connection with the opinion required by Section 1.2 of the Agreement.
Terms not defined herein have the meanings set forth in the Agreement.
For purposes of this opinion, we have examined and relied, with your
approval, with respect to matters of Florida law, on the opinion of Boling &
McCart and have relied with your approval as to all factual matters that affect
our opinions solely upon the documents which have been examined by Boling &
McCart and have made no independent investigation thereof. Said opinion is
satisfactory in form and scope, and we are of the opinion that you and we may
properly rely thereon as to all matters covered thereby.
We have assumed the signatures on all documents examined by us are
genuine and that the Agreement and the Registration Rights Agreement have been
duly authorized and executed by Apollo.
We express no opinion as to the applicability of, compliance with, or
effect of any law, including Florida law, other than the laws of The
Commonwealth of Massachusetts and the United States of America. We call your
attention to the fact that the Agreement and the Registration Rights Agreement
provide that they are governed by the law of the State of New York. With your
permission, we have assumed that such agreements are governed by the law of The
Commonwealth of Massachusetts.
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Based upon and subject to the foregoing, we are of the opinion that:
1. To our knowledge, the execution and delivery by the Company of the
Agreement, the performance by the Company of its obligations thereunder and the
consummation by the Company of the transactions contemplated thereby do not
require the Company or any of its subsidiaries to obtain any consent, approval
or action of, or make any filing with or give any notice to, any corporation,
person or firm or any public, governmental or judicial authority except (a) as
set forth in Schedule 2.10 to the Agreement; (b) such as have been duly obtained
or made, as the case may be, and are in full force and effect on the date
hereof; and (c) such as would not have a Material Adverse Effect or an Apollo
Material Adverse Effect following the Closing.
2. To our knowledge, the execution and delivery of the Agreement, the
fulfillment of the terms thereof by the Company, and the issuance of the Shares
will not, (i) result in a breach of any of the terms, conditions or provisions
of, or (ii) constitute a default under, or (iii) permit the acceleration of
rights under or termination of, any Agreements and Instruments, or the
Organizational Documents, or any rule or regulation of any court or federal,
state or foreign regulatory board or body or administrative agency having
jurisdiction over the Company or any of its subsidiaries or over their
respective properties or businesses, which breach, default, acceleration of
rights or termination would have a Material Adverse Effect or an Apollo Material
Adverse Effect following the Closing. We call your attention to the fact that,
under the provisions of various loan agreements between the Company and its
lenders, the Company may be obligated to apply some portion or all of the
proceeds of the transactions contemplated by the Agreement to the repayment of
such indebtedness. To our knowledge, no event has occurred and no condition
exists which, upon notice or the passage of time (or both), would constitute a
default under any Agreements and Instruments or in any license, permit or
authorization to which the Company or any subsidiary is a party or by which any
of them may be bound.
This opinion is furnished to you by us as counsel for the Company
solely for your benefit, and is rendered solely in connection with the
transaction to which this opinion relates. This opinion may be relied upon only
in connection with this transaction and may not be relied upon by any other
person or persons without our prior written consent.
Very truly yours,
Ropes & Gray
-2-
<PAGE>
ARTICLES OF AMENDMENT AND RESTATEMENT
of the
ARTICLES OF INCORPORATION
of
KOGER EQUITY, INC.
1. These Articles of Amendment amend and restate the Amended and
Restated Articles of Incorporation of Koger Equity, Inc.
2. The preamble to Article V and Paragraph A. of Article V of the
Amended and Restated Articles of Incorporation of Koger Equity, Inc. are hereby
amended and restated to read:
ARTICLE V - CAPITAL STOCK
The total number of shares of stock that this corporation shall have
authority to issue is 100,000,000 shares of Common Stock, each of which shall
have a par value of $.01 per share (the "Common Stock") and 50,000,000 shares of
Preferred Stock, each of which shall have a par value of $.01 per share (the
"Preferred Stock"). The board of directors is authorized to issue the Preferred
Stock from time to time in one or more classes or series thereof, each such
class or series to have such voting powers (if any), conversion rights (if any),
designations, preferences and relative, participating, optional or other special
rights, and such qualifications, limitations or restrictions thereof, as shall
be determined by the board of directors and stated and expressed in a resolution
or resolutions thereof providing for the issue of such Preferred Stock. Subject
to the powers, preferences and rights of any Preferred Stock, including any
class or series thereof, having any preference or priority over, or rights
superior to, the Common Stock and except as otherwise provided by law, the
holders of the Common Stock shall have and possess all powers and voting and
other rights pertaining to the stock of this corporation and each share of
Common Stock shall be entitled to one vote.
Except as otherwise provided in the Articles of Incorporation and
subject to the rights of the holders of Preferred Stock, the following is a
description of the voting rights, limitations as to dividends, preemptive
rights, restrictions, and terms and conditions of redemption of the Common Stock
of the Company:
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(A) Voting Rights
-------------
At every annual or special meeting of stockholders of the Company, every
holder of Common Stock shall be entitled to one vote, in person or by proxy, for
each share of Common Stock standing in the stockholder's name on the books of
the Company in the election of directors and upon all other matters submitted to
a vote of the stockholders of the Company.
3. The foregoing amendment was adopted by a vote of the holders of a
majority of this Corporation's outstanding shares of Common Stock, par value
$.01 per share (the "Shares"), voted at this corporation's annual meeting of
shareholders held on May 10, 1994, at which a quorum was present. The Shares
were the only securities of this Corporation authorized to vote on this matter.
4. The number of votes cast for this Amendment by the
holders of the Shares was sufficient for the approval of this
Amendment.
5. Attached hereto as Exhibit A and by this reference made a part
hereof, are the Amended and Restated Articles of Incorporation of Koger Equity,
Inc. filed for the purpose of reflecting the amendment to Article V, set forth
in Paragraph 2. above, which amendment was approved by shareholders. This
restatement does not require the approval of shareholders, but was adopted by
the Board of Directors at their meeting held on May 10, 1994, at which a quorum
was present and acting.
6. The attached Restated Articles of Incorporation supersede the
original Articles of Incorporation and all amendments to them.
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<PAGE>
IN WITNESS WHEREOF, the undersigned President and the Secretary of this
Corporation have executed these Articles of Amendment, this 10th day of May,
1994.
KOGER EQUITY, INC.
Attest:
- -------------------------------- -----------------------------
W. Lawrence Jenkins Irvin H. Davis
Secretary President and Chief Executive
Officer
STATE OF FLORIDA
COUNTY OF DUVAL
BEFORE ME, a notary public authorized to take acknowledgements in the
state and county set forth above, personally appeared IRVIN H. DAVIS and W.
LAWRENCE JENKINS, known to me and known by me to be the persons who executed the
foregoing Articles of Amendment, and they acknowledged before me that they
executed these Articles of Amendment.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal, in the state and county aforesaid, this 10th day of May, 1994.
------------------------------
Notary Public, State of
Florida at Large
My Commission Expires:
3
<PAGE>
KOGER EQUITY, INC.
BY-LAWS
as
AMENDED AND RESTATED
on
August 21, 1996
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the Company
shall be in the State of Florida and shall be at such place as the Board of
Directors of the Company (the "Board of Directors") may determine.
Section 2. Principal Executive Office. The principal executive office
of the Company shall be in the City of Jacksonville, State of Florida, or in
such other place as the Board of Directors may from time to time determine.
Section 3. Other Offices. The Company may also have offices at such
other places, both within and outside of the State of Florida as the Board of
Directors may from time to time determine.
ARTICLE II
STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders of the
Company shall be held at such place, either within or outside of the State of
Florida as shall be determined from time to time by the Board of Directors and
stated in a notice of meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meeting. The annual meeting of the stockholders shall
be held on such day in the month of May, or in such other month, as shall be
designated from time to time by the Board of Directors and stated in the notice
of the meeting. Except as the Articles of Incorporation of the Company (the
"Articles of Incorporation") or the Florida Business Corporation Act (the "Act")
may provide otherwise, any business may be considered at an annual meeting.
Failure to hold an annual meeting does not invalidate the Company's existence or
affect any otherwise valid corporate acts.
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Section 3. Special Meeting. Except as the Articles of Incorporation or
the Act may otherwise provide, Special Meetings of the stockholders, for any
purpose or purposes, may be called by the Chairman of the Board of Directors, by
the Vice Chairman of the Board of Directors, by the President or by a majority
of the Board of Directors or upon the written request of stockholders holding in
the aggregate at least ten percent (10%) in amount of the entire outstanding
capital stock of the Company issued and outstanding and entitled to vote at such
meeting. If a special meeting is called at the written request of stockholders,
such request shall state with specificity the purpose or purposes of such
meeting and the matters proposed to be acted on. Any business of the Company
transacted at any special meeting of stockholders shall be limited to the
purposes stated in the notice thereof.
Section 4. Notice of Meetings and Waiver of Notice. Not less than ten
(10) days nor more than sixty (60) days before the date of any meeting of
stockholders, written or printed notice of the meeting shall be given to each
stockholder entitled to vote at the meeting and to each other stockholder not
entitled to vote who is entitled by statute to receive notice of the meeting.
The notice shall state the place, date and hour of the meeting and, in the case
of a special meeting, the purpose or purposes for which the meeting is called.
Notice is given to a stockholder when it is personally delivered to the
stockholder, left at the stockholder's residence or usual place of business, or
mailed to the stockholder at the stockholder's address as it appears on the
records of the Company. If such notice is mailed with postage thereon prepaid,
such notice shall be deemed to be given when deposited in the United States mail
addressed to the stockholder at the stockholder's post office address as it
appears on the records of the Company.
In the case of a special meeting of stockholders convened at the
written request of the stockholders, as provided for in Section 3 of this
Article II, the notice herein provided for shall be given in the manner herein
provided, not less than ten (10) days nor more than sixty (60) days before the
date of the meeting.
Notwithstanding the foregoing provisions, each person who is entitled
to notice of any meeting of stockholders waives notice if the stockholder
attends such meeting in person or by proxy, or if the stockholder, before or
after the meeting, submits a signed waiver of the notice which is filed with the
records of stockholders' meetings. When a meeting of stockholders is adjourned
to another time and place, unless the Board of Directors after the adjournment
shall fix a new record date for an adjourned meeting, notice of such adjourned
meeting need not be given if the time and place to which the meeting shall be
adjourned were announced at the meeting at which the adjournment was taken.
Section 5. Quorum and Voting. The holders of a majority of the stock
issued and outstanding and entitled to vote at the meeting, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business, except as otherwise provided by
the Act or the Articles of Incorporation. When a quorum is present at any
meeting, the vote of the holders of a majority of the stock having voting power
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present in person or represented by proxy shall decide any question, unless such
question is one upon which by express provision of the Act or the Articles of
Incorporation, a different vote is required, in which case such express
provision shall govern and control the decision of such question. If, however,
such quorum shall not be present or represented at any meeting of the
stockholders, the stock holders entitled to vote thereat, present in person or
by proxy, by majority vote and without notice other than announcement at the
meeting, except as required by Section 4 of this Article II, shall have power to
adjourn the meeting from time to time until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. In the event that at any meeting a quorum
exists for the transaction of some business but does not exist for the
transaction of other business, the business as to which a quorum is present may
be transacted by the holders of stock present in person or by proxy who are
entitled to vote thereon.
Section 6. General Right to Vote and Proxies. Each outstanding share of
stock is entitled to one (1) vote on each matter submitted to a vote at a
meeting of stockholders. A stockholder may vote the stock the stockholder owns
as shown on the record of stockholders of the Company as of the record date,
determined pursuant to Section 7 of this Article II, either in person or by
written proxy signed by the stockholder or by the stockholder's duly authorized
attorney-in-fact, but no proxy shall be voted or acted upon after eleven (11)
months from its date, unless the proxy provides for a longer period.
Section 7. Fixing of Record Date and List of Stockholders. In order
that the Company may determine the stockholders (a) entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, or to express
consent to corporate action in writing without a meeting, or (b) entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or (c) entitled to exercise any rights with respect to any change,
conversion, or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which, in the case of
a consent to corporate action without a meeting, shall not be more than ten (10)
days after the date upon which the resolution fixing the record date is adopted
by the Board of Directors, and which shall not be less than ten (10) days nor
more than seventy (70) days before the date then fixed for the holding of any
meeting of the stockholders, nor more than seventy (70) days prior to any other
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting which it must do if the meeting is adjourned to a date more
than one hundred twenty (120) days after the date fixed for the original
meeting. At any meeting of stockholders, a full, true and complete list of all
stockholders entitled to vote at such meeting, showing the number and class of
shares held by each and certified by the transfer agent for such class or by the
Secretary, shall be furnished by the Secretary. Any stockholder of record
seeking to have the stockholders authorize or take corporate action by written
consent shall, by written notice to the Secretary, request the Board of
Directors to fix a record date. The Board of Directors shall promptly, but in
all events within ten (10) days after the date on which such a request is
received, adopt a resolution fixing the record date. If no record date has been
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<PAGE>
fixed by the Board of Directors within ten (10) days of the date on which such a
request is received, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting, when no prior action
by the Board of Directors is required by applicable law, shall be the date of
the earliest dated written consent delivered to the Company in the manner
provided in Section 607.0704 of the Florida 1989 Business Corporation Act (the
"Act"). Delivery shall be by hand or by certified or registered mail, return
receipt requested. If no record date has been fixed by the Board of Directors
and prior action by the Board of Directors is required by applicable law, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting shall be at the close of business on the date on
which the Board of Directors adopts the resolution taking such prior action.
Section 8. Organization and Order of Business. At each meeting of the
stockholders, the Chairman of the Board of Directors, or in the Chairman's
absence or inability to act, the Vice Chairman of the Board or in the Chairman's
or Vice Chairman's absence or inability to act, the President, or in the absence
or inability to act of the Chairman of the Board, Vice Chairman of the Board or
the President, a Vice President designated by the Board of Directors shall act
as Chairman of the meeting. The Secretary, or in the Secretary's absence or
inability to act, any person appointed by the Chairman of the Board or the
presiding Chairman of the meeting, shall act as Secretary of the meeting and
keep the minutes thereof. The order of business of all meetings of the
stockholders shall be determined by the Chairman of the meeting, who shall have
the authority in his discretion to regulate the conduct of such meeting,
including, without limitation, to impose restrictions on the persons (other than
stockholders of the corporation or their duly appointed proxies) who may attend
such meeting, to regulate and restrict the making of statements or asking of
questions at such meeting and to cause the removal from such meeting of any
person who has disrupted or appears likely to disrupt the proceedings at such
meeting. At a meeting of the stockholders, only such business shall be conducted
as shall have been properly brought before the meeting. To be properly brought
before a meeting of stockholders, business must be (a) specified in the notice
of meeting (or any supplement thereto) given as provided in these by-laws, (b)
otherwise properly brought before the meeting by or at the direction of a
majority of the Board of Directors then in office, or (c) otherwise properly
brought before the meeting by a stockholder. For business to be properly brought
before a meeting by a stockholder, the stockholder must have given timely notice
thereof in writing to the secretary of the corporation and the stockholder must
be a stockholder of record at the time such notice is given. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the corporation, not less than seventy (70) days
nor more than ninety (90) days prior to the meeting; provided, however, that in
the event that the date of the meeting is not publicly announced by the
Corporation by mail, press release or otherwise more than seventy (70) days
prior to the meeting, notice by the stockholder to be timely must be delivered
to the Secretary of the Corporation not later than the close of business on the
tenth (10th) day following the day on which such announcement of the date of the
meeting was made. A stockholder's notice to the secretary shall set forth as to
each matter the stockholder proposes to bring before the annual meeting (a) a
brief description of the business desired to be brought before the meeting and
the reasons for conducting such business at the meeting, (b) the name and
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<PAGE>
address, as it appears on the corporation's books, of the stockholder proposing
such business, (c) the number of shares of the corporation's common stock which
are beneficially owned by the stockholder, and (d) any material financial
interest of the stockholder in such business. Notwithstanding anything in these
by-laws to the contrary, no business shall be conducted at any meeting except in
accordance with the procedures set forth in this Section 8, and if the Chairman
of the meeting should so determine, he shall so declare to the meeting any such
business not properly brought before the meeting shall not be transacted
Notwithstanding the foregoing provisions of this Section 8, a stockholder shall
also comply with all applicable requirements of the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder with respect to the
matters set forth in this Section.
Section 9. Conduct of Voting. At all meetings of stockholders, the
proxies and ballots shall be received, and all questions concerning the
qualifications of voters and the validity of proxies and the acceptance or
rejection of votes shall be decided by the Chairman of the meeting.
Section 10. Informal Action by Stockholders. Any action required or
permitted to be taken at a meeting of stockholders may be taken without a
meeting if there is filed with the records of stockholders' meetings a unanimous
written consent which sets forth the action and is signed by each stockholder
entitled to vote on the matter and a written waiver of any right to dissent
signed by each stockholder entitled to notice of the meeting but not entitled to
vote at it.
Section 11. Procedures for Counting Consents. Within three (3) business
days after receipt of the earliest dated consent delivered to the Company in the
manner provided in Section 607.0704 of the Act or the determination by the Board
of Directors of the Company that the Company should seek corporate action by
written consent, as the case may be, the Secretary shall engage nationally
recognized independent inspectors of elections for the purpose of performing a
ministerial review of the validity of the consents and revocations. The cost of
retaining such inspectors shall be borne by the Company.
Consents and revocations shall be delivered to the inspectors upon
receipt by the Company, the stockholders soliciting consents or soliciting
revocations in opposition to action by consents proposed by the Company (the
"Soliciting Stockholders"), or their proxy solicitors or other designated
agents. As soon as consents and revocations are received, the inspectors shall
review the consents and revocations and shall maintain a count of the number of
valid and unrevoked consents. The inspectors shall keep such count confidential
and shall not reveal the count to the Company, the Soliciting Stockholders, or
their representatives or any other entity. As soon as practicable after the
earlier of (i) sixty (60) days after the date of the earliest dated consent
delivered to the Company in the manner provided in Section 607.0704 of the Act,
or (ii) the delivery to the inspector and the party opposing the solicitation,
if any, of a written request by the Company or the Soliciting Stockholders
(whichever is soliciting consents) stating that the Company or Soliciting
Stockholders, as the case may be, have a good faith belief that the requisite
number of valid and unrevoked consents to authorize or take the action specified
in the consents has been received in accordance with these By-Laws, the
inspectors shall issue a preliminary report to the Company and the Soliciting
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Stockholders stating: (i) the number of valid and unrevoked consents; (ii) the
number of valid revocations; (iii) the number of invalid consents; (iv) the
number of invalid revocations; and (v) whether, based on their preliminary
count, the requisite number of valid and unrevoked consents has been obtained to
authorize or take the action specified in the consents. In making such
determinations, the inspectors shall determine whether consents executed by
parties other than the beneficial owners of the shares represented by such
consents have been executed pursuant to the authorization of the beneficial
owner of such shares.
Unless the Company and the Soliciting Stockholders shall agree to a
shorter or longer period, the Company and the Soliciting Stockholders shall have
forty-eight (48) hours to review the inspectors' report and the consents and
revocations and to advise the inspectors and the opposing party in writing as to
whether they intend to challenge the preliminary report of the inspectors. If no
written notice of an intention to challenge the preliminary report (a "Challenge
Notice") is received by the inspectors within forty-eight (48) hours after the
issuance of the preliminary report, the inspectors shall issue to the Company
and the Soliciting Stockholders their final report containing the information
from the inspectors' determination with respect to whether the requisite number
of valid and unrevoked consents was obtained to authorize and take the action
specified in the consents. If the Company or the Soliciting Stockholders issue a
Challenge Notice within forty-eight (48) hours after the issuance of the
preliminary report, a challenge session shall be scheduled by the inspectors as
promptly as practicable, but in no event later than forty-eight (48) hours from
the receipt of the Challenge Notice. Following completion of the challenge
session, the inspectors shall as promptly as practicable issue their final
report to the Soliciting Stockholders and the Company, which report shall
contain the information included in the preliminary report, plus all changes in
the vote totals as a result of the challenge and a certification of whether the
requisite number of valid and unrevoked consents was obtained to authorize or
take the action specified in the consents. A copy of the final report of the
inspectors shall be included in the book in which the proceedings of meetings of
stockholders are recorded.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the Company
shall be managed under the direction of its Board of Directors. All powers of
the Company may be exercised by or under authority of the Board of Directors,
except as conferred on or reserved to the stockholders by the Act, the Articles
of Incorporation or these By-Laws.
Section 2. Number of Directors. The number of Directors which shall
constitute the whole Board of Directors shall not be less than one (1), with the
exact number of Directors as may be fixed from time to time by resolution of the
Board of Directors. The initial Board of Directors shall consist of three (3)
Directors until changed as herein provided, a majority of which Directors shall
be persons who are not Affiliates (as defined in Section 4 of Article IX of
these By-Laws) or employees of any independent contractor of the Company or an
Affiliate (as defined in Section 4 of Article IX of these By-Laws) of such
independent contractor. Directors need not be stockholders of the Company.
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Section 3. Nomination, Election and Tenure of Directors. Nominations
for the election of Directors may be made by the Board of Directors or by any
stockholder entitled to vote for the election of Directors. Any stockholder
entitled to vote for the election of Directors at a meeting may nominate persons
for election as Directors by giving timely notice thereof in proper written form
to the secretary accompanied by a petition signed by at least one hundred (100)
record holders of the common stock of the corporation which shows the number of
shares held by each person and which represent in the aggregate one percent (1%)
of the outstanding shares entitled to vote in the election of Directors. To be
timely, notice shall be delivered to or mailed and received at the principal
executive offices not less than seventy (70) days nor more than ninety (90) days
prior to the meeting; provided, however, that in the event that less than
seventy (70) days' notice or prior public disclosure of the date of the meeting
is given or made to the stockholders, to be timely, notice by the stockholder
must be received at the principal executive offices not later than the close of
business on the tenth day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. To be in proper
written form, a stockholder's notice shall set forth in writing (i) as to each
person whom the stockholder proposes to nominate for election or re-election as
a Director, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of Directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended, including, without limitation, such person's written
consent to being named in the proxy statement as a nominee and to serving as a
Director if elected and (ii) as to the stockholder giving the notice (x) the
name and address, as they appear on the corporation's books, of such stockholder
and (y) the number of shares of the corporation which are beneficially owned by
such stockholder. At the request of the Board of Directors, any person nominated
by the Board of Directors for election as a Director shall furnish to the
secretary the information required to be set forth in a stockholder's notice of
nomination which pertains to the nominee. In the event that a stockholder seeks
to nominate one or more Directors, the secretary shall appoint one or more
inspectors to determine whether a stockholder has complied with this Section 3.
If the inspectors shall determine that a stockholder has not complied with this
Section 3, the inspectors shall direct the Chairman of the meeting to declare to
the meeting that a nomination was not made in accordance with the procedures
prescribed by the by-laws, and the Chairman shall so declare to the meeting and
the defective nomination shall be disregarded. Except as provided in Section 5
of this Article III, the Directors shall be elected at the annual meeting of
stockholders and shall hold office until the next annual meeting and until their
successors are elected and qualified, unless sooner displaced. Directors are
eligible for re-election, and a Director may resign at any time by giving
written notice to the Company.
Section 4. Removal of Director. The stockholders may remove any
Director or Directors at any time, with or without cause, by the affirmative
vote of a majority of all the votes entitled to be cast for the election of
Directors and may elect a successor or successors to fill any resulting
vacancies for the unexpired terms of the removed Directors. A majority of the
Directors may remove a Director for cause.
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Section 5. Vacancies on the Board of Directors. A majority of the
remaining Directors, whether or not sufficient to constitute a quorum, or a sole
remaining Director, may fill a vacancy on the Board of Directors which results
from any cause except an increase in the number of Directors, and a majority of
the entire Board of Directors may fill a vacancy which results from an increase
in the number of Directors. A Director elected by the Board of Directors to fill
a vacancy serves for the balance of the term of the replaced Director, unless
sooner displaced.
Section 6. Regular Meetings. After each meeting of stockholders at
which a Board of Directors shall have been elected, the Board of Directors so
elected shall meet as soon as practicable for the purpose of organization and
the transaction of other business. No notice of such meeting shall be necessary
to the newly elected Directors in order legally to constitute the meeting,
provided a quorum shall be present. Any other regular meeting of the Board of
Directors shall be held at such time and at any place within or outside of the
State of Florida as may be determined by the Board of Directors, the Chairman of
the Board, Vice Chairman of the Board or the President of the Company.
Section 7. Special Meetings. Special meetings of the Board of Directors
may be called at any time by the Chairman of the Board of Directors, the Vice
Chairman of the Board of Directors, the President of the Company, or by a
majority of the Board of Directors by vote at a meeting, or by a majority of the
Board of Directors in writing without a meeting. A special meeting of the Board
of Directors shall be held on such date and at any place within or outside of
the State of Florida as may be designated from time to time by the Chairman of
the Board, the Vice Chairman of the Board of Directors, the President of the
Company or the Board of Directors.
Section 8. Notice of Meeting. Except for regular meetings held after a
meeting of the stockholders as provided in Section 6 of this Article III, the
Secretary of the Company, or in the Secretary's absence or inability to act, any
officer of the Company appointed by the Chairman of the Board, the Vice Chairman
of the Board of Directors or the President of the Company, shall give notice to
each Director of each regular and special meeting of the Board of Directors. The
notice shall state the date and place of the meeting. Notice is given to a
Director when it is delivered personally to him, left at his residence or usual
place of business, or sent by telegraph, cablegram, or telephonic communication,
at least twenty-four (24) hours prior to the time of the meeting or, in the
alternative, by first-class mail, postage prepaid, addressed to the Director at
his post office or his address as it appears on the records of the Company, at
least four (4) days before the day on which such meeting is to be held. If
mailed with postage prepaid, such notice shall be deemed to be given when
deposited in the United States mail addressed to the Director at his address as
it appears in the records of the Secretary. The notice need not state the
business to be transacted at or the purpose of the meeting. No notice of any
meeting of the Board of Directors need be given to any Director who attends, or
to any Director who, in writing executed and filed with the records of the
meeting either before or after the holding thereof, waives such notice. Any
meeting of the Board of Directors may adjourn from time to time to reconvene at
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the same or some other place, and no notice need be given of any such adjourned
meeting other than by announcement.
Section 9. Action by Directors. The action of a majority of the
Directors present at a meeting at which a quorum of the Board of Directors is
present constitutes action of the Board of Directors, except as otherwise
provided in the Act, the Articles of Incorporation, or these ByLaws in respect
of any investment or action by the Company which involves a potential conflict
of interest between the Company and any independent contractor retained by the
Company or any Affiliate (as defined in Section 4 of Article IX of these
By-Laws) of any such independent contractor. A majority of the entire Board of
Directors shall constitute a quorum for the transaction of business. In the
absence of a quorum, the Directors present, by majority vote and without notice
other than by announcement, may adjourn the meeting from time to time until a
quorum shall attend. At any such adjourned meeting at which a quorum shall be
present, any business may be transacted which might have been transacted at the
meeting as originally noticed.
Section 10. Organization. The Chairman of the Board of Directors of the
Company shall preside at each meeting of the Board of Directors. In the absence
or inability of the Chairman of the Board to preside at a meeting, the Vice
Chairman of the Board of Directors of the Company shall preside at a meeting. In
the absence or inability of either of the Chairman or Vice Chairman of the Board
to preside at a meeting, the President of the Company shall preside at a
meeting. In the absence or inability of the Chairman of the Board, Vice Chairman
of the Board or the President to preside at a meeting, another Director chosen
by a majority of the Directors present, shall act as Chairman of the meeting and
preside thereat. The Secretary of the Company or, in the Secretary's absence or
inability to act, any person appointed by the Chairman of the Board or the
presiding Chairman shall act as Secretary of the meeting and keep the minutes
thereof.
Section 11. Meeting by a Conference Telephone. Members of the Board of
Directors or of any committee thereof may participate in a meeting by means of a
conference telephone or similar communications equipment, by means of which all
persons participating in the meeting can hear each other at the same time.
Participation in a meeting by these means shall constitute presence in person at
a meeting.
Section 12. Consent in Lieu of Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if a written consent to such
action is signed by all members of the Board of Directors or of such committee,
as the case may be, and such written consent or consents are filed with the
minutes of proceedings of the Board of Directors or committee.
Section 13. Compensation. Directors may receive compensation for
services to the Company in their capacities as Directors in such manner and in
such amounts as may be fixed from time to time by the Board of Directors, and
expenses, if any, of attendance at each regular or special meeting of the Board
9
<PAGE>
of Directors, or any committee of the Board of Directors, or any meeting of
stockholders. No such payment shall preclude any Director from serving the
Company in any other capacity and receiving compensation therefor.
ARTICLE IV
COMMITTEES OF DIRECTORS
Section 1. Committees. The Board of Directors may, by resolution
adopted by a majority of the full Board of Directors, appoint or designate one
or more committees, each committee of the Board of Directors to consist of two
(2) or more Directors, and may delegate to such committees any of the powers of
the Board of Directors except such powers as are required to be performed by the
Board of Directors under the Act, the Articles of Incorporation, or these
By-Laws.
Section 2. Minutes and Reports. Each committee of the Board of
Directors shall keep minutes of its proceedings and shall report the same to the
Board of Directors, and any action taken by the committees shall be subject to
revision and alteration by the Board of Directors, provided that no rights of
third persons shall be affected by any such revision or alteration.
Section 3. Notice. Notice of committee meetings shall be given in the
same manner as notice for special meetings of the Board of Directors, and a
waiver thereof in writing, signed by the Director entitled to such notice and
filed with the records of the meeting, whether before or after the holding
thereof, or actual attendance at the committee meeting in person shall be deemed
equivalent to the giving of such notice to such Director.
Section 4. Quorum, Voting and General. One-third (1/3), but not less
than two (2), of the members of any committee shall be present in person at any
meeting of such committee in order to constitute a quorum for the transaction of
business at such meeting, and the act of the majority present shall be the act
of such committee. The Board of Directors or the Chairman of the Board of
Directors may designate a chairman of any committee and such chairman or any two
members of any committee may fix the time and place of its meetings unless the
Board of Directors shall otherwise provide. The Board of Directors shall have
the power at any time to change the membership of any committee, to fill all
vacancies, to designate alternate members to replace any absent or disqualified
member, or to dissolve any such committee.
ARTICLE V
OFFICERS
Section 1. The officers of the Company shall consist of a Chairman of
the Board of Directors, a Vice Chairman of the Board of Directors, a President,
a Secretary and a Treasurer, each of whom shall be elected by the Board of
Directors at the first meeting of directors immediately following the annual
10
<PAGE>
meeting of shareholders of the Company, and shall serve until their successors
are chosen and qualified. Such other officers and assistant officers and agents,
as may be deemed necessary, may be elected or appointed by the Board of
Directors, the Chairman of the Board of Directors, the Vice Chairman of the
Board of Directors or the President from time to time. Any two (2) or more
offices may be held by the same person. The failure to elect a Chairman of the
Board of Directors, Vice Chairman of the Board of Directors, President,
Secretary or Treasurer shall not affect the existence of the Company.
Section 2. Duties. The officers of the Company shall have the following
duties:
The Chairman of the Board of Directors shall have general supervisory
authority over the management of the business and affairs of this corporation
subject to the direction of the Board of Directors and shall preside at all
meetings of Shareholders and the Board of Directors of this corporation.
The Vice Chairman of the Board of Directors shall have general
supervisory authority over the management of the business and affairs of this
corporation subject to the direction of the Chairman of the Board of Directors
and the Board of Directors and in the absence of the Chairman of the Board of
Directors shall preside at all meetings of the Shareholders and the Board of
Directors.
The President shall have general and active management of the business
and affairs of the corporation subject to the directions of the Chairman of the
Board of Directors, the Vice Chairman of the Board of Directors and the Board of
Directors, and in the absence of the Chairman of the Board of Directors and the
The Secretary shall have custody of, and maintain, all of the corporate
records except the financial records; shall record the minutes of all meetings
of the shareholders and Board of Directors, send all notices of meetings out,
and perform such other duties as may be prescribed by the Board of Directors,
Chairman of the Board of Directors, Vice Chairman of the Board of Directors or
the President.
The Treasurer shall have custody of all corporate funds and financial
records, shall keep full and accurate accounts of receipts and disbursements and
render accounts thereof at the annual meetings of shareholders and whenever else
required by the Board of Directors or the President, and shall perform such
other duties as may be prescribed by the Board of Directors, Chairman of the
Board of Directors, Vice Chairman of the Board of Directors or the President.
The functions of the chief executive officer, chief financial officer,
and chief accounting officer of the Company shall be performed by those officers
designated as such by the Board of Directors of the Company.
11
<PAGE>
Section 3. Removal of Officers. Any officer or agent elected or
appointed by the Board of Directors may be removed by the Board whenever in its
judgment the best interests of the Company will be served thereby.
Any officer or agent elected by the shareholders may be removed only by
vote of the shareholders, unless the shareholders shall have authorized the
Directors to remove such officer or agent.
Any officer or agent elected or appointed by any of the Chairman of the
Board of Directors, the Vice Chairman of the Board of Directors or the President
may be removed by the officer who appointed such officer or by the Board of
Directors.
Any vacancy, however occurring, in any office may be filled by the
Board of Directors.
Removal of any officer shall be without prejudice to the contract
rights, if any, of the person so removed; however, election or appointment of an
officer or agent shall not of itself create contractual rights.
ARTICLE VI
INVESTMENT POLICIES
Section 1. General. The Board of Directors shall determine the
Company's investment policies and shall review those policies at least annually
to determine that the policies are being followed by the Company and are in the
best interests of its stockholders.
It shall be the duty of the Board of Directors to insure that the
purchase, sale, retention and disposal of Company assets, and the investment
policies of the Company and the limitations thereon or amendment thereof are at
all times in compliance with the restrictions applicable to real estate
investment trusts pursuant to the Internal Revenue Code of 1986, as it may be
amended from time to time (the "Internal Revenue Code").
The Company will not, without the approval of a majority of the Board
of Directors, acquire from or sell to a Director, an officer or employee of the
Company, any person in which a Director owns more than a one percent (1%)
interest, or any Affiliate (as defined in Section 4 of Article IX of these
By-Laws) of any of the foregoing, any of the assets or other property of the
Company, or make loans to any of the foregoing.
Section 2. Limitations. Each of the following limitations shall apply
only to the extent that each limitation must be satisfied in order for the
Company to qualify as a real estate investment trust under the Internal Revenue
Code, and to the extent that each limitation is required for such qualification,
each limitation may not be changed without the approval of the holders of a
majority of the outstanding shares: (1) the Company may not hold property
12
<PAGE>
primarily for sale to customers in the ordinary course of business; (2) the
Company may not issue "redeemable securities" as defined in the Investment
Company Act of 1940; (3) the Company may not invest in any real estate
investment trust which holds investments or engages in activities which the
Company would be prohibited from engaging in by these By-Laws; (4) the Company
may not invest in commodities or commodity future contracts other than
"financial futures" contracts intended to hedge the Company against losses from
its temporary investments; (5) the Company may not invest more than one percent
(1%) of its assets in real estate contracts of sale, unless such contracts are
recordable in the chain of title; and (6) the Company may not engage in trading
(as compared with investment activities) or engage in the underwriting or the
agency distribution of securities issued by others.
ARTICLE VII
STOCK
Section 1. Certificate for Stock. Every holder of stock in the Company
shall be entitled to have a certificate or certificates which represents and
certifies the number and kind and class of shares of stock owned by each such
stockholder in the Company. Certificates for fractional shares shall not be
issued. Each stock certificate shall include on its face the name of the
Company, the name of the stockholder or other person to whom it is issued, the
class of stock and the number of shares represented by the certificate. It shall
be in such form, not inconsistent with the Act or with the Articles of
Incorporation, as shall be approved by the Board of Directors or any officer or
officers designated for such purpose by resolution of the Board of Directors.
Each stock certificate shall be signed by the Chairman of the Board of
Directors, the Vice Chairman of the Board of Directors, the President, or a Vice
President, and countersigned by the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer. Each certificate may be sealed with the
actual corporate seal or a facsimile of it or in any other form and the
signatures may be either manual or facsimile signatures. Where a certificate is
countersigned: (i) by a transfer agent other than the Company or its employee;
or (ii) by a registrar other than the Company or its employee, any other
signature on the certificate may be facsimile. In case any officer, transfer
agent or registrar, who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, the certificate may nevertheless be
issued by the Company with the same effect as if such officer, transfer agent or
registrar had not ceased to be such as of the date of its issue.
Section 2. Transfers. The Board of Directors shall have power and
authority to make such rules and regulations as it may deem expedient concerning
the issue, transfer and registration of certificates of stock and may appoint
transfer agents and registrars thereof. The duties of transfer agent and
registrar may be combined.
13
<PAGE>
Section 3. Stock Ledger. The Company shall maintain a stock ledger
which contains the name and address of each stockholder of the Company and the
number of shares of stock of each class which the stockholder holds. The stock
ledger may be in written form or in any other form capable of producing copies
for visual inspection. The original or a duplicate of the stock ledger shall be
kept at the offices of the transfer agent, within or outside the State of
Florida, or, if none, at the principal executive office of the Company.
Section 4. Lost, Destroyed or Mutilated Certificates. Subject to such
rules, regulations and procedures as may be determined or set by the Board of
Directors, the holder of any certificates representing shares of stock in the
Company shall immediately notify the Company of any loss, destruction or
mutilation of such certificate, and the Company may issue a new certificate of
stock in the place of any certificate theretofore issued by the Company upon the
making of an affidavit of that fact by the person claiming the certificate of
stock to be stolen, lost or destroyed. When authorizing such issue of a new
certificate or certificates, the Board of Directors may, in its discretion and
as a condition precedent to the issuance thereof, require the owner of such
stolen, lost or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require and to
give the Company a bond, with sufficient surety, to indemnify it against any
loss or claim which may arise by reason of the issuance of a new certificate.
Section 5. Payment of Redeemed Shares. Any shares of stock in the
Company, redeemed by the Company as Excess Shares pursuant to the provisions of
Paragraph (d) of Article V - CAPITAL STOCK of the Articles of Incorporation,
shall be paid for by the Company at the redemption price, as provided in Article
V of the Articles of Incorporation, as soon as reasonably practicable after the
receipt by the stockholder of the notice calling the Excess Shares for
redemption by the Company.
ARTICLE VIII
FINANCE
Section 1. Checks, Drafts, Etc. All checks, drafts and orders for the
payment of money, notes and other evidences of indebtedness issued in the name
of the Company shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.
Section 2. Fiscal Year. The fiscal year of the Company shall be the
calendar year.
14
<PAGE>
ARTICLE IX
SUNDRY PROVISIONS
Section 1. Books and Records. The Company shall keep correct and
complete books and records of its accounts and transactions and minutes of the
proceedings of its stockholders and Board of Directors and of any committee when
exercising any of the powers of the Board of Directors.
Section 2. Distributions to Stockholders. Each distribution to
stockholders of income or capital assets shall be accompanied by a written
statement disclosing the source of the funds distributed. The amount and date of
distributions to stockholders shall be determined in the sole discretion of the
Board of Directors of the Company.
Section 3. Transactions With Affiliates. Except as otherwise provided
in the Articles of Incorporation or these By-Laws, the Company shall not enter
into any transaction with any independent contractor retained by the Company or
any Affiliate (as defined in Section 4 below) of such independent contractor, or
with any officer or Director, or any Affiliate of any officer of Director
unless: (i) such transaction is approved by a majority of the Directors, who are
not Affiliates (as defined in Section 4 below) of such independent contractor or
a party to the transaction or (ii) such transaction is approved by the
stockholders of the Company; or (iii) such transaction is fair and reasonable to
the Company and its stockholders; or (iv) the terms of such transaction are at
least as favorable as the terms of any comparable transaction made on an arm's
length basis and known to the Board of Directors; or (v) the appraised value of
any property being acquired in such transaction is not less than the total
consideration paid by the Company in such transaction.
Section 4. Affiliates Defined. As used in these By-Laws, the term
"Affiliate" of another person shall mean any person directly or indirectly
owning, controlling, or holding with power to vote, five percent (5%) or more of
the outstanding voting securities of such other person; any person, five percent
(5%) or more of whose outstanding voting securities are directly or indirectly
owned, controlled, or held with power to vote, by such person; any person
directly or indirectly controlling, controlled by, or under common control with,
such other person; and any officer, Director, or employee of such person. The
term "person" includes a natural person, company, corporation, trust,
partnership (limited or general) or any other organization.
Section 5. Company Seal. There shall be a suitable seal, bearing the
name of the Company, which shall be in the charge of the Secretary. It shall be
in such form, not inconsistent with the Act or with the Articles of
Incorporation, as shall be approved by the Board of Directors or any officer or
officers designated for such purpose by resolution of the Board of Directors.
The Board of Directors may authorize one or more duplicate seals and provide for
the custody thereof. The seal may be used by causing it or a facsimile thereof
to be impressed or affixed or reproduced or otherwise.
15
<PAGE>
Section 6. Amendments. Any and all provisions of these By-Laws may be
altered or repealed and new By-Laws may be adopted by the stockholders of the
Company at any regular or special meeting in accordance with Section 5 of
Article II of these By-Laws, or by the Board of Directors.
- ------------------------------
August 28, 1996
- ------------------------------
BYLAWSAM.DKE
16
<PAGE>
Exhibit E(1)
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Agreement dated as of ___________, 199_, is between Koger Equity,
Inc., a Florida corporation (the "Company"), AP-KEI Holdings, LLC, a Delaware
limited liability company (the "Investor") and _________________, a _________
(the "Assignee").
WHEREAS, under the terms of that certain Stock Purchase Agreement dated
as of October __, 1996 (the "Stock Purchase Agreement") by and between the
Company and the Investor, the Investor Beneficially Owns _____ shares of Common
Stock (the "Stock"), which are Permitted Securities under the Stock Purchase
Agreement;
WHEREAS, in conncetion with its transfer of the Stock to the Assignee,
Investor desires to assign its rights under the Stock Purchase Agreement to the
Assignee to the extent permitted in Section 9.4 thereof;
WHEREAS, it is a condition to the validity of such assignment that the
Assignee execute and deliver to the Company this Assignment and Assumption
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledges, the parties agree as follows:
1. Definitions. Capitalized terms are used herein with the meanings
provided in the Stock Purchase Agreement.
2. Assignment. Investor hereby transfers, assigns and sets over to
Assignee all of its right, title and interest in and to, and its rights under,
the Stock Purchase Agreement.
3. Assumption. Assignee hereby agrees with the Company to assume and be
bound by all of the obligations of Investor to the Company under the Stock
Purchase Agreement. Assignee confirms to the Company that it is an Affiliate of
Investor, as defined in the Stock Purchase Agreement.
-1-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Assumption Agreement to be duly executed as of the day and year first above
written.
KOGER EQUITY, INC.
By_________________________________
Name:
Title:
AP-KEI HOLDINGS, LLC, as Investor
By AP-MM KEI HOLDINGS, LLC,
its Managing Member
By KRONUS PROPERTY, INC,
its Managing Member
By___________________________
Name:
Title:
Assignee
By_________________________________
Name:
Title:
-2-
<PAGE>
Exhibit E(2)
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Agreement dated as of ___________, 199_, is between Koger Equity,
Inc., a Florida corporation (the "Company"), AP-KEI Holdings, LLC, a Delaware
limited liability company (the "Investor") and _________________, a _________
(the "Permitted Assignee").
WHEREAS, under the terms of that certain Stock Purchase Agreement dated
as of October __, 1996 (the "Stock Purchase Agreement") by and between the
Company and the Investor, the Investor Beneficially Owns _____ shares of Common
Stock (the "Stock"), which are Permitted Securities under the Stock Purchase
Agreement;
WHEREAS, in connection with its pledge of the Stock to the Permitted
Assignee, Investor desires to assign its rights under the Stock Purchase
Agreement to the Permitted Assignee to the extent permitted in Section 9.4
thereof;
WHEREAS, it is a condition to the validity of such assignment that the
Permitted Assignee execute and deliver to the Company this Assignment and
Assumption Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledges, the parties agree as follows:
1. Definitions. Capitalized terms are used herein with the meanings
provided in the Stock Purchase Agreement.
2. Assignment. Investor hereby transfers, assigns and sets over to
Permitted Assignee all of its right, title and interest in and to, and its
rights under, the Stock Purchase Agreement.
3. Assumption. Permitted Assignee hereby agrees with the Company to
assume and be bound by all of the obligations of the Permitted Assignee to the
Company under the Stock Purchase Agreement. Assignee confirms to the Company
that it is an Eligible Institution and a Permitted Assignee, as defined in the
Stock Purchase Agreement. It further agrees and confirms that it shall not
assign this Agreement or any part thereof to any third party.
-1-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Assumption Agreement to be duly executed as of the day and year first above
written.
KOGER EQUITY, INC.
By_________________________________
Name:
Title:
AP-KEI HOLDINGS, LLC, as Investor
By AP-MM KEI HOLDINGS, LLC,
its Managing Member
By KRONUS PROPERTY, INC,
its Managing Member
By___________________________
Name:
Title:
Permitted Assignee
By_________________________________
Name:
Title:
-2-
<PAGE>
SCHEDULES
to the
STOCK PURCHASE AGREEMENT
between
AP-KEI HOLDINGS, LLC
and
KOGER EQUITY, INC.
October 10, 1996
All information included in any Schedule to this Agreement is hereby
incorporated by reference in all other Schedules.
<PAGE>
S C H E D U L E
2.2
SUBSIDIARIES AND INVESTMENTS
Subsidiaries of Koger Equity, Inc.:
* Koger Real Estate Services, Inc., a Florida corporation
* Southeast Properties Holding Corporation, Inc., a Florida corporation
Investments of Koger Equity, Inc. in other entities:
* Koger Equity, Inc. owns 100% of the Series A Preferred Stock of Koger
Realty Services, Inc., a Delaware corporation
<PAGE>
S C H E D U L E
2.5
ABSENCE OF CERTAIN CHANGES OR EVENTS
* Wellspring Resources LLC Loan Agreement: Agreement sets forth Koger
Equity's obligation to lend the following amounts to Wellspring
Resources in the event they request such no later than January 2, 1997:
1. Primary Loan
a.) Maximum loan of $5,593,945.00
b.) Interest Rate: 11%
c.) Payments: phased in monthly payments which fully
amortize the loan on October 14, 2006.
2. Secondary Loan
a.) Maximum loan of $3,995,675.00
b.) Interest Rate: 14%
c.) Payments: phased in monthly payments which fully
amortize the loan on October 14, 2006.
State Street Bank and Trust Company and Watson Wyatt & Company will
each deliver an irrevocable, unconditional guarantee of Wellspring's
obligations under the Loan Documents if the loan is requested.
* Construction of each of the Piedmont Building in Charlotte, North
Carolina (over 74,000 gross square feet) and the Grove Building in
Memphis, Tennessee (approximately 49,000 gross square feet).
* Northwestern Loan Application:
Koger Equity's Loan Application to The Northwestern Mutual Life
Insurance Company has been approved for a $190 million non-recourse
loan which will be secured by 10 officer parks. This loan will be
divided into:
i) a tranche in the amount of $100.5 million with a
10-year maturity at an annual interest rate of 8.25%
and
<PAGE>
S C H E D U L E
2.5
(continued)
ii) a tranche in the amount of $89.5 million with a
maturity of 12 years at an annual interest rate of
8.33%.
The Company expects to close this loan before the end of 1996.
* Refinancing of Balance of Debt:
The Company plans to refinance the balance of its debt with existing
lenders or modify the terms of such debt to eliminate restrictive
covenants before the end of 1996.
However, as yet no commitments have been arranged.
* Revolving Credit Facility:
The Company is in the process of obtaining a $50 million bank revolving
credit facility which will be available to finance future growth.
However, as yet no commitments have been arranged.
* On August 12, 1996, the Company sold a thirty (30) acre parcel of real
property located in Burmingham, Alabama for $1,350 million.
* During the quarter ended September 30, 1996, the Company entered into
an amendment of certain contracts previously entered into with KOALA
relating to the sale of a certain parcel of land (approximately 8.1
acres) in Miami.
* On August 26, 1996, the Company specified and delivered a termination
of certain restrictions on competitive leasing activities on a parcel
formerly owned in San Antonio, Texas.
* Leases of all or substantially all of a property are set forth on
Attachment A to this Schedule.
<PAGE>
S C H E D U L E
2.5
(continued)
S C H E D U L E
2.6
UNDISCLOSED LIABILITIES
* During the quarter ended September 30, 1996, the Company recorded an
increase of $485,616 to the Additional Minimum Liability - SERP.
<PAGE>
S C H E D U L E
2.5
(continued)
S C H E D U L E
2.7
CAPITALIZATION
* Shares issued and outstanding at 10/08/96 - 17,881,556
* [Shares Reserved: (all at 10/08/96)
Stock Option Plan 1,375,809
Stock Option Plan
Conversion of Warrants 1,111,604
Stock Investment Plan 157,885
Common Stock Rights Agreement 17,881,556
<PAGE>
S C H E D U L E
2.5
(continued)
S C H E D U L E
2.10
CONSENTS AND APPROVALS
None.
<PAGE>
S C H E D U L E
2.5
(continued)
S C H E D U L E
2.13
REIT STATUS
* RGI Realty, Inc. and its related affiliates ("RGI"), some of which are
non-domestic entities, have filed with the Company and the Securities
and Exchange Commission a Schedule 13D on March 18, 1996 which stated
that, at that time, they owned in the aggregate 2,452,571 (or 13.8% of
the shares of the Common Stock of Koger Equity, Inc.). RGI filed an
amendment (Amendment Number 2) to the above described Schedule 13D,
dated September 11, 1996, which stated that RGI sold the Shares to the
following Institutional Investors:
<TABLE>
<CAPTION>
Shares Transferred
------------------
<S> <C>
Alliance Variable Products Series Fund 100,000
(Held in the name of: NEWMOWN & CO.)
Smith Barney/Travelers Series Fund 250,000
(Held in the name of: BARNETT & CO.)
Equitable Retirement Plan 340,000
(Held in the name of: CUDD & CO.)
Alliance Growth Fund 1,762,571
(Held in the name of: BLUENOSE & CO.)
</TABLE>
<PAGE>
S C H E D U L E
2.5
(continued)
S C H E D U L E
2.14
LITIGATION
* On March 23, 1993, the Securities and Exchange Commission (the
"Commission") entered an Order directing a private investigation with
respect to Koger Properties, Inc.'s accounting practices, including the
accuracy of financial information included in certain reports filed by
Koger Properties, Inc. ("KPI") with the Commission, possible insider
trading in KPI's stock, and possible misleading statements concerning
the financial condition of KPI and its ability to pay dividends to its
shareholders. Prior to March 23, 1993, the Commission had been engaged
in a confidential investigation without a formal order. As a result of
the Merger, the Company assumed responsibility for responding to the
requests and subpoenas of the Commission staff in connection with this
private investigation. Although the staff of the Commission had
subpoenaed KPI documents and former employees of KPI, who are presently
employees of the Company, for testimony, on February 8, 1994, the
Commission staff advised the Company, through its counsel, that the
scheduled depositions of former KPI employees and the review of
documents of KPI had been suspended. The Company has received no
communication from the Commission staff since the above notice of
suspension. Based on the information currently available to the
Company, it is unable to determine whether or not the private
investigation will lead to formal legal proceedings or administrative
actions or whether or not such legal proceedings or administrative
actions will involve the Company.
* Koger Equity, Inc. has no such litigation which is likely to result in
or have a Material Adverse Effect.
<PAGE>
S C H E D U L E
2.5
(continued)
S C H E D U L E
2.17
* Koger Equity, Inc. has an agreement dated February 26, 1996, as
amended, with J.P. Morgan Securities, Inc. ("Morgan"). Morgan has
confirmed orally that no fee was earned under such agreement by reason
of this Agreement.
* Koger Equity, Inc. has agreed to pay a fee in the amount of $350,000,
plus expenses, to Rothschild Realty, Inc.
* Koger Equity, Inc. has agreed to pay a fee in the amount of $204,000,
to David B. Hiley in addition to payments plus expenses he receives
pursuant to a monthly retainer as Financial Advisor to the Company.
<PAGE>
Schedule 7.1
Apollo Advisors, L.P.
Apollo Advisors II, L.P.
Lion Advisors, L.P.
Apollo Real Estate Advisors, L.P.
Apollo Real Estate Advisors II, L.P.
Apollo Investment Fund, L.P.
AIF II, L.P.
Apollo Investment Fund III, L.P.
Apollo Real Estate Investment Fund, L.P.
Apollo Real Estate Investment Fund II, L.P.
Leon D. Black
John J. Hannan
William L. Mack
W. Edward Scheetz
Lee S. Neibert
William S. Benjamin
Ricardo Koenigsberger
Richard J. Mack
John R.S. Jacobsson
William A. Scully
Stewart F. Koenig
-1-
<PAGE>
